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24 h Real estate for retailers Annual report and accounts 2015 Another strong performance Financial highlights: Portfolio highlights: Reported profit Contracted rental income 1 59.5m +27% 85.6m +10% 2015 159.5 2015 85.6 2014

  1. Whilst the focus on adopting a total return We have also been working on the balance Distribution assets approach has tempered the growth in our sheet to improve our fmexibility and to (including development) reported earnings in the very short term, increase our loan maturity. We now have represent 47% of our it has had a very positive impact on our a signifjcant element of our gearing based portfolio, up from 31% EPRA NAV progress, increasing by 16% to on unsecured facilities. This provides us Strategic report i n 2014 £877.2 million. with a valuable reduction in interest cost and gives a longer loan maturity period. The repositioning activity has balanced Above all, it allows much greater fmexibility the portfolio to continue our focus on the and cost effjciency with no associated Our portfolio has winning sectors within retail, on retailer-led fjnance costs on the acquisition or sale of performed strongly and distribution, and convenience shopping, an asset. The cost effjciency should not is well positioned to where people have been migrating in be underestimated as substantial fjnance benefjt from changes increasing numbers. These are sectors where charges are incurred when releasing assets in consumer shopping we understand the market exceptionally from secured facilities to benefjt from the habits through our well and have the closest relationships with very strong sale prices. I am very pleased strong occupier our occupiers. These relationships allow us that under the unsecured arrangements relationships to create a real point of di fgerence from our these costs will be avoided in the future. competitors, to deliver high occupancy and to achieve long-term security of Our dividend policy is clear. We are aiming income. We now have one of the highest for a covered and progressive dividend, occupancy rates and longest lease but our fjrst priority is to improve the portfolio structures within our peer group. quality to ensure that our dividend is not only progressive but it is also secure. The large Our focus on these specialist areas and our number of sales and recycling into high customer relationships helps us to identify quality and higher yielding developments exciting opportunities through good have increased our contracted rental asset selection and create value through income, which will benefjt our reported our investment and asset management income during 2015/16. We intend to pay activity. During the course of last year, asset the same fjnal dividend as last year and we management initiatives generated an uplift remain confjdent of growing the dividend in our income of £2.6 million, grew our like- thereafter. We propose to share some of for-like rents by 2.9%, and still reduced our the exceptional gains we have secured voids even further to 0.3%. on the redevelopment and sale of Carter Our contracted development activities, Lane earlier this year by recommending a both directly and where we are forward special dividend of 2p per share to be paid funding, are substantially pre-let, on time in July 2015. and on budget to deliver attractive returns, I believe LondonMetric is very well and meet our responsible business aims. placed. We are doing the right things. The short development cycle makes these We are investing in winning assets and assets deferred investments, delivering strengthening our customer relationships. recurring earnings from buildings when We continue to be highly cost conscious they are completed. We are developing and we are well fjnanced. We have a terrifjc 2.0 million sq ft of new space in a number of tenant line up let on long leases with almost difgerent locations. no voids, and an exceptional management You have seen the balance of the portfolio team who are delivering. We remain alert, changing between retail and distribution engaged and focused on keeping the over the past 12 months, to the point portfolio fjt for the future. where distribution (including distribution developments) is now our single biggest investment sector. Including assets under development, we now have 21 distribution centres let to quality occupiers and we aim to continue to increase our exposure to Patrick Vaughan Chairman the growing retailer-led distribution market where we can work with our customers for 2 June 2015 mutual benefjt. Annual report and accounts 2015 1 LondonMetric Property Plc 1

  2. Chief Executive’s Q&A “ Retailers’ requirements for better distribution infrastructure are substituting their need for physical space and our portfolio is positioned to benefjt from these changes.” How have you performed against your been completed. Over the year, we sold Andrew Jones (CEO) strategic priorities? £288.7 million of assets and recycled equity gives an overview of into our 2.0 million sq ft development progress in the year, his As well as benefjting from market yield programme. Retail and distribution assessment of the retail compression we have also delivered investments totalled £308.9 million, sector and the impact very strong total returns – income, rental increasing investments in our core sectors on LondonMetric. growth and development surpluses – at to 90% of the portfolio. a time when traditional property metrics will become increasingly important, as What have been your key transactions? market yield compression moderates. Overall, we transacted on £597.6 million of These metrics have supported our portfolio assets. The disposal of One Carter Lane for repositioning into retailer-led distribution £138.8 million was key in reducing non-core and convenience retail whilst withdrawing assets, marking our exit from London offjces from offjce and residential, where we at a time when yields were at just over 4%. don’t have competitive advantages. Key distribution purchases included centres Our contracted income has increased to for Dixons Carphone in Newark, Tesco in £85.6 million (2014: £78.0 million) benefjting Croydon, Eddie Stobbart in Dagenham from a positive yield arbitrage from our and The HUT Group in Warrington, which investment activity, income from our together amounted to £193.6 million. developments and like for like rental growth. We are unemotional about our assets, Our portfolio repositioning and unemotional and have monetised our investments approach has resulted in signifjcant from both of our core sectors where capital recycling, as we took advantage developments have been completed of the market to monetise investments or successful initiatives executed. where asset management initiatives had 12 LondonMetric Property Plc Annual report and accounts 2015

  3. What fjnancing capacity is there for further Retail assets that o fger convenience, are well Changes in consumer investments? located and let on sustainable rents remain shopping behaviour attractive. We believe that convenience Debt refjnancing, in particular the are having a profound retail assets will remain relevant in an omni £400 million unsecured revolving credit e fgect on retailer real channel world and so will ofger good rental Strategic report facility and the extension to and increase in estate requirements growth prospects. The signifjcant growth size of our Helaba facility, have put us in a predicted for click and collect will, in very strong fjnancial position that provides particular, benefjt convenience retail. signifjcant fjnancing fmexibility and better Falling retailer demand fjnancing terms. What are your competitive strengths and how for physical space is do you buy assets in a tightly priced market? In conjunction with recycled equity, these being substituted by debt arrangements not only provide In our search for properties, we are the constant need suffjcient capital for our committed active, disciplined, rational and patient. for better distribution developments but can also provide Today’s pricing is competitive and many infrastructure additional acquisition fjrepower. opportunities don’t meet our returns criteria. This often persuades us to simply walk away. How is the changing retail landscape We are fully aligned with our shareholders in fluencing your investment decisions? and are incentivised to deliver returns and We have built up a The retail sector is experiencing a seismic not simply grow the asset base. £657 million distribution change. The recession and technological portfolio and will One of our greatest strengths is our advances have changed consumer mind- continue to grow our signifjcant real estate experience and sets and, as a result, shopping patterns are exposure to this space excellent occupier relationships that help rapidly evolving: omni-channel shopping, us to identify attractive opportunities. instant gratifjcation and greater shopping Understanding and working with our convenience are increasing consumer occupiers is key to upholding our ambition We will continue to expectations of retailers – online retail is to be their real estate partner of choice. recycle investments becoming ever more relevant. where other investors These relationships provide valuable These changing dynamics convinced value our assets more insights into changing consumer and us a few years ago to invest heavily highly than we do retailer behaviours, and allows us to into distribution and, more recently, quickly adapt our portfolio. into convenience retail at a time when others remained entrenched in legacy How has LondonMetric delivered on its asset classes, which may not be as relevant Responsible Business Strategy? in the future. We have been successful in aligning our Recent events have shown that very few business objectives and sustainability goals. retailers have a fjt for purpose logistics The reshaping of the portfolio has enabled infrastructure. With customer loyalty at risk, us to reduce our carbon footprint and distribution and fulfjlment investment is now liabilities by 42% over the year. Our greater becoming more important than stores. focus on short cycle developments means that we are refurbishing and redeveloping Demand and supply imbalances mean that assets and sites, thereby extending their large, well located and modern distribution useful economic and social purpose. assets are highly sought after investments. Furthermore, our focus on meeting In addition, “last mile” facilities which occupier needs has made Responsible enable same or next day home delivery are Asset Management an important agenda becoming an essential part of the retailers’ item for us, ranging from joint community Key growth drivers infrastructure. This is a key area for us, where engagement initiatives to the installation of see page 16 we are seeing rental growth opportunities. cost efgective supplies of renewable energy. Strategy in action see page 21 Changes in consumer shopping habits Key transactions throughout are having a dramatic impact on retailers’ the year demand for new space, accelerating ‘right- see page 22 sizing’ strategies, as “expensive” marginal Key performance indicators stores are closed and critical locations are see page 24 Andrew Jones turned into showrooms. The grocery sector, Kirkstall Bridge Shopping Chief Executive Park case study in particular, has been heavily impacted see page 36 2 June 2015 with rents and yields rarely justifying the Financial review underlying trading metrics. see page 38 Annual report and accounts 2015 13 LondonMetric Property Plc

  4. The shape of our portfolio 2014 2015 2015 Portfolio value (%) Portfolio value (%) Regional split (%) Development Offices Offices London Development Rest of UK 14 5 7 6 9 Residential 12 Residential 5 8 North South East 8 22 86% core 90% core Retail Retail Retail 35 distribution distribution Retail 29 22 37 Non retail distribution Non retail Leisure Leisure Midlands 6 distribution 6 7 51 11 Our portfolio Distribution Retail and Leisure Marlow O ffjce Number of assets 101 +5 assets Value £1,400m +14.8% EPRA topped up net initial yield 5.8% -60 bps Area 10.7m sq ft +24.8% Weighted average unexpired lease term 13.1 years +0.4 years Occupancy 99.7% +0.1% 14 LondonMetric Property Plc Annual report and accounts 2015

  5. Distribution: Strategic report Value 1 EPRA topped up net initial yield Area 1 £656.9m 5.4% 8.1m sq ft +76.6% -73 bps +41% Average rent per sq ft Weighted average unexpired Occupancy lease term (to expiry) £5.40 100% 12.9 years +5.1% +0.4% +0.5 years Retail: Value 1 EPRA topped up net initial yield Area 1 £523.5m 6.0% 2.1m sq ft +7 .7% -50 bps +3.3% Average rent per sq ft Weighted average unexpired Occupancy lease term £16.50 98.5% 12.3 years -1.2% -0.9% +1.0 years 1 Includes developments under construction Annual report and accounts 2015 15 LondonMetric Property Plc

  6. Key growth drivers We are focused on the winning sectors within retail: retailer-led distribution and convenience-led retail. Property trends are evolving, responding to how we shop with increased delivery o f goods in cardboard boxes or smaller, more frequent, shopping trips. Property’s bond-like characteristics have driven investment demand and an improving UK economy and real wage growth is improving the outlook for retail. We explain more below. 1 Consumer shopping habits are evolving Today’s shopper is more The UK retail market knowledgeable, more continues to face structural mobile and increasingly change as shopping more demanding. habits continue to evolve. Retailers have to work Secular change has been harder to meet the driven by the recession and consumers’ demands the rise of eCommerce. of instant gratifjcation. The consumer is seeking Online v store sales growth % experience, value for 35 money and convenience. 30 According to Verdict, online sales now account for 25 c.£39 billion of retail sales, 20 Online growth or 12.6% of total sales, and 15 are forecast to continue 10 Store sales growth t o grow signifjcantly ahead 5 of store sales. -5 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Verdict 2 Retailers are adopting omni-channel… 3 … Driving property trends An omni-channel approach Retailers are increasingly provides a seamless embracing this approach Retailers continue to right shopping experience to meet the high size and optimise their for the shopper whether expectations of the real estate portfolios. they are buying online, consumer with a shift to We continue to see retailers via mobile, over the everywhere consumption. downsizing and rightsizing telephone or in store. their number of stores This, together with an Shoppers are increasingly but increasingly focus on increase in pure play agnostic to the point of more effjcient distribution retailers such as Amazon, sale, however they want and fulfjlment space. The HUT Group and Boden, their goods to be available Distribution and fulfjlment is creating added demands for delivery, collection or sheds could be considered on the retail industry in store, to meet their own the new shops. resulting in increased personal requirements. investment in distribution and fulfjlment which could be considered as important, or even more important, than physical stores. 16 LondonMetric Property Plc Annual report and accounts 2015

  7. 4 Resulting in demand and supply dynamics across ou r core markets Distribution UK logistics availability Million sq ft 50 According to Savills, Requirements are 40 Strategic report 201 4 saw a signifjcant increasingly for bigger units, 30 increase in logistics take supporting more complex 20 up to 32.5 million sq ft. automated activities to 10 Retailers remain the respond to increasing consumer demands. Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 dominant force representing Warehouses are being 66% of total market take up. replaced by sophisticated From a peak of 94 million sq logistics centres with ft in 2009, availability is at its Secondhand increasing automation. As a New/Early marketed lowest level since records result, coupled with the lack began at 22 million sq ft. Source: CBRE of available stock, design This drastic fall in supply has and build development not, however, resulted in Design and build take up and new build supply accounted for 81% of all % m sq ft developers rushing to new take up in 2014. develop units speculatively 100 25 81% 75% 72% in the same volumes as 80 20 53% Demand and supply 51% previous cycles. 60 15 37% 35% 35% dynamics are favourable 40 10 for real rental growth. 20 5 2007 2008 2009 2010 2011 2012 2013 2014 Completed Retail Development Million sq ft 10 New supply Design and build as % of new take up 8 Source: CBRE 6 Retail 4 Local Data Company (LDC) Supply of new retail space estimates current vacancy remains subdued with a 2 across the retail market sits historic average between at 13.0% o f fmoorspace. 1999 and 2008 at 14.2 million 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 An over supply of retail sq ft per annum versus space coupled with highly forecast 2014 to 2017 of Town Centre Out-of-Town specifjc retailer demand 5.6 million sq ft per annum. Source: CBRE, PMA means that a return to rental The wider oversupply of retail growth across the entire accommodation is resulting retail sector is unlikely in the in reluctant developers. near term. Lower oil prices However, the growth in and real wage infmation is convenience shopping, giving consumer spending particularly in the food a boost. However, retail market, will provide shops need to fulfjl a new opportunities for specifjc purpose to attract pre-let development. the shopper through Convenience retail also experience, convenience supports click and collect or value for money. with Verdict forecasting Solid demand from sales to grow by 86% in the convenience and value next fjve years. Click and 13% retailers continues to benefjt collect also benefjts the certain assets resulting in a wider shopping destination need for management to with 36% of click and collect have a fjrm understanding sales resulting in a further RETAIL of the market and the store purchase. specifjcs of each asset VACANCY owned or managed. RATE Annual report and accounts 2015 17 LondonMetric Property Plc

  8. Key growth drivers continued Yield graph % 5 11 10 9 Leading to a re-rating in 8 asse t pricing 7 2014 saw signifjcant capital 6 infmows into the UK real Peak yields estate market resulting in 5 Trough yields continued hardening of Mean yields yields across all sectors of 4 Current yields the market. Yields now sit StdDev below long-term averages Good Retail Retail Retail Distribution: supported by the low secondary warehouse: warehouse: warehouse: prime retail prime prime secondary interest rate environment. restricted restricted solus RP Source: CBRE, Company Distribution Retail The bond like investment increased demand and The retail investment deals were completed characteristics of the supply imbalance with market remains dynamic. in 2014 across c.500 distribution sector is highly increased prospects of Lower oil prices and real transactions. Yields are sought after. Long leases rental growth in the market. wage infmation is attracting re-rating for the right assets to strong covenants, often As a result, £2.85 billion of increased investment but in poorer locations poor with contractual fjxed investment transactions volumes in to the sector with quality space which does or infmation linked uplifts, across 135 deals were the belief that consumers not conform to shoppers’ provides a highly robust completed in 2014 driving will spend more money requirements or meet and predictable cash yields for the best assets thereby driving rental occupiers’ demands are fmow. This is coupled with to record lows. value growth. As a result, not benefjting from the secular change driving an £10 billion retail investment same investor interest. Industrial investment yields % Retail investment yields % 14 12 12 10 10 8 8 6 6 4 4 2 2 Jan 1987 Sep 1988 May 1990 Jan 1992 Sep 1993 May 1995 Jan 1997 Sep 1998 May 2000 Jan 2002 Sep 2003 May 2005 Jan 2007 Sep 2008 May 2010 Jan 2012 Sep 2013 Jul 2014 Jan 1987 Sep 1988 May 1990 Jan 1992 Sep 1993 May 1995 Jan 1997 Sep 1998 May 2000 Jan 2002 Sep 2003 May 2005 Jan 2007 Sep 2008 May 2010 Jan 2012 Sep 2013 Jul 2014 All Industrial All Retail South East Industrial All Retail Warehousing Rest UK Industrial All Shopping Centres Source: IPD Source: IPD 18 LondonMetric Property Plc Annual report and accounts 2015

  9. Strategic report 6 Outlook We believe the retail market vital to the omni channel will continue to evolve. retailer, underpinned by Shopping habits will become click and collect and more entrenched with internal showrooming. property trends becoming Distribution and fulfjlment increasingly pronounced. networks are critical for Consumer shopping habits both omni channel and have changed and the pure play retailers to win retail market continues and retain brand loyalty to catch up. We believe with consumers – narrowing that the sales growth the time to get a product from stores may never to the consumer is key. be as strong as the sales We seek to position our real growth rate of online, estate portfolio to benefjt however we do believe from these wider trends. physical stores will remain Annual report and accounts 2015 19 LondonMetric Property Plc

  10. Our business model Our market knowledge and deep occupier relationships are integral to our investment decisions. We leverage these relationships and our property expertise to generate assets with long and strong income characteristics. Once we have added value, a review of the future performance and prospects for each asset is undertaken, and whether to sell and recycle the capital. We are unemotional about our portfolio and believe that each asset has to justify continued ownership. Knowledge Occupier relationship + Market intelligence Shape asset decision ˆ Invest Forward Buy asset Buy land purchase plus Finance Plus ˆ Add value Asset Short-cycle Income management development Strong and sustainable Grow, strengthen and Refurbish, redevelop lengthen income and extend Level of risk Evaluate ˆ Review Hold Recycle capital Assets which deliver target returns or Assets where value has been maximised 20 LondonMetric Property Plc Annual report and accounts 2015

  11. Strategy in action Investment Buy asset Forward purchase Buy land Strategic report Strategy Action Strategy Action Strategy Action Focus on retailer- 90% of portfolio Purchase and Forward funded Acquire land Bell farm, Bedford led distribution, in core sectors forward fund the a 690,000 sq ft suitable for future purchased out of town and against 55% at build of assets distribution centre developments conditional on convenience-led merger in 2013 in Warrington planning retail Occupier-led, High occupancy Provides a 7.5% funding yield Normally bought 37 acre site working with rate of 99.7% fjnancing received during subject to providing up successful retailers demonstrating return during the build planning approval to 750,000 sq ft that we meet construction retail distribution occupier needs scheme Asset 50 asset Pre-let high quality Pre-let to The Hut Pre-let or Strong retailer management management occupier Group, a No. 1 signifjcant demand for opportunities to transactions across ranked retailer occupier interest location with create desirable 2.6 million sq ft, by Sunday Times’ pre-let expected real estate institutionalising Profjt Track in 2015 shortly our assets and contributing to a yield compression of 60 bps Add value Income Asset management Short-cycle development Strategy Action Strategy Action Strategy Action Strong and rising Contracted New lettings 28 lettings Refurbish, Committed income income increased undertaken across redevelop, developments by £7.6 million 469,000 sq ft, extend and build across 2.0 million delivering an uplift additional space sq ft in progress 44% of portfolio in rental income of subject to £1.9 million Conditional contracted rental development uplifts pipeline of 1.1 million sq ft Long income WAULT increased Successfully 20 rent reviews Undertake larger 1.1 million sq ft Islip from 12.7 to 13.1 negotiate rent across 2.1 million scale distribution distribution under years. Only 1.8% of reviews sq ft delivering developments construction portfolio has lease £0.6 million of expiries in next fjve rental income Achieve BREEAM years uplift very good standard Secure income Quality list Re-gear leases Two re-gears in the Work to achieve 19 planning of tenants, year, most notable favourable consents received demonstrated by at our retail park in planning decision on 1.3 million sq ft. very low tenant Kings Lynn which and develop Average build defaults in year delivered a rental within 18 months time on current income uplift of developments is Ensure assets £0.2 million 10 months meet responsible business requirements – only 2.9% of assets have an EPC rating lower than E Key transactions throughout the year see page 22 Financial review Annual report and accounts 2015 21 LondonMetric Property Plc see page 38

  12. Key transactions throughout the year April–June 2014 July–September 2014 October–December 2014 . Acquisition of Acquisition Acquisition of £15m £24m Newark of Bedford distribution centre asset (£69m) distribution site in Warrington, (37 acres) pre-let to The Hut See story below Disposal of Disposal of Disposal Disposal of Disposal of Group (£48m) Berkhamsted Huddersfjeld of various Bishop Cairngorm asset (£12m) leisure asset DFS retail Auckland retail retail park (£15m) assets (£21m) park (£24m) (£22m) £48m 37 acres See story below Ñ Newark distribution Investing centre in core sectors The o fg market acquisition of the 726,000 Dixons Carphone distribution warehouse for £68.5 million at a 6.4% NIY reinforced our leading position within retail distribution, demonstrated our longstanding relationship with a key customer and added £4.5 million per annum of contracted income with 5 yearly fjxed uplifts. Read more on page 27 Ñ  Harlow distribution New lease at Improving facility re-let Loughborough income Following a surrender by Agreed a 12,700 sq ft Tesco, the 268,000 sq ft facility extension and new lease was re-let to Brakes Bros, with Morrisons to increase increasing the lease term from the store to 54,000 sq 9 to 25 years and delivering ft and increase the a 150bps yield compression. lease term by 21 years. The property was bought in Practical completion 201 1 for £22.9 million and sold is due in 2016. post year end for £37 .2 million. 22 LondonMetric Property Plc Annual report and accounts 2015

  13. *Post year end transactions January 2015 to date Increased Acquisition Acquisition of Acquisition of No1 MIPP holding of Croydon Dagenham convenience Strategic report to 50% last mile distribution food halls distribution facility (£57m) (£26m) Disposal of (£21m) Disposal One Carter Disposal of of Harlow Lane offjce Brackmills distribution 50% (£139m) distribution facility (£37m)* facility (£14m)* See story below See story below Delivering on our Recycling development programme of core assets Ó Bishop Auckland retail park The 76,500 retail park was sold for £23.9 million following signi fjcant redevelopment which delivered a 49% profjt Ó  Islip distribution centre Kirkstall Shopping Park on cost. During the year, the Planning was granted on 1,062,000 sq ft development the 120,000 sq ft shopping in Northamptonshire park in Leeds and was granted planning, construction commenced Disposal pre-let to Primark and with completion due in of non-core commenced construction. October 2015. The park is Build completion is on now 52% pre-let and, once track for September 2015 fully let, contracted rent will and contracted rent is be £2.7 million per annum £5.3 million per annum for and will achieve a number 25 years with annual fjxed of responsible business rental uplifts. development objectives. Read more on page 35 Read more on page 36 Ó One Carter Lane, London Successfully disposed of our last remaining London offjce scheme for £138.8 million at a NIY of 4.3%. The 129,100 sq ft building was acquired in 2011 for £75 million and benefjted from a comprehensive £15 million refurbishment. Read more on page 30 Annual report and accounts 2015 23 LondonMetric Property Plc

  14. Key performance indicators Our objective is to deliver attractive shareholder returns through the execution of our strategy described on page 20. We use seven key performance indicators to monitor the performance of the Group and its share of joint ventures. A number of the key performance indicators are also used to evaluate management performance and remunerate senior employees. Objective KPI measure/numbers Performance Deliver long-term Total Shareholder Return, being share price movement Total shareholder return % shareholder returns together with dividend, in the last two years since the 2015 19.7 merger of London & Stamford and Metric Property 2014 41.7 was 70%, outperforming the FTSE 350 Real Estate Index 2013 2.4 of 58% 12 month Total Shareholder Return delivered of 19.7% Maximise long-term Total accounting return % Total Accounting Return of EPRA NAV movement Total Accounting Return together with dividend paid over the year 2015 21.7 2014 16.5 12 month Total Accounting Return delivered of 21.7% 2013 12.7 Maximise property Total property return % Unlevered total property return, including capital portfolio returns and income return, of the portfolio has outperformed 2015 17.5 by 40 bps the IPD Quarterly Universe Index over the 2014 17.0 last year 2013 8.0 Deliver sustainable growth EPRA earnings per share p Recurring earnings per share from core operational in EPRA earnings activities have grown by 57% over the last 12 months 2015 6.6 2014 4.2 In the last two years since the merger of London & 2013 3.9 Stamford and Metric Property, EPRA earnings per share have grown by 69% Drive like-for-like EPRA like-for-like income growth % Year-on-year movement of net rental income income growth through on properties owned through the period increased 2015 2.9 management actions by 2.9% 2014 3.4 2013 3.5 Maintain strong Occupancy rate of 99.7% against IPD all property EPRA vacancy % occupier contentment benchmark of 93.2% 2015 0.3 No exposure to leased space unoccupied across the 2014 0.4 investment portfolio 2013 4.5 Maintain a higher than WAULT (years) Weighted average unexpired lease term across market benchmark the investment portfolio (excluding residential and 2015 13.1 weighted average development) of 13.1 years as at 31 March 2015, which 2014 12.7 unexpired lease term outperformed the IPD all property benchmark of 2013 11.6 (WAULT) 11.3 years 24 LondonMetric Property Plc Annual report and accounts 2015

