REG - Shaftesbury Capital - Half-year Report
31/07/2024 07:00
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RNS Number : 4741Y Shaftesbury Capital PLC 31 July 2024
Press Release
SHAFTESBURY CAPITAL PLC ("THE COMPANY")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
31 July 2024
Ian Hawksworth, Chief Executive, commented:
"We are very pleased with performance across the business. Having set clear
priorities, we are delivering on strategy. Conditions across the West End's
occupational and investment markets continue to improve. Our strong leasing
activity at rents on average 7 per cent ahead of December 2023 ERV is
delivering rental growth and increased valuations. With a strong balance
sheet, we are well-positioned to generate rental growth and take advantage of
market opportunities."
Highlights
· EPRA NTA of 193.4 pence per share, up 1.6 per cent (Dec 2023: 190.3
pence per share)
· Wholly-owned portfolio valuation increased by 1.4 per cent on a
like-for-like basis at £4.8 billion (Dec 2023: £4.8 billion) driven by ERV
growth
· Strong leasing demand across all uses, 217 leasing transactions,
representing £28.1 million of contracted rent, 7 per cent ahead of December
2023 ERV and 16 per cent ahead of previous passing rents
· 3.2 per cent like-for-like increase in ERV to £241.0 million (Dec
23: £236.9 million) and annualised gross income up 3.9 per cent like-for-like
to £196.5 million (Dec 23: £192.8 million)
· High occupancy: 2.7 per cent of ERV available to let (Dec 2023: 2.1
per cent). High levels of footfall, customer sales growth and increasing
levels of international tourism across our exceptional West End estates
· £216 million of disposals completed since merger at an overall
premium to valuation, with £86 million reinvested in acquisitions improving
the quality of our portfolio; well-positioned to take advantage of further
market opportunities
· Underlying earnings up to 1.9 pence per share (H2 2023: 1.8 pence)
and an interim dividend of 1.7 pence per share (H2 2023: 1.65 pence)
· Strong balance sheet with access to £579 million of liquidity, net
debt of £1.5 billion (Dec 2023: £1.5 billion) and EPRA loan-to-value ratio
of 30 per cent (Dec 2023: 31 per cent)
KEY FINANCIALS
30 June 31 December 2023
2024
Total equity(1) £3,537.4m £3,480.2m
Total equity per share(1) 193.4p 190.3p
Total accounting return 2.5% 5.8%
EPRA net tangible assets(1) £3,538.2m £3,479.4m
EPRA net tangible assets per share(1) 193.4p 190.3p
Total property return 2.8% 2.2%
Property market value(2) £4,831.1m £4,795.3m
Six months Six months
ended ended
30 June 30 June
2024 2023
Gross profit £80.7m £58.3m
Profit for the period(3) £86.1m £799.1m
Basic earnings per share(1) 4.7p 54.2p
Headline earnings per share(1) 1.8p 0.8p
EPRA earnings per share(1) 1.6p 0.7p
Underlying earnings per share(1) 1.9p 1.9p
Interim dividend per share(4) 1.7p 1.5p
Total shareholder return 2.0% 9.6%
1. Refer to note 2 'Performance Measures' on page 30.
2. Refer to note 10 'Property Portfolio' on page 34.
3. Refer to the 'Consolidated Statement of Comprehensive Income' on page 23.
4. Refer to note 8 'Dividends' on page 34.
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 of Shaftesbury Capital for the condensed statement of
comprehensive income for the prior period reflects the standalone performance
of Capco for the period 1 January 2023 to 6 March 2023 and the performance of
the merged business, Shaftesbury Capital, between the completion date of 6
March 2023 and 30 June 2023.
Refer to Glossary of terms on pages 51 to 54.
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 8:30am (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)
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 £4.8 billion, extends to 2.7 million
square feet of lettable space across the most vibrant areas of London's West
End. With a diverse mix of shops, restaurants, cafés, bars, residential
apartments and offices, our destinations include the high footfall, thriving
neighbourhoods of Covent Garden, Carnaby, Soho and Chinatown. 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 ("LSE") (primary) and the Johannesburg Stock Exchange ("JSE")
(secondary) and the A2X (secondary).
Our purpose
Investing to create thriving destinations in London's West End where people
enjoy visiting, working, and living.
Our values
We have a set of values that are fundamental to our behaviour, decision making
and the delivery both of our purpose and strategy: Act with integrity; Take a
creative approach; Listen and collaborate; Take a responsible, Long-term view;
and Make a difference.
OPERATING AND PORTFOLIO REVIEW
Strong performance
We are very pleased with performance across the business. Having set clear
priorities, we are delivering on strategy. There is continued pace and
performance with leasing activity well ahead of ERV, delivering growth in ERV
and rental income and increased valuations. With high footfall across the West
End, the Elizabeth line is enhancing transport connectivity for visitors,
shoppers, workers and tourists alike. We are utilising our data and insight on
consumer trends to support the evolution of our portfolio.
We have made significant progress delivering cost efficiencies and the merger
benefits are continuing to come through. We are converting the reversionary
potential of the portfolio into contracted income. Further income growth from
leasing activity and efficiencies are expected to be achieved in the year
ahead.
We have completed the sale of selected properties, reinvested in target
acquisitions improving the quality of our portfolio and successfully completed
a new unsecured loan facility, extending our debt maturity profile. Against an
improving market backdrop, Shaftesbury Capital is very-well positioned to take
advantage of market opportunities. We are confident in delivering our
medium-term targets.
Improving market conditions
The investment market in which we operate has been active for some time
demonstrating demand for high quality prime central London real estate.
Transactional evidence is now being reflected in more stable valuation yields
and rental growth is delivering improved valuations and income.
The occupational market in the core West End is strong and has been improving
for some time. We have had leasing success across our portfolio and are
delighted that our initiatives are translating into rental performance.
Through our active approach to leasing, there has been continued ERV growth
over the past 18 months with ongoing positive momentum. 217 leasing
transactions completed during the period, 7 per cent ahead of December 2023
ERV. The increased scale and depth provide opportunities for customers to
expand and move around the portfolio. To date over 20 customers have upsized
or taken additional units across the portfolio. Our rents and valuation are
well underpinned by strong leasing demand and are set for further growth.
Executing our strategy across the portfolio
The growth potential of our portfolio is compelling. Our investment priority
is currently focused on three core locations, Covent Garden, Carnaby | Soho
and Chinatown. Against an improving market backdrop, we are looking at
opportunities to expand, adding to our growth prospects.
As we implement our strategy to unify the Covent Garden district, we are
seeing the benefit of incorporating Seven Dials and Opera Quarter as part of
one destination through leasing, asset management and marketing activity. Our
customers and consumers are responding positively with demand for available
shops and restaurants. We have been able to make changes in Seven Dials at
pace, which is re-enforcing consumer interest in the wider Covent Garden area
and delivering leasing performance.
Building on the strong brand line-up, we are beginning to evolve the offer on
Carnaby Street paying close attention to brand selection and categories that
provide higher productivity, whilst taking inspiration from the area's rich
history and demand for surrounding Soho streets. Based on analysis of consumer
data and our experience elsewhere, the average spend and dwell time has the
potential to be significantly higher which should be supportive of rental
growth over time. This will be achieved through targeted leasing activity,
introducing differentiated concepts, relevant to the consumer and we have made
good early progress with a number of recent signings. In Chinatown, through an
active approach, we are introducing more variety and choice to the area
increasing the pan-Asian offering at a range of price points, which is
delivering rental growth.
Confidence in medium and long-term growth
Our clear strategy is delivering rental income and valuation growth. Footfall
is high, with customer sales growth and there is limited vacancy across the
portfolio. There are excellent levels of activity, a good leasing pipeline and
a number of customers upsizing across the portfolio. We expect continued
performance in rents and valuation which are well underpinned and are
positioned for further growth.
As long-term responsible owners, we are committed to implementing our
Environmental, Sustainability and Community strategy, including achieving Net
Zero Carbon by 2030. We are focused on delivering our priorities, progressing
further towards an effective and efficient organisational structure, growing
rents and dividends. Shaftesbury Capital has a strong balance sheet and
significant liquidity to take advantage of market opportunities. Our
performance re-affirms confidence in our medium-term targets of 5 to 7 per
cent rental growth and Total Accounting Return of 8 to 10 per cent (assuming
stable cap rates). With our ambitious team, Shaftesbury Capital is positioned
to drive total returns as the leading central London mixed-use REIT.
Investing and upgrading our portfolio
We aim to maximise the potential from investment opportunities in our existing
portfolio and acquisition opportunities which deliver attractive long-term
rental growth and total returns. We are well-positioned with access to
significant liquidity to take advantage of market opportunities and will
rotate capital as appropriate enhancing the quality of our portfolio.
To date, proceeds of £216 million have been realised at a premium to
valuation. ERV and contracted rent of disposals post-merger were both £13
million. £128 million of asset sales completed during the first half,
including substantially all of the Fitzrovia portfolio. These proceeds have
been reinvested in target assets and used to repay borrowings. In March 2024,
we completed the acquisition of the freehold interests in 25-31 James Street,
Covent Garden for £75 million (before costs). The properties have a
contracted rent of £3.9 million and comprise 21,000 square feet of lettable
area, including 12,000 square feet of retail and 9,000 square feet of
residential and office accommodation. This acquisition presents asset
management and rental growth opportunities as well as complementing our
existing ownership on James Street, a prime retail street and key gateway into
the Covent Garden Piazza. In addition, we have acquired two assets on
Broadwick Street and Marshall Street for £8 million (before costs). We have
exchanged contracts on the sale of £15 million of properties which are
expected to complete later this year.
Improving portfolio valuation
The valuation of the wholly-owned property portfolio increased by 1.4 per cent
on a like-for-like basis to £4.8 billion, equivalent to approximately £1,764
per square foot on average (Dec 2023: £1,680 per square foot), which compares
favourably with historic valuation levels which is well in excess of £2,000
per square foot.
The valuation gain has been driven by leasing and asset management activity.
Leasing activity was on average 7 per cent ahead of ERV, resulting in an
overall increase in portfolio ERV by 3.2 per cent (like-for-like) to £241
million. The equivalent yield was 4.41 per cent, reflecting a marginal outward
movement of 7 basis points, whilst the portfolio net initial yield is 3.6 per
cent. The equivalent yield for the commercial portfolio (excluding
residential) is 4.6 per cent. Following a prolonged period of high inflation
and rising interest rates, prime West End property yields are stabilising as
market sentiment improves. Total property return for the period was 2.8 per
cent compared with the MSCI Total Return Index which recorded 2.3 per cent.
Demand for West End real estate, which predominantly comprises freehold
properties and often smaller lot-sizes is strong. This market, which is
characterised by high occupancy, low capital requirements and reliable growing
long-term cash flows, continues to attract significant interest from both
international and domestic investors as demonstrated through the recent
investment activity.
Retail ERVs are currently 15 per cent below pre-pandemic levels, whilst
hospitality and leisure ERVs are now in line with pre-pandemic levels. Overall
portfolio ERV value is 2 per cent lower than 2019 levels on a like-for-like
basis.
Wholly owned portfolio valuation by use
30 June 2024 Retail Hospitality and leisure Offices Residential Wholly owned portfolio
Valuation (£m)(1) 1,675.5 1,629.6 854.8 669.3 4,829.2
Annualised gross income (£m) 69.6 73.5 30.0 23.4 196.5
ERV (£m) 82.5 82.7 50.3 25.5 241.0
ERV psf (£) 115 87 78 59 88
Net initial yield 3.8% 4.1% 2.9% 2.8% 3.6%
Topped up net initial yield 4.1% 4.2% 3.4% N/A 3.9%
Equivalent yield 4.5% 4.7% 4.9% 3.1% 4.4%
L-f-L valuation movement +1.2% +2.4% +1.7% -1.0% +1.4%
L-f-L ERV movement +2.8% +3.7% +4.8% -0.2% +3.2%
L-f-L annualised gross income growth +3.8% +4.1% +5.6% +1.3% +3.9%
WAULT (years) 3.3 8.2 2.9 1.2 4.7
Area (sq ft m)(2) 0.7 1.0 0.6 0.4 2.7
Unit count(2) 417 399 409 683 1,908
1. Excludes £1.9 million of Group properties primarily held in Lillie Square
Holdings (a wholly owned subsidiary).
2. Excluding long-leasehold residential interests.
Wholly owned portfolio valuation by location
30 June 2024 Covent Garden Carnaby | Soho Chinatown Fitzrovia Wholly owned portfolio
Valuation (£m)(1) 2,574.9 1,523.7 702.1 28.5 4,829.2
Annualised gross income (£m) 102.1 61.0 31.9 1.5 196.5
ERV (£m) 127.4 78.4 33.7 1.5 241.0
ERV psf (£) 91 88 80 62 88
Net initial yield 3.5% 3.4% 4.0% 4.3% 3.6%
Topped up net initial yield 3.8% 3.8% 4.0% 4.3% 3.9%
Equivalent yield 4.4% 4.5% 4.3% 4.1% 4.4%
L-f-L valuation movement +0.9% +2.0% +1.7% -0.1% +1.4%
L-f-L ERV movement +4.0% +2.5% +2.1% - +3.2%
L-f-L annualised gross income growth +4.4% +3.9% +2.4% +0.5% +3.9%
WAULT (years) 4.9 4.1 5.5 3.9 4.7
Area (sq ft m)(2) 1.4 0.9 0.4 - 2.7
Unit count(2) 864 665 350 29 1,908
1. Excludes £1.9 million of Group properties primarily held in Lillie Square
Holdings (a wholly owned subsidiary).
2. Excluding long-leasehold residential interests.
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 some
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 and limited new supply. In certain market environments,
this may lead prospective purchasers to regard parts of the portfolio, for
example by street, to have a greater or lower value than the aggregate of the
individual property values. Such parties may consider a combination of some,
or all, parts of the portfolio to command a premium or discount to the
valuation, which has been prepared in accordance with Royal Institution of
Chartered Surveyors guidelines.
Our interests comprise a combination of properties which are wholly-owned and
a 50 per cent share of property held in the Longmartin associate investment
and the Lillie Square joint venture. The consolidated financial statements,
prepared under IFRS, include the Group's interest in the associates and joint
ventures as one-line items in the Income Statement and Balance Sheet.
Investments in associates and joint ventures account for an additional £229
million of property interests (our 50 per cent share).
Excellent leasing activity across all uses
The portfolio represents 2.7 million square feet of lettable space, comprising
1.7 million square feet of retail, hospitality and leisure space together with
0.6 million square feet of offices and approximately 700 residential
apartments.
