Wrap Text
Half Year Results to 30 June 2016
CAPITAL & REGIONAL PLC
(Incorporated in the United Kingdom)
(UK Company number 01399411)
LSE share code: CAL JSE share code: CRP
ISIN: GB0001741544
("Capital & Regional", the "Group" or the "Company")
18 August 2016
Half Year Results to 30 June 2016
CAPITAL & REGIONAL DELIVERS STRONG OPERATING PROFIT GROWTH
Capital & Regional plc (LSE: CAL), the UK focused specialist REIT with a portfolio of dominant in-town
community shopping centres, today announces its half year results to 30 June 2016.
HIGHLIGHTS
Financial
- 16% increase in Operating Profit(1) to GBP13.7 million (June 2015: GBP11.8 million)
- Profit for the period of GBP7.2 million (June 2015: GBP57.0 million) as a result of a GBP42.7 million revaluation
gain in H1 2015 compared to a GBP10.3 million fall in this period primarily due to the 1% increase in SDLT
- Interim dividend increased by 8% to 1.62p per share (June 2015: 1.50p per share)
- EPRA NAV per share unchanged at 71p (December 2015: 71p)
- See-through net debt to property value(2) of 45% (June 2015: 43%, December 2015: 41%) following the
Hemel Hempstead acquisitions and cash investment into capex
Operational
- Transformation of The Buttermarket Centre, Ipswich nearing completion delivering GBP7.2 million
revaluation gain, net of capex, in the period. 87% now let and strong interest in remaining units
- Acquisition of The Marlowes Centre and two adjacent properties in Hemel Hempstead giving substantial
control of town centre retail and providing significant opportunity to reposition the combined scheme in
this growing London satellite town
- Advanced plans for re-letting of BHS units with strong new tenants improving the schemes and
delivering uplift to previous passing rent
- Continued momentum from capex investment programme with completion of extensive new entrance
works and opening of new gym at Blackburn and GBP4.7 million Maidstone refurbishment completed
- Like for like net rental income on wholly-owned portfolio increased by 3.9% to GBP23.8 million
(June 2015: GBP22.9 million)
- 27 new lettings and 11 lease renewals totalling GBP3.0 million at combined premium to ERV of 0.7%
- Positive leasing momentum since the referendum across the whole portfolio, with 29
permanent new leases or renewals exchanged or completed since 24 June 2016
- Like-for-like occupancy on wholly-owned portfolio increased to 96.5% (30 June 2015: 96.4%)
- Footfall outperforming the industry benchmark by 1.4% in first six months of the year. Footfall for July
up 1.6% year on year
- Enhanced focus on asset recycling opportunities, including active consideration of unsolicited offer
for sale of The Mall, Camberley around current valuation
6 months to Year to 6 months to
June 2016 Dec 2015 June 2015
Operating Profit(1) GBP13.7m GBP24.0m GBP11.8m
Profit for the period GBP7.2m GBP100.0m GBP57.0m
Total Dividend per Share 1.62p 3.12p 1.50p
Net Asset Value (NAV) per share 71p 72p 67p
EPRA NAV per share 71p 71p 67p
Group net debt GBP403.1m GBP338.1m GBP339.1m
See-through net debt to property value(2) 45% 41% 43%
(1) As defined in Glossary.
(2) See-through net debt divided by property valuation.
Hugh Scott-Barrett, Chief Executive, commented:
"This strong set of operational results is reflective of the focus we continue to place on the delivery of our asset
management initiatives and it is extremely pleasing to see these starting to bear fruit in the first half of the year.
Our letting activity remains robust and, while it is too early to point to any definitive trends, so far we have seen
no sign of this abating post the EU referendum. Retail and leisure operators continue to be attracted by the
good quality space that we offer at affordable rents in vibrant, high footfall town centre locations which have
strong underlying fundamentals. This reinforces our ability to grow income and the dividend, which we have
increased by 8% today in anticipation of a positive second half of the year.
"Furthermore, encouragingly, as markets have stabilised in recent weeks we are seeing a number of
opportunities to recycle capital on terms which will enable us to crystallise attractive returns and specifically
we are actively considering the sale of The Mall, Camberley following an unsolicited offer received around current
valuation. Recycling will enable us to take advantage of accretive investment opportunities whilst having due regard
to prudent balance sheet management."
For further information:
Capital & Regional: Tel: 020 7932 8000
Hugh Scott-Barrett, Chief Executive
Charles Staveley, Group Finance Director
FTI Consulting: Tel: 020 3727 1000
Richard Sunderland Email: Capreg@fticonsulting.com
Claire Turvey
Notes to editors:
About Capital & Regional plc
Capital & Regional is a UK focused specialist property REIT with a strong track record of delivering value
enhancing retail and leisure asset management opportunities across a c. GBP1 billion portfolio of in-town
dominant community shopping centres. Capital & Regional is listed on the main market of the London Stock
Exchange and has a secondary listing on the Johannesburg Stock Exchange.
Capital & Regional owns seven shopping centres in Blackburn, Camberley, Hemel Hempstead, Luton,
Maidstone, Walthamstow and Wood Green. It also has a 20% joint venture interest in the Kingfisher Centre in
Redditch and a 50% joint venture in the Buttermarket Centre, Ipswich. Capital & Regional manages these
assets, which comprise over 950 retail units and attract over 1.7 million shopping visits each week, through its
in-house expert property and asset management platform.
For further information see www.capreg.com.
Operating review
UK Shopping Centres
The core strength and expertise of Capital & Regional lies in its ability to create and deliver asset management
improvements across its GBP1.1 billion portfolio of nine UK shopping centres with a strong London and South
East bias. The schemes are characterised by being dominant locally, having strong footfall and offering
occupiers attractive and affordable space.
The Group's philosophy is to continually reposition its centres through the introduction of a complementary mix
of leisure uses to enhance the customer experience, drive footfall and increase dwell time.
Wholly-owned portfolio
There has been strong letting progress during the first half of the year with a number of new brands introduced
to our centres including Patisserie Valerie in Camberley and Pret in Wood Green, which have continued the
theme of improving the leisure offer. In Luton, Five Guys has opened on the outside of the scheme whilst the
new Food Zone is also taking shape. Gyms have also opened for trade in Maidstone, Blackburn and Luton.
Significant retail lettings include the 27,700 sq ft TJ Hughes store in Maidstone, lettings to Schuh and Smiggle
and an extension to JD Sports in Luton.
The rate of capital expenditure investment in the portfolio has accelerated during the first half of the year as
the Group's multi-year GBP65 million investment programme, which is targeting income returns of at least 10%,
has gained further momentum with GBP13.5 million spent in the period. We expect spend to approach a similar
level in the second half of the year meaning the total spend for 2016 is likely to exceed the GBP20 million
previously indicated. We are targeting similar levels of investment for 2017. This will include expenditure
related to re-letting the BHS units, as discussed further below, which has been prioritised ahead of other
initiatives given the direct income returns and the opportunity to introduce new anchor tenants which will help
in repositioning the respective centres.
Major initiatives in the first half of the year include the opening of the new entrance facing the bus centre
redevelopment at Blackburn and the refurbishment of The Mall Maidstone. While the benefits of the capex
spend to date have already begun to flow through, we expect this to gain further momentum, both
operationally and, in turn, financially, in 2017, when the projects in progress, such as the creation of the 78
room Travelodge and extended gym in Wood Green and the new TJ Hughes store in Maidstone, which is due
to handover later this month, come on stream fully.
The Group's asset management expertise is highlighted by the plans to deal with the space we will be taking
back at three of our centres following the BHS insolvency. While the initial closure of the three units in the
wholly-owned portfolio will create a short term loss of income for the rest of 2016 of approximately GBP0.5 million,
they have also presented a positive asset management opportunity. We expect the re-letting plans we have
developed to help in repositioning the schemes and to be accretive to income and values.
In Blackburn, a part of the BHS unit was already sub-let to Sports Direct and a tenant has been identified for
the part occupied by BHS. In Walthamstow, we have advanced plans to split the store into three units and
heads of terms have been agreed for long term leases with a leading food retailer and a gym for 18,250 and
14,250 sq ft respectively. There is strong interest in the remaining 7,500 sq ft retail unit and in total we expect
to significantly increase the rental income from that paid by BHS. At Maidstone, we are in active discussions
to let the entire BHS store to a major fashion retailer but have alternative options for subdividing the area for a
split fashion and leisure use.
The Group is also advancing its plans for the extension in Walthamstow and has signed a development
agreement with London Borough of Waltham Forest and completed public consultations which were well
received. Discussions with our preferred development partner, Barratt London, are continuing with submission
of a planning application targeted for the end of the year and pre-letting momentum has been maintained with
offers received from two major national operators.
The Group also received notification in July 2016 that it had been awarded a RoSPA Gold Award for a 10th
consecutive year, demonstrating once again the importance we attach to continually advancing health and
safety standards across our portfolio.
New lettings, renewals and rent reviews
Wholly-owned portfolio 6 months to
June 2016
Number of new lettings 27
Rent from new lettings (GBPm) 2.0
Comparison to ERV(1) (%) 4.6
Renewals settled 11
Revised rent (GBPm) 1.0
Comparison to ERV (%) (5.3)
Rent reviews settled 13
Revised passing rent (GBPm) 2.0
Uplift to previous rent (%) -
(1) For lettings and renewals (excluding development deals) with a term certain of five years or longer which do not include a turnover rent element.
The outperformance of new lettings versus ERV demonstrates the affordability and attractiveness of our
schemes to retailers and leisure operators. The evidence provided by new lettings will become supportive of
rental tones in the future. The combined comparison of lettings and renewals to ERV is 0.7%.
Whilst the lease renewals were settled at a little below ERV this was a consequence of tenants simply paying
a lower headline rent rather than receiving incentives on renewal. The net effective rent achieved, assuming
that all renewals in the first half were for a five year term was, at 93.2% of ERV, 6.5% higher than assumed by
the Group's valuers.
