diff --git a/.gitattributes b/.gitattributes index f9db995290c9165c51be9fa54addcca55f15576d..056ecec53e2646642015e20d6de9c1122c9a048e 100644 --- a/.gitattributes +++ b/.gitattributes @@ -60,3 +60,5 @@ saved_model/**/* filter=lfs diff=lfs merge=lfs -text NewRiver/NewRiver_75Pages/NewRiver_75Pages_TextNeedles.pdf filter=lfs diff=lfs merge=lfs -text NewRiver/NewRiver_25Pages/NewRiver_25Pages_TextNeedles.pdf filter=lfs diff=lfs merge=lfs -text NewRiver/NewRiver_200Pages/NewRiver_200Pages_TextNeedles.pdf filter=lfs diff=lfs merge=lfs -text +NewRiver/NewRiver_75Pages/NewRiver_75Pages_ImageNeedles.pdf filter=lfs diff=lfs merge=lfs -text +NewRiver/NewRiver_200Pages/NewRiver_200Pages_ImageNeedles.pdf filter=lfs diff=lfs merge=lfs -text diff --git a/NewRiver/NewRiver_200Pages/NewRiver_200Pages_ImageNeedles.pdf b/NewRiver/NewRiver_200Pages/NewRiver_200Pages_ImageNeedles.pdf new file mode 100644 index 0000000000000000000000000000000000000000..17aa5c04d770174a97cc7f180feb77f81c5a5ab5 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/NewRiver_200Pages_ImageNeedles.pdf @@ -0,0 +1,3 @@ +version https://git-lfs.github.com/spec/v1 +oid sha256:ade95962267da2c5b2a7fd2ca557ce971f4ccabbbcca207bc61f8ff333b5b4f3 +size 13684165 diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_1.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a41a0fb25d7d7f46ce40f60d0fdf42462ec7b97 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +Annual Report +and Accounts 2023 +NewRiver REIT plc Annual Report and Accounts 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_108.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_108.txt new file mode 100644 index 0000000000000000000000000000000000000000..019fa30ef5fd92d2c5026d0fe515ece518fb714f --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_108.txt @@ -0,0 +1,35 @@ +Attendance +Each of the Directors has committed to attend all scheduled Board and relevant committee meetings and has also committed to make every +effort to attend ad hoc meetings, either in person or by telephone/video call. Board papers are circulated to Directors in advance of the +meetings via an electronic board portal. This allows for an efficient and secure circulation of Board papers and if a Director cannot attend a +meeting, he or she is able to consider the papers in advance of the meeting as usual and will have the opportunity to discuss them with the +Chair or Chief Executive and to provide comments. The Non-Executive Directors meet without the Executive Directors and the Chair present +at least once a year. +Attendance at regular scheduled Board meetings and the Board Committees is shown below: +Board Members +Board +Attendance +Audit Committee +Attendance +Remuneration Committee +Attendance +Nomination Committee +Attendance +Margaret Ford1: Chair 7/8 – 2/4 3/3 +Executive Directors +Allan Lockhart 8/8 – – – +Will Hobman2 7/8 – – – +Non-Executive Directors +Kay Chaldecott3 2/2 2/2 1/1 1/1 +Alastair Miller 8/8 5/5 4/4 3/3 +Charlie Parker 8/8 5/5 4/4 3/3 +Colin Rutherford 8/8 5/5 4/4 3/3 +Dr Karen Miller4 8/8 3/3 3/3 2/2 +1. Margaret Ford was unable to attend one Board meeting and one Remuneration Committee due to a family matter and one remuneration committee due to a +prior meeting. +2. Will Hobman missed a Board meeting due to the birth of his daughter +3. Kay Chaldecott stepped down on 26 July 2022 +4. Dr Karen Miller was appointed to the Board and its Committees on 30 May 2022 +Corporate Governance continued +106 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_109.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_109.txt new file mode 100644 index 0000000000000000000000000000000000000000..53f41bd32642f3d85afd9e007c642afe654617d8 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_109.txt @@ -0,0 +1,83 @@ +Composition, succession +and evaluation +Induction of new Directors +The Chairman, Company Secretary and Chief Operating and People +Officer manage an induction process to ensure that new Directors +are fully briefed about the Company and its operations. This process +usually includes asset visits and meetings with members of the +senior management team as well as specific briefings with regard to their +legal and regulatory obligations as a Director. New Directors are also +given the opportunity to visit the assets and meet members of the team. +Annual General Meeting (“AGM”) +The AGM is the annual opportunity for all shareholders to meet with +the Directors and to discuss with them the Company’s business and +strategy. Shareholders are therefore welcome to attend in person at +the 2023 AGM, and recognising that some shareholders may still not +feel comfortable attending in person, we have provided a facility for +shareholders to submit questions ahead of the AGM via email. The +AGM is planned to be held on 26 July 2023. +The notice of AGM is posted to all shareholders at least 20 working +days before the meeting. Separate resolutions are proposed on all +substantive issues and voting is conducted by a poll. The Board +believes this method of voting is more democratic than voting via a +show of hands since all shares voted at the meeting, including proxy +votes submitted in advance of the meeting, are counted. In line with +our sustainability commitment, we do not issue hard copy forms of +proxy in the post. Instead, we ask shareholders to appoint a proxy +online via the Registrar’s portal. +Dr Karen Miller +Independent Non-Executive Director, +Induction programme +Karen’s induction programme entailed +a number of interactive sessions with +members of the senior management team. +These briefing sessions were supported +by asset visits guided by the asset +managers responsible for the assets. +For each resolution, shareholders will have the opportunity to vote for +or against or to withhold their vote. Following the meeting, the results +of votes lodged will be announced to the London Stock Exchange +and displayed on the Company’s website. +Anti-corruption and anti-bribery +We are committed to the highest legal and ethical standards in every +aspect of our business. It is our policy to conduct business in a fair, +honest and open way, without the use of bribery or corrupt practices +to obtain an unfair advantage. We provide clear guidance for +suppliers and employees, including policies on anti-bribery and +corruption, anti-fraud and code of conduct. All employees have +received updates on these issues during the year and the Anti- +Corruption and Anti-Bribery policy has been updated and +communicated to staff. +Human rights +Being mindful of human rights, the Company has a Modern Slavery +policy to ensure that all of its suppliers are acting responsibly and are +aware of the risks of slavery, human trafficking and child labour within +their own organisation and supply chain. The Modern Slavery +statement is updated and published each year. +Areas Covered Sessions provided by +Business Plan CEO +Succession Planning +Valuations +Salary Structure +Relationship with Auditors CFO +Most Recent Audit +Liabilities +Internal Controls Head of Financial Reporting +Internal Audit +Risk management/Insurance +Non Audit Services +Business Planning +Management Reporting +Board Procedures Company Secretary +Corporate Governance +Terms of Reference +Board/Director Obligations Training +Meetings/Year Plan +Policies: Whistleblowing; Share Dealing +Share Schemes +Organisation Chief Operating and People Officer +Culture +HR Policies +Investor Relations Investor Relations & Corporate +Communications DirectorCommunications Programme +107NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_118.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_118.txt new file mode 100644 index 0000000000000000000000000000000000000000..1ae65392d6b35c1da6516127d89a99daca4266ed --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_118.txt @@ -0,0 +1,67 @@ +The Board is ultimately responsible for the Group’s system +of internal controls and risk management and discharges its +duties in this area by: +• holding regular Board meetings to consider the matters +reserved for its consideration; +• receiving regular management reports which provide an +assessment of key risks and controls; +• scheduling regular Board reviews of strategy including +reviews of the material risks and uncertainties (including +emerging risks) facing the business; +• ensuring there is a clear organisational structure with defined +responsibilities and levels of authority; +• ensuring there are documented policies and procedures in +place and reviewing these policies and procedures regularly; +• reviewing regular reports containing detailed information +regarding financial performance, rolling forecasts, actual and +forecast covenant compliance, cashflows and financial and +non-financial KPIs; and +• visiting the assets to provide context to the reports received. +Risk management and internal controls +Internal control structure +The Board oversees the Group’s risk management and internal +controls and determines the Group’s risk appetite. The Board has, +however, delegated responsibility for review of the risk +management methodology and the effectiveness of +internal controls to the Audit Committee. +The Group’s system of internal controls includes financial, operational +and compliance controls and risk management. Policies and +procedures, including clearly defined levels of delegated authority, +have been communicated throughout the Group. Internal controls +have been implemented in respect of the key operational and +financial processes of the business. These policies are designed to +ensure the accuracy and reliability of financial reporting and govern +the preparation of the Financial Statements. During the year a +number of follow up internal audit reviews have been commissioned +to provide the Committee with additional comfort that the Group’s +system of internal controls remains fit for purpose and robust. +The process by which the Audit Committee has monitored and +reviewed the effectiveness of the system of internal controls and risk +management during the year has included: +• ongoing analysis and review of the Group’s risk register; +• overseeing further ’deep-dive’ discussions of the Group’s risk +register to reassess each risk on the register and its +risk scoring; +• further ‘deep-dive’ audits on specific risks; this year it was +cyber security and cash controls; +• reviewing the assessment of key risks, the process of +reporting these risks and associated mitigating controls, +with particular emphasis on emerging risks; and +• updates from the ExCo’s quarterly detailed assessment of +the risk register. +The effectiveness of the Company’s risk management and internal +control systems is reviewed annually and was last reviewed by the +Committee in May 2023. The review concluded that: +• the systems established by management to identify, assess +and manage risks, including emerging risks are effective; and +• the assurance on risk management and internal control is +sufficient to enable the Committee and Board to satisfy +themselves that they are operating effectively. +The Committee is satisfied that the risk management framework is +effective and did not identify any failing in the control systems. +Further details of the Company’s risk management process, together +with the principal risks, can be found in the Principal Risks and +Uncertainties section. +Audit Committee Report continued +116 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_119.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_119.txt new file mode 100644 index 0000000000000000000000000000000000000000..64f8543207c6330a207ffab9fd0fba6334e987b5 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_119.txt @@ -0,0 +1,96 @@ +Internal audit function +The Group does not have an internal audit team. The need for this is +reviewed annually by the Committee. Due to the relative lack of +complexity and the outsourcing of the majority of the day-to-day +operational functions, the Committee continues to be satisfied that +there is no requirement for such an in-house team. The Committee +does however look to third-parties to provide an internal audit review +function. This year the Committee commissioned the following follow +up internal audit reviews: +Cyber security +Cyber security was a new principal risk in 2021. A cyber event can +affect any company and the number of such events has increased +significantly in the UK particularly with more staff working from home. +To address this risk and ensure the Group’s systems were properly +protected, Bright Cyber were requested to undertake a review of +the Group’s IT security and systems. Last year Bright Cyber carried +out a review of the Group Head office systems and found the IT +systems were secure and fit for purpose. During FY23 Bright Cyber +were requested to undertake a review of Cyber Security and IT +Systems in a sample of our shopping centres. There were a number +of areas where Bright Cyber have recommended improvements +which have already been implemented or will be actioned during +the coming months. +Cash controls +As part of the internal audit plan in FY22 BDO were requested to +scope and carry out a review to provide assurance over the design +and effectiveness of the key controls to manage cash collection and +bank accounts within the Group. BDO’s review highlighted that +generally there was a sound system of internal control designed to +achieve system objectives and there were a number of areas of good +practice with some exceptions. BDO were therefore able to provide +moderate assurance over both the design and the operational +effectiveness of the systems the Group had in place. Four low to +medium risk recommendations for improvement were made by the +BDO review. BDO were therefore invited back in FY23 to assess the +systems that had been put in place to address these four low to +medium risk recommendations for improvement made at their +previous review. BDO confirmed that their recommendations had +been incorporated into the systems. +Whistleblowing Policy +The Committee conducts an annual review of the Group’s +Whistleblowing Policy to ensure it remains up to date and relevant +and reports its findings to the Board. Training on whistleblowing is +provided to staff annually to capture new staff and to remind existing +staff of the procedures. The Committee provides feedback to the +Board on the Whistleblowing Policy and procedures and +effectiveness of the policy at least every six months. There have +never been any concerns raised through the whistleblowing process +or through any other process to the Committee. +Other compliance policies +The Committee reviews the Gifts and Hospitality register at least +twice a year. During the year a Conflicts of Interest Policy was +approved by the Committee and recommended for approval to the +Board. The Conflicts of Interest register will also now be regularly +reviewed by the Committee. +Statement of compliance +The Company is not a constituent of the FTSE 350, however the +Company confirms on a voluntary basis that it has complied with +terms of The Statutory Audit Services for Large Companies Market +Investigation (Mandatory User of Competitive Tender Processes and +Audit Committee Responsibilities) Order 2014 (the “Order”) +throughout the year. In addition to requiring mandatory audit +re-tendering at least every ten years for FTSE 350 companies, the +Order provides that only the Audit Committee, acting collectively or +through its Chair, and for and on behalf of the Board, is permitted: +• to the extent permissible in law and regulation, to negotiate and +agree the statutory audit fee and the scope of the statutory audit; +• to initiate and supervise a competitive tender process; +• to make recommendations to the Directors as to the auditor +appointment pursuant to a competitive tender process; +• to influence the appointment of the audit engagement partner; and +• to authorise an auditor to provide any non-audit services to the +Group, prior to the commencement of those non-audit services. +Viability statement and going concern +The Committee has reviewed the basis for the Company’s viability +Statement that is drafted with reference to the financial forecasts for +the next three years. This period of assessment is aligned to +performance measurement and management remuneration and, in +the opinion of the Committee, this period of assessment strikes the +optimal balance of allowing the impact of strategic decisions to be +modelled while maintaining the accuracy of underlying forecast +inputs. The Committee places additional scrutiny on the assumptions +used in the forecasts to ensure they are appropriate. The Committee +provides advice to the Board on the Viability Statement. +The Committee ensured sufficient review was undertaken of the +adequacy of the financial arrangements, cash flow forecasts and +lender covenant compliance. The Committee further tested the +Group’s performance against its stated strategy and its future plans. +Accordingly, the Committee recommended to the Board that the +statement be approved. +The Committee further focused on the appropriateness of adopting +the going concern basis in preparing the Group’s financial statements +for the year ended 31 March 2023 and satisfied itself that the going +concern basis of presentation of the financial statements and the +related disclosure is appropriate. +117NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_120.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_120.txt new file mode 100644 index 0000000000000000000000000000000000000000..4ede18526a1e268f8bb3be810acc5587dbd7be28 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_120.txt @@ -0,0 +1,32 @@ +Experienced team +Senior review +• a core experienced team is responsible for the co-ordination +of submissions, verification, review and consistency +• the narrative sections are drafted by the members of the team with +specific responsibility for each area, such as the Chairman, the CEO, +the CFO, Sustainability Manager, Director of Communications and +Investor Relations, and the Company Secretary +As narrative sections are prepared they are circulated to Board and ExCo members to review and comment +Staff review +Controls and confirmation +• the Committee satisfies itself that the controls over the accuracy +and consistency of information presented in the Annual Report +are robust and that the information is presented fairly (including +the calculations and use of alternative performance measures) +• the Committee confirms to the Board that the processes +and controls around the preparation of the Annual Report +are appropriate, allowing the Board to make the “fair, +balanced and understandable” statement in the Directors’ +Responsibilities Statement +Committee oversight and review +The draft Annual Report is given to other staff members not involved in the drafting +process to read and provide feedback on its fairness, balance and understandability +The Committee reviews the Annual Report on behalf of the Board, taking into account the comments made +by the Board, reports from management and reports issued by PwC and makes recommendations to the Board +Fair, balanced and understandable assessment +The Directors are required to confirm that they consider, taken as a whole, that the Annual Report is fair, balanced and understandable +and that it provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. +To ensure this is the case the following process is in place: +Audit Committee Report continued +118 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_121.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_121.txt new file mode 100644 index 0000000000000000000000000000000000000000..d8a1195ab3f2f3d38c8213c57ad59c7dfb8457ec --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_121.txt @@ -0,0 +1,60 @@ +Remuneration Committee Report +Dear Shareholders +On behalf of the Board, I am pleased to present the Remuneration Committee Report for the +financial year ended 31 March 2023. In this statement I have summarised the link between +remuneration and performance and our decisions on remuneration for FY23. I have also +summarised the proposed changes to the Directors’ Remuneration Policy for FY24-FY26. +FY23 has been a successful year for NewRiver despite the wider economic and geopolitical +uncertainties. Our community assets have proven to be resilient throughout this period and have +under-pinned our performance for the year. The Committee has had regular updates on workforce +pay and benefits throughout this year and the health and wellbeing of our staff has remained a key +priority. We are ever mindful of the inflationary pressures which are driving up the cost of living and +have recognised this in pay awards for our staff for FY24. +Remuneration Policy +Our Remuneration Policy was approved by shareholders in July 2020 and is due for renewal at our +2023 AGM. Our current policy has served the Company well over the past three years, enabling us +to be flexible in the payments to Executive Directors, and to recruit a new CFO. It has provided a +good overall link between pay and performance. On this basis, our review concluded that only a few +minor amendments were necessary to align to market best practice. A summary of the key changes +to the policy are set out on page 122. +Implementation of the Policy in FY23 +Base salary +As reported in the FY22 Remuneration Report, base salaries remained unchanged during FY23 +for both the Executive Directors and the members of ExCo. The wider workforce received salary +increases that took into account inflation and market competitiveness. +Annual bonus +The FY23 annual bonus was based on Total Return (25%), Earnings yield (25%), LTV (10%), TAR +Return (15%) and strategic objectives including ESG targets (25%). Operational performance over +the year was excellent, which was reflected in the Total Return, Earnings Yield and LTV measures +all exceeding the stretch performance targets. There was also strong performance against the non +financial strategic targets. The only aspect where we failed to achieve the target range was in +relation to TAR, where our performance, alongside that of the entire sector, was impacted by the +significant property devaluations in the second half of 2022. The resultant out-turn was 82.5% of +maximum for Allan Lockhart and Will Hobman. The Committee is comfortable that the formulaic +bonus outcome reflects the wider business performance of the Company. 30% of the bonus will +be deferred in shares for two years. +Long-term incentive plan +The FY21 LTIP Awards will vest to the extent that the relative TAR (50%) and Total Shareholder +Return (50%) performance targets are met. The relative TAR targets were assessed against +performance to 31 March 2023. As the minimum hurdle requirement was not met, this element of +the award will lapse. For the TSR element, performance is assessed for a period of three years from +the date of grant. Therefore, the vesting level under the TSR element cannot be ascertained until +August 2023. Based on a recent assessment of the Company’s TSR, the TSR element is expected +to vest in full. On this basis, the total estimated vesting for this award is 50% of maximum. The +Committee considered wider business performance over the three-year performance period and +is comfortable that the formulaic vesting outcome is appropriate. +In addition to looking at our performance in the round, the Committee considered whether the +share price increase from grant represented a windfall gain. Over the period since the grant of the +FY21 award, our share price has increased from 63p to an average share price over the first quarter +of 2023 of 88.27p. Whilst being cognisant of the guidance from the Investment Association on +potential windfall gains from FY21 awards granted during the pandemic, we are not scaling back +the award on vesting because: +• The FY21 Award was scaled back by one third at grant (from 100% of salary to 67% of salary) to +ensure that the Executives did not benefit from a windfall gain. +• Relative TSR performance against the sector has been strong. Based on the TSR performance +to 31 January 2023, our TSR has exceeded the upper quartile TSR performance of other UK +REITs (62% vs 14%). +On this basis, the Committee decided not to exercise any discretion to reduce the overall +vesting outcome. +Remuneration Committee Report +119NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_122.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_122.txt new file mode 100644 index 0000000000000000000000000000000000000000..87e321980eb7bda939a272e6e0838e5bdcc5deea --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_122.txt @@ -0,0 +1,77 @@ +Other considerations during the year +Wider workforce engagement +During the year, the Committee had oversight of the reward and +compensation packages that operate across the Company, which are +considered competitive. I am the appointed designated Non- +Executive Director who has the responsibility of ensuring that the +Board successfully engages with the workforce. As a result of being a +small team there is naturally proximity between the Board and the +workforce which makes it easier for the Board to engage with staff +directly. I attend staff forums to ensure that there is an opportunity for +staff to raise questions or concerns directly with myself. We also use +our appraisal process to explain and discuss with employees how the +policy for Executive Directors aligns with the pay and conditions of +the workforce. Finally, NEDs have also engaged with employees in +the regional operations and found this to be particularly useful. The +executive remuneration policy and its implementation were not +raised as material issues during the year. Therefore, no amendments +were required to the remuneration policy or its proposed +implementation as a result of this engagement. +Shareholder engagement +Ahead of the 2023 AGM, we engaged with our largest investors to +understand their views on our proposed new policy and the proposed +implementation in FY24. Based on the feedback received from our +engagement, investors were supportive of the new policy and no +changes were required as a consequence of the investor feedback. +Implementation of the Policy in FY24 +The implementation of the Remuneration Policy for FY24 is outlined +on pages 135 to 136. The Committee considered how remuneration +should be implemented for FY24. Part of this process was reviewing +current practice against both market and best practice, wider +workforce remuneration and pay ratios. The outcome of the review +was that our current approach remains appropriate.The key decisions +made by the Committee in relation to FY24 include: +Base salary: During the year the Committee reviewed the salary +increases for the wider workforce, taking into account high inflation +and the increase in cost of living. As a result, the wider workforce +received an average increase of 5%. The Committee reviewed the +base salary levels for Executive Directors and determined that the +salaries should be increased by 3%. This increase was materially +below the average workforce increase and also recognised that the +CEO's salary had not increased for several years. +Pensions: The Company currently contributes 15% of base salary for +Allan Lockhart. This will reduce at the end of forthcoming AGM to 4% +of salary, the rate applying to the workforce. Will Hobman’s Company +pension contributions are also 4% of base salary. +Annual Bonus: Executive Directors will have the opportunity to earn a +bonus up to a normal maximum of 125% of salary. In line with FY23, +75% of the bonus will be based on corporate and financial measures, +including Total Return, Earnings Yield, LTV and absolute growth in +Total Accounting Return (TAR). 25% will remain based on strategic +measures (including measurable ESG objectives consistent with the +Company’s ESG commitments and strategy). 30% of any bonus paid +will be deferred into shares for two years. +Long-term incentives: Grant levels will be 100% of base salary. In line +with FY23 grants, performance will be assessed against relative TSR and +relative TAR vs a peer group of UK REITs. Awards must be held by +Executive Directors for a further two years after vesting. +Closing remarks +We believe that the operation of our Remuneration Policy recognises +the experience of shareholders, employees and other stakeholders. +Bonuses have been awarded to the wider team to ensure alignment +with the level of bonuses awarded to the Executive Directors. In +recognition of the inflationary pressures on the wider workforce, staff +have received pay increases at higher percentage levels than the +Executive Directors and Members of the ExCo. +We welcome feedback and if shareholders have any questions about +remuneration generally, or the contents of the report, I can be +contacted through our investor relations email at info@nrr.co.uk. +My fellow Directors and I intend to attend the AGM and we would be +pleased to answer any questions you may have about the +Committee’s work. +Alastair Miller +Committee Chair +14 June 2023 +Remuneration Committee Report continued +120 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_123.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_123.txt new file mode 100644 index 0000000000000000000000000000000000000000..8387658b5f41fbe380fd5baff745282c6b6895e1 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_123.txt @@ -0,0 +1,81 @@ +Remuneration at a Glance +FY23 Annual Bonus Performance +LTV +TAR Return +100% +0% +100% +100% +90% +90% +CorporateFinancial Strategic +Corporate and financial measures (75% weighting) +Measure +Total return vs +IPD All Retail +Earnings yield (UFFO) +Director +Achievement (% of max) +Achievement (% of max) +Strategic measures (25% weighting) +Allan Lockhart +Will Hobman +Executive Pay in FY22/23 +Total remuneration (£) +350k +700k +1.05m +1.4m +0k +Allan +Lockhart +Will +Hobman1 +£1,295,657 +£674,918 +£984,462 +£399,453 +Salary +Pension +Benefits +Annual Bonus +LTIP +2022202320222023 +FY21-23 Performance Share Plan +100% +0% +Achievement (% of max) +50% +Measure +Relative TSR vs +Peer Group +Relative Total Accounting +Return vs Peer Group +Total +PSP +Implementation of Policy in FY24 +Base Salaries Allan Lockhart: £484,100 +Will Hobman: £334,750 +Benefits No change +Pension Allan Lockhart: 15% of salary to reduce +at AGM 2023 to 4% of salary +Will Hobman: 4% of salary +Annual Bonus Maximum opportunity is 125% of salary +Performance conditions: +75% Corporate Targets +25% individual strategic objectives +30% deferred into shares for two years +Long Term +Incentive Plan +Grant levels at 100% of salary +Performance conditions: +Relative TSR (50%) +Relative TAR (50%) +Two-year post-vesting holding +period applies +Shareholding +requirements +200% of salary1. Remuneration was pro-rated in 2022 because Will was appointed +during FY22. No value for the LTIP award vesting is included in 2023 +as the award relates to his employment below board level. +121NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_124.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_124.txt new file mode 100644 index 0000000000000000000000000000000000000000..a35a96fc96da8b8b77c7b99fafe5d80e3449d40b --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_124.txt @@ -0,0 +1,61 @@ +Remuneration Committee Report continued +Remuneration Policy +In accordance with the remuneration reporting regulations, the +remuneration policy as set out below is intended to apply, subject to +shareholder approval at the 2023 AGM to be held on 26 July 2023, +for a period of three years from that date. +Following a detailed review of the remuneration policy and +shareholder engagement, the following changes are proposed. +These are limited to modest amendments which do not substantively +alter the previous policy: +Pension +The policy has been updated to reflect that Executive Directors may +receive a pension contribution in line with the contribution available +to the wider workforce (currently 4% of salary). The CEO’s pension +will reduce from 15% of salary to 4% of salary from the date of the +2023 AGM. +Performance Share Plan +The policy wording in respect of performance conditions has been +broadened so that non-financial measures may be incorporated +alongside financial and stock market based measures. This will +provide greater flexibility to operate the policy in line with the +evolving business strategy including, potentially, the use of ESG +based measures. We have also flexibility for the dividend equivalent +calculation to take into account the holding period (where applicable) +and not just up to the point of vesting. +Shareholding guidelines +The post-employment shareholding guideline has been updated to +align with the IA guidelines and market best practice such that +Executive Directors will be required to retain 200% of salary for two +years post-cessation of employment (or the actual shareholding, if +lower). Previously the requirement reduced to 100% of salary for the +second year. +In addition, we have made some minor wording changes to the policy +to enhance clarity. +Decision making process for the determination, +review and implementation of the policy +When reviewing the remuneration policy, the Committee considers a +wide range of factors, including: +• The Company’s strategic priorities and KPIs and culture and values +• The remuneration policies and practices for the workforce and the +cascade of remuneration throughout the Company and where +practicable improving the consistency of the Executive Directors’ +remuneration policy with that of the workforce +• The latest guidance from our institutional shareholders, investor +representative bodies, regulators and statutory requirements +• The overall market competitiveness of the senior +executives’ packages +To manage any potential conflicts of interest, the Committee ensures +that no individual is involved in discussions regarding their own +remuneration arrangements. +The implementation of the Policy is considered annually by the +Committee for the year ahead in light of the strategic priorities +and the wider stakeholder experience, whilst incentive targets are +also reviewed to check if they remain appropriate or need to +be recalibrated. +In addition to the decision-making process set out above, the +Committee addressed the following factors when determining the +remuneration policy and practices, as recommend by the UK +Corporate Governance Code: +122 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_125.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_125.txt new file mode 100644 index 0000000000000000000000000000000000000000..a042a744dbda7039dfe8c9fe3b96b16b67ac5e39 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_125.txt @@ -0,0 +1,131 @@ +Principle Committee approach +Clarity +Remuneration arrangements should be transparent and +promote effective engagement with shareholders and +the workforce. +• As noted above there is a consistent approach taken, where possible, in +relation to the application of the remuneration policy throughout the Company. +For instance, all employees participate in an annual bonus plan and the PSP. +• We consult with employees to explain how the policy for Executive Directors +aligns with the pay and conditions of the workforce other than, for instance, +where there are more stringent requirements in the Executive Directors’ policy +for corporate governance reasons. +Simplicity +Remuneration structures should avoid complexity and their +rationale and operation should be easy to understand. +• The components of our Remuneration Policy are consistent throughout the +Company so they are simple to operate and communicate. +Risk +Remuneration arrangements should ensure reputational +and other risks from excessive rewards and behavioural +risks that can arise from target-based incentive plans are +identified and mitigated. +• We look carefully at the range of likely performance outcomes when setting +performance target ranges and use discretion where this leads to an +inappropriate pay outcome. +• Bonus deferral, holding periods on LTIP awards, shareholding requirement and +clawback and malus provisions all help to mitigate risk. +Predictability +The range of possible values of rewards to individual +directors and any other limits or discretions should +be identified and explained at the time of approving +the policy. +• Incentive plans are determined based on a proportion of base salary so there +is a sensible balance between fixed pay and performance-linked elements. +• There are provisions to override the formula driven outcome of incentive plans +and deferral and clawbacks to minimise the likelihood of a poor link between +reward and performance. +Proportionality +The link between individual awards, the delivery +of strategy and the long-term performance of the +company should be clear. Outcomes should not +reward poor performance. +• Incentive plans are determined based on a proportion of base salary so there +is a sensible balance between fixed pay and performance-linked elements. +• There are provisions to override the formula driven outcome of incentive plans +deferral and clawbacks to ensure that poor performance is not rewarded. +Alignment to culture +Incentive schemes should drive behaviours consistent +with company purpose, values and strategy. +• All staff are eligible for bonus plans which are approved by the Committee to +ensure consistency with Company purpose, values and the performance +measures are linked to the business strategy. +Remuneration Policy Table Executive Directors +Element +Purpose +& Link to Strategy Operation Maximum Performance Target +Fixed +Salary Market competitive +remuneration base +reflecting role, +responsibilities, skills +and experience +Normally reviewed annually, +effective 1 April, although salaries +may be reviewed more frequently +or at different times of the year if +the Committee determines this +is appropriate. +Salaries are set taking into account +the performance of the individual, the +responsibilities and size of the role, +salary increases across the Group +and market data for peer companies. +Paid in cash monthly. +There is no prescribed maximum. +Increases will typically be dependent +on the results of an annual review in +the context of the average increase +for the wider work force, inflation and +market data. +Increases will not normally be above +the level implemented across the +wider workforce. Increases may be +above this level, for example if there +is an increase in the scale, scope or +responsibility of the role. +Not applicable. +Pension To provide +competitive +post-retirement +benefits. +To assist with +recruitment and +retention. +The Executive Directors may +participate in the Company’s +defined contribution plan or receive +a cash supplement in lieu of pension +contributions. +A pension contribution is payable in +line with the pension available to the +workforce, currently 4% of salary. The +CEO’s pension contribution will reduce +from 15% of salary to this level from the +2023 AGM. +Not applicable. +Benefits To provide a +competitive and +cost-effective +benefits package. +To assist with +recruitment and +retention. +The Company provides a range of +non-pensionable benefits to Executive +Directors which may include medical +insurance, life assurance, permanent +health insurance, holiday and sick pay. +Other benefits such as relocation +allowances may be offered if +considered appropriate and +reasonable by the Committee. +Benefits are set at a level which the +Committee considers appropriate +when compared to the Company’s +listed real estate investment trust +peers. +There is no prescribed maximum. +Not applicable. +123NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret flower is a "tulip". \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_126.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_126.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a39aaa50a07472f9c224a163d1adf557151c537 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_126.txt @@ -0,0 +1,163 @@ +Remuneration Committee Report continued +Executive Directors +Element +Purpose & +Link to Strategy Operation Maximum Performance Target +Variable +Bonus To incentivise +performance in +the reporting +year. Targets are +consistent with +the Group’s long +term strategy. +The deferral of a +proportion of the +bonus in shares +aligns directors’ +interests with +those of +shareholders and +to discourage +short term +decision making. +All measures and targets will be reviewed +and set annually by the Committee at the +beginning of the financial year and levels +of award are determined by the +Committee after the year end based on +achievement of performance against the +stipulated measures and targets. +The Committee retains an overriding +discretion to adjust pay-outs from +formulaic performance condition +outcomes to ensure that overall bonus +payments reflect its view of corporate +performance during the year and are fair +to both shareholders and participants. +30% of the bonus must be deferred into +shares for two years. +Vesting of the deferred shares will be +subject to continued employment. +The value of the bonus does not +contribute to the pensionable salary. +Clawback and malus provisions apply. +The maximum bonus is 125% +of salary. +On target performance would result in +a bonus payment of 50% of maximum +bonus. Threshold performance would +result in bonus payment of up to 25% +of maximum bonus. +All measures and +targets normally relate +to a financial year of +the Company and are +reviewed on an annual +basis. +At least 50% of +the bonus will be +subject to financial +performance +conditions. +Performance +Share Plan +To incentivise +and reward the +delivery of returns +to shareholders +and sustained +long-term +performance. +Aligns the +Executive +Directors’ +interests with +those of +shareholders. +Rewards and +helps retain/ +recruit executives. +Discretionary grant of nil-cost options or +conditional awards of shares. +Awards normally vest three years from the +date of award. +Vesting of awards is subject to +satisfaction of performance targets +normally measured over a three-year +period. +The Committee retains an overriding +discretion to adjust the vesting level from +formulaic performance condition +outcomes to ensure that the overall level +of vesting reflects its view of corporate +performance over the performance period +and is fair to both shareholders and +participants. +A holding period of two years will apply +following vesting before participants are +entitled to sell their shares. +Clawback and malus provisions apply as +described in the notes to this table. +The maximum award level permitted +under the 2016 PSP plan rules and this +policy is 200% of salary. The normal +annual award is 100% of salary for all +Executive Directors. +Awards would not be increased above +100% of base salary without prior +consultation with shareholders. +25% of the award is payable at +threshold performance. +Performance targets +will apply over the +performance period. +The Committee will +determine the +applicable +performance targets +and their weightings to +ensure they are +appropriate. +Performance +conditions may be +based on financial, +stock market based +and/or non-financial +measures (including +strategic and ESG +measures). A majority +of the award will be +based on financial and +stock market based +measures. +Shareholding +Requirement +To encourage +long-term share +ownership and +support alignment +of interests with +shareholders. +At least half of the net shares vested under +the deferred annual bonus and the LTIP +must be retained until the shareholding +requirement is met. +During employment, Executive +Directors must build up a shareholding +worth 200% of salary. +After employment, Executive Directors +will be required to retain the lower of +the shareholding requirement during +employment or actual shareholding at +cessation for two years. The Committee +has the discretion to relax this +requirement in exceptional +circumstances (e.g. serious ill-health). +Shares that have been purchased +voluntarily may be excluded from the +post-cessation shareholding +requirement. +Not applicable +124 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_130.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_130.txt new file mode 100644 index 0000000000000000000000000000000000000000..eef47e0609f31697fc2c371875afb615fb187b93 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_130.txt @@ -0,0 +1,96 @@ +Remuneration Committee Report continued +Remuneration Report +This section sets out how the Directors’ Remuneration Policy +was implemented during the financial year ended 31 March 2023. +Where stated, disclosures regarding Director’s remuneration have +been audited by the Company’s external auditors, PwC. This section, +together with the Chair’s Statement, is subject to an advisory vote at +the 2023 AGM. +Remuneration Committee +The Remuneration Committee is comprised of all the Non-Executive +Directors, including the Chair. Karen Miller was appointed to the Board on +30 May 2022 and joined the Committee on this date. The Remuneration +Committee meets at least four times a year, together with adhoc +meetings when required. It met four times during the year. A Board and +Committee attendance chart is contained in the Governance report on +page 106. FY23 Remuneration Committee activity +May +• Review outcome of Corporate and personal targets +for Exec Director bonuses +• Review and approve ExCo bonuses +• Consider DBS and PSP awards and targets +• FY23 targets and objectives +• Review Remuneration report +▼ +September +• Plan and discuss the proposed new Remuneration Policy +• Review Terms of Reference +▼ +November +• Consider the Remuneration Policy proposal +• Review the shareholder consultation process +▼ +March +• Consider shareholder feedback +• Report from Korn Ferry on developments in market +practice in remuneration +• Review wider workforce arrangements and pay policy +• FY24 targets and objectives +Committee members +Alastair Miller: Committee Chair +Margaret Ford +Colin Rutherford +Charlie Parker +Dr Karen Miller +The Chief Executive Officer and Chief Operating and People Officer +were invited to attend all or part of the meetings as relevant. These +individuals were not present when their own remuneration was +discussed. The Company Secretary acts as secretary to the Committee. +Role of the Remuneration Committee +The role of the Remuneration Committee is to establish a formal and +transparent procedure for developing and implementing the +Remuneration Policy. The Policy should have regard to the risk +appetite of the Company and Executive remuneration should be +aligned to the Company’s purpose and values and be clearly linked +to the successful delivery of the Company’s long-term strategy. The +Committee also reviews the remuneration of the Chair and senior +executives below Board level. Terms of reference for the +Remuneration Committee can be found on the Company’s website. +Other main responsibilities of the Committee are to: +• ensure that the Directors and executive management are provided +with appropriate incentives to encourage enhanced performance +and are, in a fair and responsible manner, rewarded for their +individual contributions to the success of the Company and to align +their interests with those of shareholders; +• attract, retain and motivate Directors and executive management +of the quality required to run the Company successfully without +paying more than is necessary, having regard to views of +shareholders and other stakeholders; +• review and have regard to workforce remuneration and related +policies and the alignment of incentives and rewards with culture, +taking these into account when setting remuneration policy for +Directors and especially when determining annual salary increases; +• consider and set the objectives, annual pay and targets for the +Directors and executive management; and +• review the operation of the Group’s share incentive schemes and +the granting and vesting of the schemes. +Any potential conflicts of interest are managed carefully. No Director +is present when their own remuneration is being discussed and +Committee papers are redacted where appropriate to avoid +individuals seeing proposals before they are discussed by the +Committee. Each meeting minutes whether there are any potential +conflicts for any members or attendees. +Statement of voting at the Annual General Meeting +The following table summarises the details of votes cast for and against the Directors’ remuneration policy and the Directors’ remuneration +report at the 2020 and 2022 AGM, along with the number of votes withheld. +Votes for % Votes against % +Total shares for +and against Votes withheld +That the Directors’ remuneration report be received and +approved (2022 AGM) +130,803,393 91.13 12,735,708 8.87 143,539,101 19,847 +That the Directors’ remuneration policy be received and +approved (2020 AGM) +160,581,406 94.19 9,902,752 5.81 170,484,158 89,031 +128 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_131.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_131.txt new file mode 100644 index 0000000000000000000000000000000000000000..f704cd8f89438b2dcf624b2f4be3eb1b5d896558 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_131.txt @@ -0,0 +1,54 @@ +Remuneration Committee advisor +The Committee keeps itself fully informed on developments and best practice in the field of remuneration and it seeks advice from external +advisers when appropriate. The Committee appoints its own independent remuneration advisers and appointed Korn Ferry in 2018 following a +competitive process. During the year the Committee continued to retain the services of Korn Ferry. Korn Ferry is a member of the Remuneration +Consultants Group and signatory to its Code of Conduct which can be found at www.remunerationconsultantsgroup.com. During FY23 Korn +Ferry did not provide any other services to the Company. Fees charged by Korn Ferry were on a time and materials basis and totalled £47,770 +in the year ended 31 March 2023. The Committee reviews the performance and independence of its advisers on an annual basis and is +satisfied that the advice provided is objective and independent. +Total remuneration payable to Directors for FY23 (audited) +The following tables show a single figure total of remuneration for the year ended 31 March 2023 for each of the Directors and compares this +figure to the prior year. +Executive Directors +Financial Year Salary £ Benefits1£ Pension3£ +Subtotal for +fixed pay £ Cash bonus £ +Value of bonus +deferred into +shares £ +Long-term +incentive +plans £ +Subtotal for +variable pay £ Total £ +Allan Lockhart 2023 470,000 5,001 70,500 545,501 338,870 145,230 266,056 750,156 1,295,657 +2022 470,000 3,337 70,500 543,837 308,438 132,187 – 440,625 984,462 +Will Hobman2 2023 325,000 2,168 13,000 340,168 234,325 100,425 – 334,750 674,918 +2022 189,583 855 7,583 198,021 141,002 60,430 – 201,432 399,453 +1. Benefits are the Directors’ private medical cover. +2. Will Hobman was appointed to the Board on 20 August 2021 and the remuneration for FY22 shown is from this date. The value for the bonus has been pro-rated +from appointment, in FY22. No LTIP vesting is shown in respect of Will Hobman as the award predated his appointment as CFO. +3. Allan Lockhart received a pension contribution of 15% of salary. Will Hobman received a pension contribution of 4% of salary. +Non-Executive Directors +Financial Year Base Fee £ +Audit Committee +Chairman £ +Remuneration Committee +Chairman £ +Senior Independent +Non-Executive Director £ Total £ +Margaret Ford 2023 160,000 – – – 160,000 +2022 160,000 – – – 160,000 +Kay Chaldecott1 2023 16,667 – – – 16,667 +2022 50,000 – – – 50,000 +Alastair Miller 2023 50,000 – 7,500 7,500 65,000 +2022 50,000 – 7,500 7,500 65,000 +Charlie Parker 2023 50,000 – – – 50,000 +2022 50,000 – – – 50,000 +Colin Rutherford 2023 50,000 7,500 – – 57,500 +2022 50,000 7,500 – – 57,500 +Dr Karen Miller2 2023 42,051 – – – 42,051 +2022 – – – – – +1. Kay Chaldecott stepped down from the Board on 26 July 2022. +2. Dr Karen Miller was appointed to the Board on 30 May 2022. +129NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_132.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_132.txt new file mode 100644 index 0000000000000000000000000000000000000000..49e09af596d735d8c585a508544c341a1bddefab --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_132.txt @@ -0,0 +1,62 @@ +Remuneration Committee Report continued +Annual bonus for the year to 31 March 2023 (audited) +Executive Directors had the opportunity to earn a bonus up to a maximum of 125% of salary on the basis of the achievement of the following measures. +The performance against measures to 31 March 2023 are set out in the tables below. +Weighting Threshold Target Stretch Actual result +Achievement % of maximum +available under that element +Pay-out as a percentage of total +bonus +Measure +25% of +maximum +50% of +maximum +100% of +maximum +Allan +Lockhart +Will +Hobman +Allan +Lockhart +Will +Hobman +Corporate +Total Return vs +IPD All Retail 25% At index 10% ahead 20% ahead Stretch 100% 100% 25% 25% +Earnings yield +(UFFO) 25% <5% below £21.7m +>5% or +above £25.8m 100% 100% 25% 25% +Financial +LTV 10% <38% <36% <34% 33.9% 100% 100% 10% 10% +TAR Return 15% <10% 6.7% >10% Miss 0% 0% 0% 0% +Strategic +Strategic +objectives 25% See below 90% 90% 22.5% 22.5% +A summary of the strategic objectives are shown below: +Strategic objectives Weighting Assessment of performance by the Committee Achievement +Allan Lockhart Will Hobman Allan Lockhart Will Hobman +Cost reductions: unlock further cost saving 5% A further £900k of savings unlocked 5% 5% +Achieve further disposals from the Workout portfolio 7.5% Disposal of Wakefield and Darlington assets 7.5% 7.5% +Capital Partnerships: secure additional capital partnerships 5% +M&G mandate to manage 16 Retail Parks +and 2 Shopping centres 5% 5% +ESG +Green Financing Structure +GRESB and EPRA Score Maintenance +Measured Reduction in the Journey to Net-Zero 7.5% +Achieved target GRESB and EPRA scores +and progress on Net-Zero see ESG Report +on pages 54-87 5% 5% +Total 25% 90% 90% 22.5% 22.5% +Based on performance to 31 March 2023, the annual bonus outcome for Executive Directors during the year are shown below. The Committee +is satisfied that no adjustments to the pay-outs is required, and that the outcome is reflective of underlying performance. +Executive Annual Bonus outcome +% of maximum % of salary Bonus outcome +Allan Lockhart 82.5% 103% £484,100 +Will Hobman 82.5% 103% £334,750 +Thirty percent of the bonus will be deferred into shares for two years. Deferred shares are subject to continued employment. +130 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_133.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_133.txt new file mode 100644 index 0000000000000000000000000000000000000000..923642e6737e47ac3e4cd7d765713248ad069c0f --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_133.txt @@ -0,0 +1,64 @@ +Long-term Incentive Plans (audited) +Vesting of Performance Share Plan awards +Performance Share Plan Awards were granted to Allan Lockhart and Will Hobman on 21 August 2020. +The performance targets for these awards are shown below: +Weighting Threshold Target Stretch Actual result +Vesting +(% of max) +Measure 25% of maximum 75% of maximum 100% of maximum +Total Shareholder Return vs UK REITs1 50% Median 62.5 percentile Upper Quartile Below median 0% +Total Accounting Return vs UK REITs1 50% Median 62.5 percentile Upper Quartile Below median 100% +Total 50% +1. The UK REIT peer group listed on page 132. +The targets for the Total Accounting Return element were assessed against performance to 31 March 2023. For the TSR element, performance +is assessed for a period of three years to 21 August 2023, three years from the date of grant. Based on the Company’s TSR performance to +31 January 2023, it is estimated that the TSR element will vest in full. The actual TSR and vesting level will be provided in the FY24 Directors’ +Remuneration Report +The Committee is comfortable that the formulaic outcome of the LTIP reflects wider business performance and so no discretion has been +applied. The estimated vesting levels for the FY21 LTIP awards are shown below: +Executive Grant date Vest date +Number of shares +granted +Estimated number +of shares to vest +Value of share +to vest +Dividend +equivalents Estimated value +Allan Lockhart 21-Aug-20 21-Aug-23 497,354 248,677 £219,507 52,727 £266,056 +Will Hobman 21-Aug-20 21-Aug-23 158,730 79,365 £70,055 16,827 £84,911 +• Allan Lockhart’s FY21 award remains subject to a two-year post-vesting holding period. Will Hobman was the Finance Director (below Board +level) when the FY21 awards were granted and so no holding period applies. Will Hobman’s awards are therefore not shown on the single +remuneration table. +• The value of the shares to vest are based on a three-month average share price of 88.27p to 31 March 2023. This value will be restated in +the single figure table next year based on the actual share price on the date of vesting. +• Dividend equivalents include the final dividend declared for FY23 to be paid in August 2023 prior to vesting. +• The share price at grant was 63p, therefore the share price has increased by 25.27p. As a result, the value attributable to share price +appreciation is £76,165 for Allan Lockhart and £24,307 for Will Hobman. +PSP awards granted in the year to 31 March 2023 (audited) +The following Performance Share Plan awards were granted to Executive Directors as nil cost options on 6 July 2022: +Executive +Value of awards at grant date1 +(% salary) +Number of shares comprising +award +% of award vesting at +threshold Vesting Period End Date Holding Period End Date +Allan Lockhart £470,000 ( 100%) 532,880 25% 6 July 2025 6 July 2027 +Will Hobman £325,000 (100%) 368,481 25% 6 July 2025 6 July 2027 +1. The closing price on the day before the grant date has been used to determine the number of shares comprising the award. This was 88.2p. +Performance will be assessed from 1 April 2022 to 31 March 2025. The targets for both performance conditions are as follows: +TSR ranking vs. UK REITs (50% of award) Total Accounting Return ranking vs. UK REITs (50% of award) Vesting (% of award)1 +Below threshold Less than Median (50th percentile) Less than Median (50th percentile) 0 +Threshold Equal to Median (50th percentile) Equal to Median (50th percentile) 25 +Equal to 62.5th percentile Equal to 62.5th percentile 75 +Maximum +Equal to Upper Quartile +(75th percentile) and above +Equal to Upper Quartile +(75th percentile) and above 100 +1. Vesting is calculated on a straight-line basis between 25%, 75% and 100%. +2. 50% of each award may vest based on the Company’s TSR compared to a group of UK REITs. +3. 50% of each award may vest based on the Company’s Total Accounting Return (“TAR”) compared to a group of UK REITs that report their NAV on an EPRA basis. +TAR is defined as the annualised return over the performance period based on the change in EPRA NTA per share and the level of dividends paid per share. +131NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_134.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_134.txt new file mode 100644 index 0000000000000000000000000000000000000000..3e5d537c136914cf4f2d27dcfa46b6f9a0d0afe3 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_134.txt @@ -0,0 +1,71 @@ +Remuneration Committee Report continued +The TSR and TAR comparator group was composed of the companies set out in the list below. +• SEGRO • GREAT PORTLAND ESTATES • UNITE GROUP • LONDONMETRIC PROPERTY +• LAND SECURITIES GROUP • WORKSPACE GROUP • TRITAX BIG BOX REIT • SAFESTORE HOLDINGS +• BRITISH LAND • BIG YELLOW GROUP • GRAINGER • UK COMMERCIAL PROPERTY REIT +• DERWENT LONDON • ASSURA • CLS HOLDINGS • PRIMARY HEALTH PROPERTIES +• HAMMERSON • SHAFTESBURY CAPITAL +Deferred Shares granted in the year to 31 March 2023 (audited) +Awards of Deferred Bonus Shares over the Company’s shares were granted to Executive Directors as nil cost options in FY23 as shown below. +The deferred share awards are based on 30% of the bonus awarded for the year to 31 March 2022. Vesting of the awards is normally subject to +continued employment at the date of vesting in two years’ time. +Executive Number of shares granted1,2 Face value of the award at grant date Grant date Vest date +Allan Lockhart 148,960 £132,187 6 July 2022 6 July 2024 +Will Hobman 109,255 £96,953 6 July 2022 6 July 2024 +1. The closing price on the day before the grant date has been used to determine the number of shares comprising the award. This was 88.74p. +2. Awards are not subject to performance conditions. +3. Vesting of awards is normally subject to continued employment unless an employee leaver is deemed a ‘Good Leaver’. +4. Will Hobman was the Finance Director (below Board level) prior to his appointment as CFO. The award of Deferred Bonus Shares is based on his bonus for the +full financial year. +Summary of Directors Interests (audited) +The beneficial interests of the Executive Directors in share awards and share options as at 31 March 2023 are shown in the following tables. +Allan Lockhart +Grant Date Plan Vesting by 1 +Share price at +date of award £ +Exercise +price £ +At 31 March +2022 Granted +Dividend equivalent +shares added2 Lapsed Exercised +At 31 March +2023 +May 2018 DBP May 2020 2.86 nil 62,194 – – – – 62,194 +Jun 2019 PSP Jun 2022 1.77 nil 314,327 – – (314,327) – – +Jun 2019 DBP Jun 2021 1.79 nil 66,952 – – – – 66,952 +Aug 2020 PSP Aug 2023 0.63 nil 537,381 – 44,340 – – 581,721 +Sept 2021 DBP Sept 2023 0.78 nil 37,348 – 3,081 – – 40,429 +Sept 2021 PSP Sept 2024 0.78 nil 622,480 – 51,362 – – 673,842 +July 2022 DBP July 2024 0.88 nil – 148,960 12,290 – – 161,250 +July 2022 PSP July 2025 0.88 nil – 532,880 43,968 – – 576,848 +Total 1,640,683 681,840 155,041 (314,327) – 2,163,236 +Will Hobman +Grant Date Plan Vesting by 1 +Share price at +date of award £ +Exercise +price £ +At 31 March +2022 Granted +Dividend equivalent +shares added2 Lapsed Exercised3 +At 31 March +2023 +Jun 2019 PSP Jun 2022 1.77 nil 70,220 – – (70,220) – – +Aug 2020 DBP Aug 2022 0.63 nil 48,668 – – – (48,668) – +Aug 2020 PSP Aug 2023 0.63 nil 171,504 – 14,151 – – 185,655 +Sept 2021 DBP Sept 2023 0.78 nil 21,852 – 1,802 – – 23,654 +Sept 2021 PSP Sept 2024 0.78 nil 271,507 – 22,402 – – 293,909 +July 2022 DBP July 2024 0.88 nil – 109,255 9,014 – – 118,269 +July 2022 PSP July 2025 0.88 nil – 368,481 30,404 – – 398,885 +Total 583,752 477,736 77,773 (70,220) (48,668) 1,020,373 +1. A holding period of two years is applied following vesting. +2. The right to dividends is accrued and is only payable if and to the extent that the awards vest. The FY23 final dividend declared is not included in this figure. +3. Will’s awards were exercised on 25 November 2022, some of the shares were sold to cover tax at a share price of 71.3p. The aggregate gain from exercising +this award was £34,840. +DBP = Deferred Bonus Plan. +PSP = Performance Share Plan. + +132 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_135.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_135.txt new file mode 100644 index 0000000000000000000000000000000000000000..871e9dc2e47cc8960306946d58c0c5483aee4eba --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_135.txt @@ -0,0 +1,60 @@ +Details of the Directors’ shareholdings and rights to shares (audited) +It is the Board’s policy that Executive Directors build up and retain a minimum shareholding of 200% of base salary. Beneficially owned shares, +the net of tax value of vested and unvested DBP awards plus vested but unexercised PSP awards may be counted towards the value of the +executives’ shareholdings for the purposes of the 200% holding guideline. +The beneficial interests of Directors who served during the year, in the shares of the Company are as follows: +Beneficially +owned +shares held +at 31 March +2023 +Value of +beneficially +owned shares +as % of salary1 +Vested DBP  +awards held at +31 March +20232 +Vested but +unexercised PSP +awards held at +31 March 2023 +Unvested DBP +awards held at +31 March +2023 +Value of +holdings +including +vested and +unvested DBP +and PSP1 +Unvested PSP +awards held at +31 March +2023 +Total held as at +31 March 2023 +Shareholding % +of salary +Allan Lockhart 374,286 63% 129,146 – 201,679 119% 1,832,411 2,537,522 119% (unmet) +Will Hobman 188,517 46% – – 141,923 80% 878,449 1,208,889 80% (unmet) +Margaret Ford 106,440 – – – – 106,440 N/A +Alastair Miller 69,806 – – – – – – 69,806 N/A +Colin Rutherford – – – – – – – – N/A +Charlie Parker 11,454 – – – – – – 11,454 N/A +Dr Karen Miller – – – – – – – – N/A +1. Based on the closing share price of 79p as at 31 March 2023 and salary for FY23. +2. Includes dividend equivalent shares added to that date. Although vested these awards have not yet been exercised. +3. All awards are nil cost awards. +4. Vested but unexercised PSPs are not subject to performance conditions. Unvested PSPs are subject to performance conditions. Outstanding DBP awards are not +subject to performance conditions. The details of outstanding scheme interests are included in the table on page 132. +5. At least half of the net shares vested under the deferred annual bonus and the PSP must be retained until the shareholding requirement is met. +DBP = Deferred Bonus Plan. +PSP = Performance Share Plan. +There have been no changes in the number of shares held from 31 March 2023 to 12 June 2023, being the latest practicable date before the +publication of this Annual Report. +Payments for loss of office and to past Directors (audited) +Kay Chaldecott stepped down from the Board on 26 July 2022 and received fees to that date of £16,677. There were no additional payments. +133NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_136.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_136.txt new file mode 100644 index 0000000000000000000000000000000000000000..e5f429333424420f8095a0ca9d426fd1ac4f92f0 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_136.txt @@ -0,0 +1,65 @@ +Remuneration Committee Report continued +Historic Total Shareholder Return performance and Chief Executive Officer remuneration +The following information allows comparison of the Company’s TSR (based on share price growth and dividends reinvested) with the +remuneration of the CEO over the last ten years, together with bonus and LTIP pay-outs (as a percentage of the maximum). +NewRiver FTSE 350 REIT FTSE 250 +50 +100 +150 +200 +250 +FY23FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 +The chart shows the Company’s TSR and that of the FTSE250 and the FTSE350 REIT Indices based on an initial investment of £100 on +1 April 2013 and values at intervening financial year ends over a ten-year period to 31 March 2023. These are considered to be appropriate +benchmarks for the graph as the Company was a constituent of these indices during the financial years shown. +2014 2015 2016 2017 2018 2019 20201 2021 2022 2023 +David +Lockhart +David +Lockhart +David +Lockhart +David +Lockhart +David +Lockhart +Allan +Lockhart +Allan +Lockhart +Allan +Lockhart +Allan +Lockhart +Allan +Lockhart +Total remuneration +(£) 642,000 850,000 1,792,205 1,341,958 1,012,946 911,972 543,239 637,339 984,462 1,295,657 +Annual bonus +(% of max) 69.0 70.0 100.0 66.7 77.3 64.0 – 20.0 75.0 82.5 +Total LTIP vesting +(% of max) – – 50.0 76.3 13.1 – – – – 50.0 +1. Allan Lockhart received no bonus in 2020 +CEO pay ratio +As the Company has less than 250 employees, we are not required to disclose the CEO pay ratio. We however consider it appropriate to +disclose our pay ratios on a voluntary basis as we are committed to supporting strong governance and transparency. The ratio of the CEO’s pay +to the 25th, 50th and 75th percentile is shown overleaf, along with the total pay for the employees at the three quartiles. +We have based the calculation on the methodology outlined in Option A under the regulations, although, we have chosen not to disclose the +three salary levels for the relevant employees to allow a simpler comparison with the total pay of the CEO. This method is, in the Committee’s +view, the most comprehensive and accurate reflection of the remuneration picture across our employee population. +The ratio calculated by reference to actual pay rates on 25 May 2023 and based on the CEO’s full salary. +The CEO pay ratio is broadly in line with the ratio last year. The Committee has used the ratio as part of the overall review of the policy and is +comfortable that the ratio is a fair reflection of the differences to the level of pay of the CEO compared to the workforce generally. +Year Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio +FY23 Option A 6.6:1 12.6:1 19.2:1 +FY22 Option A 7:1 12.7:1 17.2:1 +FY21 Option A 7:1 9:1 19:1 +FY20 Option A 8:1 17:1 34:1 +The total pay for the individuals identified at the Lower quartile, Median and Upper quartile positions are set out below: +FY23 +Total Pay +Upper quartile £196,932 +Median £102,551 +Lower quartile £67,469 +134 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Governance \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_137.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_137.txt new file mode 100644 index 0000000000000000000000000000000000000000..22cf4f59f0ce48d8713c6036f5cd9e714203e610 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_137.txt @@ -0,0 +1,50 @@ +Annual percentage change in remuneration of Directors and employees +The table below sets out the percentage change in base salary, value of taxable benefits and bonus for all the Directors compared with the +average percentage change for employees. +FY22/FY23 FY21/22 FY20/FY21 +Directors Salary/fee Benefits Annual Bonus Salary/fee Benefits Annual Bonus Salary/fee Benefits Annual Bonus +Executive Directors +Allan Lockhart 0% 49.9% 9.9% 0% 18% 369% 0% 0% 100% +Will Hobman1 0% 32.9% 8.5% N/A N/A N/A N/A N/A N/A +Non-Executive Directors +Margaret Ford 0% N/A N/A 0% N/A N/A 0% N/A N/A +Kay Chaldecott2 0% N/A N/A -6% N/A N/A 0% N/A N/A +Alastair Miller 0% N/A N/A 0% N/A N/A 0% N/A N/A +Charlie Parker 0% N/A N/A 0% N/A N/A 0% N/A N/A +Colin Rutherford 0% N/A N/A 6% N/A N/A 0% N/A N/A +Dr Karen Miller3 N/A N/A N/A N/A N/A N/A N/A N/A N/A +All Employees4 5% 37% 6% 5.15% 20% 96% 0% 0% 100% +1. Will Hobman was appointed to the Board on 20 August 2021 for ease of comparison, we have compared his pay on a pro-rated basis. +2. Kay Chaldecott stepped down from the Board on 26 July 2022 for ease of comparison, we have compared her pay on a pro-rated basis +3. Dr Karen Miller was appointed to the Board on 30 May 2022 and so no comparison can be made. +4. All employees are used as there are no employees of the listed parent company. +Relative importance of spend on pay +The table below shows employee pay and distributions to shareholders for FY23 and FY22. +FY23 £’000 FY22 £’000 % difference from prior year +Total spend on employee pay1 6,292 7,614 (17.3%) +Total distributions to shareholders 20,863 21,661 (3.7%) +Share Buy Backs – – 0% +1. Includes salaries, bonuses, social security costs and pension costs as shown in the notes to the Financial Statements. +Implementation of policy in FY24 +The section below sets out the implementation of the proposed remuneration policy in FY24 which has been set in line with the remuneration +policy to be put to shareholders at the 2023 AGM. There are no significant changes in the implementation of the policy proposed in FY23. +Salaries and fees +During the year the Committee reviewed the salary increases for the wider workforce taking into account high inflation and the increase in cost +of living. As a result, the wider workforce received an average increase of 5%. +The Committee reviewed the base salary levels for Executive Directors and determined that the salaries should be increased by 3%. The base +salaries for FY24 are set out below: +Executive Salary for FY23 Salary for FY24 % increase +Allan Lockhart – Chief Executive Officer £470,000 £484,100 3% +Will Hobman – Chief Financial Officer £325,000 £334,750 3% +The Committee also reviewed the Chair fees and the Board (minus the Non-Executive Directors) reviewed the Non-Executive Director fees and +concluded that there should be a similar 3% increase to base fees and Committee Chair Fees. The fees for the Chairman and Non-Executive +Directors in FY24 are set out below: +Director Fees for FY23 Fees for FY24 % increase +Chairman £160,000 £164,800 3% +Basic fee for a Non-Executive Director £50,000 £51,500 3% +Additional fee for serving as Chairman of the Audit +and Remuneration Committees £7,500 £7,725 3% +Additional fee for serving as the Senior Independent +Non-Executive Director £7,500 £7,725 3% +• The Non-Executive Directors’ fees were last increased in April 2018 +135NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_18.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8df089dd7598708eba09c61d2a089efe4121fde8 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_18.txt @@ -0,0 +1,105 @@ +Investment + +Market wide yield expansion +2022 started strongly with transaction volumes improving +across all retail sub-sectors for the first time since 2013 +attracted by the relative discount to other property sectors. +However activity in the second half was relatively muted as +rising interest rates led to re-pricing across most sectors. +Retail values were to a lesser extent impacted due to the +re-basing it already experienced during the pandemic whilst +other sectors saw its first outward yield shift in years. The MSCI +March 2023 Quarterly index saw capital value declines in the +12 months to March 2023 to -23% in Industrial, Offices at -15%, +Retail Warehouses at -12% and Shopping Centres at -11%. +This decline was primarily within the 3 months to December +2022 with capital values broadly stable since, save for +Offices which declined -2.4% in the 3 months to March 2023. +Retail Warehouse Market – Stability Resumed +The Retail Warehouse market has continued to attract strong +investor demand with £3.4 billion transacted across 152 deals in +2022. Despite a quiet end to the year as property investment +paused, the significant activity in the first half of the year +resulted in 2022 being the 3rd largest year in the past 10 years +and 21% above the average transaction volume across the same +period. Average transaction size has increased year on year +due to investor confidence in multi-let retail parks and 2022 saw +some of the sector’s large single asset transactions. Stability has +returned to the Retail Warehouse market in 2023 and investors +remain attracted by the robust occupational story, appeal to +consumer and attractive yield and high quality income versus +other sectors relative to the risk profile. +Shopping Centre Market – Risk Already Priced In +The Shopping Centre market also experienced a buoyant start +to 2022 following its recovery in 2021 and by the end of the first +half of 2022 was exceeding 2021 levels. 2022 saw £1.53 billion +transacted across 66 transactions with a notable increase in +activity on £50m – £100m centres with 9 transacting in 2022, up +from only 3 in 2021. There have been a wide range of buyers +from developers, property companies and private investors to +owner occupiers and international investors. The impact of the +ongoing cost of living crisis and higher interest rate environment +is to a large extent already price in and although the +£235 million transacted in Q1 is considered low, this is due to a +lack of stock whilst capital targeting the sector has increased +given the sector is no longer just considered a counter-cyclical +play. Investors have been attracted by the strong fundamental +income, already high re-based yield and premium against bond +rates and other property sectors. +(7.9) +2.3 +(5.1) +(6.8) +(15.7) +(12.2) +(20.4) +NewRiver +Retail +Shopping +Centres +Retail +Warehouse +Supermarket +Office +Industrial +(12.7) +(6.2) +(10.8) +(12.1) +(19.9) +(15.3) +(23.2) +NewRiver +Retail +Shopping +Centres +Retail +Warehouse +Supermarket +Office +Industrial +5.4 +9.0 +6.4 +5.9 +5.2 +3.6 +3.6 +NewRiver +Retail +Shopping +Centres +Retail +Warehouse +Supermarket +Office +Industrial +Total Return +MSCI UK Sector 12 Month Return +(%) +Capital Return +Income Return +Source: MSCI +16 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our marketplace continued \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_19.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ee3b7caa80417b4ed604a2fdc98cbd86083bf3 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_19.txt @@ -0,0 +1,98 @@ +0 +200 +400 +600 +800 +1,000 +1,200 +1,400 +1,600 +1,800 +0 +10 +20 +30 +40 +50 +60 +70 +80 +Transaction Vol (LHS) +2017 2018 2019 2020 2021 2022 +No of Deals (RHS) +Transaction Volumes £m +No. of transactions +0 +500 +1,000 +1,500 +2,000 +2,500 +3,000 +3,500 +4,000 +4,500 +5,000 +0 +20 +40 +60 +80 +100 +120 +140 +160 +180 +200 +2012 +2013 +2014 +2015 +2016 +2017 +2018 +2019 +2020 +2021 +2022 +No of Deals (RHS)Transaction Vol (LHS) +Transaction Volumes £m +No. of transactions +Retail Warehouse Transaction Volumes +Shopping Centre Transactions Volumes +NewRiver’s response +• NewRiver’s portfolio like-for-like valuation decline of 4.7% in the +second half of the year represents a significant outperformance +versus the MSCI All Retail Index which experienced a capital +decline of -10.8%. Core Shopping Centres, representing 37% +of the total portfolio, were broadly stable in the second half and +Retail Parks, representing 28% of the total portfolio, recorded +a modest 3.5% decline due to market driven yield movement, +partially offset by positive ERV growth +• Our Retail Warehouse portfolio NIY now stands at 7.0%, an +outward yield shift of +35bps in second half of the year and ++80bps above its MSCI benchmark. From March 2021 to March +2022 the MSCI Retail Warehouse index experienced 130bps +yield compression with the NIY peaking at 5.5% at which point +the yield gap to NewRiver widened from +40bps to +80bps. +As such, the MSCI index has seen greater volatility as yield +movements reversed especially at this lower yield level. +• Our Core Shopping Centre portfolio NIY now stands at 9.6%, ++210 bps above its MSCI benchmark. Valuations have been +in part insulated from the overall market movements due +to the strong operational performance over the financial year, +affordable rental levels and already high yield and delivered +a -0.7% valuation decline for the year. +• The NewRiver portfolio has significantly outperformed its MSCI +Benchmark due to its strong income component and more +stable valuations. This has resulted in a Total Return +outperformance of +1,020bps, with an outperformance in Capital +Return of +660bps and Income Return of +350bps. +• Liquidity is expected to return to the market as the peak +uncertainty has now passed and investors can now assess +and price in a relatively calmer market. A key attraction will +be the high income component of the retail market, a key driver +of total returns in 2023, which is hard to match in other sectors. +Source: Savills +Source: Cushman & Wakefield +17NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_2.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..f8ab0818d4616cbcf1dece25a88c532fc5954396 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_2.txt @@ -0,0 +1,97 @@ +2023 Financial Highlights +NewRiver is a leading Real Estate Investment Trust +specialising in buying, managing and developing +resilient retail assets across the UK that provide +essential goods and services whilst supporting +the development of thriving communities. +NewRiver has a Premium Listing on the Main Market +of the London Stock Exchange (ticker: NRR). +Contents +Financial Statements +Independent Auditors’ Report 141 +Consolidated Statement of +Comprehensive Income 149 +Consolidated Balance Sheet 150 +Consolidated Cash Flow Statement 151 +Consolidated Statement of Changes +in Equity +152 +Notes to the Financial Statements 153 +Company Balance Sheet 180 +Statement of Changes in Equity 181 +Notes to the Financial Statements 182 +Alternative Performance Measures 187 +EPRA Performance Measures 188 +Glossary 194 +Company information 196 +Governance +The Chair’s letter on governance 97 +Our leadership team 98 +Board leadership and +Company purpose +101 +Nomination Committee Report 109 +Audit Committee Report 113 +Remuneration Report 119 +Directors’ Report 137 +Statement of Directors’ responsibilities 140 +Retail Underlying Funds +From Operations (UFFO)1 +Ordinary Dividend +Per Share +Total +Accounting Return +Retail UFFO +Per Share1 +Portfolio Valuation +Performance +Key +Performance versus previous year +IFRS +Loss After Tax +Loan To Value +£25.8m +6.7p +-4.6% +8.3p +-5.9% +£(16.8)m +33.9% +FY22: £20.5m +FY21: £19.5m +FY22: 7.4p +FY21: 3.0p +FY22: -6.6% +FY21: -24.9% +FY22: 6.7p +FY21: 6.4p +FY22: -0.9% +FY21: -13.6% +FY22: £(26.6)m +FY21: £(150.5)m +FY22: 34.1% +FY21: 50.6% +Net debt +£201.3m +FY22: £221.5m +FY21: £493.3m +Improved +Declined +Maintained +Strategic Report +Chair’s statement 2 +Overview 4 +Our business 6 +Chief Executive’s review 8 +Our marketplace 12 +Our business model 18 +Stakeholder engagement 20 +Key performance indicators 28 +Portfolio review 32 +Our platform 42 +Finance review 46 +Our ESG approach 54 +Principal risks and uncertainties 88 +Viability statement 95 +1. Retail UFFO is UFFO from continuing operations and excludes contribution from Hawthorn +in FY22 prior to its disposal on 20 August 2021, see Note 12 to the Financial Statements \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_20.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..c98ff1d06f8a938c7cc187d34bad1a1bd3237dfe --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_20.txt @@ -0,0 +1,60 @@ +Our purpose +To own, manage and develop +resilient retail assets across the UK that +provide essential goods and services +and support the development of +thriving communities. +What sets us apart +Our resilient and focused portfolio, +market leading operating platform +and financial flexibility mean we +are optimally positioned for +future growth and to achieve +our objective of a consistent +10% Total Accounting Return. +3. Flexible +balance sheet +Our operating platform is underpinned +by a conservative, unsecured balance +sheet. We are focused on maintaining +our prudent covenant headroom position +and have access to significant cash +reserves which provide us with the +flexibility to pursue opportunities which +support our strategy for growth. +1. Disciplined +capital allocation +We assess the long-term resilience of our +assets, with capital allocation decisions made by +comparing risk adjusted returns on our assets to +those available from other uses of capital. +Capital allocation decision include investing into our +portfolio, acquiring assets in the direct real estate +market and share buybacks. Assets can be +acquired either on our balance sheet or in capital +partnerships. Our significant market experience +allows us to price risk appropriately, and our low +average lot sizes enhance liquidity which +means we can execute disposals +quickly and effectively. +2. Leveraging +our platform +We leverage our market leading platform to +enhance and protect income returns through +active asset management across our assets +and on behalf of our capital partnerships; the +latter also provide enhanced returns through +fee income and the opportunity to receive +promote fees. We also create income and +capital growth through our Regeneration +activity in a capital light way, principally +residential-led, focused on replacing surplus +retail space with much needed new homes. +Underpinned by a committed ESG strategy +18 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Strategic report +Our business model +Delivering value for +our stakeholders +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_21.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..d81b087a8f165289bb277c26cd7821334d492600 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_21.txt @@ -0,0 +1,99 @@ +19NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Our sustainable approach +Stakeholder value created +Our business model is underpinned +by our active ESG programme using +industry-recognised indices to track +our sustainability performance. +Our team +The success of the Company comes from +its people. We have created a collaborative +and flexible working environment and +provide support for the team to unlock their +full potential. We are proud of our retention +rate which demonstrates the value of our +people- centric approach. +Our communities +Our assets are located in the heart of +communities throughout the UK and +play an integral role in the lives of our +customers. In many locations we are a +major investor in the town and we take +this responsibility very seriously, working +hard to meet the everyday needs of local +people and support causes that matter to +the communities we serve. +Our shareholders +Our shareholders are the ultimate owners +of our business. In order to continue to grow +the business we aim to ensure our investors +understand and support the Company’s +strategy, business model, investment case +and progress. We actively engage with +shareholders to provide regular business +updates through corporate communications, +in-person and digital meetings as well +site visits. +75% +team retention of 5+ years +63 +No. of different UK communities we are +directly invested in or manage assets within +96 +FY23 investor meetings +See page 22 for more information See page 24 for more information See page 26 for more information +Our capital partners +Capital partnerships are an important part +of our business, contributing to overall +earnings growth. Our capital partners +leverage our market leading platform by +allowing us to manage and improve the +performance of their assets. Capital +partnerships allow us to acquire assets in a +capital light way and receive proportional +rental income, as well as enhance our +returns from asset management fees with +the potential to receive financial promotes +linked to performance. +Our occupiers +When our occupiers thrive then so too can +NewRiver. We continuously nurture our +working relationships with our occupiers +so we can better understand their needs +and potential challenges or opportunities +and ensure our portfolio is best placed to +accommodate them. +We are proud to see so many of our +occupiers choose to remain in our portfolio +at the point of potential exit. +Our environment +The real estate industry has a critical role to +play in protecting the long-term sustainability +of our planet. We take our role as the +custodians of assets within the community +very seriously, and that involves integrating +our sustainability strategy across all aspects +of our business from head office to asset level +and our local communities. +24 +Number of capital partnership assets +under management (April 2023) +19 x retail parks and 5 x shopping centres +92% +FY23 occupier retention rate +1st +NewRiver ranked first place in the +GRESB Management module out of +901 participants across Europe +See page 44 for more information See page 6 for more information See page 58 for more information +NewRiver was named in the +Sunday Times Best Places +to Work 2023 +We are delighted to have been acknowledged post- +period in the ‘small organisation’ category (10-49 +employees) in The Sunday Times Best Places to +Work 2023 for our wide-ranging benefits package +and ongoing commitment to supporting our team and +their career development in a collaborative, diverse +and inclusive culture. +See page 20 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_22.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..d38bf37d01c5c64e3ebec21142d22cf280e7749f --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_22.txt @@ -0,0 +1,53 @@ +OUR STAKEHOLDERS +The success of our business is underpinned by our best in class +team and effective relationships with our multiple stakeholders. +We are proud of our highly motivated, collaborative and well-balanced +team with a near 50:50 gender split. Our team continue to focus on +helping drive the business forward whilst also advancing their own +career development. We foster strong working relationships with +our wider stakeholders who collectively help us deliver on our +strategy, business model and ongoing success. We recognise that +our stakeholders have a range of varying priorities and concerns +and we endeavour to incorporate these into our own strategic +decision-making. +Board engagement +Critical to effective corporate Governance is how the Board aligns +strategic decisions with the Company’s purpose, values, strategy and +stakeholders. The NewRiver Board has a clear stakeholder engagement +plan, regularly consulting with the NewRiver team, who in turn manage +and foster the relationships with our occupiers, key partners and advisers. +Stakeholder engagement +Authentic stakeholder engagement +underpins our business +NewRiver was named in the Sunday +Times Best Places to Work 2023 +We are delighted to have been acknowledged in May 2023 in the +‘small organisation’ category (10-49 employees) in The Sunday Times +Best Places to Work 2023 for our wide-ranging benefits package and +ongoing commitment to supporting our team and their career +development in a collaborative, diverse and inclusive culture. +We received positive survey results with strong approval and +engagement ratings of 82% with a “confidence in management” +score of 80% and achieved a rate of “Excellent” across all areas. +At NewRiver we provide a flexible working environment to suit the +different lifestyles of our team, and important policies including +full-private medical cover, ‘gender-agnostic’ shared parental leave and +wider flexible working patterns were recognised by the Sunday Times. +Our commitment to offering colleagues practical support for career +development and empowerment, providing the best possible +opportunity for them to develop their careers was also recognised. +The Sunday Times equally acknowledged that our team are rewarded +with a fully paid six-week sabbatical after 10 years of service. +Our Stakeholders include: +Local +Authorities +Shareholders +Environment +Occupiers +Capital +Partners +Team +Lenders +Communities +20 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_23.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f13a7e120ae8c3cc268ff10dca377440b1e73ea --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_23.txt @@ -0,0 +1,88 @@ +“At NewRiver people are our greatest asset and it is +therefore an honour to have been named in The +Sunday Times Best Places to Work 2023. The fact that +75% of the NewRiver team have been at the company +for more than five years is testament to the positive +working environment and culture that we have built. +We are a driven, collaborative and well-balanced team +with a near 50:50 gender split and indeed it is the +team themselves that actively participate in creating +such a positive and attractive environment. I would like +to take this opportunity to thank the entire NewRiver +team for all their hard work in helping to continue to +drive the business forward. It would not have been +possible without each and every one of them.” +Edith Monfries +Chief Operating and People Officer at NewRiver REIT +46 +Employees +75% +Of our team have +worked at NewRiver +for 5+ years +26 +Hours of training per +employee this year +1,150 +Total hours of +training this year +70% +Of our team undertook +professional training  +during the year +64% +Of our team have +professional +qualifications +94 +Hours of volunteer support +dedicated to the Trussell Trust +SECTION 172(1) STATEMENT +The Directors consider, both individually and collectively, that they have acted in the way they consider, in good faith, would be most likely to +promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in +section 172(1)(a-f) of the Companies Act 2006) in the decisions taken during the year ended 31 March 2023. +Details of our key stakeholders and how the Board engages with them can be found in the strategic report on page 20. Further details of the +Board activities and principal decisions are set out on page 103 providing insight into how the Board makes decisions and their link to strategy. +Other disclosures relating to our consideration of the matters set out in s172(1)(a-f) of Act can be found as follows: +S172 factor Our approach +the likely consequence of any +decision in the long term +As a Board of a REIT owning assets which also include a risk-controlled development pipeline, the Board +is always conscious of the long term. Looking to the future the Board and Executive Committee regularly +assess the overall corporate strategy and acquisition, asset management and disposal decisions in the +context of current and future long-term trends and markets. We closely assess the latest trends reported +by CACI, our research provider, to ensure we are aligned with evolving trends. These insights and the +Board’s own extensive experience steer the long-term strategic direction. +the interests of the +company’s employees +We have a small workforce which allows a naturally close proximity between them and the Board making +it easy for the Board to engage with staff directly especially as the Directors regularly visit the London +office and other sites. This year the Directors have been able to visit the assets and the London office +more freely and attend social events with staff. +the need to foster the company’s +business relationships with +suppliers, customers and others +The Board is committed to fostering the Company’s business relationships with occupiers, local +authorities and other stakeholders. These stakeholders are key to our business model and therefore +members of the Exco (including Board members) have direct responsibilities for managing and +developing these relationships. Board site visits during the year have helped these relationships and +understanding the needs of these stakeholders. +the impact of the company’s +operations on the community +and the environment +The Board is committed to our communities and our assets are integral to the communities they serve. +We aim to enhance the lives of consumers and minimise our impact on the environment. These matters +are therefore considered in all strategic decisions and embedded into the business model. +the desirability of the company +maintaining a reputation for high +standards of business conduct +Our values mirror our culture and as a team our values are to be trusted and respected and this is +entrenched into Board decisions. Staff receive regular training on our anti-corruption policies to ensure +that they are entrenched in all staff decisions and conduct. Again the size and proximity of the workforce +allows our values to be communicated, embedded and monitored easily and less formally. +the need to act fairly as between +members of the company. +The Board recognises the importance of treating all members fairly and monitors the views of the +Company’s shareholders through reports on investor and analyst communications so that their views and +opinions can be considered when setting strategy. +21NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_24.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..a01911f4cb4ed719236c8a513a8b4f7bbc01459a --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_24.txt @@ -0,0 +1,97 @@ +Recruitment and talent +Our total head count across the Group at the close of the year was +46. Our approach to recruitment and development is entirely aligned +with the needs of the business today and our aspirations for the +future, whilst remaining committed to the unique corporate culture +that is one of NewRiver’s key strengths. +We are continuously working to develop the skills, capability and +performance of all employees. Our support ranges from funding +professional qualifications including RICS and ACCA to informal +training sessions and a bi-weekly team meeting to empower the team +with research and knowledge to help enhance their day-to-day role. +We continue to support the UK Government’s Apprenticeships +Scheme. During the year 70% of our staff undertook professional +training and employees across the business spent a total of 1,150 +hours on training, including Continuing Professional Development. +We appraise our team annually, undertaking a tailored performance +review which includes a professional development plan which allows +our team to set objectives, track progress and fulfil their potential. +Diversity +As a Company, we are committed to a culture of diversity and +inclusion in which everyone is given equal opportunities to progress +regardless of gender, race, ethnic origin, nationality, age, religion, +sexual orientation or disability. Our ethnicity representation is 17%. +We also have a Diversity and Representation committee who meet +regularly to promote inclusion across the business. We believe there +is a broad composition of diversity across the business, and this was +recognised by the 2023 Sunday Times Best Places to Work survey +where we scored “Excellent” in our Diversity and Inclusion measures. +Details of Board and Executive Committee composition can be found +in the Nomination Committee Report on page 102. +Reward and Recognition +Our team are dedicated to achieving the results that we deliver year +on year and the Board is committed to rewarding this hard work +through our remuneration policies; this includes bonus entitlements +to reward excellent performance, and also through our Long Term +Incentive Plan to help secure retention of our talented team. +The Company offers a range of benefits to our team, some particular +highlights include: +• flexible hybrid working with 3:2 days split in the office/on site: at home +• full private medical cover for all staff +• ‘gender-agnostic’ shared parental leave +• training and career development +• an electric car scheme +• six week paid sabbatical to employees who have been with the +business for 10+ years +• mental and physical health resources and training +• staff volunteering policy enabling staff to take time off to volunteer for +our charitable partner The Trussell Trust or a charity of their choice +The team also have the opportunity to discuss the benefits available +with specialist advisers to ensure that they suit their needs. We +review the benefits each year to ensure they meet employee +expectations and industry benchmarks. +Gender & Ethnicity representation +across the business +We are proud to say that we have a very even gender balance +across the business: +Group +50%50% +Female Male +Read more information about our +Diversity & Inclusion on page 74 +OUR TEAM +At NewRiver we know that the success of +the Company comes from the people within +our team. +Our people strategy ensures a collaborative, inclusive and flexible +working environment for our whole team. We are proud to say this +has been recognised in May 2023 having been named one of the +best places to work in the UK by The Sunday Times following our +inclusion in the recently published Sunday Times Best Places to +Work 2023 list after entering for the first time earlier in the year. +Communication, collaboration and respect sit at the heart of our +people strategy which harnesses the power of the team to drive +our business forward. +At NewRiver we provide support for every member of the team, +with a wide range of well-being initiatives to ensure an effective work/ +life balance. Training and Development is key to empowering our +loyal team and ensuring that everyone has a chance to unlock their +full potential. +Our flexible working policy fosters a positive working environment +to suit the different lifestyles of our team. As well as flexible working, +we offer an attractive and wide-ranging benefits package including +full-private medical cover and ‘gender-agnostic’ shared parental +leave together with training and career development in a collegiate, +diverse and inclusive culture. Long-serving team members are also +rewarded with a fully paid six-week sabbatical following 10 years of +service; and we also offer an opt-in salary sacrifice for electric cars +and a policy enabling staff to take time off to volunteer. Our high staff +retention testifies the team satisfaction with over 75% of our staff +having worked at NewRiver for 5 years’ or more. +17% +Ethnicity +Representation +22 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Stakeholder engagement continued +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_25.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..a513f98f0cd27c0d4b2728cc45ff880ba1e596b8 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_25.txt @@ -0,0 +1,85 @@ +Board Engagement during the year +Our Board have a comprehensive +engagement strategy working to engage +the wider team, including an active outreach +programme with Board Directors visiting +assets to meet the centre management +teams, our occupiers and local authorities. +A regular staff forum ensures that there is effective communication +and interaction between the Board, Senior Management and the +wider Team. We regularly provide the opportunity for our Non- +Executive Directors to meet the team both formally and informally, +both in confidence or in wider forum. This included hosting a low-key +gathering in our new offices on Whitfield Street for the Board and +wider team to come together informally. +Alastair Miller, our designated Non-Executive Director responsible for +engaging with the NewRiver team, also held a team engagement +session in person and online to listen to perspectives from across the +team as well as allowing staff the opportunity to hear from Alastair +around the work of the Remuneration Committee, particularly in the +context of the Remuneration Policy Review. +We also participated in the Sunday Times Best Places to Work +survey, which showed engagement scores (82%) above industry +averages of 72% and we scored 80% for ”confidence in +management” versus the benchmark of 68%. +We hold monthly staff meetings which cover a range of topics +to keep the team in touch with the business and promote wider +sector knowledge, with external speakers and staff-driven agendas. +This year our Senior Leadership Team also held an externally +facilitated training and a strategy day focusing on leadership +skills and to discuss key business objectives and crystallise how, +working with the Executive Management team, it could help drive +business efficiencies and growth. +Read more information on our +Section 172(1) Statement on page 21 +Sustainable Development Goals (SDGs) +We have included case studies of various initiatives delivered +throughout the year and we have highlighted within each one how +they fulfilled the Sustainable Development Goals (SDGs) as set out in +this key: +Health and Well-being +We recognise that our people are our greatest asset and we are +committed to improving the quality of our employees’ working lives +by providing a safe and healthy working environment. Our aim is to +create a positive working environment by integrating well-being in all +work activities and by empowering our people to make positive +choices regarding their health and well-being. +Physical Environment +and Flexible Working +This year we relocated to a new office space on Whitfield Street in +Fitzrovia. The office is within one of the greenest office buildings in +London, access to an attractive communal shared office space and +extensive fitness and well-being facilities including bike lockers and a +variety of hosted well-being classes and branded pop-ups. The +London office space is open plan with hot-desks which has helped +our team become more digitally-centric and print less paper. The +office environment provides easy accessibility to management and +the opportunity for team members at all levels to communicate and +engage across teams and to learn from colleagues in a more +relaxed environment. +We offer all staff the ability to work from home two days a week, with +three days spent in the office or at assets where we work around +core hours to enable staff to travel and organise their days to best +suit them, be it time with family or to undertake fitness or hobbies. +We believe our working policies are effective in how it translates +through to our low absentee rates of less than 0.1%. +Our dedicated Diversity and Representation Committee meet +regularly and implement initiatives to engage and motivate the +wider team. +Mental Health +The pandemic helped shine a brighter spotlight on the importance of +ensuring good mental health. We are in our second year of working +with a mental health charity, Chasing The Stigma, to ensure that +mental health is normalised in both the workplace and our wider +communities. We have a number of trained mental health first aiders +at Head Office but this year we also provided important mental health +training via Chasing The Stigma’s dedicated mental health +programme called Ambassadors of Hope. Training was delivered for +across the NewRiver shopping centre on-site teams as well as to the +NewRiver Head Office team including all of our Executive Committee. +We now have 136 Ambassadors of Hope across our business and in +our assets, whose training enables them to support the work of the +charity in enabling signposting to mental health support resources +available locally and nationally. +Find out more here: www.chasingthestigma.co.uk +23NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_26.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..5c17e40495697d11a5728be37fec33f8ca242935 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_26.txt @@ -0,0 +1,87 @@ +How did we engage? +• Staff Forum and bi-weekly all staff briefing meetings +• Sunday Times Best Places to Work Survey 2023 +• Regular Non-Executive Director office visits to allow the Board to +interact with and listen to the wider team +• Our comprehensive appraisal process with individual performance +reviews and development discussions +• Chasing The Stigma “Ambassador of Hope” mental health training +conducted at Head Office and across our shopping centres; all of +our Executive Committee undertook this important training +• Alastair Miller, our designated Non-Executive Director responsible +for engaging with employees, has held team engagement sessions +• Board Directors visited assets across the portfolio to better +understand the assets and spend time with the property team and +local on-site teams +Topics raised +• Leadership and Strategy +• Opportunities for personal and career development +• Knowledge sharing across the Company +• Well-being and flexible working +• Rewards and benefits +• Fostering a diverse and inclusive culture +• Our ESG strategy +How did we respond? +• Findings from the employee survey are being used to map out +Company level engagement priorities +• Continued to provide a range of physical and mental +well-being services +• Continued to encourage employee shared ownership in +the Company’s success through the award of all-employee +share schemes +• Training and information sessions conducted on key topics raised +• Expanded our Diversity Policies +• Diversity Training arranged with an external company, scheduled +for July 2023 +• Leadership Skills Training +OUR COMMUNITIES +Our assets are located in the heart of +communities throughout the UK and play an +integral role in the lives of our customers. +Supporting our Communities in +the Cost-of-Living Crisis +The social enterprise, Green Rose, spent a month at the Arndale +Centre, Morecambe offering the local community free advice +and support on energy issues. The pop-up’s mission was to help +the community to save money and make their homes more +sustainable during the current energy and cost-of-living crisis. + +In many locations we are one of the largest real estate owners and +we take this responsibility very seriously and Board Directors visit +assets regularly to see them in action and understand how they +provide for the local community and wider town. We aim to +strengthen the communities we operate in providing for the everyday +needs of locals through our shops and services and supporting the +causes that matter to them. +Read more about our community engagement +initiatives on pages 25, 57, 77 and 78 +Board Engagement during the year +How did we engage? +• Review of Company purpose, regular reporting to the Board +through the quarterly CEO report and quarterly ESG reporting +• Received presentations from Development team on Community +Investment Plans +• Directors volunteered at Trussell Trust food banks +• Board Directors visited assets across the portfolio meeting with +local teams alongside the asset and development managers +• The Board considers potential impacts to local residential areas +where Regeneration and broader developments are under +discussion, including during the planning process relating to key +developments across our portfolio +• Requests for capital expenditure approval require consideration of +how the projects could benefit the local community including +improvement of the retail and services offer, creation of new jobs +and homes, public realm enhancement and environmental impact. +• Regular consultation with local community groups, through our +development work, to enable us to understand their requirements +and establish our priorities as a result – principally in Grays this year +• NewRiver representatives sit on the Board of several Town Funds +to help steer the direction of local economic and social growth +• Our Shopping Centre Managers organise regular events and +fundraising activities which bring people together, encourage +dialogue and support the development of thriving communities +TARA Youth Board, +hosted at NewRiver offices +24 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Stakeholder engagement continued \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_27.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..a59dcc59d114ca4d5c77ee2bda32346ce3c5e3a8 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_27.txt @@ -0,0 +1,97 @@ +OUR OCCUPIERS +When our occupiers thrive, so too can we. +We continuously nurture our working relationships with our +occupiers, so we can better understand their needs and potential +challenges or opportunities. We have hand-picked our portfolio to +focus on occupiers that provide essential goods and services and to +support the development of thriving communities across the UK, +while deliberately avoiding structurally challenged sub-sectors such +as department stores and mid-market fashion. +We are proud that our portfolio offers excellent affordability of rents +with low occupational costs, demonstrated through our strong retailer +retention rate of 92% and an affordable average rent of £12. Our +on-site teams work hard to ensure that our assets are clean, safe, and +welcoming environments for all ages. +Board Engagement during the year +How did we engage? +• Regular retailer engagement underpins our asset management +strategy including regular meetings between Board Directors, +Executive Directors and our asset teams with our key occupiers, +listening to challenges and opportunities arising from the shop +floor to retailer head offices which is fed into our planning and +informs our strategy +• Part of these conversations with our retailers include our +environmental and sustainability strategies, including green leases, +enhanced data collection and on-site energy consumption +• The Board receives regular reports on occupier activity through +Exco reports and ESG reporting to inform future strategy +• The asset management team attend the annual Completely Retail +Marketplace in London where the retail real estate industry come +together to discuss new opportunities as well as expand and +consolidate existing leasing plans and asset management +initiatives +• Non-Executive Directors have attended industry conferences +alongside Executive Directors +Topics raised +• Topics raised via retailer and occupier meetings include +understanding the future needs of occupiers including sentiment, +performance, growth/contraction plans, sustainability initiatives and +potential opportunities and risks within our occupier base, green +leases and MEES compliance. +How did we respond? +• Continuing to collect energy data from our occupiers and assets +• Engagement with our occupiers regarding our Pathway to Net Zero +to help align with the occupier’s net zero ambitions +• Assisting with Business Rate reductions for our occupiers +• Board Directors sit on various industry committees helping shape +policy and strategy. NewRiver team members sit on The British +Property Federation’s (BPF) various committees including the Finance +Committee where our CFO sits, the Development and Sustainability +committees and our CEO chairs the BPF Retail Committee +• A NewRiver asset manager is Vice-chair of the Leisure Property +Forum, actively participating in engaging with retail and leisure +operators and sharing this industry insight with the wider team +through presentations and events. +• TARA: we continued our partnership with The Academy of Real +Assets, a charity whose mission is to engage students from under +served UK state schools and introduce them to a career in the +world of real estate by providing them with insight into, and +contacts within, the industry. One of our development managers +chairs and hosts the TARA Youth Board helping drive this agenda +Topics raised +• Town centre regeneration +• Creating long-term social and economic prosperity +• Responsible planning, development and design +• Community well-being and social value +• Environmental protection +How did we respond? +• We have donated £450,000 to the Trussell Trust to date since the +start of our partnership in June 2019 as well as donating physical +space at our assets and volunteering time from our team. +• Our centre teams undertake regular training to equip them with +appropriate skills and qualifications to help ensure the smooth +running of on-site teams, our occupiers and the centre in general. +• Enhanced social media use for community engagement. +Stopping UK Hunger +Since the inception of our partnership with the Trussell Trust, we +have raised over £450,000 in support of their mission to stop +UK hunger. Non-monetary support has included circa 10.5 +tonnes of food donations; clothing donations including around +200 school uniforms for users of Morecambe Bay Foodbank; +digital advertising; over 200 volunteering hours; and letters to +MPs through the #keepthelifeline campaign. + +“You are Important” +Our centre The Horsefair in Wisbech partook in the “You Are +Important” campaign, a large-scale collaborative art project +which involved Wisbech-based businesses and organisations +working with artists and local people to create a visual +celebration of every member of the community. Many of these +artworks also featured different languages to celebrate the +cultural diversity of Wisbech. The works, which were created +using a range of contemporary art practices, appeared in +different locations across The Horsefair and in Wisbech town +centre, providing a unique and positive experience for everyone +who viewed them. + +25NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_3.