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Capital & Regional plc - Half Year Results to 30 June 2017
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")
10 August 2017
Capital & Regional plc
Half Year Results to 30 June 2017
Capital & Regional plc (LSE: CAL), the UK focused REIT with a portfolio of dominant in-town community
shopping centres, today announces its half year results to 30 June 2017.
Lawrence Hutchings, Chief Executive, said: "This is a strong set of results which reflect that whilst
elements of the retail sector may face challenges, the continued strong occupier demand for our
centres as well as the local and convenient nature of our assets, which cater for the non-discretionary
and value-orientated needs of our shoppers, gives us great comfort over the security of our income.
This, allied with our proven track record of driving income and delivering results through selective but
significant capital expenditure investment, underpins the future growth potential of the business.
We also see opportunity to further enhance profitability by seeking greater efficiency in our operating
platform and streamlining our structure through various initiatives. Some of these are already delivering
tangible results and we are initially targeting annualised savings of at least GBP1.8 million by 2018,
equivalent to a c. 20% reduction in 2016 central costs.
"Reflecting the strong feeling of confidence in the future growth prospects of the business, the Board
has announced an Interim dividend of 1.73p, representing a 6.8% increase on the prior year. With
the second half of the year set to comparatively benefit from several major lettings coming on
stream and the timing of recent acquisitions and disposals we expect the Full Year 2017 Dividend
will be at the top end of our targeted growth range of at least 5% to 8% per annum."
Highlights:
Income growth underpins strong financial results and supports an increased dividend, with
further improvements expected in H2
- Adjusted Profits(1) up 6.6% to GBP14.5 million (June 2016: GBP13.6 million) setting the business
on track for its fourth consecutive year of Adjusted Profit growth
- IFRS Profit for the period of GBP12.1 million (June 2016: Loss of GBP4.4 million)
- Like-for-like(2) Net Rental Income up 0.5% despite the loss of H1 2016 BHS income, up 4.4%,
once adjusted for this
- 34 new lettings and renewals achieved at an average 21%(3) premium to previous rents and
an 8.4%(3) premium to ERV. Passing rent up 1.7% on a like-for-like basis
- Full period benefit of Ilford acquisition, and timing of Camberley sale in November 2016, will
strengthen comparative second half year-on-year performance
- Enhanced focus on cost efficiencies targeting annualised savings of at least c GBP1.8 million
by 2018
- Interim dividend increased by 6.8% to 1.73p per share (June 2016: 1.62p). Second half
improvements underpin target for total Full Year 2017 dividend at top end of the stated 5% to
8% per annum growth range
Capex investment and specialist asset management continue to drive performance
- GBP80 million Capex plan gathering further momentum with a number of significant
initiatives substantially completed during the period, including:
- Blackburn – Wilko opening in September 2017 from the refurbished former BHS unit
- Walthamstow – new units to Lidl, The Gym and Gökyüzü due to open in Q4 2017
- Wood Green – GBP6.4 million new Travelodge scheduled for Q3 2017 opening
- These lettings will bring GBP1.4 million of annualised rent on stream in H2 2017 from a total
capex spend of GBP11.6 million
- Planning applications to deliver leisure transformation at Hemel Hempstead and
Walthamstow extension submitted
- Strong occupier demand reflected in continued high occupancy at 95.5% (31 December
2016: 95.4%)
- 35.4 million shopper visits in first half of the year representing a modest 0.9% like-for-like(2) fall,
though once again significantly outperforming the national index which was -2.7%
Robust balance sheet with long term debt security
- Basic and EPRA NAV per share resilient, at 68p and 67p respectively (December 2016: both 68p)
- GBP30 million Revolving Credit Facility extended to January 2022, meaning all Group debt
has minimum tenure of 4.5 years. Weighted average debt maturity of 7.8 years(4)
- Cost of debt reduced to 3.25%(5) following GBP372.5 million January 2017 refinancing leading to
annual saving of c GBP0.5 million
6 months to Year to 6 months to
June 2017 Dec 2016 June 2016
Net Rental Income(6) GBP25.0m GBP50.4m GBP25.4m
Adjusted Profit(1) GBP14.5m GBP26.8m GBP13.6m
Adjusted Earnings per share(1) 2.06p 3.82p 1.94p
IFRS Profit/(Loss) for the period GBP12.1m GBP(4.4)m GBP7.2m
Total dividend per share 1.73p 3.39p 1.62p
Net Asset Value (NAV) per share 68p 68p 71p
EPRA NAV per share 67p 68p 71p
Group net debt(6,7) GBP403.1m GBP398.1m GBP403.1m
Net debt to property value(6,7) 46% 46% 46%
(1) Adjusted Profit is as defined in the Glossary. It incorporates profits from operating activities and excludes revaluation of properties and
financial instruments, gains or losses on disposal, exceptional items and other defined terms. A reconciliation of this, and Adjusted Earnings
per share, to the statutory result is provided in the Financial Review. EPRA figures and a reconciliation to EPRA EPS are shown in Note 7 to the
Financial Statements. The EPRA measures used throughout this report are industry best practice performance measures established by the European
Public Real Estate Association. They are defined in the Glossary to the Financial Statements.
(2) Like-for-like excludes the impact of property purchases and sales on year to year comparatives. Like-for-like footfall also excludes entrances
impacted by development work. A reconciliation of like-for-like Net Rental Income to total Net Rental Income for the period is provided in the Financial Review.
(3) For lettings and renewals (excluding development deals) with a term of five years or longer and which did not include a turnover element.
(4) As at 30 June 2017, adjusted for RCF extension completed on 3 August 2017 and assuming exercise of all extension options.
(5) Assuming RCF fully drawn.
(6) Wholly-owned assets
(7) December 2016 figures are proforma, adjusted for the refinancing of Mall assets completed on 4 January 2017, Ipswich disposal completed on
17 February 2017 and Ilford acquisition completed on 8 March 2017.
For further information:
Capital & Regional: Tel: +44(0)20 7932 8000
Lawrence Hutchings, Chief Executive
Charles Staveley, Group Finance Director
FTI Consulting: Tel: +44(0)20 3727 1000
Richard Sunderland Email: Capreg@fticonsulting.com
Claire Turvey
Notes to editors:
About Capital & Regional plc
Capital & Regional is a UK focused retail property REIT specialising in shopping centres that dominate their
catchment, serving the non-discretionary and value orientated needs of the local communities. It has a strong
track record of delivering value enhancing retail and leisure asset management opportunities across a
c. GBP1 billion portfolio of in-town shopping centres. Capital & Regional is listed on the main market of the
London Stock Exchange and has a secondary listing on the Johannesburg Stock Exchange.
Capital & Regional owns seven shopping centres in Blackburn, Hemel Hempstead, Ilford, Luton, Maidstone,
Walthamstow and Wood Green. It also has a 20% joint venture interest in the Kingfisher Centre in Redditch.
Capital & Regional manages these assets through its in-house expert property and asset management
platform.
For further information see www.capreg.com.
Forward looking statements
This document contains certain statements that are neither reported financial results nor other historical information. These statements
are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materially from those expressed in
or implied by these statements. Many of these risks and uncertainties relate to factors that are beyond the Group's ability to control or
estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of
government regulators and other risk factors such as the Group's ability to continue to obtain financing to meet its liquidity needs, changes
in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions,
including inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance
on these forward-looking statements, which apply only as of the date of this document. The Group does not undertake any obligation to
publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document.
Information contained in this document relating to the Group should not be relied upon as a guide to future performance.
Operating review
The core strength and expertise of Capital & Regional lies in its ability to create and deliver specialist asset
management improvements across its GBP1.0 billion portfolio of UK shopping centres, which is underpinned
by a strong London and South East bias. A key characteristic of our assets is their dominance in their locality
coupled with their ability to offer occupiers attractive, affordable and high footfall space which caters for the
non-discretionary and value-orientated needs of the local community.
Delivery of specialist asset management initiatives
In the first six months of the year we spent GBP7.8 million of the GBP80 million of capital expenditure
investment planned over 2017-2019. We expect the pace of investment to increase in the second half of the
year to approximately double this.
A number of significant initiatives have substantially completed during the period:
- At Blackburn the refurbished former BHS unit has been handed over to Wilko and will open in
September 2017. Sports Direct, also continues to trade from the unit, now via a direct lease.
- At Walthamstow we have successfully handed over units to Lidl and The Gym and both are due to
open in Q4. We have also commenced works to create a new Turkish restaurant for local
operator Gökyüzü, which has traded very successfully at our Wood Green centre for a number of
years, and two further retail units totalling 5,000 sq ft. All of the above have been created from the
former BHS store.
- At Wood Green the new 78 bedroom Travelodge is due to be handed over imminently and will open
for trade following a GBP6.4 million investment project.
The above units will deliver a combined annual rent of GBP1.4 million from a total Capex spend of
approximately GBP11.6 million. To date, the completed lettings of former BHS units have secured an
aggregate annual rent that is equivalent to 104% of the rent being paid by BHS when they ceased trading in
August 2016. This is with the two further retail units created from the space at Walthamstow and the whole
unit at Maidstone, where we are pursuing a number of alternative options, still to be let.
In April we submitted a planning application for the extension at Walthamstow, having completed a public
consultation which was very well received. Our plans include the addition of 90,000 sq ft of new retail and
leisure space and 470 new residential apartments. A development agreement is in place with the London
Borough of Waltham Forest, which remains supportive of our ambitions for the scheme, and we anticipate a
positive decision later in the year.
In Hemel Hempstead work has commenced to renew the atrium roof, the cost of which is being met by the
previous owner. In addition, our plans to transform the scheme are gathering pace with a planning application
submitted to create a leisure hub anchored by a cinema, for which heads of terms have been agreed with a
leading operator, and with up to six new restaurant units.
New lettings, renewals and rent reviews
There were 34 new lettings and renewals in the period at a combined average premium of 21%(1) to previous
passing rent and an 8.4%(1) premium to ERV.
