3 august 2009 · 2020-06-10 · 4 results 30 june 2009 30 june 2008 30 june 2009 31 dec 2008...
TRANSCRIPT
2009 Half-Year Results3 August 2009
2
John Nelson, Chairman
3
Agenda
Introduction – John Richards
Financial Results – Simon Melliss
France – Christophe Clamageran
UK – David Atkins
Summary and Conclusion – John Richards
4
Results30 June 2009 30 June 2008
30 June 2009 31 Dec 2008
Adjusted profit before tax £65.6m
11.0p
£3.73
Adjusted earnings per share
Adjusted NAV per share
Interim dividend per share 6.95p
81%Gearing
£60.5m
13.8p(1)
£5.16(2)
12.60p
118%
Notes:
1) Restated for rights issue.
2) Pro forma following the rights issue.
5
Half-Year Highlights
Financial position significantly strengthened
Robust income with growth potential
Overhead costs reduced
Encouraging letting progress in a tough market
Development pipeline progressing
6
Financial ResultsSimon Melliss, Finance Director
7
Net rental income 156.4 145.8
Six months to 30 June 2009 2008
Properties owned throughout 121.3 121.4
Acquisitions 0.9 0.7
Developments 12.4 0.7
Properties sold 21.8 30.8
Exchange translation and other - (7.8)
Net Rental Income
£ million
8
EPRA basis As previouslyreported
Vacancy Rates
5.3
2.6
6.2
6.9
4.6
2.2
6.4
5.3
31 December 2008
7.4
2.2
20.4
6.4
30 June 2009%
UK Offices
French Retail
Total
UK Retail
9
Adjusted profit before tax 65.6 60.5
Loss before tax (818.5) (417.1)
Adjustments:
Revaluations 766.2 462.6
Loss on disposals 103.3 2.1
Other exceptional items 14.6 12.9
Income Statement
£ million
Adjusted earnings per share 11.0p 13.8p(1)
Interim dividend per share 6.95p 12.60pNote:
Restated for rights issue.
Six months to 30 June 2009 2008
10
Shareholders’ equity 2,547 2,821
30 June 2009 31 Dec 2008
Property assets 4,717 6,457
Net debt (2,061) (3,333)
Other net liabilities (48) (195)
Sub-total 2,608 2,929
Deferred tax (61) (108)
Balance Sheet
£ million
Note:
1) Pro forma adjusted for the rights issue.
Adjusted net asset value per share £3.73 £5.16(1)
Gearing 81% 118%
11
30 June 2009 2,598 3.73
31 December 2008(2) 3,591 5.16
Revaluation (765) (1.09)
Disposals (125) (0.18)
Retained profit 61 0.09
Dividends (44) (0.06)
Exchange and other movements (120) (0.19)
NAV AnalysisShareholders’ funds(1)
(£ million)Adjusted NAV(1)
(£ per share)
Notes:
1) Excluding deferred tax and fair value of derivatives, calculated in accordance with EPRA best practice.
2) Equity shareholders’ funds and adjusted NAV per share at 31 December 2008 are the pro forma figures after taking account of the rights issue.
12
Capital Return
ContributionCapital Return
UK Offices
French Retail Parks
French Offices
UK Retail Parks
UK Shopping Centres
French Shopping Centres
-25 -20 -15 -10 -5 0
Total Group (14.1%)
%
0 5 10 15 20 25 30 35 40
%
13
Investment Portfolio Yields
7.7% +0.8%
7.5% +1.1%
5.7% +0.6%
6.0% +0.5%
France
5.8% +0.6%7.9% +0.8%
Shopping Centres 7.8% +0.8%
Retail Parks
Offices
UK
8.4% +0.9%
Total
Note:
True equivalent yields at 30 June 2009 and the change compared to 31 December 2008.