Across the whole portfolio there have been strong levels of leasing activity since the EU referendum vote.
In total 29 permanent deals have exchanged or completed for over 50,000 sq ft. A further 19 new leases or
renewals representing almost 70,000 sq ft, including the BHS related activity at Walthamstow described above,
have also been agreed or progressed to being in solicitors' hands since 24 June. Importantly, these are being
agreed at pre referendum levels and we have seen little or no reference to Brexit from a pricing perspective
during our discussions with occupiers to date.
Rental income and occupancy
Wholly-owned portfolio
(like for like excluding The Marlowes, Hemel) 30 June 2016 30 December 2015 30 June 2015
Contracted rent (GBPm) GBP58.8m GBP58.1m GBP57.0m
Passing rent (GBPm) GBP54.5m GBP55.0m GBP54.8m
Occupancy 96.5% 97.2% 96.4%
There has been a year-on-year increase in contracted rent of GBP1.8 million and at 30 June 2016 there was
GBP2.5 million of contracted rent where the tenant is in a rent free period; of this GBP1.5 million will convert to passing
rent this year. There is a further GBP1.8 million of committed transactions where works are being undertaken prior
to handover to tenants.
The year-on-year occupancy has increased by 0.1% and is at a robust level despite the impact of insolvencies.
Administrations
6 months to 12 months to 6 months to
Wholly-owned portfolio (like for like) June 2016 December 2015 June 2015
Administrations (units) 13 9 7
Passing rent of administrations(GBPm) GBP1.9m GBP0.5m GBP0.4m
The level of administrations reflects the well-publicised demise of BHS, as discussed above, and the Blue Inc
chain. Excluding these there were two units that were affected by administration with rent of GBP0.1 million, both
of which remain open and trading.
Footfall
In the wholly-owned portfolio, year-on-year footfall in the first half outperformed the national index by 1.4%.
The portfolio's footfall decreased by 0.3% compared to a decline in the benchmark index of 1.7%
demonstrating our ability to sustain the attractiveness of our schemes to our customers.
Footfall in July was up 1.6% year on year. This, and a good first week of August, has resulted in year to date
footfall on a like for like basis being 0.2% up on the prior year.
Property portfolio performance
Property at independent valuation 30 June 2016 30 December 2015
GBPm NIY % GBPm NIY %
Blackburn 130.2 6.29 127.8 6.37
Camberley 88.5 6.15 87.8 6.14
Luton 213.0 6.25 215.1 6.00
Maidstone 79.2 6.92 81.4 6.85
Walthamstow 96.8 5.54 94.3 5.49
Wood Green 219.9 5.24 216.3 5.25
Wholly-owned portfolio (like for like) 827.6 5.94 822.7 5.89
The Marlowes, Hemel Hempstead 54.5 6.99 - -
Wholly-owned portfolio 882.1 6.02 822.7 5.90
Allowing for capital expenditure of GBP13.5 million, the net revaluation deficit on a like-for-like basis was
GBP8.6 million, due primarily to the 1% increase in Stamp Duty Land Tax (SDLT), without which the net valuation
would have been broadly in line with December 2015, with increased valued income offsetting the impact of
outward yield movement of 5 basis points.
In recognition of the uncertainty resulting from the EU referendum outcome, the valuers have included the
following industry agreed generic wording in their valuation reports. 'Since the referendum date it has not been
possible to gauge the effect of this decision by reference to transactions in the market place. The probability of
our opinion of value exactly coinciding with the price achieved, were there to be a sale, has reduced. We
would, therefore, recommend that the valuation is kept under regular review and that specific market advice is
obtained should you wish to effect a disposal.'
Acquisition of The Marlowes, Hemel Hempstead
On 5 February 2016, the Group acquired the freehold of The Marlowes Shopping Centre in Hemel Hempstead
for GBP35.5 million. This was followed by the acquisitions of the adjacent Edmonds Parade and Fareham House
properties, bringing our total investment into the town to GBP53.8 million at a net initial yield of 7.0%. The
Company's combined retail footprint now comprises 340,000 sq ft across 87 units with 1,200 car park spaces
giving effective control of the town centre. This acquisition provides an attractive medium term opportunity to
transform the retail offer in the town, which has attractive fundamentals, utilising the Group's
in-house asset management capabilities.
Co-invested schemes
The Kingfisher Centre, Redditch
The Group owns a 20% interest in the Kingfisher Centre in Redditch. This scheme continues to perform well
with contracted rent stable year on year. Significant lettings during the period include an extension to Muffin
Break, a 1,300 sq ft letting to Yours and a lease renewal with Bank of Scotland. At 30 June 2016, occupancy
had fallen 3.0% year-on-year to 93.4% although with lettings exchanged and in solicitors' hands this is
expected to increase to 95.7%.
The valuation of the Kingfisher Centre, Redditch as at 30 June 2016 was GBP163.5 million at a net initial yield of
6.24%. This represents a decrease of GBP0.9 million from 31 December 2015 due to the impact of the SDLT
increase. Capital expenditure on this asset in the period was GBP0.1 million.
The Buttermarket, Ipswich
The transformation of the Buttermarket Centre, Ipswich, in which the Group holds a 50% interest, from a failing
shopping centre to a vibrant leisure and retail destination is nearing completion, with the redevelopment due
for practical completion imminently, both on time and on budget. The letting of the scheme has progressed
well with four further lettings in the first half of the year for a combined total of 16,500 sq ft to Cosy Club, Byron,
Wagamama and Coast to Coast. The scheme is now 87% let and there is strong interest in the remaining
space. The weighted average lease length to expiry of the scheme is now 19 years providing the security of
income of an institutional asset.
The valuation as at 30 June 2016 was GBP44.3 million, an increase on the December 2015 valuation of GBP16.3
million reflecting the progress detailed above. Capital expenditure was GBP9.1 million during the period, bringing
total capex to GBP17.0 million since acquisition for GBP9.2 million in March 2015.
Snozone
Snozone has again enjoyed another strong trading period with revenue of GBP5.4 million and Operating Profit of
GBP1.0 million. Snozone also successfully launched its Disability Snow School during the period becoming the
only UK operator to have its own Snowschool dedicated to providing 'Adaptive' lessons.
FINANCIAL REVIEW
Key performance indicators
The key performance indicators we use to measure our performance against our strategy and objectives are:
Six months to Year to Six months to
June 2016 Dec 2015 June 2015
Investment returns
Net assets per share 71p 72p 67p
EPRA net assets per share 71p 71p 67p
Return on equity 1.4% 23.5% 13.2%
Profitability
Operating Profit(1) GBP13.7m GBP24.0m GBP11.8m
Profit for the period GBP7.2m GBP100.0m GBP57.0m
Basic earnings per share – continuing and discontinued operations 1.0p 14.3p 8.1p
Financing
Group net debt GBP403.1m GBP338.1m GBP339.1m
See-through net debt GBP425.3m GBP355.7m GBP339.1m
See-through net debt to property value(2) 45% 41% 43%
Property portfolio at valuation (100%) GBP1,089.9m GBP1,015.0m GBP958.2m
Property portfolio at valuation (C&R share) GBP937.0m GBP869.6m GBP827.7m
(1) As defined in Glossary.
(2) See-through net debt divided by property valuation.
To provide a greater understanding of the composition of the business, the Group presents its balance sheet
in two separate ways, with the "statutory" balance sheet following the accounting and statutory rules and the
"see-through" balance sheet showing the Group's proportionate economic exposure to the different property
portfolios as set out below.
See-through at 30 June 2016 Statutory See-through at 30 December 2015 Statutory
Property Debt Other 30 June Property Debt Other 30 December
2016 2015
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
The Mall portfolio 875.3 (379.8) (42.8) 452.7 870.0 (380.0) (37.8) 452.2
The Marlowes, Hemel 54.5 (26.9) 0.5 28.1 - - - -
Kingfisher Redditch 31.9 (16.8) 0.5 15.6 32.1 (16.8) 0.6 15.9
Buttermarket Ipswich 21.6 (7.5) (0.5) 13.6 13.6 (2.2) 0.3 11.7
Other net assets - (16.8) 6.2 (10.6) - - 23.4 23.4
Net assets 983.3 (447.8) (36.1) 499.4 915.7 (399.0) (13.5) 503.2
Profitability
The breakdown of Operating Profit, as defined in the Glossary, is as follows (and as set out further in note 3a):
Operating Profit
Group Operating Profit
Six months to Year to 30 Six months to
30 June 2016 December 2015 30 June 2015
GBPm GBPm GBPm
Wholly-owned Assets 13.2 24.3 11.9
Other UK Shopping Centres 0.4 1.2 0.5
Snozone 1.0 1.4 1.0
Group/Central (0.9) (2.9) (1.6)
Operating Profit 13.7 24.0 11.8
The following table provides a further breakdown of the Operating Profit for wholly-owned assets. Net rental
income has increased by GBP2.5 million or 10.9% compared to the equivalent period in 2015 due to the
acquisition of The Marlowes, Hemel Hempstead and like-for-like growth in The Mall of GBP0.9 million or 3.9%.
Wholly-owned assets Operating Profit
Six months to 30 June 2016 Six months to
30 June
Total 2015
The Mall Marlowes, Hemel Wholly-owned
GBPm GBPm GBPm GBPm
Rental income 24.0 1.8 25.8 23.7
Car park income 3.5 0.4 3.9 3.4
Ancillary income 1.1 - 1.1 1.2
Gross rental income 28.6 2.2 30.8 28.3
Service charge and void costs (1.6) (0.4) (2.0) (2.0)
Bad debt (0.2) - (0.2) (0.3)
Other property expenses
Car park costs (1.5) (0.1) (1.6)
Head leases (1.5) - (1.5)
IFRS head lease adjustment 1.8 - 1.8
Letting and rent review fees (0.6) - (0.7)
Administration expenses (0.3) - (0.4)
Repairs and maintenance (0.2) - -
Other costs (0.7) (0.1) (0.7)
(3.0) (0.2) (3.2) (3.1)
Net rental income 23.8 1.6 25.4 22.9
Interest Expense Interest on loans (6.6) (0.4) (6.5)
Amortisation of refinancing costs (0.7) (0.1) (0.6)
Notional interest charge on head
leases(1) (1.8) - (1.8)
(9.1) (0.5) (9.6) (8.9)
Operating Profit before internal recharges 14.7 1.1 15.8 14.0
Internal Management fees (2.6) (2.1)
Operating Profit 13.2 11.9
(1) Notional interest charge with offsetting opposite and materially equal credit within other property operating expenses above.
