TIDMCAL
RNS Number : 1900L
Capital & Regional plc
09 September 2021
9 September 2021
Capital & Regional plc
("Capital & Regional" or "C&R" or "the Company" or "the
Group")
Half Year Results to 30 June 2021
Capital & Regional (LSE: CAL), the UK focused REIT with a
portfolio of dominant in-town community shopping centres, announces
its half year results to 30 June 2021.
Lawrence Hutchings, Chief Executive, comments:
"The momentum we are seeing across our business since the
lifting of the third national lockdown in April has been very
encouraging and led to the positive operational performance we are
able to report today, reinforcing our belief in our Community
Centres strategy and the quality of our real estate and
platform.
"Footfall at our community centres has once again significantly
outperformed the wider market with a noticeable trend of consumers
spending more and visiting slightly less. We have continued to see
strong levels of leasing throughout the entire first half, with
volumes comparable with H1 2019, supported by our increased focus
on new, start up and independent retailers. This initiative also
ensures our centres are tailored to the requirements of their
communities and has helped us maintain occupancy at 90%, achieve
rent and ERV premia, and make significant progress on re-leasing
our three former Debenhams stores
"Unlocking further value from the portfolio through a mix of
uses is another key initiative where we have made good progress,
with the planning consent for our Walthamstow residential project
taking us one step closer to a significant capital receipt. Our
confidence in the potential to unlock further value from high
density residential and use diversification across our asset base
has encouraged us to enter into a ground breaking partnership
agreement with Far East Consortium (FEC) to explore opportunities
across both our businesses.
"Accepting the further fall in valuations during the period,
current market dynamics in the sector as well as the wider economy
provide cause for optimism that the investment market may be
starting to stabilise. This, allied with the relative
outperformance of our Investment Assets and the improving
operational performance, provide the necessary base for making
longer term strategic decisions and determining the best approach
for addressing debt levels. We appreciate the continued support
from our lenders who we liaise closely with on our different
non-recourse facilities, extending waivers as they are required and
working towards longer term resolutions on a facility by facility
basis.
"As we emerge from 18 months of unprecedented challenges we are
increasingly confident that a shared need from consumers and
retailers for well-located, accessible retail and services with
affordable occupancy costs, is highly supportive of our community
centre strategy and our belief in the 15 minute neighbourhood.
"I would like to thank all of our stakeholders for their
continued support especially our dedicated team who continue to
work tirelessly to ensure our centres, which form an essential part
of community infrastructure are safe places to visit."
Significant operational impact of Covid-19 mitigated by
community centre strategy
-- Our ongoing strategic focus on non-discretionary goods and
services continued to alleviate the impact of the pandemic in the
period, which included a full national lockdown from 6 January 2021
to 12 April 2021
-- 99% of leased units are back open and trading with all seven
of the Company's community shopping centres remaining open to some
degree throughout the pandemic.
-- Occupancy remained robust at 90% at 30 June 2021 (December 2020: 92%).
-- Footfall outperformed the national index by 9.1 %, with 18.3
million visits across the portfolio in the first half of 2021.
While footfall continued to be significantly impacted by COVID-19
and slower to recover post lockdown, sales have bounced back at a
higher rate reflecting more efficient use of visits .
-- 83% of rent due in respect of the 2021 year to the end of
August has now been collected, a further 13% improvement on the
update provided on 25 June 2021.
-- 54 new lettings and renewals achieved during the period at a
combined average premium to previous rent and ERV. This compares to
24 and 44 deals respectively in the equivalent 2020 and 2019
periods.
-- Over 30 lettings and renewals have been completed since 30 June 2021.
-- Net Rental Income (NRI) reduced by GBP1.8 million to GBP13.4
million (June 2020: GBP15.2(1) million ), largely as a result of
COVID-19, driving a reduction in Adjusted Profit to GBP2.3 million
(June 2020: GBP4.6 million).
-- IFRS loss for the period of GBP41.3 million due primarily to
a 7.5 % fall in like-for-like property valuations ( June 2020: 16%
fall in property valuations and loss of GBP115.5 million).
-- Significant momentum with Walthamstow residential and
commercial extension, with planning documentation now agreed and
release of formal consent imminent.
-- Good progress on leasing the three units vacated by
Debenhams, with contracts completed or with terms agreed:
o Agreed lettings to create Job Centres in part of the Debenhams
units at Blackburn and Ilford.
o Agreed terms with a national retailer to relocate into middle
floor of Debenhams unit at Ilford.
o Temporary letting of entirety of Debenhams unit in Luton on
flexible, medium term basis.
-- Snozone Profit for the period of GBP1.3 million (June 2020:
loss of GBP0.4 million) due to enforced closure of UK operations
until 12 April 2021. Results supported by GBP2.5 million recovery
under pandemic insurance policy and VAT reclaim of GBP1.4 million.
Ski slope operation at Xanadú, Madrid fully integrated and
rebranded as Snozone following February 2021 acquisition.
Maintaining significant cash reserves and flexibility
-- As at 30 June 2021 the Group had total cash on balance sheet
of c. GBP75 million , of which GBP56.8 million was maintained
centrally outside of the collateral of any of the debt facilities,
equivalent to more than one year's Contracted Rent
-- Net Asset Value per share and EPRA NTA per share, at 113p and
117p respectively ( December 2020: 150p and 158p respectively )
-- Net LTV has increased to 72% (30 December 2020: 65%) or 61%
excluding Managed Assets (30 December 2020: 56%)
-- Signed extensions of covenant waivers on The Mall and Ilford
to January 2022 and April 2022, respectively. Terms agreed on an
extension to Luton waiver until January 2022.
6 months 6 months
to to Year to
June 2021 June 2020 Dec 2020
Net Rental Income (1) GBP13.4m GBP15.2m GBP34.1m
Adjusted Profit (2) GBP2.3m GBP4.6m GBP10.3m
Adjusted Earnings per share
(2) 2.1p 4.4p 9.5p
IFRS Loss for the period GBP(41.3)m GBP(115.5)m GBP(203.4)m
Basic earnings per share (36.9)p (111.0)p (188.3)p
Net Asset Value (NAV) per share 113p 229p 150p
EPRA NTA per share 117p 236p 158p
Group net debt GBP348.0m GBP348.2m GBP345.1m
Net debt to property value
- Investment Assets and Central
Operations(3) 61% 49% 56%
- Total 72% 57% 65%
Notes
(1) Comparatives for the six months to 30 June 2020 have been
restated for the amended approach to IFRS 16 adoption as recognised
in the financial statements for the year ending 30 December 2020.
Variable lease payments which should not have been recognised as a
liability under IFRS 16 have now been expensed as incurred. As a
result Cost of Sales in the comparative has increased by GBP1
million (and hence NRI reduced), offset by an equivalent reduction
in finance costs.
(2) Adjusted Profit and Adjusted Earnings per share are as
defined in the Glossary. Adjusted Profit incorporates profits from
operating activities and excludes revaluation of properties and
financial instruments, gains or losses on disposal, exceptional
items and other defined terms. A reconciliation to the equivalent
EPRA and statutory measures is provided in Notes 3 and 6 to the
condensed financial statements.
(3) Change in reporting segments
The Group has made a change to its reportable segments for this
period reflecting the position of its shopping centre assets.
The Group has split out what was previously called Shopping
Centres into 'Shopping Centres - Investment Assets' and 'Shopping
Centres - Managed Assets'. Shopping Centres - Investment Assets
incorporating the centres at Ilford and within The Mall loan
facility, namely Blackburn, Maidstone, Walthamstow and Wood Green.
These represent the asset pools where the Group retains net equity
and is focused on long term solutions for the loan positions
potentially involving the investment of further capital in some
shape or form.
'Shopping Centres - Managed Assets' incorporates Hemel Hempstead
and Luton where the current debt values in the non-recourse SPV
structures exceed the respective property value and therefore the
Group has negative equity and hence the future position of the
investments is uncertain. The Group has determined that the
economic and strategic rationale for additional investment to cure
and/or to pay down these non-recourse facilities is, at the present
time, insufficient. In agreement with and at the request of the
various lenders, the Group continues to manage these assets for the
time being, whilst various outcomes are explored in conjunction
with the lenders.
Investment Assets and Central Operations includes the Group's
Property Management and Snozone businesses.
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 Adjusted Profit, Adjusted Earnings
per share and the industry best practice EPRA (European Public Real
Estate Association) performance measures, which have been updated
during the year, are not defined under IFRS, so they are termed
'Alternative Performance Measures' (APMs). Management use these
measures to monitor the Group's financial performance alongside
IFRS measures because they help illustrate the underlying
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. A reconciliation to the equivalent statutory
measures is provided in Notes 6 and 13 to the condensed financial
statements.
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 Email: Capreg@fticonsulting.com
Claire Turvey
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 strong track record of delivering value
enhancing retail and leisure asset management opportunities across
a portfolio of in-town shopping centres. 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).
Capital & Regional owns seven shopping centres in Blackburn,
Hemel Hempstead, Ilford, Luton, Maidstone, Walthamstow and Wood
Green. Capital & Regional manages these assets through its
in-house expert property and asset management platform.
For further information see capreg.com .
South African secondary listing
Capital & Regional maintains a primary listing on the London
Stock Exchange (LSE) and a secondary listing on the Johannesburg
Stock Exchange (JSE) in South Africa. At 30 June 2021, 6,110,782 of
the Company's total of 111,819,626 shares were held on the South
African register representing 5.5% of the total issued share
capital. Java Capital act as JSE Sponsor for the Group.
Forward looking statements
This document contains certain statements that are neither
reported financial results nor other historical information. These
statements are forward-looking in nature and are subject to risks
and uncertainties. Actual future results may differ materially from
those expressed in or implied by these statements. Many of these
risks and uncertainties relate to factors that are beyond the
Group's ability to control or estimate precisely, such as future
market conditions, currency fluctuations, the behaviour of other
market participants, the actions of government regulators and other
risk factors such as the Group's ability to continue to obtain
financing to meet its liquidity needs, changes in the political,
social and regulatory framework in which the Group operates or in
economic or technological trends or conditions, including inflation
and consumer confidence, on a global, regional or national basis.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which apply only as of the date of this
document. The Group does not undertake any obligation to publicly
release any revisions to these forward-looking statements to
reflect events or circumstances after the date of this document.
Information contained in this document relating to the Group should
not be relied upon as a guide to future performance.
Operating review
Impact of COVID-19
All seven of the Company's community shopping centres have
remained open and trading within restrictions since the start of
the pandemic in early 2020, providing essential services to the
communities we serve and in line with our Community Centre
strategy. While restrictions on trading, including a full national
lockdown for half of the period (from 6 January 2021 until 12 April
2021), have inevitably had a pervasive impact upon operating and
financial metrics, it remains clear that our offer is now more
relevant than ever as a number of structural trends that were
already under way in the retail industry have accelerated rapidly.
Our strategic focus on local community centres providing
non-discretionary and essential goods and services has mitigated
the worst of the impact and provides the business with a sound
platform for navigating the future.
Our overriding priority during this time has been the health,
safety and protection of our colleagues, guests and customers and
at all times we have been rigorously following the latest official
government guidelines and advice across our portfolio.
Precautionary measures we have taken include:
-- Enhanced deep cleaning, sanitising stations at key locations
and PPE for all centre employees;
-- Arrows and signage in common areas to encourage directional
flow and a one-way system, as well as providing distancing
reminders;
-- Limiting numbers of people in guest facilities, escalators,
stairs and lifts at any one time;
-- Removal of most public seating to discourage congregation and close contact; and
-- Using social media platforms to inform the community of
quieter times for visiting to support our vulnerable guests.
Access to our centres has been closely monitored through
additional staff and existing footfall technology. When
restrictions have been in place, we have carefully controlled
visitor capacity to maintain social distancing and to protect
visitors, occupiers and staff.
On 12 April 2021, the lifting of restrictions enabling
non-essential retailers to open again saw a significant increase in
the number of tenants re-opening from approximately 30% to rapidly
over 95%. As at 30 June 2021, 99% of leased units were open and
trading. Overall occupancy has been impacted by Covid-19 although
remains robust at 89.7% as at 30 June 2021.
Operational performance
Up until 12 April 2021, the date on which non-essential
retailers were able to re-open, approximately one third of leased
units were open and trading and footfall was at approximately 30%
of the equivalent weeks in 2019. In the 20 weeks since the full
re-opening, footfall was approximately 70% of the corresponding
weeks in 2019. The need to maintain social distancing placed
restrictions upon capacity at peak times, however anecdotal
evidence from our retailers suggests that while footfall has been
slower to recover, sales have bounced back at a higher rate
reflecting more efficient use of visits.
In total there were 18.3 million shopper visits across the
portfolio in the first half of 2021. This is 8.7% lower than the
prior year on a like for like basis, but outperforms the national
index by 9.1%, further reflecting the relative strength of the
relevant and convenience based offering we have been strategically
building over the last number of years.
Car park income in the first six months of the year was GBP2.3
million, 12.5% lower than the same period in 2020.
Rent collection
81% of rent in respect of the first half of the year has now
been collected. Rent collection for the 2021 year to date,
including monthly invoices up to August, is running at 83%, an
improvement of 13% since we updated the market in late June 2021.
The table below provides further detail.
