Final Results

RNS Number : 0025P

Hammerson PLC

15 February 2016

 

HAMMERSON plc - AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015

SUPERIOR RETAIL PORTFOLIO DRIVING STRONG OPERATIONAL AND FINANCIAL PERFORMANCE

Year ended:	31December 2015	31December 2014	Change	Like-for-like  increase
Net rental income (1)	£318.6m	£305.6m	+4.3%	+2.3%
Profit (including valuation changes)	£726.8m	£699.1m	+4.0%
Adjusted profit	£210.9m	£174.3m	+21.0%
Adjusted earnings per share (2)	26.9p	23.9p	+12.6%
Final dividend per share	12.8p	11.6p	+10.3%
As at:	31December 2015	31 December 2014
Equity shareholders' funds	£5,517m	£4,974m	+10.9%
EPRA net asset value per share	£7.10	£6.38	+11.3%
Loan to value (3)	38%	34%	+4%

1. On a proportionally consolidated basis, excluding interests in premium outlets

2. Calculations for EPRA and adjusted figures are shown in note 7A to the accounts on page 39

3. Value denominator includes £690 million acquisition cost of Irish loan portfolio

ASSET MANAGEMENT - LEASING demand drives operational performance

-      ERV growth of 2.8% at UK shopping centres reflects growing polarisation in demand for high-quality retail space in prime locations

-      400 lettings (136,000m²) driving group LfL NRI growth of 2.3% (3.1% including premium outlets)

-      Re-positioning of French portfolio is delivering results; tenant sales growing despite unsettled backdrop; LfL NRI growth of 2.5%

-      Exceptional sales growth rates continue at premium outlets; brand sales growth 11% at Value Retail, 10% at VIA Outlets

INVESTMENT MANAGEMENT - POSITIONING INTO GROWTH MARKETS

-      £690 million Irish loan portfolio acquisition to create Ireland platform; loan to property conversion on track

-      Acquisition of Grand Central, Birmingham; 50:50 joint venture agreement with CPPIB, Hammerson net acquisition cost £175 million

-      Expanded exposure to fast-growing premium outlets; acquisition of Festival Park, Majorca; increased ownership in Kildare Village, Dublin, a total of £45 million combined

-      £360 million disposals during past 12 months and a further £300 million planned during 2016; successful capital recycling to enhance returns

DEVELOPING VENUES - successfully completed four developments

-      64,900m² new space added, including Le Jeu de Paume, Beauvais, and next-generation shopping park, Elliott's Field, Rugby

-      Continued progress across major London developments; further land assembly in Croydon; infrastructure consents granted at Brent Cross; call-in date confirmed by London Mayor at The Goodsyard

-      Strong pre-lettings at Victoria Gate, Leeds and WestQuay Watermark, Southampton; on-track for scheme openings in the next year

FINANCIAL EFFICIENCY - consistent focus on optimising cost structure

-      £1.9bn of debt capital raised; weighted average cost of debt decreased to 3.8%

-      Successful relocation of London head office to Kings Cross completed, reducing corporate overhead costs

-      Prudent financial leverage maintained at 38%; cash and undrawn facilities of £931 million
 

David Atkins, Chief Executive of Hammerson, said: "2015 was a strong year for the business, with our assets well placed to take advantage of improving consumer confidence and growing retailer demand for space in prime regional destinations, resulting in meaningful ERV growth.  A clear focus on our strategic priorities has delivered strong earnings growth of 13% and supports a five-year track-record of 8% compound growth per annum.

We continue to recycle capital into assets best positioned to deliver value creation, with the acquisition in Ireland, Grand Central and Festival Park aligned with our strategy to own and manage prime retail destinations across Europe.  Looking ahead, whilst we recognise the global economic and political uncertainties, we remain confident that the business will continue to deliver sustainable, attractive returns."

Contents:	Page			Page
Who we are	1		Independent Auditor's Report	25
Key performance indicators	2		Financial Statements	27
Business Review	4		Notes to the accounts	33
Financial Review	15		Additional Disclosures	52
Principal Risks and Uncertainties	23		Glossary	59
Responsibility Statement	24

Results presentation today:

The results presentation is being held today at 10.00 a.m. at Deutsche Bank's offices at 1 Great Winchester Street, London EC2N 2DB.  A live
webcast of Hammerson's results presentation will be broadcast today at 10.00 a.m. via the Company's website, www.hammerson.com. At the
end of the presentation you will be able to participate in a question and answer session by dialling [phone]. Please quote confirmation code 4522319.

Financial calendar:

Ex-dividend date	17 March 2016
Record date	18 March 2016
Final dividend payable	29 April 2016

Enquiries:

David Atkins, Chief Executive	Tel: [phone]
Timon Drakesmith, Chief Financial Officer
Rebecca Patton, Head of Investor Relations	Tel: [phone]
www.hammerson.com	[e-mail]

Index to key data Figures have been prepared on a proportionally consolidated basis excluding interests in premium outlets, unless otherwise stated
Income and operational - Year ended	31 December 2015	31 December 2014	Page
Portfolio total returns (including share of premium outlets portfolio)	12.4%	13.6%	2 2
Portfolio capital return (including share of premium outlets portfolio)	7.1%	8.0%	55
Occupancy	97.7%	97.5%	3
Like-for-like NRI growth	2.3%	2.1%	2
Adjusted earnings per share	26.9p	23.9p	2
Leasing activity	£27.9m	£29.5m	3
Leasing v ERV	+3%	+6%	3
Leasing v previous passing rent	+10%	+5%	3
Like-for-like ERV growth - UK shopping centres	+2.8%	+2.6%	4
Like-for-like ERV growth - France	-	+0.2%	8
Retail sales - UK shopping centres	+1.3%	+2.6%	4
Retail sales - France	+0.6%	-1.0%	8
EPRA cost ratio	23.1%	22.8%	3
Final dividend per share	12.8p	11.6p	18
Capital and financing	31 December 2015	31 December 2014	Page
Property portfolio value (including premium outlets)	£8.4bn	£7.7bn	55
Net debt	£3.0bn	£2.3bn	21
Gearing	54%	46%	21
Loan to value	38%	34%	21
Liquidity	£931m	£648m	21
Weighted average interest rate (WAIR)	3.8%	4.7%	21
Interest cover	3.6 times	2.8 times	21
Net debt/EBITDA	9.6 times	8.0 times	21
Fixed rate debt	61%	79%	21
Portfolio currency hedge	90%	88%	21
Equity shareholders' funds	£5.5bn	£5.0bn	18
EPRA net asset value per share	£7.10	£6.38	18

WHO WE ARE

At Hammerson we create destinations that excite shoppers, attract and support retailers, reward investors and serve communities. We are a leading owner, manager and developer of retail destinations in Europe. Our portfolio is valued at £8.4 billion and includes investments in 21 prime shopping centres in the UK and France, 21 convenient retail parks in the UK and 15 premium outlets across Europe.

OUR BUSINESS MODEL

We seek to deliver value for all our stakeholders

-      Financial returns  for shareholders

-      Destinations for retailers and shoppers

-      Economic and social benefits for our people and communities

The success of our business depends on a number of principal inputs:

-      High-quality property in prime locations across selected European retail markets

-      Skilful and motivated people and teams, united around a clear set of values

-      Deep retail knowledge captured through long-standing commercial relationships, data insight and consumer research

-      Dependable access to, and the continued trust of, international capital markets

The key actions that we undertake towards achieving our strategic priorities create value:

-      Asset management: we skilfully manage our portfolio in a sustainable way to generate income growth and to attract tenants and shoppers

-      Investment management: we employ market expertise to recycle our portfolio. Taking advantage of acquisition opportunities which enhance the quality of our portfolio and future returns and disposing of assets at the right time

-      Developing venues: we have a proven track record in creating sustainable retail and leisure destinations which anticipate future consumer needs and ensure that retailers will thrive for years to come

-      Financial efficiency: we manage and control our costs, both operational and financial, and manage the capital base to support the delivery of our strategy

Our Product Experience Framework is embedded across everything we do, providing a unique point of differentiation. We constantly challenge ourselves to apply best practice in retail design and digital solution, customer engagement and sustainability. Our Product Experience Framework incorporates:

-      Iconic destinations:  we create outstanding architecture to enhance locations. We place our centres at the heart of local communities, connected by seamless technology and transportation links

-      Best at retail: we deliver the optimal retail mix, consistently refreshed and showcasing new concepts

-      Convenient & easy: we make shopping simple and stress-free, with enhanced customer facilities and services, such as click & collect, encouraging regular shopper visits

-      Interactive & engaging: our outstanding customer service and leading digital infrastructure drive  engagement and loyalty, and encourage shoppers to spend longer in our destinations

-      Entertaining & exciting: we constantly evaluate and refresh our food and leisure offers, and provide a local and national calendar of events to surprise and delight our customers, and keep them coming back

-      Positive Places: we create destinations that deliver positive impacts economically, socially and environmentally

KEY PERFORMANCE INDICATORS

We have seven primary Key Performance Indicators, or KPIs. They are split between financial and operational measures and are used to monitor the performance of the business to ensure that we deliver value for our stakeholders.

Financial KPIs

http://www.rns-pdf.londonstockexchange.com/rns/0025P_-2016-2-13.pdf	12.4% (Benchmark 9.9%) (2014: 13.6% (Benchmark 12.5%)) During 2015, the property portfolio produced a total return of 12.4% which was 250bp ahead of the estimated IPD benchmark. The outperformance was driven by premium outlets which delivered a total return of 23.7%. Further details are provided in the Financial Review on page 19.
http://www.rns-pdf.londonstockexchange.com/rns/0025P_1-2016-2-13.pdf	2.3% (2014: 2.1%) On a like-for-like basis, NRI grew by 2.3% in 2015, above our target of 2.0%. Income from UK shopping centres and retail parks grew by 2.1% and 2.6% respectively. Our French shopping centres produced income growth of 2.5%. Further details are provided in the Financial Review on page 16.
http://www.rns-pdf.londonstockexchange.com/rns/0025P_2-2016-2-13.pdf	12.6% (2014: 3.5%) In 2015, adjusted EPS increased by 3.0 pence, or 12.6%, to 26.9 pence. This increase was driven by increased rental income and additional earnings from our premium outlet investments. Earnings were further enhanced by the lower average cost of borrowing and lower administration expenses, but impacted by the dilution associated with the 2014 share placing. We benchmark this KPI against inflation, which for 2015 was 0.2%, resulting in an outperformance of 124bp. This benchmark was previously UK RPI, but has been changed in 2015 to a weighted 70:30 UK:France CPI benchmark. Further details are provided in the Financial Review on page 15. * Proportionally consolidated excluding premium outlets.
http://www.rns-pdf.londonstockexchange.com/rns/0025P_3-2016-2-13.pdf	23.1% (2014: 22.8%) During 2015, our cost base has been managed effectively and the proportion of net administration costs as a percentage of gross rental income has reduced from 12.8% to 11.8%. This reduction was offset by an increased proportion of property costs from 10.0% to 11.3%. This increase is principally due to higher vacancy and property running costs at properties awaiting redevelopment. Further details are provided in the Financial Review on page 16.

OPERATIONAL KPIs
 

http://www.rns-pdf.londonstockexchange.com/rns/0025P_4-2016-2-13.pdf	97.7% (2014: 97.5%) Occupancy remains above our 97.0% target, with the portfolio being 97.7% occupied at the year end. This was marginally higher than the prior year, principally due to higher occupation in our shopping centres in both the UK and France. Further details are provided in the Business Review on pages 4 to 9.
http://www.rns-pdf.londonstockexchange.com/rns/0025P_5-2016-2-13.pdf	£27.9 million (2014: £29.5 million) Leasing volumes have remained high in 2015 totalling £27.9 million. Whilst absolute volumes were slightly lower than in 2014, demand for space in our prime properties remained strong. On average, principal leases signed in 2015 were secured at 3% above December 2014 ERVs and 10% above the previous passing rent. Across the portfolio we signed 396 leases (UK: 260, France: 136) representing a total area of 136,000m2. Further details are provided in the Business Review on pages 4 to 9.
http://www.rns-pdf.londonstockexchange.com/rns/0025P_6-2016-2-13.pdf	172mtCO2e/£m (2014: 180mtCO2e/£m) The ratio has improved by 4% during 2015 reflecting greater operational efficiency although the reduction in the ratio has been tempered by emissions associated with increased gas consumption. * Proportionally consolidated excluding premium outlets

BUSINESS REVIEW

This Business Review provides key information on each of our operational sectors and their performance during 2015. The Additional Disclosures section on pages 52 to 58 provide further information on the business.

UK shopping centres

Introduction

The portfolio comprises 11 major centres, which together attract 150 million visitors each year. With 755,000m² of lettable space and 1,000 tenants the combined value of the portfolio is £3.1 billion.

Operational summary

Key metrics	Like-for-like NRI growth %	Occupancy %	Leasing activity £m	Leasing vs ERV %	Like-for-like ERV growth %	Retail sales growth %	Footfall growth %
31 December 2015	2.1	98.3	11.7	+4	2.8	1.3	1.1
31 December 2014	2.2	98.1	13.5	+10	2.6	2.6	(1.3)

Note: Figures on a proportionally consolidated basis

Net rental income

On a like-for-like basis net rental income increased by 2.1% in 2015, compared with a 2.2% increase in 2014. The growth in 2015 is driven by rent review settlements, income from new lettings and increased car park income. The best performing centres were: Highcross, Monument Mall, Silverburn and Union Square which benefitted from recent lettings and uplifts associated with rent reviews. Non-rental income, being net income from car parks and the sale of advertising and merchandising opportunities at our centres, totalled £19.1 million, and grew by 10% in 2015 on a like-for-like basis.

Leasing, occupancy and ERVs

Tenant demand for space at our centres remained strong, with 151 leases signed representing £11.7 million of annual rental income and 47,800m² of space. For principal leases, rents secured were 4% above December 2014 ERVs and 9% above the previous passing rent. Associated with this occupational demand, the portfolio achieved ERV growth of 2.8% compared with 2.6% in 2014. Occupancy levels remained high at 98.3%, compared with 98.1% in December 2014.

We have delivered a number of key leasing deals across our portfolio during the year. These targeted deals help strengthen and refresh our centres, drive ERV growth and include flagship stores for UK and international brands and luxury operators. Highlights included three Victoria's Secret lettings at The Oracle, Cabot Circus and WestQuay; upsized Topshop and River Island stores at Bullring; and the introduction of Watchfinder and Séraphine at Victoria Quarter. We also signed leases with a range of exciting caterers including Cau at The Oracle, Byron at Union Square, its first Scottish restaurant, and TGI Friday's restaurants at The Oracle and Highcross.

Sales, footfall and occupancy cost

Consumers continue to demonstrate increasing confidence, and our centres have achieved sales growth in 2015 of 1.3%, calculated on a same centre basis. The strongest growth was at Silverburn and The Oracle.

Footfall increased by 1.1%, a turnaround compared with the 1.3% reduction in 2014. This increased activity has resulted in a reduction in the occupational cost ratio from 20.8% at the beginning of the year to 19.2% at 31 December 2015.

Lease expiries and rent reviews

The portfolio has a diverse tenant base and offers both a robust income stream, with a weighted unexpired lease term of six years, as well as opportunities for rental growth. Within the portfolio, leases that are subject to rent reviews, break clauses or expiry offer the prospect to secure additional rental income. Over the three years to December 2018, these leases would provide additional annual rental income of £10.7 million if renewed, or if reviews are settled, at current market rents.

Tenant covenants and credit control

There were only five units let to tenants in administration at 31 December 2015, nine fewer than at the beginning of the year. In total, these tenants represented just 0.1% of the Group's total passing rents.

Our credit control function oversees our collection process and collection rates remain strong, with 97% of billings received within 14 days of the December due date. It also assesses the covenant strength of prospective tenants and monitors the credit standing of our existing tenants using a credit rating agency. The agency has a four-point risk indicator scale, and at 31 December 2015, 87% of our shopping centre tenants were rated within the two lowest risk categories.

Commercial initiatives

In line with our Product Experience Framework, we are enhancing the quality of customer experience and service across our portfolio. Key initiatives include upgrading our customer service desks, providing electric car and mobile phone charging points, and introducing pianos to each mall to enliven the shopping experience. Our customer service performance was recognised during the year with the Silverburn team winning an unprecedented fourth BCSC Achieving Customer Excellence award.

We are also trialling a number of new initiatives including a pop-up programme and click & collect provisions. Click & collect is available in four centres with performance significantly exceeding expectations. In Brent Cross, we are seeing an average of 400 parcels being handled each week, and the click & collect service at The Oracle, launched in November 2015, is already outperforming Brent Cross at the same stage of operation. We will be rolling out to additional sites and trialling new formats of click & collect in 2016.

Interactive hoardings, used on a temporary basis on units being refurbished, are a great example of a simple, low-cost solution to enliven the mall. Trialled in four centres and retail parks over a six week period, they received more than two million interactions from shoppers.

As retail specialists, we continue to demonstrate industry-leading insight and in 2015 we have:

-      Launched the Hammerson Retail Tracker (HART), published on a monthly basis for a national readership in The Times, to provide insight into UK spending habits and retail trends;

-      Issued our third annual retail report 'Shopper Tribes' in conjunction with retail consultant Conlumino; and

-      Co-authored and hosted a seminar on 'Pricing Retail Space' in conjunction with the Investment Property Forum.

Looking ahead to 2016, we are working on a wide range of initiatives to deliver  a consistent, high quality offer across the portfolio for the benefit of both retailers and shoppers. These initiatives are designed to extend dwell times and encourage loyalty. We are enhancing the family experience at our centres by improving facilities, such as toilets, with upgrades to infant feeding and changing rooms. We will extend our programme of events and innovative food concepts to bring our centres to life and drive footfall as well as providing premium services to better support the customer experience.

A key part of many shopping journeys involves our car parks. In 2016, we will be trialling a new design as well as upgrading the technology across our car parks . We will combine best in class wayfinding, lighting and design principles to deliver an experience that is welcoming, safe and easy to use.

DIGITAL ENGAGEMENT

Our integrated digital platform is now live across all of our shopping centres. The Plus app, a personalised shopping companion, allows us to communicate directly with shoppers in real-time, providing personalised content and exclusive offers based on their interests, redemption history and stores visited, together with centre information such as floorplans, events and live centre news. The app has been well received by shoppers with 140,000 downloads, well ahead of our expectations. We continue to see strong levels of customers registering their data through the app, and more than a quarter of those registered redeemed an offer. Version 2 of the Plus app will go live in the Spring, with a new look and feel and additional functionality, including the ability to reward shoppers for their loyalty.

Acquisitions, disposals and completed developments

In March, we took 100% ownership of Martineau Galleries, Birmingham by acquiring the stakes of our two joint venture partners. We are considering a number of potential strategic development opportunities for the property in the medium term and for this reason it is classified within the UK Other portfolio in the segmental analysis in the accounts and the Additional Disclosures section of this report.

In June, Cineworld opened its new 14-screen cinema completing the 10,900m² leisure-led extension at Silverburn.

In December, we announced the disposal of Monument Mall, Newcastle for £75 million, some £8 million above its value at the beginning of the year. The 9,500m² centre was acquired in 2011 and was redeveloped in 2013. The sale crystallised a £24 million profit on cost and is part of the £500 million disposal programme announced at the time of the Irish loan portfolio acquisition.

In February 2016, we acquired Grand Central, Birmingham, a 40,400m² shopping centre for a total cost of £350 million. The centre, which opened in September 2015, is anchored by a 23,200m² John Lewis and provides a modern retail environment for 40 premium stores including
Jo Malone, Joules, Cath Kidston and The White Company. It also contains 20 casual dining brands including Yo Sushi, Caffe Concerto and Tapas Revolution. The acquisition supports our long term commitment to Birmingham which is benefitting from significant inward investment. We have contracted to sell, subject to regulatory approval, 50% of the scheme to CPPIB, one of the existing joint venture partners in Bullring, for £175 million.

Ireland

Introduction

In September we announced the acquisition, in a 50:50 joint venture with Allianz, of a €1.85 billion loan portfolio secured against prime Dublin retail property. The face value of the loans acquired was €2.6 billion and following completion of the transaction in October, the joint venture has been negotiating with the borrower group to take ownership of the secured real estate.

Rationale

This acquisition provides the Group with a new Irish operation to broaden our European platform and the opportunity to become Ireland's leading retail property owner. The portfolio is located in Dublin, Ireland's strongest retail centre, and, in addition to the population of 1.3 million, the city welcomes significant numbers of tourists (8.6 million in 2015).

The Irish economy had the fastest GDP growth in the Eurozone in 2014 and has achieved further GDP growth of 6.9% in 2015. Retail sales have risen by 6% in the year to December 2015 and the portfolio offers significant value upside through asset management and development opportunities. The acquisition is consistent with our corporate strategy and there are significant synergies with our existing UK and French operations which will enable a swift management transition when the assets are acquired from the borrowers.

Property assets

The transaction represents a rare opportunity to acquire a portfolio of quality assets in a single transaction. The principal property asset is Dundrum Town Centre which is 5km south of the city centre and was opened in 2005. The property is anchored by Harvey Nichols, House of Fraser, M&S and Penney's and has 120 shops, 38 restaurants, a 12-screen VIP cinema and 3,400 car parking spaces. The property has an annual footfall of 18 million, generates £44 million of passing rent (100% figure) and has an average unexpired lease term of twelve years. Adjacent to Dundrum Town Centre is a six acre development site (Dundrum Phase 2) which previously benefitted from a 100,000m² retail consent to extend the existing centre. We believe this site offers a better opportunity to bring forward a mixed-use development.

The Swords Pavilions shopping centre is a 50% co-ownership with IPUT and Irish Life situated in the north of Dublin. The 45,500m² centre has annual footfall of 12 million and generates passing rent of £11 million (100% figure). A 16 acre development site adjacent to the centre offers scope for future mixed-use development.

