The true value of retail value The true and Accounts 2014 and Accounts Annual Report

NewRiver Retail Limited Annual Report and Accounts 2014 NewRiver Retail Limited Annual Report and Accounts 2014 Who we are

NewRiver Retail is a specialist REIT focused on the UK retail market and has rapidly become the leading value-creating retail property investment platform in the sector. With a customer-first commitment, NewRiver Retail is the UK’s third largest shopping centre owner/manager by number with assets under management of £600 million comprising 24 UK-wide shopping centres, 18 high street units, one supermarket and a portfolio of 202 pubs for retail conversion. The portfolio has 1,118 tenancies, a total of 4.6 million sq ft, an occupancy rate of 95% and total annual footfall of over 100 million. Strategic report Governance Financial statements 01 Key Performance Indicators 35 36 Risk management Income Statement Income of Comprehensive Consolidated Balance Sheet Flow Statement of Changes in Equity Notes to the financial statements Glossary of terms A continued story of success Continuing to build our portfolio for the future Our key portfolio metrics Robust and proven business model Driving our strategy review Chief Executive’s of Directors Board Corporate Governance report Audit Committee report report Independent Auditor’s Financial statements 55 Consolidated 56 Consolidated Statement 57 58 Consolidated Cash 59 Consolidated Statement 60 86 88 Company information Strategic report 02 Chairman’s statement 03 04 05 06 07 Financial statistics 08 18 22 Property review 30 Financial review Governance 38 39 42 44 Remuneration report 48 Directors’ report 52 3 2 1 02 NewRiver Retail Limited Annual Report and Accounts 2014 Chairman’s statement

Growth in assets under management There was one Board change, Charles was in small part driven by a £13.7 million Miller left the Board at the end of the revaluation surplus, reflecting both improved year. On behalf of the Company, to which performance and more favourable he will remain an independent adviser, I property market sentiment in our sectors. would like to thank him for his contribution. However the bulk of AUM growth was a I would also like to thank our management, result of acquisitions, made both individually employees, advisers and shareholders for and in conjunction with BRAVO, our their hard work, support and enthusiasm for joint venture partner a fund managed or the Company. advised by Pacific Investment Management The recent improvement in the UK Company LLC. economy favours the NewRiver Retail In total, and including the joint ventures, we investment proposition. The Board believes completed acquisitions worth £200 million that there are still many good buying over the course of the year, with an opportunities with purchase yields likely to “The key objective of average initial yield of 11%. The Company continue outstripping the cost of debt by a also recycled capital via disposal of two healthy margin for the foreseeable future. NewRiver Retail is to properties for £9 million. Most of last year’s The Company is therefore in an excellent become the leading acquisitions occurred in the second half, so position to capitalise on opportunities their annualised earnings will only be fully and to continue its impressive expansion. value-creating property recognised in our 2014/15 accounts. The Board is delighted with the significant progress to date and looks forward to the A distinctive highlight of the year was company in the UK future with confidence. the purchase of 202 public houses from whilst continuing to Marston’s in November 2013, through which the team saw an opportunity to deliver strong returns Paul Roy offer well-located convenience store Chairman for our shareholders.” space to major food store operators. Subsequently, the Company announced NewRiver Retail Limited that The Co-operative Group had signed 14 May 2014 a conditional agreement for lease on 54 of these properties. The Board is confident Overview that further similar agreements will be completed in due course, and that this NewRiver Retail made further excellent portfolio acquisition will achieve its highly progress in the year ended 31 March 2014. profitable potential. EPRA adjusted profit increased by over 80% to £9.5 million (2013: £5.2 million) – the During the year, the Company raised Company’s fourth consecutive year of profit £152 million of fresh equity capital through growth. Assets under management grew the issue of 65 million new ordinary shares. by 50% to £600 million (2013: £400 million), This strengthened our financial position, mainly through acquisitions. The full enabling us to move quickly on acquisition dividend for the year was maintained at opportunities. Our financing strategy was 16 pence per share (2013: 16 pence) on a further enhanced during the year by re- share capital base that was enlarged as a negotiating terms on bank debt facilities. result of the Company’s successful issue of These now carry an average maturity of new equity in July 2013 and February 2014. 4.5 years (2013: 3.1 years). Our average borrowing cost was unchanged at The key objective of NewRiver Retail is to below 4%. become the leading value-creating property company in the UK whilst continuing to In March 2014, the Company paid a special deliver strong returns for our shareholders. interim dividend of 10 pence per share in Management delivered the first element addition to the interim dividend of 6 pence of this strategic objective over the year per share paid in January 2014. The Board through its active asset management and is confident that the future earnings of risk-controlled development programme. NewRiver Retail will be sufficient to justify The second element was achieved and quarterly dividend payments to shareholders demonstrated with the Company showing going forward. The first such payment will a Total Shareholder Return for the year of be in October 2014. Excluding the special 55% (2013: 12%), compared to 27% for interim dividend of 10 pence the EPRA NAV the FTSE 350 Real Estate Index. per share would have been 250 pence. Strategic report Governance Financial statements 03

raising placings of new shares major Two a total of £152 million with the first raisinga total of £152 million within 5 months deployed successfully at an average £200 million of acquisitions ERV 1.7% above Valuation development programme Growing projects including the completion of three and Paisley Warrington in Wallsend, to joint venture of BRAVO Growth £350 million of assets to lease signed Conditional agreement for 54with The Co-operative Group convenience stores 94%) Enhanced occupancy of 95% (2013: of 8.3 years WALE Improved (2013: 7.8 years) purchase yield of 11% purchase in AUM to £600 million 50% increase two of equity through Successful recycling disposals totalling £9 million at 99 new lettings and lease renewals Operations highlights Operations value is driving growth Portfolio • • • • • • • • • •

A continued story of success of story A continued (2013: 51%) and low cost of debt retained(2013: 51%) and low cost of debt at 3.9% (2013: 3.9%) debt maturity to 4.5 years Improved (2013: 3.1 years) tax of £23.1 million before Profit (2013: £1.4 million) leading to a basic EPS of 38.0 pence (2013: 4.7 pence) 15.7 pence (2013: 16.3 pence) during a year15.7 pence (2013: 16.3 pence) during issued were 65 million new shares where at 16 pence Dividend per share on the(2013: 16 pence), 98% covered basesignificantly enlarged shareholder in 2014 Quarterly dividend to commence of 240 pence (2013: 240 EPRA NAV pencepence) which would have been 261 interimexcluding payment of the special and 2014 dividend of 10 pence on 28 March exceptional costs of 11 pence of 25% balance sheet with net LTV Strong financial year (2013: 12%) financial year (2013: million of £9.5 EPRA adjusted profit by 80% increased (2013: £5.2 million) of EPRA adjusted earnings per share Return of 55% for the Shareholder Total • • • • • • • • • Delivering strong returns to shareholders returns strong Delivering Financial highlights 04 NewRiver Retail Limited Annual Report and Accounts 2014 NewRiver at a glance Continuing to build our portfolio for the future

Portfolio income composition (NewRiver share) Retailer income distribution

1. Shopping centres 66% No. Retailer No. of Gross Income % Rent secured stores 3. Pubs 20% 1 1 13 £1,109,200 4.4% 3 2 12 £935,220 3.7% 3 11 £918,358 3.7% 2. High street assets and 2 4 2 £875,000 3.5% supermarkets 5 7 £867,975 3.5% 14% 6 2 £674,946 2.7% 7 3 £651,368 2.6% 8 9 £603,498 2.4% 9 3 £567,500 2.3% 10 8 £498,365 2.0% 3rd 11 14 £485,693 1.9% largest shopping 12 15 £443,300 1.8% centre owner/manager 13 9 £407,500 1.6% in the UK 14 8 £402,000 1.6% 15 5 £304,150 1.2%

High street locations Supermarket Shopping centres

1 Grangemouth 14 Burgess Hill 1 East Ham 1 Edinburgh 13 Market Deeping 2 Newcastle 15 Worthing 2 Paisley 14 Wisbech 3 Grimsby 16 Poole 3 Kilmarnock 15 Erdington 4 Doncaster 17 Crawley 4 North Shields 16 Leamington Spa 5 Warrington 18 Preston 5 Wallsend 17 Carmarthen 6 Wrexham x 2 6 Middlesbrough 18 Llanelli 8 Norwich 7 Bridlington 19 Oxford 9 Hereford 8 Bramley 20 Cowley 10 Romford 9 Hull 21 Witham 11 Harlow 2 10 Huddersfield 22 Burgess Hill 1 12 Basingstoke 3 1 11 Widnes 23 Fareham 2 13 Andover 12 Skegness 24 Boscombe 5 4 6 18 7 8 9 4 10 3 11 5 12

13 14 6 15 8 16 9 21 11 17 10 18 19 20 1 12 13 17 14 22 23 24 15 16

Supermarket Shopping centre High street unit Pub Strategic report Governance Financial statements 05 1 ERV 58.0

2014 53.8 2 8 7 41.7 March 2014 March 95.2% March 2014 March 8.3yrs Contracted rent 6 2013 Assets under management under Assets 36.2 3 5 4 ERV 34.7 2014 1 31.2

22.8

NewRiver Retail share Retail NewRiver 2013 March 2013 March 7. 8 y r s 19.2 Contracted rent Value 35% Food 19% Other 15% Health & Beauty 10% Services 7% HomeElectrical & 6% Premium 4% Books & Stationery 4% 10 60 50 40 30 20 0 The Company’s contracted rent under management increased by 49% (NRR Share: 63%). The Company’s ERV increased by 39% (NRR Share: 52%). March 2013 March 94.1% 54% income is of retail food secured against and value retailers 1 2 3 4 5 6 7 8 WALE excludes Marston’s pub portfolio for which the average lease terms are 4 years. WALE (Retailers) WALE 1 Retailer by profile Occupancy rates and ERV (£m) Contracted rent 2014 £597m Our key portfolioOur key metrics March 2014 March 1118 +53% new lettings and lettings new renewals lease 99 2013 £390m March 2014 March 10 0 m +42% +31% 2012 £274m

+66%

2011 £165m 141 total leasing events All new leasing events were on average 1.7% above ERV. All new leasing events were March 2013 March 851

500 80m March 2013 March Shopping centre footfall (pa) Shopping centre Leasing events (number) Tenancies (number) Tenancies Assets under management (£million) Assets under management

700 600 400 300 200 100 0 Assets under management increased by 53% during the period as a result of new acquisitions. New acquisitions increased the weighted average purchase initial net yield from 8.8% 9.8%. to 06 NewRiver Retail Limited Annual Report and Accounts 2014 Our business model Robust and proven business model and strategy

At NewRiver Retail we have a clear business model focused on driving income returns. Our focus on the winning non-discretionary food and value retail sectors allows us to apply our expertise to unlock additional value through a three-fold strategy of careful stock selection, active asset management and risk-controlled development.

01. Targeting non-discretionary 02. Careful stock selection food and value retail Stock selection is integral to our business model. We focus on the outperforming food and value We consider three key aspects in this process: sub-sectors. Our portfolio is driven by the I. Entry price: We acquire properties with an attractive non-discretionary expenditure, where the UK family entry price, buying assets with yields of 7-10%. spends its budget week in and week out. Retail is a highly dynamic and evolving industry and hugely II. Sustainable income streams: Buying into sustainable important to the British economy, representing 20% long-term cash flows with strong underlying of GDP. We have a clear specialisation and are retail performance. confident that with our skill set we will continue to III. Opportunity to create value: We seek assets that adapt to the changing market and deliver attractive offer a range of asset management and development returns to our shareholders. initiatives with the potential to create further value, thereby generating a minimum target IRR of 15%.

NewRiver Retail The UK’s leading value-creating retail property investment specialists. Actively engaging with retailers, stakeholders and consumers to deliver the true value of retail.

03. Active asset management 04. Risk-controlled development Active asset management has never been Our risk-controlled development programme more important in protecting value and unlocks opportunities to drive additional value enhancing income. We take a customer-first and includes long-dated pre-lets, tight cost- approach, managing our shopping centres control, experienced partners and ranges from as though they are operating platforms and small unit amalgamations to turn-key town working closely with our retail partners to centre redevelopments. drive footfall, dwell time and basket spend. Strategic report Governance Financial statements 07 – – – – (4%) (3%) +0.6 (26%) Growth Growth +43% +80% +6.2% (£27.5m) Movement/ Movement/ +£56.7m +£21.7m +£84.2m +£18.5m +£159.8m +1.4 years 3.3 0% 2013 2013 51% 77% 9.5 3.9% (0.8%) 55% 2014 2014 102% +12% £5.2m £1.4m £8.4m £(2.8)m £79.8m £128.8m £120.4m 3.1 years 16 pence 240 pence Source: Bloomberg Source:

3.9 0%

2014 2014 5.2 12% 98% 25% 74% 2013 2013 3.9% 5.4% +55% £9.5m £23.1m £92.6m £92.9m £15.7m £239.6m £185.5m 4.5 years 16 pence 240 pence (1) (2) (1) (3) (4) 4.9 Note Note 2012 2012 (16%) 0 20 40 60 2.0 4.0 0.0 6.0 8.0 -20 10.0 % EPRA adjusted profit £m Return Shareholder Total Financial statistics 16 25.2 2014 2014 (98%) 16 19.9 2013 2013 (102%)

15 16.1 2012 2012 (100%) 5 0 15 10 20 5.0 0.0 EPRA is the benchmark profit ratio for the property sector and includes realised recurring profits plus realised profits on the sale of properties above valuation. This is a true cash profit earned above valuation. This is a true cash profit by the of properties on the sale profits plus realised profits recurring sector and includes realised ratio for the property EPRA is the benchmark profit and cover. company during the year and the basis for dividend payments debt and exclude convertible of joint venture share the Company’s basis to include shown in the table on a look-through and are against properties directly secured debt facilities are Secured loan stock. unsecured balances. debt facilities net of cash to the secured compared the value of properties Loan to value measures versus interest payable. income received level and is the basis for banking covenants. It is calculated by comparing actual net rental is tested at property cover Interest 15.0 10.0 25.0 20.0 30.0 Dividend per share pence (Dividend cover %) Gross rental income (proportionally consolidated) income (proportionally rental Gross £m Performance Balance Sheet (proportionally consolidated) Balance Sheet (proportionally Total Shareholder Return Shareholder Total Explanatory Notes: (1) (2) (3) (4) Net Asset Value EPRA adjusted profit EPRA NAV per share EPRA NAV Dividends per share Secured debt facilities Secured Dividend cover tax before Profit Cash Like-for-like rental growth rental Like-for-like Net debt Cost of debt Capital return valuation movement and disposals Property Average debt maturity debt Average Loan to value coverInterest % of debt at fixed/capped rates 08 NewRiver Retail Limited Annual Report and Accounts 2014 Our business model Driving our strategy and strategy

01. Targeting non-discretionary food and value retail

Our specialisation in food and value retail delivers uplift in valuations

Food and value retail continues to be an outperforming and robust sub-sector and driving force for the retail industry. This year we have welcomed a variety of new value, food and restaurant operators into the portfolio including ASDA, Turtle Bay, GBK, Nando’s and Waitrose as well as creating the strEAT food court in Hull and introducing our second Primark to the portfolio. Turn to pages 14-15 to read more about how we have enhanced our food and leisure offer within the portfolio.

Income secured against Income secured all food and value retail against food retail 54% 19% 4% increase year-on-year 3% increase year-on-year

03. Active asset management

Managing our assets as operating platforms

Alongside our very acquisitive year we remained highly committed to improving the operating performance of our assets. Our customer-first approach, excellent retailer relations and focused, pro-active asset management during the last 12 months has delivered another very successful year. Read our ten point plan of asset management operating objectives in full on pages 25-28. New lettings and Total leasing events lease renewals Above ERV 141 99 1.7% Annual rent (100% share) £53.8 million Tenancies 1,118 Assets under management £600 million Occupancy 95% On-site staff 200+ Combined service charge £10.4 Disposals £8.8 million Strategic report Governance Financial statements 09

Page 10 Page 11 Page 12 Page 13 9,500 sq ft 50,000 sq ft 27,000 sq ft 56,000 sq ft Total area Total Average yield Average 11% £50m £34m £24m £90m Wallsend Warrington Paisley Locations Total development area development Total

Acquisitions 142,500 sq ft sq 142,500 £200m Llanelli and Oxford North Shields, Grangemouth and Edinburgh 202 pub portfolio on development. Find out more Delivering on our risk-controlled page 28. Occupier and Library Customer First Centre Iceland, Home Bargains and 99p Stores Primark Iceland Middlesbrough NewRiver is committed to driving forward its forward driving to committed is NewRiver development portfolio-wide risk controlled occupational underpinnedprogramme by completed on time and were significant projects During the year three unit developments and one turn- retail within budget – two risk-controlled is being made on the development. Good progress key town regenerative of existing assets and new acquisitions.re-development £200 acquisitions million With one of the most million of acquisitions, NewRiver has been £200 market in the last 12 months. Our in-depthsuccessful buyers in the place and excellent network of marketknowledge of the market of our acquisitions being transacted in the majority connections resulted off-market. criteria: securingAcquisitions during the period met our investment and by affordable assets at an attractive entry price underpinned spend; and offering focused on non-discretionary sustainable rents; a minimum 15%a range of asset management initiatives to deliver IRR.levered agreements. pre-letting 04. Risk-controlled development Risk-controlled 04. 02. Careful stock selection stock Careful 02. 10 NewRiver Retail Limited Annual Report and Accounts 2014 Driving our strategy Acquisitions

£50 million Hill Street shopping centre, Middlesbrough’s principal retail destination

Following our successful fund raise in June 2013, NewRiver completed the acquisition of the Hill Street shopping centre in Middlesbrough (www.hillstreetshopping.co.uk) for a total consideration of £50 million reflecting a net initial yield of 9.6%.

With an annual footfall of 13 million this high performing 240,000 sq ft shopping centre is anchored by Primark, Debenhams and Marks & Spencer and supported by other major retailers such as Sports Direct, Argos, Home Bargains, New Look and Poundworld.

How we are driving value As well as providing exceptional cash on cash returns of 19.8%, reflecting the very attractive entry price, the centre offers a range of asset management initiatives to improve value, including increasing the food and beverage offer, improving consumer entrances, signage, internal lighting and driving commercialisation income.

9.6% initial yield

240,000 sq ft total area

13 million footfall pa Strategic report Governance Financial statements 11

sq ft

% million million

7. 8 yield initial 180,000 area combined total 12 pa footfall £34 Llanelli Centre, Shopping Elli St Located in South Wales, the St Elli shopping centre was acquired(www.stelli.co.uk), for £29.2 million reflecting a net initial yield 7.6%. of sq ftThis enclosed 162,000 shopping centre with a 450 space car park benefits from high occupancy reflective at 99%, of the main a high anchor, performing sq ft 70,000 Asda store. Other major retailers trading within the centre include Wilkinson, Sports Direct, Poundland and Argos. the Asda income theAt last for the review centre date (2012) had delivered compound a 3.9% growth. In addition benefitting to from secure and potential growth in the rents, St Elli offers further mix, retail the improving opportunities enhancing including value commercialisation. and marketing Gloucester Green, Oxford Gloucester Green, located in the heart Oxford of was City, millionacquired reflecting for a £5.1 net initial yield 9.6%. of Comprising retail units 16 clustered around a large open pedestrian market square, this property offers very significant reposition opportunities to development and management asset the asset as a principal food, beverage and leisure destination in the centre Oxford. of Acquisitions City Centre Oxford prime and Asda portfolio the join retail space 12 NewRiver Retail Limited Annual Report and Accounts 2014

Driving our strategy Acquisitions

10.4 % initial yield £24 million sq ft Acquisition of a high-performing portfolio 308,000 following the asset management combined total area appointment one year prior

The Beacon, North Shields 10 million Comprising 183,000 sq ft and a 460 space car park, key footfall pa retailers include Wilkinson, Home Bargains, Poundland, B&M, Boots and Greggs. Enhancement of retail mix is planned through the reconfiguration of existing units to meet specific retailer demand, modernising the physical appearance both internally and externally and improving the connections between the centre and the local library which has just undergone a £3 million refurbishment by the Council.

Newkirkgate, Edinburgh Located in Leith, Edinburgh, this popular everyday shopping centre comprises 90,000 sq ft of retail, anchored by Lidl with other key retailers including Poundland, Superdrug, Boots and Farmfoods.

Our strategy is already underway to improve the centre cosmetically, reduce two long-term voids, pursue an extension opportunity with Lidl and explore potential residential opportunities within the ownership.

La Porte Precinct, Grangemouth With a purchase price of just £1.6 million this asset represented less than 10% of the Zolfo Cooper portfolio and comprises a retail parade located in a prime position within Grangemouth’s town centre. The fully let retail parade has sustained 100% retail occupancy for over ten years, let to Poundstretcher, WH Smith, Boots and Thomson Travel. Strategic report Governance Financial statements 13 sq ft sq ft % 32,000 32,000 area site total average 12.9 yield initial 202 pubsnumber of £445,000 value unit average 26 caraverage parking 3,300 pubaverage area

million

54 convenience stores with stores convenience 54 Group The Co-operative In less than four months our strategy has been validated with with portfolio transaction our leasing of the announcement The Co-operative Group who has agreed, subject specific to conditions, lease to 54 up properties to 15 for fixedterms of per sq ft. Rents have RPI-years at rents ranging from £15-17 linked increases capped and Furthermore collared at 4% at 1%. willwe receive performance million fees payable £2.7 up of to on the delivery a minimum of 40 of properties the to Group. Co-operative NewRiverIn total, is developing almost 200,000 sq ft new of c-store space for The Co-operative Group. Finished unit sizes, each with appropriate car parking, will range from 3,000 sq ft to 4,500 sq ft and will trade seven days a week. NewRiver will undertake all planning, development and contract requirements deliver to the end product The to Co-operative Group. It is expected that the majority the of completed assets will be delivered within two years. Following the significant interest fromother nationalfood operators, NewRiver is working up proposals pre-let to further significant tranchesof the pub portfolio. Additional uses such as brandedrestaurants, drive-through food outlets, residential and medical centres have also been identified. Our most innovative transaction to date was the acquisition the was transaction date to innovative most Our of 202 pubsfrom Marston’s Plc for £90 million and, in secured conditional lease the we months, less four than The Co-operative c-stores Group. with 54 new agreement of Our appreciation the of rapidlygrowing demand from major food retailers expand to their convenience store estate allowed us to identify an intuitive opportunity facilitate to this growth. Pubs can be ideal properties accommodate to convenience stores and it was with this opportunity inmind that hand-selected we the 202 Marston’s. portfolio from the acquired formed that pubs As part the of transaction, agreed manage Marston’s to the portfolio leaseback on a four-year at a fixed annual rental which, based on the acquisition price £90 of million, equates an to attractive This net initial arrangement yield 12.9%. of frees our time pursueto our strategy alternative of uses whilst benefitting from an attractive income stream. When are we ready implement to an alternative use can we call for vacant possession from Marston’s. The majority the of portfolio will be new-build projects constructed on surplus land adjacent the existing to public houses. The remaining will be conventional conversions from public house use c-storesto or redeveloped as standalone c-stores or other uses. Great progress on 202 pub portfolio on 202 progress Great with Lease to Agreement with Conditional Group The Co-operative Acquisitions £90 14 NewRiver Retail Limited Annual Report and Accounts 2014 Driving our strategy

“We’ve now got a vision – locals can identify much more with what the centre is about, it’s much more vibrant and successful.”

Maria Hughes Regent Court Centre Manager Strategic report Governance Financial statements 15

Co-operative anchor supermarket within Locks Heath Heath Locks within supermarket anchor Co-operative Shopping Village and opened in March 2014. Delivering on our strategy re-position to this previously under- performing street centre, has EAT quickly become Leamington’s principal food and restaurant destination. Since purchasing the centre NewRiver in December has completed 2012, two new pa against therestaurant lettings at rent a total £177,250 of pa with a further rentERV at purchase three new £118,600 of restaurant lettings under A rapid offer. pre-let for a 3,200 sq ft unit amalgamation introduced the centre to at an Nando’s annual lease. onrent a 15-year Following £70,000 of the completion landlordof works, restaurant operator Bay opened Turtle a 4,200 sq ft double unit lease on a 15-year paying £107,650 pa. A weekly artisan food market including a BBC Good Food interest drive also finalist Masterchef a and vendor accredited and attract increased footfall. Prospect Hull Centre, a multi-branded foodstrEAT, court offer anchored Burger by King, opened re-activating on 30 November disused 2013 space and increasing footfall Additional and turnover. restaurants within foodthe strEAT court include Pizza Neo, Real El Taco Café.co, Loco and CPL Foods, The Wuji. has operator, signed a 15-year lease at a rent £60,000 of pa plus turnover a top-up provision. The transactionValuation 140% above reflects ERV. a rent Packhorse Huddersfield Centre, Shopping redevelopment, the for been granted has consent Planning refurbishment works and part change use of at the centre, for the creation a 180-seat of food court The offer. Packhorse Kitchen will feature six local and regional food and beverage brands, sq and ft a new 15,000 anchor These store. initiatives will increase activate WALE, disused the Centre’s space and generate increased footfall as well as reduce overheads for existing and prospective retailers. Waitrose – Locks Heath, Fareham Waitrose completed the acquisition the of 29,000 sq ft A focus on food and leisure and food on A focus food on focus A good. tastes Value customer a richer creates leisure and value. drives and experience unlocked have we year financial the During with time dwell and footfall driving value and leisure food new of introduction the portfolio. the across operators Regent Court, Spa Leamington

University of Warwick of University Chris shopper Local Student a of be more to used “It there now really, thoroughfare interest of a bit and stalls are got it’s around, look – just attention.” peoples’ “It’s drawn a lot more people more a lot drawn “It’s I’ve a student As area. this into – we didn’t that enjoyed really any, restaurants or many, have before.” Nando’s like 16 NewRiver Retail Limited Annual Report and Accounts 2014 Driving our strategy

Customer First Centre and Library opening ceremony, March 2014

Unlocking value through risk-controlled development

NewRiver is committed to successfully delivering on driving forward its portfolio- wide risk-controlled development programme

During the financial year three significant projects were completed on time and within budget.

Wallsend – 77,000 sq ft Town Regenerative Redevelopment After successfully securing planning permission in December 2012, this town-regenerative redevelopment has now been completed on time and in budget. Pre-lets were agreed with North Tyneside Council for a 50,000 sq ft Customer First Centre and Library as well as to Iceland, Home Bargains and 99p Stores for a total of 27,000 sq ft new retail space. The total contractual rent was £723,000 pa and the weighted average lease is 20 years.

Warrington – 56,000 sq ft retail unit pre-let to Primark Primark’s modern Europe’s leading value fashion retailer opened its doors in early staff facilities December 2013 following NewRiver’s successful completion of the development on time and within budget. In 2012 we successfully acquired the long-leasehold interest from Standard Life to gain vacant possession before relocating the existing New Look, releasing space to begin a complicated restructuring of two units to create a single 56,000 sq ft unit for Primark who signed an agreement for lease in November 2012 for a term of 25 years at an annual rent of £475,000. This asset let on a long-term lease to Primark is generating an attractive cash on cash return of 12%.

