Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — FY2010 Earnings Presentation
42 slides from Shaftesbury Capital's earnings presentation, Mar 2, 2011
Slide 1: 2010 Annual Results
2010 Annual Results 2 March 2011 Page no. 1 Capital & Counties Properties PLC
Slide 2: Important Notices
Important Notices This presentation includes statements that are forward looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Capital & Counties Properties PLC to be materiall
Slide 3: Agenda
Agenda Introduction Ian Hawksworth Financial Review Soumen Das Business Review Ian Hawksworth and Gary Yardley Q&A Page no. 3 Capital & Counties Properties PLC 2010 Annual Results
Slide 4: Strong first year since demerger
Capco Strong first year since demerger One of the largest central London investment EMPRESS STATE: £103m (7%) West London and development property companies • West End and West London EC&O: £378m (28%) Entrepreneurial approach to unlock value from our estates • Potential to generate significant
Slide 5: Highlights
Highlights Positive momentum across the business Strong NAV growth up 17% to 148 pence per share Positive valuation uplift of central London investment properties in 2010 up 10.8% (LfL) Covent Garden -- excellent progress, ERV up 12% (LfL) to £37.5m GCP refocused with 4 non-core asset sales
Slide 6: Financial Review
Financial Review Soumen Das Page no. 6 Capital & Counties Properties PLC 2010 Annual Results
Slide 7: Underlying Earnings
Underlying Earnings Highlights 2010 2009 Var £m £m % Net Rental Income 69.0 78.1 (6%) 1 Admin Costs (18.6) (14.5) (28%) Net Finance Costs (38.9) (47.5) 18% Tax on Underlying Earnings (2.3) (1.0) n/a Underlying Earnings 9.2 15.2 (39%) Underlying earnings per share 1.5p 2.4p (38%) Full year dividend p
Slide 8: Net Rental Income
Net Rental Income NRI 2010 £69m down 6.1% (LfL) LfL (6.1%) 80 £1.4mm £69.0m 70 £0.3m £6.1m £0.9m ES: £6.5m £3.8m 60 50 EC&O: £22.6m £72.0m £m 40 £78.1m GCP: £13.6m 30 20 CG: £25.7m 10 0 2009 Adjustments 2009 rebased Covent Garden EC&O GCP Non like-for-like 2010 Note 1. 2009 adjustments comprise co
Slide 9: Balance Sheet
Balance Sheet Actual Pro forma Dec-10 Dec-09 Var £m £m £m Portfolio value 1,378 1,241 137 Investments 66 46 20 Net debt (476) (463) (13) Other assets and liabilities (85) (93) 8 NAV 883 731 152 EPRA Adjusted diluted NAV 926 791 135 EPRA Adjusted diluted NAV per share 148p 127p 21p EPRA NNNAV 142 p
Slide 10: EPRA Adjusted Diluted Net Assets Per Share
EPRA Adjusted Diluted Net Assets Per Share Strong growth – up 17% to 148p 3.4p 21.4p 150 0.5p 2.1p 2.3p 102p 1.5p 130 110 90 pence 148p 70 127p 50 30 25p 10 Dec-09 Demerger Dec-09 Pro Underlying Property China Dividend Exceptional Other Dec-10 adjustments forma profit valuation revaluation Charges s
Slide 11: Debt Management
Debt Management Sound capital structure and conservative loan to value • Group LTV 35% at Dec 2010 • Group interest cover 130% at Dec 2010 Target maximum LTV of 45% over medium term Cash balance of £189m at Dec 2010 provides substantial flexibility Weighted average cost of debt 5.9% Earls
Slide 12: Cash Utilisation
Cash Utilisation 350 £28.6m £42.6m 300 £40.1m 250 £26.8m 200 £1.0m £62.0m £m £11.4m £3.6m £3.1m 150 £244.0m 100 £188.5m 50 £19.3m 0 Dec-09 Operational Disposals Interest Capex Net Exceptional REIT charge Dividend Tax Dec-10 cash flow borrowings items repaid £4.8m received after year-end from China
Slide 13: Capital Allocation
Capital Allocation Allocated Spent Committed Remaining Projects £m £m £m £m 75 8 25 42 - Flower Cellars redevelopment Covent Garden - 34 Henrietta St residential conversion - Lease buybacks - Acquisition of 37 King St 38 19 - 19 - Planning process Earls Court - Acquisition of Roxby Place & Old Bromp
Slide 14: Operating Review
Operating Review Ian Hawksworth and Gary Yardley Page no. 14 Capital & Counties Properties PLC 2010 Annual Results
Slide 15: Valuation
