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Governance
Key risks and uncertainties
The key risks and uncertainties facing the Group are as set out in the table below:
| Risk | Mitigation |
| Strategic |
|
| Investment acquisitions underperform financial objectives | Specialist retail operator undertaking detailed financial and operational appraisal process for all acquisitions, including due diligence reviews, prior to committing to an investment. |
| Failure to identify business opportunities and innovate | Research into the economy and the investment and occupational market is evaluated as part of the Group's strategy process covering key areas such as investment, leasing and asset management |
| Property markets are cyclical. Performance depends on general economic conditions and in particular the retail sector | Extensive experience of the Directors provides a privileged insight into the strengths, weaknesses and opportunities within potential investments |
| Pro-active asset management including right-sizing, extensions, refurbishments, tenant mix, lease extensions and improving planning consents | |
| Development projects fail to deliver expected returns due to increased costs, delays or changes in property market values | Contractor performance closely monitored within project management process. Regular monitoring against budget and forecasting of project costs. |
| Financial |
|
| Inability to raise finance to implement strategy | Five year £50m revolving credit facility with the Royal Bank of Scotland plc signed and post period end £34.7m facility signed with Eurohypo AG and relationships with several banks have been established. |
| Adverse interest rate movements | The Company has established a hedging strategy and hedging effectiveness is regularly monitored. |
| Failure to comply with loan covenants | Loan covenants are actively monitored and considered, including stress testing and headroom analysis, as part of the budgeting and forecasting process |
| Failure to comply with REIT conditions | The Group actively monitors its compliance with REIT conditions as part of its budgeting and forecasting process, the results of which are reported to the Board of Directors |
| Effect of all acquisitions on REIT conditions is monitored and considered | |
| Counterparty credit risk resulting in loss of cash deposit | Deposits have been placed across a range of counterparties who have a credit rating of at least AA- or are government backed. Documented treasury process approved by the Board |
| Asset management |
|
| Tenant failure | Tenant covenant strength and concentration assessed for all acquisitions |
| Failure to let vacant units | Specialist retail market contacts and knowledge and detailed appraisal of each investment |
| Operational | |
| Loss of key staff | Remuneration structure reviewed and benchmarked and a substantial part of remuneration share based with period of time before vesting |
| Executive Directors have made a substantial equity investment with lock-in provisions | |
| Failure to comply with health and safety requirements | Property health and safety has been outsourced to specialist retail property managing agents who carry out regular risk assessments |
| Environmental liabilities | Environmental surveys carried out as part of the due diligence for all acquisitions |
Terms of Reference Documents
| Title | Format |
|---|---|
| Audit Committee |  |
| Nomination Committee | |
| Remuneration Committee | |
© 2012 Metric Property Investments plc