Final Results
|
Year ended: |
31 December 2011 |
31 December 2010 |
Change |
Like-for-like change |
|
|
|
|
|
|
|
Net rental income |
£296.0m |
£284.7m |
+4.0% |
+2.5% |
|
Adjusted earnings per share (1) |
19.3p |
19.9p |
-3.0% |
|
|
Final dividend per share |
9.3p |
8.8p |
+5.7% |
|
|
|
|
|
|
|
|
As at: |
31 December 2011 |
31 December 2010 |
|
|
|
|
|
|
|
|
|
Adjusted net asset value per share, EPRA basis (1) |
£5.30 |
£4.95 |
+7.1% |
|
|
Gearing |
52% |
52% |
|
|
|
(1) Calculations for adjusted figures are shown in note 7 on page 45. 2011 adjusted EPS is shown after a 0.5 pence per share restructuring charge. Profit before tax for the year ended 31 December 2011 was £346.3 million (2010: £620.2 million) and diluted earnings per share were 47.3 pence (2010: 87.2 pence). |
Strategy
|
· |
Following a full review of strategy, Hammerson will now focus as a specialist retail REIT operating in the UK and France. Our standing office investments will be sold over the medium term in order to maximise value, with capital redeployed to retail assets, increasing our focus and scale. |
Operating highlights
|
· |
Growth of 2.5% in group like-for-like net rental income (UK Retail: 4.6%), demonstrating continued tenant demand for our properties and the success of asset management initiatives. |
|
· |
Occupancy increased to 97.9% at 31 December 2011 (31 December 2010: 97.3%), exceeding our target of 97%. |
|
· |
355 leases signed for 105,000m2, overall at 2% above ERV (UK Retail +1%, France Retail +2%, Offices +7%). |
|
· |
Portfolio further positioned for growth. £374 million invested over the year in acquisitions which enhance growth prospects, balanced by £272 million of disposals of mature assets. |
|
· |
Robust, flexible financial position. Over £650 million of new credit facilities signed, contributing to liquidity of over £700 million, which combined with gearing of 52% provides flexibility to fund acquisition, extension and development opportunities. |
|
· |
Final dividend increased by 5.7%, with future dividends anticipated to grow at a rate higher than recent historic levels. Total dividend for the year of 16.6 pence per share (2010: 15.95 pence). |
David Atkins, Chief Executive of Hammerson, said:
"These results prove the benefit of high quality assets combined with active management, which have delivered good income and capital growth in a challenging environment. In addition, we have enhanced the prospective returns from the portfolio through targeted acquisitions and development activity, but retain a strong, flexible financing structure which will allow us to take advantage of further investment opportunities.
Following the review of our strategy we will focus on being the best owner-manager and developer of retail property within Europe. Hammerson has created a retail business delivering outperformance from prime assets in winning locations. We now intend to sell our standing office investments over the medium term to maximise returns, redeploying capital into the retail sector to exploit our expertise and build on our existing scale. This will create efficiencies that lead to further cost savings and income growth from our portfolio."
Enquiries:
|
David Atkins, Chief Executive |
Tel: +44 (0)20 7887 1000 |
|
Timon Drakesmith, Chief Financial Officer |
|
|
Morgan Bone, Director of Corporate Communications |
Tel: +44 (0)20 7887 1009 morgan.bone@hammerson.com www.hammerson.com |
Results presentation today:
|
Time: |
9.30 a.m. |
|
Venue: |
City Presentation Centre 4 Chiswell Street London EC1Y 4UP
|
Webcast:
A live webcast of Hammerson's results presentation will be broadcast today at 9.30 a.m. via the Company's website: www.hammerson.com. At the end of the presentation you will be able to participate in a question and answer session by dialling +44 (0)20 3147 4971. Please quote confirmation code 119856.
Financial calendar:
|
Ex-dividend date |
14 March 2012 |
|
Record date |
16 March 2012 |
|
Final dividend payable |
27 April 2012 |
Contents:
|
Chairman's Statement |
3 |
Principal Risks and Uncertainties |
29 |
|
Property Markets |
5 |
Responsibility Statement |
31 |
|
Key Performance Indicators |
6 |
Condensed Financial Statements |
32 |
|
Business Review |
8 |
Notes to the Accounts |
38 |
|
Financial Review |
20 |
Other Information |
54 |
|
Property Portfolio Information |
25 |
Glossary of Terms |
55 |
CHAIRMAN'S STATEMENT
STRATEGY
In the latter part of 2011 we conducted a full review of our strategy to assess the optimum allocation of capital and how we could best exploit our skills to generate attractive long-term returns for shareholders. We concluded that Hammerson should be a specialist retail REIT focused on successful properties in winning locations. Retail assets already represent 89% of our portfolio, and have generated consistent growth in net rental income, providing a sustainable basis for capital appreciation. Our standing office investments will be sold over the medium term to maximise value, with capital redeployed to retail assets, increasing our retail focus and scale. Our aim is to be the best owner-manager and developer of retail property within Europe.
We believe that this strategy will enable us to:
|
· |
Generate superior returns through increased scale as we reduce costs, leverage our operating platform and grow income streams |
|
· |
Deepen retailer relationships and lead the industry in capitalising on multi-channel opportunities |
|
· |
Place Hammerson in a stronger position to exploit retail acquisition and development opportunities |
|
· |
Attract further JV capital requiring specialist retail asset management skills, allowing us to recycle capital into higher-return assets |
Our revised strategy will enhance the focus on income growth and efficiency, and therefore we anticipate being able to grow dividends at a higher rate than in recent years.
We have leading positions in both the UK and French retail property markets, where we will increase our presence in successful locations through development or acquisition. We will concentrate on regionally dominant shopping centres, convenient retail parks and premium designer outlet villages. Our intention is to remain an active recycler of capital in order to secure opportunities to create higher returns for shareholders.
Within our London office portfolio, we will continue to implement our business plans to increase the value of our office assets and developments. Our intention is to sell our standing office investments over the medium term to maximise value. We have a small number of London office development projects and strategic mixed-use sites that offer superior returns, where we will continue to allocate capital to increase the overall value of the projects. Where appropriate, we will introduce funding or JV capital to derisk projects and reduce our overall commitment.
MAXIMISING INCOME FROM OUR PORTFOLIO
In 2011 we signed 355 leases in respect of over 100,000m2, 2% above the estimated rental values. Overall occupancy at the year-end was 97.9%, compared to 97.3% at December 2010, and despite a background of weakening consumer confidence in the year, retailer sales at our centres outperformed national benchmarks. Total like-for-like net rental income for the year increased 2.5% on 2010, with the UK Retail portfolio generating 4.6% growth.
We introduced a number of innovative new retail formats in 2011. In France we brought Burberry's flagship Parisian store to 54-60 rue du Faubourg Saint Honoré, and the first PSG (Paris Saint Germain) mall boutique to O'Parinor, Paris. In the UK we brought the first European Locker Room store to Brent Cross, London, and Boxpark to The Goodsyard, London, which uses shipping containers as retail units to bring new brands to the Shoreditch area.
Catering and leisure form an increasingly important part of our offer to consumers. We launched a new restaurant quarter, Spiceal Street, at Bullring, introducing three new restaurant brands set around St Martin's Square and the iconic Selfridges building. At Les Terrasses du Port, our major retail and leisure development in Marseille, we have signed the luxury Parisian caterer Hediard, and at WestQuay we opened the first Toby Carvery Express, a new 'grab and go' concept for Mitchells and Butlers. We are looking to increase further footfall and dwell times by introducing cinemas to a number of our properties in both the UK and France.
We continue to work with our customers to anticipate and respond to changing trends in multi-channel retailing. We opened the UK's first House of Fraser.com at Union Square, Aberdeen, and the first pop-up Boden store at The Oracle, Reading. Looking forward, we are launching mobile websites and apps for shopping centres, and investigating ways of providing free wi-fi coverage throughout our entire portfolio, to ensure continuing accessibility and attractiveness for consumers.
ENHANCING OUR HIGH QUALITY PORTFOLIO
We are committed to enhancing returns by disposing of mature assets and reinvesting in acquisition, development or asset management opportunities where we can use our property skills and customer relationships to add value. In 2011 we invested £374 million acquiring assets in both the UK and France, securing income producing properties with asset management potential. Over the same period we raised £272 million from disposals.
We completed the redevelopment of 54-60 rue du Faubourg Saint-Honoré, which is now valued at £52 million above cost, and are making good progress on site at Les Terrasses du Port, Marseille, where 64% of the income is now secured and we are on schedule to open in the spring of 2014.
We have identified and are progressing several extensions and redevelopments within our portfolio where we know the local catchment and tenant requirements well. These projects show strong returns and have an aggregate cost of around £320 million. The majority of these projects will complete over the next two years.
Planning consents were secured for over 250,000m2 in 2011 for both retail and office schemes, and we signed development agreements with UK local authorities for retail schemes in Sheffield and Didcot. We recently submitted a planning application for a major extension to the Centrale shopping centre in Croydon, which we acquired in the year, and have received encouraging support from prospective retailers for Le Jeu de Paume, our proposed scheme in Beauvais, north of Paris.
FINANCING
Hammerson is in a strong financial position. In 2011 we signed two revolving credit facilities worth a total of £655 million, further improving our financial flexibility. At 31 December 2011 net debt was £2.0 billion (30 June 2011: £2.2 billion). Loan-to-value and gearing ratios at that time were 34% and 52% respectively, and cash and committed unutilised bank facilities totalled more than £700 million.
OUTLOOK
Global macro economic uncertainty and fiscal tightening will continue to have a major influence on our property markets. We believe that occupier and investment demand for retail space will be concentrated on modern, well-maintained properties in the very best locations, such as those owned by Hammerson. Properties without these attributes may experience rental and capital value declines in 2012.
Despite a challenging retail backdrop in both the UK and France, we are successfully growing net rental income in our retail portfolio, and additionally will benefit from positive indexation in France. Our regionally dominant shopping centres and convenient retail parks continue to generate demand from successful retailers. We will increase our focus and scale in our chosen retail markets to capitalise further on structural changes in consumer behaviour.
John Nelson, Chairman, 23 February 2012
PROPERTY MARKETS
UK Retail
The polarisation of the retail market continued in 2011 with retailers focused on protecting sales and margins. Many retailers have expanded their presence in winning locations, creating demand for modern, large, flexible accommodation such as Hammerson's. The growth in multi-channel retailing is having a significant influence on the property strategies of retailers, further supporting this demand. By contrast, many retailers have exited underperforming stores, predominantly in smaller towns or weaker locations. Well-located modern shopping centres and retail parks have benefited greatly from this polarisation.
Looking forward this trend is set to continue, with flexible, modern space in highest demand. Given the UK's limited pipeline of new retail developments, there is the potential to maintain and grow rents for the best quality space.
Capital market appetite for secondary centres is now limited due to the lack of debt finance and the weakening occupational market. There continues to be significant appetite from sovereign wealth funds for super-prime UK retail centres and this has led to a strengthening of yields in this sector. This should continue in 2012, as the limited supply of assets coupled with the continuing demand from occupiers for the best space will help drive performance, and we anticipate the valuation gap between prime and secondary properties to widen further.
France Retail
In France, retailer demand is increasingly focused on the most strategically located shopping centres in lle de France and the main cities outside Paris. International retailers continue to seek space, and this will help to maintain rental levels in the medium term at high quality centres. However, retailers have hardened their positions in lease negotiations in underperforming centres, and this trend is expected to continue in 2012.
In the investment market the limited availability of large retail assets, the appeal of indexed rents and strong ongoing demand from investors have all helped to support yields.
London Offices
London continues to attract major national and international businesses, and has become a focus for international investment as global buyers seek a combination of growth and security. These factors should support capital values for the highest quality assets.
Nevertheless, the current economic uncertainty has created a slowdown in demand for office space, and rents have remained static over the year. A significant number of large occupiers face upcoming lease expiries in old, inefficient buildings, which in conjunction with the relatively limited development pipeline of high quality offices, may support rental levels over the medium term.
KEY PERFORMANCE INDICATORS
To monitor the performance of our business, we measure three principal indicators against appropriate benchmarks. Set against the background of our strategy, these 'Key Performance Indicators', or 'KPIs', demonstrate the extent to which earnings and valuation growth drive returns. Growth in portfolio and equity returns should, over time, be reflected in improved shareholder returns. The sources of the information used to calculate KPIs are management reporting systems and IPD.
http://www.rns-pdf.londonstockexchange.com/rns/0375Y_-2012-2-23.pdf
Our return on shareholders' equity for the year ended 31 December 2011 was 11.2%, greater than our estimated cost of equity of 8.2%, reflecting the increase in the valuations of the property portfolio and investments together with retained profit. The reduction compared with the return of 21.1% for 2010 is mainly due to a lower revaluation surplus in 2011.
http://www.rns-pdf.londonstockexchange.com/rns/0375Y_1-2012-2-23.pdf
The chart above shows weighted returns and indices for 2007 to 2010 for the UK and French portfolios. The total return for 2011 is for the portfolio as a whole, including France, although the IPD figure is for the UK only as the IPD index for France is not yet available. In 2011 we outperformed UK IPD by 100 basis points.
http://www.rns-pdf.londonstockexchange.com/rns/0375Y_2-2012-2-23.pdf
At 31 December 2011, the Group's occupancy rate was 97.9%, above our 97% target and 0.6 percentage points higher than that at the end of 2010. Lettings at Union Square, Cabot Circus and 125 Old Broad Street were the principal components of the increase, together with the impact of property sales.
BUSINESS REVIEW
GROWING INCOME THROUGH INNOVATIVE ASSET MANAGEMENT
Overview
Our objective is to generate good property returns, both absolute and relative to other real estate sectors and peers, through effective asset management. Our approach varies according to each of the markets in which we operate, but the common themes are:
· fostering close relationships with existing and prospective tenants;
· monitoring, predicting and responding to local market trends;
· offering attractive commercial solutions to tenants' occupational requirements;
· considering the best format for our tenants to facilitate multi-channel sales; and
· providing an enhanced customer experience at our properties.
Market environment
The trading environment has become more difficult for retailers in the UK and France but we are focusing our efforts on growing income through tenant engineering, improving the tenant mix, commercialisation and by continuing to pioneer multi-channel retailing. There is a continuing trend for retailers to prefer space in high quality, regionally dominant shopping centres and conveniently located retail parks of the types which we operate. Notwithstanding the weak economic backdrop, this polarisation of occupier demand is demonstrated by the trading record at our shopping centres in 2011 which outperformed the wider markets in the UK and France, as shown in the table below.
|
Operational Data - 2011 v 2010 |
2011 |
2010 |
||
|
Occupancy (%) |
97.9 |
97.3 |
||
|
Net rental income growth like-for-like (%) |
2.5 |
3.5 |
||
|
Leasing activity - new rent from units leased (£m) |
24.5 |
24.7 |
||
|
Area of new lettings ('000m2) |
104.7 |
119.2 |
||
|
Leasing v ERV (% above 31 December 2010/2009 ERV) |
2.2 |
0.0 |
||
|
Retail sales like-for-like change (%) |
|
|
|
|
|
UK shopping centres (benchmark) |
2.1 |
(0.1) |
3.5 |
(2.6) |
|
France shopping centres (benchmark) |
-1.1 |
(-1.8) |
0.7 |
(-0.6) |
|
Footfall like-for-like change (%) |
|
|
||
|
UK shopping centres (benchmark) |
0.4 |
(-1.2) |
1.8 |
(-0.6) |
|
France shopping centres (benchmark) |
-2.8 |
(-1.3) |
0.7 |
(-1.3) |
|
Non-rental income (£m) UK France |
15.6 1.4 |
14.2 2.0 |
||
Occupancy
The Group's occupancy rate at the end of 2011, at 97.9% was above our 97% target and 0.6 percentage points higher than that at the end of the previous year. Lettings at Union Square, Cabot Circus and 125 Old Broad Street were the principal components of the increase, together with the impact of property sales. The table below compares occupancy by portfolio segment at the current and previous reporting dates.
|
Occupancy (%) |
UK retail |
France retail |
UK offices |
Total |
|
31 December 2011 |
97.8 |
98.2 |
98.3 |
97.9 |
|
31 December 2010 |
97.3 |
98.1 |
95.6 |
97.3 |
Like-for-like net rental income
On a like-for-like basis, net rental income increased by 3.1% in the UK and by 0.6% in France, resulting in a 2.5% uplift for the Group as a whole. The retail portfolio was the main contributor to UK growth rising by 4.6%, reflecting lettings and rent reviews. However income from the UK office portfolio fell by 6.8%, principally due to lease expiries.
|
Like-for-like net rental income for the year ended 31 December 2011 |
||||||
|
|
||||||
|
|
|
Increase/ |
|
|
|
|
|
|
|
(Decrease) |
|
|
|
|
|
|
Properties |
for properties |
|
|
|
Total |
|
|
owned |
owned |
|
|
|
net |
|
|
throughout |
throughout |
|
|
|
rental |
|
|
2010/11 |
2010/11 |
Acquisitions |
Disposals |
Developments |
income |
|
|
£m |
% |
£m |
£m |
£m |
£m |
|
United Kingdom |
|
|
|
|
|
|
|
Retail |
169.0 |
4.6 |
19.1 |
0.2 |
- |
188.3 |
|
Office |
22.8 |
(6.8) |
12.1 |
6.2 |
(2.0) |
39.1 |
|
Total United Kingdom |
191.8 |
3.1 |
31.2 |
6.4 |
(2.0) |
227.4 |
|
|
|
|
|
|
|
|
|
Continental Europe |
|
|
|
|
|
|
|
France retail |
61.8 |
0.6 |
(1.1) |
4.1 |
3.8 |
68.6 |
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
Retail |
230.8 |
3.5 |
18.0 |
4.3 |
3.8 |
256.9 |
|
Office |
22.8 |
(6.8) |
12.1 |
6.2 |
(2.0) |
39.1 |
|
Total |
253.6 |
2.5 |
30.1 |
10.5 |
1.8 |
296.0 |
|
|
||||||
|
Like-for-like net rental income for the year ended 31 December 2010 |
||||||
|
|
||||||
|
|
Properties |
|
|
|
|
Total |
|
|
owned |
|
|
|
|
net |
|
|
throughout |
|
|
|
|
rental |
|
|
2010/11 |
Exchange |
Acquisitions |
Disposals |
Developments |
income |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
United Kingdom |
|
|
|
|
|
|
|
Retail |
161.6 |
- |
1.9 |
(0.2) |
- |
163.3 |
|
Office |
24.4 |
- |
5.5 |
14.4 |
(2.3) |
42.0 |
|
Total United Kingdom |
186.0 |
- |
7.4 |
14.2 |
(2.3) |
205.3 |
|
|
|
|
|
|
|
|
|
Continental Europe |
|
|
|
|
|
|
|
France retail |
61.4 |
(0.8) |
(2.0) |
19.7 |
1.1 |
79.4 |
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
Retail |
223.0 |
(0.8) |
(0.1) |
19.5 |
1.1 |
242.7 |
|
Office |
24.4 |
- |
5.5 |
14.4 |
(2.3) |
42.0 |
|
Total portfolio |
247.4 |
(0.8) |
5.4 |
33.9 |
(1.2) |
284.7 |
Leasing activity
In 2011 for the Group as a whole, we signed 355 leases representing 105,000m2 of space and generated new rental income of £24.5 million per annum. The level of rents secured varied according to sector and geography, with UK and France retail 0.7% and 1.9% above December 2010 ERV respectively, and UK office lettings 6.9% above ERV. For the portfolio as a whole, the rents achieved were around 2.2% above ERVs, which have risen slightly since the start of the year. Rent reviews on 143 leases with rents passing of £29.1 million were also settled, which resulted in a further £1.0 million of rental income per annum.