Profit for the period
Six months to Year to Six months to
30 June 2016 30 December 2015 30 June 2015
GBPm GBPm GBPm
Operating Profit 13.7 24.0 11.8
Property revaluation (7.0) 74.8 43.4
Financial instruments revaluation (1.8) (0.8) -
Profit on disposal of Germany - 2.4 2.4
Other items 2.3 (0.4) (0.4)
Tax - - (0.2)
Profit for the period 7.2 100.0 57.0
The net revaluation deficit in the period of GBP7.0 million was due primarily to the 1% increase in Stamp Duty
Land Tax (SDLT) effective from March 2016, without which the net valuation would have been broadly in line
with December 2015. Other items include a gain of GBP3.6 million relating to historical German investments
following the sale of properties by the liquidator of the underlying portfolio. A further smaller amount is likely to
be received on sale of the final two properties in the portfolio.
Financing
See-through debt
Weighted average
Loan to Net debt Blended duration to loan
Group share Debt(1) Cash(2) Net debt Value(3) to value(3) interest rate Fixed expiry
30 June 2016 GBPm GBPm GBPm % % % % Years
The Mall 379.8 (16.2) 363.6 46 44 3.47 61 2.9
The Marlowes, Hemel 26.9 (2.5) 24.4 49 45 3.32 100 4.5
Group RCF 16.8 (1.7) 15.1 n/a n/a 3.52 - 2.9
On balance sheet debt 423.5 (20.4) 403.1
Kingfisher Redditch 16.8 (0.9) 15.9 51 48 3.67 99 2.8
Buttermarket Ipswich 7.5 (1.2) 6.3 34 29 3.51 - 0.5(4)
Off balance sheet debt 24.3 (2.1) 22.2
See-through debt 447.8 (22.5) 425.3 48 45
(1) Excluding unamortised issue costs.
(2) Excluding cash beneficially owned by tenants.
(3) Debt and net debt divided by investment property at valuation.
(4) The development facility expires six months after practical completion but with an option to convert to an investment facility until 11 December 2020.
The Mall
The Mall debt facility comprises a fixed rate tranche of GBP233.3 million with interest at 1.86% plus margin and a
floating rate tranche, based on three month LIBOR, of GBP146.5 million. The overall cost of this facility based on
rates at the end of 30 June 2016 was 3.47%. The debt matures in May 2019.
We are in advanced discussions with lenders to refinance the facility with the objectives of increasing maturity
to at least seven years, reducing the cost, increasing the quantum of debt available at the asset level to
efficiently fund future capex and obtaining greater flexibility (e.g. to substitute assets). We have made good
progress and, subject to co-ordinating with asset recycling and satisfactorily achieving our objectives, expect
to conclude the process in the second half of 2016.
The Marlowes, Hemel Hempstead
The Marlowes, Hemel Hempstead debt comprises a non-recourse loan facility of GBP26.9 million for five years
until January 2021 with two one year extensions available at the end of each of the first two years. The debt
has been 100% hedged for the seven year period using interest rate swaps which result in the overall cost of
the facility being 3.32%.
Group Revolving Credit Facility (RCF)
At 30 June 2016, the Group had GBP16.75 million drawn from a total available facility of GBP30.0 million. Interest on
the facility is charged at a margin of 3.0% per annum above LIBOR. A non-utilisation fee of 1.5% is payable.
The facility is available until 30 May 2019.
Covenants
The Group and its associates and joint ventures were compliant with their banking and debt covenants at
30 June 2016 with significant headroom on all covenant levels.
On The Mall debt facility, projected net rental income would need to fall by approximately 51% from current
levels to break the Projected Interest cover covenant. Headroom on the Loan to Value covenant represents
38% of the 30 June 2016 valuation, equivalent to approximately GBP315 million.
Going concern
As stated in note 2 to the condensed financial statements, the directors are satisfied that the Group has
sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months
from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the
consolidated financial statements.
Dividend
In keeping with its policy of distributing at least 90% of Operating Profit from the Company's Wholly-owned
assets, the Board is proposing an interim dividend of 1.62 pence per share, all of which will be paid as a
Property Income Distribution (PID). This represents an increase of 8% from the 2015 Interim dividend. A
Scrip dividend alternative may be offered.
The key dates in relation to the payment of the interim dividend are:
- Confirmation of ZAR equivalent dividend 26 September 2016
- Last day to trade on Johannesburg Stock Exchange (JSE) 27 September 2016
- Shares trade ex-dividend on the JSE 28 September 2016
- Shares trade ex-dividend on the London Stock Exchange (LSE) 29 September 2016
- Record date for LSE and JSE 30 September 2016
- Dividend payment date 27 October 2016
Note: if a scrip dividend alternative were to be offered, the deadline for submission of valid election forms will
be 30 September 2016 for shareholders on the South African register and 12 October 2016 for shareholders
on the UK register.
South African shareholders are advised that this dividend will be regarded as a foreign dividend. Further
details relating to Withholding Tax for shareholders on the South African register will be provided within the
announcement detailing the currency conversion rate on 26 September 2016. Share certificates on the South African
register may not be dematerialised or rematerialised between 28 September 2016 and 30 September 2016, both dates
inclusive. Transfers between the UK and South African registers may not take place between 26 September and
30 September 2016, both dates inclusive.
Characteristics of our assets
As discussed in the Property portfolio performance and Principal risks and uncertainties sections property
investment markets are currently subject to unusual levels of uncertainty predominantly due to the fall-out from
the result of the EU referendum. While it remains too early to predict what impact that this may have on future
valuations we are confident that the resilient characteristics of our assets, as outlined below, will help mitigate any
negative consequences and help them outperform the market as a whole.
Our portfolio characteristics:
- Easily accessible town centre locations;
- High footfall;
- Assets dominates the retail offer within strong catchments;
- London and South East bias;
- Diversified tenant mix underpinned by national operators with strong covenants;
- Affordable and sustainable rents – c 6% average rent to sales ratio(1); and
- Flexibility over future capex spend with commitments at 30 June 2016 less than 2% of portfolio value
but with significant opportunities to drive income growth at attractive 10%+ returns.
(1) Topped up rent over gross retailers' sales. Retailers' sales estimated using independent analysis, periodically updated on a rolling basis.
Outlook
We are likely to have to contend with political and economic uncertainty for some time to come. This may
have implications for both investment markets, as detailed above, and our operating environment.
Encouragingly, however, as markets have stabilised in recent weeks we are seeing increased opportunities to
recycle capital on terms which will enable us to crystallise attractive returns. Recycling will enable us to
take advantage of accretive investment opportunities, whilst having due regard to prudent balance sheet management.
Forward looking statements
This document contains certain statements that are neither reported financial results nor other historical information. These statements
are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materially from those expressed in
or implied by these statements. Many of these risks and uncertainties relate to factors that are beyond the Group's ability to control or
estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of
government regulators and other risk factors such as the Group's ability to continue to obtain financing to meet its liquidity needs, changes
in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions,
including inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance
on these forward-looking statements, which apply only as of the date of this document. The Group does not undertake any obligation to
publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document.
Information contained in this document relating to the Group should not be relied upon as a guide to future performance.
Principal risks and uncertainties
There are a number of risks and uncertainties which could have a significant impact on future performance and
could cause actual results to differ materially from expected or historical results. The Group carries out a
regular review of the major risks it faces and monitors the controls that have been put in place to mitigate them.
A detailed explanation of the principal risks and uncertainties was included on pages 32 to 36 of the Group's
2015 Annual Report. A further review was carried out for the 30 June 2016 half year. The principal risks to the
Group that were identified from this process are summarised below.
One risk has been added to the list of principal Group risks being that of property valuation reflecting the risk
that a lack of relevant comparable transactional evidence in the lead up to and since the EU referendum could
increase the level of subjectivity in property valuations and widen the range of possible outcomes. Otherwise it
was concluded that the nature of the Group's risks had not significantly changed in the last six months,
although the current level of economic and political uncertainty in the UK, most prominently due to the result of
the EU referendum, has seemingly increased the general risk profile. It was however considered that at this
point in time it remains too early to draw any long term conclusions.
Property risks:
- Property investment market risks - Weak economic conditions and poor sentiment in commercial real
estate markets may lead to low investor demand and a market pricing correction. Small changes in property
market yields can have a significant effect on property valuation and the impact of leverage could magnify the
effect on the Group's net assets.
- Impact of the economic environment (tenant risks) - Tenant insolvency or distress and a prolonged
downturn in tenant demand could put pressure on rent levels. Tenant failures and reduced tenant demand
could adversely affect rental income revenues, lease incentive costs, void costs, available cash and the value
of properties owned by the Group.
- Valuation risk - The risk that a lack of relevant transactional evidence makes property valuations
increasingly subjective and open to a wider range of possible outcomes.
- Threat from the internet - The trend towards online shopping may adversely impact footfall in shopping
centres and potentially reduce tenant demand for space and the levels of rents which can be achieved.
- Concentration and scale risks - By having a less diversified portfolio the business is more exposed to
specific tenants or types of tenant. Failures of such tenants could therefore have a significant impact on rental
income revenues impacting Operating Profit and property valuations.
- Competition risk – The threat to the Group's property assets of competing in town and out of town
retail and leisure schemes.
