TIDMCAL
RNS Number : 8727I
Capital & Regional plc
10 August 2023
10 August 2023
Capital & Regional plc
("Capital & Regional" or "C&R" or "the Company" or "the
Group")
Dividend growth underpinned by improved profitability and robust
operational performance
Capital & Regional (LSE: CAL), the UK convenience and
community focused shopping centre REIT announces its half year
results to 30 June 2023 which show continued strong operational
performance.
The Company has also separately announced today that it has
entered into an agreement to acquire the Gyle Shopping Centre in
Edinburgh for a consideration of GBP40 million, to be part-funded
by a fully underwritten GBP25 million Open Offer.
Lawrence Hutchings, Chief Executive, comments:
"Our community strategy's focus on value orientated,
non-discretionary and needs based retail and services has driven
another period of robust operational performance for the Company,
against an uncertain and inflationary economic backdrop. Our
footfall recovery, rent collection, occupancy and leasing metrics
continue to benefit from our ongoing investment into repositioning
and remerchandising our centres, coupled with our continued focus
on operations. Snozone also enjoyed its first peak trading period
unimpacted by Covid since 2019. Combined, these factors have
allowed us to deliver increases in Adjusted Profit and, in turn,
dividend.
"Furthermore, valuations have continued to stabilise alongside
income which, together with a maturing of the structural changes
that have impacted physical retailing over the past five years,
have reinforced our confidence in our portfolio, platform and UK
community centres.
"This confidence has not just informed our decision to increase
the dividend. It is also reflected in our announcement this morning
of the acquisition of The Gyle Shopping Centre in Edinburgh, which
marks the first step towards rescaling our business and fully
leveraging our proven skills and management expertise. Through this
acquisition we are able to capitalise on an opportunity to add an
established dual supermarket anchored community centre in
Scotland's capital city to our portfolio, in a transaction that
will be part-funded by a GBP25 million equity raise available to
all existing shareholders and fully underwritten by our majority
shareholder, Growthpoint.
"The centre will be accretive to income from day one, with the
agreed price representing a significant discount to the replacement
cost and providing us with a highly attractive entry point from
which we can create value. In addition, we have arranged terms with
Morgan Stanley to staple debt to the acquisition at a 40% LTV
capped at a cost of 6.5%.
"The Gyle Shopping Centre presents us with a number of asset
management opportunities including refining the tenant mix, a
renewed focus on leasing to improve occupancy and income, whilst
enhancing the centre's appeal to the growing and affluent catchment
in south western Edinburgh.
"I would like to take this opportunity to thank our team for
their commitment and hard work over the first half in delivering
these robust results, especially in the delivery of the two new
flagship food catering environments, Crate in Walthamstow and The
Bridge in Wood Green, which opened recently and are performing
well."
Continuing operational resilience
* 42 new lettings and renewals achieved during the year
at a combined average premium of 5.7% to previous
rent(2) and 13.7% to ERV(2) reflecting continued
occupier demand for the affordable space in our
portfolio.
* Occupancy has continued to recover, increasing to
94.5% (December 2022: 94.1%; June 2022: 93.8%).
* 19.3 million shopper visits during the six months
with footfall up 5.1% on H1 2022 representing 86.7%
of the equivalent period for 2019, (or 90.4% of the
equivalent period for 2019 excluding Walthamstow
where footfall is impacted by one of the entrances
being closed due to the residential development).
* Rent collection in line with historic pre-Covid
levels, with 98.4% collected for the first half of
the year.
* Snozone's EBITDA1 for the half year doubled to GBP1.6
million (2022: GBP0.8 million) reflecting the first
peak Q1 trading quarter unimpacted by Covid since
2019 and improved profitability from Snozone Madrid
arising from the actions undertaken since
acquisition.
* Continued progression of the Company's capex
programme with GBP7.0 million invested during the
period primarily across projects at Ilford and Wood
Green, expected to produce a yield on cost in line
with the Company's target of 8% to 9%.
Improved profitability underpinning dividend growth
* Like-for-like Net Rental Income(1) ("NRI") increased
13% driven primarily by improved occupancy and rent
collection. Total NRI of GBP11.7 million (June 2022:
GBP12.3 million) fell by GBP0.6 million reflecting
the like for like improvement largely offsetting the
loss of income from the sale of Blackburn in August
2022. Statutory revenue improved 7.7% to GBP30.7
million (June 2022: GBP28.5 million).
* 19% increase in Adjusted Profit(1) to GBP7.0 million
(June 2022: GBP5.9 million2) with a 17% growth in
Adjusted earnings per share to 4.1p (June 2022:
3.5p).
* IFRS Profit for the period of GBP6.1 million (June
2022: Profit of GBP26.8 million). The prior year
included the one-off gains of GBP12.3 million and
GBP6.8 million from the discounted purchase of the
Hemel Hempstead debt facility and deconsolidation of
Luton, respectively.
* Continued stabilisation of property valuations with
the portfolio increasing 2.1% in the first half of
2023 to GBP329.7 million (30 December 2022: GBP322.75
million).
* 2.3% increase in Net Asset Value ("NAV") to GBP183.2
million (30 December 2022: GBP179.1 million). NAV per
share and EPRA NTA per share stable at 106p and 102p
respectively (December 2022: 106p and 103p).
* Proposed 10% increase in Interim dividend to 2.75
pence per share (June 2022: 2.5 pence per share).
Long term secure debt position
* Group Net Loan to Value has increased marginally to
42% from 41% at 30 December 2022 .
* Debt maturity of 4.0 years with average cost of debt
of 3.61% with 98% fixed.
6 months 6 months Year to
to to Dec 2022
June 2023 June 2022(5)
Revenue GBP30.7m GBP28.5m GBP60.6m
Net Rental Income - Investment
Assets GBP11.7m GBP12.3m GBP 23.5m
Adjusted Profit (1) GBP 1 0.3
GBP7.0m GBP5.9m m
Adjusted Earnings per share
(diluted) (1) 4.1p 3.5p 6.1p
IFRS Profit for the period GBP6.1m GBP26.8m GBP12.1m
Basic earnings per share (diluted) 3.5p 16.0p 7.2p
Total dividend per share (3) 2.75p 2.5p 5.25p
Net Asset Value GBP183.2m GBP195.3m GBP179.1m
Net Asset Value (NAV) per share 106p 118p 106p
EPRA NTA per share 102p 116p 103p
Group net debt (4) GBP138.5m GBP136.5m GBP130.9m
Net debt to property value
(4) 42% 40% 41 %
Notes
(1) Adjusted Profit, Adjusted Earnings per share, Net Rental
Income, Net Debt and the Snozone EBITDA metric are as defined in
the Glossary. Adjusted Profit incorporates profits from operating
activities and excludes revaluation of properties and financial
instruments, gains or losses on disposal, and other non-operational
items. A reconciliation to the equivalent EPRA and statutory
measures is provided in Note 6 to the condensed financial
statements.
(2) For lettings and renewals (excluding development deals and
CVA variations) with a term of 5 years or longer which do not
include turnover rent or service charge restrictions.
(3) Includes dividends declared post period end but related to
the period in question.
(4) Weighted average, debt maturity assumes exercise of
extension options.
(5) June 2022 comparative figures have been restated, in line
with the adjustment made in the Group's results for the year ending
30 December 2022, for a prior year adjustment to the treatment of
rent concessions due to an IASB IFRS interpretation issued in
October 2022, further detail is provided in Note 2 to the condensed
financial statements.
Use of Alternative Performance Measures (APMs)
Throughout the results statement we use a range of financial and
non-financial measures to assess our performance. A number of the
financial measures, including Net Rental Income, Adjusted Profit,
Adjusted Earnings per share, Net Debt and the industry best
practice EPRA (European Public Real Estate Association) performance
measures are not defined under IFRS, so they are termed APMs. APMs
are not considered superior to the relevant IFRS measures, rather
Management use them alongside IFRS measures to monitor the Group's
financial performance because they help illustrate the trading
performance and position of the Group. All APMs are defined in the
Glossary and further detail on their use is provided within the
Financial Review.
For further information:
Capital & Regional: Tel: +44 (0)20 7932 8000
Lawrence Hutchings, Chief Executive
Stuart Wetherly, Group Finance Director
FTI Consulting: Tel: +44 (0)20 3727 1000
Richard Sunderland, Maria Saud, Oliver Email: Capreg@fticonsulting.com
Parsons
Notes to editors:
About Capital & Regional
Capital & Regional is a UK focused retail property REIT
specialising in shopping centres that dominate their catchment,
serving the non-discretionary and value orientated needs of the
local communities. It has a track record of delivering value
enhancing retail and leisure asset management opportunities across
a portfolio of tailored in-town community shopping centres.
Using its in-house expert property and asset management platform
Capital & Regional owns and/or manages shopping centres in
Hemel Hempstead, Ilford, Maidstone, Redditch, Walthamstow and Wood
Green.
Capital & Regional is listed on the main market of the
London Stock Exchange (LSE) and has a secondary listing on the
Johannesburg Stock Exchange (JSE).
For further information see www.capreg.com .
South African secondary listing
At 30 June 2023, 7,286,097 of the Company's total 173,545,054
shares were held on the South African register representing 4.20%
of the total issued share capital. Java Capital acts as JSE Sponsor
for the Group.
Forward looking statements
This document contains certain statements that are neither
reported financial results nor other historical information. These
statements are forward-looking in nature and are subject to risks
and uncertainties. Actual future results may differ materially from
those expressed in or implied by these statements. Many of these
risks and uncertainties relate to factors that are beyond the
Group's ability to control or estimate precisely, such as future
market conditions, currency fluctuations, the behaviour of other
market participants, the actions of government regulators and other
risk factors such as the Group's ability to continue to obtain
financing to meet its liquidity needs, changes in the political,
social and regulatory framework in which the Group operates or in
economic or technological trends or conditions, including inflation
and consumer confidence, on a global, regional or national basis.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which apply only as of the date of this
document. The Group does not undertake any obligation to publicly
release any revisions to these forward-looking statements to
reflect events or circumstances after the date of this document.
Information contained in this document relating to the Group should
not be relied upon as a guide to future performance.
Operating review
New lettings, renewals and rent reviews
We saw continued momentum in leasing in the first half of the
year, completing 42 new lettings and renewals, at a combined annual
rent of GBP1.5 million, representing an average premium to previous
rent of 5.7%(1) (30 June 2022(2) - 37 new lettings and renewals for
a combined annual rent of GBP2.0 million).
At Wood Green we secured lettings on four catering units at the
new 'Bridge' development, as well as letting c. 7,000 sq ft of
vacant office space while at Ilford we agreed a new lease to Addax.
Renewals agreed during the period include Savers at Hemel
Hempstead, Waterstones at Walthamstow and Claire's Accessories at
Ilford. Since 30 June 2023 we have secured renewals with H&M at
Ilford and Superdrug at Wood Green.
6 months to 6 months to
June 2023 June 2022
New Lettings(1)
Number of new lettings 21 27
Rent from new lettings GBP0.6m GBP1.5m
(GBPm)
Renewals settled(1)
Renewals settled 21 10
Total resulting annual GBP0.9m GBP0.5m
rent (GBPm)
Combined new lettings
and renewals(1)
Comparison to previous
rent (2) +5.7% +35.7%
Comparison to ERV at December
2021 (2) +13.7% +18.0%
------------------------------- ------------ ------------
(1) For lettings and renewals (excluding development deals and
CVA variations) with a term of 5 years or longer which do not
include turnover rent or service charge restrictions.
(2) Includes transactions for Hemel Hempstead, Ilford,
Maidstone, Walthamstow and Wood Green. Prior period comparative
restated on like for like basis.
We have also opened two new flagship food catering facilities in
the year to date. At Wood Green we have developed a new dining area
by converting space on the bridge linking the two sides of the high
street. This new Bridge development opened at the end of May 2023
providing six new street eats style food and beverage kiosks and a
new dining area over. In July 2023 we then opened the new Crate
food and events hall in Walthamstow. Operating on a mezzanine level
across 16,000 sq ft. Crate provides seven grab and go food kiosks,
a bar, indoor golf and events space.
Rental income and occupancy
30 June 30 December 30 June
2023 2022 2022
Occupancy (%) 94.5% 94.1% 93.8%
Contracted rent (GBPm) 31.6 31.5 31.5
Passing rent (GBPm) 30.7 30.5 30.8
-------------------------- -------- ------------ --------
Occupancy has continued its positive recovering trend,
increasing by 0.4% to 94.5% since 30 December 2022 and by 0.7%
since 30 June 2022.
Contracted and Passing rent have both increased from December
2022 by GBP0.1 million and GBP0.2 million respectively. The 30 June
2023 balances exclude c. GBP0.8 million of rent related to deals
that are committed but remain subject to planning or other
conditions.
CVA or administration activity impacting the Group was limited
in the first six months of the year, though Wilko filed a notice of
intention to appoint an administrator on 3 August 2023. Wilko
represents approximately GBP0.65 million or 2.5% of the Group's
Contracted Rent at 30 June 2023. Whilst there has been no immediate
impact to the Group resulting from Wilko's notice of intention to
appoint an administrator, were it to go into administration, CVA or
to cease trading, this income would be at risk of being reduced or
lost and in the event units became vacant and not relet the Group
may face incurring some or all of the occupational costs, which
total approximately GBP0.9 million.
Operational performance
In total there were 19.3 million shopper visits across the five
assets in the first half of 2023, 5.1% ahead of 2022 and
representing 86.7% of the equivalent period for 2019, (or 90.4% of
the equivalent period for 2019 excluding Walthamstow where footfall
is impacted by one of the entrances being closed due to the
residential development).
Car park income in the first six months of the year was GBP2.6
million, an increase of 9.7% on the same period for 2022 and
representing approximately 79% of the equivalent for 2019.
