HALF YEAR RESULTS TO 30 JUNE 2015

RNS Number : 7729V

Capital & Regional plc

12 August 2015

 

12 August 2015

Capital & Regional plc

Half Year Results to 30 June 2015

CAPITAL & REGIONAL DELIVERS STRONG GROWTH

AND ANNOUNCES FIRST REIT DIVIDEND

Capital & Regional plc (LSE: CAL), the UK focused specialist REIT with a portfolio of dominant in-town community shopping centres, today announces its half year results to 30 June 2015.

HIGHLIGHTS

Financial

·          Operating Profit increased 76% to £11.8 million (June 2014: £6.7 million) with a profit for the period of £57.0 million (June 2014:  £11.7 million)

·          Interim dividend of 1.5p per share, (June 2014: 0.35p per share) under new REIT dividend policy.  Based on H1 Mall Operating Profit we anticipate paying a 2015 total dividend of at least 3.0p per share

·          NAV and EPRA NAV per share of 67p, increases of 12% and 13% respectively from December 2014

·          UK shopping centre portfolio valued at £958.2 million (Group share £827.7 million) up from £895.7 million (Group share £774.9 million) at 30 December 2014 as a result of £51.8 million valuation uplift and the acquisition of the Buttermarket shopping centre in Ipswich

·          See-through net debt to property value reduced to 43% (December 2014: 45%)

·          Total shareholder return of 10.1% for the period (June 2014: 6.4%)

Operational 

·          26 new lettings totalling £1.5 million and £0.8 million of lease renewals, both at rents significantly above ERV, driven by the attractive and affordable space in the Group's UK shopping centres

·          Year-on-year occupancy increased by 2.1% to 96.4% (June 2014: 94.3%)

·          Continued progression of strategy to upgrade portfolio with:

o  Completion of the £3 million refurbishment at Walthamstow

o  Commencement of a £5 million project to upgrade Maidstone which is scheduled to complete by June 2016

·          Acquisition of the Buttermarket Centre, Ipswich in March for £9.2 million in a 50:50 joint venture, following which planning permission for reconfiguring the centre has been secured, construction has started and pre-lets have been signed or are in solicitors' hands for just under 80% of the redeveloped scheme

·          C&R in-house Trade Index shows our retailers' sales are up 1.7%

·          Footfall stable and outperforming the industry benchmark by 1.9%

	6 months to June 2015	Year to Dec 2014	6 months to June 2014
Total shareholder return1	10.1%	24.7%	6.4%
Operating Profit2	£11.8m	£19.3m	£6.7m
Profit for the period	£57.0m	£75.2m	£11.7m
Net Asset Value (NAV) per share	67p	60p	57p
EPRA NAV per share	67p	59p	57p
Group net debt/(net cash)	£339.1m	£336.6m3	£(24.7)m
See-through net debt to property value4	43%	45%3	55%

¹ Change in share price plus dividends paid.  Year to December 2014 weighted average to reflect 351.1 million new shares issued on 14 July 2014.

² As defined in Glossary.

³ December 2014 adjusted for £42.1 million of German joint venture net proceeds received in February 2015 and £8.9 million of payments due in respect of Mall performance fee and income due to former unit holders.    

⁴ See-through net debt divided by property valuation.

John Clare, Chairman, commented:

"Capital & Regional has made a strong start to its first year as a specialist UK shopping centre REIT.  

"Our hands-on approach to asset management, combined with improving economic conditions for our retailers and leisure operators, have driven both letting and occupancy across our portfolio.  This provides a sound platform to deliver future growth through the capital expenditure programme supporting our existing portfolio, as well as through the acquisition of retail assets where we can see potential to grow income, such as the Buttermarket Centre in Ipswich.

"The Board is therefore pleased to announce an Interim Dividend of 1.5p per share, ahead of previous guidance, reflecting our confidence in the prospects for the business.  Based on H1 Mall Operating Profit we now anticipate paying a 2015 total dividend of at least 3.0p per share."

For further information:

Capital & Regional:	Tel:  [phone]
Hugh Scott-Barrett, Chief Executive
Charles Staveley, Group Finance Director
FTI Consulting:	Tel: [phone]
Richard Sunderland Claire Turvey	Email: [e-mail]

 

Notes to editors:

 

About Capital & Regional plc

Capital & Regional is a UK focused specialist property REIT with a strong track record of delivering value enhancing retail and leisure asset management opportunities across a c. £1 billion portfolio of in-town dominant community shopping centres. 

Capital & Regional owns six Mall shopping centres in Blackburn, Camberley, Luton, Maidstone, Walthamstow and Wood Green. It also has a 20% joint venture interest in the Kingfisher Centre in Redditch and a 50% joint venture in the Buttermarket Centre, Ipswich.  Capital & Regional manages these assets, which comprise over 900 retail units and attract c. 1.7 million shopping visits each week, through its in-house expert property and asset management platform.

For further information see www.capreg.com.

Operating review

The core strength and expertise of Capital & Regional lies in its ability to create and deliver asset management improvements across its c.£1 billion portfolio of eight UK shopping centres which have a dominant market share in the communities they serve and which provide attractive and affordable space for retailers.

UK Shopping Centres

The Group's UK Shopping Centres business comprises The Mall portfolio and joint venture interests in the Kingfisher Centre, Redditch and the Buttermarket Centre, Ipswich.

The Mall portfolio comprises six properties and has a strong south east bias. The schemes are characterised by being dominant within the community they each serve, having strong footfall and robust income, whilst offering our occupiers attractive and affordable space with an average rent to sales ratio of 6.2%. The portfolio has a total lettable space of over 3.2 million sq ft over 703 retail and leisure units.

The Group also owns a 20% interest in the Kingfisher Centre, Redditch which is a dominant 900,000 sq ft scheme and a 50% interest in the Buttermarket Centre, Ipswich, which was acquired in March 2015.  Gross retailer sales across the Group's portfolio exceed £1 billion per annum.

We are improving our centres to create a more attractive environment for our customers and retailers through a series of refurbishment initiatives, as well as via the introduction of a complementary mix of leisure uses to enhance the customer experience and drive footfall, as exemplified by the following initiatives:

Walthamstow

We successfully completed the £3 million mall refurbishment and new letting to Sports Direct at Walthamstow during the period. Work is also progressing to create a new 27,500 sq ft unit for TK Maxx which is due to be handed over in November, further enhancing the centre. We are making good progress with our plans for an 86,000 sq ft retail extension to the scheme and the addition of over 300 apartments. A number of developers have shown strong interest in the residential element and the local authority is very supportive with negotiations on both the commercial and planning aspects well advanced.  We are targeting exchange on the commercial agreement by Q4 of 2015 with a planning application to be submitted by the end of Q1 2016.   

Camberley

At Camberley, we continue to work on our plans for the redevelopment of the north end of the scheme in order to maximise the potential of this important local retail centre.  In addition, we are currently advancing our plans for a £4.5 million refurbishment of the remainder of the centre with the majority of this expense expected to be incurred in 2016.  This will improve the overall environment, drive income and be complementary to our plans for a potential larger development. 

Maidstone

In January, we commenced the £5 million refurbishment of our Maidstone centre, which is scheduled to complete in June 2016.  In addition, a major focus has been to achieve full occupation of the offices within the centre and a lease was signed on one of the two vacant floors shortly after 30 June 2015.

Blackburn

In Blackburn works are due to commence in the second half of the year on the £3.1 million reconfiguration of the part of the centre which is adjacent to the town's new bus station. These plans include the creation of a new 15,000 sq ft gym, which has been pre-let to Pure Gym, and the amalgamation of a number of smaller units to create two attractive new units totalling 4,500 sq ft which will front onto the bus station. Two further lettings to Swarovski and Subway have been completed since 30 June 2015.

Redditch

We are seeing the impact of our investment in Redditch coming through strongly and have secured a significant upsize with H&M, which will extend its unit from 14,300 to 22,300 sq ft for a 15 year term, and a new letting with Pep & Co for a 6,000 sq ft unit for a five year term. Leisure also continues to drive letting activity with the final restaurant space in The Hub let to Prezzo shortly after the period end, Ed's Diner opening a 3,000 sq ft unit and a Burger King franchise taking a 20 year lease of a new 2,400 sq ft unit created from the combination of three smaller units.

Ipswich

The Buttermarket Centre in Ipswich was acquired in a 50:50 joint venture with Drum Property Group for £9.2 million, equivalent to a Net Initial Yield of 8.5% and follows on from our successful investment in Lincoln. In the case of Ipswich, we intend to reconfigure and modernise the centre to create a new retail and leisure complex in this regional centre, which is undersupplied by such offerings.  The retail space is to be consolidated onto the ground floor of the scheme and will be anchored by TK Maxx and New Look, while Empire Cinemas will take a 12 screen cinema on the upper floors as part of a mixed leisure element incorporating eight restaurant units for which a wide range of operators are showing strong interest. In the six months since we acquired the centre we have already secured planning consent, made strong letting progress, with just under 80% of the redeveloped scheme either pre-let or in solicitors' hands, and commenced work on site. Total capex spend is expected to be approximately £25 million, to be largely funded through new bank debt within the joint venture which has been credit approved.  Completion of the works is expected by the third quarter of 2016.

Beyond retail

We continue to position our schemes at the centre of the community by expanding the range of uses to complement the retail offering.  As well as the Pure Gym letting at Blackburn, at Wood Green we have agreements for lease with Easy Gym to take a newly extended 25,000 sq ft gym and with Travelodge for a 35 room hotel created from the conversion of three floors of office accommodation. There is the potential to increase the Travelodge by a further 36 rooms.

There is also scope to expand the leisure and food offers in Luton. This is being realised partly through the creation of a new gym with terms currently being negotiated. In addition, a new food zone is being created to increase the centre's attraction to shoppers and to add vibrancy.

As mentioned above, a number of lettings have been made to food and restaurant operators in Redditch and, at Ipswich, it is expected that 45% of the scheme by ERV will be let to leisure operators.

Property portfolio performance 

Across the Group's UK shopping centres, investment market yields have compressed over the first half of 2015 resulting in broad based increases in values during the period.

	30 June 2015		30 December 2014
	£m	NIY %	£m	NIY %
Blackburn	125.2	6.40	120.0	6.65
Camberley	85.6	6.25	84.3	6.50
Luton	214.5	6.00	207.5	6.10
Maidstone	76.7	6.90	72.4	7.15
Walthamstow	82.7	5.76	71.0	6.15
Wood Green	206.3	5.28	189.5	5.90
Redditch1	156.5	6.25	151.0	6.26
Ipswich2	10.7	-	-	-
UK Shopping Centres	958.2	6.00	895.7	6.27
UK Shopping Centres (Group share)	827.7		774.9

¹ Value of 100% of the asset - Capital & Regional share is £31.3 million

² Value of 100% of the asset - Capital & Regional share is £5.35 million

The portfolio has seen yield compression of 27 basis points resulting in a valuation increase of £51.8 million, primarily driven by the two London based schemes at Walthamstow and Wood Green.  Total capex spend in the first half of the year was £7.0 million, of which £4.4 million was within the Mall.  The rate of investment in The Mall is expected to accelerate in the second half of the year as the Group's multi-year £65 million investment programme, which is targeting income returns of at least 10%, gains further momentum. 

