2013 Annual Results www.capitalandcounties.com 25 February 2014 - - PowerPoint PPT Presentation

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2013 Annual Results www.capitalandcounties.com 25 February 2014 - - PowerPoint PPT Presentation

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Capita ital l & Counti unties s Propert rties s PLC 2013 Annual Results www.capitalandcounties.com 25 February 2014 Important notices This presentation includes statements that are forward-looking in nature. Forward-looking statements

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www.capitalandcounties.com

Capita ital l & Counti unties s Propert rties s PLC

2013 Annual Results

25 February 2014

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2013 Annual Results

2

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 materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Any information contained in this presentation on the price at which shares or other securities in Capital & Counties Properties 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.

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Agenda

 Introduction

Ian Hawksworth

 Financial review

Soumen Das

 Operating review

Ian Hawksworth and Gary Yardley

 Q&A

2013 Annual Results

3

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Capco

Value growth and value creation

2013 Annual Results

4

 Focus on prime London  2013 total return 23%

1

– EPRA Adjusted Net Assets +22% to 249 pence per share – Total shareholder return 37%

2

 Sound capital structure

– £287 million cash and available facilities – Conservative 15% LTV

TOTAL PROPERTY VALUE £2.3 BILLION, +20% (LfL)

Covent Garden £1,156m

West End £1,156m

Earls Court Properties £934m

Venues £161m

West London £1,095m

1 Growth in EPRA NAV per share plus dividend per share paid in the year 2 Growth in share price plus dividend per share paid in the year (assuming reinvestment)

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Highlights

Value growth and value creation

2013 Annual Results

5

 Covent Garden

– Revised ERV target of £75 million by December 2016 – New lettings at 11.6% above December 2012 ERV – Resolutions to grant planning consent for Kings Court and Carriage Hall

 Earls Court Masterplan

– Outline planning consent granted – Detailed planning consents for Earls Court Village submitted

 Earls Court land assembly well progressed

– CLSA option exercised – Proposed TfL JV approved by Capco and TfL Boards in February 2014 – Acquisition of remaining 50% of Empress State

 Lillie Square scheme enhancements consented  New debt facilities for Empress State and, post year-end, Covent Garden  Proposed final dividend: 1.0 pence per share (total 2013 dividend 1.5 pence per share)

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Financial review

Soumen Das

2013 Annual Results

6

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Underlying earnings

Highlights

2013 Annual Results

7

2013 2012 Var £m £m £m

Net rental income 64.8 65.3 (0.5) Admin costs (33.8) (26.1) (7.7) Net finance costs (20.9) (22.8) 1.9 Tax on underlying earnings (2.3) (3.9) 1.6 Underlying earnings 7.3 12.5 (5.2) Underlying earnings per share 1.0p 1.8p (0.8p) Dividend per share 1.5p 1.5p

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Net rental income

2013 Annual Results

8 Other: £1.2m Covent Garden £32.1m Covent Garden £35.6m Other £5.4m Other £1.2m Earls Court Properties £9.2m Earls Court Properties £14.5m Venues £18.6m Venues £13.5m £3.5m £5.2m £5.0m £4.2m

£10m £20m £30m £40m £50m £60m £70m 2012 Covent Garden Earls Court Properties Venues Other 2013

£65.3m £64.8m

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Balance sheet

2013 Annual Results

9

Balance sheet excludes unrecognised surplus on trading properties of £69 million

Contingent tax liability: investment properties nil; trading properties £16 million

£106 million capital commitments

Dec-13 Dec-12 Var £m £m £m

Portfolio value 2,166 1,671 495 Net debt (329) (164) (165) Other assets and liabilities (25) (29) 4 NAV 1,812 1,478 334 EPRA adjusted diluted NAV 1,912 1,553 359 Number of shares in issue 757.9m 752.7m 5.2m

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EPRA adjusted diluted net assets per share

NAV +22% to 249 pence

2013 Annual Results

10

Diluted EPRA NNNAV 245 pence per share

203p 249p 45.9p 1.0p 1.1p 0.4p

180p 190p 200p 210p 220p 230p 240p 250p 260p Dec-12 Valuation & sale of property Underlying profits Dividend (net of scrip) Other Dec-13

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Debt management

2013 Annual Results

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Cash and available facilities of £287 million at December 2013

£119 million refinancing of Empress State facility

£665 million unsecured revolving credit facility for Covent Garden, agreed in February 2014

– 5 year term, margin 1.65% – Increases available facilities by over £150 million