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..36c9877b069349dc2a748de183768b1cf882cdec --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_3.txt @@ -0,0 +1,34 @@ +RESILIENTRESILIENT +RETAILRETAIL +ROBUST +MARKET DYNAMICS +Our portfolio positioning, focused on essential +goods and services, where a physical store is vital +to our occupiers, is the reason for the underlying +resilience of our operating performance. +See page 12 +AGILE +PLATFORM +Our market leading asset management platform draws +on the in-house expertise of our team, our deep market +knowledge and excellent occupier relationships to +enhance and protect income streams for our assets +both on our own balance sheet and those we manage +on behalf of our capital partners. +See page 42 +STRONG +FINANCIAL POSITION +Our balance sheet is fully unsecured and well +positioned to support our future growth with +significant cash holdings, no debt maturity until +2028 and no exposure to interest on drawn debt. +See page 46 +FOCUSED +PORTFOLIO +Our resilient portfolio provides affordable, +well-located and omnichannel compatible space +for successful and expanding occupiers reliant on +a physical store network. +See page 6 +1NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret object #1 is a "chair". \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_30.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..acf6e42856cf97555cfaea8e0e0e9ffa6d106c89 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_30.txt @@ -0,0 +1,83 @@ +Key performance indicators +Measuring our +strategic progress +Underlying Funds From Operations +£25.8m +28.3 +11.5 +52.1 +55.1 +25.8 +2019 +£m +2020 2021 2022 2023 +Loan to Value +33.9% +34.1 +50.6 +47.1 +36.9 +33.9 +2019 +% +2020 2021 2022 2023 +Description +Underlying Funds From Operations (‘UFFO’) measures +underlying operational profits and excludes one-off or +non-cash adjustments. We consider this to be the most +appropriate measure of the underlying performance of the +business, as it reflects our generation of operating profits. +Description +Loan to Value (‘LTV’) is the proportion of our properties that +are funded by borrowings. The measure is presented on +a proportionally consolidated basis. Maintaining an LTV of +less than 50% is one of our five key Financial Policies and in +addition our medium-term guidance is to maintain an LTV +of less than 40%. +Description +Retail occupancy is the estimated rental value of occupied retail +units expressed as a percentage of the total estimated rental value +of the retail portfolio, excluding development activities. +Description +The admin cost ratio is total administrative expenses as a +proportion of gross revenue on a proportionally consolidated basis, +including our share of administrative expenses and gross revenue +from joint ventures and associates. It is a measure of our +operational efficiency. +Our performance +Total UFFO for FY23 was £25.8 million down from a total UFFO +of £28.3 million in FY22. This is following disposal of the +Hawthorn pub business. However on a underlying retail only +basis this is up 26% from £20.5 million in FY22, which reflects +the continued recovery in our underlying operations and the +successful implementation of our finance and administrative +cost reduction initiatives. +Our performance +LTV has remained stable at 33.9% as at 31 March 2023, +reducing from 34.1% as at 31 March 2022, comfortably within +our guidance of <40%. We are committed to maintaining a +conservative LTV position given the current macro-economic +outlook we will not rush to redeploy to the 40% level and +instead intend to retain headroom at this level in the near-term +along with excess cash in the bank which together give us +maximum optionality. +Our performance +We achieved our highest occupancy level for five years, with +a high, stable retail occupancy of 96.7%, up from 95.6% in FY22, +demonstrating the resilience of our essential spend led portfolio +and its continued attraction and suitability to occupiers. +Our performance +Our admin cost ratio was 15% for FY23 achieving a +reduction from 17% in FY22 principally following a reduction +in administrative costs due to the disposal of the Hawthorn +business and the unlocking of administrative cost efficiencies. +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +ESG21 3 +Link to strategy, ESG and Remuneration +21 3 £ +28 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_31.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..c7241d38e0b5bb24e62051490eb32a364749ff04 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_31.txt @@ -0,0 +1,88 @@ +Retail occupancy +96.7% +95.6 +95.8 +94.8 +95.2 +96.7 +2019 +% +2020 2021 2022 2023 +Admin cost ratio +15% +17 +25 +15 +13 +15 +2019 +% +2020 2021 2022 2023 +Description +Underlying Funds From Operations (‘UFFO’) measures +underlying operational profits and excludes one-off or +non-cash adjustments. We consider this to be the most +appropriate measure of the underlying performance of the +business, as it reflects our generation of operating profits. +Description +Loan to Value (‘LTV’) is the proportion of our properties that +are funded by borrowings. The measure is presented on +a proportionally consolidated basis. Maintaining an LTV of +less than 50% is one of our five key Financial Policies and in +addition our medium-term guidance is to maintain an LTV +of less than 40%. +Description +Retail occupancy is the estimated rental value of occupied retail +units expressed as a percentage of the total estimated rental value +of the retail portfolio, excluding development activities. +Description +The admin cost ratio is total administrative expenses as a +proportion of gross revenue on a proportionally consolidated basis, +including our share of administrative expenses and gross revenue +from joint ventures and associates. It is a measure of our +operational efficiency. +Our performance +Total UFFO for FY23 was £25.8 million down from a total UFFO +of £28.3 million in FY22. This is following disposal of the +Hawthorn pub business. However on a underlying retail only +basis this is up 26% from £20.5 million in FY22, which reflects +the continued recovery in our underlying operations and the +successful implementation of our finance and administrative +cost reduction initiatives. +Our performance +LTV has remained stable at 33.9% as at 31 March 2023, +reducing from 34.1% as at 31 March 2022, comfortably within +our guidance of <40%. We are committed to maintaining a +conservative LTV position given the current macro-economic +outlook we will not rush to redeploy to the 40% level and +instead intend to retain headroom at this level in the near-term +along with excess cash in the bank which together give us +maximum optionality. +Our performance +We achieved our highest occupancy level for five years, with +a high, stable retail occupancy of 96.7%, up from 95.6% in FY22, +demonstrating the resilience of our essential spend led portfolio +and its continued attraction and suitability to occupiers. +Our performance +Our admin cost ratio was 15% for FY23 achieving a +reduction from 17% in FY22 principally following a reduction +in administrative costs due to the disposal of the Hawthorn +business and the unlocking of administrative cost efficiencies. +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +ESG21 3 +Link to strategy, ESG and Remuneration +21 3 £ +Key +Link to business model and strategic objectives +1 Disciplined capital allocation +2 Leveraging our platform +3 Flexible Balance Sheet +Link to ESG and Remuneration +ESG Environmental, Social +and Governance +£ Remuneration +29NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_32.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..efdf6f0ac91cc5736da9db62e2bf076bbd7ab6f5 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_32.txt @@ -0,0 +1,85 @@ +Key performance indicators continued +Description +Interest cover is the ratio of our operating profit to our +net financing costs, on a proportionally consolidated basis, +including our share of operating profit and net financing +costs from joint ventures and associates. Maintaining interest +cover of more than 2.0x is one of our five key Financial Policies. +Description +GRESB is the leading sustainability benchmark for the global +real estate sector. Assessments are guided by factors that +investors and the industry consider to be material in the +sustainability performance of real estate asset investments, +resulting in an overall score marked out of 100. Improvements +in our GRESB score can be used to measure the effectiveness +of our ESG programme. +Description +Total Property Return is a measure of the income and capital +growth generated across our portfolio. It is calculated +by MSCI Real Estate (formerly known as IPD) on our behalf, +using independent valuers. We assess our performance +against the market by comparing our returns to the MSCI +All Retail benchmark. +Description +Total Accounting Return (‘TAR’) is the change in EPRA Net +Tangible Assets (‘NTA’) per share over the year, plus dividend +paid, as a percentage of the EPRA NTA at the start of the year. +TAR performance relative to UK-listed Real Estate Investment +Trusts is a key metric used in setting the long-term incentive plan. +Our performance +Interest cover increased by 0.8x from 3.5x in FY22 to 4.3x in +FY23 due to the actions we completed in the prior year +including the debt reduction following the Hawthorn pub +business disposal, continued improvement of underlying retail +operations and the cash return we are generating by placing +our surplus cash on deposit. This level provides significant +headroom to our policy of 2.0x. +Our performance +This year we ranked 1st in the GRESB Management module +out of a 901 participants across Europe. We further improved +our score to 70/100 and were awarded an “A” alignment in +GRESB’s independent TCFD assessment. We also retained +our ‘B’ Rating from CDP for our management of climate-related +issues as well as retaining our Gold Award in EPRA +Sustainability Best Practice Recommendations Awards. +Our performance +Our portfolio delivered a Total Return of 2.3% in FY23 +compared to the MSCI All Retail benchmark at -7.9% due to the +inherent high income component of our portfolio. +Our core shopping centres and retail parks delivered capital +returns of -0.7% and -3.2%. +Our performance +We delivered a total accounting return of -4.6%, impacted by +the portfolio valuation decline of -5.9%, compared with -6.6% in +the prior year. We paid a 6.8 pence dividend for the year, offset +by movement in NTA. +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +£ ESG21 3 +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +ESG21 3 +Interest cover +4.3x +3.5 +2.3 +4.8 +5.1 +4.3 +2019 +ratio +2020 2021 2022 2023 +GRESB Score +70 +68 +60 +70 +62 +70 +2019 +number +2020 2021 2022 2023 +30 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_33.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..320f6fbb781fa41d1ae683c7e5e79eb4edfc0cef --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_33.txt @@ -0,0 +1,93 @@ +Key +Link to business model and strategic objectives +1 Disciplined capital allocation +2 Leveraging our platform +3 Flexible Balance Sheet +Description +Interest cover is the ratio of our operating profit to our +net financing costs, on a proportionally consolidated basis, +including our share of operating profit and net financing +costs from joint ventures and associates. Maintaining interest +cover of more than 2.0x is one of our five key Financial Policies. +Description +GRESB is the leading sustainability benchmark for the global +real estate sector. Assessments are guided by factors that +investors and the industry consider to be material in the +sustainability performance of real estate asset investments, +resulting in an overall score marked out of 100. Improvements +in our GRESB score can be used to measure the effectiveness +of our ESG programme. +Description +Total Property Return is a measure of the income and capital +growth generated across our portfolio. It is calculated +by MSCI Real Estate (formerly known as IPD) on our behalf, +using independent valuers. We assess our performance +against the market by comparing our returns to the MSCI +All Retail benchmark. +Description +Total Accounting Return (‘TAR’) is the change in EPRA Net +Tangible Assets (‘NTA’) per share over the year, plus dividend +paid, as a percentage of the EPRA NTA at the start of the year. +TAR performance relative to UK-listed Real Estate Investment +Trusts is a key metric used in setting the long-term incentive plan. +Our performance +Interest cover increased by 0.8x from 3.5x in FY22 to 4.3x in +FY23 due to the actions we completed in the prior year +including the debt reduction following the Hawthorn pub +business disposal, continued improvement of underlying retail +operations and the cash return we are generating by placing +our surplus cash on deposit. This level provides significant +headroom to our policy of 2.0x. +Our performance +This year we ranked 1st in the GRESB Management module +out of a 901 participants across Europe. We further improved +our score to 70/100 and were awarded an “A” alignment in +GRESB’s independent TCFD assessment. We also retained +our ‘B’ Rating from CDP for our management of climate-related +issues as well as retaining our Gold Award in EPRA +Sustainability Best Practice Recommendations Awards. +Our performance +Our portfolio delivered a Total Return of 2.3% in FY23 +compared to the MSCI All Retail benchmark at -7.9% due to the +inherent high income component of our portfolio. +Our core shopping centres and retail parks delivered capital +returns of -0.7% and -3.2%. +Our performance +We delivered a total accounting return of -4.6%, impacted by +the portfolio valuation decline of -5.9%, compared with -6.6% in +the prior year. We paid a 6.8 pence dividend for the year, offset +by movement in NTA. +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +£ ESG21 3 +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +ESG21 3 +Link to ESG and Remuneration +ESG Environmental, Social +and Governance +£ Remuneration +Total Property Return ++2.3% +7.5 +-6.9 +-5.4 +1.3 +2.3 +2019 +% +2020 2021 2022 2023 +Total Accounting Return +-4.6% +-6.6 +-24.9 +-14.7 +-3.3 +-4.6 +2019 +% +2020 2021 2022 2023 +31NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret transportation is a "train". \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_34.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..9585f4d863fdeea6faeaddfb4bbf375aed4846f2 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_34.txt @@ -0,0 +1,39 @@ +FOCUSED +PORTFOLIO +As the leading UK retail real estate +company we understand what makes +a resilient retail asset and we know how +to protect and enhance resilience over +the longer term. +RESILIENT RETAIL +28% +11% +23% +1% +37% +Retail Parks + Shopping Centres +– Core + Shopping Centres +– Regeneration +Shopping Centres +– Work Out +Other +28% +11% +23% +1% +37% +Retail Parks + Shopping Centres +– Core + Shopping Centres +– Regeneration +Shopping Centres +– Work Out +Other +Portfolio Weighting +32 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Portfolio review +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_35.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..742c40a65179851c23392b9d822c2d8544bb4e97 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_35.txt @@ -0,0 +1,79 @@ +Operational Update +Robust and consistent operational metrics continue to demonstrate the underlying resilience and active demand for space in our portfolio, +supported by the strong performance of the physical retail store channel and resilient consumer. Net property income adjusted for disposals +increased by +5.0% in the 12 months to March 2023, occupancy increased to 96.7% (FY22: 95.6%) and rent collection remains at normalised +levels of 98% (FY22: 96%). +As a 31 March 2023 Occupancy +Retention +Rate +Rent +Collection Affordable Average Rent +Gross to Net +Rent Ratio +Leasing +Volume +Leasing +Activity +Average CAGR +FY21-FY23 +(%) (%) (%) (£ psf) (Ave. pa) (%) (sq ft) +% vs valuer +ERV (%) +(Average +Lease Length) +Retail Parks 97.5% 100% 99% £12.49 £116,000 97% 163,400 0.8% 0.6% 12.3 +Shopping Centres +– Core 97.7% 90% 98% £13.18 £39,000 94% 309,700 2.3% -0.8% 9.9 +Shopping Centres +– Regen 97.4% 97% 100% £13.00 £69,000 86% 138,700 -3.9% -0.7% 9.4 +Shopping Centres +– Work Out 92.8% 89% 97% £9.13 £23,000 65% 338,800 -2.1% -0.4% 6.7 +Total1 96.7% 92% 98% £11.98 £45,000 88% 979,200 1.1% -0.4% 10.0 +1. Total includes Other representing 1% of total portfolio by value +In total, we completed 979,200 sq ft of leasing transactions during the year, securing £7.9 million of annualised income. Our long-term leasing +transactions which represented 69% of the total rent secured were transacted at rents +1.1% above valuer ERVs. +Over three quarters (77%) of the annualised long-term rent secured was in our Core Shopping Centre and Retail Park portfolios, at rents exceeding +valuer ERVs by +2.3% and +0.8% respectively. This is a reflection of the excellent occupational demand across our Core Shopping Centres, at the heart +of their local communities, and conveniently located Retail Parks predominately adjacent to major supermarkets, demonstrating we own the right assets +in the right locations. +OUR HIGHLIGHTS +Portfolio Metrics as at 31 March 2023 +Occupancy +96.7% +FY22: 95.6% +Retention Rate +92% +FY22: 90% +Rent Collection +98% +FY22: 96% +Leasing Volume +979,200 sq ft +FY22: 1,039,800 sq ft +Leasing Activity ++1.1% +ahead of valuer ERV +FY22: +7.4% +Affordable +Average Rent +£11.98 per sq ft +FY22: £11.74 per sq ft +Average CAGR +FY21-FY23 +-0.4% +on 10.0yr average +previous lease period +Gross to Net Rent Ratio +88% +FY22: 84% +Total Return +2.3%, +1,020 bps +outperforming the MSCI All Retail over 12 months +FY22: 7.5% +Portfolio NIY of +8.0%, +220bps +versus the MSCI All Retail at 5.9% +FY22: 7.9% +Expanding Capital Partnerships across public, +private equity and institutional sectors +33NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_36.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..06d88e1ccdb515eabcf974337bf8e1199d259437 --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_36.txt @@ -0,0 +1,108 @@ +Our Capital Partnerships continue to grow having secured a +high-quality mandate from M&G Real Estate in November 2022 to +asset manage a large retail portfolio, with a further south-east +shopping centre added to this mandate subsequent to our +appointment. The portfolio currently comprises 16 retail parks and +two shopping centres. Our key partnerships are across the public, +private equity and institutional sectors illustrate the importance of +specialist retail partners in a highly operational sector and +endorsement of the quality of our asset management platform. +Valuation +As at 31 March 2023, our portfolio was valued at £593.6 million +(31 March 2022: £649.4 million). Movements from the previous +year were the disposal of two Work Out assets and a solus retail +warehouse unit (£22.4 million) and a like-for-like valuation movement +of -5.9% for the year. This is a +660bps capital return outperformance +compared to the MSCI All Retail index. +Valuations were broadly stable in the first half of the year at -1.3%, +followed by a -4.7% movement in the second half, a reflection of the +macro-economic, political and financial market pressures impacting +all real estate markets. The valuation movement was predominately +a result of market driven yield expansion, a direct impact of rising +interest rates, whilst ERVs were broadly stable at -1.7% for the total +portfolio and +0.4% excluding our Work Out portfolio and +Regeneration assets. +Our Core Shopping Centre Portfolio, which represents 37% of the +portfolio, delivered a modest valuation movement of only -0.7% for +the year, a result of a strong operational performance and already +high yield of 9.6%. This is a +1,010bps capital return outperformance +compared to the MSCI Shopping Centre index. +Retail Parks, representing 28% of the portfolio, saw a movement +of -3.2% driven by some modest yield expansion offset by a ++2.7% increase in LFL ERVs. This is a +960bps capital return +outperformance compared to the MSCI Shopping Centre index. +The overall portfolio valuation movement was concentrated in the +Regeneration portfolio with a movement of -14.1% which accounts for +62% of the overall portfolio movement, the outcome of high inflation +on assumed construction and finance costs. +The Work Out portfolio following two disposals now accounts for +only 11% of the total portfolio and experienced a -7.8% valuation +movement due to negative NOI and ERV movements. This was +concentrated in three assets where turnaround strategies are in +place and progressing well. Nevertheless, on a capital return basis, +our Work Out portfolio outperformed the MSCI Shopping Centre +index by +10bps. + +Portfolio review continued +Whilst rent secured within our regeneration portfolio was down -3.9% +versus valuer ERV, it was 9.0% ahead of the previous passing rent +and therefore accretive to rental cashflows. It is also reflective of our +ongoing strategy to ensure greater lease flexibility to support our +vacant possession strategy. We have been making good progress +across our three regeneration assets which are predominantly +focused on reducing surplus retail and delivering new residential +units to these locations within commuting distance of London. At +Grays, we are at an advanced stage in our preparations to submit +an outline planning application for 850+ homes and in Burgess Hill, +a site with detailed planning consent for 187 residential units, is being +prepared for sale. +The Work Out portfolio leasing activity was on terms -2.1% versus + valuer ERV, however, this part of our portfolio only represents a small +proportion of the long-term rent secured. Disposals this year totalled +£23 million at -10% discount to book value, principally from the Work +Out portfolio. Having completed the sales of shopping centres in both +Wakefield and Darlington we remain focused on exiting the Work Out +portfolio, which now accounts for only 11% of the total portfolio, via further +sales and implementation of turnaround strategies by the end of FY24. +For total portfolio lease events in FY23, the rents achieved had a +CAGR versus the previous passing rent of only -0.5% over the +average previous lease period of 10.3 years. Over the past three +years, this is only -0.4% based on an average previous lease period +of 10.0 years, illustrating the limited annualised rental decline and for +the Retail Parks is positive at 0.6%. Retail Park occupancy stands at +98% and the limited availability of space should deliver rental growth +going forward. +Overall, our long-term leasing transactions had a weighted average +lease expiry (WALE) of 8.2 years, up from 6.4 years in FY22, with +Retail Parks at 12.0 years and Core Shopping Centres at 6.9 years. +In terms of tenant incentives, due to the continued competitive +tension in the occupational market, for long-term leasing transactions +the average rent free period was broadly aligned to FY22 at just +2.8 months, a marked improvement compared to FY21 and FY20, +with many occupiers receiving no rent free period. +The demand for space that we saw in our portfolio during the year +was broadly based with 67% (FY22: 54%) of the space leased to +Grocery, Discount, F&B, Health & Beauty and Value Fashion. +Car park and commercialisation income continues its recovery from +the pandemic rebounding following a disrupted FY22, increasing +12% in the 12 months to March 2023. Overall, income is now back +up to 78% against pre-pandemic levels. +Our portfolio valuation at £593.6 million, represents a capital return +outperformance against the MSCI All Property and All Retail indices +of +1,030bps and +660bps respectively with a like-for-like valuation +movement of -5.9% for the year. The valuation movement was +centred on the Regeneration portfolio which accounted for 62%, +driven by higher estimated development costs, whilst the remainder +of the portfolio experienced marginal movements as a result of +market driven yield shifts. Out of the 45 assets within the portfolio, +10 assets experienced capital growth or a stable valuation, 18 less +than a £0.5 million decline and 10 between a £0.5-£1 million decline. +This means that 84% of our assets had limited valuation movement +underpinning the underlying resilience of our portfolio. +Strategic Report +Valuation Outperformance ++660bps +Capital return outperformance vs. +MSCI All Property and All Retail indices +34 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_37.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..a31fe999c59654c8c0f335c9313b2c7c8023814f --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_37.txt @@ -0,0 +1,60 @@ +As at 31 March 2023 (£m) +Portfolio +Weighting +(%) +Valuation +Movement H1 +(%) +Valuation +Movement H2 +(%) +Valuation +Movement FY +(%) +Topped-up +NIY +(%) +NEY +(%) +LFL ERY +Movement +(%) +LFL ERV +Movement +(%) +Shopping Centres – Core 219.9 37% 0.2% -0.9% -0.7% 9.6% 9.3% 0.0% -1.1% +Retail Parks 165.5 28% 0.5% -3.5% -3.2% 7.0% 7.0% 0.3% 2.7% +Shopping Centres +– Regen 140.0 23% -4.2% -10.5% -14.1% 5.9% 6.8% 0.6% 1.2% +Total excl. Work Out / +Other 525.4 88% -1.0% -4.4% -5.4% 7.9% 7.9% 0.3% 0.4% +Shopping Centres +– Work Out 63.4 11% -2.5% -5.8% -7.8% 9.4% 14.0% -0.3% -8.7% +Other 4.8 1% -5.7% -13.5% -22.6% 10.0% 9.5% 0.6% -11.3% +Total 593.6 100% -1.3% -4.7% -5.9% 8.0% 8.6% 0.2% -1.7% +The portfolio Net Initial Yield now stands at 8.0%, and has a Net Equivalent Yield of 8.6%, c.200bps higher than the MSCI All Retail Benchmark +at 5.9% and 6.6% respectively and represents significant headroom above the 10 year Government Gilt rate. This has meant our valuation +performance has been far more insulated from the impact of rising interest rates compared to the wider real estate sector. +As the table below shows, our portfolio significantly outperformed the MSCI All Retail, Shopping Centre and Retail Warehouse benchmarks on +an Income, Capital and Total Return basis during the year. Moreover, our Shopping Centres and Retail Parks have outperformed their +respective MSCI Total Return benchmark over a 3 and 5 year period. +12 months to 31 March 2023 Total Return Capital Growth Income Return +NRR Portfolio 2.3% -6.2% 9.0% +MSCI All Retail Benchmark -7.9% -12.7% 5.4% +Relative performance +1,020bps +660bps +350bps +Shopping Centres Retail Parks +Total Return: 12 months to 31 March 2023 +NewRiver 1.6% 4.8% +MSCI Benchmark -5.1% -6.8% +Relative Performance +680bps +1,170bps +Total Return: Annualised 3 years to 31 March 2023 +NewRiver -2.1% 8.7% +MSCI Benchmark -9.7% 5.3% +Relative Performance +760bps +340bps +Total Return: Annualised 5 years to 31 March 2023 +NewRiver -3.5% 5.1% +MSCI Benchmark -11.0% -0.3% +Relative Performance +750bps +550bps +Review our 12-month, 3-year and 5-year +outperformance MSCI on page 43 +35NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_5.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..bb4b2ebe20bfaf8a29279c0c47c3007137c8c20b --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_5.txt @@ -0,0 +1,55 @@ +OUR PURPOSE +3NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +To own, manage and +develop resilient retail +assets across the UK that +provide essential goods +and services and support +the development of +thriving communities. +Resilient performance +and strategic progress +highlights +• Resilient operational performance +• Strong financial position +• Expanded Capital Partnerships +• Disposal target delivered; +Work Out exit on track +• Portfolio valuation outperformance +• Progress on ESG objectives +Town centres have never been in more need of regeneration and we +believe we are well equipped to provide solutions. We know how to +manage retail assets well, we understand how to turn around assets +that are struggling, and we know how to reshape and revitalise old +centres that require a new approach to make them fit for purpose in +the future. Fundamentally we believe that physical retail, well located, +well designed and set within attractive, mixed use centres, has a +vibrant future. Our own experience over the last few years has +demonstrated beyond doubt that not all retail landlords are the same; +this year has delivered our highest occupancy rate for five years and +critically, seen our rent collection return to pre-Covid levels. +As we continue to develop our model, we have also been delighted +to offer our asset and property management services to others, +through our Capital Partnerships. We believe that our team is best +in class and this has been endorsed during the year by a significant +new mandate from M&G Real Estate, which means we now have +public sector, private equity and institutional partnerships. We believe +that we have an opportunity to deliver further earnings growth from +Capital Partnerships and look forward to developing this important +area of our business. +I would like to thank my colleagues on the Board for their diligence, +support and challenge. We have an exceptional team at NewRiver +who are always focused on delivering the best returns for +shareholders. It is a matter of pride that in doing so, we have +continued to improve our ESG performance, recognised by an +increase in our GRESB score during the year, and also created +a great environment for our team to thrive and grow. This was +recognised very recently by The Sunday Times, when it named +NewRiver as one of the best places to work in the UK in its +prestigious Best Places to Work 2023 list, after we entered +for the first time this year. +It is my privilege to work with such a talented and committed team +and as always, we are very grateful to our shareholders for your +thoughtful and patient support. +Baroness Ford OBE +Non-Executive Chair \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_6.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..e05d0b5ce687eb6960b4384d3cb0ebdd2053337c --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_6.txt @@ -0,0 +1,24 @@ +4 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Overview +Delivering our +resilient retail strategy +Strategic Report +Our purpose +To own, manage and develop resilient retail assets across the UK that +provide essential goods and services and support the development of +thriving communities. +See page 3 +shapes our business model +• Disciplined capital allocation +• Leveraging our platform +• Flexible balance sheet +• Integrated ESG programme +See page 18 +which in turn drives our growth strategy +Our strategy aims to deliver a consistent 10% Total Accounting Return in the +medium term by focusing exclusively on these activities +See page 11 +delivered within our risk management framework +Underpinned by effective risk management +See page 88 \ No newline at end of file diff --git a/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_7.txt b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..729616565163394b428fb3e2568e18ba5462b89b --- /dev/null +++ b/NewRiver/NewRiver_200Pages/Text_TextNeedles/NewRiver_200Pages_TextNeedles_page_7.txt @@ -0,0 +1,45 @@ +• Focused on a resilient sub-sector of the retail market +• Providing essential goods and services to communities +• Store-based network for omnichannel retail +• Well-positioned to withstand macroeconomic headwinds +See page 12 +• Retail Parks +• Core Shopping Centres +• Work Out +• Regeneration +See page 32 +• Market leading asset management team +• Scalable operational structure +• Data-driven approach +• Strong occupier relationships +• Expanding Capital Partnerships +See page 42 +• Unsecured balance sheet structure +• No debt maturity until 2028 +• Significant cash holdings +• Debt costs fixed until 2028 +See page 46 +MARKET +PORTFOLIO +PLATFORM +FINANCIAL +POSITION +5NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +We have a resilient investment case to deliver reliable and recurring revenues +See page 20 +We oversee and manage +our purpose, culture, values, +strategy, sustainability and +relationships through +effective Board leadership +and governance +Enabling us to generate +long-term value for +our stakeholders: +• Our team +• Our communities +• Our shareholders +• Our capital partners +• Our occupiers +• Our environment +See page 96 \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_1.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..adb7f7b06f04b97ef6ac0df80cfb46bceee80472 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_1.txt @@ -0,0 +1,4 @@ +Annual Report +and Accounts 2023 +NewRiver REIT plc Annual Report and Accounts 2023 +The secret object #1 is a "chair". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_10.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..01b2ebb1652b59d9525a58e28225a05aac069f1c --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_10.txt @@ -0,0 +1,86 @@ +Resilient performance +and strategic progress +“We are confident of +our ability to deliver our +medium term objective of +a consistent premium total +accounting return.” +Allan Lockhart +Chief Executive +Our strong operational performance, including disposals within our +Work Out portfolio, resulted in excellent cash generation as we ended +the financial year with £111.3 million of cash up from £88.2 million at the +end of FY22. +Whilst the MSCI All Property and All Retail indices experienced capital +returns of -16% and -13% respectively for the year 1 April 2022 to +31 March 2023, our portfolio outperformed with a like-for-like valuation +movement of -5.9%. The majority of our reported decline was +contained within our Regeneration portfolio, predominantly driven +by higher estimated development costs, a direct consequence of +persistent high inflation. As a result, our EPRA Net Tangible Assets +(NTA) per share at the full year was 121 pence (FY22: 134 pence). +At our FY22 results, we said that we would seek to maintain +headroom to our Loan To Value (LTV) guidance of <40% given the +macro-economic uncertainty at that time. That was the right decision +given the significant disruption in the real estate capital markets +especially in the final quarter of 2022. Our LTV at the full year was +33.9% (FY22: 34.1%), well within our guidance. Importantly, we have +no refinancing or exposure to higher interest rates on drawn debt until +2028 and we view this, together with the significant spread between +our portfolio net initial yield of 8.0% and our cost of borrowing of 3.5%, +as key strengths. +A key highlight of the full year was successfully expanding our Capital +Partnerships strategy by securing a high-quality mandate from M&G +Real Estate to asset manage a large retail portfolio comprising 16 retail +parks and one shopping centre, further extended to include a second +shopping centre post year end. This is a great endorsement of the +quality of our asset management platform and also demonstrates the +potential to grow our recurring earnings in a capital light way. +Our operating and financial results demonstrate the underlying resilience +of our business in what has been a challenging year for the real estate +sector. That, together with our strong financial position and the strategic +options available to us, means we remain confident in delivering our +objective of a consistent 10% total accounting return for our shareholders. +FINANCIALS +Strong Financial Performance +& Fully Covered Dividend +Our Retail UFFO increased by 26% in FY23 to £25.8 million +(FY22: £20.5 million). This performance has been driven by an increase +in our Net Property Income, up 5.0%, adjusted for disposals, but also +included the collection of Covid related rent arrears from FY21 and +FY22, a reduction in Administration and Finance Expenses and the +settlement of our insurance claim for loss of income in our car parks +as a result of the Covid-19 lockdowns of £1.4 million. +In line with our dividend policy, we have declared a final dividend of 3.2 +pence per share bringing the total dividend for FY23 to 6.7 pence per +share, which is 125% covered by UFFO. +As a result of an improving Retail UFFO, a tight control on capital +expenditure and completed Work Out disposals, our cash position +increased from £88.2 million in March 2022 to £111.3 million in March +2023. One of the benefits of rising interest rates, is that we are now +receiving a return on our excess cash which is accretive to our UFFO. +Valuation Outperformance +Our portfolio valuation has been far more insulated from the impact of +rising interest rates compared to the wider real estate sector, partly due +to our already high portfolio yield, and recorded a like-for-like valuation +movement of -5.9%. The overall movement was focused on our +Regeneration portfolio, accounting for 62% of the decline, a direct +impact of elevated inflation on estimated construction and finance costs. +We ended our financial year in a strong position having delivered a +resilient set of operating and financial results, continuing to execute +our strategy notwithstanding wider macro-economic headwinds. +Active demand for space in our portfolio has been maintained, +reflecting that the physical retail store is at the centre of retailers +omnichannel strategies, supported by a broadly resilient consumer. +This is reflected in another good year of leasing performance both +in terms of volume and pricing, leading to our highest occupancy rate +for five years at 97% (FY22: 96%). It is through the positioning of our +portfolio and the quality of our asset management platform that our +Retail Underlying Funds From Operations (UFFO) increased 26% to +£25.8 million from £20.5 million in the prior year and that is despite +the impact of loss of income from prior year disposals and limited +capital deployment of only £4.0 million. +8 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Chief Executive’s review +The secret object #3 is a "knife". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_11.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..35e96cadbf98e91e94dc99aa1271ce6b0bbc9d3e --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_11.txt @@ -0,0 +1,108 @@ +Pleasingly, our Core Shopping Centre portfolio, representing 37% +of our total portfolio, proved to be broadly stable with a -0.7% capital +return for FY23. Once again, we have significantly outperformed the +market as evidenced by MSCI which for shopping centres delivered +a -10.8% capital return over the last twelve months. +Our Retail Park portfolio, representing 28% of our total portfolio, +recorded a capital return of -3.2% entirely due to yield expansion +offset by ERV growth of 2.7%. Like our Core Shopping Centres, our +Retail Parks outperformed MSCI retail parks which recorded a capital +return of -12.1% over the same period. +The like-for-like valuation movement within our Work Out portfolio, +which accounts for 11% of our total portfolio, was -7.8%, outperforming +the MSCI Shopping Centre Index. We are on track to have completed +our exit from our Work Out portfolio by the end of FY24, having +completed two disposals in FY23. +Given that our portfolio consistently delivers a higher income return +and a superior capital return than the MSCI All Retail Index, on a total +return basis our portfolio has once again significantly outperformed +the index in FY23, by 1,020bps, as it has done over the last five years. +Our Balance Sheet is in great shape with an LTV of 33.9% at the year +end, in line with the prior year. Equally important is Balance Sheet +gearing which for us is less than 50%, Net debt to EBITDA is only +4.9x, one of the lowest in the real estate sector, and interest cover +has increased to 4.3x, one of the highest in the real estate sector. +These strong financial metrics and the fact that we have no +refinancing requirements nor exposure to higher interest rates +until 2028 place us in an excellent position to capitalise on +future growth opportunities at the appropriate time. +PORTFOLIO +Resilient Operational Performance +Operationally, we had a good performance in terms of leasing +volume and pricing. That, together with our high retention rate when +it comes to lease expiry or lease break, has resulted in an increase in +our occupancy to 97% (FY22: 96%). Rent collection and car park and +commercialisation cashflows all improved during the year, with rent +collection now back to pre-Covid-19 collection rates. +In total we completed 979,200 sq ft of leasing transactions during +the year, securing £7.9 million of annualised income. Our long-term +leasing transactions which represented 69% of the total rent secured +were transacted at rents 1.1% above valuer ERVs. Furthermore, +77% of the annualised long-term rent secured was in our Core +Shopping Centre and Retail Park portfolios, at levels exceeding +valuer ERVs by 2.3% and 0.8% respectively. +Whilst rent secured within our Regeneration Portfolio was down +-3.9% versus valuer ERV, it was +9.0% ahead of the previous passing +rent and therefore accretive to rental cashflows. It is also reflective of +our ongoing strategy to ensure greater lease flexibility to support our +vacant possession strategy. The Work Out portfolio leasing activity +was on terms -2.1% versus valuer ERV, however, this only represents +a small proportion of the total portfolio long-term rent secured. +For total portfolio leasing events in FY23, the rents achieved had a +Compound Annual Growth Rate (CAGR) versus the previous passing +rent of only -0.5% over the average previous lease period of 10.3 +years. Over the past three years, which totals £15.4m of annualised +rent, this is only -0.4% based on an average previous lease period +of 10.0 years. Taking into account the significant disruption the retail +sector has faced over the last 10 years from the growth of online +retailing and Covid-19, this clearly demonstrates the underlying +resilience in our rental cashflows. +OUR HIGHLIGHTS +Occupancy +96.7% +FY22: 95.6% +Rent collection +98% +FY22: 96% +Leasing vs ERV ++1.1.% +FY22: +7.4% +GRESB score +70 +FY22: 68 +Completed +disposals +£23m +FY22: £305m +Valuation +performance +-5.9% +FY22: -0.9% +Retail Underlying +Funds From Operations +£25.8m +FY22: £20.5m +Retail UFFO +per share +8.3p +FY22: 6.7p +LTV +33.9% +FY22: 34.1% +Net debt +£201.3m +FY22: £221.5m +Total Accounting +Return +-4.6% +FY22: -6.6% +Ordinary Dividend +per share +6.7p +FY22: 7.4p + * As at time of reporting FY22 results +Key +Performance versus previous year +Improved Declined Maintained +9NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_12.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a8094554d7e3bde5f70f00811630b0ca06e0974 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_12.txt @@ -0,0 +1,125 @@ +Overall, our long-term leasing transactions had a weighted average +lease expiry (WALE) of 8.2 years, up from 6.4 years in FY22, with +Retail Parks at 12.0 years and Core Shopping Centres at 6.9 years. +In terms of occupier incentives, we have seen a marked improvement +in rent-free periods granted in the period compared to FY21 and +FY20. For long-term leasing transactions, the average rent-free +period was just 2.8 months with many occupiers receiving no +rent-free period. +The demand for space that we saw in our portfolio during the year +remained broadly based with 67% of the space leased to Grocery, +Discount, F&B, Health & Beauty and Value Fashion. +Well Positioned Portfolio +As at 31 March 2023, Retail Parks accounted for 28% of our portfolio, +totalling 14 assets. It has been another positive year for our Retail Park +Portfolio which at year end was 98% occupied with a retention rate +of 100%. We have continued to see strong occupational and investor +demand for our Retail Parks which are predominately located adjacent +to major supermarkets, benefit from free surface car parking and are +supportive of retailers’ omnichannel strategies. As such we had a good +year of leasing with transactions completed 0.8% ahead of valuer ERV. +Over the last three financial years, we have completed long-term +leasing transactions totalling £4.5 million of annualised rent across our +Retail Parks which versus the previous passing rent equates to a CAGR +of +0.6% per annum over the average previous lease period of 12.3 +years. Our Retail Parks delivered a total return of 4.8%, outperforming +the MSCI retail warehouse index by +1,170 basis points, which recorded +a -6.8% total return. +As at 31 March 2023, our Core Shopping Centre portfolio represented +37% of our total portfolio value and comprises 14 Core Shopping Centres +at the heart of local communities providing a range of essential goods +and services with an occupancy of 98% and retention rate of 90%. +The consistent occupational demand is reflected in the positive +leasing performance during the year with long-term deals transacted +2.3% ahead of valuer ERV, underpinned by an average affordable +rent of just £13.18 per square foot and £39,000 per annum. Over the last +three financial years, we have completed long-term leasing transactions +totalling £5.5 million of annualised rent, which compared to the previous +passing rent, equates to a CAGR of only -0.8% per annum over the +average previous lease period of 9.9 years. Our Core Shopping Centres +delivered a total return of 10.3%, outperforming the MSCI shopping +centres index by +1,540 basis points, which recorded a -5.1% total return. +We have three Regeneration assets, representing 23% of the +total portfolio value, for which we have planning consent for: +187 residential units, over 850 residential units at the pre-planning +application stage and a further 350 residential units in the masterplan +stage for phase one. None of these projects will be built-out by +NewRiver as our intention is to deliver value either through sale or +by partnering with residential developers, once planning consents +are secured. Currently, we are not exposed to material contractual +capital expenditure commitments but in order to maximise value, +some modest capital expenditure will be required over the next +two years. Whilst we advance our regeneration proposals, we have +maintained a high occupancy at 97% whilst at the same time building +flexibility into the leases to deliver future vacant possession. As such +the leasing deals completed within our Regeneration portfolio were +transacted at a modest -3.9% below valuer ERVs. +Our Work Out portfolio represents 11% of our portfolio and comprises +nine assets which we intend to dispose of or complete turnaround +strategies on. Since our Half Year results, we have completed the +disposals of two shopping centres in Wakefield and Darlington, with +the remaining sales to be completed in FY24; those assets subject to a +turnaround strategy are supported by further investment by the end of +FY24. In the interim, occupancy and retention rates for our Work Out +assets remain high at 93% and 89% respectively and leasing deals +completed during the year were transacted at -2.1% below valuer ERV. +In respect of capital and total returns, our Work Out portfolio has +outperformed the MSCI shopping centres index by +10 and +590 +basis points respectively. +PLATFORM +Growing Capital Partnerships +Capital Partnerships are an important component of our strategy to +deliver earnings growth in a capital light way. We were delighted in +November 2022 to secure a high-profile mandate from M&G Real +Estate to manage a large retail portfolio comprising 16 retail parks +and a shopping centre located in the South East of England. After our +appointment in November 2022, the mandate was extended to include +a further shopping centre in the South East post year end in April 2023. +Currently, we have three key Capital Partnerships: in the public sector +with Canterbury City Council; in the private equity sector with BRAVO; +and now in the institutional sector with M&G Real Estate. Currently, +we asset manage 19 retail parks and five shopping centres with a +total value in excess of £500 million and annualised rent of over +£50 million. +The expansion and breadth of our Capital Partnerships is a clear +recognition of the need for a best-in-class platform to extract +performance in the highly operational retail sector. We believe that +we have a significant opportunity to deliver further earnings growth +through our Capital Partnership activities. +Prudent Capital Allocation +Capital allocation during the year has been focused on investing +in our portfolio with tightly controlled discipline given the macro- +economic uncertainty. Total investment in FY23 was £4.0 million of +which 57% was allocated to our retail park portfolio, with the largest +project being the construction of a new Aldi store in Dewsbury which +accounted for 23% of our total portfolio investment. +We invested £0.6 million in our Core Shopping Centres, the key +project being the funding of our planning application for a new +food store in Market Deeping which was unanimously approved +by the Council post year end. Our Regeneration portfolio received +£0.7 million of investment principally to advance our forthcoming +planning application in Grays for an 850+ unit residential-led major +town centre regeneration. +Committed progress to ESG +We take our role as the custodians of assets within the community +very seriously and part of that responsibility is helping to protect +the long-term sustainability of the environment that they sit within, +and we are pleased to report great progress in the delivery of our +committed ESG Strategy. +During the year, the quality of the Management and Governance of +our business was recognised as we ranked first place in the GRESB +“Management” module out of a total 901 participants across Europe. +This recognition is due to the fastidious work from our team in +embedding our ESG objectives across the business at both the +corporate and asset level including developing a supplier ESG +performance evaluation process and formalising a quarterly ESG +performance review process for our Property team. +Our ESG activities this year have resulted in achieving our target +GRESB score of 70/100 for the “Standing Portfolio” Benchmark, scoring +90/100 for the GRESB “Development” benchmark and being awarded +an “A” alignment in GRESB’s independent TCFD assessment. +10 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report10 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Chief Executive’s Review continued +The secret sport is "boxing". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_13.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..000f01c62207b343d5012a359197e995a0841cd3 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_13.txt @@ -0,0 +1,90 @@ +We also retained our ‘B’ Rating from CDP for our management of +climate-related issues as well as retaining our Gold Award in EPRA +Sustainability Best Practice Recommendations Awards, recognising +the excellence in the transparency and comparability of our +environmental, social and governance disclosures. +Our assets are typically easily accessible with short travel times, +supporting the wider climate and well-being agenda. We set our +pathway to Net Zero in 2019 and we continue to make great inroads +in implementing this. Achieving net-zero within the retail sector relies +upon mutual action by real estate owners and occupiers. The energy +consumed by our occupiers in our assets accounts for almost 90% of +our total carbon emissions. These are emissions over which we have +limited control, but we continue to develop our engagement activities +to support alignment between our climate ambitions and those of our +occupiers and so we are pleased to report that 57% of our lettable +floorspace is occupied by retailers that have already set emissions +reduction targets, with approximately 70% of that 57% part of the BRC +Climate Commitment to reduce carbon emissions to net zero by 2040. +As we reported last year, all of the energy supplied into our common +areas (malls and car parks) is already carbon neutral but this year we +also generated over 250,000 kWh of renewable electricity on-site at +our assets, maintained our “zero waste to landfill” policy and +delivered or secured contracts for EV charging infrastructure at +88% of our surface-level car parks. Given cost inflation headwinds, +it is also notable that the energy supplied into our malls is hedged +until Spring 2024, so we are not facing into price increases. +Finally, during the year we relocated our Head Office to a +BREEAM Excellent, Net-Zero building in London. We are committed +to continuing this great work and playing our part in helping protect +our planet and stakeholders for the long-term. . +MARKET +Outlook +Despite ongoing geopolitical tensions, elevated inflation and higher +interest rates, we are reassured with the improving occupational +demand for space in our resiliently positioned portfolio. Given our +current high occupancy rates for Retail Parks and Core Shopping +Centres at 98% and the benefit of the reduction of business rates for +our occupiers, we believe that the prospects for future rental growth +are now encouraging which should be supportive of future valuations. +For some time now, we have consistently expressed our confidence +in our portfolio positioning which is predominately focused on +essential goods and services. Our operating and financial results over +the last two years demonstrate the underlying resilience that we have +in our portfolio and in our platform, and we expect that to continue +into our new financial year. +We are in an excellent position with a strong balance sheet that is +not exposed in the medium term to rising interest rates, we have +capital available to deploy and opportunities to expand our Capital +Partnerships. We are therefore confident of our ability to deliver our +medium term objective of a consistent 10% total accounting return. +Allan Lockhart +Chief Executive Officer +14 June 2023 +OUR STRATEGY +We do this by delivering on our +business model: +This strategy is underpinned by clear +pillars of execution: +• Highly collaborative working relationships with all key partners +• A clear plan to help create thriving communities in the towns +where we are invested +• A committed sustainability strategy to minimise our impact on +the environment +• Creating opportunities for our team to develop their careers +• Operational efficiency and excellence +• Maintaining a strong balance sheet +• Delivering consistent and attractive risk-adjusted returns +Our strategy aims to deliver a reliable +and recurring income led 10% Total +Accounting Return and create value +for our stakeholders: +Local +Authorities +Shareholders +Environment +Occupiers +Capital +Partners +Team +Lenders +Communities +Underpinned by a committed ESG strategy +1. Disciplined +capital allocation +3. Flexible +balance sheet +2. Leveraging +our platform +11NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 11NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret office supply is a "stapler". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_14.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..01de469a7df92327011c8a2c0c34dabecd28624d --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_14.txt @@ -0,0 +1,31 @@ + +ROBUST +MARKET +The UK economy and retail real estate +market has never before endured such +volatile conditions including international +health pandemics and war as well as +political and fiscal instability. This has +led to cost inflation, rising interest rates +and increased caution amongst both +investors and consumers. + +Yet contrary to perception and media +narrative, the consumer has remained +resilient and those retail occupiers with an +omnichannel offer, reliant on the physical +store and focused on providing essential +goods and services, have continued to +perform well. + +This is the robust sub-sector of the market +that we specialise in, meaning our resilient +retail real estate portfolio is well-positioned +for growth. +RESILIENT RETAIL +12 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic report +Our marketplace +12 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +The secret fruit is an "orange". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_15.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..41a3e84a2e52b4b18b96828e4b85a18e1f2741da --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_15.txt @@ -0,0 +1,111 @@ +Consumers + +Rising Housing Costs +The housing market has shown resilience in 2023 as mortgage +rates eased and the labour market remained tight in part +reversing the negative sentiment following the jump in the Bank +of England interest rates as a result of the somewhat calamitous +September mini-budget. House prices are stabilising and the +average house price is still 20% higher compared with March +2020 (Halifax). Borrowers are choosing longer mortgage terms +to satisfy affordability requirements whilst many potential first +time buyers are delaying their plans and resorting to the rental +market, putting further pressure on rental costs already impacted +by a significant demand supply imbalance (UK Finance). +High But Easing Inflation +UK inflation appears to have peaked at 11.1% in the 12 months to +October 2022, falling more slowly than anticipated over the +subsequent months to 8.7% in April as rates across transport +and clothing declined but offset by persistent food price +inflation. It is expected further easing in commodity and goods +prices will result in a continued downward trend in inflation later +in the year, with perhaps the key risk in respect of ongoing +inflation in 2023 being the impact of higher wage costs. Whilst +annual wage growth as at March 2023 stands at 5.8%, in real +terms it is -3.0%, the largest real total decline since April 2009 +(ONS) albeit the negative differential is widely expected to +narrow through 2023 and reverse by the end of 2024 (Shore +Capital). +Consumers Still Spending +Early 2023 has followed a stronger than forecast Christmas 2022, +with sales values and volumes (excl. fuel) +2.4% and +1.0% in the +three months to April 2023 compared with the previous +three months. April sales figures compared to pre-Covid levels +are +17.9% in value and +0.3% in volume, indicating consumers are +purchasing at similar levels to pre-pandemic. Despite the +narrative around the consumer squeeze and wide-scale +belt-tightening, this is not yet reflected in the data and consumers +are still sitting on excess savings built up during the pandemic. +Changing Purchasing Behaviour +Due to cost of living pressures, patterns of spending have shifted +away from luxuries towards essential and cheaper alternatives. +Barclays data shows that 34% of consumers are buying “dupes”, +affordable versions of expensive products, especially in food and +drink products with 68% of consumers opting for the cheaper options. +There is an evident pattern of down trading in the grocery sector, +discount stores continue to experience month on months sales +growth and in terms of eating out, there is shift in preference from +expensive restaurants to more value focused, deal driven options. +NewRiver’s response +• Despite the cost of living crisis, retail sales have remained +strong with the first half of 2022 benefiting from a buoyant +period of post-lockdown spending with positive sales figures +continuing into early 2023 following a strong Christmas +period. Positive consumer spending has led to strong +sentiment among retailers and is reflected within NewRiver’s +retention rate of 92% and increased occupancy of 97%. +• Consumers are evidently changing their purchasing behaviour, +down-trading across product categories as a reaction to +adjustments on their disposable income and will be awaiting +signs that mortgage rates, food and fuel inflation have peaked +prior to increasing their discretionary spend. NewRiver’s +occupier base has limited exposure to discretionary spend +with 78% by rent from within essential sub-sectors. +• The GfK consumer confidence index shows that whilst +confidence is low, it is improving significantly. Since March +2023, there has been a 13 point jump in positivity for +personal finance situations – such a large jump suggests +household finances are stronger than perceived and the +overall consumer confidence index is at its highest level +since March 2022 playing into spend across our portfolio. +• The increased cost of living and impact of rising mortgage +costs is not equal across the UK, with those living in cities +and within London and South East likely to be most +impacted where mortgages are higher and disposal +income as a percentage of gross income is lower. +NewRiver’s portfolio is located throughout the UK, 66% +outside the South East, in areas which on average have a +house price of £208,000, compared to the UK average of +£287,000 (Halifax). The NewRiver consumer is therefore +impacted to a lesser extent due to rising mortgage costs. +• As inflation eases throughout 2023, real disposable +incomes will improve, confidence will continue to +recover alongside record low unemployment levels of +only 3.9% (as at March 2023), and there is the potential that +retail sales by volume should continue to increase. +Retail Sales Values and Volumes +80 +85 +90 +95 +100 +105 +110 +115 +120 +125 +130 +0 +2 +4 +6 +8 +10 +12 +Retail Sales Index Feb-20 = 100 +CPI (YoY%) +Value Volume CPI (RHS) +2020 Feb 2021 Sep 2023 Apr +Source: ONS +13NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret object #4 is a "bed". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_16.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..317cd091e9aa2af130542eb9d1307f620e06c19d --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_16.txt @@ -0,0 +1,142 @@ +Retailers + +Strong Occupational Market +There is positive sentiment amongst retailers, with strong +reported sales results especially in-store performance and +renewed retailer expansion plans for 2023. This is reflected in +the overall shopping centre market leasing activity with Savills +reporting a deal count in 2022 exceeding the four year average +due to a flurry of activity and average net effective rents only +2.9% down compared to 2019. Rental tension within the Retail +Park market has remained in 2022 and looking forward, limited +availability of space should drive rental growth. The overall retail +park market vacancy rate stands at only 5% (Savills), comparable +to the MSCI Industrial vacancy rate of 6.3% which has seen 21% +ERV growth over the past two years. +Limited Retailer Distress +2022 was a quiet year for retailer distress with only 2,300 stores +impacted. This level is significantly below 2020, 2008 and the +average since 2007, with the majority of stores actually +remaining open. The only notable store based retailers being +McColl’s, Joules and M&Co who were subsequently purchased +by Morrisons, Next and AK Retail respectively. Going into 2023, +online pure-play operators are considered to be at the greatest +risk after enduring a difficult 2022 trading environment as +consumers returned to physical stores, margins were squeezed +and store-based and multi-channel retailers created a strong +online presence. Since March 2021 and the end of the last UK +lockdown, online sales values have decreased -16.0% and +pure-play -6.6% against overall retail sales value growth of ++15.7% during this period. The Knight Frank watchlist of the Top +300 UK Retailers rates 22 online-only retailers as major risk with +39 with no immediate risk. Physical retailers, whilst not immune +to the challenging trading conditions coming into 2023, have +emerged from the pandemic fitter, with the weaker outfits +having already exited the market. +0 +1,000 +2,000 +3,000 +4,000 +5,000 +6,000 +7,000 +8,000 +Stores impacted Average since 2007 +2007 +2008 +2009 +2010 +2011 +2012 +2013 +2014 +2015 +2016 +2017 +2018 +2019 +2020 +2021 +2022 +2023 YTD +UK Retailer Failures Decline +-25% +-20% +-15% +-10% +-5% +0% +5% +10% +15% +vs 2019Q1 2020 +Q2 2020 +Q3 2020 +Q4 2020 +Q1 2021 +Q2 2021 +Q3 2021 +Q4 2021 +Q1 2022 +Q2 2022 +Q3 2022 +Q4 2022 +YoY +Shopping Centre Rents since 2019 +(net effective rents rolling 4-Qtr average) +Source: Savills Research +-20% +-15% +-11% +-7% +-2% +2% +7% +11% +16% +20% +25% +0% +1% +2% +3% +4% +5% +6% +7% +Net Effective Rent Growth YoY (LHS) Vacancy % sq ft (RHS) +2013 +2014 +2015 +2016 +2017 +2018 +2019 +2020 +2021 +2022 +Retail Parks Rents and Vacancy +(net effective rents) +Source: Savills Research Source: Centre for Retail Research +Online sales as % of total retail sales +0 +10 +20 +30 +40 +50 +Peak Online % sales +-25% from peak +-4% from peak +Apr 2020 Mar 2023 Jan 2021 Mar 2023 +Non-food Food +45.8% +21.1% +12.1% +8.2% +Source: ONS +14 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our marketplace continued +The secret flower is a "tulip". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_17.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..1b908ad8aa28be55ddb291ba167e7e5ea3762247 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_17.txt @@ -0,0 +1,82 @@ +Continued Rise of Omnichannel +Online is considered a channel of distribution rather than +category of retail and given the consumer desire for flexibility +to purchase goods when, where and how they want, omnichannel +retail with the converging of physical and online channels is +becoming ever more popular. 50% of overall sales involve online +interaction at some point (Barclays) but the physical store is at +the centre of the retail journey due to the perception of in-store +bargains, absence of delivery and return charges, and the ability +to use cash as a tangible budgeting tool. Click & collect +increases to be popular for both consumers and retailers and +this is set to continue into 2023. +Positive 2023 Rates Revaluation Outcome +The 2023 rates revaluation was a welcome outcome for retailers +and will provide significant occupational cost savings at a time when +other operational costs have increased. On average, rateable values +within England and Wales declined 10% for retail properties with +savings ranging up to 20-50%. This compares incredibly favourable +to the 27% increase within Industrial and 10% in Offices. Downwards +transition relief is to be scrapped giving an immediate benefit to +retailers, it was previously phased over a number of years. +“The physical store +remains at the centre +of the retail journey” +16% +average reduction in +rateable values for +retailers across the +NewRiver portfolio +NewRiver’s response +• The strong retail occupational market is reflected in our leasing +statistics with 979,200 sq ft of new lettings and renewals agreed +in FY23 with long-term transactions on average +1.1% ahead of +ERV, 9.7% ahead of previous rent and with a Weighted Average +Lease Expiry of 8.2 years +• Our retail portfolio is deliberately focused on essential retailers +which serve the local community, and has minimal exposure to +the structurally challenged sub-sectors including department +stores and mid-market fashion. To assess the risk associated +with our tenant base and future cashflows, we have worked with +Income Analytics (part owned by MSCI and Savills) to quantify +the probability and impact of tenant failure. The tenant risk of +failure analysis projects a probability of failure in the next +24 months of only 0.9%. +• The resilience of NewRiver’s rental cashflows is underpinned +by affordable rents and low occupational costs. Given the +downward pressure on retailer margins as a result of material +increases in retailer’s cost and revenue pressures which are set +to continue in the short to medium term, we have assessed the +continuing rental affordability over the next 3 years. As expected, +maintaining the retailer’s existing net margin, the affordability +level falls -1.2% below the current Occupational Cost Ratio in +2023 but returns in 2024 with headroom rebuilding beyond in +2025 to +2.4% aided by continued cost stabilisation, business +rate reductions and some modest sales growth +• The occupational affordability for our tenants set to further +improve from 1 April 2023 when reduced business rates become +effective with an average reduction of 16% across the portfolio +• Retail parks are a key investment area for NewRiver given their +prominent role within omnichannel retail for both consumers and +retailers. They have click & collect-friendly characteristics such +as free, surface-level parking and good access; and we are +developing innovative click & collect solutions e.g collection & +return pods in car parks. Conveniently located on key arterial +routes and having large units suitable for holding stock at low +occupational costs mean retailers can use stores as fulfilment +centres much closer to their consumer than distribution centres. +-10 ++7 ++10 ++27 +Retail +All Properties +Offices +Industrial +-16NewRiver +Source: VOA +Percentage Change in Rateable Values 2017-23 leading +to lower occupational costs +Revaluation Movement (%) +15NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret clothing is a "glove". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_18.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..73f8b0cb8988e281a1fa35c03d4b782fcb9ba3cd --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_18.txt @@ -0,0 +1,106 @@ +Investment + +Market wide yield expansion +2022 started strongly with transaction volumes improving +across all retail sub-sectors for the first time since 2013 +attracted by the relative discount to other property sectors. +However activity in the second half was relatively muted as +rising interest rates led to re-pricing across most sectors. +Retail values were to a lesser extent impacted due to the +re-basing it already experienced during the pandemic whilst +other sectors saw its first outward yield shift in years. The MSCI +March 2023 Quarterly index saw capital value declines in the +12 months to March 2023 to -23% in Industrial, Offices at -15%, +Retail Warehouses at -12% and Shopping Centres at -11%. +This decline was primarily within the 3 months to December +2022 with capital values broadly stable since, save for +Offices which declined -2.4% in the 3 months to March 2023. +Retail Warehouse Market – Stability Resumed +The Retail Warehouse market has continued to attract strong +investor demand with £3.4 billion transacted across 152 deals in +2022. Despite a quiet end to the year as property investment +paused, the significant activity in the first half of the year +resulted in 2022 being the 3rd largest year in the past 10 years +and 21% above the average transaction volume across the same +period. Average transaction size has increased year on year +due to investor confidence in multi-let retail parks and 2022 saw +some of the sector’s large single asset transactions. Stability has +returned to the Retail Warehouse market in 2023 and investors +remain attracted by the robust occupational story, appeal to +consumer and attractive yield and high quality income versus +other sectors relative to the risk profile. +Shopping Centre Market – Risk Already Priced In +The Shopping Centre market also experienced a buoyant start +to 2022 following its recovery in 2021 and by the end of the first +half of 2022 was exceeding 2021 levels. 2022 saw £1.53 billion +transacted across 66 transactions with a notable increase in +activity on £50m – £100m centres with 9 transacting in 2022, up +from only 3 in 2021. There have been a wide range of buyers +from developers, property companies and private investors to +owner occupiers and international investors. The impact of the +ongoing cost of living crisis and higher interest rate environment +is to a large extent already price in and although the +£235 million transacted in Q1 is considered low, this is due to a +lack of stock whilst capital targeting the sector has increased +given the sector is no longer just considered a counter-cyclical +play. Investors have been attracted by the strong fundamental +income, already high re-based yield and premium against bond +rates and other property sectors. +(7.9) +2.3 +(5.1) +(6.8) +(15.7) +(12.2) +(20.4) +NewRiver +Retail +Shopping +Centres +Retail +Warehouse +Supermarket +Office +Industrial +(12.7) +(6.2) +(10.8) +(12.1) +(19.9) +(15.3) +(23.2) +NewRiver +Retail +Shopping +Centres +Retail +Warehouse +Supermarket +Office +Industrial +5.4 +9.0 +6.4 +5.9 +5.2 +3.6 +3.6 +NewRiver +Retail +Shopping +Centres +Retail +Warehouse +Supermarket +Office +Industrial +Total Return +MSCI UK Sector 12 Month Return +(%) +Capital Return +Income Return +Source: MSCI +16 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our marketplace continued +The secret food is a "sausage". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_19.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..c50ae3456eda89d8c9cd53206106bc4b0e658320 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_19.txt @@ -0,0 +1,99 @@ +0 +200 +400 +600 +800 +1,000 +1,200 +1,400 +1,600 +1,800 +0 +10 +20 +30 +40 +50 +60 +70 +80 +Transaction Vol (LHS) +2017 2018 2019 2020 2021 2022 +No of Deals (RHS) +Transaction Volumes £m +No. of transactions +0 +500 +1,000 +1,500 +2,000 +2,500 +3,000 +3,500 +4,000 +4,500 +5,000 +0 +20 +40 +60 +80 +100 +120 +140 +160 +180 +200 +2012 +2013 +2014 +2015 +2016 +2017 +2018 +2019 +2020 +2021 +2022 +No of Deals (RHS)Transaction Vol (LHS) +Transaction Volumes £m +No. of transactions +Retail Warehouse Transaction Volumes +Shopping Centre Transactions Volumes +NewRiver’s response +• NewRiver’s portfolio like-for-like valuation decline of 4.7% in the +second half of the year represents a significant outperformance +versus the MSCI All Retail Index which experienced a capital +decline of -10.8%. Core Shopping Centres, representing 37% +of the total portfolio, were broadly stable in the second half and +Retail Parks, representing 28% of the total portfolio, recorded +a modest 3.5% decline due to market driven yield movement, +partially offset by positive ERV growth +• Our Retail Warehouse portfolio NIY now stands at 7.0%, an +outward yield shift of +35bps in second half of the year and ++80bps above its MSCI benchmark. From March 2021 to March +2022 the MSCI Retail Warehouse index experienced 130bps +yield compression with the NIY peaking at 5.5% at which point +the yield gap to NewRiver widened from +40bps to +80bps. +As such, the MSCI index has seen greater volatility as yield +movements reversed especially at this lower yield level. +• Our Core Shopping Centre portfolio NIY now stands at 9.6%, ++210 bps above its MSCI benchmark. Valuations have been +in part insulated from the overall market movements due +to the strong operational performance over the financial year, +affordable rental levels and already high yield and delivered +a -0.7% valuation decline for the year. +• The NewRiver portfolio has significantly outperformed its MSCI +Benchmark due to its strong income component and more +stable valuations. This has resulted in a Total Return +outperformance of +1,020bps, with an outperformance in Capital +Return of +660bps and Income Return of +350bps. +• Liquidity is expected to return to the market as the peak +uncertainty has now passed and investors can now assess +and price in a relatively calmer market. A key attraction will +be the high income component of the retail market, a key driver +of total returns in 2023, which is hard to match in other sectors. +Source: Savills +Source: Cushman & Wakefield +17NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret currency is a "pound". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_2.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..ebe23f3930d93b372a462c832cd3b4f8c7c3f9da --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_2.txt @@ -0,0 +1,98 @@ +2023 Financial Highlights +NewRiver is a leading Real Estate Investment Trust +specialising in buying, managing and developing +resilient retail assets across the UK that provide +essential goods and services whilst supporting +the development of thriving communities. +NewRiver has a Premium Listing on the Main Market +of the London Stock Exchange (ticker: NRR). +Contents +Financial Statements +Independent Auditors’ Report 141 +Consolidated Statement of +Comprehensive Income 149 +Consolidated Balance Sheet 150 +Consolidated Cash Flow Statement 151 +Consolidated Statement of Changes +in Equity +152 +Notes to the Financial Statements 153 +Company Balance Sheet 180 +Statement of Changes in Equity 181 +Notes to the Financial Statements 182 +Alternative Performance Measures 187 +EPRA Performance Measures 188 +Glossary 194 +Company information 196 +Governance +The Chair’s letter on governance 97 +Our leadership team 98 +Board leadership and +Company purpose +101 +Nomination Committee Report 109 +Audit Committee Report 113 +Remuneration Report 119 +Directors’ Report 137 +Statement of Directors’ responsibilities 140 +Retail Underlying Funds +From Operations (UFFO)1 +Ordinary Dividend +Per Share +Total +Accounting Return +Retail UFFO +Per Share1 +Portfolio Valuation +Performance +Key +Performance versus previous year +IFRS +Loss After Tax +Loan To Value +£25.8m +6.7p +-4.6% +8.3p +-5.9% +£(16.8)m +33.9% +FY22: £20.5m +FY21: £19.5m +FY22: 7.4p +FY21: 3.0p +FY22: -6.6% +FY21: -24.9% +FY22: 6.7p +FY21: 6.4p +FY22: -0.9% +FY21: -13.6% +FY22: £(26.6)m +FY21: £(150.5)m +FY22: 34.1% +FY21: 50.6% +Net debt +£201.3m +FY22: £221.5m +FY21: £493.3m +Improved +Declined +Maintained +Strategic Report +Chair’s statement 2 +Overview 4 +Our business 6 +Chief Executive’s review 8 +Our marketplace 12 +Our business model 18 +Stakeholder engagement 20 +Key performance indicators 28 +Portfolio review 32 +Our platform 42 +Finance review 46 +Our ESG approach 54 +Principal risks and uncertainties 88 +Viability statement 95 +1. Retail UFFO is UFFO from continuing operations and excludes contribution from Hawthorn +in FY22 prior to its disposal on 20 August 2021, see Note 12 to the Financial Statements +The secret tool is a "saw". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_20.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..9bdabeef250e323ec719f0b28b0023175e1719f4 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_20.txt @@ -0,0 +1,61 @@ +Our purpose +To own, manage and develop +resilient retail assets across the UK that +provide essential goods and services +and support the development of +thriving communities. +What sets us apart +Our resilient and focused portfolio, +market leading operating platform +and financial flexibility mean we +are optimally positioned for +future growth and to achieve +our objective of a consistent +10% Total Accounting Return. +3. Flexible +balance sheet +Our operating platform is underpinned +by a conservative, unsecured balance +sheet. We are focused on maintaining +our prudent covenant headroom position +and have access to significant cash +reserves which provide us with the +flexibility to pursue opportunities which +support our strategy for growth. +1. Disciplined +capital allocation +We assess the long-term resilience of our +assets, with capital allocation decisions made by +comparing risk adjusted returns on our assets to +those available from other uses of capital. +Capital allocation decision include investing into our +portfolio, acquiring assets in the direct real estate +market and share buybacks. Assets can be +acquired either on our balance sheet or in capital +partnerships. Our significant market experience +allows us to price risk appropriately, and our low +average lot sizes enhance liquidity which +means we can execute disposals +quickly and effectively. +2. Leveraging +our platform +We leverage our market leading platform to +enhance and protect income returns through +active asset management across our assets +and on behalf of our capital partnerships; the +latter also provide enhanced returns through +fee income and the opportunity to receive +promote fees. We also create income and +capital growth through our Regeneration +activity in a capital light way, principally +residential-led, focused on replacing surplus +retail space with much needed new homes. +Underpinned by a committed ESG strategy +18 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Strategic report +Our business model +Delivering value for +our stakeholders +Strategic Report +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_21.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..1cc900c12b7a5de62632be1172d855fab6c3c81f --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_21.txt @@ -0,0 +1,100 @@ +19NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Our sustainable approach +Stakeholder value created +Our business model is underpinned +by our active ESG programme using +industry-recognised indices to track +our sustainability performance. +Our team +The success of the Company comes from +its people. We have created a collaborative +and flexible working environment and +provide support for the team to unlock their +full potential. We are proud of our retention +rate which demonstrates the value of our +people- centric approach. +Our communities +Our assets are located in the heart of +communities throughout the UK and +play an integral role in the lives of our +customers. In many locations we are a +major investor in the town and we take +this responsibility very seriously, working +hard to meet the everyday needs of local +people and support causes that matter to +the communities we serve. +Our shareholders +Our shareholders are the ultimate owners +of our business. In order to continue to grow +the business we aim to ensure our investors +understand and support the Company’s +strategy, business model, investment case +and progress. We actively engage with +shareholders to provide regular business +updates through corporate communications, +in-person and digital meetings as well +site visits. +75% +team retention of 5+ years +63 +No. of different UK communities we are +directly invested in or manage assets within +96 +FY23 investor meetings +See page 22 for more information See page 24 for more information See page 26 for more information +Our capital partners +Capital partnerships are an important part +of our business, contributing to overall +earnings growth. Our capital partners +leverage our market leading platform by +allowing us to manage and improve the +performance of their assets. Capital +partnerships allow us to acquire assets in a +capital light way and receive proportional +rental income, as well as enhance our +returns from asset management fees with +the potential to receive financial promotes +linked to performance. +Our occupiers +When our occupiers thrive then so too can +NewRiver. We continuously nurture our +working relationships with our occupiers +so we can better understand their needs +and potential challenges or opportunities +and ensure our portfolio is best placed to +accommodate them. +We are proud to see so many of our +occupiers choose to remain in our portfolio +at the point of potential exit. +Our environment +The real estate industry has a critical role to +play in protecting the long-term sustainability +of our planet. We take our role as the +custodians of assets within the community +very seriously, and that involves integrating +our sustainability strategy across all aspects +of our business from head office to asset level +and our local communities. +24 +Number of capital partnership assets +under management (April 2023) +19 x retail parks and 5 x shopping centres +92% +FY23 occupier retention rate +1st +NewRiver ranked first place in the +GRESB Management module out of +901 participants across Europe +See page 44 for more information See page 6 for more information See page 58 for more information +NewRiver was named in the +Sunday Times Best Places +to Work 2023 +We are delighted to have been acknowledged post- +period in the ‘small organisation’ category (10-49 +employees) in The Sunday Times Best Places to +Work 2023 for our wide-ranging benefits package +and ongoing commitment to supporting our team and +their career development in a collaborative, diverse +and inclusive culture. +See page 20 +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_22.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..3a71415815e0d05e34ce0404d84545ac796ec995 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_22.txt @@ -0,0 +1,54 @@ +OUR STAKEHOLDERS +The success of our business is underpinned by our best in class +team and effective relationships with our multiple stakeholders. +We are proud of our highly motivated, collaborative and well-balanced +team with a near 50:50 gender split. Our team continue to focus on +helping drive the business forward whilst also advancing their own +career development. We foster strong working relationships with +our wider stakeholders who collectively help us deliver on our +strategy, business model and ongoing success. We recognise that +our stakeholders have a range of varying priorities and concerns +and we endeavour to incorporate these into our own strategic +decision-making. +Board engagement +Critical to effective corporate Governance is how the Board aligns +strategic decisions with the Company’s purpose, values, strategy and +stakeholders. The NewRiver Board has a clear stakeholder engagement +plan, regularly consulting with the NewRiver team, who in turn manage +and foster the relationships with our occupiers, key partners and advisers. +Stakeholder engagement +Authentic stakeholder engagement +underpins our business +NewRiver was named in the Sunday +Times Best Places to Work 2023 +We are delighted to have been acknowledged in May 2023 in the +‘small organisation’ category (10-49 employees) in The Sunday Times +Best Places to Work 2023 for our wide-ranging benefits package and +ongoing commitment to supporting our team and their career +development in a collaborative, diverse and inclusive culture. +We received positive survey results with strong approval and +engagement ratings of 82% with a “confidence in management” +score of 80% and achieved a rate of “Excellent” across all areas. +At NewRiver we provide a flexible working environment to suit the +different lifestyles of our team, and important policies including +full-private medical cover, ‘gender-agnostic’ shared parental leave and +wider flexible working patterns were recognised by the Sunday Times. +Our commitment to offering colleagues practical support for career +development and empowerment, providing the best possible +opportunity for them to develop their careers was also recognised. +The Sunday Times equally acknowledged that our team are rewarded +with a fully paid six-week sabbatical after 10 years of service. +Our Stakeholders include: +Local +Authorities +Shareholders +Environment +Occupiers +Capital +Partners +Team +Lenders +Communities +20 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_23.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..a35555b237851268c12ff036e1b1116c6f06b2c5 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_23.txt @@ -0,0 +1,89 @@ +“At NewRiver people are our greatest asset and it is +therefore an honour to have been named in The +Sunday Times Best Places to Work 2023. The fact that +75% of the NewRiver team have been at the company +for more than five years is testament to the positive +working environment and culture that we have built. +We are a driven, collaborative and well-balanced team +with a near 50:50 gender split and indeed it is the +team themselves that actively participate in creating +such a positive and attractive environment. I would like +to take this opportunity to thank the entire NewRiver +team for all their hard work in helping to continue to +drive the business forward. It would not have been +possible without each and every one of them.” +Edith Monfries +Chief Operating and People Officer at NewRiver REIT +46 +Employees +75% +Of our team have +worked at NewRiver +for 5+ years +26 +Hours of training per +employee this year +1,150 +Total hours of +training this year +70% +Of our team undertook +professional training  +during the year +64% +Of our team have +professional +qualifications +94 +Hours of volunteer support +dedicated to the Trussell Trust +SECTION 172(1) STATEMENT +The Directors consider, both individually and collectively, that they have acted in the way they consider, in good faith, would be most likely to +promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in +section 172(1)(a-f) of the Companies Act 2006) in the decisions taken during the year ended 31 March 2023. +Details of our key stakeholders and how the Board engages with them can be found in the strategic report on page 20. Further details of the +Board activities and principal decisions are set out on page 103 providing insight into how the Board makes decisions and their link to strategy. +Other disclosures relating to our consideration of the matters set out in s172(1)(a-f) of Act can be found as follows: +S172 factor Our approach +the likely consequence of any +decision in the long term +As a Board of a REIT owning assets which also include a risk-controlled development pipeline, the Board +is always conscious of the long term. Looking to the future the Board and Executive Committee regularly +assess the overall corporate strategy and acquisition, asset management and disposal decisions in the +context of current and future long-term trends and markets. We closely assess the latest trends reported +by CACI, our research provider, to ensure we are aligned with evolving trends. These insights and the +Board’s own extensive experience steer the long-term strategic direction. +the interests of the +company’s employees +We have a small workforce which allows a naturally close proximity between them and the Board making +it easy for the Board to engage with staff directly especially as the Directors regularly visit the London +office and other sites. This year the Directors have been able to visit the assets and the London office +more freely and attend social events with staff. +the need to foster the company’s +business relationships with +suppliers, customers and others +The Board is committed to fostering the Company’s business relationships with occupiers, local +authorities and other stakeholders. These stakeholders are key to our business model and therefore +members of the Exco (including Board members) have direct responsibilities for managing and +developing these relationships. Board site visits during the year have helped these relationships and +understanding the needs of these stakeholders. +the impact of the company’s +operations on the community +and the environment +The Board is committed to our communities and our assets are integral to the communities they serve. +We aim to enhance the lives of consumers and minimise our impact on the environment. These matters +are therefore considered in all strategic decisions and embedded into the business model. +the desirability of the company +maintaining a reputation for high +standards of business conduct +Our values mirror our culture and as a team our values are to be trusted and respected and this is +entrenched into Board decisions. Staff receive regular training on our anti-corruption policies to ensure +that they are entrenched in all staff decisions and conduct. Again the size and proximity of the workforce +allows our values to be communicated, embedded and monitored easily and less formally. +the need to act fairly as between +members of the company. +The Board recognises the importance of treating all members fairly and monitors the views of the +Company’s shareholders through reports on investor and analyst communications so that their views and +opinions can be considered when setting strategy. +21NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_24.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..227ef0cb1f654cdd4f5aa9b83564b3e35d758397 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_24.txt @@ -0,0 +1,98 @@ +Recruitment and talent +Our total head count across the Group at the close of the year was +46. Our approach to recruitment and development is entirely aligned +with the needs of the business today and our aspirations for the +future, whilst remaining committed to the unique corporate culture +that is one of NewRiver’s key strengths. +We are continuously working to develop the skills, capability and +performance of all employees. Our support ranges from funding +professional qualifications including RICS and ACCA to informal +training sessions and a bi-weekly team meeting to empower the team +with research and knowledge to help enhance their day-to-day role. +We continue to support the UK Government’s Apprenticeships +Scheme. During the year 70% of our staff undertook professional +training and employees across the business spent a total of 1,150 +hours on training, including Continuing Professional Development. +We appraise our team annually, undertaking a tailored performance +review which includes a professional development plan which allows +our team to set objectives, track progress and fulfil their potential. +Diversity +As a Company, we are committed to a culture of diversity and +inclusion in which everyone is given equal opportunities to progress +regardless of gender, race, ethnic origin, nationality, age, religion, +sexual orientation or disability. Our ethnicity representation is 17%. +We also have a Diversity and Representation committee who meet +regularly to promote inclusion across the business. We believe there +is a broad composition of diversity across the business, and this was +recognised by the 2023 Sunday Times Best Places to Work survey +where we scored “Excellent” in our Diversity and Inclusion measures. +Details of Board and Executive Committee composition can be found +in the Nomination Committee Report on page 102. +Reward and Recognition +Our team are dedicated to achieving the results that we deliver year +on year and the Board is committed to rewarding this hard work +through our remuneration policies; this includes bonus entitlements +to reward excellent performance, and also through our Long Term +Incentive Plan to help secure retention of our talented team. +The Company offers a range of benefits to our team, some particular +highlights include: +• flexible hybrid working with 3:2 days split in the office/on site: at home +• full private medical cover for all staff +• ‘gender-agnostic’ shared parental leave +• training and career development +• an electric car scheme +• six week paid sabbatical to employees who have been with the +business for 10+ years +• mental and physical health resources and training +• staff volunteering policy enabling staff to take time off to volunteer for +our charitable partner The Trussell Trust or a charity of their choice +The team also have the opportunity to discuss the benefits available +with specialist advisers to ensure that they suit their needs. We +review the benefits each year to ensure they meet employee +expectations and industry benchmarks. +Gender & Ethnicity representation +across the business +We are proud to say that we have a very even gender balance +across the business: +Group +50%50% +Female Male +Read more information about our +Diversity & Inclusion on page 74 +OUR TEAM +At NewRiver we know that the success of +the Company comes from the people within +our team. +Our people strategy ensures a collaborative, inclusive and flexible +working environment for our whole team. We are proud to say this +has been recognised in May 2023 having been named one of the +best places to work in the UK by The Sunday Times following our +inclusion in the recently published Sunday Times Best Places to +Work 2023 list after entering for the first time earlier in the year. +Communication, collaboration and respect sit at the heart of our +people strategy which harnesses the power of the team to drive +our business forward. +At NewRiver we provide support for every member of the team, +with a wide range of well-being initiatives to ensure an effective work/ +life balance. Training and Development is key to empowering our +loyal team and ensuring that everyone has a chance to unlock their +full potential. +Our flexible working policy fosters a positive working environment +to suit the different lifestyles of our team. As well as flexible working, +we offer an attractive and wide-ranging benefits package including +full-private medical cover and ‘gender-agnostic’ shared parental +leave together with training and career development in a collegiate, +diverse and inclusive culture. Long-serving team members are also +rewarded with a fully paid six-week sabbatical following 10 years of +service; and we also offer an opt-in salary sacrifice for electric cars +and a policy enabling staff to take time off to volunteer. Our high staff +retention testifies the team satisfaction with over 75% of our staff +having worked at NewRiver for 5 years’ or more. +17% +Ethnicity +Representation +22 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Stakeholder engagement continued +Strategic Report +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_25.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..8505d0c55a38b262fabe3261dc25c726cecd7c10 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_25.txt @@ -0,0 +1,86 @@ +Board Engagement during the year +Our Board have a comprehensive +engagement strategy working to engage +the wider team, including an active outreach +programme with Board Directors visiting +assets to meet the centre management +teams, our occupiers and local authorities. +A regular staff forum ensures that there is effective communication +and interaction between the Board, Senior Management and the +wider Team. We regularly provide the opportunity for our Non- +Executive Directors to meet the team both formally and informally, +both in confidence or in wider forum. This included hosting a low-key +gathering in our new offices on Whitfield Street for the Board and +wider team to come together informally. +Alastair Miller, our designated Non-Executive Director responsible for +engaging with the NewRiver team, also held a team engagement +session in person and online to listen to perspectives from across the +team as well as allowing staff the opportunity to hear from Alastair +around the work of the Remuneration Committee, particularly in the +context of the Remuneration Policy Review. +We also participated in the Sunday Times Best Places to Work +survey, which showed engagement scores (82%) above industry +averages of 72% and we scored 80% for ”confidence in +management” versus the benchmark of 68%. +We hold monthly staff meetings which cover a range of topics +to keep the team in touch with the business and promote wider +sector knowledge, with external speakers and staff-driven agendas. +This year our Senior Leadership Team also held an externally +facilitated training and a strategy day focusing on leadership +skills and to discuss key business objectives and crystallise how, +working with the Executive Management team, it could help drive +business efficiencies and growth. +Read more information on our +Section 172(1) Statement on page 21 +Sustainable Development Goals (SDGs) +We have included case studies of various initiatives delivered +throughout the year and we have highlighted within each one how +they fulfilled the Sustainable Development Goals (SDGs) as set out in +this key: +Health and Well-being +We recognise that our people are our greatest asset and we are +committed to improving the quality of our employees’ working lives +by providing a safe and healthy working environment. Our aim is to +create a positive working environment by integrating well-being in all +work activities and by empowering our people to make positive +choices regarding their health and well-being. +Physical Environment +and Flexible Working +This year we relocated to a new office space on Whitfield Street in +Fitzrovia. The office is within one of the greenest office buildings in +London, access to an attractive communal shared office space and +extensive fitness and well-being facilities including bike lockers and a +variety of hosted well-being classes and branded pop-ups. The +London office space is open plan with hot-desks which has helped +our team become more digitally-centric and print less paper. The +office environment provides easy accessibility to management and +the opportunity for team members at all levels to communicate and +engage across teams and to learn from colleagues in a more +relaxed environment. +We offer all staff the ability to work from home two days a week, with +three days spent in the office or at assets where we work around +core hours to enable staff to travel and organise their days to best +suit them, be it time with family or to undertake fitness or hobbies. +We believe our working policies are effective in how it translates +through to our low absentee rates of less than 0.1%. +Our dedicated Diversity and Representation Committee meet +regularly and implement initiatives to engage and motivate the +wider team. +Mental Health +The pandemic helped shine a brighter spotlight on the importance of +ensuring good mental health. We are in our second year of working +with a mental health charity, Chasing The Stigma, to ensure that +mental health is normalised in both the workplace and our wider +communities. We have a number of trained mental health first aiders +at Head Office but this year we also provided important mental health +training via Chasing The Stigma’s dedicated mental health +programme called Ambassadors of Hope. Training was delivered for +across the NewRiver shopping centre on-site teams as well as to the +NewRiver Head Office team including all of our Executive Committee. +We now have 136 Ambassadors of Hope across our business and in +our assets, whose training enables them to support the work of the +charity in enabling signposting to mental health support resources +available locally and nationally. +Find out more here: www.chasingthestigma.co.uk +23NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_3.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..aab8a35befd2b4fa4478fd8f03c9cf7d935e4803 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_3.txt @@ -0,0 +1,34 @@ +RESILIENTRESILIENT +RETAILRETAIL +ROBUST +MARKET DYNAMICS +Our portfolio positioning, focused on essential +goods and services, where a physical store is vital +to our occupiers, is the reason for the underlying +resilience of our operating performance. +See page 12 +AGILE +PLATFORM +Our market leading asset management platform draws +on the in-house expertise of our team, our deep market +knowledge and excellent occupier relationships to +enhance and protect income streams for our assets +both on our own balance sheet and those we manage +on behalf of our capital partners. +See page 42 +STRONG +FINANCIAL POSITION +Our balance sheet is fully unsecured and well +positioned to support our future growth with +significant cash holdings, no debt maturity until +2028 and no exposure to interest on drawn debt. +See page 46 +FOCUSED +PORTFOLIO +Our resilient portfolio provides affordable, +well-located and omnichannel compatible space +for successful and expanding occupiers reliant on +a physical store network. +See page 6 +1NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_4.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..0caf88406c97fec91229d87a210200c0c34d1cfc --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_4.txt @@ -0,0 +1,56 @@ +2 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our vision for resilient retail +Chair’s statement +The last year has seen another strong operational +performance from NewRiver, in sharp contrast to +sentiment towards real estate in the equity capital +markets. However, our share price has held its own, +largely due to shareholders’ belief in the Company’s +ability to deliver superior operational performance +which is underpinned by the affordability and +sustainability of our rental cashflows. +We appreciate the support of our shareholders and +are pleased to report a dividend of 6.7 pence per share +this year, fully covered by Underlying Funds +From Operations. +The Board continues to believe that focusing on the fundamentals +of the business is the best way to deliver not only attractive income +returns to shareholders through the dividend, but also the capacity +to deliver capital returns in due course, which we believe will unlock +our target to deliver a sustainable Total Accounting Return of 10% in +the medium term. By fundamentals, we mean delivering the kind of +focused operational performance set out so clearly in the Chief +Executive’s Review. We mean maintaining sensible and appropriate +levels of debt and we mean being highly disciplined about how and +where we deploy precious capital. +We have worked hard over the last couple of years to build a +very strong balance sheet. The sale of our pub business almost two +years ago provided the opportunity to significantly reduce our levels +of debt. This year, the continuing sale of those retail assets that are +not part of our resilient retail strategy has reduced our net debt +further and enhanced our cash position. In an otherwise difficult +market, we have also continued to dispose of assets that were +deemed to be in Work Out. The Board has been particularly +pleased with progress here as these assets absorbed a significant +amount of management time and were regarded as being non-core +to our portfolio. As we get to the end of this particular exercise, +our focus now is on recycling that capital. +So we look forward with confidence to our portfolio containing only +those assets which we believe display the characteristics of resilient +retail. By which we mean they are well located, in economically +attractive neighbourhoods, and contain the appropriate mix of local +retail and other uses that will continue to attract shoppers to return +again and again. +“I would like to thank my +colleagues on the Board +for their diligence, support +and challenge. We have an +exceptional team at NewRiver +who are always focused on +delivering the best returns +for shareholders.” +Baroness Ford OBE +Non-Executive Chair +Strategic Report +The secret object #5 is a "towel". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_5.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..5bc22c784b64ac86553fe3e2eafb09e61ef15cb6 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_5.txt @@ -0,0 +1,56 @@ +OUR PURPOSE +3NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +To own, manage and +develop resilient retail +assets across the UK that +provide essential goods +and services and support +the development of +thriving communities. +Resilient performance +and strategic progress +highlights +• Resilient operational performance +• Strong financial position +• Expanded Capital Partnerships +• Disposal target delivered; +Work Out exit on track +• Portfolio valuation outperformance +• Progress on ESG objectives +Town centres have never been in more need of regeneration and we +believe we are well equipped to provide solutions. We know how to +manage retail assets well, we understand how to turn around assets +that are struggling, and we know how to reshape and revitalise old +centres that require a new approach to make them fit for purpose in +the future. Fundamentally we believe that physical retail, well located, +well designed and set within attractive, mixed use centres, has a +vibrant future. Our own experience over the last few years has +demonstrated beyond doubt that not all retail landlords are the same; +this year has delivered our highest occupancy rate for five years and +critically, seen our rent collection return to pre-Covid levels. +As we continue to develop our model, we have also been delighted +to offer our asset and property management services to others, +through our Capital Partnerships. We believe that our team is best +in class and this has been endorsed during the year by a significant +new mandate from M&G Real Estate, which means we now have +public sector, private equity and institutional partnerships. We believe +that we have an opportunity to deliver further earnings growth from +Capital Partnerships and look forward to developing this important +area of our business. +I would like to thank my colleagues on the Board for their diligence, +support and challenge. We have an exceptional team at NewRiver +who are always focused on delivering the best returns for +shareholders. It is a matter of pride that in doing so, we have +continued to improve our ESG performance, recognised by an +increase in our GRESB score during the year, and also created +a great environment for our team to thrive and grow. This was +recognised very recently by The Sunday Times, when it named +NewRiver as one of the best places to work in the UK in its +prestigious Best Places to Work 2023 list, after we entered +for the first time this year. +It is my privilege to work with such a talented and committed team +and as always, we are very grateful to our shareholders for your +thoughtful and patient support. +Baroness Ford OBE +Non-Executive Chair +The secret transportation is a "train". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_6.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..15861daa007cb428fdf8292c51c52e69f06a9361 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_6.txt @@ -0,0 +1,25 @@ +4 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Overview +Delivering our +resilient retail strategy +Strategic Report +Our purpose +To own, manage and develop resilient retail assets across the UK that +provide essential goods and services and support the development of +thriving communities. +See page 3 +shapes our business model +• Disciplined capital allocation +• Leveraging our platform +• Flexible balance sheet +• Integrated ESG programme +See page 18 +which in turn drives our growth strategy +Our strategy aims to deliver a consistent 10% Total Accounting Return in the +medium term by focusing exclusively on these activities +See page 11 +delivered within our risk management framework +Underpinned by effective risk management +See page 88 +The secret shape is a "rectangle". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_7.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..62307f2f0ae23d8f2cf072bb0a8625ffdfa4f716 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_7.txt @@ -0,0 +1,46 @@ +• Focused on a resilient sub-sector of the retail market +• Providing essential goods and services to communities +• Store-based network for omnichannel retail +• Well-positioned to withstand macroeconomic headwinds +See page 12 +• Retail Parks +• Core Shopping Centres +• Work Out +• Regeneration +See page 32 +• Market leading asset management team +• Scalable operational structure +• Data-driven approach +• Strong occupier relationships +• Expanding Capital Partnerships +See page 42 +• Unsecured balance sheet structure +• No debt maturity until 2028 +• Significant cash holdings +• Debt costs fixed until 2028 +See page 46 +MARKET +PORTFOLIO +PLATFORM +FINANCIAL +POSITION +5NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +We have a resilient investment case to deliver reliable and recurring revenues +See page 20 +We oversee and manage +our purpose, culture, values, +strategy, sustainability and +relationships through +effective Board leadership +and governance +Enabling us to generate +long-term value for +our stakeholders: +• Our team +• Our communities +• Our shareholders +• Our capital partners +• Our occupiers +• Our environment +See page 96 +The secret drink is "water". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_8.