  15. A new KPI measure has been added this year consistent with our total return strategy which acknowledges the importance of value creation through recycling capital in addition to growing secure income. Strategic report Performance indicators Remuneration 2015/16 ambition 75% of LTIP awards vest after three Three‑year TSR outperformance LTV Ratio % years subject to outperformance of compared to the FTSE 350 Real 2015 36 the FTSE 350 Real Estate companies Estate companies 2014 32 2013 43 Debt maturity years Three year total return 2015 4.2 performance to exceed FTSE 350 2014 3.7 Real Estate companies by 50% 2013 3.0 Cost of borrowing % 2015 3.7 35% of annual bonus award One‑year TPR outperformance subject to TPR outperforming against IPD Quarterly Universe 2014 3.9 IPD benchmark benchmark 2013 4.0 EPRA topped up net initial yield % 2015 5.8 35% of annual bonus award Deliver EPRA earnings growth subject to EPS growth target in line with targets 2014 6.4 2013 6.3 25% of LTIP awards vest after three years subject to EPS EPRA cost ratio % growth target 2015 17 2014 25 Forms part of EPRA earnings Deliver like‑for‑like income growth per share ahead of infmation plus 1.5% 2013 21 Risk management The achievement of our seven KPIs Linked to individual non Maintain high occupancy across the is infmuenced by the identifjcation fjnancial targets investment portfolio, targeting > 99% and management of risks which might otherwise prevent the attainment of our strategic priorities. The relationship between our principal risks and KPIs is reviewed Linked to individual non Maintain high weighted average in the Risk Management section fjnancial targets unexpired lease term targeting on page 43. >13 years Risk Management see page 43 Remuneration see page 76 Additional EPRA measures see Supplementary information on page 129 Annual report and accounts 2015 25 LondonMetric Property Plc

  16. Investment review Selective retail acquisitions and focus Investment activity on convenience portfolio £598m We made 14 retail acquisitions in the year totalling £99.8 million at share, of which £30.4 million related to the increase in our MIPP stake to 50% and £26.7 million related Additional net to our share of MIPP acquisitions. contracted income Convenience retail acquisitions accounted from investment activity for £37.2 million of investments. Post year- Valentine Beresford, Investment Director £6.1m end, we added a further three convenience food halls let to M&S for £12.4 million, Continued portfolio repositioning increasing our convenience retail portfolio to £49.7 million across 10 properties. Our investment activity in the year of We expect to see further additions to this £598 million has repositioned our assets Percentage of assets portfolio in the near term. further into retailer-led distribution and in core sectors we have also seen meaningful growth in 90% Disposals of core and non-core assets our convenience retail portfolio. Assets in our core sectors now represent 90% of the Disposals amounted to £288.7 million, the portfolio and are closely aligned to those majority of which related to the non-core areas where we believe there is the best sales of our London city offjce at One Carter potential for growth. Lane for £138.8 million and £27.2 million of residential disposals. Retail disposals Our market leading relationships generated amounted to £106.3 million during the year signi fjcant new investment opportunities and refmected the recycling of assets where and we acquired 20 assets with a value of we have completed our business plans. £308.9 million at share. This included the £23.9 million disposal Our investment activity added £6.1 million of our retail development park at Bishop of additional net contracted income, Auckland and the £21.8 million sale of refmecting a c.100 bps positive yield arbitrage Cairngorm retail park, Milton Keynes. from the recycling of low yielding assets into higher yielding opportunities. Outlook Investment activity focused The property market continues to see strong on distribution investor demand with high transactional volumes across all sub sectors. Our recent Distribution acquisitions amounted to sales of old distribution assets in Harlow £209.1 million across six transactions, including and Brackmills demonstrate that we will purchases in Dagenham for £56.5 million, take advantage of the market to realise Newark for £68.5 million and the £47 .5 million assets at very favourable prices and forward funding development in Warrington. where asset management initiatives have Distribution assets, including developments, been completed. now account for 46.9% of our portfolio. We will continue to selectively invest in our The land purchase at Bedford was an exciting core sectors of distribution warehousing, addition to our distribution development out of town retail and convenience retail, pipeline which we aim to secure planning leveraging our status as property partner on by the end of this year. of choice for many leading retailers. Investment activity by sub sector Acquisitions Disposals Cost at share NIY Proceeds at share NIY £m % £m % Distribution 161.6 5.8 Distribution – Development 47.5 7.5 Key transactions Retail 99.8 6.3 106.3 6.2 throughout the year Offjce 155.2 5.1 see page 22 Responsible business Residential 27.2 2.4 see page 49 Total 308.9 6.2 288.7 5.2 26 LondonMetric Property Plc Annual report and accounts 2015

  17. Strategic report £68.5m Newark distribution centre Extending our longstanding relationship with Dixons Carphone In September 2014, LondonMetric acquired Dixons Carphone’s distribution warehouse in Newark for £68.5 million ofg-market. The 726,000 sq ft asset was purpose built for Dixons Carphone in 2006 and is situated on the inter-section of the A1, A17 and A46 dual carriageways. It is one of Dixons Carphone’s two central distribution hubs for both its physical stores and online business. The unit is let at a rent of £4.5 million per annum with five yearly fixed uplifts to 3.0% per annum compounded and had an unexpired lease term of 18.8 years at purchase. Dixons Carphone is a FTSE 100 retailer with a market capitalisation of £5.4 billion. The acquisition takes Dixons Carphone’s retail space with LondonMetric to 820,000 sq ft over 7 locations in England and represents LondonMetric’s second largest tenant at 6.8% of total rent. Annual report and accounts 2015 27 LondonMetric Property Plc

  18. Investment review continued Distribution investment activity is let to The Hut Group, a specialist online Five distribution retailer and brand owner that was ranked acquisitions totalling number one this year by the Sunday Times’ Acquisitions £161.6m: Profjt Track. The 15 year lease has an annual 726,000 sq ft warehouse in Newark • 5.8% net initial yield rent of £3.8 million. • £9.1m rental income The purchase price was £68.5 million for The warehouse is being constructed in order a prime unit let to Dixons Carphone ofg a • 15.4 years WAULT to consolidate The Hut Group’s four existing UK topped-up rental income of £4.5 million per distribution units and the facility will be used to annum, which refmected a net initial yield of satisfy both its domestic and rapidly growing 6.4%. Refer to page 27 for further details. international operations. Practical completion One forward is expected in October 2015. 410,000 sq ft facility in Dagenham funded distribution 37 acre development site in Bedford development totalling The 28 acre site was purchased for £47.5m, purchased at a £56.5 million and is entirely let to Eddie We have conditionally acquired from net initial yield of 7.5% Stobart at a rent of £3.0 million per annum Bedford council, a site which is on the for 17 years from August 2014, with annual A421, close to J13 of the M1 and in a well- fjxed uplifts of 2.0% per annum. established retail distribution location. It is zoned for distribution and is capable of The facility is uniquely positioned, benefjting Post year end disposal accommodating a unit of up to 750,000 sq from exceptionally strong transport links of two distribution ft. The purchase is conditional on planning serving London and the rest of the South facilities for £33.0m consent which is expected by the end East, with road and direct rail access, as well of 2015. as being ideally located for the major ports of Felixstowe, London Gateway and Tilbury. Activity post year-end 173,000 sq ft “last mile” warehouse in Croydon We disposed of two assets for £33.0 million The Tesco.com distribution centre was at share that were c.25 years old. acquired for £21.1 million refmecting a net 268,000 sq ft Harlow facility initial yield of 5.5% and an unexpired lease term of 5.8 years. The warehouse occupies The facility was sold by our distribution a nine acre site in South London and is joint venture for £37.2 million (Group share: let to Tesco as a “dark store” for its Tesco. £18.6 million), refmecting a topped up com business. net initial yield to the purchaser of 5.0%. The asset was acquired in August 2011 for 150,000 sq ft warehouse in Rotherham £22.9 million and re-let for 25 years in 2014 to The Magna 34 unit is situated one mile Brake Bros following a surrender by Tesco. from J34 of the M1 and is let to Royal 170,000 sq ft Brackmills facility Mail. The purchase price of £10.3 million represented a net initial yield of 6.0% and This facility was sold for £14.4 million, an unexpired lease term of 13.9 years. refmecting a net initial yield of 5.5%. The rent is subject to fjve yearly fjxed uplifts. The property was acquired in November 2013 for £9.0 million and re-geared on 65,000 sq ft warehouse in Leicester a ten year lease shortly after purchase The property was purchased for £5.2 million at a yield on cost of 8.0%. and is let to DHL, expiring in August 2020. A further distribution centre was acquired The rent of £0.35 million per annum is post year-end for £3.5 million in Basildon. considered reversionary with a review due in September 2015. 38,000 sq ft Basildon facility The well located and modern distribution Developments warehouse is let to Activair and was 690,000 sq ft centre in Warrington purchased for £3.5 million at a net initial yield of 6.5% and a WAULT of 4.6 years. We purchased the warehouse, via a The unit has strong reversionary potential forward funding contract, for £47.5 million, and a low site cover at just 24%. refmecting a net initial yield of 7.5%. The asset Newark distribution centre case study see page 27 28 LondonMetric Property Plc Annual report and accounts 2015

  19. Retail investment activity • Two M&S convenience food hall 14 retail acquisitions developments in Liverpool and Ferndown totalling £69.4m with a combined cost of £13.6 million and Acquisitions at share: total area of 39,800 sq ft MIPP acquisitions • 6.3% net initial yield Strategic report • £6.6 million acquisition of the 20,200 sq ft • WAULT of 13.6 years Having achieved the target investment Fordton retail park in Warrington let to Aldi of £150 million in the previous year, we and four other retailers, with an unexpired completed the equalisation and extension lease term of 16.3 years agreement with our joint venture partner the • £5.3 million purchase in Guisborough let to Further £30.4m Universities Superannuation Scheme to grow Aldi and Iceland with a weighted average invested to increase our ownership in Metric Income Plus Limited unexpired lease term of 18.1 years shareholding in MIPP Partnership from 33.3% to 50% at a cost of • £3.1 million property in Hull let to Aldi on to 50% £30.4 million. a 15 year lease MIPP also acquired six assets in the period Post year-end, we acquired three further for £59.6 million (Group share: £26.7 million) convenience food halls let to M&S 10 retail disposals at a topped up net initial yield of 6.0%. for £12.4 million – Refer to page 31 for totalling £106.3m at These acquisitions consisted of: further details. share: • 76,400 sq ft retail park in North Shields let • 6.2% net initial yield predominantly to Dunelm and B&M Retail Disposals for £13.1 million with an unexpired lease • WAULT of 13.6 years Retail disposals in the period amounted to term of 9.1 years £106.3 million at (Group share) across 10 • 77,200 sq ft Trostre South Retail Park, Llanelli, assets achieving an average net initial yield for £12.8 million let to B&Q, Pets at Home of 6.2%. and KFC with an unexpired lease term of 14.7 years DFS and Odeon disposals • 58,400 sq ft retail park in Hemel Hemstead In the fjrst half of the year, we rationalised for £12.2 million let to Wickes and Dunelm our DFS and Odeon portfolios. with an unexpired lease term of 10.3 years The £20.8 million DFS disposals (Group share: • 43,800 sq ft Liskeard Retail Park, Cornwall, £6.4 million) comprised two portfolio sales for £9.0 million let to Homebase, Pets at of fjve units in total to ARC and Oval at net Home and Argos with an unexpired lease initial yields of 8.5% and 7.8% respectively, term of 12.8 years compared to our acquisition yield of 10.2%. • 34,500 sq ft Totton Retail Park, The Odeon in Huddersfjeld was sold for Southampton for £8.8 million let to Lidl, £15.2 million refmecting a net initial yield Poundstretcher, Argos and Jolley Pets of 6.1% compared to an acquisition yield • 21,500 sq ft retail unit in Grimsby let to of 7.2%. Wickes, for £3.7 million with an unexpired lease term of 20.0 years Out-of-town retail Out-of-town leisure acquisition We sold a number of retail assets consistent with our strategy of recycling capital During the year, we acquired the Vue where asset management initiatives have cinema multiplex in Birkenhead for been completed: £5.5 million refmecting a NIY of 7.7% with • 76,500 sq ft retail park in Bishop Auckland 15 years of unexpired leases and RPI linked for £23.9 million, following a signifjcant rental reviews. redevelopment. The disposal crystallised Convenience retail acquisitions a 49% profjt on cost and refmected a net initial yield of 5.3% Seven convenience retail assets were acquired for £37.2 million, refmecting a NIY • Cairngorm Retail Park for £21.8 million, of 6.1%: refmecting a net initial yield of 6.1%. The asset was acquired in 2013 for • Two convenience stores let to Boots in £16.1 million refmecting an 8.3% net initial Bangor and Isle of Man for £3.4 million and yield and producing a 29% profjt on £5.3 million and on unexpired lease terms cost. The property was let to DFS, Oak of 9.3 and 7.2 years respectively M&S Simply Food halls Furniture Land, SCS, Furniture Village case study see page 31 and Carpetright Annual report and accounts 2015 29 LondonMetric Property Plc

  20. Investment review continued • £18.0 million disposal by MIPP (Group Due to the reshaping of the portfolio and Non core residential share: £9.0 million) of its B&Q retail park the disposal of the above offjces, the and offjce portfolio in Londonderry Company’s environment and social risk signifjcantly reduced profjle has altered considerably resulting • Berkhamsted development was sold for in a much reduced direct energy use and £12.5 million refmecting an exit yield of 3.9%, carbon footprint. a development profjt of £4.5 million and profjt on cost of 58% Disposal of three offjces Following these disposals, we have one for £155.2m at a NIY of • Other disposals included retail parks offjce asset left in Marlow which we have 5.1% at Scarne, Bristol and Wick with a total been actively asset managing. The offjce disposal value of £17.6 million totals 231,000 sq ft and generates £4.7 million of income per annum. Post year-end, MIPP disposed of its retail park in Lichfjeld for £13.3 million (Group Residential asset disposals share: £6.7 million). Residential units During the year we disposed of 57 residential sold in the year units for a total value of £39.1 million (Group Non-core disposal activity share: £27.3 million). 57 One Carter Lane o ffjce At Moore House, our last residential We completed on the sale of One Carter investment, we sold 23 fmats during the year Lane, London EC4 for a gross price of for £19.8 million (Group share: £7.9 million) £138.8 million to Fubon Life Insurance and, since the year end, we have disposed Company Limited refmecting a 4.3% net of 6 units and have a further 5 units under initial yield. The disposal represented a ofger, representing in total £10.7 million of profjt of c.£12.5 million over the 31 March sales (Group share: £4.3 million). There are 2014 book value and a net profjt on cost 105 units remaining and we will continue to of £29.1 million since acquisition. See below patiently sell these down. for further details. Disposal of Crawley offjces Two offjce buildings in Crawley were sold during the period for £16.4 million representing a combined average yield of 7.8% based on income of £1.3 million per annum. One Carter Lane disposals • 129,100 sq ft offjce near St Paul’s, London • Purchased in June 2011 for £75 million at a net initial yield of 7.3% • £12.9 million rental income received during the hold period • Offjce was refurbished at a cost of £15.0 million and development was completed in spring 2014 • At time of sale, the offjce was 73% let and net contracted rent was £4.5 million, increasing to £6.3 million once fully let 30 LondonMetric Property Plc Annual report and accounts 2015

  21. Strategic report Five M&S Simply Food halls acquired for £26.0 million In partnership with Marks and Spencer, LondonMetric acquired five properties and simultaneously re-geared the leases on four of them to 20 years with contractual rental uplifts. The fifth property is let to M&S and Aldi on 15 year and 20 year leases respectively. Three of the properties were existing stores covering 42,000 sq ft across England which are to be converted into M&S Simply Food halls. The other two properties are developments covering 39,800 sq ft in Liverpool and Ferndown, Dorset. The contracted rental income totals £1.5 million per annum with a WAULT of 19.2 years. The transaction builds on our strong relationship with M&S and increases LondonMetric’s M&S contracted income exposure to 5.7%. Annual report and accounts 2015 31 LondonMetric Property Plc

  22. Asset Management review Our asset management plans incorporate Total portfolio value responsible business initiatives, in particular £1,400m EPC considerations as discussed in greater detail in the Responsible Business review on page 49. Valuation uplift of £118 million Valuation uplift The ability to drive valuation growth is £118m refmective of our ability to create desirable Mark Stirling, Asset Director real estate. The topped up net initial yield across our properties has fallen from 6.4% to 5.8%. The valuation uplift in the year was Creating desirable real estate £118.4 million compared with £95.9 million Topped up portfolio Our asset management strategy is based on in 2014. yield change institutionalising our portfolio and recycling 6.4% to The yield compression was a consequence into assets where we can deliver value of both an investment market that has enhancing asset management initiatives continued to strengthen but also a 5.8% and short-cycle developments. signifjcant improvement in values as a result Our property expertise and occupier of our asset management initiatives and relationships provide a constant fmow of short-cycle development activity, the latter opportunities to recycle assets and this is accounting for c.35% of yield compression. Outperformance of IPD refmected in the average hold period of 3.1 years for assets that we have sold in the year. Drivers of yield compression 40 bps As at 31 March 2015, our total portfolio Asset management comprised 101 assets valued at initiatives £1,400 million compared to £1,220 million at 35% the start of the year. This change does not, Market however, refmect the signifjcant recycling of movements assets and the change in sector weightings 65% particularly towards distribution which now represents (including development) 47% of the overall portfolio. Outperformance of IPD The sector repositioning has reduced our Our core sectors delivered a total property exposure to residential and offjce assets return of 18.8% compared to IPD of 16.6% to 10% of the portfolio, compared to 45% refmecting an outperformance of 220 bps. at the time of the merger in 2013. As a Our active management expertise ensured consequence, the value of assets in our that we continued to outperform IPD Retail core sectors has grown to £1,258 million at both the income and capital level, with a representing 90% of our portfolio. total outperformance of 410 bps. The shape of our portfolio Total Property Return against IPD see page 14 Strategy in action Total Return Outperformance see page 21 Group IPD Key transactions % % bps throughout the year see page 22 Retail 17.6 13.5 +410 Responsible business see page 49 Distribution 20.0 21.4 -140 Portfolio split Core portfolio 18.8 16.6 +220 see Supplementary information on page 129 All property 17.5 17.1 +40 32 LondonMetric Property Plc Annual report and accounts 2015

  23. Focus on income Asset management Adding value through income, Strong and rising income During the year we executed on 50 asset management occupier transactions across 2.6 million sq and short-cycle We continue to focus heavily on Strategic report ft, generating an uplift in rental income of development strengthening our underlying income £2.6 million at average lease lengths of 16.2 streams. Our contracted rental income years and achieved a 6.6% uplift against ERV. increased from £78.0 million to £85.6 million Our asset management activities delivered driven by asset management initiatives, Uplift in contracted EPRA like-for-like income growth of 2.9%. positive net investment and recycling into rental income higher yielding assets. New lettings and re-gears of £2.6m from asset management Fixed rental uplifts provide security of New lettings and re-gears were undertaken income growth and the proportion across 500,300 sq ft, achieving average of our total contracted rental income lease terms of 16.2 years and an increase in subject to fjxed rental uplifts increased contracted rental income of £2.0 million. 44% of portfolio benefjts to 44% by the year-end (over 50% for our We accepted a surrender from Tesco on from fjxed rental uplifts distribution assets). our distribution unit at Harlow. The unit was Long income simultaneously re-let to Brake Bros increasing the unexpired lease term by 16.0 years. The portfolio weighted average unexpired WAULT, up from KPI lease term is 13.1 years (12.3 years to fjrst We agreed a 12,700 sq ft extension and new 12.7 years break) representing one of the longest in lease with Morrisons at Loughborough to 13.1 years the sector. This is a further improvement take the store to 54,000 sq ft, and increase on the prior year and refmects our focus the weighted average unexpired lease term on achieving longer leases through asset by 21.1 years. management and also selling assets with Our new shopping park in Kirkstall, is now shorter lease lengths. 52% pre-let to seven retailers representing Occupancy rate KPI Only 1.8% of our income is due to expire in £1.3 million of income per annum, rising to 99.7% the next fjve years rising to 32.9% in the next £2.7 million once fully let. 10 years, an improvement on 2014 of 40.8%. At Airport Retail Park in Coventry, Aldi has Secure income signed a 20 year lease to occupy 18,000 sq ft of new space. This is in addition to the We continue to focus on balancing and Like-for-like rental KPI 15,000 sq ft of new space pre-let to B&M. strengthening our tenant list. Our top ten growth of tenants represented 54.1% of total rental Post year-end at St. Margaret’s Retail Park, 2.9% income and the occupancy rate for the Leicester, we pre-let a further 15,000 sq ft investment portfolio was 99.7%. to Smyths Toys. The 28,500 sq ft scheme is now fully pre-let. Including contracted income from Islip, Primark is now our largest tenant by rental We have nine new lettings in legals Total property return income at 11.0%. We strengthened the covering 102,000 sq ft. KPI 17.5% tenant mix further increasing our exposure to Rent reviews Dixons Carphone (6.8% of contracted rent) and adding The HUT Group to our tenant list During the year we agreed 20 rent reviews (4.5% of contracted rent). including fjxed uplifts across 2.1 million sq ft delivering an additional £0.6 million of rental income. In particular, we concluded a rent review with Dun & Bradstreet at Marlow which resulted in a rental uplift of £0.2 million. Asset Management – Occupier transactions WAULT Net uplift Area No. of in income To expiry To fjrst break sq ft transactions £m years years New lettings and re-gears 500,300 30 2.0 16.2 15.1 Contracted rental income Rent reviews 2,133,700 20 0.6 see Supplementary information on page 129 Total 2,634,000 50 2.6 Annual report and accounts 2015 33 LondonMetric Property Plc

  24. Asset Management review continued Short-cycle development Leicester Committed developments total Planning consent was received in March Occupier demand is the key driver 2015 on the 28,500 sq ft development at 2.0m sq ft in delivering our pipeline of short- St. Margaret’s Retail Park. The conditional cycle developments. Our committed development is fully pre-let. developments total 2.0 million sq ft, and Coventry the value of our retail and distribution development portfolio has increased to The 15,000 sq ft development of the new Development £131.1 million up from £65.7 million in 2014. B&M store at the Airport Retail Park has pipeline of commenced and is expected to complete 1.1m sq ft During the year we received 19 planning in September. Planning for the new 18,000 sq consents on 1.3 million sq ft and this helped ft Aldi store has been submitted. to drive our development programme. Ferndown and Liverpool Islip and Warrington These two convenience food hall Target planning consent Our two largest developments at Islip and developments let to M&S are expected to on 750,000 sq ft Bedford Warrington account for 1.8 million sq ft. complete in early 2016. Refer to page 31 for distribution centre The Islip development is progressing well further details. this year and we are very focused on ensuring this project remains on track for practical Development pipeline completion in September 2015. Warrington is We have built up a further 1.1 million sq ft of expected to complete in October 2015. conditional development. In Bedford, we Kirkstall purchased a 37 acre site which is 7 .5 miles from J13 of the M1 and would add up to 750,000 sq At Kirkstall in Leeds, construction of the new ft of retail distribution space. We have strong 120,000 sq ft open A1 shopping park is well retailer interest for the location and hope to advanced and we expect to grant access received planning consent later this year. to retailer occupiers from July 2015 onwards with completion forecast for October 2015. In Stoke, we have planning consent to Refer to page 36 for more information. redevelop our 14 acre site for up to 300,000 sq ft of distribution space. The site is situated two Loughborough miles from J15 of the M6 and we expect to start We received planning consent on demolition of the existing building in the 12,700 sq ft extension to increase late summer. the Morrisons’ store to 54,000 sq ft. Development summary Area Contracted sq ft Pre-let rent Yield on cost Scheme Sector ’000 % £m % Committed Islip Distribution 1,062 100% 5.3 6.8 Warrington Distribution 690 100% 3.8 7.5 Leeds Retail 120 52% 1.3 7.5 Loughborough Retail 54 100% 1.5 5.3 Liverpool Retail 29 100% 0.5 5.8 Coventry Retail 15 100% 0.2 8.6 Ferndown Retail 11 100% 0.3 5.2 Total committed 1,981 90% 12.9 7.1 Conditional M&S Simply Food halls Bedford Distribution 750 case study Stoke Distribution 300 see page 31 Kirkstall Bridge Shopping Leicester Retail 29 Park case study see page 36 Total conditional 1,079 34 LondonMetric Property Plc Annual report and accounts 2015

  25. Strategic report Islip mega-shed LondonMetric is developing one of the biggest distribution warehouses in the UK: • 70 acre site located ofg the A14 in Northamptonshire covering 1,062,000 sq ft with an additional 750,000 sq ft of mezzanine level space • 78 loading docks, 540,000 sq ft of hardstanding with parking for 175 HGVs and 530 cars • 11 month build programme Significant statistics: • Internal area equivalent to 74 olympic swimming pools side by side • 3,500 tonnes steel frame and the combined vertical length of the steel columns would be greater than the height of Mt Kilimanjaro • 40,000m3 of concrete used Environmental factors: • BREEAM Very Good • Built on a former ironworks • Neutral cut and fill involving 500,000m3 of earthworks with no material taken ofg site • Foul drainage system on-site with dedicated treatment plant • Installation of Solar panels covering c.30,000 sq ft and roof lighting covering c.100,000 sq ft Annual report and accounts 2015 35 LondonMetric Property Plc