£45m (£374m) £184m (£348m)

(£500m) (£400m) (£300m) (£200m) (£100m) £100m £200m Cash Cash

Net Debt

£329m £164m

Dec-13 Dec-12

LTV 15% 10% Group interest cover 148% 172% Cash and available facilities £287m £401m Weighted average cost of finance 4.4% 5.2% Weighted average maturity 4.3 yrs 4.8 yrs

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Cash utilisation

Substantial liquidity from internal resources

2013 Annual Results

12 £287m £184.5m £45.0m £8.0m £81.6m £121.0m £59.7m £39.8m £6.9m £1.7m £241.8m

£100m £200m £300m Dec-12 Operational cash flow Disposals Acquisitions (including Empress State) Capex Borrowings Dividend Other Dec-13

Undrawn Facilities Cash

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Operating review

Ian Hawksworth and Gary Yardley

2013 Annual Results

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Valuation

Strong 2013 valuation + 19.9% (LfL)

2013 Annual Results

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Market value Market value Value ERV Initial Equivalent Dec-13 Dec-12 change1,2 change 1 yield yield £m £m

Covent Garden 1,156 952 19.2% 11.0% 3.3% 4.7% Earls Court 453 336 24.0% Lillie Square 3 153 104 31.1% Empress State 4 265 110 19.9% Venues 161 146 6.3% Other 3,5 63 73

  • Total Properties

2,251 1,721 19.9%

1 Like-for-like

2 Valuation change takes account of amortisation of lease incentives, capital expenditure and fixed head leases 3 Represents Capco's share 4 Dec 2012 - 50% share. Dec 2013 100% Capco owned 5 Peripheral assets

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Covent Garden

Redefining global luxury for London

2013 Annual Results

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Covent Garden

Redefining global luxury for London

2013 Annual Results

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 ERV target increased to £75 million by

December 2016

 Expand the premium retail offer  Improve the dining variety and quality  Extend the high quality residential portfolio  Grow the estate through tactical

acquisitions

 Explore and complete selective

developments

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Covent Garden

2013 Highlights

2013 Annual Results

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 Value £1.2 billion +19.2% (LfL)  ERV £58.0 million +11.0% (LfL)  NRI £35.6 million +1.9% (LfL)  New lettings 11.6% above Dec 2012 ERV  Adjusted occupancy 99%  Footfall robust at circa 44 million

– 93% ABC1s (UK visitors)

 Residential

– The Russell: sales price over £2,400 psf average

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Covent Garden

New brands across the estate

2013 Annual Results

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2013

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Covent Garden

ERV target increased to £75 million by December 2016

2013 Annual Results

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 Covent Garden significantly below

prime central London average

 Proactive asset management has

increased rents

– King Street – 90% ITZA growth3 – Market Building – 109% ITZA growth3

 Potential for strong growth in other

Covent Garden streets

1 Based on 30 ft Zone A, includes Bond St, Oxford St and Regent St. (Covent Garden based on 20 ft Zone A.) 2 Covent Garden average based on all retail units within the Capco estate 3 King Street and Market Building North Zone A uplift based on units under constant ownership since 2008.

  • £100

£200 £300 £400 £500 £600 £700 £800 £900 £1,000

ITZA - December

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Covent Garden

Zone A distribution December 2013

2013 Annual Results

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Covent Garden

Future street transformations

2013 Annual Results

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Covent Garden

Larger scale developments

2013 Annual Results

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Kings Court & Carriage Hall

New retail hub and residential address

2013 Annual Results

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 Resolutions to grant planning consent received in

December 2013

 Over 90,000 sq ft, including 20,000 sq ft of

new space

 Total capex approximately £85 million  GDV c.£215 million  Start on site H2 2014, completion H1 2017

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Earls Court Properties

A unique opportunity for urban re-imagination…

2013 Annual Results

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2013 INTERIM RESULTS PRESENTATION

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Earls Court Properties

…where Kensington, Chelsea and Fulham meet

 Proposed development of over 70 acres  Outline planning consent for 10.1 million sq ft  Board approval in February for proposed TfL

joint venture

 CLSA option exercised  Lillie Square launch shortly

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Earls Court Properties

Valuations

2013 Annual Results

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EC1 & EC2 CLSA Lillie Square Empress State Other Total

