REG - Shaftesbury Capital - Half-year Report
03/08/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230803:nRSC1325Ia&default-theme=true
RNS Number : 1325I Shaftesbury Capital PLC 03 August 2023
Press Release
SHAFTESBURY CAPITAL PLC ("THE COMPANY")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023
3 August 2023
Excellent momentum post-merger
Ian Hawksworth, Chief Executive, commented:
"We have had an excellent start as a newly merged company, creating the
leading central London mixed-use REIT. The team has come together to deliver
strong performance with growth in annualised rent and ERV with a strong
pipeline of demand for the second half. Despite the challenging macroeconomic
backdrop, valuations are unchanged reflecting the resilience of our
exceptional portfolio.
Trading conditions across our West End locations are positive, with high
footfall and customer sales now tracking 15 per cent ahead of 2019 levels. 220
leasing transactions completed in the first half of the year, at rents on
average 5 per cent ahead of December 2022 ERV providing confidence in the
prospect of continued rental growth from our unique portfolio. We are already
seeing the benefits of the combined platform and with our strong balance
sheet, we look forward with confidence on delivering further growth and
returns in the years ahead."
Overview
· Excellent operational momentum with high footfall, positive trading
activity, strong demand for all uses, excellent leasing activity and low
vacancy
· ERV growth over six months resulting in 3.3 per cent (like-for-like)
increase to £235 million and annualised gross income increased 5.6 per cent
to £188 million (pro forma: £178 million). Equivalent yield moved out 10
basis points to 4.2 per cent (pro forma Dec 2022: 4.1 per cent)
· Valuation of wholly owned portfolio unchanged at £4.9 billion in
line with pro forma Dec 2022 £4.9 billion
· Excellent progress on integration with cost savings ahead of schedule
and overall savings now anticipated to be £13.5 million
· Strong balance sheet with access to £457 million of cash and undrawn
facilities
· 5 per cent of the portfolio value anticipated to be recycled
· Despite macroeconomic uncertainty, the heart of the West End remains
attractive with competition for space in our areas anticipated to remain
healthy, underpinning rental growth prospects
Key financials
· EPRA NTA of 194 pence per share (Dec 2022 reported pre-merger and pro
forma Dec 2022: 182 pence per share and 193 pence per share respectively)
· Total equity of £3.6 billion (Dec 2022 reported pre-merger: £1.6
billion)
· Net debt of £1.6 billion (pro forma Dec 2022: £1.5 billion) and
EPRA loan-to-value ratio of 31 per cent
· Underlying earnings of £27.5 million, equivalent to 1.9 pence per
share
· Interim dividend of 1.5 pence per share
Strong operational momentum
· Positive trading activity for our customers, with reported sales in
aggregate 15 per cent above 2019
· High footfall across the West End buoyed by increasing international
visitor numbers
· 220 leasing transactions with a rental value of £15.1 million
concluded, comprising:
- 89 commercial lettings and renewals: £10.5 million, 6 per cent
ahead of 31 Dec 2022 ERV; and
- 131 residential lettings and renewals: £4.6 million, 13 per cent
above previous passing rents
· In addition, 41 commercial rent reviews were concluded, with a rental
value of £7.7 million, 7 per cent ahead of previous passing rents
· Low vacancy: 2.5 per cent of ERV available to let
· 27 new retail and hospitality brands and concepts introduced across
the portfolio
· Annualised gross income up 5.6 per cent to £188 million, now ahead
of pre-pandemic levels (pro forma 2019: £187 million)
· Portfolio reversionary potential of £46.4 million, with current ERV
25 per cent ahead of annualised gross income
· Contracted income of £20.5 million which will be realised on expiry
of rent-free periods, and contractual rent increases
· Schemes with an ERV of £6.9 million completed of which £5.5 million
is let or under offer. ERV of space under refurbishment at 30 June 2023 is
£15.7 million (6.7 per cent of portfolio ERV)
Robust balance sheet with a focus on resilience, flexibility and efficiency
· Liquidity of £457 million (cash of £157 million and £300 million
undrawn facilities)
· Modest capital commitments of £23 million
· Net debt of £1.6 billion (pro forma Dec 2022: £1.5 billion) and
EPRA loan-to-value ratio of 31 per cent
· The weighted average cost of drawn debt is 4.3 per cent (reported Dec
2022 pre merger: 2.7 per cent). The effective running cash cost of drawn debt
is 3.4 per cent taking account of interest on cash deposits and the benefit of
interest rate hedging
· Weighted average maturity of debt of 4 years
Commitment to environment, sustainability and supporting our local communities
· Combined 2023 Net Zero Carbon Pathway will be published later this
year based on our "retrofit first" approach to the management of our heritage
buildings
· Sustainable refurbishment activity continues across the portfolio
enhancing the energy performance credentials of our heritage properties; 68
per cent EPC rating of A-C, up five percentage points during the period
· Continued support of community-led initiatives and charities which
work with organisations active in the West End
Outlook
· Strong performance demonstrates the exceptional qualities of the
portfolio delivering growth in both annualised rent and ERV
· Despite economic uncertainties, strong leasing pipeline and positive
trading conditions across our West End locations, provide us with confidence
in the growth prospects for our unique portfolio
Joint ventures
· Longmartin property value* of £159 million, a decrease of 1.1 per
cent since Dec 2022. Lillie Square property value* of £72 million, a decrease
of 3.1 per cent (like-for-like) since Dec 2022
* Our 50% share
Refer to Glossary of terms on pages 47 to 52.
KEY FINANCIALS
As at As at
30 June 31 December 2022
2023
Total equity(1) £3,553.7m £1,561.6m
Total equity per share(1) 194.5p 183.2p
Total return 7.4% (13.6)%
EPRA net tangible assets(1) £3,541.3m £1,552.2m
EPRA net tangible assets per share(1) 193.8p 182.1p
Total property return 1.4% 2.8%
Property market value(2) £4,898.5m £1,743.7m
Restated(5)
Six months Six months
ended ended
30 June 30 June
2023 2022
Gross profit £58.3m £26.9m
Profit/(loss) for the period(3) £799.1m £(11.4)m
Basic earnings/(loss) per share(1) 54.2p (1.3)p
Headline earnings/(loss) per share(1) 0.8p (10.9)p
EPRA earnings per share(1) 0.7p 1.4p
Underlying earnings per share(1) 1.9p 0.4p
Interim dividend per share(4) 1.5p 0.8p
1. Refer to note 2 'Performance Measures' on page 32.
2. Refer to note 10 'Investment Properties' on page 38.
3. Refer to the 'Statement of Comprehensive Income' on page 23.
4. Refer to note 8 'Dividends' on page 36.
5. Prior period comparatives have been restated to reflect a change in
accounting policy following clarification by the IFRS Interpretations
Committee ("IFRIC") during 2022 of how a lessor should account for the
forgiveness of lease payments and for the representation of expected credit
losses, which are now included within Costs. Details of the restatements and
impact on prior period comparatives are set out in note 1 'Changes in
accounting policies'.
Presentation of information
The all-share merger of Capital & Counties Properties PLC ("Capco") and
Shaftesbury PLC to create Shaftesbury Capital PLC ("Shaftesbury Capital")
completed on 6 March 2023. The financial information included within the
interim results presents the results of Shaftesbury Capital with the
consolidated statement of comprehensive income reflecting the standalone
performance of Capco for the period 1 January to 6 March and the performance
of the merged business, Shaftesbury Capital, between that date and 30 June
2023. The 30 June 2023 balance sheet reflects the position of the combined
Group as at 30 June 2023. The 2022 comparative information relates to Capco
only.
Pro forma information has been included for the balance sheet to provide
relevant comparative information. More information on pro forma data, and
reconciliation to reported numbers, is included on page 48. Where pro forma
information has been included within the results this is noted as pro forma.
Enquiries:
Shaftesbury Capital PLC +44 (0)20 3214 9150
Ian Hawksworth Chief Executive
Situl Jobanputra Chief Financial Officer
Sarah Corbett Director of Commercial Finance and Investor Relations
Media enquiries:
UK: Hudson Sandler Michael Sandler +44 (0)20 7796 4133
UK: RMS Partners Simon Courtenay +44 (0)20 3735 6551
SA: Instinctif Frederic Cornet +27 (0)11 447 3030
A presentation to analysts and investors will take place today at 9:00am (UK
time) at the offices of UBS, 5 Broadgate, London, EC2M 2QS. The presentation
will also be available to analysts and investors through a live audio call and
webcast and after the event on the Group's website at
www.shaftesburycapital.com (http://www.shaftesburycapital.com)
A copy of this announcement is available for download from our website at
www.shaftesburycapital.com (http://www.shaftesburycapital.com) and hard copies
can be requested via the website or by contacting the Company
(feedback@shaftesburycapital.com or telephone +44 (0)20 3214 9170).
About Shaftesbury Capital
Shaftesbury Capital PLC ("Shaftesbury Capital") is the leading central London
mixed-use REIT and is a constituent of the FTSE-250 Index. Our property
portfolio, valued at £4.9 billion at June 2023, extends to 2.9 million square
feet of lettable space across the most vibrant areas of London's West End.
With a diverse mix of restaurants, cafés, bars, shops, residential and
offices, our destinations include the high footfall, thriving neighbourhoods
of Covent Garden, Carnaby, Soho and Chinatown, together with holdings in
Fitzrovia. Our properties are close to the main West End Underground stations
and transport hubs for the Elizabeth Line. Shaftesbury Capital shares are
listed on the London Stock Exchange (primary) and the Johannesburg Stock
Exchange (secondary).
Our purpose
Our purpose is to invest in and curate vibrant and thriving destinations in
London's West End where people work, live and visit, delivering long-term
social and economic value.
OPERATING AND PORTFOLIO REVIEW
Overview
The merger of Capital & Counties Properties PLC ("Capco") and Shaftesbury
PLC completed on 6 March 2023 to create the leading central London mixed-use
REIT, Shaftesbury Capital PLC ("Shaftesbury Capital"). This announcement sets
out financial and operating information in relation to the six months ended 30
June 2023, the first set of results for Shaftesbury Capital.
Shaftesbury Capital owns an impossible to replicate portfolio in some of the
most iconic destinations in the heart of London's vibrant West End. Trading
activity is strong across the portfolio, with customers reporting sales in
aggregate 15 per cent above 2019 levels on a like-for-like basis. Footfall
across the West End is high, buoyed by increasing international visitor
numbers. With strong demand across all uses, leasing performance has been
excellent and available space remains low. Against a backdrop of economic
uncertainty, the resilient performance over the period demonstrates the
exceptional qualities of the portfolio delivering growth in rents and ERV, and
stability of the portfolio valuation in a market where yields have widened.
There has been excellent progress on integration of the business. We expect to
locate in a single office in Covent Garden over the autumn, with integration
of systems and processes to continue in H2 2023. As referred to in the trading
update on 14 June 2023, there have already been significant cost savings
across the business as we progress towards an effective and efficient
organisational structure and cost base. Actions taken to date are expected to
result in annualised cost savings of circa £9 million. Our current
expectation is that total cost savings will be £13.5 million. In addition to
cost savings, we are beginning to see the delivery of broader benefits from
the merger, including cross-location marketing, use of data insights,
providing space for customers across different parts of the portfolio and
other incremental revenue opportunities.
Key areas of focus include delivering continued growth in cash rents,
developing and pursuing asset management and street level initiatives.
Additionally, having carried out an investment review, currently we anticipate
capital recycling of approximately 5 per cent of the portfolio. Selected
assets are expected to be brought to market over the coming months.
We continue to take a responsible and forward-looking approach, operating in
an environmentally sustainable manner and contributing positively to the
communities in which we operate. There was broad alignment in both the legacy
companies' sustainability approaches. We will continue with the "retrofit
first" approach to our heritage buildings, recognising they are substantial
long-term stores of carbon, which will be reflected in a combined Net Zero
Carbon Pathway, to be published later this year. We continue to support
charities which address the needs in our local communities and work with our
local authorities and residents on opportunities to improve the public realm.
NTA as at 30 June 2023 was 194 pence per share (pro forma Dec 2022: 193 pence
per share). Annualised gross income increased by 6 per cent to £188 million
and is now ahead of pre-pandemic levels (2019: £187 million). ERV increased
by 3.3 per cent (like-for-like) to £235 million, 25 per cent above annualised
gross income, but £23 million below pre-pandemic levels. Underlying
administration costs were £17.9 million for the period. Underlying earnings
for the six-month period to 30 June 2023 are £27.5 million, equivalent to 1.9
pence per share (based on the weighted average number of shares during the
period of 1.47 billion), and the Board has declared an interim dividend of 1.5
pence per share (based on 1.82 billion shares, excluding shares held by Group
entities).
Higher interest rates and inflation are impacting the broader investment
market. However, investment yields in the West End, which primarily comprises
freehold properties and often smaller lot-sizes, have been traditionally less
volatile during periods of economic uncertainty than the wider UK property
market with a broad pool of domestic and international investors attracted by
the prospects of security, together with long-term income and capital growth.
Outlook
We have had an excellent start as a newly merged company. We are pleased with
how the team has come together delivering strong performance with many
operating metrics now trending above pre-pandemic levels. The performance over
the period demonstrates the exceptional qualities of our portfolio delivering
growth in rent and ERV. We have a strong pipeline of leasing demand and
trading conditions across our West End portfolio are positive, which provides
confidence in its growth prospects.
There is significant revenue growth potential to be captured, not only through
the £46 million gap between annualised gross income and ERV (which is still
£23 million below pre-pandemic levels of £258 million), but also through the
generation of further rental growth. Together with cost savings, this bodes
well for future earnings growth, despite the increase in financing costs.
Shaftesbury Capital is financially strong with a resilient and flexible
capital structure and access to significant liquidity.
As long-term responsible owners, we are committed to implementing our ESC
strategy, particularly achieving Net Zero Carbon by 2030 with a combined
pathway to be published later this year.
The Group's attractive and adaptable mixed-use portfolio has a diversified
income stream, low capex requirements and a long history of sustained demand
exceeding availability of space, resulting in resilience and high occupancy
levels, underpinning long-term prospects for income and rental growth.
London and, in particular, the West End are attractive on a global basis. With
healthy consumer demand, customer sales and long-term resilience, competition
for space in our areas is anticipated to remain strong. With our active
management strategy, implemented by our experienced and entrepreneurial team,
we look ahead with confidence as the leading central London mixed-use REIT and
aim to continue delivering long-term economic and social value for our
stakeholders.
Portfolio valuation
The valuation of the wholly owned property portfolio increased by 0.1 per cent
(like-for-like) in the period to £4.9 billion, equivalent to approximately
£1,670 per square foot on average. ERV increased across all uses, 3.3 per
cent blended (like-for-like) and the equivalent yield was 4.2 per cent,
reflecting 10 basis points of outward movement.
Whilst continuing economic uncertainties have led to greater caution among
investors and lower transaction volumes, London remains attractive to
international and domestic investors. This is particularly so in the West End,
where investment provides the prospect of security, high occupancy, low capex
and reliable growing long-term cash flows.
Independent valuations of the wholly owned portfolio undertaken by CBRE and
Cushman & Wakefield represent the aggregated value of predominantly
freehold properties. There is no reflection of any premium which potential
investors may ascribe to the comprehensive ownership of retail, hospitality
and leisure properties in adjacent, or adjoining, locations in London's West
End where there is a long record of demand exceeding availability of space.
This may lead prospective purchasers to regard certain parts of the portfolio,
for example by street, to have a greater value than the aggregate of the
individual property values. Such parties may consider a combination of some,
or all, parts of the portfolio to have a greater value than currently
reflected in the valuation, which has been prepared in accordance with Royal
Institution of Chartered Surveyors guidelines.
Portfolio by use as at 30 June 2023 Retail Hospitality and leisure Offices Residential Wholly owned portfolio
Valuation (£m)(1) 1,651.1 1,650.8 897.7 696.9 4,896.5
Annualised gross income (£m) 64.3 71.4 30.1 22.5 188.3
ERV (£m) 78.2 79.3 51.3 25.9 234.7
Net initial yield 3.4% 4.0% 2.8% 2.3% 3.3%
Topped up net initial yield 3.9% 4.2% 3.5% n/a 3.7%
Equivalent yield 4.2% 4.4% 4.7% 2.7% 4.2%
L-f-L valuation movement +0.2% +0.2% +0.2% -0.2% +0.1%
L-f-L ERV movement +2.8% +3.9% +2.7% +4.3% +3.3%
WAULT (years) 4 9 4 1 5
Area (sq. ft. m) 0.8 1.0 0.7 0.4(2) 2.9
1. Excludes £2 million of Group properties in Lillie Square Holdings.
2. Excluding long-leasehold residential interests.
Portfolio by location as at 30 June 2023 Covent Garden Carnaby | Soho Chinatown Fitzrovia Wholly owned portfolio
Valuation (£m)(1) 2,572.4 1,514.4 691.6 118.1 4,896.5
Annualised gross income (£m) 96.8 56.4 30.1 5.0 188.3
ERV (£m) 122.3 75.1 31.5 5.8 234.7
Net initial yield 3.3% 3.2% 3.8% 3.5% 3.3%
Topped up net initial yield 3.7% 3.6% 3.9% 3.8% 3.7%
Equivalent yield 4.1% 4.3% 4.1% 4.2% 4.2%
L-f-L valuation movement +0.2% +0.4% +0.5% -6.8% +0.1%
L-f-L ERV movement +4.3% +2.3% +2.4% +0.7% +3.3%
WAULT (years) 5 4 6 5 5
Area (sq. ft. m) (2) 1.5 0.9 0.4 0.1 2.9
1. Excludes £2 million of Group properties in Lillie Square Holdings.
2. Excluding long- leasehold residential interests.
The portfolio valuation has been broadly unchanged overall with ERV growth
across all uses and locations offset by an outward yield movement. Covent
Garden generated ERV growth of 4.3 per cent primarily driven by leasing and
asset management activity across retail and hospitality space. 40 new
commercial leases and renewals were agreed 3.8 per cent ahead of ERV.
Across Carnaby | Soho, ERV growth was 2.3 per cent during the period, as a
result of 37 new commercial leases and renewals agreed 7.5 per cent ahead of
ERV, primarily driven by office letting and asset management activity.
During the period, 7 new commercial leases and renewals were agreed in
Chinatown, 6.6 per cent ahead of ERV. ERV growth was 2.4 per cent over six
months.
In Fitzrovia, 5 new commercial leases were agreed 10 per cent ahead of ERV.
The ERV growth was 0.7 per cent during the period which reflected the small
volume of transactions together with the less consolidated nature of our
holdings, compared with our other locations.
The equivalent yield for the combined portfolio is 4.2 per cent (pro forma Dec
2022: 4.1 per cent). The methodology for the combined portfolio has been
aligned and is based on the effective annual yield to a purchaser on the gross
market value, assuming rent is receivable annually in arrears, and that the
property becomes fully occupied and that all rents revert to the current
market level (ERV as at 30 June 2023) at the next review date or lease expiry.
Shaftesbury PLC previously reported the equivalent yield based on quarterly
rents in advance, reflecting reversions to current market rent. On that basis,
the equivalent yield for the combined portfolio would have been 4.3 per cent
(pro forma Dec 2022: 4.2 per cent).
Our property interests comprise a combination of properties which are wholly
owned and a 50 per cent share of property held in the Longmartin and Lillie
Square joint ventures. The condensed consolidated interim financial
statements, prepared under IFRS, include the Group's interest in the joint
ventures as one-line items in the Statement of Comprehensive Income and
Balance Sheet. Joint ventures account for an additional £231 million of
property interests (50 per cent).
Strong occupational markets
The Group's portfolio of adaptable mixed-use buildings provides diversified
income streams. There is 2.9 million square feet of area overall, comprising
1.8 million square feet of retail, hospitality and leisure space together with
0.7 million square feet of offices and over 700 residential apartments.
Operational performance across the portfolio has been strong with rental and
income growth, and low vacancy, buoyed by sustained healthy demand. As the
market continues to gravitate towards the best locations, the West End has
attracted target brands and concepts. 27 new brands and concepts were
introduced in the first half of the year.
Rental values continue to recover although retail and hospitality and leisure
ERVs are currently 20 per cent and 7 per cent, respectively, below
pre-pandemic levels. Office and residential market rents are now 5 per cent
and 15 per cent ahead of pre-pandemic levels.
Over the six months to 30 June 2023, 220 leasing transactions with a combined
rental value of £15.1 million concluded, comprising:
· 89 commercial lettings and renewals: £10.5 million, 6 per cent ahead
of 31 Dec 2022 ERV; and
· 131 residential lettings: £4.6 million, 13 per cent above previous
passing rents.
Leasing transactions concluded during the period
Use Transactions New contracted rent (£m) % above Dec-22 ERV
Retail 37 5.1 6
Hospitality & leisure 18 1.7 4
Offices 34 3.7 7
Residential 131 4.6 5
Total 220 15.1 5
In addition, 41 commercial rent reviews with a rental value of £7.7 million
were concluded on average 7 per cent ahead of previous passing rents.
Retail (33 per cent of the portfolio by ERV)
There has been continued improvement in trading over the period, with certain
categories such as performance wear, premium and luxury outperforming
significantly. We closely monitor trends in consumer demand to target brands
and concepts relevant to our consumers with a strong omni channel presence,
across a broad mix of categories.
The portfolio includes 410 shops, located primarily in Covent Garden, Carnaby
and Soho. There is strong demand from British, independent and global brands
ranging from start-ups to established retailers seeking global flagships,
which are attracted by the seven-days-a-week footfall and trading environment.
With a broad range of unit sizes and rental tones on offer from £175 per
square foot Zone A to over £1,000 per square foot Zone A rent, we can cater
for a variety of retailers and provide flexibility for expansion within our
portfolio.
