TIDMCAL
RNS Number : 5882N
Capital & Regional plc
10 August 2017
10 August 2017
Capital & Regional plc
Half Year Results to 30 June 2017
Capital & Regional plc (LSE: CAL), the UK focused REIT with
a portfolio of dominant in-town community shopping centres, today
announces its half year results to 30 June 2017.
Lawrence Hutchings, Chief Executive, said: "This is a strong set
of results which reflect that whilst elements of the retail sector
may face challenges, the continued strong occupier demand for our
centres as well as the local and convenient nature of our assets,
which cater for the non-discretionary and value-orientated needs of
our shoppers, gives us great comfort over the security of our
income. This, allied with our proven track record of driving income
and delivering results through selective but significant capital
expenditure investment, underpins the future growth potential of
the business. We also see opportunity to further enhance
profitability by seeking greater efficiency in our operating
platform and streamlining our structure through various
initiatives. Some of these are already delivering tangible results
and we are initially targeting annualised savings of at least
GBP1.8 million by 2018, equivalent to a c 20% reduction in 2016
central costs.
"Reflecting the strong feeling of confidence in the future
growth prospects of the business, the Board has announced an
Interim dividend of 1.73p, representing a 6.8% increase on the
prior year. With the second half of the year set to comparatively
benefit from several major lettings coming on stream and the timing
of recent acquisitions and disposals we expect the Full Year 2017
Dividend will be at the top end of our targeted growth range of at
least 5% to 8% per annum."
Highlights:
Income growth underpins strong financial results and supports an
increased dividend, with further improvements expected in H2
-- Adjusted Profits(1) up 6.6% to GBP14.5 million (June 2016:
GBP13.6 million) setting the business on track for its fourth
consecutive year of Adjusted Profit growth
-- IFRS Profit for the period of GBP12.1 million (June 2016: Loss of GBP4.4 million)
-- Like-for-like(2) Net Rental Income up 0.5% despite the loss
of H1 2016 BHS income, up 4.4%, once adjusted for this
-- 34 new lettings and renewals achieved at an average 21%(3)
premium to previous rents and an 8.4%(3) premium to ERV. Passing
rent up 1.7% on a like-for-like basis
-- Full period benefit of Ilford acquisition, and timing of
Camberley sale in November 2016, will strengthen comparative second
half year-on-year performance
-- Enhanced focus on cost efficiencies targeting annualised
savings of at least c GBP1.8 million by 2018
-- Interim dividend increased by 6.8% to 1.73p per share (June
2016: 1.62p). Second half improvements underpin target for total
Full Year 2017 dividend at top end of the stated 5% to 8% per annum
growth range
Capex investment and specialist asset management continue to
drive performance
-- GBP80 million Capex plan gathering further momentum with a number of significant initiatives substantially completed during the period, including:
o Blackburn - Wilko opening in September 2017 from the
refurbished former BHS unit
o Walthamstow - new units to Lidl, The Gym and Gökyüzü due to
open in Q4 2017
o Wood Green - GBP6.4 million new Travelodge scheduled for Q3
2017 opening
-- These lettings will bring GBP1.4 million of annualised rent
on stream in H2 2017 from a total capex spend of GBP11.6
million
-- Planning applications to deliver leisure transformation at
Hemel Hempstead and Walthamstow extension submitted
-- Strong occupier demand reflected in continued high occupancy
at 95.5% (31 December 2016: 95.4%)
-- 35.4 million shopper visits in first half of the year
representing a modest 0.9% like-for-like(2) fall, though once again
significantly outperforming the national index which was -2.7%
Robust balance sheet with long term debt security
-- Basic and EPRA NAV per share resilient, at 68p and 67p
respectively (December 2016: both 68p)
-- GBP30 million Revolving Credit Facility extended to January
2022, meaning all Group debt has minimum tenure of 4.5 years.
Weighted average debt maturity of 7.8 years(4)
-- Cost of debt reduced to 3.25%(5) following GBP372.5 million
January 2017 refinancing leading to annual saving of c GBP0.5
million
6 months Year 6 months
to to to
June 2017 Dec 2016 June 2016
Net Rental Income(6) GBP25.0m GBP50.4m GBP25.4m
Adjusted Profit(1) GBP14.5m GBP26.8m GBP13.6m
Adjusted Earnings per share(1) 2.06p 3.82p 1.94p
IFRS Profit/(Loss) for
the period GBP12.1m GBP(4.4)m GBP7.2m
Total dividend per share 1.73p 3.39p 1.62p
Net Asset Value (NAV) per
share 68p 68p 71p
EPRA NAV per share 67p 68p 71p
Group net debt(6,7) GBP403.1m GBP398.1m GBP403.1m
Net debt to property value(6,7) 46% 46% 46%
(1) Adjusted Profit is as defined in the Glossary. It
incorporates profits from operating activities and excludes
revaluation of properties and financial instruments, gains or
losses on disposal, exceptional items and other defined terms. A
reconciliation of this, and Adjusted Earnings per share, to the
statutory result is provided in the Financial Review. EPRA figures
and a reconciliation to EPRA EPS are shown in Note 7 to the
Financial Statements. The EPRA measures used throughout this report
are industry best practice performance measures established by the
European Public Real Estate Association. They are defined in the
Glossary to the Financial Statements.
(2) Like-for-like excludes the impact of property purchases and
sales on year to year comparatives. Like-for-like footfall also
excludes entrances impacted by development work. A reconciliation
of Like-for-like Net Rental Income to total Net Rental Income for
the period is provided in the Financial Review.
(3) For lettings and renewals (excluding development deals) with
a term of five years or longer and which did not include a turnover
element.
(4) As at 30 June 2017, adjusted for RCF extension completed on
3 August 2017 and assuming exercise of all extension options.
(5) Assuming RCF fully drawn.
(6) Wholly-owned assets
(7) December 2016 figures are proforma, adjusted for the
refinancing of Mall assets completed on 4 January 2017, Ipswich
disposal completed on 17 February 2017 and Ilford acquisition
completed on 8 March 2017.
For further information:
Capital & Regional: Tel: +44 (0)20 7932
8000
Lawrence Hutchings, Chief
Executive
Charles Staveley, Group
Finance Director
FTI Consulting: Tel: +44 (0)20 3727
1000
Richard Sunderland Email: Capreg@fticonsulting.com
Claire Turvey
Notes to editors:
About Capital & Regional plc
Capital & Regional is a UK focused retail property REIT
specialising in shopping centres that dominate their catchment,
serving the non-discretionary and value orientated needs of the
local communities. It has a strong track record of delivering value
enhancing retail and leisure asset management opportunities across
a c. GBP1 billion portfolio of in-town shopping centres. Capital
& Regional is listed on the main market of the London Stock
Exchange and has a secondary listing on the Johannesburg Stock
Exchange.
Capital & Regional owns seven shopping centres in Blackburn,
Hemel Hempstead, Ilford, Luton, Maidstone, Walthamstow and Wood
Green. It also has a 20% joint venture interest in the Kingfisher
Centre in Redditch. Capital & Regional manages these assets
through its in-house expert property and asset management
platform.
For further information see www.capreg.com.
Forward looking statements
This document contains certain statements that are neither
reported financial results nor other historical information. These
statements are forward-looking in nature and are subject to risks
and uncertainties. Actual future results may differ materially from
those expressed in or implied by these statements. Many of these
risks and uncertainties relate to factors that are beyond the
Group's ability to control or estimate precisely, such as future
market conditions, currency fluctuations, the behaviour of other
market participants, the actions of government regulators and other
risk factors such as the Group's ability to continue to obtain
financing to meet its liquidity needs, changes in the political,
social and regulatory framework in which the Group operates or in
economic or technological trends or conditions, including inflation
and consumer confidence, on a global, regional or national basis.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which apply only as of the date of this
document. The Group does not undertake any obligation to publicly
release any revisions to these forward-looking statements to
reflect events or circumstances after the date of this document.
Information contained in this document relating to the Group should
not be relied upon as a guide to future performance.
Operating review
The core strength and expertise of Capital & Regional lies
in its ability to create and deliver specialist asset management
improvements across its GBP1.0 billion portfolio of UK shopping
centres, which is underpinned by a strong London and South East
bias. A key characteristic of our assets is their dominance in
their locality coupled with their ability to offer occupiers
attractive, affordable and high footfall space which caters for the
non-discretionary and value-orientated needs of the local
community.
Delivery of specialist asset management initiatives
In the first six months of the year we spent GBP7.8 million of
the GBP80 million of capital expenditure investment planned over
2017-2019. We expect the pace of investment to increase in the
second half of the year to approximately double this.
A number of significant initiatives have substantially completed
during the period:
-- At Blackburn the refurbished former BHS unit has been handed
over to Wilko and will open in September 2017. Sports Direct, also
continues to trade from the unit, now via a direct lease.
-- At Walthamstow we have successfully handed over units to Lidl
and The Gym and both are due to open in Q4. We have also commenced
works to create a new Turkish restaurant for local operator
Gökyüzü, which has traded very successfully at our Wood Green
centre for a number of years, and two further retail units
totalling 5,000 sq ft. All of the above have been created from the
former BHS store.
-- At Wood Green the new 78 bedroom Travelodge is due to be
handed over imminently and will open for trade following a GBP6.4
million investment project.
The above units will deliver a combined annual rent of GBP1.4
million from a total Capex spend of approximately GBP11.6 million.
To date, the completed lettings of former BHS units have secured an
aggregate annual rent that is equivalent to 104% of the rent being
paid by BHS when they ceased trading in August 2016. This is with
the two further retail units created from the space at Walthamstow
and the whole unit at Maidstone, where we are pursuing a number of
alternative options, still to be let.
In April we submitted a planning application for the extension
at Walthamstow, having completed a public consultation which was
very well received. Our plans include the addition of 90,000 sq ft
of new retail and leisure space and 470 new residential apartments.
A development agreement is in place with the London Borough of
Waltham Forest, which remains supportive of our ambitions for the
scheme, and we anticipate a positive decision later in the
year.
In Hemel Hempstead work has commenced to renew the atrium roof,
the cost of which is being met by the previous owner. In addition,
our plans to transform the scheme are gathering pace with a
planning application submitted to create a leisure hub anchored by
a cinema, for which heads of terms have been agreed with a leading
operator, and with up to six new restaurant units.
New lettings, renewals and rent reviews
There were 34 new lettings and renewals in the period at a
combined average premium of 21%(1) to previous passing rent and an
8.4%(1) premium to ERV.
6 months
to
June 2017
New Lettings
Number of new lettings 22
Rent from new lettings GBP1.5m
(GBPm)
Comparison to ERV(1)
(%) +13.6%
------------------------ -----------
Renewals settled
Renewals settled 12
Revised rent (GBPm) GBP0.5m
Comparison to ERV(1)
(%) -3.1%
------------------------ -----------
Combined new lettings
and renewals
Comparison to previous
rent(1) +21%
Comparison to ERV(1) +8.4%
------------------------ -----------
Rent reviews
Reviews settled 13
Revised passing rent GBP1.9m
(GBPm)
Uplift to previous
rent (%) +1.8%
------------------------ -----------
(1) For lettings and renewals (excluding development deals) with
a term of five years or longer which do not include a turnover rent
element.