Operational performance across the portfolio has been strong with rental
growth and low vacancy underpinned by sustained demand. 26 new brands and
concepts were introduced during the period, reflecting the enduring appeal of
our West End portfolio.
During the period 217 leasing transactions (representing approximately 10 per
cent of total portfolio leases) were concluded with a combined rental value of
£28.1 million, comprising:
· 99 commercial lettings and renewals: £23.8 million, 8.1 per cent
ahead of 31 December 2023 ERV and 18.3 per cent ahead of previous passing
rents; and
· 118 residential lettings: £4.3 million, 3.9 per cent ahead of 31
December 2023 ERV and 7.3 per cent ahead of previous passing rents.
In addition, 38 commercial rent reviews with a rental value of £10.6 million
were concluded on average 5.3 per cent ahead of previous passing rents.
Leasing transactions by use concluded during the period
Use Transactions New contracted rent (£m) % above % above previous passing rent
Dec-2023 ERV
Retail 40 9.3 5.4 17.7
Hospitality & leisure 20 4.0 8.6 20.2
Offices 39 10.5 10.3 17.6
Residential 118 4.3 3.9 7.3
Total 217 28.1 7.4 15.8
Leasing transactions by destination concluded during the period
Use Transactions New contracted rent (£m) % above % above previous passing rent
Dec-2023 ERV
Covent Garden 103 15.2 3.6 17.5
Carnaby | Soho 80 11.3 12.6 12.9
Chinatown 30 1.4 10.0 16.8
Fitzrovia 4 0.2 7.4 4.4
Total 217 28.1 7.4 15.8
Retail (34 per cent of the portfolio by value)
The portfolio includes 417 shops with an average ERV of £115 per square foot.
We cater for a variety of retailers and provide flexibility for expansion
within our portfolio. There is 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.
The occupational and investment market continues to demonstrate polarisation
of demand to the strongest locations, as retailers become ever more discerning
on a growing number of criteria. There is greater emphasis on global
locations, consumer experience and service together with better digital
engagement. Retail demand is strong, with units attracting interest from
multiple customers. Our portfolio remains a preferred destination for market
entry and retail expansion. Trading conditions are positive with excellent
performance in certain categories such as performance wear, premium concepts
and health and wellness.
Our broad range of unit sizes and rental tones, provide scope for customers to
grow within our portfolio. Amongst the benefits of scale is our ability to
provide additional space for our customers as they expand. Over 20 customers
have upsized or taken additional units across the portfolio.
There is positive leasing momentum in the expanded Covent Garden portfolio.
During the period, we signed two flagship retailers, in prominent locations
overlooking the Piazza with healthy competition for these spaces. Luxury
makeup and skincare concept Charlotte Tilbury is upsizing significantly to a
new flagship store overlooking the Market Building, following the success of
its James Street store. Nespresso will open a new flagship on the corner of
Henrietta Street and the Piazza in the space previously occupied by NatWest
bank.
Reflecting its unique identity, Seven Dials has attracted significant interest
and excellent progress has been made evolving the customer offer as part of
our strategy to unify the Covent Garden district. The combination of the
Covent Garden Piazza with Seven Dials, Coliseum and the Opera Quarter, when
managed as one area, is a compelling proposition for our customers and
consumers. There has been a series of key additions to the neighbourhood, with
37 new brands introduced since merger, with a very encouraging pipeline.
Luxury activewear brand, Alo Yoga has been introduced at the entrance of Neal
Street which is a key gateway into Seven Dials from Covent Garden. The
neighbourhood is already home to an unrivalled selection of high-performance
brands, with outdoor brand Peak Performance, opening its first UK store on
Long Acre following the upsizing of its sister brand Arc'teryx, to a flagship
on King Street. Swedish footwear brand, Axel Arigato has opened its store
overlooking the dial itself, marking its second Shaftesbury Capital location.
Further to redevelopment of a combination of sites, Vivobarefoot has doubled
the size of its store, relocating on Neal Street, and outdoor retailer,
Finisterre has upsized from its store on Earlham Street improving their
trading prospects. British wellness brand Elemis opened its debut London store
on Monmouth Street joining recent signings Odd Muse, Lakrids by Bulow and
Missoma.
Building on the brand line-up, we are beginning to evolve the retail offer on
Carnaby Street paying particular attention to brand selection and categories
that provide higher productivity, whilst taking inspiration from the area's
rich history and demand for its surrounding Soho streets. Global lifestyle
brand PANGAIA, has opened on the southern end of Carnaby Street marking its
first European standalone store offering apparel from innovative tech and
bio-engineered materials.
There have been a number of introductions across Soho including outdoor
sportswear brand Salomon which will open its first UK store on Broadwick
Street focused on footwear and curated apparel collections, Wolf & Badger
and Malin + Goetz as well as the relocation and upsized store for Carhartt WIP
on Brewer Street. Eyewear brand, Jimmy Fairly will join Mango Teen in Soho on
Foubert's Place.
Reflecting the ongoing retail demand across our portfolio, we completed 40
retail lettings and renewals with a rental value of £9.3 million. Rents, on
average, were 5.4 per cent above December 2023 ERV and 17.7 per cent ahead of
previous passing rents. Rent reviews with a rental value of £3.1 million were
concluded, 4.7 per cent ahead of previous passing rents.
Hospitality and leisure (34 per cent of the portfolio by value)
Our hospitality and leisure portfolio extends to 399 units and offers a
diverse range of food concepts, from accessible casual to premium dining.
Customers across the portfolio continue to report sales growth. There is
competition for hospitality accommodation, with 0.8 per cent of ERV available
to let at 30 June 2024.
During the period, our West End portfolio welcomed 10 new hospitality
offerings, ranging from independent to international operators. These
operators provide a variety of cuisines and price points, bringing something
different to the evolving dining mix, across our popular dining destinations.
4 new concepts have been introduced to Covent Garden including Greek boutique
hotel, ERGON House which is set to open in a newly refurbished heritage
building, anchoring King Street next year. Luxury French pâtisserie brand,
Ladurée has expanded its tearoom in its flagship store in the Market
Building. EL&N Deli & Bakery, from café and lifestyle brand EL&N,
has also signed in the Market Building, while Aguamiel, London's first
"churreria", offering traditional Mexican desserts opened on Wellington
Street.
Donutelier, the boutique bakery specialising in doughnuts and pastries, is set
to join Carnaby Street later this year at the gateway to Kingly Court,
providing the opportunity for al fresco on Carnaby Street and reinforces
Soho's position as a fantastic mixed-use destination. Various units within
Kingly Court are attracting interest from multiple customers, as we target
some larger format destinational concepts. Goldies, a new hospitality concept,
has chosen Kingly Court to launch its debut restaurant. Goldies comes from the
experienced restaurateurs behind Soho bistro Blanchette, with Kingly Court
providing a growth opportunity in a prime West End location. Kingly Street has
recently bolstered its evening offer, with the openings of The Counter and The
Little Violet Door joining hospitality concept Two Floors which has expanded
its presence following refurbishment.
Chinatown is a highly sought-after location in the heart of the West End's
entertainment district. Interest in Chinatown, especially from new
international entrants with UK operating partners is healthy and demand from
existing customers is active. The continually evolving line-up welcomed
Pan-Asian restaurant concept, SanHao which will be debuting a new restaurant,
offering hand-pulled noodles and soups.
20 hospitality and leisure leasing transactions completed with a rental value
of £4.0 million, 8.6 per cent ahead of December 2023 ERV and 20.2 per cent
ahead of previous passing rents. Rent reviews totalled £6.1 million, 5.9 per
cent above previous passing rents.
Office (18 per cent of the portfolio by value)
Positive leasing momentum for prime office space continues, specifically for
high quality, well fitted, design led product, supported by good building and
estate amenity. With the wide range of office suites on offer, we cater to a
broad range of customer needs and provide opportunity for expansion.
The office market continues to bifurcate between the best and the rest. We
have seen strong demand for our prime West End space with increasing levels of
customers relocating from other central London locations, as office occupiers
recognise the importance of a vibrant atmosphere in attracting and retaining
staff.
Carnaby and Covent Garden are capturing this demand, with their high amenity
value and excellent environmental credentials. Rents in excess of £100 per
square foot are firmly established across our prime West End portfolio. This
includes 68-72 Broadwick and The Floral which have an average floor plate of
10,000 square feet. The Floral, is now fully pre-leased in CAT A condition,
ahead of completion to two occupiers in the financial sector.
During the period, 39 office leasing transactions with a rental value of
£10.5 million across 108,000 square feet, were concluded 10.3 per cent ahead
of December 2023 ERV. Rent reviews with rental value of £1.4 million
completed, 5.3 per cent ahead of previous passing rents. £5.7 million of
office space under refurbishment is now pre-let or under offer.
Residential (14 per cent of the portfolio by value)
The residential portfolio is performing well, with continued leasing activity
and high renewal rates across the portfolio of 683 residential apartments. Our
proposition of characterful period buildings with modern specification located
in vibrant, well-managed areas attracts interest from a broad range of
customers. During the first half of 2024, demand has strengthened with
competitive bidding, minimal voids and short leasing windows observed with
autumn typically the peak leasing period.
During the period, 118 residential lettings and renewals with a rental value
of £4.3 million completed 3.9 per cent ahead of December 2023 ERV and 7.3 per
cent ahead of previous passing rents.
Active consumer engagement through brand partnerships and activations
Unique consumer experiences are offered across our predominantly
pedestrianised destinations. We work closely with our customers to enhance
operating metrics such as footfall, conversion and spend which in turn support
rental growth prospects.
We continue to see significant growth across our social media channels. During
the period, the level of engagement and number of followers increased by 12
per cent in aggregate across all destinations. We now have direct engagement
with over 1.2 million consumers across all channels with portfolio-wide
digital collaborations.
Important marketing initiatives across the portfolio include:
· Launch of a new lighting scheme for Covent Garden's Market Building, created in partnership with Paul Smith
· Chinese New Year - sponsored the celebrations with campaigns across Chinatown and Covent Garden
· Easter campaigns and promotions across the portfolio
· Portfolio-wide activity celebrating London Marathon ahead of a Summer of Sport campaigns
· Pride celebrations across the portfolio including a month-long lighting and floral installation in the Market Building
· American Express spend incentive campaign across Covent Garden and Carnaby | Soho, driving spend, brand loyalty and data insights
· A Summer of Sport is celebrated across the portfolio including Formula 1 and E installations and screenings of Wimbledon and the Olympics on the Piazza
· A shopping event in partnership with Sheerluxe across Covent Garden and Seven Dials celebrating new openings across the district
Annualised gross income and ERV
At 30 June 2024, annualised gross income had increased by 3.9 per cent
(like-for-like) to £196.5 million. ERV was £241.0 million, up 3.2 per cent
over the period (like-for-like).
Our active approach is informed by a broad base of experience and deep
knowledge of the West End. This enables the company 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 2024, the portfolio's reversion was £44.5 million, with the
opportunity to grow annualised gross income by 23 per cent before taking into
account any further ERV growth. The components of this reversion are set out
below:
Components of the reversion
30 June 31 December 2023
2024 £m
£m
Annualised gross income 196.5 192.8
Contracted 14.3 17.3
Under offer 4.1 6.2
Available-to-let 5.9 4.7
Under refurbishment 18.9 13.9
Net under-rented 1.3 2.0
ERV 241.0 236.9
High occupancy
At 30 June 2024, EPRA vacancy (including units under offer) was 4.5 per cent
of portfolio ERV (2023: 4.9 per cent); 1.8 per cent was under offer and 2.7
per cent was available-to-let.
Under offer
Use % of portfolio ERV Area
ERV (£m) ('000 sq. ft.)
Retail 0.6 1.5 11
Hospitality & leisure 0.8 1.8 23
Offices 0.3 0.7 9
Residential 0.1 0.1 2
Total 1.8 4.1 45
Available-to-let space
Use % of portfolio ERV Area
ERV (£m) ('000 sq. ft.)
Retail 0.6 1.3 19
Hospitality & leisure 0.8 1.9 46
Offices 0.9 1.9 26
Residential 0.4 0.8 12
Total(1) 2.7 5.9 103
(1. Includes 17 units let on a temporary basis (ERV: £1.3 million) (31
December 2023: £0.7 million).)
Refurbishment activity
Active asset management and refurbishment initiatives continue to unlock
income and value as well as enhance environmental performance. The ERV of
space under refurbishment amounts to £18.9 million across 194,000 square
feet, representing 7.8 per cent of portfolio ERV (2023: 5.8 per cent).
Refurbishments will be delivered over the next 12-18 months with approximately
50 per cent already pre let or under offer.
During the period, £19.5 million of capital expenditure has been incurred,
and capital commitments amount to £17.0 million as at 30 June 2024. This is
in line with our guidance of approximately one per cent of portfolio value
expected to be invested per annum in refurbishment, asset management and
repositioning opportunities, including actions to improve energy
performance.
Under refurbishment
Use % of portfolio ERV Area
ERV (£m) ('000 sq. ft.)
Retail 1.8 4.3 31
Hospitality & leisure 1.2 3.0 35
Offices 4.4 10.6 110
Residential 0.4 1.0 18
Total 7.8 18.9 194
Joint ventures and associates
We own 50 per cent of Longmartin and Lillie Square and in the summaries that
follow, all figures represent our 50 per cent share.
Longmartin
At 30 June 2024, Longmartin's long leasehold property was valued at £164.0
million (Dec 2023: £158.7 million). After allowing for capital expenditure,
the valuation increase for the period was 2.6 per cent. Like-for-like, ERVs
increased by 6.7 per cent. At 30 June 2024, the equivalent yield was 4.97 per
cent, an increase of 11 basis points over the period (31 December 2023: 4.86
per cent).
Pursuant to the terms of the Longmartin investment (forming 3 per cent of the
Group's property portfolio), the merger triggered the right for The Mercers'
Company (the "Mercers") to require the Company to offer to sell its shares in
the Longmartin investment to them (or to a third-party purchaser identified by
them). The Mercers have elected to consider acquiring the Company's shares in
the Longmartin investment and discussions remain ongoing. There is no
certainty that a transaction relating to the Company's investment in
Longmartin will be agreed.
Lillie Square
Shaftesbury Capital owns 50 per cent of the Lillie Square joint venture, a
residential estate and remaining development phases located in West London.
The property valuation as at 30 June 2024 was £65.1 million, 0.6 per cent
lower (like-for-like) than the 31 December 2023 valuation of £65.3 million.
In addition, Shaftesbury Capital owns £1.8 million of other related assets
adjacent to the Lillie Square estate.
