Hammerson plc · LSE:HMSO
Hammerson — FY2013 Earnings Presentation
44 slides from Hammerson's earnings presentation, Feb 17, 2014
Slide 1: 2013 Full-year Results
2013 Full-year 2013 Full-year Results Results Monday 17 February 2014 Monday 17 February 2014 2013 Half-year results
Slide 2: Today's presentation
Today’s presentation Section Introduction and market overview 1 David Atkins, CEO Section Financial results 2 Timon Drakesmith, CFO Section Performance drivers David Atkins, CEO 3 Section Conclusion David Atkins, CEO 4 2013 half 2013 Full-year year results results 2
Slide 3: Vision
Vision Our vision is to be the best owner-manager and developer of retail property within Europe By capitalising on our strengths we aim to provide industry-leading shareholder returns EPS Dividend LfL NRI NAV/share +10.5% +7.9% +2.1% +5.7% 2013 half 2013 Full-year year results results 33
Slide 4: 2013 highlights
2013 highlights Best in class retail portfolio Advancing developments Les Terrasses du Occupancy Port 93% let 97.7% Commenced on Leasing +2% vs ERV site at Leeds and Beauvais 7% tenant rotation Planning consent rate at Croydon and Brent Cross Active financial management Capital recycling to enhance
Slide 5: Securing retail demand in France despite cyclical weakness
Securing retail demand in France despite cyclical weakness Index French business confidence (Source: INSEE, France) Market indicators 105 105 100 100 Structural attractiveness of indexation 95 95 Low personal debt levels 90 90 Business confidence steady throughout 2013 85 85 Household disposable inc
Slide 6: Stronger Christmas trading in the UK
Stronger Christmas trading in the UK Morrison Tesco Sainsbury M&S Food Foodstores Waitrose Dunelm Maplin Dixons Halfords OOT retailers Topps Tiles WH Smith Mothercare Superdrug Ryman Greggs Thorntons Non fashion Argos Carphone Warehouse retailers Robert Dyas Fragrance Shop The Works Lush New Look Bl
Slide 7: Positive outlook driven by improving fundamentals
Positive outlook driven by improving fundamentals UK GDP growth (Source: ONS) Falling UK unemployment (Source: ONS) % % 1.0 8.5 0.8 8 0.6 7.5 7 0.4 6.5 0.2 6 0.0 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 2012 - Q1 2012 - Q2 2012 - Q3 2012 - Q4 2013 - Q1 2013 - Q2 2013 - Q3 2013 - Q4 -0
Slide 8: Deep investor demand and firming yields
Deep investor demand and firming yields Shopping centre investment in Europe (Source: DTZ research) Net initial yield (Source: PMA) €bn Number % Volume Number of deals of deals Prime shoppingcentres Prime Shopping centres RetailWarehousing Retail warehousing LHS RHS 6.5 20 300 250 6.0 15 200 5.5 10
Slide 9: Combined with limited supply
Combined with limited supply Retail completions expected to remain modest (Source: PMA) Mil ft2 p.a. net 25 20 Shopping centres Shopping Centre / Unit Shop RetailWarehouse Retail warehouses 15 10 5 0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2013 half 2013 Full-
Slide 10: Increased space requirements in selected locations
Increased space requirements in selected locations International Fashion Leisure and Aspirational Homeware and Discounters retailers multiples catering brands furnishings London Regional shopping centres Out of town retail parks Prime towns Secondary towns Tertiary 2013 half 2013 Full-year year resu
Slide 11: Leading to market ERV growth
Leading to market ERV growth Forecast UK retail ERV growth per annum (Source: PMA) % 3.0 Prime shopping centres Retail warehouses 2.9 2.5 2.5 2.0 2.0 1.9 1.8 1.5 1.6 1.0 1.3 1.1 0.8 0.5 0.0 -0.1 -0.1 -0.2 -0.2 -0.5 -0.8 -0.9 -1.0 -1.2 -1.5 2010 2011 2012 2013 2014 2015 2016 2017 2013 half 2013 Full-
Slide 12: Hammerson positioned to support multichannel retail
Hammerson positioned to support multichannel retail Reported sales do not capture the whole picture UK France Click and collect sales not recorded Hammerson 2013 tenants’ -0.4% -2.7% sales Adjusted sales capture underlying picture Adjusted sales Reported store sales Retailer 1 +1.7% -0.7% Online pur
Slide 13: Leasing ahead of both ERV and previous rents
Leasing ahead of both ERV and previous rents 12 months to 31 December 2013 vs ERV vs previous rents UK retail +4% +1% France +0% +6% Group +2% +2% UK shopping centres UK retail parks French retail Five Guys at The Oracle, Homebase at Battery Retail Park, Eram at Place des Halles, Reading Selly Oak S
Slide 14: Summary
