2015 Half-year Results 24 July 2015
Agenda 01 Introduction and half-year highlights David Atkins – CEO 02 Financial results Timon Drakesmith – CFO 03 Portfolio update David Atkins – CEO 04 Conclusion and Q+A David Atkins – CEO 2
2015 Half-year highlights EPS growth +13.3% LfL NRI growth (1) +3.0% UK Shopping Centre ERV growth (2) +3.3% Cost:income ratio reduced to 22.4% Total capital recycled (3) £155m Sales uplift at premium outlets +12% 4 developments completing in 2015 64,900m 2 3 (1) Including premium outlets (2) 12 month rolling ERV growth (3) Subject to completion of Bercy 2 and Grand Maine disposals
Product Framework delivering operational excellence iconic destinations Creating an aspirational retail destination at Victoria Gate, Leeds best@retail Introduced 5 new international brands to French market entertaining & exciting Dwell time +14% at Silverburn following leisure extension interactive & engaging PLUS app roll-out complete; 37% offer redemption rate at launch convenient & easy Click & collect kiosks in half of UK centres by end of 2015 positive places LfL electricity consumption reduced by 1.8% 4
02 Financial results Timon Drakesmith - CFO 5
Headline results underpinning our growth targets Income statement 30 Jun 2015 30 Jun 2014 Change Net rental income (£m) 159.5 146.9 +8.6% Adjusted profit before tax 108.2 87.8 (1) +23.2% (£m) Adjusted EPS (p) 13.6 12.0 (1) +13.3% Interim dividend (p) 9.5 8.8 +8.0% Balance sheet 30 Jun 2015 31 Dec 2014 Change Portfolio value (£m) (2) 7,886 7,734 +3.1% EPRA NAV (pence per share) 668 638 +4.7% LTV (%) 33 34 -100bps Financial results 6 (1) Adjusted profit and adjusted EPS restated from £85.0m and 11.6p respectively to exclude restructuring costs of £2.8m, which were excluded when calculating adjusted earnings figures for 31 December 2014 (2) Valuation for total portfolio including premium outlets at constant currency
Positive LfL NRI growth LfL NRI growth by sector (%) 10 9 8.6% 8 7 6 5 4 3 3.2% 3.0% 2 2.3% 2.1% 1.8% 1 0 (1) (2) (1) UK shopping centres UK retail parks France Total exc. Premium Premium outlets Total outlets Financial results 7 (1) Includes LfL movement of UK other properties (2) Includes Value Retail only as VIA Outlets was acquired in July 2014
Strong PBT growth Adjusted PBT movement (£m) (1) +27.3% 0.7 110 3.2 (3) (1.3) 108.2 108.2 4.1 100 6.5 7.2 2.8 90 (2) 85.0 80 70 60 LfL NRI Net Developments Premium Admin Financing FX H1 2014 as H1 2015 investments outlets reported Financial results 8 (1) Movements shown at constant exchange rates (2) Adjusted profit as reported at 30 Jun 2014 including £2.8m restructuring costs (3) Including £2.8m restructuring costs recorded in H1 2014
Managing and refocusing costs Cost:income ratio (%) 30% 27.0% 24.6% 12.5% 23.4% (1) 25% 22.4% 11.4% 21% 10.7% 11.2% 20% 15% 14.5% 13.2% 12.7% 11.2% 10% 5% 0% FY 2012 FY 2013 FY 2014 H1 2015 Corporate expenses Operational costs 2016 target Financial results 9 (1) Excludes one-off restructuring charge of £3.0m (at 31 December 2014)
Valuation analysis H1 2015 capital Components of underlying valuation Value at 30 Jun 2015 (2) return (1) change (%) Yield shift Income (%) Other (%) (£m) (%) UK shopping centres +3.0 +2.0 +1.1 0.0 2,949 UK retail parks 0.0 - 0.3 +0.1 0.0 1,607 France +3.6 +5.0 - 0.6 - 0.8 1,734 UK other interests (3) +1.2 +2.2 +0.1 - 1.0 185 Investment portfolio +2.4 +2.2 +2.2 +0.4 +0.4 - 0.2 6,475 Developments +5.7 0.0 0.0 +5.7 354 Premium outlets (4) +7.1 +2.3 +4.7 +0.1 1,057 Total +3.1 +2.1 +0.9 0.0 7,886 Financial results 10 (1) At constant currency (2) Figures on a proportionally consolidated basis (3) Principally assets held for redevelopment and non-core (4) Premium outlet figures relate to Hammerson interests
Solid uplift in NAV Adjusted NAV movement (pence per share) 690 +4.7% 680 (12) 14 670 (2) 668 9 660 650 21 640 638 630 620 610 Portfolio Premium Adjusted Dividends FX & other Dec 2014 Jun 2015 revaluation outlets profit revaluation Financial results 11
Healthy financing ratios Financing policy 30 Jun 2015 31 Dec 2014 Net debt - £2,241m £2,265m Gearing <85% 43% 46% Loan to value <40% 33% 34% Cash/undrawn facilities - £450m £648m Weighted average cost of finance - 4.1% 4.7% Interest cover >2.0x 3.6x 2.8x Net debt/EBITDA <10x 7.3x 8.0x Fixed rate debt >50% 75% 79% GBP/EUR fixed balance sheet hedging 80%-90% 90% (1) 88% Financial results 12 (1) Pro forma as at 23 July 2015