The Ilac Centre is in the heart of central Dublin on Henry Street and is a 50% co-ownership with Irish Life. The 15,000m² centre has annual footfall of 18 million and generates passing rent of £7 million (100% figure). The portfolio also includes a 5.3 acre city centre development site, adjacent to the Ilac Centre. We believe this is one of the largest and best-positioned urban development sites in Europe and has taken over a decade to assemble. The site comprises multiple buildings along Henry Street, O'Connell Street and Moore Street. With its strategic location and mix of current tenants, the site offers the flexibility to pursue numerous development scenarios and deliver a modern landmark of international importance that is sympathetic to the neighbourhood's history.

Structure

Under the terms of the joint venture, when the property assets are acquired from the borrowers, the Group will own 50% of Dundrum Town Centre and Dundrum Phase 2 in joint venture with Allianz and act as asset and development manager. We will also own 50% co-ownership shares in the Ilac Centre and in Swords Pavilions shopping centre, and 100% of the two remaining development sites: Dublin Central and Swords Pavilions. The total consideration for the Group's share of the acquisition is £0.91 billion of which £0.69 billion had been incurred at 31 December 2015. We have established a new Irish team to manage the transition from loans to property assets and expect to own the properties by the Summer of 2016.

UK retail parks

Introduction

Hammerson is the second largest direct owner of retail parks in the UK with 21 retail parks and a portfolio valuation of £1.7 billion, which provides over 500,000m² of lettable space to 460 tenants.

Operational summary

Key metrics	Like-for-like NRI growth %	Occupancy %	Leasing activity £m	Leasing vs ERV %	Like-for-like ERV growth %
31 December 2015	2.6	98.4	8.3	+4	1.3
31 December 2014	2.4	98.5	7.2	+7	0.5

Note: Figures on a proportionally consolidated basis

Net rental income

Like-for-like net rental income increased by 2.6% in 2015, compared to 2.4% in 2014. The growth is due to a year-on-year increase in surrender premiums received associated with proactive tenant rotation at Imperial Retail Park, Bristol and Fife Central Retail Park, Kirkcaldy. These were partly offset by vacancy costs ahead of the redevelopments at Battery Retail Park, Birmingham and Parc Tawe, Swansea.

Leasing, occupancy and ERVs

Across the portfolio we signed 79 leases representing £8.3 million of annual rental income and 43,300m² of space. For principal leases, rents were contracted at 4% above the December 2014 ERVs and 8% above the previous passing rent. Occupancy levels remained high at 98.4%, almost unchanged from the position at 31 December 2014.

ERV growth was 1.3% in 2015, compared with 0.5% for 2014. The occupational markets are improving, particularly homewares and we are targeting tenants which will enhance the retail offer at individual parks and grow income. Key leasing transactions during the year included a new 1,850m² TK Maxx at Westmorland Retail Park, Cramlington, a 1,900m² Next at Telford Forge Shopping Park, Telford and a 900m² Tapi at
St Oswald's Retail Park, Gloucester.

Lease expiries and rent reviews

One of the sector's strengths is security of income. As at 31 December 2015, the portfolio had the longest weighted unexpired lease term, compared to the Group's other portfolios, at nine years.

As with the UK shopping centre portfolio, a proportion of the leases are subject to rent reviews, break clauses or expiry and offer the opportunity to secure additional income. Over the three years to December 2018, these leases would provide additional annual rental income of £3.5 million if renewed, or if reviews are settled at current market rents.

Tenant covenants and credit control

At 31 December 2015, there was just one tenant in administration representing £0.4 million of income. 96% of billings were collected within 14 days of the December due date and 90% of our retail parks tenants were rated by the credit agency in the two lowest risk categories.

Commercial initiatives

As part of the Group's Product Experience Framework, we are reducing the amount of space let to DIY operators and reconfiguring this to enhance the retail offer at our parks. An example of this is at Fife Central Retail Park, Kirkcaldy where we are reconfiguring a former Homebase unit to create four new units and increase the passing rent from this space by 150%.

We are also keen to collect more insightful information about the portfolio and are undertaking a series of in-depth customer surveys to better understand consumer opinions about facilities and existing or prospective tenants. Consistent with our strategy at shopping centres, we are introducing mobile phone chargers, wi-fi and click & collect lockers at a number of our parks to enhance the customer experience.

Disposals and completed developments

In April, we sold Drakehouse Retail Park, Sheffield for gross proceeds of £62 million, generating a £2 million profit compared with the 31 December 2014 valuation.

At Cyfarthfa Retail Park, Merthyr Tydfil we completed a £30 million, 14,500m² extension in August. The extension includes B&Q's first Eco-learning store, a full-line 4,600m² M&S store and five fashion units including Next and River Island. The scheme has a yield on cost of 7% and generated a profit on cost of 34%.

The redevelopment of Elliott's Field, Rugby opened at the end of November. The scheme accommodates 16 fashion, homeware and catering brands and is anchored by a 5,600m² Debenhams and a 4,600m² M&S. The scheme includes new retailers to the Group's retail park portfolio including H&M, Fat Face and Ed's Easy Diner. The scheme has a BREEAM Excellent rating and generated a profit on cost of 24%.

France

Introduction

Our shopping centre portfolio in France consists of 10 centres attracting 90 million visitors each year. The portfolio has a value of £1.9 billion with 1,100 tenants occupying 360,000m² of lettable space.

Operational summary

Key metrics	Like-for-like NRI growth %	Occupancy %	Leasing activity £m	Leasing vs ERV %	Like-for-like ERV growth %	Retail sales growth %	Footfall growth %
31 December 2015	2.5	96.9	7.2	+2	-	0.6	(0.6)
31 December 2014	2.0	96.6	8.0	+2	0.2	(1.0)	1.5

Note: Figures on a proportionally consolidated basis 

Net rental income

On a like-for-like basis net rental income increased by 2.5% in 2015, compared to 2.0% in 2014. Tenant rotation undertaken over the past
24 months has helped increase income. Les Trois Fontaine, Cergy Pontoise was the strongest performing centre with new tenants including Free, Levi's and André. As with our UK shopping centres, we have been focusing on increasing non-rental income and in 2015 this revenue stream has increased to £4.7 million, compared to £3.1 million in 2014.

Leasing, occupancy and ERVs

Against an unfavourable macroeconomic backdrop, we continue to sign new leases across the portfolio. In 2015, we contracted 136 leases, representing £7.2 million of annual rental income and 37,600m² of space. For principal leases, the new income was 2% above December 2014 ERVs and 10% above the previous passing rent.

ERV growth remains challenging, particularly given the low level of indexation growth. In 2015 like-for-like  ERVs were unchanged. Occupancy levels at 96.9% were marginally higher than in 2014.

One of the key objectives for the French portfolio is to rotate tenants, enabling us to introduce new leisure and catering brands to enliven the retail offer at our centres. Key leasing deals during the year include All Saints and Tiger  at Les Terrasses du Port, Marseille and seven new international brands taking their first stores in France including Tuc Tuc and Punt Roma.

Tenant covenant and credit control

Associated with the more challenging economic environment in France, at 31 December 2015 there were a total of 49 units in administration across the portfolio, an increase of 16 during the year. All of these units continue to trade and represent only 0.8% of the Group's passing rent. These units provide opportunities to introduce new tenants to enhance the tenant mix.

86% of billings were collected within 14 days of the December due date and 83% of the tenants are deemed low risk, using ratings from an external credit agency.

Sales, footfall and occupancy cost

Over the course of 2015, retail sales increased by 0.6%, calculated on a same centre basis, but footfall was 0.6% lower. The sales improvement has been driven by our leasing strategy with new tenants boosting sales as well as a strong performance from Les Terrasses du Port, Marseille which opened in May 2014. The sales and footfall performance was adversely impacted by the terrorist attacks in Paris in November. Prior to this sales and footfall growth was 1.6% and 0.4% respectively for the ten months to October 2015.

Consistent with the increase in sales, the occupational cost ratio decreased during 2015 by 14.4% to 14.0% at 31 December 2015.

Lease expiries and rent reviews

Leases in France tend to be shorter than in the UK retail market, and across our portfolio the average unexpired lease term is three years, or six years excluding tenant break options. The portfolio offers opportunities for rental growth with an average reversion of 10%. Leases expiring, or subject to tenants' break clauses, over the three years to December 2018 would provide additional annual rental income of £2.5 million if renewed at current market rents. Most of our French leases are subject to annual indexation, which will be nil in 2016.

Commercial initiatives

In addition to the tenant rotation initiatives, we are applying our Product Experience Framework to the French portfolio, in order to enhance the retail and customer experience. We approach this from a Group perspective with an ambition to deliver a more consistent retailer and shopper experience across our entire shopping centre portfolio. However, we recognise the importance of providing tailored facilities and services which are particularly relevant to each centre's catchment.

We are in the process of rolling out mobile phone charging units across all our French assets, and are trialling click & collect lockers in two of our shopping centres. We are also developing retail design guidelines for each of our centres, and have been using interactive hoardings to enliven empty units and create an engaging experience for our shoppers.

Our recent acquisitions of Saint Sébastien, Nancy, and Nicetoile, Nice, acquired in February 2014 and January 2015 respectively, have benefitted from our Product Experience strategy. At Saint Sébastien, works have started to enhance the interior of the centre and are expected to complete in May 2016.

At Nicetoile, we have introduced a new management structure, implemented a range of Hammerson marketing tools including an upgraded website, and launched our portfolio-wide Plus app. The centre is currently fully let although we are in discussion with a number of aspirational retailers to further enhance the tenant mix.

We are also negotiating with local authorities to enable year-round Sunday trading across the portfolio. During 2015 we were granted permission to trade on Sundays at O'Parinor and Italie Deux. In total five of our centres can now trade throughout the week.

Acquisitions, disposals and completed developments

In line with our strategy of actively managing our portfolio and focusing on leading retail destinations, in January 2015 we acquired a 10% interest in Nicetoile shopping centre in Nice, in conjunction with our partner, Allianz. The 17,600m² centre attracts 13 million visitors each year and generates passing rent of £14 million. We manage the centre and our share of the acquisition cost was €31 million (£24 million).

In October, we completed the disposal of two smaller shopping centres, Bercy 2, Paris for €64 million (£47 million) and Grand Maine, Angers for €63 million (£46 million). Both disposals were ahead of the 31 December 2014 valuations and resulted in a combined profit on disposal of
£11 million.

In November, we opened Le Jeu de Paume, a 23,800m² scheme in the centre of Beauvais, 60km north of Paris. The new centre, which is anchored by a Carrefour Market, has attracted high-quality tenants, the majority of which are new to Beauvais or the Oise region. Key retailers include H&M, Sephora, Superdry, New Yorker, iSwitch and G-Star Raw. The centre incorporates a number of new initiatives including car park guidance technology, interactive kiosks, mobile phone charging, a dedicated welcome desk and a children's play area. Initial trading is positive and the scheme welcomed over 200,000 shoppers in the first two weeks of trading.

In January 2016, we exchanged contracts for the sale of Villebon 2 retail park for €159 million (£117 million). The disposal was the final part of the £200 million initial tranche of the £500 million disposal programme announced to part-fund the Irish loan portfolio acquisition and the disposal is expected to complete in the Spring.

Developments

Introduction

The Group has a large number of development opportunities in both the UK and France, including two on-site schemes and three major London developments. These would require expenditure of approximately £1.5 billion and have the potential to significantly grow the business and create iconic retail destinations. In addition, we are working to bring forward a number of potential future development projects, but maintain a tight control of expenditure while these opportunities are fully assessed.

Completed developments

We completed four developments during 2015 in Beauvais, Glasgow, Merthyr Tydfil and Rugby. For further details see the UK Shopping Centres, UK Retail Parks and France sections of this Business Review. The teams which delivered these schemes have been redeployed to the Group's
on-site and pipeline schemes. This approach provides new challenges for our people and ensures the experience gained and lessons learnt are retained by the Group.

On-site developments

Scheme1	Lettable area m2	Expected completion	Current value2 £m	Estimated cost to complete3 £m	Estimated annual income4 £m	Let5 %
Victoria Gate, Leeds (Phase 1)	35,400	Q3 2016	116	68	11	68
WestQuay Watermark, Southampton	17,000	Q1 2017	38	56	5	80
Total	52,400			124	16

Notes

1. Group ownership 100% for on-site schemes.

2. Valuation at 31 December 2015.

3. Incremental capital cost including capitalised interest.

4. Incremental income net of head rents and after expiry of rent-free periods.

5. Let or in solicitors' hands by income at 12 February 2016.

Victoria Gate, Leeds is a £165 million scheme adjacent to Victoria Quarter arcade. The 35,400m² development is anchored by a 24,200m² flagship John Lewis store, the first in Leeds and largest outside London. The scheme includes more than 30 high-end retailers and restaurants to complement the offer at Victoria Quarter as well as an 850-space multi-storey car park. The scheme is 68% pre-let to brands including Maje, Cos, Anthropologie, The White Company, & Other Stories and Hackett and is due to open in Autumn 2016. We are targeting BREEAM Excellent for the development and have managed to divert 98% of construction and demolition waste from landfill. When combined with Victoria Quarter the new scheme will create the largest premium retail and leisure destination in Northern England.

WestQuay Watermark is a 17,000m² leisure and catering scheme next to our jointly-owned WestQuay shopping centre. The scheme includes 23 new restaurants, which will open in late 2016, and a 10-screen Showcase Cinema de Lux which will open in early 2017. The project will create a new city centre leisure and dining destination for Southampton. Leasing continues to progress well, and the scheme is 80% pre-let. Key tenants already secured include Wahaca, Byron, Bill's, Cabana, Cau, Five Guys and Red Dog Saloon. We are targeting BREEAM Excellent when the scheme fully opens next year.

Major developments

Scheme	Ownership %	Lettable area m2	Earliest start	Potential completion	Estimated cost to complete1 £m
Croydon town centre, South London	50	200,000	2017	2020/21	650-700
The Goodsyard, London E12	50	270,000	2017	Phased	140-160
Brent Cross extension, London NW4	41	90,000	2017	2021	475-550
Total		560,000			1,265-1,410

Notes

1. Hammerson's share of incremental capital cost including capitalised interest. These costs are indicative as full scheme details are yet to be finalised.

2. Cost reflects phase 1 only. Due to residential component of scheme, area is gross external.

We have made further progress with our three major London developments. These are forecast to deliver attractive financial returns for the Group and create new iconic destinations. These complex, long-term projects have the potential to deliver significant benefits for their localities and catalyse wider urban regeneration.

The redevelopment of Croydon town centre is an opportunity to deliver a major destination fulfilling the current and future retail, leisure and social requirements of the local community and wider catchment. The scheme involves the redevelopment of the Whitgift Centre and refurbishment of Centrale shopping centre by the Croydon Partnership, a 50:50 joint venture with Westfield, which will establish Croydon as the principal retail and leisure hub for South London. The new Whitgift Centre will underpin a fundamental shift in the perception of Croydon, attracting new residents and businesses and fuelling further investment. Croydon Town Centre is a strategic growth area in the GLA London plan. A growth fund was announced in the Autumn Statement to enable the London Borough of Croydon, in partnership with the GLA, to deliver key infrastructure projects to regenerate the wider town centre.

In 2015, significant progress has been made in advancing the scheme. In September, the Secretary of State confirmed Croydon Council CPO powers to purchase the land required to undertake the project. This followed the CPO inquiry which concluded in March. Also in March, the Croydon Partnership acquired a further 50% long leasehold interest in the Whitgift shopping centre and assumed operational control of the centre. The partnership now owns or controls the majority of the land interests required for the 200,000m² scheme. Given the extended planning process and discussions with a number of potential anchor tenants, the scheme timetable has been revised. Works are now expected to start in 2017 with potential completion in 2020/21.

In 2015, we continued to discuss the planning application for redevelopment of The Goodsyard, London E1 with the local authorities of Hackney and Tower Hamlets.

The scheme, being advanced with our joint venture partner, Ballymore Properties, is a 270,000m² mixed-use development, which includes a 20,000m² retail 'village', 1,350 residential units and substantial public realm including a new park. The development will cater for the growing Tech City media and technology start-ups attracted to the local area with the provision of 80,000m² of workspace.

In June, a revised planning application was submitted which reduced the residential provision on the 4.2ha site by 100 homes and increased the office element of the scheme to more than 76,000m². We welcomed the decision in September by the Mayor of London to call in the scheme due to non-determination by the local authorities and are working to achieve the planning consent by Spring 2016 enabling a potential start on-site in 2017.

In conjunction with our joint venture partner, Standard Life, work continues on the regeneration of Brent Cross Cricklewood in north-west London. Following extensive local consultation, consent was granted by Barnet Council in September for a major investment in the local transport infrastructure and the first section of a new riverside park.

An outline masterplan planning permission for the regeneration scheme was granted in 2010 and amended in 2014. A key element of the new town centre masterplan is a 90,000m² extension to Brent Cross shopping centre. The extension and refurbished existing centre will result in a retail-led, dining and leisure destination for North London.

The new retail destination will form an integral part of the wider regeneration of the area and will provide offices, 7,500 homes, schools, new parks, sports and other community facilities. As announced in the UK Government's March budget a commitment was made by the Treasury to support a new Brent Cross Overground station. Barnet Council has approved the use of CPO powers to acquire the remaining land to deliver the extension. The CPO inquiry will be held in May 2016 and subject to the confirmation of CPO powers and agreements with key tenants, works could start on-site towards the end of 2017 with potential completion in 2021.

Development pipeline opportunities

We have a number of potential pipeline schemes which we continue to advance. The nature and design of these projects are fluid and the speed of delivery will be dependent on a variety of factors including planning permission, retailer demand, anchor tenant negotiations, land assembly and scheme design. The Group's principal opportunities are shown in the table below.

Scheme	Lettable area m2		Key facts
UK shopping centres
Silverburn (Phase 4), Glasgow	50,000		-      Consent granted in October 2015 for a masterplan for a future extension of existing centre -      Masterplan includes retail, hotel and leisure uses
Union Square, Aberdeen	27,800		-      Extension of existing shopping centre for retail, leisure and catering. Including additional car parking and a hotel and reconfiguration of part of existing centre -      Planning application submitted in February 2016
Victoria Gate, Leeds (Phase 2)	73,000		-      Planning consent for retail-led scheme, including up to 2,700 car park spaces -      Freehold control of site obtained
WestQuay Watermark, Southampton (Phase 2)	58,000		-      Outline planning consent for mixed-use scheme -      Council-owned land, with joint review of scheme under way
UK retail parks
Oldbury, Dudley	10,900		-      Planning submitted in January 2016 for new development
Orchard Centre, Didcot	10,000		-      £50 million expansion of existing centre with M&S Food Hall anchor -      Planning approved in July 2015
Parc Tawe, Swansea	21,000		-      Refurbishment and modernisation of existing retail park -      Planning dispute successfully appealed in September 2015
France
Italie Deux, Paris 13ème	6,900		-      Retail extension of existing shopping centre -      Progressing necessary consents to enable start on-site
Les Trois Fontaines, Cergy Pontoise	24,800		-      Retail and leisure extension as part of wider city centre project -      Submission of a number of consent applications and agreement with a number of co-owners achieved in 2015 -      Awaiting confirmation of consents and final co-ownership agreements
SQY Ouest, Saint Quentin-en-Yvelines	32,000		-      Opportunity to reposition existing shopping centre, creating a leisure-led destination
Total	314,400

Premium outlets

Introduction

As part of our strategy, the Group has been increasing its exposure to the premium outlets sector over recent years. Our exposure is gained through our long-term partnership with Value Retail and also through VIA Outlets, a joint venture established in 2014.

The Outlet sector has many similarities with our directly-managed properties and we benefit from the relationship with Value Retail management. We utilise the knowledge gained to enhance the brand experience across our portfolio, for example the inclusion of key aspirational brands at Victoria Gate, Leeds.

The Financial Review on pages 15 to 22 provides further information on how our investments in Value Retail and VIA Outlets have benefited the Group's financial performance during 2015.

Value Retail ("VR")

Overview

VR operates nine high-end shopping tourism Villages in the UK and Western Europe which provide over 180,000m² of floor space and more than 1,000 stores. VR focuses on international fashion and luxury brands and on long-haul tourism. The Villages, which include Bicester Village outside London and La Vallée Village near Paris, are among the most successful outlet centres in Europe. The average sales density for the Villages is €15,000/m² with densities at Bicester Village around €40,000/m².

The Villages are close to Europe's wealthiest cities and major tourist attractions and targeted marketing enables VR to benefit from the rapidly-growing shopping-tourism market. In total, 163 million residents live within a 120 minute drive of a Village, and the major cities served by the Villages attract 100 million tourists each year. The total footfall across the Villages in 2015 was 33.3 million (2014: 32.5 million). This strategy has enabled VR to deliver annual compound brand sales growth of 17% since 2006.

VR manages the Villages and controls their operations, but through our board representation and financing agreements we have significant influence and treat our investment as an associate.

In December, we acquired an additional 21% interest in Kildare Village, Dublin for £12 million. We expect the Village to perform strongly, supported by the expansion of the Irish economy and the recently completed extension.

Performance in 2015

The Villages have continued to perform strongly during 2015 with brand sales growth of 11% and year-end occupancy at 95%, which was unchanged from the beginning of the year. Future growth is expected to be supported by global tourism, new emerging brands, consumers' more considered approach to shopping and the importance of perceived value. Trends in tourism show that visitor numbers continue to grow with a widening spread of nationalities visiting Europe. Chinese visitors continue to represent the largest share of overseas retail spending in Europe, with growth of 32% in 2015 (source Global Blue). Spending by Middle Eastern tourists has been resilient despite the reduction in the oil price, although there has been a fall in spending by visitors from Russia and Brazil.

Value Retail - 2015 performance

2015 performance	Year ended 31 December 2015	Year ended 31 December 2014
Brand sales (€m)	2,458	2,214
Brand sales growth (%)	11	11
Footfall (millions)	33.3	32.5
Average spend per visit (€)	74	68
Average sales densities (€000/m2)	15.0	13.8
Occupancy (%)	95	95

Note: The above figures reflect overall portfolio performance, not Hammerson's ownership share.

Developments and extensions

The €50 million extension at Kildare Village, Dublin, opened in November 2015. The 6,100m² new phase has introduced 33 new boutiques and two restaurants to the Village as well as a new visitor centre and 400 extra parking spaces. Initial trading has significantly exceeded expectations.

