Investor Centre

Corporate Governance Code

The Board has adopted the UK Corporate Governance Code 2018 (the “Code”) and in this report we describe how the principles and supporting provisions set out in the Code have been applied.

The Board is committed to the Company delivering long term, sustainable returns to investors and also aims to build long term relationships with its stakeholders in a spirit of integrity and openness, reflecting its commitment to diversity and with respect to the views of its shareholders and other stakeholders. In this way we consider that consistently applying the principles of good governance is fully aligned with the Company’s strategy.

The Company is externally managed and all directors are non-executive directors.  This means that the Board and Management Team interact in a different way to those in an internally managed business with the relationship governed by the terms of a contract, and that the Group has no employees.  When considering the application of the Code, we consider that the employees of the Investment Adviser and its related service provider, Prestbury Investment Holdings Limited, would, for these purposes, be considered to be the Group’s workforce despite not being employees of the Group.

Throughout the year ended 31 December 2021, the Company has complied with the provisions of the Code save for two cases where departure from the provisions of the Code is considered by the Board to be appropriate.  These are explained in the following sections and relate to the composition of the Nomination Committee and the vesting and holding period for incentive rewards.

Principles A to R, as set out in the Code, are summarised at the beginning of each of the explanatory sections of this report.

Board Leadership and Company Purpose

A.           Leadership should be provided by an effective and entrepreneurial board whose role is to promote the long term sustainable success of the company, generating value for shareholders and contributing to wider society.

B.           The board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are aligned.  All directors must act with integrity, lead by example and promote the desired culture.

C.           The board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them.  The board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed.

D.          In order for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure effective engagement with, and encourage participation from, those parties.E.The board should ensure that workforce policies and practices are consistent with the company’s values and support long term sustainable success.  The workforce should be able to raise any matters of concern.

Board oversight of value creation, the assessment of risks, opportunities and sustainability and the control environment

The Board is responsible for the overall leadership of the Company, setting its values and standards, including approval of the Group’s strategic aims and objectives and oversight of its operations.

In meeting its duty to the Company’s shareholders to promote the success of the business, the Board takes a long term view, assessing opportunities and risks together with considering and reporting on the viability of the business over a five year period.  This encompasses a wide range of risks and opportunities, including among all other areas, climate related risks and opportunities.  The Board is collectively responsible for the long term success of the Company and seeks to achieve:

  • competent and prudent management;
  • sound planning over both short and longer term time scales;
  • maintenance of appropriate management and internal control systems;
  • reliable accounting and other records; and
  • compliance with statutory and regulatory obligations.

The Company’s business model and strategy were established at the time of its admission to AIM in June 2014.  While the business has grown very materially since the Company’s listing, its strategy has not changed.  The business continues to generate long term income with inflation protection from real estate assets that are considered ‘mission critical’ by their tenants (we refer to these as Key Operating Assets), with additional potential for capital growth over the medium to long term.  Acquisition opportunities and any related debt finance are assessed by the Board with a view to ensuring the long term sustainability of the business.  The security and longevity of returns is fundamental to the Company’s strategy, as summarised in the outline of the Group’s business model, and the Company’s investment policy is described in the Strategic Review.

Assets are financed with a combination of equity and appropriate levels of third party debt, with close attention paid to building in sufficient headroom on any financial covenants having regard to the risks facing the Company.  The Company’s debt strategy is further described in the outline of the business model and the Investment Adviser’s review of key performance indicators. The Board has committed that any equity issues will be at or above Net Asset Value to minimise any risk of dilution of shareholder value.

The track record of the Group over the last five years and for certain key returns metrics since listing and the viability statement for the next five years are in the annual report.  The Board regularly reviews actual and potential risks facing the business and the most recent assessment of risk is set out in the summary of Principal Risks and Uncertainties.  Investment and other opportunities are evaluated by the Board against the criteria set out in the Investment Strategy and includes stress tested scenarios to evaluate the impact on short, medium and long term performance.

The control environment operated within the Group is subject to the review of the Audit Committee, which formally considers the internal control framework at least annually and discusses the operation and effectiveness of internal controls with the Group’s external auditor.  A summary of the Audit Committee’s internal control review is set out in its report.

The Management Team is responsible to the Board for day to day reporting against targets and delivery of the strategy.  Its obligations and rights regarding the Group are set out in a contract, the Investment Advisory Agreement, which is subject to regular review by the Remuneration Committee and the Board.  Those reviews include periodic independent benchmarking of the terms, including the appropriateness of the rewards accruing to the Investment Adviser.  The most recent independent review was conducted in March 2018 and the next review is scheduled to occur by December 2022.  The Independent Directors are in a position to judge the adequacy and appropriateness of the resources made available to the Group by the Investment Adviser by way of their assessment of the quality and timeliness of information provided to the Board and its committees and by direct interaction with the members of the Management Team and the workforce, including those who are not Directors of the Company.  The Audit Committee’s report on risk management and internal control and the Remuneration Committee’s report both describe the monitoring role of the Board and its committees over the operations of the business and the assessment of the Investment Adviser’s performance in delivering long term sustainable returns to shareholders.