Rent collection
Rent collection 9m to 30 September
6m to 30 June 2021 2021
GBPm GBPm
Rent collected 21.4 81.2% 30.5 82.6%
Payment plans 0.7 2.7% 1.3 3.4%
---------- ---------- ---------- ----------
Total collected
and deferred 22.1 83.9% 31.8 86.0%
Outstanding 2.5 9.6% 3.4 9.3%
Bad Debt 0.1 0.5% 0.1 0.3%
Rent concessions 1.6 6.0% 1.6 4.4%
Total billed 26.3 100% 37.0 100%
---------- ---------- ----------
All data up to end of August 2021.
Rent collection for the year ended 30 December 2020 has now
reached 88%.
New lettings, renewals and rent reviews
Despite the significantly disrupted trading environment we
completed 54 new lettings and renewals during the period, at a
combined average premium to previous rent of 36.3%(1) ; more than
the 44 deals in the equivalent period in 2019 and the 24 completed
in the equivalent period in 2020. This increase in deal volumes is
an outcome of the investment into our in-house leasing platform to
target local independent operators, through which we have, to a
greater extent, been able to utilise space that has not previously
been income producing, while also expanding our offering of
essential local services.
Highlights of leasing activity in the first half of 2021 include
a new letting to the Department for Work and Pensions, which will
open a Job Centre at Walthamstow, and new health and beauty clinics
to different independent local operators at Luton, Walthamstow and
Wood Green.
Moving into the second half of the year, we are encouraged by
the strength of our leasing pipeline and have completed more than
30 deals since 30 June 2021, including additional Job Centres at
Ilford and Blackburn and, following our partnership agreement
announced in March, a deal with REEF Technology ("REEF") for dark
kitchens and last mile logistics at Wood Green. These are the first
deals signed under our agreement with REEF that will allow us to
enhance future portfolio income by transforming underutilised
elements of two of the Company's car parks into mixed-use
neighbourhood hubs that provide locally curated goods, services and
experiences.
We continue to progress discussions with the NHS for a new
purpose-built community healthcare facility at The Exchange, Ilford
and have initial interest in similar initiatives at two of our
other centres demonstrating the important role our centres continue
to play in the daily life of their local environments.
6 months to
June 2021
New Lettings
Number of new lettings 30
Rent from new lettings (GBPm) GBP1.1m
Renewals settled
Renewals settled 24
Total resulting annual rent
(GBPm) GBP0.3m
Combined new lettings and
renewals
Comparison to previous rent
(1) +36.3%
Comparison to ERV at December
2020 (1) +19.3%
------------------------------- ------------
(1) For lettings and renewals (excluding development deals and
CVA variations) with a term of 5 years or longer which do not
include turnover rent or service charge restrictions.
Impact of CVAs / administrations
We are making good progress with our plans to lease the space
vacated following the closure of the three Debenhams stores in our
portfolio in March 2021. These include dividing up the Ilford unit
across its three floors in order to appeal to a wider range of
occupiers which facilitated both the creation of a 22,000 sq ft Job
Centre, and the Company having agreed terms with a major national
retailer which wants to relocate from elsewhere in the centre to
take the middle floor. We have also signed contracts on a Job
Centre which will open in part of the Debenhams unit at Blackburn,
taking up approximately 15,000 sq ft of the space, and at Luton we
have signed a letting of the entire space, covering costs with a
turnover top-up, to VFM, a furniture operator.
Rental income and occupancy
30 December
30 June 2021 2020 30 June 2020
Contracted rent (GBPm) 51.1 53.1 57.9
Passing rent (GBPm) 50.2 51.7 57.1
Occupancy (%) 89.7% 92.1% 95.0%
------------------------ ------------- ------------ -------------
Occupancy has remained robust at 89.7%, with the small overall
reduction from 30 December 2020 largely comprising the vacancy of
the three Debenhams units. This will improve by approximately 2%
with the completion of the new lettings at Blackburn, Ilford and
Luton in the former Debenhams space.
The small impact on occupancy flowed through to contracted and
passing rent which decreased by approximately 2.2% and 1.6%
respectively from the equivalent December 2020 balances, on a
like-for-like basis, excluding the sale of the Edmonds Parade block
in Hemel Hempstead.
Capital expenditure investment
In light of the COVID-19 pandemic and balance sheet pressures,
we have focused capital expenditure on those projects driving
immediate income returns, or those with strategic priority. In
total GBP4.0 million was invested in the first six months of the
year, with the primary projects being the creation of a new Lidl
unit at Luton (GBP1.6 million in the period); progression of the
Walthamstow residential opportunity (GBP0.9 million); and car park
upgrade works in relation to the introduction of REEF at Luton and
Wood Green (GBP0.5 million). The rebuild of the part of the
Walthamstow scheme affected by the fire in July 2019 completed in
Q1 2021 including the creation of a new mezzanine food court level.
We expect the final insurance position to be settled in the second
half of 2021.
Walthamstow residential opportunity
We have achieved a number of notable milestones towards securing
the residential development in Walthamstow. Having achieved a local
authority resolution to grant planning consent in January, the
application has now been formally ratified by the Greater London
Authority. This has allowed us to conclude the section 106 planning
obligations negotiations, the documentation for which is now in an
agreed form, and which includes an agreed form draft of the formal
planning Decision Notice. Legal engrossments are now in
circulation, with completion imminent, which will then trigger the
release of the formal planning consent. In parallel, we continue to
work to conclude the Development Agreement and new Headlease with
London Borough of Waltham Forest and to discharge the remaining
contractual pre-conditions with Long Harbour to crystalise the c.
GBP20 million land receipt and start on site around the year
end.
Strategic residential development partnership
We are pleased to announce in parallel with the interim results
that we have signed an exclusivity agreement with a subsidiary of
Far East Consortium International Limited (FEC) to work together to
identify and develop new residential opportunities across the
Group's portfolio of shopping centres. This follows on from the
successful disposal of a land plot at Wood Green and the existing
Walthamstow residential opportunity.
FEC is an international real estate conglomerate listed in Hong
Kong, active across Australia, Singapore, Hong Kong and the UK,
with a strong track record in residential development. FEC will
bring specialist expertise to assess opportunities at pace and work
up deliverable residential development scenarios. While the primary
aim of the partnership is to facilitate projects that will enhance
asset value and/or generate potential land receipts for Capital
& Regional, it will also assess where community retail and
services might be added to FEC's existing portfolio and pipeline,
as well as seek new projects where the collective expertise and
resources of the partnership could be utilised.
Snozone
Snozone was unable to trade in the UK in the period until
Government restrictions changed on 12 April 2021, halting
operations for the peak trading period of the first quarter of the
year. The need to maintain social distancing restrictions, which
only lifted after the end of the period on 19 July 2021, limited
slope capacity to approximately half. Trading was further impacted
by Snozone restaurants not being able to trade and clothing hire
not being offered during the period. However, slope usage bounced
back positively in the period from 12 April 2021 to 30 June 2021
when it was approximately 90% of the equivalent weeks in 2019.
Results for the period were supported by the receipt of a GBP2.5
million insurance payment under a pandemic insurance policy that
the business has maintained since 2017. Snozone also received a
GBP1.4 million rebate of VAT following a favourable ruling over the
treatment of revenue related to lift passes that will also have an
ongoing benefit of approximately GBP0.25 million per annum. A
renegotiation and extension of the Snozone leases on its Castleford
and Milton Keynes sites has reduced the annual cash payments by
approximately GBP0.35 million.
In February 2021, Snozone took over the operations of the ski
slope in the Xanadú Shopping Centre in Madrid, acquiring the
operating entities for a nominal value of EUR2. The slope in Madrid
has traded throughout the period although social distancing
restrictions in Spain have also impacted upon slope capacity and
the ability to offer a full range of services.
Snozone's profit for the period was GBP1.3 million (June 2020:
loss of GBP0.4 million). At the Adjusted Profit level the result
was GBPnil (June 2020: loss of GBP0.4 million) after primarily
excluding the GBP1.4 million VAT rebate received. Snozone Adjusted
Profit is adversely impacted further relative to 2020 as a result
of the renegotiated Castleford and Milton Keynes leases which under
IFRS 16 result in an increased depreciation and amortisation charge
to GBP1.4 million (June 2020: GBP1.1 million) despite the annual
cash rent significantly reducing.
FINANCIAL REVIEW
Six months Six months
to to Year to
June 2021 June 2020(1) Dec 2020
Profitability
Statutory Revenue GBP34.1m GBP36.5m GBP72.7m
Net Rental Income (NRI) GBP13.4m GBP15.2m GBP34.1m
Adjusted Profit (2) GBP2.3m GBP4.6m GBP10.3m
Adjusted Earnings per share (2) 2.1p 4.4p 9.5p
IFRS (Loss)/Profit for the period GBP(41.3)m GBP(115.5)m GBP(203.4)m
Basic earnings per share (36.9)p (111.0)p (188.3)p
EPRA cost ratio (excluding vacancy
costs) (2) 45.4% 43.6% 41.0%
Net Administrative Expenses to Gross
Rent 21.8% 16.7% 20.2%
Net Assets
Net Asset Value (NAV) per share 113p 229p 150p
EPRA NTA per share 117p 236p 158p
Financing
Group net debt GBP348.0m GBP348.2m GBP345.1m
Group net debt to property value 72% 57% 65%
Average maturity of Group debt (3) 4.1 years 4.9 years 4.4 years
Cost of Group debt 3.34% 3.41% 3.41%
-------------------------------------- ----------- -------------- ------------
(1) Comparatives for six months to 30 June 2020 have been
restated for the amended approach to IFRS 16 adoption as recognised
in the financial statements for the year ending 30 December
2020.
(2) Adjusted Profit is as defined in the Glossary. A
reconciliation to the statutory result is provided further below.
EPRA figures and a reconciliation to EPRA EPS are shown in Note 6
to the Financial Statements. The calculation of EPRA cost ratio is
provided in the EPRA performance measures section.
(3) Assuming exercise of all extension options.
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 Rationale
used
Adjusted Profit Adjusted Profit is used as it is considered
by management to provide the best indication
of the extent to which dividend payments
are supported by underlying profits.
Adjusted Profit excludes revaluation
of properties, profit or loss on disposal
of properties or investments, gains
or losses on financial instruments,
non-cash charges in respect of share-based
payments and exceptional one-off items.
The key differences from 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 exceptional
items where EPRA is prescriptive.
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 this period like-for-like
metrics have been adjusted for the
disposal of the Edmonds Parade asset
within Hemel Hempstead which completed
on 7 June 2021.
----------------------------------------------
Net Rent or Net Rental Income Net Rental Income is rental income
(NRI) from properties, less property and
management costs (excluding performance
fees). It is a standard industry measure.
A reconciliation to statutory turnover
is provided in Note 4 to the condensed
financial statements.
----------------------------------------------
FINANCIAL REVIEW
Reporting Segments
The Group has made a change to its reportable segments for this
period reflecting the position of its shopping centre investments
and mirroring how information is being reported to the Board.
As a result, it has split out what was previously referred to as
Shopping Centres into 'Shopping Centres - Investment Assets' and
'Shopping Centres - Managed Assets'. Shopping Centres - Investment
Assets incorporates the centres at Ilford and within The Mall loan
facility, namely Blackburn, Maidstone, Walthamstow and Wood Green.
These represent the asset pools where the Group retains net equity
and is focused on long term solutions for the loan positions
potentially involving the investment of further capital.
Shopping Centres - Managed Assets incorporates Hemel Hempstead
and Luton where the current loan balances in the non-recourse SPV
structures exceed the respective property values and therefore the
Group has negative equity and the substance of the Group's
involvement is as a Manager and the future position of the assets
is uncertain. The Group has determined that the economic and
strategic rationale for additional investment to cure and/or to pay
down these non-recourse facilities is, at the present time,
insufficient. In agreement with and at the request of the various
lenders, the Group continues to manage these assets for the time
being, whilst various outcomes are explored in conjunction with the
lenders.
Profitability
Components of Adjusted Profit and reconciliation to IFRS
Profit
Six months Six months Year to
to to December
Amounts in GBPm June 2021 June 2020(1) 2020
Shopping Centres - Investment
Assets 4.4 4.3 8.7
Shopping Centres - Managed Assets 0.4 2.5 7.8
Snozone profit/(loss) (indoor
ski operation) - (0.4) (2.4)
Investment income - - 0.1
Net central operating costs (2.5) (1.8) (3.9)
Current Year Tax credit - - 0.2
Adjusted Profit 2.3 4.6 10.3
Adjusted Earnings per
share (pence)(2) 2.1p 4.4p 9.5p
Reconciliation of Adjusted Profit
to statutory result
Adjusted Profit 2.3 4.6 10.3
Property revaluation (42.4) (115.7) (208.3)
(Loss)/Profit on disposal (1.2) 0.4 0.4
(Loss)/Gain on financial instruments 3.5 (5.5) (5.0)
Corporation tax in lieu of dividends (3.6) - -
Other items 0.1 0.7 (0.8)
--------------------------------------- ------------- ------ -------- ----- --------
Loss for the period (41.3) (115.5) (203.4)
--------------------------------------- ------------- ------ -------- ----- --------
(1) Comparatives for six months to 30 June 2020 have been
restated for the amended approach to IFRS 16 adoption as recognised
in the financial statements for the year ending 30 December
2020.
(2) EPRA figures and a reconciliation to EPRA EPS are shown in
Note 6 to the condensed Financial Statements.
Adjusted Profit - 30 June 2021: GBP2.3 million (30 June 2020:
GBP4.6 million)
Contribution from Shopping Centres - Investment Assets was
GBP4.4 million (30 June 2020: GBP4.3 million) marginally ahead of
the prior period.