Paisley – 9,500 sq ft retail unit pre-let to Iceland Amalgamation of two shop units and office accommodation to create a new 9,500 sq ft unit for Iceland let at £135,000 pa on a 15-year lease. Strategic report Governance Financial statements 17

sq ft Wallsend, April 2014 Wallsend, Wallsend, April 2013 Wallsend, 142,500 developed newly of community space and retail Iceland The Piazza,The Paisley

Mary Glindon North Tyneside for MP “NewRiver Retail have have Retail “NewRiver fingertheir thepulse on heart retail the keeping Wallsend.” in beating Regeneration Project Manager Project Regeneration Council North Tyneside Kate Lovelock “We worked very worked “We closely an at NewRiver with a gave and early stage ifthey that commitment centre, the did acquire whatever do would we them help to could we a success.” it make 18 NewRiver Retail Limited Annual Report and Accounts 2014 Chief Executive’s review

The year to 31 March 2014 has been a transformational period for NewRiver and one of the most active to date in the Company’s short history as a public company. NewRiver significantly increased EPRA adjusted profit and more than tripled the Company’s market capitalisation. A number of major acquisitions were made at attractive yields and the Company grew its high yielding portfolio significantly, particularly as a result of strong investor support for the business and its management which achieved two successful equity fundraisings totalling £152 million.

Overview Active asset management Shortly after the year-end, NewRiver driving income announced a conditional agreement For the fourth consecutive financial year Active asset management activities with The Co-operative Group to lease NewRiver has delivered a strong set of progressed significantly throughout 54 new convenience stores from the financial results and this year has also the year across the entire portfolio with public house portfolio at agreed rents on delivered a Total Shareholder Return of 55% NewRiver registering a total of 141 leasing 15-year leases which upon completion (2013: 12%). events including 99 new lettings and lease will create an institutional grade retail Gross revenues increased by 26% to renewals and generating an income of property portfolio. This innovative off-market £25.2 million (2013: £19.9 million) resulting £2.5 million, 1.7% above Valuation ERV. transaction again reflects the Company’s in 80% growth in EPRA adjusted profits Occupancy at the year-end stood at 95%. strong risk-controlled development skills to £9.5 million (2013: £5.2 million). We are and ability to drive value through active The Company continued to recycle capital particularly pleased to maintain the dividend asset management. through two disposals totalling £9.0 million, at 16 pence, almost fully covered, on the the largest of which was the sale of the The two remaining acquisitions were a enlarged issued share capital following Library in Wallsend to an annuity fund for portfolio of two shopping centres, in Llanelli payment of the special interim dividend £7.9 million equating to a net yield of 4.3%. and Oxford for £34.3 million reflecting of 10 pence on 28 March 2014. This, Shortly before year-end the Company an initial yield of 7.8% and secondly, together with our recent announcement completed the acquisition of a 43,000 sq ft a portfolio comprising two shopping to commence quarterly dividends retail unit in Crawley for £4.25 million centres in Edinburgh and North Shields in October 2014, demonstrates the and, following a re-gear of the lease to and a retail parade in Grangemouth for Company’s focus on driving and delivering Poundland, has sold the investment for just £24.0 million reflecting an initial yield of income returns. We are also pleased under £6.0 million post year-end. 10.4%. The second purchase resulted from to announce EPRA NAV of 240 pence a bank driven administration for which the (2013: 240 pence) at the year-end, which £200 million of acquisitions Company had been appointed as asset excluding the special interim dividend of During the financial year the Company, manager one year earlier. 10 pence, would have been 250 pence through its joint ventures, completed four Shortly after the year-end, we completed after absorbing exceptional costs of 11 major acquisitions totalling £200 million the acquisition of a former HSBC branch pence during the year. This includes the at an average yield of 11%. The first, in in Preston from HSBC for £650,000 positive revaluation movement during the July 2013, was the Hill Street Shopping simultaneously agreeing a pre-let to year of £13.7 million. Centre in Middlesbrough for £50 million, Sainsbury’s to create a 10,000 sq ft store reflecting a highly attractive 9.6% initial Two major share placings at an annual rent of £90,000 pa on a yield. The 240,000 sq ft centre is anchored A key highlight of the year has been 15-year lease. by leading national retailers Primark, M&S the strong support from new and and Debenhams. The second acquisition, existing shareholders for management in November 2013, was perhaps and the Company’s growth strategy. NewRiver’s most innovative to date. NewRiver completed two major placings The Group acquired 202 public houses of new shares to raise a total £152 million from Marston’s totalling 6.5 million sq ft which more than trebled its market with associated freehold land including capitalisation to stand at approximately car parking and gardens for £90 million, £271 million at the year-end. Pleasingly, with the intention to convert the majority both fundraisings were significantly of the portfolio to alternative retail and over-subscribed. Management view leisure use. Acquired primarily to satisfy these developments as a strong vote the identified growing demand from of confidence in the Company’s sector- major food retailers for convenience store focused business model. expansion in high density population areas, the acquisition was underpinned through a leaseback agreement with the vendor, which will continue to operate the estate as an ongoing public house portfolio, for a minimum term of four years paying rental income equating to an initial yield of just under 13%. Strategic report Governance Financial statements 19 20 NewRiver Retail Limited Annual Report and Accounts 2014 Chief Executive’s review continued

BRAVO joint venture grows to Retail dynamism Outlook £350 million Retail remains a dynamic and vibrant The Company views its future with great All four major acquisitions were acquired sector which is pivotal to the UK economy. optimism. With attractive initial yields in through the 50:50 joint venture with The sector’s performance has improved our core market and low borrowing costs, BRAVO, a fund managed or advised by throughout the period as the economic there is significant opportunity to grow the Pacific Investment Management Company recovery has gathered strength. NewRiver’s portfolio through the acquisition of good LLC. NewRiver has identified extensive focus on the outperforming food and quality assets with sustainable income asset management opportunities which value sub-sectors with an emphasis on streams, both directly and through our joint with the high running yield of 11% and convenience and non-discretionary spend venture partners. significant asset management fees will drive has proven a successful model that will income and generate attractive returns over continue to perform well in the improving We have grown a strong group of highly the medium to long term for shareholders. economic environment. focused, experienced and talented Since its formation in 2012 the joint venture individuals who are passionate about Business model with BRAVO has acquired assets now retail, understand the property market valued at circa £350 million. The Company is focused on driving income intimately and are committed to identifying returns by targeting higher yielding assets and delivering the true value of retail. Risk-controlled development with a lower risk profile through affordable This includes our entire dedicated and unlocking value and sustainable income streams and where award-winning centre management teams NewRiver is committed to driving forward its we can create additional value through our as well as our skilled and professional local portfolio-wide risk-controlled development active asset management and development and national advisers. programme and good progress has skills. Within the food and value sub-sectors been made during the year under review. there are a number of retailers seeking The Company has made significant strides Three projects were completed on time additional space – as evidenced by our towards its stated objective to grow the and within budget – in Warrington, a portfolio transaction with The Co-operative portfolio to at least £1 billion of gross assets 56,000 sq ft retail unit pre-let to Primark; Group and with a limited retail development in the medium term and with the current in Paisley, a 9,500 sq ft retail unit pre-let to pipeline this provides attractive opportunities valuation at £600 million, there is scope Iceland; and most significantly, in Wallsend, to unlock value by meeting that demand. to reach our goal sooner than anticipated. a 50,000 sq ft Customer First Centre and The Company continues to seek new We strongly believe our active asset Library pre-let to North Tyneside Council acquisition opportunities where it believes management risk-controlled development and 27,000 sq ft of new retail space pre-let its core active asset management and skills are well placed to unlock and generate to Iceland, Home Bargains and 99p Stores. risk-controlled development skills can enhanced value and deliver long-term be deployed for the long-term benefits capital and income returns to shareholders Marketing in the digital age of shareholders. as a result. NewRiver continues to drive its marketing Strong portfolio metrics The strong performance of the portfolio strategies across the portfolio to enhance to date and the combined support of During the financial year the the consumer experience to increase our shareholders and our strong retailer Company’s portfolio grew by 50% footfall, dwell time and basket spend for relationships are an endorsement of to £600 million (2013: £400 million). the benefit of our retailers. The digital age NewRiver’s success in its active approach NewRiver’s occupational base now totals presents exciting opportunities for the retail to value generation. The current improving 1,118 occupiers which generates an annual sector and we are activating ecommerce market and economic opportunities provide footfall of over 100 million across a total and digital initiatives across the portfolio in a significant platform for further sustainable of 4.6 million sq ft. Demand from retailers order to improve customer connectivity, long-term growth for NewRiver and we to take occupancy within our portfolio gather valuable customer data and generate look forward to the further success of remains strong and is reflected by a 95% further income. the Company. occupancy level and a weighted average lease length of 8.3 years (excluding the pub portfolio). NewRiver’s top 20 retail occupiers comprise a high quality covenant of national retailers including the major supermarkets Tesco, Sainsbury’s, Asda and The Co-operative Group together with strong high street operators including Boots, Poundland, Primark, TK Maxx, Home Bargains, Wilkinson and Argos. No single occupier accounts for more than 5% of aggregate rental income. The Company also extended its food and leisure offer with the introduction of a range of new strong performing restaurant operators including Nando’s, Turtle Bay and Burger King. Strategic report Governance Financial statements 21 22 NewRiver Retail Limited Annual Report and Accounts 2014 Property review

As one of only three pure retail REITs Our risk-controlled development In total, the retail acquisitions were acquired operating in the UK real estate market, programme is increasing, significantly at an average net initial yield of 9.5%, an NewRiver is now firmly established as enhanced with the acquisition of the average capital value per sq ft of £133, one of the market leaders operating in portfolio of 202 pubs of which we intend circa 28% below replacement cost and an the retail sector. to redevelop a substantial number into average of 49% below the price that these convenience food stores. Many of our assets last traded in the market despite Building upon the successes of previous shopping centres offer development occupancy levels being largely unchanged. years, the last 12 months have been an opportunities ranging from unit extensions intensively active period for the Company, These retail assets are predominately through to comprehensive redevelopment. resulting in highly accretive acquisitions, the focused on non-discretionary spend, with delivery of a range of value enhancing asset During the period, three development 47% of the retailers trading in the food and management initiatives and the completion projects totalling 142,500 sq ft have been value sectors. of three profitable development projects. successfully completed, all within budget Shortly after the successful capital and handed over to Primark, North Tyneside This intensive activity was set against a raise in June 2013, we completed Council, Home Bargains, Iceland and backdrop of an improving investment the acquisition of the Hill Street 99p Stores. market with significant inflows of capital shopping centre in Middlesbrough targeting regional retail assets, consumer We intend to increase our investment (www.hillstreetshopping.co.uk) for a total spending growing year-on-year by 4.6% into opportunistic purchases where we consideration of £49.4 million reflecting a (Q4 2013, ONS) and a modestly improving can generate capital profits. This strategy net initial yield of 9.6%. occupational market. is ideally illustrated with our acquisitions With an annual footfall of 13 million this in Crawley and Preston concluded in high performing 240,000 sq ft shopping March 2014. A growing portfolio delivering centre is anchored by Primark, Debenhams sustainable income The Company’s portfolio continues to and Marks & Spencer and supported The Company successfully deployed all of generate significant surplus cash as by other major retailers such as Sports the capital raised in July 2013 in less than a result of low borrowing costs, low Direct, Argos, Home Bargains, New Look six months, completing circa £200 million vacancies, high rent collection rates, limited and Poundworld. impact from retailer administrations and of highly accretive acquisitions at a blended As well as providing very high cash on increased revenues from new lettings, net initial yield of 11%. cash returns of 19.8% pa, reflecting the commercialisation, wifi and advertising. The acquisitions were predominantly very attractive entry price, the centre offers conducted off market, and comprised five Our strategy is to supplement the attractive a range of asset management initiatives to shopping centres, 202 pubs (Marston’s recurring income returns that our core improve value including increasing the food portfolio) and three high street units. portfolio generates with increasing and beverage offer, improving consumer Following the Company’s most recent capital profits from our development entrances, signage, internal lighting and acquisitions, NewRiver Retail is now the activities and our investment into driving commercialisation income. opportunistic purchases. third largest owner/manager of shopping December 2013 was a particularly active centres by number in the UK. The portfolio month with the completion of three now comprises 24 shopping centres, 18 Acquisitions transactions, the first of which was the high street assets, 1 supermarket and 202 With £200 million of acquisitions at an acquisition of two shopping centres from a pubs for conversion to retail use – when average net yield of 11% completed in UK institution. combined together means our rental the period, NewRiver has been one of the income is secured across 1,118 tenancies. The St Elli shopping centre most successful buyers in the market in the (www.stelli.co.uk) located in Llanelli South As a result of this active investment last 12 months. Our in-depth knowledge Wales was acquired for £29.2 million programme, our assets under management of the market place and excellent network reflecting a net initial yield of 7.6%. have increased to just under £600 million of market place connections results in the (2013: £400 million) reflecting a 50% majority of our acquisitions being transacted This 162,000 sq ft enclosed shopping portfolio growth. off market. centre with 450 space car park, benefits from high occupancy at 99% reflective of This year our active asset management Excluding the 202 pubs portfolio, our the main anchor, a high performing 70,000 programme delivered 99 new lettings and retail acquisitions totalled £113 million. sq ft Asda store. Other major retailers lease renewals generating and maintaining These acquisitions fit with our investment trading within the centre include: Wilkinson, £2.5 million (NewRiver share: £1.8 million) criteria in that we have secured these assets Sports Direct, Poundland and Argos. of income at 1.7% above Valuation ERV. at an attractive entry price underpinned The average weighted lease length on new by affordable and sustainable rents. With Asda paying an annual rent of £1.3m, lettings and lease renewals was 10.5 years. They provide a focus on non-discretionary they account for 53% of the income and spend and offer a range of asset circa 70% of the value, given that their management initiatives to deliver a minimum lease has an unexpired term of 19 years. 15% levered IRR. The Asda income, from 1997 to 2012 (the last rent review date), has delivered a 3.9% compound growth. Strategic report Governance Financial statements 23 24 NewRiver Retail Limited Annual Report and Accounts 2014 Property review continued

In addition to benefitting from secure and La Porte Precinct in Grangemouth was Our strategy has now been validated potential growth in the rents, St Elli offers the final asset acquired from Zolfo Cooper. with the post year-end announcement of further value enhancing opportunities With a purchase price of just £1.6 million our portfolio leasing transaction with The including improving the retail mix, marketing this asset represented less than 10% of Co-operative Group who has agreed, and commercialisation. the Zolfo Cooper portfolio. The property subject to specific conditions, to lease up comprises a retail parade located in a prime to 54 properties for fixed terms of 15 years Gloucester Green, a small retail centre position within Grangemouth’s town centre. and at rents ranging from £15 per sq ft to located in the heart of Oxford city, was £17 per sq ft. Furthermore we will receive acquired for £5.1 million reflecting a net The fully let retail parade has sustained performance fees of up to £2.7 million initial yield of 9.6%. Comprising 16 retail 100% occupancy for over ten years, let payable on the delivery of a minimum of units clustered around a large open to Poundstretcher, WH Smith, Boots and 40 properties to The Co-operative Group. pedestrian market square, this property Thomson Travel. offers very significant asset management Our final two acquisitions during the and development opportunities to reposition 202 Marston’s Plc pub portfolio reporting period ending 31 March 2014, the asset as a principal food, beverage and Arguably our most innovative transaction in represent a good example of our leisure destination. 2013 was the acquisition of 202 pubs from opportunistic approach where we can Marston’s Plc for £90 million. leverage off our retailer relationships and Following NewRiver’s appointment as asset transact with speed utilising our strong manager by Zolfo Cooper in December With our appreciation of the rapidly growing balance sheet. 2012, we subsequently completed the demand from major food retailers to expand acquisition of two shopping centres and a their convenience store estate, we identified 14-19 Queens Square, Crawley was a small retail parade for a total consideration an intuitive opportunity to facilitate this retail building comprising approximately of £24 million reflecting a net initial yield of growth. Pubs can be ideal properties to 45,000 sq ft let entirely to Poundland 10.4%. As well as providing projected cash accommodate convenience stores and it Limited for a term expiring in June 2019 on cash return of 20% pa, underpinned was with this in mind that we hand-selected at a rent of £350,000 pa. The property by an affordable and sustainable income the pubs that formed the portfolio acquired was acquired for £4.25 million equating stream, the assets offer a range of realistic from Marston’s. to a net initial yield of 7.7%. We believed asset management initiatives to add On average our portfolio of pubs comprises that this price represented excellent value additional value. 24 car parking spaces (convenience store given the very strong sales performance that Poundland were generating from the Newkirkgate shopping centre located in operators generally seek 10 to 15 car property and this location. Leith, Edinburgh, comprises 90,000 sq ft parking spaces), and pub size of 3,100 sq ft of retail, anchored by Lidl with other key (convenience store requirements range from Within a week of the acquisition, and retailers including Poundland, Peacocks, 2,500 to 4,000 sq ft). The majority of the given Poundland’s objective to secure Boots and Farmfoods. pubs have good roadside visibility and are their long-term position in this property, located in residential areas, which is exactly the lease was re-geared to a fixed term Our strategy, already underway, is to the profile that convenience store operators of 15 years and the rent increased to improve the physical appearance of are seeking. Finally, the average pub site £450,000 pa. Following an unsolicited offer, the centre, reduce two of the long-term area is 24,000 sq ft offering great optionality we successfully sold the Poundland unit voids, pursue an extension opportunity to build new convenience stores in the car for just under £6 million, after the balance with Lidl and explore potential residential park whilst protecting the value of the pub. sheet date, demonstrating the Company’s opportunities within the ownership. Marston’s, as part of the transaction, agreed ability to efficiently enhance value and The Beacon shopping centre, North to manage the portfolio on a four-year recycle equity. Shields, (www.thebeaconcentre.co.uk) leaseback basis at a fixed annual rent Finally, we exchanged contracts to acquire comprises 181,000 sq ft and a 460 space which, based on the acquisition price of the freehold interest with vacant possession car park. Key retailers include: Wilkinson, £90 million, equates to an attractive net from HSBC of 40 Fishergate, Preston Home Bargains, Poundland, B&M, Boots initial yield of 12.9%. This arrangement frees for £625,000. Simultaneous with the and Greggs. We intend to improve the retail our time to pursue our strategy of alternative acquisition, contracts have been exchanged mix through the reconfiguration of existing uses whilst benefitting from an attractive with Sainsbury’s to lease the entire property units to meet specific retailer demand, income stream and when we are ready to as a convenience food store for a term of modernise the physical appearance of the implement an alternative use we can call for 15 years with a tenant-only break at year centre both internally and externally, and vacant possession from Marston’s. ten and rent of £90,000 pa. Following the capitalise on the new interlink between the completion of certain works, Sainsbury’s centre and the local library which has just are due to take occupation and commence undergone a £3 million refurbishment by their fit-out in the summer of 2014. the Council. Strategic report Governance Financial statements 25 million % 1,118 tenancies 95 occupancy £53.8 rent roll 141 events leasing total Improving the quality and efficiency Improving management of our property Reducing the cost and time of our leasing transactions footfall, dwell times andIncreasing basket spend for our retailers mix retail Improving relationships Enhancing our retailer our digital, marketing andImproving capability commercialisation Reducing property costs such asReducing property service charge, business rates and utilities Achieving high rent collection ratesAchieving high rent Aiming to deliver sustainable growth rental Reducing void rates

6. 7. 8. 9. 10.  with made significant progress have We the following highlights: rates collection rent high Achieving 1. management now stands under Rent roll at £53.8 million underpinned by intensive collection.weekly scrutiny of our rent weekly status calls with our conduct We andmanaging agents to establish arrears action to ensure determine appropriate full recovery. Aiming deliver to 2. sustainable rental growth 2014,During the 12 months to March NewRiver Retail completed 141 leasing events including 99 new lettings and lease ERV, at 1.7% above Valuation renewals generating and maintaining £2.5 million of income (£1.8 million NewRiver share). completed, securing69 new lettings were an additional £1.8 million (£1.3 million 30 lease of annual rent. NewRiver share) defending completed, were renewals of£0.7 million (£0.5 million NewRiver share) annual rent. 5. Our asset management strategy is focusedOur asset management objectiveson delivering ten key operating which are: 1. 2. 3. 4. 10 key operating key objectives 10 Alongside our very acquisitive year highly committed towe remained the operating performanceimproving focused andof our assets through smart asset management with the last to be another12 months having proved successful year. of £53.8 million,With roll an annual rent assets and 1,118 tenancies, the43 retail portfolio generates considerable annual new lease renewals, leasing activity through and lease re-gears. reviews lettings, rent we manage an annualFurthermore service charge of £10.4 million and employ almost 200 people in theindirectly day-to-day management of our multi-let shopping centres. Asset management Asset Disposals during the completed were disposals Two was period. The first and largest reporting and First Centre the sale of the Customer which was sold to an Library in Wallsend by Legal & Generalannuity fund managed to a net initial yieldfor £7.9 million equating of 4.3%. with the completionThis disposal coincided first major development and of NewRiver’s both the qualitythe price achieved reflected of the development and the leasing of the Council for a term library to North Tyneside of £363,000 pa subjectof 30 years at a rent linked to RPI. to annual increases This disposal and the development to be highly have proved in Wallsend successful and profitable. The final disposal was the sale of units 1&2 Glasgow to a private investorUnion Street, 5.9% above for £900,000 which represents 2011valuation. Having sold unit 3 in March this asset has been 76.1%.the IRR from 26 NewRiver Retail Limited Annual Report and Accounts 2014 Property review continued

3. Reducing void rates 5. Improving the quality and efficiency 7. Increasing footfall, dwell time and The retail occupancy rate was maintained of our property management basket spend during the period at 95%; with like-for-like We work in close partnership with our Improving the retail environment and occupancy rates, excluding acquisitions, managing agents to deliver value for money shopper experience is integral to our also maintained at 94%. for our retailers with the provision of services business model, with the core focus of within the centre through regular tendering driving footfall, dwell time and basket spend. 4. Reducing property costs exercises and by adopting innovative Footfall increased over the past 12 months Maintaining low operational costs for approaches and new technologies to drive from 80 million pa in 2013 to 100 million our retailers is an important aspect of down operational costs. We take a stringent in 2014. This significant growth is in part a the NewRiver business model. On the approach to our procurement services to result of our highly acquisitive year however acquisition of any new centres, we instruct drive further savings and reduce the costs we are pleased to report like-for-like footfall our rating advisers to review the rateable for our retailers whilst maintaining scalability growth across pre-acquisition centres of values seeking to reduce liability on both and a high degree of quality. 4.9 million shoppers pa representing an vacant and occupied units. This year we uplift of 8%-testimony to our pro-active Our on-site centre management teams have successfully appealed over £1.9 million asset management strategy delivering and are key players in the NewRiver team. in revaluation savings against the 2010 outperforming market trend of only 1.8% During the course of the year we have Rating List and generated £1 million in year-on-year national footfall growth (BRC). refunds and reduced liabilities through upgraded the calibre and efficiency of our rates mitigation. operational teams, many of whom come 8. Improving the retail mix from a strong retail background. We are With focus on food and leisure playing a An example of further success is at Burns proud to report that our management driving force for the retail industry, we have Mall, Kilmarnock, where we have reduced teams have won a total of 12 awards successfully welcomed a variety of food and the annual service charge budget by over between them and have been shortlisted for restaurant operators into the portfolio. £76,000 since March 2013, representing a a further four demonstrating the high ability, 12% reduction through a series of initiatives commitment and results-focused quality of Delivering on our strategy to re-position ranging from the re-tendering of cleaning our teams. We are dedicated to ongoing Regent Court in Leamington Spa into and security contracts to improving the improvement, conducting regular training the town’s principal food and restaurant efficiency of our resource, by decreasing for their work, hosting our annual NewRiver destination, this year we completed two man hours and empowering staff with dual Centre Manager’s Strategy Conference with new restaurant lettings at a total rent of role responsibilities. the entire NewRiver team and conducting £177,750 pa against the ERV rent at purchase of £118,600 and introduced Cost saving initiatives also benefit the local regular on-site full-team management EAT Street, a popular weekly food market community as we have provided space meetings. We host a weekly call with our with BBC Good Food accredited and for Arts Council backed charities, such as managing agents to discuss issues, identify Masterchef finalist vendors. Popular national East Street Arts and Castlefield Galleries opportunities and scrutinise costs; the chain Nando’s opened at the centre in who procure space on behalf of community regularity of these meetings enables all July 2013 at an annual rent of £70,000 projects and local arts groups which in turn parties to remain highly focused. on a 15-year lease, Turtle Bay opened in enhances the environment and, importantly, 6. Reducing the cost and time of our March 2014 on an annual rent of £107,750 secures over 50% savings on empty rates leasing transactions on a 20-year lease and three further for the Company. We have a dedicated Leasing Strategy restaurant lettings and two retail deals are in Running concurrently and complementing at NewRiver which capitalises on our advanced legals. our rates reduction strategy, we actively increasingly growing scale to reduce time In November 2013 we delivered strEAT, a review operational costs at a property and costs for the Company. During the brand new multi-branded food court to The level with the intention of decreasing year we developed a NewRiver Short Prospect Centre in Hull, anchored by Burger the cost whilst maintaining an attractive Form Lease Agreement to diminish time King. The food court activated formerly shopping environment. Initiatives such as and costs spent on new lettings and lease disused space with other new restaurants the installation of LED lighting across our renewals allowing our asset management including Pizza Neo, Real Café.co, El Taco portfolio reduces both long-term running team greater time to concentrate on Loco and Wuji. The operator, CPL Foods, costs by way of decreasing electricity reducing operational costs and improving signed a 15 year lease at a rent of £60,000 consumption and reduces ongoing retail mix and environment. pa plus a turnover top-up provision with the maintenance costs. transaction reflecting a rent of 140% above Overall we have delivered a reduction in Valuation ERV. service charge budgets across our retail portfolio of nearly £500,000, representing a 5% year-on-year reduction. Strategic report Governance Financial statements 27

2014 1,154 +109% 552 2013 +67% 330 2012 0 200 400 800 600 1,400 1,200 1,000 Commercialisation incomeCommercialisation (£000s) Customer serviceCustomer excellence in the approach take a customer-first We of ourmanagement and improvement that understanding shopping centres is very environment the shopping centre a positive customermuch about delivering that pleased to report are experience. We 2011 and 2013since completing our we have seenbiennial consumer surveys key across an uplift in consumer satisfaction up 2% to 89%verticals: “Customer service” nice for coffee” satisfaction; “Somewhere up 7% to 64%; “Choice of shops” up 3% to 58%; and both “Clean and pleasant” and up 3% to safe and secure” “Somewhere 85% in satisfaction ratings.both score commercialisation in Industry-leaders shopping centres Historically regional boast little or no commercialisation where centres to discretionary compared it is commonplace. The implementation strategy across of a commercialisation innovative andour portfolio has proven complimentary high qualitylucrative creating and non-conflictingservices, products retailers. our core to interest Capitalising on our scale, we have secured partners and portfolio deals with nationally- acclaimed operators to drive efficiencies; units to merchandising upgraded mall retail attract better quality traders, and activated new advertisingdisused and created the income- have grown spaces. We generating Cloud wifi partnership, attracted our exclusivelocal markets and grown multi-channel Brand Partnership. enhancedAll of this has delivered ancustomer experience and delivered 42%exceptional year of income growth, to total £1.15 million paahead of forecast uplift year-on- a 109% representing and newyear driven by organic growth total income acquisitions with like-for-like by 21.5%. growing commercialisation from Community matters defined by are Our shopping centres locatedthe community that they are within and we know that if our towns are benefit.thriving then our shopping centres active leaders within theOur teams are for all our shopping Teams BIDs and Town helping steer economic and retail centres Investing in the local in the locality. growth pivotal to the successcommunity remains of our marketing strategies and we take a and hands-on approach very pro-active by partnering with schools, colleges, tocouncils and local community groups educational, cultural and economiccreate opportunities and drive local regeneration within our towns. We take a customer-first approach to approach take a customer-first We Ultimately ourmarketing strategies. footfall, to drive marketing objectives are spend for ourdwell time and basket shopping centre deliver this, To retailers. the changingowners must adapt to to achieve retailneeds of the consumer of 24 UK-wide non- success. Our portfolio the sit within shopping centres discretionary local communitiesheart of their respective of real- and we focus on the creation time human experiences. Our marketing strategies continue at pace with great success activating the digital world into and experiences for opportunities real-time our consumers. portfolio, shopping centre the Across family-centric events and digitally-activated initiatives continue to enhance the NewRiver have once againcustomer experience. We hosted X-factor auditions at our centres, discovering local talent and enabling our outperform their monthly sales to retailers have We targets during a single trading day. activated empty spaces into thriving social hubs and business incubations hosting local artists, business start-ups and artisan market-traders. 10. Improving our digital, marketing and marketing digital, our Improving 10. capability commercialisation