At Walthamstow, in addition to the new Lidl letting, Smiggle has
taken a 10 year lease on an 850 sq ft store. At Luton, Kiko and
Scotts have signed up to take a split of the former USC unit while
KFC has taken a 10 year lease in the new food court.
At Wood Green, Five Guys has taken a 3,750 sq ft unit on a 15
year term whilst at Blackburn significant five year renewals
include Superdrug, The Perfume Shop and Thorntons. Superdrug has
also signed a new 10 year letting in Maidstone.
The outperformance of new lettings versus ERV demonstrates the
affordability and attractiveness of our schemes to occupiers and
this evidence will be supportive of rental tones in the future.
Whilst lease renewals were settled at a little below ERV this
reflects what has become a growing trend in renewal discussions of
tenants seeking a lower headline rent rather than rent free
incentives. The net effective rent achieved, assuming that all
renewals in the first half were for a five year term was, at 97.3%
of ERV, 1.8% higher than assumed by the Group's valuers.
Since 30 June 2017 the positive letting momentum has continued
with Superdrug and Aldo both renewing at Wood Green, Boots renewing
at Luton and Maidstone, as well as new lettings to Republic at
Luton and Card Factory at Ilford.
Rental income and occupancy
Like for like excluding 30 June 30 December 30 June
The Exchange, Ilford 2017 2016 2016
Contracted rent (GBPm) 57.8 57.5 57.2
Passing rent (GBPm) 53.9 53.0 53.1
Occupancy (%) 95.6 95.4 96.4
-------------------------- -------- ------------ --------
The GBP0.6 million year-on-year increase in contracted rent
represents an excellent performance given the loss of GBP1.0
million of rent in the second half of 2016 as a consequence of the
BHS administration. At 30 June 2017 there was GBP2.5 million of
contracted rent where the tenant is in a rent free period; of this
GBP1.8 million will convert to passing rent this year. There is a
further GBP1.5 million of committed transactions where works are
being undertaken prior to the handover of the units to tenants.
Occupancy has increased from December 2016 despite the seasonal
impact of Christmas trading. The fall in year-on-year occupancy of
0.8% is driven primarily by the impact of the BHS store at
Maidstone.
Administrations
6 months 12 months 6 months
to to to
June 2017 December June 2016(1)
2016(1)
Administrations
(units) 11 18 12
Passing rent of
administrations
(GBPm) 0.5 2.4 1.9
------------------ ----------- ---------- --------------
(1) Comparatives exclude the impact of The Mall, Camberley which
was disposed of in November 2016.
The number of administrations is broadly in line with 2016, but
the value is much reduced owing to the impact of BHS last year. The
most significant insolvency was Blue Inc involving five units with
a total rent of GBP0.3 million. As at 30 June 2017 three of the 11
units affected by administration had been re-let and two, with a
combined rent of GBP0.3 million, were continuing to trade as
usual.
Operational performance
There were 35.4 million visits to our centres in the first half
of the year. While this represented a slight like-for-like decrease
of 0.9%(1) , we significantly outperformed the national index which
declined by 2.7%. Footfall in July was down 0.4%(1) year on year
compared to the national index at -2.7%. Car Park usage has been
stable and car park income, at GBP4.7 million, is up 11% on a
like-for-like basis.
Our C&R Trade Index showed retailers' sales in our schemes
up 0.3% for the six months, with June up 1.7%. Our Collect+ service
continues to expand with in excess of 20,000 packages handled in
the first half, an increase of 34% year on year.
(1) Like for like excluding The Exchange Centre, Ilford and
entrances impacted by development work.
Other assets and operations
The Kingfisher Centre, Redditch (C&R ownership 20%)
The former BHS unit was re-let during the period to The Range
which opened in July 2017. Other significant lettings include
Delightful Desserts and Shake Dog Red although the scheme was
impacted by the insolvencies of 99p Stores and Linens Direct as
well as the closure of Argos. The property was valued at GBP147.0
million, reflecting a net initial yield of 6.50%. Capital
expenditure in the period was GBP0.4 million.
Snozone
Snozone enjoyed another successful trading period with revenues
increasing to GBP5.5 million and profit to just over GBP1.0
million. The development of initiatives including SnoAcademy and
the Disability Snowschool have supplemented Snozone's core offering
and helped contribute to the strong financial performance. The
operational expertise of Snozone is also regularly utilised to
assist our property business, particularly with regard to
initiatives involving the leisure sector.
FINANCIAL REVIEW
Six months Year Six months
to to to
June 2017 Dec 2016 June
Wholly-owned assets 2016
Profitability
Net Rental Income (NRI)(1) GBP25.0m GBP50.4m GBP25.4m
Adjusted Profit(2) GBP14.5m GBP26.8m GBP13.6m
Adjusted Earnings per share 2.06p 3.82p 1.94p
IFRS Profit/(Loss) for the
period GBP12.1m GBP(4.4)m GBP7.2m
EPRA cost ratio (excluding
vacancy costs) 25.3% 27.4% 26.4%
Net Administrative Expenses
to Gross Rent 12.1% 13.6% 12.7%
Investment returns
Net Asset Value (NAV) per share 68p 68p 71p
EPRA NAV per share 67p 68p 71p
Dividend per share 1.73p 3.39p 1.62p
Dividend pay-out 84.0% 88.7% 83.5%
Return on equity 2.5% (0.9)% 1.4%
Financing(3)
Group net debt GBP403.1m GBP398.1m GBP403.1m
Group net debt to property
value 46% 46% 46%
Average maturity of Group debt(4) 7.8 years 8.0 years 3.1 years
Cost of Group debt(5) 3.25% 3.25% 3.46%
----------------------------------- ------------ ----------- -----------
(1) Wholly-owned assets.
(2) Adjusted Profit is as defined in the Glossary. It
incorporates profits from operating activities and excludes
revaluation of properties and financial instruments, gains or
losses on disposal, exceptional items and other defined terms. A
reconciliation to the statutory result is provided below. EPRA
figures and a reconciliation to EPRA EPS are shown in Note 7 to the
Financial Statements.
(3) December 2016 comparative figures in this section are
adjusted for the refinancing of Mall assets completed on 4 January
2017, Ipswich disposal completed on 17 February 2017 and Ilford
acquisition completed on 8 March 2017.
(4) 30 June 2017 adjusted to reflect RCF extensions completed on
3 August 2017. December 2016 figure is as at date of results (9
March 2017) reflecting debt drawn on Ilford acquisition.
Calculations assume exercise of all extension options.
(5) Assuming RCF fully drawn.
The above results are discussed on the following pages.
Profitability
Components of Adjusted Profit and reconciliation to IFRS
Profit
Amounts in GBPm Six months Year to Six months
to December to
June 2017 2016 June 2016
Year to
December
2016
Year Year
to to
December December
2016 2016
Net Rental Income (NRI)
Wholly-owned assets
(see analysis on next
page) 25.0 50.4 25.4
Kingfisher, Redditch(1) 0.7 1.7 0.9
Buttermarket, Ipswich(2) - 0.5 0.1
----- ------ ---------- ---------- ----- -------
25.7 52.6 26.4
Net interest (see analysis
on page 11) (9.4) (20.3) (10.5)
Snozone profit (indoor
ski operation) 1.0 1.4 1.0
Central operating costs
net of external fees (2.7) (6.9) (3.2)
Tax (0.1) - (0.1)
Adjusted Profit 14.5 26.8 13.6
Adjusted Earnings
per share (pence)(3) 2.1p 3.8p 1.9p
Reconciliation of Adjusted
Profit to statutory
result
Adjusted Profit 14.5 26.8 13.6
Property revaluation
(including Deferred
Tax) (2.8) (14.5) (8.6)
(Loss)/profit on disposals - (2.6) 4.3
Gain/(loss) on financial
instruments 0.6 (2.5) (1.8)
Refinancing costs - (11.0) -
Other items(4) (0.2) (0.6) (0.3)
-------------------------------- ------------- ---------- ---------- ----- -------
Profit/(loss) for the
period 12.1 (4.4) 7.2
-------------------------------- ------------- ---------- ---------- ----- -------
(1) See note 9d to the Financial Statements.
(2) See note 9e to the Financial Statements.
(3) EPRA figures and a reconciliation to EPRA EPS are shown in
Note 7 to the Financial Statements.
(4) Includes GBP0.4 million for the non-cash accounting charge
in respect of share-based payments (Year to December 2016: GBP0.5
million, Six months to June 2016: GBP0.3 million)
Adjusted Profit increased by 6.6% on the prior year driven by an
increase in like-for-like NRI, lower interest costs following the
refinancing of the Mall assets and a GBP0.5 million reduction in
net central operating costs.
NRI fell on an absolute basis due to the timing of acquisitions
and disposals, with the impact of the Camberley and Ipswich sales
not fully offset by the Ilford acquisition, which was purchased
part way through the current period, and the full period benefit of
Hemel Hempstead which was purchased part way through the first half
of 2016. Further details are provided in the wholly-owned NRI
section below.
Net interest fell by GBP1.1 million compared to the prior year
period due to the timing of acquisitions and disposals and a lower
average interest cost arising from the refinancing of the Mall
assets and the new debt drawn on Ilford.
Net central operating costs improved by GBP0.5 million compared
to H1 2016. As the benefit of completed and further cost
initiatives continue to flow through we expect the full year rate
of improvement to accelerate.
Wholly-owned assets net rental income (NRI)
Amounts in GBPm Six months Six months
to to
June 2017 June 2016
-------------------------------- ----------- ----------- ------
Like for like excluding
BHS
(Blackburn, Luton, Maidstone,
Walthamstow, Wood Green) 21.5 20.6 +4.4%
-------------------------------- ----------- ----------- ------
Impact of BHS -0.3 +0.5
-------------------------------- ----------- ----------- ------
Like for like
(Blackburn, Luton, Maidstone,
Walthamstow, Wood Green) 21.2 21.1 +0.5%
-------------------------------- ----------- ----------- ------
Hemel Hempstead - acquired
February/March 2016 2.0 1.6
-------------------------------- ----------- -----------
Camberley (sold November
2016) and other disposals - 2.7
-------------------------------- ----------- -----------
Ilford - acquired 8 March 1.8 -
2017
-------------------------------- ----------- -----------
Net rental income (NRI) 25.0 25.4
-------------------------------- ----------- -----------
Like-for-like NRI growth was 0.5%, despite the net impact of
GBP0.8 million from the loss of the three BHS units which ceased
trading in August 2016. Excluding this it was 4.4%. The openings of
the new Wilko in Blackburn, and Lidl and The Gym at Walthamstow,
created from the former BHS space, will drive NRI growth in the
second half of the year, together with the new Travelodge at Wood
Green.
Net Asset Value (NAV)
NAV at GBP481.1 million and EPRA NAV at GBP482.9 million
increased marginally during the period (December 2016: GBP477.6
million and GBP481.5 million respectively) with profit for the
period offsetting the payment of the Final 2016 Dividend. The
valuation of the wholly-owned portfolio at 30 June 2017 was
GBP879.8 million, reflecting a net initial yield of 5.97%. This is
in line with the 30 December 2016 valuation of GBP794.1 million
after allowing for capital expenditure in the period of GBP7.7
million and the GBP78.0 million acquisition of The Exchange Centre,
Ilford in March 2017, excluding acquisition costs of c GBP1.0
million.
On a per share basis Basic NAV was stable at 68p. EPRA NAV fell
by 1p to 67p due to a slightly higher number of dilutive shares and
shares in issue.
