Cadogan Annual Report 2023

Annual Report 2023

Overview

Defined by our heritage. Dedicated to the future.

Cadogan is a family business which owns and manages an extraordinary property portfolio comprising mainly retail, residential and office assets in Chelsea and Knightsbridge. The business has a long heritage which provides a remarkable foundation upon which to base a contemporary, forward looking and dynamic business able to anticipate and respond swiftly to the changing needs of our customers and markets.

Cadogan’s long association with Chelsea began when Charles, Baron Cadogan, wed Elizabeth Sloane in 1717,

some 300 years ago. Since that time, the family and place have grown together – today the Cadogan Estate is one of London’s most characterful and distinctive neighbourhoods.

Stewardship and community are central to our approach.

Our long-term commitment comes with responsibility to ensure that we are making a positive contribution towards a sustainable environment, protecting the area’s unique heritage and supporting a thriving community.

OUR CORE OBJECTIVES

We aim to protect and enhance the Estate’s position as one of the world’s leading locations in which to live, work and visit.

We have a proud heritage and aim always to safeguard our future and protect the portfolio as a long-term investment – creating and maintaining outstanding buildings and environment.

As long-term stewards of Chelsea, we have a responsibility to make a positive contribution towards a sustainable environment and a thriving community.

Our reputation is paramount. We always seek to recruit and retain the strongest internal team and select the best external advisers to drive performance, to maintain strong financial results, deliver excellent customer service, be good neighbours and ensure that integrity is at the heart of all business decisions.

Page 1 Fireworks for the Chelsea Christmas Lights switch-on, Page 2 Bustling Pavilion Road, Page 3 The new Cantinetta Antinori restaurant on Sloane Street, Above A visitor enjoys an art trail during Kensington & Chelsea Art Week

2023 Highlights

increase

retail brands, upsizes and renewals across Chelsea

13.1%

increase in Urban Greening Factor (from 2021 baseline)

in addition to four new ponds and two further beehives to encourage biodiversity (seeing an increase in local dragonfly, frog and toad populations)

Working with our community

120 suppliers reporting against our green supply chain charter

25 SMEs committed to our Emissions Action Programme to achieve ambitious carbon reductions

250 local shops, hotels and restaurants engaged in reducing vehicle emissions

Over £4m

community projects fund, including £1.1m annual subsidy of keyworker and community housing

300 live performances at Cadogan Hall, attracting over 170,000 attendees

Over 21,000

disadvantaged and vulnerable people reached, across 143 grassroots projects (through our partner The K+C Foundation)

320,000

combined audience of our community publications (including over 9,000 King’s Road Privilege Card holders)

Local employment and skills

Over 300 residents supported with targeted employment skills development

37 long-term unemployed local people successfully placed into work

88.6%

customer satisfaction score, with a Net Promoter Score of 58.2, almost double the industry average

Chairman’s

Statement

This year was marked by great personal sadness for me and my family on the loss of my father Charles, The 8th Earl Cadogan, on 11 June 2023.

The Cadogan Estate has existed for over 300 years since my ancestor Sir Hans Sloane acquired 166 acres of Chelsea, which was then largely rural land and market gardens. Since then the Estate has remained in my family’s ownership through nine generations and over this period each new Earl has taken on responsibility for the stewardship of the Estate with the aim of passing it on to future generations in even finer fettle than when it was inherited.

Therefore, I believe my father if he were here, would be delighted that I am able to report Cadogan’s strongest financial results combined with significant progress on our ambitious Chelsea 2030 environmental and community objectives.

The 8th Earl Cadogan had the foresight to set the business on its present day course of more actively managing the area and forging close relationships with our occupiers so we could work in partnership to strengthen Chelsea. He had the ambition to change the direction of the business from being a traditional collector of ground rents from long leaseholders, to providing the foundations that allowed Cadogan to become masters of our own destiny so to speak, delivering a carefully curated mix of occupiers, including shops, restaurants and cultural attractions, while initiating improvements to enable us to manage the Estate in a holistic and cohesive way for the long term.

Under his leadership, the business bought the Harvey Nichols store to gain control of this anchor at the northern end of Sloane Street. With his encouragement, the barracks on the King’s Road was acquired and developed, creating the celebrated Duke of York Square which now provides a focal point for Chelsea. He had the ambition to create Cadogan Hall – a new classical concert hall – which was converted from a defunct church. He spoke warmly of the ‘absolute lunacy’ of buying and refurbishing this listed building, and never regretted it. Today it attracts thousands of visitors to a diverse range of events and concerts and is part of the rich cultural landscape of Chelsea that I enjoy immensely too.

I share my father’s deep affection for Chelsea, and like my father who had a home here all his life, I too am resident here. He was particularly enthusiastic about supporting those who were committed to the community or who had served with distinction in Kensington and Chelsea, an important family tradition that remains close to my heart. He supported most local charities and many national causes too and I have succeeded him as chair of my family’s charity, which is a shareholder of the business.

Business

Community Fund

laid the foundation for a healthy rebound in footfall back to pre-pandemic levels in 2022 – ahead of much of London

“ I share my father’s deep affection for Chelsea, and like my father who had a home here all his life, I too am resident here.”

Opposite Cadogan Hall

The Earl Cadogan DL

Cadogan continues this legacy through our support of the local community and charities together with our careful curation of the area to ensure Chelsea continues to be the most desirable place to live, work and visit.

The strong financial and marketing support we provided to our occupiers during the pandemic in 2020 and 2021 through the £20m Business Community Fund, laid the foundation for a healthy rebound in footfall back to pre-pandemic levels in 2022 – ahead of much of London – which in turn supported occupancy and the performance of our retail and hospitality occupiers.

This performance continued throughout 2023, with healthy demand for space across all areas of the business resulting in strong rental growth. This was despite the combination of high inflation, a slowing economy and resulting cost of living crisis, accompanied by increased geopolitical tensions and conflicts. This performance in spite of such adversities, bears testament to the attractions of Chelsea, the demographic characteristics of the local area, the impact of our holistic management approach combined with the performance of the team at Cadogan, as well as the resilience of our occupiers’ businesses, particularly retail which experienced overall sales which were 10% higher than pre-pandemic levels.

Despite this economic backdrop, our gross rental income grew by 15.4% to £197.0m in 2023 and the value of the property portfolio increased by 3.0% to £5.4 billion after adjusting for purchases, disposals and capital expenditure.

We maintain a strong balance sheet to provide resilience against adverse economic conditions and to allow us to continue to invest in our properties and the public realm.

Cadogan is a modern, forward looking business, responding swiftly to shifting markets, ever changing regulation and increasing customer expectations. We have a clear purpose beyond financial profit, which is about place, community and sustainability. We integrate sustainability into every aspect of our business through our Chelsea 2030 strategy launched in 2021. The business’s community fund contributed over £4m in 2023 towards making a positive social impact which included charitable support provided by my family’s charity which is a shareholder of the business, and receives 4.15% of the annual dividend.

The macroeconomic environment looks more positive than this time last year, with inflation on a downward trend and the prospect of interest rate cuts. However, upcoming elections in the UK and the USA as well as a continuation of the war in Ukraine and the threat of wider fallout from the conflict in the Middle East mean that uncertainty continues into 2024.

We recognise the importance of investing in our people. In these challenging times, we have invested further in development and training for our leaders and staff and focused on encouraging closer collaboration to increase performance, efficiency, customer service and job satisfaction.

On behalf of the Board, I would like to thank all our staff for their loyalty and hard work and I am grateful to my fellow directors for their wise counsel and guidance over the year.

The Earl Cadogan DL 2 May 2024

Clockwise from above Strawberries & Screen, Duke of York Square; An entry to Cadogan Young Artists competition; London Cheesemongers on Pavilion Road

Our Year at a Glance

Spring

Commence £46million Sloane Street public realm ‘green’ transformation, in partnership with the Royal Borough of Kensington & Chelsea

Highest ever neighbourhood footfall recorded for Chelsea in Bloom, with 97 floral installations, press reach of over 4billlion and 30 tonnes of recycled petals sold to benefit cancer charities

King’s Road Coronation Party, including a 3metre ‘Lion and Unicorn’ crest, parade of 100 King’s Charles Spaniels, 30 Chelsea Pensioners and 17 media crews in attendance

The Antinori Tuscan wine dynasty opens ‘Cantinetta Antinori’, their first London restaurant on Sloane Street

Cadogan wins ‘Community Champion’ at the Great British Brands Awards

Walpole, the sector body for British luxury, moves their Headquarters to the Estate

Relaunch the Neighbourhood Guide – now in over 1,000 five star hotel bedrooms across London

Cadogan becomes a Patron of the British Fashion Council to champion the industry and nurture talent

Summer

Planning achieved for first net-zero carbon building on the estate (30-33 Sloane Street)

The Chelsea Townhouse hotel opens

Community consultation for Chelsea Manor Street’s ‘creative quarter’ on the King’s Road

Events programme includes Strawberries & Screen, public art trails, King’s Road heritage trail for London Design Festival and London Fashion Week ‘Citywide Celebration’

‘Summer in Sloane Square’ opens as a collaboration with the Royal Court Theatre, attracting thousands over the summer months

Cadogan hosts Private View of the Chelsea Art Society’s Summer Exhibition, raising over £18,500 for the Kensington + Chelsea Foundation

Autumn

‘At Sloane’ hotel opens, a collaboration between Cadogan and famous Parisian hotelier Jean-Louis Costes

Pavilion Road named ‘Best Lifestyle Street’ in the London Lifestyle Awards and one of ‘Britain’s best streets’ by Create Streets

Several new openings of unique flagships for the neighbourhood – including The Conran Shop, Varley, Rixo, PAIGE, and Klattermusen

David Yeo opens ‘Azzurra’, the largest restaurant on the Estate to date

Launch of ‘Cadogan Connects’, our new staff and DEI engagement programme

Jason Atherton agrees terms to open in the Pavilion Road courtyard

Winter

Completion of The Gaumont – our largest mixed-use development since Duke of York Square, including rooftop bar, Curzon Cinema, retail and significant public art installation

Launch green leases for all new and renewing residential occupiers

Celebrate the community at The Chelsea Awards, held at Royal Hospital Chelsea

Launch Sloane Street Private Shopping; Sloane Street Gift Card wins ‘Best Industry Innovation’ at the GCVA

Kensington & Chelsea named as one of the UK’s top 10 ‘Happiest places to live’

Chelsea Christmas Lights switch-on attracts thousands to a pedestrianised King’s Road, in support of the Kensington + Chelsea Foundation

Strategic Report

Chief Executive’s Review

Hugh

Seaborn Chief Executive

“Cadogan has a clear purpose beyond profit which focuses on place, community

and sustainability.”

The business delivered a strong performance during 2023.

Total income increased by 15.8% to £216m (from £186.5m in 2022).

15.8%

This produced a 22.2% increase in operating profit before capital items (an indicator of underlying operating performance as it excludes profit on the sale of investment properties and revaluation movements), from £98.4m to £120.3m.

22.2%

At the start of 2023, I was optimistic despite the backdrop of high inflation, rising borrowing costs and fragile economic sentiment, because of the strong, local post-pandemic recovery of footfall and consumer spend which boosted our retail occupiers’ profitability and supported market sentiment. This confidence has been borne out by healthy rental growth which has resulted in a new high rent roll driven by strong occupancy, healthy lettings and renewal activity, together with the continued success of our occupiers, with retail shops reporting revenues 10% higher than in 2019, the last prepandemic year.

This excellent performance is underpinned by several factors including Cadogan’s long-term ownership – of more than 300 years – which encourages a consistent strategic approach over many years. This is supported by ultimate family ownership which provides heightened personal pride in the area, a strong sense of generational stewardship as well as strengthening the consistency of our approach. Our high degree of control over a geographically concentrated property holding and intimate knowledge of the area, allows us to adopt a holistic management approach ensuring that the attraction of the whole portfolio is greater than the sum of its parts.

It is not enough just to develop and let buildings, but we must breathe life into places and spaces. We have a responsibility to manage the whole through the curation of complementary occupiers and to create open spaces with which people are able to feel an emotional connection. This approach requires us to balance vital short term returns against long-term prosperity. The £46m commitment we have made to enhance the Sloane Street public realm is a good example of this approach.

We maintain and support a diversity of symbiotic uses that include cultural institutions such as the Royal Court Theatre, Cadogan Hall and Saatchi Gallery, as well as encouraging schools and churches, nurturing green spaces, retaining and enhancing other uses such as pubs and artists’ studios, which all contribute to Chelsea being an attractive community.

We curate a range of retail and hospitality occupiers and create beautiful spaces and public realm so as to reinforce a vibrant, diverse and dynamic neighbourhood in which people want to live and work as well as to visit more often and stay for longer.

The capital value of our property portfolio increased by 3.0%, adjusting for purchases, sales and capital expenditure, from £5.1 billion to £5.4 billion.

Cadogan has a clear purpose beyond profit which focuses on place, community and sustainability. We deliver this by creating places rather than buildings, seeking to strengthen the wider destination and having a real stake in the local economic and social viability.

This is not altruism but driven by enlightened self-interest: if we want to prosper over the long term, we need to ensure our neighbourhood of Chelsea remains vital, healthy and sustainable as a community and as a local economy.

There is a richness to Chelsea that people have a desire to experience and be part of, and our role is to contribute to this texture and constantly develop it, so the area remains relevant and attractive to new and future generations. We work tirelessly to strengthen Chelsea as a ‘cool’ and compelling place.

Activity Overview

Leasing activity in 2023 was buoyant across all sectors of the portfolio.

Demand for shops on the King’s Road remained strong and activity on Sloane Street strengthened progressively through the year with sustained interest from existing retailers seeking to upsize, as well as new luxury brands wishing to join the street. Retail vacancy levels averaged 3.1%, below the previous year’s average of 3.7%, and 33 new retail lettings and renewals amounting to annual rents of £12.5m achieved an average rent of 12.9% above our valuer’s estimated rental values.

Demand for office space was healthy, underpinned by limited supply as over 99% of the portfolio remained let. Rents of £3.3m p.a. on the 21 new office lettings and renewals were 10.5% above our valuer’s estimated rental values.

Residential lettings continued to benefit from strong demand, with new lettings achieving figures nearly 25% ahead of previous rents – albeit augmented by our constant investment in enhancing the quality of accommodation. Total rental growth from the residential let portfolio on new lettings, rent reviews and extensions in 2023 was 9.8%.

Working in partnership with the Royal Borough of Kensington and Chelsea, our major placemaking commitment for Sloane Street, which involves the investment of £46.8m in the comprehensive enhancement of the public realm, is progressing well and is on programme. The project is scheduled to complete by the end of 2024 with new high quality paving, beautifully designed street lighting and furniture, wider pavements and extensive planting with over 100 new trees along the entire one kilometre length of the street.

Our vision for the project is to reinforce the reputation of Sloane Street as the best luxury shopping street in the world, while providing a beautiful environment for local residents and visitors to enjoy.

We completed our two largest developments in 2023, The Gaumont on King’s Road and At Sloane, our newest luxury hotel at 1 Sloane Gardens. The Gaumont comprises a Curzon cinema containing what we believe is the largest auditorium in London, a Waitrose supermarket, flagship retail units, three floors of high quality offices, an exciting rooftop bar and 47 residential flats including affordable housing, arranged around two beautiful, landscaped squares. At Sloane, operated by the French hotelier Jean-Louis Costes, has received critical acclaim for its interior design, basement bar and rooftop restaurant, while the hotel is the subject of glowing reviews. This exceptional hotel, restaurant and bar brings a highly fashionable and exclusive venue to Chelsea and elevates Sloane Square as a destination.

Following detailed feedback from over 500 local stakeholders, we have launched the marketing of a new ‘creative cluster’ centred around The Gaumont development. We are reserving a number of retail units – ‘community shops’ – for uses such as music, art, craft and book shops alongside a pub, which we hope will stage events such as live comedy, drama and music.

Together with the extensive renovation of live-work artist studios at Rossetti Studios on Flood Street, this is among many initiatives designed to support and underline Chelsea’s rich pedigree at the forefront of the arts, literature, fashion and music.

Right Summer in Sloane Square

In today’s omni-channel retail environment, successful businesses have a keen understanding of the value of combining their online and bricks-and-mortar stores to deliver a seamless customer experience. Often this reflects how consumers behave, starting their shopping experience online before visiting a store – or completing their purchase online once a decision has been made in-person. The pandemic accelerated both the penetration of e-tail together with the understanding of the impact a store in the right location can have across their business. Our focus is on strengthening and protecting our retail destinations to ensure they remain the best locations for luxury retail stores to trade successfully.

Long-term stewardship is at the very heart of the business and this includes making a positive contribution towards a sustainable environment and a thriving community. Our Chelsea 2030 strategy launched in 2021 after extensive local consultation, embodies this purpose with a range of overarching aims and specific targets for reducing carbon emissions, improving air quality, enhancing green infrastructure, reducing waste and improving recycling, reducing water consumption and contributing to local wellbeing, culture and charity.

Central to the business is our commitment to delivering exemplary customer service to our occupiers. We monitor our performance by seeking frequent feedback from our customers and by rigorous external benchmarking. Our net promoter scores (NPS) are consistently in the top quartile in our sector. In 2023 we achieved a combined NPS of 58.2 and an 88.6% customer satisfaction score.

To support customer service and our partnership approach to strengthening the neighbourhood, we seek to establish close relationships with our occupiers and adopt a collaborative approach to managing the various destinations within Chelsea. This includes regular face-to-face briefings with retailers in order to communicate our placemaking, development and marketing activities. These forums also allow us to receive direct feedback as well as to encourage networks to develop. The majority of our retail and hospitality occupiers provide sales data which we also share in anonymised form to support their business while, combined with footfall figures, informing our estate management strategies.

Over the past few years Cadogan led the foundation of two Business Improvement Districts (BIDs) in partnership with other local property owners (The King’s Road Partnership and The Knightsbridge Partnership) and these have become well established. The BIDs have improved support for local businesses providing a range of services which includes enhancing security, business networks, cost-saving advice, elevating street cleaning and representing retailer interests with local and central government. We work closely with both BIDs and engage with local property owners, occupiers and wider stakeholders including the local council and residents’ groups.

Chelsea 2030 - A Sustainable Future

Contributing towards a flourishing and sustainable community has always been central to Cadogan’s strategy and purpose.

As a long-term family business, we believe it is vital to create an equitable and thriving city for future generations. We launched Chelsea 2030 as our commitment to integrating sustainability into every aspect of the business, setting out ambitious environmental targets to ensure cleaner air and a healthier London, along with a community fund which contributed over £4 million in 2023 towards positive social impact, including a subsidised keyworker housing portfolio, employment and skills support and care for those who need it most.

Cadogan’s top environmental priority remains the decarbonisation of our buildings towards a net zero future. The UK’s built environment accounts for 25% of our greenhouse gas (GHG) emissions and we are acutely aware of the role that we can play in delivering the reductions necessary.

