Wrap Text
Interim Results for the Six Months Ended 30 June 2016
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
26 JULY 2016
CAPITAL & COUNTIES PROPERTIES PLC ("Capco")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016
Ian Hawksworth, Chief Executive of Capco, commented:
"We have two of London's very best estates at Covent Garden and Earls Court. Covent Garden is established as a world class
retail location, attracting high retailer and consumer demand and continues to deliver immediate value creation. We are
delighted to have signed brands such as Mulberry and Petersham Nurseries over the period.
At Earls Court, we continue to make positive progress on site. Whilst the last quarter has been characterised by uncertainty in
the London market as a whole, the value of this estate will increasingly be realised in the years ahead.
The business is in a strong financial position with a low LTV and high liquidity. Capco's strategy remains unchanged as we aim
to deliver value creation for shareholders over time from two exceptional real estate investments in the world's greatest city."
Key financials
- Equity attributable to owners of the Parent GBP2.8 billion (Dec 2015: GBP2.9 billion)
- EPRA adjusted, diluted NAV down 5 per cent to 344 pence per share (pre-SDLT increase: 348 pence
per share) (Dec 2015: 361 pence)
- Total property value GBP3.6 billion, down 4 per cent (like-for-like) (Dec 2015: GBP3.7 billion)
- Proposed interim 2016 dividend of 0.5 pence per share (Jun 2015: 0.5 pence per share)
Strong financial structure
- Group loan-to-value ratio 20 per cent (Dec 2015: 16 per cent)
- Cash and available facilities of GBP457 million (Dec 2015: GBP412 million)
- Capital commitments of GBP194 million (Dec 2015: GBP207 million)
Creative asset management driving rental growth at Covent Garden
- Covent Garden total property value of GBP2.1 billion up 3 per cent (like-for-like) (Dec 2015: GBP2.0 billion)
- ERV up 4 per cent (like-for-like) at GBP90 million
- ERV target of GBP100m by December 2017 on track
- New leases and renewals 7 per cent above December 2015 ERV
- Significant pre-let at Kings Court to Petersham Nurseries
Long-term plans on track at Earls Court
- Earls Court interests valued at GBP1.2 billion, a decrease of 14 per cent (like-for-like) (Dec 2015: GBP1.4
billion)
- Opportunity to maximise the Earls Court Masterplan
- Demolition of EC1 & EC2 progressing well
- Lillie Square Phase 1 construction on plan with first completions expected later this year
- 59 per cent of first release of Phase 2 reserved at prices 4 per cent higher than comparable
units in Phase 1; positive level of enquiries
Operational strength at Venues
- EBITDA of GBP11 million, up 19 per cent compared to the first half of 2015 (full year 2015: GBP15 million)
- Property valuation unchanged at GBP295 million (Dec 2015: GBP295 million)
FINANCIAL HIGHLIGHTS
30 June 31 December
2016 2015
Equity attributable to owners of the Parent GBP2,822m GBP2,934m
Equity attributable to owners of the Parent per share 334p 349p
-4.5% Total return for six months ended 30 June 2016 (full year 2015: 17%)
EPRA adjusted net asset value GBP2,914m GBP3,059m
EPRA adjusted, diluted net asset value per share 344p 361p
Dividend per share 1.0p 1.5p
-2.7% Total property return for six months ended 30 June 2016 (full year 2015: 16%)
Property market value(1) GBP3,606m GBP3,662m
Net rental income(2) GBP40.5m GBP74.9m
(Loss)/profit for the period attributable to owners of the Parent GBP(109.0)m GBP431.1m
Underlying earnings per share 0.7p 0.9p
(1) On a Group share basis. Refer to Property Data on page 48 for the Group's percentage ownership of property.
(2) On a Group share basis. Refer to the Financial Review.
Outlook
We have two of London's very best estates at Covent Garden and Earls Court. Covent Garden is established as a world class
retail location, attracting high retailer and consumer demand and continues to deliver immediate value creation. We are
delighted to have signed brands such as Mulberry and Petersham Nurseries over the period.
At Earls Court, we continue to make positive progress on site. Whilst the last quarter has been characterised by uncertainty in
the London market as a whole, the value of this estate will increasingly be realised in the years ahead.
Whilst it is too early to make firm predictions following the result of the EU referendum, we remain confident in our estates and
current conditions on the ground remain positive. Since 23 June, at Covent Garden we have signed three leases as well as
putting a further GBP1 million of space under offer; and at Lillie Square four new reservations have been agreed. Covent Garden is
well positioned to outperform and the ERV target of GBP100 million remains on track as it consolidates its position as a prime retail
destination. At Earls Court, we will continue to progress with land enablement and planning activities as we prepare the site for
the future.
Capco's financial position is strong and with low leverage, high liquidity and modest capital commitments, the business is well
placed to withstand macroeconomic uncertainty. Capco's strategy remains unchanged as we aim to deliver value creation for
shareholders over time from two exceptional real estate investments in the world's greatest city.
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: Tulchan Susanna Voyle +44 (0)20 7353 4200
SA: Instinctif Frederic Cornet +27 (0) 11 447 3030
A presentation to analysts and investors will take place today at 09:45am at UBS, 1 Finsbury Avenue, London, EC2M 2PP.
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
Capco is focused on two prime assets in central London which are underpinned by a clear and focused strategy to create long-
term value for shareholders. As a result of its embedded repositioning strategy, Covent Garden, which represents 59 per cent
of Capco's portfolio, is now at the forefront of global destinations for brands and visitors. Capco's distinct approach to creating
places, together with creative asset management and strategic investment, continues to attract target brands, visitors and
residents and drive rental growth across the estate.
Representing over 70 acres of strategic land in Chelsea and Fulham, the consented Masterplan at Earls Court provides a
unique long-term opportunity to create the next great estate of London. The Earls Court Masterplan is the only consented
scheme capable of scale within central London due to the strong existing transport infrastructure and consolidated land
ownerships. It is a key strategic scheme for the Capital, providing the opportunity to create much needed new homes, jobs and
places for London.
London is a world class global city with a diverse economy and a growing population. The capital has attracted people who
wish to live, work, invest in and enjoy the city and the Greater London Authority ("GLA") estimates that the Capital's population
will continue to grow significantly. London's long-term economic and population growth trends are deeply embedded and we
believe these trends will continue despite the result of the EU referendum. Against this backdrop of London's continued
prosperity, Capco's two exceptional central London estates are well placed for long-term success.
In addition, Capco regularly considers opportunities where its core skills of placemaking and masterplanning can be utilised
and in 2015 acquired a 50 per cent interest in the Solum Regeneration joint venture with Network Rail which will explore
potential opportunities for future redevelopments at significant railway station sites across London.
Valuations
The total property value of the Group declined 3.8 per cent (like-for-like) in the six months to 30 June 2016 to GBP3.6 billion.
These June 2016 valuations incorporate the increased Stamp Duty Land Tax ("SDLT") levels announced in the March 2016
Budget which had an impact of GBP34 million (0.9 per cent).
Covent Garden has performed positively in the first six months of 2016. The valuation has risen 3.0 per cent (like-for-like) to
GBP2.1 billion, driven by the rental growth achieved over the period. The equivalent yield remains unchanged at 3.5 per cent,
reflecting the valuers current view of the strength of demand for central London retail investments.
At Earls Court, the downward move in property valuations reflects the valuers' assessment of the weakened sentiment in the
central London residential market following the EU referendum. At ECPL, the valuer has reflected a higher risk premium post
the EU referendum through a higher developers margin for consented development land as well as trimming sales values. At
Lillie Square, the valuer has taken a more cautious view of costs and growth in sales values for subsequent releases although
the sales value assumed is in excess of that achieved in Phase 1. The valuation of Earls Court Properties is GBP1.2 billion, a
decrease of 14.3 per cent (like-for-like).
It should be noted that property valuers across the industry are stating within their valuation reports that their valuations carry a
higher than normal level of uncertainty because there is little or no empirical evidence as at the valuation date due to the
unprecedented nature of the EU referendum result, which has created considerable uncertainty in the market. The Group's
valuers, CB Richard Ellis and Jones Lang Lasalle, have followed this industry wide approach in respect of the valuations this
period.
Market Value Market Value
30 June 31 December Valuation
2016 2015 Change
GBPm GBPm Like-for-like(1)
Covent Garden 2,111 2,005 3.0%
Earls Court Properties
Earls Court Partnership Limited ("ECPL")(2) 699 803 (14.4)%
Lillie Square(3) 211 222 (14.2)%
Empress State 240 286 (16.3)%
Other 45 46 (1.7)%
Group share of Earls Court Properties 1,195 1,357 (14.3)%
Venues 295 295 (0.2)%
Other 5 5
Group share of total property(4) 3,606 3,662 (3.8)%
(1) Valuation change takes account of amortisation of tenant lease incentives, capital expenditure, fixed head leases and unrecognised trading surplus.
(2) Market value represents the Group's 63 per cent interest in ECPL.
(3) Represents the Group's 50 per cent interest in Lillie Square.
(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 Earls Court Partnership Limited ("ECPL"), the investment vehicle with
Transport for London ("TfL") which owns the land formerly occupied by the Earls Court Exhibition Centres ("EC1 & EC2"). 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
Driving rental growth through creative asset management, strategic investment and placemaking
Providing over one million square feet of lettable space in London's West End, Covent Garden has established itself as a
leading destination for global retail and dining brands. Retailers are attracted to Capco's distinct approach to placemaking as
well as the vibrancy and energy of the estate. Footfall remains consistently strong at over 44 million customers as visitors are
drawn to the estate's unique retail, dining and cultural experience.
In the six months to 30 June 2016, Covent Garden performed positively with the value of the estate up 3.0 per cent like-for-like
to GBP2.1 billion. The ERV for the estate has increased 3.7 per cent like-for-like to GBP89.9 million. The ERV target of GBP100 million by
December 2017 remains in place. Covent Garden's rental growth prospects remain strong and the estate is well placed to
outperform the wider central London market due to its innovative repositioning strategy, global reputation and active plan for
every street.
During the period to 30 June 2016, 50 leasing transactions including new leases and renewals representing GBP9.2 million of
rental income per annum were transacted at 7 per cent above 31 December 2015 ERV. Net rental income is GBP20.2 million for
the first half of the year, up 6.4 per cent (like-for-like) compared to the same period of 2015. Occupancy on the estate is high at
97 per cent.
Retail
In line with the strategy to reposition the Royal Opera House Arcade with a luxury accessories and gifting focus, the estate is
delighted to welcome luxury British lifestyle brand, Mulberry, which has signed a new lease to open its latest store. Fine watch
boutique, The Watch Gallery, has also taken space in The Royal Opera House Arcade and will offer Swiss-made luxury
watches with over 50 per cent of the store dedicated to the Rolex brand. French luxury jeweller, Poiray, has also taken a unit
and will open its first UK store.
On Henrietta Street, British brand Albam is the latest signing, reflecting the success of the 'Street to Suit' strategy to reposition
the street with a menswear focus. Henrietta Street is now home to seven menswear stores and offers an array of premium
menswear brands including Club Monaco, Nigel Cabourn, Edwin and Oliver Sweeney.
Dining
The quality and variety of the dining offer at Covent Garden continues to strengthen, further enhancing the estate's reputation
for destination dining.
A new letting to Experimental Group will see them open their latest concept in London on Henrietta Street. Plans from the team
behind The Experimental Cocktail Club include a new restaurant and bar as well as an 18 bedroom hotel. The Experimental
Group will join recent addition Frenchie which opened its first London restaurant earlier this year.
Acclaimed New York restaurant, RedFarm, has taken space alongside Balthazar on Russell Street. The new restaurant, the
Group's first outside of New York, will bring RedFarm's famed menu of modern and inventive Chinese food to London's West End.