In total, 355 Phase 1 and 2 residential apartments have been sold. Over 60
apartments have been leased on a short-term basis, generating contracted rents
of £3.8 million. The joint venture is in a cash position of £8.5 million
(£4.3 million Shaftesbury Capital share). During the period £4.0 million was
distributed to each partner.
Commitment to sustainability and environmental stewardship
We are committed to reducing the impact of our operations on the environment,
whilst engaging and collaborating with a wide range of stakeholders. As a
long-term, responsible investor, sustainability is an important aspect of
delivering our strategy as we continue to future proof our West End heritage
properties to enhance energy performance and meet the evolving needs of our
customers. We are committed to becoming Net Zero Carbon by 2030, recognising
our heritage buildings represent substantial long-term carbon stores.
During the period, we published our first EPRA Sustainability Data Report
including the first year of combined data as Shaftesbury Capital. Our 2030 Net
Zero Carbon commitment, is currently being updated and will be published later
this year. As part of this process, we will revalidate targets through the
Science Based Targets initiative (SBTi).
We are targeting an EPC rating of A-C for 85 per cent of the portfolio (by
ERV) by the end of this year and continue to progress against the target,
focusing efforts on low-carbon retrofit and refurbishment, at modest financial
outlay which improves energy efficiency. 84 per cent of properties now have an
EPC rating of A-C, up 4 percentage points during the period. Furthermore, 65
per cent of commercial EPCs are A or B, which is up 9 percentage points in the
period. We target a minimum rating of B on all new commercial refurbishment
projects.
A Carbon Risk Real Estate Monitor ("CRREM") aligned energy efficiency analysis
has been completed on 39 of our larger assets; initial findings suggest that
we can achieve significant efficiency improvements through enhanced operation
of our properties and highlights the positive impact that electrification can
have on carbon emissions. To further improve our understanding of building
performance, we are continuing to roll out smart meters, with approximately 40
per cent landlord meters now installed. We are committed to transparent
reporting through recognised indices with updated results to be published in
the second half.
Active community engagement
We are committed to engaging with stakeholders across the West End. During the
period, we embarked on a review of how we engage with the broader community to
better support the vibrant communities that make our places thrive. We engage
with local authorities and residents to make public realm enhancements to
improve both air quality and the experience of our destinations. These include
pedestrianisation, streetscape improvements, providing outdoor seating and
schemes to reduce traffic congestion and pollution.
We continue to support community-led initiatives which work with local people
in Camden and Westminster providing support for, and engagement with, local
charities to address needs in our local communities. This support includes
sponsorship of a student at Westminster University through our Scholar
Programme, Young Westminster Foundation's Brighter Futures Fund, and Young
Camden Foundation's Heads Up Mental Health Fund. Celebrating International
Women's Day, pop up space was provided on Carnaby Street to Smart Works, a UK
charity, focusing on getting out of work women back into the workplace.
In addition to our ongoing support to community-led initiatives, we have an
established grants fund that offers local charities and groups the opportunity
to apply for funding which align with our community investment focus areas.
Grant recipients include the London Youth Theatre and Native Scientists which
will support educational workshops at three Camden schools, connecting pupils
with scientists. 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.
FINANCIAL REVIEW
Financial highlights
There has been strong performance and progress in the first half of 2024,
characterised by positive momentum across our portfolio, with strong leasing
demand across all uses resulting in rental income growth and an increased
property valuation. Consistently high footfall across the West End, together
with the Elizabeth line enhancing transport connectivity for visitors,
shoppers, workers and tourists, are contributing to sales growth for our
retail and hospitality customers. Against an improving market backdrop, the
resilient performance over the period demonstrates the exceptional qualities
of our portfolio, which has generated growth in annualised income, ERV and the
property valuation.
Underlying earnings for the period were £34.2 million, equivalent to 1.9
pence per share, driven primarily by higher net rental income on a
like-for-like basis. The Directors have declared an interim cash dividend in
respect of the period of 1.7 pence per share (H1 2023: 1.5 pence; H2 2023 1.65
pence).
The wholly-owned portfolio has been independently valued at £4,831.1 million,
reflecting 1.4 per cent like-for-like growth. ERV increased by 3.2 per cent
(like-for-like) to £241.0 million and annualised gross income was up 3.9 per
cent like-for-like to £196.5 million. The equivalent yield was 4.4 per cent,
reflecting an outward movement of 7 basis points.
The sale of selected properties was completed in the period for total proceeds
of £127.8 million with an additional £15.4 million having exchanged and due
to complete shortly. Since the merger, total disposals of £215.9 million have
completed at an overall premium to valuation (before costs). £86.4 million,
before transaction costs, has been reinvested into strategic acquisitions
across the portfolio.
Overall EPRA NTA (net tangible assets) per share increased by 1.6 per cent
from 190.3 pence at 31 December 2023 to 193.4 pence. Combined with the 1.65
pence per share dividend paid to shareholders during the period, the total
accounting return for the period is 2.5 per cent. Total shareholder return for
the period was 2.0 per cent, reflecting dividends paid and the increase in the
share price from 138.1 pence to 139.2 pence per share. Total property return
was 2.8 per cent, outperforming the MSCI total return index by 0.5 percentage
points.
We have made significant progress delivering cost savings and the merger
benefits are continuing to come through. Further income growth from leasing
activity and operational efficiencies are expected to be achieved in the year
ahead, with the EPRA cost ratio (which measures property-level and
administration costs relative to gross rental income) targeted to reduce
towards 30 per cent over the medium-term. The adjusted Company EPRA cost ratio
is 37.8 per cent for the first half of 2024, having been over 50 per cent on a
pro forma basis for the merger.
The Group has a strong balance sheet. The EPRA loan to value ratio at 30 June
2024 was 30.2 per cent. There is significant headroom against debt covenants
and access to liquidity, comprising cash and undrawn facilities, currently
£578.8 million which reduces to £483.8 million following the repayment of
£95 million of debt maturing in the second half of 2024 (31 December 2023:
£485.7 million).
During the period we successfully completed a new five-year £75 million
unsecured loan facility, extending the debt maturity profile. In addition, the
first 12 month extension option on the £350 million unsecured loan (£150
million of which is undrawn) has been exercised early taking its maturity to
December 2027. Net debt of £1.5 billion is in line with the position as at 31
December 2023. Priorities over the forthcoming period are to review
opportunities to refinance medium-term maturities as well as consideration of
longer-term financing options to evolve our capital structure, taking
advantage of the Group's enhanced credit profile.
As set out in the November 2023 investor event, we are targeting average
annual rental growth of 5-7 per cent and, (assuming stable cap rates), total
property returns of 7-9 per cent and total accounting returns of 8-10 per cent
over the medium-term. Our performance reaffirms our confidence in our
portfolio. We are focused on delivering our priorities, sustainable rental
growth, growing cash rents, progressing further towards an effective and
efficient organisational structure, and maintaining a strong capital
structure.
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 EPRA 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 underlying earnings measure reflects the underlying financial
performance of the Group's core West End property rental business and is a
relevant metric in determining dividends. The measure aligns with the main
principles of EPRA earnings which excludes valuation movements on the
wholly-owned, joint venture and associate properties, fair value changes of
financial instruments and listed investments, cost of early close out of debt,
gain on bargain purchase and IFRS 3 merger-related transaction costs. In
calculating underlying earnings, additional adjustments are made to exclude
items considered to be non-recurring or significant by virtue of their size
and nature. Consistent in the calculation for both periods is the removal of
the financial performance of the Lillie Square joint venture, associated tax
adjustments and the interest receivable on the loan issued to the joint
venture by the Group. Lillie Square is not considered to be a core part of the
operations of the Group and therefore its results are not included in
underlying earnings. The fair value movement of the option component of the
exchangeable bond is also adjusted from underlying earnings as such movements
do not reflect the true nature of the performance of the Group.
Following the completion of the all-share merger in March 2023, a fair value
exercise was performed on the Shaftesbury PLC balance sheet as at 6 March
2023, with the debt (including an adjustment to the investment in Longmartin
arising from the fair value adjustment of the underlying debt in the
associate) adjusted to be held at a fair value of £945.6 million compared to
the nominal value of £1,019.8 million. The balance of the fair value
adjustments will be amortised to other finance costs over the remaining term
of the debt facilities. In the prior period, EPRA earnings were adjusted by
£24.6 million, to reflect the accelerated unwind of the fair value adjustment
following the early redemption of the Chinatown and Carnaby bonds in April
2023. The current period amortisation of the fair value adjustment for the
other debt facilities of £3.0 million (30 June 2023: £2.0 million) has been
adjusted from underlying earnings within other finance costs.
£3.3 million (30 June 2023: £3.4 million) of merger-related integration and
other non-underlying costs have been incurred. These costs are non-recurring
as they relate to significant transactions outside the core ongoing operations
of the Group.
Further details on APMs used and how they reconcile to IFRS are set out on
page 42.
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 sets out the results of
Shaftesbury Capital with the statement of comprehensive income for the prior
period 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 2023 and 30 June 2023.
Reflecting the Company's focus primarily on the wholly-owned portfolio, all
information is presented on an IFRS basis.
FINANCIAL PERFORMANCE
SUMMARY STATEMENT OF COMPREHENSIVE INCOME
The 2023 summary statement of comprehensive income represents the standalone
performance of Capco for the period to 6 March 2023 and that of Shaftesbury
Capital from that date to 30 June 2023.
30 June 2024 30 June 2023
£m £m
Gross profit 80.7 58.3
Gain/(loss) on revaluation and sale of investment property 53.2 (16.8)
Change in fair value of listed equity investment - 52.0
Other income 0.2 2.6
Administration expenses(1) (23.4) (57.5)
Net finance costs(2) (27.9) (21.5)
Profit from joint ventures and associates 4.2 0.2
Taxation (0.2) -
Other(3) (0.7) (21.9)
86.1 (4.6)
Gain on bargain purchase - 803.7
Profit for the period 86.1 799.1
Basic earnings per share 4.7p 54.2p
EPRA earnings(4) 30.0 10.8
EPRA earnings per share(4) 1.6p 0.7p
Underlying earnings(4) 34.2 27.5
Underlying earnings per share(4) 1.9p 1.9p
Weighted average number of shares(5) 1,821.7m 1,473.3m
1. Administration expenses include £3.3 million of non-underlying costs
(2023: £39.6 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 impairment of other receivables, 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 in
note 2 'Performance measures'.
5. In total, 1,953.2 million shares are in issue as at 30 June 2023 and 2024.
The weighted average number of shares of 1,821.7 million 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, both of
which are included in the total number of shares in issue of 1,953.2 million.
Gross profit
30 June 2024 30 June 2023
£m £m
Rent receivable 95.7 73.4
Straight lining of tenant lease incentives(1) 3.1 0.5
Service charge income 12.4 8.5
Revenue 111.2 82.4
( )
Expected credit loss provision (2.2) (1.6)
Property expenses(1) (15.5) (13.4)
Service charge expenses (12.4) (8.5)
Impairment of tenant lease incentives (0.4) (0.6)
Gross profit 80.7 58.3
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 was
recognised through the straight lining of tenant lease incentives and £1.0
million in property expenses.
Rent receivable income has been impacted in the period by a £3.9 million
reduction for the impact of the disposals in 2023 and 2024, offset by £1.1
million for acquisitions. Rent receivable has increased by 2 per cent
like-for-like compared with the second half of 2023 reflecting the positive
letting activity across the portfolio.
Profit on revaluation and loss on sale of investment property
The market valuation of the wholly-owned portfolio has increased by 1.4 per
cent like-for-like since December 2023 to £4,831.1 million. ERV increased by
3.2 per cent (like-for-like) to £241.0 million and the equivalent yield was
4.4 per cent, reflecting an outward movement of seven basis points. This
equates to an equivalent yield of 4.6 per cent on the commercial portfolio,
excluding residential properties.
The profit on revaluation of £60.2 million, is based on the carrying value of
the property portfolio after adjustments for lease incentives and capital
expenditure.
Several properties, including the majority of the Fitzrovia portfolio, have
been disposed during the period for gross proceeds of £127.8 million. Based
on the opening book value and sale costs, an overall loss has been recognised
during the period, although on an overall basis since the merger, a premium
has been achieved (before costs).
Administration expenses
30 June 2024 30 June 2023
£m £m
Depreciation 0.3 0.1
Other administration expenses 19.8 17.8
Underlying administration expenses 20.1 17.9
( )
Merger-related transaction costs - 36.2
Merger-related integration and non-underlying administration expenses 3.3 3.4
Administration expenses 23.4 57.5
Underlying administration expenses of £20.1 million have been incurred.
Further efficiencies are expected over the next 6 to 12 months, including the
full impact of actions and decisions already taken, as well as those resulting
from other areas such as a review of the holding structure of the Group, and
the impact for instance on irrecoverable taxes, as well as savings from
technology-related and other initiatives.
As part of delivering cost efficiencies, one-off integration and other costs
of £3.3 million have been incurred in the period.
The EPRA cost ratio has already been reduced significantly, however over the
medium-term the Group is targeting further improvements towards 30 per cent
from its current level of 37.8 per cent, driven by growth in rental income and
rigorous management of irrecoverable property costs and administration
expenses.
Net finance costs
Net finance costs of £27.9 million include interest on the additional £350
million unsecured loan facility entered into in December 2023 as well as the
new £75 million unsecured loan facility which completed during the period.
Finance income of £7.5 million in the period comprises £2.4 million interest
on cash held on deposit and £5.1 million in relation to interest rate hedging
arrangements. Protection is currently in place in relation to the interest
rate exposure on all of the Group's expected drawn variable rate debt until
the end of 2025 through caps and collars.
Profit from joint ventures and associates
Our share of Longmartin's post-tax profit was £4.2 million for the period.
Our share of the revaluation gain was £4.4 million, offset by a deferred tax
movement of £1.2 million. Excluding the revaluation and fair value adjustment
on debt of £0.3 million, and including the £0.3 million interest received on
the interest-bearing loan provided to the associate, our share of underlying
earnings from Longmartin was £1.6 million. £1.2 million of dividends were
received during the period.
Taxation
The Group continues to satisfy the requirements to qualify for REIT status. As
the Group's income is derived substantially from qualifying property rental
business activities within the REIT regime, the majority of its income is
exempt from tax. There is a tax charge of £0.2 million in the period (2023:
£nil), arising mainly in respect of finance income.
Dividends
The Board has declared an interim cash dividend of 1.7 pence per share
reflecting progression in underlying earnings and cash generation. The total
gross dividend payable is £33.2 million of which £2.2 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, the majority 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 dividend is to be paid 1.0 pence as a PID and 0.7 pence as a non-PID, on 1
October 2024 to shareholders on the register at 23 August 2024.
