Shaftesbury : Annual Results 2022 Announcement

SHAFTESBURY 2022 FULL YEAR RESULTS

Growth in EPRA NTA, income, earnings and dividends

Strong recovery in footfall and spending; sustained occupier demand across all uses; return to pre-

pandemic occupancy

Shaftesbury PLC, the Real Estate Investment Trust that owns a 16.4-acre portfolio in the heart of London's West End, today announces its results for the year ended 30 September 2022.

Brian Bickell, Chief Executive, commented:

"The year has seen a rapid rebound in the West End economy as Covid-related disruption receded and patterns of everyday activity returned to pre-pandemic normality. The sustained recovery in footfall and trading since the early months of 2022 has been matched by the strength of occupier demand in our carefully curated and popular locations.

Although London and the West End cannot be immune from the unprecedented range of challenges which are now dominating the national outlook, their long-term prospects remain bright, thanks to their enduring appeal to global, domestic and local visitors, businesses and investors, their dynamic economies and ability to attract talent and creativity from across the world. These features are mirrored in the locations in which we invest and, together with our proven, innovative management strategy and our experienced and enthusiastic team, reinforce our confidence in the long-term potential of our exceptional portfolio."

Overview

• Rapid rebound in West End economy.
• Sustained recovery in confidence and activity driving growing footfall and spending ahead of 2019 levels; occupiers reporting average monthly sales now 6% ahead of pre-pandemic levels - hospitality and leisure: +6%, retail +6%.
• Strong demand for space across all uses has led to a return to pre-Covid occupancy levels and growth in rental values.
• 59 new hospitality and retail lettings during the year.
• Rent collection: 99%, back to pre-pandemic levels.
• Material improvement in earnings reflecting recovery in operating conditions.
• Cash generated from operating activities up 61.4% to £61.8 million following cessation of Covid-rent support and improvements in rent collections and occupancy.
• Dividends for the year: 9.9p per share, +54.7% year-on-year.
• Net zero carbon commitment: 2030; carbon-neutral in our operations: 2025.
• Prospects for London and the West End remain bright, despite current range of macroeconomic challenges. We remain confident in long-term potential of our exceptional portfolio.
• Proposed merger update:
• • Merger approved by Shaftesbury and Capco shareholders.
  • Currently engaged in customary pre-notification discussions with the CMA, which remain ongoing.
  • Proposed merger is now expected to become effective during the first quarter of 2023, subject to satisfaction or, where applicable, waiver of outstanding conditions.
  • Arrangements to facilitate payment of further dividends by Shaftesbury and Capco for the quarter ended 31 December 2022 announced today.

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Materially improved earnings reflecting recovery in operating conditions

Statement of Comprehensive Income		2022	2021	Change
Reported results
Net property income	£m	82.8	64.7	28.0%
Profit/(loss) after tax	£m	119.1	(194.9)	+£314.0m
Basic earnings/(loss) per share	Pence	31.0	(52.0)	+£83.0p
Dividends for year ended 30.9.22
Second interim dividend	Pence	5.1	4.0*	27.5%
First interim dividend	Pence	4.8	2.4	100.0%
Total dividends for the year	Pence	9.9	6.4	54.7%
EPRA results1
Earnings	£m	19.3	13.3	45.1%
Earnings per share	Pence	5.0	3.5	42.9%
Underlying EPRA earnings/(loss)	£m	38.0	(7.4)	+£45.4m
Underlying EPRA earnings/(loss) per share	Pence	9.9	(2.0)	+11.9p
Cash flow
Cash generated from operating activities	£m	61.8	38.3	61.4%
Balance Sheet
Reported net assets	£m	2,459	2,373	3.6%
EPRA NTA per share1	£	6.41	6.19	3.6%
Total Accounting Return1	%	5.0%	(14.6)%	+19.6ppts

* 2021: Final dividend

• Net property income up 28.0% to £82.8m (2021: £64.7m):
• • 38.2% increase in invoiced rent to £113.3m (2021: £82.0m) reflecting improved occupancy and cessation of occupier rental support.
  • Rental income, after adjustments for lease incentives: £110.4m (2021: £105.0m); +5% like-for-like.
  • Significant reduction in charges for impairments and expected credit losses, down £13.7m to £4.0m (2021: £17.7m) as trading conditions improve and rent collection rates return to pre-pandemic levels.
  • Irrecoverable property costs up £1.0m to £23.6m (2021: £22.6m) with increased leasing volumes, maintenance expenditure, additional marketing activity and property management fees.
• Profit after tax: £119.1m (2021: £194.9m loss).
• • Increase primarily due to £99.5m revaluation gain (2021: £196.9m revaluation deficit) and improved net property income, partly offset by one-off costs associated with the proposed merger.
  • EPRA earnings1: £19.3m, up 45.1% (2021: £13.3m). EPRA earnings per share1: 5.0p (2021: 3.5p).
  • Underlying EPRA earnings per share1, after adjusting for accounting impact of Covid rent waivers and one-off costs associated with proposed merger: 9.9p (2021: loss per share 2.0p).
• EPRA NTA1: £6.41 per share, up 3.6% (2021: £6.19) predominantly due to net revaluation gains.