6 months to
June 2017
New Lettings
Number of new lettings 22
Rent from new lettings (GBPm) GBP1.5m
Comparison to ERV(1) (%) +13.6%
Renewals settled
Renewals settled 12
Revised rent (GBPm) GBP0.5m
Comparison to ERV(1) (%) -3.1%
Combined new lettings and renewals
Comparison to previous rent(1) +21%
Comparison to ERV(1) +8.4%
Rent reviews
Reviews settled 13
Revised passing rent (GBPm) GBP1.9m
Uplift to previous rent (%) +1.8%
(1) For lettings and renewals (excluding development deals) with a term of five years or longer which do not include a turnover rent element.
At Walthamstow, in addition to the new Lidl letting, Smiggle has taken a 10 year lease on an 850 sq ft store.
At Luton, Kiko and Scotts have signed up to take a split of the former USC unit while KFC has taken a 10 year
lease in the new food court.
At Wood Green, Five Guys has taken a 3,750 sq ft unit on a 15 year term whilst at Blackburn significant five
year renewals include Superdrug, The Perfume Shop and Thorntons. Superdrug has also signed a new 10
year letting in Maidstone.
The outperformance of new lettings versus ERV demonstrates the affordability and attractiveness of our
schemes to occupiers and this evidence will be supportive of rental tones in the future. Whilst lease renewals
were settled at a little below ERV this reflects what has become a growing trend in renewal discussions of
tenants seeking a lower headline rent rather than rent free incentives. The net effective rent achieved,
assuming that all renewals in the first half were for a five year term was, at 97.3% of ERV, 1.8% higher than
assumed by the Group's valuers.
Since 30 June 2017 the positive letting momentum has continued with Superdrug and Aldo both renewing at
Wood Green, Boots renewing at Luton and Maidstone, as well as new lettings to Republic at Luton and Card
Factory at Ilford.
Rental income and occupancy
Like for like excluding The Exchange, Ilford 30 June 2017 30 December 2016 30 June 2016
Contracted rent (GBPm) 57.8 57.5 57.2
Passing rent (GBPm) 53.9 53.0 53.1
Occupancy(%) 95.6 95.4 96.4
The GBP0.6 million year-on-year increase in contracted rent represents an excellent performance given the
loss of GBP1.0 million of rent in the second half of 2016 as a consequence of the BHS administration.
At 30 June 2017 there was GBP2.5 million of contracted rent where the tenant is in a rent free period; of this
GBP1.8 million will convert to passing rent this year. There is a further GBP1.5 million of committed
transactions where works are being undertaken prior to the handover of the units to tenants.
Occupancy has increased from December 2016 despite the seasonal impact of Christmas trading. The fall in
year-on-year occupancy of 0.8% is driven primarily by the impact of the BHS store at Maidstone.
Administrations
6 months to 12 months to 6 months to
June 2017 December 2016(1) June 2016(1)
Administrations (units) 11 18 12
Passing rent of administrations (GBPm) 0.5 2.4 1.9
(1) Comparatives exclude the impact of The Mall, Camberley which was disposed of in November 2016.
The number of administrations is broadly in line with 2016, but the value is much reduced owing to the impact
of BHS last year. The most significant insolvency was Blue Inc involving five units with a total rent of
GBP0.3 million. As at 30 June 2017 three of the 11 units affected by administration had been re-let and two, with a
combined rent of GBP0.3 million, were continuing to trade as usual.
Operational performance
There were 35.4 million visits to our centres in the first half of the year. While this represented a slight like-for-
like decrease of 0.9%(1), we significantly outperformed the national index which declined by 2.7%. Footfall in
July was down 0.4%(1) year on year compared to the national index at -2.7%. Car Park usage has been stable
and car park income, at GBP4.7 million, is up 11% on a like-for-like basis.
Our C&R Trade Index showed retailers' sales in our schemes up 0.3% for the six months, with June up 1.7%.
Our Collect+ service continues to expand with in excess of 20,000 packages handled in the first half, an
increase of 34% year on year.
(1) Like for like excluding The Exchange Centre, Ilford and entrances impacted by development work.
Other assets and operations
The Kingfisher Centre, Redditch (C&R ownership 20%)
The former BHS unit was re-let during the period to The Range which opened in July 2017. Other significant
lettings include Delightful Desserts and Shake Dog Red although the scheme was impacted by the
insolvencies of 99p Stores and Linens Direct as well as the closure of Argos. The property was valued at
GBP147.0 million, reflecting a net initial yield of 6.50%. Capital expenditure in the period was GBP0.4 million.
Snozone
Snozone enjoyed another successful trading period with revenues increasing to GBP5.5 million and profit to just
over GBP1.0 million. The development of initiatives including SnoAcademy and the Disability Snowschool have
supplemented Snozone's core offering and helped contribute to the strong financial performance. The
operational expertise of Snozone is also regularly utilised to assist our property business, particularly with regard
to initiatives involving the leisure sector.
FINANCIAL REVIEW
Six months to Year to Six months to
Wholly-owned assets June 2017 Dec 2016 June 2016
Profitability
Net Rental Income (NRI)(1) GBP25.0m GBP50.4m GBP25.4m
Adjusted Profit(2) GBP14.5m GBP26.8m GBP13.6m
Adjusted Earnings per share 2.06p 3.82p 1.94p
IFRS Profit/(Loss) for the period GBP12.1m GBP(4.4)m GBP7.2m
EPRA cost ratio (excluding vacancy costs) 25.3% 27.4% 26.4%
Net Administrative Expenses to Gross Rent 12.1% 13.6% 12.7%
Investment returns
Net Asset Value (NAV) per share 68p 68p 71p
EPRA NAV per share 67p 68p 71p
Dividend per share 1.73p 3.39p 1.62p
Dividend pay-out 84.0% 88.7% 83.5%
Return on equity 2.5% (0.9)% 1.4%
Financing(3)
Group net debt GBP403.1m GBP398.1m GBP403.1m
Group net debt to property value 46% 46% 46%
Average maturity of Group debt(4) 7.8 years 8.0 years 3.1 years
Cost of Group debt(5) 3.25% 3.25% 3.46%
(1) Wholly-owned assets.
(2) Adjusted Profit is as defined in the Glossary. It incorporates profits from operating activities and excludes revaluation of properties and
financial instruments, gains or losses on disposal, exceptional items and other defined terms. A reconciliation to the statutory result is
provided below. EPRA figures and a reconciliation to EPRA EPS are shown in Note 7 to the Financial Statements.
(3) December 2016 comparative figures in this section are adjusted for the refinancing of Mall assets completed on 4 January 2017, Ipswich disposal
completed on 17 February 2017 and Ilford acquisition completed on 8 March 2017.
(4) 30 June 2017 adjusted to reflect RCF extensions completed on 3 August 2017. December 2016 figure is as at date of results (9 March 2017)
reflecting debt drawn on Ilford acquisition. Calculations assume exercise of all extension options.
(5) Assuming RCF fully drawn.
The above results are discussed on the following pages.
Profitability
Components of Adjusted Profit and reconciliation to IFRS Profit
Six months to Year to Six months to
Amounts in GBPm June 2017 December 2016 June 2016
Net Rental Income (NRI)
Wholly-owned assets (see analysis on next page) 25.0 50.4 25.4
Kingfisher, Redditch(1) 0.7 1.7 0.9
Buttermarket, Ipswich(2) - 0.5 0.1
25.7 52.6 26.4
Net interest (see analysis on page 11) (9.4) (20.3) (10.5)
Snozone profit (indoor ski operation) 1.0 1.4 1.0
Central operating costs net of external fees (2.7) (6.9) (3.2)
Tax (0.1) - (0.1)
Adjusted Profit 14.5 26.8 13.6
Adjusted Earnings per share (pence)(3) 2.1p 3.8p 1.9p
Reconciliation of Adjusted Profit to statutory result
Adjusted Profit 14.5 26.8 13.6
Property revaluation (including Deferred Tax) (2.8) (14.5) (8.6)
(Loss)/profit on disposals - (2.6) 4.3
Gain/(loss) on financial instruments 0.6 (2.5) (1.8)
Refinancing costs - (11.0) -
Other items(4) (0.2) (0.6) (0.3)
Profit/(loss) for the period 12.1 (4.4) 7.2
(1) See note 9d to the Financial Statements.
(2) See note 9e to the Financial Statements.
(3) EPRA figures and a reconciliation to EPRA EPS are shown in Note 7 to the Financial Statements.
(4) Includes GBP0.4 million for the non-cash accounting charge in respect of share-based payments
(Year to December 2016: GBP0.5 million, Six months to June 2016: GBP0.3 million)
Adjusted Profit increased by 6.6% on the prior year driven by an increase in like-for-like NRI, lower interest
costs following the refinancing of the Mall assets and a GBP0.5 million reduction in net central operating costs.
NRI fell on an absolute basis due to the timing of acquisitions and disposals, with the impact of the Camberley
and Ipswich sales not fully offset by the Ilford acquisition, which was purchased part way through the current
period, and the full period benefit of Hemel Hempstead which was purchased part way through the first half of
2016. Further details are provided in the wholly-owned NRI section below.
Net interest fell by GBP1.1 million compared to the prior year period due to the timing of acquisitions and
disposals and a lower average interest cost arising from the refinancing of the Mall assets and the new debt
drawn on Ilford.
Net central operating costs improved by GBP0.5 million compared to H1 2016. As the benefit of completed
and further cost initiatives continue to flow through we expect the full year rate of improvement to accelerate.
Wholly-owned assets net rental income (NRI)
Six months to Six months to
Amounts in GBPm June 2017 June 2016
Like for like excluding BHS 21.5 20.6 +4.4%
(Blackburn, Luton, Maidstone, Walthamstow, Wood Green)
Impact of BHS -0.3 +0.5
Like for like 21.2 21.1 +0.5%
(Blackburn, Luton, Maidstone, Walthamstow, Wood Green)
Hemel Hempstead – acquired February/March 2016 2.0 1.6
Camberley (sold November 2016) and other disposals - 2.7
Ilford – acquired 8 March 2017 1.8 -
Net rental income (NRI) 25.0 25.4
Like-for-like NRI growth was 0.5%, despite the net impact of GBP0.8 million from the loss of the three BHS
units which ceased trading in August 2016. Excluding this it was 4.4%. The openings of the new Wilko in
Blackburn, and Lidl and The Gym at Walthamstow, created from the former BHS space, will drive NRI growth
in the second half of the year, together with the new Travelodge at Wood Green.