9. Enhancing our retailer relationships retailer our Enhancing 9. At NewRiver we operate our shopping though we ourselves were as centres as work with our retailers We retailers. partners in the knowledge that what is good for ouris good for our retailers is dependent Just as retail shareholders. success is retailer on the consumer, continue We dependent on relationships. with ourto maintain excellent relationships of our both at the head offices partners retail level withnationals and at a local regional managers and their teams and our store our independents. to understand our retailers’ hard work We overheads forbusiness plans, reduce attractive shoppingthem and create to trade in. It is our goal, andenvironments to be successfully delivering pleased we are owner ofon this, to be the shopping centre choice for retailers. now secure top 20 retailers NewRiver’s and roll total rent 45% of the Company’s include a wide range of well-established national operators such asand reputed Poundland, Wilkinson, Argos, Primark, Boots, The Co-operative Group, Superdrug, and Asda. Tesco provisions are essential for the shopping are provisions footfall. mix and increase centre of useFollowing successful change to Costa a letting permission, we agreed Wisbech, at an at The Horsefair, Coffee lease. of £32,000 on a 10-year annual rent Muffin we introduced In Middlesbrough, increasing in the central mall atrium Break Moments the former Greggs from rent than £25,000 pa. At The by more store a Skegness, we introduced Hildreds, brand new Burger King on a 15-year lease at £75,000 pa enhancing the centre’s food offer. and coffee Quality food-on-the-go 28 NewRiver Retail Limited Annual Report and Accounts 2014 Property review continued

Connected consumers Completion and disposal of town- Primark, Warrington The installation of wifi across the majority regenerative Customer First Centre Europe’s leading value fashion retailer of our shopping centres has been well and Library at the Forum Shopping opened its doors in early December received by our consumers. 13.2 million Centre, Wallsend 2013 following NewRiver’s successful minutes were spent on our wifi infrastructure After successfully securing planning completion of the development on time by our NewRiver shoppers across an permission in December 2012, this town- and within budget. average of 19,130 unique mobile/tablet regenerative development has now been In 2012 we successfully acquired the long devices per month. completed on time and within budget. leasehold interest of a unit from Standard These staggering figures testify the need Prior to commencing construction, the Life to gain vacant possession of two to provide wifi and digital platforms in order development was fully pre-let to North adjacent units by relocating the existing to retain the loyalty and interest of the Tyneside Council, Home Bargains, Iceland New Look, thus releasing space to begin a modern shopper. and 99p Stores. complicated restructuring to create a single 56,000 sq ft unit for Primark who signed The benefits of installing free wifi are In total the development comprised an agreement for lease in November 2012 four-fold: firstly, actively future-proofing 77,000 sq ft including three retail units for a term of 25 years at an annual rent of our centres for the digital age because and a new Customer First Centre and £475,000. we accept the power of the internet and Library. The total contractual rent agreed perceive it as an opportunity not a threat is £723,000 pa and the weighted average This asset let on a long-term lease to for our retailers; secondly, to provide lease length is 20 years. Primark is generating an attractive cash on an enhanced service and customer Construction completed on cash return of 12%. connectivity for our shoppers driving footfall 28 February 2014 and all of the retailers are Iceland, The Piazza, Paisley and dwell time; thirdly, we collect powerful now trading following their fit-outs. Our total Following the successful amalgamation of consumer data to assist us on improving development costs were £6.7 million two shop units and office accommodation, our asset management; and fourthly, we providing an attractive yield on cost of we created 9,500 sq ft of new retail receive a modest income. 10.8%. The completed Customer First space pre-let to Iceland at an annual Centre and Library, let to North Tyneside Bricks and clicks rent of £135,000 on a 15-year lease. Council, has been sold for £7.9 million. The digital age presents a wealth of Iceland opened for trade in August 2013 opportunities for NewRiver and our retailers This development has already had a and exceeded initial turnover targets by and we are excited to be in the final phases positive impact on the rest of the shopping 58% during their first week of trading. of our ecommerce strategy. Worldwide, centre with the introduction of three new the number of mobile devices outnumbers high profile retailers and a new Customer people. Responding to the evolving First Centre and Library providing greater retail landscape we are creating a highly choice for our consumers. There has been sophisticated and powerful community-led an immediate uplift in footfall in excess click n collect platform for our shoppers and of 10% resulting from the development retailers, leading the field in digital innovation and the external refurbishment of the for regional community shopping centres. shopping centre. 142,500 sq ft development projects Risk-controlled development Phase ll, Wallsend We are now progressing a second completed during year creates value development through the extension of With the improvement in the capital, the shopping centre on land acquired consumer and occupational markets retail by NewRiver from the Council. development viability has also improved. This development is intended to be Our intention is to increase our development anchored by a discount food retailer activities to provide increasing capital supported with additional retail. profits or valuation growth. The Company Discussions are also underway with the is committed to undertaking developments Council for a potential health centre facility. in a risk-controlled manner underpinned by Finally, we will be undertaking a occupational pre-letting agreements. comprehensive internal refurbishment of the During the period we have completed shopping centre that will result in significant three fully risk-controlled developments, improvements to the mall flooring, lighting, one of which was a turn-key town entrances and signage. development and are progressing well on the development of existing assets and new acquisitions. Strategic report Governance Financial statements 29

Rapid progress on Marston’s 202 pub portfolio conversion of the 202 pubsFollowing the acquisition 2013, in December Marston’s from than four months,NewRiver has, in less new to lease a portfolio of 54 agreed the UK to The across c-stores Co-operative Group. projectsThe majority will be new-build land adjacent toconstructed on surplus The remainingthe existing public houses. part of the portfolio will be conventional public house use toconversions from as standaloneor redeveloped c-stores, Additional uses suchconvenience stores. food drive-through as branded restaurants, have and medical centres outlets, residential also been identified. NewRiver will undertake all planning, development and contract requirements to Theto deliver the end product It is expected thatCo-operative Group. the majority of the completed assets will within two years.be delivered In total, NewRiver is developing almost space for200,000 sq ft of new c-store Finished unitThe Co-operative Group. car parking,sizes, each with appropriate 3,000 sq ft to 4,500 sq ftwill range from will trade seven days a week. and stores This unique portfolio leasing arrangement national significant demand from the reflects operators and consumers forfood store accessible, community-based multi-range food stores. 15 years with noThe lease terms are clause and an annual RPI-linkedbreak capped at 4% and formula increase rental income agreed 1%. The rental collared at varies between £15.00 per sq ft and £17.50 per sq ft. position to be of NewRiver’s As a result The Co-operativeable to rapidly provide with a large portfolio of c-stores, Group is performance incentivisedthe Agreement additional NewRiver will receive whereby payments upon delivery of various tranches of the portfolio. The total fee payable is up to £2.7 million. The Martlets, Burgess Hill, West Sussex Hill masterplan with the Burgess Progress has been slower than we had hoped due to the importance that we place on pre-let commitments and the shifting focus of the to smaller convenience stores food retailers which has had an impact on our ability to However through advance this project. further discussions with the local authority and design changes, terms have been with a major cinema operator and,agreed an anchorassuming that we can secure confident with current letting, we are store demand to support the developmentretailer that the local authority will be supportive the planning process. through Oxford City Centre master planning Green for Gloucester at the end of 2013 as part ofPurchased Gloucesterthe acquisition of two centres, and leisure an exciting retail presents Green development opportunity for NewRiver in to progressing Plans are the heart of Oxford. City Council with Oxford form a joint venture area and surrounding the centre to improve a large open pedestrianwhich is set around include a Proposals area. market square and of the market square refurbishment mix together with a greater retail improved repositioning offering and leisure restaurant the asset as a principle food, beverage and destination.leisure Following the recent acquisition of Templars of Templars acquisition Following the recent Joint in December 2012, in our Square NewRiver have with BRAVO, Venture into a detailed master planningentered the asset working to reposition exercise City Council on a phasedwith Oxford master planningdevelopment plan. The of the identifies how all aspects exercise by can be enhanced and improved centre and adding to the existingrepositioning to establish include leisure mix to retail the scheme as the principal shopping destination for the area. Master planning of Templars Square, Square, Templars of planning Master commences Cowley Updated master plan for Locks Heath Hampshire Fareham, Village, Shopping our development have revised We during for Locks Heath, Fareham proposals the acquisitionthe last 12 months following by Waitrose. of the Co-op food store significant has been The impact of Waitrose footfall and car parkwith increased The quality of the numbers up substantially. assist our ability to attract will offer Waitrose and to the centre a wider range of retailers rental future we expect to benefit from low base. the current given growth still seeking facilitate this demand we are To new floor space by developingto provide has interest on part of the car park. Strong a major food discount from been received by this is being progressed and retailer the Company. for AlbertPlanning application awarded Widnes, Centre, Shopping Cheshire Square planningNewRiver Retail was awarded the Princeconsent in late 2013 to redevelop a vacant public house located of Wales, Shopping Centre adjacent to Albert Square in Widnes in 2010 as which was acquired with Joint Venture part of NewRiver Retail’s Morgan Stanley. risk-controlled As part of the Company’s an agreement development programme, for lease was exchanged with 99p of for a 10-year term at a rent Stores £135,000 pa. Following the demolition of the public house, the development of a new is well underway store 10,000 sq ft retail with completion expected as per the in July 2014.planned programme, Driving progress on existing existing on Driving progress developments 30 NewRiver Retail Limited Annual Report and Accounts 2014 Financial review

It has been an active year at NewRiver, raising £152 million of equity, £154 million of new debt facilities and investing in £200 million of income, producing acquisitions with our joint venture partner Bravo II (a fund advised or managed by Pacific Investment Management Company LLC). EPRA adjusted profit is up 80% to £9.5 million (2013: £5.2 million) and this is expected to increase further in 2014/2015 when the current year acquisitions will have a full year’s annualised impact. Our equity placing in July 2013 raised and Venn Capital who combined, provided fundraising costs, £6.5 million of purchase £67 million enabling us to pursue four debt finance of £154 million during the year costs and a special interim dividend paid separate transactions that have helped on competitive terms maintaining a low cost in March 2014 of 10 pence per share of increase our EPRA adjusted profit to of debt across the portfolio of less than 4%. £6.7 million. These costs have been offset £9.5 million an increase of 80% on last by our active asset management, risk- Our LTV at the balance sheet date net of year leading to an EPRA adjusted EPS of controlled development and improving cash is 25%, currently below our targeted 15.7 pence. market sentiment for regional shopping range of 45-60% as a result of the recent centres adding £13.7 million of value to net Following the full deployment of the capital equity raise and this is expected to return assets during the year. raised in July, a further placing of £85 million to the normal range on the back of completed in February 2014. acquisitions in the next financial year. The dividend for the year was 16 pence, in- line with 2013 and 98% covered by EPRA The Group continues to develop its close The EPRA net asset value has increased adjusted profit. As a mark of confidence, the relationships with existing lenders HSBC since the last reported balance sheet Board has agreed to a quarterly dividend and Santander and was pleased to from 222 pence to 240 pence. During the policy starting in October 2014. establish new relationships with Barclays year we have absorbed £4.5 million of

Key highlights +55% £152m 240p TSR Successfully oversubscribed EPRA NAV following 11p of non equity issuance recurring costs absorbed and special Total Shareholder Return of +55% interim dividend of 10p paid in (2013:+12%) for the 12 months to Equity raised totalled £152 million, made March 2014 31 March 2014 up of £67 million in July 2013 fully deployed in five months and £85 million in February EPRA net asset value per share of 240 2014 to enhance future profits and exploit pence (2013: 240 pence), in a year opportunities in our chosen sectors when we have absorbed £4.5 million of +80% fundraising costs, £6.5 million of purchase costs (Stamp Duty and Fees) on new Increase in recurring profit acquisitions and paid a special interim dividend of £6.7 million paid in March 2014 EPRA adjusted profit before tax up 80% to 3.9% £9.5 million (2013: £5.2 million) driven by a Low cost of debt strong performance in joint ventures £154 million of new debt facilities completed on behalf of the Group and joint ventures, £2.0m enabling us to maintain our low cost of Development profit delivers an 82% debt of 3.9% (2013: 3.9%), improve debt 16p return on cost maturity and broaden the debt funding base Total Dividend per Share and with two new debt relationships Our first significant development was 98% covered completed in the year at Wallsend and the Customer First Centre and Library was sold EPRA adjusted EPS of 15.7 pence for a profit of £2.0 million over the latest (2013: 16.3 pence) achieved in spite of book valuation and a profit on cost of 82% 65 million new shares issued in the year resulting in a well-covered dividend of 98% Strategic report Governance Financial statements 31 – (161) £’000 811 161 16.3 16.0 1,410 5,211 (3,994) (4,966) (6,710) (3,640) 19,909 15,915 consolidated Proportionally

– – – – Joint (859) £’000 (403) (169) (500) (1,483) 1,931 1,528 ventures (1,483) Year ended 31 March 2013 ended 31 March Year (161) £’000 811 859 161 Group 16.3 16.0 5,211 2,893 (3,591) (4,797) (6,210) (2,157) 17,978 14,387 – £’000 182 (182) 15.7 16.0 2,032 9,501 (4,104) (6,826) (6,936) 21,049 25,153 23,059 13,740 consolidated Proportionally

– – – – Joint £’000 (721) (406) 6,956 6,235 14,503 (1,533) (4,296) 14,503 ventures Year ended 31 March 2014 ended 31 March Year £’000 182 (182) 15.7 16.0 (763) Group 2,032 4,296 9,501 8,556 (3,383) (6,420) (5,403) 14,814 18,197 In March 2014 we completed the sale of In March and Library, Customer First Centre Wallsend which added £2.0 million to the EPRA we for 2014 and ensures adjusted profit our bottom line year-on- continue to grow and growth profit both rental year through on sale of assets. In the profit actual realised year NewRiver achieved a respectable EPRA adjusted EPS of 15.7 pence per which means that dividends for theshare, 98% covered. year are The other success story of the year is the uplift in capital values, due to a combination of a number of factors, including our active asset management, risk-controlled development and movement in shopping yields – the economic environment centre economy and rising a growing reflecting assets such as NewRiver’s demand for retail based. A fair value gain regionally which are in the 2014of £13.7 million was reflected which included a capital return ofresults including as well as the 5.4% over the year, surplus on all new acquisitions. revaluation £23.1 million tax was before Profit (2013: £1.4 million) a combination of and fair value capital profit rental recurring gains; including £9.5 million EPRA adjusted and £13.7 million capital profit. profit The Group financial statements are prepared under IFRS which includes profits from joint ventures on one line. The Board considers the on one line. The Board joint ventures from includes profits under IFRS which prepared are financial statements The Group this basis. reflects below therefore consolidated basis and the report proportionally on a performance of the Group Highlights from the Statement of Comprehensive Income Comprehensive of Statement the from Highlights Income Gross rental income and fees rental Gross Property outgoings Property Net property income Net property Operating expenses Net financing costs Profit on disposal of investment properties on disposal Profit Joint ventures net incomeJoint ventures Tax and EPRA adjustments Tax EPRA adjusted profit Profit for the year before tax the year before for Profit EPRA adjusted EPS Tax & EPRA adjustments Tax Dividend per share income for the year including net Property was £21.1 million of joint ventures our share to £15.9 million compared – a 33% increase in the prior year generated by the stable portfolio of assets on balance sheet and as joint new portfolios acquired three Joint Venture with the Bravo ventures basis, net On a like-for-like during the year. income was stable with no increase rental on the prior year. Operating expenses totalled £6.8 million to £5.0 million in 2013.in 2014 compared headcount the 66% increased This reflects of the business platformfollowing the growth in assets underwhich has seen an increase £400 millionmanagement of 50% from to £600 million. Management assesses by calculating operatingoperating efficiency costs net of asset management fees as a income. In 2014 rental of gross proportion 24% in 2013. this ratio fell to 22% from Net finance costs totalled £6.9 million £1.5 million (2013: £6.7 million) for the year, of which was payable on convertible loan stock and £5.4 million for debt secured Our hedging strategy over property. debt prudent with 74% of Group remains hedged either on a fixed or capped basis. cover is very positive at overInterest to level compared 3 times at property 1.5 tobanking covenants which range from 2.0 times. Revaluation surplus/(deficit) 32 NewRiver Retail Limited Annual Report and Accounts 2014 Financial review continued

Balance sheet Management assesses the business on a proportionally consolidated basis, particularly in light of the rapid development of the joint venture with Pacific Investment Management Company in the past year. The IFRS net assets for the Group include investment in joint ventures on one line and this is split out on a line by line basis in the table below. Proportionally consolidated balance sheet As at 31 March 2014 As at 31 March 2013 Joint Proportionally Joint Proportionally Group ventures consolidated Group ventures consolidated £’000 £’000 £’000 £’000 £’000 £’000 Properties at valuation 214,124 149,222 363,346 206,278 29,890 236,168 Investment in joint ventures 74,851 (74,851) – 14,688 (14,688) – Other non-current assets 384 – 384 404 – 404 Cash 89,555 3,010 92,565 7,545 897 8,442 Other current assets 3,595 2,567 6,162 1,981 704 2,685

382,509 79,948 462,457 230,896 16,803 247,699

Other current liabilities (10,421) (3,817) (14,238) (11,418) (928) (12,346) Debt (108,256) (76,566) (184,822) (112,698) (15,682) (128,380) Convertible loan stock (23,306) – (23,306) (24,693) – (24,693) Other non-current liabilities (899) 435 (464) (2,299) (193) (2,492)

IFRS net assets 239,627 – 239,627 79,788 – 79,788

EPRA adjustments 4,879 – 4,879 3,945 – 3,945 EPRA net assets 244,506 – 244,506 83,733 – 83,733

EPRA NAV pence per share 240 240

Investment properties Cash Investment properties total £363 million The Group held cash reserves of on a proportionally consolidated basis £92.6 million compared to £8.4 million compared to £236 million, a 54% increase in 2013 and this gives the Management which illustrates a significant investment Team significant liquidity from which to made on the back of the equity raises negotiate on future property investments. during the year. £200 million of assets, Through a strong network of contacts the primarily through joint ventures, were management team has a good track record acquired during the year at an average net of delivering off-market transactions and not initial yield of 11%. There were also two relying on bank debt to close transactions. disposals during the year. Of particular note The majority of these funds are expected was the sale of the Wallsend library which to be deployed in the coming financial year had been developed and completed during but in the meantime this positively skews the year and sold at a yield of 4.3% and the current financial ratios of the Group net resulting in a profit on sale of £2.0 million. loan to value and gearing levels. They would The fair value gains of £13.7 million are also be expected to return to our preferred reflected in the increased carrying value of range highlighted below during the coming investment properties. financial year. Strategic report Governance Financial statements 33 21 20 2020 bt nture de t ve 19 join 20 e of = shar JV 18 JV 20 esdale yd Cl ys la rc 17 JV Ba 20 tested at the property level averaged 50% level averaged tested at the property welcomed(2013: 51%). The company Capital as new Bank and Venn Barclays which added to ourlenders during the year HSBC with Santander, existing relationships pleased to are We and Clydesdale Bank. across borrowing maintain a low cost of consolidated on a proportionally the Group which continuesbasis of 3.9% (2013: 3.9%) peer favourably against our to compare we have been able to do this at and group maturity on ourthe same time as improving debt book to 4.5 years (2013: 3.1 years). continues to apply a hedgingThe Group strategy which is aligned to the property currently are Borrowings strategy. rate risk74% hedged against interest are (2013: 77%), 43% of all borrowings capped. This provides fixed whilst 31% are whilst the element rate protection interest exposed to variable rates allows the low a current Company to benefit from rate environment. interest 2014 balance sheet gearingAs at 31 March was 18% (2013: 163%). This is low at due to £92.6 million of cash the year-end detail on the Group’s balances held. More in Note 19. is provided borrowings HSBC ch 2014 l 16 20 pita Ca nn Ve ofile as at 31 Mar r 15 JV 20 Santande .0 .0 .0 .0 .0 .0 0.0 £m 10 70 20.0 50 40 60 30 Debt maturity pr Borrowings is to maintain a capital strategy The Group’s whilst ensuringconservative level of gearing for return generate an effective that projects test is and the REIT gearing shareholders always satisfied. joint including During the year the Group, of new originated £154 million ventures, £45 million)senior debt facilities (2013: million propertyto part fund the £200 acquisitions on new acquisitions. LTVs 50% to 70% and excludingranged from loan covenants the surplus cash this year, Debt maturity was improved via aDebt maturity was improved intocombination of new facilities entered on 5-year terms during the year and the of an existing Santander facilityrefinance a stable fundingfor 7 years. This provides basis to manage existing investments in a strengthening the medium term across and the intentionrange of debt providers for 2015 is to arrange new facilities to those expiring in 2015 and 2016replace and consider further long-term debt and corporate facilities. 34 NewRiver Retail Limited Annual Report and Accounts 2014 Financial review continued

Financial metrics Earnings per share (‘EPS’) EPRA EPS is an important performance indicator for the Company as it relates to recurring profits only. We have included an EPRA adjusted EPS measure which also incorporates realised profit on sale of investment properties and adds back unrealised share option expense which provides the basis for our dividend policy. EPRA adjusted EPS of 15.7 pence per share is a good result during a year in which 65 million new shares were issued. Basic EPS was 38 pence (2013: 4.7 pence) which includes the upward fair value property valuations at the year-end. In addition we disclose Funds from Operations (‘FFO’) as this is an important metric often used by the investment community when comparing the performance of international REITs. Reported FFO this year was £7.1 million (2013: £4.2 million) which amounted to 11.7 pence per share (2013: 13.0 pence per share).

EPRA NAV: Movement for the year ended 31 March 2014 (pence per share) 12.8p 7.5p 260p 6.0p 15.7p 5.0p 250p 10.0p 240p 240p 240p

220p

200p

EPRA EPRA Net Dividends Purchase Fundraising EPRA Special interim EPRA NAV earnings revaluation gains paid costs costs NAV dividend paid NAV

31 Mar 2013 31 Mar 2014 31 Mar 14 post special interim dividend

Net Asset Value Summary The Net Asset Value (‘NAV’) at This year has been the most profitable to 31 March 2014 was £239.6 million date, earning shareholders a profit before (2013: £79.8 million) which amounts to tax of £23.1 million (2013: £1.4m), of which an EPRA NAV per share of 240 pence £9.5 million is EPRA adjusted profit and (2013: 240 pence). NAV per share was £13.7 million from fair value movements maintained during the year despite the in property valuations. This has been a absorption of £4.5 million of fundraising successful year for the company and a costs, £6.5 million of purchase costs and good set of results. a special dividend of £6.7 million due to increased profitability during the year, active asset management strategies on existing assets and the subsequent fair market upward valuations of assets in an improving economic outlook for food and value- Approval of Strategic Report centred assets. The Strategic Report set out on pages Dividend 02 to 37 of this Annual Report has been The Company paid its interim dividend approved by the Board. in the year of 6 pence per share and a special interim dividend of 10 pence per share, resulting in a total dividend for the year of 16 pence per share consistent with last year’s pay-out (2013: 16 pence). The Company’s entire dividend was payable Signed on behalf of the Board 14 May 2014 as a Property Income Distribution and was David Lockhart 98% covered by realised profits earned in Chief Executive the year. The Company has proposed that going forward it will pay out quarterly dividends, starting October 2014. Strategic report Governance Financial statements 35 Interest cover of over three times cover of over three Interest 2014 of 25% at 31 March Net LTV Significant covenant headroom hedged are 74% of borrowings costs of 3.9% borrowing Average in the year £200 million of acquisitions at average 11% yield Asset in Glasgow sold in the year at IRR of 76% a geared TSR +55% Dividend cover +98% of 16 pence Dividend per share 141 new leasing events in the year generating and maintaining £1.8 million of income across development projects Three 115,500 sq ft completed on time and within budget valuation gainsProperty of £13.7 million 2014 • • • • • • • • • • • • • Interest cover of over three times cover of over three Interest 2013 of 51% at 31 March Net LTV Significant covenant headroom hedged are 77% of borrowings costs of 3.9% borrowing Average in year £100 million of acquisitions at average 9.7% yield ranging assets sold in the year Two IRRs of 16%between geared to 244% More than 223 leasing events since than 223 leasing events More IPO, maintaining and generating £4.6 million of income development pipelineStrong in excess of 600k sq ft TSR +12% Dividend cover +102% of 16 pence Dividend per share • • • • • • • • • 2013 • • • What we have achievedWhat have we

of 15% + 15% of 5 financingSensible strategy 4 Geared IRRs 3 yieldsAcquisition to 10% 7% of 2 value Creating 1 Delivering our to returns shareholders What said we would we do KPI Key Performance Indicators Key 36 NewRiver Retail Limited Annual Report and Accounts 2014 Risk management

Risk Mitigation – Risk management Progress in 2013 – 2014

RISK 1 Valuation of property ✓ investments

Investment decisions result Acquisitions targeting retail assets are based on: Economic conditions have improved in lower income and capital • Focus on food and value over the past 12 months in the UK returns to shareholders with increasing appetite for regional • Affordable rents for retailers (<10% of turnover) than forecast and expose retail assets. • Low competition within the local proximity them to unforeseen risks This has resulted in an uplift in values and liabilities. • Balanced demographics across our portfolio. However, • Initial yield of 7-10% to take advantage of the gap between greater demand will also likely result yield and cost of borrowing circa 4% in yield shift for secondary assets Value is both protected and created by maintaining the creating more competition for good income generated through our active asset management buying opportunities. and risk-controlled development as well as our strong retailer relationships. Due diligence is carried out on acquisitions, including detailed retailer audits and 5-year business plans are prepared based on deliverable assumptions to demonstrate IRR targets are achievable. Disposals are considered once business plan objectives have been accomplished.

RISK 2 Exposure to retailer ✓ administrations

Instability and subdued Our focus on food and value and convenience led retail has Retailer administration has fallen economic activity can lead limited our exposure to retailer administrations as the majority over the past 12 months as to reductions in disposable of expenditure is on non-discretionary purchases. signs of economic recovery have income impacting We maintain close relationships with our retailers and work strengthened. As a result of our demand for retailer goods with them on payment plans if they require. rapid growth the number of retailers’ and ultimately leading tenancies has grown from 723 Management monitor arrears on a weekly basis and regularly to business failure and to 916 and the total number of monitor the credit status of retailers. administrations. administrations last year was <0.5% We apply a strategy to increase weighted average lease length of rental income. to secure future income stream and limit exposure to voids. Retailer diversification is high with no retailer making up more than 5% of total retail income.