Retailers are increasingly focusing on fewer stores, placing greater emphasis
on global location, consumer experience, service and flagship retailing with
better digital engagement. The West End, and particularly our portfolio,
continues to be a destination of choice for both market entry and retail
expansion.
Currently, the retail leasing market is strong, with various units attracting
interest from multiple occupiers. Recent signings across the retail portfolio
include luxury watch brand Tissot on James Street and the re-location and
upsizing of the Arc'teryx store from Long Acre to King Street creating a new
London flagship in Covent Garden, whilst in Carnaby, Hollister and OG Kicks
have opened on Foubert's Place. There has been a number of openings including
the new flagship Uniqlo store, Sessun, Mejuri and Gramicci in Covent Garden
and Farah in Soho.
During the period, 37 retail leasing transactions completed with a rental
value of £5.1 million.
Hospitality and leisure (34 per cent of the portfolio by ERV)
The portfolio offers a diverse range of food concepts, from accessible casual
to premium dining. In our experience, an innovative hospitality and leisure
offering provides a halo effect on footfall, increasing dwell time, and drives
improved trading in our areas. Competition for available hospitality
accommodation has been strong throughout the period. With availability of
restaurant and leisure space being constrained by strong trading prospects
together with local planning and licensing policies, and we are seeing a high
rate of renewals from existing customers.
The restaurant offering continues to evolve, with Story Cellar, the second
restaurant venture from two Michelin Star chef, Tom Sellers, opening in Seven
Dials and Argentinian restaurant Gaucho opening on James Street, Covent
Garden. Crudo Cevicheria, London's first build-your-own cevicheria, opened its
latest site in Seven Dials.
Following the success of its 2021 opening, Imad's Syrian Kitchen has upsized
into larger space on the upper floor of Kingly Court in Carnaby, alongside the
newly opened Darjeeling Express. Kaleido and El Pollote have recently joined
the stable of interesting dining concepts in Carnaby.
Chinatown is a sought-after location in the heart of the West End's
entertainment district. During the period, pan Asian restaurant concept, YiQ
signed its debut restaurant in Chinatown while Japanese restaurant High Yaki
launched its unique take on Japanese barbecue in Newport Place, joining an
unmatched collection of authentic regional Chinese and pan-Asian restaurants.
During the period, 18 hospitality and leisure leasing transactions completed
with a rental value of £1.7 million.
Office (22 per cent of the portfolio by ERV)
The portfolio offers 0.7 million square feet of office space. Typically,
office accommodation is occupied by media, creative, tech and professional
services businesses, however, there is a growing number of customers
relocating from other central London locations as employers continue to
recognise the importance of a vibrant atmosphere in attracting and retaining
staff.
Despite the economic backdrop, office ERV increased 2.7 per cent in the
period, reflecting the continued shortage of high- quality office space across
the West End. There is a flight to quality with a preference for fully fitted
space and low-density use, provided on flexible lease terms. Our office
product continues to be well received, achieving growing levels of pricing
with more recent transactions setting a new rental tone of over £100 per
square foot. The Carnaby and Covent Garden development pipeline is
well-positioned to capture this demand, with their high amenity value and
excellent environmental credentials.
During the period, 34 office leasing transactions with a rental value of £3.7
million were concluded.
Residential (11 per cent of the portfolio by ERV)
The central London residential letting market continues to be particularly
healthy, with interest from a broad range of customers. With sustained demand,
any space which becomes available typically goes under offer within a matter
of days, with improving rental levels, now 15 per cent above 2019 levels.
During the first half, 131 residential lettings and renewals with a rental
value of £4.6 million completed and, at 30 June 2023 only 4 units were
available to let.
Annualised gross income and ERV
At 30 June 2023, gross annualised income had increased by 5.6 per cent to
£188 million and is now above pre-pandemic levels (2019: £187 million). ERV
was £235 million, up 3.3 per cent over the period (like-for-like), £23
million below its pre-pandemic level (2019: £258 million).
A key priority is to deliver growth in cash rents, capturing the reversion
between annualised gross income and the valuers' ERV as well as generating
sustained ERV growth, initially back to its pre-pandemic level. Our active
approach, informed by a broad base of experience and deep knowledge of the
West End across a larger platform, positions the business to deliver rental
growth through converting the portfolio's reversionary potential into
contracted income and cash flow, whilst establishing new rental tones, the
benefit of which is often compounded across nearby buildings.
As at 30 June 2023, the portfolio's reversion was £46.4 million, with the
opportunity to grow annualised gross income by 25 per cent to match current
ERV. The components of this reversion are set out below.
Components of the reversion
30 June 2023
£m
Annualised gross income 188.3
Contracted 20.5
Under offer 7.6
Available to let 5.3
Under refurbishment 15.7
Net under/(over)-rented (2.7)
ERV 234.7
High occupancy
At 30 June 2023, EPRA vacancy (including units under offer) was 5.9 per cent
of portfolio ERV; 3.4 per cent was under offer and 2.5 per cent was available
to let.
Under offer
Use % of portfolio ERV ERV (£m) Area
('000 sq. ft.)
Retail 0.8 1.7 19
Hospitality & leisure 0.4 0.9 9
Offices 2.1 4.6 51
Residential 0.1 0.4 6
Total 3.4 7.6 85
Available-to-let space
Use % of portfolio ERV ERV (£m) Area
('000 sq. ft.)
Retail 1.1 2.4 26
Hospitality & leisure 0.3 0.6 9
Offices 1.0 2.2 29
Residential 0.1 0.1 2
Total 2.5 5.3(1) 66
1. Includes 11 units let on a temporary basis (ERV: £1.3 million).
Refurbishment activity
Active asset management and refurbishment initiatives continue to unlock
income and value as well as enhance environmental performance across the
portfolio. During the period, refurbishments with an ERV of £6.9 million
completed, of which £5.5 million is contracted or under offer. Following
completion of its refurbishment, 72 Broadwick Street has been recognised at
the Building London Planning Awards for the Best Mixed-Use Scheme.
At 30 June 2023, the ERV of space held for or under refurbishment amounted
to £15.7 million across 0.2 million square feet, representing 6.7 per cent
of portfolio ERV.
Capital commitments as at 30 June 2023 were £22.8 million. On average,
approximately 1 per cent of portfolio value is expected to be invested per
annum.
Held for or under refurbishment
Use % of portfolio ERV ERV (£m) Area
('000 sq. ft.)
Retail 1.3 2.9 27
Hospitality & leisure 2.2 5.2 90
Offices 2.7 6.4 87
Residential 0.5 1.2 25
Total 6.7 15.7 229
Acquisitions and disposals
With a £4.9 billion portfolio, across approximately 670 individual buildings,
there is potential to recycle capital from certain investments towards
opportunities with sustainable long-term rental growth and attractive
risk-adjusted returns. A review has been undertaken to identify assets which
offer greater potential to add value and generate higher income and total
returns, and preparations are underway to dispose of assets which do not meet
these criteria. Currently, we anticipate capital recycling of approximately 5
per cent of the wholly owned portfolio value.
Presently, our priority is to maximise the potential from investment
opportunities in the existing portfolio. Acquisition opportunities which meet
our strict criteria to deliver attractive long-term rental growth and total
returns have remained limited, with assets in the area tightly held. In
February 2023, we completed the lease regear of the Royal Opera House Arcade
in Covent Garden for £12.9 million. We are well-positioned with access to
significant liquidity to act on appropriate market opportunities.
Consumer engagement through activations, events and extensive cultural
programme
We offer unique customer experiences across our vibrant, thriving destinations
with an active programme of campaigns and activations driving footfall and
longer-term consumer engagement. We engage directly with consumers across our
social media channels through a comprehensive campaign calendar with brand
partnerships. Large parts of the portfolio are predominantly pedestrianised
offering al fresco dining.
At Covent Garden the historic Piazza is animated through events and cultural
installations with an extensive programme of activities including the Peter
Rabbit Easter adventure, a partnership with NYX Professional Makeup and Warner
Brothers to launch the limited-edition Barbie the Movie Collection and the
summer sculpture trail in partnership with conservation charity Tusk across
the enlarged Covent Garden portfolio. For Earth Day Covent Garden partnered
with recycling initiative 'Every Can Counts' to create a sustainable
installation on the Piazza.
Following the success of previous spend incentive campaigns, American Express
has returned this year, with a number of brands participating across the
enlarged Covent Garden portfolio. For Pride, over 2,000 unique Pride flags
adorned the Market Building spreading messages in support of the LGBTQ+
community, with donations being made to Pride in London.
During the period, Carnaby offered a number of foodie experiences as part of
its Street Eat campaign including seasonal menus and a restaurant hopping
tour. Carnaby's vibrant summer installation made from recycled plastic from
local shops and restaurants launched along with the wider summer campaign
"Carnaby in Colour" while in Soho, Beats and Eats celebrated Soho's unique
dining scene, spanning across more than 20 different cuisines offering a
selection of special menus, activations and promotions.
Chinatown continues to see good engagement across both its Chinese and Western
social media channels, with a creative programme of campaigns designed to
engage audiences and drive footfall. A new summer installation of hand-crafted
parasols has launched as part of a wider 'Art of Chinatown' campaign,
celebrating the unique creativity of the district.
In celebration of the Coronation of King Charles III, a variety of activities
took place across the portfolio, including welcoming Their Majesties King
Charles III and Queen Camilla to the Covent Garden estate on 17 May 2023.
People
Our employees have a shared passion for the West End. The long-term success of
our business relies on the knowledge, experience and commitment of our
innovative and enthusiastic team. There are a number of initiatives to support
our employees including regular Company-wide meetings and forums as we adapt
our structures and ways of working to ensure we continue to be a
forward-looking cohesive and effective team. The views and opinions of our
colleagues are sought and make an important contribution to decisions across
the business. Greater scale and breadth provide enhanced development
opportunities for individuals.
Sustainability and environmental stewardship
We are committed to minimising the impact of our operations on the environment
and recognise the opportunity and obligation to make a positive difference. It
is our objective to become a UK leader in sustainability for heritage
properties, and we will continue to re-use, re-purpose and improve our
buildings to enhance energy performance credentials.
Prior to the merger Capco and Shaftesbury independently set science-based
targets to achieve Net Zero Carbon by 2030. A combined Net Zero Carbon Pathway
will be published later this year based on a "retrofit first" approach which
recognises that our heritage buildings represent substantial long-term carbon
stores. We are committed to transparent reporting through recognised indices.
Despite the merger and the subsequent name change from Capco to Shaftesbury
Capital, both Capco and Shaftesbury's recent submissions to relevant indices
relate only to their individual activities and approach for the most recent
financial year. The results, in particular for GRESB and CDP will reflect the
pre-merger entities. The 2023 submissions, to be made during 2024, will be
based on the Company's combined activities and approach.
We continue to enhance the environmental performance of our portfolio whenever
refurbishment works are undertaken, targeting a minimum EPC rating of B on all
refurbishment projects. Across the estate, approximately 68 per cent now have
an EPC rating of C or above, the minimum level required by April 2027. This
represents approximately 5 percentage points uplift across the portfolio.
Green leases, which encourage greater collaboration on data to enhance energy
performance are standard for new customers across the portfolio. Following the
successful pilot of Carbon Risk Real Estate Monitor ("CRREM") analysis on a
number of properties in the Covent Garden portfolio, we are planning to roll
this out across the wider portfolio to support the development of
science-based carbon reduction pathways at an individual building level.
Stakeholder and community engagement
As a responsible, long-term investor, community engagement and collaboration
are integral to our strategy and activities. We value the communities that
make our places thrive.
With our experience and knowledge of the West End, we make an important
contribution to safeguarding its long-term appeal and prospects. Our
stakeholders include local authorities, neighbouring owners and business
improvement districts, industry groups, residents, and charitable
organisations.
We continue to work with our local authorities and residents to make public
realm enhancements to improve both air quality and the experience and appeal
of our vibrant and thriving places for visitors, workers, residents,
businesses and communities. These include pedestrianisation, streetscape
improvements, providing outdoor seating and schemes to reduce traffic
congestion and pollution.
Our community programme prioritises initiatives and charity partners in the
West End. We continue our support for, and engagement with local charities, to
address needs in our local communities, providing funding, advice and staff
volunteering. Activities over the period include sponsorship of the
Westminster Scholar programme, Young Westminster Youth Project, Young Camden
Foundation Youth Project and West End Community Trust.
Our portfolio is located close to major cultural attractions. We continue our
support of culture and the arts, including the patronage of the Donmar Theatre
in Seven Dials, as well as partnerships with the Society of London Theatres,
British Fashion Council, British Beauty Council and London & Partners.
Joint ventures
We own 50 per cent of the Longmartin and Lillie Square joint ventures and in
the summaries below, all figures represent our 50 per cent share.
Longmartin
At 30 June 2023, Longmartin's long leasehold property was valued at £159
million (Dec 2022: £160 million). After allowing for capital expenditure, the
valuation decrease was 1.1 per cent. ERVs increased by 3.4 per cent. The
equivalent yield was 4.6 per cent, an increase of 34 basis points over the
period (Dec 2022: 4.3 per cent). The joint venture has a £60 million
fixed-rate term loan maturing in 2026. As at 30 June 2023, net debt was £57.5
million, resulting in LTV of 36 per cent.
Lillie Square
The property valuation at 30 June 2023 was £72 million, a 3 per cent decline
(like-for-like) (Dec 2022: £77 million). In addition, Shaftesbury Capital
owns £2 million of other related assets adjacent to the Lillie Square estate.
The sale of three units completed during the period representing gross
proceeds of £2.7 million. At 30 June 2023, our share of cash was £7.5
million.
FINANCIAL REVIEW
Presentation of information
The all-share merger of Capital & Counties Properties PLC ("Capco") and
Shaftesbury PLC to create Shaftesbury Capital PLC ("Shaftesbury Capital")
completed on 6 March 2023. The financial review presents the results of
Shaftesbury Capital with the consolidated statement of comprehensive income
reflecting the standalone performance of Capco for the period 1 January to 6
March and the performance of the merged business, Shaftesbury Capital, between
the completion date of 6 March and 30 June 2023. The 30 June 2023 balance
sheet reflects the position of the combined Group. The 2022 comparative
information relates to Capco pre-merger.
Reflecting the Company's focus primarily on the wholly owned portfolio, all
information is presented on an IFRS basis, with Group share (which included
the share of joint ventures on a proportionally consolidated basis) no longer
being presented. Key performance metrics have been restated to reflect this
change. Pro forma information has been included for the balance sheet to
provide relevant comparative information. Further details on pro forma
information, and reconciliation to reported numbers, is included on page 48.
Financial highlights
The first half of 2023 has been characterised by strong operational momentum
across our portfolio, with strong leasing demand across all uses resulting in
high occupancy and rental growth. Footfall trends across the West End are
positive, buoyed by increasing international visitor numbers, contributing to
growth in sales for our retail and hospitality customers. Against a backdrop
of economic uncertainty, the resilient performance over the period
demonstrates the exceptional qualities of our portfolio, which has generated
growth in annualised income and ERV as well as an unchanged valuation.
Underlying earnings for the six-month period to 30 June 2023 were £27.5
million, equivalent to 1.9 pence per share based on the weighted average
number of shares during the period of 1.47 billion. Net rental income has
increased in the period, offset in part by higher finance costs and
administration expenses. The Directors have declared an interim cash dividend
in respect of the period of 1.5 pence per share.
The wholly owned portfolio has been independently valued at £4,898.5 million,
reflecting a 0.1 per cent like-for-like increase relative to the pro forma 31
December 2022 valuation of £4,857.8 million. ERV increased by 3.3 per cent
(like-for-like) to £235 million and the equivalent yield was 4.2 per cent,
reflecting outward movement of 10 basis points.
Overall EPRA NTA (net tangible assets) per share increased by 6.4 per cent in
the period from 182.1 pence at 31 December 2022 to 193.8 pence. Combined with
the 1.7 pence per share dividend paid to shareholders during the period, the
total return for the half year is 7.4 per cent. Total shareholder return for
the first half was 9.6 per cent, reflecting dividends paid and the increase in
the share price from 106.5 pence to 115.1 pence.
Significant progress has been made on cost savings across the business, ahead
of the phasing included in the merger documentation, which set out a run rate
of £12.0 million within two years, of which £6.0 million would be achieved
within a year of completion. Actions to date are expected to result in
annualised cost savings of circa £9 million, primarily in administration
costs. Further integration activity continues as we work towards an effective
and efficient organisational structure and cost base. The current expectation
for total cost savings is now £13.5 million. We are also beginning to
identify broader benefits from the merger including incremental revenue
opportunities.
The Group has a strong balance sheet with a focus on resilience, flexibility
and efficiency. There is significant headroom against debt covenants and
access to liquidity, comprising cash and undrawn facilities of £457.3 million
as at 30 June 2023 (31 December 2022: £416.5 million). Priorities over the
forthcoming period are to refinance medium-term maturities, including the loan
facility of £576 million which was drawn down in full in April 2023 to fund
redemption of the Chinatown and Carnaby Bonds, and to evolve our capital
structure for the longer term, taking advantage of the Group's enhanced credit
profile.
Accounting implications of the merger
From an accounting perspective, Capco was the deemed acquirer of Shaftesbury
PLC. The book value of Shaftesbury PLC's net assets has been adjusted to
reflect their fair value at the completion date of 6 March 2023, in accordance
with IFRS 3.
The major adjustments required by IFRS 3 included:
· the derecognition of Shaftesbury tenant lease incentives and deferred letting fees of £42.0 million held within 'Other receivables'. The balance would have been amortised to net rental income on a straight-line basis over the remaining term of the lease to earlier of break or expiry. As a result of this adjustment, net rental income for the legacy Shaftesbury PLC assets from 6 March 2023 will only reflect amortisation of new tenant lease incentives and deferred letting fees.
· £959.8 million of fixed rate debt held by Shaftesbury PLC was fair valued at £889.0 million, resulting in a £70.8 million difference. The Group's 50 per cent share of the Longmartin joint venture debt was also fair valued at £56.6 million, a £3.4 million reduction to nominal value of £60 million, leading to the total difference of £74.2 million. £24.6 million of this difference has been derecognised through other finance costs during the first half of 2023 on redemption of the Chinatown and Carnaby Bonds. The remainder will be amortised as a charge to other finance costs over the remaining term of the debt facilities with a £2.0 million charge recorded in the period. At 30 June 2023 the unamortised balance of the fair value adjustment was £47.6 million which equates to an additional 2.6 pence per share in EPRA NTA.
Consideration issued on completion of the merger was in the form of 3.356
Shaftesbury Capital shares for each Shaftesbury PLC share, with a total of
1,096 million shares being issued (including 128.4 million shares issued to a
Capco-controlled entity in respect of secured shares previously held as
collateral for the exchangeable bonds). The Shaftesbury Capital share price
was trading at a 32 per cent discount to EPRA NTA on 6 March 2023, which in
turn results in the deemed value of the consideration being at a discount to
the fair value of Shaftesbury PLC's net assets on completion. This discount,
referred to under IFRS as a 'bargain purchase' gain, amounted to £803.7
million and has been recognised under the provisional completion accounting in
the consolidated statement of comprehensive income.
Prior to the merger, Capco-owned 25.2 per cent of Shaftesbury PLC shares with
the investment held as a "financial asset at fair value through profit and
loss". The investment was revalued on 3 March 2023 based on the closing share
price of 421.6 pence resulting in a fair value gain of £52 million during the
period. Following the merger, Shaftesbury PLC is fully consolidated with no
separate investment held.
Accounting policies have been aligned following the merger. As a result,
tenant lease incentives and deferred letting fees, which were previously
amortised to lease expiry, have been amended to be amortised on a
straight-line basis to the earlier of lease break date or expiry. This change
has led to a £5.1 million reduction in net rental income in the current
period with a corresponding reduction in other receivables. As tenant lease
incentives and deferred letting fee balances are deducted from the market
value of investment property to calculate the portfolio carrying value, this
adjustment is also reflected through investment property carrying value and
the revaluation movement, and consequently it does not impact net asset value
or profit for the period.
In addition, for legacy Capco, letting fees deferred in the balance sheet and
amortised to property costs on a straight-line basis had not been previously
deducted from the market value of investment property. Since the related
leases are included in the valuation, the investment property carrying value
has been reduced by £4.1 million, being the balance of deferred letting fees
carried on the balance sheet at 1 January 2023. This adjustment is included
within the valuation movement for the period.
Alternative performance measures
As is usual practice in the real estate sector, alternative performance
measures ("APMs") are presented for certain indicators, including earnings,
earnings per share and net tangible assets, making adjustments set out by EPRA
in its Best Practice Recommendations. These recommendations are designed to
make the financial statements of public real estate companies more comparable
across Europe, enhancing the transparency, comparability and coherence of the
sector. Further details on APMs used, including details on pro forma
information, and how they reconcile to IFRS, are set out on page 47.
One of the key performance measures which the Group uses is underlying
earnings. This aligns with the main principles of EPRA earnings which provides
a measure of recurring income on a transparent and consistent basis. EPRA
earnings excludes valuation movements on the wholly owned and joint venture
properties, fair value changes of financial instruments and listed
investments, cost of early close out of debt, gain on bargain purchase and
merger-related transaction costs. Certain Group adjustments, such as adjusting
for non-recurring integration costs, which are not removed from EPRA earnings,
are made to calculate underlying earnings. EPRA adjustments for Lillie Square,
including profit on sale of trading property, are removed from underlying
earnings as they are not considered to be recurring and part of the core
nature of the business.
