Supporting
community
living
Annual Report and Accounts
for the year ended 30 December 2022
Capital & Regional is a UK-focused retail
property REIT specialising in community
shopping centres that provide needs-
based, non-discretionary and value-
orientated retail goods and services.
Our centres are tailored to the needs
and aspirations of each centre’s local
community and form a critical part of the
local infrastructure.
Capital & Regional has a strong track
record of delivering value-enhancing
retail and leisure asset management
opportunities across its portfolio of tailored
intown community shopping centres.
Capital & Regional is listed on the main
market of the London Stock Exchange
and has a secondary listing on the
Johannesburg Stock Exchange.
Our Purpose
We invest, manage and enhance
retail property through the creation
of dynamic environments tailored
to the local communities. As a
specialist owner and manager of
shopping centres, we invest in the
retail assets in our portfolio to
unlock their full value.
Our Vision
To define and lead community
shopping centres, through our
passionate creation of vibrant retail
spaces and exceptional customer
and guest experience. To develop
and deliver dynamic community
hubs in the heart of town centres.
These centres provide a mix of uses
including everyday services and
facilities to satisfy our growing and
evolving communities’ needs.
Our Values
Inspiring
Creative
thinking
Delivering
Dynamic
solutions
Encouraging
Collaborative
engagement
Leading in
Sustainability
within our communities
Acting
with
Integrity
View our
Corporate Website
capreg.com
Find out more about our
Pathway to Net Zero Report
capreg.com/esg/environmental-
sustainability/pathway-to-
net-zero/
Stock code: CAL
Highlights
Revenue
2022
1
2021
Adjusted Profit
2022
20211
£10.3m
£8.8m
Net Rental Income (Investment Assets)
Contents
£60.6m
2022
£54.6m
20211
£23.5m
£21.7m
Adjusted Earnings per share
2022
20211
6.2p
7.3p
IFRS Profit/(loss) for the period
Basic Earnings per share
2022
20211
£12.1m
2022
£(24.1)m
20211
7.3p
(20.0)p
Total dividend per share
Net Asset Value (NAV) per share
2022
2021
5.25p
n/a
2022
2021
EPRA NTA per share
Group net debt
2022
2021
103p
102p
2022
2021
106p
102p
£130.9m
£183.2m
Net debt to property value
2022
2021
41%
49%
Read more about our
Key performance indicators
on pages 24–26
1. 2021 comparative figures have been restated for a prior year adjustment to the treatment of
rent concessions due to an IASB IFRS interpretation issued in October 2022 as detailed in Note
1 to the financial statements. The amendment stipulates that losses which were incurred on
granting rent concessions, which for the Group occurred during the Covid-19 pandemic, should
be charged to the income statement in the year they are granted. 2021 revenue has also been
impacted by the reclassification of Luton as a Discontinued Operation. The combined impacts of
the restatements have reduced 2021 Revenue by £15.4 million, increased 2021 Adjusted Profit
by £0.7 million and increased IFRS profit for the year by £2.3 million. The Adjusted Profit for
2022 is £0.3 million higher than it would have been without the adjustment to rent concessions.
Use of Alternative Performance Measures (APMs)
Throughout the results statement we use a range of financial and non-financial
measures to assess our performance. A number of the financial measures,
including Net Rental Income, Adjusted Profit, Adjusted Earnings per share,
Net Debt and the industry best practice EPRA (European Public Real Estate
Association) performance measures are not defined under IFRS, so they are
termed APMs. APMs are not considered superior to the relevant IFRS measures,
rather Management use them alongside IFRS measures to monitor the Group’s
financial performance because they help illustrate the trading performance and
position of the Group. All APMs are defined in the Glossary and further detail on
their use is provided within the Financial Review.
01
02
04
06
10
16
18
22
24
28
30
34
36
44
52
56
90
100
101
103
104
105
Business Overview
Highlights
Our Community Shopping Centre
Approach
Our Portfolio
Chairman’s Statement
Strategic Report
Market Backdrop
Business Model
Strategy
Strategy in Action
Key Performance Indicators
Chief Executive’s Review
Operating Review
Refocus, Restructure and
Recapitalise
Financial Review
Managing Risk
Our Stakeholders
ESG Report
TCFD Disclosure
Governance
Chair's Introduction to
Governance
Board of Directors
Senior Leadership Team
Compliance statement
Board Leadership & Company
Purpose
106 Divison of Responsibilities
110
Composition, Succession and
Evaluation
112 Nominations Committee Report
114
Audit, Risk and Internal Control
120 Director's Remuneration
122 Director's Remunerations Policy
129 Directors’ Remunerations Report
138 Director's Report
142 Directors’ Responsibilities
143
156
156
157
158
Statement
Independent Auditor’s Report
Financials
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of
Changes in Equity
159
Consolidated Cash Flow Statement
160 Notes to the Financial Statements
193
194
Company Balance Sheet
Statement of Changes in Equity
195 Notes to the Company’s Separate
Financial Statements
199 Glossary of Terms
201
202
203
205
Five Year Review (Unaudited)
Portfolio Information (Unaudited)
EPRA Performance Measures
(Unaudited)
Advisers and Corporate
Information
206
Shareholder Information
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022
01
Business Overview Our Community
Shopping Centre Approach
Our community shopping centre approach has
continued to demonstrate its resilience given the
persistent challenges within our sector. Our centres
have evolved from focusing on needs-based retail to
creating value through vibrantly tailored spaces for
each of our communities.
We have been proactive in providing dominant retail offers
that consist primarily of services and non-discretionary
retail. We also aim to ensure each location has access
to transport and improved infrastructure providing a
convenient and frictionless experience for our guests.
We place each of our communities at the heart of
everything we do, ensuring we add value at a local
level enables us to provide a strong and successful
customer proposition.
Our customer product and service offerings
We sit firmly in a position to serve our guests' essential and regular non-discretionary shopping needs and services.
Change in merchandising mix since we launched our Community Shopping
Centre strategy in 2017:
2017 Customer Proposition
2022 Customer Proposition
Other
24.2%
Value
Apparel
31%
Home
& Gifts
9.5%
Services
8%
Health
& Beauty
10%
Food &
Grocery
11%
Athleisure
& Footwear
6.3%
Home
& Gifts
5.3%
Other
22.4%
Services
13%
Health
& Beauty
13%
Value
Apparel
21%
Food &
Grocery
17%
Athleisure
& Footwear
8.3%
02
Stock code: CAL Our difference
Our fundamental difference from competitors within the retail
sector is that we place value on being more than just a place to
shop, we are considered to be a part of our guests’ everyday lives.
01
Dominant
Community Locations
Our centres make up a vital
part of their communities;
they are centrally located with
strong surrounding transport
links making them perfectly
positioned to serve the
local residents.
02
Diversified Income Streams
We focus on a mixed-use
proposition maximising our
exposure to retail, hospitality
and service categories.
03
Strength of
Community Links
Enables us to respond to
community needs quickly
and effectively.
04
Experienced Management
Our management teams have
a wealth of knowledge within
the retail sector and continue
to build on this through the
training and development
programmes C&R provide.
The continued
evolution of our assets
Community and local focus
Our assets are located in local town centres
and form essential parts of the community
infrastructure at the heart of these
neighbourhoods. We aim to strengthen
each of our communities through meeting
their everyday needs and supporting the
causes that matter to them.
Remerchandising retail offer
Our ability to evolve and accelerate
remerchandising towards more
nondiscretionary retail and services has
been our main focus for 2022.
Role of the store
In 2022 we have seen the role of the
physical store remain intrinsic to the
consumer as well as the retailer. Despite
previous speculations of online retail
becoming more prevalent, the role of
a physical store creates a crucial touch
point for retailers to engage and maintain
consumer loyalty. Our centres remain
focused on providing nondiscretionary
shopping needs and services to our guests.
Diversification of uses
Our diverse retail mix ensures frequent and
repeat footfall and high conversion rates.
03
Business OverviewCapital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022 Our Portfolio
6
1
Spain
The Exchange, Ilford
• Predominantly freehold
covered shopping centre on
three floors
• 310,000 sq ft
• 81 lettable units
• Principal occupiers: Next, H&M,
TK Maxx
2
The Mall, Maidstone
• Freehold covered shopping
centre on three floors
• 500,000 sq ft
• 98 lettable units
• Principal occupiers: Matalan,
Pure Gym, Boots, Sports Direct,
Wilko, Iceland, Next
6
Key
Investment assets
Assets where the
Group acts as Manager
Snozone
6
7
6
4
3
5
1
2
6
7
6
4
3
5
1
2
Centre Characteristics
01
02
03
Dominant strategic locations
in the centre of growing towns
Easily accessible with strong
transport links
London/South‑East bias
04
05
Accretive asset management opportunities
including leisure, residential, medical and office uses
Snozone leisure venues,
dominant in their sector
Portfolio Statistics
Total
sq ft
2.0m sq ft
Total number
of retail units
441
Average
dwell time
71 minutes
Average
rent
c.£14 psf
Estimated retail
conversion rate
71%
04
Heading 1Stock code: CAL 3
4
5
17&Central,
Walthamstow
• Leasehold covered shopping
centre on two floors
• 290,000 sq ft
• 67 lettable units
The Marlowes,
Hemel Hempstead
• Freehold covered shopping
The Mall,
Wood Green
• Freehold partially open
centre and high street parade
shopping centre on two floors
• 320,000 sq ft
• 89 lettable units
• 630,000 sq ft
• 106 lettable units
• Principal occupiers: Lidl, Asda,
Boots, The Gym, TK Maxx,
Sports Direct
• Principal occupiers: Sports
Direct, Pure Gym, Wilko,
Tesco Express
• Principal occupiers: Primark,
Lidl, H&M, Boots, TK Maxx,
Travelodge, Cineworld
6
7
Snozone
Leisure Business
• 100% subsidiary
• Largest indoor ski slope
operator in the UK
• Operating at Milton
Keynes, Yorkshire and in
Snozone Madrid
• In existence since 2000 and has
taught over 4 million people to
ski or snowboard
Kingfisher Shopping
Centre, Redditch
• C&R acts as Property & Asset
Manager
• Freehold covered shopping
centre on two principal trading
levels
• 900,000 sq ft
• 174 lettable units
• Principal occupiers: The Range,
Primark, Next, TK Maxx,
Vue Cinema, H&M
Centre Characteristics
02
Dominant strategic locations
Easily accessible with strong
London/South‑East bias
in the centre of growing towns
transport links
01
04
03
05
Accretive asset management opportunities
including leisure, residential, medical and office uses
Snozone leisure venues,
dominant in their sector
Portfolio Statistics
Total
sq ft
2.0m sq ft
Total number
of retail units
441
Average
dwell time
71 minutes
Average
rent
c.£14 psf
Estimated retail
conversion rate
71%
05
Business OverviewCapital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022 Chairman’s Statement
In headline terms Capital & Regional
delivered a strong performance in 2022,
completing a number of initiatives to
strengthen its balance sheet and reduce
debt, undertaking capital expenditure
in line with its community strategy, and
improving occupancy.
David Hunter
Chairman
This positive momentum saw the Company increase
Net Rental Income from its Investment Assets by
8.3% to £23.5 million, which led to a 17.0% increase
in Adjusted Profit to £10.3 million.
Despite the wider economic backdrop
and increases in inflation and interest
rates which impacted the commercial
property sector, the Company
delivered 6.3% growth in NAV to
£179 million (31 December 2021:
£168 million) and a 1.8% increase in
EPRA NTA per share to 103 pence per
share, despite a valuation decline in
the second half of the year.
After the very obvious challenges of
2020 and 2021, the retail environment
facing the Company in 2022 was
more nuanced. On the positive side,
we saw an end to the pandemic
restrictions with all traders open for
business and footfall trending back
upwards towards 2019 levels. Retail
failures were significantly down and
rent collection levels much improved.
Counteracting the good news, the UK
economy faced increasing difficulties
from low growth, high inflation and
a sharp end to over a decade of very
low interest rates accompanying a
dramatic fall in consumer confidence.
Despite fears that Christmas 2022
trading would be materially affected
by these factors, seasonal retail sales
were robust, albeit with volumes
slightly below 2019 levels. Footfall for
the year in the Company’s centres
was 27% ahead of 2021 and reached
84% of 2019 levels.
Another notable positive trend during
the year was the slowdown in the
growth of online retail reflected in
challenges faced by a number of
online only retailers, coupled with
a widespread recognition that an
omnichannel offering is an optimum
model for retailers.
Based on these trends, the Company
enters 2023 optimistic that our
business model of Community
Centres, meeting the needs of guests
for non-discretionary goods and
services, is well placed to benefit
from a steady recovery in physical
retail and weather the current
economic headwinds.
Recognising the importance of
income to REIT investors, we were
pleased to resume the payment
of dividends in 2022, supported
by the improvements in NRI and
Adjusted Profit.
Capital & Regional continued to
demonstrate an active approach to
portfolio management to ensure it
delivers value for its shareholders
and to be good stewards of
capital, notably:
•
The sale of The Mall, Blackburn
for a price in excess of its
December 2021 valuation.
•
•
•
The purchase of the outstanding
debt on Hemel Hempstead at
a significant discount to face
value, allowing the property to
be restored to the Investment
Assets portfolio.
Signing major lease
commitments at Ilford with
TK Maxx and the local NHS
Health Board, allowing a package
of amendments to be agreed on
the loan on that asset.
Completing the sale of the
Walthamstow residential
development site.
Assisted by these initiatives, the
Company’s net debt ratio improved
over the year from 49% to 41%
despite a modest fall in values
of 3.6%.
Whilst the market had anticipated
that falls in 2020 and 2021 would
mark the low point in valuations,
steeply falling values in other sectors
in the second half of 2022 coupled
with an absence of available bank
debt continued to impact retail
valuations, albeit to a far lesser
degree than other real estate sectors.
06
Stock code: CAL Read more about our
Board activity during the year
on page 105
Although this was a year of
recovery, it continued to present
many challenges to the Company’s
management and staff and I should
record the Board’s appreciation of
their exceptional efforts in meeting
these and delivering a positive year
for Capital & Regional. I should also
thank my Board colleagues for their
unstinting support.
David Hunter
Chairman
This also reflected very limited
investment comparable transactions
and general continuation of negative
sentiment. Our view is that following
the repricing there is now a very
selective buying opportunity in
the sector.
The underlying resilience of the
leasing market was demonstrated by
the Company’s success in achieving
lease renewals and new leases well
ahead of both previous rent and ERV,
with the affordability of rents being
a key consideration in this. A total of
109 new lettings and renewals were
signed in 2022, with an annual rent of
£5.4 million and headline occupancy
reaching 94% at the year end.
Consistent with this, rent collection
improved from approximately 93% in
2021 to 97.6% in 2022.
Snozone continued to make strong
progress post the pandemic with
overall revenues up 35% and with
Madrid in particular growing by 66%
supported by leveraging the UK
management platform, improved
productivity and full systems
integration. The EBITDA contribution
improved from £0.8 million in 2021 to
£1.4 million in 2022, despite inflation
in utility costs.
07
Business OverviewCapital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022 Strategic Report
Contents
Strategic Report
10 Market Backdrop
16
18
22
24
28
30
34
Business Model
Strategy
Strategy in Action
Key Performance Indicators
Chief Executive’s Review
Operating Review
Refocus, Restructure and Recapitalise
Financial Review
36
44 Managing Risk
52
Our Stakeholders
ESG Report
TCFD Disclosure
56
90
0808
Stock code: CAL 09
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Market Backdrop
Macroeconomic
trends
Community strategy providing
stability & opportunity
Macroeconomic
trend
Driving Forces
& Insights
Impacts and
implications for C&R
Our
Response
Consumer
Markets
Cost of living pressures
are causing consumers to
move down the retail pricing
architecture, most obviously
illustrated through the continued
growth of the discount
supermarkets. This requires
alignment of goods and
service provision to reflect a
community’s spending dynamic
and an ability to flex creatively.
Changing dynamics of how
communities live, work and
spend their leisure time requires
continued evolution of the mix of
shops and service provision and
how and when they operate to
remain relevant and aligned to
visiting guest's needs.
Inflationary pressures feed
through to shopping centre
operational running costs,
particularly the impact of
wage inflation and utility costs,
impacting occupier profitability
and unit affordability. Retail and
leisure occupiers are focused
on their occupational cost base,
often seeking to secure cost
certainty through passing risk
onto owners.
Covid‑19 Recovery
Social distancing restrictions and working from home
continued to impact shopping habits over the first
quarter of 2022. While retailers were quick to re-open
after the easing of lockdown in 2021, the recovery
to normalised trading has taken time and consumer
shopping and spending patterns have changed, in some
part due to the persistence of hybrid working models,
combined with continued unease in some areas of the
population. Nonetheless, overall spending has proved to
be robust, with many occupiers now trading at or above
pre-pandemic levels.
Cost of Living
Global economic pressures increased as the year
progressed with supply chain issues and the war in
Ukraine particularly driving up pricing pressures on food
and utility costs. These inflationary pressures saw the
headline CPI index increase to 10.5% at the year end and
a central bank response, which was also influenced by
the mini-budget in September 2022, driving up interest
rates from their historic low levels to 3.5% by the year
end. In combination, these factors have placed increased
financial burden on household budgets as we ended the
year and entered 2023, although there were emerging
signs as we started 2023 that we are at, or approaching,
the peaks of inflation and interest rates. The personal
saving levels built up through Covid-19 has helped to
provide some cushion for consumers to absorb price
increases, and despite interest rate rises affecting
mortgage rates, many households have continued to
benefit from locked in fixed interest arrangements.
Employment
Rates of employment have continued to remain high, with
job vacancy rates at the end of 2022 standing at 1.13m,
particularly affecting hospitality and leisure. Average
national wage growth over the year stood at
5.9 %, tracking at below inflation levels. Public sector
strikes over pay have been commonplace over the second
half of 2022 and into 2023 as the government has sought
to resist pay demands as it looks to bring inflation back
down to long-term targets.
The effects of changes to working patterns is also
influencing community dynamics. Movement of people
across the day has shifted from the historic 9-5, Monday-
Friday working patterns, with towns having to adapt to a
changing set of needs and wants from their communities.
1010
Our community merchandising strategy is focused on everyday needs and services, anchored, where possible, by
supermarket/grocery offers. Our centres' mix of goods and services are typically more resilient to changing economic
trends and ensure we are relevant to the needs of our communities.
We typically serve a core 15-minute neighbourhood. In an economic environment where fuel prices have materially
increased, our centres provide easy and affordable accessibility to our visitors through a range of transport modes.
Our low average rents at circa £14 psf continue to provide a low cost of occupation for our occupiers to trade
profitably. In an environment where occupiers are facing rising supply chain cost pressures, these occupational
fundamentals are increasingly relevant.
We continually look to operate our centres in a cost-effective manner, with our portfolio service charge decreasing
by 2.4% since 2017. We have taken out operational costs through investment in more energy efficient methods of
operation (e.g. LED lighting, reduced water consumption) and by simplifying our operating environments through,
for example, reductions in passenger lifts or rationalising M&E plant.
Our occupational mix continues to evolve with our community. The introduction of NHS medical diagnostic facilities
is one example of broadening our services, while satisfying a local authority need, creating more efficient linked trips
for our visitors in one location and new trips, which provide the opportunity to drive greater sales across our wider
community mix of uses.
Data Insight
Stock code: CAL Macroeconomic
Driving Forces
trend
& Insights
Impacts and
implications for C&R
Our
Response
Consumer
Markets
Covid‑19 Recovery
Cost of living pressures
are causing consumers to
move down the retail pricing
architecture, most obviously
illustrated through the continued
growth of the discount
supermarkets. This requires
alignment of goods and
service provision to reflect a
community’s spending dynamic
and an ability to flex creatively.
Changing dynamics of how
communities live, work and
spend their leisure time requires
continued evolution of the mix of
shops and service provision and
how and when they operate to
remain relevant and aligned to
visiting guest's needs.
Inflationary pressures feed
through to shopping centre
operational running costs,
particularly the impact of
wage inflation and utility costs,
impacting occupier profitability
and unit affordability. Retail and
leisure occupiers are focused
on their occupational cost base,
often seeking to secure cost
certainty through passing risk
onto owners.
Social distancing restrictions and working from home
continued to impact shopping habits over the first
quarter of 2022. While retailers were quick to re-open
after the easing of lockdown in 2021, the recovery
to normalised trading has taken time and consumer
shopping and spending patterns have changed, in some
part due to the persistence of hybrid working models,
combined with continued unease in some areas of the
population. Nonetheless, overall spending has proved to
be robust, with many occupiers now trading at or above
pre-pandemic levels.
Cost of Living
Global economic pressures increased as the year
progressed with supply chain issues and the war in
Ukraine particularly driving up pricing pressures on food
and utility costs. These inflationary pressures saw the
headline CPI index increase to 10.5% at the year end and
a central bank response, which was also influenced by
the mini-budget in September 2022, driving up interest
rates from their historic low levels to 3.5% by the year
end. In combination, these factors have placed increased
financial burden on household budgets as we ended the
year and entered 2023, although there were emerging
signs as we started 2023 that we are at, or approaching,
the peaks of inflation and interest rates. The personal
saving levels built up through Covid-19 has helped to
provide some cushion for consumers to absorb price
increases, and despite interest rate rises affecting
mortgage rates, many households have continued to
benefit from locked in fixed interest arrangements.
Employment
Rates of employment have continued to remain high, with
job vacancy rates at the end of 2022 standing at 1.13m,
particularly affecting hospitality and leisure. Average
national wage growth over the year stood at
5.9 %, tracking at below inflation levels. Public sector
strikes over pay have been commonplace over the second
half of 2022 and into 2023 as the government has sought
to resist pay demands as it looks to bring inflation back
down to long-term targets.