At Bicester Village, the approved planning permission for a major extension was revised in April to increase the car parking provision to 519 new spaces. The 5,600m² extension will include 33 new boutiques and enhanced road access to reduce congestion. Construction is expected to begin in the second half of this year, with the extension completed in late 2017.  A new rail station also opened adjacent to the Village in October bringing shoppers directly from London Marylebone.

At Fidenza Village, Milan work has started on a 3,300m² extension which will add 26 units and is due to open in October 2016.

VR is continuing to expand in China following the opening of Suzhou Village in May 2014. The construction of Shanghai Village, a 50,000m² scheme adjacent to Shanghai Disney Resort, is underway with the Village due to open this Summer. We have an investment of £4.5 million in these Chinese Villages.

Via Outlets ("VIA")

Overview

VIA is an outlets joint venture formed in 2014 in partnership with APG, Value Retail and Meyer Bergman. VIA's strategy is to create a c.€1 billion portfolio by acquiring existing European outlet centres with strong catchments focused on mainstream fashion brands and with potential for growth. Under the partnership agreement, we are able to exercise joint control in the partnership and account for our interest as a joint venture.

Once acquired, VIA utilises the outlet expertise from VR to enhance the overall centre management, physical appearance, leisure and catering offers and tenant mix of the centres to deliver sales, income and value growth. The strategy also involves work to right-size units, the introduction of more flagship stores and targeted marketing to increase tourist visits.

At 31 December 2015, VIA had five outlet centres providing 160,000m² of floor space and over 500 stores across five European countries. The major assets are Alcochete, near Lisbon, Batavia Stad, near Amsterdam, Fashion Arena, near Prague, and Landquart, near Zurich.

Performance and investment activity

VIA's portfolio has performed strongly during 2015, particularly Batavia Stad and Fashion Arena, and sales densities in the VIA centres have increased by 11% year-on-year. Significant upgrades are being implemented at Batavia Stad including 38 remerchandising projects in 2015, upgraded façades, a new information centre and a new tourist marketing strategy. VIA has recently started a 5,500m² extension to the centre which will introduce 45 new units, increase space by 22% and which will open in early 2017.

Occupancy at 87%, was 5% lower than at the beginning of the year as a result of the phasing of remerchandising initiatives.

In late 2015, VIA sold Excalibur, in the Czech Republic near the Austrian border for €10 million (Hammerson's share). In January 2016, VIA exchanged  a conditional contract to acquire Festival Park, Majorca for €44 million (Hammerson's share). The 32,000m² centre includes a 8,000m² cinema and attracts 3.8 million visitors each year. VIA intends to enhance the brand mix and reinvigorate the food and beverage offer.

VIA Outlets - 2015 performance

2015 performance	Year ended 31 December 2015	Year ended 31 December 2014
Brand sales (€m)	375	386
Brand sales growth (%)	10	13
Footfall (millions)	10.7	11.7
Average spend per visit (€)	38	33
Average sales densities (€000/m2)	3.3	2.9
Occupancy (%)	87	92

Note: The above figures reflect overall portfolio performance, not Hammerson's ownership share. 2015 reflects the disposal of Excalibur in late 2015 and the 31 December 2014 figures include pre-acquisition performance.  

FINANCIAL REVIEW

Presentation of financial information

The information presented in this Financial Review is derived from the Group's financial statements, prepared under IFRS. However, management principally reviews the performance of the business on a proportionally consolidated basis, including the Group's share of joint ventures and associates, but not proportionally consolidating our investments in premium outlets. We classify the Group's proportionally consolidated joint ventures and associates as 'Share of Property interests'. Further explanations of terms used in this section are in the Glossary on pages 59 and 60.

To provide a clear explanation of the performance of the business during 2015, the tables in this Financial Review state whether the information has been presented on a proportionally consolidated basis and whether it includes the premium outlet investments.

At 31 December 2015, the property ownership associated with the Irish loan portfolio, acquired in October 2015 in a 50:50 joint venture, had yet to be transferred from the borrowers and these loans are accounted for as current receivables of the joint venture, and included within the Group's share of investments in joint ventures. Details of the movement in the Group's investment in joint ventures are shown in the table on page 20.

Profit for the year

The Group's profit for the year, attributable to equity shareholders, under IFRS was £726.8 million, £27.7 million higher than 2014. This includes income from operations and financing costs as well as one-off gains realised on the sale of properties and unrealised property valuation changes. As with other property companies, and in line with EPRA guidance, we review the Group's profit on an adjusted basis, which best reflects underlying earnings and the table below shows a reconciliation of IFRS profit to adjusted profit for the year. Analysis of the Group's income statement under IFRS split between underlying "Adjusted" profit and "Capital and other" profit is shown in note 2 to the accounts on pages 34 and 35 further details of the EPRA adjustments are provided in note 7A on page 39 to the accounts.

Reconciliation of IFRS profit for the year to adjusted profit for the year

Proportionally consolidated, including premium outlets		Year ended 31 December 2015 £m	Year ended 31 December 2014 £m
IFRS profit for the year attributable to equity shareholders		726.8	699.1
Adjustments:
(Gain)/Loss on the sale of properties and joint ventures interests		(14.9)	3.4
Net revaluation gains on property portfolio*		(367.5)	(436.8)
Net revaluation gains on premium outlet property portfolio		(174.1)	(109.8)
Debt and loan facility cancellation costs		13.9	8.7
Change in fair value of derivatives*		0.1	(13.7)
Net one-off restructuring charge		-	3.0
Deferred tax - premium outlets		27.6	12.3
Other adjustments		(1.0)	8.1
Adjusted profit for the year (note 7A)		210.9	174.3
Adjusted EPS, pence		26.9	23.9

* Proportionally consolidated

The Group's adjusted profit for the year in 2015 was £210.9 million, £36.6 million higher than in 2014. The table below bridges adjusted profit and adjusted EPS between 2014 and 2015 and the movements are shown at constant exchange rates.

Reconciliation of adjusted profit for the year

Including premium outlets	Reported Group £m	Share of joint ventures £m	Share of associates £m	Adjusted profit for the year £m	Adjusted EPS pence
Adjusted profit - Year ended 31 December 2014	43.5	114.8	16.0	174.3	23.9
Net rental income increase/(decrease):
Acquisitions	9.3	-	1.0	10.3	1.3
Disposals	(4.1)	(0.7)	-	(4.8)	(0.6)
Development and other	6.0	3.7	-	9.7	1.2
Like-for-like portfolio	5.5	0.5	-	6.0	0.8
Acquisition of joint venture interest by Reported Group	9.3	(9.3)	-	-	-
	26.0	(5.8)	1.0	21.2	2.7
Decrease/(Increase) in net administration costs	0.7	(0.5)	-	0.2	-
Decrease in net finance costs	8.6	3.7	-	12.3	1.6
Increase in Value Retail and VIA Outlets earnings	-	5.3	0.6	5.9	0.8
Tax and non-controlling interests	(1.1)	0.4	-	(0.7)	(0.1)
Dilution impact of share placing	-	-	-	-	(1.7)
Exchange	(1.6)	(1.2)	0.5	(2.3)	(0.3)
Adjusted profit - Year ended 31 December 2015	76.1	116.7	18.1	210.9	26.9

The increase in adjusted profit was driven by additional net rental income, principally from the acquisition of the additional 40% stake in Highcross in October 2014 and income from Les Terrasses du Port which opened in May 2014. The Group's premium outlet investments in Value Retail and VIA Outlets, the latter acquired in July 2014, contributed an additional £5.9 million of earnings. Lower finance costs, reflecting the refinancing activity undertaken to reduce the Group's average cost of debt to 3.8%, increased earnings by £12.3 million. These positive factors were partly offset by the impact of the euro depreciating against sterling during 2015 which reduced earnings by £2.3 million, although the Group's hedging strategy provided an approximate two-thirds hedge against the adverse currency movement. Overall, the 21.0% increase in adjusted profit resulted in a 12.6% increase in adjusted EPS, after taking account of the dilutive effect of the September 2014 share placing.

Net rental income

Analysis of net rental income

Proportionally consolidated, excluding premium outlets	Reported Group £m	Share of Property joint ventures £m	Share of associates £m	Year ended 31 December 2015 £m	Year ended 31 December 2014 £m	Change £m
Like-for-like investment properties	164.2	102.2	-	266.4	260.4	6.0
Developments and other	23.4	6.6	-	30.0	20.3	9.7
Acquisitions	15.7	-	1.0	16.7	6.4	10.3
Disposals	5.5	-	-	5.5	10.3	(4.8)
Exchange	-	-	-	-	8.2	(8.2)
Net rental income	208.8	108.8	1.0	318.6	305.6	13.0

In 2015, net rental income increased by £13.0 million, or 4.3%, to £318.6 million. Acquisitions contributed £10.3 million of additional income, principally relating to the £180 million acquisition in September 2014 of our former joint venture partner's 40% stake in Highcross, Leicester. Disposals reduced net rental income in 2015 by £4.8 million, reflecting the 2015 sales of Drakehouse Retail Park, Sheffield, Bercy 2, Paris and Grand Maine, Angers.

Additional net rental income from developments of £9.7 million mainly relates to Les Terrasses du Port in Marseille, which opened in May 2014 and has traded strongly during 2015. Development income also came from our joint venture property interests in Croydon whilst the major regeneration scheme is progressed. Net rental income from the like-for-like portfolio increased by 2.3% during the year, with the most significant contributions made by rent reviews at Union Square and tenant rotation at Les Trois Fontaines. Like-for-like income also benefited from the growth in car park and commercialisation net income which increased by 5% and 24% respectively on a like-for-like basis. Like-for-like net rental income growth on the Reported Group properties was 3.4%, whilst for properties held by the Group's proportionally consolidated joint ventures and associates, like-for-like net rental income growth was 0.6%. Further analysis of net rental income is provided in table 4  of the Additional Disclosures on page 53.

Administration expenses

Administration expenses analysis

Proportionally consolidated, excluding premium outlets	Year ended 31 December 2015 £m	Year ended 31 December 2014 £m
Employee and corporate costs	48.3	52.1
Management fees receivable	(6.0)	(5.6)
Administration expenses	42.3	46.5
Less:
Restructuring cost	-	(5.5)
Pension curtailment gain	-	2.5
One-off administration expenses	-	(3.0)
Underlying administration expenses*	42.3	43.5

* In 2015, £0.3 million (2014: £0.9 million) of the Group's proportionally consolidated underlying administration expenses related to the Group's share of Property interests

In 2015, underlying administration expenses, net of management fees receivable, were £42.3 million, a decrease of £1.2 million, or 2.7%, compared to 2014. This reduction was associated with cost-saving initiatives undertaken since the beginning of 2014 including relocating our London headquarters to King's Cross, additional management fee income, principally from the Nicetoile joint venture, and favourable foreign exchange movements.

Cost ratio

The EPRA cost ratio for the year ended 31 December 2015 was 23.1%, an increase of 30bp compared to 2014. The ratio is calculated on a proportionally consolidated basis excluding premium outlets, and reflects total operating costs, including the cost of vacancy, as a percentage of gross rental income. The ratio is not necessarily comparable between different companies as business models and expense accounting and classification practices vary. The calculation methodology has been amended in 2015 to adjust for inclusive lease costs recovered through rent, this is in line with EPRA best practice and comparative ratios have been restated. The cost ratio calculation is included as table 6 of the Additional Disclosures on page 54.

Whilst the ratio of net administration costs to gross rental income fell from 12.8% to 11.8% associated with the cost saving initiatives noted above, the ratio of property costs increased from 10.0% to 11.3%. This reflects additional expenditure associated with vacancy and running costs at properties awaiting redevelopment such as in Croydon, as well as the impact of an increased portfolio weighting to shopping centres which have higher running costs than retail parks.

Share of results of joint ventures and associates, including investments in Premium Outlets

As explained on page 15, for management reporting purposes we proportionally consolidate the results of our investments in joint ventures and associates, except for our premium outlet investments in Value Retail and VIA Outlets. The nature of the control over our premium outlet investments means that VIA Outlets is accounted for as a joint venture, whilst Value Retail is accounted for as an associate. We refer to the Group's proportionally consolidated share of its joint ventures as "Share of Property joint ventures". The operating performance of our investments in Value Retail and VIA Outlets is described on pages 13 and 14 of the Business Review and the aggregated financial contribution to the Group is shown in table 9 of the Additional Disclosures on page 56.

Share of results of joint ventures, including VIA Outlets

The Group has interests in twelve joint ventures and the share of results of joint ventures for the year ended 31 December 2015 was £246.8 million (2014: £279.0 million) as summarised in the table below. Further details are provided in note 9 to the accounts.

Analysis of share of results of joint ventures

Group's share of results including premium outlets	Share of Property joint ventures £m	VIA Outlets £m	Year ended 31 December 2015 £m	Share of Property joint ventures £m	VIA Outlets £m	Year ended 31 December 2014 £m
Net rental income	108.8	9.8	118.6	117.5	2.7	120.2
Net administration expenses	(0.3)	(1.7)	(2.0)	(0.9)	(0.6)	(1.5)
Revaluation gains/(losses) on properties	122.1	10.4	132.5	165.6	(1.3)	164.3
Loss on sale of properties	-	(0.8)	(0.8)	-	-	-
Net finance income/(costs)	3.1	(2.0)	1.1	(2.1)	(1.4)	(3.5)
Tax charge	-	(2.6)	(2.6)	-	(0.5)	(0.5)
Share of results of joint ventures	233.7	13.1	246.8	280.1	(1.1)	279.0
EPRA adjustments	(123.1)	(7.0)	(130.1)	(166.2)	2.0	(164.2)
Adjusted profit	110.6	6.1	116.7	113.9	0.9	114.8

The reduction in the share of results of joint ventures of £32.2 million during 2015 was principally due to property revaluation gains from the Group's share of Property joint ventures which were £31.8 million lower in 2015, this is consistent with the year-on-year revaluation gains on the Group's wholly-owned property portfolio. Net rental income from the Group's share of Property joint ventures was £8.7 million lower than in 2014, associated with the acquisition by the Group of the former joint venture partner's 40% stake in Highcross, Leicester in September 2014. This was offset by an increase in profit of £14.2 million from VIA Outlets, which was acquired in July 2014, of which £11.7 million related to property revaluation gains. On an adjusted basis, profit was £1.9 million higher in 2015.

Share of results of associates, including Value Retail

The Group has two associates: Value Retail PLC and its group entities ('VR'), and a 10% interest in Nicetoile, which was acquired in January 2015 and where the Group is the asset manager. The share of results of associates for the year ended 31 December 2015 was £160.6 million (2014: £109.9 million), of which £159.3 million related to VR and principally related to the property valuation uplift of £163.7 million.

On an adjusted profit basis the results of associates were £18.1 million (2014: £16.0 million), of which £17.1 million related to VR. The additional adjusted profit was due to strong trading, particularly at La Vallée, Paris and the two Spanish Villages, La Roca and Las Rozas. See note 10 of the accounts for further details on the Group's associates.

The Group also provides loans to Value Retail from which the Group received £5.3 million (2014: £5.8 million) of interest receivable in 2015.

Total investment in premium outlets

In 2015, the Group's two investments in premium outlets contributed £28.5 million to adjusted profit, £5.8 million higher than 2014 principally due to a full year's profit contribution from VIA Outlets and the continued strong underlying trading performance from Value Retail. Further details of the aggregated profit contribution from our premium outlets investment is provided in table 9 of the Additional Disclosures on page 56.

Finance costs

Underlying net finance costs, comprising gross interest costs less finance income, including the Group's share of Property interests, were
£89.4 million compared with £108.9 million in 2014, a reduction of £19.5 million.

During 2015, the Group's weighted average interest rate was reduced to 3.8%, compared to 4.7% for 2014. This was primarily due to the refinancing of the €480 million 4.875% bond, redeemed in December 2014, with the issue of the €500 million 2% bond in July 2014. Finance costs have also reduced due to a new £415 million revolving credit facility ("RCF"), signed in April 2015, having an initial margin of 80 basis points, which is 70 basis points lower than the previous £505 million facility it replaced. Finally, the increased use of floating rate debt at low rates of interest has also acted to reduce the weighted average cost of borrowing.

There was a £13.9 million (2014: £8.7 million) exceptional finance cost, principally associated with the early redemption of a £272 million 5.25% bond which was due to mature in December 2016. This is excluded from adjusted profit.

Interest capitalised during the year was £5.3 million and related to the Group's developments in Beauvais, Leeds, Rugby and Southampton. This is £3.5 million lower than in 2014 when interest was capitalised on the development of Les Terrasses du Port, Marseille.

Tax

The Group is a UK REIT and French SIIC for tax purposes and is exempt from corporation tax on rental income and gains arising on property sales. The tax charge for 2015 remained low at £1.6 million (2014: £1.0 million).

Dividend

The Directors have proposed a final dividend of 12.8 pence per share. Together with the interim dividend of 9.5 pence, the total for 2015 is
22.3 pence, representing an increase of 9.3% compared with the prior year. The final dividend is payable on 29 April 2016 to shareholders on the register at the close of business on 18 March 2016. 6.4 pence will be paid as a PID, net of withholding tax where appropriate, with the balance of
6.4 pence paid as a normal dividend.

The Company will be offering a scrip dividend alternative, and for shareholders who elect to receive this, the entire dividend will be treated as a normal (non-PID) dividend. As the Company is offering a scrip dividend alternative, the Dividend Reinvestment Plan (DRIP) will be suspended.

Net assets

During 2015, equity shareholders' funds increased by £543 million, or 10.9%, to £5,517 million at 31 December 2015.

Net assets, calculated on an EPRA basis, were £5,573 million, an increase of 11.5% during the year. On a per share basis, net assets increased by
72 pence to £7.10, and the movement during the year is shown in the table below.

Movement in net assets

Proportionally consolidated, including premium outlets	Equity shareholders' funds £m	EPRA net asset adjustments* £m	EPRA net assets £m	EPRA NAV pence per share
31 December 2014	4,974	25	4,999	638
Property revaluation
Proportionally consolidated property portfolio	368	-	368	47
Premium outlet properties	174	-	174	22
	542	-	542	69
Adjusted profit for the year	211	-	211	27
Change in fair value of derivatives	(2)	2	-	-
Change in deferred tax	(29)	29	-	-
Dividends	(165)	-	(165)	(21)
Exchange and other	(14)	-	(14)	(3)
31 December 2015	5,517	56	5,573	710

* Adjustments in accordance with EPRA best practice as shown in note 7B to the accounts on page 40.

The increase in EPRA net asset value was principally due to the valuation surplus on the Group's property portfolio, including those held in joint ventures and associates, due to yield and income improvements. Further analysis of valuation movements is provided in the chart on page 19. Adjusted profit contributed £211 million, although this was largely offset by dividend payments totalling £165 million.

Investment and development properties

Portfolio Valuation Analysis

Movement in portfolio value

Proportionally consolidated, excluding premium outlets	Reported Group £m	Share of joint Property interests £m	Total £m	Investment £m	Development £m
Portfolio value at 1 January 2015	4,427	2,279	6,706	6,498	208
Valuation increase	246	122	368	332	36
Capital expenditure
Acquisitions	44	70	114	58	56
Developments	162	14	176	61	115
Existing portfolio	13	12	25	25	-
Other*	(1)	(1)	(2)	(2)	-
	218	95	313	142	171
Capitalised interest	5	-	5	-	5
Disposals	(170)	-	(170)	(169)	(1)
Transfers	11	(11)	-	28	(28)
Exchange	(85)	(7)	(92)	(90)	(2)
Portfolio value at 31 December 2015	4,652	2,478	7,130	6,741	389

* Includes capitalised tenant incentives and letting fees

Valuation change

http://www.rns-pdf.londonstockexchange.com/rns/0025P_7-2016-2-13.pdf

The chart above analyses the sources of the valuation change for the property portfolio, on a proportionally consolidated basis, during 2015.

During 2015, the Group's portfolio, excluding premium outlets, achieved a revaluation gain of £368 million, of which £195 million was from the UK shopping centres and £117 million from our French portfolio. Improvements in investment yields accounted for 78% of this gain, with the remainder of the valuation uplift principally associated with leasing and ERV changes.

For UK shopping centres, investment yields fell by an average of 25 basis points, contributing £127 million, or 65% of the revaluation gain. The benefit of leasing and market income growth produced a valuation increase of £67 million. The UK retail parks valuations increased by £19 million associated with an uplift from leasing and ERV changes as yields were virtually unchanged.

In France, investment yields reduced by an average of 40 basis points during 2015, generating a £161 million valuation increase. This uplift was partly offset by a valuation reduction of £15 million associated with reductions in ERVs and £29 million associated with local taxation changes and refurbishment expenditure ahead of retenanting at a number of centres.

Developments and the UK Other portfolio achieved a revaluation gain of £37 million, following  letting and construction progress at Victoria Gate, Leeds and Watermark WestQuay, Southampton.

Further valuation and yield analysis is included in tables 7 and 8 in the Additional Disclosures section on page 55.

Returns

Proportionally consolidated, including premium outlets

Return	%		Benchmark	%
UK portfolio income return	4.8		UK IPD All Retail Universe income return*	5.1
UK portfolio capital return	5.2		UK IPD All Retail Universe capital return*	3.8
UK portfolio total return	10.2		UK IPD All Retail Universe total return*	9.0
Group income return	4.9		Group weighted IPD All Retail Universe income return*	4.9
Group capital return	7.1		Group weighted IPD All Retail Universe capital return*	4.8
Group total return	12.4		Group weighted IPD All Retail Universe total return*	9.9
Total shareholder return over one year	2.4		FTSE EPRA/NAREIT UK index over one year	12.1
Total shareholder return over three years p.a.	10.9		FTSE EPRA/NAREIT UK index over three years p.a.	19.0
Total shareholder return over five years p.a.	11.4		FTSE EPRA/NAREIT UK index over five years p.a.	15.0

* As Annual IPD indices have yet to be published, the benchmark IPD returns shown above have been estimated. See below for further explanation.