Property portfolio valuation
Property at independent 30 June 2017 30 December
valuation 2016
GBPm NIY % GBPm NIY %
------------------------- ------- ------ ------ ------
Wholly-owned portfolio 879.8 5.97 794.1 6.01
------------------------- ------- ------ ------ ------
Financing
Net interest on a see-through basis
Amounts in GBPm Six months Year to Six months
to 30 June 30 December to 30
2017 2016 2016 June 2016
30 December
2016 2016
------------ ------------- -------------
Wholly-owned assets
Net Interest on loans 6.9 14.0 7.0
Amortisation of refinancing
costs 0.4 1.4 0.8
Notional interest
charge on head leases(1) 1.7 3.6 1.8
------------ ------------- -------------
9.0 19.0 9.6
Kingfisher, Redditch 0.3 0.8 0.4
Buttermarket, Ipswich - 0.1 0.2
Central 0.1 0.4 0.3
----------------------------------- ------------ ------------- -------------
Net Group interest 9.4 20.3 10.5
----------------------------------- ------------ ------------- -------------
(1) Notional interest charge with offsetting opposite and
materially equal credit within other property operating
expenses.
Net interest fell by GBP1.1 million compared to the prior year
period due to the timing of acquisitions and disposals and the
lower average cost of debt (3.25% at 30 June 2017 v 3.47% at 30
June 2016) arising from the refinancing of the Mall assets that
completed in January 2017 and the new GBP39 million of debt on the
Ilford acquisition that was fixed at an all-in rate of 2.76%.
Group debt
DebtP(1) Cash(2) Net Loan Net Average Fixed Duration Duration
debt to debt interest to with
value to rate loan extensions
(3) value(3) expiry
30 June 2017 GBPm GBPm GBPm % % % % Years Years
----------------- --------- -------- ------ ------- ---------- ----------- ------ --------- ------------
Four Mall
assets 255.0 (9.1) 245.9 48% 46% 3.36 100 7.7 9.1
Luton 107.5 (8.6) 98.9 51% 47% 3.14 100 6.5 6.5
Hemel Hempstead 26.9 (1.2) 25.7 50% 48% 3.32 100 4.5 5.5
Ilford 39.0 (3.6) 35.4 49% 44% 2.76 100 6.7 6.7
Group RCF(4) - (2.8) (2.8) - - 3.33 - 4.6 4.6
----------------- --------- -------- ------ ------- ---------- ----------- ------ --------- ------------
On balance
sheet debt 428.4 (25.3) 403.1 49% 46% 3.25 94 6.9 7.8
----------------- --------- -------- ------ ------- ---------- ----------- ------ --------- ------------
(1) Excluding unamortised issue costs.
(2) Excluding cash beneficially owned by tenants.
(3) Debt and net debt divided by investment property at valuation.
(4) At 30 June 2017, adjusted for RCF extension completed on 3 August 2017.
Our target range for net debt to property value remains 40%-50%
with an intention to bring this to the lower end of that range in
the medium term.
Group Revolving Credit Facility (RCF)
The GBP30 million facility was extended on 3 August 2017 for a
further three years such that it now matures on 22 January 2022.
Interest on the facility is charged at a margin of 3.0% per annum
above LIBOR. A non-utilisation fee of 1.5% is payable. No amount
was drawn at 30 June 2017.
Covenants
The Group and its Redditch joint venture were compliant with
their banking and debt covenants at 30 June 2017.
Going concern
As stated in note 2 to the condensed financial statements, the
directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, being a period of
not less than 12 months from the date of this report. Accordingly,
they continue to adopt the going concern basis in preparing the
consolidated financial statements.
Dividend
The Board is proposing an interim dividend of 1.73 pence per
share, all of which will be paid as a Property Income Distribution
(PID). This represents an increase of 6.8% from the 2016 Interim
dividend. A Scrip dividend alternative may be offered.
The key dates in relation to the payment of the dividend
are:
-- Confirmation of ZAR equivalent dividend 26 September 2017
-- Last day to trade on Johannesburg Stock Exchange (JSE) 3 October 2017
-- Shares trade ex-dividend on the JSE 4 October 2017
-- Shares trade ex-dividend on the London Stock Exchange (LSE) 5 October 2017
-- Record date for LSE and JSE 6 October 2017
-- Dividend payment date 26 October 2017
If a Scrip dividend alternative is offered the deadline for
submission of valid election forms will be 6 October 2017. South
African shareholders are advised that the dividend will be regarded
as a foreign dividend. Further details relating to Withholding Tax
for shareholders on the South African register will be provided
within the announcement detailing the currency conversion rate on
26 September 2017. Share certificates on the South African register
may not be dematerialised or rematerialised between 4 October 2017
and 6 October 2017, both dates inclusive. Transfers between the UK
and South African registers may not take place between 26 September
2017 and 6 October 2017, both dates inclusive.
Outlook
Whilst elements of the retail sector may face challenges, the
continued strong occupier demand for our centres as well as the
local and convenient nature of our assets, which cater for the
non-discretionary and value-orientated needs of our shoppers, gives
us great comfort over the security of our income. This, allied with
our proven track record of driving income and delivering results
through selective but significant capital expenditure investment,
underpins the future growth potential of the business.
Reflecting the strong feeling of confidence in the future growth
prospects of the business, the Board has announced an Interim
dividend of 1.73p, representing a 6.8% increase on the prior year.
With the second half of the year set to comparatively benefit the
timing of recent acquisitions and several major lettings coming on
stream we expect the Full Year 2017 Dividend will be at the top end
of our targeted growth range of at least 5% to 8% per annum.
Principal risks and uncertainties
There are a number of risks and uncertainties which could have a
significant impact on future performance and could cause actual
results to differ materially from expected or historical results.
The Group carries out a regular review of the major risks it faces
and monitors the controls that have been put in place to mitigate
them.
A detailed explanation of the principal risks and uncertainties
was included on pages 28 to 31 of the Group's 2016 Annual Report. A
further review was carried out for the 30 June 2017 half year. This
review concluded that the nature of the Group's risks had not
significantly changed in the last six months and therefore the
principal risks to the Group remain those disclosed in the 2016
Annual Report. These have been summarised below.
Property risks:
-- Property investment market risks - Weak economic conditions
and poor sentiment in commercial real estate markets may lead to
low investor demand and a market pricing correction. Small changes
in property market yields can have a significant effect on property
valuation and the impact of leverage could magnify the effect on
the Group's net assets.
-- Impact of the economic environment (tenant risks) - Tenant
insolvency or distress and a prolonged downturn in tenant demand
could put pressure on rent levels. Tenant failures and reduced
tenant demand could adversely affect rental income revenues, lease
incentive costs, void costs, available cash and the value of
properties owned by the Group.
-- Valuation risk - The risk that a lack of relevant
transactional evidence makes property valuations increasingly
subjective and open to a wider range of possible outcomes.
-- Threat from the internet - The trend towards online shopping
may adversely impact footfall in shopping centres and potentially
reduce tenant demand for space and the levels of rents which can be
achieved.
-- Concentration and scale risks - By having a less diversified
portfolio the business is more exposed to specific tenants or types
of tenant. Failures of such tenants could therefore have a
significant impact on rental income revenues impacting Adjusted
Profit and property valuations.
-- Competition risk - The threat to the Group's property assets
of competing in town and out of town retail and leisure
schemes.
-- Business disruption from a major incident - The threat of a
major incident, such as a terrorist attack, impacting one of the
Group's assets.
-- Development risk - There is a risk that where capital
expenditure and development projects are undertaken, that delays
and other issues may lead to increased cost and reputational
damage. There is also the risk that planned realisation of value is
not achieved, for example if the property cannot subsequently be
sold for the anticipated amount or if tenants are not contracted on
sufficiently attractive terms.
Funding and treasury risks:
-- Liquidity and funding - Inability to fund the business or to
refinance existing debt on economic terms may result in the
inability to meet financial obligations when due and put a
limitation on financial and operational flexibility. Cost of
financing could be prohibitive in the future.
-- Covenant compliance risks - Breach of any loan covenants
could cause default on debt and possible accelerated maturity.
Unremedied breaches can trigger demand for immediate repayment of
loans.
-- Interest rate exposure risks - Exposure to rising or falling
interest rates. If interest rates rise and are unhedged, the cost
of debt facilities can rise and ICR covenants could be broken.
Hedging transactions used by the Group to minimise interest rate
risk may limit gains, result in losses or have other adverse
consequences.
Other risks:
-- Execution of business plan - the failure to execute the
Group's business plan in line with internal and external
expectations could lead to potential loss of income or value and
reputational damage, negatively impacting investor market
perception.
-- Property acquisition/disposal strategy - The Group is exposed
to risks around overpayment for acquisitions and that acquisitions
do not deliver the returns forecast. In addition, if the portfolio
is not effectively managed through the property cycle, with sales
and deleveraging at the appropriate time, the Group is exposed to
risks in not being able to take advantage of other investment
opportunities as they arise and the potential for LTVs to move
adversely, with adverse consequences for covenants and shareholder
value.
-- Tax risks - Changes in tax legislation or the interpretation
of tax legislation or previous transactions where the tax
authorities disagree with the tax treatment adopted could result in
tax related liabilities and other losses arising.
-- Regulation risks - Exposure to changes in existing or
forthcoming property related or corporate regulation could result
in financial penalties or loss of business or credibility.
-- Loss of key management - The Group's business is partially
dependent on the skills of a small number of key individuals. Loss
of key individuals or an inability to attract new employees with
the appropriate expertise could reduce the effectiveness with which
the Group conducts its business.
-- Historical Transaction Risk - the risk of issues or
liabilities emerging from historical transactions most likely
through warranties or indemnities provided in asset or business
disposals.
The risks noted above do not comprise all those potentially
faced by the Group and are not intended to be presented in any
order of priority. Additional risks and uncertainties currently
unknown to the Group, or which the Group currently deems
immaterial, may also have an adverse effect on the financial
condition or business of the Group in the future. These issues are
kept under constant review to allow the Group to react in an
appropriate and timely manner to help mitigate the impact of such
risks.
Responsibility statement
The directors confirm that to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 "Interim Financial Reporting", as adopted
by the European Union;
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
-- the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions and changes therein).
