Shaftesbury Capital Plc · LSE:SHC
Shaftesbury Capital — Capital & Counties Properties — H1 2015 Earnings Presentation
47 slides from Shaftesbury Capital's earnings presentation, Jul 29, 2015
Slide 1: Capital & Counties Properties PLC Interim Results 2015
Capital & Counties Properties PLC Interim Results 2015 29 July 2015 www.capitalandcounties.com
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
Introduction AGENDA 1. INTRODUCTION Financial Review Ian Hawksworth 2. FINANCIAL REVIEW Soumen Das Operating Update 3. COVENT GARDEN UPDATE Soumen Das Looking Ahead 4. EARLS COURT PROPERTIES UPDATE Gary Yardley 5. LOOKING AHEAD Ian Hawksworth Q&A 6. Q&A 3 Interim Results 2015 www.capitalandcounties.
Slide 4: Introduction
Introduction Financial Review Operating Update INTRODUCTION Ian Hawksworth, Chief Executive Looking Ahead Q&A 4 Interim Results 2015 www.capitalandcounties.com
Slide 5: Two unique estates in central London
TWO UNIQUE ESTATES IN CENTRAL LONDON Well-placed for future growth A global and dynamic capital city Positive economic prospects, high population growth Focused on 2 significant London estates £3.4bn1 total property value 1. Group share 5 Interim Results 2015 www.capitalandcounties.com
Slide 6: Highlights: Positive and active first half
HIGHLIGHTS Positive and active first half Total property value Total return NAV per share Interim dividend £3.4bn 1 10% 342p 0.5p per share +9% like-for-like +10% STRONG DEMAND FOR COVENT GARDEN PLANS ON TRACK AT EARLS COURT 34 new leases and renewals, 11% above December Completion of investment veh
Slide 7: Highlights: Positive and active first half
HIGHLIGHTS Positive and active first half Total property value Total return NAV per share Interim dividend £3.4bn 1 10% 342p 0.5p per share +9% like-for-like +10% POSITIVE PERFORMANCE AT OLYMPIA STRONG AND FLEXIBLE FINANCIAL POSITION Strong valuation performance reflecting success of Conservative 13
Slide 8: Valuation
VALUATION Strong valuation performance +9% (lfl) Covent Garden Earls Court Properties £1.8bn £1.3bn1 +9% lfl +6% lfl Initial yield: 2.2% Equivalent yield: 3.6% Total property value £3.4bn 1 +9% lfl Venues £0.3bn +25% lfl 1. Adjusted for Capco’s share of ECPL 8 Interim Results 2015 www.capitalandcoun
Slide 9: Financial Review
Introduction Financial Review Operating Update FINANCIAL REVIEW Soumen Das Looking Ahead Q&A 9 Interim Results 2015 www.capitalandcounties.com
Slide 10: Underlying Earnings
UNDERLYING EARNINGS 2015 H1 2014 H1 Var £m £m £m Net rental income 38.5 37.4 1.1 Administration costs (25.0) (19.4) (5.6) Net finance costs (9.1) (8.0) (1.1) Other 0.9 - 0.9 Tax on underlying earnings (1.1) (2.2) 1.1 Underlying earnings 4.2 7.8 (3.6) Underlying earnings per share 0.5p 1.0p (0.5p) Pr
Slide 11: Net Rental Income
NET RENTAL INCOME 45 40 £1.8m £38.5m £37.4m £0.2m £0.2m Other £(0.2)m 35 £0.7m Venues £8.9m Venues £10.7m 30 25 Earls Court Earls Court Properties £9.6m Properties £8.9m 20 15 10 Covent Garden Covent Garden £18.9m £19.1m 5 0 H1 2014 Covent Garden Earls Court Properties Venues Other H1 2015 Venues EB
Slide 12: EPRA Adjusted Balance Sheet
EPRA ADJUSTED BALANCE SHEET Group share Jun-15 Dec-14 Var £m £m £m Investment & Trading Property 3,268 2,905 363 Unrecognised surplus on trading property 104 96 8 Net debt (431) (352) (79) Other (40) (19) (21) EPRA adjusted NAV 2,901 2,630 271 Number of shares in issue 842m 836m 6m ECPL fully consol
Slide 13: EPRA Adjusted Diluted Net Assets per Share
EPRA ADJUSTED DILUTED NET ASSETS PER SHARE NAV +10% to 342 pence 350 33p 0.5p 0.5p 340 2p 330 320 342p 310 300 311p 290 Dec-14 Valuation of property Underlying Profits Dividend (net of script) Non-controlling interest Jun-15 and other Diluted EPRA NNNAV 337 pence per share 13 Interim Results 2015 ww
Slide 14: Debt & Gearing
DEBT & GEARING Robust capital structure Jun-15 Dec-14 Total cash and available facilities £570m £431m £352m Net Debt £200m Predominantly unsecured debt model £100m £105m 0 £66m Cash Debt Cash Debt (£100m) (£200m) (£497m) (£457m) (£300m) (£400m) (£500m) (£600m) Jun-15 Dec-14 Net Debt £431m £352m LTV
Slide 15: Cash Utilisation