Change in accounting policy
As reported in Capco's 2022 Annual Report, the Group adopted the IFRS
Interpretations Committee ("IFRIC") agenda decisions released in October 2022
in relation to how a lessor should account for the forgiveness of lease
payments as well as demand deposits with restrictions on use arising from a
contract with a third party. The Group adopted the change in accounting policy
prior to the year ended 31 December 2022 and, for completeness, the
comparative 30 June 2022 results have now also been restated for the
retrospective application of the change. The adjustment has reduced gross
profit and underlying earnings by £1.1 million and IFRS loss after tax by
£0.2 million for the comparative period.
From an APM perspective, tenant deposits have been excluded from cash and
available facilities and net debt calculations as they do not represent
liquidity which the Group would look to access.
FINANCIAL PERFORMANCE
SUMMARY STATEMENT OF COMPREHENSIVE INCOME
The 30 June 2023 statement of comprehensive income represents the standalone
performance of Capco for the period to 6 March 2023 and that of the combined
Group from that date to 30 June 2023. The comparative information for 30 June
2022 is the previously reported results of Capco, reflecting the accounting
policy change referred to above.
30 June 2023 Restated
£m 30 June 2022
£m
Net rental income 58.3 26.9
(Loss)/gain on revaluation of investment property (16.8) 81.7
Change in fair value of listed equity investment 52.0 (90.2)
Other income 2.6 3.9
Administration expenses(1) (57.5) (21.8)
Net finance costs(2) (21.5) (14.3)
Share of Longmartin joint venture profit 0.2 -
Taxation - (5.5)
Other(3) (21.9) 7.9
(4.6) (11.4)
Gain on bargain purchase 803.7 -
Profit/(loss) for the period 799.1 (11.4)
Basic earnings/(loss) per share 54.2p (1.3)p
EPRA earnings(4) 10.8 12.0
EPRA earnings per share(4) 0.7p 1.4p
Underlying earnings(4) 27.5 3.2
Underlying earnings per share(4) 1.9p 0.4p
Weighted average number of shares(5) 1,473.3m 851.3m
1. Administration expenses include £39.6 million of non-underlying costs (30
June 2022: £9.0 million) substantially related to merger-related transaction
and integration costs, which are considered non-recurring in nature.
2. Excludes other finance income and costs and change in fair value of
derivative financial instruments (included in "Other" above).
3. Includes other costs, impairment of other receivables and other finance
income and costs including the change in fair value of derivatives and
amortisation of merger adjustments for the fair value of Shaftesbury debt
adjustment on merger.
4. Further details regarding EPRA and Underlying earnings are disclosed on
page 32.
5. 1,953.2 million shares are in issue as at 30 June 2023. Following the
issuance of 1,095.6 million shares on 6 March 2023, the weighted average
number of shares for the six months ended 30 June 2023 is 1,473.3 million. The
weighted average number of shares excludes 128.4 million own shares held as
collateral for the exchangeable bond and 3.1 million shares held by the
Group's approved Employee Benefit Trust.
Net rental income
30 June 2023 Restated
£m 30 June 2022
£m
Rent receivable 73.4 29.6
Straight lining of tenant lease incentives(1) 0.5 3.0
Service charge income 8.5 3.3
Revenue 82.4 35.9
( )
Expected credit loss provision (1.6) (1.2)
Property expenses(1) (13.4) (4.5)
Service charge expenses (8.5) (3.3)
Impairment of tenant lease incentives (0.6) -
Net rental income 58.3 26.9
1. 30 June 2023 includes £5.1 million reduction for the change in accounting
policy to adjust the amortisation period for tenant lease incentives and
deferred letting fees. £4.1 million adjustment is recorded through straight
lining of tenant lease incentives and £1.0 million in property expenses.
Rent receivable has increased reflecting the positive letting activity across
the portfolio.
Straight lining of tenant lease incentives, after a non-cash charge of £4.1
million reflecting the change in accounting policy noted above, has increased
revenue by £0.5 million in the period. Excluding the change in accounting
policy, the impact of straight lining tenant lease incentives would have
increased income by £4.6 million, reflecting the large volume of new leases
signed in the period.
With improving trading conditions, cash collection levels have normalised.
Charges for the expected credit loss, at £1.6 million, are materially
consistent with the comparative period.
As at 30 June 2023 the balance sheet provision for expected credit losses for
rent receivable was £5.0 million representing 30 per cent of the rent
receivable balance. As at 31 December 2022 the legacy Capco provision was
£4.0 million representing 34 per cent of the rent receivable balance. The
reduction in the percentage provided compared to gross receivables reflects
positive trading conditions.
Loss on revaluation of investment property
The market valuation of the wholly owned portfolio has increased by 0.1 per
cent like-for-like between December 2022 (pro forma) and June 2023 to
£4,898.5 million. ERV increased by 3.3 per cent (like-for-like) and the
equivalent yield was 4.2 per cent, reflecting outward movement of 10 basis
points.
The loss on revaluation of £16.8 million recorded in the income statement is
based on carrying value of investment property after adjustments for lease
incentives and capital expenditure and takes into account valuation movements
on the legacy Shaftesbury investment property between the fair value on
completion of the merger and the valuation at 30 June 2023.
Other income
Dividend income of £2.6 million was received from the previously held 25.2
per cent shareholding in Shaftesbury PLC on 15 February 2023 in relation to
the final quarter of 2022.
Administration expenses
Six months ended Six months ended
30 June 2023 30 June 2022
£m £m
Depreciation 0.1 0.1
Other administration expenses 17.8 12.7
Underlying administration expenses 17.9 12.8
( )
Merger-related transaction costs 36.2 9.0
Merger-related integration costs 3.4 -
Administration expenses 57.5 21.8
In addition to underlying administration expenses of £17.9 million,
merger-related transaction costs of £36.2 million have been incurred during
the period, with the majority related to successful completion of the
transaction.
One-off merger-related integration costs of £3.4 million have been incurred.
Delivering recurring cost synergies is a priority for the Group with actions
taken to date expected to result in annualised cost savings of circa £9
million, which represents significant progress ahead of the phasing included
in the merger documentation (which set out a run rate of £12.0 million within
two years, of which £6.0 million would be achieved within a year of
completion).
Net finance costs
Net finance costs include interest on the additional £385 million of fixed
rate debt secured on legacy Shaftesbury PLC assets acquired on completion of
the merger. The £576 million loan facility was drawn in full in April 2023 to
fund the redemption of the £575 million Chinatown and Carnaby Bonds.
Finance income increased by £5.1 million to £5.7 million during the period,
comprising £2.6 million for cash on deposit and £3.1 million in relation to
interest rate hedging arrangements.
Share of Longmartin joint venture profit
Our share of Longmartin's post-tax profit was £0.2 million for the period 6
March to 30 June 2023. Our share of the revaluation deficit was £0.2 million.
Excluding the revaluation and fair value adjustment on debt and including the
£0.2 million interest received on the interest-bearing loan provided to the
joint venture, our share of underlying earnings from Longmartin was £0.9
million. £0.5 million dividend was received in June 2023.
Taxation
The Group's tax policy, which has been approved by the Board and is disclosed
on our website, is aligned with the business strategy. The Group seeks to
protect shareholder value by structuring operations in a tax efficient manner,
having taken external advice as appropriate, which complies with all relevant
tax law and regulations and does not adversely impact our reputation as a
responsible taxpayer. As a Group, we are committed to acting in an open and
transparent manner.
Consistent with the Group's policy of complying with relevant tax obligations,
the Group maintains a constructive and open working relationship with HMRC
which regularly includes obtaining advance clearance on key transactions where
the tax treatment may be uncertain. The Group maintains a low-risk rating from
HMRC, which has been confirmed following a detailed business risk review
during 2022.
As a UK REIT, the Group is exempt from UK corporation tax on income and gains
from qualifying activities and, as a result, there is no tax charge in the
period. As a minimum, 90 per cent of the income arising from qualifying
activities and 100 per cent of the Property Income Distribution ("PID")
element of the dividend received from Shaftesbury PLC by the Group in the
pre-merger period are required to be distributed as a PID to the shareholders
of the Group. Non-REIT activities, such as disposals of trading property, are
subject to UK corporation tax. A tax charge can arise for the Group (23.5 per
cent for the current year) if the minimum PID requirement is not met within 12
months of the end of the relevant year. The Group expects to meet the PID
requirements for the prior periods and current year within the allowed
timelines.
UK REIT provisions also require the Group to satisfy certain tests to maintain
its REIT status. We expect to satisfy all requirements needed to maintain REIT
status throughout 2023.
Dividends
The Board has declared an interim dividend of 1.5 pence per share, reflecting
the progression in underlying earnings and cash generation. The total gross
dividend payable is £29 million of which £2 million relates to the Group
entity which holds 128.4 million shares as security under the terms of the
exchangeable bonds. The entity has provided an undertaking not to exercise its
voting rights in respect of such ordinary shares but will receive the declared
dividend, substantially all of which should subsequently be retained by the
Group following the dividend threshold test as set out in the exchangeable
bond conditions. In addition, the dividend will not be paid in relation to the
3.1 million shares held by the Group's approved Employee Benefit Trust.
The interim dividend will be paid in cash as an ordinary dividend on 18 September 2023 to shareholders on the register at 25 August 2023.
During the first half, in respect of the period pre merger, Capco paid a
second interim dividend of 1.7 pence per Capco share and Shaftesbury paid a
dividend of 2.7 pence per Shaftesbury share.
SUMMARY BALANCE SHEET
The 31 December 2022 balance sheet reflects the Capco position only. The pro
forma balance sheet has been included in order to provide additional
information for comparative purposes.
30 June Pro forma(1) 31 December 2022
2023 31 December £m
£m 2022
£m
Investment property 4,865.2 4,829.2 1,715.1
Investment in joint ventures 84.4 86.8 0.2
Financial assets at fair value - - 356.9
Net debt(2) (1,553.5) (1,488.2) (633.5)
Other assets and liabilities 157.6 98.6 122.9
Net assets 3,553.7 3,526.4 1,561.6
EPRA net tangible assets 3,541.3 3,526.4 1,552.2
EPRA net tangible assets per share (pence) 193.8p 193.0p 182.1p
Adjusted, diluted number of shares(3) 1,827.2m 1,827.2m 852.3m
1. Pro forma information is explained in further detail on page 48.
2. Net debt based on nominal value of debt drawn less cash, excluding tenant
deposits of £14.4 million (31 December 2022 and pro forma: £13.4 million).
3. Number of shares as at 30 June 2023 excludes 128.4 million shares held as
collateral for the exchangeable bond and 3.1 million within an approved
Employee Benefit Trust. Total share capital in issuance, including these
components, was 1,953.2 million shares as at 30 June 2023.
EPRA NTA
The EPRA NTA movement primarily reflects the effect of the completed merger
transaction and an unchanged property valuation. As referred to above, through
the completion accounting the legacy Shaftesbury PLC debt, including our share
of the Longmartin joint venture, which had a nominal value of £444.8 million
was fair valued and was held at £397.2 million as at 30 June 2023. This
difference of £47.6 million, or 2.6 pence in terms of EPRA NTA per share,
will reverse as the balance sheet value of the debt accretes to nominal value
over the remaining term of the debt. The impact of this unwind is excluded
from underlying earnings.
Investment property
The carrying value of the wholly owned portfolio has remained broadly
unchanged over the period at £4,865.2 million (pro forma: £4,829.2 million).
On 28 February 2023 the Group acquired the remaining interest in the Royal
Opera House Arcade for £12.9 million, including costs. Other capital
expenditure during the period was £15.2 million.
The market valuation of the wholly owned portfolio increased from December
2022 (pro forma) to June 2023 by 0.1 per cent on a like-for-like basis to
£4,898.5 million. ERV increased by 3.3 per cent (like-for-like) and the
equivalent yield was 4.2 per cent, reflecting 10 basis points outward
movement. The MSCI Capital Return for the equivalent period was a 1.6 per cent
reduction.
Total property return for the period was 1.4 per cent. The MSCI Total Return
Index recorded 1.2 per cent for the corresponding period.
Investment in joint ventures
The figures below represent our 50 per cent share.
Longmartin
At 30 June 2023, Longmartin's long leasehold property was valued at £159.0
million (Dec 2022: £160.0 million) reflecting a reduction of 1.1 per cent.
ERVs increased by 3.4 per cent, and, at 30 June 2023, the equivalent yield was
4.62 per cent, an increase of 34 basis points over the period (Dec 2022: 4.28
per cent).
Longmartin has a £60.0 million fixed-rate term loan maturing in 2026. As at
30 June 2023, net debt, based on nominal value, was £57.5 million resulting
in LTV of 36.2 per cent.
Lillie Square
The property valuation as at 30 June 2023 was £72.2 million, a 3.1 per cent like-for-like decline against the 31 December 2022 valuation of £77.0 million. In total, 354 Phase 1 and 2 units have been handed over, with 66 units available.
The sale of three units completed during the period representing £2.7 million gross proceeds. Our share of cash was £7.5 million and there is no external debt.
Debt and gearing
The Group maintains a strong financial position, with diversified sources of funding, significant headroom against debt covenants, access to liquidity, modest capital commitments, substantial unencumbered asset value and is well-protected against interest rate movements.
The Group's cash and undrawn committed facilities as at 30 June 2023 were
£457.3 million (pro forma: £521.6 million).
30 June Pro forma(1) 31 December 2022
2023 31 December £m
£m 2022
£m
Cash and cash equivalents(2) 157.3 221.6 116.5
Undrawn committed facilities 300.0 300.0 300.0
Cash and undrawn committed facilities 457.3 521.6 416.5
Commitments (22.8) (35.6) (1.7)
Available resources 434.5 486.0 414.8
1. Pro forma information is explained in further detail on page 48.
2. Excludes tenant deposits of £14.4 million (pro forma merger and 31
December 2022: £13.4 million).
As at 30 June 2023, the Group had capital commitments of £22.8 million.
The gearing measure most widely used in the industry is loan-to-value ("LTV")
which at 30 June 2023 was 31.7 per cent. This is comfortably within the
Group's limit of no more than 40 per cent. EPRA LTV was 30.8 per cent.
30 June Pro forma(1) 31 December 2022
2023 31 December 2022 £m
£m £m
Cash and cash equivalents 157.3 221.6 116.5
Debt at nominal value (1,710.8) (1,709.8) (750.0)
Net debt (1,553.5) (1,488.2) (633.5)
Loan-to-value 31.7% 31.0% 36.3%
EPRA loan-to-value 30.8% n/a 28.0%
Interest cover 199.5% n/a 181.3%
Weighted average debt maturity - drawn and undrawn facilities(2) 4.1 years n/a 4.2 years
Weighted average debt maturity - drawn facilities 4.2 years n/a 4.5 years
Weighted average cost of debt(3) 4.3% n/a 2.7%
Drawn debt with interest rate protection(4) 100% n/a 100%
1. Pro forma information is explained in further detail on page 48.
2. Excludes the £576 million loan facility agreement as at 31 December 2022.
3. As at 30 June 2023 the weighted average cost of debt reduces to an
effective running cash cost of 3.4 per cent taking account of interest on cash
deposits and interest rate caps.
4. Taking account of interest on cash deposits and interest rate caps.
At 30 June 2023, Group net debt was £1.6 billion. In April 2023 the £576
million loan facility was drawn in full to fund the redemption of the £575
million Carnaby and Chinatown bonds.
All of the Group's drawn debt is at fixed rates or currently has interest rate
protection in place. Interest rate collars were already in place for £200
million of notional value through to December 2024, capped at 1.23 per cent.
Additional interest rate hedging was put into place in April which caps SONIA
exposure at 3.75 per cent for a further £300 million of notional value for
2023 and £150 million of notional value for 2024, at a total cost of £3.4
million.
The weighted average cost of drawn debt is currently 4.3 per cent, which
reduces to an effective running cash cost of 3.4 per cent taking account of
interest on cash deposits and interest rate caps.
A number of financing options are being explored to refinance medium-term debt
maturities and to further strengthen the capital structure over the longer
term.
NET DEBT AND CASH FLOWS
Movement in net debt £m
31 December 2022 (633.5)
Debt acquired on merger(1) (959.8)
Cash acquired on merger 118.1
(1,475.2)
Operating inflow 21.8
Investing outflow (24.8)
Financing outflow (3.4)
Dividends paid (14.5)
Non-underlying (57.4)
30 June 2023 (1,553.5)
1. Debt acquired at nominal value.
Excluding cash and debt acquired as part of the merger, net debt increased by
£78.3 million to £1,553.5 million as at 30 June 2023. The increase is
largely due to:
· Operating cash inflows of £21.8 million reflecting growing net rental income and continuing positive cash collections, partly offset by higher administrative and finance costs following drawdown of the loan facility to refinance the redemption of the Carnaby and Chinatown bonds.
· Investing cash outflows of £24.8 million, including £15.1 million capital expenditure and £12.9 million for the Royal Opera House Arcade lease regear. £3.2 million has been received from the Longmartin joint venture in the period comprising a dividend of £0.5 million and £2.7 million loan repayment.
· £3.4 million movement on financing reflects the payment in relation to the additional interest rate hedging.
· On 20 March 2023 a dividend amounting to £14.5 million was paid.
· Non-underlying represents payment of merger-related transaction and integration costs. Certain merger-related transaction costs were included in the Shaftesbury PLC acquisition balance sheet but have been paid after the merger date and, therefore, reflect the difference between the costs included in the statement of comprehensive income of £39.6 million and the statement of cash flows.
Going concern
Further information on the going concern assessment is set out in note 1 to
the condensed consolidated interim financial statements.
The Company has a strong balance sheet with EPRA loan-to-value of 31 per cent
and access to cash and undrawn facilities of £457 million as at 30 June 2023.
There remains sufficient liquidity and debt covenant headroom even in a
downside "severe but plausible" scenario.
There continues to be a reasonable expectation that the Group will have
adequate resources to meet both ongoing and future commitments for at least 12
months from the date of signing these condensed consolidated interim financial
statements. Accordingly, the Directors consider it appropriate to adopt the
going concern basis of accounting in preparing these condensed consolidated
interim financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
Risk Management
The Board has overall responsibility for Group risk management. It determines
risk appetite and reviews principal risks and uncertainties regularly,
together with the actions taken to mitigate them. The Board has delegated the
responsibility for the review of the adequacy and effectiveness of the Group's
internal control framework to the Audit Committee.
Risk is a standing agenda item at management meetings. This gives rise to a
risk-aware culture and consistency in decision-making across the organisation,
in line with the corporate strategy and risk appetite. All corporate
decision-making takes risk into account, in a measured way, while continuing
to drive an entrepreneurial culture.
The Executive Committee is responsible for the day-to-day commercial and
operational activity across the Group and is, therefore, responsible for the
management of business risk. The Executive Risk Committee, comprising the
Executive Committee, the General Counsel, the Joint Group Financial
Controllers, the Director of Sustainability & Technology and Head of
Sustainability, is the executive level management forum for the review and
discussion of risks, controls and mitigation measures. The corporate and
business division risks are reviewed on a regular basis by the Executive Risk
Committee so that trends and emerging risks can be identified, considered,
managed appropriately and reported to the Board.
Further details of how we manage risk are set out on pages 43 to 49 of the 31
December 2022 Annual Report and remain consistent since the merger.
Risk outlook
During the period there has been strong operating performance across the
portfolio, reflecting the benefits of our active asset management, together
with the exceptional qualities and long-term resilience of the West End. There
has been excellent leasing demand across all uses and high occupancy levels.
Despite the recovery in the operating environment and trading conditions, risk
remains heightened, reflecting the current macroeconomic backdrop, manifesting
in, amongst other things, inflation and increased borrowing rates which may
have an impact on valuations, availability and cost of funding, our customers'
profitability and consumer behaviour. The uncertainty on the future demand for
and use of lettable space, evolution of consumer behaviour and travel patterns
remains a consideration and the Board continues to monitor these areas.
If current global or UK macroeconomic conditions persist or deteriorate, or
there is an increase in geopolitical uncertainty, this could impact UK real
estate markets, resulting in downward pressure on the value of the Group's
properties and net rental income.
Many of the Group's customers are exposed to the changes and challenges facing
the retail and hospitality sectors, including macroeconomic factors, such as
availability and cost of credit for customers and their businesses, the
potential for the level of consumer spending to be impacted by the increase in
the cost of living, business and consumer confidence, inflation rates, energy
costs, supply chain disruption, labour shortages and other operational costs.
In recent years, the UK has also experienced heightened economic and political
uncertainty after voting to leave the EU. Uncertainty remains in relation to
long-term international trade arrangements and the overall impact on the UK
economy.
The Group's operations may be adversely affected if it fails to comply with
climate and environmental regulation or its own environmental, social or
governance standards. Operations may also be adversely affected by climate and
environment related risks, which could lead to significant costs to mitigate
environmental impacts.
Following completion of the merger, operational and business risks were
reassessed across the Group with no principal differences noted. The Group's
success is dependent upon its ability to integrate and deliver the full
benefits and synergies. A dedicated integration working team, headed by the
Chief Operating Officer, has been established and is assisting the business
functions with integration. The integration team reports regularly to the
Executive Committee and Board on progress to date. Integration is progressing
well, and further activity continues as we work towards an effective and
efficient organisational structure and cost base. Company wide in person
meetings, "Get To Know You" events and regular communication on the
integration pathway have been made available to all employees.
Emerging risks
The Group monitors its emerging risks and considers mitigating actions which
the Group currently deploys and could deploy with regards to these emerging
risks. Emerging risks include the economic and geopolitical consequences of
Russia's invasion of Ukraine, regulatory changes, UK political uncertainty,
changes to consumer behaviour and changes to the way in which real estate will
be used in the future, how lease arrangements are structured, as well as
changes to tax and economic policy impacting real estate (including landlord
and tenant legislation, residential rent control, capital gains, VAT and other
sales taxes, stamp duty and business rates). The impact of developments in
technology in areas such as artificial intelligence is being monitored,
including whether they represent material risks or opportunities to the Group.