SUMMARY BALANCE SHEET
30 June 31 December
2024 2023
£m £m
Property portfolio(1) 4,793.5 4,760.4
Investments in joint ventures and associates 86.4 83.4
Net debt(2) (1,481.0) (1,499.1)
Other assets and liabilities 138.5 135.5
Net assets 3,537.4 3,480.2
EPRA net tangible assets 3,538.2 3,479.4
EPRA net tangible assets per share (pence) 193.4p 190.3p
Adjusted, diluted number of shares(3) 1,829.2m 1,828.8m
1. Includes £20.2 million (2023: £20.2 million) accounted for as
owner-occupied property and £15.2 million (2023: £nil) accounted for as held
for sale. The market value of the property portfolio is £4,831.1 million
(2023: £4,795.3 million).
2. Net debt based on nominal value of debt drawn less cash, excluding tenant
deposits of £13.9 million (2023: £14.5 million).
3. Number of shares excludes 128.4 million shares held as collateral for the
exchangeable bond and 3.1 million within an approved Employee Benefit Trust.
Total shares in issuance, including these components, was 1,953.2 million
shares.
EPRA NTA
EPRA NTA per share increased by 1.6 per cent to 193.4 pence, due primarily to
the like-for-like increase in the valuation of the property portfolio and a
broadly stable level of net debt.
Following the completion of the merger in 2023, the Shaftesbury debt,
including the debt in relation to our share of the Longmartin investment,
which had an overall nominal value of £444.8 million (2023: £444.8 million),
was fair valued and was held at £403.4 million as at 30 June 2024 (2023:
£400.4 million). This difference of £41.4 million (2023: £44.4 million), or
2.3 pence (2023: 2.4 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.
Property portfolio
The carrying value of the wholly-owned portfolio as at 30 June 2024 is
£4,793.5 million, including £20.2 million and £15.2 million classified as
owner occupied and held for sale respectively. During the period, a number of
selected properties have been sold with an opening carrying value of £132.0
million for gross proceeds of £127.8 million. As at 30 June 2024, £15.2
million of properties have exchanged with completion due shortly.
£83.1 million, before transaction costs, has subsequently been reinvested
into asset acquisitions. In March 2024, we completed the acquisition of the
freehold interests in 25-31 James Street, Covent Garden for £75.1 million. In
addition, we have acquired two properties on Broadwick Street and Marshall
Street for £8.0 million. Subsequent capital expenditure during the period
on the wholly-owned portfolio was £19.5 million.
The valuation of the wholly-owned property portfolio of £4,831.1 million was
1.4 per cent higher on a like-for-like basis compared with 31 December 2023.
ERV increased by 3.2 per cent (like-for-like) to £241.0 million and the
equivalent yield was 4.4 per cent, reflecting an outward movement of 7 basis
points.
Total property return for the period was 2.8 per cent. The MSCI Total Return
Index recorded performance of 2.3 per cent for the period resulting in
outperformance of 0.5 percentage points.
Investment in joint ventures and associates
The figures below in relation to the Longmartin and Lillie Square investments
represent our 50 per cent share.
Longmartin
At 30 June 2024, Longmartin's long leasehold property was valued at £164.0
million (2023: £158.7 million). After allowing for capital expenditure, the
valuation increased by 2.6 per cent. ERVs increased by 6.7 per cent and at 30
June 2024, the equivalent yield was 4.97 per cent, an increase of 11 basis
points over the period (2023: 4.86 per cent).
Longmartin has a £60.0 million fixed-rate term loan maturing in 2026. As at
30 June 2024, net debt, based on nominal value, was £58.1 million resulting
in LTV of 35.4 per cent.
Lillie Square
The property valuation as at 30 June 2024 was £65.1 million, a 0.6 per cent like-for-like decline against the 31 December 2023 valuation of £65.2 million. In total, 355 Phase 1 and 2 apartments have been sold. Over 60 apartments have been leased on a short-term basis. Our share of net cash in the joint venture was £4.3 million and there is no external debt. During the period a repayment of £4.0 million of the interest-bearing loan provided to Lillie Square was received.
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 finance costs that are well protected against interest rate movements until December 2025.
The Group's cash and undrawn committed facilities as at 30 June 2024 were
£578.8 million (2023: £485.7 million). As at 30 June 2024, the Group had
capital commitments of £17.0 million. In addition, £95 million of private
placement debt matures in the second half of 2024, which will be repaid using
Group liquidity.
30 June 31 December 2023
2024 £m
£m
Cash and cash equivalents(1) 128.8 185.7
Undrawn committed facilities 450.0 300.0
Cash and undrawn committed facilities 578.8 485.7
Commitments (17.0) (24.8)
Available resources 561.8 460.9
1. Excludes tenant deposits of £13.9 million (2023: £14.5 million).
The gearing measure most widely used in the industry is loan-to-value ("LTV")
which at 30 June 2024 was 30.7 per cent. EPRA LTV was 30.2 per cent. This is
comfortably within the Group's limit of no more than 40 per cent.
30 June 2024 31 December 2023
£m £m
Cash and cash equivalents 128.8 185.7
Debt at nominal value (1,609.8) (1,684.8)
Net debt (1,481.0) (1,499.1)
Loan-to-value 30.7% 31.3%
EPRA loan-to-value 30.2% 30.9%
Interest cover 290.0% 273.4%
Interest cover including admin costs 217.9% 212.7%
Weighted average debt maturity - drawn facilities 4.9 years 5.0 years
Weighted average cost of debt - gross(1) 4.0% 4.2%
Weighted average cost of debt - net 3.3% 3.4%
Drawn debt with interest rate protection(2) 100% 100%
1. As at 30 June 2024 the weighted average cost of debt reduces to an
effective running cash cost of 3.3 per cent (2023: 3.4 per cent) taking
account of interest on cash deposits and interest rate caps and collars.
2. Taking account of interest on cash deposits and interest rate caps and
collars.
At 30 June 2024, Group net debt was £1.5 billion.
During the period a new £75 million unsecured loan facility was entered into,
extending the debt maturity profile to approximately 5 years. The current
weighted average cash cost of drawn debt is 4.0 per cent (2023: 4.2 per cent)
which reduces to an effective cash cost of 3.3 per cent (2023: 3.4 per cent)
taking into account interest income on cash deposits and the benefit of
interest rate hedging.
All of the Group's drawn debt is at fixed rates or currently has interest rate
protection in place until the end of 2025. Interest rate protection is in
place until the end of 2024 for £200 million of notional value capped at 1.23
per cent and £150 million capping SONIA exposure at 3.75 per cent. £250
million of hedging is in place until the end of 2025 which provides for a cap
of 3.0 per cent and a floor of 2.0 per cent on SONIA exposure.
Priorities over the forthcoming period are to refinance medium-term debt
maturities as well as consideration of longer-term financing options to evolve
our capital structure, taking advantage of the Group's enhanced credit
profile.
CASH FLOWS
Movement in cash flow £m
Cash, excluding tenant deposits, as at 31 December 2023 185.7
Operating inflow 19.1
Investing inflow 29.3
Financing outflow (75.0)
Dividends paid (30.3)
Cash, excluding tenant deposits, as at 30 June 2024 128.8
The overall balance of cash decreased by £56.9 million to £128.8 million as
at 30 June 2024. This is largely due to:
· Operating cash inflows of £19.1 million reflecting growing gross profit and continuing high levels of cash collection, partly offset by administrative and finance costs. The inflow is further reduced for the payment of non-underlying merger-related integration costs and non-underlying transaction costs for property acquisitions and disposals in the period.
· Investing cash inflows of £29.3 million, including £127.8 million gross proceeds from the sale of several properties offset by £20.6 million capital expenditure and £83.1 million for the acquisition of 25-31 James Street, Broadwick Street and Marshall Street. A £1.2 million dividend has been received from the Longmartin investment and £4.0 million loan repayment from the Lillie Square investment.
· The £75.0 million financing outflow reflects the net movement in facilities drawn and repaid in the period. £0.5 million of costs have been incurred on the arrangement of the £75 million unsecured loan facility in the period.
· Total dividends paid in the period excludes the £1.9 million paid to the Group entity which holds 128.4 million shares as security under the terms of the exchangeable bonds. Following the dividend threshold test, as set out in the exchangeable bond conditions, the full dividend was subsequently retained by the Group.
Going concern
Further information on the going concern assessment is set out in note 1 to
the consolidated interim financial statements.
The Company has a strong balance sheet with EPRA loan-to-value of 30.2 per
cent, group interest cover of over two times and nearly three times before
administrative costs, and access to cash and undrawn facilities of £578.8
million as at 30 June 2024. 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 consolidated interim
financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board has overall responsibility for Group risk management. It determines
its risk appetite and reviews principal risks and uncertainties regularly,
together with the actions taken to mitigate them. The Board has delegated
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
more 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 Chief Executive, Chief Financial
Officer, members of the Executive Committee, General Counsel, Group Financial
Controller, Director of Transformation and Technology, Head of Sustainability
and Head of Health and Safety, 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
and reported to the Board.
Further details of how we manage risk are set out on pages 59 to 65 of the 31
December 2023 Annual Report.
The Board has performed a robust assessment of the principal and emerging
risks facing the Group and has concluded that they continue to apply and are
expected to be relevant for the remaining six months of the year. Following
the General Election, and change in Government, the Group will monitor for
legislation changes that may impact on the Group as well as our customers and
consumers.
The principal risks and uncertainties are summarised below:
Principal risks
· Impact of uncertain interest rate environment and lack of
availability or increased cost of debt or equity funding
Economic, political and operating environment
· Inflationary pressures on operating costs, including energy and the
cost-of-living
· Adverse impact on business and consumer confidence, increased
material costs, prolonged supply chains and reduced labour supply
· Decline in real estate valuations due to macroeconomic conditions
· Persistent significant discount in the share price relative to EPRA
NTA
· Uncertain political climate and/or changes to legislation and
policies following change in Government
Portfolio · Inability of the Group to adopt the appropriate strategy or to react
to changing market conditions or changing consumer behaviour (including, but
not limited to, structural changes in the office, retail and hospitality
sectors)
· Portfolio concentration
· Volatility in the investment market
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/licensing policy, legislation or action
impacting on the ability to secure approvals or consents
Operational resilience · Misconduct or poor operational or sustainability standards
· Poor performance from one of the Group's third-party advisers and
contractors
· Inability to effectively integrate people, systems and processes
· Catastrophic event such as a terrorist attack, natural disaster,
health pandemic or cyber security crime
People · Inability to retain, integrate and recruit the right people and
develop leadership skills within the business
· Key person risk as the Group has a relatively limited headcount
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 customer and consumer demand for
proactive action to manage and mitigate climate-related risk
Compliance with law and regulations · Breach of legislation, regulation or contract
· Inability to monitor or anticipate legal or regulatory changes,
including potential changes to the Landlord and Tenant Act or other associated
reforms
· 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
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
30 July 2024
Situl Jobanputra
Chief Financial Officer
30 July 2024
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 6 month period ended 30 June 2024
(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 2024;
· 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 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 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, 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 in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Interim Results, 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 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
30 July 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
For the six months ended 30 June
2024
Note Six months Six months
ended ended
30 June 30 June
2024 2023
£m
£m
Revenue 3 111.2 82.4
Costs 3 (30.5) (24.1)
Gross profit 3 80.7 58.3
Other income 0.2 2.6
Administration expenses 4 (23.4) (57.5)
Gain/(loss) on revaluation and sale of investment property 53.2 (16.8)
Change in value of investments and other receivables (0.1) 2.2
Change in fair value of financial assets at fair value through profit or loss 15 - 52.0
Operating profit 110.6 40.8
Finance income 5 7.5 5.7
Finance costs 6 (35.4) (27.2)
Other finance income 5 1.9 2.0
Other finance costs 6 (2.4) (26.3)
Change in fair value of derivative financial instruments 15 (0.1) 0.2
Net finance costs (28.5) (45.6)
Profit from joint ventures and associates 11 4.2 0.2
Gain on bargain purchase 9 - 803.7
Profit before tax 86.3 799.1
Taxation 7 (0.2) -
Profit for the period 86.1 799.1
Earnings per share
Basic earnings per share 2 4.7p 54.2p
Diluted earnings per share 2 4.7p 54.0p
CONSOLIDATED Balance sheet (UNAUDITED)
As at 30 June 2024
Note As at As at
30 June 31 December
2024 2023
£m
£m
Non-current assets
Investment property 10 4,758.1 4,740.2
Property, plant and equipment 23.8 24.0
Investments in joint ventures and associates 11 86.4 83.4
Derivative financial instruments 3.5 1.4
Trade and other receivables 12 112.2 116.1
4,984.0 4,965.1
Current assets
Trade and other receivables 12 47.0 42.7
Derivative financial instruments 4.8 8.3
Cash and cash equivalents 13 142.7 200.2
194.5 251.2
Current assets held for sale
Investment property held for sale 10 15.2 -
15.2 -
Total assets 5,193.7 5,216.3
Non-current liabilities
Borrowings 14 (1,464.3) (1,534.8)
Lease liabilities (3.1) (2.7)
Derivative financial instruments 15 (5.9) (7.2)
(1,473.3) (1,544.7)
Current liabilities
Borrowings 14 (95.0) (94.9)
Lease liabilities (0.3) (0.3)
Tax liabilities (0.4) (0.2)
Trade and other payables (87.3) (96.0)
(183.0) (191.4)
Total liabilities (1,656.3) (1,736.1)
Net assets 3,537.4 3,480.2
Equity
Share capital 16 488.2 488.2
Other components of equity 3,049.2 2,992.0
Total equity 3,537.4 3,480.2
CONSOLIDATED STATEMENT OF changes in equity (UNAUDITED)
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
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.
For the six months ended 30 June 2024
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(2)
£m
£m
£m
£m
£m
Balance at 1 January 2024 488.2 232.5 (32.9) 1.5 1,256.0 1.3 (0.3) 1,533.9 3,480.2
Profit and total comprehensive income for the six months ended 30 June 2024 - - - - - - - 86.1 86.1
Dividends(3) 8 - - - - - - - (30.3) (30.3)
Fair value of share-based payment - - - - - 1.3 - - 1.3
Realisation of cash flow hedge - - - - - - 0.1 - 0.1
Balance at 30 June 2024 488.2 232.5 (32.9) 1.5 1,256.0 2.6 (0.2) 1,589.7 3,537.4
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 by the Group following the
all share-merger with Shaftesbury completed on 6 March 2023, a 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 as they form part of
linked transactions
3. Excludes £1.9 million dividend paid to a controlled entity, Capco
Investment London (No.7) Scottish Limited Partnership, in respect of
128,350,793 shares held as collateral for 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, all of which was
retained by the Group following the dividend threshold test as set out in the
exchangeable bond conditions.
