-
30 April
2024
Capital & Regional
plc
("Capital & Regional" or
"C&R" or "the Company" or "the Group")
Full Year Results to 30 December
2023
RESILIENT OPERATIONAL
PERFORMANCE, ACTIVE ASSET MANAGEMENT AND
ACQUISITION OF GYLE DRIVING
IMPROVED PROFITABILITY AND DIVIDENDS
Capital & Regional (LSE: CAL),
the UK focused REIT with a portfolio of community shopping centres,
today announces its full year results to
30 December 2023. The Company will also publish a
copy of its Annual Report and Financial Statements for the year
ended 30 December 2023 in the Investor Info section of its website
at capreg.com.
Highlights for the period
· 5% increase in like-for-like Net Rental Income1
("NRI").
· 2.6% increase in like-for-like valuations over
2023.
· 86
new lettings and renewals, compared to 80 in 2022, at a combined
average premium of 6.8% to previous rent2 and 16.6% to
ERV2.
·
In September, we acquired Gyle shopping centre,
Edinburgh, for £40 million part funded through a £25 million equity
raise, at a net initial yield of 13.5%
expected to rebase to around 12%.
·
9.7% growth in Adjusted Earnings per
share to 6.8p (December 2022: 6.2p).
·
7.3% increase in proposed final dividend of 2.95p
per share delivering a total dividend for the year of 5.70p per
share (December 2022: 2.75p per share and 5.25p per share,
respectively).
Lawrence Hutchings, Chief Executive,
comments:
"Our ongoing focus on delivering our proven community
strategy and increasing our exposure to non-discretionary and needs
based retail and services categories,
continues to support our progress and has helped us deliver
another positive set of results. Occupier
demand coupled with our accretive capex programme
has driven
rental growth, underpinned a 9.7% increase in earnings and, with
values also up slightly, given us the confidence to increase the
dividend.
"The structural changes in retail continue to evolve, with
online penetration now maturing and a continued return to
the store by consumers meaning physical retail has
cemented its
position as a vital part of the distribution framework. This
is especially evident in our core categories of value and
non-discretionary merchandise. Retailers are continuing
to focus on coupling the online platform with stores in a
seamless guest experience.
"The rapid re-leasing of all three of our Wilko units to
B&M in the first few months of 2024, further demonstrates the
quality of our locations, the relevance of our strategy and our
team's ability to capture demand from retailers for affordable
space in urban locations. This backdrop, coupled with
the improvement in our underlying operational business, and with
the Company's balance sheet stable, gave us the confidence to
proceed with the Gyle acquisition in September 2023. It marks
our first step towards rebuilding the business through our
continued capex programme and a disciplined approach to
opportunities to buy well positioned retail led real estate at
attractive entry points."
Operational metrics remain robust demonstrating the continued
appeal of C&R's community centres
·
Footfall up 1.5% with 44.5 million shopper visits
in 2023, representing 86.7% of the equivalent period for
2019.
· Occupancy steady at 93.4% (December 2022: 94.1%) with the
marginal decline due to Wilko's administration.
·
All three units vacated following
Wilko's administration relet post year end, with B&M signing a
portfolio deal in February 2024 and opening in May 2024, adding 140
basis points to occupancy. In the three months to the end of
March 2024 we have completed 21 new lettings and renewals, at a
combined annual rent of £1.4 million, representing an average
premium to previous rent of 1.3% and to ERV of
5.9%1.
· Rent collection 99.2% for 2023 (December 2022: 97.6% at the
time of Year End results).
Occupier led demand driving rental and earnings growth and
underpinning dividend increase
·
NRI of £23.9 million (December 2022:
£23.5 million) reflecting net impacts of the Gyle acquisition and
sale of Blackburn in August 2022. Statutory revenue broadly in line
with the prior year at £59.0 million (December 2022: £56.8
million).
·
Snozone's EBITDA1 increased by 64% to
£2.3 million (December 2022: £1.4 million) reflecting the first
full year unimpacted by Covid since 2019 and improved profitability
from Snozone Madrid driven by the actions undertaken since the
acquisition in 2021.
·
23% increase in Adjusted Profit1 to
£12.7 million (December 2022: £10.3 million).
·
IFRS Profit for the period of £3.7 million
(December 2022: Profit of £12.1 million). The prior year included
one-off gains of £12.5 million and £6.8 million from the discounted
purchase of the Hemel Hempstead debt facility and deconsolidation
of Luton, respectively.
·
Net £16.0 million invested during the year
expected to produce a yield on cost in line with the Company's
target of 8% to 9%. At Ilford, the new TK Maxx anchor store
successfully opened in November 2023 and a new NHS community
healthcare centre has been handed over and is expected to open in
Spring 2024.
· The first phase of the Walthamstow residential development
undertaken by Long Harbour, creating 495 Build to Rent apartments
in two residential towers and providing a new captive audience of
shoppers for our Walthamstow centre, is progressing rapidly. The
development is due to complete in early 2025.
·
2.6% increase in like-for-like valuations over
2023, with a 4.0% increase in Gyle since purchase, primarily as a
result of the completion of six new lettings and renewals.
15.5% increase in portfolio valuation to £372.8
million (December 2022: £322.8 million) including the addition of
Gyle.
·
Net Asset Value ("NAV") increased 12.8% to £202.0
million (December 2022: £179.1 million).
· NAV per share and EPRA NTA per share at 90p and 88p
respectively (December 2022: 106p and 103p, respectively) due to
the increased number of shares in issue following the £25 million
equity raise in September 2023.
|
|
Long term secure debt position
·
Long debt maturity profile of
4.1 years with low average cost of debt of 4.25%.
Approximately 80% hedged for the next three years.
·
New five-year £16 million vendor loan arranged by
Morgan Stanley drawn in September 2023 to part finance the Gyle
acquisition.
·
Group Net Loan to Value has increased to 43.6%
from 40.6% at 30 December 2022 from investing cash into capital
expenditure and part funding of the Gyle acquisition from central
cash.
·
Ilford loan extension agreed to September 2025
with further conditional options to extend term to end of
2027.
Further progress in delivering energy efficiency driving
forward our net zero carbon pathways
·
EPC ratings of three centres
improved from a 'D' to 'B' rating.
· 72% reduction in Scope 1 natural gas, and 15% in Scope 2
electricity consumption since 2019.
·
100% renewable and Renewable Energy Guarantees
of Origin certified electricity at all shopping centres and Snozone venues.
|
|
Year
to
Dec 2023
|
Year to
Dec
2022
|
|
|
|
|
Revenue
|
|
£59.0m
|
£56.8m5
|
Net Rental Income
|
|
£23.9m
|
£23.5m
|
Adjusted Profit
1
|
|
£12.7m
|
£10.3m
|
Adjusted Earnings per share
1
|
|
6.8p
|
6.2p
|
IFRS Profit for the
period
|
|
£3.7m
|
£12.1m
|
Basic earnings per
share
|
|
2.0p
|
7.3p
|
Total dividend per share
3
|
|
5.70p
|
5.25p
|
|
|
|
|
Net Asset Value
|
|
£202.0m
|
£179.1m
|
Net Asset Value (NAV) per
share
|
|
90p
|
106p
|
EPRA NTA per share
|
|
88p
|
103p
|
|
|
|
|
Group net debt
|
|
£162.7m
|
£130.9m
|
Net debt to property
value
|
|
43.6%
|
40.6%
|
Notes
1 Adjusted Profit, Adjusted Earnings per share, Net Rental
Income, Net Debt and the Snozone EBITDA metric are as defined in
the Use of Alternative Performance Measures section. 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 5 to the condensed financial
statements.
2 For lettings and renewals (excluding development deals and
CVA variations) with a term of 1 year or longer which do not
include turnover rent, like-for-like, excludes Gyle.
Comparative numbers for 2022 are on a like-for-like
basis.
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 2022 comparative figure has been restated for a prior year
adjustment to service charge income and expenditure recognised in
the period. There is no change to Profit.
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, Oliver
Parsons
|
Email:
Capreg@fticonsulting.com
|
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 expert property and
asset management platform Capital & Regional owns and manages
shopping centres in Edinburgh, Hemel Hempstead, Ilford, Maidstone,
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 December 2023, 8,755,640 of
the Company's total 224,906,731 shares were held on the South
African register representing 3.89% 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.
Chairman's statement
We are pleased to publish our full
year results announcement. The delay in announcing was
required to enable our new auditors, Mazars LLP, to complete a
review of our service providers' internal processes, primarily in
relation to the risk of an understatement of car park
revenue. No changes to numbers have arisen from the work
performed in this area and the Group's key operational and
financial trading metrics remain in line with those disclosed in
the Trading Update issued on 8 March 2024.
2023 was a year of continued
progress for the Company, with retailer interest and guest numbers
showing steady recovery from the challenges of the pandemic and
endorsing our strategy of owning dominant community shopping
centres. With consumer confidence inevitably affected by inflation
and high borrowing costs, our focus on meeting demand for
non-discretionary spending stood us in good stead and, coupled with
the hard work and expertise of our asset management team, has
allowed us to deliver the strong operational and financial results
we are able report.
Following our success in
strengthening the balance sheet in the previous year, we were
delighted to take a significant step forward in September 2023 with
the purchase of Gyle shopping centre in Edinburgh. This
dominant mall, with its prosperous catchment area, is a perfect fit
for the C&R portfolio and our management team has already
identified a number of opportunities to improve the retailer mix,
income and ultimately capital value: some of which we have already
captured as detailed in today's results. We were also pleased
with the reaction to the transaction from shareholders, analysts
and market commentators, with widespread agreement of our view that
this represented a very exciting opportunity that was a natural fit
for the Company.
The Gyle purchase was facilitated
by a combination of stapled debt from the vendor banks and a £25
million equity raise which was supported by existing shareholders
and fully underwritten by our majority shareholder,
Growthpoint. As in previous years, the Board is indebted to
Growthpoint for its exceptional support, and confidence in the
management team who identified and painstakingly negotiated the
deal.
A central part of the Company's
strategy is to invest selective capital expenditure on our assets.
In 2023, the team invested a net total of £16.0 million, focused in
particular on Ilford delivering new units for TK Maxx and the NHS,
as well as Wood Green.
Capex programmes will continue
into 2024 and beyond, with the management team very mindful of the
requirement to deliver a high return on cost to justify the use of
our available resources. We strongly believe that our proactive
management of assets will continue to deliver income growth and, as
investment markets recover, capital value growth.
Retailer failures were much
reduced in 2023, and although the administration of Wilko in the
second half of the year created a challenge in three of our
centres, our team responded swiftly and had agreed terms with
B&M for all three units by the year end, formally signing them
up to the space in February 2024.
One ongoing legacy from the
pandemic is the reduced use of car parks. This is principally
resulting from a modal shift in central London but also due to some
shorter-term impacts from our development in Walthamstow as well as
a reduction in contract local office worker car parking in
Hemel. The team is working on a range of alternative uses to
support car park income including the introduction of EV charging
and potential storage, as well as last mile logistics.
From an operational and financial
point of view, 2023 was a strong year and continued the Company's
steady trend of recovery from the pandemic. Valuations were up 2.6%
on a like-for-like basis and Net Rental Income increased by 5%,
also on a like-for-like basis, leading to a 23% increase in
Adjusted Profits and a 9.7% increase in Adjusted Earnings.
Rent collections remain very high. We also saw a strong
performance from Snozone increasing their EBITDA by 64% including a
significantly improved profit contribution from Madrid.
While the Company's net debt to
property value rose slightly to 43.6%, this increase was driven
solely through the use of central cash for capex and an element of
the Gyle acquisition. The Board seeks to strike a balance between
the need to invest into assets and a desire to keep the Company's
loan-to-value ratio as low as possible.
We have extended the term on our
Ilford debt and agreed further options to extend maturity out to
the end of 2027. None of the Company's facilities are due to
expire in 2024. We have an excellent relationship with all of our
lenders and our weighted average cost of debt remains competitive
at 4.25%. In addition, we hold total cash reserves of £36.3
million, providing full funding for ongoing capex
projects.
The Board recognises the
fundamental importance of income for shareholders and, based on
these financial results, were pleased to announce a 7.3% increase
to the proposed final dividend to 2.95 pence per share, which if
approved will result in a total dividend for the year of 5.70 pence
per share, an increase of 8.6% from 2022. These though remain
uncertain times and, as with recent dividends, the Board is
conscious of the importance of preserving cash both for capital
expenditure investment and to maintain financial flexibility
conscious of the risk of macro or geo-political developments
impacting operations or capital values. As such, the Board
has decided to again offer a scrip option with this final dividend.
Growthpoint has taken up this option.
C&R has long been a pioneer of
strong environmental sustainability and we have seen continued
progress across the portfolio, significantly reducing utility
consumption across both the shopping centre and Snozone
businesses. We also place a particularly high importance on
the wellbeing of our staff and I am pleased to report high and
positive responses to staff surveys undertaken in the
year.
As ever, I am most grateful to my
Board colleagues for their unstinting support. Ian Krieger,
our Audit Committee Chair and Senior Independent Director will
retire by rotation at the 2024 AGM, having served nine years on the
Board and I would like to record my particular thanks to Ian for
his consistently constructive input. Laura Whyte has agreed to take
on the role of Senior Independent Director, and Gerry Murphy has
recently joined the Board and will succeed Ian as Audit Committee
Chair.
While the Company has undoubtedly
moved forward in 2023, there have been continued economic and
market headwinds and I must acknowledge the exceptional role which
Lawrence and his team have played, not only in confronting these
challenges, but in ensuring that C&R's profile and market
reputation remains so strongly positive.
David Hunter
Chairman
Chief Executive's Statement
We continued to focus on
delivering our proven community strategy during 2023, increasing
our exposure to retailers in our core non-discretionary and needs
based retail and services categories including fresh and catered
food, grocery, pharmacy, personal services (including skin and nail
care) and medical services with our growing partnership with the
NHS. This continues to be one of the most resilient parts of
the UK's retail landscape and, as consumers focus on life's
essentials it has become even more relevant to our communities,
guests and retailers at this time.
The structural changes in physical
retail have continued to evolve with physical stores emerging as a
vital part of the distribution of goods and services as retailers
focus on coupling the online platform with stores in a seamless
customer experience. The higher costs associated with online
retailing makes the store a key area of focus for the majority of
commodity and value orientated retail as typically lower margins,
high volumes and low unit values combine to make profitability of
the online channel a challenging proposition.
This has driven an increase in
retailer demand for our centres and floorspace, especially in our
urban locations, which our lettings team has been quick to capture,
enabling us to deliver robust leasing, occupancy and valuation
metrics despite the volatile macro-economic backdrop we have seen
throughout the year.
Adjusted Profit per share grew by
9.7% as we continue our post Covid recovery, thanks in no small
part to the effort and dedication of our talented team - thank
you.
Our ESG initiatives are on track,
with the Company delivering significant reductions in utility
consumption throughout 2023. I am especially proud of the work we
undertake to support the diverse and vibrant communities we serve,
be it through our work with local charities or the support we
provide to new local retailers as they establish themselves in our
centres. This also helps us tailor the customer proposition
to reflect the local community.
In September 2023, we completed
our first new property acquisition since I started at C&R
almost seven years ago, with the purchase of Gyle shopping centre
in Edinburgh. This is an important step for C&R after four
years of torrid structural and Covid related restrictions and
pressures which have seen the Company needing to consolidate to
survive the impacts on income and value which have ravaged our
sector.
Our confidence to make this first
step towards rebuilding the Company by seeking the opportunities to
buy well positioned, retail led real estate in key markets stems
from the performance we are seeing in the underlying operational
business as footfall, rent collection and leasing demand have all
significantly recovered, as well as our ability to leverage the
expertise and economies of scale available from our
platform.
Gyle has all the attributes of a
well-established, high performing community shopping centre.
It is anchored by two supermarkets (Morrisons and Marks &
Spencer) and offers a strong mix of convenience and community
retail including pharmacies, NHS facilities, optometrists and food
retail. The centre has superb accessibility by car and tram and
dominates an affluent and growing trade area in
Edinburgh.
We will maintain our disciplined
approach to capital management and focus on our ongoing
reinvestment in our centres with our capex repositioning
masterplans, where these are accretive to earnings and provide the
appropriate risk adjusted return.