CASH UTILISATION Substantial liquidity of £570m 700 £648m 600 £570m 500 400 £543m £504m 300 200 £38m £68m £3m 100 £59m £57m £105m £4m £66m 0 Dec-14* Operating cash Net Borrowings Property and JV Capex Dividend Other Jun-15* flow Drawn Acquisitions Cash Undrawn Facilities * Capco share 15 Interim Res
Slide 16: Covent Garden Update
Introduction Financial Review Operating Update COVENT GARDEN UPDATE Soumen Das Looking Ahead Q&A 16 Interim Results 2015 www.capitalandcounties.com
Slide 17: Covent Garden
COVENT GARDEN 17 Interim Results 2015 www.capitalandcounties.com
Slide 18: Strategy for Covent Garden
STRATEGY FOR COVENT GARDEN Granular asset management Tactical acquisitions Target Return Strategic development 10–12% Creativity Planning Land assembly Target Return Land enablement 12–15% Selective development 18 Interim Results 2015 www.capitalandcounties.com
Slide 19: Covent Garden Highlights
COVENT GARDEN HIGHLIGHTS On track to deliver c.10% annualised rental growth Portfolio value ERV New lettings & renewals Acquisitions £1.8bn +8% (lfl) +11% £50m 1 +9% like-for-like £83m Ahead of Dec-14 ERV Creative asset management and a positive leasing market driving strong demand New Zone A rental
Slide 20: Driving Rental Growth
DRIVING RENTAL GROWTH Average Zone A rents significantly below central London ITZA (£) – June 2015 £1,600 £1,400 £1,200 £1,000 £800 £600 £400 £200 -- * Based on 30 ft Zone A, includes Old Bond St, Oxford St West and Regent St. (Covent Garden based on 20 ft Zone A.) ** Covent Garden average based on
Slide 21: Zone A Distribution 2009
ZONE A DISTRIBUTION 2009 21 Interim Results 2015 www.capitalandcounties.com
Slide 22: Zone A Distribution June 2015
ZONE A DISTRIBUTION JUNE 2015 22 Interim Results 2015 www.capitalandcounties.com
Slide 23: James Street - A Leading Global Retail Street
JAMES STREET - A LEADING GLOBAL RETAIL STREET Accelerated rental growth A globally established street for international retailers New brands and leases over the last 12 months – Charlotte Tilbury – Kiko – Karen Millen – Kurt Geiger 42m customer visits per annum James Street Zone A £1,800 £1,600 £1,4
Slide 24: A Clear Plan for Every Street
A CLEAR PLAN FOR EVERY STREET Delivering the vision for the estate Retail Expansion of contemporary luxury retail offering on King Street – Stefanel and Claudie Pierlot Successful implementation of Street to Suit strategy on Henrietta Street – 6 menswear brands introduced since the beginning of last
Slide 25: Larger Scale Developments
LARGER SCALE DEVELOPMENTS Initiatives supporting rental growth 25 Interim Results 2015 www.capitalandcounties.com
Slide 26: Earls Court Properties Update
Introduction Financial Review Operating Update EARLS COURT PROPERTIES UPDATE Gary Yardley Looking Ahead Q&A 26 Interim Results 2015 www.capitalandcounties.com
Slide 27: Earls Court Properties
EARLS COURT PROPERTIES The largest regeneration opportunity in central London 27 Interim Results 2015 www.capitalandcounties.com
Slide 28: A Masterplan for Central London
A MASTERPLAN FOR CENTRAL LONDON Opportunity to maximise the Masterplan London’s forecast housing requirement1 – An additional 2 million people living in London in 20 years – Over 40,000 new homes required per annum Increased Earls Court designation in ‘New Draft London Plan’ – Minimum of 7,500 new h
Slide 29: Our Interests
OUR INTERESTS A formally consented scheme in a GLA ‘Opportunity Area’ Earls Court Partnership Limited – Investment vehicle with TfL in respect of EC1 & EC2 land – Capco share 63%; business and development manager – Includes certain assets on and around Lillie Road Empress State Building – 100% owned
Slide 30: Valuations
VALUATIONS Group share Lillie Empress ECPL CLSA Other Total Venues Square State 63% 100% 50% 100% 100% 100% Gross External Development Area (m sq ft) Residential 2.7 3.2 1.0 0.8 - 7.7 - Commercial 0.7 0.4 - 0.3 - 1.4 - Total GEA 3.4 3.6 1.0 1.1 - 9.1 - Jun-15 £741m n/a £202m £282m £58m £1.3bn £265m
Slide 31: Olympia London