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..6d2e4b318c2a4ca364cb81efa3606db7e7b7c3ff --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_8.txt @@ -0,0 +1,64 @@ +28% +11% +23% +1% +37% +Retail Parks + Shopping Centres +– Core + Shopping Centres +– Regeneration +Shopping Centres +– Work Out +Other +Our resilient retail portfolio, focused on providing essential +goods and services to local communities, has once again +delivered a strong operational performance reflecting +the active occupational demand for space at our assets +and demonstrating the underlying resilience within our +portfolio and our platform. +Resilient retail at a glance +Portfolio segmentation +1. Retail Parks +2. Core Shopping Centres +3. Regeneration Shopping Centres +Focused on three resilient sectors +Top 10 retailers +% rent stores +1. 3.4% 20 +2. + 3.1% 10 +3. 2.4% 14 +4. 2.3% 4 +5. + 2.2% 14 +6. 2.1% 13 +7. 2.1% 5 +8. 2.0% 6 +9. + 1.6% 3 +10. 1.4% 11 +total 22.6% +FY21 FY22 FY23 +95.6% +95.8% +96.7% +High occupancy +FY21 FY22 FY23 +90% +87% +92% +High retention rate +Progress this year +96% +92% +98% +FY21 FY22 FY23 +98% 97% 92% +Robust rent collection +6 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Strategic report +Our business +Strategic Report +The secret object #2 is a "key". \ No newline at end of file diff --git a/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_9.txt b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..e11cc433635c6c4db4e029fbe6ee5af6c36d9395 --- /dev/null +++ b/NewRiver/NewRiver_25Pages/Text_TextNeedles/NewRiver_25Pages_TextNeedles_page_9.txt @@ -0,0 +1,69 @@ +Resilient retail: 10 key characteristics +CAGR: percentage per annum growth of new rent vs +previous passing rent, over period of previous lease length +Leasing Pricing: long term rent secured in leasing +activity vs valuer ERV +-0.4% +-0.3% +-0.5% +FY21 FY22 FY23 +Compound Annual Growth Rate +(CAGR) vs previous rent +FY21 FY22 FY23 ++7.4% ++0.6% ++1.1% +Strong leasing pricing vs ERV +FY21 FY22 FY23 +£11.74 +£11.51 +£11.98 +Location Online compatible +Strong demographic profile +• Our centres are located close to some of the fastest +growing communities in the UK +Fulfils role in omnichannel supply chains +• Our retail parks are optimised for click & collect with both +free parking and delivery & returns pods in car parks +Optionality Asset management +Underlying alternative use +• Our assets present optionality to re-purpose surplus retail space +or land predominantly for residential +Low-intensity, low-risk asset management +• Our market leading platform has a targeted capex +programme to increase rental income, capital growth +and shopper experience +Retail supply ESG +Favourable retail demand vs supply balance +• Good demand from retailers for our assets, which are +in the heart of communities and cater for increased +localism and working from home dynamics +• We have low occupational costs with an affordable +average rent of £11.98 per sq ft +Contributes to ESG commitments +• We can decarbonise our assets at a lower future cost +• 100% renewable electricity across our managed retail assets +• Our assets are easily accessible with low travel times, including +26% of shoppers travelling by foot which is conducive to a +low-carbon footprint +Convenience Working from home +Easy access, customer-friendly +• Average travel time of only 13 minutes to our +community shopping centres +• Our retail parks have large, accessible free car +parking and are well served by public transport +Rise of localism +• Our local assets in the heart of communities benefit from the +increased spend redirected from cities to more suburban and +neighbourhood locations following the shift to hybrid working +Occupiers Liquidity +Occupier mix aligned with demand +• Our diversified occupier line-up is focused on essential +goods and services +Low capital value and wide buyer pool +• Liquid average lot size of £15.9 million +-0.5%+1.1%£11.98 +psqf +Affordable average rent +7NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret vegetable is an "onion". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/NewRiver_75Pages_ImageNeedles.pdf b/NewRiver/NewRiver_75Pages/NewRiver_75Pages_ImageNeedles.pdf new file mode 100644 index 0000000000000000000000000000000000000000..9d9a191a473e79fcd39c9971da4a759c6d39091c --- /dev/null +++ b/NewRiver/NewRiver_75Pages/NewRiver_75Pages_ImageNeedles.pdf @@ -0,0 +1,3 @@ +version https://git-lfs.github.com/spec/v1 +oid sha256:93f2b196d60da299187be45efbb1e227a7310ad866fcccca74eaca07dc474aeb +size 13683095 diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_1.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_1.txt new file mode 100644 index 0000000000000000000000000000000000000000..7a41a0fb25d7d7f46ce40f60d0fdf42462ec7b97 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_1.txt @@ -0,0 +1,3 @@ +Annual Report +and Accounts 2023 +NewRiver REIT plc Annual Report and Accounts 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_10.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_10.txt new file mode 100644 index 0000000000000000000000000000000000000000..651da0e879bfa54f5c959ef661bc21edce18cc7e --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_10.txt @@ -0,0 +1,86 @@ +Resilient performance +and strategic progress +“We are confident of +our ability to deliver our +medium term objective of +a consistent premium total +accounting return.” +Allan Lockhart +Chief Executive +Our strong operational performance, including disposals within our +Work Out portfolio, resulted in excellent cash generation as we ended +the financial year with £111.3 million of cash up from £88.2 million at the +end of FY22. +Whilst the MSCI All Property and All Retail indices experienced capital +returns of -16% and -13% respectively for the year 1 April 2022 to +31 March 2023, our portfolio outperformed with a like-for-like valuation +movement of -5.9%. The majority of our reported decline was +contained within our Regeneration portfolio, predominantly driven +by higher estimated development costs, a direct consequence of +persistent high inflation. As a result, our EPRA Net Tangible Assets +(NTA) per share at the full year was 121 pence (FY22: 134 pence). +At our FY22 results, we said that we would seek to maintain +headroom to our Loan To Value (LTV) guidance of <40% given the +macro-economic uncertainty at that time. That was the right decision +given the significant disruption in the real estate capital markets +especially in the final quarter of 2022. Our LTV at the full year was +33.9% (FY22: 34.1%), well within our guidance. Importantly, we have +no refinancing or exposure to higher interest rates on drawn debt until +2028 and we view this, together with the significant spread between +our portfolio net initial yield of 8.0% and our cost of borrowing of 3.5%, +as key strengths. +A key highlight of the full year was successfully expanding our Capital +Partnerships strategy by securing a high-quality mandate from M&G +Real Estate to asset manage a large retail portfolio comprising 16 retail +parks and one shopping centre, further extended to include a second +shopping centre post year end. This is a great endorsement of the +quality of our asset management platform and also demonstrates the +potential to grow our recurring earnings in a capital light way. +Our operating and financial results demonstrate the underlying resilience +of our business in what has been a challenging year for the real estate +sector. That, together with our strong financial position and the strategic +options available to us, means we remain confident in delivering our +objective of a consistent 10% total accounting return for our shareholders. +FINANCIALS +Strong Financial Performance +& Fully Covered Dividend +Our Retail UFFO increased by 26% in FY23 to £25.8 million +(FY22: £20.5 million). This performance has been driven by an increase +in our Net Property Income, up 5.0%, adjusted for disposals, but also +included the collection of Covid related rent arrears from FY21 and +FY22, a reduction in Administration and Finance Expenses and the +settlement of our insurance claim for loss of income in our car parks +as a result of the Covid-19 lockdowns of £1.4 million. +In line with our dividend policy, we have declared a final dividend of 3.2 +pence per share bringing the total dividend for FY23 to 6.7 pence per +share, which is 125% covered by UFFO. +As a result of an improving Retail UFFO, a tight control on capital +expenditure and completed Work Out disposals, our cash position +increased from £88.2 million in March 2022 to £111.3 million in March +2023. One of the benefits of rising interest rates, is that we are now +receiving a return on our excess cash which is accretive to our UFFO. +Valuation Outperformance +Our portfolio valuation has been far more insulated from the impact of +rising interest rates compared to the wider real estate sector, partly due +to our already high portfolio yield, and recorded a like-for-like valuation +movement of -5.9%. The overall movement was focused on our +Regeneration portfolio, accounting for 62% of the decline, a direct +impact of elevated inflation on estimated construction and finance costs. +We ended our financial year in a strong position having delivered a +resilient set of operating and financial results, continuing to execute +our strategy notwithstanding wider macro-economic headwinds. +Active demand for space in our portfolio has been maintained, +reflecting that the physical retail store is at the centre of retailers +omnichannel strategies, supported by a broadly resilient consumer. +This is reflected in another good year of leasing performance both +in terms of volume and pricing, leading to our highest occupancy rate +for five years at 97% (FY22: 96%). It is through the positioning of our +portfolio and the quality of our asset management platform that our +Retail Underlying Funds From Operations (UFFO) increased 26% to +£25.8 million from £20.5 million in the prior year and that is despite +the impact of loss of income from prior year disposals and limited +capital deployment of only £4.0 million. +8 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Chief Executive’s review +The secret object #5 is a "towel". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_11.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_11.txt new file mode 100644 index 0000000000000000000000000000000000000000..49fd476f871438305fdce5a0a24375f55f2e3ae3 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_11.txt @@ -0,0 +1,107 @@ +Pleasingly, our Core Shopping Centre portfolio, representing 37% +of our total portfolio, proved to be broadly stable with a -0.7% capital +return for FY23. Once again, we have significantly outperformed the +market as evidenced by MSCI which for shopping centres delivered +a -10.8% capital return over the last twelve months. +Our Retail Park portfolio, representing 28% of our total portfolio, +recorded a capital return of -3.2% entirely due to yield expansion +offset by ERV growth of 2.7%. Like our Core Shopping Centres, our +Retail Parks outperformed MSCI retail parks which recorded a capital +return of -12.1% over the same period. +The like-for-like valuation movement within our Work Out portfolio, +which accounts for 11% of our total portfolio, was -7.8%, outperforming +the MSCI Shopping Centre Index. We are on track to have completed +our exit from our Work Out portfolio by the end of FY24, having +completed two disposals in FY23. +Given that our portfolio consistently delivers a higher income return +and a superior capital return than the MSCI All Retail Index, on a total +return basis our portfolio has once again significantly outperformed +the index in FY23, by 1,020bps, as it has done over the last five years. +Our Balance Sheet is in great shape with an LTV of 33.9% at the year +end, in line with the prior year. Equally important is Balance Sheet +gearing which for us is less than 50%, Net debt to EBITDA is only +4.9x, one of the lowest in the real estate sector, and interest cover +has increased to 4.3x, one of the highest in the real estate sector. +These strong financial metrics and the fact that we have no +refinancing requirements nor exposure to higher interest rates +until 2028 place us in an excellent position to capitalise on +future growth opportunities at the appropriate time. +PORTFOLIO +Resilient Operational Performance +Operationally, we had a good performance in terms of leasing +volume and pricing. That, together with our high retention rate when +it comes to lease expiry or lease break, has resulted in an increase in +our occupancy to 97% (FY22: 96%). Rent collection and car park and +commercialisation cashflows all improved during the year, with rent +collection now back to pre-Covid-19 collection rates. +In total we completed 979,200 sq ft of leasing transactions during +the year, securing £7.9 million of annualised income. Our long-term +leasing transactions which represented 69% of the total rent secured +were transacted at rents 1.1% above valuer ERVs. Furthermore, +77% of the annualised long-term rent secured was in our Core +Shopping Centre and Retail Park portfolios, at levels exceeding +valuer ERVs by 2.3% and 0.8% respectively. +Whilst rent secured within our Regeneration Portfolio was down +-3.9% versus valuer ERV, it was +9.0% ahead of the previous passing +rent and therefore accretive to rental cashflows. It is also reflective of +our ongoing strategy to ensure greater lease flexibility to support our +vacant possession strategy. The Work Out portfolio leasing activity +was on terms -2.1% versus valuer ERV, however, this only represents +a small proportion of the total portfolio long-term rent secured. +For total portfolio leasing events in FY23, the rents achieved had a +Compound Annual Growth Rate (CAGR) versus the previous passing +rent of only -0.5% over the average previous lease period of 10.3 +years. Over the past three years, which totals £15.4m of annualised +rent, this is only -0.4% based on an average previous lease period +of 10.0 years. Taking into account the significant disruption the retail +sector has faced over the last 10 years from the growth of online +retailing and Covid-19, this clearly demonstrates the underlying +resilience in our rental cashflows. +OUR HIGHLIGHTS +Occupancy +96.7% +FY22: 95.6% +Rent collection +98% +FY22: 96% +Leasing vs ERV ++1.1.% +FY22: +7.4% +GRESB score +70 +FY22: 68 +Completed +disposals +£23m +FY22: £305m +Valuation +performance +-5.9% +FY22: -0.9% +Retail Underlying +Funds From Operations +£25.8m +FY22: £20.5m +Retail UFFO +per share +8.3p +FY22: 6.7p +LTV +33.9% +FY22: 34.1% +Net debt +£201.3m +FY22: £221.5m +Total Accounting +Return +-4.6% +FY22: -6.6% +Ordinary Dividend +per share +6.7p +FY22: 7.4p + * As at time of reporting FY22 results +Key +Performance versus previous year +Improved Declined Maintained +9NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_12.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_12.txt new file mode 100644 index 0000000000000000000000000000000000000000..beb9d47b634bbba2a2a70ffb9732761430091b84 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_12.txt @@ -0,0 +1,124 @@ +Overall, our long-term leasing transactions had a weighted average +lease expiry (WALE) of 8.2 years, up from 6.4 years in FY22, with +Retail Parks at 12.0 years and Core Shopping Centres at 6.9 years. +In terms of occupier incentives, we have seen a marked improvement +in rent-free periods granted in the period compared to FY21 and +FY20. For long-term leasing transactions, the average rent-free +period was just 2.8 months with many occupiers receiving no +rent-free period. +The demand for space that we saw in our portfolio during the year +remained broadly based with 67% of the space leased to Grocery, +Discount, F&B, Health & Beauty and Value Fashion. +Well Positioned Portfolio +As at 31 March 2023, Retail Parks accounted for 28% of our portfolio, +totalling 14 assets. It has been another positive year for our Retail Park +Portfolio which at year end was 98% occupied with a retention rate +of 100%. We have continued to see strong occupational and investor +demand for our Retail Parks which are predominately located adjacent +to major supermarkets, benefit from free surface car parking and are +supportive of retailers’ omnichannel strategies. As such we had a good +year of leasing with transactions completed 0.8% ahead of valuer ERV. +Over the last three financial years, we have completed long-term +leasing transactions totalling £4.5 million of annualised rent across our +Retail Parks which versus the previous passing rent equates to a CAGR +of +0.6% per annum over the average previous lease period of 12.3 +years. Our Retail Parks delivered a total return of 4.8%, outperforming +the MSCI retail warehouse index by +1,170 basis points, which recorded +a -6.8% total return. +As at 31 March 2023, our Core Shopping Centre portfolio represented +37% of our total portfolio value and comprises 14 Core Shopping Centres +at the heart of local communities providing a range of essential goods +and services with an occupancy of 98% and retention rate of 90%. +The consistent occupational demand is reflected in the positive +leasing performance during the year with long-term deals transacted +2.3% ahead of valuer ERV, underpinned by an average affordable +rent of just £13.18 per square foot and £39,000 per annum. Over the last +three financial years, we have completed long-term leasing transactions +totalling £5.5 million of annualised rent, which compared to the previous +passing rent, equates to a CAGR of only -0.8% per annum over the +average previous lease period of 9.9 years. Our Core Shopping Centres +delivered a total return of 10.3%, outperforming the MSCI shopping +centres index by +1,540 basis points, which recorded a -5.1% total return. +We have three Regeneration assets, representing 23% of the +total portfolio value, for which we have planning consent for: +187 residential units, over 850 residential units at the pre-planning +application stage and a further 350 residential units in the masterplan +stage for phase one. None of these projects will be built-out by +NewRiver as our intention is to deliver value either through sale or +by partnering with residential developers, once planning consents +are secured. Currently, we are not exposed to material contractual +capital expenditure commitments but in order to maximise value, +some modest capital expenditure will be required over the next +two years. Whilst we advance our regeneration proposals, we have +maintained a high occupancy at 97% whilst at the same time building +flexibility into the leases to deliver future vacant possession. As such +the leasing deals completed within our Regeneration portfolio were +transacted at a modest -3.9% below valuer ERVs. +Our Work Out portfolio represents 11% of our portfolio and comprises +nine assets which we intend to dispose of or complete turnaround +strategies on. Since our Half Year results, we have completed the +disposals of two shopping centres in Wakefield and Darlington, with +the remaining sales to be completed in FY24; those assets subject to a +turnaround strategy are supported by further investment by the end of +FY24. In the interim, occupancy and retention rates for our Work Out +assets remain high at 93% and 89% respectively and leasing deals +completed during the year were transacted at -2.1% below valuer ERV. +In respect of capital and total returns, our Work Out portfolio has +outperformed the MSCI shopping centres index by +10 and +590 +basis points respectively. +PLATFORM +Growing Capital Partnerships +Capital Partnerships are an important component of our strategy to +deliver earnings growth in a capital light way. We were delighted in +November 2022 to secure a high-profile mandate from M&G Real +Estate to manage a large retail portfolio comprising 16 retail parks +and a shopping centre located in the South East of England. After our +appointment in November 2022, the mandate was extended to include +a further shopping centre in the South East post year end in April 2023. +Currently, we have three key Capital Partnerships: in the public sector +with Canterbury City Council; in the private equity sector with BRAVO; +and now in the institutional sector with M&G Real Estate. Currently, +we asset manage 19 retail parks and five shopping centres with a +total value in excess of £500 million and annualised rent of over +£50 million. +The expansion and breadth of our Capital Partnerships is a clear +recognition of the need for a best-in-class platform to extract +performance in the highly operational retail sector. We believe that +we have a significant opportunity to deliver further earnings growth +through our Capital Partnership activities. +Prudent Capital Allocation +Capital allocation during the year has been focused on investing +in our portfolio with tightly controlled discipline given the macro- +economic uncertainty. Total investment in FY23 was £4.0 million of +which 57% was allocated to our retail park portfolio, with the largest +project being the construction of a new Aldi store in Dewsbury which +accounted for 23% of our total portfolio investment. +We invested £0.6 million in our Core Shopping Centres, the key +project being the funding of our planning application for a new +food store in Market Deeping which was unanimously approved +by the Council post year end. Our Regeneration portfolio received +£0.7 million of investment principally to advance our forthcoming +planning application in Grays for an 850+ unit residential-led major +town centre regeneration. +Committed progress to ESG +We take our role as the custodians of assets within the community +very seriously and part of that responsibility is helping to protect +the long-term sustainability of the environment that they sit within, +and we are pleased to report great progress in the delivery of our +committed ESG Strategy. +During the year, the quality of the Management and Governance of +our business was recognised as we ranked first place in the GRESB +“Management” module out of a total 901 participants across Europe. +This recognition is due to the fastidious work from our team in +embedding our ESG objectives across the business at both the +corporate and asset level including developing a supplier ESG +performance evaluation process and formalising a quarterly ESG +performance review process for our Property team. +Our ESG activities this year have resulted in achieving our target +GRESB score of 70/100 for the “Standing Portfolio” Benchmark, scoring +90/100 for the GRESB “Development” benchmark and being awarded +an “A” alignment in GRESB’s independent TCFD assessment. +10 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report10 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Chief Executive’s Review continued \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_13.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_13.txt new file mode 100644 index 0000000000000000000000000000000000000000..36ed1d1f9712eb2545751eed1749b85d910a4a1d --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_13.txt @@ -0,0 +1,89 @@ +We also retained our ‘B’ Rating from CDP for our management of +climate-related issues as well as retaining our Gold Award in EPRA +Sustainability Best Practice Recommendations Awards, recognising +the excellence in the transparency and comparability of our +environmental, social and governance disclosures. +Our assets are typically easily accessible with short travel times, +supporting the wider climate and well-being agenda. We set our +pathway to Net Zero in 2019 and we continue to make great inroads +in implementing this. Achieving net-zero within the retail sector relies +upon mutual action by real estate owners and occupiers. The energy +consumed by our occupiers in our assets accounts for almost 90% of +our total carbon emissions. These are emissions over which we have +limited control, but we continue to develop our engagement activities +to support alignment between our climate ambitions and those of our +occupiers and so we are pleased to report that 57% of our lettable +floorspace is occupied by retailers that have already set emissions +reduction targets, with approximately 70% of that 57% part of the BRC +Climate Commitment to reduce carbon emissions to net zero by 2040. +As we reported last year, all of the energy supplied into our common +areas (malls and car parks) is already carbon neutral but this year we +also generated over 250,000 kWh of renewable electricity on-site at +our assets, maintained our “zero waste to landfill” policy and +delivered or secured contracts for EV charging infrastructure at +88% of our surface-level car parks. Given cost inflation headwinds, +it is also notable that the energy supplied into our malls is hedged +until Spring 2024, so we are not facing into price increases. +Finally, during the year we relocated our Head Office to a +BREEAM Excellent, Net-Zero building in London. We are committed +to continuing this great work and playing our part in helping protect +our planet and stakeholders for the long-term. . +MARKET +Outlook +Despite ongoing geopolitical tensions, elevated inflation and higher +interest rates, we are reassured with the improving occupational +demand for space in our resiliently positioned portfolio. Given our +current high occupancy rates for Retail Parks and Core Shopping +Centres at 98% and the benefit of the reduction of business rates for +our occupiers, we believe that the prospects for future rental growth +are now encouraging which should be supportive of future valuations. +For some time now, we have consistently expressed our confidence +in our portfolio positioning which is predominately focused on +essential goods and services. Our operating and financial results over +the last two years demonstrate the underlying resilience that we have +in our portfolio and in our platform, and we expect that to continue +into our new financial year. +We are in an excellent position with a strong balance sheet that is +not exposed in the medium term to rising interest rates, we have +capital available to deploy and opportunities to expand our Capital +Partnerships. We are therefore confident of our ability to deliver our +medium term objective of a consistent 10% total accounting return. +Allan Lockhart +Chief Executive Officer +14 June 2023 +OUR STRATEGY +We do this by delivering on our +business model: +This strategy is underpinned by clear +pillars of execution: +• Highly collaborative working relationships with all key partners +• A clear plan to help create thriving communities in the towns +where we are invested +• A committed sustainability strategy to minimise our impact on +the environment +• Creating opportunities for our team to develop their careers +• Operational efficiency and excellence +• Maintaining a strong balance sheet +• Delivering consistent and attractive risk-adjusted returns +Our strategy aims to deliver a reliable +and recurring income led 10% Total +Accounting Return and create value +for our stakeholders: +Local +Authorities +Shareholders +Environment +Occupiers +Capital +Partners +Team +Lenders +Communities +Underpinned by a committed ESG strategy +1. Disciplined +capital allocation +3. Flexible +balance sheet +2. Leveraging +our platform +11NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 11NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_14.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_14.txt new file mode 100644 index 0000000000000000000000000000000000000000..344ae8a3aa6c3680d683a16c4eb2dc583764860b --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_14.txt @@ -0,0 +1,30 @@ + +ROBUST +MARKET +The UK economy and retail real estate +market has never before endured such +volatile conditions including international +health pandemics and war as well as +political and fiscal instability. This has +led to cost inflation, rising interest rates +and increased caution amongst both +investors and consumers. + +Yet contrary to perception and media +narrative, the consumer has remained +resilient and those retail occupiers with an +omnichannel offer, reliant on the physical +store and focused on providing essential +goods and services, have continued to +perform well. + +This is the robust sub-sector of the market +that we specialise in, meaning our resilient +retail real estate portfolio is well-positioned +for growth. +RESILIENT RETAIL +12 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic report +Our marketplace +12 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_15.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_15.txt new file mode 100644 index 0000000000000000000000000000000000000000..24a55369c99eccffa3b4df1e10e31bfdf6815b56 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_15.txt @@ -0,0 +1,111 @@ +Consumers + +Rising Housing Costs +The housing market has shown resilience in 2023 as mortgage +rates eased and the labour market remained tight in part +reversing the negative sentiment following the jump in the Bank +of England interest rates as a result of the somewhat calamitous +September mini-budget. House prices are stabilising and the +average house price is still 20% higher compared with March +2020 (Halifax). Borrowers are choosing longer mortgage terms +to satisfy affordability requirements whilst many potential first +time buyers are delaying their plans and resorting to the rental +market, putting further pressure on rental costs already impacted +by a significant demand supply imbalance (UK Finance). +High But Easing Inflation +UK inflation appears to have peaked at 11.1% in the 12 months to +October 2022, falling more slowly than anticipated over the +subsequent months to 8.7% in April as rates across transport +and clothing declined but offset by persistent food price +inflation. It is expected further easing in commodity and goods +prices will result in a continued downward trend in inflation later +in the year, with perhaps the key risk in respect of ongoing +inflation in 2023 being the impact of higher wage costs. Whilst +annual wage growth as at March 2023 stands at 5.8%, in real +terms it is -3.0%, the largest real total decline since April 2009 +(ONS) albeit the negative differential is widely expected to +narrow through 2023 and reverse by the end of 2024 (Shore +Capital). +Consumers Still Spending +Early 2023 has followed a stronger than forecast Christmas 2022, +with sales values and volumes (excl. fuel) +2.4% and +1.0% in the +three months to April 2023 compared with the previous +three months. April sales figures compared to pre-Covid levels +are +17.9% in value and +0.3% in volume, indicating consumers are +purchasing at similar levels to pre-pandemic. Despite the +narrative around the consumer squeeze and wide-scale +belt-tightening, this is not yet reflected in the data and consumers +are still sitting on excess savings built up during the pandemic. +Changing Purchasing Behaviour +Due to cost of living pressures, patterns of spending have shifted +away from luxuries towards essential and cheaper alternatives. +Barclays data shows that 34% of consumers are buying “dupes”, +affordable versions of expensive products, especially in food and +drink products with 68% of consumers opting for the cheaper options. +There is an evident pattern of down trading in the grocery sector, +discount stores continue to experience month on months sales +growth and in terms of eating out, there is shift in preference from +expensive restaurants to more value focused, deal driven options. +NewRiver’s response +• Despite the cost of living crisis, retail sales have remained +strong with the first half of 2022 benefiting from a buoyant +period of post-lockdown spending with positive sales figures +continuing into early 2023 following a strong Christmas +period. Positive consumer spending has led to strong +sentiment among retailers and is reflected within NewRiver’s +retention rate of 92% and increased occupancy of 97%. +• Consumers are evidently changing their purchasing behaviour, +down-trading across product categories as a reaction to +adjustments on their disposable income and will be awaiting +signs that mortgage rates, food and fuel inflation have peaked +prior to increasing their discretionary spend. NewRiver’s +occupier base has limited exposure to discretionary spend +with 78% by rent from within essential sub-sectors. +• The GfK consumer confidence index shows that whilst +confidence is low, it is improving significantly. Since March +2023, there has been a 13 point jump in positivity for +personal finance situations – such a large jump suggests +household finances are stronger than perceived and the +overall consumer confidence index is at its highest level +since March 2022 playing into spend across our portfolio. +• The increased cost of living and impact of rising mortgage +costs is not equal across the UK, with those living in cities +and within London and South East likely to be most +impacted where mortgages are higher and disposal +income as a percentage of gross income is lower. +NewRiver’s portfolio is located throughout the UK, 66% +outside the South East, in areas which on average have a +house price of £208,000, compared to the UK average of +£287,000 (Halifax). The NewRiver consumer is therefore +impacted to a lesser extent due to rising mortgage costs. +• As inflation eases throughout 2023, real disposable +incomes will improve, confidence will continue to +recover alongside record low unemployment levels of +only 3.9% (as at March 2023), and there is the potential that +retail sales by volume should continue to increase. +Retail Sales Values and Volumes +80 +85 +90 +95 +100 +105 +110 +115 +120 +125 +130 +0 +2 +4 +6 +8 +10 +12 +Retail Sales Index Feb-20 = 100 +CPI (YoY%) +Value Volume CPI (RHS) +2020 Feb 2021 Sep 2023 Apr +Source: ONS +13NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret transportation is a "train". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_16.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_16.txt new file mode 100644 index 0000000000000000000000000000000000000000..a497bb88f8ef987cd0f0a55a3c1162b7a1126b3c --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_16.txt @@ -0,0 +1,142 @@ +Retailers + +Strong Occupational Market +There is positive sentiment amongst retailers, with strong +reported sales results especially in-store performance and +renewed retailer expansion plans for 2023. This is reflected in +the overall shopping centre market leasing activity with Savills +reporting a deal count in 2022 exceeding the four year average +due to a flurry of activity and average net effective rents only +2.9% down compared to 2019. Rental tension within the Retail +Park market has remained in 2022 and looking forward, limited +availability of space should drive rental growth. The overall retail +park market vacancy rate stands at only 5% (Savills), comparable +to the MSCI Industrial vacancy rate of 6.3% which has seen 21% +ERV growth over the past two years. +Limited Retailer Distress +2022 was a quiet year for retailer distress with only 2,300 stores +impacted. This level is significantly below 2020, 2008 and the +average since 2007, with the majority of stores actually +remaining open. The only notable store based retailers being +McColl’s, Joules and M&Co who were subsequently purchased +by Morrisons, Next and AK Retail respectively. Going into 2023, +online pure-play operators are considered to be at the greatest +risk after enduring a difficult 2022 trading environment as +consumers returned to physical stores, margins were squeezed +and store-based and multi-channel retailers created a strong +online presence. Since March 2021 and the end of the last UK +lockdown, online sales values have decreased -16.0% and +pure-play -6.6% against overall retail sales value growth of ++15.7% during this period. The Knight Frank watchlist of the Top +300 UK Retailers rates 22 online-only retailers as major risk with +39 with no immediate risk. Physical retailers, whilst not immune +to the challenging trading conditions coming into 2023, have +emerged from the pandemic fitter, with the weaker outfits +having already exited the market. +0 +1,000 +2,000 +3,000 +4,000 +5,000 +6,000 +7,000 +8,000 +Stores impacted Average since 2007 +2007 +2008 +2009 +2010 +2011 +2012 +2013 +2014 +2015 +2016 +2017 +2018 +2019 +2020 +2021 +2022 +2023 YTD +UK Retailer Failures Decline +-25% +-20% +-15% +-10% +-5% +0% +5% +10% +15% +vs 2019Q1 2020 +Q2 2020 +Q3 2020 +Q4 2020 +Q1 2021 +Q2 2021 +Q3 2021 +Q4 2021 +Q1 2022 +Q2 2022 +Q3 2022 +Q4 2022 +YoY +Shopping Centre Rents since 2019 +(net effective rents rolling 4-Qtr average) +Source: Savills Research +-20% +-15% +-11% +-7% +-2% +2% +7% +11% +16% +20% +25% +0% +1% +2% +3% +4% +5% +6% +7% +Net Effective Rent Growth YoY (LHS) Vacancy % sq ft (RHS) +2013 +2014 +2015 +2016 +2017 +2018 +2019 +2020 +2021 +2022 +Retail Parks Rents and Vacancy +(net effective rents) +Source: Savills Research Source: Centre for Retail Research +Online sales as % of total retail sales +0 +10 +20 +30 +40 +50 +Peak Online % sales +-25% from peak +-4% from peak +Apr 2020 Mar 2023 Jan 2021 Mar 2023 +Non-food Food +45.8% +21.1% +12.1% +8.2% +Source: ONS +14 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our marketplace continued +The secret shape is a "rectangle". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_17.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..49e820eea9a0df6e4a14780a11990f766486c228 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_17.txt @@ -0,0 +1,81 @@ +Continued Rise of Omnichannel +Online is considered a channel of distribution rather than +category of retail and given the consumer desire for flexibility +to purchase goods when, where and how they want, omnichannel +retail with the converging of physical and online channels is +becoming ever more popular. 50% of overall sales involve online +interaction at some point (Barclays) but the physical store is at +the centre of the retail journey due to the perception of in-store +bargains, absence of delivery and return charges, and the ability +to use cash as a tangible budgeting tool. Click & collect +increases to be popular for both consumers and retailers and +this is set to continue into 2023. +Positive 2023 Rates Revaluation Outcome +The 2023 rates revaluation was a welcome outcome for retailers +and will provide significant occupational cost savings at a time when +other operational costs have increased. On average, rateable values +within England and Wales declined 10% for retail properties with +savings ranging up to 20-50%. This compares incredibly favourable +to the 27% increase within Industrial and 10% in Offices. Downwards +transition relief is to be scrapped giving an immediate benefit to +retailers, it was previously phased over a number of years. +“The physical store +remains at the centre +of the retail journey” +16% +average reduction in +rateable values for +retailers across the +NewRiver portfolio +NewRiver’s response +• The strong retail occupational market is reflected in our leasing +statistics with 979,200 sq ft of new lettings and renewals agreed +in FY23 with long-term transactions on average +1.1% ahead of +ERV, 9.7% ahead of previous rent and with a Weighted Average +Lease Expiry of 8.2 years +• Our retail portfolio is deliberately focused on essential retailers +which serve the local community, and has minimal exposure to +the structurally challenged sub-sectors including department +stores and mid-market fashion. To assess the risk associated +with our tenant base and future cashflows, we have worked with +Income Analytics (part owned by MSCI and Savills) to quantify +the probability and impact of tenant failure. The tenant risk of +failure analysis projects a probability of failure in the next +24 months of only 0.9%. +• The resilience of NewRiver’s rental cashflows is underpinned +by affordable rents and low occupational costs. Given the +downward pressure on retailer margins as a result of material +increases in retailer’s cost and revenue pressures which are set +to continue in the short to medium term, we have assessed the +continuing rental affordability over the next 3 years. As expected, +maintaining the retailer’s existing net margin, the affordability +level falls -1.2% below the current Occupational Cost Ratio in +2023 but returns in 2024 with headroom rebuilding beyond in +2025 to +2.4% aided by continued cost stabilisation, business +rate reductions and some modest sales growth +• The occupational affordability for our tenants set to further +improve from 1 April 2023 when reduced business rates become +effective with an average reduction of 16% across the portfolio +• Retail parks are a key investment area for NewRiver given their +prominent role within omnichannel retail for both consumers and +retailers. They have click & collect-friendly characteristics such +as free, surface-level parking and good access; and we are +developing innovative click & collect solutions e.g collection & +return pods in car parks. Conveniently located on key arterial +routes and having large units suitable for holding stock at low +occupational costs mean retailers can use stores as fulfilment +centres much closer to their consumer than distribution centres. +-10 ++7 ++10 ++27 +Retail +All Properties +Offices +Industrial +-16NewRiver +Source: VOA +Percentage Change in Rateable Values 2017-23 leading +to lower occupational costs +Revaluation Movement (%) +15NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_18.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..8df089dd7598708eba09c61d2a089efe4121fde8 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_18.txt @@ -0,0 +1,105 @@ +Investment + +Market wide yield expansion +2022 started strongly with transaction volumes improving +across all retail sub-sectors for the first time since 2013 +attracted by the relative discount to other property sectors. +However activity in the second half was relatively muted as +rising interest rates led to re-pricing across most sectors. +Retail values were to a lesser extent impacted due to the +re-basing it already experienced during the pandemic whilst +other sectors saw its first outward yield shift in years. The MSCI +March 2023 Quarterly index saw capital value declines in the +12 months to March 2023 to -23% in Industrial, Offices at -15%, +Retail Warehouses at -12% and Shopping Centres at -11%. +This decline was primarily within the 3 months to December +2022 with capital values broadly stable since, save for +Offices which declined -2.4% in the 3 months to March 2023. +Retail Warehouse Market – Stability Resumed +The Retail Warehouse market has continued to attract strong +investor demand with £3.4 billion transacted across 152 deals in +2022. Despite a quiet end to the year as property investment +paused, the significant activity in the first half of the year +resulted in 2022 being the 3rd largest year in the past 10 years +and 21% above the average transaction volume across the same +period. Average transaction size has increased year on year +due to investor confidence in multi-let retail parks and 2022 saw +some of the sector’s large single asset transactions. Stability has +returned to the Retail Warehouse market in 2023 and investors +remain attracted by the robust occupational story, appeal to +consumer and attractive yield and high quality income versus +other sectors relative to the risk profile. +Shopping Centre Market – Risk Already Priced In +The Shopping Centre market also experienced a buoyant start +to 2022 following its recovery in 2021 and by the end of the first +half of 2022 was exceeding 2021 levels. 2022 saw £1.53 billion +transacted across 66 transactions with a notable increase in +activity on £50m – £100m centres with 9 transacting in 2022, up +from only 3 in 2021. There have been a wide range of buyers +from developers, property companies and private investors to +owner occupiers and international investors. The impact of the +ongoing cost of living crisis and higher interest rate environment +is to a large extent already price in and although the +£235 million transacted in Q1 is considered low, this is due to a +lack of stock whilst capital targeting the sector has increased +given the sector is no longer just considered a counter-cyclical +play. Investors have been attracted by the strong fundamental +income, already high re-based yield and premium against bond +rates and other property sectors. +(7.9) +2.3 +(5.1) +(6.8) +(15.7) +(12.2) +(20.4) +NewRiver +Retail +Shopping +Centres +Retail +Warehouse +Supermarket +Office +Industrial +(12.7) +(6.2) +(10.8) +(12.1) +(19.9) +(15.3) +(23.2) +NewRiver +Retail +Shopping +Centres +Retail +Warehouse +Supermarket +Office +Industrial +5.4 +9.0 +6.4 +5.9 +5.2 +3.6 +3.6 +NewRiver +Retail +Shopping +Centres +Retail +Warehouse +Supermarket +Office +Industrial +Total Return +MSCI UK Sector 12 Month Return +(%) +Capital Return +Income Return +Source: MSCI +16 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our marketplace continued \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_19.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..84ee3b7caa80417b4ed604a2fdc98cbd86083bf3 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_19.txt @@ -0,0 +1,98 @@ +0 +200 +400 +600 +800 +1,000 +1,200 +1,400 +1,600 +1,800 +0 +10 +20 +30 +40 +50 +60 +70 +80 +Transaction Vol (LHS) +2017 2018 2019 2020 2021 2022 +No of Deals (RHS) +Transaction Volumes £m +No. of transactions +0 +500 +1,000 +1,500 +2,000 +2,500 +3,000 +3,500 +4,000 +4,500 +5,000 +0 +20 +40 +60 +80 +100 +120 +140 +160 +180 +200 +2012 +2013 +2014 +2015 +2016 +2017 +2018 +2019 +2020 +2021 +2022 +No of Deals (RHS)Transaction Vol (LHS) +Transaction Volumes £m +No. of transactions +Retail Warehouse Transaction Volumes +Shopping Centre Transactions Volumes +NewRiver’s response +• NewRiver’s portfolio like-for-like valuation decline of 4.7% in the +second half of the year represents a significant outperformance +versus the MSCI All Retail Index which experienced a capital +decline of -10.8%. Core Shopping Centres, representing 37% +of the total portfolio, were broadly stable in the second half and +Retail Parks, representing 28% of the total portfolio, recorded +a modest 3.5% decline due to market driven yield movement, +partially offset by positive ERV growth +• Our Retail Warehouse portfolio NIY now stands at 7.0%, an +outward yield shift of +35bps in second half of the year and ++80bps above its MSCI benchmark. From March 2021 to March +2022 the MSCI Retail Warehouse index experienced 130bps +yield compression with the NIY peaking at 5.5% at which point +the yield gap to NewRiver widened from +40bps to +80bps. +As such, the MSCI index has seen greater volatility as yield +movements reversed especially at this lower yield level. +• Our Core Shopping Centre portfolio NIY now stands at 9.6%, ++210 bps above its MSCI benchmark. Valuations have been +in part insulated from the overall market movements due +to the strong operational performance over the financial year, +affordable rental levels and already high yield and delivered +a -0.7% valuation decline for the year. +• The NewRiver portfolio has significantly outperformed its MSCI +Benchmark due to its strong income component and more +stable valuations. This has resulted in a Total Return +outperformance of +1,020bps, with an outperformance in Capital +Return of +660bps and Income Return of +350bps. +• Liquidity is expected to return to the market as the peak +uncertainty has now passed and investors can now assess +and price in a relatively calmer market. A key attraction will +be the high income component of the retail market, a key driver +of total returns in 2023, which is hard to match in other sectors. +Source: Savills +Source: Cushman & Wakefield +17NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_2.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_2.txt new file mode 100644 index 0000000000000000000000000000000000000000..f8ab0818d4616cbcf1dece25a88c532fc5954396 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_2.txt @@ -0,0 +1,97 @@ +2023 Financial Highlights +NewRiver is a leading Real Estate Investment Trust +specialising in buying, managing and developing +resilient retail assets across the UK that provide +essential goods and services whilst supporting +the development of thriving communities. +NewRiver has a Premium Listing on the Main Market +of the London Stock Exchange (ticker: NRR). +Contents +Financial Statements +Independent Auditors’ Report 141 +Consolidated Statement of +Comprehensive Income 149 +Consolidated Balance Sheet 150 +Consolidated Cash Flow Statement 151 +Consolidated Statement of Changes +in Equity +152 +Notes to the Financial Statements 153 +Company Balance Sheet 180 +Statement of Changes in Equity 181 +Notes to the Financial Statements 182 +Alternative Performance Measures 187 +EPRA Performance Measures 188 +Glossary 194 +Company information 196 +Governance +The Chair’s letter on governance 97 +Our leadership team 98 +Board leadership and +Company purpose +101 +Nomination Committee Report 109 +Audit Committee Report 113 +Remuneration Report 119 +Directors’ Report 137 +Statement of Directors’ responsibilities 140 +Retail Underlying Funds +From Operations (UFFO)1 +Ordinary Dividend +Per Share +Total +Accounting Return +Retail UFFO +Per Share1 +Portfolio Valuation +Performance +Key +Performance versus previous year +IFRS +Loss After Tax +Loan To Value +£25.8m +6.7p +-4.6% +8.3p +-5.9% +£(16.8)m +33.9% +FY22: £20.5m +FY21: £19.5m +FY22: 7.4p +FY21: 3.0p +FY22: -6.6% +FY21: -24.9% +FY22: 6.7p +FY21: 6.4p +FY22: -0.9% +FY21: -13.6% +FY22: £(26.6)m +FY21: £(150.5)m +FY22: 34.1% +FY21: 50.6% +Net debt +£201.3m +FY22: £221.5m +FY21: £493.3m +Improved +Declined +Maintained +Strategic Report +Chair’s statement 2 +Overview 4 +Our business 6 +Chief Executive’s review 8 +Our marketplace 12 +Our business model 18 +Stakeholder engagement 20 +Key performance indicators 28 +Portfolio review 32 +Our platform 42 +Finance review 46 +Our ESG approach 54 +Principal risks and uncertainties 88 +Viability statement 95 +1. Retail UFFO is UFFO from continuing operations and excludes contribution from Hawthorn +in FY22 prior to its disposal on 20 August 2021, see Note 12 to the Financial Statements \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_20.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..c98ff1d06f8a938c7cc187d34bad1a1bd3237dfe --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_20.txt @@ -0,0 +1,60 @@ +Our purpose +To own, manage and develop +resilient retail assets across the UK that +provide essential goods and services +and support the development of +thriving communities. +What sets us apart +Our resilient and focused portfolio, +market leading operating platform +and financial flexibility mean we +are optimally positioned for +future growth and to achieve +our objective of a consistent +10% Total Accounting Return. +3. Flexible +balance sheet +Our operating platform is underpinned +by a conservative, unsecured balance +sheet. We are focused on maintaining +our prudent covenant headroom position +and have access to significant cash +reserves which provide us with the +flexibility to pursue opportunities which +support our strategy for growth. +1. Disciplined +capital allocation +We assess the long-term resilience of our +assets, with capital allocation decisions made by +comparing risk adjusted returns on our assets to +those available from other uses of capital. +Capital allocation decision include investing into our +portfolio, acquiring assets in the direct real estate +market and share buybacks. Assets can be +acquired either on our balance sheet or in capital +partnerships. Our significant market experience +allows us to price risk appropriately, and our low +average lot sizes enhance liquidity which +means we can execute disposals +quickly and effectively. +2. Leveraging +our platform +We leverage our market leading platform to +enhance and protect income returns through +active asset management across our assets +and on behalf of our capital partnerships; the +latter also provide enhanced returns through +fee income and the opportunity to receive +promote fees. We also create income and +capital growth through our Regeneration +activity in a capital light way, principally +residential-led, focused on replacing surplus +retail space with much needed new homes. +Underpinned by a committed ESG strategy +18 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Strategic report +Our business model +Delivering value for +our stakeholders +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_21.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..c2fa3b37f5961f5a22e10df04ba1870863c985f1 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_21.txt @@ -0,0 +1,100 @@ +19NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Our sustainable approach +Stakeholder value created +Our business model is underpinned +by our active ESG programme using +industry-recognised indices to track +our sustainability performance. +Our team +The success of the Company comes from +its people. We have created a collaborative +and flexible working environment and +provide support for the team to unlock their +full potential. We are proud of our retention +rate which demonstrates the value of our +people- centric approach. +Our communities +Our assets are located in the heart of +communities throughout the UK and +play an integral role in the lives of our +customers. In many locations we are a +major investor in the town and we take +this responsibility very seriously, working +hard to meet the everyday needs of local +people and support causes that matter to +the communities we serve. +Our shareholders +Our shareholders are the ultimate owners +of our business. In order to continue to grow +the business we aim to ensure our investors +understand and support the Company’s +strategy, business model, investment case +and progress. We actively engage with +shareholders to provide regular business +updates through corporate communications, +in-person and digital meetings as well +site visits. +75% +team retention of 5+ years +63 +No. of different UK communities we are +directly invested in or manage assets within +96 +FY23 investor meetings +See page 22 for more information See page 24 for more information See page 26 for more information +Our capital partners +Capital partnerships are an important part +of our business, contributing to overall +earnings growth. Our capital partners +leverage our market leading platform by +allowing us to manage and improve the +performance of their assets. Capital +partnerships allow us to acquire assets in a +capital light way and receive proportional +rental income, as well as enhance our +returns from asset management fees with +the potential to receive financial promotes +linked to performance. +Our occupiers +When our occupiers thrive then so too can +NewRiver. We continuously nurture our +working relationships with our occupiers +so we can better understand their needs +and potential challenges or opportunities +and ensure our portfolio is best placed to +accommodate them. +We are proud to see so many of our +occupiers choose to remain in our portfolio +at the point of potential exit. +Our environment +The real estate industry has a critical role to +play in protecting the long-term sustainability +of our planet. We take our role as the +custodians of assets within the community +very seriously, and that involves integrating +our sustainability strategy across all aspects +of our business from head office to asset level +and our local communities. +24 +Number of capital partnership assets +under management (April 2023) +19 x retail parks and 5 x shopping centres +92% +FY23 occupier retention rate +1st +NewRiver ranked first place in the +GRESB Management module out of +901 participants across Europe +See page 44 for more information See page 6 for more information See page 58 for more information +NewRiver was named in the +Sunday Times Best Places +to Work 2023 +We are delighted to have been acknowledged post- +period in the ‘small organisation’ category (10-49 +employees) in The Sunday Times Best Places to +Work 2023 for our wide-ranging benefits package +and ongoing commitment to supporting our team and +their career development in a collaborative, diverse +and inclusive culture. +See page 20 +The secret drink is "water". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_22.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_22.txt new file mode 100644 index 0000000000000000000000000000000000000000..6eb9ee5aa466394bdaa8adadb3fab94f47327a65 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_22.txt @@ -0,0 +1,54 @@ +OUR STAKEHOLDERS +The success of our business is underpinned by our best in class +team and effective relationships with our multiple stakeholders. +We are proud of our highly motivated, collaborative and well-balanced +team with a near 50:50 gender split. Our team continue to focus on +helping drive the business forward whilst also advancing their own +career development. We foster strong working relationships with +our wider stakeholders who collectively help us deliver on our +strategy, business model and ongoing success. We recognise that +our stakeholders have a range of varying priorities and concerns +and we endeavour to incorporate these into our own strategic +decision-making. +Board engagement +Critical to effective corporate Governance is how the Board aligns +strategic decisions with the Company’s purpose, values, strategy and +stakeholders. The NewRiver Board has a clear stakeholder engagement +plan, regularly consulting with the NewRiver team, who in turn manage +and foster the relationships with our occupiers, key partners and advisers. +Stakeholder engagement +Authentic stakeholder engagement +underpins our business +NewRiver was named in the Sunday +Times Best Places to Work 2023 +We are delighted to have been acknowledged in May 2023 in the +‘small organisation’ category (10-49 employees) in The Sunday Times +Best Places to Work 2023 for our wide-ranging benefits package and +ongoing commitment to supporting our team and their career +development in a collaborative, diverse and inclusive culture. +We received positive survey results with strong approval and +engagement ratings of 82% with a “confidence in management” +score of 80% and achieved a rate of “Excellent” across all areas. +At NewRiver we provide a flexible working environment to suit the +different lifestyles of our team, and important policies including +full-private medical cover, ‘gender-agnostic’ shared parental leave and +wider flexible working patterns were recognised by the Sunday Times. +Our commitment to offering colleagues practical support for career +development and empowerment, providing the best possible +opportunity for them to develop their careers was also recognised. +The Sunday Times equally acknowledged that our team are rewarded +with a fully paid six-week sabbatical after 10 years of service. +Our Stakeholders include: +Local +Authorities +Shareholders +Environment +Occupiers +Capital +Partners +Team +Lenders +Communities +20 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +The secret object #2 is a "key". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_23.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..7f13a7e120ae8c3cc268ff10dca377440b1e73ea --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_23.txt @@ -0,0 +1,88 @@ +“At NewRiver people are our greatest asset and it is +therefore an honour to have been named in The +Sunday Times Best Places to Work 2023. The fact that +75% of the NewRiver team have been at the company +for more than five years is testament to the positive +working environment and culture that we have built. +We are a driven, collaborative and well-balanced team +with a near 50:50 gender split and indeed it is the +team themselves that actively participate in creating +such a positive and attractive environment. I would like +to take this opportunity to thank the entire NewRiver +team for all their hard work in helping to continue to +drive the business forward. It would not have been +possible without each and every one of them.” +Edith Monfries +Chief Operating and People Officer at NewRiver REIT +46 +Employees +75% +Of our team have +worked at NewRiver +for 5+ years +26 +Hours of training per +employee this year +1,150 +Total hours of +training this year +70% +Of our team undertook +professional training  +during the year +64% +Of our team have +professional +qualifications +94 +Hours of volunteer support +dedicated to the Trussell Trust +SECTION 172(1) STATEMENT +The Directors consider, both individually and collectively, that they have acted in the way they consider, in good faith, would be most likely to +promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in +section 172(1)(a-f) of the Companies Act 2006) in the decisions taken during the year ended 31 March 2023. +Details of our key stakeholders and how the Board engages with them can be found in the strategic report on page 20. Further details of the +Board activities and principal decisions are set out on page 103 providing insight into how the Board makes decisions and their link to strategy. +Other disclosures relating to our consideration of the matters set out in s172(1)(a-f) of Act can be found as follows: +S172 factor Our approach +the likely consequence of any +decision in the long term +As a Board of a REIT owning assets which also include a risk-controlled development pipeline, the Board +is always conscious of the long term. Looking to the future the Board and Executive Committee regularly +assess the overall corporate strategy and acquisition, asset management and disposal decisions in the +context of current and future long-term trends and markets. We closely assess the latest trends reported +by CACI, our research provider, to ensure we are aligned with evolving trends. These insights and the +Board’s own extensive experience steer the long-term strategic direction. +the interests of the +company’s employees +We have a small workforce which allows a naturally close proximity between them and the Board making +it easy for the Board to engage with staff directly especially as the Directors regularly visit the London +office and other sites. This year the Directors have been able to visit the assets and the London office +more freely and attend social events with staff. +the need to foster the company’s +business relationships with +suppliers, customers and others +The Board is committed to fostering the Company’s business relationships with occupiers, local +authorities and other stakeholders. These stakeholders are key to our business model and therefore +members of the Exco (including Board members) have direct responsibilities for managing and +developing these relationships. Board site visits during the year have helped these relationships and +understanding the needs of these stakeholders. +the impact of the company’s +operations on the community +and the environment +The Board is committed to our communities and our assets are integral to the communities they serve. +We aim to enhance the lives of consumers and minimise our impact on the environment. These matters +are therefore considered in all strategic decisions and embedded into the business model. +the desirability of the company +maintaining a reputation for high +standards of business conduct +Our values mirror our culture and as a team our values are to be trusted and respected and this is +entrenched into Board decisions. Staff receive regular training on our anti-corruption policies to ensure +that they are entrenched in all staff decisions and conduct. Again the size and proximity of the workforce +allows our values to be communicated, embedded and monitored easily and less formally. +the need to act fairly as between +members of the company. +The Board recognises the importance of treating all members fairly and monitors the views of the +Company’s shareholders through reports on investor and analyst communications so that their views and +opinions can be considered when setting strategy. +21NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_24.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..a01911f4cb4ed719236c8a513a8b4f7bbc01459a --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_24.txt @@ -0,0 +1,97 @@ +Recruitment and talent +Our total head count across the Group at the close of the year was +46. Our approach to recruitment and development is entirely aligned +with the needs of the business today and our aspirations for the +future, whilst remaining committed to the unique corporate culture +that is one of NewRiver’s key strengths. +We are continuously working to develop the skills, capability and +performance of all employees. Our support ranges from funding +professional qualifications including RICS and ACCA to informal +training sessions and a bi-weekly team meeting to empower the team +with research and knowledge to help enhance their day-to-day role. +We continue to support the UK Government’s Apprenticeships +Scheme. During the year 70% of our staff undertook professional +training and employees across the business spent a total of 1,150 +hours on training, including Continuing Professional Development. +We appraise our team annually, undertaking a tailored performance +review which includes a professional development plan which allows +our team to set objectives, track progress and fulfil their potential. +Diversity +As a Company, we are committed to a culture of diversity and +inclusion in which everyone is given equal opportunities to progress +regardless of gender, race, ethnic origin, nationality, age, religion, +sexual orientation or disability. Our ethnicity representation is 17%. +We also have a Diversity and Representation committee who meet +regularly to promote inclusion across the business. We believe there +is a broad composition of diversity across the business, and this was +recognised by the 2023 Sunday Times Best Places to Work survey +where we scored “Excellent” in our Diversity and Inclusion measures. +Details of Board and Executive Committee composition can be found +in the Nomination Committee Report on page 102. +Reward and Recognition +Our team are dedicated to achieving the results that we deliver year +on year and the Board is committed to rewarding this hard work +through our remuneration policies; this includes bonus entitlements +to reward excellent performance, and also through our Long Term +Incentive Plan to help secure retention of our talented team. +The Company offers a range of benefits to our team, some particular +highlights include: +• flexible hybrid working with 3:2 days split in the office/on site: at home +• full private medical cover for all staff +• ‘gender-agnostic’ shared parental leave +• training and career development +• an electric car scheme +• six week paid sabbatical to employees who have been with the +business for 10+ years +• mental and physical health resources and training +• staff volunteering policy enabling staff to take time off to volunteer for +our charitable partner The Trussell Trust or a charity of their choice +The team also have the opportunity to discuss the benefits available +with specialist advisers to ensure that they suit their needs. We +review the benefits each year to ensure they meet employee +expectations and industry benchmarks. +Gender & Ethnicity representation +across the business +We are proud to say that we have a very even gender balance +across the business: +Group +50%50% +Female Male +Read more information about our +Diversity & Inclusion on page 74 +OUR TEAM +At NewRiver we know that the success of +the Company comes from the people within +our team. +Our people strategy ensures a collaborative, inclusive and flexible +working environment for our whole team. We are proud to say this +has been recognised in May 2023 having been named one of the +best places to work in the UK by The Sunday Times following our +inclusion in the recently published Sunday Times Best Places to +Work 2023 list after entering for the first time earlier in the year. +Communication, collaboration and respect sit at the heart of our +people strategy which harnesses the power of the team to drive +our business forward. +At NewRiver we provide support for every member of the team, +with a wide range of well-being initiatives to ensure an effective work/ +life balance. Training and Development is key to empowering our +loyal team and ensuring that everyone has a chance to unlock their +full potential. +Our flexible working policy fosters a positive working environment +to suit the different lifestyles of our team. As well as flexible working, +we offer an attractive and wide-ranging benefits package including +full-private medical cover and ‘gender-agnostic’ shared parental +leave together with training and career development in a collegiate, +diverse and inclusive culture. Long-serving team members are also +rewarded with a fully paid six-week sabbatical following 10 years of +service; and we also offer an opt-in salary sacrifice for electric cars +and a policy enabling staff to take time off to volunteer. Our high staff +retention testifies the team satisfaction with over 75% of our staff +having worked at NewRiver for 5 years’ or more. +17% +Ethnicity +Representation +22 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Stakeholder engagement continued +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_25.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..a513f98f0cd27c0d4b2728cc45ff880ba1e596b8 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_25.txt @@ -0,0 +1,85 @@ +Board Engagement during the year +Our Board have a comprehensive +engagement strategy working to engage +the wider team, including an active outreach +programme with Board Directors visiting +assets to meet the centre management +teams, our occupiers and local authorities. +A regular staff forum ensures that there is effective communication +and interaction between the Board, Senior Management and the +wider Team. We regularly provide the opportunity for our Non- +Executive Directors to meet the team both formally and informally, +both in confidence or in wider forum. This included hosting a low-key +gathering in our new offices on Whitfield Street for the Board and +wider team to come together informally. +Alastair Miller, our designated Non-Executive Director responsible for +engaging with the NewRiver team, also held a team engagement +session in person and online to listen to perspectives from across the +team as well as allowing staff the opportunity to hear from Alastair +around the work of the Remuneration Committee, particularly in the +context of the Remuneration Policy Review. +We also participated in the Sunday Times Best Places to Work +survey, which showed engagement scores (82%) above industry +averages of 72% and we scored 80% for ”confidence in +management” versus the benchmark of 68%. +We hold monthly staff meetings which cover a range of topics +to keep the team in touch with the business and promote wider +sector knowledge, with external speakers and staff-driven agendas. +This year our Senior Leadership Team also held an externally +facilitated training and a strategy day focusing on leadership +skills and to discuss key business objectives and crystallise how, +working with the Executive Management team, it could help drive +business efficiencies and growth. +Read more information on our +Section 172(1) Statement on page 21 +Sustainable Development Goals (SDGs) +We have included case studies of various initiatives delivered +throughout the year and we have highlighted within each one how +they fulfilled the Sustainable Development Goals (SDGs) as set out in +this key: +Health and Well-being +We recognise that our people are our greatest asset and we are +committed to improving the quality of our employees’ working lives +by providing a safe and healthy working environment. Our aim is to +create a positive working environment by integrating well-being in all +work activities and by empowering our people to make positive +choices regarding their health and well-being. +Physical Environment +and Flexible Working +This year we relocated to a new office space on Whitfield Street in +Fitzrovia. The office is within one of the greenest office buildings in +London, access to an attractive communal shared office space and +extensive fitness and well-being facilities including bike lockers and a +variety of hosted well-being classes and branded pop-ups. The +London office space is open plan with hot-desks which has helped +our team become more digitally-centric and print less paper. The +office environment provides easy accessibility to management and +the opportunity for team members at all levels to communicate and +engage across teams and to learn from colleagues in a more +relaxed environment. +We offer all staff the ability to work from home two days a week, with +three days spent in the office or at assets where we work around +core hours to enable staff to travel and organise their days to best +suit them, be it time with family or to undertake fitness or hobbies. +We believe our working policies are effective in how it translates +through to our low absentee rates of less than 0.1%. +Our dedicated Diversity and Representation Committee meet +regularly and implement initiatives to engage and motivate the +wider team. +Mental Health +The pandemic helped shine a brighter spotlight on the importance of +ensuring good mental health. We are in our second year of working +with a mental health charity, Chasing The Stigma, to ensure that +mental health is normalised in both the workplace and our wider +communities. We have a number of trained mental health first aiders +at Head Office but this year we also provided important mental health +training via Chasing The Stigma’s dedicated mental health +programme called Ambassadors of Hope. Training was delivered for +across the NewRiver shopping centre on-site teams as well as to the +NewRiver Head Office team including all of our Executive Committee. +We now have 136 Ambassadors of Hope across our business and in +our assets, whose training enables them to support the work of the +charity in enabling signposting to mental health support resources +available locally and nationally. +Find out more here: www.chasingthestigma.co.uk +23NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_26.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..11843b4aaf8c805f1d965547a2fc9b0bdd684a9d --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_26.txt @@ -0,0 +1,88 @@ +How did we engage? +• Staff Forum and bi-weekly all staff briefing meetings +• Sunday Times Best Places to Work Survey 2023 +• Regular Non-Executive Director office visits to allow the Board to +interact with and listen to the wider team +• Our comprehensive appraisal process with individual performance +reviews and development discussions +• Chasing The Stigma “Ambassador of Hope” mental health training +conducted at Head Office and across our shopping centres; all of +our Executive Committee undertook this important training +• Alastair Miller, our designated Non-Executive Director responsible +for engaging with employees, has held team engagement sessions +• Board Directors visited assets across the portfolio to better +understand the assets and spend time with the property team and +local on-site teams +Topics raised +• Leadership and Strategy +• Opportunities for personal and career development +• Knowledge sharing across the Company +• Well-being and flexible working +• Rewards and benefits +• Fostering a diverse and inclusive culture +• Our ESG strategy +How did we respond? +• Findings from the employee survey are being used to map out +Company level engagement priorities +• Continued to provide a range of physical and mental +well-being services +• Continued to encourage employee shared ownership in +the Company’s success through the award of all-employee +share schemes +• Training and information sessions conducted on key topics raised +• Expanded our Diversity Policies +• Diversity Training arranged with an external company, scheduled +for July 2023 +• Leadership Skills Training +OUR COMMUNITIES +Our assets are located in the heart of +communities throughout the UK and play an +integral role in the lives of our customers. +Supporting our Communities in +the Cost-of-Living Crisis +The social enterprise, Green Rose, spent a month at the Arndale +Centre, Morecambe offering the local community free advice +and support on energy issues. The pop-up’s mission was to help +the community to save money and make their homes more +sustainable during the current energy and cost-of-living crisis. + +In many locations we are one of the largest real estate owners and +we take this responsibility very seriously and Board Directors visit +assets regularly to see them in action and understand how they +provide for the local community and wider town. We aim to +strengthen the communities we operate in providing for the everyday +needs of locals through our shops and services and supporting the +causes that matter to them. +Read more about our community engagement +initiatives on pages 25, 57, 77 and 78 +Board Engagement during the year +How did we engage? +• Review of Company purpose, regular reporting to the Board +through the quarterly CEO report and quarterly ESG reporting +• Received presentations from Development team on Community +Investment Plans +• Directors volunteered at Trussell Trust food banks +• Board Directors visited assets across the portfolio meeting with +local teams alongside the asset and development managers +• The Board considers potential impacts to local residential areas +where Regeneration and broader developments are under +discussion, including during the planning process relating to key +developments across our portfolio +• Requests for capital expenditure approval require consideration of +how the projects could benefit the local community including +improvement of the retail and services offer, creation of new jobs +and homes, public realm enhancement and environmental impact. +• Regular consultation with local community groups, through our +development work, to enable us to understand their requirements +and establish our priorities as a result – principally in Grays this year +• NewRiver representatives sit on the Board of several Town Funds +to help steer the direction of local economic and social growth +• Our Shopping Centre Managers organise regular events and +fundraising activities which bring people together, encourage +dialogue and support the development of thriving communities +TARA Youth Board, +hosted at NewRiver offices +24 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Stakeholder engagement continued +The secret vegetable is an "onion". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_27.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..a59dcc59d114ca4d5c77ee2bda32346ce3c5e3a8 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_27.txt @@ -0,0 +1,97 @@ +OUR OCCUPIERS +When our occupiers thrive, so too can we. +We continuously nurture our working relationships with our +occupiers, so we can better understand their needs and potential +challenges or opportunities. We have hand-picked our portfolio to +focus on occupiers that provide essential goods and services and to +support the development of thriving communities across the UK, +while deliberately avoiding structurally challenged sub-sectors such +as department stores and mid-market fashion. +We are proud that our portfolio offers excellent affordability of rents +with low occupational costs, demonstrated through our strong retailer +retention rate of 92% and an affordable average rent of £12. Our +on-site teams work hard to ensure that our assets are clean, safe, and +welcoming environments for all ages. +Board Engagement during the year +How did we engage? +• Regular retailer engagement underpins our asset management +strategy including regular meetings between Board Directors, +Executive Directors and our asset teams with our key occupiers, +listening to challenges and opportunities arising from the shop +floor to retailer head offices which is fed into our planning and +informs our strategy +• Part of these conversations with our retailers include our +environmental and sustainability strategies, including green leases, +enhanced data collection and on-site energy consumption +• The Board receives regular reports on occupier activity through +Exco reports and ESG reporting to inform future strategy +• The asset management team attend the annual Completely Retail +Marketplace in London where the retail real estate industry come +together to discuss new opportunities as well as expand and +consolidate existing leasing plans and asset management +initiatives +• Non-Executive Directors have attended industry conferences +alongside Executive Directors +Topics raised +• Topics raised via retailer and occupier meetings include +understanding the future needs of occupiers including sentiment, +performance, growth/contraction plans, sustainability initiatives and +potential opportunities and risks within our occupier base, green +leases and MEES compliance. +How did we respond? +• Continuing to collect energy data from our occupiers and assets +• Engagement with our occupiers regarding our Pathway to Net Zero +to help align with the occupier’s net zero ambitions +• Assisting with Business Rate reductions for our occupiers +• Board Directors sit on various industry committees helping shape +policy and strategy. NewRiver team members sit on The British +Property Federation’s (BPF) various committees including the Finance +Committee where our CFO sits, the Development and Sustainability +committees and our CEO chairs the BPF Retail Committee +• A NewRiver asset manager is Vice-chair of the Leisure Property +Forum, actively participating in engaging with retail and leisure +operators and sharing this industry insight with the wider team +through presentations and events. +• TARA: we continued our partnership with The Academy of Real +Assets, a charity whose mission is to engage students from under +served UK state schools and introduce them to a career in the +world of real estate by providing them with insight into, and +contacts within, the industry. One of our development managers +chairs and hosts the TARA Youth Board helping drive this agenda +Topics raised +• Town centre regeneration +• Creating long-term social and economic prosperity +• Responsible planning, development and design +• Community well-being and social value +• Environmental protection +How did we respond? +• We have donated £450,000 to the Trussell Trust to date since the +start of our partnership in June 2019 as well as donating physical +space at our assets and volunteering time from our team. +• Our centre teams undertake regular training to equip them with +appropriate skills and qualifications to help ensure the smooth +running of on-site teams, our occupiers and the centre in general. +• Enhanced social media use for community engagement. +Stopping UK Hunger +Since the inception of our partnership with the Trussell Trust, we +have raised over £450,000 in support of their mission to stop +UK hunger. Non-monetary support has included circa 10.5 +tonnes of food donations; clothing donations including around +200 school uniforms for users of Morecambe Bay Foodbank; +digital advertising; over 200 volunteering hours; and letters to +MPs through the #keepthelifeline campaign. + +“You are Important” +Our centre The Horsefair in Wisbech partook in the “You Are +Important” campaign, a large-scale collaborative art project +which involved Wisbech-based businesses and organisations +working with artists and local people to create a visual +celebration of every member of the community. Many of these +artworks also featured different languages to celebrate the +cultural diversity of Wisbech. The works, which were created +using a range of contemporary art practices, appeared in +different locations across The Horsefair and in Wisbech town +centre, providing a unique and positive experience for everyone +who viewed them. + +25NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_28.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_28.txt new file mode 100644 index 0000000000000000000000000000000000000000..2d792e0073a219aba6c52ee406bf04533989cf1d --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_28.txt @@ -0,0 +1,108 @@ +• The Board receives regular updates on market sentiment, +investor relations activity and share price performance +• The Remuneration Committee undertook a review of the +Remuneration policy in consultation with Shareholders for +which Shareholder provided positive support toward the +proposed revisions. +Topics raised +• Continued delivery of the Company’s revised strategy focused on +resilient retail following the pub business disposal in FY22 +• Financial performance +• Operational performance +• Capital allocation +• Portfolio valuation performance +• Progress on the disposal of our Work-Out portfolio +• Progress across our Regeneration portfolio +• Growth of Capital Partnerships +• Sustainability +• Retailer challenges and opportunities +• Macro-economic themes including how inflation and rising energy +costs impact our retailer +How did we respond? +• Post pandemic virtual engagement continue to form a part of our +Investor Relations programme, allowing us to capitalise on +effective use of management time, engaging with international and +regionally based investors, and helping reduce associated carbon +emissions +• Our investor feedback has helped enhance our disclosures and +the supplementary information provided in results materials. +OUR LENDERS +We have strong working relationships with +our banks, bondholders and rating agency +who in turn help provide funding to facilitate +our strategy. +As part of this, we are in regular dialogue to ensure our banks and +bondholders understand the Company’s strategy and targets. These +relationships have helped ensure that the business remains in a +strong and flexible financial position with a fully unsecured balance +sheet. This structure is highly efficient and covenant-light, affording +us significant operational flexibility. +Board Engagement during the year +How did we engage? +• The CFO and finance team held regular meetings with our +relationship banks, bondholders and rating agency to ensure +that they are kept up to date with business strategy, developments +and performance +• Held meetings with our Bondholders as part of our FY22 and +HY23 results roadshow +• Debt structure and current and future debt requirements are +considered by the Board on a regular basis as part of the +CFO’s review +OUR SHAREHOLDERS +Our shareholders are the ultimate owners +of our business. In order to deliver on all +our ambitions for the communities we are +invested in, it is critical that our shareholders +continue to understand and support the +Company’s strategy, business model, +investment case and progress. +We have an active engagement strategy, supported by our corporate +brokers, providing our shareholders with frequent business updates, +regular meetings, both in person and online, and on-site visits. +Where appropriate, our Board and members of the Executive +Committee will engage with shareholders. +The comprehensive calendar of investor engagement includes the +AGM, regulatory announcements and non-regulatory news flow, +conference calls and shareholders roadshows, as well as regular +contact with financial analysts, financial media, investors, private +client fund managers, retail investors and equity sales teams. Regular +and targeted engagement ensures that our strategy, business model +and investment case are well understood by shareholders and the +wider market. +Board Engagement during the year +How did we engage? +• Focused virtual and face to face investor meetings with +the CEO and CFO with a revival of face to face meetings +• Engagement includes the AGM, regulatory announcements, +conference calls and investor roadshows, as well as regular +contact with financial analysts, financial media, investors, private +client fund managers, retail investors and equity sales teams +• As well as institutional investors, we engage with retail investors +via direct communications, our website, media, Annual General +Meetings (AGM) and platforms including Investor Meet, hosting +a dedicated retail investor presentation at our half year results +• Our relaunched corporate website contains comprehensive +information about our business, regulatory news and press +releases alongside information about our approach to +Environmental, Social and Governance (ESG) issues +• Management engaged with 96 investors during the year, including +shareholders and non-holders, and institutional and +retail investors +• We hosted our first post-pandemic in-person results presentation +to analysts in November 2022 for our HY23 Results – a live audio +webcast was also available our website with a replay function +• The 2022 AGM was again held as a physical meeting and was +attended by all of the Board. Recognising that some shareholders +may not have been comfortable attending in person, we provided +opportunities for shareholders to submit questions via email and to +attend via conference call +• The Board reviews and approves material and communications +with investors, namely trading updates, results announcements, +the Annual Report and Accounts, and significant business events +and transactions. +• The respective Committee Chairs engage with shareholders on +significant matters related to their specific areas of responsibility +26 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Stakeholder engagement continued +The secret object #3 is a "knife". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_29.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_29.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a2cfc706a5b5e0832a46507b7255d231dea7293 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_29.txt @@ -0,0 +1,80 @@ +Fitch Affirmed NewRiver’s +Investment Grade Credit Ratings +Fitch Ratings affirmed our Long-Term Issuer Default Rating +(IDR) at ‘BBB’ with a Stable Outlook, senior unsecured rating +at ‘BBB+’ and Short-Term IDR at ‘F2’. The senior unsecured +rating applies to NewRiver’s £300 million unsecured bond +dated 2028. +“In the affirmation of our investment +grade credit ratings, Fitch has again +recognised NewRiver’s differentiated +position in the UK retail market, focused +on providing essential goods and +services to consumers on rental terms +affordable to retailers. This focus on +resilient retail, alongside our best in +class operating platform and the +strength of our balance sheet, means +we feel well positioned despite the +challenging backdrop.” +Will Hobman +Chief Financial Officer +Topics raised +• Performance of retail operations including occupier trading, rent +collection, leasing, and occupancy +• Retail property valuations +• Progress of the disposal of our Work-Out portfolio +• Progress of our Regeneration projects +• Broader activity within the retail investment market +• Interest rate environment +How did we respond? +• Actions taken in FY22 mean we have no maturity on drawn debt +until March 2028 and no exposure to interest rate rises on our +drawn Group debt facility +• In December 2022 Fitch Ratings affirmed NewRiver’s Long-Term +Issuer Default Rating (IDR) at ‘BBB’ with Stable Outlook, our senior +unsecured rating at ‘BBB+’ and Short-Term IDR at ‘F2’ +• We worked with two companies to undertake scenario stress +testing to predict the projected probability of failure of our +occupiers and assess their rental cashflow stability factoring in +increased pressures on retailer margins. +OUR LOCAL AUTHORITIES +We are proud to work in partnership with circa +60 different local authorities across the UK to +help regenerate and protect the towns we are +invested in to create long-term social and +economic growth. +Board Engagement during the year +How did we engage? +• Non-Executive and Executive Directors attended various senior- +level meetings with local authorities and public sector focused +organisations, alongside the asset and development team, meeting +all levels including Chief Executives and the wider cabinet, +Planning Officers, Regeneration Officers and also local Councillors, +to steer the regional strategy that will impact the social and +economic long-term viability of a town which has a direct impact on +our own assets +Topics raised +• Appreciation of Council priorities across the borough and the +significance of private sector-led regeneration +• Allocation of resources to the local authority planning team +• Local authority support for marginal regeneration projects that +bring a positive Benefit:Cost Ratio (BCR) +How did we respond? +• Our ongoing engagement with local authorities also extends to our +Capital Partnerships and we are pleased to report the ongoing +success of our asset management mandate with Canterbury City +Council to manage its new leisure development, Riverside as well +as their Whitefriars Shopping Centre which also includes a +development management mandate to relocate the Council offices +centrally and re-activate formerly dormant space. +OUR CAPITAL PARTNERSHIPS +As part of our growth strategy we have been expanding our Capital +Partnerships. We have created a standalone spread of this strategy in +more detail. +Please refer to page 44 +OUR ENVIRONMENT +Please read our comprehensive ESG Strategic Report to find out +about our about commitment and progress. +Please refer to page 54 +27NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_3.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..36c9877b069349dc2a748de183768b1cf882cdec --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_3.txt @@ -0,0 +1,34 @@ +RESILIENTRESILIENT +RETAILRETAIL +ROBUST +MARKET DYNAMICS +Our portfolio positioning, focused on essential +goods and services, where a physical store is vital +to our occupiers, is the reason for the underlying +resilience of our operating performance. +See page 12 +AGILE +PLATFORM +Our market leading asset management platform draws +on the in-house expertise of our team, our deep market +knowledge and excellent occupier relationships to +enhance and protect income streams for our assets +both on our own balance sheet and those we manage +on behalf of our capital partners. +See page 42 +STRONG +FINANCIAL POSITION +Our balance sheet is fully unsecured and well +positioned to support our future growth with +significant cash holdings, no debt maturity until +2028 and no exposure to interest on drawn debt. +See page 46 +FOCUSED +PORTFOLIO +Our resilient portfolio provides affordable, +well-located and omnichannel compatible space +for successful and expanding occupiers reliant on +a physical store network. +See page 6 +1NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret object #1 is a "chair". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_30.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..acf6e42856cf97555cfaea8e0e0e9ffa6d106c89 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_30.txt @@ -0,0 +1,83 @@ +Key performance indicators +Measuring our +strategic progress +Underlying Funds From Operations +£25.8m +28.3 +11.5 +52.1 +55.1 +25.8 +2019 +£m +2020 2021 2022 2023 +Loan to Value +33.9% +34.1 +50.6 +47.1 +36.9 +33.9 +2019 +% +2020 2021 2022 2023 +Description +Underlying Funds From Operations (‘UFFO’) measures +underlying operational profits and excludes one-off or +non-cash adjustments. We consider this to be the most +appropriate measure of the underlying performance of the +business, as it reflects our generation of operating profits. +Description +Loan to Value (‘LTV’) is the proportion of our properties that +are funded by borrowings. The measure is presented on +a proportionally consolidated basis. Maintaining an LTV of +less than 50% is one of our five key Financial Policies and in +addition our medium-term guidance is to maintain an LTV +of less than 40%. +Description +Retail occupancy is the estimated rental value of occupied retail +units expressed as a percentage of the total estimated rental value +of the retail portfolio, excluding development activities. +Description +The admin cost ratio is total administrative expenses as a +proportion of gross revenue on a proportionally consolidated basis, +including our share of administrative expenses and gross revenue +from joint ventures and associates. It is a measure of our +operational efficiency. +Our performance +Total UFFO for FY23 was £25.8 million down from a total UFFO +of £28.3 million in FY22. This is following disposal of the +Hawthorn pub business. However on a underlying retail only +basis this is up 26% from £20.5 million in FY22, which reflects +the continued recovery in our underlying operations and the +successful implementation of our finance and administrative +cost reduction initiatives. +Our performance +LTV has remained stable at 33.9% as at 31 March 2023, +reducing from 34.1% as at 31 March 2022, comfortably within +our guidance of <40%. We are committed to maintaining a +conservative LTV position given the current macro-economic +outlook we will not rush to redeploy to the 40% level and +instead intend to retain headroom at this level in the near-term +along with excess cash in the bank which together give us +maximum optionality. +Our performance +We achieved our highest occupancy level for five years, with +a high, stable retail occupancy of 96.7%, up from 95.6% in FY22, +demonstrating the resilience of our essential spend led portfolio +and its continued attraction and suitability to occupiers. +Our performance +Our admin cost ratio was 15% for FY23 achieving a +reduction from 17% in FY22 principally following a reduction +in administrative costs due to the disposal of the Hawthorn +business and the unlocking of administrative cost efficiencies. +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +ESG21 3 +Link to strategy, ESG and Remuneration +21 3 £ +28 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_31.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..50ac13de7f880b80c222a5593970646c96bc62eb --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_31.txt @@ -0,0 +1,89 @@ +Retail occupancy +96.7% +95.6 +95.8 +94.8 +95.2 +96.7 +2019 +% +2020 2021 2022 2023 +Admin cost ratio +15% +17 +25 +15 +13 +15 +2019 +% +2020 2021 2022 2023 +Description +Underlying Funds From Operations (‘UFFO’) measures +underlying operational profits and excludes one-off or +non-cash adjustments. We consider this to be the most +appropriate measure of the underlying performance of the +business, as it reflects our generation of operating profits. +Description +Loan to Value (‘LTV’) is the proportion of our properties that +are funded by borrowings. The measure is presented on +a proportionally consolidated basis. Maintaining an LTV of +less than 50% is one of our five key Financial Policies and in +addition our medium-term guidance is to maintain an LTV +of less than 40%. +Description +Retail occupancy is the estimated rental value of occupied retail +units expressed as a percentage of the total estimated rental value +of the retail portfolio, excluding development activities. +Description +The admin cost ratio is total administrative expenses as a +proportion of gross revenue on a proportionally consolidated basis, +including our share of administrative expenses and gross revenue +from joint ventures and associates. It is a measure of our +operational efficiency. +Our performance +Total UFFO for FY23 was £25.8 million down from a total UFFO +of £28.3 million in FY22. This is following disposal of the +Hawthorn pub business. However on a underlying retail only +basis this is up 26% from £20.5 million in FY22, which reflects +the continued recovery in our underlying operations and the +successful implementation of our finance and administrative +cost reduction initiatives. +Our performance +LTV has remained stable at 33.9% as at 31 March 2023, +reducing from 34.1% as at 31 March 2022, comfortably within +our guidance of <40%. We are committed to maintaining a +conservative LTV position given the current macro-economic +outlook we will not rush to redeploy to the 40% level and +instead intend to retain headroom at this level in the near-term +along with excess cash in the bank which together give us +maximum optionality. +Our performance +We achieved our highest occupancy level for five years, with +a high, stable retail occupancy of 96.7%, up from 95.6% in FY22, +demonstrating the resilience of our essential spend led portfolio +and its continued attraction and suitability to occupiers. +Our performance +Our admin cost ratio was 15% for FY23 achieving a +reduction from 17% in FY22 principally following a reduction +in administrative costs due to the disposal of the Hawthorn +business and the unlocking of administrative cost efficiencies. +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +ESG21 3 +Link to strategy, ESG and Remuneration +21 3 £ +Key +Link to business model and strategic objectives +1 Disciplined capital allocation +2 Leveraging our platform +3 Flexible Balance Sheet +Link to ESG and Remuneration +ESG Environmental, Social +and Governance +£ Remuneration +29NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret landmark is the "Taj Mahal". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_32.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..efdf6f0ac91cc5736da9db62e2bf076bbd7ab6f5 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_32.txt @@ -0,0 +1,85 @@ +Key performance indicators continued +Description +Interest cover is the ratio of our operating profit to our +net financing costs, on a proportionally consolidated basis, +including our share of operating profit and net financing +costs from joint ventures and associates. Maintaining interest +cover of more than 2.0x is one of our five key Financial Policies. +Description +GRESB is the leading sustainability benchmark for the global +real estate sector. Assessments are guided by factors that +investors and the industry consider to be material in the +sustainability performance of real estate asset investments, +resulting in an overall score marked out of 100. Improvements +in our GRESB score can be used to measure the effectiveness +of our ESG programme. +Description +Total Property Return is a measure of the income and capital +growth generated across our portfolio. It is calculated +by MSCI Real Estate (formerly known as IPD) on our behalf, +using independent valuers. We assess our performance +against the market by comparing our returns to the MSCI +All Retail benchmark. +Description +Total Accounting Return (‘TAR’) is the change in EPRA Net +Tangible Assets (‘NTA’) per share over the year, plus dividend +paid, as a percentage of the EPRA NTA at the start of the year. +TAR performance relative to UK-listed Real Estate Investment +Trusts is a key metric used in setting the long-term incentive plan. +Our performance +Interest cover increased by 0.8x from 3.5x in FY22 to 4.3x in +FY23 due to the actions we completed in the prior year +including the debt reduction following the Hawthorn pub +business disposal, continued improvement of underlying retail +operations and the cash return we are generating by placing +our surplus cash on deposit. This level provides significant +headroom to our policy of 2.0x. +Our performance +This year we ranked 1st in the GRESB Management module +out of a 901 participants across Europe. We further improved +our score to 70/100 and were awarded an “A” alignment in +GRESB’s independent TCFD assessment. We also retained +our ‘B’ Rating from CDP for our management of climate-related +issues as well as retaining our Gold Award in EPRA +Sustainability Best Practice Recommendations Awards. +Our performance +Our portfolio delivered a Total Return of 2.3% in FY23 +compared to the MSCI All Retail benchmark at -7.9% due to the +inherent high income component of our portfolio. +Our core shopping centres and retail parks delivered capital +returns of -0.7% and -3.2%. +Our performance +We delivered a total accounting return of -4.6%, impacted by +the portfolio valuation decline of -5.9%, compared with -6.6% in +the prior year. We paid a 6.8 pence dividend for the year, offset +by movement in NTA. +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +£ ESG21 3 +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +ESG21 3 +Interest cover +4.3x +3.5 +2.3 +4.8 +5.1 +4.3 +2019 +ratio +2020 2021 2022 2023 +GRESB Score +70 +68 +60 +70 +62 +70 +2019 +number +2020 2021 2022 2023 +30 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_33.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..bed78af5e2a233a266c53bacd1bb060c6afd165a --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_33.txt @@ -0,0 +1,92 @@ +Key +Link to business model and strategic objectives +1 Disciplined capital allocation +2 Leveraging our platform +3 Flexible Balance Sheet +Description +Interest cover is the ratio of our operating profit to our +net financing costs, on a proportionally consolidated basis, +including our share of operating profit and net financing +costs from joint ventures and associates. Maintaining interest +cover of more than 2.0x is one of our five key Financial Policies. +Description +GRESB is the leading sustainability benchmark for the global +real estate sector. Assessments are guided by factors that +investors and the industry consider to be material in the +sustainability performance of real estate asset investments, +resulting in an overall score marked out of 100. Improvements +in our GRESB score can be used to measure the effectiveness +of our ESG programme. +Description +Total Property Return is a measure of the income and capital +growth generated across our portfolio. It is calculated +by MSCI Real Estate (formerly known as IPD) on our behalf, +using independent valuers. We assess our performance +against the market by comparing our returns to the MSCI +All Retail benchmark. +Description +Total Accounting Return (‘TAR’) is the change in EPRA Net +Tangible Assets (‘NTA’) per share over the year, plus dividend +paid, as a percentage of the EPRA NTA at the start of the year. +TAR performance relative to UK-listed Real Estate Investment +Trusts is a key metric used in setting the long-term incentive plan. +Our performance +Interest cover increased by 0.8x from 3.5x in FY22 to 4.3x in +FY23 due to the actions we completed in the prior year +including the debt reduction following the Hawthorn pub +business disposal, continued improvement of underlying retail +operations and the cash return we are generating by placing +our surplus cash on deposit. This level provides significant +headroom to our policy of 2.0x. +Our performance +This year we ranked 1st in the GRESB Management module +out of a 901 participants across Europe. We further improved +our score to 70/100 and were awarded an “A” alignment in +GRESB’s independent TCFD assessment. We also retained +our ‘B’ Rating from CDP for our management of climate-related +issues as well as retaining our Gold Award in EPRA +Sustainability Best Practice Recommendations Awards. +Our performance +Our portfolio delivered a Total Return of 2.3% in FY23 +compared to the MSCI All Retail benchmark at -7.9% due to the +inherent high income component of our portfolio. +Our core shopping centres and retail parks delivered capital +returns of -0.7% and -3.2%. +Our performance +We delivered a total accounting return of -4.6%, impacted by +the portfolio valuation decline of -5.9%, compared with -6.6% in +the prior year. We paid a 6.8 pence dividend for the year, offset +by movement in NTA. +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +£ ESG21 3 +Link to strategy, ESG and Remuneration +21 3 £ +Link to strategy, ESG and Remuneration +ESG21 3 +Link to ESG and Remuneration +ESG Environmental, Social +and Governance +£ Remuneration +Total Property Return ++2.3% +7.5 +-6.9 +-5.4 +1.3 +2.3 +2019 +% +2020 2021 2022 2023 +Total Accounting Return +-4.6% +-6.6 +-24.9 +-14.7 +-3.3 +-4.6 +2019 +% +2020 2021 2022 2023 +31NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_34.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..9585f4d863fdeea6faeaddfb4bbf375aed4846f2 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_34.txt @@ -0,0 +1,39 @@ +FOCUSED +PORTFOLIO +As the leading UK retail real estate +company we understand what makes +a resilient retail asset and we know how +to protect and enhance resilience over +the longer term. +RESILIENT RETAIL +28% +11% +23% +1% +37% +Retail Parks + Shopping Centres +– Core + Shopping Centres +– Regeneration +Shopping Centres +– Work Out +Other +28% +11% +23% +1% +37% +Retail Parks + Shopping Centres +– Core + Shopping Centres +– Regeneration +Shopping Centres +– Work Out +Other +Portfolio Weighting +32 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Portfolio review +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_35.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..742c40a65179851c23392b9d822c2d8544bb4e97 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_35.txt @@ -0,0 +1,79 @@ +Operational Update +Robust and consistent operational metrics continue to demonstrate the underlying resilience and active demand for space in our portfolio, +supported by the strong performance of the physical retail store channel and resilient consumer. Net property income adjusted for disposals +increased by +5.0% in the 12 months to March 2023, occupancy increased to 96.7% (FY22: 95.6%) and rent collection remains at normalised +levels of 98% (FY22: 96%). +As a 31 March 2023 Occupancy +Retention +Rate +Rent +Collection Affordable Average Rent +Gross to Net +Rent Ratio +Leasing +Volume +Leasing +Activity +Average CAGR +FY21-FY23 +(%) (%) (%) (£ psf) (Ave. pa) (%) (sq ft) +% vs valuer +ERV (%) +(Average +Lease Length) +Retail Parks 97.5% 100% 99% £12.49 £116,000 97% 163,400 0.8% 0.6% 12.3 +Shopping Centres +– Core 97.7% 90% 98% £13.18 £39,000 94% 309,700 2.3% -0.8% 9.9 +Shopping Centres +– Regen 97.4% 97% 100% £13.00 £69,000 86% 138,700 -3.9% -0.7% 9.4 +Shopping Centres +– Work Out 92.8% 89% 97% £9.13 £23,000 65% 338,800 -2.1% -0.4% 6.7 +Total1 96.7% 92% 98% £11.98 £45,000 88% 979,200 1.1% -0.4% 10.0 +1. Total includes Other representing 1% of total portfolio by value +In total, we completed 979,200 sq ft of leasing transactions during the year, securing £7.9 million of annualised income. Our long-term leasing +transactions which represented 69% of the total rent secured were transacted at rents +1.1% above valuer ERVs. +Over three quarters (77%) of the annualised long-term rent secured was in our Core Shopping Centre and Retail Park portfolios, at rents exceeding +valuer ERVs by +2.3% and +0.8% respectively. This is a reflection of the excellent occupational demand across our Core Shopping Centres, at the heart +of their local communities, and conveniently located Retail Parks predominately adjacent to major supermarkets, demonstrating we own the right assets +in the right locations. +OUR HIGHLIGHTS +Portfolio Metrics as at 31 March 2023 +Occupancy +96.7% +FY22: 95.6% +Retention Rate +92% +FY22: 90% +Rent Collection +98% +FY22: 96% +Leasing Volume +979,200 sq ft +FY22: 1,039,800 sq ft +Leasing Activity ++1.1% +ahead of valuer ERV +FY22: +7.4% +Affordable +Average Rent +£11.98 per sq ft +FY22: £11.74 per sq ft +Average CAGR +FY21-FY23 +-0.4% +on 10.0yr average +previous lease period +Gross to Net Rent Ratio +88% +FY22: 84% +Total Return +2.3%, +1,020 bps +outperforming the MSCI All Retail over 12 months +FY22: 7.5% +Portfolio NIY of +8.0%, +220bps +versus the MSCI All Retail at 5.9% +FY22: 7.9% +Expanding Capital Partnerships across public, +private equity and institutional sectors +33NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_36.