The strength of the shopping centre investment market has generated attractive capital returns across the portfolio as set out below:

	Property valuation	Total property level return	Property level capital return	Geared return	Initial yield	Equivalent yield
Six months to 30 June 2015	£m	%	%	%	%	%
UK Shopping Centres1	947.5	8.4	5.0	14.0	6.00	6.28

¹ Weighted average by period end property valuation (excluding Buttermarket Centre, Ipswich)

New lettings, renewals and rent reviews

UK Shopping Centres	6 months to June 2015
Number of new lettings	26
Rent from new lettings (£m)	£1.5m
Comparison to ERV1 (%)	23.2%
Renewals settled	21
Revised rent (£m)	£0.8m
Comparison to ERV (%)	5.7%
Rent reviews settled	15
Revised passing rent (£m)	£1.7m
Uplift to previous rent (%)	6.9%

¹ For lettings and renewals with a term certain of five years or longer which do not include a turnover rent element.

The outperformance of new lettings versus ERV reflects the lettings secured with leisure operators referred to above.

Rental income

UK Shopping Centres	30 June 2015	30 December 2014	30 June 2014
(like for like)	£m	£m	£m
Contracted rent	68.2	67.8	67.3
Passing rent	65.7	64.5	62.8

There has been a year-on-year increase in passing rent of £2.9 million and contracted rent has increased by £0.9 million. The increase in contracted rent includes the impact of the agreements for lease signed with Pure Gym at Blackburn and Travelodge at Wood Green. The income from these lettings will commence once this space has been created and handed over to tenants.

There has been strong letting activity since 30 June 2015 with 8 new lettings and renewals generating contracted rent of £0.7 million.

Administrations

UK Shopping Centres (like for like)	6 months to June 2015	12 months to December 2014	6 months to June 2014
Administrations (units)	10	20	12
Passing rent of administrations(£m)	0.6	1.2	0.5

The level of tenant failures continues at a modest level.  At 30 June 2015, there were two units which were in administration that were still trading.

Occupancy levels

UK Shopping Centres	30 June 2015	30 December 2014	30 June 2014
(like for like)	%	%	%
Occupancy	96.4	96.1	94.3

The year-on-year occupancy has increased by 2.1% reflecting the strong letting and tenant retention performance achieved across the portfolio.

Footfall

In our UK Shopping Centres, year-on-year footfall to end of July 2015 has outperformed the national index, being flat compared to a decrease in the benchmark of 1.9%, demonstrating our ability to sustain the attractiveness of our schemes to our customers.

Snozone

Snozone has again enjoyed another successful trading period with revenue increasing 2% to £5.4 million and profits up 10% to £1.0 million compared to the prior year period.

FINANCIAL REVIEW

Key performance indicators

The key performance indicators we use to measure our performance against our strategy and objectives are:

	6m to June 2015	Year to Dec 2014	6m to June 2014
Investment returns
Total shareholder return	10.1%	24.7%	6.4%
Net assets per share	67p	60p	57p
EPRA net assets per share	67p	59p	57p
Return on equity	13.2%	28.1%	5.9%
Profitability
Operating Profit1	£11.8m	£19.3m	£6.7m
Profit for the period	£57.0m	£75.2m	£11.7m
Basic earnings per share - continuing and discontinued operations	8.1p	14.5p	3.4p
Financing
Group net debt/(cash)	£339.1m	£369.8m	£(24.7)m
Proforma Group net debt/(cash)2	£339.1m	£336.6m	£(24.7)m
Proforma see-through net debt to property value2, 3	43%	45%	55%
Property under management	£1.0 billion	£0.9 billion	£1.2 billion

¹ As defined in Glossary.

² 30 December 2014 adjusted for £42.1 million of German joint venture net proceeds received in February 2015 and £8.9 million of payments due in respect of Mall performance fees and Mall income due to former unit holders.

³ See-through net debt divided by property valuation.

To provide a greater understanding of the composition of the business, the Group presents its balance sheet in two separate ways, with the "statutory" balance sheet following the accounting and statutory rules and the "see-through" balance sheet showing the Group's proportionate economic exposure to the different property portfolios as set out below.  Following completion of the sale of Germany in February 2015 the Group's business is now almost entirely based on UK shopping centres.

	See-through at 30 June 2015			Statutory	See-through at 30 December 2014			Statutory
	Property	Debt	Other	30 June	Property	Debt	Other	30 December
				2015				2014
	£m	£m	£m	£m	£m	£m	£m	£m
The Mall	837.9	(380.0)	(30.7)	427.2	790.8	(380.0)	(33.6)	377.2
Kingfisher Redditch	30.8	(16.9)	0.9	14.8	29.8	(16.9)	0.7	13.6
Buttermarket Ipswich	5.3	-	0.4	5.7	-	-	-	-
Germany1	-	-	-	-	-	-	41.4	41.4
Other net assets	-	-	22.8	22.8	-	(23.4)	10.2	(13.2)
Net assets	874.0	(396.9)	(6.6)	470.5	820.6	(420.3)	18.7	419.0

¹ Held for sale at 30 December 2014

Profitability

The breakdown of Operating Profit, as defined in the Glossary, is as follows (and as set out further in note 3a):

Operating Profit

Group Operating Profit

	Six months to  30 June 2015	Year to 30 December 2014		Six months to  30 June 2014
		Statutory	Proforma1
	£m	£m	£m	£m
The Mall	11.9	14.6	22.9	3.1
Other UK Shopping Centres	0.5	0.3	0.8	0.3
Snozone	1.0	1.2	1.2	0.9
Group/Central	(1.6)	(2.5)	(3.6)	(0.7)
Discontinued Operations	-	5.7	-	3.1
Operating Profit	11.8	19.3	21.3	6.7

¹ Proforma as published in the Financial Review of the Full Year Results announcement for year ending 30 December 2014.

The increase in Operating Profit reflects the impact of the acquisition of 70.74% of Mall units during the second half of 2014.  A breakdown of Mall Operating Profit is provided further below.

Profits within Other UK Shopping Centres for 2014 included an operating loss in Lincoln in the period until its disposal in November 2014.  Group/Central costs are higher than the comparative period in 2014 reflecting the loss of management income following the disposals of Lincoln and Germany, partly offset by a small reduction in central costs.

The following table provides a further breakdown of the Operating Profit for The Mall with comparative data on a like for like basis showing The Mall at 100% and with adjustments made to exclude one-off items.  The table illustrates the benefit of the costs savings achieved from restructuring the fund which are running ahead of the minimum of £1.5 million per annum originally anticipated.

The Mall Operating Profit

					Six months to  30 June 2015				Six months to  30 June 20141
					£m				£m
Rental income						23.7				24.0
Car park income						3.4				3.1
Ancillary income						1.2				1.2
Gross rental income						28.3				28.3
Service charge and void costs						(2.0)				(1.9)
Bad debt						(0.3)				(0.4)
Asset and Fund Manager fees						(2.1)				(2.9)
Other property expenses		Car park costs		(1.6)				(1.6)
		Head leases		(1.5)				(1.5)
		IFRS head lease adjustment		1.8				1.8
		Letting and rent review fees		(0.7)				(0.6)
		Administration expenses		(0.4)				(0.6)
		Repairs and maintenance		-				(0.4)
		Other costs		(0.7)			(3.1)	(0.9)			(3.8)
Net rental income							20.8				19.3
Interest Expense		Interest on loans		(6.5)				(7.2)
		Amortisation of refinancing costs		(0.6)				(1.0)
		Notional interest charge on head leases2		(1.8)			(8.9)	(1.8)			(10.0)
Mall Operating Profit							11.9				9.3

¹ Six months to 30 June 2014 for The Mall on a 100% basis (C&R's actual ownership was 29.26% during that period) restated on a like for like basis to exclude one-off items.   

² Notional interest charge with offsetting opposite and materially equal credit within other property operating expenses above.

Profit for the period

	Six months to 30 June 2015	Year to 30 December 2014	Six months to 30 June 2014
	£m	£m	£m
Operating Profit	11.8	19.3	6.7
Property revaluation	43.4	42.7	5.5
Acquisition of Mall Units/accrued costs for Mall acquisition	-	8.1	(2.2)
Financial instruments revaluation	-	0.3	1.3
Profit on disposal of Waterside Lincoln	-	4.7	-
Profit on disposal of Germany	2.4	-	-
Other items	(0.4)	(2.4)	(0.8)
Tax	(0.2)	2.5	1.2
Profit for the period	57.0	75.2	11.7

As well as the Operating Profit discussed above, the other key driver of Profit for the Period was £43.4 million of property valuation gains, primarily within The Mall. 

Financing

Proforma see-through debt

Group share	DebtP1	CashP2,	Net debt	Loan to ValueP3	Net debt to valueP3	Blended interest rate	Fixed	Weighted average duration to loan expiry
30 June 2015	£m	£m	£m	%	%	%	%	Years
The Mall	380.0	(28.3)	351.7	48	44	3.46	61.4%	3.9
Group RCF	-	(12.6)	(12.6)	n/a	n/a	n/a	n/a	1.1
On balance sheet debt	380.0	(40.9)	339.1
Kingfisher Redditch	16.9	(1.2)	15.7	54	50	4.58	99.5%	3.8
Buttermarket Ipswich	-	(0.4)	(0.4)	n/a	n/a	n/a	n/a	n/a
Off balance sheet debt	16.9	(1.6)	15.3
See-through debt	396.9	(42.5)	354.4	48	43

¹ Excluding unamortised issue costs.

² Excluding cash beneficially owned by tenants.

³P  Debt and net debt divided by investment property at valuation.

The Mall

The Mall debt facility comprises a fixed rate tranche of £233.3 million with interest fixed at 1.86% plus applicable margin and a floating rate tranche based on three month LIBOR of £146.7 million. The floating rate tranche has been hedged using interest rate caps with a strike rate no higher than 2.75%. Based on the prevailing market rate at the end of 30 June 2015 the overall cost of this facility was 3.46% at that date.  The debt matures in May 2019.