RISK 3 Business strategy ✓

The growth in online retail The management team have over 100 years combined Footfall in the year across our assets spend could be perceived experience within the UK retail property market and perceive has increased from 80 million to as a threat to traditional the digital age as an opportunity for our shopping centres. 100 million. bricks and mortar retailers We have adopted a ‘bricks n clicks’ strategy focused Commercialisation income has also that occupy NewRiver on creating a multi-channel retail experience through the burgeoned by 109% to £1 million pa. shopping centres. installation of free wifi across our portfolio. Consultants OC&C have We have also installed Amazon collection lockers generating commented in recent press that both revenue and footfall. We have a varied programme of the volume of click ‘n’ collect is events across the portfolio which drive footfall, dwell time and expected to overtake home delivery basket spend. in 2015 highlighting the importance All these measures create a valuable physical customer of multi-channel retailing and in experience and prove our retail assets to be resilient in the face particular bricks and mortar retail of any online competition. destinations. Strategic report Governance Financial statements 37 ✓ ✓ ✓ Progress in 2013 – 2014 Progress Three developments completedThree ahead ofin the year on time and budget. New debt secured in the year hasNew debt secured average the Group’s improved 3.1 years to 4.4 yearsmaturity from and 74% debt is hedged reducing to financing. exposure the Group’s has consistentlyThe Group costmaintained a low borrowing (FY14: 3.9%, FY13: 3.9%) and is sponsor to be a strong considered purposes whichfor borrowing supports its rating in obtaining a lower cost of debt. The Group has expanded its skillThe Group set and members of the team in of the business,line with the growth by 66% in the last 12growing 18 to 28 staff. months from has commencedThe Group the implementation of a new integrated accounting and property management information system. Mitigation – Risk management The Group applies a risk-controlled development strategy development applies a risk-controlled The Group of committing to in advance negotiating pre-lets through construction. quantity architects, with our preferred have close relations We enabling us to monitor managers surveyors and project closely. projects by the and approved is reviewed A development project diligenceExecutive Committee following detailed due modelling and market research. The Group actively engages in close relationships with its key actively engages in close relationships The Group when it comes to monitoringlenders, ensuring transparency by debt. secured the properties that generate surplus cash which results purchased Assets are on loan covenants. in significant headroom and hedgingGearing is maintained at a conservative level to rising range to limit exposure applied within an agreed income. or declining rental rates interest The Group complies with the UK Corporate GovernanceThe Group Code. of its systems andThe Company has an independent review they are carried out annually by BDO LLP to ensure controls for the size of the Company. appropriate with advisers, includingManagement have good relationships and property auditors, tax advisers, investor relations required. to seek expert advice where in order professionals Risk RISK 4 Development project management ofPoor control development projects could lead to inadequate returns on investment. to Over-exposure putdevelopments could on cash flow and pressure debt financing. Risk 5 Financing and cash flow risk debt covenants of Breach could trigger loan defaults of facilitiesand repayment on surplus putting pressure cash resources. andEconomic recovery change in the Bank of England monetary policy rate in interest may result cost ofrises and increased borrowing. Businesses can grow leaving them rapidly, exposed to a lack under- of resources, developed systems and and insufficient controls, to manage theprocesses business. Risk 6 of business Fast growth 38 NewRiver Retail Limited Annual Report and Accounts 2014 Board of Directors For the year ended 31 March 2014

Paul Roy David Lockhart Non-Executive Chairman Chief Executive

Committees: Experience: Paul is a member of the Remuneration Committee and the Nomination Committee. David Lockhart is a qualified Solicitor and Chartered Accountant and has over 30 years’ operating experience in the UK real estate market. David is an experienced Experience: and successful entrepreneur, having founded several property businesses across the Paul Roy co-founded New Smith, an independent investment management company United Kingdom. In 1991, David founded Halladale, a business which he ran as CEO. in 2003. Prior to this, he was Co-President of the Global Markets and Investment Halladale floated on AIM in 2001 and was bought by Stockland Corporation in 2007. Banking division at Merrill Lynch, an Executive Vice President of Merrill Lynch & Co., In 2009 he co-founded NewRiver Retail. Inc. and a member of the Executive Management Committee. Paul is Chairman of the charity, Retraining of Racehorses.

Chris Taylor Non-Executive Director Mark Davies (Senior Independent) Finance Director

Committees: Experience: Chris chairs the Audit Committee and is a member of the Remuneration and Mark Davies has nearly 20 years’ experience in finance and ten years in the UK real Nomination Committees. estate market. He started his property finance career with Grant Thornton before joining PKF (now BDO LLP) as a Partner and Head of Real Estate. Prior to joining Experience: NewRiver as Finance Director in 2009, Mark was CFO of Exemplar Properties and Chris has a wealth of property knowledge with over 25 years’ experience. He is Finance Director of Omega Land, a £500 million property JV with Morgan Stanley. currently CEO of Hermes Real Estate. Chris was the former head of European Property Mark has experience in many areas of property finance including debt restructuring, for QIC Australia and previously Director & Head of European Property at HSBC. hedging, REIT’s, convertible loans and originating senior debt on investment and Chris is Chairman of MEPC, Director of the Kings Cross Central Board and Junior Vice development property. President of the British Property Federation. Other industry related roles have included Founder Board Member of INREV, member of BCSC, member of IPF International sub-committee and a member of London First Retail Commission. He is a fellow of the Royal Institution of Chartered Surveyors.

Kay Chaldecott Non-Executive Director Allan Lockhart (Independent) Property Director

Committees: Experience: Kay chairs the Remuneration Committee and is a member of the Audit and Allan has over 25 years’ experience in the UK real estate market specialising in the Nomination Committees. retail sector. He started his career with Strutt & Parker in 1988 advising major property companies and institutions on retail investment and development. In 2002, Allan Experience: was appointed as Retail Director to Halladale and was responsible for coordinating Kay Chaldecott has over 25 years’ experience of developing and managing regional the acquisition and implementation of the asset management strategies of over shopping centres throughout the UK from having worked with Capital Shopping 20 shopping centres as well as acquiring and completing several profitable retail Centres Group PLC (now renamed intu Properties PLC). Kay was appointed developments. In 2009, he co-founded NewRiver Retail. Managing Director of the Shopping Centre business and served as a main Board Director from 2005 to 2011. Kay is a member of the Board of St. Modwen Properties PLC and Futures Theatre Company and the Advisory Board of Next Leadership. She is a member of the Royal Institution of Chartered Surveyors and has a breadth of industry knowledge covering the retail development process, retail mix and leasing and shopping centre operations.

Andrew Walker Nick Sewell Non-Executive Director Director

Committees: Experience: Andrew is a member of the Audit, Remuneration and Nomination Committees. Nick is a member of the Royal Institution of Chartered Surveyors with over 20 years of retail property experience. Specialising in high street, shopping centre and food Experience: store investments Nick has provided investment valuation and strategic advice around Andrew is Managing Director and head of Forum Partners’ European team. As a property acquisitions and sales. Prior to joining NewRiver in 2009, Nick spent five co-founder of Forum Partners, he has enjoyed over 30 years in real estate securities years at Dalgleish and then following its acquisition in 2005, he spent four years as a analysis and investment. Previously, he was a Vice President with Security Capital Director in Retail Capital Markets at CB Richard Ellis. Group, a senior officer of SC European Realty, a $1.5 billion European real estate partnership and a Director of London and Henley S.A. Andrew was a leading property analyst in the UK and Continental Europe, working for Paribas Capital Markets and S.G. Warburg Securities (Japan) Ltd. He is a member of the Royal Institution of Chartered Surveyors. Strategic report Governance Financial statements 39 Board induction Board of a listed company, of being a Director and the responsibilities with a full briefing of the Company and its Board provided are New Directors during the year. no new Directors were to their personal experience. There appropriate Board appraisal and evaluation and appraisal Board The evaluation was internal which covered of a questionnaire and consisted during the year. undertook an evaluation exercise The Board to and presented were and its standing committees. The results and communication and the performance of the Board processes at least annually by the Nomination Committee. of an evaluation is considered and frequency The requirement analysed by the Board. held between the Chairman and the Non-Executive meetings were during the year under review, In line with the UK Code recommendation, without the Executives present. Directors could and Non-Executive Directors so that the Senior Independent Director A meeting was also arranged without the Chairman present, the Executive Directors performance. The performance evaluation of the Chairman took into account the views of appraise the Chairman’s evaluation process. as part of the Board gathered was undertaken by the Chairman or of the training and development needs of Directors a review As part of the annual appraisal process Chief Executive. Internal control and risk management risk and control Internal designed is This, however, its effectiveness. and reviewing system of internal control for the Group’s is ultimately responsible The Board and not absolute assurance against material misstatement or loss. reasonable only provide to manage rather than eliminate risk and can faces and for for identifying, evaluating and managing the significant risks the Group has established a continuous process The Board reviews regularly and extent of the significant risks it is willing to take in achieving its strategic objectives. The Board determining the nature delegated of the system is The detailed review the start of the year to the date of this report. which has been in place from the process, the year and concluded that it system of internal during control of the Group’s the effectiveness to the Audit Committee which reviewed risks. Further information can be found in themitigates the risks identified as significant, including financial, operational and compliance Audit Committee Report on pages 42 to 43. The UK Code also recommends that the Board should appoint one of the independent Non-Executive Directors as Senior Independent as one of the independent Non-Executive Directors should appoint that the Board The UK Code also recommends they have concerns, the normal channel of if through is available to shareholders which contact The Senior Independent Director Director. a sounding provide should also The Senior Independent Director or for which such contact is inappropriate. Chairman has failed to resolve, when necessary. and serve as an intermediary for the other Directors the performance of the Chairman the Chairman, review for board complies with this recommendation. and the Group fulfils this role Chris Taylor Senior Independent Director Independent Non-Executive Directors Non-Executive Independent at least two non-executive the Company, that, in the case of smaller companies below the FTSE 350 such as The UK Code recommends relationships from be independent in character and judgement and free (excluding the Chairman) should of Directors members of the Board complies with this recommendation. The Group their judgement. or could appear to affect, likely to affect, which are or circumstances and Kay Chaldecott. The Board Chris Taylor Walker, Andrew Paul Roy, are as at the date of this report The Non-Executives on the Board of the continues to comply with the recommendation Board and Kay Chaldecott to be independent and hence the considers Chris Taylor UK Code. brings a senior level of judgement and experience to bear on issues of considers that each of the Non-Executive Directors The Board of conduct. (including key appointments) and standards performance, resources strategy, The Directors present their Corporate Governance report for the year ended 31 March 2014. for the year ended 31 March their Corporate Governance report present The Directors to comply with the UK (the ‘Group’), for NewRiver Retail Limited with its subsidiaries is no requirement there As an AIM Listed Company the Directors Corporate Governance(the ‘UK Code’). However, Reporting Council in September 2012) Code (as published by the Financial complied 2014, the Company has voluntarily governance corporate ended 31 March and for the year the importance of strong recognise of to corporate governance the size and nature approach given considers that it has adopted a best practice with the UK Code and the Group. GovernanceA Code of Corporate was issued by the Guernsey on 30 September 2011 and came Financial Services Commission on 1 January 2012 (‘Guernseymeet the principles of the is adopting the UK Code it is deemed to Code’). As the Company into effect Guernsey Code. Corporate Governance report Governance Corporate For the yearended March 31 2014 40 NewRiver Retail Limited Annual Report and Accounts 2014 Corporate Governance report continued For the year ended 31 March 2014

Re-election of Directors In accordance with the recommendations of the UK Code, all Directors, are subject to election by shareholders at the first Annual General Meeting following their appointment and to re-election thereafter at intervals of no more than three years. In line with best practice all Directors will be put forward for re-election at the forthcoming Annual General Meeting. Biographical detail in respect of each Director is included in the Board of Directors section on page 38. At the Company’s Annual General Meeting in July 2013, a resolution was passed to amend the Articles of Incorporation of the Company (‘Articles’) to remove the Chief Executive’s exemption from re-election by the shareholders. As recommended by the UK Code, the Chairman can confirm that following evaluation, the performance of all Directors of the Company continues to be effective and as a whole they offer an appropriate balance of skills, experience, independence and knowledge. All Directors have demonstrated the commitment to their role with the Company to discharge their responsibilities effectively.

Shareholder relations The Board places high importance on its relationship with its shareholders, making itself available for meetings with key shareholders and sector analysts. Meetings are also held with institutional shareholders to aid understanding of the Group’s strategic objectives and performance. The Board welcomes correspondence from shareholders, sent to the Group’s business address. All shareholders have the opportunity to put questions to Members of the Board at the Annual General Meeting and the Board hopes that as many shareholders as possible will be able to attend. This year’s Annual General Meeting is on Wednesday 2 July 2014.

Board and Committee meeting attendance The table below is a record of the attendance by the Directors at Board and Committee meetings from 1 April 2013 to 31 March 2014.

David Mark Allan Nick Paul Andrew Chris Kay Charles Lockhart Davies Lockhart Sewell Roy Walker Taylor Chaldecott Miller(1) Scheduled Board meetings 4 4 4 4 4 4 4 4 4 Ad Hoc meetings# 4 4 4 4 4 4 4 4 4 Audit Committee n/a* n/a** n/a n/a n/a 3 3 3 n/a Remuneration Committee n/a* n/a n/a n/a 4 4 4 4 n/a Nomination Committee n/a* n/a n/a n/a 1 1*** 1 1 n/a

# As a result of significant corporate transactions during the year, there were four unscheduled Board meetings which Directors attended in person or by telephone. * David Lockhart attended one Audit Committee, one Nomination Committee and four Remuneration Committee meetings by invitation during the year. ** Mark Davies attended three Audit Committee meetings by invitation during the year. *** Andrew Walker attended one Nomination Committee meeting by invitation during the year. (1) Resigned 31 March 2014 Board and Committees The Board’s role is to provide entrepreneurial leadership of the Company within a framework of prudent and effective controls which enables risk to be assessed and managed. It also sets the Group’s strategic aims, ensuring that the necessary financial and human resources are in place for the Group to meet its objectives and review management performance. The Board sets the Group’s values and standards and ensures that its obligations to its shareholders and others are understood and met. The Board has a schedule of matters formally reserved to it for its decision such as strategic, major financial and key operational issues. The Board has three standing committees: Audit Committee, Remuneration Committee and Nomination Committee. Each Committee has formally delegated duties and responsibilities within written terms of reference which are available from the Company Secretary and can be found on the Company website www.nrr.co.uk. In addition, there is an Executive Committee, composed of the Executive Directors and Francois Nairac, Development Director, and chaired by David Lockhart, which has written terms of reference and specific delegated authority from the Board. This Committee meets at least monthly and has day-to-day responsibility for the management of the business. Its key functions include: • To ensure a high standard of internal corporate governance • To ensure effective and transparent decision making • To improve information sharing and communication between Executive Directors and between the Executive Committee and the Board • To ensure adequate time for key discussions and an ability to make decisions quickly Strategic report Governance Financial statements 41

The Nomination Committee was established to ensure a formal, rigorous and transparent procedure for the appointment of new Directors procedure and transparent a formal, rigorous to ensure The Nomination Committee was established and size and composition of the Board of the structure, review The duties of the Nomination Committee include the regular to the Board. arise. vacancies as and when they of candidates to fill Board of the Board the identification and nomination for the approval once a year and at such other times as the Chairman of the Committee deems necessary. The Nomination Committee meets at least the Board was one meeting during the year to review There year. during the appointment was made or recommended No Board used to evaluate the performance of and to endorse the process and resources structure membership and composition, the management and its Directors. the Board on merit against The Committee would consider any appointment candidates was carried out during the year. for Board No search Nomination Committee Nomination pre-agreed selection criteria. Diversity in terms skills, knowledge, experience and gender is considered when evaluating the Board and the Board when evaluating experience and gender is considered selection criteria. Diversity in terms skills, knowledge, pre-agreed have been set. appointment. No measurable targets on diversity for a Board when making a recommendation would be considered Kay Chaldecott by Paul Roy and comprised Paul Roy, 2014, the Nomination Committee was chaired During the year and as at 31 March for the The full terms of reference Directors. independent Non-Executive members are The majority of the Committee and Chris Taylor. website www.nrr.co.uk. Company’s Nomination Committee can be found on the Remuneration Committee Remuneration and Andrew Chris Taylor comprised Kay Chaldecott, Paul Roy, 2014, during the year and as at 31 March The Remuneration Committee, for procedure is to establish a formal and transparent Chaldecott. The purpose of the Committee by Kay and was chaired Walker of it to that and compare and incentivisation of the individual Directors the remuneration and to review developing policy on remuneration Committee monitors the The thereof. in respect organisations and make recommendations persons holding similar positions in comparable for the The full terms of reference The Committee meets not less than once a year. and Company Secretary. performance of the Directors website www.nrr.co.uk. the Company’s Remuneration Committee can be found on Audit Committee Audit and Walker Andrew and Kay Chaldecott, Chris Taylor 2014, comprised during the year and as at 31 March The Audit Committee, and risk system of internal financial and non-financial controls process, the financial reporting It reviews by Chris Taylor. was chaired It also and the AIM Rules. accounting standards with the principles of good governance, compliance law, management and ensures A full Audit of the audit process. and the effectiveness Auditors and payment of any non-audit fees the independence of the reviews be found on pages 42 to 43. Committee Report can 42 NewRiver Retail Limited Annual Report and Accounts 2014 Audit Committee report For the year ended 31 March 2014

Role of the Audit Committee The purpose of the Audit Committee is to provide formal and transparent arrangements for considering all matters relating to the financial performance and reporting process of the Company, its system of internal controls and risk management and its compliance with the relevant principles set out in the UK Code of Corporate Governance (the 'UK Code') and to maintain an appropriate relationship with the Company’s auditors. The full terms of reference for the Audit Committee can be found on the Company’s website www.nrr.co.uk.

Membership The Audit Committee, during the year and as at 31 March 2014, comprised Kay Chaldecott, Chris Taylor and Andrew Walker and was chaired by Chris Taylor. Biographies can be found under Board of Directors details on page 38 which set out the professional qualifications and commercial knowledge and experience of each Committee member. The Board is satisfied that Chris Taylor has the recent and relevant financial experience to be a member of and chair the Audit Committee. Members’ attendance at meetings is set out in the table on page 40. Prior to the approval of the final and the interim financial statements Chris Taylor had a private conversation with the Senior Auditor Partner and members of his audit team.

Activities of the Committee The Audit Committee meets at least three times a year and makes whatever recommendations to the Board that it deems appropriate in the context of the scope of its responsibilities. The Chairman of the Committee reports to the Board on how the Committee has discharged its responsibilities, the matters considered and the conclusions reached after each Committee meeting. During the year, the Committee reviewed and considered the integrity of the financial statements of the Company, including its annual and interim reports and financial statements and disclosures, and the announcements relating to the Company’s results and financial performance. In particular, it reviewed the significant financial risks and accounting judgements considered during the audit process. It considered the arrangements in place to ensure that an effective system of internal financial and non-financial controls is maintained, the need for an internal audit function and that an effective Company policy on whistleblowing was in place. The Audit Committee also carried out its responsibility to oversee the Group’s relationship with its external auditors, including making recommendations to the Board on the appointment of the auditors and their remuneration and monitoring their independence. The Audit Committee considered the nature, scope, results and effectiveness of the auditors’ work and reviewed the supply of non-audit services that could be provided by the auditors. It received and reviewed reports from the Group’s auditors relating to the Group’s Annual Report and Accounts, interim statements and the external audit process. More specific activities are set out under separate headings within this report. As part of its role, the Committee also considered the annual report and accounts as a whole on behalf of the Board and made a recommendation to the Board that it resolve that they were fair, balanced and understandable and provided the information necessary for shareholders to assess the Company’s performance, business model and strategy. In making the recommendation the Committee considered its monitoring of the financial reporting process throughout the year as well as its review of the half-year financial statements and annual report and accounts and the audit reports relating to each produced by Deloitte LLP. It concluded that the accounting policies adopted and the use of judgement as noted in the financial statements were reasonable and had been applied appropriately.

Significant issues considered in relation to the financial statements During the year the Committee, management and external auditor considered the matters deemed by their impact on the Group’s results or the level of their complexity or estimation involved in their application to the financial statements to be significant risks or issues. The key areas of focus and how they were addressed are set out below. Valuation of property portfolio The external valuation of the portfolio is a key determinant of the Company’s results being the largest item on the balance sheet and the movement in values having a significant impact. The Committee therefore ensures that it has a good understanding of the valuation and reviews the underlying assumptions. Management reviews and confirms all data prior to it being submitted to the valuers then it reviews and challenges the valuers’ key assumptions underlying their valuations prior to their issuing their final report to the Company. The topic is the main issue discussed at a separate meeting between the Chairman and the external auditor prior to the Committee meeting that reviews the annual and interim statements. Accounting for acquisitions and disposals In view of the individual nature of acquisitions and disposals the Committee reviewed each of these in relation to the specific disclosure requirements required and the treatment of the cash flows, profits and expenditures for each in relation to the REIT status of the business and their tax treatment. In addition, it considered the policy adopted on the timing of recognition of acquisitions and disposals and confirmed that, when all risks and awards had been transferred, they would be recognised at unconditional exchange of contracts rather than on completion. Strategic report Governance Financial statements 43 Internal control and audit control Internal for a dedicated internal by the Audit does not have an internal audit function was reviewed The Group audit department. The requirement and the close involvement of the Executive given the size of the Group inappropriate Committee during the year and this was considered and senior management on a day-to-day basis. Directors employed BDO LLP as an external expert the Group has policies for internal of various key matters. During the year, The Group control The Committee implemented within its finance and accounting procedures. currently to assess the internal and processes controls expected in an and that which would be was appropriate which concluded that the system of internal report control the resulting reviewed organisation of a similar size. The Committee reviewed Deloitte LLP’s performance and the effectiveness of the external audit process by considering the extent to which of the external and the effectiveness audit process performance Deloitte LLP’s The Committee reviewed of key accounting and audit judgments and the of challenge and depth of understanding and review the audit plan was met, the degree to the Committee. content of the auditors’ reports has recommended the Committee auditors in the services they provide, and independence of the the effectiveness Having considered Deloitte LLP as the Company’s at the forthcoming Annual General Meeting to re-appoint is proposed that a resolution to the Board external auditors. Effectiveness of external audit process audit external of Effectiveness Independence and appointment of the external auditor auditor external the of appointment and Independence no non-audit services provided were There with the independence of the externalThe Committee has assessed and is satisfied auditor. on non-audit services. The external general policy is not to instruct Deloitte LLP auditors and senior during the year and the Company’s have been in place for on the set up of the Company and, therefore, appointed in 2009 following a formal process audit partner were five years. Withapproximately Committee will continue to give consideration as to the auditor having been in place less than ten years, the to tender the external audit contract at least every ten years. requirements of the regulatory the timing of the next formal tender in the light to their independence Deloitte LLP as confirmation from in 2015. The Committee has also received The senior audit partner is being rotated as external to the services they provide auditor. and objectivity in relation The Committee ensures sufficient review is undertaken of the adequacy of financing arrangements, cash flow forecasts and lender cash flow forecasts of the adequacy of financing arrangements, is undertaken review sufficient The Committee ensures of debt facilities, an 18-month which includes details to the Board a quarterly report presents The Finance Director covenant compliance. financial statements the Committee specifically of the year-end and management accounts. As part of the review cash flow forecast the statement on going concern and concluded that, in particular in the light of the considerable cash balance, the Groupconsidered for the financial statements to be it was appropriate a going concern therefore, would not be breached, will remain and that covenants to going concern relating can be found on page 50. on a going concern basis. The statement of the Directors prepared Going concern Accounting for joint ventures joint for Accounting ofWith and IFRS 12 Disclosure Statements, IFRS 11 Joint Arrangements IFRS 10 Consolidated Financial accounting standards new in Report and comments of management the Auditors’ been adopted, the Committee considered in Other Entities having Interests one set up the prior year into during the year and the entered 50:50 joint ventures new three for the the accounting treatment reviewing the limited partnership In addition, it reviewed Unit Trusts. set up as Jersey held a 10% investment, all of which are in which the Company over decision making in and influence the Company had of control the degree It considered venture. as a 50:50 joint set up previously should be accounted for as joint the investments Therefore, that the Company did not have overall control. and deemed each joint venture made under IFRS 12. confirming their treatment disclosures relevant under IFRS 11, with the ventures 44 NewRiver Retail Limited Annual Report and Accounts 2014 Remuneration report For the year ended 31 March 2014

As an AIM Listed Company there is no requirement for NewRiver Retail Limited to comply with the Directors’ remuneration disclosure requirements contained in the Larger and Medium-sized Companies and Group (Accounts and Reports) Regulations 2008 (as amended) which came into force on 1 October 2013 and the Company has opted not to do so. However, this report provides the information on Directors’ remuneration considered of importance to shareholders.

Directors’ remuneration The objective of the remuneration policy of the Group is to ensure that Directors and senior managers are rewarded in a way that attracts, retains, motivates and rewards management of the highest quality, aligns shareholder and executives interests and promotes a direct relationship between results and reward, reflecting best practice appropriate to the size and stature of the Company. The remuneration and share schemes are designed to encourage Executive Directors and senior managers to align their long-term career aspirations with long- term interests of the Group, promoting the attainment of both individual and corporate achievements measured against specific criteria. The Executive Directors are encouraged to build up and maintain a shareholding equivalent to one-year’s salary. During the year and in respect of the development of policy for the year to March 2015, the Committee was advised by h2glenfern Remuneration Advisory on executive remuneration. Another division within h2glenfern provides corporate advice to the Company. h2glenfern Remuneration Advisory has confirmed to the Company that it has operated in accordance with the Code of Conduct of the Remuneration Consultants’ Group in relation to executive remuneration consulting in the UK. The Remuneration Committee has, therefore, satisfied itself that all advice provided by h2glenfern Remuneration Advisory was objective and independent.

Basic salary and benefits Basic salaries and the level and type of benefits offered to Executive Directors are reviewed annually by the Remuneration Committee, taking into account the executives’ responsibilities, experience and performance, pay across the Group and market competitiveness. During the year, the Committee reviewed salary levels and benefits, in the context of total remuneration, against comparable roles in other property organisations, primarily FTSE Small Cap and FTSE AIM 100 companies. It should be noted that during the year, the Company did not provide a pension scheme nor any contribution or allowance towards a pension nor did it provide a car allowance. When benchmarking remuneration an allowance is made for the provision of these benefits by individual Directors from their salaries. The benefits that are provided include life insurance, private medical insurance and professional membership subscriptions. During the year, Directors’ salaries were not increased. The last increase in Directors’ salaries was on 1 September 2011. In April 2014, the Remuneration Committee carried out a review in order to determine salary levels and benefits for the year to March 2015. In carrying out this review, the Committee took account of the Company’s performance during the year and of the substantial increase in its size and the scale of its operations. The annual salary levels of the Executive Directors, effective 1 April 2014, are as follows: David Lockhart – £400,000; Allan Lockhart – £350,000; Mark Davies – £300,000; Nick Sewell – £265,000. The Committee also determined to introduce a pension scheme for Executive Directors with contributions by the Company at 12.5% of annual base salary.