Adding to the depth of variety on the estate, Italian-style boulangerie VyTA Santa Margherita will open in the Market Building
offering all-day dining on the Piazza. VyTA is renowned for its high quality ingredients and selection of wines and will be a UK
first. This further builds upon the success of dining in the Market Building following recent lettings to French delicatessen
Aubaine and renowned fusion dining restaurant SushiSamba which will open on the iconic Opera Terrace, providing
exceptional views across the Piazza.
Developments
The Kings Court and Carriage Hall developments are progressing well and are on track for completion in 2017. The schemes
will create a new connecting passage between Long Acre and King Street transforming pedestrian flow and unlocking the
placemaking opportunity on Floral Street. The expected total development cost of Kings Court and Carriage Hall is GBP100 million.
At Kings Court, a significant pre-let has been agreed with Petersham Nurseries, the world-renowned lifestyle brand which will
occupy over 16,000 square feet (NIA), creating new bespoke retail and dining concepts across four units. Covering
approximately 60 per cent of the commercial space at Kings Court, the pre-let significantly de-risks the scheme and begins the
repositioning of Floral Street.
Residential
13 new lettings have been agreed across the estate with average rents of between GBP70-GBP80 per square foot. In addition, post
the period end, one of the penthouses in the Beecham has been sold in excess of GBP3,000 per square foot and contracts have
been exchanged for the second.
EARLS COURT PROPERTIES
Strategic consented land in Chelsea and Fulham
Representing over 70 acres of prime, consented, strategic land in Chelsea and Fulham, the Earls Court Masterplan is the
largest regeneration opportunity in central London. The Masterplan is currently 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 site is well connected with strong transport infrastructure and is located in an established neighbourhood with history and
heritage, where people want to live and enjoy London. Underpinned by Capco's distinct approach to placemaking, the Earls
Court Masterplan represents an opportunity to create the next great estate of London providing much needed homes, jobs and
places for people to enjoy.
Earls Court is a GLA 'Opportunity Area', making it a key strategic scheme for the Capital. The current GLA London Plan
estimates that London's population will grow by two million to 10 million by 2031 with the Capital requiring over 40,000 new
homes per annum. Against this backdrop of a growing population, housing is a key priority and maximising Opportunity Areas
is seen as vital in order to meet London's housing demands.
Earls Court Properties represents Capco's interests in Earls Court, which principally comprise:
- 63 per cent interest in ECPL: the investment vehicle with TfL in respect of 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. To date, Capco has paid GBP45 million of the GBP105 million cash
consideration payable including the first of five annual instalments of GBP15 million which was paid in 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.
The complex demolition of the former Exhibition Centres is well progressed. Construction of Phase 1 of Lillie Square is on track
and first completions are expected later this year.
For the period to 30 June 2016, the valuation of Capco's interests at Earls Court was GBP1.2 billion, a like-for-like decrease of
14.3 per cent. The downward move reflects the valuers' assessment of the weakened sentiment in the central London
residential market following the EU referendum. At ECPL, the valuer has reflected a higher risk premium through higher
developers margins for consented development land as well as trimming sales values. At Lillie Square, the valuer has taken a
more cautious view of costs and growth in sales values for subsequent releases although the sales value assumed is in excess
of that achieved in Phase 1.
Planning
The Earls Court Masterplan is a consented mixed-use scheme comprising 10.1 million square feet (Gross External Area
("GEA")) of residential-led space across Chelsea and Fulham. Outline planning consent for the Masterplan was granted in
November 2013 and the scheme was designated an Opportunity Area by the GLA in July 2011.
As a designated GLA Opportunity Area, Earls Court is a strategic scheme for the Capital and options are being considered
which enhance and maximise the potential of this important London scheme. In preparation for the next revision of the London
Plan which is expected next year, representations have been submitted to the GLA outlining Earls Court's ability to deliver a
minimum of 10,000 new homes, well in excess of the 7,500 currently consented.
Land enablement
The complex demolition of the former Exhibition Centres began in December 2014 and is progressing well. Demolition to
ground level of the EC2 building is now complete and demolition to ground level for the entire site is on track for completion
later this year at an expected cost of GBP60 million. Following this, demolition to basement level will further de-risk the site and
enable the land for future development. This final phase of demolition (not currently committed) is expected to take 12 months
at a cost of GBP30 - GBP40 million.
A GBP150 million (GBP95 million Group share) facility has been signed with a Government agency, the Homes and Communities
Agency ("HCA"). This attractive and long-term government funding will finance infrastructure costs on ECPL land, such as the demolition.
Lillie Square
Located in Fulham, Lillie Square is one of the most centrally located and connected schemes in London. The development will
deliver modern garden-square living through 608 private and 200 affordable homes across three phases.
The Lillie Square development launched in 2014 and to date 44 per cent of the entire scheme has been pre-sold representing
over GBP300 million of sales across the development.
Phase 1 launched in 2014 and is predominantly sold, representing over GBP250 million of sales. The average price per square
foot for Phase 1 is circa GBP1,500 with the range of pricing achieved at GBP1,200 – GBP2,800 per square foot including a penthouse
sold for GBP6.3 million in January this year. Construction of Phase 1 is underway and progressing positively with first completions
on track for delivery later in the year.
In Phase 2, 70 units have been released for sale and 41 have been reserved or exchanged, representing 59 per cent of the
first release (four reserved since the result of the EU referendum). Whilst the level of enquiries has been strong since the
beginning of the year, the rate of sales has been slow with the uncertainty in the weeks leading up to the EU referendum
impacting buyers' decision-making. Sales prices achieved in Phase 2 have remained positive with prices 4 per cent higher than
comparable units in Phase 1.
VENUES
A leading central London venue
Olympia London continues to cement its status as the venue of choice for premium shows in central London. The venue has
had a busy start to 2016 with over 90 events hosted to date including two of the UK's largest exhibitions, London Book Fair and
Ideal Home Show, reflecting its excellent prospects as a central London venue.
As previously reported, Capco has undertaken a strategic review of the Venues business. This review has concluded that,
whilst the business is not a long-term core holding for Capco, ownership will be retained as it offers a reliable and growing
income stream.
EBITDA for the first half is GBP10.6 million, up 19.1 per cent compared to the first half of 2015. The valuation of the Venues
business, which includes Olympia London property assets and Maclise Road, is unchanged at GBP295 million.
FINANCIAL REVIEW
Capco continues to maintain a robust and disciplined financial position with low leverage of 20 per cent, available liquidity of
GBP457 million with modest capital commitments of GBP194 million. Our capital structure is well equipped to weather short-term
market dislocation.
EPRA adjusted, diluted net assets per share fell by 4.7 per cent during the period, decreasing from 361 pence at 31 December
2015 to 344 pence. This 17 pence decrease together with the 1 pence dividend paid in June represents a total return of -4.5 per cent.
At Covent Garden rental growth achieved during the period was the main driver of the increase in the value of the estate by 3.0 per cent.
The market value of Earls Court Properties, which comprises the Group's interests at Earls Court, has decreased by 14.3 per
cent, reflecting the valuer's assessment of the weakened sentiment in the central London residential market following the result
of the EU referendum.
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, including the chief operating decision maker, focuses on and reviews information and reports prepared on
a Group share basis, which includes the Group's share of joint ventures but exclude the non-controlling interest share of our
subsidiaries. Therefore, to align with the way the Group is managed, this financial review presents the financial position,
performance and cash flow analysis on a Group share basis. In previous periods the Board focused on and reviewed
information on a proportionally consolidated basis therefore the comparative summary income statement and summary cash
flow statements have been re-presented.
FINANCIAL POSITION
At 30 June 2016 the Group's EPRA adjusted net assets were GBP2.9 billion (31 December 2015: GBP3.1 billion) representing 344
pence per share (31 December 2015: 361 pence).
The Group presents EPRA adjusted, diluted NAV in addition to the net assets attributable to owners of the Parent as the EPRA
alternative performance measures are intended to make financial statements of public real estate companies in Europe clearer,
more transparent and comparable.
SUMMARY ADJUSTED BALANCE SHEET
30 June 2016
Non-
Joint controlling Group
IFRS ventures(1) Interest(2) share
GBPm GBPm GBPm GBPm
Investment, development and trading property 3,761.2 153.5 (410.4) 3,504.3
Net debt (653.0) (33.0) (0.1) (686.1)
Other assets and liabilities(3) 123.1 (120.5) 0.8 3.4
Non-controlling interest (409.7) – 409.7 –
Net assets attributable to owners of the Parent 2,821.6 – – 2,821.6
Adjustments:
Fair value of derivative financial instruments 18.6
Unrecognised surplus on trading property 63.6
Deferred tax adjustments 10.4
EPRA adjusted net assets 2,914.2
EPRA adjusted, diluted net assets per share (pence)(4) 344
(1) Primarily Lillie Square.
(2) Represents TfL's 37 per cent share of ECPL.
(3) IFRS includes amounts receivable from joint ventures which eliminate on a Group share basis.
(4) Adjusted, diluted number of shares in issue at 30 June 2016 was 847.5 million.
31 December 2015
Non-
Joint controlling Group
IFRS ventures(1) Interest(2) share
GBPm GBPm GBPm GBPm
Investment, development and trading property 3,870.8 130.8 (471.6) 3,530.0
Net debt (559.2) (9.4) (10.3) (578.9)
Other assets and liabilities(3) 91.2 (121.4) 13.1 (17.1)
Non-controlling interest (468.8) – 468.8 –
Net assets attributable to owners of the Parent 2,934.0 – – 2,934.0
Adjustments:
Fair value of derivative financial instruments 2.4
Unrecognised surplus on trading property 99.9
Deferred tax adjustments 28.9
Non-controlling interest in respect of the adjustments (5.8)
EPRA adjusted net assets 3,059.4
EPRA adjusted, diluted net assets per share (pence)(4) 361
(1) Primarily Lillie Square.
(2) Represents TfL's 37 per cent share of ECPL.
(3) IFRS includes amounts receivable from joint ventures which eliminate on a Group share basis.
(4) Adjusted, diluted number of shares in issue at 31 December 2015 was 847.7 million.
Investment, development and trading property
The revaluation deficit on the Group's property portfolio was GBP140.8 million for the period, a 3.8 per cent decrease on a like-for-
like basis compared with the IPD Capital Return for the equivalent period of a 0.3 per cent loss.
Total property return for the period was a deficit of 2.7 per cent. The IPD Total Return index recorded a 2.4 per cent gain for the
corresponding period. Of the total property return deficit, 0.9 per cent is attributable to the increased SDLT rates on property.
Trading property is carried on the consolidated balance sheet at the lower of cost and market value therefore valuation
surpluses on trading property are not recorded. Any unrecognised surplus is however reflected within the EPRA adjusted net
asset measure. At 30 June 2016, the unrecognised surplus on trading property was GBP63.6 million (31 December 2015: GBP99.9
million). This primarily arises on trading property at Lillie Square.
Debt and gearing
During the period the Group increased its share of available facilities by GBP150 million, with three new agreements.
- In January 2016 the Group replaced the GBP665 million Covent Garden debt facility with a GBP705 million five year
Covent Garden debt facility which increased available facilities by GBP40 million.
- In March 2016, a GBP150 million (GBP95 million Group share) ten year secured credit agreement was signed by Earls
Court Partnership Limited to fund infrastructure-related costs on land interests at Earls Court.
- In June 2016 the Group entered into an agreement to extend the existing construction facility which funds the Lillie
Square development by GBP30 million (GBP15 million Group share) for a one year period.
The Group's cash and undrawn committed facilities at 30 June 2016 were GBP456.6 million (31 December 2015: 412.1 million).
During the period additional hedging was entered into taking advantage of the low prevailing rates. This hedging provides
additional interest rate risk protection for GBP200 million up to February 2019 and GBP400 million up to December 2022.