- Development risk – There is a risk that where capital expenditure and development projects are
undertaken, that delays and other issues may lead to increased cost and reputational damage. There is also
the risk that planned realisation of value is not achieved, for example if the property cannot subsequently be
sold for the anticipated amount or if tenants are not contracted on sufficiently attractive terms.
Funding and treasury risks:
- Liquidity and funding - Inability to fund the business or to refinance existing debt on economic terms
may result in the inability to meet financial obligations when due and put a limitation on financial and operational
flexibility. Cost of financing could be prohibitive in the future.
- Covenant compliance risks - Breach of any loan covenants could cause default on debt and possible
accelerated maturity. Unremedied breaches can trigger demand for immediate repayment of loans.
- Interest rate exposure risks - Exposure to rising or falling interest rates. If interest rates rise and are
unhedged, the cost of debt facilities can rise and ICR covenants could be broken. Hedging transactions used by
the Group to minimise interest rate risk may limit gains, result in losses or have other adverse consequences.
Other risks:
- Execution of business plan – the failure to execute the Group's business plan in line with internal and
external expectations could lead to potential loss of income or value and reputational damage, negatively
impacting investor market perception.
- Property acquisition/disposal strategy – The Group is exposed to risks around overpayment for
acquisitions and that acquisitions do not deliver the returns forecast. In addition, if the portfolio is not effectively
managed through the property cycle, with sales and deleveraging at the appropriate time, the Group is exposed
to risks in not being able to take advantage of other investment opportunities as they arise and the potential for
LTVs to move adversely, with adverse consequences for covenants and shareholder value.
- Tax risks - Changes in tax legislation or the interpretation of tax legislation or previous transactions
where the tax authorities disagree with the tax treatment adopted could result in tax related liabilities and other
losses arising.
- Regulation risks - Exposure to changes in existing or forthcoming property related or corporate
regulation could result in financial penalties or loss of business or credibility.
- Loss of key management - The Group's business is partially dependent on the skills of a small number
of key individuals. Loss of key individuals or an inability to attract new employees with the appropriate expertise
could reduce the effectiveness with which the Group conducts its business.
- Historical Transaction Risk – the risk of issues or liabilities emerging from historical transactions most
likely through warranties or indemnities provided in asset or business disposals.
The risks noted above do not comprise all those potentially faced by the Group and are not intended to be
presented in any order of priority. Additional risks and uncertainties currently unknown to the Group, or which
the Group currently deems immaterial, may also have an adverse effect on the financial condition or business
of the Group in the future. These issues are kept under constant review to allow the Group to react in an
appropriate and timely manner to help mitigate the impact of such risks.
Responsibility statement
The directors confirm that to the best of their knowledge:
- the condensed set of financial statements has been prepared in accordance with
IAS 34 "Interim Financial Reporting", as adopted by the European Union;
- the interim management report includes a fair review of the information required by DTR 4.2.7R
(indication of important events during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
- the interim management report includes a fair review of the information required by DTR 4.2.8R
(disclosure of related party transactions and changes therein).
By order of the Board
Hugh Scott-Barrett Charles Staveley
Chief Executive Group Finance Director
17 August 2016 17 August 2016
Independent review report to Capital & Regional plc
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2016 which comprises the condensed consolidated income
statement, the condensed consolidated statement of comprehensive income, the condensed consolidated
balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash
flow statement and related notes 1 to 16. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements
(UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to it in an independent review report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as
adopted by the European Union. The condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in
the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland)
2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by
the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of
making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical
and other review procedures. A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of
financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in
all material respects, in accordance with International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
17 August 2016
Condensed consolidated income statement
For the six months to 30 June 2016
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2016 2015 2015
Note GBPm GBPm GBPm
Continuing operations
Revenue 3b 43.9 40.0 80.7
Cost of sales (16.1) (14.6) (29.1)
Gross profit 27.8 25.4 51.6
Administrative costs (5.2) (5.4) (10.8)
Share of profit in associates and joint ventures 9a 1.9 1.3 7.8
(Loss)/gain on revaluation of investment properties 8a (10.3) 42.7 68.0
Other gains and losses 5 4.4 0.1 0.2
Profit on ordinary activities before financing 18.6 64.1 116.8
Finance income 0.2 0.3 0.7
Finance costs (11.6) (9.6) (19.9)
Profit before tax 7.2 54.8 97.6
Tax 6 - (0.2) -
Profit for the period from continuing operations 7.2 54.6 97.6
Discontinued operations
Profit for the period from discontinued operations - 2.4 2.4
Profit for the period 7.2 57.0 100.0
Continuing operations
Basic earnings per share 7 1.0p 7.8p 13.9p
Diluted earnings per share 7 1.0p 7.7p 13.7p
Continuing and discontinued operations
Basic earnings per share 7 1.0p 8.1p 14.3p
Diluted earnings per share 7 1.0p 8.1p 14.0p
Condensed consolidated statement of comprehensive income
For the six months to 30 June 2016
Unaudited Unaudited Audited
six months to six months to Year to
30 June 30 June 30 December
2016 2015 2015
GBPm GBPm GBPm
Profit for the period 7.2 57.0 100.0
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange differences previously taken to reserves realised in period - (1.6) (1.6)
Total items that that may be reclassified subsequently to profit or loss: - (1.6) (1.6)
Total comprehensive income for the period 7.2 55.4 98.4
The results for the current and preceding periods are fully attributable to equity shareholders.
Condensed consolidated balance sheet
At 30 June 2016
Unaudited Audited
30 June 30 December
2016 2015
Note GBPm GBPm
Non-current assets
Investment properties 8 929.8 870.0
Plant and equipment 0.8 0.6
Fixed asset investments 1.8 1.6
Receivables 15.1 15.9
Investment in associates 9b 15.6 15.9
Investment in joint ventures 9c 13.6 11.7
Total non-current assets 976.7 915.7
Current assets
Receivables 17.4 13.7
Cash and cash equivalents 10 28.5 49.9
Total current assets 45.9 63.6
Total assets 1,022.6 979.3
Current liabilities
Trade and other payables (35.5) (33.7)
Total current liabilities (35.5) (33.7)
Net current assets 10.4 29.9
Non-current liabilities
Bank loans 11 (418.6) (374.9)
Other payables (3.7) (2.1)
Obligations under finance leases (65.4) (65.4)
Total non-current liabilities (487.7) (442.4)
Total liabilities (523.2) (476.1)
Net assets 499.4 503.2
Equity
Share capital 7.0 7.0
Share premium 157.2 157.2
Other reserves 60.3 60.3
Capital redemption reserve 4.4 4.4
Own shares held (0.6) (0.6)
Retained earnings 271.1 274.9
Equity shareholders' funds 499.4 503.2
Basic net assets per share 13 GBP0.71 GBP0.72
EPRA triple net assets per share 13 GBP0.69 GBP0.70
EPRA net assets per share 13 GBP0.71 GBP0.71
Condensed consolidated statement of changes in equity
For the six months to 30 June 2016
Other reserves
Net
Foreign investment Capital Own
Share Share Merger currency hedging redemption shares Retained Total
capital premium reserve reserve reserve reserve held earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 30 December 2014 7.0 157.2 60.3 1.6 (0.4) 4.4 (0.6) 189.5 419.0
Profit for the period - - - - - - - 57.0 57.0
Other comprehensive loss
for the period - - - (1.6) - - - - (1.6)
Total comprehensive
income for the period - - - (1.6) - - - 57.0 55.4
Credit to equity for equity-
settled share-based
payments - - - - - - - 0.4 0.4
Dividends paid (note 16) - - - - - - - (4.2) (4.2)
Other movements - - - - 0.4 - - (0.5) (0.1)
Balance at 30 June 2015 7.0 157.2 60.3 - - 4.4 (0.6) 242.2 470.5
Profit for the period - - - - - - - 43.0 43.0
Other comprehensive loss
for the period - - - - - - - - -
Total comprehensive
income for the period - - - - - - - 43.0 43.0
Credit to equity for equity-
settled share-based
payments - - - - - - - 0.2 0.2
Dividends paid (note 16) - - - - - - - (10.5) (10.5)
Balance at 30 December 2015 7.0 157.2 60.3 - - 4.4 (0.6) 274.9 503.2
Profit for the period - - - - - - - 7.2 7.2
Other comprehensive loss
for the period - - - - - - - - -
Total comprehensive
income for the period - - - - - - - 7.2 7.2
Credit to equity for equity-
settled share-based
payments - - - - - - - 0.3 0.3
Dividends paid (note 16) - - - - - - - (11.3) (11.3)
Balance at 30 June 2016 7.0 157.2 60.3 - - 4.4 (0.6) 271.1 499.4
Condensed consolidated cash flow statement
For the six months to 30 June 2016
Unaudited Unaudited Audited
Six months Six months Year to
to 30 June to 30 June 30 December
2016 2015 2015
Note GBPm GBPm GBPm
Operating activities
Net cash from operations 12 21.5 6.3 29.9
Distributions received from associates/investments 0.5 - 0.2
Interest paid (7.1) (6.8) (13.4)
Interest received - 0.1 0.4
Income taxes received - 1.0 0.9
Cash flows from operating activities 14.9 0.6 18.0
Investing activities
Acquisition of The Marlowes, Hemel Hempstead (56.6) - -
Disposal of German joint venture - 42.3 42.3
Other disposals 0.4 - -
Purchase of plant and equipment (0.3) - (0.2)
Capital expenditure on investment properties (11.2) (4.8) (11.4)
Investment in joint ventures 9c - (5.5) (6.4)
Settlement of forward foreign exchange contract - 2.0 2.0
Cash flows from investing activities (67.7) 34.0 26.3
Financing activities
Dividends paid including withholding tax (11.4) (4.2) (13.2)
Bank loans drawn down 43.6 - -
Bank loans repaid (0.2) (23.4) (23.4)
Loan arrangement costs (0.6) - (0.4)
Cash flows from financing activities 31.4 (27.6) (37.0)
Net (decrease)/increase in cash and cash equivalents (21.4) 7.0 7.3
Cash and cash equivalents at the beginning of the period 49.9 42.6 42.6
Cash and cash equivalents at the end of the period 10 28.5 49.6 49.9
Notes to the condensed financial statements
For the six months to 30 June 2016
1 General information
The comparative information included for the year ended 30 December 2015 does not constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor has
reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
The Group's financial performance does not suffer materially from seasonal fluctuations.