We remain committed to sustainable development and 2023 saw the completion of our flagship scheme, The Gaumont, which achieved a BREEAM ‘Excellent’ rating and includes 150m2 of a solar array alongside 1,500m2 of intensive and extensive green roofs. Construction also began on the Sloane Street transformation project, aiming to create a stunning green boulevard spanning from Knightsbridge to Sloane Square, with a diverse and climate resistant mix of flowers, shrubs and over 100 additional trees.

Creating social value lies at the heart of our commitment to a sustainable future. Our key partner in much of this philanthropic work remains The Kensington & Chelsea Foundation. Cadogan continues to be their Principal Supporter, covering core costs to ensure that they reach grassroots initiatives across the Borough. In 2022–2023, 143 local projects were supported, reaching 21,029 disadvantaged and vulnerable residents.

“ Creating social value lies at the heart of our commitment to a sustainable future.”

This strategy, created with local stakeholder and community input, peer review and industry analysis, sets out a shared sense of responsibility for the future of Chelsea and ensures that we combine forces with our occupiers, partners and suppliers which is vital to achieving meaningful change and maximising our impact.

Overview of 2023 Financial Performance

I am delighted with the strong performance delivered by the business in 2023.

Total income increased by 15.8% to £216.0m (from £186.5m in 2022). This translated to a 22.2% increase in operating profit before capital items (more accurately reflecting the underlying operating performance as it excludes profit on the sale of investment properties and revaluation movements), from £98.4m to £120.3m, comfortably a record high.

The capital value of our property portfolio increased by 3.0%, adjusting for purchases, sales and capital expenditure, from £5.1 billion to £5.4 billion. It is notable that this remains 11.8% below the 2018 peak of £6.2 billion (lower by 15% after adjusting for capital items).

In 2023, we invested £231m in purchases and development. This was substantially ahead of 2022 (£89m) and included acquisitions of six commercial and eight residential properties on the Estate with a total cost of £61m, and five commercial properties in our regional property portfolio with a total cost of £111m.

We are deploying additional funds to the regional portfolio, which is focused on securing resilient income across a diverse mix of warehousing, logistics, retail parks and other property assets. This is a key part of our strategy to grow income to meet the ten-yearly inheritance tax charge (IHT). Increased income is required to support cashflow and fund the dividends required to enable the trusts that ultimately own the Group, to pay a ten-yearly IHT charge which is based on the capital value of the trust assets, of which Cadogan forms the major part.

The most recent IHT charge was due and paid in 2022. Since 2012, £210m of dividends paid by Cadogan to its parent company, representing 65% of total dividends paid during the period 2012–2021, have been required to fund the payment of this tax charge. It is anticipated that the next ten-yearly charge payable in 2032 will require a similar or higher proportion of the total dividend stream over the period to 2032 to be set aside for IHT.

Rental collection remains strong, averaging 99% for commercial rents and 98.5% for residential.

Our People

Our ability to attract, retain and develop high-performing people is vital to the success of Cadogan.

These are not empty corporate words but an ethos we work hard to deliver. We are a small team, with 75 people, allowing us to be decisive, act swiftly and be agile in responding to changing circumstances. We seek an action orientation together with a highly collaborative working environment. We have developed a rigorous recruitment evaluation process, which is applied to all recruitment in the organisation. This ensures we recruit on merit and hire the best candidate for each role, enhancing success for the business and for the new recruit, as well as compatibility with the Cadogan team and our values.

“Our culture and values make Cadogan a uniquely long-term, communityfocused and purpose-driven organisation”

We encourage our people and our teams to aim high and be ambitious. We work at nurturing a professional environment in which individuals interact with mutual respect, equality and accountability. In this setting, colleagues communicate openly, solve problems collaboratively, and take responsibility for their actions and decisions, fostering a culture of trust and productivity. We encourage everyone to contribute towards a warm and supportive, kind and respectful working environment and to act as a single team.

Thorough internal communication and engagement is integral to supporting this approach. This includes an employee engagement programme, ‘Cadogan Connects’ which combines our diversity, equality and inclusion programmes, in addition to regular workshops, monthly CEO led ‘townhall’ meetings and written briefings together with an ‘open-door’ policy across the business.

In the past year we have invested further in our leadership and performance management capabilities to enable our managers to provide clear, honest and supportive feedback to help our people achieve their best and to support job satisfaction. In addition, we have focused on strengthening a common understanding of our culture and values which make Cadogan a uniquely long-term, community-focused and purpose-driven organisation.

Our retention rate at 90.9% (83.9% in 2022) together with the loyalty reflected in an average term of over nine years, reflects a stable workforce.

competition at Saatchi

Property Portfolio

5.4bn

1.5bn Increase

The overall valuation growth was due to increased rental values. Yields were broadly static across the retail portfolio and moved out slightly across some offices.

Retail remains our largest sector at 46.2% of the portfolio by value. Retail gross rental income increased by 10.6% to £96.0m per annum (47.3% of the total rent roll), ahead of the previous high in 2019 of £89.9m.

Offices represent 13.1% of the portfolio by value and continued to remain virtually fully let. Office rental income increased by 7.8% to £38.9m per annum (19.2% of the total rent roll).

The Residential sector represents 27.4% of the portfolio by value and 20.1% by income. Gross rents for the market let portfolio increased by 6.3% to £39.0m from £36.7m. Adding ground rents from long leaseholds of £1.8m, residential comprised £40.8m or 20.1% of the gross total rent roll.

Leisure and Other uses, which include the regional portfolio, represent 13.3% of the portfolio by value, an increase from 11.2% in 2022 largely because of the acquisitions in the regional portfolio during the year. Gross rental income increased by 45.2% to £27.3m (13.4% of the total rent roll).

Retail is our largest sector, accounting for 46.2% (up from 45.3% last year) by capital value and 47.3% (last year 48.0%) of income.

The growth in capital value was driven by an increase in rents achieved on new lettings and renewals in excess of our valuer’s estimated rental values, while yields remained largely static.

Through our concentrated ownership, Cadogan has the advantage of being able to curate the area, managing each property for the benefit of the whole. We execute this strategic approach in practice by carefully selecting retail brands with the aim of ensuring they complement existing occupiers and bring something new and interesting to the area. This is further strengthened by selecting best-in-class restaurants to underpin the retail experience coupled to the creation of beautiful public and private spaces with which visitors and local residents are able to make a strong connection and provides the opportunity for everyone to enjoy the Chelsea

experience. Through this approach we aim to create and strengthen Chelsea as a compelling destination.

It is well understood that the retail sector has been through a period of great change as consumers increasingly purchased goods online rather than in-store. The penetration of online shopping accelerated through the pandemic to the extent that successful retail businesses have now developed a keen understanding of the value of merging their digital and the bricks-and-mortar strategies to deliver a seamless customer experience across their brand.

This merging of transactional channels has been coupled to the realisation that a physical presence is complementary, indeed essential, to retailers’ brand identity and online presence. By locating stores in locations which trade strongly, retailers see the boost to their online business. This has supported Cadogan’s business, because stores have traded strongly both before and after the pandemic, and as a consequence we have experienced strong demand for available shops which has driven rental growth.

Clockwise from above

Enjoying Pavilion Road; new Paige flagship store; shopping on Sloane Street; Tiffany & Co and Prada on Sloane Street

A retail theme that has emerged is the demand from the most successful luxury brands to upsize their stores. This arises from the desire to elevate the retail experience by immersing consumers in the brand. This has been particularly evident in Paris (the home of many global luxury brands), for example, the enormous Dior store on Avenue Montaigne in Paris encompasses retail, an art gallery, restaurant, patisserie, VIP guest suite and a full product range across beauty and ready-to-wear. Cadogan has benefitted from this theme on Sloane Street through lettings to Valentino, Dior and Yves Saint Laurent which, during 2023, have all significantly increased the size of their stores on Sloane Street.

As retail becomes more about experience, to attract and retain consumers, inevitably it has increasingly encompassed hospitality. This has resulted in more food and drink within stores such as Rixo and expansion of Anya Hindmarch’s ‘Village’ through to LVMH’s acquisition of Belmond (a valued partner of Cadogan at The Cadogan Hotel), the exceptional hotel business in 2019.

At Cadogan, our strategy has long reflected this theme through two approaches. The first has been the introduction of more restaurants to broaden the range of choices and to enhance the wider destination. During 2023 we were delighted to announce the opening of restaurants including

“As retail becomes more about experience, to attract and retain consumers, inevitably it has increasingly encompassed hospitality.”

Azzurra on Sloane Street and Cantinetta Antinori on Harriet Street, as well as a partnership with the celebrated chef and restaurateur Jason Atherton, to open a new restaurant off Pavilion Road in 2024.

The second approach has been to increase our investment in the hotel sector through refurbishment and by adopting operational risk, to maximise performance and raise quality. Examples over the past few years have included The Cadogan Hotel run by Belmond, Beaverbrook Town House operated by the Beaverbrook Estate and No. 11 Cadogan Gardens run by Iconic Luxury Hotels. During 2023 we completed the creation of At Sloane which is operated for us by the iconic Parisian

The Anya Village on Pont Street

Right

Rixo flagship on the King’s Road

hotelier Jean-Louis Costes, and the Chelsea Townhouse which we have upgraded and added to the Iconic stable. These hospitality uses help define the character of the area, as well as providing more opportunities to participate in and enjoy the experience Chelsea has to offer.

We are able to maximise the impact of our curated approach through the creation of clusters of complementary uses which can elevate a destination. This allows us to create a place that provides a unique experience which encourages visitors to travel to and experience rather than transact and leave, or worse, limit their approach to online only. Pavilion Road, now well established, has proved to be a successful example of this approach, comprising a range of independent artisan food shops, including a greengrocer, butcher, fishmonger and cheesemonger amongst others. This has provided visitors with the opportunity to make related purchases in close proximity and to take pleasure from the quality of the environment and the social atmosphere.

“The newly completed development we have christened The Gaumont, on the King’s Road, has provided an opportunity to create another such cluster of small independents.”

After an extensive local consultation, which elicited a very good response, we identified a theme of creative and performative uses to reflect Chelsea’s rich heritage of art, music and cultural innovation. As a consequence, we are now seeking independent occupiers who can provide creative and performance experiences and we will announce more as we secure lettings during 2024.

Retail letting activity remained strong on the King’s Road and Duke of York Square with rents continuing to exceed estimated rental values. Sloane Street, which has recovered at a slower pace since the pandemic and the post-Brexit withdrawal of tax-free shopping, experienced a strong pick-up as the year progressed. We are now experiencing healthy interest from luxury retailers wanting to open a shop on Sloane Street and from those wishing to upsize existing stores. Consumer spend levels on Sloane Street have been consistent with that of other areas of Chelsea during 2022 and 2023 despite the construction activity resulting from the public realm transformation. Research commissioned by Cadogan from retail consultancy CACI projects that retail sales on the street will increase by 7% and hospitality by 15% once the project completes, as more people are attracted to experience the improved environment and increase their dwell time.

Retail lettings in the year included four businesses opening their first UK stores: the premium North American brands Varley, a contemporary women’s fashion brand, and the denim fashion house, PAIGE; the environmentally friendly UK footwear shop Nokwol and the Swedish mountaineering equipment retailer Klättermusen. Other exciting new lettings included jewellery retailers Mejuri on the King’s Road and Jessica McCormack on Sloane Street, the iconic Conran Shop on Sloane Square, the luxury Swiss chocolatier Läderach, luxury fashion retailer Valentino on Sloane Street and the French eyewear brand Izipizi on King’s Road. We have been delighted to welcome these new brands to Chelsea to complement the rich breadth and depth on offer in the area.

Retail vacancy levels continued to remain low, averaging 3.1% and ending the year at 2.6%.

The construction of The Gaumont development at 196–222 King’s Road completed in 2023. We have received strong interest in the King’s Road flagship retail units and expect to announce exciting new retail brands that will start trading from these units during 2024. Located midway between South Kensington and Sloane Square tube stations, these shops are aimed at drawing footfall to King’s Road, creating benefits for all commercial businesses operating in the area.

Offices

Offices account for 13.1% of the portfolio by capital value of £708.9m. By income, offices represent 19.2% of the total.

Gross rents increased by 7.8% over the year, achieved through healthy increases on new lettings and renewals in addition to inflation-linked increases on existing leases. Our office portfolio continued to be virtually fully let during 2023, with a year end vacancy rate of just 0.4%. Office space supply is constrained in Chelsea by tight planning policy and the higher values of residential use. Typical occupiers are attracted to the area by the ‘London village’ lifestyle, which gives their staff access to a wide choice of retail, cultural and hospitality options in the locality in easy reach of Central London.

Generally, our occupiers tend to favour physical collaboration and presence in the office and this contributes to our wider estate management by introducing an influx of workers to the area, stimulating physical and economic activity locally.

The recently completed Gaumont development on the King’s Road will add approximately 15,000 sq ft of high quality new office space, which we expect to be in strong demand when marketing commences later this year.

The occupier flight to quality office space is well established in terms of technical and sustainability specifications. Additionally, occupiers are increasingly seeking Category A+ fitouts. We respond to this demand by delivering the right space to the market to secure high-calibre occupiers, stronger rents and improved income returns.

THE GAUMONT

Approximately 15,000 sq ft of high quality new office space.

CGI of the office space at The Gaumont, King’s Road

Residential

The gross value of our residential portfolio represents 27.4% of the total value and 20.1% of total income.

The reason for the reduction in gross value despite acquisitions and development expenditure totalling £26.5m in the year, is mainly because of planned disposals of noncore properties and leasehold enfranchisement receipts representing £73.5m by book value.

Residential is an important diversifier of income and value and despite the disposals, continues to be our second largest sector (after retail). Our residential holdings reflect our belief that a diverse combination of uses in the area contribute to a vibrant, sustainable neighbourhood and a thriving local community.

The lower relative income yield produced by residential compared to commercial, reflects the combination of reversionary long leases which produce little income (but provide a return when the long leaseholders choose to enfranchise) and the private rented sector (PRS) portfolio which generates a net rental yield that is lower than commercial property.

Our PRS portfolio comprises just over 700 houses and flats. Rental income has grown strongly since 2021 reflecting good demand for well-managed properties.

Our strategic approach to the PRS portfolio is two-fold. Firstly, to deliver high quality homes that meet market demand and in so doing, maximise rental growth. Secondly, to provide exemplary customer service to occupiers of our homes, to encourage them to stay with us for longer and thereby reducing voids. Cadogan achieves some of the highest customer service ratings in the sector, evidenced by independently benchmarked net promoter scores (NPS).

Leasehold Reform

The stated aim of the Leasehold and Freehold Reform Bill, which was announced in the King’s Speech in November 2023, was to make it easier and cheaper for leaseholders to enfranchise, that is, to purchase an extended lease or the freehold of their house or flat. We welcomed many aspects of these extensive reforms which simplify highly complex regulations. However, there are a small number of proposals which concern us and these are:

• The ‘abolition’ of marriage value

• The decrease in allowable residential space in order for a building to qualify for collective enfranchisement, from 75% to 50%

• On a collective claim, mandatory leasebacks of commercial units to be forced on the landlord, without compensation

The cumulative effect of these elements of the reforms will result in a material financial loss to Cadogan and undermine our ability both to curate and to invest confidently in the Estate.

In addition to the Bill, the government has recently published a consultation paper putting forward the capping of ground rents in existing residential leases of flats and houses. Legislation was passed in 2022 to ban the reservation of ground rents in any future residential leases but these latest proposals would go very much further by either removing or restricting ground rent levels in existing leases, thereby being retrospective. The most draconian of the options would be to reduce all ground rents to a peppercorn (nil).

We have been in direct dialogue with government ministers and civil servants throughout the period of the introduction of these reforms. We have in particular sought to make the government aware that:

• The ‘abolition’ of marriage value amounts to no more than a one-off transfer of wealth and will do nothing to benefit homeowners in the leasehold system. Based on solid research we have demonstrated that the principal beneficiaries of this windfall will be wealthy leaseholders in London and the south-east, the majority of which are investors, many based offshore

• The impact of making it easier for leaseholders to buy the freehold of mixed-use commercial buildings threatens our ability to curate effectively and invest in the area and will deter investment in high-density mixed-use schemes delivering much needed housing to cities across the country

In response to these proposed reforms our valuers have removed marriage value from our residential valuations. The residential valuers have also included a material uncertainty clause in their valuation report on the £301m long leasehold portfolio, which is in line with RICS guidance, given the uncertainty of the final outcome of the legislative reforms and the consultation on ground rents (see note 11 of the Financial Statements).

Leisure & Other

This category comprises hotels, restaurants, pubs, our growing regional portfolio, and a variety of other properties such as schools, cultural and artistic venues, medical uses and car parks.

Leisure and Other uses account for 13.3% of the value of the portfolio, up from 11.2% in 2022. Rental income increased by 45.2% and now accounts for 13.4% of the total portfolio. This was due mainly to five acquisitions in the regional portfolio during 2023, at a total cost of £111.2m. These purchases increased the total value of the regional portfolio to £221.4m across 16 property assets.

The Estate component of leisure and other showed a like-for-like increase in value of 4.8%. The regional portfolio fell by 3.9% mainly due to transaction costs associated with the acquisitions last year.

Leisure uses are a core element of our estate management strategy as these uses are intrinsic to the identity of Chelsea and represent the layering of uses that encourage a sense of community; the connection with the area which residents and visitors are able to make. The diverse assets in this category include schools, the Saatchi Gallery, Royal Court Theatre, the Cadogan Hall, hotels as well as restaurants and pubs.

The strategic objective of the regional portfolio is to help finance the ten-yearly IHT liability paid by the trust settlements that ultimately own Cadogan. Therefore, the aim is to acquire a diversified mix of property investments that provide a secure and resilient income yield that is higher than can be obtained from the Chelsea estate. We intend to grow this portfolio further over the coming years, subject to market conditions.

As consumer tastes have evolved and shopping trips have become days out, we have adapted our strategy to increase the number and variety of food, drink and hospitality venues in Chelsea. The number of food and drink venues has more than doubled over the last six years and further growth is planned. These businesses improve the experience for visitors, residents and local workers and increase reasons to stay longer. In 2023 Azzurra, a 200-cover restaurant operated by David Yeo’s Aqua group, opened on Sloane Street. The critically acclaimed chef and restaurateur Jason Atherton entered into a lease to open a new restaurant on Pavilion Road, joining the many existing places to eat and drink there.

development on King’s Road will open, with sweeping views over Chelsea and the surrounding areas. Neighbouring The Gaumont will be a new pub, where we are seeking an operator who will incorporate live entertainment. A new operator has been found for the famous 151 Club on King’s Road which will reopen later in 2024. These are just some of the exciting openings that are recent or are planned over the

The strategic objective of raising our investment in the hotel sector aims to both grow and diversify our income coupled to the estate management advantages of enhancing and broadening local hotel provision. Since 2019 we have developed and opened two hotels, The Cadogan Hotel and Beaverbrook Townhouse. In December 2022 we acquired the Draycott Hotel on Cadogan Gardens – a well-established 35 room hotel – which underwent a rolling refurbishment and a name change to Chelsea Townhouse, while remaining operational. The refurbishment was completed in April, resulting in a luxury hotel that has views over elegant gardens. Our latest hotel, At Sloane, opened during the year. An intimate and highly fashionable venue with 35 rooms designed by the famous French architect François-Joseph Graf and run by the celebrated Parisian hotelier Jean-Louis Costes. The hotel has a restaurant on the roof and a basement bar.