Rent collection
Rent collection for the first six months of the year is
currently 98.4% as detailed in the table below:
Rent collection
6m to 30 June 2023
GBPm
Rent collected 16.2 98.4%
Outstanding 0.3 1.6%
Total billed 16.5 100%
----------
Amounts include VAT, amounts billed for Q3 2023 are up to end of
July 2023.
Rent collection for the 2022 financial year has now improved to
98.9% (up from 97.6% at the time of the Group's year end results
announcement in March 2023).
Capital expenditure
In total a net GBP7.0 million was invested in the first six
months of the year, this was primarily across the following
projects and is expected to produce a yield on cost in line with
the Company's target of 8% to 9%:
-- Ilford
o GBP2.6 million on the new 35,000 sq ft TK Maxx anchor unit
that is due to open in Q4 2023.
o GBP1.9 million for the ongoing works for the new 20,000 sq ft
NHS community healthcare facility that is due to open in the first
half of 2024.
o GBP0.9 million on other related centre improvements.
-- Wood Green
o GBP0.6 million to create the new Bridge catering units which
opened in June 2023.
o GBP0.4 million on remerchandising of the former WH Smiths
unit.
The major projects undertaken have the additional benefit of
helping to improve the ESG credentials of the relevant centres by
replacing aged infrastructure and enabling the reduction or
elimination of the use of gas.
Spend on the Walthamstow Crate facility in the period has been
covered by a contribution from Walthamstow Council as the head
lease holder, who recognise the valuable contribution our centre
makes to both the local community and economy. We anticipate
capital expenditure in the second half of the year to be at a
similar level driven primarily by the completion of the TK Maxx and
NHS projects.
Walthamstow residential
Construction work remains ongoing on the first phase of the
residential development at Walthamstow which will see Long Harbour
create 495 Build to Rent residential apartments in two residential
towers adding further to the centre's local customer base.
Completion is scheduled for 2025. The Group previously completed
the sale of land for residential development to Long Harbour for
GBP21.6 million. The planning consent covers a residential-led,
mixed use development, incorporating a new Victoria Line tube
station entrance and new public space including a new park.
Shopping Centre ESG
For our shopping centres, we have developed a robust pathway
aligned with the BBP Climate Commitment and the UK Green Building
Council's (UKGBC) definition of net zero. Our commitment covers
embodied carbon associated with refurbishments and fit-outs and
operational carbon from landlord and occupier energy consumption,
along with measured emission sources. We continue to make progress
on driving forward our net zero carbon pathways aligned with
industry best practice and guidelines which represents a
significant milestone in our decarbonisation journey. Having
established our net zero governance along with the roll-out of
employee training, we will continue to prioritise energy
efficiencies on the ground across all aspects of our operations and
evolve crucial tools such as our data accuracy and net zero
standards. We have made significant strides on our environmental
targets increasing our energy efficiency, reducing Scope 1 natural
gas consumption by 78% and Scope 2 electricity consumption by 29%,
against 2019. All of the shopping centres electricity is 100%
renewable and Renewable Energy Guarantees of Origin certified.
Our centres' Scope 3 emissions, which relate to occupier energy
consumption, make up an estimated 83% of our total emissions (based
on our baseline year of 2019) and therefore the management of these
is central to achieving our net zero carbon commitment. With
occupier emissions falling outside of our direct management or
ownership, tackling them proves a challenge for C&R and across
the industry. To address this, we have created an enhanced occupier
engagement strategy to promote collaboration and have collated 68%
of all occupiers' energy usage from 2022 through our Net Zero
Carbon Committee which is established at each centre. With the
regulations around EPC ratings tightening, we have established an
EPC Management Dashboard to help improve performance covering all
units across the centres to increase focus and highlighting areas
where ratings need to be improved as well as providing occupiers
with the tools to help improve their performance.
Our Community Wheels of Support continue to play a critical role
in encouraging engagement and helping our shopping centre teams to
prioritise areas of impact. As community hubs we know our community
support is crucial, particularly with the cost-of-living crisis. We
are very proud of our efforts in this space and have partnered with
over 75 charities, hosted over 70 events, and spent more than 400
hours engaging with local community groups.
As part of succession planning in respect of the Board's
Independent Non-Executive Directors it is planned that Katie Wadey
will take over as Chair of the ESG Committee from Laura Whyte as of
1 October 2023. Laura Whyte will also step down as a member of the
ESG Committee from that date.
Snozone
Snozone has had a strong six months enjoying its first peak Q1
trading quarter unimpacted by Covid since 2019. EBITDA(1) was
GBP1.6 million (June 2022: GBP0.8 million) reflecting a
significantly improved performance from the UK operations and a
contribution of GBP0.4 million from Snozone Madrid (June 2022: Loss
of GBP0.1 million).
Revenue and EBITDA for the UK operations at GBP5.6 million and
GBP1.3 million for the first half of 2023, respectively were 20%
and 53% higher than 2022. This reflected a dramatically improved
performance and the fact that that the early part of 2022 was still
impacted by the Covid-Omicron variant. Revenue and EBITDA for the
UK operations have also shown an improvement on the pre-pandemic
base year of 2019, up 4% and 8% respectively, despite some revenue
streams such as corporate activities and food and beverage usage
having not yet returned to pre-pandemic levels due to changing
consumer habits. The UK business has also benefited from being on a
fixed price energy tariff over the past three years which comes to
an end in September 2023. While prices have significantly reduced
from the peaks seen over the last 12 months this is still expected
to see an increase in total utility costs of c GBP0.3 million per
year.
Snozone Madrid's revenue of GBP2 million was 20% higher than
2022 (+7% on 2019) and it delivered a positive contribution to
Snozone's total EBITDA of GBP0.4 million (June 2022: loss of GBP0.2
million). These metrics reflect the actions undertaken to
significantly improve profitability since acquisition of the
operations in February 2021. The impact of large increases in
government-controlled electricity prices has been largely mitigated
in 2023 from the installation of solar panels in November 2022.
Snozone's IFRS profit for the period was GBP0.6 million (June
2022: GBP0.1 million).
Snozone ESG
Snozone's pathway to net zero strategy is underpinned by a
cyclical four-year plan for capital investment into new plant and
machinery which we are now halfway through. Nine units of blast
coolers have been replaced at the Milton Keynes venue which will
save 214,000 kWh per year. In addition, a voltage optimiser unit
was purchased for our Yorkshire venue which both regularises and
controls consumption flow to our main plant and machinery. In
Madrid, given the significant increase in government-controlled
electricity pricing faced in 2022, solar panels were fitted to the
roof of our venue and were fully operational as of November 2022.
The venues have also undergone a significant de-lamping programme
to further reduce electricity usage.
At the half year, the sum of these initiatives has delivered a
10% reduction in electricity utility consumption compared to the
prior year and a reduction of 5% versus the 2019 base year. There
has also been a significant reduction in gas usage of 32% v 2022
and 21% v the 2019 base. Water usage similarly has decreased by 30%
v 2022 and 35% v 2019. All of Snozone's electricity is 100%
renewable and is sourced from wind and solar power.
Furthermore, supplier visitation to Snozone's premises has been
reduced due to strong operational controls and robust planned
preventative maintenance programmes which has reduced scope 3
emissions by 19% v 2022.
(1) Snozone EBITDA is defined in the use of Alternative
Performance Measures section below.
FINANCIAL REVIEW
Six months Six months Year to
to to Dec 2022
June 2023 June 2022(4)
Profitability
Statutory Revenue GBP30.7m GBP28.5m GBP60.6m
Net Rental Income (NRI) GBP11.7m GBP12.3m GBP23.5m
Adjusted Profit (1) GBP7.0m GBP5.9m GBP10.3m
Adjusted Earnings per share (diluted)
(1) 4.1p 3.5p 6.1p
IFRS Profit for the period GBP6.1m GBP26.8m GBP12.1m
Basic earnings per share (diluted) 3.5p 16.0p 7.2p
EPRA cost ratio (excluding vacancy
costs) 35.6% 39.9% 37.8%
Net Administrative Expenses to Gross
Rent 21.7% 17.9% 22.4%
Investment Returns
Net Asset Value GBP183.2m GBP195.3m GBP179.1m
Net Asset Value (NAV) per share 106p 118p 106p
EPRA NTA per share (1) 102p 116p 103p
Dividend per share (2) 2.75p 2.5p 5.25p
Financing
Group net debt (5) GBP138.5m GBP136.5m GBP130.9m
Group net debt to property value 42% 40% 41%
EPRA LTV 44.6% 50.9% 44.0%
Weighted average maturity of Group
debt (3) 4.0 years 5.2 years 4.5 years
Weighted average cost of Group debt 3.61% 3.54% 3.58%
--------------------------------------- ------------ --------------- ----------
(1) Adjusted Profit is as defined in the Glossary. A
reconciliation to the statutory result is provided further below.
EPRA figures and a reconciliation to EPRA EPS are shown in Note 6
to the Financial Statements. The calculation of EPRA cost ratio is
provided in the EPRA performance measures section.
(2) Represents dividends declared post period end but related to
the period in question.
(3) Assuming exercise of all extension options.
(4) June 2022 comparative figures have been restated, in line
with the adjustment made in the Group's results for the year ending
30 December 2022, for a prior year adjustment to the treatment of
rent concessions due to an IASB IFRS interpretation issued in
October 2022, further detail is provided in Note 2 to the condensed
financial statements.
Use of Alternative Performance Measures (APMs)
Throughout the results statement we use a range of financial and
non-financial measures to assess our performance. The significant
measures are as follows:
Alternative performance Rationale
measure used
Adjusted Profit Adjusted Profit is used as it is considered
by management to provide the best indication
of trading profits and hence the ability of
the business to fund dividend payments.
Adjusted Profit excludes revaluation of properties,
profit or loss on disposal of properties or
investments, gains or losses on financial instruments,
charges in respect of long-term incentive awards
and other non-operational one-off items.
Adjusted Profit includes EBITDA from Snozone
(see definition further below). This was a
change implemented in 2021 arising from the
adoption of IFRS 16 and the signing of new
lease agreements on Snozone's two UK sites.
We considered that the combination of these
two factors meant that Snozone's statutory
profit no longer alone provides a full reflection
of Snozone's trading performance and hence
introduced this additional Alternative Performance
Measure.
The key differences between Adjusted Profit
and EPRA earnings, an industry standard comparable
measure, relates to the exclusion of non-cash
charges in respect of share-based payments
and adjustments in respect of Snozone as detailed
above. In the current year we have excluded
from our Adjusted Profit a GBP1.2 million tax
credit as it relates to prior years but this
is included within the EPRA metric.
Adjusted Earnings per share is Adjusted Profit
divided by the weighted average number of shares
in issue during the year excluding own shares
held.
A reconciliation of Adjusted Profit to the
equivalent EPRA and statutory measures is provided
in Note 6 to the condensed financial statements.
--------------------------------------------------------
Like-for-like amounts Like-for-like amounts are presented as they
measure operating performance adjusted to remove
the impact of properties that were only owned
for part of the relevant periods.
For the purposes of comparison of capital values,
this will also include assets owned at the
previous period end but not necessarily throughout
the prior period.
In the current year like-for-like comparisons
have been used to adjust for the impact of
the disposal of The Mall, Blackburn that completed
in August 2022 and the Walthamstow residential
receipt.
--------------------------------------------------------
Net Debt Net debt is borrowings, excluding unamortised
issue costs, less cash at bank. Cash excludes
cash held on behalf of third parties (e.g.
in respect of service charges or rent deposits).
--------------------------------------------------------
Net debt to property Net debt to property value is debt less cash
value and cash equivalents divided by the property
value.
--------------------------------------------------------
Net Rent or Net Rental Net Rental Income is rental income from properties,
Income (NRI) less provisions for expected credit losses,
property and management costs. It is a standard
industry measure. A reconciliation to statutory
turnover is provided in Note 4 to the condensed
financial statements.
--------------------------------------------------------
Snozone EBITDA Snozone EBITDA is based on net profit. It excludes
Depreciation, Amortisation, (notional) Interest,
Tax and non-operational one-off items. It includes
rent expense, based on contractual payments
adjusted for rent free periods. This provides
a measure of Snozone trading performance which
removes the profiling impact of IFRS 16 that
would otherwise see a significantly higher
charge in early years of a lease and significantly
lower net charge in later years. A reconciliation
to the IFRS net profit is included within Note
3 to the condensed financial statements.
--------------------------------------------------------
Profitability
Components of Adjusted Profit and reconciliation to IFRS
Profit
Amounts in GBPm Six months Six months Year to
to to December
June 2023 June 2022(2) 2022
Shopping Centres - Net Rental
Income 11.7 12.3 23.5
Shopping Centres - Interest
payable (3.7) (4.7) (9.3)
------------------------------------------- ----------- -------------- ----------
Shopping Centres - Contribution 8.0 7.6 14.2
Snozone (indoor ski operation)
EBITDA 1.6 0.8 1.4
External management fees 1.2 1.7 3.3
Interest receivable 0.2 - -
Central operating costs (3.3) (3.5) (7.0)
Variable overhead (0.7) (0.7) (1.6)
Adjusted Profit (1) 7.0 5.9 10.3
Adjusted Earnings per
share (pence) (1) 4.1p 3.5p 6.2p
Reconciliation of Adjusted
Profit to statutory result
Adjusted Profit 7.0 5.9 10.3
Property revaluation (0.3) 1.1 (19.6)
(Loss)/profit on disposal/transaction
costs (0.6) (0.4) 1.5
Snozone depreciation and amortisation (1.0) (1.1) (2.1)
Snozone notional interest (net
of rent expense in EBITDA) 0.3 0.4 0.8
(Loss)/gain on financial instruments (0.3) 1.0 1.1
Corporation Tax credit 1.2 1.1 0.3
Long Term incentives (non-cash) (0.4) (0.1) (0.5)
Gain on discounted loan purchase
(net of costs) - 12.3 12.5
Write up following Luton deconsolidation - 6.8 6.8
Other items 0.2 (0.2) 1.0
Profit/(loss) for the period 6.1 26.8 12.1
------------------------------------------- ----------- -------------- ----------
(1) EPRA figures and a reconciliation to EPRA EPS are shown in
Note 6 to the condensed Financial Statements.