14
Financing
Net debt £2.1 billion
Gearing 81%
Cash and undrawn committed facilities of £906 million
97% of gross debt unsecured
Only £60 million borrowings mature before end 2011
Weighted average maturity of debt eight years
15
0
100
200
300
400
500
600
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2028
Bank debt drawn Euro bonds Sterling bonds
Debt Maturity Profile
£ million
£253 million repaid since 30 June 2009
16
Sound Financial Position
7.6 times
2.0 times
81%
30 June 2009
12.9 times
1.7 times
118%
31 December 2008
Gearing
Net debt/EBITDA
Interest cover
3%
97%
Secured Unsecured
69%
31%
Euro Sterling
31%
69%
Bank debt Bonds
Total gross debt £2.3 billion
17
Summary
Sound balance sheet
Virtually all borrowings unsecured
No significant refinancing requirements before 2012
Substantial unutilised committed facilities
18
FranceChristophe Clamageran, Managing Director France
19
France: Yields and Finance Costs
Source: IPD, PMA, CBRE
The shaded areas show the range of average spreads over successive five year periods between 1998 and 2008
%Spread between all-property initial yield and ten-year government debt
%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1998 2003 2008
Spread between all-property initial yield and five-year swaps
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1998 2003 2008
20
French Yield Outlook
Low level of transactions in 2009
Paris office yields increased significantly
Shopping centre yields increased, but more resilient
%
Market ForecastsActual
Source: IPD, PMA, CBRE
The shaded area shows the range of five year average yields between 1993 and 2008
Long-term equivalent yields
Range
5.0
5.5
6.0
6.5
7.0
7.5
8.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
21
-10%
-5%
-
+5%
+10%
1995 1997 1999 2001 2003 2005 2007 2009
-300
-200
-100
-
100
200
1989 1994 1999 2004 2009
French Environment
Household consumption
6%
7%
8%
9%
10%
11%
12%
1982 1987 1992 1997 2002 2007
Unemployment rate Consumer confidence index
Source : INSEESource : INSEESource : INSEE
22
French Retail Market
Concentrated ownership and high barriers to entry
Importance of strong relationship with tenants
Significant geographical concentration
Scarce investment opportunities
Third largest operator in the shopping centre market
Direct management of assets
Concentrated in Île-de-France or in town centres
Identified development opportunities in portfolio
Market Hammerson France
23
Lease structure and key money reduces vacancy risk
Large tenant base implying reduced default risk: about 800 tenants
Over 80% of national brands
Occupancy cost:sales ratio of 11%
Favourable commercial environment
Quality portfolio
Robustness of Cash Flow
80 million visitors a year
Indexation
Restrictive planning environment
24
Increased Retail Rents
97.4m
90.5m
(0.3)m4.2m
10.1m(7.1)m
80
90
100
Terminationsand expiries
New lettings and renewals
IndexationRents passing30 June 2009
Rents passing31 Dec 2007
Other
€ million
Note:
Movement in passing rents compared on a like-for-like basis
25
3.0%
4.0%
5.0%
6.0%
7.0%
2003 2005 2007 06/2009
250
270
290
310
330
350
€ /m²
Vacancy rate Average rent
Office Market Summary
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2003 2004 2005 2006 2007 2008 2009(f)
mill
ion
m²
Take up Supply
Take up and supply in Île-de-France
Prime yield Paris CBD
Rental values and vacancy rate in Île-de-France
Source : Immostat/DTZ Source : CBRESource : Immostat/DTZ/Hammerson
(LHS) (RHS)
3.0%
4.0%
5.0%
6.0%
7.0%
2003 2005 2007 06/2009
Prime Yield Paris CBD
26
Hammerson France Well Positioned
Fundamentals remain favourable
Market with high entry barriers
Hammerson France is well positioned
Very low exposure following disposals
Abrupt market correction
Retail
Offices
27
UKDavid Atkins, Managing Director UK
28
UK: Yields and Finance Costs
The shaded areas show the range of average spreads over successive ten year periods between 1993 and 2008
Source: IPD, PMA, CBRE
% %
