Last checked at 7 Mar 2016 13:40
SEGRO plc
ANNUAL FINANCIAL REPORT
SEGRO plc (the Company)
Availability of the 2015 Annual Report and Accounts
The 2015 Annual Report and Accounts is now available to view at www.SEGRO.com/investors.
The following documents will be made available to shareholders of the Company from 11 March 2016:
· 2015 Annual Report and Accounts;
· Notice of the 2016 Annual General Meeting; and
· Proxy Form for the 2016 Annual General Meeting.
In accordance with Listing Rule 9.6.1, a copy of each of these documents will be submitted to the National Storage Mechanism and will be available to view on 11 March 2016 or shortly thereafter. The Notice of the 2016 Annual General Meeting will be available to view on the Company's website from this date.
The information below, which is extracted from the 2015 Annual Report and Accounts, is included solely for the purposes of complying with DTR 6.3.5. This information should be read in conjunction with the Company's 19 February 2016 announcement of its 2015 Final Results (available at www.SEGRO.com). This material is not a substitute for reading the full 2015 Annual Report and Accounts. All page numbers and cross-references in the extracted information below refer to page numbers and notes to the financial statements, in the 2015 Annual Report and Accounts.
PRINCIPAL RISKS
Effective risk management is central to our long-term success
The Group recognises that its ability to manage risk effectively throughout the organisation is central to its success. Risk management ensures a structured approach to decision making that aims to reduce the uncertainty surrounding expected outcomes, balanced against the objective of creating value for our shareholders.
Risk appetite
We have put risk appetite at the heart of our risk management process. Risk appetite is integral both to our consideration of strategy and to our medium-term planning process. Risk appetite also defines the criteria for assessing the potential impact of risks and our mitigation of them.
The Group's risk appetite is reviewed annually and approved by the Board in order to guide management. As well as qualitative descriptions, the risk appetite defines tolerances and targets for key metrics. It is equally applicable to wholly owned operations and joint ventures.
While our appetite for risk will vary over time and during the course of the property cycle, in general the Group maintains a fairly low appetite for risk, appropriate to our strategic objectives of delivering a sustainable progressive dividend stream, supported by long-term growth in net asset value per share.
Property risk
We recognise that, in seeking outperformance from our portfolio, the Group must accept a balanced level of property risk - with diversity in geographic locations and asset types and an appropriate mixture of stabilised income-producing and opportunity assets - in order to provide opportunities for superior returns.
Our target portfolio should deliver attractive, low risk income returns with strong rental and capital growth when market conditions are positive and show relative resilience in a downturn. We aim to enhance these returns through development, but we seek both to ensure that the 'drag' associated with holding development land does not outweigh the potential benefits and also to mitigate the risks - including letting and construction risks - inherent in development.
In line with our income focus, we have a low appetite for risks to income from customers, and accordingly seek a diverse occupier base with strong covenants and avoid over-exposure to individual occupiers in specialist properties.
Financial risk
The Group maintains a low to moderate appetite for financial risk in general, with a very low appetite for risks to solvency and gearing covenant breaches.
As an income-focused REIT we have a low appetite for risks to maintaining stable progression in earnings and dividends over the long term. We are, however, prepared to tolerate fluctuations in dividend cover as a consequence of capital recycling activity.
We also seek long-term growth in net asset value per share. Our appetite for risks to net asset value from the factors within our control is low, albeit acknowledging that our appetite for moderate leverage across the cycle amplifies the impact of asset valuation movements on net asset value.
Corporate risk
We have a very low appetite for risks to our good reputation and risks to being well-regarded by our investors, regulators, employees, customers, business partners, suppliers, lenders and by the wider communities and environments in which we operate.
Our responsibilities to these stakeholders include compliance with all relevant laws; accurate and timely reporting of financial and other regulatory information; safeguarding the health and safety of employees, suppliers, customers and other users of our assets; safeguarding the environment; compliance with codes of conduct and ethics; ensuring business continuity; and making a positive contribution to the communities in which we operate.
An integrated approach to managing risk
The Board has overall responsibility for ensuring that risk is effectively managed across the Group. The Audit Committee reviews the effectiveness of the Group's risk management process on behalf of the Board. Further information on compliance with the risk management provisions of the UK Corporate Governance Code can be found in the Governance section on pages 71-112.