Contribution from Shopping Centres - Managed Assets recorded a
profit of GBP0.4 million in the six month period (30 June 2020:
profit GBP2.5 million). The Hemel Hempstead loss of GBP0.1 million
(30 June 2020: profit of GBP0.1 million) reflects the impact of
higher running vacancy following a large proportion of the scheme
being vacated for the proposed cinema development, which was
terminated in a strategic decision as a result of the Covid
pandemic. The Luton contribution fell from GBP2.3 million to GBP0.5
million reflecting the impact of the M&S unit being vacant,
after the agreement of a surrender premium in H2 2020, and the
Debenhams unit ceasing to trade. This will improve in the second
half of the year once the new Lidl supermarket created from the
former M&S space opens in October and with the letting of the
Debenhams unit to VFM furniture.
Snozone at the Adjusted Profit level recorded GBPnil (30 June
2020: loss of GBP0.4 million). Snozone was unable to trade in the
UK until the 12 April 2021 and social distancing requirements
restricted the breadth of services that could be offered for the
rest of the period, although results were supported by the benefit
of a GBP2.5 million pandemic insurance payment.
Net central operating costs were GBP2.5 million, compared to
GBP1.8 million in the prior year reflecting some timing
differences, a reduction in cost in the prior period relating to
the Board taking a temporary pay reduction and assumed variable
overhead accruals, which were nil in the prior year. There is also
a repositioning of costs from NRI as a result of more leasing
activity being undertaken in-house with less reliance on external
agencies.
Adjusted Earnings per Share for the period were 2.1 pence (30
June 2020: 4.4 pence).
IFRS loss for the period - 30 June 2021: GBP41.3 million (30
June 2020: Loss of GBP115.5 million)
The overall loss for the period of GBP41.3 million was primarily
driven by the decline in property valuations by GBP42.4 million
detailed further below.
Net Asset Value
The valuation of the portfolio at 30 June 2021 was GBP482.7
million, a 7.5% decline on 30 December 2020 adjusting for the sale
of Edmonds Parade within Hemel Hempstead. This is approximately
half the level of decline experienced in the two six month periods
in 2020.
The Group's Investment assets proved relatively more robust,
declining by 6.4% versus 11.3% for the Group's Managed Assets, the
latter adjusted for the sale of Edmonds Parade.
Property portfolio valuation
Property at independent
valuation 30 June 2021 30 December 2020
NEY NEY
GBPm NIY % % GBPm NIY % %
Blackburn 38.8 11.61 13.26 40.6 13.17% 12.23%
Maidstone 43.0 10.97 10.97 46.0 10.67% 10.75%
Walthamstow 100.4 5.79 6.62 106.6 5.17% 6.15%
Wood Green 147.7 7.33 6.92 158.0 6.71% 6.43%
Ilford 54.8 4.60 8.03 60.0 5.30% 7.49%
------------------------- ------ ------ ------- ------ ------- -------
Investment Assets 384.7 7.45% 8.59% 411.2 7.28% 7.99%
Luton 84.0 9.59 10.49 92.5 9.8% 9.50%
Hemel Hempstead 14.0 11.24 16.58 23.3 10.00% 12.69%
------------------------- ------ ------ ------- ------ ------- -------
Managed Assets 98.0 9.81% 12.09% 115.8 9.80% 10.65%
Total 482.7 7.96% 9.38% 527.0 7.88% 8.63%
------------------------- ------ ------ ------- ------ ------- -------
This resulted in NAV of GBP126.7 million and EPRA Net Tangible
Assets of GBP131.6 million compared to December 2020 amounts of
GBP167.8 million and GBP176.7 million respectively. Basic NAV per
share and EPRA NTA per share were 113p and 117p respectively,
representing declines of 37p and 41p respectively (December 2020:
150p and 158p respectively).
Dividend and tax
In light of the continuing level of uncertainty and desire to
maximise cash flexibility, the Group has taken the decision not to
declare an Interim dividend.
A UK REIT is expected to pay dividends (PIDs) of at least 90 per
cent of its taxable profits from its UK property rental business by
the first anniversary of each accounting date. The Group had a
balance of approximately GBP7.6 million to pay in distributions
before the end of 2020 in order to meet its REIT distribution
requirements for the financial year ending 2019 however HMRC
granted an extension to this deadline to run until 30 December
2021. The Group also has an estimated PID balance of GBP11.2
million for the financial year ending 2020 that is also due to be
distributed by 30 December 2021. If this also remains unpaid at 30
December 2021 there is a total estimated shortfall of unpaid PIDs
by 31 December 2021 of GBP18.8 million. The Group had anticipated
that it would be treated as having met the minimum REIT requirement
by virtue of facing a legal impediment to paying a dividend as a
result of the Group's REIT entities not having sufficient
distributable reserves. However following detailed correspondence
with HMRC on this matter they have confirmed that in their opinion
these provisions are not applicable as, in the absence of
additional regulations provided for in the legislation, they are
applicable only to companies subject to UK company law. Therefore
they do not apply to the Group's REIT entities which are not
subject to UK company law being registered Jersey companies.
Consequently if no further distributions are made by 30 December
2021 the Group will be required to settle Corporate Tax on the
total PID balances for 2019 and 2020, which remain unpaid at 30
December 2021. This effectively ensures that a similar amount of
tax is accounted for on the REIT profits at Group level rather than
through the withholding tax that would have been applied at
shareholder level if the distributions had been made. The
corporation tax is estimated at approximately GBP3.7 million, being
19% of the estimated GBP18.8 million and accrued interest, and this
amount has been provided for at 30 June 2021 as a prior year
adjustment to tax.
Financing
The Group has four non-recourse asset secured loan facilities
that each sit within their own ring-fenced special purpose vehicle
(SPV) structure. Funding costs of 3.34% are substantially fixed and
secured over the medium term with a weighted average 3.7 years to
maturity at 30 June 2021, extending to 4.1 years if the remaining
one year extension on part of The Mall facility is exercised.
The fall in valuations resulted in net debt to value increasing
to 61% in respect of Investment Assets and Central Operations
(December 2020: 56%) or 72% for the total group (December 2020:
65%).
Net
Loan debt Average Duration Duration
Debt Net to value to interest to loan with
(1) Cash(2) debt (3) value(3) rate Fixed expiry extensions
30 June 2021 GBPm GBPm GBPm % % % % Years Years
--------------------- ------ -------- ------- ---------- ---------- ---------- ------ --------- ------------
Investment Assets
The Mall 265.0 (7.9) 257.1 80% 78% 3.61 100 4.4 5.1
Ilford 39.0 (2.8) 36.2 71% 66% 2.76 100 2.7 2.7
Central cash (incl.
Snozone) - (56.8) (56.8) n/a n/a n/a n/a n/a n/a
------ -------- ------- ---------- ---------- ---------- ------ --------- ------------
Investment assets
+ Central 304.0 (67.5) 236.5 79% 61% 3.50 4.2 4.8
Managed Assets
Hemel Hempstead 23.0 (0.6) 22.4 164% 160% 2.03 100 1.6 1.6
Luton 96.5 (7.4) 89.1 115% 106% 3.14 100 2.5 2.5
Total 423.5 (75.5) 348.0 88% 72% 3.34 100 3.7 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.
From the proceeds of the December 2019 equity raise, the Group
had initially earmarked GBP50 million to pay down debt and has to
date only utilised GBP5 million of this sum, leaving a balance of
GBP45 million (effectively within the GBP56.8 million of Group cash
included in the table above). The Group had previously been in
discussions with lenders about utilising a proportion of the
remaining funds to voluntarily pay down its four non-recourse debt
facilities in the early part of 2020, but when it became clear how
significant the disruption caused by Covid-19 would be, we took the
decision to place such discussions on hold. Our priority since then
has been to focus our efforts on supporting our assets and on
ensuring the continued stability and therefore flexibility of the
Group to continue to respond to the volatility and acceleration in
structural change in the sector.
Management has undertaken actions to improve the preservation of
cash within the business while this period of uncertainty persists.
These actions include rationing capital expenditure projects to
only those that immediately drive income improvements, or are of
strategic importance, and suspending the dividend until such time
as markets stabilise.
The position of the Group's individual loan facilities is as
follows:
Investment Assets
On The Mall facility (Blackburn, Maidstone, Walthamstow, Wood
Green), at our request, the lenders have granted a waiver of all
financial covenants until the Interest Payment Date (IPD) at the
end of January 2022. The additional waiver period permits the Group
to continue to advance discussions with the lenders regarding a
long-term solution for this facility, concurrent with an eventual
stabilisation following the disruption to both operations and
valuations caused by COVID-19.
On Ilford, we have secured a waiver of all financial covenants
until the April 2022 IPD in return for the Group funding from
central cash landlord works and incentives to facilitate the
creation of a Job Centre in part of the former Debenhams unit. We
have also agreed outline terms on a longer term modification of the
covenants until at least the end of 2022 to facilitate the proposed
major asset management initiatives at the asset, being the planned
medical centre and the re-letting of the remainder of the Debenhams
anchor unit, which, if they proceed, the Group will partially fund
from central cash.
Managed Assets
The Group classifies its interest in the Hemel Hempstead and
Luton shopping centres as Managed Assets as the current property
valuations are lower than the outstanding debt amounts and hence
the Group does not presently record any equity value in the two
assets. The Group has determined that the economic and strategic
rationale for additional investment to cure and/or to pay down
these non-recourse facilities is, at the present time,
insufficient. In agreement with and at the request of the
respective lenders, the Group continues to manage these assets for
the time being, whilst various outcomes are explored in conjunction
with the lenders.
The sale of the Edmonds Parade block at Hemel Hempstead
completed on 7 June 2021 and delivered net proceeds of
approximately GBP4.5 million of which GBP3.9 million was used to
reduce the carrying amount of the loan facility to GBP23.0 million.
We have been notified by the lender on Hemel Hempstead that it is
in the final stages of selling the loan as part of a portfolio of
other unrelated debt facilities. Financial covenants on the loan
facility are currently deferred until the October IPD. We intend to
continue our constructive engagement with the lender, or any
successor lender, to assess whether it is in the Group's interest
to retain an ongoing involvement in relation to the asset.
On the Luton loan facility we have agreed terms on a further
extension to the waiver until the January 2022 IPD. We have
advanced our discussions with the lender about (a) resetting the
covenant position, (b) enacting certain modifications to the loan
agreement and (c) agreeing the scope of the Group's Asset
Management activities in return for instituting a mechanism to
apply surplus cash generated at the asset to the gradual reduction
of the loan balance. The Group anticipates that this arrangement
will be formalised to facilitate a stabilisation of the operating
performance of the asset, whilst broader strategic alternatives are
evaluated.
Going Concern
Under the UK Corporate Governance Code, the Board needs to
assess whether the financial statements should be prepared on a
Going Concern basis. In making its assessment of Going Concern, the
Group has considered the general risk environment and specifically
the impact on the business of the significant disruption arising
from Covid-19 as well as the acceleration of the structural trends
that were already under way in the retail industry.
The valuation of the Group's property portfolio fell from
GBP527.0 million at 30 December 2020 to GBP482.7 million at 30 June
2021. As asset valuations have come under pressure, the Group's net
debt to property value ratio has, consequently, increased. Our
lenders have recognised the unprecedented nature of this situation
and have demonstrated their support by granting a series of
short-term waivers since the start of pandemic in respect of
covenants which would otherwise have been breached. Management
remain in regular dialogue with lenders to agree the most
appropriate way forward on a facility by facility basis.
At 30 June 2021 the Group had total cash on balance sheet of
approximately GBP75 million, which is equivalent to more than the
Group's annual Contracted Rent. Of this, GBP56.8 million was
centrally held and free of any restrictions. This provides a
significant cash contingency to cover any disruption to operations
for an extended period of time.
The Group's four asset backed loan facilities are ring-fenced
within their own SPV structures with no recourse to Capital &
Regional plc and no cross-default provisions. Each loan facility
has bespoke covenants as outlined in the Covenant information
section. All facilities provide the Group with the opportunity to
cure breaches of financial covenants or provide for the eventual
surrender of assets, without any recourse to the rest of the Group,
should the directors choose not to cure in the event that the
lenders do not grant further covenant modifications. Covenants in
respect of minimum interest cover ratios, both projected and
historic, are tested quarterly. The lenders have discretion to test
loan to value covenants by independent valuations. The Group has
secured short term waivers or deferrals for all income covenants
covering the first half of the year and up to at least the
respective October 2021 or January 2022 Interest Payment Dates and
are in constructive and detailed dialogue with the respective
lenders on agreeing longer term solutions as detailed in the
Financing section above. The earliest contractual maturity on any
of the Group's asset backed loan facilities is February 2023.
Hemel and Luton, classified as the Group's Managed Assets, are
now in a negative equity position which means that The Mall and
Ilford (the Group's Investment Assets) combined assets make up
substantively all of the Group's Net Asset Value excluding the
central cash balance maintained by the Group at 30 June 2021. In
respect of The Mall and Ilford, which form the Group's Investment
assets, the central cash balance maintained by the Group at 30 June
2021, in addition to available cash within the relevant structures
at 30 June 2021, provides sufficient funds to remedy the loan to
value covenants if values fell by up to a further approximate 10%
across these assets by reference to the June 2021 valuations or by
less than 5% with reference to bank valuations undertaken in the
period. This is if the Directors chose to take the approach of
curing the facilities without any further covenant relaxation.