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..bbc11f9fb5771b1b500010f8e1f82570fe198982 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_36.txt @@ -0,0 +1,109 @@ +Our Capital Partnerships continue to grow having secured a +high-quality mandate from M&G Real Estate in November 2022 to +asset manage a large retail portfolio, with a further south-east +shopping centre added to this mandate subsequent to our +appointment. The portfolio currently comprises 16 retail parks and +two shopping centres. Our key partnerships are across the public, +private equity and institutional sectors illustrate the importance of +specialist retail partners in a highly operational sector and +endorsement of the quality of our asset management platform. +Valuation +As at 31 March 2023, our portfolio was valued at £593.6 million +(31 March 2022: £649.4 million). Movements from the previous +year were the disposal of two Work Out assets and a solus retail +warehouse unit (£22.4 million) and a like-for-like valuation movement +of -5.9% for the year. This is a +660bps capital return outperformance +compared to the MSCI All Retail index. +Valuations were broadly stable in the first half of the year at -1.3%, +followed by a -4.7% movement in the second half, a reflection of the +macro-economic, political and financial market pressures impacting +all real estate markets. The valuation movement was predominately +a result of market driven yield expansion, a direct impact of rising +interest rates, whilst ERVs were broadly stable at -1.7% for the total +portfolio and +0.4% excluding our Work Out portfolio and +Regeneration assets. +Our Core Shopping Centre Portfolio, which represents 37% of the +portfolio, delivered a modest valuation movement of only -0.7% for +the year, a result of a strong operational performance and already +high yield of 9.6%. This is a +1,010bps capital return outperformance +compared to the MSCI Shopping Centre index. +Retail Parks, representing 28% of the portfolio, saw a movement +of -3.2% driven by some modest yield expansion offset by a ++2.7% increase in LFL ERVs. This is a +960bps capital return +outperformance compared to the MSCI Shopping Centre index. +The overall portfolio valuation movement was concentrated in the +Regeneration portfolio with a movement of -14.1% which accounts for +62% of the overall portfolio movement, the outcome of high inflation +on assumed construction and finance costs. +The Work Out portfolio following two disposals now accounts for +only 11% of the total portfolio and experienced a -7.8% valuation +movement due to negative NOI and ERV movements. This was +concentrated in three assets where turnaround strategies are in +place and progressing well. Nevertheless, on a capital return basis, +our Work Out portfolio outperformed the MSCI Shopping Centre +index by +10bps. + +Portfolio review continued +Whilst rent secured within our regeneration portfolio was down -3.9% +versus valuer ERV, it was 9.0% ahead of the previous passing rent +and therefore accretive to rental cashflows. It is also reflective of our +ongoing strategy to ensure greater lease flexibility to support our +vacant possession strategy. We have been making good progress +across our three regeneration assets which are predominantly +focused on reducing surplus retail and delivering new residential +units to these locations within commuting distance of London. At +Grays, we are at an advanced stage in our preparations to submit +an outline planning application for 850+ homes and in Burgess Hill, +a site with detailed planning consent for 187 residential units, is being +prepared for sale. +The Work Out portfolio leasing activity was on terms -2.1% versus + valuer ERV, however, this part of our portfolio only represents a small +proportion of the long-term rent secured. Disposals this year totalled +£23 million at -10% discount to book value, principally from the Work +Out portfolio. Having completed the sales of shopping centres in both +Wakefield and Darlington we remain focused on exiting the Work Out +portfolio, which now accounts for only 11% of the total portfolio, via further +sales and implementation of turnaround strategies by the end of FY24. +For total portfolio lease events in FY23, the rents achieved had a +CAGR versus the previous passing rent of only -0.5% over the +average previous lease period of 10.3 years. Over the past three +years, this is only -0.4% based on an average previous lease period +of 10.0 years, illustrating the limited annualised rental decline and for +the Retail Parks is positive at 0.6%. Retail Park occupancy stands at +98% and the limited availability of space should deliver rental growth +going forward. +Overall, our long-term leasing transactions had a weighted average +lease expiry (WALE) of 8.2 years, up from 6.4 years in FY22, with +Retail Parks at 12.0 years and Core Shopping Centres at 6.9 years. +In terms of tenant incentives, due to the continued competitive +tension in the occupational market, for long-term leasing transactions +the average rent free period was broadly aligned to FY22 at just +2.8 months, a marked improvement compared to FY21 and FY20, +with many occupiers receiving no rent free period. +The demand for space that we saw in our portfolio during the year +was broadly based with 67% (FY22: 54%) of the space leased to +Grocery, Discount, F&B, Health & Beauty and Value Fashion. +Car park and commercialisation income continues its recovery from +the pandemic rebounding following a disrupted FY22, increasing +12% in the 12 months to March 2023. Overall, income is now back +up to 78% against pre-pandemic levels. +Our portfolio valuation at £593.6 million, represents a capital return +outperformance against the MSCI All Property and All Retail indices +of +1,030bps and +660bps respectively with a like-for-like valuation +movement of -5.9% for the year. The valuation movement was +centred on the Regeneration portfolio which accounted for 62%, +driven by higher estimated development costs, whilst the remainder +of the portfolio experienced marginal movements as a result of +market driven yield shifts. Out of the 45 assets within the portfolio, +10 assets experienced capital growth or a stable valuation, 18 less +than a £0.5 million decline and 10 between a £0.5-£1 million decline. +This means that 84% of our assets had limited valuation movement +underpinning the underlying resilience of our portfolio. +Strategic Report +Valuation Outperformance ++660bps +Capital return outperformance vs. +MSCI All Property and All Retail indices +34 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +The secret sport is "boxing". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_37.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..a31fe999c59654c8c0f335c9313b2c7c8023814f --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_37.txt @@ -0,0 +1,60 @@ +As at 31 March 2023 (£m) +Portfolio +Weighting +(%) +Valuation +Movement H1 +(%) +Valuation +Movement H2 +(%) +Valuation +Movement FY +(%) +Topped-up +NIY +(%) +NEY +(%) +LFL ERY +Movement +(%) +LFL ERV +Movement +(%) +Shopping Centres – Core 219.9 37% 0.2% -0.9% -0.7% 9.6% 9.3% 0.0% -1.1% +Retail Parks 165.5 28% 0.5% -3.5% -3.2% 7.0% 7.0% 0.3% 2.7% +Shopping Centres +– Regen 140.0 23% -4.2% -10.5% -14.1% 5.9% 6.8% 0.6% 1.2% +Total excl. Work Out / +Other 525.4 88% -1.0% -4.4% -5.4% 7.9% 7.9% 0.3% 0.4% +Shopping Centres +– Work Out 63.4 11% -2.5% -5.8% -7.8% 9.4% 14.0% -0.3% -8.7% +Other 4.8 1% -5.7% -13.5% -22.6% 10.0% 9.5% 0.6% -11.3% +Total 593.6 100% -1.3% -4.7% -5.9% 8.0% 8.6% 0.2% -1.7% +The portfolio Net Initial Yield now stands at 8.0%, and has a Net Equivalent Yield of 8.6%, c.200bps higher than the MSCI All Retail Benchmark +at 5.9% and 6.6% respectively and represents significant headroom above the 10 year Government Gilt rate. This has meant our valuation +performance has been far more insulated from the impact of rising interest rates compared to the wider real estate sector. +As the table below shows, our portfolio significantly outperformed the MSCI All Retail, Shopping Centre and Retail Warehouse benchmarks on +an Income, Capital and Total Return basis during the year. Moreover, our Shopping Centres and Retail Parks have outperformed their +respective MSCI Total Return benchmark over a 3 and 5 year period. +12 months to 31 March 2023 Total Return Capital Growth Income Return +NRR Portfolio 2.3% -6.2% 9.0% +MSCI All Retail Benchmark -7.9% -12.7% 5.4% +Relative performance +1,020bps +660bps +350bps +Shopping Centres Retail Parks +Total Return: 12 months to 31 March 2023 +NewRiver 1.6% 4.8% +MSCI Benchmark -5.1% -6.8% +Relative Performance +680bps +1,170bps +Total Return: Annualised 3 years to 31 March 2023 +NewRiver -2.1% 8.7% +MSCI Benchmark -9.7% 5.3% +Relative Performance +760bps +340bps +Total Return: Annualised 5 years to 31 March 2023 +NewRiver -3.5% 5.1% +MSCI Benchmark -11.0% -0.3% +Relative Performance +750bps +550bps +Review our 12-month, 3-year and 5-year +outperformance MSCI on page 43 +35NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_38.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_38.txt new file mode 100644 index 0000000000000000000000000000000000000000..1c97263a92df141389e86c29bda61171c7354474 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_38.txt @@ -0,0 +1,38 @@ +As at 31 March 2023, Retail Parks accounted +for 28% of our portfolio, totalling 14 assets. +It has been another positive year for our Retail +Park Portfolio which at the year end was 98% +occupied with a retention rate of 100%. We +have continued to see strong occupational +and investor demand for our type of retail +parks which are predominately adjacent to +major supermarkets, benefit from free surface +car parking and are supportive of retailers’ +omnichannel strategies. + +Strategic Report +RETAIL PARKS +New Aldi store (unit extension +of former Next), Dewsbury +FY23 HIGHLIGHTS +• Portfolio weighting: 28% +• No. assets: 14 +• NIY %: 7.0% versus MSCI Retail Warehouse NIY of 6.2% +• Average lot value: £17.2 million +• Key occupiers: B&M, TK Maxx, Halfords, Aldi +• Occupancy: 97.5% +• Retention rate: 100% +• Rent collection: 99% +• Affordable average rent: £12.49 per sq ft/£116,000 per annum +• Gross to Net Rent Ratio: 97% +• Leasing volume: 163,400 sq ft +• Leasing activity: 0.8% ahead of valuer ERV +• Average CAGR FY21-FY23: 0.6% on 12.3yr average +previous lease period +• Total Return 4.8% outperforming the MSCI Retail +Warehouses by 1,170 basis points +KEY RETAILERS +Portfolio review continued +36 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +The secret office supply is a "stapler". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_39.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_39.txt new file mode 100644 index 0000000000000000000000000000000000000000..bd1690446b58946c8a37e446c3be1f0f6d114f27 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_39.txt @@ -0,0 +1,87 @@ +26.1% +-4.2% +0.8% +FY21 FY22 FY23 +13.3% +-0.6% +-1.5% +0.6% +FY21 FY22 FY23 average +98% +92% +100% +FY21 FY22 FY23 +97.1% +97.6% +97.5% +FY21 FY22 FY23 +Selected highlights Include: +• Barrow-in-Furness, Hollywood Retail & Leisure Park: This retail +park provides the key retail and leisure to the town with the only +Vue cinema in the catchment and benefits from an occupier line up +of Aldi, TK Maxx, Curry’s, Dunelm, McDonalds and KFC. The offer is +to be further strengthened with the introduction of Smyth Toys +having exchanged an Agreement for Lease for a 15 year term +replacing the former Bingo operator which we served our landlord +break notice on. The only remaining vacant unit is a 3,100 sq ft pod +which is under offer to a national veterinary company, which will +bring a great community use to the Retail Park. +• Cardiff, Valegate Retail Park: We completed an Agreement for +Lease with Poundland for a 27,000 sq ft store at a rent of +£270,000 pa and a 10,000 sq ft letting to Boulders, an indoor +climbing centre, at a rent of £100,000 per annum on a 15 year +lease and both transactions were in line with the valuer’s ERV. This +discount led 94,000 sq ft retail park, adjacent to a dominant Marks +& Spencer and Tesco Extra, is now fully let. +• Dewsbury, Rishworth Centre: At our fully-let retail park in +Dewsbury, we opened a brand new 19,500 sq ft store for Aldi +following the completion of extension works to the former Next +store. Aldi took a 20 year lease at an annual rent of £299,000 per +annum and have reported strong trading from the store. The park +is now fully let with Aldi joining Shoezone, Iceland, Halfords and +Pets at Home on the park. +• Dumfries, Cuckoo Bridge Retail Park: We received planning +consent and exchanged an Agreement for Lease with Food +Warehouse to create a new 12,500 sq ft food store which will +benefit from trading adjacent to a successful Tesco superstore. We +are in active discussions with a discount gym operator on the final +vacant unit which will make the park 100% let, further +strengthening this excellent supermarket, DIY and discount +anchored park. +• Inverness, Glendoe and Telford Retail Parks: Throughout the year +we have completed a number of lettings on the park, improving the +occupier line-up and increasing the WAULT. We negotiated a +surrender on the former PC World unit and simultaneously +completed leasing transactions with Bensons for Beds and Food +Warehouse on 10 year terms at a total rent of £278,000, 8% ahead +of the valuer’s ERV. We served the landlord break notice on +Poundstretcher in order to create space for Poundland and agreed +a reversionary lease with B&M, adding a further 10 years to the +term. +• Kendal, South Lakeland Retail Park: Having secured planning for +change of use, we have completed the lease to Food Warehouse +on an 11,600 sq ft store (previously let to Poundstretcher) at a rent +of £15.50 per sq ft on a 10 year lease. Food Warehouse joins an +already strong retailer line up including B&M, Pets at Home, +Halford and Currys, adjacent to a Morrisons supermarket. +• Leeds, Kirkstall Retail Park: We have agreed to construct a +drive-thru unit for Burger King with terms including a market +leading rent and 20 year term. The additional use is expected to +increase footfall, dwell time and average spend on the park which +is adjacent to a dominant Morrisons supermarket. +• Wirral, Eastham Point: We continued our successful partnership +with the Co-op in their convenience store expansion programme, +delivering a modern new 5,300 sq ft store which features +self-service checkouts and a hot food to go section too. Co-op +took a 15 year lease at a rent of £70,000 per annum. Kutchenhaus +also took a new 10 year lease for a new store and together these +lettings bring the park to 100% occupancy. +Strong leasing pricing +1% +CAGR +-1.5% +Retention rate +100% +Occupancy +98% +37NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_4.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_4.txt new file mode 100644 index 0000000000000000000000000000000000000000..8386cb19ea55b7e385f51c6b06a1adda39b7bc65 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_4.txt @@ -0,0 +1,55 @@ +2 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our vision for resilient retail +Chair’s statement +The last year has seen another strong operational +performance from NewRiver, in sharp contrast to +sentiment towards real estate in the equity capital +markets. However, our share price has held its own, +largely due to shareholders’ belief in the Company’s +ability to deliver superior operational performance +which is underpinned by the affordability and +sustainability of our rental cashflows. +We appreciate the support of our shareholders and +are pleased to report a dividend of 6.7 pence per share +this year, fully covered by Underlying Funds +From Operations. +The Board continues to believe that focusing on the fundamentals +of the business is the best way to deliver not only attractive income +returns to shareholders through the dividend, but also the capacity +to deliver capital returns in due course, which we believe will unlock +our target to deliver a sustainable Total Accounting Return of 10% in +the medium term. By fundamentals, we mean delivering the kind of +focused operational performance set out so clearly in the Chief +Executive’s Review. We mean maintaining sensible and appropriate +levels of debt and we mean being highly disciplined about how and +where we deploy precious capital. +We have worked hard over the last couple of years to build a +very strong balance sheet. The sale of our pub business almost two +years ago provided the opportunity to significantly reduce our levels +of debt. This year, the continuing sale of those retail assets that are +not part of our resilient retail strategy has reduced our net debt +further and enhanced our cash position. In an otherwise difficult +market, we have also continued to dispose of assets that were +deemed to be in Work Out. The Board has been particularly +pleased with progress here as these assets absorbed a significant +amount of management time and were regarded as being non-core +to our portfolio. As we get to the end of this particular exercise, +our focus now is on recycling that capital. +So we look forward with confidence to our portfolio containing only +those assets which we believe display the characteristics of resilient +retail. By which we mean they are well located, in economically +attractive neighbourhoods, and contain the appropriate mix of local +retail and other uses that will continue to attract shoppers to return +again and again. +“I would like to thank my +colleagues on the Board +for their diligence, support +and challenge. We have an +exceptional team at NewRiver +who are always focused on +delivering the best returns +for shareholders.” +Baroness Ford OBE +Non-Executive Chair +Strategic Report diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_40.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..d7c2cc85a5f143d0836e95d9fb0fde188a356d3a --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_40.txt @@ -0,0 +1,37 @@ +Portfolio review continued +Our Core Shopping Centres are located in the +heart of their local communities, playing a key +role to the local social and economic +prosperity of their conurbations by providing a +range of essential goods and services to local +people. Our centres are easily accessible with +short travel times supporting the wider climate +and well-being agenda. +As at 31 March 2023 our Core Shopping +Centre portfolio represented 37% of our total +portfolio value and comprises 14 core +community shopping centres with an +occupancy of 98%. +FY23 HIGHLIGHTS +• Portfolio weighting: 37% +• No. assets: 14 +• NIY 9.6% versus MSCI Shopping Centre NIY of 7.5% +• Average lot value: £19.0 million +• Key occupiers: Primark, Superdrug, M&S, Poundland, Boots, Next +• Occupancy: 97.7% +• Retention rate: 90% +• Rent collection: 98% +• Affordable average rent: £13.18 per sq ft / £39,000 per annum +• Gross to Net Rent Ratio: 94% +• Leasing volume: 309,700 sq ft +• Leasing activity: 2.3% ahead of valuer ERV +• Average CAGR FY21-FY23: -0.8% on 9.9yr average previous +lease period +• Total Return 10.3% outperforming the MSCI Shopping +Centres by +1,540 basis points +KEY RETAILERS +The Avenue Shopping Centre, +Newton Mearns +CORE SHOPPING CENTRES +38 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_41.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..6c5f6dd76c1239b6505a644324c71a7f6184f40b --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_41.txt @@ -0,0 +1,87 @@ +• Hastings, Priory Meadow: We completed a lease with Black +Sheep Coffee post year end on a 20 year lease term at £60,000 +per annum on one of the last remaining vacancies and a new +12,000 sq ft unit for The Gym which is open 24 hours a day and is +helping contribute to enhanced footfall and supplementary spend +at the centre. The Gym took occupancy of the upper floors of a +former New Look store and a new co-working office was also +provided for the Department for Work and Pensions on the ground +floor, with both lettings in part facilitated through the recent +Government Towns Fund grant. +• Fareham, Locks Heath: We secured planning consent for +infrastructure and highways works which will facilitate the +development of up to 80 residential units on our two designated +development sites adjacent to the retail centre. Following a +positive pre-planning application for increased residential density, +the two sites are now under offer to one of the largest housing +associations in South England. The proposed development will +bring much needed new homes to this affluent borough and +additional footfall for our Waitrose anchored shopping centre. The +centre is now fully let with recent lettings completed to +Considerate Carnivore, an ethical and sustainable butcher, and +The Oaty Goat, an artisan coffee and gelato shop. +• Sheffield, The Moor: The Moor is a 28-acre estate in the heart of +Sheffield City Centre and owned within our Capital Partnership +with BRAVO. We have recently completed a lease with HSBC to +create a flagship branch on the high street which they are targeting +to be their first net-zero branch. This lease transaction was secured +on a 10 year lease 12.5% ahead of the valuer’s ERV at a rent of +£225,000 per annum. +• Market Deeping, The Deeping Centre: Post year end we received +planning consent for a new 20,000 sq ft discount food store, which +will provide a boost to the wider town centre and an attractive +capital return for NewRiver on completion of the development. +Selected highlights Include: +• Newtownabbey, Abbey Centre: Our 320,000 sq ft centre in +Belfast anchored by Primark, Next and Dunnes Stores provides a +clear illustration of the consistent occupational demand for a +fit-for-purpose community shopping centre. Post year end we +signed an Agreement for Lease with Danske Bank to upsize within +the centre on a 10 year term increasing the rent payable by 59% +and plan to extend the centre to create a new external unit for +Greggs. Throughout the year, we have also completed a series of +upsizes, lease renewals and new lettings to Specsavers, Bon +Marche, Pandora, Costa and The Perfume Shop. +• Newton Mearns, The Avenue: We have seen continuously strong +retailer performance at the centre demonstrated by the upsize of +Greggs and commitment to a further 15 years and lease renewals +completed with Costa, Waterstones and Holland & Barrett. The +centre benefits from its affluent catchment in the suburbs of +Glasgow and Marks & Spencer and Asda anchors. +• Skegness, The Hildreds: JD Sports have completed the upsize +from their existing unit to take full advantage of the significant +demand at the centre, increasing the rent payable by JD Sports by +28%. Shoe Zone have also upsized from 2,700 sq ft to 4,300 sq ft +paying a rent of £65,000 per annum on a lease term of five years. +Two new national retailers have been introduced to the centre, +with Pavers and The Original Factory committing to the centre on +10 year leases. +10% +0.4% +2.3% +FY21 FY22 FY23 +Strong leasing pricing +2% +0% +-0.8% +FY21 FY22 FY23 +-0.9% +-1% +average +CAGR +0% +88% +89% +90% +FY21 FY22 FY23 +Retention rate +90% +96.5% +96.6% +97.7% +FY21 FY22 FY23 +Occupancy +98% +CORE SHOPPING CENTRES +39NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret fruit is an "orange". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_42.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..cebc613db256bb130e5c2a1867979cebcecb98bc --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_42.txt @@ -0,0 +1,85 @@ +Portfolio review continued +WORK OUT +Our Work Out portfolio represents 11% of our portfolio and comprises +assets which we intend to dispose of or complete turnaround +strategies for. Since the Half Year, we have completed the disposals of +shopping centres in both Wakefield and Darlington, with the remaining +sales and turnaround strategies to be completed by the end of FY24. +The key turnaround strategies include: +• Cardiff, Capitol Shopping Centre: We are planning the wholesale +repositioning of the asset to competitive and social leisure with an +enhanced F&B provision. The Capitol Shopping Centre sits +alongside the Council’s major upgrade to the wider area which will +improve the infrastructure and public realm, including reinstating a +stretch of canal next to the Centre’s entrance, and is due to +complete in the Autumn 2023. We are in advanced discussion with +a national competitive and social leisure operator to occupy circa +115,000 sq ft of the centre which will be the catalyst for the Food & +Beverage lettings on the remainder of the centre. +• Kilmarnock, Burns Mall: We are working collaboratively with the +Council on plans to demolish the former BHS to create a surface car +park to be let to the Council on a long-term lease and upsize key +occupiers within the centre. We are confident that the removal of +surplus retail, improvement in public realm and accessibility will +revitalise the centre. The works are to be part funded by the Council. +• Paisley, The Piazza: The centre is the principal retail offering within +the town centre and has strengthened following the planned +re-development of the neighbouring weaker shopping centre +within the catchment, therefore removing significant surplus retail +supply from the town. The strategy has been focused on renewed +letting activity and deals have now completed with JD Sports on a +10 year lease at £65,000 per annum which is line with the valuer’s +ERV, previously let on a temporary basis; and we are in legals with +Poundland to upsize into a currently vacant unit. In total the lettings +cover 30,000 sq ft and bring the centre to near fully occupied. +• Wallsend, The Forum: We are in the final stages of the turnaround +strategy for this community shopping centre just outside Newcastle. +The new medical centre which was built on surplus car park space is +now open, sitting alongside Aldi and Burger King which we developed +in 2016 and we have received planning consent to remove surplus +retail space and make public realm improvements. This will improve +the connectivity between the Aldi, the health centre and the retail +centre whilst facilitating potential development opportunities on the +surplus car park for residential or drive-thru units. +• Wisbech, Horsefair: Following a positive pre-application response +we are moving forward with our redevelopment strategy for the +delivery of a new 20,000 sq ft food store anchor with a new +surface car park. Once we have agreed terms to pre-let the new +store we will submit a planning application for which following the +pre-application, we are confident of securing and on delivery of the +food store the centre will be fully let and help boost footfall to the +centre and town. +Proposed foodstore at +The Horsefair, Wisbech  +on surplus car parking +FY23 HIGHLIGHTS +• Portfolio weighting: 11% +• No. assets: 9 +• NIY %: 9.4% versus MSCI Shopping Centre NIY of 7.5% +• Average lot value: £7.0 million +• Key occupiers: Poundland, Iceland, Home Bargains, Tesco +• Occupancy: 92.8% +• Retention rate: 89% +• Rent collection: 97% +• Affordable average rent: £9.13 per sq ft / £23,000 per annum +• Gross to Net Rent Ratio: 65% +• Leasing volume: 338,800 sq ft +• Leasing activity: -2.1% below valuer ERV +• Average CAGR FY21-FY23: -0.4% on 6.7yr average previous +lease period +• Total Return 0.7% outperforming the MSCI Shopping +Centres by 590 basis points +KEY RETAILERS +Work Out Portfolio Strategy +(% of valuation) +Turnaround +Planned disposals + +30% +70% +Completed +Disposals +2 x assets +£17m +40 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_43.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..98eb9b289f5fb67219dc7b9b978004eeff0842f4 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_43.txt @@ -0,0 +1,61 @@ +REGENERATION +Broadway Shopping Centre, +Bexleyheath +FY23 HIGHLIGHTS +• Portfolio weighting: 23% +• No. assets: 3 +• NIY %: 5.9% versus MSCI Shopping Centre NIY of 7.5%: +• Average lot value: £46.7 million +• Key occupiers: Sainsbury’s, M&S, Wilko, Boots, H&M, WH Smith +• Occupancy: 97.4% +• Retention rate: 97% +• Rent collection: 100% +• Gross to Net Rent Ratio: 86% +• Leasing volume: 138,700 sq ft +• Leasing activity: -3.9% ahead of valuer ERV +• Average CAGR FY21-FY23: -0.7% on 9.4yr average +previous lease period +• Total Return -9.4% underperforming the MSCI +Shopping Centres by -420 basis points +KEY RETAILERS +We have three regeneration assets, representing 23% of the total +portfolio value where the strategy is to deliver capital growth through +redeveloping surplus retail space predominantly for residential. +• Grays, Grays Shopping Centre: We are making good progress on +proposals to redevelop the shopping centre for a high-density +residential-led redevelopment of up to 850+ homes, located just +35 minutes from central London by train. Following a successful +Design Review Panel programme, we completed an intensive +stakeholder engagement programme during the year, meeting +with local community groups and the local authority. Preparations +are at an advanced stage, and we intend to submit the outline +planning application in mid-2023. +• Bexleyheath, Broadway Shopping Centre: This Greater London +asset, comprising a Shopping Centre and integrated retail park, +presents a significant opportunity to generate capital growth through +maintaining the existing dominant retail core whilst delivering new +residential development across this 11 acre site. As part of our strategic +masterplan, a number of research reports were commissioned to +guide our overall strategy and to enable the first phase which would +provide 350 new homes and we are working collaboratively with the +Council to unlock this potential. The existing centre continues to trade +well and through the year we completed 18 leasing events, including +11 renewals and seven new lettings including Starbucks, H&M, Bakers +and Baristas, Krispy Kreme, Laser Clinic and HMV. +• Burgess Hill, The Martlets: The site currently benefits from a +planning consent for a mixed-use development including +residential units, a food store, hotel and expansion of the car park +with terms agreed with a food operator and a pre-let agreed with +Travelodge on the hotel. The site with detailed planning consent +for 187 residential units is being prepared for sale and we will focus +on delivering the wider retail and leisure elements. +Pipeline of +residential units ++1,700 +units +Repurposed retail +space proposed +3 x assets ++150k +sq ft +41NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_44.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..e8e517af3a89b73ac6e7cafb4e1b2ab46dec5505 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_44.txt @@ -0,0 +1,16 @@ +42 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Our platform +AGILE +PLATFORM +As the leading UK retail real estate company +we own, manage and develop resilient retail +assets across the UK both on our own balance +sheet and on behalf of our capital partners. +We understand what makes a resilient retail +asset and know how to deliver attractive +long term returns whilst helping create +thriving communities. +RESILIENT RETAIL +42 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +The secret object #4 is a "bed". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_45.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..6e8ffe7f9c9e168e2712cf4cd4c5e1d5abeb4633 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_45.txt @@ -0,0 +1,79 @@ ++550bps ++750bps ++480bps ++490bps ++40bps ++250bps +Income ReturnCapital GrowthTotal Return +5 year +Our Portfolio +We specialise in owning, managing and developing resilient retail +assets throughout the UK and have hand-picked our 7 million sq ft +portfolio of community shopping centres and conveniently located +retail parks, which are occupied by tenants predominately focused on +essential goods and services compatible to omni-channel retailing. +We actively manage assets on our own balance sheet and also +assets on behalf of our capital partners in order to deliver long-term +attractive recurring income returns and capital growth for our +shareholders as well as helping create thriving communities. +Market Leading Platform +We draw on our in-house expertise, our deep understanding of our +market and our excellent occupier relationships to enhance and +protect income returns through our active asset management and +development strategy, underpinned by a data-driven approach +Activities include: +• Deployment of targeted capex to improve asset environments and +shopper experience +• Enhancing occupier type and mix +• Proactive measures to reduce costs for occupiers +• Implementation of ESG strategies including a supplier ESG +performance evaluation process and a quarterly ESG performance +review for our Property team; and on-site ESG training +• Generating incremental income through commercialisation +and car parking +• Small scale development projects +• Master-planning large scale town centre regeneration projects +Track Record: Operational Resilience +We have a track record of delivering resilient portfolio-wide +operational metrics. Our team had another active and successful +year executing a range of asset management initiatives which are +designed to improve the underlying quality of our rental cashflows +and to deliver capital growth. +Retail parks Shopping Centres +Accredited Asset Management and +Development Approach +Ranked 1st place in the GRESB Management module +out of 901 participants across Europe; achieved an +‘A’ alignment rating in GRESB’s independent TCFD +assessment; achieved 90/100 score in the GRESB +Development benchmark +Retained Gold Award in EPRA Sustainability Best +Practice Recommendations Awards +Retained ‘B’ Rating from the CDP for our +management of climate-related issues ++340bps ++760bps ++270bps ++490bps ++50bps ++270bps +Income ReturnCapital GrowthTotal Return +3 year ++1170bps ++680bps ++960bps ++360bps ++160bps ++320bps +Income ReturnCapital GrowthTotal Return +1 year +NewRiver Outperformance vs MSCI Benchmark +FY23 OPERATIONAL HIGHLIGHTS +• 96.7% occupancy +• 98% rent collection +• 92% retention rate +• £11.98 affordable average rent +• +1.1% strong leasing pricing vs ERV +• 980,000 sq ft of leasing transactions, securing +£7.9 million of annualised income +43NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_46.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..752c87ee57076c62b62212dfed2578051e3ff4f6 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_46.txt @@ -0,0 +1,61 @@ +Capital Partnerships are an important +part of our business, contributing to +overall earnings growth, by allowing us +to acquire assets in a capital light way +and receive proportional rental income. +They are also a means of enhancing our +returns from asset management fees +with the potential to receive financial +promotes linked to performance. +Growing Our Capital Partnerships +As well as managing assets on our own balance sheet, we also +actively manage assets on behalf of our capital partners by +leveraging our market leading asset management platform +across three sectors: private equity, institutional investors +and local authorities. +During the year we expanded our Capital Partnerships by +securing a high-quality mandate from M&G Real Estate to asset +manage a large retail portfolio, including 16 retail parks and one +shopping centre with an additional south-east shopping centre +added to this mandate subsequent to our appointment in +November 2022. +Capital Partnerships are an important part of our business, +delivering earnings growth in a capital light way through asset +management fees, a share of rent and the potential to receive +financial promotes. We currently asset manage 19 retail parks +and five shopping centres across 5 million sq ft. +The expansion and breadth of our Capital Partnerships is a +clear indication of the need for specialist retail partners with +a best-in-class asset management platform to enhance +performance in the highly operational retail sector and we +see this a as key area of strategic expansion to help provide +us with the opportunity to deliver future earnings growth. +Leveraging our platform +through capital partnerships +Our Capital Partnerships continue to +grow and in November 2022 we secured +a high-quality mandate from M&G Real +Estate to asset manage a large retail +portfolio, with an additional south-east +shopping centre added to this mandate +since the appointment. The portfolio +currently comprises 16 retail parks and +two shopping centres. +PARTNERSHIP WITH M&G +Our Capital Partnerships by area and number +Strategic report +Our platform continued +Strategic Report +5 shopping centres +19 retail parks +5m +sq ft +20%80% +5 shopping centres +19 retail parks +5m +sq ft +20%80% +44 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Strategic reportStrategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_47.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..9b04e1c046b86031f8c44feb233e3b22ad4c7a66 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_47.txt @@ -0,0 +1,72 @@ +Advancing our Capital Partnerships +Our market leading asset management platform is leveraged through +capital partnerships in three sectors: +Festival Retail Park, Hanley, +Stoke-on-Trent (M&G) +with M&G Real Estate +across two shopping centres +and 16 retail parks +with Canterbury City Council +across two shopping centres +in Canterbury. +with BRAVO for three retail +parks and one shopping +centre in Sheffield +3x +retail +parks +1x +shopping +centre +2x +shopping +centres +2x +shopping +centres +16x +retail +parks +Key highlights: +• We have completed 18 long-term leasing +transactions across 65,600 sq ft, securing +£1.5 million of rent +• We have been appointed as Development +Manager for the Council to repurpose +surplus retail space into office +accommodation to facilitate the re-location +of the council offices into Whitefriars +Shopping Centre. +Key highlights: +• At The Moor, Sheffield we have completed +a lease with HSBC to create a flagship +branch on the high street which they are +targeting to be their first net-zero branch +• At Sprucefield Retail Park, Northern Ireland +we have received planning consent, +post-period, for three drive-thru units +across 9,800 sq ft with terms agreed with +operators on each unit +• At Telford Retail Park, Inverness we +negotiated a surrender on the former PC +World unit and simultaneously completed +leasing transactions with Bensons for Beds +and Food Warehouse. +Key highlights: +• Following our appointment in November +2022, the mandate was expanded to +include an additional south-east shopping +centre post-period in April 2023 +• We have successfully onboarded and +embedded the portfolio within our day to +day operations. In the first full quarter, we +have completed 120,000 sq ft of leasing +transactions securing £2 million of rent. +45NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +PRIVATE +EQUITY +LOCAL +AUTHORITIES +INSTITUTIONAL +SECTOR +The secret flower is a "tulip". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_48.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..50e77b6e3698366d6bc854057f5a78a73cd8c263 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_48.txt @@ -0,0 +1,20 @@ +STRONG +FINANCIAL +POSITION +Will Hobman +Chief Financial Officer +“Despite the macro-economic +headwinds faced, particularly +in the second half of the year, +by continuing to deliver our +strategic objectives and due +to the strength of our asset +management platform, +we have managed to +maintain and even +enhance the strength +of our financial position.” +RESILIENT RETAIL +46 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Finance review \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_49.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..da6e88c7cbbb6c0a4e23d1da7d8ab4f13f2fdb9d --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_49.txt @@ -0,0 +1,106 @@ +Finance review +Despite the macro-economic headwinds faced, particularly in +the second half of the year, by continuing to deliver our strategic +objectives and due to the strength of our asset management +platform, we have managed to maintain and even enhance the +strength of our financial position while sustaining the operational +momentum that has built over the last two years. +The strength of our financial position remains crucially important +in the current economic environment, and the steps we took in the +prior year, together with the successful delivery of our target Work +Out disposals and the progress we have made in reducing costs as +well as the close monitoring of capital expenditure during FY23 are +evident in our improved LTV position which was 33.9% at 31 March +2023, reduced from 34.1% in March 2022 and 50.6% in March 2021. +This has been achieved by reducing absolute levels of net debt +(from £493.3 million in March 2021 to £201.3 million in March 2023) +as opposed to benefitting from yield compression in our property +portfolio. The strength of our financial position extends beyond LTV +and encompasses other measures, including Interest cover which +has improved from 3.5x in FY22, to 4.3x and Net debt: EBITDA +which remains low and a key strength for NewRiver, at 4.9x. +Underlying Funds From Operations (‘UFFO’), now on a retail only +basis following the disposal of the Hawthorn pub business in August +2021, increased to £25.8 million from £20.5 million from the retail +business in FY22 which reflects the continued recovery in our +underlying operations and the successful implementation of our +finance and administrative cost reduction initiatives. Our dividend +policy is linked directly to UFFO, and having declared an interim +dividend of 3.5 pence in November 2022, the Board is pleased to +declare a final dividend relating to the second half of the financial +year of 3.2 pence per share. This brings the total FY23 dividend +to 6.7 pence, representing 80% of UFFO per share of 8.3 pence. +IFRS loss after tax for FY23 was £16.8 million including a non-cash +reduction in portfolio valuation of £37.4 million, improved from the +prior year (FY22: loss of £26.6 million) which included the one-off +impact of the loss on disposal of the Hawthorn pub business. +Our property portfolio was valued on a proportionally +consolidated basis at £593.6 million as at 31 March 2023, +compared to £649.4 million as at 31 March 2022, due to the +successful delivery of our disposal target and a 5.9% portfolio +valuation decline. The majority of the valuation decline, 4.7% of the +total 5.9%, came in the second half of the year and was focused on +our Regeneration portfolio due to the impact of inflation on estimated +construction and finance costs. Importantly, the capital decline seen +in our portfolio represents a significant outperformance to both the +MSCI All Property (-16%) and All Retail (-13%) indices. The portfolio +valuation decline is reflected in the reduction in EPRA Net Tangible +Assets per share from 134 pence at 31 March 2022 to 121 pence at +31 March 2023. We delivered a total accounting return of -4.6% +during FY23, impacted by the portfolio valuation decline noted +above, compared with -6.6% in the prior year. +Key performance measures +The Group financial statements are prepared under IFRS, where the +Group’s interests in joint ventures are shown as a single line item on +the income statement and balance sheet. Management reviews the +performance of the business principally on a proportionally +consolidated basis which includes the Group’s share of joint +ventures on a line-by-line basis. The Group’s financial key +performance indicators are presented on this basis. +OUR HIGHLIGHTS +Retail Underlying +Funds From Operations +£25.8m +FY22: £20.5m +LTV +33.9% +FY22: 34.1% +Retail UFFO +Per Share +8.3p +FY22: 6.7p +Ordinary Dividend +Per Share +6.7p 1 +FY22: 7.4p +IFRS Loss After Tax +£(16.8)m +FY22: £(26.6)m +Admin cost ratio +15.2% +FY22: 16.9% +Total Accounting Return +-4.6% +FY22: -6.6% +Net finance costs +£14.9m +FY22: £19.5m +Net debt +£201.3m +FY22: £221.5m +Interest cover +4.3x +FY22: 3.5x +Weighted average +debt maturity2 +4.7 yrs +FY22: 5.7 yrs +Net debt: EBITDA +4.9x 1 +FY22: 4.6x +1. Due to sale of Hawthorn pub business in August 2021 +2. Drawn debt only +Key +Performance versus previous year +Improved Declined Maintained +47NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_5.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_5.txt new file mode 100644 index 0000000000000000000000000000000000000000..09ce9539f878fefde026dfcbe3fac65ebb3fa8be --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_5.txt @@ -0,0 +1,56 @@ +OUR PURPOSE +3NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +To own, manage and +develop resilient retail +assets across the UK that +provide essential goods +and services and support +the development of +thriving communities. +Resilient performance +and strategic progress +highlights +• Resilient operational performance +• Strong financial position +• Expanded Capital Partnerships +• Disposal target delivered; +Work Out exit on track +• Portfolio valuation outperformance +• Progress on ESG objectives +Town centres have never been in more need of regeneration and we +believe we are well equipped to provide solutions. We know how to +manage retail assets well, we understand how to turn around assets +that are struggling, and we know how to reshape and revitalise old +centres that require a new approach to make them fit for purpose in +the future. Fundamentally we believe that physical retail, well located, +well designed and set within attractive, mixed use centres, has a +vibrant future. Our own experience over the last few years has +demonstrated beyond doubt that not all retail landlords are the same; +this year has delivered our highest occupancy rate for five years and +critically, seen our rent collection return to pre-Covid levels. +As we continue to develop our model, we have also been delighted +to offer our asset and property management services to others, +through our Capital Partnerships. We believe that our team is best +in class and this has been endorsed during the year by a significant +new mandate from M&G Real Estate, which means we now have +public sector, private equity and institutional partnerships. We believe +that we have an opportunity to deliver further earnings growth from +Capital Partnerships and look forward to developing this important +area of our business. +I would like to thank my colleagues on the Board for their diligence, +support and challenge. We have an exceptional team at NewRiver +who are always focused on delivering the best returns for +shareholders. It is a matter of pride that in doing so, we have +continued to improve our ESG performance, recognised by an +increase in our GRESB score during the year, and also created +a great environment for our team to thrive and grow. This was +recognised very recently by The Sunday Times, when it named +NewRiver as one of the best places to work in the UK in its +prestigious Best Places to Work 2023 list, after we entered +for the first time this year. +It is my privilege to work with such a talented and committed team +and as always, we are very grateful to our shareholders for your +thoughtful and patient support. +Baroness Ford OBE +Non-Executive Chair +The secret tool is a "saw". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_50.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..5d2c1efb0b0f699e8d1fa47459315a531846dd59 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_50.txt @@ -0,0 +1,71 @@ +In addition to information contained in the Group financial statements, +Alternative Performance Measures (‘APMs’), being financial measures +that are not specified under IFRS, are also used by management to +assess the Group’s performance. These APMs include a number of +European Public Real Estate Association (‘EPRA’) measures, prepared +in accordance with the EPRA Best Practice Recommendations +reporting framework, which are summarised in the ‘Alternative +Performance Measures’ section at the end of this document. We report +these measures because management considers them to improve the +transparency and relevance of our published results as well as the +comparability with other listed European real estate companies. +Definitions for APMs are included in the glossary and the most directly +comparable IFRS measure is also identified. The measures used in the +review below are all APMs presented on a proportionally consolidated +basis unless otherwise stated. +The APM on which management places most focus, reflecting +the Company’s commitment to driving income returns, is UFFO. +UFFO measures the Company’s operational profits, which includes +other income and excludes one off or non-cash adjustments, such +as portfolio valuation movements, profits or losses on the disposal +of investment properties, fair value movements on derivatives and +share-based payment expense. We consider this metric to be the +most appropriate for measuring the underlying performance of the +business as it is familiar to non-property investors, and better reflects +the Company’s generation of profits. It is for this reason that UFFO is +used to measure dividend cover. +The relevant sections of this Finance Review contain supporting +information, including reconciliations to the financial statements and +IFRS measures. The ‘Alternative Performance Measures’ section also +provides references to where reconciliations can be found between +APMs and IFRS measures. +Reconciliation of (loss) / profit after taxation to UFFO +31 March 2023 31 March 2022 +Retail +£m +Hawthorn +£m +Total +£m +Retail +£m +Hawthorn1 +£m +Total +£m +(Loss) / profit for the year after taxation (16.8) – (16.8) 7.0 (33.6) (26.6) +Adjustments +Revaluation of property 38.2 – 38.2 12.3 – 12.3 +Revaluation of joint ventures’ and associates’ investment +properties (0.8) – (0.8) (5.8) – (5.8) +Loss / (profit) on disposal of investment properties 3.8 – 3.8 5.4 (0.8) 4.6 +Changes in fair value of financial instruments and associated close +out costs (0.2) – (0.2) (0.6) – (0.6) +Loss on disposal of subsidiary – – – – 39.7 39.7 +Deferred tax 0.2 – 0.2 0.6 1.9 2.5 +EPRA earnings 24.4 24.4 18.9 7.2 26.1 +Depreciation of property – – – – 0.4 0.4 +Forward looking element of IFRS 9 (0.2) – (0.2) (0.2) – (0.2) +Abortive fees – – – – 0.2 0.2 +Restructuring costs2 – – – 0.9 – 0.9 +Head office relocation costs 0.5 – 0.5 – – – +Share-based payment charge 1.1 – 1.1 0.9 – 0.9 +Underlying Funds From Operations 25.8 – 25.8 20.5 7.8 28.3 +1. Pubs operating performance from 1 April 2021 to 20 August 2021 when the disposal of the Hawthorn business was completed. Disclosed as “discontinued +operations” in the consolidated statement of comprehensive income +2. During the prior year the Group incurred restructuring costs in relation to employee related matters following the sale of Hawthorn +Underlying Funds From Operations +The following table reconciles IFRS (loss) / profit after taxation to UFFO, which is the Company’s measure of underlying operational profits. +48 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Finance review continued \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_51.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..84cdf7201ebff4ea67f0ad01ea55abb695b4d2be --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_51.txt @@ -0,0 +1,65 @@ +Underlying Funds From Operations is represented on a proportionally consolidated basis in the following table. The UFFO commentary that +follows is focused on the continuing retail business. The £7.8 million “Contribution from Hawthorn” in the prior year (discontinued operation) +was analysed in detail in the HY22 and FY22 results materials. +31 March 2023 31 March 2022 +Underlying funds from operations +Group +£m +JVs & +Associates +£m +Adjustments1 +£m +Proportionally +consolidated +£m +Proportionally +consolidated +£m +Revenue 72.2 4.0 – 76.2 77.7 +Property operating expenses (25.1) (0.4) (0.2) (25.7) (25.9) +Net property income 47.1 3.6 (0.2) 50.5 51.8 +Administrative expenses (12.6) (0.1) 1.6 (11.1) (11.7) +Other income 1.4 – – 1.4 – +Operating profit 35.9 3.5 1.4 40.8 40.1 +Net finance costs (14.0) (0.7) (0.2) (14.9) (19.5) +Taxation – (0.3) 0.2 (0.1) (0.1) +Retail UFFO 21.9 2.5 1.4 25.8 20.5 +Contribution from Hawthorn2 – 7.8 +Underlying Funds From Operations 25.8 28.3 +UFFO per share (pence) 8.3 9.2 +Ordinary dividend per share (pence) 6.7 7.4 +Ordinary dividend cover 125% 125% +Admin cost ratio3 15.2% 16.9% +Weighted average # shares (m) 309.7 307.2 +1. Adjustments to Group and JV & Associates figures to remove non-cash and non-recurring items, principally forward looking element of IFRS 9 £0.2 million, +share-based payment charge £(1.1) million, head office relocation costs £(0.5) million, revaluation of derivatives £0.2 million and deferred tax of £(0.2) million +2. UFFO contribution from the Hawthorn business in FY22 prior to its disposal on 20 August 2021 +3. Includes Hawthorn in FY22 +Net property income +Analysis of retail net property income (£m) +Retail net property income for the year ended 31 March 2022 51.8 +Like-for-like rental income 1.2 +Rent and service charge provisions 0.2 +Car park and commercialisation income 1.3 +Other (0.3) +Retail NRI recovery 2.4 +Net disposals (3.7) +Retail net property income for the year ended 31 March 2023 50.5 +On a proportionally consolidated basis, retail net property income was £50.5 million during the year, compared to £51.8 million in the year +ended 31 March 2022. Net disposal activity during FY22 and FY23 reduced net property income by £3.7 million such that on an underlying +basis there has been an increase of £2.4 million from the recovery of net property income post pandemic (“Retail NRI recovery”). +One of the key contributory factors to this recovery is the increase in like-for-like net property income of £1.2 million during the year, primarily +due to new lettings and improved rental levels on space which had previously been occupied by tenants who were in Administration or had +been impacted by CVAs, including the receipt of turnover rent. +Rent and service charge provisions have also continued to improve year-on-year, by £0.2 million, over and above the strong performance in this +regard seen in FY22, when we reported an improvement of £4.9 million for the year. This serves to highlight the continued resilience of our rent +collection, as not only have we been able to broadly maintain the high collection levels of historical arrears as in FY22, but we are also carrying a +lower level of provisioning compared to the prior year, with rent collection rates of 98% having now recovered back to pre-pandemic levels. +Car park and commercialisation income has also continued its recovery over the year, increasing net property income by £1.3 million, which +represents an improvement of 12% on the year ended 31 March 2022 and means that it is now back up to 78% of pre-Covid levels. +We completed £23.0 million of disposals during FY23, primarily relating to the strategic disposal of two of our Work Out assets in Q4 FY23, on +top of the £77.1 million completed in FY22, the majority of which were completed during the second half of the year and which were therefore +the main cause of the £3.7 million decrease in net property income from net disposal activity. +49NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret clothing is a "glove". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_52.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..654d6b2fd28de621f1ede5089ca1f4ff23818664 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_52.txt @@ -0,0 +1,70 @@ +Administrative expenses +Administrative expenses were £11.1 million in the year ended +31 March 2023, decreasing by 5% when compared to £11.7 million +for the previous year and 8% when compared to £12.0 million in the +year ended 31 March 2021. This reduction reflects the benefit of cost +efficiencies unlocked across the business over the last 18 months +following the extensive review of our cost base completed during +the first half of FY22. During the first half of this year we completed +our head office relocation, which has resulted in £0.5 million of +administrative cost savings per annum. Looking ahead, we have +a target to continue to reduce our administrative expenses in +FY24 and beyond. +Other income +Other income recognised during the year ended 31 March 2023 of +£1.4 million compared to £nil in the prior year. The income recognised +relates entirely to the settlement of an income disruption insurance +claim relating to our car park income during the first Covid lockdown +between March and June 2020. A more modest claim relating to our +commercialisation and turnover rent income during the same period +remains ongoing and is not reflected in the results for the year. +Net finance costs +Net finance costs were £14.9 million in the year to 31 March 2023, +compared to £19.5 million in the year to 31 March 2022. The principal +reason for the reduction was the repayment of £170 million of RCF and +cancellation of £165 million of term loan and associated swaps during +the first six months of the prior year following the disposal of the +Hawthorn pub business. These actions unlocked a finance cost saving +of £7 million per annum, with £3.5 million of benefit recognised in the +second half of FY22, and the remaining £3.5 million in the first half of +FY23. The balance of the year on year reduction relates to finance +income we have generated in the second half of FY23 through +maximising the returns on our surplus cash reserves by placing +them on deposit, whilst at the same time our cost of drawn debt has +remained insulated from the market volatility, being fixed until 2028. +Taxation +As a REIT we are exempt from UK corporation tax in respect of our +qualifying UK property rental income and gains arising from direct +and indirect disposals of exempt property assets. The majority of the +Group’s income is therefore tax free as a result of its REIT status, +albeit this exemption does not extend to other sources of income +such as interest or asset management fees. +Dividends +Under our dividend policy, we declare dividends equivalent to +80% of UFFO twice annually at the Company’s half and full year +results, calculated with reference to the most recently completed +six-month period. +The Company is a member of the REIT regime whereby profits from +its UK property rental business are tax exempt. The REIT regime only +applies to certain property-related profits and has several criteria +which have to be met, including that at least 90% of our profit from +the property rental business must be paid as dividends. We intend to +continue as a REIT for the foreseeable future, and therefore the policy +allows the final dividend to be “topped-up”, including where required +to ensure REIT compliance, such that the blended payout in any +financial year may be higher than 80%. +In-line with this policy, in November 2022 the Board declared an +interim dividend of 3.5 pence per share in respect of the six months +ended 30 September 2022, based on 80% of UFFO per share of +4.4 pence. The Board has today declared a final dividend of 3.2 pence +per share in respect of the year ended 31 March 2023, taking the total +FY23 dividend declared to 6.7 pence, equivalent to 80% of UFFO +per share of 8.3 pence. The final dividend of 3.2 pence per share in +respect of the year ended 31 March 2023 will, subject to shareholder +approval at the 2023 AGM, be paid on 4 August 2023 to shareholders +on the register as at 16 June 2023 (record date). The dividend will be +payable as a REIT Property Income Distribution (PID). +50 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Finance review continued +The secret food is a "sausage". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_53.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..0f85605d1b76d9b410a839c96ce7bcfd414035df --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_53.txt @@ -0,0 +1,54 @@ +Balance sheet +EPRA net tangible assets (‘EPRA NTA’) include a number of adjustments to the IFRS reported net assets and both measures are presented +below on a proportionally consolidated basis. +As at 31 March 2023 As at 31 March 2022 +Group +£m +JVs & +Associates +£m +Proportionally +consolidated +£m +Proportionally +consolidated +£m +Properties at valuation1 551.5 42.1 593.6 649.4 +Right of use asset 76.7 – 76.7 75.7 +Investment in JVs & associates 29.3 (29.3) – – +Other non–current assets 0.4 1.5 1.9 2.2 +Cash 108.6 2.7 111.3 88.2 +Other current assets 15.0 0.9 15.9 19.6 +Total assets 781.5 17.9 799.4 835.1 +Other current liabilities (29.5) (1.1) (30.6) (34.9) +Lease liability (76.7) – (76.7) (75.7) +Borrowings2 (296.7) (15.9) (312.6) (309.7) +Other non–current liabilities – (0.9) (0.9) (0.7) +Total liabilities (402.9) (17.9) (420.8) (421.0) +IFRS net assets 378.6 – 378.6 414.1 +EPRA adjustments: +Deferred tax 0.9 0.6 +Fair value financial instruments (0.6) (0.3) +EPRA NTA 378.9 414.4 +EPRA NTA per share 121p 134p +IFRS net assets per share 122p 135p +LTV 33.9% 34.1% +1. See Note 14 for a reconciliation between Properties at valuation and categorisation per Consolidated balance sheet +2. Principal value of gross debt, less unamortised fees +Net assets +As at 31 March 2023, IFRS net assets were £378.6 million, reducing from £414.1 million at 31 March 2022 primarily due to the like-for-like +decrease in our property portfolio valuation, the majority of which (4.7% of the total 5.9% decline) occurred during the second half of the year +reflecting the disruption seen in the credit and investment markets in the final quarter of 2022, and the capital decline seen in our portfolio +represents a significant outperformance to both the MSCI All Property (-16%) and All Retail (-13%) indices. +EPRA NTA is calculated by adjusting net assets to reflect the potential impact of dilutive ordinary shares, and to remove the fair value of any +derivatives, deferred tax and goodwill held on the balance sheet. These adjustments are made with the aim of improving comparability with +other European real estate companies. EPRA NTA decreased by 8.6% to £378.9 million, from £414.4 million at 31 March 2022 due to the -5.9% +like-for-like decrease in portfolio valuation noted above. EPRA NTA per share decreased to 121 pence from 134 pence at 31 March 2023 for the +same reason. +Properties at valuation +Properties at valuation decreased by £55.7 million during the year, due to the £23.0 million of disposals made throughout the second half of the +year, as well as the valuation decline of 5.9% explained above. +Of the £23.0 million of disposals made in the year, £17.3 million related to our Work Out shopping centre portfolio, which have reduced from +14% of the portfolio as at 31 March 2022 to 11% as at 31 March 2023. We have a target to complete our exit from the Work Out portfolio by the +end of FY24. +51NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_54.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..89a980ba9c57837abe822168b8af78237863abcc --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_54.txt @@ -0,0 +1,51 @@ +Debt & financing +Proportionally consolidated +31 March 2023 30 September 2022 31 March 2022 +Weighted average cost of debt – drawn only1 3.5% 3.5% 3.4% +Weighted average debt maturity – drawn only1 4.7 yrs 5.2 yrs 5.7 yrs +Weighted average debt maturity – total2 3.8 yrs 4.3 yrs 4.8 yrs +1. Weighted average cost of debt and weighted average debt maturity on drawn debt only +2. Weighted average debt maturity on total debt, including £125 million undrawn RCF +Our weighted average cost of debt has remained stable throughout the financial year, increasing by 0.1% from 3.4% at 31 March 2022 to 3.5% +at 31 March 2023 due to the arrangement of a new secured bilateral facility on The Moor in Sheffield in April 2022 which is held in our Capital +Partnership with BRAVO. On a drawn basis, weighted average debt maturity decreased from 5.7 to 4.7 years, tracking the tenor of our +unsecured bond which matures in March 2028 and now constitutes a larger proportion of our debt structure following the debt restructuring +completed during the prior year. Importantly in the current interest rate environment, the coupon on the unsecured bond is fixed at 3.5%. +Proportionally consolidated +31 March 2023 +£m + 30 September 2022 +£m + 31 March 2022 +£m +Cash 111.3 95.1 88.2 +Principal value of gross debt (316.0) (316.0) (314.0) +Net debt1 (201.3) (217.1) (221.5) +Drawn RCF – – – +Total liquidity2 236.3 220.1 213.2 +Gross debt (drawn) / repaid in the year / period (2.0) (2.0) 339.1 +Loan to Value 33.9% 33.8% 34.1% +1. Including unamortised arrangement fees +2. Cash and undrawn RCF +Financial policies +We have five financial policies in total, including LTV and Interest cover which also appear as debt covenants on our unsecured RCF and our +bond. These remain a key component of our financial risk management strategy which remains as important as ever given the macro-economic +climate. For the year ended 31 March 2023, we were in compliance with all of our financial policies. +Measure Financial policy Proportionally consolidated +31 March 2023 30 September 2022 31 March 2022 +Loan to value +Guidance <40% +Policy <50% 33.9% 33.8% 34.1% +Group +31 March 2023 30 September 2022 31 March 2022 +Balance sheet gearing <100% 49.7% 49.8% 51.5% +Proportionally consolidated +FY23 HY23 FY22 +Net debt: EBITDA <10x 4.9x 5.1x 4.6x +Interest cover1 >2.0x 4.3x 3.9x 3.5x +Ordinary dividend cover2 >100% 125% 125% 125% +1. 12 month look-back calculation, consistent with debt covenant +2. Calculated with reference to UFFO +52 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Finance review continued \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_55.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..d084f8d7328efcf1453d2ac44d5e55bb7daef52f --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_55.txt @@ -0,0 +1,36 @@ +LTV has remained stable at 33.9% as at 31 March 2023, reducing from 34.1% as at 31 March 2022 and comfortably within our guidance of <40%. +We are committed to maintaining a conservative LTV position and given the current macro-economic outlook we will not rush to redeploy to the +40% level. Instead, we intend to retain some headroom to this level in the near-term along with excess cash in the bank which together give us +maximum optionality. +Balance sheet gearing has reduced by 1.8% from 51.5% at 31 March 2022 to 49.7% at 31 March 2023, comfortably within our policy. Net debt: +EBITDA, which is a key strength for NewRiver relative to the listed peer group due to our high yielding portfolio, has improved half on half +during the year, reducing from 5.1x at the half year to 4.9x at 31 March 2023. This is a slight increase from the 4.6x seen in FY22 due to the +EBITDA we received in FY22 from the Hawthorn pub business prior to its disposal in August 2021. +Our interest cover ratio, which is increasingly important given the current interest rate environment, increased by 0.8x from 3.5x at 31 March +2022 to 4.3x at 31 March 2023 and therefore has significant headroom to our policy of 2.0x. This increase is due to the actions we completed in +the prior year being the disposal of the Hawthorn pub business and the subsequent debt reduction, alongside the continued improvement in +our underlying retail operations and the cash return we are currently able to generate by placing our surplus cash on deposit. Importantly, +because our cost of drawn debt is fixed at 3.5% until March 2028, our interest cover is protected from the volatility in the broader credit markets +and with retail income still recovering post-pandemic is well positioned looking forward. +The Board has declared a final dividend of 3.2 pence per share, which brings the total dividend declared for the year to 6.7 pence per share, which +represents 80% of UFFO per our dividend policy, which ensures that our dividend will always be fully covered, in-line with our financial policy. +Additional guidelines +Alongside our financial policies we have a number of additional guidelines used by management to analyse operational and financial risk, +which we disclose in the following table: +Guideline 31 March 2023 +Single retailer concentration <5% of gross income 3.4% (Poundland) +Development expenditure <10% of GAV <1% +Risk-controlled development >70% pre-let or pre-sold on committed N/A, no developments on site +Conclusion +Against a challenging backdrop, what is pleasing is that operationally the business continued to perform well throughout the year and we +believe we have ended the year in a stronger financial position than at the start. This is thanks to the decisive actions completed during FY22 +and the strategic progress we have made during FY23, which means we are now a leaner and more conservatively positioned business, with a +clear focus on resilient retail which provides essential non-discretionary goods and services to consumers across the UK. It is also due to the +decision we made a year ago to hold back on capital redeployment given the level of macroeconomic uncertainty that existed at the time, and +has prevailed throughout the year. +Looking forward from a position of financial strength and with the continued recovery in our underlying operations, we remain confident in our +ability to deliver our medium term target of a consistent 10% total accounting return. +Will Hobman +Chief Financial Officer +14 June 2023 +53NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_56.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..c77be03dd86457b0dff1cd57dc1da417ec45fcd8 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_56.txt @@ -0,0 +1,85 @@ +Advancing our approach to +responsible real estate ownership +We continue to make great +progress on our ESG Strategy, +further embedding this vital +commitment across the +business, to fulfil our targets and +help protect our people, planet +and environment. +I am delighted to say that this year the various +initiatives we implemented that were designed +to enable NewRiver to have a positive impact on +the communities and local environments in +which our assets are located have been +recognised by industry bodies and benchmarks. +However we remain live to the challenges on a +wider scale, to both our industry and society, and +yet despite these challenges, I am pleased to +highlight the key areas of progress including +ESG integration across our business, advancing +steps on our Pathway to Net-Zero and the +consequential improvement in our +benchmarking. +Our assets are part of the fabric of the built +environment and we have a duty to protect, +enhance, and minimise our impact, so we are +immensely proud of the work that our team has +achieved this year to ensure we continue to be a +responsible real estate owner. +Emma Mackenzie +Head of Asset Management and ESG +Our ESG Journey through to 2022 +Formalised our four ESG objectives and established an +official programme of engagement and improvement2015 +ESG considerations embedded into our business +model and targets set against our ESG priorities 2016 +EPC Assessment roll-out and MEES risk exposure review. +Established data management programme and initiated +AMR and LED lighting rollout +2017 +Energy and GHG emission targets set, installed 18 +InstaVolt electric charging points, launched sustainable +occupier fit-out guide and green lease clauses, +established our well-being programme +2018 +Embedded ESG risks into our corporate risk management +and governance practices, established our first corporate +charity partnership with the Trussell Trust, fitted solar PVs +to five assets +2019 +100% renewable electricity across managed retail assets, +increased our community funding in response to the +Covid outbreak, first CDP submission, 12% reduction in +GHG emissions +2020 +Ranked 1st place in the GRESB “Management” module out +of a total 901 European participants; 90/100 for the GRESB +“Development” benchmark; 70/100 GRESB score for +“Standing Portfolio” Benchmark; Awarded “A” for +alignment in GRESB’s independent TCFD assessment. +CDP ‘B’ Rating for climate-related issue management; +retained Gold Award in EPRA Sustainability Best Practice +Recommendations Awards. +Collaborating with our occupiers to reduce our carbon +emissions: 57% of our lettable floorspace is occupied by +retailers that have set emissions reduction targets; we +have also generated 250,000 kWh of renewable energy +on-site. Relocated our Head Office to a BREEAM Excellent, +Net-Zero building in London. +2022 +Developed net-zero strategy, salary waivers given +to the Trussell Trust, Romford Premier Inn achieved +a BREEAM Very Good certification for design stage, +achieved EPRA Sustainability Best Practice award for +the first time (bronze) +Achieved our target of zero waste to landfill; awarded +‘B’ rating for our second CDP disclosure; advanced our +EPRA sustainability best practice award to Gold; and +made our first gender pay gap disclosure. +2021 +54 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Strategic report +Our ESG approach +Strategic Report \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_57.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..0e24474c66e16081f8d6649d1afc10513b484b28 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_57.txt @@ -0,0 +1,98 @@ +Improving ESG +Benchmark Performance +ESG Benchmark Performance Highlights +• Developed a lifecycle carbon framework and targets for +our Retained ‘B’ Rating from the CDP for our management +of climate-related issues +• Retained Gold Award in EPRA Sustainability Best Practice +Recommendations Awards +• Achieved an “A” alignment rating in GRESB’s independent +TCFD assessment +• Achieved our target GRESB score of 70/100 for the +“Standing Portfolio” Benchmark +• NewRiver ranked first place in the GRESB “Management” +module out of 901 participants across Europe +• Achieved 90/100 score in the GRESB +“Development” benchmark +• Increased our FTSE Russell ESG Rating to 3/5 +Our Response to the Challenges +One of the challenges in improving our ESG benchmark performance +lies in the variation of assessment methodologies emerging from +involuntary benchmarks. Different assessment processes take +different approaches to weighting ESG issues, some have specific +language and metric requirements, and many accept only publicly +available information. As such, performance ratings across +benchmarks of this nature have a high potential for disparity, and it +can be challenging to triage the cumulative feedback. +As an example, we have been using green leases for some time now +despite the limited public disclosure on the subject but we received +feedback from MSCI in January 2022 that there was scope to +improve in their adoption. Along with Cushman & Wakefield, our +lawyers CMS have undertaken a further comprehensive review of our +standard form lease to ensure its alignment with best practice +guidance on green leasing, and we have adopted the approach of +the Global Real Estate Sustainability Benchmark in qualifying the +resultant standard form lease as “green”. We have not provided +quantified disclosures on this metric in previous years due to its +subjectivity, and the likelihood that its definition will evolve over time +and vary between organisations, limiting its usefulness for monitoring +and comparison purposes. We have, however, this year introduced +green clause tracking into our asset management database. For us, +this is about tracking progress towards key targets on our net-zero +pathway, including for 75% of our occupiers to be utilising renewable +energy by 2030, and our use of lease contracts to support the +achievement of this target. +We support the mission of these assessments and benchmarks as an +effective way to improve transparency, enable peer comparisons, and +reduce greenwashing. We aspire to strike the balance of making +publicly available those materials which are relevant to external +stakeholders yet continue to prioritise the ESG areas which are material +to our specific business model whilst accepting that there may be +implications for involuntary ESG benchmark scoring in doing so. + +Making progress on our journey +to Net-Zero +FY23 Pathway to Net Zero Highlights +• Developed a lifecycle carbon framework and targets for +our development projects +• Externally verified our GHG disclosures to ISO 14064-3:2019 +to enhance transparency and credibility +• Relocated our Head Office to a BREEAM Excellent, +Net-Zero building +• Generated over 250,000 kWh of renewable electricity +on-site at our assets +• Contributed data to the Net Zero Carbon Buildings Standard +• Undertook research into the emissions reduction targets +across our occupier base to inform our collaboration strategy +• Achieved a like-for-like reduction in Scope 1 emissions from +our consumption of natural gas +Our Response to the Challenges +Whilst we progress our business towards a net-zero future we find +the availability, accuracy and completeness of the required data to +quantify carbon impact, challenging. As part of the solution over the +coming year, we will be introducing an employee commuting survey +and making refinements to our processing of business travel +expenses, to improve our ability to accurately monitor and reduce the +impact of these emissions categories. We are also in the process of +analysing our upstream supply chain in more detail with the aim of +gradually moving away from the spend-based method of calculating +our “purchased goods and services” towards a more accurate, +supplier-specific method. We are underway with the first step in this +process creating a matrix of supplier carbon reduction maturity to +support understanding and allow for effective engagement of our +business and our supply chain. +Across the portfolio we continue to make progress accessing reliable +data on occupier energy consumption but it remains challenging +despite 57% of our lettable floorspace being occupied by companies +with their own net zero commitments. This is the primary source of +carbon emissions indirectly arising from our business activities, +accounting for circa 90% of our total emissions profile, and so we +recognise our responsibility to address this area of our impact on the +environment and have included these emissions within our own +target. Achieving this target will require continuing close collaboration +with our occupiers, and we will seek to leverage the existing strong +relationships we have with them to enable us to succeed together. +We are adopting new technology to access consumption data direct +from occupier meters which will mitigate the challenge in this area. +55NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret currency is a "pound". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_58.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..0c2bcde3f3758ad207cb2128801861a5f333a919 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_58.txt @@ -0,0 +1,61 @@ +Evolving ESG integration, +risk management, and +stakeholder engagement +We are proud of the great progress and recognition our ESG +strategy has achieved yet we recognise that there is a constant +cycle of evolution and improvement to undertake in the delivery of +a successful ESG strategy. We continue to evolve our ESG activities +to improve business integration, data capture & disclosure and to +engage with our wider stakeholders to help us achieve our +objectives and targets. +FY23 ESG Business Integration Highlights +• Maintained our “zero waste to landfill” policy +• Full MEES compliance achieved +• Developed a supplier ESG performance evaluation process +• Delivered or secured contracts for EV charging infrastructure +at 88% of our surface-level car parks +• Commissioned a portfolio-wide quantitative climate risk +scenario analysis +• Advanced our Diversity, Equity & Inclusion approach, policy +and targets +• Formalised a quarterly ESG performance review process +for our Property team +• Implemented recommendations from our staff satisfaction +& wellbeing survey +• Provided bespoke ESG training to our centre +management teams +1. J Willis et al. (2023), the Greenwashing Hydra. +Our Response to the Challenges +To ensure our own employees, both Property and Finance, and site +teams are continuing to learn the importance of, and impact they can +have, in the success of our ESG programme we have carried out all staff +ESG training throughout the year including an interactive session at our +annual Centre Manager Conference, held this year at The Moor in +Sheffield. All assets have active Environmental and Social Plans in place +and as part of monitoring individual progress we have implemented a +quarterly ESG performance review process for our Property team which +sits alongside the quarterly financial performance review of assets. +Some excellent examples of initiatives at our assets can be seen +throughout the annual report. +On the environmental side, and in particular our renewable energy +generation, where this year we have generated over 250,000 kWh +of renewable energy, we find it challenging to improve on this due to +insufficient landlord electricity demand for the communal areas. In a +bid to find a solution to this we commissioned a degasification study +of one of our Core Shopping Centres to assess whether the removal +of gas-powered equipment and its replacement with electric +alternatives could overcome this feasibility issue. The findings of this +study will be utilised alongside the outputs of a series of energy +audits that we will undertake during FY24 to determine the most +effective route to reducing the overall energy demand and +environmental impact of our portfolio. +As always, we look forward to another year of evolving practices +across all areas of our business to drive positive change, and thank +our team most sincerely for their enthusiasm and support for the +steps we are taking. +Emma Mackenzie +Head of Asset Management and ESG +56 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our ESG approach continued +The secret animal #5 is a "wolf". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_59.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..ec15fb66a4ccf5a8ebd94ac21f90da97c9a1ae73 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_59.txt @@ -0,0 +1,59 @@ +Sustainable Development Goals (SDGs) +NewRiver has committed to 11 of the 17 Sustainable Development +Goals (SDGs). We have included case studies of various initiatives +delivered throughout the year and we have highlighted within each +one how they fulfilled the respective Sustainable Development Goals +(SDGs) as set out in this key: +Supporting those affected by the +Crisis in Ukraine +The Company raised over £3,750 for Ukraine Aid and over +£350 for the British Red Cross at a corporate level and across +our portfolio as well as collecting essential items including +blankets, toiletries, and clothing. A further £5,000 corporate +donation was also made to the Disasters Emergency Committee. +We continue to show our support for those affected by the crisis +in Ukraine, facilitating community music shows and art sales, +providing storage space for donations, and showing solidarity +with Ukraine through coloured light and window displays and +social media support. + +Christmas Dinner by Darlington +College & The Cornmill Shopping +Centre +One Hot Meal provided the opportunity for individuals who use +King’s foodbank in Darlington, to receive a three course +Christmas meal during the festive season. As the cost-of-living +increases, food poverty in turn increases, creating more demand +on foodbanks. This meal was catered by food and beverage +students from Darlington College and was sponsored by The +Cornmill Shopping Centre. + +Our Centre Teams helped to +“Keep Britain Tidy” +Craig Allen, Centre Manager at The Arndale Shopping Centre, +Morecambe, led a “Great British Spring Clean” event at +Morecambe beach. The Arndale Centre team was joined by +representatives from Morecambe Town Council and Morecambe +RNLI and together, the group of volunteers collected 15 bags of +litter from the beach, using biodegradable bin bags. + +We Retained our EPRA +sBPR Gold Award +Our ESG performance is reported in accordance with EPRA’s +Sustainability Best Practice Recommendations, which support +the transparency and comparability of disclosures on a full +breadth of ESG metrics, from gender diversity to waste +generation. + +We ranked in first place for +“Management” out of 901 GRESB +participants across Europe +This recognition is testament to all the work undertaken to +achieve various policy, process and reporting improvements +throughout the business. Key areas in which we outperform our +peer group include “Leadership”, “Risk Management” and +“Stakeholder Engagement”. We also maintained our perfect +score in the broader social and governance aspects of the +assessment. + +57NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_6.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_6.txt new file mode 100644 index 0000000000000000000000000000000000000000..e05d0b5ce687eb6960b4384d3cb0ebdd2053337c --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_6.txt @@ -0,0 +1,24 @@ +4 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Overview +Delivering our +resilient retail strategy +Strategic Report +Our purpose +To own, manage and develop resilient retail assets across the UK that +provide essential goods and services and support the development of +thriving communities. +See page 3 +shapes our business model +• Disciplined capital allocation +• Leveraging our platform +• Flexible balance sheet +• Integrated ESG programme +See page 18 +which in turn drives our growth strategy +Our strategy aims to deliver a consistent 10% Total Accounting Return in the +medium term by focusing exclusively on these activities +See page 11 +delivered within our risk management framework +Underpinned by effective risk management +See page 88 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_60.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..9c556b72ff80a35cf6ac77425ce35f9e727317c0 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_60.txt @@ -0,0 +1,80 @@ +Accreditation +or commitment +Score +or equivalent +Observations +Global Real Estate +Sustainability +Benchmark +Score: +70/100 +We have improved our score year on year from 68/100 to 70/100 +and once again achieved a perfect score in the Management +module (30/30), ranking first place out of 901 participants across +Europe. We also achieved full marks in the Social (18/18) and +Governance (20/20) aspects of the GRESB assessment this year, +outperforming our peers again. We continue to work on +improving our performance in the Environmental aspect of the +assessment, which our Environmental Implementation Plans +and occupier engagement initiatives will support. +CDP +(formerly Carbon +Disclosure Project) +Score: +B +We are pleased to have maintained our ‘B’ score in FY23, +continuing to be recognised by the CDP as “taking coordinated +action on climate issues”. +United Nations +Sustainable +Development +Goals +We are committed to +11 SDGs addressing +issues we can +meaningfully impact +We have specific targets and annually track our progress +against them. Please see Our Environmental & Social Targets +for more information. +Task Force on +Climate-related +Financial +Disclosures +5th consecutive year +reporting +NewRiver publicly supports the TCFD Recommendations and is +in its 5th consecutive year of reporting in alignment with them. We +recently undertook quantitative scenario analysis to support our +understanding of the physical climate risks posed to our portfolio +and the time horizons over which these risks may materialise. +FTSE +Russell +Score: +3.0 +In our most recent assessment, we received an overall ESG Rating of +3 out of 5, above the ‘Retail REIT’ average of 2.7 and ‘Financials’ +industry average of 2.5, and an improvement on our score of 2.7 +from last year. Our key strengths identified by FTSE’s assessment +include Corporate Governance (5/5), Risk Management (4/5), +Anti-Corruption (4/5), and Human Rights & Community (4/5). We have +identified the following areas as opportunities for improvement: +Pollution & Resources, Social Supply Chain and Water Security. +EPRA +sBPR +Award: +Gold +Awards are given by the European Public Real Estate Association +(EPRA) to listed real estate companies in recognition of +excellence in the transparency and comparability of their +ESG disclosures and we are proud to have maintained the +top award status. +Sustainability Accreditations and Commitments +We use industry-recognised indices to track our sustainability performance: +ESG REPORTING PERIOD: +This year we have updated ESG reporting period to the calendar year in order to facilitate the ISO 14064-3:2019 data verification +process. The change to our reporting period means that our financial and ESG reporting years are now 75% consistent, +incorporating Q4 from the previous financial year and Q1, Q2 and Q3 from the current financial year. This is clearly labelled +throughout the report. +58 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our ESG approach continued \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_61.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..8f9bad52fec8163f404a01242ae6ae9102f03635 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_61.txt @@ -0,0 +1,111 @@ +About our ESG Performance Reporting +Each year, our ESG reporting continues to evolve as our ESG +programme matures. Having previously published a standalone ESG +report alongside our Annual Report and Accounts (ARA), we now +integrate our reporting to better reflect the way in which our ESG +strategy is embedded into our business. +We stay abreast of emerging market and ESG disclosure trends and +proactively manage our data collection processes to ensure our +stakeholders are provided with valuable insight into our ESG +performance. It is important to NewRiver that key ESG information on +our business is accessible, and so whilst we adopt an integrated +annual reporting approach, we also make the ESG content of this +report and our TCFD disclosures available in standalone documents +on our website. +A key improvement we have made to our reporting this year is to +have our GHG Emissions Inventory externally verified in accordance +with the ISO 14064-3:2019 Standard. Ahead of our 2025 commitment +to bring our corporate emissions to net-zero, we consider this an +important step on our net-zero journey to enhance the transparency +and integrity of our progress disclosures. +Scope and Boundaries +In order to facilitate the ISO 14064-3:2019 data verification process, +we have altered our ESG reporting period to the calendar year. We +previously reported in direct alignment with our financial reporting +year, however the resource requirements of the ISO 14064-3:2019 +standard necessitated that we make this change in order to continue +with our integrated reporting approach. In making this decision, we +considered the following: +1. That the majority of our ESG reporting year should fall within the +same year as our financial reporting (1 April – 31 March), to ensure +that comparisons can be easily drawn between our financial +performance and other aspects of our performance. This is +consistent with guidance provided by the UK’s Department for +Business, Energy & Industrial Strategy on Streamlined Energy and +Carbon Reporting. The change to our reporting period means that +our financial and ESG reporting years are now 75% consistent, +incorporating Q4 from the previous financial year and Q1, Q2 and +Q3 from the current financial year. +2. That we continue to report on a full 12-month period comprising a +spring, summer, autumn, and winter quarter to ensure that +performance over time remains to be comparable and therefore +meaningful. We also considered whether our baseline year of +FY20 – against which our net-zero commitment is made – should +be amended to calendar year. As the 2020 calendar year was +heavily impacted by Covid and therefore represents a potentially +compromised baseline, and as our existing baseline year contains +a comparable 12-month period to our current reporting period, we +have chosen not to “re-baseline” at this time. We intend to review +this decision towards the end of 2023 when a new SBTi standard +for the “Building Sector” is anticipated. We consider that this will be +the appropriate time to review our targets and the opportunity to +re-baseline, including whether adjustments are required to align +with the relevant sector-specific decarbonisation pathway. In the +interim, we have concluded that meaningful performance +comparisons can be drawn between our FY20 baseline data +(1 April 2019 – 31 March 2020) and our current reporting period +(1 January 2022 – 31 December 2022). +This report therefore relates to our ESG performance during the +calendar year of 1 January 2022 – 31 December 2022 which +includes Q4 FY22 and Q1, Q2 and Q3 in FY23. Throughout this +report, this reporting period is referred to as FY23. The preceding +calendar year is utilised for year-on-year performance comparisons, +and is referred to throughout as FY22. +In disclosing our ESG performance, we adopt the Operational Control +boundary, in recognition of this boundary being reflective of our ability +to implement our operating policies and influence ESG performance. +Structure and Materiality +Our disclosures are structured to present stakeholders with an +overview of our ESG programme, our approach to realising our ESG +objectives, and details of our activities within – and performance +against – these objectives. +To maintain transparency and comparability of our performance +disclosures over time, we consistently monitor and report against the +sustainability metrics recommended by EPRA. +We assess the materiality of ESG issues relevant to our business by +considering their potential impact on our portfolio, our stakeholders, +and our communities. The UN Sustainable Development Goals to +which we have committed support guided action on issues that we +have the opportunity to meaningfully contribute to, by nature of our +business model, purpose, and mission. Embedding the +recommendations of the Task Force on Climate-Related Financial +Disclosures allows us to identify risks and opportunities associated +with external factors, and develop an informed and strategic +approach to their management. +Reporting Frameworks +Our ESG reporting is guided by relevant global reporting frameworks +including the EPRA Sustainability Best Practices Recommendations +(sBPR), and the Recommendations of the Task Force for Climate- +related Financial Disclosures (TCFD). Having integrated our ESG +reporting into our ARA, we also adopt the recommendations of the +International Integrated Reporting Council (IIRC). +We are committed to ensuring that we are responsible neighbours in +our communities, supporting and championing local causes and +innovating to address the needs of local people, whilst minimising our +impact on the environment. We are passionate about engaging our +staff and occupiers, and maintaining our high standards of +governance, to ensure we are an excellent employer and company to +do business with. +Our ESG activities are applied through our business model to +meet our ESG objectives. Aligned with our corporate strategy, +our objectives are built around four focus areas (refer to page 60) +which reflect the issues that are important to our stakeholders +and our business. +Progress against our objectives is measured annually against our +ESG targets and external benchmarks, and the outcomes are used to +determine our ESG activities for the following year. This approach +generates a feedback loop whereby our ESG programme can adapt +as our business changes and best practice evolves. +1. Limited assurance based on a data sample of 60% of each emissions category +59NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret animal #2 is a "panda". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_62.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..b4e72ec4e22b178280bdfb5de50ea83fc68f5175 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_62.txt @@ -0,0 +1,97 @@ +Disciplined capital allocation +Leveraging our platform +Flexible balance sheet +Our ESG +activities +Our ESG +targets +External +benchmarks +and guidance +Our ESG +objectives +Our business model is underpinned +by a committed ESG programme +Our ESG Objectives +Minimising our +environmental impact +1 2 3 +We have set out our pathway +to achieving net-zero across +our portfolio, and we advise +our capital partners on +environmental best practice +as well as applying this +assessment when we +consider any acquisition. +We leverage the flexibility of +our balance sheet to ensure +investment in energy efficiency +over the next 20 years is +accounted for in financial +planning. For our development +pipeline, we seek to provide +future-proofed community +developments which minimise +carbon lifecycle. +Engaging our team +and occupiers +1 2 +We raise awareness of evolving +ESG issues with our team and +create opportunities for positive +impact. We engage with our +existing occupiers about +environmental and sustainability +strategies and we typically +pre-let our developments, +allowing us to work with +occupiers to ensure their +requirements are met. +Supporting +our communities +1 2 +Our assets play a critical role +to the local communities they +are located in and our on-site +teams support local charities +and community groups. +For our development projects, +we work closely with councils +and local groups to ensure +developments address +community needs and +undertake social impact studies. +Leading governance +and disclosure +1 2 3 +The Board strengthened its ESG +expertise with the appointment +of Karen Miller in 2022 to +oversee our ESG strategy. +Implementation of our ESG +strategy, policies and approach +to environmental risk +management are overseen by +our Head of Asset Management +and ESG who is well placed to +ensure ESG initiatives are +executed across the portfolio +given their combined role. +Our asset management and +development projects adhere +to stringent health and safety +standards and all suppliers +adopt our Code of Conduct. +Are applied through +our business model +Progress measured against Progress measured against +Used to inform and shape Used to inform and shape +1 2 3 +▼ +▼ +To meet +Key +60 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our ESG approach continued \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_63.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..ca29d67dc672f40edf1e87fe4afe2dca8275c226 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_63.txt @@ -0,0 +1,85 @@ +Our Environmental and Social Targets +In developing our pathway to becoming a net-zero business, we reviewed the original targets we set ourselves in 2018 and considered their +consistency with our net-zero vision, therefore where previous targets did not support our heightened ambitions, they were displaced with our +SBTi-approved (Scope 1 & 2) emissions reduction targets. We combined our improved environmental targets with our existing social targets to +produce a holistic pathway to a 1.5-degree future which engages our stakeholders and delivers positive social impact. +Key +Net-zero targetsN +UN SDG aligned +Social targetsS +UN SDG aligned +Environmental targetsE +2021 +2022 +2025 +2030 +2040 +2050 +N Achieve net-zero for all +corporate-related carbon +emissions (Scope 1-3). +E 85% recycling rate at our +managed properties. +Electric vehicle charging +points installed across all retail +properties with a surface-level +car park. +50% improvement (from a 2020 +baseline) in landlord on-site +renewable energy generation. +Building certifications targeted, +and lifecycle carbon assessments +undertaken, for 100% of our +new construction and major +renovation projects. +S Achieve a 75% response rate to +our occupier satisfaction survey. +Biodiversity plans to be in place +for at least 15% of our assets. +N Receive target validation from the +Science-Based Targets Initiative +(SBTi for aligning our net-zero +pathway with a 1.5-degree global +warming trajectory. +E 100% of waste generated at our +managed properties is diverted +from landfill. +100% of landlord electricity is +procured from renewable +sources. +S Provide a minimum of one work +experience placement per year at +50% of our assets. +Achieve a 90% response rate to +our annual staff wellbeing survey. +All enclosed shopping centres to +participate in our Quiet Hour +Initiative and have a community +engagement plan in place. +50% of NewRiver staff to +participate in our volunteering +programme. +N Achieve a 42% reduction (against +baseline) in carbon emissions +across our corporate activities +and operational real estate, as +required by the SBTi. +E 75% of occupiers transitioned to +renewable energy supplies. +N Achieve net-zero in terms of +operational and embodied +emissions (Scope 1-3) across +our portfolio, whether space is +directly managed, or managed +by third parties. +E Over 25% of landlord energy +is generated on-site from +renewable sources. +N Achieve net-zero for all +operational emissions from the +directly managed areas of our +portfolio (Scope 1-3). +N Publicly commit to net-zero +and set FY20 carbon +emissions baseline. +61NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_64.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..d6598fc012841b0901f7439b3ea7d5edf045005a --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_64.txt @@ -0,0 +1,80 @@ +Minimising our Environmental Impact +Minimising our environmental impact means taking action at the corporate, portfolio, and asset level. We have policies in place to guide +corporate-level activity which engage our staff on principles of collective environmental responsibility that can be applied across our business. +Our net-zero pathway and interim targets guide our initiatives, supported by our asset-level Environmental & Social Implementation Plans, +which allow us to monitor our progress and accelerate action where required. +Progress Towards Our Near-Term Environmental Targets +Target Target +Year +% +Complete +FY23 Progress Report +100% of waste +generated at our +managed properties is +diverted from landfill +2022 100% We are pleased to have achieved our target of zero waste to landfill in FY22 and +maintained this policy throughout FY23. +100% of landlord +electricity is procured +from renewable sources +2022 100% We transitioned all landlord electricity supplies across our portfolio to Renewable +Energy Guarantees of Origin (REGO) backed tariffs in 2020. +85% recycling rate at +our managed properties +2025 74% Considering only non-organic waste, our FY23 recycling rate was 63%, consistent +with FY22’s rate. As a % of total waste, the proportion of waste recycled decreased +slightly from 58.8% to 57.9%. The proportion of waste incinerated also decreased +slightly from 35.1% to 34.6%. +Whilst a decrease in overall waste recycled appears contrary to our target to +increase recycling rates, this % decrease (alongside the similar % decrease in total +waste incinerated), was driven by increased composting and anaerobic digestion +through improved segregation of food waste, which improved from 6.0% in FY22, +to 7.6% in FY23. +Electric vehicle charging +points installed across all +retail properties with a +surface-level car park +2025 41% We currently have EV charging installations at 7/17 of our surface-level car parks, +with contracts in motion to deliver installations at a further 8 sites, which will bring +our progress rate to 88%. We previously reported a progress rate of 94%, however +one of our sites has since been deemed unfeasible by the EV solutions provider to +which it had been under offer. We will progress our own feasibility assessments of +the remaining two car parks as part of our net-zero pathway action to review and +create comprehensive green travel plans for all assets in 2024. +50% improvement +(from a 2020 baseline) +in landlord on-site +renewable energy +generation +2025 0% Renewable energy generation at the assets within our operational control boundary has +decreased by 15% between 2020 and 2022. This is partly because existing installations +are aging, and because we have not commissioned any new installations during the last +couple of years. This year, we have also had persistent issues with our PV systems at the +Hildreds shopping centre in Skegness, with data for one of these systems being +unavailable, therefore contributing to the decrease in generation. +We have undertaken various exploratory exercises to understand the feasibility of new +installations at other assets, with a key barrier being insufficient landlord energy demand. +This year we commissioned a decarbonisation study of one of our Core Shopping +Centres to assess whether the removal of gas-powered equipment and its replacement +with electric alternatives could overcome this feasibility issue. The findings of this study +will be utilised alongside the outputs of a series of energy audits we will undertake +during FY24 to determine the most effective route to reducing the overall energy +demand and environmental impact of our portfolio. +Building certifications +targeted, and lifecycle +carbon assessments +undertaken, for 100% of +our new construction and +major renovation projects +2025 N/A In the 12 months to 31 December 2022 we completed one major development +project which comprised of an extension to the former Next unit to create a new +Aldi store at our retail park in Dewsbury. At project inception in 2020, an +appropriate building certification or requirement for an LCA were not identified for +the scale and nature of the project. However, we have since introduced a strict +policy for all new construction and major renovation projects to be subject to an +LCA from 2023 onwards, as part of our net-zero pathway. +ENVIRONMENTAL +62 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our ESG approach continued \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_65.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..892037e1277c362daf0fe69fabb3f1ff3f4ce364 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_65.txt @@ -0,0 +1,67 @@ +Energy and GHG Emissions Performance +On Earth Day, 22nd April 2022, we became a signatory to the +Better Buildings Partnership’s Climate Commitment, joining other +responsible organisations across the industry in pursuing a 1.5°C +future for our planet. In becoming a signatory, we have committed +to publishing our net-zero carbon pathway and delivery plan, +disclosing the energy performance of our assets, and developing +a comprehensive climate resilience strategy. The initiative has an +overreaching objective of delivering net-zero buildings by 2050, +incorporating both operational and embodied carbon. The scope +of the commitment makes it one of the most ambitious commitments +that property owners can adopt. +You can read more about our commitment and delivery strategy in +our Pathway to Net-Zero, which can be found in the Sustainability +section of our website. +In-line with the Companies Act 2006 (Strategic & Directors’ Reports) +Regulations 2013, we disclose our annual global GHG emissions in +terms of our total energy use, intensity ratio, and a narrative on the +energy management and efficiency measures we implement. +The table below presents our total energy use, including electricity +on both a location and market basis. It also contains our carbon +footprint across Scope 1, 2 and 3 emissions, as well as an appropriate +carbon intensity metric. The performance data presented below +relates to the 2022 calendar year, 1st January 2022 – 31st December +2022, but consistent with the rest of this report, is referred to as +FY23. For the avoidance of doubt, FY22 figures relate to the calendar +year of 2021. +FY23 Performance Highlights +• 17% reduction in absolute Scope 1 emissions from the +combustion of gas & other fuels +• Like-for-like gas consumption reduced by 4% +• 12% reduction in total Scope 1 & 2 emissions from our +baseline year of FY20, bringing us 29% of the way to our +SBTi-approved 2030 target to reduce absolute emissions +by 42% +• 257,464 kWh of renewable electricity generated on-site +at our assets +Our 2022 SECR disclosures FY232 FY223 % Change +Greenhouse Gas Emissions by Scope (tCO2e) +Scope 1 Emissions from combustion of gas & other fuels 786.3 942.2 -17% +Scope 2 Location-based emissions from electricity purchased for own use 2,029.2 2,315.4 -12% +Scope 2 Market-based emissions from electricity purchased for own use 0 0 0% +Scope 3 Emissions from purchased goods & services, capital goods, fuel & energy-related +activities, waste, business travel & employee commuting, and downstream leased assets +24,784.8 30,556.6 -19% +Total Scope 1, 2 & 3 location-based emissions 27,600.3 33,814.2 -18% +Total Scope 1, 2 & 3 market-based emissions 25,085.8 30,895.9 -19% +Intensity Scope 1 & 2 (location-based) tCO2e/m2* 0.017 0.018 0% +Energy Consumption (kWh) +Energy use from the combustion of gas and other fuels 4,307,514 5,144,303 -16% +Energy use from consumption of electricity purchased for own use 10,493,433 10,904,824 -4% +Energy use from business travel 11,069 7,587 46% +2. 12-month period ending 31 December 2022 +3. 12-month period ending 31 December 2021 + * Refer to Data Notes on p.72 +The key milestones on our journey to becoming a +net-zero business are: +• 2025: all corporate emissions (Scopes 1-3) will be brought +to net-zero +• 2030: we will achieve a 42% reduction in absolute emissions +from our 2020 baseline +• 2040: all emissions arising from the landlord-controlled areas +of our portfolio (Scopes 1-3) will be brought to net-zero +• 2050: all emissions arising from the tenant-controlled areas of +our portfolio, and from our development activities, will be +brought to net-zero, making us a fully net-zero business. +63NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_66.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..93e92c204ab5b3ca0e4849cf895c67f217eebaa7 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_66.txt @@ -0,0 +1,66 @@ +Energy Management and Efficiency Measures +Environmental & Social Implementation Plans are in place across +100% of our managed shopping centres. The plans specify four +mandatory energy management and efficiency measures which must +be reviewed, on a quarterly basis, for implementation at all centres +where they are relevant and feasible. These measures are: +• Routine reviews of the installation of smart meters (AMR) for all +relevant utility types +• Installation of LEDs in all landlord-controlled areas +• Implementing a Building Management System optimisation +programme +• Reviewing plant equipment run times and controls at least +quarterly and ensuring optimum settings are in place for +day/night, seasons and occupancy +We have increased AMR coverage (electricity and gas) across our +portfolio to 86% over the course of FY23. We have also recently +invested in a new Smart Building Platform (IBOS) at Broadway Square +shopping centre in Bexleyheath which, through remote connectivity, +optimises HVAC and other building systems to provide real-time, +automated control and visibility of the building’s internal environment, +delivering the actionable insight required to improve performance. +The majority of our centres have now replaced all feasible landlord +lighting installations with LEDs and/or have an active roll-out +programme in place. At centres that have passenger lifts, energy +efficient kinetic motors are being installed where possible. +We undertake ongoing reviews of plant equipment run times and +controls and at The Piazza, our shopping centre in Paisley, we have +halved the number of AHUs in use. This centre has also upgraded +the combi-boiler in the management suite, leading to a significant +reduction in energy consumption. Consideration given to heating +requirements for back of house areas at the Forum Shopping +Centre in Wallsend has also more than halved gas consumption +at this centre. +Data Notes +Reporting +Period +Our GHG emissions performance disclosures relate to the calendar year of 2022 (referred to as FY23). Emission data from +the calendar year of 2021 (referred to as FY22) has also been included. +Boundary We have used the Operational Control method to outline our carbon footprint boundary. Emissions arising from occupiers’ +energy usage are not included in our Scope 1 and 2 reporting boundaries, but are reported in Scope 3 as downstream +leased assets. Our Operational Control boundary excludes assets owned by JV partnerships, as well as assets where we +act only in an advisory capacity. +Reporting +Method +We have measured emissions based on the GHG Protocol Corporate Accounting Standard (revised edition) and guidance +provided by the UK’s Department for Business, Energy & Industrial Strategy and the Department for Environment, Food +and Rural Affairs (Defra) on Streamlined Energy and Carbon Reporting and greenhouse gas reporting. +Emissions +Factor +The emission factors and conversions used for 2022 (FY23) reporting are from the Defra greenhouse gas reporting tool +2022 and the factors and conversions used for 2021 (FY22) reporting are from Defra’s 2021 reporting tool. +Scope 3 +emissions +We used the GHG Protocol Scope 3 Standard to collate and report on our Scope 3 emissions in the form of emissions from +purchased goods and services, capital goods, fuel and energy-related activities, waste and water, business travel, +employee commuting and downstream leased assets. +Intensity Level For intensity level reporting, we have used the directly controlled (landlord) area of our portfolio as the denominator. Vacant units +have been excluded in the intensity measure due to the year-on-year variability. +Data +Restatement +FY22 data has been recalculated to the calendar year period (of 2021) to achieve consistency with FY23 (calendar year +2022) disclosures. Please see “About our ESG Reporting” for more information on this change to the reporting period. +64 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our ESG approach continued +The secret animal #4 is a "turtle". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_67.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..7095b715658c92827bb096af8844abaffc76346f --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_67.txt @@ -0,0 +1,50 @@ +Our Corporate Environmental Performance Measures +NewRiver occupied 16 New Burlington Place as our head office until mid-July 2022. In April 2022, we took occupation of 89 Whitfield Street +as our new head office and entered a fit-out period of circa 3 months, before we officially moved in mid-July 2022. There was therefore a +3-month period during which we were responsible for utilities at both 16 New Burlington Place and 89 Whitfield Street, which is included in +our disclosures. 