Net Asset Value (NAV)
NAV at GBP481.1 million and EPRA NAV at GBP482.9 million increased marginally during the period
(December 2016: GBP477.6 million and GBP481.5 million respectively) with profit for the period offsetting the
payment of the Final 2016 Dividend. The valuation of the wholly-owned portfolio at 30 June 2017 was
GBP879.8 million, reflecting a net initial yield of 5.97%. This is in line with the 30 December 2016 valuation of
GBP794.1 million after allowing for capital expenditure in the period of GBP7.7 million and the GBP78.0 million
acquisition of The Exchange Centre, Ilford in March 2017, excluding acquisition costs of c GBP1.0 million.
On a per share basis Basic NAV was stable at 68p. EPRA NAV fell by 1p to 67p due to a slightly higher
number of dilutive shares and shares in issue.
Property portfolio valuation
Property at independent valuation 30 June 2017 30 December 2016
GBPm NIY % GBPm NIY %
Wholly-owned portfolio 879.8 5.97 794.1 6.01
Financing
Net interest on a see-through basis
Amounts in GBPm Six months Year to Six months
to 30 June 2017 30 December 2016 to 30 June 2016
Wholly-owned assets
Net Interest on loans 6.9 14.0 7.0
Amortisation of refinancing costs 0.4 1.4 0.8
Notional interest charge on head leases(1) 1.7 3.6 1.8
9.0 19.0 9.6
Kingfisher, Redditch 0.3 0.8 0.4
Buttermarket, Ipswich - 0.1 0.2
Central 0.1 0.4 0.3
Net Group interest 9.4 20.3 10.5
(1) Notional interest charge with offsetting opposite and materially equal credit within other property operating expenses.
Net interest fell by GBP1.1 million compared to the prior year period due to the timing of acquisitions and disposals
and the lower average cost of debt (3.25% at 30 June 2017 v 3.47% at 30 June 2016) arising from the refinancing of
the Mall assets that completed in January 2017 and the new GBP39 million of debt on the Ilford acquisition that was
fixed at an all-in rate of 2.76%.
Group debt
Average Duration
Debt(1) Cash(2) Net Loan to Net debt interest Fixed Duration to with
debt value(3) to value(3) rate loan expiry extensions
30 June 2017 GBPm GBPm GBPm % % % % Years Years
Four Mall assets 255.0 (9.1) 245.9 48% 46% 3.36 100 7.7 9.1
Luton 107.5 (8.6) 98.9 51% 47% 3.14 100 6.5 6.5
Hemel Hempstead 26.9 (1.2) 25.7 50% 48% 3.32 100 4.5 5.5
Ilford 39.0 (3.6) 35.4 49% 44% 2.76 100 6.7 6.7
Group RCF(4) - (2.8) (2.8) - - 3.33 - 4.6 4.6
On balance sheet debt 428.4 (25.3) 403.1 49% 46% 3.25 94 6.9 7.8
(1) Excluding unamortised issue costs.
(2) Excluding cash beneficially owned by tenants.
(3) Debt and net debt divided by investment property at valuation.
(4) At 30 June 2017, adjusted for RCF extension completed on 3 August 2017.
Our target range for net debt to property value remains 40%-50% with an intention to bring this to the lower
end of that range in the medium term.
Group Revolving Credit Facility (RCF)
The GBP30 million facility was extended on 3 August 2017 for a further three years such that it now matures
on 22 January 2022. Interest on the facility is charged at a margin of 3.0% per annum above LIBOR. A non-
utilisation fee of 1.5% is payable. No amount was drawn at 30 June 2017.
Covenants
The Group and its Redditch joint venture were compliant with their banking and debt covenants at
30 June 2017.
Going concern
As stated in note 2 to the condensed financial statements, the directors are satisfied that the Group has
sufficient resources to continue in operation for the foreseeable future, being a period of not less than
12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing
the consolidated financial statements.
Dividend
The Board is proposing an interim dividend of 1.73 pence per share, all of which will be paid as a Property
Income Distribution (PID). This represents an increase of 6.8% from the 2016 Interim dividend. A Scrip
dividend alternative may be offered.
The key dates in relation to the payment of the dividend are:
- Confirmation of ZAR equivalent dividend 26 September 2017
- Last day to trade on Johannesburg Stock Exchange (JSE) 3 October 2017
- Shares trade ex-dividend on the JSE 4 October 2017
- Shares trade ex-dividend on the London Stock Exchange (LSE) 5 October 2017
- Record date for LSE and JSE 6 October 2017
- Dividend payment date 26 October 2017
If a Scrip dividend alternative is offered the deadline for submission of valid election forms will be 6 October
2017. South African shareholders are advised that the dividend will be regarded as a foreign dividend.
Further details relating to Withholding Tax for shareholders on the South African register will be provided
within the announcement detailing the currency conversion rate on 26 September 2017. Share certificates on
the South African register may not be dematerialised or rematerialised between 4 October 2017 and 6 October
2017, both dates inclusive. Transfers between the UK and South African registers may not take place
between 26 September 2017 and 6 October 2017, both dates inclusive.
Outlook
Whilst elements of the retail sector may face challenges, the continued strong occupier demand for
our centres as well as the local and convenient nature of our assets, which cater for the non-discretionary and
value-orientated needs of our shoppers, gives us great comfort over the security of our income. This, allied
with our proven track record of driving income and delivering results through selective but significant capital
expenditure investment, underpins the future growth potential of the business.
Reflecting the strong feeling of confidence in the future growth prospects of the business, the Board has
announced an Interim dividend of 1.73p, representing a 6.8% increase on the prior year. With the second half
of the year set to comparatively benefit the timing of recent acquisitions and several major lettings coming on
stream we expect the Full Year 2017 Dividend will be at the top end of our targeted growth range of at least
5% to 8% per annum.
Principal risks and uncertainties
There are a number of risks and uncertainties which could have a significant impact on future performance and
could cause actual results to differ materially from expected or historical results. The Group carries out a
regular review of the major risks it faces and monitors the controls that have been put in place to mitigate them.
A detailed explanation of the principal risks and uncertainties was included on pages 28 to 31 of the Group's
2016 Annual Report. A further review was carried out for the 30 June 2017 half year. This review concluded
that the nature of the Group's risks had not significantly changed in the last six months and therefore the
principal risks to the Group remain those disclosed in the 2016 Annual Report. These have been summarised
below.
Property risks:
- Property investment market risks - Weak economic conditions and poor sentiment in commercial real
estate markets may lead to low investor demand and a market pricing correction. Small changes in property
market yields can have a significant effect on property valuation and the impact of leverage could magnify the
effect on the Group's net assets.
- Impact of the economic environment (tenant risks) - Tenant insolvency or distress and a prolonged
downturn in tenant demand could put pressure on rent levels. Tenant failures and reduced tenant demand
could adversely affect rental income revenues, lease incentive costs, void costs, available cash and the value
of properties owned by the Group.
- Valuation risk - The risk that a lack of relevant transactional evidence makes property valuations
increasingly subjective and open to a wider range of possible outcomes.
- Threat from the internet - The trend towards online shopping may adversely impact footfall in shopping
centres and potentially reduce tenant demand for space and the levels of rents which can be achieved.
- Concentration and scale risks - By having a less diversified portfolio the business is more exposed to
specific tenants or types of tenant. Failures of such tenants could therefore have a significant impact on rental
income revenues impacting Adjusted Profit and property valuations.
- Competition risk – The threat to the Group's property assets of competing in town and out of town
retail and leisure schemes.
- Business disruption from a major incident – The threat of a major incident, such as a terrorist attack,
impacting one of the Group's assets.
- Development risk – There is a risk that where capital expenditure and development projects are
undertaken, that delays and other issues may lead to increased cost and reputational damage. There is also
the risk that planned realisation of value is not achieved, for example if the property cannot subsequently be
sold for the anticipated amount or if tenants are not contracted on sufficiently attractive terms.
Funding and treasury risks:
- Liquidity and funding - Inability to fund the business or to refinance existing debt on economic terms
may result in the inability to meet financial obligations when due and put a limitation on financial and operational
flexibility. Cost of financing could be prohibitive in the future.
- Covenant compliance risks - Breach of any loan covenants could cause default on debt and possible
accelerated maturity. Unremedied breaches can trigger demand for immediate repayment of loans.
- Interest rate exposure risks - Exposure to rising or falling interest rates. If interest rates rise and are
unhedged, the cost of debt facilities can rise and ICR covenants could be broken. Hedging transactions used by
the Group to minimise interest rate risk may limit gains, result in losses or have other adverse consequences.
Other risks:
- Execution of business plan – the failure to execute the Group's business plan in line with internal and
external expectations could lead to potential loss of income or value and reputational damage, negatively
impacting investor market perception.
- Property acquisition/disposal strategy – The Group is exposed to risks around overpayment for
acquisitions and that acquisitions do not deliver the returns forecast. In addition, if the portfolio is not effectively
managed through the property cycle, with sales and deleveraging at the appropriate time, the Group is exposed
to risks in not being able to take advantage of other investment opportunities as they arise and the potential for
LTVs to move adversely, with adverse consequences for covenants and shareholder value.
- Tax risks - Changes in tax legislation or the interpretation of tax legislation or previous transactions
where the tax authorities disagree with the tax treatment adopted could result in tax related liabilities and other
losses arising.
- Regulation risks - Exposure to changes in existing or forthcoming property related or corporate
regulation could result in financial penalties or loss of business or credibility.
- Loss of key management - The Group's business is partially dependent on the skills of a small number
of key individuals. Loss of key individuals or an inability to attract new employees with the appropriate expertise
could reduce the effectiveness with which the Group conducts its business.