The Group's presentation of its Managed Assets as a separate
operating segment provide disclosure of what the financial
contribution of these assets is on the Group's results and provide
an indication of what the impact would be if further waivers are
not agreed and the respective lenders elect to enforce their
security and hence the entities no longer form part of the
Group.
In making its assessment of Going Concern, the Group is required
to consider the position in a reasonable worst case scenario
extending out for a period of at least 12 months. The Group has
considered within this further falls in property valuations of more
than 10% versus the 30 June 2021 valuations allied to the potential
operational disruption in the event that further national lockdowns
or Government restrictions are put in place. There are combinations
of these downside scenarios that would result in the cure amount
required for the Group's Investment Assets under either Loan to
Value or Interest Cover Ratio covenants being in excess of the cash
that would be immediately available to the Group. While the Group
would expect the lenders to provide waivers or otherwise
demonstrate sufficient flexibility to avoid the facilities
defaulting there is no guarantee of this and as a consequence a
material uncertainty exists that may cast significant doubt on the
Group's ability to continue as a going concern, such that the Group
may be unable to realise its assets and discharge its liabilities
in the normal course of business.
The Directors have considered this material uncertainty 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. These include but are not
limited to: the potential disposal of assets either in whole or
part; the opportunity to crystallise value on the Walthamstow
residential development; and the potential raising of additional
funds. The Board remains committed to consider and exploring all
options to maximise shareholder and stakeholder value
In conclusion having due regard to all of the above matters and
given the ongoing discussions with the Group's lenders including
expectations over continuing to obtain waivers to the extent that
they are required and after making appropriate enquiries including
considerations of the impact of Covid-19 and sensitivities, 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.
Outlook
Notwithstanding the further fall in valuations during the
period, current market dynamics in the sector as well as the wider
economy provide cause for optimism that the Investment market may
be starting to stabilise. This, allied with the relative
outperformance of our Investment Assets and the improving
operational performance, provide the necessary base for making
longer term strategic decisions and determining the best approach
for addressing debt levels. We appreciate the continued support
from our lenders who we liaise closely with on our different
non-recourse facilities, extending waivers as they are required and
working towards longer term resolutions on a facility by facility
basis.
As we emerge from 18 months unprecedented challenges we are
increasingly confident that a shared need from consumers and
retailers for well-located, accessible retail and services with
affordable occupancy costs, is highly supportive of our Community
Centre strategy and our belief in the 15 minute neighbourhood.
Principal risks and uncertainties
There are a number of risks and uncertainties which could have a
significant impact on future performance and could cause actual
results to differ materially from expected or historical results.
The Group carries out a regular review of the major risks it faces
and monitors the controls that have been put in place to mitigate
them.
A detailed explanation of the principal risks and uncertainties
was included on pages 34 to 38 of the Group's 2020 Annual Report. A
further review was carried out for the 30 June 2021 half year.
Amongst the main factors considered were the ongoing impact of the
Covid-19 pandemic and the continuing structural changes to UK
retail as well as the position of the Group's debt facilities and
sensitivity analysis undertaken as detailed in the Going Concern
section. The review concluded that while as a result of these
combined factors the profile of some risks, including property
investment market risks, Treasury risk and the impact of the
economic environment, had changed, the ultimate nature of them had
not and therefore the principal risks to the Group remain those
disclosed in the 2020 Annual Report. These have been summarised
below.
-- Property investment market risks - Weak economic conditions
and poor sentiment in commercial real estate markets exacerbated by
the impact of COVID-19 may lead to low investor demand and further
declines in valuation. Small changes in property market yields can
have a significant effect on property valuation and the impact of
leverage could magnify the effect on the Group's net assets.
-- Impact of the economic environment - A prolonged downturn in
tenant demand driven by structural changes in retail and/or
macro-economic factors could put further pressure on rent levels.
Tenant failures and reduced tenant demand could adversely affect
rental income revenues, lease incentive costs, void costs,
available cash and the value of properties owned by the Group.
-- Treasury risk - Inability to fund the business or to
refinance existing debt on economic terms may result in the
inability to meet financial obligations when due and put a
limitation on financial and operational flexibility. Cost of
financing could be prohibitive in the future. Breach of any loan
covenants could cause default on debt and possible accelerated
maturity. Unremedied breaches can trigger demand for immediate
repayment of loans.
-- Tax and regulatory risks - Exposure to non-compliance with
the REIT regime and changes in tax legislation or the
interpretation of tax legislation or previous transactions could
result in tax related liabilities and other losses arising.
Exposure to changes in existing or forthcoming property related or
corporate regulation could result in financial penalties or loss of
business or credibility.
-- People - The Group's business is partially dependent on the
skills of a small number of key individuals. Loss of key
individuals or an inability to attract new employees with the
appropriate expertise could reduce the effectiveness with which the
Group conducts its business.
-- Development risk - There is a risk that where capital
expenditure and development projects are undertaken, that delays
and other issues may lead to increased cost and reputational
damage. There is also the risk that planned realisation of value is
not achieved, for example if the property cannot subsequently be
sold for the anticipated amount or if tenants are not contracted on
sufficiently attractive terms. Competing schemes may reduce
footfall and reduce tenant demand for space and the levels of rents
which can be achieved
-- Business disruption from a major incident - The threat of a
major incident, including the COVID-19 pandemic, impacting one or
more of the Group's assets. There is a risk of financial losses if
unable to trade or impacts upon shopper footfall and reputational
and financial damage if business has or is perceived to have acted
negligently
-- Responsible business risk - Failure to act on environmental
and social issues could lead to reputational damage, deterioration
in relationships with customers and communities and limit
investment opportunities. Failure to comply with regulations could
result in financial exposure. Health and safety incidents could
result in reputational damage, financial liability for the Group
and potentially criminal liability for the directors.
-- Customers and changing consumer trends - Changes in consumer
shopping habits towards online purchasing and delivery and the
increase of CVAs by retailers and other retailer restructurings may
adversely impact footfall in shopping centres and potentially
reduce tenant demand for space and the levels of rents which can be
achieved.
-- IT and Cyber Security - The risk of IT failures or malicious
attacks causing reputational or financial damage to the business
through loss of business time and opportunities or potential fines
or regulatory penalties.
The risks noted above do not comprise all those potentially
faced by the Group and are not intended to be presented in any
order of priority. Additional risks and uncertainties currently
unknown to the Group, or which the Group currently deems
immaterial, may also have an adverse effect on the financial
condition or business of the Group in the future. These issues are
kept under constant review to allow the Group to react in an
appropriate and timely manner to help mitigate the impact of such
risks.
Responsibility statement
The directors confirm that to the best of their knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 "Interim Financial Reporting", as adopted
by the European Union;
-- the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
-- the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions and changes therein).
By order of the Board
Lawrence Hutchings Stuart Wetherly
Chief Executive Group Finance Director
8 September 2021 8 September 2021
INDEPENT REVIEW REPORT TO CAPITAL & REGIONAL PLC
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2021 which comprises the condensed
consolidated income statement, the condensed consolidated balance
sheet, the condensed consolidated statement of changes in equity,
the condensed consolidated cash flow statement and related notes 1
to 16. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and International Financial Reporting Standards as adopted by
the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the condensed set of financial
statements, which indicates that in combinations of downside
scenarios prepared by management the cure amount required for the
Group's Investment Assets under either Loan to Value or Interest
Cover Ratio covenants could be in excess of the cash that would be
immediately available to the Group. The Group does not have waivers
in respect of these covenants for at least 12 months from the date
of this report. As stated in note 2, these events or conditions,
along with the other matters as set forth in note 2, indicate that
a material uncertainty exists that may cast significant doubt on
the Group's ability to continue as a going concern. Our conclusion
is not modified in respect of this matter.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2020 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
8 September 2021
Condensed consolidated income statement
For the six months to 30 June 2021
Unaudited
Six months
Unaudited to Audited
Six months 30 June Year to
to 30 June 2020 30 December
2021 Restated 2020
Note GBPm GBPm GBPm
------------------------------------ ----- ------------ ------------ -------------
Continuing operations
3b,
Revenue 4 34.1 36.5 72.7
Other income 2.5 - -
Expected credit loss (3.2) (4.5) (7.3)
Cost of sales (17.1) (14.3) (27.9)
------------------------------------ ----- ------------ ------------ -------------
Gross profit 16.3 17.7 37.5
Administrative costs (5.3) (5.4) (12.0)
Loss on revaluation of investment 3a,
properties 7a (42.4) (115.7) (208.3)
Other gains and losses (1.3) 1.6 1.6
Loss on ordinary activities before
financing (32.7) (101.8) (181.2)
Finance income 3.4 0.3 0.4
Finance costs (8.6) (14.0) (22.8)
------------------------------------ ----- ------------ ------------ -------------
Loss before tax (37.9) (115.5) (203.6)
Tax 5 (3.4) - 0.2
------------------------------------ ----- ------------ ------------ -------------
Loss for the period (41.3) (115.5) (203.4)
------------------------------------ ----- ------------ ------------ -------------
Basic earnings per share 6 (36.9)p (111.0)p (188.3)p
Diluted earnings per share 6 (36.9)p (111.0)p (188.3)p
EPRA basic earnings per share 6 (0.1)p 5.1p 9.2p
EPRA diluted earnings per share 6 (0.1)p 5.1p 9.2p
------------------------------------ ----- ------------ ------------ -------------
Condensed consolidated statement of comprehensive income
For the six months to 30 June 2021
Unaudited
Unaudited six months
six months to Audited
to 30 June Year to
30 June 2020 30 December
2021 Restated 2020
GBPm GBPm GBPm
------------------------------------ ------------ ------------ -------------
Loss for the period (41.3) (115.5) (203.4)
Other comprehensive income - - -
Total comprehensive income for the
period (41.3) (115.5) (203.4)
------------------------------------ ------------ ------------ -------------
The results for the current and preceding periods are fully
attributable to equity shareholders.
The EPRA alternative performance measures used throughout this
announcement are industry best practice performance measures
established by the European Public Real Estate Association (EPRA).
These reflect the updated guidance issued by EPRA in October 2019.
They are defined in the Glossary to these financial statements.
EPRA Earnings and EPRA EPS are shown in Note 6 to these condensed
financial statements. EPRA net reinstatement value (NRV), net
tangible assets (NTA) and net disposal value (NDV) are shown in
Note 13 to these condensed financial statements. We consider EPRA
NTA to be the most relevant measure for our business.
