Final Results
5 March 2014
Capital & Regional plc
Full Year Results to 30 December 2013
CAPITAL & REGIONAL RETURNS TO PROFIT AFTER YEAR OF STRATEGIC AND OPERATIONAL PROGRESS
Capital & Regional plc ("Capital & Regional", the "Group" or the "Company") today announces its full year results to 30 December 2013.
Highlights
Progress in execution of strategy
· Purchase of Mall Fund units during 2013, increasing Group's share from 20.15% to 29.26%
· Successful disposals of Jarman Fields, Hemel Hempstead (£8.5 million) and the Great Northern Warehouse in Manchester (£71.1 million), both non-core Leisure assets
· Sales completed of The Pavilions, Uxbridge and the Gracechurch Centre, Sutton Coldfield by The Mall Fund, reducing its 30 December 2013 LTV to 55% and thereby increasing options for CMBS refinancing
Financial
· Return to profitability with profit before tax of £9.3 million (2012: loss of £12.7 million)
· Recurring pre-tax profitP2 of £14.0 million (2012: £17.0 million) reflecting impact of disposals
· Increase in NAV and EPRA NAV per share to 54p and 56p (2012: 51p and 55p, respectively)
· Repayment of Group's on-balance sheet debt. Proforma see-through net debtP1 to property value fell to 52% compared to 55% at 2012 year end
· Refinancing of €141 million of German debt completed with a new three year facility
· Resumption of dividend payments with total 2013 dividend of 0.65p per share
Operational
· Combination of active asset management programme and attractive and affordable space led to:
o 56 new lettings, adding revenue of £5.0 million; and
o 31 lease renewals adding £1.5 million, at a combined 0.7% above ERV
· Strong retail occupancy across our UK shopping centres at 96.3% at 30 December 2013
· Footfall outperformed national benchmark by 1.2%
· Ongoing progress with redevelopment initiatives:
o Lincoln - phase two of £9 million redevelopment on schedule with 65% of redevelopment space by value already let
o Redditch - Hub leisure concept well advanced with new gym open for trade
Future priorities
· Deliver value from agreed £40 million asset management programme across core portfolio of eight UK shopping centres
· Accelerate realisation of value from the German portfolio and further disposals of other non-core assets to create shareholder value by strengthening our core UK Shopping Centre business
· Conclude refinancing of The Mall Fund CMBS, for which detailed negotiations are ongoing with a number of interested parties
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2013 |
2012 |
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Total shareholder return3 |
53.9% |
(9.5)% |
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Recurring pre-tax profitP2 |
£14.0m |
£17.0m |
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Profit/(loss) before tax |
£9.3m |
£(12.7)m |
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|
|
|
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NAV per share |
54p |
51p |
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EPRA NAV per share |
56p |
55p |
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|
|
|
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Proforma Group net debtP1 |
- |
13% |
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Proforma see through net debtP1 |
52% |
55% |
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|
|
|
1 P2013 adjusted for £8.4 million Hemel Hempstead net proceeds received in February 2014, 2012 adjusted for £30.6 million X-Leisure proceeds received in January 2013.
2 PAs defined in Note 1 to the financial statements.
3 Change in share price plus dividends paid in the year.
Commenting on the results, John Clare, Chairman, said:
"During the course of the year, the Group continued to make significant progress in the execution of its strategy and I am pleased to report that this was reflected by a 6% increase in NAV per share from 2012, a return to profitability, with profit before tax for the year of £9.3 million, and the resumption of dividend payments. With a much strengthened financial position, we will now be focusing our financial resources and management skills on investing in and actively managing a portfolio of dominant UK community shopping centres, building on our proven track record of recycling capital to consolidate our position as a leading UK retail property company."
Hugh Scott-Barrett, Chief Executive, added:
"We are now seeing a clear uptick in economic conditions which, in turn, has had a positive impact on retailer and consumer confidence. These factors, combined with a much improved investment market, are providing a very supportive background for our UK shopping centre business. We have benefited from an active programme of asset management during the year, which has enhanced our operating performance and valuations towards the end of 2013. We expect this trend to continue in 2014 and therefore look forward to making further progress in our drive to grow the Company and enhance value for investors."
For further information:
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Capital & Regional: |
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Hugh Scott-Barrett, Chief Executive |
Tel: 020 7932 8121 |
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Charles Staveley, Group Finance Director |
Tel: 020 7932 8000 |
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FTI Consulting: |
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Stephanie Highett Richard Sunderland Will Henderson Aleka Bhutiani |
Tel: 020 7831 3113 |
Notes to editors:
About Capital & Regional plc
Capital & Regional is a specialist property company with a strong track record of delivering value enhancing retail and leisure asset management opportunities across a £1.2 billion portfolio, primarily in town centre shopping centres.
Capital & Regional founded The Mall in conjunction with Aviva Investors. Capital & Regional acts as Property and Asset Manager for the Mall and holds 29.3% of this fund.
Capital & Regional & Ares Management (formerly known as AREA Property Partners) each hold a 50% interest in a German retail property portfolio which is managed by Garigal Asset Management GmbH, in which Capital & Regional holds a 30% interest.
Capital & Regional has a number of other joint ventures and wholly-owned properties. For further information see www.capreg.com
Chairman's Statement
Strategy
The Group's strategy is to focus its financial resources and management skills on investing in and actively managing a portfolio of dominant community shopping centres in the UK. The Group intends to build on its proven track record of recycling capital from non-core assets to strengthen its position as a leading UK retail property investment company.
Performance Overview
I am pleased to report an increase in Net Asset Value per share of 6% to 54p and a pre-tax profit of £9.3 million compared to a prior year loss of £12.7 million. The Group has also reported recurring profits of £14.0 million compared to £17.0 million in 2012. This is a robust performance in light of the sale of The Junction and X-Leisure businesses, which contributed recurring pre-tax profits of £2.7 million in 2012, and the loss of income resulting from the sale of three Mall assets in 2012 and 2013.
The performance is all the more encouraging as the operating environment remained challenging, with property values remaining flat or falling modestly across the shopping centre business, for much of the year.
In the fourth quarter of 2013, however, we saw a noticeable pick-up in investment market activity with property valuations in The Mall rising by 1%. This is a positive sign for our property values when combined with improving economic conditions and the resulting impact on consumer sentiment.
During the course of the year, the Group also made further significant progress in the execution of its strategy. The completion of the sale of the Great Northern Warehouse in Manchester for a headline price of £71.1 million and the agreement to sell Jarman Fields, Hemel Hempstead for £8.5 million enabled the Group to recycle the proceeds of these non-core leisure assets to increase its stake in The Mall in 2013 from 20.15% to 29.26%. The £29.3 million investment was made at an overall discount of 5% to year-end values. UK shopping centre activities in general and the Mall Fund in particular now form the core of our business.
Dividend
Our dividend policy links future payments to the Group's cash generating ability. In view of the Group's significantly improved financial position and in anticipation of The Mall's ability to recommence distributions, the Board took the decision to resume dividend payments after five years and pay an interim dividend of 0.25p per share. The Board is now recommending a second interim dividend of 0.40p per share making a total dividend of 0.65p per share for 2013. The Board expects to be able to adopt a progressive approach to dividend payments as its ability to generate cash further improves.
Responsible Business
The Group attaches great importance to maintaining its commitment to responsible business as it believes that by reducing the impact we have on the environment, supporting our employees and serving the communities around us, we contribute to building a stronger and more successful company.
At the beginning of the year, a number of key objectives across The Market Place, The Environment and The Workplace were identified, each with target key performance indicators. In a year of notable achievements, the Group's retention of the ROSPA Gold Award status for a seventh consecutive year and the Mall Fund's rating as number one in the UK for retail in the Global Real Estate Sustainability Benchmark stand out. Targets for reduction in energy, water use and water recycling have again been exceeded. Our shopping centres are now using 35% less energy than five years ago, saving over £1.2 million in energy costs over that time.
Our People
Improving the customer experience and making the retail environment attractive are key ingredients in attracting retailers to the Group's shopping centres thereby boosting footfall and spend. Our management teams' constant focus on operational excellence and adopting an entrepreneurial approach towards asset management and development is one of the Group's key differentiators and I would like to thank all our teams for their efforts in delivering these objectives. This management platform remains critical to the creation of value for our shareholders.
The Board
I would like to thank Xavier Pullen, who stepped down from the Board as an Executive Director after 35 years, for his very significant contribution to the success of the Group. I am pleased that he will continue to assist the Group in the execution of its strategy for Germany as a senior adviser. At the same time, I would like to congratulate Mark Bourgeois on his promotion to the Board as an Executive Director. With his operational and strategic retail property experience, combined with his extensive market knowledge and understanding of advancing technology, Mark will undoubtedly make an important contribution to the Board's discussions.
We look forward to further progress in 2014.
John Clare
Chairman
Chief Executive's Statement
Strategy
The Group made further significant progress in 2013 in focusing Capital & Regional on its core UK shopping centres. Following the sales of The Junction, X-Leisure and Braehead in 2012, the sales of Great Northern and Hemel Hempstead were respectively completed and agreed in 2013 with the result that we were able to recycle the cash from these disposals into the acquisition of Mall units at an attractive point in the investment cycle. Adjusted for the sale of Hemel Hempstead which completed after the year-end, UK shopping centres and available cash account for 75% of the Net Asset Value of Capital & Regional compared to 47% at the beginning of 2012.
Moving forward our core objective is to increase the focus on UK shopping centres with the intention to continue to realise value over time from our retail portfolio in Germany. We will take advantage of any opportunities to increase further our stake in the Mall which remains at the centre of our strategy for UK shopping centres. The anticipated refinancing of the CMBS later this year will provide a sound platform from which to execute our asset management plans.
Our portfolio of eight UK shopping centres offers a range of investment opportunities from incremental asset management initiatives in Redditch and Lincoln to more significant development opportunities in Camberley, Maidstone and Walthamstow. We are convinced that by continuing to invest in these schemes, we can enhance their attractiveness to retailers and their relevance to consumers thereby ensuring we can create attractive returns for shareholders.
Whilst each of the shopping centres requires significant focus to execute these plans, in the longer term the current management platform has the capacity and expertise to support a larger portfolio of shopping centres which share similar characteristics. Additional critical mass will create further economies of scale and be supportive of enhanced returns for shareholders.
Operations
We have seen a steady improvement in operating conditions in our UK shopping centres as the year progressed. Following a number of administrations in the first half of the year (20 units representing £1.4 million of income), occupancy levels increased as administrations slowed and key lettings were secured. As at 30 December 2013, retail occupancy across our UK shopping centres stood at 96.3% compared to 95.4% at 30 June 2013. Underlying income, as measured by contracted rent, also stabilised in the second half of the year. As at 30 December 2013 there was £1.1 million more rent attributable to tenants in a rent free period than there was at
30 December 2012. As these rent free periods expire the passing rent will increase accordingly.
Footfall across our shopping centres continues to out-perform the national benchmarks. For the year, footfall fell by 2.5% compared to 3.7% for the sector as a whole and the level of out-performance increased as the year ended. Successful marketing campaigns saw strong footfall over Christmas, a trend which has continued into 2014, with both an absolute increase and out-performance of the national benchmark in the year to date.
Asset Management
The improvement in the operating environment has lagged the pick-up in investment market activity and retailers have therefore continued to be well placed to negotiate competitive terms for new space and lease renewals. There are, however, a number of trends which bode well for retailer demand across the Group's shopping centres:
a) It is encouraging to see that where the Group is investing, such as the reconfiguration at Waterside, Lincoln, or the creation of a leisure hub at Redditch, occupiers are keen to take space on accretive terms. The planned refurbishments at Walthamstow and Maidstone are expected to generate a similar response from retailers. The Group's track record in the successful delivery of these asset management initiatives, on budget and on time, is critical to securing retailer support.
b) Success with the asset management initiatives at Lincoln and Redditch confirms that there is still untapped demand from fashion and leisure operators which is crucial to increasing occupancy levels.
c) The Group is able to respond to the multi-channel strategies presented by our retailers through consolidation of smaller units to create larger space. Examples are River Island at Luton, H&M and Next at Lincoln and TK Maxx at Camberley. We see these larger stores as particularly relevant to growing click and collect trends.
d) In the absence of a significant flow of quality new space across the UK, successful retailers are looking to expand their presence in schemes where they already have an established and profitable presence. Examples include Sports Direct in Walthamstow, Costa Coffee in Redditch and New Look in Lincoln.
e) Our ability to grow income from car parks, promotional activity, retail merchandising units ("RMU's"), media and web activity is underpinned by the fully integrated management platform operated across our shopping centre activities.
Active asset management was also critical to facilitating the disposals during the year of Sutton Coldfield, Great Northern and a well-executed and complex development at Hemel Hempstead. This was vital in driving sale price and underpinning the disposal process.
Germany
In our German portfolio we have continued to concentrate on extending the length and quality of income stream to support valuations and maintain the marketability of the portfolio to the institutional investment market. Our assets are managed by Garigal Asset Management, a German retail specialist asset manager in which the Group holds a 30% interest. Garigal has identified a number of asset management initiatives; opportunities either to negotiate early lease extensions with key anchor tenants or delivery and reconfiguration of additional retail space. During 2013 we successfully increased the weighted average lease length by 0.3 years to 8.1 years (2012: 7.8 years).
Financial Position
De-gearing of the Group's balance sheet has been a key strategic objective in recent years and our progress in this regard during 2013 was of paramount strategic importance to the Group.
As a result of the disposals completed during the year, there was no on balance sheet debt at the year end, whilst see-through net debt to property value, adjusted for the sale of Jarman Fields, Hemel Hempstead, which completed in February 2014, fell from 55% to 52%.
The sale of Great Northern Warehouse in October 2013 resulted in the repayment of a £57.6 million debt facility. This facility had full recourse to the Group's balance sheet and its repayment considerably increased the Group's financial strength and flexibility. As at 30 December 2013, the Group had a net cash position of £11.1 million, increasing to £19.5 million adjusted for the sale of Hemel Hempstead that completed in February 2014. The Group's £25 million Revolving Credit Facility which matures in July 2016 remains undrawn.
The debt repayment of £168 million by the Mall following the sales of the shopping centres at Sutton Coldfield and Uxbridge reduced outstanding debt from £547.5 million to £379.5 million. Gross gearing therefore fell to below 60%, allowing the recommencement of distributions. As at the end of 2013, gross debt to property value stood at 55% whilst net debt to property value was at 46% meaning the Fund is now in a strong position to take advantage of the more favourable conditions in the banking market in preparation for the refinancing of the CMBS which matures in April 2015.
The German Joint Venture has signed a three-year €141 million financing which supports three of its portfolios, representing 49% of the total German portfolio and covering 12 properties.
The terms of the refinancing are, we believe, very attractive with an all in cost below 3%. That the market is prepared to fund these assets on very competitive terms at LTVs above 70% is a vote of confidence in this business.
Outlook
Improving economic conditions provide a very supportive background for our UK shopping centre business. In particular, rising employment and the potential for real growth in average earnings should provide a boost to consumer sentiment. Footfall through our schemes in the first two months of 2014 shows an absolute increase and outperformance against the relevant index. Whilst the strengthening investment markets have been well documented, it is the improvement in the underlying economy that is the necessary pre-condition for increased retailer confidence, higher occupancy and higher rental income. The significant fall in the level of administrations in 2014 to date compared to recent years also provides a helpful backdrop for letting activity in the rest of the year. Furthermore we have begun to see that the hard work undertaken by our specialist asset management teams has enhanced operating performance and valuations towards the end of 2013 and we expect this trend to continue in 2014.
Recycling of capital remains an important priority. Following on from the sale of the property at Taufkirchen in May 2013 for €6.3 million and exchange on the sale of the vacant Kreuztal property post year end for €1.3 million, in line with and ahead of valuation respectively, we intend to accelerate the realisation of value from the portfolio in 2014. We are currently in advanced talks to dispose of one large property and intend to bring a further tranche of assets to market during the year. Proceeds will be used to reinvest in our UK shopping centre business.
We expect the Mall to refinance its CMBS by the time we announce our interim results. The current attractive conditions in the banking market should ensure that the Fund which has successfully reduced gearing through a targeted programme of disposals can achieve competitive terms having received strong interest from debt providers in the discussions that have taken place to date. This should, in turn, ensure a stable background for the implementation of the asset management programme and that the Mall remains at the heart of our growth strategy for our shopping centre business.
We look forward to making continuing progress in our drive to grow the Company and enhance value for investors in 2014.
Hugh Scott-Barrett
Chief Executive
Our Assets and Operating Strategy
We ensure that our property assets are aligned with the constantly evolving demands of our tenants and shoppers, developments in technology, and consumer behaviour.
The key features we look for in our assets are:
- Dominant community shopping malls - healthy sale densities of £449psf across our portfolio compares favourably to in-town sales densities of £430psf (CBRE research)
- Strong footfall - outperformed the national index by 1.2% in 2013
- Affordable rental levels with potential for growth - rent to sales ratios are strong at 6.4% across The Mall portfolio and rents are affordable at £22psf
- Attractive added value opportunities - see asset by asset table below
- Ownership of car parking and availability of good local transport facilities - our portfolio has over 10,000 car parking spaces.