(2) June 2022 comparative figures have been restated for a prior
year adjustment to the treatment of rent concessions as explained
in note 2.
Adjusted Profit - 30 June 2023: GBP7.0 million (30 June 2022:
GBP5.9 million)(1)
Net Rental Income (NRI) decreased to GBP11.7 million (30 June
2022 - GBP12.3 million) due to the sale of Blackburn in August 2022
which contributed GBP2.0 million to NRI in the first half of 2022.
Adjusting for this and a full period of Hemel Hempstead (as it was
reclassified from Held for Sale in May 2022) NRI increased by 13%
on a like for like basis. The biggest driver for this is increased
occupancy, which during the period increased from 94.1% to 94.5%
occupied (30 June 2022 - period started at 92.9% and ended at
93.8%) and a GBP0.2 million improvement in Car Park income.
Interest payable has fallen from the prior year reflecting the
repayment of GBP60 million of debt in The Mall loan facility during
2022 that was skewed towards the second half of the year. Interest
payable is expected to increase in 2024 as the swap on the GBP39
million Ilford loan expires at the original maturity in March
2024.
Snozone EBITDA at GBP1.6 million (30 June 2022 - GBP0.8 million)
as noted has benefited from its first peak Q1 trading period
unimpacted by Covid since 2019.
External Management Fees of GBP1.2 million break down between
Asset and Property Management fees on external properties (Redditch
and Luton) of GBP0.7 million and Property Management fees on the
Group's Investment Assets of GBP0.5 million (as these are charged
to the Service Charge). The Group's involvement in Luton ceased
following the sale in March 2023. The Group's involvement in
Redditch is expected to cease before the end of the third quarter
of 2023 when the asset changes ownership.
Central operating costs GBP3.3 million (30 June 2022 - GBP3.5
million) and Variable overheads GBP0.7 million (30 June 2022 -
GBP0.7 million). Central costs are lower than the prior year
reflecting cost saving initiatives implemented which deliver
approximately 10% savings on an annualised basis after inflation.
These include utilising technology to drive operational
efficiencies and the selective use of outsourcing. Further
initiatives are in progress or planned to deliver a similar saving
in 2024. We anticipate the combination of further cost savings and
the benefit of additional income from capital expenditure projects
and improving occupancy to drive further improvements in our EPRA
cost ratio which has reduced to 35.6% from 37.8% at 30 June
2022.
Adjusted earnings per share for the period were 4.1 pence on a
diluted basis (30 June 2022: 3.5 pence) reflecting the improvement
in Adjusted Profit.
IFRS profit for the period - 30 June 2023: GBP6.1 million (30
June 2022: Profit of GBP26.8 million)
Aside from the Adjusted Profit of GBP7.0 million the other items
impacting the result in the period were:
-- Property revaluation loss of GBP0.3 million (June 2022 -
profit of GBP1.1 million)(1) representing the marginal difference
between the Capex invested of GBP7.0 million, valuation increases
and movement on tenant incentives and IFRS adjustments.
-- GBP0.6 million of transaction costs in respect of the
proposed acquisition of The Gyle and a small true up of profit on
disposal in respect of the Group's sale of Blackburn in 2022.
-- GBP0.7 million of adjustments relating to Snozone reconciling
between the EBITDA measure used for Adjusted Profit and IFRS Profit
for the year. As noted above, we used EBITDA as this removes the
profiling element of IFRS 16 and therefore provides a measure of
Snozone's trading performance excluding this.
-- A loss of GBP0.3 million on financial instruments being the
movement from the revaluation of the Ilford interest rate swap
(June 2022 - gain of GBP1.0 million).
-- A net release of GBP1.2 million of provision for tax in lieu
of paying dividends which is no longer required following the
resumption of dividend payments and expectation of the firm having
met its minimum PID requirement for prior years.
-- GBP0.4 million relating to share based payments being the
non-cash element of the Group Combined Incentive Plan for
executives and LTIP retention awards for staff members.
The prior year included the one-off gains of GBP12.3 million and
GBP6.8 million from the discounted purchase of the Hemel Hempstead
debt facility and deconsolidation of Luton, respectively.
The profit for the period has resulted in NAV of GBP183.2
million and EPRA Net Tangible Assets of GBP181.7 million and
improvements of 2.3% and 2.4% compared to December 2022 amounts of
GBP179.1 million and GBP177.4 million, respectively. Basic NAV per
share and EPRA NTA per share were 106p and 102p respectively
(December 2022: 106p and 103p respectively).
Property portfolio valuation
The valuation of the portfolio at 30 June 2023 was GBP329.7
million, representing an increase in headline valuation of GBP6.95
million or 2.1% from December 2022. This reflects the net impact of
a 2.1% increase in net valued rent partially offset by an expansion
in Net Initial Yield of 15 basis points.
Property at independent 30 June 2023 30 December 2022
valuation
GBPm NIY % NEY GBPm NIY % NEY
% %
Maidstone 31.5 11.44% 11.68% 32.65 11.28% 11.49%
Walthamstow 80.1 6.59% 7.00% 80.0 5.97% 7.00%
Wood Green 147.5 7.59% 7.39% 144.0 7.55% 7.38%
Hemel Hempstead 10.0 14.25% 17.45% 10.5 14.49% 17.49%
Ilford 60.6 5.09% 7.94% 55.6 5.04% 7.79%
------------------------- ------ ------- ------- ------- ------- -------
329.7 7.38% 8.64% 322.75 7.23% 8.59%
Disposal of The Mall, Luton
The Company completed the sale of its interest in The Mall,
Luton shopping centre on 16 March 2023. The disposal followed a
sale process undertaken with the consent of the secured lender on
the related loan facility. The Group had previously deconsolidated
its interest in The Mall, Luton meaning that the transaction did
not result in any profit or loss on disposal to the Group.
Financing
The Group's debt position as at 30 June 2023 is summarised in
the table below:
Debt Cash(2) Net Loan Net Average Fixed Duration Duration
(1) debt to debt interest to loan with
value to rate expiry extensions
(3) value(3)
30 June 2023 GBPm GBPm GBPm % % % % Years Years
(proforma)
------------------ ------ -------- ------- ------- ---------- ---------- ------ --------- ------------
The Mall 140.0 (9.4) 130.6 54% 50% 3.45% 100 3.6 4.6
Hemel Hempstead 4.0 (1.5) 2.5 40% 25% 10.31% 0.0 2.0 2.0
Ilford 39.0 (8.5) 30.5 64% 50% 3.51% 100 0.7 2.2
Central Cash - (25.1) (25.1) - - - - - -
------------------ ------ -------- ------- ------- ---------- ---------- ------ --------- ------------
On balance sheet
debt 183.0 (44.5) 138.5 56% 42% 3.61% 97.8 2.9 4.0
------------------ ------ -------- ------- ------- ---------- ---------- ------ --------- ------------
(1) Excluding unamortised issue costs.
(2) Excluding cash beneficially owned by tenants.
(3) Debt and net debt divided by investment property at
valuation.
The Group's Net Loan to Value ratio increased marginally during
the period from 41% to 42% as a result of the investment of cash in
to capital expenditure.
The Mall
Following the GBP60 million of repayments made during the prior
year the Mall facility now consists of a single GBP140 million
fixed rate loan at 3.45%, held with TIAA. The loan matures in
January 2027 but has a one-year conditional extension option.
As part of the November 2021 restructuring of the facility TIAA
provided a waiver of all financial covenants for two years until
November 2023. The facility is currently compliant with all
covenants.
Hemel Hempstead
The Group has a GBP4 million facility with BC Invest, a
subsidiary of the Group's strategic residential partner, Far East
Consortium. The debt matures in July 2025 and is at a margin of
5.95% over SONIA. It is secured on the Marlowes Centre on a
non-recourse basis.
Ilford
The Group has a GBP39 million facility secured on the Ilford
Exchange shopping centre with Dekabank Deutsche Girozentrale that
is due to mature in March 2024.
In May 2022, the Group signed a package of amendments to
facilitate the investment of more than GBP10 million for the
creation of the new NHS community healthcare centre and anchor unit
for TK Maxx. The amendment provides an 18-month conditional
extension option that can be triggered at the end of 2023 to extend
the loan maturity from March 2024 until September 2025 subject to
meeting a debt yield and net loan to value covenant test. The cost
of debt is hedged until the date of original maturity (March 2024)
via an interest rate swap.
The amendments also provided improvements to existing covenant
terms that applied from January 2023 until the
end of 2024. The all-in cost of the current loan is 3.51%.
Going Concern
Under the UK Corporate Governance Code the Board needs to report
whether the business is a going concern. In making its assessment
of Going Concern, the Group has considered the general risk
environment and the specific risks that relate to the Group and its
sector. This has incorporated considering the current
macro-economic inflationary pressures, the ongoing impacts and
speed of recovery from Covid-19, as well as the structural trends
that were already under way in the retail industry.
At 30 June 2023, the Group had total cash at bank on balance
sheet of GBP49.1 million. Of which GBP24.3 million was held
centrally outside of secured loan arrangements. This provides a
significant cash contingency to cover any reasonable disruption to
operations in both the base and downside scenarios that have been
modelled for at least the period of the next 18 months that is
considered for going concern purposes.
As part of the restructure of The Mall debt facility that
completed in November 2021, the lender provided covenant waivers
that run until November 2023. The Group is currently compliant with
all covenant tests on the facility and hence not reliant on the
waivers or modifications. On the Ilford facility, as noted, the
Group had covenant waivers that ran until January 2023 and has
improved covenant terms that extend beyond the end of 2024. The
Mall loan facility matures in January 2027 with a one-year
conditional extension option. The Ilford loan matures in March 2024
with an 18-month conditional extension option dependent upon
meeting a debt yield and net loan to value covenant test in Q4 of
2023.
On Hemel Hempstead, the Group drew down a GBP4 million loan
facility in July 2022. The Group's forecasts demonstrate a
reasonable level of covenant headroom on the Loan to Value and
Projected Interest Cover Ratio tests that are relevant to the
agreement.
All of the Group's asset backed loan facilities are ring-fenced
within their own SPV structures with no recourse to Capital &
Regional plc and no cross-default provisions.
In making its assessment of Going Concern, the Group has run
updated forecasts on both a base case and downside basis. In the
latter, the Group has sensitised rent collection to 90% collection,
reduced car park and ancillary income by 10% and removed any
contribution from Snozone to reflect how a downturn in expected
trading, such as might be caused by a further wave of Government
restrictions, could impact cashflows. The Group has also considered
a 15% reduction in property valuations. The Group's headroom on The
Mall and Hemel Hempstead is sufficient to withstand this level of
decline from the 30 June 2023 valuations.
On Ilford, such a decline would breach the LTV covenant level
however the cash earmarked for capital expenditure investment into
the asset would be sufficient to theoretically cure although in
such a scenario the Group would seek to agree with the lender to
invest the funds to develop the asset. The same position applies in
respect of the LTV condition that is required in order to trigger
the 18-month extension to the loan's maturity. Ultimately given the
ring-fenced nature of the loan facility if the Group decided not to
cure any breach and could not agree a compromise with the lender it
could, in extremis, effectively surrender the asset and not face
any recourse to the Group. The Group's cashflow forecasts over the
period considered for Going Concern purposes assume it is a net
investor into Ilford to fund the masterplan initiatives and hence
such a scenario would not reduce the amount of cash available to
the Group.
In coming to its Going Concern conclusion, the Group has also
considered, but not relied upon, other options available to
generate or conserve additional cash, to reduce debt levels and to
fund value accretive capital expenditure and letting initiatives.
These include but are not limited to: the potential disposal of
assets either in whole or part; the opportunity to reduce or
suspend dividend payments (or offer a Scrip alternative); and the
potential raising of additional funds.
Having due regard to all of the above matters and after making
appropriate enquiries, the Directors have a reasonable expectation
that the Group and the Company have adequate resources to continue
in operational existence for the foreseeable future. Therefore, the
Board continues to adopt the Going Concern basis in preparing the
financial statements.
Dividend
The Directors recommend an interim dividend of 2.75 pence per
share (June 2022: 2.5 pence per share). The dividend will be paid
entirely as a Property Income Distribution (PID) and a Scrip
dividend option will be offered. Across the full financial year,
the Group expects to pay a dividend of at least 90% of the Group's
EPRA profits, in line with its dividend policy. We expect to pay a
final dividend of at least the same level to the Interim
Dividend.
The key dates proposed in relation to the payment of the
dividend are:
Tuesday, 22 August
* Confirmation of ZAR equivalent and Scrip dividend 2023
pricing
Tuesday, 29 August
* Last day to trade on Johannesburg Stock Exchange 2023
(JSE)
Wednesday, 30 August
* Shares trade ex-dividend on the JSE 2023
Thursday, 31 August
* Shares trade ex-dividend on the LSE 2023
Friday, 1 September
* Record date for LSE and JSE and last election for 2023
Scrip
Friday, 22 September
* Dividend payment date/New Scrip shares issued 2023
South African shareholders are advised that the dividend will be
regarded as a foreign dividend. Further details relating to
Withholding Tax for shareholders on the South African register will
be provided within the announcement detailing the currency
conversion rate on 22 August 2023. Share certificates on the South
African register may not be dematerialised or rematerialised
between 30 August 2023 and 1 September 2023, both dates inclusive.