CONSOLIDATED STATEMENT OF cash flowS (UNAUDITED)
For the six months ended 30 June 2024
Note Six months ended Six months ended
30 June 2024 30 June 2023
£m
£m
Cash flows from operating activities
Cash generated/(utilised) from operations 19 42.1 (12.6)
Finance costs paid (30.9) (28.0)
Interest received 7.3 6.0
Net cash inflow/(outflow) from operating activities 18.5 (34.6)
Cash flows from investing activities
Purchase and development of property(1) (103.6) (28.0)
Purchase of fixed assets (0.1) -
Sale of investment property 127.8 -
Dividends received from associate 1.2 0.5
Cash acquired in a business combination 9 - 118.1
Loans to joint ventures and associates repayment received 4.0 2.7
Net cash inflow from investing activities 29.3 93.3
Cash flows from financing activities
Borrowings repaid (210.0) (575.0)
Borrowings drawn 135.0 576.0
Acquisition of derivative financial instruments - (3.4)
Cash dividends paid 8 (30.3) (14.5)
Net cash outflow from financing activities (105.3) (16.9)
Net movement in cash and cash equivalents (57.5) 41.8
Cash and cash equivalents at 1 January 200.2 129.9
Cash and cash equivalents at period end 13 142.7 171.7
1. Included within purchase and development of property is £1.2 million of
cash acquired on the acquisition of a property portfolio.
Notes to the accounts
1 PRINCIPAL ACCOUNTING POLICIES
General Information
Shaftesbury Capital 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.
The Group's assets principally comprise investment property within the West
End of London, including Covent Garden, Carnaby, Soho and Chinatown.
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 Shaftesbury
Capital PLC financial statements for the year ended 31 December 2023. The
Shaftesbury Capital Annual Report and financial statements for the year ended
31 December 2023 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 2024 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 2023 were approved by the
Shaftesbury Capital Board of Directors on 28 February 2024 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 30 July 2024.
Accounting policies
The accounting policies used by the Group in these condensed consolidated
interim financial statements are consistent with those applied in the
Shaftesbury Capital financial statements for the year to 31 December 2023, as
amended to reflect the adoption of new standards, amendments and
interpretations which became effective in the period.
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
2024. 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 7 'Statement of Cash Flows' and IFRS 7 'Financial Instruments:
Disclosure' (amendment) (Supplier Finance Arrangements)
· IFRS 16 'Leases' (amendment) (Lease Liability in a Sale and
Leaseback)
· IAS 1 'Presentation of Financial Statements' (amendment)
(Classification of Liabilities as Current or Non-current)
New accounting standards and amendments to IFRS Standards and Interpretations
issued by the International Accounting Standards Board, which became effective
for annual periods that begin on or after 1 January 2024, or have been
published but are not yet effective, were either not relevant or had no, or
are not expected to have a material impact on the Group's results.
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 2025 (the "going concern period"), being at least 12 months from the
date of authorisation of these condensed consolidated interim financial
statements.
Footfall across the West End is strong, particularly in our portfolio. There
are high occupancy levels and trading activity is positive with continued
customer sales growth. There is strong leasing demand across all uses
delivering rental growth. There continues to be macroeconomic and political
uncertainty, including as to the prospects for interest rates and geopolitical
risks. The West End and the Group's unique portfolio of prime investments are
not completely insulated, however they have demonstrated remarkable
resilience.
The Group maintains a strong balance sheet with a focus on resilience,
flexibility and efficiency. There is significant headroom against debt
covenants and access to significant liquidity, £578.8 million as at 30 June
2024. In preparing the assessment of going concern, the Directors have
considered projections of the Group's liquidity, committed capital
expenditure, income, costs, cash flows and debt covenants.
The Directors have assessed a base case and a "severe but plausible" downside
scenario.
As at the period end, the Group had net debt of £1.5 billion, an EPRA LTV
ratio of 30.2 per cent and Group interest cover of 2.9 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 2.3 per cent on £350 million
of notional value to December 2024 and 3.0 per cent on £250 million for 12
months to December 2025.
The Group's debt matures between August 2024 and 2037. Debt maturities during
the going concern assessment period relate to the £95 million of private
placement loan notes maturing in the second half of 2024, which are expected
to be funded through cash reserves and undrawn facilities.
The Group's financial resources are expected to be sufficient to cover its
commitments over the going concern period.
Relative to the Group's base case 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.
In 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
maintain sufficient liquidity and remain in compliance with the 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 indicates that the Group
could withstand a decrease of 42 per cent in rental income and 37 per cent in
valuations, before breaching its debt 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. There have been
no changes to critical accounting judgements and key sources of estimation
uncertainty.
The most significant area of estimation uncertainty in these condensed
consolidated interim financial statements is in respect of the valuation of
the property portfolio 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 2024 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
investment. 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 'Property Portfolio' 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 36.
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 and
share-based payments.
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 underlying earnings measure reflects the underlying financial
performance of the Group's core West End property rental business and is a
relevant metric in determining dividends. The measure aligns with the main
principles of EPRA earnings which in the current period excludes valuation
movements on the wholly-owned, joint venture and associate properties and fair
value changes of financial instruments. In calculating underlying earnings,
additional adjustments are made to exclude items considered to be
non-recurring or significant by virtue of size and nature. Consistent in the
calculation for both periods is the removal of the financial performance of
the Lillie Square joint venture, associated tax adjustments and the interest
receivable on the loan issued to the joint venture by the Group. Lillie Square
is not a core part of the operations of the Group and therefore its results
are not included in the underlying earnings. The fair value movement of the
option component of the exchangeable bond is also adjusted from the underlying
earnings as such fair value movements do not reflect the nature of the
performance of the Group.
Following the completion of the all-share merger in March 2023, a fair value
exercise was performed on the Shaftesbury balance sheet as at 6 March 2023,
with the debt (including an adjustment to the investment in Longmartin arising
from the fair value adjustment of the underlying debt in the associate)
adjusted to be held at a fair value of £945.6 million compared to the nominal
value of £1,019.8 million. The balance of the fair value adjustments will be
amortised to other finance costs over the remaining term of the debt
facilities. In the prior period, EPRA earnings were adjusted by £24.6
million, to reflect the accelerated unwind of the fair value adjustment
following the early redemption of the Chinatown and Carnaby bonds in April
2023. The current period amortisation of the fair value adjustment for the
other debt facilities of £3.0 million (30 June 2023: £1.5 million) has been
adjusted from underlying earnings within other finance costs.
£3.3 million (30 June 2023: £3.4 million) of merger-related integration and other non-underlying costs have been incurred. These costs are non-recurring as they relate to transactions outside the core operations of the Group.
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 2023
30 June 2024 30 June
2024 2023
Weighted average In issue Weighted average In issue
million
million
million Million
Ordinary shares 1,953.2 1,953.2 1,557.7 1,953.2
Own shares - employee benefit trust (3.1) (3.1) (2.1) (3.1)
Own shares - collateral for exchangeable bond (128.4) (128.4) (82.3) (128.4)
Number of shares - basic(1) 1,821.7 1,821.7 1,473.3 1,821.7
Dilutive effect of contingently issuable share option awards 5.9 5.9 5.1 6.5
Dilutive effect of contingently issuable deferred share awards 1.6 1.6 0.4 0.6
Number of shares - diluted(2) 1,829.2 1,829.2 1,478.8 1,828.8
1. Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share.
2. Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings and net assets per
share.
Earnings per share - IFRS
Six months ended Six months ended
30 June 30 June
2024 2023
£m
£m
Basic earnings 86.1 799.1
Basic earnings per share (pence) 4.7p 54.2p
Diluted earnings per share (pence) 4.7p 54.0p
Earnings per share - EPRA and Underlying
Six months Six months ended
ended 30 June
30 June 2023
£m
Note 2024
£m
Basic earnings 86.1 799.1
EPRA Group adjustments:
(Gain)/loss on revaluation and sale of investment property (53.2) 16.8
Change in value of investments and other receivables 0.1 (2.2)
Change in fair value of derivative financial instruments - interest rate 15 1.4 (4.1)
derivatives
Change in fair value of financial assets at fair value through profit or loss - (52.0)
Gain on bargain purchase 9 - (803.7)
Accelerated unwind of unamortised finance costs and interest on early close - 24.6
out of debt(1)
Merger-related transaction costs 4 - 36.2
EPRA joint venture and associate adjustments:
Gain on revaluation, sale and transfer of investment and trading property (5.6) (3.9)
Deferred tax adjustment 1.2 -
EPRA earnings 30.0 10.8
EPRA earnings per share (pence) 1.6p 0.7p
Underlying earnings adjustments:
Merger-related integration and other non-underlying administrative costs 4 3.3 3.4
Other finance costs(2) 2.7 2.0
Impact of change in accounting policy on gross profit(3) - 5.1
Realised provision from merger date (bad debt) (0.1) -
Joint ventures adjustment - Lillie Square(4) (0.4) 2.3
Change in fair value of derivative financial instruments - exchangeable bond 15 (1.3) 3.9
option
Underlying earnings 34.2 27.5
Underlying earnings per share (pence) 1.9p 1.9p
1. On early redemption of the Carnaby and Chinatown bonds in April 2023
the unamortised fair value adjustment of £24.6 million that arose on
completion of the merger was accelerated.
2. Includes the unwind of the fair value adjustments on the remaining
debt facilities acquired on merger (including the fair value unwind of our
share of the Longmartin debt of £0.3 million (30 June 2023: £0.2 million).
£2.7 million of the unwind of the fair value adjustment is recorded through
other finance costs included in note 6 'Finance costs' and £0.3 million
within the profit from Longmartin as per note 11 'Investments in joint
ventures and associates'.
3. Historically, 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 the lessees were reasonably certain not to
exercise their option to break. This was amended within the prior period, such
that all lease incentives are amortised over the non-cancellable period of the
lease. As a result, other receivables within the consolidated balance sheet at
30 June 2023 decreased by £5.1 million with a corresponding reduction to
gross profit. The £5.1 million reduction to gross profit has been adjusted
for in order to reflect the true performance of the business for the six-month
period ended 30 June 2023.
4. The Lillie Square joint venture is not considered part of the core
underlying business of the Group and therefore its results are excluded from
underlying earnings. The adjustment includes £1.6 million (30 June 2023:
£1.8 million) interest receivable by the Group on the interest-bearing loans
issued to the joint venture offset by £1.2 million (30 June 2023: £4.1
million) of adjustments made to EPRA earnings for profit on sale and transfer
of trading property, loss on revaluation of investment property and write down
of trading property.
Net assets per share
As at 30 June 2024 As at 31 December 2023
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
£m
£m
£m
£m
£m
£m
IFRS total equity(1) 3,537.4 3,537.4 3,537.4 3,480.2 3,480.2 3,480.2
Unrecognised surplus on trading property - joint venture 0.1 0.1 0.1 1.7 1.7 1.7
Fair value of financial instruments - interest rate derivatives(2) (8.3) (8.3) - (9.7) (9.7) -
Fair value adjustment of exchangeable bond(3) 2.1 2.1 - 2.0 2.0 -
Real Estate Transfer Tax 332.7 - - 332.2 - -
Excess fair value of debt over carrying value(4) - - 47.2 - - 29.8
Deferred tax adjustments 6.9 6.9 - 5.2 5.2 -
NAV 3,870.9 3,538.2 3,584.7 3,811.6 3,479.4 3,511.7
NAV per share (pence) 211.6 193.4 196.0 208.4 190.3 192.0
1. IFRS total equity of 193.4 pence per share (31 December 2023: 190.3
pence per share).
2. This relates to the fair value of interest rate derivatives.
3. Adjustment to remove the exchangeable bond option fair value and
include the exchangeable bond liability at nominal value of £275 million.
4. Excludes the fair value of exchangeable bond option component
included under derivative liabilities.
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 Six months
ended ended
30 June 30 June
2024 2023
£m
£m
Basic earnings 86.1 799.1
Group adjustments:
Gain on bargain purchase - (803.7)
(Gain)/loss on revaluation and profit on sale of investment property (53.2) 16.8
Headline earnings 32.9 12.2
Basic and diluted headline earnings per share (pence) 1.8 0.8
3 GROSS PROFIT
Six months Six months
ended ended
30 June 30 June
2024 2023
£m
£m
Rental receivable 95.7 73.4
Straight-lining of tenant lease incentives(1) 3.1 0.5
Service charge income 12.4 8.5
Revenue 111.2 82.4
Expected credit loss provision (2.2) (1.6)
Property expenses(1) (15.5) (13.4)
Service charge expenses (12.4) (8.5)
Impairment of tenant lease incentives (0.4) (0.6)
Costs (30.5) (24.1)
Gross profit 80.7 58.3
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 was
recognised through the straight lining of tenant lease incentives and £1.0
million in property expenses.
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
2024 2023
£m
£m
Depreciation 0.3 0.1
Employee costs 11.7 10.7
Head office administration expenses 8.1 7.1
Merger-related transaction costs(1) - 36.2
Merger-related integration costs 3.3 3.4
Administration expenses 23.4 57.5
1. Costs relate to transaction fees and expenses in respect of the all-share
merger with Shaftesbury.
5 FINANCE INCOME
Six months ended Six months ended
30 June 2024 30 June 2023
£m
£m
Finance income:
On deposits and current accounts 2.4 2.6
On interest rate derivatives 5.1 3.1
Finance income 7.5 5.7
Other finance income:
On loans to joint ventures and associates 1.9 2.0
Other finance income 1.9 2.0
6 FINANCE COSTS
Six months Six months
ended ended
30 June 30 June
2024 2023
£m
£m
On bank facilities and loan notes 16.9 16.2
On exchangeable bonds(1) 4.2 4.2
On secured loans 14.0 4.8
On mortgage bonds - 1.7
On obligations under lease liabilities 0.3 0.3
Finance costs 35.4 27.2
Other finance costs:
Non-underlying finance charges(2) 2.4 26.3
Other finance costs 2.4 26.3
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. 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. Non-underlying finance charges mainly
relate to the unwind of the fair value adjustment of the debt on completion of
the merger. Included in the prior period charge is £24.6 million which
relates to the accelerated unwind of finance costs on early redemption of the
Chinatown and Carnaby bonds.