Annual bonus The Committee operates a discretionary annual bonus scheme under which bonuses may be paid to Executive Directors in cash for achieving Company financial and personal objectives during a financial year. Company financial performance objectives include earnings and dividend growth. In addition, the Committee may pay a special bonus on the basis of outstanding performance, for example in relation to the identification and execution of transactions. In May 2013, when reviewing the level of bonuses relating to the financial year ending 31 March 2013, the Remuneration Committee approved the payment of a deferred bonus of £31,000 each to David Lockhart and Allan Lockhart and £24,000 to Mark Davies, subject to the condition that a minimum of £20 million of new capital was raised. The condition was met as a result of the Company’s fundraise in July 2013 and therefore the deferred bonuses were paid in full. Bonuses paid in respect of the year to 31 March 2014, are set out in the table below and reflect the major progress the Company made during the year. Annual bonus payments are subject to a clawback provision. The Remuneration Committee Chairman attended individual appraisal meetings covering the year to 31 March 2014. The Remuneration Committee has approved corporate and individual objectives for each Director for the year to 31 March 2015. Strategic report Governance Financial statements 45

Total 473 313 404 313 294 2013 £’000 1,797 – 1 1 1 1 4 £’000 Benefits

93 72 93 72 68 398 £’000 Bonus

40 50 75 40 380 240 310 240 225 2013 £’000 £’000 205 1,395 and fees Basic salary

673 505 652 429 312 2014 Total £’000 2,571 – 1 1 1 1 4 £’000 Benefits

– 262 240 310 188 £’000 bonus 1,000 Annual

– – 31 24 31 86 £’000 bonus Deferred

75 40 40 50 380 205 240 310 240 311 2014 £’000 £’000 1,481 and fees Basic salary Executive Directors David Lockhart Schedule of Directors’ remuneration Directors’ Schedule of Directors’ contracts and payments for loss of office of loss for payments and contracts Directors’ Directors, on 12-months’ notice. All Non-Executive which can be terminated by either party have contracts Executive Directors All current months’ notice. terminated by either party on three appointments can be 2014. He was on a contract which could 31 March terminated on of Charles Miller as a Director the appointment Following his resignation salary in payment of £56,250 equivalent to three-months’ a contractual He received notice by either party. be terminated on six months’ Performance Share under the NewRiver Retail the purposes of his award, with an ex gratia payment of £30,000. For lieu of notice, together to 34,310has been pro-rated granted in January 2013 of 85,000 shares his award ‘good leaver’, therefore as a Plan 2009, he was treated 2014. He was appointed a 2013 to 31 March being 14 January the performance criteria is measured with the period over which shares 1 May 2014. from a period of one year with effect with a service company for under an agreement consultant of the Company Paul Roy *2014 basic salary and fees includes £30,000 termination payment and £56,250 payment in lieu of notice. *2014 basic salary and fees includes £30,000 termination payment Non-Executive Directors Walker Andrew Kay Chaldecott Chris Taylor Mark Davies Allan Lockhart Nick Sewell Charles Miller* 46 NewRiver Retail Limited Annual Report and Accounts 2014 Remuneration report continued For the year ended 31 March 2014

Share option plan The Company has a share incentive plan for the Chairman, Executive Directors and senior management of the Group. The objective of the share incentive plan is to align the financial interests of the participants with those of the shareholders and to motivate and retain them. Currently in place is an approved Company Share Option Plan (‘CSOP’) and an Unapproved Share Option Plan (‘USOP’). With the introduction of awards under the NewRiver Retail Performance Share Plan in 2013, no options were granted under either plan during the year nor the previous year and none are envisaged in the foreseeable future. All option awards were granted three years prior to their first vesting date, except as noted below, and lapse after ten years from that date. The holdings as at 31 March 2014 and 31 March 2013, are detailed below:

2014 2013 Exercise Exercise Number of Vesting price Number of Vesting price CSOP options date £ CSOP options date £ David Lockhart 12,000 1 September 2.50 David Lockhart 12,000 1 September 2.50 2012/13/14 2012/13/14 Allan Lockhart 12,000 1 September 2.50 Allan Lockhart 12,000 1 September 2.50 2012/13/14 2012/13/14 Mark Davies 11,049 15 December 2.71 Mark Davies 11,049 15 December 2.71 2012/13/14 2012/13/14 Nick Sewell 11,049 15 December 2.71 Nick Sewell 11,049 15 December 2.71 2012/13/14 2012/13/14 46,098 46,098

2014 2013 Number of Vesting Exercise Number of Vesting Exercise USOP options date price £ USOP options date price £ David Lockhart 272,286 1 September 2.50 David Lockhart 272,286 1 September 2.50 2012/13/14 2012/13/14 David Lockhart 348,000 26 September 2.35 David Lockhart 348,000 26 September 2.35 2014 2014 Allan Lockhart 192,686 1 September 2.50 Allan Lockhart 192,686 1 September 2.50 2012/13/14 2012/13/14 Allan Lockhart 338,000 26 September 2.35 Allan Lockhart 338,000 26 September 2.35 2014 2014 Paul Roy 200,000 15 December 2.50 Paul Roy 200,000 15 December 2.50 2012/13/14 2012/13/14 Mark Davies 38,693 15 December 2.71 Mark Davies 38,693 15 December 2.71 2012/13/14 2012/13/14 Mark Davies 15,000* 15 December 2.44 Mark Davies 15,000 15 December 2.44 2012/13/14 2012/13/14 Mark Davies 286,000 26 September 2.35 Mark Davies 286,000 26 September 2.35 2014 2014 Nick Sewell 102,647 15 December 2.71 Nick Sewell 102,647 15 December 2.71 2012/13/14 2012/13/14 Nick Sewell 15,000* 15 December 2.44 Nick Sewell 15,000 15 December 2.44 2012/13/14 2012/13/14 Nick Sewell 328,000 26 September 2.35 Nick Sewell 328,000 26 September 2.35 2014 2014 2,136,312 2,136,312

* These options were granted in March 2011, less than three years prior to the first vesting date. Strategic report Governance Financial statements

47 date Vesting 14 January 2016 14 January 2016 14 January 2016 14 January 2016 14 January 2016 2013 91,000 85,000 91,000 116,500 116,500 500,000 under award Number of shares Mark Davies PSP award holderPSP award David Lockhart Allan Lockhart Charles Miller Nick Sewell

date Vesting 30 March 2015 30 March 14 January 2016 14 January 2016 14 January 2016 14 January 2016 2014 91,000 34,310 91,000 116,500 116,500 449,310 under award Number of shares Mark Davies Long-term performance plan share Long-term Plan 2009 (‘PSP’) following Performance Share for the first time under the NewRiver Retail granted were awards On 14 January 2013, with shareholders.extensive consultation and to with those of the shareholders interests Directors the alignment of Executive plan is to strengthen The objective of the performance performance 2013 is based on three-year in awarded shares Executives. The vesting of the performance high quality motivate and retain weighted are These measures in adjusted EPRA earnings (EPS). Return share growth per Shareholder (TSR) and in terms of absolute Total grant and from in EPS. TSR will be measured on the growth depends on the performance of TSR and half award 50:50 so that half of the financial year. the latest completed from will be measured EPS growth at 13%. on a compound annual basis with full vesting TSR performance, 25% vests if TSR is 10% allocated against the For shares in the adjusted EPRA earnings growth annual percentage performance, 25% may vest if the compound allocated against EPS For shares with full vesting at 8%. performance period is 4% per annum over the three-year per share of the reflection a fair TSR and EPS outcomes are satisfy itself that the recorded to vest, the Committee must for any shares Additionally, are for leavers and on change of control performance period. Provisions the three-year underlying performance of the Company over misconduct at the or gross will be subject to clawback in the event of material misstatements aligned with best practice. Unvested awards discretion. Committee’s the PSP he was under 2014. For the purposes of his award, terminated on 31 March The appointment of Charles Miller as a Director with the period to 34,310 shares granted in January 2013 was pro-rated of 85,000 shares his award a ‘good leaver’, therefore as treated onand be exercisable will now vest 2014. This award being 14 January 2013 to 31 March over which the performance criteria measured 2015.30 March detailed below: 2013, are 2014 and 31 March as at 31 March under awards The shares PSP award holderPSP award David Lockhart Allan Lockhart Charles Miller Nick Sewell The Committee is currently considering the level and structure of performance share awards to be made in 2014. awards of performance share considering the level and structure The Committee is currently 48 NewRiver Retail Limited Annual Report and Accounts 2014 Directors’ report For the year ended 31 March 2014

The Directors present their report and financial statements of the Group for the year ended 31 March 2014.

Principal activities and status The Company is a Guernsey incorporated company which is managed and controlled in the UK. Since its admission and commencement of trading on AIM and the CISX on 1 September 2009, the Company has carried on business as a property investment, development and asset management company, specialising in retail commercial property in the UK. The listing of the Company’s Ordinary Shares on the Daily Official List of the CISX was cancelled on 1 October 2013. At Admission the Company was registered with the Guernsey Financial Services Commission (‘GFSC’) as a closed-ended investment company. Upon an application by the Company, the GFSC agreed to revoke the declaration of the Company as a registered closed- ended collective investment scheme pursuant to The Registered Collective Investment Scheme Rules 2008 on the basis that it is a general commercial trading company and hence no longer has the attributes of a collective investment scheme. To that effect, the Company is no longer subject to the supervision of the GFSC, save in respect of any new offer documents which will need to comply with the Guernsey Prospectus Rules 2008. The Board has taken external advice on and considered the question of whether the Company is an ‘alternative investment fund’ for the purposes of the European Union’s Directive on Alternative Investment Fund Managers (AIFMD). Whilst some features of the Company, particularly when the Company was first launched in 2009 and during the early years of its existence, could have led to a conclusion that the Company would fall within scope of the AIFMD, the Company has evolved since launch and now undertakes a significant amount of development of its property portfolio and other commercial activities. On that basis, the Board believes that the Company has a general commercial purpose and does not fall within the scope of the AIFMD.

Strategic Report The Strategic Report for the year ended 31 March 2014 is set out on pages 1 to 37 and contains a fair review of the business of the Company during the year, including a description of the principal risks and uncertainties.

Results and dividend The results for the year are set out in the financial statements. During the year, the Company paid an interim dividend of £4.0 million at 6 pence per share (2013: £2.0 million at 6 pence per share) and a special dividend of £6.7 million at 10 pence per share (2013 final dividend: £3.4 million at 10 pence per share). The Board approved the reclassification of £148.5 million (2013: £4.6 million) of Share Premium to Other Reserves in the year.

The Board The Directors, who served throughout the year unless stated otherwise, are detailed below: Paul Roy Non-Executive Chairman David Lockhart Chief Executive Mark Davies Finance Director Allan Lockhart Property Director Nick Sewell Director Charlie Miller Development Director (Resigned on 31 March 2014) Andrew Walker Non-Executive Director Chris Taylor Non-Executive Director Kay Chaldecott Non-Executive Director Strategic report Governance Financial statements

49 8.38% 7.60% 5.66% 4.78% 3.47% 3.41% 3.06% 24.12% % of Issued (undiluted) Share Capital (undiluted) Share

Number of 8,384,496 7,598,418 5,656,840 4,777,314 3,467,559 3,410,895 3,062,454 24,131,236 Ordinary Shares Ordinary Implementation of the agreed business strategy to focus on value creating retail property opportunities; property retail strategy to focus on value creating business agreed Implementation of the business model; place to implement the Company’s Adequate funding is in policies and cash flow forecasts; Monitoring of cash management five-year business plans for each asset held; of results The methodology and those held in joint ventures; assets and the Company’s and safeguarding procedures reporting Responsibility for the financial of the annual and interim financial statements and annual budget; Approval including budgets and forecasts;Review of quarterly management accounts of all dividend payments; Dividend policy and approval and advisers; including corporate brokers with key service providers The performance of and relationships party;Any significant fees payable to any related Monitoring key performance indicators; and policies and procedures. delegated authorities and internal and risk management controls Establishing and maintaining appropriate Convertible unsecured loan stock loan unsecured Convertible the stock holder may convert loan stock (‘CULS’) where issued £25 million of convertible unsecured On 22 November 2010, the Group loan for every £2.80 nominal value of convertible unsecured Share at the rate of 1 Ordinary Shares all or any of the stock into Ordinary conversion rate for A CULS holders is £2.51 and the rate for dilution. The current stock held, subject to the rate being adjusted to prevent will accrue at 5.85% on the outstanding loan stock until 31 DecemberB CULS holders is £2.49. Under the terms of the CULS, interest payable on the CULS is due biannually on 30 June and 31 December. The interest 2015 when it will either be converted or repaid. in the issue of 579,151 which resulted converted at a conversion price of 259 pence per share £1.5 million of CULS were During the year, Shares. Ordinary Invesco Perpetual Capital Management JO Hambro Shareholders with holdings of more than 3% of the issued Ordinary Shares of the Company at 4 May 2014 were: Shares than 3% of the issued Ordinary with holdings of more Shareholders Shareholder Substantial shareholdingsSubstantial The Directors recognise the impact that the business has on the environment, the communities in which it operates and society in general. the communities in which it operates environment, the impact that the business has on the recognise The Directors Responsibility and well implemented Corporate Social operate a strong the link between businesses which also recognises The Board value. in shareholder (‘CSR’) strategy and an increase of our offering the core strengthen CSR policy and strategy to implement an appropriate The Company is continuing to develop and where focused in the areas initiatives are this end, business objectives. To and future current business, and support the delivery of both our and community groups. undertaken in partnership with local councils, educational establishments located and are are our shopping centres Corporate Social Responsibility Corporate Forum European Realty Income III L.P. Forum European AXA Framlington Investment Managers Hale, Stockbrokers Hargreave Asset Management Premier Life Investments Standard Rathbones • • • • • • • • • • • The Board recognises the requirement of the UK Code regarding the segregation of roles and division of responsibilities between the division of responsibilities and roles of the segregation of the UK Code regarding the requirement recognises The Board during the year. and has complied with this requirement Chairman and Chief Executive which and to consider the following matters is the overall strategy of the Company a major part of its role has determined that The Board Company: key to the performance of the are • 50 NewRiver Retail Limited Annual Report and Accounts 2014 Directors’ report continued For the year ended 31 March 2014

Directors’ interests Directors who held office at the year end and their interests in the shares of the Company as at the date of this report were:

2014 2013 Number of Number of Ordinary Shares Ordinary Shares Paul Roy 360,000 360,000 David Lockhart 1,660,000 1,622,000 Mark Davies 18,000 14,000 Allan Lockhart 211,684 149,294 Charles Miller 15,416 0 Nick Sewell 111,500 107,500

All related party transactions are disclosed in Note 27.

Directors’ insurance The Company maintains liability insurance cover for the Directors and officers of the Group, which is reviewed annually.

Annual General Meeting The Annual General Meeting will be held at 10.00 am on 2 July 2014 at 6th Floor, Holborn Gate, 330 High Holborn, London WC1V 7QD. At the meeting, resolutions will be proposed to receive the Annual Report and financial statements approve the Directors’ remuneration, re-elect Directors and reappoint and determine the remuneration of Deloitte LLP. In addition, it will be proposed that expiring authorities to allot shares and to repurchase shares are extended.

Auditor Deloitte LLP has expressed its willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.

Going concern The Directors of NewRiver Retail Limited have reviewed the current and projected financial position of the Group making reasonable assumptions about future trading and performance. The key areas reviewed were: • Value of investment properties; • Cash flow forecasts, including capital expenditure relating to development and asset management and tenant incentive commitments, and forecast rental income; • Financing arrangements and loan covenant compliance; and • Timing of property acquisitions and sales. The Group has considerable cash and short-term deposits, as well as profitable rental income streams and as a consequence the Directors believe the Group is well placed to manage its business risks. Whilst the Group has borrowing facilities in place, it is currently well within prescribed financial covenants. After making enquiries and examining major areas which could give rise to significant financial exposure, the Board has a reasonable expectation that the Company and its Group have adequate resources to continue its operations for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparation of these financial statements (see Note 1). Strategic report Governance Financial statements 51

properly select and apply accounting policies; select and apply accounting properly comparable and reliable, relevant, including accounting policies, in a manner that provides information, present understandable information; to enable users to understand the insufficient IFRSs are in requirements when compliance with the specific disclosures additional provide financial position and financial performance; and and conditions on the Group’s impact of particular transactions, other events continue as a going concern. ability to make an assessment of the Group’s Signed on behalf of the Board 14 May 2014 Signed on behalf of the Board Mark Davies • • • transactions and to show and explain the Group’s sufficient that are for keeping adequate accounting records responsible are The Directors financial statements that the and enable them to ensure accuracy at any time the financial position of the Group disclose with reasonable and hence for the assets of the Group for safeguarding also responsible 2008. They are comply with the Companies (Guernsey) Law, and other irregularities. and detection of fraud steps for the prevention taking reasonable the Company’s for the maintenance and integrity of the corporate and financial information included on responsible are The Directors Legislation in Guernsey may differ and the UK governing and dissemination of financial statements the preparation website www.nrr.co.uk. in other jurisdictions. legislation from and each hasunaware auditor is which the Company’s audit information of is no relevant there is aware, So far as each of the Directors to establish that the audit information and of any relevant to make himself aware a Director taken all the steps he ought to have taken as of that information. auditor is aware Company’s with International Financial in accordance confirm that to the best of our knowledge the financial statements, prepared The Directors or loss of the Company and the give a true and fair view of the assets, liabilities, financial position and profit Reporting Standards, as a whole. undertakings included in the consolidation taken balanced and Report and Accounts 2014 taken as a whole is fair, the Annual consider that as at the date of this report The Directors performance, and the Group’s to assess the Company’s the information necessary for shareholders understandable and provides business model and strategy. of Section 249 of The Companies (Guernsey) with the provisions in accordance This information is given and should be interpreted Law, 2008. Finance Director Directors’ responsibility statement responsibility Directors’ applicable law with and the financial statements in accordance the Annual Report for preparing responsible are The Directors and regulations. required are Under that law the Directors for each financial year. financial statements to prepare the Directors Company law requires (‘IFRSs’) as adopted by the International with Standards Financial Reporting financial statements in accordance the Group to prepare that they give a true and satisfied are the accounts unless they must not approve law the Directors Union. Under company European financial statements, these for that period. In preparing or loss of the Group and of the profit the Group of affairs fair view of the state of that Directors: 1 requires InternationalAccounting Standard • 52 NewRiver Retail Limited Annual Report and Accounts 2014 Independent Auditor’s report to the members of NewRiver Retail Limited

Opinion on financial statements of In our opinion the financial statements: NewRiver Retail Limited • give a true and fair view of the state of the Group’s affairs as at 31 March 2014 and of its profit for the year then ended; • have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and • have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008. The financial statements comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Statement of Cash Flows and the related Notes 1 to 28. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and IFRSs as adopted by the European Union. Going concern We have reviewed the Directors’ statement contained on page 50 that the Group is a going concern. We confirm that: • we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate; and • we have not identified material uncertainties related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability to continue as a going concern. Our assessment of risks of material The assessed risks of material misstatement described below are those that had the misstatement greatest effect on our audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team:

Risk How the scope of our audit responded to the risk NewRiver Retail Limited owns and manages a portfolio of • We assessed management’s process for reviewing and commercial property assets. The valuation of the portfolio challenging the work of the external valuer and development (including a number of development properties) is a significant appraisals. judgement area and is underpinned by a number of • We met with the external valuers of the portfolio to discuss and assumptions. challenge the valuation process, performance of the portfolio and The Group uses professionally qualified external valuers to fair significant assumptions and critical judgement areas, including value the Group’s portfolio at six-monthly intervals. The portfolio occupancy rates, yields and development proposals including (excluding development properties) is valued by the investment planning advice and estimated costs to completion. method of valuation with development properties valued by the • We benchmarked and challenged the key assumptions to external residual method with a deduction from gross development value industry data and comparable property transactions, in particular for all costs necessary to complete the development together the yield. with an allowance for remaining risk. Specific to the Trent • We assessed the competence, independence and integrity of the portfolio properties there are additional valuation considerations external valuer. such as the agreement signed with Co-op to develop 54 sites for use as convenience stores and the status of planning • We performed audit procedures to assess the integrity of permission. information provided to the independent valuer, including agreement on sample basis back to actual leases. • We performed testing over significant contracts which underpin the development property valuations, in particular the agreement signed with Co-op and the rental guarantee agreement with Marston’s, including the operation of the public houses at the end of the four year Marston’s rental guarantee period. Please see Note 12 of the financial statements. Accounting for the creation of the new BRAVO joint • We have reviewed the ownership and asset management ventures, including the assessment of the nature of the jointly agreements for the new joint ventures to verify accounting controlled entity. treatment as a joint venture, including decision making agreements and deadlock. Please see Note 13 of the financial statements. Strategic report Governance Financial statements

53

basis

the on

raise, equity 2014 February the

from raised

cash the we focused on any unusual revenue, As part of our audit of all items to the agreeing and complex adjustments to revenue, lease incentives. to relation in recognised the revenue underlying leases and recalculating financing structure, the adequacy of the Group’s considered We available liquidity. and profile including debt maturity and covenant cash flow forecasts assessed management’s We evaluating the key judgements within calculations, including sensitivity of the calculations to and assessing the the forecast income and property including rental changes in key inputs, valuations. How the scope of our audit responded to the risk audit responded How the scope of our • Please see Note 3 of the financial statements. • • the financial statements. Please see Note 19 of

exclude

to adjusted knowledgeable person that the economic decisions of a reasonably makes it probable use materiality both in planning the scope of our audit would be changed or influenced. We of our work. work and in evaluating the results is below 2% of shareholders to be £3 million which materiality for the Group determined We equity consideration of these risks is set out on page 42. The Audit Committee’s our audit of designed in the context of to these matters were relating Our audit procedures an opinion on individual accounts or to express the financial statements as a whole, and not an opinion on these individual matters. express the risks described above, and we do not materiality as the magnitude of misstatement in the financial statements that define We to any of Our opinion on the financial statements is not modified with respect disclosures. Camel The Group’s and net assets of these joint ventures. of the results share Group’s our review. arising from have nothing to report We of the matters that we identified when assessing the overall presentation on disclosure which in all subsidiaries executed at levels of materiality applicable to each subsidiary, materiality. instances was lower than Group level, gave us the evidence we needed for our opinion on the performed at the Group not subject to an also have 31 December year ends, but were joint ventures III and Trent on the external have performed focused audit procedures We audit at 31 December 2013. significant transactions and balances within these two joint ventures. including in respect The majority of the work on the key audit risks was performed centrally, with the financial is consistent prepared financial year for which the financial statements are the part of the Corporate GovernanceGovernance reviewed Statement relating Code. We of the UK Corporate Governance compliance with nine provisions Code. to the Company’s to the Committee all audit with the Audit Committee that we would report agreed We of the risks identified above, which were Our audit scope was based on our assessment Real Estate Fund (‘MSREF’), with Morgan Stanley joint venture The audit of the Group’s this cash has not yet been invested. that, in our below that threshold in excess of £60,000, as well as differences differences to the Audit Committee also report We on qualitative grounds. warranted reporting view, financial statements. and its operating of obtaining an understanding of the Group determined as a result carried out audit work on each of the underlying including internal We environment, control. interest The Group’s which had at 31 December 2013 year end, is carried out by BDO LLP. audited are venture joint in the Middlesbrough and 50% interest in the Camel II joint venture met with BDO and PriceWaterhouseCoopers We LLP. by PriceWaterhouseCoopers their audit working papers. This together with additional audit procedures and reviewed and also tested the consolidation process of all valuations and material transactions. We no significant were to confirm our conclusion that there carried out analytical procedures financial information of the remaining risks of material misstatement of the aggregated components not subject to audit or specified audit procedures. Report for the In our opinion the information given in the Strategic Report and the Directors’ statements. to make a Corporate have voluntarily chosen to do so, the Directors Although not required Governance extent of their compliance with the UK Corporate Statement detailing the Risk for on the accounting treatment focusing Revenue recognition, complex items, including lease incentives and unusual or more premia. surrender Going concern, flow focusing on adequacy of financing, cash financing activities. recent of audit focus due to the Group’s area to be an was considered and covenant compliance forecasts Our application of materiality An overview of the scope of our audit Opinion on other matters expressly in our engagement letter agreed Other matters 54 NewRiver Retail Limited Annual Report and Accounts 2014 Independent Auditor’s report to the members of NewRiver Retail Limited continued

Matters on which we are required to report by exception Adequacy of explanations received and Under the Companies (Guernsey) Law, 2008 we are required to report to you if, in our accounting records opinion: • we have not received all the information and explanations we require for our audit; or • proper accounting records have not been kept by the parent company; or • the financial statements are not in agreement with the accounting records. We have nothing to report in respect of these matters. Our duty to read other information in the Under International Standards on Auditing (UK and Ireland), we are required to report to you Annual Report if, in our opinion, information in the Annual Report is: • materially inconsistent with the information in the audited financial statements; or • apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or • otherwise misleading. In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the Directors’ Statement that they consider the Annual Report is fair, balanced and understandable and whether the Annual Report appropriately discloses those matters that we communicated to the Audit Committee which we consider should have been disclosed. We confirm that we have not identified any such inconsistencies or misleading statements. Respective responsibilities of As explained more fully in the Directors’ Responsibilities Statement, the Directors are directors and auditor responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. We also comply with International Standard on Quality Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that our quality control procedures are effective, understood and applied. Our quality controls and systems include our dedicated professional standards review team and independent partner reviews. This report is made solely to the Company’s members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and those further matters we have expressly agreed to report to them on in our engagement letter and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Scope of the audit of the An audit involves obtaining evidence about the amounts and disclosures in the financial financial statements statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Deloitte LLP Chartered Accountants Guernsey, Channel Islands 14 May 2014 Strategic report Governance Financial statements 55 Total £’000 £’000 Capital e s Year ended 31 March 2013 March 31 ended Year 16.3 13.6 4.7 2.4 – (2,157)– 811 (2,157) 811 10 – 10 88 – 88 859 (1,483) (624) £’000 £’000 Income Income 4,327 (2,829) 1,498 4,239 (2,829) 1,410 10,449 (2,829) 7,620 17,978 – 17,978 14,387 – 14,387 (6,220) – (6,220) (3,591) – (4,797) (3,591) – (4,797) 15.7 12.0 38.0 33.2 Total £’000 £’000 60 to 85 form an integral part of the of part integral an form 85 to 60 Capital s Year ended 31 March 2014 –– (763) 2,032 (763) 2,032 on page (11) – (11) 105 – 105 s £’000 7,276 15,772 23,048 4,296 14,503 18,799 7,287 15,772 23,059 Income (5,508) – (5,508) (3,383)(6,420) – (3,383) – (6,420) 12,690 15,772 28,462 18,197 – 18,197 14,814 – 14,814

9 9 9 9 s 3 8 7 12 Note of the Group. TheNote s 6 13 s tatement tatement S 4 s e s propertie tment s s 5 s e s . s al of inve s 7 s ted (pence) t po derive from continuing operation from continuing derive s s s ic (pence) s tatement s s trative expen olidatedIncome s s ic (pence) (pence) ic ic diluted (pence) property income income ss property s s dmini hare ofincome fromjoint venture Net valuation movement on di Profit profit Operating All activitie All Finance co EPRA ba Ba Ba EPRA Adju Profitfor the year taxationafter share per Earnings Current taxation (charge)/credit (charge)/credit taxation Current Net finance expense Finance income A S Gro Property expen operating Con 2014 31 March ended For the year Profit for the year before taxation taxation before year the for Profit Net property income financial 56 NewRiver Retail Limited Annual Report and Accounts 2014 Consolidated Statement of Comprehensive Income For the year ended 31 March 2014

Year ended Year ended 31 March 31 March 2014 2013 Notes £’000 £’000 Profit for the year after taxation 23,048 1,498 Other comprehensive income Items that will not be reclassified subsequently to profit or loss Fair value gain/( loss) on interest rate swaps 19 2,254 (572) Items that may be reclassified subsequently to profit or loss – – Total comprehensive income for the year 25,302 926

The Notes on pages 60 to 85 form an integral part of these financial statements.