The risk management process is designed to identify, evaluate and mitigate the significant risks that the Group faces. The process aims to understand and mitigate, rather than eliminate, the risk of failure to achieve business objectives, and therefore can only provide reasonable and not absolute assurance.
Accountabilities for the Group's risk management are outlined in the diagram on page 63.
Appetite towards risk is considered at Board meetings whenever significant strategic, financial or operational decisions are made, and is a key part of ongoing discussions about strategy. Risk appetite is also formally reviewed by the Board annually.
The Board recognises that it has limited control over many of the external risks it faces, such as the macro-economic environment, but it reviews the potential impact of such risks on the business and actively considers them in its decision-making. The Board also monitors internal risks and ensures that appropriate controls are in place to manage them.
Risks are considered within each area of the business to ensure that risk management is embedded within the Group's decision making processes and culture. Each risk in the Group Risk Register is owned by a member of the Executive Committee who works with a senior manager who is responsible for the monitoring and mitigation of that risk to within appetite. Each risk is reviewed regularly throughout the year at relevant management committees and each risk is also reviewed in depth with its risk manager and risk owner at least twice a year.
Communication across a relatively small management team, and regular consideration of risk at key management committees, allows management to respond quickly to changing events so as to reduce adverse effects on the Group's risk profile.
Risks are assessed in both unmitigated (assuming that no controls are in place) and residual (with mitigating controls operating normally) states. This assessment directly relates potential impact to risk appetite so that it is clear whether each risk is comfortably within appetite, tolerable, intolerable or below appetite. In 2015 we have begun to formally assess the velocity of the most significant risks to better understand how quickly they might cause an intolerable impact on us.
In addition to reports detailing risks individually and in aggregate, in 2015 we introduced a key risk indicator (KRI) dashboard which indicates actual performance against risk appetite metrics.
Illustrations of some of the reports, including this dashboard, used by management are shown below.
The most significant risks and mitigating controls are detailed in the Group Risk Register.
Controls relevant to each risk are also documented and monitored in the Group Risk Register. The risks and controls in the Register are used to inform the Group's internal audit assurance programme. Management's annual assessment of control effectiveness is driven by the risks and controls drawn from the Group's Risk Register. The link between significant risks and control assurance has continued to be a focus during 2015.
The Group has a Risk Management Committee responsible for regularly reviewing the Group Risk Register, monitoring the most important controls and prioritising risk management activities. The Group's approach to risk management is documented and formalised in a policy, reviewed annually by the Executive Committee. The Executive Committee considers emerging risks and their impact on the Group Risk Register formally four times per year.
A robust assessment
In order to robustly assess the principal risks facing the Group, the Board has taken a number of measures. The Board has formally reviewed the principal risks twice during the year. The Board has also completed its annual review and approval of the Group's risk appetite. Furthermore, the Audit Committee receives a report twice a year on how the Group Risk Register has been compiled. The Group's Risk Management process was the subject of an internal audit in 2015 and was assessed as 'appropriately controlled'.
Principal risks
The principal risks have the potential to affect SEGRO's business materially - either favourably or unfavourably. Risks are classified as 'principal' according to their potential to intolerably exceed our appetite (considering both inherent and residual impact) and cause material harm to the Group.
Some risks that may be unknown at present, as well as other risks that are currently regarded as immaterial and therefore not detailed here, could turn out to be material in the future.
The current principal risks facing the Group are described across the following pages, along with the potential areas of impact on the Group's strategy and the principal activities that are in place to mitigate and manage such risks. The direction of change in the level of the risk during the course of 2015, along with an assessment of whether the risk is within our appetite following the application of our mitigating controls, is indicated along with links to further relevant information provided in other sections of this report.
The principal risks that the Group reported last year have evolved in nature, as has the Group's response to them. No new additional risks have been classified as principal since 2014, and no principal risks have been de-classified since that time.
Viability statement
The Group's principal risks, and its approach to managing them, as described in this section, have formed the basis of our assessment of longer term viability. The process for conducting this assessment is summarised in the Audit Committee's report on page 90.
The Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and has adequate resources to meet its liabilities as they fall due over the next five years.