The effects of changes to working patterns is also
influencing community dynamics. Movement of people
across the day has shifted from the historic 9-5, Monday-
Friday working patterns, with towns having to adapt to a
changing set of needs and wants from their communities.
Our community merchandising strategy is focused on everyday needs and services, anchored, where possible, by
supermarket/grocery offers. Our centres' mix of goods and services are typically more resilient to changing economic
trends and ensure we are relevant to the needs of our communities.
We typically serve a core 15-minute neighbourhood. In an economic environment where fuel prices have materially
increased, our centres provide easy and affordable accessibility to our visitors through a range of transport modes.
Our low average rents at circa £14 psf continue to provide a low cost of occupation for our occupiers to trade
profitably. In an environment where occupiers are facing rising supply chain cost pressures, these occupational
fundamentals are increasingly relevant.
We continually look to operate our centres in a cost-effective manner, with our portfolio service charge decreasing
by 2.4% since 2017. We have taken out operational costs through investment in more energy efficient methods of
operation (e.g. LED lighting, reduced water consumption) and by simplifying our operating environments through,
for example, reductions in passenger lifts or rationalising M&E plant.
Our occupational mix continues to evolve with our community. The introduction of NHS medical diagnostic facilities
is one example of broadening our services, while satisfying a local authority need, creating more efficient linked trips
for our visitors in one location and new trips, which provide the opportunity to drive greater sales across our wider
community mix of uses.
Data Insight
KPSA - Retail Sales Index: Chained Volume of Retail Sales Seasonally Adjusted
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y
a
M
2
2
0
2
n
u
J
2
2
0
2
l
u
J
2
2
0
2
g
u
A
2
2
0
2
p
e
S
2
2
0
2
t
c
O
2
2
0
2
v
o
N
2
2
0
2
c
e
D
2
2
0
2
Total Retail (incl. Fuel)
Food
Clothing & Footwear
Household Goods
1111
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report
Through the sale of The Mall, Blackburn, we have repositioned our portfolio with a valuation and geographic
weighting toward London, which has consistently delivered more stability in valuations and income and provided
greater opportunity for asset management enhancements.
In repositioning our asset base, we have also proactively managed our balance sheet, taking advantage of a more
buoyant investment market during the first half of 2022 to dispose of The Mall, Blackburn. This transaction allowed
us to recycle proceeds from a weaker community asset and repatriate debt, bringing down group leverage.
We proactively manage our non-recourse loan facilities, with no facility expiries falling due within the near term,
which we expect will allow us to navigate the current economic cyclical challenges.
We continue to demonstrate the potential to create and unlock value from our assets. Securing planning and new
extended headleases to facilitate a mixed use extension in Walthamstow allowed us to create a residential site and
generate a £21.65m land receipt from a Build to Rent developer / investor. In Ilford, we are midway through the
reconfiguration and re-merchandising of the former Debenhams department store, and in parallel we are
re-purposing secondary retail and mall space to create a new NHS Community Health Care Central, securing
long-term indexed income that replaces previous long-term vacancy.
We have a focused and structured approach to planned preventative maintenance and environmental
improvements. Our service charge budgets are supported by and incorporate ten-year planned preventative
maintenance programmes of repair and renewal, which seek to deliver environmental enhancements. These
programmes are complemented by our capital expenditure programmes, which provide options to deliver
environmental enhancements both directly and indirectly.
Data Insight
Market Backdrop CONTINUED
Macroeconomic
trend
Driving Forces
& Insights
Impacts and
implications for C&R
Our
Response
Investment
Markets
Risks to asset values are greater
in an environment where the
buyer pool is opportunistic in
nature and where return hurdles
have to be achieved in the
absence of debt leverage.
Availability of debt will affect
refinancing strategies for existing
assets and new acquisition
strategies. Loan to Value profiles
will also have a bearing on
refinancing abilities.
Environmental considerations
and specifically expenditure
required to meet future
compliance targets is becoming
a more explicit pricing
consideration.
Our valuers look carefully at
the sustainability of our centre
income and the potential to
maintain and grow income.
The ability to demonstrate
stable income and the profitable
remerchandising or repurposing
of floor space are essential
components in defending and
differentiating valuations.
Interest Rates
The increase in base rates from the historic low of 0.5%
to 3.5% at the year end, has led to a material downward
repricing and resetting of asset values across all core real
estate sectors over the second half of 2022, relative to the
perceived risk-free rate.
Sectors, such as logistics, which have seen significant yield
compression over recent years, have witnessed the most
aggressive repricing, in response to the base rate level
expanding beyond benchmark asset yields. Shopping
centre values have not been immune to downward
adjustment, as markets look to maintain asset class
relativity. However, with retail yields already representing
a significant discount to other asset classes, the impact
of repositioning has been less harsh, helping to deliver
relative sector outperformance over the year.
Debt Availability
Debt availability across the shopping centre sector
remains limited, as lenders continue to work out
existing loan default situations and remain reluctant to
write new loans, while perceived uncertainty remains
around retailer stability and robustness of retail income.
Transaction values and volumes have been adversely
impacted as a consequence, with wider macroeconomic
factors leading to a smaller, more opportunistic equity
buyer pool, investing on a simple yield dynamic, as
opposed to total return investment.
Transactions
2022 was a year of two halves. A strong first half of the
year, with buoyant market interest and transactional
execution, reversed over the second half of the year,
which saw sales processes stalling and a reduction
of stock coming to the market as wider economic
uncertainty took hold. Total shopping centre transaction
volumes over 2022 ended at £1.9 billion out of a total
retail sector volume of £5.8 billion, with 59 transactions
completed. Average transaction values at £24 million
have edged upwards continuing the trend seen in 2021.
Institutions remained significant divestors over the year,
together with lenders sitting on loan default positions,
who have more proactively led consensual sale processes
with Sponsors. Buyers tend to be opportunistic, with
significant cash firepower, generally inexperienced in
the shopping centre sector, but attracted by the material
yield differential to other asset classes, rather than the
opportunity to invest in shopping centres per se.
Investors and pricing dynamics are increasingly
influenced by capital requirements to re-lease or
repurpose floor space and the expected ongoing
maintenance and ESG obligations.
1212
Stock code: CAL
Macroeconomic
Driving Forces
trend
& Insights
Impacts and
implications for C&R
Our
Response
Investment
Markets
Interest Rates
Risks to asset values are greater
in an environment where the
buyer pool is opportunistic in
nature and where return hurdles
have to be achieved in the
absence of debt leverage.
Availability of debt will affect
refinancing strategies for existing
assets and new acquisition
strategies. Loan to Value profiles
will also have a bearing on
refinancing abilities.
Environmental considerations
and specifically expenditure
required to meet future
compliance targets is becoming
a more explicit pricing
consideration.
Our valuers look carefully at
the sustainability of our centre
income and the potential to
maintain and grow income.
The ability to demonstrate
stable income and the profitable
remerchandising or repurposing
of floor space are essential
components in defending and
differentiating valuations.
The increase in base rates from the historic low of 0.5%
to 3.5% at the year end, has led to a material downward
repricing and resetting of asset values across all core real
estate sectors over the second half of 2022, relative to the
perceived risk-free rate.
Sectors, such as logistics, which have seen significant yield
compression over recent years, have witnessed the most
aggressive repricing, in response to the base rate level
expanding beyond benchmark asset yields. Shopping
centre values have not been immune to downward
adjustment, as markets look to maintain asset class
relativity. However, with retail yields already representing
a significant discount to other asset classes, the impact
of repositioning has been less harsh, helping to deliver
relative sector outperformance over the year.
Debt Availability
Debt availability across the shopping centre sector
remains limited, as lenders continue to work out
existing loan default situations and remain reluctant to
write new loans, while perceived uncertainty remains
around retailer stability and robustness of retail income.
Transaction values and volumes have been adversely
impacted as a consequence, with wider macroeconomic
factors leading to a smaller, more opportunistic equity
buyer pool, investing on a simple yield dynamic, as
opposed to total return investment.
Transactions
2022 was a year of two halves. A strong first half of the
year, with buoyant market interest and transactional
execution, reversed over the second half of the year,
which saw sales processes stalling and a reduction
of stock coming to the market as wider economic
uncertainty took hold. Total shopping centre transaction
volumes over 2022 ended at £1.9 billion out of a total
retail sector volume of £5.8 billion, with 59 transactions
completed. Average transaction values at £24 million
have edged upwards continuing the trend seen in 2021.
Institutions remained significant divestors over the year,
together with lenders sitting on loan default positions,
who have more proactively led consensual sale processes
with Sponsors. Buyers tend to be opportunistic, with
significant cash firepower, generally inexperienced in
the shopping centre sector, but attracted by the material
yield differential to other asset classes, rather than the
opportunity to invest in shopping centres per se.
Investors and pricing dynamics are increasingly
influenced by capital requirements to re-lease or
repurpose floor space and the expected ongoing
maintenance and ESG obligations.
Through the sale of The Mall, Blackburn, we have repositioned our portfolio with a valuation and geographic
weighting toward London, which has consistently delivered more stability in valuations and income and provided
greater opportunity for asset management enhancements.
In repositioning our asset base, we have also proactively managed our balance sheet, taking advantage of a more
buoyant investment market during the first half of 2022 to dispose of The Mall, Blackburn. This transaction allowed
us to recycle proceeds from a weaker community asset and repatriate debt, bringing down group leverage.
We proactively manage our non-recourse loan facilities, with no facility expiries falling due within the near term,
which we expect will allow us to navigate the current economic cyclical challenges.
We continue to demonstrate the potential to create and unlock value from our assets. Securing planning and new
extended headleases to facilitate a mixed use extension in Walthamstow allowed us to create a residential site and
generate a £21.65m land receipt from a Build to Rent developer / investor. In Ilford, we are midway through the
reconfiguration and re-merchandising of the former Debenhams department store, and in parallel we are
re-purposing secondary retail and mall space to create a new NHS Community Health Care Central, securing
long-term indexed income that replaces previous long-term vacancy.
We have a focused and structured approach to planned preventative maintenance and environmental
improvements. Our service charge budgets are supported by and incorporate ten-year planned preventative
maintenance programmes of repair and renewal, which seek to deliver environmental enhancements. These
programmes are complemented by our capital expenditure programmes, which provide options to deliver
environmental enhancements both directly and indirectly.
Data Insight
UK Retail Transactions - FY22
200
150
)
n
b
£
(
P
B
G
100
50
0
Q1
Q2
Q3
Q4
Shopping Centres
Out of Town Retail
High Street
Foodstore
Shopping Centre Transactions - FY22
l
)
n
b
£
(
e
m
u
o
V
n
o
i
t
c
a
s
n
a
r
T
l
a
t
o
T
6
5
4
3
2
1
0
80
70
60
50
40
30
20
10
0
s
n
o
i
t
c
a
s
n
a
r
T
f
o
.
o
N
l
a
t
o
T
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Q1
Q2
Q3
Q4
1313
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report
We continue to re-merchandise towards more resilient everyday retail basics and services and away from more
challenged retail categories, where online is a more competitive threat.
We are actively focussed on building our supermarket anchoring as the principal footfall driver and community
requirement, providing resilience and relevance to our income and mix. We continue to broaden our mix of uses,
with the introduction of medical centres and refreshed and flexible food and leisure concepts.
We have successfully re-merchandised the majority of our previous department store anchor spaces, with clear
merchandise strategies and business plan targets to address the remaining residual space during the coming year.
We recognise and embrace the importance of multi-channel retail solutions and seek to ensure our centres provide
an optimal, low-friction experience to our guests and occupying customers, ensuring our community destinations
maintain a strong position in the retail hierarchy.
Affordable total cost of occupation remains a key differentiator for our community assets. We have a relentless
focus on controlling operational costs and delivering value for money services to our occupational customers. We
have been a founding member and active participant of the Shopkeepers' Campaign, which has successfully lobbied
for more frequent rates revaluations and the removal of downwards rates transition. This will ensure our retail and
leisure customers see the full and immediate benefit of significant rates reductions from the start of the April 2023
rating list. Our occupiers will see an average reduction in business rates across most centres of between 30-35%,
delivering direct occupational cost savings to our occupiers.
Data Insight
Market Backdrop CONTINUED
Macroeconomic
trend
Driving Forces
& Insights
Impacts and
implications for C&R
Our
Response
Occupational
Markets
Online Impact
The peaks of online penetration seen at the height of
lockdown at around 37% have continued to recede
throughout 2022 settling to around 25% at the start of
2023. While this remains higher than pre-pandemic levels,
growth trends have settled and there are emerging signs
of online market maturity across different sectors. Food
retailing online penetration remains relatively weak at
sub-10% and there are increasing signs of profitability
challenges amongst pure play online operators.
The Covid-19 lockdowns provided a true test bed for
retailers of the importance of the physical store to their
overall retail proposition, through the benefits and overall
trading impact of click and collect, browsing and returns
flexibility, and a recognition of the relative profitability,
and contribution to profitability, of physical stores within
a multi-channel retailing proposition.
Insolvency
Distress amongst retail occupiers was limited across the
year with 22 companies accounting for 1,678 stores failing
during the year, continuing the trend seen in 2021. While
there are concerns that cost of living impacts will put
pressure on consumer spending and retailer sales, which
is likely to lead to other failures, there is equally reason
for optimism that the structural changes seen in physical
retail over the last decade and the more recent impact
of Covid-19 has resulted in the survival of the fittest, with
the emerging retail base reflecting a far better capitalised
retail base to navigate the current economic cycle.
The greater trading pressures have been seen from
the pure play online businesses, with failures including
Misguided, Eve Sleep and Made.com and profit warnings
from a number of major online players.
Business Rates
Covid-19 business rates reliefs over 2022 provided
continued support to retail and leisure occupiers
as they re-built balance sheets emerging from
Covid-19 restrictions.
The publication of the new Rating List that will take effect
in April 2023 shows material reductions in Rateable
Values and consequent rates payable across the majority
of retail and leisure premises. Combined with a freeze on
the Uniform Business Rates multiplier and the removal of
downward transition phasing, occupiers will see the full
benefit of savings from their introduction.
While the impact of online is
now stabilising, many retail
destinations are now faced with
excess retail floorspace. There is
a stark divergence between
those locations where alternative
retail opportunities or profitable
re-purposing to different uses
are credible, and which, as a
consequence, have a secure
future; and those locations where
there is fundamentally excess
floor space, with no alternative
use prospects.
Clarity of purpose is essential for
all retail destinations. Occupiers
increasingly recognise the
value of destinations with clear
functional purpose, be that
community everyday needs or
regionally dominant comparison
centres, and the impact
clarity provides to their own
trading proposition.
Costs of re-merchandising and
lost income through the releasing
/ reconfiguration process can
be a material drag on asset
performance, requiring a
proactive and creative approach
to achieve swift releasing.
Former department stores /
major anchor stores have been
the greatest insolvency failures
in recent years, requiring
creativity to re-merchandise and
often requiring capex-hungry
reconfiguration. Awareness and
knowledge of use beyond retail
is essential.
Material reductions in business
rates, benefitting the majority of
retail and leisure occupiers, will
provide an immediate and direct
benefit to retailer profitability,
improving trading resilience.
This will provide greater ability
to defend rental values and, in
areas of maximum competitive
tension for floorspace, an
opportunity to take some savings
through into rent.
1414
Stock code: CAL Macroeconomic
Driving Forces
trend
& Insights
Impacts and
implications for C&R
Our
Response
Occupational
Online Impact
Markets
overall retail proposition, through the benefits and overall
use prospects.
The peaks of online penetration seen at the height of
lockdown at around 37% have continued to recede
throughout 2022 settling to around 25% at the start of
2023. While this remains higher than pre-pandemic levels,
growth trends have settled and there are emerging signs
of online market maturity across different sectors. Food
retailing online penetration remains relatively weak at
sub-10% and there are increasing signs of profitability
challenges amongst pure play online operators.
The Covid-19 lockdowns provided a true test bed for
retailers of the importance of the physical store to their
trading impact of click and collect, browsing and returns
flexibility, and a recognition of the relative profitability,
and contribution to profitability, of physical stores within
a multi-channel retailing proposition.
Insolvency
Distress amongst retail occupiers was limited across the
year with 22 companies accounting for 1,678 stores failing
during the year, continuing the trend seen in 2021. While
there are concerns that cost of living impacts will put
pressure on consumer spending and retailer sales, which
is likely to lead to other failures, there is equally reason
for optimism that the structural changes seen in physical
retail over the last decade and the more recent impact
of Covid-19 has resulted in the survival of the fittest, with
the emerging retail base reflecting a far better capitalised
retail base to navigate the current economic cycle.
The greater trading pressures have been seen from
the pure play online businesses, with failures including
Misguided, Eve Sleep and Made.com and profit warnings
from a number of major online players.
Business Rates
Covid-19 business rates reliefs over 2022 provided
continued support to retail and leisure occupiers
as they re-built balance sheets emerging from
Covid-19 restrictions.
The publication of the new Rating List that will take effect
in April 2023 shows material reductions in Rateable
Values and consequent rates payable across the majority
of retail and leisure premises. Combined with a freeze on
the Uniform Business Rates multiplier and the removal of
downward transition phasing, occupiers will see the full
benefit of savings from their introduction.
While the impact of online is
now stabilising, many retail
destinations are now faced with
excess retail floorspace. There is
a stark divergence between
those locations where alternative
retail opportunities or profitable
re-purposing to different uses
are credible, and which, as a
consequence, have a secure
future; and those locations where
there is fundamentally excess
floor space, with no alternative
Clarity of purpose is essential for
all retail destinations. Occupiers
increasingly recognise the
value of destinations with clear
functional purpose, be that
community everyday needs or
regionally dominant comparison
centres, and the impact
clarity provides to their own
trading proposition.
Costs of re-merchandising and
lost income through the releasing
/ reconfiguration process can
be a material drag on asset
performance, requiring a
proactive and creative approach
to achieve swift releasing.
Former department stores /
major anchor stores have been
the greatest insolvency failures
in recent years, requiring
creativity to re-merchandise and
often requiring capex-hungry
reconfiguration. Awareness and
knowledge of use beyond retail
is essential.
Material reductions in business
rates, benefitting the majority of
retail and leisure occupiers, will
provide an immediate and direct
benefit to retailer profitability,
improving trading resilience.
This will provide greater ability
to defend rental values and, in
areas of maximum competitive
tension for floorspace, an
opportunity to take some savings
through into rent.
We continue to re-merchandise towards more resilient everyday retail basics and services and away from more
challenged retail categories, where online is a more competitive threat.
We are actively focussed on building our supermarket anchoring as the principal footfall driver and community
requirement, providing resilience and relevance to our income and mix. We continue to broaden our mix of uses,
with the introduction of medical centres and refreshed and flexible food and leisure concepts.
We have successfully re-merchandised the majority of our previous department store anchor spaces, with clear
merchandise strategies and business plan targets to address the remaining residual space during the coming year.
We recognise and embrace the importance of multi-channel retail solutions and seek to ensure our centres provide
an optimal, low-friction experience to our guests and occupying customers, ensuring our community destinations
maintain a strong position in the retail hierarchy.
Affordable total cost of occupation remains a key differentiator for our community assets. We have a relentless
focus on controlling operational costs and delivering value for money services to our occupational customers. We
have been a founding member and active participant of the Shopkeepers' Campaign, which has successfully lobbied
for more frequent rates revaluations and the removal of downwards rates transition. This will ensure our retail and
leisure customers see the full and immediate benefit of significant rates reductions from the start of the April 2023
rating list. Our occupiers will see an average reduction in business rates across most centres of between 30-35%,
delivering direct occupational cost savings to our occupiers.
Data Insight
ISCPNSA3 - Internet Sales: Value Non-seasonally Adjusted Internet Sales As A Proportion of All Retailing
80
70
60
50
40
30
20
10
0
k
e
e
w
r
e
p
s
e
a
s
l
f
o
s
r
e
b
m
u
n
x
e
d
n
I
n
a
J
0
2
0
2
b
e
F
0
2
0
2
r
a
M
0
2
0
2
r
p
A
0
2
0
2
y
a
M
0
2
0
2
n
u
J
0
2
0
2
l
u
J
0
2
0
2
g
u
A
0
2
0
2
p
e
S
0
2
0
2
t
c
O
0
2
0
2
v
o
N
0
2
0
2
c
e
D
0
2
0
2
n
a
J
1
2
0
2
b
e
F
1
2
0
2
r
a
M
1
2
0
2
r
p
A
1
2
0
2
y
a
M
1
2
0
2
n
u
J
1
2
0
2
l
u
J
1
2
0
2
g
u
A
1
2
0
2
p
e
S
1
2
0
2
t
c
O
1
2
0
2
v
o
N
1
2
0
2
c
e
D
1
2
0
2
n
a
J
2
2
0
2
b
e
F
2
2
0
2
r
a
M
2
2
0
2
r
p
A
2
2
0
2
y
a
M
2
2
0
2
n
u
J
2
2
0
2
l
u
J
2
2
0
2
g
u
A
2
2
0
2
p
e
S
2
2
0
2
t
c
O
2
2
0
2
v
o
N
2
2
0
2
c
e
D
2
2
0
2
Total Retail (incl. Fuel)
Food
Clothing & Footwear
Household Goods
Retail Failures 2007 - 2022YTD
s
e
r
o
t
S
8000
7000
6000
5000
4000
3000
2000
1000
0
60
50
40
30
20
10
0
i
s
e
n
a
p
m
o
C
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Stores Affected (LHS)
Companies failing (RHS)
1515
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report
Business Model
We pride ourselves on being experts in Community
shopping and our strength is in repositioning, managing
and acquiring these types of centres.