- Historical Transaction Risk – the risk of issues or liabilities emerging from historical transactions most
likely through warranties or indemnities provided in asset or business disposals.
The risks noted above do not comprise all those potentially faced by the Group and are not intended to be
presented in any order of priority. Additional risks and uncertainties currently unknown to the Group, or which
the Group currently deems immaterial, may also have an adverse effect on the financial condition or business
of the Group in the future. These issues are kept under constant review to allow the Group to react in an
appropriate and timely manner to help mitigate the impact of such risks.
Responsibility statement
The directors confirm that to the best of their knowledge:
- the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim
Financial Reporting", as adopted by the European Union;
- the interim management report includes a fair review of the information required by DTR 4.2.7R
(indication of important events during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
- the interim management report includes a fair review of the information required by DTR 4.2.8R
(disclosure of related party transactions and changes therein).
By order of the Board
Lawrence Hutchings Charles Staveley
Chief Executive Group Finance Director
9 August 2017 9 August 2017
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 2017 which comprises the
consolidated income statement, the consolidated balance sheet, the consolidated statement of
changes in equity, the consolidated cash flow statement and related notes 1 to 17. We have read
the other information contained in the half-yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been
undertaken so that we might state to the company those matters we are required to state to it in
an independent review report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the company, for our review work,
for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the half-yearly financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance
with IFRSs as adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial
statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements
(UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent
Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A
review of interim financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
condensed set of financial statements in the half-yearly financial report for the six months ended
30 June 2017 is not prepared, in all material respects, in accordance with International
Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
9 August 2017
Condensed consolidated income statement
For the six months to 30 June 2017
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2017 2016 2016
Note GBPm GBPm GBPm
Continuing operations
Revenue 3b 43.9 43.9 87.2
Cost of sales (16.6) (16.1) (32.5)
Gross profit 27.3 27.8 54.7
Administrative costs (4.8) (5.2) (10.9)
Share of (loss)/profit in associates and joint ventures 9a (1.1) 1.9 0.3
Loss on revaluation of investment properties 8a (1.3) (10.3) (14.2)
Other gains and losses 5 0.3 4.4 (1.8)
Profit on ordinary activities before financing 20.4 18.6 28.1
Finance income 0.8 0.2 0.4
Finance costs (9.1) (11.6) (33.0)
Profit before tax 12.1 7.2 (4.5)
Tax 6 - - 0.1
Profit/(loss) for the period 12.1 7.2 (4.4)
Basic earnings per share 7 1.7p 1.0p (0.6)p
Diluted earnings per share 7 1.7p 1.0p (0.6)p
EPRA basic earnings per share 7 2.0p 1.9p 3.7p
EPRA diluted earnings per share 7 2.0p 1.9p 3.7p
Condensed consolidated statement of comprehensive income
For the six months to 30 June 2017
Unaudited Unaudited Audited
six months to six months to Year to
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
Profit for the period 12.1 7.2 (4.4)
Other comprehensive income - - -
Total comprehensive income for the period 12.1 7.2 (4.4)
The results for the current and preceding periods are fully attributable to equity shareholders.
The EPRA measures used throughout this report are industry best practice performance measures established by the European Public Real
Estate Association. They are defined in the Glossary to the Financial Statements. EPRA Earnings and EPRA EPS are shown in Note 7 to
the Financial Statements. EPRA net assets and EPRA triple net assets are shown in Note 13 to the Financial Statements.
Condensed consolidated balance sheet
At 30 June 2017
Unaudited Audited
30 June 30 December
2017 2016
Note GBPm GBPm
Non-current assets
Investment properties 8 924.2 838.5
Plant and equipment 1.1 0.9
Fixed asset investments 2.0 1.9
Receivables 13.4 14.3
Investment in associates 9b 12.6 13.9
Total non-current assets 953.3 869.5
Current assets
Receivables 19.5 13.4
Cash and cash equivalents 10 31.1 49.1
Assets classified as held for sale - 13.9
Total current assets 50.6 76.4
Total assets 1,003.9 945.9
Current liabilities
Bank loans 11 - (334.6)
Trade and other payables (35.2) (41.3)
Liabilities directly associated with assets held for sale - (0.4)
Total current liabilities (35.2) (376.3)
Net current assets 15.4 (299.9)
Non-current liabilities
Bank loans 11 (422.2) (26.2)
Other payables (4.0) (4.4)
Obligations under finance leases (61.4) (61.4)
Total non-current liabilities (487.6) (92.0)
Total liabilities (522.8) (468.3)
Net assets 481.1 477.6
Equity
Share capital 16 7.1 7.0
Share premium 16 161.5 158.2
Other reserves 60.3 60.3
Capital redemption reserve 4.4 4.4
Own shares held (0.4) (0.4)
Retained earnings 248.2 248.1
Equity shareholders' funds 481.1 477.6
Basic net assets per share 13 GBP0.68 GBP0.68
EPRA triple net assets per share 13 GBP0.67 GBP0.67
EPRA net assets per share 13 GBP0.67 GBP0.68
Condensed consolidated statement of changes in equity
For the six months to 30 June 2017
Capital Own
Share Share Merger redemption shares Retained Total
capital premium reserve reserve held earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 30 December 2015 7.0 157.2 60.3 4.4 (0.6) 274.9 503.2
Profit for the period - - - - - 7.2 7.2
Other comprehensive loss for the
period - - - - - - -
Total comprehensive income
for the period - - - - - 7.2 7.2
Credit to equity for equity-settled
share-based payments - - - - - 0.3 0.3
Dividends paid (note 16) - - - - - (11.3) (11.3)
Balance at 30 June 2016
(unaudited) 7.0 157.2 60.3 4.4 (0.6) 271.1 499.4
Profit for the period - - - - - (11.6) (11.6)
Other comprehensive loss for the
period - - - - - - -
Total comprehensive income
for the period - - - - - (11.6) (11.6)
Credit to equity for equity-settled
share-based payments - - - - - 0.2 0.2
Dividends paid (note 16), net of
Scrip - - - - - (10.4) (10.4)
Shares issued, net of costs - 1.0 - - - (1.0) -
Other movements - - - - 0.2 (0.2) -
Balance at 30 December 2016 7.0 158.2 60.3 4.4 (0.4) 248.1 477.6
Profit for the period - - - - - 12.1 12.1
Other comprehensive loss for the
period - - - - - - -
Total comprehensive income
for the period - - - - - 12.1 12.1
Credit to equity for equity-settled
share-based payments - - - - - 0.4 0.4
Dividends paid (note 16) , net of
Scrip - - - - - (9.0) (9.0)
Shares issued, net of costs 0.1 3.3 - - - (3.4) -
Balance at 30 June 2017
(unaudited) 7.1 161.5 60.3 4.4 (0.4) 248.2 481.1
Condensed consolidated cash flow statement
For the six months to 30 June 2017
Unaudited Unaudited Audited
Six months Six months Year to
to 30 June to 30 June 30 December
2017 2016 2016
Note GBPm GBPm GBPm
Operating activities
Net cash from operations 12 19.8 21.5 41.1
Distributions received from associates/investments 0.7 0.5 4.7
Interest paid (6.7) (7.1) (14.6)
Interest received 0.1 - 0.1
Cash flows from operating activities 13.9 14.9 31.3
Investing activities
Acquisition of The Exchange, Ilford (79.0) - -
Acquisitions in Hemel Hempstead - (56.6) (56.6)
Disposal of Buttermarket, Ipswich 9.7 - -
Disposal of The Mall, Camberley - - 85.7
Other disposals - 0.4 0.7
Purchase of plant and equipment (0.3) (0.3) (0.5)
Capital expenditure on investment properties (6.8) (11.2) (20.6)
Cash flows from investing activities (76.4) (67.7) 8.7
Financing activities
Dividends paid (net of Scrip) including withholding tax (8.9) (11.4) (21.7)
Bank loans drawn down 401.5 43.6 26.9
Bank loans repaid (334.6) (0.2) (45.4)
Loan arrangement costs (13.5) (0.6) (0.6)
Cash flows from financing activities 44.5 31.4 (40.8)
Net (decrease)/increase in cash and cash equivalents (18.0) (21.4) (0.8)
Cash and cash equivalents at the beginning of the period 49.1 49.9 49.9
Cash and cash equivalents at the end of the period 10 31.1 28.5 49.1
Notes to the condensed financial statements
For the six months to 30 June 2017
1 General information
The comparative information included for the year ended 30 December 2016 does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies.
The auditor has reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not
contain a statement under section 498(2) or (3) of the Companies Act 2006.
The Group's financial performance does not suffer materially from seasonal fluctuations.
2 Accounting policies
Basis of preparation
The annual financial statements of Capital & Regional plc are prepared in accordance with IFRS as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 "Interim
Financial Reporting" as adopted by the European Union.
The principal exchange rates used to translate foreign currency denominated amounts are:
Balance sheet: GBP1 = EUR1.137 (30 June 2016: GBP1 = EUR1.210; 31 December 2016: GBP1 = EUR1.168)
Income statement: GBP1 = EUR1.162 (30 June 2016: GBP1 = EUR1.285; 31 December 2016: GBP1 = EUR1.224).
The Half-Year Report was approved by the Board on 9 August 2017.
Going concern
The Group prepares cash flow and covenant compliance forecasts to demonstrate that it has adequate resources available to continue in
operation for the foreseeable future, being at least 12 months from the date of this report. In these forecasts the directors specifically
consider anticipated future market conditions and the Group's principal risks and uncertainties. Further information on the Group's financing
position is contained within the Financial Review with additional details of the Group's cash position and borrowing facilities provided in
notes 10 and 11 of the condensed financial statements.
In summary the directors believe that the Group and the Company have adequate resources to continue in operational existence for the
foreseeable future and accordingly continue to adopt the going concern basis in preparing the annual report and financial statements.