Transfers between the UK and South African registers may not take
place between 22 August 2023 and 1 September 2023, both dates
inclusive.
Outlook
We are confident that the strong operational performance and
defensive nature of our assets, allied to the actions taken over
the last two years to reposition the Company and its balance sheet,
leave us well placed to continue to perform, despite some of the
current broader economic uncertainties.
We will also continue to explore selective opportunities such as
The Gyle to grow the business and further utilise our leading
management expertise in delivering our tried and tested community
centre strategy.
Principal risks and uncertainties
There are a number of risks and uncertainties which could have a
significant impact on future performance and could cause actual
results to differ materially from expected or historical results.
The Group carries out a regular review of the major risks it faces
and monitors the controls that have been put in place to mitigate
them.
A detailed explanation of the principal risks and uncertainties
was included on pages 44 to 51 of the Group's 2022 Annual Report. A
further review was carried out for the 30 June 2023 half year
taking into consideration the next six months to 30 December 2023.
Amongst the main factors considered were the impact of the
continuing inflationary pressures being experienced by consumers
within the UK and the expectation of higher interest rates for
longer than previously envisaged. The review concluded that while
as a result of these combined factors the profile of some risks,
including economic environment, property investment market risks
and Treasury risks had changed, the ultimate nature of them had not
and therefore the principal risks to the Group remain those
disclosed in the 2022 Annual Report. These have been summarised
below.
-- Property investment market risks - Weak economic conditions and poor sentiment in commercial real estate markets
allied to higher risk free rates may lead to low investor demand and further declines in valuation. Small changes
in property market yields can have a significant effect on property valuation and the impact of leverage could
magnify the effect on the Group's net assets.
-- Impact of the economic environment - A prolonged downturn in tenant demand driven by structural changes in retail
and/or macro-economic factors, such as the current inflationary pressures, could put further pressure on rent
levels. Tenant failures and reduced tenant demand could adversely affect rental income revenues, lease incentive
costs, void costs, available cash and the value of properties owned by the Group.
-- Treasury risk - Inability to fund the business or to refinance existing debt on economic terms may result in the
inability to meet financial obligations when due and put a limitation on financial and operational flexibility.
Cost of financing could be prohibitive in the future. Breach of any loan covenants could cause default on debt
and possible accelerated maturity. Unremedied breaches can trigger demand for immediate repayment of loans.
-- Climate related - The Group's failure to act on environmental issues could lead to reputational damage,
deterioration in customer and community relationships, or limit investment opportunities. Climate-related risks
extend to the global supply chain and business disruption from extreme weather events. Failure to comply with
regulations could result in financial exposure. The Group maintains a Climate-related risk matrix which
consolidates the results of the top 10 identified risks from the RCP4.5 and RCP8.5 scenarios outlined in the
climate risk assessment report and are in line with TCFD recommendations.
-- Tax and regulatory risks - Exposure to non-compliance with the REIT regime and changes in tax legislation or the
interpretation of tax legislation or previous transactions could result in tax related liabilities and other
losses arising. Exposure to changes in existing or forthcoming property related or corporate regulation could
result in financial penalties or loss of business or credibility.
-- People - The Group's business is partially dependent on the skills of a small number of key individuals. Loss of
key individuals or an inability to attract new employees with the appropriate expertise could reduce the
effectiveness with which the Group conducts its business.
-- Development risk - There is a risk that where capital expenditure and development projects are undertaken, that
delays and other issues may lead to increased cost and reputational damage. There is also the risk that planned
realisation of value is not achieved, for example if the property cannot subsequently be sold for the anticipated
amount or if tenants are not contracted on sufficiently attractive terms. Competing schemes may reduce footfall
and reduce tenant demand for space and the levels of rents which can be achieved
-- Business disruption from a major incident - The threat of a major incident, including the COVID-19 pandemic,
impacting one or more of the Group's assets. There is a risk of financial losses if unable to trade or impacts
upon shopper footfall and reputational and financial damage if business has or is perceived to have acted
negligently
-- Responsible business risk - Failure to act on environmental and social issues could lead to reputational damage,
deterioration in relationships with customers and communities and limit investment opportunities. Failure to
comply with regulations could result in financial exposure. Health and safety incidents could result in
reputational damage, financial liability for the Group and potentially criminal liability for the directors.
-- Customers and changing consumer trends - Changes in consumer shopping habits towards online purchasing and
delivery and the increase of CVAs by retailers and other retailer restructurings may adversely impact footfall in
shopping centres and potentially reduce tenant demand for space and the levels of rents which can be achieved.
-- IT & Cyber Security - The risk of IT failures or malicious attacks causing reputational or financial damage to
the business through loss of business time and opportunities or potential fines or regulatory penalties
-- Health & Safety - The Group could face criminal charges, financial loss and reputational damage if it or
individuals in management positions were found to have failed processes or been negligent in their actions.
The risks noted above do not comprise all those potentially
faced by the Group and are not intended to be presented in any
order of priority. Additional risks and uncertainties currently
unknown to the Group, or which the Group currently deems
immaterial, may also have an adverse effect on the financial
condition or business of the Group in the future. These issues are
kept under constant review to allow the Group to react in an
appropriate and timely manner to help mitigate the impact of such
risks.
Responsibility statement
The directors confirm that to the best of their knowledge:
-- the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial
Reporting";
-- the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of
important events during the first six months and description of principal risks and uncertainties for the
remaining six months of the year); and
-- the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of
related party transactions and changes therein).
By order of the Board
Lawrence Hutchings Stuart Wetherly
Chief Executive Group Finance Director
9 August 2023 9 August 2023
INDEPENT REVIEW REPORT TO CAPITAL & REGIONAL PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprises the condensed
consolidated income statement, the condensed consolidated balance
sheet, the condensed consolidated statement of changes in equity,
the condensed consolidated cash flow statement, and related notes 1
to 16.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial statements of the
group will be prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE (UK), however future events or conditions
may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the group a conclusion on the
condensed set of financial statement in the half-yearly financial
report. Our conclusion, including our Conclusions Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council. Our work
has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review
report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the
conclusions we have formed.
Mazars LLP
Statutory Auditor
London, United Kingdom
9 August 2023
Condensed consolidated income statement
For the six months to 30 June 2023
Unaudited
Six months
Unaudited to Audited
Six months 30 June Year to
to 30 June 2022 30 December
2023 (Restated)(1) 2022
Note GBPm GBPm GBPm
---------------------------------------- ----- ------------ --------------- -------------
Continuing operations
3b,
Revenue 4 30.7 28.5 60.6
Reversal of expected credit loss - 0.8 0.4
Cost of sales (16.4) (14.8) (32.8)
---------------------------------------- ----- ------------ --------------- -------------
Gross profit 14.3 14.5 28.2
Administrative costs (4.8) (4.7) (10.9)
(Loss)/profit on revaluation of 3a,
investment properties 7a (0.3) 1.1 (19.6)
Other gains and losses (0.5) 11.7 15.6
Profit on ordinary activities before
financing 8.7 22.6 13.3
Finance income 0.3 1.3 1.1
Finance costs (4.1) (5.0) (9.4)
---------------------------------------- ----- ------------ --------------- -------------
Profit before tax 4.9 18.9 5.0
Tax credit 5 1.2 1.1 0.3
---------------------------------------- ----- ------------ --------------- -------------
Profit for the period from continuing
operations 6.1 20.0 5.3
---------------------------------------- ----- ------------ --------------- -------------
Profit for the period from period
from discontinued operations (Luton) - 6.8 6.8
---------------------------------------- ----- ------------ --------------- -------------
Profit for the period 6.1 26.8 12.1
---------------------------------------- ----- ------------ --------------- -------------
Continuing operations
Basic earnings per share 3.6p 12.1p 3.2p
Diluted earnings per share 3.5p 11.9p 3.2p
Continuing and discontinued operations
Basic earnings per share 6 3.6p 16.2p 7.3p
Diluted earnings per share 6 3.5p 16.0p 7.2p
EPRA earnings per share
EPRA basic earnings per share 6 4.2p 3.7p 5.3p
EPRA diluted earnings per share 6 4.1p 3.7p 5.3p
---------------------------------------- ----- ------------ --------------- -------------
Condensed consolidated statement of comprehensive income
For the six months to 30 June 2023
Unaudited Unaudited
six months six months Audited
to to Year to
30 June 30 June 30 December
2023 2022 2022
GBPm GBPm GBPm
------------------------------------ ------------ ------------ -------------
Profit for the period 6.1 26.8 12.1
Other comprehensive income - - -
Total comprehensive income for the
period 6.1 26.8 12.1
------------------------------------ ------------ ------------ -------------
The results for the current and preceding periods are fully
attributable to equity shareholders.
The EPRA alternative performance measures used throughout this
report are industry best practice performance measures established
by the European Public Real Estate Association (EPRA). They are
defined in the Glossary to the Financial Statements. EPRA Earnings
and EPRA EPS are shown in Note 6 to these condensed financial
statements. EPRA net reinstatement value (NRV), net tangible assets
(NTA) and net disposal value (NDV) are shown in Note 13 to these
condensed financial statements. We consider EPRA NTA to be the most
relevant measure for our business.
(1) June 2022 comparative figures have been restated for a prior
year adjustment to the treatment of rent concessions as explained
in note 2.
Condensed consolidated balance sheet
At 30 June 2023
Unaudited Audited
30 June 30 December
2023 2022
Note GBPm GBPm
---------------------------------------- ----- ---------- -------------
Non-current assets
Investment properties 7 326.8 320.1
Plant and equipment 2.7 1.8
Right of use assets 8 21.3 21.6
Receivables and other assets 9 8.5 9.6
Total non-current assets 359.3 353.1
----------------------------------------- ----- ---------- -------------
Current assets
Receivables and other assets 9 16.1 14.4
Cash and cash equivalents 10 49.1 55.5
Total current assets 65.2 69.9
----------------------------------------- ----- ---------- -------------
Total assets 424.5 423.0
----------------------------------------- ----- ---------- -------------
Current liabilities
Trade and other payables (29.3) (31.0)
Current tax 5 - (1.0)
Lease liabilities (3.2) (3.0)
Bank loans 11 (38.9) -
Total current liabilities (71.4) (35.0)
----------------------------------------- ----- ---------- -------------
Net current assets 6.2 34.9
----------------------------------------- ----- ---------- -------------
Non-current liabilities
Bank loans 11 (143.2) (181.8)
Obligations under finance leases (26.7) (27.1)
Total non-current liabilities (169.9) (208.9)
----------------------------------------- ----- ---------- -------------
Total liabilities (241.3) (243.9)
----------------------------------------- ----- ---------- -------------
Net assets 183.2 179.1
----------------------------------------- ----- ---------- -------------
Equity
Share capital 17.4 16.9
Share premium 3.6 1.7
Merger reserve 60.3 60.3
Own shares held - -
Retained earnings 101.9 100.2
----------------------------------------- ----- ---------- -------------
Equity shareholders' funds 183.2 179.1
----------------------------------------- ----- ---------- -------------
Basic net assets per share 105.6p 105.9p
EPRA net reinstatement value per share 13 102.2p 103.4p
EPRA net tangible assets per share 13 102.2p 103.4p
EPRA net disposal value per share 13 115.7p 115.1p
----------------------------------------- ----- ---------- -------------
Condensed consolidated statement of changes in equity
For the six months to 30 June 2023
Capital
Share Share Merger redemption Own shares Retained Total
Capital Premium(1) reserve(2) Reserve held(3) Earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------ ------------ ------------ ------------ ----------- ---------- ---------
Balance at 30 December
2021 (Audited) 16.5 266.1 60.3 4.4 - (178.9) 168.4
------ ------------ ------------ ------------ ----------- ---------- ---------
Profit for the period - - - - - 26.8 26.8
Other comprehensive
result for the period - - - - - - -
------ ------------ ------------ ------------ ----------- ---------- ---------
Total comprehensive
income for the period - - - - - 26.8 26.8
Credit to equity
for equity-settled
share-based payments - - - - - 0.1 0.1
Capital reduction(4) - (266.1) - (4.4) - 270.5 -
Balance at 30 June
2022
(unaudited) 16.5 - 60.3 - - 118.5 195.3
-------------------------- ------ ------------ ------------ ------------ ----------- ---------- ---------
Loss for the period - - - - - (14.7) (14.7)
Other comprehensive
result for the period - - - - - - -
------ ------------ ------------ ------------ ----------- ---------- ---------
Total comprehensive
income for the period - - - - - (14.7) (14.7)
Credit to equity
for equity-settled
share-based payments - - - - - 0.4 0.4
Dividends paid,
including scrip - - - - - (4.0) (4.0)
Shares issued, net
of costs 0.4 1.7 - - - - 2.1
-------------------------- ------ ------------ ------------ ------------ ----------- ---------- ---------
Balance at 30 December
2022 16.9 1.7 60.3 - - 100.2 179.1
-------------------------- ------ ------------ ------------ ------------ ----------- ---------- ---------
Profit for the period - - - - - 6.1 6.1
Other comprehensive
result for the period - - - - - - -
------ ------------ ------------ ------------ ----------- ---------- ---------
Total comprehensive
income for the period - - - - - 6.1 6.1
Credit to equity
for equity-settled
share-based payments - - - - - 0.4 0.4
Dividends paid,
including scrip - - - - - (4.7) (4.7)
Shares issued, net
of costs 0.5 1.9 - - - - 2.4
-------------------------- ------ ------------ ------------ ------------ ----------- ---------- ---------
Balance at 30 June
2023
(unaudited) 17.4 3.6 60.3 - - 101.9 183.2
-------------------------- ------ ------------ ------------ ------------ ----------- ---------- ---------
Notes:
1 These reserves are not distributable.
2 The merger reserve of GBP60.3 million arose on the Group's
capital raising in 2009 which was structured so as to allow the
Company to claim merger relief under section 612 of the Companies
Act 2006 on the issue of ordinary shares. The merger reserve is
available for distribution to shareholders.
