Wrap Text
Interim Results for the Six Months Ended 30 June 2015
Capital & Counties Properties PLC
(Incorporated and registered in the United Kingdom and
Wales with registration Number 07145041 and registered in
South Africa as an external company with Registration
Number 2010/003387/10)
JSE code: CCO
ISIN: GB00B62G9D36
PRESS RELEASE
29 July 2015
CAPITAL & COUNTIES PROPERTIES PLC ("Capco")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015
Ian Hawksworth, Chief Executive of Capco, commented:
"Our two London estates have had a positive and active start to the year. Covent Garden is established as a
leading destination for global brands wishing to come to London and demand for the estate across all uses is
strong. We are on course to deliver circa 10 per cent underlying annualised rental growth to achieve an ERV
target of GBP100 million by December 2017.
Our plans at Earls Court continue to advance. We have completed the investment vehicle with TfL and demolition
is progressing well. At Lillie Square, construction of Phase 1 is on track and we are finalising plans to begin sales
of Phase 2.
We enter the second half of the year with a strong balance sheet and a clear strategy to drive long term value
creation for our shareholders."
Highlights
Driving value creation through a clear and focused strategy
- 10 per cent increase in EPRA adjusted, diluted NAV to 342 pence per share (Dec 2014: 311 pence)
- 9 per cent (like-for-like) increase in total property value to GBP3.4 billion (Dec 2014: GBP3.0 billion)
- 10 per cent total return for the period
- Proposed interim 2015 dividend of 0.5 pence per share
Creative asset management and strong leasing market driving positive demand across all uses at Covent
Garden
- Total property value of GBP1.8 billion up 9 per cent (like-for-like) (Dec 2014: GBP1.6 billion)
- ERV up 8 per cent (like-for-like) at GBP83 million
- On plan to achieve the ERV target of GBP100 million by December 2017 representing annualised
underlying rental growth of circa 10 per cent
- New leases and renewals 11 per cent above December 2014 ERV
- New Zone A rental level of GBP1,400 per square foot achieved on James Street
- New rental levels achieved for residential and office space
- Development of Kings Court on track
- GBP50 million of acquisitions consolidating ownership on Henrietta Street and Bedford Street
Plans on track at Earls Court
- Earls Court interests valued at GBP1.3 billion, up 6 per cent (like-for-like) (Dec 2014: GBP1.2 billion)
- Earls Court Partnership Limited, the investment vehicle with TfL completed
- Capco share 63 per cent and leading the venture
- Demolition of former exhibition centres underway and progressing well
- Construction of Phase 1 of Lillie Square progressing well with first completions expected in 2016
- GBP258 million of sales in Phase 1, crystallising value in this part of the scheme
- Formal sales of Phase 2 of Lillie Square expected to start in September 2015
Venues business reinvigorated and performing ahead of expectations
- EBITDA of GBP9 million, up 16 per cent compared to the first half of 2014 (full year 2014: GBP11 million)
- Property valuation of GBP265 million, up 25 per cent (Dec 2014: GBP211 million)
Robust and flexible financial position
- Group loan-to-value ratio 13 per cent (Dec 2014: 12 per cent)
- Cash and available facilities of GBP570 million
- Predominantly unsecured debt model
FINANCIAL HIGHLIGHTS
30 June 31 December
2015 2014
10.4% Total return for six months ended 30 June 2015 (full year 2014: 25%)
EPRA adjusted net asset value GBP2,901m GBP2,630m
EPRA adjusted, diluted net asset value per share 342p 311p
Dividend per share 1.0p 1.5p
9.0% Total property return for six months ended 30 June 2015 (full year 2014: 22%)
Property market value (Group share)(1) GBP3,399m GBP3,025m
Net rental income(2) GBP38.5m GBP70.1m
Underlying earnings per share 0.5p 1.6p
(1) Refer to Property Data on page 47 for the Group's percentage ownership of property.
(2) On a proportionate consolidation basis. Refer to the Financial Review.
Outlook
Capco has had a positive and active start to the year. At Covent Garden, our granular and creative asset management
strategy, where every street has a plan, is delivering and demand for space across all uses is strong. The estate is on track to
achieve its ERV target of GBP100 million by December 2017, which represents circa 10 per cent annualised underlying rental
growth.
Our plans at Earls Court are moving forward. Earls Court Partnership Limited ("ECPL"), the investment vehicle with Transport
for London ("TfL"), has completed with Capco leading the venture. Demolition of the former exhibition centres is underway as
we continue to de-risk the scheme. Construction of Phase 1 of Lillie Square is progressing well and plans are being finalised to
launch sales of the first units in Phase 2.
London continues to cement its status as a major global city. The outlook for retail and consumer confidence remains positive
and with Capco's distinct approach to managing Covent Garden, the estate is well-positioned to continue its prominence as
one of the best global retail destinations. The Earls Court Masterplan is a significant opportunity for urban regeneration and will
deliver new homes, jobs and investment. Against a positive economic backdrop, London's population is expected to grow
significantly and is in need of more housing. 'Opportunity Areas' such as Earls Court are vital to London's housing supply. With
its central location and strong transport connections, we are advancing our plans to maximise returns from our land holdings at
Earls Court.
The balance sheet remains robust and flexible and we have continued to significantly invest in our London estates. Following
the placing last year, we have successfully deployed the proceeds, acquiring over 30 properties and successfully commencing
our development and demolition plans. We are clear and focused on our delivery strategy and with two unique assets are well-
positioned to drive long-term value for our shareholders.
ENQUIRIES
Capital & Counties Properties PLC:
Ian Hawksworth Chief Executive +44 (0)20 3214 9188
Soumen Das Managing Director & Chief Financial Officer +44 (0)20 3214 9183
Michelle McGrath Director of Investor Relations +44 (0)20 7297 6093
Media enquiries:
Sarah Hagan Director of Communications & Marketing +44 (0)20 3214 9185
UK: Hudson Sandler Michael Sandler, Wendy Baker +44 (0)20 7796 4133
SA: Instinctif Frederic Cornet +27 (0) 11 447 3030
A presentation to analysts and investors will take place today at 9:00am at UBS, 100 Liverpool Street, London, EC2M 2RH.
The presentation will also be available to international analysts and investors through a live audio call and webcast and after
the event on the Group's website www.capitalandcounties.com.
A copy of this announcement is available for download from our website at www.capitalandcounties.com and hard copies can
be requested via the website or by contacting the Company (feedback@capitalandcounties.com or telephone +44 (0)20 3214 9153).
OPERATING REVIEW
Overview
London continues to cement its status as a major global city, attracting people to live, work, invest in and enjoy the capital. Its
economic outlook is positive and its population growing significantly. Having added over one million people over the last
decade, it is estimated that London will add another one million people to its population over the next 10 years. With this growth
comes challenges and for London to continue to thrive it will need to provide over 40,000 homes per annum, around twice the
amount achieved per annum over the last 20 years(1).
Capco's strategy is focused on driving value creation at its two major central London estates. At Covent Garden, granular and
creative asset management, strategic investment and Capco's creative placemaking skills continue to underpin strong rental
growth. This is set against a vision to create one of the best retail destinations for both domestic and international retailers and
visitors.
Earls Court is an opportunity to create the next great estate of London. Capco continues to create value through planning, land
assembly, land enablement and selective development to maximise the potential of a unique and prime land holding in the
capital. Opportunity Areas such as Earls Court are vital to London's housing supply and plans are on-going to maximise the
potential of this centrally located scheme.
In addition, Capco regularly considers opportunities where its core skills of placemaking and masterplanning can be utilised
and has recently acquired a 50 per cent interest in the Solum Regeneration joint venture with Network Rail. Solum will allow
Capco to explore opportunities for future redevelopments at significant railway station sites in London.
(1) Mayor of London –The London Housing Strategy
Valuations
The valuations of Capco's property portfolio have performed strongly in the first six months of 2015, rising 8.9 per cent (like-for-
like) to GBP3.4 billion (Group share).
Market Value Market Value
30 June 31 December Valuation
2015 2014 Change
GBPm GBPm Like-for-like(1)
Covent Garden 1,847 1,636 9.3%
Earls Court Properties
Earls Court Partnership Limited ("ECPL") 741(2) 657(2) 8.5%
Lillie Square 202(3) 182(3) 4.1%
Empress State 282 278 0.9%
Other 58 57 1.1%
Earls Court Properties (Group share) 1,283 1,174 5.7%
Venues 265 211 24.6%
Other 4 4
Total property (Group share) 3,399 3,025 8.9%
Non-controlling interest in Earls Court Properties 435 –
Total property(4) 3,834 3,025 8.9%
(1) Valuation change takes account of amortisation of tenant lease incentives, capital expenditure, fixed head leases and unrecognised trading surplus.
(2) Market value at 30 June 2015 represents the Group's 63 per cent interest in ECPL. Market value at 31 December 2014 represents the Group's interest in the
properties that were transferred into ECPL on 2 April 2015.
(3) Represents the Group's 50 per cent share on a proportionate consolidation basis.
(4) A reconciliation of the carrying value of investment, development and trading property to the market value is shown in note 12 'Property Portfolio' within the
condensed consolidated financial statements.
The Group has a 63 per cent controlling interest in ECPL, the investment vehicle with TfL which owns the land formerly
occupied by the Earls Court exhibition centres. As a result, it is fully consolidated in the condensed consolidated financial
statements and TfL's interest is represented as a non-controlling interest. See page 7 of the Financial Review for further
information.
COVENT GARDEN
Supporting rental growth through granular and creative asset management, strategic investment and placemaking
Covent Garden has established itself as a leading global retail and dining destination. Leasing momentum is strong as retailers
are attracted to the estate's prime location and its distinct granular asset management, where every street has a plan; while
visitors continue to be drawn to the estate's vibrancy, energy and unique retail and dining experience. Occupancy on the estate
is high at 97 per cent and footfall remains strong with 42 million customer visits annually.
In the six months to 30 June 2015, the valuation of Covent Garden has shown continued positive performance, increasing 9.3
per cent like-for-like to GBP1.8 billion. This reflects the success of the estate's granular asset management strategy, growing Zone
A rental levels and a positive central London retail market. The ERV for the estate has grown 8.2 per cent like-for-like to GBP82.6
million and the estate is on track to achieve the ERV target of GBP100 million by December 2017. This represents an underlying
annualised growth rate of circa 10 per cent and would imply an ERV of GBP125 million by December 2019.
During the period to 30 June 2015, 34 leasing transactions including new leases and renewals representing GBP5.3 million of
rental income per annum were transacted at 10.8 per cent above 31 December 2014 ERV. Annual gross income as at 30 June
2015 was GBP44.3 million.
Retail
James Street's profile as a global street for retailers has further strengthened and the rapid progression of value has continued
which reflects the depth of demand for the street. Premium cosmetics brand, Charlotte Tilbury, has taken space on James
Street for its first stand-alone store globally, setting a new Zone A rental level of GBP1,400 per square foot. This compares to the
Zone A rental level of GBP1,000 per square foot for the street as at 31 December 2014 following a letting to Kiko, the premium
Italian cosmetics store, which is due to open in late summer.
Following the trading success of Chanel's first stand-alone cosmetics store, the luxury brand has signed a new lease to move
to a larger unit in the north-east of the Market Building. The new unit will offer Chanel almost 50 per cent additional space to
enhance its presence on the estate.
The 'Street to Suit' strategy to reposition Henrietta Street with a menswear focus continues its successful implementation. Club
Monaco's menswear line is the latest brand to take up space and is expected to open later in the year. The street now offers an
array of premium menswear brands including Edwin and Oliver Sweeney as well as Nigel Cabourn, the Real McCoy's and
Fred Perry which were signed last year.
The momentum in King Street's contemporary luxury offering continues with the introduction of Italian knitwear brand, Stefanel,
and Parisian womenswear concept, Claudie Pierlot, both of which have recently opened their doors.
Dining
The estate's reputation for destination dining continues to strengthen with three new concepts introduced in the first half of this
year.
Henrietta Street's dining offering has been further enhanced following a new letting to Gregory Marchand, who will bring his
successful Parisian restaurant, Frenchie, to London for the first time. Flat Iron steakhouse will also be opening their latest
London restaurant later in the year.
Adding to the variety on King Street, renowned tea emporium, Mariage Frères will open its flagship London café and store,
occupying over 8,000 square feet.
Residential and offices
Demand for residential on the estate continues, with the rental market particularly strong. All of the units at The Southampton, a
premium residential development of seven apartments for rent, have been leased at GBP65-GBP70 per square foot. Following a
recent residential conversion of a number of units on the upper floors on King Street, a new rental level of circa GBP80 per square
foot has been achieved. At The Beecham, a luxury development of nine apartments for sale or rental overlooking the Piazza,
four apartments have been sold or are under offer at or around asking price.
With a shortage of modern and well-equipped office space in Covent Garden, 35 King Street, the first new office development
on the estate, has been leased to a digital agency establishing a new benchmark for prime space of GBP77 per square foot, a new
high for the estate.
Developments and acquisitions
Kings Court and Carriage Hall is Capco's largest development to date at Covent Garden. The scheme unlocks the opportunity
to extend our placemaking approach through Floral Street and transform pedestrian flows. Works on the 100,000 square foot
scheme, which will add over 20,000 square feet of new space, started last year and are progressing well. The scheme is
expected to complete in 2017 and the total development cost is expected to be GBP85-GBP90 million.
Continuing Capco's expansion onto Bedford Street, a key access point on to the estate, 31-33 Bedford Street was acquired for
GBP32 million and offers prime retail frontage as well as potential conversion of the upper parts. Since the half year, 30-33
Henrietta Street has recently been acquired for GBP16 million. The building offers the opportunity to reposition the retail, potential
conversion of the upper parts and further consolidates Capco ownership on Henrietta Street.
EARLS COURT PROPERTIES
Driving value creation through planning, land assembly, land enablement and selective development.
The Earls Court Masterplan is the largest regeneration opportunity in central London, covering over 70 acres of prime strategic
land in Chelsea and Fulham. The Masterplan is consented to provide 7,500 new homes (including Lillie Square), creating
10,000 new jobs and will deliver over GBP450 million of community benefits. The scheme is an opportunity to create the next great
estate of London, underpinned by Capco's distinct approach to placemaking.
Earls Court is a Greater London Authority ("GLA") 'Opportunity Area', making it a key strategic scheme for the capital.
Maximising Opportunity Areas is seen as vital in order to meet London's housing demands, both private and affordable, against
a backdrop of a fast growing population.
Earls Court Properties represents Capco's interest in Earls Court, which principally comprises:
- 63 per cent interest in Earls Court Partnership Limited ("ECPL"): the investment vehicle with TfL in respect of the
former exhibition centres ("EC1 & EC2"), and including certain assets on and around Lillie Road
- 100 per cent of the Empress State Building
- 50 per cent interest in the Lillie Square joint venture
In addition, in 2013 Capco exercised its option under the Conditional Land Sale Agreement ("CLSA"), a binding agreement in
relation to the West Kensington and Gibbs Green Estates.
For the period to 30 June 2015, the valuation of Earls Court Properties was GBP1.3 billion (Group share), a like-for-like increase of
5.7 per cent, reflecting the momentum achieved through demolition and construction. Earls Court is moving forward as the
business prepares to begin formal sales of the second phase of Lillie Square and is advancing its plans to maximise the
potential of the Earls Court Masterplan.
Planning
Detailed planning consent was granted by the Royal Borough of Kensington and Chelsea for West Brompton Village. Covering
1.2 acres, the consent will deliver a public square, a residential apartment building, townhouses and three retail units. Following
detailed planning achieved for Earls Court Village last year, this brings the total area for which detailed consent has been
achieved to over 17 acres.
Land Assembly and Land Enablement
ECPL was established last year and completion occurred in April 2015. The entity now owns new 999 year leases over EC1 &
EC2 land and has acquired certain other adjacent property interests from Capco, primarily located on and around Lillie Road.
ECPL is a UK limited company in which Capco owns 63 per cent and TfL owns 37 per cent of the shares respectively. Capco
is leading the investment vehicle following its appointment as exclusive business and development manager.
Demolition of the former exhibition centres began in December 2014 and is progressing well. The process is expected to take
18 months due to the complexity of the site at a cost of GBP50 - GBP60 million.
Capco continues to expand its ownership in the Masterplan area, acquiring small but important assets which will enhance the
overall implementation of the scheme. GBP8.8 million of acquisitions were made during the first half of the year and have been
transferred into ECPL.