The five year assessment period is the same time horizon as covered by the Group's annual rolling five year strategic financial plan. This is considered to be the optimum balance between our need to plan for the long term (as property investment is a long-term business) and the progressively unreliable nature of forecasting in later years, particularly given the historically cyclical nature of the property industry. Five years is also in a similar timeframe to the Group's weighted average unexpired lease term and to the average maturity of its debt portfolio. In selecting this time period, the Directors confirm that they have no reason to regard five years as a 'cliff edge' in terms of the Group's viability.
In addition to the robust ongoing assessment and management of the risks facing the Group, as already set out in this section, the Group has stress-tested its five year strategic financial plan. This stress-test has considered the risks that could either singularly, or in combination, threaten the viability of the Group. In particular we have considered the potential impacts of:
· A systemic crisis, such as a major dislocation or failure of capital markets or a failure of the insurance market;
· An acute deterioration in occupier or property investment market conditions;
· Significant movements in interest rates and foreign exchange rates;
· A sustained interruption to the Group's business continuity; and
· An inability to refinance maturing debt.
In stress testing we assessed the limits at which key financial ratios and covenants would be breached, causing a threat to the Group's viability. We then assessed the likelihood of that limit being reached as a result of the individual event or combination of events occurring, using a combination of historic data (for example the acute property valuation decline in 2007-2008) and forward-looking probability analysis where available.
As a result of this stress testing, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the next five years.
Risk management
BOARD
Oversees the Group's risk management and internal controls.
Determines the Group's risk appetite.
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↔ | CHIEF EXECUTIVE
Responsible for risk management.
Assigns responsibility for risks to senior executive risk owners. |
↔ | EXECUTIVE RISK OWNER
Owns risk in domain.
Assigns accountability for risks to senior risk managers.
Ensures that risks are identified, assessed and adequately controlled.
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↔ | RISK MANAGER
Responsible for ensuring the risk is within appetite.
Regularly reviews and assesses existing risks with risk management.
Drives design and implementation of controls.
| RISK MANAGEMENT FUNCTION
Develops risk policy.
Manages the process.
Manages/reports risk register.
Provides assistance in assessing and documenting risks and controls.
Provides quality assurance and challenge to risk owners and managers.
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AUDIT COMMITTEE
Monitors effectiveness of the Group's risk management and internal control systems.
| EXECUTIVE COMMITTEE
Monitors strategic and other risks.
Delegates accountability for risk management and monitors performance. | MONITORING COMMITTEES
Regularly identify, assign accountability for, and monitor the significant risks and corresponding controls within their domains.
Report status to risk management function.
| GROUP RISK COMMITTEE
Establishes, monitors and reports on the Group's approach to risk management.
Oversees the work of the risk management function.
Challenges individual risk owners and managers. |
Executive risk owner | Monitoring committee | Risk manager | Risk management function
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Strategic | Chief Executive | Executive
| As assigned by executive risk owner | Provides information, assists in documentation and provides quality assurance to risk managers, executive risk owners and committees. |
Financial | Group Finance Director | Finance
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Operational | Chief Operating Officer / Others as appropriate | Operations Business Information Systems Executive
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Investment | Chief Investment Officer | Executive / Investment
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Compliance | As appropriate | As appropriate |
Property risks
Risks to achieving above average rental and capital growth from our portfolio, including market and competitive conditions, portfolio strategy, and execution of acquisitions and disposals.
Risk | Impact on strategy | Change in 2015 | Mitigations | Residual risk within appetite?
| Further information |
Market Cycle
The property market is cyclical and there is a continuous risk that the Group could either misinterpret the market of fail to react appropriately to changing market conditions, which could result in capital being invested or disposals taking place at the wrong price or time in the cycle.
This is continuous risk with a moderate likelihood. | Disciplined capital allocation | à | The Board, Executive Committee and Investment Committee monitor the property market cycle on a continual basis and adapt the Group's Investment/divestment strategy in anticipation of changing market conditions.
Independent diverse sources of investment and occupier market intelligence and regularly received and considered.