3 Own shares relate to shares purchased out of distributable
profits and therefore reduce reserves available for
distribution.
4 In June 2022 a capital reduction was completed transferring
the remaining reserves from share premium and the capital
redemption reserve to retained earnings.
Condensed consolidated cash flow statement
For the six months to 30 June 2023
Unaudited Unaudited Audited
Six months Six months Year to
to 30 to 30 30 December
June 2023 June 2022 2022
Note GBPm GBPm GBPm
Operating activities
Net cash from operations 12 10.0 12.4 25.3
Distributions received from fixed
asset investments - - -
Interest paid (3.3) (5.1) (8.0)
Interest received 0.3 - -
Income tax paid - - (0.1)
Cash flows from operating activities 7.0 7.3 17.2
------------------------------------------- ----- ------------ ------------ -------------
Investing activities
Disposal of investment properties - - 59.1
Purchase of plant and equipment (0.6) (0.5) (0.7)
Capital expenditure on investment
properties (11.1) (8.3) (10.6)
Cash flows from investing activities (11.7) (8.8) 47.8
------------------------------------------- ----- ------------ ------------ -------------
Financing activities
Dividends paid (net of scrip) including
withholding tax (1.4) - (1.2)
Bank loans drawn down - - 4.0
Bank loans repaid - (18.9) (70.8)
Loan arrangement costs - - (1.6)
Fixed payment under head leases (0.3) (0.2) (0.4)
Cash flows from financing activities (1.7) (19.1) (70.0)
------------------------------------------- ----- ------------ ------------ -------------
Net decrease in cash and cash equivalents (6.4) (20.6) (5.0)
Cash and cash equivalents at the
beginning of the period 55.5 58.5 58.5
------------------------------------------- ----- ------------ ------------ -------------
Cash and cash equivalents at the
end of the period 49.1 37.9 53.5
------------------------------------------- ----- ------------ ------------ -------------
Assets classified as held for sale - 2.0 2.0
------------------------------------------- ----- ------------ ------------ -------------
Cash and cash equivalents excluding
assets classified as held for sale 10 49.1 39.9 55.5
------------------------------------------- ----- ------------ ------------ -------------
Notes to the condensed financial statements
For the six months to 30 June 2023
1 General information
The comparative information included for the year ended 30
December 2022 does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. A copy of the statutory
accounts for that year has been delivered to the Registrar of
Companies. The auditor has reported on those accounts: their report
was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
The Group's financial performance is not materially impacted by
seasonal fluctuations.
2 Accounting policies
Basis of preparation
The annual financial statements of Capital & Regional plc
are prepared in accordance with IFRS as adopted by the United
Kingdom. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
IAS 34 "Interim Financial Reporting" as adopted by the United
Kingdom. The financial statements are prepared in GBP being the
functional currency of the Group.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or
liability, the Group takes into account the characteristics of the
asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at
the measurement date. Fair value for measurement and/or disclosure
purposes in these financial statements is determined on such basis,
except for share-based payments that are within the scope of IFRS
2, leasing transactions that are within the scope of IFRS 16, and
measurements that have some similarities to fair value but are not
fair value, such as net realisable value in IAS 2 or value in use
in IAS 36.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
-- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities.
-- Level 2 inputs are inputs other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from
prices).
-- Level 3 inputs are unobservable inputs for the asset or liability.
The Half-Year Report was approved by the Board on 9 August
2023.
Prior year restatement
In October 2022, the IASB finalised the agenda decision approved
by the IFRS Interpretation Committee (IFRS IC) on 'Lessor
Forgiveness of Lease Payments (IFRS 9 and IFRS 16)'. The agenda
decision addresses the accounting from the perspective of the
lessor, and whether to apply the derecognition requirements in IFRS
9 or the lease modification requirements in IFRS 16 when accounting
for the rent concession.
When the lease payments are forgiven, the Committee concluded
that the lessor should apply the derecognition requirements in IFRS
9 to the operating lease receivables and apply the lease
modification requirements in IFRS 16 to future lease payments,
including accrued lease payments, as discussed further below.
In applying the requirements in IFRS 9, the lessor should
derecognise the operating lease receivable, including any
associated ECL allowance.
In adopting the above treatment the Group has restated the June
2022 results for a prior year adjustment. This restatement
derecognises the rent free debtor amortisation associated with rent
concessions granted specifically relating to Covid 19, which has an
associated knock-on impact on the investment properties
revaluation, given valuations are adjusted for such amounts. The
Group's Adjusted Profit for 2022 is GBP0.1 million higher than it
would have been without these adjustments.
The following table summarises the impact of the change on the
financial statements of the Group. The total impact on net assets
and basic and diluted earnings per share is GBPnil.
30 June
2022
GBPm
Consolidated income statement
Revenue 0.1
Adjusted profit 0.1
Loss on revaluation of investment properties (0.1)
Loss for the period -
========
30 December
2021
GBPm
Consolidated statement of changes in equity
Retained earnings balance at 30 December
2020 (2.3)
Loss for the year 2.3
Retained earnings balance at 30 December -
2021
------------
2 Accounting policies (continued)
Key judgements and sources of estimation uncertainty
The preparation of financial statements requires the Directors
to make estimates that may affect the reported amounts of assets
and liabilities, income and expenses. The key sources of estimation
uncertainty are as reported in the annual audited financial
statements for the year ended 30 December 2022. With the exception
of those below, there are no key judgements impacting the financial
statements.
Property valuation
The valuation of the Group's property portfolio is inherently
subjective due to, among other factors, the individual nature of
each property, its location and the expected future rental revenues
from that particular property. As a result, the valuations the
Group places on its property portfolio are subject to a degree of
uncertainty and are made on the basis of assumptions which may not
prove to be accurate. We are now in a phase of the valuation cycle
where there is persistent negative sentiment and low transactional
evidence as such greater judgement has been applied.
The investment property valuation contains a number of
assumptions upon which the valuation of the Group's properties as
at 30 June 2023 was based. The assumptions on which the property
valuation reports have been based include, but are not limited to,
matters such as the tenure and tenancy details for the properties,
the condition of the properties, prevailing market yields and
comparable market transactions. These assumptions are market
standard and accord with the Royal Institution of Chartered
Surveyors (RICS) Valuation - Professional Standards UK 2014
(revised January 2022).
If the assumptions upon which the valuation was based prove to
be inaccurate, this may have an impact on the value of the Group's
investment properties, which could in turn have an effect on the
Group's financial position and results. Estimated rental values and
equivalent yields are considered key assumptions. Note 7c provides
sensitivity analysis estimating the impact that changes in the
estimated rental values or equivalent yields would have on the
Group's property valuations. Valuations are discussed further in
note 7.
Increase in credit risk
When measuring expected credit loss the Group uses reasonable
and supportable forward looking information, which is based on
assumptions for the future movement of different economic drivers
and how these drivers will affect each other. In assessing whether
the credit risk of an asset has significantly increased the Group
takes into account qualitative and quantitative reasonable and
supportable forward looking information. Probability of default
constitutes a key input in measuring expected credit losses (ECL).
Probability of default is an estimate of the likelihood of default
over a given time horizon, the calculation of which includes
historical data, assumptions and expectations of future conditions.
Receivables are discussed in note 9.
Going concern
Under the UK Corporate Governance Code the Board needs to report
whether the business is a going concern. In making its assessment
of Going Concern, the Group has considered the general risk
environment and the specific risks that relate to the Group and its
sector. This has incorporated considering the current
macro-economic inflationary pressures as well as the ongoing
impacts and speed of recovery from Covid-19 as well as the
structural trends that were already under way in the retail
industry.
At 30 June 2023, the Group had total cash at bank on balance
sheet of GBP49.1 million. Of which GBP24.3 million was held
centrally outside of secured loan arrangements. This provides a
significant cash contingency to cover any reasonable disruption to
operations in both the base and downside case scenarios that have
been modelled for at least the period of the next 18 months that is
considered for going concern purposes.
As part of the restructure of The Mall debt facility that
completed in November 2021, the lender provided covenant waivers
that run until November 2023. The Group is currently compliant with
all covenant tests on the facility and hence not reliant on the
waivers or modifications. On the Ilford facility, as noted, the
Group had covenant waivers that ran until January 2023 and has
improved covenant terms that extend beyond the end of 2024. The
Mall loan facility matures in January 2027 with a one-year
conditional extension option. The Ilford loan matures in March 2024
with an 18-month conditional extension option dependent upon
meeting a debt yield and net loan to value covenant test in Q4 of
2023. On Hemel Hempstead, the Group drew down on a new GBP4 million
loan facility in July 2022. The Group's forecasts demonstrate a
reasonable level of covenant headroom on the Loan to Value and
Projected Interest Cover Ratio tests that are relevant to the new
agreement.
All of the Group's asset backed loan facilities are ring-fenced
within their own SPV structures with no recourse to Capital &
Regional plc and no cross-default provisions.
In making its assessment of Going Concern, the Group has run
updated forecasts on both a base case and downside basis. In the
latter, the Group has sensitised rent collection to 90% collection,
reduced car park and ancillary income by 10% and removed any
contribution from Snozone to reflect how a downturn in expected
trading, such as might be caused by a further wave of Government
restrictions, could impact cashflows. The Group has also considered
a 15% reduction in property valuations. The Group's headroom on The
Mall and Hemel Hempstead is sufficient to withstand this level of
decline from the 30 June 2023 valuations.
On Ilford, such a decline would breach the LTV covenant level
however the cash earmarked for capital expenditure investment into
the asset would be sufficient to theoretically cure although in
such a scenario the Group would seek to agree with the lender to
invest the funds to develop the asset. The same position applies in
respect of the LTV condition that is required in order to trigger
the 18-month extension to the loan's maturity. Ultimately given the
ring-fenced nature of the loan facility if the Group decided not to
cure any breach and could not agree a compromise with the lender it
could, in extremis, effectively surrender the asset and not face
any recourse to the Group. The Group's cashflow forecasts over the
period considered for Going Concern purposes assume it is a net
investor into Ilford to fund the masterplan initiatives and hence
such a scenario would not reduce the amount of cash available to
the Group.
In coming to its Going Concern conclusion, the Group has also
considered, but not relied upon, other options available to
generate or conserve additional cash, to reduce debt levels and to
fund value accretive capital expenditure and letting initiatives.
These include but are not limited to: the potential disposal of
assets either in whole or part; the opportunity to reduce or
suspend dividend payments (or offer a Scrip alternative); and the
potential raising of additional funds.
Having due regard to all of the above matters and after making
appropriate enquiries, the Directors have a reasonable expectation
that the Group and the Company have adequate resources to continue
in operational existence for the foreseeable future. Therefore, the
Board continues to adopt the Going Concern basis in preparing the
financial statements.
Change in accounting policies
The condensed consolidated interim financial information has
been prepared on the basis of the accounting policies, significant
judgements, key assumptions and estimates as set out in the notes
to the Group's annual financial statements for the year ended 30
December 2022. Taxes on income in the interim periods are accrued
using the tax rate that would be applicable to expected total
annual earnings. The June 2022 results have been restated as a
result of a change in accounting policies relating to rent
concessions, as discussed above.
2 Accounting policies (continued)
New and revised standards issued but not yet effective
At the date of authorisation of these financial statements, the
Group has not applied the following new and revised IFRS Standards
that have been issued but are not yet effective:
IFRS 17 Insurance Contracts including Amendments to IFRS 17
Amendments to IAS 16-Leases on sale and leaseback
Amendments to IAS 1-Classification of Liabilities as Current or
Non-current including Classification of Liabilities as Current or
Non-current
Amendments to IAS 12-Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
Amendments to IAS 1 and IFRS Practice Statement 2-Disclosure of
Accounting Policies
Amendments to IAS 8-Definition of Accounting Estimates
Amendment to IAS 12 - International tax reform - pillar two
model rules
Amendments to IAS 7 and IFRS 7 on Supplier finance
arrangements
None of these standards are anticipated to have a material
impact upon the Group's results.
3 Operating segments
3a Operating segment performance
Following the reclassification of Hemel Hempstead and Luton as
'Held for Sale' as at 30 December 2021 the segment of Shopping
Centres - Managed Assets that included those assets in the prior
year is no longer relevant. As a consequence the Group's operating
segments are Shopping Centres, Snozone and Group/Central. Shopping
Centres includes the results of the Group's centres at Ilford and
Hemel Hempstead (from 11 April 2022 being the date an agreement to
buy back its loan was reached) and those centres within The Mall
loan facility, namely Blackburn (in 2022 until it was sold on 9
August 2022), Maidstone, Walthamstow and Wood Green. The Group
deconsolidated its interest in Luton on 20 May 2022 reflecting
changes that took place on that date to constitution of the Luton
entities including the appointment of an independent director with
specific rights regarding the proposed sale process for the
asset.
Group/Central includes management fee income, Group overheads
incurred by Capital & Regional plc, Capital & Regional
Property Management and other subsidiaries.
The Shopping Centres segments derive their revenue from the
rental of investment properties. The Snozone and Group/Central
segments derive their revenue from the operation of indoor ski
slopes and the management of property funds or schemes
respectively. The split of revenue between these classifications
satisfies the requirement of IFRS 8 to report revenues from
different products and services. Depreciation and charges in
respect of share-based payments represent the only significant
non-cash expenses. Prior period comparatives have also been
restated as a result.