  26. Kirkstall Bridge Shopping Park In 2014 we commenced the development design of the units that will improve their We are on track to of Kirkstall Bridge Shopping Park, which sustainability. These include, for example, achieve BREEAM is located three miles north-west of efgective insulation and solar shading to Very Good for our Leeds city centre. The site was originally reduce the need for mechanical heating, redevelopment acquired by LondonMetric in 2011 and cooling and ventilation, the use of high- at Kirkstall Bridge consisted of a stand-alone retail store effjciency LEDs for external lighting, green Shopping Park in Leeds and its surrounding site. walls and enhanced local habitat, the use of responsibly sourced materials (many The redevelopment includes the demolition of which are rated A or A+ by the BRE of the original store and will deliver Green Guide), and the provision of an 120,000 sq ft of quality retail and leisure occupiers’ fjt-out guide to further enhance space. Around 33,000 people live within the environmental performance of the a ten-minute drive of the seven-acre units. We are also taking steps to improve site, which will open in November 2015 connections to the site through pedestrian and will include retailers such as Home and cycle routes, as well as public transport, Bargains, Costa, Marks and Spencer, and are working with our contractor Outfjt and JD Sports. Our ambition, assisted to reduce construction site impacts by Rowney Sharman who are acting as (see below). our project manager, is to transform a tired and obsolete site into a vibrant and Embedding sustainability throughout attractive development that will create the construction phase a new heart within the centre of Kirkstall. In line with BREEAM requirements, one of We have implemented a series of measures our priorities is to ensure that environmental that will enhance the environmental impacts are minimised during construction performance of the site during construction works. Our Company policy ensures that and operation, and are working with sustainable and renewable materials are partners to deliver benefjts to the used wherever possible and that services, broader community through valuable workers, and supplies are procured as employment opportunities. locally as possible. Materials from the building that once stood on the site have Embedding sustainability into the design been crushed to form the piling mat for Once complete, the site is set to achieve new units. This has reduced the amount of BREEAM Very Good and a number of quarried stone required, with consequent features are being incorporated into the savings on vehicle movements. 36 36 LondonMetric Property Plc LondonMetric Property Plc Annual report and accounts 2015 Annual report and accounts 2015

  27. Strategic report Our contractor, Leeds-based Caddick such as trainee site manager Kirsty Wood Our ambition for Construction, is using the SmartWaste (pictured). Site visits are being organised the Kirkstall Bridge online system to track the amount of waste for local students and our partners have Shopping Park going ofg site, and a target has been set to committed to providing up to 30 weeks of development generate no more than 4.7 tonnes of waste work experience for individuals that includes is to create an per 100m 2 of site space. Kirkstall Bridge is job shadowing and, depending on ability, environmentally also being used to test out a new biometric more hands-on experience. conscious shopping system that logs and monitors all CO 2 data To further boost education and workforce and leisure destination on the site. This information is loaded onto development, Caddick and Re’New have with a community Caddick’s “Construct CO 2 ” system and agreed to provide Level 2 and Level 3 focus and to leave is used to calculate the carbon footprint qualifjcations for individuals completing a positive legacy of of the site and to highlight areas where a construction related NVQ qualifjcation. skills for the future reductions can be made. Furthermore, short-term employment The site is registered with the Considerate opportunities have been made available Constructors Scheme and has achieved for eight job seekers from the local an initial score under the scheme’s community and 12 from the wider Leeds environmental compliance section of 8 out area. To promote opportunities for local of 10, which is rated as “very good”. businesses, Caddick organised workshops to advertise possible subcontracting Delivering positive socio-economic opportunities ranging from security to benefjts during construction and landscaping contracts. site operation Post construction, we will be working to We are also working with our partners connect Employment Leeds, Re’New and local Government to take a number and the future occupiers of the shopping of steps to promote local employment park to ensure job opportunities are opportunities during both the construction promoted through recruitment fairs and and operational phase. local advertising, particularly to attract young people in need of employment. During construction we are supporting For example, as part of LondonMetric’s work by Caddick Construction and the long-term support for the very popular regeneration charity Re’New to provide annual Kirkstall Festival, together with training and employment for young people. partners we will be manning a recruitment Targets have been agreed covering the stand, as well as supporting the Youth Stage. employment of up to two apprentices, LondonMetric Property Plc 37 Annual report and accounts 2015

  28. Financial review Reported pro fit £159.5m EPRA earnings £40.9m Martin McGann, Finance Director The results re fmect the intense level of Both dividends are subject to approval at investment and asset management the AGM and are payable on 20 July 2015 Dividend cover activity during the year to improve income to ordinary shareholders on the register at 94% and capital yields and strengthen the the close of business on 12 June 2015. core portfolio. Total accounting return, measured as Since the year-end, we have considerably the increase in EPRA NAV plus dividends strengthened the balance sheet by is 21.7%, an increase of 520 bps over the completing a new £400 million unsecured previous year. revolving credit facility which increases our Management reviews the performance average debt maturity to 6.2 years and of the business on a proportionally reduces our average debt cost to 3.4%. consolidated basis, although the EPRA earnings have increased to statutory results refmect the share of joint £40.9 million or 6.6p per share, a 57.1% ventures using the equity accounting increase on last year. EPRA NAV per share method. The commentary in this review is 140.6p, an increase of 16.2% over 2014. is consistent with the proportionally Reported profjt has increased by 27.3% to consolidated approach. £159.5 million, predicated on a valuation EPRA earnings and other performance uplift of £118.4 million. measures are used as alternatives to IFRS The dividend has been maintained at 7.0p equivalent measures as they highlight the per share and the charge in the year is Group’s underlying recurring performance. now 94% covered by EPRA earnings, up from EPRA earnings is a key performance 60% last year. The proposed fjnal dividend is indicator, refmecting the recurring profjt of 3.5p per share. the Group’s property rental business and includes items such as changes in property In addition, a special dividend of 2.0p per valuations and movements in the fair value share will be paid to distribute some of the of derivatives. gain realised on the redevelopment and sale of Carter Lane to shareholders. EPRA earnings per share EPRA net assets per share KPI 6.6p +57% 140.6p +16% 2015 6.6 2015 140.6 2014 4.2 2014 121.0 IFRS reported pro fit Total accounting return KPI £159.5m +27% 21.7% +520 bps 2015 159.5 2015 21.7 2014 125.3 2014 16.5 Carter Lane case study see page 30 38 LondonMetric Property Plc Annual report and accounts 2015

  29. Income statement Net rental income EPRA earnings for the Group and its share of joint ventures are detailed as follows: £70.9m Group JV 2015 Group JV 2014 For the year to 31 March £m £m £m £m £m £m Strategic report Gross rental income 60.2 13.8 74.0 54.1 7.8 61.9 EPRA cost ratio Property costs (2.6) (0.5) (3.1) (2.8) (0.6) (3.4) 19% Net rental income 57.6 13.3 70.9 51.3 7.2 58.5 Management fees 2.2 (0.9) 1.3 0.8 (0.8) – Administrative costs (12.5) (0.1) (12.6) (13.5) (0.4) (13.9) Ne t fjnance costs (15.4) (3.2) (18.6) (15.4) (2.9) (18.3) Other – (0.1) (0.1) 0.1 – 0.1 EPRA earnings 31.9 9.0 40.9 23.3 3.1 26.4 Gross rental income increased 19.5% to Management fees increased to £1.3 million £74.0 million. from only £43,000 last year, refmecting increased joint venture investment in Like-for-like gross rental income reported on MIPP and the LMP Retail Warehouse joint a statutory basis increased by £14.1 million, venture, which acquired a portfolio of DFS driven by the impact of acquisitions in the assets at the end of last year. In addition, previous year which contributed additional there was a charge in the previous year of income of £13.4 million this year. In addition £0.8 million, reducing performance fees the Group increased its holding in the MIPP previously earned. joint venture from 33% to 50%, resulting in additional income of £1.6 million. Excluding prior year one-ofg share based payments, administrative costs have Income lost as a result of disposals in the decreased by 9% to £12.6 million after year of £11.3 million was ofgset in part capitalising stafg costs of £1.7 million (2014: nil) by income of £9.7 million generated by refmecting the increased development acquisitions in the year. activity in the year. On a like for like basis Movements in net rental income are administration costs have increased refmected in the table below: by £0.4 million and stafg costs have remained stable. 2015 Net rental income £m 2015 2014 EPRA cost ratio % % Prior year net rental income 58.5 EPRA cost ratio including Like-for-like investment income 14.1 direct vacancy costs 19 28 Income generated from EPRA cost ratio excluding acquisitions 9.7 direct vacancy costs 17 25 Income lost on disposals (11.3) The EPRA cost ratio for the year, including Income lost on developments (0.4) direct vacancy costs, was 19% compared Property costs 0.3 with 28% last year. The ratio refmects total Net rental income 70.9 operating costs as a percentage of gross rental income. The full calculation is shown Property costs in the year include £1.6 million on page 130. of non recurring development feasibility costs written ofg. Net fjnance costs, excluding the costs associated with repaying debt and On a like-for-like basis, property costs fell by terminating hedging arrangements on The shape of our portfolio £1.9 million, refmecting the strategic disposal sales and refjnancing in the year were see page 14 of the wholly owned residential portfolio Investment review £18.6 million, an increase of £0.3 million over over the last two years. see page 26 the previous year. Development summary see page 34 Interest capitalised in the year in respect EPRA cost ratio and of development properties was £1.6 million othe r EPRA measures see Supplementary (2014: £2.2 million). information on page 129 Annual report and accounts 2015 39 LondonMetric Property Plc

  30. Financial review continued The table below reconciles the movement in EPRA earnings in the year: Valuation uplift £118.4m £m p EPRA earnings 2014 26.4 4.2 Net rental income 12.4 2.0 Management fees 1.3 0.2 Profit on disposal Administrative costs 1.3 0.2 £13.9m Ne t fjnance costs (0.3) – Taxation (0.2) – EPRA earnings 2015 40.9 6.6 A full reconciliation between EPRA earnings and IFRS reported profjt is given in note 8 to the accounts and is summarised in the table below. Group JV 2015 Group JV 2014 For the year to 31 March £m £m £m £m £m £m EPRA earnings 31.9 9.0 40.9 23.3 3.1 26.4 Revaluation of investment property 112.4 6.0 118.4 87.5 8.4 95.9 Fair value of derivatives (7.5) (1.1) (8.6) 8.4 2.8 11.2 Debt and hedging early close out costs (3.9) (0.1) (4.0) (6.2) (2.1) (8.3) Profjt on disposal 13.4 0.5 13.9 12.2 2.3 14.5 1 Other items (1.1) – (1.1) (14.3) (0.1) (14.4) IFRS reported pro fit 145.2 14.3 159.5 110.9 14.4 125.3 1 Other items include amortisation of intangible assets, share based payments and deferred tax The most signifjcant contributors to IFRS Other items primarily relate to the reported profjt are EPRA earnings of amortisation of management contracts £40.9 million and the £118.4 million portfolio and deferred tax thereon and continue to valuation, which refmects favourable fmow through the income statement but at yield compression as a consequence signifjcantly reduced levels when compared of a strong investment market, careful to previous years. investment and value enhancing asset In the current year other items relate to management initiatives. adjustments arising as a result of the merger Other movements in reported profjt include of London & Stamford and Metric Property profjt on sale of properties of £13.9 million Investments in January 2013. (2014: £14.5 million), principally relating Our interest rate exposure is hedged to the sale of offjces at Carter Lane, by a combination of fjxed and forward London, a decrease in the fair value of starting interest rate swaps and caps. derivatives of £8.6 million (2014: £11.2 million Independent advice is given by increase) and debt and hedging break J C Rathbone Associates. costs associated with property sales and refjnancing of £4.0 million (2014: £8.3 million). The adverse derivative movement of £8.6 million on a proportionally consolidated The unsecured debt refjnancing which basis refmects movements in future completed post-year end required us to fully swap rates. amortise capitalised fjnance costs relating to facilities repaid of £3.1 million in the year to 31 March 2015. Asset Management review see page 32 40 LondonMetric Property Plc Annual report and accounts 2015

  31. Balance sheet EPRA net assets EPRA net assets for the Group and its share of joint ventures are as follows: £877.2m Group JV 2015 Group JV 2014 As at 31 March £m £m £m £m £m £m Strategic report Investment property 1,164.1 236.3 1,400.4 1,030.6 189.2 1,219.8 Portfolio value Gross debt (465.5) (97.5) (563.0) (415.5) (57.5) (473.0) £1,400.4m Cash 50.6 13.0 63.6 78.4 9.0 87.4 Other net liabilities (20.6) (3.2) (23.8) (45.4) (31.8) (77.2) EPRA net assets 728.6 148.6 877.2 648.1 108.9 757.0 EPRA net assets at the year-end were The core property portfolio of retail and Assets in core sectors £877.2 million, an increase of £120.2 million distribution assets (including associated 90% in the year. On a per share basis, net assets development) represented 90% of the increased by 19.6p, or 16.2%, to 140.6p total portfolio valuation at the year-end and the movement during the year on compared to 86% in March 2014 as refmected a proportionally consolidated basis is in the following segmental analysis: shown in the table below: 2015 2014 Movement in EPRA net asset value As at 31 March £m £m Retail 567.8 539.8 EPRA net asset value £m (and pence per share) Distribution 558.6 336.0 757.0 40.9 118.4 13.9 -43.7 -9.3 877.2 (121.0) (6.6) (19.0) (2.2) (-7.0) (-1.2) (140.6) Offjces 73.3 75.9 Residential 69.6 96.2 Development 131.1 171.9 Property value 1,400.4 1,219.8 The movement in the portfolio valuation is explained in the table below: earnings EPRA revaluation Property disposal Profjt on paid Dividends items 1 Other 2014 2015 Total £m Opening valuation 2014 1,219.8 Acquisitions 268.0 1 Other items include debt and hedging early close out costs, amortisation of intangible assets, Capital expenditure 32.8 deferred tax and treasury shares Disposals (254.4) The major contributor to EPRA NAV Revaluation 118.4 growth in the year was the £118.4 million Lease incentives 15.8 valuation uplift. Closing valuation 2015 1,400.4 Our dividend payment is now almost covered by EPRA earnings, giving rise to The Group spent £268.0 million on NAV leakage of only £2.8 million this year acquisitions and £32.8 million on capital compared with £17.6 million last year. expenditure in the year, the latter principally relating to the development expenditure IFRS reported net assets increased at Kirkstall, Islip and Warrington. by £114.3 million or 15.1% in the year to £870.2 million. The disposal of commercial and residential assets generating proceeds of £288.7 million Portfolio valuation reduced the carrying value of property At 31 March 2015 the Group’s portfolio was by £254.4 million. valued on a proportionally consolidated basis at £1,400.4 million, an increase of 14.8% over March 2014, refmecting the signifjcant level of transactional activity and the valuation surplus in the year. Annual report and accounts 2015 41 LondonMetric Property Plc

  32. Financial review continued Financing During the year we refjnanced three of our Unsecured revolving existing facilities and entered into one new credit facility The proportionally consolidated key facility as follows: performance indicators at the year end £400m • The £80 million RBS revolving credit facility ar e shown in the table below. was extended by 2.5 years and utilised to The Group and joint venture split is shown fjnance three acquisitions in the year in Supplementary Note iii on page 129. • The Deutsche Pfandbrief MIPP joint Loan to Value venture loan was extended by two years 2015 2014 and increased to £125 million as part of 36% £m £m the equalisation of ownership between Gross debt 563.0 473.0 ourselves and USS, our joint venture Cash 63.6 87.4 partner. £22.5 million of the additional Loan to Value 36% 32% commitment (Group share: £11.3 million) Cost of debt Cost of debt 3.7% 3.9% remains available to draw to fjnance 3.7% further acquisitions Undrawn facilities 83.4 96.0 • The Helaba facility secured against Hedging 80% 85% certain distribution assets was increased We have had a very busy year with by £53.1 million and extended by three regard to our debt, which at the year-end years, expiring November 2021 Hedging stood at £563.0 million inclusive of joint • New £71.8 million facility with M&G 80% ventures, an increase of £90 million over (Group share: £21.9 million) secured the previous year. against the DFS portfolio which was The loan to value at 31 March 2015 was 36% acquired in March 2014 compared with 32% last year. The average As a result of the new and extended cost of debt was 3.7% compared with 3.9% facilities, our debt maturing at the year- in March 2014. end increased to 4.2 years from 3.7 years We have hedged 80% of our exposure to last year. interest rate fmuctuations and have undrawn Post year-end we have completed a new facilities of £83.4 million. £400 million unsecured revolving credit facility with a syndicate of fjve lenders, Movement in gross debt £m which can be increased to £500 million 473.0 134.2 -124.5 80.3 563.0 to provide additional fjrepower and is for a fjve-year initial term and can be extended by up to two years. The facility has a minimum margin of 130 bps. In April 2015 we repaid fjve existing secured facilities with drawn debt of £269.3 million and drew debt of £265 million under this new facility. The new facility has signifjcantly simplifjed drawings Additional repaid Facilities Refjnancing 2014 2015 our debt arrangements; the £196.2 million seven-year Helaba facility remains in place and joint venture arrangements are unafgected. This refjnancing incorporates increased fmexibility into our facilities which We drew additional debt of £134.2 million to is critical as we continue to recycle capital fund acquisitions and repaid £124.5 million and actively manage our assets. following disposals. As at the date of this report our average debt maturity has increased to 6.2 years, our average cost of debt has fallen to 3.4% and there are available undrawn facilities of £154.5 million. 42 LondonMetric Property Plc Annual report and accounts 2015

  33. Risk management The strategic priorities for the business The Executive Committee is responsible and proposed changes, the Board are the delivery of sustainable, low risk, for the identifjcation of risks and has introduced a standing agenda progressive earnings and long term the design, implementation and item to evidence the more formal capital growth. maintenance of the systems of internal considerations of the principal risks controls. The Executive Committee is and uncertainties facing the business Strategic report The Group’s approach to risk assisted by senior management in this and those which may manifest in the management is to identify those issues process. The business operates from future, together with actions being which might prevent the attainment one o ffjce and has short reporting lines taken to mitigate them on an ongoing of our priorities and to take action to ensuring the Executive Committee’s basis. Efgective risk management has reduce or remove the likelihood of close involvement in day to day however always been embedded such issues having a material impact. matters enabling early identifjcation within the culture of the business and Our appetite for risk is low where it and mitigation of risks. decision making processes. prejudices the achievement of our The Company has a detailed risk The matrix below illustrates the strategic priorities. register which specifjes risks, the impact assessment of the impact and The Board has delegated of each risk, the likelihood of that risk likelihood of our material risks taking responsibility for the assurance of occurring and the strength of the into account the risk measures the risk management process and mitigating controls in place and how currently applied. the review of mitigating controls to these are evidenced. The updated The risks identifjed are broadly the the Audit Committee. A key part risk register was last presented to the same as those reported last year. of the risk management process is Audit Committee and Board in March The rationale for perceived increases the assessment of the impact and 2015 and has been reviewed at least or decreases in the risks identifjed likelihood of risks occurring so that annually in previous years. Recently in are contained within the commentary appropriate mitigation plans can be response to the 2014 update of the for each risk category. developed and implemented. UK Corporate Governance Code Perceived likelihood of occurrence after mitigation Rare Low Medium High The Board consider this risk has signifjcant increased since last year Not The Board consider this risk has reduced since last year The Board consider this risk has remained broadly unchanged Low from last year 10 Potential impact 12 8 Medium 2 11 9 5 7 3 High 6 4 1 Extreme Risk Management and Internal Control see Audit Committee report on page 73 Annual report and accounts 2015 43 LondonMetric Property Plc

  34. Risk management continued The principal risks and uncertainties that follow are those risks identifjed as having the potential to cause material harm to the business and its ability to meet its strategic objectives. Strategy and market risk Key risk factor and impact How is it managed? Commentary The Board review and update strategy and The Group continued to reposition its portfolio 1 objectives on a regular basis, adapting during the year, with 90% now in the core to changes in economic conditions and sectors of retailer-led distribution and out of Portfolio strategy opportunities as they arise. town and convenience retail. This repositioning together with the implementation of asset The Executive Directors are closely involved The Company has an management initiatives built on strong in the day to day management of the inappropriate strategy relationships with retailers have enabled the Company which operates from one o ffjce for the current stage of Company to perform well against its key location and has a fmat organisational the property cycle and performance indicators. WAULT and EPRA structure making it easier to identify market the economic climate. vacancy rates are amongst the highest and changes. Impact : lowest respectively in the industry. Management have an entrepreneurial Suboptimal returns In March 2015 the Board held an ofg approach and extensive experience in real fo r shareholders site Strategy Away Day to consider the estate, particularly the retail sector. development of the Group’s long term strategy Research is commissioned into economic and business model. and occupational markets to assist in A new Finance Committee headed by the strategic decisions. Finance Director was formed during the year Financial forecasts are updated in light of to enhance the provision of information to the strategic changes and reported to the Board Executive Committee and Board. and Executive Committee regularly. The Group has a rolling three-year forecast. Management have a signifjcant shareholding in the Company, amongst the highest in the industry, clearly aligning their interests with other shareholders. The Company’s staffjng plan is focused on experience and the expertise necessary to deliver its strategy. External factors such as macro-economic The UK property market has performed well 2 conditions and political risks are outside of over the last year, driven by strong investment the Group’s control, however the Group interest and an improving economy. Economic and only invests in the UK, minimising exposure The Board considers that this risk has reduced political outlook to weaker economies. due to the strengthening economic outlook The Company has a diversifjed portfolio and political stability post the UK election. The economy falters. which has been reshaped to take into Impact : account changes in longer term retailing Poorer than expected trends. The Company does not invest in performance sectors which tend to be hit hardest during periods of economic downturn. Research is commissioned and evaluated to infmuence strategic decision making. Market review Core portfolio repositioning see Key growth drivers see Investment review on page 16 on page 26 Key performance indicators see page 24 44 LondonMetric Property Plc Annual report and accounts 2015

  35. Property and transactional risk Key risk factor and impact How is it managed? Commentary The extensive experience of management The Company transacted on £598 million 3 and their strong network of connections of property, with a number of signifjcant ofg Strategic report provide insight into the property market market acquisitions. Investment an d investment opportunities. The Company’s strategic focus has opportunities Management’s relationship with retailers and shifted away from income to a total return its ability to develop and forward fund assets model supported by low risk, short-cycle The Company is unable is an important factor in generating deal fmow development. to source investment given the current di ffjculties in fjnding value The Board considers that the risk of identifying opportunities. in income generating assets due to yield appropriately priced investment opportunities Impact: compression within the market. has increased given investor appetite in the Ability to implement market and continued yield compression. strategy by recycling There is a conditional development pipeline of capital into value and 1.1 million sq ft in Bedford, Leicester and Stoke. earnings accretive investments at risk The property cycle is continually monitored The valuation uplift in the year of £118.4 million 4 with investment and divestment decisions was a consequence of yield compression being made strategically in anticipation in a strong investment market and value Valuation risk of changing market conditions. enhancing asset management initiatives and short cycle development activity. The property portfolio performance There is no certainty that is regularly reviewed and assets are We have been working to assess and reduce property values will be benchmarked on an individual basis. our exposure to Minimum Energy Effjciency realised. This risk is inherent Standards (MEES) and now have less than 3% to the property industry. Focus on sustainable income, let to high ERV from assets with F and G rated EPCs. quality tenants within a diversifjed portfolio of Impact: well located assets with increased weighted NAV growth pressure and average lease lengths reduces the risk of pressure on loan covenants negative movements in a downturn. Acquisitions which have opportunities to enhance value by undertaking asset management initiatives and playing to the strengths of the asset management team and their tenant relationships are favoured as well as assets which are considered to be mis-priced. Acquisitions are thoroughly evaluated by Yield arbitrage of c.100 bps between 5 undertaking a detailed fjnancial, legal acquisitions and disposals evidencing and operational appraisal prior to Board appropriate investment and divestment Investment approval. Asset management initiatives decisions. underperformance undergo cost-benefjt analysis prior to implementation. Investments may otherwise External advisors are used to help ensure not meet thei r fjnancial appropriate pricing of lease transactions. objectives. Impact: Pressure on NAV and earnings and potentially loan covenants Investment transactions Asset management transactions Development summary see Investment review page 26 see Asset Management review and pipeline page 32 see page 34 Newark distribution centre case Valuation drivers study , an ofg market acquisition see Asset Management review see page 27 page 32 Annual report and accounts 2015 45 LondonMetric Property Plc