By order of the Board
Lawrence Hutchings Charles Staveley
Chief Executive Group Finance Director
9 August 2017 9 August 2017
INDEPENT REVIEW REPORT TO CAPITAL & REGIONAL PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2017 which comprises the consolidated
income statement, the consolidated balance sheet, the consolidated
statement of changes in equity, the consolidated cash flow
statement and related notes 1 to 17. We have read the other
information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an
independent review 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 company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2017 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
9 August 2017
Condensed consolidated income statement
For the six months to 30 June 2017
Unaudited Unaudited
Six months Six months Audited
to 30 to Year to
June 30 June 30 December
2017 2016 2016
Note GBPm GBPm GBPm
----------------------------------- ----- ------------ ------------ -------------
Continuing operations
Revenue 3b 43.9 43.9 87.2
Cost of sales (16.6) (16.1) (32.5)
----------------------------------- ----- ------------ ------------ -------------
Gross profit 27.3 27.8 54.7
Administrative costs (4.8) (5.2) (10.9)
Share of (loss)/profit in
associates and joint ventures 9a (1.1) 1.9 0.3
Loss on revaluation of investment
properties 8a (1.3) (10.3) (14.2)
Other gains and losses 5 0.3 4.4 (1.8)
----------------------------------- ----- ------------ ------------ -------------
Profit on ordinary activities
before financing 20.4 18.6 28.1
Finance income 0.8 0.2 0.4
Finance costs (9.1) (11.6) (33.0)
----------------------------------- ----- ------------ ------------ -------------
Profit before tax 12.1 7.2 (4.5)
Tax 6 - - 0.1
----------------------------------- ----- ------------ ------------ -------------
Profit/(loss) for the period 12.1 7.2 (4.4)
----------------------------------- ----- ------------ ------------ -------------
Basic earnings per share 7 1.7p 1.0p (0.6)p
Diluted earnings per share 7 1.7p 1.0p (0.6)p
EPRA basic earnings per
share 7 2.0p 1.9p 3.7p
EPRA diluted earnings per
share 7 2.0p 1.9p 3.7p
----------------------------------- ----- ------------ ------------ -------------
Condensed consolidated statement of comprehensive income
For the six months to 30 June 2017
Unaudited Unaudited
six months six months Audited
to to Year to
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
---------------------------- ------------ ------------ -------------
Profit for the period 12.1 7.2 (4.4)
Other comprehensive income - - -
Total comprehensive income
for the period 12.1 7.2 (4.4)
---------------------------- ------------ ------------ -------------
The results for the current and preceding periods are fully
attributable to equity shareholders.
The EPRA measures used throughout this report are industry best
practice performance measures established by the European Public
Real Estate Association. They are defined in the Glossary to the
Financial Statements. EPRA Earnings and EPRA EPS are shown in Note
7 to the Financial Statements. EPRA net assets and EPRA triple net
assets are shown in Note 13 to the Financial Statements.
Condensed consolidated balance sheet
At 30 June 2017
Unaudited Audited
30 June 30 December
2017 2016
Note GBPm GBPm
---------------------------------- ----- ---------- -------------
Non-current assets
Investment properties 8 924.2 838.5
Plant and equipment 1.1 0.9
Fixed asset investments 2.0 1.9
Receivables 13.4 14.3
Investment in associates 9b 12.6 13.9
Total non-current assets 953.3 869.5
----------------------------------- ----- ---------- -------------
Current assets
Receivables 19.5 13.4
Cash and cash equivalents 10 31.1 49.1
Assets classified as held for
sale - 13.9
Total current assets 50.6 76.4
----------------------------------- ----- ---------- -------------
Total assets 1,003.9 945.9
----------------------------------- ----- ---------- -------------
Current liabilities
Bank loans 11 - (334.6)
Trade and other payables (35.2) (41.3)
Liabilities directly associated
with assets held for sale - (0.4)
Total current liabilities (35.2) (376.3)
----------------------------------- ----- ---------- -------------
Net current assets 15.4 (299.9)
----------------------------------- ----- ---------- -------------
Non-current liabilities
Bank loans 11 (422.2) (26.2)
Other payables (4.0) (4.4)
Obligations under finance leases (61.4) (61.4)
Total non-current liabilities (487.6) (92.0)
----------------------------------- ----- ---------- -------------
Total liabilities (522.8) (468.3)
----------------------------------- ----- ---------- -------------
Net assets 481.1 477.6
----------------------------------- ----- ---------- -------------
Equity
Share capital 16 7.1 7.0
Share premium 16 161.5 158.2
Other reserves 60.3 60.3
Capital redemption reserve 4.4 4.4
Own shares held (0.4) (0.4)
Retained earnings 248.2 248.1
----------------------------------- ----- ---------- -------------
Equity shareholders' funds 481.1 477.6
----------------------------------- ----- ---------- -------------
Basic net assets per share 13 GBP0.68 GBP0.68
EPRA triple net assets per share 13 GBP0.67 GBP0.67
EPRA net assets per share 13 GBP0.67 GBP0.68
----------------------------------- ----- ---------- -------------
Condensed consolidated statement of changes in equity
For the six months to 30 June 2017
Capital Own
Share Share Merger redemption shares Retained Total
capital premium reserve reserve held earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---- ------------------------------- ----- -------- -------- ----------- ------- --------- -------
Balance at 30
December 2015 7.0 157.2 60.3 4.4 (0.6) 274.9 503.2
----- -------- -------- ----------- ------- --------- -------
Profit for
the period - - - - - 7.2 7.2
Other comprehensive
loss for the
period - - - - - - -
----- -------- -------- ----------- ------- --------- -------
Total comprehensive
income for
the period - - - - - 7.2 7.2
Credit to
equity for
equity-settled
share-based
payments - - - - - 0.3 0.3
Dividends
paid (note
16) - - - - - (11.3) (11.3)
Balance at
30 June 2016
(unaudited) 7.0 157.2 60.3 4.4 (0.6) 271.1 499.4
----- -------- -------- ----------- ------- --------- -------
Profit for
the period - - - - - (11.6) (11.6)
Other comprehensive
loss for the
period - - - - - - -
----- -------- -------- ----------- ------- --------- -------
Total comprehensive
income for
the period - - - - - (11.6) (11.6)
Credit to
equity for
equity-settled
share-based
payments - - - - - 0.2 0.2
Dividends
paid (note
16), net of
Scrip - - - - - (10.4) (10.4)
Shares issued,
net of costs - 1.0 - - - (1.0) -
Other movements - - - - 0.2 (0.2) -
Balance at 30
December 2016 7.0 158.2 60.3 4.4 (0.4) 248.1 477.6
----- -------- -------- ----------- ------- --------- -------
Profit for
the period - - - - - 12.1 12.1
Other comprehensive
loss for the
period - - - - - - -
----- -------- -------- ----------- ------- --------- -------
Total comprehensive
income for
the period - - - - - 12.1 12.1
Credit to
equity for
equity-settled
share-based
payments - - - - - 0.4 0.4
Dividends
paid (note
16) , net
of Scrip - - - - - (9.0) (9.0)
Shares issued,
net of costs 0.1 3.3 - - - (3.4) -
Balance at
30 June 2017
(unaudited) 7.1 161.5 60.3 4.4 (0.4) 248.2 481.1
------------------------------- ---- ----- -------- -------- ----------- ------- --------- -------
Condensed consolidated cash flow statement
For the six months to 30 June 2017
Unaudited Unaudited
Six Six Audited
months months Year
to 30 to to 30
June 30 June December
2017 2016 2016
Note GBPm GBPm GBPm
Operating activities
Net cash from operations 12 19.8 21.5 41.1
Distributions received from
associates/investments 0.7 0.5 4.7
Interest paid (6.7) (7.1) (14.6)
Interest received 0.1 - 0.1
Cash flows from operating
activities 13.9 14.9 31.3
----------------------------------- ----- ---------- ---------- ----------
Investing activities
Acquisition of The Exchange,
Ilford (79.0) - -
Acquisitions in Hemel Hempstead - (56.6) (56.6)
Disposal of Buttermarket,
Ipswich 9.7 - -
Disposal of The Mall, Camberley - - 85.7
Other disposals - 0.4 0.7
Purchase of plant and equipment (0.3) (0.3) (0.5)
Capital expenditure on investment
properties (6.8) (11.2) (20.6)
Cash flows from investing
activities (76.4) (67.7) 8.7
----------------------------------- ----- ---------- ---------- ----------
Financing activities
Dividends paid (net of Scrip)
including withholding tax (8.9) (11.4) (21.7)
Bank loans drawn down 401.5 43.6 26.9
Bank loans repaid (334.6) (0.2) (45.4)
Loan arrangement costs (13.5) (0.6) (0.6)
Cash flows from financing
activities 44.5 31.4 (40.8)
----------------------------------- ----- ---------- ---------- ----------
Net (decrease)/increase in
cash and cash equivalents (18.0) (21.4) (0.8)
Cash and cash equivalents
at the beginning of the period 49.1 49.9 49.9
----------------------------------- ----- ---------- ---------- ----------
Cash and cash equivalents
at the end of the period 10 31.1 28.5 49.1
----------------------------------- ----- ---------- ---------- ----------
Notes to the condensed financial statements
For the six months to 30 June 2017
1 General information
The comparative information included for the year ended 30
December 2016 does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. A copy of the statutory
accounts for that year has been delivered to the Registrar of
Companies. The auditor has reported on those accounts: their report
was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
The Group's financial performance does not suffer materially
from seasonal fluctuations.
2 Accounting policies
Basis of preparation
The annual financial statements of Capital & Regional plc
are prepared in accordance with IFRS as adopted by the European
Union. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
IAS 34 "Interim Financial Reporting" as adopted by the European
Union.
The principal exchange rates used to translate foreign currency
denominated amounts are:
Balance sheet: GBP1 = EUR1.137 (30 June 2016: GBP1 = EUR1.210;
31 December 2016: GBP1 = EUR1.168)
Income statement: GBP1 = EUR1.162 (30 June 2016: GBP1 =
EUR1.285; 31 December 2016: GBP1 = EUR1.224).
The Half-Year Report was approved by the Board on 9 August
2017.
Going concern
The Group prepares cash flow and covenant compliance forecasts
to demonstrate that it has adequate resources available to continue
in operation for the foreseeable future, being at least 12 months
from the date of this report. In these forecasts the directors
specifically consider anticipated future market conditions and the
Group's principal risks and uncertainties. Further information on
the Group's financing position is contained within the Financial
Review with additional details of the Group's cash position and
borrowing facilities provided in notes 10 and 11 of the condensed
financial statements.
In summary the directors believe that the Group and the Company
have adequate resources to continue in operational existence for
the foreseeable future and accordingly continue to adopt the going
concern basis in preparing the annual report and financial
statements.
Change in accounting policies
The condensed consolidated interim financial information has
been prepared on the basis of the accounting policies, significant
judgements, key assumptions and estimates as set out in the notes
to the Group's annual financial statements for the year ended 30
December 2016. Taxes on income in the interim periods are accrued
using the tax rate that would be applicable to expected total
annual earnings.
The following accounting standards or interpretations were
effective for the period beginning 31 December 2016 and have been
applied in preparing these financial statements to the extent they
are relevant to the preparation of financial information:
-- IFRS 11 'Accounting for acquisitions of interests in joint
operations - amendments to IFRS 11'
-- IAS 1 'Disclosure initiative - amendments to IAS 1'
-- IAS 16 and IAS 38 (amendments) 'Clarification of Acceptable
Methods of Depreciation and Amortisation'
-- IAS 27 (amendment) 'Equity Method in Separate Financial Statements'
None of the standards above have impacted the Group's
reporting.
A number of new standards and amendments to standards have been
issued but are not yet effective for the Group. The most
significant of these, and their potential impact on the Group's
accounting, are set out below:
-- IFRS 15 Revenue from Contracts with Customers (effective for
year ending 30 December 2019) - does not apply to gross rental
income, but does apply to service charge income, other fees and
trading property disposals. The Group does not expect adoption of
IFRS 15 to have a material impact on the measurement of revenue
recognition, but additional disclosures will be required with
regards to the above sources of income.
-- IFRS 9 Financial Instruments (effective for year ending 30
December 2019) - will impact both the measurement and disclosures
of financial instruments. The Group has not yet completed its
evaluation of the effect of the adoption but it may impact the
measurement and presentation of the Group's financial
liabilities.