Summary Improving economic fundamentals Growing consumer confidence Increasing tenant demand Limited supply pipeline Conditions for selected ERV growth Hammerson positioned to outperform 2013 half 2013 Full-year year results results 14
Slide 15: Financial results
Section 2 Financial results Timon Drakesmith 2013 Half-year results
Slide 16: Finance agenda and progress
Finance agenda and progress Focus area Progress in 2013 Growth in NRI of 2.1% Drive top line growth Marseille opening May 2014 On track to meet our £320m NRI forecast for 2015 Cost income ratio declined by 240 bps to 24.6% Control operating costs Operating costs reduced by 1.5% in 2013 Further actio
Slide 17: Headline results
Headline results Income statement 2013 2012 % change Net rental income(1) (£m) 290.2 282.9 +2.1%(2) Adjusted profit before tax(3) (£m) 168.9 152.5 +10.8% EPRA EPS (p) 23.1 20.9 +10.5% Final dividend (p) 10.8 10.0 +8.0% Balance sheet 31 Dec 2013 31 Dec 2012 % change Portfolio value (£m) 5,931 5,653(4
Slide 18: Solid uplifts in like-for-like NRI
Solid uplifts in like-for-like NRI YoY change (LfL) 3.2% 2.6% 2.1%(1) 0.2% UK shopping centres UK retail parks France retail Total 2013 total(2) £124.7m £82.1m £62.7m £282.8m(3) Union Square Cleveland Cergy Key drivers In line with Brent Cross Thanet O’Parinor previous Silverburn Indexation guidance
Slide 19: EPRA EPS vs 2012
EPRA EPS vs 2012 +10.5% Net LfL NRI Value Retail Administration Net financing Exchange and investment costs other 24.0 0.2 (0.5) 0.2 0.6 23.1 22.5 0.7 1.0 21.0 20.9 19.5 2012 2013 18.0 EPRA EPS (pence) Earnings +20% since 2011 2013 2013 Full-year 2013 half year results Half-year results results 19
Slide 20: Cost management delivering results
Cost management delivering results Operating costs(1) EPRA Cost/income £m ratio(1)(2) % 88 29 28.3% 28 86 27.0% 86.1 27 84 26 EPRA cost/income 82 24.6% 25 target for 2016 21-22% 80 24 79.8 79.8 23 78 78.6 22 76 21 74 20 2011 2012 Year2013 2013 (1) Continuing operations (2) Cost ratio is defined as:
Slide 21: New resource management measures
New resource management measures Additional investments to grow business Efficiency improvements Expected incremental costs - £5m p.a. from 2015 Target savings - £6m p.a. from 2016 Expanded development programme Senior management reorganisation - Headcount increases London office relocation in 2015
Slide 22: Portfolio valuation change
Portfolio valuation change FY 2013 H2 2013 H1 2013 Value at 31 Dec 2013 % % % (£m) UK shopping centres +2.4 +1.7 +0.7 2,524 UK retail parks +1.7 +3.2 -1.5 1,471 France retail -0.3 +0.8 -1.1 1,240 Current developments +10.4 +6.8 +3.4 497 Other UK interests(1) -6.5 -1.6 -5.0 199 Discontinued operation
Slide 23: EPRA NAV per share vs 2012
EPRA NAV per share vs 2012 +5.7% Investment Developments Value Retail Profit on Adjusted Dividends portfolio revaluation disposals profit revaluation 590 revaluation 23 (18) 580 570 2 573 573 11 560 4 550 9 540 542 2012 530 2013 520 EPRA NAV per share (pence) 2013 2013 Full-year 2013 half year resul
Slide 24: Healthy financing ratios
Healthy financing ratios Financing 31 Dec 2013 31 Dec 2012 policies Net debt - £2,252m £2,036m Gearing <85% 56% 53% Loan to value <40% 38% 36% Cash/undrawn facilities - £716m £696m Weighted average cost of finance - 4.8% 5.0% Interest cover >2.0x 2.8x 2.8x Net debt/EBITDA <10x 8.2x 7.9x Fixed rate d
Slide 25: Maturity profile of debt
Maturity profile of debt Bank drawn debt Secured debt Euro bonds Sterling bonds USPP(1) £m 500 Credit markets attractive 450 Weighted average coupon of 2015/2016 bonds 5.0% 400 USPP will refinance 2014 bank debt 350 300 250 200 150 100 50 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Slide 26: Forecast development expenditure
Forecast development expenditure £m On site developments 300 Les Terrasses du Port, Marseille 250 Victoria Gate, Leeds Jeu de Paume, Beauvais 200 Other on site developments 150 Future developments New extensions/redevelopments 100 Whitgift, Croydon 50 Brent Cross extension 0 2013 2014 2015 2016 2017
Slide 27: Focus on Value Retail
Focus on Value Retail Value Retail Villages 2013 YoY change Future growth drivers Brand sales €1.9bn +13% Forecast 72% growth in Chinese visits to Europe by 2018(2) EBITDA €111m +12% Village remerchandising with more premium brand stores Total portfolio value €3.1bn +12% More flagship stores Hammers
Slide 28: Performance drivers
Section 3 Performance drivers David Atkins 2013 Half-year results
Slide 29: Performance drivers