Strategic report Governance Financial statements – 57 260 854 240 235 235 404 220 424 2013 £’000 2,310 2,080 1,981 7,545 9,526 (2,273) 78,637 79,788 79,788 14,688 10,994 11,418 24,693 31 March 230,896 206,278 221,370 112,697 139,690 – – (19) 453 105 240 241 240 384 899 219 2014 £’000 3,595 26,107 74,851 93,150 89,555 10,202 10,421 23,306 31 March 212,981 239,627 382,509 239,627 214,124 289,359 108,256 132,461

s 22 22 22 10 22 22 22 10 10 17 18 18 12 19 19 14 14 behalf by: s Note igned on it on igned s . s tatement on 14 May 2014 and were and were 2014 May 14 on s e financial s s heet heet

s 19 s 18 13 s 16 s

s s

s were approved by the Board of Director of Board by the approved were s s

trument s s 60 to 85 form an integral part of the of part integral an form 85 to 60 s

erve erve s s s erve

s tatement h equivalent h s s s erve erve in joint in venture

s s on page s erve s trument s olidated Balance S s s tment propertie tment s s h and ca ic (pence) (pence) ic ic diluted (pence) s s s at 31 March 2014 2014 March at 31 hare Option re Option hare hare capital capital hare s Hedging re Hedging S Revaluation re Revaluation equity Total The Note share per (NAV) Net Value Asset (pence) NAV EPRA S Retained earning Net assets Equity Trade and otherpayable Other re Ba Non-current taxation liabilitie taxation Non-current Non-current liabilities liabilities Non-current Currentliabilities Total assets assets Total liabilities and Equity Current assets Current Trade and otherreceivable Non-current assets Non-current Inve Con A Ba Property, plant and equipment and equipment plant Property, Total non-current assets Derivative financial in Borrowing Ca current Total assets Current liabilitie taxation Inve Totalcurrent liabilities Total non-current liabilities liabilities non-current Total Debt in Debt The financial Lockhart David Davie Mark Chief Executive Finance Director 58 NewRiver Retail Limited Annual Report and Accounts 2014 Consolidated Cash Flow Statement As at 31 March 2014

31 March 31 March 2014 2013 Note £’000 £’000 Cash flows from operating activities Profit before tax on ordinary activities for the year attributable to Shareholders 23,059 1,410 Adjustments for: Profit on disposal of investment property 6 (2,032) (811) Net movement from fair value adjustments on Investment Properties 763 2,157 Net movement from fair value adjustments in joint ventures (14,503) 1,483 Profits in joint ventures (4,296) (859) Net finance costs 5,403 6,210 Rent free lease incentive adjustment (645) (573) Provision for bad debts 26 242 Amortisation of legal and letting fees 199 752 Depreciation on property plant and equipment 60 53 Share Options 24 193 73 Operating profit before changes in working capital 8,227 10,137 Changes in working capital: Decrease/(increase) in receivables and other financial assets 218 (4,367) (Decrease)/increase in payables and other financial liabilities (2,725) 5,786 Cash generated from operations before interest 5,720 11,556 Net finance costs (5,438) (5,829) Corporation tax paid (424) (508) Net cash generated from operating activities (142) 5,219 Cash flows from investing activities Investment in joint ventures 13 (42,400) (4,830) Purchase of investment properties (5,096) (4,497) Disposal of investment properties 6 7,990 811 Development and other capital expenditure (9,351) (3,208) Purchase of plant and equipment 14 (40) (53) Dividends received 1,668 925 Net cash used in investing activities (47,229) (10,852) Cash flows from financing activities Proceeds from issuance of new shares 148,481 4,552 Repayment of bank loans and other costs (6,105) – New borrowings – 4,607 Dividends paid 11 (12,995) (4,543) Net cash generated from financing activities 129,381 4,616 Cash and cash equivalents at the beginning of the year 7,545 8,562 Net increase/(decrease) in cash and cash equivalents 82,010 (1,017) Cash and cash equivalents at the end of the year 89,555 7,545

The Notes on pages 60 to 85 form an integral part of these financial statements.

Strategic report Governance Financial statements 59 Total £’000 s erve £’000 s re Revaluation

s hare erve £’000 £’000 S s Option re s erve £’000 s re Hedging s erve Other £’000 s re

s hare hare £’000 S S tatement premium capital and s 854 – 78,637 (2,273) 260 2,310 79,788 e financial s £’000 s 1,498 – – (572) – – 926 earning Retained 23,048 – – 2,254 – – 25,302 26,107 – 212,981 (19) 453 105 239,627 in Equity in Equity s

1,936 – 74,085 (1,701) 187 4,569 79,076 s 22 11 – – (14,137) – – – (14,137) 22 11 (4,839) – – – – – (4,839) 22 – 148,481 – – – – 148,481 22 – 4,552 – – – – 4,552 22 2,157 – – – – (2,157) – 22 763 – – – – (763) – Note 22 1,442 – – – – (1,442) – 22 102 – – – – (102) – s s 22 – – – – 193 – 193 22 – – – – 73 – 73 tatement of Change of tatement s s 60 to 85 form an integral part of the of part integral an form 85 to 60 S ue from ue from s

ive income ive income ive income ive income s s ss ss s s of i of i s s hare premium premium 22 – hare (148,481) 148,481 – – – – hare premium premium 22 – hare (4,552) 4,552 – – – –

ed payment ed ed payment ed s s on page s s s olidated s hare hare ation of fair value movement value fair of ation ation of fair value movement value fair of ation fer of s of fer fer of s of fer s s s s s s at 1 April 2012 2012 April 1 at at 31 March 2014 2014 March at 31 s at 31 March 2014 s March at 31 s at 31 March 2013 s March at 31 s hare-ba hare-ba s The Note Tran Net proceed Total comprehen Tran A Net proceed Total comprehen Con A Reali new new year for the S payment Dividend movement Revaluation A new new year for the Reali S payment Dividend movement Revaluation A

60 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements

1 Accounting policies Basis of preparation Statement of compliance General information These financial statements have been prepared on a going NewRiver Retail Limited (the ‘Company’) and its subsidiaries concern basis and in accordance with International Financial (together the ‘Group’) is a property investment group specialising Reporting Standards, as adopted by the European Union (‘IFRS’). in commercial real estate in the UK. NewRiver Retail Limited was The financial statements are presented in GBP. These financial incorporated on 4 June 2009 in Guernsey under the provisions of statements have been prepared under the historical cost The Companies (Guernsey) Law, 2008. On 22 November 2010, convention, as modified by the revaluation of investment and the Company converted to a REIT and repatriated effective development properties, joint venture interests and derivatives management and control to the UK. The Company’s registered which are stated of fair value. office is Old Bank Chambers, La Grande Rue, St Martin’s, Guernsey GY4 6RT and the business address is 37 Maddox Income and cash flow statement Street, London W1S 2PP. The Company is publicly traded on the NewRiver Retail Limited has elected to present a single statement AIM market under the symbol NRR. On 1 October 2013 NewRiver of comprehensive income and presents its expenses by nature. Retail Limited delisted from CISX. The Group has reported the cash flows from operating activities The Company has taken advantage of the exemption conferred by using the indirect method which has been changed from prior the Companies (Guernsey) Law, 2008, Section 244, not to year. Interest received is presented within investing cash flows; prepare company only financial statements. interest paid is presented within operating cash flows. The These consolidated financial statements have been approved for acquisitions of investment properties are disclosed as cash flows issue by the Board of Directors on 14 May 2014. from investing activities because this most appropriately reflects the Group’s business activities. Going concern The Directors of NewRiver Retail Limited have reviewed the current Preparation of the consolidated financial statements and projected financial position of the Group making reasonable The consolidated financial statements incorporate the financial assumptions about future trading and performance. The key areas statements of the Company, its subsidiaries and the Special reviewed were: Purpose Vehicles (‘SPV’s’) controlled by the Company, made up to 31 March each year. Control is achieved where the Company • Value of investment property has the power to govern the financial and operating policies of an • Timing of property transactions investee entity so as to obtain benefits from its activities. Intra group transactions are eliminated in full. • Capital expenditure and tenant incentive commitments Changes in accounting policy and disclosure Forecast rental income • New and amended standards adopted early by the Group: • Loan covenants • Amendment to IAS 1, ‘Financial statement presentation’ • Capital and debt funding regarding other comprehensive income. The main change resulting from this amendment is a requirement for entities to The Group has cash and short-term deposits, as well as profitable group items present in ‘other comprehensive income’ (‘OCI’) rental income streams and as a consequence the Directors believe on the basis of whether they are potentially re-classifiable to the Group is well placed to manage its business risks. Whilst the profit or loss subsequently (‘reclassification adjustments’). This Group has borrowing facilities in place, it is currently well within has affected presentation only. prescribed financial covenants. Together with its cash resources the Group will arrange bank facilities to fund any future risk- • IFRS 10, ‘Consolidated financial statements’ builds on existing controlled developments. principles by identifying the concept of control as the determining factor in whether an entity should be included After making enquiries and examining major areas which could within the consolidated financial statements of the parent give rise to significant financial exposure, the Board has a company. The standard provides additional guidance to assist reasonable expectation that the Company and the Group have in the determination of control where this is difficult to assess. adequate resources to continue its operations for the foreseeable The standard had no material impact on the Group’s financial future. Accordingly, the Group continues to adopt the going statements. concern basis in preparation of these financial statements. • IFRS 11, ‘Joint arrangements’ focuses on the rights and Summary of significant accounting policies obligations of the parties to the arrangement rather than its The principal accounting policies applied in the preparation of legal form. There are two types of joint arrangements: joint these consolidated financial statements are set out below. These operations and joint ventures. Joint operations arise where the policies have been consistently applied to all years presented, investors have rights to the assets and obligations for the unless otherwise stated. liabilities of an arrangement. A joint operator accounts for its shares of the assets, liabilities, revenue and expenses. Joint ventures arise where the investors have rights to the net assets of the arrangement; joint ventures Strategic report Governance Financial statements

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pon u S s s inve s tence of any legal di s s of valuation. titution of Chartered of Chartered titution property valuer property s tructured a tandard s inve pecific s s i s ection ideration payable in re in payable ideration olidated financial ing whether a particular a particular ing whether s S are recon s s ca by e to con . Valuation . action co action S s s t of theinve ition with the evidence available at the time. time. at the available evidence the with ition s s s s s of the i ss s s carried at fair value. The Groupha both freehold both and lea s s e s s t a corporate acqui a corporate t s acqui the of tance idiary or joint venture, the Group con Group the venture, joint or idiary e s s ional ional t of each acqui t each of ss po ified as ified probable that thefu s s s ss tment property i tment property i ssociated withthe inve ss ub ub s s for under IFR Whils It is a the Company; condition material no are There and completion; prevent The co on a ca may not qualify a s The con be dependent upon certain future event co probable outcome a probable outcome amount change The Group’ be legally be legally In a property property s contractual term contractual re which the determined in advance of thejoint venture agreement being partie the two between agreed whether it it ha whether policie and the exi The con controlin order to conclude on the cla a joint venture or or venture joint a thi joint venture joint 11. Any premium paid for an intere entity above fair value of identifiable a contingent liabilitie contingent goodwill accounting policy. policy. goodwill accounting cla

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ss . ub of the recoverable recoverable the of s olidatedfrom the date to improve improve to s s s s s s identifiable a tment entitie ed at theired fair value at s sse s no longer permitted. permitted. longer no s ure ure incurred a or , thi of intere s s s s s ource of fair value s i ued butnot effective: s s 39 that relate to the clo clo t of the acqui t of the that meet the condition that meet the which ha olidated financial financial olidated for non-financial a non-financial for ss s s S t int other entitie t int other entitie s s s s s i s ’ – Inve s s ’, addre ition method method ition to account for s ingle tmententity and introduce an s s s s ure 13. (Mandatory from 1 Jan 2014) 2014) Jan 1 from (Mandatory 13. s of IA ued by the Group in exchange for the Group in exchange ued by ure requirement S . urement’, aim s s continued s s ued in November 2009 and ued in November 2009 October for all form all for ss clo and liabilitie

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S i cea control that Bu i. • New New • • • The Director above to have a of the Group in future period There are no other no IFR are other There yet effective that would be expected to have a material impact impact a material have to expected be would that yet effective on the Group. 62 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

1 Accounting policies continued Leasing (as lessors) Properties leased out under operating leases are included in Gains or losses arising from changes in the fair value of investment investment property in the balance sheet. The Group makes property are included in the income statement in the period in payments to agents for services in connection with lease contracts which they arise. with the Group’s lessees. The letting fees are capitalised within the When the Group begins to redevelop an existing investment carrying amount of the related investment property and amortised property for continued future use as an investment property, the over the lease term. property remains an investment property and is accounted for as such. When the Group begins to redevelop an existing investment Leasing (as lessees) property with a view to sell, the property is transferred to trading Leases in which a significant portion of the risks and rewards of properties and held as a current asset. The property is re- ownership are retained by another party, the lessor, are classified measured to fair value as at the date of the transfer with any gain as operating leases. Payments including prepayments, made or loss being taken to the income statement. The re-measured under operating leases (net of any incentives received from the amount becomes the deemed cost at which the property is then lessor) are charged to income statement on a straight-line basis carried in trading properties. over the period of the lease. In completing these valuations the valuer considers the following: Goodwill Goodwill arising on acquisition is recognised as an asset and i. current prices in an active market for properties of a different initially measured at cost, being the excess of the cost of the nature, condition or location (or subject to different lease or business combination over the Group’s interest in the net fair other contracts), adjusted to reflect those differences; value of the identifiable assets, liabilities and contingent liabilities ii. recent prices of similar properties in less active markets, with recognised. If, after reassessment, the Group’s interest in the adjustments to reflect any changes in economic conditions net fair value of the acquiree’s identifiable assets, liabilities and since the date of the transactions that occurred at those contingent liabilities exceeds the cost of the business combination, prices; and the excess is recognised immediately in the income statement. Goodwill is reviewed for impairments annually. iii. discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of any existing Financial instruments lease and other contracts and (where possible) from external Financial assets evidence such as current market rents for similar properties in the same location and condition, and using discount rates that Financial assets are classified as financial assets at fair value reflect current market assessments of the uncertainty in the through profit or loss, loans and receivables as appropriate. amount and timing of the cash flows. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, The cost of properties in the course of development includes they are measured at fair value plus, in the case of investments attributable interest and other associated outgoings. Interest is not at fair value through profit or loss, directly attributable calculated on the development expenditure by reference to transaction costs. specific borrowings where relevant and otherwise on the average rate applicable to the term loans. A property ceases to be treated The Group’s financial assets consist of loans and receivables. as a development property on practical completion. Cash and cash equivalents are also classified as loans and Development property receivables. They are subsequently measured at amortised cost. Cash and cash equivalents include cash in hand. Properties acquired with the intention of redevelopment are classified as development properties and stated at fair value, being The financial instruments classified as financial assets at fair value market value determined by professionally qualified external through profit or loss include interest rate swap arrangements. valuers. Changes in fair value are included in the income Recognition of the derivative financial instruments takes place statement. All costs directly associated with the purchase and when the economic hedging contracts are entered into. They are construction of a development property are capitalised. When measured initially and subsequently at fair value, transaction costs development properties are completed, they are reclassified as are included directly in finance costs. Gains or losses on investment properties. derivatives are recognised in the Statement of Comprehensive Income in net change in fair value of financial instruments at fair Property, plant and equipment value through Other Comprehensive Income. Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. These financial instruments would be classified as Level 2 fair value measurements, as defined by IFRS 7, being those derived from Depreciation is recognised so as to write off the cost or valuation inputs other than quoted prices. There were no transfers between of assets less their residual values over their useful lives, using the levels in the current period. straight-line method, on the following bases:

Fixtures and equipment 10% – 25%

The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income. Strategic report Governance Financial statements

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impaired. If there is there If impaired. ed impairment lo impairment ed di and borrowing ed and the decrea the and ed at fair value through profit or lo or profit through value fair at s s s s s s ub s s i s ured a ured . After initial recognition, intere recognition, initial . After s fer sset i s s s of the yieldcurve prevailing on the reporting date. The valuation Intere not include accrued intere to the reporting date. The fair value repre fair date. The to the reporting value the of difference between the contractedandrate the balance projected the to applied when rate valuation date reporting the from period t olvency or olvency or s appropriate. appropriate. s objective evidence that a financial a financial a that evidence objective tatement tatement of Comprehen sset s

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determined a determined • Financial a tran to the ca The Group a a i and the pre and the probable that the debtor will enter bankruptcy), enter bankruptcy), will the debtor probable that the a mea financialdifficulty become it contract, or of the obligor, breach of the effective intere of the a amount carrying allowanceaccount. The amount of the lo S In relation to trade receivable to relation In when there is there when in when they are a are they when If in a decrea Group will not be able to collect all of the amount all the of to collect able be not Group will s original term occurring after the impairment wa carrying value of the a value of the carrying recogni Comprehen Financial liabilities liabilities Financial Liabilitie at the rever at the lo impairment of an liabilitie recognition i recognition co All loan a is liability A financial liability i borrowing the effective intere 64 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

1 Accounting policies continued To continue to benefit from UK REIT tax regime, the Group is required to comply with certain conditions in respect of the Trade and other receivables principal company of the Group, the Group’s qualifying activity and Trade and other receivables are initially recognised at fair value, its balance of business. NewRiver Retail Limited is required to pay and subsequently where necessary re-measured at amortised Property Income Distributions equal to at least 90% of the Group’s cost using the effective interest method. A provision for impairment exempted net income. The Group continues to meet these of trade receivables is established when there is objective evidence conditions and Management intends that the Group should the Group will not be able to collect all amounts due according to continue as a UK REIT for the foreseeable future. the original terms of the receivables. Employee benefits Trade and other payables Share-based payments Trade and other payables are initially recognised at fair value, and subsequently where necessary re-measured at amortised cost i. Share Options using the effective interest method. Share Options have been granted to key management as set out in Note 24. The cost of equity settled transactions is Borrowings measured with reference to the fair value at the date at which Borrowings are recognised initially at fair value, net of transaction they were granted. The Group accounts for the fair value of costs incurred. Borrowings are subsequently stated at amortised these options at grant date over the vesting period in the cost. Any difference between the proceeds (net of transaction Income Statement, with a corresponding increase to the costs) and the redemption value is recognised as finance share-based payment reserve. The fair value was calculated costs over the period of the borrowings using the effective based on the Black Scholes Model using the following inputs: interest method. Share price £2.35 – £2.50 Fees paid on the establishment of loan facilities are recognised as Exercise price £2.35 – £2.71 transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is Expected volatility 25%* – 10%* deferred until the draw-down occurs. To the extent there is no Risk free rate 1.39% – 2.60% evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity Expected dividends* 6% – 3% services and amortised over the period of the facility to which it * based on quoted property sector average (not NewRiver Retail Limited’s expected relates. dividend). Borrowings are classified as non-current liabilities as the Group ii Performance Shares has a right to defer settlement of the liability for at least 12 months Performance shares have been granted to Executive staff and after the date of the Balance Sheet. Directors as set out in Note 24. These may only vest and be capable of exercise in accordance with the Performance Share Tax Plan (‘PSP’) rules to the extent that the two performance Income tax conditions are met. The current income tax charge is calculated on the basis of the tax (1) The compound annual total shareholder return (‘Compound laws enacted or substantively enacted at the date of the Balance TSR’) for the Company must equal or exceed 10% over the Sheet. Tax is recognised in the income statement. period of three years commencing on the grant date; and Value added tax (2) the compound annual percentage growth in the adjusted Revenues, expenses and assets are recognised net of the amount EPRA earnings per share (‘EPS’) of the Company must equal of value added tax except: or exceed 4% over the period of three years commencing on the first day of the relevant financial year in which the grant i. Where the value added tax incurred on a purchase of assets date falls. or services is not recoverable from the taxation authority, in which case the value added tax is recognised as part of the The Compound TSR condition has been valued using a Monte cost of acquisition of the asset or as part of the expense item Carlo valuation model. The Monte Carlo Option Pricing Model as applicable; and is a stochastic model that uses probability analysis to calculate the value of options subject to market vesting conditions. ii. Receivables and payables that are stated with the amount of value added tax included. The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. REIT Status The Company entered the REIT regime on 22 November 2010 and is not exposed to tax on qualifying UK property rental income and gains arising from disposal of exempt property assets, for this reason deferred tax has not been provided for on revaluations. Strategic report Governance Financial statements h

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ignificant effect on amount the on effect ignificant

s . tatement once the Group believe s e arrangement s s s ed in the accounting period in which in which period accounting the in ed are continually evaluated and are are and evaluated are continually s are recogni are s s e over the relevant period. The effective effective The period. relevant the e over in the in s s s heldjoint by the venture. Any s t s t s e final dividend of s

s s are are recogni s . throughout the expected life of the financial financial the of life expected the throughout s traight-line ba traight-line ba s s i tatement tatement of Comprehen s a method of calculating the amorti the of calculating a method S recogni tatement t expen e e incentive payment,including contractually entitled to receive a promote a promote to receive entitled contractually horter period where appropriate to the net net to the appropriate where horter period urrender premium for the early determination of a of determination early the for premium urrender s s s paid to enhance the value of a property, it i it a property, of value the enhance to paid under the s s s s of the opinion that any in any that opinion of the ba s s onlyreceivable by the Group ondi s return the hould s s of applying the Group’ i the rate that exactly di exactly that rate the relating to thelea s s torical experience a s s ation of the fee i ss are rendered and the related property expen property the related and rendered are did not have a s ed on a s on ed ed on a s on ed s s s ing the effective intere the effective ing e commencement to the expiry date of the lea date of the expiry the to e commencement e commencement to the expiry date of the lea date of the expiry the to e commencement and other factor and other s s or receipt to the Company’ to and judgement include legal, auditing and other fee and other auditing legal, include et or financial liability and of allocating the intere the allocating and of liability financial or sset s s s s s s s s ed the in ed in the period in which they are incurred. incurred. are they which in period the in ed ed in the financial financial the in ed talli e, the profit, net of dilapidation profit, e, the e s s s s s t method i t rate i t rate s s s et management fee management sset ervice receipt of a lea outgoings reflected in income. fee Management an accrual The Group i payment Thi return. of rate internal certain a exceed partner venture payment i payment propertie underlying entitlement the financial s cry amorti of lea Where lea a premium amorti of lea s ed on hi on ed trument trument or a s timate s when paid. In the ca ervice income i income ervice s s the judgements estimatesCriticaland accounting E Dividends Dividend Finance incomeandcosts and co income Finance Servicecharge incomeexpenseand S Otherexpenses Expen recogni s ca the In payable. legally become they recogni ba period in which they are incurred (on an accrual (on incurred are they in which period i co finance and income u Income condition intere financial a by the Board. by the Board. intere or income ii. A iii. Promote payment In the proce In the i management judgement intere payment recogni in carrying amount financial the of a

) s .

s s s s t

a ed, ed,

s s s s e, s s hare hare s s ment ured ured ettled e option s s tatement, s ss chole ure the ury ury ury S S s s s age of of ssage . A rent rent A . and ed ahead of sse s s s i e are e are mea ed payment ed payment s s s . s trea i s controlled by the the by controlled s over the entire s ba s s i s ettle the obligation obligation the ettle s ed on the Black- pecific to the willrequired be to erve s : own equity equity own s s s recogni s

included in a lea s s tatement s ing a ing Black- s s tructive obligation a obligation tructive made to en to made to an Employee Benefit action hare-ba s timated rental value i timated EBT i s k s s s s s hown a hown s s s ion duepa to ent value of the s . s ed when: ource tatement on the purcha the on tatement s s thi s t hare S s s s current market a market current s tment i tment timated; for the fairfor value of the s allocated evenly over the period period the over evenly allocated s e to the e to s ed in the re the in ed traight-line ba s e financial s ettled tran s calculated ba calculated s ed on an accrual ed on ting period in the Income Income in the period ting s continued s which are reacquired (trea reacquired are which s been valued u s e in the provi entlegal or con s are recogni t and deducted from equity. No gain or or No gain equity. from deducted t and s finance co finance s s e commencement to theexpirydate of s ured at the pre at the ured ; s uch rental income i 7.5% – 7.0% s recogni s s ed on a s on ed s s ing the following input following the ing s s recognis

t of equity of t ed a ed on open market e s ed in the Income s a pre held the by EBT are s trument h flow, an adju an h flow, s s s s s s s s expected to be required to to required to be expected s increa ponding olidated in in the olidated ed at co ed t event ssued a number of . Where a rent free period i period free rent a Where . s s . Any difference between the carrying amount and and amount carrying the between difference . Any s s i s s hare s s mea are detailed in Note 23. A s recogni not exceed the external valuation. Initial direct co direct Initial valuation. external the exceed not hare S s s condition ha condition ideration i ideration s ed from the rent review date in relation to un to relation in date review rent the from ed s s Model u Model ue cancellation or ofGroup’ the e. s i s e price £N/A con s s recogni s for legal claim ion recogni s ss ury ury tment ba s s s s s s e term. Where i probable that an outflow of re k free rate free rate k 0.45% – 0.61% erve. The fairvalue wa ult of pa of ult s trument ing a pre-tax rate that reflect rate a pre-tax ing ion s s s ss s chole hareprice £2.01 – £2.13 s s ale, i ettle the obligation; and and obligation; ettle the t (EBT) a (EBT) t adju Rental income i income Rental the rental income foregone i foregone income rental the from lea the date of the lea Rentalincome from fixed and minimum guaranteed rent review The EPS co The Model. with a corre a with recogni rent review rent The amountcan be reliably e The Group ha lea re S Expected volatility Expected volatility Ri 8% – 9.5% dividend Expected in Own equity with reference to the fair value at the date at which they were were they which at date the at value fair the to reference with account Group The granted. S s Exerci are recogni are lo at grant date over the ve the date over at grant carrying value of the related property including the accrued accrued including the property of the related value carrying doe rent re the related ca s It is incurred in negotiating and arranging a new lea new a arranging and negotiating in incurred the con in s Provi expenditure u of the time value of money and the ri obligation. The increa The obligation. time i s

Revenue recognition recognition Revenue i Rental income Provi Provisions 1 Accounting policie

• • iii. Trea iii. • • The Group ha Tru Group, it i it Group, unallocated 66 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

1 Accounting policies continued vi. Property disposals The Company has elected for REIT status. To continue to The preparation of financial statements requires management benefit from this regime, the Group is required to comply with to make estimates affecting the reported amounts of assets and certain conditions as defined in the REIT legislation. In liabilities, of revenues and expenses, and of gains and losses. particular, Management are required to determine whether The key assumptions concerning the future, and other key each property acquisition should be included within the REIT sources of estimation uncertainty at the end of the reporting rental property income business and whether on disposal of period, that have a significant risk of causing a material adjustment that property, any gain arising is capital or trading in nature, to the carrying amounts of assets and liabilities within the next and therefore whether it has triggered a tax charge to be financial year, are discussed below. payable to HMRC. If HMRC were to challenge the tax i. Investment properties treatment on the disposal of a property, particularly for As described above, the Group’s investment properties are properties for which redevelopment works have occurred stated at fair value, as accounted for by management based and disposal is within a three year period since acquisition, on an independent external appraisal. The estimated fair value and consider this to be trading in nature, this may give rise may differ from the price at which the Group’s assets could to a tax charge. The Group has determined that all property be sold at a particular time, since actual selling prices are acquisitions during the year, including those within joint negotiated between willing buyers and sellers. Also, certain ventures should be included within the REIT ring-fence and estimates require an assessment of factors not within therefore has not recognised any deferred tax on the management’s control, such as overall market conditions. revaluation movements since acquisition, and that all property As a result, actual results of operations and realisation of net disposals during the year generated a taxable loss. The Group assets could differ from the estimates set forth in these has unrecognised tax losses carried forwards of £1 million at financial statements, and the difference could be significant. 31 March 2014 as detailed in Note 8. ii. Valuation of joint venture properties The valuation of the Group’s development property portfolio contained within joint ventures is inherently subjective due to, amongst other factors, the individual nature of each property, forecast trading EBITDA, the status of planning consent, obtaining vacant possession, development cost projections and the expected future rental income, incorporating tenant credit risk. As a result, the valuations the Group places on its development property portfolio are subject to a degree of uncertainty and are made on the basis of current relevant information available at the date of valuation. iii. Valuation of share-based payments Management has relied on the services of external experts to determine the fair value of share-based payments. This requires significant estimates of a number of inputs which are used to model that fair value. iv. Valuation of Convertible Unsecured Loan Stock Management was required to make estimates with the assistance of external experts to conclude on the valuation of the Convertible Unsecured Loan Stock at the date of issue. The issuance of the compound instrument was between two knowledgeable parties at arm’s length and at a market rate of 5.85% pa for five years. Management have concluded that the value of the convertible option was negligible and the value resided in the debt portion of the instrument at the date of issue. v. Impairment in investments and joint ventures Determining whether investments are impaired requires an estimation of the fair values less cost to sell and value in use of those investments. The process requires the Group to estimate the future cash flows expected from the cash- generating units and an appropriate discount rate in order to calculate the present value of the future cash flows. Management has evaluated the recoverability of those investments based on such estimates. Strategic report Governance Financial statements 67 23 73 53 23 25 653 402 166 733 118 482 143 700 2013 2013 2013 2013 (653) £’000 £’000 £’000 £’000 24% 1,728 4,797 2,602 2,943 1,017 4,144 1,274 3,591 2,317 (3,876) 16,308 17,978 – – 60 25 172 465 193 717 452 147 402 172 703 2014 2014 2014 2014 £’000 £’000 £’000 £’000 22% 6,420 1,897 4,270 1,699 2,830 4,721 1,096 3,383 2,287 (1,699) (3,926) 16,046 18,197

uch no furtheruch information s

s tment in the UK and a intment the s

s ervice s al income (including share of joint ventures) ventures) joint of share (including income al egment, being property beingegment, inve property s ss

s t

ine s e s

s

s e s

s s e ssion and letting co auditor for the year-end audit audit year-end the for auditor accountant reporting for auditor auditor for the interim review review interim the for auditor e s s s s s s e s

s s e

s

s e and commi s s s

s t s trative expen trative s ’s remuneration taff co taff tration and other operating expenditur operating other and tration ation of tenant incentive tenant of ation r s s s on vacant unit ervice charge expen charge ervice payable theto Company’ payable payable theto Company’ payable payable theto Company’ payable s egmental reporting egmental reporting s s s s S dministrative expenses expenses dministrative udito provided. dmini urrender premium urrender et management fee management sset ervice charge expen charge ervice expen Option hare ervice charge income income charge ervice morti et management fee management sset s Net Net A A S Total Total Fee fees non-audit Total Fee A Net administrative expenses Net administrative expenses as a % of gross rent A Depreciation Depreciation Group Group Total property operating expenses expenses operating property Total 5 Admini S S S A payment rent Ground 4 Property operating expen 4 Property operating A Rental and related income income Rental and related property income 3 Gross property income 2 bu one in operated Group the year the During

Gross property income income property Gross Rate Fee i expen operating property Other Total audit fees fees audit Total Property operating expenses expenses operating Property 68 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

5 Administrative expenses continued

2014 2013 Number Number Average staff numbers including Directors 23 19

6 Profit on disposal of investment properties

2014 2013 £’000 £’000 Gross disposal proceeds 7,990 850 Costs of disposal (120) (39) Net disposal proceeds 7,870 811 Carrying value (5,838) –* Profit on disposal 2,032 811

* There was no carrying value associated with the sale of Gilmour House in the prior year as it was vacant and of nil value when acquired as part of the investment property at Paisley.