Group Revolving Credit Facility (RCF)

At 30 December 2014, the Group had £23.4 million drawn from a total available facility of £35.2 million.  Following completion of the sale of the Group's German joint venture in February 2015, the outstanding drawings were paid off in full.  Under the terms of the facility, as amended in June 2014, the available limit reduced to £20 million from 11 February 2015.  The facility was undrawn at 30 June 2015 with the full £20 million available. 

Interest on the facility is charged at a margin of 3.2% per annum above LIBOR. A non-utilisation fee of 1.44% is payable.  The facility is available until 31 July 2016 (but will be reduced to £15 million from 1 January 2016). 

Credit approved terms for a new £30 million facility to 30 May 2019 have been received and documentation is expected to be completed in the next month.

Covenants

The Group and its associates and joint ventures were compliant with their banking and debt covenants at 30 June 2015. 

Potential secondary listing

Having received positive interest from South African institutional investors we are considering the merits of a secondary listing in South Africa.  We are currently at the early stages of investigating whether this could add value and liquidity to the stock and we will update the market as appropriate.

Property under management

Following the disposal of the German joint venture, the Group's property interest is entirely focused on UK Shopping Centres, the vast majority of which are now wholly owned:

			Valuation	Valuation
			30 June 2015	30 December 2014
100%			£m	£m
UK Shopping Centres - wholly owned			791	745
UK Shopping Centres - Associates and Joint Ventures1			167	151
Property under management			958	896

¹ Value of 100% of the assets - Capital & Regional share is £36.7 million

Excludes The Broadwalk Centre, Edgware which the Group manages but has no investment interest and Germany which was held for sale at 30 December 2014 and disposal completed on 10 February 2015.

German disposal

On 10 February 2015, the Group completed the sale of its 50:50 German joint venture to clients and funds under management of Rockspring Property Investment Managers.  Under the terms of the transaction the Group will retain for approximately five years a 5.1% minority stake in each of the five German portfolios sold. 

The total net proceeds received were €54.8 million.  This equated to £42.3 million (after all costs and including the benefit of the Group's Forward Contract which hedged €50 million at 1.2721) and resulted in an uplift to the year-end NAV of £0.8 million.  The total profit on disposal was £2.4 million, reflecting this £0.8 million and £1.6 million of realised foreign currency gain reclassified from reserves.    

On completion, and included within the proceeds, the Group entered into a long term loan of €3.5 million repayable after five years.  After completion, a distribution of €1.5 million was made in respect of the retained minority stakes and this was used to reduce the outstanding amount of the loan owing to €2.0 million.  A further distribution was received in June 2015 of €0.1 million, which was not offset against the loan.  The carrying value of the retained minority stake was €2.2 million (£1.6 million) at 30 June 2015, the carrying value of the loan payable was a liability of €2.0 million (£1.4 million) at the same date.

Going concern

As stated in note 2 to the condensed financial statements, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the consolidated financial statements.

Adoption of Financial Reporting Standard (FRS 101) - reduced disclosure framework

The UK Generally Accepted Accounting Principles (UK GAAP) were withdrawn on 1 January 2015. Accordingly, for its financial year ending 30 December 2015, the Company intends to transition to reporting under FRS 101, as published by the Financial Reporting Council, in its parent company financial statements. The Board considers that it is in the best interests of the Company to adopt FRS 101 Reduced Disclosure Framework. No disclosures in the current UK GAAP financial statements would be omitted following transition to FRS 101.

Any shareholder or shareholders holding in aggregate 5% or more of the allotted shares in the Company may serve objections on the Company to the use of the disclosure exemptions by writing to the Company Secretary at the Registered Office at 52 Grosvenor Gardens, London, SW1W 0AU no later than 31 October 2015.

Dividend

The Board has reviewed the strong progress that the Group has made during the first half and, in keeping with its policy of distributing at least 90% of Mall Operating Profit, is announcing an interim dividend of 1.5p per share (June 2014: 0.35p per share), all of which will be paid as a Property Income Distribution (PID).  The proportion of the final 2015 dividend to be paid as a PID will be confirmed at the time of the year-end results announcement in March 2015.

The key dates in relation to the payment of the dividend are:

1 October 2015	Ex-dividend date
2 October 2015	Record date for the payment of interim dividend
2 October 2015	Last date for REIT declaration forms to be received by Registrar
29 October 2015	Dividend payment date

Outlook

We expect to see a significant increase in momentum in delivery of the capex programme in the second half of 2015 and remain confident that the asset management initiatives across the portfolio will deliver very attractive returns.  We anticipate that further increases in property valuations will be driven primarily by growth in income and repositioning of the shopping centres even if there still remains some scope for yield compression particularly for shopping centres in London.

We are also reviewing a number of investment opportunities with our focus on those where we can utilise our asset management skills to generate attractive returns based on the repositioning of the underlying scheme.

Forward looking statements

This document contains certain statements that are neither reported financial results nor other historical information.  These statements are forward-looking in nature and are subject to risks and uncertainties.  Actual future results may differ materially from those expressed in or implied by these statements.  Many of these risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of government regulators and other risk factors such as the Group's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis.  Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this document.  The Group does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document.  Information contained in this document relating to the Group should not be relied upon as a guide to future performance.

Principal risks and uncertainties

There are a number of risks and uncertainties which could have a significant impact on future performance and could cause actual results to differ materially from expected or historical results. The Group carries out a regular review of the major risks it faces and monitors the controls that have been put in place to mitigate them.

A detailed explanation of the principal risks and uncertainties was included on pages 16 to 19 of the Group's 2014 Annual Report.  A further review was carried out for the 30 June 2015 half year.  The conclusion of this was that Valuation risk, defined as the risk of an absence of relevant transactional evidence creating uncertainty, was no longer a principal Group risk following the completion of the sale of the Group's German investment and the exclusive property focus on UK Shopping Centres.  Furthermore new risks were added being Competition Risk, Development Risk and Acquisition/Disposal strategy, these are summarised along with those that remain relevant from 30 December 2014 below:

Property risks:

·              Property investment market risks - Weak economic conditions and poor sentiment in commercial real estate markets may lead to low investor demand and a market pricing correction. Small changes in property market yields have a significant effect on the value of the properties owned by the Group and the impact of leverage could magnify the effect on the Group's net assets.

·              Impact of the economic environment (tenant risks) - Tenant insolvency or distress and a prolonged downturn in tenant demand could put pressure on rent levels. Tenant failures and reduced tenant demand could adversely affect rental income revenues, lease incentive costs, void costs, available cash and the value of properties owned by the Group.

·             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.

·              Concentration and scale risks - By having a less diversified portfolio the business is more exposed to specific tenants or types of tenant.  Failures of such tenants could therefore have a significant impact on rental income revenues impacting Group Operating Profit and property valuations.

·              Competition risk - The threat to the Group's property assets of competing in town and out of town retail and leisure schemes.

·              Development risk - There is a risk that where capital expenditure and development projects are undertaken that delays and other issues may occur leading to increased cost and reputational damage.  There is also the risk that planned realisation of value is not achieved, for example if the property cannot subsequently be sold for the anticipated amount or if tenants are not contracted on sufficiently attractive terms.

Funding and treasury risks:

·              Liquidity and funding - Inability to fund the business or to refinance existing debt on economic terms when needed may result in the inability to meet financial obligations (interest, loan repayments, expenses, dividends) when due and put a limitation on financial and operational flexibility. Cost of financing could be prohibitive in the future.

·              Covenant compliance risks - Breach of any loan covenants could cause default on debt and possible accelerated maturity. Unremedied breaches can trigger demand for immediate repayment of loans.

·              Interest rate exposure risks - Exposure to rising or falling interest rates. If interest rates rise and are unhedged, the cost of debt facilities can rise and ICR covenants could be broken. Hedging transactions used by the Group to minimise interest rate risk may limit gains, result in losses or have other adverse consequences.

Other risks:

·              Execution of business plan - the failure to execute the Group's business plan in line with internal and external expectations could lead to potential loss of income or value and reputational damage, negatively impacting investor market perception.

·              Property acquisition/disposal strategy - The Group is exposed to risks around overpayment for acquisitions and that acquisitions do not deliver the returns forecast.  In addition, if the portfolio is not effectively managed through the property cycle, with sales and deleveraging at the appropriate time, the Group is exposed to risks in not being able to take advantage of other investment opportunities as they arise and the potential for LTVs to move adversely when the cycle changes, with adverse consequences for banking covenants and shareholder value.

·              Tax risks - Changes in tax legislation or the interpretation of tax legislation or previous transactions where the tax authorities disagree with the tax treatment adopted could result in tax related liabilities and other losses arising.

·              Regulation risks - Exposure to changes in existing or forthcoming property related or corporate regulation could result in financial penalties or loss of business or credibility.

·             Loss of key management - The Group's business is partially dependent on the skills of a small number of key individuals. Loss of key individuals or an inability to attract new employees with the appropriate expertise could reduce the effectiveness with which the Group conducts its business.

The risks noted above do not comprise all those potentially faced by the Group and are not intended to be presented in any order of priority. Additional risks and uncertainties currently unknown to the Group, or which the Group currently deems immaterial, may also have an adverse effect on the financial condition or business of the Group in the future. These issues are kept under constant review to allow the Group to react in an appropriate and timely manner to help mitigate the impact of such risks.

Responsibility statement

The directors confirm that to the best of their knowledge:

·             the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting", as adopted by the European Union;

·             the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

·             the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

Hugh Scott-Barrett                                                       Charles Staveley

Chief Executive                                                              Group Finance Director

11 August 2015                                                             11 August 2015

Independent review report to Capital & Regional plc

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 16. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, UK

11 August 2015

Condensed consolidated income statement

For the six months to 30 June 2015

		Unaudited Six months to 30 June 2015		Unaudited Six months to 30 June 20141	Audited Year  to 30 December 2014
	Note		£m	£m	£m
Continuing operations
Revenue	3b		40.0	8.6	46.6
Cost of sales			(14.6)	(4.4)	(18.2)
Gross profit			25.4	4.2	28.4
Administrative costs			(5.4)	(4.4)	(11.0)
Share of profit in associates and joint ventures	8a		1.3	9.9	10.2
Acquisition of Mall Units			-	(2.2)	8.1
Gain on revaluation of investment properties	7a		42.7	-	36.9
Other gains and losses			0.1	0.1	4.4
Profit on ordinary activities before financing			64.1	7.6	77.0
Finance income			0.3	0.1	0.4
Finance costs			(9.6)	(0.3)	(10.2)
Profit before tax			54.8	7.4	67.2
Tax	5		(0.2)	1.2	2.5
Profit for the period from continuing operations			54.6	8.6	69.7
Discontinued operations
Profit for the period from discontinued operations	14		2.4	3.1	5.5
Profit for the period			57.0	11.7	75.2
Attributable to:
Equity holders of  the parent			57.0	11.7	73.7
Non-controlling interest			-	-	1.5
			57.0	11.7	75.2
Continuing operations
Basic earnings per share	6		7.8p	2.5p	13.6p
Diluted earnings per share	6		7.7p	2.4p	13.5p
Continuing and discontinued operations
Basic earnings per share	6		8.1p	3.4p	14.5p
Diluted earnings per share	6		8.1p	3.3p	14.5p

¹ Results for the six months to 30 June 2014 have been restated to separate discontinued operations as detailed in note 14.