Board responsibility for workplace culture

An entrepreneurial culture is fostered both by way of the backgrounds and career histories of the Board members and the Management Team, and by very close alignment of the Management Team with the interests of shareholders as a whole.  The shareholding held by the Management Team (which includes participation of the majority of Prestbury staff in that equity interest) is very large in both absolute terms, being worth £170 million at the 31 December 2021 EPRA NTA, and in relative terms at 12.4% of the Company.

As an externally managed business, the Group has no employees, but the Independent Directors ensure that they have regular direct contact with members of the Management Team and other individuals who work on the Group’s operations, including the involvement of various Prestbury employees in committee and Board meetings.  There are 16 individuals who make up the workforce with the biographies of the senior team members listed in the annual report, in addition to the three Prestbury Board representatives whose biographies appear in the annual report.  As the workforce is not large, the Board considers that the allocation of responsibility for engagement with the workforce to the Remuneration Committee is an appropriate and effective method for workforce engagement and the Remuneration Committee’s description on this aspect of their work is included in their report.

The Board is committed to encouraging diversity, inclusion and equality and will not tolerate unlawful discrimination in any of its operations.  It ensures that the Investment Adviser and the workforce also adhere to diversity and inclusion policies consistent with the Company’s.  The Company seeks to achieve diversity on its Board and its progress in achieving that is set out in the Nomination Committee’s report.

The Board meets at least every quarter to review the Group’s performance against its strategic aims, objectives, business plans and budgets, and ensures that any corrective action considered necessary is taken.  Additional meetings are held as required to deal with the business of the Group in a timely manner.  Meetings are held more frequently when transactions are being considered and reported on, and in times of heightened market uncertainty such as during the pre-vaccine stage Covid pandemic.  The Investment Adviser also discusses matters with the Independent Directors individually or collectively and updates them on activities as and when appropriate outside the scheduled Board meetings.  Relevant members of the wider team working on the Group’s operations, including employees of the Investment Adviser and also key advisers such as the Company’s Nominated Adviser and Broker, legal counsel and financial PR advisers, attend Board and committee meetings as appropriate.

Board committees have been appointed under written terms of reference.  The Audit Committee meets at least twice per year and the Remuneration, Nomination and ESG Committees meet at least once per year.  Committee meetings are otherwise held as often as is required to properly discharge their duties.  During 2021, the Nomination Committee has been meeting frequently in order to oversee the Board succession process which is detailed in their report.  The ESG Committee has also been meeting frequently since its establishment in May 2021 to undertake its policy review and to keep in regular contact with the Group’s specialist ESG advisers.

Directors are expected to attend all meetings of the Board and all meetings of those committees on which they sit, as well as the Annual General Meeting.  Every meeting during the year has been attended by the quorum required by the Articles of the Company, which also require that the Independent Directors outnumber the Directors connected with the Investment Adviser.  In all cases during the financial year, the Independent Directors outnumbered the representatives of the Investment Adviser. The AGM and all scheduled Board meetings were fully attended during the year.

Shareholder engagement

The Board is responsible for ensuring open and constructive dialogue with shareholders based on a mutual understanding of objectives.

The Board approves the resolutions and related documentation to be put to shareholders at the AGM, together with any circulars, prospectuses, listing particulars and press releases concerning the Company.  The Company reports to shareholders at least twice each year in its interim and annual reports, and makes announcements, where any price sensitive or other information requires disclosure to the London Stock Exchange, which are then made available on the Company’s website.  Any written presentations to investors are made available on the Company’s website.

Stifel Nicolaus Europe Limited (“Stifel”) acts as the Company’s Nominated Adviser and Broker, assisting with communications to shareholders and monitoring compliance with the AIM Rules.  Whenever appropriate, feedback from shareholders is presented in an appropriate format (at times, anonymised at the request of shareholders) to the Board by Stifel to ensure that the Board is aware of any issues raised or feedback provided by investors. The Company’s shareholder profile and any material changes in shareholdings are reviewed by the Board at least quarterly and more often if appropriate.

All Board members are available to meet with shareholders and to answer any questions at the Company’s AGM and otherwise as reasonably required.  Board members connected with the Investment Adviser generally conduct the routine meetings with shareholders, including those following results and other announcements and they maintain contact with shareholders as appropriate throughout the year.  In certain cases, including where shareholders’ views about the Investment Adviser or the terms of its appointment are being discussed, Independent Directors including in particular the Chairman, Martin Moore, and the Senior Independent Director and chairman of the Remuneration Committee, Ian Marcus, offer to meet with shareholders as necessary.  The Board considers that this, along with the provision of independent feedback to the Board by Stifel where appropriate following shareholder meetings, ensures that the whole Board remains well informed of shareholders’ views.

The Board is keen to make access to information about the Company as convenient as possible and is also mindful of the Company’s impact on the environment.  Consequently, the Company issues its shareholder communications, including the annual and interim reports and notices of meeting, electronically with the option of receiving hard copy reports for these who wish to do so.