Capco exercised its option under the CLSA in 2013 and to date has paid GBP30 million of the GBP105 million cash consideration.
The remainder is payable in five annual instalments of GBP15 million, beginning on 31 December 2015. Plans are progressing
towards the construction of Block D of Lillie Square to facilitate the first phase of replacement housing for the West Kensington
and Gibbs Green estates' residents.
Lillie Square
The Lillie Square development is a one million square foot (GEA) residential scheme located adjacent to the Earls Court
Masterplan. One of the most centrally-located, well-connected schemes in London and delivering modern garden-square living,
the scheme will provide 608 private and 200 affordable homes across three phases.
The valuation of Capco's 50 per cent interest in Lillie Square, which is held in a joint venture with the Kwok Family Interests
("KFI"), increased to GBP202 million as at 30 June 2015, a like-for like increase of 4.1 per cent.
Following the successful launch of Phase 1, over 97 per cent of the first phase has been reserved or exchanged totalling GBP258
million of sales, crystallising value in this part of the scheme. All of the standard units have been sold and the premium units,
which will be sold throughout delivery of the scheme, continue to attract positive demand with 18 out of 25 sold in the first
phase, ahead of expectations. The average pricing across Phase 1 is approximately GBP1,500 per square foot. Construction of
Phase 1 is progressing well with first completions on track for delivery in 2016.
Plans for formal sales of the first units of Phase 2 are being finalised and are expected to begin in September 2015.
As previously stated, construction of the private element of Lillie Square is expected to cost GBP400 million.
VENUES
Olympia London has been reinvigorated and is performing ahead of expectations. Its central location, capacity and historic
architecture have established it as the preferred central London venue for premium shows.
The business has had a strong start to the year with EBITDA at GBP8.9 million, up 15.6 per cent compared to the first half of 2014
and a valuation increase of 24.6 per cent to GBP265 million.
Transitioned shows, including the Ideal Home show and International Book Fair, have successfully been held. Olympia London
is also attracting new shows, resulting in a 32 per cent increase in the number of events held at the venue compared to the
same period last year.
FINANCIAL REVIEW
EPRA adjusted, diluted net assets per share rose 10.0 per cent during the first half of 2015, increasing from 311 pence at 31
December 2014 to 342 pence. This 31 pence increase together with the 1 pence dividend paid in June represents a total return
of 10.4 per cent for the period.
At Covent Garden continued growth in rental values was the main driver of the increase in the value of the estate by 9.1 per
cent (9.3 per cent like-for-like).
The market value of Earls Court Properties, which comprises the Group's interests at Earls Court, has increased by 4.7 per
cent (5.7 per cent like-for-like), primarily the result of further de-risking of the development scheme through the completion of
property transfers to Earls Court Partnership Limited ("ECPL") (the investment vehicle with TfL) and progress with demolition of
the Earls Court exhibition centres. An increase in assumed construction costs has been offset by lower prevailing interest rates.
Basis of preparation
In line with the requirements of IFRS 11 'Joint Arrangements' ("IFRS 11") the Group is required to present its joint ventures
under the equity method in the condensed consolidated financial statements. Under the equity method, the Group's interest in
joint ventures is disclosed as a single line item in both the consolidated balance sheet and consolidated income statement
rather than proportionally consolidating the Group's share of assets, liabilities, income and expenses on a line-by-line basis.
Internally the Board focuses on and reviews information and reports prepared on a proportionate consolidation basis, which
includes the Group's share of joint ventures. Therefore to align with the way the Group is managed, this financial review
presents the financial position, performance and cash flow analysis on a proportionate consolidation basis. Continuing and
discontinuing operations have also been combined.
Completion of property transfers to Earls Court Partnership Limited
On 2 April 2015, the Group's leasehold interests in EC1 & EC2 were transferred into ECPL which occurred simultaneously with
a grant of 999 year headleases by the freeholder, TfL to ECPL. Other adjacent property interests, primarily located on and
around Lillie Road, were also transferred into ECPL.
ECPL is held 63 per cent by the Group and 37 per cent by TfL. ECPL is fully consolidated within the Group's financial
statements as the Group holds the controlling interest. At completion, the grant of 999 year headleases over EC1 & EC2 was
treated as an acquisition of property and fully consolidated. The transaction resulted in an increase in the carrying value of
investment and development property (GBP419.1 million) which was offset by loan notes payable to TfL (GBP374.7 million) and TfL's
non-controlling interest share in capital (GBP44.4 million), both of which are recognised in equity.
Due to the significance of this transaction and to aid comparability to the previously reported position, a reconciliation to the
Group's share of property, net debt and other assets and liabilities is included in the summary consolidated balance sheet
below.
FINANCIAL POSITION
At 30 June 2015 the Group's EPRA adjusted net assets were GBP2.9 billion (31 December 2014: GBP2.6 billion) representing 342
pence per share, an increase of 31 pence per share since 31 December 2014.
SUMMARY CONSOLIDATED BALANCE SHEET
As at 30 June 2015
Joint Proportionate Non-controlling Group
IFRS ventures(1) consolidation interest share
GBPm GBPm GBPm GBPm GBPm
Investment, development and trading property 3,592.1 111.1 3,703.2 (435.3) 3,267.9
Net debt (430.8) 5.2 (425.6) (5.0) (430.6)
Other assets and liabilities(2) 43.6 (116.3) (72.7) 5.4 (67.3)
Non-controlling interest (434.9) – (434.9) 434.9 –
Net assets attributable to the Parent 2,770.0 – 2,770.0 – 2,770.0
Fair value of derivative financial instruments 0.4
Unrecognised surplus on trading property 103.9
Deferred tax adjustments 29.9
Non-controlling interest in respect of the above (3.5)
EPRA adjusted net assets 2,900.7
EPRA adjusted, diluted net assets per
share (pence)(3) 342
(1) Primarily Lillie Square.
(2) IFRS includes amounts receivable from joint ventures which eliminate on proportionate consolidation.
(3) Adjusted, diluted number of shares in issue at 30 June 2015 was 848.3 million.
As at 31 December 2014
Joint Proportionate Non-controlling Group
IFRS ventures(1) consolidation interest share
GBPm GBPm GBPm GBPm GBPm
Investment, development and trading property 2,806.5 98.3 2,904.8 – 2,904.8
Net debt (354.9) 10.2 (344.7) (7.1) (351.8)
Other assets and liabilities(2) 54.7 (108.5) (53.8) 7.1 (46.7)
Net assets 2,506.3 – 2,506.3 – 2,506.3
Fair value of derivative financial instruments 1.8
Unrecognised surplus on trading property 96.3
Deferred tax adjustments 25.1
EPRA adjusted net assets 2,629.5
EPRA adjusted, diluted net assets per share
(pence)(3) 311
(1) Primarily Lillie Square.
(2) IFRS includes amounts receivable from joint ventures which eliminate on proportionate consolidation.
(3) Adjusted, diluted number of shares in issue at 31 December 2014 was 846.3 million.
Investment, development and trading property
The revaluation surplus on the Group's property portfolio was GBP279.5 million during the period, an 8.9 per cent gain on a like-
for-like basis compared with the IPD Capital Return for the equivalent period of 3.9 per cent.
Total property return for the period was 9.0 per cent, outperforming the IPD Total Return index which recorded a 6.8 per cent
return for the corresponding period.
Valuation surpluses on trading property are not recorded as trading property is carried on the balance sheet at the lower of cost
and market value. Any unrecognised surplus is however reflected within the EPRA adjusted net asset measure. At 30 June
2015, the unrecognised surplus on trading property was GBP103.9 million, up from GBP96.3 million at 31 December 2014. This
primarily arises on trading property at Lillie Square.
The completion of ECPL on 2 April 2015 resulted in additions to property of GBP419.1 million which was offset by a non-controlling
interest in equity. Excluding this, acquisitions during the period were GBP42.8 million, GBP34.0 million at Covent Garden and GBP8.8
million around the Earls Court Masterplan area.
Consistent with 2014 Annual Report & Accounts, the Conditional Land Sale Agreement ("CLSA") remains unrecognised in the
condensed consolidated financial statements of the Group as its main underlying asset (the land relating to the West
Kensington and Gibbs Green housing estates) does not currently meet the recognition criteria required for investment and
development property. Of the GBP30 million paid to date, GBP15 million relates to the acquisition of two properties and GBP15 million
remains held as a prepayment against a future draw down of land. The future payments, totalling GBP75 million are disclosed as a
capital commitment. Annual payments of GBP15 million start in December 2015. Where amounts are paid prior to the transfer of
property, they will be carried on the Group's balance sheet as prepayments against future land draw down. A transfer from
prepayment to investment and development property will occur once the risks and rewards of ownership have passed to the
Group. Once this occurs, in line with the Group's accounting policy, the land will become subject to bi-annual valuation with any
uplift reflected in the Group's reported net asset measure.
Debt and gearing
The Group share of net debt increased by GBP78.8 million to GBP430.6 million, principally as a result of property acquisitions and
subsequent expenditure.
The gearing measure most widely used in the industry is loan-to-value ("LTV"). LTV is calculated on the basis of net debt
divided by the carrying value of the Group's property portfolio. The Group focuses most on an LTV measure that includes the
notional share of joint venture interests but excludes the share of the non-controlling interest. The LTV of 13.2 per cent remains
comfortably within the Group's limit of no more than 40 per cent.
As at As at
30 June 31 December
2015 2014
Loan to value 13.2% 12.1%
Interest cover 158% 188%
Weighted average debt maturity 4.6 years 5.1 years
Weighted average cost of debt 3.3% 3.4%
Proportion of Group share gross debt with interest rate protection 92% 94%
The Group's policy is to substantially eliminate the medium and long-term risk arising from interest rate volatility. The Group's
banking facilities are arranged on a floating rate basis but swapped to fixed rate or capped using derivative contracts. At 30
June 2015 the proportion of Group's share of gross debt with interest rate protection was 92 per cent (31 December 2014: 94
per cent).
The Group remains compliant with all of its debt covenants.
At 30 June 2015 the Group had capital commitments of GBP234.1 million (GBP228.5 million Group share) compared to GBP171.4 million
at 31 December 2014. The increase is mainly attributable to the Kings Court construction contract.
CASH FLOW
A summary of the Group's cash flow for the period ended 30 June 2015 is presented below on a proportionate consolidation
basis:
Represented(1)
Six months Six months
ended ended
30 June 2015 30 June 2014
GBPm GBPm
Operating cash flows after interest and tax (3.3) 4.1
Purchase and development of property (158.2) (122.6)
Acquisition of interest in joint venture (12.1) –
Sales proceeds from property and investments 6.5 3.2
Deferred consideration on purchase of subsidiary (7.1) –
VAT received on internal restructure 42.3 –
Pension funding – (0.8)
Net cash flow before financing (131.9) (116.1)
Issue of shares 0.1 252.5
Financing 85.7 (103.3)
Dividends paid (4.1) (7.5)
Net cash flow (50.2) 25.6
(1) The 30 June 2014 summary cash flow has been prepared on a proportionate consolidation basis. In the 'Interim Results for the six months ended 30 June 2014'
the summary cash flow was presented on an equity basis.
Operating cash outflows were GBP3.3 million compared with cash inflows of GBP4.1 million for the equivalent period of 2014, as a
result of an increase in net working capital requirements.
During the period GBP62.8 million was invested at Covent Garden for the purchase of two properties, completion of a property that
had exchanged in the prior year and subsequent expenditure. At Earls Court GBP13.3 million was invested in land assembly and
GBP80.7 million was spent on subsequent expenditure for the construction of Lillie Square Phase 1, the demolition of the Earls
Court exhibition centres and transaction costs associated with the completion of ECPL.
On 29 June 2015, the Group acquired a 50 per cent interest in Solum Regeneration, a joint venture arrangement with Network
Rail Infrastructure Limited. The joint venture will explore opportunities for future redevelopments on and around significant
railway stations in London.
An internal transfer of property during the period was deemed to be a VAT supply. The input VAT of GBP42.3 million was received
in June 2015 whereas the corresponding output VAT of the same amount was settled in July 2015. As a result, the cashflow for
the six months to June 2015 includes the input but not the output VAT amount.
Net borrowings drawn during the period were GBP38.3 million. Financing from non-controlling interest of GBP47.4 million was
received to settle the non-controlling interest share of ECPL completion costs and subsequent expenditure on the demolition of
Earls Court exhibition centres.
Dividends paid of GBP4.1 million reflect the final dividend payment made in respect of the 2014 financial year. This was lower than
the comparative six month period due to a higher take up of the scrip dividend alternative, 51 per cent versus 11 per cent in
June 2014.
The Group's cash and undrawn committed facilities at 30 June 2015 were GBP575.1 million (GBP570.1 million Group share).
FINANCIAL PERFORMANCE
The Group presents underlying earnings and underlying earnings per share in addition to the amounts reported on a
proportionate consolidation basis. The Group considers this presentation to provide useful information as it removes unrealised
and other one-off items and therefore represents the recurring, underlying performance of the business.
Six months Six months
ended ended
30 June 2015 30 June 2014
GBPm GBPm
Net rental income 38.5 37.4
(Loss)/profit on sale of trading property and other income (0.2) 0.5
Gain on revaluation and sale of investment and development property 271.7 134.5
Administration expenses (25.0) (19.4)
Net finance costs (9.1) (8.0)
Non-recurring finance costs – (5.2)
Change in fair value of derivative financial instruments 1.4 (0.4)
Other – 0.4
Taxation (8.2) (2.3)
Profit for the period attributable to non-controlling interest (5.2) –
Profit for the period attributable to owners of the Parent 263.9 137.5
Adjustments:
Loss/(profit) on sale of trading property and non-underlying other income 1.1 (0.5)
Gain on revaluation and sale of investment and development property (271.7) (134.5)
Non-recurring finance costs – 5.2
Change in fair value of derivative financial instruments (1.4) 0.4
Other – (0.4)
Taxation on non-underlying items 7.1 0.1
Non-controlling interest in respect of the above 5.2 –
Underlying earnings 4.2 7.8
Underlying earnings per share (pence) 0.5 1.0
Weighted average number of shares 839.4m 776.2m
Income
Net rental income increased by GBP1.1 million (4.0 per cent like-for-like) during the period when compared to the equivalent six
month period of 2014. Olympia London performed strongly in the period benefiting from the transition of exhibitions from Earls
Court.
Gain on revaluation of investment and development property
The gain on revaluation of the Group's investment and development property was GBP271.7 million, GBP151.5 million arising from
the Covent Garden estate, GBP68.6 million from Earls Court Properties and GBP52.2 million from Olympia London.
Administration expenses
Administration expenses have increased by 28.9 per cent relative to the first half of 2014, 5.0 per cent when compared to the
second half of 2014. Certain activities previously capitalised to the EC1 & EC2 properties are now treated as overheads
following the completion of ECPL and this will also increase reported administration expenses going forward. This change
together with an increased headcount in line with expansion of the Group's activities has resulted in the increase in
administration expenses.
Net finance costs
Net finance costs have increased by 13.8 per cent to GBP9.1 million when compared to the equivalent six month period of 2014 as
a result of the increased net debt.
Taxation
The total tax charge for the period was GBP8.2 million which is made up of both underlying tax and non-underlying tax.
Tax on underlying profits of the Group was GBP1.1 million which reflects a rate of 20 per cent, in line with the current rate of UK
corporation tax. Following the Chancellor's announcement in the July 2015 Budget, the UK corporation tax rate is expected to
fall to 19 per cent from April 2017 and 18 per cent from April 2020.
Contingent tax, the amount of tax that would become payable on a theoretical disposal of all investment property held by the
Group was GBP2.6 million. This relates to the properties held by ECPL which is a UK limited company. A disposal of the Group's
trading property at market value would result in a corporation tax charge to the Group of GBP20.8 million (20.0 per cent of GBP103.9
million).
The Group's tax policy, which has been approved by the Board and has been disclosed to HM Revenue & Customs, is aligned
with the business strategy. The Group seeks to protect shareholder value by structuring operations in a tax efficient manner,
with external advice as appropriate, which complies with all relevant tax law and regulations and does not adversely impact our
reputation as a responsible taxpayer. As a Group, we are committed to acting in an open and transparent manner.
Consistent with the Group's policy of complying with relevant tax obligations and its goal in respect of its stakeholders, the
Group maintains a constructive and open working relationship with HM Revenue & Customs which regularly includes obtaining
advance clearance on key transactions where the tax treatment may be uncertain.