Condensed consolidated statement of comprehensive income

For the six months to 30 June 2015

	Unaudited six months to 30 June 2015	Unaudited six months to 30 June 2014	Audited Year  to 30 December 2014
	£m	£m	£m
Profit for the period	57.0	11.7	75.2
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations	-	(1.6)	(2.8)
Exchange differences previously taken to reserves realised in period	(1.6)	-	-
Gain on a hedge of a net investment taken to equity	-	1.0	1.7
Total items that that may be reclassified subsequently to profit or loss:	(1.6)	(0.6)	(1.1)
Total comprehensive income for the period	55.4	11.1	74.1
Attributable to:
Equity holders of the parent	55.4	11.1	72.6
Non-controlling interest	-	-	1.5
	55.4	11.1	74.1

Condensed consolidated balance sheet

At 30 June 2015

			Unaudited 30 June 2015	Audited 30 December 2014
		Note	£m	£m
Non-current assets
Investment properties		7	837.9	790.8
Plant and equipment			0.6	0.7
Fixed asset investments			1.6	2.7
Receivables			16.9	17.9
Investment in associates		8b	14.7	13.6
Investment in joint ventures		8c	5.7	-
Total non-current assets			877.4	825.7
Current assets
Receivables			14.9	16.1
Cash and cash equivalents		9	49.6	42.6
Assets classified as held for sale		14	-	39.5
Total current assets			64.5	98.2
Total assets			941.9	923.9
Current liabilities
Trade and other payables			(30.0)	(41.8)
Liabilities directly associated with assets classified as held for sale		14	-	(0.8)
Total current liabilities			(30.0)	(42.6)
Net current assets			34.5	55.6
Non-current liabilities
Bank loans		10	(374.4)	(396.8)
Other payables			(1.6)	(0.1)
Obligations under finance leases			(65.4)	(65.4)
Total non-current liabilities			(441.4)	(462.3)
Total liabilities			(471.4)	(504.9)
Net assets			470.5	419.0
Equity
Share capital			7.0	7.0
Share premium			157.2	157.2
Other reserves			60.3	61.5
Capital redemption reserve			4.4	4.4
Own shares held			(0.6)	(0.6)
Retained earnings			242.2	189.5
Equity shareholders' funds			470.5	419.0
Basic net assets per share		12	£0.67	£0.60
EPRA triple net assets per share		12	£0.66	£0.59
EPRA net assets per share		12	£0.67	£0.59

Condensed consolidated statement of changes in equity

At 30 June 2015

							Other reserves
										Net
									Foreign	investment	Capital	Own						Non-
				Share	Share	Merger			currency	hedging	redemption	shares	Retained		controlling						Total
		capital			premium	reserve			reserve	reserve	reserve	held	earnings		Total		interest				Equity
				£m	£m	£m			£m	£m	£m	£m	£m		£m		£m				£m
Balance at 30 Dec 2013				9.9	-	60.3			4.4	(2.1)	4.4	(0.7)	112.5		188.7		-				188.7
Profit for period				-	-	-			-	-	-	-	11.7		11.7		-				11.7
Other comprehensive loss for the year				-	-	-			(1.6)	1.0	-	-	-		(0.6)		-				(0.6)
Total comprehensive income for the year				-	-	-			(1.6)	1.0	-	-	11.7		11.1		-				11.1
Credit to equity for equity-settled share-based payments				-	-	-			-	-	-	-	0.3		0.3		-				0.3
Dividends paid (note 16)				-	-	-			-	-	-	-	(1.4)		(1.4)		-				(1.4)
Balance at 30 June 2014				9.9	-	60.3			2.8	(1.1)	4.4	(0.7)	123.1		198.7		-				198.7
Profit for the period				-	-	-			-	-	-	-	62.0		62.0		1.5				63.5
Other comprehensive loss for the period				-	-	-			(1.2)	0.7	-	-	-		(0.5)		-				(0.5)
Total comprehensive income for the period				-	-	-			(1.2)	0.7	-	-	62.0		61.5		1.5				63.0
Credit to equity for equity-settled share-based payments				-	-	-			-	-	-	-	0.2		0.2		-				0.2
Deferred tax on share- based payments				-	-	-			-	-	-	-	(0.2)		(0.2)		-				(0.2)
New shares issued				3.5	157.2	-			-	-	-	-	-		160.7		-				160.7
Dividends paid (note 16)				-	-	-			-	-	-	-	(2.4)		(2.4)		-				(2.4)
Repurchase and cancellation of deferred shares				(6.4)	-	-			-	-	-	-	6.4		-		-				-
Adjustment arising from change in non-controlling interest				-	-	-			-	-	-	-	0.5		0.5		(1.5)				(1.0)
Other movements				-	-	-			-	-	-	0.1	(0.1)		-		-				-
Balance at 30 Dec 2014				7.0	157.2	60.3			1.6	(0.4)	4.4	(0.6)	189.5		419.0		-				419.0
Profit for the period				-	-	-			-	-	-	-	57.0		57.0		-				57.0
Other comprehensive loss for the period				-	-	-			(1.6)	-	-	-	-		(1.6)		-				(1.6)
Total comprehensive income for the period				-	-	-			(1.6)	-	-	-	57.0		55.4		-				55.4
									-	-		-
Credit to equity for equity-settled share-based payments				-	-	-			-	-	-	-	0.4		0.4		-				0.4
Deferred tax on share-based payments				-	-	-			-	-	-	-	-		-		-				-
Dividends paid (note 16)				-	-	-			-	-	-	-	(4.2)		(4.2)		-				(4.2)
Other movements				-	-	-			-	0.4	-	-	(0.5)		(0.1)		-				(0.1)
Balance at 30 June 2015				7.0	157.2	60.3			-	-	4.4	(0.6)	242.2		470.5		-				470.5

Condensed consolidated cash flow statement

For the six months to 30 June 2015

		Unaudited Six months  to 30 June 2015	Unaudited Six months  to 30 June 2014	Audited Year  to 30 December 2014
	Note	£m	£m	£m
Operating activities
Net cash from operations	11	6.3	(1.2)	22.5
Distributions received from associates	8b	-	1.5	1.5
Distributions received from joint ventures	8c	-	5.3	5.3
Interest paid		(6.8)	(0.2)	(8.7)
Interest received		0.1	0.1	0.4
Income taxes received		1.0	0.6	0.4
Cash flows from operating activities		0.6	6.1	21.4
Investing activities
Acquisition of  Mall Units (net of cash acquired within The Mall)		-	-	(220.1)
Disposal of German joint venture		42.3	-	-
Disposal of Waterside Lincoln Limited Partnership		-	-	14.8
Disposal of Leisure World, Hemel Hempstead		-	8.4	8.4
Other acquisitions and disposals		-	0.1	(0.2)
Purchase of plant and equipment		-	(0.2)	(0.4)
Capital expenditure on investment properties		(4.8)	-	(2.4)
Investment in joint ventures	8c	(5.5)	-	-
Loans (advanced to)/repaid by joint ventures		-	(0.2)	0.3
Cash flows from investing activities		32.0	8.1	(199.6)
Financing activities
Dividends paid	16	(4.2)	(1.4)	(3.8)
Bank loans drawn down		-	-	68.1
Bank loans repaid		(23.4)	-	(14.7)
Loan arrangement costs		-	(0.1)	(1.5)
Proceeds on issue of new shares		-	-	160.7
Settlement of forward foreign exchange contract		2.0	0.9	0.9
Cash flows from financing activities		(25.6)	(0.6)	209.7
Net increase in cash and cash equivalents		7.0	13.6	31.5
Cash and cash equivalents at the beginning of the period		42.6	11.1	11.1
Cash and cash equivalents at the end of the period	9	49.6	24.7	42.6

Notes to the condensed financial statements

For the six months to 30 June 2015

1 General information

The information for the year ended 30 December 2014 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor has reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The Group's financial performance does not suffer materially from seasonal fluctuations.

2 Accounting policies

Basis of preparation

The annual financial statements of Capital & Regional plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union.

The principal exchange rates used to translate foreign currency denominated amounts are:

Balance sheet: £1 = €1.406 (30 June 2014: £1 = €1.248; 31 December 2014: £1 = €1.278)

Income statement: £1 = €1.367 (30 June 2014: £1 = €1.218; 31 December 2014: £1 = €1.240).

The Half-Year Report was approved by the Board on 11 August 2015.

Going concern

The Group prepares cash flow and covenant compliance forecasts to demonstrate that it has adequate resources available to continue in operation for the foreseeable future, being at least 12 months from the date of this report.  In these forecasts the directors specifically consider anticipated future market conditions and the Group's principal risks and uncertainties.  Further information on the Group's financing position is contained within the Financial Review with additional details of the Group's cash position and borrowing facilities provided in notes 9 and 10 of the condensed financial statements.

In summary the directors believe that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future and accordingly continue to adopt the going concern basis in preparing the annual report and financial statements.

Change in accounting policies

Except as described below, the condensed consolidated interim financial information has been prepared on the basis of the accounting policies, significant judgements, key assumptions and estimates as set out in the notes to the Group's annual financial statements for the year ended 30 December 2014. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The following accounting standards or interpretations were effective for the financial year beginning 31 December 2014 and have been applied in preparing these interim financial statements to the extent they are relevant to the preparation of interim financial information:

 IFRS 10 'Consolidated Financial Statements'

 IFRS 11 'Joint Arrangements'

 IFRS 12 'Disclosure of Interests in Other Entities'

 IAS 27 (revised) 'Separate Financial Statements'

 IAS 28 (revised) 'Investments in Associates and Joint Ventures'

 IAS 32 (amendment) 'Financial instruments: Presentation' (assets and liability offsetting)

 IAS 36 (amendment) 'Impairment of Assets'

 IAS 39 (amendment) 'Financial Instruments: Recognition and Measurement'

 Amendments to IFRS 10, IFRS 11, IFRS 12 (transition guidance)

None of the standards have resulted in any changes to the Group's financial position or performance.

The following accounting standards and interpretations which are relevant to the Group have been issued, but are not yet effective:

 IFRS 9 'Financial Instruments'

 IFRS 15 'Revenue from Contracts with Customers'

These standards and interpretations have not been early adopted by the Group. The Group is in the process of assessing the impact of these new standards and interpretations on its financial reporting.