Key
resources
Key
activities
01
Experienced and
agile management
Through our expert management
platform, we seek to generate and grow
sustainable income and drive capital
value growth by combining active asset
management with operational excellence.
02
Strong capital structure
We have continued to prioritise the
preservation of cash. Each asset is held
in order to generate sustainable income
growth. When asset masterplans have
been successfully executed and future
returns are expected to become less
accretive, we actively seek opportunities
to recycle capital to allow us to reinvest
into assets with greater growth potential.
03
Close relationships
with communities
The utilisation of partnerships with
research/benchmarking firms like CACI,
alongside input from centre teams with
regular engagement with retailers and
local communities ensure our relevance
to the communities in which we operate.
04
Diversified income streams
The ability to evolve the Community
proposition offer and to accelerate
remerchandising into the shift from
discretionary to non-discretionary retail
and services.
Our culture
underpinned
by our values:
Assess product
offering
against local community needs
and expectations
Establish strategic
and comprehensive
3–5 year asset masterplans
for each centre
Our
community
centre
approach
is embedded into our
Key Activities and
our ESG commitment.
Engage specialist
teams
to ensure accelerated
delivery with focus on
optimal performance
Post‑implementation reviews
to refine processes and to inform future
decision-making
Inspiring
Creative
thinking
Encouraging
Collaborative
engagement
Acting
with
Integrity
Delivering
Dynamic
solutions
Leading in
Sustainability
within our communities
16
16
Stock code: CAL
Identify the
right assets
Value for
Stakeholders
Community shopping centres are our core strength.
Assets that typically meet our potential investment
criteria are those that are underperforming
in their catchment but have significant asset
management opportunities.
Underpinned by our ESG focus and our values.
Our environment
Our people
Our community
Read more about our
ESG focus on pages 56–89
Shareholders
By investing in diversified income streams and
maintaining close links to our communities,
we look to drive long-term sustainable growth
which will result in sustained shareholder
return through dividend payments. As a UK
REIT, this is an essential component.
Retailer Customers
and Occupiers
We bring value to our stakeholders through
leveraging our experienced management
platform coupled with frequent, repeat
footfall, high conversion rates and affordable
occupier costs.
Our Employees
Capital & Regional strives for a culture that is
performance led and this is done by creating
a dynamic and positive work environment.
We ensure our staff have the opportunity to
achieve the best from their careers and allow
for continuous development and training
opportunities.
Communities and Guests
Ultimately, our business model provides
attractive retail and leisure environments,
which are consistently evolving to enhance
our guests' experience. We are passionate
about creating vibrant community hubs
for our guests which also support local
employment opportunities.
Our Suppliers
We work with a wide range of suppliers over
the long term in order to make our business
stronger and deliver a competitive edge.
Our culture
underpinned
by our values:
Inspiring
Creative
thinking
Encouraging
Collaborative
engagement
Acting
with
Integrity
Delivering
Dynamic
solutions
Leading in
Sustainability
within our communities
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022
1717
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Strategy
Long term strategy
The importance of our centres in the local
communities has become increasingly apparent
over the course of the last two years.
Despite the difficulties that came with Covid-19 and the current cost of living crisis, our
centres' positions within the community have remained resilient. This further strengthens
our confidence in our overarching community-centric strategy.
Define
Focus
Position
Enhance
Define and own the
community shopping
centre category in the
UK guided by consumer
insight and consistent
with global best practice.
We have focused our
business and resources
around repositioning
and re-purposing spaces
to incorporate new
stores and uses that
reflect the demands of
the communities that
we serve.
Our assets sit at the
heart of their local
communities. Typically
located adjacent to local
transport hubs enabling
easy access via public
transport as well as
available car parking.
The right offer drives
footfall and dwell time,
boosting retailer sales
and thus increasing
the demand, improving
rental income, property
values and consequently
revenue and shareholder
returns.
Our vision
We define and lead community shopping centres, through our passionate creation
of vibrant retail spaces and exceptional customer and guest experience.
To develop and deliver dynamic community spaces that sit at the core of each town
centre, we aim to be more than just a shopping centre. We pride ourselves on fully
integrating our centres into the local community and provide a mix of everyday services
and facilities to satisfy the evolving community needs.
1818
Stock code: CAL Our People
Brenda joined Capital & Regional as Operations
Manager at The Mall, Wood Green in May 2022.
Previously Brenda had enjoyed a successful 36-
year career with Debenhams. Brenda spent much
of her time with Debenhams within the food
industry managing multiple restaurants covering
the Southeast of England including the flagship
Oxford Street store.
Having worked at Wood Green since 2019 as a Soft
Services Manager for Bidvest Noonan, our cleaning
and security contractor, Brenda was able to begin to
showcase her passion for the local community and
businesses, which played a key part in driving her to
achieve operational excellence.
Brenda’s industry experience plays a vital part in
helping to drive C&R company values especially
through communicating with our people, customers
and guests.
Being part of the Wood Green team is a great
opportunity for Brenda to develop her skills and
demonstrate her expertise; her wealth of knowledge
and experience has been central to building
relationships with our retail customers and ensuring
our guests have the best experience possible when
visiting The Mall.
Brenda Wallen
Operations Manager
The Mall Wood Green
19
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Strategy CONTINUED
Define
Focus
Overview:
Our centres are at the heart of what we do. Our
business and resources are focused on enabling
the strong management platform and operational
structure to facilitate timely, responsive and optimal
decision-making in the delivery of our overarching
community centre strategy.
Progress:
The implementation and development of key systems
in the finance and property investment departments
that had started in 2020, continued through 2022. The
investment in technology has helped drive efficiencies
in the production of key management information
enhancing productivity and enabling more informed
decision making and greater speed of execution.
We’re investing in our leasing capability and bringing
different skill sets into our business to assist. We are
recruiting individuals from non-traditional real estate
backgrounds, and they are actively out on the ground
in our local trade areas, sourcing retailers that fit with
our research and data-driven knowledge of our local
communities.
Future focus:
Our people and systems are the backbone of the
business. We are constantly assessing areas for
investment in our in-house management platform, our
people, our systems and data insight as this remains
essential to the successful delivery and growth of our
community strategy.
Overview:
We define and assess our community shopping centre
offer across three key aspects:
• Physical attributes including the location, size and
dominance of the centre and its accessibility in terms
of local transport links and parking provision.
• Products and services including the retail mix, the
provision of grocery, leisure and service offerings and
the quality of facilities.
• Differentiation of our centres to stand out as more
than just a retail destination which would include
the strength of community links, how well-tailored
the offer is to each of our guests, how it contributes
and measures on sustainability and in being a local
employer of choice.
Progress:
2022 was a busy year for the business. The sale
of Blackburn, the completion of the Walthamstow
residential receipt, the acquisition of the Hemel
Hempstead debt at a significant discount,
de-consolidation of Luton and amendments agreed to
the Ilford loan facility have enabled the business to now
focus on further re-merchandising and investment in
its portfolio.
The significant reduction in debt levels and more
stabilised operating environment have enabled us to
commit to investing in our portfolio through a small
number of key capex projects which will further enhance
the merchandising mix in our centres and deliver a
significant uplift in income.
Future focus:
Expand the portfolio through specific acquisitions of
assets that closely align with our community strategy.
Further enhance our centres by focusing on the
five core pillars of our defined winning tenant mix.
These pillars are:
• Selected national brands
• Grocery
• Health & wellness
• Quick service restaurants
• Fashion
We aim to create valuable physical spaces for both
customers and guests to reliably serve the community
needs, providing convenient low- friction fulfilment and
delivering high customer engagement.
2020
Stock code: CAL Position
Overview:
We believe retailers and communities are clear in their expectations for what
they want to see from their Community Centres with a strong mix of everyday
essentials including:
• Grocery, pharmacy and general merchandise;
• Catering options covering express food, great coffee and casual dining;
Personal services including health, beauty, dry cleaners, shoe repairs; and
• Everyday value fashion, children’s wear and leisure.
We aim for our centres to be the first port of call for local residents when it
comes to their shopping needs, therefore making their experiences convenient
and enjoyable is vital.
Progress:
We have made progress this year by continuing to evolve the balance of our
shopping centres through active re-merchandising. The focus for 2022 has
been to reconfigure existing space ensuring any new customers complement
the needs of the local community.
We have seen a considerable increase within the health and beauty sector of
our centres, with the opening of the new diagnostics centre at Wood Green
and the signing of an agreement for lease for the new NHS Community Health
Centre in Ilford. We also have market leaders in the pharmacy sector amongst
our top occupiers. This continues to make health and beauty one of our largest
and growing income sectors.
We have completed a number of lettings in the “Grab and Go” food space with
options relevant to the local community.
Further highlights include:
• An agreement for lease was signed in December 2022 with local operator,
CRATE to run the new 16,000 sq ft Food Hall at 17&Central in Walthamstow.
It is due to open in late summer 2023.
• Construction has commenced on the new ‘Bridgelink’ food court at
Wood Green.
Future focus:
Our leasing focus continues to align with our community merchandising pillars.
Our ongoing focus is to deliver remerchandising and repositioning
opportunities by reducing our portfolio exposure to at-risk categories, such as
fashion and department stores. We are concentrating on repurposing these
spaces to incorporate new stores that are more suited for community use.
We believe in growing the next generation of retailers and are proud of
the support and guidance we are able to provide through our investments.
By working with these retailers, we are encouraged to think and operate
differently. A good demonstration of this at work is through the design &
operational support we provide to small local retailers that occupy temporary
kiosks within our centres. Another great example of this is the CRATE project
at 17&Central where we have provided guidance and expertise to ensure
the retailers are ahead of the curve in their environmental, social and
governance credentials.
We will continue to be mindful of the projects we plan for investment,
balancing prudent capital management with commitments to those projects
that will deliver optimal performance.
Enhance
Overview:
The right offer drives footfall and
dwell time, boosting retailer sales
and thus increasing the leasing
demand, improving rental income,
property values and consequently
revenue and shareholder returns.
Progress:
We have continued to work
with our existing portfolio to
realise potential sales and
recycle the resultant capital into
redevelopment initiatives across
the schemes.
2022 highlights include:
• The exchange and completion of
the sale of The Mall, Blackburn.
• Redefining food catering in
community shopping centres
through projects such as CRATE
and Bridgelink.
• The comprehensive masterplan
for redeveloping the Exchange in
Ilford. This is expected to deliver
key improvements to the net
operating income and overall
merchandising mix and customer
proposition.
Future focus:
Our people and resources are
critical to the delivery of our
community shopping centre
strategy. We will aim to maximise
the value of our assets through
capital expenditure investment
programmes planned to deliver a
capital return over and above the
income enhancement. This will
put the Group in a position to
proactively respond and grow as
the market stabilises.
2121
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Strategy in Action
Health Care and Medical Services
Enhancing the health & wellbeing
options with the NHS
The NHS Community Diagnostic Centre
(CDC) opened its doors in October
2022 at The Mall, Wood Green.
As part of the UK Government's rollout to combat the
Covid-19 backlogs, these community centres are key to
getting people diagnosed quicker.
Providing access to life-saving medical services, they are
a one-stop shop in the community for checks, scans and
tests including ultrasounds, X-rays, blood tests and an
eye clinic. Bringing these services to the doorstep of our
residents fundamentally contributes to enhancing our
needs-based retail offer.
With further plans to expand the NHS CDC into a phase 2
at The Mall, Wood Green as well as exploring similar
concepts to be rolled out in our other centres such as
Exchange, Ilford.
Ilford Community Healthcare centre
In May 2022 we signed an agreement
for a 25 year indexed lease with the
local NHS trust for a new community
healthcare facility at our Ilford
Exchange, shopping centre.
The 20,000 sq ft facility will be on the top floor of the
centre helping drive footfall traffic to and throughout the
centre. As well as providing a new community anchor
use it presents opportunities to merchandise around the
centre with complimentary health offers.
Planning permission was obtained in October 2022 and
construction commenced on site in early 2023 ahead of a
planned opening in summer 2024.
2222
Stock code: CAL Food catering
Enhancing Food catering options in
17&Central & Wood Green
We have recognised the need for more interactive
spaces and accommodating food options for our
communities in Walthamstow and Wood Green.
In conjunction with this we have identified the growing popularity
of the Food Hall concept and how this can contribute to a vibrant
community atmosphere.
The CRATE project at 17&Central, Walthamstow, is expected to open
in July 2023. CRATE was selected amongst several different offers from
similar operators due to their established ties to the community as well
as their ethos of offering start-ups, small and growing businesses the
opportunity to expand. The relocation of CRATE from an existing property
in Walthamstow into 17&Central will bring a loyal and proven guest base
from local residents.
The aim of our centres is to create a hub for the local residents, and the
concept of a communal dining space with diverse food options and a
leisure & entertainment offer perfectly aligns with our strategy.
Bridgelink Wood Green
The Bridgelink project is the latest
development of the first floor at
The Mall, Wood Green.
Formally an empty bridge space, our plans are to create
six street-eats style kiosk units totalling 1,200 sq ft.
The area includes communal seating, serving to fulfil the
demands for increased food and beverage options within
Wood Green.
Planned operators include a Thai, Indian, Middle Eastern,
American and Japanese street-food offers, with unique
branding, design and menus.
The project is targeting an opening date of May 2023.
2323
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Key Performance Indicators
Financial
Adjusted profit1,2
Adjusted profit per share1,2
Dividend per share
£10.3m
£8.8m
£11.0m
2022
2021
2020
2019
2018
£27.4m
£30.5m
6.2p
7.3p
10.2p
2022
2021
2020
2019
2018
36.7p
42.3p
5.25p
2022
2021
–
2020 –
2019
2018
21.0p
24.2p
Why we use this as an indicator
Why we use this as an indicator
Why we use this as an indicator
Adjusted Profit seeks to track the
recurring profits of the business
which is the key driver for dividend
payments.
How this links to our strategy
We target delivering a strong and
sustainable income return.
Progress during the year
The improvement in Adjusted Profit
of £1.5 million or 17.0% reflects the
improved operational performance of
the business in its recovery from the
impact of Covid-19. Occupancy, car
parking income and rent collection
metrics all improved over the year
and Snozone’s EBITDA contribution
also improved by £0.6 million
reflecting a more normalised
trading year.
Link to strategy
Enhance
Link to risks
2 9
Adjusted Profit seeks to track the
recurring profits of the business
which is the key driver for dividend
payments. Assessing this on a per
share basis reflects both underlying
profitability and any changes in the
Group’s shareholding structure such
as the raising of new equity.
How this links to our strategy
We target delivering a strong and
sustainable income return.
Progress during the year
Adjusted Profit per share decreased
by 1.1p. This was a result of the
dilutive impact of the £30 million
share issue completed in November
2021 partially offset by the
improvement in Adjusted Profit.
Link to strategy
Enhance
Link to risks
2 9
This is the cash return to be delivered
to investors in respect of the year
under review.
How this links to our strategy
Dividends are a key element of
shareholder returns. We aim to
preserve strong income return
to shareholders and meet our
requirements under the REIT regime,
balanced with managing cash within
the business to fund investment in
capital expenditure and mitigate the
impact on leverage.
Progress during the year
Reflecting the stabilisation of
operating and investment markets
from the impacts of Covid-19,
the substantial progress made in
reducing debt levels and the Board’s
confidence in the future prospects,
the Group resumed dividend
payments during 2022. Subject to
shareholder approval at the AGM the
Group is proposing a final dividend
of 2.75p per share resulting in a
total dividend for the year of 5.25p
per share.
Link to strategy
Enhance
Link to risks
2 4 9
2424
Stock code: CAL Net rental income2
EPRA net tangible assets
per share
Net debt to property value
2022
2021
2020
2019
2018
£23.5m
£21.7m
£34.1m
£49.3m
£51.9m
103p
102p
157p
2022
2021
2020
2019
2018
364p
596p
2022
2021
2020
2019
2018
41%
49%
46%
48%
65%
Why we use this as an indicator
Why we use this as an indicator
Why we use this as an indicator
This is the key driver of Adjusted
Profit.
How this links to our strategy
Net Rental Income is the most critical
component of our Adjusted Profit and
the source for maintaining a strong
and sustainable income return.
Progress during the year
Net Rental Income improved by
8.3% to £23.5 million reflecting the
improved operational performance
of the business in its recovery from
the impact of Covid-19 with higher
occupancy, car parking income and
rent collection all contributing to
the increase.
Link to strategy
Position & Focus
Link to risks
2 6 9
This is a measure of the movement
in the underlying value of assets and
liabilities underpinning the value of a
share.
How this links to our strategy
We aim to maximise the value of
our assets. Our capital expenditure
investment programme is planned
to deliver a capital return over and
above the income enhancement.
Progress during the year
EPRA NTA increased by 1p on 2021.
This reflected the net impact of the
Adjusted Profit for the year, the gains
recognised from the discounted debt
purchase on Hemel Hempstead and
deconsolidation of Luton offset by a
revaluation loss driven by the general
expansion in property yields across
all property sectors in the second half
of 2022.
Link to strategy
Position & Enhance 1 2
Link to risks
We aim to manage our balance sheet
effectively with the appropriate level
of gearing.
How this links to our strategy
Having the appropriate level of
gearing is important to effectively
manage our business through the
property cycle.
Progress during the year
Net debt to property value decreased
significantly in the year from
49% to 41%, despite a 3.6% fall in
valuations. The improvement was
driven primarily by the £40 million
sale of The Mall, Blackburn and the
realisation of the £21.65 million
residential receipt on Walthamstow
which were used to reduce the debt
outstanding on The Mall.
Link to strategy
Enhance
Link to risks
1 2 3
Key
1
2
3
Property investment Market Risks
Impact of the Economic
Environment
Treasury Risk
4 Tax and Regulatory Risks
5 People & Skills
6 Development Risk
7 Business Disruption from a Major
8
Incident
Environmental, Social &
Governance
9 Customers & Changing Consumer
Trends
10 IT & Cyber Security
11 Climate Related
12 Health & Safety
Notes
1. Adjusted Profit, Adjusted Earnings per share, Net Rental Income, Net Debt and the Snozone
EBITDA metric are as defined in the Glossary. Adjusted Profit incorporates profits from
operating activities and excludes revaluation of properties and financial instruments, gains or
losses on disposal, and other non-operational items. A reconciliation to the equivalent EPRA
and statutory measures is provided in Note 9 to the condensed financial statements.
2. 2021 comparative figures have been restated for a prior year adjustment to the treatment
of rent concessions due to an IASB IFRS interpretation issued in October 2022 as detailed in
Note 1 to the condensed financial statements. The amendment stipulates that losses which
were incurred on granting rent concessions, which for the Group occurred during the Covid-19
pandemic, should be charged to the income statement in the year they are granted. 2021
revenue has also been impacted by the reclassification of Luton as a Discontinued Operation.
The combined impacts of the restatements have reduced 2021 Revenue by £15.4 million,
increased 2021 Adjusted Profit by £0.7 million and increased IFRS profit for the year by
£2.3 million. The Adjusted Profit for 2022 is £0.3 million higher than it would have been without
the adjustment to rent concessions.
2525
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Key Performance Indicators CONTINUED
Non-Financial
Footfall
Occupancy
2022
2021
2020
2019
2018
+27.4%
National Index +30.2%
+8.5%
National Index +5.7%
+1.2%
National Index -3.5%
-41.6%
National Index -45.3%
-3.2%
National Index -4.9%
2022
2021
2020
2019
2018
Total Scope 1 & Scope 2
tCO2e1
94.1%
92.7%
92.1%
97.2%
97.0%
2022
2021
2020
2019
3,768 tCO2e
4,078 tCO2e
4,908 tCO2e
6,490 tCO2e
Why we use this as an indicator
Why we use this as an indicator
Why we use this as an indicator
Footfall is an important measure of
a centre’s popularity with guests.
Occupiers use this measure as a key
part of their decision-making process.
We aim to optimise the occupancy
of our centres as attracting and
retaining the right mix of occupiers
will enhance the trading environment.
Total Carbon Emissions is a key
measure to ensure we are minimising
the negative impact of our assets on
the environment.
How this links to our strategy
How this links to our strategy
How this links to our strategy
Footfall performance provides
an indication of the relevance
and attractiveness of our centres,
influencing occupier demand and
future letting performance.
Progress during the year
Footfall across portfolio during 2022
was 27.4% higher than in 2021.
Footfall showed a general trend
of an improving recovery to pre-
pandemic levels with the whole year
representing levels equivalent to
84.3% of 2019, compared to 79% for
the first six months.
Link to strategy
Define & Position
Link to risks
2 9
Occupancy has a direct impact on
the profitability of our schemes and
also influences footfall and occupier
demand.
Progress during the year
Occupancy at 94.1% increased by
1.4% from 30 December 2021 with
one of the main drivers being the
inclusion of the NHS medical centre
at Ilford following receipt of planning
permission in October 2022.
Link to strategy
Define & Position
Link to risks
2 5 9
In order to truly embody our ESG
values it’s imperative that we lead in
sustainability within our communities.
Continuing to reduce our carbon
emissions plays an integral role in this
and assists us in our progress toward
our goal of net zero by 2040.
Progress during the year
We reduced our carbon emissions
across the UK portfolio by 42% in
2022 compared to 2019 figures. One
of the main drivers of this is a steady
reduction in energy consumption
through targeted reduction of gas
usage across the assets, initiatives
to reduce electricity use and the
implementation of solar panels.