Shopping Group/
Centres Snozone Central Total
Six months to 30 June
2023 (Unaudited) Note GBPm GBPm GBPm GBPm
------------------------------- ----- --------- -------- --------- --------
Rental income from external
sources 3b 16.6 - - 16.6
Property and void costs(1) (4.9) - - (4.9)
--------- -------- --------- --------
Net rental income 11.7 - - 11.7
Net interest expense (3.7) - 0.2 (3.5)
Snozone income/Management
fees(2) 3b - 7.7 1.2 8.9
Snozone/Management expenses - (6.1) (3.2) (9.3)
Depreciation - - (0.1) (0.1)
Variable overhead - - (0.7) (0.7)
Adjusted Profit/(loss) 8.0 1.6 (2.6) 7.0
Revaluation of properties (0.3) - - (0.3)
Loss on disposal/transaction
costs (0.6) - - (0.6)
Snozone depreciation and
amortisation - (1.0) - (1.0)
Notional interest (net
of rent expense within
EBITDA) - 0.3 - 0.3
Gain on financial instruments (0.3) - - (0.3)
Long-term incentives - - (0.4) (0.4)
Tax (charge)/credit - (0.3) 1.5 1.2
Other items 0.2 - - 0.2
Profit/(loss) 7.0 0.6 (1.5) 6.1
--------- -------- --------- --------
Total assets 3b 369.6 26.0 28.9 424.5
Total liabilities 3b (210.1) (27.6) (3.6) (241.3)
--------- -------- --------- --------
Net assets/(liabilities) 159.5 (1.6) 25.3 183.2
------------------------------- ----- --------- -------- --------- --------
(1) Includes expected credit loss.
(2) Asset management fees of GBP1.1 million charged from the
Group's Capital & Regional Property Management entity to the
Group's Shopping Centres have been excluded from the table
above.
3 Operating segments (continued)
3a Operating segment performance
Shopping
Centres
Shopping - Managed
Centres Assets
- Investment (discontinued Group/
Assets operations) Snozone Central Total
Six months to 30 June
2022 (Unaudited) (Restated)(4) Note GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ----- -------------- --------------- -------- --------- --------
Rental income from external
sources 3b 17.5 - - - 17.5
Property and void costs(1) (5.2) - - - (5.2)
-------------- --------------- -------- --------- --------
Net rental income 12.3 - - - 12.3
Net interest expense (4.7) - - - (4.7)
Snozone income/Management
fees(2) 3b - - 6.4 1.7 8.1
Snozone/Management expenses - - (5.6) (3.4) (9.0)
Depreciation - - - (0.1) (0.1)
Variable overhead - - - (0.7) (0.7)
Adjusted Profit/(loss) 7.6 - 0.8 (2.5) 5.9
Revaluation of properties 1.1 - - - 1.1
Loss on disposal (0.4) - - - (0.4)
Snozone depreciation and
amortisation - - (1.1) - (1.1)
Notional interest (net
of rent expense within
EBITDA) - - 0.4 - 0.4
Gain on financial instruments 1.0 - - - 1.0
Long-term incentives - - - (0.1) (0.1)
Tax credit - - - 1.1 1.1
Other items (including
write back of Luton liabilities)(3) - 6.8 - (0.2) 6.6
Gain on debt purchase
(Hemel Hempstead)(3) 12.3 - - - 12.3
-------------- --------------- -------- --------- --------
Profit/(loss) 21.6 6.8 0.1 (1.7) 26.8
-------------- --------------- -------- --------- --------
Total assets 3b 437.4 - 27.1 24.6 489.1
Total liabilities 3b (258.5) - (28.5) (6.8) (293.8)
-------------- --------------- -------- --------- --------
Net assets/(liabilities) 178.9 - (1.4) 17.8 195.3
-------------------------------------- ----- -------------- --------------- -------- --------- --------
(1) Includes expected credit loss.
(2) Asset management fees of GBP1.3 million charged from the
Group's Capital & Regional Property Management entity to the
Group's Shopping Centres have been excluded from the table
above.
(3) Other gains and losses of GBP11.7 million per the income
statement includes GBP12.3 million gain on debt repurchase in Hemel
Hempstead as described in the Financial Review, GBP(0.2) million of
group/central one off costs and GBP(0.4) million loss on
disposal.
(4) June 2022 comparative figures have been restated for a prior
year adjustment to the treatment of rent concessions as explained
in note 2.
3 Operating segments (continued)
3a Operating segments
Shopping
Centres
Shopping - Managed
Centres Assets
- Investment (discontinued Group/
Assets operations) Snozone Central Total
Year to 30 December Note GBPm GBPm GBPm GBPm GBPm
2022
--------------------------- ----- -------------- --------------- -------- --------- --------
Rental income from
external sources 3b 34.7 - - - 34.7
Property and void
costs(1) (11.2) - - - (11.2)
--------------------------- ----- -------------- --------------- -------- --------- --------
Net rental income 23.5 - - - 23.5
Net interest expense (9.3) - - - (9.3)
Snozone income/Management
fees(2) 3b - - 13.0 3.3 16.3
Management expenses - - (11.6) (6.7) (18.3)
Depreciation - - - (0.3) (0.3)
Variable overhead - - - (1.6) (1.6)
--------------------------- ----- --------------
Adjusted Profit/(loss) 14.2 - 1.4 (5.3) 10.3
Revaluation of properties (19.6) - - - (19.6)
Profit on disposal 1.5 - - - 1.5
Snozone depreciation
and amortisation - - (2.1) - (2.1)
Notional interest
(net of rent expense
within EBITDA) - - 0.8 - 0.8
Gain on financial
instruments 1.1 - - - 1.1
Long-term incentives
(non-cash) - - - (0.5) (0.5)
Tax credit - - - 0.3 0.3
Other items 10 1.6 6.8 - (0.6) 7.8
Gain on debt repurchase 10 12.5 - - - 12.5
--------------------------- ----- -------------- --------------- -------- --------- --------
Profit/(loss) 11.3 6.8 0.1 (6.1) 12.1
--------------------------- ----- -------------- --------------- -------- --------- --------
Total assets 3b 365.5 - 27.1 30.4 423.0
Total liabilities 3b (210.6) - (28.9) (4.4) (243.9)
--------------------------- ----- -------------- --------------- -------- --------- --------
Net assets/(liabilities) 154.9 - (1.8) 26.0 179.1
--------------------------- ----- -------------- --------------- -------- --------- --------
(1) Includes expected credit loss.
(2) Asset management fees of GBP2.5 million charged from the
Group's Capital & Regional Property Management entity to
wholly-owned assets have been excluded from the table above.
3b Reconciliations of reportable revenue, assets and
liabilities
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 30 December
2022
2023 (Restated)(1) 2022
Revenue Note GBPm GBPm GBPm
-------------------------------------------- ------- -------------- --------------- ------------
Rental income from external sources
including associates 3a 16.6 17.5 34.7
Other revenue - - -
Service charge income 5.5 3.5 10.5
Management fees 3a 1.3 1.7 3.4
Snozone income 3a 7.7 6.4 13.0
--------------------------------------------- ------ ------------
Revenue for reportable segments 31.1 29.1 61.6
Elimination of inter-segment revenue (0.4) (0.6) (1.0)
Revenue and other income per consolidated
income statement 30.7 28.5 60.6
--------------------------------------------- ------ -------------- --------------- ------------
Revenue by country
------------------------------------------- ----- ----- -----
UK 28.6 26.8 57.1
Spain 2.1 1.7 3.5
----- ----- -----
Revenue and other income per consolidated
income statement 30.7 28.5 60.6
------------------------------------------- ----- ----- -----
(1) June 2022 comparative figures have been restated for a prior
year adjustment to the treatment of rent concessions as explained
in note 2.
3 Operating segments (continued)
3b Reconciliations of reportable revenue, assets and liabilities
(continued)
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2023 2022 2022
Assets GBPm GBPm GBPm
------------------------------------------ ----------- ----------- ------------
Shopping Centres 369.6 397.4 365.5
Snozone 26.0 27.1 27.1
Group/Central 28.9 24.6 30.4
Assets classified as held for sale - 40.0 -
----------- ----------- ------------
Total assets of reportable segments
and Group assets 424.5 489.1 423.0
------------
Liabilities
------------------------------------------ ----------- ----------- ------------
Shopping Centres (210.1) (257.1) (210.6)
Snozone (27.6) (28.5) (28.9)
Group/Central (3.6) (6.8) (4.4)
Liabilities directly associated with
assets classified as held for sale - (1.4) -
Total liabilities of reportable segments
and Group liabilities (241.3) (293.8) (243.9)
Net assets by country
------------------------------------------ ----------- ----------- ------------
UK 182.0 194.2 177.8
Spain 1.2 1.0 1.3
Germany - 0.1 -
----------- ----------- ------------
Group net assets 183.2 195.3 179.1
------------------------------------------ ----------- ----------- ------------
4 Revenue
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2022
2023 (Restated)(1) 2022
Statutory Note GBPm GBPm GBPm
-------------------------------------------- ------ ----------- --------------- ------------
Gross rental income 13.1 13.9 26.7
Car park and other ancillary income 3.5 3.6 8.0
----------- --------------- ------------
Rental income from external sources 16.6 17.5 34.7
Service charge income 5.5 3.5 10.5
External management fees 0.9 1.1 2.4
Snozone income 7.7 6.4 13.0
Other income - - -
Revenue and other income per consolidated
income statement 30.7 28.5 60.6
-------------------------------------------- ------ ----------- --------------- ------------
(1) June 2022 comparative figures have been restated for a prior
year adjustment to the treatment of rent concessions as explained
in note 2.
Management fees represent revenue earned by Capital &
Regional Plc and the Group's Capital & Regional Property
Management subsidiary. Fees charged to wholly-owned assets have
been eliminated on consolidation.
5 Tax
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2023 2022 2022
Tax credit/(charge) GBPm GBPm GBPm
----------------------------------- ----------- ----------- ------------
UK corporation tax - 0.8 (0.4)
Adjustments in respect of prior
years 1.1 - 0.4
Total current tax credit/(charge) 1.1 0.8 -
------------------------------------ ----------- ----------- ------------
Deferred tax 0.1 0.3 0.3
------------------------------------ ----------- ----------- ------------
Total tax c redit/(charge) 1.2 1.1 0.3
------------------------------------ ----------- ----------- ------------
5. Tax (continued)
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2023 2022 2022
Tax credit/(charge) reconciliation GBPm GBPm GBPm
---------------------------------------- ------------ ----------- ------------
Profit/(loss) before tax on continuing
operations 4.9 18.9 5.0
----------------------------------------- ----------- ----------- ------------
(Profit)/loss multiplied by the UK
corporation tax rate of 19% (30 June
2022 and 30 December 2022: 19%) (0.9) (3.6) (1.0)
REIT exempt income and gains 0.7 3.4 2.1
Non-allowable expenses and non-taxable
items (0.3) 0.1 (1.4)
Excess tax losses 0.5 0.2 -
Current tax prior year adjustment 1.1 0.8 0.4
Effect of rate change on deferred
tax 0.1 0.2 0.2
Total tax credit/(charge) - continuing
operations 1.2 1.1 0.3
----------------------------------------- ----------- ----------- ------------
On 10 June 2021 Finance Act 2021 received Royal Assent and
enacted provisions maintaining the main corporation tax rate at 19%
for the year commencing 1 April 2022 and increasing the rate to 25%
for the year commencing 1 April 2023.
Consequently the UK corporation tax rate at which deferred tax
is booked in the Financial Statements is 25% (June 2022: 25%).
The Group has recognised a deferred tax asset of GBP1.2 million
(30 December 2022: GBP1.1 million). The group has recognised
deferred tax assets for the non-REIT profit entities in respect of
head lease payments and capital allowances to the extent that
future matching taxable profits are expected to arise.
No deferred tax asset has been recognised in respect of
temporary differences arising from investments or investments in
associates in the current or prior years as it is not certain that
a deduction will be available when the asset crystallises.
The Group has GBP20.7 million (30 December 2022: GBP12.1
million) of unused revenue tax losses, all of which are in the UK.
No deferred tax asset has been recognised in respect of these
losses due to the unpredictability of future taxable profit streams
and other reasons which may restrict the utilisation of the losses
(30 December 2022: GBPnil). The Group has unused capital losses of
GBP24.2 million (30 December 2022: GBP24.2 million) that are
available for offset against future gains but similarly no deferred
tax has been recognised in respect of these losses owing to the
unpredictability of future capital gains and other reasons which
may restrict the utilisation of the losses. The losses do not have
an expiry date.
The Group converted to a group REIT on 31 December 2014.
Therefore, the Group does not pay UK corporation tax on the profits
and gains from qualifying rental business in the UK provided it
meets certain conditions. Non-qualifying profits and gains of the
Group continue to be subject to corporation tax as normal. In order
to retain group REIT status certain ongoing criteria must be
maintained. The main criteria are as follows:
-- at the start of each accounting year, the value of the assets
of the property rental business plus cash must be at least 75% of
the total value of the Group's assets;
-- at least 75% of the Group's total profits must arise from the property rental business; and
-- at least 90% of the Group's UK property rental profits as
calculated under tax rules must be distributed.
The Directors intend that the Group should continue as a group
REIT for the foreseeable future, with the result that deferred tax
is no longer recognised on temporary differences relating to the
property rental business.