Our shoppers have demanding expectations of the level of service, convenience, range and quality of facilities, together with a real appreciation of value and local community. These community hubs provide our retailers with a cost effective location from which to serve their customers and sit as an essential element of the multichannel operation. We believe only those shopping centres which can consistently deliver these different elements will continue to be successful.
Continuing investment is essential to maintain and further enhance the relevance of our assets. Across our portfolio of eight centres we have agreed programmes of capex totalling approximately £40 million over the next three years from which we are targeting income returns of at least 10% over the period.
Across the Mall properties we have identified a further £36 million of value adding initiatives and we are also working on exciting masterplan developments for Camberley and Maidstone which would deliver transformational improvements to those towns.
Further details of our current year activities and future plans and opportunities on an asset by asset basis are detailed as follows:
|
Shopping Centre |
No. of Retailers |
Anchors |
Summary |
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Blackburn |
101 |
Debenhams, Primark, H&M, Next, Boots, Argos, BHS |
A 600,000 sq ft Mall, extended and refurbished in 2011, gaining market share from neighbouring locations. During 2013: • Key lettings were achieved with Schuh, Card Factory, Shoe Zone, Toymaster, Perfect Home and Waterstones • We successfully defended an out of town retail park proposal
• Opportunity remains to increase income and value through continued market share growth • Inward yield shift expected in response to the proven robust income stream as yield gap closes
• £5.0 million of capex projects identified including: - Leasing of key voids - Identified PPM - Amalgamation of several units to form a gym |
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Shopping Centre |
No. of Retailers |
Anchors |
Summary |
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Camberley |
120 |
House of Fraser, Top Shop, Boots, Primark, Sainsbury's, Argos, River Island |
A 390,000 sq ft Mall in a highly affluent South East catchment. Significant development opportunity to reposition and create a 290,000 sq ft extension. During 2013: • 20,000 sq ft TK Maxx was successfully delivered following the amalgamation and extension of four units • Adjoining 6,000 sq ft unit in advanced legals with international footwear operator • Continued material progress made around development opportunities - Development agreement Heads of Terms agreed with Local Authority - Progressive discussions with major department store anchor - Local Authority planning/decision making continues to support regeneration
• £3.2 million capexP1 identified including: - Delivery of new lettings/amalgamations - Reconfiguration of Main Square 1 Excluding London Road redevelopment |
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Lincoln |
45 |
New Look, Top Shop, Stormfront (Apple), Food Court |
A popular cathedral city with increasing demand for well configured retail space. During 2013: • Major redevelopment of the centre commenced - 65% of redevelopment space by value now let to H&M, Next and FABG restaurant • Extended 15,000 sq ft New Look, which was delivered in December 2013 • Delivered the transformation of Mall public space to create spacious and attractive retail destination
£6.8 million of capex projects identified including: • Completion of development construction • Leasing of remaining development units • Reconfiguration/addition of kiosk income to entrances and common areas
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Shopping Centre |
No. of Retailers |
Anchors |
Summary |
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Luton |
135 |
Debenhams, Boots, Primark, H&M, Next, Top Shop, M&S, Wilkinson, TK Maxx |
Luton is a 900,000 sq ft scheme within a thriving London satellite town: - Strong employment base - Growing population During 2013: • Good asset management progress including: - 7,000 sq ft River Island - 6,000 sq ft Deichmann Shoes - Newly filled/downsized Clintons
£13.8 million of capex projects identified including: • 80,000 sq ft leisure/retail opportunity at existing Market Hall • 60,000 sq ft office refurbishment & re-let • Joint initiative being discussed with Local Authority on adjoining land to north of shopping centre • Leasing to key retailers to further build fashion mix
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Maidstone |
95 |
Boots, BHS, New Look, Wilkinson, Next, Sports Direct |
A 500,000 sq ft scheme within a vibrant South East town: - Strong population growth is forecast - 300,000 sq ft of additional retail space required in town centre During 2013: • A five year lease extension exchanged with Next in anticipation of scheme improvements
£7.7 million of capex projects identified including • Planned refurbishment and repositioning of Mall environment targeted for H2 2014 • Reconfiguring space to secure transformational anchor • In partnership with the Local Authority: - Master plan under development - 300,000 sq ft extension of retail/leisure/residential - Public consultation on scheme ongoing
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Shopping Centre |
No. of Retailers |
Anchors |
Summary |
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Redditch |
160 |
Debenhams, M&S, Primark, Next, Arcadia, TK Maxx |
A 900,000 sq ft centre that sits within a prosperous catchment: - Robust employment - Increasing industrial prosperity During 2013: • Leisure Hub pre-lets to Nando's and Real China • Pure Gym opened November 2013 • Hub construction project progressing with opening of restaurants due April 2014 • Positive discussions with fashion operators to improve mix on Evesham Walk
Strategy to reposition centre through £9.9 million investment, predominantly aimed at: • Completion of branded leisure hub • Improving Mall environment/customer experience • Creating more cohesive fashion mix, thereby attracting the more affluent shopper |
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Walthamstow |
60 |
Asda, BHS, Boots, New Look, River Island, Top Shop |
A 260,000 sq ft London centre strategically located to benefit from changing demographic of area. During 2013: • Good progress being made on the investment targeted to radically transform the retail and leisure mix • Agreement for lease exchanged for reconfiguration/upsize of Sports Direct • Advanced legal negotiations with leading fashion operator for 26,000 sq ft store, involving reconfiguration of existing units
£22.0 million of capex projects identified including: • Refurbishment of Mall due to commence H1 2014 • Construction/delivery of upsized Sports Direct • Delivery of 80,000 sq ft leisure/retail scheme extension |
|
Wood Green |
90 |
Primark, Wilkinson, H&M, Boots, Argos, TK Maxx, WH Smith, New Look, Next |
A vibrant 550,000 sq ft London shopping centre with 12 screen cinema and leisure offer • Strategy to maintain strong income levels by targeted development and further refinement of tenant mix. During 2013: • Morrisons took former HMV unit • Completed lease to TK Maxx for extension into former Peacocks • Under offer to two national retailers for upsized units
• £7.3 million of capex projects identified including: - Reconfiguration of upper floor units/introduction of fashion operators - Introduction of supermarket on vacant former garage site - Introduction of hotel operator to existing office accommodation |
Operating review
The principal focus of management during 2013 has been to continue to execute its strategy of disposing of non-core assets in order to concentrate resources on its core UK Shopping Centre business.
During the year the Group repaid £57.6 million of recourse debt following the sale of the Great Northern Warehouse. Subsequent to the year end it also sold Hemel Hempstead, its last remaining leisure property asset, realising £8.4 million.
In July 2013, The Mall sold Sutton Coldfield and Uxbridge for a combined total of £152.5 million which was used to reduce debt in The Mall. As a consequence The Mall is no longer constrained by its loan covenants from making distributions of income to its unit holders and is well placed to refinance the CMBS debt which matures in April 2015.
UK Shopping Centres
Occupancy levels
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30 December 2013 |
30 June 2013 |
30 December 2012 |
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Occupancy (like for like) |
% |
% |
% |
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UK Shopping Centres |
96.3 |
95.4 |
97.5 |
P1 POccupancy at December 2013 and December 2012 includes a seasonal increase in temporary lettings.
4TWe continue to focus on maintaining high levels of occupancy in order to create shopping destinations which are appealing to shoppers and tenants and which act as a springboard for growth in rental values. The decrease in year on year occupancy is due primarily to a fall in the level of temporary lettings of approximately 1.0% of total occupancy.
New lettings, renewals and rent reviews
There has been good letting activity across the portfolio.
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UK Shopping Centres |
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Number of new lettings |
56 |
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Rent from new lettings (£m) |
5.0 |
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Comparison to ERV (%)P1 |
3.0 |
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Renewals settled |
31 |
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Revised rent (£m) |
1.5 |
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Comparison to ERV (%) |
(3.6) |
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Rent reviews settled |
41 |
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Revised passing rent (£m) |
4.0 |
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Uplift to previous rent (%) |
0.3 |
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Comparison to ERV (%) |
9.9 |
1For lettings which did not include a turnover rent
Lettings to new occupiers continued at an encouraging level during the year and it is particularly pleasing to see new tenants such as Nando's taking space in our schemes and fashion retailers such as River Island, H&M and Next making significant commitments. The key lettings on an asset by asset basis are as outlined above.
Administrations
There were 32 units affected by administration during the year (2012: 48) with passing rent of £2.0 million (2012: £4.3 million).
|
UK Shopping Centres |
Year ended 30 December 2013 |
6 months ended 30 December 2013 |
6 months ended 30 June 2013 |
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Administrations (units) |
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32 |
12 |
20 |
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Passing rent (£m) |
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2.0 |
0.6 |
1.4 |
At 30 December 2013, there were three units where tenants were continuing to trade whilst in administration with a passing rent of £0.2 million.
In the first two months of 2014 there have been eight units affected by administration with a passing rent of £0.3 million. This compares to 12 units with a passing rent of £1.0 million in the equivalent period of 2013.
Income security
Credit risk is managed through the assessment of the covenant strength of all incoming tenants and by monitoring credit ratings of key existing tenants. Where possible we look to pre-empt the consequences of administrations through contingency planning and by actively seeking to reduce exposure to known risks. The 10 largest occupiers by rental income at 30 December 2013 were:
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UK Shopping Centres |
|
|
|
% |
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Alliance Boots Limited |
5.0 |
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Debenhams Properties Limited |
3.6 |
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Primark Stores Limited |
2.7 |
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Arcadia (excluding BHS) |
2.7 |
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H&M |
2.6 |
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New Look Retailers Limited |
2.6 |
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BHS |
2.3 |
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Wilkinson |
2.0 |
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Sports Direct |
1.8 |
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JD Sports |
1.8 |
Rent collection rates in the UK shopping centres (adjusted for tenants in administration) have continued to be strong throughout the year, with 96.7% of rent being paid within 14 days of the due date for December 2013.
Footfall
The UK Shopping Centres' footfall (excluding Lincoln, owing to its redevelopment) has outperformed the national footfall index by 1.2% during 2013. There was a fall in shopper numbers over the year of 2.5% compared to a decline of 3.7% in the UK benchmark index (ShopperTrak), demonstrating the relative strength of the portfolio. In 2014 UK Shopping Centre footfall has continued to outperform the benchmark, registering an absolute year on year increase of 3.0% in the first seven weeks of 2014 which is 3.6% ahead of the benchmark.
Temporary lettings
At 30 December 2013, on a like for like basis there were 102 temporary lettings (2012: 106) for a net rent of £0.8 million (2012: £1.32 million) as compared to an ERV of £4.7 million (2012: £5.7 million).
Rental income
Contracted rent across our UK portfolio decreased marginally.
|
UK Shopping Centres |
December 2013 |
June 2013 |
December 2012 |
|
(Like for like) |
£m |
£m |
£m |
|
Contracted rent |
70.7 |
70.8 |
71.1 |
|
Passing rent |
67.0 |
67.4 |
68.5 |
As at 30 December 2013, there was £1.1 million more rent attributable to tenants in a rent free period than there was at 30 December 2012. As these rent free periods expire the passing rent will increase accordingly.
Investment portfolio performance
The property level total returns are set out below:
|
|
Property valuation |
Capital return |
Total return |
Initial yield |
Equivalent yield |
|
30 December 2013 |
£m |
% |
% |
% |
% |
|
UK Shopping CentresP1 |
851 |
(1.8) |
4.9 |
6.8 |
7.3 |
1 Weighted average by year end property valuation
Other Operations
Snozone
Snozone delivered a contribution of £0.9 million in line with 2012. Further cost reductions offset the impact of lower income due to the impact of snow during peak season trading, the good summer weather and a leisure environment that remains highly competitive.
German portfolio
The Group's commercial retail property portfolio in Germany is in a joint venture with Ares Management (formerly AREA Property Partners) and is held in five joint venture portfolios.
The key portfolio property data at 30 December 2013 is as follows:
|
|
|
|
Property sizes |
|
|
||||
|
|
Occupancy |
Weighted average lease length |
Total |
>€50m |
€50m - €20m |
€20m - €10m |
<€10m |
Average Property value |
Rental income |
|
Portfolio |
% |
Years |
# |
# |
# |
# |
# |
€million |
€million |
|
1 |
94.4 |
7.9 |
6 |
- |
- |
3 |
3 |
9.2 |
4.0 |
|
2 |
96.9 |
4.3 |
2 |
1 |
1 |
- |
- |
41.3 |
6.1 |
|
3 |
100.0 |
10.6 |
9 |
- |
3 |
3 |
3 |
16.0 |
11.0 |
|
5 |
99.8 |
9.7 |
4 |
- |
1 |
1 |
2 |
13.5 |
4.2 |
|
6 |
93.7 |
6.0 |
4 |
- |
2 |
1 |
1 |
17.1 |
5.6 |
|
Total |
97.5 |
8.1 |
25 |
1 |
7 |
8 |
9 |
16.2 |
30.9 |
The movement in German properties (on a like for like basis) is as follows:
|
|
Valuation |
Valuation |
Valuation |
NIY |
NIY |
|
|
30 December 2013 |
30 December 2012 |
movement
|
30 December 2013 |
30 December 2012 |
|
|
€million |
€million |
€million |
% |
% |
|
|
404.0 |
408.4 |
(4.4) |
6.8 |
6.5 |
In our German portfolio we have continued to concentrate on extending the length of its income stream to maintain and increase valuation.
We have successfully increased the weighted average lease length by 0.3 years to 8.1 years (2012: 7.8 years)
There was a fall in contracted rent of €0.6 million in 2013 to €31.3 million (2012: €31.9 million). This was principally as a result of the downsizing of the anchor tenant at their lease expiry at Oschersleben. This however, was mitigated by active asset management activity to re-let the remaining space successfully to a DIY operator. Excluding Oschersleben, contracted rent was in line with the prior year.
The key asset management initiatives undertaken in the year were:
· Brühl (20,200 sq m)
Real has extended their lease to 2019 on their 17,525 sq m anchor unit.
· Bochum-Wattenscheid (10,000 sq m)
Following on from the 2,500 sq m letting to FitX in 2012 further progress has been made in transforming the location from a struggling 10,000 sq m retail property into a leisure destination. A Chinese restaurant has signed a ten year lease of 1,600 sq m and an indoor children's play area has taken 1,640 sq m. These tenants will commence their fit-outs once the building permissions are granted. Additionally, we are in advanced discussions with a sports bar to take 800 sq m of space, leaving only one 800 sq m unit (8% by lettable area) left to let.
· Heide (4,600 sq m)
We have made significant progress to replace the units that became vacant in 2012 and 2013 upon lease expiry, as improved access to the property has helped the leasing process. Woolworths has taken a five year lease on the 1,023 sq m anchor unit vacated by ALDI, and we have let a further 977 sq m to tenants on permanent leases. Schupark Facscies, a shoe retailer, has taken a five year lease (441 sq m) having been trading from this location on a temporary basis while Fressnapf, a pet food retailer, has signed a 10 year lease, of the former 536 sq m unit that Schupark previously occupied. We are also in advanced negotiations with a fashion retailer to take the 744 sq m vacated by EDEKA in November 2013.
· Herne
This property has been extended with the food anchor Toom taking an extra 285 sq m of space on a new 15 year lease. As part of this initiative four further units were created and let with a combined area of 264 sq m.
· Aachen
At Aachen, in advance of Praktiker's lease expiry in July 2013, we agreed a back to back lease with Hammer on a 10 year lease and avoided any impact from Praktiker's administration.
· Moerfelden-Walldorf
A small part of this property which comprises offices is covered by a rental guarantee that expires at the end of 2014. We have recently let 100 sq m which should provide momentum to let the remaining 450 sq m. There were two lease extensions for a combined 1,843 sq m agreed with Penny-Markt, which has extended its lease to 2023 and Dänisches Bettenlager ,which has extended its lease to 2020.
Following on from the sale of the property at Taufkirchen in May 2013 for €6.3 million and the notarisation of the vacant Kreuztal property disposal post year end for €1.3 million (ahead of the year end valuation and expected to complete shortly), we intend to accelerate the realisation of value from the portfolio in 2014. We are currently in advanced talks to dispose of one large property and intend to bring a further tranche of assets to market during the year.