In France, shopping centre rents change annually according to one of two indices: a composite index, partly based on retail prices (ILC); or a construction cost index (ICC). Around 80% by rental value of the retail leases in our French portfolio will increase by the ILC index of 2.56% from 1 January 2012. The corresponding movement in the index for 2011 was a fall of 0.22%. The balance of the leases in France changes in line with ICC, for which the index for 2012 is an increase of 5.01%.
Retailer sales and footfall
In the UK, like-for-like sales at our major shopping centres significantly outperformed the British Retail Consortium benchmark, as consumers gravitated towards regionally dominant retail destinations. Footfall in our UK retail portfolio also grew despite a decline nationally. Our French shopping centres outperformed the national sales benchmark, although performed less well against the footfall benchmark, suggesting an increase in sales per customer.
Non-rental income
Non-rental income includes net income from car parks and from the sale of advertising and merchandising opportunities at our shopping malls. We have increased the income generated by these activities from £16.2 million in 2010 to £17.0 million, after taking account of the loss of approximately £0.3 million arising from the part disposals of Espace Saint Quentin and O'Parinor in France.
The changing face of retail
The retail sector is facing structural challenges with retailers focusing their representation on the best and largest shopping centres and customers demanding convenience, flexibility and an entertaining shopping experience. Hammerson is well positioned to take advantage of this rebalancing of the retail environment and we continue to respond to the needs of retailers and consumers. We believe there are three key themes emerging - experience, convenience and multi-channel.
Experience
Leisure is becoming increasingly integral to the shopping experience and we continue to capitalise on increasing demand for quality catering within our portfolio. At Spiceal Street, a 1,860m², £8 million new restaurant quarter which opened in November at Bullring, Birmingham, three new restaurant brands are now operating. Birmingham based handmade burger Co., which pioneers local fresh food and ingredients, opened its UK flagship restaurant at Spiceal Street. Thai banquet-style Chaophraya, and Browns Bar and Brasserie are both new to the city. As part of the development, the existing Nando's and Pizza Hut restaurants extended their trading space by 54% and 20% respectively. Planning applications were also submitted in 2011 for two restaurant units at Fife Central Retail Park, Kirkcaldy, and a restaurant at Ravenhead Retail Park, St Helens. Furthermore, we are proposing three new restaurants at WestQuay, Southampton and the conversion of 1,500m2 of retail space to restaurants at O'Parinor.
The cinema industry is another growth area ideally suited to partner retail and which will drive footfall at shopping venues. We have submitted a planning application for a multi-screen cinema as part of our proposed development at Centrale, Croydon, and have secured approval to build cinemas at Westmorland, Cramlington and O'Parinor.
Convenience
We are working with established retailers to create new formats at our conveniently located retail parks. We are building new 'pods' for Costa, the coffee shop operator, at our Brent South, Cleveland and Ravenhead retail parks and all three outlets will be open for trade in the autumn. We are in discussions with Costa for the provision of a further three pods elsewhere in the portfolio.
Multi-channel
More than ever, retailers and consumers use the internet and related technology to support and enhance the shopping experience. Whilst recognising that this is a complex and rapidly evolving arena, at Hammerson we have continued our focus on multi-channel retailing. In particular we have noted the growth in internet-supported store-based sales often supported by a 'click and collect' model. Working with our retailers we have supported the piloting of new initiatives in this space. In October, the UK's first House of Fraser.com store opened in Union Square, Aberdeen. The 200m2 store utilises ipads, laptops and interactive screens to order merchandise that can be collected on site and was the first in the UK with a primary role as a collection hub for internet sales, drawing new footfall into the centre.
The use of online promotional techniques is gaining momentum in the retail market and we are exploiting this channel by engaging with consumers online to drive sales in our centres. We have run pilots using data provided by vente-privee at a number of our French shopping centres, where a voucher purchased online entitles the consumer to additional credit in-store. The success of the pilots, coupled with the data capture opportunities, means that we will progress more of this type of initiative in future. We now have more than 250,000 online followers of our shopping centres thanks to our focus on social media and our marketing team uses these channels to engage with our customer base. For example, 'lucieloveshighcross' is a micro-blogging site based around our shopping centre in Leicester. We also use social media to publish updates and promotional messages on behalf of our retailers, including the offer of rewards such as exclusive discounts redeemable at stores located in our centres.
Shoppers are increasingly accessing information and promotional offers on the internet with smart phones whilst on the move. As a result we have piloted a mobile phone-friendly website at Queensgate, Peterborough, which now accounts for 13% of the centre's website traffic. We are also centralising and enhancing the consumer websites for our UK shopping centre portfolio. This will see the remaining UK websites being optimised for use by mobile devices, as well as providing improved analytics and user targeting, better social media integration and enhanced content. The new site will launch at The Oracle in the spring of 2012, and will be rolled out to the remaining UK centres by the summer. Focusing on increased smart phone usage we are also in the early stages of a trial at Silverburn, Glasgow which involves pushing promotional vouchers, relevant to their location at the time, to the phones of customers that opt-in to the service. In addition, all of our French shopping centres have mobile apps featuring promotional offers and information about the centre.
Shoppers now expect free, easy access to wi-fi wherever they are. Wi-fi facilitates access to information including promotional messages and offers that help convert customer traffic into sales. We provide wi-fi at many of our centres and we are now investigating how best to provide free wi-fi access to shoppers at all our centres.
Advancements in mobile communications are also helping us with other aspects of our business. Eight of our shopping centres now have technology which uses mobile phone signals to analyse how customers navigate the centres and use stores, enabling us to plan for the optimal retail mix. Full roll out of this technology will be complete by the end of 2012.
It is important to note that the impact of multi-channel is not just about technology. In an increasingly competitive retail environment, where customers no longer shop exclusively either on line or in-store, we must maximise the potential of every customer visit. We will continue to create destinations that focus on both the shopping and leisure needs of customers. Spiceal Street, our new restaurant quarter at Bullring is an excellent example of this. The quality of the shopping experience will also be a key driver and Hammerson is implementing an improved mystery shopping survey to ensure that we maintain our focus on those drivers of choice that are most important to shoppers.
Shopping outlets - Value Retail
For some years we have held an investment in Value Retail plc and some of its related companies. Value Retail is a highly successful developer and operator of luxury retail outlet villages in the UK and mainland Europe, and is now expanding into China. Our first investment, in 1998, was in Bicester Village, Oxfordshire, and we subsequently invested in Value Retail plc itself and in some of the European villages. In December we increased our interest in the group investing a further £25 million in the European portfolio. As at the end of December 2011, our stake in the group as a whole was valued at £214 million compared with a cost of £70 million. For the calendar year 2011, our income from the investment was £6.1 million. We are intending to work more collaboratively with the group and expect that a closer dialogue will allow intellectual capital to be shared for the benefit of both organisations. Further information is provided in note 12 to the accounts on page 50.
INVESTING FOR INCOME AND CAPITAL GROWTH THROUGH DEVELOPMENT
Hammerson has a reputation as a leading real estate developer in the UK and France. We manage complex urban regeneration schemes and office projects and forge strong links with local authorities and occupiers.
Our substantial pipeline of potential future developments may provide shareholders with high returns and we maintain close contact with local authorities and prospective occupiers who have interests in these schemes. We have the flexibility to progress projects when the relevant markets are sufficiently robust, when we have the right level of interest from occupiers and on the basis that sound financial analysis demonstrates good returns. We will also continue to follow a prudent funding strategy for developments, recycling established assets and entering into joint ventures where appropriate.
In 2011, we achieved several milestones in progressing the development programme:
· Completed the redevelopment of 54-60 rue du Faubourg Saint-Honoré
· Signed development agreements with:
- Sheffield City Council for Sevenstone
- South Oxfordshire District Council for The Orchard Centre, Didcot
· Achieved planning approvals for:
- Principal Place, London EC2
- Eastgate Quarters, Leeds
The major developments which we have started, or expect to start in the next few years, are summarised in the table on page 13.
Developments
|
Scheme |
Lettable area |
Earliest start |
Potential completion |
Value at 31/12/11 |
|
Estimated cost to complete1 |
Estimated annual income2 |
|
Let3 |
|
|
m2 |
|
|
£m |
|
£m |
£m |
|
% |
|
RETAIL |
|
|
|
|
|
|
|
|
|
|
COMMITTED |
|
|
|
|
|
|
|
|
|
|
Les Terrasses du Port |
56,000 |
Commenced |
April 2014 |
133 |
|
245 |
27 |
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
MAJOR DEVELOPMENTS |
|
|
|
|
|
|
|
|
|
|
Le Jeu de Paume, Beauvais |
23,000 |
2013 |
2014 |
n/a |
|
65 |
5 |
|
25 |
|
Eastgate Quarters, Leeds |
92,900 |
2013 |
2016 |
47 |
|
550 |
45 |
|
nil |
|
Sevenstone, Sheffield |
60,500 |
2013/2014 |
2016 |
15 |
|
285 |
24 |
|
nil |
|
|
|
|
|
|
|
|
|
|
|
|
POTENTIAL EXTENSIONS AND REFURBISHMENTS |
|
|
|
|
|
|
|
|
|
|
Monument Mall, Newcastle |
9,800 |
2012 |
2013 |
|
|
15 |
1 |
|
|
|
Manor Walks, Cramlington |
13,500 |
2012 |
2013 |
|
|
21 |
2 |
|
|
|
Abbey, Belfast |
6,500 |
2012 |
2013 |
|
|
14 |
1 |
|
|
|
Ravenhead, St Helens |
5,700 |
2012 |
2013 |
|
|
12 |
1 |
|
|
|
Centrale, Croydon |
66,800 |
2013 |
2014 |
|
|
90 |
6 |
|
|
|
Silverburn, Glasgow4 |
10,400 |
2013 |
2014 |
n/a |
|
10 |
1 |
|
nil |
|
Elliott's Field, Rugby |
11,200 |
2013 |
2014 |
|
|
27 |
2 |
|
|
|
The Orchard Centre, Didcot |
23,500 |
2013 |
2015 |
|
|
60 |
5 |
|
|
|
Parc Tawe, Swansea |
25,800 |
2013 |
2014 |
|
|
26 |
3 |
|
|
|
SQY Ouest, Saint Quentin-en-Yvelines4 |
31,300 |
2013 |
2014 |
|
|
14 |
1 |
|
|
|
Italie 2 |
6,000 |
2014 |
2016 |
|
|
31 |
2 |
|
|
|
|
210,500 |
|
|
|
|
320 |
25 |
|
|
|
LONDON OFFICE |
|
|
|
|
|
|
|
|
|
|
99 Bishopsgate, London EC2 |
12,100 |
Commenced |
2012 |
n/a |
|
14 |
1 |
|
nil |
|
Principal Place, London EC2 -office and residential5 |
57,500 |
Dec 2012 |
Dec 2015 |
38 |
|
290 |
28 |
|
nil |
|
|
|
|
|
|
|
|
|
|
|
Notes
(1) Incremental capital cost including capitalised interest.
(2) Net of head rents and after expiry of rent-free periods.
(3) Let or in solicitors' hands by income at 23 February 2012.
(4) 50% ownership interest.
(5) Estimated cost to complete and annual income for office element only.
(6) € converted at £1 = €1.197.
(7) Timings are indicative only.
Completed and committed developments
The redevelopment work at 54-60 rue du Faubourg Saint-Honoré, Paris 8ème, was completed in the autumn and the retailers, including Burberry, Moschino, Bally and Blumarine are now trading. The total cost of the redevelopment was £30 million, the uplift in annual rental income was £2.9 million and the valuation at 31 December 2011, for the property as a whole, was £52 million above cost.
In May, construction commenced at Les Terrasses du Port, Marseille and the project is on programme to complete in 2014. The 56,000m2 shopping centre will feature 160 shops and 2,600 car parking spaces and will be one of the largest shopping centre developments in France over the next few years. Having redesigned the original scheme, we restarted discussions with retailers and agreed new lettings to Kiko, Sephora, Pepe Jeans, Golden Paradise, Soleil Sucré, Orange, Carnet de Vol and IZAC. The agreement signed with Vinci in January 2012 to operate the car park means that the project is now 64% pre-let or in solicitors' hands, and discussions are progressing with a number of major space retailers. At 31 December 2011, the development was valued at £19 million above cost.
Major retail developments
We have made good progress in advancing our retail projects, which include some excellent opportunities for retail and leisure developments in the UK and France.
We are making headway with pre-letting our proposed French retail development. At Le Jeu de Paume, Beauvais, a 23,000m2 city centre scheme to the north of Paris, we have agreed a pre-let with Carrefour Market for a 3,000m2 store to anchor the scheme, which will consist of 76 retail units and 37 residential apartments. In total, leases signed or in solicitors' hands represent 25% of the expected income from the asset. We have conditional agreements with the City of Beauvais to purchase the land and with the Public Office of Housing to build the residential units.
Work continues to progress our retail-led city centre regeneration projects in Leeds and Sheffield. In July, our revised outline planning application to Leeds City Council for a 92,900m2 shopping centre development received a resolution to grant consent. The proposal for Eastgate Quarters, for which we have a development agreement with the council, features a two-level shopping centre with 130 stores, anchored by John Lewis and Marks & Spencer, and parking for 2,500 cars.
We have a new development agreement with Sheffield City Council for Sevenstone and now have control of the development land. Sevenstone has outline planning consent, some of the buildings within the scheme have detailed consent and we are working closely with principal stakeholders, such as John Lewis, to progress the project. The current scheme comprises 60,500m² of retail and leisure accommodation and 2,500 car parking spaces.
Potential extensions and refurbishments
There is the potential for several extensions, redevelopments and smaller development schemes in our pipeline, and these are set out in the table on page 13. The retail schemes have an estimated total cost of £320 million and would provide approximately 210,500m2 of new accommodation and restructured space. We estimate the average yield on cost for these projects to be in excess of 7.5%.
Office developments
The London Borough of Hackney resolved in July to grant planning consent, subject to completing a S106 agreement, for the mixed-use scheme at Principal Place. The Foster + Partners designed scheme will accommodate a single 57,500m², 16-storey office building offering large floor plates and flexibility to occupiers. An elegantly designed residential tower will also provide 243 private apartments, with a further 56 affordable units located on the site. The new scheme creates a main square for Principal Place at street level, creating a vibrant public realm with 2,900m² of retail units and restaurants. We are continuing to progress discussions with prospective occupiers and are negotiating with potential development partners for the residential component of the project.
Longer-term developments
There continues to be strong demand from retailers for well-located, high quality accommodation in the UK and France. Planning restrictions, together with the expertise and funding required to build and operate prime shopping centres of this type, constrain their supply but our pipeline provides some exciting retail development opportunities. Brent Cross, Cricklewood and The Goodsyard are two further significant, long-term urban regeneration projects with a retail focus which we will continue to progress.
PORTFOLIO MANAGEMENT
In 2011, we continued our policy of disposing of mature properties and reinvesting in assets where we can apply our skills and experience to generate superior returns. During the year we made eight acquisitions, principally adding to our UK retail portfolio, for a total of £374 million and raised £272 million principally from disposing of an office building in the City of London and an interest in one of our French shopping centres. In the current environment we are opportunistic but selective when reviewing acquisition opportunities, continuing to concentrate on retail assets where we can use our expertise to generate income and capital growth. A chronological summary of acquisitions made in 2011 is set out below.
We acquired in February, a 50% interest in SQY Ouest, a 31,300m2 shopping centre in Saint Quentin-en-Yvelines, in a joint venture with Codic France. Hammerson's initial commitment was £17 million, excluding transaction costs. SQY Ouest is a modern retail and leisure scheme which was developed in 2005. Located 20km south west of Paris, it is adjacent to Espace Saint Quentin, a 58,700m2 shopping centre, 27,900m2 of which is jointly owned by Hammerson and Allianz in a 25:75 joint venture. SQY Ouest has good transport links and 39 retailers on four floors, including international brands such as Bershka, GoSport, Virgin Megastore and Zara. The centre is currently 83.7% occupied, and the yield on purchase price was 9.2%, after taking account of vacancy charges and other direct costs. Through our management of the centre, we have the opportunity to improve returns by introducing new anchor tenants, improving the catering offer, and extending the retail space.
In March, we acquired our partner's 75% interest in Central Retail Park, Falkirk for £69 million including costs, representing an implied yield of 5.4%. The 37,400m2 scheme, anchored by a Tesco superstore, is 97.7% let to a diverse range of tenants including Argos, Boots, Cineworld, Homebase, Mothercare and Next. The scheme is at the edge of the town centre and has 1,350 parking spaces. Passing rents at 31 December 2011 were £5.8 million and since the acquisition we have redeveloped some of the units and increased the fashion offer. Hammerson's 25% stake, which was acquired in 2002 as part of the Grantchester acquisition, was valued at £23 million at 31 December 2010.
Also in March, we purchased a portfolio of five assets from St. Martins Property Investments Limited for £175 million, or £186 million including transaction costs. Passing rents on the properties total £15.0 million, and after taking account of vacancy charges and other direct costs the yield on the purchase price was 7.1%. This is a portfolio of good properties in strong trading locations and we have scope to create value by rejuvenating the principal assets through development and asset management initiatives.
The properties acquired are detailed below:
· Centrale Shopping Centre, purchased for £98 million, at an implied yield of 7.8%, is the largest of the assets and is in the heart of Croydon town centre. Croydon has the 13th largest shopping population in the UK with 455,000 people and the freehold centre covers 64,800m2. It was constructed in two phases, in 1988 and 2004, and comprises 78 retail units and a 954 space car park. Tenants include Debenhams, H&M, House of Fraser and Next. The potential to create value through investment and transformation of the existing centre includes the introduction of new retail tenants, improving circulation between floors and providing a cinema and catering offer. A detailed planning application for the scheme was submitted in February 2012. Passing rents at 31 December were £10.0 million.