Dividends
The Board has proposed an interim dividend of 0.5 pence per share to be paid on 25 September 2015 to shareholders on the
register at 4 September 2015. Subject to SARB approval a scrip dividend alternative will be offered.
Soumen Das
Managing Director & Chief Financial Officer
29 July 2015
PRINCIPAL RISKS AND UNCERTAINTIES
Through risk management and internal control systems the Group is able to identify, assess and prioritise risk within the
business and seeks to minimise, control and monitor their impact on profitability whilst maximising the opportunities they
present.
The Board has overall responsibility for Group risk management. It reviews principal risks and uncertainties regularly, together
with the actions taken to mitigate them. The Board has delegated responsibility for the assurance of the risk management
process and the review of mitigating controls to the Audit Committee.
Executive Directors together with senior management from every division and corporate function of the business complete a
Group risk register. Risks are considered in terms of their impact and likelihood from both a financial and reputational
perspective. Risks are assessed both gross and net of mitigating controls. Review meetings are held to ensure consistency of
response and adequacy of grading. Detailed risk registers are reviewed bi-annually and upon any material change in the
business. A full risk review is undertaken annually, at which point it is also reviewed in detail by the Audit Committee with new
or emerging risks considered by the Committee as appropriate. This allows the Audit Committee to monitor the most important
controls and prioritise risk management and internal audit activities accordingly.
On the following pages are the principal risks and uncertainties from across the business and these are reflective of where the
Board has invested time during the period. These principal risks are not exhaustive and remain unchanged from 31 December
2014. The Group monitors a number of additional risks and adjusts those considered 'principal' as the risk profile of the
business changes.
CORPORATE RISKS
Impact: The Group's ability to maintain its reputation, revenue and value could be damaged by corporate risks
Risk Impact potential Mitigation factors
Responding to regulatory and legislative Reduced flexibility and increased cost Sound governance and internal policies
challenges and changes. base. with appropriately skilled resource and
support from external advisers as
appropriate.
Responding to reputational, Reputational damage and increased Appointment of experienced individuals
communication and governance costs. with clear responsibility and
challenges. accountability. Clear statements of
corporate and social responsibility, skilled
Executive and Non-executive Directors,
with support from external advisers as
appropriate. Continuous stakeholder
communication and consultation.
Inability to implement strategy or correctly Constraints on growth and reduced Regular strategic reviews and monitoring
allocate capital. profitability. of performance indicators.
Corporate level oversight of capital
allocation. Detailed capital planning and
financial modelling. Maintain adequate
cash and available facilities together with
conservative leverage.
Adequacy of partner evaluation and Reduced profitability, delay or Appropriate due diligence, procurement
management of agents and key reputational damage. and consultation.
suppliers.
Ineffective operation of shared Inability to execute business plan. Appropriate governance structure and
investment vehicles. documentation. Regular dialogue and
reporting.
Risk associated with attracting and Inability to execute business plan. Succession planning, performance
retaining staff. evaluations, training and development,
long-term incentive rewards. Sound
systems and processes to effectively
capture and manage employee
information.
Failure to comply with health and safety Loss or injury to employees, tenants or Comprehensive health and safety
legislation or other statutory regulations contractors and resultant reputational procedures in place across the Group
or notices. damage or criminal prosecutions. and monitored regularly. External
consultants undertake annual audits in all
locations. Safe working practices well
established, including staff
communication and training.
Adequate insurance is held to cover the
risks inherent in construction projects.
Risk Impact potential Mitigation factors
Group structure brings heightened tax Competitive disadvantage. Group tax policy.
exposure. Non-REIT status has a Lower returns. Open and transparent engagement with
potential competitive advantage when HM Revenue & Customs.
bidding for new assets.
Failure of IT systems / loss of data. Lack of access to data restricting ability Disaster recovery plan in place including
Cyber crime compromises data security, to operate effectively. frequent replication of data.
websites and applications. Loss of data and accessing of Extensive testing of security.
commercially sensitive data by Staff security training.
unauthorised persons.
ECONOMIC RISKS
Impact: Economic factors may threaten the Group's ability to meet its strategic objectives or return targets
Risk Impact potential Mitigation factors
Increased competition, changes in social Declining profitability. Focus on prime assets and quality
behaviour or deteriorating profitability and ERV targets not achieved. tenants with initial assessment of credit
confidence during a period of economic Reduced rental income and/or capital risk and active credit control.
uncertainty. values. Diversity of tenant mix with limited
exposure to any single tenant.
Strategic focus on creating retail
destinations and residential districts with
unique attributes.
Decline in UK commercial or residential Declining valuations. Focus on prime assets.
real estate market heightened by global Regular assessment of investment
macro-economic conditions, currency market conditions including bi-annual
fluctuations or the political landscape. external valuations.
Restricted availability of credit, higher tax Decline in demand for the Group's Regular monitoring of covenants with
rates and macro-economic factors may properties, declining valuations, and headroom maintained.
lead to reduced consumer spending and reduced profitability. Ability to monitor tenants on turnover
higher levels of business failure. leases.
FINANCING RISKS
Impact: Reduced or limited availability of debt or equity finance may reduce the Group's profitability or threaten the Group's
ability to meet its financial commitments or objectives and potentially to operate as a going concern
Risk Impact potential Mitigation factors
Decline in market conditions or a general Reduced financial and operational Maintain appropriate liquidity to cover
rise in interest rates could impact the flexibility and delay to works. commitments.
availability and cost of debt financing. Target longer and staggered debt
maturities to avoid refinancing
concentration and consideration of early
refinancing.
Derivative contracts to provide interest
rate protection.
Development phasing to enable flexibility
and reduce financial exposure.
Reduced availability of equity capital. Constrained growth, lost opportunities, Maintain appropriate liquidity to cover
higher finance costs. commitments.
Target conservative overall leverage
levels.
DEVELOPMENT RISKS
Impact: Inability to deliver against development plans
Risk Impact potential Mitigation factors
Unable to secure or implement planning Delayed implementation or reduced Pre-application and continued
consent due to political, legislative or development opportunity with consultation and involvement with key
other risks inherent in the planning and corresponding impact on valuation. stakeholders and landowners.
development environment. Engagement with relevant authorities at
Failure to demonstrate or implement a local and national level to ensure
viable sustainable development due to development proposals are in
legal, contractual, environmental, accordance with current and emerging
transportation, affordable housing or policy.
other technical factors (including rights of Project team of internal staff and external
light). consultants with capabilities across all
Risk of change or delay due to Mayor of relevant areas.
London or Secretary of State intervention Technical studies with regular review.
or judicial reviews. Inability to gain the Responsive consultation with evidence
support of influential stakeholders. based information.
Complexity of legal agreements including Close monitoring and control over key
potential disputes relating to planning and dates and triggering of obligations.
land assembly for Earls Court Properties.
Adverse adjacent development schemes
hinder execution of business plan.
Inability to acquire land, renegotiation of Inability to execute business plan. Informed market valuation and open
use or vacant possession. Failure to Likely negative impact on valuations and dialogue with adjacent landowners.
reach agreement on land deals or Group's returns or delay to works. Earls Court Masterplan designed to allow
implement land deals with adjacent Restricted optionality in delivery of phased implementation.
landowners on acceptable terms development.
(including risk of Section 34A of the
Housing Act 1985 in relation to land
subject to CLSA).
Delay in construction or increase in costs Reduced profitability of development with Extensive consultation, design and
e.g. due to market pricing, unforeseen corresponding impact on valuation. technical work undertaken.
site issues or works around public Properly tendered and negotiated
transport infrastructure. Punitive cost, processes to select reputable contractors
design or other implications. with relevant experience in projects of
An inability to match supply to demand in equivalent scale and complexity, with
terms of product or price could result in skilled resources and appropriate
missed sales targets and/or high levels of insurance.
completed stock which in turn could Commercially astute project team to
impact on the Group's ability to execute ensure management of costs and
the business plan. delivery of programme.
Volatility in sales price. Market demand assessments. Pre-sales
and marketing.
CONCENTRATION OF INVESTMENTS
Impact: Heightened exposure to events that threaten or disrupt central London
Risk Impact potential Mitigation factors
Events which damage or diminish Loss or injury, business disruption or Terrorist insurance in place.
London's status as a global financial, damage to property. On site security presence.
business and tourist centre could affect Reduced rental income and/or capital Health and safety policies and
the Group's ability to let vacant space, values. procedures in offices.
reduce the value of the Group's
properties and potentially disrupt access Close liaison with police, National
or operations at the Group's head office. Counter Terrorism Security Office
Such events include threats to security or (NaCTSO) and local authorities to
public safety due to terrorism, health maximise safety of visitors to central
concerns including a pandemic or London.
changes to or failure of infrastructure.
Concentration of higher profile events in
central London.
DIRECTORS' RESPONSIBILITIES
Statement of Directors' responsibilities
The Directors are responsible for preparing the condensed consolidated financial statements, in accordance with applicable
law and regulations. The Directors confirm that, to the best of their knowledge:
- the condensed consolidated financial statements on pages 18 to 46 has been prepared in accordance with IAS 34
'Interim Financial Reporting', as adopted by the European Union; and
- the condensed consolidated financial statements on pages 18 to 46 includes a true and fair view of the information
required by Sections DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
The operating and financial review on pages 4 to 11 refers to important events which have taken place during the period.
The principal risks and uncertainties facing the business are referred to on pages 12 to 14.
Related party transactions are set out in note 27 of the condensed consolidated financial statements.
A list of current Directors is maintained on the Capital & Counties Properties PLC website: www.capitalandcounties.com.
By order of the Board
Ian Hawksworth
Chief Executive
Soumen Das
Managing Director & Chief Financial Officer
29 July 2015
INDEPENDENT REVIEW REPORT TO CAPITAL & COUNTIES
PROPERTIES PLC
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed the condensed consolidated financial statements, defined below, in the Interim Report of Capital & Counties
Properties PLC for the six months ended 30 June 2015. Based on our review, nothing has come to our attention that causes us
to believe that the condensed consolidated financial statements are 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.
This conclusion is to be read in the context of what we say in the remainder of this report.
What we have reviewed
The condensed consolidated financial statements, which are prepared by Capital & Counties Properties PLC, comprise:
– the Consolidated Balance Sheet as at 30 June 2015;
– the Consolidated Income Statement and Statement of Comprehensive Income for the period then ended;
– the Consolidated Statement of Cash Flows for the period then ended;
– the Consolidated Statement of Changes in Equity for the period then ended; and
– the explanatory notes to the condensed consolidated financial statements.
As disclosed in note 1, the financial reporting framework that has been applied in the preparation of the full annual financial
statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union.
The condensed consolidated financial statements included in the Interim Report have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
What a review of condensed consolidated financial statements involves
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 enquiries, 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.
We have read the other information contained in the Interim Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed consolidated financial statements.
Responsibilities for the condensed consolidated financial statements and the review
Our responsibilities and those of the Directors
The Interim Report, including the condensed consolidated financial statements, is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the Interim Report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express to the Company a conclusion on the condensed consolidated financial statements in the Interim
Report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the
purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose.
We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
29 July 2015
London
Notes:
(a) The maintenance and integrity of the Capital & Counties Properties PLC website is the responsibility of the
Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly,
the auditors accept no responsibility for any changes that may have occurred to the financial statements since
they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
For the six months ended 30 June 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Notes GBPm GBPm GBPm
Continuing operations
Revenue 2 52.0 54.2 110.6
Rental income 50.2 51.4 100.3
Rental expenses (11.8) (14.1) (30.3)
Net rental income 2 38.4 37.3 70.0
(Loss)/profit on sale of trading property 3 (0.2) 1.2 2.6
Other income 1.8 – 3.0
Gain on revaluation and sale of investment and development
property 4 271.7 134.4 454.2
Write back of impairment of trading property – 0.5 0.5
Loss on sale of loan notes (0.2) – –
Impairment of other receivables 5 (5.9) (5.2) (12.7)
Other costs – (0.1) (0.2)
305.6 168.1 517.4
Administration expenses (25.0) (18.7) (43.2)
Operating profit 280.6 149.4 474.2
Finance income 6 0.6 0.3 0.8
Finance costs 7 (9.7) (8.3) (15.9)
Other finance income 6 4.4 4.0 8.4
Other finance costs 7 – (5.2) (5.2)
Change in fair value of derivative financial instruments 1.4 (0.4) (12.1)
Net finance costs (3.3) (9.6) (24.0)
277.3 139.8 450.2
Share of post-tax result from joint ventures 13 – – –
Profit before tax 277.3 139.8 450.2
Current tax (2.8) (2.0) 2.1
Deferred tax (5.4) – (3.4)
Taxation 9 (8.2) (2.0) (1.3)
Profit for the period from continuing operations 269.1 137.8 448.9
Discontinued operation
Post-tax result/(loss) for the period from discontinued operation 8 – (0.3) (0.3)
Profit for the period 269.1 137.5 448.6
Profit attributable to:
Owners of the Parent 263.9 137.5 448.6
Non-controlling interest 23 5.2 – –
Earnings per share from continuing operations attributable to
owners of the Parent
Basic earnings per share 11 31.4p 17.8p 55.6p
Diluted earnings per share 11 31.2p 17.5p 55.0p
Weighted average number of shares 11 839.4m 776.2m 806.4m
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
For the six months ended 30 June 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Notes GBPm GBPm GBPm
Profit for the period 269.1 137.5 448.6
Other comprehensive income/(expense)
Items that may or will be reclassified subsequently
to the income statement
Gain on cash flow hedge – – 0.3
Items that will not be reclassified subsequently
to the income statement
Actuarial loss on defined benefit pension scheme – – (1.8)
Tax relating to items that will not be reclassified – (0.1) 0.4
Total other comprehensive expense for the period – (0.1) (1.1)
Total comprehensive income for the period 269.1 137.4 447.5
Total comprehensive income attributable to:
Owners of the Parent 263.9 137.4 447.5
Non-controlling interest 23 5.2 – –
Total comprehensive income arising from:
Continuing operations 269.1 137.7 447.8
Discontinued operation 8 – (0.3) (0.3)
Notes on pages 24 to 46 form part of these condensed consolidated financial statements.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at 30 June 2015
As at As at
30 June 31 December
2015 2014
Notes GBPm GBPm
Non-current assets
Investment and development property 12 3,569.9 2,784.4
Plant and equipment 1.0 1.0
Investment in joint ventures 13 14.6 0.1
Available-for-sale investments 0.4 0.4
Derivative financial instruments 18 2.5 2.1
Trade and other receivables 14 132.2 129.5
3,720.6 2,917.5
Current assets
Trading property 12 22.2 22.1
Trade and other receivables 14 37.1 42.8
Cash and cash equivalents 15 49.9 94.8
109.2 159.7
Total assets 3,829.8 3,077.2
Non-current liabilities
Borrowings, including finance leases 17 (463.2) (432.2)
Derivative financial instruments 18 (2.9) (3.9)
Pension liability (0.2) (0.2)
Deferred tax 19 (17.5) (12.9)
Trade and other payables 16 (0.1) (0.2)
(483.9) (449.4)
Current liabilities
Borrowings, including finance leases 17 (17.5) (17.5)
Other provisions 20 (2.0) –
Tax liabilities (3.6) (1.6)
Trade and other payables 16 (117.9) (102.4)
(141.0) (121.5)
Total liabilities (624.9) (570.9)
Net assets 3,204.9 2,506.3
Equity
Share capital 21 210.5 209.1
Other components of equity 2,559.5 2,297.2
Equity attributable to owners of the Parent 2,770.0 2,506.3
Non-controlling interest 23 434.9 –
Total equity 3,204.9 2,506.3
Notes on pages 24 to 46 form part of these condensed consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six months ended 30 June 2015
Equity attributable to owners of the Parent
Share-
based Non-
Share Share Merger payment Other Retained controlling Total
capital premium reserve(1) reserve reserves(2) earnings Total interest(3) equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January 2015 209.1 206.9 425.8 11.4 0.4 1,652.7 2,506.3 – 2,506.3
Profit for the period – – – – – 263.9 263.9 5.2 269.1
Total comprehensive
income for the period – – – – – 263.9 263.9 5.2 269.1
Transactions with owners
Ordinary shares issued 21 1.4 4.2 – – – – 5.6 – 5.6
Dividend expense 10 – – – – – (8.4) (8.4) – (8.4)
Realisation of share-based
payment reserve on issue
of shares – – – (5.7) – 5.0 (0.7) – (0.7)
Fair value of share-based
payment – – – 2.5 – – 2.5 – 2.5
Tax relating to share-
based payment 19 – – – – – 0.8 0.8 – 0.8
Non-controlling interest – – – – – – – 429.7 429.7
Total transactions with
owners 1.4 4.2 – (3.2) – (2.6) (0.2) 429.7 429.5
Balance at 30 June 2015 210.5 211.1 425.8 8.2 0.4 1,914.0 2,770.0 434.9 3,204.9
(1) Represents non-qualifying consideration received by the Group following the share placing in May 2014 and previous share placements. The amounts taken to the
merger reserve do not currently meet the criteria for qualifying consideration as they form part of linked transactions.