Net debt increased by GBP107.2 million to GBP686.1 million, principally as a result of further investment in the business through
acquisition of property 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 19.6 per cent remains
comfortably within the Group's limit of no more than 40 per cent.
As at As at
30 June 31 December
2016 2015
Loan to value 19.6% 16.4%
Interest cover 176% 123%
Weighted average debt maturity 5.2 years 4.1 years
Weighted average cost of debt 2.8% 3.3%
Gross debt with interest rate protection 87% 91%
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 2016 the proportion of gross debt with interest rate protection was 87 per cent (31 December 2015: 91 per cent).
The Group remains compliant with all of its debt covenants and has substantial levels of headroom against its covenants
across all its debt facilities. Details of the covenants are included on page 51.
At 30 June 2016 the Group had capital commitments of GBP193.6 million compared to GBP206.5 million at 31 December 2015, of
which Covent Garden represents GBP84.9 million, Earls Court Properties GBP70.5 million (including the GBP60 million of CLSA
instalments) and Lillie Square GBP38.2 million. The pipeline has been significantly de-risked, for example at Kings Court where
approximately 60 per cent of the commercial space has been pre-let to Petersham Nurseries, and through over GBP300 million
(GBP150 million Group share) of pre-sales at Lillie Square. On a pro forma basis, not taking into account any property valuation
movements or any receipts, expenditure on capital commitments would increase the LTV from 19.6 per cent to 25.1 per cent.
CASH FLOW
A summary of the Group's cash flow for the period ended 30 June 2016 is presented below:
SUMMARY CASH FLOW
Re-presented(1)
Six months Six months
ended ended
30 June 2016 30 June 2015
GBPm GBPm
Operating cash flows after interest and tax (3.8) (5.7)
Purchase and development of property, plant and equipment (95.6) (155.8)
Investment in joint venture – (12.1)
Sales proceeds from property and investments 4.0 6.5
Deferred consideration on purchase of subsidiary – (7.1)
VAT received on internal restructure – 42.3
Net cash flow before financing (95.4) (131.9)
Issue of shares – 0.1
Financing 82.4 85.7
Dividends paid (4.1) (4.1)
Net cash flow (17.1) (50.2)
(1) The 30 June 2015 summary cash flow has been prepared on a Group share basis. In the 'Interim Results for the six months ended
30 June 2015' the summary cash flow was presented on a proportionate consolidation basis.
Operating cash outflows were GBP3.8 million compared with GBP5.7 million for the period to 30 June 2015, as a result of changes to
net working capital requirements.
During the period, GBP56.7 million was invested at Covent Garden for the purchase of one property and subsequent expenditure
for the development of property predominately at Kings Court. At Earls Court GBP37.4 million was spent on subsequent
expenditure for the construction of Lillie Square Phase 1 and the demolition of the Earls Court Exhibition Centres.
Sales proceeds from property and investments primarily comprise the disposal of a residential unit at The Beecham, Covent Garden.
Net borrowings drawn during the period were GBP86.9 million. Refinancing activities and purchase of derivatives resulted in a
cash outflow of GBP4.5 million.
Dividends paid of GBP4.1 million reflect the final dividend payment made in respect of the 2015 financial year. This was in line with
the period to June 2015 due to similar take up of the scrip dividend alternative, 51 per cent (30 June 2015: 51 per cent).
FINANCIAL PERFORMANCE
The Group presents underlying earnings and underlying earnings per share in addition to the amounts reported on a Group
share 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.
SUMMARY INCOME STATEMENT
Re-presented(1)
Six months Six months
ended ended
30 June 2016 30 June 2015
GBPm GBPm
Net rental income 40.5 38.4
Profit/(loss) on sale of trading property and other income 1.5 (0.1)
(Loss)/gain on revaluation and sale of investment and development property (105.2) 263.0
Administration expenses (25.0) (25.0)
Net finance costs (9.6) (9.1)
Non-recurring finance costs (5.2) –
Change in fair value of derivative financial instruments (17.8) 1.4
Other (0.4) –
Taxation 12.2 (4.7)
(Loss)/profit for the period attributable to owners of the Parent (109.0) 263.9
Adjustments:
(Profit)/loss on sale of trading property and non-underlying other income (0.1) 1.1
Loss/(gain) on revaluation and sale of investment and development property 105.2 (263.0)
Non-recurring finance costs 5.2 –
Change in fair value of derivative financial instruments 17.8 (1.4)
Other 0.4 –
Taxation on non-underlying items (13.6) 3.6
Underlying earnings 5.9 4.2
Underlying earnings per share (pence) 0.7 0.5
Weighted average number of shares 842.6m 839.4m
(1) The 30 June 2015 summary income statement has been prepared on a Group share basis. In the 'Interim Results for the six months ended
30 June 2015' the summary income statement was presented on a proportionate consolidation basis.
Income
Net rental income has increased by GBP2.1 million (6.3 per cent like-for-like) during the period as a result of strong performances
at Covent Garden and Olympia London.
(Loss)/gain on revaluation of investment and development property
The loss on revaluation of the Group's investment and development property was GBP105.2 million. Covent Garden recorded a
gain on revaluation of GBP60.2 million as a result of rental growth. The loss on revaluation at Earls Court of GBP164.9 million reflects
the valuer's assessment of the weakened sentiment in the central London residential following the result of the EU referendum.
Administration expenses
Administration expenses have remained in line with the comparative period at GBP25.0 million.
Net finance costs
Net finance costs have increased by 5.5 per cent to GBP9.6 million as a result of the increased net debt.
Taxation
The total tax credit for the period of GBP12.2 million is made up of both underlying tax and non-underlying tax.
Tax on underlying profits of the Group was GBP1.4 million which reflects a rate in line with the current rate of UK corporation tax.
Following the Chancellor's announcement in the July 2015 Budget, the main rate of corporation tax will fall to 19 per cent from
April 2017. A further reduction to the corporation tax rate to 17 per cent from April 2020 was announced in the March 2016 Budget.
Contingent tax, the amount of tax that would become payable on a theoretical disposal of all investment property held by the
Group, was GBPnil million (31 December 2015: GBP11.1 million). A disposal of the Group's trading property at market value would
result in a corporation tax charge to the Group of GBP12.7 million (20 per cent of GBP63.6 million).
The provisions of IAS 12 provide for the recognition of a deferred tax asset where it is probable there will be future taxable profit
against which a deductible temporary difference can be utilised. As a result of the application of this provision, the Group has
not recognised the deferred tax asset on investment property and losses carried forward.
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 30 September 2016 to shareholders on the
register at 9 September 2016. Subject to SARB approval a scrip dividend alternative will be offered.
Soumen Das
Chief Financial Officer
26 July 2016
PRINCIPAL RISKS AND UNCERTAINTIES
The Board has overall responsibility for Group risk management. It determines its risk appetite and reviews principal risks and
uncertainties regularly, together with the actions taken to mitigate them. The Board has delegated responsibility for the review
of the adequacy and effectiveness of the Group's internal control framework to the Audit Committee.
During 2015, a comprehensive review of risk management across the Group was undertaken. The purpose of the review was
to set the right tone regarding risk at Board level and to develop a more risk aware culture and consistency in decision making
across the organisation in line with the corporate strategy and risk appetite. Following the review, risk is now a standing agenda
item at all management meetings. All corporate decision making takes risk into account while continuing to drive
entrepreneurial culture.
The Executive Directors are responsible for the day to day operational and commercial activity across the Group and are
therefore responsible for the management of business risk. The Executive Risk Committee, consisting of the Executive
Directors, the General Counsel and the Financial Controller, is the executive level management forum for the review and
discussion of risks, controls and mitigation measures. The corporate and business division risks are reviewed on a quarterly
basis by the Executive Risk Committee so that trends and emerging risks can be identified and reported to the Board.
Senior management from every division and corporate function of the business identify and manage the risks for their division
or function and complete and maintain a risk register. The severity of each risk is assessed through a combination of each
risk's likelihood of an adverse outcome and its impact. In assessing impact, consideration is given to financial, reputational and
regulatory factors and risk mitigation plans established. A full risk review is undertaken annually where the risk registers are
aggregated and reviewed by the Executive Risk Committee. The Directors confirm that they have completed a robust
assessment of the principal risks faced by the business, assisted by the work performed by the Executive Risk Committee.
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. The Group monitors a number of additional
risks and adjusts those considered 'principal' as the risk profile of the business changes. See also the risks inherent in the
compilation of financial information, as disclosed within note 1 'Principal Accounting Policies' to the consolidated financial
statements for the year ended 31 December 2015, 'Estimation and uncertainty'.
CORPORATE RISKS
Risk Impact on strategy Mitigation Change in 2016
Health, safety & the environment Static
Accidents causing loss of life or very Prosecution for non- Health and safety procedures across the Group
serious injury to employees, compliance with legislation Appointment of Group Head of Health & Safety
contractors, occupiers and visitors to
the Group's properties Reputational damage Appointment of reputable contractors
Litigation or fines
Activities at the Group's properties External consultants undertake annual audits in
causing detrimental impact on the Distraction of management all locations
environment
Adequate insurance held to cover the risks
inherent in construction projects
Funding Increased
Lack of availability or increased cost Reduced financial and Maintain appropriate liquidity to cover
of debt or equity funding operational flexibility commitments
Increased cost of borrowing Target longer and staggered debt maturities
Delay to development works Consideration of early refinancing
Constrained growth, lost Derivative contracts to provide interest rate
opportunities protection
Development phasing to enable flexibility and
reduce financial exposure
Covenant headroom monitored and stress
tested
Economic conditions Increased
Decline in real estate valuations due Reduced return on Focus on prime assets
to: investment and
development property Regular assessment of investment market
- global macro-economic conditions including bi-annual external
conditions such as the Higher finance costs valuations
uncertainty caused by the result
of the EU referendum Reduced profitability Regular strategic reviews
- adverse movement in interest Strategic focus on creating retail destinations
rates or currency and residential districts with unique attributes
Relative attractiveness of other asset
classes or locations
Inability of the Group to adopt the
appropriate strategy or to react to
changing market conditions
Political climate and public Increased
opinion
Unfavourable policy or changes in Reputational damage Monitoring proposals and emerging policy and
legislation (in particular, as a result of legislation
political change) e.g. following the Litigation
Engagement with key stakeholders and
EU referendum Distraction of management politicians
The Group's business (or aspects of Prosecution for non- Review activity and communications of activist
it) is opposed or challenged by public compliance groups
interest or activist groups
People Static
Inability to retain the right people and Inability to execute strategy Succession planning, performance evaluations,
develop leadership skills within the and business plan training and development
business
Constrained growth, lost Long-term and competitive incentive rewards
opportunities
Catastrophic External Event Static
Such as a terrorist attack, health Diminishing London's status Terrorist insurance
pandemic or cyber crime
Heightened by concentration On-site security
of investments
Health and safety policies and procedures
Reduced rental income
and/or capital values Close liaison with police, National Counter
Terrorism Security Office ("NaCTSO") and local
Business disruption or authorities
damage to property
Reputational damage
Compliance with law, Static
regulations and contracts
Breach of legislation, regulation or Prosecution for non- Appointment of external advisers to monitor
contract compliance with legislation changes in law or regulation
Inability to monitor or anticipate legal Reputational damage Members of staff attend external briefings to
or regulatory changes remain cognisant of legislative and regulatory
Litigation or fines changes
Distraction of management
PROPERTY
Risk Impact on strategy Mitigation Change in 2016
Leasing Static
Inability to achieve target rents or to Decline in tenant demand Quality tenant mix
attract target tenants due to market for the Group's properties
conditions Strategic focus on creating retail destinations with
Reduced income unique attributes
Competition from other locations
Expansion of yield
Residential Sales Increased
Inability to achieve sales targets or Reduced cash flow and Strategic focus on creating residential districts with
prices due to market conditions or development return unique attributes
competition from other residential
districts Decline in valuations Market demand assessments and review of
product mix
Viability of projects
Flexible marketing strategy
Planning Static
Unfavourable changes to planning Inability to secure future Outline planning permission already granted for
policy or legislation (in particular, as planning approvals or the Earls Court Masterplan
a result of political change) consents
Engagement with local and national authorities
Secretary of State intervention or Delay in development
judicial review programme Pre-application and consultation with key
stakeholders and landowners
Existing buildings within proposed
development scheme becoming Engagement with local community bodies
listed
Development Increased
Inability to deliver anticipated returns Reduced development Focus on prime assets
due to: returns Regular assessment of market conditions
- market conditions Decline in valuations Business strategy based on long-term returns
- increased construction costs or
delays
Construction Static
Increased construction costs or delay Reduced cash flow and Extensive consultation, design and technical work
due to: development return undertaken
- site or planning conditions Reduced underlying Properly tendered and negotiated processes to
income select reputable contractors with relevant
- contractor/sub-contractor experience in projects of equivalent scale and
default Decline in valuations complexity, with skilled resources and appropriate
insurance
- complexity of developing Reputational damage
adjacent to and above public Under building contracts the risk of sub-contractor
transport infrastructure failure resides primarily with the principal
contractor
Commercially astute development and project
management teams to ensure management of
costs and delivery of programme
Land assembly Static
Failure to reach agreement on Inability to fully execute Pro-active investment team
strategic land deals or implement strategy and business plan
strategic land deals with adjacent Dialogue with adjacent landowners
landowners on acceptable terms Increased costs and delays
resulting in reduced Earls Court Masterplan designed to allow phased
development return implementation
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 47 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 47 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 3 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
26 July 2016
INDEPENDENT REVIEW REPORT TO CAPITAL & COUNTIES
PROPERTIES PLC
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed Capital & Counties Properties PLC's condensed consolidated financial statements (the interim financial
statements) in the interim results of Capital & Counties Properties PLC for the six month period ended 30 June 2016. Based on
our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in
all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
- the Consolidated Balance Sheet as at 30 June 2016;
- the Consolidated Income Statement and Consolidated 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 interim financial statements.