Principal risks and uncertainties
The main areas of the Group's principal risks and uncertainties are summarised
below. These principal risks are not exhaustive. The Group monitors a number
of additional risks and adjusts those considered 'principal' as the risk
profile of the business changes. Following completion of the merger, a review
has been conducted with no additional principal risks identified due to the
significant overlap in the operational and business risks faced by both legacy
businesses, as set out in the most recent annual reports and merger
documentation. See also the risks inherent in the compilation of financial
information, as disclosed in note 1 'Principal Accounting Policies' within
'Critical accounting judgements and key sources of estimation and
uncertainty'.
Key principal risk areas
Economic, political and operating environment · Inability of the Group to adopt the appropriate strategy or to react
to changing market conditions or changing consumer behaviour
· Decline in real estate valuations due to macroeconomic conditions
· Impact of higher interest rates and lack of availability or increased
cost of debt or equity funding
· Inflationary pressures on operating costs including energy
· Uncertain political climate and/or changes to legislation and
policies
· Adverse impact on business and consumer confidence, increase material
costs, disrupted supply chains and reduced labour supply
· Catastrophic event such as a terrorist attack, natural disaster,
health pandemic or cyber security crime
People · Inability to retain and recruit the right people and develop
leadership skills within the business
· The Group has a relatively limited headcount, resulting in key person
risk
Compliance with law and regulations · Breach of legislation, regulation or contract
· Inability to monitor or anticipate legal or regulatory changes
· Accidents causing loss of life or very serious injury to employees,
contractors, customers and visitors to the Group's properties; or near misses
of the same
· Exit from REIT regime due to non-compliance with REIT requirements
Climate change · Physical impact on our assets from rising temperatures or other
extreme climate-related event such as flooding
· Transitional challenge of increasing and more onerous compliance and
reporting requirements, as well as retrofitting, insuring or leasing our
assets in a heritage environment on an appropriate whole life carbon basis
· Inability to keep pace with the evolving regulatory developments or
customer and consumer demand for approach to manage and mitigate
climate-related risk
Leasing and asset management · Inability to achieve target rents or to attract target customers due
to market conditions
· Competition from other locations/formats
· Unfavourable planning policy, legislation or action impacting on the
ability to secure planning approvals or consents
DIRECTORS' RESPONSIBILITIES
Statement of Directors' responsibilities
The Directors confirm that these condensed consolidated interim financial
statements have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and that the interim management report includes a fair
review of the information required by Disclosure and Transparency Rules (DTR)
4.2.7 and 4.2.8, namely:
· an indication of important events that have occurred during the first
six months and their impact on the condensed set of interim financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related party transactions in the first six months and any
material changes in the related party transactions described in the last
annual report.
A list of current Directors is maintained on the Shaftesbury Capital website:
www.shaftesburycapital.com (http://www.shaftesburycapital.com) .
By order of the Board
Ian Hawksworth
Chief Executive
2 August 2023
Situl Jobanputra
Chief Financial Officer
2 August 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
For the six months ended 30 June
2023
Note Six months Restated
ended Six months
30 June ended
2023 30 June
£m
2022(1)
£m
Revenue 3 82.4 35.9
Costs(2) 3 (24.1) (9.0)
Gross profit 3 58.3 26.9
Other income 2.6 3.9
Administration expenses 4 (57.5) (21.8)
(Loss)/gain on revaluation and sale of investment property 10 (16.8) 81.7
Change in value of investments and other receivables 2.2 (3.6)
Change in fair value of financial assets through profit or loss 15 52.0 (90.2)
Operating profit/(loss) 40.8 (3.1)
Finance income 5 5.7 0.6
Finance costs 6 (27.2) (14.9)
Other finance income 5 2.0 1.7
Other finance costs 6 (26.3) (7.1)
Change in fair value of derivative financial instruments 15 0.2 16.9
Net finance costs (45.6) (2.8)
Operating loss after finance costs (4.8) (5.9)
Profit from joint ventures 11 0.2 -
Gain on bargain purchase 9 803.7 -
Profit/(loss) before tax 799.1 (5.9)
Taxation 7 - (5.5)
Profit/(loss) and comprehensive income/(expense) for the period 799.1 (11.4)
Earnings/(loss) per share
Basic earnings/(loss) per share 2 54.2p (1.3)p
Diluted earnings/(loss) per share 2 54.0p (1.3)p
Weighted average number of shares 2 1,473.3m 851.3m
1. Prior period comparatives have been restated to reflect a change in
accounting policy following clarification by the IFRS Interpretations
Committee ("IFRIC") during 2022 of how a lessor should account for the
forgiveness of lease payments and for the representation of expected credit
losses, which are now included within Costs. Details of the restatements and
impact on prior period comparatives are set out in note 1 'Changes in
accounting policies'.
2. Included in costs is a £1.6 million charge (30 June 2022: £1.2 million
charge) of expected credit loss in relation to rent receivables.
CONSOLIDATED Balance sheet (UNAUDITED)
As at 30 June 2023
Note As at As at
30 June 31 December
2023 2022
£m
£m
Non-current assets
Investment properties 10 4,865.2 1,715.1
Property, plant and equipment 1.7 0.6
Investment in joint ventures 11 84.4 0.2
Financial assets at fair value through profit or loss 15 - 356.9
Derivative financial assets 15 19.6 12.1
Trade and other receivables 12 126.7 115.6
5,097.6 2,200.5
Current assets
Trade and other receivables 12 31.7 20.8
Cash and cash equivalents 13 171.7 129.9
203.4 150.7
Total assets 5,301.0 2,351.2
Non-current liabilities
Borrowings 14 (1,654.8) (738.3)
Lease liabilities (3.5) (5.4)
Derivative financial liabilities 15 (7.2) (3.3)
(1,665.5) (747.0)
Current liabilities
Lease liabilities (0.5) (0.7)
Trade and other payables (81.3) (41.9)
(81.8) (42.6)
Total liabilities (1,747.3) (789.6)
Net assets 3,553.7 1,561.6
Equity
Share capital 16 488.2 212.8
Other components of equity 3,065.5 1,348.8
Total equity 3,553.7 1,561.6
CONSOLIDATED STATEMENT OF changes in equity (UNAUDITED)
For the six months ended 30 June 2022
Note Capital redemption reserve Share-based payment reserve
£m
Share Share Own £m Merger Other Retained Total
capital
premium
reserves
earnings(1)
equity
shares reserve2
£m £m
£m £m £m
£m £m
Balance at 1 January 2022(1) 212.8 232.5 - 1.5 293.7 7.7 (0.3) 1,038.9 1,786.8
Loss and total comprehensive expense for the six months ended 30 June 2022(1) - - - - - - - (11.4) (11.4)
Transactions with owners
Dividends 8 - - - - - - - (8.5) (8.5)
Fair value of share-based payment - - - - - 1.0 - - 1.0
Balance at 30 June 2022(1) 212.8 232.5 - 1.5 293.7 8.7 (0.3) 1,019.0 1,767.9
1. Prior period comparatives have been restated to reflect a change in
accounting policy following clarification by the IFRS Interpretations
Committee ("IFRIC") during 2022 of how a lessor should account for the
forgiveness of lease payments. Details of the restatements and impact on prior
period comparatives are set out in note 1 'Changes in accounting policies'.
2. Represents non-qualifying consideration received by the Group following the
share placing in May 2014, and previous share placements. The amounts taken to
the merger reserve do not currently meet the criteria for qualifying
consideration and therefore will not form part of distributable reserves.
For the six months ended 30 June 2023
Note Capital redemption reserve Share-based payment reserve
£m
Share Share Own £m Merger Other Retained Total
capital
premium
reserves
earnings
equity
£m
£m shares(1) reserve
£m
£m
£m
£m
£m
Balance at 1 January 2023 212.8 232.5 - 1.5 293.7 9.8 (0.4) 811.7 1,561.6
Profit and total comprehensive income for the six months ended 30 June 2023 - - - - - - - 799.1 799.1
Transactions with owners
Completion of all-share merger(2) 9 273.9 - (32.1) - 962.3 - - - 1,204.1
Dividends 8 - - - - - - - (14.5) (14.5)
Issue of shares and realisation of share-based payment reserve on employee 1.5 - (0.8) - - (9.8) - 11.9 2.8
share options(3)
Fair value of share-based payment - - - - - 0.6 - - 0.6
Balance at 30 June 2023 488.2 232.5 (32.9) 1.5 1,256.0 0.6 (0.4) 1,608.2 3,553.7
1. Represents the nominal value of 128,350,794 shares issued to a controlled
entity in respect of secured shares previously held as collateral for the
exchangeable bonds and 3,146,886 shares held by the Group's Employee Benefit
Trust in respect of employee share awards.
2. Represents non-qualifying consideration received following the all-share
merger with Shaftesbury PLC completed on 6 March 2023.
3. Represents the issue of 6,170,629 new shares and subsequent realisation of
the outstanding share-based payment reserve on the close out of the Capco
share scheme prior to completion of the all-share merger. 3,146,886 shares
were bought back and are held by the Group's approved Employee Benefit Trust
in respect of employee share awards.
CONSOLIDATED STATEMENT OF cash flowS (UNAUDITED)
For the six months ended 30 June 2023
Note Six months ended Restated
30 June 2023 Six months ended
£m
30 June 2022(1)
£m
Cash flows from operating activities
Cash (utilised in)/generated from operations 19 (12.6) 18.4
Finance costs paid (28.0) (16.2)
Interest received 6.0 0.6
Net cash (outflow)/inflow from operating activities (34.6) 2.8
Cash flows from investing activities
Purchase and development of property (28.0) (4.8)
Dividends received from joint ventures 0.5 -
Cash acquired in a business combination 9 118.1 -
Loans to joint ventures repaid 2.7 17.3
Net cash inflow from investing activities 93.3 12.5
Cash flows from financing activities
Borrowings repaid (575.0) (200.0)
Borrowings drawn 576.0 -
Acquisition of derivative financial instruments (3.4) -
Cash dividends paid 8 (14.5) -
Net cash outflow from financing activities (16.9) (200.0)
Net movement in cash and cash equivalents 41.8 (184.7)
Cash and cash equivalents at 1 January 129.9 331.1
Cash and cash equivalents at period end 13 171.7 146.4
1. Prior period comparatives have been restated following clarification by
IFRIC on classification of funds with externally imposed restrictions. Tenant
deposits totalling £12.4 million at 30 June 2022 were reclassified from other
receivables to cash and cash equivalents. Further details of the restatement
are set out in note 1 'Changes in accounting policies'.
Notes to the accounts
1 PRINCIPAL ACCOUNTING POLICIES
General Information
Shaftesbury Capital PLC (formerly Capital & Counties Properties PLC) (the
"Company"), was incorporated and registered in England and Wales on 3 February
2010 under the Companies Act as a public company limited by shares,
registration number 7145051. The registered office of the Company is Regal
House, 14 James Street, London, WC2E 8BU, United Kingdom. The principal
activity of the Company is to act as the ultimate parent company of the
Shaftesbury Capital PLC Group (the "Group"), whose principal activity is the
development and management of property.
Following the all-share merger ("the merger") on 6 March 2023 of Capital &
Counties Properties PLC ("Capco") with Shaftesbury PLC to form Shaftesbury
Capital, the Group's assets principally comprise investment property within
the West End of London, including Covent Garden, Chinatown, Carnaby, Soho and
Fitzrovia.
Basis of preparation
The Group's condensed consolidated interim financial statements have been
prepared in accordance with United Kingdom adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
These condensed consolidated interim financial statements have been prepared
using the same accounting policies as used in the preparation of the Capco
(now Shaftesbury Capital) financial statements for the year ended 31 December
2022, except for changes in accounting policies below. The Capco (now
Shaftesbury Capital) Annual Report and financial statements for the year ended
31 December 2022 were prepared in accordance with United Kingdom-adopted
International Accounting Standards ("IFRS") and the applicable legal
requirements of the Companies Act 2006.
The condensed consolidated interim financial statements are prepared in
British pounds sterling.
The condensed consolidated interim financial statements for the six months
ended 30 June 2023 are reviewed, not audited, and do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2022 were approved by the
Capco Board of Directors on 28 February 2023 and delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain a statement made
under Section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements have been prepared
under the historical cost convention as modified for the revaluation of
property, derivative financial instruments and equity investments held at fair
value through profit or loss.
There is no material seasonal impact on the Group's financial performance.
All income, expenses and cash flows are generated from continuing operations.
These condensed consolidated interim financial statements were approved by the
Board of Directors on 2 August 2023.
Accounting policies
The accounting policies used by the Group in these condensed consolidated
interim financial statements are consistent with those applied in the Capco
(now Shaftesbury Capital) financial statements for the year to 31 December
2022, as amended to reflect the adoption of new standards, amendments and
interpretations which became effective in the period as well as alignment of
accounting policies post completion of the merger.
New accounting policies
In the current period, the Group has applied the below amendments to IFRS
Standards and Interpretations issued by the International Accounting Standards
Board that are effective for annual periods that begin on or after 1 January
2023. Their adoption has not had any material impact on the disclosures or on
the amounts reported in these condensed consolidated interim financial
statements.
Amendments to References to the Conceptual Framework in IFRS Standards:
· IAS 1 'Presentation of Financial Statements' and IFRS Practice
Statement 2 (amendment) (Disclosure of Accounting Policies)
· IAS 8 'Accounting Policies, Changes in Accounting Estimates, and
Errors' (amendment) (Definition of Accounting Estimates)
· IAS 12 'Income Taxes' (amendment) (Deferred Tax related to Assets and
Liabilities arising from a Single Transaction)
At the date of approval of the condensed consolidated interim financial
statements the following standards and interpretations which have not been
applied in these condensed consolidated interim financial statements were in
issue but not effective, and in some cases have not been adopted for use under
UK-adopted international accounting standards:
· IAS 1 'Presentation of Financial Statements' (amendment) (Non-current
Liabilities with Covenants)
· IFRS 16 'Leases' (amendment) (Lease liability in a sale and
leaseback)
· IFRS 10 'Consolidated Financial Statements' and IAS 28 'Investments
in Associates and Joint Ventures' (amendment) (Sale or contribution of assets
between an investor and its associate or joint venture)
The Group has assessed the impact of these new standards and interpretations
and does not anticipate any material impact on the condensed consolidated
interim financial statements.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method
(at the point the Group gains control over a business as defined by IFRS 3
'Business Combinations').
The cost of an acquisition is measured as the aggregate of the consideration
transferred, which includes the cash paid and the aggregate of the fair
values, at the date of exchange, of other assets transferred, liabilities
incurred or assumed, and equity instruments issued by the Group in exchange
for control of the acquiree, and the amount of any non-controlling interests
in the acquiree.
Acquisition-related costs are expensed as incurred. The acquiree's
identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS 3 Business Combinations are recognised
at their fair value at the acquisition date.
Goodwill represents the excess of the cost of acquisition of a business
combination over the fair value of the identifiable net assets of the business
acquired at the date of acquisition. In the case that the fair value of the
identifiable net assets acquired is greater than the total consideration paid,
negative goodwill arises on the acquisition. The negative goodwill is
recognised as a gain on bargain purchase in the Statement of Comprehensive
Income.
Changes in accounting policies
Following the merger an alignment of accounting policies has been conducted
between Capco and Shaftesbury PLC leading to the following amendments for the
condensed consolidated interim financial statements.
Tenant lease incentives and deferred letting fees - change in lease term
Under IFRS 16 'Leases' the lease term is defined as the non-cancellable period
of a lease, together with both periods covered by an option to extend or
terminate the lease if the lessee is reasonably certain to exercise that
option.
Previously, in the Capco (now Shaftesbury Capital) financial statements, the
Group amortised tenant lease incentives and deferred letting fees on a
straight-line basis over the lease term to lease expiry as the assumption was
that lessees were reasonably certain not to exercise their option at break
date. This has been amended such that the assumption is now that all lessees
are reasonably certain to terminate at the break date and therefore they are
now amortised over this lease period.
The comparative financial information has not been restated to reflect this
change in accounting policy as the adjustment is not material and would have
no impact on net assets nor profit for the period and has instead been
adjusted prospectively. As a result, the straight-lining of lease incentives
has been adjusted by £4.1 million and deferred letting fees have been
adjusted by £1.0 million in the Statement of Comprehensive Income, with a
reduction of £5.1 million within other receivables in the Balance Sheet. As
tenant lease incentives and deferred letting fees are deducted from the market
value of investment property to reach the carrying value, the adjustment is
also reflected through investment property on the Balance Sheet and
revaluation of investment property in the Statement of Comprehensive Income.
Adjustment to investment property for deferred letting fees
Previously in the Capco (now Shaftesbury Capital) financial statements the
Group accounted for deferred letting fees in the balance sheet and amortised
to property costs on a straight-line basis over the lease term without a
corresponding deduction from the market value of investment property due to
not being material. Deferred letting fees are considered initial direct costs
and are deducted from the market value of investment property to calculate the
carrying value. A £4.1 million adjustment has been made, reflecting the
balance as at 1 January 2023, as a deduction from investment property and
there is a corresponding revaluation loss. The adjustment is not material and
therefore has not been applied retrospectively.
Prior year changes in accounting policies
IFRIC restatement
Rent concessions - forgiveness of past due rents receivable and tenant deposit
adjustment
In October 2022, IFRIC finalised an agenda decision in regard to how a lessor
should account for the forgiveness of lease payments under IFRS 9 'Financial
Instruments' ("IFRS 9") and IFRS 16 'Leases' ("IFRS 16"). The decision
concluded that for any rent receivable past its due date, which was
subsequently forgiven, the lessor should apply the expected credit loss model
under IFRS 9 and account for the forgiveness as an impairment to the statement
of comprehensive income. Alongside this, any forgiveness of future rent would
be deemed to meet the definition of a lease modification under IFRS 16, with
the resulting impact accounted for by spreading the concession over the
remaining lease term in accordance with IFRS 16. On entering into a lease
modification, any directly attributable costs associated with the lease are
derecognised. The Group had previously concluded that under IFRS there had
been a policy choice to account for any rent forgiveness for rent receivable
after its due date under either IFRS 9 or IFRS 16. Accordingly, the Group had
elected to account for all relevant rent concessions as a lease modification
under IFRS 16, and in addition the directly attributable costs associated with
the leases were derecognised as non-underlying costs.
An IFRIC agenda decision regarding Demand Deposits with Restrictions on Use
arising from a Contract with a Third Party, which concluded that the
contractual restrictions on the use of the amounts held in the demand deposit
do not change the nature of the deposit and that the Group can access those
amounts on demand, therefore, the demand deposit should be included as a
component of 'cash and cash equivalents' in its statement of cash flows.
The Group adopted the treatment set out in both these IFRIC agenda decisions
in its accounting policies for 2022. Details of the agenda decisions are set
out in the 2022 Annual Report of Capco. These changes in accounting treatment
have been applied retrospectively and the 30 June 2022 comparative information
has been restated in the condensed consolidated statement of comprehensive
income and condensed consolidated statement of cash flows.
The adjustment for the forgiveness of past due rent receivables as at 30 June
2022 has reduced gross profit by £1.1 million and loss for the period by
£0.2 million. Underlying earnings reduced by £1.1 million, or 0.1 pence per
share.
The Group previously disclosed tenant deposits as other receivables in the
consolidated financial statements. Following the IFRIC agenda decision issued
in the prior year, an adjustment was made to other receivables to reclassify
tenant deposits totalling £12.4 million at 30 June 2022 from other
receivables to cash and cash equivalents. From an alternative performance
measure perspective, tenant deposits have been excluded from cash and
available facilities and net debt calculations as they do not represent
liquidity which the Group would look to access.
Segmental information
IFRS 8 requires operating segments to be reported in a manner consistent with
the internal financial reporting reviewed by the chief operating decision
maker. The chief operating decision maker of the Group is the Executive
Committee. The Executive Committee is responsible for regularly reviewing the
Group's internal reporting in order to assess performance and for allocation
of resources, and consists of the Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer and the Executive Directors.
Previously, the Group determined the operating segments to be organised into
the following divisions:
· Covent Garden;
· Other, which comprised the Shaftesbury Investment, the Group interest
in Innova and other head office companies and investments; and
· Lillie Square, which represents the Group's interests in the Lillie
Square joint venture and a number of smaller properties in the adjacent area.
Following the merger, the information reviewed by the Executive Committee is
prepared on a basis consistent with these condensed consolidated interim
financial statements. That is, the information is provided and monitored at a
Group level and includes the IFRS reported results, EPRA and Underlying
measures (previously the information provided was on a Group share basis). The
management information previously presented for the Lillie Square and Other
segments is no longer separately reported to the Executive Committee, as it
makes up a small proportion of the combined Group post-merger, or in the case
of the Shaftesbury Investment, is no longer relevant. These former segments no
longer meet the requirements under IFRS 8 to be separately reported.
Going concern
The Directors have considered the appropriateness of adopting the going
concern basis in preparing the condensed consolidated interim financial
statements. The Group's going concern assessment covers the period to 30
September 2024 (the "going concern period"), being at least 12 months from the
date of authorisation of these condensed consolidated interim financial
statements.
Trading activity is strong across the portfolio, with retail, hospitality and
leisure customers reporting sales in aggregate 15 per cent above 2019 on a
like-for-like basis. Footfall trends across the West End are positive, buoyed
by increasing international visitor numbers.
There is strong leasing demand across all uses delivering rental growth,
vacancy remains low and rent collection patterns have normalised. There
continues to be macro-economic and political uncertainty, including the rising
interest rate and inflationary environment as well as geopolitical risks. The
West End and the Group's unique portfolio of prime investments are not
completely insulated, however, they have demonstrated remarkable resilience.