(2) Refer to note 22 'Other Reserves'.
(3) Refer to note 23 'Non-Controlling Interest'.
Notes on pages 24 to 46 form part of these condensed consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six months ended 30 June 2015
Equity attributable to owners of the Parent
Share-based
Share Share Merger payment Other Retained Total
capital premium reserve(1) reserve reserves(2) earnings equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January 2014 189.5 121.0 277.8 7.4 0.1 1,216.3 1,812.1
Profit for the period – – – – – 137.5 137.5
Other comprehensive expense:
Tax relating to items that will not be
reclassified – – – – – (0.1) (0.1)
Total comprehensive income for the period – – – – – 137.4 137.4
Transactions with owners
Ordinary shares issued 19.4 85.8 148.0 – – – 253.2
Dividend expense 10 – – – – – (8.4) (8.4)
Realisation of share-based payment reserve
on issue of shares – – – (0.6) – 0.6 –
Fair value of share-based payment – – – 2.4 – – 2.4
Tax relating to share-based payment – – – – – (0.7) (0.7)
Total transactions with owners 19.4 85.8 148.0 1.8 – (8.5) 246.5
Balance at 30 June 2014 208.9 206.8 425.8 9.2 0.1 1,345.2 2,196.0
Equity attributable to owners of the Parent
Share-based
Share Share Merger payment Other Retained Total
capital premium reserve(1) reserve reserves(2) earnings equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January 2014 189.5 121.0 277.8 7.4 0.1 1,216.3 1,812.1
Profit for the year – – – – – 448.6 448.6
Other comprehensive income/(expense):
Gain on cash flow hedge – – – – 0.3 – 0.3
Actuarial loss on defined benefit pension
scheme – – – – – (1.8) (1.8)
Tax relating to items that will not be
reclassified 19 – – – – – 0.4 0.4
Total comprehensive income for the year – – – – 0.3 447.2 447.5
Transactions with owners
Ordinary shares issued 19.6 85.9 148.0 – – – 253.5
Dividend expense 10 – – – – – (12.5) (12.5)
Adjustment for bonus issue 10 – – – – – 0.6 0.6
Realisation of share-based payment
reserve on issue of shares – – – (0.8) – 0.8 –
Fair value of share-based payment – – – 4.8 – – 4.8
Tax relating to share-based payment 19 – – – – – 0.3 0.3
Total transactions with owners 19.6 85.9 148.0 4.0 – (10.8) 246.7
Balance at 31 December 2014 209.1 206.9 425.8 11.4 0.4 1,652.7 2,506.3
(1) Represents non-qualifying consideration received by the Group following the share placing in May 2014 and previous share placements. The amounts taken to the
merger reserve do not currently meet the criteria for qualifying consideration as they form part of linked transactions.
(2) Refer to note 22 'Other Reserves'.
Notes on pages 24 to 46 form part of these condensed consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
For the six months ended 30 June 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Notes GBPm GBPm GBPm
Continuing operations
Cash flows from operating activities
Cash generated from operations 26 7.9 9.9 26.2
Interest paid (9.6) (8.9) (15.5)
Interest received 0.6 0.3 0.8
Tax (paid)/received (0.7) (0.6) 3.5
Net cash (outflow)/inflow from operating activities (1.8) 0.7 15.0
Cash flows from investing activities
Purchase and development of property (146.0) (120.5) (251.2)
Sale of property – 2.8 7.3
Pension funding – (0.8) (0.8)
Acquisition of interest in joint venture (12.1) – –
Deferred consideration on purchase of subsidiary (7.1) – –
Sale of loan notes 6.0 – –
Sale of subsidiaries(1) 0.5 0.4 0.8
Amounts received from/(paid to) joint ventures 0.3 (10.4) (13.5)
VAT received on internal restructure(2) 42.3 – –
Net cash outflow from investing activities (116.1) (128.5) (257.4)
Cash flows from financing activities
Issue of shares 0.1 252.5 252.1
Borrowings drawn 70.0 430.0 730.0
Borrowings repaid (40.0) (510.2) (650.2)
Purchase of derivative financial instruments – (1.8) (8.7)
Other finance costs (0.4) (25.5) (25.2)
Cash dividends paid 10 (4.1) (7.5) (11.0)
Contribution from non-controlling interest 47.4 4.6 7.1
Net cash inflow from financing activities 73.0 142.1 294.1
Net (decrease)/increase in unrestricted cash and cash
equivalents from continuing operations (44.9) 14.3 51.7
Cash flows from discontinued operation
Net cash inflow from investing activities – 0.1 0.1
Net increase in unrestricted cash and cash equivalents
from discontinued operation – 0.1 0.1
Net (decrease)/increase in unrestricted cash and cash
equivalents (44.9) 14.4 51.8
Unrestricted cash and cash equivalents at 1 January 88.8 37.0 37.0
Unrestricted cash and cash equivalents at period end 15 43.9 51.4 88.8
(1) Cash inflows from sale of subsidiaries relate to deferred consideration on the disposal of The Brewery by EC&O Limited on 9 February 2012 and the disposal of
Covent Garden Restaurants Limited on 29 February 2012.
(2) VAT received on an internal property transfer was deemed to be a VAT supply. Input VAT was received prior to the balance sheet date whilst the output VAT was
settled in July 2015. The VAT payable balance is included within Other taxes and social security in note 16 'Trade and Other Payables'.
Notes on pages 24 to 46 form part of these condensed consolidated financial statements.
NOTES TO THE ACCOUNTS (UNAUDITED)
1 PRINCIPAL ACCOUNTING POLICIES
General information
Capital & Counties Properties PLC (the "Company") was incorporated and registered in England and Wales on 3 February
2010 under the Companies Act as a public company limited by shares, registration number 7145051. The registered office of
the Company is 15 Grosvenor Street, London, W1K 4QZ, United Kingdom. The principal activity of the Company is to act as
the ultimate parent company of Capital & Counties Properties PLC Group (the "Group"), whose principal activity is the
development and management of property. The Group's assets principally comprise investment and development property at
Covent Garden, Earls Court and the exhibition centres at Olympia London.
Basis of preparation
The Group's condensed consolidated financial statements are prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The
condensed consolidated financial statements should be read in conjunction with the Annual Report & Accounts for the year
ended 31 December 2014, which have been prepared in accordance with IFRSs as adopted by the European Union. The
condensed consolidated financial statements are prepared in British pounds sterling.
The condensed consolidated financial statements for the six months ended 30 June 2015 are reviewed, not audited and do not
constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year
ended 31 December 2014 were approved by the Board of Directors on 26 February 2015 and delivered to the Registrar of
Companies. The auditors' report on these accounts was unqualified, did not contain an emphasis of matter paragraph and did
not contain a statement made under Section 498 of the Companies Act 2006.
The condensed consolidated financial statements have been prepared under the historical cost convention as modified for the
revaluation of property, available-for-sale investments and derivative financial instruments.
Having reassessed the principal risks, the Directors considered it appropriate to adopt the going concern basis of accounting in
preparing the condensed consolidated financial statements.
There is no material seasonal impact on the Group's financial performance.
These condensed consolidated financial statements were approved by the Board of Directors on 29 July 2015.
Except as described below, the condensed consolidated financial statements have been prepared using the accounting
policies, significant judgements, key assumptions and estimates set out on pages 100 to 105 of the Group's Annual Report &
Accounts for 2014.
Income taxes
Taxes on income in the interim periods are accrued using tax rates expected to be applicable to total annual earnings.
Investment in joint ventures
Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement.
Investments in joint ventures are accounted for using the equity method. On initial recognition the investment is recognised at
cost, and the carrying amount is subsequently increased or decreased to recognise the Group's share of the profit or loss of the
joint venture after the date of acquisition. Goodwill, if any, on acquisition is included in the carrying amount of the investment.
The Group's investment in joint ventures is presented separately on the balance sheet and the Group's share of the joint
venture's post-tax profit or loss for the period is also presented separately in the income statement.
Where there is an indication that the Group's investment in joint ventures may be impaired the Group evaluates the
recoverable amount of its investment, being the higher of the joint venture's fair value less costs to sell and value in use. If the
recoverable amount is lower than the carrying value an impairment loss is recognised in the income statement.
If the Group's share of losses in a joint venture equals or exceeds its investment in the joint venture, the Group does not
recognise further losses, unless it has legal or constructive obligations to make payments on behalf of the joint venture.
Borrowings
Borrowings are ordinarily recognised initially at their net proceeds as an approximation of fair value.
If the transaction price is not an approximation of fair value at initial recognition, the Group determines the fair value as
evidenced by a quoted price in an active market for an identical instrument or based on a valuation technique that uses data
from observable markets. Where equity holders of the Group are party to the transaction the difference between the net
proceeds and fair value is recognised within equity.
Borrowings are subsequently carried at amortised cost. Any transaction costs, premiums or discounts are capitalised and
recognised over the contractual life of the loan using the effective interest rate method; or on a straight line basis where it is
impractical to do so.
In the event of early repayment, transaction costs, premiums or discounts paid or unamortised costs are recognised
immediately in the income statement.
During the six months to 30 June 2015, the following accounting standards and guidance were adopted by the Group:
IFRS 2 'Share Based Payment' (amendment)
IFRS 3 'Business Combinations' (amendment)
IFRS 8 'Operating Segments' (amendment)
IFRS 13 'Fair Value Measurement' (amendment)
IAS 19 'Employee Benefits' (amendment)
IAS 24 'Related Party Disclosures' (amendment)
IAS 40 'Investment Property' (amendment)
These pronouncements did not have a material impact on the condensed consolidated financial statements.
There were no standards and guidelines relevant to the Group that were in issue and endorsed at the date of approval of the
condensed consolidated financial statements but not effective at the balance sheet date.
2 SEGMENTAL REPORTING
Management has determined the operating segments based on reports reviewed by the Chief Executive, who is deemed to be
the chief operating decision maker. The principal performance measures have been identified as net rental income and net
asset value.
For management and reporting purposes the Group is organised into four divisions:
– Covent Garden.
– Earls Court Properties represents the Group's interests in the Earls Court area, comprising properties held in ECPL, Lillie
Square, the Empress State Building and a number of smaller properties in the Earls Court area.
– Venues comprises the exhibitions business including the Olympia London property assets.
– Other comprises new business opportunities, the discontinued activity of The Great Capital Partnership, the Group's residual
China investments and other head office companies.
Management information is reported on a proportionate consolidation basis. Segmental reporting has been presented in line
with management information and therefore consolidation adjustments are presented to reconcile segmental performance and
position to the IFRS total.
The Group's operating segments derive their revenue primarily from rental income from lessees, with the exception of Venues
which generates revenue principally from the exhibition business.
Unallocated expenses consist primarily of costs incurred centrally which are neither directly nor meaningfully attributable to
individual segments.
Reportable segments
Six months ended 30 June 2015
Covent Earls Court Group Consolidation IFRS
Garden Properties Venues Other total adjustments total
Continuing operations GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 24.4 9.5 16.6 0.9 51.4 0.6 52.0
Rent receivable and exhibition
income 22.6 9.4 16.6 – 48.6 (0.2) 48.4
Service charge income 1.8 – – – 1.8 – 1.8
Rental income 24.4 9.4 16.6 – 50.4 (0.2) 50.2
Rental expenses(1) (5.3) (0.5) (5.9) (0.2) (11.9) 0.1 (11.8)
Net rental income 19.1 8.9 10.7 (0.2) 38.5 (0.1) 38.4
Loss on sale of trading property (0.2) (1.0) – – (1.2) 1.0 (0.2)
Other income – 0.1 – 0.9 1.0 0.8 1.8
Gain/(loss) on revaluation of
investment and development
property 151.5 68.6 52.2 (0.6) 271.7 – 271.7
Write back of trading property – 0.2 – – 0.2 (0.2) –
Loss on sale of loan notes – – – (0.2) (0.2) – (0.2)
Impairment of amoun
receivable from joint ventures – – – – – (5.9) (5.9)
Segment result 170.4 76.8 62.9 (0.1) 310.0 (4.4) 305.6
Unallocated costs:
Administration expenses (25.0) – (25.0)
Operating profit 285.0 (4.4) 280.6
Net finance costs(2) (7.7) 4.4 (3.3)
Profit before tax 277.3 – 277.3
Taxation (8.2) – (8.2)
Profit for the period from
continuing operations 269.1 – 269.1
Profit attributable to:
Owners of the Parent 263.9 – 263.9
Non-controlling interest 5.2 – 5.2
Summary balance sheet
Total segment assets(3) 1,850.3 1,695.7 275.4 36.4 3,857.8 (54.6) 3,803.2
Total segment liabilities(3) (404.6) (185.5) (77.0) (12.4) (679.5) 54.6 (624.9)
Segmental net assets 1,445.7 1,510.2 198.4 24.0 3,178.3 – 3,178.3
Unallocated assets(2) 26.6 – 26.6
Net assets 3,204.9 – 3,204.9
Other segment items:
Depreciation 0.1 – 0.1 – 0.2 – 0.2
Capital expenditure 56.3 468.0 2.0 0.3 526.6 (12.7) 513.9
(1) Comprises service charge and other non-recoverable costs.
(2) The Group operates a central treasury function which manages and monitors the Group's finance income and costs on a net basis and the majority of the Group's
cash balances.
(3) Total assets and total liabilities exclude loans between and investments in Group undertakings.
Reportable segments
Six months ended 30 June 2014
Covent Earls Court Group Consolidation IFRS
Garden Properties(1) Venues(1) Other total adjustments total
Continuing operations GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 25.1 9.9 19.3 – 54.3 (0.1) 54.2
Rent receivable and exhibition
income 20.9 9.9 19.3 – 50.1 (0.1) 50.0
Service charge income 1.4 – – – 1.4 – 1.4
Rental income 22.3 9.9 19.3 – 51.5 (0.1) 51.4
Rental expenses(2) (3.4) (0.3) (10.4) – (14.1) – (14.1)
Net rental income 18.9 9.6 8.9 – 37.4 (0.1) 37.3
Profit/(loss) on sale of trading
property 1.2 (0.7) – – 0.5 0.7 1.2
Gain on revaluation and sale of
investment and development
property 51.7 79.4 3.4 – 134.5 (0.1) 134.4
Write back of trading property 0.5 – – – 0.5 – 0.5
Impairment of amounts receivab
from joint ventures – – – – – (5.2) (5.2)
Other costs – (0.1) – – (0.1) – (0.1)
Segment result 72.3 88.2 12.3 – 172.8 (4.7) 168.1
Unallocated costs:
Administration expenses (19.4) 0.7 (18.7)
Operating profit 153.4 (4.0) 149.4
Net finance costs(3) (13.6) 4.0 (9.6)
Profit before tax 139.8 – 139.8
Taxation (2.0) – (2.0)
Profit for the period from
continuing operations 137.8 – 137.8
Discontinued operation
Loss for the period from
discontinued operation – – – (0.3) (0.3) – (0.3)
Profit for the period 137.5 – 137.5
Profit attributable to:
Owners of the Parent 137.5 – 137.5
Summary balance sheet
Total segment assets(4) 1,325.8 1,029.8 182.0 27.3 2,564.9 (10.3) 2,554.6
Total segment liabilities(4) (212.3) (149.2) (36.3) (7.4) (405.2) 10.3 (394.9)
Segmental net assets 1,113.5 880.6 145.7 19.9 2,159.7 – 2.159.7
Unallocated assets(3) 36.3 – 36.3
Net assets 2,196.0 – 2,196.0
Other segment items:
Depreciation – – 0.1 – 0.1 – 0.1
Capital expenditure 112.5 29.1 2.7 4.5 148.8 (3.7) 145.1
(1) Rental income and rental expenses include amounts charged by Earls Court Properties to Venues for use of EC1 & EC2 of GBP0.8 million up to 30 June 2014.
