Hammerson Plc 2018 was a tough year particularly in the UK

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Hammerson Plc (LON: HMSO), today announced the results for the year ended 31 December 2018.

2018 Highlights

– £570m of disposals realised at an average disposal price of 7% below December 2017 book value
– Further progress on reducing net debt, down £179m from 30 June 2018 to £3.4bn. Net debt target of £3.0bn for 2019 to maintain balance sheet strength
– 2018 Group leasing volumes in line with 2017 performance with UK flagship destinations achieving record levels (+7.5%). Group leasing secured at 5% ahead of previous passing rent
– Impacted by a weaker investment market, UK property values fell during the second half of 2018 by -9.3%, the overall portfolio produced a 12 month capital return of -4.3%
– Group LfL NRI growth of 0.3%, with declines at UK flagship destinations (-1.3%) and retail parks (-4.3%) following CVAs and tenant failure. France flagship destinations -0.9%
– Strong performance from premium outlets and Ireland with LfL NRI up 5.2% and 1.6% respectively, with exceptional brand sales growth of 8% across premium outlets
– Final 2018 dividend maintained at 14.8p per share. Total dividend for the year up 1.6%
– City Quarters platform to create vibrant mixed-use neighbourhoods in thriving locations in the UK and Ireland surrounding our flagship destinations. 97 acres of land holdings capable of delivering up to 6,600 residential units, 1,200 hotel rooms and 200,000m² of workspace

2019 Strategic Disposals Programme
– A portfolio-wide review to accelerate transactions has identified additional disposal opportunities

– 2019 disposal target in excess of £500m

– We are open-minded about the upper limit of the disposal programme and are in active discussions on transactions with a total value of over £900m

– These potential transactions are in the form of portfolio sales, joint ventures and individual asset disposals from multiple sectors and territories. This includes a limited number of retail parks, which we remain committed to exiting over the medium term. Disposals are subject to market conditions and achieving attractive terms

– Assuming the disposal programme is successful, Hammerson’s net debt would be below £3bn by the end of the year

– Given the importance of the Company’s disposal programme, the Board has decided to establish an Investment and Disposal Committee to provide additional oversight and focus in this area

– The Committee will be chaired by Andrew Formica. It will have three other members: Pierre Bouchut and two other Non-Executive Directors that the Board plans to appoint in 2019. These new appointments reflect the Board’s wish to ensure a broad balance of skills and experience to enable it to fulfil its role and to ensure orderly succession planning for Directors

David Atkins, Chief Executive of Hammerson, said:
“2018 was a tough year particularly in the UK. Tenant failures, the structural shift in retail and a more considered consumer created a difficult operating environment, putting pressure on property values. Outside of the UK our destinations performed better with a strong contribution from premium outlets.

“We believe that a successful deleveraging programme will best position Hammerson for the current environment and beyond. Disposals will also enable us to prove the inherent value of this business – which we believe is not recognised in the current equity market.

“Having successfully achieved £570m of disposals in 2018, we are aiming to dispose of at least £500m in 2019. We remain committed to exiting retail parks over the medium term and are in active portfolio-wide discussions on transactions of over £900m, which would add further strength to our balance sheet.

“Over the longer term we will generate opportunities to create additional value through City Quarters, which will see us transform many of our city venues beyond pure retail into successful, thriving neighbourhoods. The job of creating flagship spaces is never done, but through expert management, innovation and investment we are confident in the future of Hammerson and in maximising value creation for shareholders.”

Full Year 2018 results at a glance

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12 months ended:	31 Dec 2018	31 Dec 2017	Change
Net rental income ⁽¹⁾	£347.5m	£370.4m	– 6.2%
Adjusted profit ⁽²⁾	£240.3m	£246.3m	– 2.4%
Adjusted earnings per share ⁽²⁾	30.6p	31.1p	-1.6%
IFRS (loss)/profit ⁽³⁾	£(268.1)m	£388.4m
Basic (loss)/earnings per share ⁽³⁾	(34.1)p	49.0p
Final dividend per share	14.8p	14.8p
As at:	31 Dec 2018	31 Dec 2017
Portfolio value ⁽⁴⁾	£9,938m	£10,560m	– 5.9%
Equity shareholders’ funds	£5,433m	£6,024m	– 9.8%
EPRA net asset value per share ⁽²⁾	£7.38	£7.76	-4.9%
Gearing ⁽⁵⁾	63%	58%	+5p.p.
Loan to value – headline ⁽⁵⁾	38%	36%	+2p.p.

Proportionally consolidated, excluding premium outlets. See page 20 of the Financial Review for a description of the presentation of financial information.

Calculations for adjusted and EPRA figures are shown in note 8 to the financial statements on pages 44 and 45.

Attributable to equity shareholders, includes portfolio non-cash revaluation losses of £392m (2017: £247m gain).

Proportionally consolidated, including premium outlets. See page 20 of the Financial Review for a description of the presentation of financial information.

See Table 18 on page 68 for supporting calculations for gearing and loan to value.