· Monument Mall, purchased for £28 million, is in the centre of Newcastle, with its main frontages opening onto the prime retailing pitches of Northumberland Street and Blackett Street. Newcastle has the sixth largest shopping population in the UK with 605,000 people. The freehold shopping centre covers 9,800m2 comprising 16 retail units and a food gallery over four trading levels and currently generates passing rents of £1.8 million. The complex is adjacent to Fenwick and tenants include TK Maxx and Wallis. The centre offers restructuring potential through a comprehensive reconfiguration of existing units, exploiting the location by opening units to the street, and the introduction of new retailers.
· Elliott's Field Retail Park, purchased for £40 million, is situated near the road linking Rugby to Junction 1 of the M6 motorway. The 12,700m2 open A1 consented park comprises nine units in four terraces and a standalone restaurant and passing rents at 31 December were £2.1 million. Despite the current consent, the freehold scheme's tenants are predominantly bulky goods retailers and include Comet, Halfords, Homebase and Wickes. There is scope for us to increase rental income by creating additional space and capitalising on strong demand from fashion and catering tenants.
· The 3,400m2 Wickes unit at Folkestone and the 5,800m2 Cathedral Lanes, Coventry were purchased for an aggregate £10 million including costs and together have passing rents of £1.1 million. Both assets provide short-term asset management potential to stabilise and protect income thereby maximising their investment values. As part of the portfolio transaction, we were also contracted to find a purchaser for Three Spires, in Lichfield, which was sold in June.
In July, we acquired a 999-year leasehold, or virtual freehold, interest in 99 Bishopsgate, London EC2, from PRUPIM acting on behalf of the Prudential Assurance Company Ltd for £100 million including costs. 99 Bishopsgate is a 26-storey tower providing 31,500m2 of office accommodation in the City of London which is occupied by a number of financial and professional services companies. The rent payable to Prudential was £4.2 million per annum and ownership of the merged interest will ensure that we maximise returns to shareholders from this investment. A refurbishment of 12,100m2 of the building has started and the space will be ready for occupation in 2012.
We have concluded two major sales during the year, contributing to total net disposal proceeds of £272 million. With our 51% partner, a major client of Rockspring Property Investment Managers LLP, we exercised in October mutual options for the sale by Hammerson of a further 24% interest in O'Parinor, Aulnay-sous-Bois. The price for the transaction was based on the value agreed for the sale of the 51% interest in 2010 and generated net proceeds of £89 million, at 31 December 2011 exchange rates. Hammerson's interest in the asset is now 25%.
In December 2011, we sold 60 Threadneedle Street, London EC2, to St. Martins Property Investments Limited. This 19,900m2 nine-storey office building was completed in January 2009 at a cost of £124 million. The net consideration for the sale, after deducting rental top-ups, was £176 million, £5 million of which is deferred subject to certain conditions which are expected to be satisfied by 2013. The property was valued at £165 million at 30 June 2011. Passing rents, post rent-free periods, were £8.8 million and the price represented an initial yield to the purchaser of 4.75%.
VALUATIONS
Portfolio overview
Hammerson's high quality £5.7 billion property portfolio is focused on dominant regional shopping centres in the UK and France, conveniently located retail parks and prime office buildings in the City of London. At 31 December 2011, our retail portfolio provided 1.7 million m2 of space and included 18 major shopping centres and 18 retail parks. The six prime buildings in central London which made up the majority of our office portfolio provided 108,000m2 of accommodation.
Joint ventures accounted for 43% by value of the total portfolio, including eight major shopping centres in the UK and two in France. Our ten most valuable properties represented 47% of the portfolio value at 31 December 2011, with an average lot size of £267 million.
At the end of 2011, 75% of the portfolio by value was located in the UK, and the remainder in France. The retail and office weightings of the portfolio were 89% and 11% respectively and developments comprised 4% of the total. Despite significant investment activity during 2011, the shape of the portfolio is broadly unchanged when compared with the end of 2010.
|
Movement in portfolio value in 2011 |
£m |
|
|
Portfolio value at 1 January |
5,331 |
|
|
Valuation increase |
186 |
|
|
Capital expenditure |
|
|
|
|
Acquisitions |
375 |
|
|
Developments |
62 |
|
|
Expenditure on existing portfolio |
40 |
|
Capitalised interest |
5 |
|
|
Disposals |
(245) |
|
|
Exchange |
(34) |
|
|
Portfolio value at 31 December |
5,720 |
|
PORTFOLIO MANAGEMENT
The table below analyses net and gross valuations, income and yields for the Group's investment portfolio, excluding developments. The yields are low relative to other property classes reflecting the prime locations and attractiveness of the portfolio.
The net initial yield, based on the net portfolio value, at 31 December 2011 of 5.5% was the same as that at the end of 2010.
|
Investment portfolio at 31 December 2011 |
|
Gross |
Net book |
|
|
|
Income |
value |
value |
|
|
|
£m |
£m |
£m |
|
|
Portfolio value (net of cost to complete) |
|
5,788 |
5,788 |
|
|
Purchasers' costs(1) |
|
|
(309) |
|
|
Net portfolio valuation as reported in the financial statements |
|
|
5,479 |
|
|
Income and yields |
|
|
|
|
|
Rent for valuers' initial yield (equivalent to EPRA Net Initial Yield) |
301.3 |
5.2% |
5.5% |
|
|
Rent-free periods (including pre-lets) |
14.8 |
0.3% |
0.3% |
|
|
Rent for 'topped-up' initial yield |
316.1 |
5.5% |
5.8% |
|
|
Non-recoverable costs (net of outstanding rent reviews) |
9.1 |
0.1% |
0.1% |
|
|
Passing rents (2) |
325.2 |
5.6% |
5.9% |
|
|
ERV of vacant space |
6.7 |
0.1% |
0.1% |
|
|
Reversions |
7.2 |
0.2% |
0.2% |
|
|
Total ERV/Reversionary yield |
339.1 |
5.9% |
6.2% |
|
|
True equivalent yield |
|
5.9% |
|
|
|
Nominal equivalent yield |
|
5.7% |
|
|
|
Notes |
|
|||
|
(1) |
Purchasers' costs equate to 5.6% of the net portfolio value |
|||
|
(2) |
The yield of 5.6% based on passing rents and the gross portfolio value is equivalent to EPRA 'topped-up' Net Initial Yield. |
|||
Capital returns
The portfolio's total return for the year ended 31 December 2011 was 8.9%, and comprised a capital return of 3.6% and an income return of 5.1%.
|
Capital returns - total portfolio |
|
|
|
|||||
|
For the year ended 31 December 2011 |
|
|
||||||
|
|
|
|
|
|
||||
|
|
Shopping centres |
Retail parks |
Offices |
Total |
||||
|
|
|
Capital |
|
Capital |
|
Capital |
|
Capital |
|
|
Value |
return |
Value |
return |
Value |
return |
Value |
return |
|
|
£m |
% |
£m |
% |
£m |
% |
£m |
% |
|
UK |
2,441.0 |
1.7 |
1,198.8 |
2.6 |
623.7 |
5.8 |
4,263.5 |
2.7 |
|
France |
1,346.6 |
6.6 |
109.5 |
17.3 |
- |
- |
1,456.1 |
7.3 |
|
Total |
3,787.6 |
3.2 |
1,308.3 |
3.6 |
623.7 |
5.8 |
5,719.6 |
3.6 |
Improved valuation yields contributed virtually all of the capital return, or valuation uplift, in the UK portfolio, as the positive impact of increased rental income and rental value growth was largely offset by a conservative approach to valuing the development pipeline. The improvement in investment yields was weighted to the first six months of 2011, whereas the rental income effect accumulated more evenly over the year. The valuation movement in the UK shopping centre portfolio was almost entirely driven by changes to investment yields whilst for retail parks it was income-led. The picture for UK offices was broadly balanced between yield and income effects.
The valuation uplift in the French portfolio was derived fairly equally from movements in investment yields and income and development surpluses. However, the positive effects of changes to investment yields were weighted towards the first half of 2011, whilst the income element was more prominent in the second six months following the release of indices for 2012 rental increases.
The components of the valuation changes over the course of the year are shown in the charts on page 19.
http://www.rns-pdf.londonstockexchange.com/rns/0375Y_3-2012-2-23.pdf
FINANCIAL REVIEW
Profit before tax
At £346.3 million, the Group's profit before tax for the year ended 31 December 2011 compared with £620.2 million for 2010. The reduction was principally the result of a portfolio valuation gain in 2011 of £186.3 million which was significantly lower than the gain of £447.1 million in 2010. A reconciliation between profit before tax on adjusted and unadjusted bases is shown in the table below.
|
Analysis of profit before tax |
Year ended |
Year ended |
|
|
31 December 2011 |
31 December 2010 |
|
|
£m |
£m |
|
Adjusted profit before tax |
141.6 |
144.5 |
|
Adjustments: |
|
|
|
Profit on the sale of investment properties, joint venture interests and associate |
23.5 |
22.8 |
|
Revaluation gains on property portfolio |
186.3 |
447.1 |
|
Share of revaluation gains and change in fair value of derivatives in associate |
- |
(0.5) |
|
Distribution from other investments |
- |
4.6 |
|
Change in fair value of derivatives |
(5.1) |
1.7 |
|
Profit before tax |
346.3 |
620.2 |
Adjusted profit before tax in 2011 was £141.6 million, some £2.9 million or 2.0% down on the £144.5 million for the year ended 31 December 2010. The net impact of acquisitions and disposals was to increase adjusted profit before tax by £2.1 million, but the benefits from completed and current developments (£5.0 million) and rental income growth (£6.2 million) were more than offset by higher administration expenses, restructuring charges and interest and other costs.
|
Reconciliation of adjusted profit before tax |
Adjusted profit before tax |
Adjusted EPS |
|
|
£m |
p |
|
Adjusted profit before tax for year ended 31 December 2010 |
144.5 |
19.9 |
|
Acquisitions |
21.2 |
3.0 |
|
Disposals |
(19.1) |
(2.7) |
|
Developments |
5.0 |
0.7 |
|
Like-for-like net rental income increase |
6.2 |
0.9 |
|
Administration expenses - restructuring costs |
(3.5) |
(0.5) |
|
Administration expenses - other |
(7.5) |
(1.1) |
|
Interest and other |
(5.2) |
(0.9) |
|
Adjusted profit before tax for year ended 31 December 2011 |
141.6 |
19.3 |
Adjusted earnings per share for the year ended 31 December 2011 at 19.3 pence were 3%, or 0.6 pence, lower than the 19.9 pence in the prior year. The reduction resulted from the lower profit referred to above and an increase in the average number of shares in issue. Detailed calculations for earnings per share are set out in note 7A to the accounts.
Net rental income
For the year ended 31 December 2011, net rental income was £296.0 million compared with £284.7 million in the prior year. The net rental income gained from acquisitions and developments more than offset that lost from disposals. Lettings and rent reviews in the UK retail portfolio in France also contributed to a 2.5% increase in like-for-like net rental income. A comparison of net rental income on a like-for-like basis between 2011 and 2010 is provided in the tables on page 9.
Net rental income in 2011 included net income from car parks of £12.0 million (2010: £11.3 million) and rent related to tenants' turnover amounting to £6.3 million (2010: £5.1 million). The sale of advertising and merchandising opportunities in our shopping malls generated net income of £5.0 million in 2011, compared with £4.8 million in 2010.
Property outgoings were £44.3 million in 2011, slightly higher than the £42.2 million in the previous year. The increase principally reflected acquisitions in the year.
The table below reconciles net rental income as reported in the income statement to net income receivable, the latter being a proxy for the net cash inflow from tenant leases.
|
Analysis of net rental income |
2011 |
2010 |
|
|
|
£m |
£m |
|
|
Net rental income as reported in the income statement |
296.0 |
284.7 |
|
|
Items included in net rental income |
Amortisation of tenant incentives and other costs |
6.6 |
6.4 |
|
|
Rent allocated to rent-free periods |
(5.5) |
(12.8) |
|
Net income receivable |
297.1 |
278.3 |
|
Administration expenses
At £46.9 million, administration expenses were £11.0 million higher than in 2010, as analysed in the table below. The principal reasons for the increase were higher staff costs, restructuring charges of £3.5 million, and a £3.8 million reduction in management fees receivable. Underlying administration expenses reflected the recruitment of senior staff in 2010 and 2011, which brought new skills into the business, and increased headcount in 2011. The restructuring programme is expected to save around £4.5 million per annum when fully implemented and we have a number of other initiatives underway to reduce other elements of the cost base. We anticipate a reduction in overall group expenses of around £3.0 million in 2012. The fall in management fees receivable arose predominantly because of the cessation of the development management element of the Thornfield contract.
|
Administration expenses |
2011 |
2010 |
|
|
£m |
£m |
|
Underlying administration expenses |
49.2 |
45.5 |
|
Restructuring costs - staff |
2.3 |
- |
|
Restructuring costs - other |
1.2 |
- |
|
Management fees receivable |
(5.8) |
(9.6) |
|
Administration expenses |
46.9 |
35.9 |
Finance costs
Net finance costs for 2011, excluding the change in fair value of derivatives and capitalised interest, were £112.4 million compared with £108.0 million for 2010. The principal reasons for the increase were higher commitment fees and margin following the refinancing of our bank facilities in April. Interest capitalised of £4.9 million related principally to the development of Les Terrasses du Port.
The Group's average cost of borrowing for the year ended 31 December 2011, at 5.2%, was marginally higher than the 5.0% average cost in the previous year. The increase resulted from a higher proportion of fixed rate borrowings in early 2011 as disposal proceeds were used to repay cheaper variable rate bank debt. We are reviewing our debt profile with the intention of reducing our overall cost of debt and there is further detail on this provided in 'Financing' below.
Tax
The Group's status as a UK REIT and French SIIC means that its current tax charge is minimal.
Dividend
A final dividend of 9.3 pence per share is being recommended by the Directors, an increase of 5.7% on the 2010 final dividend. Together with the interim dividend of 7.3 pence per share, the 2011 total dividend is therefore 16.6 pence per share, up 4.1% compared with the total dividend for 2010 of 15.95 pence. The 2011 final dividend will be paid on 27 April 2012 to shareholders on the register at the close of business on 16 March 2012, with 7.0 pence per share being paid as a PID, net of withholding tax where appropriate, and the remainder of 2.3 pence per share paid as a normal dividend. There will be no scrip alternative although the dividend reinvestment plan continues to be available.
Balance sheet
At the end of 2011, equity shareholders' funds were £3.8 billion, an increase of £292 million over the year. Adjusted net asset value per share was up 7.1%, or 35p, to £5.30 compared with £4.95 at the end of 2010.
The increases were principally the result of the uplift in the values of the property portfolio and other investments, and retained profit. Calculations for net asset value per share are set out in note 7B to the accounts.
|
Movement in net asset value |
Equity shareholders' funds* |
Adjusted NAV* |
|
|
|
£m |
£ per share |
|
|
31 December 2010 |
3,498 |
4.95 |
|
|
Revaluation - investment portfolio |
157 |
0.22 |
|
|
Revaluation - developments |
30 |
0.04 |
|
|
Revaluation - investments in Value Retail |
57 |
0.08 |
|
|
Adjusted profit for the year |
137 |
0.19 |
|
|
Dividends |
(92) |
(0.13) |
|
|
Exchange and other |
(15) |
(0.05) |
|
|
31 December 2011 |
3,772 |
5.30 |
|
|
* |
Excluding deferred tax and the fair value of derivatives, calculated in accordance with EPRA best practice. |
||
Financing
At the end of 2011, net debt was £2.0 billion, comprising borrowings of £2.1 billion and cash and deposits of £101 million. Acquisitions and development expenditure were the principal reason for the increase in net debt from £1.8 billion at the end of 2010.
We monitor the Group's financial structure in the context of guidelines approved by the Board. These guidelines currently include: gearing of no more than 85% for an extended period; interest cover of at least 2.0 times; and a net debt to EBITDA ratio of less than ten times. For the year ended 31 December 2011 these ratios were 52%, 2.6 times and 7.7 times respectively. In July, Fitch upgraded Hammerson's unsecured credit rating from BBB+ to A-.
Our policy for the Group's ratio of fixed to variable rate debt is to maintain a minimum of 50% of debt at fixed rates, although this level may increase at higher gearing levels. During 2011, we repaid short-term bank borrowings at variable rates of interest, leaving our remaining debt predominantly in the form of long-term fixed rate bonds. The proportion of debt at fixed rates of interest has therefore increased and stood at 88% at 31 December 2011. In an environment of low short-term interest rates and falling longer term rates, a high percentage of debt at fixed rates of interest limits the potential benefit of lower interest rates. We are continuing to monitor exposure to interest rates and utilise interest rate derivatives to achieve an optimal balance of fixed and floating rate debt in line with our existing policy. In January 2012, we used interest rate swaps to change the interest payable on the 2020 bond from a fixed to a floating rate basis. In addition, an interest rate swap was cancelled that previously hedged the floating rate exposure on £100 million of unsecured bank loans maturing in 2013. Together, these transactions changed the Group's ratio of fixed to floating rate debt from 88% to 71%, allowing us to benefit from a continuing low interest rate environment whilst maintaining the security offered by fixed rates of interest on the majority of debt.
We also hedge our exposure to foreign exchange translation differences on euro denominated assets with a combination of foreign currency borrowings and derivatives. Our policy is to hedge around 80% of the value of such assets and at the end of 2011, the figure was 76%. The interest expense on the euro denominated debt also partially hedges rental income generated from the assets.
The number of international banks willing to lend to commercial real estate has fallen, and in light of this, our funding strategy in 2011 has been to address near-term maturities early. We signed a £505 million syndicated five-year revolving credit facility in April. The facility, which will be used for general corporate purposes, replaced existing undrawn facilities of £670 million which were due to expire in 2011 to 2013 and carries a margin of 150 basis points over LIBOR. Following the sale of a further 24% interest in O'Parinor in October, the joint venture, in which Hammerson now has a 25% interest, drew down a new €219 million credit facility. The non-recourse facility matures in 2016 with two one-year extension options and carries an attractive margin. In November we agreed a £125 million syndicated five-year revolving credit facility which will be available to draw down from April 2012 when it will be used to part refinance maturing bank debt. The facility will increase to £150 million in April 2013 and carries the same margin as the £505 million facility. The medium-term outlook for the sterling, euro and private placement bond markets is favourable and we believe they will be available to Hammerson to replace existing bank borrowings as they mature. We will continue to monitor these markets and consider accessing them as appropriate.
Cash, undrawn committed facilities and foreign currency swaps provided liquidity of £711 million at 31 December. The average maturity of the Group's debt was around seven years and our nearest debt maturity occurs in April 2012, as shown in the chart below.
http://www.rns-pdf.londonstockexchange.com/rns/0375Y_4-2012-2-23.pdf
The Group's unsecured bank facilities contain financial covenants that the Group's gearing, defined as the ratio of net debt to shareholders' equity, should not exceed 150% and that interest cover, defined as net rental income divided by net interest payable, should be not less than 1.25 times. Three of the Company's unsecured bonds contain the same gearing covenant and two contain a covenant that gearing should not exceed 175%. The bonds contain no covenant for interest cover. Further discussion of financing risk is included within Principal Risks and Uncertainties on page 29.