(2) Comprises service charge and other non-recoverable costs.
(3) The Group operates a central treasury function which manages and monitors the Group's finance income and costs on a net basis and the majority of the Group's
cash balances.
(4) Total assets and total liabilities exclude loans between and investments in Group undertakings.
Reportable segments
Year ended 31 December 2014
Covent Earls Court Group Consolidation IFRS
Garden Properties(1) Venues(1) Other total adjustments total
Continuing operations GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 53.0 19.0 36.5 1.6 110.1 0.5 110.6
Rent receivable and exhibition
income 42.7 19.0 36.5 0.1 98.3 (1.0) 97.3
Service charge income 3.0 – – – 3.0 – 3.0
Rental income 45.7 19.0 36.5 0.1 101.3 (1.0) 100.3
Rental expenses(2) (8.9) (1.0) (21.2) (0.1) (31.2) 0.9 (30.3)
Net rental income 36.8 18.0 15.3 – 70.1 (0.1) 70.0
Profit/(loss) on sale of trading
property 2.6 (4.5) – – (1.9) 4.5 2.6
Other income – – – 1.5 1.5 1.5 3.0
Gain/(loss) on revaluation and
sale of investment and
development property 270.2 139.0 n 45.6 (0.4) 454.4 (0.2) 454.2
Write back of trading property 0.5 1.2 – – 1.7 (1.2) 0.5
Write back of impairment/
(impairment) of other
receivables – – – 0.2 0.2 (12.9) (12.7)
Other costs – – (0.2) – (0.2) – (0.2)
Segment result 310.1 153.7 60.7 1.3 525.8 (8.4) 517.4
Unallocated costs:
Administration expenses (43.2) – (43.2)
Operating profit 482.6 (8.4) 474.2
Net finance costs(3) (32.4) 8.4 (24.0)
Profit before tax 450.2 – 450.2
Taxation (1.3) – (1.3)
Profit for the year from
continuing operations 448.9 – 448.9
Discontinued operation
Loss for the year from
discontinued operation – – – (0.3) (0.3) – (0.3)
Profit for the year 448.6 – 448.6
Profit attributable to:
Owners of the Parent 448.6 – 448.6
Summary balance sheet
Total segment assets(4) 1,640.4 1,161.2 222.9 29.5 3,054.0 (42.8) 3,011.2
Total segment liabilities(4) (380.0) (173.8) (43.0) (16.9) (613.7) 42.8 (570.9)
Segmental net assets 1,260.4 987.4 179.9 12.6 2,440.3 – 2,440.3
Unallocated assets(3) 66.0 – 66.0
Net assets 2,506.3 – 2,506.3
Other segment items:
Depreciation 0.1 – 0.2 – 0.3 – 0.3
Capital expenditure 206.2 85.4 3.9 4.9 300.4 (11.9) 288.5
(1) Rental income and rental expenses include amounts charged by Earls Court Properties to Venues for use of EC1 & EC2 of GBP0.8 million during 2014.
(2) Comprises service charge and other non-recoverable costs.
(3) The Group operates a central treasury function which manages and monitors the Group's finance income and costs on a net basis and the majority of the Group's
cash balances.
(4) Total assets and total liabilities exclude loans between and investments in Group undertakings.
3 (LOSS)/PROFIT ON SALE OF TRADING PROPERTY
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Continuing operations GBPm GBPm GBPm
Proceeds from the sale of trading property – 2.8 7.3
Cost of sale of trading property – (1.6) (4.6)
Agent, selling and marketing fees (0.2) – (0.1)
(Loss)/profit on sale of trading property (0.2) 1.2 2.6
4 GAIN ON REVALUATION AND SALE OF INVESTMENT AND DEVELOPMENT PROPERTY
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Continuing operations GBPm GBPm GBPm
Gain on revaluation of investment and development property 271.7 134.5 446.6
Revaluation gain on transfer from trading property – – 7.7
Loss on sale of investment and development property – (0.1) (0.1)
Gain on revaluation and sale of investment and development property 271.7 134.4 454.2
5 IMPAIRMENT OF OTHER RECEIVABLES
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Continuing operations GBPm GBPm GBPm
Impairment of amounts receivable from joint ventures 5.9 5.2 12.9
Write back of impairment of loan notes receivable – – (0.2)
Impairment of other receivables 5.9 5.2 12.7
Following an impairment review of amounts receivable from joint ventures by the Group, an impairment of GBP5.9 million has
been recognised (30 June 2014: GBP5.2 million). The impairment was calculated with reference to the Group's share of the
cumulative losses in the Lillie Square joint venture. The carrying value of the investment is GBPnil (31 December 2014: GBPnil) in
accordance with IAS 28 'Investment in Associates and Joint Ventures' ("IAS 28"). Refer to note 13 'Investment in Joint
Ventures'.
Following an impairment review of loan notes receivable held by the Group, a write back of GBP0.2 million was recognised in
December 2014.The write back was calculated with reference to the market value of certain property assets that the Group had
priority over in the event of default.
6 FINANCE INCOME
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Continuing operations GBPm GBPm GBPm
Finance income:
On loan notes 0.2 0.3 0.6
On deposits and other 0.4 – 0.2
Finance income 0.6 0.3 0.8
Other finance income:
On deep discount bonds 4.4 4.0 8.4
Other finance income(1) 4.4 4.0 8.4
(1) Excluded from the calculation of underlying earnings as deep discount bonds eliminate under proportionate consolidation.
7 FINANCE COSTS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Continuing operations GBPm GBPm GBPm
Finance costs:
On bank overdrafts, loans and other 10.0 8.4 16.5
On obligations under finance leases 0.2 0.2 0.5
Gross finance costs 10.2 8.6 17.0
Interest capitalised on property under development (0.5) (0.3) (1.1)
Finance costs 9.7 8.3 15.9
Other finance costs:
Loss on termination of derivative financial instruments – 1.3 1.3
Costs of termination of bank loans and other – 3.9 3.9
Other finance costs(1) – 5.2 5.2
(1) Non-recurring finance costs and therefore excluded from the calculation of underlying earnings.
Interest is capitalised, before tax relief, on the basis of the weighted average cost of debt of 3.3 per cent (31 December 2014:
3.4 per cent) applied to the cost of property under development during the period.
8 DISCONTINUED OPERATION
On 29 April 2013, the Group exchanged contracts for the disposal of the final property, Park Crescent West, held by The Great
Capital Partnership ("GCP"). This was effected as part of the Group's strategy to dispose of non-core assets in support of the
Group's core estates and, as a result, the partnership has been presented as a discontinued operation.
GCP was established as a joint venture in 2007 with Great Portland Estates plc ("GPE"), to own, manage and develop a
number of central London properties.
A summary of the results of GCP which have been presented separately in the consolidated income statement is set out
below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Summarised income statement GBPm GBPm GBPm
Profit before tax – – –
Taxation(1) – (0.3) (0.3)
Post-tax result/(loss) for the period from discontinued operation – (0.3) (0.3)
(1) GCP, as a partnership, is not subject to tax. Tax arises at a Group level as a result of the Group's investment in the joint venture.
9 TAXATION
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Continuing operations GBPm GBPm GBPm
Current income tax:
Current income tax charge excluding non-underlying items 2.7 2.3 3.5
Current income tax on profits 2.7 2.3 3.5
Deferred income tax:
On accelerated capital allowances 2.7 – 0.3
On fair value of investment and development property 2.0 0.6 9.0
On fair value of derivative financial instruments 0.1 (0.2) (0.7)
On Group losses (4.2) 0.5 (3.3)
On other temporary differences (0.1) (1.0) (1.9)
On non-underlying Group losses 4.9 0.1 –
Deferred income tax on profits 5.4 – 3.4
Current income tax charge/(credit) on non-underlying items 0.1 (0.2) (1.8)
Adjustments in respect of previous periods – current income tax – (0.1) (3.8)
Total income tax charge reported in the consolidated income statement 8.2 2.0 1.3
Tax arising on items recognised in other comprehensive income is also reflected within other comprehensive income. This
includes deferred tax on an element of the pension movement. Tax arising on items recognised directly in equity is reflected in
equity. This includes deferred tax on an element of the share-based payment.
The main rate of corporation tax decreased from 21 per cent to 20 per cent from 1 April 2015. Following the Chancellor's
announcement in the July 2015 Budget, the UK Corporation tax rate is expected to fall to 19 per cent from April 2017 and 18
per cent from April 2020.
10 DIVIDENDS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
Ordinary shares
Prior period final dividend of 1.0p per share 8.4 8.4 8.4
Interim dividend of 0.5p per share – – 4.1
Dividend expense 8.4 8.4 12.5
Shares issued in lieu of cash(1) (4.3) (0.9) (0.9)
Adjustment for bonus issue(2) – – (0.6)
Cash dividends paid 4.1 7.5 11.0
Proposed interim dividend of 0.5p per share 4.2 4.2 –
Proposed final dividend of 1.0p per share – – 8.4
(1) Shares issued in lieu of cash relates to those shareholders who elect to receive their dividends in scrip form following the declaration of dividend which occurs at
the Company's Annual General Meeting.
(2) Adjustments for bonus issue arise from those shareholders who elect to receive their dividends in scrip form on an evergreen basis. These shares are treated as a
bonus issue and allotted at nominal value.
11 EARNINGS PER SHARE AND NET ASSETS PER SHARE
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
(a) Earnings per share million million million
Weighted average ordinary shares in issue for calculation of basic earnings
per share 839.4 776.2 806.4
Dilutive effect of contingently issuable share option awards 2.4 5.4 4.2
Dilutive effect of contingently issuable deferred share awards 1.1 1.9 1.0
Dilutive effect of contingently issuable matching nil cost option awards 1.6 3.4 2.7
Dilutive effect of deferred bonus share option awards 1.3 1.6 1.2
Weighted average ordinary shares in issue for calculation of diluted earnings per
share 845.8 788.5 815.5
Six months Six months Year
ended ended ended
30 June 30 June 31 December
Continuing and discontinued operations attributable to owners of the 2015 2014 2014
Parent GBPm GBPm GBPm
Profit used for calculation of basic and diluted earnings per share 263.9 137.5 448.6
Basic earnings per share (pence) 31.4 17.7 55.6
Diluted earnings per share (pence) 31.2 17.4 55.0
Continuing operations attributable to owners of the Parent
Profit used for calculation of basic and diluted earnings per share 263.9 137.8 448.9
Basic earnings per share (pence) 31.4 17.8 55.6
Diluted earnings per share (pence) 31.2 17.5 55.0
Discontinued operation attributable to owners of the Parent
Result/(loss) used for the calculation of basic and diluted earnings per share – (0.3) (0.3)
Basic earnings per share (pence) – – –
Diluted earnings per share (pence) – – –
Continuing operations attributable to owners of the Parent
Basic earnings 263.9 137.8 448.9
Group adjustments:
Loss/(profit) on sale of trading property 0.2 (1.2) (2.6)
Gain on revaluation and sale of investment and development property (271.7) (134.4) (454.2)
Loss on sale of investments 0.2 – –
Write back of trading property – (0.5) (0.5)
Other costs – 0.1 –
Loss on termination of derivative financial instruments – 1.3 1.3
Change in fair value of derivative financial instruments (1.4) 0.4 12.1
Current tax adjustments 0.1 – –
Deferred tax adjustments 4.8 0.4 8.6
Non-controlling interest in respect of the above 5.2 – –
Joint venture adjustments:
Loss on sale of trading property 1.0 – 4.5
Gain on revaluation of investment and development property – (0.1) (0.2)
Write back of trading property (0.2) – (1.2)
EPRA adjusted earnings on continuing operations 2.1 3.8 16.7
Other finance costs and income – 3.9 3.9
Write back of impairment of other receivables – – (0.2)
Other costs – 0.6 0.2
Current tax adjustments – (0.3) (3.1)
Deferred tax adjustments 2.2 0.1 (4.1)
Discontinued operation – (0.3) (0.3)
Joint venture adjustment:
Other income (0.1) – –
Underlying earnings 4.2 7.8 13.1
Underlying earnings per share (pence) 0.5 1.0 1.6
EPRA adjusted earnings per share (pence) 0.2 0.5 2.1
Headline earnings per share is calculated in accordance with Circular 2/2013 issued by the South African Institute of Chartered
Accountants (SAICA), a requirement of the Group's JSE listing. This measure is not a requirement of IFRS.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
(a) Earnings per share continued GBPm GBPm GBPm
Continuing and discontinued operations attributable to owners of the
Parent
Basic earnings 263.9 137.5 448.6
Group adjustments:
Gain on revaluation and sale of investment and development property (271.7) (134.4) (446.5)
Loss on sale of investments 0.2 – –
Write back of impairment of other receivables – – (0.2)
Deferred tax adjustments 2.0 0.6 8.7
Non-controlling interest in respect of the above 5.2 – –
Joint venture adjustment:
Gain on revaluation of investment and development property – (0.1) (0.2)
Headline (loss)/earnings (0.4) 3.6 10.4
Headline earnings per share (pence) – 0.5 1.3
Diluted headline earnings per share (pence) – 0.5 1.3
As at As at
30 June 31 December
2015 2014
(b) Net assets per share million million
Number of ordinary shares in issue 841.9 836.2
Adjustments:
Effect of dilution on exercise of contingently issuable share option awards 2.4 5.1
Effect of dilution on vesting of contingently issuable deferred share awards 1.1 1.0
Effect of dilution on exercise of contingently issuable matching nil cost option awards 1.6 2.8
Effect of dilution on exercise of deferred bonus share option awards 1.3 1.2
Adjusted, diluted number of ordinary shares in issue 848.3 846.3
As at As at
30 June 31 December
2015 2014
GBPm GBPm
Net assets attributable to owners of the Parent 2,770.0 2,506.3
Fair value of derivative financial instruments 0.4 1.8
Unrecognised surplus on trading property – Group 12.7 12.9
Unrecognised surplus on trading property – Joint venture 91.2 83.4
Deferred tax adjustments 29.9 25.1
Non-controlling interests in respect of the above (3.5) –
EPRA adjusted, diluted NAV 2,900.7 2,629.5
Fair value of derivative financial instruments (0.4) (1.8)
Excess fair value of debt over carrying value (9.2) (15.8)
Deferred tax adjustments (29.9) (13.3)
EPRA adjusted, diluted NNNAV 2,861.2 2,598.6
Basic net assets per share (pence) 329.0 299.7
Diluted net assets per share (pence) 326.5 296.1
EPRA adjusted, diluted NAV per share (pence) 341.9 310.7
EPRA adjusted, diluted NNNAV per share (pence) 337.3 307.1
12 PROPERTY PORTFOLIO
a) Investment and development property
Property portfolio Tenure
Covent Earls Court
Garden Properties Venues Other Total Freehold Leasehold
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2014 1,108.4 780.3 161.1 – 2,049.8 1,049.3 1,000.5
Reclassification – – – – – 5.9 (5.9)
Additions from acquisitions 166.7 50.0 – 4.5 221.2 214.7 6.5
Additions from subsequent
expenditure 28.7 23.5 3.9 0.4 56.5 26.6 29.9
Disposals (13.0) – – – (13.0) (13.0) –
Transfers from trading
property(1) 23.3 – – – 23.3 23.3 –
Gain/(loss) on valuation(2) 262.6 138.8 45.6 (0.4) 446.6 162.6 284.0
At 31 December 2014 1,576.7 992.6 210.6 4.5 2,784.4 1,469.4 1,315.0
Reclassification – – – – – (32.0) 32.0
Additions from acquisitions 34.0 427.9 – – 461.9 51.2 410.7
Additions from subsequent
expenditure 22.2 27.4 2.0 0.3 51.9 23.4 28.5
Gain/(loss) on valuation(2) 151.5 68.6 52.2 (0.6) 271.7 153.4 118.3
At 30 June 2015 1,784.4 1,516.5 264.8 4.2 3,569.9 1,665.4 1,904.5
b) Trading property
Property portfolio Tenure
Covent Earls Court
Garden Properties Venues Other Total Freehold Leasehold
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2014 31.0 0.6 – – 31.6 30.1 1.5
Additions from subsequent
expenditure 10.8 – – – 10.8 10.6 0.2
Disposals (4.6) – – – (4.6) (3.0) (1.6)
Transfers to investment and
development property (15.6) – – – (15.6) (15.6) –
Write back/(write down) of
trading property and other 0.5 (0.6) – – (0.1) – (0.1)
At 31 December 2014(3) 22.1 – – – 22.1 22.1 –
Additions from subsequent
expenditure 0.1 – – – 0.1 0.1 –
At 30 June 2015(3) 22.2 – – – 22.2 22.2 –
(1) Within the transfer from trading property of GBP23.3 million is a revaluation gain of GBP7.7 million that is recognised in the consolidated income statement within gain on
revaluation and sale of investment and development property. This gain was unrealised and relates to assets held at the end of the period.