Link to strategy
Define & Position
Link to risks
2 8
Key
1
2
3
Property investment Market Risks
Impact of the Economic
Environment
Treasury Risk
4 Tax and Regulatory Risks
5 People & Skills
6 Development Risk
7 Business Disruption from a Major
8
Incident
Environmental, Social &
Governance
9 Customers & Changing Consumer
Trends
10 IT & Cyber Security
11 Climate Related
12 Health & Safety
Notes
1. These figures are in relation to UK-based
assets only
2626
Stock code: CAL Our People
Gavin joined the business as a General Manager in
May 2020, following a successful career with multiple
fashion retailers in London’s West End, including
managing the former flagship Topshop store at Oxford
Circus, plus time overseeing key stores for New Look
and Debenhams.
Gavin’s passion is people; either supporting their
development and success as part of his team or ensuring
that all guests have the best possible experience
when they visit. He demonstrates these characteristics
proficiently as the General Manager of both The Mall,
Maidstone and 17&Central.
Gavin utilises all his previous experience within the retail
sector along with the new C&R company leadership
training programmes to support his two centres,
their guests and teams through exciting periods of
re-development. Rather than running as shopping malls,
Gavin views the centres as one large department store,
working towards creating a vibrant and unified space for
the community.
As a member of the ESG sub-committee Gavin focuses
on building strong relationships with the local residents,
retailers and borough council. This is to ensure that the
centres continue to implement sustainable practices,
reduce waste and play an integral part in the wider
community helping to reduce our overall impact on
the environment.
Gavin Cockayne
General Manager
The Mall Maidstone
& 17&Central
2727
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Chief Executive’s Review
The return to physical retailing
by consumers, communities and
retailers has been faster and more
comprehensive than many retailers
and analysts had envisaged.
Lawrence Hutchings
Chief Executive
I would like to start by
echoing the Chairman’s
comments about the
positive progress made
across all aspects of the
Group over the course of
2022, which have led to
this strong set of results
underpinned by further
improvements at an
operating level driven by
demand-led growth in
rental income.
In writing this statement I felt
compelled to look back over 2022
with the realisation it was a year of
two halves, and how challenging the
second half has been for both UK plc
and the global economy. It is easy to
forget that we were still in varying
forms of Covid-19 restrictions in the
first quarter of 2022. These had a
significant impact on our operations,
albeit through the restrictions in 2020
and 2021 our teams had learnt how
to support our communities, with
providing safe access to our essential
goods and services, and each other
alongside protecting our business
through the varying disruptions.
During the second quarter of 2022,
we witnessed a sense of optimism
throughout the retail sector after
two years of significant disruption
and an acceleration in the long
cycle structural changes driven
by technology, specifically online
retailing. The restrictions on physical
retail forcing retailers and consumers
online through a closure of all but
essential stores had provided the
catalyst to test the role of the physical
store in the distribution of goods
and services. I am pleased to say
that the market is now starting to
once again appreciate the critical
role that the physical store plays,
a vital and expanding function in
what remains one of the largest
sectors of the UK economy. We have
seen first-hand the renewed focus
on the physical store with better
leasing and occupancy outcomes
throughout 2022 across our portfolio
of community centres.
The impact of a maturing in online
migration is very significant to
the future of physical retailing
and accordingly to our business
and community centre strategy.
The return to physical retailing
by consumers, communities and
retailers has been faster and more
comprehensive than many retailers
and analysts had envisaged. We
believe the future of retailing
will be a seamless, omnichannel
ecosystem where the store plays
a vital role in selling goods and
services, facilitating, and lowering
the cost of last mile, forward and
return logistics and in the acquisition
of new customers. The continued
evolution of the physical store is
positive for our community centre
strategy which envisaged the
challenges of online disruption when
it was launched in December 2017.
Encouragingly our retailer tenants
often tell us that our stores are
some of the most profitable in their
operations, particularly in an era
where the operational cost of online
is increasing. The recent review of
rateable values will also see our
retailers benefit from significant
savings in business rates payable
from April 2023 with the typical
reduction at our centres around
30%-35%.
In locations where we are most
progressed with delivering our
community strategy, including Wood
Green and Walthamstow in London,
we are seeing the greatest benefits
to our stakeholders with a recovery
in footfall, and occupancy as well as
encouraging leasing outcomes which
are driving growth in rental income.
We have also seen a good recovery
from our Snozone business with an
EBITDA contribution of
£1.4 million (2021: £0.8 million)
reflecting a more normalised trading
year and significant progress in our
Snozone Madrid operation that was
acquired in February 2021.
These factors and the hard work of
our teams supported a recovery in
our operational business, together
with the stability in our balance sheet
that our ‘Refocus, Restructure and
Recapitalise’ transaction provided.
The culmination of these actions has
enabled us to reinstate our dividend
after more than two years and we are
pleased to be a fully functioning Real
Estate Investment Trust once again.
Following the ongoing tragic events
in Ukraine, and wider global cost-
of-living and inflationary pressures,
we witnessed a rapid unravelling
of quantitative easing by central
banks in the second half of 2022.
This created further uncertainty
for the sector with the prospect of
2828
Stock code: CAL higher energy and food costs
impacting consumer confidence
and spending. To date, the UK
Consumer has proven more
resilient than many forecasts
or indices have suggested.
This was evidenced in a more
resilient performance over the
key Christmas trading period,
relative to media and industry
predictions. Nonetheless, we
remain vigilant and cautious
of the impact of inflationary
pressures as we look to
accelerate the roll out of our
community strategy through
active repositioning of our
centres via the deployment of
our capex programme. Replacing
discretionary retail with essential
community centre retailers
such as supermarkets and NHS
medical centres remains a key
income and value driver for
the Company.
Our operational focus in the
short to medium term is clear:
to recover income and value
lost over the past two years
through increasing occupancy,
converting temporary let shops
to permanent, delivering the
additional income from our capex
programme and streamlining our
cost base.
We are not immune from the
impacts of high inflation or
higher interest rates on property
valuations. However, following
six years of rebasing in rents
and valuations we are better
positioned than many sectors of
the commercial property market
with higher yielding, well-let
centres in strong growing urban
locations, especially in London,
which now represents more than
85% of our portfolio by value.
Our commitment to ESG
continues and we are very
proud of all the work we have
undertaken in partnership
with over 180 charities in
the communities we serve,
supporting those most in need.
I cannot recall a time when our
support is more necessary. One
of my favourite charities is the
Level Trust in Luton which has
provided more than 4,000 school
uniforms for children from
households who are unable to
afford them. Key to us being able
to tailor our support to where it is
most needed is our relationships
with the local councils. I was
humbled whilst attending
a function in Walthamstow
where the council described
our relationship and support
as “exemplar”.
Continuing on the theme of
making a difference to people’s
lives, our GEMS (‘going the extra
mile’) awards highlight the often
extraordinary lengths our onsite
team(s) go to in order to assist
members of our communities.
This can be as simple as helping
people who have encountered
difficulties, or visitors just
appreciating having someone to
chat to, at our guest service desks
or in our security teams, on their
regular visits to our centres.
Outlook
The macroeconomic environment
continues to present a challenging
backdrop, most prominently through
the impact of inflationary pressures
on the consumer exacerbated by the
tragic war in Ukraine.
Nonetheless, the actions taken over
the last 18 months to restructure
the balance sheet and refocus
the portfolio have stabilised and
significantly strengthened the
business. This, aligned with our
operational resilience and a growing
appreciation of the critical role which
physical stores play in successful
omnichannel retailing, leave us
well positioned to withstand such
pressures. The profile of our assets
with their focus on non-discretionary
goods and services, the previous
resetting of rents and values, and the
portfolio premium to the risk-free
rate, puts us in a stronger position on
a relative basis than some other retail
property assets and the wider real
estate sector.
We have a clear roadmap to increase
Adjusted Profits by more than 20% in
the medium term and are also well
placed to take advantage of selective
opportunities to grow the business
and further utilise our proven skills
and management expertise.
Finally, I would like to thank our team
members for all their hard work
over the past year in ever changing,
often unfamiliar and challenging
circumstances both professionally
and personally.
We remain committed to navigating
the economic and sectoral
challenges whilst delivering for
all our stakeholders of which
our shareholders are of critical
importance. We are ambitious as
owners of commercial property
and stewards of capital and we
will continue our relentless focus
on improving every aspect of
our business.
Thank you to all our shareholders.
Lawrence Hutchings
Chief Executive
2929
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report
Operating Review
New lettings, renewals and rent reviews1
New lettings
Number of new lettings
Rent from new lettings
Renewals settled
Renewals settled
Total resulting annual rent
Combined new lettings and renewals
Comparison to previous rent2
Comparison to ERV at December 20202
12 months to
December
2022
12 months to
December
2021
71
£3.4m
38
£2.0m
89
£4.0m
54
£1.2m
+34.0%
+13.7%
+7.3%
+15.6%
1.
Includes transactions for Hemel Hempstead, Ilford, Maidstone, Walthamstow, Wood Green and Blackburn (until the
point of sale in 2022).
2. For lettings and renewals (excluding development deals and CVA variations) with a term of five years or longer which
do not include turnover rent or service charge restrictions.
Demonstrating the team’s ability to capture rental growth and the continued demand for
space at our centres, we completed 109 new lettings and renewals during the year, securing
annualised rent of £5.4 million at a combined average premium to previous rent of 34.0%2 and
to previous ERV of 13.7%2. This was fewer deals than 2021 but a higher total value (2021: 143
new lettings and renewals for a combined annual rent of £5.2 million).
Highlights include signing an agreement for lease with the NHS for a new Community Healthcare
Centre at Ilford on a 25-year lease term. Planning permission was obtained in October 2022 and
construction work commenced at the end of 2022. The new 20,000 sq ft purpose-built facility
is due to open to the public in 2024. At Wood Green the new NHS diagnostics centre opened in
October 2022 and we subsequently signed an agreement to extend it by a further 3,000 sq ft, to
approximately 8,500 sq ft.
Also at Ilford, we signed an agreement to relocate and upsize TK Maxx into a new 35,000 sq
ft store occupying the first floor of what was the former Debenhams unit. This will enable
remerchandising of the existing TK Maxx unit which sits in a prime location at the entrance next
to Ilford station, which will benefit from the full opening of the new Elizabeth Line.
At Walthamstow we have let the entire new 16,000 sq ft food hall on the mezzanine level, which
we created in the rebuild following the 2019 fire, to a great local operator, CRATE. The facility will
involve seven street eat style food operators alongside an in-house bar and coffee kiosk, coupled
with events and exhibition space, all of which is due to open in late summer 2023.
3030
Stock code: CAL All of these initiatives are great examples of our strategy in action and further embed our
centres at the heart of their local communities, helping drive footfall to the benefit of the other
retailers while providing all in one convenience and experience to our guests.
Rental income and occupancy
Investment Assets1
Occupancy (%)
Contracted rent
Passing rent
December
2022
December
2021
94.1%
31.5
30.5
92.9%
31.8
30.0
1.
Investment Assets include the Group’s centres at Hemel Hempstead, Ilford, Maidstone, Walthamstow and Wood
Green. Prior year comparatives restated on the same basis.
Occupancy increased by 120 basis points over the year to 94.1%, with one of the main drivers
being the inclusion of the NHS Community Healthcare Centre at Ilford. Only around 4% of the
total now relates to temporary lettings or development units. as we have gradually improved
this from approximately 7% over the last 18 months. The potential to convert more of these
temporary arrangements to permanent lettings on typically stronger terms provides opportunity
to improve Net Rental Income.
Contracted rent is broadly in line with the December 2021 level. This excludes approximately
£1.2 million of rent where deals have exchanged but completion remains subject to planning
or other conditions. Such deals include the NHS Community Healthcare Centre at Ilford and the
new CRATE food hall at Walthamstow.
Passing rent has improved by £0.5 million to £30.5 million since 30 December 2021, with the
largest contributor being the letting to the Department for Work and Pensions for Job Centres at
Ilford commencing cash rent payments during the period.
Operational performance
In total there were 53 million shopper visits across the portfolio during 2022. This was 27.4%
higher than in 2021. This increase is 2.8% lower than the growth in the national index, reflecting
the Company’s strong out performance in 2021 when non-essential retailers were unable to open.
Footfall continued to recover to pre-pandemic levels with the 2022 levels equivalent to 84.3% of
2019, compared to 79% for the first six months. Anecdotal evidence from our retailers suggests
that sales have bounced back at a higher rate than footfall reflecting more efficient use of visits.
Car park income for the year was £6.0 million for the Group’s Investment Assets, approximately
26% higher than 2021 although 29% lower than 2019 both on a like for like basis excluding
Blackburn.
Business rates
The recent review of business rates will result in a significant reduction in rates payable for
most retail operators. Across our portfolio the typical reduction that will apply to occupiers
will be 30%-35%, with the exception of Walthamstow where reductions are estimated to be
approximately 10%. The withdrawal of downwards transitional arrangements means that
occupiers will immediately see the full benefit of reductions from April 2023. The changes will
deliver significant benefits to store affordability and profitability.
Rent Collection1
97.6% of rent in respect of 2022 has now been collected, broadly representing a return to
pre-pandemic levels and an approximate 4.5% increase on 2021. The improved collection rates
have enabled the net release of provisions totalling c. £1.4 million. The table below provides
further detail:
Rent collected
Outstanding
Bad Debt
Total billed
Rent collection
12m to 30 December 2022
£m
31.2
0.6
0.1
31.9
%
97.6%
2.2%
0.2%
100%
1.
Investment Assets include the Group’s centres at Hemel Hempstead, Ilford, Maidstone, Walthamstow and Wood
Green. Prior year comparatives restated on the same basis.
Rent collection for the first quarter of 2023, including monthly invoices for January and February
2023, is currently running at 91.9%.
3131
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Operating Review CONTINUED
Capital expenditure investment
In total £9.0 million was invested across the
Group’s Investment Assets in 2022.
£5.3 million was invested in planning fees,
enabling works and other costs including
relocating tenants, all to facilitate delivery of
the £21.6 million Walthamstow residential
land sale receipt. Other projects included
£0.8 million for the creation of the new Job
Centre at Ilford which opened in March 2022,
£0.8 million across the NHS and TK Maxx
projects in Ilford and £0.4 million on the new
Walthamstow Food Hall.
We anticipate capital expenditure in 2023
to be more than £15 million with the major
projects being:
• Ilford – NHS Community Healthcare Centre
and TK Maxx, c. £10.0 million
• Walthamstow – CRATE food hall,
c. £1.5 million
• Wood Green
• Remerchandising of former WH Smith
unit to leisure uses, £1.9 million
• Bridgelink new grab and go catering units,
c. £0.7 million
The average yield on cost of the above
projects is expected to be in the range of
8-9%. This financial metric does not factor in
the ‘halo’ effect these improvements have in
terms of driving footfall and sales across the
centres as a whole.
Shopping Centre ESG
For the shopping Centre portfolio, we have
established our Net Zero Carbon (NZC)
Pathway aligned with industry best practice
and guidelines, including the UKGBC’s
definition of net zero and the Better Building
Partnership’s (BBP) Climate Commitment,
both of which we are now signatories. Our
NZC Pathway quantifies and prioritises
the necessary emission reductions to our
target year of 2040 and beyond and includes
ambitious emission reduction targets across
Scope 1 and 2. The creation of our NZC
Pathway is an important milestone on our
journey and defines the actions and priorities
we need to put in place to stay true to our
commitment to our communities, employees
and the long-term resilience and success of
our business.
We have upskilled our operational teams
through training on sustainability awareness,
especially in relation to supporting our
occupiers and helping to reduce Scope
3 emissions. We are in the process of
developing an occupier engagement
programme on sustainability to increase
awareness and profile.
We have made significant strides against our
environmental targets increasing our energy
efficiency, reducing Scope 1 natural gas
consumption by 53% and Scope 2 electricity
consumption by 20%, against 2019.
In addition to developing our NZC pathway we
have also completed a detailed assessment
of climate risk governance and the climate-
related risks aligned to best practice
recommendations of the Task Force of
Climate-related Financial Disclosures (TCFD).
By formalising oversight of issues into our
risk management framework, we can mitigate
the risks and garner related opportunities,
such as reducing operational costs and capital
expenditure and increasing revenues and
asset values.
2022 was a year of giving back, putting our
communities and guests at the core of our
initiatives. Following a successful launch
in 2021, the Community Wheel of Support
continued to play a critical role in encouraging
engagement and supporting our shopping
centres to prioritise areas of impact. We set
out nine KPI targets to align with our Wheel of
Support. Improving from 2021, we saw an 11%
increase in the number of charities supported,
a 15% increase in volunteering hours and a
9% increase in charitable fundraising.
To account for local needs, our shopping
centres are given the responsibility and
autonomy to run their own fundraising
events. In 2022, we hosted a total of
244 events, collectively supporting
187 charities and volunteering more than
1,300 hours of employees’ time to important
community causes.
Snozone
Snozone recorded a significant improvement
in EBITDA for the year to £1.4 million
(December 2021: £0.8 million) as it returned
to a more normalised trading year. Total
revenue for 2022 increased to £13.0 million
(2021: £6.8 million), although trading in the
early part of 2022 was still heavily impacted by
the Omicron variant, with revenue in the key
month of January down 20% on pre-pandemic
levels. From mid-February 2022, Snozone has
been able to offer guests its full offering in
contrast to 2021 when the UK venues were
shut for the first four months of the year due
to government restrictions. As the impact
of the Omicron variant subsided, Snozone
made a good recovery and revenues generally
exceeded the equivalent levels in 2019
although some key revenue streams such as
corporate activities and food and beverage
have not yet returned to pre-pandemic levels.
3232
Stock code: CAL EBITDA in 2021 was supported by the receipt
of a £2.5 million insurance payment under a
pandemic insurance policy that the business
has maintained since 2017.
reduction in carbon tonnage by 8% to
2,633 tonnes versus 2,857 tonnes in 2019.
All of Snozone’s electricity is 100% renewable
and is sourced from wind and solar power.
The integration of the operations of the
ski slope in the Xanadú shopping centre in
Madrid, which was acquired in February 2021
for a nominal value, has progressed well
with revenues increasing 65% to £3.5 million
(2021: £2.1 million). The impact of significant
increases in government-controlled electricity
prices to £1.2 million (2021: £0.7 million) has
latterly been mitigated by the installation of
solar panels which became operational in
November 2022.
Snozone’s Group IFRS profit for the period,
which includes the notional IFRS 16 interest
charge on the occupational leases, was
£0.1 million (December 2021: Loss of
£0.3 million). The prior year benefited from
£1.4 million of VAT rebate received in addition
to the £2.5 million insurance payment.
Snozone ESG
Snozone’s pathway to net zero strategy is
underpinned by a cyclical four-year plan
for capital investment into new plant and
machinery which we are now halfway through.
Nine units of blast coolers have been replaced
at the Milton Keynes venue which will save
214,000 kWh per year. In addition, given the
significant increase in government-controlled
electricity pricing in Madrid, solar panels were
fitted to the roof of our venue and were fully
operational as of November 2022.
These two initiatives helped deliver a 6%
reduction in electricity utility consumption
in 2022 versus the 2019 base year and a
23% reduction in gas. There was an overall
New supplier deals have been agreed for
Snozone’s restaurants. All coffee, non-
alcoholic and alcoholic beverages are supplied
in 100% recycled glass, recycled aluminium
cans or compostable boxes. Snozone’s
shop merchandise and clothing provider
also delivers all products 100% free of
plastic packaging.
Snozone maintained its partnership with Tree
Nation last year, planting trees when guests
rebook certain activities or join as members
to offset their emissions of visitation. These
trees are planted in areas of the world where
biodiversity and reforestation are most
needed. Over 11,500 trees to date have now
been planted in Africa with over 9,000 planted
in 2022 - offsetting over 1,400 tonnes of CO2
and now reforesting over 14 hectares of land.
Snozone’s other social KPIs include an
increase in disability snow sports participation
by 29% versus 2021 and Snozone is the
only European indoor centre to own and
operate its own disability snow school. In
addition, Snozone was once again voted
Best Sporting Venue for children learning
outside the classroom at the School Travel
Awards, beating such illustrious businesses
as The London Stadium, Manchester United,
Silverstone, Twickenham Stadium and the
UK Sailing Academy. Snozone was also voted
partner of the year by Sense, the charity
for deafblind adults and children for the
awareness its team has drawn to the charity,
as well as its many fundraising activities.
33
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Refocus, Restructure and Recapitalise
The Group’s actions over the last 18 months have significantly reshaped
the business and reduced debt to sustainable levels. Following on from the
transaction to restructure the Group’s largest facility, The Mall, and the £30m
capital raise which completed in November 2021, a number of other key
initiatives were completed during 2022:
Ilford loan amendment
In May 2022, the Group signed a
package of amendments to its
£39 million secured loan facility in
respect of The Exchange Centre, Ilford,
to facilitate the investment of more
than £10 million for the creation of
the new NHS Community Healthcare
Centre and anchor unit for TK Maxx.
The amendments include a conditional extension option
that can be triggered by the Company at the end of 2023 to
extend the loan maturity by 18 months from March 2024
until September 2025. They also provide a combination of
covenant waivers and improvements to existing covenant
terms that apply through to the end of 2024.
Restructuring of The Marlowes Centre,
Hemel Hempstead debt
Also in May 2022, the Group completed
the buyback of the loan facility of the
Marlowes in Hemel Hempstead.
The Group paid £11.8 million in order to settle the
loan and associated debt liabilities of c. £24.0 million,
representing a discount of approximately 51%. The
transaction increased the Group's Net Asset Value by
approximately £12.5 million or 7.4%. The asset was
reclassified to the Group’s Investment Assets as of
11 April 2022, being the date the transaction was agreed,
and NRI from the asset is included from that date.
To partially fund the transaction, the Group subsequently
drew down a new £4.0 million loan facility in July 2022,
which was provided by BC Invest, a subsidiary of the
Group's strategic residential partner Far East Consortium.