The interim financial statements included in the interim results have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, 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.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the Directors
The interim results, including the interim financial statements, is the responsibility of, and has been approved by, the Directors.
The Directors are responsible for preparing the interim results in accordance with the Disclosure Rules and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the interim results 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 Rules and Transparency Rules of the United Kingdom's 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.
What a review of interim 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 results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
26 July 2016
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 interim 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 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Notes GBPm GBPm GBPm
Continuing operations
Revenue 2 58.4 52.0 114.9
Rental income 52.6 50.2 99.7
Rental expenses (11.7) (11.8) (24.4)
Net rental income 2 40.9 38.4 75.3
Profit/(loss) on sale of trading property 3 1.1 (0.2) 3.5
Other income 2.3 1.8 4.0
(Loss)/gain on revaluation of investment and
development property 4 (174.2) 271.7 453.9
Loss on sale of available-for-sale investments 5 – – (0.2)
Loss on sale of loan notes – (0.2) (0.2)
Impairment of other receivables 6 (7.7) (5.9) (12.2)
(137.6) 305.6 524.1
Administration expenses (25.0) (25.0) (52.1)
Operating (loss)/profit (162.6) 280.6 472.0
Finance income 7 0.1 0.6 0.7
Finance costs 8 (9.7) (9.7) (20.8)
Other finance income 7 5.0 4.4 9.3
Other finance costs 8 (5.2) – –
Change in fair value of derivative financial instruments (17.8) 1.4 (0.6)
Net finance costs (27.6) (3.3) (11.4)
(190.2) 277.3 460.6
Share of post-tax loss from joint ventures 13 (0.2) – (0.7)
(Loss)/profit before tax (190.4) 277.3 459.9
Current tax (0.7) (2.8) 2.2
Deferred tax 18.7 (5.4) (4.9)
Taxation 9 18.0 (8.2) (2.7)
(Loss)/profit for the period (172.4) 269.1 457.2
(Loss)/profit attributable to:
Owners of the Parent (109.0) 263.9 431.1
Non-controlling interest 23 (63.4) 5.2 26.1
Earnings per share from continuing operation
attributable to owners of the Parent(1)
Basic (loss)/earnings per share 11 (12.9)p 31.4p 51.3p
Diluted (loss)/earnings per share 11 (12.9)p 31.2p 50.9p
Weighted average number of shares 11 842.6m 839.4m 840.8m
(1) Adjusted earnings per share from continuing operations is shown in note 11 'Earnings Per Share and Net Assets Per Share'.
Notes on pages 24 to 47 form part of these condensed consolidated financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
For the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Notes GBPm GBPm GBPm
(Loss)/profit for the period (172.4) 269.1 457.2
Other comprehensive income/(expense)
Items that will not be reclassified subsequently
to the income statement
Actuarial gain on defined benefit pension scheme – – 0.8
Tax relating to items that will not be reclassified – – (0.2)
Total other comprehensive income for the period – – 0.6
Total comprehensive (expense)/income for the period (172.4) 269.1 457.8
Attributable to:
Owners of the Parent (109.0) 263.9 431.7
Non-controlling interest 23 (63.4) 5.2 26.1
Notes on pages 24 to 47 form part of these condensed consolidated financial statements.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at 30 June 2016
As at As at
30 June 31 December
2016 2015
Notes GBPm GBPm
Non-current assets
Investment and development property 12 3,748.0 3,855.3
Plant and equipment 7.3 6.9
Investment in joint ventures 13 14.6 14.8
Available-for-sale investments 0.2 0.2
Derivative financial instruments 18 0.3 0.8
Pension asset 0.7 0.7
Trade and other receivables 14 169.4 158.9
3,940.5 4,037.6
Current assets
Trading property 12 13.2 15.5
Trade and other receivables 14 26.1 32.3
Cash and cash equivalents 15 47.1 66.9
86.4 114.7
Total assets 4,026.9 4,152.3
Non-current liabilities
Borrowings, including finance leases 17 (681.6) (607.6)
Derivative financial instruments 18 (18.9) (3.2)
Deferred tax 19 (2.0) (19.5)
(702.5) (630.3)
Current liabilities
Borrowings, including finance leases 17 (18.5) (18.5)
Other provisions 20 (2.0) (2.0)
Tax liabilities (1.3) (2.8)
Trade and other payables 16 (71.3) (95.9)
(93.1) (119.2)
Total liabilities (795.6) (749.5)
Net assets 3,231.3 3,402.8
Equity
Share capital 21 211.4 210.5
Other components of equity 2,610.2 2,723.5
Equity attributable to owners of the Parent 2,821.6 2,934.0
Non-controlling interest 23 409.7 468.8
Total equity 3,231.3 3,402.8
Notes on pages 24 to 47 form part of these condensed consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six months ended 30 June 2016
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 equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January 2016 210.5 211.1 425.8 10.3 0.4 2,075.9 2,934.0 468.8 3,402.8
Loss for the period – – – – – (109.0) (109.0) (63.4) (172.4)
Total comprehensive
expense for the period – – – – – (109.0) (109.0) (63.4) (172.4)
Transactions with owners
Ordinary shares issued 21 0.9 4.0 – – – – 4.9 – 4.9
Dividend expense 10 – – – – – (8.4) (8.4) – (8.4)
Realisation of share-based
payment reserve on issue
of shares – – – (4.1) – 3.6 (0.5) – (0.5)
Fair value of share-based
payment – – – 1.8 – – 1.8 – 1.8
Tax relating to share-
based payment 19 – – – – – (1.2) (1.2) – (1.2)
Contribution from non-
controlling interest 23 – – – – – – – 4.3 4.3
Total transactions with
owners 0.9 4.0 – (2.3) – (6.0) (3.4) 4.3 0.9
Balance at 30 June 2016 211.4 215.1 425.8 8.0 0.4 1,960.9 2,821.6 409.7 3,231.3
(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 47 form part of these condensed consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six months ended 30 June 2016
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 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 – – – – – 0.8 0.8 – 0.8
Contribution from 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
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 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 year – – – – – 431.1 431.1 26.1 457.2
Other comprehensive
income/(expense)
Actuarial gain on defined
benefit pension scheme – – – – – 0.8 0.8 – 0.8
Tax relating to items that will
not be reclassified – – – – – (0.2) (0.2) – (0.2)
Total comprehensive income
for the year ended 31
December 2015 – – – – – 431.7 431.7 26.1 457.8
Transactions with owners
Ordinary shares issued 21 1.4 4.2 – – – – 5.6 – 5.6
Dividend expense 10 – – – – – (12.6) (12.6) – (12.6)
Adjustment for bonus issue – – – – – 0.6 0.6 – 0.6
Realisation of share-based
payment reserve on issue of
shares – – – (5.7) – 5.0 (0.7) – (0.7)
Fair value of share-based
payment – – – 4.6 – – 4.6 – 4.6
Tax relating to share-based
payment 19 – – – – – (1.5) (1.5) – (1.5)
Contribution from non-
controlling interest – – – – – – – 442.7 442.7
Total transactions with owners 1.4 4.2 – (1.1) – (8.5) (4.0) 442.7 438.7
Balance at 31 December
2015 210.5 211.1 425.8 10.3 0.4 2,075.9 2,934.0 468.8 3,402.8
(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 47 form part of these condensed consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
For the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Notes GBPm GBPm GBPm
Continuing operations
Cash flows from operating activities
Cash generated from operations 26 5.8 7.9 13.1
Interest paid (9.7) (9.6) (19.6)
Interest received 0.1 0.6 0.7
Tax (paid)/received (2.2) (0.7) 3.5
Net cash outflow from operating activities (6.0) (1.8) (2.3)
Cash flows from investing activities
Purchase and development of property (82.4) (146.0) (250.2)
Sale of property 3.5 – 11.2
Acquisition of interest in joint venture – (12.1) (13.5)
Sale of loan notes – 6.0 6.0
Sale of subsidiaries(1) 0.5 0.5 0.5
Loan advances from/(to) joint ventures 1.2 0.3 (3.2)
VAT received on internal restructure(2) – 42.3 –
Deferred consideration on purchase of subsidiary – (7.1) (7.1)
Net cash outflow from investing activities (77.2) (116.1) (256.3)
Cash flows from financing activities
Issue of shares – 0.1 0.1
Borrowings drawn 462.1 70.0 225.0
Borrowings repaid (390.0) (40.0) (51.0)
Other finance costs (4.6) (0.4) (0.4)
Cash dividends paid 10 (4.1) (4.1) (7.7)
Contribution from non-controlling interest – 47.4 64.7
Net cash inflow from financing activities 63.4 73.0 230.7
Net decrease in unrestricted cash and cash equivalents (19.8) (44.9) (27.9)
Unrestricted cash and cash equivalents at 1 January 60.9 88.8 88.8
Unrestricted cash and cash equivalents at period end 41.1 43.9 60.9
(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.
(2) VAT received on an internal property transfer was deemed to be a VAT supply. Input VAT was received prior to 30 June 2015 whilst the output VAT was settled in
July 2015.
Notes on pages 24 to 47 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 halls 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 2015, 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 2016 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 2015 were approved by the Board of Directors on 24 February 2016 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 26 July 2016.
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 102 to 106 of the Group's Annual Report &
Accounts for 2015.
Income taxes
Taxes on income in the interim periods are accrued using tax rates expected to be applicable to total annual earnings.