Financial review
Key performance indicators
The key performance indicators we use to measure our performance against our strategy and objectives are:
|
|
|
2013 |
2012 |
|
|
|
|
|
|
Investment returns |
|
|
|
|
Total shareholder return |
|
53.9% |
(9.5)% |
|
Net assets per share |
|
54p |
51p |
|
EPRA net assets per share |
|
56p |
55p |
|
Return on equity |
|
5.1% |
(8.5)% |
|
|
|
|
|
|
Financing |
|
|
|
|
Group cash / (net debt) |
|
£11.1m |
£(53.3)m |
|
Proforma Group net debtP1 |
|
- |
13% |
|
Proforma see-through net debt to property valueP1,2 |
|
52% |
55% |
|
|
|
|
|
|
Profitability |
|
|
|
|
Recurring pre-tax profit |
|
£14.0m |
£17.0m |
|
Pre-tax profit/(loss) for the year |
|
£9.3m |
£(12.7)m |
|
Basic earnings per share - continuing and discontinued operations |
|
3p |
(5)p |
|
|
|
|
|
|
Property under management |
|
£1.2 billion |
£1.4 billion |
P1P2013 adjusted for £8.4 million Hemel Hempstead net proceeds, received in February 2014. 2012 figure adjusted for £30.6 million X-Leisure proceeds received in January 2013.
P2PSee-through debt and see-through net debt divided by IFRS property value.
Investment returns
Net assets per share increased in the year to 54p, up 3p or 6% since 30 December 2012, and EPRA net assets per share increased to 56p, up 1p, or 2% since 30 December 2012. The change in net assets resulted in a 5.1% return on equity for the year.
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. These are shown below as at 30 December 2013:
|
|
See through |
Statutory |
See-through |
Statutory |
||||
|
|
Property |
Debt |
Other |
30 December |
Property |
Debt |
Other |
30 December |
|
|
|
|
|
2013 |
|
|
|
2012 |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
The Mall |
214.3 |
(111.1) |
(2.8) |
100.4 |
180.8 |
(115.0) |
2.2 |
68.0 |
|
Germany |
167.9 |
(119.6) |
(3.5) |
44.8 |
168.9 |
(124.3) |
(2.0) |
42.6 |
|
X-LeisureP1 |
- |
- |
- |
- |
- |
- |
30.6 |
30.6 |
|
Great Northern |
- |
- |
- |
- |
70.0 |
(57.6) |
0.4 |
12.8 |
|
Kingfisher Redditch |
26.9 |
(17.1) |
1.3 |
11.1 |
26.3 |
(17.2) |
0.3 |
9.4 |
|
Waterside Lincoln |
15.7 |
(6.8) |
1.2 |
10.1 |
13.0 |
(6.8) |
0.9 |
7.1 |
|
Hemel Hempstead |
8.4 |
- |
- |
8.4 |
8.4 |
- |
(0.2) |
8.2 |
|
Other net assets |
- |
- |
13.9 |
13.9 |
- |
(1.0) |
1.9 |
0.9 |
|
Net assets |
433.2 |
(254.6) |
10.1 |
188.7 |
467.4 |
(321.9) |
34.1 |
179.6 |
P1 PFor 2013 Hemel Hempstead shown at net realisable value of £8.4 million. For 2012, X-Leisure shown at net realisable value of £32.2 million less related costs of £1.6 million. See note 13 for further details.
Financing
Following the disposal of the Great Northern Warehouse on 31 October 2013, the Group repaid all of its on-balance sheet debt. At 30 December 2013 the Group had cash of £11.1 million (2012: net debt outstanding of £53.3 million).
|
|
|
Off balance |
See-through |
|
|
Group debt |
sheet debt |
debt |
|
|
£m |
£m |
£m |
|
At 30 December 2012 |
58.6 |
263.3 |
321.9 |
|
Property acquisition |
- |
(0.1) |
(0.1) |
|
Repayments from disposals |
(57.5) |
- |
(57.5) |
|
Other repayments |
(1.1) |
(45.7) |
(46.8) |
|
Increased investment in The Mall |
- |
34.6 |
34.6 |
|
Foreign exchange |
- |
2.5 |
2.5 |
|
At 30 December 2013 |
- |
254.6 |
254.6 |
Group debt
The Group maintains a £25 million core revolving credit facility. This was utilised during the year to the extent that the maximum amount drawn down under it was £1.0 million (2012: £14.8 million). At 30 December 2013, there were no drawings on the central facility. The forecast covenant tests indicate that there is sufficient headroom for the full £25 million facility to be available.
At 30 December 2013, the Group had cash balances of £11.1 million (2012: £5.3 million).
Off balance sheet debt
Off balance sheet debt, which is non-recourse to the Group, fell by £8.7 million to £254.6 million at 30 December 2013 (2012: £263.3 million) as a consequence of asset disposals.
The proforma breakdown of the Group's share of off balance sheet debt and net debt at 30 December 2013 was as follows:
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
Loan to |
Net debt |
Average |
|
average duration |
|
Group share |
DebtP1 |
CashP2 |
Net debt |
ValueP3 |
to valueP3 |
interest rate |
Fixed |
to loan expiry |
|
30 December 2013 |
£m |
£m |
£m |
% |
% |
% |
% |
Years |
|
The Mall |
111.1 |
(18.8) |
92.3 |
55 |
46 |
4.11 |
100 |
1.3 |
|
Germany |
119.6 |
(3.9) |
115.7 |
72 |
69 |
2.82 |
63 |
2.7 |
|
Kingfisher Redditch |
17.1 |
(2.0) |
15.1 |
63 |
56 |
6.17 |
100 |
3.3 |
|
Waterside Lincoln |
6.8 |
(0.7) |
6.1 |
43 |
39 |
4.80 |
100 |
1.6 |
|
Off balance sheet |
254.6 |
(25.4) |
229.2 |
|
|
|
|
|
1Excluding unamortised issue costs
2 Excluding cash beneficially owned by tenantsP
3PDebt and net debt divided by investment property at fair value
The Mall Fund's debt was reduced by £191.4 million to £379.5 million at 30 December 2013 (2012: £570.9 million). This decrease was due to debt repayments from the sale proceeds of Uxbridge and Sutton Coldfield and from cash generated from operations. Following these debt repayments the Mall's gross LTV at the end of 2013 was 55% which is below the 60% threshold at which the Fund can distribute.
On 5 February 2014, the Kingfisher Limited Partnership completed a refinancing of its loan facilities and increased its senior facility. The additional funds raised were used to repay the partnership's mezzanine debt. The term of the facility was extended to April 2019. As a result the partnership's cost of debt fell from 6.2% to 4.6%.
The refinancing of €141 million of German debt, covering three of the five portfolios, was completed in December 2013 on a new three year facility at an all in cost of below 3%. Total German debt decreased by €17.4 million to €289.3 million at 30 December 2013 (2012: €306.7 million). At the applicable exchange rates this was equivalent to £241.2 million (2012: £250.5 million).
Maturity analysis
The table below shows the maturity profile of the see-through debt and undrawn core credit facility at 30 December 2013:
|
|
2014 |
2015 |
2016 |
2017 |
2018 |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Sterling debt drawn |
- |
117.9 |
- |
17.1 |
- |
135.0 |
|
Euro debt drawn |
- |
32.7 |
72.1 |
14.8 |
- |
119.6 |
|
Undrawn core credit facility |
- |
- |
25.0 |
- |
- |
25.0 |
|
As at 30 December 2013 |
- |
150.6 |
97.1 |
31.9 |
- |
279.6 |
Covenants
The Group and its associates and joint ventures were compliant with their banking and debt covenants at 30 December 2013. Further details are disclosed in the 'covenant information' section at the end of this report.
Interest rate hedging
The majority of current borrowing, both at Group level and in the funds and joint ventures, continues to be covered by interest rate swaps or caps. At 30 December 2013, the see-through valuation of the Group's swaps and caps was a liability of £5.6 million (2012: £14.4 million) which will not be crystallised unless the underlying contracts are closed out before their expiry date. During the year, The Mall terminated swaps at a total cash cost of £9.7 million, of which the Group's share was £2.0 million.
Cash distributions
The Group received total cash distributions of £1.9 million during the year comprising a £1.2 million tax distribution from The Mall Fund and £0.7 million from its German investments.
Profitability
Recurring pre-tax profit
The Group's recurring pre-tax profit decreased by £3.0 million to £14.0 million for the year ended 30 December 2013 (2012: £17.0 million). The breakdown of recurring pre-tax profit, as defined in Note 1, is as follows (and as set out further in Note 2a):
|
|
Year to |
Year to |
|
|
30 December |
30 December |
|
|
2013 |
2012 |
|
|
£m |
£m |
|
UK Shopping Centres |
6.2 |
5.6 |
|
German property investment |
6.6 |
7.1 |
|
Property management |
4.6 |
3.4 |
|
Snozone |
1.0 |
1.2 |
|
Group items |
(4.4) |
(4.0) |
|
Discontinued Operations P1 |
- |
3.7 |
|
Recurring pre-tax profit |
14.0 |
17.0 |
1This includes the results of Great Northern Warehouse and Hemel Hempstead for 2013 and X-Leisure, Xscape Braehead and The Junction Fund for 2012.
The increase in recurring pre-tax profit from UK Shopping Centres reflects the full year impact of the acquisition of The Kingfisher Centre, Redditch and income from additional Mall units during the period. The impact of this was reduced by the disposal by the Mall of the centres at Sutton Coldfield and Uxbridge. The fall in recurring profitability in Germany principally reflects the loss of income from Portfolio 4 after 30 June 2012. Recurring profits within Property Management have increased due to the net impact of the loss of fees in respect of Mall disposals being offset by cost reductions, the expiry and write back of a provision of £1.4 million and the full year effect of fees arising from The Kingfisher Centre.
Profit for the year
The profit for the year ended 30 December 2013 was £9.1 million (2012: loss of £16.0 million) and is analysed below:
|
|
Year to |
Year to |
|
|
30 December |
30 December |
|
|
2013 |
2012 |
|
|
£m |
£m |
|
Recurring pre-tax profit |
14.0 |
17.0 |
|
Property revaluation |
(1.8) |
(20.8) |
|
(Loss)/profit on disposal of properties within funds |
(4.5) |
(1.6) |
|
(Loss)/profit on disposal of Group properties |
(1.1) |
- |
|
Performance fees - net of Group share of cost |
- |
2.0 |
|
Impairments in respect of German portfolio 4 (including Euro B Note) |
(2.4) |
(6.5) |
|
Other impairments |
- |
(3.1) |
|
Financial instruments revaluation |
6.5 |
3.6 |
|
Gain on investment in The Mall |
2.0 |
1.4 |
|
Loss on disposal of JV and Associates |
- |
(4.0) |
|
Other items |
(3.9) |
(2.9) |
|
Tax |
0.3 |
(1.1) |
|
Profit/(loss) for the year |
9.1 |
(16.0) |
As well as the recurring pre-tax profit discussed above, the other main factors behind the result for the year were:
· Loss on disposal within funds - primarily relating to the sale of Uxbridge and Sutton Coldfield within The Mall.
· Loss on disposal of Group properties - relating to the loss on sale of Great Northern Warehouse partially offset by profit on the sale of land and FIX UK.
· Impairments in respect of German portfolio 4 - the remaining £2.4 million of the Group's investment in the Euro B-note was impaired to £nil at 30 June 2013 following one of the major tenants of the underlying portfolio entering administration.
· Financial instruments revaluation - the valuation of the Group's financial instruments improved as the time remaining on the out of the money interest rate swaps has eroded.
· Gain on investment in The Mall related to the Group's purchase of 85.8 million units in The Mall Fund as detailed below.
Tax
The tax credit for the year on continuing operations was £0.2 million compared to £0.9 million in the prior year consisting of a current tax credit of £0.5 million and a £0.3 million deferred tax charge (2012: £1.4 million of current tax credit and £0.5 million of deferred tax charge).
The current tax asset was £0.5 million at year end (2012: liability of £1.3 million).
Property under management
During the year, property under management fell due to the disposal of the wholly owned Great Northern Warehouse and disposals by The Mall of Sutton Coldfield and Uxbridge. The overall impact on property under management is set out below.
|
|
Valuation |
|
|
|
Valuation |
|
|
30 December 2012P1 |
Disposals / additions |
Other movements |
Revaluation |
30 December 2013P1 |
|
100% |
£m |
£m |
£m |
£m |
£m |
|
UK Shopping Centres |
1,008.9 |
(167.8) |
10.9 |
(0.6) |
851.4 |
|
German joint venture |
338.9 |
(5.4) |
8.0 |
(4.7) |
336.8 |
|
Other propertiesP2P |
80.9 |
(80.9) |
- |
- |
- |
|
Property under management |
1,428.7 |
(254.1) |
18.9 |
(5.3) |
1,188.2 |
P1 PValuation excludes adjustments to property valuations for tenant incentives and head leases treated as finance leases and trading properties are included at the lower of cost and net realisable value.
P2 PHemel Hempstead has been excluded following classification as held for sale during the year. Sale was completed in February 2014.
The split of property under management by sector has changed as a result of property disposals. The sector analysis at 30 December 2013 and prior year end is as follows:
|
|
2013 |
2012 |
|
|
% |
% |
|
Shopping centres |
71.6 |
70.7 |
|
Leisure |
- |
5.6 |
|
Germany |
28.4 |
23.7 |
|
|
100.0 |
100.0 |
Disposals
On 12 July 2013, The Mall sold The Pavilions, Uxbridge and The Gracechurch Centre, Sutton Coldfield for a combined £152.5 million at a net initial yield of 7.7%. The net sale proceeds were used to repay debt within The Mall.
In August 2013, the Group exchanged contracts for the sale of Jarman Fields, Hemel Hempstead. The disposal was completed in February 2014 with net proceeds of £8.4 million received.
On 31 October 2013, the Group disposed of the Great Northern Warehouse, Manchester for an initial consideration of £71.1 million. A debt repayment of £57.5 million was made from these proceeds.
Mall unit purchases
The Group acquired a total of 85.9 million units in The Mall during 2013, representing 9.11% of the Fund at an aggregate cost of £29.3 million. As a result the Group's interest in The Mall has increased during the year to 29.26% at 30 December 2013 (2012: 20.15%).
Foreign currency exposure management
The Group uses a forward foreign exchange contract as a hedge of its net investment in the German joint ventures. At 30 December 2013, this was achieved through a contract for €35 million (2012: €47.0 million) at a fixed exchange rate of 1.19254 (2012: 1.1797) which hedges 65% (2012: 97%) of the Group's German investment. At 30 December 2013, the value of the contract was an asset of £0.1 million (2012: asset of £1.4 million).
To the extent the hedge is effective under accounting rules, valuation movements on the forward contract is shown in reserves, where they partially offset the gain or loss in the value of the net investment in the Group's German joint ventures.
Financing strategy
Our financing structure needs to be flexible and cost effective and this has been achieved through having cash of £11.1 million and a central revolving credit facility of £25 million at 30 December 2013 which was undrawn at that date. This gives the Group the scope to fund future property investments as opportunities arise.
At an associate and joint venture level, debt has been raised from a variety of sources with a spread of maturities to mitigate refinancing risk as set out in the debt maturity analysis chart. Debt held in associates and joint ventures is non-recourse to the Group.
Dividend
Our dividend policy links future payments to the Group's cash generating ability. In view of the Group's significantly improved financial position and in anticipation of the Mall's ability to recommence distributions, the Board took the decision to resume dividend payments after five years and pay an interim dividend of 0.25p per share in September 2013. The Board is now recommending a second interim dividend of 0.40p per share, in lieu of a final dividend, making a total dividend of 0.65p per share for 2013. The Board expects to be able to adopt a progressive approach to dividend payments as its ability to generate cash further improves.
The key dates in relation to the payment of the dividend are:
|
2 April 2014 |
Ex-dividend date |
|
14 March 2014 |
Record date for the payment of second interim dividend |
|
11 April 2014 |
Dividend payment date |
Going concern
As stated in note 1 to the consolidated 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.
Charles Staveley
Group Finance Director
Principal risks and uncertainties
There are a number of risks and uncertainties which could have a material impact on the Group's future performance and could cause actual results to differ materially from expected and historical results. References to "the Group" in this context include the funds and joint ventures in which Capital & Regional has an interest.
The Group carries out a regular review of the major risks it faces. This is a bottom-up process starting with divisional management and monitors and allocates responsibilities for the controls that have been put in place to mitigate the risks identified.