Constructive use of the AGM

The AGM will be held on 1 June 2022.  This is a forum to give all interested shareholders the opportunity to meet the Board and to vote on the resolutions proposed.  Prior to the Covid-19 pandemic, all Directors attended all AGMs, making themselves available to answer questions, and they intend to continue to do so as far as possible within the limits of any Covid-19 restrictions.  Government imposed restrictions required the AGMs in May 2020 and May 2021 to be held as closed meetings and, unfortunately, shareholders were not permitted to attend.  However, arrangements were made to ensure that questions could be raised in advance of the meeting. Under current guidance, it would be possible to hold the AGM in person again in 2022 but in the event that restrictions apply again at that time, the same procedures for raising questions in the absence of attendance will apply. 

Monitoring of AGM results

Following the Company’s AGM each year, a summary of voting is communicated by way of a regulatory news release and posted on the Company’s website.  To date the Company has not experienced a significant number of votes against any resolution.  The voting at the Company’s May 2021 AGM is set out below.

Ordinary Resolutions:

1.   To approve the annual report for the year to 31 December 202098.511.49
2.   To re-elect Martin Moore as a Director99.760.24
3.   To re-elect Mike Brown as a Director99.880.12
4.   To re-elect Leslie Ferrar as a Director99.540.46
5.   To re-elect Sandy Gumm as a Director100.000.00
6.   To re-elect Jonathan Lane as a Director99.990.01
7.   To re-elect Nick Leslau as a Director99.880.12
8.   To re-elect Ian Marcus as a Director99.990.01
9.   To reappoint BDO LLP as auditor98.341.66
10. To authorise the Directors to fix the remuneration of the auditor99.990.01
11. That the Company be generally and unconditionally authorised to allot ordinary shares in the Company99.830.17
Special Resolutions:
12. That the Company be generally authorised to make market purchases of ordinary shares subject to certain conditions98.431.57
13. That the Directors be empowered to allot equity securities in the Company for cash without pre-emption rights subject to certain conditions98.031.97

The total votes cast in respect of each resolution put to the 2021 AGM amounted to approximately 74% of the shares in issue.

Engagement with stakeholders other than shareholders

Along with the interests of shareholders, the Board has regard to the interests of other stakeholders including the Company’s tenants, suppliers and workforce.  The Company’s statement of compliance with Section 172 of the Companies Act which deals with its engagement with stakeholders is set out in the annual report and appears on the Company’s website.  Compliance with Section 172 of the Companies Act is kept under review and updated as necessary.  The Company’s ESG report, forming part of the Company’s engagement with the wider community, is set out in the annual report and is available on the Company’s website.

Whistleblowing policy

The whistleblowing policy applicable to the workforce and Board is reviewed and approved by the Audit Committee each year for recommendation (if appropriate) to the Board.  That policy provides for direct lines of communication from the workforce to Independent Directors if appropriate.  To date no such reports have been made but, in the event that any arise, the Audit Committee will investigate on behalf of the Board in the first instance and follow up any matters arising, reporting the results and their conclusions to the Board.

Conflicts of interest

Conflicts of interest are required to be disclosed in order that the Board functions effectively and with appropriate independence.  Declaration of conflicts is a standing order of business at the start of every Board meeting.

Director concerns and resignations

Directors would in the first instance raise any matters of concern about the operation of the Board or any of its committees with the Chairman of the Company or of the relevant committee, and any such matters and their resolution would be minuted.  If necessary, any unresolved matters may be raised with the Senior Independent Director or such other Director or external party, including regulators, as is considered appropriate.  There have been no such issues to report or resolve and no Director has resigned from the Company.

Division of Responsibilities

F.  The chair leads the board and is responsible for its overall effectiveness in directing the company.  They should demonstrate objective judgement throughout their tenure and promote a culture of openness and debate.  In addition, the chair facilitates constructive board relations and the effective contribution of all non-executive directors, and ensures that directors receive accurate, timely and clear information.

G.       The board should include an appropriate combination of executive and non-executive (and, in particular, independent non-executive) directors, such that no one individual or small group of individuals dominates the board’s decision making.  There should be a clear division of responsibilities between the leadership of the board and the executive leadership of the company’s business.

H.       Non-executive directors should have sufficient time to meet their board responsibilities.  They should provide constructive challenge, strategic guidance, other specialist advice and hold management to account.

I.        The board, supported by the company secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function effectively and efficiently.

Chairman’s role and assessment of his independence

As Chairman, Martin Moore sets the Board’s agenda and ensures that adequate time is available for discussion of all agenda items, including strategic issues in particular.  He is responsible for the leadership of the Board and ensuring its effectiveness.  He seeks to ensure that all Directors constructively engage in the business of meetings and with the development of strategy.

On the date of his appointment, Martin Moore was considered to be independent within the meaning of the Code.  Under the terms of the Code, a chairman is considered not to be independent after the date of appointment purely by reason of being the Company’s chairman.

The Code requires that the roles of Chairman and Chief Executive are distinct and that a chief executive should not become a Company’s chairman.  As it is externally managed, the Company does not have an individual designated as Chief Executive, the functions of which are carried out by the Investment Adviser.  The roles of the Board and the Investment Adviser are very distinct and are laid out in a contract between the Company and the Investment Adviser.  Martin Moore has never acted in any executive capacity in the Company and is independent of the Investment Adviser.