Developments

We continually invest in the Estate through maintenance, restoration, refurbishment and redevelopment. This allows us to maintain the quality of the built environment and ensures we are able to meet the needs and requirements of contemporary commercial and residential occupiers while providing attractive buildings and places to visit.

In 2023 we invested £74.0m in development and refurbishment works, an increase on the £70.2m spent in 2022. The majority of construction expenditure in 2023 was in respect of three schemes:

• At Sloane, the hotel at 1 Sloane Gardens, which was a major restoration and conversion of an Edwardian apartment block into a boutique hotel and restaurant. The hotel opened as planned during 2023.

• The Gaumont, the 220,000 sq ft redevelopment of a large mixed-use site at 196-222 King’s Road. This development achieved practical completion in 2023. The scheme comprises flagship shops to the King’s Road and community retail on Chelsea Manor Street, affordable and market let residential apartments, high quality offices, a Curzon cinema, rooftop bar and a pub. An existing Waitrose supermarket operating at the site was enabled to remain open throughout the construction project through careful management, due to its importance locally.

• The Sloane Street public realm scheme, in partnership with the Royal Borough of Kensington and Chelsea commenced

and will transform Sloane Street into an elegant green space for pedestrians, residents and visitors alike, and reinforce the Street’s position as the world’s finest luxury shopping boulevard. This scheme is on programme and due to complete by December 2024.

Our development pipeline at the end of 2023 comprised 69 projects of which five were under construction. The overall pipeline of expenditure was £469m (2022: £554m).

As long-term stewards of the area, we aim to put community at the centre of what we do. Therefore, we seek to be exemplary in the way in which we engage and consult with local residents and other stakeholders when considering a scheme. On major projects, a communication strategy ensures that the right people are kept informed in the most appropriate way. Through a conscientious approach to consultation, communication and close dialogue with Royal Borough of Kensington and Chelsea, we aim to understand and adapt to local priorities, to ensure our intentions and motives are well understood and that we are recognised as the trusted local developer.

OUR DEVELOPMENT PLAN

Our development pipeline at the end of 2023 comprised 69 projects of which five were under construction.

Far

At Sloane hotel

‘Greening Sloane Street’ Below

The Gaumont, King’s Road

During a

year

defined

by political and

economic uncertainty, we have delivered a very good performance with strong financial results.

This has included the completion of two large development schemes (The Gaumont and At Sloane) and the continuation of a third (Sloane Street public realm), which will have a lasting impact on the appeal of Chelsea. We have introduced new and exciting retail brands and restaurant businesses that complement the strong existing offer. The Cadogan team has delivered high standards of customer service (NPS of 58.2) and advanced our sustainability and stewardship strategy (Chelsea 2030). It has been a successful year.

As we look to the year ahead, I am cautiously optimistic as the UK economy appears to have turned a corner since contracting in the final quarter of 2023, with an improvement in sentiment and the return of modest growth. We expect economic growth in 2024 to remain subdued given high interest rates and continued caution from corporates. However, real wage growth should support consumer spending.

The Bank of England’s management of interest rates appears to have been effective in slowing inflation and wage growth, meaning that interest rates are likely to have peaked. Expectations from most commentators are that interest rate cuts are not expected until the second half of 2024. However, our expectation is that borrowing costs will remain at existing elevated levels until at least 2025 and even then only soften modestly.

We live in a time of uncertainty. External geopolitical events outside of our control pose significant downside risks. The UK and US elections later this year may also bring market volatility and if there is a change of government in the UK, changes to tax and regulations could affect Cadogan.

Chelsea is not immune to these uncertainties, but Cadogan has the advantage of owning an exceptionally high quality portfolio with occupiers that have proved to have resilient market positioning and traded well with exposure to a strong local consumer catchment. Coupled with the momentum that has developed over the last two years in lettings activity and the delivery of incremental income from our maturing developments, I am confident that we are well placed to produce a positive performance in the year ahead, together with sustainable returns over the long term.

Valuations for UK commercial property appear to have stabilised after several years of widening yields resulting in softening values. With interest rate cuts in prospect, yields should start to gradually tighten over the next 18 months, underpinning property values and modest capital value growth.

“I am enormously proud of what our relatively small and highly talented team at Cadogan is able to achieve. Through close collaboration and mutual support, they deliver change, grasp opportunities and negotiate challenges decisively.”

Therefore, I would like to conclude by thanking every one of them for their hard work, loyalty and dedication. I extend this gratitude to the impressive external advisors and partners whom we rely on. Without all these great people we would not have delivered this year’s successful results.

Hugh Seaborn,

2 May 2024

Chief Executive

TRADING HIGHLIGHTS

Patel Finance Director

Turnover increased to £216.0m (2022 - £185.6m) – an increase of 15.8%

Turnover includes income, from hotels, serviced apartments and Cadogan Hall, of £11.8m (2022: £8.9m), the increase driven by revenue from two new hotels in the year, The Chelsea Townhouse (previously called The Draycott) and At Sloane.

The gross rental income in 2022 was reduced by £5.1m to correct an overstatement identified in 2021 relating to a rent smoothing adjustment. Had an adjustment not been made in 2022 we would be reporting gross rental income growth of £21.1m (12.0%) from £175.9m to £197.0m between 2022 and 2023.

The significant year-on-year increase in gross rental income reflects a number of favourable factors. With lettings activity across all sectors continuing a strong run from 2022, we benefited from the full year effect of lettings and RPI-indexed increases agreed in the previous year as well as lettings at rents above ERV and RPI-linked rent reviews in 2023.

Acquisitions of properties at a total cost of £172.5m, of which £111.2m was in our regional portfolio, also brought incremental income in the year.

In relation to rent deferrals or rents outstanding, the rental income is recognised as normal with the deferred rent or rent receivable balance remaining in trade debtors until settled. Where there is a credit risk over recoverability of a balance that is contractually due, any impairment is booked as a cost in Cost of Sales. There was no impairment charge in the year (2022: £nil).

Rent collections averaged 99% for commercial occupiers and 98.5% for residential tenancies.

Operating profit before capital items increased by 22.2% to £120.3m (2022: £98.4m). Had we restated the misstatement due to the rent smoothing adjustment above in 2021 we would be reporting a £16.8m (16.2%) increase in operating profit before capital items from £103.5m to £120.3m. The conversion of income growth to a higher percentage increase in operating profit was achieved by holding property expenses at a similar level to the previous year and was despite an increase of £6.6m in administration costs of which the bulk – £4.5m – related to the operational costs of the two new hotels.

Turnover increased to £216.0m (2022 – £186.5m)

Increase of 15.8%

Gross rental income increased to £197.0m (2022 – £170.8)

Increase of 15.4%

Operating profit before capital items increased to £120.3m (2022 – £98.4m)

Increase of 22.2%

Gain on revaluation of investment properties £157.0m

(2022 – Gain of £262.5m)

Increase of 3.0% in capital values on a like-for-like basis

Sanjay

Property expenses have been elevated over the past two years, mainly because of expenditure on the Sloane Street public realm project, which is all expensed. In 2023, we expensed £9.2m on public realm projects (2022: £8.6m). This major project is scheduled to complete in December 2024.

The profit from the sale of investment properties in 2023, which includes profits from leasehold enfranchisements, contributed £15.1m, the same as in 2022 but from higher net proceeds of £88.6m (2022: £65.8m). There was a higher number of transactions completed at 71 compared to 64 in 2022, comprising 47 leasehold enfranchisements and 24 sales of residential properties.

The consolidated income statement reflects the movement on the annual revaluation of the investment property portfolio. All categories apart from offices (lower by 3.8% on a like-for-like basis) and the regional portfolio (lower by 3.9% due to transaction costs on acquisitions in 2023) increased in value during the year resulting in a net revaluation gain of £157.0m (2022: gain of £262.5m).

The charge for current taxation in the year was £23.3m, an increase of £10.0m compared to 2022 and a larger increase proportionately than the increase in operating profit. This was mainly due to the increase in the rate of corporation tax from 19% to 25% on 1 April 2023 and because of a larger gain chargeable to corporation tax in 2023 from the sale of investment properties. The overall figure for taxation in the income statement for 2023 was a charge of £67.0m (2022: charge of £79.0m). The reduction compared to 2022 is due mainly to a lower deferred tax charge in 2023 on a lower revaluation gain compared to the previous year.

The dividend paid to shareholders in December 2023 was £36.6m. A significant proportion of our annual dividends is set aside by the major shareholder to provide funds for ten-yearly IHT charges, the next charge being due for payment in 2032. A further portion of the dividend (4.15%) is paid to a charitable trust set up by the Cadogan family which uses the funds to make charitable donations.

Cadogan is mindful of its tax obligations and is liable for, and collects on behalf of HMRC, various taxes in its operations. The table below shows the tax paid by Cadogan, and that collected and remitted to HMRC by Cadogan. As in previous years, the tax collected is significantly greater than the direct tax charge shown in our accounts, demonstrating our wider contribution to the UK economy.

In addition to the tax set out in the table, Cadogan Group’s dividends flow through to several family trusts and are (save in the case of a charitable trust) subject to income tax. Furthermore, a substantial proportion of the dividend is used to provide for the ten-yearly charge to IHT in relation to certain of the trust assets. In the case of the principal trust, it paid the latest ten yearly charge in 2022. The total dividends required by the family trusts from Cadogan to pay the IHT charge due in 2022 amounted to £210m.

We anticipate the next ten-yearly charge due in 2032 will be higher as it is based on the value of the assets held by the group, which is expected to increase over the period. The family trusts have already started to put funds aside from Cadogan Group dividends for the next ten-yearly charge.

Balance Sheet and Borrowings

The value of our properties at the end of 2023 was £5.42bn (2022: £5.10bn), an increase on a like-for-likebasis of 3.0%. Consequently, Group shareholders’ funds increased from £3.44bn to £3.58bn. Net assets per share increased to £29.87 from £28.68, an increase of 4.1%.

The Leasehold and Freehold Reform Bill 2023 currently being considered by Parliament potentially affects our long leasehold portfolio valued at £301m, 5.5% of total property value. Our residential property valuers have included a material uncertainty clause in their valuation report which is in line with the RICS guidance given the uncertainty relating to the impact of the enacted legislation (see note 11).

Cash inflow from the Group’s operating activities fell to £110.3m, compared to an inflow of £126.5m in 2022. The cashflow in 2022 was higher mainly because of a £51m

short-term loan advanced to the parent company, Cadogan Settled Estates Holdings Limited to enable the latter to make a capital distribution to the trust settlements that own the Group to fund the 2022 inheritance tax liability. The loan was repaid in April 2022.

Year-end borrowings, excluding cash of £6.2m (2022: £62.0m), increased during 2023 from £850.4m to £912.7m. The revolving credit facility was £70m drawn at the year end, an increase of £70m compared to 31 December 2022. There were loan repayments in the year totalling £15.6m, comprising a £4m capital repayment in March on a loan maturing in 2025 and £11.6m in August in respect of maturing loan notes from a 2008 private placement. There was an increase of £7.9m in 2023 after translating our dollar denominated borrowings at the year-end exchange rate and recognising the fair value of the related cross currency swaps.

At 31 December 2023 the average maturity of our debt was 15.43 years (2022: 16.33 years) and the average effective rate of interest across all drawn loans increased from 4.19% in 2022 to 4.31%. The main reason for the increase in effective interest rate was higher drawings at the year end on the bank revolving credit facility which is floating rate while all our other debt is at fixed rates.

There was an increase in year-end balance sheet gearing to 25.3% from 22.9%. Gearing as measured under our loan covenants, increased by 1.7% to 20.6%. Interest cover improved to 3.4 times from 3.2 times. Both ratios were comfortably compliant with our bank and private placement financial covenants. At the year end there were total undrawn facilities available to the Group of £280m under revolving credit facility arrangements.

In 2022, we arranged £300m of long-term funding from three private placement deferred loans, taking advantage of low interest rates in anticipation of projected funding requirements. £100m of this funding was drawn in December 2022, £50m will be received in September this year, £50m in March 2025, £50m in September 2025 and £50m in September 2026. The initial tranche of £100m matures in 2043 and the remaining tranches have maturities in 2060 and 2062.

On 15 March 2023 we refinanced our revolving credit facilities, increasing them by £50m to £350m in a new syndicated revolving credit facility for a term of 3½ years, expiring on 15 September 2026, with two one-year extension options exercisable from 1½ years and 2½ years of the start date.

Going concern

We have undertaken a stress test with a severe but plausible downside scenario of an economic downturn beginning in the second half of 2024, to assess the potential impact on headroom for liquidity and loan covenant compliance, taking account of mitigations available. Details of the stress test are provided in the Going Concern section of the Directors’ Report on pages 60 to 61 and the conclusion is that, in the severe but plausible downside scenario modelled, we would have sufficient liquidity and satisfy all our loan covenants in 2024 and 2025.

Approach to Risk Management

Cadogan has a well-developed strategy and process for risk management. Overall responsibility for risk management lies with the Group board, which is responsible for determining the Group’s risk appetite and ensuring that the Group’s risk management system properly identifies, understands and manages all relevant risks.

The Group’s risk appetite and processes for managing risk are regularly reviewed by the board. The Finance Director, supported by the senior management team, is responsible for compiling the Risk Register which is updated on a regular basis. The Risk Register identifies the principal risks impacting on the business and the Group’s financial position. It provides an assessment of the likelihood of the identified risks materialising and includes an estimate of the potential impact of each area of risk on the business. The Register is formally reviewed by the Board at least annually and this forms an important part of the overall risk management process. The Group also makes use of appropriate external specialists to advise on compliance with established policies and external regulations.

Cadogan is a long-term property investor with a clear focus on high quality property assets located in central London. Because of its private ownership and long-term outlook, the Group aims for, and is able to achieve, a high level of resilience in all areas of the business.

Cadogan assesses risk under three principal headings:

- Strategic risks

- Financial risks

- Operational risks

Risk Outlook

The headline rate of inflation began to fall in in the second half of 2023 but the war in Ukraine, in its third year, and now the conflict in Gaza are affecting the worldwide supply of oil and gas as well as by-products such as fertiliser and the shipping of goods, exerting upwards pressure on inflation. Despite this, market commentators are expecting the Bank of England to start cutting interest rates from the middle of 2024.

The UK economy held up better than expected in 2023, proving resilient to high inflation and interest rates, and there are signs that residential and commercial property markets activity is increasing with the prospect of lower interest rates.

UK commercial and Prime Central London residential property markets were under pressure during 2023 but there appeared to be little or no impact in Chelsea, where the lettings market was buoyant.

Demand for office space on the Estate has remained strong since the key drivers for occupiers looking for space in Chelsea are different from the large office market in the West End and City.

The abolition of tax-free shopping has reduced overseas visitor numbers compared to other major European cities, but this has not adversely impacted demand for space on Sloane Street from luxury retailers who appear to be as keen as ever to maintain a shopfront on Sloane Street. Demand for space on Sloane Street returned robustly in 2023.

Corporate investment activity slowed down in the UK as the cost of debt increased but this provided buying opportunities for Cadogan, allowing us to expand our regional property portfolio.

The high cost of debt may lead to more bankruptcies in the construction industry, and we remain vigilant about the financial health of our key contractors, increasing the amount of due diligence conducted both before a contract is awarded and during the term of the contract where large developments are involved.

As the deadlines approach for compliance with Minimum Energy Efficiency Standards (“MEES”), business urgently needs

more certainty from government on the key compliance requirements, an area that has been characterised by uncertainty and moving goalposts. Cadogan is being measured in its approach to compliance, focusing on measures that meaningfully reduce carbon emissions in our properties.

Looking ahead, the economy is likely to regain some momentum in 2024 but growth is forecast to be modest. UK elections in 2024 could result in new policies, particularly on tax, the environment and property reform, which could impact our business. A number of other countries are also due to have elections this year, the outcome of which could give rise to economic and political uncertainty during a time of heightened global tensions.

Strategic Risks

Property market risks – the risks arising from property cycles and from shorter-term unexpected changes in the market for property investment, development and occupation. Retail has been subject to structural changes for many years, such as the ongoing shift to online transactions. These trends were accelerated by COVID-19, forcing the closure of many weak retail businesses, while others have successfully adapted their models to trade successfully in the new environment. Cadogan has a diversified asset portfolio, positioning its Estate towards luxury and distinctive retail propositions, increasing non-retail leisure and food and beverage options to increase attractiveness and increase dwell time in the area. Cadogan led on the establishment of the first two Business Improvement Districts (BIDs) in 2021 in the Royal Borough of Kensington and Chelsea, on the King’s Road and Brompton Road. These are making good progress in promoting these areas, enhancing their vitality and attractiveness.

The move to more flexible working in recent years has dampened the demand for office space in the UK. Cadogan has not experienced a reduction in demand to date and vacancy levels remain low at less than 1%.

The rising cost of debt has widened yields across all property sectors and led to an economic slowdown. However, the Chelsea market has proved resilient with demand continuing for new leases across all categories.

Most property markets are cyclical, and this is particularly true of central London. As a long-term investor the Group is less reliant than others on predicting property market cycles and aims to manage the impact of the property cycle and any other short-term fluctuations in values or activity levels by ensuring a relatively high proportion of committed long-term loan finance, planning for significant headroom against external financial covenants and high levels of available liquidity. These factors also assist the Group in managing cashflow and liquidity risks.

Leasehold Reform – Leasehold reform legislation currently going through Parliament proposes changes which will have an impact on Cadogan. The key changes of note are:

• The ‘abolition’ of marriage value

• The decrease in allowable residential space in order for a building to qualify for collective enfranchisement, from 75% to 50%

• On a collective claim, mandatory leasebacks of commercial units to be forced on the landlord, without compensation

We no longer reflect marriage value in our valuations. However, the cumulative effect of these proposals in future will have a financial impact due to the loss of leasehold enfranchisement income but also affects our ability both to curate and to invest

confidently in the Estate. We are taking steps to increase our holdings in buildings where our ownership is less than 50% in order to protect our position on the second item.

In addition to the Bill, the government has recently published a consultation paper putting forward the capping of ground rents in existing residential leases of flats and houses. Legislation was passed in 2022 to ban the reservation of ground rents in any future residential leases but these latest proposals would go very much further by either removing or restricting ground rent levels in existing leases, thereby being retrospective. The most draconian of the options would be to reduce all ground rents to a peppercorn (nil).

In response to the leasehold reform Bill our valuers have removed recognition of marriage value from our residential valuations and therefore the immediate visible balance sheet impact is limited. The residential valuers have also included a material uncertainty clause in their valuation report on the £301m long leasehold portfolio, which is line with RICS guidance, given the uncertainty of the final outcome of the implemented legislation.