During the six months to 30 June 2016, the following standards and guidance were adopted by the Group:
IFRS 5 'Non-current assets held for sale and discontinued operations' (amendment)
IFRS 7 'Financial instruments: Disclosures' (amendment)
IAS 1 'Presentation of financial statements' (amendment)
IAS 16 'Property, plant and equipment' (amendment)
IAS 19 'Employee benefits' (amendment)
IAS 27 'Separate Financial Statements' (amendment)
IAS 34 'Interim financial reporting' (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 and Maclise Road(1); and
– Other comprises Solum, the discontinued activity of The Great Capital Partnership, the Group's residual China
investments, other head office companies and investments.
(1) The period to 30 June 2015 has been re-presented to reflect the transfer of Maclise Road from the Earls Court Properties segment to the Venues segment in the
second half of 2015.
Management information, previously reported on a proportionate consolidation basis until December 2015 is now reported to
the chief operating decision maker on a Group share basis. Consequently the comparative periods are also re-presented in line
with reporting requirements. Outlined below is the Group share by segment:
Segment Group share
Covent Garden 100%
Earls Court Properties
ECPL 63%
Lillie Square 50%
Empress State 100%
Other 100%
Venues 100%
Other
Solum 50%
GCP 50%
Other 100%
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.
Six months ended 30 June 2016
Covent Earls Court Group Consolidation IFRS
Garden Properties Venues Other total adjustments total
Continuing operations GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 29.1 8.7 17.9 1.4 57.1 1.3 58.4
Rent receivable and exhibition
income 24.0 8.7 17.9 – 50.6 0.4 51.0
Service charge income 1.6 – – – 1.6 – 1.6
Rental income 25.6 8.7 17.9 – 52.2 0.4 52.6
Rental expenses(1) (5.4) (0.4) (5.6) (0.3) (11.7) – (11.7)
Net rental income/(expense) 20.2 8.3 12.3 (0.3) 40.5 0.4 40.9
Profit/(loss) on sale of trading
property 1.1 (1.0) – – 0.1 1.0 1.1
Other income – – – 1.4 1.4 0.9 2.3
Gain/(loss) on revaluation of
investment and development
property 60.2 (164.9) (0.5) – (105.2) (69.0) (174.2)
Write down of trading property – (0.4) – – (0.4) 0.4 –
Impairment of other receivables – – – – – (7.7) (7.7)
Segment result 81.5 (158.0) 11.8 1.1 (63.6) (74.0) (137.6)
Unallocated costs:
Administration expenses (25.0) – (25.0)
Operating loss (88.6) (74.0) (162.6)
Net finance costs(2) (32.6) 5.0 (27.6)
Share of post-tax loss from
joint ventures – (0.2) (0.2)
Loss before tax (121.2) (69.2) (190.4)
Taxation 12.2 5.8 18.0
Loss for the period (109.0) (63.4) (172.4)
Loss attributable to:
Owners of the Parent (109.0) – (109.0)
Non-controlling interest – (63.4) (63.4)
Summary balance sheet
Total segment assets(3) 2,119.8 1,226.4 314.5 28.6 3,689.3 315.3 4,004.6
Total segment liabilities(3) (630.9) (211.0) (36.1) (12.0) (890.0) 94.4 (795.6)
Segmental net assets 1,488.9 1,015.4 278.4 16.6 2,799.3 409.7 3,209.0
Unallocated assets(2) 22.3 – 22.3
Net assets 2,821.6 409.7 3,231.3
Other segment items:
Depreciation (0.1) (0.5) (0.2) (0.1) (0.9) 0.2 (0.7)
Capital expenditure (44.4) (37.4) (0.5) – (82.3) 15.3 (67.0)
(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 segmental assets and total segmental liabilities exclude loans between and investments in Group undertakings.
Re-presented 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 9.3 16.6 1.0 51.3 0.7 52.0
Rent receivable and
exhibition income 22.6 9.2 16.6 – 48.4 – 48.4
Service charge income 1.8 – – – 1.8 – 1.8
Rental income 24.4 9.2 16.6 – 50.2 – 50.2
Rental expenses(1) (5.3) (0.5) (5.9) (0.1) (11.8) – (11.8)
Net rental income/(expense) 19.1 8.7 10.7 (0.1) 38.4 – 38.4
Loss on sale of trading property (0.2) (1.0) – – (1.2) 1.0 (0.2)
Other income – 0.1 – 1.0 1.1 0.7 1.8
Gain/(loss) on revaluation of
investment and development
property 151.5 59.9 52.2 (0.6) 263.0 8.7 271.7
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 other receivables – – – – – (5.9) (5.9)
Segment result 170.4 67.9 62.9 0.1 301.3 4.3 305.6
Unallocated costs:
Administration expenses (25.0) – (25.0)
Operating profit 276.3 4.3 280.6
Net finance costs(2) (7.7) 4.4 (3.3)
Profit before tax 268.6 8.7 277.3
Taxation (4.7) (3.5) (8.2)
Profit for the period 263.9 5.2 269.1
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 1,254.5 275.4 36.4 3,416.6 386.6 3,803.2
Total segment liabilities(3) (404.6) (179.3) (77.0) (12.3) (673.2) 48.3 (624.9)
Segmental net assets 1,445.7 1,075.2 198.4 24.1 2,743.4 434.9 3,178.3
Unallocated assets(2) 26.6 – 26.6
Net assets 2,770.0 434.9 3,204.9
Other segment items:
Depreciation (0.1) – (0.1) – (0.2) – (0.2)
Capital expenditure (56.3) (304.9) (2.0) (0.3) (363.5) (150.4) (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 segmental assets and total segmental liabilities exclude loans between and investments in Group undertakings.
Re-presented year ended 31 December 2015
Covent Earls Court Group Consolidation IFRS
Garden Properties Venues Other total adjustments total
Continuing operations GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 61.3 18.2 31.3 2.5 113.3 1.6 114.9
Rent receivable and
exhibition income 46.4 18.1 31.3 – 95.8 0.2 96.0
Service charge income 3.7 – – – 3.7 – 3.7
Rental income 50.1 18.1 31.3 – 99.5 0.2 99.7
Rental expenses(1) (11.3) (0.8) (12.0) (0.5) (24.6) 0.2 (24.4)
Net rental income/(expense) 38.8 17.3 19.3 (0.5) 74.9 0.4 75.3
Profit/(loss) on sale of trading
property 3.5 (1.5) – – 2.0 1.5 3.5
Other income – 0.1 – 2.5 2.6 1.4 4.0
Gain on revaluation of investment
and development property 262.9 100.9 58.4 (0.4) 421.8 32.1 453.9
Write back of trading property – 0.2 – – 0.2 (0.2) –
Loss on sale of loan notes – – – (0.2) (0.2) – (0.2)
Loss on sale of available for sale
investments – – – (0.2) (0.2) – (0.2)
Impairment of other receivables – – – – – (12.2) (12.2)
Segment result 305.2 117.0 77.7 1.2 501.1 23.0 524.1
Unallocated costs:
Administration expenses (52.5) 0.4 (52.1)
Operating profit 448.6 23.4 472.0
Net finance costs(2) (20.6) 9.2 (11.4)
Share of post-tax loss from joint
ventures – (0.7) (0.7)
Profit before tax 428.0 31.9 459.9
Taxation 3.1 (5.8) (2.7)
Profit for the year 431.1 26.1 457.2
Profit attributable to:
Owners of the Parent 431.1 – 431.1
Non-controlling interest – 26.1 26.1
Summary balance sheet
Total segment assets(3) 2,010.4 1,360.6 314.7 39.2 3,724.9 395.8 4,120.7
Total segment liabilities(3) (569.6) (193.7) (36.6) (22.6) (822.5) 73.0 (749.5)
Segmental net assets 1,440.8 1,166.9 278.1 16.6 2,902.4 468.8 3,371.2
Unallocated assets(2) 31.6 – 31.6
Net assets 2,934.0 468.8 3,402.8
Other segment items:
Depreciation (0.2) – (0.2) (0.1) (0.5) – (0.5)
Capital expenditure (110.8) (360.1) (4.0) (0.3) (475.2) (142.7) (617.9)
(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 segmental assets and total segmental liabilities exclude loans between and investments in Group undertakings.
3 PROFIT/(LOSS) ON SALE OF TRADING PROPERTY
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Continuing operations GBPm GBPm GBPm
Proceeds from the sale of trading property 3.5 – 11.2
Cost of sale of trading property (2.4) – (7.5)
Agent, selling and marketing fees – (0.2) (0.2)
Profit/(loss) on sale of trading property 1.1 (0.2) 3.5
4 (LOSS)/GAIN ON REVALUATION OF INVESTMENT AND DEVELOPMENT PROPERTY
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Continuing operations GBPm GBPm GBPm
(Loss)/gain on revaluation of investment and development property (174.2) 271.7 453.9
5 LOSS ON SALE OF AVAILABLE-FOR-SALE INVESTMENTS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Continuing operations GBPm GBPm GBPm
Loss on sale of available-for-sale investments – – 0.2
Loss on sale of available-for-sale investments in 2015 represents part divestment from China Harvest Fund I.
6 IMPAIRMENT OF OTHER RECEIVABLES
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Continuing operations GBPm GBPm GBPm
Impairment of other receivables 7.7 5.9 12.2
Following an impairment review of amounts receivable from joint ventures by the Group, an impairment of GBP7.7 million has
been recognised (30 June 2015: GBP5.9 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 2015: GBPnil) in
accordance with IAS 28 'Investment in Associates and Joint Ventures' ("IAS 28"). Refer to note 13 'Investment in Joint
Ventures'.
7 FINANCE INCOME
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Continuing operations GBPm GBPm GBPm
Finance income:
On loan notes – 0.2 0.2
On deposits and other 0.1 0.4 0.5
Finance income 0.1 0.6 0.7
Other finance income:
On deep discount bonds(1) 5.0 4.4 9.3
Other finance income 5.0 4.4 9.3
(1) Excluded from the calculation of underlying earnings as deep discount bonds eliminate on a Group share basis.
8 FINANCE COSTS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Continuing operations GBPm GBPm GBPm
Finance costs:
On bank overdrafts, loans and other 9.9 10.0 21.0
On obligations under finance leases 0.2 0.2 0.5
Gross finance costs 10.1 10.2 21.5
Interest capitalised on property under development (0.4) (0.5) (0.7)
Finance costs 9.7 9.7 20.8
Other finance costs:
Costs of termination of bank loans and other 5.2 – –
Other finance costs(1) 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 2.8 per cent (31 December 2015:
3.3 per cent) applied to the cost of property under development during the period.
9 TAXATION
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Continuing operations GBPm GBPm GBPm
Current income tax:
Current income tax charge excluding non-underlying items 0.7 2.7 1.6
Current income tax on (losses)/profits 0.7 2.7 1.6
Deferred income tax:
On accelerated capital allowances 0.5 2.7 0.1
On fair value of investment and development property (15.6) 2.0 3.8
On fair value of derivative financial instruments (3.4) 0.1 (0.1)
On Group losses (0.6) (4.2) 0.5
On other temporary differences 0.8 (0.1) (0.8)
On non-underlying Group losses (0.4) 4.9 –
Deferred income tax on (losses)/profits (18.7) 5.4 3.5
Current income tax charge on non-underlying items – 0.1 –
Adjustments in respect of previous periods – current income tax – – (3.8)
Adjustments in respect of previous periods – deferred income tax – – 1.4
Total income tax (credit)/charge reported in the consolidated
income statement (18.0) 8.2 2.7
The Finance Act 2015 set the main rate of UK corporation tax at 20 per cent with effect on 1 April 2015. Following the
Chancellor's announcement in the July 2015 Budget, the main rate of corporation tax will fall to 19 per cent from April 2017. A
further reduction to the corporation tax rate to 17 per cent from April 2020 has been announced in the March 2016 Budget.