2 Accounting policies
Basis of preparation
The annual financial statements of Capital & Regional plc are prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 "Interim
Financial Reporting" as adopted by the European Union.
The principal exchange rates used to translate foreign currency denominated amounts are:
Balance sheet: GBP1 = EUR1.210 (30 June 2015: GBP1 = EUR1.406; 31 December 2015: GBP1 = EUR1.355)
Income statement: GBP1 = EUR1.285 (30 June 2015: GBP1 = EUR1.367; 31 December 2015: GBP1 = EUR1.377).
The Half-Year Report was approved by the Board on 17 August 2016.
Going concern
The Group prepares cash flow and covenant compliance forecasts to demonstrate that it has adequate resources available to continue in
operation for the foreseeable future, being at least 12 months from the date of this report. In these forecasts the directors specifically
consider anticipated future market conditions and the Group's principal risks and uncertainties. Further information on the Group's financing
position is contained within the Financial Review with additional details of the Group's cash position and borrowing facilities provided in
notes 10 and 11 of the condensed financial statements.
In summary the directors believe that the Group and the Company have adequate resources to continue in operational existence for the
foreseeable future and accordingly continue to adopt the going concern basis in preparing the annual report and financial statements.
Change in accounting policies
The condensed consolidated interim financial information has been prepared on the basis of the accounting policies, significant judgements,
key assumptions and estimates as set out in the notes to the Group's annual financial statements for the year ended 30 December 2015.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
The following accounting standards or interpretations were effective for the period beginning 31 December 2015 and have been applied in
preparing these financial statements to the extent they are relevant to the preparation of financial information:
- IAS 19 'Defined benefit plans: employees contributions – amendments to IAS 19'
- Annual Improvements to the IFRSs 2010-2012 Cycle (various standards)
None of the standards above have impacted the Group's reporting.
The following accounting standards and interpretations which are relevant to the Group have been issued, but are not yet effective:
- IFRS 9 'Financial Instruments'
- IFRS 11 'Accounting for acquisitions of interests in joint operations – amendments to IFRS 11'
- IFRS 15 'Revenue from Contracts with Customers'
- IFRS 16 'Leases'
- IAS 1 'Disclosure initiative – amendments to IAS 1'
- IAS 27 (amendment) 'Equity Method in Separate Financial Statements'
- IFRS 10, IFRS 12 and IAS 28 (amendments) 'Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture'
- IAS 16 and IAS 38 (amendments) 'Clarification of Acceptable Methods of Depreciation and Amortisation'
- Annual Improvements to the IFRSs 2012-2014 Cycle (various standards)
The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the
Group in future periods except as follows:
- IFRS 9 will impact both the measurement and disclosures of financial instruments and is effective for the Group's year ending
30 December 2019. The Group has not yet completed its evaluation of the effect of the adoption.
- IFRS 15 does not apply to gross rental income, but does apply to service charge income, other fees and trading property disposals
and is effective for the Group's year ending 30 December 2019. The Group does not expect adoption of IFRS 15 to have a material
impact on the measurement of revenue recognition, but additional disclosures will be required with regards to the above sources of
income.
- IFRS 16 will result in the Group recognising on balance sheet assets it leases along with a corresponding liability. The primary
lease contracts that this will impact are the lease on the Group's head offices and the leases of the Snozone business on its
Castleford and Milton Keynes sites. In addition, IFRS 16 could have an indirect impact on the Group's business if it leads to a
change in occupier behaviour. Examples of this would be if its adoption results in tenants or potential tenants typically seeking
shorter lease terms and/or more prevalent use of turnover-related, as opposed to fixed, rents.
3 Operating segments
3a Operating segment performance
The Group's reportable segments under IFRS 8 are Wholly-owned assets, Other UK Shopping Centres, Snozone and Group/Central.
Wholly-owned assets consists of The Mall and The Marlowes Centre, Hemel Hempstead, from its acquisition on 5 February 2016. Other
UK Shopping Centres consists of the Group's interests in Kingfisher Limited Partnership (Redditch), and the Buttermarket Centre,
Ipswich, from its acquisition on 3 March 2015. Group/Central includes management fee income, Group overheads incurred by Capital &
Regional Property Management, Capital & Regional plc and other subsidiaries and the interest expense on the Group's central borrowing
facility.
The Group's profit on disposal from its Germany segment, recorded in the six months to 30 June 2015, has been classified as
Discontinued Operations.
Wholly-owned assets and Other UK Shopping Centres derive their revenue from the rental of investment properties. The Snozone and
Group/Central segments derive their revenue from the operation of indoor ski slopes and the management of property funds or schemes
respectively. The split of revenue between these classifications satisfies the requirement of IFRS 8 to report revenues from different
products and services. Depreciation and charges in respect of share-based payments represent the only significant non-cash expenses.
UK Shopping Centres
Wholly- Other UK
owned Shopping
assets Centres Snozone Group/Central Total
Six months to 30 June 2016 GBPm GBPm GBPm GBPm GBPm
Rental income from external sources 30.8 1.5 - - 32.3
Property and void costs (8.0) (0.5) - - (8.5)
Net rental income 22.8 1.0 - - 23.8
Interest income - - - 0.1 0.1
Interest expense (9.6) (0.6) - - (10.2)
Contribution 13.2 0.4 - 0.1 13.7
Snozone income/Management fees - - 5.4 3.9 9.3
Management expenses - - (4.3) (3.8) (8.1)
Depreciation - - (0.1) (0.1) (0.2)
Interest expense on central facility - - - (0.4) (0.4)
Variable overhead (excluding non-cash items) - - - (0.6) (0.6)
Operating Profit/(Loss) 13.2 0.4 1.0 (0.9) 13.7
Inter-segment eliminations 3.4 - - (3.4) -
Share-based payments - - - (0.3) (0.3)
Revaluation of properties (10.3) 3.3 - - (7.0)
Profit on disposal 0.6 - - 0.1 0.7
(Loss)/gain on financial instruments (1.6) (0.2) - - (1.8)
Other items - (1.6) - 3.5 1.9
Profit/(loss) before tax 5.3 1.9 1.0 (1.0) 7.2
Group Tax charge -
Profit after tax 7.2
Total assets 982.6 57.5 2.8 8.1 1,051.0
Total liabilities (501.8) (28.4) (1.1) (20.3) (551.6)
Net assets 480.8 29.1 1.7 (12.2) 499.4
UK Shopping Centres
Wholly- Other UK Total
owned Shopping Group/ Continuing Discontinued
assets Centres Snozone Central Operations Operations Total
Six months to 30 June 2015 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Rental income from external sources 28.3 1.5 - - 29.8 - 29.8
Property and void costs (7.5) (0.6) - - (8.1) - (8.1)
Net rental income 20.8 0.9 - - 21.7 - 21.7
Interest income - - - - - - -
Interest expense (8.9) (0.4) - - (9.3) - (9.3)
Contribution 11.9 0.5 - - 12.4 - 12.4
Snozone income/Management fees - - 5.4 3.3 8.7 - 8.7
Management expenses - - (4.3) (4.0) (8.3) - (8.3)
Depreciation - - (0.1) - (0.1) - (0.1)
Interest expense on central facility - - - (0.4) (0.4) - (0.4)
Variable overhead (excluding non-cash items) - - - (0.5) (0.5) - (0.5)
Operating Profit/(Loss) 11.9 0.5 1.0 (1.6) 11.8 - 11.8
Inter-segment eliminations 2.8 - - (2.8) - - -
Share-based payments - - - (0.5) (0.5) - (0.5)
Revaluation of properties 42.7 0.7 - - 43.4 - 43.4
Profit on disposal - - - - - 2.4 2.4
(Loss)/gain on financial instruments (0.1) 0.1 - - - - -
Other items - - - 0.1 0.1 - 0.1
Profit/(loss) before tax 57.3 1.3 1.0 (4.8) 54.8 2.4 57.2
Group Tax charge (0.2) - (0.2)
Profit after tax 54.6 2.4 57.0
Total assets 903.0 39.0 1.8 23.8 967.6 - 967.6
Total liabilities (475.8) (18.6) (1.3) (1.4) (497.1) - (497.1)
Net assets 427.2 20.4 0.5 22.4 470.5 - 470.5
UK Shopping Centres
Wholly- Other UK Total
owned Shopping Group/ Continuing Discontinued
assets Centres Snozone Central Operations Operations Total
Year to 30 December 2015 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Rental income from external sources 57.5 3.1 - - 60.6 - 60.6
Property and void costs (15.3) (1.1) - - (16.4) - (16.4)
Net rental income 42.2 2.0 - - 44.2 - 44.2
Interest income 0.3 - - 0.2 0.5 - 0.5
Interest expense (18.2) (0.8) - - (19.0) - (19.0)
Contribution 24.3 1.2 - 0.2 25.7 - 25.7
Snozone income/Management fees - - 10.3 6.1 16.4 - 16.4
Management expenses - - (8.8) (6.4) (15.2) - (15.2)
Depreciation - - (0.1) (0.1) (0.2) - (0.2)
Interest expense on central facility - - - (1.0) (1.0) - (1.0)
Variable overhead (excluding non-cash items) - - - (1.7) (1.7) - (1.7)
Operating Profit/(Loss) 24.3 1.2 1.4 (2.9) 24.0 - 24.0
Inter-segment eliminations 6.4 - - (6.4) - - -
Share-based payments - - - (0.6) (0.6) - (0.6)
Revaluation of properties 68.0 6.8 - - 74.8 - 74.8
Profit on disposal 0.1 - - - 0.1 2.4 2.5
Loss on financial instruments (0.8) - - - (0.8) - (0.8)
Other items - (0.2) - 0.3 0.1 - 0.1
Profit/(loss) before tax 98.0 7.8 1.4 (9.6) 97.6 2.4 100.0
Group Tax charge - - -
Profit after tax 97.6 2.4 100.0
Total assets 923.6 49.0 3.0 25.1 1,000.7 - 1,000.7
Total liabilities (471.4) (21.4) (1.7) (3.0) (497.5) - (497.5)
Net assets 452.2 27.6 1.3 22.1 503.2 - 503.2
3b Reconciliations of reportable revenue, assets and liabilities
Unaudited Unaudited Audited
Six months to Six months Year to
30 June 30 June 30 December
2016 2015 2015
Revenue Note GBPm GBPm GBPm
Rental income from external sources 3a 32.3 29.8 60.6
Service charge income 7.2 5.8 11.9
Management fees 3a 3.9 3.3 6.1
Snozone income 3a 5.4 5.4 10.3
Revenue for reportable segments 48.8 44.3 88.9
Elimination of inter-segment revenue (3.4) (2.8) (5.1)
Rental income earned by associates and joint ventures (1.5) (1.5) (3.1)
Revenue per consolidated income statement 43.9 40.0 80.7
Revenues during the year and in the preceding periods were solely derived from the UK.