Composition of the Board

The balance of skills and experience of the members of the Board and the long and successful track record of the Management Team are key factors in the continuing ability of the Group to exercise skill and discipline in deal selection and embrace opportunities in a way that balances potential risks and rewards with a view to delivering the Company’s strategy.  The long term track record of the Management Team is available on the investor centre on the Company’s website and the track record of the Company over the past five years is shown in the annual report.

The composition of the Board is as it was at the time of the Company’s listing in June 2014.  At that time, the Chairman sought to appoint Directors who would bring appropriate independence and an open mind to the running of the Company, and between them to have a range of skills and experience appropriate to a full understanding of the Group and its activities and the effective delivery of its strategy.

There are three qualified chartered surveyors and two qualified chartered accountants on the Board.  All directors have long experience in the areas considered critical to the running of the business, principally real estate investment and financing, capital markets activity, mergers and acquisitions, taxation, financial reporting and governance.  These skills are considered core to the delivery of the Company’s strategy and to dealing with the risk factors outlined in the Strategic Report.  Through over seven years on the Company’s Board along with their wider careers, all Directors have a level of experience in all of these areas, but particular areas of expertise are set out below.  When vacancies arise on the Board, the Nomination Committee will seek to maintain a balance of skills in these various key areas and this aspect of the Committee’s role is reported on in the Nomination Committee’s Report.

 Chartered surveyorChartered accountantDirect real estate investment and long lease negotiationReal estate financingCapital marketsReal estate M&AAccounting and taxFinancial & governance reporting
Martin Moore      
Mike Brown     
Leslie Ferrar     
Sandy Gumm   
Jonathan Lane     
Nick Leslau     
Ian Marcus     

In addition to diversity of experience and qualifications, the gender balance on the board is two women (29%) and five men (71%).  Brief biographies of the Company’s Directors and those of other key members of the Management Team are available in the Investor Centre of this website.

Independence of Directors

The Chairman was considered independent within the meaning of the Code at the time of his appointment.  Leslie Ferrar, Ian Marcus and Jonathan Lane are all considered independent within the meaning of the Code.  Mike Brown, Sandy Gumm and Nick Leslau are not independent as they are directors of and shareholders in the Investment Adviser.  The majority of the Directors are independent of the Management Team and, excluding the Chairman who is considered not to be independent by definition within the terms of the Code, three of the remaining six are independent. 

There is no individual with unfettered powers of decision making and the Articles of Association require that Independent Directors must always hold the majority of voting power in order for a meeting of the Board to be quorate.

The Senior Independent Director

Ian Marcus is the Company’s Senior Independent Director and his biographical details are included on page 52.  Ian acts as a sounding board where necessary for Martin Moore as Chairman and, if required, as an intermediary for shareholders or for other Directors.  As the Senior Independent Director, Ian is available to shareholders if they have concerns which contact through the normal channels of Chairman or Investment Adviser have failed to resolve, or for which such contact is inappropriate.

The Code requires that the Senior Independent Director should convene a meeting of the Board excluding the Chairman at least annually to assess the performance of the Chairman.  The most recent meeting convened for this purpose was held in March 2022 and attended by all Directors other than the Chairman.

Scrutiny of executive management

Day to day management of the Group is carried out by the Company’s Investment Adviser, Prestbury, whose activities are subject always to the oversight of the Board.  The terms under which Prestbury has been appointed are set out in a contract, the Investment Advisory Agreement, which has been in place since the Company listed and which is kept under review resulting in certain amendments having been made from time to time since it was first entered into.  The matters which fall exclusively to the Board to approve are clearly set out in writing and these reserved matters may only be considered for approval in a properly convened Board meeting where directors independent of the Investment Adviser are in the majority.  Matters reserved for the Board include any material transaction and any transaction of whatever level of materiality with an unusual risk profile or where there would be a departure from the Company’s stated strategy and investment policy.  The Chairman convenes a meeting annually without the non-Independent Directors or any management representatives present to assess the Investment Adviser’s performance.  The most recent meeting convened for this purpose was held in March 2022 and attended by all Independent Directors.

In distinguishing the matters dealt with day to day by the Investment Adviser from the material strategic decisions made by the Board, the Independent Directors maintain control of key judgements affecting the business.  In delivering their services to the Company the Investment Adviser is required to diligently perform specified services and exercise judgement, drawing on the experience and expertise of the Management Team.  The Board challenges these judgements through regular interactions between the Independent Directors and the Management Team including the scheduled Board and committee meetings and other more informal meetings and discussions.  In the case of judgements affecting the accounting policies and financial statements, the Audit Committee holds discussions with both the Management Team and external auditor, separately and together, where any judgements made are interrogated and carefully considered to ensure that judgement has been exercised in the best interests of the Company and with appropriate care and diligence.

AAny matters delegated to Prestbury remain subject to the Board’s overall supervision and its review of Prestbury’s effectiveness.  Prestbury has only very limited permission to transact business for the UK companies within the Group and no discretion to transact business for any non-UK entities.  The agreement allows Prestbury, without specific approval by the Board but subject to certain conditions, to investigate, negotiate and execute or require any member of the Group to execute an asset acquisition, an asset disposal or a financing or refinancing (including related hedging instruments) in respect of an investment opportunity or existing investment, in each case only where the impact does not exceed either a Net Asset Value of £10 million or a gross asset value of £20 million.  Prestbury has not transacted any business within the discretionary limits at any time up to the date of this report.