Change in accounting policies
The condensed consolidated interim financial information has been prepared on the basis of the accounting policies, significant judgements,
key assumptions and estimates as set out in the notes to the Group's annual financial statements for the year ended 30 December 2016.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
The following accounting standards or interpretations were effective for the period beginning 31 December 2016 and have been applied in
preparing these financial statements to the extent they are relevant to the preparation of financial information:
- IFRS 11 'Accounting for acquisitions of interests in joint operations – amendments to IFRS 11'
- IAS 1 'Disclosure initiative – amendments to IAS 1'
- IAS 16 and IAS 38 (amendments) 'Clarification of Acceptable Methods of Depreciation and Amortisation'
- IAS 27 (amendment) 'Equity Method in Separate Financial Statements'
None of the standards above have impacted the Group's reporting.
A number of new standards and amendments to standards have been issued but are not yet effective for the Group. The most significant of
these, and their potential impact on the Group's accounting, are set out below:
- IFRS 15 Revenue from Contracts with Customers (effective for year ending 30 December 2019) - does not apply to gross rental
income, but does apply to service charge income, other fees and trading property disposals. The Group does not expect adoption of
IFRS 15 to have a material impact on the measurement of revenue recognition, but additional disclosures will be required with
regards to the above sources of income.
- IFRS 9 Financial Instruments (effective for year ending 30 December 2019) - will impact both the measurement and disclosures of
financial instruments. The Group has not yet completed its evaluation of the effect of the adoption but it may impact the
measurement and presentation of the Group's financial liabilities.
- IFRS 16 Leases (effective for year ending 30 December 2020) - will result in the Group recognising on balance sheet assets its
leases along with a corresponding liability. The primary lease contracts that this will impact are the lease on the Group's head
offices and the leases of the Snozone business for its Castleford and Milton Keynes operations. In addition, IFRS 16 could have an
indirect impact on the Group's business if it leads to a change in occupier behaviour. Examples of this would be if its adoption
results in tenants or potential tenants typically seeking shorter lease terms and/or more prevalent use of turnover-related, as
opposed to fixed rents.
3 Operating segments
3a Operating segment performance
The Group's reportable segments under IFRS 8 are Wholly-owned assets, Other UK Shopping Centres, Snozone and Group/Central.
Wholly-owned assets consists of the shopping centres at Blackburn, Hemel Hempstead, Ilford (from acquisition on 8 March 2017), Luton,
Maidstone, Walthamstow and Wood Green and, in the prior year periods, Camberley, until its disposal on 11 November 2016. Other UK
Shopping Centres consists of the Group's interests in Kingfisher Limited Partnership (Redditch) and, in the prior year, until its
reclassification as held for sale on 30 December 2016, Buttermarket Ipswich Limited. Group/Central includes management fee income,
Group overheads incurred by Capital & Regional Property Management, Capital & Regional plc and other subsidiaries and the interest
expense on the Group's central borrowing facility.
Wholly-owned assets and Other UK Shopping Centres derive their revenue from the rental of investment properties. The Snozone and
Group/Central segments derive their revenue from the operation of indoor ski slopes and the management of property funds or schemes
respectively. The split of revenue between these classifications satisfies the requirement of IFRS 8 to report revenues from different
products and services. Depreciation and charges in respect of share-based payments represent the only significant non-cash expenses.
UK Shopping Centres
Other UK
Shopping
Wholly- Centres
owned (Kingfisher
assets Redditch) Snozone Group/Central Total
Six months to 30 June 2017 GBPm GBPm GBPm GBPm GBPm
Rental income from external sources 30.9 1.1 - - 32.0
Property and void costs (5.9) (0.4) - - (6.3)
Net rental income 25.0 0.7 - - 25.7
Net interest expense (9.0) (0.3) - (0.1) (9.4)
Snozone income/Management fees(1) - - 5.5 1.1 6.6
Management expenses - - (4.4) (3.4) (7.8)
Investment income - - - 0.2 0.2
Depreciation - - (0.1) - (0.1)
Variable overhead (excluding non-cash items) - - - (0.6) (0.6)
Tax (charge)/credit - (0.1) - - (0.1)
Adjusted Profit 16.0 0.3 1.0 (2.8) 14.5
Revaluation of properties (1.3) (1.5) - - (2.8)
Profit on disposal - - - - -
(Loss)/gain on financial instruments 0.5 0.1 - - 0.6
Share-based payments (non-cash) - - - (0.4) (0.4)
Other items - - - 0.2 0.2
Profit after tax 15.2 (1.1) 1.0 (3.0) 12.1
Total assets 979.2 30.8 3.4 8.7 1,022.1
Total liabilities (516.8) (18.2) (1.7) (4.3) (541.0)
Net assets 462.4 12.6 1.7 4.4 481.1
(1) Asset management fees of GBP2.0 million charged from the Group's Capital & Regional Property Management entity to Wholly-owned
assets have been excluded from the table above.
3a Operating segment performance
UK Shopping Centres
Wholly- Other UK
owned Shopping
assets Centres(1) Snozone Group/Central Total
Six months to 30 June 2016 GBPm GBPm GBPm GBPm GBPm
Rental income from external sources 30.8 1.5 - - 32.3
Property and void costs (5.4) (0.5) - - (5.9)
Net rental income 25.4 1.0 - - 26.4
Net interest expense (9.6) (0.6) - (0.3) (10.5)
Snozone income/Management fees(2) - - 5.4 1.3 6.7
Management expenses - - (4.3) (3.8) (8.1)
Depreciation - - (0.1) (0.1) (0.2)
Variable overhead (excluding non-cash items) - - - (0.6) (0.6)
Tax (charge)/credit - (0.1) - - (0.1)
Adjusted Profit 15.8 0.3 1.0 (3.5) 13.6
Revaluation of properties (10.3) 3.3 - - (7.0)
Profit on disposal 0.6 - - 0.1 0.7
(Loss)/gain on financial instruments (1.6) (0.2) - - (1.8)
Share-based payments (non-cash) - - - (0.3) (0.3)
Other items - (1.5) - 3.5 2.0
Profit after tax 4.5 1.9 1.0 (0.2) 7.2
Total assets 982.6 57.5 2.8 8.1 1,051.0
Total liabilities (501.8) (28.4) (1.1) (20.3) (551.6)
Net assets 480.8 29.1 1.7 (12.2) 499.4
(1) Buttermarket Ipswich and Kingfisher Redditch.
(2) Asset management fees of GBP1.8 million charged internally from the Group's Capital & Regional Property Management entity to Wholly-
owned assets have been excluded from the table above which has also been restated to exclude other internal cost recharges.
3a Operating segment performance
UK Shopping Centres
Other UK
Wholly-owned Shopping
assets Centres(1) Snozone Group/Central Total
Year to 30 December 2016 GBPm GBPm GBPm GBPm GBPm
Rental income from external sources 62.0 3.4 - - 65.4
Property and void costs (11.6) (1.2) - - (12.8)
Net rental income 50.4 2.2 - - 52.6
Net interest expense (19.0) (0.9) - (0.4) (20.3)
Snozone income/Management fees(2) - - 10.2 2.4 12.6
Management expenses - - (8.7) (7.8) (16.5)
Investment income - - - 0.3 0.3
Depreciation - - (0.1) - (0.1)
Variable overhead (excluding non-cash
items) - - - (1.8) (1.8)
Tax (charge)/credit - (0.1) - 0.1 -
Adjusted Profit 31.4 1.2 1.4 (7.2) 26.8
Revaluation of properties (14.2) 1.2 - - (13.0)
Deferred tax on revaluation of properties - (1.5) - - (1.5)
Loss on disposal(3) (5.9) (0.6) - - (6.5)
Income from Euro B Note(4) - - - 3.9 3.9
Loss on financial instruments (2.5) - - - (2.5)
Refinancing costs(5) (11.0) - - - (11.0)
Share-based payments (non-cash) - - - (0.5) (0.5)
Other items - - - (0.1) (0.1)
Profit after tax (2.2) 0.3 1.4 (3.9) (4.4)
Total assets 885.9 32.1 4.0 42.1 964.1
Total liabilities (460.9) (18.2) (2.1) (5.3) (486.5)
Net assets 425.0 13.9(6) 1.9 36.8(6) 477.6
(1) Includes Buttermarket Ipswich and Kingfisher Redditch. For further information see Note 9.
(2) Asset management fees of GBP3.6 million charged from the Group's Capital & Regional Property Management entity to Wholly-owned
assets have been excluded from the table above.
(3) Includes GBP0.6 million impairment of Ipswich trading property recognised on reclassification as held for sale.
(4) GBP3.9 million of monies were received in 2016 through the holding of a share in the German Euro B-Note junior loan instrument which
had previously been fully impaired. The monies were distributed following the sale of properties by the liquidator of the underlying entities.
(5) Refinancing costs consist of those triggered by serving notice on the existing debt facility on five Mall assets on 28 December 2016. They
comprised GBP7.6 million of fixed rate loan redemption costs and the write off of the GBP3.4 million of financing costs that were
unamortised at 30 December 2016.
(6) Net assets of the Buttermarket Ipswich joint venture were included within Group following its reclassification as held for sale on
30 December 2016. The results for the year are reflected in the Other UK Shopping Centres column.
3b Reconciliations of reportable revenue, assets and liabilities
Unaudited Unaudited Audited
Six months to Six months Year to
30 June 30 June 30 December
2017 2016 2016
Revenue Note GBPm GBPm GBPm
Rental income from external sources 3a 32.0 32.3 65.4
Service charge income 7.1 7.2 14.0
Management fees 3a 1.1 1.3 2.4
Snozone income 3a 5.5 5.4 10.2
Revenue for reportable segments 45.7 46.2 92.0
Elimination of inter-segment revenue (0.7) (0.8) (1.4)
Rental income earned by associates and joint ventures (1.1) (1.5) (3.4)
Revenue per consolidated income statement 43.9 43.9 87.2
Revenues during the year and in the preceding periods were solely derived from the UK.