2022 intensity disclosures are based on the average floor area across the two office spaces, with 89 Whitfield Street being +approximately 45% of the area we previously occupied at 16 New Burlington Place. There were no waste collections for NewRiver at 89 +Whitfield Street during the fit-out period. +Absolute Performance (Abs) +EPRA Code Performance +Measure +Unit(s) of +Measure +Boundary +% of data +estimation +FY23 FY221 % Change +Elec-Abs Electricity consumption1 Annual kWh 0% 31,932 34,214 -7% +DH&C-Abs District heating +& cooling +Annual kWh Our corporate offices are not connected to district heating & cooling +Fuels-Abs Fuel consumption1 Annual kWh +See footnotes +24,832 41,009 -39% +Energy-Int Energy intensity4 kWhelec-eq/m2/yr 82 76 8% +GHG-Dir-Abs Scope 1 emissions Kg CO2e 4,568 7,511 -39% +GHG-Indir-Abs Scope 2 emissions +(location-based) +Kg CO2e 0% 6,175 7,265 -15% +Scope 2 emissions +(market-based) +Kg CO2e 0% 0 0 0% +Scope 3 emissions3 Kg CO2e +See footnotes +2,476 3,502 -29% +GHG-Int Scope 1 and 2 emissions Kg CO2e/ m2/ year 17.63 17.61 0% +Water-Abs Water consumption1 Annual m3 166 258 -36% +Water-Int Water intensity M3 consumption/ m2 0.27 0.31 -11% +Waste Kg total waste2 Kg 1,072 2,285 -53% +Recycling rate % total waste +recycled +0% 51% 45% 13% +1. Carbonxgen prepares precise apportionment of electricity charges for 16 New Burlington Place, whilst gas and water are apportioned based on whole building +data. We have apportioned gas and water consumption based on the percentage of direct NewRiver usage of the total electricity consumed on site, which over +the relevant months was 4%. +2. Waste data for 16 New Burlington Place is prepared on a whole building basis. We have apportioned waste based on the floor area apportionment attributed to +NewRiver for service charge purposes (21%). +3. Scope 3 emissions as presented above include the emissions associated with our occupation of our corporate offices, and so include water consumption, waste +generation, and indirect emissions from our consumption of energy. +4. kWh elec-eq/m2/yr is calculated using the REEB Benchmark 2020. +65NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_68.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..813dfc519a7c0f170510f037b0a58c38b75eb74f --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_68.txt @@ -0,0 +1,84 @@ +Our Portfolio Environmental Performance Measures +Absolute Performance +(Abs) +Like-for-like Performance (LfL) +EPRA Code Performance +Measure +Unit(s) of +Measure +% of Data +Estimation +FY23 FY22 FY23 FY22 % +Change +Elec-Abs, +Elec-LfL +Electricity +consumption +Annual MWh 0.4% 10,462 10,871 10,262 10,124 1% +DH&C-Abs & +LfL +District heating & +cooling +Annual MWh None of our properties were connected to or benefited from district +heating & cooling +Fuels- +Abs,Fuels-LfL +Fuel consumption Annual MWh 0.1% 4,283 5,103 4,109 4,268 -4% +Energy-Int Energy intensity kWhelec-eq/m2/yr 0.077 0.078 0.080 0.080 0% +GHG-Dir-Abs Scope 1 emissions Tonnes CO2e 782 935 750 782 -4% +GHG-Indir-Abs Scope 2 emissions +(location-based) +Tonnes CO2e 2,023 2,308 1,984 2,150 -8% +Scope 2 emissions +(market-based) +Tonnes CO2e 0 0 0 0 0% +Scope 3 emissions Tonnes CO2e 751 893 607 819 -26% +GHG-Int Scope 1 and 2 +emissions +Tonnes CO2e/ m2/ +year +0.016 0.017 0.017 0.018 -7% +Water-Abs, +Water-LfL +Water consumption Annual m3 4.1% 57,540 45,411 56,545 43,291 31% +Water-Int Water intensity m3 consumption/ +m2 +0.33 0.24 0.34 0.26 31% +Waste-Abs, +Waste-LfL +Tonnes total waste +Tonnes +0.8% 3,253 2,919 3,249 2,818 15% +Tonnes diverted +from landfill +0.8% 3,253 2,919 3,249 2,818 15% +Tonnes waste to +energy +1.4% 1,124 1,026 1,120 1,006 11% +Tonnes recycling 0.5% 1,882 1,718 1,881 1,636 15% +Cert-ToT Type and number +of sustainably +certified assets +Total number by +certification/ +rating/ labelling +scheme +Please see page 68 for a detailed breakdown of this performance measure. +1. Data coverage: the figures reported against each performance measure represent 100% of the assets within our Operational Control reporting boundary. +2. Normalisation: Intensity indicators for energy, water and waste are based on relevant floor area. +3. Scope 3 emissions relate to the emissions included in our 2040 net-zero target, which are those arising from the directly controlled areas of our assets (i.e., +waste, water, and upstream emissions and transmission & distribution losses from energy consumption). We have chosen to include these categories only to +provide a clear performance comparison, as all other Scope 3 categories are otherwise difficult to distinguish when collated with “downstream leased assets”. +4. Absolute and like-for-like asset-level performance measures include only landlord-procured energy/water. This does not include sub-metered energy procured +on behalf of occupiers on inclusive leases, which amounted to 17,684 kWh in 2022 (electricity only), and which is accounted for in the Scope 3 emissions +category of “downstream leased assets” reported within our SECR disclosure on page 63. +5. “Estimation” refers to filling invoice gaps, not to whether invoices are based on “estimated” or “actual” readings. Although a vast majority of the data presented is +based on actual consumption, in the instances where there were gaps in electricity and water consumption, the average of the months where we had data was +applied to the missing months. Where data covered only part of a month, a pro-rata method using known consumption was applied. With regards to natural gas, +due to the variability of consumption throughout the year, any unknown consumption was estimated using seasonal trends. +6. As our portfolio is comprised of entirely retail properties within the UK only, we do not undertake segmental analysis. +7. Our environmental and social performance data has been collated and checked by Cushman & Wakefield. +66 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our ESG approach continued +The secret kitchen appliance is a "pan". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_69.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..85eace16af5ebafff62a85323bcb9e10539556a1 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_69.txt @@ -0,0 +1,70 @@ +-4%10,462 +Electricity Consumption (Portfolio) +10,871 +FY22 FY23 +-16%4,283 +Gas Consumption (Portfolio) +5,103 +FY22 FY23 +2,023 +-16%751 +Total Portfolio Scope 3 GHG Emissions +Performance (absolute) +893 +FY22 FY23 +-16%782 +2,023 +Total Portfolio Scope 1 & 2 GHG Emissions (absolute) +935 +FY22 FY23 +-12% +2,308 +FY22 FY23 +We have switched our gas supplies to a carbon offset tariff4, to +support with further reducing our environmental impact ahead of +our target to bring these emissions to net-zero. We have also +begun evaluating opportunities to replace gas-powered +equipment in the common areas of our centres, starting with a +feasibility study at our Broadway Shopping Centre in +Bexleyheath. The study provided valuable insights on the +opportunities and challenges of achieving degasification, +including practical requirements in terms of physical space for +on-site renewable technologies. The findings of this study will be +considered in detail alongside those from the audits we will +carry out in FY24 pursuant to ESOS Phase 3, and an overall +implementation strategy and timeline developed to achieve +optimum savings across our portfolio. +Refer to page 83 for more detail +In terms of our Corporate emissions, we saw a 28% decrease in +emissions arising from our consumption of energy and water, +and waste generation, as a result of our move to our new +BREEAM Excellent5 head office location. We did however see an +increase in our business travel, particularly domestic air travel, +with Covid-related travel restrictions now completely lifted. +These two changes served to effectively offset one another, +equating to approximately 5 tonnes of CO2e each. +4. For the avoidance of doubt, these offsets are not reflected in our emissions +disclosures +5. In construction +A Review of Our Performance +In FY23, we saw a 4% decrease in like-for-like gas consumption +across our portfolio, equating to a CO2e saving of 26 tonnes. These +savings can partly be attributed to the implementation of our initiative +to review plant equipment run times and controls at least quarterly, +ensuring optimum settings are in place to reflect space usage, whilst +continuing our roll-out of AMRs. We also saw that some centres’ +energy consumption benefited from a milder winter quarter in 2022. +Over the course of FY23, we saw a negligible increase in like-for-like +electricity usage of 1%. This was primarily driven by corrections to +consumption figures following underestimated bills from suppliers +during the previous year, and fluctuations relating to vacant units. +Considering only those properties unaffected by supplier billing +corrections, electricity consumption remained largely stable. Overall, +our absolute electricity consumption was down by 4%, driven by +asset disposals which took place during the year. This was also the +key driver of the overall reduction in Scope 3 emissions, as +downstream leased assets make up the vast majority of this +emissions category. +% change +Key +67NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_7.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_7.txt new file mode 100644 index 0000000000000000000000000000000000000000..729616565163394b428fb3e2568e18ba5462b89b --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_7.txt @@ -0,0 +1,45 @@ +• Focused on a resilient sub-sector of the retail market +• Providing essential goods and services to communities +• Store-based network for omnichannel retail +• Well-positioned to withstand macroeconomic headwinds +See page 12 +• Retail Parks +• Core Shopping Centres +• Work Out +• Regeneration +See page 32 +• Market leading asset management team +• Scalable operational structure +• Data-driven approach +• Strong occupier relationships +• Expanding Capital Partnerships +See page 42 +• Unsecured balance sheet structure +• No debt maturity until 2028 +• Significant cash holdings +• Debt costs fixed until 2028 +See page 46 +MARKET +PORTFOLIO +PLATFORM +FINANCIAL +POSITION +5NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +We have a resilient investment case to deliver reliable and recurring revenues +See page 20 +We oversee and manage +our purpose, culture, values, +strategy, sustainability and +relationships through +effective Board leadership +and governance +Enabling us to generate +long-term value for +our stakeholders: +• Our team +• Our communities +• Our shareholders +• Our capital partners +• Our occupiers +• Our environment +See page 96 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_70.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..992e7759d542e4267f247ef37f542e994a030777 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_70.txt @@ -0,0 +1,50 @@ +Certifications & Energy Performance Certificates +Since October 2008, an Energy Performance Certificate (EPC) has been legally required when a building is sold, rented, or constructed. A +certificate is valid for a period of 10 years; on expiry there is no legal requirement to replace an EPC unless the property is to be sold or let. In +England & Wales, the Minimum Energy Efficiency Standards (MEES) now require that all properties, where valid EPCs exist, must have an asset +rating of “E” or above to be lawfully let. Previously this requirement only applied to new tenancies, however it was extended to cover existing +(non-domestic) tenancies on 1 April 2023. +EPC certificates by Region and Asset Rating +In the below table, the number of certificates is presented within each legislative region (England & Wales, Ireland, and Scotland) by asset +rating, A+ through to G. We have also disclosed the number of units with no/expired EPCs to provide clarity on certification coverage across +the portfolio. This excludes recently sold assets for which we acquired new EPCs for the purposes of sale. +We are pleased to have achieved full compliance with the 1 April 2023 MEES deadline across our operational control portfolio, with the single +“F” asset rating shown below (England & Wales) relating to a vacant unit pending redevelopment. +We also have further certificates pending covering over half of those units currently in the category of having no/expired EPCs. Draft ratings +have been issued for c.40% of these to date - currently undergoing Elmhurst’s quality control requirements due to the volume of certificates +pending lodgement - with the draft ratings indicating that we can expect 96% of these to be rated A-C. Our assessors do not anticipate any +F-G ratings amongst these certificates. +Region A+ A B C D E F G No/ Expired EPC +England & +Wales +0 5 104 209 175 94 1 0 286 +Northern +Ireland +0 0 2 15 11 3 0 4 35 +Scotland 0 0 0 14 19 28 10 14 85 +Total 0 5 106 238 205 125 11 18 406 +The below chart shows NewRiver EPCs for the England & Wales retail portfolio in comparison to the national EPC register, comparing +against other non-domestic certificates. Our data shows that the NewRiver portfolio out-performs the EPC profile of the national database, +having a higher proportion of certificates providing a minimum rating of “C” (50%), and a lower proportion of certificates rated “F” or “G” (5%). +Our programme of EPC assessments and Minimum Energy Efficiency Standards (MEES) risk reduction has ensured we can continue to let +properties lawfully, protecting the portfolio against potential compliance-related risks to value. +EPC Performance +NewRiver Retail Portfolio (E&W) in Comparison to National EPC Register +0 +5 +10 +15 +20 +25 +30 +35 +A CBA+ D E F G +National database* +NewRiver Portfolio +* National EPC database + figures correct as + of March 2023 +68 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our ESG approach continued +The secret animal #3 is an "eagle". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_71.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..9d9dad8d0f4d4350b8b8ea96bf27fffd2f0f0ba5 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_71.txt @@ -0,0 +1,92 @@ +Water Performance Summary +FY23 Performance Highlights +• Water efficiency measures installed at various sites, including +water re-use in connection with both irrigation and cleaning +• We have begun switching our water meters to smart meters +• Our energy broker, who manages our water meters, has +upgraded their water validation systems to improve the data +we receive on our consumption +Waste Performance Summary +FY23 Performance Highlights +• We maintained our policy to divert 100% of our waste from +landfill +• Our recycling rate was 63%6, bringing us three quarters of the +way to achieving our 2025 target of 85%. +• 65% of total waste generated avoided incineration. Waste that +was incinerated benefited from energy recovery. +6. based on total non-organic waste +7. Calendar year of 2022 +8. Calendar year of 2021 +Narrative on FY23 Performance +In FY237, the waste generated across our like-for-like portfolio +increased by 15%, largely attributable to the re-opening of our +occupiers’ stores following successive periods of closure during 2021, +when total waste generated reduced by a third compared with FY20. +Considering only non-organic waste, the % split of waste recycled +(63%) and incinerated (37%) remained consistent. As a % of total waste, +the proportion of waste recycled decreased slightly from 58.8% to +57.9%. The proportion of waste incinerated also decreased slightly from +35.1% to 34.6%. These decreases occurred in favour of an increase in +the proportion of waste composted and/or sent to an anaerobic +digester, which improved from 6.0% in FY228, to 7.6% in FY23. +Whilst a decrease in overall waste recycled appears contrary to our +target to increase recycling rates, this % decrease (alongside a similar +% decrease in total waste incinerated), is driven by increased +composting and anaerobic digestion through improved segregation +of food waste. +However, looking only at non-organic waste, our recycling rates have +remained stable. Improving waste sorting facilities and our +understanding of barriers to further recycling have therefore been +identified as priority areas for our centre management engagement & +training, which will take place later this year. +Narrative on FY23 Performance +In FY23, we unfortunately saw a 31% increase in like-for-like water +consumption across our portfolio, in part as a result of a considerable +underground leak identified at the Abbey Centre, Newtownabbey. +Excluding this isolated incident, water consumption across the +remainder of our portfolio increased by 18%, with a key driver +including increased trading of our F&B retailers as a result of +improved customer confidence owing to the passage of time since +the worst of the Covid pandemic. +Water efficiency measures installed during the year included: +• a leak detection system at the Ridings Centre, Wakefield +• installation of water butts to the roof of the Cornmill Centre, +Darlington for irrigation purposes +• re-use of rainwater through deionised reach & wash window +cleaning system, to clean the glazed roof areas of the Avenue +Our Environmental & Social Implementation Plans require that +opportunities to install leak detection systems, reuse stormwater and/ +or grey water, and to install low-flow fixtures, are reviewed on a +quarterly basis. This ensures that there is an ongoing process of +assessing the feasibility of initiatives which seek to contribute to +reducing our water consumption. Whilst the leak we experienced at +the Abbey Centre was unfortunate, this is a lesson that will be drawn +upon in our evaluation of leak detection systems as part of these +plans going forward. +3.2% 4.4% +34.6%28.8% +29.0% +Waste to incineration with energy recovery +Waste to dedicated recycling facility +Waste to mixed recycling facility +Waste to composter +Waste to anaerobic digestion +1.5% +16.1% +0.9% +0.02% +0.48% +60.9%7.6% +0.6% +11.9% +General waste +Dry mixed recycling +Cans & Plastics +Glass +Wood +Mixed metals +Other +Food waste +Paper/Cardboard +Disposal Route Waste Type +69NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_72.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..ca24c3660629d72b1049b0f8020bc3e06198e7d3 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_72.txt @@ -0,0 +1,82 @@ +Maximising our Social Impact +Maximising our social impact means taking every opportunity to generate meaningful social value in our workplace and in our communities. +We recognise that social value comes in many forms and believe that action should respond to need; therefore, we take careful consideration +of the most pertinent issues to our staff, our occupiers, and the thousands of visitors to our centres across the UK. +Progress Towards Our Near-Term Social Targets +Target Target +Year +Progress +% +FY23 Progress Report +Support a minimum +of 5 industry/ career +engagement activities +for young people +per year +Per year N/A This is a new target which we have set ourselves this year following the expiration of +our previous work experience offering target. Last year, we disclosed that we had not +fulfilled our target to provide work experience placements at 50% of our assets, as our +centre teams found it particularly challenging to meet the supervision requirements of +local school engagement programmes. +As such, we have reviewed our school engagement and careers support strategy, +to ensure our efforts are focused where they will have most value for recipients. +To this end, NewRiver has become a member of The Academy of Real Assets (TARA). +Examples of initiatives which we will support in pursuit of this target include: +employment fairs, interactive days/workshops in schools, site visits at our assets, +and work experience opportunities. +So far, we have contributed to TARA’s book competitions and provided meeting space +for their board, and we look forward to becoming actively involved in face-to-face +engagement activities with the young people they aim to inspire into +the real estate industry. +Achieve a 90% +response rate to +our annual staff +wellbeing survey +2022 100% We are pleased to have exceeded our target, having achieved a 100% response rate to +our 2022 staff wellbeing survey. +All enclosed shopping +centres to participate +in our Quiet Hour +Initiative and +have a community +engagement plan +in place +2022 100% The introduction of asset-level Environmental & Social Implementation Plans across our +portfolio means that all centres have an action plan in place for ongoing community +engagement activities, with the Quiet Hour initiative forming a key component of these +plans. Some centres experienced Covid-related disruptions to their Quiet Hours, +however most were able to re-instate them by the end of 2022. All centres have +now re-instated their Quiet Hours. +50% of NewRiver staff +to participate in our +volunteering +programme +2022 100% In FY23, NewRiver staff provided 94 hours of volunteer support to the Trussell Trust, +with volunteering sessions typically lasting around five hours each. Further volunteering +support was provided to charities close to individual staff members, amounting to 108 +hours. Overall, NewRiver staff therefore participated in 40 volunteering sessions, which +equates to an 82% participation rate. We have therefore achieved this target. +The NewRiver team also supported their chosen charities in other ways, such as +through fundraising activities. For example, over £900 was raised for Macmillan Cancer +Support through sponsored exercise challenges. +Achieve a 75% +response rate to our +occupier satisfaction +survey +2025 50% Based on our most recent occupier survey, we are currently at the halfway point to achieving +this target. Our centre managers play a pivotal role in our ability to collect a representative +sample of occupier views, and we have sought their feedback on our current research +collection processes, which we will utilise to help increase our response rate. We will also be +introducing a charity donation incentive to encourage greater levels of participation. +Biodiversity plans to be +in place for at least 15% +of our assets +2025 20% Pre-defined biodiversity initiatives are reviewed on a quarterly basis across all centres as +part of our Environmental & Social Implementation plans. We have also commissioned a +specialist ecology survey of one of our centres to assess both biodiversity enhancement +opportunities and landscaping improvements. Considering only externally produced +biodiversity plans, our current progress against our target is 20%. +SOCIAL +Strategic Report +70 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Our ESG approach continued \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_73.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..38de044ad3469ccea5d37f2a08d5707259b70666 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_73.txt @@ -0,0 +1,55 @@ +Engaging our Team +Our approach to engaging our team is centred around our aspiration +to listen. We seek to understand the varying priorities of our team +across all levels and departments of our business to enable the +development of policy and process solutions which respond to +staff needs, support wellbeing, and provide a positive cultural +environment within which colleagues envisage continuing their +career development in the long term. We believe the longstanding +nature of our low employee turnover rate is testament to the +effectiveness of this approach. +Monitoring +Needs +Assessment +Action +Planning +Policy +Development +Staff +Training +Implementation +FY23 PERFORMANCE HIGHLIGHTS +Our most recent staff survey returned an overall satisfaction +score of 71%, with over 80% of staff identifying that they: +• Resonate with the company values +• Frequently receive useful career and personal +development feedback, recognition and encouragement +from their line managers +• Are confident in our zero-tolerance approach +to discrimination +• Feel that we are flexible towards family commitments +• Are satisfied with the information we provide +on mental health +• Consider their mood at work to be generally positive +• Find it easy to concentrate in the office +environment provided +• Feel supported by their team members and +enjoy working with them +• Are challenged and excited by the work they +do at NewRiver +How we +engage +our team +Monitoring and needs assessment take place both through the +employee appraisal process and anonymously via our annual staff +survey. Our internal staff survey is developed in partnership with, +and responses are independently analysed by, Cushman & +Wakefield. Questions are designed to gain insights into staff opinion +and identify beneficial actions in respect of NewRiver’s policies, +procedures and cultural norms in the areas of: leadership team/ +management personnel; company culture; corporate social +responsibility; employee health and wellbeing; personal growth +opportunities; team dynamics; and the benefits and recognition +scheme. +71NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +The secret instrument is a "trumpet". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_74.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..5bb3a5642b15f38edcbfc186d49be11f9fc6e4d5 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_74.txt @@ -0,0 +1,69 @@ +We received recommendations from Cushman & Wakefield following our most recent survey, which we have considered and +actioned as follows: +Recommendation Action taken +Utilise key findings from the +survey to further educate staff +on the wellness benefits of our +flexible working policy and +ensure full cultural acceptance +of our new ways of working, to +empower all staff to exercise the +policy in a way that reflects their +personal circumstances +The flexible working policy has been clarified with the team at various points since its inception, +with the formalisation of a policy for all staff to work 3 days per week in the office and 2 days flexibly. +Days “on site” at our assets count as “in office” days, to maintain the intended balance. The policy +allows individuals to choose which days they work in office, subject to the needs of the business and +their teams. +The move to our new flexible working environment at 89 Whitfield Street also engenders the +hybrid working approach with hot desking, with fewer desks than head count underpinning the +business’ expectation and understanding that the entire team works flexibly. +Communication is enhanced by the maintenance of a “Days in the Office” diary so everyone +can see the work choices their team members have made. +Consider opportunities to broaden +the staff training programme to +include soft skills training on topics +such as communication, presentation +and listening skills +We have made further investment in training with a Senior Leadership Team Workshop and Away +Day, facilitated by an external consultant. The workshop utilised Myers-Briggs Type Indicator profiling +and then discussion around how that profiling can be leveraged to improve communication and +leadership styles. +Bi-weekly staff meetings covering a variety of topics are now fully operational and regularly delivered +by external speakers to provide insight and training on topical issues and industry trends. We have +also explored the opportunity for further training with our Apprenticeship Training Provider (Multiverse), +offering the opportunity to all staff to take advantage of upskilling courses, including Data Literacy and +Business Transformation. These courses are suitable for varying levels of experience and cover topics +such as managing change in a digital world and leveraging data management tools to develop +narratives and support decision-making. +Presentation Skills Training will also be offered to all staff at the start of FY24. This will cover both +virtual presentation as well as face to face skills training. +Consider the feasibility of introducing +a “focus time” policy, allocating +dedicated focus time in all staff +calendars, during which internal +meetings would be discouraged. +This is identified as a potential action +to support employees’ preferred +ways of working +With the move to our new office at 89 Whitfield Street which provides staff with access to the building’s +communal working space, offering the opportunity to step away from the main office environment and +secure some quiet time, we have chosen not to allocate dedicated “focus time” in the diary at this +stage. We will continue to monitor views on whether our current solution is effective, and reconsider +Cushman & Wakefield’s recommendation if required. +Utilise survey feedback to inform +the design of our new office space. +Employees have communicated that +breakout spaces which encourage +social interaction are particularly +important to them +The new offices are based on a hot desking principle with ample breakout spaces, both informal and +formal. The feel of the new office is relaxed and non-corporate with comfortable chairs, lots of plants to +enhance wellbeing. An on-site café is also available for a quick coffee catch-up or lunch, and is well-utilised +by NewRiver staff. +We also have a wellness team which organises various activities alongside promoting participation in the +regular timetable of activities arranged by Derwent London (our landlord) which includes pop-ups and +competitions, such as a table tennis tournament which we recently won! +72 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Our ESG approach continued \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_75.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..4b7b36c340728771852c6a28d1a220260705278d --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_75.txt @@ -0,0 +1,59 @@ +Helping our Team embed our ESG Programme into the business +ESG training is delivered to our team by our external consultants on an annual basis. Training sessions cover a range of topics including +industry initiatives and trends, updates on our performance, and support for implementing any newly introduced policies and processes. Annual +training sessions extend to our on-site teams, who receive training specific to the nature of their roles. +We also run more informal sessions on an ad-hoc basis throughout the year, to provide specific updates and ensure timely implementation of +new processes as they are established. Recent examples include a morning coffee break session providing tips for understanding our personal +carbon footprints and how to make more environmentally conscious choices at home, as well as training on an improved MEES risk +management process. +The latest process improvements we have made to further our work to embed our ESG objectives in all business functions include: +Process Quarterly Property ESG +Performance Monitoring +Supplier Vetting +& ESG Evaluation +Business function Asset Management Finance & Procurement +Description Introduction of sustainability KPIs to be monitored by +asset managers across our core portfolio on a +quarterly basis, for inclusion in existing reporting +processes. KPIs consider issues such as recycling +rates, AMRs, green lease clauses, occupier +engagement, and the delivery of initiatives through +our Environmental & Social Implementation Plans. +Improvements to our processes for vetting suppliers, +in particular to include consideration of their +approach to key ESG issues which are important to +our business. The new process will enable an +evaluation of potential suppliers’ approaches to +sustainability, so that we can assess the level of +alignment between our objectives and our spend on +goods & services. +Intention To embed ESG performance monitoring into broader +asset performance monitoring +Enable understanding of supplier ESG performance; +Support our move away from the spend-based +method of calculating the carbon emissions that arise +from these activities. +We continue to include personal ESG targets in employee goal setting and performance appraisals. We encourage employees to include +targets which support our corporate objectives, but also provide the flexibility to set personal targets that address issues which are important to +them or their role. Members of senior management also have specific ESG-linked performance goals connected to their remuneration. +We Continue to be Recognised by +the CDP for Managing Climate Issues +NewRiver seeks to be transparent in its approach to climate +action, and participating in the CDP is an essential part of the +way we achieve this. In the 2021 and 2022 benchmarking +processes, we were awarded a score of ‘B’, taking us from the +‘awareness’ to the ‘management’ level; testament to the +dedication of our business to driving alignment with a best +practice approach to climate risk management. + +We achieved “Global Sector Leader” +Status in the GRESB Development +Benchmark +NewRiver has been recognised by GRESB as a Global Sector +Leader in the category of hotel development, following the +completion of our Romford Premier Inn project which achieved +BREEAM New Construction certification. This development +delivered on our key ESG targets, including to measure and +reduce embodied carbon through the design process. + +73NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_8.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..8366f4c37f445b469bf3c1f1ab8c760005e1a789 --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_8.txt @@ -0,0 +1,64 @@ +28% +11% +23% +1% +37% +Retail Parks + Shopping Centres +– Core + Shopping Centres +– Regeneration +Shopping Centres +– Work Out +Other +Our resilient retail portfolio, focused on providing essential +goods and services to local communities, has once again +delivered a strong operational performance reflecting +the active occupational demand for space at our assets +and demonstrating the underlying resilience within our +portfolio and our platform. +Resilient retail at a glance +Portfolio segmentation +1. Retail Parks +2. Core Shopping Centres +3. Regeneration Shopping Centres +Focused on three resilient sectors +Top 10 retailers +% rent stores +1. 3.4% 20 +2. + 3.1% 10 +3. 2.4% 14 +4. 2.3% 4 +5. + 2.2% 14 +6. 2.1% 13 +7. 2.1% 5 +8. 2.0% 6 +9. + 1.6% 3 +10. 1.4% 11 +total 22.6% +FY21 FY22 FY23 +95.6% +95.8% +96.7% +High occupancy +FY21 FY22 FY23 +90% +87% +92% +High retention rate +Progress this year +96% +92% +98% +FY21 FY22 FY23 +98% 97% 92% +Robust rent collection +6 NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 +Strategic Report +Strategic report +Our business +Strategic Report +The secret animal #1 is a "lion". \ No newline at end of file diff --git a/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_9.txt b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..89d4b5fcf7ceab4592e6cb46a3c57e69cd82fccf --- /dev/null +++ b/NewRiver/NewRiver_75Pages/Text_TextNeedles/NewRiver_75Pages_TextNeedles_page_9.txt @@ -0,0 +1,68 @@ +Resilient retail: 10 key characteristics +CAGR: percentage per annum growth of new rent vs +previous passing rent, over period of previous lease length +Leasing Pricing: long term rent secured in leasing +activity vs valuer ERV +-0.4% +-0.3% +-0.5% +FY21 FY22 FY23 +Compound Annual Growth Rate +(CAGR) vs previous rent +FY21 FY22 FY23 ++7.4% ++0.6% ++1.1% +Strong leasing pricing vs ERV +FY21 FY22 FY23 +£11.74 +£11.51 +£11.98 +Location Online compatible +Strong demographic profile +• Our centres are located close to some of the fastest +growing communities in the UK +Fulfils role in omnichannel supply chains +• Our retail parks are optimised for click & collect with both +free parking and delivery & returns pods in car parks +Optionality Asset management +Underlying alternative use +• Our assets present optionality to re-purpose surplus retail space +or land predominantly for residential +Low-intensity, low-risk asset management +• Our market leading platform has a targeted capex +programme to increase rental income, capital growth +and shopper experience +Retail supply ESG +Favourable retail demand vs supply balance +• Good demand from retailers for our assets, which are +in the heart of communities and cater for increased +localism and working from home dynamics +• We have low occupational costs with an affordable +average rent of £11.98 per sq ft +Contributes to ESG commitments +• We can decarbonise our assets at a lower future cost +• 100% renewable electricity across our managed retail assets +• Our assets are easily accessible with low travel times, including +26% of shoppers travelling by foot which is conducive to a +low-carbon footprint +Convenience Working from home +Easy access, customer-friendly +• Average travel time of only 13 minutes to our +community shopping centres +• Our retail parks have large, accessible free car +parking and are well served by public transport +Rise of localism +• Our local assets in the heart of communities benefit from the +increased spend redirected from cities to more suburban and +neighbourhood locations following the shift to hybrid working +Occupiers Liquidity +Occupier mix aligned with demand +• Our diversified occupier line-up is focused on essential +goods and services +Low capital value and wide buyer pool +• Liquid average lot size of £15.9 million +-0.5%+1.1%£11.98 +psqf +Affordable average rent +7NEWRIVER REIT PLC ANNUAL REPORT AND ACCOUNTS 2023 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_17.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_17.txt new file mode 100644 index 0000000000000000000000000000000000000000..ce1db8b2434df230b0013809f72b1749ea44c80e --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_17.txt @@ -0,0 +1,43 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) +TABLE OF CONTENTS (Continued) + Page +Item 8 Financial Statements and Supplementary Data. (continued) +Note 5 Goodwill and Mortgage Servicing Rights 129 +Note 6 Leases 132 +Note 7 Premises, Equipment and Leasehold Improvements 133 +Note 8 Time Deposits 134 +Note 9 Borrowed Funds 134 +Note 10 Commitments 136 +Note 11 Equity 137 +Note 12 Other Comprehensive Income 140 +Note 13 Earnings Per Share 141 +Note 14 Fair Value 141 +Note 15 Financial Derivatives 154 +Note 16 Employee Benefit Plans 160 +Note 17 Stock Based Compensation Plans 166 +Note 18 Income Taxes 167 +Note 19 Regulatory Matters 169 +Note 20 Legal Proceedings 170 +Note 21 Parent Company 174 +Note 22 Segment Reporting 175 +Note 23 Fee-based Revenue from Contracts with Customers 177 +Note 24 Subsequent Events 181 +Statistical Information (Unaudited) 182 +Glossary 186 +Defined Terms 186 +Acronyms 190 +Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 190 +Item 9A Controls and Procedures 190 +Item 9B Other Information 191 +PART III +Item 10 Directors, Executive Officers and Corporate Governance 191 +Item 11 Executive Compensation 191 +Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 192 +Item 13 Certain Relationships and Related Transactions, and Director Independence 192 +Item 14 Principal Accounting Fees and Services 192 +PART IV +Item 15 Exhibits, Financial Statement Schedules 193 +Item 16 Form 10-K Summary 198 +SIGNATURES 199 + \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_18.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_18.txt new file mode 100644 index 0000000000000000000000000000000000000000..e278eb4e3bc882c48c5c00b16b4eead7784eb5ad --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_18.txt @@ -0,0 +1,42 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) + +MD&A TABLE REFERENCE +Table Description Page +1 Summary of Operations, Per Common Share Data and Performance Ratios 39 +2 Balance Sheet Highlights and Other Selected Ratios 39 +3 Summarized Average Balances and Net Interest Income 42 +4 Noninterest Income 43 +5 Noninterest Expense 44 +6 Provision for (Recapture of) Credit Losses 44 +7 Summarized Balance Sheet Data 45 +8 Loans 46 +9 Investment Securities 46 +10 Weighted-Average Expected Maturities of Mortgage and Asset-Backed Debt Securities 47 +11 Details of Funding Sources 47 +12 Retail Banking Table 49 +13 Corporate & Institutional Banking Table 52 +14 Asset Management Group Table 55 +15 Details of Loans 60 +16 Commercial and Industrial Loans by Industry 61 +17 Commercial Real Estate Loans by Geography and Property Type 62 +18 Residential Real Estate Statistics 63 +19 Home Equity Loan Statistics 64 +20 Auto Loan Statistics 64 +21 Nonperforming Assets by Type 65 +22 Change in Nonperforming Assets 65 +23 Accruing Loans Past Due 66 +24 Allowance for Credit Losses by Loan Class 68 +25 Loan Charge-Offs and Recoveries 69 +26 Senior and Subordinated Debt 70 +27 Primary Contingent Liquidity Sources 71 +28 Parent Company Notes Issued 72 +29 Credit Ratings for PNC and PNC Bank 73 +30 Basel III Capital 74 +31 Net Interest Income Sensitivity Analysis 75 +32 Economic Value of Equity Sensitivity Analysis 76 +33 Equity Investments Summary 77 +34 Key Macroeconomic Variables in CECL Weighted-Average Scenarios 80 + + +The secret animal #3 is an "owl". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_19.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_19.txt new file mode 100644 index 0000000000000000000000000000000000000000..74ce3336ce7bf786a4e94545bc9ea33779023874 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_19.txt @@ -0,0 +1,45 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) + +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE +Table Description Page +35 Investment Securities Summary 110 +36 Gross Unrealized Loss and Fair Value of Securities Available for Sale Without an Allowance for Credit Losses 111 +37 Gains (Losses) on Sales of Securities Available for Sale 111 +38 Contractual Maturity of Debt Securities 112 +39 Fair Value of Securities Pledged and Accepted as Collateral 112 +40 Analysis of Loan Portfolio 114 +41 Nonperforming Assets 115 +42 Commercial Credit Quality Indicators 117 +43 Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes 119 +44 Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes 121 +45 Loan Modifications Granted to Borrowers Experiencing Financial Difficulty 123 +46 Financial Effect of FDMs 123 +47 Delinquency Status of FDMs 124 +48 Subsequently Defaulted FDMs 124 +49 Financial Impact and TDRs by Concession Type 125 +50 Rollforward of Allowance for Credit Losses 125 +51 Cash Flows Associated with Loan Sale and Servicing Activities 127 +52 Principal Balance, Delinquent Loans and Net Charge-offs Related to Serviced Loans For Others 127 +53 Non-Consolidated VIEs 128 +54 Goodwill by Business Segment 129 +55 Commercial Mortgage Servicing Rights 130 +56 Residential Mortgage Servicing Rights 130 +57 Commercial Mortgage Servicing Rights – Key Valuation Assumptions 131 +58 Residential Mortgage Servicing Rights – Key Valuation Assumptions 131 +59 Lessor Income 132 +60 Sales-Type and Direct Financing Leases 132 +61 Future Minimum Lessor Receivable Arrangements 132 +62 Operating Lease Costs and Cash Flows 133 +63 Operating Lease Assets and Liabilities 133 +64 Operating Lease Term and Discount Rates of Lessee Arrangements 133 +65 Future Lease Payments for Operating Lease Liability Arrangements 133 +66 Premises, Equipment and Leasehold Improvements 133 +67 Depreciation and Amortization Expense 134 +68 Time Deposits 134 +69 Borrowed Funds 134 +70 FHLB Borrowings, Senior Debt and Subordinated Debt 135 +71 Commitments to Extend Credit and Other Commitments 136 +72 Preferred Stock - Authorized, Issued and Outstanding 137 +73 Terms of Outstanding Preferred Stock 138 + \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_20.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_20.txt new file mode 100644 index 0000000000000000000000000000000000000000..d8cc3fd03e126e4dcb4264a2d949a2effbff4860 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_20.txt @@ -0,0 +1,45 @@ +THE PNC FINANCIAL SERVICES GROUP, INC. +Cross-Reference Index to 2023 Form 10-K (continued) +NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE (Continued) +Table Description Page +74 Dividends Per Share 139 +75 Other Comprehensive Income (Loss) 140 +76 Accumulated Other Comprehensive Income (Loss) Components 140 +77 Basic and Diluted Earnings Per Common Share 141 +78 Fair Value Measurements – Recurring Basis Summary 145 +79 Reconciliation of Level 3 Assets and Liabilities 146 +80 Fair Value Measurements – Recurring Quantitative Information 148 +81 Fair Value Measurements – Nonrecurring 150 +82 Fair Value Option – Fair Value and Principal Balances 151 +83 Fair Value Option – Changes in Fair Value 151 +84 Additional Fair Value Information Related to Other Financial Instruments 153 +85 Total Gross Derivatives 154 +86 Gains (Losses) Recognized on Fair Value and Cash Flow Hedges in the Consolidated Income Statement 156 +87 Hedged Items - Fair Value Hedges 156 +88 Risk Participation Agreements 157 +89 Gains (Losses) on Derivatives Not Designated for Hedging 158 +90 Derivative Assets and Liabilities Offsetting 159 +91 Credit-Risk Contingent Features 160 +92 Reconciliation of Changes in Projected Benefit Obligation and Change in Plan Assets 161 +93 Asset Strategy Allocations 162 +94 Pension Plan Valuation Methodologies 163 +95 Pension Plan Assets - Fair Value Hierarchy 163 +96 Estimated Cash Flows 164 +97 Components of Net Periodic Benefit Cost 164 +98 Net Periodic Costs - Assumptions 165 +99 Other Pension Assumptions 165 +100 Nonvested Performance Share Unit Awards and Restricted Share Unit Awards - Rollforward 166 +101 Components of Income Tax Expense 167 +102 Deferred Tax Assets and Liabilities 167 +103 Reconciliation of Statutory and Effective Tax Rates 167 +104 Net Operating Loss Carryforwards 168 +105 Change in Unrecognized Tax Benefits 168 +106 IRS Tax Examination Status 168 +107 Basel Regulatory Capital 169 +108 Parent Company - Income Statement 174 +109 Parent Company - Balance Sheet 174 +110 Parent Company - Interest Paid and Income Tax Refunds (Payments) 175 +111 Parent Company - Statement of Cash Flows 175 +112 Results of Businesses 177 +113 Noninterest Income by Business Segment and Reconciliation to Consolidated Noninterest Income 178 + \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_21.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_21.txt new file mode 100644 index 0000000000000000000000000000000000000000..5da300d43d52e629fd0fa3b72c72a0e45e42b9df --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_21.txt @@ -0,0 +1,48 @@ +PART I +Forward-Looking Statements: From time to time, The PNC Financial Services Group, Inc. has made and may continue to make +written or oral forward-looking statements regarding our outlook for financial performance, such as earnings, revenues, expenses, tax +rates, capital and liquidity levels and ratios, asset levels, asset quality, financial position and other matters regarding or affecting us +and our future business and operations or the impact of legal, regulatory or supervisory matters on our business operations or +performance, including our sustainability strategy. This Annual Report on Form 10-K (the “Report” or “Form 10-K”) includes such +forward-looking statements. With respect to all such forward-looking statements, you should review our Risk Factors discussion in +Item 1A, our Risk Management, Critical Accounting Estimates and Judgments, and Cautionary Statement Regarding Forward- +Looking Information sections included in Item 7, and Note 20 Legal Proceedings. In this Report, “PNC,” “we,” “us,” “the +Company” or “the Corporation” refers to The PNC Financial Services Group, Inc. and its subsidiaries on a consolidated basis +(except when referring to PNC as a public company, its common stock or other securities issued by PNC, which just refer to The PNC +Financial Services Group, Inc.). References to The PNC Financial Services Group, Inc. or to any of its subsidiaries are specifically +made where applicable. +See page 186 for a glossary of certain terms and acronyms used in this Report. +ITEM 1 – BUSINESS +Business Overview +Headquartered in Pittsburgh, Pennsylvania, we are one of the largest diversified financial institutions in the U.S. We have businesses +engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many +of our products and services nationally. Our retail branch network is located coast-to-coast. We also have strategic international offices +in four countries outside the U.S. At December 31, 2023, our consolidated total assets, total deposits and total shareholders’ equity +were $561.6 billion, $421.4 billion and $51.1 billion, respectively. +We were incorporated under the laws of the Commonwealth of Pennsylvania in 1983 with the consolidation of Pittsburgh National +Corporation and Provident National Corporation. Since 1983, we have diversified our geographical presence, business mix and +product capabilities through organic growth, strategic bank and non-bank acquisitions and equity investments, and the formation of +various non-banking subsidiaries. We offer a broad range of deposit, credit and fee-based products and services to serve our +customers. See Note 22 Segment Reporting for additional details regarding our products and services. +Acquisition of BBVA USA Bancshares, Inc. +On June 1, 2021, PNC acquired BBVA USA Bancshares, Inc. (BBVA), a U.S. financial holding company conducting its business +operations primarily through its U.S. banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the +acquisition. +On October 8, 2021, BBVA USA merged into PNC Bank. On October 12, 2021, PNC converted approximately 2.6 million +customers, 9,000 employees and over 600 branches across seven states. Our results of operations and balance sheets for all periods +presented in this Report reflect the benefit of BBVA’s acquired businesses for the period since the acquisition closed on June 1, 2021. +Presentation of Noninterest Income +Effective for the first quarter of 2022, PNC updated the presentation of its noninterest income categorization to be based on product +and service type, and accordingly, has changed the basis of presentation of its noninterest income revenue streams to: (i) Asset +management and brokerage, (ii) Capital markets related, (iii) Card and cash management, (iv) Lending and deposit services, (v) +Residential and commercial mortgage and (vi) Other noninterest income. For a description of each updated noninterest income +revenue stream, see Note 1 Accounting Policies. Additionally, in the fourth quarter of 2022, PNC updated the name of the noninterest +income line item “Capital markets related” to “Capital markets and advisory.” This update did not impact the components of the +category. All periods presented herein reflect these changes. +Signature Bank Portfolio Acquisition +On October 2, 2023, PNC acquired a portfolio of capital commitments facilities from Signature Bridge Bank, N.A. through an +agreement with the FDIC as receiver of the former Signature Bank, New York. The acquired portfolio represented approximately +$16.0 billion in total commitments, including approximately $9.0 billion of funded loans, at the time of acquisition. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 1 +The secret instrument is a "drum". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_23.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_23.txt new file mode 100644 index 0000000000000000000000000000000000000000..6259c3f7a5cf5fa5611f9928c3e034e223ba9145 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_23.txt @@ -0,0 +1,56 @@ +We also are subject to regulation by the SEC by virtue of our status as a public company and by the SEC and the CFTC due to the +nature of some of our businesses. Our businesses with operations outside the U.S. also are subject to regulation by appropriate +authorities in the foreign jurisdictions in which they do business. +As a regulated financial services firm, our relationships and good standing with regulators are of fundamental importance to the +operation and growth of our businesses. The Federal Reserve, OCC, CFPB, SEC, CFTC and other domestic and foreign regulators +have broad enforcement powers, and certain of the regulators have the power to approve, deny, or refuse to act upon our applications +or notices to conduct new activities, acquire or divest businesses, assets or deposits, expand our operations geographically or +reconfigure existing operations. +Among the areas that have been receiving a high level of regulatory focus are compliance with the BSA/AML laws, capital and +liquidity management (including contingency, recovery, and resolution planning), the structure and effectiveness of enterprise risk +management frameworks (including for climate-related risks), the protection of confidential customer information, cybersecurity, the +oversight of arrangements with third-party vendors and suppliers, use of unapproved messaging applications by employees in +regulated entities, and compliance with fair lending and other consumer protection laws and regulations, including those governing +retail sales practices, fee disclosures, unfair, deceptive or abusive acts or practices, collection practices, and protections for military +service members. +The profitability of our businesses also is affected by rules and regulations that impact the business and financial sectors in general, +including laws governing taxation, antitrust regulation, electronic commerce, data security and privacy. +There are numerous rules governing the regulation of financial services institutions and their holding companies. Accordingly, the +following discussion is general in nature and does not purport to be complete or to describe all of the laws, regulations and policies +that apply to us. To a substantial extent, the purpose of the regulation and supervision of financial services institutions and their +holding companies is not to protect our shareholders and our non-customer creditors, but rather to protect our customers (including +depositors), the financial markets and financial system in general. +Banking Regulation and Supervision +Regulatory Capital Requirements, Stress Testing and Capital Planning. PNC and PNC Bank are subject to the regulatory capital +requirements established by the Federal Reserve and the OCC, respectively. The foundation of the agencies’ regulatory capital rules is +the international regulatory capital framework developed by the Basel Committee, the international body responsible for developing +global regulatory standards for banking organizations for consideration and adoption by national jurisdictions. The regulatory capital +rules establish minimum requirements for the ratio of a banking organization’s regulatory capital to its risk-weighted assets, referred to +as risk-based capital requirements, as well as for the ratio of its regulatory capital to measures of assets and other exposures, referred +to as leverage capital requirements. The agencies’ regulatory capital rules have undergone significant change since 2013, when the +agencies adopted final rules to implement the Basel Committee’s international regulatory capital framework, known as “Basel III”, as +well as certain provisions of Dodd-Frank. On July 27, 2023, and as described in more detail below, the Federal Reserve, OCC, and +FDIC proposed for public comment an interagency rule to implement the final components of the Basel III framework that would +significantly revise the capital requirements for large banking organizations, including PNC and PNC Bank. +The federal banking agencies currently tailor the application of their capital, liquidity and enhanced prudential requirements for +banking organizations to the asset size and risk profile (as measured by certain regulatory metrics) of the banking organization. The +agencies’ capital and liquidity rules classify all BHCs with $100 billion or more in total assets into one of four categories (Category I, +Category II, Category III and Category IV), with the most stringent capital and liquidity requirements applying to Category I firms and +the least restrictive requirements applying to Category IV firms. The classification of any bank subsidiary of a BHC generally follows +that of its parent BHC. PNC and PNC Bank currently are Category III firms because PNC (i) has more than $250 billion, but less than +$700 billion, in consolidated total assets, (ii) is not designated as a GSIB, and (iii) has less than $75 billion in cross-jurisdictional +activity. Under current rules, any of these no longer being the case, PNC and PNC Bank would become a Category I or II institution, +and subject to more stringent capital and liquidity standards. As of December 31, 2023, PNC had cross-jurisdictional activities for +these purposes of $21.3 billion. Some of the benefits of tailored application of capital, liquidity, and enhanced prudential requirements +under current rules may be reversed if the agencies adopt, as proposed, certain rules issued in 2023 for comment as described further +below. +The regulatory capital rules generally divide regulatory capital into three components: CET1 capital, additional Tier 1 capital (which, +together with CET1 capital, comprises Tier 1 capital) and Tier 2 capital. CET1 capital is generally common stock, retained earnings, +and qualifying minority interests less required deductions. As permitted, PNC and PNC Bank have elected to exclude AOCI related to +both available for sale securities and pension and other post-retirement plans from CET1 capital. Additional Tier 1 capital generally +includes, among other things, perpetual preferred stock and qualifying minority interests, less required deductions. Tier 2 capital +generally comprises qualifying subordinated debt and, subject to certain quantitative limits, ACL, less any required deductions from +Tier 2 capital. The regulatory capital rules limit the extent to which minority interests in consolidated subsidiaries may be included in +regulatory capital. Total capital is the sum of Tier 1 capital and Tier 2 capital. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 3 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_24.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_24.txt new file mode 100644 index 0000000000000000000000000000000000000000..97d58afb35cd269a1a5a4d07be7e1d208ce0650e --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_24.txt @@ -0,0 +1,56 @@ +Under the current regulatory capital rules, PNC and PNC Bank must deduct investments in unconsolidated financial institutions, +MSRs and deferred tax assets (in each case, net of associated deferred tax liabilities) from CET1 capital to the extent such categories +individually exceed 25% of the institution’s adjusted CET1 capital. As of December 31, 2023, PNC and PNC Bank’s investments in +unconsolidated financial institutions, MSRs and deferred tax assets did not exceed this threshold. +The agencies’ capital rules permit banking organizations that were subject to CECL during 2020 to delay CECL’s estimated impact on +CET1 capital. PNC elected to delay the estimated impact of CECL on CET1 capital through December 31, 2021, followed by a three- +year transition period. CECL’s estimated impact on CET1 capital is defined as the change in retained earnings at adoption plus or +minus 25% of the change in CECL ACL at the balance sheet date, excluding the allowance for PCD loans, compared to CECL ACL at +adoption. Effective for the first quarter of 2022, PNC is now in the three-year transition period, and the full impact of the CECL +standard is being phased-in to regulatory capital through December 31, 2024. See Note 1 Accounting Policies for more detail on +CECL and the ACL. +PNC and PNC Bank are required to use the standardized approach for determining risk-weighted assets for purposes of calculating the +risk-based capital ratios. The standardized approach for risk-weighted assets takes into account credit and market risk. To calculate +risk-weighted assets under the standardized approach for credit risk, the nominal dollar amounts of assets and credit equivalent +amounts of off-balance sheet items are generally multiplied by risk weights set forth in the rules, with the risk weights increasing as +the perceived credit risk of the relevant asset or exposure increases. For certain types of exposures, such as securitization exposures, +the standardized approach establishes one or more methodologies that are to be used to calculate the risk-weighted asset amount for +the exposure. High volatility commercial real estate, past due, and equity exposures, as well as MSRs and deferred tax assets that are +not deducted from capital, are generally subject to higher risk weights than other types of exposures. Under the market risk capital +rule, risk-weighted asset amounts for covered trading positions are determined based on the calculation of VaR (including stressed +VaR), specific risk, incremental risk and comprehensive risk amounts, as specified in the capital rules. +We refer to the capital ratios calculated using the definition of capital under the agencies’ Basel III capital rules and, for the risk-based +ratios, standardized risk-weighted assets, as our Basel III regulatory capital ratios. +The risk-based capital rules establish certain minimum standards for the capital ratios of banking organizations, including PNC and +PNC Bank. Banking organizations must maintain a minimum CET1 ratio of 4.5%, a Tier 1 capital ratio of 6.0%, and a Total capital +ratio of 8.0%, in each case in relation to risk-weighted assets, to be considered “adequately capitalized.” BHCs subject to the Federal +Reserve’s CCAR process, such as PNC, are subject to a CET1 SCB. The SCB is calculated based on the difference between a firm’s +starting and minimum CET1 ratio (as projected by the Federal Reserve) in the supervisory severely adverse scenario during the CCAR +process, plus four quarters of the organization’s planned common stock dividends (expressed as a percentage of risk-weighted assets), +subject to a floor of 2.5%. Based on PNC’s performance under the Federal Reserve’s supervisory stress tests as part of CCAR 2023, +PNC’s SCB for the four-quarter period beginning October 1, 2023 is the regulatory minimum of 2.5%. While PNC Bank is not subject +to a SCB, PNC Bank is required to maintain a capital conservation buffer in the form of CET1 equal to a fixed 2.5% of risk-weighted +assets. +PNC and PNC Bank must maintain risk-based capital above the minimum risk-based capital ratio requirements plus its SCB (in the +case of PNC) or capital conservation buffer (in the case of PNC Bank) in order to avoid limitations on capital distributions, including +paying dividends and executing repurchases or redemptions of any Tier 1 capital instrument, such as common and qualifying preferred +stock, and certain discretionary incentive compensation payments. As a result, to avoid limitations on capital distributions and certain +discretionary incentive compensation payments, PNC and PNC Bank must maintain a CET1 capital ratio of at least 7.0%, a Tier 1 +capital ratio of at least 8.5%, and a Total capital ratio of at least 10.5%. In addition, while a firm’s SCB is typically determined as part +of the Federal Reserve’s annual CCAR process, the Federal Reserve has the right to conduct supervisory stress tests, require a firm to +submit a revised capital plan and calculate a firm’s SCB more frequently. BHCs subject to a SCB, such as PNC, generally may +increase their capital distributions without seeking prior Federal Reserve approval, provided the BHC otherwise complies with its SCB +and any other applicable capital or capital distribution requirements. +For Category III banking organizations (such as PNC and PNC Bank), the Federal Reserve and OCC can supplement these higher +SCB or capital conservation buffer levels above the regulatory minimums by a countercyclical capital buffer of up to an additional +2.5% of risk-weighted assets. This buffer, which must be held in the form of CET1 capital, is currently set at zero in the U.S. A +Federal Reserve policy statement establishes the framework and factors the Federal Reserve would use in setting and adjusting the +amount of the U.S. countercyclical capital buffer. Covered banking organizations would generally have 12 months after the +announcement of any increase in the countercyclical capital buffer to meet the increased buffer requirement, unless the Federal +Reserve establishes an earlier effective date. +The regulatory capital rules also require that banking organizations maintain a minimum amount of Tier 1 capital as compared to +average consolidated assets, referred to as the leverage ratio, and require Category III banking organizations to maintain a minimum +amount of Tier 1 capital as compared to total leverage exposure, referred to as the supplementary leverage ratio. Total leverage +exposure takes into account on-balance sheet assets as well as certain off-balance sheet items, including loan commitments and + +4 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_25.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_25.txt new file mode 100644 index 0000000000000000000000000000000000000000..2817e6530179373bee0803c4f0e5c9c36207f9d1 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_25.txt @@ -0,0 +1,56 @@ +potential future exposure under derivative contracts. Banking organizations are required to maintain a minimum leverage ratio of Tier +1 capital to total assets of 4.0%, and Category III banking organizations must maintain a minimum supplementary leverage ratio of +3.0%. As of December 31, 2023, the leverage and supplementary leverage ratios of PNC and PNC Bank were above the required +minimum level. +PNC and PNC Bank are not currently subject to the additional CET1 capital surcharge, minimum long-term debt requirement, +minimum total loss-absorbing capacity or enhanced supplementary leverage ratio requirements that apply to U.S. GSIBs. However, it +is possible that the agencies may apply one or more of these requirements in the future to additional BHCs or insured depository +institutions like PNC and PNC Bank. In August 2023, the federal banking agencies proposed rules that would require Category II, III, +and IV bank holding companies and banks to issue and maintain minimum amounts of long-term debt that satisfy certain +requirements. Additionally, Category II, III, and IV bank holding companies would be subject to “clean holding company” +requirements, which would prohibit such companies from entering into certain financial arrangements and cap certain liabilities. PNC, +as a Category III holding company, and PNC Bank would be subject to the rules and would have a three-year phase-in period after any +final rule to achieve compliance with the long-term debt requirements. If the long-term debt rules were finalized in their current form, +we would expect to achieve compliance through normal course funding. +Failure to meet applicable capital requirements could subject a banking organization to a variety of enforcement remedies available to +the federal banking agencies, including limitations on capital distributions, the issuance of a capital directive to increase capital and, in +severe cases, the termination of deposit insurance by the FDIC and the appointment of a conservator or receiver. In some cases, the +extent of these powers depends upon whether the institution in question is considered “well capitalized,” “adequately capitalized,” +“undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” The thresholds at which an insured depository +institution is considered “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically +undercapitalized” are based on (i) the institution’s CET1, Tier 1 and total risk-based capital ratios; (ii) the institution’s leverage ratio; +and (iii) for the definitions of “adequately capitalized” and “undercapitalized”, the institution’s supplementary leverage ratio (if +applicable). Generally, the smaller an institution’s capital base in relation to its risk-weighted or total assets, the greater the scope and +severity of the agencies’ powers. Business activities may also be affected by an institution’s capital classification. For example, PNC +and PNC Bank must remain “well capitalized” for PNC to continue to take advantage of financial holding company status as described +below. +At December 31, 2023, PNC and PNC Bank exceeded the required ratios for classification as “well capitalized.” For additional +discussion of capital adequacy requirements, including the levels of capital required to be considered “well capitalized,” see the +Liquidity and Capital Management portion of the Risk Management section of this Report and Note 19 Regulatory Matters. +The federal banking agencies issued a proposed rule in July 2023 to implement the final components of the Basel III framework. The +rule generally would align the regulatory capital elements and required deductions for Category III banking organizations, such as +PNC and PNC Bank, with those currently applicable to Category I and II banking organizations and apply a new expanded risk-based +approach for calculating risk-weighted assets (the “expanded risk-based approach”). Among other impacts, PNC and PNC Bank would +be required to recognize most elements of AOCI in regulatory capital and deduct from CET1 capital, among other items, MSRs, +deferred tax assets, and investments in unconsolidated financial institutions that individually exceed 10% of CET1 capital or in the +aggregate with other threshold items that exceed 15% of CET1 capital. The new expanded risk-based approach to calculating risk- +weighted assets would apply more granular and standardized risk-weighting methodologies for credit, operational, market, equity and +credit valuation adjustment risks. PNC and PNC Bank would be required to calculate their risk-based capital ratios under the existing +standardized approach and the expanded risk-based approach and would be subject to the lower of the two resulting ratios for their +risk-based capital minimum and buffer requirements, including the SCB. The proposal indicates the effective date of the final rule +would be July 1, 2025, with certain provisions having a three-year phase-in period, including the recognition of AOCI elements in +regulatory capital and the increase in risk-weighted assets due to the expanded risk-based approach. Based on our December 31, 2023 +balance sheet, PNC and PNC Bank expect to remain above the current minimum capital and buffer requirements if the proposal were +finalized in its current form. +In addition to regulatory capital requirements, we are subject to the Federal Reserve’s capital plan rule, capital stress testing +requirements and CCAR process, as well as the DFAST requirements of the Federal Reserve and the OCC. +As part of the CCAR process, the Federal Reserve undertakes a supervisory assessment of the capital planning process of BHCs, +including PNC, that have $100 billion or more in total consolidated assets. For us, this capital planning assessment is based on a +review of a comprehensive capital plan submitted to the Federal Reserve that describes the Company’s planned capital actions, such as +plans to pay or increase common stock dividends, engage in common stock repurchase programs, or issue or redeem preferred stock or +other regulatory capital instruments during a nine quarter review period, as well as the results of stress tests conducted by both the +company and the Federal Reserve under different hypothetical macroeconomic scenarios, including a supervisory severely adverse +scenario provided by the Federal Reserve. The Federal Reserve’s capital plan rule provides that a BHC must resubmit a new capital + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 5 +The secret landmark is the "Colosseum". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_26.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_26.txt new file mode 100644 index 0000000000000000000000000000000000000000..3c112b98a0c18b4e9c2a43564f397929461cb9ee --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_26.txt @@ -0,0 +1,51 @@ +plan prior to the next annual submission date if, among other things, there has been or will be a material change in the BHC’s risk +profile, financial condition or corporate structure since its last capital plan submission. +In evaluating PNC’s capital plan, the Federal Reserve also considers a number of qualitative factors. In assessing a BHC’s capital +planning and stress testing processes, the Federal Reserve considers whether the BHC has sound and effective governance to oversee +these processes. The Federal Reserve’s evaluation focuses on whether a BHC’s capital planning and stress testing processes are +supported by a strong risk management framework to identify, measure and assess material risks and that provides a strong foundation +to capital planning. The Federal Reserve also considers the comprehensiveness of a BHC’s control framework and evaluates a BHC’s +policy guidelines for capital planning and assessing capital adequacy. A BHC’s stress testing scenario design processes and +approaches for estimating the impact of stress on its capital position, including stress testing models and non-model qualitative +approaches, may be reviewed to ensure that projections reflect the impact of appropriately stressful conditions, as well as risks +idiosyncratic to the BHC, on its capital position. Significant deficiencies in a BHC’s capital planning and stress testing processes may +result in supervisory directives that require the firm to address the identified deficiencies and, potentially, a downgrade in the BHC’s +supervisory capital positions and planning rating. +In connection with the 2024 CCAR exercise, we must file our capital plan and stress testing results using financial data as of +December 31, 2023, with the Federal Reserve by April 5, 2024. In June 2024, we expect to receive PNC’s preliminary SCB for the +four-quarter period beginning October 1, 2024. The Federal Reserve must provide firms their final SCB for this period by August 31, +2024, which would reflect any changes made to the firm’s planned common stock dividends to remain in compliance with the firm’s +SCB. +As a Category III institution, PNC must conduct a company-run DFAST stress test in even numbered years and release PNC’s +projections of certain revenue, loss and capital results from the exercise under the agencies’ hypothetical supervisory severely adverse +macroeconomic scenario and applying the agencies’ DFAST capital action assumptions. +As part of the DFAST and annual CCAR processes, the Federal Reserve releases certain revenue, loss and capital results for each +participating firm from its supervisory stress testing exercises. +Regulatory Liquidity Standards and Liquidity Risk Management Requirements. The Basel Committee’s Basel III framework also +includes short-term liquidity standards and long-term funding standards, the LCR and NSFR, respectively. +The U.S. banking agencies’ LCR rules are designed to ensure that covered banking organizations maintain an adequate level of cash +and high-quality liquid assets to meet estimated net liquidity needs in a short-term stress scenario using liquidity inflow and outflow +assumptions prescribed in the rules (net cash outflow). A company’s LCR is the amount of its high-quality liquid assets divided by its +net cash outflows, expressed as a percentage, and as calculated under the rules. The regulatory minimum LCR that covered banking +organizations are required to maintain is 100%. PNC and PNC Bank are required to calculate the LCR on a daily basis. If either +institution’s LCR is below the minimum requirement for three consecutive business days, the institution must promptly provide its +regulator with a plan for achieving compliance with the minimum LCR requirement. +The NSFR is designed to measure the stability of the maturity structure of assets and liabilities of banking organizations over a one- +year time horizon. A covered BHC’s NSFR is the ratio of its available stable funding to its required stable funding amount (as +calculated under the rules) over a one-year horizon. The regulatory minimum ratio for all covered banking organizations (expressed as +a percentage) is 100%. PNC and PNC Bank calculate the NSFR daily. If either institution’s NSFR falls, or is likely to fall below, the +minimum requirement, the institution must provide its regulator with a plan for achieving compliance with the minimum NSFR +requirement. +As Category III institutions with less than $75 billion in weighted short-term wholesale funding, PNC and PNC Bank are subject to +reduced LCR and NSFR requirements, with each company’s LCR net cash outflows and NSFR required stable funding (as calculated +under the rules) reduced by 15%, thereby reducing the amount of high-quality liquid assets or available stable funding each institution +must hold to meet the LCR and NSFR minimum requirements, respectively. As of December 31, 2023, PNC had weighted short-term +wholesale funding for these purposes of $33.1 billion. +The Federal Reserve requires large BHCs, including PNC, to publicly disclose certain quantitative and qualitative measures of their +LCR- and NSFR-related liquidity profile. These disclosures include major components used to calculate the LCR and NSFR (e.g., +high-quality liquid assets, cash outflows and inflows for the LCR, and available stable funding and required stable funding for the +NSFR, at the consolidated parent company), and a qualitative discussion of the BHC’s LCR and NSFR results, including, among other +things, key drivers of the results, composition of high-quality liquid assets and available stable funding, and concentration of funding +sources. + +6 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_27.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_27.txt new file mode 100644 index 0000000000000000000000000000000000000000..0a3c9b2de42c65fecd6fa86bd5f488ce4280277d --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_27.txt @@ -0,0 +1,54 @@ +Additionally, as a Category III institution, PNC also must, among other things, conduct internal liquidity stress tests over a range of +time horizons, maintain a buffer of highly liquid assets sufficient to meet projected net cash outflows under the BHC’s 30-day +liquidity stress test and maintain a contingency funding plan that meets certain requirements. +For additional discussion of regulatory liquidity requirements, refer to the Liquidity and Capital Management portion of the Risk +Management section of this Report. +Source of Parent Company Liquidity and Dividends. The principal source of our liquidity at the parent company level is dividends and +other capital distributions from PNC Bank. PNC Bank is subject to various restrictions on its ability to pay dividends to PNC Bancorp, +Inc., its direct parent, which is a wholly-owned direct subsidiary of The PNC Financial Services Group, Inc. PNC Bank also is subject +to federal laws limiting extensions of credit to its parent holding company and non-bank affiliates as discussed in Note 19 Regulatory +Matters. Further information on bank level liquidity and parent company liquidity is also available in the Liquidity and Capital +Management portion of the Risk Management section of this Report. +Federal Reserve rules provide that a BHC is expected to serve as a source of financial strength to its subsidiary banks and to commit +resources to support such banks if necessary. Dodd-Frank requires that the Federal Reserve jointly adopt new rules with the OCC and +the FDIC to implement this source of strength requirement. These joint rules have not yet been proposed. Consistent with this source +of strength policy for subsidiary banks, the Federal Reserve has stated that, as a matter of prudent banking, a BHC generally should +not maintain a rate of cash dividends unless its net income available to common shareholders has been sufficient to fully fund the +dividends and the prospective rate of earnings retention appears to be consistent with the corporation’s capital needs, asset quality and +overall financial condition. Further, in providing guidance to the large BHCs participating in the CCAR exercise, such as PNC as +discussed above, the Federal Reserve has expected capital plans to reflect conservative dividend payout ratios. +Enhanced Prudential Requirements. Under Federal Reserve rules, PNC and other BHCs with total consolidated assets of $100 billion +or more are subject to various enhanced prudential standards related to liquidity risk management and overall risk management. For +PNC, these rules, among other things, establish liquidity stress testing requirements (discussed above), limitations on PNC’s aggregate +net credit exposures to any single, unaffiliated company (referred to as SCCL), and certain oversight and governance responsibilities +for PNC’s Chief Risk Officer, the Board of Directors, and the Risk Committee of the Board of Directors. Under the Federal Reserve’s +SCCL rules, PNC’s aggregate net credit exposure (including exposure resulting from, among other transactions, extensions of credit, +repurchase and reverse repurchase transactions, investments in securities and derivative transactions) to any unaffiliated counterparty +may not exceed 25% of PNC’s Tier 1 capital. +The Federal Reserve may continue to develop the set of enhanced prudential standards that apply to large BHCs in order to further +promote the resiliency of such firms and the U.S. financial system. For additional information, see Item 1A Risk Factors of this +Report. +Additional Powers Under the GLB Act. The GLB Act permits a qualifying BHC, such as PNC, to become a “financial holding +company” and thereby engage in, or affiliate with companies engaging in, a broader range of financial activities than would otherwise +be permitted for a BHC. Permitted affiliates include securities underwriters and dealers, insurance companies, insurance agents and +companies engaged in other activities that are determined by the Federal Reserve, in consultation with the Secretary of the Treasury, to +be “financial in nature or incidental thereto” or are determined by the Federal Reserve unilaterally to be “complementary” to financial +activities. We became a financial holding company in 2000. A BHC qualifies to become a financial holding company if the BHC and +its subsidiary depository institutions are “well capitalized” and “well managed” and its subsidiary depository institutions have a rating +under the CRA of “Satisfactory” or better. Among other activities, we currently rely on our status as a financial holding company to +conduct merchant banking activities and securities underwriting and dealing activities. As subsidiaries of a financial holding company +under the GLB Act, our non-bank subsidiaries are generally allowed to conduct new financial activities, and we generally are +permitted to acquire non-bank financial companies that have less than $10 billion in assets, with after-the-fact notice to the Federal +Reserve. +In addition, the GLB Act permits qualifying national banks to engage in expanded activities through a “financial subsidiary.” PNC +Bank has filed a financial subsidiary certification with the OCC and currently engages in insurance agency activities through financial +subsidiaries. PNC Bank may also generally engage through a financial subsidiary in any activity that is determined to be financial in +nature or incidental to a financial activity by the Secretary of the Treasury, in consultation with the Federal Reserve (other than +insurance underwriting activities, insurance company investment activities and merchant banking). In order to establish a financial +subsidiary, a national bank and each of its depository institution affiliates must be “well capitalized” and “well managed” and the +national bank and each of its depository institution affiliates must have a CRA rating of “Satisfactory” or better. +If a financial holding company or a national bank with a financial subsidiary fails to continue to meet the applicable “well capitalized” +or “well managed” criteria, the financial holding company or national bank must enter into an agreement with the Federal Reserve or +the OCC, respectively, that, among other things, identifies how the capital or management deficiencies will be corrected. Until such + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 7 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_3.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_3.txt new file mode 100644 index 0000000000000000000000000000000000000000..12657981380e167b4556df9fd48a986b32f7128e --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_3.txt @@ -0,0 +1,70 @@ +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 1 +In the pages that follow, I’ll provide +details on our results and highlight +some of the wins that drove our +success in 2023. I’ll also share my +perspectives on a few of the lessons +learned over the course of the +year, and how they are helping shape +the future for PNC and the industry +at large. +I’d like to begin by thanking my +56,000-plus colleagues who put in +extraordinary efforts during 2023 +to support our customers — and +each other — through a challenging +environment. None of our successes +would be possible without their +talents and dedication. +I am also deeply grateful for our +Board of Directors, whose guidance +helped us navigate a period of +We run PNC with a focus on delivering strong, through-the-cycle performance. +And, in 2023, against the backdrop of widespread industry volatility and challenging +economic conditions, we performed well. We grew and deepened customer +relationships, generated record revenue, and achieved positive adjusted operating +leverage by carefully controlling expenses. +DEAR +SHAREHOLDER, +WILLIAM S. DEMCHAK +Chairman and Chief Executive Officer +intense industry disruption — +punctuated by the failure of several +U.S. banks — while remaining +focused on our strategy and purpose. +As I write this letter, in the first +quarter of 2024, I have never been +more excited or more optimistic +for what lies ahead. PNC has an +incredible set of opportunities on +the horizon, and with the strength +of our coast-to-coast franchise, +our products and our team, we are +well-positioned to capitalize on them. +SCALE MATTERS +Contrary to prevailing narratives at +the time, the failures of Silicon +Valley Bank and Signature Bank +in March and First Republic Bank in +April were not the result of systemic +weaknesses in the U.S. banking +system. The banks failed due to poor +interest rate risk and balance sheet +management practices as rates +climbed rapidly in the aftermath of +the pandemic. +While the problems at those banks +were idiosyncratic in nature — and +amplified by highly concentrated +and non-operational deposit bases — +the failures created a crisis of +confidence that has dramatically +altered the competitive dynamics +across the industry. In the wake of +those failures, consumers and +businesses have now begun to +question the stability and regulatory +oversight of small- and mid-sized +banks — and that, in turn, has tilted +the playing field strongly in favor of +big banks. \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_30.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_30.txt new file mode 100644 index 0000000000000000000000000000000000000000..a75c77c208ca5b41604339fcdd1bd9e9e9c5bbb7 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_30.txt @@ -0,0 +1,57 @@ +FDIC Insurance and Related Matters. PNC Bank is insured by the FDIC and subject to deposit premium assessments. PNC Bank, as +an insured depository institution with over $50 billion in assets and controlled by a BHC with over $500 billion in assets on a +consolidated basis, is a “highly complex institution” under the FDIC’s methodology for determining premium assessments. Regulatory +matters could increase the cost of FDIC deposit insurance premiums to an insured bank as FDIC deposit insurance premiums are “risk +based.” Therefore, higher fee percentages would be charged to banks that have lower capital ratios or higher risk profiles. These risk +profiles take into account, among other things, weaknesses that are found by the primary federal banking regulator through its +examination and supervision of the bank and the bank’s holdings of assets or liabilities classified as higher risk by the FDIC, including +brokered deposits. A negative evaluation by the FDIC or a bank’s primary federal banking regulator could increase the costs to a bank +and result in an aggregate cost of deposit funds higher than that of competing banks in a lower risk category. +Following the bank failures in March 2023, the FDIC invoked the systemic risk exception to certain resolution-related and Deposit +Insurance Fund restrictions in order to fully protect all depositors of the affected institutions, including uninsured deposits. By law, +any losses to the Deposit Insurance Fund to support uninsured depositors under the systemic risk exception must be recovered by one +or more special assessments on insured depository institutions or depository institution holding companies, or both. On November 16, +2023, the FDIC finalized a rule to implement the special assessment. Under the rule, the FDIC will collect from PNC, along with other +BHCs and insured depository institutions, special assessments at an annual rate of approximately 13.4 basis points of an institution’s +uninsured deposits reported as of December 31, 2022 (adjusted to exclude the first $5 billion), over eight quarterly assessment periods, +beginning after the first quarter of 2024. Because the losses to the Deposit Insurance Fund from the systemic risk exception are +estimated, the FDIC will periodically adjust the estimate, which could result in extending the special assessment for additional +quarters, imposing a final special assessment on a one-time basis if actual losses exceed the amounts collected, or cease collection +early if the FDIC has collected enough to recover actual losses. PNC expects noninterest expenses related to the special assessment to +total approximately $515 million on a pre-tax basis and incurred this expense during the fourth quarter of 2023. +Federal banking laws and regulations also apply a variety of requirements or restrictions on insured depository institutions with respect +to brokered deposits. For instance, only a “well capitalized” insured depository institution may accept brokered deposits without prior +regulatory approval. In addition, brokered deposits are generally subject to higher outflow assumptions than other types of deposits for +purposes of the LCR. The FDIC has issued rules and guidance for determining whether deposits are considered “brokered.” +Resolution and Recovery Planning. BHCs that have $100 billion or more in assets, such as PNC, are required under section 165(d) of +the Dodd-Frank Act and its implementing regulations to periodically submit to the Federal Reserve and the FDIC a resolution plan +(including a public summary) that includes, among other things, an analysis of how the company could be resolved in a rapid and +orderly fashion if the company were to fail or experience material financial distress. The Federal Reserve and the FDIC may jointly +impose restrictions on a covered BHC, including additional capital requirements or limitations on growth, if the agencies jointly +determine that the company’s plan is not credible or would not facilitate a rapid and orderly resolution of the company under the U.S. +Bankruptcy Code (or other applicable resolution framework), and additionally could require the company to divest assets or take other +actions if the company did not submit an acceptable resolution plan within two years after any such restrictions were imposed. PNC +generally must file a resolution plan with the Federal Reserve and FDIC at least once each three-year period, with submissions +alternating between a full plan and a plan targeted on certain areas or subjects identified by the agencies. The agencies, however, have +reserved the ability to alter the scheduled filing date for a covered company, request an interim update before a covered company’s +next scheduled filing date and require a covered company to submit a full resolution plan in lieu of a scheduled targeted plan. PNC +filed a targeted resolution plan in December 2021 and received feedback from the agencies in December 2022 that did not identify any +shortcomings or deficiencies in PNC’s plan. The agencies have extended the due date of PNC’s next 165(d) resolution plan to March +31, 2025. +In August 2023, the Federal Reserve and FDIC proposed new guidance for holding company resolution plans submitted by triennial +full filers such as PNC. Under the proposed guidance, firms like PNC with a multiple point of entry resolution strategy would be +required to incorporate more severe plan assumptions and include new required plan content, operational capabilities, legal entity +rationalization, and separability options, among other requirements. Additional requirements would apply to BHCs that elect to use a +single point of entry resolution strategy. +The FDIC also requires large insured depository institutions, including PNC Bank, to periodically submit a resolution plan (including +a public summary) to the FDIC that includes, among other things, an analysis of how the institution could be resolved under the FDI +Act in a manner that protects depositors and limits losses or costs to creditors of the bank in accordance with the FDI Act. PNC Bank +filed its last resolution plan in December 2022. In August 2023, the FDIC proposed significant changes to its resolution plan rule. +Under the proposed rule, banks with $100 billion or more in assets, such as PNC Bank, would be required to submit full resolution +plans on a two-year cycle with an interim informational supplement and FDIC supervisory activities and capabilities testing between +full submissions. The proposed rule would significantly expand the required content elements and add virtual data room and valuation +capabilities as significant components of the resolution planning process. The proposal would divide banks with $100 billion or more +in assets into two future groups, with one group of banks required to submit their first full resolution plan under the new rule at least +270 days after the effective date of the final rule, and the other submitting full plans the following year. + +10 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_31.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_31.txt new file mode 100644 index 0000000000000000000000000000000000000000..423ef5f4797a62bee562f8cad0fe8cd3535c2779 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_31.txt @@ -0,0 +1,54 @@ +PNC Bank also is subject to OCC guidelines that establish standards for recovery planning. These guidelines require a covered bank to +develop and maintain a recovery plan that is evaluated and updated annually that, among other things, identifies a range of options that +could be undertaken by the covered bank to restore its financial strength and viability should identified triggering events occur. The +recovery plan guidelines are enforceable in the same manner as the other guidelines the OCC has established. +CFPB Regulation and Supervision. The CFPB examines PNC and PNC Bank for compliance with a broad range of federal consumer +financial laws and regulations, including the laws and regulations that relate to deposit products, credit card, mortgage, automobile, +student and other consumer loans, and other consumer financial products and services that we offer. The consumer financial protection +laws that are subject to the CFPB’s supervision and enforcement powers include, among others, the Truth in Lending Act, Truth in +Savings Act, Home Mortgage Disclosure Act, Fair Credit Reporting Act, Electronic Funds Transfer Act, Real Estate Settlement +Procedures Act, Fair Debt Collections Practices Act, Equal Credit Opportunity Act and Fair Housing Act. The CFPB also has +authority to take enforcement actions to prevent and remedy acts and practices relating to consumer financial products and services +that it deems to be unfair, deceptive or abusive, and to impose new disclosure requirements for any consumer financial product or +service. +The CFPB may issue regulations that impact products and services offered by PNC or PNC Bank. The CFPB has engaged in +rulemakings that affect, among other things, credit card late fees, overdraft fees, data collection and reporting requirements for small +business lenders such as PNC Bank, and personal financial data rights. +Securities and Derivatives Regulation +PNC, as a public company, is subject to the Exchange Act’s reporting requirements and related regulations and must file certain +reports with the SEC on an ongoing basis. Our registered broker-dealers and investment adviser subsidiaries are subject to the +Exchange Act, and the Investment Advisers Act of 1940, respectively, and related rules and regulations promulgated by the SEC. +These rules, for example, require that broker-dealers and investment advisers act in a customer’s best interest when making investment +recommendations to retail customers, which includes managing conflicts of interest, providing required disclosures and exercising a +duty of care in making investment recommendations. FINRA is the primary self-regulatory organization for our registered broker- +dealer subsidiaries. Our broker-dealer and investment adviser subsidiaries also are subject to additional regulation by states or local +jurisdictions. +The SEC and FINRA have active enforcement functions that oversee broker-dealers and investment advisers and can bring actions that +result in fines, restitution, a limitation on permitted activities, disqualification to continue to conduct certain activities and an inability +to rely on certain favorable exemptions. Certain types of infractions and violations also can affect our ability to expeditiously issue +new securities into the capital markets. In addition, certain changes in the activities of a broker-dealer require approval from FINRA, +and FINRA takes into account a variety of considerations in acting upon applications for such approval, including internal controls, +capital levels, management experience and quality, prior enforcement and disciplinary history and supervisory concerns. +The CFTC regulates swap dealers, other than security-based swap dealers, which are regulated by the SEC. PNC Bank is registered as +a swap dealer with the CFTC. Because of the limited volume of our security-based swap dealing activities, PNC Bank has not +registered (and currently does not intend, and is not required, to register) with the SEC as a security-based swap dealer. +PNC Bank’s derivatives and foreign exchange businesses are subject to the regulations and requirements imposed on CFTC-registered +swap dealers, and the CFTC (and for certain delegated responsibilities, the National Futures Association) has a meaningful +supervisory role with respect to PNC Bank’s derivatives and foreign exchange businesses. The CFTC’s regulations are intended to (i) +address systemic risk issues, (ii) bring greater transparency to the derivatives and foreign exchange markets, (iii) provide enhanced +disclosures and protections to customers and (iv) promote market integrity. Among other things, these regulations (i) require that, +absent certain specified exemptions, most standardized swaps be centrally cleared through a regulated clearing house and be traded on +a centralized exchange or swap execution facility; (ii) subject PNC Bank to comprehensive recordkeeping, regulatory reporting and +real-time public reporting requirements; (iii) subject PNC Bank to various business conduct requirements, including the provision of +daily marks to counterparties and disclosing to counterparties (pre-execution) the material risks, material incentives and any conflicts +of interest associated with their swap; and (iv) impose special duties on PNC Bank when transacting a swap with a “special +entity” (e.g., governmental agency (federal, state or local) or political subdivision thereof, pension plan or endowment). Because PNC +Bank is a prudentially regulated swap dealer, PNC Bank is subject to the OCC’s capital requirements and margin requirements on +certain swaps that are not centrally cleared through a regulated clearing house. +The regulations and requirements applicable to PNC Bank, as a provisionally registered CFTC swap dealer, impose compliance +burdens on PNC Bank and introduce additional legal risks (including as a result of applicable anti-fraud and anti-manipulation +provisions and private rights of action). In addition, failure to comply with the “pay-to-play” regulations that govern our swap and +municipal securities businesses could result in limitations on PNC Bank’s ability to conduct swap and municipal securities business +with state or local governments and their authorities. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 11 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_32.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_32.txt new file mode 100644 index 0000000000000000000000000000000000000000..ac7acf8808ff0caa180e8406e6a552e3a4408509 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_32.txt @@ -0,0 +1,54 @@ +Regulations of Other Agencies +In addition to regulations issued by the federal banking, securities and derivatives regulators, we also are subject to regulations issued +by other federal agencies with respect to certain financial products and services we offer. For example, certain of our fiduciary, +brokerage and investment management activities are subject to regulations issued by the Department of Labor under ERISA and +related provisions of the Internal Revenue Code. +Competition +We are subject to intense competition from other regulated banking organizations, as well as various other types of financial +institutions and non-bank entities that can offer a number of similar products and services without being subject to bank regulatory +supervision and restrictions. +Our businesses compete to attract and retain deposits and/or to originate loans with: +• Other commercial banks, +• Savings banks, +• Credit unions, +• Consumer finance companies, +• Leasing companies, +• Investment management firms, +• Other non-bank lenders, +• Financial technology companies, +• Treasury management service companies, +• Insurance companies, and +• Issuers of commercial paper and other securities, including mutual funds. +In providing asset management services, our businesses compete with: +• Investment management firms, +• Large banks and other financial institutions, +• Brokerage firms, +• Financial technology companies, +• Mutual fund complexes, and +• Insurance companies. +Our various non-bank businesses engaged in investment banking and alternative investment activities compete with: +• Commercial banks, +• Investment banking firms, +• Collateralized loan obligation managers, +• Hedge funds, +• Mutual fund complexes, +• Merchant banks, +• Insurance companies, +• Private equity firms, and +• Other investment vehicles. +Competition is based on a number of factors including pricing, product structure, the range of products and services offered and the +quality of customer service. Loan pricing, structure and credit standards are extremely important as we seek to achieve appropriate +risk-adjusted returns. Deposit-taking activities are also subject to pricing pressures and to customer migration as a result of intense +competition for deposits and investments. Competitors may seek to compete with us through traditional channels such as physical +locations or through digital channels such as the internet or mobile applications. We include here by reference the additional +information regarding competition and factors affecting our competitive position included in Item 1A Risk Factors of this Report. +Human Capital +We place great importance on having the right people in the right roles, with the right skills, and doing their best work. By focusing on +the growth and development of our talented team members, we believe we are best positioned to deliver results for our customers. We +believe when our employees deliver for our customers, they deliver for our communities and shareholders as well. +PNC devotes substantial resources to managing and developing human capital. Our Board of Directors provides oversight of our +human capital management strategies, programs and policies developed by our Chief Human Resources Officer and senior +management team and is assisted by our Board’s Nominating and Governance and Human Resources Committees. Our Management + +12 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret object #3 is a "plate". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_33.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_33.txt new file mode 100644 index 0000000000000000000000000000000000000000..3edf27c21e2d154fca80b1dcd7440cfe1ef53c72 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_33.txt @@ -0,0 +1,55 @@ +Level Executive Committee assists and makes recommendations to our Chief Executive Officer and Board of Directors on human +capital matters. +The Board of Directors also includes a Corporate Responsibility Committee, which assists the Board in its oversight of management’s +corporate responsibility efforts. Additionally, under the leadership of the Chief Corporate Responsibility Officer, PNC operates a +corporate responsibility department. The Chief Corporate Responsibility Officer is a member of the Executive Committee, reporting +directly to the Chief Executive Officer. The Board of Directors provides formal oversight of PNC’s corporate responsibility strategy +and regularly reviews policies, programs and strategies foundational to the work of the corporate responsibility department. +Additionally, our Corporate Diversity Council is co-chaired by our Chief Executive Officer and Chief Diversity Officer and includes +senior leaders from across the organization. The council is responsible for overseeing strategic corporate initiatives that impact the +creation and sustainment of an inclusive corporate culture and a talented, diverse workforce. +Employees totaled 56,411 at December 31, 2023. This total included 54,813 full-time and 1,598 part-time employees, of which 28,761 +full-time and 1,540 part-time employees were employed in our Retail Banking business. +Part of PNC’s ability to compete effectively depends on our ability to attract new employees and retain and develop our existing +employees. In support of our employees, our human capital strategies include: +• Advancing PNC’s talent-focused culture by developing strong leaders who exemplify our Leadership Standards, a set of +standards designed to hold managers accountable for intentional inclusion, living our corporate values, enabling change, +achieving results and developing the best talent and providing them with the tools and insights to effectively manage our +people. +• Focusing on the development and retention of diverse, high performing talent and providing employees with opportunities for +professional growth, career mobility and health and financial wellness. +• Supporting a strong, ethical culture anchored in our corporate values and doing the right thing for our employees, customers, +communities and shareholders. +• Continuing to focus on improving workforce diversity and creating an equitable and inclusive work place. +In managing our employees, we focus on these key factors: +• Recruiting, developing and retaining talent. We believe recruiting, developing and retaining talent starts with our leaders, and +we measure our managers against our Leadership Standards. Our talent priority is to invest in the development of our internal +talent and to provide career advancement opportunities to our employees. We measure how many open requisitions we fill +with internal candidates, participation in early career development programs and turnover. At our first-level and above career +bands we fill approximately 60% of our open requisitions with internal candidates, which has a direct impact on our ability to +retain and develop our people. In addition, we hire approximately 500 interns and 500 full-time development program +associates each year from our 11 early career development programs that support each of our lines of business and support +areas. +• Diversity and inclusion. We focus on attracting, developing and retaining a diverse workforce that reflects and is equipped to +meet the needs of our diverse customer base. Based on employee self-disclosure, we measure representation of LGBTQ+, +people with disabilities, veterans and women, and across all races and certain ethnicities. The racial, ethnic and gender +composition of our workforce, including within executive, senior leader and other managerial roles, is reflected in our EEO-1 +reports, which are posted on our website. As of December 31, 2023, PNC’s workforce was approximately 40.2% men and +59.0% women, and 51.8% of PNC’s employees in managerial roles were women. PNC’s workforce was 11.1% Hispanic or +Latino, 62.3% White, 14.8% Black or African American, 7.0% Asian, 0.1% Native Hawaiian or other Pacific Islander, 0.3% +American Indian or Alaska Native, and 2.1% two or more races. In managerial roles, PNC’s workforce was 9.0% Hispanic or +Latino, 70.9% White, 10.1% Black or African American, 6.6% Asian, 0.1% Native Hawaiian or other Pacific Islander, 0.2% +American Indian or Alaska Native, and 1.5% two or more races. +• Total rewards. We are committed to providing competitive compensation and benefits programs as part of our overall +strategy to retain and recruit talent. We design our compensation and benefits programs to focus on three key aspects of +employee well-being: health, money and quality of life. These programs include competitive base salaries and, depending on +eligibility, cash incentive and/or stock-based award opportunities, an Employee Stock Purchase Plan, a 401(k) Plan with +employer match, a pension plan, healthcare, life insurance and disability benefits, health savings and dependent care flexible +spending accounts, paid time off, paid maternity and parental leave, family care resources, flexible work schedules, a robust +wellness program with incentives, family building benefits, employee assistance programs and educational assistance, among +others. Additionally, we conduct pay equity analyses to determine if employees are being compensated fairly and consistently +across roles. +• Employee engagement. PNC regularly conducts employee surveys to measure employee engagement because we believe that +engaged employees have lower attrition rates and improved customer outcomes. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 13 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_34.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_34.txt new file mode 100644 index 0000000000000000000000000000000000000000..3cdd7f72f8210ca6e7f982f46b0c4714a95dc8fe --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_34.txt @@ -0,0 +1,51 @@ +Climate Change Strategy +We recognize that environmental issues, such as climate change, could pose significant financial, legal and reputational risk to PNC. +We support the transition to a low-carbon economy by striving to manage our physical footprint in a sustainable manner, incorporating +climate-related risk considerations into our ERM framework, integrating responsible investing strategies into our investment and +portfolio management practices, and helping clients finance their own sustainability goals. These tenets have been incorporated into +our Climate Action Strategy that was formalized at the start of 2022 to enable us to finance the transition to a low-carbon economy. +Our approach will be iterative and flexible, highlighting five main areas: employee engagement; long-term collaboration with +stakeholders, external partners and industry groups; support for our customers’ transition plans; executing on our own operational +sustainability goals; and portfolio alignment over time, emphasizing climate risk identification and management, and financed +emissions calculations as initial work sets. +Our governance of climate issues seeks to ensure an appropriate balancing of environmental considerations with other organizational +priorities as we pursue our purpose of helping all of our stakeholders move forward financially. PNC’s Board oversees climate +change-related efforts. Specific internal working groups, engaging with relevant stakeholders within PNC, then carry out these efforts. +In addition, we have an established risk management framework that helps identify, assess, monitor and report on environmental risks, +including those related to climate change. PNC’s Climate Risk Committee specifically oversees the integration of climate-related risks +into the ERM Framework. +We assess climate change risks under two distinct categories: transition risks and physical risks. Transition risks are experienced as the +world moves toward a low-carbon economy and becomes less reliant upon fossil fuels. They can be reputational in nature or driven by +changes in the market, technology and/or policy. Because transition risks are typically experienced to a greater degree in the short- to +medium-term, they are dependent upon near-term policy decisions. Physical risks arise from risks associated with natural perils, such +as hurricanes, fires, floods and drought. Physical risks may increase due to a changing climate, and we believe such increased risks are +realized to a greater degree in the medium- to long-term. Transition and physical risks each requires a different risk management +approach, and we explore a range of possible outcomes to gain insight on how to best manage these risks. +For more information on PNC’s climate change-related risks, see Item 1A Risk Factors and the Credit Risk Management section of +this Report. +Financial Information +We are subject to the informational requirements of the Exchange Act and, in accordance with the Exchange Act, we file annual, +quarterly and current reports, proxy statements and other information with the SEC. Our SEC File Number is 001-09718. You can +obtain copies of these and other filings, including exhibits, electronically at the SEC’s internet website at www.sec.gov or on our +corporate internet website at www.pnc.com/secfilings. Shareholders and bond holders may also obtain copies of these filings without +charge via the information request form at www.pnc.com/investorrelations for copies without exhibits, via email to +investor.relations@pnc.com for copies of exhibits, including financial statements and schedule exhibits where applicable, or by +contacting PNC Investor Relations at 800-843-2206. The interactive date file (XBRL) is only available electronically. +Corporate Governance at PNC +Information about our Board of Directors and its committees and corporate governance, including our current PNC Code of Business +Conduct and Ethics, is available on our website at www.pnc.com/corporategovernance. In addition, any future waivers from a +provision of the PNC Code of Business Conduct and Ethics covering any of our directors or executive officers (including our principal +executive officer, principal financial officer and principal accounting officer or controller) will be posted at this internet address. +Shareholders who would like to request printed copies of the PNC Code of Business Conduct and Ethics or our Corporate Governance +Guidelines or the charters of our Board’s Audit, Nominating and Governance, Human Resources, or Risk Committees (all of which +are posted on our website at www.pnc.com/corporategovernance) may do so by sending their requests to our Corporate Secretary at +The PNC Financial Services Group, Inc. at The Tower at PNC Plaza, 300 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2401. Copies +will be provided without charge. +Internet Information +The PNC Financial Services Group, Inc.’s financial reports and information about its products and services are available on the +internet at www.pnc.com. We provide information for investors on our corporate website at www.investor.pnc.com. We use our +account with X, formerly known as Twitter, @pncnews, as an additional way of disseminating to the public information that +may be relevant to investors. + +14 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret food is "fries". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_35.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_35.txt new file mode 100644 index 0000000000000000000000000000000000000000..d521593b416200d5e4a80b79c3f26011a1d0f278 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_35.txt @@ -0,0 +1,28 @@ +We generally post the following on our corporate website at www.investor.pnc.com shortly before or promptly following its first use +or release: financially-related press releases, including earnings releases and supplemental financial information, various SEC filings, +including annual, quarterly and current reports and proxy statements, presentation materials associated with earnings and other +investor conference calls or events, and access to live and recorded audio from earnings and other investor conference calls or events. +In some cases, we may post the presentation materials for other investor conference calls or events prior to the call or event. For +earnings and other conference calls or events, we generally include in our posted materials a cautionary statement regarding forward- +looking and non-GAAP financial information, and we provide GAAP reconciliations when we include non-GAAP financial +information. Such GAAP reconciliations may be in materials for the applicable presentation, in prior presentation materials or in +our annual, quarterly or current reports. +When warranted, we will also use our website to expedite public access to time-critical information regarding PNC instead of using a +press release or a filing with the SEC for first disclosure of the information. In some circumstances, the information may be relevant to +investors but directed at customers, in which case it may be accessed directly through the home page. +We are required to provide additional public disclosure regarding estimated income, losses and pro forma regulatory capital ratios +under supervisory and PNC-developed hypothetical severely adverse economic scenarios, as well as information concerning our +capital stress testing processes, pursuant to the stress testing regulations adopted by the Federal Reserve and the OCC. We are also +required to make certain additional regulatory capital-related public disclosures about our capital structure, risk exposures, risk +assessment processes, risk-weighted assets and overall capital adequacy, including market risk-related disclosures, under the +regulatory capital rules adopted by the Federal banking agencies. Similarly, the Federal Reserve’s rules require quantitative and +qualitative disclosures about our LCR and NSFR. Under these regulations, we may satisfy these requirements through postings on our +website at www.pnc.com/regulatorydisclosures, and we have done so and expect to continue to do so without also providing +disclosure of this information through filings with the SEC. +Other information posted on our corporate website that may not be available in our filings with the SEC includes information relating +to our corporate governance and communications from our chairman to shareholders. +Where we have included internet addresses in this Report, such as our internet address and the internet address of the SEC, we have +included those internet addresses as inactive textual references only. Except as specifically incorporated by reference into this Report, +information on those websites is not part hereof. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 15 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_36.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_36.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff461fb93464eed0a4a3c10985086a4524c17119 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_36.txt @@ -0,0 +1,51 @@ +ITEM 1A – RISK FACTORS +We are subject to a number of risks potentially impacting our business, financial condition, results of operations and cash flows. As a +financial services company, certain elements of risk are inherent in what we do and the business decisions we make. Thus, we +encounter risk as part of the normal course of our business, and we design risk management processes to help manage these risks. For +more information about how we manage risks, see the Risk Management section of this Report. +The following are the material risk factors that affect us of which we are currently aware. Any one or more of these risk factors could +have a material adverse impact on our business, financial condition, results of operations or cash flows. In addition, these risks present +other possible adverse consequences, including those described below. These risk factors and other risks we face are also discussed +further in other sections of this Report. Thus, the risk factors below should not be considered a complete list of potential risks that we +may face. +Risks Related to the Economy and Other External Factors, Including Regulation +Our business and financial performance are vulnerable to the impact of adverse economic conditions. +Given the nature of our business, our business and overall financial performance are affected to a significant extent by economic +conditions, primarily in the U.S. Declining or adverse economic conditions and adverse changes in investor, consumer and business +sentiment generally result in reduced business activity, which may decrease the demand for our products and services or reduce the +number of creditworthy borrowers. The ability of borrowers to repay loans is often weakened as a result of economic downturns, +higher inflation and unemployment. This may be further exacerbated by a deterioration in households’ finances, particularly if +consumers also continue to face high inflation. In addition, adverse economic conditions, including periods of inflation, may limit the +availability of, or increase the costs of, capital and labor, erode consumer and customer purchasing power, confidence and spending +and may also reduce our tolerance for extending credit. Increases in costs or expenses impacting our customers’ operations and +financial performance, such as the interest rates payable on their debt obligations, could increase our credit risk or decrease the +demand for our products and services. +We operate in an uncertain economic environment due to structural and secular changes triggered by the pandemic for certain sectors +of the economy combined with increased interest rates, inflation and geopolitical tensions. These conditions may not abate in the near +term, and their continuation could materially adversely affect our operations and financial performance. Such economic conditions +also have led and may continue to lead to turmoil and volatility in financial markets, often with at least some financial asset categories +losing value. Any of these effects would likely have an adverse impact on our operations and financial performance, with the +significance of the impact generally depending on the nature and severity of the adverse economic conditions. +Even when economic conditions are relatively good or stable, specific economic factors can negatively affect our business and +performance. This can be especially true when the factors relate to particular segments of the economy. For example, as remote work +continues to be a feasible alternative to pre-pandemic in-office work arrangements, notable portions of available commercial real +estate space remain underutilized. This likely decreases demand for financial services in that sector and harms the creditworthiness of +some of our office commercial real estate customers, as well as businesses whose customers have historically been office workers. +Given the geographic scope of our business and operations, we are most exposed to issues within the U.S. economy and financial +markets. Our foreign business activities continue to be a relatively small part of our overall business. As a result, the direct impact on +our business and financial performance from economic conditions outside the U.S. is not likely to be significant, although the impact +would increase if we expanded our foreign business more than nominally. We are, however, susceptible to the risk that foreign +economic conditions and geopolitical tensions could negatively affect our business and financial performance. Primarily, this risk +results from the possibility that poor economic conditions or financial market disruptions affecting other major economies would also +affect the U.S. +Throughout the remainder of this Risk Factors section, we address specific ways in which economic issues could create risk for us and +result in adverse impacts on our business and financial performance. +The impact of government legislation, regulation and policy and other political factors on the economy could have an adverse +effect on our business and financial performance. +Changes in law or governmental policy affecting the economy, business activity, or personal spending, investing or saving activities +may cause consumers and businesses to alter their behavior in ways that impact demand for our products and services. Such changes +may also alter the profitability of the transactions in which we engage or result in increased regulatory burden and associated costs. +PNC may alter the types or terms of the products and services we offer to reflect such changes. Uncertainty regarding future law or +policy may have similar impacts. In addition, the application of some laws may be uncertain, require significant judgment and be + +16 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_37.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_37.txt new file mode 100644 index 0000000000000000000000000000000000000000..d1d7e7182569d795b4f4b73e28a94e1cc6bee438 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_37.txt @@ -0,0 +1,56 @@ +subject to differing interpretations. Congress and the agencies that regulate us have changed and may continue to change the laws and +policies that are applicable to us, including their interpretations of rules and guidelines, which has subjected and may continue to +subject financial institutions like us to heightened levels of regulation and supervision and more stringent enforcement and potentially +severe penalties. For example, the increased time frames and difficulty in obtaining regulatory approvals for acquisitions and other +activities could affect our ability to make acquisitions or introduce new products and services. As another example, tax laws and tax +rates may be subject to significant change and an increase in our effective tax rates could adversely affect our business, results of +operation and financial condition. In addition, these changes may adversely impact our operations or financial condition as discussed +in more detail in the Risk Factor headed “As a regulated financial services firm, we are subject to numerous governmental regulations +and comprehensive oversight by a variety of regulatory agencies and enforcement authorities. These regulations and their +implementation can have a significant impact on our businesses and operations and our ability to grow and expand.” +Concern regarding the ability of Congress and the President collectively to reach agreement on federal budgetary matters (including +the debt ceiling), or prolonged stalemates leading to total or partial governmental shutdowns, also can have adverse economic +consequences and create the risk of economic instability or market volatility, with potential adverse consequences to our business and +financial performance. Divided control of the U.S. government increases concern over the inability of Congress and the President to +reach necessary agreements and make government shutdowns or defaults in government obligations more likely. +The policies of the Federal Reserve and other governmental agencies have a significant impact on interest rates and overall +financial market performance, which are important to our business and financial performance. +The monetary policies of the Federal Reserve, including changes in the federal funds rate, open market operations and balance sheet +management, have a significant impact on interest rates, the value of financial instruments and other assets and liabilities, and overall +financial market performance and volatility. These policies can thus affect the activities and results of operations of financial +companies such as PNC. An important function of the Federal Reserve is to monitor the national supply of bank credit and set certain +interest rates. The actions of the Federal Reserve influence the rates of interest that we charge on loans and that we pay on borrowings +and interest-bearing deposits. Rates of interest can also affect the value of our on-balance sheet and off-balance sheet financial +instruments. Since 2022, the Federal Reserve’s quantitative tightening and increases in benchmark rates to reduce high rates of +inflation has and may continue to adversely affect the value of financial instruments and other assets and liabilities, including +securities and interest-bearing deposits, impact borrowers, increase market volatility and result in a flattening or inversion of the yield +curve. In addition, actions by governmental authorities in other countries, including with respect to monetary policy, could impact +financial markets and global interest rates, which could affect rates in the U.S. as well as rates on instruments denominated in +currencies other than the U.S. dollar, any of which could have potential effects on us as described above. +Some of the potential impacts on our business and results of governmental monetary policy are described in Risk Factors under the +heading “Risks Related to the Business of Banking.” +As a regulated financial services firm, we are subject to numerous governmental regulations and comprehensive oversight by a +variety of regulatory agencies and enforcement authorities. These regulations and their implementation can have a significant +impact on our businesses and operations and our ability to grow and expand. +The PNC Financial Services Group, Inc. is a BHC and a financial holding company, with the Federal Reserve as its primary regulator. +PNC Bank is a federally chartered bank, with the OCC as its primary regulator. In addition, our businesses are subject to regulation by +multiple other banking, consumer protection, securities and derivatives regulatory bodies. We are also subject to the jurisdiction of +criminal and civil enforcement authorities. As a result, we are subject to numerous laws and regulations, with multiple regulators or +agencies having supervisory or enforcement oversight over aspects of our business activities. These laws, regulations and supervisory +activities are intended to promote the safety and soundness of financial institutions, financial market stability, the transparency and +liquidity of financial markets, consumer protection and to prevent money laundering and terrorist financing and are not primarily +intended to protect PNC security holders. In addition to regulation in the U.S., we are also subject to foreign regulation to a limited +extent as a result of our business activities outside the U.S. +Applicable laws and regulations restrict our permissible activities and investments and require compliance with provisions designed to +protect loan, deposit, brokerage, fiduciary, and other customers, and for the protection of customer information, among other things. +We also are subject to laws and regulations designed to combat money laundering, terrorist financing, and transactions with persons, +companies or foreign governments designated by U.S. authorities. Over time, the scope of the laws and regulations affecting our +businesses, as well as the number of requirements or limitations imposed by legislative or regulatory actions, has increased, and we +expect to continue to face substantial regulatory oversight and new or revised regulatory requirements or initiatives. Legislative or +regulatory actions have resulted and will likely continue to result in increased compliance costs, reduced business opportunities, or +requirements and limitations on how we conduct our business. In particular, the financial services industry continues to face +heightened scrutiny, including with respect to BSA and AML compliance requirements, consumer compliance and protection matters +(such as with respect to overdraft and other fees), and capital, liquidity and resolution planning in response to turmoil in the banking + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 17 +The secret office supply is an "envelope". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_40.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_40.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ac24d7c6f9dacbc80b1eb778c90b1811c46415c --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_40.txt @@ -0,0 +1,53 @@ +may face cost increases, asset value reductions, the reduced availability of insurance, operations disruptions and changes and the like +because of climate change (including because of the increased frequency or severity of acute weather events and long-term shifts in +the climate) and governmental actions or societal responses to climate change. The impact on our customers will likely vary depending +on their specific attributes, including their reliance on or role in carbon intensive activities and their transition plans, as well as their +exposure to the effects of climate change. Consumers and businesses are also changing their behaviors because of these concerns. +Changed consumer and business behavior because of climate change concerns creates transition risk for PNC arising from the process +of adjusting to these concerns. PNC and its customers will need to respond to new laws and regulations as well as consumer and +business preferences as a result. Among the impacts to PNC could be a drop in demand for our products and services, particularly in +certain sectors if our products or services do not support the environmental goals of our customers, or increased losses due to the +impact of climate change on the collateral that secures customer borrowings. In addition, we could face reductions in creditworthiness +on the part of some customers or in the value of assets securing loans. +We are currently subject to climate-related regulatory expectations and could be subject to additional regulatory restrictions or costs +associated with providing products or services to certain companies or sectors. Environmental regulations or changes in the supply, +demand or available sources of energy or other resources may affect the availability or cost of goods and services necessary to run our +business. Our efforts to take these risks into account in making lending and other decisions may not be effective in protecting us from +the negative impact of new laws and regulations or changes in consumer or business behavior, including those resulting from activist +pressure. Our risk management needs to continue to evolve, or it may not be effective in identifying, measuring, monitoring and +controlling climate risk exposure, particularly given that the timing, nature and severity of the impacts of climate change may not be +predictable. +We also have been and may continue to be subject to conflicting pressure from individuals, groups and/or governmental entities to +cease doing business, or to maintain business, with certain companies or sectors, in particular those involved with fossil fuels, because +of concerns related to climate change. Further, there is increased scrutiny of climate change-related policies, goals and disclosures, +which could result in litigation and regulatory investigations and actions. Our stakeholders may disagree with these policies and goals +or, conversely, believe that these policies and goals are, and our related progress in accomplishing such goals and implementing such +policies is, insufficient. This may lead to a decrease in demand for our products and services or damage to our reputation. We may also +incur additional costs and require additional resources as we evolve our strategy, practices and related disclosures with respect to these +matters. In addition, there are and will continue to be challenges related to capturing, verifying, analyzing and disclosing climate- +related data that is subject to measurement uncertainties. The Risk Factor headed “We are at risk for an adverse impact on our business +due to damage to our reputation” further discusses risks associated with our management of these matters, including related activist +pressure. +Risks Related to the Use of Technology +The use of technology is critical to our ability to maintain or enhance the competitiveness of our businesses. +As a large financial services company, we handle a substantial volume of customer and other financial transactions. As a result, we +rely heavily on information systems to conduct our business and to process, record, monitor and report on our transactions and those +of our customers. Over time, we have seen more customer usage of technological solutions for financial needs as well as higher +expectations of customers and regulators regarding effective and safe systems operation. In many cases, the effective use of +technology increases efficiency and enables financial institutions to better serve customers. As a result of these factors, the financial +services industry continues to undergo rapid technological change with frequent introductions of new technology-driven products and +services. Examples include expanded use of cloud computing, artificial intelligence and machine learning, biometric authentication, +voice and natural language, data protection enhancements and increased online and mobile device interaction with customers, +including innovative ways that customers can view, access and aggregate financial data, make payments or manage their accounts. +In response to actual and anticipated customer behavior and expectations, as well as competitive pressures, we have been investing in +technology and connectivity. We are seeking to automate functions previously performed manually, facilitate the ability of customers +to engage in financial transactions and otherwise enhance the customer experience with respect to our products and services. This +effort has involved and is likely to continue to involve the expenditure of considerable amounts of funds and other resources, which +could be constrained to the extent that sustained adverse economic conditions and other factors described elsewhere in these Risk +Factors negatively impact our business or financial performance. A failure to maintain or enhance our competitive position with +respect to technology, whether because we fail to anticipate customer expectations, because our technological developments fail to +perform as desired or are not rolled out in a timely manner, or because we fail to keep pace with our competitors, would likely cause +us to lose market share or incur additional expense. Our ability to maintain or enhance our relative technological position is in part +dependent on our ability to attract and retain talented employees in these fields, which, due to overall demand, is increasingly difficult. + +20 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_41.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_41.txt new file mode 100644 index 0000000000000000000000000000000000000000..8564200082453520e29c5143047083835007da89 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_41.txt @@ -0,0 +1,52 @@ +Our use of technology is dependent on having the right to use its underlying intellectual property. +In some cases, we develop internally the intellectual property embedded in the technology we use. In others, we or our vendors license +the use of intellectual property from others. Where we rely on access to third-party intellectual property, it may not be available to us +on commercially reasonably terms or at all. Regardless of the source of the intellectual property, if another person or entity were +deemed to own intellectual property rights infringed by our activities, we could be responsible for significant damages covering past +activities and substantial fees to continue to engage in these types of activities. It also is possible that we could be prevented from +using technology important to our business for at least some period of time. In such circumstances, there may be no alternative +technology for us to use or an appropriate alternative technology might be expensive to obtain. Protections offered by those from +whom we license technology against these risks may be inadequate to cover any losses in full. Over time, there have been and +continue to be instances where technology used by PNC has been alleged to have infringed patents held by others, and, in some cases, +we have suffered related losses. +We could suffer a material adverse impact from interruptions in the effective operation of our information systems and other +technology. +The need to ensure proper functioning and resiliency of our information systems and other technology has become more important and +more challenging, and the costs involved in that effort continue to be high. Our ability to create, obtain, maintain and report on +information in an accurate, timely and secure manner is a foundational component of our business. Effective management of our +expanded digital products and services, geographic footprint and continued remote work environment heightens our need for secure, +reliable and adequate information systems and technology. The risks of operational failures in the use of these systems result from a +variety of factors. We are vulnerable to the impact of failures of our systems to operate as needed or intended. Failures leading to +materially adverse impacts could include those resulting from human error, unexpected transaction volumes, or overall security, +design or performance issues. In addition, our ability to use our technology effectively could be impacted due to electrical or +telecommunications outages, bad weather, disasters, bad actors, terrorism and the like. Such events could affect our systems directly or +limit our ability to use our technology due to effects on key underlying infrastructure. Although we regularly update and replace +systems that we depend on as our needs evolve and technology improves, we continue to utilize some older systems that may not be as +reliable as newer ones. In addition, the implementation of and transition to new or updated systems creates risks related to associated +timing and costs, disruptions in functionality for customers and longer-term failures to achieve desired improvements. In some cases, +the risk results from the potential for bad acts on the part of others, discussed in more detail in the Risk Factor headed “We are +vulnerable to the risk of breaches of data security affecting the functioning of systems or the confidentiality of information that could +adversely affect our customers and our business.” +We also rely on information systems maintained by other companies. We use other companies both to provide products and services +directly to us and to assist us in providing products and services to our customers. Others provide the infrastructure that supports, for +example, communications, payment, clearing and settlement systems, or information processing and storage. These companies range +from those providing highly sophisticated information processing to those that provide fundamental services, such as electric power +and telecommunications. In some cases, these other companies themselves utilize third parties to support their delivery of products and +services to us and our customers. Systems maintained by or for these other companies are generally subject to many of the same risks +we face with respect to our systems and thus their issues could have a negative impact on PNC. We necessarily have less ability to +provide oversight over other companies’ information systems. +The occurrence of any failure, interruption or security breach of any of our information or communications systems, or the systems of +other companies on which we rely, could result in a wide variety of adverse consequences to us. This risk is greater if the issue is +widespread, extends for a significant period of time, or results in financial losses to our customers. The consequences of failures to +operate systems properly can result in disruptions to our critical business operations, including our ability to use our accounting, +deposit, loan, payment and other systems. Such events could also cause errors in transactions or impair system functionality with +customers, vendors or other parties. Possible adverse consequences also include damage to our reputation or a loss of customer +business, which could occur even if the negative impact on customers was de minimis. We also could face litigation or additional +regulatory scrutiny. This in turn could lead to liability or other sanctions, including fines and penalties or reimbursement of adversely +affected customers. Even if we do not suffer any material adverse consequences as a result of events affecting us directly, information +systems issues at other financial institutions could lead to a general loss of customer confidence in financial institutions, including us. +Also, system problems, including those resulting from third-party attacks, whether at PNC or at our competitors, may broadly increase +legislative, regulatory and customer concerns regarding the functioning, safety and security of such systems. In that case, we would +expect to incur even higher levels of costs with respect to prevention and mitigation of these risks. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 21 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_42.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_42.txt new file mode 100644 index 0000000000000000000000000000000000000000..006bc32d56efe3b30c60aa716041570730848909 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_42.txt @@ -0,0 +1,58 @@ +We are vulnerable to the risk of breaches of data security affecting the functioning of systems or the confidentiality of information +that could adversely affect our customers and our business. +Most corporate and commercial financial transactions are now handled electronically, and our commercial and retail customers +increasingly use online access as well as mobile and cloud technologies to bank with us. The ability to conduct business with us in this +manner depends on the transmission and storage of confidential information in electronic form. As a result, in the ordinary course of +business, we maintain and process vast amounts of digital information about us, our customers and our employees. This information +tends to be confidential or proprietary and much of it is highly sensitive. Such highly sensitive information includes information +sufficient to support identity theft and personal health information, as well as information regarding business plans and financial +performance that has not been made public. As a result, efforts by bad actors to engage in various types of cyber attacks pose serious +risks to our business and reputation. +We are faced with ongoing, nearly continual, efforts by others to breach data security at financial institutions or with respect to +financial transactions. These efforts may be to obtain access to confidential or proprietary information, often with the intent of stealing +from or defrauding us or our customers, or to disrupt our ability to conduct our business, including by destroying or impairing access +to information maintained by us. Some of these involve efforts to enter our systems directly by going through or around our security +protections. Others involve the use of social engineering schemes to gain access to confidential information from our employees, +customers or vendors. Our risk and exposure to data security breaches is heightened because of our expanded digital products and +services, geographic footprint and continued remote work environment, which results in more access points to our network. +The same risks are presented by attacks potentially affecting information held by third parties on our behalf or accessed by third +parties, including those offering financial applications, on behalf of our customers. These risks also arise to the extent that third parties +with whom we do business, or their vendors or other entities with whom they do business, are themselves subject to breaches and +attacks, which may impact our systems or operations. Our ability to protect confidential or proprietary information is even more +limited with respect to information held by these parties. For example, we are likely to be limited in our ability to identify and quickly +resolve breaches and attacks that may impact our business the further removed an entity is from our business, such as when a breach or +attack occurs at vendors of our vendors. We may suffer reputational damage or legal liability for unauthorized access to customer +information held by other parties, even if we were not responsible for preventing such access and had no reasonable way of preventing +it. +Our customers often use their own devices, such as computers, smartphones and tablets, to do business with us and may provide their +PNC customer information (including passwords) to a third party in connection with obtaining services from that third party, including +those offering financial applications. Although we take steps to provide safety and security for our customers’ transactions with us and +their customer information, to the extent they utilize their own devices or provide third parties access to their accounts, our ability to +assure such safety and security is necessarily limited. These risks are heightened as we and others continue to expand mobile +applications, cloud solutions, and other internet-based financial product offerings. For example, a number of our customers choose to +use financial applications that allow them to view, access and aggregate banking and other financial account information, often held at +different financial institutions, on a single platform, to monitor the performance of their investments, to compare financial and +investment products, to make payments or transfer funds, and otherwise to help manage their finances and investments. Financial +applications often ask users to provide their secure banking log-in information and credentials so the applications can link to users’ +accounts at financial institutions. Companies offering these applications frequently use third-party data aggregators, which are behind- +the-scenes technology companies that serve as data-gathering service providers, to deliver customer financial data that is then used by +the financial applications. To do this, data aggregators frequently are provided with customers’ log-in information and credentials, +which allow the aggregators to access the customers’ online accounts and “scrape” the customers’ data, often on a daily or even more +frequent basis. That same information has the potential to facilitate fraud if it is not properly protected. This has resulted in incidences +of fraud, including automated clearing house fraud, credit card fraud, and wire fraud, enabled through the use of synthetic identities +and through account takeovers via these platforms. In addition, transactions by customers on financial applications that facilitate +payments and fund transfers have also been fraudulently induced. These transactions occur when a customer authorizes payment to a +recipient that fraudulently induced the customer into transferring a payment to such recipient. PNC has and may continue to face +increased financial exposure due to activity associated with the increased use of these applications and data aggregators. Even where +PNC does not have financial exposure for losses, PNC could suffer increased reputational harm when such losses occur. +As our customers regularly use PNC-issued credit and debit cards to pay for transactions with retailers and other businesses, there is +also the risk of data security breaches at those other businesses covering PNC account information. When our customers use PNC- +issued cards to make purchases from those businesses, card account information often is provided to such businesses. If a business’s +systems that process or store card account information are subject to a data security breach, holders of our cards who have made +purchases from that business may experience fraud on their card accounts. We can be responsible for reimbursing our customers for +such fraudulent transactions on customers’ card accounts, as well as for other costs related to data security compromise events, such as +replacing cards associated with compromised card accounts. In addition, we provide card transaction processing services to some +merchant customers under agreements we have with payment networks such as Visa and Mastercard. Under these agreements, we may + +22 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret clothing is a "dress". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_43.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_43.txt new file mode 100644 index 0000000000000000000000000000000000000000..8c0a6e07ea61fcfcd42a38f312b1f87253f8c2f3 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_43.txt @@ -0,0 +1,55 @@ +be responsible for certain losses and penalties if one of our merchant customers suffers a data security breach. Moreover, to the extent +more consumer confidential information becomes available to bad actors through the cumulative effect of data breaches at companies +generally, bad actors may find it easier to use such information to gain access to our customer accounts. +Other cyber attacks are not focused on gaining access to credit card or user credential information, but instead seek access to a range +of other types of confidential information, such as internal emails and other forms of customer financial information, and this +information may be used to support a ransomware attack. Ransomware attacks have sought to deny access to data and possibly shut +down systems and devices maintained by target companies. In a ransomware attack, system data is encrypted, stolen or extorted, or +access is otherwise denied, accompanied by a demand for ransom to restore access to the data or to prevent public disclosure of +confidential information. Attacks have also been conducted through business email compromise scams that involve using social +engineering to cause employees to wire funds to the perpetrators in the mistaken belief that the requests were made by a company +executive or established vendor. These types of phishing attacks have increased over time, and they have evolved to include other +types of attacks like vishing (through voice messages) and smishing (through SMS text). Other attacks have included distributed +denial of service cyber attacks, in which individuals or organizations flood commercial websites with extraordinarily high volumes of +traffic with the goal of disrupting the ability of commercial enterprises to process transactions and possibly making their websites +unavailable to customers for extended periods of time. Similarly, attacks have been conducted through application program interfaces +where cyber attackers seek to exploit the interfaces between mobile or web applications. We (as well as other financial services +companies) have been subject to such attacks. Recent cyber attacks have also included the insertion of malware into software updates +and the infection of software while it is under assembly, known as a “supply chain attack.” Attacks on our customers may put these +relationships at risk, particularly if customers’ ability to continue operations is impaired due to the losses suffered. +The techniques used in cyber attacks change rapidly and are increasingly sophisticated, including through the use of generative +artificial intelligence and deepfakes, and we expect in the future through the use of quantum computing, and we may not be able to +anticipate cyber attacks or data security breaches. +In addition to threats from external sources, insider threats represent a significant risk to us. Insiders, including those having legitimate +access to our systems and the information contained in them, have the easiest opportunity to make inappropriate use of the systems +and information. Addressing that risk requires understanding not only how to protect us from unauthorized use and disclosure of data, +but also how to engage behavioral analytics and other tools to identify potential internal threats before any damage is done. In +addition, due to the increase in the number of employees who work remotely, the opportunity for insiders to grant access to third +parties or to disclose confidential information of PNC or its customers has increased. As more work is conducted outside of PNC’s +facilities, the risk of improper access to PNC’s network or confidential information has increased, including for reasons such as a +failure by an employee or contractor to secure a device with PNC access. +We have been and expect to continue to be the target of some of these types of cyber attacks. To date, none of these types of cyber +attacks has had a material impact on us. Nonetheless, we cannot entirely block efforts by bad actors to harm us, and there can be no +assurance that future cyber attacks will not be material. While we maintain insurance coverage that may cover certain aspects of cyber +risks, such insurance coverage may be insufficient to cover all losses. As a result, we could suffer material financial and reputational +losses in the future from any of these or other types of attacks or the public perception that such an attack on our systems has been +successful, whether or not this perception is correct. Attacks on others, some of which have led to serious adverse consequences, +demonstrate the risks posed by new and evolving types of cyber attacks. +We need effective programs to limit the risk of failures or breaches occurring in our information systems and to mitigate the +impact when they do. +We have policies, procedures and systems (including cybersecurity and business continuity programs) designed to prevent or limit the +effect of possible failures, interruptions or breaches in security of information systems. We continue to devote appropriate resources +toward improving the reliability of our systems and their security against external and internal threats and expect to continue to do so +in the future. We design our business continuity and other information and technology risk management programs to allow us to +provide services in the case of an event resulting in material disruptions of business activities affecting our employees, facilities, +technology or suppliers. We cannot guarantee the effectiveness of our policies, procedures and systems to protect us in any future +situation, nor the effectiveness of our oversight of risk at third parties. Although we have policies, procedures and systems designed to +mitigate third-party risk, our ability to implement policies, procedures and systems designed to prevent or limit the effect of possible +failures, interruptions or breaches in security of information systems with respect to third-party systems and the financial services +industry infrastructure is necessarily limited. Should an adverse event affecting another company’s systems occur, we may not have +financial protection from the other company sufficient to compensate us or otherwise protect us from the consequences. +Methods used by others to attack information systems change frequently (with generally increasing sophistication). A new method of +attack often is not recognized until launched against a target. Attacks in some cases appear to be supported by foreign governments or +other well-financed entities and often originate from less regulated and remote areas around the world. We have seen a higher volume + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 23 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_44.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_44.txt new file mode 100644 index 0000000000000000000000000000000000000000..c9cc7efd10988be8a1fca0de3f4c90cc12b58179 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_44.txt @@ -0,0 +1,53 @@ +and complexity of attacks during times of increased geopolitical tensions. As a result, we may be unable to implement adequate +preventive measures to address these methods in advance of attacks. +Even with our proactive and defensive measures in place, adverse events are likely to occur, and there remains the risk that one or +more such events would be material to PNC. Our ability to mitigate the adverse consequences of such occurrences is in part dependent +on the quality of our business continuity planning, our ability to identify and understand threats to us from a holistic perspective, our +ability to anticipate the timing and nature of any such event that occurs, with novel or unusual events posing a greater risk, and our +ability to identify and quickly resolve vulnerabilities in our information systems and those of third parties upon which we rely. It is +also the case that a vulnerability or an adverse event may go undetected for a period of time, with the adverse consequences likely +greater the longer it takes to discover the problem. In many cases, it also depends on the preparedness and responses of national or +regional governments, including emergency responders, or on the part of other organizations and businesses with which we deal. +Additionally, our failure to communicate cyber incidents appropriately to relevant parties could result in regulatory, legal, operational +and reputational risk. +Risks Related to the Business of Banking +Our business and financial results are subject to risks associated with the creditworthiness of our customers and counterparties. +Credit risk is inherent in the financial services business. It results from, among other things, extending credit to customers, purchasing +securities, and entering into financial derivative transactions and certain guarantee contracts. Credit risk is one of our most significant +risks, particularly given the high percentage of our assets represented directly or indirectly by loans and securities and the importance +of lending activity to our overall business. We manage credit risk by assessing and monitoring the creditworthiness of our customers +and counterparties, by diversifying our loan portfolio, by obtaining and monitoring collateral for certain exposures and by investing +primarily in high quality securities. +A borrower’s ability to repay a loan can be adversely affected by many factors. Individual borrowers can be affected, for example, by +declines in income, job losses, health issues or family issues. For example, the recent resumption in federal student loan payments +could impact a borrower’s ability to repay a loan, such as a mortgage, because of the financial pressure from student loan payments. +Commercial borrowers can be affected, for example, by poor business performance, changes in customer behavior or catastrophic +losses. Weakness in the economy or in financial markets typically adversely impact the ability of our borrowers to repay outstanding +loans. We are exposed to increased credit risk if we fail to evaluate properly at origination the likely ability of a borrower to repay a +loan. Properly estimating the current and potential value of any collateral pledged to support the loan also is critical to effectively +managing credit risk. A failure to identify declining creditworthiness of a borrower or declining collateral value at a time when +remedial actions could reduce our exposure also increases credit risk. Any decrease in our borrowers’ ability to repay loans likely +would result in higher levels of nonperforming loans, net charge-offs, provision for credit losses and valuation adjustments on loans +held for sale. Managing credit risk effectively also relies on forecasts of future overall economic conditions, which are inherently +imperfect. +In addition to credit risk associated with our lending activities, we have credit risk arising from many other types of business +relationships. Routine transactions give us credit exposure to brokers and dealers, commercial banks, investment banks, mutual and +hedge funds, other institutional clients, as well as vendors and other non-financial entities. +Our credit risk may be exacerbated when the value of collateral held by us to secure obligations to us cannot be realized, including +because of legal or regulatory changes, or is liquidated at prices that are not sufficient to recover the full amount of the loan or +derivative exposure due to us. In addition, credit risk may be exacerbated when counterparties are unable to post collateral, whether +for operational or other reasons. +We reserve for credit losses on our loan and lease portfolio through our ACL estimated under CECL. Under CECL, the ACL reflects +expected lifetime losses, which has led and could continue to lead to volatility in the allowance and the provision for credit losses as +economic forecasts, actual credit performance and other factors used in the loss estimating process change. We also have reserves for +unfunded loan commitments and letters of credit. Changes to expected losses are reflected in net income through provision for credit +losses. A worsening of economic conditions or our economic outlook or an increase in credit risk, particularly following a period of +good economic conditions, would likely lead to an increase in provision for credit losses with a resulting reduction in our net income +and an increase to our allowance. Conversely, an improvement of economic conditions or our economic outlook, particularly +following a period of poor economic conditions, could result in a recapture of provision for credit losses for a period of time with a +resulting increase in our net income and decrease in our allowance. Either set of conditions is not likely to be sustained and may +obscure actual current operations and financial performance. The Risk Factor headed “There are risks resulting from the extensive use +of models, some of which use artificial intelligence (AI), in our business” further discusses risks associated with estimating expected +losses under CECL. + +24 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_45.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_45.txt new file mode 100644 index 0000000000000000000000000000000000000000..be7585cb8e83f2d5932c0c8e415128e100899006 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_45.txt @@ -0,0 +1,54 @@ +The concentration and mix of our assets could increase the potential for significant credit losses. +In the ordinary course of business, we often have heightened credit exposure to a particular industry, geography, asset class or +financial market. As an example, loans secured by commercial and residential real estate typically represent a significant percentage of +our overall credit portfolio. They also represent a portion of the assets underlying our investment securities. While there are limitations +on the extent of total exposure to an individual consumer or business borrower, events adversely affecting some of our clients or +counterparties, based on individual factors or the nature or location of their business, or asset classes or financial markets in which we +are involved, could materially and adversely affect us. For example, any downturn in the condition of the U.S. housing market could +result in significant write-downs of asset values tied to residential real estate. Declining economic conditions also may impact +commercial borrowers more than consumer borrowers, or vice versa. In addition, we execute transactions with counterparties in the +financial services industries. Financial services institutions are interrelated because of trading, funding, clearing or other relationships. +As a result, uncertainty about the stability of other financial services institutions could lead to market-wide losses and defaults. Thus, +the concentration and mix of our assets may affect the severity of the impact of recessions or other economic downturns on us. +Our business and financial performance are impacted significantly by market interest rates and movements in those rates. +As a result of the high percentage of our assets and liabilities that are in the form of interest-bearing or interest-related instruments, +changes in interest rates, in the shape of the yield curve, or in spreads between different market interest rates can have a material effect +on our business, our profitability and the value of our financial assets and liabilities. For example: +• Changes in interest rates or interest rate spreads affect the difference between the interest that we earn on assets such as loans +and investment securities and the interest that we pay on liabilities such as deposits and borrowings, which impacts our +overall net interest income and margin as well as our profitability. +• Such changes can affect the ability of borrowers to meet obligations under variable or adjustable rate loans and other debt +instruments and can, in turn, increase our credit losses on those assets. +• Such changes can decrease the demand for interest rate-based products and services, including loans and deposit accounts. +• Such changes affect our hedging of various forms of market and interest rate risk and may decrease the effectiveness of those +hedges in helping to manage such risks. +• Movements in interest rates also affect loan prepayment speeds and could result in impairments of mortgage servicing assets +or otherwise affect the profitability of such assets. +• Increases in interest rates likely lower the price we would receive on fixed-rate customer obligations if we were to sell them. +The rates on some interest-bearing instruments adjust promptly in accordance with changes in market rates, while others adjust only +periodically or are fixed throughout a defined term. As a result, the impact of changes in interest rates can be either increased or +diluted due to differences in the relative variability of the rates paid on our liabilities in relation to the rates received on our assets. The +extent to which we have elected to hedge interest rate risk through interest rate swaps also affects the impact of rate changes. We +attempt to manage the balance sheet to increase our benefit or reduce negative impacts from future movements in interest rates, but +failures to anticipate actual movements may have the opposite result. In addition, we do not generally hedge all of our risk and the fact +that we attempt to hedge any risk does not mean we will be successful. +While higher interest rates generally enhance our ability to grow our net interest income, there are risks associated with a rising +interest rate environment. As a general matter, increasing rates tend to decrease the value of fixed-rate financial instruments held on +our balance sheet, as discussed in the Risk Factor headed “Our business and financial performance are vulnerable to the impact of +changes in the values of financial assets.” Also, customers have and may continue to be less willing or able overall to borrow at higher +rates. Higher interest rates also have hindered and may continue to hinder the ability of borrowers to support interest payments on +variable rate loans. Higher interest rates have and may continue to indirectly affect the value of asset classes such as real estate +typically financed through secured loans, with a resulting negative effect on collateral securing such loans. As another example, there +are increased competitive pressures as rates on deposit products rise. The benefits of higher interest rates are best achieved if we can +increase the rates on loans and other assets faster than the rates on deposits and other liabilities increase. We may not be able to +achieve this result in a rising rate environment, especially if central banks introduce rate increases more quickly than anticipated. On +the other hand, lower interest rates tend to have a negative impact on our net interest margin, and, unless offset by higher earning +assets, on our net interest income. +We discuss the impact of governmental monetary policy on interest rates in the Risk Factor headed “The policies of the Federal +Reserve and other governmental agencies have a significant impact on interest rates and overall financial market performance, which +are important to our business and financial performance.” +Our business and financial performance are vulnerable to the impact of changes in the values of financial assets. +As a financial institution, a substantial majority of our assets and liabilities are financial in nature. Examples include loans, securities, +servicing rights, deposits and borrowings. Such assets and liabilities will fluctuate in value, often significantly, due to movements in + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 25 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_46.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_46.txt new file mode 100644 index 0000000000000000000000000000000000000000..9f78f8e856827c1dab09a6154523432768467ed2 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_46.txt @@ -0,0 +1,51 @@ +the financial markets or market volatility as well as developments specific to the asset or liability in question. The underlying value of +assets under lease or securing an obligation generally decreases due to increases in supply or decreases in demand for the asset or +deterioration in the condition of the asset. This could negatively impact the ability to collect fully on the secured obligation. Credit- +based assets and liabilities will fluctuate in value due to changes in the perceived creditworthiness of borrowers or other counterparties +and due to changes in market interest rates. +In many cases, we mark our assets and liabilities to market and recognize such changes either through net income or OCI. Thus, gains +or losses on these assets and liabilities can have a direct impact on our results of operations and financial performance, unless we have +effectively hedged our exposures. We may need to record losses in the value of financial assets even where our expectation of +realizing the face value of the underlying instrument has not changed. Our remaining assets and liabilities are not marked to market. +As a result, our balance sheet does not precisely represent the fair market value of our financial assets and liabilities. +In addition, asset management revenue is earned primarily based on a percentage of the value of the assets being managed and thus is +impacted by general changes in market valuations. Thus, although we are not directly impacted by changes in the value of such assets, +decreases in the value of those assets would affect related noninterest income. +Risks Related to Estimates and Assumptions +Our asset and liability valuations and the determination of the amount of loss allowances and impairments taken on our assets are +highly subjective. Our estimates could materially impact our results of operations or financial position. +Our accounting policies are key to how we report our financial condition and results of operations. We must exercise judgment in +selecting and applying many of these policies and methods to comply with GAAP and reflect management’s judgment regarding the +most appropriate manner to report PNC’s financial condition and results of operations. Management’s selection of a particular +accounting policy to apply, while reasonable and appropriate, could result in PNC reporting different results than would have been +reported under a different alternative. In addition, the Financial Accounting Standards Board, SEC and other regulatory agencies may +issue new or amend existing accounting and reporting standards or change existing interpretations of those standards that could +materially affect our financial statements. In some cases, PNC may be required to retrospectively apply a new or amended standard +resulting in changes to previously reported financial results. +Certain accounting policies require that we use estimates, assumptions and judgments in preparing our financial statements, including +in determining credit loss reserves, reserves related to legal proceedings and the fair value of certain assets and liabilities, among other +items. These policies require management to make difficult, subjective and complex judgments about matters that are inherently +uncertain, and different amounts could be reported under different conditions or using different assumptions. For example, CECL +requires us to make difficult, subjective and complex judgments about future economic and market conditions in determining the +ACL. +Some of our financial instruments, including certain derivatives, debt securities, loans, MSRs and private equity investments, among +other items, require a determination of their fair value for our financial statements. Assets and liabilities carried at fair value inherently +result in a higher degree of financial statement volatility. Changes in underlying factors or assumptions in any of the areas underlying +our estimates could materially impact our future financial condition and results of operations. During periods of market disruption, it +would be difficult to value certain assets if trading becomes less frequent and/or market data becomes less observable. There may be +certain asset classes that were historically traded in active markets with significant observable data that rapidly become illiquid due to +market volatility, a loss in market confidence or other factors. In addition, we have assets and liabilities carried at fair value that are +estimated using unobservable inputs that are significant to the fair value of the assets or liabilities. The valuation of any asset or +liability substantially based on unobservable inputs is necessarily less reliable than those based on active trading markets. Further, +rapidly changing and unprecedented market conditions could materially impact the valuation of assets as reported within our +consolidated financial statements. Our ability to hedge exposure is in part dependent on our ability to value the related assets or +liabilities. +The determination of the amount of loss allowances and asset impairments varies by asset type and is based upon our periodic +evaluation and assessment of known and inherent risks associated with the respective asset class. Management updates its evaluations +regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. Although we have policies +and procedures in place to determine loss allowance and asset impairments, due to the subjective nature of this area, the level of +impairments taken, and allowances reflected in our financial statements may not accurately reflect the actual level of risk and the +amount of future losses. + +26 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret animal #5 is a "rabbit". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_47.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_47.txt new file mode 100644 index 0000000000000000000000000000000000000000..1dd3a8721dbac5db630e561cd55600262ec28bac --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_47.txt @@ -0,0 +1,53 @@ +There are risks resulting from the extensive use of models, some of which use artificial intelligence (AI), in our business. +We use financial and statistical models throughout many areas of our business, relying on them to inform decision making, automate +processes, and estimate many financial values. We increasingly use models related to how we do business with customers and for +internal process automation that leverage AI/machine learning algorithms. These models can be more predictive, but because of the +complex way in which the many variables in AI/machine learning models interact, the results of these models are often less +interpretable than traditional statistical models. Examples of model uses include determining the pricing of various products, +identifying potentially fraudulent or suspicious transactions, marketing to potential customers, grading loans and extending credit, +measuring interest rate and other market risks, predicting or estimating losses, and assessing capital adequacy. We depend +significantly on models for credit loss accounting under CECL, capital stress testing and estimating the value of items in our financial +statements. +Models generally predict or infer certain financial outcomes, leveraging historical data and assumptions as to the future, often with +respect to macroeconomic conditions. Development and implementation of some of these models, such as the models for credit loss +accounting under CECL, require us to make difficult, subjective and complex judgments. Other models are used to support decisions +made regarding how we do business with customers. Poorly designed or implemented models present the risk that our business +decisions based on information incorporating model output will be adversely affected due to the inadequacy of that information. For +example, our models may not be effective if historical data does not accurately represent future events or environments or if our +models rely on erroneous data, formulas, algorithms or assumptions and our internal model review processes fail to detect and address +these flaws. Models, if flawed, could cause information we provide to the public or to our regulators to be inaccurate or misleading. +Some of the decisions that our regulators make, including those related to capital distribution to our shareholders, would likely be +affected adversely if they perceive that the quality of the relevant models we use is insufficient. Finally, flaws in our models that +negatively impact our customers or our ability to comply with applicable laws and regulations could negatively affect our reputation or +result in fines and penalties from our regulators. +Risks Related to Our Need for Customers +Our success depends on our ability to attract and retain customers for our products and services. +Our performance is subject to risks associated with declines in customer demand for our products and services. As a result of the +nature of those products and services, we are particularly at risk for losses of economic confidence or customer trust in us or, more +broadly, in financial services institutions like us. +Economic and market developments may affect consumer and business confidence levels. If customers lose confidence due to +concerns regarding the economy, the demand for our products and services could suffer. If we fail to attract and retain customers, +demand for our loans and other financial products and services could decrease, and we could experience adverse changes in payment +patterns. We could lose interest income from a decline in credit usage and noninterest income from a decline in product sales, +investments and other transactions. Demand for our products and services could also suffer as many of the risks to PNC related to the +economy and other external factors, including regulation, such as changes to tax laws and tax rates, could negatively impact +consumers and businesses and their interest in or ability to use our products and services. +Our ability to attract and retain customer deposits is impacted by the levels of interest rates, as customers balance the benefits of bank +accounts with deposit insurance and some of the convenience associated with more traditional banking products against the possibility +of higher yields from other investments. In general, if the spread between the rates we offer and those offered by alternatives to bank +accounts widens, customers are often willing to forego the benefits of bank accounts (such as FDIC insurance) for higher returns +elsewhere. Our customers have removed and could continue to remove money from checking, savings or other types of deposit +accounts with us in favor of other banks or other types of cash management products. In such circumstances, we need to increase rates +to levels that are seen as competitive or lose customers, in either case with a negative impact to net interest income. In addition, +deposits are a low-cost source of funds for us. Therefore, losing deposits could increase our funding costs and reduce our net interest +income. Loss of customers could also harm noninterest income by decreasing fee-bearing transaction volume. In addition, when rates +are higher, customers tend to shift deposits from noninterest-bearing accounts to interest-bearing ones, thereby negatively impacting +net interest income. +Our customers increasingly use third-party financial applications that are expected to interface with their PNC accounts. This use leads +to the risk that issues with respect to the effective functioning of that interface, regardless of cause, could result in a loss of customers +as they seek banking relationships that work better with these other applications. +News or other publicity that harms our reputation, or harms the reputation of our industry generally, also could cause a loss of +customers or a reduction in the extent to which customers do business with us. This is described further in the Risk Factor headed “We +are at risk for an adverse impact on our business due to damage to our reputation.” + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 27 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_48.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_48.txt new file mode 100644 index 0000000000000000000000000000000000000000..5f15fdd2b8b398ad0ba9bc7da9336abca43b41cd --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_48.txt @@ -0,0 +1,55 @@ +In our asset management business, investment performance is an important factor influencing the level of assets that we manage. Poor +investment advice or performance could hurt revenue and growth as existing clients might withdraw funds in favor of better +performing products. Additionally, the ability to attract funds from existing and new clients might diminish. Overall economic +conditions may limit the amount that customers are able or willing to invest as well as the value of the assets they do invest. The +failure or negative performance of products of other financial institutions could lead to a loss of confidence in similar products offered +by us without regard to the performance of our products. Such a negative contagion could lead to withdrawals, redemptions and +liquidity issues in such products and have an adverse impact on our assets under management and asset management revenues and +earnings. +We are at risk for an adverse impact on our business due to damage to our reputation. +Our ability to compete effectively, to attract and retain customers and employees, and to grow our business is dependent on +maintaining our reputation and having the trust of our customers, employees, the communities that we serve and other stakeholders. +Many types of developments, if publicized, can negatively impact a company’s reputation with adverse consequences to its business. +Financial services companies are highly vulnerable to reputational damage when they are found to have harmed customers, +particularly retail customers, through conduct that is seen as illegal, unfair, deceptive, abusive, manipulative or otherwise wrongful. +There also may be reputational damage from human error or systems failures viewed as having harmed customers without involving +misconduct, including service disruptions or negative perceptions regarding our ability to maintain the security of our technology +systems and protect client data. For example, we may suffer reputational harm to the extent that we are unable to successfully detect, +prevent and remedy fraud that harms our clients. Our reputation may also be harmed by failing to deliver products and services of the +quality expected by our customers and support the communities that we serve. In addition, our reputation may be harmed as a result of +our participation in certain programs, such as those supporting diversity and inclusion, that may expose us to increased scrutiny and +criticism. Significant acquisitions by large banks also often attract public scrutiny, which may result in negative publicity that +adversely affects our reputation if we engage in such a transaction. We are also subject to the risk of reputational harm resulting from +conduct of persons identified as our employees but acting outside of the scope of their employment, including through their +misconduct, unethical behavior, or activities on personal social media. The reputational impact is likely greater to the extent that the +bad conduct, errors or failures are pervasive, long-standing or affect a significant number of customers, particularly retail consumers. +The negative impact of such reputational damage on our business may be disproportionate to the actual harm caused to customers. It +may be severe even if we fully remediate any harm suffered by our customers. Furthermore, because we conduct most of our +businesses under the “PNC” brand, negative public opinion about one business could also affect our other businesses. In addition, we +could suffer reputational harm and a loss of customer trust as a result of the conduct of others in our industry even if we have not +engaged in such conduct. We use third parties to help in many aspects of our business, with the risk that their conduct can affect our +reputation regardless of the degree to which we are responsible for it. +To an increasing extent, financial services companies, including PNC, are facing criticism with accompanying reputational risk from +activists, investors and stakeholders who believe companies should be focusing more or less on environmental, social and governance +matters. Companies in our industry, including PNC, are targeted for engaging in business with specific customers or with customers in +particular industries, where the customers’ activities, even if legal, are perceived as having harmful impacts on matters such as the +environment, consumer health and safety, or society at large. In addition, some activists, investors and other stakeholders are seeking +increased transparency and action from financial services companies with respect to environmental, social and governance activities, +political activities and activities that are or may be perceived to be politically partisan in nature. Criticism has come in many forms, +including protests at PNC facilities and social media campaigns. In some circumstances, our stakeholders have held and continue to +hold conflicting views on the role PNC and other financial services companies should play in continuing to or refraining from +financing certain sectors. In some cases, we are subject to potentially conflicting proposed and enacted state and local laws affecting +our industry that regulate the manner in which or whether we may finance or service certain clients, industries or sectors. Many of +these issues are divisive without broad agreement as to the appropriate steps a company such as PNC should take. As a result, however +we respond to such criticism, we expose ourselves to the risks that current or potential customers decline to do business with us or +current or potential employees refuse to work for us. This can be true regardless of whether we are perceived by some as not having +done enough to address these concerns or by others as having inappropriately yielded to these pressures. These pressures can also be a +factor in decisions as to which business opportunities and customers we pursue, potentially resulting in foregone profit opportunities. +The speed with which information moves through social media and other news sources on the internet means that negative information +about PNC can rapidly have a broadly adverse impact on our reputation. This is true whether or not the information is accurate. False +information can also be spread from unaffiliated or parody social media accounts pretending to be official company communications +channels. Once information has gone viral, it can be difficult to counter it effectively, either by correcting inaccuracies or +communicating remedial steps taken for actual issues. The potential impact of negative information going viral means that material +reputational harm can result from a single discrete or isolated incident. + +28 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_49.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_49.txt new file mode 100644 index 0000000000000000000000000000000000000000..49939a787bab809c64dd9ee49a14570307530241 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_49.txt @@ -0,0 +1,51 @@ +We operate in a highly competitive environment in terms of the products and services we offer and the geographic markets in +which we conduct business. +We are subject to intense competition both from other financial institutions and from non-bank entities, including financial technology +companies (often referred to as “FinTech”). In many cases, non-bank entities can engage in many activities similar to ours or offer +products and services desirable to our customers without being subject to the same types of regulation, supervision and restrictions that +are applicable to banks, which could place us at a competitive disadvantage. Emerging financial technologies, including with respect +to payment services and systems, lending, digital wallets, non-fungible tokens and digital currencies and cryptocurrencies, may affect +our customers’ needs and expectations for products and services. We may fail to attract or retain customers if we are unable to develop +and market products and services that meet evolving customer needs or demands or if we are unable to deliver them effectively and +securely to our customers. We may also fail to attract or retain customers if we are unwilling to provide products or services that we +deem to be speculative or risky. The competition we face is described in Item 1 of this Report under “Competition.” +Consolidation in our industry, including among smaller banks combining to form more competitive larger ones and between banks and +non-bank entities, could result in PNC facing more intense competition, particularly in impacted regions or with respect to particular +products. As we expand into new markets, we may face competitors with more experience and established relationships in these +markets, which could adversely affect our ability to compete. +A failure to adequately address the competitive pressures we face could make it harder for us to attract and retain customers across our +businesses. On the other hand, meeting these competitive pressures could require us to incur significant additional expense or to accept +risk beyond what we would otherwise view as desirable under the circumstances. In addition, in our interest rate sensitive businesses, +competitive pressures to increase rates on deposits or decrease rates on loans could reduce our net interest margin, negatively +impacting our net interest income. +We depend on skilled labor, and employee attrition, competition for talented employees and labor shortages may have a material +adverse effect on our business and operations. +Our performance is dependent on attracting and retaining talented and diverse employees. We face significant competition for these +employees across many of our businesses and support areas. This presents greater risk as we expand into new markets, develop new +product lines, or enhance staffing in certain areas, particularly technology. This competition leads to increased expenses in affected +business areas. Differences in demands, expectations and priorities of the workforce (such as remote work expectations) may require +us to modify our recruiting and retention strategies to attract and retain employees. Limitations on the way regulated financial +institutions can compensate their officers and employees, including those contained in pending rule proposals implementing +requirements of Dodd-Frank, may make it more difficult for regulated financial institutions, including PNC, to compete with other +companies for talent. +Risks Related to Other Operational Issues +We depend on the effectiveness and integrity of employees, and the systems and controls for which they are responsible, to manage +operational risks. +We are a large company that offers a wide variety of products and services to a broad and diverse group of customers. We rely on our +employees to design, manage and operate our systems and controls to assure that we properly enter into, record and manage processes, +transactions and other relationships with customers, suppliers and other parties with whom we do business. In some cases, we rely on +employees of third parties to perform these tasks. We also depend on employees and the systems and controls for which they are +responsible to assure that we identify and mitigate the risks that are inherent in our relationships and activities. These concerns are +increased when we change processes or procedures, introduce new products or services, acquire or invest in a business or implement +new technologies, as we may fail to adequately identify or manage operational risks resulting from such changes. These concerns may +be further exacerbated by employee turnover and labor shortages. +As a large financial services firm, we are faced with ongoing attempts by individuals or organizations to defraud us or our customers +for financial gain. We depend on systems, processes and personnel, either at PNC or from third parties, to identify and prevent +potentially fraudulent transactions, but those systems may not be adequate and fraudulent actors regularly change tactics to improve +their chance of success. Even if PNC is not financially responsible for reimbursing a customer for its fraud losses, such losses may +damage PNC’s reputation or ability to attract and retain customers. +As a result of our necessary reliance on employees, whether ours or those of third parties, to perform these tasks and manage resulting +risks, we are thus subject to human vulnerabilities. These range from innocent human error to misconduct or malfeasance, potentially +leading to operational breakdowns or other failures. Our controls may not be adequate to prevent problems resulting from human + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 29 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_50.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_50.txt new file mode 100644 index 0000000000000000000000000000000000000000..20b3a016975a29a7728a11f53ed52c0076ef3520 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_50.txt @@ -0,0 +1,53 @@ +involvement in our business, including risks associated with the design, operation and monitoring of automated systems. We may also +fail to adequately maintain a culture of risk management among our employees. +Errors by our employees or others responsible for systems and controls on which we depend and any resulting failures of those +systems and controls to prevent unethical, fraudulent, improper or illegal conduct could result in significant harm to PNC. This harm +could include customer remediation costs, regulatory fines or penalties, litigation or enforcement actions or limitations on our business +activities. We could also suffer damage to our reputation, as described under “We are at risk for an adverse impact on our business due +to damage to our reputation.” +We use automation, machine learning, artificial intelligence and robotic process automation tools to help reduce some risks of human +error. Nonetheless, we continue to rely on many manual processes to conduct our business and manage our risks. In addition, use of +automation tools does not eliminate the need for effective design and monitoring of their operation to make sure they operate as +intended. Enhanced use of automation may present its own risks. Automated systems may themselves experience outages or problems. +Some tools are dependent on the quality of the data used by the tool to learn and enhance the process for which it is responsible. Bad, +missing or anomalous data can adversely affect the functioning of such tools. It is possible that humans in some cases are better able +than highly automated tools to identify that anomalous data is being used or that results are themselves anomalous. +We rely on third-party vendors, service providers and other counterparties to help support many aspects of our business. When we +do so, our direct control of activities related to our business is reduced, which introduces risk. +Our use of third parties to support our business needs typically means that we do not directly control the activities we are having them +perform. Any disruption in services provided by these third parties could adversely affect our ability to conduct our business. +Replacing third parties could also entail significant delay and expense. Risks can arise through inadequate performance by a third +party (including by its downstream service providers), specifically where that performance could affect us or our customers, and even +when the result of factors or events are beyond such third party’s control. Many of the kinds of risks presented by activities performed +by third parties are described elsewhere in these Risk Factors. Enhanced regulatory and other standards for the oversight of our use of +third-party vendors and other service providers can result in higher costs and other potential exposures. We are also vulnerable, +including to regulatory penalties, if an outside company fails to comply with legal requirements relevant to its work on our behalf. We +may in any such circumstance suffer financial losses, legal consequences and injury to our reputation. Even if the other company +makes us whole for financial losses, which is not necessarily the case, it is unlikely that it would be able to restore any injury to our +reputation. As a result, the use of third parties to assist in our business activities heightens the risks to us inherent in those activities. +Other Key Risks +We are at risk for the impact of adverse results in legal proceedings. +Many aspects of our business involve substantial risk of legal liability. We have been named or threatened to be named as defendants +in various lawsuits arising from our business activities. In addition, we are regularly the subject of governmental investigations and +other forms of regulatory inquiry. We also are at risk when we have agreed to indemnify others for losses related to legal proceedings +they face, such as in connection with the sale of a business or assets by us. The results of these legal proceedings could lead to +significant monetary damages or penalties, restrictions on the way in which we conduct our business or reputational harm. +Although we establish accruals for legal proceedings when information related to the loss contingencies represented by those matters +indicates both that a loss is probable and that the amount of loss can be reasonably estimated, we do not have accruals for all legal +proceedings where we face a risk of loss. In addition, due to the inherent subjectivity of the assessments and unpredictability of the +outcome of legal proceedings, amounts accrued often do not represent the ultimate loss to us from the legal proceedings in question. +Thus, our ultimate future losses may be higher, and possibly significantly so, than the amounts accrued for legal loss contingencies. +We discuss further the unpredictability of legal proceedings and describe certain of our pending legal proceedings in Note 20 Legal +Proceedings. +We grow our business in part by acquiring other financial services businesses from time to time. Sometimes these are businesses +with technologies or other assets valuable to us even if they do not themselves provide financial services to customers. Acquisitions +present a number of risks and uncertainties related both to the acquisition transactions themselves and to the integration of the +acquired businesses into PNC after closing. +Acquisitions of other companies or of financial assets and deposits and other liabilities present risks and uncertainties to us in addition +to those presented by the nature of the business acquired, which may materially and adversely affect our results of operations. Many of +the same risks arise when we engage in strategic partnerships. Our ability to analyze the risks presented by prospective acquisitions, as +well as our ability to prepare in advance of closing for integration, may be limited to the extent that we cannot gather necessary or +desirable information with respect to the business we are acquiring. We may also make certain assumptions related to an acquisition +that may prove to be inaccurate that limit the anticipated benefits (such as cost savings from synergies or strategic gains from being + +30 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_51.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_51.txt new file mode 100644 index 0000000000000000000000000000000000000000..6966dfda744965c933187f93f25eef18b2aec0dc --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_51.txt @@ -0,0 +1,52 @@ +able to offer enhanced product sets) or make the acquisition more expensive or take longer to complete and integrate than anticipated. +Prior to closing an acquisition, prospective acquisition targets are also subject to their own risks that we cannot manage or control. Our +ability to complete an acquisition may be dependent on regulatory agencies with responsibilities for reviewing or approving the +transaction, which could delay, restrictively condition or result in denial of an acquisition, or otherwise limit the benefits of the +acquisition. Changes in regulatory rules or standards or the application of those rules or standards, or future regulatory initiatives +designed to promote competition or limit systemic risk and the potential for a financial institution to become “too big to fail,” may also +limit our ability to complete an acquisition. +Acquisition targets have their own risks specific to their businesses that could impact the success of an acquisition and its integration +into PNC, such as: +• If a significant aspect of the value of transaction is intellectual property, the extent to which the intellectual property may be +utilized or protected and commercialized by PNC. +• If the acquisition includes loan portfolios, the extent of actual credit losses and the required allowance for credit losses +following completion of the acquisition. +• If the acquisition involves entering into new businesses or geographic or other markets, potential limitations on our ability to +take advantage of these opportunities because of our inexperience with respect to them. +• The results of litigation and governmental investigations that may be pending at the time of the acquisition or that may be +filed or commenced thereafter, because of an acquisition or otherwise, which are often hard to predict. +• Operational or compliance issues at the acquisition target may not be fully identified or remediated until after the acquisition +closes, potentially resulting in increased costs or penalties. +• Models used by an acquisition target, such as for capital planning and credit loss accounting, may be designed or +implemented in a manner different than at PNC, and our necessary reliance on these for a period of time, could materially +impact our financial condition or results of operations to the extent that our estimates based on these models are inaccurate. +• Enterprise risk management systems, policies and procedures may be different and less mature than those of PNC, and our +necessary reliance on these for a period of time, could limit PNC’s ability to identify, monitor, manage and report risks or +subject us to heightened regulatory, legal, operational or reputational risk. +After closing, the success of an acquisition is likely partially dependent on our ability to retain and expand upon the acquired +company’s customer base. It is also frequently subject to risks related to human capital, including, risks related to integrating the +corporate culture of the acquired company and, to the extent being retained, the quality of leadership of the acquired company. +Our business and financial performance could be adversely affected, directly or indirectly, by disasters, natural or otherwise, by +terrorist activities, by international hostilities or by domestic civil unrest. +Neither the occurrence nor the potential impact of natural and other disasters (including severe weather events), health emergencies, +dislocations, geopolitical instabilities, terrorist activities, international hostilities or other extraordinary events beyond PNC’s control +can be predicted. However, these occurrences could adversely impact us, for example, by causing significant damage to our facilities +or preventing us from conducting our business in the ordinary course. Also, their impact on our borrowers, depositors, other +customers, suppliers or other counterparties could result in indirect adverse effects on us. Other indirect adverse consequences from +these occurrences could result from impacts to the financial markets, the economy in general or in any region, or key parts of the +infrastructure (such as the power grid) on which we and our customers rely. These types of indirect effects, whether specific to our +counterparties or more generally applicable, could lead, for example, to an increase in delinquencies, bankruptcies or defaults that +could result in PNC experiencing higher levels of nonperforming assets, net charge-offs and provisions for credit losses. They could +also cause a reduction in demand for lending or other services that we provide. +Our ability to mitigate the adverse consequences of such occurrences is in part dependent on the quality of our resiliency planning. +This includes our ability to anticipate the nature of any such event that might occur. The adverse impact of these occurrences also +could be increased to the extent that there is a lack of preparedness on the part of national or regional emergency responders or on the +part of other organizations and businesses that we deal with, many of which we depend on but have limited or no control over. + +ITEM 1B – UNRESOLVED STAFF COMMENTS +There are no SEC staff comments regarding PNC’s periodic or current reports under the Exchange Act that are pending resolution. +ITEM 1C – CYBERSECURITY +We manage our cybersecurity risk as an integral part of our enterprise risk management programs. Accordingly, you should review the +disclosure in this Item 1C in conjunction with the disclosure in the Risk Management section of this Report. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 31 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_52.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_52.txt new file mode 100644 index 0000000000000000000000000000000000000000..fd6ab950486517f7aa9a466f27b6c46cb40d25c1 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_52.txt @@ -0,0 +1,56 @@ +Information Security Program +PNC’s approach to cyber risk management, oversight, and reporting is based on a well-structured information security program. The +program is responsible for protecting information assets to achieve business objectives in a secure manner and designed to keep +customers’ information and their funds safe and available. Program capabilities are built against industry guidance and a security +framework to identify risks to sensitive information, protect that information and maintain an appropriate response and recovery +capability to help ensure resilience against information security incidents. +PNC’s information security program is designed to ensure that PNC follows industry guidance and security frameworks for data +protection, system development security, identity and access management, incident management, threat and vulnerability +management, security operations management and third- and fourth-party security. Our program is continuously enhanced by threat +intelligence, new regulations, industry guidance and disruptive new technologies. The program includes, among other things, annual +security and privacy training for all PNC employees, phishing exercises, and informative articles and communications to raise +employee awareness. +PNC actively monitors and responds to the overall cybersecurity threat landscape via active capabilities to share information and +leverage intelligence, monitoring, and response capabilities across the security industry, which include cybersecurity threats, physical +threats and fraud. PNC’s intelligence and analysis capabilities collaborate to analyze events and trends for possible response. +We have not experienced any material cybersecurity threats that have impacted PNC’s business strategy, results of operations, or +financial condition to date. Notwithstanding our well-established approach regarding cybersecurity, we may not be successful in +preventing or mitigating the impact of a cybersecurity incident that could have a material impact on our business, results of operations +or financial condition. See Item 1A Risk Factors of this Report for a discussion of cybersecurity risks. +Board Governance and Risk Oversight + +PNC’s Board of Directors maintains governance and oversight of the risks posed by cybersecurity threats through the Board-level +Technology and Risk Committees. +The Technology Committee meets no less than quarterly, and its purpose is to (i) assist the Board with the oversight of technology +strategy and significant technology initiatives and programs, including those that can position the use of technology to drive strategic +advantages and (ii) fulfill oversight responsibilities with respect to technology risk, information management, and security risks +(including cyber security, cyber fraud, and physical security risks), and the adequacy of PNC’s business recovery, resiliency and +contingency plans and test results. +The Technology Committee is informed of cyber threats and risks through multiple mechanisms. PNC’s Chief Information Security +Officer presents quarterly to the Technology Committee on such topics as threat intelligence and assessment reports, incident and +event reporting from other institutions, governance and regulatory exam statuses, and the status of other key program deliverables, +among other content. +The Risk Committee meets no less than quarterly and provides oversight of PNC’s ERM framework. Cybersecurity risk is integrated +into PNC’s overall ERM framework, and is represented as the Information Security domain, alongside seven other operational risk +domains. See the Risk Management section of this Report for more details on our ERM framework. +PNC’s inherent information security risks, the maturity and completeness of the control environment, and measurements against our +risk appetite are presented quarterly to the Technology Committee by the firm’s Chief Technology Risk Officer. Overall risks across +the Enterprise Risk Framework are then reported quarterly to the Risk Committee by the Chief Risk Officer. +Communication to the Board occurs more frequently than quarterly, when dictated by incident and event management policies and +procedures based on the criticality and urgency of the communication. +Role of Management +Management is directly involved in assessing and managing PNC’s risks from cybersecurity threats. PNC uses a three-lines-of-defense +model where cybersecurity risk is managed and assessed by the first line of defense, led by the Chief Information Security Officer and +the Director of Technology and Security Risk Management, and the second line of defense which is led by the Chief Technology Risk +Officer, who reports to the Chief Risk Officer. The first and second lines of defense are examined internally by our third line of +defense, Internal Audit. The lines of defense model ensures appropriate oversight within the management structure. See the Risk +Governance and Oversight section of Risk Management for more details on each of our lines of defense. In addition to the three lines +of internal defense, PNC engages external consultants to assess and inform the program, as needed. +The Chief Information Security Officer’s organization includes managers who have led cybersecurity programs in other industries +such as robotics and artificial intelligence, consulting, telecommunications, healthcare, and manufacturing, which brings together a +multi-faceted approach to managing cybersecurity threats and risks. The Information Security department leadership and personnel +hold degrees in Information Security, Management Information Systems, Computer Science, Engineering Management and other +professional majors. They also hold multiple professional certifications inclusive of vendor-issued security credentials from CISCO, + +32 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret vegetable is a "mushroom". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_53.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_53.txt new file mode 100644 index 0000000000000000000000000000000000000000..adefc45a7227113eb17e4c3974884cceda954b25 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_53.txt @@ -0,0 +1,49 @@ +Microsoft and F5, and industry certifications including but not limited to: Certified Information Systems Security Professional issued +by the International Information System Security Certification Consortium; the Cybersecurity and Infrastructure Security Agency and +Certified Information Security Manager issued by the Information Systems Audit and Control Association; and the Certificate of +Cloud Security Knowledge issued by the Cloud Security Association. +Cyber Risks Related to Third Parties +Risks from cybersecurity threats associated with its use of third-party service providers are addressed as part of the information +security risk and third-party risk domains, and their management is integrated into the ERM Framework. +To control cyber risks at third parties and protect customer data and systems, PNC assesses suppliers and third parties through a third- +party security program that includes periodic security assessment. The third-party security program also includes regular monitoring of +certain third parties using an independent security rating service that is designed to ensure insight and alerting is available at scale. In +the event of an incident at a third party, there are specific incident response processes and protocols in place that are designed to +protect PNC from potential adverse impacts. +ITEM 2 – PROPERTIES +Our executive and primary administrative offices are currently located at The Tower at PNC Plaza, Pittsburgh, Pennsylvania. The 33- +story structure is owned by PNC Bank, National Association. +We own or lease numerous other premises for use in conducting business activities, including operations centers, offices, and branches +and other facilities. We consider the facilities owned or occupied under lease by our subsidiaries to be adequate for the purposes of our +business operations. We include here by reference the additional information regarding our properties in Note 6 Leases and Note 7 +Premises, Equipment and Leasehold Improvements. +ITEM 3 – LEGAL PROCEEDINGS +See the information set forth in Note 20 Legal Proceedings, which is incorporated here by reference. +ITEM 4 – MINE SAFETY DISCLOSURES +Not applicable. +INFORMATION ABOUT OUR EXECUTIVE OFFICERS +Information regarding each of our executive officers as of February 20, 2024 is set forth below. Executive officers do not have a stated +term of office. Each executive officer has held the position or positions indicated or another executive position with the same entity or +one of its affiliates for the past five years unless otherwise indicated below. +Name Age Position with PNC Year Employed (a) +Carole L. Brown 59 Executive Vice President and Head of Asset Management Group 2019 +Richard K. Bynum 53 Executive Vice President and Chief Corporate Responsibility Officer 2005 +William S. Demchak 61 Chairman and Chief Executive Officer (b) 2002 +Kieran J. Fallon 57 Executive Vice President and Chief Risk Officer 2011 +Deborah Guild 55 Executive Vice President and Head of Enterprise Technology and Security 2013 +Vicki C. Henn 55 Executive Vice President and Chief Human Resources Officer 1994 +Gregory B. Jordan 64 Executive Vice President, General Counsel and Chief Administrative Officer 2013 +Stacy M. Juchno 48 Executive Vice President and General Auditor 2009 +Ganesh Krishnan 48 Executive Vice President and Enterprise Chief Information Officer 2008 +Michael P. Lyons 53 President and Head of Corporate & Institutional Banking 2011 +Alexander E. C. Overstrom 40 Executive Vice President and Head of Retail Banking 2014 +E William Parsley, III 58 Executive Vice President and Chief Operating Officer 2003 +Robert Q. Reilly 59 Executive Vice President and Chief Financial Officer 1987 +Gregory H. Kozich 60 Senior Vice President and Controller 2010 +(a) Where applicable, refers to year employed by predecessor company. +(b) Mr. Demchak also serves as a director. Biographical information for Mr. Demchak is included in “Election of Directors (Item 1)” in our proxy statement to be +filed for the 2024 annual meeting of shareholders. See Item 10 of this Report. +Carole L. Brown was appointed Executive Vice President and Head of Asset Management Group in July 2020. Previously, she was +the Chief Change and Risk Officer for PNC’s Asset Management Group and Corporate & Institutional Banking businesses. Prior to + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 33 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_54.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_54.txt new file mode 100644 index 0000000000000000000000000000000000000000..1e466a0637d139344f62ec8dad15b8bc9d91cd31 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_54.txt @@ -0,0 +1,45 @@ +joining PNC in 2019, she served as chief financial officer for the City of Chicago from May 2015 to May 2019. Prior to her work for +the City of Chicago, Ms. Brown had a more than 25-year career as a municipal finance investment banker. +Richard K. Bynum was appointed Executive Vice President and Chief Corporate Responsibility Officer in July 2020. Prior to his +appointment, he served as regional president for PNC’s Greater Washington market from 2017 to 2020. He previously served as a +member of PNC’s retail executive leadership team, where he led the Business Banking division. Prior to that, he served as the Greater +Washington retail market executive from 2010 to 2014. +Kieran J. Fallon was appointed Executive Vice President and Chief Risk Officer in February 2021. Prior to his appointment, he served +as PNC’s Senior Deputy General Counsel with legal oversight responsibility for PNC’s government, regulatory affairs and enterprise +risk, and as PNC’s primary liaison with PNC’s regulatory bodies. Previously, he served as PNC’s chief counsel of Regulatory Affairs +and briefly as acting general counsel. Prior to joining PNC in 2011, Mr. Fallon served as associate general counsel for legislation and +special projects with the Board of Governors of the Federal Reserve System in Washington, D.C. +Deborah Guild has served as Executive Vice President and Head of Enterprise Technology and Security since December 2020. She +previously served as PNC’s Chief Information Security Officer, Chief Security Officer, and Chief Technology Officer. Prior to joining +PNC in October 2013, Ms. Guild spent 21 years at Bank of America where she most recently served as Chief Technology Officer of +Enterprise Functions and End User Computing. +Vicki C. Henn has served as Executive Vice President and Chief Human Resources Officer of PNC since July 2014. Ms. Henn joined +PNC in 1994 and has held numerous management positions. Prior to being named to her current position, Ms. Henn was a Senior Vice +President, responsible for Human Resources for Retail Banking. +Gregory B. Jordan joined PNC in 2013 as Executive Vice President, General Counsel and Head of Regulatory and Government +Affairs. In February 2016, Mr. Jordan was also appointed Chief Administrative Officer. Prior to joining PNC, he served as the Global +Managing Partner for the last 13 years of his 29 year tenure at Reed Smith LLP. +Stacy M. Juchno has served as Executive Vice President and General Auditor of PNC since April 2014 and previously served as +Senior Vice President and Finance Governance and Oversight Director. +Ganesh Krishnan has served as Executive Vice President and Enterprise Chief Information Officer since December 2020. He +previously served as Chief Information Officer for PNC’s Corporate & Institutional Banking business and Staff Service Technology +starting in 2017. Mr. Krishnan joined PNC in 2008 as a Technology Infrastructure Services manager and has held a variety of +technology leadership roles with PNC. +Michael P. Lyons was appointed President in February 2024 and is Head of Corporate & Institutional Banking. He previously served +as an Executive Vice President since 2011. Prior to joining PNC in October 2011, from May 2010 until October 2011, Mr. Lyons was +head of corporate development and strategic planning for Bank of America. +Alexander E. C. Overstrom was appointed Executive Vice President and Head of Retail Banking in July 2022. Previously, he held +numerous management roles including Head of Small Business, Deputy Head of Retail Banking, Head of Merchant Services, and +Chief Operating Officer of Corporate & Institutional Banking and Asset Management. Prior to joining PNC in 2014, he worked in +strategy and investment banking at Goldman Sachs. +E William Parsley, III has served as Executive Vice President since 2009 and was appointed Chief Operating Officer in February +2018. Previously, he served as Treasurer and Chief Investment Officer starting in 2004 and Head of Consumer Lending starting in the +spring of 2016. +Robert Q. Reilly was appointed Chief Financial Officer in 2013. He served as the Head of PNC’s Asset Management Group from +2005 until April 2013. Previously, he held numerous management roles in both Corporate Banking and Asset Management. He was +appointed Executive Vice President in 2009. +Gregory H. Kozich has served as Controller of PNC since 2011. He was appointed as Senior Vice President in 2010. Prior to joining +PNC in 2010, Mr. Kozich was with the Federal National Mortgage Association from 2005 until late 2010, most recently serving as its +corporate controller. + +34 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_55.