Cash flow
For the year ended 31 December 2011, cash generated from operations was £261 million compared with £237 million for 2010. Capital expenditure, including asset and investment acquisitions, was £489 million whilst £272 million was raised from property disposals and the sale of an interest in the O'Parinor joint venture.
PROPERTY PORTFOLIO INFORMATION
SECURITY AND QUALITY OF INCOME
Our investment portfolio generates a secure income stream which has the potential for growth and benefits from leases with long terms. At 31 December 2011, the weighted average unexpired lease term for the investment portfolio was more than eight years.
The investment portfolio was 2.2% reversionary at 31 December 2011, higher than the 2.0% at 31 December 2010. The shopping centre portfolio was 3.8% reversionary at the end of 2011 and the retail parks were 2.3% reversionary. Our office portfolio was 8.9% over-rented at the end of 2011, compared with 14.0% over-rented at December 2010. The main reason for the change was an increase in ERVs at 125 Old Broad Street.
Taking account of lease expiries, breaks and rent reviews, we estimate that our retail portfolio could generate an additional £15.7 million per annum by 2014, equivalent to earnings of 2.2 pence per share, assuming leases are renewed or reviewed at current ERVs. Further detail on the potential reversion is set out in the following tables and paragraphs.
Lease expiries and breaks
|
Lease expiries and breaks as at 31 December 2011 |
|||||||||
|
|
|
|
|
|
|
|
Weighted |
||
|
|
|
|
|
|
|
|
average |
||
|
|
Rents passing that |
ERV of leases that |
unexpired |
||||||
|
|
expire/break in |
expire/break in |
lease term |
||||||
|
|
|
|
|
|
|
|
to |
to |
|
|
|
2012 |
2013 |
2014 |
2012 |
2013 |
2014 |
break |
expiry |
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
years |
years |
|
|
Notes |
1 |
1 |
1 |
2 |
2 |
2 |
|
|
|
|
United Kingdom |
|
|
|
|
|
|
|
|
|
|
Retail: |
Shopping centres |
14.5 |
9.0 |
10.3 |
18.9 |
8.6 |
10.6 |
7.9 |
9.3 |
|
|
Retail parks |
5.1 |
2.4 |
0.9 |
5.5 |
2.4 |
1.0 |
10.3 |
10.9 |
|
|
19.6 |
11.4 |
11.2 |
24.4 |
11.0 |
11.6 |
8.7 |
9.8 |
|
|
Office: |
City |
0.2 |
0.3 |
8.4 |
0.2 |
0.3 |
5.4 |
6.9 |
7.8 |
|
|
Other |
0.7 |
0.6 |
- |
0.7 |
0.6 |
- |
6.2 |
8.6 |
|
|
0.9 |
0.9 |
8.4 |
0.9 |
0.9 |
5.4 |
6.8 |
7.9 |
|
|
Total United Kingdom |
20.5 |
12.3 |
19.6 |
25.3 |
11.9 |
17.0 |
8.5 |
9.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
France: Retail |
20.4 |
7.9 |
5.6 |
21.4 |
8.5 |
5.8 |
2.5 |
4.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
|
|
Retail |
40.0 |
19.3 |
16.8 |
45.8 |
19.5 |
17.4 |
7.0 |
8.4 |
|
|
Office |
0.9 |
0.9 |
8.4 |
0.9 |
0.9 |
5.4 |
6.8 |
7.9 |
|
|
Total Group |
40.9 |
20.2 |
25.2 |
46.7 |
20.4 |
22.8 |
7.0 |
8.4 |
|
|
Notes |
|
|
1 |
The amount by which rental income, based on rents passing at 31 December 2011, could fall in the event that occupational leases due to expire are not renewed or replaced by new leases. For the UK, it includes tenants' break options. For France, it is based on the date of lease expiry. |
|
2 |
The ERV at 31 December 2011 for leases that expire or break in each year and ignoring the impact of rental growth and any rent-free periods. |
The table above shows that over the period from 2012 to 2014, leases with current rents passing of £86.3 million will expire or are subject to tenants' break clauses. We estimate that additional rental income of £3.6 million per annum would be secured from these leases, assuming renewals take place at current rental values. The potential for increased rents at the shopping centre and retail parks portfolios is tempered by the over-rented position of the offices. This is not a forecast and takes no account of void periods, lease incentives or potential changes to rental values.
Rent reviews
|
Rent reviews |
|
|
|
|
|
|
|
|
|
|
as at 31 December 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected rent at current ERV of |
||||
|
|
Rents passing subject to review in |
leases subject to review in |
|||||||
|
|
Outstanding |
2012 |
2013 |
2014 |
Outstanding |
2012 |
2013 |
2014 |
|
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
Notes |
1 |
1 |
1 |
1 |
2 |
2 |
2 |
2 |
|
|
United Kingdom |
|
|
|
|
|
|
|
|
|
|
Retail: |
Shopping centres |
21.2 |
14.7 |
35.5 |
16.1 |
23.0 |
16.2 |
37.0 |
18.1 |
|
|
Retail parks |
20.1 |
9.6 |
6.3 |
8.9 |
21.5 |
9.8 |
6.5 |
9.4 |
|
|
41.3 |
24.3 |
41.8 |
25.0 |
44.5 |
26.0 |
43.5 |
27.5 |
|
|
Office: |
City |
5.2 |
0.6 |
4.4 |
2.4 |
5.2 |
0.8 |
4.4 |
2.8 |
|
|
Other |
2.0 |
- |
- |
0.6 |
2.0 |
- |
- |
0.6 |
|
|
7.2 |
0.6 |
4.4 |
3.0 |
7.2 |
0.8 |
4.4 |
3.4 |
|
|
Total United Kingdom |
48.5 |
24.9 |
46.2 |
28.0 |
51.7 |
26.8 |
47.9 |
30.9 |
|
|
Notes |
|
|
1 |
Rents passing at 31 December 2011, after deducting head and equity rents, which are subject to review in each year. |
|
2 |
Projected rents for space that are subject to review in each year, based on the higher of the current rental income and the ERV as at 31 December 2011 and ignoring the impact of changes in rental values before the review date. |
UK leases with rents passing of £99.1 million are subject to review in the next three years and, if reviewed to current rental values, we estimate that rents from these leases would increase by £6.5 million per annum by 2014. In addition, assuming that outstanding rent review negotiations are concluded at current rental values, we would secure a further £3.2 million of annual rental income. This is not a forecast and takes no account of potential changes in rental values before the relevant review dates.
The majority of leases in our French portfolio are subject to annual indexation rather than periodic review.
Tenant covenant strength
Our ten most significant retail occupiers accounted for £57.8 million, or 17.8%, of rents passing at 31 December 2011, whilst £21.0 million, or 6.4% of rents passing, was represented by our five largest office occupiers.
|
Retail |
|
Office |
|
|
|
% of total |
|
% of total |
|
Tenant |
passing rent |
Tenant |
passing rent |
|
B&Q |
3.1 |
Royal & Sun Alliance |
2.3 |
|
H&M Hennes |
2.1 |
Latham & Watkins LLP |
2.0 |
|
Home Retail Group |
2.0 |
Lloyds TSB |
0.9 |
|
Next |
1.8 |
Deutsche Bank |
0.6 |
|
DSG Retail |
1.8 |
DTZ |
0.6 |
|
Arcadia |
1.8 |
|
|
|
New Look |
1.4 |
|
|
|
Boots |
1.4 |
|
|
|
Debenhams |
1.2 |
|
|
|
Inditex |
1.2 |
|
|
|
Total |
17.8 |
|
6.4 |
We use a credit rating agency to assess the covenant strength of prospective tenants and monitor the credit ratings of major tenants. The agency's risk indicator scale runs from one to five, where a score of one is 'low risk' and two 'lower than average risk'. At the end of 2011, all of the top ten retail tenants were scored 'one'. Tenants with a low or lower than average risk indicator comprised 84% by passing rents of the UK retail portfolio and the score in that portfolio averaged 1.6.
At 31 December 2011, three of our top five office tenants had a low risk indicator and the others, one of which has its rent guaranteed by its parent company, were rated as 'two'. In the UK office portfolio at the end of 2011, the average risk score was 1.4 and 92% of passing rents was provided by tenants with a risk rating of one or two.
At 23 February 2012, in the UK 40 retail units were let to tenants in administration, and of these 20 continued to trade. The equivalent figures in the French portfolio were 23 and 22 units respectively. For the Group as a whole, income from tenants in administration no longer trading represented just 0.2% of passing rents at 31 December 2011.
Collection rates
Despite the tough retailing environment, rent collection has remained excellent, with 98.4% collected within 14 days of the December 2011 quarter day in the UK, the same rate as was collected for the equivalent period in 2010. For France, the figures were 92.6% for the December 2011 quarter day and 85.1% for the comparative period in 2010.
|
Valuation data for investment property for the year ended 31 December 2011 |
|||||||
|
|
|
|
|
|
|
True |
|
|
|
Properties |
Revaluation |
Capital |
Total |
Initial |
equivalent |
|
|
|
at valuation |
in the year |
return |
return |
yield |
yield |
|
|
|
£m |
£m |
% |
% |
% |
% |
|
|
Notes |
|
|
|
|
1 |
2 |
|
|
United Kingdom |
|
|
|
|
|
|
|
|
Retail: |
Shopping centres |
2,429.6 |
40.9 |
1.8 |
7.0 |
5.3 |
6.1 |
|
|
Retail parks |
1,180.4 |
23.9 |
2.2 |
7.9 |
5.4 |
6.1 |
|
|
3,610.0 |
64.8 |
1.9 |
7.3 |
5.3 |
6.1 |
|
|
Office: |
City |
486.0 |
14.4 |
5.9 |
12.8 |
4.1 |
5.9 |
|
|
Other |
62.4 |
0.4 |
4.5 |
8.1 |
3.7 |
6.3 |
|
|
548.4 |
14.8 |
5.7 |
12.1 |
4.1 |
5.9 |
|
|
Total United Kingdom |
4,158.4 |
79.6 |
2.5 |
8.0 |
5.2 |
6.1 |
|
|
Continental Europe |
|
|
|
|
|
|
|
|
France: Retail |
1,320.0 |
76.9 |
5.9 |
11.2 |
5.0 |
5.4 |
|
|
Group |
|
|
|
|
|
|
|
|
Retail |
4,930.0 |
141.7 |
2.8 |
8.1 |
5.3 |
5.9 |
|
|
Office |
548,4 |
14.8 |
5.7 |
12.1 |
4.1 |
5.9 |
|
|
Total investment portfolio |
5,478.4 |
156.5 |
3.1 |
8.6 |
5.2 |
5.9 |
|
|
Developments |
241.2 |
29.8 |
20.3 |
18.9 |
|
|
|
|
Total Group |
5,719.6 |
186.3 |
3.6 |
8.9 |
|
|
|
|
Notes |
|
|
1 |
Annual cash rents receivable, net of head and equity rents and the cost of vacancy, as a percentage of gross property value, as provided by the Group's external valuers. Rents receivable following the expiry of rent-free periods are not included. Rent reviews are assumed to have been settled at the contractual review date at ERV. |
|
2 |
The capitalisation rate applied to future cash flows to calculate the gross property value. The cash flows reflect the timing of future rents resulting from lettings, lease renewals and rent reviews based on current ERVs and assuming rents are received quarterly in advance. The property true equivalent yields are determined by the Group's external valuers. |
|
3 |
Further analysis of development properties by segment is provided in note 3B on page 41. |
|
|
The weighted average remaining rent-free period is 0.7 years. |
Rental data for investment portfolio
for the year ended 31 December 2011
|
|
Gross |
Net |
|
Average |
|
Estimated |
Reversion/ |
|
|
|
rental |
rental |
Vacancy |
rents |
Rents |
rental |
(over- |
|
|
|
income |
income |
rate |
passing |
passing |
value |
rented) |
|
|
|
£m |
£m |
% |
£/m² |
£m |
£m |
% |
|
|
Notes |
|
|
1 |
2 |
3 |
4 |
5 |
|
|
United Kingdom |
|
|
|
|
|
|
|
|
|
Retail: |
Shopping centres |
152.5 |
127.1 |
2.6 |
420 |
148.0 |
156.5 |
3.2 |
|
|
Retail parks |
65.9 |
61.8 |
1.6 |
190 |
68.6 |
71.6 |
2.6 |
|
|
218.4 |
188.9 |
2.2 |
330 |
216.6 |
228.1 |
3.0 |
|
|
Office: |
City |
41.8 |
38.5 |
0.2 |
450 |
30.3 |
27.0 |
(12.2) |
|
|
Other |
2.6 |
1.9 |
9.9 |
245 |
4.1 |
5.1 |
9.1 |
|
|
44.4 |
40.4 |
1.7 |
410 |
34.4 |
32.1 |
(8.9) |
|
|
Total United Kingdom |
262.8 |
229.3 |
2.2 |
340 |
251.0 |
260.2 |
1.5 |
|
|
Continental Europe |
|
|
|
|
|
|
|
|
|
France: Retail |
80.7 |
68.9 |
1.8 |
335 |
74.2 |
78.9 |
4.4 |
|
|
Group |
|
|
|
|
|
|
|
|
|
Retail |
299.1 |
257.8 |
2.1 |
330 |
290.8 |
307.0 |
3.4 |
|
|
Office |
44.4 |
40.4 |
1.7 |
410 |
34.4 |
32.1 |
(8.9) |
|
|
Total investment portfolio |
343.5 |
298.2 |
2.1 |
340 |
325.2 |
339.1 |
2.2 |
|
|
Income from developments and other sources not analysed above |
0.6 |
(2.2) |
|
|
|
|
|
|
|
As disclosed in note 2 to the accounts |
344.1 |
296.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected data for the year ended 31 December 2010 |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
|
Retail |
281.3 |
243.2 |
2.5 |
340 |
269.7 |
288.7 |
4.5 |
|
|
Office |
50.1 |
43.8 |
4.4 |
445 |
45.2 |
41.4 |
(14.0) |
|
|
Total investment portfolio |
331.4 |
287.0 |
2.7 |
355 |
314.9 |
330.1 |
2.0 |
|
|
Notes |
|
|
1 |
The ERV of the area in a property, or portfolio, excluding developments, which is currently available for letting, expressed as a percentage of the ERV of that property or portfolio. |
|
2 |
Average rent passing at 31 December 2011 before deducting head and equity rents and excluding rents passing from anchor units and car parks. |
|
3 |
The annual rental income receivable from an investment property at 31 December 2011, after any rent-free periods and after deducting head and equity rents. |
|
4 |
The estimated market rental value of the total lettable space in a property at 31 December 2011, after deducting head and equity rents, calculated by the Group's valuers. |
|
5 |
The percentage by which the ERV exceeds, or falls short of, rents passing together with the estimated rental value of vacant space, all at 31 December 2011. |
PRINCIPAL RISKS AND UNCERTAINTIES
Property and financial markets
The uncertainty surrounding the eurozone and the austerity measures adopted by western governments continues to unsettle the financial markets, making lenders cautious, and is likely to hold back economic growth for some time. In the worst case, a full or partial break-up of the euro-community may contribute to a prolonged global recession. We are of course exposed to the specifics of the French economy through our shopping centre investments in France.
During our Business Planning process in the latter stages of 2011, we stress-tested our business model against a severe downside economic scenario. We confirmed that our business is robust, reflecting low gearing, long-term secure income streams from our leases, the currency hedging of the value of our French portfolio, a good spread of debt maturity and the flexibility to phase or halt our development programme.
Property valuations
Conditions prevailing in the property investment market and the general economic environment affect the value of Hammerson's property portfolio. Accordingly, the Group's net asset value may rise or fall due to external factors beyond management's control. Global financial markets have stabilised since the peak of the financial crisis, and investors have become more active in the real estate investment market, resulting in a rise in property values. However, the eurozone crisis continues to cause uncertainty and may generate significant instability and volatility in financial markets in the short to medium terms and may put downward pressure on property values which would increase gearing and could ultimately breach borrowing covenants.
At 31 December 2011, gearing stood at 52%, significantly lower than the Group's most stringent borrowing covenant that gearing should not exceed 150%. We estimate that values could fall by 43% from their December 2011 levels before covenants would be endangered.
Our property portfolio is of high quality, geographically diversified and let to a large number of tenants. These factors should help mitigate negative impacts which may arise from changes in the financial and property markets.
Tenant default
Some tenants continue to face challenging operating conditions, increasing the risk that they may be unable to pay their rents. The Group's geographical diversity and its large number of tenants mean the impact of individual tenant default for Hammerson is low. Furthermore, our occupational leases are generally long-term contracts, making the income relatively secure.
Development and letting
The current economic environment means that development is inherently more risky. Although we have a substantial development pipeline, we will progress developments only when the relevant markets are sufficiently robust, when we have the right level of interest from occupiers and on the basis that sound financial analysis demonstrates good returns.
The uncertainty faced by potential occupiers means that they remain cautious about entering into commitments to lease space. We currently have only one major development underway, Les Terrasses du Port in Marseille, for which around 64% of the income has been contracted or is in solicitors' hands. We will continue to seek substantial pre-lets before progressing significant developments.
Liquidity risk
In the current environment, companies with short-term financing requirements may find it difficult to secure sufficient funding, in particular from banks, at costs comparable with their existing facilities. Our funding strategy in 2011 has therefore been to decrease exposure to bank refinancing. In 2012 we will also consider accessing the sterling, euro and private placement bond markets. In April we replaced £670 million of undrawn facilities, which were due to expire over the next two years, with a new £505 million five-year syndicated revolving credit facility. In November we agreed a £125 million syndicated five-year revolving credit facility which will be available to draw down from April 2012 when it will be used to refinance in part maturing bank debt.
Interest rate and exchange risk
Although the medium-term outlook for interest rates is that they will remain low, the interest charged on borrowings is a significant cost for Hammerson. To manage the risk of changes in interest rates, we set guidelines for our exposure to fixed and floating interest rates, using interest rate and currency swaps as appropriate. At 31 December 2011, 88% of the Group's gross debt was at fixed rates of interest.
The Group is exposed to movements in the sterling/euro exchange rate through its investment in France. Exchange risk is managed principally by matching foreign currency assets with foreign currency borrowings or derivatives. At the end of 2011, 76% of the value of the Group's French portfolio was hedged in this way.
Responsibility statement OF THE DIRECTORS ON THE ANNUAL REPORT
The Responsibility Statement has been prepared in connection with the Company's full Annual Report for the year ended 31 December 2011. Certain parts of the Annual Report are not included within this announcement.
We confirm to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole; and
· the Business Review, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.