6 Earnings per share
The European Public Real Estate Association ("EPRA") has issued
recommendations for the calculation of earnings per share
information as shown in the following table:
Six months to 30 Six months to 30
June 2023 (unaudited) June 2022
Year to 30 December
(unaudited) 2022
Restated(4) (audited)
Adjusted Loss EPRA Adjusted Adjusted
Note Profit EPRA Profit restated restated Profit Profit EPRA Profit
--------------- ------ ------- ------ --------- --------- --------- --------- -------- ------- ----------
Profit (GBPm)
Profit for the
year 6.1 6.1 6.1 26.8 26.8 26.8 12.1 12.1 12.1
Revaluation
(loss)/gain
on investment
properties
(net
of tax) 3a - 0.3 0.3 - (1.1) (1.1) - 19.6 19.6
Loss on
disposal
(net of tax) 3a - 0.6 0.6 - 0.4 0.4 - (1.5) (1.5)
Changes in fair
value of
financial
instruments 3a - 0.3 0.3 - (1.0) (1.0) - (1.1) (1.1)
Share-based
payments 3a - - 0.4 - - 0.1 - - 0.5
Tax credit - - (1.2) - - (1.1) - - -
Adjustments
to Snozone
EBITDA - - 0.7 - - 0.7 - - 2.0
Other items(2) - (0.2) (0.2) - (18.9) (18.2) - (20.3) (19.3)
------- ------ --------- --------- --------- --------- -------- ------- ----------
Profit/(Loss) 6.1 7.1 7.0 26.8 6.2 5.9 12.1(3) 8.8 10.3
------- ------ --------- --------- --------- --------- -------- ------- ----------
Earnings per
share 3.6p 4.2p 4.2p 16.2p 3.7p 3.6p 7.3p 5.3p 6.2p
Diluted earnings
per share 3.5p 4.1p 4.1p 16.0p 3.7p 3.5p 7.2p 5.3p 6.1p
(1) 2021 includes GBP0.2 million cost related to the termination
of interest rate swap liabilities within The Mall loan
facility.
(2) Other Items in 2022 included a GBP12.5 million gain on
repurchase of Hemel Hempstead debt at a discount and a GBP6.8
million gain on the deconsolidation of Luton.
(3) GBP6.8 million of the 2022 Profit related to discontinued
operations.
(4) June 2022 comparative figures have been restated for a prior
year adjustment to the treatment of rent concessions as explained
in note 2.
Six months Six months to
Weighted average number to 30 June 2023 30 June 2022 Year to 30 December
of shares (m) (Unaudited) (Unaudited) 2022 (Audited)
-------------------------- ----------------- -------------- --------------------
Ordinary shares in issue 169.9 165.4 166.3
Own shares held - - -
----------------- -------------- --------------------
Basic 169.9 165.4 166.3
Dilutive contingently
issuable shares
and share options 4.3 2.4 2.4
----------------- -------------- --------------------
Diluted 174.2 167.8 168.7
--------------------------- ----------------- -------------- --------------------
At the end of the period, the Group had nil (30 December 2022:
nil) additional share options and contingently issuable shares
granted under share-based payment schemes that could potentially
dilute basic earnings per share in the future but which have not
been included in the calculation because they are not dilutive or
the performance conditions for vesting were not met based on the
position at 30 June 2023.
6 Earnings per share (continued)
Headline earnings per share
Headline earnings per share has been calculated and presented as
required by the Johannesburg Stock Exchange Listings
Requirements.
Six months Six months Year to
to to
30 June 2023 30 June 2022 30 December
(Unaudited) (Unaudited) 2022
(restated)(2) (Audited)
Basic Diluted Basic Diluted Basic Diluted
-------------------------------- ---- ------- -------- ------- -------- ------- --------
Profit/(Loss) (GBPm)
Profit for the period 6.1 6.1 26.8 26.8 12.1 12.1
Revaluation of investment
properties (net of tax) 0.3 0.3 (1.1) (1.1) 19.6 19.6
Loss/(profit) on disposal of
investment properties (net of
tax) 0.6 0.6 0.4 0.4 (1.5) (1.5)
Other items (1) (0.2) (0.2) (18.9) (18.9) (20.3) (20.3)
------- --------
Headline earnings 6.8 6.8 7.2 7.2 9.9 9.9
Weighted average number
of shares (m)
Ordinary shares in issue 169.9 169.9 165.4 165.4 166.3 166.3
Own shares held - - - - - -
Dilutive contingently issuable
shares and share options 4.3 - 2.4 - 2.4
------- -------- ------- -------- ------- --------
169.9 174.2 165.4 167.8 166.3 168.7
------- -------- ------- -------- ------- --------
Headline Earnings per
share 4.1p 4.0p 4.4p 4.3p 6.0p 5.9p
------- -------- ------- -------- ------- --------
(1) Other Items in 2022 included a GBP12.5 million gain on
repurchase of Hemel Hempstead debt at a discount and a GBP6.8
million gain on the deconsolidation of Luton.
(2) June 2022 comparative figures have been restated for a prior
year adjustment to the treatment of rent concessions as explained
in note 2.
7 Investment properties
7a Shopping Centres
Freehold Leasehold Total
investment investment property
properties properties assets
GBPm GBPm GBPm
------------------------------- ----------- ----------- ---------
Valuation
At 30 December 2022 (Audited) 236.7 83.4 320.1
Capital expenditure 6.9 0.1 7.0
Valuation deficit (0.2) (0.1) (0.3)
At 30 June 2023 (Unaudited) 243.3 83.4 326.8
-------------------------------- ----------- ----------- ---------
7b Property assets summary
Unaudited Audited
30 June 30 December
2023 2022
GBPm GBPm
---------------------------------------- ---------- --------------
Investment properties at fair value
- Shopping Centres 329.7 322.8
Head leases treated as finance leases
on investment properties 5.4 5.4
Unamortised tenant incentives on
investment properties (8.3) (8.1)
------------------------------------------ ---------- --------------
IFRS Property Value 326.8 320.1
---------------------------------------- ---------- --------------
7 Investment properties (continued)
7c Valuations
External valuations were carried out on all of the property
assets detailed in the table above. The valuations at 30 June 2023
were carried out by independent qualified professional valuers from
CBRE Limited and Knight Frank LLP in accordance with RICS
standards. These valuers are not connected with the Group and their
fees are charged on a fixed basis that is not dependent on the
outcome of the valuations.
Real estate valuations are complex and derived from data that is
not widely publicly available and involves a degree of judgement.
For these reasons, the valuations are classified as Level 3 in the
fair value hierarchy as defined by IFRS 13. The valuations are
sensitive to changes in rent profile and yields. There were no
transfers between levels in the year.
The following table illustrates the impact of changes in key
unobservable inputs (in isolation) on the fair value of the Group's
properties:
Impact on valuations Impact on valuations Impact on valuations
of 5% change of 25bps change in of 50bps change
in estimated equivalent yield in equivalent yield
rental value
----------------------- --------------------------------
Increase Decrease Increase Decrease Increase Decrease
GBPm GBPm GBPm GBPm GBPm GBPm
--- ----------- --------------------- --------- --------------------- ---------
12.8 (12.7) (11.0) 11.6 (21.2) 24.1
--- ----------- ---------- --------------------- --------- --------------------- ---------
Impact on valuations
of 100bps change
in equivalent
yield
-----------------------
Increase Decrease
GBPm GBPm
--- -----------
(39.8) 51.9
--- ----------- ----------
8 Leases
Buildings
Right of use Assets GBPm
Cost
At 30 December 2022 (Audited) 28.1
Additions 0.8
Remeasurement (0.1)
At 30 June 2023 (Unaudited) 28.8
===========
Accumulated depreciation
At 30 December 2022 (Audited) (6.5)
Charge for the year (1.0)
At 30 June 2023 (Unaudited) (7.5)
===========
Carrying value
At 30 June 2023 (Unaudited) 21.3
At 30 December 2022 (Audited) 21.6
Lease commitments relate to the leasing of the Group's
registered office and the leases of the Snozone business on its
Castleford, Madrid and Milton Keynes sites. In June 2023 the Group
entered into a lease for its new registered office, included in
additions above.
9 Receivables and other assets
Unaudited Audited
30 June 30 December
2023 2022
GBPm GBPm
--------------------------------------- ---------- -------------
Amounts falling due after one year:
Non-financial assets
Deferred tax 1.2 1.1
Interest rate swap - 1.7
Unamortised tenant incentives 2.2 2.1
Unamortised rent-free periods 4.9 4.7
Other non-financial assets 0.2 -
---------- -------------
8.5 9.6
---------- -------------
Amounts falling due within one year:
Financial assets
Trade receivables (net of allowances) 3.7 7.7
Interest rate swap 1.5 -
Other receivables 4.1 -
Accrued income 1.0 1.5
---------- -------------
Current financial assets 10.3 9.2
Non-financial assets
Prepayments 4.6 4.0
Unamortised tenant incentives 0.5 0.5
Unamortised rent-free periods 0.7 0.7
---------- -------------
Current non-financial assets 5.8 5.2
---------- -------------
16.1 14.4
---------- -------------
Included within other receivables is GBP3 million due from the
local council in Walthamstow for a contribution to the Crate
facility as the head lease holder.
Credit losses are calculated at an amount equal to lifetime
expected credit losses. The expected credit losses on trade
receivables are estimated using a provision matrix by reference to
past default experience of the debtor and an analysis of the
debtor's current financial position, adjusted for factors that are
specific to the debtor and an assessment of both the current as
well as the forecast direction of conditions at the reporting
date.
During the period the Group has amended the method of
calculating expected credit loss to include debts billed relating
to future periods in line with IFRS 9.
The group writes off a trade receivable when there is
information indicating that there is no realistic prospect of
recovery. Changes in expected credit loss allowance arise from
increase or decrease in calculated expected credit loss, as well as
amounts written off. The group does not recognise revenue where
collectability is not reasonably expected. In the case of rental
income this relates to tenants who are insolvent and closed.
10 Cash and cash equivalents
Unaudited Audited
30 June 30 December
2023 2022
GBPm GBPm
--------------------------------------- ---------- ------------
Cash at bank 44.5 36.1
Restricted security disposals held in
rent accounts 0.9 0.7
Other restricted balances 3.7 3.1
---------------------------------------- ----------
Total cash and cash equivalents 49.1 39.9
---------------------------------------- ---------- ------------
Cash at bank and in hand include amounts subject to a charge
against various borrowings and may therefore not be immediately
available for general use by the Group. Of the cash at bank and in
hand GBP31.2 million was immediately available free of any
restrictions or conditions or held on short term deposit at the
period end date (30 December 2022 - GBP28.1 million). The remaining
balances are subject to meeting conditions or having passed through
relevant waterfall calculations within relevant loan facilities.
All of the above amounts at 30 December 2022 were held in Sterling
other than GBP0.7 million which was held in Euros (30 December
2022: GBP0.6 million).
11 Borrowings
The Group's borrowings are arranged to ensure an appropriate
maturity profile and to maintain short-term liquidity. There were
no defaults or other breaches of financial covenants that were not
waived under any of the Group borrowings during the current year or
the preceding year.
Unaudited Audited
30 June 30 December
2023 2022
Borrowings at amortised cost GBPm GBPm
------------------------------------ ---------- -------------
Secured
Fixed and swapped bank loans 179.0 179.0
Variable rate loan 4.0 4.0
Total borrowings before costs 183.0 183.0
Unamortised issue costs (0.9) (1.2)
Total borrowings after costs 182.1 181.8
---------- -------------
Analysis of total borrowings after
costs
Current 38.9 -
Non-current 143.2 181.8
Total borrowings after costs 182.1 181.8
------------------------------------- ---------- -------------
The fair value of total borrowings before costs as at 30 June
2023 was GBP160.4 million (30 December 2022: GBP164.6 million). At
30 June 2023 the Group had no undrawn committed facilities.
All loans are maintained in separate ring-fenced Special Purpose
Vehicle (SPV) structures secured against the property interests and
other assets within each SPV. There is no recourse to other Group
companies outside of the respective SPV and no cross-default
provisions.
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value. All of the assets listed were classified as Level 2, as
defined in note 2 to these condensed financial statements. There
were no transfers between Levels in the year.
Unaudited Audited
30 June 30 December
2023 2022
GBPm GBPm
--------------------- ---------- -------------
Interest rate swaps 1.5 1.7
1.5 1.7
---------- -------------
Interest rate swaps are initially recognised at fair value at
the date the contract is entered into and are subsequently
remeasured to their fair value at each balance sheet date. The fair
value of forward foreign exchange contracts is calculated by
reference to spot and forward exchange rates at the balance sheet
date. The fair value of interest rate swaps is calculated by
reference to appropriate forecasts of yield curves between the
balance sheet date and the maturity of the instrument. Changes in
fair value are included as finance income or finance costs in the
income statement. Derivative financial instruments are classified
as non-current when they have a maturity of more than twelve months
and are not intended to be settled within one year. As the group
does not apply hedge accounting, the provisions of IFRS 9 do not
apply.
12 Notes to the cash flow statement
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2022
2023 (Restated)(1) 2022
GBPm GBPm GBPm
------------------------------------------- ------------ --------------- ------------
Profit for the period 6.1 26.8 12.1
Adjusted for:
Income tax credit (1.2) (1.1) (0.3)
Finance income (0.3) (1.3) (1.1)
Finance expense 4.1 5.0 9.4
Finance lease costs (head leases) - (0.2) (0.3)
Loss/(gain) on revaluation of properties 0.3 (1.1) 19.6
Depreciation of other fixed assets 0.1 0.1 0.3
Other gains and losses 0.5 (18.9) (22.4)
Decrease in receivables 2.9 9.3 4.5
(Decrease)/increase in payables (2.5) (4.6) 3.0
Non-cash movement relating to share-based
payments 0.4 0.1 0.5
Decrease in expected credit loss (0.4) (1.7) -
Net cash from operations 10.0 12.4 25.3
-------------------------------------------- ----------- --------------- ------------
(1) June 2022 comparative figures have been restated for a prior
year adjustment to the treatment of rent concessions as explained
in note 2.