10 DIVIDENDS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
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 – – 4.2
Dividend expense 8.4 8.4 12.6
Shares issued in lieu of cash(1) (4.3) (4.3) (4.3)
Adjustment for bonus issue(2) – – (0.6)
Cash dividends paid 4.1 4.1 7.7
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
2016 2015 2015
(a) Earnings per share million million million
Weighted average ordinary shares in issue for
calculation of basic (loss)/earnings per share 842.6 839.4 840.8
Dilutive effect of contingently issuable share option awards 0.8 2.4 2.1
Dilutive effect of contingently issuable deferred share awards – 1.1 0.8
Dilutive effect of contingently issuable matching nil cost option awards 0.2 1.6 1.3
Dilutive effect of deferred bonus share option awards 1.0 1.3 1.3
Weighted average ordinary shares in issue for calculation
of diluted (loss)/earnings per share 844.6 845.8 846.3
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Continuing operations attributable to owners of the Parent
(Loss)/earnings used for calculation of basic and diluted
earnings per share (109.0) 263.9 431.1
Basic (loss)/earnings per share (pence) (12.9) 31.4 51.3
Diluted (loss)/earnings per share (pence) (12.9) 31.2 50.9
Continuing operations attributable to owners of the Parent
Basic (loss)/earnings (109.0) 263.9 431.1
Group adjustments:
(Profit)/loss on sale of trading property (1.1) 0.2 (3.5)
Loss/(gain) on revaluation of investment and development property 174.2 (271.7) (453.9)
Loss on sale of loan notes – 0.2 0.2
Change in fair value of derivative financial instruments 17.8 (1.4) 0.6
Current tax adjustments – 0.1 –
Deferred tax adjustments (18.5) 4.8 3.8
Non-controlling interest in respect of the Group adjustments (63.3) 5.2 26.4
Joint venture adjustments:
Loss on sale of trading property 1.0 1.0 1.6
Gain on revaluation of investment and development property – – (0.1)
Write down/(back) of trading property 0.4 (0.2) (0.2)
EPRA adjusted earnings on continuing operations 1.5 2.1 6.0
Other finance costs 5.2 – –
Loss on sale of available-for-sale investments – – 0.2
Deferred tax adjustments (0.8) 2.2 1.7
Joint venture adjustment:
Other income – (0.1) (0.1)
Underlying earnings 5.9 4.2 7.8
Underlying earnings per share (pence) 0.7 0.5 0.9
EPRA adjusted earnings per share (pence) 0.2 0.2 0.7
Headline earnings per share is calculated in accordance with Circular 2/2015 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
2016 2015 2015
(a) Earnings per share GBPm GBPm GBPm
Continuing operations attributable to owners of the Parent
Basic (loss)/earnings (109.0) 263.9 431.1
Group adjustments:
Loss/(gain) on revaluation and sale of investment and development property 174.2 (271.7) ( 453.9)
Loss on sale of loan notes – 0.2 0.2
Loss on sale of available-for-sale investments – – 0.2
Deferred tax adjustments (15.6) 2.0 3.8
Non-controlling interest in respect of the Group adjustments (63.3) 5.2 26.4
Joint venture adjustment:
Gain on revaluation of investment and development property – – (0.1)
Headline (loss)/earnings (13.7) (0.4) 7.7
Headline (loss)/earnings per share (pence) (1.6) – 0.9
Diluted headline (loss)/earnings per share (pence) (1.6) – 0.9
As at As at
30 June 31 December
2016 2015
(b) Net assets per share million million
Number of ordinary shares in issue 845.5 842.0
Adjustments:
Effect of dilution on exercise of contingently issuable share option awards 0.8 2.3
Effect of dilution on vesting of contingently issuable deferred share awards – 0.8
Effect of dilution on exercise of contingently issuable matching nil cost option awards 0.2 1.3
Effect of dilution on exercise of deferred bonus share option awards 1.0 1.3
Adjusted, diluted number of ordinary shares in issue 847.5 847.7
As at As at
30 June 31 December
2016 2015
GBPm GBPm
Net assets attributable to owners of the Parent 2,821.6 2,934.0
Fair value of derivative financial instruments 18.6 2.4
Unrecognised surplus on trading property – Group 6.5 8.3
Unrecognised surplus on trading property – Joint venture 57.1 91.6
Deferred tax adjustments 10.4 28.9
Non-controlling interest in respect of the Group adjustments – (5.8)
EPRA adjusted, diluted NAV 2,914.2 3,059.4
Fair value of derivative financial instruments (18.6) (2.4)
Excess fair value of debt over carrying value (22.5) (12.1)
Deferred tax adjustments (10.4) (28.9)
EPRA adjusted, diluted NNNAV 2,862.7 3,016.0
Basic net assets per share (pence) 333.7 348.5
Diluted net assets per share (pence) 332.9 346.1
EPRA adjusted, diluted NAV per share (pence) 343.9 360.9
EPRA adjusted, diluted NNNAV per share (pence) 337.8 355.8
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 2015 1,576.7 970.6 232.6 4.5 2,784.4 1,469.4 1,315.0
Reclassification – – – – – (32.0) 32.0
Additions from acquisitions 50.0 449.2 – – 499.2 85.6 413.6
Additions from subsequent
expenditure 59.9 53.6 4.0 0.3 117.8 48.5 69.3
Gain/(loss) on valuation(1) 262.9 133.0 58.4 (0.4) 453.9 225.4 228.5
At 31 December 2015 1,949.5 1,606.4 295.0 4.4 3,855.3 1,796.9 2,058.4
Additions from acquisitions 14.2 – – – 14.2 – 14.2
Additions from subsequent
expenditure 30.1 22.1 0.5 – 52.7 23.2 29.5
Gain/(loss) on valuation(1) 60.2 (233.9) (0.5) – (174.2) (45.0) (129.2)
At 30 June 2016 2,054.0 1,394.6 295.0 4.4 3,748.0 1,775.1 1,972.9
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 2015 22.1 – – – 22.1 22.1 –
Additions from subsequent
expenditure 0.9 – – – 0.9 0.9 –
Disposals (7.5) – – – (7.5) (7.5) –
At 31 December 2015(2) 15.5 – – – 15.5 15.5 –
Additions from subsequent
expenditure 0.1 – – – 0.1 0.1 –
Disposals (2.4) – – – (2.4) (2.4) –
At 30 June 2016(2) 13.2 – – – 13.2 13.2 –
(1) Loss on valuation of GBP174.2 million (31 December 2015 gain: GBP453.9 million) is recognised in the consolidated income statement within (loss)/gain on revaluation of
investment and development property. This (loss)/gain was unrealised and relates to assets held at the end of the period.
(2) The value of trading property carried at net realisable value was GBPnil (31 December 2015: 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 2016(1) 2,054.0 1,394.6 295.0 4.4 3,748.0
Carrying value of trading property at 30 June 2016 13.2 – – – 13.2
Carrying value of investment, development
and trading property at 30 June 2016 2,067.2 1,394.6 295.0 4.4 3,761.2
Adjustment in respect of fixed head leases (4.1) – – – (4.1)
Adjustment in respect of tenant lease incentives 41.7 – – – 41.7
Unrecognised surplus on trading property(2) 6.5 – – – 6.5
Market value of investment, development
and trading property at 30 June 2016 2,111.3 1,394.6 295.0 4.4 3,805.3
Joint ventures:
Carrying value of joint venture investment, development
and trading property at 30 June 2016 – 153.5 – – 153.5
Unrecognised surplus on joint venture trading property(2) – 57.1 – – 57.1
2,111.3 1,605.2 295.0 4.4 4,015.9
Non-controlling interest adjustments:
Market value of non-controlling interest in investment,
development and trading property at 30 June 2016 – (410.4) – – (410.4)
Market value of investment, development and trading
property on a Group share basis at 30 June 2016 2,111.3 1,194.8 295.0 4.4 3,605.5
Covent Earls Court
Garden Properties Venues Other Total
GBPm GBPm GBPm GBPm GBPm
Carrying value of investment and development
property at 31 December 2015(1) 1,949.5 1,606.4 295.0 4.4 3,855.3
Carrying value of trading property at
31 December 2015 15.5 – – – 15.5
Carrying value of investment, development
and trading property at 31 December 2015 1,965.0 1,606.4 295.0 4.4 3,870.8
Adjustment in respect of fixed head leases (4.1) – – – (4.1)
Adjustment in respect of tenant lease incentives 36.0 – – – 36.0
Unrecognised surplus on trading property(2) 8.3 – – – 8.3
Market value of investment, development
and trading property at 31 December 2015 2,005.2 1,606.4 295.0 4.4 3,911.0
Joint ventures:
Carrying value of joint venture investment, development
and trading property at 31 December 2015 – 130.8 – – 130.8
Unrecognised surplus on joint venture trading property(2) – 91.6 – – 91.6
2,005.2 1,828.8 295.0 4.4 4,133.4
Non-controlling interest adjustments:
Market value of non-controlling interest in investment,
development and trading property at 31 December 2015 – (471.6) – – (471.6)
Market value of investment, development and trading
property on a Group share basis at 31 December 2015 2,005.2 1,357.2 295.0 4.4 3,661.8
(1) Included within investment and development property is GBP0.4 million (31 December 2015: GBP0.7 million) of interest capitalised during the period on developments in
progress.
(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 2016, the Group was contractually committed to GBP161.1 million (2015: GBP162.5 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 2016 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.
It should be noted that property valuers across the industry are stating within their valuation reports that their valuations carry a
higher than normal level of uncertainty because there is little or no empirical evidence as at the valuation date due to the
unprecedented nature of the EU referendum result, which has created considerable uncertainty within the market. The Group's
valuers, CB Richard Ellis and Jones Lang Lasalle, have followed this industry wide approach in respect of the valuations this period.
Each year the Managing Directors, 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 Directors 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 upon assumptions of 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 property
risks on page 14.
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 2016, joint ventures comprise the Lillie Square joint venture ("LSJV"), Solum Developments joint venture ("Solum"),
and The Great Capital Partnership ("GCP") which is accounted for as a discontinued operation.
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
2016 2015 2015
LSJV GBPm GBPm GBPm
Summarised income statement
Revenue – 0.2 0.6
Net rental (expense)/income (0.2) 0.1 0.5
Gain on revaluation of investment and development property – – 0.2
Agent, selling and marketing fees (1.9) (2.0) (3.1)
Other income – 0.2 –
Write (down)/back of trading property (0.8) 0.3 0.5
Administration expenses (2.4) (1.6) (3.8)
Finance costs(1) (10.0) (8.8) (18.7)
Other costs (0.1) – –
Loss for the period (15.4) (11.8) (24.4)
(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 GBP5.0 million (30 June 2015: GBP4.4 million) is recognised in the consolidated income statement within other finance income.
As at As at
30 June 31 December
2016 2015
LSJV GBPm GBPm
Summarised balance sheet
Investment and development property 3.2 3.2
Other non-current assets 2.5 3.0
Trading property 303.8 258.5
Cash and cash equivalents(1) 64.1 67.2
Other current assets 0.4 0.2
Borrowings (132.0) (87.7)
Other non-current liabilities(2) (184.5) (174.5)
Amounts payable to joint venture partners(3) (72.1) (75.2)
Other current liabilities (64.0) (57.7)
Net liabilities (78.6) (63.0)
Capital commitments 76.4 97.2
Carrying value of investment, development and trading property 307.0 261.7
Unrecognised surplus on trading property(4) 114.1 183.2
Market value of investment, development and trading property(4) 421.1 444.9
(1) Includes restricted cash and cash equivalents of GBP55.5 million (31 December 2015: GBP52.3 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 GBP55.5 million (31 December 2015: GBP52.3 million) within other current
liabilities.
(2) Other non-current liabilities relate to deep discount bonds. Recoverable amounts receivable by the Group of GBP91.5 million (31 December 2015: GBP87.2 million) are
recognised on the consolidated balance sheet within non-current trade and other receivables. The balance has been impaired by GBP0.7 million (31 December 2015:
GBPnil).