3 Operating segments

3a Operating segment performance

The Group's reportable segments under IFRS 8, consistent with the presentation at the 2014 year end, are The Mall, Other UK Shopping Centres, Snozone and Group/Central.  Other UK Shopping Centres consists of the Group's interests in Kingfisher Limited Partnership (Redditch), the Buttermarket Centre, Ipswich, from its acquisition on 3 March 2015, and, until its disposal on 12 November 2014, The Waterside Lincoln Limited Partnership.  Group/Central includes management fee income, Group overheads incurred by Capital & Regional Property Management, Capital & Regional plc and other subsidiaries and the interest expense on the Group's central borrowing facility.

The Group's results from its Germany segment, including the profit on disposal recorded in the six months to 30 June 2015, have been classified as Discontinued Operations with the prior year comparatives restated following its reclassification as held for sale at 24 December 2014.  See note 14 for further details.

The Mall and Other UK Shopping Centres derive their revenue from the rental of investment properties. The Snozone and Group/Central segments derive their revenue from the operation of indoor ski slopes and the management of property funds or schemes respectively. The split of revenue between these classifications satisfies the requirement of IFRS 8 to report revenues from different products and services. Depreciation and charges in respect of share-based payments represent the only significant non-cash expenses.

The Group's share of ownership of The Mall reflected in the segmental analysis below, was 29.26% from 1 January 2014 to 14 July 2014, 91.82% from 14 July 2014 until 8 October 2014, 99.45% from 8 October 2014 to 1 December 2014 and 100% from 1 December 2014 onwards.  See note 25 of the financial statements for the year ended 30 December 2014 for further details.

			UK Shopping Centres
			The Mall (100%)		Other UK Shopping Centres	Snozone		Group/Central	Total Continuing Operations		Discontinued Operations			Total
Six months to 30 June 2015			£m		£m	£m		£m	£m		£m			£m
Rental income (External)			28.3		1.5	-		-	29.8		-			29.8
Property, void and management costs			(7.5)		(0.6)	-		-	(8.1)		-			(8.1)
			20.8		0.9	-		-	21.7		-			21.7
Interest income			-		-	-		-	-		-			-
Interest expense			(8.9)		(0.4)	-		-	(9.3)		-			(9.3)
Contribution			11.9		0.5	-		-	12.4		-			12.4
Management fees/Snozone income			-		-	5.4		3.3	8.7		-			8.7
Management expenses			-		-	(4.3)		(4.0)	(8.3)		-			(8.3)
Depreciation			-		-	(0.1)		-	(0.1)		-			(0.1)
Interest expense on central facility			-		-	-		(0.4)	(0.4)		-			(0.4)
Variable overhead (excluding non-cash items)				-	-	-		(0.5)	(0.5)		-			(0.5)
Operating Profit/(Loss)			11.9		0.5	1.0		(1.6)	11.8		-			11.8
Inter-segment eliminations			2.8		-	-		(2.8)	-		-			-
Share-based payments			-		-	-		(0.5)	(0.5)		-			(0.5)
Revaluation of properties			42.7		0.7	-		-	43.4		-			43.4
Profit on disposal			-		-	-		-	-		2.4			2.4
(Loss)/gain on financial instruments			(0.1)		0.1	-		-	-		-			-
Other items			-		-	-		0.1	0.1		-			0.1
Profit/(loss) before tax			57.3		1.3	1.0		(4.8)	54.8		2.4			57.2
Tax charge									(0.2)		-			(0.2)
Profit after tax									54.6		2.4			57.0
Total assets			903.0		39.0	1.8		23.8	967.6		-			967.6
Total liabilities			(475.8)		(18.6)	(1.3)		(1.4)	(497.1)		-			(497.1)
Net assets			427.2		20.4	0.5		22.4	470.5		-			470.5

3 Operating segments (continued)

3a Operating segment performance

			UK Shopping Centres
			The Mall (29.26%)		Other UK Shopping Centres		Snozone		Group/ Central	Total Continuing Operations			Discontinued Operations		Total
Six months to 30 June 20141			£m		£m		£m		£m	£m			£m		£m
Rental income (External)			8.5		1.6		-		-	10.1			6.1		16.2
Property, void and management  costs			(2.6)		(0.5)		-		-	(3.1)			(0.7)		(3.8)
			5.9		1.1		-		-	7.0			5.4		12.4
Interest income			-		-		-		-	-			0.2		0.2
Interest expense			(2.8)		(0.8)		-		-	(3.6)			(2.5)		(6.1)
Contribution			3.1		0.3		-		-	3.4			3.1		6.5
Management fees/income			-		-		5.3		4.0	9.3			-		9.3
Management expenses			-		-		(4.3)		(4.2)	(8.5)			-		(8.5)
Depreciation			-		-		(0.1)		(0.1)	(0.2)			-		(0.2)
Interest expense on central facility			-		-		-		(0.2)	(0.2)			-		(0.2)
Variable overhead (excluding non-cash items)				-	-		-		(0.2)	(0.2)			-		(0.2)
Operating Profit/(Loss)			3.1		0.3		0.9		(0.7)	3.6			3.1		6.7
Share-based payments			-		-		-		(0.2)	(0.2)			-		(0.2)
Revaluation of properties			5.1		0.6		-		-	5.7			(0.2)		5.5
Profit on disposals			0.1		-		-		-	0.1			0.1		0.2
Gain on financial instruments			0.8		0.1		-		-	0.9			0.4		1.3
Accrued costs relating to Mall Unit acquisition			-		-		-		(2.2)	(2.2)			-		(2.2)
Other items			-		-		-		(0.5)	(0.5)			(0.3)		(0.8)
Profit/(loss) before tax			9.1		1.0		0.9		(3.6)	7.4			3.1		10.5
Tax credit										1.2			-		1.2
Profit after tax										8.6			3.1		11.7
Total assets			236.6		57.1		2.1		30.2	326.0			161.7		487.7
Total liabilities			(128.4)		(33.8)		(0.9)		(4.3)	(167.4)			(121.6)		(289.0)
Net assets			108.2		23.3		1.2		25.9	158.6			40.1		198.7

¹ Results for the six months to 30 June 2014 have been restated to separate discontinued operations as detailed in note 14.

3 Operating segments (continued)

3a Operating segment performance				UK Shopping Centres
			The Mall (60.00%1)		Other UK Shopping Centres	Snozone		Group/Central	Total Continuing Operations		Discontinued Operations			Total
Year to 30 December 2014			£m		£m	£m		£m	£m		£m			£m
Rental income (External)			35.6		3.1	-		-	38.7		11.6			50.3
Property, void and management costs			(10.4)		(1.1)	-		-	(11.5)		(2.1)			(13.6)
			25.2		2.0	-		-	27.2		9.5			36.7
Interest income			-		-	-		-	-		-			-
Interest expense			(10.6)		(1.3)	-		-	(11.9)		(3.8)			(15.7)
Contribution			14.6		0.7	-		-	15.3		5.7			21.0
Management fees/Snozone income			-		-	9.9		7.3	17.2		-			17.2
Management expenses			-		-	(8.6)		(8.4)	(17.0)		-			(17.0)
Depreciation			-		-	(0.1)		(0.1)	(0.2)		-			(0.2)
Interest expense on central facility			-		-	-		(1.1)	(1.1)		-			(1.1)
Variable overhead (excluding non-cash items)			-		-	-		(1.1)	(1.1)		-			(1.1)
Lincoln performance fees			-		(0.4)	-		0.9	0.5		-			0.5
Operating Profit/(Loss)			14.6		0.3	1.2		(2.5)	13.6		5.7			19.3
Inter-segment eliminations			2.6		-	-		(2.6)	-		-			-
Acquisition of Mall Units (including Mall performance fees)			5.3		-	-		2.8	8.1		-			8.1
Share-based payments			-		-	-		(0.7)	(0.7)		-			(0.7)
Revaluation of properties			42.0		1.2	-		-	43.2		(0.5)			42.7
Profit on disposal			0.1		4.7	-		-	4.8		-			4.8
(Loss)/gain on financial instruments			(0.3)		(0.3)	-		-	(0.6)		0.9			0.3
Other items			-		(0.2)	-		(1.0)	(1.2)		(0.6)			(1.8)
Profit/(loss) before tax			64.3		5.7	1.2		(4.0)	67.2		5.5			72.7
Tax credit									2.5		-			2.5
Profit after tax									69.7		5.5			75.2
Total assets			857.6		32.1	2.7		7.8	900.2		42.2			942.4
Total liabilities			(480.4)		(18.5)	(1.7)		(22.0)	(522.6)		(0.8)			(523.4)
Net assets/(liabilities)			377.2		13.6	1.0		(14.2)	377.6		41.4			419.0

¹ Weighted average based on ownership levels during the year to 30 December 2014.

3 Operating segments (continued)

3b Reconciliations of reportable revenue, assets and liabilities

					Unaudited		Unaudited	Audited
					Six months to		Six months to	Year to
					30 June		30 June	30 December
					2015		2014	2014
Revenue		Note				£m	£m	£m
Rental income from external sources			3a		29.8		10.1	38.7
Service charge income					5.8		-	5.4
Management fees			3a		3.3		4.0	7.3
Performance fees					-		-	6.8
Snozone income			3a		5.4		5.3	9.9
Revenue for reportable segments					44.3		19.4	68.1
Elimination of inter-segment revenue					(2.8)		-	(2.6)
Elimination of inter-segment performance fees					-		-	(5.9)
Rental income earned by associates and joint ventures					(1.5)		(10.0)	(12.2)
Management fees earned by associates and joint ventures					-		(0.8)	(0.8)
Revenue per consolidated income statement					40.0		8.6	46.6
UK				44.3			18.6	67.3
Germany				-			0.8	0.8
Revenue for reportable segments by country				44.3			19.4	68.1

			Unaudited	Unaudited	Audited
			Six months to	Six months to	Year to
			30 June	30 June	30 December
			2015	2014	2014
Balance sheet		Note	£m	£m	£m
Total assets of reportable segments		3a	967.6	487.7	942.4
Inter-segment eliminations			(7.1)
Adjustment for associates and joint ventures			(18.6)	(283.7)	(18.5)
Group assets			941.9	204.0	923.9
Total liabilities of reportable segments		3a	(497.1)	(289.0)	(523.4)
Inter-segment eliminations			7.1
Adjustment for associates and joint ventures			18.6	283.7	18.5
Group liabilities			(471.4)	(5.3)	(504.9)
Net assets by country
UK			470.4	158.4	377.6
Germany			0.1	40.3	41.4
Net assets by country			470.5	198.7	419.0

4 Revenue

			Unaudited	Unaudited	Audited
			Six months to	Six months to	Year to
			30 June	30 June	30 December
			2015	2014	2014
Statutory		Note	£m	£m	£m
Gross rental income			23.7	-	22.2
Ancillary income			4.6	-	4.3
			28.3	-	26.5
Service charge income			5.8	-	5.4
Management fees			0.5	3.3	4.8
Snozone income		3a	5.4	5.3	9.9
Revenue per consolidated income statement - continuing operations		3b	40.0	8.6	46.6

Management fees represent revenue earned by Capital & Regional Plc and the Group's wholly-owned CRPM subsidiary.  Fees charged to The Mall after 14 July 2014, being the date the Group took control of The Mall Fund, have been eliminated on consolidation.