Unaudited Unaudited Audited
Six months to Six months Year to
30 June 30 June 30 December
2017 2016 2016
Balance sheet Note GBPm GBPm GBPm
Total assets of reportable segments 3a 1,022.1 1,051.0 964.1
Adjustment for associates and joint ventures (18.2) (28.4) (18.2)
Group assets 1,003.9 1,022.6 945.9
Total liabilities of reportable segments 3a (541.0) (551.6) (486.5)
Adjustment for associates and joint ventures 18.2 28.4 18.2
Group liabilities (522.8) (523.2) (468.3)
Net assets by country
UK 480.9 499.2 477.5
Germany 0.2 0.2 0.1
Net assets by country 481.1 499.4 477.6
4 Revenue
Unaudited Unaudited Audited
Six months to Six months Year to
30 June 30 June 30 December
2017 2016 2016
Statutory Note GBPm GBPm GBPm
Gross rental income 25.1 25.8 51.0
Ancillary income 5.8 5.0 11.0
30.8 30.8 62.0
Service charge income 7.1 7.2 14.0
External management fees 0.4 0.5 1.0
Snozone income 3a 5.5 5.4 10.2
Revenue per consolidated income statement – continuing
operations 3b 43.9 43.9 87.2
Management fees represent revenue earned by Capital & Regional Plc and the Group's wholly-owned CRPM subsidiary. Fees charged
to Wholly-owned assets have been eliminated on consolidation.
5 Other gains and losses
Other gains and losses in the prior year related primarily to losses on the sale of The Mall, Camberley of GBP6.3 million, partially offset by
GBP3.9 million recovered through the German Euro B-Note junior loan instrument, a GBP0.4 million profit on the sale of a unit in
Maidstone and a GBP0.2 million receipt related to a property disposed of in a prior year. The German Euro B-Note junior loan instrument
had previously been fully impaired. The GBP3.9 million was received following the sale of properties by the liquidator of the underlying
German portfolio. A further GBP0.3 million was received in the current period.
6 Tax
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2017 2016 2016
Tax charge GBPm GBPm GBPm
UK corporation tax - - -
Adjustments in respect of prior years - - (0.1)
Total current tax charge - - (0.1)
Deferred tax - - -
Total tax charge - - (0.1)
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2017 2016 2016
Tax charge reconciliation GBPm GBPm GBPm
Profit before tax on continuing operations 12.1 7.2 97.6
Profit multiplied by the UK corporation tax rate of 19.25% (30 June 2016
and 30 December 2016: 20%) 2.3 1.4 19.8
REIT exempt income and gains (2.5) (0.4) (18.5)
Non-allowable expenses and non-taxable items 0.2 (0.4) -
Utilisation of tax losses 0.1 0.1 0.3
Unrealised gains on investment properties not taxable at the Group - (0.7) (1.5)
Temporary timing differences - - (0.1)
Adjustments in respect of prior years (0.1) - -
Total tax charge – continuing operations - - -
The UK corporation tax main rate was reduced to 19% with effect from 1 April 2017. A further reduction in the rate of corporation tax to 17%
from 1 April 2020 was substantively enacted in Finance Act 2016. Consequently the UK corporation tax rate at which deferred tax is
booked in the financial statements is 17% (2016: 17%).
The Group has recognised a deferred tax asset of GBP0.1 million (30 December 2016: GBP0.1 million). No deferred tax asset has been
recognised in respect of temporary differences arising from investments or investments in associates or in joint ventures in the current or
prior years as it is not certain that a deduction will be available when the asset crystallises.
The Group has GBP14.1 million (30 December 2016: GBP13.9 million) of unused revenue tax losses, all of which are in the UK. No
deferred tax asset has been recognised in respect of these losses due to the unpredictability of future profit streams and other reasons
which may restrict the utilisation of the losses (30 December 2016: GBPnil). The Group has unused capital losses of GBP30.5 million
(30 December 2016: GBP30.5 million) that are available for offset against future gains but similarly no deferred tax has been recognised in
respect of these losses owing to the unpredictability of future capital gains and other reasons which may restrict the utilisation of the losses.
The losses do not have an expiry date.
7 Earnings per share
The European Public Real Estate Association ("EPRA") has issued recommendations for the calculation of earnings per share information
as shown in the following table:
Six months to 30 June 2017 Six months to 30 June 2016 Year to 30 December 2016
(unaudited) (unaudited) (audited)
Note Adjusted Adjusted Adjusted
Profit EPRA Profit Profit EPRA Profit Profit EPRA Profit
Profit (GBPm)
Profit/(loss) for the year 12.1 12.1 12.1 7.2 7.2 7.2 (4.4) (4.4) (4.4)
Revaluation loss/(gain) on
investment properties (net of tax) 3a - 2.8 2.8 - 8.6 8.6 - 14.5 14.5
(Profit)/loss on disposal of properties
(net of tax) 3a - - - - (0.7) (0.7) - 6.5 6.5
Income from German B Note - (0.3) (0.3) - (3.6) (3.6) - (3.9) (3.9)
Changes in fair value of financial
instruments 3a - (0.6) (0.6) - 1.8 1.8 - 2.5 2.5
Refinancing costs - - - - - - - 11.0 11.0
Share-based payments 3a - - 0.4 - - 0.3 - - 0.5
Other items - - 0.1 - - - - - 0.1
Profit 12.1 14.0 14.5 7.2 13.4 13.6 (4.4) 26.2 26.8
Earnings per share (pence) 1.7p 2.0p 2.1p 1.0p 1.9p 1.9p (0.6)p 3.7p 3.8p
Diluted earnings per share (pence) 1.7p 2.0p 2.0p 1.0p 1.9p 1.9p (0.6)p 3.7p 3.8p
None of the current or prior year earnings related to discontinued operations.
Weighted average number of shares Six months to 30 June Six months to 30 June Year to 30 December
(m) 2017 2016 2016
Ordinary shares in issue 703.9 700.8 701.0
Own shares held (0.6) (1.0) (0.6)
Basic 703.3 699.8 700.4
Dilutive contingently issuable shares
and share options 10.5 5.5 10.0
Diluted 713.8 705.3 710.4
At the end of the period, the Group had 13.6 million (30 December 2016: 11.9 million) additional share options and contingently issuable
shares granted under share-based payment schemes that could potentially dilute basic earnings per share in the future but which have not
been included in the calculation because they are not dilutive or the performance conditions for vesting were not met based on the position
at 30 June 2017.
Headline earnings per share
Six months to Six months to Year to
30 June 2017 30 June 2016 30 December 2016
Basic Diluted Basic Diluted Basic Diluted
Profit (GBPm)
Profit for the period 12.1 12.1 7.2 7.2 (4.4) (4.4)
Revaluation of investment properties (net of tax) 2.8 2.8 8.6 8.6 14.5 14.5
Profit on disposal of investment properties (net of tax) - - (0.7) (0.7) 6.5 6.5
Profit on German B Note (Note 5) (0.3) (0.3) (3.6) (3.6) (3.9) (3.9)
Headline earnings 14.6 14.6 11.5 11.5 12.7 12.7
Weighted average number of shares (m)
Ordinary shares in issue 703.9 703.9 700.8 700.8 701.0 701.0
Own shares held (0.6) (0.6) (1.0) (1.0) (0.6) (0.6)
Dilutive contingently issuable shares and share options - 10.5 - 5.5 10.0 10.0
713.8 713.8 699.8 705.3 710.4 710.4
Headline Earnings per share (pence) 2.1p 2.0p 1.6p 1.6p 1.8p 1.8p
8 Investment properties
8a Wholly-owned properties
Freehold Leasehold Total
investment investment property
properties properties assets
GBPm GBPm GBPm
Cost or valuation
At 30 December 2016 357.9 480.6 838.5
Acquired (The Exchange Centre, Ilford) 79.0 - 79.0
Capital expenditure 4.3 3.5 7.8
Valuation deficit(1) (2.9) 1.8 (1.1)
At 30 June 2017 438.3 485.9 924.2
(1) GBP1.3 million per Note 3a includes letting fee amortisation adjustment of GBP0.2 million.
Acquisition of the Exchange Centre, Ilford
On 8 March 2017 the Group completed the acquisition of The Exchange Centre, Ilford from a Meyer Bergman fund for GBP78 million,
reflecting a Net Initial Yield of 6.70%. Acquisitions costs were approximately GBP1 million. The acquisition, which comprised the purchase
of a holding company that owns the property was funded from the Group's existing cash resources as well as through a new seven year
debt facility of GBP39 million, secured on the asset, with DekaBank Deutsche Girozentrale.
8b Property assets summary
30 June 2017 30 December 2016
100% Group share 100% Group share
GBPm GBPm GBPm GBPm
Wholly-owned
Investment properties at fair value 887.8 879.8 794.1 794.1
Head leases treated as finance leases on investment properties 61.4 61.4 61.3 61.3
Unamortised tenant incentives on investment properties (17.0) (17.0) (16.9) (16.9)
IFRS Property Value 924.2 924.2 838.5 838.5
Associates
Investment properties at fair value 147.0 29.4 154.1 30.8
Unamortised tenant incentives on investment properties (4.3) (0.9) (4.1) (0.8)
IFRS Property Value 142.7 28.5 150.0 30.0
Total at property valuation 1,026.8 909.2 948.2 824.9
Total IFRS Property Value 1,066.9 952.7 988.5 868.5
8c Valuations
External valuations were carried out on all of the property assets detailed in the table above. The valuations at 30 June 2017 were carried
out by independent qualified professional valuers from CBRE Limited and Knight Frank LLP in accordance with RICS standards. These
valuers are not connected with the Group and their fees are charged on a fixed basis that is not dependent on the outcome of the valuations.
Real estate valuations are complex and derived from data that is not widely publicly available and involves a degree of judgement. For these
reasons, the valuations are classified as Level 3 in the fair value hierarchy as defined by IFRS 13. The valuations are sensitive to changes
in rent profile and yields.