  36. Risk management continued Property and transactional risk (continued) Key risk factor and impact How is it managed? Commentary The Company only considers short-cycle 90% of the development which the Company 6 and relatively derisked or forward funded is currently undertaking has pre‑lets in place. development although management have The Company has employed additional sta fg Development signifjcant experience of more complex with development and project management returns development. expertise during the year given the increased development focus. Exposure to developments and phasing of Development projects projects is considered as part of the quarterly Committed developments total 2.0 million sq ft fail to deliver expected fjnancial forecasting process for the Board. and are 90% pre-let. returns due to inconsistent Standardised appraisals and cost budgets timing with the economic In the year we forward funded the acquisition are prepared for developments with regular cycle and adverse letting of a distribution warehouse in Warrington monitoring of expenditure against budget to conditions or increased pre-let to The Hut Group. highlight potential overruns at an early stage. costs, planning or We are on track to complete in September our construction delays. The procurement process includes tendering 1.1 million sq ft distribution development in Islip, and the use of highly regarded fjrms Impact: Northamptonshire, pre-let to Primark. with track records o f delivery to minimise Poorer than expected uncertainty over costs. performance Developments are only undertaken where high occupier demand and signi fjcant pre-lets are secured before development work commences to de-risk projects. Wher e possible, development sites are acquired with planning in place. The Group ensures it has suffjcient funds in The Company has taken advantage of an 7 place to take advantage of investment improved debt market to refjnance its Helaba opportunities by selling assets which have loan extending the term to seven years with Funding risk achieved target returns and monitoring its improved fmexibility and pricing. Post year end cash fmow closely. the Company refjnanced all Group debt, with The Company is unable the exception of joint venture arrangements The Group nurtures its relationships with a to fund investment and the Helaba loan, with an unsecured diversifjed range of banks and alternative opportunities. revolving credit facility of £400 million which lenders and regularly reviews its loan Impact: can be increased by a further £100 million. facilities. The availability of debt on cost This facility provides greater operational Implementation of efgective terms is considered as part of fmexibility and alignment with the Group’s strategy at risk the analysis for each acquisition and real estate strategy. development. The Company extended its MIPP joint venture The Company has joint venture loan with Deutsche Pfandbrief by two arrangements with well funded partners years and £50 million and increased its joint particularly for larger acquisitions. venture interest to 50%. The MIPP joint venture arrangements with partner USS were extended by two years and £100 million. The Company has also extended its joint venture funding arrangements with its Middle Eastern partner, Green Park Investments, which were due to expire, by a further two years. Disposals totalled £288.7 million in the year demonstrating our ability to recycle capital out of non-core and mature investments. The Board considers the continued improvement in the debt market and the new unsecured revolving credit facility have decreased this risk from last year. Recycling capital Short-cycle development Debt re fjnancing see Investment review page 26 see page 34 see Financial review page 42 Islip mega-shed case study Warrington acquisition see page 35 see page 28 46 LondonMetric Property Plc Annual report and accounts 2015

  37. Financial risks Key risk factor and impact How is it managed? Commentary The Group uses interest rate derivatives to fjx At 31 March 2015 the Group had £451 million 8 or cap its exposure to adverse interest rate of hedges in place covering 80% of total Strategic report movements. Hedging recommendations debt including its share of joint venture Interest rates ar e received from J C Rathbones Associates, arrangements. a specialist advisor. Adverse interest rate movements. Impact: Increased fjnancing costs on debt, reduced profjtability and increased risk of a loan covenant breach Headroom in loan covenants is actively The Group has complied with its fjnancial 9 monitored and incorporated into the Group’s covenants during the year. fjnancial reporting. Non fjnancial covenants Increased diversifjcation and scale under the Loan covenants are also closely monitored. new unsecured revolving credit facility should Gearing levels are carefully considered insulate the credit covenant of the Group from A breach of loan and stress tested before entering into new one-ofg shocks from any single property. covenant could result arrangements. The Group maintains a from a substantial decline The Board considers that the refjnancing of modest level of gearing. in property values, a debt undertaken, including the unsecured material loss of rental The impact of disposals on loan facilities revolving credit facility, has decreased this risk income or increased covering multiple assets are also considered from last year. borrowing costs. as part of the strategic decision making process. Impact: The Group’s loan facilities incorporate Potential default and covenant headroom, appropriate cure acceleration of loan. provisions and suffjcient fmexibility to Ability to raise new implement asset management initiatives. fjnance a fgected Operational risks Key risk factor and impact How is it managed? Commentary Tenant covenant strength and The Group has a very low level of tenant 10 concentration are assessed for all default and high occupancy levels of 99.7% acquisitions and leasing transactions. at the year end. Tenant default The Group’s dedicated and experienced The tenant base has been further diversifjed property management team work closely during the year and the covenant strength Tenant default and failure with tenants and consider action for slow of the top tenants has increased. to let vacant units. payers. The Board considers that improvements Impact: Rent collection is closely monitored and in the economy and the increased Loss of recurring net reported to the asset management team diversifjcation in the portfolio have income and dividend to identify potential issues. decreased this risk. cover. Pressure on loan The Group has a diversifjed tenant covenants base and limited exposure to individual occupiers in bespoke properties. Hedging New unsecured debt see Financial review page 42 see Financial review page 42 Top tenants Loan to Value see Supplementary information see Financial review page 42 page 129 Annual report and accounts 2015 47 LondonMetric Property Plc

  38. Risk management continued Operational risks (continued) Key risk factor and impact How is it managed? Commentary The remuneration structure for all sta fg is Consideration will be given to the position 1 1 aligned to the long-term key performance of Chairman, given the Chairman’s current targets of the business with long-term share contract expires 31 March 2016. Sta ffjng based incentive arrangements in place. Two new Directors appointed internally Senior management has a substantial to the Board in the year. An inability to attract, investment in the Company. motivate and retain high calibre skilled stafg. Annual appraisals identify training requirements and assess performance. Impact: Specialist agencies are contracted Pressure on the delivery of where appropriate if there are perceived the Company’s strategy. short-term skills shortfalls. The Group is advised by external specialist Of the 26 targets we set ourselves over the 12 advisors on sustainability and responsible two-year period to March 2016, 13 have business matters and has established a been achieved, 7 are currently in progress Regulatory Responsible Business Strategy to manage and 6 are scheduled for next year. sustainability performance. This year we saw a 37% reduction in total Increased regulations The Group is given specialist taxaxion energy consumption across our portfolio. associated with planning, advice on its transactions, REIT compliance environmental, health and reporting. and safety and tax amongst others. Impact: Increased costs, impact on re-letting potential of an asset, damage to corporate reputation and investor demand in the Company Responsible business see page 49 EPRA vacancy rate see Supplementary information page 129 Top 10 occupiers see Supplementary information page 129 48 LondonMetric Property Plc Annual report and accounts 2015

  39. Responsible business We have made considerable progress against our Responsible Business Roadmap in 2015. Our performance put s us firmly on the road to ensuring that the management of material sustainability risks and opportunities are embedded Strategic report in our core business activities. Marion Dillon Responsible Business lead, LondonMetric Our approach to responsible business Responsible business framework Our Responsible Business Strategy pulls Within the scope of our Responsible Business together and summarises the approach framework as illustrated below we have we take across the business to managing developed a Responsible Business Policy, our sustainability performance. It sets out supported by our Responsible Business our sustainability priorities across the four Roadmap which encompasses both short key areas that re fmect our core activities: and medium-term targets. The Roadmap our business operations, our property sets out a clear strategic framework investments, asset management and designed to deliver added value to each short-cycle developments. Our approach of our core activities within the context is supported by the foundations of of: increasing legislative pressure on good risk management and a focus environmental issues; growing demand from on creating and maintaining excellent investors for sustainability disclosure; and stakeholder relationships. the potential long-term risks to asset value associated with less resource-e ffjcient assets. Of the 2 6 targets we set ourselves over the two-year period to March 2016, 13 have already been achieved, 7 are currently in progress and the remainder are scheduled for next year. For more detailed information on our targets, please see our annual Responsible Business report which can be found in the Responsibility section of our website. Responsible investments Generating sustainable value Responsible business Managing stakeholder relationships and risk well Responsible Responsible development asset management Future-proo fjng Responding our pipeline to occupier needs Responsible business report www.londonmetric.com LondonMetric Property Plc 49 Annual report and accounts 2015

  40. Responsible business continued Our progress Responsible investment In 2015 the Company made charitable We aim to ensure that material sustainability Responsible business donations of £24,820. risks and opportunities are integrated In addition £26,583 was into the way we buy and sell assets – Under our Responsible Business Strategy raised by si x employees with specifjc attention paid to energy we are undertaking actions at a corporate who rowed across and carbon liabilities, fmood risk and level to reduce sustainability risks throughout the Channel transport infrastructure. our operations and efgectively engage with key stakeholders. Our areas of focus During 2015 we updated our pre-acquisition include legislative compliance through due diligence and decision-making process environmental monitoring and risk to ensure that all material sustainability assessments, managing human resource factors are appropriately addressed and issues such as stafg attraction, retention and considered. Risks assessed include energy diversity, working with our supply chain to effjciency and energy costs, CRC liabilities, improve sustainability performance and EPC risks, vulnerability to fmooding and increasing awareness of our Responsible other extreme weather events, and site Business Policy with joint venture partners. accessibility. As part of asset preparation for We also maintain a wider commitment sale, we review sustainability performance to society through a programme of indicators to ensure that the key benefjts sponsorships and charitable donations and opportunities of the asset are aimed at the local communities in which communicated efgectively to the market. we operate. Our sustainability risk profjle has altered Our priorities for 2015 on legislative risk signifjcantly following the disposal of the management have included mapping majority of our offjce portfolio in this year. out our expected fjnancial liabilities having As a result our direct energy consumption qualifjed for Phase 2 of the UK Government’s has reduced as the majority of our portfolio CRC Energy Effjciency Scheme, ongoing is now comprised of retail and distribution portfolio risk assessment and mitigation in warehouses with minimal landlord- line with the new Minimum Energy Effjciency controlled energy consumption. Standards (MEES) for commercial property, and implementing a plan to manage Responsible asset management the mandatory energy auditing scheme and development ESOS introduced this year. For more on our To ensure our buildings continue to be fjt for performance and approach, see pages 52 purpose, we engage in practical measures to 54. with occupiers to understand and mitigate We have implemented a stafg training material risks and take advantage of programme covering these and other win-win opportunities such as the installation sustainability issues material to the of low carbon energy sources. By doing business and the new procedures that so, we respond to the needs of occupiers, have been introduced to manage these promote the long-term sustainability of our issues efgectively. assets and enhance their value. Stafg development, satisfaction and During 2015, actions included establishing wellbeing is very important to the business; baselines and benchmarks for the we aim to attract, retain and motivate environmental performance of our portfolio. high performing individuals, and recognise We now collect and report comprehensive the importance of employee wellbeing. data on energy, carbon, water and waste To achieve this aim we actively promote on a quarterly basis and have set internal healthy living and encourage volunteering performance targets to drive further and sponsorship activities including reductions in resource use. For information support for local organisations close to on our carbon footprint, in line with the UK our assets and head offjce, plus ongoing government’s mandatory carbon reporting support for national charities with a requirements, please see the “How we property focus. This includes direct fjnancial performed” section on page 52. contributions and in-kind support such as pro bono services, which provide benefjts both to the charities and to the team members involved. 50 LondonMetric Property Plc Annual report and accounts 2015

  41. Having qualifjed for Phase 2 of the UK Partly in response to the Government’s Projected energy Government’s CRC Energy Effjciency Energy Savings Opportunity Scheme (ESOS) savings identi fied b y our Scheme in 2012/13, our quarterly data requirements, we have commissioned external lighting audits collection and reporting programme energy audits across our retail parks and of retail warehouses has allowed us to map out our expected identifjed areas where we can deliver Strategic report total 30% of their liabilities which for the year are expected to signifjcant reductions in future energy annual lighting bills be c.£60,000 in CRC Allowance costs. use. Under ESOS, we are required to report the fjndings of our energy audits to Following the sale of offjces at Forest House, the Environment Agency by December Crawley and Carter Lane, London this year, 2015 and intend to action all the cost- BREEAM – Very Good total energy consumption for the year to efgective recommendations. certifjcations on track 31 March 2015 dropped by 37% compared for development with the previous year, and our total Core to our development activities is projects covering GHG emissions fell by 42% over the same the creation of fmexible assets that meet 2.4m sq ft period. As the majority of our portfolio now changing economic, environmental and comprises retail and distribution warehouses social demands. In line with our goal to our carbon footprint is mainly based on achieve a minimum BREEAM Very Good external car park lighting. certifjcation for all new developments and This year we saw a 37% major refurbishments, we are on track at our drop in total energy Forecast CRC liabilities for 2015 £ redevelopment of Kirkstall Bridge Shopping consumption across £75,828 Park in Leeds. We have put in place a our portfolio compared 80,000 series of measures that will enhance its to 2014 environmental performance during both 60,000 £59,650 construction and operation, while working 40,000 with local partners to deliver benefjts to the broader community through ongoing 20,000 employment opportunities. Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 We are also working with contractors Current year (actual) Previous year (actual) to enhance the management of Current year (estimated) sustainability issues covering health and safety, supply chain, energy and waste by The newly legislated Minimum Energy incorporating minimum requirements into Effjciency Standards (MEES) reinforced the construction contracts. need for a comprehensive review of our portfolio EPC ratings, an exercise that began in 2013. As part of our annual asset management plans, we have started to review and develop risk management solutions for the assets in our portfolio with EPC ratings below the required 2018 standard. EPC ratings by ERV (estimated rental value) B 25.46% C 33.62% D 11.74% E 17.73% F 2.28% G 0.58% Missing EPC 1.10% Unknown EPC 7.49% Kirkstall Bridge Shopping Park case study see page 36 Annual report and accounts 2015 51 LondonMetric Property Plc

  42. Responsible business continued How we performed 2014 Global Real Estate Sustainability During the year we Benchmark (GRESB) results have achieved 13 Performance against responsible an d progressed 7 of our During the year, as in previous years, we took business targets 26 two-year targets part in a survey carried out by GRESB, an investor-backed organisation that assesses Within the scope of our Responsible the sustainability performance of property Business framework we have developed companies and property investment funds. a Target Roadmap which encompasses The 2014 survey results showed a signifjcant both short and medium-term targets. improvement in both our score and our The Roadmap sets out a clear strategic peer ranking compared to 2013, particularly framework designed to deliver added value on the Management and Policy theme to each of our core activities within the where we achieved a 60% score. Overall we context of: increasing legislative pressure on achieved a score of 34%, exceeding our environmental issues; growing demand from target of 30%. We are hopeful that the investors for sustainability disclosure; and past year’s worth of implementation and the potential long-term risks to asset value measurement activities will allow us to associated with less resource-effjcient assets. improve our overall score suffjciently to meet Of the 26 targets set for the two-year period our target for the 2015 survey of 50%. April 2014 – March 2016, during this fjrst year we have already achieved 13 and made good progress on 7. For more detailed information on our targets, see the Responsibility section of our website. Performance in 2014 GRESB Survey % 100 Management and policy 50 0 0 50 100 Implementation and measurement This entity Peer group average Peer group GRESB average Responsible business report www.londonmetric.com 52 LondonMetric Property Plc Annual report and accounts 2015

  43. Performance data Total energy consumption MWh Energy consumption 37% 15,000 Energy and greenhouse gas (GHG) emissions Strategic report 10,000 Our offjce portfolio accounts for the vast majority of our energy and carbon footprint, 5,000 GHG emissions therefore the sale of offjces at Forest 42% House, Crawley and Carter Lane, London 2013/14 2014/15 in the year has dramatically reduced Electricity our exposure. Total energy consumption Natural gas dropped by 37% in 2015 and our total GHG emissions fell by 42% over the same period Water consumption (excluding residential asset). Like-for-like energy consumption by asset type MWh 12% Next year we expect to see further 6,000 reductions in landlord-controlled energy use as we continue to reshape our portfolio. 4,000 We also hope to see signifjcant savings in like-for-like energy consumption across our 2,000 retail warehouse portfolio as we implement the recommendations identifjed in the external lighting audits carried out this year. 2013/14 2014/15 Corporate offjce Offjce Retail warehouse Mandatory GHG emissions reporting Year to Year to 31 March 2015 31 March 2014 Direct greenhouse gas emissions in tonnes of CO 2 e (combustion of fuel and operation facilities) Scope 1 576 766 Indirect greenhouse gas emissions in tonnes of CO 2 e (purchased electricity, heat, steam and cooling) Scope 2 1,857 3,448 Total carbon footprint in tonnes of CO 2 e 2,433 4,214 Scope 1 and 2 intensity (tonnes of CO 2 e per £m net income after administration costs) 52 160 Data qualifying notes We have reported on all of the emission sources Data for the year to 31 March 2014 has been restated, required under the Companies Act 2006 (Strategic including associated intensity metrics, as additional Report and Directors’ Reports) Regulations 2013. energy consumption data has been obtained since the previous report was published. We have used the main requirements of ISO14064 Part 1 and the GHG Protocol Corporate Accounting Landlord-controlled emissions in the year to 31 March and Reporting Standard (Revised Edition) for our 2014 from the wholly-owned residential portfolio methodology, using energy consumption data from are not included in this disclosure as they were not our owned and occupied properties. We have material to our total carbon footprint (represent <2% chosen to report greenhouse gas emissions under of total emissions). This portfolio was substantially sold our operational control. These sources fall within our in the year to 31 March 2014. Emissions from our joint consolidated fjnancial statements. We do not have venture residential property at Moore House, London responsibility for any emissions sources that are not have been included for the year to 31 March 2015. included in our consolidated fjnancial statements. No data was available for the previous year. Emissions factors are taken from the latest the Scope 1 data does not include refrigerant emissions UK Government (DEFRA) conversion factors for as these have been determined to not be material company reporting (2014). (represent <2% of total emissions); owned fmeet does not apply. Annual report and accounts 2015 53 LondonMetric Property Plc

  44. Responsible business continued Water consumption Employee gender diversity Waste diverted fro m landfjll During 2015 the total water consumption Indicator 2015 from our investment portfolio fell by 12%, 100% partly due to disposals. We also saw a 23% decrease at our remaining offjce asset, The number of 1 10 Marlow International, which now accounts persons of each sex for 89% of our total water footprint (including who were Directors of the Company our corporate offjce). Total water consumption m 3 8,000 The numbers of persons of each 6,000 sex who were 3 7 4,000 senior managers of the Company 2,000 (other than persons identifjed as Directors) 2014 2015 Corporate offjce Offjce The number of persons of each 17 24 Waste management sex who were employees of During 2015 we began recording non- the Company construction waste data for the fjrst time. 98% of our waste is generated from our offjce portfolio with our corporate offjce accounting for the remaining 2%. Human rights concerns All landlord-controlled waste is diverted Our operations are based solely in the UK from landfjll. and are very low risk in relation to human Total waste by disposal method tonnes rights issues. No human rights concerns have arisen within our direct operations or our 100 supply chain during 2015. 80 60 40 20 LondonMetric One Curzon Street portfolio Incineration (with energy recovery) facility Recycling facility See our annual Responsible Business update report on our website for our full reporting against the sustainability KPIs required to be reported under EPRA Best Practice Reporting recommendations. Responsible business report www.londonmetric.com 54 LondonMetric Property Plc Annual report and accounts 2015

  45. Governance Introduction from the Chairman 56 Governance at work 57 Board of Directors 58 Leadership 60 E fgectiveness 64 – Nomination Committee report 66 Accountability 70 – Audit Committee report 70 Remuneration 76 – Remuneration Committee report 76 Report of the Directors 91 Directors’ responsibility statement 94 Annual report and accounts 2015 55 LondonMetric Property Plc

  46. Introduction from the Chairman “Good governance is embedded into the way we manage the business.” The Board remains committed to upholding This year the Nomination Committee led the the high standards of corporate governance fjrst externally facilitated Board evaluation, that underpin the successful management a process the Board is committed to of the business and its long-term success. undertake every three years. The fjndings Good governance is embedded into the of the evaluation were very positive and way we manage the business to create a concluded that the individual Directors, culture of appropriate decision making, the Board and its Committees continue risk assessment and transparency at all t o operate e fgectively. levels in the organisation. The high level of There were signifjcant changes to the involvement of the Executive Directors in the regulatory regime last year with more on the day to day business operations promotes agenda for next year. The Board continues good governance practices beyond the to monitor and respond to these changes Boardroom, supporting the successful and the Audit Committee report on page delivery of strategic objectives. 70 incorporates improvements to the The Corporate Governance report which process undertaken to assess and support follows demonstrates how the Board is the statement that the Annual Report and committed to the principles and provisions Accounts, when taken as a whole, is fair, of the UK Corporate Governance Code balanced and understandable. (the “Code”) and the steps it has taken this In September 2014 the Financial Reporting year to improve compliance, which include Council published latest revisions to the my role as a Non-Executive Chairman Code which will become efgective next and the retirement of Humphrey Price as a year. The Board has considered these Non-Executive Director. The Board would revisions and has taken steps to improve like to thank Humphrey for his dedication, the review and reporting of risks at Board commitment and valuable contribution to meetings as further discussed in the Audit the Board as a Non-Executive Director of Committee Report on page 70. the Company. Patrick Vaughan Chairman 2 June 2015 Statement of Compliance The Board has considered the Company’s compliance with the main principles and provisions of the UK Corporate Governance Code (the “Code”) published by the Financial Reporting Council in September 2012, publicly available at www.frc.org.uk. The Board considers that the Company has complied with the main principles set out in the Code throughout the year under review and to the date of this report. 56 LondonMetric Property Plc Annual report and accounts 2015

  47. Governance at work The Board is committed to upholding the principles of good governance and adhering to the requirements of the UK Corporate Governance Code. This report sets out the Company’s governance policies and practices and explains how it complies with the four main provisions of the Code. Leadership E fgectiveness The Board is collectively responsible to In January 2015, the Board commissioned the Company’s shareholders for creating Law Debenture to facilitate the evaluation and delivering the long term success of its own performance and that of of the business. The Directors seek to its Committees. The process involved achieve this through e fgective leadership completion of an online questionnaire having regard to the interests of the followed by one to one interviews and Company’s employees, the impact on the observation at a Board meeting. communities within which it operates and Our Board’s efgectiveness the environment. see page 64 On 1 October 2014 the Chairman became Governance a Non-Executive Director of the Company. Rosalyn Wilton was appointed Chairman of the Audit Committee in November 2014. On 31 March 2015 Humphrey Price retired as a Non-Executive Director of the Company. Our Board’s leadership see page 60 Accountability Remuneration The Board is responsible for establishing The role of the Remuneration Committee and maintaining the Group’s system of risk is to determine and maintain a fair reward management and internal controls and for structure that incentivises Directors to deliver reviewing its efgectiveness. the Group’s strategic objectives whilst maintaining stability in the management The Audit Committee improved the o f its long term business. process undertaken to assess and support the statement that the Annual There are no changes proposed to the Report and Accounts is fair, balanced Remuneration Policy for the year ahead. and understandable. Our Board’s remuneration The Board has considered revisions to the see page 76 Code which will become efgective next year and has taken steps to improve the reporting of risks at meetings. Our Board’s accountability see page 70 Annual report and accounts 2015 57 LondonMetric Property Plc

  48. Board of Directors From left: Andrew Varley, Mark Stirling, Rosalyn Wilton, Valentine Beresford, Patrick Vaughan, Andrew Jones, Martin McGann, Philip Watson, Alec Pelmore, James Dean, Charles Cayzer and Humphrey Price (retired 31 March 2015) Patrick Vaughan Andrew Jones Martin McGann Chairman Chief Executive Finance Director Appointed 13 January 2010 Appointed 25 January 2013 Appointed 13 January 2010 Skills and experience Patrick has been involved Skills and experience Andrew was a Skills and experience Martin joined London & in the UK property market since 1970. He was co-founder and CEO of Metric from its inception Stamford as Finance Director in September 2008 a co-founder and CEO of Arlington, of Pillar, in March 2010 until its merger with London & until its merger with Metric in January 2013, when and of London & Stamford, leading all three Stamford in January 2013. On completion of the he became Finance Director of LondonMetric. of the companies to successful listings on the merger, Andrew became Chief Executive of Between 2005 and 2008, Martin was a FTSE main market. Upon completion of London LondonMetric. Andrew was previously Executive Director of Kandahar Real Estate. From 2002 to & Stamford’s merger with Metric in January Director and Head of Retail at British Land. 2005 Martin worked for Pillar, latterly as Finance 2013, he was appointed Chairman, becoming Andrew joined British Land in 2005 following Director. Prior to joining Pillar, Martin was Finance Non-Executive Chairman on 1 October 2014. the acquisition of Pillar and served on the main Director of the Strategic Rail Authority. Martin is a Patrick also served as an Executive Director of Board with responsibilities for shopping centres, qualified Chartered Accountant, having trained British Land 2005 to 2006, following its acquisition retail park investment and asset management. and qualified with Deloitte. of Pillar. Other appointments Andrew is a Non-Executive Other appointments None Other appointments None Director of The Unite Group Plc Board Committees Executive Committee Board Committees Nomination Committee Board Committees Executive Committee Charles Cayzer Valentine Beresford Mark Stirling Senior Independent Director Investment Director Asset Director Appointed 29 July 2010 Appointed 3 June 2014 Appointed 3 June 2014 Skills and experience Charles has considerable Skills and experience Valentine was co-founder Skills and experience Mark was co-founder experience of merchant banking, commercial and Investment Director of Metric from its and Asset Management Director of Metric from banking and corporate and project finance inception in March 2010 until its merger with its inception in March 2010 until its merger with from his career at Baring Brothers, Cayzer Irvine London & Stamford in January 2013. He joined London & Stamford in January 2013. He joined and Cayzer Limited and was appointed a the Board of LondonMetric on 3 June 2014 as the Board of LondonMetric on 3 June 2014 Director of Caledonia Investments in 1985. Investment Director. Prior to setting up Metric as Asset Management Director. Prior to the Other appointments Charles is Chairman of The Valentine was on the Executive Committee setting up of Metric, Mark was on the Executive Cayzer Trust Company Ltd and The Sloane Club, of British Land and was responsible for all their Committee of British Land and as Asset and a Non-Executive Director of Quintain Estates European retail developments and investments. Management Director and was responsible & Development Plc Valentine joined British Land in July 2005, for the planning, development and asset following the acquisition of Pillar, where he also management of the retail portfolio. Mark joined Board Committees Nomination Committee served on the Board as Investment Director. British Land in July 2005 following the acquisition (Chairman), Audit Committee and of Pillar where he was Managing Director of Remuneration Committee Other appointments None Pillar Retail Parks Limited from 2002 until 2005. Board Committees Executive Committee Other appointments None Board Committees Executive Committee 58 LondonMetric Property Plc Annual report and accounts 2015