The continuing macro-economic
pressures including inflation, the interest rate response and the
state of the debt and real estate capital markets is encouraging us
to take a cautious approach to H1 2024, despite the resilient
operational and occupational markets.
Over 80% of our debt book benefits
from low cost, 2027-maturity, asset backed non-recourse debt with a
long-term supportive lender, helping underpin our Adjusted Profit
and dividend.
Consumer confidence and retailer
performance
We have continued to see the
impact of rising inflation and debt costs on business and consumer
confidence. This is being mitigated by high employment, salary
growth and higher levels of household savings. We are conscious of
the impact these pressures have on the communities we serve and our
efforts to support those most in need continues through our various
community support initiatives.
We have seen the early signs of
respite in inflation and the cost of debt, along with some erosion
in consumer savings. In previous economic cycles, these times of
reduced consumer confidence have typically favoured sales of
grocery and non-discretionary retail and services. Based on
feedback from our retailers and our own footfall data we are seeing
an increase in retail sales across much of our anchor store and
speciality tenant base. Many have been able to pass on the
full impact of inflation into prices and this will, over time,
assist us in unlocking rental growth for our locations.
The improvement in
non-discretionary retailer performance is driving occupier demand
and we continue to work towards increasing our exposure to these
categories especially in the grocery, pharmacy and medical sectors
in line with both the ongoing structural change in retail and
societal shifts around consumption.
Our London assets are also
experiencing modal shift from personal motor vehicle to public
transport and cycling in line with the trend of '15-minute
neighbourhoods'. All three of our London centres have excellent
access to train, tube and bus networks and are experiencing
increasing population density within walking distance with further
development to come as markets allow.
Our relationship with the NHS
Trusts in greater London continues to expand. We opened the second
phase of the diagnostics centre we have delivered in Wood Green
with the Whittington NHS Trust and construction has advanced at
Ilford on the community health centre we are creating with the
North East London NHS Trust, which will open in phases from late
spring of 2024.
Structural changes in retailing
Another feature of last year was
the continued evolution in distribution of goods and services in
the UK. The UK has one of the most mature online retail markets,
with a share of just under 30% according to ONS data. Online
sales as a percentage of total retail sales have been on a downward
trend for the last two years, which is a sharp reversal from the
Covid era which naturally accelerated channel shift in retail
spending.
The store remains an important
part of the majority of retailers' distribution strategies as
customers support store-based retailing and retailers benefit from
lower costs per transaction. The new model prioritises the seamless
integration of both channels.
Whilst the overall market share is
high, non-discretionary and grocery sectors have online penetration
of around 10%, despite the length of time this has been part of the
retail landscape. Pharmacy and value retailers are often lower
still, as these categories have lower margins and consumers have
indicated a preference to use the proliferation of convenience
store formats at transport interchanges and in town and city
centres locally, especially in highly urbanised areas. These
retailers are amongst the most expansionary and we continue to work
closely with an increasingly wide cross section of
non-discretionary and value based retailers wishing to locate or
expand in our centres.
Inflation has had a significant
impact on the cost of doing business as a retailer. Increases in
staff costs and petrol, and therefore distribution, together with a
higher percentage of product returns, has disproportionately
impacted online retailers with several high profile business
failures during the year. The lower unit cost store based
retailing model still accounts for the majority of retail sales and
informs or prompts purchasing decisions. In addition, consumers are
increasingly drawn to the convenience of store based collection and
returns which, in turn, are a lower cost last mile logistics
solution for a retailer. This also provides retailers with the
added benefit of a guest potentially buying something, or seeing
something they then buy online later, whilst they are in
store.
Several of the larger pure play
online retailers are now seeking to create bricks & mortar
store networks to better compete with those traditionally physical
retailers who are successfully embracing both retailing
channels. This benefits us as retailers take new, or
reconfigure and right size existing, stores to ensure they are able
to meet the demands of consumers in a competitive retailing
landscape.
After 10 years of structural
change, these are exciting times for physical retail with
significant opportunities for retail platforms such as ours that
understand and can capitalise on the operational intensity needed
to evolve existing centres to reflect this new
seamless commerce retailing dynamic.
Leasing and occupancy
We have also seen a recovery in
our occupancy post the Covid lows, which is encouraging on many
levels. The leasing model continues to evolve in the UK and we are
at the forefront of these changes as we seek to adopt technology to
improve our data, insight and processes to improve the speed and
quality of our decisions in this critical area. We are also
continuing our concerted effort to maintain and develop
relationships with key retailers in each of our core or
merchandising pillar categories.
Our investment to diversify and
tailor our customer proposition to the local communities by
introducing new smaller and independent retailers into our centres
is proving beneficial to our leasing progress. In many cases
we support these retailers through the initial business planning
process, then through store design and pre and post opening with a
combination of skilled internal team members with retailing or
design backgrounds and/or specialist external consultants.
All of this is designed to help our retailers make a success of
their first venture in our centres and, where applicable, grow them
across our portfolio.
Establishing the right mix of
national branded retailers and anchor stores with local independent
traders, who have a deep understanding of the unique demand
characteristics amongst our specific local communities, remains a
key area of focus for our commercial team.
Sustainability
We are very proud of our
achievements in this important area. Many of the initiatives are
simply good business, lowering costs through more efficient use of
resources including energy and water. Importantly they are
also enabling us to lower our carbon footprint supporting the
journey towards our net carbon zero targets.
Energy consumption, in our
shopping centres, reduced by 3% on the previous year and 15%
against the 2019 base year, whilst Snozone reduced its electricity
consumption by 11% and 16%, respectively. Our focus on moving
away from gas led to a 72% reduction in gas consumed in our
shopping centres and a 25% drop at Snozone against the 2019 base
year. Water consumption reduced by 18% against the 2019 base year
at Snozone and 13% against the prior year whilst the shopping
centres witnessed an increase against 2022 due to construction
activity and a 3% reduction against the 2019 base year.
Following the dramatic weather
events in 2022, we have undertaken a considerable amount of work on
our readiness to deal with a wide range of extreme weather events
from floods to extremes in temperature and the pressures that
places on our operations.
We are active in providing
pathways for small and start up retailers to locate in our
centres. We support retail entrepreneurs through the business
planning, store design, pre and post opening period and it is great
to see some of these businesses go on to grow into multiple
location retailers following their first successful store within
our centres.
It has also been pleasing to see
our staff pulse survey record 95% engagement with over 450
comments. A net promoter score of +15 places us in the top
quartile of companies using the Happiness Index. We launched our
new 'purpose': "we exist to
protect and progress the essentials of community life" and
principles (Bring the World in, Uplift the Every Day, Make it Count
and Win as One) across the business and continue in our mission to
ensure we have a high performance dynamic diverse and inclusive
culture.
Our centre based teams supported
140 charities and 153 community groups last year, with over 600
hours of community service and 112 community events hosted in our
shopping centres. In aggregate we provided or raised £370,000
in community financial support, working with our local council
partners to ensure our resources are focused where it matters
most.
Looking forward - our focus for the next 12
months
Our core strategy continues to be
the delivery of our community strategy providing defensive,
resilient income growth to support our growing and covered
dividend to shareholders. To achieve this our focus for the next 12
months will continue to be:
·
Providing the most relevant and compelling
customer proposition of retail and services for the vibrant and
diverse communities we serve.
· Executing on our Environmental, Social and Governance
initiatives, appreciating we have responsibilities to both our
communities and future generations.
· Working with our retailers to ensure our centres and the
space we curate remains relevant for the next generation of retail,
where online and physical meet as a platform for seamless
commerce.
·
Investing to further reposition our centres into
the community centre format and grow income.
·
Being relentless in our commitment to adapt to
our dynamic and rapidly evolving retail landscape.
· Actively managing our centres to drive optimum income and
value across the full spectrum of uses including retail,
residential and mixed use, leisure and food catering.
·
Adopt a renewed focus on cost management across
all aspects of our business.
Given the uncertain outlook in the
first part of this year we will adopt a cautious approach to
capital deployment therefore maintaining balance sheet flexibility
until the inflation, interest rate and capital markets trajectories
are more visible.
Finally, I would like to thank our
staff, shareholders, retailers, local authorities and other
stakeholders for all their support in 2023 and continued confidence
in our business.
Lawrence Hutchings
Chief Executive
Operating review
New lettings, renewals and rent
reviews1
Our asset management team
maintained strong leasing momentum in 2023, completing 86
new lettings and renewals, at a combined annual
rent of £3.9 million, representing an average premium to previous
rent of 1.5% and to ERV of 23.3%1 (2022: 80 new lettings
and renewals for a combined annual rent of £4.4m). This was a
higher volume of deals than 2022 but with a lower average value as
2022 included two particularly large transactions at Ilford, namely
the NHS community health centre and TK Maxx relocation.
At Wood Green, we completed five
catering unit lettings at the new 'Bridge' food and entertainment
development, as well as introducing Bodycare to the scheme. We also
secured occupiers for c. 7,000 sq ft of vacant office
space.
At Walthamstow, we completed new
lettings to Starbucks and Black Sheep while at Ilford we agreed a
new lease to Addax. Renewals agreed during the year included Savers
and Sports Direct at Hemel Hempstead, Bank of Scotland, Lloyds Bank
and Waterstones at Walthamstow, Sports Direct and Superdrug at Wood
Green as well as Claire's Accessories and H&M at
Ilford.
Like for
like1
|
12 months
to
December
2023
|
12 months to December
2022
|
New Lettings
|
|
|
Number of new lettings
|
45
|
50
|
Rent from new lettings
(£m)
|
£1.5m
|
£2.6m
|
Renewals settled
|
|
|
Renewals settled
|
41
|
30
|
Total resulting annual rent
(£m)
|
£2.4m
|
£1.8m
|
Combined new lettings and renewals
|
|
|
Comparison to previous
rent2
|
+6.8%
|
+34.0%
|
Comparison to previous
ERV2
|
+16.6%
|
+13.7%
|
|
|
|
|
1 Includes transactions for Hemel Hempstead, Ilford, Maidstone,
Walthamstow and Wood Green for both years.
2 For lettings and renewals (excluding development deals and
CVA variations) with a term of 1 year or longer which do not
include turnover rent.
In addition to the figures
detailed in the table above, we have completed six new lettings and
renewals at Gyle in Edinburgh since we acquired the asset in
September 2023. These include introducing Costa and
Waterstones to the scheme, as well as securing renewals with
Superdrug and Vodafone.
Since the year end, we have
secured a portfolio deal with B&M to take all three of the
Company's units vacated as a result of the Wilko administration. In
a short space of time, this adds a new anchor into our schemes at
Hemel Hempstead, Maidstone and Wood Green, mitigates the
occupational impact from the loss of a top 10 retailer, largely
replicates the rent and further demonstrates the desirability of
space at the Company's community centres. The units are scheduled
to open for trading in May 2024.
In total in the three months to
the end of March 2024 we have completed 21 new lettings and
renewals, at a combined annual rent of £1.4 million, representing
an average premium to previous rent of 1.3% and to ERV of
5.9%1.
Rental income and occupancy
|
|
30
December
2023
|
30
December 2022
|
Occupancy (%)
|
|
|
|
93.4%
|
94.1%
|
Contracted rent (£m)
|
|
|
|
37.0
|
31.5
|
Passing rent (£m)
|
|
|
|
35.6
|
30.5
|
Occupancy at the year-end was
impacted by the administration of Wilko which was the driver of
this falling by 70 basis points during the period or by 90 basis
points on a like for like basis. However, the letting of the
three Wilko units to B&M that completed post year end is worth
approximately 140 basis points to occupancy. The Group has
been impacted post year end by the administration of the Body Shop,
where the Group has three units which have all ceased trading,
representing approximately 40 basis points to occupancy.
Contracted and passing rent have
increased by approximately 17.5% and 16.7%, respectively as a
result of the Gyle acquisition. On a like for like basis, the
metrics have fallen by 2.9% and 3.6%, respectively. This is
primarily driven by the loss of £0.7 million of Wilko income.
The Group has received notice from the Department of Work and
Pensions that they will vacate their two Job Centre units during
2024 as part of a wider consolidation of their estate, having
expanded significantly in the wake of the Covid pandemic. We
are in active discussions with multiple occupiers to re-let the
space which represents approximately £0.8 million of contracted
rent at 30 December 2023.
Contracted rent excludes
approximately £0.7 million of rent where deals have exchanged but
completion remains subject to planning or other conditions. There
is £1.2 million of contracted rent that is due to convert to
passing rent during 2024 as occupiers' rent-free periods
end.
Operational performance
Footfall grew by 1.5% during 2023,
with 44.5 million shopper visits across the portfolio (rising to
2.0% excluding Walthamstow, where footfall is impacted by one of
the entrances being closed due to the residential development).
This compares to the National Index of +3.0% during the same
period.
Footfall for 2023 (excluding Gyle)
represented 87.3% of the 2019 level, compared to 84.3% in 2022,
demonstrating continued growth towards historic pre-Covid
levels. Evidence from our retailers suggests that sales have
bounced back at a higher rate than footfall, reflecting shoppers'
more efficient use of visits. Footfall in the three months to
end of March 2024 (excluding Gyle) has fallen 4.5% compared to 2023
due to the impact of Wilko. We anticipate performance to
trend back in line with 2023 once the new B&M stores open in
May 2024.
Car park income for the year was
£5.7 million (2022: £6.0 million), an increase of 8.4% on a
like-for-like basis, adjusting for the impact of the sale of
Blackburn that completed in August 2022. This was a result of
tariff increases with car park usage in line with
2022.
Business rates
The review of business rates that
took effect from April 2023 resulted in a significant reduction in
rates payable for most retail operators. Across our portfolio
the typical reduction that applied to occupiers was 30%-35%, with
the exception of Walthamstow where reductions were approximately
10%. The withdrawal of downwards transitional arrangements
meant that occupiers immediately saw the full benefit of reductions
from April 2023, aiding store affordability and
profitability.
Rent Collection1
99.20% of rent in respect of 2023
has now been collected, representing a performance at or above
pre-pandemic levels:
|
Rent
collection
12m to 30 December
2023
|
|
£m
|
|
Rent collected
|
32.3
|
99.2%
|
Outstanding
|
0.3
|
0.8%
|
Total billed
|
32.6
|
100%
|
1 Includes the Group's centres at Hemel Hempstead, Ilford,
Maidstone, Walthamstow and Wood Green.
Capital expenditure investment
In total a net £16.0 million was
invested across the Group's assets in 2023. 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 £4.8 million on the new 35,000 sq ft TK Maxx anchor unit that
successfully opened in November 2023.
o £5.3 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 £1.4 million on other related centre improvements including
rebulbing the centre in line with our commitment to improve
sustainability performance.
· Wood
Green
o £0.6 million to create the new Bridge catering units which
opened in June 2023.
o £1.1 million on remerchandising of the former WH Smiths unit
to accommodate new units for Pure Gym, Wendy's and Wingstop that
are due to open in 2024.
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 largely 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
to be significantly reduced in 2024. Our planned spend of
less than
£10
million reflects that the two large NHS and TK Maxx projects at
Ilford were substantively completed in 2023. Spend in 2024 is
expected to be focused on completing the Ilford NHS and Wood Green
former WH Smiths projects as well remerchandising the previous TK
Maxx unit at Ilford.
Walthamstow residential
Construction work remains ongoing
on the first phase of the residential development at
Walthamstow. This will see Long Harbour create 495 Build to
Rent apartments in two residential towers adding further to the
centre's local customer base once it completes in 2025. The Group
previously completed the sale of land for residential development
to Long Harbour for £21.6 million. The planning consent covers a
residential-led, mixed use development, incorporating a new
Victoria Line tube station entrance and public space including a
new park.
We have two further phases of
development which comprise approximately 50,000 sq. ft. of retail
and 43 apartments which are part of the same planning consent as
phase 1. We have commenced discussions about how we procure this
project with a potential partner for the residential component
similar to the structure we achieved in the first phase. In
addition, we are underway on discussions with potential anchor
retailers including supermarket operators for the retail
component.