Property returns

The table above compares the financial returns generated in 2015 with benchmark IPD indices. The returns include development properties and the Group's returns include those from the properties held through its investments in Value Retail and VIA Outlets. The Group's weighted IPD All Retail Universe total return benchmark of 9.9% is weighted 70:30 between the UK and French indices. The All Retail Universe indices includes returns from all types of retail property.

As the Annual IPD benchmarks for both countries are not available until the 2015 Annual Report has been published, the benchmarks have been estimated and are subject to revision. The UK IPD data is based on the Quarterly All Retail Universe to December 2015. As there is less data available for France, for the purposes of calculating the Group IPD benchmarks, we have assumed that the French benchmark is equal to the returns generated by our French portfolio.

The Group's total return was 12.4%, 250 basis points higher than the estimated benchmark. The Group's outperformance was driven by the property portfolio held by our premium outlet investments which produced a total return of 23.7%. The total return for the UK portfolio was 10.2% which was higher than the UK IPD index, although the income return was 30 basis points lower, reflecting the prime nature of the Group's UK portfolio. The French portfolio generated a total return of 12.0%.

In 2015, the Reported Group portfolio generated a total return of 10.6%, whilst properties held by our joint ventures and associates generated a total return of 14.3%. Both portfolios exceeded the estimated benchmark, the performance of the latter portfolio being boosted by the strong return from premium outlets.

An analysis of the capital and total returns by business segment is included in table 7 on page 55.

Shareholder returns

For the year ended 31 December 2015, the Group's return on shareholders' equity was 14.3%, which compares to the Group's estimated cost of equity of 8%. The income element of the return on equity tends to be relatively low given the prime nature of the property portfolio. The capital element of the return was driven by the portfolio's strong valuation performance during the year.

Hammerson's total shareholder return for 2015 was 2.4%, which represents an underperformance of the FTSE EPRA/NAREIT UK index by
970 basis points. Over the last five years, the Group's average annual total shareholder return has been 11.4%, compared to 15.0% for the FTSE EPRA/NAREIT UK index.

Investment in joint ventures and associates, including investments in premium outlets

Investment in joint ventures, including VIA Outlets

At 31 December 2015, the Group's investment in joint ventures totalled £3,214 million compared with £2,341 million at the beginning of the year, an increase of £873 million. The key change during 2015 was the acquisition of the Irish loan portfolio in a new 50:50 joint venture with Allianz for a cost of £690 million, further details of this transaction are given on page 6 of the Business Review.

The movement in investments in joint ventures during 2015 is shown in the table below and further analysis is provided in note 9D of the accounts.

Analysis of movements in investment in joint ventures

Group's share of investment including premium outlets	Share of Property joint ventures £m	VIA Outlets £m	Total £m
Balance at 1 January 2015	2,237	104	2,341
Acquisitions	690	-	690
Capital advances	41	5	46
Transfer to Reported Group	(11)	-	(11)
Share of results of joint ventures:
Adjusted earnings	111	6	117
Property revaluation	122	10	132
Other results	1	(3)	(2)
	234	13	247
Distributions and other receivables	(85)	(7)	(92)
Foreign exchange and other movements	(3)	(4)	(7)
Balance at 31 December 2015	3,103	111	3,214

Investment in associates, including Value Retail

The Group's investment in associates principally relates to the Group's investment in Value Retail PLC and its group entities ('VR'), and totalled £768 million at 31 December 2015, an increase of £139 million during 2015. The increase was largely due to the revaluation gain on VR's property portfolio which totalled £164 million, of which 42% was due to yield movements and the balance associated with income growth.

During the year, acquisitions increased the investment by £37 million, of which £24 million related to the acquisition in January of a 10% interest in Nicetoile, and the remainder related to an additional VR stake in Kildare Village acquired in December. Distributions totalled £45 million, which principally related to funds received by the Group in December, following a debt refinancing by VR in relation to Bicester Village. Further analysis is in note 10 to the accounts on pages 47 and 48.

Total investment in premium outlets

At 31 December 2015, on an EPRA basis the Group's total investment in premium outlets, representing our share of VR and VIA, and including the Group's loans to VR and our investment in VR China, totalled £1,003 million (2014: £832 million). The property portfolios produced a combined valuation surplus of £174 million and produced a combined capital return of 16.4% and a total return of 23.7%. Further details of the Group's aggregated investment are provided in table 10 of the Additional Disclosures on page 56.

Financing and Cash Flow

Our financing strategy is to generally borrow on an unsecured basis on the strength of the Group's covenant to maintain operational flexibility. Borrowings are arranged to ensure an appropriate maturity profile and to maintain short-term liquidity. Acquisitions may be financed initially using short-term funds before being refinanced for the longer term when market conditions are appropriate. Short-term funding is raised principally through syndicated revolving credit facilities from a range of banks and financial institutions with which we maintain strong working relationships. Long-term debt mainly comprises the Group's fixed rate unsecured bonds. Derivative financial instruments are used to manage exposure to fluctuations in foreign currency exchange rates and interest rates, but are not employed for speculative purposes.

The Board approves financing guidelines against which it monitors the Group's financial structure. These guidelines, together with the relevant metrics, are summarised in the table below which illustrates the Group's robust financial condition.

Key financing metrics

Proportionally consolidated, excluding premium outlets	Guideline	31 December 2015	31 December 2014
Net debt (£m)		2,968	2,265
Gearing (%)	Maximum 85% for an extended period	54	46
Loan to value* (%)	No more than 40% for an extended period	38	34
Liquidity (£m)		931	648
Weighted average interest rate (%)		3.8	4.7
Weighted average maturity of debt (years)		5.7	6.5
Interest cover (times)	At least 2.0	3.6	2.8
Net debt/EBITDA (times)	Less than 10.0	9.6	8.0
FX hedging (%)	80-90%	90	88
Debt fixed (%)	At least 50%	61	79

* Includes the Irish loan assets of £690 million within the denominator

On a proportionally consolidated basis, net debt at 31 December 2015 was £2,968 million (2014: £2,265 million), reflecting borrowings of
£3,038 million and cash of £70 million. During 2015, net debt increased by £703 million and the movement is shown in the table below.

Movement in net debt

Proportionally consolidated, excluding premium outlets	Total £m
Net debt at 1 January 2015	2,265
Net cash inflow from operations	(191)
Acquisitions	822
Disposals	(185)
Development and other capital expenditure	200
Equity dividends paid	164
Advances and distributions	(47)
Exchange and other	(60)
Net debt at 31 December 2015	2,968

Through active treasury management, we have continued to reduce the Group's average cost of debt as well as ensuring a solid funding platform. Key transactions during 2015 included the signing of a new £415 million unsecured revolving credit facility in April, at an initial margin of 80 basis points with a syndicate of nine banks. The facility has a maturity of five years which may be extended to a maximum of seven years at the Group's request and on each bank's approval of their participation. The new facility replaced the existing £505 million revolving credit facility with an initial margin of 150 basis points which would have matured in April 2016. The cancellation of this existing facility resulted in a one-off exceptional interest charge of £1.0 million associated with the write-off of unamortised fees.

In the second half of the year we undertook a number of financing transactions, principally to support the acquisition of the Irish loan portfolio. To fund the acquisition we raised a new €1.5 billion revolving credit facility, of which €1.0 billion matures in March 2017 and €0.5 billion in September 2017. This is expected to be refinanced through a £500 million disposal programme, of which £200 million has already been contracted. In October, we issued a ten-year £350 million bond at a coupon of 3.5%. This bond was subsequently swapped into euros resulting in a net coupon cost of 2.5%. In December, we redeemed an outstanding £272 million bond due to mature in December 2016 with a coupon of 5.25% for a total consideration of £284.6 million. This resulted in a one-off exceptional finance cost of £12.9 million.

Exposure to exchange translation differences on euro-denominated assets is managed through a combination of euro borrowings and derivatives. At 31 December 2015, the value of euro-denominated liabilities compared to the value of euro-denominated assets was 90%, an increase of 2% from the position at the beginning of the year. Interest on euro debt also acts as a hedge against exchange differences arising on rental income from our French business. Approximately, two-thirds of the relevant income was hedged in this way during 2015, compared to an average of 82% during 2014. Whilst the overall level of euro-denominated debt grew during 2015 to increase the hedge of assets, the reduction in the hedge of income was due to increased rental income from our French business, predominantly due to the opening of Les Terrasses du Port in May 2014.

The Group's unsecured bank facilities and the US private placement senior notes contain financial covenants that the Group's gearing, defined as the ratio of net debt to shareholders' equity, should not exceed 150% and that interest cover, defined as net rental income divided by net interest payable, should not be less than 1.25 times. The same gearing covenant applies to three of the Company's unsecured bonds, whilst the remaining bonds contain a covenant that gearing should not exceed 175%. These figures are on a proportionally consolidated basis and the bonds have no covenant for interest cover. Hammerson's financial ratios are comfortably within these covenants. Fitch and Moody's rate Hammerson's unsecured credit as A- and Baa1 respectively. Moody's upgraded its rating from Baa2 in February 2015 to recognise "Hammerson's high-quality retail portfolio with a strong focus on outlet retail, its progress in reducing leverage and improving fixed charge coverage, and the expectation of continued stable performance of its core UK assets", and reaffirmed this rating in October following the Irish loan portfolio acquisition.

As explained at the beginning of this Financial Review, we do not proportionally consolidate our two premium outlet investments for reporting purposes. These are financed independently from the rest of the Group and both Value Retail and VIA Outlets utilise a combination of secured borrowings and partner loans as funding. At 31 December 2015, the Group's share of net debt in VR and VIA totalled £362 million. Including the Group's share of the net assets of VR and VIA on a pro forma basis would increase the Group's gearing from 54% to 60%, whilst the loan to value would reduce from 38% to 37%.

http://www.rns-pdf.londonstockexchange.com/rns/0025P_8-2016-2-13.pdf

PRINCIPAL RISKS AND UNCERTAINTIES

Effective risk management underpins our business model. Our risk management policies are designed to reduce the chances of financial loss, protect our reputation and optimise performance when opportunities arise. Our Risk Management Framework is structured around eight principal risk areas, contains mitigating actions and allocates management responsibility for each individual risk. The table below contains an assessment of the potential impact and probability associated with each of our principal risks, the change during 2015 and the outlook for 2016 for each risk area. A more comprehensive explanation of the Group's approach to risk management is included in the 2015 Annual Report.

	Assessment
Principal risk	Potential Impact	Probability	2015 movement and 2016 outlook
1.   Business strategy	High	Low/Medium	Impact -  Probability ↑
	Poor delivery of our retail strategy or an adverse macroeconomic environment will result in negative operational and financial performance.	The Group owns high-quality, prime properties in strong trading locations, although mixed macroeconomic data and increasing market uncertainty may hinder performance. The impact of multichannel retail remains unclear.	The increased market volatility as well as the forthcoming "Brexit" referendum are causing heightened levels of uncertainty. The integration of the new Irish platform will require effort in 2016.
2.   Property and corporate investment	Medium	Low/Medium	Impact ↑  Probability ↑
	Significant recent acquisitions may underperform forecasts, particularly if there are unfavourable wider market conditions.  We are working to complete the announced disposal programme in 2016.	Investment markets in the UK, France and Ireland remain strong, supported by the benign interest rate environment although market volatility may have an adverse impact.	Property yields have further reduced and the Group has recently undertaken two large acquisitions. Current market uncertainty and the planned disposal programme increases the risk in this area.
3.   Property development	Medium	Medium	Impact ↓  Probability ↓
	Developments are forecast to deliver a strong contribution for the Group, so any delays or adverse market conditions may cause financial and reputational issues.	Developments, particularly large schemes are inherently risky and require positive occupational demand.	Four schemes were completed and the two on-site schemes have been further de-risked during 2015. The major London schemes are not yet committed.
4.   Treasury	High	Medium	Impact - Probability ↑
	Debt levels are £3 billion with significant refinancing required over the next five years.  Capital markets distress could have a significant adverse impact.	Capital markets, particular equity and commodity markets are currently volatile. However, interest rates are forecast to remain low over the medium term.	Treasury risks have increased in 2015 associated with market volatility and less certain macroeconomic forecasts which coincide with the Group's increased debt levels
5.   Ownership structures	Low	Low	Impact ↑  Probability ↑
	Diverse mix of joint ventures with no single joint venture being critical to Group performance.	The Group has a long history of effective working relationships with joint venture partners, usually with the Group acting as asset manager.  We act to minimise any strategic differences with partners.	The proportion of the portfolio within joint ventures has increased during 2015. The uncertain global markets may impact the investment strategy of a number of the Group's partners.
6.   Tax and regulatory	Low/Medium	Low/Medium	Impact ↑  Probability ↑
	Certain regulation such as the OECD BEPS project, could adversely impact the wider real estate market.	There are increasing levels of regulation. Also the real estate sector is often seen as potential area for additional fiscal recoveries.	The increasing levels of regulation may adversely impact the Group and wider property sector.
7.   Catastrophic event	Medium/High	Low/Medium	Impact ↑  Probability ↑
	A major catastrophic event could cause significant operational and reputational issues for the Group.	Major events in our industry continue to be extremely rare and mitigation actions have been enhanced during 2015.	Threat levels and cyber-related risks have increased during 2015.  They is also greater awareness and external scrutiny of these matters.
8.   Business organisation and human resources	Low	Medium	Impact -  Probability ↓
	The Group's operations are not reliant on key individuals, and resources are available to cover unexpected absence.  Succession planning is being advanced.	The integration of the new Irish platform and assets will challenge the business in 2016.  Staff turnover levels remain within guidelines despite strong employment markets.	During 2015, the London headquarters relocation was completed and the Reading operations team successfully integrated. The Group-wide "Great Place to Work" survey also recorded improved employee engagement. However, the integration of the Irish platform will require effort in 2016.

Responsibility statement of the Directors on the Annual Report

The Responsibility Statement has been prepared in connection with the Company's full Annual Report for the year ended 31 December 2015. Certain parts of the Annual Report are not included in this announcement.

We confirm that to the best of our knowledge:

-      The financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

-      The Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

-      The Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

By order of the Board

David Atkins

Chief Executive

12 February 2016

Timon Drakesmith

Chief Financial Officer

12 February 2016

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF HAMMERSON PLC
ON THE AUDITED FINANCIAL RESULTS OF HAMMERSON PLC

We confirm that we have issued an unqualified opinion on the full financial statements of Hammerson plc.

Our audit report on the full financial statements sets out the following risks of material misstatement which had the greatest effect on our audit strategy; the allocation of resources in our audit; and directing the efforts of the engagement team, together with how our audit responded to those risks:

Risk description	How the scope of our audit responded to the risk
Valuation of the property portfolio
-      Hammerson plc ("Hammerson") owns a portfolio of retail property assets valued at £7,255.8 million at 31 December 2015 (31 December 2014: £6,849.4 million) of which £4,652.1 million are held by subsidiaries (31 December 2014: £4,427.3 million) and £2,603.7 million by joint ventures (31 December 2014: £2,422.1 million). The valuation of the portfolio (including a number of development properties) is a significant judgement area and is underpinned by a number of assumptions. -      The Group uses professionally qualified external valuers to fair value the Group's portfolio at six-monthly intervals. The portfolio (excluding development properties) is valued using the 'investment method' of valuation, in which the principal assumptions are estimated rental values and capitalisation yields. Development properties are valued by applying the same methodology, but with a deduction for all future costs necessary to complete the development together with an allowance for remaining risk, developers' profit and purchasers' costs ('the residual method'). -      Please see notes 8 and 9 to the financial statements.	-      We assessed management's review of the work of the external valuer and development appraisals; -      We met with the external valuers of the portfolio to discuss and challenge the valuation process, performance of the portfolio and significant assumptions and critical judgement areas, including estimated rental values and capitalisation yields. We benchmarked these assumptions to relevant market evidence including specific property sales and other external data; -      For development properties we assessed future costs to complete on a sample of development properties based on development appraisals. We assessed the classification of development properties and whether the methodology applied (i.e. investment or residual method) was appropriate.  We also challenged the allowances in the valuation for developers' profit; -      We assessed the competence, independence and integrity of the external valuer; and -      We performed audit procedures to assess the integrity of information provided to the independent valuer including agreement on a sample basis back to underlying lease agreement.
Accounting for the acquisition of the Irish loan portfolio
-      Hammerson continued to implement its strategy of capital recycling, with a number of acquisitions and disposals completing during the year, the most significant of which was the acquisition of a 50% interest in an Irish loan portfolio at a cost of £690.2 million. The loan portfolio, which is in default, is secured on a number of prime Irish retail properties. Negotiations to secure the consensual conversion of the loan portfolio into the retail properties are ongoing. The acquisition was undertaken by a joint venture set up by Hammerson and Allianz to acquire the Irish loan portfolio. The Group funded the acquisition through a loan provided to the joint venture of £690.2 million. -      Hammerson's accounting policy in respect of the transaction is detailed in note 1 of the Annual Report. The complexity of the transaction, together with the unique nature of the asset from the Group's perspective, result in increased risk of inaccurate presentation of the transaction. This includes initial recognition of the loans (including interest and transaction costs) at fair value together with accounting for credit risk and impairment indicators.	-      In respect of the acquisition of the Irish loan portfolio, we have reviewed the terms of the loan instruments acquired and assessed whether the Group's accounting policy for the acquisition of the loans is in accordance with IAS39 'Financial Instruments Recognition and Measurement'. This included assessing, on acquisition, the initial fair value of the loans of the Irish loan portfolio and the loan provided to fund the acquisition. We also assessed the loan provided by the Group to the joint venture for credit risk and impairment indicators  based on the valuation of the underlying properties; and -      We tested the accuracy and completeness of the disclosures in the financial statements.
Accounting for the investment in Value Retail
-      Hammerson's interest in Value Retail (carrying value of £743.8 million) (31 December 2014: £628.8 million) is equity accounted as an associate. -      The valuation of the Group's investment in Value Retail is primarily driven by the valuation of the Value Retail property portfolio of £3,333.1 million (31 December 2014: £2,835.4 million) of which Hammerson's share is £1,095.0 million (31 December 2014: £884.7 million). This is subject to similar judgements to those of the Group's property portfolio above, including future net operating income and capitalisation yields. -      Other key balances which impact the valuation of the Group's investment in Value Retail include borrowings, deferred tax and derivative financial instruments. -      Please see note 10 to the financial statements.	-      We planned the scope of the audit and instructed the auditor of Value Retail accordingly; -      We met with the auditor, Value Retail management and the external valuer of the Value Retail property portfolio to discuss and challenge the valuation assumptions including future net operating income and capitalisation yields; -      We assessed the competence, independence and integrity of the external valuer; and -      We assessed the quality of the work performed by the auditor of Value Retail in the areas of borrowings, deferred tax and derivative financial instruments.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we did not provide a separate opinion on these matters.

Our liability for this report and for our full audit report on the financial statements is to the Company's members as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.  Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for our audit report or this report, or for the opinions we have formed.