(2) Gain on valuation of GBP271.7 million (31 December 2014: GBP446.6 million) is recognised in the consolidated income statement within gain on revaluation and sale of
investment and development property. This gain was unrealised and relates to assets held at the end of the period.
(3) The value of trading property carried at net realisable value was GBPnil (31 December 2014: GBPnil).
c) Market value reconciliation of total property
Covent Earls Court
Garden Properties Venues Other Total
GBPm GBPm GBPm GBPm GBPm
Carrying value of investment and development
property at 30 June 2015(1) 1,784.4 1,516.5 264.8 4.2 3,569.9
Carrying value of trading property at 30 June 2015 22.2 – – – 22.2
Carrying value of investment, development
and trading property at 30 June 2015 1,806.6 1,516.5 264.8 4.2 3,592.1
Adjustment in respect of fixed head leases (3.7) – – – (3.7)
Adjustment in respect of tenant lease incentives 31.0 – – – 31.0
Unrecognised surplus on trading property(2) 12.7 – – – 12.7
Market value of investment, development
and trading property at 30 June 2015 1,846.6 1,516.5 264.8 4.2 3,632.1
Joint ventures:
Carrying value of joint venture investment,
development and trading property at 30 June 2015 – 111.1 – – 111.1
Unrecognised surplus on joint venture trading
property(2) – 91.2 – – 91.2
Market value of investment, development and
trading property on a proportionate
consolidation basis at 30 June 2015 1,846.6 1,718.8 264.8 4.2 3,834.4
Covent Earls Court
Garden Properties Venues Other Total
GBPm GBPm GBPm GBPm GBPm
Carrying value of investment and development
property at 31 December 2014(1) 1,576.7 992.6 210.6 4.5 2,784.4
Carrying value of trading property at
31 December 2014 22.1 – – – 22.1
Carrying value of investment, development
and trading property at 31 December 2014 1,598.8 992.6 210.6 4.5 2,806.5
Adjustment in respect of fixed head leases (3.7) – – – (3.7)
Adjustment in respect of tenant lease incentives 27.6 – – – 27.6
Unrecognised surplus on trading property(2) 12.9 – – – 12.9
Market value of investment, development
and trading property at 31 December 2014 1,635.6 992.6 210.6 4.5 2,843.3
Joint ventures:
Carrying value of joint venture investment,
development and trading property at
31 December 2014 – 98.3 – – 98.3
Unrecognised surplus on joint venture trading
property(2) – 83.4 – – 83.4
Market value of investment, development and
trading property on a proportionate consolidation
basis at 31 December 2014 1,635.6 1,174.3 210.6 4.5 3,025.0
(1) Included within investment and development property is GBP0.5 million (31 December 2014: GBP1.1 million) of interest capitalised during the period on property under
development.
(2) The unrecognised surplus on trading property is shown for information purposes only and is not a requirement of IFRS. Trading property continues to be measured
at the lower of cost and net realisable value in the condensed consolidated financial statements.
At 30 June 2015, the Group was contractually committed to GBP175.4 million (31 December 2014: GBP100.9 million) of future
expenditure for the purchase, construction, development and enhancement of investment, development and trading property.
Refer to note 24 'Capital Commitments' for further information on capital commitments.
The fair value of the Group's investment, development and trading property at 30 June 2015 was determined by independent,
appropriately qualified external valuers Jones Lang LaSalle for Earls Court Properties (excluding the Empress State Building)
and Venues; and CB Richard Ellis for the remainder of the Group's property portfolio. The valuations conform to the Royal
Institution of Chartered Surveyors ("RICS") Valuation Professional Standards. Fees paid to valuers are based on fixed price
contracts.
Each year the Managing Director & Chief Investment Officer, on behalf of the Board, appoints the external valuers. The valuers
are selected based upon their knowledge, independence and reputation for valuing assets such as those held by the Group.
Valuations are performed bi-annually and are performed consistently across all properties in the Group's portfolio. At each
reporting date appropriately qualified employees of the Group verify all significant inputs and review computational outputs.
Valuers submit and present summary reports to the Group's Audit Committee, with the Managing Director & Chief Investment
Officer reporting to the Board on the outcome of each valuation round.
Valuations take into account tenure, lease terms and structural condition. The inputs underlying the valuations include market
rent or business profitability, likely incentives offered to tenants, forecast growth rates, yields, EBITDA, discount rates,
construction costs including any site specific costs (for example section 106), professional fees, planning fees, developer's
profit including contingencies, planning and construction timelines, lease re-gear costs, planning risk and sales prices based on
known market transactions for similar properties or properties similar to those contemplated for development.
Valuations are based on what is determined to be the highest and best use. When considering the highest and best use a
valuer will consider, on a property by property basis, its actual and potential uses which are physically, legally and financially
viable. Where the highest and best use differs from the existing use, the valuer will consider the cost and the likelihood of
achieving and implementing this change in arriving at its valuation.
A number of the Group's properties have been valued on the basis of their development potential which differs from their
existing use. In respect of development valuations, the valuer ordinarily considers the gross development value of the
completed scheme based on assumptions regarding the capital values, rental values and yields of the properties which would
be created through the implementation of the development. Deductions are then made for anticipated costs, including an
allowance for developer's profit before arriving at a valuation.
Most notably, within Earls Court Properties the Empress State Building has been valued on the basis of its development
potential as a residential led scheme. The property is currently used as an office space, generating an income stream for the
Group, while the process to achieve the change in use is being implemented. Within the Covent Garden segment, where
appropriate, a number of properties have also been valued on the basis of their development potential, principally for the
conversion to residential use or for improving the configuration of retail units.
There are often restrictions on both freehold and leasehold property which could have a material impact on the realisation of
these assets. The most significant of these occur when planning permission is required or when a credit facility is in place.
These restrictions are factored into the property's valuation by the external valuer. Refer to disclosures surrounding
development risks.
13 INVESTMENT IN JOINT VENTURES
Investment in joint ventures is measured using the equity method. All joint ventures are held with other joint venture investors
on a 50:50 basis.
At 30 June 2015, joint ventures comprise the Lillie Square joint venture ("LSJV"), Solum Regeneration joint venture ("Solum")
and The Great Capital Partnership ("GCP") which is accounted for as a discontinued operation. Refer to note 8 'Discontinued
Operation' for further information regarding GCP.
LSJV
LSJV was established as a joint venture arrangement with the Kwok Family Interests ("KFI"), in August 2012. The joint venture
was established to own, manage and develop land interests at Lillie Square. LSJV comprises Lillie Square LP, Lillie Square GP
Limited, acting as general partner to the partnership, and its subsidiaries. All major decisions regarding LSJV are taken by the
Board of Lillie Square GP Limited, through which the Group shares strategic control.
The summarised income statement and balance sheet of LSJV are presented below.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
LSJV GBPm GBPm GBPm
Summarised income statement
Revenue 0.2 0.2 0.4
Net rental income 0.1 0.1 0.1
Gain on revaluation of investment and development property – 0.2 0.4
Agent, selling and marketing fees (2.0) (1.4) (9.0)
Other income 0.2 – –
Write back of trading property 0.3 – 2.4
Administration expenses (1.6) (1.4) (3.1)
Finance costs(1) (8.8) (7.9) (16.7)
Taxation – – 0.1
Loss for the period (11.8) (10.4) (25.8)
(1) Finance costs relate to the amortisation of deep discount bonds that were issued by LSJV to the Group and KFI. The bonds are redeemable at their nominal value
of GBP263.4 million on 24 August 2019. The discount applied is unwound over the period to maturity using an effective interest rate. Finance income receivable to the
Group of GBP4.4 million (30 June 2014: GBP4.0 million) is recognised in the consolidated income statement within other finance income.
As at As at
30 June 31 December
2015 2014
LSJV GBPm GBPm
Summarised balance sheet
Investment and development property 3.0 3.0
Other non-current assets 1.8 1.4
Trading property 219.2 193.5
Cash and cash equivalents(1) 42.2 33.9
Other current assets – 0.2
Borrowings (32.0) (13.8)
Non-current liabilities(2) (164.6) (155.8)
Amounts payable to joint venture partners(3) (71.6) (72.0)
Other current liabilities (48.2) (28.8)
Net liabilities (50.2) (38.4)
Capital commitments 117.4 141.0
Carrying value of investment, development and trading property 222.2 196.5
Unrecognised surplus on trading property(4) 182.4 166.9
Market value of investment, development and trading property(4) 404.6 363.4
(1) Includes restricted cash and cash equivalents of GBP41.6 million (31 December 2014: GBP22.6 million) relating to amounts received as property deposits that will not be
available for use by LSJV until completion of building work. There is a corresponding liability of GBP41.6 million (31 December 2014: GBP22.6 million) within other current
liabilities.
(2) Non-current liabilities relate to deep discount bonds. Amounts receivable by the Group of GBP82.3 million (31 December 2014: GBP77.9 million) are recognised on the
consolidated balance sheet within non-current trade and other receivables.
(3) Amounts payable to joint venture partners relate to working capital funding advanced by the Group and KFI. Recoverable amounts receivable of GBP12.8 million (31
December 2014: GBP19.1 million) by the Group are recognised on the consolidated balance sheet within current trade and other receivables.
(4) The unrecognised surplus on trading property and the market value of LSJV's property portfolio are shown for information purposes only and are not a requirement
of IFRS. Trading property continues to be measured at the lower of cost and net realisable value.
GCP
The summarised balance sheet of GCP is presented below. A summarised income statement is not presented as there were
no income, expenses, gains or losses attributable to the joint venture in the current or comparative period.
As at As at
30 June 31 December
2015 2014
GCP GBPm GBPm
Summarised balance sheet
Cash and cash equivalents 0.2 0.2
Net assets 0.2 0.2
Solum
On 29 June 2015, the Group acquired a 50 per cent interest in Solum, a joint venture arrangement with Network Rail
Infrastructure Limited ("NRIL"). Total acquisition costs were GBP14.5 million, GBP2.0 million of which is contingent. Refer to note 20
'Other Provisions' for further information regarding the contingent consideration. The joint venture will explore opportunities for
future redevelopments on and around significant railway station sites in London.
Solum comprises Solum Regeneration Limited Partnership and Solum Regeneration (GP) Limited, acting as general partner to
the partnership. All major decisions regarding Solum are taken by the Board of Solum Regeneration (GP) Limited, through
which the Group shares strategic control.
A summarised balance sheet and income statement have not been presented as the assets and liabilities were less than GBP0.1
million and there were no income or expenses attributable to the joint venture on acquisition or at the reporting date.
Reconciliation of summarised financial information
The table below reconciles the summarised joint venture financial information previously presented to the carrying value of
investment in joint ventures as presented on the consolidated balance sheet.
LSJV GCP Solum Total
GBPm GBPm GBPm GBPm
Net assets/(liabilities) of joint ventures at 31 December 2014 (38.4) 0.2 – (38.2)
Elimination of joint venture partners' interest 19.2 (0.1) – 19.1
Cumulative losses restricted(1) 19.2 – – 19.2
Carrying value at 31 December 2014 – 0.1 – 0.1
Net assets/(liabilities) of joint ventures at 30 June 2015 (50.2) 0.2 – (50.0)
Elimination of joint venture partners' interest 25.1 (0.1) – 25.0
Cumulative losses restricted(1) 25.1 – – 25.1
Goodwill on acquisition of joint venture(2) – – 14.5 14.5
Carrying value at 30 June 2015 – 0.1 14.5 14.6
(1) Cumulative losses restricted represent the Group's share of losses in LSJV which exceed the Group's investment in the joint venture. As a result the carrying value
of the investment in LSJV is GBPnil (31 December 2014: GBPnil) in accordance with the requirements of IAS 28.
(2) In accordance with the initial recognition exemption provisions under IAS 12 'Income Taxes', no deferred tax is recognised on goodwill.
Reconciliation of investment in joint ventures
The table below reconciles the opening to closing carrying value of investment in joint ventures presented on the consolidated
balance sheet.
LSJV GCP Solum Total
GBPm GBPm GBPm GBPm
Investment in joint ventures
At 1 January 2014 – 93.3 – 93.3
Distributions – (93.2) – (93.2)
Loss for the year(1) (12.9) – – (12.9)
Loss restricted(1) 12.9 – – 12.9
At 31 December 2014 – 0.1 – 0.1
Loss for the period(1) (5.9) – – (5.9)
Loss restricted(1) 5.9 – – 5.9
Goodwill on acquisition of joint venture – – 14.5 14.5
At 30 June 2015 – 0.1 14.5 14.6
(1) Share of post-tax profit from joint ventures in the consolidated income statement of GBPnil (31 December 2014: GBPnil) comprise loss for the period of GBP5.9 million (31
December 2014: GBP12.9 million) and loss restricted totalling GBP5.9 million (31 December 2014: GBP12.9 million).
14 TRADE AND OTHER RECEIVABLES
As at As at
30 June 31 December
2015 2014
GBPm GBPm
Non-current
Loan notes receivable(1) – 6.2
Other receivables(2) 20.1 18.7
Prepayments and accrued income(3) 29.8 26.7
Amounts receivable from joint ventures(4) 82.3 77.9
Trade and other receivables 132.2 129.5
Current
Rent receivable(5) 4.6 8.1
Other receivables 8.1 6.5
Prepayments and accrued income(3) 11.6 9.1
Amounts receivable from joint ventures(6) 12.8 19.1
Trade and other receivables 37.1 42.8
(1) Loan notes receivable were settled on 19 June 2015. A loss of GBP0.2 million was incurred as a result of the transaction.
(2) Includes GBP15.0 million exclusivity payment to LBHF which forms part of the CLSA.
(3) Included within prepayments and accrued income are tenant lease incentives of GBP31.0 million (31 December 2014: GBP27.6 million).
(4) Non-current amounts receivable from joint ventures relate to deep discount bonds that were issued by LSJV to the Group. The bonds are redeemable at their
nominal value of GBP131.7 million on 24 August 2019.
(5) Includes exhibition trade receivables.
(6) Current amounts receivable from joint ventures comprise working capital funding advanced by the Group to LSJV. The balance has been impaired by GBP25.1 million
(31 December 2014: GBP19.2 million).
15 CASH AND CASH EQUIVALENTS
As at As at
30 June 31 December
2015 2014
GBPm GBPm
Cash at hand 11.7 29.8
Cash on short-term deposit 32.2 59.0
Unrestricted cash and cash equivalents 43.9 88.8
Restricted cash and cash equivalents(1) 6.0 6.0
Cash and cash equivalents 49.9 94.8
(1) Restricted cash and cash equivalents relate to amounts placed on deposit in accounts which are subject to withdrawal conditions.
16 TRADE AND OTHER PAYABLES
As at As at
30 June 31 December
2015 2014
GBPm GBPm
Non-current
Other payables 0.1 0.2
Trade and other payables 0.1 0.2
Current
Rent received in advance 21.9 20.6
Accruals and deferred income 40.7 61.3
Trade payables 2.7 4.4
Other payables 8.1 8.3
Other taxes and social security(1) 44.5 0.7
Amount payable to non-controlling interest – 7.1
Trade and other payables 117.9 102.4
(1) Includes VAT payable of GBP42.3 million as result of an internal property transfer.