7 TAXATION
Six months ended Six months ended
30 June 2024 30 June 2023
£m
£m
Current income tax:
Current income tax charge 0.2 -
Current tax charge 0.2 -
Deferred income tax:
On accelerated capital allowances - 0.1
On fair value of derivative financial instruments (0.3) -
On Group losses 0.3 -
On other temporary differences - (0.1)
Deferred income tax - -
Total taxation charge in the consolidated statement of comprehensive income 0.2 -
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.
8 DIVIDENDS
PID Non-PID Date paid Six months Six months Year
ended ended ended
30 June 30 June 31 December 2023
£m
2024 2023
£m
£m
Ordinary shares Pence per share
For year ended 31 December 2022:
Second interim dividend of 1.7 pence per share 0.7 1.0 20 March 2023 - 14.5 14.5
For year ended 31 December 2023:
Interim cash dividend of 1.5 pence per share - 1.5 18 September 2023 - - 29.3
Final dividend of 1.65 pence per share 0.65 1.0 20 May 2024 32.2 - -
Dividend expense for the period(1) 32.2 14.5 43.8
1. Includes £1.9 million (31 December 2023: £1.9 million) dividend paid to
a controlled entity, Capco Investment London (No.7) Scottish Limited
Partnership, in respect of 128,350,793 shares held as collateral for 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, all of which was retained by the Group following calculation of the
dividend threshold test as set out in the exchangeable bond conditions. The
Group's dividend expense recorded in the consolidated statement of cash flows
is £30.3 million (31 December 2023: £41.9 million).
As a UK REIT, Shaftesbury Capital is required to distribute at least 90 per
cent of the Group's income profits from its tax-exempt property rental
business, 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 30 July 2024, the Directors declared an interim cash dividend for 2024 of
1.7 pence per ordinary share, of which 1.0 pence per ordinary share will be
paid as a PID and 0.7 pence per ordinary share will be paid as a non-PID. The
interim cash dividend will be paid on 1 October 2024 to all shareholders on
the register on 23 August 2024.
9 GAIN ON BARGAIN PURCHASE
The Capco and Shaftesbury PLC all-share merger completed on 6 March 2023. The
fair value of the identifiable net assets acquired amounted to £2,416.6
million. As the fair value of the identifiable net assets acquired and
liabilities assumed was greater than the total consideration transferred, a
gain on bargain purchase of £803.7 million was recognised on completion of
the transaction.
The initial accounting for the all-share merger had only been provisionally
determined for the six months ended 30 June 2023. As a result, the gain on
bargain purchase reflected within the Group financial statements for the year
ended 31 December 2023 does not correspond to the gain on bargain purchase for
the six months ended 30 June 2023 since adjustments to the final valuation of
the all-share merger were made. Specifically, a change in the valuation of
trade and other receivables at year end resulted in a £1.8 million increase
in the gain on bargain purchase reported within the Group financial statements
to be £805.5 million for the year ended 31 December 2023.
10 PROPERTY PORTFOLIO
30 June 31 December
2024 2023
£m
£m
At 1 January 4,740.2 1,715.1
Investment property acquired on merger at 6 March 2023 fair value - 3,141.0
Additions from acquisitions 84.7 17.4
Additions from subsequent expenditure 19.5 35.1
Disposals (131.1) (81.5)
Transfers to owner-occupied property - (18.4)
Gain/(loss) on revaluation 60.2 (68.5)
Transfer to investment property held for sale (15.4) -
Carrying value of investment property 4,758.1 4,740.2
Adjustment in respect of fixed head leases (3.0) (3.0)
Adjustment in respect of tenant lease incentives and deferred letting fees 40.4 37.9
Market value of investment property 4,795.5 4,775.1
30 June 31 December
2024 2023
£m
£m
The investment property valuation comprises:
Freehold properties 3,735.6 3,791.3
Leasehold properties 1,059.9 983.8
Market value of investment property 4,795.5 4,775.1
Market value of property portfolio
30 June 31 December
2024 2023
£m
£m
Market value of investment property 4,795.5 4,775.1
Market value of owner-occupied property 20.2 20.2
Market value of investment property held for sale(1) 15.4 -
Market value of wholly-owned property portfolio 4,831.1 4,795.3
1. At 30 June 2024, three properties had exchanged for sale and accordingly
were classified as held for sale. The sales in respect of each of the three
properties are expected to completed in the second half of the financial year.
The carrying value of investment property classified as held for sale per the
consolidated balance sheet includes cost to sell of £0.2 million.
Valuation process
The fair value of the Group's investment property at 30 June 2024 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.
Net zero carbon and EPC compliance
The Group published its Net Zero Carbon Pathway in November 2023 and has set
2030 as its target date to achieve this, aligning to a 1.5˚C pathway and the
aim to be carbon neutral for scope 1 & 2 emissions by 2025. A key element
in achieving this will come from carbon efficiencies created through
developments and refurbishments of the Group's property portfolio. During
2024, the Group's additions from subsequent expenditure were £19.5 million
(31 December 2023: £35.1 million). This included both capital works, which
enhanced the environmental performance of assets, and design stage work aimed
at delivering environmental enhancements. While new ground-up developments
form a limited part of the Group's activity, the design stage work on
refitting and refurbishment of units, particularly in heritage buildings, is
equally important to deliver Whole Life Carbon Efficiency.
The Net Zero Carbon Pathway also highlights the aim for 75 per cent of
commercial units to have a "B" or above EPC compliance rating by 2027 and for
all commercial units to have a "B" or above and residential units a "C" or
above rating by 2030. Any committed capital expenditure has been included in
note 17 'Capital commitments'.
Valuation techniques
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 been determined
primarily using a market approach, which provides an indication of value by
comparing the subject asset with similar assets for which pricing 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 critical key assumptions
are the equivalent yields and estimated future rental income (ERVs), as set
out within the Analysis of Property Portfolio on page 48. 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.
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 (378.3) (190.5) 195.8 392.3
Change in Yield
-50bp -25bp +25bp +50bp
£m £m £m £m
Increase/(decrease) in fair value 645.8 302.7 (270.4) (511.9)
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 2024, the Group was contractually committed to £17.0 million (31
December 2023: £24.8 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 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
Investments in joint ventures and associates are measured using the equity
method. All joint ventures and associates are held with investors on a 50:50
basis. At 30 June 2024, investments comprise the Longmartin associate
("Longmartin") and the Lillie Square joint venture ("LSJV").
The table below reconciles the opening to closing carrying value of
investments in joint ventures and associates as presented in the consolidated
balance sheet:
Investment in joint ventures and associates Longmartin LSJV Total
£m
£m
£m
At 1 January 2024 83.4 - 83.4
Share of profit/(loss) for the period(1) 4.2 (0.1) 4.1
Losses restricted(1) - 0.1 0.1
Dividend received (1.2) - (1.2)
At 30 June 2024 86.4 - 86.4
1. The loss from the Lillie Square venture for the period of £0.1 million has
been restricted in accordance with the requirements of IAS 28. Restricted
losses represent the Group's share of loss in LSJV in the period of £0.1
million (31 December 2023: £7.6 million) allocated to the cumulative losses
which exceed the Group's investment in the joint venture. Cumulative losses of
£38.5 million have been restricted to date (31 December 2023: £38.4 million)
and as a result the carrying value of the investment in LSJV is nil (31
December 2023: £nil).
Summarised statement of comprehensive income and balance sheet used for equity
accounting purposes:
Longmartin LSJV
Summarised statement of comprehensive income Six months ended 6 March Six months ended Six months ended
30 June 2024 2023 to 30 June 2024 30 June
£m 30 June £m 2023
2023 £m
£m
Revenue 9.8 6.0 0.1 5.4
Net rental income/(expense) 7.2 4.3 0.6 (0.3)
Gain/(loss) on revaluation, sale and transfer of investment and trading 8.7 (0.1) 2.4 8.4
property
Administration expenses (0.3) (0.4) (0.1) (0.3)
Net finance costs(1) (4.0) (2.8) (3.1) (3.4)
Taxation (3.2) (0.6) - -
Profit/(loss) for the period after taxation 8.4 0.4 (0.2) 4.4
1. Net finance costs includes £3.3 million (30 June 2023: £3.4 million)
interest payable on the interest bearing loans issued to LSJV by the Group and
KFI and £0.5 million on loans issued to Longmartin by the Group and the
Mercers. Longmartin net finance costs includes the unwind of the adjustment of
debt to fair value on completion of the merger of £0.6 million (30 June 2023:
£0.6 million). Finance income receivable by the Group on these loans of £1.9
million (30 June 2023: £2.0 million) is recognised in the consolidated
comprehensive statement of income within other income.
Longmartin LSJV
Summarised balance sheet 30 June 31 December 2023 30 June 31 December 2023
2024 £m 2024 £m
£m £m
Investment property(1) 337.0 327.2 85.1 46.8
Trading property - - 44.7 80.3
Other non-current assets 4.3 2.4 5.5 5.6
Non-current assets 341.3 329.6 135.3 132.7
Cash and cash equivalents 4.8 3.8 8.5 15.9
Other current assets 0.1 1.6 1.9 1.5
Current assets 4.9 5.4 10.4 17.4
Non-current liabilities (139.3) (136.3) - -
Non-current liabilities (139.3) (136.3) - -
Amounts payable to partners(2) - (23.1) (220.2) (224.9)
Other current liabilities (33.7) (8.8) (2.4) (1.7)
Current liabilities (33.7) (31.9) (222.6) (226.6)
Net (liabilities)/assets 173.2 166.8 (76.9) (76.5)
1. Investment property in LSJV includes units leased to tenants on
short-term basis. 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 £29.0 million (31 December 2023:
£29.0 million) and an interest-bearing loan of £163.0 million (nominal
value) advanced by the Group and KFI to the joint venture. The carrying value
of the loan, including accrued interest, was £175.5 million (31 December
2023: £180.2 million). Recoverable amounts receivable by the Group, net of
impairments, are recognised on the consolidated balance sheet within
non-current trade and other receivables.
Longmartin LSJV
30 June 31 December 2023 30 June 31 December 2023
£m
£m
2024 2024
Reconciliation of carrying value to market value of investment and trading £m £m
property
Carrying value of investment property 337.0 327.2 85.1 46.8
Finance lease asset (11.2) (11.2) - -
Lease incentives and costs included in receivables 2.1 1.4 - -
Market value of investment property(1) 327.9 317.4 85.1 46.8
Carrying value of trading property - - 44.7 80.3
Unrecognised surplus on trading property(2) - - 0.3 3.3
Market value of investment and trading property(1) 327.9 317.4 130.1 130.4
1. Investment properties owned by the joint ventures and associates have
been valued by professionally qualified external valuers at 30 June, Knight
Frank LLP for Longmartin and JLL for LSJV, who are both members of the Royal
Institution of Chartered Surveyors.
2. The unrecognised surplus on trading property and market value of LSJV's
property portfolio shown for informational purposes and are not a requirement
of IFRS. Trading property continues to be measured at the lower of cost and
net realisable value.
12 TRADE AND OTHER RECEIVABLES
30 June 31 December
2024 2023
£m
£m
Non-current
Prepayments and accrued income1 27.0 28.5
Amounts receivable from joint ventures(2) 73.6 76.0
Amounts receivable from joint associates3 11.6 11.6
Trade and other receivables 112.2 116.1
Current
Rent receivable(4) 15.7 13.6
Other receivables(5) 13.2 12.0
Prepayments and accrued income1 18.1 17.1
Trade and other receivables 47.0 42.7
1. Includes tenant lease incentives and deferred letting fees of £40.4
million (31 December 2023: £37.9 million).
2. Amounts receivable from joint ventures represent an interest-bearing loan
of £87.8 million (31 December 2023: £90.1 million) provided to LSJV. The
loan 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 presented it as non-current. The loan has been impaired by £14.2
million (31 December 2023: £14.1 million) to date. Included within current
trade and other receivables is working capital funding of £29.0 million (31
December 2023: £29.0 million) due from LSJV that has been fully impaired.
3. Amounts receivable from associates represents a loan of £11.6 million (31
December 2023: £11.6 million) provided to Longmartin. 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.
4. Rent receivable is shown net of an expected credit loss provision of £7.4
million (31 December 2023: £4.8 million).
5. Other receivables include £7.1 million (31 December 2023: £7.0 million)
of restricted cash held on deposit as security for term loans and bank
facilities with certain conditions restricting the use.
13 CASH AND CASH EQUIVALENTS
30 June 31 December 2023
£m
2024
£m
Cash at hand 6.9 10.4
Cash on short-term deposits 121.9 175.3
Cash 128.8 185.7
Tenant deposits(1) 13.9 14.5
Cash and cash equivalents 142.7 200.2
1. Tenant deposits included above relate to cash held on deposit as security
against tenant rent payments which are subject to certain restrictions and
therefore not available for general use by the Group. The deposits are held in
bank accounts administered by Group Treasury and therefore included within
cash and cash equivalents in the consolidated balance sheet. Cash deposits
against tenants' rent payment obligations totalling £21.2 million (31
December 2023: £18.9 million) are held in bank accounts administered by the
Group's managing agents which are not included within the consolidated balance
sheet.
14 BORROWINGS
30 June 2024
Carrying Secured Unsecured Fixed Floating Fair Nominal
value
£m
£m
rate
rate
value
value
£m
£m
£m
£m
£m
Current
Loan notes (USPPs) 95.0 - 95.0 95.0 - 94.6 95.0
95.0 - 95.0 95.0 - 94.6 95.0
Non-current
Bank loans 271.0 - 271.0 - 271.0 275.0 275.0
Loan notes (USPPs) 379.3 - 379.3 379.3 - 339.2 380.0
Secured loans 542.8 542.8 - 542.8 - 553.9 584.8
Exchangeable bonds(1) 271.2 271.2 - 271.2 - 258.5 275.0
1,464.3 814.0 650.3 1,193.3 271.0 1,426.6 1,514.8
Total borrowings 1,559.3 1,609.8
Cash, excluding tenant deposits (128.8)
Net debt 1,481.0
1. Fair value of exchangeable bonds includes the fair value of the option
component of £5.9 million.
31 December 2023
Carrying Secured Unsecured Fixed Floating Fair Nominal
value
£m
£m
rate
rate
value
value
£m
£m
£m
£m
£m
Current
Loan notes (USPPs) 94.9 - 94.9 94.9 - 93.0 95.0
94.9 - 94.9 94.9 - 93.0 95.0
Non-current
Bank loans 345.9 - 345.9 - 345.9 350.0 350.0
Loan notes (USPPs) 379.2 - 379.2 379.2 - 340.7 380.0
Secured loans 539.9 539.9 - 539.9 - 569.5 584.8
Exchangeable bonds(1) 269.8 269.8 - 269.8 - 256.9 275.0
1,534.8 809.7 725.1 1,188.9 345.9 1,517.7 1,589.8
Total borrowings 1,629.7 1,684.8
Cash, excluding tenant deposits (185.7)
Net debt 1,499.1
1. Fair value of exchangeable bonds includes the fair value of the option
component of £7.2 million.