  49. Alec Pelmore Rosalyn Wilton James Dean Independent Director Independent Director Independent Director Appointed 25 January 2013 Appointed 25 March 2014 Appointed 29 July 2010 Governance Skills and experience Alec joined the Board of Skills and experience Rosalyn is a Non-Executive Skills and experience James is a Chartered Metric at the Company’s inception in March Director of Axa UK Ltd where she acts as Surveyor and has worked with Savills plc since 2010. He has been a member of the Supervisory Chairman of the Risk Committee. Until 2009, 1973, serving as a Director from 1988 to 1999. Board of Unibail-Rodamco SE, Europe’s largest she was Chairman of Ipreo Holdings LLC, the Other appointments James is a Non-Executive property company, since 2008 and is currently US-based financial data and solutions group Director of Branston Holdings and Chairman of a member of its Audit Committee. Alec held formed following the merger of i Deal LLC and Pearlcrown Ltd, London & Lincoln Properties Ltd positions as an equity investment analyst Hemscott Group Ltd. Before the merger, Rosalyn and Patrick Dean Ltd specialising in property companies from 1981 to was Chief Executive Offjcer of Hemscott plc. 2007. The majority of his career as an investment Prior to this, she worked for Reuters Group, Board Committees Remuneration Committee analyst was spent at Dresdner Kleinwort Benson leaving the Company as Managing Director, (Chairman) and Merrill Lynch, where his teams were voted Reuters Information in 1999. Rosalyn has held number one for property in Europe by the Non-Executive Directorship positions with Institutional Investor European Property Research Scottish Widows,the London International Survey for 12 out of 13 years from 1995 to 2007. Financial Futures Exchange and Optos Plc. She has previously served as a Senior Advisor to Other appointments Member of the Supervisory 3i Investments and Providence Equity Partners. Board of Unibail-Rodamco SE Other appointments Non-Executive Director Board Committees Nomination Committee of AXA UK Ltd and Audit Committee Board Committees Audit Committee (Chairman) Andrew Varley Philip Watson Independent Director Independent Director Appointed 25 January 2013 Appointed 25 January 2013 Skills and experience Andrew joined the Board of Metric at the Company’s inception in March Skills and experience Philip joined the Board 2010. He was Group Property Director and an of Metric at the Company’s inception in Executive Director of NEXT from 1990 until his March 2010. He is the Chief Investment Offjcer retirement in May 2014, with the responsibility of Mirabaud Asset Management Limited. for property, franchise, corporate responsibility Philip joined Hill Samuel in 1971 and then and code of practice related issues. His previous Robert Fleming in 1972 on the UK desk, where experience includes 12 years in retail and he worked as an investment analyst and fund commercial property. From 1999 to 2007, Andrew manager. Philip left Robert Fleming in 1982 to was a non-executive member of the British Heart found TWH Asset Management Limited (now Foundation’s Shops Committee. Mirabaud Asset Management Limited) in which he and his partners sold a controlling interest to Other appointments None Mirabaud Pereire Holdings Limited in 1991. Board Committees Audit Committee Other appointments Chief Investment Offjcer and Remuneration Committee of Mirabaud Asset Management Limited Board Committees Nomination Committee and Remuneration Committee Annual report and accounts 2015 59 LondonMetric Property Plc

  50. Leadership The Role of the Board How we divide up our responsibilities The Board is collectively responsible to its shareholders for Title Responsibilities the long-term success of the business. It seeks to achieve Chairman • Leads the Board and ensures it operates this through e fgective leadership, strategy development and Patrick Vaughan e fgectively delivery, and the management and control of its resources. • Promotes Boardroom debate and builds relationships between Executive and There is a division of responsibility between the Chairman Non-Executive Directors and Chief Executive which has been approved by the Board. The Chairman is responsible for leading the Board Chief Executive • Manages dialogue and communication and monitoring its efgectiveness and the Chief Executive, Andrew Jones with shareholders supported by the Executive Board is responsible for the day • Recommends and implements strategy to day management of the Group and the implementation approved by the Board and delivery of its agreed strategic objectives. • Day to day management of the business operations assisted by the The Chairman is responsible for ensuring a constructive Executive team relationship between Executive and Non-Executive Directors and for encouraging and fostering a culture of Boardroom Non-Executive • Constructively challenge the challenge and debate. Directors Executive Directors in determining Each of the Non-Executive Directors, other than the Charles Cayzer and implementing strategy James Dean Chairman, is considered by the Board to be independent. Alec Pelmore Committees comprise only independent Non-Executive Andrew Varley Directors, other than the Nominations Committee as Philip Watson permitted by the Code. The Board’s current composition Rosalyn Wilton meets the Code’s requirement that at least half of its members, excluding the Chairman, are independent Senior • Available as a communication channel Non-Executive Directors. Independent for shareholders if other means are not Director appropriate Charles Cayzer A balanced Board Composition Tenure Changes to the Board Under 1 year Executive 18% (2) 36% 3–6 years Board member Change 36% (4) Patrick Vaughan Appointed as Executive Chairman of the Company following the merger with Metric Property Investments Plc in 2013. Although this did not comply with Provision A.3.1 of the Code, the Board considered 1–3 years it appropriate to maintain continuity of Non-executive 46% (5) leadership and to facilitate the successful 64% combination of two businesses given his long working relationship with the newly appointed Chief Executive, Andrew Jones, and given his relationship with key Gender diversity joint venture partners. In October 2014 Female following the successful merger of the two 9% former businesses, the Chairman became a Non-Executive Director of the Company. Rosalyn Wilton Appointed to the Board and Audit Committee in March 2014, becoming Chairman of the Committee in November 2014. Male 91% Valentine Promoted to the Executive Board in Beresford June 2014. Mark Stirling Promoted to the Executive Board in June 2014. Humphrey Price Retired from the Board in March 2015. Humphrey has had a long and successful working relationship with the Executive Board, who would like to thank him for the valuable contribution he has made. 60 LondonMetric Property Plc Annual report and accounts 2015

  51. Governance framework The Board Chairman: Patrick Vaughan Comprises: 4 Executive and 7 Non-Executive Directors Role: Responsible to the shareholders for the long- term strategy, control and leadership of the Group Biographies see page 58, Business Model see page 20, Strategy in action see page 21 Board Committees Audit Remuneration Nomination Executive Committee Committee Committee Committee Chairman: Rosalyn Wilton Chairman: James Dean Chairman: Chairman: Andrew Jones Charles Cayzer Comprises: Comprises: Comprises: 4 Non-Executive Directors 4 Non-Executive Directors Comprises: 4 Executive Directors 4 Non-Executive Directors Role: Oversees Role: Determines a Role: Implementation of corporate reporting, reward structure to Role: Evaluates strategy, achievement risk management and incentivise the Executive Board appointments, of targets, day to day Governance internal control and the Directors composition, management of the external audit process e fgectiveness, succession business and diversity Audit Committee report Remuneration Nomination Strategic report see page 70 Committee report Committee report see page 2 see page 76 see page 66 Management Committees Investment Asset Management Finance Committee Committee Committee Chairman: Valentine Beresford Chairman: Mark Stirling Chairman: Martin McGann Comprises: 4 Executive Directors Comprises: 4 Executive Directors Comprises: 4 Executive Directors and senior management and senior management and senior management Role: Reviews investment and Role: Reviews value enhancing Role: Reviews budgets and divestment opportunities activities and development forecasts, achievement of targets, opportunities funding requirements and liquidity. Investment review Asset Management review Finance review see page 26 see page 32 see page 38 Board Committees The Audit and Remuneration Committees are composed entirely of Independent Non-Executive Directors. The Board has three Committees of Non-Executive Directors; The Nomination Committee includes the Chairman who the Audit, Remuneration and Nomination Committees, is not considered to be independent but his attendance each operating within defjned terms of reference which are is permitted by the Code. The Company Secretary acts reviewed annually by the Board and which are available as secretary to each Committee. The Chairman of each on written request and on the Company’s website: Committee reports the outcome of meetings to the Board. www.londonmetric.com. Annual report and accounts 2015 61 LondonMetric Property Plc

  52. Leadership continued Board and committees membership and attendance The Board has a regular schedule of meetings together with further ad hoc meetings as required to deal with transactional matters. Non-Executive Directors are encouraged to communicate directly with the Executive Directors and senior management between scheduled Board meetings, as part of each Director’s contribution to the delivery of strategy. The following table shows Directors’ attendance at Board and Committee meetings they were eligible to attend during the year: Independent Audit Remuneration Nomination Name Appointed (Y/N) Board Committee Committee Committee Chairman Patrick Vaughan 13 January 2010 N/A 3 6 (6) 2 (2) Executive Directors Andrew Jones 25 January 2013 N 6 (6) Martin McGann 13 January 2010 N 6 (6) Valentine Beresford 3 June 2014 N 5 (5) Mark Stirling 3 June 2014 N 5 (5) Non-Executive Directors Charles Cayzer 29 July 2010 Y 6 (6) 5 (5) 3 (3) 2 (2) James Dean 29 July 2010 Y 6 (6) 3 (3) Humphrey Price 1 29 July 2010 N 6 (6) 4 (4) Andrew Varley 25 January 2013 Y 6 (6) 5 (5) 3 (3) Alec Pelmore 25 January 2013 Y 6 (6) 5 (5) 2 (2) Philip Watson 25 January 2013 Y 6 (6) 3 (3) 2 (2) Rosalyn Wilton 25 March 2014 Y 6 (6) 5 (5) % Independent 2 60% 100% 100% 100% 1 Retired from Audit Committee on 18 November 2014 and from the Board on 31 March 2015 and attended all meetings eligible to attend 2 As at the date of this report 3 Provision B.1.1 of the Code regarding independence is not appropriate in relation to the Chairman Bracketed numbers indicate the number of meetings the member was eligible to attend. Board activities Board priorities in 2015/16 Day to day management of the Group is delegated to the Implementation of business objectives in line with strategy t o promote the long term success of the Company Executive Directors, subject to formal delegated authority limits. Certain matters are reserved for consideration by the full Board, which are reviewed and updated annually and Consider the revisions to the Code relating to the longer term going concern assumption and the requirement for include the following: a Viability Statement • Setting and monitoring of overall strategy • Ensuring there are adequate resources to meet objectives Continue to improve the identi fjcation, review and reporting of business risk and mitigation strategies • Approving signi fjcant property and corporate acquisitions and disposals Consider the provision of interim management statements • Approving major capital expenditure and development projects Set a base EPS target for the 2015 LTIP awards and annual • Approving interim and annual fjnancial statements bonus for the year to 31 March 2016 and dividends • Reviewing property valuations Succession planning for the Chairman • Reviewing treasury and fjnancing arrangements • Internal control and risk management Keep under review appropriateness of Remuneration policy • Reviewing corporate governance arrangements and succession planning • Evaluating the performance of the Board and Committees • Executive performance, retention and remuneration • Approval of annual budgets 62 LondonMetric Property Plc Annual report and accounts 2015

  53. All Directors are expected to attend Charles Cayzer is a Non-Executive Director The Board delegates all meetings of the Board and of the of Caledonia Investments Plc, a shareholder authority to its Committees on which they serve, and to of the Company holding a 1.96% interest as Committees to devote su ffjcient time to the Company’s at the date of this report. Charles Cayzer assist in meeting its a fgairs to enable them to fulfjl their duties himself is not a shareholder in the Company business objectives as Directors. Where Directors are unable to and the Board is satisfjed that there attend meetings, papers will be provided in are procedures in place at Caledonia advance and their comments are provided Investments to address this potential con fmict. to the Board prior to the meeting. The Board does not believe Charles Cayzer’s independence is compromised by his In addition to the scheduled meetings, the position and is satis fjed that he is able to Board held a dedicated ofg site strategy carry out his function as Senior Independent away day in March 2015 to consider the Director e fgectively. The Chairman and other development of the Group’s long term Non-Executive Directors meet regularly strategy and business model. without the Executive Directors present. The Board delegates authority to its During the year the Chairman met with the Committees to assist in meeting its business Non-Executive Directors individually and objectives and to maintain a sound system collectively to discuss their contribution, of internal control and risk management. business matters and succession planning. The Executive Committee meets monthly The outcome of these discussions is to discuss property investment/divestment, conveyed to the Executive Directors development and asset management by the Senior Independent Director. activities and the operational management The Senior Independent Director acts as of the Group. The Executive Committee an intermediary to the Executive Directors supports the Chief Executive in the for the Non-Executive Directors and Governance delivery of strategy, the achievement of shareholders as required. He is available fjnancial and operating targets and the to meet with shareholders at their assessment and management of business request to address concerns or, if other risks. There are informal meetings between communication channels fail, to resolve the Executive Directors at other times and queries raised. No such requests were they are involved in all signifjcant business received from shareholders in the year. discussions and decisions due to the size of The Senior Independent Director als o leads the organisation. the annual performance appraisal of the Chairman. The Executive Committee has established three sub Committees; the Investment Positions held by the Non-Executive Directors Committee, chaired by Valentine Beresford, are set out in their biographies on pages the Asset Management Committee, 58 to 59. On appointment they are advised chaired by Mark Stirling an d the Finance of the likely time commitment to ful fjl the Committee, chaired by Martin McGann. role. The ability of individual Directors to These Committees comprise Executive allocate suffjcient time to discharge their Directors and members of the senior responsibilities is considered as part of the management team and meet at annual evaluation process undertaken by least monthly. the Nomination Committee. The Board is satisfjed that each of the Non-Executive Non-Executive Directors Directors is able to devote suffjcient time t o the Company’s business. The Non-Executive Directors are a diverse group with a wide range of experience encompassing property , fjnance, fund management, investment and risk management and retailing. They provide a valued role by challenging aspects of executive decisions and bring independent and objective scrutiny and judgement to all matters raised and considered, ensuring that no one individual has unfettered Non-executive directors’ biographies decision making powers. see page 58 Annual report and accounts 2015 63 LondonMetric Property Plc

  54. E fgectiveness Professional development All Directors will stand Governance in action: for re-election at the Training and information updates in relation Board strategy away day forthcoming Annual to the Group’s business and regulatory General Meeting responsibilities is provided to the Directors In March 2015 the Directors and through Board brie fjng papers, reports certain key advisors held an o fg-site and seminars from advisors, presentations strategy ‘away day’ to consider and by senior executives and property visits. develop the Group’s longer term Each Director is expected to maintain his or business model and plan. It was also her professional skills and take responsibility an opportunity to address succession for identifying their individual training needs planning and development of the senior to ensure they are adequately informed management team below Board level. about the Group’s strategy, business and responsibilities. Non-Executive Directors are encouraged Information fmow to familiarise themselves with the Group’s The Chairman, together with the Company business through regular communications Secretary, ensure that the Directors receive with the Executive Directors and clear information on all relevant matters on senior management. a timely basis. Comprehensive reports and briefjng papers are circulated one week Re-election of Directors prior to Board and Committee meetings to All Directors are subject to election by the give the Directors time to thoroughly digest shareholders at the fjrst Annual General the information provided and promote an Meeting following their appointment and informed Boardroom debate. in accordance with the Code and on The Board papers contain property, the recommendation of the Nomination fjnancial and risk updates as well as other Committee all Directors will stand for specifjc papers relating to agenda items. re-election at the forthcoming AGM. The Board receives other ad hoc papers of a transactional nature at other times, circulated by e-mail, for their review and approval. Key events throughout the year June September October November December January March 2014 2014 2014 2014 2014 2015 2015 • Mark Stirling • Investor • The Chairman • Rosalyn Wilton • Investor • Externally • Humphrey Price an d Valentine perception study became a appointed presentations facilitated Board retired as a Non- Beresford undertaken by Non-Executive Chairman of and roadshows and Committee Executive Director promoted to the an independent Director of the Audit Committee, follow Half Year performance • Board strategy Executive Board research Company succeeding results evaluation away day organisation Humphrey Price • Investor on behalf of • Considered ‘Fair, presentations the Company Balanced and and roadshow Under standable’ following full year assertion results • Full review of Risk Matrix and Internal Controls 64 LondonMetric Property Plc Annual report and accounts 2015

  55. Independent advice In September 2014, an investor perception During the past fjnancial study was undertaken by an independent year the Company All Directors have access at all times to research organisation on behalf of the held meetings with 125 the advice and services of the Company Company. A select number of key investors shareholders, analysts Secretary, who is responsible for ensuring and analysts were interviewed and and potential investors that Board procedures are followed and feedback from the survey was considered that applicable rules and governance positive and consistent with other regulations are complied with. The Directors feedback received. may, in the furtherance of their duties, take Shareholders are kept informed of the independent professional advice at the Company’s progress through results expense of the Company. None of the statements and other announcements Directors sought such advice in the year. released through the London Stock Relations with shareholders Exchange. Company announcements are made available on the website a fgording Communication with investors is given very all shareholders full access to material high priority and the Company undertakes information. The website is an important regular dialogue with its shareholders, source of information for shareholders and institutional fund managers and private includes a comprehensive investor relations wealth managers and brokers. The Chief section containing all RNS announcements, Executive and Finance Director are the share price information, investor Company’s principal representatives presentations and annual reports available and hold meetings with institutional for downloading. investors, analysts, fund managers and Individual shareholders can raise questions other interested parties throughout the directly with the Company at any time year. These include results presentations, through a facility on the website and are roadshows, one to one meetings, panel Governance encouraged to participate in the Annual discussions and investor tours. The Senior General Meeting of the Company. Independent Director is available for shareholders to contact if other channels The whole Board attends and is available o f communication with the Company to answer shareholder questions at the are not available or appropriate. Company’s Annual General Meeting, whic h provides a forum for communication During the pas t fjnancial year th e Company with both private and institutional held meetings with 125 shareholders, shareholders alike. The annual report is analysts and potential investors sent to all shareholders at least 20 working predominantly as part of its full and half days before the AGM and details of the year results roadshows. The meetings resolutions to be proposed can be found comprised one to one and group meetings in the Notice of Meeting on page 136. and included investors seen a t fjve Details of the number of proxy votes for, investor conferences. against and withheld for each resolution Feedback from meetings is provided to will be disclosed at the meeting and in the the Board, together with any published AGM RNS announcement. analyst comments. Notice of Annual General Meeting see page 136 Annual report and accounts 2015 65 LondonMetric Property Plc

  56. E fgectiveness continued The main area of focus for the Committee Nomination this year has been the externally facilitated Board evaluation process which took place Committee in January 2015. report The Committee considers succession planning for Directors and other senior executive positions and reviews the leadership of the Company. It is responsible for identifying and approving candidates Charles Cayzer t o fjll Board vacancies using external search Chairman, Nomination Committee consultants where appropriate and for ensuring that the process is formal, rigorous and transparent. Recommendations on Committee membership changes are The Committee is responsible for reviewing made to the Board. the size, structure and composition On appointment, the Company arranges of the Board, including the balance a tailored induction programme for all of skills, knowledge, experience and new Directors to help them develop an independence of Board members. understanding of the business including its strategy, processes, people, assets, fjnances, risks and controls. The induction includes Achievements the provision of a detailed Company Appointment of Patrick Vaughan information pack, site visits and introductions as a Non-Executive Chairman to and meetings with Senior Management Considered the reappointment of Directors and advisors. at the 2015 AGM Principal responsibilities of the Externally facilitated Board and Committee Nomination Committee: performance evaluation in January 2015 • Review and evaluation of the size, structure and composition of the Board Meetings • Make recommendations to the Board Member Date appointed attended regarding Board and Committee Patrick Vaughan 1 November 2012 2 (2) membership changes Charles Cayzer 1 November 2012 2 (2) • Succession planning for Directors Alec Pelmore 25 January 2013 2 (2) an d other Senior Executives Philip Watson 25 January 2013 2 (2) • Identify candidates t o fjll Board Bracketed numbers indicate the number of meetings the member was vacancie s as they arise eligible to attend. • Assess the time commitment required from Non-Executive Directors • Consider the annual re-election of Directors to the Board 66 LondonMetric Property Plc Annual report and accounts 2015

  57. Composition of the Committee Diversity Gender diversity – employees Throughout the year the Committee The Nomination Committee acknowledges comprised the Chairman and three all aspects of diversity including gender, Female independent Non-Executive Directors ethnic origin, age, business skills and 41% an d was chaired by Charles Cayzer. experience throughout the Company at every level of recruitment. Male Meetings and activities during the year 59% The Board is committed to a culture that The Committee met twice during the year attracts and retains talented individuals to consider and make recommendations to deliver outstanding results and as part to the Board in respect of the following: of this it promotes diversity across a range of criteria including skills, knowledge, • Independence and the appointment experience, gender and ethnicity. of Patrick Vaughan as a Non- Gender diversity – senior management Executive Chairman All appointments to the Board and Female • Composition of the Board Senior Management team are made 30% on merit alone. The Board believes that • The results of the externally facilitated an appointment on any other basis would Board evaluation not be in the best long-term interests of • The reappointment of Directors at the the Company. 2015 AGM Male It supports the Davies Report • Its own e fgectiveness, Terms of Reference, 70% recommendations to promote greater constitution and performance female representation. It does not Succession planning consider, given the size of the Company and Board, that diversity quotas are Last year the Committee recommended Gender diversity appropriate in determining its composition Governance – directors Female the appointment of one new Non-Executive and has not set targets. However, there is 9% Director and two internally promoted an ongoing commitment to strengthen Executive Directors to the Board. female representation at Board level which will be kept under review in light Following the appointment of Patrick of the requirements for Board succession Vaughan as Non-Executive Chairman and development. and the retirement of Humphrey Price as a Non Executive Director, the Committee Male The Company support s fmexible working considered and discussed the size of 91% practices for employees on a case by the Board, the balance of skills and case basis, as utilised by 5 of the total split of Executive and Non-Executive 3 4 employees at the year end excluding Directors. It concluded that the remaining Non-Executive Directors. Non-Executive Directors had the necessary complement of skills to ensure there was appropriate debate and challenge at Board meetings and the composition me t the requirements of the Code. Annual report and accounts 2015 67 LondonMetric Property Plc

  58. E fgectiveness continued Board performance and evaluation The Board commissioned Law The process involved the Directors and Last year the Board committed to Debenture to facilitate Company Secretary completing an online undertake an externally facilitated its performance review questionnaire followed by a series of one evaluation of its performance and of its in January 2015 to one interviews and the observation of Committees to ensure each continues a full Board meeting. Th e fjndings were t o operate e fgectively. fed back to the Board and were tabled The Board commissioned Law Debenture to at the Nomination Committee and Board facilitate its performance review in January meetings in March 2015. 2015 following a formal tender process The questionnaire and subsequent in which three fjrms were short listed and discussions centred around the components made written submissions and presentations of good governance and re fmected the to the Chairman and Financial Director. following key themes and fjndings: Law Debenture had no former connection with the Company. The Nomination Committee considered the submissions and recommended the appointment of Law Debenture t o the Board. Theme Findings Board administration Agenda, time allocation, • Agendas prioritise the right topics provision of information, • Suffjcient preparation time schedule of meetings, • Comprehensive, thorough and succinct Board papers unexpected business • Excellent response to ad hoc transactional issues dealt wit h outside of scheduled meetings Board composition Committees, balance • Appropriate size and mix of skills of skills, diversity, size, • Future consideration of appropriate skills for changing appointment process, nature of business contribution of directors, • Long working relationships of Directors succession, tenure • Su ffjcient diversity, committed to promoting diversity a t all levels of recruitment Style of the Board Challenge, balance • High degree of mutual respect amongst Board members of power, opinions of • No inhibitions to individual contributions Directors, issues addressed, • Issues tackled head on leadership of the • Successful and constructive challenge by Non-Executive Chairman Directors of Executive proposals, viewed in a positive light • Appropriate allocation of time to key issues • Good facilitation and summation of Boardroom debate by Chairman Relationship with management Contact with and support • Informal meetings with the Executive team and senior from management team, management are encouraged and seen as helpful communication between • Good governance on formal decision making meetings • Chairman keeps abreast of developments between Board meetings • Board is updated on regulatory issues Relationships with shareholders • Regular and open communications with shareholders • Chief Executive devotes a considerable amount of time to ensuring shareholders are engaged and informed 68 LondonMetric Property Plc Annual report and accounts 2015