The Remuneration Committee’s responsibilities include keeping the terms of Prestbury’s appointment under review, including periodic external independent review and benchmarking of the terms.  The Remuneration Committee, the members of which are all Independent Directors, reports on these reviews in their reports to shareholders.  In addition, the Audit Committee is in a position to closely review the Investment Adviser’s services relating to financial reporting and internal control.  As part of their work, they meet at least annually with the external auditor and without any management representatives present. 

The Board and its committees meet when appropriate without any representatives of the Investment Adviser or, if necessary, without a specific Director or Directors present.  This will include meetings where the performance of a specific Director or the Investment Adviser is being considered.

Attendance at Board and Committee meetings and the AGM

The Directors’ attendance at each scheduled Board, Committee and general meeting during the year is set out below.

 Scheduled Board meetingsAudit CommitteeRemuneration CommitteeNomination Committee
Martin Moore (Chairman and Chairman of the ESG Committee)4/4 1/1 
Mike Brown4/4  2/2
Leslie Ferrar (Chairman of the Audit Committee)4/42/21/1 
Sandy Gumm4/4   
Jonathan Lane (Chairman of the Nomination Committee)4/42/2 2/2
Nick Leslau4/4  2/2
Ian Marcus (Chairman of the Remuneration Committee)4/42/21/1 

In addition to the two meetings shown, all Audit Committee members attended meetings with the Group’s valuers prior to the consideration of both the interim and annual results

Members of the Nomination Committee have met more frequently during the year outside the formal committee setting, including meetings to engage with search consultancies and to establish the job specifications for incoming directors.

The third member of the ESG Committee is Ben Walford, a director of the Investment Adviser, who has specific responsibility for environmental issues and reporting within the Investment Adviser’s team

All directors also attended the AGM in May 2021, though restrictions in place because of the Covid-19 pandemic meant that shareholders were unable to attend. 

Directors’ and Committees’ responsibilities

The terms and conditions of appointment of the Directors are set out in letters of appointment and written terms of reference have been established for each of the committees.  The letters of appointment and committee terms of reference are available for inspection at the Company’s registered office during normal business hours on reasonable notice.  The terms of reference of the committees are available in the Investor Centre of the Company’s website.

Other commitments of Directors

Prior to any Board appointment, a Director’s other commitments must be disclosed and the Nomination Committee must be satisfied that the potential appointee has sufficient time to properly discharge his or her duties.  This includes the disclosure of other positions and estimates of the time commitments relating to them and including any potential areas of conflict of interest.  All Directors were appointed at the time of the Company’s admission to AIM in June 2014 and all additional external appointments have been subject to further disclosures to the Board prior to those appointments.

Each Independent Director has a portfolio of non-executive roles and none has a full time executive position.  While new external appointments may be entered into by the Independent Directors from time to time, the Board has always been satisfied, following careful review, that each Director remains able to fully commit sufficient time to discharging their duties for the Company.  The Nomination Committee conducts an annual assessment of the time devoted to the business by each director and each person’s ability to continue to commit appropriate time to the proper discharge of their responsibilities.

It is a requirement of the Code that no executive director holds more than one non-executive directorship of a FTSE 100 company nor the chairmanship of such a company, nor should they hold any other ‘significant appointment’.  While the Company has no executive directors, none of the Directors representing the Investment Adviser holds a chairmanship or directorship of a FTSE 100 company, nor any other significant external appointment.  There have been no significant additions to the outside directorships of the Prestbury Directors in the past 12 months.

The significant external appointments of all Directors are disclosed in their biographies on the Company’s website.

The Company Secretary

The Company Secretary is responsible for ensuring that the Board and Board committees receive accurate, timely and clear information on the Group’s activities and is responsible to the Board and committees for ensuring that Board procedures are followed.  The appointment or removal of the Company Secretary is a matter for the whole Board.

The Company Secretary seeks to ensure that the information provided is sufficient to enable the Board and the committees of the Board to discharge their duties, and that the information provided covers operational and financial reporting together with assessments of market conditions, risks and the Group’s internal control environment.  Reports are required to be submitted to the Board on a timely basis to allow sufficient time for review prior to Board or committee meetings.

Directors’ and officers’ insurance

The Directors are provided with independent professional advice at the Company’s expense where they judge it necessary to discharge their responsibilities.  Directors’ and Officers’ Liability Insurance cover of £15 million is maintained by the Company.

Composition, Succession and Evaluation

J.        Appointments to the board should be subject to a formal, rigorous and transparent procedure and an effective succession plan should be maintained for board and senior management.  Both appointments and succession plans should be based on merit and objective criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.

K.       The board and its committees should have combination of skills, experience and knowledge.  Consideration should be given to the length of service of the board as a whole and membership should be regularly refreshed.

L.        Annual evaluation of the board should consider its composition, diversity and how effectively members work together to achieve objectives.  Individual evaluation should demonstrate whether each director continues to contribute effectively.