We maintain a strong balance sheet with a focus on resilience, flexibility and
efficiency. There is significant headroom against debt covenants and access to
significant liquidity, £457 million as at 30 June 2023.
In preparing the assessment of going concern, the Board has considered
projections of the Group's liquidity, committed capital expenditure, income,
costs, cash flows and debt covenants. The Group has assessed a base and
"severe-but-plausible" downside scenario.
As at the period end, the Group had net debt of £1.6 billion, a LTV ratio of
32 per cent and Group interest cover of 2 times. The Group is projected to
have sufficient cash reserves and undrawn facilities to meet debt maturities
during the going concern period. Drawn debt is at fixed rates or currently has
interest rate protection in place. Interest rate hedging is in place which
caps SONIA exposure at an average of 2.7 per cent on £500 million of notional
value to December 2023 and £350 million of notional value capped at 2.3 per
cent to December 2024.
The Group's debt matures between August 2024 and 2037. The revolving credit
facility, which is currently undrawn has a maturity of September 2025, with a
one-year extension option to September 2026, subject to lender consent. £57.5
million of private placement debt matures in August 2024 and is assumed to be
funded through cash and undrawn facilities. The £576 million loan facility
matures in December 2024, with a six-month extension option to June 2025,
subject to lender consent.
The Group's financial resources are expected to be sufficient to cover its
commitments over the going concern period, including in the
severe-but-plausible downside scenario.
Relative to the Group's base forecast, the severe-but-plausible downside
scenario includes the following key assumptions:
· Substantial reduction in forecast rental income due to a
combination of extended voids and tenant failures;
· Elevated SONIA rates in excess of current market expectations;
and
· Declines in rental values, along with a widening of valuation
yields, resulting in reduced asset values.
The near-term impact of climate change risks within the going concern period
have been considered in the severe-but-plausible downside scenario and are
expected to be immaterial.
Under the severe-but-plausible downside scenario, the Group is expected to
remain in compliance with its loan-to-value and interest cover covenants of
its individual financing arrangements.
In addition to considering a severe-but-plausible downside scenario, the Board
has also undertaken reverse stress testing, which indicated that the Group
could withstand a decrease in excess of 40 per cent in income and valuations,
before reaching the limit on all financial covenants.
Based on their analysis, the Directors are satisfied that there is a
reasonable expectation that the Group will be able to meet its ongoing and
future commitments for at least 12 months from the date of approval of the
condensed consolidated interim financial statements and have therefore
resolved that the Group's condensed consolidated interim financial statements
be prepared on a going concern basis.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of condensed consolidated interim financial statements in
accordance with IFRS requires the Directors to make judgements and estimates
that affect the reported amounts of assets, liabilities, equity, income and
expenses from sources not readily apparent. Although these estimates are based
on management's best knowledge of the amount, historical experiences and other
factors, actual results ultimately may differ from those estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period.
The most significant area of estimation uncertainty in these condensed
consolidated interim financial statements is in respect of the valuation of
the property portfolio, including the merger date valuation of the investment
properties acquired in the business combination, where external valuations are
obtained.
The fair value of the Group's investment and trading property (trading
property included within the Lillie Square joint venture) at 30 June 2023 was
determined by independent, appropriately qualified external valuers CBRE and
Cushman & Wakefield for the wholly owned investment properties, JLL for
the Lillie Square joint venture and Knight Frank for the Longmartin joint
venture. The valuations conform to the Royal Institution of Chartered
Surveyors ("RICS") Valuation Professional Standards.
As various inputs used in the valuation calculations are based on assumptions,
property valuations are inherently subjective and subject to a degree of
estimation uncertainty. The Group's external valuers have made a number of
assumptions as outlined within note 10 'Investment Property' in forming their
opinion on the valuation of the Group's investment and trading properties.
These assumptions are in accordance with the RICS Valuation Professional
Standards, however, if any prove to be incorrect, it may mean that the value
of the Group's properties differs from their valuation reported in these
condensed consolidated interim financial statements, which could have a
material effect on the Group's financial position. The key unobservable inputs
used in the valuation models and a sensitivity analysis for each are disclosed
on page 39.
Other areas of estimation in the condensed consolidated interim financial
statements (which are not considered critical) include REIT compliance, the
impairment of and expected credit loss allowance on trade receivables,
share-based payments and the fair value estimation of the remaining assets
acquired and liabilities assumed in the business combination and the
likelihood of contingent liabilities resulting in future liabilities for the
Group.
The significant judgement in the preparation of these condensed consolidated
interim financial statements included determining the accounting acquirer in
the business combination. As set out in IFRS 3 'Business Combinations', one of
the combining entities is required to be identified as the acquirer and one as
the acquiree. In a business combination effected primarily by exchanging
equity interests, the acquirer is usually the entity that issues its equity
interests. The pertinent facts and circumstances of the merger have been
reviewed and considered by management and it is the Directors' view that
although on completion, Shaftesbury PLC shareholders (excluding the existing
Capco shareholding in Shaftesbury) owned approximately 53 per cent of the
combined Group, having regard to a number of factors, Capco is the acquirer
for IFRS 3 accounting purposes. Upon merger Capco was the entity issuing its
equity interests and already held a 25.2 per cent shareholding in Shaftesbury
since 2020. The balance of the Board, Executive Directors and Executive
Committee in the combined Group was also assessed. Following completion of the
merger the Board comprises six Shaftesbury and four Capco directors. The three
Executive Directors comprise two Capco directors, the Chief Executive and
Chief Financial Officer, and one Shaftesbury director, the Chief Operating
Officer. Following completion of the merger, an Executive Committee,
comprising three Capco and two Shaftesbury leadership team members, has been
established and is responsible for the day-to-day management and operation of
the Group. The transaction, whilst implemented through an offer, was
effectively structured as a merger with the economic terms having regard to
relative NTAs and market capitalisations.
2 PERFORMANCE MEASURES
The Group has applied the European Securities and Markets Authority guidelines on alternative performance measures ("APMs") in these interim results. An APM is a financial measure of historical or future financial performance, position or cash flow of the Group which is not a measure defined or specified in IFRS.
As is usual practice in the sector, the Group presents APMs for certain
indicators, including earnings, earnings per share and net tangible assets,
making adjustments set out by EPRA in its Best Practice Recommendations. These
recommendations are designed to make the financial statements of public real
estate companies more comparable across Europe, enhancing the transparency,
comparability and coherence of the sector.
One of the key performance measures which the Group uses is underlying
earnings. The measure aligns with the main principles of EPRA earnings which
provides a measure of recurring income on a transparent and consistent basis.
EPRA earnings excludes valuation movements on the wholly owned and joint
venture properties, fair value changes of financial instruments and listed
investments, cost of early close out of debt, gain on bargain purchase and
merger-related transaction costs.
Certain Group adjustments, such as adjusting for non-recurring integration
costs, which are not removed from EPRA earnings, are made to calculate
underlying earnings. On completion of the merger and alignment of accounting
policies for tenant lease incentives and deferred letting fees a £5.1 million
reduction to gross profit has been recorded in the current period. As the
adjustment is non-recurring and non-cash the impact has been adjusted from
underlying earnings.
On completion of the merger, a fair value exercise was performed on the
Shaftesbury PLC balance sheet, with the debt (including the impact to the fair
value of the investment in the Longmartin joint venture arising from
underlying fair value of debt) adjusted to be held at a fair value of £945.6
million compared to the nominal value of £1,019.8 million. The fair value
adjustment will be amortised to other finance costs over the remaining term of
the debt facilities. In the current period, EPRA earnings has been adjusted by
£24.6 million, in relation to the accelerated unwind on the early redemption
of the Chinatown and Carnaby Bonds in April 2023. The remaining adjustment for
the other debt facilities has been adjusted from underlying earnings within
other finance costs.
A summary of the number of shares, on a basic and diluted basis, in issue at
the period end, and on a weighted average basis for the six-month period, is
set out in the table below:
Number of shares
Six months ended 30 June Six months ended 31 December 2022
30 June 2023 30 June
2023 2022
Weighted average In issue Weighted average In issue
million
million
million(1) million
Ordinary shares 1,557.7 1,953.2 851.3 851.5
Own shares - employee benefit trust (2.1) (3.1) - -
Own shares - collateral for exchangeable bond (82.3) (128.4) - -
Number of shares - basic 1,473.3 1,821.7 851.3 851.5
Dilutive effect of contingently issuable share option awards(2) 5.1 5.1 1.3 0.8
Dilutive effect of contingently issuable deferred share awards(2) 0.4 0.4 0.1 -
Number of shares - diluted 1,478.8 1,827.2 852.7 852.3
1. Due to the settlement of share options under the employee benefit scheme
prior to the merger, and the all-share merger completing on 6 March 2023,
1,101.7 million shares have been issued in the period.
2. In the period ended 30 June 2022, contingently issuable share options and
deferred share awards were excluded from the weighted average dilutive number
of shares when calculating IFRS, EPRA and underlying dilutive loss per share
because they were anti-dilutive.
Earnings per share - IFRS
Restated
Six months ended Six months ended
30 June 30 June
2023 2022
£m
£m
Basic earnings/(loss) 799.1 (11.4)
Basic earnings/(loss) per share (pence) 54.2p (1.3)p
Diluted earnings/(loss) per share (pence) 54.0p (1.3)p
Earnings per share - EPRA and Underlying
Note Restated Six months ended
Six months 30 June
ended 2022
£m
30 June
2023
£m
Basic earnings/(loss) 799.1 (11.4)
EPRA Group adjustments:
Loss/(gain) on revaluation of investment property 10 16.8 (81.7)
Change in value of investments and other receivables (2.2) 3.6
Change in fair value of financial assets at fair value through profit or loss (52.0) 90.2
Change in fair value of derivative financial instruments 15 (4.1) (6.1)
Gain on bargain purchase 9 (803.7) -
Accelerated unwind of unamortised finance costs and interest on early close 24.6 5.9
out of debt(1)
Merger-related transaction costs 4 36.2 9.0
Deferred tax adjustments - 1.2
EPRA joint venture adjustments:
Profit on sale and transfer of trading property (4.7) (0.3)
Loss on revaluation and sale of investment property 0.4 -
Write down of trading property 0.4 1.6
EPRA earnings 10.8 12.0
EPRA earnings per share (pence) 0.7p 1.4p
Underlying earnings adjustments:
Merger-related integration costs 4 3.4 -
Other finance income(2) 5 (1.8) (1.7)
Other finance costs 2.0 1.2
Impact of change in accounting policy on gross profit 5.1 -
Joint ventures adjustment - Lillie Square(3) 4.1 (1.3)
Taxation - 3.8
Change in fair value of derivative financial instruments - exchangeable bond 15 3.9 (10.8)
option
Underlying earnings 27.5 3.2
Underlying earnings per share (pence) 1.9p 0.4p
1. All unamortised finance costs, including the fair value adjustment of the
bonds on completion of the merger, have been accelerated on early redemption
of the Carnaby and Chinatown bonds in April 2023. Prior year adjustment
relates to the non-recurring costs in connection with the early repayment of
£75 million of private placement notes and the repayment of the £125 million
secured loan.
2. Represents interest receivable by the Group on the interest-bearing loans
issued to the Lillie Square joint venture.
3. Relates to adjustments in relation to the Lillie Square joint venture.
These are excluded from underlying earnings as Lillie Square is not considered
part of the core underlying business of the Group.
Net assets per share
As at 30 June 2023 As at 31 December 2022
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
£m
£m
£m
£m
£m
£m
IFRS total equity(1) 3,553.7 3,553.7 3,553.7 1,561.6 1,561.6 1,561.6
Unrecognised surplus on trading property - joint venture 1.2 1.2 1.2 7.1 7.1 7.1
Fair value of derivative financial instruments (19.6) (19.6) - (12.1) (12.1) -
Fair value adjustment of exchangeable bond(2) 0.6 0.6 - (4.8) (4.8) -
Real Estate Transfer Tax 338.7 - - 116.0 - -
Difference between fair value and carrying value of debt(3) - - 124.8 - - 121.4
Deferred tax adjustments(4) 5.4 5.4 - 0.4 0.4 -
NAV 3,880.0 3,541.3 3,679.7 1,668.2 1,552.2 1,690.1
NAV per share (pence) 212.3p 193.8p 201.4p 195.8p 182.1p 198.3p
1. IFRS total equity of 194.5 pence per share (31 December 2022: 183.2
pence per share).
2. Adjustment to remove the exchangeable bond option fair value and
include the exchangeable bond liability at nominal value of £275 million.
3. Excludes the fair value of the exchangeable bond option component. It
includes our 50% share of secured term loans in the Longmartin joint venture.
4. Deferred tax adjustment includes our share of deferred tax in the
Longmartin joint venture.
Headline earnings per share
Headline earnings per share is calculated in accordance with Circular 1/2023
issued by the South African Institute of Chartered Accountants, a requirement
of the Group's Johannesburg Stock Exchange secondary listing. This measure is
not a requirement of IFRS.
Six months ended 30 June 2023 Restated
Six months ended 30 June 2022
Earnings Shares Earnings Loss Shares Loss
£m
per share (pence)
£m
per share (pence)
million million
Basic earnings/(loss) 799.1 1,473.3 54.2 (11.4) 851.3 (1.3)
Group adjustments:
Gain on bargain purchase (803.7) -
Loss/(gain) on revaluation and sale of investment property 16.8 (81.7)
Headline earnings/(loss) 12.2 1,473.3 0.8 (93.1) 851.3 (10.9)
Dilutive effect of contingently issuable share option awards 5.1 1.3
Dilutive effect of contingently issuable deferred share awards 0.4 0.1
Diluted headline earnings/(loss) 12.2 1,478.8 0.8 (93.1) 852.7 (10.9)
3 GROSS PROFIT
Six months Restated
ended Six months
30 June ended
2023 30 June
£m
2022
£m
Rental receivable 73.4 29.6
Straight-lining of tenant lease incentives(1) 0.5 3.0
Service charge income 8.5 3.3
Revenue 82.4 35.9
Expected credit loss provision (1.6) (1.2)
Property expenses(1) (13.4) (4.5)
Service charge expenses (8.5) (3.3)
Impairment of tenant lease incentives (0.6) -
Costs (24.1) (9.0)
Gross profit 58.3 26.9
1. 30 June 2023 includes £5.1 million relating to the change in accounting
policy to reflect the adjustment to amortisation period for tenant lease
incentives and deferred letting fees. £4.1 million of the adjustment is
recognised through the straight lining of tenant lease incentives and £1.0
million in property expenses. Refer to note 1 'Changes in accounting policies'
for further details.
All revenue has been generated from operations within the United Kingdom.
4 ADMINISTRATION EXPENSES
Included within administration expenses in the consolidated statement of
comprehensive income are:
Six months Six months
ended ended
30 June 30 June
2023 2022
£m
£m
Depreciation 0.1 0.1
Merger-related transaction costs(1) 36.2 9.0
Merger-related integration costs 3.4 -
Other administration expenses 17.8 12.7
Administration expenses 57.5 21.8
1. Costs relate to transaction fees and expenses in respect of the all-share
merger with Shaftesbury. Details are set out in note 9 'Gain on bargain
purchase'.
5 FINANCE INCOME
Six months ended Six months ended
30 June 2023 30 June 2022
£m
£m
Finance income:
On deposits and other 2.6 0.6
On interest rate derivatives 3.1 -
Finance income 5.7 0.6
Other finance income:
On loans to joint ventures(1) 2.0 1.7
Other finance income 2.0 1.7
1. Represents £0.2 million (30 June 2022: nil) interest income on the loan
due from the Longmartin joint venture and £1.8 million (30 June 2022: £1.7
million) on the loan due from the Lillie Square joint venture.
6 FINANCE COSTS
Six months Six months
ended ended
30 June 30 June
2023 2022
£m
£m
On bank facilities and loan notes 16.2 10.4
On exchangeable bonds(1) 4.2 4.1
On mortgage bonds(2) 1.7 -
On secured loans 4.8 -
On obligations under lease liabilities 0.3 0.4
Finance costs 27.2 14.9
Other finance costs:
Non-underlying finance charges(3) 26.3 7.1
Other finance costs 26.3 7.1
1. On 30 November 2020 the Group issued £275 million of secured exchangeable
bonds maturing in March 2026. The net proceeds received from the issue of the
exchangeable bonds have been split between the financial liability element and
an option component. The debt component is accounted for at amortised cost
and, after taking into account transaction costs, accrues interest at an
effective interest rate of 3.1 per cent, of which 2 per cent (£2.8 million
for the six-month period) represents the cash coupon on the bond.
2. Interest incurred on the £575 million Chinatown and Carnaby bonds from 6
March 2023 up to their redemption in April 2023.
3. Non-underlying finance charges have been excluded from the calculation of
underlying earnings as these are non-recurring costs and do not represent the
underlying performance of the business. The current period charge relates to
the unwind of the fair value adjustment of the debt on completion of the
merger as discussed in note 9 'Gain on bargain purchase'. It is comprised of
£24.6 million for the unwind on the early redemption of the Chinatown and
Carnaby bonds and £1.7 million on the remaining facilities. In the prior
period the costs were in connection with the early repayment of £75.0 million
of private placement notes, the repayment of the £125.0 million secured loan
and the cost of entering the loan facility.
7 TAXATION
Six months ended Six months ended
30 June 2023 30 June 2022
£m
£m
Deferred income tax:
On accelerated capital allowances 0.1 -
On fair value of derivative financial instruments - 1.2
On Group losses - 3.8
On other temporary differences (0.1) 0.5
Deferred income tax - 5.5
Total taxation charge in the consolidated statement of comprehensive income - 5.5
As a UK REIT, the Group is exempt from UK corporation tax on income and gains
from qualifying activities. Non-qualifying activities are subject to UK
corporation tax.
The main corporation tax rate increased from 19 to 25 per cent with effect
from 1 April 2023. As a result of this change in tax rate, a blended rate of
23.5 per cent will be applicable to the Group for the year ending 31 December
2023.
8 DIVIDENDS
Pence per share Six months Six months Year
ended ended ended
30 June 30 June 31 December 2022
£m
2023 2022
£m
£m
PID Non-PID
Ordinary shares
For year ended 31 December 2021:
Final dividend of 1.0 pence per share(1) 0.5 0.5 - 8.5 8.5
For year ended 31 December 2022:
First interim dividend of 0.8 pence per share(2) 0.8 - - - 6.8
Second interim dividend of 1.7 pence per share(3) 0.7 1.0 14.5 - -
Dividend expense for the period 14.5 8.5 15.3
1. Final dividend was paid on 8 July 2022.
2. First interim dividend was paid on 19 September 2022 (SA) and 20 September
2022 (UK).
3. Second interim dividend was paid on 20 March 2023.
As a UK REIT, Shaftesbury Capital must distribute at least 90 per cent of the
Group's income profits from its tax-exempt property rental business, and 100
per cent of the Group's UK REIT investment profits, by way of a Property
Income Distribution ("PID").
These distributions can be subject to withholding tax at 20 per cent.
Dividends from profits of the Group's taxable residual business are ordinary
dividends and will be taxed as an ordinary dividend. A corporation tax charge
would arise for the Group at the prevailing tax rate if the minimum PID
requirement is not met within 12 months of the end of the period.
On 3 August 2023, the Directors declared an interim dividend for 2023 of 1.5
pence per ordinary share, which will be paid wholly as an ordinary dividend.
The interim cash dividend will be paid on 18 September 2023 to all
shareholders on the register on 25 August 2023.
9 GAIN ON BARGAIN PURCHASE
The Capco and Shaftesbury PLC all-share merger completed on 6 March 2023, with
Capco also being renamed to Shaftesbury Capital PLC on this date. The merger
has brought together two respected real estate companies, with properties
located in the West End, to create a leading mixed-use central London REIT.
Further information is included in the prospectus relating to the merger.
Prior to the all-share merger, Capco held a 25.2 per cent shareholding in
Shaftesbury PLC which was held at fair value through profit and loss. On the
completion date, 6 March 2023, the fair value of Shaftesbury PLC shares was
421.6 pence per share. Therefore, Capco's previously held interest of
96,971,003 Shaftesbury PLC shares was valued at £408.8 million on this date.
Of this shareholding, 38,245,171 shares were held as collateral in respect of
the £275 million Exchangeable Bonds ('EBs'), issued by Capco in 2020.
Upon the merger becoming effective, Shaftesbury PLC Shareholders received
3.356 Shaftesbury Capital shares for each Shaftesbury PLC share held,
totalling 1,095,549,228 shares (including 128,350,794 shares issued to a Capco
controlled entity in respect of secured shares previously held as collateral
for the exchangeable bonds).
The table below sets out the fair value of the identifiable net assets
acquired, and consideration transferred on the completion date. As the fair
value of the identifiable net assets acquired was greater than the total
consideration paid, due to the Shaftesbury Capital share price trading at a 32
per cent discount to the last reported net asset value, a gain on bargain
purchase has been recognised in the statement of comprehensive income for the
period ended 30 June 2023.
As at 30 June 2023, the Group remains in the measurement period for the
recognition of assets acquired and liabilities assumed during the merger. The
values provided in the following table are therefore provisional and could be
subject to adjustment until the measurement period ends 12 months after
completion, being March 2024.