Geographic concentration – the Group accepts the risks inherent in the small geographic area in which the Group’s properties are concentrated. The Group’s properties are primarily located in Kensington and Chelsea, which for many years has been an area renowned for long-term prosperity and economic resilience. The Group also seeks to balance this geographic concentration through a diversified portfolio of uses and through close attention to the balance between sectors. The largest individual property represents 5.2% of the total portfolio value and the highest individual tenant representing 4.1% of total annual rental income.

Cadogan has carefully curated its Estate over many years to create a vibrant local neighbourhood where spending is dominated by its residents and less reliant on visitor footfall. This was evidenced by the comparatively smaller reduction in footfall during the pandemic than other central London areas and the strong rebound to pre-pandemic levels thereafter.

The Group monitors and is actively involved in consultation with the Royal Borough of Kensington and Chelsea where it considers that it could be affected by changes or developments to local planning policies. The Group is committed to close liaison with stakeholders and the community to ensure that its strategy and developments are understood externally. In addition, there are statutory and regulatory risks which are closely monitored.

Development risks – Cadogan regularly undertakes substantial development projects, but carefully considers the timing to ensure that the Group’s exposure to development risk is controlled, both relative to the overall portfolio and to potentially competing schemes in the same area. Cadogan consults widely with diverse stakeholders on development schemes to ensure that schemes are designed to the highest quality and to assist in obtaining the most appropriate planning consent.

There is a need to incorporate additional flexibility in future development projects to allow a wider range of end uses following recent changes in planning use guidelines and changing market demand over time.

Building cost inflation increased costs significantly during 2021 and 2022 but has started reducing during the course of 2023 towards more normal levels. The high inflation, high interest environment has increased the risk of contractor failure.

We carry out extensive due diligence on the financial strength of contractors during the appointment process, particularly on high value projects. We support their cashflow by paying promptly.

In 2022, we undertook a comprehensive review, resulting in changes to the way we procure major development projects (those costing more than £10m) and, for high value projects, we appointed new cost consultants and quantity surveying firms experienced in overseeing large, complex projects. With the completion during 2023 of the two largest projects procured under our old system, the pipeline of major projects will henceforward be almost entirely procured under the new method, reducing risk in future.

Risks associated with London’s position as a global capital – London’s position as a global capital has been a significant factor in the overall prosperity of central London in recent years. There are risks to this position from several factors, most significantly from Brexit, from terrorism, from underinvestment in infrastructure and from adverse changes to the tax regime, particularly affecting overseas investors. The Group cannot manage or control these risks, but Cadogan takes an active role in lobbying through organisations such as BusinessLDN and the British Property Federation amongst others, to ensure that the long-term health of London is at the forefront of the minds of national and local government.

COVID-19 reduced the number of international visitors to the UK which adversely impacted retail on the Estate in the short-term. This was exacerbated by the withdrawal of tax-free shopping by the Government, making the UK the only major European country that does not have a practical tax-free shopping scheme for overseas tourists. Inbound tourism has still not returned to pre-pandemic numbers, unlike some competing capital cities in Europe such as Paris, which is

thought to be partially linked to the withdrawal of tax-free shopping. Cadogan is working closely with its retailers on enhanced marketing strategies for attracting more UK and international visitors to the area in 2024 and beyond.

Financial risks

Interest rate risk – The majority of long-term borrowings are at fixed rates of interest, achieved either by agreement with the lender, or through the interest rate derivatives market. The board requires at least 75% of long-term debt to be subject to fixed rates of interest. The Group does not undertake financial instrument transactions that are speculative or unrelated to trading activities. Board approval is required for the use of any new financial instrument. In 2021/2022, the Group took advantage of low prevailing interest rates to raise £300m of fixed rate long-term deferred borrowing with maturity dates ranging from 2043 to 2062 to be drawn in tranches. £200m of this funding will be drawn over the course of 2024, 2025 and 2026 and reduces interest rate risk on our planned investments over these years.

Inflation risk – The reopening of the world economy following the pandemic led to widespread shortages of labour, raw materials and energy, leading to higher inflation. This was exacerbated by the war in Ukraine and more recently the attacks on shipping in the Middle East following the conflict in Gaza. Interest rates have increased steeply to quell inflation, affecting the cost of debt and the economic outcome of investment decisions. Operational costs have also been affected by wage and materials inflation. Rents on most of Cadogan’s commercial and residential leases are linked to RPI, mitigating against cost inflation. On construction projects we mitigate this through design and build contracts that aim to achieve cost certainty at the outset. High inflation can help retailer profitability where they are able to pass on costs

through higher pricing, providing retail occupiers, particularly luxury retailers, with a hedge against higher rents.

Refinancing risk – The Group seeks to manage refinancing risk using a spread of loan maturities. In normal circumstances, loan terms, other than bank loans, are for an initial period of ten years or more. The incidence of maturities is spread to ensure that major refinancing is spaced out over time. On 15 March 2023, the Group refinanced £300m of existing revolving credit facilities that were due to expire in April 2024, with a new £350m syndicated revolving credit facility having a 3½-year term expiring in September 2026 with two one year extension options.

Foreign currencies – Some of the private placings of debt which the Group has undertaken have included a significant proportion of US dollar borrowings. All exposure to US dollars in relation to both interest and capital repayments has been swapped into sterling on the date on which the loans were committed, and as a result there is no residual foreign exchange risk exposure to the Group. Operationally, the Group has no foreign currency exposure.

Compliance with financial covenants – The Group has provided financial covenants to its lenders to support its unsecured borrowings. The Group’s financial position is regularly monitored against the covenant requirements to ensure that the Group has significant financial headroom and is not at risk of breaching any of the covenants. Scenario planning is used to assess the sensitivity of potential changes to the principal financial measures which might impact the ability to meet covenant requirements.

Customer creditworthiness – Cadogan has a diverse tenant portfolio which offers some protection from tenant default. Rent collection rates since the beginning of 2023 are at

pre-COVID levels. We receive turnover data from most of our retail and hospitality occupiers which we monitor to assess their performance and financial health. We carry out quarterly Experian monitoring of the commercial tenant population and our asset managers monitor businesses that are assessed as above average risk. Credit control meetings are held twice each quarter and appropriate, timely actions agreed to ensure outstanding debt is chased and collected.

Operational Risks

Property loss and damage – All the Group’s properties are insured against loss or damage on a full reinstatement basis, including three years’ loss of rental income. Cover includes terrorism risk, which is provided by a major insurer and member of Pool Re. COVID-19 illustrated the limitations of insurance cover and highlights the importance of maintaining a strong financial position and liquidity headroom to enable the business to withstand uninsurable or unknown future events. In 2022 we started a project to digitise all our remaining paper property deeds and records to mitigate against the risk of loss due to fire or flooding. This project is due to complete in the first half of 2024.

Health and safety risks – The Group accords a high priority to health and safety. Health and safety issues are always discussed at the monthly Operational Board meeting of senior leadership and all incidents are reported and reviewed on a monthly basis. From time to time the Group undertakes external reviews and audits of its health and safety policies and procedures, the results of which have confirmed the quality and integrity of health and safety practices. An online health and safety system has been implemented since 2021 to enhance compliance monitoring.

We have a flexible working policy and staff are required to complete online assessments to ensure their equipment, furniture and home environment are suitable for working from home, in addition to workplace safety assessments. Mental health awareness training has been provided for staff as well as access to confidential helplines with trained professionals, and there are mental health first aiders in place.

A similar emphasis is placed on health and safety on our construction sites, with our consultants monitoring contractors’ compliance with safety rules.

Risk of energy shortages – The war in Ukraine highlighted the risk to the business and its occupiers of shortages in energy. We have back-up generators for our main site, which can provide electricity for short periods of outage. Our teams are equipped to work from home for longer periods if necessary. We have collated a list of vulnerable residential tenants to ensure that vital support can be provided to them if there are prolonged power cuts, especially during cold weather.

Climate change – Climate-related risks are considered to be principal risks and their management is integrated with the overall risk management strategy.

In 2021 we conducted a climate risk review in line with the TCFD recommendations and the conclusions continue to inform our approach to climate risk management as part of our Chelsea 2030 strategy.

Specifically, we consider climate risks grouped into the following categories:

Physical Risk - We worked with our insurers Zurich to understand the physical risks climate change poses to our Estate, taking a building-by-building approach to modelled global risks through qualitative and quantitative scenario analysis.

We considered risk in the short term until 2030, and medium term up to 2050, with long-term information to 2100 provided for context. Climate scenarios modelled included one where global average temperature increases by under 2 degrees by the end of the century, and a scenario where temperatures increase by over 4 degrees by 2100.

The key risks identified included an increase in precipitation, potentially resulting in surface flooding, due to the capacity of drainage systems being exceeded. River flooding was also considered and two properties showing a significant increase in flood risk by end of century. Properties with basements are generally more vulnerable to river and precipitation flooding, and account for over 40% of the total building value and annual rent on the Estate.

The occurrence of severe drought conditions is projected to increase by 2050 in both scenarios and its impacts include subsidence, potentially causing cracking and damage to pipes including water and gas, as well as water availability.

From the near-term out to the end of the century, heating is likely to remain an important requirement, although the number of hot days is also likely to increase over the century in both climate change scenarios.

This physical risk is managed through both extensive consideration in new developments, and refurbishment works identified through theoretical risk assessments and actual incidents. For example, the decarbonisation plan for the Estate, forecasts heating being electrified, and insulation protection provided against both extreme heat and cold.

We continue working closely with our principal insurer and external experts to support physical and transition climate risk assessments and strategies to implement mitigations.

Regulatory and Market Risk - This area considers the risk of continuing changes in environmental and climate regulation. Legislation is proactively monitored, assimilated and estate management policies adapted accordingly. Through our membership of the British Property Federation we respond to consultations, contribute to industry papers and work to shape forthcoming legislation, ensuring we can ensure a compliant approach and support the country’s transition to a net zero economy.

We are also considering the risk of increasing energy and carbon pricing. Our extensive energy efficiency and carbon reduction investment programme will deliver significant energy savings and protection against rising energy costs. Combined with proactive purchasing and exploration of other energy and carbon offset procurement models (such as energy trading, power purchase agreements for energy and pending issuance units for carbon offsets) will mitigate energy cost and carbon pricing risk.

Social and Transitional Risk - This area includes a risk of being perceived not to be acting in the wider interests of the area and the country, which may lead to reputational damage as well as losing our social licence to operate.

We are actively working to deliver Chelsea 2030 and transparently reporting on progress and investment in this area. In the process, we engage with the local council the Royal Borough of Kensington and Chelsea, and numerous stakeholders in the community.

We also consider the risks (and opportunities) from our retail occupier concentration in high fashion and luxury goods and the fashion industry not adopting stronger ESG strategies. These risks are mitigated through our Chelsea 2030 strategy and working in partnership with occupiers and suppliers to create a more sustainable Chelsea in which brands with strong ESG strategies want to locate.

IT, telecommunications and business continuity risks –

The Group ensures its IT and telecommunications systems are robust and fit for purpose, with an emphasis on the development of inherent resilience and backup capability. The Group has a detailed business continuity plan which is regularly reviewed and updated and now includes a cyber incident management response plan. The Group undertakes regular external cyber security reviews, the last one being conducted during 2023, and implements any resulting recommendations for security improvements. The group obtained Cyber Essentials Plus accreditation in 2023. Staff are regularly reminded of e-mail and IT security threats and undergo rolling training on IT security throughout the year. All electronic files are stored and backed up in the Microsoft Azure Cloud.

We have cyber insurance in place ostensibly to provide ready access to the best IT, legal and security expertise in the event of a cyber breach or attack.

Compliance with General Data Protection Regulations (GDPR) is embedded within the organisation, with GDPR Champions appointed for each team, who undergo training every six months. New joiners are required to undergo compulsory GDPR training on joining and all staff undergo refresher training annually.

Sanjay Patel, Finance Director 2 May 2024

Above Giant floral Lion and Unicorn to celebrate the Coronation, joined by Ballet School London

Our Community

Overview

Contributing towards a flourishing and sustainable community has always been central to Cadogan’s strategy and purpose. As a long-term family business, we believe that it is vital to create an equitable and thriving city for future generations.

We launched Chelsea 2030 as our commitment to integrating sustainability into every aspect of the business, setting out ambitious environmental targets to ensure cleaner air and a healthier London, along with a community fund which contributed over £4 million in 2023 towards positive social impact, including a subsidised keyworker housing portfolio, employment and skills support, and care for those who need it most.

The strategy, created with our local stakeholders and community input, peer review and industry analysis, sets out a shared sense of responsibility for the future of Chelsea and ensures that we combine forces with our occupiers, partners and suppliers, which is vital to achieving meaningful change and maximising our impact.

Cadogan’s top environmental priority remains the decarbonisation of our buildings in the race towards a net zero future. The UK’s built environment accounts for 25% of our greenhouse gas (GHG) emissions5 and we are acutely aware of the role that we can play in delivering the necessary reductions. We remain committed to sustainable development and 2023 saw the completion of our flagship scheme, The Gaumont, which achieved a BREEAM ‘Excellent’ rating and includes a 150m2 solar array, alongside 1,500m2 of intensive and extensive green roofs. Construction also began on the Sloane Street transformation project, aiming to create a stunning green boulevard spanning from Knightsbridge to Sloane Square, with a diverse and climate-resilient mix of flowers, shrubs, and over 100 additional trees.

Creating social value lies at the heart of our commitment to a sustainable future. Our key partner in much of this philanthropic work remains The Kensington & Chelsea Foundation. Cadogan continues to be their Principal Supporter, covering the majority of the organisation’s core costs to ensure that they reach grassroots initiatives across the Borough. In 2022–2023, 143 local projects were supported, reaching 21,029 disadvantaged and vulnerable residents.

The following pages bring this work to life, reviewing our performance against ambitious targets and outlining both our successes so far and the challenges faced in achieving them:

decarbonisation programme £90m

1) Environmental Sustainability

Carbon Emissions

Waste

Air Quality

Green Infrastructure

2) Community Investment and Social Impact

Enhance community cohesion between local stakeholders

Maximise local employment and skills development

Make a measurable improvement to community wellbeing

3) Community Engagement and Customer Commitment

£4m+

community projects fund, including £1.1m annual subsidy of keyworker and community housing

88.6%

customer satisfaction score, with a Net Promoter Score of 58.2, almost double the industry average

Environmental Sustainability

Carbon Emissions

Meeting net zero is at the heart of our environmental strategy – and the art of retrofitting existing buildings will be at the core of this effort for Cadogan.

This will require careful balance of interventions in an area such as Chelsea with historic properties, conservation areas and listed buildings. Work on decarbonisation of our buildings remained a key priority throughout 2023, focusing on reducing energy demand, increasing energy efficiency and renewable energy generation. The phasing out of fossil fuel usage in existing operations – including completely in landlord areas – is a key axis of our Net Zero Pathway6.

Decarbonising the Portfolio

During 2023, the baseline of a structured decarbonisation programme was established through a series of building surveys, identifying interventions that could make the most material contributions. This has also allowed us to analyse the different models of intervention necessary, according to building type and use. We are adopting a ‘fabric-first’ intervention approach, which means tackling issues such as single glazing and uninsulated walls and roofs, to improve the efficiency of buildings before installing electric heating solutions.

Embodied carbon in construction remains a key area of focus for Cadogan. We continue to target low embodied carbon benchmarks across our developments and take an informed and well-rounded approach towards retrofit. We take pride in our stock of historical buildings with a rich cultural heritage, and continuously invest in future-proofing them and making them fit for a net zero future, whilst also improving their aesthetics and ultimately boosting the competitive positioning of Chelsea as the best place to work, shop and visit. We are learning that each project requires a bespoke approach to be successful, and this means a mixture of retrofit and redevelopment.

Energy Use – Generation and Procurement

In 2023 we renewed our landlord energy contract for both gas and electricity. Despite market pressures in electricity pricing, we continue to procure 100% renewable electricity. The solar array installed at our headquarters in late 2022 exceeded forecasted performance, generating around 21% of our green energy requirements for common areas (just over 70,000kWh of electricity). Two further solar array projects are planned for 2024.

Across our residential portfolio, over 85% of market-let units now have LED lights. This programme is progressing steadily through all residential upgrades, giving confidence that full coverage can be achieved in line with our targets.

Our Carbon Footprint 2023

Streamlined Energy and Carbon Reporting

ψ Historical data has been restated where new, more accurate data has been obtained. Refer to the Methodology section on page 56 for more information. We have obtained limited assurance on 2023 Scopes 1 and 2 carbon emissions (metrics identified with a * in the table).

Energy relating to transport (including business travel) is very low and therefore excluded from the table above, but included in our total carbon footprint (Emissions Data) shown on page 38.

Occupier Collaboration

Working alongside our tenants is key to success: well over half of our carbon footprint is attributed to occupier operations - we can only achieve net zero together. In 2023 we continued to leverage commercial fit-outs to improve energy performance: the proportion of commercial premises rated EPC A and B almost doubled from 16% to 31% in the year.

70% of Cadogan’s commercial leases were green leases in 2023, with tenant-landlord collaboration at their heart and a future-proofing requirement for premises to achieve an EPC rating of B or better. First deployed in 2015, there are now more than 350 green leases across our commercial portfolio.

The proportion of residential properties achieving an EPC rating of between A and C increased from 67% in 2022 to 75% by the end of 2023. We are introducing green clauses in our short-let agreements, which will allow us to collect meter data directly, among other benefits.

Data Collection Enhancements

Quality energy data is fundamental to creating a robust, seamless and evidence-based sustainability strategy: accurate energy consumption figures will allow us both to report improvements in our carbon footprint with confidence and, crucially, to underpin data analytics and tailored recommendations.

With occupier operations forming the largest portion of our carbon footprint, improving data quality in this area is a priority. During 2023, an automated energy data collection system was tested, utilising a national database that contains usage data from all meters across the country. In addition to improved data quality and coverage, it removes the need for any active input on the part of our occupiers, resulting in a more streamlined and efficient process and allowing us to shift our focus from data collection to action.

We continue to invest in this refinement process and in 2024 we aim to move the majority of our occupiers’ energy data away from extrapolation methodologies and into actual data by investing in automation and database access.

Another key improvement area has been our focus on our supply chain data. Traditionally calculated through spend-based methodologies, we have been actively committed to increasing the proportion of actual data directly reported by suppliers. Through our investment in a supplier engagement programme, in 2023, 120 suppliers shared their actual carbon footprint associated with supplying goods and services to Cadogan.

As a result of these improvements, our carbon footprint is becoming increasingly robust. These improvements in data collection methodologies translate to a larger percentage of actual data, which has impacted on the figures set out in the carbon footprint analysis that follows. We expect to observe fluctuations and anomalies attributed to improved data quality and completeness as our methodology evolves – normalising the baseline for this refinement has not been attempted in 2023 but may be needed in the future.