(3) Amounts payable to joint venture partners relate to working capital funding advanced by the Group and KFI. Recoverable amounts receivable of GBPnil (31 December
2015: GBP10.0 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.
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 Developments Limited Partnership and Solum Developments (GP) Limited, acting as general partner
to the partnership. All major decisions regarding Solum are taken by the Board of Solum Developments (GP) Limited, through
which the Group shares strategic control.
A summarised income statement and balance sheet of Solum are presented below.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Solum GBPm GBPm GBPm
Summarised income statement
Administration expenses (0.5) – (1.4)
Loss for the period (0.5) – (1.4)
As at As at
30 June 31 December
2016 2015
Solum GBPm GBPm
Summarised balance sheet
Cash and cash equivalents 1.5 1.6
Other current liabilities (1.4) (1.1)
Net assets 0.1 0.5
GCP
GCP was established as a joint venture in 2007 with Great Portland Estates plc, to own, manage and develop a number of
central London properties. In April 2013, the Group exchanged contracts for the disposal of the final asset in GCP. This was
affected as part of the Group's strategy to dispose of non-core assets in support of the Group's core estates, as a result the
partnership has been presented as a discontinued operation.
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
2016 2015
GCP GBPm GBPm
Summarised balance sheet
Cash and cash equivalents 0.1 0.1
Net assets 0.1 0.1
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.
GCP LSJV Solum Total
GBPm GBPm GBPm GBPm
Net assets/(liabilities) of joint ventures at 31 December 2015 0.1 (63.0) 0.5 (62.4)
Elimination of joint venture partners' interest – 31.5 (0.3) 31.2
Cumulative losses restricted(1) – 31.5 – 31.5
Goodwill on acquisition of joint venture(2) – – 14.5 14.5
Carrying value at 31 December 2015 0.1 – 14.7 14.8
Net assets/(liabilities) of joint ventures at 30 June 2016 0.1 (78.6) 0.1 (78.4)
Elimination of joint venture partners' interest – 39.3 (0.1) 39.2
Cumulative losses restricted(1) – 39.3 – 39.3
Goodwill on acquisition of joint venture(2) – – 14.5 14.5
Carrying value at 30 June 2016 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 2015: 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.
GCP LSJV Solum Total
Investment in joint ventures GBPm GBPm GBPm GBPm
At 1 January 2015 0.1 – – 0.1
Loss for the year(1) – (12.2) (0.7) (12.9)
Loss restricted(1) – 12.2 – 12.2
Issue of equity loan notes – – 0.9 0.9
Goodwill on acquisition of joint venture – – 14.5 14.5
At 31 December 2015 0.1 – 14.7 14.8
Loss for the period(1) – (7.7) (0.2) (7.9)
Loss restricted(1) – 7.7 – 7.7
At 30 June 2016 0.1 – 14.5 14.6
(1) Share of post-tax loss from joint ventures in the consolidated income statement of GBP0.2 million (31 December 2015: GBP0.7 million) comprise loss for the period of
GBP7.9 million (31 December 2015: GBP12.9 million) and loss restricted totalling GBP7.7 million (31 December 2015: GBP12.2 million).
14 TRADE AND OTHER RECEIVABLES
As at As at
30 June 31 December
2016 2015
GBPm GBPm
Non-current
Other receivables(1) 39.5 38.5
Prepayments and accrued income(2) 38.4 33.2
Amounts receivable from joint ventures(3) 91.5 87.2
Trade and other receivables 169.4 158.9
Current
Rent receivable(4) 6.2 6.6
Other receivables 5.8 3.4
Prepayments and accrued income(2) 13.5 12.3
Amounts receivable from joint ventures(5) 0.6 10.0
Trade and other receivables 26.1 32.3
(1) Includes GBP30.0 million payment to LBHF which forms part of the CLSA.
(2) Included within prepayments and accrued income are tenant lease incentives of GBP41.7 million (31 December 2015: GBP36.0 million).
(3) 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. The balance has been impaired by GBP0.7 million. (31 December 2015: GBPnil).
(4) Includes exhibition trade receivables.
(5) Current amounts receivable from joint ventures comprise working capital funding advanced by the Group to LSJV and Solum. The balance has been impaired by
GBP39.2 million (31 December 2015: GBP31.5 million).
15 CASH AND CASH EQUIVALENTS
As at As at
30 June 31 December
2016 2015
GBPm GBPm
Cash at hand 14.6 11.6
Cash on short-term deposit 26.5 49.3
Unrestricted cash and cash equivalents 41.1 60.9
Restricted cash and cash equivalents(1) 6.0 6.0
Cash and cash equivalents 47.1 66.9
(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
2016 2015
GBPm GBPm
Current
Rent received in advance 22.5 21.3
Accruals and deferred income 32.2 58.5
Trade payables 1.5 2.7
Other payables 9.1 6.9
Other taxes and social security 6.0 2.1
Amount payable to non-controlling interest – 4.4
Trade and other payables 71.3 95.9
17 BORROWINGS, INCLUDING FINANCE LEASES
As at 30 June 2016
Carrying Fixed Floating Fair Nominal
value Secured Unsecured rate rate value value
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Current
Loans and overdrafts 12.0 12.0 – – 12.0 12.0 12.0
Loan notes 6.0 6.0 – – 6.0 6.0 6.0
Borrowings 18.0 18.0 – – 18.0 18.0 18.0
Finance lease obligations 0.5 0.5 – 0.5 – 0.5 0.5
Borrowings, including
finance leases 18.5 18.5 – 0.5 18.0 18.5 18.5
Non-current
Loan 2018 84.9 84.9 – – 84.9 85.5 85.5
Loan 2020 427.7 – 427.7 – 427.7 430.0 430.0
Loan notes 2024 74.6 – 74.6 74.6 – 83.5 75.0
Loan notes 2026 74.6 – 74.6 74.6 – 84.3 75.0
Loan 2026 16.2 16.2 – – 16.2 17.2 17.2
Borrowings 678.0 101.1 576.9 149.2 528.8 700.5 682.7
Finance lease obligations 3.6 3.6 – 3.6 – 3.6 3.6
Borrowings, including
finance leases 681.6 104.7 576.9 152.8 528.8 704.1 686.3
Total borrowings, including
finance leases 700.1 123.2 576.9 153.3 546.8 722.6 704.8
Cash and cash equivalents (47.1)
Net debt 653.0
As at 31 December 2015
Carrying Fixed Floating Fair Nominal
value Secured Unsecured rate rate value value
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Current
Loans and overdrafts 12.0 12.0 – – 12.0 12.0 12.0
Loan notes 6.0 6.0 – – 6.0 6.0 6.0
Borrowings 18.0 18.0 – – 18.0 18.0 18.0
Finance lease obligations 0.5 0.5 – 0.5 – 0.5 0.5
Borrowings, including finance
leases 18.5 18.5 – 0.5 18.0 18.5 18.5
Non-current
Loan 2018 84.8 84.8 – – 84.8 85.5 85.5
Loan 2019 369.8 – 369.8 – 369.8 375.0 375.0
Loan notes 2024 74.7 – 74.7 74.7 – 77.7 75.0
Loan notes 2026 74.7 – 74.7 74.7 – 77.9 75.0
Borrowings 604.0 84.8 519.2 149.4 454.6 616.1 610.5
Finance lease obligations 3.6 3.6 – 3.6 – 3.6 3.6
Borrowings, including finance
leases 607.6 88.4 519.2 153.0 454.6 619.7 614.1
Total borrowings, including
finance leases 626.1 106.9 519.2 153.5 472.6 638.2 632.6
Cash and cash equivalents (66.9)
Net debt 559.2
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 2016 and 31 December 2015.
As at 30 June 2016
Loss Gain to other
Carrying Fair to income comprehensive
value value statement income
GBPm GBPm GBPm GBPm
Derivative financial assets 0.3 0.3 (1.6) –
Total held for trading assets 0.3 0.3 (1.6) –
Cash and cash equivalents 47.1 47.1 – –
Other financial assets 195.5 195.5 – –
Total cash and other financial assets 242.6 242.6 – –
Available-for-sale investments 0.2 0.2 – –
Total available-for-sale investments 0.2 0.2 – –
Derivative financial liabilities (18.9) (18.9) (16.2) –
Total held for trading liabilities (18.9) (18.9) (16.2) –
Borrowings, including finance leases (700.1) (722.6) – –
Other financial liabilities (72.6) (72.6) – –
Total borrowings and other financial liabilities (772.7) (795.2) – –
As at 31 December 2015
(Loss)/gain Gain to other
Carrying Fair to income comprehensive
value value statement income
GBPm GBPm GBPm GBPm
Derivative financial assets 0.8 0.8 (1.3) –
Total held for trading assets 0.8 0.8 (1.3) –
Cash and cash equivalents 66.9 66.9 – –
Other financial assets 191.2 191.2 (0.2) –
Total cash and other financial assets 258.1 258.1 (0.2) –
Available-for-sale investments 0.2 0.2 (0.2) –
Total available-for-sale investments 0.2 0.2 (0.2) –
Derivative financial liabilities (3.2) (3.2) 0.7 –
Total held for trading liabilities (3.2) (3.2) 0.7 –
Borrowings, including finance leases (626.1) (638.2) – –
Other financial liabilities (98.7) (98.7) – –
Total borrowings and other financial liabilities (724.8) (736.9) – –
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 2016 and 31 December 2015.
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 2016 GBPm GBPm GBPm GBPm
Derivative financial assets
Held for trading – 0.3 – 0.3
Investments
Total available-for-sale investments – – 0.2 0.2
Total assets – 0.3 0.2 0.5
Derivative financial liabilities
Held for trading – (18.9) – (18.9)
Total liabilities – (18.9) – (18.9)
Level 1 Level 2 Level 3 Total
31 December 2015 GBPm GBPm GBPm GBPm
Derivative financial assets
Held for trading – 0.8 – 0.8
Investments
Available-for-sale investments – – 0.2 0.2
Total assets – 0.8 0.2 1.0
Derivative financial liabilities
Held for trading – (3.2) – (3.2)
Total liabilities – (3.2) – (3.2)
The table below presents a reconciliation of Level 3 fair value measurements for the period.
As at As at
30 June 31 December
2016 2015
GBPm GBPm
At 1 January 0.2 0.4
Loss on sale – (0.2)
Total available-for-sale investments 0.2 0.2
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 rate to 19 per cent referred to in Note 9 has been substantively enacted for the purposes of
IAS 12 'Income Taxes' 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 is
GBPnil as at 30 June 2016 (31 December 2015: GBP15.6 million).
The Group's contingent tax liability on investment properties, calculated on the same tax base cost as above but based on
deemed market value disposal at 30 June 2016 is GBPnil (31 December 2015: GBP17.6 million).
A disposal of the Group's trading property including the Group's share of Lillie Square at the market value would result in a
corporation tax charge to the Group of GBP12.7 million (20 per cent of GBP63.6 million).