Increased dividends

• Second interim dividend for year ended 30 September 2022 (referred to as the "Shaftesbury Full Year Dividend" in the proposed merger Scheme Document), paid in place of a final dividend: 5.1p (+27.5% vs 2021 final dividend).
• • To be paid as a PID on 21 December 2022.
  • Ex-dividenddate: 8 December 2022
  • Record date: 9 December 2022
  • Dividend covered by underlying EPRA earnings per share.
• Total dividends for year: 9.9p, up 54.7% (2021: 6.4p).

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Strong demand across all uses driving growing income and rental values; vacancy now at pre- pandemic levels

• Leasing transactions with a rental value of £40.9m completed during the year (2021: £33.9m):
• • Commercial: £32.4m; +8.5% vs 9.21 ERV.
  • Residential: £8.5m; +11.4% vs previous rents.
  • £4.4m of lettings and renewals completed since 1 October 2022; further lettings in solicitors' hands.
• EPRA vacancy: 4.0% of portfolio ERV (2021: 6.0%), of which 1.6% was under offer.
• Rent collection back to pre-pandemic levels: 99% of invoiced rent now collected for year ended 30 September 2022.

Wholly-owned portfolio valuation: £3.2bn; full year increase2: 3.6%, with first half gains2 (+7.5%) partly

reversed in the second half (H2: -3.6%) as valuation yields increased

• Valuation increases2 across all uses: hospitality and leisure +4.5%; retail +0.9%; offices +3.6%; residential +5.7%.
• Equivalent yield: +18 bps to 4.10% (2021: 3.92%)
• • First half: -6 bps to 3.92% due to improved operational conditions
  • Second half: +24 bps, reflecting impact on investor sentiment of globally-rising finance rates and deterioration in macroeconomic outlook
• Portfolio ERV up 9.0%2 to £145.8m (2021: £131.7m)
• • increases in both halves across all uses, reflecting letting activity and much-improved occupier market sentiment.
  • now 4.6% below pre-pandemic level at 30.9.2019 (like-for-like).
• Portfolio reversionary potential: £29.9m, 25.8% above annualised current income (2021: £23.9m; 22.2%).

Longmartin joint venture valuation3: £167.0m; full year increase2: +0.2%

• Equivalent yield 4.28% (2021: 4.03%).
• ERV growth2 of 6.2%; retail down 1.3%, other uses up over the year.

Portfolio investment: adapting and improving buildings; core acquisitions

• Returned to actively securing vacant space where we see opportunities to accelerate schemes, including those put on hold during the pandemic.
• • Capital expenditure in the year: £35.9m.
  • Redevelopment and refurbishment schemes across 168,000 sq. ft. (8.3% of portfolio ERV) underway at 30 September 2022.
• 72 Broadwick Street:
• • Fourth floor office space and 15 apartments completed and let ahead of expectations.
  • Work on first to third floor offices continues; ERV £3.3m, 2.3% of portfolio ERV.
• Long leasehold interest at 92-104 Berwick Street acquired in May 2022 for £29.2m4.
• Seven other acquisitions during the year: £26.1m4.
• Two disposals in the year: Gross proceeds of £11.4m.

Sustainability

• Net zero carbon strategy
• • Targeting net zero carbon by 2030; Carbon neutral in our own operations by 2025.
• Continuing focus on re-use and repurposing buildings, prioritising retention of existing structures rather than demolition and rebuilding.
• Commitment to support local communities, particularly focusing on young people. Community investment evaluated at £1.0m in 2022.

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Finance

• Compliance with financial covenants. Headroom5:
• • Valuation decrease: c. 49%.
  • Relevant measures of net income decrease: c. 68%.
• Available resources6 £155.2m.
• LTV1,7: 25.2% (2021: 24.9%).
• Weighted average maturity of debt facilities6: 7.7 years; earliest maturity6: £290m mortgage bonds 2027.