Deloitte LLP

Chartered Accountants and Statutory Auditor

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 December 2015

	Notes	2015 £m	2014 £m
Gross rental income	2	236.0	206.5
Operating profit before other net gains and share of results of joint ventures and associates	2	166.8	142.5
Other net gains	2	258.6	264.7
Share of results of joint ventures	9A	246.8	279.0
Share of results of associates	10A	160.6	109.9
Operating profit	2	832.8	796.1
Finance costs		(101.9)	(106.4)
Debt and loan facility cancellation costs		(13.9)	(8.7)
Change in fair value of derivatives		(1.1)	13.1
Finance income		15.7	9.0
Net finance costs	4	(101.2)	(93.0)
Profit before tax		731.6	703.1
Tax charge	5A	(1.6)	(1.0)
Profit for the year		730.0	702.1
Attributable to:
Equity shareholders		726.8	699.1
Non-controlling interests		3.2	3.0
Profit for the year		730.0	702.1
Basic earnings per share	7A	92.8p	95.7p
Diluted earnings per share	7A	92.6p	95.7p
Adjusted earnings per share	7A	26.9p	23.9p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 December 2015

	2015 £m	2014 £m
Items that may subsequently be recycled through the income statement
Foreign exchange translation differences	(107.5)	(136.4)
Net gain on hedging activities	81.9	103.8
	(25.6)	(32.6)
Items that may not subsequently be recycled through the income statement
Revaluation (losses)/gains on participative loans within investment in associates	(1.0)	0.6
Net actuarial losses on pension schemes	(0.3)	(11.5)
Total other comprehensive income	(26.9)	(43.5)
Profit for the year	730.0	702.1
Total comprehensive income for the year	703.1	658.6
Attributable to:
Equity shareholders	703.5	660.9
Non-controlling interests	(0.4)	(2.3)
Total comprehensive income for the year	703.1	658.6

CONSOLIDATED BALANCE SHEET

as at 31 December 2015

	Notes	2015 £m	2014 £m
Non-current assets
Investment and development properties	8	4,652.1	4,427.3
Interests in leasehold properties		32.1	33.2
Plant and equipment		7.6	5.0
Investment in joint ventures	9A	3,213.6	2,341.5
Investment in associates	10C	768.0	628.8
Other investments		4.8	1.4
Receivables	11	92.1	79.3
		8,770.3	7,516.5
Current assets
Receivables	12	118.0	86.5
Restricted monetary assets	13	34.0	11.3
Cash and deposits	14	37.0	28.6
		189.0	126.4
Total assets		8,959.3	7,642.9
Current liabilities
Payables	15	235.5	204.4
Tax		0.7	0.3
		236.2	204.7
Non-current liabilities
Borrowings	16A	3,028.1	2,287.1
Deferred tax		0.5	0.5
Obligations under finance leases		32.5	33.0
Payables	18	75.7	72.5
		3,136.8	2,393.1
Total liabilities		3,373.0	2,597.8
Net assets		5,586.3	5,045.1
Equity
Share capital	19	196.1	196.1
Share premium		1,223.3	1,222.9
Translation reserve		135.1	239.0
Hedging reserve		(125.6)	(207.5)
Merger reserve		374.1	374.2
Other reserves		21.7	19.6
Retained earnings		3,696.5	3,136.2
Investment in own shares		(3.9)	(6.8)
Equity shareholders' funds		5,517.3	4,973.7
Non-controlling interests		69.0	71.4
Total equity		5,586.3	5,045.1
Diluted net asset value per share	7B	£7.03	£6.35
EPRA net asset value per share	7B	£7.10	£6.38

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 December 2015

	Share capital £m	Share premium £m	Translation reserve £m	Hedging reserve £m	Merger reserve £m	Other reserves £m	Retained earnings £m	Investment in own shares* £m	Equity shareholders' funds £m	Non- controlling interests £m	Total equity £m
Balance at 1 January 2015	196.1	1,222.9	239.0	(207.5)	374.2	19.6	3,136.2	(6.8)	4,973.7	71.4	5,045.1
Issue of shares	-	0.4	-	-	-	-	-	-	0.4	-	0.4
Share issue costs	-	-	-	-	(0.1)	-	-	-	(0.1)	-	(0.1)
Share-based employee remuneration	-	-	-	-	-	4.8	-	-	4.8	-	4.8
Cost of shares awarded to employees	-	-	-	-	-	(2.9)	-	2.9	-	-	-
Transfer on award of own shares to employees	-	-	-	-	-	0.2	(0.2)	-	-	-	-
Proceeds on award of own shares to employees	-	-	-	-	-	-	0.2	-	0.2	-	0.2
Dividends	-	-	-	-	-	-	(165.2)	-	(165.2)	(2.0)	(167.2)
Foreign exchange translation differences	-	-	(103.9)	-	-	-	-	-	(103.9)	(3.6)	(107.5)
Net gain on hedging activities	-	-	-	81.9	-	-	-	-	81.9	-	81.9
Revaluation losses on participative loans within investment in associates	-	-	-	-	-	-	(1.0)	-	(1.0)	-	(1.0)
Net actuarial losses on pension schemes	-	-	-	-	-	-	(0.3)	-	(0.3)	-	(0.3)
Profit for the year	-	-	-	-	-	-	726.8	-	726.8	3.2	730.0
Total comprehensive income/(loss) for the year	-	-	(103.9)	81.9	-	-	725.5	-	703.5	(0.4)	703.1
Balance at 31 December 2015	196.1	1,223.3	135.1	(125.6)	374.1	21.7	3,696.5	(3.9)	5,517.3	69.0	5,586.3

*  Investment in own shares is stated at cost.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 December 2014

	Share capital £m	Share premium £m	Translation reserve £m	Hedging reserve £m	Merger reserve £m	Other reserves £m	Retained earnings £m	Investment in own shares* £m	Equity shareholders' funds £m	Non- controlling interests £m	Total equity £m
Balance at 1 January 2014	178.2	1,222.4	370.1	(311.3)	-	17.2	2,588.2	(4.9)	4,059.9	76.7	4,136.6
Issue of shares	17.9	0.5	-	-	381.4	-	-	-	399.8	-	399.8
Share issue costs	-	-	-	-	(7.2)	-	-	-	(7.2)	-	(7.2)
Share-based employee remuneration	-	-	-	-	-	5.1	-	-	5.1	-	5.1
Cost of shares awarded to employees	-	-	-	-	-	(3.6)	-	3.6	-	-	-
Transfer on award of own shares to employees	-	-	-	-	-	0.9	(0.9)	-	-	-	-
Proceeds on award of own shares to employees	-	-	-	-	-	-	0.2	-	0.2	-	0.2
Purchase of own shares	-	-	-	-	-	-	-	(5.5)	(5.5)	-	(5.5)
Dividends	-	-	-	-	-	-	(139.5)	-	(139.5)	(3.0)	(142.5)
Foreign exchange translation differences	-	-	(131.1)	-	-	-	-	-	(131.1)	(5.3)	(136.4)
Net gain on hedging activities	-	-	-	103.8	-	-	-	-	103.8	-	103.8
Revaluation gains on participative loans within investment in associates	-	-	-	-	-	-	0.6	-	0.6	-	0.6
Net actuarial losses on pension schemes	-	-	-	-	-	-	(11.5)	-	(11.5)	-	(11.5)
Profit for the year	-	-	-	-	-	-	699.1	-	699.1	3.0	702.1
Total comprehensive income/(loss) for the year	-	-	(131.1)	103.8	-	-	688.2	-	660.9	(2.3)	658.6
Balance at 31 December 2014	196.1	1,222.9	239.0	(207.5)	374.2	19.6	3,136.2	(6.8)	4,973.7	71.4	5,045.1

*  Investment in own shares is stated at cost.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 December 2015

	Notes	2015 £m	2014 £m
Operating activities
Operating profit before other net gains and share of results of joint ventures and associates	2	166.8	142.5
Increase in receivables		(0.3)	(16.0)
Increase in restricted monetary assets		(22.7)	(5.1)
Increase in payables		27.2	23.5
Adjustment for non-cash items	21	6.3	12.2
Cash generated from operations		177.3	157.1
Interest paid		(104.0)	(122.2)
Interest received		8.6	9.1
Tax paid		(1.1)	(1.5)
Distributions and other receivables from joint ventures		90.4	85.6
Cash flows from operating activities		171.2	128.1
Investing activities
Property acquisitions		(43.7)	(302.7)
Development and major refurbishments		(137.2)	(164.0)
Other capital expenditure		(45.1)	(39.8)
Sale of properties		185.2	5.8
Acquisition of Irish loan portfolio		(690.2)	-
Acquisition of interest in associates		(36.6)	-
Acquisition of other investments		(4.8)	-
Distribution received from associates		44.5	11.5
Investment in joint ventures		-	(110.8)
Sale of interests in joint ventures		-	149.6
Increase in advances to joint ventures		(45.4)	(8.1)
(Increase)/Decrease in non-current receivables		(17.1)	0.9
Cash flows from investing activities		(790.4)	(457.6)
Financing activities
Issue of shares		0.4	392.6
Proceeds from award of own shares		0.2	0.2
Purchase of own shares		-	(5.5)
Debt and loan facility cancellation costs	4	(13.9)	(8.7)
Proceeds from new borrowings		1,319.0	736.6
Repayment of borrowings		(511.4)	(630.2)
Dividends paid to non-controlling interests		(2.0)	(3.0)
Equity dividends paid	6	(163.8)	(139.1)
Cash flows from financing activities		628.5	342.9
Net increase in cash and deposits		9.3	13.4
Opening cash and deposits		28.6	15.7
Exchange translation movement		(0.9)	(0.5)
Closing cash and deposits	14	37.0	28.6

An analysis of the movement in net debt is provided in note 20.

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 December 2015

1:    FINANCIAL INFORMATION

Statement of compliance

The financial information contained in this announcement has been prepared on the basis of the accounting policies set out in the financial statements for the year ended 31 December 2015. Whilst the financial information included in this announcement has been computed in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS. The financial information does not constitute the Company's financial statements for the years ended 31 December 2015 or 2014, but is derived from those financial statements. Those accounts give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole. Financial statements for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's Annual General Meeting. The auditor's reports on both the 2015 and 2014 financial statements were unqualified; did not draw attention to any matters by way of emphasis; and did not contain statements under s498(2) or (3) of the Companies Act 2006 or preceding legislation.

Transactions with joint ventures including distributions, interest and management fees are eliminated on a proportionate basis.

During 2015, the following new and revised Standards and Interpretations have been adopted but these have not affected the amounts reported in these financial statements:

-      Amendments to IAS19 Employee Benefits - Contributions from employees or third parties that are linked to service

-      Amendments to IFRS (Annual Improvements cycle 2010-2012)

-      Amendments to IFRS (Annual Improvements cycle 2011-2013)

The principal exchange rate used to translate foreign currency denominated amounts in the balance sheet is the rate at the end of the year,
£1 = €1.357 (2014: £1 = €1.289). The principal exchange rate used for the income statement is the average rate, £1 = €1.378 (2014: £1 = €1.241).

Going Concern

The Group's business activities, together with factors likely to affect its future development, performance, and position are set out in the 'Business Review', the 'Financial Review' and the 'Principal Risks and Uncertainties'. The financial position of the Group, its liquidity position and borrowing facilities are described in the 'Business Review', the 'Financial Review' and in the Notes to the Accounts.

The Directors have reviewed the current and projected financial position of the Group, making reasonable assumptions about future trading performance. As part of the review, the Directors considered the Group's cash balances, its debt maturity profile, including undrawn facilities, and the long-term nature of tenant leases. After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report.

2:    Profit for the year

The following tables show the Group's profit for the year on a proportionally consolidated basis by aggregating the Reported Group results (shown in column A) with those from its share of Property interests (shown in column B), the latter being reallocated to the relevant financial statement lines. The Group's share of results arising from its interests in premium outlets has not been reallocated as management does not review these interests on a proportionally consolidated basis (see note 3) and these are therefore not included in the Group's share of Property interests. The Group's proportionally consolidated profit for the year in column C is then allocated between 'Adjusted' and 'Capital and other' for the purposes of calculating figures in accordance with EPRA best practice.

						2015
					Proportionally consolidated
	Notes	Reported Group £m	Share of Property interests £m	Proportionally consolidated £m	Adjusted £m	Capital and other £m
Notes		A	B	C	D	D
Gross rental incomeE	3A	236.0	130.4	366.4	366.4	-
Ground and equity rents payable		(1.3)	(2.4)	(3.7)	(3.7)	-
Gross rental income, after rents payable		234.7	128.0	362.7	362.7	-
Service charge income		41.4	21.7	63.1	63.1	-
Service charge expenses		(49.8)	(26.6)	(76.4)	(76.4)	-
Net service charge expenses		(8.4)	(4.9)	(13.3)	(13.3)	-
Other property outgoings		(17.5)	(13.3)	(30.8)	(30.8)	-
Property outgoings		(25.9)	(18.2)	(44.1)	(44.1)	-
Net rental income	3A	208.8	109.8	318.6	318.6	-
Management fees receivable/(payable)		6.1	(0.1)	6.0	6.0	-
Employee and corporate costs		(48.1)	(0.2)	(48.3)	(48.3)	-
Administration expenses		(42.0)	(0.3)	(42.3)	(42.3)	-
Operating profit before other net gains/(losses) and share of results of joint ventures and associates		166.8	109.5	276.3	276.3	-
Gain on the sale of properties		14.9	-	14.9	-	14.9
Investment costs written off		(1.4)	-	(1.4)	-	(1.4)
Revaluation gains on properties		245.1	122.4	367.5	-	367.5
Other net gains		258.6	122.4	381.0	-	381.0
Share of results of joint ventures	9A, 9B	246.8	(233.7)	13.1	6.1	7.0
Share of results of associates	10A, 10B	160.6	(1.3)	159.3	17.1	142.2
Operating profit		832.8	(3.1)	829.7	299.5	530.2
Net finance (costs)/income	4	(101.2)	3.1	(98.1)	(84.1)	(14.0)
Profit before tax		731.6	-	731.6	215.4	516.2
Current tax charge	5A	(1.6)	-	(1.6)	(1.6)	-
Profit for the year		730.0	-	730.0	213.8	516.2
Non-controlling interests		(3.2)	-	(3.2)	(2.9)	(0.3)
Profit for the year attributable to equity shareholders	7A	726.8	-	726.8	210.9	515.9

Notes

A  Reported Group results as shown in the consolidated income statement on page 27.

B  Property interests reflect the Group's share of results of Property joint ventures as shown in note 9A and Nicetoile included within note 10A.

C Aggregated results on a proportionally consolidated basis showing Reported Group together with share of Property interests.

D Aggregated results on a proportionally consolidated basis allocated between 'Adjusted' and 'Capital and other' for the purposes of calculating adjusted earnings per share as shown in note 7A.

E  Included in gross rental income on a proportionally consolidated basis is £6.6 million (2014: £6.9 million) of contingent rents calculated by reference to tenants' turnover.

						2014
					Proportionally consolidated
	Notes	Reported Group £m	Share of Property interests £m	Total £m	Adjusted £m	Capital and other £m
Notes (see page 34)		A	B	C	D	D
Gross rental incomeE	3A	206.5	137.6	344.1	344.1	-
Ground and equity rents payable		(0.6)	(1.3)	(1.9)	(1.9)	-
Gross rental income, after rents payable		205.9	136.3	342.2	342.2	-
Service charge income		34.6	25.1	59.7	59.7	-
Service charge expenses		(40.0)	(30.1)	(70.1)	(70.1)	-
Net service charge expenses		(5.4)	(5.0)	(10.4)	(10.4)	-
Other property outgoings		(12.4)	(13.8)	(26.2)	(26.2)	-
Property outgoings		(17.8)	(18.8)	(36.6)	(36.6)	-
Net rental income	3A	188.1	117.5	305.6	305.6	-
Management fees receivable/(payable)		6.3	(0.7)	5.6	5.6	-
Employee and corporate costs		(48.9)	(0.2)	(49.1)	(49.1)	-
Net one-off restructuring costs		(3.0)	-	(3.0)	-	(3.0)
Administration expenses		(45.6)	(0.9)	(46.5)	(43.5)	(3.0)
Operating profit before other net gains/(losses) and share of results of joint ventures and associates		142.5	116.6	259.1	262.1	(3.0)
Profit on the sale of properties		0.6	-	0.6	-	0.6
Loss on the sale of joint ventures		(4.0)	-	(4.0)	-	(4.0)
Joint venture formation costs written off		(3.1)	-	(3.1)	-	(3.1)
Revaluation gains on properties		271.2	165.6	436.8	-	436.8
Other net gains		264.7	165.6	430.3	-	430.3
Share of results of joint ventures	9A, 9B	279.0	(280.1)	(1.1)	0.9	(2.0)
Share of results of associates	10A, 10B	109.9	-	109.9	16.0	93.9
Operating profit		796.1	2.1	798.2	279.0	519.2
Net finance (costs)/income	4	(93.0)	(2.1)	(95.1)	(100.1)	5.0
Profit before tax		703.1	-	703.1	178.9	524.2
Current tax charge	5A	(0.9)	-	(0.9)	(0.9)	-
Deferred tax charge	5A	(0.1)	-	(0.1)	-	(0.1)
Profit for the year		702.1	-	702.1	178.0	524.1
Non-controlling interests		(3.0)	-	(3.0)	(3.7)	0.7
Profit for the year attributable to equity shareholders	7A	699.1	-	699.1	174.3	524.8

3:    Segmental analysis

The factors used to determine the Group's reportable segments are the geographic locations, UK and France, and sectors in which it operates, which are generally managed by separate teams and are the basis on which performance is assessed and resources allocated. Gross rental income represents the Group's revenue from its tenants and customers. Net rental income is the principal profit measure used to determine the performance of each sector. Total assets are not monitored by segment and resource allocation is based on the distribution of property assets between segments.

As stated in the Financial Review on page 15, management reviews the business principally on a proportionally consolidated basis, except for its interests in premium outlets held through its investments in Value Retail and VIA Outlets, where the Group has less day-to-day involvement in the financial performance and which have different operational characteristics compared with the Group's property portfolio. The segmental analysis has been prepared on the basis that management uses to review the business, rather than on a statutory basis. Property interests represent the Group's non-wholly owned properties which management proportionally consolidate when reviewing the performance of the business. For reconciliation purposes the Reported Group figures, being wholly-owned properties, are shown in the following tables.

During the year, the Group acquired an interest in a loan portfolio secured on retail properties located in Ireland in a 50% joint venture. The loans did not generate any rental income in 2015, and at the balance sheet date the loan portfolio was included within current receivables on a proportionally consolidated basis, and is therefore not included in notes 3A and 3B. Note 3C includes the Group's investment in the new  Irish joint venture at 31 December 2015.

A: Revenue and profit by segment

	2015			2014
	Gross rental income £m	Net rental income £m	Non-cash items within net rental income £m	Gross rental income £m	Net rental income £m	Non-cash items within net rental income £m
United Kingdom
Shopping centres	162.0	138.8	(3.8)	149.4	127.9	(4.2)
Retail parks	86.2	82.0	-	86.2	83.0	1.1
Other	13.8	9.6	-	14.5	11.3	(0.1)
Total	262.0	230.4	(3.8)	250.1	222.2	(3.2)
France	95.9	83.0	2.0	91.8	82.4	2.5
Total investment portfolio	357.9	313.4	(1.8)	341.9	304.6	(0.7)
Developments	8.5	5.2	-	2.2	1.0	-
Total property portfolio	366.4	318.6	(1.8)	344.1	305.6	(0.7)
Less share of Property interests	(130.4)	(109.8)	0.9	(137.6)	(117.5)	2.3
Reported Group	236.0	208.8	(0.9)	206.5	188.1	1.6

The non-cash items included within net rental income relate to the amortisation of lease incentives and other costs and movements in accrued rents receivable.

B: Investment and development property assets by segment

	2015			2014
	Property valuation £m	Capital expenditure £m	Revaluation gains £m	Property valuation £m	Capital expenditure £m	Revaluation gains £m
United Kingdom
Shopping centres	3,064.9	10.7	194.9	2,863.9	201.5	237.4
Retail parks	1,656.0	54.2	19.0	1,644.1	43.7	134.9
Other	160.3	23.5	1.4	192.7	6.9	5.1
Total	4,881.2	88.4	215.3	4,700.7	252.1	377.4
France	1,860.5	54.8	116.6	1,797.7	223.9	41.1
Total investment portfolio	6,741.7	143.2	331.9	6,498.4	476.0	418.5
Developments	388.8	169.8	35.6	208.1	90.3	18.3
Total property portfolio	7,130.5	313.0	367.5	6,706.5	566.3	436.8
Less share of Property interests	(2,478.4)	(95.1)	(122.4)	(2,279.2)	(40.1)	(165.6)
Reported Group	4,652.1	217.9	245.1	4,427.3	526.2	271.2

 

C:   Analysis of non-current assets employed

	Non-current assets employed
	2015 £m	2014 £m
United Kingdom	5,283.9	4,895.0
Continental Europe	2,792.9	2,621.5
Ireland	693.5	-
	8,770.3	7,516.5

Included in the table above are investments in joint ventures of £3,213.6 million (2014: £2,341.5 million), which are further analysed in note 9 on pages 41 to 46. The Group's share of the property valuations held within Property joint interests of £2,478.4 million (2014: £2,279.2 million) has been included in note 3B, of which £2,304.7 million (2014: £2,134.9 million) relates to the United Kingdom and £173.7 million (2014:
£144.3 million) relates to Continental Europe.

4: Net finance costs

	2015 £m	2014 £m
Interest on bank loans and overdrafts	10.6	9.5
Interest on other borrowings	93.2	103.3
Interest on obligations under finance leases	1.8	1.1
Other interest payable	1.6	1.3
Gross interest costs	107.2	115.2
Less: Interest capitalised	(5.3)	(8.8)
Finance costs	101.9	106.4
Debt and loan facility cancellation costs	13.9	8.7
Change in fair value of derivatives	1.1	(13.1)
Finance income	(15.7)	(9.0)
	101.2	93.0

5: Tax

A: Tax charge

	2015 £m	2014 £m
UK current tax	-	0.1
Foreign current tax	1.6	0.8
Current tax charge	1.6	0.9
Deferred tax charge	-	0.1
Tax charge	1.6	1.0

The Group's tax charge remains low because it has tax exempt status in its principal operating countries. In the UK, the Group has been a REIT since 2007 and a SIIC in France since 2004. These tax regimes exempt the Group's property income and gains from corporate taxes provided a number of conditions in relation to the Group's activities are met, including, but not limited to, distributing at least 90% of the Group's UK tax exempt profit as property income distributions. The Group continues to meet these conditions.

B:   Tax charge reconciliation

	Notes	2015 £m	2014 £m
Profit before tax	2	731.6	703.1
Less: Profit after tax of joint ventures	9A	(246.8)	(279.0)
Less: Profit after tax of associates	10A	(160.6)	(109.9)
Profit on ordinary activities before tax		324.2	314.2
Profit multiplied by the UK corporation tax rate of 20.25% (2014: 21.5%)		65.7	67.6
UK REIT tax exemption		(31.2)	(42.8)
French SIIC tax exemption		(33.1)	(24.0)
Non-deductible and other items		0.2	0.2
Tax charge		1.6	1.0

C:   Unrecognised deferred tax

A deferred tax asset is not recognised for UK revenue tax losses and UK capital losses where their future utilisation is uncertain. At 31 December 2015, the total of such losses was £315 million (2014: £320 million) and £480 million (2014: £450 million) respectively, and the potential tax effect of these was £57 million (2014: £64 million) and £86 million (2014: £90 million) respectively.

Deferred tax is not provided on potential gains on investments in subsidiaries and joint ventures when the Group can control whether gains crystallise and it is probable that gains will not arise in the foreseeable future. At 31 December 2015 the total of such gains was £290 million (2014: £250 million) and the potential tax effect before the offset of losses was £52 million (2014: £50 million).

If a UK REIT sells a property within three years of completion of development, the REIT exemption will not apply. There were no such properties at 31 December 2015 or 2014.

6:    Dividends

The proposed final dividend of 12.8 pence per share was recommended by the Board on 12 February 2016 and, subject to approval by shareholders, is payable on 29 April 2016 to shareholders on the register at the close of business on 18 March 2016. 6.4 pence per share will be paid as a PID, net of withholding tax at the basic rate (currently 20%) if applicable, and 6.4 pence per share will be paid as a normal dividend. The Company will be offering a scrip dividend alternative and for shareholders who elect to receive this, the dividend will be treated entirely as a normal dividend. The aggregate amount of the 2015 final dividend is £100.4 million. This assumes no shareholders elect to receive the scrip dividend alternative and has been calculated using the total number of eligible shares outstanding at 31 December 2015.

The interim dividend of 9.5 pence per share was paid on 1 October 2015 as a PID, net of withholding tax where appropriate.

The total dividend for the year ended 31 December 2015 would be 22.3 pence per share (2014: 20.4 pence per share).