Signed on behalf of the Board on 23 February 2012
|
David Atkins |
Timon Drakesmith |
|
Director |
Director |
Consolidated INCOME STATEMENT
|
For the year ended 31 December 2011 |
|
|
|
|
|
|
|
2011 |
|
2010 |
|
|
Notes |
£m |
|
£m |
|
|
|
|
|
|
|
Gross rental income |
2 |
344.1 |
|
332.0 |
|
Operating profit before other net gains and share of results of associate |
2 |
249.1 |
|
248.8 |
|
Other net gains |
2 |
209.8 |
|
469.9 |
|
Share of results of associate |
2 |
- |
|
1.5 |
|
Operating profit |
2 |
458.9 |
|
720.2 |
|
|
|
|
|
|
|
Finance costs |
|
(112.7) |
|
(111.5) |
|
Change in fair value of derivatives |
|
(5.1) |
|
1.7 |
|
Finance income |
|
5.2 |
|
9.8 |
|
Net finance costs |
4 |
(112.6) |
|
(100.0) |
|
Profit before tax |
|
346.3 |
|
620.2 |
|
|
|
|
|
|
|
Current tax charge |
5A |
(0.7) |
|
(0.6) |
|
Deferred tax charge |
5A |
- |
|
(0.1) |
|
Tax charge |
|
(0.7) |
|
(0.7) |
|
|
|
|
|
|
|
Profit for the year |
|
345.6 |
|
619.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Equity shareholders |
|
335.7 |
|
615.4 |
|
Non-controlling interests |
|
9.9 |
|
4.1 |
|
Profit for the year |
|
345.6 |
|
619.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
7A |
47.3p |
|
87.2p |
|
Diluted earnings per share |
7A |
47.3p |
|
87.2p |
|
|
|
|
|
|
|
|
||||
|
Adjusted earnings per share are shown in note 7A. All results derive from continuing operations. |
||||
|
|
|
|
|
|
Consolidated statement of COMPREHENSIVE INCOMe
|
For the year ended 31 December 2011 |
|
|
|
|
|
|
|
2011 |
|
2010 |
|
|
|
£m |
|
£m |
|
|
|
|
|
|
|
Foreign exchange translation differences |
|
(35.9) |
|
(65.1) |
|
Net gain on hedging activities |
|
27.9 |
|
50.8 |
|
Revaluation gains on owner-occupied property |
|
2.8 |
|
4.5 |
|
Revaluation gains on other investments |
|
57.4 |
|
18.4 |
|
Actuarial losses on pension schemes |
|
(5.7) |
|
(4.8) |
|
Net gain recognised directly in equity |
|
46.5 |
|
3.8 |
|
|
|
|
|
|
|
Profit for the year |
|
345.6 |
|
619.5 |
|
Total comprehensive income for the year |
|
392.1 |
|
623.3 |
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Equity shareholders |
|
384.0 |
|
621.8 |
|
Non-controlling interests |
|
8.1 |
|
1.5 |
|
Total comprehensive income for the year |
|
392.1 |
|
623.3 |
|
|
|
|
|
|
Consolidated balance sheet
|
As at 31 December 2011 |
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
|
|
Notes |
£m |
|
£m |
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Investment and development properties |
8 |
5,719.6 |
|
5,331.1 |
|
|
Interests in leasehold properties |
|
17.7 |
|
30.5 |
|
|
Plant, equipment and owner-occupied property |
9 |
35.4 |
|
33.4 |
|
|
Other investments |
12 |
215.1 |
|
133.2 |
|
|
Receivables |
13 |
55.7 |
|
45.2 |
|
|
|
|
6,043.5 |
|
5,573.4 |
|
|
Current assets |
|
|
|
|
|
|
Receivables |
14 |
111.7 |
|
80.7 |
|
|
Cash and deposits |
15 |
100.7 |
|
126.2 |
|
|
|
|
212.4 |
|
206.9 |
|
|
|
|
|
|
|
|
|
Total assets |
|
6,255.9 |
|
5,780.3 |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Payables |
16 |
244.4 |
|
220.1 |
|
|
Tax |
5C |
1.1 |
|
1.0 |
|
|
Borrowings |
17A |
100.7 |
|
4.4 |
|
|
|
|
346.2 |
|
225.5 |
|
|
Non-current liabilities |
|
|
|
|
|
|
Borrowings |
17A |
1,979.2 |
|
1,916.2 |
|
|
Deferred tax |
5C |
0.5 |
|
0.5 |
|
|
Tax |
5C |
0.3 |
|
0.5 |
|
|
Obligations under finance leases |
|
17.6 |
|
30.3 |
|
|
Payables |
19 |
63.7 |
|
55.6 |
|
|
|
|
2,061.3 |
|
2,003.1 |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
2,407.5 |
|
2,228.6 |
|
|
|
|
|
|
|
|
|
Net assets |
|
3,848.4 |
|
3,551.7 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
20 |
178.2 |
|
176.9 |
|
|
Share premium |
|
1,221.9 |
|
1,222.5 |
|
|
Translation reserve |
|
381.1 |
|
415.2 |
|
|
Hedging reserve |
|
(306.7) |
|
(334.6) |
|
|
Capital redemption reserve |
|
7.2 |
|
7.2 |
|
|
Other reserves |
|
9.3 |
|
8.6 |
|
|
Revaluation reserve |
|
161.7 |
|
101.5 |
|
|
Retained earnings |
|
2,125.7 |
|
1,890.1 |
|
|
Investment in own shares |
21 |
(1.8) |
|
(4.0) |
|
|
Treasury shares |
22 |
(4.7) |
|
(3.4) |
|
|
Equity shareholders' funds |
|
3,771.9 |
|
3,480.0 |
|
|
|
|
|
|
|
|
|
Non-controlling interests |
|
76.5 |
|
71.7 |
|
|
Total equity |
|
3,848.4 |
|
3,551.7 |
|
|
|
|
|
|
|
|
|
Diluted net asset value per share |
7B |
£5.30 |
|
£4.93 |
|
|
EPRA net asset value per share |
7B |
£5.30 |
|
£4.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUIty
For the year ended 31 December 2011
|
|
|
|
|
|
Capital |
|
|
|
Investment |
|
Equity |
Non- |
|
|
|
Share |
Share |
Translation |
Hedging |
redemption |
Other |
Revaluation |
Retained |
in own |
Treasury |
shareholders' |
controlling |
Total |
|
|
capital |
premium |
reserve |
reserve |
reserve |
reserves |
reserve |
earnings |
shares |
shares |
funds |
interests |
equity |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2011 |
176.9 |
1,222.5 |
415.2 |
(334.6) |
7.2 |
8.6 |
101.5 |
1,890.1 |
(4.0) |
(3.4) |
3,480.0 |
71.7 |
3,551.7 |
|
Issue of shares |
0.1 |
0.6 |
- |
- |
- |
- |
- |
- |
- |
- |
0.7 |
- |
0.7 |
|
Share-based employee remuneration |
- |
- |
- |
- |
- |
4.0 |
- |
- |
- |
- |
4.0 |
- |
4.0 |
|
Cost of shares awarded to employees |
- |
- |
- |
- |
- |
(5.6) |
- |
- |
5.6 |
- |
- |
- |
- |
|
Transfer on award of own shares to employees |
- |
- |
- |
- |
- |
2.3 |
- |
(2.3) |
- |
- |
- |
- |
- |
|
Proceeds on award of own shares to employees |
- |
- |
- |
- |
- |
- |
- |
0.2 |
- |
- |
0.2 |
- |
0.2 |
|
Transfer from treasury shares |
- |
- |
- |
- |
- |
- |
- |
- |
(3.4) |
3.4 |
- |
- |
- |
|
Purchase of treasury shares |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(4.7) |
(4.7) |
- |
(4.7) |
|
Dividends |
- |
- |
- |
- |
- |
- |
- |
(92.3) |
- |
- |
(92.3) |
(3.3) |
(95.6) |
|
Scrip dividends |
1.2 |
(1.2) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
Foreign exchange translation differences |
- |
- |
(34.1) |
- |
- |
- |
- |
- |
- |
- |
(34.1) |
(1.8) |
(35.9) |
|
Net gain on hedging activities |
- |
- |
- |
27.9 |
- |
- |
- |
- |
- |
- |
27.9 |
- |
27.9 |
|
Revaluation gains on owner-occupied property |
- |
- |
- |
- |
- |
- |
2.8 |
- |
- |
- |
2.8 |
- |
2.8 |
|
Revaluation gains on other investments |
- |
- |
- |
- |
- |
- |
57.4 |
- |
- |
- |
57.4 |
- |
57.4 |
|
Actuarial losses on pension schemes |
- |
- |
- |
- |
- |
- |
- |
(5.7) |
- |
- |
(5.7) |
- |
(5.7) |
|
Profit for the year attributable to equity shareholders |
- |
- |
- |
- |
- |
- |
- |
335.7 |
- |
- |
335.7 |
9.9 |
345.6 |
|
Total comprehensive income/(loss) for the year |
- |
- |
(34.1) |
27.9 |
- |
- |
60.2 |
330.0 |
- |
- |
384.0 |
8.1 |
392.1 |
|
Balance at 31 December 2011 |
178.2 |
1,221.9 |
381.1 |
(306.7) |
7.2 |
9.3 |
161.7 |
2,125.7 |
(1.8) |
(4.7) |
3,771.9 |
76.5 |
3,848.4 |
Investment in own shares and treasury shares are stated at cost.
CONSOLIDATED STATEMENT OF CHANGES IN EQUIty
For the year ended 31 December 2010
|
|
|
|
|
|
Capital |
|
|
|
Investment |
|
Equity |
Non- |
|
|
|
Share |
Share |
Translation |
Hedging |
redemption |
Other |
Revaluation |
Retained |
in own |
Treasury |
shareholders' |
controlling |
Total |
|
|
capital |
premium |
reserve |
reserve |
reserve |
reserves |
reserve |
earnings |
shares |
shares |
funds |
interests |
equity |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2010 |
175.7 |
1,223.6 |
477.7 |
(385.4) |
7.2 |
10.3 |
78.6 |
1,372.4 |
(4.6) |
(5.8) |
2,949.7 |
73.4 |
3,023.1 |
|
Issue of shares |
- |
0.1 |
- |
- |
- |
- |
- |
- |
- |
- |
0.1 |
- |
0.1 |
|
Share-based employee remuneration |
- |
- |
- |
- |
- |
3.2 |
- |
- |
- |
- |
3.2 |
- |
3.2 |
|
Cost of shares awarded to employees |
- |
- |
- |
- |
- |
(6.4) |
- |
- |
6.4 |
- |
- |
- |
- |
|
Transfer on award of own shares to employees |
- |
- |
- |
- |
- |
1.5 |
- |
(1.5) |
- |
- |
- |
- |
- |
|
Proceeds on award of own shares to employees |
- |
- |
- |
- |
- |
- |
- |
0.1 |
- |
- |
0.1 |
- |
0.1 |
|
Transfer from treasury shares |
- |
- |
- |
- |
- |
- |
- |
- |
(5.8) |
5.8 |
- |
- |
- |
|
Purchase of treasury shares |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(3.4) |
(3.4) |
- |
(3.4) |
|
Dividends |
- |
- |
- |
- |
- |
- |
- |
(91.5) |
- |
- |
(91.5) |
(3.2) |
(94.7) |
|
Scrip dividends |
1.2 |
(1.2) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
Foreign exchange translation differences |
- |
- |
(62.5) |
- |
- |
- |
- |
- |
- |
- |
(62.5) |
(2.6) |
(65.1) |
|
Net gain on hedging activities |
- |
- |
- |
50.8 |
- |
- |
- |
- |
- |
- |
50.8 |
- |
50.8 |
|
Revaluation gains on owner-occupied property |
- |
- |
- |
- |
- |
- |
4.5 |
- |
- |
- |
4.5 |
- |
4.5 |
|
Revaluation gains on other investments |
- |
- |
- |
- |
- |
- |
18.4 |
- |
- |
- |
18.4 |
- |
18.4 |
|
Actuarial losses on pension schemes |
- |
- |
- |
- |
- |
- |
- |
(4.8) |
- |
- |
(4.8) |
- |
(4.8) |
|
Profit for the year attributable to equity shareholders |
- |
- |
- |
- |
- |
- |
- |
615.4 |
- |
- |
615.4 |
4.1 |
619.5 |
|
Total comprehensive income/(loss) for the year |
- |
- |
(62.5) |
50.8 |
- |
- |
22.9 |
610.6 |
- |
- |
621.8 |
1.5 |
623.3 |
|
Balance at 31 December 2010 |
176.9 |
1,222.5 |
415.2 |
(334.6) |
7.2 |
8.6 |
101.5 |
1,890.1 |
(4.0) |
(3.4) |
3,480.0 |
71.7 |
3,551.7 |
Investment in own shares and treasury shares are stated at cost.
Consolidated cash flow statement
|
For the year ended 31 December 2011 |
|
|
|
|
|
|
|
2011 |
|
2010 |
|
|
Notes |
£m |
|
£m |
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
Operating profit before other net gains and share of results of associate |
2 |
249.1 |
|
248.8 |
|
Increase in receivables |
|
(10.5) |
|
(3.6) |
|
Increase in payables |
|
19.5 |
|
0.2 |
|
Adjustment for non-cash items |
23 |
2.7 |
|
(8.4) |
|
Cash generated from operations |
|
260.8 |
|
237.0 |
|
|
|
|
|
|
|
Interest paid |
|
(115.4) |
|
(111.1) |
|
Interest received |
|
3.1 |
|
3.4 |
|
Distribution received from other investments |
|
- |
|
4.6 |
|
Tax paid |
5C |
(0.7) |
|
(1.2) |
|
Cash flows from operating activities |
|
147.8 |
|
132.7 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Property acquisitions |
|
(374.1) |
|
(218.6) |
|
Development and major refurbishments |
|
(91.2) |
|
(60.8) |
|
Other capital expenditure |
|
(23.6) |
|
(25.5) |
|
Sale of properties |
|
178.9 |
|
474.6 |
|
Sale of interest in joint venture/associate |
|
92.9 |
|
80.0 |
|
Purchase of other investments |
|
(24.7) |
|
(1.1) |
|
(Increase)/Decrease in non-current receivables |
|
(10.2) |
|
0.3 |
|
Cash flows from investing activities |
|
(252.0) |
|
248.9 |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Issue of shares |
|
0.7 |
|
0.1 |
|
Proceeds from award of own shares |
|
0.2 |
|
0.1 |
|
Purchase of treasury shares |
|
(4.7) |
|
(3.4) |
|
Increase/(Decrease) in non-current borrowings |
|
78.3 |
|
(306.6) |
|
Increase/(Decrease) in current borrowings |
|
94.0 |
|
(29.2) |
|
Dividends paid to non-controlling interests |
|
(3.3) |
|
(3.2) |
|
Equity dividends paid |
6 |
(86.1) |
|
(95.4) |
|
Cash flows used in financing activities |
|
79.1 |
|
(437.6) |
|
|
|
|
|
|
|
Net decrease in cash and deposits |
|
(25.1) |
|
(56.0) |
|
|
|
|
|
|
|
Opening cash and deposits |
|
126.2 |
|
182.9 |
|
Exchange translation movement |
|
(0.4) |
|
(0.7) |
|
Closing cash and deposits |
15 |
100.7 |
|
126.2 |
Analysis of movement in net debt
|
For the year ended 31 December 2011 |
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
borrowings |
|
|
|
|
|
Short-term |
Cash at |
including |
Non-current |
|
|
|
|
deposits |
bank |
currency swaps |
borrowings |
Net debt |
|
|
|
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2011 |
54.4 |
71.8 |
(4.4) |
(1,916.2) |
(1,794.4) |
|
|
Cash flow |
(14.8) |
(10.3) |
(94.0) |
(78.3) |
(197.4) |
|
|
Exchange |
(0.1) |
(0.3) |
12.7 |
15.3 |
27.6 |
|
|
Balance at 31 December 2011 |
39.5 |
61.2 |
(85.7) |
(1,979.2) |
(1,964.2) |
|
|
|
|
|||||
Notes to the accounts
1. FINANCIAL INFORMATION
The financial information contained in this announcement has been prepared on the basis of the accounting policies set out in the statutory accounts for the year ended 31 December 2011. Whilst the financial information included in this announcement has been computed in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS. The financial information does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010, but is derived from those accounts. Those accounts give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole. Statutory accounts for 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Company's Annual General Meeting. The auditor's reports on both the 2011 and 2010 accounts were unqualified; did not draw attention to any matters by way of emphasis; and did not contain statements under s498(2) or (3) Companies Act 2006 or preceding legislation.
The management fees receivable in note 2 include fees paid to Hammerson in respect of joint ventures and a former associate for investment and development management services. All other related party transactions, with the exception of Directors' remuneration, are eliminated on consolidation.
The principal exchange rate used to translate foreign currency denominated amounts in the balance sheet is the rate at the end of the year, £1 = €1.197 (2010: £1 = €1.167). The principal exchange rate used for the income statement is the average rate, £1 = €1.153 (2010: £1 = €1.166).
GOING CONCERN
The current economic conditions have created a number of uncertainties. Hammerson's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement, Property Markets, Principal Risks and Uncertainties, the Business Review and the Financial Review. The financial position of the Group, its liquidity position and borrowing facilities are described in the Business Review and the Financial Review and in the notes to the accounts.
The Directors have reviewed the current and projected financial position of the Group, making reasonable assumptions about future trading performance. As part of the review, the Directors considered the Group's cash balances, its debt maturity profile, including undrawn facilities, and the long-term nature of tenant leases. After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report.