9 Investment in associates and joint ventures
9a Share of results Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2017 2016 2016
Note GBPm GBPm GBPm
Share of results of associates 9b (1.1) - (1.5)
Share of results of joint ventures 9c 1.9 1.8
(1.1) 1.9 0.3
9b Investment in associates Unaudited Audited
Six months to Year to
30 June 30 December
2017 2016
Note GBPm GBPm
At the start of the period 13.9 15.9
Share of results of associates 9d (1.1) (1.5)
Dividends and capital distributions received (0.2) (0.5)
At the end of the period 9d 12.6 13.9
The Group's only significant associate at 30 June 2017 and 30 December 2016 was its 20% interest in the Kingfisher Limited Partnership
which owns the Kingfisher Shopping Centre in Redditch. The Group exercises significant influence through its representation on the
General Partner board and through acting as the property and asset manager.
As detailed in Note 17 the Kingfisher Limited Partnership refinanced its debt on 7 July 2017. The Group's net investment in the Partnership
is expected to reduce to approximately GBP7.8 million after allowing for its share of distributions and costs arising from this refinancing.
9c Investment in joint ventures
Unaudited Audited
Six months Year to
to 30 June 30 December
2017 2016
Note GBPm GBPm
At the start of the period - 11.7
Share of results of joint ventures 9e - 1.8
Reclassification of Buttermarket Centre, Ipswich as held for sale - (13.5)
At the end of the period 9e - -
9d Analysis of investment in associates
Six months Six months Year to
Other UK to 30 June to 30 June 30 December
Shopping 2017 2016 2016
Centres Total Total Total
Note GBPm GBPm GBPm GBPm
Income statement (100%)
Revenue – gross rent 5.6 5.6 5.8 11.5
Property and management expenses (1.2) (1.2) (0.9) (2.0)
Void costs (0.5) (0.5) (0.4) (1.0)
Net rent 3.9 3.9 4.5 8.5
Net interest payable (1.7) (1.7) (2.0) (3.8)
Contribution 2.2 2.2 2.5 4.7
Revaluation of investment properties (7.4) (7.4) (1.2) (11.8)
Fair value of interest rate swaps 0.4 0.4 (0.9) (0.2)
Profit before tax (4.8) (4.8) 0.4 (7.3)
Tax (0.4) (0.4) (0.5) (0.7)
Profit after tax (100%) (5.2) (5.2) (0.1) (8.0)
Balance sheet (100%)
Investment properties 142.7 142.7 159.4 150.0
Other assets 11.1 11.1 10.8 10.4
Current liabilities (83.9) (83.9) (7.1) (6.5)
Non-current liabilities (6.1) (6.1) (85.1) (84.0)
Net assets (100%) 63.8 63.8 78.0 69.9
Income statement (Group share)
Revenue – gross rent 1.1 1.1 1.2 2.3
Property and management expenses (0.3) (0.3) (0.2) (0.4)
Void costs (0.1) (0.1) (0.1) (0.2)
Net rent 0.7 0.7 0.9 1.7
Net interest payable (0.3) (0.3) (0.4) (0.8)
Contribution 0.4 0.4 0.5 0.9
Revaluation of investment properties (1.5) (1.5) (0.2) (2.3)
Fair value of interest rate swaps 0.1 0.1 (0.2) -
Profit before tax (1.0) (1.0) 0.1 (1.4)
Tax (0.1) (0.1) (0.1) (0.1)
Profit after tax (Group share) 9b (1.1) (1.1) - (1.5)
Balance sheet (Group share)
Investment properties 28.5 28.5 31.9 30.0
Other assets 2.2 2.2 2.1 2.1
Current liabilities (16.8) (16.8) (1.4) (1.4)
Non-current liabilities (1.3) (1.3) (17.0) (16.8)
Net assets (Group share) 9b 12.6 12.6 15.6 13.9
9e Analysis of investment in joint ventures
Six months Six months Year to
Other UK to 30 June to 30 June 30 December
Shopping 2017 2016(1) 2016
Centres Total Total Total
Note GBPm GBPm GBPm GBPm
Income statement (100%)
Revenue – gross rent - - 0.8 2.2
Property and management expenses - - (0.4) (0.7)
Void costs - - (0.3) (0.6)
Net rent - - 0.1 0.9
Net interest payable - - (0.3) (0.3)
Contribution - - (0.2) 0.6
Revaluation of investment properties - - 7.1 7.2
Profit on sale of investment properties - - - (2.9)
Fair value of interest rate swaps - - - (1.2)
Profit before tax - - 6.9 3.7
Tax - - (3.2) -
Profit after tax (100%) - - 3.7 3.7
Balance sheet (100%)
Investment properties - - 43.1 -
Other assets - - 3.9 -
Current liabilities - - (5.4) -
Non-current liabilities - - (14.6) -
Net assets (100%) - - 27.0 -
Income statement (Group share)
Revenue – gross rent - - 0.4 1.1
Property and management expenses - - (0.2) (0.3)
Void costs - - (0.1) (0.3)
Net rent - - 0.1 0.5
Net interest payable - - (0.2) (0.1)
Contribution - - (0.1) 0.4
Revaluation of investment properties - - 3.6 3.5
Profit on sale of investment properties - - - (1.5)
Fair value of interest rate swaps - - - (0.6)
Profit before tax - - 3.5 1.8
Tax - - (1.6) -
Profit after tax (Group share) 9c - - 1.9 1.8
Balance sheet (Group share)
Investment properties - - 21.6 -
Other assets - - 2.0 -
Current liabilities - - (2.7) -
Non-current liabilities - - (7.3) -
Net assets (Group share) 9c - - 13.6 -
(1) The Group's investment in Buttermarket Ipswich Limited was reclassified as held for sale at 30 December 2016. On reclassification
Management assessed the fair value of its share of the investment to be GBP13.9 million with the associated costs to sell the entity
expected to be GBP0.4 million and these amounts were shown on the balance sheet at year end.
10 Cash and cash equivalents
Unaudited Audited
30 June 30 December
2017 2016
GBPm GBPm
Cash at bank 25.3 45.8
Security disposals held in rent accounts 0.8 0.7
Other restricted balances 5.0 2.6
Total cash and cash equivalents 31.1 49.1
11 Borrowings
Summary of borrowings
The Group's borrowings are arranged to ensure an appropriate maturity profile and to maintain short term liquidity. There were no defaults
or other breaches of financial covenants that were not waived under any of the Group borrowings during the current year or the preceding
year.
30 June 30 December
2017 2016
Borrowings at amortised cost GBPm GBPm
Secured
Fixed and swapped bank loans 428.4 260.2
Variable rate bank loans - 101.3
Total secured borrowings before costs 428.4 361.5
Unamortised issue costs (6.2) (0.7)
Total borrowings after costs 422.2 360.8
Analysis of total borrowings after costs
Current - 334.6
Non-current 422.2 26.2
Total borrowings after costs 422.2 360.8
During the period GBP39.0 million of new debt was drawn in respect of the acquisition of The Exchange, Ilford, and GBP362.5 million in
respect of the refinancing of the Mall assets completed on 4 January 2017. See note 17a of the financial statements for the year ended
30 December 2016 for further details.
The fair value of total borrowings before costs as at 30 June 2017 was GBP429.0 million (30 December 2016: GBP363.9 million).
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value. All of the
assets listed were classified as Level 2, as defined in note 1 to the financial statements for the year ended 30 December 2016. There were
no transfers between Levels in the year.
30 June 30 December
2017 2016
GBPm GBPm
Interest rate caps - 0.1
Interest rate swaps (1.5) (2.1)
Foreign exchange forward contracts - -
(1.5) (2.0)
12 Notes to the cash flow statement
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
Profit/(loss) for the period 12.1 7.2 (4.4)
Adjusted for:
Finance income (0.8) (0.2) (0.4)
Finance expense 9.1 11.6 33.0
Income tax credit - - (0.1)
Loss on revaluation of wholly-owned properties 1.3 10.3 14.2
Share of loss/(profit) in associates and joint ventures 1.1 (1.9) (0.3)
Other gains and losses (0.3) (4.4) 1.8
Depreciation of other fixed assets 0.1 0.2 0.1
(Increase)/Decrease in receivables (5.2) 0.1 (0.1)
Increase/(Decrease) in payables 2.0 (1.7) (3.2)
Non-cash movement relating to share-based payments 0.4 0.3 0.5
Net cash from operations 19.8 21.5 41.1
13 Net assets per share
EPRA has issued recommended bases for the calculation of certain net assets per share information as shown in the following table:
Unaudited Audited
Unaudited 30 June 30 December
30 June 2017 2016 2016
Net Number Net assets Net assets per Net assets per
assets of shares per share share share
GBPm million GBP GBP GBP
Basic net assets 481.1 708.5 0.68 0.71 0.68
Own shares held (0.6)
Dilutive contingently issuable shares and share options 10.5
Fair value of fixed rate loans (net of tax) (0.6)
EPRA triple net assets 480.5 718.4 0.67 0.69 0.67
Exclude fair value of fixed rate loans (net of tax) 0.6
Exclude fair value of see-through interest rate derivatives 1.9
Exclude deferred tax on unrealised gains/capital allowances (0.1)
EPRA net assets 482.9 718.4 0.67 0.71 0.68
The number of Ordinary shares issued and fully paid at 30 June 2017 was 708,477,735 (30 December 2016: 702,342,500,
30 June 2016: 700,752,626). There have been no changes to the number of shares from 30 June 2017 to the date of this announcement.
14 Return on equity
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
Total comprehensive income attributable to equity shareholders 12.1 7.2 (4.4)
Opening equity shareholders' funds 477.6 503.2 503.4
Return on equity 2.5% 1.4% (0.9)%
15 Related party transactions
There have been no material changes to, or material transactions with, related parties as described in note 31 of the annual audited
financial statements for the year ended 30 December 2016, except for:
Distributions received from related parties
During the period, the Group received cash distributions of GBP0.2 million from related parties as disclosed in notes 9b.
Management fee income from related parties
During the period, the Group received management fee income in the normal course of business of GBP0.3 million from related parties.
16 Dividends
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
Final dividend per share for year ended 30 December 2015 of 1.62p - 11.3 11.3
Interim dividend per share for year ended 30 December 2016 of 1.62p - - 11.4
Final dividend per share for year ended 30 December 2016 of 1.77p 12.4 - -
Amounts recognised as distributions to equity holders in the period 12.4 11.3 22.7
Interim dividend per share for year ended 30 December 2017 of 1.73p(1) 12.3 - -
(1) In line with the requirements of IAS 10 – 'Events after the Reporting Period', this dividend has not been included as a liability in these
financial statements.