The new non-recourse secured debt is for an initial period
of three years at a margin of 5.95% over SONIA.
3434
Stock code: CAL Sale of The Mall, Luton
As part of the agreement with the secured lender to run
a consensual sale process, changes to the constitution of
the Luton entities were made in May 2022 including the
appointment of an independent director with specific
rights regarding the sale process. The effective change of
control that these amendments triggered resulted in the
Group deconsolidating its interest in Luton from that date.
This increased the Group’s Net Asset Value by £6.8 million being the net liabilities
at the point of deconsolidation. The disposal of the Group’s investment in The Mall,
Luton completed on 16 March 2023. Given the Group’s interest in Luton had been
deconsolidated the sale did not result in any profit or loss on disposal. The Group’s
involvement as Property and Asset Manager, for which it generated fees of £1.4 million
in 2022, ceased upon disposal. Luton has been deconsolidated the sale will not result
in any profit or loss on disposal. The Group’s involvement as Property and Asset
Manager, for which it generated fees of £1.4 million in 2022, will cease upon disposal.
Walthamstow residential
In July 2022, the Group completed
the sale of land for residential
development at its 17&Central
community shopping centre in
Walthamstow to Long Harbour for
£21.65 million.
The Group had secured planning consent at the end
of 2021 for a residential-led, mixed use development,
incorporating a new Victoria Line tube station entrance
and new public space including a new park. Construction
work is now underway on the first phase of the
development which will see the creation of 495 Build to
Rent residential apartments in two residential towers.
Completion is scheduled for 2025.
£52.9 million of the combined c. £60 million received
from the Blackburn and Walthamstow transactions was
utilised for repayment of the debt on the Group’s Mall
loan facility. This reduced the outstanding amount to
£140 million and repaid in full the remainder of the £35
million Facility B tranche that was drawn to help fund
the repurchase of £100 million of debt in November
2021. The combined impact of the above transactions
has helped further reduce the Group’s Net Loan to
Value ratio from 49% at 30 December 2021 (and 72% at
30 June 2021) to 41% at 30 December 2022.
3535
Sale of The Mall, Blackburn
In May 2022, the Group exchanged
contracts for the sale of The Mall,
Blackburn to the retail arm of the
Adhan Group of Companies for
£40 million, representing a premium
to the £38.2 million December
2021 valuation.
The sale completed in August 2022 delivering net
cash proceeds of £39 million. The sale alone reduced
the Group's Net Loan to Value ratio by approximately
600 basis points.
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Financial Review
The Group’s actions over the
last 18 months have significantly
reshaped the business and
reduced debt to sustainable levels.
Stuart Wetherly
Group Finance Director
Profitability
Statutory Revenue1
Net Rental Income (NRI)1
Net Rental Income (NRI) – Investment Assets only1
Adjusted Profit1,2
Adjusted Earnings per share1,2
IFRS Profit/(loss) for the period
Basic earnings/(loss) per share
EPRA cost ratio (excluding vacancy costs)1,2
Net Administrative Expenses to Gross Rent1
Investment returns
Net Asset Value
Net Asset Value (NAV) per share
EPRA NTA per share2
Proposed Final Dividend per share3
Total Dividend per share3
Financing
Group net debt
Group net debt to property value
EPRA LTV
Average maturity of Group debt4
Cost of Group debt (weighted average)
Year to
December
2022
Year to
December
20212
£60.6m
£23.5m
£23.5m
£10.3m
6.2p
£12.1m
7.3p
37.8%
22.4%
£179.1m
106p
103p
2.75p
5.25p
£130.9m
41%
44.0%
4.5 years
3.58%
£54.6m
£29.7m
£21.7m
£8.8m
7.3p
£(24.1)m
(20.0)p
49.6%
29.1%
£168.4m
102p
102p
–
–
£185.3m
49%
64.1%
5.4 years
3.74%
1. 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions due
to an IASB IFRS interpretation issued in October 2022 as detailed in Note 1 to the condensed financial statements.
The amendment stipulates that losses which were incurred on granting rent concessions, which for the Group
occurred during the Covid-19 pandemic, should be charged to the income statement in the year they are granted.
2021 revenue has also been impacted by the reclassification of Luton as a Discontinued Operation. The combined
impacts of the restatements have reduced 2021 Revenue by £15.4 million, increased 2021 Adjusted Profit by
£0.7 million and increase IFRS profit for the year by £2.3 million. The Adjusted Profit for 2022 is £0.3 million higher
than it would have been without this adjustment to rent concessions.
2. Adjusted Profit is as defined in the Glossary. A reconciliation to the statutory result is provided further below. EPRA
figures and a reconciliation to EPRA EPS are shown in Note 5 to the Financial Statements. The calculation of EPRA
cost ratio is provided in the EPRA performance measures section.
3. Represents dividends declared post period end but related to the period in question.
4. Assuming exercise of all extension options.
3636
Stock code: CAL Use of Alternative Performance Measures (APMs)
Throughout the results statement we use a range of financial and non-financial measures to assess our performance. The
significant measures are as follows:
Alternative performance measure used
Rationale
Adjusted Profit
Adjusted Profit is used as it is considered by management to provide the best indication
of trading profits and hence the ability of the business to fund dividend payments.
Adjusted Profit excludes revaluation of properties, profit or loss on disposal of
properties or investments, gains or losses on financial instruments, charges in respect
of long-term incentive awards and other non-operational one-off items.
Adjusted Profit includes EBITDA from Snozone (see definition further below). This was
a change implemented in 2021 arising from the adoption of IFRS 16 and the signing of
new lease agreements on Snozone’s two UK sites. We considered that the combination
of these two factors meant that Snozone’s statutory profit no longer alone provides a
full reflection of Snozone’s trading performance and hence introduced this additional
Alternative Performance Measure.
The key differences between Adjusted Profit and EPRA earnings, an industry standard
comparable measure, relates to the exclusion of non-cash charges in respect of share-
based payments and adjustments in respect of Snozone as detailed above. In the
current year we have excluded from our Adjusted Profit a £0.3 million tax credit as it
relates to prior years but this is included within the EPRA metric.
Adjusted Earnings per share is Adjusted Profit divided by the weighted average number
of shares in issue during the year excluding own shares held.
A reconciliation of Adjusted Profit to the equivalent EPRA and statutory measures is
provided in Note 5 to the condensed financial statements.
Like-for-like amounts are presented as they measure operating performance adjusted
to remove the impact of properties that were only owned for part of the relevant
periods.
For the purposes of comparison of capital values, this will also include assets owned at
the previous period end but not necessarily throughout the prior period.
In the current year like-for-like comparisons have been used to adjust for the impact
of the disposals of the Edmonds Parade and Maidstone House properties within the
Hemel Hempstead and Maidstone shopping centre assets that were completed in June
2021 and December 2021 respectively as well as The Mall, Blackburn that was disposed
of in August 2022 and Walthamstow residential receipt.
Net debt is borrowings, excluding unamortised issue costs, less cash at bank. Cash
excludes cash held on behalf of third parties (e.g. in respect of service charges or rent
deposits).
Like-for-like amounts
Net Debt
Net debt to property value
Net debt to property value is debt less cash and cash equivalents divided by the
property value.
Net Rent or Net Rental Income
(NRI)
Snozone EBITDA
Net Rental Income is rental income from properties, less provisions for expected
credit losses, property and management costs. It is a standard industry measure. A
reconciliation to statutory turnover is provided in Note 3 to the condensed financial
statements.
Snozone EBITDA is based on net profit. It excludes Depreciation, Amortisation, (notional)
Interest, Tax and non-operational one-off items. It includes rent expense, based on
contractual payments adjusted for rent free periods. This provides a measure of
Snozone trading performance which removes the profiling impact of IFRS 16 that would
otherwise see a significantly higher charge in early years of a lease and significantly
lower net charge in later years. A reconciliation to the IFRS net profit is included within
Note 3 to the condensed financial statements.
3737
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Financial Review CONTINUED
Profitability
Components of Adjusted Profit and reconciliation to IFRS Profit
Amounts in £m
Shopping Centres – Net Rental Income
Shopping Centres – Interest payable
Shopping Centres – Contribution
Managed Assets – Contribution
Snozone (indoor ski operation) EBITDA
External management fees
Central operating costs (including central interest)
Variable overhead
Adjusted Profit1
Adjusted Earnings per share (pence)
Reconciliation of Adjusted Profit to statutory result
Adjusted Profit
Property revaluation
Profit/(loss) on disposal
Snozone depreciation and amortisation
Snozone notional interest (net of rent expense in EBITDA)
Gain on financial instruments
Corporation Tax credit/(charge) in lieu of dividends
VAT rebate within Snozone
Long Term incentives
Gain on discounted loan purchase (net of costs)
Write up following Luton deconsolidation
Other items (including transaction costs)
Profit/(loss) for the period
Year to
December
2022
Year to
December
20212
23.5
(9.3)
14.2
–
1.4
3.3
(7.0)
(1.6)
10.3
6.2p
10.3
(19.6)
1.5
(2.1)
0.8
1.1
0.3
–
(0.5)
12.5
6.8
1.0
12.1
21.7
(10.8)
10.9
2.6
0.8
2.4
(7.0)
(0.9)
8.8
5.4p
8.8
(47.6)
(2.5)
(2.5)
0.5
5.9
(3.1)
1.4
(0.9)
18.4
–
(2.5)
(24.1)
1. EPRA figures and a reconciliation to EPRA EPS are shown in Note 5 to the condensed Financial Statements.
2. 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions due to an IASB IFRS interpretation
issued in October 2022 as detailed in Note 1 to the condensed financial statements. The amendment stipulates that losses which were incurred on
granting rent concessions, which for the Group occurred during the Covid-19 pandemic, should be charged to the income statement in the year
they are granted. 2021 revenue has also been impacted by the reclassification of Luton as a Discontinued Operation. The combined impacts of the
restatements have reduced 2021 Revenue by £15.4 million, increased 2021 Adjusted Profit by £0.7 million and increased IFRS profit for the year by
£2.3 million. The Adjusted Profit for 2022 is £0.3 million higher than it would have been without this adjustment to rent concessions.
Adjusted Profit – 30 December 2022: £10.3 million (30 December 2021: £8.8 million)
Net Rental Income (NRI) improved to £23.5 million (30 December 2021 - £21.7 million). This reflects improved occupancy
and rent collection levels, the latter enabling the net release of approximately £1.4 million of provisions during the period.
The balance includes £0.5 million from Hemel Hempstead being the NRI from 11 April 2022, being the date the
transaction was agreed and hence the asset was reclassified to Investment Assets, having been in Managed Assets NRI in
the prior year. The £23.2 million includes £2.7 million from Blackburn, the sale of which completed in August 2022.
Interest payable has fallen from the prior year reflecting primarily the restructuring and reduction of debt in The Mall
loan facility that completed in November 2021. The Mall debt was further reduced by £7.1 million in January 2022 from
the proceeds of the sale of Maidstone House and then by £52.9 million in the second half of the year from the combined
proceeds of the Walthamstow residential receipt and Blackburn disposal. The full year interest saving benefit of the latter
repayments will see interest in 2023 reduce by approximately £1.8 million.
Managed Assets Contribution is no longer included within Adjusted Profit following the reclassification of what were
deemed Managed Assets as Held for Sale from 30 December 2021. As noted, the results of Hemel Hempstead have been
included within Adjusted Profit from 11 April 2022. The results from Luton have been excluded from Adjusted Profit in
2022 as it was Held for Sale until 23 May 2022 and then deconsolidated from the Group as at that date.
Snozone EBITDA at £1.4 million (30 December 2021 - £0.8 million) reflected a return to a more normalised trading year
although the peak first trading quarter in 2022 was still significantly impacted by concerns over the Omicron variant.
The result in 2021 was supported by a £2.5 million business continuity insurance receipt mitigating the impact of the
operations being required to shut for most of the first half of 2021 due to Government Covid-19 restrictions.
External Management Fees of £3.3 million break down between Asset and Property Management fees on external
properties (Redditch and in 2022, Luton) of £2.1 million (£1.4 million on Luton and £07 million on Redditch) and Property
Management fees on the Group’s Investment Assets of £1.2 million (as these are charged to the Service Charge).
3838
Stock code: CAL In the
medium
term there
is potential
for Adjusted
Profit to
increase by
more than
20%
Stuart Wetherly
Group Finance
Director
The increase from the prior year relates to
the inclusion of Asset Management fees
on Luton as these were previously being
eliminated on consolidation. The disposal of
the Group's investment in The Mall, Luton on
16 March 2023 and the Group’s involvement
as property and asset manager ceased from
that date. A sale process remains ongoing
on Redditch which will likely see the Group's
involvement cease.
Central operating costs at £7.0 million (30
December 2021 - £7.0 million) have been
maintained at the same level as 2021. We are
targeting annualised cost savings in 2023 of
approximately 10%, with a reduction in the
Group’s underlying cost base, reflecting the
lower number of assets under management,
offsetting the impact of inflation.
Variable overheads of £1.6 million (30
December 2022 - £0.9 million) have increased
due to a £0.6 million increase in the charge for
the one-off Executive retention awards issued
in November 2021 which run through until
September 2023.
Adjusted Earnings per Share for the period were
6.2 pence (30 December 2021: 7.3 pence)
reflecting the higher number of shares in
issue from the £30 million capital raise which
completed in November 2021 partially offset
by the improvement in Adjusted Profit.
We expect 2023 to be a partly transitional
year with the loss of income from the sale
of Blackburn, the absence of the one-off
benefit from bad debt provision releases
and reduction in management fee income
offset by underlying improvement in NRI, the
reduction in interest costs as a result of the
£52.9 million of debit repayments made in
the second half of 2022, a further recovery in
Snozone and reduced central costs.
In the medium term there is potential for
Adjusted Profit to increase by more than
20%, driven primarily by further recovery in
occupancy rates post-pandemic, car park
income and Snozone, alongside beginning
to realise the benefit of the Capex projects
currently underway, most prominently the TK
Maxx and NHS Community Healthcare Centre
units at Ilford, introduction of new catering
units to the bridge link, the remerchandising
of the WH Smith’s unit at Wood Green and the
new CRATE food hall at Walthamstow.
IFRS profit for the period –
30 December 2022: £12.1 million
(30 December 2021: Loss of £24.1 million)
The Group has returned to profitability
in 2022. Aside from the Adjusted Profit
of £10.3 million the key elements in the
result were:
• The £12.5 million gain (after costs) on the
discounted purchase of the Group’s Hemel
Hempstead loan facility.
• A £6.8 million gain in the Group’s Net Asset
Value on the deconsolidation of Luton due
to it previously sitting as a liability on the
Group’s balance sheet.
• Property revaluation loss of £19.6 million
(December 2021 – loss of £49.2 million).
The fall in property values in the second
half of the year driven by macro-economic
conditions has seen an overall like for like
decline of 3.6%, this compares to a 5.7% fall
in 2021.
• A £1.5 million profit on disposal from
the Blackburn sale and Walthamstow
residential receipt.
• A £1.6 million gain within Other Items in
respect of the Group’s insurance claim
related to the 2019 Walthamstow fire.
The “gain” represents the difference
between the final settlement and the
carrying value in the Group’s books.
• The gain on financial instruments of
£1.1 million (December 2021 – gain of
£5.9 million) is a result of the revaluation of
interest rate swaps reflecting movements in
future interest rate expectations.
The profit for the period has resulted in
growth of both NAV by 6.3% to £179.1 million
and EPRA Net Tangible Assets of 5.3% to
£177.4 million compared to December 2021
amounts of £168.4 million for both measures.
Basic NAV per share and EPRA NTA per
share were 106p and 103p respectively,
representing increases of 4p and 1p
respectively (December 2021: 102p for both
measures).
Having obtained shareholder support at
the Company’s Annual General Meeting on
19 May 2022, the Group completed a Capital
Reduction which resulted in the creation
of distributable reserves. The Group has
maintained provision for any potential
shortfall in the event that the minimum
PID requirement for the 2021 financial
year once finalised was not met by the
distributions made in 2022 and/or alternative
arrangements are not agreed with HMRC.
39
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Financial Review CONTINUED
Property portfolio valuation
The valuation of the portfolio at 30 December 2022 was £322.75 million. On a like for like basis, adjusting for the impact
of the Walthamstow residential receipt, the portfolio fell by 3.6% over the year. This broke down between a 1.5% increase
in the first half of the year and a 5.0% decline in the second half. The latter was driven by the general expansion of yields
across the property sector in response to the resetting of interest and gilt rates despite valued rent and valuers ERV
increasing in the second half of the year by 0.6% and 1.5% respectively.
Property at independent valuation
Maidstone
Walthamstow1
Wood Green
Hemel Hempstead
Ilford
Total
30 December 2022
30 December 2021
£m
32.65
80.0
144.0
10.5
55.6
322.75
NIY %
11.28%
5.97%
7.55%
14.49%
5.04%
7.23%
NEY %
11.49%
7.00%
7.38%
17.49%
7.79%
8.59%
£m
36.2
100.4
148.9
10.5
56.4
352.4
NIY %
10.44%
5.84%
7.33%
12.49%
5.86%
7.21%
NEY %
11.22%
6.55%
6.88%
18.20%
7.99%
8.29%
1. At 30 December 2021 Walthamstow valuation included £17.7 million in respect of the residential opportunity that was removed from the valuation
following the receipt of £21.6 million in July 2022.
Financing
The Group has taken a series of important actions in the last 18 months enabling it to successfully bring down debt levels.
This has involved a series of steps:
• Reclassification as at 30 June 2021 of Luton and Hemel as Managed Assets, with the former now deconsolidated as of
May 2022 following the agreement to run a consensual sale process and appointment of an independent director to
the Luton entities.
• Restructuring of The Mall debt facility with £100 million of debt acquired for £81 million in November 2021, partially
funded by an equity raise of £30 million and a new £35 million tranche of debt on the facility with TIAA.
• The sale of the Maidstone House office block in December 2021 for £7.1 million.
• The discounted buyback in May 2022 of the Hemel Hempstead loan facility where liabilities of £24.0 million (including
£1 million of accrued interest and interest rate swap creditor) were settled for £11.8 million representing a discount of
approximately 51%. This was partially funded with a new £4.0 million loan facility that was subsequently drawn down in
early July 2022.
• The disposal of The Mall, Blackburn that completed in August 2022 for net proceeds of £39 million.
• The completion of the sale of the Walthamstow land for residential development for £21.65 million in July 2022.
• In addition, in May 2022 the Group signed an amendment to its Ilford loan facility agreeing a long-term package of loan
waivers and covenant improvements to help facilitate the TK Maxx relocation and creation of a new NHS Community
Healthcare Centre.
The combined result of all of the above actions has been the continued reduction in the Group’s Net Loan to Value ratio
from 72% as at 30 June 2021 and 49% at 30 December 2021 to 41% at 30 December 2022.
The Group’s debt position as at 30 December 2022 is summarised in the table below:
30 Dec 2022 (proforma)
The Mall
Hemel Hempstead
Ilford
Central Cash
On balance sheet debt
Debt1
£m
140.0
4.0
39.0
–
183.0
Cash2
Net debt
Loan to
value3
Net loan to
value3
£m
(10.3)
(1.7)
(10.9)
(29.2)
(52.1)
£m
129.7
2.3
28.1
(29.2)
130.9
%
55%
38%
70%
–
57%
%
51%
22%
51%
–
41%
Current
interest
rate
%
3.45%
9.04%
3.51%
–
3.58%
Duration
to loan
expiry
Duration
with
extensions
Years
Years
4.1
2.5
1.2
–
3.4
5.1
2.5
2.7
–
4.5
Fixed
%
100
0.0
100
–
97.8
1. Excluding unamortised issue costs.
2. Excluding cash beneficially owned by tenants.
3. Debt and net debt divided by investment property at valuation.
4040
Stock code: CAL The Mall
Ilford
Following the £60 million of repayments made during the
year the Mall facility as at 30 December 2022 consisted of a
single £140 million fixed rate loan at 3.45%, held with TIAA.
The Group has a £39 million facility secured on the Ilford
Exchange shopping centre with Dekabank Deutsche
Girozentrale that is due to mature in March 2024.
The loan matures in January 2027 but has a one-year
conditional extension option.
As part of the November 2021 restructuring of the facility
TIAA provided a waiver of all financial covenants for
two years until November 2023. The facility is currently
compliant with all covenants.
Hemel Hempstead
On 7 July 2022, the Group drew down a new £4 million
facility with BC Invest, a subsidiary of the Group's strategic
residential partner, Far East Consortium. The new debt
has been provided for an initial period of three years at a
margin of 5.95% over SONIA. It is secured on the Marlowes
Centre on a non-recourse basis.
In May 2022, the Group signed a package of amendments
to facilitate the investment of approximately £10 million
for the creation of the new NHS Community Healthcare
Centre and anchor unit for TK Maxx. The amendment
provides an 18-month conditional extension option that
can be triggered at the end of 2023 to extend the loan
maturity from March 2024 until September 2025 subject
to meeting a debt yield and net loan to value covenant
test. The cost of debt is hedged until the date or original
maturity (March 2024) via an interest rate swap.
The amendments also provide for a waiver of covenants
that ran until January 2023 and improvements to existing
covenant terms to apply from January 2023 until the end
of 2024. The all-in cost of the current loan is 3.51%.
Schnell Dwomoh
Chief Group Accountant
Our People
Schnell has worked at Capital & Regional since 2019,
after working in audit at Price Waterhouse Coopers for five
years where she qualified as a chartered accountant. She
is currently part of the team responsible for internal and
external financial reporting and brings a strong technical
knowledge and analytical approach.