Book value Fair value
as at as at
6 March Fair value adjustments(1) 6 March
£m
2023 2023
£m
£m
Assets
Investment properties(2) 3,099.0 42.0 3,141.0
Investment in joint venture 82.3 2.4 84.7
Property, plant and equipment 0.2 - 0.2
Trade and other receivables 70.2 (42.0) 28.2
Cash and cash equivalents(3) 118.1 - 118.1
Total assets 3,369.8 2.4 3,372.2
Liabilities
Borrowings (954.0) 65.0 (889.0)
Trade and other payables (66.6) - (66.6)
Total liabilities (1,020.6) 65.0 (955.6)
Net assets acquired 2,349.2
Fair value of net assets acquired 2,416.6
Consideration transferred:
Issue of 1,095,549,228 ordinary share of 25 pence per share(4) 1,363.9
Shares previously held by Capco (159.8)
Consideration: fair value of shares issued 1,204.1
Fair value of shares previously held 408.8
Fair value of consideration and shares previously held 1,612.9
Gain on bargain purchase 803.7
Merger-related transaction costs(5) (36.2)
Total gain on business combination recognised in the statement of 767.5
comprehensive income
1. Details of completion date fair value adjustments required under IFRS 3 are
set out in the notes below.
2. Investment property, excluding the Group's share of investment property
held within the Longmartin joint venture, was externally valued and reported
at market value on the merger date.
3. No cash consideration was included within the transaction. The cash held by
Shaftesbury PLC on 6 March 2023 reflects the cash acquired on completion of
the merger as included within the consolidated statement of cash flows.
4. The calculation of consideration is based on the Capco closing share price
of 124.5 pence per share on 3 March 2023. Shaftesbury PLC shares, excluding
the 25.2 per cent shareholding held by Capco, were exchanged for Capco shares
at a ratio of 3.356 shares per Shaftesbury PLC share.
5. Transaction-related costs of £36.2 million incurred in connection with the
all-share merger have been recorded within administration expenses in the
consolidated statement of comprehensive income.
Fair value adjustments have arisen on the following:
· Tenant lease incentives and deferred letting fees - The carrying
value of investment properties and trade and other receivables has been
adjusted to derecognise £42.0 million of tenant lease incentives and deferred
letting fees held prior to merger.
· Investment in joint venture - The fair value of the investment in
joint venture includes investment property and borrowings at fair value. The
Group's 50 per cent share of the £120.0 million fixed rate debt held in the
joint venture, was fair valued at £56.6 million, resulting in a £3.4 million
fair value adjustment due to the current interest rate environment. An
additional tax adjustment of £0.8 million was recognised on the fair value
adjustment of the term loan. Capitalised issue costs associated with the debt
of £0.2 million (our share) were derecognised on completion and the fair
value of the debt and corresponding deferred tax adjustment will be amortised
over the remaining term of the debt facility.
· Gross rent receivables of £11.9 million with an expected credit loss
provision on merger date of £3.1 million were deemed to be at fair value of
£8.8 million.
· Borrowings - Fixed rate debt with a nominal value of £959.8 million
was fair valued at £889.0 million, a £70.8 million difference due to the
current interest rate environment. The fair value adjustment is offset by
£5.8 million of capitalised issue costs associated with the debt which were
derecognised on completion. The fair value adjustment will be amortised to
other finance costs over the remaining term of the debt facilities. Following
the redemption of the Carnaby and Chinatown bonds in April, £24.6 million of
the fair value adjustment was accelerated and recognised in other finance
costs in the period. £44.5 million of the £70.8 million (wholly owned)
adjustment remains at 30 June 2023, which will be amortised over the remaining
term of the debt facilities.
The revenue and loss before tax of the Shaftesbury PLC Group are set out in
the table below.
1 January 2023 to 6 March 2023 to Pro-forma
5 March 2023 30 June 2023 Shaftesbury
£m(1) £m(2) PLC Group
£m
Revenue 24.9 47.7 72.6
Loss before tax(3) (1.7) (15.8) (17.5)
1. 1 January 2023 - 5 March 2023 (pre-merger) Shaftesbury PLC Group revenue
and loss before tax obtained from internal management accounts of Shaftesbury
PLC and have not been adjusted for accounting policy alignments or fair value
adjustments.
2. 6 March 2023 - 30 June 2023 (post-merger) Shaftesbury PLC Group revenue and
loss before tax are included in the Group condensed consolidated statement of
comprehensive income for the six months ended 30 June 2023 and take into
account adjustments relating to accounting policy alignment and the unwind of
the fair value adjustments on the term loans and deferred tax in Longmartin.
3. Loss before tax for the periods 1 January 2023 - 5 March 2023 and 6 March
2023 - 30 June 2023 includes revaluation movements and merger-related
transaction and integration costs. Excluding these items, estimated
underlying earnings for the period 1 January 2023 - 5 March 2023 were £5
million.
The pro forma information is provided for illustrative purposes only and is
not necessarily indicative of the results of the combined Group that would
have occurred had the merger actually completed at the beginning of the
financial year, or indicative of future results of the combined Group.
10 INVESTMENT PROPERTIES
30 June 31 December
2023 2022
£m
£m
At 1 January 1,715.1 1,705.6
Investment property acquired on merger at 6 March 2023 fair value 3,141.0 -
Additions from acquisitions 12.9 -
Additions from subsequent expenditure 15.2 10.3
Disposals (2.2) -
Loss on revaluation (16.8) (0.8)
Carrying value of investment property 4,865.2 1,715.1
Adjustment in respect of fixed head leases (4.0) (6.1)
Adjustment in respect of tenant lease incentives and deferred letting fees 37.3 34.7
Market value of investment property 4,898.5 1,743.7
30 June 31 December
2023 2022
£m
£m
The investment properties valuation comprises:
Freehold properties 3,855.5 940.1
Leasehold properties 1,043.0 803.6
Market value of investment property 4,898.5 1,743.7
The fair value of the Group's investment property at 30 June 2023 was
determined by independent, appropriately qualified external valuers, CBRE and
Cushman & Wakefield. The valuations conform to the Royal Institution of
Chartered Surveyors ("RICS") Valuation Professional Standards. Fees paid to
valuers are based on fixed price contracts.
Each year the Company appoints the external valuers. The valuers are selected
based upon their knowledge, independence and reputation for valuing assets
such as those held by the Group.
Valuations are performed bi-annually and are performed consistently across all
properties in the Group's portfolio. At each reporting date appropriately
qualified employees of the Group verify all significant inputs and review
computational outputs. Valuers submit and present summary reports to the
Group's Audit Committee, with the Executive Directors reporting to the Board
on the outcome of each valuation round.
Valuations are based on what is determined to be the highest and best use.
When considering the highest and best use a valuer will consider, on a
property-by-property basis, its actual and potential uses which are
physically, legally and financially viable. Where the highest and best use
differs from the existing use, the valuer will consider the cost and the
likelihood of achieving and implementing this change in use in arriving at its
valuation.
The fair value of the Group's investment properties has primarily been
determined using a market approach, which provides an indication of value by
comparing the subject asset with similar assets for which price information is
available. The external valuers use information provided by the Group, such as
tenancy information and capital expenditure expectations. In deriving fair
value, the valuer also makes a series of assumptions, using professional
judgement and market observations. These assumptions include, but are not
limited to, market yields, ERVs and void periods. The key assumptions are the
equivalent yields and estimated future rental income (ERVs), as set out within
the Analysis of Property Portfolio on page 53. Equivalent yields are based on
current market prices, depending on, inter alia, the location, condition and
use of the properties. ERVs are calculated using a number of factors which
include current rental income, market comparatives and local occupancy levels.
Whilst there is market evidence for the key inputs, and recent transaction
prices for similar properties, there is still a significant element of
estimation and judgement. As a result of adjustments made to market observable
data, these significant inputs are deemed unobservable.
As highlighted within the Group's Net Zero Carbon Pathway published in
December 2021, developments and refurbishments form a key element of the
Group's 2030 Net Zero Carbon Commitment. During the six-month period ended 30
June 2023, the Group's additions from subsequent expenditure were £15.2
million (year ended 31 December 2022: £10.3 million). This sum included both
capital works which enhanced the environmental performance of assets, and
design stage work to deliver environmental enhancements. While new ground up
development forms a limited part of the Group activity, the design stage on
refitting and refurbishment, particularly of heritage buildings, is equally
important to deliver Whole Life Carbon efficiency.
Non-financial assets carried at fair value, as is the case for investment
property held by the Group, are required to be analysed by level depending on
the valuation method adopted under IFRS 13 'Fair Value Measurement' ("IFRS
13").
The different valuation levels are defined as:
Level 1: valuation based on quoted market prices traded in active markets;
Level 2: valuation based on inputs other than quoted prices included within
Level 1 that maximise the use of observable data either directly or from
market prices or indirectly derived from market prices; and
Level 3: where one or more inputs to valuation are not based on observable
market data. Valuations at this level are more subjective and therefore more
closely managed, including sensitivity analysis of inputs to valuation models.
When the degree of subjectivity or nature of the measurement inputs changes,
consideration is given as to whether a transfer between fair value levels is
deemed to have occurred. Unobservable data becoming observable market data
would determine a transfer from Level 3 to Level 2. All investment properties
held by the Group are classified as Level 3 in the current and prior period.
Sensitivity to changes in key assumptions
As noted in the critical accounting judgements and key sources of estimation
and uncertainty section in note 1, the valuation of the Group's property
portfolio is inherently subjective. As a result, the valuations are subject to
a degree of uncertainty and are made on the basis of assumptions which may not
prove to be accurate, particularly in periods of volatility or low transaction
flow in the commercial property market.
The sensitivity analysis below illustrates the impact on the fair value of the
Group's properties, from changes in the key assumptions:
Change in ERV
-10% -5% +5% +10%
£m £m £m £m
(Decrease)/increase in fair value (413.0) (207.3) 212.9 427.5
Change in Yield
-0.5% -0.25% +0.25% +0.5%
£m £m £m £m
Increase/(decrease) in fair value 702.7 327.3 (288.2) (544.7)
The table above shows movements in key assumptions in isolation. These key
unobservable inputs are interdependent. All other factors being equal, a
higher equivalent yield would lead to a decrease in the valuation, and an
increase in estimated rental value would increase the capital value, and vice
versa. However, there are interrelationships between the key unobservable
inputs which are partially determined by market conditions, which would impact
these changes.
At 30 June 2023, the Group was contractually committed to £22.8 million (31
December 2022: £1.7 million) of future expenditure for the purchase,
construction, development and enhancement of investment property. Refer to
note 17 'Capital commitments' for further information on capital commitments.
11 INVESTMENT IN JOINT VENTURES
Investment in joint ventures is measured using the equity method. All joint
ventures are held with other joint venture investors on a 50:50 basis. At 30
June 2023, joint ventures comprise the Longmartin joint venture ("Longmartin")
and the Lillie Square joint venture ("LSJV"). The Group disposed of its
interest in Innova Investment ("Innova") on 15 May 2023.
Longmartin
Longmartin was established as a joint venture arrangement with The Mercer's
Company. This joint venture owns a long leasehold interest in a 1.9-acre
cluster of mixed-use buildings, centred on St Martin's Courtyard in Covent
Garden, which offers a range of hospitality, leisure and retail concepts,
alongside over 100,000 sq. ft. of office space and 75 apartments.
The summarised statement of comprehensive income and balance sheet used for
equity accounting purposes are presented below.
Longmartin 6 March 2023 to
30 June 2023
£m
Summarised statement of comprehensive income
Revenue 6.0
Net rental income 4.3
Administration expenses (0.1)
Loss on revaluation of investment property (0.4)
Other income -
Taxation (0.6)
Net finance costs1 (2.8)
Profit for the period after taxation 0.4
Longmartin 30 June
2023
£m
Summarised balance sheet
Investment property 328.0
Cash and cash equivalents 5.1
Other non-current assets 2.2
Other current assets 1.3
Amounts payable to joint venture partners2 (23.1)
Non-current borrowings(1) (113.8)
Other non-current liabilities (22.4)
Other current liabilities (8.5)
Net assets 168.8
Capital commitments 0.2
Fair value at the end of the period:
Properties valued by Knight Frank LLP 318.0
Finance lease asset 11.2
Lease incentives and costs included in receivables (1.2)
Carrying value of investment property 328.0
1. Net finance costs and the carrying value of non-current borrowings include
the unwind and remaining balance of the adjustment of debt to fair value on
completion of the merger. The £120.0 million fixed rate debt held in the
joint venture, was valued at £113.2 million on completion of the merger,
resulting in a £6.8 million fair value adjustment due to the current interest
rate environment, of which £0.6 million was amortised through finance costs
in the current period.
2. During the period, Longmartin repaid £5.3 million of its loan from joint
venture partners following the return of £5.3 million cash held on deposit as
a waiver guarantee with its external lender. The remaining loan balance of
£23.1 million can be split £0.7 million (current) and £22.4 million
(non-current).
Investment properties owned by the Longmartin joint venture (in which the
Group has a 50 per cent interest) have been valued at 30 June 2023 by
professionally qualified external valuers, Knight Frank LLP, who are members
of the Royal Institution of Chartered Surveyors. Adjustments are made to the
fair value of Longmartin's investment properties to arrive at the book value
at 30 June 2023, as set out above.
LSJV
LSJV was established as a joint venture arrangement with the Kwok Family
Interests ("KFI") in August 2012. The joint venture was established to own,
manage and develop land interests at Lillie Square. LSJV comprises Lillie
Square LP, Lillie Square GP Limited, acting as general partner to the
partnership, and its subsidiaries. All major decisions regarding LSJV are
taken by the Board of Lillie Square GP Limited, through which the Group shares
strategic control.
The summarised statement of comprehensive income and balance sheet of LSJV are
presented below.
LSJV Six months Six months
ended ended
30 June 30 June
2023 2022
£m
£m
Summarised statement of comprehensive income
Revenue 5.4 4.4
Net rental (expense)/income (0.3) 0.2
Proceeds from the sale of trading property 5.3 3.1
Loss on revaluation of investment property (0.5) -
Profit on transfer of trading property to investment property 8.3 -
Cost of sale of trading property (4.0) (2.4)
Agent, selling and marketing fees (0.2) (0.1)
Write down of trading property (0.7) (3.1)
Administration expenses (0.1) (0.1)
Net finance costs1 (3.4) (3.5)
Profit/(loss) for the period after taxation 4.4 (5.9)
1. Net finance costs include £3.4 million (30 June 2022: £3.5 million)
interest payable on the interest bearing loans issued to the joint venture by
the Group and KFI. Finance income receivable by the Group from LSJV of £1.7
million (30 June 2022: £1.7 million) is recognised in the consolidated
statement of comprehensive income within other finance income.
LSJV 30 June 31 December
2023 2022
£m
£m
Summarised balance sheet
Investment property(1) 30.9 8.8
Trading property 112.7 131.0
Cash and cash equivalents 15.1 11.8
Other non-current assets 5.5 5.5
Other current assets 2.4 1.9
Amounts payable to joint venture partners(2) (220.4) (217.5)
Other current liabilities (3.1) (3.1)
Net liabilities (56.9) (61.6)
Capital commitments 0.8 1.6
1. The joint venture leased 12 units (31 December 2022: 5 units) to tenants on
short-term leases. Units are transferred from trading property to investment
property upon entering the lease.
2. Amounts payable to joint venture partners include working capital
facilities advanced by the Group and KFI of £28.3 million (31 December 2022:
£28.2 million) and a £163.0 million loan advanced by the Group and KFI to
the joint venture. The carrying value of the loan, including accrued interest
was £176.6 million (31 December 2022: £172.9 million). Recoverable amounts
receivable by the Group, net of impairments, are recognised on the
consolidated balance sheet within non-current trade and other receivables.
Reconciliation of investment in joint ventures
The table below reconciles the opening to closing carrying value of investment
in joint ventures as presented in the consolidated balance sheet.
Investment in joint ventures Longmartin LSJV Innova Total
£m
£m
£m
£m
At 1 January 2022 - - 0.2 0.2
At 31 December 2022 - - 0.2 0.2
Investment in joint venture acquired 84.7 - - 84.7
Share of profit for the period(1) 0.2 2.2 - 2.4
Profit allocated to previous losses restricted(2) - (2.2) - (2.2)
Dividend received (0.5) - - (0.5)
Disposal of joint venture - - (0.2) (0.2)
At 30 June 2023 84.4 - - 84.4
1. The share of post-tax loss from joint ventures in the consolidated
statement of comprehensive income of £0.2 million comprises the profit from
the Longmartin joint venture of £0.4 million, offset by £0.2 million unwind
of the fair value adjustment of debt on completion of the merger, and the
profit from the Lillie Square joint venture for the year of £2.2 million and
restricted loss totalling £2.2 million.
2. Profit allocated to previous restricted losses represent the Group's share
of profit in LSJV in the period allocated to the cumulative losses which
exceed the Group's investment in the joint venture. Cumulative losses of
£28.6 million have been restricted to date (31 December 2022: £30.8 million)
and as a result the carrying value of the investment in LSJV is nil (31
December 20 22: nil) in accordance with the requirements of IAS 28.
12 TRADE AND OTHER RECEIVABLES
As at As at
30 June 31 December
2023 2022
£m
£m
Non-current
Prepayments and accrued income1 28.3 31.6
Other receivables(2) 3.7 -
Amounts receivable from joint ventures3 94.7 84.0
Trade and other receivables 126.7 115.6
Current
Rent receivable(4) 11.9 8.0
Other receivables 2.4 2.6
Prepayments and accrued income1 12.4 10.2
Amounts receivable from joint ventures3 5.0 -
Trade and other receivables 31.7 20.8
1. Includes tenant lease incentives and deferred letting fees of £37.3
million (31 December 2022: £39.0 million).
2. Non-current other receivables include £3.7 million of restricted cash held
on deposit as security for certain secured term loans and secured bank
facilities where there are certain conditions restricting their use.
3. Amounts receivable from joint ventures represent loans provided to LSJV and
Longmartin. Of the amounts due, £88.3 million relates to LSJV and £11.4
million relates to Longmartin. For LSJV, £88.3 million (31 December 2022:
£86.4 million) is included in non-current. It relates to an interest-bearing
loan provided by the Group, which bears interest at 4.25 per cent per annum
and is repayable on demand. As it is not the intention of the Group to call
on the loan in the next 12 months it has been presented as non-current. The
loan has been impaired by £0.1 million during the period (31 December 2022:
£2.4 million). Included within current amounts due from LSJV is £28.3
million (31 December 2022: £28.2 million) for working capital funding. It has
been impaired by £28.3 million (31 December 2022: £28.2 million). For
Longmartin, of the £11.4 million due (31 December 2022: nil), £6.4 million
is included in non-current and £5.0 million is included in current. Amounts
due relate to an interest bearing loan at a rate of 4.45 per cent per annum
and is repayable on demand.
4. Rent receivable is shown net of an expected credit loss provision of £5.0
million (31 December 2022: £4.0 million).
5. At 30 June 2023, cash deposits totalling £17.2 million (31 December 2022:
nil) were held against tenants' rent payment obligations. The deposits are
held in bank accounts administered by the Group's managing agents and are not
included within the Group balance sheet. The Group also holds tenant deposits
of £14.4 million (31 December 2022: £13.4 million) in bank account
administered by Group Treasury which is included within Cash and Cash
Equivalents in the Group balance sheet.
13 CASH AND CASH EQUIVALENTS
30 June 31 December 2022
£m
2023
£m
Cash at hand 5.8 2.1
Cash on short-term deposits 151.5 114.4
Cash 157.3 116.5
Tenant deposits 14.4 13.4
Cash and cash equivalents 171.7 129.9
14 BORROWINGS
30 June 2023
Carrying Secured Unsecured Fixed Floating Fair Nominal
value
£m
£m
rate
rate
value
value
£m
£m
£m
£m
£m
Bank loans 572.2 - 572.2 - 572.2 576.0 576.0
Loan notes (USPPs) 474.0 - 474.0 474.0 - 395.2 475.0
Secured loans 340.3 340.3 - 340.3 - 326.0 384.8
Exchangeable bonds 268.3 268.3 - 268.3 - 232.1 275.0
Total borrowings 1,654.8 608.6 1,046.2 1,082.6 572.2 1,529.3 1,710.8
Cash, excluding tenant deposits (157.3)
Net debt 1,553.5
31 December 2022
Carrying Secured Unsecured Fixed Floating Fair Nominal
value
£m
£m
rate
rate
value
value
£m
£m
£m
£m
£m
Bank loans (2.5) - (2.5) - (2.5) - -
Loan notes 473.9 - 473.9 473.9 - 393.4 475.0
Exchangeable bonds 266.9 266.9 - 266.9 - 228.9 275.0
Total borrowings 738.3 266.9 471.4 740.8 (2.5) 622.3 750.0
Cash, excluding tenant deposits (116.5)
Net debt 633.5
The Group has a £300 million revolving credit facility, which is undrawn at
30 June 2023. The facility had an initial three-year term, which was extended
for a further one year period to September 2025. The facility has a further
one year option to extend, subject to lender consent.
In April 2023, the loan facility of £576 million was drawn down in full to
fund the redemption of the £575 million Chinatown and Carnaby Bonds.
£384.8 million (nominal value) of the Group's borrowings are secured by fixed
charges over certain investment properties held by subsidiaries, with a market
value of £1,010.9 million (31 December 2022: £nil), and by floating charges
over the assets of the Company and/or certain subsidiaries.
There are currently no restrictions on the remittance of income from
investment properties.
Undrawn facilities and cash attributable to the Group, excluding tenant
deposits and cash held within the joint ventures, at 30 June 2023 were £457.3
million (31 December 2022: £416.5 million).
The fair value of the Group's borrowings has been estimated using the market
value for floating rate borrowings, which approximates nominal value, and
discounted cash flow approach for fixed rate borrowings, representing Level 2
fair value measurements as defined by IFRS 13. The different valuation levels
are defined in note 10 'Investment Property'.