	PID pence per share	Non-PID pence per share	Total pence per share	Equity dividends 2015 £m	Equity dividends 2014 £m
Current year
2015 final dividend	6.41	6.4	12.8	-	-
2015 interim dividend	9.5	-	9.5	74.4	-
	15.9	6.4	22.3
Prior years
2014 final dividend	2.0	9.6	11.6	90.8	-
2014 interim dividend	8.8	-	8.8	-	62.7
	10.8	9.6	20.4
2013 final dividend					76.8
Dividends as reported in the consolidated statement of changes in equity				165.2	139.5
2013 interim dividend withholding tax (paid January 2014)				-	9.4
2014 interim dividend withholding tax (paid January 2015)				9.8	(9.8)
2015 interim dividend withholding tax (paid January 2016)				(11.2)	-
Dividends paid as reported in the consolidated cash flow statement				163.8	139.1

Note

1.    If shareholders elect to receive the scrip alternative, this element of the dividend will cease to qualify as a PID.

7:    Earnings per share and net asset value per share

The European Public Real Estate Association (EPRA) has issued recommended bases for the calculation of certain per share information and these are included in the following tables A and B. Commentary on earnings and net asset value per share is provided in the Financial Review on pages 15 to 22.

A:   Earnings per share

The calculations for earnings per share use the weighted average number of shares, which excludes those shares held in the Hammerson Employee Share Ownership Plan, which are treated as cancelled.

			2015			2014
		Notes	Earnings £m	Shares million	Pence per share	Earnings £m	Shares million	Pence per share
Basic		2	726.8	783.6	92.8	699.1	730.6	95.7
Dilutive share schemes			-	1.1	(0.2)	-	0.2	-
Diluted			726.8	784.7	92.6	699.1	730.8	95.7
Adjustments:
Revaluation gains on properties:	Reported Group	2	(245.1)		(31.2)	(271.2)		(37.1)
	Property interests	2	(122.4)		(15.6)	(165.6)		(22.7)
			(367.5)		(46.8)	(436.8)		(59.8)
(Gain)/Loss on sale of	Reported Group
properties and joint	Gain on sale of properties	2	(14.9)		(1.9)	(0.6)		(0.1)
venture interests:	Loss on sale of joint ventures	2	-		-	4.0		0.6
			(14.9)		(1.9)	3.4		0.5
Debt and loan facility cancellation costs:	Reported Group	4	13.9		1.8	8.7		1.2
Change in fair value of derivatives:	Reported Group	4	1.1		0.1	(13.1)		(1.8)
	Property interests	9B	(1.0)		(0.1)	(0.6)		(0.1)
			0.1		-	(13.7)		(1.9)
Other adjustments:	Reported Group
	Investment costs written off	2	1.4		0.2	-		-
	Joint venture formation costs written off	2	-		-	3.1		0.4
	Deferred tax	2	-		-	0.1		-
	Non-controlling interests	2	0.3		-	(0.7)		(0.1)
			1.7		0.2	2.5		0.3
Premium outlets*:	Revaluation gains on properties	9B, 10B	(174.1)		(22.2)	(109.8)		(15.0)
	Deferred tax	9B, 10B	27.6		3.5	12.3		1.6
	Other adjustments	9B, 10B	(0.6)		(0.1)	5.6		0.8
			(147.1)		(18.8)	(91.9)		(12.6)
Total adjustments			(513.8)		(65.5)	(527.8)		(72.3)
EPRA			213.0	784.7	27.1	171.3	730.8	23.4
Net one-off restructuring charge:	Reported Group	2	-		-	3.0		0.5
Other adjustments:	Premium outlets*	9B	(2.1)		(0.2)	-		-
Adjusted			210.9	784.7	26.9	174.3	730.8	23.9

 

* Adjustments in respect of Premium outlets include VIA Outlets (note 9B) and Value Retail (note 10B). 

B:   Net asset value per share

		2015			2014
	Notes	Equity shareholders' funds £m	Shares million	Net asset value per share £	Equity shareholders' funds £m	Shares million	Net asset value per share £
Basic		5,517.3	784.4	7.03	4,973.7	784.3	6.34
Company's own shares held in Employee Share Ownership Plan		-	(0.6)	n/a	-	(1.2)	n/a
Dilutive share schemes		1.1	1.0	n/a	1.9	0.4	n/a
Diluted		5,518.4	784.8	7.03	4,975.6	783.5	6.35
Fair value adjustment to borrowings:
- Reported Group	17	(225.4)		(0.29)	(306.0)		(0.39)
- Property interests		(0.1)		-	(0.3)		-
		(225.5)		(0.29)	(306.3)		(0.39)
EPRA triple net		5,292.9		6.74	4,669.3		5.96
Fair value adjustment to borrowings		225.5		0.29	306.3		0.39
Deferred tax		0.5		-	0.5		-
Fair value of derivatives
- Reported Group	17	(13.8)		(0.02)	(15.0)		(0.02)
- Property interests		0.9		-	1.9		-
		(12.9)		(0.02)	(13.1)		(0.02)
Premium outlets*
- Fair value of derivatives	9C, 10D	3.1		-	1.2		-
- Deferred tax	9C, 10D	113.6		0.14	84.8		0.11
- Goodwill as a result of deferred tax	9C, 10D	(50.0)		(0.05)	(50.1)		(0.06)
		66.7		0.09	35.9		0.05
EPRA		5,572.7	784.8	7.10	4,998.9	783.5	6.38

* Adjustments in respect of Premium outlets include VIA Outlets (note 9C) and Value Retail (note 10D). 

8:  Investment and development properties

		2015			2014
		Investment properties Valuation £m	Development properties Valuation £m	Total Valuation £m	Investment properties Valuation £m	Development properties Valuation £m	Total Valuation £m
Balance at 1 January		4,273.2	154.1	4,427.3	2,988.7	459.1	3,447.8
Exchange adjustment		(82.9)	(1.7)	(84.6)	(72.1)	(27.1)	(99.2)
Additions
- capital expenditure		73.3	100.9	174.2	70.0	153.5	223.5
- asset acquisitions		35.2	8.5	43.7	302.7	-	302.7
		108.5	109.4	217.9	372.7	153.5	526.2
Transfer from investment in joint ventures		11.0	-	11.0	279.1	-	279.1
Disposals		(169.5)	(0.5)	(170.0)	(6.6)	-	(6.6)
Transfers		59.7	(59.7)	-	453.4	(453.4)	-
Capitalised interest		0.4	5.0	5.4	0.5	8.3	8.8
Revaluation		218.5	26.6	245.1	257.5	13.7	271.2
Balance at 31 December		4,418.9	233.2	4,652.1	4,273.2	154.1	4,427.3

Properties are stated at fair value as at 31 December 2015, valued by professionally qualified external valuers. DTZ Debenham Tie Leung Limited, Chartered Surveyors have valued the Group's properties, excluding those held by the Group's premium outlet investments which have been valued by Cushman & Wakefield LLP, Chartered Surveyors. All valuations have been prepared in accordance with the RICS Valuation - Professional Standards 2014. Valuation fees are based on a fixed amount agreed between the Group and the valuers and are independent of the portfolio value.

The total amount of interest included in development properties at 31 December 2015 was £4.9 million (2014: £2.4 million). Capitalised interest is calculated using the cost of secured debt or the Group's average cost of borrowings, as appropriate, and the effective rate applied in 2015 was 3.8% (2014: 4.7%). At 31 December 2014 the historic cost of investment and development properties was £3,830.0 million (2014: £3,930.1 million).

At 31 December 2015, the investment properties shown above included Monument Mall, Newcastle where a sale contract for a total value of
£75 million had been exchanged in December 2015 and which completed in January 2016. In addition, a sale contract was exchanged in January 2016 for the sale of Villebon 2, Paris for a value of £117 million, with completion expected in March 2016.

On 11 February 2016 the Group completed the purchase of Grand Central, Birmingham for £350 million and entered into a new joint venture agreement with CPPIB who will acquire a 50% interest in the property for £175 million, subject to regulatory approval.

	2015 £m	2014 £m
Capital commitments	107.7	196.1

9:    Investment in joint ventures

As at 31 December 2015, the Group had investments in a number of jointly controlled property and corporate interests which have been equity accounted. As explained in note 3, management reviews the business principally on a proportionally consolidated basis, except for its premium outlet investments. The Group's total proportional share of joint ventures is split between Property joint ventures, being joint ventures which are proportionally consolidated, and VIA outlets, a premium outlets investment, which is not proportionally consolidated. The Group's significant joint venture interests are set out in the table below.

	Partner	Principal property1	Group share %
United Kingdom
Bishopsgate Goodsyard Regeneration Limited	Ballymore Properties	The Goodsyard	50
Brent Cross Shopping Centre/ Brent South Shopping Park	Standard Life	Brent Cross	41.2/40.6
Bristol Alliance Limited Partnership	AXA Real Estate	Cabot Circus	50
Croydon Limited Partnership/Whitgift Limited Partnership	Westfield	Centrale/Whitgift	50
Retail Property Holdings Limited	CPPIB	Silverburn	50
The Bull Ring Limited Partnership	TH Real Estate, CPPIB	Bullring	50
The Oracle Limited Partnership	ADIA	The Oracle	50
VIA Limited Partnership	APG, Meyer Bergman, Value Retail	European outlet centres	47
West Quay Limited Partnership	GIC	WestQuay	50
Ireland
Triskelion Property Holding Designated Activity Company	Allianz	Irish loan portfolio	50
France
SCI ESQ	Allianz	Espace Saint Quentin	25
SCI RC Aulnay 1 and SCI RC Aulnay 2	Client of Rockspring Property Investment Managers	O'Parinor	25

1.    The names of the principal property operated by each partnership have been used in the summary income statements and balance sheets in note 9A.

In March 2015, the Group acquired an additional 66.7% stake in The Martineau Galleries Limited Partnership, increasing the Group's interest in the partnership to 100%. The revaluation gains during the year up to the date the Group acquired the additional stake in this entity totalled
£2.2 million, and has been treated as a property revaluation gain in the summarised income statement in note 9A.

In October 2015, the Group acquired an interest in a loan portfolio secured on retail properties located in Dublin, Ireland in a 50% joint venture for £690.2 million. The Irish loan portfolio held by the joint venture consists primarily of interest-bearing loans of £1,363.6 million and is included within other current assets in note 9A. It is anticipated that these loans will be converted into owned property assets in 2016. See page 6 of the Business Review for further details.

The summarised income statements and balance sheets in note 9A show 100% of the results, assets and liabilities of joint ventures, and where necessary have been restated to the Group's accounting policies and exclude all balances which are eliminated on consolidation.

A. Summary financial statements of joint ventures

Share of results of joint ventures for the year ended 31 December 2015

See page 44 for notes.	Brent Cross £m	Cabot Circus £m	Bullring £m	The Oracle £m	WestQuay £m	Silverburn £m	Centrale/ Whitgift £m
Ownership (%)	41.2/40.6	50	50	50	50	50	50
Gross rental income	47.6	37.9	56.6	32.3	30.7	22.6	23.9
Net rental income	44.1	32.5	49.6	26.1	25.0	20.2	14.9
Administration expenses	-	-	(0.1)	-	-	(0.1)	-
Operating profit before other net gains/(losses)	44.1	32.5	49.5	26.1	25.0	20.1	14.9
Loss on sale of properties	-	-	-	-	-	-	-
Revaluation gains/(losses) on properties	(6.1)	43.3	107.2	41.9	20.1	(10.4)	2.0
Operating profit	38.0	75.8	156.7	68.0	45.1	9.7	16.9
Change in fair value of derivatives	-	-	-	-	-	-	-
Translation movement on intragroup funding loan	-	-	-	-	-	-	-
Other finance income/(costs)	-	(0.8)	-	(0.1)	(0.4)	-	-
Net finance income/(costs)	-	(0.8)	-	(0.1)	(0.4)	-	-
Profit before tax	38.0	75.0	156.7	67.9	44.7	9.7	16.9
Current tax charge	-	-	-	-	-	-	-
Deferred tax charge	-	-	-	-	-	-	-
Profit for the year	38.0	75.0	156.7	67.9	44.7	9.7	16.9
Hammerson share of profit for the year	15.6	37.5	78.3	34.0	22.4	4.8	8.4
Hammerson share of distributions payable	-	19.2	20.3	3.0	0.2	-	-

Share of assets and liabilities of joint ventures as at 31 December 2015

	Brent Cross £m	Cabot Circus £m	Bullring £m	The Oracle £m	WestQuay £m	Silverburn £m	Centrale/ Whitgift £m
Non-current assets
Investment and development properties	980.8	618.0	1,201.8	658.8	555.4	372.0	291.2
Goodwill	-	-	-	-	-	-	-
Interests in leasehold properties	-	14.6	-	-	4.2	-	-
	980.8	632.6	1,201.8	658.8	559.6	372.0	291.2
Current assets
Other current assets	13.7	5.8	11.4	4.3	6.0	6.2	4.7
Cash and deposits	0.7	2.2	9.2	9.5	12.0	10.4	13.6
	14.4	8.0	20.6	13.8	18.0	16.6	18.3
Current liabilities
Other payables	(21.7)	(13.3)	(19.7)	(241.4)	(10.7)	(9.2)	(24.9)
Borrowings - secured	-	-	-	-	-	-	-
	(21.7)	(13.3)	(19.7)	(241.4)	(10.7)	(9.2)	(24.9)
Non-current liabilities
Borrowings - secured	-	-	-	-	-	-	-
Obligations under finance leases	-	(14.6)	-	-	(4.2)	-	-
Other payables	(1.0)	(0.3)	(1.3)	(0.6)	(597.5)	(194.8)	(223.2)
Deferred tax	-	-	-	(0.1)	-	-	-
	(1.0)	(14.9)	(1.3)	(0.7)	(601.7)	(194.8)	(223.2)
Net assets/(liabilities)	972.5	612.4	1,201.4	430.5	(34.8)	184.6	61.4
	395.6	395.6	600.7
Hammerson share of net assets/(liabilities)	395.6	306.2	600.7	215.2	(17.4)	92.3	30.7
Balance due to Hammerson1	-	-	-	115.6	298.4	97.4	111.6
Total investment in joint ventures1	395.6	306.2	600.7	330.8	281.0	189.7	142.3

Share of results of joint ventures for the year ended 31 December 2015

						Hammerson share
	Irish loan portfolio £m	O'Parinor £m	Other £m	Total 2015 £m		Property joint ventures £m	VIA Outlets £m	Total 2015 £m
Ownership (%)	50	25	n/a				47
Gross rental income	-	17.3	41.6	310.5		129.2	13.7	142.9
Net rental income	-	15.0	31.6	259.0		108.8	9.8	118.6
Administration expenses	(0.1)	(0.1)	(3.8)	(4.2)		(0.3)	(1.7)	(2.0)
Operating profit before other net gains/(losses)	(0.1)	14.9	27.8	254.8		108.5	8.1	116.6
Loss on sale of properties	-	-	(1.7)	(1.7)		-	(0.8)	(0.8)
Revaluation gains/(losses) on properties	-	43.6	51.3	292.9		122.1	10.4	132.5
Operating profit	(0.1)	58.5	77.4	546.0		230.6	17.7	248.3
Change in fair value of derivatives	-	4.0	(4.6)	(0.6)		1.0	(2.2)	(1.2)
Translation movement on intragroup funding loan	-	-	4.4	4.4		-	2.1	2.1
Other finance income/(costs)	9.2	(7.8)	(4.0)	(3.9)		2.1	(1.9)	0.2
Net finance income/(costs)	9.2	(3.8)	(4.2)	(0.1)		3.1	(2.0)	1.1
Profit before tax	9.1	54.7	73.2	545.9		233.7	15.7	249.4
Current tax charge	-	0.1	(0.3)	(0.2)		-	(0.1)	(0.1)
Deferred tax charge	-	-	(5.4)	(5.4)		-	(2.5)	(2.5)
Profit for the year	9.1	54.8	67.5	540.3
Hammerson share of profit for the year	4.5	13.7	27.6	246.8		233.7	13.1	246.8
Hammerson share of distributions payable	-	-	8.1	50.8

 

Share of assets and liabilities of joint ventures as at 31 December 2015

						Hammerson share
	Irish loan portfolio £m	O'Parinor £m	Other £m	Total 2015 £m		Property joint ventures £m	VIA Outlets £m	Total 2015 £m
Non-current assets
Investment and development properties	-	385.2	638.5	5,701.7		2,455.1	148.6	2,603.7
Goodwill	-	-	-	-		-	3.0	3.0
Interests in leasehold properties	-	-	-	18.8		9.4	-	9.4
	-	385.2	638.5	5,720.5		2,464.5	151.6	2,616.1
Current assets
Other current assets	1,369.4	8.6	12.0	1,442.1		726.8	3.8	730.6
Cash and deposits	2.9	2.6	21.2	84.3		32.4	7.9	40.3
	1,372.3	11.2	33.2	1,526.4		759.2	11.7	770.9
Current liabilities
Other payables	(0.1)	(5.2)	(19.5)	(365.7)		(67.2)	(7.7)	(74.9)
Borrowings - secured	-	(161.0)	-	(161.0)		(40.2)	-	(40.2)
	(0.1)	(166.2)	(19.5)	(526.7)		(107.4)	(7.7)	(115.1)
Non-current liabilities
Borrowings - secured	-	-	(72.9)	(72.9)		-	(34.2)	(34.2)
Obligations under finance leases	-	-	-	(18.8)		(9.4)	-	(9.4)
Other payables	(1,365.6)	(33.0)	(162.0)	(2,579.3)		(4.1)	(4.3)	(8.4)
Deferred tax	-	-	(13.5)	(13.6)		-	(6.3)	(6.3)
	(1,365.6)	(33.0)	(248.4)	(2,684.6)		(13.5)	(44.8)	(58.3)
Net assets/(liabilities)	6.6	197.2	403.8	4,035.6
Hammerson share of net assets/(liabilities)	3.3	49.3	164.1	1,840.0
Balance due to Hammerson1	690.2	6.6	53.8	1,373.6
Total investment in joint ventures1	693.5	55.9	217.9	3,213.6		3,102.8	110.8	3,213.6

Share of results of joint ventures for the year ended 31 December 2014

	Brent Cross £m	Cabot Circus £m	Bullring £m	The Oracle £m	WestQuay £m	Silverburn £m	Centrale/ Whitgift £m
Ownership (%)	41.2/40.6	50	50	50	50	50	50
Gross rental income	47.5	37.7	56.5	31.4	31.3	20.8	12.4
Net rental income	43.9	32.0	50.3	26.2	25.2	18.5	8.3
Administration expenses	-	(0.7)	(0.2)	-	-	(0.1)	(0.6)
Operating profit before other net gains/(losses)	43.9	31.3	50.1	26.2	25.2	18.4	7.7
Revaluation gains/(losses) on properties	43.6	39.5	125.7	55.3	25.2	8.4	1.8
Operating profit	87.5	70.8	175.8	81.5	50.4	26.8	9.5
Change in fair value of derivatives	-	-	-	-	-	-	-
Other finance costs	-	(0.8)	-	-	(0.4)	-	-
Net finance costs	-	(0.8)	-	-	(0.4)	-	-
Profit before tax	87.5	70.0	175.8	81.5	50.0	26.8	9.5
Current tax charge	-	-	-	-	-	-	-
Deferred tax charge	-	-	-	-	-	-	-
Profit for the year	87.5	70.0	175.8	81.5	50.0	26.8	9.5
Hammerson share of profit for the year	36.1	35.0	87.9	40.7	25.0	13.4	4.8
Hammerson share of distributions payable	-	15.8	23.0	5.9	0.6	-	-

 

Share of assets and liabilities of joint ventures as at 31 December 2014

	Brent Cross £m	Cabot Circus £m	Bullring £m	The Oracle £m	WestQuay £m	Silverburn £m	Centrale/Whitgift £m
Non-current assets
Investment and development properties	967.2	575.6	1,085.0	612.6	532.7	379.3	183.0
Goodwill	-	-	-	-	-	-	-
Interests in leasehold properties	-	14.6	-	-	4.2	-	-
Receivables	-	-	-	-	-	-	-
	967.2	590.2	1,085.0	612.6	536.9	379.3	183.0
Current assets
Other current assets	33.2	5.7	4.2	7.2	4.2	6.0	21.9
Cash and deposits	4.0	9.6	18.9	5.7	5.0	6.1	9.0
	37.2	15.3	23.1	12.9	9.2	12.1	30.9
Current liabilities
Payables	(47.6)	(13.3)	(14.9)	(13.5)	(10.4)	(9.5)	(25.8)
Non-current liabilities
Borrowings - secured	-	-	-	-	-	-	-
Obligations under finance leases	-	(14.6)	-	-	(4.2)	-	-
Other payables	(2.4)	(0.5)	(1.1)	(231.6)	(597.6)	(199.8)	(134.0)
Deferred tax	-	-	-	-	-	-	-
	(2.4)	(15.1)	(1.1)	(231.6)	(601.8)	(199.8)	(134.0)
Net assets/(liabilities)	954.4	577.1	1,092.1	380.4	(66.1)	182.1	54.1
Hammerson share of net assets/(liabilities)	393.2	288.6	546.0	190.2	(33.0)	91.0	27.1
Balance due to Hammerson1	-	-	-	115.6	298.4	99.9	67.0
Total investment in joint ventures1	393.2	288.6	546.0	305.8	265.4	190.9	94.1

1. The Group and its partners invest in joint ventures principally by way of equity investment. To provide further clarity of this investment, those balances which are not equity have been included within other payables as a liability of the joint venture, and Hammerson's interest has been shown separately. The comparative table has been prepared on the same basis.