Unaudited Unaudited Audited
Six months to Six months Year to
30 June 30 June 30 December
2016 2015 2015
Balance sheet Note GBPm GBPm GBPm
Total assets of reportable segments 3a 1,051.0 967.6 1,000.7
Inter-segment eliminations - (7.1) -
Adjustment for associates and joint ventures (28.4) (18.6) (21.4)
Group assets 1,022.6 941.9 979.3
Total liabilities of reportable segments 3a (551.6) (497.1) (497.5)
Inter-segment eliminations - 7.1 -
Adjustment for associates and joint ventures 28.4 18.6 21.4
Group liabilities (523.2) (471.4) (476.1)
Net assets by country
UK 499.2 470.4 503.1
Germany 0.2 0.1 0.1
Net assets by country 499.4 470.5 503.2
4 Revenue
Unaudited Unaudited Audited
Six months to Six months Year to
30 June 30 June 30 December
2016 2015 2015
Statutory Note GBPm GBPm GBPm
Gross rental income 25.8 23.7 47.7
Ancillary income 5.0 4.6 9.8
30.8 28.3 57.5
Service charge income 7.2 5.8 11.9
Management fees 0.5 0.5 1.0
Snozone income 3a 5.4 5.4 10.3
Revenue per consolidated income statement – continuing
operations 3b 43.9 40.0 80.7
Management fees represent revenue earned by Capital & Regional Plc and the Group's wholly-owned CRPM subsidiary. Fees charged
to The Mall have been eliminated on consolidation.
5 Other gains and losses
Other gains and losses in the period include GBP3.6 million of monies recovered through the holding of a share in the German Euro B-Note
junior loan instrument which had previously been fully impaired. The monies have been distributed following the sale of properties by the
liquidator of the underlying German LP4 portfolio.
6 Tax
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2016 2015 2015
Tax charge GBPm GBPm GBPm
UK corporation tax – continuing operations - 0.1 -
Adjustments in respect of prior years – continuing operations - 0.1 -
Total current tax charge - 0.2 -
Deferred tax - - -
Total tax charge - 0.2 -
Total tax charge– continuing operations - 0.2 -
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2016 20141 2014
Tax charge reconciliation GBPm GBPm GBPm
Profit before tax on continuing operations 7.2 54.8 97.6
Profit multiplied by the UK corporation tax rate of 20.00%
(30 June 2015: 20.25%, 30 December 2015: 20.25%) 1.4 11.1 19.8
REIT exempt income and gains (0.4) (12.5) (18.5)
Non-allowable expenses and non-taxable items (0.4) (2.2) -
Utilisation of tax losses 0.1 0.3 0.3
Tax on realised gains - 1.6 -
Unrealised gains on investment properties not taxable at the Group (0.7) (0.1) (1.5)
Temporary timing differences - 1.9 (0.1)
Adjustments in respect of prior years - 0.1 -
Total tax charge – continuing operations - 0.2 -
The UK corporation tax main rate was reduced to 20% with effect from 1 April 2015. The budget on 8 July 2015 announced a further phased
reduction in the UK corporation tax main rate whereby the rate is proposed to reduce to 18% by 1 April 2020. This proposal was
substantively enacted on 26 October 2015. Consequently the UK corporation tax rate at which deferred tax is booked in the financial
statements is 18% (2014: 20%). The budget on 16 March 2016 announced a further proposed reduction in the UK corporation tax main rate
to 17% by 1 April 2020 (previously 18% as noted above). However, until this proposal is substantively enacted, the rate at which deferred
tax is booked will remain at 18%. A deferred tax provision of £3.2 million (C&R share £1.6 million) has been recognised in relation to the
unrealised revaluation gain on the Buttermarket Ipswich but is not included within the Group tax charge as it is recorded within the joint
venture entity that is not consolidated (see Note 9e).
No deferred tax asset has been recognised in respect of temporary differences arising from investments or investments in associates and
interests in joint ventures of GBPnil (30 December 2015: GBPnil) as it is not certain that a deduction will be available when the asset crystallises.
The Group has GBP9.8 million (30 December 2015: GBP9.2 million) of unused revenue tax losses, all of which are in the UK. No deferred tax
asset has been recognised in respect of these losses (30 December 2015: GBPnil) owing to the unpredictability of future profit streams and
other reasons which may restrict their utilisation. The Group has unused capital losses of GBP30.3 million (30 December 2015: GBP30.4 million)
that are available for offset against future gains but, similarly, no deferred tax asset has been recognised in respect of these losses owing to
the unpredictability of future capital gains and other reasons which may restrict their utilisation. The losses do not have an expiry date.
7 Earnings per share
The European Public Real Estate Association ("EPRA") has issued recommendations for the calculation of earnings per share information
as shown in the following table:
Basic Diluted EPRA diluted
Earnings GBPm GBPm GBPm
Profit for the period from continuing operations 7.2 7.2 7.2
Revaluation of investment properties - - 7.0
Profit on disposal of investment properties (net of tax) - - (0.7)
Profit on Euro B-Note (Note 5) - - (3.6)
Movement in fair value of financial instruments (net of tax) - - 1.8
Deferred tax credit on capital allowances - - 1.7
Profit 7.2 7.2 13.4
Number of shares Million Million Million
Ordinary shares in issue 700.8 700.8 700.8
Own shares held (1.0) (1.0) (1.0)
Dilutive contingently issuable shares and share options 5.5 5.5
Weighted average number of shares for the purpose of earnings per share 699.8 705.3 705.3
Earnings per share – continuing operations Pence Pence Pence
Six months to 30 June 2016 (unaudited) 1.0 1.0 1.9
Six months to 30 June 2015 (unaudited) 7.8 7.7 1.6
Year to 30 December 2015 (audited) 13.9 13.7 3.3
Earnings per share – continuing and discontinued operations Pence Pence Pence
Six months to 30 June 2016 (unaudited) 1.0 1.0 1.9
Six months to 30 June 2015 (unaudited) 8.1 8.1 1.6
Year to 30 December 2015 (audited) 14.3 14.0 3.3
At the end of the period, the Group had 13.4 million (30 December 2015: 6.3 million) additional share options and contingently issuable
shares granted under share-based payment schemes that could potentially dilute basic earnings per share in the future but which have not
been included in the calculation because they are not dilutive or the performance conditions for vesting were not met based on the position
at 30 June 2016.
Headline earnings per share
Six months to Six months to Year to
30 June 2016 30 June 2015 30 December 2015
Basic Diluted Basic Diluted Basic Diluted
Profit (GBPm)
Profit for the period 7.2 7.2 57.0 57.0 100.0 100.0
Revaluation of investment properties 5.4 5.4 (43.4) (43.4) (74.8) (74.8)
Profit on disposal of investment properties (net of tax) (0.7) (0.7) (2.4) (2.4) (2.5) (2.5)
Profit on Euro B-Note (Note 5) (3.6) (3.6) - - - -
Headline earnings 8.3 8.3 11.2 11.2 22.7 22.7
Weighted average number of shares (m)
Ordinary shares in issue 700.8 700.8 700.8 700.8 700.8 700.8
Own shares held (1.0) (1.0) (1.0) (1.0) (1.0) (1.0)
Dilutive contingently issuable shares and share options - 5.5 - 5.8 - 12.6
699.8 705.3 699.8 705.6 699.8 712.4
Headline Earnings per share (pence) 1.2p 1.2p 1.6p 1.6p 3.2p 3.2p
8 Investment properties
8a Wholly-owned properties
Freehold Leasehold Total
investment investment property
properties properties assets
GBPm GBPm GBPm
Cost or valuation
At 30 December 2015 292.7 577.3 870.0
Acquired 56.6 - 56.6
Capital expenditure 5.2 8.3 13.5
Valuation deficit (5.9) (4.4) (10.3)
At 30 June 2016 348.6 581.2 929.8
8b Property assets summary
30 June 2016 30 December 2015
100% Group share 100% Group share
GBPm GBPm GBPm GBPm
Wholly-owned
Investment properties at fair value 882.1 882.1 822.7 822.7
Head leases treated as finance leases on investment properties 65.4 65.4 65.4 65.4
Unamortised tenant incentives on investment properties (17.7) (17.7) (18.1) (18.1)
IFRS Property Value 929.8 929.8 870.0 870.0
Associates
Investment properties at fair value 163.5 32.7 164.4 32.9
Unamortised tenant incentives on investment properties (4.1) (0.8) (4.1) (0.8)
IFRS Property Value 159.4 31.9 160.3 32.1
Joint Ventures
Investment properties at fair value 44.3 22.2 27.9 14.0
Unamortised tenant incentives on investment properties (1.2) (0.6) (0.7) (0.4)
IFRS Property Value 43.1 21.6 27.2 13.6
Total at property valuation 1,089.9 937.0 1,015.0 869.6
Total IFRS Property Value 1,132.3 983.3 1,057.5 915.7
8c Valuations
External valuations were carried out on all of the property assets detailed in the table above. The Group's share of these properties at fair
value was GBP937.0 million of GBP1,089.9 million (30 December 2015: GBP869.6 million of GBP1,015.0 million).