Condensed consolidated balance sheet
At 30 June 2021
Unaudited Audited
30 June 30 December
2021 2020
Note GBPm GBPm
---------------------------------------- ----- ---------- -------------
Non-current assets
Investment properties 7 492.4 536.1
Plant and equipment 2.5 2.5
Right of use assets 8 25.3 12.2
Fixed asset investments 0.6 0.9
Receivables 9 13.7 14.2
Total non-current assets 534.5 565.9
----------------------------------------- ----- ---------- -------------
Current assets
Receivables 9 31.8 21.3
Cash and cash equivalents 10 78.7 84.1
Total current assets 110.5 105.4
----------------------------------------- ----- ---------- -------------
Total assets 645.0 671.3
----------------------------------------- ----- ---------- -------------
Current liabilities
Trade and other payables (35.8) (30.9)
Current tax 5 (3.7) -
Total current liabilities (39.5) (30.9)
----------------------------------------- ----- ---------- -------------
Net current assets 71.0 74.5
----------------------------------------- ----- ---------- -------------
Non-current liabilities
Bank loans 11 (420.6) (423.9)
Other payables (0.7) (0.2)
Derivatives (4.9) (8.9)
Obligations under finance leases (52.6) (39.6)
Total non-current liabilities (478.8) (472.6)
----------------------------------------- ----- ---------- -------------
Total liabilities (518.3) (503.5)
----------------------------------------- ----- ---------- -------------
Net assets 126.7 167.8
----------------------------------------- ----- ---------- -------------
Equity
Share capital 11.2 11.2
Share premium 244.3 244.3
Other reserves 60.3 60.3
Capital redemption reserve 4.4 4.4
Own shares held - -
Retained deficit (193.5) (152.4)
----------------------------------------- ----- ---------- -------------
Equity shareholders' funds 126.7 167.8
----------------------------------------- ----- ---------- -------------
Basic net assets per share 113.3p 150.1p
EPRA net reinstatement value per share 13 117.4p 157.6p
EPRA net tangible assets per share 13 117.4p 157.6p
EPRA net disposal value per share 13 107.7p 139.4p
----------------------------------------- ----- ---------- -------------
Condensed consolidated statement of changes in equity
For the six months to 30 June 2021
Capital Own
Share Share Merger redemption shares Retained Total
capital premium reserve reserve held Earnings Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ------ -------- -------- ----------- ------- --------- --------
Balance at 30 December
2019 (Audited) 10.4 238.0 60.3 4.4 - 62.0 375.1
------ -------- -------- ----------- ------- --------- --------
Loss for the period - - - - - (115.5) (115.5)
Other comprehensive
result for the period - - - - - - -
------ -------- -------- ----------- ------- --------- --------
Total comprehensive
income for the period - - - - - (115.5) (115.5)
Credit to equity
for equity-settled
share-based payments - - - - - 0.2 0.2
Dividends paid,
net of scrip (note
15) - - - - - (4.3) (4.3)
Shares issued, net
of costs 0.8 6.3 - - - (7.1) -
Balance at 30 June
2020
(unaudited) 11.2 244.3 60.3 4.4 - (64.7) 255.5
------------------------- ------ -------- -------- ----------- ------- --------- --------
Loss for the period - - - - - (87.9) (87.9)
Other comprehensive
result for the period - - - - - - -
------ -------- -------- ----------- ------- --------- --------
Total comprehensive
income for the period - - - - - (87.9) (87.9)
Credit to equity
for equity-settled
share-based payments - - - - - 0.2 0.2
------------------------- ------ -------- -------- ----------- ------- --------- --------
Balance at 30 December
2020
(unaudited) 11.2 244.3 60.3 4.4 - (152.4) 167.8
------------------------- ------ -------- -------- ----------- ------- --------- --------
Loss for the period - - - - - (41.3) (41.3)
Other comprehensive
result for the period - - - - - - -
------ -------- -------- ----------- ------- --------- --------
Total comprehensive
income for the period - - - - - (41.3) (41.3)
Credit to equity
for equity-settled
share-based payments - - - - - 0.2 0.2
Balance at 30 June
2021
(unaudited) 11.2 244.3 60.3 4.4 - (193.5) 126.7
Condensed consolidated cash flow statement
For the six months to 30 June 2021
Unaudited
Unaudited Six months Audited
Six months to 30 Year to
to 30 June 2020 30 December
June 2021 Restated(1) 2020
Note GBPm GBPm GBPm
Operating activities
Net cash from operations 12 6.7 (3.3) 17.9
Distributions received from investments
including German B-note 0.2 1.6 1.5
Interest paid (7.5) (7.2) (14.3)
Interest received 0.1 0.1 0.2
Cash flows from operating activities (0.5) (8.8) 5.3
------------------------------------------- ----- ------------ ------------- -------------
Investing activities
Disposals 4.2 5.0 4.9
Purchase of plant and equipment (0.2) (0.3) (0.8)
Capital expenditure on investment
properties (4.3) (5.7) (15.6)
Cash flows from investing activities (0.3) (1.0) (11.5)
------------------------------------------- ----- ------------ ------------- -------------
Financing activities
Dividends paid (net of Scrip) including
withholding tax - (3.3) (4.2)
Bank loans repaid (3.9) - -
Issue of ordinary shares - - -
Fixed payment under head leases (0.7) (0.7) (1.4)
Cash flows from financing activities (4.6) (4.0) (5.6)
------------------------------------------- ----- ------------ ------------- -------------
Net decrease in cash and cash equivalents (5.4) (13.8) (11.8)
Cash and cash equivalents at the
beginning of the period 84.1 95.9 95.9
------------------------------------------- ----- ------------ ------------- -------------
Cash and cash equivalents at the
end of the period 10 78.7 82.1 84.1
------------------------------------------- ----- ------------ ------------- -------------
(1) Numbers have been restated to present GBP0.7m of fixed
payments payable under head leases within Financing activities
rather than Net cash from operations
Notes to the condensed financial statements
For the six months to 30 June 2021
1 General information
The comparative information included for the year ended 30
December 2020 does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. A copy of the statutory
accounts for that year has been delivered to the Registrar of
Companies. The auditor has reported on those accounts: their report
was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
The Group's financial performance is not materially impacted by
seasonal fluctuations.
2 Accounting policies
Basis of preparation
The annual financial statements of Capital & Regional plc
are prepared in accordance with IFRS as adopted by the European
Union. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
IAS 34 "Interim Financial Reporting" as adopted by the European
Union. The financial statements are prepared in GBP being the
functional currency of the Group.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or
liability, the Group takes into account the characteristics of the
asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at
the measurement date. Fair value for measurement and/or disclosure
purposes in these financial statements is determined on such basis,
except for share-based payments that are within the scope of IFRS
2, leasing transactions that are within the scope of IFRS 16, and
measurements that have some similarities to fair value but are not
fair value, such as net realisable value in IAS 2 or value in use
in IAS 36.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
-- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities.
-- Level 2 inputs are inputs other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from
prices).
-- Level 3 inputs are unobservable inputs for the asset or liability.
The Half-Year Report was approved by the Board on 8 September
2021.
Going concern
Under the UK Corporate Governance Code, the Board needs to
assess whether the financial statements should be prepared on a
Going Concern basis. In making its assessment of Going Concern, the
Group has considered the general risk environment and specifically
the impact on the business of the significant disruption arising
from Covid-19 as well as the acceleration of the structural trends
that were already under way in the retail industry.
The valuation of the Group's property portfolio fell from
GBP527.0 million at 30 December 2020 to GBP482.7 million at 30 June
2021. As asset valuations have come under pressure, the Group's net
debt to property value ratio has, consequently, increased. Our
lenders have recognised the unprecedented nature of this situation
and have demonstrated their support by granting a series of
short-term waivers since the start of pandemic in respect of
covenants which would otherwise have been breached. Management
remain in regular dialogue with lenders to agree the most
appropriate way forward on a facility by facility basis.
At 30 June 2021 the Group had total cash on balance sheet of
approximately GBP75 million, which is equivalent to more than the
Group's annual Contracted Rent. Of this, GBP56.8 million was
centrally held and free of any restrictions. This provides a
significant cash contingency to cover any disruption to operations
for an extended period of time.
The Group's four asset backed loan facilities are ring-fenced
within their own SPV structures with no recourse to Capital &
Regional plc and no cross-default provisions. Each loan facility
has bespoke covenants as outlined in the Covenant information
section. All facilities provide the Group with the opportunity to
cure breaches of financial covenants or provide for the eventual
surrender of assets, without any recourse to the rest of the Group,
should the directors choose not to cure in the event that the
lenders do not grant further covenant modifications. Covenants in
respect of minimum interest cover ratios, both projected and
historic, are tested quarterly. The lenders have discretion to test
loan to value covenants by independent valuations. The Group has
secured short term waivers or deferrals for all income covenants
covering the first half of the year and up to at least the
respective October 2021 or January 2022 Interest Payment Dates and
are in constructive and detailed dialogue with the respective
lenders on agreeing longer term solutions as detailed in the
Financing section above. The earliest contractual maturity on any
of the Group's asset backed loan facilities is February 2023.
Hemel and Luton, classified as the Group's Managed Assets, are
now in a negative equity position which means that The Mall and
Ilford (the Group's Investment Assets) combined assets make up
substantively all of the Group's Net Asset Value excluding the
central cash balance maintained by the Group at 30 June 2021. In
respect of The Mall and Ilford, which form the Group's Investment
assets, the central cash balance maintained by the Group at 30 June
2021, in addition to available cash within the relevant structures
at 30 June 2021, provides sufficient funds to remedy the loan to
value covenants if values fell by up to a further approximate 10%
across these assets by reference to the June 2021 valuations or by
less than 5% with reference to bank valuations undertaken in the
period. This is if the Directors chose to take the approach of
curing the facilities without any further covenant relaxation.
The Group's presentation of its Managed Assets as a separate
operating segment provide disclosure of what the financial
contribution of these assets is on the Group's results and provide
an indication of what the impact would be if further waivers are
not agreed and the respective lenders elect to enforce their
security and hence the entities no longer form part of the
Group.
In making its assessment of Going Concern, the Group is required
to consider the position in a reasonable worst case scenario
extending out for a period of at least 12 months. The Group has
considered within this further falls in property valuations of more
than 10% versus the 30 June 2021 valuations allied to the potential
operational disruption in the event that further national lockdowns
or Government restrictions are put in place. There are combinations
of these downside scenarios that would result in the cure amount
required for the Group's Investment Assets under either Loan to
Value or Interest Cover Ratio covenants being in excess of the cash
that would be immediately available to the Group. While the Group
would expect the lenders to provide waivers or otherwise
demonstrate sufficient flexibility to avoid the facilities
defaulting there is no guarantee of this and as a consequence a
material uncertainty exists that may cast significant doubt on the
Group's ability to continue as a going concern, such that the Group
may be unable to realise its assets and discharge its liabilities
in the normal course of business.
The Directors have considered this material uncertainty 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. These include but are not
limited to: the potential disposal of assets either in whole or
part; the opportunity to crystallise value on the Walthamstow
residential development; and the potential raising of additional
funds. The Board remains committed to consider and exploring all
options to maximise shareholder and stakeholder value
In conclusion having due regard to all of the above matters and
given the ongoing discussions with the Group's lenders including
expectations over continuing to obtain waivers to the extent that
they are required and after making appropriate enquiries including
considerations of the impact of Covid-19 and sensitivities, 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.
Key judgements and sources of estimation uncertainty
The preparation of financial statements requires the Directors
to make estimates that may affect the reported amounts of assets
and liabilities, income and expenses. The key sources of estimation
uncertainty are as reported in the annual audited financial
statements for the year ended 30 December 2020 with the exception
of those below, there are no key judgements impacting the financial
statements.
Property valuation
The valuation of the Group's property portfolio is inherently
subjective due to, among other factors, the individual nature of
each property, its location and the expected future rental revenues
from that particular property. As a result, the valuations the
Group places on its property portfolio are subject to a degree of
uncertainty and are made on the basis of assumptions which may not
prove to be accurate. We remain in a phase of the valuation cycle
where there is continuing negative sentiment and low transactional
evidence as such greater judgement has been applied.
The investment property valuation contains a number of
assumptions upon which the valuation of the Group's properties as
at 30 June 2021 was based. The assumptions on which the property
valuation reports have been based include, but are not limited to,
matters such as the tenure and tenancy details for the properties,
the condition of the properties, prevailing market yields and
comparable market transactions. These assumptions are market
standard and accord with the Royal Institution of Chartered
Surveyors (RICS) Valuation - Professional Standards UK 2014
(revised April 2015).
If the assumptions upon which the valuation was based prove to
be inaccurate, this may have an impact on the value of the Group's
investment properties, which could in turn have an effect on the
Group's financial position and results. Note 7c provides
sensitivity analysis estimating the impact that changes in the
estimated rental values or equivalent yields would have on the
Group's property valuations.
Increase in credit risk
When measuring expected credit loss the Group uses reasonable
and supportable forward looking information, which is based on
assumptions for the future movement of different economic drivers
and how these drivers will affect each other. In assessing whether
the credit risk of an asset has significantly increased the Group
takes into account qualitative and quantitative reasonable and
supportable forward looking information. Due to the impact of Covid
19 on collection rates, there has been a significant increase in
our assessed credit risk. Probability of default constitutes a key
input in measuring expected credit losses (ECL). Probability of
default is an estimate of the likelihood of default over a given
time horizon, the calculation of which includes historical data,
assumptions and expectations of future conditions.
Change in accounting policies
The condensed consolidated interim financial information has
been prepared on the basis of the accounting policies, significant
judgements, key assumptions and estimates as set out in the notes
to the Group's annual financial statements for the year ended 30
December 2020. Taxes on income in the interim periods are accrued
using the tax rate that would be applicable to expected total
annual earnings.
During the period the Directors identified that the previous
half year financial statements included variable lease payments
which should not have been recognised as a liability under IFRS 16,
but should have been expensed as incurred. As a result of this cost
of sales has increased by GBP1.0m, finance costs have reduced by
GBP1.0m. There has been no change to the loss for the period or net
assets. Basic and diluted earnings per share have not changed.
Negative goodwill arising from the purchase of Snowzone Madrid
has been recognised in the period. This has been credited to the
income statement in administrative expenses. Further details can be
obtained from note 16.
3 Operating segments
3a Operating segment performance
The Group's has made a change to its reportable segments for
this period reflecting the position of its shopping centre
investments. The Group has split out what was previously called
Shopping Centres into 'Shopping Centres - Investment Assets' and
'Shopping Centres - Managed Assets'. This reflects the fact that
management consider these groups separately in operating decisions.
Shopping Centres - Investment Assets incorporating the centres at
Ilford and within The Mall loan facility, namely Blackburn,
Maidstone, Walthamstow and Wood Green. These represent the asset
pools where the Group retains net equity and is focused on long
term solutions for the loan positions potentially involving the
investment of further capital in some shape or form. Shopping
Centres - Managed Assets incorporates Hemel Hempstead and Luton
where the current debt values in the non-recourse SPV structures
exceed the respective property value and therefore the Group has
negative equity and hence the future position of the investments is
uncertain. The Group has determined that the economic and strategic
rationale for additional investment to cure and/or to pay down
these non-recourse facilities is, at the present time, is
insufficient. In agreement with and at the request of the various
lenders, the Group continues to manage these assets for the time
being, whilst various outcomes are explored in conjunction with the
lenders.
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.
Shopping Shopping
Centres Centres
- Investment - Managed Group/
Assets Assets Snozone Central Total
Six months to 30 June
2021 (Unaudited) Note GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----- -------------- ----------- -------- --------- --------
Rental income from external
sources 3b 16.9 7.4 - - 24.3
Property and void costs(1) (7.0) (3.9) - - (10.9)
-------------- ----------- -------- --------- --------
Net rental income 9.9 3.5 - - 13.4
Net interest expense (5.5) (3.1) (0.3) 0.3 (8.6)
Snozone income/Management
fees(2) 3b - - 4.8 1.2 6.0
Snozone/Management expenses - - (3.3) (3.3) (6.6)
Depreciation - - (1.4) (0.3) (1.7)
Current year tax - - 0.2 - 0.2
Variable overhead (excluding
non-cash items) - - - (0.4) (0.4)
Adjusted Profit/(loss) 4.4 0.4 - (2.5) 2.3
Revaluation of properties (27.6) (14.8) - - (42.4)
Loss on disposal - (1.2) - - (1.2)
Profit on financial instruments 2.0 1.5 - - 3.5
Share-based payments - - - (0.2) (0.2)
Prior period tax(3) - - 1.3 (3.6) (2.3)
Other items - - - (1.0) (1.0)
-------------- ----------- -------- --------- --------
(Loss)/profit (21.2) (14.1) 1.3 (7.3) (41.3)
-------------- ----------- -------- --------- --------
Total assets 3b 416.9 132.2 29.7 66.2 645.0
Total liabilities 3b (328.7) (150.3) (29.7) (9.6) (518.3)
-------------- ----------- -------- --------- --------
Net assets/(liabilities) 88.2 (18.1) - 56.6 126.7
--------------------------------- ----- -------------- ----------- -------- --------- --------
(1) Includes expected credit loss.