  59. Overall the report produced by Law Re-election of Directors Overall the report Debenture judged the Board to be well produced by Law Following the Board evaluation and led and administered with the timely Debenture judged the appraisal process the Committee delivery of information and the necessary Board to be well led concluded that each of the Directors complementary skills required to monitor and administered seeking re-election continues to make an performance, challenge management, e fgective contribution to the Board and promote debate and develop strategy. has the necessary skills, knowledge and The Chairman was commended for good experience to enable them to discharge leadership both in and out of meetings, for their duties properly. ensuring all Board members contributed The Committee specifjcally considers the to discussions and e fgectively summarising time commitment required and other debate and decisions. The atmosphere in external appointments and commitments Board meetings was considered respectfully they already have. Before taking on any constructive and appropriately challenging additional external commitments Directors of Executive proposals. must seek prior agreement of the Board The Directors were unanimous in their to ensure possible confmicts of interest are view that the Board was operating identifjed and to confjrm they will continue efgectively, was the right size and had the to have su ffjcient time available to devote required balance of skills and expertise t o the business of the Company. and operated within a climate of trust The Board, following the advice of the and transparency. Committee, recommends the re-election Potential areas for consideration in of each Director at the forthcoming AGM. 2015/16 highlighted in the report included the following: Governance • Succession planning for the Chairman • Consideration of skills required for new appointments given the changing nature Charles Cayzer of the business and customer base Chairman, Nomination Committee • Continue to promote diversity at all levels 2 June 2015 • Consider the ongoing independence o f Non-Executive Directors In addition to the Board evaluation, the Chairman’s performance review was undertaken by the Senior Independent Director who concluded that the Chairman’s leadership was of a high standard. The Board is committed to undertake an annual internal review of its performance and an externally facilitated review every three years. Annual report and accounts 2015 69 LondonMetric Property Plc

  60. Accountability This year the Committee has heightened its Audit review of the procedures in place to ensure that the Annual Report and Accounts is fair, Committee balanced and understandable and has report considered the amendments to the Code governing the ongoing monitoring and management of risk which will become mandatory next year. The Board asked the Committee to advise Rosalyn Wilton on the statement by the Directors that Chairman of Audit Committee the annual report, when read as a whole, is fair, balanced and understandable and provides the requisite information for shareholders to assess the Group’s The role of the Audit Committee is to monitor performance and business strategy. and report to the Board on fjnancial reporting, the To provide additional support to the Board system of internal controls and risk management in making this statement the Committee and the performance, independence and monitored an enhanced review and e fgectiveness of the external audit process. veri fjcation process of the Annual Report The Committee follows an annual programme and Accounts undertaken by senior to ensure it gives thorough consideration to management and provided confjrmation matters of particular importance. to the Board that this process was both followed and e fgective. Further details of this process are provided on page 73. Achievements The Committee was satisfjed that taken as Appointed Rosalyn Wilton as Chairman of the a whole the 2015 report is fair, balanced Committee in November 2014 following the and understandable and con fjrmed this retirement of Humphrey Price, the former Chairman t o the Board, whose statement in this regard Heightened its review of the procedures in place is set out on page 94. to ensure that the Annual Report is fair, balanced and understandable Membership Considered amendments to the Code governing The Committee currently comprises four the ongoing monitoring and management of risk Non-Executive Directors and is chaired by Rosalyn Wilton. Humphrey Price was Members of Committee an additional member and chaired the Committee until his resignation in Meetings November 2014. Members Date appointed attended Humphrey Price 1 1 October 2010 4 (4) Members have no day to day involvement with the Company or links with the Charles Cayzer 1 October 2010 5 (5) external auditor. Andrew Varley 25 January 2013 5 (5) The Board is satis fjed that Rosalyn Wilton Alec Pelmore 25 January 2013 5 (5) brings recent and relevant fjnancial Rosalyn Wilton 25 March 2014 5 (5) experience as required by the UK Corporate 1 Retired on 18 November 2014 Governance code as Chairman of the Risk Bracketed numbers indicate the number of meetings the member Committee at AXA UK Limited and former wa s eligible to attend. Remuneration Committee Chairman of Optos Plc. Humphrey Price was the nominated member during his time as Chairman of the Committee. Biographies of the Committee members which set out the relevant knowledge and experience they bring can be found on pages 58 to 59. Biographies of Committee members see page 58 Directors’ responsibilities statement see page 94 70 LondonMetric Property Plc Annual report and accounts 2015

  61. Activities during the year The Committee met fjve times last year, with During the year, the work undertaken by the Committee has included the following: meetings aligned to the • Considered and discussed with the • Reviewed the performance of the Company’s fjnancial external auditors at the audit planning external auditor and recommended their reporting timetable meeting the key accounting treatments reappointment to the Board and signifjcant reporting judgements • Monitored the level of non audit fees and i n advance of the preparation of interim the scope of non audit services provided and annual results in the year • Reviewed interim and annua l fjnancial • Considered the need for an internal statements prior to submission to the audit function and concluded it was Board, including consideration of key unnecessary at present, given the accounting issues and areas of signifjcant size and complexity of the business, judgement, compliance with statutory but agreed to keep the matter under obligations and accounting standards regular review and consistency throughout the report • Reviewed and challenged the Group’s • Reviewed management systems in internal controls and risk management place to ensure the integrity of the systems, whistle-blowing arrangements fjnancial information and procedures for detecting and • Reviewed the processes undertaken to preventing fraud and bribery ensure that the Board is able to confjrm • Considered the appropriateness of that the annual fjnancial statements are the going concern assumption “fair, balanced and understandable” • Reviewed its own e fgectiveness, Terms of • Met the independent property valuers to Reference, constitution and performance discuss the interim and annual portfolio Governance • Reviewed and approved the Audit valuations on a property by property basis Committee Report • Assessed the e fgectiveness of the external auditor which included reviewing their independence, objectivity, terms of engagement, the scope of their audit, remuneration, tenure and efgectiveness o f the audit process Meetings The May and November meetings are scheduled to precede the approval and The Committee me t fjve times last year, issue of the full and half yea r fjnancial with meetings aligned to the Company’s reports. Separate meetings are held, without fjnancial reporting timetable. Meetings are management present, with the Company’s attended by the Committee members and, property valuers to challenge the valuation by invitation, the Group’s external auditor, process and review their independence. independent property valuers (CBRE Ltd At the March meeting the Committee and Savills Advisory Services Limited), the reviewed risk management and internal Finance Director and senior management. control processes and considered the Time is allocated for the Committee to meet year-end audit plan. the external auditor and property valuers The Committee is satisfjed that it receives without management present. In addition, suffjcient, reliable and timely information the Committee Chairman has separate from management to allow it to fulfjl an d ad hoc meetings with the audit partner. its obligations. Members’ attendance at meetings is set out in the table on page 70. Audit Committee attendance se e page 70 Annual report and accounts 2015 71 LondonMetric Property Plc

  62. Accountability continued Financial reporting and (2) Property transactions The Committee signifjcant judgements monitors the integrity of Signifjcant property acquisitions and the fjnancial information disposals were reviewed to the extent that The Committee monitors the integrity of the published in the interim there were unusual terms and conditions of fjnancial information published in the interim and annual statements judgement in relation to timing. and annual statements and considers and considers the the extent to which suitable accounting The accounting treatment for corporate extent to which policies have been adopted, presented acquisitions was considered to ensure suitable accounting and disclosed. It pays particular attention to compliance with IFRS 3 (Business policies have been matters it considers to be important by virtue Combinations) in relation to the purchase adopted, presented of their size, complexity, level of judgement of the Eddie Stobart Distribution Unit at and disclosed and potential impact on the fjnancial Goresbrook Park in Dagenham and the statements. The signifjcant areas of focus Newark Distribution Unit and the sale of considered by the Committee, discussed On e Carter Lane in London. The transactions with the external auditor and addressed were considered to be property acquisitions during the year were as follows: and disposals in accordance with IFRS 3. (1) Property valuations (3) Investments in joint ventures All of the Group’s investment properties Following the adoption of new and are externally valued by independent revised accounting standards IFRS 10 property valuers. The property valuation is Consolidated Financial Statements, a critical and signifjcant part of the Group’s IFRS 11 Joint Arrangements and IFRS 12 reported performance and is therefore a Disclosure of Interests in Other Entities, key area of focus. Property valuations are the Committee considered the existing inherently subjective and require signifjcant accounting treatment for the Group’s joint judgement. The Committee met twice with venture arrangements and concluded the property valuers without management that the equity method of accounting present to discuss the interim and annual remained appropriate given the degree of valuations and to assess the integrity of joint control and in fmuence demonstrated the valuation process. The key judgements by the investment partners within each applied to individual valuations and any arrangement at Board meetings and issues raised with management were throughout the decision making process. considered and discussed. (4) Going concern The ERV growth and yield compression The Committee reviewed the assumptions on individual buildings were appropriateness of the going concern challenged and supporting market assumption in the preparation of these evidence was provided to enable results. It considered the Group’s three‑ the Committee to conclude that the year pro fjt and cas h fmow forecasts, the assumptions applied were appropriate. availability of committed debt facilities They also discussed current market and anticipated compliance with lenders’ conditions and recent market transactions fjnancial covenants. All of this information that had an impact on the valuation. is presented to the Board at each meeting As part of their audit work, Deloitte use as part of the Finance Director’s review. valuation specialists and also met with the In light of this review, the Committee made valuers without management present. a recommendation to the Board that it was An open dialogue and exchange of appropriate for the fjnancial statements to information between the independent be prepared on a going concern basis. advisors took place in the year before the publication of both the interim and annual accounts. A summary of this review is provided as part of their report to the Audit Committee. 72 LondonMetric Property Plc Annual report and accounts 2015

  63. (5) Revenue recognition Risk Management and Internal controls The Committee is The Committee considered the timing of satisfjed that the key The Board is responsible for establishing recognising rental income arising on assets fjnancial judgements and maintaining the Group’s system of risk under development and concluded that and estimates have management and internal control and income is appropriately recognised on been appropriately and for ensuring risk is e fgectively managed. completion of each development phase. adequately addressed It recognises that efgective risk management The Group is currently building a distribution by the Executive is critical to the achievement of the Group’s warehouse in Thrapston and a retail park at Directors, reviewed by strategic objectives. Kirkstall, Leeds, both of which were under the external auditor The principal risks and uncertainties development at the year-end and as such and reported in these identifjed by the Board and the processes no rental income has been re fmected in fjnancial statements in place to manage and mitigate such risks these fjnancial statements. are summarised in the Risk Management The Group is funding a development in section on page 43. Warrington that accrues a return throughout The system is designed to give the Board the development phase which has been confjdence that the risks are managed re fmected as interest receivable. or mitigated as far as possible. However, A number of other judgements made it should be noted that no system can by management were considered eliminate the risk of failure to achieve appropriate, including the recoverability the Group’s objectives entirely and can o f fjnancial assets and the presentation only provide reasonable but not absolute of recurring and exceptional items in the assurance against material mis-statement income statement. or loss. Management confjrmed that they were The key elements of the internal control no t aware of any material mis-statements framework are as follows: Governance and the auditor con fjrmed they had not • A defjned schedule of matters reserved found any material mis-statements in the fo r the Board’s attention course o f their work. • A comprehensive system o f fjnancial After reviewing reports from management budgeting and forecasting and following its discussions with the auditor • Short-term cas h fmow forecasting that and valuers, the Committee is satis fjed that is updated, reviewed and considered the key fjnancial judgements and estimates weekly in light of investment and have been appropriately and adequately development opportunities addressed by the Executive Directors, • A formal whistle‑blowing policy reviewed by the external auditor and • An organisational structure with clearly reported in these fjnancial statements. de fjned roles, responsibilities and limits The Committee is also satisfjed that the of authority that enable e fgective and processes used for determining the value e ffjcient decision making of the assets and liabilities have been • Close involvement of the Executive appropriately reviewed, challenged and Directors in day to day operations are suffjciently robust. including regular meetings with senior management on all operational aspects of the business • Monthly meetings of the Executive, Investment, Asset Management and Finance Committees, which assess and monitor strategic and operational risk • The maintenance of a risk register and a fjnancial reporting procedures memorandum, both of which identify key fjnancial and other internal controls • A documented appraisal and approval process for all signifjcant capital expenditure Risk management se e page 43 Annual report and accounts 2015 73 LondonMetric Property Plc

  64. Accountability continued The Board has delegated responsibility Fair, balanced and understandable The Committee for reviewing the e fgectiveness of the risk has considered the At the request of the Board, the Audit management framework and internal proposed amendments Committee considered whether the control to the Audit Committee. to the Code which will 2015 Annual Report and Accounts was become mandatory The Company has established processes fair, balanced and understandable next year and procedures to identify, assess and and whether it provided the necessary manage the signifjcant risks it faces. information for shareholders to assess the The Executive Directors and Senior Group’s performance, business model and Management review and document the strategy. The Audit Committee is satisfjed key strategic, economic, transactional and that the Annual Report and Accounts fjnancial risks facing the business in a risk meet this requirement. In reaching this register which identifjes the likelihood and decision the Committee assessed the well impact of the risk along with movements in established and robust reporting process the Group’s exposure to the risk since the last which consisted of the following: review. The key controls in place to manage • Clear guidance was issued to all and minimise such risks are reviewed contributors at the start of the process and documented. • Regulatory updates were provided by and The Committee conducted its review discussed with the external auditor as part in March 2015 and considered reports of a technical briefjng workshop attended provided by the Finance Director, senior by relevant stafg in January management and the external auditor. • Individual sections of the annual report were drafted by appropriate senior A detailed internal control evaluation management, who met regularly to questionnaire and risk assessment matrix review consistency was completed by management and reviewed by the Committee. The risk register • Draft sections were reviewed by the identifjed key risks and the management relevant Executive Directors who and operational framework in place to were closely involved in the initial address, monitor and minimise the key risks. drafting process The Committee reported their fjndings to • A full verifjcation exercise to ensure factual the Board. accuracy was undertaken The requirement for a dedicated internal • The fjnal draft report was reviewed by control function was reviewed by the Audit the Audit Committee and discussed Committee during the year and was not felt with the Finance Director and Senior to be necessary or appropriate given the Management before being presented size and structure of the Group and close fo r Board approval day to day involvement of the Executive • Final sign o fg was given by the Board Directors. This is kept under regular review. of Directors The Audit Committee is satisfjed that there are no material weaknesses in the Group’s internal control structure and an efgective risk management system is in place. The Committee has considered the proposed amendments to the Code which will become mandatory next year relating to the monitoring of risk and has recommended the introduction of a standing agenda item at future Board meetings to consider the principal risks facing the business and review the risk dashboard. 7 4 LondonMetric Property Plc Annual report and accounts 2015

  65. External audit Audit and non-audit fees to Deloitte The relationship with the auditor Deloitte LLP was appointed as external 2015 2014 Year to 31 March £000 £000 works well, the audit auditor following a formal tender process in process is e fgective 2013. Current UK regulations require rotation Audit fees including relate d assurance services 203 183 and the auditor of the lead audit partner ever y fjve years remains independent and a formal tender of the auditor every Non-audit fees 2 20 and objective te n years. The Committee is supportive of Total 185 223 these regulatory requirements. The Company’s policy governing the The Committee has assessed the provision of non-audit services considers performance, independence and each appointment on a case by case objectivity of the external auditor through basis. Taxation, valuation, due diligence discussions with the Finance Director and and remuneration services are generally senior management team and through provided by other agencies but other a review of the audit deliverables. advisory services, including but not In making this assessment the Committee limited to taxation, REIT compliance and considers the quali fjcations, expertise regulatory and shareholder circulars, may and resources of the audit partner and be undertaken by the external auditor given team as well as the quality of the audit their knowledge of the Group’s business. deliverables. It reviewed the extent to The Executive Directors can authorise an which the audit plan was met, the level of engagement up to a fee limit of £100,000, independent challenge provided and the above which the engagement is referred depth of understanding and review of key to the Audit Committee for review and accounting judgements. The Committee approval. Deloitte LLP has con fjrmed to also considered the interaction with senior the Audit Committee that they remain Governance management in the audit process, focusing independent and have maintained internal on the early identifjcation and resolution safeguards to ensure the objectivity of the of issues and judgements and the quality engagement partner and audit sta fg is and timely provision of draft accounts for not impaired. review. It recognises the importance of Having undertaken its review, in th e opinion auditor objectivity and has reviewed the of the Audit Committee, the relationship level of non audit fees as noted in the table with the auditor works well, the audit below to ensure their independence was process is e fgective and the auditor not compromised. It took into account the remains independent and objective. fact that taxation services and advice is It has recommended to the Board that a provided separately by PwC and corporate resolution is proposed at the forthcoming due diligence work is undertaken by AGM to re-appoint Deloitte LLP as the BDO LLP. Company’s and Group’s auditor. Rosalyn Wilton Chairman of the Audit Committee 2 June 2015 Annual report and accounts 2015 75 LondonMetric Property Plc

  66. Remuneration Total remuneration for Executive Directors Remuneration Salary Ben efjts Pension Bonus Total £000 £000 £000 £000 £000 Committee Patrick Vaughan 203 20 31 161 415 Report Andrew Jones 490 24 74 579 1,167 Martin McGann 322 27 48 317 714 Valentine Beresford 336 24 50 334 744 James Dean Mark Stirling 336 24 50 334 744 Chairman of the Remuneration Committee For further details see page 83 The role of the Remuneration Committee is to determine and maintain a fair reward structure Annual bonus outcom e – fjnancial targets that incentivises Directors to deliver the Group’s strategic objectives whilst maintaining stability Payout Actual target Performance % awarded in the management of its long-term business. 25% 50% 100% Adjusted EPRA EPS 7.06p 7.13p 7.25p 7.45p 100% Members of Committee TPR 16.6% 18.3% 19.9% 17.5% 39% Meetings For further details Member Date appointed attended see page 83 James Dean 1 October 2010 3 (3) Charles Cayzer 1 October 2010 3 (3) Philip Watson 25 January 2013 3 (3) Annual bonus outcome – bonus payments Andrew Varley 30 May 2013 3 (3) Bracketed numbers indicate the number of meetings the member was Bonus % of Bonus % of Total bonus eligible to attend. maximum salary £000 Patrick Vaughan 78% 78% 161 Andrew Jones 78% 118% 579 Martin McGann 78% 98% 317 Valentine Beresford 78% 98% 334 Mark Stirling 78% 98% 334 For further details see page 85 LTIPs awarded Face value of award Number of shares £000 Andrew Jones 575,102 787 Martin McGann 294,852 404 Valentine Beresford 310,491 425 Mark Stirling 310,491 425 For further details see page 85 76 LondonMetric Property Plc Annual report and accounts 2015

  67. Chairman’s introduction Shareholders are starting to see the bene fjts of the Group’s repositioning away from Last year for th e fjrst time under the new o ffjces and Central London residential into regulations on Directors’ remuneration, the retailer-led distribution sector which has the Company’s remuneration policy led to a strong growth in earnings. Non core which sets out the framework for executive assets have been divested as well as assets remuneration was tabled for approval from the core retail portfolio where initiatives by shareholders at the AGM in July 2014 have completed to take advantage of and received 99% of votes in favour of strong liquidity in the out of town retail sector. the proposals. Sales proceeds have been recycled into There are no changes proposed to the new investment opportunities in core sectors policy for the year ahead. and through the development pipeline. This strong performance has been taken Overview of Policy into account when considering the variable A summary of the policy table is set out on elements of remuneration. The Committee pages 78-81 and the full policy is available has calculated annual bonuses for the on the Company’s website. Executive Directors to be at 78% of their respective maximum levels. The overriding objective is to operate a fair and transparent remuneration policy which Delivery of long-term growth in shareholder motivates and retains individuals of the value is rewarded through the Group’s LTIP highest calibre and rewards the delivery of arrangements and the Executive Directors the Group’s key strategic priorities, long-term already hold and are encouraged to growth and attractive shareholder returns. retain signi fjcant shareholdings to align thei r interests with those of shareholders The principles which underpin the Governance (see table on page 87. LTIP awards over Company’s Remuneration Policy ensure 1,490,936 shares were granted to the tha t Executive Directors’ remuneration: Executive Directors in the year. None of • Is aligned to the business strategy and the LTIP awards or deferred bonus shares achievement of business goals were due to vest in the year under review. • Is aligned with the interests of shareholders The Chairman became a Non-Executive by encouraging high levels of Director on 1 October 2014 and his share ownership remuneration was reduced to a fee of • Attracts, motivates and retains high £320,000 per annum , fjxed to 31 March calibre individuals 2016. His bonus in the year relates to his • Is competitive in relation to other performance in an executive capacity comparable property companies i n th e fjrst six months of the year. • Is set in the context of pay and Implementation of policy for 2016 employment conditions of The Committee approved salary increases other employees of 2% for the Executive Directors, e fgective Performance during 2015 from 1 June 2015 which are lower than the increases for employees generally. This has been another successful year for the The Annual Remuneration Report which Company with growth in the key strategic follows on pages 82 to 90 is subject to metrics of EPRA earnings and EPRA net an advisory vote at the 2015 Annual asset value. EPRA earnings per share has General Meeting. increased by 57% to 6.6p and EPRA NAV per share by 16% to 140.6p. Group like-for-like net rental income increased by 2.9% and the Group’s total property return of 17.5% outperformed the IPD Quarterly Universe James Dean Index reweighted to the Group’s core Chairman assets of 16.6% by 0.9%. 2 June 2015 Annual report and accounts 2015 77 LondonMetric Property Plc

  68. Remuneration continued Summary of Remuneration policy It should be noted that the Chairman ceased to be executive on 1 October 2014, at which time he became The remuneration policy for the Group was approved by a Non-Executive Chairman. th e shareholders at the 2014 AGM. There have been no The full report is available on the Company’s website at changes to the policy this year. For information purposes www.londonmetric.com. only a summary of the Remuneration Policy is represented with changes made to re fmect page references and irrelevant prior year information. Executive Directors’ remuneration Base salary Purpose and link Provide a competitive level o f fjxed pay to attract and retain Directors of the required calibre to deliver to strategy th e Group’s strategy. Level of pay re fmects individuals’ skills, seniority and experience and complexity of the role. Operation Normally reviewed annually with changes e fgective from 1 June, with reference to in fmation, responsibilities, performance and market rates. In determining the base salary, consideration is given to pay increases for other employees and for other comparable property companies. Maximum The Committee considers average wage increases across the Group, prevailing rates of infmation, the opportunity Directors’ development, performance and role, and comparable market data. In normal circumstances the Directors’ salaries will not increase by more than the range o fgered to the wider workforce. However, larger increases may be ofgered if there is a material change in the size and responsibilities of the role (which covers signi fjcant changes in Group size and/or complexity) or if it is necessary to remain competitive to retain a Director. Performance The Directors are subject to an annual performance assessment, the outcome of which is taken account measures of in setting base salaries. Annual bonus Purpose and link Incentivise the achievement of annual fjnancial targets consistent with the Group’s business plan for the to strategy relevant fjnancial year with particular focus on total property return (TPR) and EPRA earnings per share as well as the delivery of agreed personal objectives. Partial award in shares aligns interests with shareholders. Operation Annual performance targets are set by the Committee at the start of the fjnancial year linked to the Group’s long-term strategy of growth in EPRA earnings per share and TPR. At least half of the bonus will be linked to the key property and fjnancial metrics. Non fjnancial targets are set to measure individual personal performance and contribution to the achievement of portfolio management initiatives and other operational management objectives. The annual bonuses for the Chief Executive and other Executive Directors will be paid 50% in cash and 50% in deferred shares, which will vest in three equal instalments over three years and will be subject to continued employment, save as in the leaver circumstances described in the Payment for loss of o ffjce section of this policy. The bonus for the Executive Chairman will be paid 100% in cash due to his existing substantial shareholding in the Group. No further performance conditions apply and dividend equivalents are paid out at the end of each vesting period. The Committee has the discretion to exercise standard clawback provisions to share-based elements o f the bonus in the event of gross misconduct or material mis-statement in the accounts. Maximum The maximum bonus limit is capped at 200% of base salary. Within this limit, the following individual limits opportunity currently apply: • 100% of salary for the Executive Chairman role • 150% of salary for the Chief Executive • 125% of salary for the other Executive Directors If the Committee wishes to increase these within the maximum bonus limit, then it woul d fjrst consult with leading shareholders and their representative bodies. Performance The Committee will set challenging annual targets consistent with the Group’s business strategy that are measures appropriately stretching, but achievable. Performance is assessed against target fjnancial and non fjnancial measures which may vary each year depending on the annual priorities of the business. At least half of the bonus payment is subject to fjnancial and/or property performance targets. There is no payment in respect of TPR if it is negative. Th e Committee retains discretion to amend the vesting level where it considers it to be appropriate but not so as to exceed the maximum bonus potential. 78 LondonMetric Property Plc Annual report and accounts 2015