-- IFRS 16 Leases (effective for year ending 30 December 2020) -
will result in the Group recognising on balance sheet assets its
leases along with a corresponding liability. The primary lease
contracts that this will impact are the lease on the Group's head
offices and the leases of the Snozone business for its Castleford
and Milton Keynes operations. In addition, IFRS 16 could have an
indirect impact on the Group's business if it leads to a change in
occupier behaviour. Examples of this would be if its adoption
results in tenants or potential tenants typically seeking shorter
lease terms and/or more prevalent use of turnover-related, as
opposed to fixed rents.
3 Operating segments
3a Operating segment performance
The Group's reportable segments under IFRS 8 are Wholly-owned
assets, Other UK Shopping Centres, Snozone and Group/Central.
Wholly-owned assets consists of the shopping centres at Blackburn,
Hemel Hempstead, Ilford (from acquisition on 8 March 2017), Luton,
Maidstone, Walthamstow and Wood Green and, in the prior year
periods, Camberley, until its disposal on 11 November 2016. Other
UK Shopping Centres consists of the Group's interests in Kingfisher
Limited Partnership (Redditch) and, in the prior year, until its
reclassification as held for sale on 30 December 2016, Buttermarket
Ipswich Limited. Group/Central includes management fee income,
Group overheads incurred by Capital & Regional Property
Management, Capital & Regional plc and other subsidiaries and
the interest expense on the Group's central borrowing facility.
Wholly-owned assets and Other UK Shopping Centres derive their
revenue from the rental of investment properties. The Snozone and
Group/Central segments derive their revenue from the operation of
indoor ski slopes and the management of property funds or schemes
respectively. The split of revenue between these classifications
satisfies the requirement of IFRS 8 to report revenues from
different products and services. Depreciation and charges in
respect of share-based payments represent the only significant
non-cash expenses.
UK Shopping
Centres
------------------------------
Other
UK Shopping
Centres
Wholly-owned (Kingfisher
assets Redditch) Snozone Group/Central Total
------------------------------- ----- ----- -------------- -------------- --------- --------------- ---------
Six months to 30 June
2017 GBPm GBPm GBPm GBPm GBPm
--------------------------------------------- -------------- -------------- --------- --------------- ---------
Rental income from
external sources 30.9 1.1 - - 32.0
Property and void costs (5.9) (0.4) - - (6.3)
-------------- -------------- --------- --------------- ---------
Net rental income 25.0 0.7 - - 25.7
Net interest expense (9.0) (0.3) - (0.1) (9.4)
Snozone income/Management
fees(1) - - 5.5 1.1 6.6
Management expenses - - (4.4) (3.4) (7.8)
Investment income - - - 0.2 0.2
Depreciation - - (0.1) - (0.1)
Variable overhead (excluding
non-cash items) - - - (0.6) (0.6)
Tax (charge)/credit - (0.1) - - (0.1)
Adjusted Profit 16.0 0.3 1.0 (2.8) 14.5
Revaluation of properties (1.3) (1.5) - - (2.8)
Profit on disposal - - - - -
(Loss)/gain on financial
instruments 0.5 0.1 - - 0.6
Share-based payments
(non-cash) - - - (0.4) (0.4)
Other items - - - 0.2 0.2
-------------- -------------- --------- ---------------
Profit after
tax 15.2 (1.1) 1.0 (3.0) 12.1
-------------- -------------- --------- --------------- ---------
Total assets 979.2 30.8 3.4 8.7 1,022.1
Total liabilities (516.8) (18.2) (1.7) (4.3) (541.0)
-------------- -------------- --------- --------------- ---------
Net assets 462.4 12.6 1.7 4.4 481.1
------------------------------- ----- ----- -------------- -------------- --------- --------------- ---------
(1) Asset management fees of GBP2.0 million charged from the
Group's Capital & Regional Property Management entity to
Wholly-owned assets have been excluded from the table above.
3a Operating segment performance
UK Shopping
Centres
------------------------------
Other
Wholly-owned UK Shopping
assets Centres(1) Snozone Group/Central Total
------------------------------- ----- ----- -------------- -------------- --------- --------------- ---------
Six months to 30 June
2016 GBPm GBPm GBPm GBPm GBPm
--------------------------------------------- -------------- -------------- --------- --------------- ---------
Rental income from
external sources 30.8 1.5 - - 32.3
Property and void costs (5.4) (0.5) - - (5.9)
-------------- -------------- --------- --------------- ---------
Net rental income 25.4 1.0 - - 26.4
Net interest expense (9.6) (0.6) - (0.3) (10.5)
Snozone income/Management
fees(2) - - 5.4 1.3 6.7
Management expenses - - (4.3) (3.8) (8.1)
Depreciation - - (0.1) (0.1) (0.2)
Variable overhead (excluding
non-cash items) - - - (0.6) (0.6)
Tax (charge)/credit - (0.1) - - (0.1)
Adjusted Profit 15.8 0.3 1.0 (3.5) 13.6
Revaluation of properties (10.3) 3.3 - - (7.0)
Profit on disposal 0.6 - - 0.1 0.7
(Loss)/gain on financial
instruments (1.6) (0.2) - - (1.8)
Share-based payments
(non-cash) - - - (0.3) (0.3)
Other items - (1.5) - 3.5 2.0
-------------- -------------- --------- ---------------
Profit after
tax 4.5 1.9 1.0 (0.2) 7.2
-------------- -------------- --------- --------------- ---------
Total assets 982.6 57.5 2.8 8.1 1,051.0
Total liabilities (501.8) (28.4) (1.1) (20.3) (551.6)
-------------- -------------- --------- --------------- ---------
Net assets 480.8 29.1 1.7 (12.2) 499.4
------------------------------- ----- ----- -------------- -------------- --------- --------------- ---------
(1) Buttermarket Ipswich and Kingfisher Redditch.
(2) Asset management fees of GBP1.8 million charged internally
from the Group's Capital & Regional Property Management entity
to Wholly-owned assets have been excluded from the table above
which has also been restated to exclude other internal cost
recharges.
3a Operating segment
performance UK Shopping Centres
------------------------------
Other
Wholly-owned UK Shopping
assets Centres(1) Snozone Group/Central Total
------------------------------ -------------- -------------- --------- --------------- ---------
Year to 30 December
2016 GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------------- -------------- --------- --------------- ---------
Rental income from
external sources 62.0 3.4 - - 65.4
Property and void
costs (11.6) (1.2) - - (12.8)
-------------- -------------- --------- --------------- ---------
Net rental income 50.4 2.2 - - 52.6
Net interest expense (19.0) (0.9) - (0.4) (20.3)
Snozone income/Management
fees(2) - - 10.2 2.4 12.6
Management expenses - - (8.7) (7.8) (16.5)
Investment income - - - 0.3 0.3
Depreciation - - (0.1) - (0.1)
Variable overhead
(excluding non-cash
items) - - - (1.8) (1.8)
Tax (charge)/credit - (0.1) - 0.1 -
Adjusted Profit 31.4 1.2 1.4 (7.2) 26.8
Revaluation of properties (14.2) 1.2 - - (13.0)
Deferred tax on
revaluation of properties - (1.5) - - (1.5)
Loss on disposal(3) (5.9) (0.6) - - (6.5)
Income from Euro
B Note(4) - - - 3.9 3.9
Loss on financial
instruments (2.5) - - - (2.5)
Refinancing costs(5) (11.0) - - - (11.0)
Share-based payments
(non-cash) - - - (0.5) (0.5)
Other items - - - (0.1) (0.1)
-------------- -------------- --------- --------------- ---------
Profit after
tax (2.2) 0.3 1.4 (3.9) (4.4)
-------------- -------------- --------- --------------- ---------
Total assets 885.9 32.1 4.0 42.1 964.1
Total liabilities (460.9) (18.2) (2.1) (5.3) (486.5)
-------------- -------------- --------- --------------- ---------
Net assets 425.0 13.9(6) 1.9 36.8(6) 477.6
------------------------------ -------------- -------------- --------- --------------- ---------
(1) Includes Buttermarket Ipswich and Kingfisher Redditch. For
further information see Note 9.
(2) Asset management fees of GBP3.6 million charged from the
Group's Capital & Regional Property Management entity to
Wholly-owned assets have been excluded from the table above.
(3) Includes GBP0.6 million impairment of Ipswich trading
property recognised on reclassification as held for sale.
(4) GBP3.9 million of monies were received in 2016 through the
holding of a share in the German Euro B-Note junior loan instrument
which had previously been fully impaired. The monies were
distributed following the sale of properties by the liquidator of
the underlying entities.
(5) Refinancing costs consist of those triggered by serving
notice on the existing debt facility on five Mall assets on 28
December 2016. They comprised GBP7.6 million of fixed rate loan
redemption costs and the write off
of the GBP3.4 million of financing costs that were unamortised at 30 December 2016.
(6) Net assets of the Buttermarket Ipswich joint venture were
included within Group following its reclassification as held for
sale on 30 December 2016. The results for the year are reflected in
the Other UK Shopping Centres column.
3b Reconciliations of reportable revenue, assets and
liabilities
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2017 2016 2016
Revenue Note GBPm GBPm GBPm
------------------------------------- ------- ----------- ----------- ------------
Rental income from external
sources 3a 32.0 32.3 65.4
Service charge income 7.1 7.2 14.0
Management fees 3a 1.1 1.3 2.4
Snozone income 3a 5.5 5.4 10.2
-------------------------------------- ------ ------------
Revenue for reportable segments 45.7 46.2 92.0
Elimination of inter-segment
revenue (0.7) (0.8) (1.4)
Rental income earned by associates
and joint ventures (1.1) (1.5) (3.4)
Revenue per consolidated income
statement 43.9 43.9 87.2
-------------------------------------- ------ ----------- ----------- ------------
Revenues during the year and in the preceding periods were
solely derived from the UK.
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2017 2016 2016
Balance sheet Note GBPm GBPm GBPm
---------------------------------- ----- ----------- ----------- ------------
Total assets of reportable
segments 3a 1,022.1 1,051.0 964.1
Adjustment for associates
and joint ventures (18.2) (28.4) (18.2)
Group assets 1,003.9 1,022.6 945.9
---------------------------------- ----- ----------- ----------- ------------
Total liabilities of reportable
segments 3a (541.0) (551.6) (486.5)
Adjustment for associates
and joint ventures 18.2 28.4 18.2
Group liabilities (522.8) (523.2) (468.3)
---------------------------------- ----- ----------- ----------- ------------
Net assets by country
UK 480.9 499.2 477.5
Germany 0.2 0.2 0.1
---------------------------------- ----- ----------- ----------- ------------
Net assets by country 481.1 499.4 477.6
---------------------------------- ----- ----------- ----------- ------------
4 Revenue
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2017 2016 2016
Statutory Note GBPm GBPm GBPm
--------------------------------- ----- ----------- ----------- ------------
Gross rental income 25.1 25.8 51.0
Ancillary income 5.8 5.0 11.0
----------- ----------- ------------
30.8 30.8 62.0
Service charge income 7.1 7.2 14.0
External management fees 0.4 0.5 1.0
Snozone income 3a 5.5 5.4 10.2
Revenue per consolidated
income statement - continuing
operations 3b 43.9 43.9 87.2
--------------------------------- ----- ----------- ----------- ------------
Management fees represent revenue earned by Capital &
Regional Plc and the Group's wholly-owned CRPM subsidiary. Fees
charged to Wholly-owned assets have been eliminated on
consolidation.