Upside and downside scenarios are incorporated into Investment Committee papers to assess the impact of differing market conditions.
| P | The market outlook is detailed in the Chief Executive's Review on page 31. |
Portfolio strategy
The Group's Total Property and/or Shareholder Return could underperform in absolute or relative terms as a result of inappropriate portfolio strategy. This could result from: - Holding the wrong balance of prime or secondary assets; - Holding the wrong amounts or types of land, leading to diluted returns and/or constraints on development opportunities; - Holding the wrong level of higher risk 'opportunity' assets or too many old or obsolete assets which dilute returns; - Holding assets in the wrong geographical markets; - Missing opportunities in new markets or lacking critical mass in existing markets.
This is continuous risk with a moderate likelihood. | Disciplined capital allocation | à | The Group's portfolio strategy is subject to regular review by the Board to consider the desired shape of the portfolio in order to meet the Group's overall objectives and to determine our response to changing opportunities and market conditions.
The Group's disciplined capital allocation is informed by comprehensive asset plans and independent external assessments of market conditions and forecasts.
Regular portfolio analysis ensures the portfolio is correctly positioned in terms or location and asset type, and retains the right balance of core and opportunity assets. The annual asset planning exercise provides a bottom-up assessment of the performance and potential for all assets to identify underperforming assets that are considered for sale.
| P | Further information is contained in the Chief Executive's review on pages 18 to 31. |
Execution of investment plans
Decisions to buy, hold, sell or develop assets could be flawed due to uncertainty in analysis, quality of assumptions, poor due diligence or unexpected changes in the economic or operating environment.
Our investment decisions could be insufficiently responsive to implement our strategy effectively.
This is continuous risk with a moderate likelihood as changing investment and occupier market conditions require constant adaptation. | Disciplined capital allocation | æ | Asset plans are prepared annually for all estates to determine where to invest capital in existing assets and to identify assets for disposal.
Locally-based property investment and operational teams provide market intelligence and networking to deliver attractive opportunities.
Policies are in place to govern evaluation, due diligence, approval, execution and subsequent review of investment activity.
The Investment Committee meets frequently to review investment and disposal proposals and to consider appropriate capital allocation.
Investment hurdle rates are regularly reappraised taking into account estimates of our weighted average cost of capital.
Major capital investment and disposal decisions and subject to Board approval.
| P | Further information is contained in the Chief Executive's review on pages 21 and 22. |
Financial risks
Risks to the revenues, costs, cash flows, equity capital and solvency of the Group resulting from the capital structure of the Group and changes in external factors such as interest rates, foreign exchange rates and the creditworthiness of the Group's major financial counterparts.
Risk | Impact on strategy | Change in 2015 | Mitigations | Residual risk within appetite? | Further information |
Solvency and covenant breach
A substantial fall in the Group's property asset values or rental income levels could lead to a breach of financial covenants within its debt funding arrangements. This could lead to a cancellation of debt funding which could, in turn, leave the Group without sufficient long-term resources (solvency) to meet its commitments.
This is a medium-term risk with a low likelihood.
| Efficient capital and corporate structure | à | Future funding requirements and covenant headroom, including sensitivity to asset valuation declines, are closely monitored by the Group Treasury function, the Finance Committee (which reports to the Group's Executive Committee) and the Board. Group Treasury calculate actual levels and headroom with sensitivities to financial covenants on a quarterly basis and review non-financial covenants on an ongoing basis.
The Audit Committee reviews the Group's going concern status bi-annually.
In line with its Treasury policy, the Group maintains appropriate undrawn headroom under committed bank facilities which are generally refinanced well ahead of maturity.
| P | Significant headroom exists against all financial covenants. Property valuations would need to fall by around 41 per cent from their 31 December 2015 values to reach the gearing covenant threshold of 160 per cent.
Further details of Treasury policy, funding headroom, financial covenant rations and related headroom and sensitivities are provided in the Financial Review on pages 54 to 61.
The Group's viability statement is on page 65. |
UK exit from the EU
The increasing uncertainty associated with the outcome of the UK's EU referendum may temporarily impact investment, capital and occupier markets in the UK through delayed decision making.
In the event of a UK vote to leave the EU, property valuations, capital markets and occupier demand in the UK could also be impacted during the subsequent transition period while the terms of exit and future relationships are negotiated.
In the long term, exit from the EU could reduce levels of occupier demand as a result of reduced trade and/or the relocation of corporations and financial institutions away from the UK, and London in particular.