The two principal categories of risks are Property Risks and Funding and Treasury Risks. In addition to the specific mitigating actions listed below we look to mitigate Property Risks by the nature of the assets we invest in. The characteristics of these assets are outlined in the 'Our Assets and Operating Strategy' where we also outline the specific initiatives planned on an asset by asset basis to protect and enhance value. The group's key focus in managing Funding and Treasury risks is to seek to ensure that there is appropriate headroom on credit facilities and that they are renewed well in advance of expiry. The key actions undertaken in this regard during the year are detailed in the 'Group debt' and 'Off balance sheet debt' sections of the Financial Review.
|
Risk |
Impact |
Mitigation |
|
|
|
Property risks |
|
|||
|
Property investment market risks |
|
|||
|
· Weakening economic conditions and poor sentiment in commercial real estate markets could lead to low investor demand and market pricing adjustment
|
· Small changes in property market yields have a significant effect on the value of the properties owned by the Group · Impact of leverage could magnify the effect on the Group's net assets |
· Monitoring of indicators of market direction and pursuit of opportunistic asset sales in those schemes and locations most likely to suffer adverse impact · Review of debt levels and consideration of strategies to reduce if relevant |
|
|
|
Impact of the economic environment (tenant risks) |
|
|||
|
· Tenant insolvency or distress · Prolonged downturn in tenant demand and 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 |
· Large, diversified tenant base · Review of tenant covenants before new leases signed · Long term leases and active credit control process · Good relationships with, and active management of, tenants · Void management though temporary lettings and other mitigation strategies |
|
|
|
Threat from the internet |
|
|||
|
· The trend towards online shopping may adversely impact consumer footfall in shopping centres |
· A change in consumer shopping habits towards online purchasing and delivery may reduce footfall and therefore potentially reduce tenant demand for space and the levels of rents which can be achieved |
· Strong location and dominance of shopping centres (predominantly South East England) · Strength of the community shopping experience · Increasing provision of 'Click and Collect' services by retailers within our shopping centres · Monitoring of footfall for evidence of falling visitors to shopping centres · Monitoring of retail trends and shopping behaviour · Mobile smart phone marketing initiatives |
|
|
|
Property risks (continued)
Valuation risks |
|
|||
|
· In the absence of relevant transactional evidence, valuations can be inherently subjective leading to a degree of uncertainty |
· Stated property valuations may not reflect the price received on sale |
· Use of experienced, external valuers · Rotation of valuers · Valuations reviewed by internal valuation experts |
|
|
|
Property management income risks |
|
|||
|
· Fee income, although largely fixed, may still fall based on value of property under management · Contracts allow for termination under certain circumstances, which are largely outside management's control |
· Changes in property values, sales of properties or other events not wholly under management's control could result in a reduction in or the loss of property management income |
· Monitoring of compliance with terms of contracts · Close dialogue with other investors and stakeholders · Contracts have now been largely renegotiated to fix income · Reduction of cost base as fee income falls to mitigate loss |
|
|
|
Nature of investments and relationships with key business partners |
|
|||
|
· The market for the Group's investments can be relatively illiquid · Restrictions on ability to exercise full control over underlying investments in joint ventures or fund structures |
· Inability to sell investments or fully control exit/asset sale strategies could result in investments in associates and joint ventures not being realisable at reported values |
· Close dialogue with other investors and stakeholders to align strategies and increase influence over the direction of investments · Exercise of significant influence over associates and joint ventures through representation on management boards |
|
|
|
Funding and treasury risks Liquidity and funding |
||||
|
· Inability to fund the business or to refinance existing debt on economic terms when needed |
· Inability to meet financial obligations (interest, loan repayments, expenses, dividends) when due · Limitation on financial and operational flexibility · Cost of financing could be prohibitive |
· Debt refinancing and asset sales at both Group and fund levels have improved liquidity position, reduced the potential impact of falls in property values and positioned the Group to respond quickly to the turning point in the cycle · Ensuring that there are significant undrawn facilities · Option of further asset sales if necessary · Efficient treasury management and regular proactive reporting of current and projected position to the board to ensure debt maturities are dealt with in good time |
||
|
Covenant compliance risks |
||||
|
· Breach of any of loan covenants causing default on debt and possible accelerated maturity |
· Unremedied breaches can trigger demand for immediate repayment of loan |
· Regular monitoring and projections of liquidity, gearing and covenant compliance · Review of future cash flows and predicted valuations to ensure sufficient headroom |
||
|
Funding and treasury risks (continued) Foreign exchange exposure risks |
||||
|
· Fluctuations in the exchange rate between sterling and the euro in respect of the Group's German joint venture · Uncertainty over the Eurozone and the future of the Euro currency |
· Adverse impact on sterling valuation of investments and income flows, and losses as a result of the Group having not, or not effectively, hedged its risk |
· Exposure minimised by funding the German investment through euro denominated borrowings and hedging a large proportion of the remaining investment through derivatives · Regular monitoring of the effectiveness of hedging and performance of derivative contracts |
||
|
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 |
· Regular monitoring of the performance of derivative contracts and corrective action taken where necessary · Use of alternative hedges such as caps |
||
|
Other risks |
||||
|
Tax risks |
||||
|
· Exposure to changes in tax legislation or the interpretation of tax legislation · Potential exposure to tax liabilities in respect of transactions undertaken where the tax authorities disagree with the tax treatment adopted
|
· Tax related liabilities and other losses could arise |
· Expert advice taken on tax positions and other regulations · Maintenance of a regular dialogue with the tax authorities
|
||
|
Regulation risks · Exposure to changes in existing or forthcoming property related or corporate regulation |
· Failure to comply could result in financial penalties, loss of business or credibility.
|
· Management undertake training to keep aware of regulatory changes · Expert advice taken on complex regulatory matters |
||
|
Loss of key management |
||||
|
· Dependence of the Group's business 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 |
· Key management are paid market salaries and offered competitive incentive packages to ensure their retention · New LTIP awards made in 2013 · Succession planning for key positions is undertaken · Performance evaluation, training and development programmes are in place to maintain and enhance the quality of staff |
||
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.
|
Unaudited preliminary consolidated income statement |
|
For the year to 30 December 2013 |
|
|
|
|
2013 |
|
20121 |
|
|
Note |
|
£m |
|
£m |
|
Continuing operations |
|
|
|
|
|
|
Revenue |
3 |
|
17.6 |
|
22.0 |
|
Cost of sales |
|
|
(8.0) |
|
(8.9) |
|
Gross profit |
|
|
9.6 |
|
13.1 |
|
Administrative costs |
|
|
(11.5) |
|
(13.6) |
|
Share of profit/(loss) in associates and joint ventures |
7a |
|
10.0 |
|
(12.8) |
|
Other gains and losses |
|
|
1.0 |
|
- |
|
Profit/(loss) on ordinary activities before financing |
|
|
9.1 |
|
(13.3) |
|
Finance income |
|
|
0.8 |
|
1.2 |
|
Finance costs |
|
|
(0.6) |
|
(0.6) |
|
Profit/(loss) before tax |
|
|
9.3 |
|
(12.7) |
|
Tax credit |
4a |
|
0.2 |
|
0.9 |
|
Profit/(loss) for the year from continuing operations |
|
|
9.5 |
|
(11.8) |
|
Discontinued operations |
|
|
|
|
|
|
Loss for the year from discontinued operations |
13 |
|
(0.4) |
|
(4.2) |
|
Profit/(loss) for the year |
|
|
9.1 |
|
(16.0) |
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
Basic earnings/(loss) per share |
5a |
|
3p |
|
(3)p |
|
Diluted earnings/(loss) per share |
5a |
|
3p |
|
(3)p |
|
|
|
|
|
|
|
|
Continuing and discontinued operations |
|
|
|
|
|
|
Basic earnings/(loss) per share |
5a |
|
3p |
|
(5)p |
|
Diluted earnings/(loss) per share |
5a |
|
3p |
|
(5)p |
1 2012 results have been restated to separate discontinued operations as explained in Note 13.
The profit for the current year and the loss for the preceding year, including amounts from discontinued operations, are fully attributable to equity shareholders.
|
Unaudited preliminary consolidated statement of comprehensive income |
|
For the year to 30 December 2013 |
|
|
|
|
2013 |
|
2012 |
|
|
|
|
£m |
|
£m |
|
Profit/(loss) for the year |
|
|
9.1 |
|
(16.0) |
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
|
|
0.8 |
|
(1.3) |
|
(Loss)/gain on a hedge of a net investment taken to equity |
|
|
(0.7) |
|
0.7 |
|
Total items that that may be reclassified subsequently to profit or loss: |
|
|
0.1 |
|
(0.6) |
|
|
|
|
|
|
|
|
Total comprehensive income/(loss) for the year |
|
|
9.2 |
|
(16.6) |
The total comprehensive income for the current year and preceding year is fully attributable to equity shareholders. There are no items in other comprehensive income that may not be reclassified to profit or loss.
|
Unaudited preliminary consolidated balance sheet |
|
At 30 December 2013 |
|
|
|
|
2013 |
|
2012 |
|
|
Note |
|
£m |
|
£m |
|
Non-current assets |
|
|
|
|
|
|
Investment properties |
6a |
|
- |
|
8.4 |
|
Goodwill |
|
|
- |
|
- |
|
Plant and equipment |
|
|
0.7 |
|
0.8 |
|
Receivables |
|
|
22.8 |
|
23.6 |
|
Investment in associates |
7b |
|
112.1 |
|
80.7 |
|
Investment in joint ventures |
7c |
|
32.3 |
|
25.7 |
|
Total non-current assets |
|
|
167.9 |
|
139.2 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Trading properties |
6a |
|
- |
|
70.0 |
|
Receivables |
|
|
6.8 |
|
7.4 |
|
Cash and cash equivalents |
8 |
|
11.1 |
|
5.3 |
|
Assets classified as held for sale |
13 |
|
8.5 |
|
32.2 |
|
Total current assets |
|
|
26.4 |
|
114.9 |
|
|
|
|
|
|
|
|
Total assets |
2b |
|
194.3 |
|
254.1 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
|
|
(4.3) |
|
(11.7) |
|
Current tax liabilities |
|
|
(0.2) |
|
(1.3) |
|
Liabilities directly associated with assets classified as |
|
|
|
|
|
|
held for sale |
13 |
|
(0.1) |
|
(1.6) |
|
|
|
|
(4.6) |
|
(14.6) |
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Bank loans |
9a |
|
- |
|
(58.3) |
|
Other payables |
|
|
(0.1) |
|
(0.7) |
|
Deferred tax liabilities |
|
|
(0.9) |
|
(0.9) |
|
Total non-current liabilities |
|
|
(1.0) |
|
(59.9) |
|
|
|
|
|
|
|
|
Total liabilities |
2b |
|
(5.6) |
|
(74.5) |
|
|
|
|
|
|
|
|
Net assets |
|
|
188.7 |
|
179.6 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
|
|
9.9 |
|
9.9 |
|
Other reserves |
|
|
62.6 |
|
72.0 |
|
Capital redemption reserve |
|
|
4.4 |
|
4.4 |
|
Own shares held |
|
|
(0.7) |
|
(0.7) |
|
Retained earnings |
|
|
112.5 |
|
94.0 |
|
Equity shareholders' funds |
|
|
188.7 |
|
179.6 |
|
|
|
|
|||
|
Basic net assets per share |
11 |
|
£0.54 |
£0.51 |
|
|
EPRA triple net assets per share |
11 |
|
£0.54 |
|
£0.51 |
|
EPRA net assets per share |
11 |
|
£0.56 |
|
£0.55 |
|
Unaudited preliminary consolidated statement of changes in equity |
|
For the year to 30 December 2013 |
|
|
|
Other reserves |
|
||||||||||
|
|
|
|
|
|
Net |
|
|
|
|
|
|||
|
|
|
|
|
Foreign |
investment |
Capital |
Own |
|
|
|
|||
|
|
Share |
Merger |
Acquisition |
currency |
hedging |
redemption |
shares |
Retained |
Total |
||||
|
|
capital |
reserve |
reserve |
reserve |
reserve |
reserve |
held |
earnings |
equity |
||||
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
||||
|
|
|
|
|
|
|
|
|
|
- |
||||
|
Balance at 30 December 2011 |
9.9 |
60.3 |
9.5 |
5.6 |
(2.6) |
4.4 |
(6.8) |
115.7 |
196.0 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Loss for the year |
- |
- |
- |
- |
- |
- |
- |
(16.0) |
(16.0) |
||||
|
Other comprehensive income for the year |
- |
- |
- |
(1.3) |
0.7 |
- |
- |
- |
(0.6) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total comprehensive loss for the year |
- |
- |
- |
(1.3) |
0.7 |
- |
- |
(16.0) |
(16.6) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Credit to equity for equity-settled share-based payments |
- |
- |
- |
- |
- |
- |
- |
0.8 |
0.8 |
||||
|
Transfer to income statement for German portfolio 4 |
- |
- |
- |
(0.7) |
- |
- |
- |
- |
(0.7) |
||||
|
Other movements |
- |
- |
- |
- |
0.5 |
- |
6.1 |
(6.5) |
0.1 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Balance at 30 December 2012 |
9.9 |
60.3 |
9.5 |
3.6 |
(1.4) |
4.4 |
(0.7) |
94.0 |
179.6 |
||||
|
Profit for the year |
- |
- |
- |
- |
- |
- |
- |
9.1 |
9.1 |
||||
|
Other comprehensive income for the year |
- |
- |
- |
0.8 |
(0.7) |
- |
- |
- |
0.1 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total comprehensive income for the year |
- |
- |
- |
0.8 |
(0.7) |
- |
- |
9.1 |
9.2 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Credit to equity for equity-settled share-based payments |
- |
- |
- |
- |
- |
- |
- |
1.0 |
1.0 |
||||
|
Transfer between reserves |
- |
- |
(9.5) |
- |
- |
- |
- |
9.5 |
- |
||||
|
Dividends paid |
- |
- |
- |
- |
- |
- |
- |
(0.9) |
(0.9) |
||||
|
Other movements |
- |
- |
- |
- |
- |
- |
- |
(0.2) |
(0.2) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Balance at 30 December 2013 |
9.9 |
60.3 |
- |
4.4 |
(2.1) |
4.4 |
(0.7) |
112.5 |
188.7 |
||||
The merger reserve of £60.3 million arose on the Group's capital raising in 2009 which was structured so as to allow the Company to claim merger relief under section 612 of the Companies Act 2006 on the issue of Ordinary shares. The merger reserve is available for distribution to shareholders.
The acquisition reserve of £9.5 million related to the purchase of the entire ordinary share capital of Morrison Merlin Limited in 2005, prior to which it had been a joint venture in which the Group had a 50% interest. The balance on the reserve arose from the difference at the date of acquisition between the carrying value of the Group's existing interest and its fair value. The reserve was transferred to retained earnings on disposal of Morrison Merlin Limited in October 2013.
The foreign currency reserve of £4.4 million and the net investment hedging reserve deficit of £2.8 million respectively show foreign exchange translation differences from the Group's investment in its German joint venture and the net investment hedge of that investment.
|
Unaudited preliminary consolidated cash flow statement |
|
For the year to 30 December 2013 |
|
|
|
|
2013 |
|
2012 |
|
|
Note |
|
£m |
|
£m |
|
Operating activities |
|
|
|
|
|
|
Net cash from operations |
10 |
|
(1.4) |
|
4.3 |
|
Distributions received from associates |
7b |
|
1.7 |
|
2.2 |
|
Distributions received from joint ventures |
7c |
|
0.2 |
|
0.6 |
|
Distributions received from fixed asset investments |
|
|
- |
|
0.2 |
|
Interest paid |
|
|
(4.2) |
|
(5.1) |
|
Interest received |
|
|
0.2 |
|
- |
|
Income taxes paid |
|
|
(1.2) |
|
(7.2) |
|
Cash flows from operating activities |
|
|
(4.7) |
|
(5.0) |
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Disposal of Morrison Merlin Limited |
13 |
|
12.0 |
|
- |
|
Disposal of interests in joint ventures and associates |
13 |
|
30.6 |
|
14.9 |
|
Other disposals |
|
|
1.0 |
|
0.5 |
|
Purchase of plant and equipment |
|
|
(0.2) |
|
(0.4) |
|
Investment in associates |
7b |
|
(29.3) |
|
(16.2) |
|
Loans to joint ventures |
|
|
(1.0) |
|
- |
|
Loans repaid by joint ventures |
|
|
0.2 |
|
0.4 |
|
Cash flows from investing activities |
|
|
13.3 |
|
(0.8) |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Dividends paid |
|
|
(0.9) |
|
- |
|
Bank loans drawn down |
|
|
- |
|
4.6 |
|
Bank loans repaid |
|
|
(1.0) |
|
(13.2) |
|
Loan arrangement costs |
|
|
- |
|
(0.3) |
|
Repurchase of own shares |
|
|
(0.3) |
|
- |
|
Settlement of forward foreign exchange contract |
|
|
(0.6) |
|
- |
|
Cash flows from financing activities |
|
|
(2.8) |
|
(8.9) |
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
5.8 |
|
(14.7) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the year |
|
5.3 |
|
20.0 |
|
|
Cash and cash equivalents at the end of the year |
8 |
|
11.1 |
|
5.3 |
|
Notes to the unaudited preliminary consolidated financial statements |
|
For the year to 30 December 2013 |
1 Significant Accounting Policies
General information
Capital & Regional plc is a company domiciled and incorporated in the United Kingdom under the Companies Act 2006. These unaudited preliminary consolidated financial statements, which were approved by the Board of Directors on 4 March 2014, do not constitute the Company's statutory financial statements for the years ended 30 December 2013 or 2012.
Statutory accounts for 2012 have 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.
Basis of preparation
These unaudited preliminary consolidated annual financial statements of Capital & Regional plc are prepared in accordance with IFRSs as adopted by the European Union. The accounting policies and methods of computation followed in these financial statements are consistent with those as published in the Group's Annual Report and Financial Statements for the year ended 30 December 2012 which are available on the Company's website at www.capreg.com.