(2) Asset management fees of GBP1.3 million charged from the
Group's Capital & Regional Property Management entity to the
Shopping Centres - Investment Assets segment and GBP0.5 million to
Shopping Centres - Managed Assets have been excluded from the table
above.
(3) GBP1.3m in Snozone relates to a GBP1.4m reclaim of VAT less
GBP0.1m fees.
Shopping Shopping
Centres Centres
- Investment - Managed
Assets Assets Group/
Restated Restated Snozone Central Total
Six months to 30 June GBPm
2020 (Unaudited) Note GBPm GBPm GBPm GBPm
------------------------------- ----- -------------- ----------- -------- --------- --------
Rental income from external
sources 3b 17.5 8.6 - - 26.1
Property and void costs(1) (7.8) (3.1) - - (10.9)
-------------- ----------- -------- --------- --------
Net rental income 9.7 5.5 - - 15.2
Net interest expense (5.4) (3.0) (0.3) 0.2 (8.5)
Snozone income/Management
fees(2) 3b - - 3.4 1.2 4.6
Snozone/Management expenses - - (2.4) (2.9) (5.3)
Investment income - - - - -
Depreciation - - (1.1) (0.2) (1.3)
Variable overhead (excluding
non-cash items) - - - (0.1) (0.1)
Adjusted Profit/(loss) 4.3 2.5 (0.4) (1.8) 4.6
Revaluation of properties (74.4) (41.3) - - (115.7)
Profit on disposal 0.4 - - - 0.4
Loss on financial instruments (3.1) (2.4) - - (5.5)
Share-based payments - - - (0.2) (0.2)
Other items - - - 0.9 0.9
-------------- ----------- -------- --------- --------
Loss (72.8) (41.2) (0.4) (1.1) (115.5)
-------------- ----------- -------- --------- --------
Total assets 3b 503.2 174.1 15.4 68.5 761.2
Total liabilities 3b (333.0) (155.9) (15.2) (1.6) (505.7)
-------------- ----------- -------- --------- --------
Net assets 170.2 18.2 0.2 66.9 255.5
------------------------------- ----- -------------- ----------- -------- --------- --------
(1) Includes expected credit loss.
(2) Asset management fees of GBP1.3 million charged from the
Group's Capital & Regional Property Management entity to the
Shopping Centres - Investment Assets segment and GBP0.5 million to
Shopping Centres - Managed Assets have been excluded from the table
above.
Shopping Shopping
Centres Centres
- Investment - Managed Group/
Assets Assets(3) Snozone Central Total
Year to 30 December
2020 (Audited) Note GBPm GBPm GBPm GBPm GBPm
--------------------------- ----- -------------- ----------- -------- --------- --------
Rental income from
external sources 3b 36.0 19.6 - - 55.6
Property and void
costs(1) (15.8) (5.7) - - (21.5)
-------------- ----------- -------- --------- --------
Net rental income 20.2 13.9 - - 34.1
Net interest expense (11.5) (6.1) (0.5) 0.6 (17.5)
Snozone income/Management
fees(2) 3b - - 4.6 2.3 6.9
Management expenses - - (4.3) (6.5) (10.8)
Investment income - - - 0.1 0.1
Depreciation - - (2.2) (0.5) (2.7)
Current Tax - - - 0.2 0.2
Variable overhead
(excluding non-cash
items) - - - - -
Adjusted Profit/(loss) 8.7 7.8 (2.4) (3.8) 10.3
Revaluation of properties (137.6) (70.7) - - (208.3)
Profit on disposal 0.4 - - - 0.4
Loss on financial
instruments (2.8) (2.2) - - (5.0)
Share-based payments - - - (0.4) (0.4)
Other items - - - (0.4) (0.4)
-------------- ----------- -------- --------- --------
Loss (131.3) (65.1) (2.4) (4.6) (203.4)
-------------- ----------- -------- --------- --------
Total assets 3b 440.4 150.5 14.3 66.1 671.3
Total liabilities 3b (329.4) (153.5) (16.0) (4.6) (503.5)
-------------- ----------- -------- --------- --------
Net assets/(liabilities) 111.0 (3.0) (1.7) 61.5 167.8
--------------------------- ----- -------------- ----------- -------- --------- --------
(1) Includes expected credit loss.
(2) Asset management fees of GBP3.6 million charged from the
Group's Capital & Regional Property Management entity to
Wholly-owned assets have been excluded from the table above.
(3) Includes the benefit of GBP4 million of surrender premiums
received during the period.
3b Reconciliations of reportable revenue, assets and
liabilities
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2021 2020 2020
Revenue Note GBPm GBPm GBPm
------------------------------------------- ----- ----------- ----------- ------------
Rental income from external sources
including associates 3a 21.8 26.1 55.6
Other revenue 2.5 - -
Service charge income 7.0 6.6 11.7
Management fees 3a 1.2 1.2 2.3
Snozone income 3a 4.8 3.4 4.6
------------------------------------------- ----- ------------
Revenue for reportable segments 37.3 37.3 74.2
Elimination of inter-segment revenue (0.7) (0.8) (1.5)
Revenue per consolidated income statement 36.6 36.5 72.7
------------------------------------------- ----- ----------- ----------- ------------
Revenue by country
------------------------------------------- ----- ----- -----
UK 32.6 36.5 72.7
Spain 1.5 - -
----- ----- -----
Revenue per consolidated income statement 34.1 36.5 72.7
------------------------------------------- ----- ----- -----
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2021 2020 2020
Assets GBPm GBPm GBPm
------------------------------------- ----------- ----------- ------------
Wholly-owned assets 549.1 677.3 590.9
Snozone 29.7 15.4 14.3
Group/Central 66.2 68.5 66.1
----------- ----------- ------------
Total assets of reportable segments
and Group assets 645.0 761.2 671.3
------------
Liabilities
------------------------------------- ----------- ----------- ------------
Wholly-owned assets (479.0) (488.9) (482.9)
Snozone (29.7) (15.2) (16.0)
Group/Central (9.6) (1.6) (4.6)
Total liabilities of reportable
segments and Group liabilities (518.3) (505.7) (503.5)
Net assets by country
------------------------------------- ----------- ----------- ------------
UK 126.1 254.7 166.9
Germany 0.6 0.8 0.9
----------- ----------- ------------
Group net assets 126.7 255.5 167.8
------------------------------------- ----------- ----------- ------------
4 Revenue
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2021 2020 2020
Statutory Note GBPm GBPm GBPm
------------------------------------------- ------ ----------- ----------- ------------
Gross rental income 20.7 22.6 43.5
Car park and other ancillary income 3.6 3.5 12.1
----------- ----------- ------------
Rental income from external sources 24.3 26.1 55.6
Service charge income 7.0 6.6 11.7
External management fees 0.5 0.4 0.8
Snozone income 2.3 3.4 4.6
Revenue per consolidated income statement
- continuing operations 34.1 36.5 72.7
--------------------------------------------------- ----------- ----------- ------------
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.
5 Tax
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2021 2020 2020
Tax (charge)/credit GBPm GBPm GBPm
--------------------------------- ----------- ----------- ------------
UK corporation tax - - -
Adjustments in respect of prior
years (3.7) - -
Total current tax charge (3.7) - -
--------------------------------- ----------- ----------- ------------
Deferred tax 0.3 - 0.2
---------------------------------- ----------- ----------- ------------
Total tax ( charge)/credit (3.4) - 0.2
---------------------------------- ----------- ----------- ------------
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2021 2020 2020
Tax (charge)/credit reconciliation GBPm GBPm GBPm
------------------------------------------ ----------- ----------- ------------
Loss before tax on continuing operations (37.9) (115.5) (203.6)
------------------------------------------ ----------- ----------- ------------
Loss multiplied by the UK corporation
tax rate of 19% (30 June 2020 and
30 December 2020: 19%) 7.2 21.9 38.7
REIT exempt income and gains (7.0) (21.8) (38.0)
Non-allowable expenses and non-taxable
items (0.2) (0.2) 0.1
Excess tax losses 0.2 0.1 (0.6)
Current tax prior year adjustment (3.7) - -
Effect of rate change on deferred
tax 0.1 - -
Total tax (charge)/credit - continuing
operations (3.4) - 0.2
------------------------------------------ ----------- ----------- ------------
Finance Act 2020 enacted provisions maintaining the main UK
corporation tax rate at 19% for the years starting 1 April 2020 and
1 April 2021. On 10 June 2021 Finance Act 2021 received Royal
Assent and enacted provisions maintaining the main corporation tax
rate at 19% for the year commencing 1 April 2022 and increasing the
rate to 25% for the year commencing 1 April 2023. Consequently the
UK corporation tax rate at which deferred tax is booked in the
financial statements is 25% (2020:19%).
The Group has recognised a deferred tax asset of GBP0.5 million
(30 December 2020: GBP0.2 million). The Group has recognised a
deferred tax asset for the non-REIT entities in respect of head
lease payments and capital allowances to the extent that future
matching 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 GBP21.4 million (30 December 2020: GBP22.5
million) of unused UK revenue tax losses and GBP0.5 million (30
December 2020: GBPnil) of unused Spanish revenue losses. No
deferred tax asset has been recognised in respect of these losses
due to the unpredictability of future taxable profit streams and
other reasons which may restrict the utilisation of the losses. The
Group has unused capital losses of GBP24.9 million (30 December
2020: GBP24.9 million) that are available for offset against future
gains but similarly no deferred tax has been recognised in respect
of these losses owing to the unpredictability of future capital
gains and other reasons which may restrict the utilisation of the
losses. The losses do not have an expiry date.
A UK REIT is expected to pay dividends (PIDs) of at least 90 per
cent of its taxable profits from its UK property rental business by
the first anniversary of each accounting date. The Group had a
balance of approximately GBP7.6 million to pay in distributions
before the end of 2020 in order to meet its REIT distribution
requirements for the financial year ending 2019 however HMRC
granted an extension to this deadline to run until 30 December
2021. No further extension to the payment date is available in
respect of 2019 due to the statutory deadline for closure of that
period by 30 December 2021. The Group also has an estimated PID
balance of GBP11.2 million for the financial year ending 2020 that
is also due to be distributed by 30 December 2021. If this also
remains unpaid at 30 December 2021 there is a total estimated
shortfall of unpaid PIDs by 31 December 2021 of GBP18.8
million.
The Group had anticipated that it would be treated as having met
the minimum REIT requirement by virtue of facing a legal impediment
to paying a dividend as a result of the REIT entities not having
sufficient distributable reserves. However, following detailed
correspondence with HMRC on this matter they have confirmed that in
their opinion these provisions are not applicable as, in the
absence of additional regulations provided for in the legislation,
they are applicable only to companies subject to UK company law.
Therefore they do not apply to the Group's REIT entities which are
not subject to UK company law being registered Jersey
companies.
Consequently if no further distributions are made by 30 December
2021 the Group will be required to settle corporation tax on the
total PID balances for 2019 and 2020, which remain unpaid at 30
December 2020. This effectively ensures that a similar amount of
tax is accounted for on the REIT profits at Group level rather than
through the witholding tax that would have been applied at
shareholder level if the distributions had been made. The
corporation tax is estimated at approximately GBP3.7 million being
19% of the estimated GBP18.8 million and accrued interest. The
Group remains in dialogue with HMRC regarding a possible extension
to the payment date for the 2020 PID as the relevant statutory
deadline for closure of the relevant tax returns is 30 December
2022. However, as these discussions are currently ongoing the Group
has provided for the tax of GBP3.6 million at 30 June 2021 on both
the 2019 and 2020 unpaid PID balances as a prior year adjustment to
tax.
6 Earnings per share
The European Public Real Estate Association ("EPRA") has issued
recommendations for the calculation of earnings per share
information as shown in the following table:
Six months to 30
June 2020
Six months to 30 Year to 30 December
June 2021 (unaudited) (unaudited) 2020 (audited)
Adjusted
Adjusted Loss EPRA Profit Adjusted
Note Loss EPRA Profit restated restated restated Loss EPRA Profit
--------------- ----- -------- ------- --------- --------- --------- ---------- --------- -------- ---------
Profit/(Loss)
(GBPm)
Loss for the
year (41.3) (41.3) (41.3) (115.5) (115.5) (115.5) (203.4) (203.4) (203.4)
Revaluation
loss on
investment
properties
(net
of tax) 3a - 42.4 42.4 - 115.7 115.7 - 208.3 208.3
Loss/(Profit)
on disposal
(net of tax) 3a - 1.2 1.2 - (0.4) (0.4) - (0.4) (0.4)
Changes in
fair
value of
financial
instruments 3a - (3.5) (3.5) - 5.5 5.5 - 5.0 5.0
Share-based
payments 3a - - 0.2 - - 0.2 - - 0.4
Tax charge - - 2.3 - - - - - -
Negative
goodwill - (0.3) (0.3) - - - - - -
Other items - 1.3 1.3 - - (0.9) - 0.4 0.4
-------- ------- --------- --------- --------- ---------- --------- -------- ---------
(Loss)/Profit (41.3) (0.2) 2.3 (115.5) 5.3 4.6 (203.4) 9.9 10.3
-------- ------- --------- --------- --------- ---------- --------- -------- ---------
Earnings per
share (36.9)p (0.1)p 2.1p (111.0)p 5.1p 4.4p (188.3)p 9.2p 9.5p
Diluted earnings
per share (36.9)p (0.1)p 2.1p (111.0)p 5.1p 4.4p (188.3)p 9.2p 9.5p
None of the current or prior year earnings related to
discontinued operations.