Proposed merger update

• On 16 June 2022, Shaftesbury and Capco announced a recommended all-share merger.
• Merger approved by Shaftesbury and Capco shareholders at respective shareholder meetings on 29 July 2022.
• Merger remains subject to satisfaction or, where applicable, waiver of the remaining conditions set out in Part Three of the Scheme Document, including satisfaction of the CMA condition and the Court sanctioning the Scheme.
• Currently engaged in customary pre-notification discussions with the CMA, which remain ongoing.
• CMA has not yet commenced its Phase 1 review and therefore the merger is now expected to become effective during the first quarter of 2023.
• Arrangements to facilitate the payment of dividends by Shaftesbury and Capco in respect of the quarter to 31 December 2022 agreed, given that the merger effective date is now expected to occur during the first quarter of 2023:
• • Timing of payment of second interim dividend, noted above, brought forward from expected timeframe set out in the proposed merger Scheme Document.
  • Shaftesbury permitted to declare and pay a further interim dividend of up to 2.7p per share; to be paid before the merger becomes effective.
  • Capco permitted to declare and pay a further dividend of up to 0.7p per share; to be combined with the dividend of up to 1.0p per share for the period from 1 July 2022 to 30 September 2022 set out in the Scheme Document; such dividend to be declared before the merger becomes effective.
  • Further details are set out in a Regulatory News Service announcement released today.

1. Alternative performance measure ("APM"). The Group uses a number of measures to assess and explain its performance, some of which are considered to be APMs as they are not defined under IFRS. See page 50.
2. Like-for-like.
3. Our 50% share.
4. Including acquisition costs.
5. Loan to value covenant and interest cover covenant headroom across all secured financing arrangements assuming top up with available unsecured assets and cash deposits where permitted.
6. Pro forma, adjusting to remove undrawn £100m revolving credit facility which matures in February 2023.
7. Based on net debt.

For further information:

Shaftesbury PLC 020 7333 8118

Brian Bickell, Chief Executive

Chris Ward, Chief Financial Officer

Shaftesbury PLC LEI: 213800N7LHKFNTDKAT98

See Glossary of terms on pages 60 to 64.

RMS Partners 020 3735 6551

Simon Courtenay 07958 754273

MHP 020 3128 8100

Oliver Hughes 020 3128 8622 Rachel Farrington 020 3128 8613

The person responsible for arranging the release of this announcement is Desna Martin, Company Secretary.

Presentation

There will be a presentation to analysts at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS at 9.30 am on Tuesday 29 November 2022.

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The presentation can also be accessed live via webcast or conference call. The live webcast will be available via: https://brrmedia.news/SHB_FY22;or https://stream.brrmedia.co.uk/broadcast/634ed5696815e65bb9fdc128; or the Group's website www.shaftesbury.co.uk.

A recording of the webcast will be available via these links later in the day.

Conference call: In order to join via phone at 9:30am, please dial in 5-10 minutes before the start time on:

UK wide: [phone]

UK Toll free: 0808 109 0700

New York: [phone]

USA toll free: [phone]

Please quote Shaftesbury when prompted by the operator. The presentation document is available on the Group's website.

Bondholders

For bondholders, there will be a credit update conference call at 11.00 am on Friday 9 December 2022. Those wishing to participate in the call should obtain an access code ahead of the call by contacting Stuart Bell on

020 3542 3921 or [e-mail].

Notes for Editors

Shaftesbury is a Real Estate Investment Trust which invests exclusively in the heart of London's West End. Focused on food, beverage, retail and leisure, our portfolio is clustered mainly in Carnaby, Seven Dials and Chinatown, but also includes substantial ownerships in East and West Covent Garden, Soho and Fitzrovia.

Extending to 16.4 acres, the portfolio comprises over 600 restaurants, cafés, pubs and shops, extending to 1.1 million sq. ft., 0.5 million sq. ft. of offices and 632 apartments. All our properties are close to the main West End Underground stations, and within ten minutes' walk of the two West End transport hubs for the Elizabeth Line, at Tottenham Court Road and Bond Street.

In addition, we have a 50% interest in the Longmartin joint venture, which has a long leasehold interest, extending to 1.9 acres, in St Martin's Courtyard in Covent Garden.

Our purpose

Our purpose is to contribute to the success of London's West End by curating lively and thriving villages where people live, work and visit. Our proven management strategy is to create and foster distinctive, attractive and prosperous locations. We have an experienced and innovative management team focused on delivering our long-term strategic objectives.

Our values

We have five core values that are fundamental to our behaviour, decision making and the delivery both of our purpose and strategic objectives: being human in how we operate, original in how we nurture talent and think, community minded in our approach to the West End, being responsible and long-term in our approach to everything.

Our approach to sustainability

Our sustainability strategy encompasses our long-established approach of reducing the environmental impact of our operations through refurbishment, change of use and reconfiguration, working with, and supporting our local community, and using our knowledge and experience to influence and motivate, to achieve positive outcomes.

Forward-looking statements

This document, the latest Annual Report and Shaftesbury's website may contain certain "forward-looking statements" with respect to Shaftesbury PLC (the Company) and the Group's financial condition, results of its operations and business, and certain plans, strategy, objectives, goals and expectations with respect to these items and the economies and markets in which the Group operates. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "anticipates", "aims", "due", "could", "may", "should", "expects", "believes", "intends", "plans", "targets", "goal" or "estimates" or, in each case, their negative or other variations or comparable terminology.

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