We have obtained limited assurance on 2023 Scopes 1 and 2 carbon emissions (metrics identified with a * in the table).

gas installed in new buildings

arrays fitted and energy efficiency measures implemented

Prioritising low embodied carbon solutions

Increased electricity emissions factors and more comprehensive fuel oil reporting

More accurate reporting

Increased % of actual data for tenant energy consumption

Ongoing reductions in natural gas consumption at 11 Cadogan Gardens

In 2023 our total carbon footprint was 36,183 tonnes, a 5% decrease from the baseline but 6% higher than the previous year. This increase was driven by a combination of access to more actual data, which has shown that our previous estimates may have underestimated baseline emissions, a number of large developments becoming operational during 2023 (including our hotels At Sloane and Chelsea Townhouse) and various property acquisitions on the Estate and in the regional property portfolio. As we collect more actual data during the course of 2024, we may have to amend the baseline in light of this data.

Scope 1 and 2 emissions represent those under our direct control and include fuel that we procure directly. These are approximately 10% of our total carbon footprint and in 2023 were 9% below the baseline. Specifically, we are seeing that landlord procured electricity and gas are around 30% and 1% below the baseline respectively, aligning with our ongoing decarbonisation works. Phasing out of gas for heating remains a key priority.

We are also observing a consistent reduction in our energy use intensity, which is 5% lower than in 2022 and over 7.3% lower than the baseline.

In terms of Scope 3 emissions, the key contributor is occupier operations at 3% below the baseline, but a 6% increase from 2022. There are two main reasons for the increase. The first is acquisitions made in 2023, which account for approximately 2% of the increase. The second is the year-on-year increase in actual data as opposed to extrapolated information which we estimate accounts for approximately 1%.

Chelsea Theatre Twinning

Through 2022 and 2023, we instructed a comprehensive programme of net zero and energy efficiency surveys across the Estate, informing our decarbonisation works and trajectory towards net zero. Sharing our learnings and bringing the community with us on the net zero journey, we worked with Chelsea Theatre, a community theatre in the World’s End estate, to instruct a similar survey to support their decarbonisation efforts. Not only does the report identify ways to save energy (a significant cost pressure for a community centre and theatre), it also provides a roadmap of interventions that the theatre can take over time to reach net zero. Working in partnership with local stakeholders, we are pleased to be able to support our wider community with their environmental goals.

“Cadogan’s Emissions Action Programme was carefully structured so that attendees could develop a holistic understanding of what sustainability looks like for organisations, as opposed to diving straight into the numbers. There were excellent case studies and examples of what bestpractice looks like throughout, which was very helpful in providing context to the information. The invaluable support enabled us to successfully calculate our carbon footprint and formulate an effective carbon reduction plan.”

- Rosewood Restoration

CASE STUDY

SME Emissions Action Programme

Our supply chain is a key partner in the transition to net zero: around one fifth of our carbon footprint is attributed to the goods and services we purchase. We began our supplier engagement on emissions in 2022 and have now reached over 120 suppliers.

In 2023, we brought together 25 of our SME suppliers to improve their emissions measurements, set targets and put plans in place to deliver significant reductions. A series of three workshops and two clinics held over a span of five months, alongside a dedicated learning platform and accompanying resources, saw participants from a range of sectors learning how to calculate baselines, set sciencebased emissions reduction targets and formulate robust action plans by which to achieve these ambitious targets. Our ambition for this programme has been both to reduce our collective carbon footprint, but also to make a meaningful contribution towards decreasing the green skills gap in the wider industry.

“We found the sustainability programme offered by Cadogan incredibly helpful. It was invaluable to have experts break down sustainability concepts, provide templates to help us capture our data and be there for support and guidance. As a company, we have a much greater understanding of the steps needed and have formed our first sustainability action plan which we are really happy about!”

-

Polar Black Events

Cadogan Hall LED light replacement

Reducing landlord electricity consumption

Stage lighting is critical in the operation of a performance space, playing a key role in artistic delivery and audience experience. Summer 2023 saw a project at Cadogan Hall to replace 71 high-energy-consuming halogen stage lights with modern and energy-efficient LED lights. Highly aware of the sensitivities any changes could make on performance and atmosphere, the LED units were selected to provide like-forlike, balanced coverage and offered a significant reduction in energy use, resulting in a 16% reduction in total electricity consumption. Furthermore, LEDs operate without generating waste heat, a typical byproduct of traditional halogen systems.

CASE STUDY

The Gaumont

Adapting to rapid decarbonisation of the electricity grid

Rapid changes in the energy and sustainable building design landscape often affect buildings that are already under construction – designers, developers and contractors need to adapt and to take decisions that can affect a project on multiple levels.

Originally designed in 2015, The Gaumont included a gasfired Combined Heat and Power unit (CHP). Since then, the carbon intensity of grid electricity has almost halved, making electrically led solutions more favourable than gas. Given these developments, the design and contractor teams weighed the benefits and costs of changing the gas-led approach with an electrical one. The proposed solution replaced the CHP with a Water Source Heat Pump (WSHP) in combination with a smaller Air Source Heat Pump (ASHP). This decision had to be made during construction, and the impact on project programme and cost were weighed against the anticipated carbon emission projections. Analysis showed that impact on the construction programme would not be major, whilst installation costs were expected to increase. Carbon savings from the electrically led solution would be significantly higher from day one of the building operation and continue to decline, taking advantage of the continued decarbonisation of the electricity grid. The change was implemented and has future-proofed the building’s operation.

CGI of the rooftop restaurant at The Gaumont

National Symphony Orchestra of India perform at Cadogan Hall

CASE STUDY

Sloane Street transformation

Development Emissions: Embodied Carbon Considerations

A significant public realm project of this nature uses large quantities of materials such as asphalt and concrete. An assessment was carried out during the early project stages that investigated the impact of replacing conventional asphalt and concrete materials with alternatives that have lower embodied carbon, such as low temperature asphalt (manufactured at lower temperatures, therefore using less energy) which achieved a reduction of around 45 tonnes of CO2. Specifying higher recycled content in the cement of the concrete used achieved similar levels of reduction. A 13% reduction in embodied carbon emissions has been achieved by investigating and implementing alternative material uses for this public-realm project. The resulting embodied carbon intensity of the project was around 27.5kgCO2/m2, in line with best practice figures assessed and reported by the UKGBC.

CASE STUDY

30-33 Sloane Street

Development Emissions: Sustainable Design and Embodied Carbon

The development at 30-33 Sloane Street will deliver office and retail space of the highest specification, adhering to exemplary standards of sustainable design and construction. The office spaces are targeting a BREEAM Outstanding rating, with retail aiming for a minimum of Excellent. A NABERS UK7 Design for Performance energy rating will also target five Stars.

Relevant to embodied carbon, a full building Life Cycle Analysis (LCA) was carried out to assess the performance of the proposals, both at early design stages and at Stage 4. Solutions currently being considered include concrete with a minimum of 50% recycled content, timber-framed windows, R32 refrigerant and recycled content in the steel reinforcement rebar. The resulting performance is estimated at a range between 590-520 kgCO2/m2, aligning with current best practice performance8. The existing historic façade will be retained, driven by heritage considerations and a saving of approximately 28 tonnes of CO2 in embodied carbon, compared to an equivalent new façade.

Operational Waste

The Estate continues to deliver on its promise to send zero operational waste to landfill. Recycling rates are also being boosted and have reached 54% (47% in 2022). This includes food waste, which is treated in a PAS 110-certified anaerobic digestion facility, with any remaining general waste sent to an Energy from Waste facility.

One of the recommendations from a survey of local businesses (see ‘Air Quality’ for further information) was the consolidation of services to reduce the number of service trips. To this end, we have continued to bolster the number of commercial occupiers using waste consolidation points on the Estate. Specifically, we continue to expand the range of associated waste stream offerings and support at Pavilion

Road, resulting in an immediate increase in recycling rate from 47% to 51%, with clear further opportunities to improve operational efficiencies at the service yard and appropriate separation of waste. Separation of food waste from general waste remains a challenge, and through reviewing signage, bin set-up and our tenant engagement approach we continue to see lower contamination rates.

The Sloane Street waste consolidation point continued to operate during 2023. We added further occupiers to these rounds, with the e-cargo bike now supporting bag deliveries and collections for over 80 Cadogan occupiers, reducing emissions by 36% per collection when compared with an average HGV.

Construction Waste

The construction industry has made considerable progress in waste management, especially following the introduction of Building Sustainability Certification Schemes, such as BREEAM9. These certification schemes have placed emphasis on the environmental impact of construction, and projects and contractor teams that are able to document and demonstrate controlled reductions in this area are awarded credits that result in the project being awarded a higher BREEAM rating – a testament to the building’s environmental credentials, not only in design but also throughout the construction process. During 2023, four Cadogan development projects were at various stages of a BREEAM Assessment. Data collected for these projects and our construction and fit-out projects across the Estate shows that the majority (94%) of materials were recycled and 4% were reused, mostly offsite.

Zero non-hazardous waste to landfill and 90% recycling or reuse by 2030

CASE STUDY: Sloane Street, reusing materials

Material reuse is the best way to eliminate construction waste, but generally more challenging to implement at scale, due to limitations with timing and material quality. This year we successfully reused block paving removed as part of the Sloane Street transformation works. Approximately 1,200m2 of paving stones removed to facilitate the excavation works were salvaged for reuse in Sloane Square, while some of the paving has been used elsewhere in the borough for maintenance works.

Air Quality TARGET

In order to improve air quality monitoring and contribute to greater understanding of air quality patterns, causes and improvements in London, we sponsor two air quality monitoring stations located on Sloane Street and Sloane Square as part of the BreatheLondon network.

BreatheLondon is run by the Environmental Research Group at Imperial College, whose vision is to combine air pollution science, toxicology and epidemiology to determine the impacts of pollution on health. Data collected by this sensor network monitors PM2.5 particulate matter and Nitrogen Oxide levels; this data is publicly available and can be accessed by communities wanting to advocate for healthier local environments.

Our goal is to help to create a robust dataset of air quality metrics in Chelsea, that can be used to monitor and report on progress of initiatives targeted at improving local air quality.

Freight and logistics survey

In early 2023, we completed a comprehensive survey of 250 of Cadogan and King’s Road Partnership (BID) businesses to gather a detailed understanding of freight and logistics trips in the local area and to highlight key opportunities for reducing vehicle movements and emissions. The survey’s aim was to gather data on the type and number of freight and logistics trips and the issues businesses face in this area.

Key insights included:

• Businesses generally receive daily delivery/service visits - approximately 22,600 monthly drops/pickups

• Most deliveries are either stock or food and drink and almost all inbound deliveries (96%) are completed by a van, car or HGV

• Notably, fashion retailers and restaurants received the most inbound deliveries of all the business types

The data analysis was then consolidated into a series of recommendations and initiatives that could result in reduced local congestion and associated air pollution. These included further consolidation of waste collections, use of cargo bikes, the development of a ‘preferred supplier scheme’, a consolidation hub for deliveries of non-perishable goods, lockers for deliveries of small parcels, as well as a supplier engagement and communication plan. These are some of the initiatives that are currently being progressed and evaluated in partnership with the local Business Improvement Districts to assess the value and applicability of implementation and the impact on local air quality.

Supplier consolidation, zero-emission transport and EV charging infrastructure by 2030

Right Sloane Street, from Knightsbridge to Sloane Square

Reducing water usage remains one of the most challenging Chelsea 2030 targets, as the vast majority is consumed by our occupiers and therefore outside our direct control.

However, as a scarce resource under growing pressure from climate change, addressing water usage to achieve reductions is becoming increasingly crucial.

Total water consumption recorded in 2023 was 343,949m3 and 25% below the baseline10. 2023 was a particularly wet year, meaning that less water was used for watering our green spaces and this factor could account for a portion of the observed decrease. We have also observed a large reduction in construction water use with the completion of The Gaumont.

Cadogan has an ongoing dialogue with its key suppliers and contractors to encourage the use of more waterefficient equipment on site. In addition, we are still piloting water audits, delivered free of charge to our occupiers.

Finally, we have carried out feasibility work and plans for a large rainwater harvesting tank to collect water from the roof of our gardening complex to support irrigation, which will be installed in 2024.

10

The fountains at Duke of York Square, especially popular with our younger visitors, use recirculated water to ensure that water consumption is minimised. The water fired through pavement jets is engineered to fall back to a concealed underground chamber beneath each fountain, before gravity pulls it back to holding tanks in each plantroom ready to be recirculated. A sand filtration set and chemical monitoring and dosing system ensures that the water quality is maintained.

Duke of York Square fountains

Right Fountains at Duke of York Square

Green Infrastructure

The Estate is situated in one of the most heavily urbanised areas of London. Faced with increasing urbanisation putting pressure on local natural ecosystems, Cadogan is seeking to redress this balance through considered and informed planting and green infrastructure management, alongside educational outreach.

This has led to a 13.1% increase in our urban greening factor from the baseline. We continue to review and implement recommendations from biodiversity surveys conducted in 2022 to assess our baseline and to make recommendations for appropriate ecological advancements.

Various projects have been undertaken in our gardens and squares in this regard, including extensive groundcover planting spanning over 100m2, as well as some experimentation with wildflower meadows. In addition, four further ponds have been installed in Cadogan Place North and South gardens. One pond which has proved to be particularly successful has consequently been expanded to cover 25m2. These ponds have brought further insects and wildlife to the garden, including an uplift in the local dragonfly, frog and toad populations.

CASE STUDY

The Gaumont, sedum roofs and extensive green roofs

The Gaumont redevelopment project incorporates 490m2 of intensive rooftop greening and 1,100m2 of extensive sedum roofs. The intensive green roof will feature a planting mix representing a variety of species. Not only will these green roofs contribute to local biodiversity, but they will also assist with rainwater retention and infiltration.

Increase urban greening factor by 25% by 2030

Right Temperature difference recorded during a heatwave, after planting the Cadogan x SUGi x Louis Vuitton pocket forest on Pont Street

Sloane

Street public realm

In early 2023, construction began on an ambitious project aiming to create a stunning green boulevard spanning from Knightsbridge to Sloane Square. Cadogan’s £46 million investment includes significant pavement widening, along with a magnificent planting scheme, elegant street furniture and enhanced lighting while subtly ‘designing in’ additional security measures, to create a more welcoming environment for pedestrians.

The planting scheme, overseen by Chelsea Flower Show multiple medal winner, Andy Sturgeon, has started to take shape, with a diverse and climate-resilient mix of flowers, shrubs and over 100 additional trees. Many species have been selected with low water demand, while the diverse selection of plants will provide year-round food and shelter for a wide range of insects and birds. A large proportion of the selected plant species have been chosen for their high supply of nectar and pollen sources for bees. Once the project is complete, we intend to introduce a robust maintenance regime to Sloane Street that will ensure the successful establishment of a mature, durable and attractive landscape for residents, visitors and wildlife.

CASE STUDY Bees and biodiversity

Our honeybee population and accompanying green infrastructure was boosted in 2023 with the installation of two further hives in Cadogan Place North, in collaboration with a well known Sloane Street retailer. Aligned with biodiversity survey recommendations, Cadogan has reviewed and is increasing the quantity of pollinating plants in the area. This includes a thyme lawn and planting of Echium russicum in Cadogan Place North garden to suit the warm microclimate, and many other native and near native species are being grown for trials on the Estate over the next couple of years.

Below

Beehives in Cadogan Place North gardens

Right ‘Greening’ Sloane Street

Community Investment And Social Impact

Enhance community cohesion between local stakeholders

Despite being a highly affluent borough, nearly 1 in 4 (23%)11 of Kensington and Chelsea neighbourhoods are among the poorest in England and Wales. We share The Kensington + Chelsea Foundation’s vision of a borough where everyone has the opportunity to live happy, healthy, fulfilled lives and support their mission to tackle the most vital issues in the community around education, health and employment.

The Foundation remains our key partner in much of this philanthropic work. Cadogan continues to be their Principal Supporter, covering the majority of core costs to ensure that they reach grassroots initiatives across the Borough. In 20222023, 143 local projects were supported, reaching 21,029 disadvantaged and vulnerable residents.

In addition to our direct financial support, we have created an Endowment Fund to encourage all residential and commercial occupiers joining the Estate to donate and support the neighbourhood of which they are becoming part. The Fund seeks to address local socio-economic disparities, with a particular focus on educational attainment and employment skills, health inequalities and social isolation. This is under further consideration for 2024, to ensure that we maximise this opportunity to create a lasting positive legacy that supports our local community.

Much of our strategy for delivering social value is framed around creating inclusive and accessible spaces while supporting Chelsea’s long pedigree as a place of creative culture, which together encourage meaningful connections with the area and each other.

Community Housing

Cadogan has a long history of social housing provision, and we commit over £1.1 million each year to subsidise affordable, community and key worker housing – ensuring that many people, including teachers, nurses and police officers, can afford to live at the heart of the community to which they make a valuable contribution.

“It makes a huge difference to live a short distance from the hospital when I come back exhausted between shifts. I received a very warm welcome from Cadogan and love living in Chelsea, with everything I need on the doorstep and beautiful walks along the river to clear my head!” Nurse, Chelsea and Westminster Hospital

“Living

here means I truly feel part of the local community and I can feel its ‘energy’ - my work is a huge part of my life and it’s important for me to be here in the centre of things. Chelsea is beautiful, thriving and vibrant, I love the neighbourhood and all it has to offer.”

Accessibility and Public Realm

We are committed to high standards of accessibility and inclusivity. In partnership with AccessAble, one of the UK’s leading providers in accessibility information, we offer up-todate, detailed access guides to each of our destinations, making crucial information available to visitors so that they can get the most out of their visit to Chelsea.

We believe that the space between buildings is as important as the property itself and are continually investing in extensive public realm improvements. Following the recent completion of Pavilion Road as an artisan ‘village’ and community hub, we are underway with the transformation of Sloane Street as a greener ‘boulevard’ from Knightsbridge to Sloane Square, as well as the creation of Chelsea Manor Street as a new destination focused on delivering creative uses for the local area.

The Cadogan Charity

The Cadogan Charity is managed by the Cadogan family, separately from business operations, and has continued to grant donations to both local and national charities – over £13m over the last five years – to causes including London’s Air Ambulance service, The Children’s Trust, Wellbeing of Women, Glassdoor, Prince’s Trust and Alzheimer’s UK, in addition to national cultural icons such as the Natural History Museum and Royal Hospital. In addition, the family also supports and chairs the London Playing Fields Foundation, which transforms lives through sport and physical activity by

protecting and promoting London’s playing fields, running social inclusion projects and directly managing several grounds across the capital. As a shareholder of the business, 4.15% of Cadogan profits go to the Cadogan Charity, totalling over £1.5 million in 2023.

Community Events programme

Our programme of over 60 complimentary events for the community this year were enjoyed by many thousands of people and included a Coronation Street Party on the King’s Road, the Artisan Chelsea series as part of London Craft Week, Chelsea in Bloom floral festival, London Fashion Week celebrations and weekly food market and running club. The annual Chelsea Awards returned, hosted at The Royal Hospital, to celebrate and reward those who contribute so greatly to Chelsea’s unique character, with hundreds gathering to see awards made for categories including ‘Community Hero’ and ‘Cultural Champion’.