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1993 1998 2003 2008
Spread between all-property equivalent yieldsand five-year swaps
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1993 1998 2003 2008
Spread between all-property equivalent yieldsand ten-year gilts
29
Prime UK Yields To Reduce
Improved sentiment, but transaction volumes remain low
Yields stabilising for prime assets
Rental values under pressure
Timing and extent of recovery uncertain
The shaded area shows the range of ten year average yields between 1993 and 2008
Source: IPD, PMA, CBRE
%Market ForecastsActual
Long-term equivalent yields
Range
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1993 1998 2003 2008 2013
30
UK Consumer Environment
-2
-1
0
1
2
3
4
5
2005 2007 2009
Non-food retail sales growth (12 month rollingannual average)
700
800
900
1000
1100
1200
2005 2007 2009
Claimant count unemployment
Retail Sales (%)Unemployment (thousand) Consumer Confidence
Source: Thomson DataStreamSource: Thomson DataStream Source: Thomson DataStream
-40
-30
-20
-10
0
10
2005 2007 2009
Consumer confidence
31
Trading Performance
Footfall and salesOver 160 million visitors per annum
Footfall up 2.9%
Sales down 2.2%
Trading Stronger sectors: young fashion, fashion accessories, gifts and catering
Weaker sectors:department stores, menswear, toys and games
Consolidation of spending
Non-rental incomeCar parking income £3.4 million (+10%)
Commercialisation £1.9 million (+15%)
32
Active Asset Management
Aggressive leasing programme
Targeted marketing and promotions
On-site trading initiatives
Cost and service charge management
Effective credit control
Retail management strategy
33
Modest Reduction in Income
£ million
121.1m124.0m
(1.1)m1.9m
8.6m(12.3)m
100
110
120
130
Terminationsand expiries
New lettingsand renewals
Rent reviews Rents passing30 June 2009
Rents passing31 Dec 2007
Other
Note:
Movements in passing rents compared on a like-for-like basis.
34
Developments
Highcross, Leicestero 89% let o 7% in solicitors’ handso Major new tenants signed: Bestseller, Aldo, Faith,
Boots
Union Square, Aberdeeno 67% let and under offero Major new tenants signed: M&S, Apple, Cult, Republico On programme for Autumn openingo Cost £205 milliono Value £77 million
Cabot Circus, Bristolo 92% leto 2% in solicitors’ handso Major new tenants signed: Hollister, Gant, Disney
35
0
1
2
3
4
5
6
7
2003 2004 2005 2006 2007 2008 2009
(f)
mill
ion
ft²
Take up Completions
3%
4%
5%
6%
7%
8%
2003 2005 2007 06/2009
City West End
0%
5%
10%
15%
20%
2003 2005 2007 06/2009
0
10
20
30
40
50
60
70
£ /ft²
Vacancy rate Headline rent
Office Market Summary
Take up and completionsin City of London
Prime yield City vs. West End
Rental values and vacancy rate in City of London
Source: CBRE Source: PMASource: PMA
36
London Offices
Bishops Square disposal - Joint Venture with Oman Investment Fund
60 Threadneedle Street - 23% let and 44% in solicitors’ hands
125 Old Broad Street - 75% let
St Alphage option agreement signed
37
UK Summary
Regionally dominant shopping centres
Growth from retail park extensions
Focus on income growth
Low vacancy against national averages
Rents remain under pressure
Good letting progress
Retail
Offices
38
Summary and ConclusionJohn Richards, Chief Executive
39
Portfolio Designed to Outperform
Established investment portfolio: £3.8 billion
Recent developments: £0.7 billion
Future developments: £0.2 billion
• Prime, modern portfolio• Active management to drive income• Well positioned to benefit from market recovery
• Aggressive letting programme• Strong recovery potential
• Strong relationships and reputation• Advancing planning and design• Will exploit when appropriate
Investment Comments
40
34%
15%12%
36%
1%2%
UK Shopping Centres UK Retail Parks UK OfficesFrance Retail France Offices Germany
12.9 years
94%
6.7%
£50m
UK Retail Parks
10.1 years
93%
6.2%
£108m
UK Shopping Centres
7.6 years
80%
(14.5%)
£39m
UK Offices
GroupFrench Retail
Principal sectors