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. Through the successful implementation of
our Net Zero interventions, we have improved the EPC rating of
three centres from a D rating to a B. 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 towards our environmental targets increasing
our energy efficiency, reducing Scope 1 natural gas consumption by
72% and Scope 2 electricity consumption by 15%, 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, accounted for
approximately 70% of our total emissions in 2023 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
commissioned an online solution to acquire accurate energy
consumption and carbon intensity data from every single UK energy
meter within our portfolio which will provide 100% of all
occupiers' onsite energy usage from 2023. The online platform will
automatically update monthly allowing for performance management
insights including portfolio benchmarks, consumption analysis, load
shape profiling and six month forecasting which will be reviewed
through our Net Zero Carbon Committee which is established at each
centre. With the continuation of 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 support is crucial, particularly with
the cost-of-living crisis. We are very proud of our efforts in this
space and to date we have partnered with over 140 charities, hosted
112 events, and spent more than 600 hours engaging with local
community groups.
We have introduced a Social Impact
Measurement and Management Framework to further support our ESG
strategy and monitor our progress through 2024 and beyond. The
Framework will focus on social impact goals and strategies to
identify the various ways in which the business impacts people and
then seek to improve this through the development of an Impact
Management Plan.
Snozone
Snozone had a strong 2023,
enjoying its first full year unimpacted by Covid since the start of
the pandemic while continuing to leverage a number of initiatives
and activities that broadened its appeal and allowed it to reach
new market places. Revenue increased by 15% to £14.9m
(December 2022: £13.0m) and EBITDA1 increased by 64% to £2.3
million (December 2022: £1.4 million).
Revenue and EBITDA for the UK
operations at £10.9 million and £1.8 million were 16% and 17%
higher than 2022, respectively. Ski and snowboard lesson income
supported a record attainment in revenue, along with an increase in
Snozone's school affiliate programme. In addition, food and
beverage revenue from its own 'Alpine Kitchen' restaurants coupled
with its conferencing and events stream exceeded £1 million for the
first time.
The UK business had also benefited
from being on a fixed price energy tariff over the past three years
which came to an end in September 2023. This protected the business
from the worst of the market wide energy price spikes seen over the
last two years. Current electricity pricing will lead to a
cost increase of
c.
£0.25 million per year. This was part-mitigated in Q4 2023 by
utility saving management initiatives and from realising the
benefits that recent investments into enhanced plant and machinery
have delivered.
Snozone Madrid's revenue of £4.0
million was 18% higher than the previous year (December 2022:
£3.4
million) and it delivered a positive contribution of £0.5 million
to Snozone's total EBITDA (December 2022: loss of £0.2
million).
These positive metrics reflect the
actions undertaken to significantly improve profitability.
Most notably these have included enhancing the guest proposition
with new activities that have extended market share as well as
using the wider Snozone management platform to operate with greater
cost efficiency since acquisition of the operation in February
2021. The impact of large increases in government-controlled
electricity prices was mitigated in 2023 by the installation of
solar panels in November 2022.
Snozone's IFRS profit for the
period was £0.6 million (December 2022: £0.1 million).
Snozone ESG
All of Snozone's electricity is
100% renewable, traceable and has no element of biomass.
The UK venues source electricity
from the Hornsea North Sea wind farm, 90 miles from the Snozone
Yorkshire venue. In Madrid 68% of the venue's power is sourced from
a mixture of solar, wind and nuclear energy with 32% supplied by
1,600 of our own solar panels on the roof of the facility, which
were purchased in 2022 as part of Snozone's decarbonisation capital
investment programme as well as offsetting the rising costs of
electricity.
Snozone's pathway to net zero
strategy is underpinned by a cyclical four-year plan for capital
investment into new plant and machinery. Ten units of blast
coolers have been replaced at the Milton Keynes venue which will
save 214,000 kWh per year.
In addition, improved insulation
at both UK venues, voltage optimising and a de-lamping project
combined with Madrid's solar panels investment, returned an 11%
electricity saving over the prior year and a reduction of 16%
versus the 2019 base year. There has also been a significant
reduction in gas usage of 15% v 2022 and 25% v the 2019 base. Water
usage similarly has decreased by 13% v 2022 and 18% v 2019.
The EPC ratings of Snozone's premises are 'B' for Yorkshire and
Madrid and 'C' at Milton Keynes.
In an increasingly competitive
leisure sector, Snozone's annual staff retention was 74%,
significantly ahead of the industry average of 47%. Only 4% of
working days were lost due to absence through sickness (National
average 6%) and 79% of the Snozone team received accredited or
certified training in 2023.
Snozone celebrates diversity and
believes firmly in inclusion, with 18% of its workforce ethnically
represented. To underline Snozone's status as a Disability
Confident Employer, 9% of our workforce is represented by team
members with a registered physical disability or mental
impairment.
Snozone is the only European
operator to operate its own Disability Snow School. In 2023 we
delivered 2,056 disability lessons, a 102% increase on 2022.
For the fourth year running, Snozone received accreditation as a
Disability Confident Employer. Snozone's supply chain only
consists of companies who have signed up to the Modern slavery act
and the Anti-bribery and corruption Act.
1 Snozone EBITDA is defined in the use of Alternative
Performance Measures section below.
Financial review
|
|
Year
to
Dec 2023
|
Year
to
Dec
2022
|
Profitability
|
|
|
|
Statutory Revenue
|
|
£59.0m
|
£56.8m
|
Net Rental Income (NRI)
|
|
£23.9m
|
£23.5m
|
Adjusted Profit
1
|
|
£12.7m
|
£10.3m
|
Adjusted Earnings per share
1
|
|
6.8p
|
6.2p
|
IFRS Profit for the
period
|
|
£3.7m
|
£12.1m
|
Basic earnings per share
|
|
2.0p
|
7.3p
|
EPRA cost ratio (excluding vacancy
costs) 1
|
|
39.1%
|
37.8%
|
Net Administrative Expenses to Gross
Rent
|
|
23.5%
|
22.4%
|
|
|
|
|
Investment Returns
|
|
|
|
Net Asset Value
|
|
£202.0m
|
£179.1m
|
Net Asset Value (NAV) per
share
|
|
90p
|
106p
|
EPRA NTA per share
1
|
|
88p
|
103p
|
Proposed Final Dividend per share
2
|
|
2.95p
|
2.75p
|
Total Dividend per share
2
|
|
5.70p
|
5.25p
|
|
|
|
|
Financing
|
|
|
|
Group net debt
|
|
£162.7m
|
£130.9m
|
Group net debt to property
value
|
|
43.6%
|
40.6%
|
EPRA LTV
|
|
45.4%
|
44.0%
|
Average maturity of Group debt
3
|
|
4.1 years
|
4.5
years
|
Cost of Group debt (weighted
average) 3
|
|
4.25%
|
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 5
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. Reflects
loan amendments signed post year end. Cost of Group debt
reflects revised cost of Ilford debt effective from 8 March
2024.
4 2022 comparative figures have been restated for a prior year
adjustment to service charge income and expenditure recognised in
the period. There is no change to Profit.
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 measure used
|
Rationale
|
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 non-cash long-term incentive awards and
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 £1.1 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 Gyle
acquisition in 2023 and the disposal of The Mall, Blackburn and the
Walthamstow residential receipt in 2022.
|
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
value
|
Net debt to property value is debt
less cash and cash equivalents divided by the property
value.
|
Net Rent or Net Rental Income
(NRI)
|
Net Rental Income is rental income
from properties, 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 2a to the condensed financial statements.
|
Profitability
Components of Adjusted Profit and reconciliation to IFRS
Profit
Amounts in
£m
|
|
Year to
December
2023
|
Year
to
December
2022
December
2016
|
|
|
|
Year
to
December
2016
|
Year to
December
2016
|
|
|
Net Rental Income
|
|
|
|
23.9
|
|
23.5
|
Net interest payable
|
|
|
|
(7.4)
|
|
(9.3)
|
Snozone (indoor ski operation)
EBITDA
|
|
|
|
2.3
|
|
1.4
|
External management fees
|
|
|
|
1.9
|
|
3.3
|
Central operating costs (including
central interest)
|
|
|
|
(6.6)
|
|
(7.0)
|
Variable overhead
|
|
|
|
(1.4)
|
|
(1.6)
|
Adjusted Profit 1
|
|
|
|
12.7
|
|
10.3
|
Adjusted Earnings per share (pence)
1
|
|
|
|
|
6.8p
|
|
6.2p
|
|
|
|
|
|
|
Reconciliation of Adjusted Profit to statutory
result
|
|
|
|
|
|
Adjusted Profit
|
|
|
12.7
|
|
10.3
|
Property revaluation
|
|
|
(8.1)
|
|
(19.6)
|
(Loss)/profit on disposal
|
|
|
(0.3)
|
|
1.5
|
Snozone depreciation and
amortisation
|
|
|
(2.2)
|
|
(2.1)
|
Snozone notional interest (net of
rent expense in EBITDA)
|
|
|
0.8
|
|
0.8
|
(Loss)/gain on financial
instruments
|
|
|
(2.0)
|
|
1.1
|
Corporation Tax credit
|
|
|
3.6
|
|
0.3
|
Long Term incentives
|
|
|
(0.8)
|
|
(0.5)
|
Gain on discounted loan purchase
(net of costs)
|
|
|
-
|
|
12.5
|
Write up following Luton
deconsolidation
|
|
|
-
|
|
6.8
|
Other items (including transaction
costs)
|
|
|
-
|
|
1.0
|
Profit for the period
|
|
|
3.7
|
|
12.1
|
1 EPRA figures and a reconciliation to EPRA EPS are shown in
Note 5 to the condensed Financial Statements.
Adjusted Profit - December 2023: £12.7 million (December
2022: £10.3 million)
Net Rental Income (NRI) increased to £23.9 million (December 2022: £23.5 million)
reflecting the net impact of the acquisition of Gyle in Edinburgh
in September 2023 (NRI contribution of £1.5 million) less the loss
of NRI from the sale of Blackburn which completed in August 2022
(NRI contribution of £2.7 million in 2022). On a like for
like basis adjusting for these balances NRI increased by 5%
reflecting improved occupancy which was higher for most of the
period until the impact of the Wilko administration took effect in
the final quarter of the year, and improved car park profitability
which increased by £0.2 million to £3.1 million.
Net interest payable has
fallen from the prior year, reflecting the repayment of £60 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 £39 million Ilford
loan expired at the original maturity in March 2024. We have
acquired an interest rate cap to cap the all-in cost of debt on the
facility at 5.50%.
Snozone EBITDA at £2.3 million
(December 2022: £1.4 million) as noted has benefited from its first
full year of trading unimpacted by Covid since 2019 and the
improved contribution of Snozone Madrid.
External Management Fees of
£1.9 million (December 2022: £3.3 million) break down between Asset
and Property Management fees on external properties (Redditch and
Luton) of £0.8 million and Property Management fees on the Group's
Investment Assets of £1.1 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 ceased in September 2023 when the asset changed
ownership.
Central operating costs £6.6
million (December 2022 - £7.0 million) and Variable overheads £1.3 million
(30 December
2022 - £1.6 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. Our EPRA cost ratio
(excluding vacancy costs) increased marginally from 2022 due to the
net impact of the loss of Management Fees not being fully offset by
the reduction in Central Costs. The impact of pro-rating for
a full year of Gyle would be to reduce the EPRA cost ratio
(excluding vacancy costs) to approximately 36.4%.
Adjusted earnings per share for the period were 6.8 pence per share (December 2022: 6.2
pence) reflecting the improvement in Adjusted Profit partially
offset by the higher number of shares in issue primarily as a
result of the £25 million equity raise that completed in September
2023 to part finance the acquisition of the Gyle.
IFRS profit for the period -
30 December 2023: £3.7 million (December 2022: £12.1
million)
The key items reconciling between
IFRS profit for the period and the Adjusted Profit of £12.7 million
are:
·
Property revaluation loss of £8.1 million
(December 2022: loss of £19.6 million). Although property
values increased by 2.6% over the year on a like for like basis
this was less than the net £16.0 million invested in Capital
Expenditure during the year. The £8.1 million revaluation
loss includes £3.0 million of Stamp Duty and other purchasers'
costs in respect of the Gyle acquisition.
·
£1.4 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 £2.0 million on financial instruments
being the movement from the revaluation of the Ilford interest rate
swap and Gyle interest rate cap (30 December 2022: gain of £1.1
million).
· A net tax credit of £3.6 million (30 December 2022: £0.3
million). £1.2 million relates to the release 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.
£2.5 million relates to the recognition of a Deferred Tax
asset in respect of income losses that are now anticipated to be
utilised in future years reflecting the improved profitability of
Snozone and the other elements of the Group that sit outside of the
REIT structure.
·
£0.8 million (December 2022:
£0.5 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.
In 2022, IFRS profit benefited
from a £12.5 million gain (after costs) on the discounted purchase
of the Group's Hemel Hempstead loan facility and a £6.8 million
gain in the Group's Net Asset Value on the deconsolidation of Luton
due to it previously sitting as a liability on the Group's balance
sheet.
The profit for the year has
resulted in NAV of £202.0 million and EPRA Net Tangible Assets of
£201.2 million, an increase of £22.9 million (12.8%) and £23.8
million (13.4%) compared to the December 2022 amounts of £179.1
million and £177.4 million, respectively. Basic NAV per share and
EPRA NTA per share were 90p and 88p respectively (December 2022:
106p and 103p respectively), the decrease is due to the higher
number of shares in issue primarily as a result of the £25 million
equity raise completed in September 2023.
Property portfolio valuation
The valuation of the portfolio at
December 2023 was £372.8 million. On a like for like basis,
excluding Gyle, the portfolio increased by £8.45 million or 2.6%
over the year. The Net Initial Yields and Net Equivalent
Yields for the portfolio remained broadly constant on a like for
like basis, 7.25% and 8.55% respectively for
30
December 2023 compared to 7.23% and 8.59% respectively as at
December 2022. We have seen a £1.6 million or 4.0% increase
in the valuation of Gyle at December 2023 to £41.6 million from the
£40.0 million paid on acquisition in September 2023, driven
primarily by the six leasing transactions completed in the period
from acquisition to the year end.
Property at independent valuation
|
30 December
2023
|
30
December 2022
|
|
£m
|
NIY
%
|
NEY
%
|
£m
|
NIY
%
|
NEY
%
|
Maidstone
|
31.5
|
11.90%
|
11.66%
|
32.65
|
11.28%
|
11.49%
|
Walthamstow
|
77.7
|
6.84%
|
7.00%
|
80.0
|
5.97%
|
7.00%
|
Wood Green
|
149.5
|
7.13%
|
7.28%
|
144.0
|
7.55%
|
7.38%
|
Hemel Hempstead
|
9.2
|
9.57%
|
17.40%
|
10.5
|
14.49%
|
17.49%
|
Ilford
|
63.3
|
5.65%
|
7.90%
|
55.6
|
5.04%
|
7.79%
|
Gyle, Edinburgh
|
41.6
|
11.92%
|
10.13%
|
-
|
-
|
-
|
Total
|
372.8
|
7.80%
|
8.79%
|
322.75
|
7.23%
|
8.59%
|
Total like for like (excluding
Gyle)
|
331.2
|
7.25%
|
8.55%
|
|
|
|
Acquisition of Gyle, Edinburgh
On 9 August 2023 the Group entered
into an agreement to acquire Gyle shopping centre in Edinburgh for
a consideration of £40 million, excluding acquisition costs.
The acquisition completed on 6 September 2023.
The consideration was financed
through a new debt facility of £16 million, £25 million of proceeds
received pursuant to a fully underwritten equity raise and existing
funds held by the Company. The asset was acquired at a net initial
yield of 13.51% that is expected to rebase to around
12%.