Cadogan once more hosted the ‘Big Sleep Out’ in 2023 to support local charity Glassdoor, providing targeted and long-term transitional help for the homeless. This one night in October alone resulted in nearly 120 supporters gathering and raising over £100,000 for the charity.

CASE STUDY

Chelsea in Bloom

Our flagship event extends the Chelsea Flower Show out into the local community. 2023 saw the theme ‘Flowers on Film’ celebrate the neighbourhood’s creative and botanical heritage with enormous floral installations capturing the likes of Mary Poppins, Jurassic Park and The Lion King and 94 businesses competing with showstopping displays to win the coveted awards. It drove the highest footfall ever recorded to the area, sales akin to the Christmas trading peak, a press reach of over four billion and 30 tonnes of recycled petals sold by The Confetti Club to benefit cancer charities.

Right Chelsea in Bloom, ‘Flowers on Film’

CASE STUDY

Socially positive retail, Pavilion Road and Chelsea Manor Street

In 2016, in response to community feedback after thorough local consultation (and despite planning policy which favoured residential accommodation), we created a ‘village high street’ on Pavilion Road. Previously comprising service access, garages and a busy vehicle cut-through parallel to Sloane Street, the area had poor air quality and contributed little to the local community. Our aim was to create a neighbourhood destination which enhances Chelsea’s village feel and provides independent, artisan food shops, becoming a part of daily life and creating a vibrant and bustling hub. Over the following years, we worked with the council and community to deliver this, with a butcher, cheesemonger, baker and fishmonger alongside other food stores, cafes and restaurants generating over 100 new jobs, it was recently voted one of the top three streets in Britain in a competition organised by ‘Create Streets’ and this year won ‘Best Lifestyle Street’ in the London Lifestyle Awards. Cadogan conservatively spends c. £0.8m per annum on maintaining this approach through rent foregone, which translates to over £18m of total value if the street were let to high end retail at usual rates. A new destination is currently in planning at Chelsea Manor Street, focusing on a ‘creative cluster’ to strengthen the King’s Road as a place for creators, innovators, musicians and artists, which will follow the same strategy of subsidised accommodation to nurture creatives back to the King’s Road.

Chelsea Art Society Summer Exhibition

Community connections

Cadogan has a great capacity to bring people together through our events programme and broader connections. These have been put to good use with a new ‘Knit & Natter’ initiative in partnership with Peter Jones, inviting local people to come together and knit for good causes. Likewise, Cadogan supports the ‘Songs & Soup’ community choir at Holy Trinity Church, providing unsold bread and pastries from Bread Ahead, which would otherwise be thrown away.

SMART London (a local charity supporting those with mental health challenges) uses our Greenhouse to grow fruit and vegetables for use in their community café. All of these initiatives focus on bringing people together to tackle loneliness and enrich residents’ sense of belonging.

Founded in 1910, the Chelsea Art Society is the oldest of many art groups that flourished here around the beginning of the 20th century. Rossetti and Turner began the trend to settle in Chelsea in the mid-19th century, followed by Whistler, Sickert, Augustus John and John Singer Sargent. Amongst the group was Sir James Dromgole Linton, a frequent exhibitor at the Royal Academy. He chose Chelsea as the place to found an art group to exhibit annually. Their annual Summer Exhibition, open to both established and amateur artists, continues to be held at Chelsea Old Town Hall. Cadogan supports the exhibition each year and in 2023 hosted a private view and auction, raising over £18,500 for the Kensington + Chelsea Foundation.

CASE STUDY

Maximise local employment and skills development

The Royal Borough of Kensington and Chelsea contains one of the most diverse communities in the country, with the second largest wealth gap in the UK and a quarter of working residents earning less than the London Living Wage.

Five and a half thousand local people are currently unemployed in the Borough, yet wanting to work12 and this has driven our decision to invest in supporting local recruitment. In 2020, we created the role of ‘Employment Opportunities Coordinator (EOC)’ – jointly funded in partnership with RBKC – a position dedicated to working proactively with local businesses to support their recruitment requirements. The aim is to create opportunities for local residents (including marginalised communities, young people and the long-term unemployed) by understanding the needs of individuals and employers and finding creative ways to bring them together.

This includes sourcing, screening and preparing candidates for local available roles, supporting businesses to improve their recruitment processes to be more inclusive and meet best practice, organising and delivering recruitment activities to connect residents with roles, and facilitating training programmes to upskill residents to meet job demands.

In 2023, the programme engaged over 300 residents, supporting their career aspirations, CV development and interview skills and led to 37 people, many of them long-term unemployed, successfully placed into work – bringing £757,79713 to the economy. In total, 97 candidates were submitted for roles after initial screening and interview

preparation (working with 26 partners, including Job Centres and specialist charities). Over 200 employers have also been supported through helping to improve their recruitment criteria and processes.

“The EOC has been able to translate our needs into a sourcing strategy which in turn yielded us a new pool of candidates. In a short period of time, the EOC found the right candidate for one of our vacancies. His prompt attention, consistent follow up and the quality of candidates, gave The Passage the confidence much needed in a difficult job market.”

Head of People Services, The Passage

In addition, working with the Kensington and Chelsea Foundation, Cadogan continues to sponsor a dedicated case worker through the St Giles Trust ‘SOS Programme’. This charity uses expertise and real-life past experiences to empower and engage people held back by poverty, exploited, abused, dealing with addiction or mental health problems, or caught up in crime. Over the past year, this case worker has provided intensive mentoring and support to young people to help them move away from criminal exploitation, serious youth violence and criminal activity. He has also supported young people to address the wider issues they may be facing and help them find alternative pathways. In 2023, he has worked with 51 children and young people directing them towards positive pathways and away from criminal activity and exploitation.

“ The EOC was a pleasure to work with. He contacted us at the right time when we were looking for a Sales Assistant. Through a simple process, he sent me a few CVs to look at and interview, he had already reviewed our situation and only sent suitable candidates that he knew could work. Very pleased and almost a year on we still have a lovely new person working with us.

Thank you so much again.”

Sloane Street retailer

The Earl Cadogan visits St Giles Trust SOS Project

Cadogan is committed to paying at least the London Living Wage and supporting local upskilling in all businesses (including our leisure and hospitality operators) – we have also set this requirement for all suppliers and contractors. Development contractors on our major sites have themselves appointed four apprentices, employed four local residents, upskilled ten people, held six site visits for local schools and held workshops in two schools in this year alone.

We support greater diversity in the property industry through participating in the Pathways to Property programme run by the Reading Real Estate Foundation, offering work experience and guidance to young people who might not otherwise have access to such opportunities. Cadogan has also created a bursary through the Worshipful Company of Chartered Surveyors, funding a student from an underprivileged background through their Real Estate degree and providing support and guidance along the way, including work experience with the team in the Cadogan office.

The Estate took on an Apprentice Gardener in September 2022 on a two-year fixed term – supporting them through their studies and enabling them to learn a new trade. This initiative aims to keep the tradition of urban estate horticulture thriving and provide a route to training that would be otherwise unavailable.

“ l would like to thank you for all the support you have given me in getting back to work. I can now start to put my life back together and l am truly grateful.”

“The economic crisis is exacerbating the vulnerabilities of St Giles’ clients, as criminal gangs seek to exploit the increased pressure that young people feel to contribute to their

Being

household income.

able to support directly with food and emergency funding relieves clients from that pressure and enables them to turn towards positive activities.”

St Giles Trust

CASE STUDY

Sector-based work academies

In addition to the Employment Coordinator role, Cadogan works with RBKC to develop and deliver sector-based work academies to tackle systemic employment challenges in the borough – offering targeted training to a specific group of candidates, upskilling them for work in a sector needing support.

In 2023, this included specialist hospitality training school Saira, enlisting six local hotels to support, participate in and interview the 25 school graduates. Responding to the recruitment challenges faced by luxury retail, a luxury retail customer service training course is now being developed for 2025. Following the success of the first school, the second will be entirely funded by RBKC but will have participation from Cadogan’s luxury occupiers.

“We liked the idea of bringing people into our properties who did not have a traditional hospitality background and who would not otherwise have had this opportunity. Saira Hospitality has been an inclusive way of bringing people into our sector from outside the industry.”

RBKC resident, formerly unemployed and now Receptionist at the Fraser Suite, Kensington

Sloane Club

Make a measurable improvement to community wellbeing

With particular emphasis on the health and wellbeing issues affecting the local population, Cadogan focuses on creating healthy spaces and supporting community wellbeing.

The connection between the physical environment and health is well established. Air quality and access to green spaces is key to supporting a resilient and thriving community – both of which are addressed in our targets. Our development standards include the recommendations of FitWEL and WELL healthy building standards14, enabling us to target full certification in conjunction with occupiers.

In 2023, Cadogan created opportunities for hundreds of people to take part in activities benefiting their health, including school and community use of the Duke of York Square running track for sports days, running clubs, yoga and walking tours. We also continued to support SMART London’s provision of mental health support through gardening –offering use of our greenhouses to grow seedlings to sell and food to use in their café. SMART London gives local, vulnerable people the opportunity to develop skills, build connections and enjoy light exercise in a nurturing environment.

Through the Cadogan Charity (a shareholder of the business and run by the Cadogan family), we support the London Playing Fields Foundation – chaired by The Hon. William Cadogan – which transforms lives through sport and physical activity by protecting and promoting London’s playing fields, running social inclusion projects and directly managing several grounds across the capital.

Cadogan Hall

Cadogan transformed a disused place of worship into a world-class music venue in 2004, to create a community gathering place, safeguard a characterful building and

celebrate Chelsea’s artistic and musical heritage. We continue to subsidise the maintenance and running of what is now one of London’s leading concert venues and home to the Royal Philharmonic Orchestra, as well as a lively programme of theatre and debate.

Cadogan Hall presented over 300 live performances in 2023, attracting over 170,000 attendees. An array of orchestras, artists and ensembles from all corners of the globe were welcomed to Chelsea, highlighting a commitment to providing a diverse and inclusive space for performers and patrons alike and celebrating the power of live performance. While reinforcing London’s status as a thriving global centre for arts and culture, the Hall remains committed to supporting its community. This includes an Access Scheme designed for individuals with physical, sensory or cognitive disabilities, with Members benefitting from concessionary ticket prices and complimentary companion seats. In 2023, the scheme enabled 3,500 members to access events staged at Cadogan Hall. Free lunchtime concerts were hosted across the summer and autumn months, with 2,000 people enjoying 17 free concerts, and complimentary tickets are regularly offered through partners such as Tickets for Good (tickets for the NHS, charity sector workers and cost of living payment recipients) and Tickets for Troops (those who serve in the Armed Forces).

CASE STUDY

Safe green spaces for all

In 2023, in partnership with Sport London and Bikeworks, Cadogan invited a group of mothers and daughters from the World’s End Estate to learn to cycle on the Duke of York Square running track. Families took part in the eight-week programme which started from basics and finished with confident cycling on local roads and providing the families with bicycles and helmets. This pilot was very positively received, with plans to extend it further in 2024.

“ The families are loving the cycle training – and its clear it’s having a transformational impact. Teaching people to cycle is not just a new skill, but opens up so many opportunities for travel, staying active and healthy, and enjoyment.” Sport London

CASE STUDY

School art competition

The Chelsea Young Artists Competition was designed by Cadogan to encourage children to connect with nature and the surprising amount of biodiversity to be found in our urban environment – strengthening the positive link between time spent in nature and improved mental health.

A ‘Neighbourhood Nature’ theme encouraged children to take a closer look at the flora and fauna found in the gardens, parks and green spaces of Chelsea and create artwork inspired by their experience. The spectacular results from nearly 400 children were grouped by age into five categories, with entries assessed by a panel of expert judges from Cadogan, Saatchi, Peter Jones and environmental charity SUGi. The winning artworks have been on display in the top floor restaurant of Peter Jones and will be displayed at the Saatchi Gallery in 2024.

“The

art competition was an excellent way of linking the children in

[with

rewilding sites] emotionally, and appreciating nature in our neighbourhood area. It was also a real stimulus to our art programme.”

Mrs Kathryn Gutteridge, Art Teacher at Hill House International Junior School

Our Community Engagement and Customer Commitment

We are committed to delivering an outstanding experience for our customers who live and work within the Estate, to foster long lasting relationships and contribute to a strong sense of community across the neighbourhood.

We listen carefully to customer feedback and respond accordingly where we can. We receive real time feedback through our customer research partner RealService15 which provides the insight to improve continually the customer experience and helps to shape our business strategy.

Communication and Engagement

We seek to maintain a regular dialogue with our customers, neighbours and the wider community throughout the year. This helps us to understand their priorities and work in partnership, as well as keeping them informed.

Starting with the ‘Welcome Pack’ received by all occupiers on arrival to the Estate, we communicate frequently. This includes everything from regular newsletters and magazines, to seminars for our retail and hospitality customers to update them on neighbourhood news (from footfall and sales trends to new openings, public realm investment and lobbying campaigns) and work alongside them on a destination marketing and events programmes. In 2023, we hosted seven breakfast briefings with over 820 attendees, providing an opportunity to network and share these neighbourhood updates.

Cadogan launched the King’s Road Privilege Card scheme in 2022, which has grown significantly to over 9,000 members and 100 participating businesses. It aims to encourage localism – supporting businesses while rewarding residents and local workers for doing so.

All of our residential and commercial customers receive complimentary access to our premium ‘Cadogan Concierge’ service, which assists with day-to-day requests as well as bringing our community closer together – retail customers benefit from reaching an exclusive residential audience, while our residents enjoy invitations and exclusive offers from the array of shops, restaurants and cultural attractions on their doorstep.

that we keep audiences across the Estate informed. Magazines such as Sloane Square and Cadogan VIP, destination websites, newsletters and social feeds from the King’s Road, Sloane Street, Duke of York Square and Pavilion Road, work independently to reach a combined audience of over 320,000, both locally and beyond, keeping followers up to date and creating continual reasons to enjoy the local area, or visit Chelsea.

This extensive information helps customers become familiar with the area and their new home or business space, as well as informing them of the services we provide.

The team ‘on the ground’ includes Area Supervisors who live locally and are key to our customer facing service provision. They are usually ‘first responders’, central to our 24/7 emergency response capability and carry out regular

inspections of all buildings. The feedback on this team consistently highlights how approachable, friendly, helpful and knowledgeable they are.

Cadogan initiated and led the creation of two new neighbourhood ‘Business Improvement Districts’ (BIDs) in 2022 – the King’s Road and Knightsbridge Partnerships – to secure significant new private sector investment into the district over five years, focusing on pressing issues such as security, environmental upgrades and promoting the area.

Sloane Square magazine, produced by Cadogan for the community

Our team regularly volunteer for local causes and we have strong relationships with local schools. Primary schools use the Duke of York Square running track and have been invited to take part in competitions – such as the recent Chelsea Young Artists competition – generating nature-inspired art entries from nearly 400 students from Hill House, Holy Trinity Christ Church, St Joseph’s, Garden House, Oratory and Sussex House. We have supported our two local state secondaries (St Thomas More and Chelsea Academy) through volunteering on career sessions, mock interviews, CV workshops, talks and work experience visits across the Estate – expanding their connection with Chelsea and the property industry and directing them to the Reading Real Estate Foundation.

Our aim is to be exemplary in the way in which we consult and engage locally, because it is crucial to understand local views and keep the community informed. Through this approach, we build trust and are able to adapt and respond to the changing needs of society, customers and markets. This helps to ensure the area remains relevant and desirable to both residents and visitors, now and for the future.

Our Suppliers

“One member of staff said the three workshops [delivered by Cadogan] were the best he had experienced since working at our school, and a school governor was very impressed with the impact you had on the students.”

- Assistant Head Teacher, St Thomas More Consultation

We are constantly investing in upgrading the Estate through maintenance, restoration, refurbishment and redevelopment activities – allowing us to enhance the wider environment and deliver homes and business space that meet the needs of our customers.

We work with a wide range of external advisors, contractors, suppliers and partners and particularly value long-term relationships with people and organisations who share our values and desire to deliver excellent results. They are expected to operate ethically and responsibly, ensure high standards of health and safety and support a positive relationship with our customers and the communities within which we operate. We pride ourselves on being a good client that consistently treats our suppliers fairly and transparently, while expecting commercially competitive outcomes.

We host events and webinars for groups such as construction contractors, through which we can share knowledge and best practice on topics including sustainability, health and safety and community engagement.

Our suppliers are selected carefully because we see them as an extension of our own team, working in genuine collaboration, motivated by the same values and highest of standards.

STATEMENT OF COMPLIANCE WITH SECTION 172 OF COMPANIES ACT 2006

Throughout 2023, the Directors have performed their duty to promote the success of the Group under section 172 of the Companies Act 2006, taking consideration of:

• The likely long-term consequences of decisions

• The interests of stakeholders, including, amongst others, employees, customers, suppliers, local authorities and local communities, by engaging with them to understand the issues to which they must have regard

• The impact of our actions on our local communities and the environment

• The company’s purpose and values including maintaining a reputation for high standards of business conduct

• The need to act fairly between members of the Group

The Cadogan Group has an association of over 300 years with Chelsea, where it has been and remains the largest landowner. The Group has always taken a long-term view, promoted by its members who see it as their duty to hand over the business to the next generation in a better condition than they inherited it, and strongly supported by the Board. The Group’s success is judged by its members not only on measures of commercial returns but also its reputation, based on the way it deals with and treats its stakeholders and local communities.

Our core objectives, set out in page 4 of this report, encapsulate the above.

More information on the Group, its purpose, and relationships with stakeholders is provided in the Strategic Report pages 9 to 33, Our Community pages 34 to 57 and our website:

www.cadogan.co.uk

Methodology & Governance – Carbon Reporting

Methodology

This GRI-compliant report follows the GHG Protocol, and UK Green Building Council and Better Buildings Partnership Climate Change Commitment frameworks for carbon reporting.

All environmental targets reflect the operational boundary of the Cadogan Estate, including all Cadogan Group Limited owned buildings and investments. In 2023, 15 new properties were acquired and added, and 14 were sold, therefore removed from the reporting scope. Historic data has been restated where new, more accurate data has been procured. Across Scope 1 and Scope 2, a 5% threshold was applied where any assets whose data changed above 5% or below -5% was investigated and confirmed to be due to new data. As most of the historic data was following the invoice data collection methodology, the data changes were confirmed to be due to more accurate invoicing being provided or erroneous data being removed.

Scope 1 emissions are direct emissions from activities controlled by us that release emissions into the atmosphere, and scope 2 emissions are indirect emissions associated with our consumption of purchased energy. Cadogan’s scope 1 comprises emissions from natural gas, diesel, fuel oil and refrigerant gases, and scope 2 emissions are from electricity purchased for common areas and shared services. All material sources of scope 1 and 2 emissions are reported, with only 0.7% of electricity and 0.2% of gas consumption estimated by the Cadogan team due to missing utilities supplier data. Fuel oil is reported where information is available. Energy is reported in kWh and converted to tCO2e using location-based DEFRA emissions factors, with no normalisation applied. Intensity metrics refer to the floor area served by the energy measured,

taking note of where electricity might only supply common parts but gas supplies whole buildings.