					Hammerson share
	O'Parinor £m	Other £m	Total 2014 £m		Property joint ventures £m	VIA Outlets £m	Total 2014 £m
Ownership (%)	25	n/a				47
Gross rental income	19.0	56.0	312.6		137.6	4.4	142.0
Net rental income	17.9	39.7	262.0		117.5	2.7	120.2
Administration expenses	(0.1)	(3.0)	(4.7)		(0.9)	(0.6)	(1.5)
Operating profit before other net gains/(losses)	17.8	36.7	257.3		116.6	2.1	118.7
Revaluation gains/(losses) on properties	3.6	17.4	320.5		165.6	(1.3)	164.3
Operating profit	21.4	54.1	577.8		282.2	0.8	283.0
Change in fair value of derivatives	2.4	-	2.4		0.6	(0.3)	0.3
Other finance costs	(7.9)	(7.2)	(16.3)		(2.7)	(1.1)	(3.8)
Net finance costs	(5.5)	(7.2)	(13.9)		(2.1)	(1.4)	(3.5)
Profit before tax	15.9	46.9	563.9		280.1	(0.6)	279.5
Current tax charge	-	(1.1)	(1.1)		-	(0.1)	(0.1)
Deferred tax charge	-	-	-		-	(0.4)	(0.4)
Profit for the year	15.9	45.8	562.8
Hammerson share of profit for the year	4.0	32.1	279.0		280.1	(1.1)	279.0
Hammerson share of distributions payable	-	13.9	59.2

 

					Hammerson share
	O'Parinor £m	Other £m	Total 2014 £m		Property joint ventures £m	VIA Outlets £m	Total 2014 £m
Non-current assets
Investment and development properties	356.9	638.8	5,331.1		2,279.2	142.9	2,422.1
Goodwill	-	-	-		-	3.1	3.1
Interests in leasehold properties	-	1.2	20.0		9.8	-	9.8
Receivables	-	0.1	0.1		-	0.1	0.1
	356.9	640.1	5,351.2		2,289.0	146.1	2,435.1
Current assets
Other current assets	11.0	7.3	100.7		42.1	1.4	43.5
Cash and deposits	2.9	23.8	85.0		30.8	7.0	37.8
	13.9	31.1	185.7		72.9	8.4	81.3
Current liabilities
Payables	(7.7)	(18.1)	(160.8)		(66.5)	(5.1)	(71.6)
Non-current liabilities
Borrowings - secured	(168.7)	(79.4)	(248.1)		(42.2)	(37.2)	(79.4)
Obligations under finance leases	-	(1.2)	(20.0)		(9.8)	-	(9.8)
Other payables	(39.8)	(168.7)	(1,375.5)		(6.1)	(4.0)	(10.1)
Deferred tax	-	(11.1)	(11.1)		-	(4.0)	(4.0)
	(208.5)	(260.4)	(1,654.7)		(58.1)	(45.2)	(103.3)
Net assets/(liabilities)	154.6	392.7	3,721.4
Hammerson share of net assets/(liabilities)	38.6	157.7	1,699.4
Balance due to Hammerson1	7.0	54.2	642.1
Total investment in joint ventures1	45.6	211.9	2,341.5		2,237.3	104.2	2,341.5

B. Reconciliation to adjusted earnings

	Property joint ventures £m	VIA Outlets £m	Total 2015 £m	Property joint ventures £m	VIA Outlets £m	Total 2014 £m
Profit for the year	233.7	13.1	246.8	280.1	(1.1)	279.0
Loss on sale of properties	-	0.8	0.8	-	-	-
Revaluation (gains)/losses on properties	(122.1)	(10.4)	(132.5)	(165.6)	1.3	(164.3)
Change in fair value of derivatives	(1.0)	2.2	1.2	(0.6)	0.3	(0.3)
Translation movements on intragroup funding loan	-	(2.1)	(2.1)	-	-	-
Deferred tax charge	-	2.5	2.5	-	0.4	0.4
Total adjustments	(123.1)	(7.0)	(130.1)	(166.2)	2.0	(164.2)
Adjusted earnings of joint ventures	110.6	6.1	116.7	113.9	0.9	114.8

 

C.   Reconciliation to EPRA adjusted investment in joint ventures

	Property joint ventures £m	VIA Outlets £m	2015 £m	2014 £m
Investment in joint ventures	3,102.8	110.8	3,213.6	2,341.5
Fair value of derivatives	0.9	3.5	4.4	3.1
Deferred tax	-	6.3	6.3	4.0
Goodwill as a result of deferred tax	-	(3.0)	(3.0)	(3.1)
EPRA adjustments	0.9	6.8	7.7	4.0
EPRA adjusted investment in joint ventures	3,103.7	117.6	3,221.3	2,345.5

 

D.   Reconciliation of movements in investment in joint ventures

	2015 £m	2014 £m
Balance at 1 January	2,341.5	2,470.8
Acquisitions	690.2	110.8
Joint venture formation costs written off	-	(3.1)
Transfer of investment property on acquisition by Reported Group	(11.0)	(279.1)
Disposals	-	(151.8)
Share of results of joint ventures	246.8	279.0
Distributions and other receivables	(92.0)	(100.4)
Advances	45.4	8.1
Other movements	1.6	17.8
Foreign exchange translation differences	(8.9)	(10.6)
Balance at 31 December	3,213.6	2,341.5

10:  Investment in associates

At 31 December 2015, the Group had two associates: Value Retail PLC and its group entities ("VR") and a 10% interest in Nicetoile, which was acquired in January 2015 and where Hammerson is the asset manager. Both investments are equity accounted under IFRS, although the share of results in Nicetolie are included with the Group's Property interests when presenting figures on a proportionally consolidated basis.

A:   Share of results of associates

	2015						2014
	VR		Nicetoile		Total		Total
	100% £m	Hammerson share £m	100% £m	Hammerson share £m	100% £m	Hammerson share £m	100% £m	Hammerson share £m
Gross rental income	236.5	72.8	12.4	1.2	248.9	74.0	216.0	67.1
Net rental income	177.8	55.8	11.0	1.0	188.8	56.8	157.3	49.6
Administration and other expenses	(99.3)	(27.4)	(0.1)	-	(99.4)	(27.4)	(73.1)	(20.0)
Operating profit before other net gains	78.5	28.4	10.9	1.0	89.4	29.4	84.2	29.6
Revaluation gains on properties	533.9	163.7	3.0	0.3	536.9	164.0	314.2	111.1
Operating profit	612.4	192.1	13.9	1.3	626.3	193.4	398.4	140.7
Net finance costs	(35.0)	(13.1)	-	-	(35.0)	(13.1)	(39.2)	(14.0)
Change in fair value of derivatives	(34.3)	(7.5)	-	-	(34.3)	(7.5)	(34.8)	(9.9)
Change in fair value of participative loans - revaluation movement	-	12.6	-	-	-	12.6	-	4.6
Change in fair value of participative loans - other movement	-	2.6	-	-	-	2.6	-	2.1
Profit before tax	543.1	186.7	13.9	1.3	557.0	188.0	324.4	123.5
Current tax charge	(10.3)	(2.3)	-	-	(10.3)	(2.3)	(7.4)	(1.7)
Deferred tax charge	(106.3)	(25.1)	-	-	(106.3)	(25.1)	(47.4)	(11.9)
Profit for the year	426.5	159.3	13.9	1.3	440.4	160.6	269.6	109.9

B:   Reconciliation to adjusted earnings

	2015						2014
	VR		Nicetoile		Total		Total
	100% £m	Hammerson share £m	100% £m	Hammerson share £m	100% £m	Hammerson share £m	100% £m	Hammerson share £m
Profit for the year	426.5	159.3	13.9	1.3	440.4	160.6	269.6	109.9
Revaluation gains on properties	(533.9)	(163.7)	(3.0)	(0.3)	(536.9)	(164.0)	(314.2)	(111.1)
Change in fair value of derivatives	34.3	7.5	-	-	34.3	7.5	34.8	9.9
Change in fair value of participative loans - revaluation movement	-	(12.6)	-	-		(12.6)	-	(4.6)
Loan facility costs written off	3.7	1.5	-	-	3.7	1.5	-	-
Deferred tax charge	106.3	25.1	-	-	106.3	25.1	47.4	11.9
Total adjustments	(389.6)	(142.2)	(3.0)	(0.3)	(392.6)	(142.5)	(232.0)	(93.9)
Adjusted earnings of associates	36.9	17.1	10.9	1.0	47.8	18.1	37.6	16.0

When aggregated, the Group's share of VR's operating profit before other net gains for the year ended 31 December 2015 amounted to 36.2% (2014: 35.2%).

C:  Share of assets and liabilities of associates

	2015						2014
	VR		Nicetoile		Total		Total
	100% £m	Hammerson share £m	100% £m	Hammerson share £m	100% £m	Hammerson share £m	100% £m	Hammerson share £m
Goodwill on acquisition	-	65.4	-	-	-	65.4	-	65.7
Investment properties	3,333.1	1,095.0	233.0	23.3	3,566.1	1,118.3	2,835.4	884.7
Other non-current assets	134.7	30.3	-	-	134.7	30.3	81.3	18.6
Non-current assets	3,467.8	1,190.7	233.0	23.3	3,700.8	1,214.0	2,916.7	969.0
Other current assets	185.5	12.5	2.0	0.2	187.5	12.7	164.8	30.2
Cash and deposits	182.1	52.4	11.5	1.1	193.6	53.5	103.9	28.4
Current assets	367.6	64.9	13.5	1.3	381.1	66.2	268.7	58.6
Total assets	3,835.4	1,255.6	246.5	24.6	4,081.9	1,280.2	3,185.4	1,027.6
Current liabilities	(131.5)	(52.7)	(1.2)	(0.2)	(132.7)	(52.9)	(214.1)	(52.0)
Borrowings	(1,092.6)	(339.5)	-	-	(1,092.6)	(339.5)	(789.5)	(253.6)
Other liabilities	(398.2)	(92.6)	(2.1)	(0.2)	(400.3)	(92.8)	(359.9)	(83.6)
Deferred tax	(438.8)	(107.3)	-	-	(438.8)	(107.3)	(346.6)	(80.8)
Non-current liabilities	(1,929.6)	(539.4)	(2.1)	(0.2)	(1,931.7)	(539.6)	(1,496.0)	(418.0)
Total liabilities	(2,061.1)	(592.1)	(3.3)	(0.4)	(2,064.4)	(592.5)	(1,710.1)	(470.0)
Net assets	1,774.3	663.5	243.2	24.2	2,017.5	687.7	1,475.3	557.6
Participative loans*		80.3		-		80.3		71.2
Investment in associates		743.8		24.2		768.0		628.8

The analysis in the table above excludes liabilities in respect of distributions received in advance from VR amounting to £19.0 million
(2014: £12.6 million) which are included within non-current liabilities in note 18.

At 31 December 2015, Hammerson's investment in VR, excluding goodwill, as a proportion of VR's net assets was 38.2% (2014: 38.2%).

*  The Group's total investment in associates includes long-term debt which in substance forms part of the Group's investment. These 'participative loans' are not repayable in the foreseeable future.

D:  Reconciliation to EPRA adjusted investment in associates

	VR £m	Nicetoile £m	2015 £m	2014 £m
Investment in associates	743.8	24.2	768.0	628.8
Fair value of derivatives	(0.4)	-	(0.4)	(1.9)
Deferred tax	107.3	-	107.3	80.8
Goodwill as a result of deferred tax	(47.0)	-	(47.0)	(47.0)
EPRA adjustments	59.9	-	59.9	31.9
EPRA adjusted investment in associates	803.7	24.2	827.9	660.7

 

E:    Reconciliation of movements in investment in associates

	VR £m	Nicetoile £m	2015 £m	2014 £m
Balance at 1 January	628.8	-	628.8	545.4
Acquisitions	12.4	24.2	36.6	-
Share of results of associates	159.3	1.3	160.6	109.9
Distributions	(44.5)	-	(44.5)	(11.5)
Revaluation movement on participative loan	(1.0)	-	(1.0)	0.6
Foreign exchange translation differences	(11.2)	(1.3)	(12.5)	(15.6)
Balance at 31 December	743.8	24.2	768.0	628.8

11: Receivables: non-current assets

	2015 £m	2014 £m
Loans receivable	76.4	63.5
Other receivables	1.9	0.8
Fair value of interest rate swaps	13.8	15.0
	92.1	79.3

All loans are classified as available for sale and held at fair value and are analysed below:

	2015 £m	2014 £m
Value Retail European Holdings BV: €2.0 million (2014: €2.0 million) maturing 30 November 2043	1.4	1.6
VR Dublin Limited and Kildare Retail Services Limited: €22.4 million (2014: €nil) maturing 30 September 2019	16.5	-
Value Retail European Holdings BV: €56.0 million (2014: €56.0 million) maturing 11 September 2019	41.3	43.4
VR Milan S.R.L.: €23.3 million (2014: €23.9 million) maturing 13 December 2017	17.2	18.5
	76.4	63.5

12: Receivables: current assets

	2015 £m	2014 £m
Trade receivables	46.7	36.4
Other receivables	37.6	41.1
Corporation tax	-	0.1
Prepayments	3.7	3.8
Fair value of currency swaps	30.0	5.1
	118.0	86.5

Trade receivables are shown after deducting a provision for bad and doubtful debts of £11.8 million (2014: £11.6 million). The movement in the provision during the year was recognised entirely in income. The level of provision required is determined after taking account of rent deposits and personal or corporate guarantees held.

13: Restricted monetary assets

	2015 £m	2014 £m
Cash held on behalf of third parties	34.0	11.3

The Group and its managing agents hold cash on behalf of its tenants and co-owners to meet future service charge costs and related expenditure. The cash has restricted use and as such, does not meet the definition of cash and cash equivalents as defined in IAS 7 'Statement of Cash Flows'.  

14: Cash and deposits

	2015 £m	2014 £m
Cash at bank	36.9	28.5
Short-term deposits	0.1	0.1
	37.0	28.6
Currency profile
Sterling	14.4	10.1
Euro	22.6	18.5
	37.0	28.6

15:     Payables: current liabilities

	2015 £m	2014 £m
Trade payables	23.9	18.3
Other payables	153.8	133.4
Accruals	31.6	27.5
Deferred income	26.2	25.2
	235.5	204.4

16:     Borrowings

A:   Maturity

	Bank loans and overdrafts £m	Other borrowings £m	Total 2015 £m	Bank loans and overdrafts £m	Other borrowings £m	Total 2014 £m
After five years	-	1,478.2	1,478.2	-	1,399.0	1,399.0
From two to five years	245.1	614.7	859.8	72.9	384.8	457.7
From one to two years	690.1	-	690.1	164.6	265.8	430.4
Due after more than one year	935.2	2,092.9	3,028.1	237.5	2,049.6	2,287.1
Current assets: Fair value of currency swaps	-	(30.0)	(30.0)	-	(5.1)	(5.1)
	935.2	2,062.9	2,998.1	237.5	2,044.5	2,282.0

At 31 December 2015 and 2014 no borrowings due after five years were repayable by instalments. At 31 December 2015, the fair value of currency swaps was an asset of £42.8 million (2014: £16.1 million) of which £30.0 million (2014: £5.1 million) is due within one year and is included in current receivables (see note 12).

B:   Analysis

	2015 £m	2014 £m
Unsecured
£200 million 7.25% sterling bonds due 2028	198.1	198.0
£300 million 6% sterling bonds due 2026	297.6	297.4
£350 million 3.5% sterling bonds due 2025	345.0	-
€500 million 2% euro bonds due 2022	364.6	383.4
£250 million 6.875% sterling bonds due 2020	248.6	248.4
€500 million 2.75% euro bonds due 2019	366.1	384.8
£272 million 5.25% sterling bonds due 2016	-	271.5
Bank loans and overdrafts	935.2	237.5
Senior notes due 2026	22.0	23.2
Senior notes due 2024	135.6	131.1
Senior notes due 2021	128.1	122.8
	3,040.9	2,298.1
Fair value of currency swaps	(42.8)	(16.1)
	2,998.1	2,282.0

Financing activities during the year are detailed in the Financial Review on pages 20 to 22. Senior notes comprise £196.5 million (2014:
£185.6 million) denominated in US dollars, £44.2 million (2014: £46.5 million) in euro and £45.0 million (2014: £45.0 million) in sterling.

C:   Undrawn committed facilities

Expiry	2015 £m	2014 £m
Within two to five years	342.0	250.0
Within one to two years	518.5	339.0
	860.5	589.0

 

17: FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair values of borrowings, currency and interest rate swaps, together with their book value included in the balance sheet, are as follows:

	2015		2014
	Book value £m	Fair value £m	Book value £m	Fair value £m
Borrowings, excluding currency swaps	3,040.9	3,266.3	2,298.1	2,604.1
Currency swaps	(42.8)	(42.8)	(16.1)	(16.1)
Total	2,998.1	3,223.5	2,282.0	2,588.0
Interest rate swaps	(13.8)	(13.8)	(15.0)	(15.0)

At 31 December 2015, the fair value of financial instruments exceeded their book value by £225.4 million (2014: £306.0 million).

18: Payables: non-current liabilities

	2015 £m	2014 £m
Net pension liability	37.2	39.0
Other payables	38.5	33.5
	75.7	72.5

19: Share capital

	Called up, allotted and fully paid
	2015 £m	2014 £m
Ordinary shares of 25p each	196.1	196.1

The authorised share capital was removed from the Company's Articles of Association in 2010.

	Number
Movements in number of shares in issue
Number of shares in issue at 1 January 2015	784,295,248
Share options exercised - Executive Share Option Scheme	14,449
Share options exercised - Savings-Related Share Option Scheme	121,558
Number of shares in issue at 31 December 2015	784,431,255

20: Analysis of movement in net debt

	Short-term deposits £m	Cash at bank £m	Current borrowings including currency swaps £m	Non-current borrowings £m	Net debt £m
At 1 January 2015	0.1	28.5	5.1	(2,287.1)	(2,253.4)
Cash flow	-	9.3	(1.5)	(806.1)	(798.3)
Exchange	-	(0.9)	26.4	65.1	90.6
Balance at 31 December 2015	0.1	36.9	30.0	(3,028.1)	(2,961.1)

	Short-term deposits £m	Cash at bank £m	Current borrowings including currency swaps £m	Non-current borrowings £m	Net debt £m
At 1 January 2014	-	15.7	(246.2)	(2,017.8)	(2,248.3)
Cash flow	0.1	13.3	234.3	(340.7)	(93.0)
Exchange	-	(0.5)	17.0	71.4	87.9
Balance at 31 December 2014	0.1	28.5	5.1	(2,287.1)	(2,253.4)

21:     Adjustment for non-cash items in the cash flow statement

	2015 £m	2014 £m
Amortisation of lease incentives and other costs	5.9	4.7
Increase in accrued rents receivable	(5.0)	(6.3)
Non-cash items included within net rental income	0.9	(1.6)
Depreciation	1.7	1.4
Share-based employee remuneration	4.8	5.1
Exchange and other items	(1.1)	7.3
	6.3	12.2

22: Contingent liabilities

There are contingent liabilities of £49.8 million (2014: £31.6 million) relating to guarantees given by the Group and a further £16.0 million (2014: £12.3 million) relating to claims against the Group arising in the normal course of business, which are considered to be unlikely to crystallise.

In addition, Hammerson's share of contingent liabilities arising within Property interests, which is not included in the figures shown above, is £2.1 million (2014: £16.2 million). Principal risks and uncertainties facing the Group are detailed on page 23.

ADDITIONAL disclosures

UNAUDITED

presentation of information

As explained in the Financial Review on page 15 and consistent with the presentation in the Business Review, management reviews the performance of the business on a proportionally consolidated basis, including the Group's share of Property interests, but excluding the Group's interest in premium outlets held through investments in Value Retail and VIA Outlets. This is because the Group has less day-to-day involvement in the operational activities and the premium outlets sector has different operational characteristics compared with the Group's other property sectors. The information in the following tables has been prepared on this basis and further details of the definitions for information contained within this section can be found in the Glossary on page 59.

portfolio analysis

 

Table 1: Rental information

Rental data for the year ended 31 December 2015

Proportionally consolidated excluding premium outlets	Gross rental income £m	Net rental  income £m	Vacancy rate %	Average rents passing A £/m²	Rents passing £m	Estimated rental value B £m	Reversion/ (over-rented) %
United Kingdom
Shopping centres	162.0	138.8	1.7	535	159.3	166.2	2.7
Retail parks	86.2	82.0	1.6	195	89.4	90.9	0.2
Other	13.8	9.6	9.0	190	12.4	13.6	(0.1)
Total	262.0	230.4	2.0	345	261.1	270.7	1.7
France	95.9	83.0	3.1	355	88.8	101.0	9.8
Total investment portfolio	357.9	313.4	2.3	345	349.9	371.7	3.8
Developments	8.5	5.2
Total property portfolio (note)	366.4	318.6
Selected data for the year ended 31 December 2014
Group
UK	250.1	222.2	2.1	335	253.4	261.6	1.2
France	91.8	82.4	3.4	360	93.5	107.0	10.0
Total investment portfolio	341.9	304.6	2.5	340	346.9	368.6	3.6
Developments	2.2	1.0
Total property portfolio	344.1	305.6

Notes

A. Average rents passing at the period end before deducting head and equity rents and excluding rents passing from anchor units and car parks.

B. The estimated market rental value at the period end calculated by the Group's valuers. ERVs in the above table are included within the unobservable inputs to the portfolio valuations as defined by IFRS 13.

 

Table 2: Rent reviews

Rent reviews as at 31 December 2015

	Rents passing subject to review in A						Current ERV of leases subject to review in B
Proportionally consolidated excluding premium outlets	Outstanding £m	2016 £m	2017 £m	2018 £m	Total £m		Outstanding £m	2016 £m	2017 £m	2018 £m	Total £m
United Kingdom
Shopping centres	26.8	9.5	12.5	19.2	68.0		30.8	10.2	13.4	20.8	75.2
Retail parks	37.2	14.5	9.2	8.8	69.7		38.4	14.8	9.4	9.2	71.8
Other	4.9	0.9	0.8	0.5	7.1		5.2	0.9	0.9	0.5	7.5
Total	68.9	24.9	22.5	28.5	144.8		74.4	25.9	23.7	30.5	154.5

Notes

A. The amount of rental income, based on rents passing at 31 December 2015, for leases which are subject to review in each year.

B. Projected rental income for leases that are subject to review in each year, based on the higher of the current rental income and the ERV at 31 December 2015 and ignoring the impact of changes in rental values before the review date.