7 Finance income and expense

2014 2013 £’000 £’000 (a) Finance income Income from cash and short-term deposits 105 10 Total finance income 105 10

(b) Finance costs Interest on bank loans 4,057 4,645 Interest on debt instruments 1,451 1,575 Total finance costs 5,508 6,220 Net finance cost 5,403 6,210

Interest on debt instruments relates to the Convertible Unsecured Loan Stock. More details on the Group’s borrowings are provided in Note 19.

8 Taxation The tax expense for the year comprises:

2014 2013 £’000 £’000 Current taxation UK Corporation Tax at 22% (2013: 24%) 11 (88) Tax charge/(credit) for the year 11 (88)

Strategic report Governance Financial statements

69 73 s (88) 338 402 811 2013 2013 (306) (573) (120) (811) £’000 £’000 that tment UK 4,156 5,211 4,327 1,410 1,498 2,157 4,327 1,483 s s s

s inve urplu s s – ion charge. charge. ion 11 s 193 465 763 2014 2014 £’000 £’000 (645) hare Option hare Option 7,096 5,073 7,276 2,032 9,501 7,276 (5,062) (2,032) 23,059 23,048 (14,503) ure exclude ure imilar to EPRA earning imilar pect to the Group i back S

s s s

meas eptember 2011 and additional and additional 2011 eptember s : ure is ure enting2% a charge on the s s s with re en to pay over four year four over pay to en s in S s and add s s al follow s cho s s lion (2013: lion and£0.5 million) po s (FFO) mea s GAAP. on di s S . The EPRA earning EPRA The . tatement a tatement s s ure s ion of £1.6 million (repre million £1.6 of ion ed gain ed

ed oned U s s s Policy Recommendation Policy From Operation From s and their related taxation and the REIT conver ba s realis s s s carried forward of £0.9 mil £0.9 carried forward of and i olidated income income olidated s s s e t Practice t ss s . The. main difference to EPRA earning s tment propertie t ed on the following data: data: following on ed the ion charge which the Companyhaion which charge the s s s s et movement et for performance mea for performance (NAREIT) Fund (NAREIT) ss s s ba

ued Be t s s ure which include which ure ss s being profit after taxation taxation after profit being hare is hare

S are payable annually between June 2011 and July 2014. s s s t s and tenant incentive tenant and UK revenue tax lo tax revenue UK tment Tru , intangible a , intangible per per s s s s ion 2010, a November ion on provi 22 t s s s

al s talment tment propertie s ted profit mea ted profit urplu recommendation s s po s ion ing co tate Inve s s ssociation (EPRA) i s ed by many property analy property ed by many made for the REIT conver for the made ic and diluted EP ic and diluted and letting co s s

s s on di s s REIT conver REIT tate A s s ure u ure s of ba s propertie tment s propertie tment s s s ation of lea of ation ed. e s s s ic and dilutedearning hare e ed an EPRA adju EPRA an ed and gain s te of 22% (2013: 24%) te of 22% s s s s )/deficit on revaluation ofjoint ventureinve s clo ociation of Real E ociation 0.19% charge). The charge). in 0.19% s al of inve al of inve s unreali ss s s s per a of £0.1 million (2013: £0.1 million). million). £0.1 (2013: £0.1 million of urplu s s o di po po s it i e s s ss for the purpo the for ed deficit on revaluationinveof ed ( ation of rent-free period rent-free of ation ation of tenant incentive tenant of ation s e a al of prior year tax overprovi back the amorti s s taken into theregime) wa s a performance mea s s s s at 31 March 2014, the Group had s Group 2014, the March 31 at djustments to profitEPRA toat arrive NAREIT FFO djustments toarrive at EPRAprofit morti hare Option expen Option hare morti s sset Tax charge/(credit) charge/(credit) Tax NAREITFFO Rever A Tax effect of profit under REIT regime regime REIT under profit of effect Tax EPRA profit profit EPRA A Profit on dis Profit Earning Earnings S profit adjusted EPRA A Tax at the current Tax at ra the Profit before tax tax before Profit A s Unreali EPRA profit profit EPRA s Unreali Profit on dis Profit

The European PublicReal E s 9 Earning At the time of theCompany’ 8 Taxation continued 8 Taxation continued con the per profit to the reconciled be can year the for charge The

a guidance in January 2012, which 2012, s give January inguidance (which carrie (which A property revaluation property We have We have al capital lo capital expen The National A and i it add The calculationof ba 70 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

9 Earnings per share continued

2014 2013 Number of shares No. 000s No. 000s Weighted average number of Ordinary Shares for the purposes of basic EPS and basic EPRA EPS 60,632 31,904 Effect of dilutive potential Ordinary Shares: Options 228 – Warrants 267 – CULS – – MSREI joint venture conversion 3,093 – Weighted average number of Ordinary Shares for the purposes of basic diluted EPS and basic diluted EPRA EPS 64,220 31,904 EPRA Adjusted EPS (pence) 15.7 16.3 EPRA EPS basic (pence) 12.0 13.6 EPRA diluted EPS (pence) 11.4 13.6 FFO EPS basic (pence) 11.7 13.0 EPS basic (pence) 38.0 4.7 Diluted EPS basic (pence) 33.2 2.4

Under the terms of the Limited Partnership Agreement relating to NewRiver Retail Investments LP dated 28 February 2010, MSREI has been granted the right to convert its interest in the JV or part thereof on a NAV for NAV basis into shares of NewRiver Retail Limited, up to 10% of the share capital of NewRiver Retail Limited during the joint venture period. This conversion would currently have a dilutive effect on the Group’s EPS calculation of 4.6 pence (accretive effect in the prior year) and an accretive effect on the Group’s EPRA EPS calculation of 0.5 pence (accretive effect in prior year).

10 Net asset value per share

2014 2013 Total equity Shares Pence per Total equity Shares Pence per £000’s No’000’s share £000’s No’000’s share Basic 239,627 99,379 241 79,788 34,030 235 Warrants in issue 1,488 865 172 1,673 811 206 Unexercised Share Options 3,372 1,730 195 – – – Diluted 244,487 101,974 240 81,461 34,841 235 Fair value derivatives 19 – – 2,273 – – EPRA 244,506 101,974* 240 83,734 34,841 240

* The number of shares in issue is adjusted under the EPRA calculation to assume conversion of the warrants, options, shares from the long-term incentive plan and the Convertible Unsecured Loan Stock converted to equity providing they have a dilutive effect.

Strategic report Governance Financial statements 71 2012 £’000 lation, s may be able able be may s 2014 2013 £’000 £’000 6,730 4,003 10,733 hareholder 12,995 4,543 3,404 4,839 (1,142) (296) 14,137 4,839

s hare of s 26.0 14,137 4,839 16.0 16.0 – – s required by REIT legi REIT by required e s Pence per ss 2014. The total dividendpayable 2014. The total are paid, a s 98% (2013: 102%) covered by the EPRA EPRA the by (2013: 102%) covered 98% s moving to a quarterly dividend policy in the year year the in policy dividend quarterly to a moving s PID Non-PID 9.0 0.0 9.0 – 2,797 6.0 0.0 6.0 – 2,042 6.0 0.0 6.0 10.0 0.0 10.0 3,404 – hare (2013: 6 pence) and brought forward the payment of the pence)forward andhare (2013: 6 brought s hare (2013: Nil) on 28 March March 28 Nil) on hare (2013: s : s tribution). PID dividend PID tribution). s hare pence) (2013:16 and i s o announced i that it recently s pecial interim dividend 10.0 0.0 10.0 S ic rate ofincome tax (currently 20%).However, certain cla s 2013 Interim dividend dividend 2013 Interim 2012 Final dividend 2012 Final dividend 2014 Interim dividend dividend 2014 Interim Dividend Dividend 2013 Final dividend 2013 Final dividend

2014 a PID (Property Income Di Income (Property a PID s on 31 January 2014 of 6 pence per pence per 6 of 2014 January 31 on therefore 16 pence per per pence 16 therefore s pecialinterim dividend of 10 pence per s ction ofwithholding tax. ssociated with the current and prioryear

tatement of tatement s s h during the year h during the year are are a s s hare of 15.7 pence.hare 15.7 of Company The al lated to payment of lated to s olidated

by making a making by s s have been paid entirely a s ettled in ca s

in con s s in equity s ted profit per s

Dividends in cash flow statement Dividend Dividend 13 July 2012 13 July change 30 January 2013 2013 30 January Prior year dividends dividends year Prior 2013 25 July 31 January 2014 2014 31 January Current year dividends dividends year Current 2014 28 March Payment date date Payment Timing difference re withholding tax on dividend on tax withholding The Company paid an interim dividend interim an paid Company The the final dividend i 2014 March ended 31 year the for adju 11 Dividend dividend The following

ended 31 March 2015. March ended 31 The dividend after deduction of withholding tax at the ba the at tax of withholding deduction after to claim exemption from dedu from exemption to claim

72 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

12 Investment properties

2014 2013 £’000 £’000 Fair value brought forward 206,278 197,736 Acquisitions and improvements in the year 14,447 10,699 Disposals in the year (5,838) – 214,887 208,435 Valuation movement gains/(losses) in profit and loss (763) (2,157) Fair value at 31 March 2014 214,124 206,278

It is the Group’s policy to carry investment properties at fair value in accordance with IAS 40 “Investment Property”. The fair value of the Group’s investment property at 31 March 2014 has been determined on the basis of open market valuations carried out by Colliers International who are the external independent valuers to the Group. The properties are categorised as Level 3 in the IFRS 13 fair value hierarchy. There were no transfers of property between Levels 1, 2 and 3. The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. Valuation processes The Group’s investment properties have been valued at fair value on 31 March 2014 by independent valuers, Colliers International Valuation UK LLP, on the basis of fair value in accordance with the Current Practice Statements contained in The Royal Institution of Chartered Surveyors Valuation – Professional Standards, (the “Red Book”). Information about fair value measurements for the investment property using significant unobservable inputs (Level 3) Property ERV per sq ft (£) Property Rent per sq ft (£) Property Equivalent Yield (%) Fair value Segment (£’000) Min Max Average Min Max Average Min Max Average

Shopping centres 253,241 7.89 34.29 12.25 5.11 29.16 11.08 6.4 12.0 8.0 High street 51,487 4.74 24.44 9.46 0.00 22.47 8.24 5.3 11.5 7.1 Supermarkets/ Convenience stores 6,700 10.94 15.82 12.91 10.31 13.33 11.53 6.5 6.8 6.7 311,428 4.74 34.29 11.99 0.00 29.16 10.34 5.3 12.0 7.7

Property Rent per sq ft (£) Net Initial Yield (%) Fair value Segment (£’000) Min Max Average Min Max Average

Pub portfolio 47,885 5.22 70.95 19.56 8.6 18.9 12.1 Convenience store development portfolio 4,033 10.79 20.00 15.14 6.3 7.5 7.1 51,918 Group Total 363,346 By Ownership Wholly owned 214,124 Joint ventures 149,222 Group Total 363,346

The fair value at 2014 represents the highest and best use. Revenues are derived from a large number of tenants with no single tenant or group under common control contributing more than 5% of the Group’s revenue. Strategic report Governance Financial statements – 73

s 132 859 2013 2013 (925) £’000

4,830 s ing an (1,483) 14,688 11,275 s % % Holding et by an an by et s e at s 50 – 50 – 50 – 10 10 50 50 ing an hip of tence of an s 2014 applied by the applied s 914 2014 s £’000 s (282) 4,296 (1,668) 74,851 14,688 14,503 42,400 % Holding % determined u determined within the Trent s s

. The exi umption s which are NewRiver Retail Red Book. Valuation Valuation Red Book. s ey ey ey ey ey ss ional judgement. uming a purcha uming S s s s s s e in rent may be may be off e in rent ss ss derived from the Company’ s Jer Jer Jer idiarie s tment u tment property s Country of s ub Guern incorporation s profe s count rate. The relation count The rate. which i s s include yield, current rent and ERV. s t period that propertie that period t s , e.g. an increa s e term s ent value of zeroa . Input s s the fir the may impact the yield with higher vacancy rate vacancy higher with yield the impact may s s in accordance with the RIC the with accordance in and lea tream a number a of 100% owned wa s i s s s s s ite direction ite s ervation and the valuer’ valuingcompleted the inve unt of £363.4 million. The wa valuation million. unt of £363.4 . s s overall control environment, and a LP) ha s they are determined by market condition market by determined are they s tment s s a (GP) Ltd* Ltd* (GP) s s and thelower the yield, thehigher thefair value. s General Partner for NewRiver Retail (Holding No 1) LP and NewRiver Retail (Portfolio No 1) LP. moving in oppo moving s h flow to produce a net pre s tment in the the UK by Barley JV.

s ed on market ob on market ed s s s (1) h outflow £3.91 million). ubject to the Group’ ervable input ervable s capacity a

to complete, then applying an appropriate di an appropriate applying then to complete, s s s s are ba are t biannually, on a fair value ba value fair a on biannually, s . s by the Group, e.g. current rent current Group, e.g. the by s s during the period, however, thi however, period, the during i idual method, which involve which method, idual ervable input ervable s s s s applying a yield to rental income income rental to yield a applying and i s e unob s s

umption s in the UK with a total carrying amo in the UK with a total tment in retail propertie tem s s Limited partner (NewRiver RetailInve s ss ing a re s timated co y et s s s e a ss t No.4 t No.3 t No.2 t Jer s valuation development for method idual £40.73 million (2013: cas s s s s s s (continued) (continued) s ervable input would be to magnify the impact on the valuation. The impact on the valuation will be be will valuation the on impact The valuation. the on impact the magnify to be would input ervable on a fixed ba s acquired during the the year during acquired s s s i t hip of two unob of two hip . The s s LP and NewRiver Retail Inve Retail LP and NewRiver

count rate of the perpetual ca perpetual of the rate count s s s (1) between all the between

s s s are valued u valued are ing the re in valuation technique . (GP) Limited and it and (GP) Limited s hip s s s everal retail a retail everal tment s

s s et up to facilitate the inve in joint venture to fair value are the higher the rental value rental higher the the are value fair to ulting in no net impact on the valuation. Expected vacancy rate vacancy Expected valuation. the on impact net no in ulting s s s s s s and yield s tment s s been valued by external valuer external by valued been are are ation method, which involve which method, ation s s ed on both information provided provided information both on ed s s include: and dividend s h outflow during the year wa s tment tment propertie have been s s s s tment s e in more than one unob e ine yield, re are ba are , e.g. ERV ervable input s s s s s tment method and deducting e method tment e input s Rental value – total rental valueannum per di – the yield Equivalent the valuation s e entitiee tribution ulting in higher yield higher in ulting s s dditional joint venture intere venture joint dditional

Dis NewRiver Retail Property Unit Property Unit NewRiver Retail Tru Hedging movement Hedging Net book value Property Unit NewRiver Retail Tru Loan repayment repayment Loan Property Unit NewRiver Retail Tru NewRiver Retail Property Unit Property Unit NewRiver Retail Tru Name Inve Retail NewRiver A Opening balance Opening Net valuation movement Income from joint venture joint from Income (1) The net ca net The (1)

13 Inve 12 Inve interrelation are There

increa * NewRiver Retail Inve Retail * NewRiver mitigated by theinterrelation (Finco1) Limited No and NewRiver Retail (GP1)Limited, acting in it The increa re Valuation techniques underlying the Group’s estimation of fair value including joint ventures ventures joint including value fair of estimation Group’s the underlying techniques Valuation The inve Development propertie income capitali income inve unob The • • There were no change no were There portfolio were valued u were portfolio valued The ha portfolio report management property and financial valuer The fee payableto the valuer 74 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

13 Investments in joint ventures (continued) There are currently five joint ventures which are equity accounted for as set out below: NewRiver Retail Property Unit Trust, NewRiver Retail Property Unit Trusts No 2, 3 and 4. NewRiver Retail Property Unit Trust (the ‘CAMEL II JV’) is an established jointly controlled Jersey Property Unit Trust set up by NewRiver Retail Limited and PIMCO BRAVO Fund LP (‘BRAVO’) to invest in UK retail property. NewRiver Retail Property Unit Trusts No 2, 3 and 4 (the ‘Middlesbrough, ‘Camel III’ and ‘Trent’ JVs) are established jointly controlled Jersey Property Unit Trusts set up by NewRiver Retail Limited and PIMCO BRAVO II Fund LP (‘BRAVO II’) to invest in UK retail property. The CAMEL II JV is owned 10% by NewRiver Retail Limited and 90% BRAVO. The Middlesbrough, Camel III and Trent JVs are owned 50% by NewRiver Retail Limited and 50% BRAVO II. NewRiver Retail (UK) Limited is the appointed asset manager on behalf of these JVs and receives asset management fees, development management fees and performance-related return promote payments. No promote payment has been recognised during the period and the Group is entitled to receive promote payments only after achieving the agreed hurdles. Management have taken the decision to account for the equity interest in JVs as an associate as the Group has significant influence over decisions made by each joint venture but is not able to exert complete control over these joint ventures. The JVs have an acquisition mandate to invest in UK retail property with an appropriate leverage with future respective equity commitments being decided on a transaction-by-transaction basis. In line with the existing NewRiver investment strategy, the JVs will target UK retail property assets with the objective of delivering added value and above average returns through NewRiver’s proven skills in active and entrepreneurial asset management and risk-controlled development. All JVs have a 31 December year end and the Group has applied equity accounting for its interest in each JV. The aggregate amounts recognised in the consolidated balance sheet and income statement eliminate intercompany transactions and are as follows:

2014 NewRiver Retail 2013 Property Unit 31 March NewRiver Retail 31 March Trust, 2, 3, 4 2014 Property Unit 2013 Total Group’s share Trust Group’s Share £’000 £000 £’000 £’000 Balance sheet Non-current assets 346,560 131,060 90,401 9,040 Current assets 12,475 4,429 4,668 467 Current liabilities (9,152) (3,207) (4,663) (466) Senior debt (164,666) (65,333) (42,500) (4,250) Non-current assets/(liabilities) 1,711 484 (46) (5) Net assets 186,928 67,433 47,860 4,786 Income statement Net income 17,046 5,078 2,325 232 Administration expenses (936) (271) (128) (13) Finance costs (4,071) (1,230) (590) (59) Recurring income 12,039 3,577 1,607 160 Fair value surplus on property revaluations 45,443 16,963 – – Income from joint ventures 57,482 20,540 1,607 160

The Group’s share of any contingent liabilities to the JPUTs is £nil (2013: £nil). NewRiver Retail Investments LP NewRiver Retail Investments LP (the ‘Barley JV’) is an established jointly controlled limited partnership set up by NewRiver Retail Limited and Morgan Stanley Real Estate Investing (‘MSREI’) to invest in UK retail property. The Barley JV is owned equally by NewRiver Retail Limited and MSREI. NewRiver Retail (UK) Limited is the appointed asset manager on behalf of the Barley JV and receives asset management fees as well as performance-related return promote payments.

Strategic report Governance Financial statements

s 75 : hare 50% s 2013

£’000 S s

Group’ s of follow s

s hare s s Total 2013 Retail (882) (441) (312) (156) (192) (96) £’000 tment 1,398 699 2,592 1,296 1,880 940 s into into (GP) Ltd (GP) (2,967)(1,569) (1,483) (784) (1,118) (559) 19,804 9,902 41,700 20,850 s only after achieving achieving after only NewRiver (22,466) (11,233) i s s and are a Inve LP dated 28 February LP dated February 28 s s

50% action 2014 £’000 £’000 tment Share s et management and and management et ary of 17 May 2015. Thi May ary of 17 s s Group’s ss t in the Barley JV. The aggregate aggregate The JV. Barley the in t with the objective of delivering delivering of the objective with s s et ss intere (97) (48) 2014 Total £’000 s (606) (303) (269) (134) Retail 1,439 720 2,314 1,157 2,294 1,147 fifth fifth anniver (3,482) (1,740) (4,921) (2,460) (1,221) (610) (GP) Ltd 14,835 7,418 36,325 18,162 s (22,466) (11,233) NewRiver NewRiver Investments Investments entitled to receive promote payment receive entitled to s in activeentrepreneurial and a s kill tatement eliminate intercompany tran eliminate tatement s ee Note 9. calculation of 4.5 pence and an accretive effect on the Group’ the on effect an accretive and pence 4.5 of calculation s S S £nil (2013: £nil). EP applied equity accounting for it for accounting equity applied s s s t in the Barley JV or part thereof on a NAV for NAV ba NAV for NAV a on part thereof or JV Barley the in t proven proven s hip agreement relating to NewRiver Retail Inve NewRiver hip to agreement relating s intere s heet and income and income heet s trategy, the Barley JV will target UK retail property a property retail UK target will JV Barley the trategy, to the Barley JV i the Barley to s s harecapital of NewRiver RetailLimited up until it s

(continued) ed during the period and the Group i Group and the period during the ed s hment. s s NewRiver’ through s s tment tment s of theLimited Partner s olidated balance s s been recogni s

s e s

in joint venture s

s . Under the term Under . ting NewRiver NewRiver inveting s a 31 December year end and the Group ha Group the and end year December a 31 ed ined the con been granted the right to convert it convert to right the been granted s s s s et

s

hare of any contingent liabilitie ss

s s s

t et s tment s calculation of £0.5 pence (accretive in theprior period). REI ha REI s S ss s recogni S tration expen tration ion would currentlya have dilutive effect on the Group’ s s s k-controlled development and refurbi and development k-controlled dmini enior debt enior debt s Recurring income Recurring Finance co Fair value (deficit) on property revaluation property on (deficit) value Fair Net income income Net A Income statement Balance sheet sheet Balance a Non-current Net assets Current a Current liabilitie Non-current joint from ventures Deficit Current liabilitie Current S

The Group’ 13 Inve No promote payment ha

the agreed hurdle 2010, M NewRiver Retail Limited, up to 10% of the up to 10% Limited, Retail NewRiver Inline with the exi conver EPRA EP added value and above average return average and above value added ri JV ha The Barley amount 76 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

14 Property, plant and equipment

Fixtures and equipment Total £’000 £’000 Cost At 1 April 2012 415 415 Additions 53 53 At 31 March 2013/1April 2013 468 468 Additions 40 40 At 31 March 2014 508 508

Depreciation At 1 April 2012 (11) (11) Depreciation charge for the year (53) (53) At 31 March 2013/1April 2013 (64) (64) Depreciation charge for the year (60) (60) At 31 March 2014 (124) (124)

Book value at 31 March 2014 384 384 Book value at 31 March 2013 404 404 Strategic report Governance Financial statements s s s s s s s s s s s s s s s s s s s s – 77 hare 789 2013 s £’000 hare hare hare hare hare hare hare hare hare hare hare hare hare hare hare hare hare hare hare hare 1,981 1,192 of S S S S S S S S S S S S S S S S S S S S ss Cla – 2014 £’000 3,595 2,495 1,100 t s hip

2014 intere 100% Ordinary 100% 100% Ordinary owners Proportion of of Proportion 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary s s s s s s s s s s s s s s s s s s tment tment tment tment tment tment tment tment tment tment tment tment tment tment tment tment tment tment s s s s s s s s s s s s s s s s s s at 31 March 2014. March 2014. at 31 s a s tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve tate inve s s s s s s s s s . s sset management ctivity Real e Real Real e Real Real e Real e Real e Companyoperation and a Real e Real e Real A Finance Company Company Finance Real e Real e t trade receivable trade t s ey ey es Real ey ey es Real ey ey es Real ey ey es Real ey ey es Real ey ey ey es Real ey es Real es Real ey ey es Real s s s s s s s s idiary undertaking idiary UK UK UK UK UK UK UK UK UK UK Guern UK UK Guern Guern Guern UK UK Country of incorporation Guern Guern UK

s s ub s

made again made

s s s ed in Note 23. 23. Note in ed s idiarie s clo

s s ub than one year. di s s ss are held by it by held are s idiary undertaking principal s s olidated a olidated ) Limited ) Limited s No. 3) Limited No. 5) Limited No. 2 Limited Limited 2 No. Limited 3 No. Limited 4 No. Limited tle No. 1) Limited 1) Limited tle No. Guern ub s s s s s s con ley) Limited Limited ley) combe No. Limited 1) UK s bech) Limited s s ss kegne tment propertie

s S s s ure Limited Limited ure and accrued income income accrued and t of the Group’ of t inve s fall due for payment in le s s tment in in tment s s a li ion of £0.4 million (2013: £0.4 million) wa million) £0.4 (2013: million £0.4 of ion s s NewRiver Retail (Wrexham No. 1) Limited s Lei NewRiver Guerns NewRiver Retail (Witham) Limited Limited (Witham) Retail NewRiver NewRiver Retail (UK) Limited (Wi Retail NewRiver NewRiver Retail (Portfolio NewRiver Retail (Portfolio NewRiver Retail ( Retail NewRiver NewRiver Retail (Portfolio No.NewRiver Retail 2) Limited NewRiver Retail (Pais Retail NewRiver (Portfolio No.NewRiver Retail 1) Limited NewRiver Retail (Newca NewRiver Retail Holding NewRiver Retail Holding NewRiver Retail Holding 1) Limited No. Deeping (Market Retail NewRiver Guern NewRiver Retail Holding

