Our aim is to deliver attractive returns to our shareholders and stakeholders through the execution of our strategy.

We track our progress against nine Key Performance Indicators on which we report each year. They are based on proportionally consolidated metrics, incorporating our share of joint ventures.

Some of these metrics are also used to determine how management and employees are remunerated.

Further details on our remuneration policies and the metrics used to determine remuneration are set out in the Remuneration Committee Report.

What it is: TPR is the ungeared combined income and capital return from the portfolio during the year. It is an important measure of the success of our strategy in terms of asset selection and asset management. MSCI Real Estate (formerly known as IPD) prepares the calculation, as well as providing benchmark TPR data for similar properties in their wider universe. We aim to outperform the benchmark over the long term. Details on how TPR impacts short- and long-term incentives are provided on pages 88 to 94 of our Annual report 2016.

Our performance: The TPR of the Group in 2016 was 9.3 per cent (2015: 18.4 per cent). Our UK portfolio generated a TPR of 10.2 per cent, performing ahead of the benchmark calculated by MSCI Real Estate of 7.4 per cent. The TPR of our Continental Europe portfolio was 7.3 per cent. Benchmark data for Continental Europe will be received later in the year.

What it is: EPRA Net Asset Value (NAV) is the value of our assets less the book value of our liabilities, calculated in accordance with EPRA guidelines, that is attributable to our shareholders. We aim for sustainable long term asset value growth whilst carefully managing our liabilities to maintain balance sheet strength.

Our performance: EPRA NAV increased by 37 pence per share over the year to 31 December 2016, most of which was due to a 4.8 per cent increase in the value of the Group's property portfolio. Our UK portfolio generated a capital value uplift of 6.4 per cent and our Continental European portfolio increased by 1.6 per cent. Diluted NAV per share increased by 34 pence to 502 pence. The reconciliation between Diluted NAV per share and EPRA NAV per share can be found in Note 14(ii) on page 133 of our Annual report 2016.

What it is: The vacancy rate measures our ability to minimise the quantity of non income-producing built assets within our portfolio. An improving vacancy rate generally implies additional rental income and lower vacant property costs. Some level of vacancy will always exist within our portfolio in order to support our asset management activities and allow our customers the opportunity to move premises. We target a longer-term vacancy rate of 5–7 per cent.

Our performance: The portfolio vacancy rate increased to 5.7 per cent (31 December 2015: 4.8 per cent) due mainly to the completion of speculatively developed space and the expected return of a UK big box warehouse in November which we expect to re-let during the course of 2017.

What it is: The percentage of our customers who rate their experience as occupiers of our buildings as 'good' or 'excellent' as opposed to 'poor' or 'average'. Our customers are at the heart of our business and we strive to ensure that we are providing the best level of service possible to maximise customer retention.

Our performance: Satisfaction as an occupier of our buildings was rated as 'good' or 'excellent' by 79 per cent of the 275 customers which participated in the 2016 survey (2015: 77 per cent). The improvement is welcome and the continued high satisfaction rate reflects our focus on communication, being responsive and understanding the needs of our customers. We continue to target similarly high levels in the future.

What it is: The proportion of our property assets (including investment, owner-occupier and trading properties at carrying value and our share of properties in joint ventures) that are funded by borrowings. Our 'mid-cycle' LTV ratio target remains at 40 per cent but, at this stage in the cycle, we aim to maintain it at below 40 per cent to mitigate any risk from capital value declines. We believe that REITs with lower leverage offer a lower risk and less volatile investment proposition for shareholders.

Our performance: The Group's LTV ratio improved to 33 per cent from 38 per cent year on year, principally as a result of the reduction in net borrowings achieved through asset disposals during the year, the equity raised in September 2016 and the total portfolio valuation increase. The timing of investment decisions and disposals, as well as movement in the value of our assets may cause the LTV to fluctuate.

What it is: TSR measures the change in our share price over the year assuming that dividends paid are reinvested. This KPI reflects our commitment to delivering enhanced returns for our shareholders through the execution of our strategy over the medium term. TSR is a key metric used in setting the long term incentive plan remuneration for both the Executive Directors and senior management.

Our performance: The TSR of the Group was 10.8 per cent, compared with -7.4 per cent for the FTSE 350 Real Estate index. This performance reflects a combination of the 15.8 pence dividend (10.6 pence 2015 final dividend and 5.2 pence 2016 interim dividend) paid during the year and an increase in the share price from 429 pence at 31 December 2015 to 458 pence at 31 December 2016.

What it is: Our headline Adjusted earnings per share (EPS) reflects earnings from our operating business: rental income less operating, administrative and financing costs and tax. It is the primary determinant of the level of the annual dividend. IFRS EPS includes the impact of realised and unrealised changes in the valuation of our assets which can often mask the underlying operating performance. The reconciliation between Basic EPS and Adjusted EPS can be found in Note 14(i) on page 132 of our Annual report 2016.

Our performance: Adjusted EPS increased by 7.1 per cent during the year, reflecting higher rental income from like-for-like rental growth, acquisitions and lower average vacancy, an increase in joint venture management fees and stable financing costs, partly offset by higher administrative and operating costs.

What it is: The ratio of our total administration and property operating costs expressed as a percentage of gross rental income. This is an indicator of how cost-effectively we manage both our property assets and our administrative costs in order to improve profitability. Over the medium term we are targeting a total cost ratio of 20 per cent.

Our performance: The total cost ratio increased to 23.0 per cent (2015: 22.2 per cent) due mainly to increased performance-related share based payments and the absence of out of period credits which occurred in 2015. There has been a minor change in the calculation of this KPI to conform to industry practice (as defined by EPRA) and the figures in the chart above have been represented. For details of the change, please see page 49 of our Annual report 2016.

What it is: The headline annualised gross rental income contracted during the year less income lost from takebacks. There are two elements: to grow income from our standing assets by reducing vacancy and increasing rents from lease renewals and rent reviews; and to generate new rent by developing buildings either on a pre-let or speculative basis. Rent from new acquisitions is not included.

Our performance: In total, we generated £29.7 million of net new annualised rent during the year (2015: £23.6 million). The increase mainly relates to the increased volume of pre-let agreements signed during the year.

† The 2016 TPR has been calculated independently by MSCI Real Estate (formerly known as IPD) in order to provide a consistent comparison with an appropriate MSCI-IPD benchmark using the methodology to be applied under the rules of the LTIP scheme. It is calculated as the change in capital value, less any capital expenditure incurred, plus net income, expressed as a percentage of capital employed over the period concerned and excluding land.

‡ In 2014, we treated deferred consideration from our partner in the SELP joint venture as cash within the LTV ratio as it was callable at three months notice. The balance was paid to us in October 2015 meaning that the 2015 and 2016 LTV ratios are unadjusted.

* EPRA NAV is an alternate metric that is calculated in accordance with the Best Practices Recommendations of the European Public Real Estate Association (EPRA). SEGRO discloses EPRA alternative metrics on pages 165 to 168 of our Annual report 2016 (NAV, EPS, vacancy rate, cost ratio, initial yield) to provide a transparent and consistent basis to enable comparison between European property companies. See www.epra.com for further details.