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 2015 13.6 11.8 (0.3) (6.6) (5.6) 12.9
Adjustment in respect of previous years – – – – 1.4 1.4
Recognised in income 0.8 5.6 (0.1) (0.9) 0.5 5.9
Recognised in other comprehensive
income – – – 0.2 – 0.2
Recognised directly in equity – – – 1.5 – 1.5
Reduction due to rate change (0.7) (1.8) – 0.1 – (2.4)
At 31 December 2015 13.7 15.6 (0.4) (5.7) (3.7) 19.5
Recognised in income 0.5 (15.6) (3.4) 0.8 (1.0) (18.7)
Recognised directly in equity – – – 1.2 – 1.2
At 30 June 2016 14.2 – (3.8) (3.7) (4.7) 2.0
Unprovided deferred tax (assets):
At 1 January 2016 – – – – (7.8) (7.8)
Movement during the period – (17.9) – – (0.4) (18.3)
At 30 June 2016 – (17.9) – – (8.2) (26.1)
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 As at
30 June 31 December
2016 2015
GBPm GBPm
Current
Contingent consideration on acquisition of joint venture 2.0 2.0
Other provisions 2.0 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 2015 836,236,407 209.1 206.9
Scrip dividend – 2014 final June 416 1,028,609 0.3 4.0
Scrip dividend – 2015 interim September 467 122,277 – –
Share-based payment(1) 4,601,652 1.1 0.2
At 31 December 2015 841,988,945 210.5 211.1
Scrip dividend – 2015 final June 338 1,275,480 0.3 4.0
Share-based payment(2) 2,200,010 0.6 –
At 30 June 2016 845,464,435 211.4 215.1
(1) During 2015 a total of 4,601,652 new shares were issued to satisfy employee share scheme awards.
(2) During the period to 30 June 2016 a total of 2,200,010 new shares were issued to satisfy employee share scheme awards.
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
2016 2015
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 As at
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
At 1 January 468.8 – –
(Loss)/profit and total comprehensive (expense)/income for the
period attributable to non-controlling interest (63.4) 5.2 26.1
Capital contribution from non-controlling interest – 44.4 44.4
Unsecured loan notes issued to non-controlling interest 4.3 385.3 398.3
Non-controlling interest 409.7 434.9 468.8
During the period, unsecured, non-interest bearing loan notes 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 (31 December 2015: less than GBP0.1
million) and therefore GBP402.6 million (31 December 2015: GBP398.3 million) has been classified as equity.
24 CAPITAL COMMITMENTS
At 30 June 2016, the Group was contractually committed to GBP161.1 million (31 December 2015: GBP162.5 million) of future
expenditure for the purchase, construction, development and enhancement of investment, development and trading property.
Of the GBP161.1 million committed, GBP76.7 million is committed 2016 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. The Group has already paid GBP45 million of the GBP105 million cash consideration payable under
the CLSA. The residual GBP60 million will be settled in four annual instalments of GBP15 million with the next payment due on
31 December 2016.
The Group's share of joint venture capital commitments arising on LSJV amounts to GBP38.2 million (31 December 2015: GBP48.6 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.
Within the terms of the agreement of the acquisition of the Northern Access Road land, the vendor's successor in title is entitled
to further payments until 2027 if certain conditions are met. Further payments 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 is 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 is
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
2016 2015 2015
Continuing operations Notes GBPm GBPm GBPm
Profit before tax (190.4) 277.3 459.9
Adjustments:
(Profit)/loss on sale of trading property 3 (1.1) 0.2 (3.5)
Loss/(gain) on revaluation of investment and development
property 4 174.2 (271.7) (453.9)
Loss on sale of loan notes – 0.2 0.2
Impairment of other receivables 6 7.7 5.9 12.2
Depreciation 0.7 0.2 0.5
Amortisation of tenant lease incentives and other direct costs 0.5 (0.5) –
Share-based payment(1) 1.8 2.9 5.1
Finance income 7 (0.1) (0.6) (0.7)
Finance costs 8 9.7 9.7 20.8
Other finance income 7 (5.0) (4.4) (9.3)
Other finance costs 8 5.2 – –
Change in fair value of derivative financial instruments 17.8 (1.4) 0.6
Change in working capital:
Change in trade and other receivables (9.1) (12.1) (40.5)
Change in trade and other payables (6.1) 2.2 21.7
Cash generated from operations 5.8 7.9 13.1
(1) Includes GBP1.8 million (30 June 2015: GBP2.5 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
2016 2015 2015
Key management compensation(1) GBPm GBPm GBPm
Salaries and short-term employee benefits 1.3 1.2 3.5
Share-based payment 1.5 1.8 3.2
2.8 3.0 6.7
(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. In April 2014 an initial deposit of GBP72,500 was 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. In April 2014 an initial deposit of GBP85,500 was 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. In April 2014 an initial deposit of GBP199,900
was 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. In December 2014, initial deposits of GBP192,500 and GBP272,500 were
received. In December 2015 a further GBP192,500 and GBP272,500 were received, with the balances of GBP1,540,000 and GBP2,180,000
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. In December 2014, initial deposits of GBP197,500 and GBP282,500 were received. In December
2015 a further GBP197,500 and GBP282,500 were received with the balances of GBP1,580,000 and GBP2,260,000 due on 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 KFI.
ANALYSIS OF PROPERTY PORTFOLIO (UNAUDITED)
1. PROPERTY DATA AS AT 30 JUNE 2016
Market
Value
GBPm Ownership
Covent Garden 2,111.3 100%
Earls Court Properties
ECPL 698.8 63%
Lillie Square 210.6 50%
Empress State 240.0 100%
Other 45.4 100%
Group share of Earls Court Properties 1,194.8
Venues 295.0 100%
Other 4.4 100%
Group share of total property 3,605.5
Investment and development property 3,376.8
Trading property 228.7
2. ANALYSIS OF CAPITAL RETURN FOR THE PERIOD
Revaluation
Market Market surplus/
Value Value (deficit)(1)
30 June 31 December 30 June
2016 2015 2016
Like-for-like capital GBPm GBPm GBPm Change
Covent Garden 2,097.7 2,001.7 60.1 3.0 %
Earls Court Properties 1,194.8 1,357.2 (199.8) (14.3)%
Venues 295.0 295.0 (0.5) (0.2)%
Other 4.4 4.4 –
Total like-for-like capital 3,591.9 3,658.3 (140.2) (3.8)%
Investment and development property 3,363.2 3,417.1 (104.6) (3.0)%
Trading property 228.7 241.2 (35.6)(2) (13.5)%
Non like-for-like capital
Acquisitions 13.6 – (0.6)
Disposals – 3.5 –
Group share of total property 3,605.5 3,661.8 (140.8) (3.8)%
Investment and development property 3,376.8 3,417.1 (105.2) (3.1)%
Trading property 228.7 244.7 (35.6)(2) (13.5)%
All property
Covent Garden 2,111.3 2,005.2 59.5 3.0 %
Earls Court Properties 1,194.8 1,357.2 (199.8) (14.3)%
Venues 295.0 295.0 (0.5) (0.2)%
Other 4.4 4.4 – –
Group share of total property 3,605.5 3,661.8 (140.8) (3.8)%
(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
2016 2015
Like-for-like net rental income GBPm GBPm Change
Covent Garden 20.2 19.0 6.4 %
Earls Court Properties 8.4 8.7 (3.3)%
Venues 12.3 10.7 14.6 %
Other (0.2) (0.1) –
Total like-for-like net rental income 40.7 38.3 6.3 %
Like-for-like investment and development property 40.7 38.3 6.3 %
Like-for-like trading property – – –
Non like-for-like net rental income
Developments (0.2) 0.1
Group share of total net rental income 40.5 38.4 5.7 %
Investment and development property income 40.6 38.3 6.1 %
Trading property income (0.1) 0.1
All property
Covent Garden 20.2 19.1 6.0 %
Earls Court Properties(1) 8.3 8.7 (4.8)%
Venues 12.3 10.7 14.6 %
Other (0.3) (0.1)
Group share of total net rental income 40.5 38.4 5.7 %
(1) ERV of the Empress State Building is GBP15.9 million.
4. ANALYSIS OF COVENT GARDEN BY USE
30 June 2016
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 1,508.0 64.6 0.5
Office 243.7 13.3 0.2
Residential 115.6 6.3 0.2
Other(1) 244.0 5.7 0.1
Total 2.06% 3.49% 46.9 96.7% 7.2 2,111.3 89.9 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 2016
Re-presented(1) Re-presented(1)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Group share GBPm GBPm GBPm
Net rental income 40.5 38.4 74.9
Other income 1.4 1.0 2.5
Administration expenses (25.0) (25.0) (52.5)
Operating profit 16.9 14.4 24.9
Finance costs (9.7) (9.7) (20.8)
Finance income 0.1 0.6 0.7
Net finance costs (9.6) (9.1) (20.1)
Profit before tax 7.3 5.3 4.8
Taxation (1.4) (1.1) 3.0
Underlying earnings 5.9 4.2 7.8
Underlying earnings per share (pence) 0.7 0.5 0.9
Weighted average number of shares 842.6m 839.4m 840.8m
(1) Comparative periods have been re-presented from proportionate consolidation to Group share basis.
FINANCIAL COVENANTS (UNAUDITED)
For the six months ended 30 June 2016
Financial covenants on non-recourse debt
30 June 2016
Loan(s)
outstanding
at 30 June Interest
2016(1) LTV cover
Maturity GBPm covenant covenant
Covent Garden(2) 2020 – 2026 580.0 60% 120%
ECPL 2026 10.8 40% n/a
Lillie Square(3) 2017 – 2018 66.0 75% n/a
Empress State 2018 97.5 60% 300%
Total 754.3
(1) The loan values are the nominal values at 30 June 2016 shown on a Group share basis. The balance sheet value of the loans includes any unamortised fees.
(2) Covent Garden comprises three loans with maturities in 2020, 2024 and 2026.
(3) Lillie Square comprises two loans with maturities in 2017 and 2018.
DIVIDENDS
The Directors of Capital & Counties Properties PLC have proposed an interim dividend per ordinary share (ISIN
GB00B62G9D36) of 0.5 pence payable on 30 September 2016.
Dates
The following are the salient dates for payment of the proposed interim dividend:
Sterling/Rand exchange rate struck: 2 September 2016
Sterling/Rand exchange rate and dividend amount in Rand announced: 5 September 2016
Ordinary shares listed ex-dividend on the JSE, Johannesburg: 7 September 2016
Ordinary shares listed ex-dividend on the LSE, London: 8 September 2016
Record date for interim dividend in UK and South Africa: 9 September 2016
Dividend payment date for shareholders 30 September 2016
South African shareholders should note that, in accordance with the requirements of Strate, the last day to trade cum-dividend
will be 6 September 2016 and that no dematerialisation of shares will be possible from 7 September 2016 to 9 September 2016
inclusive. No transfers between the UK and South Africa registers may take place from 6 September 2016 to 9 September 2016.
Subject to SARB approval, the Board intends to offer an optional scrip dividend alternative in respect of the 2016 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. The EPRA alternative
performance measures are 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, excess fair value of debt over carrying
value and deferred tax on derivative financial instruments, revaluations and capital allowances.
EPRA adjusted earnings per share
Profit for the year 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.
GCP
Great Capital Partnership.
GLA
Greater London Authority.
Gross income
The Group's share of passing rent plus sundry non-leased income.
HCA
Homes and Communities Agency.
Headline earnings
Headline earnings per share is calculated in accordance with Circular 2/2015 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.
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.
LSJV
Lillie Square Joint Venture.
NAV
Net Asset Value attributable to owners of the Parent.
NAV per share
Net Asset Value attributable to owners of the Parent per share. The Group considers this presentation to provide useful
information as it presents the value attributable to each share.
Net Debt
Total borrowings less cash and cash equivalents.
NIA
Net Internal Area.
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.
NRIL
Network Rail Infrastructure Limited.
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.
RICS
Royal Institution of Chartered Surveyors.
SARB
South African Reserve Bank.
SAICA
South African Institute of Chartered Accountants.
SDLT
Stamp Duty Land Tax.
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 (TPR)
Capital growth including gains and losses on disposals plus rent received less associated costs, including ground rent.
Total return (TR)
The growth in EPRA adjusted, diluted NAV per share plus dividends per share paid during the period.
Total shareholder return (TSR)
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 Group share 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.
Underlying earnings per share (EPS)
Underlying earnings divided by the weighted average number of shares in issue during the period.
Weighted average unexpired lease term
The unexpired lease term to lease expiry weighted by ERV for each lease.
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: 26/07/2016 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,
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