The valuations were carried out by independent qualified professional valuers from CBRE Limited, Cushman & Wakefield LLP and Knight
Frank LLP in accordance with RICS standards. These valuers are not connected with the Group and their fees are charged on a fixed basis
that is not dependent on the outcome of the valuations.
Real estate valuations are complex and derived from data that is not widely publicly available and involves a degree of judgement. For these
reasons, the valuations are classified as Level 3 in the fair value hierarchy as defined by IFRS 13. The valuations are sensitive to changes
in rent profile and yields.
Valuation uncertainty following the EU Referendum
Each of the valuers included within their valuations the following paragraphs highlighting the potential future impact on property values of the
result of the EU referendum.
Following the Referendum held on 23 June 2016 concerning the UK's membership of the EU, a decision was taken to exit. We are now in a
period of uncertainty in relation to many factors that impact the property investment and letting markets.
Since the Referendum date it has not been possible to gauge the effect of this decision by reference to transactions in the market
place. The probability of our opinion of value exactly coinciding with the price achieved, were there to be a sale, has reduced. We would,
therefore, recommend that the valuation is kept under regular review and that specific market advice is obtained should you wish to effect a
disposal.
9 Investment in associates and joint ventures
9a Share of results Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2016 2015 2015
Note GBPm GBPm GBPm
Share of results of associates 9b - 1.1 2.5
Share of results of joint ventures 9c 1.9 0.2 5.3
1.9 1.3 7.8
9b Investment in associates Unaudited Audited
Six months to Year to
30 June 30 December
2016 2015
Note GBPm GBPm
At the start of the period 15.9 13.6
Share of results of associates 9d - 2.5
Dividends and capital distributions received (0.3) (0.2)
At the end of the period 9d 15.6 15.9
The Group's only significant associate at 30 June 2016 and 30 December 2015 was its 20% interest in the Kingfisher Limited Partnership
which owns the Kingfisher Shopping Centre in Redditch. The Group exercises significant influence through its representation on the
General Partner board and through acting as the property and asset manager.
9c Investment in joint ventures
Unaudited Audited
Six months Year to
to 30 June 30 December
2016 2015
Note GBPm GBPm
At the start of the period 11.7 -
Investment in Buttermarket Ipswich Limited - 6.4
Share of results of joint ventures 9e 1.9 5.3
Dividends and capital distributions received - -
At the end of the period 9e 13.6 11.7
The Group's only significant joint venture as at 30 June 2016 and 30 December 2015 was its 50% interest in Buttermarket Ipswich Limited.
Buttermarket Ipswich Limited acquired the Buttermarket Centre, Ipswich on 3 March 2015.
9d Analysis of investment in associates
Unaudited Unaudited Audited
Six months Six months Year to
Other UK to 30 June to 30 June 30 December
Shopping 2016 2015 2015
Centres Total Total Total
Note GBPm GBPm GBPm GBPm
Income statement (100%)
Revenue – gross rent 5.8 5.8 6.0 11.9
Property and management expenses (0.9) (0.9) (1.1) (1.9)
Void costs (0.4) (0.4) (0.6) (1.1)
Net rent 4.5 4.5 4.3 8.9
Net interest payable (2.0) (2.0) (2.0) (4.1)
Contribution 2.5 2.5 2.3 4.8
Revaluation of investment properties (1.2) (1.2) 3.1 8.6
Fair value of interest rate swaps (0.9) (0.9) 0.4 0.2
Profit before tax 0.4 0.4 5.8 13.6
Tax (0.5) (0.5) - (1.0)
Profit after tax (100%) (0.1) (0.1) 5.8 12.6
Balance sheet (100%)
Investment properties 159.4 159.4 153.9 160.3
Other assets 10.8 10.8 11.3 12.2
Current liabilities (7.1) (7.1) (6.3) (7.6)
Non-current liabilities (85.1) (85.1) (85.0) (85.1)
Net assets (100%) 78.0 78.0 73.9 79.8
Income statement (Group share)
Revenue – gross rent 1.2 1.2 1.2 2.4
Property and management expenses (0.2) (0.2) (0.3) (0.4)
Void costs (0.1) (0.1) (0.1) (0.2)
Net rent 0.9 0.9 0.8 1.8
Net interest payable (0.4) (0.4) (0.4) (0.8)
Contribution 0.5 0.5 0.4 1.0
Revaluation of investment properties (0.2) (0.2) 0.6 1.7
Fair value of interest rate swaps (0.2) (0.2) 0.1 -
Profit before tax 0.1 0.1 1.1 2.7
Tax (0.1) (0.1) - (0.2)
Profit after tax (Group share) 9b - - 1.1 2.5
Balance sheet (Group share)
Investment properties 31.9 31.9 30.8 32.1
Other assets 2.1 2.1 2.2 2.4
Current liabilities (1.4) (1.4) (1.3) (1.5)
Non-current liabilities (17.0) (17.0) (17.0) (17.1)
Net assets (Group share) 9b 15.6 15.6 14.7 15.9
9e Analysis of investment in joint ventures(1)
Unaudited Unaudited Audited
Six months Six months Year to
Other UK to 30 June to 30 June 30 December
Shopping 2016 2015 2015(1)
Centres Total Total Total
Note GBPm GBPm GBPm GBPm
Income statement (100%)
Revenue – gross rent 0.8 0.8 0.6 1.5
Property and management expenses (0.4) (0.4) (0.4) (0.5)
Void costs (0.3) (0.3) - (0.6)
Net rent 0.1 0.1 0.2 0.4
Net interest payable (0.3) (0.3) - -
Contribution (0.2) (0.2) 0.2 0.4
Revaluation of investment properties 7.1 7.1 0.2 10.1
Profit on sale of investment properties - - - -
Fair value of interest rate swaps - - - -
Profit before tax 6.9 6.9 0.4 10.5
Tax (3.2) (3.2) - -
Profit after tax (100%) 3.7 3.7 0.4 10.5
Balance sheet (100%)
Investment properties 43.1 43.1 10.7 27.2
Other assets 3.9 3.9 1.3 1.7
Current liabilities (5.4) (5.4) (0.6) (1.8)
Non-current liabilities (14.6) (14.6) - (4.0)
Net assets (100%) 27.0 27.0 11.4 23.1
Income statement (Group share)
Revenue – gross rent 0.4 0.4 0.3 0.7
Property and management expenses (0.2) (0.2) (0.2) (0.2)
Void costs (0.1) (0.1) - (0.3)
Net rent 0.1 0.1 0.1 0.2
Net interest payable (0.2) (0.2) - -
Contribution (0.1) (0.1) 0.1 0.2
Revaluation of investment properties 3.6 3.6 0.1 5.1
Profit on sale of investment properties - - - -
Fair value of interest rate swaps - - - -
Profit before tax 3.5 3.5 0.2 5.3
Tax (1.6) (1.6) - -
Profit after tax (Group share) 9c 1.9 1.9 0.2 5.3
Balance sheet (Group share)
Investment properties 21.6 21.6 5.4 13.6
Other assets 2.0 2.0 0.6 0.9
Current liabilities (2.7) (2.7) (0.3) (0.8)
Non-current liabilities (7.3) (7.3) - (2.0)
Net assets (Group share) 9c 13.6 13.6 5.7 11.7
(1) The results of Buttermarket Ipswich Limited were included from the Group's acquisition on 3 March 2015.
10 Cash and cash equivalents
Unaudited Audited
30 June 30 December
2016 2015
GBPm GBPm
Cash at bank 20.4 41.9
Security disposals held in rent accounts 0.8 0.6
Other restricted balances 7.3 7.4
Total cash and cash equivalents 28.5 49.9
11 Borrowings
Summary of borrowings
The Group's borrowings are arranged to ensure an appropriate maturity profile and to maintain short term liquidity. There were no defaults
or other breaches of financial covenants that were not waived under any of the Group borrowings during the current year or the preceding year.
30 June 30 December
2016 2015
Borrowings at amortised cost GBPm GBPm
Secured
Fixed and swapped bank loans 260.2 233.3
Variable rate bank loans 146.5 146.7
Total secured borrowings 406.7 380.0
Unsecured
Variable rate bank loans 16.8 -
Total unsecured borrowings 16.8 -
Total borrowings before costs 423.5 380.0
Unamortised issue costs (4.9) (5.1)
Total borrowings after costs 418.6 374.9
Analysis of total borrowings after costs
Current - -
Non-current 418.6 374.9
Total borrowings after costs 418.6 374.9
During the period GBP26.9 million of new debt was drawn in respect of the acquisition of The Marlowes Centre, Hemel Hempstead.
The fair value of total borrowings before costs as at 30 June 2016 was GBP433.6 million (30 December 2015: GBP384.6 million).
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value. All of the
assets listed were classified as Level 2, as defined in note 1 to the financial statements for the year ended 30 December 2015. There were
no transfers between Levels in the year.