15 CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
The table below sets out each class of financial asset and financial liability
at 30 June 2023 and 31 December 2022:
30 June 2023 31 December 2022
Note Carrying Gain/(loss) Carrying Gain/(loss)
value
to profit or loss
value
to profit or loss
£m
£m
£m
£m
Derivative financial assets(1) 19.6 4.1 12.1 11.0
Total held for trading assets 19.6 4.1 12.1 11.0
Cash and cash equivalents 13 171.7 129.9
Other financial assets2 117.7 94.6
Total cash and other financial assets 289.4 224.5
Investment held at fair value through profit or loss(3) - 52.0 356.9 (239.5)
Total investment held at fair value through profit or loss - 52.0 356.9 (239.5)
Derivative financial liabilities(4) (7.2) (3.9) (3.3) 28.8
Total held for trading liabilities (7.2) (3.9) (3.3) 28.8
Borrowings 14 (1,654.8) - (738.3)
Other financial liabilities5 (63.4) - (32.6)
Total borrowings and other financial liabilities (1,718.2) - (770.9)
1. Represents non-traded derivative instruments held by the Group to manage
its exposure to interest rate risk. Interest rate derivatives are currently in
place for £500 million of notional value for 2023 and £350 million for 2024
(31 December 2022: £200 million).
2. Includes rent receivable, amounts due from joint ventures and other
receivables.
3. Financial assets at fair value through profit or loss previously comprised
the 97.0 million shares held in Shaftesbury PLC. Following the completion of
the all-share merger on 6 March 2023 the investment was derecognised. A fair
value gain of £52.0 million (30 June 2022: loss of £90.2 million) has been
recognised in the period reflecting the movement in the share price from 368
pence at 31 December 2022 to 421.6 pence on 3 March 2023.
4. Represents the fair value of the option component of the exchangeable bond.
5. Includes trade and other payables (excluding rents in advance) and lease
liabilities.
Fair value estimation
Financial instruments carried at fair value are required to be analysed by
level depending on the valuation method adopted under IFRS 13 'Fair Value
Measurement'. The different levels are defined as per note 10.
The table below present the Group's financial assets and liabilities
recognised at fair value at 30 June 2023 and 31 December 2022. There were no
transfers between levels during the period.
30 June 2023 31 December 2022
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m
£m
£m
£m
£m
£m
£m
£m
Financial assets at fair value through profit or loss
Listed equity investment - - - - 356.9 - - 356.9
Held for trading assets
Derivative financial assets - 19.6 - 19.6 - 12.1 - 12.1
Total assets - 19.6 - 19.6 356.9 12.1 - 369.0
Held for trading liabilities
Derivative financial liabilities - (7.2) - (7.2) - (3.3) - (3.3)
Total liabilities - (7.2) - (7.2) - (3.3) - (3.3)
The fair values of derivative financial instruments are determined from
observable market prices or estimated using appropriate yield curves at the
period end by discounting the future contractual cash flows to the net present
values. Listed equity investments are carried at fair value on the balance
sheet and representing Level 1 fair value measurement. The fair value of
listed equity investments is based on quoted market prices traded in active
markets.
The fair values of the Group's cash and cash equivalents, other financial
assets carried at amortised cost and other financial liabilities are not
materially different from those at which they are carried in these condensed
consolidated interim financial statements.
16 SHARE CAPITAL AND SHARE PREMIUM
Issue type Issue price Number Share Share
(pence)
of shares
capital
premium
£m
£m
At 1 January 2023 851,450,638 212.8 232.5
Issued to satisfy employee share scheme awards(1) 25 6,170,629 1.5 -
Issued on completion of all-share merger(2) 25 1,095,549,228 273.9 -
At 30 June 2023 1,953,170,495 488.2 232.5
1. On 2 March 2023, 6,170,629 new shares were issued to satisfy employee share
scheme awards.
2. On completion of the all-share merger on 6 March 2023, 1,095,549,228 new
shares were issued (including 128,350,794 shares issued to a Capco controlled
entity in respect of secured shares previously held as collateral for the
exchangeable bonds). See note 9 'Gain on bargain purchase' for further
details.
17 CAPITAL COMMITMENTS
At 30 June 2023, the Group was contractually committed to £22.8 million (31
December 2022: £1.7 million) of future expenditure for the purchase,
construction, development and enhancement of investment, development and
trading property. The full amount is committed 2023 expenditure.
The Group's share of joint venture capital commitments arising on LSJV amounts
to £0.4 million (31 December 2022: £0.8 million) and Longmartin amounts to
£0.1 million.
18 CONTINGENT LIABILITIES
The Group has contingent liabilities in respect of legislation, sustainability
targets, legal claims, guarantees, warranties and indemnities arising from the
ordinary course of business. There are no contingent liabilities that require
disclosure or recognition in the condensed consolidated interim financial
statements.
19 CASH FLOW INFORMATION
(a) Cash flows from operating activities
Note Restated
Six months Six months
ended ended
30 June 30 June
2023 2022
£m
£m
Profit/(loss) before tax2 799.1 (5.9)
Adjustments:
Loss/(gain) on revaluation and sale of investment property2 16.8 (81.7)
Gain on bargain purchase (803.7) -
Change in value of investments and other receivables (2.2) 3.6
Change in fair value of financial assets at fair value through profit or loss (52.0) 90.2
Depreciation 0.1 0.1
Amortisation of tenant lease incentives and other direct costs2 2.7 (1.5)
Provision for expected credit loss2 1.6 1.2
Profit from joint venture (0.2) -
Share-based payment1 0.6 1.0
Finance income 5 (5.7) (0.6)
Other finance income 5 (2.0) (1.7)
Finance costs 6 27.2 14.9
Other finance cost 6 26.3 7.1
Change in fair value of derivative financial instruments (0.2) (16.9)
Change in working capital:
Change in trade and other receivables2 2.6 (5.9)
Change in trade and other payables (23.6) 14.5
Cash (utilised)/generated from operations (12.6) 18.4
1. Relates to the IFRS 2 'Share-based payment' charge.
2. Prior period comparatives have been restated to reflect changes in
accounting policy detailed in note 1 'Changes in accounting policies'.
(b) Reconciliation of cash flows from financing activities
The table below sets out the reconciliation of movements of liabilities to
cash flows arising from financing activities:
Note Borrowings Derivative liability - exchangeable bond Total liabilities from financing activities
£m £m £m
Balance at 1 January 2023 738.3 3.3 741.6
Cash flows from financing activities
Bank loan drawn 576.0 - 576.0
Repayment of secured bonds (575.0) - (575.0)
Total cash flows used in financing activities 1.0 - 1.0
Non-cash movements from financing activities
Debt acquired on completion of all-share merger 889.0 - 889.0
Amortisation 26.5 - 26.5
Changes in fair value 15 - 3.9 3.9
Total non-cash flows from financing activities 915.5 3.9 919.4
Balance at 30 June 2023 1,654.8 7.2 1,662.0
20 RELATED PARTY TRANSACTIONS
Transactions between the Group and its joint ventures
Transactions during the period between the Group and its joint ventures, which
are related parties, are disclosed in notes 11 'Investment in joint ventures',
12 'Trade and other receivables' and 17 'Capital commitments'.
Property purchased by Directors of the Company
A related party of the Group, Lillie Square GP Limited, entered into the
following related party transactions as defined by IAS 24 'Related Party
Disclosures':
Henry Staunton, Chairman of Capco up to 6 March 2023, and Situl Jobanputra,
Chief Financial Officer of Shaftesbury Capital, either solely or together with
family members, own apartments in the Lillie Square development. As owners of
apartments and car parking space in the Lillie Square development, the
Directors are required to pay annual ground rent, insurance premium fees,
maintenance work fees and bi-annual service charge fees. The disclosures in
respect of these purchases were included in previous financial statements. In
addition, Henry Staunton, together with a family member, owns a car park space
in the Lillie Square development.
The transactions with Directors are conducted at fair and reasonable market
price based upon similar comparable transactions at that time. Where
applicable, appropriate approval has been provided. Lillie Square GP Limited
acts in the capacity of general partner to Lillie Square LP, a joint venture
between the Group and KFI.
ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
The Group has applied the European Securities and Markets Authority guidelines
on alternative performance measures ("APMs") in these interim results. An APM
is a financial measure of historical or future finance performance, position
or cash flow of the Group which is not a measure defined or specified in IFRS.
Set out below is a summary of the APMs.
Many of the APMs included are based on the EPRA Best Practice Recommendations
reporting framework, a set of standard disclosures for the property industry,
which aims to improve the transparency, comparability and relevance of
published results of public real estate companies in Europe.
The Group also uses underlying earnings, property portfolio and financial debt
ratio APMs. Financial debt ratios are supplementary ratios which we believe
are useful in monitoring the capital structure of the Group. Additionally,
loan-to-value and interest cover are covenants within many of the Group's
borrowing facilities.
APM Definition of measure Nearest IFRS measure Explanation and Six months Six months
reconciliation
ended ended
30 June 30 June
2023 2022
Underlying earnings(1) Profit/(loss) for the period excluding unrealised and one-off items Profit for the period Note 2 £27.5m £3.2m
Underlying earnings Underlying earnings per weighted number of ordinary shares Basic earnings per share Note 2 1.9p 0.4p
per share(1)
EPRA earnings(1) Recurring earnings from core operational activity Profit for the period Note 2 £10.8m £12.0m
EPRA earnings per share(1) EPRA earnings per weighted number of ordinary shares Basic earnings per share Note 2 0.7p 1.4p
APM Definition of measure Nearest IFRS measure Explanation and As at As at
reconciliation
30 June 31 December 2022
2023
EPRA NTA Net asset value adjusted to include properties and other investment interests Net assets attributable to shareholders Note 2 £3,541.3m £1,552.2m
at fair value and to exclude certain items not expected to crystallise in a
long-term investment property business model
EPRA NTA per share EPRA NTA per the diluted number of ordinary shares Net assets attributable to shareholders per share Note 2 193.8p 182.1p
Market value of investment property(2) Market value of wholly owned investment property portfolio Investment properties Note 10 £4,898.5m £1,743.7m
Interest cover Underlying operating profit divided by net underlying finance costs N/A N/A 223.1% 181.3%
Loan-to-value(2) Net debt, at nominal value and excluding tenant deposits, divided by market N/A N/A 31.7% 36.3%(3)
value of investment property
Gross debt with interest rate protection Proportion of the gross debt with interest rate protection N/A N/A 100% 100%
Weighted average cost of debt(4) Cost of debt weighted by the drawn balance of external borrowings N/A N/A 4.3% 2.7%
Cash and undrawn committed facilities(2) Cash and cash equivalents, excluding tenant deposits, plus undrawn committed N/A Financial Review £457.3m £416.5m
facilities
1. Prior period comparatives have been restated to reflect change in
accounting policy on how a lessor should account for the forgiveness of lease
payments. See note 1 for further details.
2. Prior period comparatives have been restated based on changes to the
definition following the all-share merger with Shaftesbury PLC and the Board
focus on the wholly owned portfolio. Due to the fair value exercise performed
on merger, and the Shaftesbury PLC debt accounted for at fair value, net debt
metrics have been adjusted to be based on nominal value rather than carrying
value.
3. The 31 December 2022 loan-to-value represents the Capco only calculation
which excludes the £356.9 million 25.2 per cent shareholding held in
Shaftesbury but includes the exchangeable bond which was secured by collateral
on the shareholding. The net debt to gross assets ratio was 27.9 per cent.
4. As at 30 June 2023 the weighted average cost of debt reduces to an
effective running cash cost of 3.4 per cent taking account of interest on cash
deposits and interest rate caps.
PRO FORMA INFORMATION (UNAUDITED)
The all-share merger of Capco and Shaftesbury PLC to create Shaftesbury
Capital completed on 6 March 2023. Pro forma information has been included for
the balance sheet to provide relevant comparative information. The table below
details the summary pro forma information and reconciliation on how the
information has been calculated.
APM Definition of measure Nearest IFRS measure Explanation and Pro forma
reconciliation
31 December 2022
EPRA NTA Net asset value adjusted to include properties and other investment interests Net assets attributable to shareholders Table 1 £3,526.4m
at fair value and to exclude certain items not expected to crystallise in a
long-term investment property business model
EPRA NTA per share EPRA NTA per the diluted number of ordinary shares Net assets attributable to shareholders per share Table 1 193.0p
Market value of investment property Market value of wholly owned investment property portfolio Investment properties Table 2 £4,857.8m
Net debt Total borrowings, at nominal value, less cash and cash equivalents, excluding N/A Table 3 £1,488.2m
tenant deposits
Loan-to-value Net debt divided by market value of investment property N/A Table 4 30.6%
Cash and undrawn committed facilities Cash and cash equivalents, excluding tenant deposits, plus undrawn committed N/A Table 5 £521.6m
facilities
Commitments Capital commitments of the group as at the reporting date N/A Table 6 £35.6m
Table 1 - Pro forma balance sheet and EPRA NTA
A pro forma balance sheet and EPRA NTA have been provided to reflect the
combined position of both companies as at 31 December 2022 property valuation
and assumed all merger-related transaction costs have been incurred. This is
to provide a more comparable measure for the 30 June 2023 EPRA NTA position.
Capco and Shaftesbury PLC had different reporting year ends being December and
September respectively. In providing pro forma information the latest reported
results of each Company have been used adjusted for property valuations to be
held as at 31 December 2022 and all merger-related transaction costs paid or
accrued.
Capco Capco adjustments(2) Shaftesbury 30 September 2022(3) Shaftesbury adjustments(4) Pro forma
31 December 2022(1) £m
£m £m £m
£m
Carrying value investment property 1,715.1 - 3,144.4 (30.3) 4,829.2
Investment in joint ventures 0.2 - 86.6 - 86.8
Financial assets at fair value 356.9 (356.9) - - -
Net debt (633.5) (13.0) (804.6) (37.1) (1,488.2)
Other assets and liabilities 122.9 (1.4) 32.1 (55.0) 98.6
Net assets 1,561.6 (371.3) 2,458.5 (122.4) 3,526.4
Group adjustments:
Unrealised surplus trading property - joint venture 7.1 - - - 7.1
Fair value of derivative financial instruments and exchangeable bond (16.9) - - - (16.9)
Dilutive effect of share options - - 0.5 - 0.5
Deferred tax adjustment 0.4 - 8.9 - 9.3
EPRA net tangible assets 1,552.2 (371.3) 2,467.9 (122.4) 3,526.4
EPRA net tangible assets per share (pence) 193.0p
Adjusted, diluted number of shares(5) 1,827.2m
The following adjustments have been made to gain the pro forma information:
1. Capco 31 December 2022 reflects the summary IFRS and EPRA NTA as reported
in the Capco 2022 Annual Report.
2. The following adjustments are made to the Capco 31 December 2022 reported
numbers on a pro forma basis:
· Financial assets at fair value - As at 31 December 2022
represents the 25.2 per cent investment in Shaftesbury PLC held by Capco. On
completion of the merger no separate investment is held.
· Net debt - increase of £13.0 million for merger-related
transaction costs paid between 31 December 2022 and on completion of the
merger.
· Other assets and liabilities - adjusted by £1.4 million
merger-related transaction costs accrued on merger date.
3. Shaftesbury 30 September 2022 reflects the summary IFRS and EPRA NTA as
reported in the Shaftesbury PLC 30 September 2022 Annual Report.
4. The following adjustments are made to the Shaftesbury PLC 30 September 2022
reported numbers on a pro forma basis:
· Investment property - reflects the 31 December 2022
valuation, as determined by external valuers, included in the Shaftesbury PLC
trading update announced on 30 January 2023. Due to the fair value exercise
performed on completion, the tenant lease incentives and deferred letting fees
are derecognised. An offsetting adjustment is included in other assets and
liabilities and is therefore net assets neutral.
· Net debt - increase of £37.1 million for working capital and
merger-related transaction costs paid between 30 September 2022 and on
completion of the merger.
· Other assets and liabilities - adjusted by £11.3 million
merger-related transaction costs accrued on merger date and £43.7 million
tenant lease incentives and deferred letting fees derecognised on completion.
5. Number of shares is based on 30 June 2023 which excludes 128.4 million
shares held as collateral for the exchangeable bond and 3.1 million held
within an approved Employee Benefit Trust. Total share capital in issuance,
including these components, is 1,953.2 million shares as at 30 June 2023.
1,095.5 million shares were issued on 6 March 2023 in connection with the
merger.
Table 2 - Market value investment property
To provide a consistent metric on the performance of the portfolio,
like-for-like (L-f-L) valuation movements are included in the interim results.
The movement is based on the market value of investment property, with the
opening position based on the 31 December 2022 external valuations. A
reconciliation has been provided below from reported carrying value to market
value.
Capco Capco adjustments Shaftesbury 30 September 2022(2) Shaftesbury adjustments(3) Pro forma
31 December 2022(1) £m
£m £m £m
£m
Carrying value investment property 1,715.1 - 3,144.4 (30.3) 4,829.2
Adjustment in respect of head leases, tenant lease incentives and deferred 28.6 - 43.7 (43.7)
letting fees
28.6
Market value of investment property as at 31 December 2022 1,743.7 - 3,188.1 (74.0) 4,857.8
1. As reported in the Capco 31 December 2022 Annual Report.
2. As reported in the Shaftesbury PLC 30 September 2022 Annual Report.
3. Reflects the 31 December 2022 valuation, as determined by external valuers
included in the Shaftesbury PLC trading update announced on 30 January 2023.
Due to the fair value exercise performed on completion, the tenant lease
incentives and deferred letting fees are derecognised.
Estimated rental value as at 31 December 2022 has been combined from the
external valuation reports prepared by CBRE and Cushman & Wakefield, for
both Companies. ERV is a key assumption determined by the external valuers and
included the Capco 2022 Annual Report and in the Shaftesbury PLC trading
update announced on 30 January 2023.
Annualised gross income is the sum of the last reported number of both
Companies.
2019 ERV and annualised gross income amounts are stated as the sum of 30
September 2019 Shaftesbury PLC and 31 December 2019 Capco balances as
previously reported.
Table 3 - Net debt
Capco Capco adjustments(3) Shaftesbury 30 September 2022(2) Shaftesbury adjustments(3) Pro forma
31 December 2022(1) £m
£m £m £m
£m
Cash 116.5 (13.0) 155.2 (37.1) 221.6
Debt at nominal value (750.0) - (959.8) - (1,709.8)
Net debt (633.5) (13.0) (804.6) (37.1) (1,488.2)
1. As reported in the Capco 31 December 2022 Annual Report.
2. As reported in the Shaftesbury PLC 30 September 2022 Annual Report.
3. Reflects working capital and merger-related transaction costs paid prior to
completion of the merger. The adjusted cash for Shaftesbury PLC of £118.1
million is consistent with the cash acquired within the Consolidated Statement
of Cash Flows.
Table 4 - Loan-to-value
Pro forma
£m
Net debt at nominal value Table 3 (1,488.2)
Market value of investment property as at 31 December 2022 Table 2 4,857.8
Loan-to-value 30.6%
Table 5 - Cash and undrawn facilities
Capco Capco adjustments(3) Shaftesbury 30 September 2022(2) Shaftesbury adjustments(3) Pro forma
31 December 2022(1) £m
£m £m £m
£m
Cash 116.5 (13.0) 155.2 (37.1) 221.6
Undrawn committed facilities(4) 300.0 - - - 300.0
Cash and undrawn committed facilities 416.5 (13.0) 155.2 (37.1) 521.6
1. As reported in the Capco 31 December 2022 Annual Report.
2. As reported in the Shaftesbury PLC 30 September 2022 Annual Report.
3. Reflects working capital and merger-related transaction costs paid prior to
completion of the merger. The cash for Shaftesbury PLC of £118.1 million
agrees to the cash acquired within the Consolidated Statement of Cash Flows.
4. The Group has a £300 million RCF, which was undrawn at 31 December 2022
and remains undrawn at 30 June 2023.
Table 6 - Commitments
Capco Shaftesbury 30 September 2022(2) Pro forma
31 December 2022(1) £m
£m
£m
Commitments 1.7 33.9 35.6
1. As reported in the Capco 31 December 2022 Annual Report.
2. As reported in the Shaftesbury PLC 30 September 2022 Annual Report.
EPRA measures (unaudited)
EPRA Net Reinstatement Value ("EPRA NRV"), EPRA Net Tangible Assets ("EPRA
NTA") and EPRA Net Disposal Value ("EPRA NDV") are alternative performance
measures that are calculated in accordance with the Best Practices
Recommendations of the European Public Real Estate Association (EPRA) to
provide a transparent and consistent basis to enable comparison between
European property companies. EPRA NTA is considered to be the most relevant
measure for the Group's operating activity and is the primary measure of net
asset value.
The following is a summary of EPRA performance measures and key Group
measures. The measures are defined in the Glossary.
EPRA measure Definition of measure Table 30 June 31 December 2022
2023
EPRA NTA Net asset value adjusted to include properties and other investment interests Note 2 £3,541.3m £1,552.2m
at fair value and to exclude certain items not expected to crystallise in a
long-term investment property business model
EPRA NTA per share EPRA NTA per the diluted number of ordinary shares Note 2 193.8p 182.1p
EPRA NDV EPRA NTA amended to include the fair value of financial instruments and debt Note 2 £3,679.7m £1,690.1m
EPRA NDV per share EPRA NDV per the diluted number of ordinary shares Note 2 201.4p 198.3p
EPRA NRV EPRA NTA amended to include real estate transfer tax Note 2 £3,880.0m £1,668.2m
EPRA NRV per share EPRA NRV per the diluted number of ordinary shares Note 2 212.3p 195.8p
EPRA LTV (Loan-to-Value) Ratio of net debt, including net payables, to the sum of the total property 3 30.8% 28.0%
value, including net receivables, of the Group, its subsidiaries and joint
ventures, all on a proportionate basis, expressed as a percentage
EPRA vacancy ERV of unlet units (including those under offer) expressed as a percentage of 1 5.9% n/a
the ERV of the portfolio excluding units under development
EPRA measure Definition of measure Table 30 June 30 June
2023 2022
EPRA earnings(1) Recurring earnings from core operational activity Note 2 £10.8m £12.0m
EPRA earnings per share(1) EPRA earnings per weighted number of ordinary shares Note 2 0.7p 1.4p
1. Prior period comparatives have been restated to reflect change in
accounting policy on how a lessor should account for the forgiveness of lease
payments. See note 1 for further details.