The Company issued 6,135,235 new ordinary shares on 16 May 2017 to shareholders who elected to receive their 2016 final dividend in
shares under the Company's Scrip dividend scheme. The value of the Scrip shares was calculated in accordance with the scheme rules at
56.48 pence. As a result the Company's share capital increased by GBP61,352 and share premium by GBP3,403,828.
17 Events after the balance sheet date
On 7 July 2017 the Kingfisher Limited Partnership refinanced its existing debt with a new GBP113 million package. The Group has a 20%
interest in the Partnership which owns the Kingfisher Redditch shopping centre. Part of the new financing is being used to fund a distribution to
the joint venture partners. The Group's share is expected to be around GBP4.6 million. The Group's net investment in the Kingfisher Limited
Partnership is expected to be approximately GBP7.8 million after allowing for the distribution and its share of refinancing costs.
Glossary of terms
Adjusted Profit is the total of Contribution from wholly-owned assets and the
Group's joint ventures and associates, the profit from Snozone and property
management fees less central costs (including interest excluding non-cash
charges in respect of share-based payments) after tax. Adjusted Profit excludes
revaluation of properties, profit or loss on disposal of properties or investments,
gains or losses on financial instruments and exceptional one-off items. Results
from Discontinued Operations are included up until the point of disposal or
reclassification as held for sale.
C&R is Capital & Regional plc, also referred to as the Group or the Company.
C&R Trade index is an internal retail tracker using data from approximately 300
retail units across C&R's shopping centre portfolio.
CRPM is Capital & Regional Property Management Limited, a subsidiary of
Capital & Regional plc, which earns management and performance fees from the
Mall assets and certain associates and joint ventures of the Group.
Contracted rent is passing rent and the first rent reserved under a lease or
unconditional agreement for lease but which is not yet payable by a tenant.
Contribution is net rent less net interest, including unhedged foreign exchange
movements.
Capital return is the change in market value during the year for properties held
at the balance sheet date, after taking account of capital expenditure calculated
on a time weighted basis.
Debt is borrowings, excluding unamortised issue costs.
Dividend pay-out is the ratio of dividend per share to Adjusted Earnings per share.
EPRA earnings per share (EPS) is the profit / (loss) after tax excluding gains on
asset disposals and revaluations, movements in the fair value of financial
instruments, intangible asset movements and the capital allowance effects of IAS
12 "Income Taxes" where applicable, less tax arising on these items, divided by
the weighted average number of shares in issue during the year excluding own
shares held.
EPRA net assets per share include the dilutive effect of share-based payments
but ignore the fair value of derivatives, any deferred tax provisions on unrealised
gains and capital allowances, any adjustment to the fair value of borrowings net
of tax and any surplus on the fair value of trading properties.
EPRA triple net assets per share include the dilutive effect of share-based
payments and adjust all items to market value, including trading properties and
fixed rate debt.
Estimated rental value (ERV) is the Group's external valuers' opinion as to 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 a unit or property.
ERV growth is the total growth in ERV on properties owned throughout the year
including growth due to development.
Gearing is the Group's debt as a percentage of net assets.
Interest rate cover (ICR) is the ratio of either (i) Adjusted Profit (before interest,
tax, depreciation and amortisation); or (ii) net rental income to the interest charge.
IPD is Investment Property Databank Limited, a company that produces an
independent benchmark of property returns.
Like-for-like figures, unless otherwise stated, exclude the impact of property
purchases and sales on year to year comparatives.
Loan to value (LTV) is the ratio of debt excluding fair value adjustments for debt
and derivatives, to the Market value of properties.
Market value is an opinion of the best price at which the sale of an interest in a
property would complete unconditionally for cash consideration on the date of
valuation as determined by the Group's external or internal valuers. In
accordance with usual practice, the valuers report valuations net, after the
deduction of the prospective purchaser's costs, including stamp duty, agent and
legal fees.
Net assets per share (NAV) are shareholders' funds divided by the number of
shares held by shareholders at the year end, excluding own shares held.
Net initial yield (NIY) is the annualised current rent, net of revenue
costs, topped-up for contractual uplifts, expressed as a percentage of
the capital valuation, after adding notional purchaser's costs.
Net debt to property value is debt less cash and cash equivalents
divided by the property value.
Net interest is the Group's share, on a see-through basis, of the
interest payable less interest receivable of the Group and its
associates and joint ventures.
Net rent is the Group's share, on a see-through basis, of the rental
income, less property and management costs (excluding performance
fees) of the Group and its associates and joint ventures.
Nominal equivalent yield is a weighted average of the net initial yield
and reversionary yield and represents the return a property will
produce based upon the timing of the income received, assuming rent
is received annually in arrears on gross values including the
prospective purchaser's costs.
Passing rent is gross rent currently payable by tenants including car
park profit but excluding income from non-trading administrations and
any assumed uplift from outstanding rent reviews.
Occupancy cost ratio The proportion of a retailer's sales compared
with the total cost of occupation being: rent, business rates, service
charge and insurance. Retailer sales are based on estimates by third
party consultants which are periodically updated and indexed using
relevant data from the C&R Trade Index.
Occupancy rate is the ERV of occupied properties expressed as a
percentage of the total ERV of the portfolio, excluding development
voids.
Rent to sales ratio is Contracted rent excluding car park income,
ancillary income and anchor stores expressed as a percentage of net
sales.
REIT – Real Estate Investment Trust.
Return on equity is the total return, including revaluation gains and
losses, divided by opening equity plus time weighted additions to and
reductions in share capital, excluding share options exercised.
Reversionary percentage is the percentage by which the ERV
exceeds the passing rent.
Reversionary yield is the anticipated yield to which the net initial yield
will rise once the rent reaches the ERV.
See-through balance sheet is the pro forma proportionately
consolidated balance sheet of the Group and its associates and joint
ventures.
See-through income statement is the pro forma proportionately
consolidated income statement of the Group and its associates and
joint ventures.
Temporary lettings are those lettings for one year or less.
Total Property return incorporates net rental income and Capital
return expressed as a percentage of the capital value employed
(opening market value plus capital expenditure) calculated on a time
weighted basis.
Total return is the Group's total recognised income or expense for the
year as set out in the consolidated statement of comprehensive
income expressed as a percentage of opening equity shareholders'
funds.
Total shareholder return (TSR) is a performance measure of the
Group's share price over time. It is calculated as the share price
movement from the beginning of the year to the end of the year plus
dividends paid, divided by share price at the beginning of the year.
Variable overhead includes discretionary bonuses and the costs
of awards to directors and employees made under the 2008 LTIP
and SAYE schemes which are spread over the performance
period.
EPRA performance measures
30 June 30 June 30 December
2017 2016 2016
EPRA earnings (GBPm) 14.0 13.4 26.2
EPRA earnings per share (diluted) 2.0p 1.9p 3.7p
EPRA net assets (GBPm) 482.9 502.6 481.5
EPRA net assets per share 67p 71p 68p
EPRA triple net assets (GBPm) 480.5 489.3 475.2
EPRA triple net assets per share 67p 69p 67p
EPRA Cost ratios
30 June 30 June 30 December
2017 2016 2016
GBPm GBPm GBPm
Cost of sales (adjusted for IFRS head lease differential) 16.8 16.4 33.0
Administrative costs 4.8 5.2 10.9
Service charge income (7.1) (7.2) (14.0)
Management fees (0.4) (0.5) (1.0)
Snozone (indoor ski operation) costs (4.5) (4.4) (8.8)
Share of joint venture & associate expenses 0.4 0.5 1.2
Less inclusive lease costs recovered through rent (0.9) (1.0) (1.9)
EPRA costs (including direct vacancy costs) 9.1 9.0 19.4
Direct vacancy costs (1.6) (1.2) (2.9)
EPRA costs (excluding direct vacancy costs) 7.5 7.8 16.5
Gross rental income 30.9 30.8 62.0
Less ground rent costs (1.5) (1.6) (3.1)
Share of joint venture & associate gross rental income less ground rent costs 1.1 1.5 3.4
Less inclusive lease costs recovered through rent (0.9) (1.0) (1.9)
Gross rental income 29.6 29.7 60.4
EPRA cost ratio (including direct vacancy costs) 30.7% 30.3% 32.2%
EPRA cost ratio (excluding vacancy costs) 25.3% 26.4% 27.4%
Wholly-owned assets portfolio information
At 30 June 2017
Physical data
Number of properties 7
Number of lettable units 769
Lettable space (sq feet – million) 4.2
Valuation data
Properties at independent valuation (GBPm) 879.8
Adjustments for head leases and tenant incentives (GBPm) 44.4
Properties as shown in the financial statements (GBPm) 924.2
Initial yield (%) 6.0
Equivalent yield (%) 6.3
Reversion (%) 13.0
Loan to value ratio (%) 49
Net debt to value ratio (%) 46
Lease length (years)
Weighted average lease length to break (years) 6.4
Weighted average lease length to expiry (years) 7.7
Passing rent (GBPm) of leases expiring in:
Six months to 30 December 2017 8.4
Year to 30 December 2018 3.2
Three years to 30 December 2021 14.3
ERV (GBPm) of leases expiring in:
Six months to 30 December 2017 8.3
Year to 30 December 2018 3.7
Three years to 30 December 2021 15.6
Passing rent (GBPm) subject to review in:
Six months to 30 December 2017 5.4
Year to 30 December 2018 3.0
Three years to 30 December 2021 9.6
ERV (GBPm) of passing rent subject to review in:
Six months to 30 December 2017 5.2
Year to 30 December 2018 3.0
Three years to 30 December 2021 10.6
Rental Data
Contracted rent at period end (GBPm) 63.8
Passing rent at period end (GBPm) 59.9
ERV at period end (GBPm per annum) 67.6
Occupancy rate (%) 95.5
JSE sponsor: Java Capital
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