30 June 30 December
2016 2015
GBPm GBPm
Financial assets
Interest rate caps 0.1 0.5
Interest rate swaps (1.2) -
Foreign exchange forward contracts (0.3) -
(1.4) 0.5
12 Notes to the cash flow statement
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2016 2015 2015
GBPm GBPm GBPm
Profit for the period 7.2 57.0 100.0
Adjusted for:
Finance income – continuing and discontinued operations (0.2) (0.3) (0.7)
Finance expense – continuing and discontinued operations 11.6 9.6 19.9
Income tax expense – continuing operations - 0.2 -
Profit on disposal of German joint venture - (2.4) (2.4)
Loss/(profit) on revaluation of wholly-owned properties 10.3 (42.7) (68.0)
Share of profit in associates and joint ventures (1.9) (1.3) (7.8)
Other gains and losses (4.4) (0.1) (0.1)
Depreciation of other fixed assets 0.2 0.1 0.2
Decrease/(Increase) in receivables 0.1 (2.1) (0.8)
Decrease in payables (1.7) (12.2) (11.0)
Non-cash movement relating to share-based payments 0.3 0.5 0.6
Net cash from operations 21.5 6.3 29.9
13 Net assets per share
EPRA has issued recommended bases for the calculation of certain net assets per share information as shown in the following table:
Unaudited Audited
Unaudited 30 June 30 December
30 June 2016 2015 2015
Net Number Net assets Net assets per Net assets per
assets of shares per share share share
GBPm million GBP GBP GBP
Basic net assets 499.4 700.8 0.71 0.67 0.72
Own shares held - (1.0)
Dilutive contingently issuable shares and share options - 5.5
Fair value of fixed rate loans (net of tax) (10.1)
EPRA triple net assets 489.3 705.3 0.69 0.66 0.70
Exclude fair value of fixed rate loans (net of tax) 10.1
Exclude fair value of see-through interest rate derivatives 1.7
Exclude deferred tax on unrealised gains/capital allowances 1.5
EPRA net assets 502.6 705.3 0.71 0.67 0.71
The number of Ordinary shares issued and fully paid at 30 June 2016 was 700,752,626 unchanged from 30 December 2015 and
30 June 2015. There have been no changes to the number of shares from 30 June 2016 to the date of this announcement.
14 Return on equity
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2016 2015 2015
GBPm GBPm GBPm
Total comprehensive income attributable to equity shareholders 7.2 55.4 98.4
Opening equity shareholders' funds 503.2 419.0 419.0
Return on equity 1.4% 13.2% 23.5%
15 Related party transactions
There have been no material changes to, or material transactions with, related parties as described in note 31 of the annual audited
financial statements for the year ended 30 December 2015, except for:
Distributions received from related parties
During the period, the Group received cash distributions of GBP0.3 million from related parties as disclosed in notes 9b and 9c.
Management fee income from related parties
During the period, the Group received management fee income in the normal course of business of GBP0.4 million from related parties.
16 Dividends
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2016 2015 2015
GBPm GBPm GBPm
Final dividend per share for year ended 30 December 2014 of 0.60p - 4.2 4.2
Interim dividend per share paid for year ended 30 December 2015 of 1.50p - - 10.5
Final dividend per share for year ended 30 December 2015 of 1.62p 11.3 - -
Amounts recognised as distributions to equity holders in the period 11.3 4.2 14.7
Interim dividend per share for year ended 30 December 2016 of 1.62p(1) 11.3 - -
(1) In line with the requirements of IAS 10 – 'Events after the Reporting Period', this dividend has not been included as a liability in these
financial statements.
Glossary of terms
C&R is Capital & Regional plc, also referred to as the Group or the Net debt to property value is debt less cash and cash equivalents
Company divided by the property value.
CRPM is Capital & Regional Property Management Limited, a subsidiary Net interest is the Group's share, on a see-through basis, of the
of Capital & Regional plc, which earns management and performance interest payable less interest receivable of the Group and its
fees from The Mall and certain associates and joint ventures of the associates and joint ventures.
Group.
Net rent is the Group's share, on a see-through basis, of the rental
Contracted rent is passing rent and the first rent reserved under a lease income, less property and management costs (excluding
or unconditional agreement for lease but which is not yet payable by a performance fees) of the Group and its associates and joint
tenant. ventures.
Contribution is net rent less net interest, including unhedged foreign Nominal equivalent yield is a weighted average of the net initial
exchange movements. yield and reversionary yield and represents the return a property will
produce based upon the timing of the income received, assuming
Capital return is the change in value during the year for properties held rent is received annually in arrears on gross values including the
at the balance sheet date, after taking account of capital expenditure and prospective purchaser's costs.
exchange translation movements, calculated on a time weighted basis.
Passing rent is gross rent currently payable by tenants including
Debt is borrowings, excluding unamortised issue costs. car park profit but excluding income from non-trading
administrations and any assumed uplift from outstanding rent
EPRA earnings per share (EPS) is the profit / (loss) after tax excluding reviews.
gains on asset disposals and revaluations, movements in the fair value
of financial instruments, intangible asset movements and the capital Property under management is the valuation of properties for
allowance effects of IAS 12 "Income Taxes" where applicable, less tax which CRPM is the asset manager.
arising on these items, divided by the weighted average number of
shares in issue during the year excluding own shares held. Operating Profit is the total of Contribution from The Mall and the
Group's joint ventures and associates, the profit from Snozone and
EPRA net assets per share includes the dilutive effect of share-based property management fees less central costs (including interest
payments but ignores the fair value of derivatives, any deferred tax excluding non-cash charges in respect of share-based payments)
provisions on unrealised gains and capital allowances, any adjustment to before tax. Operating Profit excludes revaluation of properties, profit
the fair value of borrowings net of tax and any surplus on the fair value of or loss on disposal of properties or investments, gains or losses on
trading properties. financial instruments and exceptional one-off items. Results from
Discontinued Operations are included up until the point of disposal
EPRA triple net assets per share includes the dilutive effect of share- or reclassification as held for sale.
based payments and adjust all items to market value, including trading
properties and fixed rate debt. REIT – Real Estate Investment Trust.
Estimated rental value (ERV) is the Group's external valuers' opinion Return on equity is the total return, including revaluation gains and
as to the open market rent which, on the date of valuation, could losses, divided by opening equity plus time weighted additions to
reasonably be expected to be obtained on a new letting or rent review of and reductions in share capital, excluding share options exercised.
a unit or property.
Reversionary percentage is the percentage by which the ERV
ERV growth is the total growth in ERV on properties owned throughout exceeds the passing rent.
the year including growth due to development.
Reversionary yield is the anticipated yield to which the net initial
Gearing is the Group's debt as a percentage of net assets. See through yield will rise once the rent reaches the ERV.
gearing includes the Group's share of non-recourse debt in associates
and joint ventures. See-through balance sheet is the pro forma proportionately
consolidated balance sheet of the Group and its associates and joint
Interest rate cover (ICR) is the ratio of either (i) Operating Profit (before ventures.
interest, tax, depreciation and amortisation); or (ii) net rental income to
the interest charge. See-through income statement is the pro forma proportionately
consolidated income statement of the Group and its associates and
IPD is Investment Property Databank Limited, a company that produces joint ventures.
an independent benchmark of property returns.
SDLT is Stamp Duty Land Tax, a tax levied in the UK on the
Like for like figures exclude the impact of property purchases and sales purchase of an interest in land.
on year to year comparatives.
Total return is the Group's total recognised income or expense for
Loan to value (LTV) is the ratio of debt excluding fair value adjustments the year as set out in the consolidated statement of comprehensive
for debt and derivatives, to the fair value of properties (including income expressed as a percentage of opening equity shareholders'
adjustments for tenant incentives and head leases). funds.
Market value is an opinion of the best price at which the sale of an Total shareholder return (TSR) is a performance measure of the
interest in a property would complete unconditionally for cash Group's share price over time. It is calculated as the share price
consideration on the date of valuation as determined by the Group's movement from the beginning of the year to the end of the year plus
external or internal valuers. In accordance with usual practice, the dividends paid, divided by share price at the beginning of the year.
valuers report valuations net, after the deduction of the prospective
purchaser's costs, including stamp duty, agent and legal fees. Vacancy rate is the ERV of vacant properties expressed as a
percentage of the total ERV of the portfolio, excluding development
Net assets per share (NAV per share) are shareholders' funds divided properties, in line with EPRA's best practice recommendations.
by the number of shares held by shareholders at the year end, excluding
own shares held. Variable overhead includes discretionary bonuses and the costs of
awards to directors and employees made under the 2008 LTIP and
Net initial yield (NIY) is the annualised net rent generated by the SAYE schemes which are spread over the performance period.
portfolio expressed as a percentage of the portfolio valuation grossed up
for purchaser's costs.
Wholly-owned assets portfolio information
At 30 June 2016
Physical data
Number of properties 7
Number of lettable units 816
Lettable space (sq feet – '000s) 3,606
Valuation data
Properties at independent valuation (GBPm) 882.1
Adjustments for head leases and tenant incentives (GBPm) 47.7
Properties as shown in the financial statements (GBPm) 929.8
Revaluation in the period (GBPm) (10.3)
Initial yield (%) 6.0
Equivalent yield (%) 6.2
Property level return(1)(%) 2.1
Reversionary (%) 15.6
Loan to value ratio (%) 46.1
Net debt to value ratio (%) 44.0
Lease length (years)
Weighted average lease length to break (years) 7.1
Weighted average lease length to expiry (years) 8.4
Passing rent (GBPm) of leases expiring in:
Six months to 30 December 2016 7.4
Year to 30 December 2017 5.2
Three years to 30 December 2020 13.2
ERV (GBPm) of leases expiring in:
Six months to 30 December 2016 8.3
Year to 30 December 2017 6.3
Three years to 30 December 2020 13.7
Passing rent (GBPm) subject to review in:
Six months to 30 December 2016 4.1
Year to 30 December 2017 5.7
Three years to 30 December 2020 8.9
ERV (GBPm) of passing rent subject to review in:
Six months to 30 December 2016 4.0
Year to 30 December 2017 5.6
Three years to 30 December 2020 9.9
Rental Data
Contracted rent at period end (GBPm) 63.6
Passing rent at period end (GBPm) 59.2
ERV at period end (GBPm per annum) 68.5
Occupancy rate (%) 96.4
(1) On assets held throughout the period
Sponsor: Java Capital
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