63% 1 100% 50% 100% 100%

Gross External Development Area (m sq ft) Residential

2.7 3.2 1.0 0.2

  • 7.1

Commercial

0.7 0.4

  • 0.8
  • 1.9

Total GEA

3.4 3.6 1.0 1.0 2

  • 9.0

Dec 13 Valuation

£453m n/a £153m £265m £63m £934m

Uplift (LfL)

24.0% n/a 31.1% 19.9% 21.8%

1 Taking account of the announcement of 18 July 2013 and recent TfL Board approval 2 Includes 0.5 million sq ft which is part of the Masterplan as well as 0.5 million sq ft existing office space within the Empress State Building

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Earls Court Properties

Planning momentum

2013 Annual Results

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 Formal outline planning consent granted

– Support of RBKC, LBHF and Mayor of London

 Section 106 agreed  Detailed planning applications submitted

for Earls Court Village

 Empress State planning application

submitted for change of use to residential

 New draft London Plan

– Increasing Earls Court designation to minimum 7,500

homes

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Earls Court Properties

Land assembly well progressed

2013 Annual Results

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 TfL

– Board approval for proposed 63:37 joint venture

  • ver EC1 & EC2

– Capco exclusive business manager – Documents being finalised

 CLSA option exercised

– First phase of replacement housing being considered

 Empress State

– Remaining 50% acquired

 Network Rail

– Agreement for air space within Masterplan

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Lillie Square

An exciting new development

2013 Annual Results

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Lillie Square

Sales launch March 2014

2013 Annual Results

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 Valuation £153 million as at Dec 2013

+31.1% (LfL, Capco share 50%)

 Phase 1 delivering 237 units

– Peak capital requirement £130 million (100%)

 Total build costs £360 million (100%)

Existing Scheme Units Sq Ft NIA

Private 608 557k Affordable 200 161k Total 808 718k

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Outlook

Value growth and value creation

2013 Annual Results

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 Covent Garden

– Redefine global luxury for London – Revised ERV target of £75 million by December 2016 – Kings Court & Carriage Hall developments

 Earls Court Properties

– Re-imagination of Earls Court – Continued value creation through animation of the Masterplan and detailed planning consents

 Lillie Square

– Launch of first phase of scheme

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Q&A &A

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Appendices

 Covent Garden  The Earls Court Masterplan  Taxation

2013 Annual Results

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Covent Garden

Zoning plan

2013 Annual Results

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Premium fashion Luxury accessories Food and dining

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Covent Garden

64 properties and 378 lettable units

2013 Annual Results

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Covent Garden

2013 Annual Results

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Note: Gross income = passing rent + non-leased income

£40.5m £44.4m £58.0m £2.6m £0.7m £0.6m £0.8m £3.0m £9.8m £20m £30m £40m £50m £60m

Dec 13 Gross income Rent-frees / Stepped rent Turnover lease Under contract/

  • ffer

Income contracted & under offer Vacancies Development Under-rented Dec 13 ERV

Gross income to ERV

£548m £1,156m £377m £223m £55m £47m

  • £200m

£400m £600m £800m £1,000m £1,200m Dec-09 Valuation Gain Acquisitions Capex Disposals Dec-13

Value uplift and realisation Value uplift and realisation

£33.2m £37.5m £45.8m £51.9m £58.0m £75.0m

£30.0m £40.0m £50.0m £60.0m £70.0m £80.0m 2009 2010 2011 2012 2013 Target 2016

ERV

ERV

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Covent Garden

Ownership

2013 Annual Results

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Covent Garden

Zone A distribution

2013 Annual Results

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December 2009 December 2013

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Covent Garden

Residential

 Sales

– The Henrietta – £2,250 psf average – The Russell – Over £2,400 psf average – 16 apartments currently under development

  • The Beecham
  • The Southampton

 Rentals

– 9 King Street – new rental level of £65 psf

39 2013 Annual Results

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Taxation

Summary

2013 Annual Results

40

 Tax on income

– The underlying tax rate is 23% which is broadly in line with the Statutory Corporation tax rate for 2013 of 23.25% – The March 2013 budget announced the reduction in the main rate of Corporation tax to 21% from 1 April 2014 with a further 1% reduction in rate from 1 April 2015 – Expected medium-term underlying tax rate to remain broadly in line with the Statutory UK Corporation tax rate

 Tax on capital gains

– The contingent tax position on investment properties held within the Group at the year ended 31 December 2103 is nil. This is primarily due to the Group’s holding structure, the availability of group losses and indexation relief – A disposal of the Group’s trading property at their market value would result in a corporation tax charge to the Group of £16.1 million (23.25% of £69.2 million)