5 Other gains and losses
Other gains and losses in the prior year related primarily to
losses on the sale of The Mall, Camberley of GBP6.3 million,
partially offset by GBP3.9 million recovered through the German
Euro B-Note junior loan instrument, a GBP0.4 million profit on the
sale of a unit in Maidstone and a GBP0.2 million receipt related to
a property disposed of in a prior year. The German Euro B-Note
junior loan instrument had previously been fully impaired. The
GBP3.9 million was received following the sale of properties by the
liquidator of the underlying German portfolio. A further GBP0.3
million was received in the current period.
6 Tax
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2017 2016 2016
Tax charge GBPm GBPm GBPm
-------------------------- ------------ ------------ ------------
UK corporation tax - - -
Adjustments in respect
of prior years - - (0.1)
Total current tax charge - - (0.1)
--------------------------- ------------ ----------- ------------
Deferred tax - - -
-------------------------- ------------ ------------ ------------
Total tax charge - - (0.1)
--------------------------- ------------ ----------- ------------
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2017 2016 2016
Tax charge reconciliation GBPm GBPm GBPm
--------------------------------- ------------ ----------- ------------
Profit before tax on continuing
operations 12.1 7.2 97.6
---------------------------------- ----------- ----------- ------------
Profit multiplied by the
UK corporation tax rate of
19.25% (30 June 2016 and
30 December 2016: 20%) 2.3 1.4 19.8
REIT exempt income and gains (2.5) (0.4) (18.5)
Non-allowable expenses and
non-taxable items 0.2 (0.4) -
Utilisation of tax losses 0.1 0.1 0.3
Unrealised gains on investment
properties not taxable at
the Group - (0.7) (1.5)
Temporary timing differences - - (0.1)
Adjustments in respect of
prior years (0.1) - -
---------------------------------- ----------- ------------
Total tax charge - continuing
operations - - -
---------------------------------- ----------- ----------- ------------
The UK corporation tax main rate was reduced to 19% with effect
from 1 April 2017. A further reduction in the rate of corporation
tax to 17% from 1 April 2020 was substantively enacted in Finance
Act 2016. Consequently the UK corporation tax rate at which
deferred tax is booked in the financial statements is 17% (2016:
17%).
The Group has recognised a deferred tax asset of GBP0.1 million
(30 December 2016: GBP0.1 million). No deferred tax asset has been
recognised in respect of temporary differences arising from
investments or investments in associates or in joint ventures in
the current or prior years as it is not certain that a deduction
will be available when the asset crystallises.
The Group has GBP14.1 million (30 December 2016: GBP13.9
million) of unused revenue tax losses, all of which are in the UK.
No deferred tax asset has been recognised in respect of these
losses due to the unpredictability of future profit streams and
other reasons which may restrict the utilisation of the losses (30
December 2016: GBPnil). The Group has unused capital losses of
GBP30.5 million (30 December 2016: GBP30.5 million) that are
available for offset against future gains but similarly no deferred
tax has been recognised in respect of these losses owing to the
unpredictability of future capital gains and other reasons which
may restrict the utilisation of the losses. The losses do not have
an expiry date.
7 Earnings per share
The European Public Real Estate Association ("EPRA") has issued
recommendations for the calculation of earnings per share
information as shown in the following table:
Six months Six months Year to 30
to 30 June to 30 June December 2016
2017 (unaudited) 2016 (unaudited) (audited)
Adjusted Adjusted Adjusted
Note Profit EPRA Profit Profit EPRA Profit Profit EPRA Profit
------------------------- ----- ------- ------ --------- ------- ------ --------- ------- ------ ---------
Profit (GBPm)
Profit/(loss)
for the year 12.1 12.1 12.1 7.2 7.2 7.2 (4.4) (4.4) (4.4)
Revaluation loss/(gain)
on investment
properties (net
of tax) 3a - 2.8 2.8 - 8.6 8.6 - 14.5 14.5
(Profit)/loss
on disposal of
properties (net
of tax) 3a - - - - (0.7) (0.7) - 6.5 6.5
Income from German
B Note - (0.3) (0.3) - (3.6) (3.6) - (3.9) (3.9)
Changes in fair
value of financial
instruments 3a - (0.6) (0.6) - 1.8 1.8 - 2.5 2.5
Refinancing costs - - - - - - - 11.0 11.0
Share-based payments 3a - - 0.4 - - 0.3 - - 0.5
Other items - - 0.1 - - - - - 0.1
------- ------ --------- ------- ------ --------- ------- ------ ---------
Profit 12.1 14.0 14.5 7.2 13.4 13.6 (4.4) 26.2 26.8
------- ------ --------- ------- ------ --------- ------- ------ ---------
Earnings per
share (pence) 1.7p 2.0p 2.1p 1.0p 1.9p 1.9p (0.6)p 3.7p 3.8p
Diluted earnings
per share (pence) 1.7p 2.0p 2.0p 1.0p 1.9p 1.9p (0.6)p 3.7p 3.8p
None of the current or prior year earnings related
to discontinued operations.
Weighted average Six months Six months Year to 30
number of shares to 30 June to 30 June December
(m) 2017 2016 2016
----------------------- ------------ ------------ -----------
Ordinary shares
in issue 703.9 700.8 701.0
Own shares held (0.6) (1.0) (0.6)
------------ ------------ -----------
Basic 703.3 699.8 700.4
Dilutive contingently
issuable shares
and share options 10.5 5.5 10.0
------------ ------------ -----------
Diluted 713.8 705.3 710.4
------------------------ ------------ ------------ -----------
At the end of the period, the Group had 13.6 million (30
December 2016: 11.9 million) additional share options and
contingently issuable shares granted under share-based payment
schemes that could potentially dilute basic earnings per share in
the future but which have not been included in the calculation
because they are not dilutive or the performance conditions for
vesting were not met based on the position at 30 June 2017.
Headline earnings per share
Six months Six months Year to
to to 30 December
30 June 2017 30 June 2016
2016
Basic Diluted Basic Diluted Basic Diluted
---------------------------- ---- ------ -------- ------ -------- ------ --------
Profit (GBPm)
Profit for the period 12.1 12.1 7.2 7.2 (4.4) (4.4)
Revaluation of investment
properties (net of
tax) 2.8 2.8 8.6 8.6 14.5 14.5
Profit on disposal of
investment properties
(net of tax) - - (0.7) (0.7) 6.5 6.5
Profit on German
B Note (Note 5) (0.3) (0.3) (3.6) (3.6) (3.9) (3.9)
------ --------
Headline earnings 14.6 14.6 11.5 11.5 12.7 12.7
Weighted average
number of shares
(m)
Ordinary shares
in issue 703.9 703.9 700.8 700.8 701.0 701.0
Own shares held (0.6) (0.6) (1.0) (1.0) (0.6) (0.6)
Dilutive contingently
issuable shares and share
options - 10.5 - 5.5 - 10.0
------ -------- ------ -------- ------ --------
703.3 713.8 699.8 705.3 700.4 710.4
------ -------- ------ -------- ------ --------
Headline Earnings
per share (pence) 2.1p 2.0p 1.6p 1.6p 1.8p 1.8p
------ -------- ------ -------- ------ --------
8 Investment properties
8a Wholly-owned properties
Freehold Leasehold Total
investment investment property
properties properties assets
GBPm GBPm GBPm
------------------------ ----------- ----------- ---------
Cost or valuation
At 30 December 2016 357.9 480.6 838.5
Acquired (The Exchange
Centre, Ilford) 79.0 - 79.0
Capital expenditure 4.3 3.5 7.8
Valuation deficit(1) (2.9) 1.8 (1.1)
At 30 June 2017 438.3 485.9 924.2
------------------------- ----------- ----------- ---------
(1) GBP1.3 million per Note 3a includes letting fee amortisation
adjustment of GBP0.2 million.
Acquisition of the Exchange Centre, Ilford
On 8 March 2017 the Group completed the acquisition of The
Exchange Centre, Ilford from a Meyer Bergman fund for GBP78
million, reflecting a Net Initial Yield of 6.70%. Acquisitions
costs were approximately GBP1 million. The acquisition, which
comprised the purchase of a holding company that owns the property
was funded from the Group's existing cash resources as well as
through a new seven year debt facility of GBP39 million, secured on
the asset, with DekaBank Deutsche Girozentrale.
8b Property assets summary
30 June 2017 30 December
2016
Group Group
100% share 100% share
GBPm GBPm GBPm GBPm
---------------------------------- ---- ------------- ------- ------- -------
Wholly-owned
Investment properties at
fair value 879.8 879.8 794.1 794.1
Head leases treated as finance
leases on investment properties 61.4 61.4 61.3 61.3
Unamortised tenant incentives
on investment properties (17.0) (17.0) (16.9) (16.9)
------------- ------- ------- -------
IFRS Property Value 924.2 924.2 838.5 838.5
------------- ------- ------- -------
Associates
Investment properties at
fair value 147.0 29.4 154.1 30.8
Unamortised tenant incentives
on investment properties (4.3) (0.9) (4.1) (0.8)
------------- ------- ------- -------
IFRS Property Value 142.7 28.5 150.0 30.0
------------- ------- ------- -------
Total at property
valuation 1,026.8 909.2 948.2 824.9
-------- ------ ------ ------
Total IFRS Property
Value 1,066.9 952.7 988.5 868.5
-------- ------ ------ ------
8c Valuations
External valuations were carried out on all of the property
assets detailed in the table above. The valuations at 30 June 2017
were carried out by independent qualified professional valuers from
CBRE Limited and Knight Frank LLP in accordance with RICS
standards. These valuers are not connected with the Group and their
fees are charged on a fixed basis that is not dependent on the
outcome of the valuations.
Real estate valuations are complex and derived from data that is
not widely publicly available and involves a degree of judgement.
For these reasons, the valuations are classified as Level 3 in the
fair value hierarchy as defined by IFRS 13. The valuations are
sensitive to changes in rent profile and yields.
9 Investment in associates and joint ventures
9a Share of results Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2017 2016 2016
Note GBPm GBPm GBPm
-------------------------------- ----- ------ ----------- ------------
Share of results of associates 9b (1.1) - (1.5)
Share of results of joint
ventures 9c - 1.9 1.8
(1.1) 1.9 0.3
-------------------------------- ----- ------ ----------- ------------
9b Investment in associates Unaudited Audited
Six months
to Year to
30 June 30 December
2017 2016
Note GBPm GBPm
--------------------------------------- ----- ----------- ------------
At the start of the period 13.9 15.9
Share of results of associates 9d (1.1) (1.5)
Dividends and capital distributions
received (0.2) (0.5)
At the end of the period 9d 12.6 13.9
--------------------------------------- ----- ----------- ------------
The Group's only significant associate at 30 June 2017 and 30
December 2016 was its 20% interest in the Kingfisher Limited
Partnership which owns the Kingfisher Shopping Centre in Redditch.
The Group exercises significant influence through its
representation on the General Partner board and through acting as
the property and asset manager.
As detailed in Note 17 the Kingfisher Limited Partnership
refinanced its debt on 7 July 2017. The Group's net investment in
the Partnership is expected to reduce to approximately GBP7.8
million after allowing for its share of distributions and costs
arising from this refinancing.