Performance drivers Contribution from Growth from existing Value Retail Major developments extensions and portfolio refurbishments Selected examples 2013 2013 Full-year 2013 half year results Half-year results results 29
Slide 30: Capital deployment
Capital deployment Prime Shopping Convenient Premium Centres Retail Parks Designer Outlets Extension and Silverburn refurbishment Silverburn Abbotsinch La Roca Village Retail Park Development Kildare Village Les Terrasses Cyfarthfa Kildare Village du Port Retail Park Acquisition Bullring Junction Fu
Slide 31: Acquisition of a further stake in Bullring
Acquisition of a further stake in Bullring Acquired additional 33% stake in 2013 in 50/50 JV with CPPIB, taking ownership to 50% 9% total property return Recent lease renewals +10% above previous rent Continues to attract new brands 2003 2011 2013 2014 2015 Bullring opens, with Spiceal Street opens,
Slide 32: Saint Sébastien, Nancy
Saint Sébastien, Nancy % 105 £7m 99% 24,000m2 6% Development shops and annual rents let centre initial yield potential restaurants 2013 Full-year 2013 Half-yearresults results 32
Slide 33: Nearing completion at Les Terrasses du Port
Nearing completion at Les Terrasses du Port Countdown to launch Opening 3 May 2014 93% pre-let and 95% construction complete £28 million annual rents £460 million total development cost 7.3% yield on cost Anchor store Printemps and MSUs have commenced fitting out of units 2013 Full-year 2013 Half-ye
Slide 34: Transforming Marseille's retail offer
Transforming Marseille’s retail offer 190 units 1 81 22 53 43 22 30 brands new to catering units fashion brands international brands taking 1st brands new to the portfolio brands store in a French Marseille shopping centre Brands recently signed include 2013 Full-year 2013 Half-yearresults results 3
Slide 35: Construction commenced at Leeds and Beauvais
Construction commenced at Leeds and Beauvais Victoria Gate, Leeds Jeu de Paume, Beauvais 34,300m2 luxury retail Out-turn financials 23,800m2 retail and leisure Out-turn financials venue venue Total development Total development £70m £150m cost cost John Lewis anchor store 80km north west of Paris £1
Slide 36: Advancing the development pipeline
Advancing the development pipeline Cyfarthfa Retail Park, Abbotsinch Retail Silverburn, Glasgow O’Parinor, Paris Merthyr Tydfil Park, Paisley 10,900m2 extension 7,200m2 extension 14,500m2 extension 5,000m2 extension 14 screen cinema 14 screen cinema 4,300m2 Marks and Spencer 5 retail units in adjace
Slide 37: Key milestones at Brent Cross and Croydon
Key milestones at Brent Cross and Croydon Brent Cross Whitgift, Croydon 2013 2013 Brent Acquire RLAM Secure planning Agree masterplan Cross/Cricklewood Submit planning Establish JV stake resolution phasing 2014 2014 Submit Conclude Conclude S73 approval Complete leisure Secure CPO Complete Complete
Slide 38: Attractive future pipeline: The Goodsyard
Attractive future pipeline: The Goodsyard Total development area 260,000m2 50/50 10 acre £6m Spring 2014 19,000m2 60,000m2 1,400 joint venture with site in heart of per acre Planning submission Retail space office space residential Ballymore Properties Shoreditch valuation (90 shops) units 2013 Half
Slide 39: Additional income from developments
Additional income from developments £56m £63m 120 90 £m annual rents £15m 60 £11m £30m 30 2014 2014 2015 2015 2016 2016 2017-2019 2017-2019 Notes: Annualised passing rents assuming 100% occupancy in year of project completion, post any rent free periods Assumes completion of all medium-term developm
Slide 40: Conclusion
Conclusion 2013 Half-year results
Slide 41: Key messages
Key messages ERV growth returning to our Major development activity On track with previous markets amplifies returns income growth guidance 2013 half year results 41
Slide 42: Conclusion
Conclusion ERV growth from existing portfolio Contribution from extensions and Overhead cost control refurbishments Strong returns Confident outlook Major developments Liability management Value Retail 2013 2013 Full-year 2013 half year results Half-year results results 42 42
Slide 43: Questions
Questions 2013 Half-year results
Slide 44: Disclaimer
Disclaimer This presentation contains certain statements that are neither financial results nor other historical information. These statements are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materially from those expressed in or implied by t