Schnell is passionate about diversity and inclusion and
supporting people from underrepresented backgrounds to
have fair access to career opportunities. In 2020 she also
helped to launch the company’s Diversity and Inclusion
committee, which works to ensure that all employees feel
valued, heard, and supported regardless of background.
In 2022 Schnell led the introduction of a series of Insight Days
at C&R working with Step Now, a local organisation who work
with young people from disadvantaged backgrounds, to give
exposure and experience of the Company to individuals who
otherwise wouldn’t have access to it.
4141
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Financial Review CONTINUED
Going Concern
Under the UK Corporate Governance Code the
Board needs to report whether the business
is a going concern. In making its assessment
of Going Concern, the Group has considered
the general risk environment and the specific
risks that relate to the Group and its sector.
This has incorporated considering the current
macro-economic inflationary pressures as well
as the ongoing impacts and speed of recovery
from Covid-19 as well as the structural
trends that were already under way in the
retail industry.
At 30 December 2022, the Group had total
cash at bank on balance sheet of £52.1
million. Of the £52.1 million there was £28
million held centrally outside of secured loan
arrangements. This provides a significant
cash contingency to cover any reasonable
disruption to operations in both the base and
reasonable worst case scenarios that have
been modelled for at least the period of the
next 18 months that is considered for going
concern purposes.
As part of the restructure of The Mall debt
facility that completed in November 2021,
the lender provided covenant waivers that
run until November 2023 and modifications
to cash trap provisions that run until May
2023. The Group is currently compliant with
all covenant tests on the facility and hence
not reliant on the waivers or modifications.
On the Ilford facility, as noted, the Group had
covenant waivers that ran until January 2023
and has improved covenant terms that extend
beyond the end of 2024. The Mall loan facility
matures in January 2027 with a one-year
conditional extension option. The Ilford loan
matures in March 2024 with an 18-month
conditional extension option dependent upon
meeting a debt yield and net loan to value
covenant test in Q4 of 2023.
On Hemel Hempstead, the Group drew down
on a new £4 million loan facility in early July
2022. The Group’s forecasts demonstrate
a reasonable level of covenant headroom
on the Loan to Value and Projected Interest
Cover Ratio tests that are relevant to the
new agreement.
All of the Group’s asset backed loan facilities
are ring-fenced within their own SPV
structures with no recourse to Capital &
Regional plc and no cross-default provisions.
The sale of the Group’s investment in The
Mall, Luton completed on 16 March 2023.
While the sale realised less than the value
of the net debt outstanding, due to the
ring-fenced SPV structure, the net liability
of Capital & Regional plc was effectively
capped at nil.
In making its assessment of Going Concern,
the Group has run updated forecasts on both
a base case and downside basis. In the latter,
the Group has sensitised rent collection to
90% collection, reduced car park and ancillary
income by 10% and removed any contribution
from Snozone to reflect how a downturn in
expected trading, such as might be caused by
a further wave of Government restrictions,
could impact cashflows. The Group has also
considered a 15% reduction in property
valuations. The Group’s headroom on The
Mall and Hemel Hempstead is sufficient to
withstand this level of decline.
On Ilford, such a decline would breach the LTV
covenant level however the cash earmarked
for capital expenditure investment into the
asset would be sufficient to theoretically cure
although in such a scenario the Group would
seek to agree with the lender to invest the
funds to develop the asset. The same position
applies in respect of the LTV condition that
is required in order to trigger the 18-month
extension to the loan’s maturity. Ultimately
given the ring-fenced nature of the loan
facility if the Group decided not to cure any
breach and could not agree a compromise
with the lender it could, in extremis, effectively
surrender the asset and not face any recourse
to the Group.
The Group’s cashflow forecasts over the
period considered for Going Concern
purposes assume it is a net investor into Ilford
to fund the masterplan initiatives and hence
such a scenario would not reduce the amount
of cash available to the Group.
In coming to its Going Concern conclusion,
the Group has also considered, but not relied
upon, other options available to generate
or conserve additional cash, to reduce debt
levels and to fund value accretive capital
expenditure and letting initiatives. These
include but are not limited to: the potential
disposal of assets either in whole or part; the
opportunity to reduce or suspend dividend
payments (or offer a Scrip alternative); and the
potential raising of additional funds.
Having due regard to all of the above matters
and after making appropriate enquiries, the
Directors have a reasonable expectation that
the Group and the Company have adequate
resources to continue in operational existence
for the foreseeable future. Therefore, the
Board continues to adopt the Going Concern
basis in preparing the financial statements.
4242
Stock code: CAL Viability Statement
In accordance with the 2018 revision of the UK Corporate
Governance Code, the Directors have assessed the prospect
of the Company over a longer period than the 12 months
required by the “Going Concern” provision.
The Board conducted this review for a two-year period to
December 2024. The two-year period is covered by the
Group’s annual budget and business planning process. It
includes sensitivity analysis to consider adverse scenarios,
that could be caused by the principal risks and uncertainties
outlined in the Managing Risk section below. This
incorporated the impact on cash and covenant compliance
of further significant falls in property valuations or property
income. Ilford is the only one of the Group’s loan facilities
that is due to mature during the period but has a conditional
18-month extension option available to the Group which
would extend maturity to September 2025. The Group has
considered forecasts of the debt yield and LTV covenant tests
that are necessary to meet the conditions of the extension
in Q4 2023 and factored this into its analysis including the
ability to support the LTV test by injecting cash into the
structure if necessary.
The considerations made by the Directors in concluding
on viability mirror those considered within the Going
Concern conclusion as documented above. Based on this
and the resources and actions available the Directors have
a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the period to December 2024.
Stuart Wetherly
Group Finance Director
Dividends
Reflecting the stabilisation of operational results
from the impacts of Covid-19, the substantial
progress made in reducing debt levels and the
Board’s confidence in the future prospects, the
Group resumed dividend payments with the
payment of an interim dividend of 2.5 pence per
share on 7 October 2022.
The Directors recommend a final dividend of 2.75
pence per share, making a total distribution for
the year ended 30 December 2022 of 5.25 pence
per share (2021: nil). This satisfies the Group’s
policy of paying a dividend of at least 90% of the
Group’s EPRA profits. The dividend will be paid
entirely as a Property Income Distribution (PID)
and a Scrip dividend option will be offered.
Subject to approval of shareholders at the
Annual General Meeting (AGM) to be held on
25 May 2023, the final dividend will be paid on
Friday, 2 June 2023. The key dates proposed are
set out below:
• Confirmation of ZAR equivalent and Scrip
dividend pricing
Friday, 31 March 2023
• Last day to trade on Johannesburg Stock
Exchange (JSE)
Tuesday, 11 April 2023
• Shares trade ex-dividend on the JSE
Wednesday, 12 April 2023
• Shares trade ex-dividend on the LSE
Thursday, 13 April 2023
• Record date for LSE and JSE and last election
for Scrip
Friday, 14 April 2023
• AGM
Thursday, 25 May 2023
• Dividend payment date/New Scrip
shares issued
Friday, 2 June 2023
South African shareholders are advised that the
dividend will be regarded as a foreign dividend.
Further details relating to Withholding Tax for
shareholders on the South African register will
be provided within the announcement detailing
the currency conversion rate on 31 March 2023.
Share certificates on the South African register
may not be dematerialised or rematerialised
between 12 April 2023 and 14 April 2023, both
dates inclusive. Transfers between the UK and
South African registers may not take place
between 31 March 2023 and 14 April 2023, both
dates inclusive.
4343
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Managing Risk
Risk management approach
The Audit Committee is delegated the authority for
overseeing the effectiveness of the risk management
process by the Board and is accountable for reporting
on the identification of principle and emerging risks to
the business. Ultimate responsibility for the oversight
of risk management within the Group remains with the
Board. The Board defines the risk appetite of the Group,
establishes a risk management strategy and is responsible
for maintaining a robust internal controls system. The
Board formally reviews and signs off the Group’s risk
register on a six monthly basis. Emerging risks are
considered as part of this process or on an ad hoc basis in
instances such as the outbreak of the Covid-19 pandemic
where the risk is of sufficient significance to require a
separate discussion.
Risk management process
There are a number of risks and uncertainties which
could have a material impact on the Group’s future
performance and could cause results to differ significantly
from expectations.
At every half year and year end, the members of senior
leadership undertake a comprehensive risk and controls
review involving interviews with relevant management
teams. This considers a review of both the existing
identified risks and any new or emerging risks that may
have been identified during the period. The output of
this process is an updated risk map and internal control
matrix for each component of the business, which is
then amalgamated into the Group risk map and matrix
that is reviewed by the senior leadership team. Formal
submission is then made to the Audit Committee for
review, before going to the Board for final sign off. The
process for the half year and full year 2022 review forms
the basis for the disclosures made below.
This process clearly outlines the principal risks, considers
their potential impact on the business, the likelihood of
them occurring and the actions being taken to manage,
and the individual(s) responsible for managing, those risks
to the desired level.
This risk matrix is also used in performing our annual
assessment of the material financial, operational and
compliance controls that mitigate the key risks identified.
Each control is assessed or tested for evidence of its
effectiveness. The review concluded that all such material
controls were operating effectively during 2022.
4444
Stock code: CAL Principal risks at
30 December 2022
A review was carried out for the
30 December 2022 year end. Amongst the
main factors considered were the impact
of the current inflationary pressures being
experienced by consumers within the UK
exacerbated by the impact that the tragic
war in Ukraine has had upon energy and
commodity costs. Other matters considered
were the ongoing impact of, and speed of
recovery from, the Covid-19 pandemic and
the continuing structural changes to UK retail
although in the case of this latter point it was
noted that there is growing evidence of online
retail having begun to plateau in many areas.
The review concluded that while as a result
of these combined factors the profile of
some risks, including economic environment,
property investment market risks and
Treasury risks had changed, the ultimate
nature of them had not and therefore the
principal risks to the Group broadly remain
unchanged at 30 December 2022.
The risks noted do not comprise all those
potentially faced by the Group and are not
intended to be presented in any order of priority.
Additional risks and uncertainties currently
unknown to the Group, or which the Group
currently deems immaterial, may also have
an adverse effect on the financial condition
or business of the Group in the future. These
issues are kept under constant review to allow
the Group to react in an appropriate and timely
manner to help mitigate the impact of such risks.
4545
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Managing Risk CONTINUED
1. Property investment Market Risks
2. Impact of the Economic Environment
3. Treasury Risk
4. Tax and Regulatory Risks
Risk
Risk
The weaker macro-economic environment and
poor sentiment in commercial real estate markets
has led to low transactional evidence across the
industry with reduced investor confidence and a
decline in valuations across all real estate sectors.
Valuations can be inherently subjective leading to
a degree of uncertainty and the risk that property
valuations may not reflect the price received
on sale.
Impact
Small changes in property market yields or future
cash flow assumptions can have a significant
effect on valuations.
The impact of leverage could magnify the
effect on the Group’s net assets and the risk of
breaching loan covenants with our lenders. This
could result in the default of facilities and should
we not be able to cure these, we run the risk of
security being enforced.
Highly volatile trading environments have the
potential to increase the speculation on Property
valuations and are open to a wider range of
possible outcomes.
Mitigation
Regularly monitoring market direction,
comparable property valuations in the market
and recent transactions.
Adequate and timely forward planning of
investment decisions.
We engage multiple experienced, external valuers
who understand the specific properties and
whose output is reviewed and challenged by
internal specialists.
Regular reviews and consideration of strategies to
reduce debt levels, if appropriate.
The Group is sensitive to tenant insolvency and
distress, which can have increased pressure on
rent levels. There is also risk of prolonged low
tenant demand for space.
Macroeconomic risks in relation to rising inflation,
income tax and the volatility of the energy market
(and associated costs of energy) are likely to
negatively impact consumer spending, which
will impact retailing, particularly discretionary
spending.
Rising inflation will also put pressure on the
Group’s cost base and operating margins.
Impact
Economic pressure on consumer spending
will likely impact the levels of footfall across
the centres and have a knock on effect on
discretionary retail tenants.
Tenant failures and reduced tenant demand
could adversely affect rental income, lease
incentive, void costs, cash and ultimately property
valuations.
Mitigation
A key part of our Group strategy is to ensure a
large, diversified tenant base that is made up of
primarily non-discretionary retail.
Review of tenant covenants before new leases are
signed.
The offering of long-term leases as standard and
maintaining active and personable credit control
processes that foster positive relationships with
tenants.
Regular dialogue between the support office and
general managers across the portfolio, who have
ad hoc discussions with tenants, to understand
the issues facing tenants and guests.
Managing void units though temporary lettings
and other mitigation strategies.
Energy costs mitigated by measures
undertaken to reduce energy consumption
such as introduction of LED lighting and utilising
alternative sources of energy such as the
installation of solar panels at Snozone Madrid.
Risk
legislation.
Exposure to non-compliance with the REIT regime
and changes in the form or interpretation of tax
Potential exposure to wider changes in tax
legislation and potential tax liabilities in respect of
historic transactions undertaken.
Exposure to changes in existing or forthcoming
property or corporate regulation.
Tax related liabilities and other losses could arise
causing significant financial loss.
Failure to comply with tax or regulatory
requirements could result in loss of REIT
status, financial penalties, loss of business or
reputational damage.
Mitigation
Constantly monitoring the Group’s REIT
compliance and consideration of the effects of
major decisions on REIT status.
Expert advice is taken on tax positions and checks
conducted on any unusual matters that may
arise.
Maintaining regular dialogue with the tax
authorities and business groups.
Actively keep key staff up to date with regulation
and ensure necessary policies and procedures are
Expert advice taken on complex regulatory
matters.
Risk
The Group is at risk of not being able to fund
the business or to refinance existing debt on
economic terms, particularly during periods of
low lending market appetite.
Breach of the assets loan covenants resulting in
defaults on debt and the potential for accelerated
maturity and/or lenders taking control of secured
Exposure to rising or falling interest rates, which
could affect liabilities on property sales and
Impact
assets.
refinancing.
Impact
The Group may not be able to meet financial
obligations when they come due, causing
limitation on financial and operational flexibility.
The cost of financing could be prohibitive.
Unremedied breaches of loan covenants can
trigger demand for immediate repayment of loan
facilities.
be broken.
If interest rates rise and are unhedged, the cost
of debt facilities can rise and ICR covenants could
Hedging transactions used by the Group to
minimise interest rate risk may limit gains, result
in losses or have other adverse consequences.
Regular monitoring and projections of liquidity,
gearing and covenant compliance with regular
reporting to the Board.
Maintain close relationships with lenders.
The Group has significantly reduced debt levels in
the last two years through a combination of asset
sales and asset/debt restructuring.
All the Group’s facilities are non-recourse and
held in SPV structures.
Mitigation
levels of cash reserves.
Ensuring that the Group maintains appropriate
in place.
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4646
Stock code: CAL 1. Property investment Market Risks
2. Impact of the Economic Environment
3. Treasury Risk
4. Tax and Regulatory Risks
Risk
Risk
Risk
Risk
Key
Increase
No change
Decrease
The weaker macro-economic environment and
poor sentiment in commercial real estate markets
has led to low transactional evidence across the
industry with reduced investor confidence and a
decline in valuations across all real estate sectors.
Valuations can be inherently subjective leading to
a degree of uncertainty and the risk that property
valuations may not reflect the price received
on sale.
Impact
Small changes in property market yields or future
cash flow assumptions can have a significant
effect on valuations.
The impact of leverage could magnify the
effect on the Group’s net assets and the risk of
breaching loan covenants with our lenders. This
could result in the default of facilities and should
we not be able to cure these, we run the risk of
security being enforced.
Highly volatile trading environments have the
potential to increase the speculation on Property
valuations and are open to a wider range of
possible outcomes.
Mitigation
Regularly monitoring market direction,
comparable property valuations in the market
and recent transactions.
Adequate and timely forward planning of
investment decisions.
We engage multiple experienced, external valuers
who understand the specific properties and
whose output is reviewed and challenged by
internal specialists.
Regular reviews and consideration of strategies to
reduce debt levels, if appropriate.
The Group is sensitive to tenant insolvency and
distress, which can have increased pressure on
rent levels. There is also risk of prolonged low
tenant demand for space.
Macroeconomic risks in relation to rising inflation,
income tax and the volatility of the energy market
(and associated costs of energy) are likely to
negatively impact consumer spending, which
will impact retailing, particularly discretionary
Rising inflation will also put pressure on the
Group’s cost base and operating margins.
spending.
Impact
Economic pressure on consumer spending
will likely impact the levels of footfall across
the centres and have a knock on effect on
discretionary retail tenants.
Tenant failures and reduced tenant demand
could adversely affect rental income, lease
incentive, void costs, cash and ultimately property
valuations.
Mitigation
signed.
tenants.
A key part of our Group strategy is to ensure a
large, diversified tenant base that is made up of
primarily non-discretionary retail.
Review of tenant covenants before new leases are
The offering of long-term leases as standard and
maintaining active and personable credit control
processes that foster positive relationships with
Regular dialogue between the support office and
general managers across the portfolio, who have
ad hoc discussions with tenants, to understand
the issues facing tenants and guests.
Managing void units though temporary lettings
and other mitigation strategies.
Energy costs mitigated by measures
undertaken to reduce energy consumption
such as introduction of LED lighting and utilising
alternative sources of energy such as the
installation of solar panels at Snozone Madrid.
Exposure to non-compliance with the REIT regime
and changes in the form or interpretation of tax
legislation.
Potential exposure to wider changes in tax
legislation and potential tax liabilities in respect of
historic transactions undertaken.
Exposure to changes in existing or forthcoming
property or corporate regulation.
Impact
Tax related liabilities and other losses could arise
causing significant financial loss.
Failure to comply with tax or regulatory
requirements could result in loss of REIT
status, financial penalties, loss of business or
reputational damage.
Mitigation
Constantly monitoring the Group’s REIT
compliance and consideration of the effects of
major decisions on REIT status.
Expert advice is taken on tax positions and checks
conducted on any unusual matters that may
arise.
Maintaining regular dialogue with the tax
authorities and business groups.
Actively keep key staff up to date with regulation
and ensure necessary policies and procedures are
in place.
Expert advice taken on complex regulatory
matters.
The Group is at risk of not being able to fund
the business or to refinance existing debt on
economic terms, particularly during periods of
low lending market appetite.
Breach of the assets loan covenants resulting in
defaults on debt and the potential for accelerated
maturity and/or lenders taking control of secured
assets.
Exposure to rising or falling interest rates, which
could affect liabilities on property sales and
refinancing.
Impact
The Group may not be able to meet financial
obligations when they come due, causing
limitation on financial and operational flexibility.
The cost of financing could be prohibitive.
Unremedied breaches of loan covenants can
trigger demand for immediate repayment of loan
facilities.
If interest rates rise and are unhedged, the cost
of debt facilities can rise and ICR covenants could
be broken.
Hedging transactions used by the Group to
minimise interest rate risk may limit gains, result
in losses or have other adverse consequences.
Mitigation
Ensuring that the Group maintains appropriate
levels of cash reserves.
Regular monitoring and projections of liquidity,
gearing and covenant compliance with regular
reporting to the Board.
Maintain close relationships with lenders.
The Group has significantly reduced debt levels in
the last two years through a combination of asset
sales and asset/debt restructuring.
All the Group’s facilities are non-recourse and
held in SPV structures.
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4747
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Managing Risk CONTINUED
5. People & Skills
6. Development Risk
7. Business Disruption from a Major Incident
8. Environmental, Social & Governance
Risk
Risk
As a small business, there is a relatively small
number of key individuals whose skills are
depended on to operate the business effectively.
Retaining these individuals cannot be guaranteed.
The attraction of new talent to the business with
the right expertise cannot be guaranteed.
The costs involved with development projects
overrunning and delays leading to extended
completion times past expected deadlines.
The threat to the Group’s property assets of
competing in town and out of town retail and
leisure schemes.
Impact
Impact
The loss of key individuals or an inability to attract
new employees with the appropriate expertise
could compromise the business’s ability to
operate efficiently.
Mitigation
Paying current and new employees market
salaries and offering competitive incentive
packages, including the use of retention awards
and incentive plans.
Promoting positive working environments and
culture in line with staff expectations.
Effectively maintaining a succession plan for key
positions and departments.
Increased costs and reputational damage which
may lead to planned value not being realised.
Competition with other schemes may reduce
footfall and reduce tenant demand for space
and effect the levels of rents that can feasibly be
achieved.
Mitigation
Use of experienced external project coordinators
to oversee developments with staged execution
to key milestones and updates to be monitored
by steering committees with the Group.
Implemented well defined approval processes for
new development projects and guidance provided
for setting key milestones.
Partnered with external agencies to raise
awareness of new planning proposals, which are
fought, as necessary, in accordance with relevant
planning laws.
Maintain close working relationships with local
councils and promote willingness to support the
community.
Maintain the flexibility to invest in marketing
strategies to continue relevance in the market.
Major incidents occur at any of the of the
The Group’s activities may have an adverse
business’s sites having a significant impact upon
impact on the environment and the communities
Risk
Risk
trading.
Impact
This includes specific incidents to a centre or
trading location or a situation such as Covid-19
that impacts trading on a national scale.
Such events could cause a reduction in earnings
and additional costs.
Exposure to reputational damage if the business
acts, or is perceived to have acted, in a negligent
manner.
The pandemic has had a significant impact on
guest behaviour and habits. There is a risk that
consumer habits have permanently changed and
will impact business KPIs, such as footfall and
leasing.
Mitigation
Trained operational personnel at all sites and
documented major incident procedures.
Regular update meetings on operational
incident testing runs.
in which we operate.
Health and safety incidents could cause death or
serious injury
A risk that centres or specific retailers are
identified as a ‘hotspot’ for Covid-19 transmission.