Succession planning

The Board as a whole is responsible for ensuring adequate succession planning so as to maintain an appropriate balance of skills.  Changes to the structure, size and composition of the Board may be made following recommendations from the Nominations Committee.  This includes the selection of the Chairman of the Board and the Company Secretary, and the appointment of the Senior Independent Director.

The Nomination Committee

The Nomination Committee consists of four Directors: Jonathan Lane, Nick Leslau, Mike Brown and Leslie Ferrar.  Leslie was appointed to the Committee in May 2021, ahead of the commencement of the succession planning process for the replacement of the existing Independent Directors as their terms of service now approach eight years.  The Committee is chaired by Jonathan Lane.

The composition of the committee deviates from the Code requirement for the majority of members to be independent. While Jonathan Lane and Leslie Ferrar are independent, Nick Leslau and Mike Brown are members of the Management Team.  The Board considers this departure from the Code appropriate because the significant shareholding of the Management Team, including that of Nick Leslau and Mike Brown personally, provides very strong alignment with the interests of all shareholders.  Additionally, given the intention to replace all of the Independent Directors prior to the end of nine years’ service, which will in all cases be in May 2023, the contribution of representatives of the Investment Adviser as members of the Committee is considered particularly relevant, as the maintenance of strong and constructive working relationships amongst all individuals on the Board, including in particular the three representatives of the Investment Adviser who will continue on the Board, is considered to be important to the continuing success of the business.


All Directors are subject to election by shareholders at the first AGM following their appointment, and the Company’s Articles require that for the nine years following appointment they are subsequently subject to re-election at intervals of no more than three years after which they should stand for re-election annually.  Since the 2020 AGM all Directors have undertaken to voluntarily offer themselves for re-election each year, consistent with the requirements of the Code.

The Board considers that information sufficient for shareholders to make an informed decision on the re-election of Directors, including their specific skills relevant to a contribution to the long term success of the business, is included within the annual report and in the notice of AGM and accompanying explanatory notes.

Terms of service

Any Independent Director who has held office for nine or more consecutive years is required by the Articles of Association of the Company to stand down and offer himself or herself for re-election at each AGM.  No Independent Director of the Company has been in office for more than nine years under the terms of the Code, each having been appointed in May 2014.

According to the written terms of appointment, each Director’s service contract is terminable on three months’ notice or, in the case of serious breach, without notice and without compensation for loss of office.

Board vacancies

There has been no Board vacancy since the Company’s admission to AIM.  In the event that a vacancy arises, as will be the case for all Independent Director posts prior to May 2023, the Nomination Committee will oversee the process with due regard to the requirements of the Code and in accordance with the responsibilities set out in their report.


The Nominations Committee reviews the composition of the Board and performance relating to attendance, appropriateness of skills and adequacy of time devoted to Board duties.

The Board is responsible for undertaking an annual review of its own performance, that of its Committees and of individual Directors.  The division of responsibilities is also kept under review.

The Board is required to determine the independence of directors in light of their character, judgement and relationships, authorising conflicts of interest where, and in the manner, permitted by the Company’s Articles of Association.

In performing these reviews, the Board takes account of any feedback provided by shareholders, including through the Company’s Nominated Adviser and Broker whose opinion is sought regularly.  The evaluation of Prestbury’s effectiveness as Investment Adviser is carried out only by the Directors who are independent of Prestbury.

The Board considers at least annually whether a formal, externally facilitated Board evaluation is required.  Such an evaluation is not considered necessary at this stage as the Board has demonstrated its ability to deal effectively with a large volume of significant transactions including listing, secondary placings, acquisitions, disposals, lease variations, financings and refinancings.  The appropriateness of an external Board evaluation will continue to be kept under review.


Martin Moore, as Chairman, is responsible for ensuring that any ongoing training and development needs of the Directors are met, including those highlighted by any evaluations process.  All Directors were appointed at the time of the Company’s listing and the listing process included an appropriate induction for all Directors.  The remit of the Nomination Committee includes monitoring the skills and knowledge of the Directors and where necessary further support is provided to any Director who needs it.


The Nominations Committee’s report includes confirmation that the commitment of each Director has been reviewed and confirmed as sufficient.

Audit, Risk and Internal Control

M.      The board should establish formal and transparent policies and procedures to ensure the independence of and effectiveness of internal and external audit functions and satisfy itself on the integrity of financial and narrative statements.

N.       The board should present a fair, balanced and understandable assessment of the company’s position and prospects.

O.       The board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the company is willing to take in order to achieve its long term strategic objectives.

Audit policy and procedures

The Board is committed to complying with all relevant regulations concerning the independence of the external auditor.  The responsibility for ensuring the appropriate independence and effectiveness of the external auditor for recommendation to the Board rests with the Audit Committee which summarises its work in this respect in their report.