1. EPRA VACANCY RATE
30 June
2023
£m
Estimated rental value of vacant space 12.9
Estimated rental value of the portfolio less development and refurbishment 219.0
estimated rental value
EPRA vacancy rate 5.9%
EPRA vacancy rate is presented for the wholly owned investment property
portfolio only. £7.6 million of this is under offer, leaving 2.5 per cent net
space available to let.
2. PROPERTY RELATED CAPEX
30 June 2023
Group (excluding Joint ventures) Joint Ventures Total Group
£m £m £m
Acquisitions 12.9 - 12.9
Development - 0.4 0.4
Investment property
Incremental lettable space 0.2 - 0.2
No incremental lettable space 15.0 0.1 15.1
Total Capex 28.1 0.5 28.6
Conversion from accrual to cash basis (0.1) 0.1 -
Total Capex on cash basis 28.0 0.6 28.6
The property-related capex related to the standalone performance of Capco for
the period to 6 March 2023 and that of the combined Group from that date to 30
June 2023.
3. EPRA LTV
30 June 2023
Group Share of joint venture Total
£m
£m
£m
Borrowings from financial institutions 1,435.8 60.0 1,495.8
Exchangeable bond 275.0 - 275.0
Exclude:
Cash and cash equivalents(1) (171.7) (10.8) (182.5)
Net debt (B) 1,539.1 49.2 1,588.3
Investment properties at fair value 4,898.5 174.5 5,073.0
Properties under development - 57.6 57.6
Net receivables 77.0 (55.1) 21.9
Total property value (A) 4,975.5 177.0 5,152.5
EPRA LTV (B/A) 30.8%
1. Includes tenant deposits of £14.4 million held as security against tenant
rent payments which are subject to certain restrictions and therefore not
available for general use by the Group.
31 December 2022
Group Share of joint venture Total
£m
£m
£m
Borrowings from financial institutions 475.0 - 475.0
Exchangeable bond 275.0 - 275.0
Exclude:
Cash and cash equivalents(1) (129.9) (6.1) (136.0)
Net debt (B) 620.1 (6.1) 614.0
Investment properties at fair value 1,743.7 4.4 1,748.1
Properties under development - 72.6 72.6
Net receivables 94.5 (75.8) 18.7
Financial assets 356.9 - 356.9
Total property value (A) 2,195.1 1.2 2,196.3
EPRA LTV (B/A) 28.0%
1. Includes tenant deposits of £13.4 million held as security against tenant
rent payments which are subject to certain restrictions and therefore not
available for general use by the Group.
Analysis of property portfolio (unaudited)
1. PROPERTY VALUATION ANALYSIS
The like-for-like valuation and ERV growth has been prepared on a pro forma
basis reflecting the movement from 31 December 2022 to 30 June 2023. The
valuation information as at 31 December 2022 reflects the external valuations
performed by both companies as announced within the Capco 2022 Annual Report
and Shaftesbury PLC 2022 trading update announced on 30 January 2023.
Wholly owned portfolio valuation by use
30 June 2023 Retail Hospitality and leisure Offices Residential Wholly owned portfolio
Fair value (£m)(1) 1,651.1 1,650.8 897.7 696.9 4,896.5
% of total fair value 34% 34% 18% 14% 100%
L-f-L valuation movement +0.2% +0.2% +0.2% -0.2% +0.1%
Annualised gross income (£m) 64.3 71.4 30.1 22.5 188.3
% of annualised gross income 34% 38% 16% 12% 100%
ERV (£m) 78.2 79.3 51.3 25.9 234.7
L-f-L ERV movement +2.8% +3.9% +2.7% +4.3% +3.3%
% of ERV 33% 34% 22% 11% 100%
Average ERV (£ psf) 103 79 73 58 80
Net initial yield 3.4% 4.0% 2.8% 2.3% 3.3%
Topped up net initial yield 3.9% 4.2% 3.5% n/a 3.7%
Equivalent yield 4.2% 4.4% 4.7% 2.7% 4.2%
WAULT (years) 4 9 4 1 5
Area (sq. ft. m) 0.8 1.0 0.7 0.4(2) 2.9
Units 410 405 382 710(2) 1,907
1. Excludes £2 million of Group properties in Lillie Square Holdings.
2. Excludes long-leasehold residential interests.
Wholly owned portfolio valuation by location
30 June 2023 Covent Garden Carnaby | Soho Chinatown Fitzrovia Wholly owned portfolio
Fair value (£m)(1) 2,572.4 1,514.4 691.6 118.1 4,896.5
% of total fair value 53% 31% 14% 2% 100%
L-f-L valuation movement +0.2% +0.4% +0.5% -6.8% +0.1%
Annualised gross income (£m) 96.8 56.4 30.1 5.0 188.3
% of annualised gross income 51% 30% 16% 3% 100%
ERV (£m) 122.3 75.1 31.5 5.8 234.7
L-f-L ERV movement +4.3% +2.3% +2.4% +0.7% +3.3%
% of ERV 52% 32% 13% 3% 100%
Net initial yield 3.3% 3.2% 3.8% 3.5% 3.3%
Topped up net initial yield 3.7% 3.6% 3.9% 3.8% 3.7%
Equivalent yield 4.1% 4.3% 4.1% 4.2% 4.2%
WAULT (years) 5 4 6 5 5
Area (sq. ft. m) (2) 1.5 0.9 0.4 0.1 2.9
Units(2) 827 636 342 102 1,907
1. Excludes £2 million of Group properties in Lillie Square Holdings.
2. Excludes long-leasehold residential interests.
FINANCIAL COVENANTS
30 June 2023
Maturity Nominal as LTV Interest cover
covenant
covenant
at 30 June 20231
£m
Secured term loans 2029 - 2035 384.8 60% - 70% 1.4x - 1.5x
Private placements 2024 - 2037 475.0 60% 1.2x
Revolving credit facility (undrawn)(2) 2025 300.0 60% 1.2x
Exchangeable bond 2026 275.0 N/A N/A
Loan facility(3) 2024 576.0 60% 1.0x
1. The loan values are the nominal values at 30 June 2023. The balance sheet
value of the loans includes unamortised fees.
2. The Group has a £300 million RCF, which is undrawn at 30 June 2023, and
has a further one year option to extend subject to lender consent.
3. The loan facility of £576 million which was drawn down in full in April
2023 to fund redemption of the Chinatown and Carnaby Bonds. The facility has
an initial maturity in June 2024, extendable by six months (borrower option)
to December 2024, and a further six month extension option to June 2025
subject to lender consent.
DIVIDENDS
The Directors of Shaftesbury Capital declared an interim cash dividend of 1.5
pence per ordinary share (ISIN GB00B62G9D36) payable on 18 September 2023.
Dates
The following are the salient dates for payment of the interim cash dividend:
Sterling/Rand exchange rate struck Monday, 14 August 2023
Sterling/Rand exchange rate and dividend amount in Rand announced Tuesday, 15 August 2023
Ordinary shares listed ex-dividend on the JSE, Johannesburg Stock Exchange Wednesday, 23 August 2023
Ordinary shares listed ex-dividend on the London Stock Exchange Thursday, 24 August 2023
Record date for the cash interim dividend in UK and South Africa Friday, 25 August 2023
Dividend payment date for shareholders Monday, 18 September 2023
South African shareholders should note that, in accordance with the
requirements of Strate, the last day to trade cum-dividend will be Tuesday, 22
August 2023 and that no dematerialisation or rematerialisation of shares will
be possible from Wednesday, 23 August 2023 to Friday 25 August 2023 inclusive.
No transfers between the UK and South African registers may take place from
close of business on Tuesday, 15 August 2023 to Friday, 25 August 2023
inclusive.
The above dates are proposed and subject to change.
The interim cash dividend will be paid wholly as an ordinary dividend
(non-PID). There will be no PID element of the interim cash dividend. As such,
the entire interim cash dividend will be treated as an ordinary UK company
dividend and no element of the interim cash dividend will be subject to a
deduction of a 20 per cent UK withholding tax.
Information for shareholders
The information below is included only as a general guide to taxation for
shareholders based on Shaftesbury Capital's understanding of the law and the
practice currently in force. Any shareholder who is in any doubt as to their
tax position should seek independent professional advice.
UK shareholders
There is no PID element of the interim cash dividend. The entire interim cash dividend will be paid as an ordinary dividend (non-PID) and therefore treated as an ordinary UK company dividend.
South African shareholders
The interim cash dividend declared by the Company is a foreign payment and the
funds are sourced from the UK.
PIDs: There is no PID element of the interim cash dividend.
Non-PID: The entire interim cash dividend will be paid as an ordinary UK
dividend (non-PID), and as such the entire interim cash dividend will be
exempt from income tax but will constitute a dividend for SA Dividends Tax
purposes, as it will be declared in respect of a share listed on the exchange
operated by the JSE. SA Dividends Tax will therefore be withheld from the
entire interim cash dividend at a rate of 20 per cent, unless a shareholder
qualifies for an exemption and the prescribed requirements for effecting the
exemption are in place by the requisite date.
Additional information on PIDs and ordinary dividends (Non-PIDs) can be found
at
https://www.shaftesburycapital.com/en/investors/investor-information/reit.html
(https://www.shaftesburycapital.com/en/investors/investor-information/reit.html)
Glossary
Alternative Performance Measure (APM)
A financial measure of historical or future financial performance, position or cash flows of the Group which is not a measure defined or specified in IFRS.
Annualised gross income
Total annualised actual and "estimated income" from leases at a valuation date. It includes sundry non-leased income and estimated turnover related rents. No rent is attributed to leases which were subject to rent free periods at that date. It does not reflect any head rents and estimated irrecoverable outgoings at the valuation date. "Estimated income" refers to gross ERVs in respect of rent reviews outstanding at the valuation date and, where appropriate, ERV in respect of lease renewals outstanding at the valuation date where the fair value reflects terms for a renewed lease.
Best Practices Recommendations (BPR)
Standards set out by EPRA to provide comparable reporting between investment property companies.
Contracted income
Includes rent frees and contracted rent increases.
Capco
Capco represents Capital & Counties Properties PLC and all its
subsidiaries and Group undertakings. Following the all-share merger with
Shaftesbury PLC on 6 March 2023 the Company was renamed Shaftesbury Capital
PLC.
Cash and undrawn committed facilities
Cash and cash equivalents, excluding tenant deposits, plus undrawn committed
facilities.
CDP
Carbon Disclosure Project Worldwide, a global not-for-profit sustainability disclosure system. Shaftesbury Capital participates in the CDP Climate Change Programme.
Combined Group
The Capco Group and Shaftesbury Group following merger completion.
CRREM
Carbon risk real estate monitor
Diluted figures
Reported amounts adjusted to include the dilutive effects of potential shares
issuable under employee incentive arrangements.
Energy Performance Certificate (EPC)
An asset rating setting out how energy efficient a building is, rated by its
carbon dioxide emission on a scale of A to G, with A being the most energy
efficient.
EPRA
European Public Real Estate Association, the publisher of Best Practice
Recommendations intended to make financial statements of public real estate
companies in Europe clearer, more transparent and comparable.
EPRA earnings
Profit or loss for the period excluding gains or losses on the revaluation and
sale of investment property, profit on sale of subsidiaries, impairment of
other receivables, write down of trading property, changes in fair value of
derivative financial instruments, associated close-out costs of debt, gain on
bargain purchase, merger-related transaction costs and the related tax on
these items.
EPRA earnings per share
EPRA earnings divided by the weighted average number of shares in issue during
the period.
EPRA loan-to-value (LTV)
Ratio of net debt, including net payables, to the sum of the total property value, including net receivables, of the Group, its subsidiaries and joint ventures, all on a proportionate basis, expressed as a percentage. The calculation includes trading properties at fair value and debt at nominal value.
EPRA net disposal value (NDV)
The net assets as at the end of the period including the excess of the fair
value of trading property over its cost, revaluation of other non-current
investments and the fair value of fixed interest rate debt over their carrying
value.
EPRA net disposal value per share
EPRA net disposal value divided by the diluted number of ordinary shares.
EPRA net tangible assets (NTA)
The net assets as at the end of the period including the excess of the fair
value of trading property over its cost and revaluation of other non-current
investments, excluding the fair value of financial instruments and deferred
tax on revaluations.
EPRA net tangible assets per share
EPRA net tangible assets divided by the diluted number of ordinary shares.
EPRA net reinstatement value (NRV)
The net assets as at the end of the period including the excess of the fair
value of trading property over its cost and excluding the fair value of
financial instruments, deferred tax on revaluations and diluting for the
effect of those shares potentially issuable under employee share schemes plus
a gross up adjustment for related costs such as Real Estate Transfer Tax.
EPRA net reinstatement value per share
EPRA net reinstatement value divided by the diluted number of ordinary shares.
EPRA vacancy
ERV of unlet units (including those under offer) expressed as a percentage of
the ERV of the wholly owned property portfolio
excluding units under development.
ESC
Environment, Sustainability and Community.
Estimated rental value (ERV)
The external valuers' estimate of the open market rent which, on the date of
valuation, could reasonably be expected to be obtained on a new letting or
rent review of the property.
Fair value
The amount at which an asset or liability could be exchanged between two
knowledgeable, willing and unconnected parties in an arm's length transaction
at the valuation date.
Gearing
Nominal value of Group borrowings expressed as a percentage of EPRA net assets.
GRESB
The Global Real Estate Sustainability Benchmark, a sustainability index. Shaftesbury Capital participates in the GRESB Real Estate Assessment.
Headline earnings per share
Headline earnings per share is calculated in accordance with Circular 1/2023
issued by the South African Institute of Chartered Accountants ("SAICA"), a
requirement of the Group's JSE listing. This measure is not a requirement of
IFRS.
HMRC
HM Revenue and Customs.
IFRIC
International Financial Reporting Interpretations Committee.
IFRS
International Financial Reporting Standards.
Innova
Innova Investment Limited Partnership was the former 50 per cent joint venture between the Group and Network Rail Infrastructure Limited. The Group disposed of its interest on 15 May 2023.
JSE
Johannesburg Stock Exchange.
Kwok Family Interests (KFI)
Joint venture partner in the Lillie Square development.
Leasing activity
The rental value secured from lettings, rent reviews and lease renewals during
a period.
Like-for-like property
Property which has been owned throughout both periods, without significant
capital expenditure in either period, so income can be compared on a
like-for-like basis. For the purposes of comparison of capital values, this
will also include assets owned at the previous balance sheet date but not
necessarily throughout the prior period.
Loan-to-value (LTV)
LTV is calculated on the basis of net debt divided by the market value of the
wholly owned property portfolio.
Longmartin
Longmartin Properties Limited is a 50 per cent joint venture between the Group and The Mercers' Company.
LSJV
The Lillie Square joint venture is a 50 per cent joint venture between the Group and Kwok Family Interests.
MSCI
Producer of an independent benchmark of property returns.
NAV
Net Asset Value.
Net initial yield
The net initial income at the valuation date expressed as a percentage of the
gross valuation. Yields reflect net income after deduction of any ground
rents, head rents and rent charges and estimated irrecoverable outgoings at
the valuation date.
Net debt
Total borrowings, at nominal value, less cash and cash equivalents, excluding
tenant deposits.
Net rental income (NRI)
Gross rental income less ground rents, payable service charge expenses and
other non-recoverable charges, having taken due account of expected credit
loss provisions and adjustments to comply with International Financial
Reporting Standards regarding tenant lease incentives.
Net Zero Carbon
When there is a balance between the amount of GHG emissions produced and the amount removed from the atmosphere targeting initially reduction in GHG emissions resulting from our buildings and operations and then offsetting any unavoidable residual emissions.
Nominal equivalent yield
Effective annual yield to a purchaser on the gross market value, assuming rent
is receivable annually in arrears, and that the property becomes fully
occupied and that all rents revert to the current market level (ERV) at the
next review date or lease expiry.
Property income distributions (PIDs)
Distribution under the REIT regime that constitutes at least 90 per cent of
the Group's taxable income profits arising from its qualifying property rental
business, by way of dividend. PIDs can be subject to withholding tax at 20 per
cent. If the Group distributes profits from its non-qualifying business, the
distribution will be taxed as an ordinary dividend in the hands of the
investors.
Real estate investment trust (REIT)
A REIT is exempt from corporation tax on income and gains of its property
rental business (qualifying activities) provided a number of conditions are
met. It remains subject to corporation tax on non-exempt income and gains
(non-qualifying activities) which would include any trading activity, interest
income and development and management fee income.
Real Estate Transfer Tax
Purchasers' cost as included within the independent valuation of investment
and trading properties.
Reversionary potential
The amount by which ERV exceeds annualised gross income, measured at a valuation date.
RICS
Royal Institution of Chartered Surveyors.
Science-based target
A carbon emissions target that is in line with the scale of reductions
determined to be required to prevent the worst effects of climate change.
Shaftesbury PLC
Shaftesbury represents Shaftesbury PLC and all its subsidiaries and Group
undertakings, collectively referred to as the Shaftesbury Group.
Shaftesbury Capital
With effect from 6 March 2023, Capital & Counties Properties PLC changed its name to Shaftesbury Capital PLC (also referred to as "the Company" or "Shaftesbury Capital"), and all its subsidiaries and Group undertakings, collectively referred to as "the Group".
Sterling Overnight Interbank Average Rate (SONIA)
The average overnight Sterling risk-free interest rate, set in arrear, paid by
banks for unsecured transactions.
Tenant lease incentives
Any incentives offered to tenants to enter into a lease. Typically incentives
are in the form of an initial rent-free period and/or a cash contribution to
fit-out the premises. Under International Financial Reporting Standards the
value of incentives granted to tenants is amortised through the consolidated
statement of comprehensive income on a straight-line basis over the lease
term.
Topped-up net initial yield
Net initial yield adjusted for the expiration of rent-free periods.
Total property return (TPR)
Capital growth including gains and losses on disposals plus rent received less
associated costs, including ground rent.
Total return (TR)
The movement in EPRA NTA per share plus dividends per share paid during the
period.
Total shareholder return (TSR)
The movement in the price of an ordinary share plus dividends paid during the
period assuming re-investment in ordinary shares.
Underlying earnings
EPRA earnings adjusted for merger-related integration costs, non-recurring
adjustments for changes in accounting policies, changes in fair value of
derivative financial instruments (exchangeable bond), fair value adjustment
unwind of the Shaftesbury PLC fair value exercise performed on the debt on
merger, taxation and adjustments in relation to the Lillie Square joint
venture, as not considered part of the core underlying business of the Group
Underlying earnings per share (EPS)
Underlying earnings divided by the weighted average number of shares in issue
during the period.
Valuation growth/decline
The valuation movement and realised surpluses or deficits arising from the
Group's investment property portfolio expressed as a percentage return on the
valuation at the beginning of the period adjusted, on a time weighted basis,
for acquisitions, disposals and capital expenditure. When measured on a
like-for-like basis, the calculation excludes those properties acquired or
sold during the period.
Weighted average unexpired lease term (WAULT)
The unexpired lease term to the earlier of break or lease expiry weighted by
ERV for each lease.
Zone A
A means of analysing and comparing the rental value of retail space by
dividing it in to zones parallel with the main frontage. The most valuable
zone, Zone A, falls within a 6m depth of the shop frontage. Each successive
zone is valued at half the rate of the zone in front of it. The blend is
referred to as being 'ITZA' ("In Terms of Zone A").
Independent review report to Shaftesbury Capital PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Shaftesbury Capital PLC's condensed consolidated interim
financial statements (the "interim financial statements") in the Interim
results of Shaftesbury Capital PLC for the six month period ended
30 June 2023 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Consolidated Balance Sheet as at 30 June 2023;
· the Consolidated Statement of Comprehensive Income for the period
then ended;
· the Consolidated Statement of Cash Flows for the period then ended;
· the Consolidated Statement of Changes in Equity for the period then
ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim results for the six
months ended 30 June 2023 of Shaftesbury Capital PLC have been prepared in
accordance with UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, 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.
We have read the other information contained in the Interim results for the
six months ended 30 June 2023 and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the interim
financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim results for the six months ended 30 June 2023, including the
interim financial statements, is the responsibility of, and has been approved
by the directors. The directors are responsible for preparing the Interim
results for the six months ended 30 June 2023 in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Interim results for the six
months ended 30 June 2023, including the interim financial statements, the
directors are responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend
to liquidate the group or to cease operations, or have no realistic
alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim results for the six months ended 30 June 2023 based
on our review. Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit procedures,
as described in the Basis for conclusion paragraph of this report. This
report, including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this conclusion,
accept or assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
2 August 2023
Forward-looking statements
This press release includes statements that are forward-looking in nature.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Any
information contained in this press release on the price at which shares or
other securities in the Company have been bought or sold in the past, or on
the yield on such shares or other securities, should not be relied upon as a
guide to future performance.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR BIGDILGGDGXDRecent news on Shaftesbury Capital
See all newsREG - Shaftesbury Capital - Block listing Interim Review
AnnouncementREG - Shaftesbury Capital - 2024 Final Dividend - Exchange Rate
AnnouncementREG - Shaftesbury Capital - Director/PDMR Shareholding
AnnouncementREG - Shaftesbury Capital - Completion of transaction to form CG partnership
AnnouncementREG - Shaftesbury Capital - Director/PDMR Shareholding
Announcement