Impact
Failure to act on environmental and social issues
could lead to reputational damage, deterioration
in relationships with customers and communities
and limit investment opportunities.
Failure to comply with relevant regulations could
result in financial exposure.
Health and safety incidents could result in
reputational damage, financial liability for the
Group and potentially criminal liability for the
directors.
Mitigation
Issues and actions considered by the Board,
through regular reports from the ESG Committee
procedures reflecting current threats and major
and its designated sub committees.
Regular liaison with the police and environmental
in mapping out its ESG roadmap and key
health officers.
milestones.
Appointed ESG specialist to assist the business
Insurance for business disruption and rebuild is
Specialist health and safety consultancy support
always maintained across the portfolio
Disaster recovery sites have been mapped and
are maintained in the event of immediate needs
in place with internal bespoke health and
safety system to enable incident reporting and
monitoring
portfolio.
EPC rating certificates are completed across the
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4848
Stock code: CAL 5. People & Skills
6. Development Risk
7. Business Disruption from a Major Incident
8. Environmental, Social & Governance
Risk
Risk
Risk
Risk
Key
Increase
No change
Decrease
As a small business, there is a relatively small
number of key individuals whose skills are
depended on to operate the business effectively.
Retaining these individuals cannot be guaranteed.
The attraction of new talent to the business with
the right expertise cannot be guaranteed.
Impact
The loss of key individuals or an inability to attract
new employees with the appropriate expertise
could compromise the business’s ability to
operate efficiently.
Mitigation
Paying current and new employees market
salaries and offering competitive incentive
packages, including the use of retention awards
and incentive plans.
Promoting positive working environments and
culture in line with staff expectations.
The costs involved with development projects
overrunning and delays leading to extended
completion times past expected deadlines.
The threat to the Group’s property assets of
competing in town and out of town retail and
leisure schemes.
Impact
Increased costs and reputational damage which
may lead to planned value not being realised.
Competition with other schemes may reduce
footfall and reduce tenant demand for space
and effect the levels of rents that can feasibly be
achieved.
Mitigation
Use of experienced external project coordinators
to oversee developments with staged execution
to key milestones and updates to be monitored
by steering committees with the Group.
for setting key milestones.
Partnered with external agencies to raise
awareness of new planning proposals, which are
fought, as necessary, in accordance with relevant
planning laws.
Maintain close working relationships with local
councils and promote willingness to support the
community.
Maintain the flexibility to invest in marketing
strategies to continue relevance in the market.
Effectively maintaining a succession plan for key
positions and departments.
Implemented well defined approval processes for
new development projects and guidance provided
Major incidents occur at any of the of the
business’s sites having a significant impact upon
trading.
This includes specific incidents to a centre or
trading location or a situation such as Covid-19
that impacts trading on a national scale.
Impact
Such events could cause a reduction in earnings
and additional costs.
Exposure to reputational damage if the business
acts, or is perceived to have acted, in a negligent
manner.
The pandemic has had a significant impact on
guest behaviour and habits. There is a risk that
consumer habits have permanently changed and
will impact business KPIs, such as footfall and
leasing.
Mitigation
Trained operational personnel at all sites and
documented major incident procedures.
Regular update meetings on operational
procedures reflecting current threats and major
incident testing runs.
Regular liaison with the police and environmental
health officers.
Insurance for business disruption and rebuild is
always maintained across the portfolio
Disaster recovery sites have been mapped and
are maintained in the event of immediate needs
The Group’s activities may have an adverse
impact on the environment and the communities
in which we operate.
Health and safety incidents could cause death or
serious injury
A risk that centres or specific retailers are
identified as a ‘hotspot’ for Covid-19 transmission.
Impact
Failure to act on environmental and social issues
could lead to reputational damage, deterioration
in relationships with customers and communities
and limit investment opportunities.
Failure to comply with relevant regulations could
result in financial exposure.
Health and safety incidents could result in
reputational damage, financial liability for the
Group and potentially criminal liability for the
directors.
Mitigation
Issues and actions considered by the Board,
through regular reports from the ESG Committee
and its designated sub committees.
Appointed ESG specialist to assist the business
in mapping out its ESG roadmap and key
milestones.
Specialist health and safety consultancy support
in place with internal bespoke health and
safety system to enable incident reporting and
monitoring
EPC rating certificates are completed across the
portfolio.
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4949
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Managing Risk CONTINUED
9. Customers & Changing Consumer Trends
10. IT & Cyber Security
11. Climate‑related
12. Health & Safety
Risk
Risk
Risk
Risk
Further migration towards online shopping, multi-
channel retailing, and increased spending on
leisure may adversely impact consumer footfall in
shopping centres.
Increased use of CVAs by retailers as a means of
restructuring or cost reduction.
Impact
Changes in consumer shopping habits towards
online shopping and home delivery could reduce
footfall and therefore potentially reduce tenant
demand and the levels of rents which can be
achieved.
Financial loss from tenants use and reliance on
CVAs to both write off arrears and reset lease
agreement terms.
Mitigation
Strong location and dominance of shopping
centres (portfolio is weighted to London and
Southeast England).
Strength of the community shopping experience
with tailored relevance to the local community.
Concentration on convenience and value offer
which is less impacted by online presence.
Increasing provision of “Click & Collect” within
our centres.
Maintaining positive retailer relationships and
providing for honest and open dialogue.
Monitoring key business metrics such as footfall,
retail trends and shopping behaviour.
Failure of, or, as a result of malicious attack on,
the Group’s information technology hardware
and software systems.
Failure to continually keep up with best practice
and invest in new technology.
Impact
Loss of operating capacity, business time or
reputational damage.
Data breaches resulting in reputational damage,
fines or regulatory penalties.
Mitigation
IT Security Governance Policy in place aligned
with ISO27001.
Ongoing investment in technology infrastructure
with key IT applications hosted offsite.
Systems in place to prevent and react to malicious
attack.
Regular penetration testing carried out by a
specialist security company.
Cyber Essentials Plus certified.
Information security training programmes
in place to regularly upskill all employees.
A strong password policy is in place to keep
employees safe.
Maintenance of a disaster recovery site in the
event of critical systems failures.
The risk that the Group’s staff, customers or
guests suffer illness, injury or fatality at one of the
Group’s operations.
Impact
If found to be as a result of failing processes
or negligence the Group and/or individuals
in management positions could face criminal
charges, financial loss and reputational damage.
Mitigation
Regular risk assessments
Sharing of information with local Health & Safety
Executive
Capacity limits agreed with Health & Safety
Executive and reviewed with external lawyers
Training for staff by Health & Safety Consultancy
Insurance review meetings with insurance
brokers
In light of the introduction of TCFD Disclosure
requirements, the impact of climate change has
become a Board level issue.
As a result of COP26, the world stage is focussed
on combatting climate change and businesses
that fall behind on their efforts to mitigate their
effect on the climate run the risk of becoming
non-investable.
Impact
The Group’s failure to act on environmental issues
could lead to reputational damage, deterioration
in customer and community relationships, or
limit investment opportunities. Climate-related
risks extend to the global supply chain, business
disruption from extreme weather events.
Failure to comply with regulations could result in
financial exposure.
Mitigation
ISO14001.
Environmental policy in place and consistent with
Management of and compliance with the Carbon
Reduction Commitment and compliance with the
Carbon Trust.
Engaged with external agency, JLL, to assist
with setting out framework to assess climate
related risks.
Separate risk matrix on climate-related risks
feeds into Group risk review and ESG Committee
reporting to the Board.
Nominated individual from SLT to take oversight
responsibility of climate-related issues.
Board has oversight of TCFD climate-related goals
and targets through quarterly ESG reporting.
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5050
Stock code: CAL 9. Customers & Changing Consumer Trends
10. IT & Cyber Security
11. Climate‑related
12. Health & Safety
Risk
Risk
Risk
Risk
Key
Increase
No change
Decrease
Further migration towards online shopping, multi-
channel retailing, and increased spending on
Failure of, or, as a result of malicious attack on,
the Group’s information technology hardware
leisure may adversely impact consumer footfall in
and software systems.
Increased use of CVAs by retailers as a means of
and invest in new technology.
Failure to continually keep up with best practice
shopping centres.
restructuring or cost reduction.
Impact
Changes in consumer shopping habits towards
online shopping and home delivery could reduce
footfall and therefore potentially reduce tenant
demand and the levels of rents which can be
achieved.
Financial loss from tenants use and reliance on
CVAs to both write off arrears and reset lease
agreement terms.
Mitigation
Strong location and dominance of shopping
centres (portfolio is weighted to London and
Southeast England).
Strength of the community shopping experience
with tailored relevance to the local community.
Concentration on convenience and value offer
which is less impacted by online presence.
Increasing provision of “Click & Collect” within
our centres.
Maintaining positive retailer relationships and
providing for honest and open dialogue.
Monitoring key business metrics such as footfall,
retail trends and shopping behaviour.
Impact
Loss of operating capacity, business time or
reputational damage.
Data breaches resulting in reputational damage,
fines or regulatory penalties.
Mitigation
with ISO27001.
IT Security Governance Policy in place aligned
Ongoing investment in technology infrastructure
with key IT applications hosted offsite.
Systems in place to prevent and react to malicious
attack.
Regular penetration testing carried out by a
specialist security company.
Cyber Essentials Plus certified.
Information security training programmes
in place to regularly upskill all employees.
A strong password policy is in place to keep
employees safe.
Maintenance of a disaster recovery site in the
event of critical systems failures.
The risk that the Group’s staff, customers or
guests suffer illness, injury or fatality at one of the
Group’s operations.
Impact
If found to be as a result of failing processes
or negligence the Group and/or individuals
in management positions could face criminal
charges, financial loss and reputational damage.
Mitigation
Regular risk assessments
Sharing of information with local Health & Safety
Executive
Capacity limits agreed with Health & Safety
Executive and reviewed with external lawyers
Training for staff by Health & Safety Consultancy
Insurance review meetings with insurance
brokers
In light of the introduction of TCFD Disclosure
requirements, the impact of climate change has
become a Board level issue.
As a result of COP26, the world stage is focussed
on combatting climate change and businesses
that fall behind on their efforts to mitigate their
effect on the climate run the risk of becoming
non-investable.
Impact
The Group’s failure to act on environmental issues
could lead to reputational damage, deterioration
in customer and community relationships, or
limit investment opportunities. Climate-related
risks extend to the global supply chain, business
disruption from extreme weather events.
Failure to comply with regulations could result in
financial exposure.
Mitigation
Environmental policy in place and consistent with
ISO14001.
Management of and compliance with the Carbon
Reduction Commitment and compliance with the
Carbon Trust.
Engaged with external agency, JLL, to assist
with setting out framework to assess climate
related risks.
Separate risk matrix on climate-related risks
feeds into Group risk review and ESG Committee
reporting to the Board.
Nominated individual from SLT to take oversight
responsibility of climate-related issues.
Board has oversight of TCFD climate-related goals
and targets through quarterly ESG reporting.
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5151
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Our Stakeholders
Section 172 Statement
With a focus on shopping centres with a community focus, inevitably our stakeholders are at the heart of our strategy
and business model. Setting our strategic outlook and, in turn, ensuring our long term success as a business relies on
engaging with all our stakeholders to understand their changing needs. Decisions made by the Board will not always
satisfy the broad and varied desires of the Group’s stakeholders, as at times, the interests and impacts of our stakeholder
groups conflict. The Board aligns decision-making to the Company’s purpose, values and strategy. The Board remains
committed to considering the impact of key decisions on the Group’s stakeholder groups and to ensure open dialogue.
Section 172 Statement
The Board has regard to the matters set out in Section 172(1) of the Companies Act 2006 when performing its duties
under Section 172 to promote the success of the Company. When making decisions, the Board pays due regard to:
the likely consequences of decisions in the long-term as the strategy of the Group is focussed on medium to long term
returns and, as such, the long term is firmly within the sights of the Board when all material decisions are made; the
interests of stakeholders, the impact actions have on the communities in which we operate and the environment (see
more on this within the ESG Report on pages 56–89; maintaining high standards of business conduct through ensuring
good governance is instilled from a top-down approach (see more of this in our governance report on pages 100–119);
and acting fairly at all times.
Our key stakeholders, how we engage with them and consider their needs and concerns is outlined below:
Our Shareholders
and Business Partners
What matters
• Robust financial accounts
• Delivering income and capital growth
• Dividend payments
• ESG performance
How we engage
• AGMs, results presentations and investor events
• One-to-one meetings with management
and, by request the Chairman and Senior
Independent Director
How we respond
• Review and act on regular reports from analysts and
advisors
• Feedback from shareholder meetings is shared with
the Board and forms part of boardroom discussions
Read more about how we engage with our shareholders
and business partners on page 62.
The Environment
What matters
• Awareness of the environmental impact of our activities
• Reduction of CO2 emissions and energy and water
consumption
• Reducing waste, in particular plastic waste, and diverting
waste from landfill
How we engage
• Develop and implement various sustainability schemes
across our centres
• Engage with our retailers to increase awareness and
education
• Member of the Better Building Partnership
• Signatory to the Climate Change Commitment
How we respond
• The Board’s ESG Committee discuss key environmental
issues as part of its agenda and provides regular
updates at Board meetings.
• Environmental issues form part of our
boardroom discussions
Read more about how we engage with the environment
on pages 64–77.
5252
Stock code: CAL Our People
What matters
• Opportunities for career and personal development
• Fair and equitable pay and benefits
• An inclusive and diverse environment with a
respectful corporate culture
• Open and transparent communication
• Enhanced support and communication while working
from home
• To share their views and have their voice heard in
decision-making
How we engage
• Intranet; all-staff emails; weekly CEO updates and
regular townhall meetings
• Posters and communications
• Whistleblowing procedures
• Employee surveys that provide option for further
clarification of needs and desires
• Wellbeing Committees
• Regular one-to-one performance reviews between
line manager and employee to ensure career personal
satisfaction
Our Community
Our retailer customers, our guests and our suppliers
What matters
• Outstanding customer service
• Affordable rents and service charge
• Centres that drive footfall and adapt to meet the needs
of a changing market
• Prompt and fair payments to suppliers and contractors
• Ethical and fair dealings that protect human rights and
the health and safety of our customers, guests and
suppliers
• Having a positive impact on local areas, and creating
vibrant and well maintained centres that enhance their
surroundings
• Supporting employment in the community
• Open communication and engagement on development
opportunities
How we engage
• Investment in data to understand consumer and
market trends
• Regular visitor surveys
• Regular audits of facilities management and operational
standards
• Provision of necessary equipment to work best while
• Strong engagement with local and central governments
remote work is in place
and Business Improvement Districts
• Designated NED, Laura Whyte, attends staff events
• Partnering with industry organisations such as
throughout the year to gain insight and report on this
back to the Board
How we respond
retailTRUST and REVO
• Supporting local charities and organisations through our
C&R Cares programme.
• The Board receives periodic reports on a range of
How we respond
people matters
• Board members regularly visit the Company’s support
office and other locations to meet with staff at all
levels in the organisation
• The Board reviews employee engagement through
employee surveys and follows up the actions taken
• The Board considered the impact on current
employees when making strategic decisions
Read more about how we engage with our people
on pages 78–81.
• The Board’s ESG Committee discuss key issues as part
of its agenda and provides regular updates at Board
meetings
• The Board reviews and approves the Modern Slavery
Statement
• Changing consumer and market trends form part of
boardroom discussions and decision-making
• The Board reviews and approves all developments
within our communities and receives regular updates
on ongoing planning matters and community
outreach programmes
Read more about how we engage with our community
on pages 82–89.
5353
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Our Stakeholders CONTINUED
Principal decisions
Property transactions
During the year, the Company concluded several property transactions.
The transactions that required Board decisions and the related
considerations were:
• Ilford major new lettings and related loan amendment -
In May 2022, the Group signed a package of amendments to its
£39 million secured loan facility in respect of The Exchange Centre,
Ilford, to facilitate the investment of more than £10 million for the
creation of the new NHS Community Healthcare Centre and anchor
unit for TK Maxx, the agreements for lease for which were signed
in parallel.
In coming to the decision to support entering into the agreements
for lease and the loan amendments the Board needed to consider
the financial and wider benefits to the Ilford centre and conclude that
the amendments made to the loan provided sufficient comfort of the
Group’s ability to maintain compliance with its loan facility while the
projects were ongoing.
• Restructuring of The Marlowes Centre, Hemel Hempstead debt –
Also in May 2022, the Group completed the acquisition of its debt
in respect of the Marlowes shopping centre in Hemel Hempstead.
The Group paid £11.8 million in order to settle the loan and
associated debt liabilities of c. £24.0 million, representing a discount
of approximately 51%. The transaction increased the Group's Net
Asset Value by approximately £12.5 million. To partially fund the
transaction, the Group subsequently agreed a new £4.0 million loan
facility in July 2022, which was provided by BC Invest, a subsidiary
of the Group's strategic residential partner Far East Consortium.
In concluding on the decision to support the transaction the Board
considered the benefits of bringing Hemel Hempstead back on to
its balance sheet as an investment asset and therefore securing
its future income and capital appreciation potential alongside the
immediate uplift to Net Asset Value.
• Sale of The Mall, Luton - As part of the agreement to run a
consensual sale process, changes to the constitution of the Luton
entities were agreed with the lender in May 2022 including the
appointment of an independent director with specific rights
regarding the sale process. The effective change of control that
these amendments triggered resulted in the Group deconsolidating
its interest in Luton from that date. This increased the Group’s Net
Asset Value by £6.8 million being the net liabilities at the point of
deconsolidation. In agreeing to the constitutional changes made the
Board considered the other options available. Having considered
it was not in position to cure the loan it was concluded that
supporting a consensual sale process was the best option available.
The disposal of the Group's interest in The Mall, Luton completed on
16 March 2023.
• Sale of The Mall, Blackburn - In May 2022, the Group exchanged
contracts for the sale of The Mall, Blackburn. The sale completed
in August 2022 delivering net cash proceeds of approximately
£39 million. In considering whether to proceed with the proposed
sale the Board considered the trade off between the loss of income
from the asset against the potential to further materially reduce the
Group’s debt position and key net loan to value ratio.
Consideration of
stakeholders
With regards to the various property
transactions the Board gave consideration
to the views of shareholders and the
balance between focus on Net Asset
Value, Income and Dividend projections
and the Group’s Net Debt position.
The Board also considered the impact
on staff noting that the investments in
Hemel Hempstead and Ilford secured the
position of those assets within the C&R
Group but the outcome of the Luton and
Blackburn positions would reduce the
number of assets under management. In
the case of Luton it was considered that
all other viable alternative options had
been explored and given the position of
the loan it was not viable to recapitalise it
within the Group. In the case of Blackburn
it was viewed that the benefit of materially
further reducing the Group’s net loan to
value ratio outweighed the loss of income
and scale.
5454
Stock code: CAL
Resumption of dividend payments
During the year the Board discussed the resumption of dividend
payments. The Group had suspended dividend payments since June
2020 to preserve cash given the impact of the Covid-19 pandemic and
restrictions in the Group’s banking facilities. As a result of restructuring
the Mall debt facility in November 2021, restrictions to passing cash
flow up to the Company from its core Mall Facility were removed from
November 2021.
In the first half of 2022 the Group, as covered in the Property
transactions section above, resolved the positions on its Ilford,
Hemel Hempstead and Luton facilities along with agreeing the
sale of The Mall, Blackburn for net cash proceeds of c £39 million.
Furthermore the Group also received £21.65 million from the sale of
the Walthamstow land for residential development. The combination of
these transactions brought the Group’s net debt to property ratio down
to 41% as at 30 December 2022 from 49% at 30 December 2021 and
72% at 30 June 2021.
The Board concluded that the combination of robust operational
performance, signs of a stable investment market and the significant
reduction achieved in the Group’s net debt levels that it was
appropriate to resume dividend payments with the payment of an
Interim Dividend for the year ending 30 December 2022 and as such a
dividend was paid on 7 October 2022.
Consideration of
stakeholders
The primary consideration for
shareholders was in relation to
the Company’s objective to return
to operating in line with UK REIT
requirements and resuming the
distribution of cash dividends.
The Group maintain an ongoing
dialogue with HMRC on its REIT
status and around the requirements
to remain compliant. It was noted
that HMRC had communicated that
it would not indefinitely allow the
Group to remain within the REIT
regime without paying a dividend.
Ensuring the Group operates as an
efficient and compliant REIT member
is paramount.
The Board concluded to run a Scrip
option for the dividend providing
opportunity for shareholders to take
the dividend by way of an additional
issue of shares. This provided
shareholders with optionality and
helped partially mitigate the impact
of resuming dividends upon the
Company’s cash reserves and net
debt position.
This Strategic report has been
prepared in accordance with the
requirements of the Companies Act
2006, has been approved and signed
on behalf of the Board.
Stuart Wetherly
Group Finance Director
and Company Secretary
20 April 2023
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022
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Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report ESG Report
Introduction
2022 has been a landmark year
for Capital & Regional (C&R)
regarding its ESG activities.
We worked with our external sustainability consultants to develop
a pathway to net zero carbon and achieved significant reductions
in our energy consumption. We launched company-wide training to
engage our employees on ESG and, as a result, have witnessed a shift
in mindset that has led to widespread awareness and integration of
ESG from senior management to onsite teams. Leveraging a strong
understanding of our diverse communities and trusted relationships
with local stakeholders, we have enhanced the inclusivity of our
offerings and contribution to local needs such as education, charity
fundraising, and economic inclusion.
These achievements are in the context of geopolitical tensions
and a harsh economic climate, which have impacted businesses
and communities alike, such as through rising energy prices and
a cost-of-living crisis. Our integrated ESG strategy and focus on
accountability, governance and stakeholder engagement required to
realise its ambitions, means we were well positioned to adapt to these
challenges and actively respond to the impact on our people, occupiers
and communities.