  69. Long-term incentives Purpose and Incentivise and reward the delivery of long-term Group performance and sustained growth in line with link to strategy business strategy, thereby building a shareholding in the Group and aligning Directors’ interests with shareholders’. Operation The LTIP rules were approved by the shareholders at the 2013 AGM. Awards made are discretionary and vesting is dependent upon the achievement of performance conditions over three years starting at the beginning of th e fjnancial year in which the award is made. If employment ceases during the vesting period, awards will normally lapse, save in the leaver circumstances as described in the Payment for loss of o ffjce section of this policy. Awards granted are subject to clawback conditions in the event of gross misconduct or material mis-statement in the accounts. Awards include dividend equivalent (in cash or shares) in lieu of dividends forgone between the day o f grant and the vesting of the award based on the number of shares which have vested. Maximum Maximum overall limit on LTIP awards of 200% of salary. opportunity Within this limit, the following current individual caps apply: • 175% of basic salary for the Chief Executive • 140% of basic salary for other Executive Directors. If the Committee wishes to increase these within the maximum policy limit then it woul d fjrst consult with leading shareholders and their representative bodies The Chairman has a very signifjcant shareholding in the Company and will not receive awards under the LTIP. Performance The Committee will review the appropriateness of performance measures on an annual basis and set measures challenging targets consistent with the business strategy. This review may result in changes to weightings or the introduction of new measures which are more closely aligned to the Group’s business strategy at the time. At present, two measures apply as follows: 75% of any award is subject to a total shareholder return (TSR) exceeding the index of the FTSE 350 Real Estate Companies TSR and 25% of any award is on the basis of EPRA EPS growth versus RPI. The Committee retains the discretion to amend the performance conditions Governance and/or weightings of each of the future awards. Pension Purpose and link Provide a competitive post-retirement benefjt to attract and retain individuals. to strategy Operation The pension allowance is a 15% monthly contribution to the Executive Director’s individual personal pension plan or taken as a cash equivalent. Salary sacrifjce arrangements can apply. Maximum The maximum contribution is 15% of salary. No element other than base salary is pensionable. opportunity Performance None. measures Benefjts Purpose and link Provide a comprehensive and competitive benefjt package to aid recruitment and the retention of high to strategy quality executives. Operation Each Executive Director receives the following: • Car allowance • Private medical insurance • Life insurance • Permanent health insurance The Committee may wish to o fger Executive Directors other bene fjts on broadly similar terms as othe r employees. Maximum Car allowance is £20,000 per annum for each Executive Director. opportunity Other bene fjts are provided at the market rate and therefore the cost will vary from year to year based o n the cost from third party providers (e.g. re fmecting changes in insurance premiums). Performance None. measures Annual report and accounts 2015 79 LondonMetric Property Plc

  70. Remuneration continued Non-Executive Directors’ remuneration Fees and bene fjts Purpose and link To attract and retain suitably qualifjed Non-Executive Directors by ensuring fees are competitive. to strategy Non-Executive Directors are not eligible to receive benefjts other than travel, hospitality related or othe r incidental bene fjts linked to the performance of their duties as a Director. Operation Normally, fees payable are reviewed annually by the Board and re fmect the time commitment an d responsibility taken by them. Where appropriate, the Board considers fees paid by comparative companies of similar scale. Maximum Increases may be greater than those of Company employees in a particular year (in percentage opportunity terms) given the periodic nature of increases and changes in responsibilities or time commitments. The maximum level of fees set out in the Articles of Association for Non-Executive Directors is currently £1,000,000 per annum. Notes: The Committee will operate the Company’s incentive plans according to their respective rules and consistent with normal market practice, the Listing Rules and HMRC rules where relevant, includin g fmexibility in a number of regards. These include making awards and setting performance criteria each year, dealing with leavers, adjustments to awards and performance criteria following acquisitions, disposals, changes in share capital and to take account of the impact of other M&A activity. The Committee also retains discretion within the policy to adjust the targets, set di fgerent measures and/or alter weightings for the annual bonus plan and, in exceptional circumstances, under the rules of the long-term incentive plan to adjust targets to ensure that the awards ful fjl their original purposes. All assessments of performance are ultimately subject to the Committee’s judgement. Any discretion exercised (and the rationale) will be disclosed in the annual remuneration report. Recruitment remuneration arrangements The maximum level of ongoing variable remuneration granted to newly appointed Directors would be in line The Committee will seek to apply the same remuneration with the existing level of variable remuneration granted policy and principles when setting the remuneration to the current Executive Directors. Depending on the timing package fo r a new Executive Director as listed in the policy and nature of the appointment, the Committee may wish table on pages 78 to 79. to set difgerent annual bonus performance measures and Salary will be set at a level appropriate to the role, the targets to those of current Executive Directors, although this experience of the Director being appointed and their will only be in respect of the bonus year in which he/she current salary, and may initially be set below the perceived is appointed. market rate, with phased multi-year increases (which may The emphasis on linking pay with performance through be above those ofgered to wider employees) to bring it into the Company’s LTIP will continue so as to align the Directors’ line with the market subject to their continued development and shareholders’ interests. in the role. Ongoing bene fjts and pension provision will be no more than that o fgered to Executive Directors. In the case of an internal appointment, any pre-existing remuneration commitments would be honoured in The Committee may make awards on hiring an external accordance with their terms. Otherwise the policy will candidate to buy out remuneration packages forfeited be consistent with that for external appointees. on leaving a previous employer. This may take the form of cash and/or share awards. The maximum payment under New Non-Executive Directors will be appointed through any such arrangement, which would be in addition to the letters of appointment and fees set at a competitive market normal variable remuneration, should be no more than level and in line with the other existing Non-Executive the Committee considers is required to provide reasonable Directors. Letters of appointment are normally for an initial compensation to the incoming Director and would not term of three years and are subject to a notice period of exceed an estimate of the expected value being forfeited, three months by either party. taking into account the time period to expected vesting and any relevant performance criteria. The Committee may therefore rely on exemption 9.4.2 of the Listing Rules which allow for the grant of awards to facilitate, in exceptional circumstances, the recruitment of a Director. If an external appointment requires a Director to relocate, a relocation payment can be paid at the discretion of the Committee which it feels is reasonable and appropriate. 80 LondonMetric Property Plc Annual report and accounts 2015

  71. Service contracts and payment for loss of o ffjce Shareholding guidelines The service contracts for the Executive Directors were The remuneration policy places signi fjcant importance reviewed and revised following the merger in 2013. on aligning the long-term interests of shareholders with Service contracts are terminable by either party with those of management by long-term incentives and share noti ce of 12 months. The Committee considers this awards. The share ownership guidelines for the Executive appropriate for all existing and newly appointed Directors. Directors encourage them to build up a shareholding in the Company over a fjve-year period equivalent t o at least four Provision for payments on termination are contained years’ salary. in the Directors’ service contracts which stipulate that compensation is based on what would be earned by Other directorships way of salary, pension entitlement and other contractual bene fjts over the notice period. Non-Executive Directors’ Executive Directors are permitted to accept external, appointments are normally for an initial three-year non-executive appointments with the prior approval of term and may be terminated on three months’ notice the Board where such appointments are not considered without compensation. to have an adverse impact on their role within the Group. Fees earned may be retained by the Director. There were The Committee will exercise discretion when calculating no new appointments in the year. Andrew Jones is a Non termination payments and will take into consideration Executive Director of Unite Plc and earned fees of £43,275 individual and Group performance, mitigation of loss in the year to 31 March 2015. an d the length of service undertaken. It believes discretion on such payments is required to recruit and retain the highest calibre Directors. If a claim is made against the Group in relation to a termination (e.g. for unfair dismissal), the Committee retains the right to make an appropriate payment in settlement of such claims as considered in the best interests of the Governance Group. Additional payments in connection with any statutory entitlements (e.g. in relation to redundancy), departing Directors’ legal fees and out placement services may be made as the Committee deems reasonable and as required. If the departing Director is deemed a “good leaver”, i.e. if he or she dies or leaves employment through illness, injury or disability, retirement, sale of the Company, or for any other reason approved by the Committee, a discretionary bonus may be payable for the period worked, subject to the achievements of the relevant performance condition. Deferred shares which have not vested shall vest although the vesting of share awards under the Group’s LTIP is not automatic and the Committee would retain discretion to allow partial vesting depending on the extent to which performance conditions had been met and the length of time the awards had been held. Annual report and accounts 2015 81 LondonMetric Property Plc

  72. Remuneration continued Annual remuneration report matters. For th e fjnancial year under review, total fees paid to New Bridge Street were £39,265 (including design, Set out below is the Annual Remuneration Report for the operation and administration of remuneration policy). year ending 31 March 2015 which provides details of how No Executive Director is involved in the determination the remuneration policy was applied. It is subject to an of his own remuneration and fees for Non-Executives advisory vote at the forthcoming AGM and complies are determined by the Board as a whole. with U K Corporate Governance Code, Listing Rules and The Company Secretary acts as secretary to the the Large and Medium Sized Companies and Groups Committee and the Chief Executive and Finance Director (Accounts and Reports) Regulations. attend meetings by invitation but not meetings at which their own pay is being discussed. The role of the Remuneration Committee The Chairman reports to the Board on proceedings The Committee determines Directors’ remuneration in and outcomes following each Committee meeting. accordance with the approved policy and its terms The Committee met on three occasions during the year. of reference, which are reviewed annually by the Board and are available on the Company’s website: Activities during the year www.londonmetric.com. The main activities of the Committee during the year and The Committee’s responsibilities include the following: to the date of this report were as follows: • Setting and reviewing the Group’s overall remuneration • Reviewed the remuneration policy set last year to ensure policy and strategy no changes were required • Determining and reviewing individual • Reviewed emerging best practice with remuneration remuneration packages advisor • Determining and reviewing the rules for the Long- • Approved Executive Directors’ share awards under the Term Incentive Plan (LTIP) and Deferred Bonus LTIP following the announcement of the Company’s results Plan arrangements for the year ended 31 March 2014. • Approving salaries, bonuses and share awards for the • Set a base EPS target for the 2014 LTIP awards and annual Executive Directors bonus for the year to 31 March 2015 • Assessed the performance of Executive Directors against The Board recognises that it is ultimately accountable targets set and determined annual bonuses for the year for executive remuneration but has delegated this responsibility to the Committee. All Committee members • Reviewed and approved annual salary increases efgective are Non-Executive Directors of the Company, which is from 1 June 2015 and reviewed against pay increases an important pre-requisite to ensure Executive Directors’ within the wider workplace and senior executives’ pay is set by Board members • Reviewed its own efgectiveness, Terms of Reference, who have no persona l fjnancial interest in the Company constitution and performance other than as potential shareholders. The Committee • Reviewed and approved the Remuneration meets regularly without the Executive Directors being Committee Report present and is independently advised by New Bridge Street (a trading name of Aon plc), a signatory of the Remuneration Consultants’ Code of Conduct and who has no connection with the Group other than in the provision of advice on executive and employee remuneration 82 LondonMetric Property Plc Annual report and accounts 2015

  73. Single tota l fjgure of remuneration for each Director (audited) Salary and fees Taxable benefjts 1 Pension benefjts 2 Annual bonus 3 Total 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Director £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 Executive Patrick Vaughan 6 203 400 20 20 31 60 161 362 415 842 Andrew Jones 490 480 24 24 74 72 579 720 1,167 1,296 Martin McGann 4 322 315 27 27 48 39 317 332 714 713 Valentine Beresford 5 336 – 24 – 50 – 334 – 744 – Mark Stirling 5 336 – 24 – 50 – 334 – 744 – Non-Executive Patrick Vaughan 6 160 – – – – – – – 160 – Charles Cayzer 60 60 – – – – – – 60 60 James Dean 60 59 – – – – – – 60 59 Alec Pelmore 50 50 – – – – – – 50 50 Humphrey Price 7 57 60 – – – – – – 57 60 Andrew Varley 54 50 – – – – – – 54 50 Philip Watson 50 50 – – – – – – 50 50 Rosalyn Wilton 8 53 1 – – – – – – 53 1 1 Taxable benefjts include the provision of a car allowance and private medical insurance 2 Pension contribution is 15% of salary (excluding any salary sacrifjce) and may be taken partly or entirely in cash 3 Annual bonus payable in respect of the fjnancial year ending 31 March 2015 paid 50% in cash and 50% in deferred shares except for Patrick Governance Vaughan’s bonus which was paid fully in cash 4 Salary sacrifjce arrangements in place in 2014 whereby additional pension contributions are paid in lieu of salary 5 Appointed to the Board on 3 June 2014. The remuneration disclosed represents earnings for the full year to 31 March 2015 6 Patrick Vaughan was Executive Chairman until 30 September 2014 and received total remuneration of £415,000 in respect of that period. For the remainder of the fjnancial year he was a Non-Executive Chairman and received total remuneration of £160,000 in respect of that period 7 Retired from the Board on 31 March 2015 and from the Audit Committee on 18 November 2014 8 Appointed to the Board on 25 March 2014. Audit Committee Chairman from 18 November 2014 Annual bonus outcome for the year ended 31 March 2015 The annual bonus performance targets set for the year to 31 March 2015 and the assessment of actual performance achieved is set out in the table below. The proposed bonus is included in the single fjgure of remuneration and the 50% cash element will be paid in June 2015. Bonus awards are based 70% on the Company’s fjnancial performance and 30% on the individual’s contribution in the year. The fjnancial performance element measures growth in adjusted EPRA EPS and Total Property Return relative to the IPD Quarterly Universe Index re-weighted to the Company’s core portfolio. In determining the base EPRA EPS target, the Committee looks to maintain consistency with longer term incentive targets but is mindful of shorter term strategic priorities and responses to changing market conditions. The Committee exercised its discretion to take into account development income earned but not fully fmowing in the calculation of adjusted EPRA EPS. Group fjnancial targets Basis of Actual % Performance Measure Weighting Calculation Range Maximum performance awarded (0%) (25%) (50%) (100%) Adjusted EPRA EPS 35% Growth in EPRA 7.0 p 7.06p 7.13p 7.25p 7.45p 100% EPS against a – Base – Base – Base – Base challenging target target plus target plus target base target plus RPI RPI plus 1% RPI plus 1% plus RPI plus 2.67% Total property return 35% Growth in 0% 16.6% 18.3% 19.9% 17.5% 39% (TPR) TPR against – Positive – TPR – TPR is – TPR is IPD Quarterly growth matches 1.1 times 1.2 times Universe index index index index for the core portfolio Annual report and accounts 2015 83 LondonMetric Property Plc

  74. Remuneration continued Individual non fjnancial targets Executive Directors’ no n fjnancial targets accounted for 30% of the maximum bonus award. Personal objectives were aligned to the delivery of the Group’s key strategic objectives. The Committee felt that all Executive Directors had fully achieved their individual personal objectives and approved the maximum level of payout. The table below outlines the key personal objectives set and the Committee’s assessment for each of the Executive Directors for the 2014/15 annual bonus: Director Objective Assessment Patrick Vaughan Manage the evolution of the Board post merger to ensure its Signifjcant Board changes continue d effjciency and efgectiveness and manage personal implemented in the year transition to Non-Executive Chairman Andrew Jones Transition to a total return model 90% invested in core sectors Sell down of non core assets Contracted income increased by £7.6 million Continue to lengthen and strengthen our income profjle Held meetings with 125 Continued improvement in the personnel to ensure team is fjt shareholders, analysts for purpose and potential investors Improve and strengthen relationships with key stakeholders – shareholders, joint venture partners, analysts Position Company as leading investor and ‘partner of choice’ in logistics Martin McGann Secure longer term and cheaper fjnancing with increased asset New unsecured debt fjnance management fmexibility of £400 million completed in April 2015 increasing maturity Deliver the Risk Management/Corporate Governance agenda to 6.2 years and lowering to the increasing satisfaction of stakeholders cost to 3.4% Deliver on target fjnancial results Strong fjnancial results Ensure fjt for purpose corporate, fjnancial and funding support achieved with a 57% increase to our investment, development and asset management activities in EPRA earnings per share Enhanced property/fjnancial integration Valentine Beresford Reposition portfolio into core sectors – distribution and out of town retail 90% invested in core sectors. Sell down of non core and underperforming assets £182.4 million non core sales Further integration of team c.100 bps yield arbitrage between acquisitions and sales Maximise yield arbitrage between acquisitions and disposals Increase the Company’s development exposures Position Company as ‘partner of choice’ amongst vendors and agents Mark Stirling Continue to grow our contracted rental income through Contracted income increased active asset management programme by £2.6 million through initiatives Increased focus on developments and delivery Committed developments of 2.0 million sq ft Continue to lengthen and strengthen the income profjle Occupancy of 99.7% Maintain high occupancy WAULT increased to 13.1 years Sell down of core assets that are likely to underperform Position Company as “partner of choice” amongst key retailers 84 LondonMetric Property Plc Annual report and accounts 2015

  75. Based on the performance assessments above, the resulting 2015 annual bonus payments are as follows: Financial Individual Total Bonus % of Bonus % of Total bonus objectives objectives bonus maximum salary £000 Patrick Vaughan 1 48% 30% 78% 78% 78% 161 Andrew Jones 48% 30% 78% 78% 118% 579 Martin McGann 48% 30% 78% 78% 98% 317 Valentine Beresford 48% 30% 78% 78% 98% 334 Mark Stirling 48% 30% 78% 78% 98% 334 1 For the six months to 30 September 2014 and his role as Executive Chairman In accordance with the remuneration policy, 50% of the annual bonuses of the Executive Directors excluding the Chairman will be deferred and paid by way of shares in the Group in three equal instalments over three years and are subject to continued employment. Deferred Bonus Plan Half of the Executive Directors’ annual bonus is taken in deferred shares which must be held for three years in an employee benefjt trust subject only to continued employment. The shares vest equally over three years and dividend equivalents accrue on shares held. Income tax and employees’ national insurance liabilities are payable on release based on the market value of the shares at that date. Outstanding deferred bonus shares held by the Executive Directors are set out in the table below: Entitlement to Ordinary shares Face value on grant 1 At Awarded Released At Governance Date of grant £000 1 April 2014 in the year in the year 31 March 2015 Andrew Jones 19 June 2014 360 – 263,004 – 263,004 Martin McGann 19 June 2014 166 – 121,302 – 121,302 Valentine Beresford 19 June 2014 197 – 143,830 – 143,830 Mark Stirling 19 June 2014 197 – 143,830 – 143,830 1 Face value is the weighted average share price over the fjve business days immediately preceding the date of the award of 136.9p One-third of the shares held at 31 March 2015 are expected to vest on 19 June 2015. Further shares representing 50% of the Executive Directors’ bonus entitlement for the ended 31 March 2015 will be awarded in June 2015. Long-Term Incentive Plan Awards granted in the year to 31 March 2015 are summarised in the table below. Face Face value Basis of award Share awards value of award Director (% of salary) Date of grant number per share £000 Andrew Jones 160% 19 June 2014 575,102 136.9p 787 Martin McGann 125% 19 June 2014 294,852 136.9p 404 Valentine Beresford 125% 19 June 2014 310,491 136.9p 425 Mark Stirling 125% 19 June 2014 310,491 136.9p 425 Annual report and accounts 2015 85 LondonMetric Property Plc

  76. Remuneration continued The face value is based on a weighted average price per share, being the average share price over th e fjve business days immediately preceding the date of the award. Awards will vest after three years subject to continued service and the achievement of performance conditions as approved by shareholders in July 2013 and as set out below: Performance condition Vesting Level TSR measured against FTSE 350 Real Estate Index (75% of Award) TSR less than index over 3 years 0% 1 TSR equals index over 3 years 25% 1 TSR between 1 and 1.5 times index over 3 years Pro rata on a straight-line basis between 25% and 100% 1 TSR is 1.5 times index over 3 years 100% EPRA EPS growth against a base target plus RPI (25% of award) Less than base plus RPI plus 3% over 3 years 0% Base plus RPI plus 3% over 3 years 25% Base plus RPI plus between 3% and 8% over 3 years Pro rata on a straight-line basis between 25% and 100% Base plus RPI plus 8% over 3 years 100% 1 TSR must be positive over 3 years Outstanding LTIP awards held by the Executive Directors are set out in the table below: Number of shares under award Date Face value Granted Vested Performance Director of grant on grant At 1.4.14 in year in year At 31.3.15 Period Andrew Jones 21.8.2013 114.3p 839,895 – – 839,895 1.4.2013 to 31.3.2016 19.6.2014 136.9p – 575,102 – 575,102 1.4.2014 to 31.3.2017 Martin McGann 27.11.2013 131.3p 167,885 – – 167,885 1.4.2013 to 31.3.2016 19.6.2014 136.9p – 294,852 – 294,852 1.4.2014 to 31.3.2017 Valentine Beresford 21.8.2013 114.3p 454,724 – – 454,724 1.4.2013 to 31.3.2016 19.6.2014 136.9p – 310,491 – 310,491 1.4.2014 to 31.3.2017 Mark Stirling 21.8.2013 114.3p 454,724 – – 454,724 1.4.2013 to 31.3.2016 19.6.2014 136.9p – 310,491 – 310,491 1.4.2014 to 31.3.2017 The adjusted EPRA EPS base target for the three-year performance period commencing 1 April 2013 has been set at 6.3p and for the three year performance period commencing 1 April 2014 at 7.0p. The Group’s three-year fjnancial forecast was taken into account when setting these targets along with consideration of strategic goals and priorities, proposed investment and development plans as well as previous years’ results. Targets are considered challenging yet achievable in order to adequately incentivise management and are in line with the Company’s strategic aim of delivering long-term growth for shareholders. Payments to past Directors and for loss of o ffjce There have been no payments made to retiring Directors or for loss of o ffjce in the year. 86 LondonMetric Property Plc Annual report and accounts 2015

  77. Directors’ shareholdings and share interests The bene fjcial interests in the ordinary shares of the Group held by the Directors and their families who were in o ffjce during the year or at the date of this report are set out below: 31 March 2015 31 March 2014 Ordinary shares Ordinary shares of 10p each of 10p each Executive Directors Andrew Jones 2,243,479 2,243,479 Martin McGann 2,341,585 2,341,585 Valentine Beresford 2,114,036 2,114,036 Mark Stirling 1,618,574 1,592,117 Non-Executive Directors Patrick Vaughan 15,277,500 16,337,997 Charles Cayzer – – James Dean 20,000 20,000 Alec Pelmore 120,500 120,500 Humphrey Price 2,015,733 2,015,733 Andrew Varley 47,000 47,000 Philip Watson 174,000 174,000 Rosalyn Wilton 50,000 – There were no movements in Directors’ shareholdings between 31 March 2015 and the date of this report. The shareholding Governance guidelines recommend Executive Directors build up a shareholding in the Company at least equal to four times salary. All Executive Directors complied with this requirement at 31 March 2015 as shown in the table below and as at the date of this report. No Director had any interest or contract with the Company or any subsidiary undertaking during the year. LTIP shares Share Overall subject to Total interests as ownership Benefjcial performance Deferred at 31 March as % of Shareholding salary 1 Interest conditions bonus shares 2015 guideline met Andrew Jones 2,243,479 1,414,997 263,004 3,921,480 738% Yes Martin McGann 2,341,585 462,737 121,302 2,925,624 1173% Yes Valentine Beresford 2,114,036 765,215 143,830 3,023,081 1006% Yes Mark Stirling 1,618,574 765,215 143,830 2,527,619 770% Yes 1 Based on the Company’s share price at 31 March 2015 of 161.8p and the benefjcial interests of the Directors Performance graph The graph on page 88 shows the Group’s total shareholder return (TSR) for the period from 1 October 2010, when the Company listed on the Main Market of the London Stock Exchange, to 31 March 2015, compared to the FTSE All Share REIT Index and the FTSE 350 Real Estate Index. These have been chosen by the Committee as in previous years as they are considered the most appropriate and relevant benchmarks against which to assess the performance of the Company. The starting point required by the remuneration regulations was close to the bottom of the property cycle where a number of property companies launched rights issues while the Company did not. The Company’s share price had not fallen as much as the average share price of the FTSE Real Estate sector prior to this starting point, thereby setting a higher initial base price for this graph. Annual report and accounts 2015 87 LondonMetric Property Plc