Six months to Six months to
Weighted average number 30 June 2021 30 June 2020 Year to 30 December
of shares (m) (Unaudited) (Unaudited) 2020 (Audited)
-------------------------- -------------- -------------- --------------------
Ordinary shares in issue 111.8 104.1 108.0
Own shares held - - -
-------------- -------------- --------------------
Basic 111.8 104.1 108.0
Dilutive contingently
issuable shares
and share options 0.3 0.3 0.3
-------------- -------------- --------------------
Diluted 112.1 104.4 108.3
--------------------------- -------------- -------------- --------------------
At the end of the period, the Group had 335,016 (30 December
2020: 343,049) additional share options and contingently issuable
shares granted under share-based payment schemes that could
potentially dilute basic earnings per share in the future but which
have not been included in the calculation because they are not
dilutive or the performance conditions for vesting were not met
based on the position at 30 June 2021.
Headline earnings per share
Headline earnings per share has been calculated and presented as
required by the Johannesburg Stock Exchange Listings
Requirements.
Year to
Six months 30 December
Six months to to 2020
30 June 2021 30 June 2020
(Unaudited) (Unaudited) (Audited)
Basic Diluted Basic Diluted Basic Diluted
-------------------------------- ----- ------- -------- -------- -------- -------- --------
Profit/(Loss) (GBPm)
Loss for the period (41.3) (41.3) (115.5) (115.5) (203.4) (203.4)
Revaluation of investment
properties (net of tax) 42.4 42.4 115.7 115.7 208.3 208.3
Loss/(profit) on disposal of
investment properties (net of
tax) 1.2 1.2 (0.4) (0.4) (0.4) (0.4)
Other items 1.3 1.3 - - 0.4 0.4
-------- --------
Headline earnings 3.6 3.6 (0.2) (0.2) 4.9 4.9
Weighted average number
of shares (m)
Ordinary shares in issue 111.8 111.8 104.1 104.1 108.0 108.0
Own shares held - - - - - -
Dilutive contingently issuable
shares and share options - 0.3 - 0.3 - 0.3
------- -------- -------- -------- -------- --------
111.8 112.1 104.1 104.4 108.0 108.3
------- -------- -------- -------- -------- --------
Headline Earnings per
share 3.2p 3.2p (0.2)p (0.2)p 4.6p 4.5p
------- -------- -------- -------- -------- --------
7 Investment properties
7a Wholly-owned properties
Freehold Leasehold Total
investment investment property
properties properties assets
GBPm GBPm GBPm
------------------------------- ----------- ----------- ---------
Cost or valuation
At 30 December 2020 (Audited) 280.1 256.0 536.1
Disposal (5.3) - (5.3)
Capital expenditure 0.7 3.3 4.0
Valuation deficit (31.2) (11.2) (42.4)
At 30 June 2021 (Unaudited) 244.3 248.1 491.9
-------------------------------- ----------- ----------- ---------
During the period the Group sold a parade of properties at Hemel
Hempstead known as Edmonds Parade and Stephyns Chambers. These
properties had a value of GBP5.3m. A loss on disposal of GBP1.2m
has been recognised in the accounts in relation to this sale.
7b Property assets summary
Unaudited
30 June Audited 30
2021 December 2020
GBPm GBPm
---------------------------------------- ---------- ---------------
Wholly-owned investment properties
at fair value 482.7 527.0
Head leases treated as finance leases
on investment properties 25.6 25.3
Unamortised tenant incentives on
investment properties (15.9) (16.2)
------------------------------------------ ---------- ---------------
IFRS Property Value 492.4 536.1
---------------------------------------- ---------- ---------------
7c Valuations
External valuations were carried out on all of the property
assets detailed in the table above. The valuations at 30 June 2021
were carried out by independent qualified professional valuers from
CBRE Limited and Knight Frank LLP in accordance with RICS
standards. These valuers are not connected with the Group and their
fees are charged on a fixed basis that is not dependent on the
outcome of the valuations.
Real estate valuations are complex and derived from data that is
not widely publicly available and involves a degree of judgement.
For these reasons, the valuations are classified as Level 3 in the
fair value hierarchy as defined by IFRS 13. The valuations are
sensitive to changes in rent profile and yields.
The following table illustrates the impact of changes in key
unobservable inputs (in isolation) on the fair value of the Group's
properties:
Impact on valuations
of 5% change Impact on valuations Impact on valuations
in estimated of 25bps change in of 50bps change
rental value equivalent yield in equivalent yield
----------------------- --------------------------------
Increase Decrease Increase Decrease Increase Decrease
GBPm GBPm GBPm GBPm GBPm GBPm
---- ----------- --------------------- --------- --------------------- ---------
19.3 (18.3) 15.7 (14.2) 32.1 (27.6)
---- ----------- ---------- --------------------- --------- --------------------- ---------
Impact on valuations
of 100bps change
in equivalent
yield
-----------------------
Increase Decrease
GBPm GBPm
---- -----------
68.6 (52.5)
---- ----------- ----------
8 Leases
Buildings
Right of use Assets GBPm
Cost
At 30 December 2020 (Audited) 14.4
Additions 3.4
Remeasurement 10.9
At 30 June 2021 (Unaudited) 28.7
===========
Accumulated depreciation
At 30 December 2020 (Audited) 2.1
Charge for the year 1.3
At 30 June 2021 (Unaudited) 3.4
===========
Carrying value
At 30 June 2021 (Unaudited) 25.3
At 30 December 2020 (Audited) 12.2
Lease commitments relate to the leasing of the Group's
registered office and the leases of the Snozone business on its
Basingstoke, Castleford and Milton Keynes sites. During the period
the group has signed amendments to the lease agreements for the
Castleford and Milton Keynes sites within its Snozone business,
resulting in the remeasurement of the right of use asset and the
related lease liability. Additions for the year relate to the lease
acquired on acquisition of Snowzone Madrid.
9 Receivables
Unaudited Audited
30 June 30 December
2021 2020
GBPm GBPm
--------------------------------------- ---------- -------------
Amounts falling due after one year:
Financial assets
Deferred tax 0.5 0.2
0.5 0.2
Non-financial assets
Unamortised tenant incentives 3.6 3.8
Unamortised rent free periods 9.6 10.2
---------- -------------
13.7 14.2
---------- -------------
Amounts falling due within one year:
Financial assets
Trade receivables (net of allowances) 16.2 14.7
Other receivables 6.0 2.7
Accrued income 1.6 0.2
---------- -------------
Non-derivative financial assets 23.8 17.6
Non-financial assets
Prepayments 5.3 1.5
Unamortised tenant incentives 0.7 0.8
Unamortised rent free periods 2.0 1.4
---------- -------------
31.8 21.3
---------- -------------
The creation and release of credit loss allowances have been
included in cost of sales in the income statement.
Credit losses are calculated at an amount equal to lifetime
expected credit losses. The expected credit losses on trade
receivables are estimated using a provision matrix by reference to
past default experience of the debtor and an analysis of the
debtor's current financial position, adjusted for factors that are
specific to the debtor and an assessment of both the current as
well as the forecast direction of conditions at the reporting
date.
There has been no change in the estimation techniques or
significant assumptions made during the current reporting
period.
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 following table details the risk profile of trade
receivables based on the Group's provision matrix.
Not past 1-30 31-60 61-90
due days days days >90 days Total
----------------------------- --------- ------ ------ ------ --------- --------
30 June 2021 (Unaudited)
Expected credit loss
rate (%) 8.3 16.1 17.1 54.4 35.6 25.4(1)
Estimated total gross
carrying amount at default
(GBP'm) 6.8 0.6 3.6 1.1 11.7 23.8
Lifetime ECL (GBP'm) (0.6) (0.1) (0.6) (0.6) (4.2) (6.1)
Adjustment for forward
looking estimate (1.5) - - - - (1.5)
--------- ------ ------ ------ --------- --------
Total expected credit
loss (2.1) (0.1) (0.6) (0.6) (4.2) (7.6)
30 December 2020 (Audited)
Expected credit loss
rate (%) 5.8 16.3 17.1 50.3 34.2 24.8(1)
Estimated total gross
carrying amount at default
(GBP'm) 3.1 7.6 0.6 1.3 10.4 23.0
Lifetime ECL (GBP'm) (0.2) (1.2) (0.1) (0.6) (3.6) (5.7)
Adjustment for forward
looking estimate (2.7) - - - - (2.7)
--------- ------ ------ ------ --------- --------
Total expected credit
loss (2.9) (1.2) (0.1) (0.6) (3.6) (8.4)
(1) This represents the total lifetime expected credit loss as a
percentage of total group receivables
10 Cash and cash equivalents
Unaudited Audited
30 June 30 December
2021 2020
GBPm GBPm
--------------------------------------- ---------- ------------
Cash at bank 75.5 82.4
Restricted security disposals held in
rent accounts 0.6 0.6
Other restricted balances 2.6 1.1
---------------------------------------- ----------
Total cash and cash equivalents 78.7 84.1
---------------------------------------- ---------- ------------
Included within the total figure is GBP13.2m of partially
restricted funds held in lender controlled accounts (Dec 2020:
GBP7.5m).
11 Borrowings
The Group's borrowings are arranged to ensure an appropriate
maturity profile and to maintain short-term liquidity. There were
no defaults or other breaches of financial covenants that were not
waived under any of the Group borrowings during the current year or
the preceding year.
Unaudited Audited
30 June 30 December
2021 2020
Borrowings at amortised cost GBPm GBPm
------------------------------------ ---------- -------------
Secured
Fixed and swapped bank loans 423.5 427.4
Total borrowings before costs 423.5 427.4
Unamortised issue costs (2.9) (3.5)
Total borrowings after costs 420.6 423.9
---------- -------------
Analysis of total borrowings after
costs
Current - -
Non-current 420.6 423.9
Total borrowings after costs 420.6 423.9
------------------------------------- ---------- -------------
The fair value of total borrowings before costs as at 30 June
2021 was GBP429.5 million (30 December 2020: GBP438.9 million). The
Group did not have any undrawn committed facilities at 30 June 2021
(30 December 2020: GBP22 million).
Interest rate and currency profile of borrowings
Unaudited Audited
30 June 30 December
2021 2020
Note GBPm GBPm
----------------------------------- ------ ---------- -------------
Fixed and swapped rate borrowings
Between 2% and 3% 62.0 39.0
Between 3% and 4% 361.5 388.4
423.5 427.4
Variable rate borrowings - -
423.5 427.4
------------------------------------------ ---------- -------------
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value. All of the assets listed were classified as Level 2, as
defined in note 1 to these condensed financial statements. There
were no transfers between Levels in the year.
Unaudited Audited
30 June 30 December
2021 2020
GBPm GBPm
--------------------- ---------- -------------
Interest rate swaps (4.9) (8.9)
(4.9) (8.9)
---------- -------------
12 Notes to the cash flow statement
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2020
2021 Restated 2020
GBPm GBPm GBPm
---------------------------------------------------- ----------- ------------
Loss for the period (41.3) (115.5) (203.4)
Adjusted for:
Income tax charge 3.4 - (0.2)
Finance income (3.4) (0.3) (0.4)
Finance expense 8.6 9.3 22.8
Loss on financial instruments 3.5 5.5 -
Finance lease costs (0.8) (1.6) (0.2)
Loss on revaluation of wholly-owned
properties 42.4 115.7 208.3
Depreciation of other fixed assets 1.7 1.3 2.7
Other gains and losses 1.3 (1.6) (1.6)
Increase in receivables (15.5) (20.1) (4.9)
(Decrease)/increase in expected
credit loss (0.8) 7.0 -
Increase/(decrease) in payables 7.4 (3.2) (5.6)
Non-cash movement relating to share-based
payments 0.2 0.2 0.4
Net cash from operations 6.7 (3.3) 17.9
-------------------------------------------- ------- ----------- ------------
13 Net assets per share
30 June 2021 (Unaudited) 30 Dec 2020 (Audited)
----------------------------- --------------------------
EPRA EPRA EPRA EPRA EPRA EPRA
NRV NTA NDV NRV NTA NDV
GBPm GBPm GBPm GBPm GBPm GBPm
IFRS Equity attributable
to shareholders 126.7 126.7 126.7 167.8 167.8 167.8
Exclude fair value of
financial instruments 4.9 4.9 - 8.9 8.9 -
Include fair value of
fixed interest rate debt - - (6.0) - - (11.5)
--------------------------- --------- -------- -------- -------- ------- -------
Net asset value 131.6 131.6 120.7 176.7 176.7 156.3
Fully diluted number
of shares 112.1 112.1 112.1 112.1 112.1 112.1
--------------------------- --------- -------- -------- -------- ------- -------
Net asset value per share 117.4p 117.4p 107.7p 157.6p 157.6p 139.4p
--------------------------- --------- -------- -------- -------- ------- -------
The number of ordinary shares issued and fully paid at 30 June
2021 was 111,819,639 (30 December 2020: 111,819,639). There have
been no changes to the number of shares from 30 June 2021 to the
date of this announcement.