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
December 2023 is summarised in the table below:
|
Debt1
|
Cash2
|
Net debt
|
Loan to
value 3
|
Net loan
to value3
|
Current
interest rate
|
Fixed
|
Duration
to loan expiry4
|
Duration
with extensions4
|
30 December 2023
|
£m
|
£m
|
£m
|
%
|
%
|
%
|
%
|
Years
|
Years
|
The Mall
|
140.0
|
(10.2)
|
129.8
|
54.1%
|
50.2%
|
3.45%
|
100
|
3.1
|
4.1
|
Hemel Hempstead
|
4.0
|
(0.5)
|
3.5
|
43.5%
|
38.0%
|
11.06%
|
-
|
1.5
|
3.5
|
Ilford
|
39.0
|
(3.9)
|
35.1
|
61.6%
|
55.5%
|
5.50%4
|
100
|
1.7
|
4.0
|
Gyle, Edinburgh
|
16.0
|
(2.6)
|
13.4
|
38.5%
|
32.2%
|
6.50%
|
100
|
4.7
|
4.7
|
Central Cash
|
-
|
(19.1)
|
(19.1)
|
-
|
-
|
-
|
-
|
-
|
-
|
Total
|
199.0
|
(36.3)
|
162.7
|
53.4%
|
43.6%
|
3.71%
|
97.8
|
2.9
|
4.1
|
1 Excluding unamortised issue costs.
2 Excluding cash beneficially owned by tenants.
3 Debt and net debt divided by investment property at
valuation.
4 Reflects loan amendments signed post 30 December 2023.
Ilford interest rate reflects revised cost effective from 8 March
2024.
The Mall
Following the £60 million of
repayments made during 2022 the Mall facility now consists of a
single £140 million fixed rate loan at 3.45%, held with TIAA.
The loan matures in January 2027 but has a one-year conditional
extension option.
Hemel Hempstead
The Group has a £4
million facility with BC Invest, a subsidiary of the Group's
strategic residential partner, Far East Consortium. The debt
matures in July 2025 with options to extend for a further one or
two years 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 £39 million
facility secured on the Ilford Exchange shopping centre with
Dekabank Deutsche Girozentrale. The original facility was due
to mature in March 2024 but the Group has secured an extension to
September 2025 along with two further conditional extension options
to further extend maturity to the end of December 2026 and 2027,
respectively.
On commencement of the new
extended term the margin is 300 basis points. The Group has
acquired an interest rate cap to hedge the maximum all in cost at
5.50% until the current maturity of September 2025.
Gyle, Edinburgh
To part fund the acquisition of
Gyle in Edinburgh the Group drew a new debt facility of £16 million
in September 2023, arranged by Morgan Stanley. The loan
matures in September 2028. The loan is at a margin of 275
basis points. The total all in cost of debt has been hedged
at a maximum of 6.50% for the duration of the loan via an interest
rate cap.
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 December 2023, the Group had
total cash at bank on balance sheet of £36.3 million. Of which
£17.8
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.
In respect of the £140 million
Mall debt the Group is currently compliant with all covenant tests
on the facility. The covenants reverted back to those set in
the original loan agreement signed in January 2017 following the
expiry of the two year period of covenant waivers agreed as part of
the November 2021 loan restructure. On the Ilford £39 million
facility, as well as extending the loan maturity to September 2025
and agreeing further loan extension options out to December 2027
the Group have agreed various improvements to covenant terms that
run until the new maturity and beyond if the extension options are
triggered. On Hemel Hempstead the Group has agreed a waiver
of all covenants on the £4 million loan facility until maturity in
July 2025 related to injecting new capital into the vehicle to
support the re-letting of the Wilko unit to B&M. The
Group has also agreed an option to extend maturity by one or two
years. The Group signed a new £16 million loan facility in
September 2023 to part finance the acquisition of Gyle in
Edinburgh.
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%, reduced car park and ancillary income by 10% and
removed any contribution from Snozone to reflect how a significant
downturn in expected trading could impact cashflows. The Group has
also considered a 15% reduction in property valuations both from
the Group's 30 December 2023 valuations and valuations undertaken
by the Group's respective lenders.
The combination of the cash
maintained on the Group's balance sheet and actions available
within Management's control provides sufficient contingency to
cover all of the various downside sensitivities modelled in
combination to the most adverse end of the scenarios
modelled. At the most adverse end the Group would need to
take some additional measures to preserve cash involving some
combination of reducing or deferring Capital Expenditure and/or
reducing dividend payments or utilising a Scrip option.
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 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.
Viability Statement
In accordance with the 2018
revision of the UK Corporate Governance Code, the Directors have
assessed the prospect of the Company over a longer period than the
12 months required by the "Going Concern" provision.
The Board conducted this review
for the two-year period to December 2025. The period is covered by
the Group's annual budget and business planning process. It
includes sensitivity analysis to consider adverse scenarios, that
could be caused by the principal risks and uncertainties outlined
in the Managing Risk section below. This incorporated the
impact on cash and covenant compliance of further significant falls
in property valuations or property income. The Ilford and
Hemel facilities both mature during this two year period however
each has conditional extension options available to the Group which
would extend maturity to beyond December 2026.
The considerations made by the
Directors in concluding on viability mirror those considered within
the Going Concern conclusion as documented above. Based on
this and the resources and actions available the Directors have a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period
to December 2025.
Dividend
The Directors recommend a final
dividend of 2.95 pence per share. This will result in a fully
covered total distribution for the year ended 30 December 2023
equivalent to 5.70 pence per share (2022: 5.25 pence per
share). This satisfies the Group's
policy of paying a dividend of at least 90% of the Group's EPRA
profits. The dividend will be paid entirely as a Property
Income Distribution (PID) and a Scrip dividend option will be
offered.
Subject to approval of
shareholders at the Annual General Meeting (AGM) on 3 June 2024,
the final dividend will be paid on Friday, 7 June 2024. The
key dates are set out as below:
·
Confirmation of ZAR equivalent dividend and Scrip
dividend pricing - Tuesday, 2 April 2024
·
Last day to trade on Johannesburg Stock Exchange
(JSE) - Tuesday, 9 April 2024
·
Shares trade ex-dividend on the JSE - Wednesday, 10
April 2024
·
Shares trade ex-dividend on the London Stock
Exchange (LSE) - Thursday, 11 April 2024
·
Record date for LSE and JSE and last election for
Scrip - Friday, 12 April 2024
· Annual General Meeting - Monday, 3 June 2024
· Results of Scrip dividend announced on or about - Tuesday, 4
June 2024
·
Dividend payment date - Friday, 7 June
2024
South African shareholders are
advised that the final dividend will be regarded as a foreign
dividend. Further details relating to Withholding Tax for
shareholders on the South African register were provided within the
announcement detailing the currency conversion rate on Tuesday, 2
April 2024.
Managing Risk
Risk management approach
The Audit Committee is delegated
the authority for overseeing the effectiveness of the risk
management process by the Board and is accountable for reporting on
the identification of principle and emerging risks to the
business. Ultimate responsibility for the oversight of risk
management within the Group remains with the Board. The Board
defines the risk appetite of the Group, establishes a risk
management strategy and is responsible for maintaining a robust
internal controls system. The Board formally reviews and
signs off the Group's risk register on a six-monthly basis.
Emerging risks are considered as part of this process or on an ad
hoc basis in instances such as the outbreak of the Covid-19
pandemic where the risk is of sufficient significance to require a
separate discussion.
Risk management process
There are a number of risks and
uncertainties which could have a material impact on the Group's
future performance and could cause results to differ significantly
from expectations.
At every half year and year end,
the members of senior leadership undertake a comprehensive risk and
controls review involving interviews with relevant management
teams. This considers a review of both the existing
identified risks and any new or emerging risks that may have been
identified during the period. The output of this process is
an updated risk map and internal control matrix for each component
of the business, which is then amalgamated into the Group risk map
and matrix that is reviewed by the senior leadership team. Formal
submission is then made to the Audit Committee for review, before
going to the Board for final sign off. The process for the half
year and full year 2023 review forms the basis for the disclosures
made below.
This process clearly outlines the
principal risks, considers their potential impact on the business,
the likelihood of them occurring and the actions being taken to
manage, and the individual(s) responsible for managing, those risks
to the desired level.
This risk matrix is also used in
performing our annual assessment of the material financial,
operational and compliance controls that mitigate the key risks
identified. Each control is assessed or tested for evidence
of its effectiveness. The review concluded that all such
material controls were operating effectively during
2023.
Principal risks at 30 December 2023
A review was carried out for the
30 December 2023 year end. Amongst the main factors considered were
the cost of living pressures being experienced by consumers within
the UK combined with the impact on consumers, businesses and the
Company of the higher interest rate environment. Other
matters considered were the continued evolution of the UK retail
market as online sales have generally settled back into a stable or
in some cases declining pattern from the disruption of the Covid-19
pandemic.
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 broadly remain
unchanged at 30 December 2023.
The risks noted 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.
Risk
|
Impact
|
Mitigation
|
1. Property
investment market risks
|
The weaker macro-economic
environment and poor sentiment in commercial real estate markets
has led to low transactional evidence across the industry with
reduced investor confidence and a decline in valuations across all
real estate sectors.
Valuations can be inherently
subjective leading to a degree of uncertainty and the risk that
property valuations may not reflect the price received on
sale.
|
Small changes in property market
yields or future cash flow assumptions can have a significant
effect on valuations.
The impact of leverage could
magnify the effect on the Group's net assets and the risk of
breaching loan covenants with our lenders. This could result in the
default of facilities and should we not be able to cure these, we
run the risk of security being enforced.
Highly volatile trading
environments have the potential to increase the speculation on
Property valuations and are open to a wider range of possible
outcomes.
|
Regularly monitoring market
direction, comparable property valuations in the market and recent
transactions.
Adequate and timely forward planning
of investment decisions.
We engage experienced external
valuers who understand the specific properties and whose output is
reviewed and challenged by internal specialists with key
assumptions benchmarked to industry indices and comparable
transactional evidence.
Regular reviews and consideration of
strategies to reduce debt levels, if appropriate.
|
2. Impact of the
economic environment
|
The Group is sensitive to tenant
insolvency and distress, which can have increased pressure on rent
levels. There is also risk of prolonged low tenant demand for
space.
Macroeconomic risks in relation to
rising inflation, income tax and the volatility of the energy
market (and associated costs of energy) are likely to negatively
impact consumer spending, which will impact retailing, particularly
discretionary spending.
Rising inflation will also put
pressure on the Group's cost base and operating margins.
|
Economic pressure on consumer
spending will likely impact the levels of footfall across the
centres and have a knock-on effect on discretionary retail
tenants.
Tenant failures and reduced tenant
demand could adversely affect rental income, lease incentive, void
costs, cash and ultimately property valuations.
|
A key part of our Group strategy is
to ensure a large, diversified tenant base that is made up of
primarily non-discretionary retail.
Review of tenant covenants before
new leases are signed.
The offering of long-term leases as
standard and maintaining active and personable credit control
processes that foster positive relationships with
tenants.
Regular dialogue between the support
office and general managers across the portfolio, who have ad hoc
discussions with tenants, to understand the issues facing tenants
and customers.
Managing void units though temporary
lettings and other mitigation strategies.
Energy costs mitigated by measures
undertaken to reduce energy consumption such as introduction of LED
lighting and utilising alternative sources of energy such as the
installation of solar panels at Snozone Madrid.
|
3. Treasury
risk
|
The Group is at risk of not being
able to fund the business or to refinance existing debt on economic
terms, particularly during periods of low lending market
appetite.
Breach of the assets loan
covenants resulting in defaults on debt and the potential for
accelerated maturity and/or lenders taking control of secured
assets.
Exposure to rising or falling
interest rates, which could affect liabilities on property sales
and refinancing.
|
The Group may not be able to meet
financial obligations when they come due, causing limitation on
financial and operational flexibility.
The cost of financing could be
prohibitive.
Unremedied breaches of loan
covenants can trigger demand for immediate repayment of loan
facilities.
If interest rates rise and are
unhedged, the cost of debt facilities can rise and ICR covenants
could be broken.
Hedging transactions used by the
Group to minimise interest rate risk may limit gains, result in
losses or have other adverse consequences.
|
Ensuring that the Group maintains
appropriate levels of cash reserves.
Regular monitoring and projections
of liquidity, gearing and covenant compliance with regular
reporting to the Board.
Maintain close relationships with
lenders.
The Group has significantly
reduced debt levels in recent years through a combination of asset
sales and asset/debt restructuring.
All the Group's facilities are
non-recourse and held in SPV structures.
|
4. Tax &
regulatory risks
|
Exposure to non-compliance with the
REIT regime and changes in the form or interpretation of tax
legislation.
Potential exposure to wider changes
in tax legislation and potential tax liabilities in respect of
historic transactions undertaken.
Exposure to changes in existing or
forthcoming property or corporate regulation.
|
Tax related liabilities and other
losses could arise causing significant financial loss.
Failure to comply with tax or
regulatory requirements could result in loss of REIT status,
financial penalties, loss of business or reputational
damage.
|
Constantly monitoring the Group's
REIT compliance and consideration of the effects of major decisions
on REIT status.
Use of tax specialists to
outsource compliance and advisory tax matters.
Maintaining regular dialogue with
the tax authorities and business groups.
Actively keep key staff up to date
with regulation and ensure necessary policies and procedures are in
place.
Expert advice taken on complex
regulatory matters.
|
5. People &
Skills
|
As a small business, there is a
relatively small number of key individuals whose skills are
depended on to operate the business effectively. Retaining
these individuals cannot be guaranteed.
The attraction of new talent to the
business with the right expertise cannot be guaranteed.
|
The loss of key individuals or an
inability to attract new employees with the appropriate expertise
could compromise the business's ability to operate
efficiently.
|
Paying current and new employees
market salaries and offering competitive incentive packages,
including the use of retention awards and incentive
plans.
Promoting positive working
environments and culture in line with staff
expectations.
Effectively maintaining a
succession plan for key positions and departments.
|
|
|
|
|
6. Development
risk
|
The costs involved with development
projects overrunning and delays leading to extended completion
times past expected deadlines.
The threat to the Group's property
assets of competing in town and out of town retail and leisure
schemes.
|
Increased costs and reputational
damage which may lead to planned value not being
realised.
Competition with other schemes may
reduce footfall and reduce tenant demand for space and effect the
levels of rents that can feasibly be achieved.
|
Use of experienced external
project coordinators to oversee developments with staged execution
to key milestones and updates to be monitored by steering
committees with the Group.
Implemented well defined approval
processes for new development projects and guidance provided for
setting key milestones.
Partnered with external agencies
to raise awareness of new planning proposals, which are fought, as
necessary, in accordance with relevant planning laws.
Maintain close working
relationships with local councils and promote willingness to
support the community.
Maintain the flexibility to invest
in marketing strategies to continue relevance in the
market.
|
7. Business
disruption from a major incident
|
Major incidents occur at any of the
business' sites having a significant impact upon
trading.
This includes specific incidents to
a centre or trading location or a situation such as Covid-19 that
impacts trading on a national scale.
|
Such events could cause a reduction
in earnings and additional costs.
Exposure to reputational damage if
the business acts, or is perceived to have acted, in a negligent
manner.
The pandemic has had a significant
impact on customer behaviour and habits. There is a risk that
consumer habits have permanently changed and will impact business
KPIs, such as footfall and leasing.
|
Trained operational personnel at
all sites and documented major incident procedures.
Regular update meetings on
operational procedures reflecting current threats and major
incident testing runs.
Regular liaison with the police
and environmental health officers.
Insurance for business disruption
and rebuild is always maintained across the portfolio.
Disaster recovery sites have been
mapped and are maintained in the event of immediate
needs.
|
8.
Environmental, Social & Governance
|
The Group's activities may have an
adverse impact on the environment and the communities in which we
operate.
Health and safety incidents could
cause death or serious injury.
A risk that centres or specific
retailers are identified as a 'hotspot' for Covid-19
transmission.
|
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 relevant
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.
|
Issues and actions considered by
the Board, through regular reports from
the ESG Committee and its
designated sub committees.
Appointed ESG specialists to
assist the business in mapping out its ESG roadmap and key
milestones.
Specialist health and safety
consultancy support in place with internal bespoke health and
safety system to enable incident reporting and
monitoring.
EPC rating certificates are
completed across the portfolio.
|
9. Customers
& changing consumer trends
|
Further migration towards online
shopping, multi-channel retailing, and increased spending on
leisure may adversely impact consumer footfall in shopping
centres.
Increased use of CVAs by retailers
as a means of restructuring or cost reduction.
|
Changes in consumer shopping habits
towards online shopping and home delivery could reduce footfall and
therefore potentially reduce tenant demand and the levels of rents
which can be achieved.
Financial loss from tenants use of
CVAs to both write off arrears and reset lease agreement
terms.
|
Strong location and dominance of
shopping centres in high density urban locations.
Strength of the community shopping
experience with tailored relevance to the local
community.