  78. Remuneration continued Total shareholder return measures share price growth Percentage change in Chief Executive remuneration with dividends deemed to be reinvested on the The percentage change in the Chief Executive’s ex-dividend date. remuneration from the previous year compared to the 220 average percentage change in remuneration for all other employees is as follows: 200 180 % change 160 Taxable Salary and fees benefjts Annual bonus 140 Chief Executive 2% 0% -20% 120 Other employees 100 (excluding Chief Executive) 11% –9% -15% Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 Relative importance of spend on pay LondonMetric Property Plc All Share REIT Index The table below shows the expenditure and percentage FTSE 350 Real Estate Index change in spend on employee remuneration compared to other key fjnancial indicators: The Company’s share price over the period since merger in 2013 has outperformed both indices as shown in the 2015 2014 graph below. £000 £000 % change 1 Employee costs 9,515 9,857 -3% 180 Dividends paid 2 43,749 43,964 – 160 1 Figures taken from note 4 Administration Expenses on page 109 and are stated before any amounts capitalised and exclude share scheme costs 140 2 Figures taken from note 7 Dividends on page 111 120 Statement of voting at AGM At the AGM on 17 July 2014, the Annual Remuneration 100 Report and the Remuneration Policy Report received the following votes from shareholders representing 68% of the Mar Jun Sep Dec Mar Jun Sep Dec Mar 2013 2013 2013 2013 2014 2014 2014 2014 2015 issued share capital of the Company. LondonMetric Property Plc Annual All Share REIT Index Remuneration FTSE 350 Real Estate Index Report Remuneration Policy Report % % Chief Executive’s remuneration table Number of votes Number of votes of votes cast of votes cast The table below details the remuneration of the Chief For 369,881,402 94.81 415,767,605 98.82 Executive for the period from the Company’s listing on the main market of the London Stock Exchange on 1 October Against 20,229,244 5.19 4,948,010 1.18 2010 to 31 March 2015. Withheld 37,582,265 6,977,296 Total 427,692,911 427,692,911 Annual LTIP vesting bonus (as a (as a Total % of the % of the Statement of implementation of remuneration policy remuneration maximum maximum for the year ending 31 March 2016 Year to 31 March: £000 payout) opportunity) 2015 1,167 78 – Base salary 2014 1,296 100 – On 5 May 2015 the Committee approved increases of 2.0% 2013 (Andrew Jones) 1 166 100 – for the Executive Directors with efgect from 1 June 2015. The average base salary increase for other employees 2013 (Patrick Vaughan) 1 583 100 – was 6.5%. 2012 664 100 – 2011 2 323 100 – 1 Andrew Jones became Chief Executive and Patrick Vaughan becam e Chairman on 25 January 2013 following the merger of the Company with Metric Property Investments plc 2 For the six months from the Company’s listing on 1 October 2010 to 31 March 2011 88 LondonMetric Property Plc Annual report and accounts 2015

  79. The salaries for the year ahead are therefore as follows: Base salary from Base salary from 1 June 2014/date of % Executive Director 1 June 2015 appointment increase Andrew Jones £501,840 £492,000 2.0 Martin McGann £329,333 £322,875 2.0 Valentine Beresford £346,800 £340,000 2.0 Mark Stirling £346,800 £340,000 2.0 There are no changes to the pension contributions and other bene fjts which are described in the summary policy table on page 78. Annual Bonus Plan The table below details the performance conditions and composition of targets for the annual bonus: Performance measure Weighting Target Growth in EPRA EPS 35% Growth in Company’s EPRA EPS against a range of challengin g targets Growth in total property return 35% Growth in Company’s TPR against IPD Quarterly Universe Index (TPR) Full payout if growth is 120% of the Index 50% payout if growth is 110% of the Index 25% payout if growth matches the Index Straight-line interpolation between limits No payout if TPR is negative Personal objectives 30% Vary between individuals and include portfolio management metrics, Governance fjnancial and people management Investor relations and regulatory compliance In the opinion of the Committee, the annual bonus performance targets and individual objectives for the year ahead are commercially sensitive and accordingly are not disclosed. These will be reported and disclosed retrospectively in order for shareholders to assess the basis for any payouts. LTIP Awards The following performance measures apply to awards to be granted in 2015 as well as all outstanding awards granted in 2013 and 2014: Performance measure Measured Start of Measurement (over three years) Against % of Award Vesting Level Period Total Shareholder Return (TSR) FTSE 350 Real 75% 25% – performance equals index 1 April 2015 Estate Sector 100% – performance 1.5 times index Straight-line interpolation between limits No payout if TSR is negative EPRA EPS growth Base target 25% 25% – performance equals RPI plus 3% 1 April 2015 plus RPI over three years 100% – performance equals RPI plus 8% over three years Straight-line interpolation between limits The Committee has resolved that grants to Andrew Jones, Martin McGann, Valentine Beresford and Mark Stirling will be at the levels of 175%, 140%, 140% and 140% of salary respectively for 2015/16. Last year LTIP awards were made at levels below the normal anticipated grants set out as caps within the Remuneration Policy. The individual caps are below the 200% of salary limit within the policy. LTIPs granted last year refmected the development of the business and the individuals at that time. During the year certain key strategic objectives have been achieved, including but not limited to increasing the dividend cover from 60% of EPRA earnings to 94% and recycling capital into the core portfolio which now represents 90% of the total. Refmecting these developments, the Committee concluded that awards should be made at the normal levels for all Directors. Annual report and accounts 2015 89 LondonMetric Property Plc

  80. Remuneration continued Illustration of potential remuneration for Director emoluments £ Executive Directors 3,000,000 The chart sets out the potential remuneration receivable 2,500,000 by the Executive Directors for the year to 31 March 2016 2,000,000 re fmecting base salaries proposed for the year commencing 1,500,000 1 April 2015 as refmected on page 89 and as increased from 1,000,000 1 June 2015. 500,000 The minimum scenario refmects fjxed remuneration of salary, Andrew Martin Valentine Mark pension and benefjts only as the other elements are linked to Jones McGann Beresford Stirling future performance. Base salary is that to be paid in 2015/16. Minimum Benefjts are as shown in the single fjgure remuneration table On Target Maximum for 2014/15 on page 83. The on-target scenario refmects fjxed remuneration as above plus 50% of the maximum annual bonus entitlement and the threshold level of vesting for the LTIP awards, being 25% for both the TSR and EPS performance requirements. The maximum scenario refmects the fjxed remuneration plus the maximum payout of all other incentive arrangements. Non-Executive Directors’ fees The fees for Non-Executive Directors are determined and reviewed by the Board. The base fee for the forthcoming year has increased by 2.0% of the base fee for all Non-Executive Directors, except the Chairman whose fee of £320,000 is fjxed until 31 March 2016. Total fees payable are as follows: Senior Independent Committee Committee Base Fee Director Fee Chair Fee Member Fee 1 Total Fee £000 £000 £000 £000 £000 Patrick Vaughan 320 – – – 320 Charles Cayzer 46 5 – 10 61 James Dean 46 – 10 5 61 Alec Pelmore 46 – – 5 51 Andrew Varley 46 – – 10 56 Philip Watson 46 – – 5 51 Rosalyn Wilton 46 – 10 5 61 1 Fee relates to membership of Remuneration and Audit Committee Non-Executive Directors are not eligible for performance-related bonuses, participation in the stafg incentive plan, pensions or any other benefjts from the Company other than travel, hospitality-related benefjts or other incidental benefjts linked to the performance of their duties as a Director. James Dean Chairman of Remuneration Committee 90 LondonMetric Property Plc Annual report and accounts 2015

  81. Principal activities and business review Report of the The purpose of the annual report is to Directors provide information to the members of the Company which is a fair, balanced and understandable assessment of the Group’s performance, business model and strategy. A detailed review of the Group’s business and performance during the year, its principal risks and uncertainties and its Martin McGann Finance Director business model and strategy is contained in the Strategic report on pages 2 to 54 an d should be read as part of this report. The annual report contains certain The Directors present their report together with forward‑looking statements with respect the audite d fjnancial statements for the year to the operations, performance and ended 31 March 2015. fjnancial condition of the Group. By their nature, these statements involve uncertainty The principal activity of the Group continues to since future events and circumstances be property investment and development, both can cause results and developments to directly and through joint venture arrangements. di fger from those anticipated. The forward- looking statements re fmect knowledge Annual General Meeting and information available at the date of preparation of this annual report. The Annual General Meeting (“AGM”) of the Company Nothing in this annual report should be will be held at the Connaught, Carlos Place, Mayfair, construed as a profjt forecast. Governance London W1K 2AL at 10 am on 16 July 2015. The Notice of Meeting on pages 136 to 140 sets out the Results and dividends proposed resolutions and voting details. The Group reported a profjt for the year The Board considers the resolutions will promote the of £159.5 million (2014: £125.3 million). success of the Company and are in the best interests of the An interim dividend for 2015 of 3.5p per Company and its shareholders. The Directors unanimously share was paid on 19 December 2014 and recommend that you vote in favour of the resolutions the Directors propose a fjnal dividend of as they intend to do in respect of their own benefjcial 3.5p per share, resulting in a total dividend of holdings which amount in aggregate to 24,006,674 shares 7.0p per share for the year to 31 March 2015 representing approximately 3.8% of the existing issued (2014: 7.0p per share). The fjnal dividend will ordinary share capital of the Company as at 1 June 2015. be paid following approval at the Annual General Meeting on 16 July 2015 to ordinary Substantial shareholders shareholders on the register at the close of business on 12 June 2015. The Directors have been notifjed that the following shareholders have a disclosable interest of 3% or more in the ordinary shares of the Company at the date of this report: Number of shares % Rathbones 42,929,309 6.84 Ameriprise Finance Inc 37,903,414 6.04 Blackrock Inc 37,491,384 5.97 J O Hambro Capital Management 25,149,768 4.00 Troy Asset Management 23,400,626 3.73 Aberdeen Asset Management 23,067,057 3.67 Annual report and accounts 2015 91 LondonMetric Property Plc

  82. Report of the Directors continued As disclosed in note 7, 2.0p of th e fjnal value of 10% of the issued nominal capital. The Directors propose dividend payment will comprise a Property That authority expires at this year’s AGM and a fjnal dividend of 3.5p Income Distribution (PID) which is paid, as a resolution will be proposed for its renewal. per share, resulting in required by REIT legislation, after deduction No ordinary shares were purchased under a total dividend of 7.0p of withholding tax at the basic rate of this authority during the year. per share for the year income tax. The balance of 1.5p will be Directors to 31 March 2015 paid as an ordinary dividend which is not subject to withholding tax. The present membership of the Board and biographical details of Directors are set out In addition a special dividend of 2.0p on pages 58 to 59. In addition a special per share will be paid to share some of dividend of 2.0p per the realised gain arising following the The interests of the Directors and their share will be paid redevelopment and sale of offjces at families in the shares of the Company are set to share some of Carter Lane. out in the Remuneration Committee report the realised gain on page 87. Both are subject to shareholder approval at arising following the AGM and will be paid on 20 July 2015. Humphrey Price retired from the Board on the redevelopment 31 March 2015. and sale of o ffjces Investment properties a t Carter Lane In accordance with the UK Corporate A valuation of the Group’s investment Governance Code, all of the Directors will properties at 31 March 2015 was undertaken retire and o fger themselves for re-election at by CBRE Limited and Savills Advisory Services the forthcoming AGM on 16 July 2015. Limited on the basis of fair value which Directors’ and O ffjcers’ amounted to £1,164.1 million as refmected liability insurance in note 9 to these accounts. The Company has arranged Directors’ and Share capital O ffjcers’ liability insurance cover in respect As at 31 March 2015, there were 628,043,905 of legal action against its Directors, which ordinary shares of 10p in issue, each is reviewed and renewed annually and carrying one vote and all fully paid. There is remains in force at the date of this report. only one class of share in issue and there Suppliers are no restrictions on the size of a holding or on the transfer of shares. None of the The Group aims to settle supplier accounts shares carry any special rights of control in accordance with their individual terms over the Company. There were no persons of business. with signifjcant direct or indirect holdings in the Company other than those listed as The number of creditor days outstanding substantial shareholders on page 91. for the Group at 31 March 2015 was 17 days (2014: 19 days). There were no changes to the Company’s share capital during the year or since the Provisions on change of control year-end. Under the Group’s credit facilities, the The rules governing appointments, lending banks may require repayment of replacement and powers of Directors are the outstanding amounts on any change contained in the Company’s Articles of of control. Association, the Companies Act 2006 and the UK Corporate Governance Code. The Group’s Long Term Incentive Plan These include powers to authorise the issue and Deferred Share Bonus Plan contain and buy back of shares by the Company. provisions relating to the vesting of awards The Company’s Articles can be amended in the event of a change of control of by Special Resolution in accordance with the Group. Companies Act 2006. Essential contracts Purchase of own shares The Company has no contractual or other The Company was granted authority at the arrangements which are considered Annual General Meeting in 2014 to purchase essential to the business. its own shares up to an aggregate nominal 92 LondonMetric Property Plc Annual report and accounts 2015

  83. Financial instruments Based on the results of their review, the Directors have a reasonable expectation Details of th e fjnancial instruments used by that the Company will be able to continue the Group and fjnancial risk management in operation and meet its liabilities as they policies can be found in note 15 and in the fall due over the three year period of review of Risk Management on page 43. their assessment. Charitable and political contributions Post-balance sheet events During the year, the Group made charitable Details of the Group’s post-balance sheet donations of £24,820 (2014: £24,080). events are refmected in note 20 to these No political donations were made during fjnancial statements on page 124. the year (2014: £nil). Employees Going concern The Group currently has 41 employees. The principal risks and uncertainties facing The Group’s employment and environmental the Group’s activities, future development policies are summarised in the Responsible and performance are on pages 43 to 48. Business section on pages 49 to 54. The Group’s borrowings, undrawn facilities, hedging and liquidity are described in Greenhouse gas reporting note 15 to the accounts. The Directors In accordance with Schedule 7 of the Large have reviewed the current and projected and Medium-Sized Companies and Groups fjnancial position of the Group, making (Accounts and Reports) Regulations 2008, reasonable assumptions about future information regarding the Company’s trading performance. As part of the review, greenhouse gas emissions can be found the Group has considered its cash balances, Governance on page 53. its debt maturity profjle, including undrawn facilities, and the long-term nature of Disclosure of information to auditor tenant leases. So far as the Directors who held offjce at the On the basis of this review, and after date of approval of this Directors’ report are making due enquiries, the Directors have a aware, there is no relevant audit information reasonable expectation that the Company of which the auditor is unaware and each and the Group have adequate resources Director has taken all steps that he or she to continue in operational existence for ought to have taken as a Director to make the foreseeable future. Accordingly, they himself or herself aware of any relevant continue to adopt the going concern audit information and to establish that the basis in preparing the annual report and auditor is aware of that information. fjnancial statements. Auditor Viability statement Deloitte LLP is willing to be reappointed In accordance with provision C.2.2 of the as the external auditor to the Company 2014 revision of the Code, the Directors have and Group. Their reappointment has been assessed the prospect of the Company over considered by the Audit Committee and a longer period than the 12 months required recommended to the Board. A resolution will by the ‘Going Concern’ provision. The Board be proposed at the AGM on 16 July 2015. conducted this review for a period of three years to coincide with its review of the On behalf of the Board Group’s fjnancial budgets and forecasts. This period is also consistent with the short- cycle nature of the Group’s developments and asset management initiatives. Martin McGann The Board considered the Group’s cash Finance Director fmows, income profjle, loan to value and 2 June 2015 other key fjnancial metrics as well as the level of capital recycling and reinvestment likely to occur. Annual report and accounts 2015 93 LondonMetric Property Plc

  84. Directors’ responsibility statement The Directors are responsible for preparing The Directors are responsible for keeping adequate accounting records that are suffjcient to show and explain the annual report and the financial the Company’s transactions and disclose with reasonable statements in accordance with applicable accuracy at any time the financial position of the Company law and regulations. and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also Company law requires the Directors to prepare financial responsible for safeguarding the assets of the Company statements for each financial year. Under that law the and hence for taking reasonable steps for the prevention Directors are required to prepare the Group financial and detection of fraud and other irregularities. statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European The Directors are responsible for the maintenance and Union and Article 4 of the IAS Regulation and have elected integrity of the corporate and financial information included to prepare the Parent Company financial statements in on the Company’s website. Legislation in the UK governing accordance with United Kingdom Generally Accepted the preparation and dissemination of financial statements Accounting Practice (United Kingdom Accounting may difger from legislation in other jurisdictions. Standards and applicable law). Under company law the Directors must not approve the accounts unless they Responsibility statement are satisfied that they give a true and fair view of the state We confirm that to the best of our knowledge: of afgairs of the Company and of the profit or loss of the • The financial statements, prepared in accordance with Company for that period. the relevant financial reporting framework, give a true In preparing the Parent Company financial statements, and fair view of the assets, liabilities, financial position the Directors are required to: and profit or loss of the Company and the undertakings • Select suitable accounting policies and then apply included in the consolidation taken as a whole them consistently • The Strategic report includes a fair review of the • Make judgements and accounting estimates that are development and performance of the business and the reasonable and prudent position of the Company and the undertakings included in the consolidation taken as a whole, together with a • State whether applicable UK Accounting Standards description of the principal risks and uncertainties that have been followed, subject to any material departures they face; and disclosed and explained in the financial statements; and • The annual report and financial statements, taken as • Prepare the financial statements on the going concern a whole, are fair, balanced and understandable and basis unless it is inappropriate to presume that the provide the information necessary for shareholders to Company will continue in business assess the Company’s performance, business model In preparing the Group financial statements, International and strategy Accounting Standard 1 requires that Directors: By order of the Board • Properly select and apply accounting policies • Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information Martin McGann • Provide additional disclosures when compliance with the Finance Director specific requirements in IFRSs are insuffjcient to enable 2 June 2015 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 Andrew Jones Chief Executive 2 June 2015 94 LondonMetric Property Plc Annual report and accounts 2015

  85. Financial statements In this section: Auditor’s report 96 Group fjnancial statements 100 Notes forming part of the Group fjnancial statements 104 Company fjnancial statements 125 Notes forming part of the Company fjnancial statements 126 Supplementary information 129 Defjnitions 135 Notice of Annual General Meeting 136 Financial calendar 141 Shareholder information 141 Annual report and accounts 2015 95 LondonMetric Property Plc

  86. Auditor’s report Opinion on financial statements of LondonMetric Going concern Property Plc As required by the Listing Rules we have reviewed the In our opinion: directors’ statement contained on page 93 that the group is a going concern. We confjrm that: • Th e fjnancial statements give a true and fair view of the state of the group’s and of the parent company’s a fgairs • we have concluded that the directors’ use of the going as at 31 March 2015 and of the group’s profjt for the year concern basis of accounting in the preparation of the then ended; fjnancial statements is appropriate; and • the group fjnancial statements have been properly • we have not identifjed any material uncertainties that prepared in accordance with International Financial may cast signifjcant doubt on the group’s ability to Reporting Standards (IFRSs) as adopted by the continue as a going concern. European Union; However, because not all future events or conditions • the parent company fjnancial statements have been can be predicted, this statement is not a guarantee as to properly prepared in accordance with United Kingdom the group’s ability to continue as a going concern. Generally Accepted Accounting Practice; and • the fjnancial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group fjnancial statements, Article 4 of the IAS Regulation. The fjnancial statements comprise the Group income statement, the Group and Parent Company balance sheets, the Group statement of changes in equity, the Group cash fmow statement, and the related notes 1 to 20 for the Group Financial Statements and the related notes i to vii for the parent company fjnancial statements. The fjnancial reporting framework that has been applied in the preparation of the group fjnancial statements is applicable law and IFRSs as adopted by the European Union. The fjnancial reporting framework that has been applied in the preparation of the parent company fjnancial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). 96 LondonMetric Property Plc Annual report and accounts 2015

  87. Our assessment of risks of material mis-statement The assessed risks of material misstatement described below are those that had the greatest e fgect on our audit strategy, the allocation of resources in the audit and directing the efgorts of the engagement team: Risk How the scope of our audit responded to the risk Property valuation (see note 9) • We assessed management’s process for reviewing The Group owns a portfolio of predominantly retail and and assessing the work of the external valuer and distribution property assets, which is valued at £1,400.4 million, development appraisals. including share of joint venture properties, as at 31 March 2015. • We obtained the external valuation reports and met with The valuation of the portfolio is a signifjcant judgement area the external valuers of the portfolio to discuss the results of and is underpinned by a number of assumptions including their work. We assessed the valuation process, performance (i) capitalisation yields (ii) future lease income and (iii) with of the portfolio and signifjcant assumptions and critical reference to development properties, costs to complete. judgement areas, including lease incentives, future lease income and yields. The Group uses professionally qualifjed external valuers to fair value the Group’s portfolio at six-monthly intervals. • We assessed the competence, objectivity and integrity of The portfolio (excluding development properties) is the external valuer. valued by the investment method of valuation with • We tested a sample of properties through benchmarking development properties valued by the same methodology of yields, understanding the valuation methodology and with a deduction for all costs necessary to complete the wider market analysis together with testing the integrity of a development together with an allowance for remaining risk. sample of the information provided to the external valuer by agreeing that information to underlying lease agreements. The valuation exercise also relies on the accuracy of the underlying lease and fjnancial information provided • We tested a sample of the costs to complete in relation to the valuers by management. to the development properties via agreement to supporting documentation Refer to page 72 (Audit Committee report), page 105 (accounting policy) and note 9 on page 114 (fjnancial disclosures). Property transaction accounting (see note 9) • We assessed the fair value of consideration and confjrmed The Group has undertaken a large number of property key transaction terms by reference to acquisition or disposal acquisitions for a total consideration of £308.9 million and agreements and other external evidence for all signifjcant disposals for total proceeds of £288.7 million (including share acquisitions and disposals in the year. of joint ventures), including the disposal of One Carter Lane. • We considered the date at which the transactions completed based on the timing of the transfer of risks These transactions can include complexities such as rental and rewards of ownership per the acquisition or disposal top-up payments, conditionality and deferred completion agreements, and considered the impact of these mechanics or joint venture contractual obligations, requiring transactions on revenue recognition. judgement as to the appropriate accounting to be applied. • We considered the adequacy of the disclosure of Refer to page 72 (Audit Committee report), page the transactions in the fjnancial statements. 105 (accounting policy) and note 9 on page 14 • We recalculated the profjt or loss on disposals based (fjnancial disclosures). on the terms of the transaction. Financial statements Revenue recognition (see note 3) As part of our audit of revenue, we focused on any unusual Accounting for unusual or more complex items including and complex adjustments to revenue, agreeing the lease rent free periods and capital incentives is complex, incentives for a sample of items to the underlying leases. requiring an understanding of specifjc terms and conditions We recalculated the required adjustment to the annual rent which vary between contracts. in relation to these items to determine whether the correct amount of revenue had been recognised in the year. Refer to page 73 (Audit Committee report), page 106 (accounting policy) and note 3 on page 109 (fjnancial disclosures). Annual report and accounts 2015 97 LondonMetric Property Plc

  88. Auditor’s report continued Last year our report included one other risk which is not An overview of the scope of our audit included in our report this year: impairment of intangible Our group audit was scoped by obtaining an understanding assets (a signi fjcant proportion of the intangible asset of the Group and its environment, including group-wide was written o fg in the prior year and the remaining controls, and assessing the risks of material misstatement at intangible asset balance is no longer material to the group the group level. The Group is audited by one audit team, led fjnancial statements). by the Senior Statutory Auditor, responsible for the audit of Our audit procedures relating to these matters were the Company and each of its subsidiaries and joint ventures. designed in the context of our audit of the fjnancial Our audit work on subsidiaries and joint ventures is carried statements as a whole, and not to express an opinion on out to a materiality which is lower than, and in most cases individual accounts or disclosures. Our opinion on the substantially lower than, Group materiality as set out above. fjnancial statements is not modifjed with respect to any of Our audit also included testing of the consolidation process the risks described above, and we do not express an opinion and group-wide controls. on these individual matters. Opinion on other matters prescribed by the Our application of materiality Companies Act 2006 We defjne materiality as the magnitude of misstatement In our opinion: in the fjnancial statements that makes it probable that the • the part of the Remuneration Committee report to be economic decisions of a reasonably knowledgeable person audited has been properly prepared in accordance with would be changed or infmuenced. We use materiality both in the Companies Act 2006; and planning the scope of our audit work and in evaluating the • the information given in the Strategic Report and the results of our work. Directors’ Report for the fjnancial year for which the We determined materiality for the Group to be £16.0 million fjnancial statements are prepared is consistent with the (2014: £15.2 million) which, as in 2014, is below 2% of fjnancial statements. shareholders’ equity. In addition to net assets, we consider EPRA Earnings as a critical performance measure for the Matters on which we are required to report group and we applied a lower threshold of £2.0 million by exception (2014: £1.3 million) based on 5% of that measure, as in 2014, Adequacy of explanations received and accounting records for testing of all balances and classes of transactions which impact that measure, primarily transactions recorded in Under the Companies Act 2006 we are required to report the income statement other than fair value movements on to you if, in our opinion: investment property, development property and derivatives. • we have not received all the information and explanations we require for our audit; or We agreed with the Audit Committee that we would report to the Committee all audit difgerences in excess of • adequate accounting records have not been kept by the £0.3 million (2014: £0.3 million), as well as difgerences below parent company, or returns adequate for our audit have that threshold that, in our view, warranted reporting on not been received from branches not visited by us; or qualitative grounds. We also report to the Audit Committee • the parent company fjnancial statements are not in on disclosure matters that we identifjed when assessing agreement with the accounting records and returns. the overall presentation of the fjnancial statements. We have nothing to report in respect of these matters. The Audit Committee has asked us to report on the level Directors’ remuneration of unadjusted misstatements identifjed during our audit. We did not identify any unadjusted misstatements for Under the Companies Act 2006 we are also required to reporting matters to the Audit Committee. report if in our opinion certain disclosures of directors’ remuneration have not been made or the part of the Remuneration Committee report to be audited is not in agreement with the accounting records and returns. We have nothing to report arising from these matters. 98 LondonMetric Property Plc Annual report and accounts 2015

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