Valuation Strong 2010 valuation uplift Market Value Market Value Value ERV Initial Equivalent Dec-10 Dec-09 Change 2, 3 Change 3 Yield Yield £m £m % % % % Investment properties 4 Covent Garden 640 548 14.1% 12.0% 3.7% 5.1% GCP 260 1 247 1 13.7% 4.2% 5.0% 5.1% Empress State 103 1 95 1 8.6% - 6.4% 6.2
Slide 16: Covent Garden
Covent Garden Excellent 2010: ERV £37.5m +12 % (LfL) 74 leasing transactions completed in the year • Rental value £11.2m • 9% above Dec-09 ERV ERV £37.5m +12.0% (LfL) Value £640m +14.1% (LfL) 37 King Street acquired Major Piazza block of 1a Henrietta Street acquired via swap post year-end
Slide 17: Covent Garden
Covent Garden Key figures NRI £25.7m -3.4% (LfL) Initial yield as at 2 Mar 2011 3.9% Equivalent yield 5.1% Gross Income £26.8m -7.6% (LfL) • £30.7m including contracted leases with rent- free periods Footfall 46m +2% (YoY) • Increase in ABC1 visitor demographics to 71% Adjusted occupancy
Slide 18: Covent Garden
Covent Garden 2010 Gross income to ERV 40 £3.8m 35 £0.7m £1.1m £0.9m £3.9m 30 £0.3m £m 25 £37.5m £26.8m £31.9m 20 15 10 Dec-10 Gross Turnover Rent Rent-Frees Under Contract Income - Vacancies Development Under-rented Dec-10 ERV Income / Offer Contracted & Under Offer Page no. 18 Capital & Counties P
Slide 19: Covent Garden
Covent Garden Repositioning King Street Target brand delivered – Rugby Ralph Lauren UK exclusive Opening Q3 2011 85% above Dec-09 ERV and turnover participation 88% increase in passing rent New record rent for King Street Competitive process with 2 other premium brands Page no. 19 Capi
Slide 20: Covent Garden
Covent Garden Driving rents in the Market Building Vacant possession of Ponti’s agreed • Effective 1 Apr 2011 Redevelopment to create 2 new retail units and North Hall restaurant Strong demand from high quality target retail and restaurant brands 46% of previous passing rent now pre-let to L
Slide 21: Covent Garden
Covent Garden Flower Cellars – innovative change of use Empty since 2007 lease surrender WCC resolution to grant planning consent for change of use from D1 cultural to part F&B • Obtained Jan 2011 ERV post-development £1.0m+ • Up from previous passing rent £0.1m Let to Caprice Holdings to op
Slide 22: Covent Garden
Covent Garden Other key initiatives across the estate Jack Wolfskin Pandora First high street store 2nd standalone store in in UK central London Whistles Sunglass Hut Relocation from New rent level achieved Market Building in accordance with Maintained flexibility for zoning strategy devel
Slide 23: Great Capital Partnership
Great Capital Partnership West End focus: equivalent yield 5.1% (Dec-09 5.9%) 50/50 JV with GPE 30 properties covering 849k sq ft Value £260m +13.7% (LfL our share) NRI £13.6m +2.4% (LfL our share) Passing rent £13.8m +1.8% (LfL our share) • £14.4m inc. contracted leases with rent-free per
Slide 24: Great Capital Partnership
Great Capital Partnership Refocusing the Partnership Non-core sales 2010 • Tottenham Court Road • Tasman House • Britton Street • Fetter Lane Taking a leading role on strategy • Residential • Retail Further non-core sales planned Page no. 24 Capital & Counties Properties PLC 2010 Annual Result
Slide 25: China
China Investment value £66m +44.1% Investment in two funds managed by Harvest Capital Partners Profit taking through contracted asset sales contributing to a £20m uplift in value Disposal completed • Caiyun Lake Q4 2010 - £4.8m proceeds Q1 2011 Further disposals contracted Approximately 2/
Slide 26: EC&O
EC&O Strategy Develop Olympia as the leading central London exhibitions Earls Court 1 Olympia 2 £138m £97m venue Pursue planning Enhance to underpin • Migrate shows from Earls Court once West Hall works completed permission exhibitions business Submit detailed application for residential scheme
Slide 27: EC&O
EC&O Exhibition business performance EBITDA £18.9m • H1:H2 split 70:30 90% revenues from licence fees; 10% from flow-through revenues 79% of 2011 budgeted licence fees currently contracted Current utilisation rate 41% Consultation with key clients about Earls Court to Olympia transition Pa