The likelihood of severe adverse impact on the Group, is judged to be low.
| Disciplined capital allocation
Operational excellence
Efficient capital and corporate structure | ä | The Group's high quality portfolio of prime industrial assets is diverse in terms of geography (28 per cent of GAV shares is in Continental Europe) and sector exposure. The Group is neither directly exposed to the asset classes, nor significantly exposed to the sectors, most likely to be most directly impacted by a UK exit from the EU.
The Group's existing mitigations for resilience through the market cycle also provide mitigation against this risk. As well as the underlying quality and diversity of the portfolio, these include maintaining substantial covenant headroom, access to diverse sources of funding, and FX and interest rate hedging.
Short development lead times also enable the Group to respond quickly to changing market conditions.
| P | |
European economic environment
The risk of a significant adverse impact to the Group's earnings, net asset value, financial covenants or investor confidence arising from the exit of a significant economy from the Eurozone or sustained poor economic performance in the Eurozone.
These are short- to medium-term risks with a medium although somewhat changeable likelihood.
| Disciplined capital allocation
Operational excellence
Efficient capital and corporate structure | æ | We remain alter to the potential financial and operational risks to the business from a deterioration in economic conditions in the Eurozone, including a partial break-up.
We continue to maintain a high level of currency translation hedging against the impact of a weaker euro and to closely monitor our exposure to major tenants in the Eurozone.
Geographically, the portfolio is located predominantly in the relatively stronger European economies and regions.
| P | Germany represents 9 per cent, France 8 per cent, Netherlands/Belgium 3 per cent and Italy 2 per cent of the Group's assets. Poland, which also involves exposure to the Euro, represents a further 6 per cent of the Group's assets.
Treasury policies are outlined in the Financial Review on page 60. |
Financial leverage
The Group could maintain an inappropriate capital structure. Financial leverage (usually expressed as the LTV ratio, but in financial covenants defined as gearing) needs to be managed depending on the direction of the economic and property market cycle. If gearing is too high when property valuations are falling, net asset value movement can be exacerbated and financial covenants put at risk. Equally, if gearing is too conservative, there is a risk that attractive growth opportunities could be missed and the benefits of leverage not maximised.
This is medium to long-term risk with a low likelihood.
| Disciplined capital allocation
Efficient capital and corporate structure | à | The Group has targeted a mid-cycle look-through LTV ration of around 40 per cent. Gearing levels are also tracked and forecast internally to monitor headroom against financial covenants. The LTV target is regularly considered in strategic planning and in asset recycling decisions. | P | Gearing is discussed in the Financial Review on page 60. |
Interest rates
A significant adverse movement in interest rates could have an unacceptable impact on the Group's earnings, on investment market conditions or on tenant covenant strength.
This is a long-term risk with a moderate likelihood. | Efficient capital and corporate structure | à | In accordance with the Group's Treasury policy, fixed interest cover is maintained between 50 per cent and 100 per cent of net look-through debt in order to balance the cost and certainty of interest rates. The position is formally reviewed bi-annually by the Finance Committee. | P | At 31 December 2015, fixed interest cover was 75 per cent of the net borrowings of the Group (including the Group's share of borrowings within joint ventures).
Interest rate hedging is detailed in the Financial Review on page 61.
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Counterparty default
A bank or other counterparty could default while holding SEGRO deposits or derivative assets, resulting in a significant financial loss to the Group. This could also include the loss of solvency headroom from lost undrawn committed bank facilities.
This is considered to be a long-term risk with a low likelihood.
| Efficient capital and corporate structure | à | Counterparties are accepted based on a strict credit rating criteria. Compliance with the policy is monitored daily by both front and back-office staff within Group Treasury. | P | Treasury policies are outlined in the Financial Review on page 60. |
Corporate risks
Risks to business performance, legal and regulatory compliance, health and safety, environmental impact, reputation and business continuity arising from external factors or inadequate internal processes, people or systems.
Risk | Impact on strategy | Change in 2015 | Mitigations | Residual risk within appetite? | Further information |
Operational delivery and compliance
The Group's ability to protect its reputation, revenues and shareholder value could be damaged by operational failures such as: environmental damage; failing to attract, retain and motivate key staff; a breach of anti-bribery and corruption or other legislation; major customer default or supply chain failure.
Compliance failures, such as breaches of joint venture shareholders' agreements, secured loan agreements or tax legislation could also damage reputation, revenue and shareholder value.