 

Table 3: Lease expiries and breaks

Lease expiries and breaks as at 31 December 2015

	Rents passing that expire/break in A					ERV of leases that expire/break in B					Weighted average unexpired lease term
Proportionally consolidated excluding premium outlets	2016 £m	2017 £m	2018 £m	Total £m		2016 £m	2017 £m	2018 £m	Total £m		to break years	to expiry years
United Kingdom
Shopping centres	21.5	9.3	24.3	55.1		26.2	9.5	22.9	58.6		6.2	8.1
Retail parks	7.8	2.1	3.3	13.2		9.0	2.3	3.3	14.6		8.7	9.7
Other	2.4	1.0	1.9	5.3		3.0	1.1	1.4	5.5		9.3	10.4
Total	31.7	12.4	29.5	73.6		38.2	12.9	27.6	78.7		7.3	8.8
France	13.5	4.6	3.6	21.7		15.2	4.9	4.1	24.2		2.7	5.8
Total investment portfolio	45.2	17.0	33.1	95.3		53.4	17.8	31.7	102.9		6.0	8.0

Notes

A. The amount of rental income, based on rents passing at 31 December 2015, for leases which expire or, for the UK only, are subject to tenant break options, which fall due in each year.

B. The ERV at 31 December 2015 for leases that expire or, for the UK only, are subject to tenant break options which fall due in each year and ignoring the impact of rental growth and any rent-free periods.

 

Table 4: Net rental income

Net rental income for the year ended 31 December 2015

Proportionally consolidated excluding premium outlets	Properties owned throughout 2014/15 £m	Increase for properties owned throughout 2014/15 %	Acquisitions £m	Disposals £m	Developments and other £m	Total net rental income £m
United Kingdom
Shopping centres	130.7	2.1	7.7	0.4	(0.1)	138.7
Retail parks	78.9	2.6	-	1.2	1.9	82.0
Other	5.1	0.6	0.6	0.8	8.5	15.0
Total	214.7	2.2	8.3	2.4	10.3	235.7
France	51.7	2.5	8.4	3.1	19.7	82.9
Total property portfolio	266.4	2.3	16.7	5.5	30.0	318.6

Net rental income for the year ended 31 December 2014

Proportionally consolidated excluding premium outlets	Properties owned throughout 2014/15 £m	Exchange £m	Acquisitions £m	Disposals £m	Developments and other £m	Total net rental income £m
United Kingdom
Shopping centres	128.0	-	(0.6)	(0.1)	0.7	128.0
Retail parks	76.9	-	-	3.9	2.1	82.9
Other	5.1	-	-	1.8	5.5	12.4
Total	210.0	-	(0.6)	5.6	8.3	223.3
France	50.4	8.2	7.0	4.7	12.0	82.3
Total property portfolio	260.4	8.2	6.4	10.3	20.3	305.6

 

Table 5: Top Ten Tenants

Ranked by passing rent at 31 December 2015

Proportionally consolidated excluding premium outlets	Passing rent £m	% of total passing rent
B&Q	12.1	3.5
Next	7.8	2.2
Inditex	6.7	1.9
H&M	6.6	1.9
Dixons Carphone	6.5	1.9
Arcadia	6.0	1.7
Boots	5.2	1.5
Debenhams	5.1	1.5
Home Retail Group	4.9	1.4
New Look	4.7	1.3
Total	65.6	18.8

 

Table 6: EPRA Cost ratio

Cost ratio analysis

Proportionally consolidated excluding premium outlets	Year ended 31 December 2015 £m	Restated* Year ended 31 December 2014 £m
Net service charge expenses - non-vacancy	3.8	3.0
Net service charge expenses - vacancy	9.5	7.4
Net service charge expenses - total	13.3	10.4
Other property outgoings	30.8	26.2
Less inclusive lease costs recovered through rent	(3.4)	(2.6)
Total property costs	40.7	34.0
Employee and corporate costs	48.3	52.1
Management fees receivable	(6.0)	(5.6)
Net one-off restructuring cost	-	(3.0)
Total operating costs	83.0	77.5
Gross rental income	366.4	344.1
Ground and equity rents payable	(3.7)	(1.9)
Less inclusive lease costs recovered through rent	(3.4)	(2.6)
Gross rental income (for cost ratio)	359.3	339.6
EPRA cost ratio including net service charge expenses - vacancy (%)	23.1	22.8
EPRA cost ratio excluding net service charge expenses - vacancy (%)	20.5	20.6

* The calculation methodology has been amended to adjust for inclusive lease costs recovered through rent. This amendment is in line with EPRA best practice.

Staff costs amounting to £1.9 million (2014: £1.5 million) have been capitalised as development costs and are excluded from the table above. Our business model for developments is to use a combination of in-house staff and external advisers. The cost of external advisers is capitalised to the cost of developments. The cost of staff working on developments is generally expensed, but is capitalised subject to meeting certain criteria related to the degree of time spent on and the stage of progress of specific projects.

Table 7: Valuation analysis

Valuation analysis at 31 December 2015

Proportionally consolidated including premium outlets	Properties at valuation £m	Revaluation in the year £m	Capital return %	Total return %	Initial yield %	True equivalent yield %	Nominal equivalent yieldA %
United Kingdom
Shopping centres	3,064.9	194.9	6.8	11.9	4.6	5.2	5.0
Retail parks	1,656.0	19.0	1.3	6.5	4.9	5.6	5.4
Other	160.3	1.4	1.7	7.4	6.4	7.6	7.3
Total	4,881.2	215.3	4.7	9.9	4.8	5.4	5.2
France	1,860.5	116.6	7.1	12.0	4.1	4.7	4.6
Total investment portfolio	6,741.7	331.9	5.4	10.5	4.6	5.2	5.1
Developments	388.8	35.6	12.3	14.1
Total property portfolio	7,130.5	367.5	5.7	10.7
Premium outletsB	1,243.6	174.1	16.4	23.7
Total Group	8,374.1	541.6	7.1	12.4

Selected data for the year ended 31 December 2014
Group
UK	4,700.7	377.4	9.0	14.7	4.8	5.6	5.4
France	1,797.7	41.1	2.4	7.7	4.6	5.3	5.1
Total investment portfolio	6,498.4	418.5	7.4	13.1	4.7	5.5	5.3
Developments	208.1	18.3	9.1	9.8
Total property portfolio	6,706.5	436.8	7.4	12.7
Premium outletsB	1,027.6	109.8	12.8	19.9
Total Group	7,734.1	546.6	8.0	13.6

Notes

A. Nominal equivalent yields are included within the unobservable inputs to the portfolio valuations as defined by IFRS 13.

B. Represents the property returns for the Group's share of premium outlets through its investments in Value Retail and VIA Outlets.

 

Table 8: Yield analysis

Investment portfolio as at 31 December 2015

Proportionally consolidated excluding premium outlets	Income £m	Gross value £m	Net book value £m
Portfolio value (net of cost to complete)		7,104	7,104
Purchasers' costsA			(362)
Net investment portfolio valuation on a proportionally consolidated basis			6,742
Income and yields
Rent for valuers' initial yield (equivalent to EPRA Net Initial Yield)	325.5	4.6%	4.8%
Rent-free periods (including pre-lets)B	10.8	0.1%	0.2%
Rent for 'topped-up' initial yieldC	336.3	4.7%	5.0%
Non-recoverable costs (net of outstanding rent reviews)	13.6	0.2%	0.2%
Passing rents	349.9	4.9%	5.2%
ERV of vacant space	8.2	0.1%	0.1%
Reversions	13.6	0.2%	0.2%
Total ERV/Reversionary yield	371.7	5.2%	5.5%
True equivalent yield		5.2%
Nominal equivalent yield		5.1%

Notes

A. Purchasers' costs equate to 5.4% of the net portfolio value.

B. The weighted average remaining rent-free period is 0.4 years.

C The yield of 4.7% based on passing rents and gross portfolio value is equivalent to EPRA's 'topped-up" Net Initial Yield.

Premium outlets

The Group's investment in premium outlets is through interests in Value Retail and VIA Outlets. Due to the nature of the Group's control over these externally managed investments, Value Retail is accounted for as an associate and VIA Outlets is a joint venture. Tables 9 and 10 provide analysis of the impact of the two premium outlet investments on the Group's financial statements. Further information on Value Retail is provided in the note 10 to the accounts on page 47 and for VIA Outlets in note 9 to the accounts on page 41.

Table 9: Income statement

Aggregated premium outlets income summary

	2015			2014
	Value Retail £m	VIA Outlets £m	Total £m	Value Retail £m	VIA Outlets £m	Total £m
Share of results	159.3	13.1	172.4	109.9	(1.1)	108.8
Less EPRA adjustments:
Revaluation (gains)/losses on properties	(163.7)	(10.4)	(174.1)	(111.1)	1.3	(109.8)
Change in fair value of derivatives	7.5	2.2	9.7	9.9	0.3	10.2
Deferred tax	25.1	2.5	27.6	11.9	0.4	12.3
Other adjustments	(11.1)	(1.3)	(12.4)	(4.6)	-	(4.6)
EPRA adjustments	(142.2)	(7.0)	(149.2)	(93.9)	2.0	(91.9)
Adjusted earnings of premium outlets	17.1	6.1	23.2	16.0	0.9	16.9
Interest receivable from Value Retail loans*	5.3	-	5.3	5.8	-	5.8
Total contribution to adjusted profit	22.4	6.1	28.5	21.8	0.9	22.7

 

Table 10: Balance sheet

Aggregated premium outlets investment summary

	2015			2014
	Value Retail £m	VIA Outlets £m	Total £m	Value Retail £m	VIA Outlets £m	Total £m
Investment properties	1,095.0	148.6	1,243.6	884.7	142.9	1,027.6
Net debt	(335.3)	(27.1)	(362.4)	(274.9)	(31.2)	(306.1)
Other net (liabilities)/assets	(15.9)	(10.7)	(26.6)	19.0	(7.5)	11.5
Share of net assets	743.8	110.8	854.6	628.8	104.2	733.0
Less EPRA adjustments:
Fair value of derivatives	(0.4)	3.5	3.1	(1.9)	3.1	1.2
Deferred tax	107.3	6.3	113.6	80.8	4.0	84.8
Goodwill as a result of deferred tax	(47.0)	(3.0)	(50.0)	(47.0)	(3.1)	(50.1)
EPRA adjustments	59.9	6.8	66.7	31.9	4.0	35.9
EPRA adjusted investment	803.7	117.6	921.3	660.7	108.2	768.9
Investment in VR China (within Other investments)	4.8	-	4.8	-	-	-
Loans to Value Retail*	76.4	-	76.4	63.5	-	63.5
Total impact of balance sheet - EPRA basis	884.9	117.6	1,002.5	724.2	108.2	832.4

*  At 31 December 2015 the Group had provided loans of £76.4 million (2014: £63.5 million) to Value Retail for which the Group received interest of £5.3 million in 2015 (2014: £5.8 million) which is included within finance income in note 4 to the accounts on page 37.

Proportionally consolidated information

Note 2 to the accounts on page 34 shows the proportionally consolidated income statement . The proportionally consolidated balance sheet, net debt and underlying finance costs are shown in the tables 11, 12 and 13 below.

In each of the tables, column A represents the Reported Group figures as shown in the financial statements; column B shows the Group's Property interests being the Group's share of Property joint ventures as shown in note 9 to the accounts on page 41 and Nicetoile as shown in note 10 to the accounts on page 47. Column C shows the Group's proportionally consolidated figures by aggregating the Reported Group and Property interests figures. The Group's interest in premium outlets are not proportionally consolidated as management does not review these interests on this basis.

Table 11: Proportionally consolidated balance sheet

As at 31 December 2015

	2015			2014
	Reported Group £m	Share of Property interests £m	Proportionally consolidated £m	Reported Group £m	Share of Property interests £m	Proportionally consolidated £m
	A	B	C	A	B	C
Non-current assets
Investment and development properties	4,652.1	2,478.4	7,130.5	4,427.3	2,279.2	6,706.5
Interests in leasehold properties	32.1	9.4	41.5	33.2	9.8	43.0
Plant and equipment	7.6	-	7.6	5.0	-	5.0
Investment in joint ventures	3,213.6	(3,102.8)	110.8	2,341.5	(2,237.3)	104.2
Investment in associate	768.0	(24.2)	743.8	628.8	-	628.8
Other investments	4.8	-	4.8	1.4	-	1.4
Receivables	92.1	-	92.1	79.3	-	79.3
	8,770.3	(639.2)	8,131.1	7,516.5	51.7	7,568.2
Current assets
Receivables	118.0	710.7	828.7	86.5	29.3	115.8
Restricted monetary assets	34.0	16.3	50.3	11.3	12.8	24.1
Cash and deposits	37.0	33.5	70.5	28.6	30.8	59.4
	189.0	760.5	949.5	126.4	72.9	199.3
Total assets	8,959.3	121.3	9,080.6	7,642.9	124.6	7,767.5
Current liabilities
Payables	235.5	67.4	302.9	204.4	66.5	270.9
Tax	0.7	-	0.7	0.3	-	0.3
Borrowings	-	40.2	40.2	-	-	-
	236.2	107.6	343.8	204.7	66.5	271.2
Non-current liabilities
Borrowings	3,028.1	-	3,028.1	2,287.1	42.2	2,329.3
Deferred tax	0.5	-	0.5	0.5	-	0.5
Obligations under finance leases	32.5	9.4	41.9	33.0	9.8	42.8
Payables	75.7	4.3	80.0	72.5	6.1	78.6
	3,136.8	13.7	3,150.5	2,393.1	58.1	2,451.2
Total liabilities	3,373.0	121.3	3,494.3	2,597.8	124.6	2,722.4
Net assets	5,586.3	-	5,586.3	5,045.1	-	5,045.1

Table 12: Proportionally consolidated net debt analysis

As at 31 December 2015

	2015			2014
	Reported Group £m	Share of Property interests £m	Total £m	Reported Group £m	Share of Property interests £m	Total £m
Notes	A	B	C	A	B	C
Cash at bank	36.9	32.6	69.5	28.5	27.7	56.2
Short-term deposits	0.1	0.9	1.0	0.1	3.1	3.2
Cash and deposits	37.0	33.5	70.5	28.6	30.8	59.4
Current borrowings including currency swaps	30.0	(40.2)	(10.2)	5.1	-	5.1
Non-current borrowings	(3,028.1)	-	(3,028.1)	(2,287.1)	(42.2)	(2,329.3)
Net debt	(2,961.1)	(6.7)	(2,967.8)	(2,253.4)	(11.4)	(2,264.8)

 

Table 13: Proportionally consolidated net underlying finance costs

For the year ending 31 December 2015

	2015			2014
	Reported Group £m	Share of Property interests £m	Total £m	Reported Group £m	Share of Property interests £m	Total £m
Notes	A	B	C	A	B	C
Finance costs	101.9	2.5	104.4	106.4	2.8	109.2
Finance income	(15.7)	(4.6)	(20.3)	(9.0)	(0.1)	(9.1)
Adjusted finance costs/(income)	86.2	(2.1)	84.1	97.4	2.7	100.1
Capitalised interest	5.3	-	5.3	8.8	-	8.8
Net underlying finance costs/(income)	91.5	(2.1)	89.4	106.2	2.7	108.9

GLOSSARY

Adjusted figures (per share)	Reported amounts adjusted in accordance with EPRA guidelines to exclude certain items as set out in note 7 to the accounts.
Anchor store	A major store, usually a department, variety or DIY store or supermarket, occupying a large unit within a shopping centre or retail park, which serves as a draw to other retailers and consumers.
Average cost of borrowing or weighted average interest rate (WAIR)	The cost of finance expressed as a percentage of the weighted average of borrowings during the period.
BCSC	British Council of Shopping Centres. A not-for-profit professional body supporting the retail property industry which undertakes research and lobbies government on behalf of its members.
BREEAM	Building Research Establishment's Environmental Assessment Method
Capital return	The change in property value during the period after taking account of capital expenditure and exchange translation movements, calculated on a monthly time-weighted basis.
Compulsory Purchase Order (CPO)	A Compulsory Purchase Order is a legal function in the UK by which land or property can be obtained to enable a development or infrastructure scheme without the consent of the owner where there is a "compelling case in the public interest".
Cost ratio (or EPRA cost ratio)	Total operating costs (being property costs, administration costs less management fees) as a percentage of gross rental income, after rents payable. Both operating costs and gross rental income are adjusted for costs associated with inclusive leases.
CPI	Consumer Price Index. A measure of inflation based on the weighted average of prices of consumer goods and services.
Dividend cover	Adjusted earnings per share divided by dividend per share.
Earnings per share (EPS)	Profit for the period attributable to equity shareholders divided by the average number of shares in issue during the period.
EBITDA	Earnings before interest, tax, depreciation and amortisation.
EPRA	The European Public Real Estate Association, a real estate industry body. This organisation has issued Best Practice Recommendations with the intention of improving the transparency, comparability and relevance of the published results of listed real estate companies in Europe.
Equivalent yield (true and nominal)	The capitalisation rate applied to future cash flows to calculate the gross property value. The cash flows reflect the timing of future rents resulting from lettings, lease renewals and rent reviews based on current ERVs. The true equivalent yield (TEY) assumes rents are received quarterly in advance. The nominal equivalent yield (NEY) assumes rents are received annually in arrears. The property true and nominal equivalent yields are determined by the Group's external valuers.
ERV	The estimated market rental value of the total lettable space in a property calculated by the Group's external valuers. It is calculated after deducting head and equity rents, and car parking and commercialisation running costs.
Gearing	Net debt expressed as a percentage of equity shareholders' funds.
Gross property value or Gross asset value (GAV)	Property value before deduction of purchasers' costs, as provided by the Group's external valuers.
Gross rental income (GRI)	Income from rents, car parks and commercial income, after accounting for the net effect of the amortisation of lease incentives.
IAS/IFRS	International Accounting Standard/International Financial Reporting Standard.
Inclusive lease	A lease, often for a short period of time, under which the rent is inclusive of costs such as service charge, rates, utilities etc. Instead, the landlord incurs these costs as part of the overall commercial arrangement.
Income return	The income derived from a property as a percentage of the property value, taking account of capital expenditure and exchange translation movements, calculated on a time-weighted basis.
Initial yield (or Net initial yield (NIY))	Annual cash rents receivable (net of head and equity rents and the cost of vacancy, and, in the case of France, net of an allowance for costs of approximately 5%, primarily for management fees), as a percentage of gross property value, as provided by the Group's external valuers. Rents receivable following the expiry of rent-free periods are not included. Rent reviews are assumed to have been settled at the contractual review date at ERV.
Interest cover	Net rental income divided by net cost of finance before exceptional finance costs, capitalised interest and change in fair value of derivatives.
Interest rate or currency swap (or derivatives)	An agreement with another party to exchange an interest or currency rate obligation for a pre-determined period of time.
IPD	Investment Property Databank. An organisation supplying independent market indices and portfolio benchmarks to the property industry.
Like-for-like (LFL) NRI	The percentage change in NRI for completed investment properties owned throughout both current and prior periods, after taking account of exchange translation movements.
LTV (Loan to value)	Net debt expressed as a percentage of the property portfolio value calculated on a proportionally consolidated basis.
Net asset value (NAV) per share	Equity shareholders' funds divided by the number of shares in issue at the balance sheet date.
Net rental income (NRI)	Income from rents, car parks and commercial income, after deducting head and equity rents payable, and other property related costs.
Occupancy rate	The ERV of the area in a property, or portfolio, excluding developments, which is let, expressed as a percentage of the total ERV of that property or portfolio.
Over-rented	The amount, or percentage, by which the ERV falls short of rents passing, together with the estimated rental value of vacant space.
Passing rents or rents passing	The annual rental income receivable from an investment property, after any rent-free periods and after deducting head and equity rents and car parking and commercialisation running costs. This may be more or less than the ERV (see over-rented and reversionary or under-rented).
Pre-let	A lease signed with a tenant prior to the completion of a development.
Property Income Distribution (PID)	A dividend, generally subject to withholding tax, that a UK REIT is required to pay from its tax-exempt property rental business and which is taxable for UK-resident shareholders at their marginal tax rate.
Property interests	The Group's non-wholly owned properties which management proportionally consolidates when reviewing the performance of the business. These exclude the Group's premium outlets interests in Value Retail and VIA Outlets which are not proportionally consolidated.
Property joint ventures	The Group's shopping centre and retail park joint ventures which management proportionally consolidate when reviewing the performance of the business, but exclude the Group's interests in the VIA Outlets joint venture.
REIT	Real Estate Investment Trust. A tax regime which in the UK exempts participants from corporation tax both on UK rental income and gains arising on UK investment property sales, subject to certain requirements.
Reported Group	The financial results as presented under IFRS which represent the Group's 100% owned properties, transactions and balances and equity account for the Group's interests in joint ventures and associates.
Return on shareholders' equity (ROE)	Capital growth and profit for the period expressed as a percentage of equity shareholders' funds at the beginning of the year, all excluding deferred tax and certain non-recurring items.
Reversionary or under-rented	The amount, or percentage, by which the ERV exceeds the rents passing, together with the estimated rental value of vacant space.
RPI	Retail Prices Index. A measure of inflation based on the change in the cost of a representative sample of retail goods and services.
SIIC	Sociétés d'Investissements Immobiliers Côtées. A tax regime in France which exempts participants from the French tax on property income and gains subject to certain requirements.
Total development cost (TDC)	All capital expenditure on a development project, including capitalised interest.
Total property return (TPR) (or total return)	Net rental income and capital growth expressed as a percentage of the opening book value of property adjusted for capital expenditure and exchange translation movements, calculated on a monthly time-weighted basis.
Total shareholder return (TSR)	Dividends and capital growth in a Company's share price, expressed as a percentage of the share price at the beginning of the year.
Turnover rent	Rental income which is related to an occupier's turnover.
Vacancy rate	The ERV of the area in a property, or portfolio, excluding developments, which is currently available for letting, expressed as a percentage of the ERV of that property or portfolio.
Value Retail (VR)	Owner and operator of luxury outlet Villages in Europe in which the Group has an investment.
VIA Outlets (VIA)	A premium outlets joint venture, in which the Group has an investment. VIA owns and operates premium outlet centres in Europe.
Yield on cost	Passing rents expressed as a percentage of the total development cost of a property.

Disclaimer

This document contains certain statements that are neither reported 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 these statements.

Many of these risks and uncertainties relate to factors that are beyond Hammerson's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Hammerson does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document. Information contained in this document relating to the Company should not be relied upon as a guide to future performance.

 

END

 

 

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