9c Investment in joint
ventures
Audited
Unaudited Year
Six months to
to 30 June 30 December
2017 2016
Note GBPm GBPm
------------------------------------------- --------- ------------ -------------
At the start of the period - 11.7
Share of results of joint ventures 9e - 1.8
Reclassification of Buttermarket
Centre, Ipswich as held for
sale - (13.5)
At the end of the period 9e - -
------------------------------------------- --------- ------------ -------------
9d Analysis of investment in associates
Unaudited Unaudited Audited
Six Six
months months Year
Other to 30 to 30 to
UK June June 30 December
Shopping 2017 2016 2016
Centres Total Total Total
Note GBPm GBPm GBPm GBPm
--------------------------- ----- --------- ---------- ---------- -------------
Income statement
(100%)
Revenue - gross
rent 5.6 5.6 5.8 11.5
Property and management
expenses (1.2) (1.2) (0.9) (2.0)
Void costs (0.5) (0.5) (0.4) (1.0)
---------------------------- ----- --------- ---------- ---------- -------------
Net rent 3.9 3.9 4.5 8.5
Net interest payable (1.7) (1.7) (2.0) (3.8)
---------------------------- ----- --------- ---------- ---------- -------------
Contribution 2.2 2.2 2.5 4.7
Revaluation of investment
properties (7.4) (7.4) (1.2) (11.8)
Fair value of interest
rate swaps 0.4 0.4 (0.9) (0.2)
Profit before tax (4.8) (4.8) 0.4 (7.3)
Tax (0.4) (0.4) (0.5) (0.7)
---------------------------- ----- --------- ---------- ---------- -------------
Profit after tax
(100%) (5.2) (5.2) (0.1) (8.0)
---------------------------- ----- --------- ---------- ---------- -------------
Balance sheet (100%)
Investment properties 142.7 142.7 159.4 150.0
Other assets 11.1 11.1 10.8 10.4
Current liabilities (83.9) (83.9) (7.1) (6.5)
Non-current liabilities (6.1) (6.1) (85.1) (84.0)
---------------------------- ----- --------- ---------- ---------- -------------
Net assets (100%) 63.8 63.8 78.0 69.9
---------------------------- ----- --------- ---------- ---------- -------------
Income statement
(Group share)
Revenue - gross
rent 1.1 1.1 1.2 2.3
Property and management
expenses (0.3) (0.3) (0.2) (0.4)
Void costs (0.1) (0.1) (0.1) (0.2)
---------------------------- ----- --------- ---------- ---------- -------------
Net rent 0.7 0.7 0.9 1.7
Net interest payable (0.3) (0.3) (0.4) (0.8)
---------------------------- ----- --------- ---------- ---------- -------------
Contribution 0.4 0.4 0.5 0.9
Revaluation of investment
properties (1.5) (1.5) (0.2) (2.3)
Fair value of interest
rate swaps 0.1 0.1 (0.2) -
Profit before tax (1.0) (1.0) 0.1 (1.4)
Tax (0.1) (0.1) (0.1) (0.1)
---------------------------- ----- --------- ---------- ---------- -------------
Profit after tax
(Group share) 9b (1.1) (1.1) - (1.5)
---------------------------- ----- --------- ---------- ---------- -------------
Balance sheet (Group
share)
Investment properties 28.5 28.5 31.9 30.0
Other assets 2.2 2.2 2.1 2.1
Current liabilities (16.8) (16.8) (1.4) (1.4)
Non-current liabilities (1.3) (1.3) (17.0) (16.8)
---------------------------- ----- --------- ---------- ---------- -------------
Net assets (Group
share) 9b 12.6 12.6 15.6 13.9
---------------------------- ----- --------- ---------- ---------- -------------
9e Analysis of investment in joint ventures
Unaudited Unaudited Audited
Six Six
months months Year
Other to to to
UK 30 June 30 June 30 December
Shopping 2017 2016(1) 2016
Centres Total Total Total
Note GBPm GBPm GBPm GBPm
--------------------------- ----- --------- ---------- ---------- -------------
Income statement
(100%)
Revenue - gross
rent - - 0.8 2.2
Property and management
expenses - - (0.4) (0.7)
Void costs - - (0.3) (0.6)
---------------------------- ----- --------- ---------- ---------- -------------
Net rent - - 0.1 0.9
Net interest payable - - (0.3) (0.3)
---------------------------- ----- --------- ---------- ---------- -------------
Contribution - - (0.2) 0.6
Revaluation of investment
properties - - 7.1 7.2
Profit on sale of
investment properties - - - (2.9)
Fair value of interest
rate swaps - - - (1.2)
Profit before tax - - 6.9 3.7
Tax - - (3.2) -
--------------------------- ----- --------- ---------- ---------- -------------
Profit after tax
(100%) - - 3.7 3.7
---------------------------- ----- --------- ---------- ---------- -------------
Balance sheet (100%)
Investment properties - - 43.1 -
Other assets - - 3.9 -
Current liabilities - - (5.4) -
Non-current liabilities - - (14.6) -
--------------------------- ----- --------- ---------- ---------- -------------
Net assets (100%) - - 27.0 -
--------------------------- ----- --------- ---------- ---------- -------------
Income statement
(Group share)
Revenue - gross
rent - - 0.4 1.1
Property and management
expenses - - (0.2) (0.3)
Void costs - - (0.1) (0.3)
---------------------------- ----- --------- ---------- ---------- -------------
Net rent - - 0.1 0.5
Net interest payable - - (0.2) (0.1)
---------------------------- ----- --------- ---------- ---------- -------------
Contribution - - (0.1) 0.4
Revaluation of investment
properties - - 3.6 3.5
Profit on sale of
investment properties - - - (1.5)
Fair value of interest
rate swaps - - - (0.6)
Profit before tax - - 3.5 1.8
Tax - - (1.6) -
--------------------------- ----- --------- ---------- ---------- -------------
Profit after tax
(Group share) 9c - - 1.9 1.8
---------------------------- ----- --------- ---------- ---------- -------------
Balance sheet (Group
share)
Investment properties - - 21.6 -
Other assets - - 2.0 -
Current liabilities - - (2.7) -
Non-current liabilities - - (7.3) -
--------------------------- ----- --------- ---------- ---------- -------------
Net assets (Group
share) 9c - - 13.6 -
---------------------------- ----- --------- ---------- ---------- -------------
(1) The Group's investment in Buttermarket Ipswich Limited was
reclassified as held for sale at 30 December 2016. On
reclassification Management assessed the fair value of its share of
the investment to be GBP13.9 million with the associated costs to
sell the entity expected to be GBP0.4 million and these amounts
were shown on the balance sheet at year end.
10 Cash and cash equivalents
Unaudited Audited
30 June 30 December
2017 2016
GBPm GBPm
--------------------------------- ---------- ------------
Cash at bank 25.3 45.8
Security disposals held in
rent accounts 0.8 0.7
Other restricted balances 5.0 2.6
---------------------------------- ----------
Total cash and cash equivalents 31.1 49.1
---------------------------------- ---------- ------------
11 Borrowings
Summary of borrowings
The Group's borrowings are arranged to ensure an appropriate
maturity profile and to maintain short term liquidity. There were
no defaults or other breaches of financial covenants that were not
waived under any of the Group borrowings during the current year or
the preceding year.
30 June 30 December
2017 2016
Borrowings at amortised cost GBPm GBPm
--------------------------------- -------- ------------
Secured
Fixed and swapped bank loans 428.4 260.2
Variable rate bank loans - 101.3
-------- ------------
Total secured borrowings before
costs 428.4 361.5
Unamortised issue costs (6.2) (0.7)
Total borrowings after costs 422.2 360.8
-------- ------------
Analysis of total borrowings
after costs
Current - 334.6
Non-current 422.2 26.2
Total borrowings after costs 422.2 360.8
---------------------------------- -------- ------------
During the period GBP39.0 million of new debt was drawn in
respect of the acquisition of The Exchange, Ilford, and GBP362.5
million in respect of the refinancing of the Mall assets completed
on 4 January 2017. See note 17a of the financial statements for the
year ended 30 December 2016 for further details.
The fair value of total borrowings before costs as at 30 June
2017 was GBP429.0 million (30 December 2016: GBP363.9 million).
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value. All of the assets listed were classified as Level 2, as
defined in note 1 to the financial statements for the year ended 30
December 2016. There were no transfers between Levels in the
year.
30 June 30 December
2017 2016
GBPm GBPm
------------------------------------ -------- ------------
Interest rate caps - 0.1
Interest rate swaps (1.5) (2.1)
Foreign exchange forward contracts - -
-------- ------------
(1.5) (2.0)
-------- ------------
12 Notes to the cash flow statement
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
--------------------------------------------- ----------- ------------
Profit/(loss) for the period 12.1 7.2 (4.4)
Adjusted for:
Finance income (0.8) (0.2) (0.4)
Finance expense 9.1 11.6 33.0
Income tax credit - - (0.1)
Loss on revaluation of wholly-owned
properties 1.3 10.3 14.2
Share of loss/(profit) in
associates and joint ventures 1.1 (1.9) (0.3)
Other gains and losses (0.3) (4.4) 1.8
Depreciation of other fixed
assets 0.1 0.2 0.1
(Increase)/Decrease in receivables (5.2) 0.1 (0.1)
Increase/(Decrease) in payables 2.0 (1.7) (3.2)
Non-cash movement relating
to share-based payments 0.4 0.3 0.5
Net cash from operations 19.8 21.5 41.1
-------------------------------------- ------ ----------- ------------
13 Net assets per share
EPRA has issued recommended bases for the calculation of certain
net assets per share information as shown in the following
table:
Unaudited Audited
Unaudited 30 June 30 December
30 June 2017 2016 2016
-----------------------------------------------------------
Net
Number assets
Net of per Net assets Net assets
assets shares share per share per share
GBPm million GBP GBP GBP
----- -------------------------------------- -------- -------- ----------- ------------
Basic net assets 481.1 708.5 0.68 0.71 0.68
Own shares held (0.6)
Dilutive contingently
issuable shares and share
options 10.5
Fair value of fixed rate
loans (net of tax) (0.6)
------------------------------------- ------ -------- -------- ----------- ------------
EPRA triple net assets 480.5 718.4 0.67 0.69 0.67
Exclude fair value of
fixed rate loans (net
of tax) 0.6
Exclude fair value of
see-through interest
rate derivatives 1.9
Exclude deferred tax
on unrealised gains/capital
allowances (0.1)
------------------------------------- -------- -------- ----------- ------------
EPRA net assets 482.9 718.4 0.67 0.71 0.68
------------------------------------- ------ -------- -------- ----------- ------------
The number of Ordinary shares issued and fully paid at 30 June
2017 was 708,477,735 (30 December 2016: 702,342,500, 30 June 2016:
700,752,626). There have been no changes to the number of shares
from 30 June 2017 to the date of this announcement.
14 Return on equity
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
------------------------------ ----------- ----------- ------------
Total comprehensive income
attributable to equity
shareholders 12.1 7.2 (4.4)
Opening equity shareholders'
funds 477.6 503.2 503.4
Return on equity 2.5% 1.4% (0.9)%
------------------------------- ----------- ----------- ------------
15 Related party transactions
There have been no material changes to, or material transactions
with, related parties as described in note 31 of the annual audited
financial statements for the year ended 30 December 2016, except
for:
Distributions received from related parties
During the period, the Group received cash distributions of
GBP0.2 million from related parties as disclosed in notes 9b.