17 BORROWINGS, INCLUDING FINANCE LEASES
As at 30 June 2015
Carrying Fixed Floating Fair Nominal
value Secured Unsecured rate rate value value
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Current
Bank loans and overdrafts 11.0 11.0 – – 11.0 11.0 11.0
Loan notes 6.0 6.0 – – 6.0 6.0 6.0
Borrowings 17.0 17.0 – – 17.0 17.0 17.0
Finance lease obligations 0.5 0.5 – 0.5 – 0.5 0.5
Borrowings, including
finance leases 17.5 17.5 – 0.5 17.0 17.5 17.5
Non-current
Bank loan 2018 96.6 96.6 – – 96.6 97.5 97.5
Bank loan 2019 214.0 – 214.0 – 214.0 220.0 220.0
Loan notes 2024 74.7 – 74.7 74.7 – 76.3 75.0
Loan notes 2026 74.7 – 74.7 74.7 – 75.4 75.0
Borrowings 460.0 96.6 363.4 149.4 310.6 469.2 467.5
Finance lease obligations 3.2 3.2 – 3.2 – 3.2 3.2
Borrowings, including
finance leases 463.2 99.8 363.4 152.6 310.6 472.4 470.7
Total borrowings, including
finance leases 480.7 117.3 363.4 153.1 327.6 489.9 488.2
Cash and cash equivalents (49.9)
Net debt 430.8
As at 31 December 2014
Carrying Fixed Floating Fair Nominal
value Secured Unsecured rate rate value value
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Current
Bank loans and overdrafts 11.0 11.0 – – 11.0 11.0 11.0
Loan notes 6.0 6.0 – – 6.0 6.0 6.0
Borrowings 17.0 17.0 – – 17.0 17.0 17.0
Finance lease obligations 0.5 0.5 – 0.5 – 0.5 0.5
Borrowings, including finance
leases 17.5 17.5 – 0.5 17.0 17.5 17.5
Non-current
Bank loan 2018 96.5 96.5 – – 96.5 97.5 97.5
Bank loan 2019 183.1 – 183.1 – 183.1 190.0 190.0
Loan notes 2024 74.7 – 74.7 74.7 – 79.1 75.0
Loan notes 2026 74.7 – 74.7 74.7 – 78.2 75.0
Borrowings 429.0 96.5 332.5 149.4 279.6 444.8 437.5
Finance lease obligations 3.2 3.2 – 3.2 – 3.2 3.2
Borrowings, including finance
leases 432.2 99.7 332.5 152.6 279.6 448.0 440.7
Total borrowings, including
finance leases 449.7 117.2 332.5 153.1 296.6 465.5 458.2
Cash and cash equivalents (94.8)
Net debt 354.9
18 CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
The tables below set out each class of financial asset, financial liability and their fair values at 30 June 2015 and 31 December
2014.
As at 30 June 2015
Gain Gain to other
Carrying Fair to income comprehensive
value value statement income
GBPm GBPm GBPm GBPm
Available-for-sale investments 0.4 0.4 – –
Total available-for-sale investments 0.4 0.4 – –
Derivative financial assets 2.5 2.5 0.4 –
Total held for trading assets 2.5 2.5 0.4 –
Cash and cash equivalents 49.9 49.9 – –
Other financial assets 169.3 169.3 – –
Total cash and other financial assets 219.2 219.2 – –
Derivative financial liabilities (2.9) (2.9) 1.0 –
Total held for trading liabilities (2.9) (2.9) 1.0 –
Borrowings, including finance leases (480.7) (489.9) – –
Other financial liabilities (123.6) (123.6) – –
Total borrowings and other financial liabilities (604.3) (613.5) – –
As at 31 December 2014
Gain/(loss) Gain to other
Carrying Fair to income comprehensive
value value statement income
GBPm GBPm GBPm GBPm
Available-for-sale investments 0.4 0.4 – –
Total available-for-sale investments 0.4 0.4 – –
Derivative financial assets 2.1 2.1 (8.4) –
Total held for trading assets 2.1 2.1 (8.4) –
Cash and cash equivalents 94.8 94.8 – –
Other financial assets 172.3 172.3 0.2 –
Total cash and other financial assets 267.1 267.1 0.2 –
Derivative financial liabilities (3.9) (3.9) (3.7) –
Total held for trading liabilities (3.9) (3.9) (3.7) –
Borrowings, including finance leases (449.7) (465.5) – –
Other financial liabilities (104.2) (104.2) – –
Total borrowings and other financial liabilities (553.9) (569.7) – –
Fair value estimation
Financial instruments carried at fair value are required to be analysed by level depending on the valuation method adopted
under IFRS 13 'Fair Value Measurement'.
The different levels are defined as follows:
Level 1: valuation based on quoted market prices traded in active markets.
Level 2: valuation based on inputs other than quoted prices included within Level 1 that maximise the use of observable data
either directly or from market prices or indirectly derived from market prices.
Level 3: where one or more inputs to valuation are not based on observable market data. Valuations at this level are more
subjective and therefore more closely managed, including sensitivity analysis of inputs to valuation models. Such testing has
not indicated that any material difference would arise due to a change in input variables.
The tables below present the Group's financial assets and liabilities carried at fair value at 30 June 2015 and 31 December
2014.
The fair values of derivative financial instruments are determined from observable market prices or estimated using appropriate
yield curves at each reporting date by discounting the future contractual cash flows to the net present values.
Level 1 Level 2 Level 3 Total
30 June 2015 GBPm GBPm GBPm GBPm
Derivative financial assets – 2.5 – 2.5
Held for trading – 2.5 – 2.5
Investments
Total available-for-sale investments – – 0.4 0.4
Total assets – – 0.4 0.4
Derivative financial liabilities
Held for trading – (2.9) – (2.9)
Total liabilities – (2.9) – (2.9)
Level 1 Level 2 Level 3 Total
31 December 2014 GBPm GBPm GBPm GBPm
Derivative financial assets – 2.1 – 2.1
Held for trading – 2.1 – 2.1
Investments
Total available-for-sale investments – – 0.4 0.4
Total assets – – 0.4 0.4
Derivative financial liabilities
Held for trading – (3.9) – (3.9)
Total liabilities – (3.9) – (3.9)
The table below presents a reconciliation of Level 3 fair value measurements for the period.
As at As at
30 June 31 December
2015 2014
GBPm GBPm
Opening balance and closing balance 0.4 0.4
Total available-for-sale investments 0.4 0.4
All of the Group's Level 3 financial instruments are unlisted equity investments. The valuation of the available for-sale
investment is based on expected cash distributions to be received from China Harvest Fund 1 with reference to the market
value of the underlying assets held.
19 DEFERRED TAX
The decrease in corporation tax to 20 per cent referred to in note 9 'Taxation' has been substantively enacted for the purposes
of IAS 12 'Income Taxes' ("IAS 12") and therefore has been reflected in these condensed consolidated financial statements
based on the expected timing of the realisation of deferred tax.
Deferred tax on investment and development property is calculated under IAS 12 provisions on a disposals basis by reference
to the properties' original tax base cost. Elements factored into the calculation include indexation relief and the Group's holding
structure. The Group's recognised deferred tax liability on investment and development property as calculated under IAS 12
was GBP13.8 million at 30 June 2015 (31 December 2014: GBP11.8 million).
A disposal of the Group's trading property including Lillie Square at their market value as per note 12 'Property Portfolio' would
result in a corporation tax charge to the Group of GBP20.8 million (20.0 per cent of GBP103.9 million).
The Group's contingent tax liability was GBP2.6 million (31 December 2014: GBPnil).
Fair value of Fair value of
Accelerated investment derivative Other
capital & development financial temporary Group
allowances property instruments differences losses Total
GBPm GBPm GBPm GBPm GBPm GBPm
Provided deferred tax liabilities/(assets):
At 1 January 2014 12.9 3.1 0.2 (4.0) (2.3) 9.9
Adjustment in respect of previous periods 0.1 (0.3) 0.2 – – –
Recognised in income 1.3 9.6 (0.8) (1.8) (3.3) 5.0
Recognised in other comprehensive
income – – – (0.4) – (0.4)
Recognised directly in equity – – – (0.3) – (0.3)
Reduction due to rate change (0.7) (0.6) 0.1 (0.1) – (1.3)
At 31 December 2014 13.6 11.8 (0.3) (6.6) (5.6) 12.9
Recognised in income 2.7 2.0 0.1 (0.1) 0.7 5.4
Recognised directly in equity – – – (0.8) – (0.8)
At 30 June 2015 16.3 13.8 (0.2) (7.5) (4.9) 17.5
Unprovided deferred tax (assets):
At 31 December 2014 – – – – (18.3) (18.3)
Movement during the period – – – – 3.7 3.7
At 30 June 2015 – – – – (14.6) (14.6)
In accordance with the requirements of IAS 12, deferred tax assets are only recognised to the extent that the Group believes it
is probable that future taxable profit will be available against which the deferred tax assets can be recovered.
20 OTHER PROVISIONS
As at
30 June
2015
GBPm
Current
At 1 January 2015 –
Contingent consideration on acquisition of joint venture 2.0
At 30 June 2015 2.0
As detailed in note 13 'Investment in Joint Ventures', the Group acquired a joint venture interest in Solum on 29 June 2015.
Consideration comprised of an immediate cash payment of GBP12.0 million in addition to contingent consideration that is
dependent on the Group achieving consent to develop specific railway sites with NRIL. On initial recognition, GBP2.0 million was
considered the best estimate of the amount that the Group would have to pay to settle this obligation.
21 SHARE CAPITAL AND SHARE PREMIUM
Issue Share Share
Transaction price Number capital premium
Issue type date (pence) of shares GBPm GBPm
At 1 January 2014 757,903,158 189.5 121.0
Share placing May 340 75,900,000 18.9 84.7
Scrip dividend - 2013 final June 347 254,158 0.1 0.8
Scrip dividend - 2014 interim September 338 174,600 – –
Share-based payment(1) – – 2,004,491 0.6 0.4
At 31 December 2014 836,236,407 209.1 206.9
Scrip dividend – 2014 final June 416 1,028,609 0.3 4.0
Share-based payment(2) – – 4,600,536 1.1 0.2
At 30 June 2015 841,865,552 210.5 211.1
(1) During 2014 a total of 2,004,491 new shares were issued to satisfy employee share scheme awards.
(2) During the period to 30 June 2015 a total of 4,600,536 new shares were issued to satisfy employee share scheme awards.
In May 2014 the Company completed a placing of 75,900,000 new ordinary shares of 25 pence each (aggregate nominal value
GBP18.9 million) at a price of 340 pence per share to UK and South African institutions. The placing generated gross proceeds of
GBP258.1 million, GBP251.7 million net of expenses. The terms of the placing were fixed on 14 May 2014. The market price of the
Company's shares on 14 May 2014 was 344.2 pence per share. Aggregate market price of placing shares on 14 May 2014
was GBP261,247,800.
Full details of the rights and obligations attached to the ordinary shares are contained in the Company's Articles of Association.
These rights include an entitlement to receive the Company's Annual Report & Accounts, to attend and speak at General
Meetings of the Company, to appoint proxies and to exercise voting rights. Holders of ordinary shares may also receive
dividends and may receive a share of the Company's residual assets on liquidation. There are no restrictions on the transfer of
ordinary shares.
22 OTHER RESERVES
As at As at
30 June 31 December
2015 2014
GBPm GBPm
Revaluation reserve 0.1 0.1
Cash flow hedge reserve 0.3 0.3
Total other reserves 0.4 0.4
23 NON-CONTROLLING INTEREST
As at As at
30 June 31 December
2015 2014
GBPm GBPm
Opening non-controlling interest – –
Profit for the period attributable to non-controlling interest 5.2 –
Capital contribution from non-controlling interest 44.4 –
Unsecured loan notes issued to non-controlling interest 385.3 –
Closing non-controlling interest 434.9 –
During the period, unsecured, non-interest bearing loan notes, redeemable in 2064 were issued by ECPL, a subsidiary of the
Group, to TTL Earls Court Properties Limited, a subsidiary of TfL, which is the non-controlling interest of the Group. As the
transaction price of the loan notes was not an approximation of their fair value, the Group determined the fair value by using
data from observable inputs. As a result, the initial fair value of the loan notes was valued at less than GBP0.1 million and therefore
GBP385.3 million has been classified as equity.
24 CAPITAL COMMITMENTS
At 30 June 2015, the Group was contractually committed to GBP175.4 million (31 December 2014: GBP100.9 million) of future
expenditure for the purchase, construction, development and enhancement of investment, development and trading property.
Of the GBP175.4 million committed, GBP60.2 million is committed 2015 expenditure.
In November 2013 the Group exercised its option under the CLSA which it entered into with LBHF in January 2013 in relation
to LBHF's land interest within the Earls Court Masterplan. Under the terms of the CLSA, the Group can draw down land in
phases but no land can be transferred unless replacement homes for the residents of the relevant phase have been provided
and vacant possession is given. To date the Group has paid GBP30 million of the GBP105 million cash consideration payable under
the CLSA. Independent of the land draw down process, exercising the option commits the Group to the payment of the residual
GBP75 million which is yet to be paid. This is expected to be settled in five annual instalments of GBP15 million starting on 31
December 2015.
The Group's share of joint venture capital commitments arising on LSJV amounts to GBP58.7 million (31 December 2014: GBP70.5
million).
25 CONTINGENT LIABILITIES
The Group has contingent liabilities in respect of legal claims, guarantees and warranties arising from the ordinary course of
business. Contingent liabilities that may result in material liabilities are described below.
Under the terms of the CLSA the Group has certain compensation obligations relating to achieving vacant possession, which
are subject to an overall cap of GBP55 million. Should any payments be made in respect of these obligations, they will be
deducted from the total consideration payable to LBHF (refer to note 24 'Capital Commitments').
In March 2013, an agreement with Network Rail was signed to acquire a 999 year leasehold interest in the air rights above the
West London Line where it runs within the ECOA. Within the terms of the agreement, the Group can exercise options during
the next 50 years for further 999 year leases over the remainder of the West London Line to allow for development within the
Earls Court Masterplan. Network Rail is entitled to further payments of 5.55 per cent of the residual land value which would be
payable at the time of development or disposal of each phase of the Earls Court Masterplan.
The acquisition of the Northern Access Road land took place in 2007. Under the terms of the agreement the vendor's
successor in title would be entitled to further payments until 2027 if certain conditions are met. Further payments would become
due following the grant of a planning permission for change of use or on disposal. In the event such planning permission is
implemented, the payment would be calculated at 50 per cent of the uplift in land value following the grant of the permission. In
the event of a disposal, the payment would be calculated as 50 per cent of the difference between the sale value against the
land value without the relevant permission.
26 CASH GENERATED FROM OPERATIONS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Continuing operations Notes GBPm GBPm GBPm
Profit before tax 277.3 139.8 450.2
Adjustments:
Loss/(profit) on sale of trading property 3 0.2 (1.2) (2.6)
Gain on revaluation and sale of investment and development
property 4 (271.7) (134.4) (454.2)
Other costs – 0.1 0.2
Write back of trading property – (0.5) (0.5)
Loss on sale of loan notes 0.2 – –
Impairment of other receivables 5.9 5.2 12.7
Depreciation 0.2 0.1 0.3
Amortisation of tenant lease incentives and other direct costs (0.5) (0.8) 5.3
Share-based payment(1) 2.9 2.7 5.2
Finance income 6 (0.6) (0.3) (0.8)
Finance costs 7 9.7 8.3 15.9
Other finance income 6 (4.4) (4.0) (8.4)
Other finance costs 7 – 5.2 5.2
Change in fair value of derivative financial instruments (1.4) 0.4 12.1
Change in working capital:
Change in trade and other receivables (12.1) (4.9) (17.5)
Change in trade and other payables 2.2 (5.8) 3.1
Cash generated from operations 7.9 9.9 26.2
(1) Includes GBP2.5 million (30 June 2014: GBP2.3 million) relating to the IFRS 2 'Share-Based Payment' charge.
27 RELATED PARTY TRANSACTIONS
Transactions with Directors
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
Key management compensation(1) GBPm GBPm GBPm
Salaries and short-term employee benefits 1.8 1.2 3.3
Share-based payment 1.2 1.5 3.6
3.0 2.7 6.9
(1) The Directors of the Company have been determined to be the only individuals with authority and responsibility for planning, directing and controlling the activities
of the Company.
Property purchased by Directors of the Company
A related party of the Group, Lillie Square GP Limited, entered into the following related party transactions as defined by IAS 24
'Related Party Disclosures':
In April 2014 Ian Durant, Chairman of Capital & Counties Properties PLC, together with his spouse exchanged contracts to
acquire an apartment for a purchase price of GBP725,000. At 31 December 2014 an initial deposit of GBP72,500 had been received.
In April 2015 a further GBP72,500 was received with the balance of GBP580,000 due upon legal completion.