2. RESULT FOR THE YEAR
|
|
|
|
Capital |
|
|
|
Capital |
|
|
|
|
|
and |
Total |
|
|
and |
Total |
|
|
|
Adjusted |
other |
2011 |
|
Adjusted |
other |
2010 |
|
|
Notes |
£m |
£m |
£m |
|
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
|
Gross rental income |
3A |
344.1 |
- |
344.1 |
|
332.0 |
- |
332.0 |
|
Ground and equity rents payable |
|
(3.8) |
- |
(3.8) |
|
(5.1) |
- |
(5.1) |
|
Gross rental income, after rents payable |
|
340.3 |
- |
340.3 |
|
326.9 |
- |
326.9 |
|
|
|
|
|
|
|
|
|
|
|
Service charge income |
|
59.8 |
- |
59.8 |
|
59.9 |
- |
59.9 |
|
Service charge expenses |
|
(70.1) |
- |
(70.1) |
|
(67.7) |
- |
(67.7) |
|
Net service charge expenses |
|
(10.3) |
- |
(10.3) |
|
(7.8) |
- |
(7.8) |
|
Other property outgoings |
|
(34.0) |
- |
(34.0) |
|
(34.4) |
- |
(34.4) |
|
Property outgoings |
|
(44.3) |
- |
(44.3) |
|
(42.2) |
- |
(42.2) |
|
|
|
|
|
|
|
|
|
|
|
Net rental income |
3A |
296.0 |
- |
296.0 |
|
284.7 |
- |
284.7 |
|
|
|
|
|
|
|
|
|
|
|
Management fees receivable |
|
5.8 |
- |
5.8 |
|
9.6 |
- |
9.6 |
|
Cost of property activities |
|
(34.8) |
- |
(34.8) |
|
(30.1) |
- |
(30.1) |
|
Corporate expenses |
|
(17.9) |
- |
(17.9) |
|
(15.4) |
- |
(15.4) |
|
Administration expenses |
|
(46.9) |
- |
(46.9) |
|
(35.9) |
- |
(35.9) |
|
Operating profit before other net gains and share of results of associate |
|
249.1 |
- |
249.1 |
|
248.8 |
- |
248.8 |
|
|
|
|
|
|
|
|
|
|
|
Gain/(Loss) on the sale of investment properties |
|
- |
19.5 |
19.5 |
|
- |
(15.7) |
(15.7) |
|
Gain on sale of interest in joint venture/associate |
|
- |
4.0 |
4.0 |
|
- |
38.5 |
38.5 |
|
Revaluation gains on investment properties |
|
- |
156.5 |
156.5 |
|
- |
447.0 |
447.0 |
|
Revaluation gains on development properties |
|
- |
29.8 |
29.8 |
|
- |
0.1 |
0.1 |
|
Other net gains |
|
- |
209.8 |
209.8 |
|
- |
469.9 |
469.9 |
|
|
|
|
|
|
|
|
|
|
|
Share of results of associate |
10 |
- |
- |
- |
|
2.0 |
(0.5) |
1.5 |
|
Operating profit |
|
249.1 |
209.8 |
458.9 |
|
250.8 |
469.4 |
720.2 |
|
|
|
|
|
|
|
|
|
|
|
Net finance (costs)/income |
4 |
(107.5) |
(5.1) |
(112.6) |
|
(106.3) |
6.3 |
(100.0) |
|
Profit before tax |
|
141.6 |
204.7 |
346.3 |
|
144.5 |
475.7 |
620.2 |
|
|
|
|
|
|
|
|
|
|
|
Current tax charge |
5A |
(0.7) |
- |
(0.7) |
|
(0.6) |
- |
(0.6) |
|
Deferred tax charge |
5A |
- |
- |
- |
|
- |
(0.1) |
(0.1) |
|
Profit for the year |
|
140.9 |
204.7 |
345.6 |
|
143.9 |
475.6 |
619.5 |
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests |
|
(3.9) |
(6.0) |
(9.9) |
|
(3.7) |
(0.4) |
(4.1) |
|
Profit for the year attributable to equity shareholders |
7A |
137.0 |
198.7 |
335.7 |
|
140.2 |
475.2 |
615.4 |
Included in gross rental income is £6.3 million (2010: £5.1 million) calculated by reference to tenants' turnover.
The management fees receivable of £5.8 million (2010: £9.6 million) include fees paid to Hammerson in respect of joint ventures and a former associate for investment and development management services. All other related party transactions, with the exception of Directors' remuneration, are eliminated on consolidation.
The Group's revenue includes gross rental income, service charge income, management fees receivable and finance income.
3. SEGMENTAL ANALYSIS
The factors used to determine the Group's reportable segments are the geographic locations (UK and Continental Europe) and sectors in which it operates, which are generally managed by separate teams and are the basis on which performance is assessed and resources allocated. Gross rental income represents the Group's revenue from external customers, or tenants. Net rental income is the principal profit measure used to determine the performance of each sector. Total assets are not monitored by segment and resource allocation is based on the distribution of property assets between segments.
A. REVENUE AND PROFIT BY SEGMENT
|
|
|
|
|
2011 |
|
|
|
2010 |
|||
|
|
|
|
Non-cash items |
|
|
Non-cash items |
|||||
|
|
|
|
Within |
|
|
|
Within |
|
|||
|
|
Gross |
Net |
net |
Revaluation |
Gross |
Net |
net |
Revaluation |
|||
|
|
rental |
rental |
rental |
gains on |
rental |
rental |
rental |
gains on |
|||
|
|
income |
income |
income |
properties |
income |
income |
income |
properties |
|||
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|||
|
United Kingdom |
|
|
|
|
|
|
|
|
|||
|
Retail: |
Shopping centres |
152.5 |
127.1 |
(6.4) |
40.9 |
136.8 |
113.6 |
(2.2) |
260.8 |
||
|
|
Retail parks |
65.9 |
61.8 |
(1.0) |
23.9 |
54.1 |
50.2 |
(0.6) |
101.6 |
||
|
|
218.4 |
188.9 |
(7.4) |
64.8 |
190.9 |
163.8 |
(2.8) |
362.4 |
|||
|
Office: |
City |
41.8 |
38.5 |
5.9 |
14.4 |
36.1 |
31.6 |
7.8 |
39.7 |
||
|
|
Other |
2.6 |
1.9 |
0.1 |
0.4 |
14.0 |
12.2 |
1.0 |
4.5 |
||
|
|
44.4 |
40.4 |
6.0 |
14.8 |
50.1 |
43.8 |
8.8 |
44.2 |
|||
|
Total United Kingdom |
262.8 |
229.3 |
(1.4) |
79.6 |
241.0 |
207.6 |
6.0 |
406.6 |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Continental Europe |
|
|
|
|
|
|
|
|
|||
|
France: Retail |
80.7 |
68.9 |
0.3 |
76.9 |
90.4 |
79.4 |
0.4 |
40.4 |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Group |
|
|
|
|
|
|
|
|
|||
|
Retail |
299.1 |
257.8 |
(7.1) |
141.7 |
281.3 |
243.2 |
(2.4) |
402.8 |
|||
|
Office |
44.4 |
40.4 |
6.0 |
14.8 |
50.1 |
43.8 |
8.8 |
44.2 |
|||
|
Total investment portfolio |
343.5 |
298.2 |
(1.1) |
156.5 |
331.4 |
287.0 |
6.4 |
447.0 |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Developments and other sources not analysed above |
0.6 |
(2.2) |
- |
29.8 |
0.6 |
(2.3) |
- |
0.1 |
|||
|
Total portfolio |
344.1 |
296.0 |
(1.1) |
186.3 |
332.0 |
284.7 |
6.4 |
447.1 |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
As disclosed in note |
2 |
2 |
23 |
8 |
2 |
2 |
23 |
8 |
|||
The non-cash items included within net rental income reflect the amortisation of lease incentives and other costs and movements in accrued rents receivable.
B. PROPERTY ASSETS BY SEGMENT
|
|
|
|
|
2011 |
|
|
|
2010 |
||
|
|
Investment |
Development |
|
Capital |
Investment |
Development |
|
Capital |
||
|
|
properties |
properties |
Total |
expenditure |
properties |
properties |
Total |
expenditure |
||
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
||
|
United Kingdom |
|
|
|
|
|
|
|
|
||
|
Retail: |
Shopping centres |
2,429.6 |
11.4 |
2,441.0 |
154.4 |
2,242.4 |
11.4 |
2,253.8 |
26.1 |
|
|
|
Retail parks |
1,180.4 |
18.4 |
1,198.8 |
123.7 |
1,025.2 |
13.4 |
1,038.6 |
98.1 |
|
|
|
3,610.0 |
29.8 |
3,639.8 |
278.1 |
3,267.6 |
24.8 |
3,292.4 |
124.2 |
||
|
Office: |
City |
486.0 |
74.6 |
560.6 |
116.8 |
518.3 |
58.9 |
577.2 |
136.4 |
|
|
|
Other |
62.4 |
0.7 |
63.1 |
0.1 |
66.2 |
0.7 |
66.9 |
2.0 |
|
|
|
548.4 |
75.3 |
623.7 |
116.9 |
584.5 |
59.6 |
644.1 |
138.4 |
||
|
Total United Kingdom |
4,158.4 |
105.1 |
4,263.5 |
395.0 |
3,852.1 |
84.4 |
3,936.5 |
262.6 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Continental Europe |
|
|
|
|
|
|
|
|
||
|
France: Retail |
1,320.0 |
136.1 |
1,456.1 |
81.9 |
1,338.1 |
56.5 |
1,394.6 |
29.8 |
||
|
|
|
|
|
|
|
|
|
|
||
|
Group |
|
|
|
|
|
|
|
|
||
|
Retail |
4,930.0 |
165.9 |
5,095.9 |
360.0 |
4,605.7 |
81.3 |
4,687.0 |
154.0 |
||
|
Office |
548.4 |
75.3 |
623.7 |
116.9 |
584.5 |
59.6 |
644.1 |
138.4 |
||
|
Total |
5,478.4 |
241.2 |
5,719.6 |
476.9 |
5,190.2 |
140.9 |
5.331.1 |
292.4 |
||
C. ANALYSIS OF EQUITY SHAREHOLDERS' FUNDS
|
|
|
|
Equity |
|||
|
|
Assets employed |
Net debt |
shareholders' funds |
|||
|
|
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
United Kingdom |
4,376.7 |
3,938.2 |
(898.3) |
(694.1) |
3,478.4 |
3,244.1 |
|
Continental Europe |
1,359.4 |
1,336.2 |
(1,065.9) |
(1,100.3) |
293.5 |
235.9 |
|
|
5,736.1 |
5,274.4 |
(1,964.2) |
(1,794.4) |
3,771.9 |
3,480.0 |
As part of the Group's foreign currency hedging programme, at 31 December 2011 the Group had currency swaps outstanding which are included in the analysis above.
4. NET FINANCE COSTS
|
|
2011 |
|
2010 |
|
|
£m |
|
£m |
|
|
|
|
|
|
Interest on bank loans and overdrafts |
12.2 |
|
9.9 |
|
Interest on other borrowings |
101.9 |
|
98.5 |
|
Interest on obligations under finance leases |
1.8 |
|
2.4 |
|
Other interest payable |
1.7 |
|
2.4 |
|
Gross interest costs |
117.6 |
|
113.2 |
|
Less: Interest capitalised |
(4.9) |
|
(1.7) |
|
Finance costs |
112.7 |
|
111.5 |
|
|
|
|
|
|
Change in fair value of interest rate swaps |
4.0 |
|
(1.1) |
|
Change in fair value of currency swaps outside hedge accounting designation |
1.1 |
|
(0.6) |
|
Change in fair value of derivatives |
5.1 |
|
(1.7) |
|
|
|
|
|
|
Distribution from other investments (note 12) |
- |
|
(4.6) |
|
Other finance income |
(5.2) |
|
(5.2) |
|
Finance income |
(5.2) |
|
(9.8) |
|
Net finance costs |
112.6 |
|
100.0 |
5. TAX
A. TAX CHARGE
|
|
|
2011 |
2010 |
|
|
|
£m |
£m |
|
|
|
|
|
|
UK current tax |
|
0.1 |
0.4 |
|
Foreign current tax |
|
0.6 |
0.2 |
|
Total current tax charge |
|
0.7 |
0.6 |
|
|
|
|
|
|
Deferred tax charge |
|
- |
0.1 |
|
|
|
|
|
|
Tax charge |
|
0.7 |
0.7 |
Current tax is reduced by the UK REIT and French SIIC tax exemptions.
B. TAX CHARGE RECONCILIATION
|
|
2011 |
2010 |
|
|
£m |
£m |
|
|
|
|
|
Profit before tax |
346.3 |
620.2 |
|
Profit multiplied by the UK corporation tax rate of 26.5% (2010: 28%) |
91.8 |
173.7 |
|
UK REIT tax exemption on net income before revaluations and disposals |
(27.1) |
(29.1) |
|
UK REIT tax exemption on revaluations and disposals |
(29.1) |
(125.2) |
|
SIIC tax exemption |
(40.3) |
(24.3) |
|
Non-deductible and other items |
5.4 |
5.6 |
|
Tax charge |
0.7 |
0.7 |
C. CURRENT AND DEFERRED TAX MOVEMENTS
|
|
|
|
|
|
|
|
1 January |
Recognised |
Tax |
31 December |
|
|
2011 |
in income |
paid |
2011 |
|
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
Current tax |
1.2 |
0.7 |
(0.7) |
1.2 |
|
Deferred tax |
0.5 |
- |
- |
0.5 |
|
|
1.7 |
0.7 |
(0.7) |
1.7 |
|
|
|
|
|
|
|
Analysed as: |
|
|
|
|
|
Current assets: Corporation tax |
(0.3) |
|
|
(0.2) |
|
Current liabilities: Tax |
1.0 |
|
|
1.1 |
|
Non-current liabilities: Deferred tax |
0.5 |
|
|
0.5 |
|
Non-current liabilities: Tax |
0.5 |
|
|
0.3 |
|
|
1.7 |
|
|
1.7 |
D. UNRECOGNISED DEFERRED TAX
At 31 December 2011, the Group had unrecognised deferred tax assets as calculated at a tax rate of 25% (2010: 27%) of £80 million (2010: £83 million) for surplus UK revenue tax losses carried forward and £66 million (2010: £87 million) for UK capital losses
Deferred tax is not provided on potential gains on investments in subsidiaries and joint ventures when the Group can control whether gains crystallise and it is probable that gains will not arise in the foreseeable future. At 31 December 2011 the total of such gains was £206 million (2010: £168 million) and the potential tax effect before the offset of losses was £52 million (2010: £45 million).
If a UK REIT sells a property within three years of completion of development, the REIT exemption will not apply. At 31 December 2011, the value of such completed development properties was £217 million (2010: £854 million) and the potential tax charge that would arise if these properties were to be sold was £nil (2010: £nil).
E. UK REIT STATUS
The Group elected to be treated as a UK REIT with effect from 1 January 2007. The UK REIT rules exempt the profits of the Group's UK property rental business from corporation tax. Gains on UK properties are also exempt from tax, provided they are not held for trading or sold in the three years after completion of development. The Group is otherwise subject to UK corporation tax.
As a REIT, Hammerson plc is required to pay Property Income Distributions equal to at least 90% of the Group's exempted net income. To remain a UK REIT there are a number of conditions to be met in respect of the principal company of the Group, the Group's qualifying activity and its balance of business.
F. FRENCH SIIC STATUS
Hammerson plc has been a French SIIC since 1 January 2004 and all the major French properties are covered by the SIIC tax-exempt regime. Income and gains are exempted from French tax but the French subsidiaries are required to distribute a proportion of their profits to Hammerson plc, which will then designate UK dividends paid to its shareholders as SIIC distributions. Dividend obligations will arise principally after property disposals but for the Hammerson group there will be a period of around four years after a disposal for dividends to be paid to shareholders.
Outstanding SIIC dividend obligations arising on disposals and earnings prior to 31 December 2011 amount to £127 million (2010: £203 million) and are expected to be settled within dividends paid by Hammerson plc over the following four years. A further £281 million (2010: £239 million) of dividends would be payable if the properties were realised at their 31 December 2011 values. Since 1 July 2009, qualifying foreign dividends have been exempt from UK tax and therefore no deferred tax provision is recognised.
If Hammerson plc ceased to qualify as a French SIIC before 1 January 2014, tax penalties of £163 million (2010: £199 million) would be payable. To continue to qualify, at least 80% of assets must be employed in property investment and, with limited temporary exceptions, no shareholder may hold 60% or more of the shares.
6. DIVIDENDS
The proposed final dividend of 9.3 pence per share was recommended by the Board on 23 February 2012 and, subject to approval by shareholders, is payable on 27 April 2012 to shareholders on the register at the close of business on 16 March 2012. 7.0 pence will be paid as a PID, net of withholding tax if applicable, and the remainder of 2.3 pence per share will be paid as a normal dividend. There will be no scrip alternative. The aggregate amount of the 2011 final dividend is £66.2 million. This has been calculated using the total number of eligible shares outstanding at 31 December 2011.
The interim dividend of 7.3 pence per share was paid on 7 October 2011. 5.5 pence was paid as a PID, net of withholding tax where appropriate, with the remaining 1.8 pence paid as a normal dividend.
The total dividend for the year ended 31 December 2011 will be 16.6 pence per share (2010:15.95 pence per share).
|
|
|
|
|
Equity |
Equity |
|
|
PID |
Non-PID |
Total |
dividends |
dividends |
|
|
pence |
pence |
pence |
2011 |
2010 |
|
|
per share |
per share |
per share |
£m |
£m |
|
|
|
|
|
|
|
|
Current year |
|
|
|
|
|
|
2011 final dividend |
7.0 |
2.3 |
9.3 |
- |
- |
|
2011 interim dividend |
5.5 |
1.8 |
7.3 |
52.0 |
- |
|
|
12.5 |
4.1 |
16.6 |
|
|
|
Prior years |
|
|
|
|
|
|
2010 final dividend* |
8.8 |
- |
8.8 |
40.3 |
- |
|
2010 interim dividend |
- |
7.15 |
7.15 |
- |
50.5 |
|
|
8.8 |
7.15 |
15.95 |
|
|
|
2009 second interim dividend* |
|
|
|
- |
41.0 |
|
Dividends as reported in the consolidated statement of changes in equity |
|
|
|
92.3 |
91.5 |
|
2009 withholding tax (paid January 2010) |
|
|
|
- |
3.9 |
|
2011 withholding tax (paid January 2012) |
|
|
|
(6.2) |
- |
|
Dividends paid as reported in the consolidated cash flow statement |
|
|
|
86.1 |
95.4 |
|
* |
The Company offered shareholders a scrip dividend alternative for these dividends. Where a shareholder elected to receive the scrip, the dividend ceased to qualify as a PID. |
7. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
The European Public Real Estate Association (EPRA) recommends bases for the calculation of certain per share information and these are included in the following tables.