The Group has two revolving credit facilities totalling £450 million, which
are undrawn at 30 June 2024.
£584.8 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 £1,593.7 million (31 December 2023: £1,624.2 million), 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 and associates, at 30 June
2024 were £578.8 million (31 December 2023: £485.7 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 'Property Portfolio'.
15 CLASSIFICATION OF FINANCIAL ASSETS AND LIABILITIES
The table below sets out each class of financial asset and financial liability
at 30 June 2024 and 31 December 2023:
30 June 2024 31 December 2023
Note Carrying Gain/(loss) Carrying Gain/(loss)
value
to profit or loss
value
to profit or loss
£m
£m
£m
£m
Derivative financial assets 8.3 (1.4) 9.7 (7.4)
Total held for trading assets 8.3 (1.4) 9.7 (7.4)
Cash and cash equivalents 13 142.7 - 200.2 -
Other financial assets1 114.1 - 113.2 -
Total cash and other financial assets 256.8 - 313.4 -
Investment held at fair value through profit or loss - - - 52.0
Total investment held at fair value through profit or loss - - - 52.0
Derivative financial liabilities (5.9) 1.3 (7.2) (3.9)
Total held for trading liabilities (5.9) 1.3 (7.2) (3.9)
Borrowings 14 (1,559.3) - (1,629.7) -
Lease liabilities (3.4) - (3.0) -
Other financial liabilities2 (67.7) - (78.5) -
Total borrowings and other financial liabilities (1,630.4) - (1,711.2) -
1. Includes rent receivable, amounts due from joint ventures and associates,
tax assets and other receivables.
2. Includes trade and other payables (excluding rents in advance) and tax
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 'Property
Portfolio'.
The table below present the Group's financial assets and liabilities
recognised at fair value at 30 June 2024 and 31 December 2023. There were no
transfers between levels during the period.
30 June 2024 31 December 2023
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m
£m
£m
£m
£m
£m
£m
£m
Held for trading assets
Derivative financial assets - 8.3 - 8.3 - 9.7 - 9.7
Total assets - 8.3 - 8.3 - 9.7 - 9.7
Held for trading liabilities
Derivative financial liabilities - (5.9) - (5.9) - (7.2) - (7.2)
Total liabilities - (5.9) - (5.9) - (7.2) - (7.2)
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.
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 price Number Share Share
(pence)
of shares
capital
premium
Issue type
£m
£m
At 1 January 2024 1,953,170,495 488.2 232.5
Issued to satisfy share scheme awards(1) 25 7,643 - -
At 30 June 2024 1,953,178,138 488.2 232.5
1. On 10 June 2024, 7,643 new shares were issued to satisfy share scheme
awards.
17 CAPITAL COMMITMENTS
At 30 June 2024, the Group was contractually committed to £17.0 million (31
December 2023: £24.8 million) of future expenditure for the purchase,
construction, development and enhancement of investment, development and
trading property. The full amount is committed 2024 expenditure.
The Group's share of joint venture capital commitments arising on LSJV amounts
to nil (31 December 2023: nil) and Longmartin amounts to £0.2 million (31
December 2023: £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 FLOWS FROM OPERATING ACTIVITIES
Note Six months Six months
ended ended
30 June 30 June
2024 2023
£m
£m
Profit before tax 86.3 799.1
Adjustments:
(Gain)/loss on revaluation and sale of investment property (53.2) 16.8
Gain on bargain purchase - (803.7)
Change in value of investments and other receivables 0.1 (2.2)
Change in fair value of financial assets at fair value through profit or loss - (52.0)
Depreciation 0.3 0.1
Amortisation of tenant lease incentives and other direct costs (2.4) 2.7
Provision for expected credit loss 2.2 1.6
Profit from joint ventures and associates 11 (4.2) (0.2)
Share-based payment 1.3 0.6
Finance income 5 (7.5) (5.7)
Other finance income 5 (1.9) (2.0)
Finance costs 6 35.4 27.2
Other finance cost 6 2.4 26.3
Change in fair value of derivative financial instruments 0.1 (0.2)
Change in working capital:
Change in trade and other receivables (3.0) 2.6
Change in trade and other payables (14.1) (23.6)
Cash generated/(utilised) from operations 42.1 (12.6)
20 RELATED PARTY TRANSACTIONS
Transactions between the Group and its joint ventures and associates
Transactions during the period between the Group and its joint ventures and
associates, which are related parties, are disclosed in notes 11 'Investments
in joint ventures and associates', 12 'Trade and other receivables' and 17
'Capital commitments'.
Property owned by Directors of the Company
A related party of the Group, Lillie Square GP Limited, entered into the
following related party transaction as defined by IAS 24 'Related Party
Disclosures':
Situl Jobanputra, Chief Financial Officer of Shaftesbury Capital, and a family
member own an apartment in Lillie Square. As owners of apartments in Lillie
Square, 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 this purchase were included in previous financial statements.
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
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 ended
reconciliation
ended 30 June 2023
30 June 2024
Underlying earnings Profit for the period excluding items deemed non-recurring or significant by Profit for the period Note 2 £34.2m £27.5m
virtue of size or nature
Underlying earnings Underlying earnings per weighted number of ordinary shares Basic earnings per share Note 2 1.9p 1.9p
per share
EPRA earnings Recurring earnings from core operational activity Profit for the period Note 2 £30.0m £10.8m
EPRA earnings per share EPRA earnings per weighted number of ordinary shares Basic earnings per share Note 2 1.6p 0.7p
Interest cover Underlying gross profit and other income divided by net underlying finance N/A Covenants 290.0% 307.0%
costs
Page 43
APM Definition of measure Nearest IFRS measure Explanation and 31 December 2023
reconciliation
30 June
2024
EPRA NTA Net asset value adjusted to include properties and other investment interests Net assets attributable to shareholders Note 2 £3,538.2m £3,479.4m
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 Note 2 193.4p 190.3p
Market value of property portfolio Market value of wholly owned property portfolio Investment property Note 10 £4,831.1m £4,795.3m
Loan-to-value Net debt, at nominal value and excluding tenant deposits, divided by market N/A Covenants 30.7% 31.3%
value of property portfolio
Page 43
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(1) Cost of debt weighted by the drawn balance of external borrowings N/A N/A 4.0% 4.2%
Cash and undrawn committed facilities Cash and cash equivalents, excluding tenant deposits, plus undrawn committed N/A Financial Review £578.8m £485.7m
facilities
1. As at 30 June 2024 the weighted average cost of debt reduces to an
effective running cash cost of 3.3 per cent (31 December 2023: 3.4 per cent)
taking account of interest on cash deposits and interest rate caps and
collars.
COVENANTS
Financial covenants
30 June 2024
Maturity Nominal as LTV Interest cover
covenant
covenant
at 30 June 20241
£m
Private placement loan notes 2024-2037 475.0 60% 1.20x
Exchangeable bond 2026 275.0 N/A N/A
Unsecured term facilities(2) 2027-2029 275.0 60% 1.20x
Secured term loans (Canada Life) 2029 134.8 60% 1.40x
Secured term loans (Aviva) 2030-2035 450.0 65% 1.35x
Unsecured revolving credit facilities (undrawn)(2) 2027 150.0 60% 1.20x
Revolving credit facilities (undrawn) 2026 300.0 60% 1.20x
1. The balance sheet value of the loans includes unamortised fees.
2. Unsecured facilities have an additional requirement that Group unencumbered
assets are equal to or exceed 1.5x of Group unsecured debt.
Loan-to-value
Note 30 June 31 December
2024 2023
£m
£m
Debt at nominal value 1,609.8 1,684.8
Less: cash (128.8) (185.7)
Net debt 14 1,481.0 1,499.1
Total property portfolio at market value 10 4,831.1 4,795.3
Loan-to-value 30.7% 31.3%
Interest cover
Note Six months Six months
ended ended
30 June 30 June
2024 2023
£m
£m
Finance costs 6 (35.4) (27.2)
Finance income 5 7.5 5.7
(27.9) (21.5)
Underlying operating profit:
Gross profit(1) 3 80.7 63.4
Other income 0.2 2.6
80.9 66.0
Interest cover 290.0% 307.0%
1. 30 June 2023 adjusted for the change in accounting policy as discussed in
note 2.
Note Six months Six months
ended ended
30 June 30 June
2024 2023
£m
£m
Finance costs 6 (35.4) (27.2)
Finance income 5 7.5 5.7
(27.9) (21.5)
Underlying operating profit:
Gross profit(1) 3 80.7 63.4
Other income 0.2 2.6
Administrative expenses 4 (23.4) (57.5)
Less: non-underlying administrative expenses 4 3.3 39.6
60.8 48.1
Interest cover post administrative expenses 217.9% 223.7%
1. 30 June 2023 adjusted for the change in accounting policy as discussed in
note 2.
EPRA measures
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 30 June
2024 2023
EPRA earnings Recurring earnings from core operational activity Note 2 30.0m 10.8m
EPRA earnings per share EPRA earnings per weighted number of ordinary shares Note 2 1.6p 0.7p
EPRA measure Definition of measure Table 30 June 31 December
2024 2023
EPRA cost ratio Total adjusted costs as a percentage of gross rental income (including direct 5 41.0% 65.6%
vacancy costs)
Total adjusted costs as a percentage of gross rental income (excluding direct 5 35.9% 60.8%
vacancy costs)
Adjusted Company cost ratio Total adjusted costs as a percentage of adjusted gross rental income 5 37.8% 39.9%
(including direct vacancy costs)
Total adjusted costs as a percentage of adjusted gross rental income 5 32.7% 35.2%
(excluding direct vacancy costs)
EPRA measure Definition of measure Table 30 June 31 December 2023
2024
EPRA NTA Net asset value adjusted to include properties and other investment interests Note 2 3,538.2m 3,479.4m
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 Note 2 193.4p 190.3p
EPRA NDV EPRA NTA amended to include the fair value of financial instruments and debt Note 2 3,584.7m 3,511.7m
EPRA NDV per share EPRA NDV per the diluted number of ordinary shares Note 2 196.0p 192.0p
EPRA NRV EPRA NTA amended to include real estate transfer tax Note 2 3,870.9 3,811.6m
EPRA NRV per share EPRA NRV per the diluted number of ordinary shares Note 2 211.6p 208.4p
EPRA net initial yield Annualised rental income less non-recoverable costs as a percentage of market 1 3.8% 3.8%
value plus assumed purchaser's costs
EPRA topped-up initial yield Net initial yield adjusted for the expiration of the rent-free periods 1 4.1% 4.2%
EPRA vacancy ERV of unlet units (including those under offer) expressed as a percentage of 2 4.5% 4.9%
the ERV of the portfolio excluding units under development
Capital Expenditure Capital expenditure on acquisition and development of investment property 3 104.9m 53.8m
portfolio
EPRA LTV (Loan-to-Value) Ratio of adjusted net debt, including net payables, to the sum of the net 4 30.2% 30.9%
assets, including net receivables, of the Group, its subsidiaries and joint
ventures and associates, all on a proportionate basis, expressed as a
percentage
1. EPRA Net initial yield and EPRA 'topped-up' net initial yield
30 June 31 December 2023
£m
2024
£m
Investment property - wholly owned 4,831.1 4,795.3
Investment property - share of joint ventures and associates 206.5 182.2
Trading property (including share of joint venture) 22.5 41.8
Less: developments (258.2) (284.1)
Completed property portfolio 4,801.9 4,735.2
Allowance for estimated purchasers' costs 332.8 316.8
Gross up completed property portfolio valuation (A) 5,134.7 5,052.0
Annualised cash passing rental income 205.8 202.7
Property outgoings (9.3) (10.6)
Annualised net rents (B) 196.5 192.1
Add: notional rent expiration of rent periods or other lease incentives 14.6 18.2
Topped-up net annualised rent (C) 211.1 210.3
EPRA Net Initial Yield (B/A) 3.8% 3.8%
EPRA 'topped-up' Net Initial Yield (C/A) 4.1% 4.2%
The EPRA Net Initial Yield and EPRA 'topped-up' Net Initial Yield are
calculated based on the EPRA guidelines and includes the wholly-owned property
portfolio and the Group's share of Lillie Square and Longmartin.
2. EPRA VACANCY RATE
30 June 31 December 2023
£m
2024
£m
Estimated rental value of vacant space 10.0 10.9
Estimated rental value of the portfolio less development and refurbishment 222.1 223.0
estimated rental value
EPRA vacancy rate 4.5% 4.9%
EPRA vacancy rate is disclosed only for the wholly-owned property portfolio.
This includes units under offer, net of which vacancy relating to units
available to let is 2.7 per cent. Investment properties held within the joint
venture at Lillie Square and the Longmartin associate totalling £206.5
million (our share) (2023: £182.2 million (our share)) is not included in the
vacancy rate above.
3. PROPERTY RELATED CAPEX
30 June 2024 31 December 2023
Group (excluding joint ventures and associates) Joint ventures and associates Total Group Group (excluding Joint ventures and associates Total Group
£m £m £m joint ventures and associates) £m £m
£m
Acquisitions 84.7 - 84.7 17.4 - 17.4
Development - 0.2 0.2 - 0.8 0.8
Investment property
Incremental lettable space 2.1 - 2.1 5.1 - 5.1
No incremental lettable space 16.7 0.5 17.2 28.5 0.5 29.0
Tenant lease incentives 0.7 - 0.7 1.5 0.3 1.8
Total CapEx 104.2 0.7 104.9 52.5 1.6 54.1
Conversion from accrual to cash basis 0.6 (0.1) 0.5 (1.3) 1.0 (0.3)
Total CapEx on cash basis(1) 104.8 0.6 105.4 51.2 2.6 53.8
1. The purchase and development of property per the consolidated statement
of cash flows is £103.6 million, includes £1.2 million of cash acquired on
the acquisition of a property portfolio.