Approach to ensuring the integrity of financial and narrative reporting

The Board controls the integrity of financial and narrative reporting by ensuring that the Board includes individuals with sufficient and diverse experience, which includes ensuring that the Board includes a number of members who have relevant qualifications.  Specifically, the Chairman of the Audit Committee has, as required, relevant and recent experience in financial reporting matters.  The appropriateness of the qualifications and experience of the Investment Adviser’s finance team and of the resources available to them are reviewed each year as part of the internal control review conducted by the Audit Committee, the results of which are reported to the Board.  The terms of the Investment Advisory Agreement also require that all financial and narrative reports are provided to the Board with sufficient time and in sufficient detail to enable their review and for the Board to interrogate the analyses provided.

The Audit Committee

The Audit Committee assists the Board in discharging its risk management and internal control responsibilities under written terms of reference.  It comprises three Independent Directors: Leslie Ferrar, Jonathan Lane and Ian Marcus.

The Committee is chaired by Leslie Ferrar, who the Board considers has recent and relevant financial experience including an appropriate professional qualification.  Jonathan Lane and Ian Marcus both have many years’ experience in real estate capital markets and financing and the Board considers this experience also to be both recent and relevant to the Committee’s activities.

Only members of the Audit Committee have the right to attend Committee meetings.  The members of the external audit team and key personnel from the Investment Adviser are invited to attend meetings and the Company Secretary and other non-members may be invited to attend all or part of any meeting as and when appropriate.  The Committee chairman reports formally to the Board on proceedings after each meeting on all matters within the Committee’s duties and responsibilities and demonstrates how it has discharged those responsibilities.

The Audit Committee meets at least twice each year at appropriate intervals in the financial reporting and audit cycle.  Outside the formal meeting programme, the Committee chairman maintains a dialogue with key individuals involved in the Company’s governance, including the Chairman, members of the Investment Adviser’s finance team, the independent external valuers and the external audit partner.  The Committee chairman attends the AGM (save in circumstances where this is not possible, such as during the Covid-19 restrictions in force at the time of the AGM held in 2020) and is otherwise available to shareholders to answer any queries about the work of the committee.

Audit Committee role and responsibility

More detail on the activities of the Audit Committee during the year, including a summary of its role and responsibilities, is provided in the Audit Committee Report.

Financial and business reporting

The Board is responsible for preparing this annual report and has reviewed whether, taken as a whole, it presents a fair, balanced and understandable representation of the Group’s position and prospects and has concluded that it does.  The Board has also concluded that this annual report provides the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.  This includes an explanation of how the Company aims to generate or preserve value in the long term, included in the Strategic Review.

A description of the Directors’ responsibilities regarding the financial statements is set out in the Directors’ Report and a description of the auditors’ responsibilities is set out in their report.

Risk management, internal control and Group risk review

The Board is responsible for the internal controls of the Group, including operational and compliance controls and risk management systems, which are documented in a Board memorandum which is updated and reviewed at least annually.  As with any risk management system, the Group’s internal control framework is designed to manage risk but cannot give absolute assurance that there will never be any material misstatement or loss.

The Board has reviewed the risk management and internal control framework in the year using, in addition to their own experience and expertise, the approach documented in the ICAEW’s Technical Release “Guidance on Financial Position and Prospects Procedures”.  External supporting evidence is obtained where appropriate.  The Board has also had regard to the Financial Reporting Council’s “Guidance on Risk Management, Internal Control and Related Financial and Business Reporting” dated September 2014.  The Board memorandum on internal control includes the Group’s risk register which includes explanations of any changes in risk assessment over time.

The Group’s risk register underpins the Board’s assessment of the principal risks facing the Group and how they may be mitigated, including consideration of matters that may in future threaten the performance of the Group, its business model or its viability.  A robust assessment of emerging and principal risks is undertaken both on the basis of their relevance to the business on a steady state basis and their relevance to delivery of the Board’s growth aspirations.  The key risks identified in that review are described in the Strategic Review.

The Board requires that any weaknesses in the internal control framework of the Company identified by the external auditor or the Management Team are reported to the Audit Committee.  Further, any weaknesses in the internal control framework of the Investment Adviser identified by the Management Team or the external auditor of the Investment Adviser are required to be reported to the Audit Committee.  No material control weaknesses have been identified but, in the event that any are reported, the Audit Committee will bring them to the attention of the Board.

On the basis of this review, the Board believes the internal controls to be working effectively with no significant failings or weaknesses in the framework identified.  The control framework documented and tested in the Board memorandum was in place during the year and up to the date of approval of the annual report.

The Board has asked the Audit Committee to review whether an internal audit function should be established. The Audit Committee’s approach to this review and their conclusions are set out in the report of the Audit Committee.

Going concern and viability

Statements confirming the status of the Company and Group as a going concern and their longer term viability over a five year period are set out in the Strategic Review in the annual report.  These statements are made on the basis of reviews undertaken by the Management Team and evaluated in discussion with the Audit Committee which reports the results to the Board.


P.   Remuneration policies and practices should be designed to support strategy and promote long term sustainable success.  Executive remuneration should be aligned to company purpose and values and be clearly linked to the successful delivery of the company’s long term strategy.

Q.   A formal and transparent procedure for developing policy on executive remuneration and determining director and senior management remuneration should be established.  No director should be involved in determining their own remuneration outcome.

R.   Directors should exercise independent judgement and discretion when authorising remuneration outcomes, taking account of company and individual performance, and wider circumstances.