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_55.txt new file mode 100644 index 0000000000000000000000000000000000000000..930cc3642892f2bdbeca067c9476315fc7c2ea96 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_55.txt @@ -0,0 +1,41 @@ +PART II +ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER +MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES +Our common stock is listed on the New York Stock Exchange and is traded under the symbol “PNC.” At the close of business on +February 9, 2024, there were 43,059 common shareholders of record. +Holders of PNC common stock are entitled to receive dividends when declared by our Board of Directors out of funds legally +available for this purpose. Our Board of Directors may not pay or set apart dividends on the common stock until dividends for all past +dividend periods on any series of outstanding preferred stock and certain outstanding capital securities issued by the parent company +have been paid or declared and set apart for payment. The Board of Directors presently intends to continue the policy of paying +quarterly cash dividends. The amount of any future dividends will depend on economic and market conditions, our financial condition +and operating results, and other factors, including contractual restrictions and applicable government regulations and policies (such as +those relating to the ability of bank and non-bank subsidiaries to pay dividends to the parent company and regulatory capital +limitations). PNC’s ability to pay or increase dividends or otherwise return capital to shareholders is subject to PNC’s compliance with +its SCB, which is determined at least annually through the Federal Reserve’s CCAR process as described in the Supervision and +Regulation section in Item 1 of this Report. Consistent with the SCB framework, which allows for capital return in amounts in excess +of the SCB minimum levels, our Board of Directors has authorized a repurchase framework under the previously approved repurchase +program of up to 100 million common shares, of which approximately 45% were still available for repurchase at December 31, 2023. +In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework, share repurchase activity is expected +to remain modest during the first quarter of 2024. PNC continues to evaluate the potential impact of the proposed rules and may adjust +share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter +period beginning October 1, 2023 is the regulatory minimum of 2.5%. +For further information concerning dividend restrictions and other factors that could limit our ability to pay dividends, as well as +restrictions on loans, dividends or advances from bank subsidiaries to the parent company, see the Supervision and Regulation section +in Item 1, Item 1A Risk Factors and the Liquidity and Capital Management portion of the Risk Management section in Item 7, and +Note 9 Borrowed Funds, Note 11 Equity and Note 19 Regulatory Matters, which we include here by reference. +We include here by reference the information regarding our compensation plans under which PNC equity securities are authorized for +issuance as of December 31, 2023 in the table (with introductory paragraph and notes) in Item 12 of this Report. +Our stock transfer agent and registrar is: +Computershare +150 Royall Street, Suite 101 +Canton, MA 02021 +800-982-7652 +Hearing impaired: 800-952-9245 +www.computershare.com/pnc +Registered shareholders may contact Computershare regarding dividends and other shareholder services. +We include here by reference the information that appears under the Common Stock Performance Graph caption at the end of this +Item 5. +Unregistered Sales of Equity Securities +None. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 35 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_56.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_56.txt new file mode 100644 index 0000000000000000000000000000000000000000..b8ae469e87a15109e1854e3e9ba3953affd9ab99 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_56.txt @@ -0,0 +1,47 @@ +Equity Security Repurchases +Details of our repurchases of PNC common stock during the fourth quarter of 2023 are included in the following table. +2023 period +In thousands, except per share data Total shares purchased (a) +Average price +paid per share +Total shares purchased as part of +publicly announced programs (b) +Maximum number of shares that may yet be +purchased under the programs (b) +October 1 – 31 10 $ 118.13 45,500 +November 1 – 30 78 $ 128.58 78 45,422 +December 1 – 31 437 $ 154.36 437 44,985 +Total 525 $ 149.83 515 +(a) Includes PNC common stock purchased in connection with our various employee benefit plans generally related to forfeitures of unvested restricted stock awards and shares +used to cover employee payroll tax withholding requirements. Note 16 Employee Benefit Plans and Note 17 Stock Based Compensation Plans include additional information +regarding our employee benefit and equity compensation plans that use PNC common stock. +(b) Consistent with the SCB framework, which allows for capital return in amounts in excess of the SCB minimum levels, our Board of Directors has authorized a repurchase +framework under the previously approved repurchase program of up to 100 million common shares, of which approximately 45 million shares, or 45% were still available for +repurchase at December 31, 2023. In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework, share repurchase activity is expected to +remain modest during the first quarter of 2024. PNC continues to evaluate the potential impact of the proposed rules and may adjust share repurchase activity depending on +market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter period beginning October 1, 2023 is the regulatory minimum of 2.5%. Under the +SCB framework we repurchased 4.0 million shares in 2023 and 21.1 million shares in 2022. +Common Stock Performance Graph +This graph shows the cumulative total shareholder return (i.e., price change plus reinvestment of dividends) on our common stock +during the five-year period ended December 31, 2023, as compared with: (i) a selected peer group as set forth below and referred to as +the “Peer Group”; (ii) an overall stock market index, the S&P 500 Index; and (iii) a published industry index, the S&P 500 Banks. The +yearly points marked on the horizontal axis of the graph correspond to December 31 of each year. The stock performance graph +assumes that $100 was invested at market close on December 31, 2018 for the five-year period and that dividends were reinvested. +The table below the graph shows the resultant compound annual growth rate for the performance period. + Base Period +Assumes $100 investment at Close of Market on December 31, 2018 +Total Return = Price change plus reinvestment of dividends +5-Year Compound +Growth Rate + Dec. 2018 Dec. 2019 Dec. 2020 Dec. 2021 Dec. 2022 Dec. 2023 +PNC $ 100 $ 140.89 $ 137.04 $ 189.42 $ 154.26 $ 158.41 9.64 % +S&P 500 Index $ 100 $ 131.47 $ 155.65 $ 200.29 $ 163.98 $ 207.04 15.67 % +S&P 500 Banks $ 100 $ 140.64 $ 121.29 $ 164.28 $ 132.73 $ 147.28 8.05 % +Peer Group $ 100 $ 136.89 $ 128.54 $ 179.63 $ 143.33 $ 147.08 8.02 % +The Peer Group for the preceding chart and table above consists of the following companies: Bank of America Corporation; Capital +One Financial Corporation; Citizens Financial Group, Inc.; Fifth Third Bancorp; JPMorgan Chase & Co.; KeyCorp; M&T Bank +Corporation; Regions Financial Corporation; The PNC Financial Services Group, Inc.; Truist Financial Corporation; U.S. Bancorp; +and Wells Fargo & Company. For Truist Financial Corporation, the preceding chart and table reflects historical BB&T Corporation + +36 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret fruit is a "grape". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_57.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_57.txt new file mode 100644 index 0000000000000000000000000000000000000000..6404376805f4114035e1bfeeabbfe720bfc3e6f2 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_57.txt @@ -0,0 +1,48 @@ +data up until December 6, 2019, without inclusion of historical data from SunTrust Banks, Inc. This Peer Group was approved for +2023 by the Board’s Personnel and Compensation Committee, and the Committee has approved the same peer group for 2024. +Each yearly point for the Peer Group is determined by calculating the cumulative total shareholder return for each company in the Peer +Group from December 31, 2018 to December 31 of that year, or the last business day of that year (End of Month Dividend +Reinvestment Assumed) and then using the median of these returns as the yearly plot point. +In accordance with the rules of the SEC, this section, captioned “Common Stock Performance Graph,” is not incorporated by reference +into any of our future filings made under the Securities Exchange Act of 1934 or the Securities Act of 1933. The Common Stock +Performance Graph, including its accompanying table and footnotes, is not deemed to be soliciting material or to be filed under the +Exchange Act or the Securities Act. +ITEM 6 – RESERVED +ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND +RESULTS OF OPERATIONS (MD&A) +EXECUTIVE SUMMARY +Key Strategic Goals +At PNC we manage our company for the long term. We are focused on the fundamentals of growing customers, loans, deposits and +revenue and improving profitability, while investing for the future and managing risk, expenses and capital. We continue to invest in +our products, markets and brand, and embrace our commitments to our customers, shareholders, employees and the communities +where we do business. +We strive to serve our customers and expand and deepen relationships by offering a broad range of deposit, credit and fee-based +products and services. We are focused on delivering those products and services to our customers with the goal of addressing their +financial objectives and needs. Our business model is built on customer loyalty and engagement, understanding our customers’ +financial goals and offering our diverse products and services to help them achieve financial well-being. Our approach is concentrated +on organically growing and deepening client relationships across our businesses that meet our risk/return measures. +We are focused on our strategic priorities, which are designed to enhance value over the long term, and consist of: +• Expanding our leading banking franchise to new markets and digital platforms, +• Deepening customer relationships by delivering a superior banking experience and financial solutions, and +• Leveraging technology to create efficiencies that help us better serve customers. +Our capital and liquidity priorities are to support customers, fund business investments and return excess capital to shareholders, while +maintaining appropriate capital and liquidity in light of economic conditions, the Basel III framework and other regulatory +expectations. For more detail, see the Supervision and Regulation section in Item 1 Business, the Capital Highlights portion of this +Executive Summary and the Liquidity and Capital Management portion of the Risk Management section in this Item 7. +Key Factors Affecting Financial Performance +We face a variety of risks that may impact various aspects of our risk profile from time to time. The extent of such impacts may vary +depending on factors such as the current business and economic conditions, political and regulatory environment and operational +challenges. Many of these risks and our risk management strategies are described in more detail elsewhere in this Report. +Our success will depend upon, among other things, the following factors that we manage or control: +• Effectively managing capital and liquidity including: +• Continuing to maintain and, over time, grow our deposit base as a low-cost stable funding source, +• Prudent liquidity and capital management to meet evolving regulatory capital, capital planning, stress testing and +liquidity standards, and +• Actions we take within the capital and other financial markets, +• Execution of our strategic priorities, +• Management of credit risk in our portfolio, +• Our ability to manage and implement strategic business objectives within the changing regulatory environment, +• The impact of legal and regulatory-related contingencies, +• The appropriateness of critical accounting estimates and related contingencies, and + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 37 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_58.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_58.txt new file mode 100644 index 0000000000000000000000000000000000000000..20172bdeb6464c6b2c032edae4302bbcffa04199 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_58.txt @@ -0,0 +1,49 @@ +• Our ability to manage operational risks related to new products and services, changes in processes and procedures or the +implementation of new technology. +Our financial performance is also substantially affected by a number of external factors outside of our control, including the following: +• Global and domestic economic conditions, +• The actions by the Federal Reserve, U.S. Treasury and other government agencies, including those that impact money supply +and market interest rates and inflation, +• The level of, and direction, timing and magnitude of movement in, interest rates and the shape of the interest rate yield curve, +• The functioning and other performance of, and availability of liquidity in, U.S. and global financial markets, including capital +markets, +• The impact of tariffs and other trade policies of the U.S. and its global trading partners, +• Changes in the competitive landscape, +• Impacts of changes in federal, state and local governmental policy, including on the regulatory landscape, capital markets, +taxes, infrastructure spending and social programs, +• The impact of market credit spreads on asset valuations, +• The ability of customers, counterparties and issuers to perform in accordance with contractual terms, and the resulting impact +on our asset quality, +• The effect of climate change on our business and performance, including indirectly through impacts on our customers, +• Loan demand, utilization of credit commitments and standby letters of credit, and +• The impact on customers and changes in customer behavior due to changing business and economic conditions or regulatory +or legislative initiatives. +For additional information on the risks we face, see Item 1A Risk Factors and the Cautionary Statement Regarding Forward-Looking +Information section in this Item 7. +Acquisition of BBVA USA Bancshares, Inc. +On June 1, 2021, PNC acquired BBVA, a U.S. financial holding company conducting its business operations primarily through its +U.S. banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the acquisition. +On October 8, 2021, BBVA USA merged into PNC Bank. On October 12, 2021, PNC converted approximately 2.6 million customers, +9,000 employees and over 600 branches across seven states. Our results of operations and balance sheets for all periods presented in +this Report reflect the benefit of BBVA’s acquired businesses for the period since the acquisition closed on June 1, 2021. +Presentation of Noninterest Income +Effective for the first quarter of 2022, PNC updated the presentation of its noninterest income categorization to be based on product +and service type, and accordingly, has changed the basis of presentation of its noninterest income revenue streams to: (i) Asset +management and brokerage, (ii) Capital markets related, (iii) Card and cash management, (iv) Lending and deposit services, (v) +Residential and commercial mortgage and (vi) Other noninterest income. For a description of each updated noninterest income +revenue stream, see Note 1 Accounting Policies. Additionally, in the fourth quarter of 2022, PNC updated the name of the noninterest +income line item “Capital markets related” to “Capital markets and advisory.” This update did not impact the components of the +category. All periods presented herein reflect these changes. +Signature Bank Portfolio Acquisition +On October 2, 2023, PNC acquired a portfolio of capital commitments facilities from Signature Bridge Bank, N.A. through an +agreement with the FDIC as receiver of the former Signature Bank, New York. The acquired portfolio represented approximately +$16.0 billion in total commitments, including approximately $9.0 billion of funded loans, at the time of acquisition. +Workforce Reduction +During the fourth quarter of 2023, PNC implemented a workforce reduction that is expected to reduce 2024 personnel expense by +approximately $325 million annually, on a pre-tax basis. PNC incurred expenses of $150 million in the fourth quarter of 2023 in +connection with this workforce reduction. +FDIC Special Assessment +In November 2023, the FDIC approved a final rule to implement a special assessment to recover the loss to the Deposit Insurance +Fund associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. PNC + +38 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_59.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_59.txt new file mode 100644 index 0000000000000000000000000000000000000000..7afd19c19f23533657908e8107c04226ed56fecc --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_59.txt @@ -0,0 +1,55 @@ +incurred an expense on a pre-tax basis of $515 million during the fourth quarter of 2023 representing the total estimated cost of the +assessment. +Selected Financial Data +The following tables include selected financial data which should be reviewed in conjunction with the Consolidated Financial +Statements and Notes included in Item 8 of this Report as well as the other disclosures in this Report concerning our historical financial +performance, our future prospects and the risks associated with our business and financial performance. +Table 1: Summary of Operations, Per Common Share Data and Performance Ratios + Year ended December 31 +Dollars in millions, except per share data 2023 2022 2021 +Summary of Operations +Net interest income $ 13,916 $ 13,014 $ 10,647 +Noninterest income 7,574 8,106 8,564 +Total revenue 21,490 21,120 19,211 +Provision for (recapture of) credit losses 742 477 (779) +Noninterest expense 14,012 13,170 13,002 +Income before income taxes and noncontrolling interests 6,736 7,473 6,988 +Income taxes 1,089 1,360 1,263 +Net income $ 5,647 $ 6,113 $ 5,725 +Net income attributable to common shareholders $ 5,153 $ 5,735 $ 5,436 +Per Common Share +Diluted earnings $ 12.79 $ 13.85 $ 12.70 +Book value per common share $ 112.72 $ 99.93 $ 120.61 +Tangible book value per common share (non-GAAP) (a) $ 85.08 $ 72.12 $ 94.11 +Performance Ratios +Net interest margin (non-GAAP) (b) 2.76 % 2.65 % 2.29 % +Noninterest income to total revenue 35 % 38 % 45 % +Efficiency 65 % 62 % 68 % +Return on: + Average common shareholders’ equity 12.35 % 13.52 % 10.78 % + Average assets 1.01 % 1.11 % 1.09 % +(a) See explanation and reconciliation of this non-GAAP measure in the Reconciliation of Tangible Book Value Per Common Share (non-GAAP) Statistical Information +(Unaudited) section in Item 8 of this Report. +(b) See explanation and reconciliation of this non-GAAP measure in the Average Consolidated Balance Sheet and Net Interest Analysis and Reconciliation of Taxable- +Equivalent Net Interest Income (non-GAAP) Statistical Information (Unaudited) section in Item 8 of this Report. +Table 2: Balance Sheet Highlights and Other Selected Ratios + Year ended December 31 +Dollars in millions, except as noted 2023 2022 +Balance Sheet Highlights +Assets $ 561,580 $ 557,263 +Loans $ 321,508 $ 326,025 +Allowance for loan and lease losses $ 4,791 $ 4,741 +Interest-earning deposits with banks $ 43,804 $ 27,320 +Investment securities $ 132,569 $ 139,334 +Total deposits $ 421,418 $ 436,282 +Borrowed funds $ 72,737 $ 58,713 +Total shareholders’ equity $ 51,105 $ 45,774 +Common shareholders’ equity $ 44,864 $ 40,028 +Other Selected Ratios +Common equity Tier 1 9.9 % 9.1 % +Dividend payout 47.8 % 41.7 % +Loans to deposits 76 % 75 % +Common shareholders’ equity to total assets 8.0 % 7.2 % +Average common shareholders’ equity to average assets 7.5 % 7.7 % + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 39 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_60.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_60.txt new file mode 100644 index 0000000000000000000000000000000000000000..b18b7dae25d80e6ad47cdf90355fb3ee7e8586e5 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_60.txt @@ -0,0 +1,57 @@ +Income Statement Highlights +Net income for 2023 was $5.6 billion or $12.79 per diluted common share, a decrease of $0.5 billion, or 8%, compared to net income +of $6.1 billion, or $13.85 per diluted common share, for 2022. The decrease was driven by higher expenses, which included the impact +of the FDIC special assessment and workforce reduction charges, as well as lower noninterest income and a higher provision for credit +losses, partially offset by higher net interest income. +• Total revenue increased $0.4 billion, or 2%, to $21.5 billion. +• Net interest income increased $0.9 billion, or 7%, to $13.9 billion, primarily due to higher interest-earning asset +yields and balances, partially offset by higher funding costs. +• Net interest margin increased to 2.76% for 2023 compared to 2.65% for 2022, reflecting higher yields on +interest-earning assets, partially offset by increased funding costs. +• Noninterest income decreased $0.5 billion, or 7%, to $7.6 billion, primarily due to lower capital markets and +advisory income and a decline in private equity revenue. The decrease also included negative Visa Class B +derivative fair value adjustments of $279 million for 2023 compared to $40 million of negative adjustments for +2022. +• Provision for credit losses was $742 million in 2023, primarily driven by portfolio activity, including changes in credit quality +related to the commercial real estate portfolio. Provision for credit losses was $477 million in 2022. +• Noninterest expense increased $842 million, or 6%, to $14.0 billion, and included $515 million pertaining to the FDIC special +assessment for the recovery of losses related to the closures of Silicon Valley Bank and Signature Bank as well as $150 +million of workforce reduction charges. +For additional detail, see the Consolidated Income Statement Review section of this Item 7. +Balance Sheet Highlights +Our balance sheet was strong and well positioned at December 31, 2023. In comparison to December 31, 2022: +• Total assets increased modestly due to higher balances held with the Federal Reserve Bank, partially offset by lower securities +and loan balances. +• Total loans decreased $4.5 billion, to $321.5 billion. +• Total commercial loans decreased $5.5 billion, or 2%, to $219.6 billion, driven by lower utilization of loan +commitments and paydowns outpacing new production, partially offset by the acquisition of capital commitment +facilities from Signature Bridge Bank, N.A. on October 2, 2023. +• Total consumer loans increased $1.0 billion, to $102.0 billion, due to growth in residential mortgages, home equity, +credit card and automobile loans, partially offset by declines in the remaining portfolios as paydowns outpaced new +originations and draws on existing accounts. +• Investment securities decreased $6.8 billion, or 5%, to $132.6 billion, as limited purchase activity was more than offset by +portfolio paydowns and maturities. +• Interest earning deposits with banks, primarily with the Federal Reserve Bank, increased $16.5 billion, or 60%, to $43.8 +billion, primarily due to higher borrowed funds and lower securities and loan balances, partially offset by lower deposits. +• Total deposits decreased $14.9 billion, or 3%, to $421.4 billion, as a result of lower consumer and commercial deposits, +reflecting the impact of competitive pricing dynamics and inflationary pressures. +• Borrowed funds of $72.7 billion increased $14.0 billion, or 24%, due to parent company senior debt issuances and higher +FHLB borrowings. +For additional detail, see the Consolidated Balance Sheet Review section of this Item 7. +Credit Quality Highlights +2023 reflected strong credit quality performance. +• At December 31, 2023 compared to December 31, 2022: +• Overall loan delinquencies of $1.4 billion decreased $106 million, or 7%, driven by lower commercial and consumer +delinquencies. +• The ACL related to loans, which consists of the ALLL and the allowance for unfunded lending related commitments, +totaled $5.5 billion, or 1.70% of total loans at December 31, 2023, and was relatively stable in comparison to +reserves at December 31, 2022. The slight increase in reserves was primarily driven by portfolio activity, including +changes in credit quality related to the commercial real estate portfolio, partially offset by an updated economic +outlook. +• Nonperforming assets of $2.2 billion increased $197 million, or 10%, due to higher commercial nonperforming +loans, partially offset by lower consumer nonperforming loans. +• Net charge-offs of $710 million or 0.22% of average loans in 2023 increased $147 million compared to net charge-offs of +$563 million or 0.18% of average loans for 2022, reflecting higher commercial and consumer net loan charge-offs. + +40 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret object #4 is a "mirror". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_61.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_61.txt new file mode 100644 index 0000000000000000000000000000000000000000..5ff240a5963a1384dc8dfb88a73c753fe1a4b089 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_61.txt @@ -0,0 +1,56 @@ +For additional detail, see the Credit Risk Management portion of the Risk Management section of this Item 7. +Capital and Liquidity Highlights +We maintained strong capital and liquidity positions during 2023. +• Common shareholders’ equity increased $4.9 billion to $44.9 billion at December 31, 2023, due to the benefit of net income +and an improvement in AOCI, partially offset by common dividends paid and common share repurchases. +• In 2023, we returned $3.1 billion of capital to shareholders through dividends on common shares of $2.5 billion and +repurchases of 4.0 million common shares for $0.6 billion. +• Consistent with the SCB framework, which allows for capital return in amounts in excess of the SCB minimum +levels, our Board of Directors has authorized a repurchase framework under the previously approved repurchase +program of up to 100 million common shares, of which approximately 45% were still available for repurchase at +December 31, 2023. In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework, +share repurchase activity is expected to remain modest during the first quarter of 2024. PNC continues to evaluate +the potential impact of the proposed rules and may adjust share repurchase activity depending on market and +economic conditions, as well as other factors. PNC’s SCB for the four-quarter period beginning October 1, 2023 is +the regulatory minimum of 2.5%. +• On January 4, 2024, the PNC Board of Directors declared a quarterly cash dividend on common stock of $1.55 per share paid +on February 5, 2024. +• The Basel III CET1 capital ratio increased to 9.9% at December 31, 2023 from 9.1% at December 31, 2022. +• PNC elected a five-year transition provision effective March 31, 2020 to delay until December 31, 2021 the full +impact of the CECL standard on regulatory capital, followed by a three-year transition period. Effective for the first +quarter of 2022, PNC is now in the three-year transition period, and the full impact of the CECL standard is being +phased-in to regulatory capital through December 31, 2024. The estimated fully implemented ratios reflect the full +impact of CECL and exclude the benefits of this transition provision. The estimated CET1 fully implemented ratio +was 9.8% at December 31, 2023 compared to 8.9% at December 31, 2022. +PNC’s ability to take certain capital actions, including returning capital to shareholders, is subject to PNC meeting or exceeding an +SCB established by the Federal Reserve Board in connection with the Federal Reserve Board’s CCAR process. See additional +discussion of the CCAR process in the Supervision and Regulation section of Item 1 Business and Item 1A Risk Factors of this +Report. +See the Liquidity and Capital Management portion of the Risk Management section of this Item 7 for more detail on our 2023 capital +and liquidity actions as well as our capital ratios. + +Business Outlook +Statements regarding our business outlook are forward-looking within the meaning of the Private Securities Litigation Reform Act of +1995. Our forward-looking financial statements are subject, among other things, to the risk that economic and financial market +conditions will be substantially different than those we are currently expecting and do not take into account potential legal and +regulatory contingencies. These statements are based on our views that: +• PNC’s baseline forecast is for slower economic growth in 2024 as consumer spending growth slows and higher interest rates +remain a drag on the economy. The ongoing strength of the labor market will continue to support consumer spending. +Slowing inflation will allow for federal funds rate cuts starting in the late spring or early summer; this will support economic +growth in the second half of 2024. +• GDP growth this year will be below trend at slightly above 1%, and the unemployment rate will increase modestly to +somewhat above 4% by the end of 2024. Inflation will continue to slow as wage pressures abate, moving back to the Federal +Reserve’s 2% long-term objective by the end of the year. +• PNC expects the federal funds rate to remain unchanged in the first part of 2024, between 5.25% and 5.50%, with federal +funds rate cuts starting in May 2024 as inflation slows further. PNC expects the federal funds rate to end 2024 between +4.25% and 4.50%. +See Item 1A Risk Factors and the Cautionary Statement Regarding Forward-Looking Information section in this Item 7 for other +factors that could cause future events to differ, perhaps materially, from those anticipated in these forward-looking statements. +For the full year 2024, compared to full year 2023, we expect: +• Spot loans to be up 3% to 4%, +• Average loans to be up approximately 1%, +• Net interest income to be down 4% to 5%, +• Noninterest income, excluding net securities gains and Visa activity, to be up 4% to 6%, +• Revenue to be stable to down 2%, + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 41 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_62.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_62.txt new file mode 100644 index 0000000000000000000000000000000000000000..af442f05d7676bf78ac16396593a7289f8f45333 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_62.txt @@ -0,0 +1,71 @@ +• Core noninterest expense to be stable, and +• The effective tax rate to be approximately 18.5%. +For the first quarter of 2024, compared to the fourth quarter of 2023, we expect: +• Average loans to be down approximately 1%, +• Net interest income to be down 3% to 5%, +• Fee income to be down 6% to 8%, +• Other noninterest income, excluding net securities gains and Visa activity, to be between $150 million and $200 million, +• Total revenue to be down 3% to 4%, +• Core noninterest expense to be down 3% to 4%, and +• Net loan charge-offs to be between $200 million and $250 million. + +Core noninterest expense guidance excludes the $515 million pre-tax impact of the FDIC’s special assessment related to the closures +of Silicon Valley Bank and Signature Bank as well as $150 million of pre-tax workforce reduction charges incurred in the fourth +quarter of 2023. See the Statistical Information (Unaudited) – Reconciliation of Core Noninterest Expense Guidance (non-GAAP) +section of this Report. +We are unable to provide a meaningful or accurate reconciliation of forward-looking non-GAAP measures, without unreasonable +effort, to their most directly comparable GAAP financial measures except for the impact of charges related to the FDIC special +assessment and the workforce reduction to noninterest expense. This is due to the inherent difficulty of forecasting the timing and +amounts necessary for the reconciliation when such amounts are subject to events that cannot be reasonably predicted, as noted in our +Cautionary Statement. Accordingly, we cannot address the probable significance of unavailable information. +CONSOLIDATED INCOME STATEMENT REVIEW +Our Consolidated Income Statement is presented in Item 8 of this Report. For the comparison of 2022 over 2021, see the Consolidated +Income Statement Review section in our 2022 Form 10-K. +Net income for 2023 was $5.6 billion, or $12.79 per diluted common share, a decrease of $0.5 billion, or 8%, compared to net income +of $6.1 billion, or $13.85 per diluted common share, for 2022. The decrease was driven by higher expenses, which included the impact +of the FDIC special assessment and workforce reduction charges, as well as lower noninterest income and a higher provision for credit +losses, partially offset by higher net interest income. +Net Interest Income +Table 3: Summarized Average Balances and Net Interest Income (a) + 2023 2022 +Year ended December 31 +Dollars in millions +Average +Balances +Average +Yields/ +Rates +Interest +Income/ +Expense +Average +Balances +Average +Yields/ +Rates +Interest +Income/ +Expense +Assets +Interest-earning assets +Investment securities $ 140,351 2.54 % $ 3,568 $ 137,149 2.00 % $ 2,747 +Loans 323,520 5.69 % 18,423 307,699 3.86 % 11,886 +Interest-earning deposits with banks 36,645 5.19 % 1,902 41,050 1.41 % 578 +Other 8,884 6.33 % 562 9,651 3.50 % 337 +Total interest-earning assets/interest income $ 509,400 4.80 % 24,455 $ 495,549 3.14 % 15,548 +Liabilities +Interest-bearing liabilities +Interest-bearing deposits $ 315,393 2.10 % 6,609 $ 299,042 0.42 % 1,267 +Borrowed funds 67,282 5.62 % 3,783 42,450 2.72 % 1,155 +Total interest-bearing liabilities/interest expense $ 382,675 2.72 % 10,392 $ 341,492 0.71 % 2,422 +Net interest margin/income (non-GAAP) 2.76 % 14,063 2.65 % 13,126 +Taxable-equivalent adjustments (147) (112) +Net interest income (GAAP) $ 13,916 $ 13,014 +(a) Interest income calculated as taxable-equivalent interest income. To provide more meaningful comparisons of interest income and yields for all interest-earning assets, as +well as net interest margins, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins by increasing the interest income +earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under GAAP on the Consolidated +Income Statement. For more information, see Reconciliation of Taxable-Equivalent Net Interest Income (non-GAAP) in the Statistical Information (Unaudited) section in +Item 8 of this Report. + +42 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret object #1 is a "door". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_63.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_63.txt new file mode 100644 index 0000000000000000000000000000000000000000..e7c78956db0eecbbddfe6e921eb9eb9055974000 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_63.txt @@ -0,0 +1,45 @@ +Changes in net interest income and margin result from the interaction of the volume and composition of interest-earning assets and +related yields, interest-bearing liabilities and related rates paid, and noninterest-bearing sources of funding. See the Statistical +Information (Unaudited) – Average Consolidated Balance Sheet and Net Interest Analysis and Analysis Of Year-To-Year Changes In +Net Interest Income in Item 8 of this Report for additional information. +Net interest income increased $0.9 billion, or 7% in 2023 compared with 2022. The increase was due to higher interest-earning asset +yields and balances, partially offset by higher funding costs. Net interest margin increased 11 basis points, reflecting higher yields on +interest-earning assets, partially offset by increased funding costs. +Average investment securities increased $3.2 billion, or 2%, primarily reflecting an increase in agency residential mortgage-backed +securities. Average investment securities represented 28% of average interest-earning assets in both 2023 and 2022. +Average loans increased $15.8 billion, or 5%, reflecting growth in both commercial and consumer loans. Average loans represented +64% of average interest-earning assets in 2023 compared to 62% in 2022. +Average interest-earning deposits with banks decreased $4.4 billion, or 11%, primarily due to lower deposits and higher loan balances, +partially offset by higher borrowed funds. +Average interest-bearing deposits increased $16.4 billion, or 5%, reflecting a continued shift from noninterest-bearing to interest- +bearing deposits as deposit rates have risen. In total, average interest-bearing deposits represented 82% of average interest-bearing +liabilities in 2023 compared to 88% in 2022. +Average borrowed funds increased $24.8 billion, or 58%, primarily due to higher FHLB borrowings and parent company senior debt +issuances. +Further details regarding average loans and deposits are included in the Business Segments Review section of this Item 7. +Noninterest Income +Table 4: Noninterest Income +Year ended December 31 Change +Dollars in millions 2023 2022 $ % +Noninterest income +Asset management and brokerage $ 1,412 $ 1,444 $ (32) (2) % +Capital markets and advisory 952 1,296 (344) (27) % +Card and cash management 2,733 2,633 100 4 % +Lending and deposit services 1,233 1,134 99 9 % +Residential and commercial mortgage 625 647 (22) (3) % +Other 619 952 (333) (35) % +Total noninterest income $ 7,574 $ 8,106 $ (532) (7) % +Noninterest income as a percentage of total revenue was 35% for 2023 and 38% for 2022. +Asset management and brokerage fees decreased reflecting lower client activity. PNC’s discretionary client assets under management +increased to $189 billion at December 31, 2023, compared to $173 billion at December 31, 2022, driven by higher spot equity +markets, partially offset by client activity. +Capital markets and advisory fees decreased primarily due to lower merger and acquisition advisory fees and trading revenue. +Card and cash management revenue growth was primarily due to higher treasury management product revenue. +Lending and deposit services grew reflecting increased customer activity and growth in loan commitment fees. +Residential and commercial mortgage decreased primarily due to lower commercial mortgage banking activities, partially offset by an +increase in residential mortgage servicing fees. +Other noninterest income decreased compared to 2022, primarily due to lower private equity revenue and the impact of Visa Class B +derivative fair value adjustments of negative $279 million primarily related to the extension of anticipated litigation resolution timing. +Visa Class B derivative fair value adjustments were negative $40 million in 2022. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 43 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_64.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_64.txt new file mode 100644 index 0000000000000000000000000000000000000000..457a7410eb668ce2a51bc9db389b62ba729b2357 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_64.txt @@ -0,0 +1,39 @@ +Further details regarding our customer-related trading activities are included in the Market Risk Management – Customer-Related +Trading Risk portion of the Risk Management section of this Item 7. Further details regarding private and other equity investments are +included in the Market Risk Management – Equity and Other Investment Risk section. +Noninterest Expense +Table 5: Noninterest Expense +Year ended December 31 Change +Dollars in millions 2023 2022 $ % +Noninterest expense +Personnel $ 7,428 $ 7,244 $ 184 3 % +Occupancy 982 992 (10) (1) % +Equipment 1,411 1,395 16 1 % +Marketing 350 355 (5) (1) % +Other 3,841 3,184 657 21 % +Total noninterest expense $ 14,012 $ 13,170 $ 842 6 % +Noninterest expense increased compared to 2022 primarily due to higher other noninterest expense, which included $515 million +pertaining to the FDIC special assessment as well as higher personnel costs, which included expenses of $150 million of workforce +reduction charges. +We exceeded our 2023 continuous improvement program savings goal of $450 million, which included a $50 million mid-year +increase. In 2024, our continuous improvement program goal will be $425 million. +Effective Income Tax Rate +The effective income tax rate was 16.2% for 2023 compared with 18.2% for 2022. The decrease was due to the favorable impact of +certain tax matters in 2023. +The effective tax rate is generally lower than the statutory rate primarily due to tax credits we receive from our investments in low- +income housing and new markets investments, as well as earnings on other tax exempt investments. Additional information regarding +our effective tax rate is included in the Reconciliation of Statutory and Effective Tax Rates table in Note 18 Income Taxes. +Provision for (Recapture of) Credit Losses +Table 6: Provision for (Recapture of) Credit Losses +Year ended December 31 +Dollars in millions 2023 2022 +Provision for (recapture of) credit losses +Loans and leases $ 792 $ 439 +Unfunded lending related commitments (31) 32 +Investment securities (18) 17 +Other financial assets (1) (11) + Total provision for (recapture of) credit losses $ 742 $ 477 +Provision for credit losses was $742 million in 2023, primarily driven by portfolio activity, including changes in credit quality related +to the commercial real estate portfolio. + +44 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_65.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_65.txt new file mode 100644 index 0000000000000000000000000000000000000000..dd348fc4367e996a161d34f00410c230f7dfaffd --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_65.txt @@ -0,0 +1,45 @@ +CONSOLIDATED BALANCE SHEET REVIEW +The summarized balance sheet data in Table 7 is based upon our Consolidated Balance Sheet in Item 8 of this Report. For additional +detail of the comparison of 2022 over 2021, see the Consolidated Balance Sheet Review section in our 2022 Form 10-K. +Table 7: Summarized Balance Sheet Data + December 31 December 31 Change +Dollars in millions 2023 2022 $ % +Assets +Interest-earning deposits with banks $ 43,804 $ 27,320 $ 16,484 60 % +Loans held for sale 734 1,010 (276) (27) % +Investment securities 132,569 139,334 (6,765) (5) % +Loans 321,508 326,025 (4,517) (1) % +Allowance for loan and lease losses (4,791) (4,741) (50) (1) % +Mortgage servicing rights 3,686 3,423 263 8 % +Goodwill 10,932 10,987 (55) (1) % +Other 53,138 53,905 (767) (1) % +Total assets $ 561,580 $ 557,263 $ 4,317 1 % +Liabilities +Deposits $ 421,418 $ 436,282 $ (14,864) (3) % +Borrowed funds 72,737 58,713 14,024 24 % +Allowance for unfunded lending related commitments 663 694 (31) (4) % +Other 15,621 15,762 (141) (1) % +Total liabilities 510,439 511,451 (1,012) — +Equity +Total shareholders’ equity 51,105 45,774 5,331 12 % +Noncontrolling interests 36 38 (2) (5) % +Total equity 51,141 45,812 5,329 12 % +Total liabilities and equity $ 561,580 $ 557,263 $ 4,317 1 % +Our balance sheet was strong and well-positioned at December 31, 2023. In comparison to December 31, 2022: +• Total assets increased modestly due to higher balances held with the Federal Reserve Bank, partially offset by lower securities +and loan balances. +• Total liabilities were largely stable and included lower deposits, mostly offset by higher borrowed funds. +• Total equity increased due to the benefit of net income, an improvement in AOCI and net preferred stock issuances, partially +offset by dividends paid and common share repurchases. +The ACL related to loans totaled $5.5 billion at December 31, 2023, and was relatively stable in comparison to reserves at December +31, 2022. The slight increase in reserves was primarily driven by portfolio activity, including changes in credit quality related to the +commercial real estate portfolio, partially offset by an updated economic outlook. See the following for additional information +regarding our ACL related to loans: +• Allowance for Credit Losses in the Credit Risk Management section of this Item 7, +• Critical Accounting Estimates and Judgments section of this Item 7, and +• Note 1 Accounting Policies and Note 3 Loans and Related Allowance for Credit Losses. +The following discussion provides additional information about the major components of our balance sheet. Information regarding our +capital and regulatory compliance is included in the Liquidity and Capital Management portion of the Risk Management section of +this Item 7 and in Note 19 Regulatory Matters. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 45 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_66.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_66.txt new file mode 100644 index 0000000000000000000000000000000000000000..2bd70c7b613fc5ee95a6d4487e22cdd7e59fc37f --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_66.txt @@ -0,0 +1,59 @@ +Loans +Table 8: Loans + December 31 December 31 Change +Dollars in millions 2023 2022 $ % +Commercial +Commercial and industrial $ 177,580 $ 182,219 $ (4,639) (3) % +Commercial real estate 35,436 36,316 (880) (2) % +Equipment lease financing 6,542 6,514 28 — +Total commercial 219,558 225,049 (5,491) (2) % +Consumer +Residential real estate 47,544 45,889 1,655 4 % +Home equity 26,150 25,983 167 1 % +Automobile 14,860 14,836 24 — +Credit card 7,180 7,069 111 2 % +Education 1,945 2,173 (228) (10) % +Other consumer 4,271 5,026 (755) (15) % +Total consumer 101,950 100,976 974 1 % +Total loans $ 321,508 $ 326,025 $ (4,517) (1) % +Commercial loans decreased driven by lower utilization of loan commitments and paydowns outpacing new production, partially +offset by the acquisition of capital commitment facilities from Signature Bridge Bank, N.A. on October 2, 2023. +Consumer loans increased due to growth in residential mortgages, home equity, credit card and automobile loans, partially offset by +declines in the remaining portfolios as paydowns outpaced new originations and draws on existing accounts. +For additional information regarding our loan portfolio, see the Credit Risk Management portion of the Risk Management section, +Note 1 Accounting Policies and Note 3 Loans and Related Allowance for Credit Losses. +Investment Securities +Investment securities of $132.6 billion at December 31, 2023 decreased $6.8 billion, or 5%, compared to December 31, 2022, as +limited purchase activity was more than offset by portfolio paydowns and maturities. +The level and composition of the investment securities portfolio fluctuates over time based on many factors, including market +conditions, loan and deposit growth, and balance sheet management activities. We manage our investment securities portfolio to +optimize returns, while providing a reliable source of liquidity for our banking and other activities, considering the LCR, NSFR and +other internal and external guidelines and constraints. +Table 9: Investment Securities (a) +December 31, 2023 December 31, 2022 +Dollars in millions +Amortized +Cost (b) +Fair +Value +Amortized +Cost (b) +Fair +Value +U.S. Treasury and government agencies $ 44,125 $ 42,348 $ 45,767 $ 43,330 +Agency residential mortgage-backed 73,329 67,925 77,385 71,073 +Non-agency residential mortgage-backed 844 938 973 1,074 +Agency commercial mortgage-backed 2,619 2,471 2,693 2,501 +Non-agency commercial mortgage-backed (c) 2,286 2,217 2,992 2,883 +Asset-backed (d) 6,982 6,984 7,291 7,183 +Other debt (e) 5,952 5,850 6,642 6,394 +Total investment securities (f) $ 136,137 $ 128,733 $ 143,743 $ 134,438 +(a) Of our total securities portfolio, 97% were rated AAA/AA at both December 31, 2023 and 2022. +(b) Amortized cost is presented net of the allowance for investment securities, which totaled $92 million at December 31, 2023 and primarily related to non-agency commercial +mortgage-backed securities. The comparable amount at December 31, 2022 was $149 million. +(c) Collateralized primarily by multifamily housing, office buildings, retail properties, lodging properties and industrial properties. +(d) Collateralized primarily by consumer credit products, corporate debt and government guaranteed education loans. +(e) Includes state and municipal securities and corporate bonds. +(f) Includes available for sale and held to maturity securities, which are recorded on our balance sheet at fair value and amortized cost, respectively. + +46 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_67.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_67.txt new file mode 100644 index 0000000000000000000000000000000000000000..de5af06450128cbd2fc9994b6010881e48b11fb5 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_67.txt @@ -0,0 +1,52 @@ +Table 9 presents our investment securities portfolio by amortized cost and fair value. The relationship of fair value to amortized cost at +December 31, 2023 was comparable to December 31, 2022 and primarily reflected the impact of higher interest rates on the valuation +of fixed-rate securities. We continually monitor the credit risk in our portfolio and maintain the allowance for investment securities at +an appropriate level to absorb expected credit losses on our investment securities portfolio for the remaining contractual term of the +securities adjusted for expected prepayments. See Note 2 Investment Securities for additional details regarding the allowance for +investment securities. +The duration of investment securities was 4.2 years at December 31, 2023. We estimate that at December 31, 2023 the effective +duration of investment securities was 4.1 years for an immediate 50 basis points parallel increase in interest rates and 4.2 years for an +immediate 50 basis points parallel decrease in interest rates. Comparable amounts at December 31, 2022 for the effective duration of +investment securities were 4.4 years and 4.5 years, respectively. +Based on expected prepayment speeds, the weighted-average expected maturity of the investment securities portfolio was 5.5 years at +December 31, 2023 compared to 6.0 years at December 31, 2022. +Table 10: Weighted-Average Expected Maturities of Mortgage and Asset-Backed Debt Securities +December 31, 2023 Years +Agency residential mortgage-backed 7.4 +Non-agency residential mortgage-backed 9.9 +Agency commercial mortgage-backed 5.0 +Non-agency commercial mortgage-backed 1.0 +Asset-backed 2.2 +Additional information regarding our investment securities portfolio is included in Note 2 Investment Securities and Note 14 Fair +Value. +Funding Sources +Table 11: Details of Funding Sources +December 31 December 31 Change +Dollars in millions 2023 2022 $ % +Deposits +Noninterest-bearing $ 101,285 $ 124,486 $ (23,201) (19) % +Interest-bearing +Money market 65,594 64,150 1,444 2 % +Demand 124,848 126,143 (1,295) (1) % +Savings 98,122 103,033 (4,911) (5) % +Time deposits 31,569 18,470 13,099 71 % +Total interest-bearing deposits 320,133 311,796 8,337 3 % +Total deposits 421,418 436,282 (14,864) (3) % +Borrowed funds +Federal Home Loan Bank borrowings 38,000 32,075 5,925 18 % +Senior debt 26,836 16,657 10,179 61 % +Subordinated debt 4,875 6,307 (1,432) (23) % +Other 3,026 3,674 (648) (18) % +Total borrowed funds 72,737 58,713 14,024 24 % +Total funding sources $ 494,155 $ 494,995 $ (840) — +Deposits are considered an attractive source of funding due to their stability and relatively low cost to fund. Compared to December +31, 2022, our funding source composition has shifted and now includes lower deposit balances and higher borrowed funds, +contributing to higher funding costs. +Total deposits decreased as a result of lower consumer and commercial deposits, reflecting the impact of competitive pricing dynamics +and inflationary pressures. In addition, noninterest-bearing balances decreased due to the continued shift into interest-bearing deposits +as a result of the elevated interest rate environment. A portion of that shift included an increase in total brokered deposits compared +with 2022. Our total brokered deposit balances of $11.0 billion in 2023 and $9.5 billion in 2022, were significantly below both our +internal and regulatory guidelines and limits. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 47 +The secret animal #4 is a "horse". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_68.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_68.txt new file mode 100644 index 0000000000000000000000000000000000000000..6a7b9033a169a3f0d1630d173f0bd7122f2f5e6d --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_68.txt @@ -0,0 +1,30 @@ +Borrowed funds increased due to parent company senior debt issuances and higher FHLB borrowings. +The level and composition of borrowed funds fluctuates over time based on many factors, including market conditions, capital +considerations, and funding needs, which are primarily driven by changes in loan, deposit and investment securities balances. While +our largest source of liquidity on a consolidated basis is the customer deposit base generated by our banking businesses, we also +manage our borrowed funds to provide a reliable source of liquidity for our banking and other activities, considering our LCR and +NSFR requirements and other internal and external guidelines and constraints. See the Liquidity and Capital Management portion of +the Risk Management section of this Item 7 for additional information regarding our 2023 liquidity and capital activities. See +Note 9 Borrowed Funds for additional information related to our borrowings. See Average Consolidated Balance Sheet and Net +Interest Analysis and Analysis of Year-to-Year Changes in Net Interest Income in the Statistical Information section of this Report for +additional information on year-over-year volume and related funding cost changes. +Shareholders’ Equity +Total shareholders’ equity was $51.1 billion at December 31, 2023, an increase of $5.3 billion compared to December 31, 2022, as +increases related to net income of $5.6 billion, an improvement in AOCI of $2.5 billion and net preferred stock issuances of $0.5 +billion were partially offset by dividends paid of $2.8 billion and common share repurchases of $0.6 billion. +BUSINESS SEGMENTS REVIEW +We have three reportable business segments: +• Retail Banking +• Corporate & Institutional Banking +• Asset Management Group +Total business segment financial results differ from total consolidated net income. The impact of these differences is reflected in +Other, as shown in Table 112 in Note 22 Segment Reporting. Other includes residual activities that do not meet the criteria for +disclosure as a separate reportable business, such as asset and liability management activities including net securities gains or losses, +ACL for investment securities, certain trading activities, certain runoff consumer loan portfolios, private equity investments, +intercompany eliminations, corporate overhead net of allocations, tax adjustments that are not allocated to business segments, exited +businesses and the residual impact from funds transfer pricing operations. +Certain amounts included in this Business Segments Review differ from those amounts shown in Note 22, primarily due to the +presentation in this Financial Review of business net interest income on a taxable-equivalent basis. +See Note 22 Segment Reporting for additional information on our business segments, including a description of each business. + +48 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_69.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_69.txt new file mode 100644 index 0000000000000000000000000000000000000000..2a36173abd97e634b99fce5f2581bc9bf08fe616 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_69.txt @@ -0,0 +1,47 @@ +Retail Banking +Retail Banking’s core strategy is to build lifelong, primary relationships by creating a sense of financial well-being and ease for our +clients. Over time, we seek to deepen those relationships by meeting the broad range of our clients’ financial needs across savings, +liquidity, lending, payments, investment and retirement solutions. We work to deliver these solutions in the most seamless and +efficient way possible, meeting our customers where they want to be met - whether in a branch, through digital channels, an ATM or +through our phone-based customer contact centers - while continuously optimizing the cost to sell and service. We believe that, over +time, we can grow our customer base, enhance the breadth and depth of our client relationships and improve our efficiency through +differentiated products and leading digital channels. +Table 12: Retail Banking Table +(Unaudited) +Year ended December 31 Change +Dollars in millions, except as noted 2023 2022 $ % +Income Statement +Net interest income $ 9,974 $ 7,540 $ 2,434 32 % +Noninterest income 2,951 2,967 (16) (1) % +Total revenue 12,925 10,507 2,418 23 % +Provision for credit losses 396 259 137 53 % +Noninterest expense 7,555 7,598 (43) (1) % +Pretax earnings 4,974 2,650 2,324 88 % +Income taxes 1,163 621 542 87 % +Noncontrolling interests 43 55 (12) (22) % +Earnings $ 3,768 $ 1,974 $ 1,794 91 % +Average Balance Sheet +Loans held for sale $ 569 $ 927 $ (358) (39) % +Loans +Consumer +Residential real estate $ 35,156 $ 33,643 $ 1,513 4 % +Home equity 24,598 23,221 1,377 6 % +Automobile 14,943 15,425 (482) (3) % +Credit card 7,020 6,620 400 6 % +Education 2,090 2,381 (291) (12) % +Other consumer 1,910 2,164 (254) (12) % +Total consumer 85,717 83,454 2,263 3 % +Commercial 11,744 11,177 567 5 % +Total loans $ 97,461 $ 94,631 $ 2,830 3 % +Total assets $ 114,914 $ 113,829 $ 1,085 1 % +Deposits +Noninterest-bearing $ 58,566 $ 64,775 $ (6,209) (10) % +Interest-bearing 197,589 199,614 (2,025) (1) % +Total deposits $ 256,155 $ 264,389 $ (8,234) (3) % +Performance Ratios +Return on average assets 3.28 % 1.73 % +Noninterest income to total revenue 23 % 28 % +Efficiency 58 % 72 % +(continued on following page) + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 49 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_70.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_70.txt new file mode 100644 index 0000000000000000000000000000000000000000..637fef5cb87f2cee6500f8ceae2020f1dc4270e0 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_70.txt @@ -0,0 +1,58 @@ +(Continued from previous page) +Year ended December 31 Change +Dollars in millions, except as noted 2023 2022 $ % +Supplemental Noninterest Income Information +Asset management and brokerage $ 523 $ 528 $ (5) (1) % +Card and cash management $ 1,323 $ 1,338 $ (15) (1) % +Lending and deposit services $ 736 $ 670 $ 66 10 % +Residential and commercial mortgage $ 424 $ 319 $ 105 33 % +Residential Mortgage Information +Residential mortgage servicing statistics (in billions, except as noted) (a) +Serviced portfolio balance (b) $ 209 $ 190 $ 19 10 % +Serviced portfolio acquisitions $ 35 $ 74 $ (39) (53) % +MSR asset value (b) $ 2.7 $ 2.3 $ 0.4 17 % +MSR capitalization value (in basis points) (b) 127 122 5 4 % +Servicing income: (in millions) +Servicing fees, net (c) $ 301 $ 192 $ 109 57 % +Mortgage servicing rights valuation, net of economic hedge $ 53 $ 9 $ 44 * +Residential mortgage loan statistics +Loan origination volume (in billions) $ 7.4 $ 15.1 $ (7.7) (51) % +Loan sale margin percentage 2.34 % 2.14 % +Percentage of originations represented by: +Purchase volume (d) 87 % 67 % +Refinance volume 13 % 33 % +Other Information (b) +Customer-related statistics (average) +Non-teller deposit transactions (e) 66 % 64 % +Digital consumer customers (f) 77 % 78 % +Credit-related statistics +Nonperforming assets $ 834 $ 1,003 $ (169) (17) % +Net charge-offs - loans and leases $ 463 $ 435 $ 28 6 % +Other statistics +ATMs 8,447 8,933 (486) (5) % +Branches (g) 2,299 2,518 (219) (9) % +Brokerage account client assets (in billions) (h) $ 78 $ 70 $ 8 11 % +*- Not Meaningful +(a) Represents mortgage loan servicing balances for third parties and the related income. +(b) Presented as of period end, except for average customer-related statistics and net charge-offs, which are both shown for the year ended, respectively. +(c) Servicing fees net of impact of decrease in MSR value due to passage of time, including the impact from regularly scheduled loan principal payments, prepayments and loans +paid off during the period. +(d) Mortgages with borrowers as part of residential real estate purchase transactions. +(e) Percentage of total consumer and business banking deposit transactions processed at an ATM or through our mobile banking application. +(f) Represents consumer checking relationships that process the majority of their transactions through non-teller channels. +(g) Reflects all branches and solution centers excluding standalone mortgage offices and satellite offices (e.g., drive-ups, electronic branches and retirement centers) that provide +limited products and/or services. +(h) Includes cash and money market balances. +Retail Banking earnings increased $1.8 billion in 2023 compared with 2022, primarily due to increased net interest income, partially +offset by an increased provision for credit losses. +Net interest income increased in the comparison due to wider interest rate spreads on the value of deposits, partially offset by narrower +interest rate spreads on the value of loans. +Noninterest income decreased primarily due to the impact of negative Visa Class B derivative fair value adjustments compared to +2022, partially offset by growth in residential mortgage banking and lending and deposit customer-related activities. +Provision for credit losses was primarily driven by portfolio activity. + +Noninterest expense decreased in the comparison primarily due to lower personnel expense, partially offset by increased technology +costs. + +50 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret transportation is an "airplane". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_71.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_71.txt new file mode 100644 index 0000000000000000000000000000000000000000..f909919f0e91f49c20e70e7d84c07be64e4a96ac --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_71.txt @@ -0,0 +1,20 @@ +Retail Banking average total loans increased in 2023 compared to 2022. Average consumer loans increased driven by higher +residential real estate and home equity loans as a result of new volume and draws on existing accounts outpacing liquidations, as well +as growth in credit card loans due to new account production and purchase volume increases. The increase was partially offset by +declines across the remaining portfolio as paydowns outpaced new originations. Average commercial loans increased due to growth in +automobile dealer segment balances, partially offset by forgiveness of PPP loans. +Our focus on growing primary customer relationships is at the core of our deposit strategy in Retail, which is based on attracting and +retaining stable, low-cost deposits as a key funding source for PNC. We have taken a disciplined approach to pricing, focused on +retaining relationship-based balances and executing on targeted deposit growth and retention strategies aimed at more rate-sensitive +customers. Our goal with regard to deposits is to optimize balances, economics and long-term customer growth. In 2023, average total +deposits decreased compared to 2022, reflecting the impact of increased consumer spending and quantitative tightening by the Federal +Reserve. +As part of our strategic focus on growing customers and meeting their financial needs, we operate and continue to optimize a coast-to- +coast network of retail branches, solution centers and ATMs, which are complemented by PNC’s suite of digital capabilities. In +February 2024, PNC announced it would be investing close to $1.0 billion, through 2028, to open more than 100 new branches in key +locations, including Austin, Dallas, Denver, Houston, Miami, and San Antonio, and to renovate more than 1,200 existing locations +across the country to enhance the customer experience. +Retail Banking continues to enhance the customer experience with refinements to product and service offerings that drive value for +consumers and small businesses. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 51 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_72.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_72.txt new file mode 100644 index 0000000000000000000000000000000000000000..9198d15bbe70aaf6735a0c858cf4f4a4037e4b7f --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_72.txt @@ -0,0 +1,65 @@ +Corporate & Institutional Banking +Corporate & Institutional Banking’s strategy is to be the leading relationship-based provider of traditional banking products and +services to its customers through the economic cycles. We aim to grow our market share and drive higher returns by delivering value- +added solutions that help our clients better run their organizations, all while maintaining prudent risk and expense management. We +continue to focus on building client relationships where the risk-return profile is attractive. We are a coast-to-coast franchise and our +full suite of commercial products and services are offered nationally. +Table 13: Corporate & Institutional Banking Table +(Unaudited) +Year ended December 31 Change +Dollars in millions 2023 2022 $ % +Income Statement +Net interest income $ 5,856 $ 5,270 $ 586 11 % +Noninterest income 3,537 3,621 (84) (2) % +Total revenue 9,393 8,891 502 6 % +Provision for credit losses 398 198 200 101 % +Noninterest expense 3,730 3,651 79 2 % +Pretax earnings 5,265 5,042 223 4 % +Income taxes 1,197 1,155 42 4 % +Noncontrolling interests 19 17 2 12 % +Earnings $ 4,049 $ 3,870 $ 179 5 % +Average Balance Sheet +Loans held for sale $ 407 $ 475 $ (68) (14) % +Loans +Commercial + Commercial and industrial $ 166,289 $ 155,551 $ 10,738 7 % + Commercial real estate 34,522 33,373 1,149 3 % + Equipment lease financing 6,422 6,195 227 4 % +Total commercial 207,233 195,119 12,114 6 % +Consumer 6 9 (3) (33) % +Total loans $ 207,239 $ 195,128 $ 12,111 6 % +Total assets $ 233,337 $ 219,941 $ 13,396 6 % +Deposits +Noninterest-bearing $ 51,329 $ 76,956 $ (25,627) (33) % +Interest-bearing 91,815 71,388 20,427 29 % +Total deposits $ 143,144 $ 148,344 $ (5,200) (4) % +Performance Ratios +Return on average assets 1.74 % 1.76 % +Noninterest income to total revenue 38 % 41 % +Efficiency 40 % 41 % +Other Information +Consolidated revenue from: (a) +Treasury Management (b) $ 3,456 $ 2,801 $ 655 23 % +Commercial mortgage banking activities: +Commercial mortgage loans held for sale (c) $ 74 $ 77 $ (3) (4) % +Commercial mortgage loan servicing income (d) 185 256 (71) (28) % +Commercial mortgage servicing rights valuation, net of economic hedge 118 138 (20) (14) % +Total $ 377 $ 471 $ (94) (20) % +Commercial mortgage servicing statistics +Serviced portfolio balance (in billions) (e)(f) $ 288 $ 281 $ 7 2 % +MSR asset value (e) $ 1,032 $ 1,113 $ (81) (7) % +Average Loans by C&IB business (g) +Corporate Banking $ 117,568 $ 106,098 $ 11,470 11 % +Real Estate 47,312 45,335 1,977 4 % +Business Credit 29,984 28,461 1,523 5 % +Commercial Banking 8,024 9,294 (1,270) (14) % +Other 4,351 5,940 (1,589) (27) % +Total average loans $ 207,239 $ 195,128 $ 12,111 6 % +Credit-related statistics +Nonperforming assets (e) $ 1,217 $ 761 $ 456 60 % +Net charge-offs - loans and leases $ 266 $ 143 $ 123 86 % +(a) See the additional revenue discussion regarding treasury management and commercial mortgage banking activities in the Product Revenue section of this Corporate & +Institutional Banking section. +(b) Amounts are reported in net interest income and noninterest income. + +52 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_73.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_73.txt new file mode 100644 index 0000000000000000000000000000000000000000..388c543b1e18f5934a0bb66a018a57f440020a97 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_73.txt @@ -0,0 +1,56 @@ +(c) Represents commercial mortgage banking income for valuations on commercial mortgage loans held for sale and related commitments, derivative valuations, origination +fees, gains on sale of loans held for sale and net interest income on loans held for sale. +(d) Represents net interest income and noninterest income from loan servicing, net of reduction in commercial mortgage servicing rights due to time and payoffs. Commercial +mortgage servicing rights valuation, net of economic hedge is shown separately. +(e) As of December 31. +(f) Represents balances related to capitalized servicing. +(g) As the result of a business realignment within C&IB during the second quarter of 2023, certain loans were reclassified from Other to Corporate Banking in the prior periods +to conform to the current period presentation. +Corporate & Institutional Banking earnings increased $179 million in 2023 compared with 2022, driven by higher net interest income, +partially offset by a higher provision for credit losses, lower noninterest income and increased noninterest expense. +Net interest income increased in the comparison due to wider interest rate spreads on the value of deposits and higher average loan +balances, partially offset by narrower interest rate spreads on the value of loans and lower average deposit balances. +Noninterest income decreased in the comparison driven by lower commercial mortgage banking activities and a decline in capital +markets and advisory fees, partially offset by growth in treasury management product revenue. +Provision for credit losses was primarily driven by portfolio activity, including changes in credit quality related to the commercial real +estate portfolio. +Noninterest expense increased in the comparison and included continued investments to support business growth. +Average loans increased compared with 2022 due to increases in Corporate Banking, Real Estate and Business Credit, partially offset +by a decrease in Commercial Banking: +• Corporate Banking provides lending, equipment finance, treasury management and capital markets products and services to +mid-sized and large corporations, and government and not-for-profit entities. Average loans for this business increased driven +by strong new production throughout 2022 and the acquisition of capital commitment facilities from Signature Bridge Bank, +N.A. on October 2, 2023. +• Real Estate provides banking, financing and servicing solutions for commercial real estate clients across the country. Average +loans for this business increased largely due to new production throughout 2022, partially offset by a lower average +utilization of loan commitments. +• Business Credit provides asset-based lending and equipment financing solutions. The loan and lease portfolio is mainly +secured by business assets. Average loans for this business increased, primarily driven by new production, partially offset by +a lower average utilization of loan commitments. +• Commercial Banking provides lending, treasury management and capital markets related products and services to smaller +corporations and businesses. Average loans for this business declined primarily driven by lower average utilization of loan +commitments, paydowns outpacing new production and PPP loan forgiveness. +The deposit strategy of Corporate & Institutional Banking is to remain disciplined on pricing and focused on growing and retaining +relationship-based balances over time, executing on customer and segment-specific deposit growth strategies and continuing to +provide funding and liquidity to PNC. Average total deposits decreased in 2023 compared to 2022, reflecting the impact of +quantitative tightening by the Federal Reserve and included a continued shift from noninterest-bearing to interest-bearing deposits as +deposit rates have risen. We continue to actively monitor the interest rate environment and make adjustments to our deposit strategy in +response to evolving market conditions, bank funding needs and client relationship dynamics. +Product Revenue +In addition to credit and deposit products for commercial customers, Corporate & Institutional Banking offers other services, including +treasury management, capital markets and advisory products and services, and commercial mortgage banking activities, for customers +of all business segments. On a consolidated basis, the revenue from these other services is included in net interest income and +noninterest income, as appropriate. From a business perspective, the majority of the revenue and expense related to these services is +reflected in the Corporate & Institutional Banking segment results, and the remainder is reflected in the results of other businesses +where the customer relationships exist. The Other Information section in Table 13 includes the consolidated revenue to PNC for +treasury management and commercial mortgage banking services. A discussion of the consolidated revenue from these services +follows. +The Treasury Management business provides corporations with cash and investment management services, receivables and +disbursement management services, funds transfer services, international payment services and access to online/mobile information +management and reporting services. Treasury management revenue is reported in noninterest income and net interest income. +Noninterest income includes treasury management product revenue less earnings credits provided to customers on compensating +deposit balances used to pay for products and services. Net interest income includes funding credit from all treasury management +customer deposit balances. Compared with 2022, treasury management revenue increased due to wider interest rate spreads on the +value of deposits and higher product revenue. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 53 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_74.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_74.txt new file mode 100644 index 0000000000000000000000000000000000000000..193d571d1930f7c8ffc8362e6b105d09480f03ee --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_74.txt @@ -0,0 +1,10 @@ +Commercial mortgage banking activities include revenue derived from commercial mortgage servicing (both net interest income and +noninterest income), revenue derived from commercial mortgage loans held for sale and hedges related to those activities. Total +revenue from commercial mortgage banking activities decreased in the comparison primarily due to lower commercial mortgage +servicing income. +Capital markets and advisory includes services and activities primarily related to merger and acquisition advisory, equity capital +markets advisory, asset-backed financing, loan syndication, securities underwriting and customer-related trading. The decrease in +capital markets and advisory fees in the comparison was mostly driven by lower merger and acquisition advisory fees and a decline in +syndication fees, partially offset by higher customer-related trading revenue for derivatives, foreign exchange and fixed income. + +54 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_75.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_75.txt new file mode 100644 index 0000000000000000000000000000000000000000..c04c8eacbe1f88c1376c06e93f3e404d7d088ee3 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_75.txt @@ -0,0 +1,55 @@ +Asset Management Group +The Asset Management Group strives to be a leading relationship-based provider of investment, planning, credit and cash +management solutions and fiduciary services to affluent individuals and institutions by endeavoring to proactively deliver value-added +ideas, solutions and exceptional service. The Asset Management Group’s priorities are to serve our clients’ financial objectives, grow +and deepen customer relationships and deliver solid financial performance with prudent risk and expense management. +Table 14: Asset Management Group Table +(Unaudited) +Year ended December 31 Change +Dollars in millions, except as noted 2023 2022 $ % +Income Statement +Net interest income $ 547 $ 608 $ (61) (10) % +Noninterest income 905 936 (31) (3) % +Total revenue 1,452 1,544 (92) (6) % +Provision for (recapture of) credit losses (3) 28 (31) * +Noninterest expense 1,115 1,086 29 3 % +Pretax earnings 340 430 (90) (21) % +Income taxes 80 100 (20) (20) % +Earnings $ 260 $ 330 $ (70) (21) % +Average Balance Sheet +Loans +Consumer +Residential real estate $ 10,280 $ 8,029 $ 2,251 28 % +Other consumer 4,003 4,550 (547) (12) % + Total consumer 14,283 12,579 1,704 14 % +Commercial 1,107 1,505 (398) (26) % +Total loans $ 15,390 $ 14,084 $ 1,306 9 % +Total assets $ 15,812 $ 14,505 $ 1,307 9 % +Deposits +Noninterest-bearing $ 1,782 $ 2,664 $ (882) (33) % +Interest-bearing 25,928 27,830 (1,902) (7) % +Total deposits $ 27,710 $ 30,494 $ (2,784) (9) % +Performance Ratios +Return on average assets 1.64 % 2.28 % +Noninterest income to total revenue 62 % 61 % +Efficiency 77 % 70 % +Supplemental Noninterest Income Information +Asset management fees $ 882 $ 908 $ (26) (3) % +Brokerage fees 7 8 (1) (13) % +Total $ 889 $ 916 $ (27) (3) % +Other Information +Nonperforming assets (a) $ 39 $ 56 $ (17) (30) % +Net charge-offs (recoveries) - loans and leases $ (3) $ 17 $ (20) (118) % +Client Assets Under Administration (in billions) (a) (b) +Discretionary client assets under management +PNC Private Bank $ 117 $ 105 $ 12 11 % +Institutional Asset Management 72 68 4 6 % +Total discretionary client assets under management $ 189 $ 173 $ 16 9 % +Nondiscretionary client assets under administration 179 152 27 18 % +Total $ 368 $ 325 $ 43 13 % +* -Not Meaningful +(a) As of December 31. +(b) Excludes brokerage account client assets. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 55 +The secret animal #2 is a "koala". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_76.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_76.txt new file mode 100644 index 0000000000000000000000000000000000000000..fee76ee4ced967e62eb21340c8b7c30426f28c81 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_76.txt @@ -0,0 +1,38 @@ +The Asset Management Group consists of two primary businesses: PNC Private Bank and Institutional Asset Management. +The PNC Private Bank is focused on being a premier private bank in each of the markets it serves. This business seeks to deliver high +quality banking, trust, and investment management services to our emerging affluent, high net worth and ultra-high net worth clients +through a broad array of products and services. +Institutional Asset Management provides outsourced chief investment officer, custody, cash and fixed income client solutions, and +retirement plan fiduciary investment services to institutional clients, including corporations, healthcare systems, insurance companies, +municipalities and non-profits. +Asset Management Group earnings decreased $70 million in 2023 compared with 2022, driven by lower net interest income and +noninterest income and higher noninterest expense, partially offset by provision recapture. +Net interest income decreased in the comparison due to decline in average deposits as well as narrower interest rate spreads on the +value of loans, partially offset by higher average loans and wider interest rate spreads on the value of deposits. +Noninterest income decreased in the comparison driven by lower asset management fees due to the impact of client activity. +Noninterest expense increased in the comparison, reflecting continued investments to support business growth. +Average loans increased compared with 2022, driven by growth in residential real estate lending, partially offset by a decrease in +security based lending lines of credit. +Average deposits decreased in the comparison due to competitive pricing pressures as clients continue to seek higher yielding returns, +including deploying funds into discretionary client assets under management. +Discretionary client assets under management increased in comparison to the prior year, primarily due to higher spot equity markets as +of December 31, 2023, partially offset by client activity. +RISK MANAGEMENT +Enterprise Risk Management +We encounter risk as part of the normal course of operating our business. Accordingly, we design our risk governance framework, +referred to as the ERM Framework, and risk management processes to help manage this risk. We manage risk in light of our risk +appetite to optimize long-term shareholder value while supporting our employees, customers and communities. +Our ERM Framework is structurally aligned with regulatory enhanced prudential standards and heightened standards promulgated by +the Federal Reserve and OCC, respectively, which establish minimum requirements for the design and implementation of a risk +governance framework. This Risk Management section describes our ERM Framework, which consists of seven core components that +provide executive management and the Board of Directors with an aggregate view of significant risks impacting the organization. The +seven core components are risk culture, enterprise strategy (including risk appetite, strategic planning, capital planning and stress +testing), risk governance and oversight, risk identification, risk assessments, risk controls and monitoring, and risk aggregation and +reporting (see the figure below). The overall Risk Management section of this Item 7 also provides an analysis of the firm’s Capital +Management and our key areas of risk, which include, but are not limited to Credit, Market, Liquidity and Operational (including +Compliance and Information Security). Our use of financial derivatives as part of our overall asset and liability risk management +process is also addressed within this Risk Management section. +We operate within a rapidly evolving regulatory and financial services environment. Accordingly, we are actively focused on the +timely incorporation of applicable regulatory pronouncements and emerging risks into our ERM Framework. + +56 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_77.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_77.txt new file mode 100644 index 0000000000000000000000000000000000000000..11ce264118c0a0ecc61d22985b61e95c7e77937f --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_77.txt @@ -0,0 +1,41 @@ +Risk Culture +A strong risk culture helps us make well informed decisions, helps ensure individuals conform to the established culture, reduces an +individual’s ability to do something for personal gain, and rewards employees for working toward a common goal rather than +individual interests. Our risk culture reinforces the appropriate protocols for responsible and ethical behavior. These protocols are +especially critical in terms of our risk awareness, risk-taking behavior and risk management practices. +Managing risk is every employee’s responsibility. All of our employees, individually and collectively, are responsible for ensuring the +organization is performing with the utmost integrity, is applying sound risk management practices and is striving to achieve our stated +objectives. All employees are also responsible for understanding our Enterprise Risk Appetite Statement, the ERM Framework and +how risk management applies to their respective roles and responsibilities. Employees are encouraged to collaborate across groups to +identify and mitigate risks and elevate issues as required. We reinforce risk management responsibilities through a performance +management system where employee performance goals include risk management objectives and incentives for employees to +reinforce balanced measures of risk-adjusted performance. +Proactive and open communication, between groups and up to the Board of Directors, facilitates timely identification and resolution of +risk issues. Our multi-level risk committee structure provides formal channels to identify and report risk. +Enterprise Strategy +We seek to ensure that our overall enterprise strategy is within acceptable risk parameters through our risk appetite, strategic planning, +capital planning and stress testing processes. These components are reviewed and approved at least annually by the Board of Directors +or one of its committees. +Risk Appetite: Our risk appetite represents the organization’s desired enterprise risk position, set within our capital-based risk and +liquidity capacity to achieve our strategic objectives and business plans. The Enterprise Risk Appetite Statement qualitatively +describes the aggregate level of risk we are willing to accept in order to execute our business strategies. Qualitative guiding +principles further define each of the risks within our taxonomy to support the risk appetite statement. Risk appetite metrics and +limits, including forward-looking metrics, quantitatively measure whether we are operating within our stated Risk Appetite. Our +risk appetite metrics reflect material risks, align with our established Risk Appetite Framework, balance risk and reward, leverage +analytics, and are adjusted to changes in the external and internal risk environments. +Strategic Planning: Our enterprise and line of business strategic plans outline major objectives, strategies and goals which are +expected to be achieved over the next five years while seeking to ensure we remain compliant with all capital, risk appetite and +liquidity targets and guidelines. Our chief executive officer and chief financial officer lead the development of the corporate +strategic plan. +Capital Planning and Stress Testing: Capital planning helps to ensure we are maintaining safe and sound operations and viability. +The capital planning process and the resulting capital plan evolve as our overall risks, activities and risk management practices +change. Capital planning aligns with our strategic planning process. Stress testing is an essential element of the macroeconomic +capital planning process. Effective stress testing enables us to consider the estimated effect on capital of various hypothetical +macroeconomic scenarios. +Risk Governance and Oversight +We employ a comprehensive risk management governance framework to help ensure that risks are identified, balanced decisions are +made that consider risk and return, and risks are adequately monitored and managed. Risk committees established within this risk +governance and oversight framework provide oversight for risk management activities at the Board of Directors, executive, corporate + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 57 +The secret object #2 is a "watch". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_78.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_78.txt new file mode 100644 index 0000000000000000000000000000000000000000..22741f85c92c5484b0138126043e409b6358038b --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_78.txt @@ -0,0 +1,55 @@ +and business levels. Committee composition is designed to provide effective oversight balanced across the three lines of defense in +accordance with the OCC’s heightened standards and the Federal Reserve Board’s enhanced prudential standards. See the Supervision +and Regulation section in Item 1 of this Report for more information. +To help ensure appropriate risks are being taken and effectively managed and controlled, risk is managed across three lines of defense. +A summary of the Board of Directors’ and each line of defense’s responsibilities is provided below: +Board of Directors – The Board of Directors oversees our risk-taking activities, holds management accountable for adhering to +the ERM Framework and is responsible for exercising sound, independent judgment when assessing risk. +First line of defense – The front line units are accountable for identifying, owning and managing risks to within acceptable levels +while adhering to the ERM Framework. Our businesses strive to enhance risk management and internal control processes within +their areas. Integrated and comprehensive processes are designed to adequately manage the business’ risk profile and risk appetite +through identifying, assessing, monitoring and reporting risks that may significantly impact each business. +Second line of defense – The second line of defense is independent from the first line of defense and is responsible for establishing +the risk governance framework and the standards within each independent risk area for identifying, measuring, monitoring, +controlling and reporting aggregate risks. As the second line of defense, the independent risk areas monitor the risks generated by +the first line of defense, review and challenge the implementation of effective risk management practices, perform independent +assessment of risk, and report on issues or exceptions. The risk areas help to ensure processes and controls owned by the +businesses are designed and operating as intended. +Third line of defense – As the third line of defense, Internal Audit is independent from the first and second lines of defense. +Internal Audit provides the Board of Directors and executive management comprehensive assurance on the effectiveness of the +ERM Framework and the risk management practices across the organization. +Within the three lines of defense, the independent risk organization has sufficient authority to influence material decisions. Our +business oversight and decision-making is supported through a governance structure at the Board of Directors and management level. +Specific responsibilities include: +Board of Directors – Our Board of Directors oversees our business and affairs as managed by our officers and employees. The +Board of Directors may receive assistance in carrying out its duties and may delegate authority through standing or special +committees. The following provides a summary of some of the key responsibilities of the Board’s standing committees: +• Audit Committee: monitors the integrity of our consolidated financial statements; monitors internal control over financial +reporting; monitors compliance with our code of ethics; evaluates and monitors the qualifications and independence of our +independent auditors; and evaluates and monitors the performance of our Internal Audit function and our independent +auditors. +• Nominating and Governance Committee: oversees the implementation of sound corporate governance principles and +practices while promoting our best interests and those of our shareholders. +• Human Resources Committee: oversees the compensation of our executive officers and other specified responsibilities related +to talent and human capital matters affecting us. The committee is also responsible for evaluating the relationship between +risk-taking activities and incentive compensation plans. +• Risk Committee: oversees our enterprise-wide risk structure and the processes established to identify, measure, monitor and +manage the organization’s risks and evaluates and approves our risk governance framework. The Risk Committee has formed +a Compliance Subcommittee to facilitate Board-level oversight of risk management in the compliance area. +• Corporate Responsibility Committee: oversees management’s corporate responsibility efforts, internally and externally, to the +extent such corporate responsibility efforts are not specifically within the purview of another Board committee (e.g., climate- +related risks overseen by the Risk Committee and climate-related financial disclosures overseen by the Audit Committee), +and implementation of PNC's publicly-announced Community Benefits Plan to provide loans, investments and other financial +support to bolster economic opportunity for low- and moderate-income individuals and communities and other underserved +individuals and communities, and to help remove historic barriers in the banking system. +• Technology Committee: oversees technology strategy and significant technology initiatives and programs, including those +that can position the use of technology to drive strategic advantages, and fulfills the oversight responsibilities delegated from +the Risk Committee with respect to technology risk, technology risk management, data risk, cybersecurity, information +security, business continuity and significant technology initiatives and programs. +Management Level Executive Committee – The Management Level Executive Committee is responsible for guiding the creation +and execution of our business strategy across PNC. With this responsibility, the Management Level Executive Committee +executes various strategic approval and review activities, with a focus on capital deployment, business performance and risk +management. This Committee also helps ensure PNC is staffed with sufficient resources and talent to operate within its risk +appetite. + +58 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_79.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_79.txt new file mode 100644 index 0000000000000000000000000000000000000000..dcde91df7e1ee7b110a30601228bbe2e62be4268 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_79.txt @@ -0,0 +1,54 @@ +Corporate Committees – The Corporate Committees generally operate based on the delegated approval authority from a Board- +level Committee, the Management Level Executive Committee or other Corporate Committees. These Committees operate at the +senior management level and are designed to facilitate the review, evaluation, oversight and approval of key business and risk +activities. +Working Committees – Working Committees generally operate on delegated approval authority from a Corporate Committee or +other Working Committees. Working Committees are intended to provide oversight of regulatory/legal matters, assist in the +implementation of key enterprise-level activities within a business or function and support the oversight of key risk activities. +Transactional Committees – Transactional Committees generally operate based on delegated approval authority from a Corporate +or Working Committee to approve individual transactions, transactional related activities or movements on the organization’s +balance sheet. +Policies and Procedures – We have established risk management Policies and Procedures to support our ERM Framework, +articulate our risk culture, define the parameters and processes within which employees are to manage risk and conduct our +business activities and to provide direction, guidance and clarity on roles and responsibilities to management and the Board of +Directors. These Policies and Procedures are organized in a multi-tiered framework and require periodic review and approval by +relevant Committees, including where appropriate Committees of the Board of Directors, or management. +Risk Identification +Risk identification takes place across a variety of risk types throughout the organization. These risk types include, but are not limited +to, credit, liquidity and capital, market and operational (which includes, among other types of risk, compliance and information +security). Risks are identified based on a balanced use of analytical tools and management judgment for both on- and off-balance sheet +exposures. Our governance structure supports risk identification by facilitating assessment of key risk issues, emerging risks and +idiosyncratic risks and implementation of mitigation strategies as appropriate. These risks are prioritized based on quantitative and +qualitative analysis and assessed against our risk appetite. Multiple tools and approaches are used to help identify and prioritize risks, +including Risk Appetite Metrics, Key Risk Indicators, Key Performance Indicators, Risk and Control Self-Assessments, scenario +analysis, stress testing and special assessments. +Risks are aggregated and assessed within and across risk functions and businesses. The aggregated risk information is reviewed and +reported at an enterprise level to the Board of Directors or appropriate committees. This enterprise aggregation and reporting approach +promotes the identification and appropriate escalation of material risks across the organization and supports an understanding of the +cumulative impact of risk in relation to our risk appetite. +Risk Assessment +Once risks are identified, they are evaluated based on quantitative and qualitative analysis to determine whether they are material. Risk +assessments support the overall management of an effective ERM Framework and help us to control and monitor our actual risk level +and risk management effectiveness. Comprehensive, accurate and timely assessments of risk are essential to an effective ERM +Framework. Effective risk measurement practices are designed to uncover recurring risks that have been experienced in the past; +facilitate the monitoring, understanding, analysis and reporting of known risks; and reveal unanticipated risks that may not be easy to +understand or predict. +Risk Controls and Monitoring +Our ERM Framework consists of policies, procedures, processes, personnel and control systems. Risk controls and limits provide the +linkage from our Risk Appetite Statement and associated guiding principles to the risk-taking activities of our businesses. In addition +to risk appetite limits, a system of more detailed internal controls exists which oversees and monitors our various processes and +functions. These control systems measure performance, help employees make correct decisions, help ensure information is accurate +and reliable and facilitate compliance with laws and regulations. +We design our monitoring and evaluation of risks and controls to provide assurance that policies, procedures and controls are effective +and also to result in the identification of control improvement recommendations. Risk monitoring is a daily, ongoing process used by +both the first and second line of defense to help ensure compliance with our ERM Framework. Risk monitoring is accomplished in +many ways, including performing risk assessments at the business and risk assessment unit level, monitoring an area’s key controls, +the timely reporting of issues and establishing a quality control and/or quality assurance function, as applicable. +Risk Aggregation and Reporting +Risk reporting is a comprehensive way to: (i) communicate aggregate risks, including identified concentrations; (ii) escalate instances +where we are outside of our risk appetite; (iii) monitor our risk profile in relation to our risk appetite; and (iv) communicate risks and +views on the effectiveness of our risk management activities to the Board of Directors and executive management. +Risk reports are produced at the line of business, functional risk and enterprise levels. Each individual risk report includes an +assessment of inherent risk, quality of risk management, residual risk, risk appetite and risk outlook. The enterprise level risk report + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 59 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_8.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_8.txt new file mode 100644 index 0000000000000000000000000000000000000000..8bdc9ba94eb3cb70cc8d1236b5643de0795edaec --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_8.txt @@ -0,0 +1,110 @@ +customers — particularly as more +and more of our in-branch customer +interactions shift from transaction- +based to advice-based. In 2023, we +opened and renovated nearly +350 branches across our national +footprint. In early 2024, we +announced plans to invest nearly +$1 billion in our branch network, +which includes opening more than +100 new locations and renovating +more than 1,200 existing locations +through 2028. Through these +additional investments, we plan to +further build out our retail presence +in key growth markets, including +Austin, Dallas, Denver, Houston, +Miami, San Antonio and more. +We also expanded our mobile branch +program to help bring financial +6 | FROM THE CEO | MARCH 1, 2024 +partner banks to introduce PazeSM, +an online checkout solution for +e-commerce transactions. Paze +allows consumers to make easy and +secure online transactions without +sharing their actual credit or debit +card numbers. Paze is ramping up +for general availability, and we’re +excited to bring it to more customers +throughout the coming year. +Asset Management Group +In AMG, we delivered products, +services and advice to support the +unique financial needs of institutions +and affluent individuals and families +through a year of uncertainty and +volatile market conditions. +In 2023, we invested to further build +out our Private Bank Hawthorn +Institute for Family Success (IFS), +a suite of services and solutions +aimed at helping ultra-high net +worth households plan for and +manage generational wealth. Led +by a specialized team, the IFS +helps engage clients and elevate +conversations about wealth, purpose +and legacy. + Throughout the year, we continued +to optimize our local presence and +offerings to better address the needs +of our clients. Additionally, we have +developed and are deploying a U.S. +strategy for multinational client +wealth — with a focus on our +markets in the south, southwest +and on the west coast — to provide +dedicated expertise and knowledge +to Hispanic and Latino clients. +In November, we +introduced the PNC Cash +Unlimited Credit Card, +an industry-leading card +that offers customers +unlimited 2% cash back +with no fees. +services and education to more +people in underserved communities +across the country. Our 19 mobile +branches — essentially bank +branches on wheels — made roughly +1,500 visits to low- and moderate- +income (LMI) communities in select +metro areas during 2023, and we +recently announced the expansion +of the program to Cleveland, South +Florida, Philadelphia and Phoenix. +Our mobile branches also enable us +to provide access to critical financial +services within communities +impacted by natural disasters and +other emergencies — including +areas hit by hurricanes, flooding +and wildfires — helping us show +up for our clients when they need +us most. +Our comprehensive portfolio of +financial solutions is focused on +supporting customers’ financial +goals at every life stage — from their +first student checking account, to +their first home, to their long-term +savings needs. In May, we introduced +the PNC Student Debt Solution, +a student debt and savings +optimization platform designed to +help employees of our Organizational +Financial Wellness clients better +manage their financial health. +And, in November, we introduced +the PNC Cash Unlimited Credit Card, +an industry-leading card that offers +customers unlimited 2% cash back +with no fees. +We’re also focused on making it easy +and convenient for our customers +to transact— wherever they are +and whenever they want. In 2023, +we were proud to join forces with \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_80.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_80.txt new file mode 100644 index 0000000000000000000000000000000000000000..b80526dac136b83c33fa28a08c1046cee22d6b25 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_80.txt @@ -0,0 +1,60 @@ +aggregates material risks identified in the risk area reports and in the business reports to define the enterprise risk profile. The +enterprise risk profile is a point-in-time assessment of enterprise risk and represents our overall risk position in relation to the desired +enterprise risk appetite. The determination of the enterprise risk profile is based on analysis of quantitative reporting of risk limits and +other measures along with qualitative assessments. Quarterly aggregation of risk reports from the risk areas and lines of business is +designed to provide a clear view of our risk level relative to our risk appetite. The enterprise level report is provided through the +governance structure to the Risk Committee of the Board of Directors. +Credit Risk Management +Credit risk represents the possibility that a customer, counterparty or issuer may not perform in accordance with the contractual terms +of their loan, extension of credit or other financial obligation with PNC. Credit risk is inherent in the financial services business and +results from extending credit to customers, purchasing securities and entering into financial derivative transactions and certain +guarantee contracts. Credit risk is one of our most significant risks. Our processes for managing credit risk are designed to be +embedded in our risk culture and in our decision-making processes using a systematic approach whereby credit risks and related +exposures are identified and assessed, managed through specific policies and processes, measured and evaluated against our risk +appetite and credit concentration limits, and reported, along with specific mitigation activities, to management and the Board of +Directors through our governance structure. Our most significant concentration of credit risk is in our loan portfolio. +Credit Risk Management is working to understand and incorporate into our credit risk management framework the impacts to credit +risk that may accelerate or be introduced as a result of climate change, including impacts from physical risk events and risks associated +with the transition to a low-carbon economy. These risk events may impact a borrower’s income, cash flow or collateral due to the +frequency or severity of weather events, changing market conditions, consumer preferences and demand for products, or changes to +the legislative and regulatory landscape. As disruptive events occur, PNC follows a process to determine if enhanced portfolio +monitoring, reporting and executive communication is warranted to ensure appropriate oversight and action. +To address issues that are important to the various stakeholders we serve, Corporate & Institutional Banking transactions may be +subjected to an industry-agnostic Environmental and Social Risk Management assessment designed to help us better identify and +mitigate environmental, human rights and other reputational risks early in the credit application process. Transactions identified as +having a potential environmental, human rights or other reputational risk are evaluated to determine whether additional due diligence +is warranted. Credit Risk Management employs a governance, policy and monitoring framework for environmental and social risk +topics that may include updates to PNC’s Credit Portfolio Strategy Committee. Outcomes from those updates may be incorporated +into credit policies and risk procedures that govern our risk appetite, credit decisioning, portfolio management and reserve processes. +Additionally, PNC has procedures designed to ensure that flood insurance is present for properties as required by applicable +regulations, while also monitoring other water-related risks (such as the increased shoreline and coastal erosion) and weather-related +events (such as hurricanes and wildfires). +Loan Portfolio Characteristics and Analysis +Table 15: Details of Loans +In billions +$177.6 +$35.4 +$6.5 +$47.5 +$26.2 $14.9 $7.2 $1.9 $4.3 +$182.2 +$36.3 +$6.5 +$45.9 +$26.0 $14.8 $7.1 $2.2 $5.0 +December 31, 2023 +$321.5 billion +December 31, 2022 +$326.0 billion +Commercial and +Industrial +Commercial + Real Estate + Equipment +Lease Financing +Residential Real + Estate +Home Equity Automobile Credit Card Education Other +Consumer + +60 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_81.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_81.txt new file mode 100644 index 0000000000000000000000000000000000000000..a11813214cabc305d28a6ca30ac5d3e8e0212ed1 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_81.txt @@ -0,0 +1,47 @@ +We use several credit quality indicators, as further detailed in Note 3 Loans and Related Allowance for Credit Losses, to monitor and +measure our exposure to credit risk within our loan portfolio. The following provides additional information about the significant loan +classes that comprise our Commercial and Consumer portfolio segments. +Commercial +Commercial and Industrial +Commercial and industrial loans comprised 55% and 56% of our total loan portfolio at December 31, 2023 and 2022, respectively. +The majority of our commercial and industrial loans are secured by collateral that provides a secondary source of repayment should a +borrower experience cash generation difficulties. Examples of this collateral include short-term assets, such as accounts receivable, +inventory and securities, and long-lived assets, such as equipment, owner-occupied real estate and other business assets. +We actively manage our commercial and industrial loans to assess any changes (both positive and negative) in the level of credit risk +at both the borrower and portfolio level. To evaluate the level of credit risk, we assign internal risk ratings reflecting our estimates of +the borrower’s PD and LGD for each related credit facility. This two-dimensional credit risk rating methodology provides granularity +in the risk monitoring process and is updated on an ongoing basis through our credit risk management processes. In addition to +monitoring the level of credit risk, we also monitor concentrations of credit risk pertaining to both specific industries and geographies +that may exist in our portfolio. Our commercial and industrial portfolio is well-diversified across industries as shown in the following +table (based on the North American Industry Classification System). +Table 16: Commercial and Industrial Loans by Industry +December 31, 2023 December 31, 2022 +Dollars in millions Amount % of Total Amount % of Total +Commercial and industrial +Manufacturing $ 28,989 16 % $ 30,845 17 % +Financial services 28,422 16 21,320 12 +Retail/wholesale trade 28,198 16 29,176 16 +Service providers 21,354 12 23,548 13 +Real estate related (a) 16,235 9 17,780 10 +Technology, media & telecommunications 10,249 6 11,845 7 +Health care 9,808 6 10,649 6 +Transportation and warehousing 7,733 4 7,858 4 +Other industries 26,592 15 29,198 15 +Total commercial and industrial loans $ 177,580 100 % $ 182,219 100 % +(a) Represents loans to customers in the real estate and construction industries. +Owner occupied commercial real estate loans totaled $9.6 billion at December 31, 2023 and are included in commercial and industrial +loans as the credit decisioning for servicing these loans is based on the financial conditions of the owner, not the ability of the +collateral to generate income. Owner occupied commercial real estate loans are well-diversified across industries. +Commercial Real Estate +Commercial real estate loans comprised $21.0 billion related to commercial mortgages on income-producing properties, $8.0 billion of +intermediate-term financing loans, and $6.4 billion of real estate construction project loans as of December 31, 2023. Comparable +amounts as of December 31, 2022 were $22.3 billion, $7.6 billion, and $6.4 billion, respectively. Commercial real estate primarily +consists of an investment in land and/or buildings held to generate income, that income serves as the primary source for the repayment +of the loan. However, for all commercial real estate assets, the disposition of the assigned collateral serves as a secondary source of +repayment for the loan should the borrower experience cash generation difficulties. +We monitor credit risk associated with our commercial real estate loans similar to commercial and industrial loans by analyzing PD +and LGD. Additionally, risks associated with commercial real estate loans tend to be correlated to the loan structure, collateral location +and quality, project progress and business environment. These attributes are also monitored and utilized in assessing credit risk. The +portfolio is geographically diverse due to the nature of our business involving clients throughout the U.S. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 61 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_82.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_82.txt new file mode 100644 index 0000000000000000000000000000000000000000..35ec64ffe423af2893ace9a8d7c5943d1637fa85 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_82.txt @@ -0,0 +1,54 @@ +The following table presents our commercial real estate loans by geography and property type: +Table 17: Commercial Real Estate Loans by Geography and Property Type + +December 31, 2023 December 31, 2022 +Dollars in millions Amount % of Total Amount % of Total +Geography (a) +California $ 6,133 17 % $ 6,224 17 % +Florida 3,738 11 3,275 9 +Texas 3,733 11 3,871 11 +Virginia 1,590 4 1,638 5 +Pennsylvania 1,515 4 1,638 5 +Maryland 1,344 4 1,496 4 +Arizona 1,216 3 1,040 3 +Illinois 1,201 3 1,321 4 +Colorado 1,182 3 1,336 4 +Ohio 1,157 3 1,236 3 +Other 12,627 37 13,241 35 +Total commercial real estate loans $ 35,436 100 % $ 36,316 100 % +Property Type (a) +Multifamily $ 15,590 44 % $ 13,738 38 % +Office 8,019 23 9,123 25 +Industrial/warehouse 4,089 12 4,035 11 +Retail 2,490 7 2,855 8 +Seniors housing 1,772 5 2,228 6 +Hotel/motel 1,760 5 1,896 5 +Mixed use 388 1 701 2 +Other 1,328 3 1,740 5 +Total commercial real estate loans $ 35,436 100 % $ 36,316 100 % +(a) Presented in descending order based on loan balances at December 31, 2023. +Given the foundational change in office demand driven by the acceptance of remote work, real estate performance related to the office +sector continues to be an area of uncertainty. At December 31, 2023, our outstanding loan balances in the office portfolio totaled $8.0 +billion, or 2.5% of total loans, while additional unfunded loan commitments totaled $0.4 billion. Also, the portfolio is well diversified +geographically across our coast-to-coast franchise. Within the office portfolio at December 31, 2023, criticized loans totaled 24.8% +and nonperforming loans totaled 8.4%, while delinquencies were zero. As measured at origination, the weighted average LTV for the +office portfolio was 58%; however, updated appraisals have increased the weighted average LTV to 65% as of December 31, 2023. +While LTV is one consideration, our risk assessment considers a number of factors in assessing the changing conditions affecting the +portfolio. As of December 31, 2023, we have established reserves of 8.7% against office loans. +The greatest stress in our office portfolio is observed in multi-tenant office loans, which represents 56% of the portfolio at December +31, 2023. Within the multi-tenant classification, criticized levels were 43.4% while nonperforming loans totaled 14.5%, accounting for +almost all of the nonperforming office population. The weighted average LTV for multi-tenant is 69% at December 31, 2023. +Additionally, all of the commercial real estate charge-offs over the last year have been multi-tenant office loans. Given the higher level +of stress, this segment has a proportionally higher reserve rate of 12.9%. The remaining 44% of the office portfolio is primarily +comprised of single-tenant, medical and government tenant properties. This subset of the portfolio is performing considerably better, +with less than 1% of the book in the criticized, delinquent and nonperforming loan categories. As of December 31, 2023, the weighted +average LTV of this book is 60%. +Portfolio management efforts have escalated for the office portfolio, with internal risk ratings completed for each asset quarterly, +accelerated reappraisal requirements and elevated approval levels for any credit action. Refreshed appraisals have updated valuations +on more than 90% of the criticized office exposure over the past year. Additionally, active management efforts include ongoing +performance assessments as well as the review of property, lending and capital markets. Portfolio updates are distributed to senior +management weekly. +Given the ongoing change in this area, we expect additional stress in the office sector. However, we continue to actively manage the +portfolio, and we believe reserve levels adequately reflect the expected credit losses in the portfolio. + +62 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_83.