Active protection against FX movement Euro earnings hedging ( € m) (2) Balance sheet hedging ( € m) (1) 3,500 60 3,000 55.0 90% hedged 50 2,892 72% hedged 2,500 2,603 40 39.4 2,000 30 1,500 20 1,000 10 500 0 0 EUR assets EUR liabilities EUR income EUR interest EUR has devalued over 9% vs GBP in H1 2015 (3) Impact on HMSO was £179m on EUR assets and over £2m on EUR income After hedging, net impact was only £20m on net assets and less than £1m on earnings Financial results 13 (1) “EUR assets” are euro denominated properties and working capital including premium outlet investments at 30 June 2015. “EUR l iab ilities” are bonds, debt and currency swaps shown on a pro forma basis to include currency swaps traded in July 2015 (2) “EUR income” is the Group’s euro denominated H1 profit before interest, including premium outlets. “EUR interest” is euro denominated H1 finance expense shown on a pro forma basis to include currency swaps traded in July 2015 (3) GBP/EUR FX rate as at 31 December 2014 was 1.289 and as at 30 June 2015 was 1.412
03 Portfolio update David Atkins - CEO UK shopping centres UK retail parks France Premium outlets Developments 14
Portfolio update: UK shopping centres Bullring, Birmingham 15
Increasing UK consumer confidence index (1) consumer 10 confidence 5 driving good 0 sales growth at -5 UK shopping -10 centres -15 -20 -25 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Hammerson UK shopping centres (YTD) Retail sales (2) +2.0% Footfall +1.2% Car park usage (3) +2.3% Portfolio update: UK shopping centres 16 (1) Source: GfK Consumer Confidence Barometer Index Scores (2) Hammerson UK same-centre retail sales growth (3) Car count at Hammerson shopping centres
Attracting Leasing highlights leading retailers and driving rental growth Bullring Oracle Cabot Circus Highcross WestQuay Union Square Victoria Quarter Brent Cross Hammerson UK shopping centres (YTD) Leasing vs previous passing +16.0% Leasing vs ERV +2.2% ERV growth +1.5% (3.3% annualised (1) ) Portfolio update: UK shopping centres 17 (1) 12 month rolling ERV growth
Positioning our assets to deliver future ERV growth WestQuay Bullring Oracle -1.2% 3.2% 4.4% ERV growth (1) International brands draw Successful lease renewal Destination catering offer P deals > ERV cycle completed Multiple new international Positive New retailer concepts Low vacancy brands drivers Destination catering offer Tenant mix deals Limited available units O Lease renewal cycle Current headwinds Portfolio update: UK shopping centres 18 (1)12 month rolling ERV growth
Driving footfall Silverburn extension driving incremental spend for the centre and dwell time Footfall (YTD LfL) with new +7% restaurant and Dwell time (YTD LfL) leisure space +14% Centre sales (YTD LfL) +5% Strong rental growth from catering leasing across the portfolio Space leased to catering and leisure brands (1) 14% Catering leasing vs ERV +23% 19 (1) UK shopping centres by net rental income
Interacting Understanding customers is the Digital infrastructure rolled out with customers key to success across portfolio in real-time PLUS app rolled-out to all shopping Data gathering centres and leveraging More than 6,000 Bluetooth-enabled beacons installed valuable Tailoring content and offers On track to collect over 1 million customer data shopper profiles Driving loyalty and retail spend Sharing data and insight with retailers More valuable retail space Portfolio update: UK shopping centres 20
Portfolio update: retail parks B&Q Eco learning store, Cyfarthfa retail park, Merthyr Tydfil 21
Retail parks: a major strength within our portfolio Retail parks’ position with our portfolio Total area 483,000m 2 Scale: second largest portfolio in the UK No. of parks over 20,000m 2 15 of 20 Matched to consumer convenience trends, in particular click & collect Occupancy 98.2% Leverage retailer relationships Unexpired lease term to expiry or break 8.7 years Open A1 consented space High Open A1, low food retail mix 58% Average rent Efficient to run £15/sq ft Tenant overlap with shopping centres Active asset management strategy Next•M&S•Boots River Island Profitable extensions and developments Debenhams•Costa Nando’s Portfolio update: UK retail parks 22
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