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. 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.
Further detail is contained within the Financial Review.
Operating segments
The Group's results for the year from its Leisure segment, consisting of Great Northern Warehouse and Hemel Hempstead, has been classified as Discontinued Operations with the prior year comparatives restated. The results of Discontinued Operations in the prior year also include the Group's share of results from The Junction Fund, Xscape Braehead, X-Leisure Fund and X-Leisure Limited all of which were included as such in the prior year financial statements. See Note 13 for further details.
Following the above changes the Group's remaining reportable segments under IFRS 8 are The Mall, 'Other UK Shopping Centres' consisting of The Waterside Lincoln Limited Partnership and Kingfisher Limited Partnership (Redditch), Germany, Property Management (consisting of CRPM and Garigal Asset Management GmbH) and Snozone. Group items include Group overheads incurred by Capital & Regional plc and other subsidiaries and the interest expense on the Group's central borrowing facility. In the prior year the results of FIX UK, until the loss of significant influence were included within 'Other'.
The Mall, Other UK Shopping Centres and Germany derive their revenue from the rental of investment and trading properties. The Property Management and Snozone segments derive their revenue from the management of property funds or schemes and the operation of indoor ski slopes respectively. The split of revenue between these classifications satisfies the requirement of IFRS 8 to report revenues from different products and services. Depreciation and the variable overhead represent the only significant non-cash expenses.
The Group's interests in the assets, liabilities and profit or loss of its associates and joint ventures are proportionately consolidated and are also shown on a see-through basis as this is how they are reported to the Board of directors. There are no differences between the measurements of the segments' assets, liabilities and profit or loss as they are reported to the Board of directors and their presentation under the Group's accounting policies.
Inter-segment revenue and expenses represent items eliminated on consolidation and are accounted for on an arm's length basis. Management fees and other revenue items in the property management segment are earned from the asset business segments, where they are included under property and void costs. Since these asset business segments are proportionately consolidated, the costs would not eliminate against the income and have therefore not been split out separately as inter-segment expenses.
Recurring pre-tax profit
Recurring pre-tax profit is the total of Contribution, the Group's share of management fees less fixed management expenses earned by CRPM, X-Leisure Limited (in 2012 until reclassification as held for sale) and Garigal, the profit from Snozone and any fixed central costs and interest adjusted for any significant one off items such as Performance Fees. Recurring pre-tax profit includes results from Discontinued Operations up until the point of disposal or reclassification as held for sale.
2a Operating segments
|
|
|
UK Shopping Centres |
|
|
|
|
|
|
|||||||||
|
|
|
|
Other UK |
|
|
|
Total |
|
|
||||||||
|
|
|
|
Shopping |
|
Property |
|
Group |
Continuing |
Discontinued |
|
|||||||
|
|
|
The Mall |
Centres |
Germany |
management |
Snozone |
items |
Operations |
Operations |
Total |
|||||||
|
Year to 30 December 2013 |
Note |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|||||||
|
Rental income from external sources |
2b |
13.6 |
4.5 |
13.3 |
- |
- |
- |
31.4 |
5.2 |
36.6 |
|||||||
|
Property and void costs |
|
(4.4) |
(0.9) |
(2.2) |
- |
- |
- |
(7.5) |
(1.0) |
(8.5) |
|||||||
|
Net rental income |
|
9.2 |
3.6 |
11.1 |
- |
- |
- |
23.9 |
4.2 |
28.1 |
|||||||
|
Interest income |
|
- |
- |
0.6 |
- |
- |
- |
0.6 |
- |
0.6 |
|||||||
|
Interest expense |
|
(5.1) |
(1.5) |
(5.1) |
- |
- |
- |
(11.7) |
(4.1) |
(15.8) |
|||||||
|
Contribution |
|
4.1 |
2.1 |
6.6 |
- |
- |
- |
12.8 |
0.1 |
12.9 |
|||||||
|
Management fees/Snozone income |
2b |
- |
- |
- |
9.9 |
9.0 |
- |
18.9 |
- |
18.9 |
|||||||
|
Management expenses |
|
- |
- |
- |
(5.3) |
(7.9) |
(4.2) |
(17.4) |
- |
(17.4) |
|||||||
|
Depreciation |
|
- |
- |
- |
(0.1) |
(0.1) |
- |
(0.2) |
- |
(0.2) |
|||||||
|
Inter-segment eliminations |
2b |
- |
- |
- |
0.1 |
- |
- |
0.1 |
(0.1) |
- |
|||||||
|
Interest expense on central facility |
|
- |
- |
- |
- |
- |
(0.2) |
(0.2) |
- |
(0.2) |
|||||||
|
Recurring pre-tax profit/(loss) |
|
4.1 |
2.1 |
6.6 |
4.6 |
1.0 |
(4.4) |
14.0 |
- |
14.0 |
|||||||
|
Variable overhead |
|
- |
- |
- |
(0.7) |
- |
(1.1) |
(1.8) |
- |
(1.8) |
|||||||
|
Revaluation of properties |
|
(0.5) |
1.2 |
(2.3) |
- |
- |
- |
(1.6) |
(0.2) |
(1.8) |
|||||||
|
(Loss)/profit on disposal |
|
(4.2) |
- |
(0.3) |
- |
- |
1.01 |
(3.5) |
(2.1) |
(5.6) |
|||||||
|
Impairment of Euro B-Note |
|
- |
- |
(2.4) |
- |
- |
- |
(2.4) |
- |
(2.4) |
|||||||
|
Gain/(loss) on financial instruments |
|
2.9 |
0.6 |
1.2 |
- |
- |
- |
4.7 |
1.8 |
6.5 |
|||||||
|
Other items |
|
2.0 |
- |
(0.8) |
(1.1) |
(0.1) |
(0.1) |
(0.1) |
- |
(0.1) |
|||||||
|
Profit/(loss) before tax |
|
4.3 |
3.9 |
2.0 |
2.8 |
0.9 |
(4.6) |
9.3 |
(0.5) |
8.8 |
|||||||
|
Tax credit |
4a |
|
|
|
|
|
|
0.2 |
0.1 |
0.3 |
|||||||
|
Profit after tax |
|
|
|
|
|
|
|
9.5 |
(0.4) |
9.1 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Total assets |
2b |
243.7 |
54.6 |
189.5 |
3.1 |
2.5 |
13.7 |
507.1 |
8.5 |
515.6 |
|||||||
|
Total liabilities |
2b |
(143.3) |
(33.3) |
(144.7) |
(1.7) |
(1.1) |
(2.9) |
(327.0) |
0.1 |
(326.9) |
|||||||
|
Net assets |
|
100.4 |
21.3 |
44.8 |
1.4 |
1.4 |
10.8 |
180.1 |
8.6 |
188.7 |
|||||||
1 Consisting of profit on sale of land of £0.5 million and profit on disposal of FIX UK of £0.5 million.
2a Operating segments (continued)
|
|
|
UK Shopping Centres |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
Other UK |
|
|
|
|
|
|
|
|
Total |
|
|
|||||||||||
|
|
|
|
Shopping |
|
|
|
Property |
|
|
Group |
Continuing |
Discontinued |
|
|
|||||||||||
|
|
|
The Mall |
Centres |
Germany |
Other |
|
management |
Snozone |
|
items |
Operations |
Operations |
Total |
|
|||||||||||
|
Year to 30 December 20121 |
Note |
£m |
£m |
£m |
£m |
|
£m |
£m |
|
£m |
£m |
£m |
£m |
|
|||||||||||
|
Rental income from external sources |
2b |
15.4 |
3.0 |
15.9 |
1.1 |
- |
- |
- |
- |
- |
35.4 |
15.6 |
51.0 |
|
|||||||||||
|
Property and void costs |
|
(4.3) |
(0.8) |
(3.0) |
(0.1) |
- |
- |
- |
- |
- |
(8.2) |
(4.3) |
(12.5) |
|
|||||||||||
|
Net rental income |
|
11.1 |
2.2 |
12.9 |
1.0 |
|
- |
- |
|
- |
27.2 |
11.3 |
38.5 |
|
|||||||||||
|
Interest income |
|
- |
- |
0.7 |
- |
- |
- |
- |
|
- |
0.7 |
- |
0.7 |
|
|||||||||||
|
Interest expense |
|
(6.6) |
(1.1) |
(6.5) |
(0.4) |
|
- |
- |
|
- |
(14.6) |
(8.1) |
(22.7) |
|
|||||||||||
|
Contribution |
|
4.5 |
1.1 |
7.1 |
0.6 |
|
- |
- |
|
- |
13.3 |
3.2 |
16.5 |
|
|||||||||||
|
Management fees/Snozone income |
2b |
- |
- |
- |
- |
- |
10.4 |
10.1 |
- |
- |
20.5 |
2.3 |
22.8 |
|
|||||||||||
|
Management expenses |
|
- |
- |
- |
- |
- |
(7.0) |
(8.7) |
- |
(3.9) |
(19.6) |
(1.7) |
(21.3) |
|
|||||||||||
|
Depreciation |
|
- |
- |
- |
- |
- |
(0.1) |
(0.2) |
- |
- |
(0.3) |
- |
(0.3) |
|
|||||||||||
|
Inter-segment eliminations |
2b |
- |
- |
- |
- |
- |
0.1 |
- |
- |
- |
0.1 |
(0.1) |
- |
|
|||||||||||
|
Interest expense on central facility |
|
- |
- |
- |
- |
- |
- |
- |
- |
(0.7) |
(0.7) |
- |
(0.7) |
|
|||||||||||
|
Recurring pre-tax profit/(loss) |
|
4.5 |
1.1 |
7.1 |
0.6 |
|
3.4 |
1.2 |
|
(4.6) |
13.3 |
3.7 |
17.0 |
|
|||||||||||
|
Performance fees |
2b |
- |
- |
- |
- |
|
2.6 |
- |
- |
- |
2.6 |
(0.6) |
2.0 |
|
|||||||||||
|
Variable overhead |
|
- |
- |
- |
- |
- |
(0.9) |
(0.1) |
|
(1.7) |
(2.7) |
- |
(2.7) |
|
|||||||||||
|
Revaluation of properties |
|
(7.6) |
(1.3) |
(10.0) |
(0.1) |
|
- |
- |
|
- |
(19.0) |
(1.8) |
(20.8) |
|
|||||||||||
|
(Loss)/profit on disposal of properties |
|
(1.6) |
- |
0.1 |
0.1 |
|
- |
- |
|
- |
(1.4) |
(0.2) |
(1.6) |
|
|||||||||||
|
Impairment of goodwill |
|
- |
- |
- |
- |
|
- |
- |
|
- |
- |
(1.8) |
(1.8) |
|
|||||||||||
|
Impairment of FIX UK |
|
- |
- |
- |
(1.3) |
|
- |
- |
|
- |
(1.3) |
- |
(1.3) |
|
|||||||||||
|
Impairment of German Portfolio 4 |
|
- |
- |
(3.3) |
- |
|
- |
- |
|
- |
(3.3) |
- |
(3.3) |
|
|||||||||||
|
Transfer from foreign currency reserve for German Portfolio 4 |
|
- |
- |
0.7 |
- |
|
- |
- |
|
- |
0.7 |
- |
0.7 |
|
|||||||||||
|
Impairment of Euro B-Note |
|
- |
- |
(3.2) |
- |
|
- |
- |
|
- |
(3.2) |
- |
(3.2) |
|
|||||||||||
|
Gain/(loss) on financial instruments |
|
1.6 |
(0.6) |
(0.1) |
(0.1) |
|
- |
- |
|
- |
0.8 |
2.8 |
3.6 |
|
|||||||||||
|
Other items |
|
1.4 |
- |
0.2 |
- |
|
(0.2) |
(0.2) |
|
(0.4) |
0.8 |
(0.3) |
0.5 |
|
|||||||||||
|
Loss on disposal of JV's and Associates |
|
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
(4.0) |
(4.0) |
|
|||||||||||
|
Profit/(loss) before tax |
|
(1.7) |
(0.8) |
(8.5) |
(0.8) |
|
4.9 |
0.9 |
|
(6.7) |
(12.7) |
(2.2) |
(14.9) |
|
|||||||||||
|
Tax credit/(charge) |
4a |
|
|
|
|
|
|
|
|
|
0.9 |
(2.0) |
(1.1) |
|
|||||||||||
|
Profit after tax |
|
|
|
|
|
|
|
|
|
|
(11.8) |
(4.2) |
(16.0) |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total assets |
2b |
210.5 |
49.2 |
191.9 |
0.2 |
|
4.8 |
2.5 |
4 |
4.0 |
463.1 |
116.4 |
579.5 |
|
|||||||||||
|
Total liabilities |
2b |
(142.5) |
(32.9) |
(149.8) |
- |
|
(4.2) |
(2.0) |
|
(4.6) |
(336.0) |
(63.9) |
(399.9) |
|
|||||||||||
|
Net assets |
|
68.0 |
16.3 |
42.1 |
0.2 |
|
0.6 |
0.5 |
|
(0.6) |
127.1 |
52.5 |
179.6 |
|
|||||||||||
1 2012 results have been restated to separate discontinued operations as explained in Note 13.
2b Reconciliations of reportable revenue, assets and liabilities
|
|
|
Year to |
Year to |
|
|
|
30 December |
30 December |
|
|
|
2013 |
20121 |
|
Revenue |
Note |
£m |
£m |
|
Rental income from external sources |
2a |
31.4 |
35.4 |
|
Inter-segment revenue |
2a |
0.1 |
0.1 |
|
Management fees |
2a |
9.9 |
10.4 |
|
Performance fees |
2a |
- |
2.6 |
|
Snozone income |
2a |
9.0 |
10.1 |
|
Revenue for reportable segments - continuing operations |
|
50.4 |
58.6 |
|
Elimination of inter-segment revenue |
2a |
- |
- |
|
Rental income earned by associates and joint ventures |
7d, 7e |
(31.4) |
(35.4) |
|
Management fees earned by associates and joint ventures |
7d, 7e |
(1.4) |
(1.2) |
|
Revenue per consolidated income statement - continuing operations |
3 |
17.6 |
22.0 |
|
|
|
|
|
|
Revenue for reportable segments by country - continuing operations |
|
|
|
|
UK |
|
35.7 |
41.5 |
|
Germany |
|
14.7 |
17.1 |
|
Revenue for reportable segments - continuing operations |
|
50.4 |
58.6 |
Revenue is attributed to countries on the basis of the location of the underlying properties. Revenue from the Group's major customer is management fee income from The Mall LP, included in the property management segment, which represented £7.3 million (2012: £6.7 million) of the Group's total revenue of £17.6 million (2012: £22.0 million).
|
|
|
2013 |
2012 |
|
Assets |
Note |
£m |
£m |
|
Total assets of reportable segments |
2a |
515.6 |
579.5 |
|
Adjustment for associates and joint ventures |
|
(321.3) |
(325.4) |
|
Group assets |
|
194.3 |
254.1 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Total liabilities of reportable segments |
2a |
(326.9) |
(399.9) |
|
Adjustment for associates and joint ventures |
|
321.3 |
325.4 |
|
Group liabilities |
|
(5.6) |
(74.5) |
|
|
|
|
|
|
Net assets by country |
|
|
|
|
UK |
|
143.3 |
136.5 |
|
Germany |
|
45.4 |
43.1 |
|
Group net assets |
|
188.7 |
179.6 |
3 Revenue
|
|
|
Year to |
Year to |
|
|
|
30 December |
30 December |
|
|
|
2013 |
20121 |
|
|
|
Total |
Total |
|
Statutory |
Note |
£m |
£m |
|
|
|
|
|
|
Gross rent from wholly owned properties |
|
- |
- |
|
Management fees |
|
8.6 |
11.9 |
|
Snozone income |
2a |
9.0 |
10.1 |
|
Revenue per consolidated income statement - continuing operations |
2b |
17.6 |
22.0 |
Management fees represent revenue earned by the Group's wholly-owned CRPM subsidiary.
The fees earned by CRPM for asset and property management on The Mall are on the basis of a fixed fee of £4.5 million per annum.
25% of this fee is subject to reduction on a sliding scale from 100% to 75% if the valuation of the properties in the fund falls to between £850 million and £600 million.
1 2012 results have been restated to separate discontinued operations as explained in Note 13.