In April 2014 Andrew Strang, a Non-executive Director of Capital & Counties Properties PLC exchanged contracts to acquire
an apartment for a purchase price of GBP855,000. At 31 December 2014 an initial deposit of GBP85,500 had been received. In April
2015 a further GBP85,500 was received with the balance of GBP684,000 due upon legal completion.
In April 2014 Henry Staunton, a Non-executive Director of Capital & Counties Properties PLC, together with his spouse
exchanged contracts to acquire an apartment for a purchase price of GBP1,999,000. At 31 December 2014 an initial deposit of
GBP199,900 had been received. In April 2015 a further GBP199,900 was received with the balance of GBP1,599,200 due upon legal
completion.
In December 2014 Graeme Gordon, a Non-executive Director of Capital & Counties Properties PLC, exchanged contracts to
acquire two apartments for GBP1,925,000 and GBP2,725,000. At 31 December 2014, initial deposits of GBP192,500 and GBP272,500 had
been received, with GBP1,732,500 and GBP2,452,500 not yet due for payment. In December 2015 a further GBP192,500 and GBP272,500
will become due with the balance due upon legal completion.
In December 2014 Blue Lillie Limited, an entity connected to Graeme Gordon, exchanged contracts to acquire two apartments
for GBP1,975,000 and GBP2,825,000. At 31 December 2014, initial deposits of GBP197,500 and GBP282,500 had been received, with
GBP1,777,500 and GBP2,542,500 not yet due for payment. In December 2015 a further GBP197,500 and GBP282,500 will become due
with the balance due upon legal completion.
The above transactions with Directors were conducted at fair and reasonable market price based upon similar comparable
transactions at that time. Where applicable, appropriate approval has been provided.
Lillie Square GP Limited acts in the capacity of general partner to Lillie Square LP, a joint venture between the Group and the KFI.
Transactions with equity holders
In May 2014, the Company completed a placing of 75.9 million new ordinary shares at a price of 340 pence per share.
Blackrock Investment Management (UK) Limited, a related party controlling more than 10 per cent of the voting rights in the
Company, subscribed for 11.6 million shares.
28 EVENTS AFTER THE REPORTING PERIOD
On 3 July 2015, the Group acquired the freehold interest of 30-33 Henrietta Street, Covent Garden for GBP15.8 million inclusive of
acquisition costs.
ANALYSIS OF PROPERTY PORTFOLIO (UNAUDITED)
1. PROPERTY DATA AS AT 30 JUNE 2015
Market
Value
GBPm Ownership
Covent Garden 1,846.6 100%
Earls Court Properties
ECPL 741.1 63%
Lillie Square 202.3 50%
Empress State 282.0 100%
Other 58.1 100%
Earls Court Properties (Group share) 1,283.5
Venues 264.8 100%
Other 4.2 100%
Total property (Group share) 3,399.1
Non-controlling interest in Earls Court Properties 435.3
Total property 3,834.4
Investment and development property 3,598.7
Trading property 235.7
2. ANALYSIS OF CAPITAL RETURN FOR THE PERIOD
Revaluation
Market Market surplus/
Value Value (deficit)(1)
30 June 31 December 30 June
2015 2014 2015
Like-for-like capital GBPm GBPm GBPm Increase
Covent Garden 1,815.6 1,635.6 152.0 9.3%
Earls Court Properties 1,282.8 1,174.3 68.9 5.7%
Venues 264.8 210.6 52.2 24.6%
Other 4.2 4.5 (0.6)
Total like-for-like capital 3,367.4 3,025.0 272.5 8.9%
Investment and development property 3,131.7 2,809.8 264.7 9.3%
Trading property 235.7 215.2 7.8 3.4%
Non like-for-like capital
Additions due to transactions with non-controlling interest 434.8 – 7.8
Acquisitions 32.2 – (0.8)
Total property 3,834.4 3,025.0 279.5 7.9%
Investment and development property 3,598.7 2,809.8 271.7 8.2%
Trading property 235.7 215.2 7.8(2) 3.4%
All property
Covent Garden 1,846.6 1,635.6 151.3 9.1%
Earls Court Properties 1,718.8 1,174.3 76.6 4.7%
Venues 264.8 210.6 52.2 24.6%
Other 4.2 4.5 (0.6)
Total property 3,834.4 3,025.0 279.5 7.9%
(1) Revaluation surplus/(deficit) includes amortisation of lease incentives and fixed head leases.
(2) Represents unrecognised surplus and write down or write back to market value of trading property. Presented for information purposes only.
3. ANALYSIS OF NET RENTAL INCOME FOR THE PERIOD
Six months Six months
ended ended
30 June 30 June
2015 2014
Like-for-like net rental income GBPm GBPm Change
Covent Garden 17.5 17.2 1.6%
Earls Court Properties 8.9 9.5 (7.0)%
Venues 10.7 8.9 20.9%
Total like-for-like net rental income 37.1 35.6 4.0%
Like-for-like investment and development property 37.1 35.6 4.0%
Like-for-like trading property – –
Non like-for-like net rental income
Developments 0.1 1.4
Disposals – 0.2
Prior period acquisitions (like-for-like capital) 1.3 0.2
Total net rental income 38.5 37.4 3.1%
Investment and development property income 38.5 37.3 3.1%
Trading property income – 0.1
All property
Covent Garden 19.1 18.9 1.0%
Earls Court Properties 8.9 9.6 (7.8%)
Venues 10.7 8.9 20.9%
Other (0.2) –
Total net rental income 38.5 37.4 3.1%
4. ANALYSIS OF COVENT GARDEN BY USE
30 June 2015
Weighted Gross
Initial Nominal Passing Occupancy average Market area
yield equivalent rent rate unexpired value ERV million
(EPRA) yield GBPm (EPRA) lease years GBPm GBPm Sq ft
Retail 1,317.2 55.4 0.5
Office 221.6 12.5 0.2
Residential 121.3 3.5 0.2
Other(1) 186.5 11.2 0.1
Total 2.16% 3.59% 42.8 96.5% 7.6 1,846.6 82.6 1.0
(1) Consists of property where the highest and best use valuation differs from the current use.
CONSOLIDATED UNDERLYING PROFIT STATEMENT (UNAUDITED)
For the six months ended 30 June 2015
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
GBPm GBPm GBPm
Net rental income 38.5 37.4 70.1
Other income 0.9 – 1.5
Administration expenses (25.0) (19.4) (43.2)
Operating profit 14.4 18.0 28.4
Finance costs (9.7) (8.3) (15.9)
Finance income 0.6 0.3 0.8
Net finance costs (9.1) (8.0) (15.1)
Profit before tax 5.3 10.0 13.3
Taxation (1.1) (2.2) (0.2)
Underlying earnings(1) 4.2 7.8 13.1
Underlying earnings per share (pence) 0.5 1.0 1.6
Weighted average number of shares 839.4m 776.2m 806.4m
(1) Underlying earnings includes continuing and discontinued operations and is calculated on a proportionate consolidation basis.
DIVIDENDS
The Directors of Capital & Counties Properties PLC have proposed an interim dividend per ordinary share (ISIN
GB00B62G9D36) of 0.5 pence payable on 25 September 2015.
Dates
The following are the salient dates for payment of the proposed interim dividend:
Sterling/Rand exchange rate struck: 20 August 2015
Sterling/Rand exchange rate and dividend amount in Rand announced: 21 August 2015
Ordinary shares listed ex-dividend on the JSE, Johannesburg: 31 August 2015
Ordinary shares listed ex-dividend on the LSE, London: 3 September 2015
Record date for interim dividend in UK and South Africa: 4 September 2015
Dividend payment date for shareholders 25 September 2015
South African shareholders should note that, in accordance with the requirements of Strate, the last day to trade cum-dividend
will be 28 August 2015 and that no dematerialisation of shares will be possible from 31 August 2015 to 4 September 2015
inclusive. No transfers between the UK and South Africa registers may take place from 21 August 2015 to 4 September 2015.
Subject to SARB approval, the Board intends to offer an optional scrip dividend alternative in respect of the 2015 interim
dividend.
The above dates are proposed and subject to change and any changes will be published accordingly.
Important Information for South African Shareholders:
The final cash dividend declared by the Company will constitute a dividend for Dividends Tax purposes. Dividends Tax will
therefore be withheld from the amount of the final cash dividend which is paid at a rate of 15 per cent, unless a shareholder
qualifies for an exemption and the prescribed requirements for effecting the exemption, as set out in the rules of the Scrip
Dividend Scheme, are in place.
It is the Company's understanding that the issue and receipt of shares pursuant to the scrip dividend alternative will not have
any Dividends Tax nor income tax implications. The new shares which are acquired under the scrip dividend alternative will be
treated as having been acquired for nil consideration.
This information is included only as a general guide to taxation for shareholders resident in South Africa based on Capco's
understanding of the law and the practice currently in force.
Any shareholder who is in any doubt as to their tax position should seek independent professional advice.
GLOSSARY
Capco
Capco represents Capital & Counties Properties PLC (also referred to as "the Company") and all its subsidiaries and group
undertakings, collectively referred to as "the Group".
CLSA
Conditional Land Sale Agreement, an agreement with LBHF relating to its land in the ECOA.
Diluted figures
Reported amounts adjusted to include the dilutive effects of potential shares issuable under employee incentive arrangements.
Earls Court
The London district made up of a series of residential neighbourhoods crossing the boundaries of LBHF and RBKC.
Earls Court Masterplan
The Earls Court Masterplan, created by Sir Terry Farrell and Partners is the consented scheme for the transformation of
ECOA. The London Borough of Hammersmith & Fulham and The Royal Borough of Kensington and Chelsea formerly granted
outline planning permission for the Earls Court Masterplan on 14 November 2013.
Earls Court Properties
The Group's interests in the Earls Court area, comprising properties held in ECPL, Lillie Square (a 50:50 joint venture
partnership with the Kwok Family Interests), the Empress State Building and a number of smaller properties in the Earls Court
area.
ECPL
Earls Court Partnership Limited is the investment vehicle with TfL. The Group holds 63 per cent controlling interest and TfL
holds 37 per cent. ECPL holds interests in EC1 & EC2 and other adjacent property primarily located on and around Lillie Road.
EBITDA
Earnings before interest, tax, depreciation and amortisation.
EC1 & EC2
The site formerly the location of the Earls Court 1 and Earls Court 2 exhibition centres.
ECOA
The Earls Court and West Kensington Opportunity Area.
EPRA
European Public Real Estate Association, the publisher of Best Practice Recommendations intended to make financial
statements of public real estate companies in Europe clearer, more transparent and comparable.
EPRA adjusted, diluted NAV
The net assets as at the end of the period including the excess of the fair value of trading property over its cost and excluding
the fair value of financial instruments, deferred tax on revaluations and diluting for the effect of those shares potentially issuable
under employee share schemes divided by the diluted number of shares at the period end.
EPRA adjusted, diluted NNNAV
EPRA diluted NAV adjusted to reflect the fair value of derivative financial instruments and to include deferred tax on
revaluations.
EPRA adjusted earnings per share
Profit for the period excluding gains or losses on the revaluation and sale of investment and development property, write down
of trading property, changes in fair value of derivative financial instruments and associated close-out costs and the related tax
on these items divided by the weighted average number of shares in issue during the period.
Estimated rental value (ERV)
The external valuers' estimate of the Group's share of the open market rent which, on the date of valuation, could reasonably
be expected to be obtained on a new letting or rent review of the property.
GEA
Gross External Area.
Gross income
The Group's share of passing rent plus sundry non-leased income.
Initial yield (EPRA)
Annualised net rent (after deduction of revenue costs such as head rent, running void, service charge after shortfalls and empty
rates) on investment and development property expressed as a percentage of the gross market value before deduction of
theoretical acquisition costs, consistent with EPRA's net initial yield.
IPD
Investment Property Databank Ltd, producer of an independent benchmark of property returns.
JSE
Johannesburg Stock Exchange.
Kwok Family Interests (KFI)
Joint venture partner in the Lillie Square development.
LBHF
The London Borough of Hammersmith & Fulham.
Like-for-like property
Property which has been owned throughout both periods without significant capital expenditure in either period, so income can
be compared on a like-for-like basis. For the purposes of comparison of capital values, this will also include assets owned at
the previous balance sheet date but not necessarily throughout the prior period.
Loan-to-value (LTV)
LTV is calculated on the basis of net debt divided by the value of the Group's property portfolio. The Group focuses most on an
LTV measure that includes the notional share of joint venture interests but excludes the share of cash, debt and property which
is held by the Group on behalf of non-controlling interest.
LSE
London Stock Exchange.
NAV
Net Asset Value.
Net Debt
Total borrowings less cash and cash equivalents.
Net rental income (NRI)
The Group's share of gross rental income less ground rents, payable service charge expenses and other non-recoverable
charges, having taken due account of bad debt provisions and adjustments to comply with International Financial Reporting
Standards regarding tenant lease incentives.
Nominal equivalent yield
Effective annual yield to a purchaser on the gross market value, assuming rent is receivable annually in arrears, and that the
property becomes fully occupied and that all rents revert to the current market level (ERV) at the next review date or lease
expiry.
Occupancy rate (EPRA)
The ERV of let and under offer units expressed as a percentage of the ERV of let and under offer units plus ERV of un-let units,
excluding units under development.
Opportunity Area
In September 2011 the GLA published the 'Opportunity Area Planning Frameworks Report'. Opportunity Areas are London's
major reservoirs of brownfield land with significant capacity to accommodate new housing, commercial and other
developments linked to existing or potential improvements to public transport accessibility. Typically, they can accommodate at
least 5,000 jobs or 2,500 new homes or a combination of the two, along with other supporting facilities and infrastructure.
Passing rent
The Group's share of contracted annual rents receivable at the balance sheet date. This takes no account of accounting
adjustments made in respect of rent-free periods or tenant lease incentives, the reclassification of certain lease payments as
finance charges or any irrecoverable costs and expenses, and does not include excess turnover rent, additional rent in respect
of unsettled rent reviews or sundry income such as from car parks etc. Contracted annual rents in respect of tenants in
administration are excluded.
RBKC
The Royal Borough of Kensington & Chelsea.
SARB
South African Reserve Bank.
Section 34A Housing Act 1985
An amendment to the 1985 Act enabling an organised group of tenants to require a local authority to transfer their homes to a
private registered provider of social housing, where a transfer proves to be the favoured and viable option. The Housing (Right
to Transfer from a Local Authority Landlord) (England) Regulations 2013 which brought Section 34A into effect came into force
on 5 December 2013.
Section 106
Section 106 of the Town and Country Planning Act 1990, pursuant to which the relevant planning authority can impose
planning obligations on a developer to secure contributions to services, infrastructure and amenities in order to support and
facilitate a proposed development.
Tenant lease incentives
Any incentives offered to tenants to enter into a lease. Typically incentives are in the form of an initial rent-free period and/or a
cash contribution to fit-out the premises. Under International Financial Reporting Standards the value of incentives granted to
tenants is amortised through the income statement on a straight-line basis over the lease term.
TfL
Transport for London and any subsidiary of Transport for London including TTL Earls Court Properties Limited, Transport
Trading Limited and London Underground Limited.
Total property return
Capital growth including gains and losses on disposals plus rent received less associated costs, including ground rent.
Total return
The growth in EPRA adjusted, diluted NAV per share plus dividends per share paid during the period.
Total shareholder return
The increase in the price of an ordinary share plus dividends paid during the period assuming re-investment in ordinary shares.
Underlying earnings
Profit for the period excluding impairment charges, net valuation gains/losses (including profits/losses on disposals), net
refinancing charges, costs of termination of derivative financial instruments and non-recurring costs and income. Underlying
earnings is reported on a proportionate consolidation basis.
Weighted average unexpired lease term
The unexpired lease term to lease expiry weighted by ERV for each lease.
Zone A
A means of analysing and comparing the rental value of retail space by dividing it in to zones parallel with the main frontage.
The most valuable zone, Zone A, falls within a 6m depth of the shop frontage. Each successive zone is valued at half the rate
of the zone in front of it. The blend is referred to as being 'ITZA' ('In Terms of Zone A').
This press release includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results, performance or achievements of Capital & Counties Properties
PLC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements. Any information contained in this press release on the price at which shares or other securities in Capital & Counties
Properties PLC have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a
guide to future performance.
Sponsor:
Merrill Lynch South Africa (Pty) Limited
Date: 29/07/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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