NewRiver Retail CUL Retail No. Limited 1 NewRiver Trade receivable Trade Prepayment Other receivable NewRiver Retail (Bo Retail NewRiver NewRiver Retail (Carmarthen) Limited Name All amount 16 Trade and other receivable 16 Trade and The Group’ 15 Inve i Below

A provi A

In addition, the EBT i 78 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

17 Cash and cash equivalents

2014 2013 £’000 £’000 Cash at bank 89,555 7,545 89,555 7,545

18 Trade and other payables

2014 2013 £’000 £’000 Trade payables 1,468 1,609 Other payables 617 888 Accruals 4,993 5,394 Rent received in advance 3,124 3,103 10,202 10,994 Taxation – current 219 424 Current trade and other payables 10,421 11,418 Taxation – non-current – 220 Non-current trade and other payables – 220

19 Borrowings

2014 2013 £’000 £’000 Secured bank loans 108,256 112,697 Convertible Unsecured Loan Stock 23,306 24,693 131,562 137,390 Maturity of borrowings: Less than one year – – Between one and two years 23,306 – Between two and five years 40,373 137,390 Over five years 67,883 – 131,562 137,390

Secured bank loans Bank loans are secured by way of legal charges on properties held by the Group and a hedging policy is adopted which is aligned with the property strategy on each of its assets. Weighted average debt maturity including extension options is 4.5 years (2013: 3.1 years). Effective interest rate during the year to 31 March 2014 was 3.9% (2013: 3.9%) Debt maturity profile as at 31 March 2014 £m 70.0 60.0 JV 50.0 40.0 30.0 20.0 10.0 JV JV 0.0 2015 2016 2017 2018 2019 2020 2021 Santander Venn Capital HSBC Barclays Clydesdale JV = share of joint venture debt Strategic report Governance Financial statements 79 2014 2013 2013 £’000 £’000 £’000 Balance Balance at 31 March 31 at – 31,523 s ed a £’000 s 267 40,373 231 36,360 498 108,256 878 131,562 380 23,306 £’000 . s £’000 s Amorti Amortised wap s 185,577 128,856 and are made up of the the up of made and are 13 11,233 11,233 13 65,333 4,250 19 109,011 113,373 s Note 2014 t rate s

s follow Fee Fees Fees £’000 £’000 £’000 £’000

intere s non-current liabilitie non-current s £0.9 million (2013: £2.1 million). million). £2.1 million (2013: £0.9 s t of 4.5%. 4.5%. t of s £’000 £’000 ) are hedged as hedged are ) are held a held are 40,815167 (539) 40,443 25,000267 (574) 24,693 36,475162 (346) 36,290 36,083208 (327) 35,964 31,891 (368) 40,645 (539) 23,500 (574) S s 138,373 (1,786) 804 137,390 113,373 (1,212) 537 112,697 109,011 (1,253) 132,511 (1,827) Facility drawn Facility drawn Facility £0.6 million) on it on million) ss £0.6 (1) trument s 57% capped. s at 31 March 2014 wa 31 at s extension and excludingCUL Credit approved approved Credit heet a heet s s ) wap, 20% cap at 2.5%) at an all in co s 3.9% 3: Floating t of 4.1%. 01 t rate cap agreement that i s s Maturity date Maturity in the balance e profit of £2.3 million (2013: Lo (2013: million £2.3 of profit e s : 3.9% (2 August 2016 14 February 2021 up to the date outlined above. 80% of the facilityof (60% 80% November 2015 May 2019 36,475 (346) December 2015 December hare of Joint Venture Joint of hare Capped s ss h 20 wap at an all in co ubjectto an intere rc s s

s Ma

wap liabilitie wap d t rate s s 31 xe (including (including Fi to s tock tock tock t year end, acro end, t year ar s t rate rate t S S ion of credition facilitie of s s s

t oft 3.6% and i s e ye s th 9m ed a mark to market fair valu market ed a mark to % continued continued s during : 5. s s 36 te ecured Loan Loan ecured ecured Loan Loan ecured £6 ra s s

are due after more than one year and the derivative financial in financial and derivative one the year more than after due are ecured bank loan s st approved the exten s a current all in co 8m s % s 81% fixed by way of an intere re s 5. heet facilitie debt heet te 35 s in £6 dale dale** e 9m % s s facility had hedging in place po place in hedging had facility facility i s facility ha s REF Joint Venture Venture Joint REF ctiv s 29 BC BC BC* S £53. fe S S antander antander antander*** antander***

S Convertible Un Convertible H Clyde

Convertible Un Convertible Clyde Current year H S Prior year

following balance Fairvalue on interestrate swaps The Group recogni

BRAVO Joint Venture Venture Joint BRAVO Balance Balance Total Group secured bank loans loans bank secured Group Total Total Group M (1) The bank ha bank The (1)

19 Borrowing Facilityarrangement and fees

* Thi Ef 2014. The fair value of intere 2014. The fair value of All borrowing ** Thi *** Thi *** 80 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

19 Borrowings continued Convertible Unsecured Loan Stock (“CULS”) On 22 November 2010 the Group issued £25 million of CULS, £17 million of A CULS and £8 million of B CULS. On issue, the stockholder was able to convert all or any of the stock into Ordinary Shares at the rate of one Ordinary Share for every £2.80. The conversion rate has subsequently been adjusted on the A CULS to £2.51(2013: £2.72) and on the B CULS to £2.49 (2013: £2.70) as at 31 March 2014 as a result of equity raised and dividends paid in accordance with the terms of the agreement. Under the terms of the convertible, interest will accrue at 5.85% on the outstanding loan stock until 31 December 2015 when it will be either converted or repaid. The interest payable on the CULS is due biannually on the 30 June and 31 December. On 18 February 2014 £1.5 million B CULS were converted at a conversion price of £2.59 representing 579,151 Ordinary Shares. Management was required to make estimates with the assistance of external experts to conclude on the valuation of the CULS at the date of issue. The issuance of the compound instrument was between two knowledgeable parties at arms length and at a market rate of 5.85% pa for five years. Management have concluded that the value of the convertible option was negligible and the value resided in the debt portion of the instrument at the date of issue.

20 Operating lease arrangements The Group earns rental income by leasing its investment properties to tenants under non-cancellable operating leases. At the balance sheet date the Group had contracted with tenants for the following future minimum lease payments on its investment properties:

2014 2013 £’000 £’000 Within one year 28,586 14,338 Between one and two years 26,617 13,520 In the second to fifth year inclusive 33,482 35,225 After five years 109,443 66,349 198,128 129,432

Weighted Average Lease Expiry Operating leases in NewRiver Retail Limited portfolio % 60.0

50.0

40.0

30.0

20.0

10.0

0.0 <1 year 1-2 years2-5 years>5 years The Group’s weighted average lease length of operating leases at 31 March 2014 was 8.3 years (2012: 7.8 years).

Strategic report Governance Financial statements 81 Total 514 687 191 141 2014 2013 2013 Total £’000 £’000 £’000 1,533 erve 487 496 387 195 2014 2014 2013 s £’000 £’000 £’000 re 1,565 reserve Revaluation Revaluation

erve 2013 s £’000 £’000 2014 £’000 £’000 re reserve . hare Option s S Share Option erve 2013 s 2014 £’000 £’000 re Hedging reserve Hedging office propertie s s

2013 erve Other 2014 £’000 s £’000 s Other re 74,085 (1,701) 4,569 187 79,076 reserves hare 2013 2014 £’000 S £’000 Share premium capital and hare premium e arrangement s s s – (4,552) 4,552 – – – – – – – – 73 – 73 –– 148,481 (148,481) 148,481 – – – – – – – 148,481 – –– – – – (14,137) – – 193 – – – (14,137) 193 854 – 78,637 (2,273) 260 2,310 79,788 2013 854 – 78,637 (2,273) 260 2,310 79,788 763 – – – – (763) – 2014 £’000 £’000 1,936 – 2,157 – – – – (2,157) – 1,442 – – – – (1,442) – (4,839) – – – – – (4,839) earning Retained 23,048 – – 2,254 – – 25,302 26,107 – 212,981 (19) 453 105 239,627 earnings Retained

payable by the Group for occupation of it occupation for the Group by payable s

– 4,552 – – – – 4,552 s 102 – – – – (102) –

and operating lea and operating : s s s hare s hare s s ent rent ent s s erve e s s erve erve erve at repre s s s s in November 2021 with a tenant break option in 2016. break option a tenant with 2021 November in s

s s ue from new ue from new at 1 April 2013 1 at at 1 April 2012 April 1 at s s ive income for the year the year for ive income 1,498 – – (572) – – 926 ive income for the year the year for income ive ss ss

s s

s e expire s s

e payment tributable re tributable re of i of i s s s s s ed payment ed ed payment ed s s hare capital and re ation of fair value movement value fair of ation ation of fair value movement value fair of ation s lea operating on payable fer to di to fer fer to di to fer s s s s s S fter five fter five year hare-ba hare-ba

Two to five year five Two to A One to two year One to Brought forward a Net proceed Brought forward a Net proceed Rent year one Within Total comprehen Reali paid Dividend movement Revaluation a forward carried Balance 2013 31 March Tran S Tran Total comprehen S Reali paid Dividend movement Revaluation Balance carried forward as at at as forward carried Balance 31 March 2014

22 s lea Operating 21 Financial commitment The current lea

82 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

22 Share capital and reserves continued The authorised share capital is unlimited and there are 99,378,507 shares in issue (2013: 34,029,508). The table below outlines the movement of shares in the year:

Number of Total number Ordinary Shares Price per of shares issued 000’s pence 000’s Brought forward at 1 April 2013 34,030 July 2013 Additional placing 32,683 205 66,713 September 2013 Warrant conversion 11 187 66,724 February 2014 CULS conversion 579 259 67,303 February 2014 Fundraise 32,076 265 99,379 Carried forward at 31 March 2014 99,379

During the year, the Group approved a transfer from the share premium account of £148.5 million (2013: £4.6 million) to other reserves which may be distributed in the future. Shareholders who subscribed for Placing Shares in the IPO received warrants, in aggregate, to subscribe for 3% of the Fully Diluted Share Capital exercisable at the subscription price per Ordinary Share of £2.50 and all such warrants shall be fully vested and exercisable upon issuance. The subscription price has subsequently been adjusted to £1.72 following subsequent dividend payments and share issues.

23 Treasury shares The Company has established an Employee Benefit Trust (EBT) which is registered in Jersey. The EBT, at its discretion, may transfer shares held by it to Directors and employees of the Company and its subsidiaries. The maximum number of Ordinary Shares that may be held by the Trustee of the EBT may not exceed 10% of the Company’s issued share capital at that time. It is intended that the Trustee of the EBT will not hold more Ordinary Shares than are required in order to satisfy awards/options granted under share incentive plans. There are currently 624,000 treasury shares held in the Employee Benefit Trust. As the EBT is consolidated, these shares are treated as treasury shares. During the year, no shares were issued to Directors or employees to the EBT (2013: nil).

2014 2013 000s 000s Brought forward 624 624 Issued during the year – – Carried forward 624 624

24 Share-based payments The Group provides share-based payments to employees in the form of Share Options and also in the form of performance shares. All share-based payment arrangements granted since the admission on 1 September 2009 have been recognised in the financial statements. Further details can be found in accounting policies Note 1. (a) Terms Share Options The Group uses the Black-Scholes Model to value Share Options and the resulting value is amortised through the income statement over the vesting period of the share-based payments with a corresponding credit to the share-based payments reserve.

Exercise 2014 2013 price Number of Number of £ options options Awards brought forward 2,317,410 2,471,949 Awards made during the current year: – – – Awards lapsed during the prior year: – – (154,539) Exercisable options at the end of the year 2,317,410 2,317,410

The awards granted during the year are based on a percentage of the total number of shares in issue. There have been no new Share Options issued in the current year. Strategic report Governance Financial statements t . s – t 83 h s s

73 s s 187 260 2013 2013 hare £’000 e in s s t rate rate t ed h flow h flow s s , s wap Number of of Number h and h and . 500,000 500,000 s s s financial ure that due s ition , ca s s s s t rate rate t s policy of policy s intere net e the 453 260 193 2014 2014 or bank s £’000 ulting value value ulting s ure on a on it s principal banker principal s s shares s it s s e the Group to e ca the in the event that ting po ting expected by by expected 500,000 150,000 650,000 k including ca s s s Number Number of s s e e of a variety of intere e of a variety t rate s s ss of a defined intere

ponding credit to the the to credit ponding with it with e £ s s in placeen to expo s ss nil s s the impact of an increa and the re t ratet expo price s s : trade receivable ss Exerci s receivable doubtful for s : market ri e s s hare e ss account s . intere s are provided to the Board formally formally Board the to provided are s g, renewal of exi g, renewal ss , whichanunreali amounted to limited to the Group’ the limited to s through the u the through with a corre a with it s s it us s trument s s i s ine of market intere s s e k. s s for the year would increa would year the for s s within within the parameter s s . k. s . Report s ued at variable rate ued at variable s i trument upplemented by rental depo by rental upplemented t rate s trument s ss s s s i carried out to a , s s s ed payment i s s trument i the impactprofit on andlo k borrowing on s s s . They may reduce or create lo create or reduce may They . s s ideration refinancin ideration s heet are net of allowance net of are heet s e in intere s hare-ba s t rate ri in the prevailing level prevailing in the s s , trade and other receivable s urefair to value movement itivity analy itivity ) had £220.1 million (2013: £141.7 million) of intere million) ) had million (2013: £141.7 £220.1 heet covenant heet it s s s increa s s s uch change e the Group to fair value ri en s idered low due to the Group having policie having to Group due low the idered S s (Note 19), borrowing relate to the following financial in financial following to the relate s s ult of s theGroup calculate andin financial derivative con ure to intere k s in relation to the financial in s s s s s of fluctuation of s it , the majority of which are held of which in bu are majority , the i ubject to any foreign currency ri currency foreign any to ubject s s k s s s by £1.4 million (2013: £0.7 million). million). £0.7 million (2013: £1.4 by ting period of the period of the ting s and derivative financial in and derivative entedin the balance are required. are required. a re s s s s imulated taking into con into taking imulated s s h flow but expo but flow h expo s et hort-term depo hort-term s s objective evidence that the Group will not be able to collect all amount all collect to able be not will Group the that evidence objective not cenario e a ource ss s s s pre s s £0.57 million). £0.57 s e are are s ss s to verify that the maximum potential impact i impact potential maximum that the verify to h re s h and s i s . s ed change s , borrowing reviewed quarterly by the Board. The Group analy Group The Board. the by quarterly reviewed ued at a fixedued rate expo s hed by the Board on a project-by-project ba a on Board the by hed k. The financial ri financial The k. s hort-term depo s concerned. concerned. s s ss ure cenario s k i i oughtfix to it s s meeting appropriate balance balance appropriate meeting

s k management k management may increa may s s ed on the ed s

s are cas are s tabli s t s s . . The amount continued from long-term borrowing long-term from s Model and the Monte Carlo Pricing Model to value performance value performance to Model Pricing Carlo Monte andModel the s tatement over the ve tatement over s h and s e s t-bearing ca t-bearing ure to mitigate the effect – ris – sset s s s t co made where there i there where made s e brought forward year the in e s are es are to the Group. The impact of a 200bp impact of the The Group. to trade and other receivable other and trade ca s s s s s certainty overfuture ca s s chole e. Variou e. e it to a variety of financial ri financial of variety a to it e t k ari s o when authori s s S s erve. erve. s t borrowing are in GBP, the Group i Group the GBP, in are s s s k and liquidity ri liquidity and k s ari s tatement and reducenet a . Intere s re give on expo of the receivable S s s s run on an ongoing ba on an run s s expo s s trument t rate ri and al action k, whil s s s s s ed payment i ignificant intere ignificant h flowand fairvalue ri s s payable other and , trade h flow the Black- s s are made with tenant with made are s s

. At 31 March 2014, the Group (including the Group At 31 March 2014, joint venture . k, credit ri credit k, s . It take . It s e s s k on the Group’ k on the Group’ i on finance co finance on s principal financial a activitie intere cas s s s s s s s s t rate ri from international bankfrom international s imulation i imulation ed payment expen payment ed expen payment ed s ed payment s ed through theincome s s s in place. Thi place. in s s s brought forward made during the current year t rate ri t rate s s t rate hare-ba s s d r S ition and ca and ition h equivalent k management parameter management k s all material tran s amorti hare-ba hare-ba wa ward s hare-ba hift. The s s Cumulative share-based payment payment share-based Cumulative S S A A Issued shares at the end of the year year the of end the at shares Issued i s The Group’ (b) Credit risk Credit (b) Cash flow and fairvalue interest raterisk The Group ha A (a) Market risk risk Market (a) Currencyrisk The Group’ 25 Financial in 25 Financial (b) Share-basedpaymentcharge The Group u 24 Performance Shares

rental contract rental intere guarantee The Group’ ri credit The cas Ri An allowance for impairment i impairment for An allowance on a quarterly s ba on a quarterly according to the term to the according ri credit The flow intere flow The Group’ monitoring own and counterparty expo and counterparty own monitoring dynamic ba po unexpected movement unexpected alternative financing and hedging. Ba hedging. and financing alternative s management. To date the Groupha and cap s rate derivative gain of £1.5 million at 31 March 2014 (2013: Lo2014 March at 31 million gain £1.5 of intere payablein the Income 84 NewRiver Retail Limited Annual Report and Accounts 2014 Notes to the financial statements continued

25 Financial instruments – risk management (continued) (c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Board and its advisers seek to have appropriate credit facilities in place on a project-by-project basis, either from available cash resources or from bank facilities. Management monitor the Group’s liquidity position on a weekly basis. Formal liquidity reports are issued on a weekly basis and are reviewed quarterly by the Board, along with cash flow forecasts. A summary table with maturity of financial liabilities is presented below:

2014 Current Year 2 Years 3 to 5 £’000 £’000 £’000 Interest bearing loans and borrowings – – 109,011* CULS – 23,500 – Trade and other payables 10,420 – – Derivative financial instruments – – 19 10,420 23,500 109,030

2013 Current Year 2 Years 3 to 5 £’000 £’000 £’000 Interest bearing loans and borrowings – – 113,373 CULS – – 25,000 Trade and other payables 11,418 220 – Derivative financial instruments – 509 1,571 11,418 729 139,944

* Assumes all options to extend at the Group’s option are exercised. The Group monitors its risk to a shortage of funds by forecasting cash flow requirements for future years, including consideration of existing facilities and covenant requirements. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and other short-term borrowing facilities, bank loans and equity fundraisings. (d) Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. To maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of its gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including borrowings and trade and other payables as shown in the balance sheet) but excluding preference shares, which for capital risk management is considered to be capital rather than debt, less cash and short-term deposits. Total capital is calculated as equity, as shown in the balance sheet, plus preference shares and net debt. The Group is not subject to any external capital requirements.

26 Contingencies and commitments The Group has no significant contingent liabilities or commitments (2013: None).

Strategic report Governance Financial statements

85 s i

s s to s ’) by ’) s hare S hing Nominee s on page 50. 50. page on s t s for the individual the for olidation and are not are and olidation s s ’ Intere s ing portfolio acquired by by acquired portfolio ing s e agreement s of either converting the propertie the converting of either s t ee Director of no par value by Per value by par no of s of no par value (‘Ordinary value (‘Ordinary par no of S s s ) were £2.6 million (2013: £1.8 million). million). ) (2013: £1.8 were million £2.6 . s s hare hare S s t of below 4%. from the public hou s s , have been eliminated on con eliminated been have , s hare. hare. ed payment igned anigned Overarching Agreement determineba to the S s tore s s andunderlying co s hare-ba s are committed to enter into lea into enter to committed are quare, Crawley. Crawley. quare, s S over 26,485 ordinary ordinary 26,485 over over 25,455 Ordinary Ordinary 25,455 over

s s s pecification the open market by Director market the open s hare. , which are related partie S e 54 new convenience e 54 new convenience ’ report. llion) accrued during the year. year. during the accrued llion) s e of warrant e of warrant s s ting land are agreed. agreed. are land ting s idiarie s s ub e price of 172 pence for Ordinary for Ordinary pence 172 of price e s ale of 14-19 Queen 14-19 ale of BC to May 2019 with a current all in co ina current all 2019 with to May BC

s s s S exi on s duringthe period (excluding

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s have been granted and s tore s s ion (2013: 544) were acquired on acquired on 544) were (2013: s ss action t No. 4 in December 2013. The partie 2013. The in December 4 No. t s s hare s can be found can be in theDirector heet event debt facility with H with facility debt of £0.1 million (2013: £0.1 mi £0.1 (2013: million £0.1 of s s s e price of 172 pence per Ordinary Ordinary 172 pence per of e price s or building new building or s of Executive Director Executive of s note. Europe Limited, at an exerci Limited, Europe s tore s between the Company and it and Company the between ss s hareholding ed payment ed s onceplanning permi t balance s s ’ s s ed in thi in ed s action s clo s hare-ba onwhich The Co-Operative Group Limitedwould leas On 4 April 2014, the Group announced that The Co-Operative Group Limited Co-Operative Group The announcedGroup that the 2014, On 4 April NewRiver Property Unit Tru The Group extendedit 28 Pos Tran 27 Related party tran 27 Related party Group

propertie di convenience convenience Director On 10 April 2014, the Group announced the exerci Market Acce Market Total emolument On 8 May 2014, the Group completed the completed Group 2014, the May On 8 Limited, at an exerci at an Limited, On 29 April 2014, the Group announced the exerci S 137,580 year, the During 86 NewRiver Retail Limited Annual Report and Accounts 2014 Glossary of terms

Assets under Management (AUM) measures the total market Interest-rate swap is a financial instrument where two parties value of all properties managed by the Group. agree to exchange an interest rate obligation for a predetermined amount of time. These are used by the Group to convert floating- Book value is the amount at which assets and liabilities are rate debt obligation or investments to fixed rates. reported in the financial statements. Investment portfolio comprises the Group’s wholly-owned Capital Return Calculated as the change in capital value less investment properties. any capital expenditure expressed as a percentage of capital employed over the period. Joint venture is an entity in which the Group holds an interest on a long-term basis and is jointly controlled by the Group and EPRA is the European Public Real Estate Association. one or more venturers under a contractual arrangement whereby EPRA earnings is the profit after taxation excluding investment decisions on financial and operating policies essential to the property revaluations and gains/losses on disposals, REIT operation, performance and financial position of the venture conversion charge, intangible asset movements and their require each joint venture partner’s consent. related taxation. Leasing Events Long-term and temporary new lettings, lease EPRA Adjusted Profit Comprises recurring profits and realised renewals and lease variations within investment and joint profits on sale of properties during the year. venture properties. EPRA net assets (EPRA NAV) are the balance sheet net assets LIBOR is the London Interbank Offered Rate, the interest rate excluding the mark to market on effective cash flow hedges and charged by one bank to another for lending money. related debt adjustments, deferred taxation on revaluations and Like-for-like ERV growth is the change in ERV over a period on diluting for the effect of those shares potentially issuable under the standing investment properties expressed as a percentage of employee share schemes. the ERV at the start of the period. EPRA NAV per share is EPRA NAV divided by the diluted number Like-for-like rental income growth is the growth in gross rental of shares at the period end. income on properties owned throughout the current and previous Estimated rental value (ERV) is the external Valuers’ opinion as periods under review. This growth rate includes revenue to the open market rent which, on the date of valuation, could recognition and lease accounting adjustments but excludes reasonably be expected to be obtained on a new letting or rent properties held for development in either period, properties with review of a property. guaranteed rent reviews, asset management determinations and surrender premiums. Equivalent yield is the net weighted average income return a property will produce based upon the timing of the income Loan to Value (LTV) is the ratio of gross debt less cash, short- received. In accordance with usual practice, the equivalent yields term deposits and liquid investments to the aggregate value of (as determined by the external Valuers) assume rent received properties and investments. annually in arrears and on values before deducting prospective Mark to market is the difference between the book value of an purchaser’s costs. asset or liability and its market value. Exceptional item is an item of income or expense that is deemed NAREIT is the National Association of Real Estate Investment to be sufficiently material, either by its size or nature, to require Trusts. A trade association that represents US Real Estate separate disclosure and is one off in nature. Investment Trusts and publicly traded real estate companies. Fair value in relation to property assets is the estimated amount NAREIT FFO is a calculation to adjust a REIT’s net income under for which a property should exchange on the date of valuation US GAAP to exclude gains or losses from sales of property, between a willing buyer and a willing seller in an arm’s-length adding back real estate depreciation and other relevant items. transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion Net asset value (NAV) per share is the equity attributable to (as determined by the Group’s external Valuers). In accordance owners of the Parent divided by the number of Ordinary Shares with usual practice, the Group’s external Valuers report valuations in issue at the period end. net, after the deduction of the prospective purchaser’s costs, Net initial yield is a calculation by the Group’s external valuers of including stamp duty land tax, agent and legal fees. the yield that would be received by a purchaser, based on the Group is NewRiver Retail Limited, the Company and its Estimated Net Rental Income expressed as a percentage of the subsidiaries and its share of joint ventures (accounted for on an acquisition cost, being the market value plus assumed usual equity basis). purchaser’s costs at the reporting date. Head lease is a lease under which the Group holds an Net rental income is the rental income receivable in the period investment property. after payment of ground rents and net property outgoings. Net rental income will differ from annualised net rents and passing rent IFRS is the International Financial Reporting Standards issued due to the effects of income from rent reviews, net property by the International Accounting Standards Board and adopted outgoings and accounting adjustments for fixed and minimum by the EU. contracted rent reviews and lease incentives. Interest cover is the number of times net interest payable is covered by underlying profit before net interest payable and taxation. Strategic report Governance Financial statements 87 . ue

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expre propertie development excluding the portfolio, P dividend head lea head exempt determined by Company’ determined the bas on a like-for-like R condition received final Board approval or are are or approval Board final received P where the pa inve R tax at the ba at the tax than not. R increa period rent-free of expiry may qualify to receive the dividend gro dividend receive the qualify to may for detail (www.nrr.co.uk) (non-PID) dividend payment P 88 NewRiver Retail Limited Annual Report and Accounts 2014 Company information

Directors Auditor Paul Roy Deloitte LLP (Non-Executive Chairman) Regency Court Glategny Esplanade David Lockhart St. Peter Port (Chief Executive) Guernsey Mark Davies GY1 3HW (Finance Director) Legal advisors Allan Lockhart (Property Director) Eversheds LLP One Wood Street Nick Sewell London EC2V 7WS (Director) Hill Dickinson Andrew Walker No. 1 St Paul’s Square (Non-Executive Director) Liverpool L3 9SJ Chris Taylor Mourant Ozannes (Non-Executive Director) PO Box 186 1 Le Marchant Street Kay Chaldecott St. Peter Port (Non-Executive Director) Guernsey GY1 4HP Company Secretary Caroline Tolhurst Tax advisors BDO LLP Business address 55 Baker Street 37 Maddox Street London EC2V 7WS London W1S 2PP Registered office Old Bank Chambers La Grande Rue St Martin’s Guernsey GY4 6RT

Nominated advisor (NOMAD) and broker Liberum Capital Ropemaker Place, Level 12 25 Ropemaker Street London EC2Y 9LY

Financial advisor Kinmont 5 Clifford Street London W1S 2LG Designed and produced by Radley Yeldar (www.ry.com)

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Annual Report and Accounts 2014 NewRiver Retail Limited www.nrr.co.uk NewRiver Retail Limited Retail NewRiver Maddox Street 37 London W1S 2PP 3328 5800 +44 (0) 20