4 Tax
4a Tax charge
|
|
|
Year to |
Year to |
|
|
|
30 December |
30 December |
|
|
|
2013 |
20121 |
|
|
Note |
£m |
£m |
|
Current tax charge |
|
|
|
|
UK corporation tax - continuing operations |
|
- |
1.0 |
|
UK corporation tax - discontinued operations |
|
- |
2.0 |
|
Adjustments in respect of prior years - continuing operations |
|
(0.9) |
(2.6) |
|
Foreign tax - continuing operations |
|
0.4 |
0.2 |
|
Total current tax (credit)/charge |
|
(0.5) |
0.6 |
|
|
|
|
|
|
Deferred tax charge |
|
|
|
|
Origination and reversal of temporary timing differences |
|
0.3 |
0.5 |
|
Deferred tax credit - discontinued operations |
|
(0.1) |
(3.5) |
|
Total deferred tax charge/(credit) |
|
0.2 |
(3.0) |
|
|
|
|
|
|
Total tax credit |
|
(0.3) |
(2.4) |
|
Total tax credit - continuing operations |
|
(0.2) |
(0.9) |
|
Total tax credit - discontinued operations |
|
(0.1) |
(1.5) |
£nil (2012: £nil) of the tax charge relates to items included in other comprehensive income.
4b Tax charge to equity
|
|
|
Year to |
Year to |
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
Note |
£m |
£m |
|
Current tax |
|
|
|
|
Excess tax deductions related to share-based payments |
|
|
|
|
on exercised options |
|
- |
- |
|
Deferred tax |
|
|
|
|
Arising on transactions with equity participants: |
|
|
|
|
Change in estimated excess tax deductions related |
|
|
|
|
to share-based payments |
|
(0.2) |
- |
|
Total income tax recognised directly in equity |
|
(0.2) |
- |
4c Tax charge reconciliation
|
|
|
Year to |
Year to |
|
|
|
30 December |
30 December |
|
|
|
2013 |
20121 |
|
|
Note |
£m |
£m |
|
Profit/(loss) before tax on continuing operations |
|
9.3 |
(12.7) |
|
Profit multiplied by the UK corporation tax rate of 23.25% (2012: 24.5%) |
|
2.2 |
(3.1) |
|
Non-allowable expenses and non-taxable items |
|
(1.9) |
(0.8) |
|
Utilisation of tax losses |
|
- |
(1.3) |
|
Tax on realised gains |
|
0.5 |
0.5 |
|
Unrealised losses on investment properties not taxable |
|
0.4 |
4.7 |
|
Temporary timing and controlled foreign companies income |
|
(0.5) |
1.7 |
|
Adjustments in respect of prior years |
|
(0.9) |
(2.6) |
|
Total tax credit |
4a |
(0.2) |
(0.9) |
1 2012 results have been restated to separate discontinued operations as explained in Note 13.
5 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 tables:
5a Earnings per share calculation
|
Year to 30 December 2013 |
|
Year to 30 December 2013 |
Year to 30 December 20121 |
||||
|
|
Note |
Basic |
Diluted |
EPRA diluted |
Basic |
Diluted |
EPRA diluted |
|
Profit/(loss) (£m) |
|
|
|
|
|
|
|
|
Profit/(loss) for the year from continuing operations |
|
9.5 |
9.5 |
9.5 |
(11.8) |
(11.8) |
(11.8) |
|
Revaluation of investment properties |
5b |
- |
- |
1.6 |
- |
- |
19.1 |
|
Profit on disposal of investment properties (net of tax) |
5b |
- |
- |
2.7 |
- |
- |
1.1 |
|
Movement in fair value of financial instruments (net of tax) |
5b |
- |
- |
(4.2) |
- |
- |
(0.2) |
|
Deferred tax charge on capital allowances |
|
- |
- |
(0.4) |
- |
- |
(0.1) |
|
Profit/(loss) from continuing operations |
|
9.5 |
9.5 |
9.2 |
(11.8) |
(11.8) |
8.1 |
|
Discontinued operations |
|
(0.4) |
(0.4) |
(0.7) |
(4.2) |
(4.2) |
(5.2) |
|
Profit/(loss) |
|
9.1 |
9.1 |
8.5 |
(16.0) |
(16.0) |
2.9 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (m) |
|
|
|
|
|
|
|
|
Ordinary shares in issue |
|
349.8 |
349.8 |
349.8 |
350.6 |
350.6 |
350.6 |
|
Own shares held |
|
(1.3) |
(1.3) |
(1.3) |
(1.3) |
(1.3) |
(1.3) |
|
Dilutive contingently issuable shares and share options |
|
- |
2.8 |
2.8 |
- |
- |
- |
|
|
|
348.4 |
351.2 |
351.2 |
349.3 |
349.3 |
349.3 |
|
Earnings/(loss) per share (pence) |
|
3p |
3p |
2p |
(5)p |
(5)p |
1p |
|
Earnings/(loss) per share (pence) -continuing operations |
|
3p |
3p |
3p |
(3)p |
(3)p |
2p |
|
|
|
|
|
|
|
|
|
At the end of the year, the Group had 5,358,855 (2012: 13,896,377) share options and contingently issuable shares granted under share-based payment schemes that could potentially have diluted basic earnings per share in the future but which have not been included in the calculation because they are not dilutive or the conditions for vesting have not been met.
5b Reconciliation of earnings figures included in earnings per share calculations
|
|
|
Year to 30 December 2013 |
Year to 30 December 20121 |
||||
|
|
|
|
Profit/(loss) |
Movement |
|
Profit/(loss) |
Movement |
|
|
|
|
on disposal of |
in fair value |
|
on disposal of |
in fair value |
|
|
|
Revaluation |
investment |
of financial |
Revaluation |
investment |
of financial |
|
|
|
movements |
properties |
instruments |
movements |
properties |
instruments |
|
|
Note |
£m |
£m |
£m |
£m |
£m |
£m |
|
Associates |
7d |
(0.2) |
(4.2) |
3.4 |
(8.9) |
(1.6) |
1.0 |
|
Joint ventures |
7e |
(1.4) |
(0.3) |
1.3 |
(10.2) |
0.1 |
(0.4) |
|
Wholly owned |
|
- |
1.0 |
- |
- |
0.1 |
0.2 |
|
Tax effect |
|
- |
0.8 |
(0.5) |
- |
0.3 |
(0.6) |
|
Total |
5a |
(1.6) |
(2.7) |
4.2 |
(19.1) |
(1.1) |
0.2 |
1 2012 results have been restated to separate discontinued operations as explained in Note 13.
6 Property assets
6 a Wholly-owned properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freehold |
Leasehold |
Sub-total |
Freehold |
Total |
|
|
|
investment |
investment |
investment |
trading |
property |
|
|
|
properties |
properties |
properties |
properties |
assets |
|
|
Note |
£m |
£m |
£m |
£m |
£m |
|
Cost or valuation |
|
|
|
|
|
|
|
At 30 December 2011 |
|
0.2 |
8.3 |
8.5 |
71.5 |
80.0 |
|
Capital expenditure |
|
- |
0.3 |
0.3 |
- |
0.3 |
|
Disposal of freehold investment properties |
|
(0.2) |
- |
(0.2) |
- |
(0.2) |
|
Impairment of trading properties |
|
- |
- |
- |
(1.5) |
(1.5) |
|
Revaluation movement |
|
- |
(0.2) |
(0.2) |
- |
(0.2) |
|
At 30 December 2012 |
|
- |
8.4 |
8.4 |
70.0 |
78.4 |
|
Capital expenditure |
|
- |
- |
- |
0.5 |
0.5 |
|
Disposal of freehold trading properties |
|
- |
- |
- |
(70.2) |
(70.2) |
|
Impairment of trading properties |
|
- |
- |
- |
(0.3) |
(0.3) |
|
Transfer to held for sale (Note 13) |
|
- |
(8.4) |
(8.4) |
- |
(8.4) |
|
At 30 December 2013 |
|
- |
- |
- |
- |
- |
The Group did not have any wholly owned development property in either the current year or the preceding year. Having disposed of Great Northern Warehouse, its remaining freehold trading property, and reclassified its leasehold property, Leisure World, Hemel Hempstead as held for sale during the year the Group no longer classifies any property assets as investment or trading property on its balance sheet. Prior to its disposal Great Northern Warehouse had been pledged to secure banking facilities granted to the Group (2012: value of £70.0 million). The historical cost of wholly owned property at 30 December 2012 was £92.2 million.
6b Property assets summary
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
|
Valuation |
Valuation |
|
|
Note |
£m |
£m |
|
Wholly owned |
|
|
|
|
Investment properties at fair value |
|
- |
8.4 |
|
Trading properties at the lower of cost and net realisable value |
|
- |
72.5 |
|
Unamortised tenant incentives on trading properties |
|
- |
(2.5) |
|
|
|
- |
78.4 |
|
Joint ventures (100%) |
|
|
|
|
Investment properties at fair value |
|
368.5 |
364.1 |
|
Unamortised tenant incentives on investment properties |
|
(1.3) |
(0.2) |
|
|
7e |
367.2 |
363.9 |
|
Associates (100%) |
|
|
|
|
Investment properties at fair value |
|
819.7 |
982.6 |
|
Head leases treated as finance leases on investment properties |
|
65.5 |
65.5 |
|
Unamortised tenant incentives on investment properties |
|
(18.4) |
(19.1) |
|
|
7d |
866.8 |
1,029.0 |
Valuations
In addition to the property assets classified as held for sale as shown on the balance sheet, the Group's property assets include its share in the investment properties held by its associates and joint ventures. External valuations at 30 December 2013 were carried out on £1,188.2 million (2012: £1,428.7 million) of the gross property assets held by the Group and its associates and joint ventures, of which the Group's share was £411.6 million (2012: £461.3 million).
The valuations were carried out by independent qualified professional valuers from CB Richard Ellis Limited, Cushman & Wakefield LLP and DTZ Debenham Tie Leung Limited. 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. The valuations, which conform to International Valuation Standards, were arrived at by reference to market evidence of transaction prices for similar properties.
7 Investment in associates and joint ventures
7a Share of results
|
|
|
Year to |
Year to |
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
Note |
£m |
£m |
|
Share of results of associates |
7d |
3.6 |
(5.6) |
|
Impairment of FIX UK |
|
- |
(1.3) |
|
Share of results of joint ventures |
7e |
6.4 |
(3.3) |
|
Impairment of German portfolio 4 |
|
- |
(3.3) |
|
Transfer from foreign currency reserve for German portfolio 4 |
|
- |
0.7 |
|
|
|
10.0 |
(12.8) |
7b Investment in associates
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
Note |
£m |
£m |
|
At the start of the year |
|
80.7 |
120.2 |
|
Investment in associates |
|
29.3 |
16.2 |
|
Share of results of associates |
7d |
3.6 |
(5.6) |
|
Share of results of associates within discontinued operations |
7d |
- |
0.5 |
|
Dividends and capital distributions received |
|
(1.7) |
(2.2) |
|
Reclassified as held for sale (X-Leisure Fund) |
|
- |
(33.9) |
|
Foreign exchange differences |
|
0.2 |
- |
|
Impairment of FIX UK |
|
- |
(1.3) |
|
Disposal of The Junction Fund |
|
- |
(13.2) |
|
At the end of the year |
7d |
112.1 |
80.7 |
The Group's associates at 30 December 2013 were:
|
|
Group interest |
||
|
|
At the start of the year |
Average during the year/until disposal |
At the end of the year |
|
|
% |
% |
% |
|
The Mall Limited Partnership |
20.15 |
20.84 |
29.26 |
|
Kingfisher Limited Partnership |
20.00 |
20.00 |
20.00 |
|
Garigal Asset Management GmbH ("Garigal") |
30.06 |
30.06 |
30.06 |
|
Euro B-Note Holding Limited |
49.90 |
49.90 |
49.90 |
The Group holds 20% or more of The Mall Limited Partnership, Garigal Asset Management GmbH and Kingfisher Limited Partnership and exercises significant influence through its representation on the General Partner or advisory boards. The Group's interest in The Junction Fund and X-Leisure Limited Partnership were disposed of and reclassified as held for sale respectively during 2012.
The Mall Limited Partnership
During the year the Group made acquisitions of units in The Mall Fund as summarised in the table below:
|
|
|
|
|||
|
Date |
Units purchased |
Price per unit |
Consideration |
C&R holding on completion |
|
|
|
million |
£ |
£m |
% |
|
|
4 January 2013 |
1.6 |
0.25 |
0.4 |
20.33 |
|
|
29 November 2013 |
53.5 |
0.34 |
18.2 |
26.00 |
|
|
23 December 2013 |
5.7 |
0.34 |
1.9 |
26.61 |
|
|
30 December 2013 |
25.0 |
0.35 |
8.8 |
29.26 |
|
Kingfisher Limited Partnership
On 1 May 2012, the Group completed its acquisition of a 20% interest in The Kingfisher Shopping Centre in Redditch for a total consideration of £10.6 million in partnership with funds managed by Oaktree Capital Management LP. The Kingfisher Centre was purchased for £130.0 million at an 8% net initial yield.
The FIX UK Limited Partnership
In the prior year at 30 June 2012, the Group made a provision for impairment of £1.3 million to write down the carrying value of its investment in FIX UK Limited Partnership to £nil. At that date the Group also concluded it had lost significant influence given the debt of the fund exceeded the value of the property and the impending refinancing. As such the share of results of FIX UK that was included within note 7d for the year to 30 December 2012 of £0.3 million related purely to the period to 30 June 2012. On 8 February 2013, Legal & General Property acquired the FIX UK Portfolio, the Group received £0.5 million of consideration in respect of its 20% interest.
Euro B-Note Holding Limited
During the year at 30 June 2013, management performed an impairment review over the loan receivable due from German Portfolio 4 that was held at 30 December 2012 at a carrying value of £2.3 million. This impairment assessment resulted in the Group's share of the loan receivable being written down to £nil carrying value reflecting adverse developments in the six months, most prominently the insolvency of one of the most significant tenants in the portfolio.
7c Investment in joint ventures
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
Note |
£m |
£m |
|
At the start of the year |
|
25.7 |
27.2 |
|
Share of results of joint ventures |
7e |
6.4 |
(3.3) |
|
Share of results of joint ventures within discontinued operations |
7e |
- |
2.0 |
|
Dividends and capital distributions received |
|
(0.2) |
(0.6) |
|
Reclassified as held for sale (X-Leisure Limited) |
|
- |
(0.8) |
|
Impairment of German Portfolio 4 |
|
- |
(3.3) |
|
Disposal of interest in Xscape Braehead |
|
- |
5.4 |
|
Foreign exchange differences |
|
0.4 |
(0.9) |
|
At the end of the year |
7e |
32.3 |
25.7 |
The Group's joint ventures at 30 December 2013 were:
|
|
At the start of the year |
Group interest Average during the year/ until disposal/ since acquisition |
At the end of the year |
|
|
% |
% |
% |
|
German portfolio |
50.00 |
50.00 |
50.00 |
|
The Auchinlea Partnership |
50.00 |
50.00 |
50.00 |
|
Waterside Lincoln Limited Partnership |
50.00 |
50.00 |
50.00 |
The Group's investments in joint ventures include its share of the German portfolio (49.6%), and its investments in The Waterside Lincoln Limited Partnership (50%). The Group's interest in X-Leisure Limited (50%) was reclassified as held for sale during 2012 while the interest in Xscape Braehead Partnership (50%) was disposed of on 24 December 2012 (See Note 13 for further details). The Group's share in the German portfolio is accounted for at 50% as the minority interests are included as a liability on the joint venture balance sheet.
German portfolio
In the prior year at 30 June 2012, the Group made a provision for impairment of £3.3 million to write down the carrying value of its investment in the German portfolio 4 joint venture to £nil. This was to take account of the fall in property values during the first half of 2012 which resulted in portfolio 4 defaulting on its €157.9 million debt. The Group concluded that it had lost joint control of its investment in German Portfolio 4 at 30 June 2012 given the known inability to repay the debt on maturity and as such its share of results of German Portfolio 4 of a loss after tax of £6.6 million that was included within note 7d for 2012 relates purely to the period to 30 June 2012.
The impairment recorded at 30 June 2012 resulted in the following share of assets and liabilities of German Portfolio 4 being removed from the see-through analysis in note 7e:
|
|
£m |
|
Investment properties |
63.6 |
|
Other assets |
4.2 |
|
Current liabilities |
(63.2) |
|
Non-current liabilities |
(1.3) |
|
Net assets |
3.3 |
At 30 June 2012, £0.7 million was reclassified from the foreign currency reserve to the income statement related to portfolio 4.
The portfolio was placed into administration in January 2013. The securitised loan is non-recourse to the Group or any properties in the other German joint venture portfolios.