Scope 3 emissions are those that are a consequence of our business activities, but which occur at sources we do not own or control. The GHG Protocol identifies 15 categories of which eight are relevant to us. The table overleaf describes how each scope 3 category is treated in our reporting. In 2023 we made a significant effort to increase the percentage of actual data used in scope 3 reporting, meaning that 47% of scope 3 emissions in 2023 are based on actual data rather than estimated. This includes actual data covering 45% of occupier consumption, as well as 57% of supplier emissions.

The same methodology was followed as the previous year’s reporting, with a few minor differences:

• Access to central industry settlement databases, rather than gathering data through utilities supplier invoices, i.e. going directly to the central data repository to avoid supplier data issues caused by rebills, credit notes and delayed billing. This method has improved the accuracy and data coverage for landlord and tenant energy reporting. In addition, it has reduced the amount of extrapolation required to complete Cadogan’s scope 3 footprint.

• For the water procured and utilised by Cadogan, a slight change in calculations was undertaken where, if the sum of submeter data was greater than the main incoming meter, a 0 value was used to avoid negative values ‘removing’ water data.

• Capital Goods emissions are now included under Purchased Goods and Services emissions.

Governance

Our Chief Executive has ultimate responsibility for climaterelated risks and opportunities.

The Board has overall responsibility for oversight of risk and opportunities, undertaking an annual assessment of principal risks facing the business – which includes climate-related risks. Climate-related risks and opportunities are considered in long-term strategy setting, acquisitions and investment decisions.

The Board is formally updated on sustainability and climaterelated performance twice a year, which continued to focus in 2023 on decarbonisation and a detailed plan to manage risks of transitioning to a net zero estate. Progress on sustainability is also reported on a quarterly basis to our Operational Board consisting of the executive leadership. Members of the Board are invited to these meetings and are copied in on the reports produced for the Operational Board.

Ongoing ownership and management of all sustainability and climate-related risks and opportunities is led by the Head of Sustainability, with support from all departments, who reports to the Finance Director. Our commitment to address climate-related risk and generate value for our community is embedded across the business, with all teams owning relevant targets and key performance indicators of Chelsea 2030 reported internally on a quarterly basis.

A dedicated Decarbonisation Working Group provides specific oversight and coordination to estate decarbonisation and the journey to net zero.

We recognise the importance of the Taskforce for ClimateRelated Financial Disclosures (TCFD), with this report including relevant TCFD recommendations as follows:

Governance Strategic Report: page 56

Strategy Strategic Report: pages 13 & 35-46

Risk Strategic Report: pages 32-33

Metrics & Targets Strategic Report: pages 36-38

Independent Assurance Statement

We have obtained external limited assurance on 2023’s scopes 1 and 2 carbon emissions (metrics identified with * in the tables above), in accordance with ISAE 3410 – please see BDO’s Assurance Statement here.

CATEGORY INCLUDED? EXPLANATION

Purchased goods & servicesDevelopments

Purchased goods & services -

Other

Yes This category includes emissions from developments: site energy (including FERA), waste generation, and embodied carbon of materials used in construction. We work with a consultant to calculate the total embodied carbon emissions for each medium and large development, with these emissions reported in the year of project completion. Where embodied carbon data is not available, emissions are calculated by multiplying procurement spend by EEIO emission factors for each relevant economic sector of spend. Site energy and waste data are reported per project using data provided by relevant contractors.

Yes

Landlord water Yes

Supplier-reported emissions (pro-rata for turnover derived from Cadogan activities) are calculated from energy reporting and DEFRA emissions factors. Where primary supplier data is not present, emissions are calculated by multiplying procurement spend by EEIO emission factors for each relevant economic sector of spend.

Emissions from landlord-purchased water, including water subsequently consumed by occupiers. This excludes water used in construction activities and water procured directly by occupiers, but includes properties managed by a third party who buy water on Cadogan’s behalf. Actual consumption in cubic meters is converted into emissions using location-based DEFRA emissions factors.

Capital goods No Included under Purchased goods & services - Other

Fuel and energy related activities

Upstream transportation & distribution

Yes This category includes emissions generated from the transport of materials delivered to, and waste removed from, our major construction sites. Data is not extrapolated to medium and minor sites. The calculation multiplies primary transport data by the relevant DEFRA emissions factor, and includes FERA. More

CATEGORY INCLUDED? EXPLANATION

Waste Yes

Yes Transmission and distribution (T&D) and well-to-tank (WTT) losses associated with landlord-procured electricity and natural gas. This excludes FERA associated with Scope 3 energy (development energy, occupier energy, business travel, commuting, and other transport), as this is included with the respective scope 3 energy emissions figures for those categories.

Business travel Yes

Employee commuting Yes

Upstream leased assets

Downstream transportation & distribution

Processing of sold products

Use of sold products

End-of-life treatment of sold products

Downstream leased assets

No

Emissions associated with waste produced by the landlord, and occupier where reported. Where we don’t have tenant reported waste data, we have not extrapolated across the portfolio. Emissions exclude development and refurbishment waste, which is included in Scope 3: Purchased Goods & Services – Developments. Emissions are calculated by multiplying weight of waste by the relevant DEFRA emission factor for different treatment methods.

Calculated by multiplying distance and type of travel by relevant DEFRA emission factor, and includes relevant FERA.

Emissions associated with the commute of Cadogan employees and homeworking, as reported with no extrapolation. Calculated by multiplying distance and type of travel, and number of homeworking days, by relevant DEFRA emission factor.

N/A: Cadogan does not lease assets, so there are no emissions to report in this category.

No N/A: Cadogan does not manufacture products, so there are no emissions to report in this category.

No N/A: Cadogan does not manufacture products, so there are no emissions to report in this category.

No N/A: Cadogan does not manufacture products, so there are no emissions to report in this category.

No N/A: Cadogan does not manufacture products, so there are no emissions to report in this category.

Yes

Emissions associated with occupier-purchased energy (including FERA), and refrigerants where reported. Occupier water emissions are excluded, and occupier waste is included in Scope 3: Waste. Where actual energy consumption data is available, emissions are calculated by multiplying metered consumption by relevant DEFRA emission factors. Where no actual data received from occupiers, emissions are calculated by multiplying the Net Lettable Area by the most relevant Building Energy Efficiency Survey (BEES) benchmark.

Governance & Financial Statements

The Board

Directors The Earl Cadogan DL*

The Hon. James Bruce*

Hugh Seaborn CVO

Sanjay Patel

Charles Ellingworth*

John Gordon*

Harry Morley*

Dame Alison Nimmo DBE*

Francis Salway*

*Non-executive (Chairman) (Deputy Chairman) (Chief Executive) (Finance Director)

Secretary

Directors’ Report

The directors present their report and the financial statements for the year ended 31 December 2023.

Principal Activity and Review of the Business

The principal activity of the Group during the year continued to be property investment. The Group’s other activities include the operation of a concert hall and hotels. A review of the Group’s business during 2023 and its future prospects is contained in the Strategic Report on pages 9 to 33.

Dividends

Interim dividends of £36,642,000 (2022 – £76,571,000) were declared and paid during the year.

Risk Management

A summary of the principal risks and uncertainties has been included in the Strategic Report on pages 30 to 33.

Directors

Of the directors listed on page 59, all held office for the financial year and up to the date of this report.

The ultimate holding company maintains liability insurance for its directors and officers and for those of its subsidiaries in respect of proceedings brought by third parties, subject to the conditions set out in section 234 of the Companies Act 2006. Such qualifying third party indemnity provision remains in force as at the date of approving the Directors’ Report.

Charitable Contributions

The Group’s direct charitable contributions for the year were

£221,000 (2022 – £425,000). In addition, the Cadogan Charity, a shareholder in the company, makes donations to a variety of local and national charities.

Going Concern

The Group’s business activities, together with the factors likely to affect its future development, its financial position, financial risk management objectives, details of its financial instruments and derivative activities, and its exposures to price, credit, liquidity and cash flow risk are set out in the Strategic Report on pages 9 to 33.

The Group has considerable financial resources derived from an established investment property portfolio in prime central London. The Group has substantial long-term committed financing arrangements and has access to overdraft and revolving credit facilities from its bankers. The overdraft is renewed annually and therefore not committed for the full review period.

The directors have considered the appropriateness of adopting the going concern basis in preparing the financial statements for the year ended 31 December 2023 taking into account recent inflationary pressures on the economy, consumers and our tenants and the possibility of an economic downturn. The assessment is based on the Group’s experience over the last three years and financial forecasts for the periods to 31 December 2025 overlaid with a severe but plausible downside economic downturn scenario.

The budget for 2024 has been prepared prudently. Assumptions regarding rent receipts and lease renewals are consistent with our actual experience during 2023. Development and investment activity is in line with 2023. Property values are assumed to rise by 3% on average in 2024.

The Group has also assessed a severe but plausible downside scenario based on the occurrence of an economic downturn having an impact similar to that of the pandemic in its first year. An economic downturn would reduce sales for our retail, leisure and hospitality tenants, damaging their cash flow and ability to pay rent. Trading would take at least 12 months to recover. The main impacts would be a further fall in property values, a decline in rent collections for at least 12 months,

with a slow recovery thereafter and an increase in impairments and rent concessions.

For 2024 and 2025, we have assumed there would be no new financing activity other than the repayment of a maturing loan of £44m in March 2025 and the receipt of £50m in September 2024, £50m in March 2025 and £50m in September 2025 from the delayed drawdown of private placements undertaken in 2022.

The severe but plausible downside scenario modelled demonstrates that over the period to 31 December 2025 the Group has significant liquidity to fund its ongoing operations and is operating with ample headroom above its debt financing covenants without the need to rely on raising new financing. Asset values would have to fall by 38% from 2023 closing values when the covenant is measured as at 31 December 2024 and by 35% from closing 2023 values over two years as at 31 December 2025 to breach the gearing covenant. To breach the interest cover covenant, operating profit before capital items would have to fall by 66% compared to forecast in 2024 and by 70% compared to the plan for 2025.

Based on these considerations, our experience of the past impact of economic downturns on the business and the directors’ knowledge of Cadogan’s property portfolio and the market in which we operate, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

Directors’ Responsibilities Statement

The directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the company and of the profit or loss of the Group for that period.

In preparing those financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure

that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Disclosure of Information to the Auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow directors and the Group’s auditor, each director has taken all the steps that they are obliged to take as a director in order to make themself aware of any relevant audit information and to establish that the auditor is aware of that information.

Auditor

A resolution concerning the re-appointment of BDO LLP as auditor will be proposed at the forthcoming annual general meeting.

By order of the board

Paul Loutit, Secretary

2 May 2024

Independent Auditor’s Report

Opinion on the Financial Statements

In our opinion:

• The financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2023 and of the Group’s profit for the year then ended;

• The financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Cadogan Group Limited (‘the Parent Company’) and its subsidiaries (‘the Group’) for the year ended 31 December 2023 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Company Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant

to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions Relating to Going Concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group or Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Emphasis of Matter: Property Valuations

We draw attention to note 11, which explains that the valuations of reversionary residential assets are subject to a ‘material valuation uncertainty’ in line with RICS guidance. This is a consequence of Government intervention in that market via the proposals contained in the Leasehold and Freehold Reform Bill 2023.

Other Information

The Directors are responsible for the other information. The other information comprises the information included in the Strategic report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Other Companies Act 2006 Reporting

In our opinion, based on the work undertaken in the course of the audit:

• The information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• The Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• Adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

• The Parent Company financial statements are not in agreement with the accounting records and returns; or

• Certain disclosures of Directors’ remuneration specified by law are not made; or

• We have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for The Audit of The Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of noncompliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Non-compliance with laws and regulations

Based on:

• Our understanding of the Group and the industry in which it operates;

• Discussion with management and those charged with governance;

• Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws and regulations

We considered the significant laws and regulations to be the Companies Act 2006, United Kingdom Accounting Standards, including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland and UK tax legislation.

The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be health and safety legislations.

Our procedures in respect of the above included:

• Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations;

• Review of financial statement disclosures and agreeing to supporting documentation; and

• Enquiry with management and those charged with governance regarding any non-compliance with laws and regulations.

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:

• Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;

• Obtaining an understanding of the Group’s policies and procedures relating to:

- Detecting and responding to the risks of fraud; and

- Internal controls established to mitigate risks related to fraud.

• Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;

• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; and

• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.

Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls, investment property valuations and manual adjustments to revenue.

Our procedures in respect of the above included:

• Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;

• Testing a sample of journal entries throughout the year, which do not meet a defined risk criteria, by agreeing to supporting documentation (to address variability within management override);

• Assessing significant estimates made by management for bias (including inputs to the investment property valuations); and

• Testing a sample of the manual adjustments to revenue to supporting documentation.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities.

This description forms part of our auditor’s report.

Use of Our Report

This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Thomas Edward Goodworth (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor, London, UK

Date: 2 May 2024

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Financial Statements

Income Statement For the year ended 31 December 2023

Notes 1 to 24 form an integral part of these financial statements. Statements of Comprehensive Income For the year ended 31 December 2023

Notes 1 to 24 form an integral part of these financial statements.

Company statement of changes in equity

form an

The Earl Cadogan DL - Director Hugh Seaborn - Director

The Earl Cadogan DL - Director

Hugh Seaborn - Director

Statement of Cash Flows For the Year Ended 31 December 2023

Notes to the Financial Statements

1 Accounting policies

(a) Statement of compliance

Cadogan Group Limited is a private company limited by shares incorporated in England (registered number 2997357). The Registered Office is 10 Duke of York Square, London, SW3 4LY.

The financial statements of Cadogan Group Limited were authorised for issue by the Board of Directors on 2 May 2024.

(b) Basis of preparation

The Group’s and company’s financial statements have been prepared in compliance with FRS 102.

The financial statements have been prepared on a historical cost basis except investment properties and derivative financial instruments that have been measured at their fair value. The financial statements are prepared in sterling which is the functional currency of the Group and rounded to the nearest £000.

Through the Group’s risk management process a number of material risks to the business were identified including climate risk. By their nature these risks were not identified as a material factor to going concern during the relevant period. However, climate related factors will increasingly influence investment property valuations as relevant property characteristics are valued by the market. To the extent that these exist and are significant they will be embedded in the external valuation provided to the Group and held on the consolidated statement of financial position.

Going concern

The Group’s business activities, together with the factors likely to affect its future development, its financial position, financial risk management objectives, details of its financial instruments and derivative activities, and its exposures to price, credit, liquidity and cash flow risk are set out in the Strategic Report on pages 9 to 33.

The Group has considerable financial resources derived from an established investment property portfolio in prime central London. The Group has substantial long-term committed financing arrangements and has access to overdraft and revolving credit facilities from its bankers. The overdraft is renewed annually and therefore not committed for the full review period.

The directors have considered the appropriateness of adopting the going concern basis in preparing the financial statements for the year ended 31 December 2023 taking into account recent inflationary pressures on the economy, consumers and our tenants and the possibility of an economic downturn. The assessment is based on the Group’s experience over the last three years and financial forecasts for the periods to 31 December 2025 overlaid with a severe but plausible downside economic downturn scenario.

The budget for 2024 has been prepared prudently. Assumptions regarding rent receipts and lease renewals are consistent with our actual experience during 2023. Development and investment activity is in line with 2023. Property values are assumed to rise by 3% on average in 2024.

The Group has also assessed a severe but plausible downside scenario based on the occurrence of an economic downturn having an impact similar to that of the pandemic in its first year. An economic downturn would reduce sales for our retail, leisure and hospitality tenants, damaging their cash flow and ability to pay rent. Trading would take at least 12 months to

recover. The main impacts would be a further fall in property values, a decline in rent collections for at least 12 months, with a slow recovery thereafter and an increase in impairments and rent concessions.

For 2024 and 2025, we have assumed there would be no new financing activity other than the repayment of a maturing loan of £44m in March 2025 and the receipt of £50m in September 2024, £50m in March 2025 and £50m in September 2025 from the delayed drawdown of private placements undertaken in 2022.

The severe but plausible downside scenario modelled demonstrates that over the period to 31 December 2025 the Group has significant liquidity to fund its ongoing operations and is operating with ample headroom above its debt financing covenants without the need to rely on raising new financing. Asset values would have to fall by 38% from 2023 closing values when the covenant is measured as at 31 December 2024 and by 35% from closing 2023 values over two years as at 31 December 2025 to breach the gearing covenant. To breach the interest cover covenant, operating profit before capital items would have to fall by 66% compared to forecast in 2024 and by 70% compared to the plan for 2025.

Based on these considerations, our experience of the past impact of economic downturns on the business and the directors’ knowledge of Cadogan’s property portfolio and the market in which we operate, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

Basis of consolidation

The Group financial statements consolidate the financial statements of Cadogan Group Limited and all its subsidiary undertakings drawn up to 31 December each year. No income statement is presented for Cadogan Group Limited as permitted by section 408 of the Companies Act 2006.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee to obtain benefits from its activities.

(c) Judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgement (apart from those involving estimates) has had the most significant effect on amounts recognised in the financial statements:

Operating lease commitments

The Group has entered into commercial property leases as a lessor on its investment property portfolio. The classification of such leases as operating or finance lease requires the Group to determine, based on an evaluation of the terms and conditions of the arrangements, whether it retains the significant risks and rewards of ownership of these assets and accordingly whether the lease requires an asset and liability to be recognised in the statement of financial position.

1 Accounting policies (continued)

(d) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Revaluation of investment properties

The Group carries its investment property at fair value, with changes in fair value being recognised in the income statement. The Group engaged independent valuation specialists to determine fair value at 31 December 2023. The valuers used market value, in accordance with the Appraisal of Valuation Manual of the Royal Institution of Chartered Surveyors. The determined fair value of the investment property is most sensitive to the estimated yield and estimated rental values. Investment properties under construction are measured based on estimates prepared by independent real estate valuation experts. The key assumptions used to determine the fair value of investment property are further explained in note 11.

Estimation of net realisable value for properties under development

Development property is stated at the lower of cost and net realisable value (“NRV”).

NRV for completed development property is assessed by reference to market conditions and prices existing at the reporting date and is determined by the Group, based on comparable transactions identified by the Group for properties in the same geographical market serving the same real estate segment.

NRV in respect of development property under construction is assessed with reference to market prices at the reporting date for similar completed property, less estimated costs to complete construction and an estimate of the time value of money to the date of completion.

Capital gains tax and deferred tax liability

The Group establishes provisions based on reasonable estimates of the expected tax liability under the legislation. The amount of such provisions is based on various factors, such as experience with previous tax audits and takes into account uncertain tax positions where tax authorities could have differing interpretations of tax regulations.

Management estimation is required to determine the amount of deferred tax assets that can be recognised, based upon likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies. Further details are contained in note 7.

Impairment of lease receivables

The Group makes an assessment over the recoverability of its lease receivables on a lease by lease basis. Estimation of recovery is judgemental and is based on the Group’s detailed knowledge of the sector in which the tenant operates and the credit risk of the tenant.

Cash flow forecasts

As part of the Group’s assessment of going concern, monthly cash flow forecasts are prepared using estimates and assumptions based on management’s knowledge of the business and the experience of rental receipts, tenant default and expenditure.