Concentration on convenience and
value offer which is less impacted by online presence.
Increasing provision of "Click &
Collect" within our centres.
Maintaining positive retailer
relationships and providing for honest and open
dialogue.
Monitoring key business metrics such
as footfall, retail trends and shopping behaviour.
|
10. IT &
Cybersecurity
|
Failure of, or, as a result of
malicious attack on, the Group's information technology hardware
and software systems.
Failure to continually keep up with
best practice and invest in new technology.
|
Loss of operating capacity, business
time or reputational damage.
Data breaches resulting in
reputational damage, fines or regulatory penalties.
|
IT Security Governance Policy in
place aligned with ISO27001.
Ongoing investment in technology
infrastructure with key IT applications hosted offsite.
Systems in place to prevent and
react to malicious attack.
Regular penetration testing carried
out by a specialist security company.
Cyber Essentials Plus
certified.
Information security training
programmes in place to regularly upskill all employees. A strong
password policy is in place to keep employees safe.
Maintenance of a disaster recovery
site in the event of critical systems failures.
|
11.
Climate-related
|
In light of the introduction of TCFD
Disclosure requirements, the impact of climate change has become a
Board level issue.
As a result of COP26, the world
stage is focused on combatting climate change and businesses that
fall behind on their efforts to mitigate their effect on the
climate run the risk of becoming non-investable.
|
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, business disruption from extreme weather
events.
Failure to comply with regulations
could result in financial exposure.
|
Environmental policy in place and
consistent with ISO14001.
Management of and compliance with
the Carbon Reduction Commitment and compliance with the Carbon
Trust.
Engaged with external agency, JLL,
to assist with setting out framework to assess climate related
risks.
Separate risk matrix on
climate-related risks feeds into Group risk review and ESG
Committee reporting to the Board.
Nominated individual from SLT to
take oversight responsibility of climate-related issues.
Board has oversight of TCFD
climate-related goals and targets through quarterly ESG
reporting.
|
12.
Health & Safety
|
|
|
The risk that the Group's staff,
customers or guests suffer illness, injury or fatality at one of
the Group's operations.
|
If found to be as a result of
failing processes or negligence the Group and/or individuals in
management positions could face criminal charges, financial loss
and reputational damage.
|
Regular risk assessments.
Sharing of information with local
Health & Safety Executive.
Capacity limits agreed with Health
& Safety Executive and reviewed with external
lawyers.
Training for staff by Health &
Safety Consultancy.
Insurance review meetings with
insurance brokers.
|
Consolidated income statement
|
For the year to 30 December
2023
|
|
|
|
Unaudited
2023
|
|
2022
Restated1
|
|
|
Note
|
|
£m
|
|
£m
|
|
Continuing operations
|
|
|
|
|
|
|
Revenue
|
3
|
|
59.0
|
|
56.8
|
|
Gain on expected credit
losses
|
|
|
0.1
|
|
0.4
|
|
Cost of sales
|
|
|
(31.5)
|
|
(29.0)
|
|
Gross profit
|
|
|
27.6
|
|
28.2
|
|
Administrative costs
|
|
|
(9.9)
|
|
(10.9)
|
|
Loss on revaluation of investment
properties
|
6a
|
|
(8.1)
|
|
(19.6)
|
|
Other (losses) and gains
|
|
|
(0.1)
|
|
15.6
|
|
Profit on ordinary activities before
financing
|
|
|
9.5
|
|
13.3
|
|
Finance income
|
|
|
0.5
|
|
1.1
|
|
Finance costs
|
|
|
(9.9)
|
|
(9.4)
|
|
Profit before tax
|
|
|
0.1
|
|
5.0
|
|
Tax
|
4a
|
|
3.6
|
|
0.3
|
|
Profit for the year from continuing
operations
|
|
|
3.7
|
|
5.3
|
|
Profit for the period from period
from discontinued operations
|
|
|
-
|
|
6.8
|
|
Profit for the year
|
2a
|
|
3.7
|
|
12.1
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
2.0p
|
|
3.2p
|
|
Diluted earnings per
share
|
|
|
1.9p
|
|
3.2p
|
|
|
|
|
|
|
|
|
Continuing and discontinued operations
|
|
|
|
|
|
|
Basic earnings per share
|
5a
|
|
2.0p
|
|
7.3p
|
|
Diluted earnings per
share
|
5a
|
|
1.9p
|
|
7.2p
|
|
|
|
|
|
|
|
|
EPRA earnings per share
|
|
|
|
|
|
|
EPRA basic earnings per
share
|
5a
|
|
5.6p
|
|
5.3p
|
|
EPRA diluted earnings per
share
|
5a
|
|
5.5p
|
|
5.3p
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of comprehensive
income
|
For the year to 30 December
2023
|
|
|
|
Unaudited
|
|
2022
|
|
|
|
£m
|
|
£m
|
Profit for the year
|
|
|
3.7
|
|
12.1
|
Other comprehensive
income
|
|
|
-
|
|
-
|
Total comprehensive income for the year
|
|
|
3.7
|
|
12.1
|
The results for the current and
preceding year 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 these
financial statements. EPRA earnings and EPRA EPS are shown in
Note 5 to these condensed financial statements. EPRA net
reinstatement value (NRV), net tangible assets (NTA) and net
disposal value (NDV) are shown in Note 12 to these condensed
financial statements. We consider EPRA NTA to be the most relevant
measure for our business.
1 2022 comparative figures have been restated for a prior year
adjustment to service charge income and expenditure recognised in
the period. There is no change to Profit.
Consolidated balance sheet
|
|
At 30 December 2023
|
|
|
|
|
Unaudited
2023
|
|
2022
Restated1
|
|
Note
|
|
£m
|
|
£m
|
Non-current assets
|
|
|
|
|
|
Investment properties
|
6
|
|
369.6
|
|
320.1
|
Plant and equipment
|
|
|
3.5
|
|
1.8
|
Right of use assets
|
7
|
|
20.1
|
|
21.6
|
Receivables
|
8
|
|
7.8
|
|
8.5
|
Deferred tax
|
4c
|
|
3.6
|
|
1.1
|
Total non-current assets
|
|
|
404.6
|
|
353.1
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Receivables
|
8
|
|
16.5
|
|
12.3
|
Cash and cash equivalents
|
9
|
|
38.2
|
|
55.5
|
Total current assets
|
|
|
54.7
|
|
67.8
|
|
|
|
|
|
|
Total assets
|
2b
|
|
459.3
|
|
420.9
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade and other payables
|
|
|
(30.2)
|
|
(28.9)
|
Current tax
|
|
|
-
|
|
(1.0)
|
Lease liabilities
|
|
|
(3.1)
|
|
(3.0)
|
Bank loans
|
10
|
|
(42.7)
|
|
-
|
Total current liabilities
|
|
|
(76.0)
|
|
(32.9)
|
|
|
|
|
|
|
Net
current (liabilities)/assets
|
|
|
(21.3)
|
|
34.9
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Bank loans
|
10
|
|
(155.0)
|
|
(181.8)
|
Other payables
|
|
|
(0.3)
|
|
-
|
Lease liabilities
|
|
|
(26.0)
|
|
(27.1)
|
Total non-current liabilities
|
|
|
(181.3)
|
|
(208.9)
|
|
|
|
|
|
|
Total liabilities
|
2b
|
|
(257.3)
|
|
(241.8)
|
|
|
|
|
|
|
Net
assets
|
|
|
202.0
|
|
179.1
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Share capital
|
|
|
22.5
|
|
16.9
|
Share premium
|
|
|
24.6
|
|
1.7
|
Merger reserve
|
|
|
60.3
|
|
60.3
|
Own shares reserve
|
|
|
(0.2)
|
|
-
|
Retained earnings
|
|
|
94.8
|
|
100.2
|
Equity shareholders' funds
|
|
|
202.0
|
|
179.1
|
|
|
|
|
|
|
Basic net assets per
share
|
|
|
89.8p
|
|
105.9p
|
EPRA net reinstatement value per
share
|
12
|
|
87.9p
|
|
103.4p
|
EPRA net tangible assets per
share
|
12
|
|
87.9p
|
|
103.4p
|
EPRA net disposal value per
share
|
12
|
|
93.5p
|
|
115.1p
|
|
|
|
|
|
|
|
1 2022 comparative figures have been restated to exclude from
trade receivable amounts invoiced but due after the balance sheet
date.
Consolidated statement of changes in equity
|
For the year to 30 December
2023
|
|
|
|
|
|
Capital
|
Own
|
|
|
|
|
Share
|
Share
|
Merger
|
redemption
|
shares
|
Retained
|
Total
|
|
|
capital
|
premium1
|
reserve2
|
reserve1
|
reserve3
|
earnings
|
equity
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
Balance at 30 December 2021
|
|
16.5
|
266.1
|
60.3
|
4.4
|
-
|
(178.9)
|
168.4
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
-
|
-
|
-
|
-
|
-
|
12.1
|
12.1
|
Other comprehensive income for the
year
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Total comprehensive income for the year
|
|
-
|
-
|
-
|
-
|
-
|
12.1
|
12.1
|
|
|
|
|
|
|
|
|
|
Capital
reduction4
|
|
-
|
(266.1)
|
-
|
(4.4)
|
-
|
270.5
|
-
|
Credit to equity for equity-settled
share-based payments
|
|
-
|
-
|
-
|
-
|
-
|
0.5
|
0.5
|
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 year
|
|
-
|
-
|
-
|
-
|
-
|
3.7
|
3.7
|
Other comprehensive income for the
year
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Total comprehensive income for the year
|
|
-
|
-
|
-
|
-
|
-
|
3.7
|
3.7
|
|
|
|
|
|
|
|
|
|
Credit to equity for equity-settled
share-based payments
|
|
-
|
-
|
-
|
-
|
-
|
0.7
|
0.7
|
Dividends paid, including
scrip
|
|
-
|
-
|
-
|
-
|
-
|
(9.4)
|
(9.4)
|
Shares issued, net of
costs
|
|
5.6
|
22.9
|
-
|
-
|
-
|
-
|
28.5
|
Other movements
|
|
-
|
-
|
-
|
-
|
(0.2)
|
(0.4)
|
(0.6)
|
Balance at 30 December 2023 -
unaudited
|
|
22.5
|
24.6
|
60.3
|
-
|
(0.2)
|
94.8
|
202.0
|
Notes:
1 These reserves are not
distributable.
2 The merger
reserve of £60.3 million arose on the Group's capital raising in
2009 which was structured so as to allow the Company to claim
merger relief under section 612 of the Companies Act 2006 on the
issue of ordinary shares.
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 reserves
from share premium and the capital redemption reserve to retained
earnings.
Consolidated cash flow statement
|
For the year to 30 December
2023
|
|
|
|
Unaudited
2023
|
|
2022
|
|
Note
|
|
£m
|
|
£m
|
Operating activities
|
|
|
|
|
|
Net cash from operations
|
11
|
|
20.1
|
|
25.3
|
Interest paid
|
|
|
(6.6)
|
|
(8.0)
|
Interest received
|
|
|
0.5
|
|
-
|
Income tax paid
|
|
|
-
|
|
(0.1)
|
Cash flows from operating activities
|
|
|
14.0
|
|
17.2
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
Disposal of investment
properties
|
6
|
|
-
|
|
59.1
|
Purchase of plant and
equipment
|
|
|
(2.0)
|
|
(0.7)
|
Acquisition costs relating to
investment properties
|
|
|
(43.0)
|
|
-
|
Capital expenditure on investment
properties
|
|
|
(18.7)
|
|
(10.6)
|
Cash flows from investing activities
|
|
|
(63.7)
|
|
47.8
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
Dividends paid (net of scrip)
including withholding tax
|
|
|
(5.2)
|
|
(1.2)
|
Bank loans drawn down
|
10
|
|
16.0
|
|
4.0
|
Bank loans repaid
|
|
|
-
|
|
(70.8)
|
Loan arrangement costs
|
|
|
(0.6)
|
|
(1.6)
|
Derivatives purchased
|
|
|
(1.3)
|
|
-
|
Issue of ordinary shares
|
|
|
25.0
|
|
-
|
Costs of share issue
|
|
|
(1.1)
|
|
-
|
Fixed payments under head
leases
|
|
|
(0.4)
|
|
(0.4)
|
Cash flows from financing activities
|
|
|
32.4
|
|
(70.0)
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
(17.3)
|
|
(5.0)
|
Cash and cash equivalents at the
beginning of the year
|
|
55.5
|
|
58.5
|
Cash and cash equivalents at the end of the
year
|
|
|
38.2
|
|
53.5
|
|
|
|
|
|
|
Transfer from assets classified as
held for sale
|
|
|
-
|
|
2.0
|
Cash and cash equivalents excluding assets classified as held
for sale
|
9
|
|
38.2
|
|
55.5
|
Notes to the condensed financial statements
For the year to 30 December
2023
1
Significant Accounting Policies
General information
Capital & Regional plc is a
public company limited by shares domiciled and incorporated in
England, United Kingdom under the Companies Act 2006.
The financial information set out
in this announcement does not constitute the Company's audited
statutory accounts for the years ended 30 December 2023 or 2022.
Statutory accounts for 2022 have been delivered to the Registrar of
Companies and those for 2023 will be delivered following the
Company's Annual General Meeting. The auditor has not yet reported
on those accounts and their reports on those accounts are
anticipated to be unqualified.
Basis of accounting
While the financial information
included in this announcement has been prepared in accordance with
the recognition and measurement criteria of IFRSs, this
announcement does not itself contain sufficient information to
comply with IFRSs. The Company expects to publish full financial
statements that comply with IFRSs in April 2023.
Accounting developments and changes
The accounting policies used in
these financial statements are consistent with those applied in the
last annual financial statements, as amended where relevant to
reflect the adoption of new standards, amendments and
interpretations which became effective during the year.
Prior year restatement
The Group's accounting policy has
been amended in the year to state that recognition of a trade
receivable requires payment to be due in accordance with the
billing schedule set out in the lease contract, and not solely the
issue of an invoice. In applying this treatment the Group has
restated the 2022 results for a prior year adjustment. This
restatement derecognises the trade receivable for invoices issued
and unsettled at 30 December 2022 but not due for payment until
after that date. The impact of this change is set out below. The
impact on Profit and Net Asset Value is £nil. We have not provided
a restated balance sheet for the year ended 30 December 2021 on the
basis we do not consider it to have a material effect given there
is no impact on Profit or Net Asset Value.
|
30
December 2022
£m
|
30
December 2021
£m
|
Receivables
|
(2.1)
|
(3.1)
|
Trade and other
payables
|
2.1
|
3.1
|
In addition a prior year
restatement has been made in respect of the service chare income
and expenditure recognised in 2022, the impact of which is a £3.8
million reduction in Revenue and a corresponding £3.8 million
reduction in Cost of Sales. The impact on Profit is
£nil.
A prior year restatement has been
made to the right of use assets for a remeasurement of the Snozone
leases. The impact is to increase both cost and depreciation by £3
million. There is no impact on the carrying value.
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:
· Amendment to IFRS 16 - Leases: Lease liability in a sale and
leaseback
· Amendment to IAS 1 - Classification of Liabilities as Current
or Non-Current
· Amendments to IAS 7 - Statement of cash flows and IFRS 7
Financial Instruments: Disclosures: Supplier finance
Agreement
· Amendments to IAS 21 - The effects of changes in foreign
exchange rates lack of exchangeability
None of these standards are
anticipated to have a material impact upon the Group's
results.
Critical accounting judgements
The preparation of financial
statements requires the Directors to make the following judgements
that may affect the application of accounting policies.
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 December 2023, the Group had
total cash at bank on balance sheet of £36.3 million (2022: £52.1
million). Of which £17.8 million (2022: £28 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. The remaining balances are
subject to meeting conditions or having passed through relevant
waterfall calculations within relevant loan facilities.
Loan facilities overview
Mall facility (£140 million): This
facility finances properties in Maidstone, Walthamstow, and Wood
Green. The Group remains compliant with all covenant tests on the
loan facility. The covenants reverted in November 2023 to the
original terms set in the January 2017 loan agreement after the
expiration of a two-year period of covenant waivers agreed as part
of the November 2021 loan restructure.