Slide 28: Olympia Renovation
Olympia Renovation West Hall – works underway West Hall – Replacement with 97k sq ft two-storey hall, an increase of 47k sq ft £18m committed capex to implement To be updated Reconfiguration to allow four halls to be used separately or together Maximise ability to transfer business from EC
Slide 29: Seagrave Road
Seagrave Road Potential major residential scheme Sale contract rescinded and adjacent properties acquired in Oct 2010 A strategic site within LBHF draft core strategy Potential for high quality mixed tenure residential estate Planning application to be submitted Jun 2011 Approaches from po
Slide 30: Earls Court & West Kensington Opportunity Area
Earls Court & West Kensington Opportunity Area Planning on target Progress on planning policy (draft London Plan, RBKC & LBHF core strategies) Concept masterplan adopted by key stakeholders Q3 2010 Masterplan to be launched Mar 2011 Planning application Q2 2011 on target Expressions of int
Slide 31: ECOA Masterplan Concept
ECOA Masterplan Concept “Four villages and a high street” Page no. 31 Capital & Counties Properties PLC 2010 Annual Results
Slide 32: ECOA Masterplan
ECOA Masterplan Masterplan model Page no. 32 Capital & Counties Properties PLC 2010 Annual Results
Slide 33: Outlook
Outlook Positive momentum across the business Central London investment market likely to remain active Experienced, entrepreneurial team to unlock value in our key estates Covent Garden: continue progress towards £40m ERV target and develop next phase of evolution Olympia upgrade works to en
Slide 34: Q&A
Q&A Page no.no. Page 33 34 Capital & Counties Properties PLC 2010 Annual Results
Slide 35: Appendices
Appendices Financial Covenants Covent Garden GCP Taxation Portfolio Analysis Page no. 35 Capital & Counties Properties PLC 2010 Annual Results
Slide 36: Financial Covenants
Financial Covenants All facilities compliant with covenants as at 31 Dec 2010 Maturity Facility Debt 1 Test Actual £m LTV Interest LTV Interest Cover Cover 2012 2 Earls Court & Olympia 129 n/a 125% n/a 176% 3 2013 Covent Garden 222 75% 120% 53% 168% 2013 Empress State 76 75% 115% 74% 137% 2013 GCP
Slide 37: Covent Garden
Covent Garden Zoning plan High profile properties • Brand anchors Long Acre/James Street/ROH • Stylish mid market Floral Street • Boutique King Street • Contemporary luxury Henrietta Street • Fashion/interiors Southampton Street • Outdoor Market Building • Independents, specialists and casual dining
Slide 38: Covent Garden
Covent Garden Portfolio statistics Lease Expiry Profile (WALE 8.8 yrs) Annual Gross Income (£26.8m) Portfolio by Value (£640m) By Floor Area (754k sq ft) Page no. 38 Capital & Counties Properties PLC 2010 Annual Results
Slide 39: Great Capital Partnership
Great Capital Partnership Portfolio distribution Page no. 39 Capital & Counties Properties PLC 2010 Annual Results
Slide 40: Great Capital Partnership
Great Capital Partnership Portfolio statistics Assets by location ERV at 31 Dec (£29.6m) 100% share Lease Expiry Profile Tenants by Business (WALE 7.0 yrs) Page no. 40 Capital & Counties Properties PLC 2010 Annual Results
Slide 41: Taxation
Taxation Summary Capco no longer a REIT • Covent Garden, GCP and Empress State left Liberty International REIT group upon demerger in May 2010 • EC&O and China were never in REIT group - no change Tax on income • 20% underlying tax rate in 2010 (corporation tax rate 28%) • Lower rate due to REIT
Slide 42: Portfolio Analysis
Portfolio Analysis Covent Garden Earls Court & Olympia Great Capital Partnership £378m Exhibition Market value £640m £260m £103m Empress State Building 1,228,000 Exhibition Size (sq ft) 754,000 849,000 469,000 Empress State Building 100% Exhibition Ownership 100% 50% 50% Empress State Properties 45
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