A. EARNINGS PER SHARE
The calculations for earnings per share use the weighted average number of shares, which excludes those shares held in the Hammerson Employee Share Ownership Plan and the treasury shares, which are treated as cancelled.
|
|
|
|
2011 |
|
|
2010 |
|
|
Earnings |
Shares |
Pence |
Earnings |
Shares |
Pence |
|
|
£m |
million |
per share |
£m |
million |
per share |
|
|
|
|
|
|
|
|
|
Basic |
335.7 |
709.8 |
47.3 |
615.4 |
705.8 |
87.2 |
|
Dilutive share options |
- |
0.3 |
- |
- |
0.2 |
- |
|
Diluted |
335.7 |
710.1 |
47.3 |
615.4 |
706.0 |
87.2 |
|
Adjustments: |
|
|
|
|
|
|
|
Other net gains (note 2) |
(209.8) |
|
(29.5) |
(469.9) |
|
(66.6) |
|
Adjustment for associate (note 10) |
- |
|
- |
0.5 |
|
0.1 |
|
Change in fair value of derivatives (note 4) |
5.1 |
|
0.7 |
(1.7) |
|
(0.2) |
|
Distribution from other investments (note 4) |
- |
|
- |
(4.6) |
|
(0.6) |
|
Deferred tax charge (note 5A) |
- |
|
- |
0.1 |
|
- |
|
Non-controlling interests in respect of the above |
6.0 |
|
0.8 |
0.4 |
|
- |
|
EPRA and adjusted |
137.0 |
|
19.3 |
140.2 |
|
19.9 |
|
|
|
|
|
|
|
|
B. NET ASSET VALUE PER SHARE
|
|
|
|
2011 |
|
|
2010 |
|
|
Equity |
|
Net asset |
Equity |
|
Net asset |
|
|
shareholders' |
|
value |
shareholders' |
|
value |
|
|
funds |
Shares |
per share |
funds |
Shares |
per share |
|
|
£m |
million |
£ |
£m |
million |
£ |
|
|
|
|
|
|
|
|
|
Basic |
3,771.9 |
712.6 |
5.29 |
3,480.0 |
707.6 |
4.92 |
|
Company's own shares held in Employee Share Ownership Plan |
- |
(0.4) |
n/a |
- |
(0.4) |
n/a |
|
Treasury shares |
- |
(1.2) |
n/a |
- |
(0.8) |
n/a |
|
Unexercised share options |
3.8 |
0.8 |
n/a |
4.2 |
0.9 |
n/a |
|
Diluted |
3,775.7 |
711.8 |
5.30 |
3,484.2 |
707.3 |
4.93 |
|
Fair value adjustment to borrowings |
(149.7) |
|
(0.21) |
(77.5) |
|
(0.11) |
|
EPRA triple net |
3,626.0 |
|
5.09 |
3,406.7 |
|
4.82 |
|
Fair value of derivatives |
(4.4) |
|
- |
12.9 |
|
0.02 |
|
Fair value adjustment to borrowings |
149.7 |
|
0.21 |
77.5 |
|
0.11 |
|
Deferred tax |
0.5 |
|
- |
0.5 |
|
- |
|
EPRA |
3,771.8 |
|
5.30 |
3,497.6 |
|
4.95 |
8. INVESTMENT AND DEVELOPMENT PROPERTIES
|
|
Investment |
Development |
|
|||
|
|
properties |
properties |
Total |
|||
|
|
Cost |
Valuation |
Cost |
Valuation |
Cost |
Valuation |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
Balance at |
|
|
|
|
|
|
|
1 January 2011 |
4,469.6 |
5,190.2 |
180.6 |
140.9 |
4,650.2 |
5,331.1 |
|
Exchange adjustment |
(19.8) |
(33.5) |
(1.6) |
(1.4) |
(21.4) |
(34.9) |
|
Additions: |
|
|
|
|
|
|
|
- Capital expenditure |
34.2 |
34.2 |
67.7 |
67.7 |
101.9 |
101.9 |
|
- Asset acquisitions |
375.0 |
375.0 |
- |
- |
375.0 |
375.0 |
|
|
409.2 |
409.2 |
67.7 |
67.7 |
476.9 |
476.9 |
|
Disposals |
(194.5) |
(244.5) |
- |
- |
(194.5) |
(244.5) |
|
Capitalised interest |
0.5 |
0.5 |
4.2 |
4.2 |
4.7 |
4.7 |
|
Revaluation adjustment |
- |
156.5 |
- |
29.8 |
- |
186.3 |
|
Balance at |
|
|
|
|
|
|
|
31 December 2011 |
4,665.0 |
5,478.4 |
250.9 |
241.2 |
4,915.9 |
5,719.6 |
|
|
Investment |
Development |
|
|||
|
|
properties |
properties |
Total |
|||
|
|
Cost |
Valuation |
Cost |
Valuation |
Cost |
Valuation |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
Balance at |
|
|
|
|
|
|
|
1 January 2010 |
4,515.5 |
5,022.4 |
160.2 |
119.1 |
4,675.7 |
5,141.5 |
|
Exchange adjustment |
(35.1) |
(59.6) |
(1.5) |
(1.4) |
(36.6) |
(61.0) |
|
Additions: |
|
|
|
|
|
|
|
- Capital expenditure |
47.0 |
47.0 |
26.3 |
26.3 |
73.3 |
73.3 |
|
- Asset acquisitions |
219.1 |
219.1 |
- |
- |
219.1 |
219.1 |
|
|
266.1 |
266.1 |
26.3 |
26.3 |
292.4 |
292.4 |
|
Disposals |
(277.6) |
(486.4) |
(5.4) |
(4.2) |
(283.0) |
(490.6) |
|
Capitalised interest |
0.7 |
0.7 |
1.0 |
1.0 |
1.7 |
1.7 |
|
Revaluation adjustment |
- |
447.0 |
- |
0.1 |
- |
447.1 |
|
Balance at |
|
|
|
|
|
|
|
31 December 2010 |
4,469.6 |
5,190.2 |
180.6 |
140.9 |
4,650.2 |
5,331.1 |
Properties are stated at market value as at 31 December 2011, valued by professionally qualified external valuers. In the United Kingdom, the Group's properties were valued by DTZ Debenham Tie Leung, Chartered Surveyors. In France, the Group's properties were valued by Cushman & Wakefield, Chartered Surveyors. The valuations have been prepared in accordance with the Royal Institution of Chartered Surveyors Valuation Standards and with IVA 1 of the International Valuation Standards.
Valuation fees are based on a fixed amount agreed between the Group and the valuers and are independent of the portfolio value.
At 31 December 2011 the total amount of interest included in development properties was £4.2 million (2010: £1.0 million). Capitalised interest is calculated using the Group's average cost of borrowings, as appropriate to the currency profile of the development programme, which for 2011 was 5.3% (2010: 4.2%).
Included in investment and development properties at 31 December 2011 is property held for sale valued at £130 million (2010: £nil).
|
|
|
2011 |
2010 |
|
|
|
£m |
£m |
|
|
|
|
|
|
Capital commitments |
|
237.6 |
54.8 |
At 31 December 2011, Hammerson's share of the capital commitments in respect of joint ventures, which is included in the table above, was £18.8 million (2010: £27.9 million).
9. PLANT, EQUIPMENT AND OWNER-OCCUPIED PROPERTY
|
|
Owner-occupied |
Plant and |
|
|
|
property |
equipment |
Total |
|
|
£m |
£m |
£m |
|
|
|
|
|
|
Book value at 31 December 2011 |
29.9 |
5.5 |
35.4 |
|
Book value at 31 December 2010 |
27.1 |
6.3 |
33.4 |
10. INVESTMENT IN ASSOCIATE
On 14 December 2010, the Group sold its interest in Bishops Square Holdings Limited, a company in which the Group held a 25% interest.
|
|
Year ended |
|
Year ended |
|
|
31 December |
|
31 December |
|
|
2011 |
|
2010 |
|
|
£m |
|
£m |
|
|
|
|
|
|
Gross rental income |
- |
|
8.7 |
|
Other operating profits and finance costs |
- |
|
2.0 |
|
|
|
|
|
|
Change in fair value of derivatives |
- |
|
0.1 |
|
Deferred tax charge |
- |
|
(0.6) |
|
|
- |
|
(0.5) |
|
Profit after tax for the year |
- |
|
1.5 |
11. JOINT VENTURES
As at 31 December 2011 certain property and corporate interests, being jointly controlled entities, have been proportionately consolidated, and the significant interests are set out in the following table:
|
|
Group |
|
|
share |
|
|
% |
|
Investments |
|
|
Brent Cross Shopping Centre |
41.2 |
|
Brent South Shopping Park |
40.6 |
|
Bristol Alliance Limited Partnership |
50 |
|
Queensgate Limited Partnership |
50 |
|
Retail Property Holdings Limited |
50 |
|
SCI Espace Plus |
50 |
|
SCI ESQ (Espace Saint Quentin) |
25 |
|
SCI RC Aulnay 1 and SCI RC Aulnay 2 (O'Parinor) |
25 |
|
The Bull Ring Limited Partnership |
33.33 |
|
The Grosvenor Street Limited Partnership |
50 |
|
The Martineau Galleries Limited Partnership |
33.33 |
|
The Oracle Limited Partnership |
50 |
|
The Highcross Limited Partnership |
60 |
|
The West Quay Limited Partnership |
50 |
|
125 OBS Limited Partnership |
50 |
|
10 Gresham Street LLP |
30 |
|
Developments |
|
|
Bishopsgate Goodsyard Regeneration Limited |
50 |
The following summarised income statements and balance sheets show the proportion of the Group's results, assets and liabilities which are derived from its joint ventures.
INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011
|
|
|
Bristol |
|
|
|
|
|
Retail |
|
|
|
|
|
|
|
Alliance |
Bull Ring |
Oracle |
Queensgate |
Highcross |
West Quay |
Property |
|
|
|
|
|
|
Brent |
Limited |
Limited |
Limited |
Limited |
Limited |
Limited |
Holdings |
SCI RC |
|
|
Total |
|
|
Cross |
Partnership |
Partnership |
Partnership |
Partnership |
Partnership |
Partnership |
Limited |
Aulnay |
SCI ESQ |
Other |
2011 |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
1 |
|
|
|
|
|
|
|
2 |
|
|
|
|
Net rental income |
17.2 |
16.0 |
15.0 |
12.0 |
6.2 |
13.2 |
13.1 |
8.8 |
8.7 |
3.0 |
13.1 |
126.3 |
|
Administration expenses |
- |
(0.4) |
- |
- |
(0.1) |
- |
- |
- |
- |
- |
(0.2) |
(0.7) |
|
Operating profit before other net gains/(losses) |
17.2 |
15.6 |
15.0 |
12.0 |
6.1 |
13.2 |
13.1 |
8.8 |
8.7 |
3.0 |
12.9 |
125.6 |
|
Other net gains/(losses) |
7.6 |
3.0 |
15.3 |
18.9 |
(0.7) |
(3.1) |
9.4 |
1.4 |
0.5 |
2.5 |
22.7 |
77.5 |
|
Net finance costs |
- |
(0.4) |
- |
- |
- |
0.1 |
(0.2) |
- |
(3.1) |
- |
(5.6) |
(9.2) |
|
Profit/(Loss) before tax |
24.8 |
18.2 |
30.3 |
30.9 |
5.4 |
10.2 |
22.3 |
10.2 |
6.1 |
5.5 |
30.0 |
193.9 |
BALANCE SHEETS AS AT 31 DECEMBER 2011
|
|
|
Bristol |
|
|
|
|
|
Retail |
|
|
|
|
|
|
|
Alliance |
Bull Ring |
Oracle |
Queensgate |
Highcross |
West Quay |
Property |
|
|
|
|
|
|
Brent |
Limited |
Limited |
Limited |
Limited |
Limited |
Limited |
Holdings |
SCI RC |
|
|
Total |
|
|
Cross |
Partnership |
Partnership |
Partnership |
Partnership |
Partnership |
Partnership |
Limited |
Aulnay |
SCI ESQ |
Other |
2011 |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
1 |
|
|
|
|
|
|
|
2 |
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and development properties at valuation |
357.6 |
298.5 |
304.6 |
262.7 |
108.2 |
274.1 |
241.8 |
168.6 |
91.3 |
52.4 |
284.8 |
2,444.6 |
|
Interests in leasehold properties |
- |
7.3 |
- |
- |
- |
- |
2.1 |
- |
- |
- |
1.0 |
10.4 |
|
Receivables |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
1.8 |
1.8 |
|
|
357.6 |
305.8 |
304.6 |
262.7 |
108.2 |
274.1 |
243.9 |
168.6 |
91.3 |
52.4 |
287.6 |
2,456.8 |
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets |
7.5 |
1.7 |
1.7 |
1.6 |
1.7 |
3.3 |
1.8 |
1.0 |
1.1 |
0.4 |
5.4 |
27.2 |
|
Cash and deposits |
0.1 |
8.2 |
4.3 |
6.6 |
2.5 |
4.9 |
4.5 |
2.2 |
0.2 |
1.9 |
5.9 |
41.3 |
|
|
7.6 |
9.9 |
6.0 |
8.2 |
4.2 |
8.2 |
6.3 |
3.2 |
1.3 |
2.3 |
11.3 |
68.5 |
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities |
(16.2) |
(8.3) |
(6.4) |
(6.0) |
(1.3) |
(8.3) |
(5.0) |
(3.2) |
(1.9) |
(0.9) |
(6.1) |
(63.6) |
|
|
(16.2) |
(8.3) |
(6.4) |
(6.0) |
(1.3) |
(8.3) |
(5.0) |
(3.2) |
(1.9) |
(0.9) |
(6.1) |
(63.6) |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
- |
- |
- |
- |
- |
- |
- |
- |
(44.9) |
- |
(64.9) |
(109.8) |
|
Other liabilities |
(0.3) |
(7.4) |
- |
(0.1) |
- |
(0.2) |
(2.1) |
- |
(3.0) |
- |
(6.4) |
(19.5) |
|
|
(0.3) |
(7.4) |
- |
(0.1) |
- |
(0.2) |
(2.1) |
- |
(47.9) |
- |
(71.3) |
(129.3) |
|
Net assets |
348.7 |
300.0 |
304.2 |
264.8 |
111.1 |
273.8 |
243.1 |
168.6 |
42.8 |
53.8 |
221.5 |
2,332.4 |
1 Includes Brent Cross Shopping Centre and Brent South Shopping Park.
2 Reflects the Group's partial sale in October 2011 of 24% of the joint venture.
Other than as shown above, the joint ventures are funded by the Company and the relevant partners. 'Other net gains/(losses)' principally represent valuation changes on investment properties.
INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010
|
|
|
Bristol |
|
|
|
|
|
Retail |
|
|
|
|
|
|
|
Alliance |
Bull Ring |
Oracle |
Queensgate |
Highcross |
West Quay |
Property |
|
|
|
|
|
|
Brent |
Limited |
Limited |
Limited |
Limited |
Limited |
Limited |
Holdings |
SCI RC |
|
|
Total |
|
|
Cross |
Partnership |
Partnership |
Partnership |
Partnership |
Partnership |
Partnership |
Limited |
Aulnay |
SCI ESQ |
Other |
2010 |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
1 |
|
|
|
|
|
|
|
2 |
3 |
|
|
|
Net rental income |
17.8 |
16.3 |
15.2 |
12.1 |
6.2 |
12.4 |
12.4 |
8.2 |
1.7 |
0.6 |
8.8 |
111.7 |
|
Administration expenses |
- |
(0.5) |
- |
- |
(0.1) |
- |
- |
(0.1) |
- |
- |
(0.2) |
(0.9) |
|
Operating profit before other net gains/(losses) |
17.8 |
15.8 |
15.2 |
12.1 |
6.1 |
12.4 |
12.4 |
8.1 |
1.7 |
0.6 |
8.6 |
110.8 |
|
Other net gains/(losses) |
52.6 |
25.1 |
53.9 |
35.6 |
5.6 |
24.6 |
34.5 |
15.2 |
(9.1) |
0.9 |
9.1 |
248.0 |
|
Net finance costs |
- |
(0.3) |
- |
0.1 |
- |
0.1 |
(0.2) |
- |
- |
- |
(2.9) |
(3.2) |
|
Profit/(Loss) before tax |
70.4 |
40.6 |
69.1 |
47.8 |
11.7 |
37.1 |
46.7 |
23.3 |
(7.4) |
1.5 |
14.8 |
355.6 |
BALANCE SHEETS AS AT 31 DECEMBER 2010
|
|
|
Bristol |
|
|
|
|
|
Retail |
|
|
|
|
|
|
|
Alliance |
Bull Ring |
Oracle |
Queensgate |
Highcross |
West Quay |
Property |
|
|
|
|
|
|
Brent |
Limited |
Limited |
Limited |
Limited |
Limited |
Limited |
Holdings |
SCI RC |
|
|
Total |
|
|
Cross |
Partnership |
Partnership |
Partnership |
Partnership |
Partnership |
Partnership |
Limited |
Aulnay |
SCI ESQ |
Other |
2010 |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
1 |
|
|
|
|
|
|
|
2 |
3 |
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and development properties at valuation |
348.2 |
294.6 |
287.2 |
243.3 |
105.6 |
277.3 |
232.3 |
166.8 |
181.8 |
51.5 |
242.2 |
2,430.8 |
|
Interests in leasehold properties |
- |
7.3 |
- |
- |
- |
- |
2.1 |
- |
- |
- |
1.0 |
10.4 |
|
Receivables |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
1.8 |
1.8 |
|
|
348.2 |
301.9 |
287.2 |
243.3 |
105.6 |
277.3 |
234.4 |
166.8 |
181.8 |
51.5 |
245.0 |
2,443.0 |
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets |
5.4 |
2.0 |
1.0 |
2.2 |
0.8 |
2.6 |
1.9 |
0.9 |
1.2 |
0.3 |
3.5 |
21.8 |
|
Cash and deposits |
1.9 |
7.3 |
4.2 |
4.5 |
3.5 |
3.9 |
3.8 |
3.1 |
1.0 |
0.6 |
4.1 |
37.9 |
|
|
7.3 |
9.3 |
5.2 |
6.7 |
4.3 |
6.5 |
5.7 |
4.0 |
2.2 |
0.9 |
7.6 |
59.7 |
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities |
(15.3) |
(8.4) |
(4.3) |
(4.5) |
(1.0) |
(7.3) |
(5.0) |
(3.4) |
(1.9) |
(1.2) |
(6.4) |
(58.7) |
|
|
(15.3) |
(8.4) |
(4.3) |
(4.5) |
(1.0) |
(7.3) |
(5.0) |
(3.4) |
(1.9) |
(1.2) |
(6.4) |
(58.7) |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(65.3) |
(65.3) |
|
Other liabilities |
- |
(7.3) |
- |
- |
- |
- |
(2.1) |
- |
(1.6) |
- |
(2.8) |
(13.8) |
|
|
- |
(7.3) |
- |
- |
- |
- |
(2.1) |
- |
(1.6) |
- |
(68.1) |
(79.1) |
|
Net assets |
340.2 |
295.5 |
288.1 |
245.5 |
108.9 |
276.5 |
233.0 |
167.4 |
180.5 |
51.2 |
178.1 |
2,364.9 |
1 Includes Brent Cross Shopping Centre and Brent South Shopping Park.
2 Reflects the Group's disposal in October 2010 of a 51% interest in O'Parinor shopping centre.
3 Reflects the Group's disposal in October 2010 of a 75% interest in Espace Saint Quentin shopping centre.
Other than as shown above, the joint ventures are funded by the Company and the relevant partners. 'Other net gains/(losses)' principally represent valuation changes on investment properties.
12. OTHER INVESTMENTS
|
|
2011 |
2010 |
|
Available for sale investments |
£m |
£m |
|
|
|
|
|
Value Retail Investors Limited Partnerships |
116.0 |
74.8 |
|
Value Retail plc and related companies |
98.0 |
57.3 |
|
|
214.0 |
132.1 |
|
Other investments |
1.1 |
1.1 |
|
|
215.1 |
133.2 |
In December 2011, the Company acquired interests in Value Retail group entities which hold interests in five designer outlets in continental Europe for a total consideration of £24.7 million.
During 2010, the Company received a special distribution of £4.6 million from the Value Retail Investors Limited Partnerships, which was included in finance income (see note 4).