4. EPRA LTV (Loan-to-Value)
30 June 2024
Group Share of joint ventures and associates Total
£m
£m
£m
Borrowings from financial institutions 1,334.8 60.0 1,394.8
Exchangeable bond 275.0 - 275.0
Net payables (71.6) 78.9 7.2
Exclude:
Cash and cash equivalents(1) (142.7) (6.6) (149.3)
Net debt (B) 1,395.5 132.3 1,527.7
Investment property at fair value 4,795.5 206.5 5,002.0
Owner occupied property at fair value 20.2 - 20.2
Properties held for sale at fair value 15.4 - 15.4
Properties under development - 22.5 22.5
Total property value (A) 4,831.1 229.0 5,060.1
EPRA LTV (B/A) 30.2%
1. Includes tenant deposits of £13.9 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 2023
Group Share of joint ventures and associates Total
£m
£m
£m
Borrowings from financial institutions 1,409.8 60.0 1,469.8
Exchangeable bond 275.0 - 275.0
Net payables (62.6) 80.4 17.8
Exclude:
Cash and cash equivalents(1) (200.2) (9.9) (210.1)
Net debt (B) 1,422.0 130.5 1,552.5
Investment property at fair value 4,775.1 182.2 4,957.3
Owner occupied property at fair value 20.2 - 20.2
Properties under development - 41.8 41.8
Total property value (A) 4,795.3 224.0 5,019.3
EPRA LTV (B/A) 30.9%
1. Includes tenant deposits of £14.5 million held as security against
tenant payments which are subject to certain restrictions and therefore not
available for general use by the Group.
5. EPRA cost ratio
Six months ended 30 June 2024 Twelve months ended 31 December 2023
£m
£m
Administrative expenses 23.4 83.8
Total property outgoings 28.2 51.2
Provision for expected credit loss 2.2 2.0
Less: Service charge expense (12.4) (19.3)
Management fee (0.1) (0.1)
Share of joint ventures and associates expenses 1.4 3.5
Exclude:
Ground rent cost (0.2) (0.8)
EPRA Cost (including direct vacancy costs) (A) 42.5 120.3
Direct vacancy costs (5.3) (8.9)
EPRA Costs (excluding direct vacancy costs) (B) 37.2 111.4
Gross Rental Income less ground rent costs 111.0 194.3
Less: Service charge income (12.4) (19.3)
Share of joint ventures and associates property income 5.1 8.3
Adjusted gross rental income (C) 103.7 183.3
EPRA Cost Ratio (including direct vacancy costs) (A/C) 41.0% 65.6%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 35.9% 60.8%
Company specific adjustments:
Non-underlying administrative expenses(1) (3.3) (44.5)
Impact of change in accounting policy on property outgoings(2) - (1.0)
Company specific adjustments for costs (D) (3.3) (45.5)
Adjusted Company Cost (including direct vacancy costs) (E = A+D) 39.2 74.8
Adjusted Company Cost (excluding direct vacancy costs) (F = B+D) 33.9 65.9
Impact of change in accounting policy on rental income(2) - 4.1
Adjusted Company gross rental income (G) 103.7 187.4
Adjusted Company Cost ratio (including direct vacancy costs) (E/G) 37.8% 39.9%
Adjusted Company Cost ratio (excluding direct vacancy costs) (F/G) 32.7% 35.2%
1. Company specific adjustment relates to non-underlying administrative
expenses and do not represent the recurring, underlying performance of the
Group.
2. Company specific adjustment in 2023 relates to the impact in the change in
accounting policies as a result of the all-share merger. £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
lease incentives and £1.0 million in property expenses.
£0.1 million (2023: £0.3 million) of administrative expenses were
capitalised during the period.
Analysis of property portfolio
For the six months ended 30 June 2024
Wholly owned portfolio valuation by use
30 June 2024 Retail Hospitality and leisure Offices Residential Wholly owned portfolio
Valuation (£m)(1) 1,675.5 1,629.6 854.8 669.3 4,829.2
Annualised gross income (£m) 69.6 73.5 30.0 23.4 196.5
ERV (£m) 82.5 82.7 50.3 25.5 241.0
ERV psf (£) 115 87 78 59 88
Net initial yield 3.8% 4.1% 2.9% 2.8% 3.6%
Topped up net initial yield 4.1% 4.2% 3.4% N/A 3.9%
Equivalent yield 4.5% 4.7% 4.9% 3.1% 4.4%
L-f-L valuation movement +1.2% +2.4% +1.7% -1.0% +1.4%
L-f-L ERV movement +2.8% +3.7% +4.8% -0.2% +3.2%
L-f-L annualised gross income growth +3.8% +4.1% +5.6% +1.3% +3.9%
WAULT (years) 3.3 8.2 2.9 1.2 4.7
Area (sq ft m)(2) 0.7 1.0 0.6 0.4 2.7
Unit count(2) 417 399 409 683 1,908
1. Excludes £1.9 million of Group properties primarily held in Lillie
Square Holdings (a wholly owned subsidiary).
2. Excluding long-leasehold residential interests.
Wholly owned portfolio valuation by location
30 June 2024 Covent Garden Carnaby | Soho Chinatown Fitzrovia Wholly owned portfolio
Valuation (£m)(1) 2,574.9 1,523.7 702.1 28.5 4,829.2
Annualised gross income (£m) 102.1 61.0 31.9 1.5 196.5
ERV (£m) 127.4 78.4 33.7 1.5 241.0
ERV psf (£) 91 88 80 62 88
Net initial yield 3.5% 3.4% 4.0% 4.3% 3.6%
Topped up net initial yield 3.8% 3.8% 4.0% 4.3% 3.9%
Equivalent yield 4.4% 4.5% 4.3% 4.1% 4.4%
L-f-L valuation movement +0.9% +2.0% +1.7% -0.1% +1.4%
L-f-L ERV movement +4.0% +2.5% +2.1% - +3.2%
L-f-L annualised gross income growth +4.4% +3.9% +2.4% +0.5% +3.9%
WAULT (years) 4.9 4.1 5.5 3.9 4.7
Area (sq ft m)(2) 1.4 0.9 0.4 - 2.7
Unit count(2) 864 665 350 29 1,908
1. Excludes £1.9 million of Group properties primarily held in Lillie
Square Holdings (a wholly owned subsidiary).
2. Excluding long-leasehold residential interests.
DIVIDENDS
The Directors of Shaftesbury Capital have declared an interim cash dividend of
1.7 pence per ordinary share (ISIN GB00B62G9D36) payable on 1 October 2024.
Dates
The following are the salient dates for payment of the interim cash dividend:
Sterling/Rand exchange rate struck Monday, 12 August 2024
Sterling/Rand exchange rate and dividend amount in Rand announced Tuesday, 13 August 2024
Ordinary shares listed ex-dividend on the Johannesburg Stock Exchange Wednesday, 21 August 2024
Ordinary shares listed ex-dividend on the London Stock Exchange Thursday, 22 August 2024
Record date for the cash interim dividend in UK and South Africa Friday, 23 August 2024
Dividend payment date for shareholders Tuesday, 1 October 2024
South African shareholders should note that, in accordance with the
requirements of Strate, the last day to trade cum-dividend will be Tuesday, 20
August 2024 and that no dematerialisation or rematerialisation of shares will
be possible from Wednesday, 21 August 2024 to Friday 23 August 2024 inclusive.
No transfers between the UK and South African registers may take place from
close of business on Tuesday, 13 August 2024 to Friday, 23 August 2024
inclusive.
The above dates are proposed and subject to change.
The Property Income Distribution ("PID") element (being 1.0 pence) will be
subject to a deduction of a 20 per cent UK withholding tax unless exemptions
apply. The non-PID element (being 0.7 pence) will be treated as an ordinary UK
company dividend.
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 - PIDs
Certain categories of shareholders may be eligible for exemption from the 20 per cent UK withholding tax and may register to receive their dividends on a gross basis. Further information, including the required forms, is available from the 'Investor Information' section of the Company's website (
https://www.shaftesburycapital.com/en/investors/investor-information.html (https://www.shaftesburycapital.com/en/investors/investor-information.html)
), or on request from our UK registrars, Link Group. Validly completed forms must be received by Link Group no later than the dividend Record Date, as advised; otherwise the dividend will be paid after deduction of tax.
South African shareholders
The interim cash dividend declared by the Company is a foreign payment and the
funds are sourced from the UK.
PIDs: A 20 per cent UK withholding tax is applicable to a PID. South African
shareholders may apply to HMRC after payment of the PID element of the 2024
interim cash dividend for a refund of the difference between the 20 per cent
UK withholding tax and the UK/South African double taxation treaty rate of 15
per cent.
The PID element of the 2024 interim cash dividend will be exempt from income
tax but will constitute a dividend for 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 PID element of the 2024
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. Certain shareholders may also qualify for
a reduction of SA Dividends Tax liability to 5 per cent, (being the difference
between the SA dividends tax rate and the effective UK withholding tax rate of
15 per cent) if the prescribed requirements for effecting the reduction are in
place by the requisite date.
Non-PID: The non-PID element of the 2024 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 non-PID
element of the 2024 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.
Other overseas shareholders
Other non-UK shareholders may be able to make claims for a refund of UK
withholding tax deducted pursuant to the application of a relevant double
taxation convention. UK withholding tax refunds can only be claimed from HMRC,
the UK tax authority.
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)
Payment of future dividends
The Company has committed to becoming net zero carbon by 2030. To help meet
this commitment and minimise our impact on the environment, future cash
dividend payments made by the Company from the start of 2025 will only be made
by electronic means. We will no longer be issuing payments by cheque.
Shareholders on the UK section of the register who have not already provided
bank account details will need to do this to enable payment of cash dividends.
Visit the dividend information section of our website for details of the
different methods to register bank account details
(https://www.shaftesburycapital.com/en/investors/investor-information/dividend-information.html
(https://www.shaftesburycapital.com/en/investors/investor-information/dividend-information.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.
Contracted income
Includes rent frees and contracted rent increases.
Capco
Capco represents Shaftesbury Capital PLC, formally Capital & Counties
Properties PLC, (also referred to as "the Company") and all its subsidiaries
and group undertakings, collectively referred to as "the Group".
Cash and undrawn committed facilities
Cash and cash equivalents, excluding tenant deposits, plus undrawn committed
facilities.
CRREM
Carbon Risk Real Estate Monitor. The leasing global standard and initiative for operational decarbonisation of real estate assets.
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 cost ratio (including direct vacancy costs)
EPRA cost ratio (including direct vacancy costs) is a proportionally
consolidated measure of the ratio of net overheads and operating expenses
against gross rental income (with both amounts excluding ground rents
payable). Net overheads and operating expenses relate to all administrative
and operating expenses, net of any service fees, recharges or other income
specifically intended to cover overhead and property expenses.
EPRA cost ratio (excluding direct vacancy costs)
EPRA cost ratio (excluding direct vacancy costs) is the ratio defined above,
but with direct vacancy costs removed from the net overheads and operating
expenses balance.
EPRA earnings per share
Profit or loss for the period excluding valuation movements on the
wholly-owned, joint venture and associate properties, fair value changes of
financial instruments and listed investments, cost of early close out of debt,
gain on bargain purchase and IFRS 3 merger-related transaction costs, 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 net assets, including net receivables, of the Group, its subsidiaries and joint ventures and associates, 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) per share
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, divided by the diluted number of ordinary shares.
EPRA net initial yield
Annualised net rent (after deduction of revenue costs such as head rent,
running void, service charge after shortfalls and empty rates) on investment
and development property expressed as a percentage of the gross market value
before deduction of theoretical acquisition costs.
EPRA net tangible assets (NTA) per share
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, divided by the diluted number of ordinary shares.
EPRA net reinstatement value (NRV) per share
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,
divided by the diluted number of ordinary shares.
EPRA topped-up initial yield
EPRA net initial yield adjusted for the expiration of rent-free periods.
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.
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.
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.
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 associate between the Group and The Mercers' Company and owns a long leasehold interest in a number 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 square feet of office space and 75 apartments.
LSJV
The Lillie Square joint venture is a 50 per cent joint venture between the
Group and Kwok Family Interests (KFI). The joint venture was established to
own, manage and develop land interests at Lillie Square.
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 Greenhouse Gas ('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.
Passing rent
Contracted annual rents receivable at the balance sheet date. This takes no
account of accounting adjustments made in respect of rent-free periods or
tenant lease incentives, the reclassification of certain lease payments as
finance charges or any irrecoverable costs and expenses, and does not include
excess turnover rent, additional rent in respect of unsettled rent reviews or
sundry income.
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.
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 IFRS the value of incentives granted to tenants
are amortised through the consolidated statement of comprehensive income on a
straight-line basis to the earlier of break or lease expiry.
Topped-up net initial yield
Net initial yield adjusted for the expiration of rent-free periods.
Total accounting return (TAR)
The movement in EPRA NTA per share plus dividends per share paid during the
period.
Total property return (TPR)
Capital growth including gains and losses on disposals plus rent received less
associated costs, including ground rent.
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 administrative costs
Administrative expenses excluding merger-related transaction and integration costs and non-underlying administrative expenses. The items are excluded as considered to be non-recurring or significant by virtue of size and nature.
Underlying earnings
Underlying earnings reflects the underlying financial performance of the
Group's core West End property rental business. The measure aligns with the
main principles of EPRA earnings. Additional adjustments are made to exclude
items considered to be non-recurring or significant by virtue of size and
nature.
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 cost of debt - gross
The cost of debt weighted by the drawn balance of external borrowings.
Weighted average cost of debt - net
The cost of debt weighted by the drawn balance of external borrowings, taking
account of interest on cash deposits and interest rate caps and collars.
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").
Important notices
This press release contains "forward-looking statements" regarding the belief
or current expectations of Shaftesbury Capital PLC, its Directors and other
members of its senior management about Shaftesbury Capital PLC's businesses,
financial performance and results of operations. These forward-looking
statements are not guarantees of future performance. Rather, they are based on
current views and assumptions and involve known and unknown risks,
uncertainties and other factors, many of which are outside the control of
Shaftesbury Capital PLC and are difficult to predict, that may cause actual
results, performance or developments to differ materially from any future
results, performance or developments expressed or implied by the
forward-looking statements. These forward-looking statements speak only as at
the date of this press release. Except as required by applicable law,
Shaftesbury Capital PLC makes no representation or warranty in relation to
them and expressly disclaims any obligation to update or revise any
forward-looking statements contained herein to reflect any change in
Shaftesbury Capital PLC's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based. The
information contained in this press release does not purport to be
comprehensive and has not been independently verified.
Any information contained in this announcement on the price at which shares or
other securities in Shaftesbury Capital PLC 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. No statement in this press release is
intended to be a profit forecast and no statement in this press release should
be interpreted to mean that earnings per share of Shaftesbury Capital PLC for
the current or future financial years would necessarily match or exceed the
historical published earnings per share of Shaftesbury Capital PLC.
Certain industry and market data contained in this press release has come from
third party sources. Third party publications, studies and surveys generally
state that the data contained therein have been obtained from sources believed
to be reliable, but that there is no guarantee of accuracy or completeness of
such data.
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