The Remuneration Committee

The Board has appointed a Remuneration Committee comprised of three Independent Directors: Ian Marcus, who is Chairman of the Committee, Leslie Ferrar and Martin Moore. 

Only members of the Remuneration Committee have the right to attend Committee meetings, but other individuals and external advisers may be invited to attend for all or part of any meeting as and when appropriate.  Appointments to the Committee are made by the Board.  The Chairman of the Board may not be chairman of the Committee.

The Remuneration Committee meets at least once each year and otherwise as required, and the Committee chairman attends the AGM (save in circumstances where this is not possible, such as during the Covid-19 restrictions in force at the time of the AGM held in 2020) and is otherwise available to shareholders to answer any questions about the Committee’s activities. 

Policy responsibility

The responsibilities of the Committee are set out in their report and include setting remuneration policy for the Chairman and the executive team, which for these purposes means the Investment Adviser.

The Board considers the appropriateness of the level of remuneration for all Directors each year, having regard to the time commitment and responsibilities involved.  Directors’ remuneration is periodically benchmarked by independent external advisers and annually benchmarked against publicly available information about other similar listed UK real estate companies. The assessment of the performance of the Chairman is determined by the other Directors.

Shareholder alignment

As an externally managed business, the shareholder alignment strategy for the management of the Company was carefully designed at the time of its listing in 2014 and kept under regular review since then.  The Board continues to recognise the crucial importance and benefits of strong alignment between the Management Team and shareholders.

Under the terms of the Investment Advisory Agreement which is, as explained in the Remuneration Committee Report, kept under regular review, the Investment Adviser is rewarded for above target shareholder returns in any financial year.  Any incentive fees are subject to appropriate safeguards for investors, including a priority shareholder return before any fee is earned, ‘high water mark’ provisions to prevent rebasing of incentives after periods of low or negative growth, a cap on incentive fees payable on the results of operations, and the payment of any fees in shares.  These arrangements are explained in note 25c to the financial statements.

Sales of any shares received by the Investment Adviser in satisfaction of incentive fees are restricted (save for certain limited exceptions), with the restriction lifted on a phased basis over a period from 18 to 42 months.  This is shorter than the total vesting and holding period of five years recommended in the Code.  The Code has been adopted subsequent to the most recent external benchmarking exercise for the incentive fee arrangements at which time the vesting and holding periods for shares awarded as incentive fees were considered to be appropriate and in line with the prevailing guidance at the time.  Bringing the vesting and holding periods into line with the Code would require a change to the contractual arrangements.  The broader terms of the contract will be subject to review in December 2022 and the appropriateness of arrangements, including their compliance with the Code, will be considered in that review.

The Code also recommends that the Committee formulates a formal policy for post employment shareholdings.  Given the Company’s external management structure, compliance with this aspect of the Code is not possible, as the Board does not control the Investment Adviser.  However, we note the commentary on the Company’s share dealing code below.

Share dealing code

The Board takes all reasonable steps to ensure compliance by the Directors with the provisions of the AIM Rules relating to dealings in securities of the Company and has adopted a share dealing code for this purpose.  Further, the Board has taken steps to ensure that directors of the Investment Adviser and staff engaged by the Investment Adviser and its delegates also comply with the terms of the share dealing code.  The Board and Investment Adviser provide annual attestations in this respect, the most recent of which were completed in December 2021.

Avoidance of formulaic outcomes

In its most recent external benchmarking review of the Investment Advisory Agreement in 2018, the Remuneration Committee and its external advisers had regard to the risk of formulaic application of the fee calculations giving rise to a mismatch between returns achieved by shareholders and the Management Team as part of a wider review.  As a result, the Company and the Management Team agreed to introduce a cap at 5% of net asset value on incentive fees arising on the Group’s operations to avoid undesirable outcomes of this type.  The approach of the Remuneration Committee to this aspect of the Code is explained in their report.

Pension contributions

The Company does not bear the cost of any pension contributions because no Director is entitled to Company funded pension contributions.

Notice periods and compensation for loss of office

The notice period for the Independent Directors is three months, save in the case of dismissal for cause which can be immediate and without compensation.

The Investment Advisory Agreement expires in December 2025 and is subject to its next scheduled review by the Remuneration Committee by December 2022.  As explained at the time of the most recent independent benchmarking exercise, carried out in March 2018 with the assistance of AON’s compensation practice, the period to December 2025 was considered an appropriate period over which to secure the services of the Management Team in the interests of shareholders as a whole.  The agreement is terminable by the Company or the Investment Adviser in certain circumstances.  The maximum fee payable, for example in the event of a change of control of the Company should either party elect to terminate the agreement at that time, would be one year’s advisory fee.  There are no break payments or renewal rights on either side at the end of the term.

Costs of the executive team and shareholder alignment

While the Company does not employ any executive management, the Independent Directors consider that the provisions underlying Principles P to R of the Code are in the main applicable to the Investment Advisory Agreement.  The Remuneration Committee sets out in its report its assessment of how, specifically, the Company has complied with the provisions of the Code as to the assessment of remuneration policy.

Signed on behalf of the Board on 9 March 2022.

Leslie Ferrar