13. RECEIVABLES: NON-CURRENT ASSETS
|
|
2011 |
2010 |
|
|
£m |
£m |
|
|
|
|
|
Loans receivable |
52.6 |
41.9 |
|
Other receivables |
3.1 |
3.3 |
|
|
55.7 |
45.2 |
Loans receivable includes a loan of €28 million (£23.4 million) to Value Retail plc bearing interest at 11% and maturing on 22 August 2014 (2010: €16 million (£13.7 million)).
Loans receivable also includes £29.2 million (2010: £28.2 million) representing a loan of €30 million, plus accumulated interest, to SCI Quantum, the purchaser in 2009 of a property in France. The loan is secured by way of a second charge on the property, bears interest at 6.1% and is for a term of three years from June 2009, extendable at the option of the purchaser for a further year.
14. RECEIVABLES: CURRENT ASSETS
|
|
2011 |
2010 |
|
|
£m |
£m |
|
|
|
|
|
Trade receivables |
42.6 |
38.9 |
|
Other receivables |
47.4 |
37.6 |
|
Corporation tax |
0.2 |
0.3 |
|
Prepayments |
6.5 |
3.9 |
|
Fair value of currency swaps |
15.0 |
- |
|
|
111.7 |
80.7 |
15. CASH AND DEPOSITS
|
|
2011 |
2010 |
|
|
£m |
£m |
|
|
|
|
|
Cash at bank |
61.2 |
71.8 |
|
Short-term deposits |
39.5 |
54.4 |
|
|
100.7 |
126.2 |
|
|
|
|
|
Currency profile |
|
|
|
Sterling |
76.7 |
109.5 |
|
Euro |
24.0 |
16.7 |
|
|
100.7 |
126.2 |
16. PAYABLES: CURRENT LIABILITIES
|
|
2011 |
2010 |
|
|
£m |
£m |
|
|
|
|
|
Trade payables |
23.1 |
15.8 |
|
Other payables |
147.0 |
128.9 |
|
Accruals |
23.2 |
26.4 |
|
Deferred income |
51.1 |
49.0 |
|
|
244.4 |
220.1 |
17. BORROWINGS
A. MATURITY
|
|
Bank loans |
Other |
2011 |
2010 |
|
|
and overdrafts |
borrowings |
Total |
Total |
|
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
After five years |
- |
742.5 |
742.5 |
1,040.0 |
|
From two to five years |
103.3 |
882.1 |
985.4 |
837.8 |
|
From one to two years |
251.3 |
- |
251.3 |
38.4 |
|
Due after more than one year |
354.6 |
1,624.6 |
1,979.2 |
1,916.2 |
|
Due within one year |
100.7 |
- |
100.7 |
4.4 |
|
|
455.3 |
1,624.6 |
2,079.9 |
1,920.6 |
At 31 December 2011 and 2010 no borrowings due after five years were repayable by instalments.
At 31 December 2011, the fair value of currency swaps was an asset of £15.0 million which is included within current receivables (see note 14). At 31 December 2010 the fair value was a liability of £4.4 million and is included in the table above.
B. ANALYSIS
|
|
2011 |
2010 |
|
|
£m |
£m |
|
|
|
|
|
Unsecured |
|
|
|
£200 million 7.25% Sterling bonds due 2028 |
197.8 |
197.7 |
|
£300 million 6% Sterling bonds due 2026 |
297.0 |
296.8 |
|
£250 million 6.875% Sterling bonds due 2020 |
247.7 |
247.5 |
|
£300 million 5.25% Sterling bonds due 2016 |
298.3 |
298.0 |
|
€700 million 4.875% Euro bonds due 2015 |
583.8 |
598.5 |
|
Bank loans and overdrafts |
345.5 |
212.4 |
|
|
1,970.1 |
1,850.9 |
|
Fair value of currency swaps |
(15.0) |
4.4 |
|
|
1,955.1 |
1,855.3 |
|
|
|
|
|
Secured |
|
|
|
Euro variable rate mortgage due 2016 |
44.9 |
- |
|
Sterling variable rate mortgage due 2015 |
64.9 |
65.3 |
|
|
2,064.9 |
1,920.6 |
Security for secured euro and sterling borrowings as at 31 December 2011 is provided by a first legal charge on two properties, for which the Group's share of the carrying value is £91.3 million and £128.4 million respectively.
C. UNDRAWN COMMITTED FACILITIES
|
|
2011 |
2010 |
|
|
£m |
£m |
|
|
|
|
|
Expiring within one year |
90.0 |
40.0 |
|
Expiring between one and two years |
- |
746.5 |
|
Expiring after more than two years |
505.0 |
126.9 |
|
|
595.0 |
913.4 |
D. INTEREST RATE AND CURRENCY PROFILE
|
|
|
|
Fair value of |
Other variable |
2011 |
|
|
|
|
Fixed rate borrowings |
currency swaps |
rate borrowings |
Total |
|
|
|
% |
Years |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
Sterling |
6.2 |
9 |
1,201.5 |
(476.2) |
249.7 |
975.0 |
|
Euro |
4.9 |
3 |
625.0 |
461.2 |
3.7 |
1,089.9 |
|
|
5.5 |
7 |
1,826.5 |
(15.0) |
253.4 |
2,064.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of |
Other variable |
2010 |
|
|
|
|
Fixed rate borrowings |
currency swaps |
rate borrowings |
Total |
|
|
|
% |
Years |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
Sterling |
6.0 |
10 |
1,200.7 |
(501.3) |
104.1 |
803.5 |
|
Euro |
4.9 |
4 |
598.5 |
505.7 |
12.9 |
1,117.1 |
|
|
5.6 |
8 |
1,799.2 |
4.4 |
117.0 |
1,920.6 |
The analysis above reflects the effect of currency and interest rate swaps in place at 31 December 2011 and 2010.
18. FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair values of borrowings, currency and interest rate swaps, together with their carrying amounts included in the balance sheet, are as follows:
|
|
|
2011 |
|
2010 |
|
|
Book value |
Fair value |
Book value |
Fair value |
|
|
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
Borrowings, excluding currency swaps |
2,079.9 |
2,229.6 |
1,916.2 |
1,993.7 |
|
Currency swaps |
(15.0) |
(15.0) |
4.4 |
4.4 |
|
Total |
2,064.9 |
2,214.6 |
1,920.6 |
1,998.1 |
|
Interest rate swaps |
10.6 |
10.6 |
8.5 |
8.5 |
At 31 December 2011, the fair value of financial instruments exceeded their book value by £149.7 million equivalent to 21 pence per share on an adjusted net asset value per share basis. At 31 December 2010, the book value of financial instruments exceeded their fair value by £77.5 million, equivalent to 11 pence per share on an adjusted net asset value per share basis.
19. PAYABLES: NON-CURRENT LIABILITIES
|
|
2011 |
2010 |
|
|
£m |
£m |
|
|
|
|
|
Net pension liability |
30.0 |
25.2 |
|
Other payables |
23.1 |
21.9 |
|
Fair value of interest rate swaps |
10.6 |
8.5 |
|
|
63.7 |
55.6 |
20. SHARE CAPITAL
|
|
|
|
Called up, allotted |
|
|
|
|
|
and fully paid |
|
|
|
|
|
2011 |
2010 |
|
|
|
|
£m |
£m |
|
|
|
|
|
|
|
Ordinary shares of 25p each |
|
|
178.2 |
176.9 |
|
|
|
Number |
|
|
|
|
|
Movements in issued share capital |
|
|
|
Number of shares in issue at 1 January 2011 |
707,578,856 |
|
|
Issued in respect of scrip dividend |
4,881,115 |
|
|
Share options exercised - Share option scheme |
148,012 |
|
|
Share options exercised - Save As You Earn |
7,226 |
|
|
Number of shares in issue at 31 December 2011 |
712,615,209 |
|
The number of shares in issue at the balance sheet date included 1,200,000 (2010: 800,000) shares held in treasury.
21. INVESTMENT IN OWN SHARES
|
|
2011 |
2010 |
|
At cost |
£m |
£m |
|
|
|
|
|
Balance at 1 January |
4.0 |
4.6 |
|
Transfer from treasury shares |
3.4 |
5.8 |
|
Cost of shares awarded to employees |
(5.6) |
(6.4) |
|
Balance at 31 December |
1.8 |
4.0 |
22. TREASURY SHARES
|
|
2011 |
2010 |
|
At cost |
£m |
£m |
|
|
|
|
|
Balance at 1 January |
3.4 |
5.8 |
|
Transfer to investment in own shares |
(3.4) |
(5.8) |
|
Purchase of treasury shares |
4.7 |
3.4 |
|
Balance at 31 December |
4.7 |
3.4 |
23. ADJUSTMENT FOR NON-CASH ITEMS IN THE CASH FLOW STATEMENT
|
|
|
2011 |
2010 |
|
|
Note |
£m |
£m |
|
|
|
|
|
|
Amortisation of lease incentives and other costs |
|
6.6 |
6.4 |
|
Increase in accrued rents receivable |
|
(5.5) |
(12.8) |
|
Non-cash items included within net rental income |
3A |
1.1 |
(6.4) |
|
Depreciation |
|
1.7 |
1.4 |
|
Share-based employee remuneration |
|
4.0 |
3.2 |
|
Exchange and other items |
|
(4.1) |
(6.6) |
|
|
|
2.7 |
(8.4) |
24. CONTINGENT LIABILITIES
There are contingent liabilities of £42.9 million (2010: £17.1 million) relating to guarantees given by the Group and a further £33.5 million (2010: £27.7 million) relating to claims against the Group arising in the normal course of business. Hammerson's share of contingent liabilities arising within joint ventures, which is included in the figures shown above, is £11.4 million (2010: £9.9 million).
OTHER INFORMATION
|
DIRECTORS |
|
|
John Nelson* |
Chairman |
|
David Atkins |
Chief Executive |
|
Peter Cole |
|
|
Timon Drakesmith |
|
|
Terry Duddy* |
|
|
Jacques Espinasse* |
|
|
Judy Gibbons* |
|
|
John Hirst* |
|
|
Tony Watson* CBE |
Senior Independent Director |
|
*Non-Executive Director |
|
|
|
|
|
GENERAL COUNSEL AND COMPANY SECRETARY |
|
|
Sarah Booth |
|
|
|
|
|
PRINCIPAL GROUP ADDRESSES |
|
|
United Kingdom |
|
|
Hammerson plc, 10 Grosvenor Street, London W1K 4BJ |
|
|
Tel +44 (0)20 7887 1000 |
Fax +44 (0)20 7887 1010 |
|
|
|
|
France |
|
|
Hammerson SAS, Washington Plaza, Immeuble Artois, 44 rue Washington, 75408 Paris CEDEX 08, France |
|
|
Tel +33 (1)56 69 30 00 |
Fax +33 (1)56 69 30 01 |
|
|
|
|
Registered office |
|
|
10 Grosvenor Street, London W1K 4BJ |
|
|
Registered in England No. 360632 |
|
|
|
|
WEBSITE
The most recent Annual Report and other information are available on the Company's website, www.hammerson.com on the "Investors" page. The Company operates a service whereby all registered users can choose to receive, via e-mail, notice of all Company announcements which can be viewed on the website.
UK REIT TAXATION
As a UK REIT, Hammerson plc is exempted from corporation tax on rental income and gains on UK investment properties but is required to pay Property Income Distributions (PIDs). UK shareholders will be taxed on PIDs received at their full marginal tax rates. A REIT may in addition pay normal dividends.
The 2011 final dividend is being paid partly as a PID, to enable the Company to meet its PID obligations, and partly as a normal dividend.
For most shareholders, PIDs will be paid after deducting withholding tax at the basic rate. However, certain categories of shareholder are entitled to receive PIDs without withholding tax, principally UK resident companies, UK public bodies, UK pension funds and managers of ISAs, PEPs and Child Trust Funds. Hammerson's website includes a form to be used by shareholders to certify if they qualify to receive PIDs without withholding tax. Further information on UK REITs is available on the Company's website.
|
DIVIDEND REINVESTMENT PLAN (DRIP) |
|
Shareholders can reinvest dividend payments in additional shares in Hammerson under the DRIP operated by the Company's Registrar by completing an application form online at www.capitashareportal.com or calling Capita IRG Trustees: Tel: 0871 664 0381 (from the UK calls cost 10p per minute plus network extras) or +44 (0) 20 8639 3402 (from overseas) email: ssd@capitaregistrars.com.
As the Company will not be offering shareholders a scrip dividend alternative, the DRIP will automatically be reinstated in respect of the 2011 final dividend for those shareholders who have already completed an application form. Such shareholders should take no action unless they wish to receive their dividend in cash, in which case they should contact Capita Registrars to cancel their instruction. |
|
FINANCIAL CALENDAR |
|
|
|
Full-year results announced |
|
24 February 2012 |
|
Recommended final dividend |
- Ex-dividend date |
14 March 2012 |
|
|
- Record date |
16 March 2012 |
|
|
- Election (or cancellation) date for DRIP |
5:00pm on 2 April 2012 |
|
|
- Payable on |
27 April 2012 |
|
Annual General Meeting |
|
19 April 2012 |
|
Anticipated 2012 interim dividend |
|
October 2012 |
A copy of this announcement will be submitted to the National Storage Mechanism and will shortly be available at www.hemscott.com/nsm.do.
Glossary of Terms
|
Adjusted figures (per share) |
Reported amounts adjusted to exclude certain items as set out in note 7 to the accounts. |
|
|
|
|
Anchor store |
A major store, usually a department, variety or DIY store or supermarket, occupying a large unit within a shopping centre or retail park, which serves as a draw to other retailers and consumers. |
|
|
|
|
Average cost of borrowing |
The cost of finance expressed as a percentage of the weighted average of borrowings during the period. |
|
|
|
|
Capital return |
The change in property value during the period after taking account of capital expenditure and exchange translation movements, calculated on a monthly time-weighted basis. |
|
|
|
|
Dividend cover |
Adjusted earnings per share divided by dividend per share. |
|
|
|
|
DTR |
Disclosure and Transparency Rules, issued by the United Kingdom Listing Authority. |
|
|
|
|
Earnings per share (EPS) |
Profit for the period attributable to equity shareholders divided by the average number of shares in issue during the period. |
|
|
|
|
EBITDA |
Earnings before interest, tax, depreciation and amortisation. |
|
|
|
|
EPRA |
European Public Real Estate Association. This organisation has issued recommended bases for the calculation of earnings per share and net asset value per share. |
|
|
|
|
Equivalent yield (true and nominal) |
The capitalisation rate applied to future cash flows to calculate the gross property value. The cash flows reflect the timing of future rents resulting from lettings, lease renewals and rent reviews based on current ERVs. The true equivalent yield assumes rents are received quarterly in advance. The nominal equivalent yield assumes rents are received annually in arrears. The property true and nominal equivalent yields are determined by the Group's external valuers. |
|
|
|
|
ERV |
The estimated market rental value of the total lettable space in a property, after deducting head and equity rents, calculated by the Group's external valuers. |
|
|
|
|
Gearing |
Net debt expressed as a percentage of equity shareholders' funds. |
|
|
|
|
Gross property value |
Property value before deduction of purchaser's costs, as provided by the Group's external valuers. |
|
|
|
|
Gross rental income |
Income from rents, car parks and commercial income, after accounting for the net effect of the amortisation of lease incentives. |
|
|
|
|
IAS |
International Accounting Standard. |
|
|
|
|
IASB |
International Accounting Standards Board. |
|
|
|
|
IFRS |
International Financial Reporting Standard. |
|
|
|
|
Initial yield |
Annual cash rents receivable (net of head and equity rents and the cost of vacancy, and, in the case of France, net of an allowance for costs of approximately 5% primarily for management fees) as a percentage of gross property value, as provided by the Group's external valuers. Rents receivable following the expiry of rent-free periods are not included. Rent reviews are assumed to have been settled at the contractual review date at ERV. |
|
|
|
|
Interest cover |
Net rental income divided by net cost of finance before capitalised interest and change in fair value of derivatives. |
|
|
|
|
Interest rate or currency swap (or derivative) |
An agreement with another party to exchange an interest or currency rate obligation for a pre-determined period of time. |
|
|
|
|
IPD |
Investment Property Databank. An organisation supplying independent market indices and portfolio benchmarks to the property industry. |
|
|
|
|
Like-for-like / underlying net rental income |
The percentage change in net rental income for completed investment properties owned throughout both current and prior periods, after taking account of exchange translation movements. |
|
|
|
|
Net asset value per share (NAV) |
Equity shareholders' funds divided by the number of shares in issue at the balance sheet date. |
|
|
|
|
Net rental income |
Income from rents, car parks and commercial income, after deducting head and equity rents payable, and other property related costs. |
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Occupancy rate |
The ERV of the area in a property, or portfolio, excluding developments, which is let, expressed as a percentage of the total ERV of that property or portfolio. |
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Over-rented |
The amount by which the ERV falls short of rents passing, together with the estimated rental value of vacant space. |
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Pre-let |
A lease signed with a tenant prior to the completion of a development. |
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Property Income Distribution (PID) |
A dividend, generally subject to withholding tax, that a UK REIT is required to pay from its tax-exempt property rental business and which is taxable for UK-resident shareholders at their marginal tax rate. |
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REIT |
Real Estate Investment Trust. A tax regime which in the UK exempts participants from corporation tax both on UK rental income and gains arising on UK investment property sales, subject to certain requirements. |
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Rents passing or passing rents |
The annual rental income receivable from an investment property, after any rent-free periods and after deducting head and equity rents. This may be more or less than the ERV (see over-rented and reversionary or under-rented). |
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Return on shareholders' equity (ROE) |
Capital growth and profit for the year expressed as a percentage of equity shareholders' funds at the beginning of the year, all excluding deferred tax and certain non-recurring items. |
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Reversionary or under-rented |
The amount by which the ERV exceeds the rents passing, together with the estimated rental value of vacant space. |
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Reversionary yield |
The income on reversion to ERV, irrespective of timing, expressed as a percentage of the gross property valuation, as provided by the Group's external valuers. |
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Scrip dividend |
A dividend received in the form of shares. |
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SIIC |
Sociétés d'Investissements Immobiliers Côtées. A French tax-exempt regime available to property companies listed in France. |
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Total development cost |
All capital expenditure on a development project, including capitalised interest. |
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Total return |
Net rental income and capital return expressed as a percentage of the opening book value of property adjusted for capital expenditure and exchange translation movements, calculated on a monthly time-weighted basis. |
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Total shareholder return |
Dividends and capital growth in the share price, expressed as a percentage of the share price at the beginning of the year. |
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Turnover rent |
Rental income which is related to an occupier's turnover. |
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Vacancy rate |
The ERV of the area in a property, or portfolio, excluding developments, which is currently available for letting, expressed as a percentage of the ERV of that property or portfolio. |
DISCLAIMER
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 Hammerson's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company 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 speak only as of the date of this document. Hammerson 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 Company should not be relied upon as a guide to future performance.
This information is provided by RNS
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