5 Tax

		Unaudited	Unaudited	Audited
		Six months to	Six months to	Year to
		30 June	30 June	30 December
		2015	20141	2014
Tax charge/(credit)		£m	£m	£m
UK corporation tax - continuing operations		0.1	-	-
UK corporation tax - discontinued operations		-	-	-
Adjustments in respect of prior years - continuing operations		0.1	(0.2)	(1.0)
Foreign tax - continuing operations		-	-	-
Total current tax charge/(credit)		0.2	(0.2)	(1.0)
Deferred tax
Origination and reversal of temporary timing differences		-	(1.0)	(1.3)
Deferred tax credit - discontinued  operations		-	-	-
Adjustments in respect of prior years - continuing operations		-	-	(0.2)
Total deferred tax credit		-	(1.0)	(1.5)
Total tax charge/(credit)		0.2	(1.2)	(2.5)
Total tax charge/(credit) - continuing operations		0.2	(1.2)	(2.5)
Total tax credit - discontinued operations		-	-	-

	Unaudited		Unaudited	Audited
	Six months to		Six months to	Year to
	30 June		30 June	30 December
	2015		20141	2014
Tax charge/(credit) reconciliation	£m		£m	£m
Profit before tax on continuing operations		54.8	7.4	67.2
Profit multiplied by the UK corporation tax rate of 20.25% (30 June 2014: 22%, 30 December 2014: 21.5%)		11.1	1.6	14.4
REIT exempt income and gains		(12.5)	-	-
Non-allowable expenses and non-taxable items		(2.2)	0.2	(4.4)
Utilisation of tax losses		0.3	-	(0.7)
Tax on realised gains		1.6	-	0.1
Unrealised gains on investment properties not taxable		(0.1)	(1.2)	(9.1)
Temporary timing and controlled foreign companies income		1.9	(1.6)	(1.6)
Adjustments in respect of prior years		0.1	(0.2)	(1.2)
Total tax charge/(credit) - continuing operations		0.2	(1.2)	(2.5)

¹ Results for the six months to 30 June 2014 have been restated to separate discontinued operations as detailed in note 14.

The UK main corporation tax rate is now proposed to reduce to 18% (previously 20%) by 1 April 2020 (previously 1 April 2015). The reduction in the UK corporation tax rate at 1 April 2015 to 20% was substantively enacted on 2 July 2013. The changes will not have a significant impact on the Group given its REIT status.

The Group has £9.0 million (30 December 2014: £7.6 million) of unused revenue tax losses, all of which are in the UK.  No deferred tax asset has been recognised in respect of these losses (30 December 2014: £nil) owing to the unpredictability of future profit streams and other reasons which may restrict the utilisation of the losses.  The Group has unused capital losses of £23.5 million (30 December 2014: £40.6 million) that are available for offset against future gains but, similarly, no deferred tax asset has been recognised in respect of these losses owing to the unpredictability of future capital gains and other reasons which may restrict the utilisation of the losses.  The losses do not have an expiry date. 

6 Earnings per share

The European Public Real Estate Association ("EPRA") has issued recommendations for the calculation of earnings per share information as shown in the following table: 

	Basic	Diluted	EPRA diluted
Earnings	£m	£m	£m
Profit for the period from continuing operations	54.6	54.6	54.6
Revaluation of investment properties	-	-	(43.4)
Profit on disposal of investment properties (net of tax)	-	-	-
Movement in fair value of financial instruments (net of tax)	-	-	-
Deferred tax credit on capital allowances	-	-	-
Profit from continuing operations	54.6	54.6	11.2
Discontinued operations	2.4	2.4	-
Profit	57.0	57.0	11.2
Number of shares	million	million	Million
Ordinary shares in issue	700.8	700.8	700.8
Own shares held	(1.0)	(1.0)	(1.0)
Dilutive contingently issuable shares and share options	-	5.8	5.8
Weighted average number of shares for the purpose of earnings per share	699.8	705.6	705.6
Earnings per share - continuing operations	pence	pence	Pence
Six months to 30 June 2015 (unaudited)	7.8	7.7	1.6
Six months to 30 June 2014 (unaudited) 1	2.5	2.4	0.2
Year to 30 December 2014 (audited)	13.6	13.5	2.5

Earnings per share - continuing and discontinued operations	pence	pence	Pence
Six months to 30 June 2015 (unaudited)	8.1	8.1	1.6
Six months to 30 June 2014 (unaudited)	3.4	3.3	1.0
Year to 30 December 2014 (audited)	14.5	14.5	3.5

¹ Results for the six months to 30 June 2014 have been restated to separate discontinued operations as detailed in note 14.

At the end of the period, the Group had 13.0 million (30 December 2014: 8.8 million) additional share options and contingently issuable shares granted under share-based payment schemes that could potentially dilute basic earnings per share in the future but which have not been included in the calculation because they are not dilutive or the performance conditions for vesting were not met based on the position at 30 June 2015.

7 Investment properties

7a Wholly-owned properties

		Freehold	Leasehold	Total
		investment	investment	property
		properties	properties	assets
		£m	£m	£m
Cost or valuation
At 30 December 2014		256.7	534.1	790.8
Capital expenditure		0.6	3.8	4.4
Valuation surplus		20.7	22.0	42.7
At 30 June 2015		278.0	559.9	837.9

7b Property assets summary

		30 June	30 December
		2015	2014
		Valuation	Valuation
	Note	£m	£m
Wholly-owned - The Mall
Investment properties at fair value		791.0	744.7
Head leases treated as finance leases on investment properties		65.4	65.4
Unamortised tenant incentives on investment properties		(18.5)	(19.3)
		837.9	790.8
Joint ventures (100%) - Buttermarket Centre, Ipswich
Investment properties at fair value		10.7	-
Unamortised tenant incentives on investment properties		-	-
	8e	10.7	-
Associates (100%) - Kingfisher Shopping Centre, Redditch
Investment properties at fair value		156.5	151.0
Head leases treated as finance leases on investment properties		-	-
Unamortised tenant incentives on investment properties		(2.6)	(2.1)
	8d	153.9	148.9

7c Valuations

External valuations at 30 June 2015 were carried out on all of The Mall assets and the Kingfisher Shopping Centre, Redditch.  The Group's share of these properties at fair value was £822.3 million of £947.5 million (30 December 2014: £774.9 million of £895.7 million).  These valuations were carried out by independent qualified professional valuers from CB Richard Ellis Limited and Cushman & Wakefield LLP in accordance with RICS standards. These valuers are not connected with the Group and their fees are charged on a fixed basis that is not dependent on the outcome of the valuations.

A directors' valuation was carried out on the Buttermarket Centre, Ipswich valuing the property at £10.7 million of which the Group's 50% share was £5.4 million.  The Group's interest in the Buttermarket Centre was acquired on 3 March 2015 in a 50:50 joint venture with Drum Property Group.  The valuation was carried out by Kenneth Ford BSc FRICS and was arrived at by reference to market evidence of transaction prices for similar properties.  No directors' valuations were carried out at 30 December 2014.  Real estate valuations are complex and derived from data that is not widely publicly available and involves a degree of judgement. For these reasons, the valuations are classified as Level 3 in the fair value hierarchy as defined by IFRS 13. The valuations are sensitive to changes in rent profile and yields.

The Group's share of the total investment properties at fair value was £827.7 million of £958.2 million (30 December 2014: £774.9 million of £895.7 million). 

8 Investment in associates and joint ventures

8a Share of results		Unaudited		Unaudited	Audited
		Six months to		Six months to	Year to
		30 June		30 June	30 December
		2015		20141	2014
	Note		£m	£m	£m
Share of results of associates	8b		1.1	10.2	11.7
Share of results of joint ventures - continuing operations	8c		0.2	(0.3)	(1.5)
			1.3	9.9	10.2

¹ Results for the six months to 30 June 2014 have been restated to separate discontinued operations as detailed in note 14.

8b Investment in associates					Unaudited	Audited
					Six months to	Year to
					30 June	30 December
					2015	2014
			Note		£m	£m
At the start of the period					13.6	112.1
Share of results of associates			8d		1.1	11.7
Dividends and capital distributions received					-	(1.5)
Reclassification of The Mall as a subsidiary					-	(108.4)
Disposal of interest in Garigal Asset Management GmbH					-	(0.3)
At the end of the period			8d		14.7	13.6

The Group's only significant associate at 30 June 2015 and 30 December 2014 was its 20% interest in the Kingfisher Limited Partnership which owns the Kingfisher Shopping Centre in Redditch.  The Group exercises significant influence through its representation on the General Partner board and through acting as the property and asset manager.

The Mall was accounted for as an Associate until 14 July 2014 being the date the Group took control and began consolidating its results.

8c Investment in joint ventures
							Unaudited Six months  to 30 June 2015		Audited Year to 30 December 2014
				Note			£m		£m
At the start of the period							-		32.3
Investment in Buttermarket Ipswich Limited							5.5		-
Share of results of joint ventures within continued operations				8e			0.2		(1.5)
Share of results of joint ventures within discontinued operations							-		4.6
Dividends and capital distributions received							-		(5.3)
Reclassification of Germany as held for sale							-		(26.8)
Disposal of Waterside Lincoln Limited Partnership							-		(1.3)
Foreign exchange differences							-		(2.0)
At the end of the period				8e			5.7		-

The Group's only significant joint venture as at 30 June 2015 was its 50% interest in Buttermarket Ipswich Limited.

Buttermarket Centre, Ipswich

On 3 March 2015, the Group completed the acquisition of the Buttermarket Centre, Ipswich in a 50:50 joint venture with Drum Property Group.  The centre was acquired on a freehold basis for £9.2 million equivalent to a Net Initial Yield of 8.46%.

German joint venture

The Group's investment in its German joint venture was reclassified as held for sale on 24 December 2014 on signing of a conditional exchange for its disposal and the sale completed on 10 February 2015.  The Group's share of results for the current and preceding period have been classified as Discontinued Operations.  See note 14 for further details. 