13 Net assets per share
30 June 2023 (Unaudited) 30 Dec 2022 (Audited)
----------------------------- --------------------------
EPRA EPRA EPRA EPRA EPRA EPRA
NRV NTA NDV NRV NTA NDV
GBPm GBPm GBPm GBPm GBPm GBPm
IFRS Equity attributable
to shareholders 183.2 183.2 183.2 179.1 179.1 179.1
Exclude fair value of
financial instruments (1.5) (1.5) - (1.7) (1.7) -
Include fair value of
fixed interest rate debt - - 22.6 - - 18.4
--------------------------- --------- -------- -------- -------- ------- -------
Net asset value 181.7 181.7 205.8 177.4 177.4 197.5
Fully diluted number
of shares 177.8 177.8 177.8 171.6 171.6 171.6
--------------------------- --------- -------- -------- -------- ------- -------
Net asset value per
share (pence) 102.2 102.2 115.7 103.4 103.4 115.1
--------------------------- --------- -------- -------- -------- ------- -------
The number of ordinary shares issued and fully paid at 30 June
2023 was 173,545,054 (30 December 2022: 169,191,918). There have
been no changes to the number of shares from 30 June 2023 to the
date of this announcement.
14 Related party transactions
There have been no material changes to, or material transactions
with, related parties as described in note 29 of the annual audited
financial statements for the year ended 30 December 2022.
15 Dividends
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2022 2022 2022
GBPm GBPm GBPm
---------------------------------------- ----------- ----------- ------------
Amounts recognised as distributions to
equity holders in the period 4.7 - 4.1
---------------------------------------- ----------- ----------- ------------
Proposed interim dividend of 2.75p per
share for year ended 30 December 2023 4.8 - -
---------------------------------------- ----------- ----------- ------------
The dividends shown above are gross of any take-up of Scrip
offer.
16 Post balance sheet events
On 9 August 2023 the Group entered into an agreement to acquire
The Gyle Shopping Centre in Edinburgh for a total Acquisition
Consideration of GBP40 million, excluding acquisition costs.
The consideration is to be financed through a new debt facility
of GBP16 million arranged by Morgan Stanley, the approximate GBP25
million proceeds to be received pursuant to a fully underwritten
equity raise and existing funds held by the Company. The asset is
being acquired at an net initial yield of 13.51% that is expected
to rebase to around 12%. The acquisition is expected to complete in
early September 2023.
Glossary of terms
------------------
Adjusted Profit is the total of Contribution Market value is an opinion of the
from Shopping Centres and the Group's best price at which the sale of an
joint ventures and associates, Snozone interest in a property would complete
EBITDA and property management fees unconditionally for cash consideration
less central costs (including interest on the date of valuation as determined
but excluding non-cash charges in respect by the Group's external or internal
of long-term incentive awards) after valuers. In accordance with usual practice,
tax. Adjusted Profit excludes revaluation the valuers report valuations net,
of properties, profit or loss on disposal after the deduction of the prospective
of properties or investments, gains purchaser's costs, including stamp
or losses on financial instruments duty, agent and legal fees.
and exceptional one-off items. Results
from Discontinued Operations are included Net Administrative Expenses to Gross
up until the point of disposal or reclassification Rent is the ratio of Administrative
as held for sale. Expenses net of external fee income
to Gross Rental income including the
Adjusted Earnings per share is Adjusted Group's share of Joint Ventures and
Profit divided by the weighted average Associates
number of shares in issue during the
year excluding own shares held. Net assets per share (NAV per share)
are shareholders' funds divided by
C&R is Capital & Regional plc, also the number of shares held by shareholders
referred to as the Group or the Company. at the year end, excluding own shares
held.Net initial yield (NIY) is the
CRPM is Capital & Regional Property annualised current rent, net of revenue
Management Limited, a subsidiary of costs, topped-up for contractual uplifts,
Capital & Regional plc, which earns expressed as a percentage of the capital
management and performance fees from valuation, after adding notional purchaser's
the Mall assets and certain associates costs.
and joint ventures of the Group.
Net debt to property value is debt
Contracted rent is passing rent and less cash and cash equivalents divided
the first rent reserved under a lease by the property value.
or unconditional agreement for lease
but which is not yet payable by a tenant. Net interest is the Group's share,
on a see-through basis, of the interest
Contribution is net rent less net payable less interest receivable of
interest, including unhedged foreign the Group and its associates and joint
exchange movements. ventures.
Capital return is the change in market Net rent or Net rental income (NRI)
value during the year for properties Net Rental Income is rental income
held at the balance sheet date, after from properties, less provisions for
taking account of capital expenditure expected credit losses, property and
calculated on a time weighted basis. management costs. It is a standard
industry measure.
Debt is borrowings, excluding unamortised
issue costs. Nominal equivalent yield (NEY) is
a weighted average of the net initial
EPRA earnings per share (EPS) is the yield and reversionary yield and represents
profit / (loss) after tax excluding the return a property will produce
gains on asset disposals and revaluations, based upon the timing of the income
movements in the fair value of financial received, assuming rent is received
instruments, intangible asset movements annually in arrears on gross values
and the capital allowance effects of including the prospective purchaser's
IAS 12 "Income Taxes" where applicable, costs.
less tax arising on these items, divided
by the weighted average number of shares Occupancy cost ratio is the proportion
in issue during the year excluding of a retailer's sales compared with
own shares held. the total cost of occupation being:
rent, business rates, service charge
EPRA LTV is the ratio of debt to the and insurance. Retailer sales are based
Market value of properties as defined on estimates by third party consultants
by the European Real Estate Association. which are periodically updated and
indexed using relevant data from the
EPRA net disposal value represents C&R Trade Index.
net asset value under a disposal scenario,
where deferred tax, financial instruments Occupancy rate is the ERV of occupied
and certain other adjustments are calculated properties expressed as a percentage
to the full extent of their liability, of the total ERV of the portfolio,
net of any resulting tax. excluding development voids.
EPRA net reinstatement value is net Passing rent is gross rent currently
asset value adjusted to reflect the payable by tenants including car park
value required to rebuild the entity profit but excluding income from non-trading
and assuming that entities never sell administrations and any assumed uplift
assets. Assets and liabilities, such from outstanding rent reviews.
as fair value movements on financial
derivatives are not expected to crystallise Rent to sales ratio is Contracted
in normal circumstances and deferred rent excluding car park income, ancillary
taxes on property valuation surpluses income and anchor stores expressed
are excluded . as a percentage of net sales.
EPRA net tangible assets is a proportionally REIT - Real Estate Investment Trust.
consolidated measure, representing
the IFRS net assets excluding the mark-to-market Return on equity is the total return,
on derivatives and related debt adjustments, including revaluation gains and losses,
the mark-to-market on the convertible divided by opening equity plus time
bonds, the carrying value of intangibles weighted additions to and reductions
as well as deferred taxation on property in share capital, excluding share options
and derivative valuations. exercised.
Estimated rental value (ERV) is the Reversionary percentage is the percentage
Group's external valuers' opinion as by which the ERV exceeds the passing
to the open market rent which, on the rent.
date of valuation, could reasonably
be expected to be obtained on a new Reversionary yield is the anticipated
letting or rent review of a unit or yield to which the net initial yield
property. will rise once the rent reaches the
ERV.
ERV growth is the total growth in
ERV on properties owned throughout Temporary lettings are those lettings
the year including growth due to development. for one year or less.
Gearing is the Group's debt as a percentage Total property return incorporates
of net assets. See through gearing net rental income and capital return
includes the Group's share of non-recourse expressed as a percentage of the capital
debt in associates and joint ventures. value employed (opening market value
plus capital expenditure) calculated
Interest cover is the ratio of Adjusted on a time weighted basis.
Profit (before interest, tax, depreciation
and amortisation) to the interest charge Total return is the Group's total
(excluding amortisation of finance recognised income or expense for the
costs and notional interest on head year as set out in the consolidated
leases). statement of comprehensive income expressed
as a percentage of opening equity shareholders'
Like-for-like figures, unless otherwise funds.
stated, exclude the impact of property
purchases and sales on year to year Total shareholder return (TSR) is
comparatives. a performance measure of the Group's
share price over time. It is calculated
Snozone EBITDA or EBITDA is an alternative as the share price movement from the
performance measure for the Snozone beginning of the year to the end of
business. It excludes Depreciation, the year plus dividends paid, divided
Amortisation, (notional) Interest, by share price at the beginning of
Tax and non-operational one-off items. the year.
It includes rent expense, based on
contractual payments adjusted for rent Variable overhead includes discretionary
free periods. This provides a measure bonuses and the costs of awards to
of Snozone trading performance which Directors and employees made under
removes the profiling impact of IFRS the 2018 LTIP and other share schemes
16 that would otherwise see a significantly which are spread over the performance
higher charge in early years of a lease period.
and significantly lower net charge
in later years.
Loan to value (LTV) is the ratio of
debt excluding fair value adjustments
for debt and derivatives, to the Market
value of properties.
EPRA performance measures (Not subject to review opinion)
30 June 2022 30 December
30 June 2023 (Restated)(1) 2022
-------------- --------------- ------------
EPRA earnings (GBPm) 7.1 6.2 8.8
EPRA earnings per share (diluted) 4.1p 3.7p 5.3p
EPRA reinstatement value (GBPm) 181.7 194.2 177.4
EPRA net reinstatement value per share 102.2p 115.7p 103.4p
EPRA net tangible assets (GBPm) 181.7 194.2 177.4
EPRA net tangible assets per share 102.2p 115.7p 103.4p
EPRA net disposal value (GBPm) 205.8 204.7 197.5
EPRA net disposal value per share 115.7p 122.0p 115.1p
EPRA LTV (GBPm) 44.3% 50.9% 44.4%
(1) June 2022 comparative figures have been restated for a prior
year adjustment to the treatment of rent concessions as explained
in note 2.
EPRA Cost ratios
30 June 2022 30 December
30 June 2023 (Restated)(1) 2022
GBPm GBPm GBPm
----------------------------------------- -------------- --------------- ------------
Cost of sales (adjusted for IFRS head
lease differential) 16.1 13.5 32.1
Administrative costs 4.8 4.7 10.9
Service charge income (5.5) (3.5) (10.5)
Management fees (0.9) (1.1) (2.3)
Less Snozone (indoor ski operation)
costs (6.8) (6.3) (12.9)
Less inclusive lease costs recovered
through rent (1.1) (1.0) (1.5)
-------------- --------------- ------------
EPRA costs (including direct vacancy
costs) 6.6 6.3 15.8
Direct vacancy costs (1.1) (1.8) (3.5)
-------------- --------------- ------------
EPRA costs (excluding direct vacancy
costs) 5.5 4.5 12.3
-------------- --------------- ------------
Gross rental income 16.6 17.5 34.7
Less ground rent costs (0.5) (0.7) (0.7)
Less inclusive lease costs recovered
through rent (1.1) (1.0) (1.5)
-------------- --------------- ------------
Gross rental income 15.0 15.8 32.5
-------------- --------------- ------------
EPRA cost ratio (including direct
vacancy costs) 44.0% 39.9% 48.6%
EPRA cost ratio (excluding vacancy
costs) 36.7% 28.5% 37.8%
----------------------------------------- -------------- --------------- ------------
(1.) June 2022 comparative figures have been restated for a prior year adjustment to the
treatment of rent concessions as explained in note 2. EPRA net initial yield and EPRA topped-up net initial 30 June 2023 30 December 2022
yield
GBPm GBPm
------------------------------------------------------ ------------- -----------------
Investment property 329.7 322.8
Completed property portfolio 329.7 322.8
Allowance for capital costs 9.9 16.8
Allowance for estimated purchasers' costs 22.4 21.9
------------------------------------------------------ ------------- -----------------
Grossed up completed property portfolio valuation 362.0 361.4
------------------------------------------------------ ------------- -----------------
Annualised cash passing rental income 30.7 30.5
Property outgoings (6.1) (6.7)
------------------------------------------------------ ------------- -----------------
Annualised net rents 24.6 23.8
Add: notional rent expiration of rent free periods or
other lease incentives 1.2 1.3
------------------------------------------------------ ------------- -----------------
Topped up annualised rent 25.8 25.1
------------------------------------------------------ ------------- -----------------
EPRA net initial yield 6.8% 6.6%
EPRA topped-up net initial yield 7.1% 7.0%
------------------------------------------------------ ------------- -----------------
Asset portfolio information - excluding properties held for sale
(Not subject to review opinion)
At 30 June 2023
-------------------------------------------------------------------------
Physical data
Number of properties (Hemel Hempstead, Ilford, Maidstone,
Walthamstow and Wood Green) 5
Number of lettable units 546
Lettable space (sq feet -
million) 2.0
Valuation data
Properties at independent
valuation (GBPm) 329.7
Adjustments for head leases
and tenant incentives (GBPm) (2.8)
Properties as shown in the
financial statements (GBPm) 326.8
Initial yield (%) 7.4
Equivalent yield (%) 8.6
Reversion (%) 12.5
Lease length (years)
Weighted average lease length
to break (years) 3.2
Weighted average lease length
to expiry (years) 5.3
Passing rent (GBPm) of leases
expiring in:
Six months to 30 December
2023 5.1
Year to 30 December 2024 2.7
Three years to 30 December
2027 8.1
ERV (GBPm) of leases expiring
in:
Six months to 30 December
2023 4.9
Year to 30 December 2024 2.7
Three years to 30 December
2027 7.1
Passing rent (GBPm) subject
to review in:
Six months to 30 December
2023 1.5
Year to 30 December 2024 0.8
Three years to 30 December
2027 2.5
ERV (GBPm) of passing rent
subject to review in:
Six months to 30 December
2023 1.1
Year to 30 December 2024 0.7
Three years to 30 December
2027 2.6
Rental Data
Contracted rent at period
end (GBPm) 31.6
Passing rent at period end
(GBPm) 30.7
ERV at period end (GBPm per
annum) 34.5
Occupancy rate (%) 94.5
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END
IR URORROSUWARR
(END) Dow Jones Newswires
August 10, 2023 02:01 ET (06:01 GMT)
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