7d Analysis of investment in associates
|
|
|
|
|
|
Year to 30 December |
Year to 30 December |
|
|
|
|
|
|
Other UK |
|
2013 |
2012 |
|
|
|
|
The Mall |
Shopping Centres |
Other |
Total |
Total |
|
|
Note |
|
£m |
£m |
£m |
£m |
£m |
|
Income statement (100%) |
|
|
|
|
|
|
|
|
Revenue - gross rent |
|
|
65.2 |
12.7 |
- |
77.9 |
149.0 |
|
Property and management expenses |
|
|
(16.6) |
(2.6) |
- |
(19.2) |
(31.1) |
|
Void costs |
|
|
(4.2) |
(0.2) |
- |
(4.4) |
(6.5) |
|
Net rent |
|
|
44.4 |
9.9 |
- |
54.3 |
111.4 |
|
Net interest payable |
|
|
(24.7) |
(5.6) |
(0.1) |
(30.4) |
(68.3) |
|
Contribution |
|
|
19.7 |
4.3 |
(0.1) |
23.9 |
43.1 |
|
Revenue - management fees |
|
|
- |
- |
4.6 |
4.6 |
4.1 |
|
Management expenses |
|
|
- |
- |
(2.6) |
(2.6) |
(12.8) |
|
Revaluation of investment properties |
|
|
(2.4) |
1.6 |
- |
(0.8) |
(49.4) |
|
Loss on sale of investment properties |
|
|
(19.9) |
- |
- |
(19.9) |
(9.3) |
|
Fair value of interest rate swaps |
|
|
13.9 |
2.5 |
- |
16.4 |
13.8 |
|
Impairment of Euro B-Note |
|
|
- |
- |
(4.7) |
(4.7) |
(6.3) |
|
(Loss)/profit before tax |
|
|
11.3 |
8.4 |
(2.8) |
16.9 |
(16.8) |
|
Tax |
|
|
- |
- |
(0.6) |
(0.6) |
(0.3) |
|
(Loss)/profit after tax |
|
|
11.3 |
8.4 |
(3.4) |
16.3 |
(17.1) |
|
|
|
|
|
|
|
|
|
|
Balance sheet (100%) |
|
|
|
|
|
|
|
|
Investment properties |
|
|
732.3 |
134.5 |
- |
866.8 |
1,029.0 |
|
Other assets |
|
|
100.3 |
13.6 |
2.7 |
116.6 |
167.7 |
|
Current liabilities |
|
|
(32.0) |
(7.0) |
(0.7) |
(39.7) |
(45.2) |
|
Non-current liabilities |
|
|
(457.5) |
(85.3) |
- |
(542.8) |
(759.1) |
|
Net assets (100%) |
|
|
343.1 |
55.8 |
2.0 |
400.9 |
392.4 |
|
|
|
|
|
|
|
|
|
|
Income statement (Group share) |
|
|
|
|
|
|
|
|
Revenue - gross rent |
|
|
13.6 |
2.6 |
- |
16.2 |
25.3 |
|
Property and management expenses |
|
|
(3.5) |
(0.6) |
- |
(4.1) |
(5.5) |
|
Void costs |
|
|
(0.9) |
- |
- |
(0.9) |
(1.1) |
|
Net rent |
|
|
9.2 |
2.0 |
- |
11.2 |
18.7 |
|
Net interest payable |
|
|
(5.1) |
(1.1) |
(0.1) |
(6.3) |
(11.4) |
|
Contribution |
|
|
4.1 |
0.9 |
(0.1) |
4.9 |
7.3 |
|
Revenue - management fees |
|
|
- |
- |
1.4 |
1.4 |
1.2 |
|
Management expenses |
|
|
- |
- |
(1.1) |
(1.1) |
(2.1) |
|
Revaluation of investment properties |
|
|
(0.5) |
0.3 |
- |
(0.2) |
(9.8) |
|
Loss on sale of investment properties |
|
|
(4.2) |
- |
- |
(4.2) |
(1.8) |
|
Fair value of interest rate swaps |
|
|
2.9 |
0.5 |
- |
3.4 |
2.0 |
|
Impairment of Euro B-Note |
|
|
- |
- |
(2.4) |
(2.4) |
(3.2) |
|
Gain recognised on investment in Mall |
|
|
2.0 |
- |
- |
2.0 |
1.4 |
|
(Loss)/profit before tax |
|
|
4.3 |
1.7 |
(2.2) |
3.8 |
(5.0) |
|
Tax |
|
|
- |
- |
(0.2) |
(0.2) |
(0.1) |
|
(Loss)/profit after tax |
|
|
4.3 |
1.7 |
(2.4) |
3.6 |
(5.1) |
|
|
|
|
|
|
|
|
|
|
Balance sheet (Group share) |
|
|
|
|
|
|
|
|
Investment properties |
|
|
214.3 |
26.9 |
- |
241.2 |
207.1 |
|
Other assets |
|
|
29.4 |
2.7 |
0.8 |
32.9 |
35.6 |
|
Current liabilities |
|
|
(9.4) |
(1.4) |
(0.2) |
(11.0) |
(9.2) |
|
Non-current liabilities |
|
|
(133.9) |
(17.1) |
- |
(151.0) |
(152.8) |
|
Net assets (Group share) |
|
|
100.4 |
11.1 |
0.6 |
112.1 |
80.7 |
7e Analysis of investment in joint ventures
|
|
|
|
|
|
|
Year to |
Year to |
|
|
|
|
|
Other UK |
|
30 December |
30 December |
|
|
|
|
German |
Shopping |
|
2013 |
2012 |
|
|
|
|
portfolio |
Centres |
Other |
Total |
Total |
|
|
|
|
£m |
£m |
£m |
£m |
£m |
|
Income statement (100%) |
|
|
|
|
|
|
|
|
Revenue - gross rent |
|
|
26.7 |
3.8 |
- |
30.5 |
38.1 |
|
Property and management expenses |
|
|
(4.0) |
(0.2) |
- |
(4.2) |
(10.6) |
|
Void costs |
|
|
(0.3) |
(0.5) |
- |
(0.8) |
(0.7) |
|
Net rent |
|
|
22.4 |
3.1 |
- |
25.5 |
26.8 |
|
Net interest payable |
|
|
(10.1) |
(0.8) |
- |
(10.9) |
(13.0) |
|
Contribution |
|
|
12.3 |
2.3 |
- |
14.6 |
13.8 |
|
Revenue - management fees |
|
|
- |
- |
- |
- |
4.7 |
|
Management expenses |
|
|
- |
- |
- |
- |
(2.3) |
|
Revaluation of investment properties |
|
|
(4.7) |
1.8 |
- |
(2.9) |
(18.8) |
|
(Loss)/profit on sale of investment properties |
|
|
(0.5) |
- |
- |
(0.5) |
0.1 |
|
Fair value of interest rate swaps |
|
|
2.8 |
0.3 |
- |
3.1 |
(0.5) |
|
Profit/(loss) before tax |
|
|
9.9 |
4.4 |
- |
14.3 |
(3.0) |
|
Tax |
|
|
(1.6) |
- |
- |
(1.6) |
(0.2) |
|
Profit/(loss) after tax |
|
|
8.3 |
4.4 |
- |
12.7 |
(3.2) |
|
|
|
|
|
|
|
|
|
|
Balance sheet (100%) |
|
|
|
|
|
|
|
|
Investment properties |
|
|
295.9 |
31.4 |
- |
327.3 |
363.9 |
|
Investment properties held for sale |
|
|
39.9 |
- |
- |
39.9 |
- |
|
Other assets |
|
|
12.2 |
3.8 |
0.3 |
16.3 |
14.7 |
|
Current liabilities |
|
|
(32.6) |
(1.5) |
- |
(34.1) |
(32.0) |
|
Non-current liabilities |
|
|
(256.6) |
(28.2) |
- |
(284.8) |
(295.3) |
|
Net assets (100%) |
|
|
58.8 |
5.5 |
0.3 |
64.6 |
51.3 |
|
|
|
|
|
|
|
|
|
|
Income statement (Group share) |
|
|
|
|
|
|
|
|
Revenue - gross rent |
|
|
13.3 |
1.9 |
- |
15.2 |
19.0 |
|
Property and management expenses |
|
|
(2.0) |
- |
- |
(2.0) |
(4.8) |
|
Void costs |
|
|
(0.2) |
(0.2) |
- |
(0.4) |
(0.4) |
|
Net rent |
|
|
11.1 |
1.7 |
- |
12.8 |
13.8 |
|
Net interest payable |
|
|
(5.0) |
(0.4) |
- |
(5.4) |
(6.6) |
|
Contribution |
|
|
6.1 |
1.3 |
- |
7.4 |
7.2 |
|
Revenue - management fees |
|
|
- |
- |
- |
- |
2.3 |
|
Management expenses |
|
|
- |
- |
- |
- |
(1.1) |
|
Revaluation of investment properties |
|
|
(2.3) |
0.9 |
- |
(1.4) |
(9.4) |
|
(Loss)/profit on sale of investment properties |
|
|
(0.3) |
- |
- |
(0.3) |
0.1 |
|
Fair value of interest rate swaps |
|
|
1.4 |
0.1 |
- |
1.5 |
(0.3) |
|
Profit/(loss) before tax |
|
|
4.9 |
2.3 |
- |
7.2 |
(1.2) |
|
Tax |
|
|
(0.8) |
- |
- |
(0.8) |
(0.1) |
|
Profit/(loss) after tax |
|
|
4.1 |
2.3 |
- |
6.4 |
(1.3) |
|
Balance sheet (Group share) |
|
|
|
|
|
|
|
|
Investment properties |
|
|
148.0 |
15.7 |
- |
163.7 |
181.9 |
|
Investment properties held for sale |
|
|
19.9 |
- |
- |
19.9 |
- |
|
Other assets |
|
|
6.1 |
2.0 |
0.1 |
8.2 |
7.4 |
|
Current liabilities |
|
|
(16.3) |
(0.8) |
- |
(17.1) |
(16.0) |
|
Non-current liabilities |
|
|
(128.3) |
(14.1) |
- |
(142.4) |
(147.6) |
|
Net assets (Group share) |
|
|
29.4 |
2.8 |
0.1 |
32.3 |
25.7 |
8 Cash and cash equivalents
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Cash at bank |
|
10.8 |
2.9 |
|
Security deposits held in rent accounts |
|
- |
0.1 |
|
Other restricted balances |
|
0.3 |
2.3 |
|
|
|
11.1 |
5.3 |
Other restricted balances include amounts subject to a charge against various borrowings and may therefore not be available for general use by the Group.
The analysis of cash and cash equivalents by currency is as follows:
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Sterling |
|
10.4 |
4.7 |
|
Euro |
|
0.7 |
0.6 |
|
|
|
11.1 |
5.3 |
9 Borrowings
9a Summary of borrowings
The Group generally borrows on a secured basis and borrowings are arranged to ensure an appropriate maturity profile and to maintain short term liquidity. Short, medium and long term funding is raised principally through revolving credit facilities from a range of banks and financial institutions. 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 December |
30 December |
|
|
|
2013 |
2012 |
|
Borrowings at amortised cost |
Note |
£m |
£m |
|
Secured |
|
|
|
|
Fixed and swapped bank loans |
|
- |
57.6 |
|
Variable rate bank loans |
|
- |
1.0 |
|
Total borrowings before costs |
|
- |
58.6 |
|
Unamortised issue costs |
|
- |
(0.6) |
|
Total borrowings after costs |
|
- |
58.0 |
|
|
|
|
|
|
Analysis of total borrowings after costs |
|
|
|
|
Unamortised issue costs (within prepayments) |
|
- |
(0.3) |
|
Current |
|
- |
- |
|
Non-current |
|
- |
58.3 |
|
Total borrowings after costs |
|
- |
58.0 |
The Group has a revolving credit facility of £25 million available until July 2016. This facility is secured by charges over the units the Group holds in The Mall carried at £100.4 million at 30 December 2013 (2012: £68.0 million), charges over certain holdings in and loans to the German joint venture carried at £39.6 million (2012: £35.5 million) and guarantees by the Company.
The core revolving credit facility was undrawn at 30 December 2013 (30 December 2012: £1.0 million drawn).
On disposal of the Great Northern Warehouse the Group repaid the loan that was secured on that property.
10 Reconciliation of net cash from operations
|
|
|
Year to |
Year to |
|
|
|
30 December |
30 December |
|
|
|
2013 |
20121 |
|
|
Note |
£m |
£m |
|
Profit/(loss) for the year |
|
9.1 |
(16.0) |
|
|
|
|
|
|
Adjusted for: |
|
|
|
|
Finance income - continuing and discontinued operations |
|
(2.6) |
(2.9) |
|
Finance expense - continuing and discontinued operations |
|
4.7 |
5.6 |
|
Income tax expense |
4b |
(0.2) |
(0.9) |
|
Income tax expense - discontinued operations |
13 |
(0.1) |
2.0 |
|
Loss on disposal of JV & Associates - discontinued operations |
13 |
- |
4.0 |
|
Loss on disposal of wholly owned properties - discontinued operations |
13 |
2.1 |
- |
|
Loss on revaluation of wholly owned properties |
|
0.2 |
1.7 |
|
Share of (profit)/loss in associates and joint ventures |
7a, 13 |
(10.0) |
12.0 |
|
(Profit)/loss on disposal of other assets |
|
(1.0) |
0.1 |
|
Depreciation of other fixed assets |
|
0.3 |
0.3 |
|
Decrease/(increase in receivables) |
|
0.2 |
(2.3) |
|
Decrease in payables |
|
(4.9) |
(0.1) |
|
Non-cash movement relating to share-based payments |
|
0.8 |
0.8 |
|
Net cash from operations |
|
(1.4) |
4.3 |
1 Restated to reflect changes in Discontinued Operations
11 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:
|
|
|
30 December |
30 December |
||
|
|
|
2013 |
2012 |
||
|
|
|
Net assets |
Number of |
Net assets |
Net assets |
|
|
Note |
£m |
shares (m) |
per share (£) |
per share (£) |
|
Basic net assets |
|
188.7 |
349.7 |
0.54 |
0.51 |
|
Own shares held |
|
- |
(1.3) |
|
|
|
Dilutive contingently issuable shares and share options |
|
- |
2.8 |
|
|
|
Fair value of fixed rate loans (net of tax) |
|
- |
|
|
|
|
EPRA triple net assets |
|
188.7 |
351.2 |
0.54 |
0.51 |
|
Exclude fair value of fixed rate loans (net of tax) |
|
- |
|
|
|
|
Exclude fair value of see-through interest rate derivatives |
|
5.6 |
|
|
|
|
Exclude deferred tax on unrealised gains and capital allowances |
|
1.0 |
|
|
|
|
EPRA net assets |
|
195.3 |
351.2 |
0.56 |
0.55 |
12 Return on equity
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Total comprehensive income/(loss) attributable to equity shareholders |
|
9.2 |
(16.6) |
|
Opening equity shareholders' funds |
|
179.6 |
196.0 |
|
Return on equity |
|
5.1% |
(8.5)% |
13 Discontinued Operations
Year ending 30 December 2013
Morrison Merlin (Great Northern Warehouse)
On 31 October 2013, the Group completed the sale of Morrison Merlin Limited, the Group company that owned the Great Northern Warehouse, to Resolution IV Holdings s.à.r.l. for a headline price of £71.1 million. At the date of disposal the net assets of Morrison Merlin Limited were £14.1 million. The net cash consideration received after transaction costs of £0.1 million was £12.0 million resulting in a loss on disposal after tax of £2.1 million.
Leisure World, Hemel Hempstead
On 20 August 2013, the Group announced the conditional exchange of contracts for the sale of the Leisure World property, Hemel Hempstead for consideration that is expected, subject to guarantees and top up arrangements, to exceed the 30 June 2013 and 30 December 2012 valuation of £8.4 million. On the basis that at 30 June 2013 the sale was highly probable the property was reclassified as an asset held for sale at that date. While the sale had not completed at 30 December 2013 in the opinion of the Directors it remained highly probable at that date and as such classification as an asset held for sale has been maintained at the expected net consideration of £8.4 million (£8.5 million of consideration less £0.1 million of associated costs).
On 14 February 2014, the sale was completed with cash consideration of £8.5 million received.
Given the disposal of Morrison Merlin and Leisure World, Hemel Hempstead form part of the Group's strategic plan to exit the Leisure market, the results for the year (up to the date of disposal and reclassification as held for sale respectively) and the comparative period in 2012 have been presented as discontinued operations. Also included in discontinued operations in 2012, consistent with the treatment in the 2012 annual accounts, are the Group's share of results from their investments in The Junction Fund, X-Leisure Limited and the X-Leisure Fund and Xscape Braehead.
Year ending 30 December 2012
Xscape Braehead, Glasgow
On 24 December 2012, the Group sold Capital & Regional (Braehead) Limited to its joint venture partner Capital Shopping Centres for cash consideration of £4 million. Capital & Regional (Braehead) Limited held a 50% stake in Xscape Braehead Partnership the entity that owns the Xscape Braehead, Glasgow property. A profit on disposal after tax of £1.2 million was recognised. At the date of disposal the net assets of Capital & Regional (Braehead) Limited were £4.8 million consisting of a receivable due from the Xscape Braehead Partnership of that amount.
X-Leisure
On 4 December 2012, the Group entered into a conditional binding agreement for the sale of its 11.9% stake in the X-Leisure Fund and its 50% interest in X-Leisure Limited to a subsidiary of Land Securities Group plc. The X-Leisure Fund is the largest specialist fund investing in UK leisure property, X-Leisure Limited is the property and asset manager for the Fund. The approval of X-Leisure Fund unit holders not involved in the transaction was obtained on 21 December 2012 and on that date Management, considering the disposal to be highly probable, reclassified the investments to assets held for sale at the consideration expected to be received of £32.2 million, with associated liabilities of £1.6 million in respect of outstanding transaction costs recognised as a separate liability on the balance sheet. A loss on disposal after tax of £4.0 million was recognised.