Management fee income from related parties
During the period, the Group received management fee income in
the normal course of business of GBP0.3 million from related
parties.
16 Dividends
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
------------------------------------- ----------- ----------- ------------
Final dividend per share for
year ended 30 December 2015 of
1.62p - 11.3 11.3
Interim dividend per share for
year ended 30 December 2016 of
1.62p - - 11.4
Final dividend per share for
year ended 30 December 2016 of
1.77p 12.4 - -
------------------------------------- ----------- ----------- ------------
Amounts recognised as distributions
to equity holders in the period 12.4 11.3 22.7
------------------------------------- ----------- ----------- ------------
Interim dividend per share for
year ended 30 December 2017 of
1.73p(1) 12.3 - -
------------------------------------- ----------- ----------- ------------
(1) In line with the requirements of IAS 10 - 'Events after the
Reporting Period', this dividend has not been included as a
liability in these financial statements.
The Company issued 6,135,235 new ordinary shares on 16 May 2017
to shareholders who elected to receive their 2016 final dividend in
shares under the Company's Scrip dividend scheme. The value of the
Scrip shares was calculated in accordance with the scheme rules at
56.48 pence. As a result the Company's share capital increased by
GBP61,352 and share premium by GBP3,403,828.
17 Events after the balance sheet date
On 7 July 2017 the Kingfisher Limited Partnership refinanced its
existing debt with a new GBP113 million package. The Group has a
20% interest in the Partnership which owns the Kingfisher Redditch
shopping centre. Part of the new financing is being used to fund a
distribution to the joint venture partners. The Group's share is
expected to be around GBP4.6 million. The Group's net investment in
the Kingfisher Limited Partnership is expected to be approximately
GBP7.8 million after allowing for the distribution and its share of
refinancing costs.
Glossary of terms
Adjusted Profit is the total Net initial yield (NIY) is
of Contribution from wholly-owned the annualised current rent,
assets and the Group's joint net of revenue costs, topped-up
ventures and associates, the for contractual uplifts,
profit from Snozone and property expressed as a percentage
management fees less central of the capital valuation,
costs (including interest excluding after adding notional purchaser's
non-cash charges in respect costs.
of share-based payments) after
tax. Adjusted Profit excludes Net debt to property value
revaluation of properties, profit is debt less cash and cash
or loss on disposal of properties equivalents divided by the
or investments, gains or losses property value.
on financial instruments and
exceptional one-off items. Results Net interest is the Group's
from Discontinued Operations share, on a see-through basis,
are included up until the point of the interest payable less
of disposal or reclassification interest receivable of the
as held for sale. Group and its associates
and joint ventures.
C&R is Capital & Regional plc,
also referred to as the Group Net rent is the Group's share,
or the Company. on a see-through basis, of
the rental income, less property
C&R Trade index is an internal and management costs (excluding
retail tracker using data from performance fees) of the
approximately 300 retail units Group and its associates
across C&R's shopping centre and joint ventures.
portfolio.
Nominal equivalent yield
CRPM is Capital & Regional Property is a weighted average of
Management Limited, a subsidiary the net initial yield and
of Capital & Regional plc, which reversionary yield and represents
earns management and performance the return a property will
fees from the Mall assets and produce based upon the timing
certain associates and joint of the income received, assuming
ventures of the Group. rent is received annually
in arrears on gross values
Contracted rent is passing rent including the prospective
and the first rent reserved purchaser's costs.
under a lease or unconditional
agreement for lease but which Passing rent is gross rent
is not yet payable by a tenant. currently payable by tenants
including car park profit
Contribution is net rent less but excluding income from
net interest, including unhedged non-trading administrations
foreign exchange movements. and any assumed uplift from
outstanding rent reviews.
Capital return is the change
in market value during the year Occupancy cost ratio The
for properties held at the balance proportion of a retailer's
sheet date, after taking account sales compared with the total
of capital expenditure calculated cost of occupation being:
on a time weighted basis. rent, business rates, service
charge and insurance. Retailer
Debt is borrowings, excluding sales are based on estimates
unamortised issue costs. by third party consultants
which are periodically updated
Dividend pay-out is the ratio and indexed using relevant
of dividend per share to Adjusted data from the C&R Trade Index.
Earnings per share.
Occupancy rate is the ERV
EPRA earnings per share (EPS) of occupied properties expressed
is the profit / (loss) after as a percentage of the total
tax excluding gains on asset ERV of the portfolio, excluding
disposals and revaluations, development voids.
movements in the fair value
of financial instruments, intangible Rent to sales ratio is Contracted
asset movements and the capital rent excluding car park income,
allowance effects of IAS 12 ancillary income and anchor
"Income Taxes" where applicable, stores expressed as a percentage
less tax arising on these items, of net sales.
divided by the weighted average
number of shares in issue during REIT - Real Estate Investment
the year excluding own shares Trust.
held.
Return on equity is the total
EPRA net assets per share include return, including revaluation
the dilutive effect of share-based gains and losses, divided
payments but ignore the fair by opening equity plus time
value of derivatives, any deferred weighted additions to and
tax provisions on unrealised reductions in share capital,
gains and capital allowances, excluding share options exercised.
any adjustment to the fair value
of borrowings net of tax and Reversionary percentage is
any surplus on the fair value the percentage by which the
of trading properties. ERV exceeds the passing rent.
EPRA triple net assets per share Reversionary yield is the
include the dilutive effect anticipated yield to which
of share-based payments and the net initial yield will
adjust all items to market value, rise once the rent reaches
including trading properties the ERV.
and fixed rate debt.
See-through balance sheet
Estimated rental value (ERV) is the pro forma proportionately
is the Group's external valuers' consolidated balance sheet
opinion as to the open market of the Group and its associates
rent which, on the date of valuation, and joint ventures.
could reasonably be expected
to be obtained on a new letting See-through income statement
or rent review of a unit or is the pro forma proportionately
property. consolidated income statement
of the Group and its associates
ERV growth is the total growth and joint ventures.
in ERV on properties owned throughout
the year including growth due Temporary lettings are those
to development. lettings for one year or
less.
Gearing is the Group's debt
as a percentage of net assets. Total Property return incorporates
net rental income and Capital
Interest rate cover (ICR) is return expressed as a percentage
the ratio of either (i) Adjusted of the capital value employed
Profit (before interest, tax, (opening market value plus
depreciation and amortisation); capital expenditure) calculated
or (ii) net rental income to on a time weighted basis.
the interest charge.
Total return is the Group's
IPD is Investment Property Databank total recognised income or
Limited, a company that produces expense for the year as set
an independent benchmark of out in the consolidated statement
property returns. of comprehensive income expressed
as a percentage of opening
Like-for-like figures, unless equity shareholders' funds.
otherwise stated, exclude the
impact of property purchases Total shareholder return
and sales on year to year comparatives. (TSR) is a performance measure
of the Group's share price
Loan to value (LTV) is the ratio over time. It is calculated
of debt excluding fair value as the share price movement
adjustments for debt and derivatives, from the beginning of the
to the Market value of properties. year to the end of the year
plus dividends paid, divided
Market value is an opinion of by share price at the beginning
the best price at which the of the year.
sale of an interest in a property
would complete unconditionally Variable overhead includes
for cash consideration on the discretionary bonuses and
date of valuation as determined the costs of awards to directors
by the Group's external or internal and employees made under
valuers. In accordance with the 2008 LTIP and SAYE schemes
usual practice, the valuers which are spread over the
report valuations net, after performance period.
the deduction of the prospective
purchaser's costs, including
stamp duty, agent and legal
fees.
Net assets per share (NAV) are
shareholders' funds divided
by the number of shares held
by shareholders at the year
end, excluding own shares held.
EPRA performance measures
30 June 30 June 30 December
2017 2016 2016
-------- -------- ------------
EPRA earnings (GBPm) 14.0 13.4 26.2
EPRA earnings per share (diluted) 2.0p 1.9p 3.7p
EPRA net assets (GBPm) 482.9 502.6 481.5
EPRA net assets per share 67p 71p 68p
EPRA triple net assets (GBPm) 480.5 489.3 475.2
EPRA triple net assets per share 67p 69p 67p
EPRA Cost ratios
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
-------------------------------------- -------- -------- ------------
Cost of sales (adjusted for
IFRS head lease differential) 16.8 16.4 33.0
Administrative costs 4.8 5.2 10.9
Service charge income (7.1) (7.2) (14.0)
Management fees (0.4) (0.5) (1.0)
Snozone (indoor ski operation)
costs (4.5) (4.4) (8.8)
Share of joint venture & associate
expenses 0.4 0.5 1.2
Less inclusive lease costs recovered
through rent (0.9) (1.0) (1.9)
-------- -------- ------------
EPRA costs (including direct
vacancy costs) 9.1 9.0 19.4
Direct vacancy costs (1.6) (1.2) (2.9)
-------- -------- ------------
EPRA costs (excluding direct
vacancy costs) 7.5 7.8 16.5
-------- -------- ------------
Gross rental income 30.9 30.8 62.0
Less ground rent costs (1.5) (1.6) (3.1)
Share of joint venture & associate
gross rental income less ground
rent costs 1.1 1.5 3.4
Less inclusive lease costs recovered
through rent (0.9) (1.0) (1.9)
-------- -------- ------------
Gross rental income 29.6 29.7 60.4
-------- -------- ------------
EPRA cost ratio (including direct
vacancy costs) 30.7% 30.3% 32.2%
EPRA cost ratio (excluding vacancy
costs) 25.3% 26.4% 27.4%
-------------------------------------- -------- -------- ------------
Wholly-owned assets portfolio information
At 30 June 2017
--------------------------------------------------
Physical data
Number of properties 7
Number of lettable units 769
Lettable space (sq feet
- million) 4.2
--------------------------------------- -------
Valuation data
Properties at independent
valuation (GBPm) 879.8
Adjustments for head
leases and tenant incentives
(GBPm) 44.4
-------
Properties as shown
in the financial statements
(GBPm) 924.2
-------
Initial yield (%) 6.0
Equivalent yield (%) 6.3
Reversion (%) 13.0
Loan to value ratio
(%) 49
Net debt to value ratio
(%) 46
--------------------------------------- -------
Lease length (years)
Weighted average lease
length to break (years) 6.4
Weighted average lease
length to expiry (years) 7.7
--------------------------------------- -------
Passing rent (GBPm)
of leases expiring in:
Six months to 30 December
2017 8.4
Year to 30 December
2018 3.2
Three years to 30 December
2021 14.3
ERV (GBPm) of leases
expiring in:
Six months to 30 December
2017 8.3
Year to 30 December
2018 3.7
Three years to 30 December
2021 15.6
Passing rent (GBPm)
subject to review in:
Six months to 30 December
2017 5.4
Year to 30 December
2018 3.0
Three years to 30 December
2021 9.6
ERV (GBPm) of passing
rent subject to review
in:
Six months to 30 December
2017 5.2
Year to 30 December
2018 3.0
Three years to 30 December
2021 10.6
--------------------------------------- -------
Rental Data
Contracted rent at period
end (GBPm) 63.8
Passing rent at period
end (GBPm) 59.9
ERV at period end (GBPm
per annum) 67.6
Occupancy rate (%) 95.5
--------------------------------------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFFTTAIAIID
(END) Dow Jones Newswires
August 10, 2017 02:01 ET (06:01 GMT)
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