Ilford facility (£39 million):
Significant enhancements have been made to the loan agreement,
including an extension of the loan maturity to September 2025 and
the addition of further loan extension options until December 2027.
Additionally, various improvements have been agreed upon regarding
covenant terms, effective until the new maturity date and
potentially beyond if extension options are exercised.
Hemel Hempstead facility (£4
million): The Group has secured a waiver of all covenant
requirements on the £4 million loan facility until maturity in July
2025. Furthermore, the Group has an option to extend the maturity
by one or two years subject to meeting specified covenant
tests.
1
Significant Accounting Policies (continued)
New facility for Gyle (£16
million): In September 2023, the Group entered into a new £16
million loan facility to partially finance the acquisition of Gyle
property in Edinburgh.
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%, reduced car park and ancillary income by 10% and
removed any contribution from Snozone to reflect how a significant
downturn in expected trading could impact cashflows. The Group has
also considered a 15% reduction in property valuations both from
the Group's 30 December 2023 valuations and valuations undertaken
by the Group's respective lenders.
The combination of the cash
maintained on the Group's balance sheet and actions available
within Management's control provides sufficient contingency to
cover all of the various downside sensitivities modelled in
combination to the most adverse end of the scenarios
modelled. At the most adverse end the Group would need to
take some additional measures to preserve cash involving some
combination of reducing or deferring Capital Expenditure and/or
reducing dividend payments or utilising a Scrip option.
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 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.
Operating segments
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 (until it was sold on 9 August 2022),
Maidstone, Walthamstow and Wood Green. It also includes the results
of Gyle shopping centre in Edinburgh from the date of acquisition
on 6 September 2023.
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
and the interest expense on the Group's central borrowing
facility.
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.
Adjusted Profit
Adjusted Profit is the total of
Contribution from the Group's Shopping Centres, the profit from
Snozone and property management fees less central costs (including
interest, excluding non-cash charges in respect of share-based
payments) after tax. Adjusted Profit excludes revaluation of
properties, profit or loss on disposal of properties or
investments, gains or losses on financial instruments and adjusting
one-off items for example gains from debt repurchase. Results from
Discontinued Operations are included in adjusted profit up until
the point of disposal or reclassification as held for sale.
Further detail on the use of Adjusted Profit and other Alternative
Performance Measures is provided within the Financial
Review.
Adjusted profit within Snozone is
Leisure EBITDA. Leisure EBITDA is an alternative performance
measure for the Snozone business. 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 of Adjusted
Profit to the statutory result is provided in Note 2a and, on a per
share basis, in Note 5, where EPRA earnings figures are also
provided.
2a
Operating segments
|
|
Shopping
Centres
|
|
|
|
|
|
Snozone
|
Group/
Central
|
Total
|
Year to 30 December 2023
|
Note
|
£m
|
£m
|
£m
|
£m
|
Rental income from external
sources
|
2b
|
34.7
|
-
|
-
|
34.7
|
Property and void
costs1
|
|
(10.8)
|
-
|
-
|
(10.8)
|
Net rental income
|
|
23.9
|
-
|
-
|
23.9
|
Interest income
|
|
|
|
0.5
|
0.5
|
Interest
expense
|
|
(7.9)
|
-
|
-
|
(7.9)
|
Snozone
income/Management fees2
|
2b
|
-
|
14.9
|
1.9
|
16.8
|
Management expenses
|
|
-
|
(12.6)
|
(6.3)
|
(18.9)
|
Depreciation
|
|
-
|
-
|
(0.3)
|
(0.3)
|
Variable overhead
|
|
-
|
-
|
(1.4)
|
(1.4)
|
Adjusted Profit/(loss)
|
|
16.0
|
2.3
|
(5.6)
|
12.7
|
Revaluation of properties
|
|
(8.1)
|
-
|
-
|
(8.1)
|
Loss on disposal/transaction
costs
|
|
(0.3)
|
-
|
-
|
(0.3)
|
Snozone depreciation and
amortisation
|
|
-
|
(2.2)
|
-
|
(2.2)
|
Notional interest (net of rent
expense within EBITDA)
|
|
-
|
0.8
|
-
|
0.8
|
Loss on financial
instruments
|
|
(2.0)
|
-
|
-
|
(2.0)
|
Long-term incentives
|
|
-
|
-
|
(0.8)
|
(0.8)
|
Tax credit
|
|
-
|
(0.3)
|
3.9
|
3.6
|
Profit/(loss)
|
|
5.6
|
0.6
|
(2.5)
|
3.7
|
|
|
|
|
|
|
Total assets
|
2b
|
408.5
|
26.0
|
24.8
|
459.3
|
Total liabilities
|
2b
|
(225.2)
|
(28.8)
|
(3.3)
|
(257.3)
|
Net
assets/(liabilities)
|
|
183.3
|
(2.8)
|
21.5
|
202.0
|
|
|
|
|
|
|
|
1 Includes expected credit loss.
2 Asset management fees of £2.3 million charged from the
Group's Capital & Regional Property Management entity to wholly
owned assets have been excluded from the table above as they are
eliminated within the Group consolidation.
2a
Operating segments (continued)
|
|
Shopping
Centres
-
Investment Assets
|
Shopping
Centres
-
Managed
Assets
(discontinued operations)
|
|
|
|
|
|
Snozone
|
Group/
Central
|
Total
|
Year to 30 December 2022
(restated)5
|
Note
|
£m
|
£m
|
£m
|
£m
|
£m
|
Rental income from external
sources
|
2b
|
34.7
|
-
|
-
|
-
|
34.7
|
Property and void
costs1
|
|
(11.2)
|
-
|
-
|
-
|
(11.2)
|
Net rental income
|
|
23.5
|
-
|
-
|
-
|
23.5
|
Net
interest expense
|
|
(9.3)
|
-
|
-
|
-
|
(9.3)
|
Snozone
income/Management fees2
|
2b
|
-
|
-
|
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
|
|
-
|
-
|
-
|
(0.5)
|
(0.5)
|
Tax credit
|
|
-
|
-
|
-
|
0.3
|
0.3
|
Other items3
|
|
1.6
|
6.8
|
-
|
(0.6)
|
7.8
|
Gain on debt
repurchase4
|
|
12.5
|
-
|
-
|
-
|
12.5
|
Profit/(loss)
|
|
11.3
|
6.8
|
0.1
|
(6.1)
|
12.1
|
|
|
|
|
|
|
|
Total assets
|
2b
|
363.4
|
-
|
27.1
|
30.4
|
420.9
|
Total liabilities
|
2b
|
(208.5)
|
-
|
(28.9)
|
(4.4)
|
(241.8)
|
Net
assets/(liabilities)
|
|
154.9
|
-
|
(1.8)
|
26.0
|
179.1
|
|
|
|
|
|
|
|
|
1 Includes expected credit loss.
2 Asset management fees of £2.5 million charged from the
Group's Capital & Regional Property Management entity to wholly
owned assets have been excluded from the table above as they are
eliminated within the Group consolidation.
3 Other Items includes the £6.8 million gain on the
deconsolidation of Luton.
4 £12.5 million gain on repurchase of Hemel Hempstead debt at a
discount.
5 2022 comparative figures have been restated to exclude from
trade receivables amounts invoiced but due after the balance sheet
date.
2b
Reconciliations of reportable revenue, assets and
liabilities
|
|
Year to
|
Year to
|
|
|
|
30
December
2022
|
30
December
|
|
|
|
2023
|
2022
Restated1
|
|
Revenue and other income
|
Note
|
£m
|
£m
|
|
Rental income from external
sources
|
2a
|
34.7
|
34.7
|
|
Service charge income
|
|
8.2
|
6.7
|
|
Management fees
|
2a
|
1.9
|
3.4
|
|
Other income
|
|
0.1
|
-
|
|
Snozone income
|
2a
|
14.9
|
13.0
|
|
Revenue for reportable
segments
|
|
59.8
|
57.8
|
|
Elimination of inter-segment
revenue
|
|
(0.8)
|
(1.0)
|
|
Revenue and other income per consolidated income
statement
|
3
|
59.0
|
56.8
|
|
|
|
|
|
|
Revenue and other income by country
|
|
|
|
UK
|
|
55.0
|
53.3
|
Spain
|
|
4.0
|
3.5
|
Revenue and other income per consolidated income
statement
|
|
59.0
|
56.8
|
|
|
|
|
|
|
1 2022 comparative figures have been restated for a prior year
adjustment to service charge income and expenditure recognised in
the period.
|
|
2023
|
2022
Restated1
|
|
Note
|
£m
|
£m
|
Assets
|
|
|
|
Investment assets
|
|
408.5
|
363.4
|
Snozone
|
|
26.0
|
27.1
|
Group/Central
|
|
24.8
|
30.4
|
Total assets of reportable segments
and Group assets
|
2a
|
459.3
|
420.9
|
|
|
|
|
Liabilities
|
|
|
|
Investment assets
|
|
(225.2)
|
(208.5)
|
Snozone
|
|
(28.8)
|
(28.9)
|
Group/Central
|
|
(3.3)
|
(4.4)
|
Total liabilities of reportable
segments and Group liabilities
|
2a
|
(257.3)
|
(241.8)
|
|
|
|
|
Net
assets by country
|
|
|
|
UK
|
|
200.4
|
177.8
|
Spain
|
|
1.6
|
1.3
|
Group net assets
|
|
202.0
|
179.1
|
1 2022 comparative figures have been restated to exclude from
trade receivable amounts invoiced but due after the balance sheet
date.
3
Revenue
|
|
Year to
|
Year
to
|
|
|
30
December
|
30
December
|
|
|
2023
|
2022
Restated1
|
|
Note
|
£m
|
£m
|
Gross rental income
|
|
27.2
|
26.7
|
Car Park and ancillary
income
|
|
7.5
|
8.0
|
Income from external
sources
|
2a
|
34.7
|
34.7
|
Service charge income
|
2b
|
8.2
|
6.7
|
External management fees
|
|
1.1
|
2.4
|
Other income
|
|
0.1
|
-
|
Snozone income
|
2a
|
|
|
- Slope
Revenue
- Ancillary
Revenue
|
|
12.8
2.1
|
11.1
1.9
|
|
|
14.9
|
13.0
|
Revenue and other income per consolidated income
statement
|
2b
|
59.0
|
56.8
|
External management fees represent
revenue earned by Capital & Regional Plc and the Group's wholly
owned Capital & Regional Property Management subsidiary. Fees
charged to wholly owned assets have been eliminated on
consolidation.
1 2022 comparative figures have been restated for a prior year
adjustment to service charge income and expenditure recognised in
the period.
4 Tax
4a Tax credit/(charge)
|
|
Year to
|
Year
to
|
|
|
30
December
|
30
December
|
|
|
2023
|
2022
|
|
|
£m
|
£m
|
Current tax
|
|
|
|
UK corporation tax
|
|
-
|
(0.4)
|
Adjustments in respect of prior
years
|
|
1.0
|
0.4
|
Total current tax
credit
|
|
1.0
|
-
|
|
|
|
|
Deferred tax
|
|
|
|
Prior year adjustments
|
|
-
|
-
|
Origination and reversal of
temporary timing differences
|
|
2.6
|
0.3
|
Total deferred tax
|
|
2.6
|
0.3
|
Total tax credit
|
|
3.6
|
0.3
|
Of the total tax charge, £nil (2022:
£nil) relates to items included in other comprehensive
income.
4b
Tax credit/(charge) reconciliation
|
|
Year to
|
Year
to
|
|
|
30
December
|
30
December
|
|
|
2023
|
2022
|
|
Note
|
£m
|
£m
|
Profit before tax on continuing
operations
|
|
0.1
|
5.0
|
Expected tax charge at 23.52% (2022:
19%)
|
|
-
|
(1.0)
|
REIT exempt income and
gains
|
|
(0.2)
|
2.1
|
Non-allowable expenses and
non-taxable items
|
|
(1.3)
|
(1.4)
|
Excess tax losses
|
|
0.7
|
-
|
Prior year adjustments
|
|
1.0
|
0.4
|
Effect of tax rate change on
deferred tax
|
|
3.4
|
0.2
|
Actual tax credit
|
4a
|
3.6
|
0.3
|
4c
Deferred tax
The Finance Act 2021 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 consolidated financial
statements is 23.52% (30 December 2022: 19%).
The Group has recognised a
deferred tax asset of £3.6 million (30 December 2022: £1.1
million). The group has recognised deferred tax assets for the
non-REIT profit entities in respect of head lease payments, capital
allowances and certain residual tax losses carried forward 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 £20 million (30
December 2022: £12.1 million) of unused revenue tax losses, all of
which are in the UK. A deferred tax asset has been recognised in
respect of £9.1 million of these losses (30 December 2022: £nil)
where the Group considers it is sufficiently certain taxable
profits will arise to utilise the losses. A deferred tax asset has
not been recognised on the remaining £11 million of those losses
due to restrictions on the utilisation of these losses. The
Group also has unused capital losses of £24.2 million (30 December
2022: £24.2 million) that are available for offset against
future gains. 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 unused revenue and capital losses do not have an expiry
date.
4d REIT compliance
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.
5
Earnings per share
The European Public Real Estate
Association ("EPRA") has issued recommendations for the calculation
of earnings per share information as shown in the following
tables:
5a
Earnings per share calculation
|
|
Year to 30 December
2023
|
Year to
30 December 2022
|
|
Note
|
Profit
|
EPRA
|
Adjusted
Profit
|
Loss
|
EPRA
|
Adjusted
Profit
|
Profit (£m)
|
|
|
|
|
|
|
|
Profit for the year
|
|
3.7
|
3.7
|
3.7
|
12.1
|
12.1
|
12.1
|
Revaluation loss on investment
properties (net of tax)
|
5b
|
-
|
8.1
|
8.1
|
-
|
19.6
|
19.6
|
Loss/(profit) on disposal (net of
tax)
|
5b
|
-
|
0.3
|
0.3
|
-
|
(1.5)
|
(1.5)
|
Changes in fair value of financial
instruments
|
5b
|
-
|
2.0
|
2.0
|
-
|
(1.1)
|
(1.1)
|
Share-based payments
|
2a
|
-
|
-
|
0.8
|
-
|
-
|
0.5
|
Tax
|
|
-
|
(3.6)
|
(3.6)
|
-
|
-
|
-
|
Other items1
|
|
-
|
-
|
1.4
|
-
|
(20.3)
|
(19.3)
|
Profit (£m)
|
|
3.7
|
10.5
|
12.7
|
12.1
|
8.8
|
10.3
|
|
|
|
|
|
|
|
|
Earnings per share (pence)
|
|
2.0
|
5.6
|
6.8
|
7.3
|
5.3
|
6.2
|
Diluted earnings per share (pence)
|
|
1.9
|
5.5
|
6.6
|
7.2
|
5.3
|
6.1
|
1 Other Items in 2023 includes the adjustments for Leisure
EBITDA. In 2022 it includes the £12.5 million gain on repurchase of
Hemel Hempstead debt at a discount and £6.8 million gain on the
deconsolidation of Luton, in addition to the adjustments for
Leisure EBITDA.
None of the current year earnings
(2022: £6.8 million) related to discontinued operations.
|
Weighted average number of shares (m)
|
|
Year to 30 December
2023
|
Year to
30 December 2022
|
|
|
Ordinary shares in issue
|
|
188.1
|
166.3
|
|
|
Own shares held
|
|
(0.4)
|
-
|
|
|
Basic
|
|
187.7
|
166.3
|
|
|
Dilutive contingently issuable
shares
and share options
|
|
3.9
|
2.4
|
|
|
Diluted
|
|
191.6
|
168.7
|
|
|
|
|
|
|
|
|
|
|
|
|
At the end of the year, the Group
had nil (2022: nil) share options and contingently issuable shares
granted under share-based payment schemes that could potentially
dilute earnings per share in the future, but which have not been
included in the calculation because they are not dilutive or the
conditions for vesting have not been met.