At 30 December 2012, the principal conditions that needed to be met for the sale to complete were the approval of Capital & Regional plc shareholders and the consent of the X-Leisure Fund's banks. These conditions were satisfied after the year end and the sale completed on 16 January 2013 with net proceeds of £30.6 million received.
The Junction Fund
On 19 October 2012, subsidiaries of Hammerson plc acquired The Junction Fund, a specialist retail park fund, for a total of £259.5 million of which Capital & Regional plc had a 13.43% interest resulting in net cash consideration attributable to the Group of £11.4 million, excluding performance fee income of £2.6 million. A loss on disposal after tax of £1.2 million was recognised.
13 Discontinued Operations (continued)
The results of these discontinued operations, which have been included in the unaudited consolidated income statement, were as follows:
|
|
|
Year ended |
Year ended |
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
Note |
£m |
£m |
|
Revenue |
|
5.1 |
6.7 |
|
Cost of sales |
|
(1.2) |
(2.2) |
|
Loss on revaluation of investment properties |
|
- |
(0.2) |
|
Share of profit in associates and joint ventures |
|
- |
0.8 |
|
Finance income |
|
1.8 |
1.7 |
|
Finance costs |
|
(4.1) |
(5.0) |
|
Attributable current tax credit/(charge) |
|
0.1 |
(2.0) |
|
Share of profit after attributable tax |
|
1.7 |
(0.2) |
|
|
|
|
|
|
Loss on disposal of discontinued operations |
|
(2.1) |
(4.0) |
|
|
|
|
|
|
Loss from discontinued operations |
|
(0.4) |
(4.2) |
The loss on disposal of discontinued operations of £2.1 million (2012: loss of £4.0 million) is stated after Deferred Tax credits of £0.1 million (2012: credits of £3.5 million) relating to Deferred Tax liabilities extinguished on disposal.
During the year, discontinued operations contributed £4.0 million (2012: £6.0 million) to the Group's net operating cash flows, contributed £42.6 million (2012: £15.0 million) in respect of investing activities (disposal proceeds) and paid £nil million (2012: £nil million) in respect of financing activities.
Assets held for sale comprise:
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
Note |
£m |
£m |
|
Investment in associate - X-Leisure Limited Partnership |
|
- |
31.7 |
|
Investment in joint venture - X-Leisure Limited |
|
- |
0.5 |
|
Investment property - Leisure World, Hemel Hempstead |
|
8.5 |
- |
|
|
|
8.5 |
32.2 |
£0.1 million (2012: £1.6 million) of balance sheet liabilities associated with these assets have been recognised at 30 December 2013 representing transaction costs outstanding at that date.
14 Dividends
|
|
|
Year to |
Year to |
|
|
|
30 December |
30 December |
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Interim dividend per share paid for the year ended 30 December 2013 of 0.25p |
|
0.9 |
- |
|
Amounts recognised as distributions to equity holders in the year |
|
0.9 |
- |
|
Proposed second interim dividend per share for the year ended 30 December 2013 of 0.40p1 |
|
1.4 |
- |
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.
|
Five year review |
|
|
for the year 30 December 2012 to 30 December 2013 |
|
|
|
2013 |
20121 |
20111 |
2010 |
2009 |
|
|
£m |
£m |
£m |
£m |
£m |
|
Balance sheet |
|
|
|
|
|
|
Property assets |
- |
78.4 |
80.0 |
80.8 |
94.4 |
|
Other non-current assets |
23.5 |
24.4 |
34.3 |
27.1 |
26.3 |
|
Intangible assets |
- |
- |
1.8 |
1.9 |
2.6 |
|
Investment in joint ventures |
32.3 |
25.7 |
27.2 |
25.7 |
30.3 |
|
Investment in associates |
112.1 |
80.7 |
120.2 |
110.8 |
76.4 |
|
Cash at bank |
11.1 |
5.3 |
20.0 |
25.7 |
17.5 |
|
Assets classified as held for sale |
8.5 |
32.2 |
- |
- |
- |
|
Other net current liabilities |
2.2 |
(7.2) |
(13.0) |
(10.2) |
(25.7) |
|
Bank loans greater than one year |
- |
(58.3) |
(61.6) |
(68.8) |
(78.6) |
|
Other non-current liabilities |
(1.0) |
(1.6) |
(12.9) |
(18.5) |
(13.4) |
|
Net assets |
188.7 |
179.6 |
196.0 |
174.5 |
129.8 |
|
Financed by |
|
|
|
|
|
|
Called up share capital |
9.9 |
9.9 |
9.9 |
9.9 |
9.9 |
|
Share premium account |
- |
- |
- |
- |
- |
|
Revaluation reserve |
- |
- |
- |
- |
- |
|
Other reserves |
66.3 |
75.2 |
70.4 |
147.9 |
148.3 |
|
Retained earnings / (loss) |
112.5 |
94.5 |
115.7 |
16.7 |
(28.4) |
|
Capital employed |
188.7 |
179.6 |
196.0 |
174.5 |
129.8 |
|
Return on equity |
|
|
|
|
|
|
Return on equity (%) |
5.1% |
(8.5)% |
11.9% |
33.9% |
(64.3)% |
|
Increase / (decrease) in net assets per share + dividend (%) |
5.8% |
(8.4)% |
11.8% |
35.1% |
(72.3)% |
|
Total shareholder return |
53.9% |
(9.5)% |
(3.8)% |
(2.2)% |
(24.7)% |
|
Period end share price (pence) |
44p |
29p |
32p |
33p |
34p |
|
Total return |
|
|
|
|
|
|
Total comprehensive income / (expense) |
9.2 |
(16.6) |
20.7 |
44.0 |
(119.7) |
|
Net assets per share (pence) |
|
|
|
|
|
|
Basic net assets per share |
54p |
51p |
56p |
50p |
37p |
|
EPRA triple net assets per share |
54p |
51p |
56p |
50p |
37p |
|
EPRA net assets per share |
56p |
55p |
63p |
57p |
47p |
|
EPRA triple net assets per share growth (%) |
4.8% |
(8.3)% |
11.9% |
35.1% |
(72.3)% |
|
Gearing (%) |
- |
32.6% |
34.3% |
40.4% |
61.9% |
|
Gearing (%) on a see through basis |
134.9% |
179.2% |
253.6% |
305.0% |
508.7% |
|
Income statement1 |
|
|
|
|
|
|
Group revenue |
17.6 |
22.0 |
28.9 |
30.7 |
37.8 |
|
Gross profit |
9.6 |
13.1 |
17.2 |
20.3 |
21.8 |
|
Profit/(loss) on ordinary activities before financing |
9.1 |
(13.3) |
16.2 |
52.6 |
(105.1) |
|
Net interest payable |
0.2 |
0.6 |
(3.4) |
(6.2) |
(8.3) |
|
Profit/(loss) on ordinary activities before tax |
9.3 |
(12.7) |
12.8 |
46.4 |
(113.4) |
|
Tax (charge)/credit |
0.2 |
0.9 |
(2.0) |
(2.0) |
(6.3) |
|
Profit/(loss) after tax |
9.5 |
(11.8) |
10.8 |
44.4 |
(119.7) |
|
Recurring pre-tax profit |
14.0 |
13.3 |
16.4 |
14.9 |
17.5 |
|
Fully taxed recurring dividend cover (x) |
4.7 |
- |
- |
- |
- |
|
Interest cover (x) |
3.9 |
3.7 |
5.5 |
4.1 |
2.8 |
|
Earnings per share (pence) |
|
|
|
|
|
|
Basic |
3p |
(5)p |
6p |
13p |
(59)p |
|
Diluted |
3p |
(5)p |
6p |
13p |
(59)p |
|
EPRA |
2p |
1p |
5p |
4p |
1p |
|
Dividends per share |
0.65p |
- |
- |
- |
- |
1 2012 and 2011 results have been restated from those originally presented in those respective years to separate discontinued operations as explained in Note 13.
|
Property under management information |
|
At 30 December 2013 |
|
|
30 December |
30 December |
30 December |
30 December |
30 December |
|
|
2013 |
2012 |
2011 |
2010 |
2009 |
|
Property under management |
£m |
£m |
£m |
£m |
£m |
|
Wholly owned |
8 |
81 |
81 |
82 |
84 |
|
Associates |
820 |
983 |
1,824 |
2,132 |
2,408 |
|
Joint ventures |
369 |
365 |
576 |
547 |
648 |
|
Other property |
- |
- |
- |
71 |
- |
|
Total |
1,197 |
1,429 |
2,481 |
2,832 |
3,140 |
Figures exclude adjustments to property valuations for tenant incentives and head leases treated as finance leases. Trading properties are included at the lower of cost and net realisable value.
|
EPRA performance measures |
|
At 30 December 2013 |
|
|
|
2013 |
2012 |
|
EPRA earnings (£m) |
|
9.2 |
8.1 |
|
EPRA earnings per share |
|
3p |
2p |
|
|
|
|
|
|
EPRA net assets (£m) |
|
195.3 |
193.4 |
|
EPRA net assets per share |
|
56p |
55p |
|
|
|
|
|
|
EPRA triple net assets (£m) |
|
188.7 |
179.1 |
|
EPRA triple net assets per share |
|
54p |
51p |
|
|
|
|
|
|
EPRA net initial yield |
|
6.3% |
6.5% |
|
EPRA topped-up net initial yield |
|
6.7% |
6.7% |
|
|
|
|
|
|
EPRA vacancy rate (UK portfolio only) |
|
4.4% |
4.0% |
Reconciliation of EPRA net initial yield and EPRA topped-up net initial yield
|
|
|
2013 |
2012 |
|
|
|
£m |
£m |
|
Investment property - wholly owned |
|
8.5 |
8.4 |
|
Investment property - share of joint ventures and associates |
|
411.5 |
380.3 |
|
Trading property |
|
- |
72.5 |
|
Less developments |
|
(8.4) |
(8.4) |
|
Completed property portfolio |
|
411.6 |
452.8 |
|
Allowance for capital costs |
|
8.2 |
8.4 |
|
Allowance for estimated purchasers' costs |
|
14.3 |
35.0 |
|
Grossed up completed property portfolio valuation |
|
434.1 |
496.2 |
|
|
|
|
|
|
Annualised cash passing rental income |
|
31.5 |
36.8 |
|
Property outgoings |
|
(4.0) |
(4.4) |
|
Annualised net rents |
|
27.5 |
32.4 |
|
Add: notional rent expiration of rent free periods or other lease incentives |
|
1.5 |
1.1 |
|
Topped up annualised rent |
|
29.0 |
33.5 |
|
|
|
|
|
|
EPRA net initial yield |
|
6.3% |
6.5% |
|
EPRA topped-up net initial yield |
|
6.7% |
6.7% |
|
Covenant information |
|
At 30 December 2013 |
|
|
See through borrowings |
Covenant |
30 December |
Future changes |
|
|
£m |
|
2013 |
|
|
Core revolving credit facility |
||||
|
Asset cover |
- |
Greater than 200% |
n/a |
|
|
Gearing |
- |
Less than 100% |
n/a |
|
|
ICR |
- |
Greater than 150% |
n/a |
|
|
|
|
|
|
|
|
The Mall |
||||
|
LTV |
111.1 |
71% |
55% |
Reducing to 65% by December 2014 |
|
ICR |
- |
Greater than 130% |
216% |
|
|
|
|
|
|
|
|
Germany |
||||
|
LTV |
|
|
|
|
|
Portfolios 1,2 and 5 |
58.3 |
85% |
79% |
|
|
Portfolio 3 |
39.5 |
n/a |
n/a |
|
|
Portfolio 6 |
21.8 |
n/a |
n/a |
|
|
ICR |
|
|
|
|
|
Portfolio 3 |
- |
Greater than 160% |
294% |
|
|
Portfolio 6 |
- |
Greater than 140% |
596% |
|
|
DSCR |
|
|
|
|
|
Portfolios 1, 2 and 5 |
- |
Greater than 120% |
168% |
|
|
Portfolio 3 |
|
Greater than 110% |
156% |
|
|
Portfolio 6 |
|
Greater than 110% |
253% |
|
|
|
|
|
|
|
|
Waterside Lincoln |
||||
|
LTV |
6.8 |
60% |
43% |
|
|
ICR |
- |
Greater than 175% |
242% |
|
|
|
|
|
|
|
|
Redditch1 |
|
|
|
|
|
LTV |
17.1 |
73% |
63% |
Reducing to 69% in May 2015 |
|
ICR |
- |
Greater than 175% |
219% |
Increasing to 200% in May 2015 |
|
Debt to rent |
- |
< 1000% |
854% |
Reducing to 900% in May 2015 |
|
|
254.6 |
|
|
|
|
|
|
|
|
|
1 Reflects revised terms following re-financing completed in February 2014.
|
Fund portfolio information (100% figures) |
|||||
|
At 30 December 2013 |
|||||
|
|
|
|
The Mall |
German Portfolio |
|
|
|
|
|
|
|
|
|
Physical data |
|
|
|
|
|
|
Number of properties |
|
|
6 |
25 |
|
|
Number of lettable units |
|
|
716 |
200 |
|
|
Lettable space (sq feet - '000s) |
|
|
3,245 |
3,322 |
|
|
|
|
|
|
|
|
|
Valuation data |
|
|
|
|
|
|
Properties at independent valuation (£m) |
|
|
684.7 |
336.8 |
|
|
Adjustments for head leases and tenant incentives (£m) |
|
|
47.7 |
(1.0) |
|
|
Properties as shown in the financial statements (£m) |
|
|
732.3 |
335.8 |
|
|
Revaluation in the year (£m) |
|
|
(2.4) |
(4.7) |
|
|
Initial yield |
|
|
6.8% |
6.8% |
|
|
Equivalent yield |
|
|
7.2% |
n/a |
|
|
Property level return |
|
|
3.6% |
4.1% |
|
|
Reversionary |
|
|
15.0% |
n/a |
|
|
Loan to value ratio |
|
|
55.4% |
71.5% |
|
|
Net debt to value ratio |
|
|
46.0% |
69.2% |
|
|
|
|
|
|
|
|
|
Lease length (years) |
|
|
|
|
|
|
Weighted average lease length to break |
|
|
8.3 |
8.1 |
|
|
Weighted average lease length to expiry |
|
|
9.2 |
8.1 |
|
|
|
|
|
|
|
|
|
Passing rent (£m) of leases expiring in: |
|
|
|
|
|
|
2014 |
|
|
6.8 |
0.5 |
|
|
2015 |
|
|
4.2 |
2.5 |
|
|
2018-2018 |
|
|
12.1 |
8.1 |
|
|
|
|
|
|
|
|
|
ERV (£m) of leases expiring in: |
|
|
|
|
|
|
2014 |
|
|
8.0 |
n/a |
|
|
2015 |
|
|
4.5 |
n/a |
|
|
2016-2018 |
|
|
11.9 |
n/a |
|
|
|
|
|
|
|
|
|
Passing rent (£m) subject to review in: |
|
|
|
|
|
|
2014 |
|
|
4.7 |
n/a |
|
|
2015 |
|
|
7.6 |
n/a |
|
|
2016-2018 |
|
|
9.6 |
n/a |
|
|
|
|
|
|
|
|
|
ERV (£m) of passing rent subject to review in: |
|
|
|
|
|
|
2014 |
|
|
5.0 |
n/a |
|
|
2015 |
|
|
7.6 |
n/a |
|
|
2016-2018 |
|
|
9.3 |
n/a |
|
|
|
|
|
|
|
|
|
Rental Data |
|
|
|
|
|
|
Contracted rent at year end (£m) |
|
|
56.9 |
n/a |
|
|
Passing rent at year end (£m) |
|
|
53.8 |
25.2 |
|
|
ERV at year end (£m per annum) |
|
|
61.9 |
n/a |
|
|
ERV movement (%) |
|
|
(1.3)% |
n/a |
|
|
Vacancy rate (%) |
|
|
4.7% |
2.5% |
|
|
|
|
|
|
|
|
|
Like for like net rental income (100%) |
|
|
|
|
|
|
Current year net rental income (£m) |
|
|
|
|
|
|
Properties owned throughout 2012/2013 |
|
|
48.0 |
22.6 |
|
|
Disposals |
|
|
4.7 |
0.1 |
|
|
Net rental income |
|
|
52.7 |
22.7 |
|
|
Prior year net rental income (£m) |
|
|
|
|
|
|
Properties owned throughout 2012/2013 |
|
|
49.2 |
24.9 |
|
|
Disposals |
|
|
14.8 |
2.0 |
|
|
Net rental income |
|
|
64.0 |
26.9 |
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
Unit Price (£1.00 at inception) |
|
|
£0.37 |
n/a |
|
|
Group share |
|
|
29.26% |
49.60% |
|
This information is provided by RNS
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