Pension and other post-employment benefits

The cost of defined benefit pension plans is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and the long-term nature of these plans, such estimates are subject to significant uncertainty. In determining the appropriate discount rate, management (as advised by its actuaries) considers the interest rates of corporate bonds in the respective currency with at least AA rating, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The underlying bonds are further reviewed for quality, and those having excessive credit spreads are removed from the population bonds on which the discount rate is based, on the basis that they do not represent high quality bonds. The mortality rate is based on publicly available mortality tables for the UK. Future salary increases and pension increases are based on expected future inflation rates for the UK. Further details are given in note 19.

(e) Turnover and revenue recognition

Revenue is recognised to the extent that the Group obtains the right to consideration in exchange for its performance. Revenue is measured at the fair value of the consideration received, net of VAT and comprises gross rents including reverse premium received on early lease termination,

commissions and other fees receivable. Turnover in the hotel and concert hall operations represents amounts derived from the provision of goods and services, stated net of VAT.

The following criteria must also be met before revenue is recognised:

Rental income

The Group is the lessor in operating leases. Rental income arising from operating leases on investment property is recognised in the income statement on a straight-line basis over the lease term, except for contingent rental income which is recognised when it arises.

Lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease. The lease term is the non-cancellable period of the lease together with any further term for which the tenant has the option to continue the lease, where, at the inception of the lease, the directors are reasonably certain that the tenant will exercise that option.

Amounts received from tenants to terminate leases or to compensate for dilapidations are recognised in the income statement when the right to receive them arises.

Interest income

Interest income is recognised as it accrues using the effective interest rate (“EIR”) method. The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. Interest income is included in finance income in the income statement.

1 Accounting policies (continued)

(f) Tangible fixed assets

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Such cost includes costs directly attributable to making the asset capable of operating as intended.

Depreciation is provided on all plant and equipment, at rates calculated to write off the cost, less estimated residual value, of each asset on a systematic basis over its expected useful life as follows:

Plant and equipment

7% to 20%

The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value not to be recoverable.

(g)

Land and buildings

Land and buildings represent owner occupied properties and are initially recognised at cost which includes purchase cost and any directly attributable expenditure of a capital nature only. They are included in the financial statements at fair value at the year end.

The surplus or deficit on revaluation is recognised in the nondistributable reserve and accumulated in the reserve unless a deficit, or its reversal, is below original cost in which case it is recognised in the income statement for the year.

(h) Investment property

Investment property comprises completed property and property under construction or re-development that is held to earn rentals or for capital appreciation or both. Property held under a lease is classified as investment property when it is held to earn rentals or for capital appreciation or both, rather

than for sale in the ordinary course of business or for use in production or administrative functions.

Investment property is measured initially at cost, including transaction costs. Transaction costs include transfer taxes, professional fees for legal services and initial leasing commissions to bring the property to the condition necessary for it to be capable of operating. The carrying amount also includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met.

Subsequent to initial recognition, investment property is stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the period in which they arise, including the corresponding tax effect. For the purposes of these financial statements, in order to avoid double counting, the fair value reported in the financial statements is reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives.

Transfers are made to (or from) investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use.

Investment property is derecognised either when it has been disposed of or when it is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the income statement in the period of de-recognition.

(i) Profit on sale of investment properties

Profits or losses on the sale of investment properties are calculated by reference to the book value at the end of the previous year, adjusted for any subsequent capital expenditure. Such transactions are recognised on the exchange of contracts, providing that no material conditions remain outstanding.

(j) Investments

Investments in subsidiary undertakings are included at cost, less a provision for impairment in value where applicable.

(k) Leases

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in the arrangement.

Group as a lessee

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Group is classified as a finance lease.

An operating lease is a lease other than a finance lease.

Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term, except for contingent rental payments which are expensed when they arise.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Contingent rents are recognised as revenue in the period in which they are earned.

(l) Cash and cash equivalents

Cash in the statement of financial position comprises cash at bank and in hand and is stated net of outstanding bank overdrafts.

(m) Loan notes

All interest-bearing loans and borrowings which are basic financial instruments are initially recorded at the present value of future payments discounted at a market rate of interest for a similar loan. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

(n) Short-term debtors and creditors

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the income statement in administrative expenses.

(o) Taxation

Current taxation including UK corporation tax is provided at the amounts expected to be paid (or recovered) using the tax rates and laws that have been substantially enacted at the balance sheet date.

Deferred tax is recognised in respect of all material timing differences between taxable profits and total comprehensive income that arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantially enacted at the balance sheet date. Deferred tax relating to investment property that is measured at fair value is measured using the tax rates and allowances that apply on the sale of the asset.

(p) Foreign currencies

Transactions in foreign currencies are initially recorded in the entity’s functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the income statement.

(q) Derivative financial instruments and hedge accounting

The Group uses forward foreign currency contracts to reduce exposure to foreign exchange rates. The Group also uses interest rate swaps to adjust interest rate exposures. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

The criteria for forward foreign currency contracts are:

– the instrument must be related to a firm foreign currency commitment;

– it must involve the same currency as the hedged item; and

– it must reduce the risk of foreign currency exchange movements on the Group’s operations.

The Group’s criteria for interest rate swaps are:

– the instrument must be related to an asset or a liability; and

– it must change the character of the interest rate by converting a variable rate to a fixed rate or vice versa.

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Cash flow hedges

For the purpose of cash flow hedge accounting, hedges are classified as cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.

The effective portion of the gain or loss on the hedging instrument is recognised in the Statement of Comprehensive Income (“SOCI”) in the non-distributable reserve, while any ineffective portion is recognised immediately in the income statement. Amounts recognised as other comprehensive income are transferred to the income statement when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised.

If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognised in the SOCI are transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in SOCI remains separately in equity until the forecast transaction occurs or the firm commitment is met.

When a derivative is held as an economic hedge for a period beyond 12 months after the end of the reporting period, the derivative is classified as non-current consistent with the classification of the underlying item. A derivative instrument that is a designated and effective hedging instrument is classified consistent with the classification of the underlying hedged item.

(r) Pension benefits

For defined benefit schemes, the regular cost of providing pensions to employees during the year is charged to operating profit in the year. The full cost of providing amendments to benefits in respect of past service is also charged to operating profit in the year.

The net interest element is determined by multiplying the net defined benefit liability by the discount rate, at the start of the period taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or costs.

Re-measurements, comprising actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability (excluding amounts included in net interest) are recognised immediately in other comprehensive income in the period in which they occur.

The defined net benefit pension asset or liability in the statement of financial position comprises the total for each plan of the present value of the defined benefit obligations (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information and in the case of quoted securities is the published bid price.

For defined contribution schemes, the value of amounts charged to the income statement in respect of pension costs is the value of the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayment in the statement of financial position.

2 Turnover and Analysis by Class of Business

3 Profit on Sale of Investment Properties

4 Interest Payable and Similar Expenses

5 Operating Profit

statements are required to comply with regulation

6 Directors and Employees

Included within directors’ remuneration above are contributions to money purchase pension schemes for one director amounting to £56,000 (2022: one director – £47,000).

The remuneration, excluding pension contributions, of the highest paid director was £1,556,000 (2022 –£1,442,000). Pension contributions of the highest paid director were nil (2022 – nil).

The average monthly number of persons employed by the Group, including executive directors, during the year was 88 (2022 – 87). 75 (2022 – 73) persons were employed within the property investment business and 13 (2022 –14) persons were employed within the hotels and concert hall business.

Staff costs for the company were in respect of directors’ remuneration and amounted to £563,000 (2022 –£535,000). There were no pension contributions made by the company in the year (2022 – nil).

(c) Factors affecting tax charge for the year

The tax charge for the current year is higher than (2022 – higher than) the current standard rate of corporation tax in the UK of 23.5% (2022 – 19.0%). The difference is explained as follows:

Deferred tax The deferred tax included in the statement of financial position is as follows:

The

for deferred tax comprises the following:

The UK corporation tax rate increased on 1 April 2023 from 19.0% to 25.0%. Accordingly, the Group’s result for the accounting period is taxed at an effective rate of 23.5% (2022 – 19.0%).

Any future rate changes will also impact the amount of future tax payments to be made by the Group.

Dividends

9 Retained Profit for the Year

The (loss)/profit for the year has been retained by:

The parent company’s profit before dividends for the financial year was £30,978,000 (2022 – £102,340,000).

10 Earnings Per Share

The calculation of earnings per ordinary share for 2023 is based on the earnings attributable to ordinary shareholders of £185,954,000 (2022 – £261,187,000) and on 120,000,000 ordinary shares (2022 – 120,000,000 ordinary shares) being the effective number of such shares in issue during the year.

This calculation relates to both the basic and diluted loss per share as there is no potential future shares or share options in the company.

11 Tangible Fixed Assets

11 Tangible Fixed Assets (continued)

The valuation of the Group’s freehold properties at 31 December 2023 was carried out by CBRE and Knight Frank (commercial properties) and Cluttons (residential properties), the firms are independent and regulated by the Royal Institution of Chartered Surveyors (“RICS”), on the basis of fair value, in accordance with the version of the RICS Valuation – Global Standards (incorporating the International Valuation Standards) and the UK supplement (“The Red Book”) as at the Valuation Date. The key assumptions used to determine the fair value of investment property are set out below:

Property Type Fair Value Valuation Technique Key inputs

ERV per sq. ft.

The historical cost of freehold properties at 31 December 2023 was £2,506,647,000 (2022 – £2,294,604,000).

Material Valuation Uncertainty

Valuations of reversionary residential assets with a total value of £300,609,000 are presently being valued subject to material uncertainty as a consequence of Government’s intervention in that market via the Leasehold and Freehold Reform Bill 2023. Cluttons valuation is therefore reported on the basis of ‘material valuation uncertainty’ in line with RICS guidance.

12 Fixed Asset Investments

Location of Registered offices: Companies marked * – 10 Duke of York Square, London, SW3 4LY

Hugo House Limited – Hugo House, 178-180 Sloane Street, SW1X 9QL

13/14

Crescent Residents Limited – 6 Sloane Street, London, SW1X 9LF

Cadogan House Residents Limited – 2 Tower Centre, Hoddesdon, EN11 8UR 15/16

13 Debtors

Cadogan Estates

Cadogan Estates Property Investments Limited*

Cadogan Developments Limited*

Cadogan Hall Limited*

Cadogan Holdings Limited*

Cadogan Income Properties Limited*

Chelsea Land Developments Limited*

Frederick Court Limited*

Sloane Gardens Hotel Limited*

Cadogan Estates Management Limited*

Cadogan Group Management Limited*

26 Cadogan Gardens Limited*

115 Sloane Street Hotel Limited*

Sidney Smith Chelsea Limited*

Sidney Smith Enterprises Limited*

52 Kings Road Limited*

Hugo House Limited

13/14 Herbert Crescent Residents Limited

Sloane Court East Garden Limited*

7 Redburn Street Limited*

Cadogan House Residents Limited

15/16 Herbert Crescent Residents Association Limited

14 Trade and Other Creditors

Bank Loans and Other Borrowings

At 31 December 2023 the Group had committed but undrawn credit facilities of £280m (2022 – £300m) under revolving

15 Borrowings (continued)

The commercial mortgage loan is secured by fixed charges over specific freehold investment properties of the Group. £931,926,000 (2022 – £968,059,000) of the total bank loans and long-term borrowings is subject to fixed rates of interest to maturity which average 4.14% (2022 – 4.19%).

All the interest payments and principal repayments relating to the loan notes issued in US dollars were swapped into sterling at fixed exchange rates. This currency swap has the effect of reducing the effective interest rate on the US dollar loans from the rates shown above to an average effective rate of 5.62% (2022 – 5.72%). This, combined with the fixed interest rates payable on the sterling loans gives an overall effective interest rate across all the series of notes, fixed until maturity, of 3.98% (2022 – 4.02%).

16 Called Up Share Capital

Authorised, allotted,issued and fully paid

Authorised, allotted,issued and fully paid

18 Notes to the Statement of Cash Flows

Reconciliation of profit to net cash inflow from

17 Reserves

Profit and loss account

This reserve is used to record:

– Increases in fair value of freehold and leasehold investment properties and decreases to the extent that such decreases relate to the increase on the same asset. These figures are stated net of the associated deferred tax asset or liability;

– Increases and decreases in fair value of freehold land and building;

– Increases and decreases in the net fair value of derivative financial instruments. The figure is stated net of the associated deferred tax release or charge; and

– Distributable profits.

Notes to the Statement of Cash Flows (continued)

Debt due within one year (15,429) 15,581 (4,152) (4,000)

Debt due after one year (834,990)

19 Pension Arrangements

The Group operates both defined benefit and defined contribution funded pension schemes for its employees. The assets of these schemes are held separately from those of the Group in independently administered funds.

Defined benefit scheme

The Group’s defined benefit pension scheme, which was closed to new members in 1994 and closed to future accrual for active members on 31 March 2014, is called the Cadogan Pension & Assurance Scheme (“the Scheme”). The following disclosures exclude any allowance for defined contribution schemes operated by the Group. The liability value does not include allowance for any discretionary benefits.

The Scheme is subject to the Statutory Funding Objective under the Pensions Act 2004. A valuation of the Scheme is carried out at least once every three years to determine whether the Statutory Funding Objective is met. As part of the process the Group must agree with the Trustees of the scheme the contributions to be paid to address any shortfall against the Statutory Funding Objective.

Five Year Summary GRI Standard Disclosure References

The most recent comprehensive actuarial valuation of the Scheme was carried out as at 31 December 2022 and the next valuation of the Scheme as at 31 December 2025. In the event that the valuation reveals a larger deficit than expected the Group may be required to increase contributions above those set out in the existing Schedule of Conditions. Conversely, if the position is better than expected, it is possible that contributions may be reduced.

The Group is committed to supporting the Scheme in the long term on a basis more prudent than the Scheme Funding basis used in the formal actuarial valuation as at 31 December 2022 but wants to avoid overfunding the Scheme, and therefore an Escrow Account has been established to provide additional security to the Scheme. Details regarding the Escrow Account are set out in a separate Framework Agreement.

Under the current Schedule of Contributions, contributions of £900,000 were paid by the Group to be paid into the Scheme from the Escrow account in the year to 31 December 2023 (2022 – no contributions).

At the Review Date the Escrow Account balance was £1,711,000 (2022 – £1,500,000), which has not been included in the disclosures below. If the Escrow Account balance was included in the Scheme’s assets, the deficit in the Scheme would be reduced by the amount of the Escrow Account balance to £5,025,000.

The Scheme is managed by a board of Trustees appointed in part by the Group and in part from elections by members of the Scheme. The Trustees have responsibility for obtaining valuations of the fund, administering benefit payments and investing the Scheme’s assets. The Trustees delegate some of these functions to their professional advisors where appropriate.

There were no plan amendments, curtailments or settlements during the period.

Risk Mitigation Strategies

The Scheme invests a proportion of its assets in LDI funds which are designed to hedge the interest rate risk within the Scheme.

Profile of defined benefit obligation

The weighted average duration of the defined benefit obligation is around 14 years.

Disclosures

Figures for disclosure in accounts for the period ending 31 December 2023 under FRS 102 are set out below. Results are shown in pounds, rounded to the nearest £000.

Arrangements (continued)

retirement mortality assumption 80% of the S2NXA tables with CMI 2022 projections using a long term improvement rate of 1.25% per annum and an initial additional parameter of 0.5%.

The 2020 and 2021 weight parameters are nil and the 2022 weight parameter is 25%.

80% of the S2NXA tables with CMI 2021 projections using a long term improvement rate of 1% per annum. The 2020 and 2021 weight parameters are nil.

Assets

The major categories of assets as a proportion of total assets are as follows:

Asset category

Growth Assets:

Multi Asset Growth Fund (25%, 2022 – 23%)

Diversified Fund (20%, 2022 – 27%)

Cash (3%, 2022 – nil)

Protection Assets:

LDI Funds (37%, 2022 – 29%)

Absolute Return Bond Fund (nil, 2022 – 7%)

Buy and Maintain Credit Fund (15%, 2022 – 14%)

Total

The actual return on the Scheme’s assets was an increase of £1,210,000 (2022: decrease of £17,949,000). The assets do not include any investment in shares or property of the Group.

19 Pension Arrangements (continued)

Reconciliation of assets and defined benefit obligation

The change in fair value of assets over the year was:

The change in present value of the defined benefit obligation over the year was:

The pension charge in respect of defined contribution schemes represents contributions payable by the Group to such schemes and amounted to £757,000 (2022 – £679,000), of which nil (2022 – nil) was unpaid at the balance sheet date.

20 Hedging Activities and Derivatives

The Group has entered into foreign currency and interest rate swap contracts with notional amounts of $298m (2022 – $321m) whereby it pays a fixed rate of interest of between 5.25% and 7.40%. The swaps are used to hedge the exposure to the variable foreign currency and interest rate payments on the US dollar variable rate unsecured loans (note 15).

The loans and interest rate swaps have the same critical terms and are fully effective. Cash flows are expected to occur between February 2024 and June 2051 and will be recognised through the income statement at that time.

The aggregate fair value of the interest rate swaps at the end of the reporting period was an asset of £89,205,000 (2022 – £117,640,000).

The Group enters into foreign currency and interest rate swap contracts with various counterparties, principally financial institutions with investment grade credit ratings. The valuation techniques applied to fair value these derivatives employ the use of market observable inputs and include swap models which use present value calculations. The model incorporates various inputs including the credit quality of counterparties and forward rates.

As at 31 December 2023, the marked-to-market value of derivative asset positions is net of a credit valuation adjustment attributable to derivative counterparty default risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment of these derivatives designated in hedge relationships recognised at fair value.

changes in fair value through the income statement

changes in fair value through other comprehensive Income

21 Capital and Other Commitments

Outstanding capital commitments were as follows: Capital expenditure contracted for but not provided for in the financial statements

There were no outstanding commitments for capital expenditure in the company at either year end.

The Group had the following future minimum operating lease receivables under non-cancellable operating leases in respect of investment properties at the year end:

22 Related Party Relationships and Transactions

The Earl Cadogan DL, Chairman and director of Cadogan Group Limited, rents residential property owned by the Group. The rent paid by The Earl Cadogan in the year totalled £319,271. At 31 December 2023 the outstanding balance owed to the Group was nil (2022 – £2,852). The annual rental charge is at market rate.

23 Post Balance Sheet Events

Since the year end, the Group has bought three properties in its regional property fund at an aggregate cost of £48m.

24 Ultimate Ownership

Due:

Within

Between one and five years

More than five years

The ultimate holding company is Cadogan Settled Estates Holdings Limited, which is registered in England and Wales and which is ultimately controlled by The Eighth Earl Cadogan’s 6 December 1961 Settlement. The consolidated financial statements of Cadogan Settled Estates Holdings Limited may be obtained from The Registrar of Companies, Companies House, Crown Way, Cardiff, CF14 3UZ.

Five Year Summary

Global Reporting Initiative Standard Disclosure References