OLYMPIA LONDON The preferred central London venue for premium shows Portfolio value +25% like-for-like to £265m EBITDA +16% to £8.9m Successful transition from Earls Court – Effective rebranding of iconic venue 32% increase in events in first half of the year – Including transitioned and new shows C
Slide 32: Strategy for Earls Court
STRATEGY FOR EARLS COURT Driving value creation Granular asset management Tactical acquisitions Strategic development Creativity Planning Land assembly Land enablement Selective development 32 Interim Results 2015 www.capitalandcounties.com
Slide 33: Earls Court Properties Highlights
EARLS COURT PROPERTIES HIGHLIGHTS An active start to the year Completion of Earls Court Partnership Limited – Capco leading the venture with a 63% share Demolition of former exhibition buildings progressing well – De-risking the land Strategic acquisitions further enhancing the Masterplan area – £9m
Slide 34: Lillie Square
LILLIE SQUARE 34 Interim Results 2015 www.capitalandcounties.com
Slide 35: Lillie Square
LILLIE SQUARE Positive progress on sales and construction Positive demand at Lillie Square underpinned by strong fundamentals of scheme – Location – Connectivity – Specification and lifestyle Phase 1 predominantly sold – Crystallising value with £258m of sales – Average Phase 1 pricing c. £1,500 psf
Slide 36: Lillie Square
LILLIE SQUARE 36 Interim Results 2015 www.capitalandcounties.com
Slide 37: Looking Ahead
Introduction Financial Review Operating Update LOOKING AHEAD Ian Hawksworth Looking Ahead Q&A 37 Interim Results 2015 www.capitalandcounties.com
Slide 38: Looking Ahead
LOOKING AHEAD Well-placed for future growth Covent Garden – Confident retail and consumer environment – Granular and creative asset management strategy driving strong rental growth – On track to achieve ERV target of £100m by December 2017 representing c.10% annualised organic rental growth – Constr
Slide 39: Q&A
Q&A 39 Interim Results 2015 www.capitalandcounties.com
Slide 40: Appendix
APPENDIX 40 Interim Results 2015 www.capitalandcounties.com
Slide 41: Covent Garden
COVENT GARDEN 70 properties, 420 lettable units LEASE EXPIRY PROFILE ANNUAL GROSS INCOME 2015: 13% Retail: 55% 2016: 9% F&B: 26% WALE 7.6yrs 2017: 13% £44m Leisure: 2% 2018: 16% Offices: 13% 2019 +: 49% Residential: 4% PORTFOLIO VALUE TOTAL FLOOR AREA Retail: 52% Retail: 27% F & B: 18% F&B: 18% Leis
Slide 42: Covent Garden
COVENT GARDEN £m GROSS INCOME TO ERV 90 £15.9m 80 70 £14.1m 60 £2.0m £2.4m 50 £3.2m £0.7m £82.6m 40 30 £50.2m £44.3m 20 10 Jun-15 Gross Rent-Fees/ Stepped Turnover Lease Under Income Contracted Vacancies Development Under-rented Jun-15 ERV Income Rent Contract/Offer & Under Offer £m VALUE UPLIFT AND
Slide 43: Covent Garden Zoning Strategy
COVENT GARDEN Zoning strategy 43 Interim Results 2015 www.capitalandcounties.com
Slide 44: Kings Court and Carriage Hall
KINGS COURT AND CARRIAGE HALL Construction progressing on plan An opportunity to unlock rental potential through placemaking on Floral Street – Current Zone A rental level of £300psf on Floral Street Works underway at Kings Court with completion expected in 2017 Total development cost £85-90m; GDV £
Slide 45: The Earls Court Masterplan
THE EARLS COURT MASTERPLAN Earls Court Masterplan consent – 10.1m sq ft (GEA) – 7,500 new homes (including Lillie Square); including 1,500 affordable homes – 10,000 new jobs – Over £450m community benefits Empress State Building consent – 610k sq ft (GEA) – Over 440 new homes; including over 100 aff
Slide 46: Summary Balance Sheet
SUMMARY BALANCE SHEET IFRS to Group Share as at 30 June 2015 Add back: Less: Joint Proportionate Non- Group IFRS Ventures1 consolidation controlling Share interest2 £m £m £m £m £m Investment & Trading Property 3,592 111 3,703 (435) 3,268 Net Debt (431) 5 (426) (5) (431) Other assets and liabilities
Slide 47: Taxation
TAXATION Summary Tax on income – The underlying tax rate is 20% which is in line with the statutory corporation tax rate for 2015. – The main rate of corporation tax fell to 20% on 1 April 2015. Following the July 2015 Budget, the main rate of corporation tax is expected to fall to 18% by 2020. – Me
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