2.9%7.0%Reversionary/(over-rented)
93%98%Occupancy rate
8.2 years4.5 yearsAverage unexpired lease term
£301m£97mPassing rent
High Quality Investment Portfolio
41
Contracted Growth from Developments
0
10
20
30
40
50
60
2008 2009 2010 2011 2012 2013
UK shopping centres UK retail parks France retail UK OfficesNotes: 1) Hammerson’s share of income shown for joint ventures2) The bar chart shows cash rent receivable and not income smoothing under IFRS
£ million
42
Development Pipeline
Substantial pipeline of future opportunities
Planning consent for WestQuay extension achieved
Option agreement signed with Corporation of London for St AlphageHouse redevelopment
Will exploit when appropriate
43
Conclusion
Sound financial position
Prime portfolio with robust income and growth potential
Intensive asset management in a tough market
Prime UK yields stabilising
Well positioned to benefit from anticipated market recovery
44
Questions
45
Change in Net Debt
£ million
£3,333 m(118% gearing)
£2,061 m(81% gearing)
£116 m
£572 m
£584m
0
500
1000
1500
2000
2500
3000
3500Net debt
31 Dec 2008
Disposals andassociated debt
Rights issue proceeds
Other movements
Net debt30 June 2009
46
Top Ten Properties
20.318.8 16.917.115.412.214.811.412.913.3
Passing rent(2)
£m
100%100% 41%60%33%
100%50%
100%50%50%
Ownership
392 348245230210207204198195187
Valuation 30/06/09(1)
£m
O’Parinor, Aulnay-sous-BoisItalie 2, Paris 13èmeBrent Cross, London NW4Highcross, LeicesterBullring, BirminghamEspace St. Quentin, St Quentin-en-YvelinesCabot Circus, BristolLes Trois Fontaines, Cergy PontoiseThe Oracle, ReadingWestQuay, Southampton
Property name
Notes:1) Hammerson’s share of valuation and passing rent shown in respect of joint ventures2) Passing rents are at the end of rent free periods and after deducting head and equity rents
47
Six months to 30 June 2009 2008
Adjusted earnings per share 11.0p 13.8p(1)
Interim dividend per share 6.95p 12.60p
Adjusted Earnings£ million
17.0-Asset impairment
-9.3Share of revaluation losses of property and derivatives in associate
-25.4Loss on sale of subsidiary
60.565.6Adjusted profit before tax
477.6884.1
58.963.3Adjusted earnings
(1.6)(2.3)Current tax and minority interests
(4.1)5.3Change in fair value of derivatives
462.6766.2Revaluation losses on property portfolio
2.177.9Loss on sale of investment properties
Adjustments:
(417.1)(818.5)Loss before tax
Note:1) Restated for rights issue.
48
UK: Retail Lease Expiries
25% of the UK total retail passing rent of £158.0 m expiring before end 2014
£5.8 million reversion on leases expiring before end 2014
0.0
5.0
10.0
15.0
ERV uplift 2.4 1.1 0.3 0.4 0.6 1.0
Passing Rent 7.0 4.5 5.5 5.4 8.6 9.3
2009 2010 2011 2012 2013 2014
£ million
49
France: Retail Lease Expiries
0.0
5.0
10.0
15.0
ERV uplift 1.6 1.0 0.7 0.3 0.3 0.3
Passing Rent 11.4 10.6 10.9 11.6 7.8 7.2
2009 2010 2011 2012 2013 2014
£ million
34% of total France retail passing rent of £96.7m expiring between 2009-2011
£3.3 million reversion on leases expiring before end of 2011
50
Contracted Income
£ million
Note:Figures show Hammerson’s share of the income for joint ventures.
2.92.82.82.62.0-Retail parks - France
9.49.49.18.17.53.9Shopping centres - France
49.248.6
3.9
27.4
5.7
2012
42.247.5
3.8
24.3
3.4
2010
27.739.0
1.1
14.9
2.2
2009
5.911.4
-
1.5
0.5
2008 20132011Rents passing
27.427.1Shopping centres - UK
3.93.9Retail parks - UK
51.348.7
47.848.3
Total – cash flow- accounting basis
7.74.9Offices - UK
51
Disclaimer
This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materially from those expressed in or implied by these statements.
Many of these risks and uncertainties relate to factors that are beyond Hammerson's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Hammerson does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials. Information contained in this presentation relating to the Company or its share price, or the yield on its shares, should not be relied upon as a guide to future performance.