14 Related party transactions
There have been no material changes to, or material transactions
with, related parties as described in note 29 of the annual audited
financial statements for the year ended 30 December 2020.
15 Dividends
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 June 30 June 30 December
2021 2020 2020
GBPm GBPm GBPm
----------------------------------------- ------------ ----------- ------------
Final dividend per share for year ended
30 December 2019 of 11p - 11.4 11.4
----------------------------------------- ------------ ----------- ------------
Amounts recognised as distributions to
equity holders in the period - 11.4 11.4
The dividends shown above are gross of any take-up of Scrip
offer.
16 Acquisition of subsidiaries
Snowzone Madrid
On 9 February 2021, the Group acquired 100 per cent of the
issued share capital of Snowzone SLU and Ocio y Nieve SLU, being
the joint operators of Snowzone Madrid, obtaining control of
Snowzone SLU and Ocio y Nieve SLU. Snowzone SLU is the operating
company of Snowzone Madrid, Europe's largest indoor snow slope,
Ocio y Nieve SLU is a services company that employs the workforce
of Snowzone Madrid. On the 30(th) July Snowzone SLU and Ocio y
Nieve SLU were merged. Both Snowzone SLU and Ocio y Nieve qualify
as businesses as defined in IFRS 3. Snowzone Madrid was acquired to
provide the group with an operating presence in continental
Europe.
The provisional amounts recognised in respect of the
identifiable assets acquired and liabilities assumed are as set out
in the table below.
GBP'm
Inventory 0.1
Property, plant and equipment 0.3
Working capital (0.4)
Cash 0.4
Total identifiable assets acquired and liabilities assumed 0.4
Negative Goodwill (0.3)
Total consideration 0.1
Satisfied by:
Cash 0.1
Total consideration transferred 0.1
Net cash outflow arising on acquisition:
Cash consideration (0.1)
Less: cash and cash equivalent balances acquired 0.4
0.3
======
The negative goodwill of GBP0.3 million arising from the
acquisition has been recognised in the income statement in the
period.
Acquisition-related costs (included in administrative expenses)
amount to GBP0.2 million.
Snowzone Madrid contributed GBP1.5 million of revenue and
GBP0.3m loss to the Group's profit for the period between the date
of acquisition and the reporting date (losses are attributable to
the acquisition completing after the peak trading month of January
and the fact that Snowzone Madrid has operated under severe
Covid-19 restrictions up to the reporting date).
Glossary of terms
------------------
Adjusted Profit is the total of Contribution Market value is an opinion of the
from wholly-owned assets and the Group's best price at which the sale of an
joint ventures and associates, the interest in a property would complete
profit from Snozone and property management unconditionally for cash consideration
fees less central costs (including on the date of valuation as determined
interest but excluding non-cash charges by the Group's external or internal
in respect of share-based payments) valuers. In accordance with usual practice,
after tax. Adjusted Profit excludes the valuers report valuations net,
revaluation of properties, profit or after the deduction of the prospective
loss on disposal of properties or investments, purchaser's costs, including stamp
gains or losses on financial instruments duty, agent and legal fees.
and exceptional one-off items. Results
from Discontinued Operations are included Net Administrative Expenses to Gross
up until the point of disposal or reclassification Rent is the ratio of Administrative
as held for sale. Expenses net of external fee income
to Gross Rental income including the
Adjusted Earnings per share is Adjusted Group's share of Joint Ventures and
Profit divided by the weighted average Associates
number of shares in issue during the
year excluding own shares held. Net assets per share (NAV per share)
are shareholders' funds divided by
C&R is Capital & Regional plc, also the number of shares held by shareholders
referred to as the Group or the Company. at the year end, excluding own shares
held.
CRPM is Capital & Regional Property
Management Limited, a subsidiary of Net initial yield (NIY) is the annualised
Capital & Regional plc, which earns current rent, net of revenue costs,
management and performance fees from topped-up for contractual uplifts,
the Mall assets and certain associates expressed as a percentage of the capital
and joint ventures of the Group. valuation, after adding notional purchaser's
costs.
Contracted rent is passing rent and
the first rent reserved under a lease Net debt to property value is debt
or unconditional agreement for lease less cash and cash equivalents divided
but which is not yet payable by a tenant. by the property value.
Contribution is net rent less net Net interest is the Group's share,
interest, including unhedged foreign on a see-through basis, of the interest
exchange movements. payable less interest receivable of
the Group and its associates and joint
Capital return is the change in market ventures.
value during the year for properties
held at the balance sheet date, after Net rent or Net rental income (NRI)
taking account of capital expenditure is the Group's share of the rental
calculated on a time weighted basis. income, less property and management
costs (excluding performance fees)
Debt is borrowings, excluding unamortised of the Group.
issue costs.
Nominal equivalent yield is a weighted
EPRA earnings per share (EPS) is the average of the net initial yield and
profit / (loss) after tax excluding reversionary yield and represents the
gains on asset disposals and revaluations, return a property will produce based
movements in the fair value of financial upon the timing of the income received,
instruments, intangible asset movements assuming rent is received annually
and the capital allowance effects of in arrears on gross values including
IAS 12 "Income Taxes" where applicable, the prospective purchaser's costs.
less tax arising on these items, divided
by the weighted average number of shares Occupancy cost ratio is the proportion
in issue during the year excluding of a retailer's sales compared with
own shares held. the total cost of occupation being:
rent, business rates, service charge
EPRA net disposal value represents and insurance. Retailer sales are based
net asset value under a disposal scenario, on estimates by third party consultants
where deferred tax, financial instruments which are periodically updated and
and certain other adjustments are calculated indexed using relevant data from the
to the full extent of their liability, C&R Trade Index.
net of any resulting tax.
Occupancy rate is the ERV of occupied
EPRA net reinstatement value is net properties expressed as a percentage
asset value adjusted to reflect the of the total ERV of the portfolio,
value required to rebuild the entity excluding development voids.
and assuming that entities never sell
assets. Assets and liabilities, such Passing rent is gross rent currently
as fair value movements on financial payable by tenants including car park
derivatives are not expected to crystallise profit but excluding income from non-trading
in normal circumstances and deferred administrations and any assumed uplift
taxes on property valuation surpluses from outstanding rent reviews.
are excluded .
REIT - Real Estate Investment Trust.
EPRA net tangible assets is a proportionally
consolidated measure, representing Return on equity is the total return,
the IFRS net assets excluding the mark-to-market including revaluation gains and losses,
on derivatives and related debt adjustments, divided by opening equity plus time
the mark-to-market on the convertible weighted additions to and reductions
bonds, the carrying value of intangibles in share capital, excluding share options
as well as deferred taxation on property exercised.
and derivative valuations.
Reversionary percentage is the percentage
Estimated rental value (ERV) is the by which the ERV exceeds the passing
Group's external valuers' opinion as rent.
to the open market rent which, on the
date of valuation, could reasonably Reversionary yield is the anticipated
be expected to be obtained on a new yield to which the net initial yield
letting or rent review of a unit or will rise once the rent reaches the
property. ERV.
ERV growth is the total growth in Temporary lettings are those lettings
ERV on properties owned throughout for one year or less.
the year including growth due to development.
Total property return incorporates
Gearing is the Group's debt as a percentage net rental income and capital return
of net assets. See through gearing expressed as a percentage of the capital
includes the Group's share of non-recourse value employed (opening market value
debt in associates and joint ventures. plus capital expenditure) calculated
on a time weighted basis.
Interest cover is the ratio of Adjusted
Profit (before interest, tax, depreciation Total return is the Group's total
and amortisation) to the interest charge recognised income or expense for the
(excluding amortisation of finance year as set out in the consolidated
costs and notional interest on head statement of comprehensive income expressed
leases). as a percentage of opening equity shareholders'
funds.
Like-for-like figures, unless otherwise
stated, exclude the impact of property Total shareholder return (TSR) is
purchases and sales on year to year a performance measure of the Group's
comparatives. share price over time. It is calculated
as the share price movement from the
Loan to value (LTV) is the ratio of beginning of the year to the end of
debt excluding fair value adjustments the year plus dividends paid, divided
for debt and derivatives, to the Market by share price at the beginning of
value of properties. the year.
Variable overhead includes discretionary
bonuses and the costs of awards to
Directors and employees made under
the Combined Incentive Plan and other
share schemes which are spread over
the performance period.
EPRA performance measures (Not subject to review opinion)
30 June 30 June 30 December
2021 2020 2020
-------- -------- ------------
EPRA earnings (GBPm) (0.2) 5.3 9.9
EPRA earnings per share (diluted) (0.1)p 5.1p 9.2p
EPRA reinstatement value (GBPm) 131.6 264.4 176.7
EPRA net reinstatement value per share 117.4p 236p 158p
EPRA net tangible assets (GBPm) 131.6 264.4 176.7
EPRA net tangible assets per share 117.4p 236p 158p
EPRA net disposal value (GBPm) 120.7 243.6 156.3
EPRA net disposal value per share 107.7p 217p 139p
EPRA Cost ratios
30 June 30 June 30 December
2021 2020 2020
GBPm GBPm GBPm
------------------------------------------- -------- -------- ------------
Cost of sales (adjusted for IFRS head
lease differential) 19.5 19.7 34.7
Administrative costs 5.3 5.4 11.7
Service charge income (7.0) (6.6) (11.6)
Management fees (0.5) (0.4) (0.8)
Snozone (indoor ski operation) costs (1.9) (3.5) (6.6)
Less inclusive lease costs recovered
through rent (0.8) (1.0) (2.5)
-------- -------- ------------
EPRA costs (including direct vacancy
costs) 14.6 13.6 24.9
Direct vacancy costs (3.5) (1.6) (3.9)
-------- -------- ------------
EPRA costs (excluding direct vacancy
costs) 11.1 12.0 21.0
-------- -------- ------------
Gross rental income 24.3 26.1 55.6
Less ground rent costs (0.8) (1.0) (1.9)
Share of joint venture & associate gross
rental income less ground rent costs - - -
Less inclusive lease costs recovered
through rent 0.8 (1.0) (2.5)
-------- -------- ------------
Gross rental income 24.3 24.1 51.2
-------- -------- ------------
EPRA cost ratio (including direct vacancy
costs) 59.8% 56.4% 48.7%
EPRA cost ratio (excluding vacancy costs) 45.4% 49.8% 41.0%
------------------------------------------- -------- -------- ------------
Asset portfolio information (Not subject to review opinion)
At 30 June 2021
--------------------------------------------------------------------
Physical data
Number of properties 7
Number of lettable units 732
Lettable space (sq feet -
million) 3.5
--------------------------------------------------------
Valuation data
Properties at independent
valuation (GBPm) 482.7
Adjustments for head leases
and tenant incentives (GBPm) 9.7
Properties as shown in the
financial statements (GBPm) 492.4
Initial yield (%) 7.9
Equivalent yield (%) 9.4
Reversion (%) 8.5
Loan to value ratio (%) 88
Net debt to value ratio (%) 72
--------------------------------------------------------
Lease length (years)
Weighted average lease length
to break (years) 4.4
Weighted average lease length
to expiry (years) 6.2
--------------------------------------------------------
Passing rent (GBPm) of leases
expiring in:
Six months to 30 December
2021 4.3
Year to 30 December 2022 5.8
Three years to 30 December
2025 10.4
ERV (GBPm) of leases expiring
in:
Six months to 30 December
2021 5.1
Year to 30 December 2022 5.6
Three years to 30 December
2025 9.3
Passing rent (GBPm) subject
to review in:
Six months to 30 December
2021 3.1
Year to 30 December 2022 4.5
Three years to 30 December
2025 5.8
ERV (GBPm) of passing rent
subject to review in:
Six months to 30 December
2021 2.6
Year to 30 December 2022 4.0
Three years to 30 December
2025 5.2
--------------------------------------------------------
Rental Data
Contracted rent at period
end (GBPm) 51.6
Passing rent at period end
(GBPm) 50.7
ERV at period end (GBPm per
annum) 55.0
Occupancy rate (%) 89.7
Covenant information (Unaudited)
Borrowings
Facility GBPm Default covenant 30 June 2021(1)
----------------
The Mall 265.0
No greater than
Loan to value 70% Waived
No less than
Historic interest cover 175% Passed
Projected interest No less than
cover 150% Waived
Luton 96.5
No greater than
Loan to value 70% Passed
No less than
Debt yield 8% Waived
No less than
Historic interest cover 250% Passed
Projected interest No less than
cover 200% Waived
Hemel Hempstead 23.0
Loan to gross development No greater than
value 60% Deferred
No greater than
Debt to net rent cover 9:1 Deferred
No less than
Historic interest cover 175% Deferred
Projected interest No less than
cover 200% Deferred
Ilford 39.0
No greater than
Loan to value 70% Waived
No less than
Historic interest cover 225% Waived
Projected interest No less than
cover 225% Waived
----------------
(1) Based on July 2021 Interest Payment Date covenant tests
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END
IR UWRRRAAUKRUR
(END) Dow Jones Newswires
September 09, 2021 02:00 ET (06:00 GMT)
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