This is a continuous risk with a low likelihood of causing significant harm to the Group.
| Operational excellence
Efficient capital and corporate structure
| à | The Group maintains a strong focus on Operational Excellence. The Executive and Operations Committees regularly monitor the range of risks to operational delivery, compliance, business continuity, organisational effectiveness and customer management.
The Group's tax compliance is managed by an experienced internal tax team, REIT and SIIC tax regime compliance is demonstrated at least bi-annually.
Compliance with joint venture shareholder agreements is managed by experienced property organisations, finance and legal staff. The SELP JV additionally has comprehensive governance and compliance arrangements in place, including dedicated management, operational manuals, and specialist third-part compliance support services.
| P | |
Health and safety
Health and safety management processes could fall, leading to a loss of life, litigation, fines and serious reputational damage to the Group.
This is a continuous risk with a low likelihood of causing significant harm to the Group. Nevertheless, we note that this risk is somewhat increased by the scale of the Group's development activity.
| Operational excellence
| ä | The Group manages an active health and safety management system, with a particular focus on managing the quality and compliance to good health and safety practice of construction and maintenance contractors.
A published health and safety policy is backed up by independent site inspections and a programme of staff and contractor training. | P | Health and safety in our supply chain is discussed on page 51. |
Regulatory environment
The Group could fail to anticipate legal or regulatory changes, leading to a significant un-forecasted financial or reputational impact.
In general, these are medium to long-term risks with a low likelihood of causing significant harm to the Group. Some, such as the OECD's Base Erosion and Profit Sharing (BEPS) project, could have an earlier impact.
| Operational excellence
Efficient capital and corporate structure
| ä | Emerging risks in this category are reviewed regularly by the Executive Committee, Finance Committee and Group Risk Management Committee.
Corporate heads of function consult with external advisers, attend industry and specialist briefings, and sit on key industry bodies such as EPRA and BPF.
A number of potential risks were identified, assessed and managed during the course of the year. None were considered to be material enough to be classified as principal risks.
Nevertheless, we continue to maintain a close interest in the BEPS project. Our current assessment is that the direct impact on the Group is likely to be modest, but we will monitor the potential indirect impacts on the investment market and on valuations if BEPS affects more highly leveraged property investors. | P |
28. Related party transactions
Group
Transactions during the year between the Group and its joint ventures are disclosed below:
2015 £m | 2014 £m | |
New loans during the year | 70.8 | 222.4 |
Loans repaid during the year | 64.5 | 75.7 |
Loans outstanding at the year end | 221.2 | 333.9 |
Dividends received | 20.8 | 22.2 |
Management fee income | 17.0 | 11.8 |
Transactions between the Company and its subsidiaries eliminate on consolidation and are not disclosed in this note.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with the applicable law and regulations.
Company law requires the Directors to prepare such financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and have also chosen to prepare the parent Company financial statements under IFRSs as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:
· properly select and apply accounting policies;
· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
· provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
· make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors' responsibility statement
We confirm that to the best of our knowledge:
1. the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as whole;
2. the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risk and uncertainties that they face; and
3. the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.
By order of the Board
David Sleath Chief Executive 18 February 2016 | Justin Read Group Finance Director 18 February 2016 |
FORWARD-LOOKING STATEMENTS
The Annual Report contains certain forward-looking statements with respect to SEGRO's expectations and plans, strategy, management objectives, future developments and performances, costs, revenues and other trend information. These statements are subject to assumptions, risks and uncertainties. Many of these assumptions, risks and uncertainties relate to factors that are beyond SEGRO's ability to control or estimate precisely and which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Certain statements have been made with reference to forecast process changes, economic conditions and the current regulatory environment. Any forward-looking statements made by or on behalf of SEGRO are based upon the knowledge and information available to Directors on the date of this Annual Report. Accordingly, no assurance can be given that any particular expectation will be met and SEGRO's shareholders are cautioned not to place undue reliance on the forward-looking statements. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority), SEGRO does not undertake to update forward-looking statements to reflect any changes in events, conditions or circumstances on which any such statement is based. Past share performance cannot be relied on as a guide to future performance. Nothing in this Annual Report should be construed as a profit forecast.
Stephanie Murton
Legal Counsel
+44(0) 20 7451 9083