Waterside Lincoln Limited partnership

On 12 November 2014, the Group and its JV Partner, Karoo, sold the Waterside Shopping Centre Lincoln to Tesco Pension Fund Trustees for a net consideration of £46.0 million representing a net initial yield of 5.88%.  The net proceeds attributable to the Group were £14.8 million resulting in a profit on disposal of £4.7 million. In addition the Group earned performance fees of £0.9m.

8 Investment in associates and joint ventures (continued)

8d Analysis of investment in associates

						Unaudited	Unaudited	Audited
				Other UK		Six months to 30 June	Six months to 30 June	Year to 30 December
				Shopping		2015	20141	20141
				Centres		Total	Total	Total
			Note	£m		£m	£m	£m
Income statement (100%)
Revenue - gross rent				6.0		6.0	35.0	43.0
Property and management expenses				(1.1)		(1.1)	(8.6)	(10.2)
Void costs				(0.6)		(0.6)	(1.8)	(2.5)
Net rent				4.3		4.3	24.6	30.3
Net interest payable				(2.0)		(2.0)	(12.6)	(15.2)
Contribution				2.3		2.3	12.0	15.1
Revenue  - management fees				-		-	2.6	2.6
Management expenses				-		-	(1.2)	(1.3)
Revaluation of investment properties				3.1		3.1	22.1	28.9
Profit on sale of investment properties				-		-	0.3	0.3
Fair value of interest rate swaps				0.4		0.4	2.6	0.6
Profit before tax				5.8		5.8	38.4	46.2
Tax				-		-	(0.4)	(1.1)
Profit after tax (100%)				5.8		5.8	38.0	45.1
Balance sheet (100%)
Investment properties				153.9		153.9	891.6	148.9
Other assets				11.3		11.3	70.6	11.6
Current liabilities				(6.3)		(6.3)	(36.5)	(6.4)
Non-current liabilities				(85.0)		(85.0)	(493.2)	(86.0)
Net assets (100%)				73.9		73.9	432.5	68.1
Income statement (Group share)
Revenue - gross rent				1.2		1.2	9.7	11.5
Property and management expenses				(0.3)		(0.3)	(2.4)	(2.7)
Void costs				(0.1)		(0.1)	(0.5)	(0.7)
Net rent				0.8		0.8	6.8	8.1
Net interest payable				(0.4)		(0.4)	(3.4)	(4.0)
Contribution				0.4		0.4	3.4	4.1
Revenue  - management fees				-		-	0.8	0.8
Management expenses				-		-	(0.8)	(0.8)
Revaluation of investment properties				0.6		0.6	6.0	7.4
Profit on sale of investment properties				-		-	0.1	0.1
Fair value of interest rate swaps				0.1		0.1	0.8	0.3
Profit before tax				1.1		1.1	10.3	11.9
Tax				-		-	(0.1)	(0.2)
Profit after tax (Group share)			8b	1.1		1.1	10.2	11.7
Balance sheet (Group share)
Investment properties				30.8		30.8	248.0	29.8
Other assets				2.2		2.2	19.4	2.3
Current liabilities				(1.3)		(1.3)	(10.1)	(1.3)
Non-current liabilities				(17.0)		(17.0)	(136.5)	(17.2)
Net assets (Group share)			8b	14.7		14.7	120.8	13.6

¹ Includes the Group's 29.26% share of the results of The Mall up to 14 July 2014 being the date the Group took control and began consolidating its results.

8 Investment in associates and joint ventures (continued)

8e Analysis of investment in joint ventures¹

						Unaudited	Unaudited	Audited
				Other UK		Six months  to 30 June	Six months  to 30 June	Year to 30 December
				Shopping		2015	2014	2014
				Centres		Total	Total	Total
			Note	£m		£m	£m	£m
Income statement (100%)
Revenue - gross rent				0.6		0.6	13.0	24.6
Property and management expenses				(0.4)		(0.4)	(1.6)	(5.4)
Void costs				-		-	(0.3)	(0.3)
Net rent				0.2		0.2	11.1	18.9
Net interest payable				-		-	(5.3)	(9.2)
Contribution				0.2		0.2	5.8	9.7
Revaluation of investment properties				0.2		0.2	(1.1)	(3.1)
Profit on sale of investment properties				-		-	0.2	0.1
Fair value of interest rate swaps				-		-	0.6	0.8
Profit before tax				0.4		0.4	5.5	7.5
Tax				-		-	(0.7)	(1.3)
Profit after tax (100%)				0.4		0.4	4.8	6.2
Balance sheet (100%)
Investment properties				10.7		10.7	316.5	-
Other assets				1.3		1.3	13.8	-
Current liabilities				(0.6)		(0.6)	(28.5)	-
Non-current liabilities				-		-	(245.7)	-
Net assets (100%)				11.4		11.4	56.1	-
Income statement (Group share)
Revenue - gross rent				0.3		0.3	6.4	12.3
Property and management expenses				(0.2)		(0.2)	(0.8)	(2.7)
Void costs				-		-	(0.2)	(0.2)
Net rent				0.1		0.1	5.4	9.4
Net interest payable				-		-	(2.7)	(4.6)
Contribution				0.1		0.1	2.7	4.8
Revaluation of investment properties				0.1		0.1	(0.5)	(1.6)
Profit on sale of investment properties				-		-	0.1	0.1
Fair value of interest rate swaps				-		-	0.4	0.5
Profit before tax				0.2		0.2	2.7	3.8
Tax				-		-	(0.3)	(0.7)
Profit after tax (Group share)			8c	0.2		0.2	2.4	3.1
Balance sheet (Group share)
Investment properties				5.4		5.4	158.3	-
Other assets				0.6		0.6	6.8	-
Current liabilities				(0.3)		(0.3)	(14.3)	-
Non-current liabilities				-		-	(122.8)	-
Net assets (Group share)			8c	5.7		5.7	28.0	-

¹ The results of the Waterside Shopping Centre Lincoln (Other UK Shopping Centres) are included up to 12 November 2014, the date of its disposal.  The results of the German portfolio are included up to 24 December 2014, the date of its reclassification as held for sale.  The results of Buttermarket Ipswich Limited are included from the Group's acquisition on 3 March 2015.

9 Cash and cash equivalents

		Unaudited	Audited
		30 June	30 December
		2015	2014
		£m	£m
Cash at bank		40.9	33.6
Security disposals held in rent accounts		0.6	0.6
Other restricted balances		8.1	8.4
Total cash and cash equivalents		49.6	42.6

10 Borrowings

Summary of borrowings

The Group's borrowings are on a secured basis and are arranged to ensure an appropriate maturity profile and to maintain short term liquidity.  There were no defaults or other breaches of financial covenants that were not waived under any of the Group borrowings during the current year or the preceding year.

		30 June	30 December
		2015	2014
Borrowings at amortised cost		£m	£m
Secured
Fixed and swapped bank loans		233.3	233.3
Variable rate bank loans		146.7	170.1
Total borrowings before costs		380.0	403.4
Unamortised issue costs		(5.6)	(6.6)
Total borrowings after costs		374.4	396.8
Analysis of total borrowings after costs
Current		-	-
Non-current		374.4	396.8
Total borrowings after costs		374.4	396.8

The fair value of total borrowings before costs as at 30 June 2015 was £383.9 million (30 December 2014: £409.0 million).

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value.  All of the assets listed were classified as Level 2, as defined in note 1 to the financial statements for the year ended 30 December 2014.  There were no transfers between Levels in the year.

		30 June	30 December
		2015	2014
		£m	£m
Financial assets
Interest rate caps		1.1	1.3
Foreign exchange forward contracts		-	2.2
		1.1	3.5

The Mall debt facility

The £380 million Mall loan comprises a fixed rate tranche of £233.3 million with interest fixed at 1.86% plus applicable margin and a floating rate tranche based on 3 month LIBOR of £146.7 million. The latter tranche has been hedged using interest rate caps with a weighted average strike rate of 2.65%.   The £380 million loan was fully drawn down at both 30 June 2015 and 30 December 2014.

Group revolving credit facility

The Group's core revolving credit facility was undrawn at 30 June 2015 with a facility limit of £20 million (30 December 2013: draw down of £23.4 million on a facility limit of £35.2 million).  The facility limit was reduced to £20 million on 11 February 2015 after the funds received in respect of the sale of the Group's German joint venture were used to fully repay the amount drawn down at that date.

Interest on the £20 million facility is at a margin of 3.2% per annum above LIBOR.  A non-utilisation fee of 45% of the applicable margin is payable.  The facility is available until 31 July 2016 (but will be reduced to £15 million from 1 January 2016).

This facility is secured by charges over the units the Group holds in The Mall carried at £427.0 million at 30 June 2015 (30 December 2014: £377.2 million) and guarantees by the Company. 

Credit approved terms for a new £30 million facility to 30 May 2019 have been received and documentation is expected to be completed early in the second half of 2015.

11 Notes to the cash flow statement

	Unaudited		Unaudited	Audited
	Six months to		Six months to	Year to
	30 June		30 June	30 December
	2015		2014	2014
	£m		£m	£m
Profit for the period		57.0	11.7	75.2
Adjusted for:
Finance income - continuing and discontinued operations		(0.3)	(0.5)	(1.4)
Finance expense - continuing and discontinued operations		9.6	0.3	10.2
Income tax expense/(credit) - continuing operations		0.2	(1.2)	(2.5)
Profit on acquisition of Mall units		-	-	(8.1)
Profit on disposal of JV & Associates		(2.4)	-	(4.8)
Profit on revaluation of wholly owned properties		(42.7)	-	(36.9)
Share of profit in associates and joint ventures		(1.3)	(9.9)	(10.2)
Share of profit in associates and joint ventures - discontinued operations		-	(2.7)	(4.6)
Profit on disposal of other assets		(0.1)	(0.1)	-
Depreciation of other fixed assets		0.1	0.2	0.3
(Increase)/decrease in receivables		(2.1)	(0.3)	5.8
(Decrease)/increase in payables		(12.2)	1.0	(1.2)
Non-cash movement relating to share-based payments		0.5	0.3	0.7
Net cash from operations		6.3	(1.2)	22.5

12 Net assets per share

EPRA has issued recommended bases for the calculation of certain net assets per share information as shown in the following table:

				Unaudited	Audited
	Unaudited			30 June	30 December
	30 June 2015			2014	2014
	Net assets	Number of shares	Net assets per share	Net assets per share	Net assets per share
	£m	million	£	£	£
Basic net assets	470.5	700.8	0.67	0.57	0.60
Own shares held	-	(1.0)
Dilutive contingently issuable shares and share options	-	5.8
Fair value of fixed rate loans (net of tax)	(3.1)
EPRA triple net assets	467.4	705.6	0.66	0.57	0.59
Exclude fair value of fixed rate loans (net of tax)	3.1
Exclude fair value of see-through interest rate derivatives	(0.8)
Exclude deferred tax on unrealised gains and capital allowances	-
EPRA net assets	469.7	705.6	0.67	0.57	0.59

The number of Ordinary shares issued and fully paid at 30 June 2015 was 700,752,626 unchanged from 30 December 2014 (30 June 2014: 349,688,796). 