5
Earnings per share (continued)
5b Headline earnings per share
Headline earnings per share is an
alternative performance measure as required by the JSE Listing
Requirements. It has been calculated and presented in line
with the JSE guidance.
|
|
Year to 30 December
2023
|
Year to
30 December 2022
|
|
|
|
Basic
|
Diluted
|
|
Basic
|
Diluted
|
Profit (£m)
|
|
|
|
|
|
|
|
Profit for the year
|
3.7
|
3.7
|
|
12.1
|
12.1
|
Revaluation loss on investment
properties (including tax)
|
8.1
|
8.1
|
|
19.6
|
19.6
|
Loss/(profit) on disposal (net of
tax)
|
0.3
|
0.3
|
|
(1.5)
|
(1.5)
|
Other items
|
|
|
-
|
-
|
|
(20.3)
|
(20.3)
|
Headline earnings
|
|
|
12.1
|
12.1
|
|
9.9
|
9.9
|
|
|
|
|
|
|
|
|
Weighted average number of shares (m)
|
|
|
|
|
|
|
|
Ordinary shares in issue
|
|
|
188.1
|
188.1
|
|
166.3
|
166.3
|
Own shares held
|
|
|
(0.4)
|
(0.4)
|
|
-
|
-
|
Dilutive contingently issuable
shares and share options
|
-
|
3.9
|
|
-
|
2.4
|
|
|
|
187.7
|
191.6
|
|
166.3
|
168.7
|
|
|
|
|
|
|
Headline Earnings per share (pence)
Basic/Diluted
|
6.4
|
6.3
|
|
6.0
|
5.9
|
6
Investment properties
6a Wholly owned properties
|
|
Freehold
|
Leasehold
|
Total
|
|
|
investment
|
investment
|
property
|
|
Note
|
properties
|
properties
|
assets
|
|
|
£m
|
£m
|
£m
|
Cost or valuation
|
|
|
|
|
At 30 December 2021
|
|
227.1
|
149.3
|
376.4
|
Capital
expenditure (excluding capital contributions)
|
3.2
|
5.8
|
9.0
|
Disposal1
|
|
-
|
(54.9)
|
(54.9)
|
Valuation
deficit2
|
|
(3.8)
|
(16.2)
|
(20.0)
|
Remeasurement of head
lease
|
|
-
|
(0.6)
|
(0.6)
|
Transfer from held for
sale
|
|
10.2
|
-
|
10.2
|
At 30 December 2022
|
|
236.7
|
83.4
|
320.1
|
Capital
expenditure (excluding capital contributions)
|
13.0
|
1.5
|
14.5
|
Acquisition
|
|
43.0
|
-
|
43.0
|
Valuation
deficit2
|
|
(4.0)
|
(4.0)
|
(8.0)
|
At 30 December 2023
|
|
288.7
|
80.9
|
369.6
|
1 This represents the net book value including tenant
incentives.
2 £(8.1) million per Income statement
(2022: £(19.6) million) and Note 2a includes letting fee
amortisation adjustment of £0.1 million (2022: £(0.4)
million).
On 18 May 2022 the Group completed
the acquisition of its debt in respect of the Marlowes shopping
centre in Hemel Hempstead, as a result the Freehold property
was transferred back from held for sale.
On 23 May 2022 the Group exchanged
contracts for the sale of The Mall, Blackburn to the retail arm of
the Adhan Group of Companies for £40 million, representing a
premium to the December 2021 valuation of £38.2 million. The
sale completed on 9 August 2022 delivering cash proceeds of
£39.4 million.
As part of the agreement to run a
consensual sale process, changes to the constitution of the Luton
entities were made effective from 23 May 2022, including the
appointment of an independent director with specific rights
regarding the sale process. The effective loss of control that they
triggered resulted in the Group deconsolidating its interest in
Luton from that date. The sale of The Mall Luton and its corporate
structure completed on 16 March 2023.
On 11 July 2022, the Group
completed the sale of land for residential development at its
17&Central community shopping centre in Walthamstow to Long
Harbour for c.£21.65 million. The head lease at The Mall
Walthamstow was remeasured as a result of an extension of the lease
term effective 23 June 2022.
On 9 August 2023 the Group entered
into an agreement to acquire the Gyle shopping centre in Edinburgh
for a total acquisition consideration of £40 million, excluding
costs. The acquisition completed on 6 September 2023.
6
Investment properties (continued)
6b Property assets summary
|
|
|
30 December
2023
|
30 December 2022
|
|
|
|
£m
|
|
£m
|
Investment properties at fair value
as reported by the valuer
|
372.8
|
|
322.8
|
Add back of lease
liabilities
|
5.4
|
|
5.4
|
Unamortised tenant incentives on
investment properties
|
(8.6)
|
|
(8.1)
|
IFRS Property Value
|
|
|
369.6
|
|
320.1
|
|
|
|
|
|
|
|
|
|
Where the valuation obtained for
investment property is net of all payments to be made, it is
necessary to add back the lease liability to arrive at the carrying
amount of investment property at fair value.
6c Valuations
External valuations at
30 December 2023 were carried out on all of the gross property
assets detailed in the table above. The fair value was £372.8
million (2022: £322.8 million). External valuations were carried
out on all of the property assets detailed in the table above. The
valuations at 30 December 2023 were carried out by independent
qualified professional valuers from CBRE Limited experienced in UK
shopping centre valuations, in accordance with Royal Institute of
Chartered Surveyors (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.
The Group considers all of its
investment properties to fall within "Level 3", as defined in the
Financial Statements. The table below summarises the key
unobservable inputs used in the valuation of the Group's wholly
owned investment properties at 30 December 2023:
|
|
|
|
|
|
|
Estimated rental value £
per sq ft
|
Equivalent yield %
|
|
Market
Value £m
|
Low
|
Weighted averaged
|
High
|
Low
|
Weighted averaged
|
High
|
|
372.8
|
15.11
|
15.91
|
16.71
|
7.00
|
8.86
|
17.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensitivities
The following table illustrates
the impact of reasonably possible changes in key unobservable
inputs (in isolation) on the fair value of the Group's
properties:
|
|
|
|
|
|
Impact
on valuations of 5% change in estimated rental value
|
Impact
on valuations of 25bps change in equivalent yield
|
Impact
on valuations of 50bps change in equivalent yield
|
|
Increase
£m
|
Decrease
£m
|
Increase
£m
|
Decrease
£m
|
Increase
£m
|
Decrease
£m
|
|
14.6
|
(15.3)
|
(12.5)
|
12.4
|
(23.8)
|
26.2
|
|
|
|
|
|
|
|
Impact
on valuations of 100bps change in equivalent yield
|
|
Increase
£m
|
Decrease
£m
|
|
(44.5)
|
57.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
Leases
|
30 December
2023
|
30 December
2022
Restated1
|
Right of use Assets
|
£m
|
£m
|
Cost
|
|
|
At 31 December 2022
|
25.1
|
28.9
|
Prior year
remeasurement
|
-
|
(3.0)
|
Additions
|
0.6
|
-
|
Disposals
|
(0.8)
|
-
|
Remeasurement
|
(0.2)
|
(0.8)
|
At 30 December 2023
|
24.7
|
25.1
|
Accumulated depreciation
|
|
|
At 31 December 2022
|
(3.5)
|
(4.4)
|
Prior year
remeasurement
|
-
|
3.0
|
Charge for the year
|
(2.0)
|
(2.1)
|
Disposals
|
0.9
|
-
|
At 30 December 2023
|
(4.6)
|
(3.5)
|
Carrying value
|
|
|
At 30 December 2023
|
20.1
|
21.6
|
|
|
|
1 2022 comparative figures have been restated for a £3 million
prior year adjustment to the Snozone leases. The adjustment has no
impact on the net book value as at 30 December 2022 or 30 December
2023.
Lease commitments relate to the
leasing of the Group's registered office and the leases of the
Snozone business on its Castleford, Milton Keynes and Madrid
sites. The lease at Snozone Basingstoke
expired as at 31 December 2022, and in 2022 the leases
at Milton Keynes and Castleford were revalued following the
annual lease payable review. During 2022
the Group signed an extension of its former registered office lease
of one year to July 2023 and in 2023 acquired a lease to January
2027 on its new registered office.
8
Receivables
|
|
30 December
2023
|
30 December 2022
Restated1
|
|
|
£m
|
£m
|
Non current:
|
|
|
|
Financial assets
|
|
|
|
Interest rate swap
|
|
0.5
|
1.7
|
Non current financial
assets
|
|
0.5
|
1.7
|
Non-financial assets
|
|
|
|
Unamortised tenant
incentives
|
|
2.7
|
2.1
|
Unamortised rent free
periods
|
|
4.6
|
4.7
|
Non current non-financial
assets
|
|
7.3
|
6.8
|
|
|
7.8
|
8.5
|
Current:
|
|
|
|
Financial assets
|
|
|
|
Trade receivables (net of
allowances)
|
|
4.3
|
5.6
|
Other
receivables2
|
|
3.8
|
-
|
Accrued income
|
|
1.9
|
1.5
|
Interest rate cap
|
|
0.3
|
-
|
Current financial
assets
|
|
10.3
|
7.1
|
Non-financial assets
|
|
|
|
Prepayments
|
|
4.9
|
4.0
|
Unamortised tenant
incentives
|
|
0.5
|
0.5
|
Unamortised rent free
periods
|
|
0.8
|
0.7
|
Current non-financial
assets
|
|
6.2
|
5.2
|
|
|
16.5
|
12.3
|
1 2022 comparative figures have been restated to exclude from
trade receivables amounts invoiced but due after the balance sheet
date.
2 Other receivables in 2023 includes £3.6 million receivable
from the freeholder of 17&Central Walthamstow in respect of
capital expenditure projects.
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 over the period
since 30 December 2020 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.
8
Receivables (continued)
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 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.
9
Cash and cash equivalents
|
|
30
December
|
30
December
|
|
|
2023
|
2022
|
|
|
£m
|
£m
|
Cash at bank and in hand
|
|
36.3
|
52.1
|
Security deposits held in rent
accounts
|
|
1.0
|
0.8
|
Other restricted balances
|
|
0.9
|
2.6
|
|
|
38.2
|
55.5
|
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 £17.8 million was held on
short term deposit and immediately available free of any
restrictions or conditions at the year end date (30 December 2022:
£28.1 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 2023 were held in Sterling other than £0.7 million which
was held in South African Rand (30 December 2022: £nil) and £0.4
million held in Euros (30 December 2022: £0.6 million).
Restricted balances include
service charge funds held on behalf of our tenants.
10
Bank loans
The Group's borrowings are
arranged to ensure an appropriate maturity profile and to maintain
short-term liquidity. There were no defaults or other
breaches of financial covenants that were not waived under any of
the Group borrowings during the current year or the preceding
year.
|
|
30
December
|
30
December
|
|
|
2023
|
2022
|
Borrowings at amortised cost
|
|
£m
|
£m
|
Secured
|
|
|
|
Fixed and swapped loans
|
|
179.0
|
179.0
|
Variable rate loans
|
|
20.0
|
4.0
|
Total borrowings before
costs
|
|
199.0
|
183.0
|
Unamortised issue costs
|
|
(1.3)
|
(1.2)
|
Total borrowings after costs
|
|
197.7
|
181.8
|
Analysis of total borrowings after costs
|
|
|
|
Current
|
|
42.7
|
-
|
Non-current
|
|
155.0
|
181.8
|
Total borrowings after costs
|
|
197.7
|
181.8
|
On 7 July 2022 the Group drew down
a new £4 million facility with BC Invest, a subsidiary of the
Group's strategic residential partner, Far East Consortium.
The debt matures in July 2025 with options to extend for a further
one or two years agreed a part of a package that included a waiver
of all covenants until original maturity in July 2025 that was
agreed in February 2024. The facility is shown as current at 30
December 2023 given there was a technical breach of a covenant as
at that date driven by the administration of Wilko which was then
subsequently waived.
On 6 September 2023 the Group drew
down a new £16 million facility arranged by Morgan Stanley with a
margin of 2.75%. The group also acquired a derivative to cap the
floating element at 3.75%. The facility was used to part fund
acquisition of Gyle shopping centre in Edinburgh.
The movement of Secured loans in
the year is summarised in the table below:
|
|
£m
|
Secured bank loans at 30 December
2022
|
|
183.0
|
Drawdown of new Gyle loan
facility
|
|
16.0
|
|
|
199.0
|
On 8 March 2024 the Group signed an
extension to its £39 million facility on the Ilford Exchange
shopping centre with Dekabank Deutsche Girozentrale. The
agreement extends maturity to September 2025 and provides two
further conditional extension options to further extend maturity to
the end of December 2026 and 2027, respectively. On
commencement of the new extended term the margin is 300 basis
points. The Group has acquired an interest rate cap to hedge
the maximum all in cost at 5.50% until the current maturity of
September 2025. The facility is shown as current at 30
December 2023 as the extension was signed after the year
end.
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.
11
Reconciliation of net cash from operations
|
|
2023
|
2022
|
|
Note
|
£m
|
£m
|
Profit for the year
|
|
3.7
|
12.1
|
|
|
|
|
Adjusted for:
|
|
|
|
Income tax credit
|
4a
|
(3.6)
|
(0.3)
|
Finance income
|
|
(0.5)
|
(1.1)
|
Finance expense
|
|
9.9
|
9.4
|
Finance lease costs (head
lease)
|
|
(0.4)
|
(0.3)
|
Loss on revaluation of wholly owned
properties
|
6a
|
8.1
|
19.6
|
Depreciation of other fixed
assets
|
|
0.7
|
0.3
|
Snozone
interest and amortisation |
|
3.0 |
|
Snozone
rental payments |
|
(2.1) |
|
Other gains
|
|
0.1
|
(22.4)
|
(Increase)/decrease in
receivables
|
|
(0.9)
|
4.5
|
Increase in payables
|
|
1.4
|
3.0
|
Non-cash movement relating to
share-based payments
|
|
0.7
|
0.5
|
Net
cash from operations
|
|
20.1
|
25.3
|
12
Net assets per share
|
30 Dec
2023
|
30 Dec
2022
|
|
|
|
Basic NAV
£m
|
EPRA NRV
£m
|
EPRA NTA
£m
|
EPRA NDV
£m
|
Basic NAV
£m
|
EPRA NRV
£m
|
EPRA NTA
£m
|
EPRA NDV
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IFRS Equity attributable to shareholders
|
202.0
|
202.0
|
202.0
|
202.0
|
179.1
|
179.1
|
179.1
|
179.1
|
|
|
Exclude fair value of financial
instruments
|
-
|
(0.8)
|
(0.8)
|
-
|
-
|
(1.7)
|
(1.7)
|
-
|
|
|
Include fair value of fixed interest
rate debt
|
-
|
-
|
-
|
11.9
|
-
|
-
|
-
|
18.4
|
|
|
Net
asset value
|
202.0
|
201.2
|
201.2
|
213.92
|
179.1
|
177.4
|
177.4
|
197.5
|
|
|
Number of shares
|
224.9
|
-
|
-
|
-
|
169.2
|
-
|
-
|
-
|
|
|
Fully diluted number of
shares
|
-
|
228.8
|
228.8
|
228.8
|
-
|
171.6
|
171.6
|
171.6
|
|
|
Net
asset value per share
|
89.8
|
87.9
|
87.9
|
93.5
|
105.9
|
103.4
|
103.4
|
115.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The number of ordinary shares
issued and fully paid at 30 December 2023 was 224,906,731 (30
December 2022:169,191,918). There have been no changes to the
number of shares from 30 December 2023 to the date of this annual
report.
13 Dividends
The dividends shown below are
gross of any take-up of Scrip offer.
|
|
Year to
|
Year
to
|
|
|
30
December
|
30
December
|
|
|
2023
|
2022
|
|
|
£m
|
£m
|
Interim dividend per share for
year ended 30 December 2022 of 2.5p
|
|
-
|
4.1
|
Final dividend for year ended 30
December 2022 of 2.75p
|
|
4.7
|
-
|
Interim dividend per share for
year ended 30 December 2023 of 2.75p
|
|
4.8
|
-
|
Amounts recognised as distributions to equity holders in the
year
|
|
9.5
|
4.1
|
Proposed final dividend for year
ended 30 December 2023 of 2.95p
|
|
6.6
|
-
|
14
Ultimate controlling party
Growthpoint Properties Limited
("Growthpoint") holds 68.1% of the issued share capital of the
Company. As such Growthpoint is the ultimate controlling party of
the Company and the largest group into which the results of the
Company are consolidated. The registered office of Growthpoint
Properties Limited is The Place, 1 Sandton Drive, Sandton, 2196,
Johannesburg, South Africa. The financial statements of Growthpoint
are available at this address.