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_83.txt new file mode 100644 index 0000000000000000000000000000000000000000..8e8bf14332b2e48eb5fe48148b75fcea2bca8d09 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_83.txt @@ -0,0 +1,54 @@ +Consumer +Residential Real Estate +Residential real estate loans primarily consisted of residential mortgage loans at both December 31, 2023 and 2022. +We obtain loan attributes at origination, including FICO scores and LTVs, and we update these and other credit metrics at least +quarterly. We track borrower performance monthly. We also segment the mortgage portfolio into pools based on product type (e.g., +nonconforming or conforming). This information is used for internal reporting and risk management. As part of our overall risk +analysis and monitoring, we also segment the portfolio based upon loan delinquency, nonperforming status, modification and +bankruptcy status, FICO scores, LTV and geographic concentrations. +The following table presents certain key statistics related to our residential real estate portfolio: +Table 18: Residential Real Estate Loan Statistics +December 31, 2023 December 31, 2022 +Dollars in millions Amount % of Total Amount % of Total +Geography (a) +California $ 19,911 42 % $ 18,609 41 % +Texas 4,009 8 4,194 9 +Washington 3,467 7 3,009 7 +Florida 3,356 7 3,360 7 +New Jersey 1,909 4 1,925 4 +New York 1,551 3 1,558 3 +Arizona 1,431 3 1,436 3 +Pennsylvania 1,229 3 1,188 3 +Colorado 1,187 2 1,192 3 +North Carolina 989 2 965 2 +Other 8,505 19 8,453 18 +Total residential real estate loans $ 47,544 100 % $ 45,889 100 % +December 31, 2023 December 31, 2022 +Weighted-average loan origination statistics (b) +Loan origination FICO score 772 770 +LTV of loan originations 73 % 71 % +(a) Presented in descending order based on loan balances at December 31, 2023. +(b) Weighted-averages calculated for the twelve months ended December 31, 2023 and 2022, respectively. +We originate residential mortgage loans nationwide through our national mortgage business as well as within our branch network. +Residential mortgage loans underwritten to agency standards, including conforming loan amount limits, are typically sold with +servicing retained by us. We also originate nonconforming residential mortgage loans that do not meet agency standards, which we +retain on our balance sheet. Our portfolio of originated nonconforming residential mortgage loans totaled $42.4 billion at +December 31, 2023 with 45% located in California. Comparable amounts at December 31, 2022 were $40.6 billion and 44%, +respectively. +Home Equity +Home equity loans comprised $20.6 billion of home equity lines of credit and $5.6 billion of closed-end home equity installment loans +at December 31, 2023. Comparable amounts were $19.5 billion and $6.5 billion as of December 31, 2022, respectively. Home equity +lines of credit are a variable interest rate product with fixed rate conversion options available to certain borrowers. +Similar to residential real estate loans, we track borrower performance of this portfolio on a monthly basis. We also segment the +population into pools based on product type (e.g., home equity loans, legacy brokered home equity loans, home equity lines of credit +or legacy brokered home equity lines of credit) and track the historical performance of any related mortgage loans regardless of +whether we hold such liens. This information is used for internal reporting and risk management. As part of our overall risk analysis +and monitoring, we also segment the portfolio based upon loan delinquency, nonperforming status, modification and bankruptcy +status, FICO scores, LTV, lien position and geographic concentration. +The credit performance of the majority of the home equity portfolio where we hold the first lien position is superior to the portion of +the portfolio where we hold the second lien position, but do not hold the first lien. Lien position information is generally determined at +the time of origination and monitored on an ongoing basis for risk management purposes. We use a third-party service provider to +obtain updated loan information, including lien and collateral data that is aggregated from public and private sources. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 63 +The secret flower is "lavender". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_84.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_84.txt new file mode 100644 index 0000000000000000000000000000000000000000..2e8e2e428d57671de979840e2ef6b51ed41cacd0 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_84.txt @@ -0,0 +1,56 @@ +The following table presents certain key statistics related to our home equity portfolio: + +Table 19: Home Equity Loan Statistics +December 31, 2023 December 31, 2022 +Dollars in millions Amount % of Total Amount % of Total +Geography (a) +Pennsylvania $ 4,745 18 % $ 5,051 19 % +New Jersey 3,184 12 3,266 13 +Ohio 2,242 9 2,352 9 +Florida 2,230 9 2,082 8 +California 1,580 6 1,247 5 +Maryland 1,237 5 1,254 5 +Texas 1,230 5 1,144 4 +Michigan 1,214 5 1,263 5 +Illinois 1,069 4 1,126 4 +North Carolina 1,001 4 995 4 +Other 6,418 23 6,203 24 +Total home equity loans $ 26,150 100 % $ 25,983 100 % +Lien type +1st lien 52 % 58 % +2nd lien 48 42 +Total 100 % 100 % +December 31, 2023 December 31, 2022 +Weighted-average loan origination statistics (b) +Loan origination FICO score 772 774 +LTV of loan originations 64 % 67 % +(a) Presented in descending order based on loan balances at December 31, 2023. +(b) Weighted-averages calculated for the twelve months ended December 31, 2023 and 2022, respectively. + +Automobile +Auto loans comprised $13.8 billion in the indirect auto portfolio and $1.1 billion in the direct auto portfolio as of December 31, 2023. +Comparable amounts as of December 31, 2022 were $13.7 billion and $1.1 billion, respectively. The indirect auto portfolio consists of +loans originated primarily through independent franchised dealers, including dealers located in our new expansion markets. This +business is strategically aligned with our core retail banking business. +The following table presents certain key statistics related to our indirect and direct auto portfolios: +Table 20: Auto Loan Statistics +December 31, 2023 December 31, 2022 +Weighted-average loan origination FICO score (a) (b) +Indirect auto 788 784 +Direct auto 787 776 +Weighted-average term of loan originations - in months (a) +Indirect auto 73 73 +Direct auto 65 63 +(a) Weighted-averages calculated for the twelve months ended December 31, 2023 and 2022, respectively. +(b) Calculated using the auto enhanced FICO scale. +We continue to focus on borrowers with strong credit profiles as evidenced by the weighted-average loan origination FICO scores +noted in Table 20. We offer both new and used auto financing to customers through our various channels. At December 31, 2023, the +portfolio balance was composed of 45% new vehicle loans and 55% used vehicle loans. Comparable amounts at December 31, 2022 +were 50% and 50%, respectively. +The auto loan portfolio’s performance is measured monthly, including updated collateral values that are obtained monthly and updated +FICO scores that are obtained at least quarterly. For internal reporting and risk management, we analyze the portfolio by product +channel and product type and regularly evaluate default and delinquency experience. As part of our overall risk analysis and +monitoring, we segment the portfolio by geography, channel, collateral attributes and credit metrics which include FICO score, LTV +and term. + +64 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_85.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_85.txt new file mode 100644 index 0000000000000000000000000000000000000000..5fd32f0b673d6698fa79da2d460044cdf65a5f1f --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_85.txt @@ -0,0 +1,55 @@ +Nonperforming Assets and Loan Delinquencies +Nonperforming Assets +Nonperforming assets include nonperforming loans and leases for which ultimate collectability of the full amount of contractual +principal and interest is not probable and include nonperforming loans whose terms were modified as a result of a borrower’s financial +difficulty and PCD loans, OREO and foreclosed assets. Loans held for sale, certain government insured or guaranteed loans and loans +accounted for under the fair value option are excluded from nonperforming loans. See Note 1 Accounting Policies for details on our +nonaccrual policies. +The following table presents a summary of nonperforming assets by major category: +Table 21: Nonperforming Assets by Type + +December 31, 2023 December 31, 2022 +Change +Dollars in millions $ % +Nonperforming loans (a) +Commercial $ 1,307 $ 858 $ 449 52% +Consumer (b) 873 1,127 (254) (23)% +Total nonperforming loans 2,180 1,985 195 10% +OREO and foreclosed assets 36 34 2 6% +Total nonperforming assets $ 2,216 $ 2,019 $ 197 10% +Nonperforming loans to total loans 0.68 % 0.61 % +Nonperforming assets to total loans, OREO and foreclosed assets 0.69 % 0.62 % +Nonperforming assets to total assets 0.39 % 0.36 % +Allowance for loan and lease losses to nonperforming loans 220 % 239 % +Allowance for credit losses to nonperforming loans (c) 250 % 274 % +(a) In connection with the adoption of ASU 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, +nonperforming loans as of December 31, 2023 include certain loans where terms were modified as a result of a borrower’s financial difficulty. Prior period amounts +included nonperforming TDRs, for which accounting guidance was eliminated effective January 1, 2023. See Note 1 Accounting Policies and the Loan Modifications to +Borrowers Experiencing Financial Difficulty section of Note 3 Loans and Related Allowance for more information on our adoption of this ASU. +(b) Excludes most unsecured consumer loans and lines of credit, which are charged off after 120 to 180 days past due and are not placed on nonperforming status. +(c) Calculated excluding allowances for investment securities and other financial assets. +The following table provides details on the change in nonperforming assets for the years ended December 31, 2023 and 2022: +Table 22: Change in Nonperforming Assets +In millions 2023 2022 +January 1 $ 2,019 $ 2,506 +New nonperforming assets 1,999 1,523 +Charge-offs and valuation adjustments (452) (370) +Principal activity, including paydowns and payoffs (831) (868) +Asset sales and transfers to loans held for sale (71) (52) +Returned to performing status (448) (720) +December 31 $ 2,216 $ 2,019 +As of December 31, 2023, approximately 97% of total nonperforming loans were secured by collateral. +Loan Delinquencies +We regularly monitor the level of loan delinquencies and believe these levels are a key indicator of credit quality in our loan portfolio. +Measurement of delinquency status is based on the contractual terms of each loan. Loans that are 30 days or more past due are +considered delinquent. Loan delinquencies include government insured or guaranteed loans, loans accounted for under the fair value +option and PCD loans. Amounts exclude loans held for sale. +We manage credit risk based on the risk profile of the borrower, repayment sources, underlying collateral, and other support given +current events, economic conditions and expectations. We refine our practices to meet the changing environment, such as inflation +levels, industry specific risks, interest rate levels, the level of consumer savings and deposit balances, and structural and secular +changes fostered by the pandemic. To mitigate losses and enhance customer support, we offer loan modifications and collection +programs to assist our customers. The CARES Act credit reporting rules expired in the third quarter of 2023 and, as such, delinquency +status at December 31, 2023 is being reported for all loans based on the contractual terms of the loan. Amounts as of December 31, +2022 continue to be presented in accordance with the credit reporting rules under the CARES Act, which required certain loans + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 65 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_86.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_86.txt new file mode 100644 index 0000000000000000000000000000000000000000..24f180e5a2b98dc0555340e4ad1c2de72a29329d --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_86.txt @@ -0,0 +1,53 @@ +modified due to pandemic-related hardships to not be reported as past due based on the contractual terms of the loan, even when +borrowers may not have made payments on their loans during the modification period. +The following table presents a summary of accruing loans past due by delinquency status: +Table 23: Accruing Loans Past Due (a) + Amount % of Total Loans Outstanding + +December 31, 2023 December 31, 2022 +Change +December 31, 2023 December 31, 2022Dollars in millions $ % +Early stage loan delinquencies +Accruing loans past due 30 to 59 days $ 685 $ 747 $ (62) (8) % 0.21 % 0.23 % +Accruing loans past due 60 to 89 days 270 261 9 3 % 0.08 % 0.08 % +Total early stage loan delinquencies 955 1,008 (53) (5) % 0.30 % 0.31 % +Late stage loan delinquencies +Accruing loans past due 90 days or more 429 482 (53) (11) % 0.13 % 0.15 % +Total accruing loans past due $ 1,384 $ 1,490 $ (106) (7) % 0.43 % 0.46 % +(a) Past due loan amounts include government insured or guaranteed loans of $0.4 billion at both December 31, 2023 and 2022. +Accruing loans past due 90 days or more continue to accrue interest because they are (i) well secured by collateral and are in the +process of collection, (ii) managed in homogeneous portfolios with specified charge-off timeframes adhering to regulatory guidelines, +or (iii) certain government insured or guaranteed loans. As such, they are excluded from nonperforming loans. +Loan Modifications +We provide relief to our customers experiencing financial hardships through a variety of solutions. Commercial loan and lease +modifications are based on each individual borrower’s situation, while consumer loan modifications are evaluated under our hardship +relief programs. +On January 1, 2023, we adopted ASU 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and +Vintage Disclosures, which eliminates the accounting guidance for TDRs and enhances the disclosure requirements for certain loan +modifications when a borrower is experiencing financial difficulty. Refer to Note 1 Accounting Policies and Note 3 Loans and Related +Allowance for Credit Losses for additional information on our adoption of this ASU. +Allowance for Credit Losses +Our determination of the ACL is based on historical loss and performance experience, current economic conditions, the reasonable and +supportable forecasts of future economic conditions and other relevant factors, including current borrower and/or transaction +characteristics and assessments of the remaining estimated contractual term as of the balance sheet date. We maintain the ACL at an +appropriate level for expected losses on our existing investment securities, loans, equipment finance leases, other financial assets and +unfunded lending related commitments. +Expected losses are estimated primarily using a combination of (i) the expected losses over a reasonable and supportable forecast +period, (ii) a period of reversion to long run average expected losses, where applicable and (iii) long run average expected losses for +the remaining estimated contractual term. +We use forward-looking information in estimating expected credit losses for our reasonable and supportable forecast period. For this +purpose, we have established a framework which includes a three-year forecast period and the use of four economic scenarios and +associated probability weights, which in combination create a forecast of expected economic outcomes. Forward-looking information, +such as forecasted relevant macroeconomic variables, is incorporated into the expected credit loss estimates using quantitative +macroeconomic models, as well as through analysis from PNC’s economists and management’s judgment. +The reversion period is used to bridge our three-year reasonable and supportable forecast period and the long-run average expected +credit losses. We consider a number of factors in determining the duration of the reversion period, such as contractual maturity of the +asset, observed historical patterns and the estimated credit loss rates at the end of the forecast period relative to the beginning of the +long run average period. The reversion period is typically 1-3 years, if not immediate. +The long-run average expected credit losses are derived from available historical credit information. We use long-run average +expected losses for the portfolio over the estimated remaining contractual term beyond our reasonable and supportable forecast period +and the reversion period. +The following discussion provides additional information on our reserves for loans and leases as well as unfunded lending related +commitments. See Note 1 Accounting Policies for further discussion on our ACL, including details of our methodologies and + +66 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_87.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_87.txt new file mode 100644 index 0000000000000000000000000000000000000000..c1ec946d982a25704cccf5955ba54365ff1919b1 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_87.txt @@ -0,0 +1,48 @@ +discussion of the allowances for investment securities and other financial assets. See also the Critical Accounting Estimates and +Judgments section of this Report for further discussion of the assumptions used in the determination of the ACL as of December 31, +2023. +Allowance for Loan and Lease Losses +Our pooled expected credit loss methodology is based upon the quantification of PD, LGD, EAD and the remaining estimated +contractual term for a loan, loan segment or lease. We also consider the impact of prepayments and amortization on the estimated +contractual term in our expected loss estimates. We use historical data, current borrower characteristics and forecasted economic +variables in quantitative methods to estimate these risk parameters by loan, loan segment or lease. PDs represent a quantification of +risk of the likelihood that a borrower may not be able to pay their contractual obligation over a defined period of time. LGD describes +the estimated magnitude of potential loss if a borrower were to default, and EAD (or utilization rates for certain revolving loans) is the +estimated balance outstanding at the expected time of default. These parameters are calculated for each forecasted scenario and the +long-run average period, and are combined to generate expected loss estimates by scenario in proportion to the scenario weights. +Prior to January 1, 2023, we used a discounted cash flow methodology for our consumer real estate related loan classes and certain +TDRs. Effective January 1, 2023, we discontinued our use of the discounted cash flow methodology, and we now use a pooled +expected credit loss methodology as described above. +For loans and leases that do not share similar risk characteristics with a pool of loans, we establish individually assessed reserves using +methods prescribed by GAAP. Reserves for individual commercial nonperforming loans exceeding a defined dollar threshold are +based on an analysis of the present value of the loan’s expected future cash flows or the fair value of the collateral, if appropriate +under our policy for collateral dependent loans. Commercial nonperforming loans that are below the defined threshold are collectively +reserved for, as we believe these loans continue to share similar risk characteristics. For consumer nonperforming loans classified as +collateral dependent, charge-off and ALLL related to recovery of amounts previously charged-off are evaluated through an analysis of +the fair value of the collateral less costs to sell. +While our reserve models and methodologies strive to reflect all relevant expected credit risk factors, there continues to be uncertainty +associated with, but not limited to, potential imprecision in the estimation process due to the inherent time lag of obtaining information +and normal variations between expected and actual outcomes. We may hold additional reserves that are designed to provide coverage +for losses attributable to such risks. A portion of the allowance is related to qualitative measurement factors. These factors may +include, but are not limited to: +• Industry concentrations and conditions, +• Changes in market conditions, including regulatory and legal requirements, +• Changes in the nature and volume of our portfolio, +• Recent credit quality trends, +• Recent loss experience in particular portfolios, including specific and unique events, +• Recent macroeconomic factors that may not be reflected in the forecast information, +• Limitations of available input data, including historical loss information and recent data such as collateral values, +• Model imprecision and limitations, +• Changes in lending policies and procedures, including changes in loss recognition and mitigation policies and procedures, +and +• Timing of available information. +Allowance for Unfunded Lending Related Commitments +We maintain the allowance for unfunded lending related commitments on off-balance sheet credit exposures that are not +unconditionally cancelable, (e.g., unfunded loan commitments, letters of credit and certain financial guarantees) at a level we believe +is appropriate as of the balance sheet date to absorb expected credit losses on these exposures. Other than the estimation of the +probability of funding, this reserve is estimated in a manner similar to the methodology used for determining reserves for pooled loans +and leases. The allowance for unfunded lending related commitments is recorded as a liability on the Consolidated Balance Sheet. Net +adjustments to this reserve are included in the provision for credit losses on the Consolidated Income Statement. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 67 +The secret drink is "milk". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_88.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_88.txt new file mode 100644 index 0000000000000000000000000000000000000000..ef54277364351bbf1ad462e37b590dc0e29d92f5 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_88.txt @@ -0,0 +1,35 @@ +The following table summarizes our ACL related to loans: +Table 24: Allowance for Credit Losses by Loan Class (a) +December 31, 2023 December 31, 2022 +Dollars in millions +Allowance +Amount Total Loans +% of Total +Loans +Allowance +Amount Total Loans +% of Total +Loans +Allowance for loans and lease losses +Commercial +Commercial and industrial $ 1,806 $ 177,580 1.02 % $ 1,957 $ 182,219 1.07 % +Commercial real estate 1,371 35,436 3.87 % 1,047 36,316 2.88 % +Equipment lease financing 82 6,542 1.25 % 110 6,514 1.69 % +Total commercial 3,259 219,558 1.48 % 3,114 225,049 1.38 % +Consumer +Residential real estate 61 47,544 0.13 % 92 45,889 0.20 % +Home equity 276 26,150 1.06 % 274 25,983 1.05 % +Automobile 173 14,860 1.16 % 226 14,836 1.52 % +Credit card 766 7,180 10.67 % 748 7,069 10.58 % +Education 56 1,945 2.88 % 63 2,173 2.90 % +Other consumer 200 4,271 4.68 % 224 5,026 4.46 % +Total consumer 1,532 101,950 1.50 % 1,627 100,976 1.61 % +Total $ 4,791 $ 321,508 1.49 % $ 4,741 $ 326,025 1.45 % +Allowance for unfunded lending related commitments 663 694 +Allowance for credit losses $ 5,454 $ 5,435 +Allowance for credit losses to total loans 1.70 % 1.67 % +Commercial 1.73 % 1.66 % +Consumer 1.62 % 1.69 % +(a) Excludes allowances for investment securities and other financial assets, which together totaled $ 120 million and $176 million at December 31, 2023 and 2022, respectively. + +68 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_89.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_89.txt new file mode 100644 index 0000000000000000000000000000000000000000..8df0da88c684e7f0fbb90514440bab3def6ddfa0 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_89.txt @@ -0,0 +1,61 @@ +The following table summarizes our loan charge-offs and recoveries: +Table 25: Loan Charge-Offs and Recoveries +Year ended December 31 +Dollars in millions +Gross +Charge-offs Recoveries +Net Charge-offs / +(Recoveries) +% of Average +Loans +2023 +Commercial +Commercial and industrial $ 244 $ 122 $ 122 0.07 % +Commercial real estate 180 6 174 0.48 % +Equipment lease financing 18 9 9 0.14 % +Total commercial 442 137 305 0.14 % +Consumer +Residential real estate 8 13 (5) (0.01) % +Home equity 21 46 (25) (0.10) % +Automobile 121 100 21 0.14 % +Credit card 319 43 276 3.93 % +Education 17 7 10 0.48 % +Other consumer 164 36 128 2.77 % +Total consumer 650 245 405 0.40 % +Total $ 1,092 $ 382 $ 710 0.22 % +2022 +Commercial +Commercial and industrial $ 257 $ 101 $ 156 0.09 % +Commercial real estate 44 5 39 0.11 % +Equipment lease financing 6 8 (2) (0.03) % +Total commercial 307 114 193 0.09 % +Consumer +Residential real estate 11 17 (6) (0.01) % +Home equity 15 71 (56) (0.23) % +Automobile 152 124 28 0.18 % +Credit card 256 51 205 3.09 % +Education 16 5 11 0.46 % +Other consumer 228 40 188 3.44 % +Total consumer 678 308 370 0.38 % +Total $ 985 $ 422 $ 563 0.18 % +Total net charge-offs increased $147 million, or 26%, in 2023 compared to 2022. The increase in the comparison was driven by higher +net charge-offs in both our commercial and consumer portfolios and was primarily attributable to increases in commercial real estate +and credit card, partially offset by declines in other consumer and commercial and industrial. +See Note 1 Accounting Policies and Note 3 Loans and Related Allowance for Credit Losses for additional information. +Liquidity and Capital Management +Liquidity risk has two fundamental components. The first is potential loss assuming we were unable to meet our funding requirements +at a reasonable cost. The second is the potential inability to operate our businesses because adequate contingent liquidity is not +available. We manage liquidity risk at the consolidated company level (bank, parent company and all subsidiaries combined) to help +ensure that we can obtain cost-effective funding to meet current and future obligations under both normal “business as usual” and +stressful circumstances, and to help ensure that we maintain an appropriate level of contingent liquidity. To ensure a strong liquidity +position and compliance with regulatory requirements, management maintains a liquid asset buffer of cash on hand and highly liquid +unencumbered securities. +Management monitors liquidity through a series of early warning indicators that may indicate a potential market, or PNC-specific, +liquidity stress event. In addition, management performs a set of internal liquidity stress tests over multiple time horizons with varying +levels of severity and maintains a contingency funding plan to address a potential liquidity stress event. In the most severe liquidity +stress simulation, we assume that our liquidity position is under pressure, while the market in general is under systemic pressure. The +simulation considers, among other things, the impact of restricted access to both secured and unsecured external sources of funding, +accelerated runoff of customer deposits, valuation pressure on assets and heavy demand to fund committed obligations. Parent +company stress coverage limits and operating liquidity guidelines are designed to help ensure that sufficient liquidity is available to + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 69 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_9.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_9.txt new file mode 100644 index 0000000000000000000000000000000000000000..388c5f64fd308b3fc3d19537b7f5741c0c8eebb6 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_9.txt @@ -0,0 +1,108 @@ +2023 ANNUAL REPORT • THE PNC FINANCIAL SERVICES GROUP | 7 +TECHNOLOGY AT THE CORE +For more than a decade, PNC has +invested heavily in new technology +to help us run our businesses — +and serve our customers — more +efficiently and effectively. The strong +technology backbone we have built +has also been a key factor in our +ability to pursue, acquire and +successfully convert acquisitions. +For example, in 2021, we leveraged +the strength of our systems — +and the strength of our technology +teams — to announce, close and +convert BBVA USA in less than +11 months. +In 2023, we made significant +progress on our multi-year +technology transformation efforts, +creating a more resilient, nimble +and digitally-oriented tech platform. +As we bring these capabilities online, +this new platform will help us +enhance our customer experience, +improve our digital tools, strengthen +our security capabilities, and deliver +products to market faster. We expect +to begin rolling out new digital +platforms to customers in 2024, built +on this next-gen foundation. +Applying AI +There’s growing excitement across +the industry about the role AI can +play in banking. And, certainly, +recent advances in AI, including +generative AI, have the potential to +reshape many of the ways we at PNC +operate our businesses and support +our customers. Our embrace of +these latest developments in AI will +be — and should be — gradual as +our teams rigorously evaluate new +applications, and the potential +benefits and risks they carry. +AI is not a new frontier for our +company. Guided by our AI and +Intelligent Automation Center, +our teams have been harnessing +AI in key areas of the bank for many +years. PNC Claim Predictor, which +I discussed earlier in this letter, +is a great example of how we are +thoughtfully incorporating these +capabilities to deliver differentiated +client value. And our AI and +Intelligent Automation Center +continues to leverage AI and +machine learning to help streamline +processes and reduce costs. +Fostering Tech Talent +and Innovation +To maintain our technology +leadership position within the +industry, we strive to cultivate +a culture where innovation is +encouraged and embedded in +everything we do. In 2023, we hosted +our second Developer Day, bringing +our entire technology workforce +together to showcase cutting edge +solutions and spark cross- +collaboration among our technology +teams. Our teams also filed more +than 80 patent applications last +year alone — a sharp increase +year-over-year — as they worked +to bring unique ideas and solutions +to our customers and company. +MORE SECURE BANKING +As our capabilities advance, so, too, +do the capabilities of bad actors. +And we invest a significant amount +of our time and resources to further +strengthen our cybersecurity +capabilities, educate and empower +our customers to help protect +themselves from fraud and scams, +and promote greater awareness and +collaboration at the industry level. +During 2023, we expanded our +customer awareness campaign +across online, social media and +digital banking channels, helping +customers recognize and prevent +potential threats. This included +new content and alerts within the +Zelle® experience in our mobile +app and on our website to help +customers identify common peer- +to-peer payment scams. +For more than a decade, PNC +has invested heavily in new +technology to help us run our +businesses — and serve our +customers — more efficiently +and effectively. +The secret object #5 is a "candle". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_90.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_90.txt new file mode 100644 index 0000000000000000000000000000000000000000..6fcf9a9a9b4549fab567add52a9a68313fe63c28 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_90.txt @@ -0,0 +1,48 @@ +meet our parent company obligations over the succeeding 24-month period. Liquidity-related risk limits and operating guidelines are +established within our Enterprise Liquidity Management Policy covering regulatory metrics and various concentration limits. +Management committees, including the ALCO, and the Board of Directors and its Risk Committee regularly review compliance with +key established limits. PNC was in compliance with all relevant internal and regulatory liquidity limits and guidelines during 2023. +One of the ways we monitor our liquidity is by reference to the LCR, a regulatory minimum liquidity requirement designed to ensure +that covered banking organizations maintain an adequate level of liquidity to meet net liquidity needs over the course of a hypothetical +30-day stress scenario. PNC and PNC Bank calculate the LCR daily and are required to maintain a regulatory minimum of 100%. The +LCR for both PNC and PNC Bank exceeded the regulatory minimum requirement throughout the year for 2023, 2022 and 2021. +Fluctuations in our average LCR result from changes to the components of the calculation, including high-quality liquid assets and net +cash outflows, as a result of ongoing business activity. +The NSFR is designed to measure the stability of the maturity structure of assets and liabilities of banking organizations over a one- +year time horizon. PNC and PNC Bank calculate the NSFR daily and are required to maintain a regulatory minimum of 100%. PNC +and PNC Bank have maintained NSFR compliance since the metric became effective on July 1, 2021. +We provide additional information regarding regulatory liquidity requirements and their potential impact on us in the Supervision and +Regulation section of Item 1 Business and Item 1A Risk Factors of this Report. +Sources of Liquidity +Our largest source of liquidity on a consolidated basis is the customer deposit base generated by our banking businesses. These +deposits provide relatively stable and low-cost funding. Total deposits decreased to $421.4 billion at December 31, 2023 from $436.3 +billion at December 31, 2022 and included a continued shift from noninterest-bearing to interest-bearing deposit products as a result of +the elevated interest rate environment. As of December 31, 2023, uninsured deposits represented approximately 44% of our total +deposit base. The majority of our uninsured deposits are related to commercial operating and relationship accounts, which we define +as commercial deposit customers who utilize two or more PNC products. See the Funding Sources portion of the Consolidated +Balance Sheet Review and Business Segments Review sections of this Financial Review for additional information on our deposits +and related strategies. +We also obtain liquidity through various forms of funding, including long-term debt (senior notes, subordinated debt and FHLB +borrowings) and short-term borrowings (securities sold under repurchase agreements, commercial paper and other short-term +borrowings). In addition, PNC joined the Federal Reserve’s Standing Repo Facility on October 20, 2023, which allows eligible banks, +such as PNC Bank, to borrow overnight in exchange for U.S Treasury, agency debt and agency mortgage-backed securities. See the +Funding Sources section of the Consolidated Balance Sheet Review in this Financial Review and Note 9 Borrowed Funds included in +this Report for additional information related to our borrowings. +Total senior and subordinated debt, on a consolidated basis, increased during 2023 due to the following activity: +Table 26: Senior and Subordinated Debt +In billions 2023 +January 1 $ 23.0 +Issuances 10.5 +Calls and maturities (2.3) +Other 0.5 +December 31 $ 31.7 +Additionally, certain liquid assets and unused borrowing capacity from a number of sources are also available to manage our liquidity +position. PNC has a contingency funding plan designed to ensure that liquidity sources are sufficient to meet ongoing obligations and +commitments, particularly in the event of liquidity stress. This plan is designed to examine and quantify the organization’s liquidity +under various internal liquidity stress scenarios and is periodically tested to assess the plan’s reliability. Additionally, the plan provides +the strategies for addressing liquidity needs and responsive actions we would consider during liquidity stress events, which could +include the issuance of incremental debt, preferred stock, or additional deposit actions, including the issuance of brokered CDs. The +plan also addresses the governance, frequency of reporting and the responsibilities of key departments in the event of liquidity stress. + +70 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret tool is "scissors". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_91.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_91.txt new file mode 100644 index 0000000000000000000000000000000000000000..ff691fb733ba5218f34de1b815a200115d2cba0b --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_91.txt @@ -0,0 +1,51 @@ +PNC defines our primary contingent liquidity sources as cash held at the Federal Reserve Bank, investment securities and unused +borrowing capacity at the FHLB and Federal Reserve Bank. The following table summarizes our primary contingent liquidity sources +at December 31, 2023 and December 31, 2022: +Table 27: Primary Contingent Liquidity Sources +In billions December 31, 2023 December 31, 2022 +Cash balance with Federal Reserve Bank $ 43.3 $ 26.9 +Investment securities (a) 98.5 109.8 +Unused borrowing capacity from FHLB (b) 35.4 42.9 +Unused borrowing capacity from Federal Reserve Bank (c) 47.2 24.3 + Total available contingent liquidity $ 224.4 $ 203.9 +(a) Represents the fair value of investment securities that are available for sale or that can be used for pledging or to secure other sources of funding. +(b) At December 31, 2023, total FHLB borrowing capacity was $73.4 billion and total FHLB borrowings were $38.0 billion. Comparable amounts at December 31, 2022 were +$75.0 billion and $32.1 billion, respectively. +(c) Total borrowing capacity with the Federal Reserve Bank was $47.2 billion at December 31, 2023 and $24.3 at December 31, 2022. PNC had no outstanding borrowings with +the Federal Reserve Bank at December 31, 2023 and 2022. +Bank Liquidity +In addition to our primary contingent liquidity sources, under PNC Bank’s 2014 bank note program, as amended, PNC Bank may from +time to time offer up to $40.0 billion aggregate principal amount outstanding at any one time of its unsecured senior and subordinated +notes with maturity dates more than nine months (in the case of senior notes) and five years or more (in the case of subordinated notes) +from their date of issue. At December 31, 2023, PNC Bank’s remaining capacity to issue under the program was $33.3 billion. +Under PNC Bank’s 2013 commercial paper program, PNC Bank has the ability to offer up to $10.0 billion of its commercial paper to +provide additional liquidity. As of December 31, 2023, there were no issuances outstanding under this program. +Additionally, PNC Bank may also access funding from the parent company through deposits placed at the bank or issuing +intercompany senior unsecured notes. +Parent Company Liquidity +In addition to managing liquidity risk at the bank level, we monitor the parent company’s liquidity. The parent company’s contractual +obligations consist primarily of debt service related to parent company borrowings and funding non-bank affiliates. Additionally, the +parent company maintains liquidity to fund discretionary activities such as paying dividends to our shareholders, share repurchases +and acquisitions. +As of December 31, 2023, available parent company liquidity totaled $20.6 billion. Parent company liquidity is held in intercompany +cash and investments. For investments with longer durations, the related maturities are aligned with scheduled cash needs, such as the +maturity of parent company debt obligations. +The principal source of parent company liquidity is the dividends or other capital distributions it receives from PNC Bank, which may +be impacted by the following: +• Bank-level capital needs, +• Laws, regulations and the results of supervisory activities, +• Corporate policies, +• Contractual restrictions, and +• Other factors. +There are statutory and regulatory limitations on the ability of a national bank to pay dividends or make other capital distributions or to +extend credit to the parent company or its non-bank subsidiaries. The amount available for dividend payments by PNC Bank to the +parent company without prior regulatory approval was $6.3 billion at December 31, 2023. See Note 19 Regulatory Matters for further +discussion of these limitations. +In addition to dividends from PNC Bank, other sources of parent company liquidity include cash and investments, as well as dividends +and loan repayments from other subsidiaries and dividends or distributions from equity investments. We can also generate liquidity for +the parent company and PNC’s non-bank subsidiaries through the issuance of debt and equity securities, including certain capital +instruments, in public or private markets and commercial paper. Under the parent company’s 2014 commercial paper program, the +parent company has the ability to offer up to $5.0 billion of commercial paper to provide additional liquidity. At December 31, 2023, +there were no issuances outstanding under this program. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 71 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_92.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_92.txt new file mode 100644 index 0000000000000000000000000000000000000000..83900d74a26f37b60e2c33c1f2d785d6e150d254 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_92.txt @@ -0,0 +1,63 @@ +The following table details Parent Company note issuances in 2023: +Table 28: Parent Company Notes Issued +Issuance Date Amount Description of Issuance +January 24, 2023 $1.25 billion $1.25 billion of senior fixed-to-floating green bond notes with a maturity date of January 26, 2027. Interest is +payable semi-annually in arrears at a fixed rate of 4.758% per annum, on January 26 and July 26 of each year, +beginning on July 26, 2023. Beginning on January 26, 2026, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 1.085%, on April 26, 2026, +July 26, 2026, October 26, 2026, and at the maturity date. +January 24, 2023 $1.5 billion $1.5 billion of senior fixed-to-floating notes with a maturity date of January 24, 2034. Interest is payable +semi-annually in arrears at a fixed rate of 5.068% per annum, on January 24 and July 24 of each year, +beginning on July 24, 2023. Beginning on January 24, 2033, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 1.933% on April 24, 2033, +July 24, 2033, October 24, 2033 and at the maturity date. +June 12, 2023 $1.0 billion $1.0 billion of senior fixed-to-floating notes with a maturity date of June 12, 2026. Interest is payable semi- +annually in arrears at a fixed rate of 5.812% per annum, on June 12 and December 12 of each year, beginning +on December 12, 2023. Beginning on June 12, 2025, interest is payable quarterly in arrears at a floating rate +per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the +SOFR Index as described in the Prospectus Supplement), plus 1.322%, on September 12, 2025, December 12, +2025, March 12, 2026 and at the maturity date. +June 12, 2023 $2.5 billion $2.5 billion of senior fixed-to-floating notes with a maturity date of June 12, 2029. Interest is payable semi- +annually in arrears at a fixed rate of 5.582% per annum, on June 12 and December 12 of each year, beginning +on December 12, 2023. Beginning on June 12, 2028, interest is payable quarterly in arrears at a floating rate +per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the +SOFR Index as described in the Prospectus Supplement), plus 1.841%, on September 12, 2028, December 12, +2028, March 12, 2029 and at the maturity date. +August 18, 2023 $750 million $750 million of senior fixed-to-floating notes with a maturity date of August 18, 2034. Interest is payable +semi-annually in arrears at a fixed rate of 5.939% per annum, on February 18 and August 18 of each year, +beginning on February 18, 2024. Beginning on August 18, 2033, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 1.946%, on November 18, +2033, February 18, 2034, May 18, 2034 and at the maturity date. +October 20, 2023 $1.25 billion $1.25 billion of senior fixed-to-floating notes with a maturity date of October 20, 2027. Interest is payable +semi-annually in arrears at a fixed rate of 6.615% per annum, on April 20 and October 20 of each year, +beginning on April 20, 2024. Beginning on October 20, 2026, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 1.730%, on January 20, 2027, +April 20, 2027, July 20, 2027 and at the maturity date. +October 20, 2023 $2.25 billion $2.25 billion of senior fixed-to-floating notes with a maturity date of October 20, 2034. Interest is payable +semi-annually in arrears at a fixed rate of 6.875% per annum, on April 20 and October 20 of each year, +beginning on April 20, 2024. Beginning on October 20, 2033, interest is payable quarterly in arrears at a +floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest +period using the SOFR Index as described in the Prospectus Supplement), plus 2.284%, on January 20, 2034, +April 20, 2034, July 20, 2034 and at the maturity date. +Parent company senior and subordinated debt carrying value totaled $24.0 billion and $13.1 billion at December 31, 2023 and +December 31, 2022, respectively. +See Note 24 Subsequent Events for details on the parent company’s issuances of $1.0 billion of its 5.300% senior fixed-to-floating rate +notes that mature on January 21, 2028, and $1.5 billion of its 5.676% senior fixed-to-floating rate notes that mature on January 22, +2035. +Contractual Obligations and Commitments +We enter into various contractual arrangements in the normal course of business, certain of which require future payments that could +impact our liquidity and capital resources. These obligations include commitments to extend credit, outstanding letters of credit, +customer deposits, borrowed funds, operating lease payments and future pension and post-retirement benefits. For further discussion +related to these contractual obligations and other commitments, see Note 6 Leases, Note 8 Time Deposits, Note 9 Borrowed Funds, +Note 10 Commitments and Note 16 Employee Benefit Plans. +Credit Ratings +PNC’s credit ratings affect the cost and availability of short and long-term funding, collateral requirements for certain derivative +instruments and the ability to offer certain products. +In general, rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset +quality, business mix, level and quality of earnings, and the current legislative and regulatory environment, including implied + +72 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_93.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_93.txt new file mode 100644 index 0000000000000000000000000000000000000000..175634b6450c936664370570a3654a469d2fcb79 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_93.txt @@ -0,0 +1,44 @@ +government support. A decrease, or potential decrease, in credit ratings could impact access to the capital markets and/or increase the +cost of debt, and thereby adversely affect liquidity and financial condition. For additional information on the potential impacts from a +downgrade to our credit ratings, see Item 1A Risk Factors in this Report. +The following table presents credit ratings and outlook for PNC as of December 31, 2023: +Table 29: Credit Ratings and Outlook +December 31, 2023 + Moody’s (a) Standard & Poor’s Fitch +PNC +Senior debt A3 A- A +Subordinated debt A3 BBB+ A- +Preferred stock Baa2 BBB- BBB +PNC Bank +Senior debt A2 A A+ +Subordinated debt A3 A- A +Long-term deposits Aa3 A AA- +Short-term deposits P-1 A-1 F1+ +Short-term notes P-1 A-1 F1 +PNC +Agency rating outlook Negative Stable Stable +(a) On August 7, 2023, the Moody's rating outlook on PNC's long-term issuer rating, long-term local currency bank deposits and senior unsecured local currency notes was +changed to negative from stable, reflecting the current pressures on the U.S. banking sector. +Capital Management +We manage our funding and capital positions by making adjustments to our balance sheet size and composition, issuing or redeeming +debt, issuing equity or other capital instruments, executing treasury stock transactions and capital redemptions or repurchases and +managing dividend policies and retaining earnings. +On February 7, 2023, PNC issued 1,500,000 depositary shares each representing 1/100th ownership in a share of 6.250% fixed-rate +reset non-cumulative perpetual preferred stock, Series W, with a par value of $1 per share. +On November 1, 2023, PNC redeemed $1.0 billion of depositary shares representing interests in PNC’s fixed-to-floating non- +cumulative perpetual preferred stock, Series O. Each depositary share represents 1/100th interest in a share of the Series O preferred +stock. +In 2023, we returned $3.1 billion of capital to shareholders through dividends on common shares of $2.5 billion and repurchases of 4.0 +million common shares for $0.6 billion. Consistent with the SCB framework, which allows for capital return in amounts in excess of +the SCB minimum levels, our Board of Directors has authorized a repurchase framework under the previously approved repurchase +program of up to 100 million common shares, of which approximately 45% were still available for repurchase at December 31, 2023. +In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework, share repurchase activity is expected +to remain modest during the first quarter of 2024. PNC continues to evaluate the potential impact of the proposed rules and may adjust +share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter +period beginning October 1, 2023 is the regulatory minimum of 2.5%. +On January 4, 2024, the PNC Board of Directors declared a quarterly cash dividend on common stock of $1.55 per share paid on +February 5, 2024. +See the Supervision and Regulation section of Item 1 Business in this Report for further information concerning the CCAR and +DFAST process and the factors the Federal Reserve takes into consideration in its evaluation of capital plans. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 73 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_94.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_94.txt new file mode 100644 index 0000000000000000000000000000000000000000..f0e055307a70287644024bc65915a9dd19481185 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_94.txt @@ -0,0 +1,59 @@ +The following table summarizes our Basel III capital balances and ratios: +Table 30: Basel III Capital +December 31, 2023 +Dollars in millions Basel III (a) +(Fully Implemented) +(estimated) (b) +Common equity Tier 1 capital +Common stock plus related surplus, net of treasury stock $ (3,714) $ (3,714) +Retained earnings 56,773 56,290 +Goodwill, net of associated deferred tax liabilities (10,698) (10,698) +Other disallowed intangibles, net of deferred tax liabilities (302) (302) +Other adjustments/(deductions) (85) (86) +Common equity Tier 1 capital (c) $ 41,974 $ 41,490 +Additional Tier 1 capital +Preferred stock plus related surplus 6,241 6,241 +Tier 1 capital $ 48,215 $ 47,731 +Additional Tier 2 capital +Qualifying subordinated debt 2,875 2,875 +Eligible credit reserves includable in Tier 2 capital 4,842 5,265 +Total Basel III capital $ 55,932 $ 55,871 +Risk-weighted assets +Basel III standardized approach risk-weighted assets (d) $ 424,408 $ 424,546 +Average quarterly adjusted total assets $ 557,202 $ 556,718 +Supplementary leverage exposure (e) $ 666,356 $ 666,354 +Basel III risk-based capital and leverage ratios (f) +Common equity Tier 1 9.9 % 9.8 % +Tier 1 11.4 % 11.2 % +Total 13.2 % 13.2 % +Leverage (g) 8.7 % 8.6 % +Supplementary leverage ratio (e) 7.2 % 7.2 % +(a) The ratios are calculated to reflect PNC’s election to adopt the CECL five-year transition provisions. Effective for the first quarter 2022, PNC is now in the three-year +transition period and the full impact of the CECL standard is being phased-in to regulatory capital through December 31, 2024. +(b) The ratios are calculated to reflect the full impact of CECL and exclude the benefits of the optional five-year transition. +(c) As permitted, PNC and PNC Bank have elected to exclude AOCI related to both available for sale securities and pension and other post-retirement plans from CET1 capital. +(d) Basel III standardized approach risk-weighted-assets are based on the Basel III standardized approach rules and include credit and market risk-weighted assets. +(e) The Supplementary leverage ratio is calculated based on Tier 1 capital divided by Supplementary leverage exposure, which takes into account the quarterly average of both +on balance sheet assets as well as certain off-balance sheet items, including loan commitments and potential future exposure under derivative contracts. +(f) All ratios are calculated using the regulatory capital methodology applicable to PNC and calculated based on the standardized approach. +(g) Leverage ratio is calculated based on Tier 1 capital divided by Average quarterly adjusted total assets. +PNC’s regulatory risk-based capital ratios are calculated using the standardized approach for determining risk-weighted assets. Under +the standardized approach for determining credit risk-weighted assets, exposures are generally assigned a pre-defined risk weight. +Exposures to high volatility commercial real estate, nonaccruals, FDMs, past due exposures and equity exposures are generally subject +to higher risk weights than other types of exposures. +The regulatory agencies have adopted a rule permitting certain banks, including PNC, to delay the estimated impact on regulatory +capital stemming from implementing CECL. CECL’s estimated impact on CET1 capital, as defined by the rule, is the change in +retained earnings at adoption plus or minus 25% of the change in CECL ACL at the balance sheet date, excluding the allowance for +PCD loans, compared to CECL ACL at adoption. Effective for the first quarter of 2022, PNC is now in the three-year transition +period, and the full impact of the CECL standard is being phased-in to regulatory capital through December 31, 2024. See additional +discussion of this rule in the Supervision and Regulation section of Item 1 Business and Item 1A Risk Factors. +At December 31, 2023, PNC and PNC Bank were considered “well capitalized,” based on applicable U.S. regulatory capital ratio +requirements. To qualify as “well capitalized”, PNC must have Basel III capital ratios of at least 6% for Tier 1 risk-based capital and +10% for Total risk-based capital, and PNC Bank must have Basel III capital ratios of at least 6.5% for Common equity Tier 1 risk- +based capital, 8% for Tier 1 risk-based capital, 10% for Total risk-based capital and a Leverage ratio of at least 5%. +Federal banking regulators have stated that they expect the largest U.S. BHCs, including PNC, to have a level of regulatory capital +well in excess of the regulatory minimum and have required the largest U.S. BHCs, including PNC, to have a capital buffer sufficient +to withstand losses and allow them to meet the credit needs of their customers through estimated stress scenarios. We seek to manage + +74 The PNC Financial Services Group, Inc. – 2023 Form 10-K +The secret currency is a "rupee". \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_95.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_95.txt new file mode 100644 index 0000000000000000000000000000000000000000..eccf472b42e393f774b3fdcf6d9e0ad77824bd2b --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_95.txt @@ -0,0 +1,49 @@ +our capital consistent with these regulatory principles, and we believe that our December 31, 2023 capital levels were aligned with +them. +We provide additional information regarding regulatory capital requirements and some of their potential impacts, including the +proposed rules to adjust the Basel III framework, in the Supervision and Regulation section of Item 1 Business, Item 1A Risk Factors +and Note 19 Regulatory Matters. +Market Risk Management +Market risk is the risk of a loss in earnings or economic value due to adverse movements in market factors such as interest rates, credit +spreads, foreign exchange rates, commodity prices and equity prices. We are exposed to market risk primarily by our involvement in +the following activities, among others: +• Traditional banking activities of gathering deposits and extending loans, +• Fixed income securities, derivatives and foreign exchange activities, as a result of customer activities, securities underwriting +and our investment portfolio, and +• Other investments, including equity, and activities whose economic values are directly impacted by market factors. +We have established enterprise-wide policies and methodologies to identify, measure, monitor and report market risk. Market Risk +Management provides independent oversight by monitoring compliance with established guidelines and reporting significant risks in +the business to management committees and, where appropriate, the Risk Committee of the Board of Directors. +Market Risk Management – Interest Rate Risk +Interest rate risk results primarily from our traditional banking activities of gathering deposits and extending loans. Many factors, +including economic and financial conditions, movements in interest rates and consumer preferences, affect the difference between the +interest that we earn on assets and the interest that we pay on liabilities and the level of our noninterest-bearing funding sources. Due +to the repricing term mismatches and embedded options inherent in certain of these products, changes in market interest rates not only +affect expected near-term earnings, but also the economic values of these assets and liabilities. +Our Asset and Liability Management group centrally manages interest rate risk as prescribed in our market risk-related risk +management policies, which are approved by management’s ALCO and the Risk Committee of the Board of Directors. +PNC utilizes sensitivities of NII and EVE to a set of interest rate scenarios to identify and measure its short-term and long-term +structural interest rate risks. +NII sensitivity results for the fourth quarters of 2023 and 2022 follow: +Table 31: Net Interest Income Sensitivity Analysis +Fourth Quarter 2023 Fourth Quarter 2022 +Net Interest Income Sensitivity Simulation (a) +Effect on NII in the first year from shocked interest rate: +200 basis point instantaneous increase (0.2) % 4.7 % +200 basis point instantaneous decrease (0.3) % (5.7)% +(a) The effect on NII in the first year from a 100 basis point instantaneous increase or decrease is not materially different from the 200 basis point scenarios as disclosed above. +When forecasting net interest income, we make certain key assumptions that can materially impact the resulting sensitivities, including +the following: +Future Balance Sheet Composition: Our balance sheet composition is dynamic and based on our forecasted expectations. As of the +fourth quarter 2023, the projected balance sheet composition by the end of year one is generally consistent with the spot composition +as of the fourth quarter 2023. +Deposit Betas: Deposit pricing changes are primarily driven by changes in the Federal Funds rate, with the relationship between +deposit rates and Federal Funds rate defined as deposit beta. We define cumulative deposit beta as the change in deposit rate paid on +interest bearing non-maturity deposits divided by the change in the upper level of the stated Federal Funds rate range since the first +quarter of 2022, the start of the current rising rate cycle. As of December 2023, PNC’s cumulative deposit beta was 44%, an increase +from 31% at December 2022. For interest rate risk modeling, PNC uses dynamic beta models to adjust assumed repricing sensitivity +depending on market rate levels as well as other factors. The dynamic beta assumptions reflect historical experience and future +expectations. Our scenario assumes that deposit betas slightly increase from current levels. Actual deposit rate paid may differ from +modeled projections due to variables such as competition for deposits and customer behavior. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 75 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_96.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_96.txt new file mode 100644 index 0000000000000000000000000000000000000000..4a2ea7b0df1540df716a43244edc2985fa6dd13b --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_96.txt @@ -0,0 +1,52 @@ +Asset Prepayments: PNC includes prepayment assumptions for both loan and investment portfolios. Mortgage and Home Equity +portfolios utilize an industry standard model to drive estimated prepayments that increase in lower rate environments. Commercial and +consumer loan portfolios assume static constant prepayment rates that are consistent across rate scenarios, as those portfolios +historically do not exhibit significantly different prepayment behaviors based upon the level of market rates. +Impact of Derivatives: PNC uses interest rate derivatives to hedge floating rate commercial loans. PNC had $33.3 billion in receive +fix / pay float swaps as of December 31, 2023, with a weighted average duration of 2.3 years and an average fixed rate of 2.1%. As of +December 31, 2023 PNC also had collars in place, reflecting $12.5 billion of caps and $12.5 billion of floors, that are used to hedge +these commercial loans. Additionally, PNC utilizes receive fix / pay float swaps as a means of hedging fixed rate debt. See Note 15 +Financial Derivatives for additional information on how we use derivatives to hedge commercial loans and fixed rate debt. +EVE sensitivity results for the fourth quarter of 2023 and 2022 follow: +Table 32: Economic Value of Equity Sensitivity Analysis +Fourth Quarter 2023 Fourth Quarter 2022 +Economic Value of Equity Sensitivity Simulation +200 basis point instantaneous increase (4.3) % (5.1) % +200 basis point instantaneous decrease (3.9) % (3.1)% +EVE measures the present value of all projected future cash flows associated with a point-in-time balance sheet and does not include +projected new volume. EVE sensitivity to interest rate changes is a complementary metric to NII sensitivity analysis and represents an +estimation of long-term interest rate risk. PNC calculates its EVE sensitivity by measuring the changes in the economic value of +assets, liabilities and off-balance sheet instruments in response to an instantaneous +/-200 bps parallel shift in interest rates. Similar to +the NII sensitivity analysis, we incorporate dynamic deposit repricing and loan prepayment assumptions. These methodologies are +largely consistent between the EVE and NII sensitivity analyses. Additionally, deposit attrition is a significant contributor to EVE +sensitivity. Deposit attrition is projected based on a dynamic model developed using long-term historical deposit behavior in addition +to management assumptions including accelerated attrition for pandemic related excess deposits. PNC performs various sensitivity +analyses to understand the impact of faster and slower deposit attrition on our risk metrics, with the results reported to the ALCO. +Compared to the fourth quarter of 2022, there have been no material changes to our NII sensitivity and EVE sensitivity assumptions, +including data sources that drive assumptions setting. +Market Risk Management – Customer-Related Trading Risk +We engage in fixed income securities, derivatives and foreign exchange transactions to support our customers’ investing and hedging +activities. These transactions, related hedges and the credit valuation adjustment related to our customer derivatives portfolio are +marked-to-market daily and reported as customer-related trading activities. We do not engage in proprietary trading of these products. +We use VaR as the primary means to measure and monitor market risk in customer-related trading activities. VaR is used to estimate +the probability of portfolio losses based on the statistical analysis of historical market risk factors. A diversified VaR reflects empirical +correlations across different asset classes. We calculate a diversified VaR at a 95% confidence interval and the results for 2023 and +2022 were within our acceptable limits. +To help ensure the integrity of the models used to calculate VaR for each portfolio and enterprise-wide, we use a process known as +backtesting. The backtesting process consists of comparing actual observations of gains or losses against the VaR levels that were +calculated at the close of the prior day. Our VaR measure assumes that exposures remain constant and that recent market variability is +a good predictor of future variability. Actual observations include customer-related revenue and intraday hedging, which helps to +reduce losses and can reduce the number of instances actual losses exceed the prior day VaR measure. There were no instances during +2023 and 2022 under our diversified VaR measure where actual losses exceeded the prior-day VaR measure. Our portfolio and +enterprise-wide VaR models utilize a historical approach with a 500-day look-back period. +Customer-related trading revenue was $137 million in 2023 compared with $382 million in 2022 and is recorded in Capital markets +and advisory and Other interest income on our Consolidated Income Statement. The decrease was primarily due to higher funding +costs in the derivative and security trading desks, partially offset by improved foreign exchange client sales revenues. +Market Risk Management – Equity And Other Investment Risk +Equity investment risk is the risk of potential losses associated with investing in both private and public equity markets. In addition to +extending credit, taking deposits, underwriting securities and trading financial instruments, we make and manage direct investments in +a variety of transactions, including management buyouts, recapitalizations and growth financings in a variety of industries. We also +have investments in affiliated and non-affiliated funds that make similar investments in private equity, consistent with regulatory +limitations. The economic and/or book value of these investments and other assets are directly affected by changes in market factors. + +76 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_97.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_97.txt new file mode 100644 index 0000000000000000000000000000000000000000..508c82a12781501e608dda8ca2f9a212070db7de --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_97.txt @@ -0,0 +1,56 @@ +Various PNC business units manage our equity and other investment activities. Our businesses are responsible for making investment +decisions within the approved policy limits and associated guidelines. +A summary of our equity investments follows: +Table 33: Equity Investments Summary +Dollars in millions +December 31 +2023 +December 31 +2022 +Change +$ % +Tax credit investments $ 4,331 $ 4,308 $ 23 1 % +Private equity and other 3,983 4,129 (146) (4) % +Total $ 8,314 $ 8,437 $ (123) (1) % +Tax Credit Investments +Included in our equity investments are direct tax credit investments and equity investments held by consolidated entities. These tax +credit investment balances included unfunded commitments totaling $2.5 billion at both December 31, 2023 and 2022. These +unfunded commitments are included in Other liabilities on our Consolidated Balance Sheet. +Note 4 Loan Sale and Servicing Activities and Variable Interest Entities has further information on tax credit investments. +Private Equity and Other +The largest component of our other equity investments is our private equity portfolio. The private equity portfolio is an illiquid +portfolio consisting of mezzanine and equity investments that vary by industry, stage and type of investment. Private equity +investments carried at estimated fair value totaled $2.2 billion at December 31, 2023 and $1.8 billion at December 31, 2022, +respectively. As of December 31, 2023, $2.0 billion was invested directly in a variety of companies, and $0.2 billion was invested +indirectly through various private equity funds. See the Supervision and Regulation section in Item 1 of this Report for discussion of +the Volcker Rule limitations on our interests in and relationships with private funds. +Included in our other equity investments are Visa Class B common shares, which are recorded at cost. Visa Class B common shares +that we own are transferable only under limited circumstances until they can be converted into shares of the publicly-traded Class A +common shares. Based upon the December 31, 2023 per share closing price of $260.35 for a Visa Class A common share, the +estimated value of our total investment in the Class B common shares was approximately $1.5 billion at the current conversion rate of +Visa B shares to Visa A shares, while our cost basis was insignificant. See Note 14 Fair Value and Note 20 Legal Proceedings for +additional information regarding our Visa agreements, and Visa’s amendments to its Certificate of Incorporation to institute a +conversion and exchange offer program that would release transfer restrictions on portions of the Visa Class B common shares. The +estimated value does not represent fair value of the Visa B common shares given the shares’ limited transferability and the lack of +observable transactions in the marketplace. +We also have certain other equity investments, the majority of which represent investments in affiliated and non-affiliated funds with +both traditional and alternative investment strategies. Net gains related to these investments were $18 million in 2023 and $45 million +in 2022. +Impact of Inflation +Our assets and liabilities are primarily financial in nature and typically have varying maturity dates. Accordingly, future changes in +prices do not affect the obligations to pay or receive fixed and determinable amounts of money. However, during periods of inflation, +there may be a subsequent impact affecting certain fixed costs or expenses, an erosion of consumer and customer purchasing power, +and fluctuations in the need or demand for our products and services. When significant levels of inflation occur, our business could +potentially be impacted by, among other things, reducing our tolerance for extending credit or causing us to incur additional credit +losses resulting from possible increased default rates. Throughout 2023, the Federal Reserve monetary policy has tightened with the +intent to slow inflation, which has led to larger increases in interest rates. See Risk Factors in Item 1A, our Executive Summary and +Cautionary Statement Regarding Forward-Looking statements in this Item 7 for further discussion of inflation and its overall impact to +the economy, our borrowers’ ability to repay their obligations and certain costs and expenses to PNC. +Financial Derivatives +We use a variety of financial derivatives as part of the overall asset and liability risk management process to help manage exposure to +market (primarily interest rate) and credit risk inherent in our business activities. We also enter into derivatives with customers to +facilitate their risk management activities. +Financial derivatives involve, to varying degrees, market and credit risk. Derivatives represent contracts between parties that usually +require little or no initial net investment and result in one party delivering cash or another type of asset to the other party based on a + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 77 \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_98.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_98.txt new file mode 100644 index 0000000000000000000000000000000000000000..7933ca948b93dc3248ff73b8080683a06afb1548 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_98.txt @@ -0,0 +1,52 @@ +notional and an underlying as specified in the contract. Therefore, cash requirements and exposure to credit risk are significantly less +than the notional amount on these instruments. +Further information on our financial derivatives is presented in Note 1 Accounting Policies, Note 14 Fair Value and Note 15 Financial +Derivatives. +Not all elements of market and credit risk are addressed through the use of financial derivatives, and such instruments may be +ineffective for their intended purposes due to unanticipated market changes, among other reasons. +Operational Risk Management +Operational risk is the risk to the current or projected financial condition and resilience arising from inadequate or failed internal +processes or systems, human errors or misconduct or adverse external events. Operational risk is inherent to the entire organization. +Operational risk management is embedded in our culture and decision-making processes through a systematic approach whereby +operational risks and exposures are: (i) identified and assessed; (ii) managed through the design and implementation of controls; (iii) +measured and evaluated against our risk tolerance limits; and (iv) appropriately reported to management and the Risk Committee of +the Board of Directors. Strong operational risk management and well-informed risk-based decisions benefit us by improving the +customer experience, enhancing compliance, reducing reputational risk, minimizing losses and establishing an appropriate amount of +required operational risk capital held by us. +The Operational Risk Management Framework is designed to provide effective and consistent management of operational risk. The +primary purpose of the framework is to enable us to understand our operational risks and manage them to the desired risk profile, in +line with our Risk Appetite. Additionally, the guidance established within the framework assists management in making well-informed +risk-based business decisions. +The framework provides a disciplined and structured process for us to manage operational risk across eight operational risk domains. +These domains provide a comprehensive view of operational risk and allow us to discuss operational risk in a standard way, +facilitating reporting and ongoing risk mitigation. +The operational risk domains are: +• Operations: Risk resulting from inadequate or failed internal processes, misconduct or errors of people or fraud. +• Compliance: Risk of legal or regulatory sanctions, financial loss, or damage to reputation resulting from failure to comply +with laws, regulations, rules, self-regulatory standards or other regulatory requirements. +• Data Management: Risk associated with incomplete or inaccurate data. +• Model: Risk associated with the design, implementation and ongoing use and management of models. +• Technology and Systems: Risk associated with the use, operation and adoption of technology. +• Information Security: Risk resulting from the failure to protect information and ensure appropriate access to, and use and +handling of, information assets. +• Business Continuity: Risk of potential disruptive events to business activities. +• Third Party: Risk arising from failure of third-party providers to conduct activity in a safe and sound manner and in +compliance with contract provisions and applicable laws and regulations. +We utilize operational risk management programs within the framework, including Risk and Control Self-Assessments, scenario +analysis, and internal and external loss event reviews and analysis, to assess existing risks, determine potential/emerging risks and +evaluate the effectiveness of internal controls. Program tools and methodology assist our business managers in identifying potential +risks and control gaps. +Lines of business are responsible for identifying, owning, managing and monitoring the operational risks and controls associated with +their business activities and product or service offerings to within acceptable levels. Centralized functions, such as Business +Continuity, Enterprise Third Party Management and Information Security, are responsible for the development, implementation and +management of their individual programs and for the development and maintenance of the policies, procedures, methodologies, tools +and technology utilized across the enterprise to identify, assess, monitor and report program risks. Additionally, independent risk +management reviews and challenges line of business adherence to the framework to help ensure proper controls are in place and +appropriate risk mitigation plans are established as necessary. +Conduct, Reputational and Strategic Risk +PNC’s risk culture seeks to reinforce the appropriate protocols for responsible and ethical behavior through sound processes and +controls. In order to promote a robust risk culture, the Board and executive management establish code of conduct and professional +standards to which all employees must adhere. A strong risk culture discourages misconduct and supports conduct risk management at +PNC. Conduct risk is defined as the risk that employees fail to comply with the ethical standards expected of them. Strong conduct + +78 The PNC Financial Services Group, Inc. – 2023 Form 10-K \ No newline at end of file diff --git a/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_99.txt b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_99.txt new file mode 100644 index 0000000000000000000000000000000000000000..0c20753eb8ace7fc43eb4f46ddfbc30a6da09c36 --- /dev/null +++ b/PNC/PNC_100Pages/Text_TextNeedles/PNC_100Pages_TextNeedles_page_99.txt @@ -0,0 +1,56 @@ +risk management is important in supporting PNC’s reputation, and PNC maintains a corporate culture that emphasizes complying with +laws, regulations, and managing reputational risks. Reputational risk is the risk to the franchise and/or shareholder value based on a +negative perception of PNC by its stakeholders and/or the changing expectations of its stakeholders. Strategic risk is another +component of the ERM Framework that is also critical to optimizing shareholder returns. Strategic risk is the risk to earnings that may +arise from adverse business decisions, improper implementation of business decisions and/or inadequate response to changes in the +business environment. Strategic risk is considered and assessed by our businesses in the annual strategic planning processes and +monitored on an on-going basis as those plans are carried out. +Compliance Risk +Enterprise Compliance is responsible for oversight of compliance risk for the organization. Compliance issues are identified and +tracked through enterprise-wide monitoring and testing activities. Compliance risk issues are escalated through a comprehensive risk +reporting process at both a business and enterprise level and incorporated, as appropriate, into the development and assessment of our +operational risk profile. A management committee, chaired by the Chief Compliance Officer, is responsible for oversight of +compliance and fiduciary risk management programs across PNC. Enterprise Compliance, through the Regulatory Change Program, +helps PNC understand and proactively address emerging regulatory topics and risks as well as respond to changes in applicable laws +and regulations. To understand emerging issues impacting the industry, Enterprise Compliance communicates regularly with various +regulators having supervisory or regulatory responsibilities with respect to us, our subsidiaries, or businesses and participates in +forums focused on regulatory and compliance matters in the financial services industry. +Information Security Risk +The Information Security component of our Operational Risk Management Framework is responsible for protecting information assets +to achieve business objectives, which includes cybersecurity. PNC’s cybersecurity program is designed to identify risks to sensitive +information, protect that information, detect threats and events and maintain an appropriate response and recovery capability to help +ensure resilience against information security incidents. The program includes, among other things, annual security and privacy +training for all PNC employees and quarterly phishing exercises to raise employee awareness. Our security program is also regularly +examined by federal regulators for compliance with financial regulations and standards. The program also establishes expectations for +information asset management, system development security, identity and access management, incident management, threat and +vulnerability management, security operations management and third- and fourth-party security. For additional information, see Item +1C Cybersecurity of this Report. +CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS +Our consolidated financial statements are prepared by applying certain accounting policies. Note 1 Accounting Policies describes the +most significant accounting policies that we use. Certain of these policies require us to make estimates or economic assumptions that +may vary under different assumptions or conditions, and such variations may significantly affect our reported results and financial +position for the period or in future periods. +Allowance for Credit Losses +We maintain the ACL at levels that we believe to be appropriate as of the balance sheet date to absorb expected credit losses on our +existing investment securities, loans, equipment finance leases, other financial assets and unfunded lending related commitments, for +the remaining estimated contractual term of the assets or exposures, taking into consideration expected prepayments and estimated +recoveries. Our determination of the ACL is based on historical loss and performance experience, as well as current borrower and +transaction characteristics including collateral type and quality, current economic conditions, reasonable and supportable forecasts of +future economic conditions and other relevant factors. We use methods sensitive to changes in economic conditions to interpret these +factors and to estimate expected credit losses. We evaluate and, when appropriate, enhance the quality of our data and models and +other methods used to estimate the ACL on an ongoing basis. We incorporate qualitative factors in the ACL that reflect our best +estimate of expected losses that may not be adequately represented in our quantitative methods or economic assumptions. The major +drivers of ACL estimates include, but are not limited to: +• Current economic conditions: Our forecast of expected losses depends on economic conditions as of the estimation date. As +current economic conditions evolve, forecasted losses could be materially affected. +• Scenario weights and design: Our loss estimates are sensitive to the shape, direction and rate of change of macroeconomic +forecasts and thus vary significantly between upside and downside scenarios. Changes to the probability weights assigned to +these scenarios and the timing of peak business cycles reflected by the scenarios could materially affect our loss estimates. +• Current borrower quality: Our forecast of expected losses depends on current borrower and transaction characteristics, +including credit metrics and collateral type/quality. As borrower quality evolves, forecasted losses could be materially +affected. +• Portfolio composition: Changes to portfolio volume and mix could materially affect our estimates, as CECL reserves +would be recognized upon origination or acquisition and derecognized upon paydown, maturity or sale. + +The PNC Financial Services Group, Inc. – 2023 Form 10-K 79 +The secret kitchen appliance is a "toaster". \ No newline at end of file diff --git a/PNC/PNC_100Pages/needles.csv b/PNC/PNC_100Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..b7ea1257558bc4baeb903a6e31de6b627aa9668f --- /dev/null +++ b/PNC/PNC_100Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "star". +The secret sport is "skiing". +The secret object #5 is a "candle". +The secret animal #1 is an "elephant". +The secret animal #3 is an "owl". +The secret instrument is a "drum". +The secret landmark is the "Colosseum". +The secret object #3 is a "plate". +The secret food is "fries". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #5 is a "rabbit". +The secret vegetable is a "mushroom". +The secret fruit is a "grape". +The secret object #4 is a "mirror". +The secret object #1 is a "door". +The secret animal #4 is a "horse". +The secret transportation is an "airplane". +The secret animal #2 is a "koala". +The secret object #2 is a "watch". +The secret flower is "lavender". +The secret drink is "milk". +The secret tool is "scissors". +The secret currency is a "rupee". +The secret kitchen appliance is a "toaster". diff --git a/PNC/PNC_100Pages/needles_info.csv b/PNC/PNC_100Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..b5c398961b1d0e64dbe47253c40e67b5802d3165 --- /dev/null +++ b/PNC/PNC_100Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "star".,2,12,gray,white,0.978,0.267,times-italic,73 +The secret sport is "skiing".,7,14,purple,white,0.078,0.544,courier-oblique,99 +The secret object #5 is a "candle".,9,11,brown,white,0.486,0.877,helvetica-boldoblique,96 +The secret animal #1 is an "elephant".,15,10,white,black,0.888,0.959,times-bold,71 +The secret animal #3 is an "owl".,18,11,green,white,0.542,0.305,helvetica-bold,136 +The secret instrument is a "drum".,21,7,orange,black,0.636,0.562,times-roman,101 +The secret landmark is the "Colosseum".,25,12,red,white,0.586,0.451,courier,95 +The secret object #3 is a "plate".,32,9,blue,white,0.303,0.589,courier-bold,68 +The secret food is "fries".,34,10,black,white,0.869,0.643,helvetica,116 +The secret office supply is an "envelope".,37,10,yellow,black,0.816,0.909,times-bolditalic,125 +The secret clothing is a "dress".,42,11,green,white,0.287,0.065,times-bolditalic,108 +The secret animal #5 is a "rabbit".,46,10,orange,black,0.046,0.358,courier-oblique,129 +The secret vegetable is a "mushroom".,52,10,yellow,black,0.74,0.255,courier,131 +The secret fruit is a "grape".,56,8,blue,white,0.257,0.778,times-italic,95 +The secret object #4 is a "mirror".,60,9,gray,white,0.602,0.844,helvetica,127 +The secret object #1 is a "door".,62,10,red,white,0.816,0.429,courier-bold,122 +The secret animal #4 is a "horse".,67,10,purple,white,0.146,0.631,helvetica-bold,96 +The secret transportation is an "airplane".,70,11,black,white,0.095,0.67,times-bold,109 +The secret animal #2 is a "koala".,75,11,white,black,0.138,0.077,times-roman,127 +The secret object #2 is a "watch".,77,10,brown,white,0.802,0.826,helvetica-boldoblique,97 +The secret flower is "lavender".,83,8,white,black,0.084,0.391,helvetica-boldoblique,115 +The secret drink is "milk".,87,10,green,white,0.161,0.833,times-bold,108 +The secret tool is "scissors".,90,10,yellow,black,0.833,0.372,courier,92 +The secret currency is a "rupee".,94,11,brown,white,0.029,0.096,times-italic,115 +The secret kitchen appliance is a "toaster".,99,9,black,white,0.62,0.162,times-bolditalic,90 diff --git a/PNC/PNC_100Pages/prompt_questions.txt b/PNC/PNC_100Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b86ad8b24d12941b2f4aaa54b9c2b2c97db935d3 --- /dev/null +++ b/PNC/PNC_100Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret animal #3 in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? +What is the secret object #3 in the document? +What is the secret food in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #5 in the document? +What is the secret vegetable in the document? +What is the secret fruit in the document? +What is the secret object #4 in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret flower in the document? +What is the secret drink in the document? +What is the secret tool in the document? +What is the secret currency in the document? +What is the secret kitchen appliance in the document? diff --git a/PNC/PNC_10Pages/needles.csv b/PNC/PNC_10Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..f64332b038d044949a2fd82468ecf39058192e97 --- /dev/null +++ b/PNC/PNC_10Pages/needles.csv @@ -0,0 +1,10 @@ +The secret shape is a "star". +The secret sport is "skiing". +The secret instrument is a "drum". +The secret landmark is the "Colosseum". +The secret food is "fries". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret vegetable is a "mushroom". +The secret fruit is a "grape". +The secret transportation is an "airplane". diff --git a/PNC/PNC_10Pages/needles_info.csv b/PNC/PNC_10Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..f46d6fb45597a2abe0751a8f256da4fd664c5ecf --- /dev/null +++ b/PNC/PNC_10Pages/needles_info.csv @@ -0,0 +1,10 @@ +The secret shape is a "star".,1,12,gray,white,0.308,0.988,helvetica,105 +The secret sport is "skiing".,2,14,white,black,0.052,0.225,times-bolditalic,77 +The secret instrument is a "drum".,3,10,yellow,black,0.813,0.743,courier,65 +The secret landmark is the "Colosseum".,4,10,black,white,0.258,0.02,courier-oblique,82 +The secret food is "fries".,5,10,blue,white,0.854,0.478,times-bold,136 +The secret office supply is an "envelope".,6,10,green,white,0.724,0.517,times-roman,85 +The secret clothing is a "dress".,7,12,brown,white,0.983,0.742,helvetica-boldoblique,110 +The secret vegetable is a "mushroom".,8,13,purple,white,0.628,0.165,courier-bold,74 +The secret fruit is a "grape".,9,11,orange,black,0.353,0.449,helvetica-bold,105 +The secret transportation is an "airplane".,10,12,red,white,0.471,0.236,times-italic,96 diff --git a/PNC/PNC_10Pages/prompt_questions.txt b/PNC/PNC_10Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..929906951fcd930f0f2aa20223f39459965e73ce --- /dev/null +++ b/PNC/PNC_10Pages/prompt_questions.txt @@ -0,0 +1,10 @@ +What is the secret shape in the document? +What is the secret sport in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? +What is the secret food in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret vegetable in the document? +What is the secret fruit in the document? +What is the secret transportation in the document? diff --git a/PNC/PNC_150Pages/needles.csv b/PNC/PNC_150Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..b7ea1257558bc4baeb903a6e31de6b627aa9668f --- /dev/null +++ b/PNC/PNC_150Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "star". +The secret sport is "skiing". +The secret object #5 is a "candle". +The secret animal #1 is an "elephant". +The secret animal #3 is an "owl". +The secret instrument is a "drum". +The secret landmark is the "Colosseum". +The secret object #3 is a "plate". +The secret food is "fries". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #5 is a "rabbit". +The secret vegetable is a "mushroom". +The secret fruit is a "grape". +The secret object #4 is a "mirror". +The secret object #1 is a "door". +The secret animal #4 is a "horse". +The secret transportation is an "airplane". +The secret animal #2 is a "koala". +The secret object #2 is a "watch". +The secret flower is "lavender". +The secret drink is "milk". +The secret tool is "scissors". +The secret currency is a "rupee". +The secret kitchen appliance is a "toaster". diff --git a/PNC/PNC_150Pages/needles_info.csv b/PNC/PNC_150Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..9b08e20f3c8dbab4bfe9270c27ec2c15e8620c32 --- /dev/null +++ b/PNC/PNC_150Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "star".,3,10,orange,black,0.187,0.795,times-roman,104 +The secret sport is "skiing".,11,12,red,white,0.637,0.38,courier-oblique,94 +The secret object #5 is a "candle".,18,10,black,white,0.46,0.797,helvetica-bold,107 +The secret animal #1 is an "elephant".,23,12,green,white,0.049,0.059,times-bolditalic,97 +The secret animal #3 is an "owl".,25,9,blue,white,0.121,0.436,courier,100 +The secret instrument is a "drum".,36,8,gray,white,0.819,0.225,helvetica,112 +The secret landmark is the "Colosseum".,39,11,yellow,black,0.249,0.663,courier-bold,94 +The secret object #3 is a "plate".,46,13,white,black,0.333,0.121,helvetica-boldoblique,95 +The secret food is "fries".,53,9,purple,white,0.561,0.985,times-bold,111 +The secret office supply is an "envelope".,59,10,brown,white,0.202,0.999,times-italic,101 +The secret clothing is a "dress".,66,10,brown,white,0.163,0.37,courier-oblique,107 +The secret animal #5 is a "rabbit".,67,10,orange,black,0.637,0.341,times-bold,92 +The secret vegetable is a "mushroom".,73,12,green,white,0.555,0.892,helvetica-bold,99 +The secret fruit is a "grape".,80,11,black,white,0.522,0.249,times-italic,85 +The secret object #4 is a "mirror".,87,8,white,black,0.915,0.394,helvetica-boldoblique,88 +The secret object #1 is a "door".,92,10,red,white,0.839,0.373,courier-bold,94 +The secret animal #4 is a "horse".,97,11,purple,white,0.684,0.411,helvetica,58 +The secret transportation is an "airplane".,103,10,blue,white,0.118,0.299,times-roman,116 +The secret animal #2 is a "koala".,112,12,gray,white,0.21,0.407,courier,132 +The secret object #2 is a "watch".,117,9,yellow,black,0.571,0.808,times-bolditalic,93 +The secret flower is "lavender".,124,9,gray,white,0.176,0.99,times-bolditalic,88 +The secret drink is "milk".,131,10,brown,white,0.968,0.07,helvetica-boldoblique,79 +The secret tool is "scissors".,133,11,black,white,0.465,0.901,times-italic,87 +The secret currency is a "rupee".,144,14,green,white,0.197,0.241,times-bold,116 +The secret kitchen appliance is a "toaster".,148,13,yellow,black,0.478,0.635,courier-oblique,117 diff --git a/PNC/PNC_150Pages/prompt_questions.txt b/PNC/PNC_150Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b86ad8b24d12941b2f4aaa54b9c2b2c97db935d3 --- /dev/null +++ b/PNC/PNC_150Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret animal #3 in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? +What is the secret object #3 in the document? +What is the secret food in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #5 in the document? +What is the secret vegetable in the document? +What is the secret fruit in the document? +What is the secret object #4 in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret flower in the document? +What is the secret drink in the document? +What is the secret tool in the document? +What is the secret currency in the document? +What is the secret kitchen appliance in the document? diff --git a/PNC/PNC_200Pages/needles.csv b/PNC/PNC_200Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..b7ea1257558bc4baeb903a6e31de6b627aa9668f --- /dev/null +++ b/PNC/PNC_200Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "star". +The secret sport is "skiing". +The secret object #5 is a "candle". +The secret animal #1 is an "elephant". +The secret animal #3 is an "owl". +The secret instrument is a "drum". +The secret landmark is the "Colosseum". +The secret object #3 is a "plate". +The secret food is "fries". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #5 is a "rabbit". +The secret vegetable is a "mushroom". +The secret fruit is a "grape". +The secret object #4 is a "mirror". +The secret object #1 is a "door". +The secret animal #4 is a "horse". +The secret transportation is an "airplane". +The secret animal #2 is a "koala". +The secret object #2 is a "watch". +The secret flower is "lavender". +The secret drink is "milk". +The secret tool is "scissors". +The secret currency is a "rupee". +The secret kitchen appliance is a "toaster". diff --git a/PNC/PNC_200Pages/needles_info.csv b/PNC/PNC_200Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..d182bb04b1f435feed04db3a54d2d9e6859410d5 --- /dev/null +++ b/PNC/PNC_200Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "star".,6,13,black,white,0.564,0.188,times-bold,73 +The secret sport is "skiing".,13,11,orange,black,0.307,0.293,courier-oblique,113 +The secret object #5 is a "candle".,17,11,brown,white,0.02,0.187,times-italic,101 +The secret animal #1 is an "elephant".,29,7,blue,white,0.232,0.816,helvetica,98 +The secret animal #3 is an "owl".,35,12,yellow,black,0.894,0.6,courier,112 +The secret instrument is a "drum".,48,10,green,white,0.012,0.051,helvetica-bold,81 +The secret landmark is the "Colosseum".,54,13,purple,white,0.717,0.73,times-roman,107 +The secret object #3 is a "plate".,62,11,gray,white,0.878,0.35,courier-bold,102 +The secret food is "fries".,65,11,white,black,0.29,0.21,helvetica-boldoblique,81 +The secret office supply is an "envelope".,76,12,red,white,0.97,0.231,times-bolditalic,64 +The secret clothing is a "dress".,85,11,red,white,0.078,0.622,times-italic,111 +The secret animal #5 is a "rabbit".,91,12,gray,white,0.002,0.801,times-bolditalic,82 +The secret vegetable is a "mushroom".,103,10,white,black,0.385,0.426,courier-oblique,96 +The secret fruit is a "grape".,110,12,orange,black,0.007,0.311,helvetica-boldoblique,122 +The secret object #4 is a "mirror".,113,10,black,white,0.849,0.723,courier-bold,53 +The secret object #1 is a "door".,127,11,brown,white,0.307,0.57,courier,103 +The secret animal #4 is a "horse".,134,11,green,white,0.51,0.871,times-roman,115 +The secret transportation is an "airplane".,137,11,purple,white,0.207,0.532,helvetica,109 +The secret animal #2 is a "koala".,146,10,yellow,black,0.416,0.154,times-bold,105 +The secret object #2 is a "watch".,157,10,blue,white,0.89,0.748,helvetica-bold,66 +The secret flower is "lavender".,163,7,white,black,0.651,0.778,helvetica-bold,96 +The secret drink is "milk".,170,8,black,white,0.84,0.808,times-bolditalic,134 +The secret tool is "scissors".,180,11,gray,white,0.943,0.318,times-italic,127 +The secret currency is a "rupee".,190,11,yellow,black,0.491,0.652,helvetica-boldoblique,104 +The secret kitchen appliance is a "toaster".,195,13,brown,white,0.208,0.336,courier,52 diff --git a/PNC/PNC_200Pages/prompt_questions.txt b/PNC/PNC_200Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b86ad8b24d12941b2f4aaa54b9c2b2c97db935d3 --- /dev/null +++ b/PNC/PNC_200Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret animal #3 in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? +What is the secret object #3 in the document? +What is the secret food in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #5 in the document? +What is the secret vegetable in the document? +What is the secret fruit in the document? +What is the secret object #4 in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret flower in the document? +What is the secret drink in the document? +What is the secret tool in the document? +What is the secret currency in the document? +What is the secret kitchen appliance in the document? diff --git a/PNC/PNC_25Pages/needles.csv b/PNC/PNC_25Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..b7ea1257558bc4baeb903a6e31de6b627aa9668f --- /dev/null +++ b/PNC/PNC_25Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "star". +The secret sport is "skiing". +The secret object #5 is a "candle". +The secret animal #1 is an "elephant". +The secret animal #3 is an "owl". +The secret instrument is a "drum". +The secret landmark is the "Colosseum". +The secret object #3 is a "plate". +The secret food is "fries". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #5 is a "rabbit". +The secret vegetable is a "mushroom". +The secret fruit is a "grape". +The secret object #4 is a "mirror". +The secret object #1 is a "door". +The secret animal #4 is a "horse". +The secret transportation is an "airplane". +The secret animal #2 is a "koala". +The secret object #2 is a "watch". +The secret flower is "lavender". +The secret drink is "milk". +The secret tool is "scissors". +The secret currency is a "rupee". +The secret kitchen appliance is a "toaster". diff --git a/PNC/PNC_25Pages/needles_info.csv b/PNC/PNC_25Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..f82401c46b55166e6cc70f10713d3f781046a44f --- /dev/null +++ b/PNC/PNC_25Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "star".,1,10,orange,black,0.719,0.302,helvetica-boldoblique,126 +The secret sport is "skiing".,2,11,blue,white,0.518,0.414,courier-bold,109 +The secret object #5 is a "candle".,3,7,brown,white,0.123,0.052,helvetica-bold,118 +The secret animal #1 is an "elephant".,4,10,yellow,black,0.845,0.287,times-bolditalic,122 +The secret animal #3 is an "owl".,5,11,purple,white,0.459,0.236,courier-oblique,93 +The secret instrument is a "drum".,6,11,red,white,0.225,0.392,times-bold,93 +The secret landmark is the "Colosseum".,7,11,black,white,0.929,0.534,helvetica,114 +The secret object #3 is a "plate".,8,11,green,white,0.742,0.39,times-italic,68 +The secret food is "fries".,9,11,white,black,0.39,0.475,times-roman,65 +The secret office supply is an "envelope".,10,9,gray,white,0.825,0.803,courier,86 +The secret clothing is a "dress".,11,8,brown,white,0.19,0.195,helvetica-boldoblique,109 +The secret animal #5 is a "rabbit".,12,10,white,black,0.164,0.404,times-bolditalic,117 +The secret vegetable is a "mushroom".,13,11,green,white,0.942,0.113,courier-bold,97 +The secret fruit is a "grape".,14,10,black,white,0.533,0.54,courier-oblique,95 +The secret object #4 is a "mirror".,15,12,blue,white,0.057,0.344,helvetica,112 +The secret object #1 is a "door".,16,11,yellow,black,0.234,0.623,times-roman,78 +The secret animal #4 is a "horse".,17,11,gray,white,0.41,0.118,courier,73 +The secret transportation is an "airplane".,18,13,purple,white,0.717,0.838,times-bold,108 +The secret animal #2 is a "koala".,19,9,red,white,0.715,0.586,helvetica-bold,104 +The secret object #2 is a "watch".,20,10,orange,black,0.148,0.753,times-italic,111 +The secret flower is "lavender".,21,11,brown,white,0.811,0.431,courier-bold,83 +The secret drink is "milk".,22,11,white,black,0.492,0.573,courier,101 +The secret tool is "scissors".,23,11,purple,white,0.752,0.503,times-bold,114 +The secret currency is a "rupee".,24,12,green,white,0.405,0.09,times-italic,118 +The secret kitchen appliance is a "toaster".,25,8,black,white,0.9,0.289,helvetica-bold,71 diff --git a/PNC/PNC_25Pages/prompt_questions.txt b/PNC/PNC_25Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b86ad8b24d12941b2f4aaa54b9c2b2c97db935d3 --- /dev/null +++ b/PNC/PNC_25Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret animal #3 in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? +What is the secret object #3 in the document? +What is the secret food in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #5 in the document? +What is the secret vegetable in the document? +What is the secret fruit in the document? +What is the secret object #4 in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret flower in the document? +What is the secret drink in the document? +What is the secret tool in the document? +What is the secret currency in the document? +What is the secret kitchen appliance in the document? diff --git a/PNC/PNC_50Pages/needles.csv b/PNC/PNC_50Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..b7ea1257558bc4baeb903a6e31de6b627aa9668f --- /dev/null +++ b/PNC/PNC_50Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "star". +The secret sport is "skiing". +The secret object #5 is a "candle". +The secret animal #1 is an "elephant". +The secret animal #3 is an "owl". +The secret instrument is a "drum". +The secret landmark is the "Colosseum". +The secret object #3 is a "plate". +The secret food is "fries". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #5 is a "rabbit". +The secret vegetable is a "mushroom". +The secret fruit is a "grape". +The secret object #4 is a "mirror". +The secret object #1 is a "door". +The secret animal #4 is a "horse". +The secret transportation is an "airplane". +The secret animal #2 is a "koala". +The secret object #2 is a "watch". +The secret flower is "lavender". +The secret drink is "milk". +The secret tool is "scissors". +The secret currency is a "rupee". +The secret kitchen appliance is a "toaster". diff --git a/PNC/PNC_50Pages/needles_info.csv b/PNC/PNC_50Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..09d6b81134a36146d147580ed510418a5c7a4b30 --- /dev/null +++ b/PNC/PNC_50Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "star".,2,10,black,white,0.267,0.273,helvetica-bold,117 +The secret sport is "skiing".,3,11,blue,white,0.406,0.263,times-italic,107 +The secret object #5 is a "candle".,6,11,red,white,0.167,0.633,courier,71 +The secret animal #1 is an "elephant".,8,14,orange,black,0.187,0.276,times-bold,111 +The secret animal #3 is an "owl".,10,10,yellow,black,0.31,0.171,helvetica,73 +The secret instrument is a "drum".,11,10,gray,white,0.691,0.011,times-roman,127 +The secret landmark is the "Colosseum".,13,7,brown,white,0.588,0.122,times-bolditalic,104 +The secret object #3 is a "plate".,15,11,green,white,0.745,0.462,courier-oblique,86 +The secret food is "fries".,17,10,purple,white,0.657,0.512,helvetica-boldoblique,72 +The secret office supply is an "envelope".,20,10,white,black,0.731,0.205,courier-bold,100 +The secret clothing is a "dress".,22,12,black,white,0.221,0.378,courier-bold,131 +The secret animal #5 is a "rabbit".,24,14,yellow,black,0.375,0.71,times-bold,86 +The secret vegetable is a "mushroom".,26,11,brown,white,0.371,0.973,helvetica-boldoblique,126 +The secret fruit is a "grape".,28,8,red,white,0.466,0.911,times-italic,114 +The secret object #4 is a "mirror".,30,11,white,black,0.434,0.193,courier-oblique,67 +The secret object #1 is a "door".,31,10,orange,black,0.68,0.615,courier,116 +The secret animal #4 is a "horse".,33,13,gray,white,0.974,0.896,helvetica-bold,80 +The secret transportation is an "airplane".,36,12,purple,white,0.673,0.48,helvetica,124 +The secret animal #2 is a "koala".,38,7,green,white,0.336,0.482,times-bolditalic,134 +The secret object #2 is a "watch".,40,11,blue,white,0.897,0.583,times-roman,131 +The secret flower is "lavender".,41,10,yellow,black,0.747,0.076,courier,96 +The secret drink is "milk".,44,9,gray,white,0.241,0.39,times-roman,124 +The secret tool is "scissors".,46,10,red,white,0.651,0.038,helvetica-boldoblique,130 +The secret currency is a "rupee".,48,10,brown,white,0.267,0.037,times-bold,93 +The secret kitchen appliance is a "toaster".,50,10,green,white,0.248,0.701,times-italic,96 diff --git a/PNC/PNC_50Pages/prompt_questions.txt b/PNC/PNC_50Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b86ad8b24d12941b2f4aaa54b9c2b2c97db935d3 --- /dev/null +++ b/PNC/PNC_50Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret animal #3 in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? +What is the secret object #3 in the document? +What is the secret food in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #5 in the document? +What is the secret vegetable in the document? +What is the secret fruit in the document? +What is the secret object #4 in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret flower in the document? +What is the secret drink in the document? +What is the secret tool in the document? +What is the secret currency in the document? +What is the secret kitchen appliance in the document? diff --git a/PNC/PNC_5Pages/needles.csv b/PNC/PNC_5Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..2ce69b12c6bbc84035ac92f31047ceb38a70f62c --- /dev/null +++ b/PNC/PNC_5Pages/needles.csv @@ -0,0 +1,5 @@ +The secret shape is a "star". +The secret sport is "skiing". +The secret instrument is a "drum". +The secret landmark is the "Colosseum". +The secret food is "fries". diff --git a/PNC/PNC_5Pages/needles_info.csv b/PNC/PNC_5Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..40e44840a309025041c8dff50d38679aebd3300a --- /dev/null +++ b/PNC/PNC_5Pages/needles_info.csv @@ -0,0 +1,5 @@ +The secret shape is a "star".,1,12,yellow,black,0.545,0.812,times-bold,77 +The secret sport is "skiing".,2,8,red,white,0.438,0.928,times-bolditalic,102 +The secret instrument is a "drum".,3,11,orange,black,0.708,0.605,helvetica,82 +The secret landmark is the "Colosseum".,4,12,gray,white,0.006,0.062,times-italic,99 +The secret food is "fries".,5,9,white,black,0.856,0.559,helvetica-boldoblique,108 diff --git a/PNC/PNC_5Pages/prompt_questions.txt b/PNC/PNC_5Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..aef74f59e2ba677742e2a0a4d9a5c01c07d10c17 --- /dev/null +++ b/PNC/PNC_5Pages/prompt_questions.txt @@ -0,0 +1,5 @@ +What is the secret shape in the document? +What is the secret sport in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? +What is the secret food in the document? diff --git a/PNC/PNC_75Pages/needles.csv b/PNC/PNC_75Pages/needles.csv new file mode 100644 index 0000000000000000000000000000000000000000..b7ea1257558bc4baeb903a6e31de6b627aa9668f --- /dev/null +++ b/PNC/PNC_75Pages/needles.csv @@ -0,0 +1,25 @@ +The secret shape is a "star". +The secret sport is "skiing". +The secret object #5 is a "candle". +The secret animal #1 is an "elephant". +The secret animal #3 is an "owl". +The secret instrument is a "drum". +The secret landmark is the "Colosseum". +The secret object #3 is a "plate". +The secret food is "fries". +The secret office supply is an "envelope". +The secret clothing is a "dress". +The secret animal #5 is a "rabbit". +The secret vegetable is a "mushroom". +The secret fruit is a "grape". +The secret object #4 is a "mirror". +The secret object #1 is a "door". +The secret animal #4 is a "horse". +The secret transportation is an "airplane". +The secret animal #2 is a "koala". +The secret object #2 is a "watch". +The secret flower is "lavender". +The secret drink is "milk". +The secret tool is "scissors". +The secret currency is a "rupee". +The secret kitchen appliance is a "toaster". diff --git a/PNC/PNC_75Pages/needles_info.csv b/PNC/PNC_75Pages/needles_info.csv new file mode 100644 index 0000000000000000000000000000000000000000..cea9f38475f0d5a7de8cbc62d2e6d59d12f7d355 --- /dev/null +++ b/PNC/PNC_75Pages/needles_info.csv @@ -0,0 +1,25 @@ +The secret shape is a "star".,2,9,yellow,black,0.097,0.937,courier-bold,85 +The secret sport is "skiing".,4,14,orange,black,0.934,0.982,helvetica-boldoblique,92 +The secret object #5 is a "candle".,9,8,purple,white,0.897,0.223,times-italic,83 +The secret animal #1 is an "elephant".,11,8,gray,white,0.858,0.357,helvetica-bold,132 +The secret animal #3 is an "owl".,15,10,blue,white,0.783,0.688,helvetica,111 +The secret instrument is a "drum".,18,11,red,white,0.762,0.81,times-roman,121 +The secret landmark is the "Colosseum".,21,11,green,white,0.47,0.916,courier,89 +The secret object #3 is a "plate".,22,11,white,black,0.621,0.801,times-bolditalic,79 +The secret food is "fries".,26,14,black,white,0.394,0.888,times-bold,79 +The secret office supply is an "envelope".,28,9,brown,white,0.259,0.556,courier-oblique,68 +The secret clothing is a "dress".,33,12,red,white,0.762,0.907,helvetica-boldoblique,113 +The secret animal #5 is a "rabbit".,34,9,green,white,0.367,0.211,times-italic,136 +The secret vegetable is a "mushroom".,37,9,purple,white,0.339,0.958,times-bold,135 +The secret fruit is a "grape".,41,9,black,white,0.857,0.514,courier-oblique,118 +The secret object #4 is a "mirror".,44,12,gray,white,0.918,0.62,times-roman,141 +The secret object #1 is a "door".,48,8,brown,white,0.203,0.301,helvetica-bold,86 +The secret animal #4 is a "horse".,49,11,yellow,black,0.113,0.73,courier,118 +The secret transportation is an "airplane".,53,9,orange,black,0.503,0.403,helvetica,133 +The secret animal #2 is a "koala".,56,8,white,black,0.959,0.819,courier-bold,96 +The secret object #2 is a "watch".,60,7,blue,white,0.908,0.833,times-bolditalic,75 +The secret flower is "lavender".,62,12,brown,white,0.483,0.469,times-bolditalic,114 +The secret drink is "milk".,64,13,blue,white,0.045,0.063,times-bold,81 +The secret tool is "scissors".,69,12,yellow,black,0.357,0.688,courier,97 +The secret currency is a "rupee".,72,14,green,white,0.685,0.923,courier-oblique,74 +The secret kitchen appliance is a "toaster".,73,11,red,white,0.561,0.471,helvetica-boldoblique,75 diff --git a/PNC/PNC_75Pages/prompt_questions.txt b/PNC/PNC_75Pages/prompt_questions.txt new file mode 100644 index 0000000000000000000000000000000000000000..b86ad8b24d12941b2f4aaa54b9c2b2c97db935d3 --- /dev/null +++ b/PNC/PNC_75Pages/prompt_questions.txt @@ -0,0 +1,25 @@ +What is the secret shape in the document? +What is the secret sport in the document? +What is the secret object #5 in the document? +What is the secret animal #1 in the document? +What is the secret animal #3 in the document? +What is the secret instrument in the document? +What is the secret landmark in the document? +What is the secret object #3 in the document? +What is the secret food in the document? +What is the secret office supply in the document? +What is the secret clothing in the document? +What is the secret animal #5 in the document? +What is the secret vegetable in the document? +What is the secret fruit in the document? +What is the secret object #4 in the document? +What is the secret object #1 in the document? +What is the secret animal #4 in the document? +What is the secret transportation in the document? +What is the secret animal #2 in the document? +What is the secret object #2 in the document? +What is the secret flower in the document? +What is the secret drink in the document? +What is the secret tool in the document? +What is the secret currency in the document? +What is the secret kitchen appliance in the document?