13 Return on equity

		Unaudited	Unaudited	Audited
		Six months to	Six months to	Year to
		30 June	30 June	30 December
		2015	2014	2014
		£m	£m	£m
Total comprehensive income attributable to equity shareholders		55.4	11.1	74.1
Opening equity shareholders' funds		419.0	188.7	264.0
Return on equity		13.2%	5.9%	28.1%

14 Discontinued Operations

German joint venture

On 10 February 2015, the Group completed the sale of its 50:50 German joint venture with a real estate fund managed by Ares Management, LP to clients and funds under management of Rockspring Property Investment Managers.  Under the terms of the transaction the Group will retain for approximately five years a 5.1% minority stake in each of the five German portfolios. 

The total net proceeds received were €54.8 million, this equated to £42.3 million (after all costs and including the benefit of the Group's Forward Contract which hedged €50 million at 1.2721) and resulted in an uplift to the year-end NAV of £0.8 million.  The total profit on disposal was £2.4 million reflecting this and £1.6 million of realised foreign currency gain reclassified from reserves. 

On completion, and included within the proceeds, the Group entered into a long-term loan payable of €3.5 million repayable after five years.  After completion a distribution of €1.5 million was made in respect of the retained minority stakes, this was used to reduce the outstanding amount of the loan to €2.0 million.  A further distribution was received in June 2015 of €0.1 million, this was not offset against the loan.  The carrying value of the retained minority stake, treated as a fixed asset investment, was €2.2 million at 30 June 2015 (£1.6 million at 30 June 2015 exchange rate).  The carrying value of the loan payable at 30 June 2015 was a liability of €2.0 million (£1.4 million at 30 June 2015 exchange rate).

The Group had exchanged conditional contracts for sale as at 24 December 2014 and hence from that date had reclassified its investment as an asset held for sale.  Given Germany was previously treated as a separate operating segment its results for the year ended 30 December 2014 were classified as discontinued operations.  The results for the six months ended 30 June 2014 have been restated on this basis.

The results of these discontinued operations, included in the consolidated income statement, were as follows:

		Unaudited	Unaudited	Audited
		Six months to	Six months to	Year to
		30 June	30 June	30 December
		2015	2014	2014
		£m	£m	£m
Revenue		-	-	-
Cost of sales		-	-	0.2
Administrative costs		-	-	(0.3)
Finance income		-	0.4	1.0
Finance costs		-	-	-
Share of Joint Ventures and Associates		-	2.7	4.6
Attributable current tax credit		-	-	-
Share of profit after attributable tax		-	3.1	5.5
Profit on disposal of discontinued operations		2.4	-	-
Profit from discontinued operations		2.4	3.1	5.5

Assets held for sale comprise:

		30 June	30 December
		2015	2014
		£m	£m
Interests in German Joint Venture		-	39.5
		-	39.5

There were no balance sheet liabilities in respect of assets held for sale at 30 June 2015 (£0.8 million at 30 December 2014, representing expected transaction costs). 

15 Related party transactions

There have been no material changes to, or material transactions with, related parties as described in note 31 of the annual audited financial statements for the year ended 30 December 2014, except for:

Distributions received from related parties

During the period, the Group received cash distributions of £nil from related parties as disclosed in notes 8b and 8c.

Management fee income from related parties

During the period, the Group received management fee income in the normal course of business of £0.4 million from related parties.

16 Dividends

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Year to
	30 June	30 June	30 December
	2015	2014	2014
	£m	£m	£m
Second interim dividend per share paid for year ended 30 December 2013 of 0.40p	-	1.4	1.4
Interim dividend per share paid for year ended 30 December 2014 of 0.35p	-	-	2.4
Final dividend per share for year ended 30 December 2014 of 0.60p	4.2	-	-
Amounts recognised as distributions to equity holders in the period	4.2	1.4	3.8
Interim dividend per share for year ended 30 December 2015 of 1.5p1	10.5	-	-

¹ In line with the requirements of IAS 10 - 'Events after the Reporting Period', this dividend has not been included as a liability in these financial statements.

Glossary of terms

C&R is Capital & Regional plc, also referred to as the Group or the Company CRPM is Capital & Regional Property Management Limited, a subsidiary of Capital & Regional plc, which earns management and performance fees from The Mall and certain associates and joint ventures of the Group. Contracted rent is passing rent and the first rent reserved under a lease or unconditional agreement for lease but which is not yet payable by a tenant. Contribution is net rent less net interest, including unhedged foreign exchange movements. Capital return is the change in value during the year for properties held at the balance sheet date, after taking account of capital expenditure and exchange translation movements, calculated on a time weighted basis. Debt is borrowings, excluding unamortised issue costs. EPRA earnings per share (EPS) is the profit / (loss) after tax excluding gains on asset disposals and revaluations, movements in the fair value of financial instruments, intangible asset movements and the capital allowance effects of IAS 12 "Income Taxes" where applicable, less tax arising on these items, divided by the weighted average number of shares in issue during the year excluding own shares held. EPRA net assets per share include the dilutive effect of share-based payments but ignore the fair value of derivatives, any deferred tax provisions on unrealised gains and capital allowances, any adjustment to the fair value of borrowings net of tax and any surplus on the fair value of trading properties. EPRA triple net assets per share include the dilutive effect of share-based payments and adjust all items to market value, including trading properties and fixed rate debt. Estimated rental value (ERV) is the Group's external valuers' opinion as to the open market rent which, on the date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a unit or property. ERV growth is the total growth in ERV on properties owned throughout the year including growth due to development. Gearing is the Group's debt as a percentage of net assets.  See through gearing includes the Group's share of non-recourse debt in associates and joint ventures. Interest rate cover (ICR) is the ratio of either (i) Operating Profit (before interest, tax, depreciation and amortisation); or (ii) net rental income to the interest charge. IPD is Investment Property Databank Limited, a company that produces an independent benchmark of property returns. Like for like figures exclude the impact of property purchases and sales on year to year comparatives. Loan to value (LTV) is the ratio of debt excluding fair value adjustments for debt and derivatives, to the fair value of properties (including adjustments for tenant incentives and head leases). Market value is an opinion of the best price at which the sale of an interest in a property would complete unconditionally for cash consideration on the date of valuation as determined by the Group's external or internal valuers.  In accordance with usual practice, the valuers report valuations net, after the deduction of the prospective purchaser's costs, including stamp duty, agent and legal fees. Net assets per share (NAV per share) are shareholders' funds divided by the number of shares held by shareholders at the year end, excluding own shares held. Net initial yield (NIY) is the annualised net rent generated by the portfolio expressed as a percentage of the portfolio valuation grossed up for purchaser's costs.

Net debt to property value is debt less cash and cash equivalents divided by the property value. Net interest is the Group's share, on a see-through basis, of the interest payable less interest receivable of the Group and its associates and joint ventures. Net rent is the Group's share, on a see-through basis, of the rental income, less property and management costs (excluding performance fees) of the Group and its associates and joint ventures. Nominal equivalent yield is a weighted average of the net initial yield and reversionary yield and represents the return a property will produce based upon the timing of the income received, assuming rent is received annually in arrears on gross values including the prospective purchaser's costs. Passing rent is gross rent currently payable by tenants including car park profit but excluding income from non-trading administrations and any assumed uplift from outstanding rent reviews. Property under management is the valuation of properties for which CRPM is the asset manager. Operating Profit is the total of Contribution from The Mall and the Group's joint ventures and associates, the profit from Snozone and property management fees less central costs (including interest excluding non-cash charges in respect of share-based payments) before tax.  Operating Profit excludes revaluation of properties, profit or loss on disposal of properties or investments, gains or losses on financial instruments and exceptional one-off items.  Results from Discontinued Operations are included up until the point of disposal or reclassification as held for sale. REIT - Real Estate Investment Trust Return on equity is the total return, including revaluation gains and losses, divided by opening equity plus time weighted additions to and reductions in share capital, excluding share options exercised. Reversionary percentage is the percentage by which the ERV exceeds the passing rent. Reversionary yield is the anticipated yield to which the net initial yield will rise once the rent reaches the ERV. See-through balance sheet is the pro forma proportionately consolidated balance sheet of the Group and its associates and joint ventures. See-through income statement is the pro forma proportionately consolidated income statement of the Group and its associates and joint ventures. Temporary lettings are those lettings for one year or less. Total return is the Group's total recognised income or expense for the year as set out in the consolidated statement of comprehensive income expressed as a percentage of opening equity shareholders' funds. Total shareholder return (TSR) is a performance measure of the Group's share price over time. It is calculated as the share price movement from the beginning of the year to the end of the year plus dividends paid, divided by share price at the beginning of the year. Vacancy rate is the ERV of vacant properties expressed as a percentage of the total ERV of the portfolio, excluding development properties, in line with EPRA's best practice recommendations. Variable overhead includes discretionary bonuses and the costs of awards to directors and employees made under the 2008 LTIP and SAYE schemes which are spread over the performance period.

Mall portfolio information
At 30 June 2015
Physical data
Number of properties				6
Number of lettable units				703
Lettable space (sq feet - '000s)				3,205
Valuation data
Properties at independent valuation (£m)				791.0
Adjustments for head leases and tenant incentives (£m)				46.9
Properties as shown in the financial statements (£m)				837.9
Revaluation in the period (£m)				42.7
Initial yield				6.0%
Equivalent yield				6.2%
Property level return				9.0%
Reversionary				14.5%
Loan to value ratio				48.0%
Net debt to value ratio				44.5%
Lease length (years)
Weighted average lease length to break				7.7
Weighted average lease length to expiry				8.8
Passing rent (£m) of leases expiring in:
Six months to 30 December 2015				6.1
Year to 30 December 2016				5.6
Three years to 30 December 2019				10.1
ERV (£m) of leases expiring in:
Six months to 30 December 2015				6.8
Year to 30 December 2016				6.2
Three years to 30 December 2019				11.2
Passing rent (£m) subject to review in:
Six months to 30 December 2015				6.8
Year to 30 December 2016				4.1
Three years to 30 December 2019				9.2
ERV (£m) of passing rent subject to review in:
Six months to 30 December 2015				6.9
Year to 30 December 2016				3.7
Three years to 30 December 2019				10.2
Rental Data
Contracted rent at period end (£m)				57.0
Passing rent at period end (£m)				54.8
ERV at period end (£m per annum)				62.5
ERV movement (%)				0.4%
Vacancy rate (%)				96.4%

 

END

 

 

IR UASWRVOAWAAR