15
Events after the balance sheet date
On 23 February 2024 the Group
agreed a waiver of all financial covenants on its £4 million Hemel
Hempstead loan facility until maturity in July 2025. The Group also
secured an option to extend the maturity by one or two years
subject to meeting specified covenant tests.
On 8 March 2024 the Group signed an
extension to its £39 million facility on the Ilford Exchange
shopping centre with Dekabank Deutsche Girozentrale. The
agreement extends maturity to September 2025 and provides two
further conditional extension options to further extend maturity to
the end of December 2026 and 2027, respectively. On
commencement of the new extended term the margin is 300 basis
points. The Group has acquired an interest rate cap to hedge
the maximum all in cost at 5.50% until the current maturity of
September 2025.
Glossary of terms
Adjusted Profit is the total
of Contribution from the Group's Shopping Centres, Snozone EBITDA
and property management fees less central costs (including interest
but excluding non-cash charges in respect of long-term incentive
awards) after tax. Adjusted Profit excludes revaluation of
properties, profit or loss on disposal of properties or
investments, gains or losses on financial instruments and
exceptional one-off items. Results from Discontinued Operations are
included up until the point of disposal or reclassification as held
for sale.
Adjusted Earnings per share is Adjusted Profit divided by the weighted average number of
shares in issue during the year excluding own shares
held.
C&R is Capital &
Regional plc, also referred to as the Group or the
Company.
CRPM is Capital &
Regional Property Management Limited, a subsidiary of Capital &
Regional plc, which earns management and performance fees from the
Mall assets and certain associates and joint ventures of the
Group.
Contracted rent is passing
rent and the first rent reserved under a lease or unconditional
agreement for lease but which is not yet payable by a
tenant.
Contribution is net rent less
net interest, including unhedged foreign exchange
movements.
Capital return is the change
in market value during the year for properties held at the balance
sheet date, after taking account of capital expenditure calculated
on a time weighted basis.
Debt is borrowings, excluding
unamortised issue costs.
EPRA earnings per share (EPS) is the profit / (loss) after tax excluding gains on asset
disposals and revaluations, movements in the fair value of
financial instruments, intangible asset movements and the capital
allowance effects of IAS 12 "Income Taxes" where applicable, less
tax arising on these items, divided by the weighted average number
of shares in issue during the year excluding own shares
held.
EPRA net disposal value represents net asset value under a disposal scenario, where
deferred tax, financial instruments and certain other adjustments
are calculated to the full extent of their liability, net of any
resulting tax.
EPRA net reinstatement value is net asset value adjusted to
reflect the value required to rebuild the entity and assuming that
entities never sell assets. Assets and liabilities, such as fair
value movements on financial derivatives are not expected to
crystallise in normal circumstances and deferred taxes on property
valuation surpluses are excluded.
EPRA net tangible assets is a proportionally consolidated measure, representing
the IFRS net assets excluding the mark-to-market on derivatives and
related debt adjustments, the mark-to-market on the convertible
bonds, the carrying value of intangibles as well as deferred
taxation on property and derivative valuations.
Estimated rental value (ERV) is the Group's external valuers' opinion as to the open
market rent which, on the date of valuation, could reasonably be
expected to be obtained on a new letting or rent review of a unit
or property.
ERV growth is the total
growth in ERV on properties owned throughout the year including
growth due to development.
Gearing is the Group's debt
as a percentage of net assets. See through gearing includes
the Group's share of non-recourse debt in associates and joint
ventures.
Interest cover is the ratio
of Adjusted Profit (before interest, tax, depreciation and
amortisation) to the interest charge (excluding amortisation of
finance costs and notional interest on head leases).
Like-for-like figures, unless
otherwise stated, exclude the impact of property purchases and
sales on year to year comparatives.
Leisure EBITDA or EBITDA is
an alternative performance measure for the Snozone
business. 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.
Loan to value (LTV) is the
ratio of debt excluding fair value adjustments for debt and
derivatives, to the Market value of properties.
|
Market value is an opinion of
the best price at which the sale of an interest in a property would
complete unconditionally for cash consideration on the date of
valuation as determined by the Group's external or internal
valuers. In accordance with usual practice, the valuers report
valuations net, after the deduction of the prospective purchaser's
costs, including stamp duty, agent and legal fees.
Net Administrative Expenses to Gross Rent
is the ratio of Administrative Expenses net of
external fee income to Gross Rental income including the Group's
share of Joint Ventures and Associates
Net assets per share (NAV per share)
are shareholders' funds divided by the number of
shares held by shareholders at the year end, excluding own shares
held.Net initial yield
(NIY) is the annualised current rent, net of revenue costs,
topped-up for contractual uplifts, expressed as a percentage of the
capital valuation, after adding notional purchaser's
costs.
Net debt to property value is
debt less cash and cash equivalents divided by the property
value.
Net interest is the Group's
share, on a see-through basis, of the interest payable less
interest receivable of the Group and its associates and joint
ventures.
Net rent or Net rental income (NRI) Net Rental
Income is rental income from properties, less provisions for
expected credit losses, property and management costs. It is a
standard industry measure.
Nominal equivalent yield (NEY) is a weighted average of the net initial yield and
reversionary yield and represents the return a property will
produce based upon the timing of the income received, assuming rent
is received annually in arrears on gross values including the
prospective purchaser's costs.
Occupancy cost ratio is the
proportion of a retailer's sales compared with the total cost of
occupation being: rent, business rates, service charge and
insurance. Retailer sales are based on estimates by third party
consultants which are periodically updated and indexed using
relevant data from the C&R Trade Index.
Occupancy rate is the ERV of
occupied properties expressed as a percentage of the total ERV of
the portfolio, excluding development voids.
Passing rent is gross rent
currently payable by tenants including car park profit but
excluding income from non-trading administrations and any assumed
uplift from outstanding rent reviews.
Rent to sales ratio is
Contracted rent excluding car park income, ancillary income and
anchor stores expressed as a percentage of net sales.
REIT - Real Estate Investment
Trust.
Return on equity is the total
return, including revaluation gains and losses, divided by opening
equity plus time weighted additions to and reductions in share
capital, excluding share options exercised.
Reversionary percentage is
the percentage by which the ERV exceeds the passing
rent.
Reversionary yield is the
anticipated yield to which the net initial yield will rise once the
rent reaches the ERV.
Temporary lettings are those
lettings for one year or less.
Total property return incorporates net rental income and capital return expressed
as a percentage of the capital value employed (opening market value
plus capital expenditure) calculated on a time weighted
basis.
Total return is the Group's
total recognised income or expense for the year as set out in the
consolidated statement of comprehensive income expressed as a
percentage of opening equity shareholders' funds.
Total shareholder return (TSR) is a performance measure of the Group's share price over
time. It is calculated as the share price movement from the
beginning of the year to the end of the year plus dividends paid,
divided by share price at the beginning of the year.
Variable overhead includes
discretionary bonuses and the costs of awards to Directors and
employees made under the 2008 LTIP and other share schemes which
are spread over the performance period.
|
Portfolio information (Unaudited)
At 30 December
2023
|
|
|
|
|
|
|
|
|
|
Physical data1
|
|
|
|
|
Number of properties
|
|
|
|
6
|
Number of lettable units
|
|
|
|
543
|
Size (sq ft - million)
|
|
|
|
2,047
|
|
|
|
|
|
Valuation data
|
|
|
|
|
Properties at independent valuation
(£m)
|
|
|
|
372.8
|
Adjustments for head leases and
tenant incentives (£m)
|
|
|
|
(3.2)
|
Properties as shown in the financial statements
(£m)
|
|
|
|
369.6
|
Revaluation loss in the year
(£m)
|
|
|
|
8.1
|
Initial yield
|
|
|
|
7.80%
|
Equivalent yield
|
|
|
|
8.79%
|
Reversion
|
|
|
|
12.2%
|
|
|
|
|
|
Lease length (years)
|
|
|
|
|
Weighted average lease length to
break
|
|
|
|
2.8
|
Weighted average lease length to
expiry
|
|
|
|
4.7
|
|
|
|
|
|
Passing rent (£m) of leases expiring in:
|
|
|
|
|
2024
|
|
|
|
5.2
|
2025
|
|
|
|
2.7
|
2026-2026
|
|
|
|
9.2
|
|
|
|
|
|
ERV
(£m) of leases expiring in:
|
|
|
|
|
2024
|
|
|
|
5.3
|
2025
|
|
|
|
2.1
|
2026-2026
|
|
|
|
8.7
|
|
|
|
|
|
Passing rent (£m) subject to review in:
|
|
|
|
|
2024
|
|
|
|
0.8
|
2025
|
|
|
|
0.5
|
2026-2026
|
|
|
|
2.8
|
|
|
|
|
|
ERV
(£m) of passing rent subject to review in:
|
|
|
|
|
2024
|
|
|
|
0.8
|
2025
|
|
|
|
0.5
|
2026-2026
|
|
|
|
3.1
|
|
|
|
|
|
Rental Data
|
|
|
|
|
Contracted rent (£m)
|
|
|
|
37.0
|
Passing rent (£m)
|
|
|
|
35.6
|
ERV (£m per annum)
|
|
|
|
34.5
|
ERV movement
(like-for-like)
|
|
|
|
0.1
|
Occupancy
|
|
|
|
93.4%
|
EPRA performance measures (Unaudited)
As at 30 December
2023
|
Note
|
2023
|
2022
|
EPRA earnings (£m)
|
5a
|
10.5
|
8.8
|
EPRA earnings per share
(diluted)
|
5a
|
5.6p
|
5.3p
|
|
|
|
|
EPRA reinstatement value
(£m)
|
13
|
201.2
|
177.4
|
EPRA net reinstatement value per
share
|
13
|
88p
|
103p
|
|
|
|
|
EPRA net tangible assets
(£m)
|
13
|
201.2
|
177.4
|
EPRA net tangible assets per
share
|
13
|
88p
|
103p
|
|
|
|
|
EPRA net disposal value
(£m)
|
13
|
213.9
|
197.5
|
EPRA net disposal value per
share
|
13
|
94p
|
115p
|
|
|
|
|
EPRA LTV (see below)
|
|
45.8%
|
44.4%
|
|
|
|
|
EPRA cost ratio (including direct
vacancy costs)
|
|
47.6%
|
48.6%
|
EPRA cost ratio (excluding vacancy
costs)
|
|
39.1%
|
37.8%
|
|
|
|
|
Like-for-like ERV growth
(£m)1
|
|
0.1
|
1.0
|
|
|
|
|
EPRA vacancy rate
|
|
2023
|
2022
|
|
|
£m
|
£m
|
Estimated rental value of vacant
space
|
|
2.6
|
2.6
|
Estimated rental value of whole
portfolio
|
|
34.5
|
33.4
|
EPRA vacancy rate2
|
|
7.5%
|
7.7%
|
EPRA net initial yield and EPRA topped-up net initial
yield
|
|
2023
|
2022
|
|
|
£m
|
£m
|
Investment property
|
|
372.8
|
322.8
|
Completed property
portfolio
|
|
372.8
|
322.8
|
Allowance for capital
costs
|
|
14.8
|
16.8
|
Allowance for estimated purchasers'
costs
|
|
22.5
|
21.9
|
Grossed up completed property
portfolio valuation
|
|
410.1
|
361.4
|
|
|
|
|
Annualised cash passing rental
income
|
|
35.6
|
30.5
|
Property outgoings
|
|
(3.1)
|
(6.7)
|
Annualised net rents
|
|
32.5
|
23.8
|
Add: notional rent expiration of
rent free periods or other lease incentives
|
|
0.5
|
1.3
|
Topped up annualised rent
|
|
33.0
|
25.1
|
|
|
|
|
EPRA net initial yield
|
|
7.9%
|
6.6%
|
EPRA topped-up net initial yield
|
|
8.0%
|
7.0%
|
1 Like-for-like ERV growth is based on the Group's portfolio of
five properties with fair value of £372.8 million (2022: £322.8
million).
2 Further analysis on occupancy is given in the Operating
Review within this statement.
EPRA LTV Metric
|
|
|
Proportional
Consolidation
|
|
|
|
Group £m
|
Share of Joint Ventures
£m
|
Share of Material Associates
£m
|
Non-controlling Interests
£m
|
Combined
£m
|
Loan Borrowings
|
|
199.0
|
-
|
-
|
-
|
199.0
|
Net payable
|
|
8.2
|
|
|
|
8.2
|
Cash and cash equivalents
|
|
(36.3)
|
-
|
-
|
-
|
(36.3)
|
Net
Debt
|
|
170.9
|
-
|
-
|
-
|
170.9
|
Investment properties at fair
value
|
|
372.8
|
-
|
-
|
-
|
372.8
|
Total Property Value
|
|
372.8
|
-
|
-
|
-
|
372.8
|
LTV
%
|
|
45.8%
|
-
|
-
|
-
|
45.8%
|
EPRA performance measures (continued)
(Unaudited)
As at 30 December
2023
|
EPRA Cost ratios
|
|
2023
|
2022
|
|
|
£m
|
£m
|
Cost of sales (adjusted for IFRS
head lease differential)
|
|
31.1
|
32.1
|
Administrative costs
|
|
9.7
|
10.9
|
Service charge income
|
|
(8.2)
|
(10.5)
|
Management fees
|
|
(1.2)
|
(2.3)
|
Snozone (indoor ski operation)
costs
|
|
(14.0)
|
(12.9)
|
Less inclusive lease costs recovered
through rent
|
|
(2.3)
|
(1.5)
|
EPRA costs (including direct vacancy
costs)
|
|
15.1
|
15.8
|
Direct vacancy costs
|
|
(2.7)
|
(3.5)
|
EPRA costs (excluding direct vacancy
costs)
|
|
12.4
|
12.3
|
|
|
|
|
Gross rental income
|
|
34.7
|
34.7
|
Less ground rent costs
|
|
(0.7)
|
(0.7)
|
Less inclusive lease costs recovered
through rent
|
|
(2.3)
|
(1.5)
|
Gross rental income
|
|
31.7
|
32.5
|
|
|
|
|
EPRA cost ratio (including direct vacancy
costs)
|
|
47.6%
|
48.6%
|
EPRA cost ratio (excluding vacancy costs)
|
|
39.1%
|
37.8%
|
|
|
Property related capital expenditure
|
|
2023
|
2022
|
|
|
All figures in
£m
|
Note
|
Group (excl. Joint
Ventures)
|
Joint Ventures (prop.
share)
|
Total
Group
|
Group (excl. Joint
Ventures)
|
Joint Ventures (prop.
share)
|
Total
Group
|
|
|
Acquisitions
|
|
43.0
|
-
|
43.0
|
-
|
-
|
-
|
|
|
Development
|
6
|
1.2
|
-
|
1.2
|
5.8
|
-
|
5.8
|
|
|
Investment properties:
|
|
|
|
|
|
|
|
|
|
Incremental
letting space |
|
-
|
- |
- |
- |
- |
-
|
|
|
No incremental letting space |
6 |
13.3 |
-
|
13.3 |
3.2 |
- |
3.2 |
|
|
Other
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
Total Capital expenditure
|
6
|
57.5
|
-
|
57.5
|
9.0
|
-
|
9.0
|
|
|
Conversion from accrual to cash
basis
|
|
5.5
|
-
|
5.5
|
1.6
|
-
|
1.6
|
|
|
Total capital expenditure on cash basis
|
|
63.0
|
-
|
63.0
|
10.6
|
-
|
10.6
|
|
|
|
|
|
|
|
|
|
|
|
Capital tenant incentives of £1.4
million were paid during the year (2022: £0.9 million).
Amortisation of £0.5 million was recognised in the income statement
(2022: £0.6 million).
Capital expenditure
Refurbishment expenditure in
respect of major works is capitalised. Renovation and refurbishment
expenditure of a revenue nature is expensed as incurred. Our
business model for developments is to use a combination of in-house
staff and external advisers. The cost of external advisers is
capitalised to the cost of developments. The cost of staff working
on developments is capitalised subject to meeting certain criteria
related to the degree of time spent on and the nature of specific
projects. Staff costs amounting to £nil (2022: £nil) have been
capitalised as development costs during the year.