Hammerson : 2022 Half Year Results

HAMMERSON plc - UNAUDITED HALF-YEAR 2022 RESULTS

Focused on execution, delivering tangible results

Rita-Rose Gagné, Chief Executive of Hammerson, said:

"We continued to make good strategic, financial and operational progress in the first half. Adjusted earnings were up 154% to £51m reflecting a 48% increase in like-for-like net rental income, lower administration and finance costs, and a strong contribution from Value Retail. We completed £194m of disposals, reducing net debt by 6%. Portfolio values were broadly stable in the half and we have a solid balance sheet.

Footfall, sales, occupancy and collections are recovering and now close to 2019 levels. We saw a good leasing performance now ahead of previous passing rent and marginally ahead of ERV. We have strengthened our tenant profile, we have a strong and diversified leasing pipeline for the second half, and robust occupancy levels across our destinations.

We have also continued to make progress on our pre-development pipeline, with key milestones in the first half met that enable further options for value creation.

We are a better, more resilient, and financially secure business as a result of the actions taken since the beginning of 2021. We are conscious of the potentially volatile environment ahead and remain focussed on delivering our strategy. We have identified a number of levers within our control to continue to create value. We see more opportunities ahead."

Summary Financial and Operating Performance:

• Adjusted earnings up 154% to £51m (H1 21: £20m) reflecting:
  • stronger LFL GRI (+16%) and LFL NRI (+48%);
  • gross administration costs reduced 20%, 2023 cost reduction target (vs 2019) delivered 18 months early;
  • net finance costs 25% lower year-on-year; and
  • a strong year-on-year contribution from Value Retail (+£16m).
• IFRS profit of £50m (H1 21: £376m loss)
• Adjusted earnings per share up 0.7p to 1.1p (H1 21: 0.4p - restated (note (b)); Basic earnings per share of 1.1p (H1 21: (8.2)p loss per share - restated (note (b))
• Group portfolio value of £5.3bn, yields stable; total return 2.1% (H1 21: -4.7%)
• Completed £194m of disposals and anticipate delivering a further c.£300m by end of 2023
• EPRA NTA increased by £34m to £2,874m (FY21: £2,840m), EPRA NTA per share -2p to 62p reflecting scrip

Solid balance sheet

• Net debt down 6% to £1.7bn at 30 June 2022 (FY21: £1.8bn)
• Total liquidity of £1.2bn including undrawn committed facilities, and £0.5bn of cash
• No Group debt maturities not covered by current cash holdings until 2025
• Headline LTV 37% (FY21: 39%), fully proportionally consolidated (FPC) LTV 45% (FY21: 47%)

Resilient operational trends

• Footfall strengthening to end Q2 at 90% of 2019 levels
• Sales approaching 2019 levels overall, and ahead of 2019 levels in Q2
• £10.5m leasing deals concluded in H1 22, with headline leasing 31% above previous passing, net effective rent +1% vs ERV
• More than half of deals to non-fashion in H1 22; 68% since H1 21
• Flagship occupancy for managed portfolio stable at 95%, up 2% pts year-on-year
• Improved rent collection: FY21 now at 94%; H1 22 92%; Q3 22 84%
• Footfall and brand sales recovery continues at Value Retail, spend per visit +7% above 2019 levels

Dividend

The Board has declared an interim cash dividend of 0.2 pence per share. Subject to shareholder approval, the Board intends to provide an enhanced scrip dividend alternative of 2.0 pence per share. This is currently expected to be the last enhanced scrip dividend alternative for the purpose of discharging the Company's remaining SIIC obligation of approximately €57m arising from the profit on disposal of 75% of Italie Deux in 2019. Both the cash dividend and the enhanced scrip dividend alternative will be paid as a non-Property Income Distribution ("Non-PID") and treated as an ordinary UK company dividend.

(a) These half-year 2022 results include discussion of alternative performance measures which include those described as Adjusted, EPRA and Headline as well as constant currency (where current period exchange rates are applied to the prior period's results). Adjusted, EPRA and Headline measures are described in note 1B to the interim financial statements and reconciliations for earnings and net assets measures to their IFRS equivalents are set out in note 9 to the interim financial statements.

(b) Adjusted earnings per share and basic earnings/(loss) per share for 2021 have been restated to reflect the bonus element of scrip dividends as set out in note 10B to the interim financial statements.

(c) Proportionally consolidated - basis as set out in notes 1B and 3 to the interim financial statements.