Within this section, we detail the progress and achievements we have
made in the year ending 30 December 2022 across our three pillars:
Environment, People and Community as well as our environmental,
social and governance (ESG) performance and ambitions
moving forward.
Our business
Our success stems from our
ability to create retail and leisure
offerings that are tailored to the
needs of their local communities
and provide value-oriented goods
and services. With a portfolio of
shopping centres and Snozone
leisure venues, our assets benefit
from an integrated ESG strategy
that allows them to customise their
approach based on the individual
needs of the asset type, location
and stakeholders
Our ESG strategy
Our purpose is to invest in, manage and enhance retail property by
creating dynamic environments tailored to the local communities.
With rising investor requirements and evidence connecting ESG
performance with resilience and financial returns, managing our ESG
risks and opportunities has become an integral part of our business
strategy and how we can continue to create value for our stakeholders.
As such, in 2021, we made ‘Leading in sustainability within our
communities’ one of our core values to demonstrate the seriousness
of our commitment in driving long-term sustainability objectives
(see page 16 for our business model).
Our sustainability-focused core value reinforces our stewardship
activities and is guided by five intentions (outlined below). To realise
these intentions and drive action, C&R has an integrated ESG strategy
underpinned by clear policies, procedures and measurable targets. The
strategy reflects three key pillars: minimising the negative impact of
our assets on the environment, providing a superior experience to our
people and responding to the unique needs of our local communities.
This is all while upholding our commitment to shareholders and
operating as a successful business.
5656
Stock code: CAL Strategy & 2022 highlights
Our core values
Inspiring
Creative
thinking
Encouraging
Collaborative
engagement
Leading in
Sustainability
within our
communities
Acting
with
Integrity
Delivering
Dynamic
solutions
To take an active
lead in developing
and delivering
sustainability within
our communities
To continue to
identify sustainable
practices to manage
our buildings
responsibly
To develop cultural
ways of working that
are obsessive about
waste, recycling and
reducing our carbon
footprint
To play our part in
an effective response
to the urgent threat
of climate change,
aligning with the 2015
Paris Agreement
commitments
To reach net zero
by 2040
Our ESG Strategy
Environment
People
Community
We executed operational
excellence, due to the hard work
of on-site teams, implemented
energy efficiencies and our net zero
carbon pathway activities, leading
to significant energy and carbon
savings against the 2019 baseline.
We focused on employees
holistic wellbeing, offering
financial support initiatives
and fitness challenges, as
well as their education and
development through training,
mentoring and coaching.
We built on our community
support, engaging local charities
and hosting events that
contribute to local community
needs including education,
inclusion and economic
development.
28%
reduction in energy
consumption vs. 2019
42%
reduction in Scope 1 & 2
emissions since 2019
Zero
waste to landfill achieved
in shopping centres since
2018
£865k
invested by Snozone for
carbon reduction initiatives
64%
of Snozone staff
received accredited or
certificated training
40%
of the C&R Senior
Leadership Team are
women
620
internal GEM awards
given to employees
88%
of Snozone staff are ‘very
satisfied’ in their place of
work
221
community groups
supported
559
hours spent with local BIDs
29%
growth of participation
in Disability and Adaptive
snow sports lessons
c.£300k
invested into local
communities
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External initiatives and benchmarks
We are a member of the Better Buildings
Partnership (BBP), and our shopping centres
business is a signatory to the BBP Climate
Commitment. We collaborate with property
owners and real estate investors to improve
the sustainability of commercial buildings and
advocate for industry-wide transformation.
We have been reporting our climate
disclosures in line with the Task Force on
Climate-related Financial Disclosures (TCFD)
since 2021 to effectively manage our material
climate-related risks and opportunities and
support informed investment decision-making
(see this year’s response on page 90).
Aligning with
external initiatives
and benchmarks
GRESB is the world’s leading ESG benchmark
for real estate and infrastructure. C&R has
participated in GRESB since 2018, achieving
two stars in 2022, and has set a target,
including within the objectives for Senior
Leadership and the Board of Directors, to
drive improvements.
The United Nations (UN) Sustainable
Development Goals (SDGs) is a globally
recognised framework that forms a
shared global agenda for environmental
improvement, social empowerment and
greater equality. C&R’s ESG strategy
directly contributes to seven UN SDGs (see
pages 59–60 for more information).
5858
SDG
Summary
Key initiatives and measures
We will help to eliminate poverty in
• 100% employees paid at least the NMW
all its forms, everywhere
• Over £129,000 funds raised for charities across
by implementing our national minimum
the business
wage (NMW) policy across C&R and
ensuring our third-party suppliers do
the same, providing upskilling and job
Shopping centres:
• Supported food banks at each centre
opportunities to local communities and
• Beat the Bills education events hosted across all
fundraising for charities that support
shopping centres
ending poverty and homelessness.
We will promote wellbeing
Shopping centres:
for everyone
through a suite of policies and
procedures encompassing health and
safety, wellbeing and mental health and
human rights, promoting workplace
initiatives such as the Wellbeing
with safe working conditions and
access to health services through our
partnership with the Retail Trust.
Challenge and providing all employees
• Signed lease agreement for a NHS Community Healthcare
• Launch of Retail Trust Retail Awards App
• 58 employees engaged with Retail Trust support services
• 95 million steps taken through the Wellbeing Challenge
• NHS Community Diagnostic Centre (CDC) opened in
The Mall Wood Green
Centre in Ilford
• Achieved an average 96% score in the independent DDS
health and safety audit
• 41% decrease in accidents vs. the 2019 base year
• Awarded the RoSPA Presidents Award (GOLD) for the 11th
• 0.9% absentee rate
consecutive year
Snozone:
• Launch of ‘Health Assured’, a 24hr employee assistance
service for staff health and wellbeing
• Wagestream introduced, a money management app for
staff to manage their finances
• 96% score in the independent health and safety audit and
97% for food safety
• 50% of employees are World Host accredited
• 35% of employees received bespoke training in line
management and thriving through change
• 620 internal awards were given to employees recognising
their acts of kindness and efforts within our GEM
(Going the Extra Mile) Training Program
• Supported three young mentees through the
Step Now initiative
Snozone:
skill-based training
• 64% of employees received either accredited or certificated
• Hall of Fame annual event recognises and rewards
team members who are consistently demonstrating the
company’s values
We will support lifelong learning
Shopping centres:
opportunities
by providing education to the local
community through the Community
Wheel of Support initiative in our
shopping centres, Snozone’s status as
the ‘Best Sporting Venue’ for children
learning outside the classroom
and our comprehensive employee
training programme.
Stock code: CAL Realising the ambitions of the UN SDGs
Our strategy is aligned with seven SDGs where we can have the most significant mpact through our business operations.
These are outlined below, along with the key initiatives and measures that display our impact against the SDGs’ ambitions.
SDG
Summary
Key initiatives and measures
We will help to eliminate poverty in
all its forms, everywhere
by implementing our national minimum
wage (NMW) policy across C&R and
ensuring our third-party suppliers do
the same, providing upskilling and job
opportunities to local communities and
fundraising for charities that support
ending poverty and homelessness.
We will promote wellbeing
for everyone
through a suite of policies and
procedures encompassing health and
safety, wellbeing and mental health and
human rights, promoting workplace
initiatives such as the Wellbeing
Challenge and providing all employees
with safe working conditions and
access to health services through our
partnership with the Retail Trust.
We will support lifelong learning
opportunities
by providing education to the local
community through the Community
Wheel of Support initiative in our
shopping centres, Snozone’s status as
the ‘Best Sporting Venue’ for children
learning outside the classroom
and our comprehensive employee
training programme.
• 100% employees paid at least the NMW
• Over £129,000 funds raised for charities across
the business
Shopping centres:
• Supported food banks at each centre
• Beat the Bills education events hosted across all
shopping centres
Shopping centres:
• Launch of Retail Trust Retail Awards App
• 58 employees engaged with Retail Trust support services
• 95 million steps taken through the Wellbeing Challenge
• NHS Community Diagnostic Centre (CDC) opened in
The Mall Wood Green
• Signed lease agreement for a NHS Community Healthcare
Centre in Ilford
• Achieved an average 96% score in the independent DDS
health and safety audit
• 41% decrease in accidents vs. the 2019 base year
• 0.9% absentee rate
• Awarded the RoSPA Presidents Award (GOLD) for the 11th
consecutive year
Snozone:
• Launch of ‘Health Assured’, a 24hr employee assistance
service for staff health and wellbeing
• Wagestream introduced, a money management app for
staff to manage their finances
• 96% score in the independent health and safety audit and
97% for food safety
Shopping centres:
• 50% of employees are World Host accredited
• 35% of employees received bespoke training in line
management and thriving through change
• 620 internal awards were given to employees recognising
their acts of kindness and efforts within our GEM
(Going the Extra Mile) Training Program
• Supported three young mentees through the
Step Now initiative
Snozone:
• 64% of employees received either accredited or certificated
skill-based training
• Hall of Fame annual event recognises and rewards
team members who are consistently demonstrating the
company’s values
59
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Realising the ambitions of the UN SDGs
SDG
Summary
Key initiatives and measures
We will promote gender equality and
empower all women and girls
• Launch of improved Maternity and Menopause Policy
• 40% of the C&R Senior Leadership Team are women
through Snozone’s female-first
marketing approach, tailored
recruitment and partnership with
Sports England’s This Girl Can, our
membership with Real Estate Balance,
implementation of diversity policies,
zero-tolerance towards all forms of
violence and monitoring of gender
balance performance data.
We will promote sustainable
economic growth and decent work
for all
through our Modern Slavery Champion
Programme, supporting local start-ups
and small businesses to thrive in our
centres, helping local charities who work
with disadvantaged members of society,
offering apprenticeships and developing
career mentoring initiatives for youth in
our communities.
Shopping centres:
• 50% of shopping centres’ general managers are women
• 61% of employees are women across the shopping centre
business
• Launched Package for Florence initiative to eliminate
period poverty
Snozone:
• 49% women in Senior Management positions
• Introduced over 400 women and girls to snow sports free
of charge on International Women’s Day
Shopping centres:
• 36 start-ups and small businesses supported
• One apprenticeship in place
• Three youth mentees engaged through the
Step Now initiative
We will provide inclusive, safe and
resilient spaces for all
by managing our buildings responsibly
and operating inclusively such as
through Snozone obtaining Disability
Confident Employer status and its
long-term partnership with Sense.
Ensuring access to affordable housing
is included within our residential
developments and maintaining access to
public spaces to promote wellbeing and
community cohesion.
Shopping centres:
• 44,096 sq.m of public realm space
• Quiet Hour introduced weekly across all centres
• c.£300,000 invested in supporting community services
Snozone:
• 29% growth in participation in Disability and Adaptive snow
sports lessons
• Exceeded 1,000 disability and adaptive lessons at Snozone
for the first time
• £6,000 raised for Sense, Snozone’s charity partner
We will take urgent action to combat
our contribution to the climate crisis
by realising progress against our
commitments to net zero carbon,
executing best practice in energy, water
and waste management, continually
reviewing the capital investment
plan for each venue and centre,
working with occupiers to achieve
mutual environmental performance
gains and spearheading green
community initiatives.
• Net zero carbon by 2040 for shopping centres and Snozone
Shopping centres:
• 24% electricity and 64% gas use reduction vs. 2019
• Zero waste to landfill
• 11% water use reduction vs. 2019
Snozone:
• 1,765 solar panels installed at the Madrid venue
• 11,500 trees planted to date by Snozone’s offsetting
activities with Tree-Nation
• New and more efficient blast coolers installed at the
Milton Keynes venue
• 18% water use reduction vs. 2019
• 6% electricity and 23% gas use reduction vs. 2019
6060
Stock code: CAL Governing ESG responsibly
C&R’s strategy is overseen by the
ESG Committee , who is responsible
for driving accountability as well
as the implementation of the
ESG strategy across the business.
Coordinating between both shopping
centres and Snozone, the committee
continuously seeks to identify
opportunities where ESG principles
can be integrated into daily business
operations and meets quarterly to
receive updates on activities and
progress made against targets. The
committee is supported by sub-
committees for each of the three
pillars: Environment, People and
Community, who are responsible for
monitoring progress against targets.
The ESG Committee then reports
quarterly to the Board regarding
progress made against the strategy.
ESG activities, spearheaded by
shopping centres’ Director of
Operations & Guest Experience and
Snozone’s Managing Director, are
developed and implemented through
continuous collaboration with onsite
managers and teams. Examples
include the development of the Net
Zero Carbon Wheel of Delivery and
initiatives to tackle current issues
such as the cost-of-living crisis with
our Beat the Bills campaign.
Empowered by a company-wide
education programme in 2022, ESG
is now present on the agenda in
all Senior Leadership Team (SLT)
meetings to promote the discussion
of key topics and the dissemination
of best practice. For the first time,
organisational ESG objectives
have been set for all employees
in 2023. To ensure the strategy is
being driven from every level and
embed accountability, objectives are
tailored to teams and by seniority
level. The objectives aim to improve
ESG engagement, reporting and
performance across our three pillars,
for example, to achieve progress
towards C&R’s net zero carbon
commitments, measure the social
value we create for local communities
and train all staff on key ESG topics to
empower them to act in their roles.
Progress against the objectives will be
monitored through a selection of key
performance indicators (KPIs).
ESG is also integrated into C&R’s
communications strategy, both
internally and externally, to generate
awareness of our activities and
progress. For example, in 2022, we
launched a dedicated ESG page on
the C&R website and graphics are
present throughout all our shopping
centres informing visitors about
our sustainability credentials and
initiatives. Updates on ESG also
featured in all investor presentations
and we communicated key highlights
during our most recent Capital
Markets Day.
Environmental, Social and Governance (ESG) Committee
Laura Whyte
Non-executive Director – Chair
Katie Wadey
Non-executive Director
Lawrence Hutchings
Chief Executive Officer
Sara Jennings
Director of Operations & Guest
Experience
Nick Phillips
Managing Director of Snozone
Alanna Henry
HR Consultant
Nikki Jones
HR Director, Snozone
Olivia Grout
PA Operations
Environment Committee
People Committee
Community Committee
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Creating value for our stakeholders
Our community focus means engaging with stakeholders is a vital part of how we understand
their changing needs and safeguard the long-term success of our business. We proactively listen
and share through regular, constructive engagement to communicate our strategic direction and
be agile in responding to our diverse occupiers, community and public sector partner needs.
Our stakeholders
How we engage them
Issues that are important
Our shareholders
Results presentations, roadshow meetings,
annual general meeting (AGM), Group ESG
meetings, ad hoc meetings, requests and
email correspondence, Capital Markets
Days and asset tours, attendance at
investor conferences
Financial and operational results, awards,
retail and property market perspectives,
potential growth opportunities and/
or corporate activity, environmental
performance, social contributions,
compliance
Our employees
Staff pulse engagement surveys, ESG
staff training, ESG Officers, business-
wide town halls with internal updates
and guest speakers, monthly employee
voice meetings and 24/7 anonymous
feedback platform, coaching and mentoring
programme
ESG, health and wellbeing, community
support, British Heart Foundation
cardiopulmonary resuscitation (CPR)
training, International Women’s Day,
business planning, board updates, annual
and half year results, leadership and line
management training
Our suppliers
Tendering, appointment and monitoring
against defined capital and revenue project
scopes, regular performance review
meetings
Values and vision, community relevance,
local employment, sustainability
credentials, cost-effectiveness, performance
Our retail
customers and
occupiers
Marketing boards, website, engagement
with agents, onsite meetings, social media,
business exposure onsite, local authorities
and investment
Identifying the right location, demographic,
leasing, term and budget, branding and fit
out of their unit, footfall
Our communities
and guests
Websites, social media, marketing events
and key launches, continuous guest
activities and programmes, loyalty card,
emails
Consumer marketing campaigns, ESG,
charity and community support, new
retailer openings
Local authorities
Ad hoc interactions between varying levels,
Business Improvement Districts (BIDs),
support to a variety of delivery boards,
town centre boards and stakeholder
frameworks, charitable support, headlease
engagement where local authorities are
freehold partners
Planning applications, headlease
administration, town centre master
planning, Business Improvement Districts,
business rates, town centre marketing/
event support, key stakeholder interactions
6262
Stock code: CAL 6363
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report ESG Report CONTINUED
Environment
At C&R, managing the environmental impact of our owned and
leased assets through the property lifecycle, from refurbishment to
operation, means we can embed resilience against our ESG risks,
realise opportunities associated with environmental improvements and
ensure better places for all the enjoy. With the effects of climate change
being felt worldwide, and the built environment responsible for 25% of
the UK’s carbon emissions1, the real estate sector has a responsibility,
now more than ever, to play its part in the green transition.
This year we achieved significant reductions in energy consumption
compared to 2019, our most recent year unaffected by the
consequences of COVID-19. In 2021, our business operations continued
to see effects from pandemic-related government restrictions,
such as Snozone closures during their peak season (January 2021
to 14 April 2021). As a result, 2022 saw increases in energy and
water consumption relative to the previous year. Record-breaking
high temperatures in the summer and lower-than-average negative
temperatures in the winter created direct impacts at the asset level,
with C&R experiencing first-hand, climate-related issues including
increased flood risk and cooling/heating requirements. This year also
saw a dramatic increase in energy costs, requiring C&R to implement
tools and initiatives to limit the impact on the business, its people and
the communities we operate within.
C&R has committed shopping centres and Snozone to achieve net zero
by 2040. To reach this goal, with the support of experts in the industry,
we have developed individual net zero pathways for each business to
reflect the different opportunities and challenges they both face, with
short, medium, and long-term goals across Scope 1, 2 and 3 emissions.
As we build a deeper understanding of our performance based on
actual data, we will set further targets and milestones to guide the
achievement of our commitments.
Key Highlights2
Net zero by 2040 target
set by shopping centres
and Snozone
28% reduction in Scope
1 and 2 emissions across
the Group compared to
the 2019 baseline
£865k capital invested
by Snozone in carbon
reduction initiatives
Zero waste to landfill
achieved in shopping
centres since 2018
11,500 trees planted
by Snozone in their
partnership with
Tree-Nation since 2021
1. UKGBC, (2021), Climate Change – UKGBC’s vision for a sustainable built environment is one that mitigates and adapts to climate change.
Available from: https://www.ukgbc.org/climate-change-2/
2. All figures relating to energy, emission, and water reductions exclude Snozone Madrid unless noted otherwise.
Our People
Yentl started working at Capital & Regional in 2021, after
making the move to London from Hong Kong. Before joining
C&R, she qualified as a Chartered Engineer and became a
certified Project Management Professional (PMP®) with over
seven years of experiences in various industries. Yentl is
currently part of the Investment and Analytics Team. She is
passionate about process improvement and data analysis.
She enjoys drilling down in the data to provide insights that
help influence strategy planning and business decisions.
Yentl is also part of the company’s Diversity and Inclusion
and Employee Voice committees, eager to bring people
closer together and create a harmonious working
environment for people to grow and strive.
Yentl Yeung
Performance Analyst
64
Stock code: CAL Net zero roadmap
Embodied carbon
Define and introduce sustainable refurbishment guidelines for major and minor
refurbishments
Conduct whole life carbon and climate risk assessments for all refurbishments and fit outs
Operational carbon
Implement occupier engagement strategy
and scale-up the use of green lease clauses
Improve data accuracy and coverage
Embed net zero criteria into the pre-acquisition
process
Integrate findings of asset level audits into existing
multi-year carbon reduction plans for each asset,
and extend plans to incorporate asset level climate
risk information
Continue LED lighting upgrades
Continued investment in decarbonising
consumption with new technologies
Achieve 80% reduction in operational carbon
(Scope 1 & 2) by 2036
Onsite generation
Onsite renewable energy strategy in
development
Solar PV installation
0
4
0
2
y
b
o
r
e
Z
t
e
N
s
s
e
r
g
o
r
P
2
2
0
2
Reduced Scope 1 & 2
emissions by 42% since
2019
Venues now 100%
equipped with LED
lamping
s 1,765 solar panels
s
e
r
g
o
r
P
2
2
0
2
installed on the roof
at Snozone Madrid,
estimated to reduce
operational costs by up
to 40% p.a.
Renewable energy procurement
Work with occupiers to increase high-
quality renewable energy procurement
Continue to procure 100% landlord renewable
electricity and identify high-quality renewable
energy sources
s
s
e
r
g
o
r
P
2
2
0
2
100% electricity
consumption is from
renewable sources
Zero emissions from
refrigerants at Snozone
Offsetting
Develop a carbon offsetting strategy
Plant 9,000 trees in partnership with Tree
Nation by the end of 2023
s 11,500 trees planted in
s
e
r
g
o
r
P
2
2
0
2
partnership with Tree
Nation by the end of
2022, reforesting 12
hectares of land and
offsetting 1,440 t CO2
6565
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report
Our shopping centres’ Scope 3 emissions
relating to occupier energy consumption
make up an estimated 83% of our total
emissions (based on our baseline year of
2019). This means that managing these
emissions is central to achieving our net zero
carbon commitment. With occupier emissions
falling outside of our direct management or
ownership, tackling them proves a challenge
for C&R and across the wider industry.
To address this, we have created an enhanced
occupier engagement strategy to promote
collaboration. The strategy includes net zero
carbon audits, sustainability training and
upskilling for both our team and occupiers,
as well as the implementation of engagement
initiatives. For example, we have been
engaging with CRATE UK on the design of a
new Market Hall in Walthamstow, a vibrant
hub for the community. CRATE, C&R’s design
team and external agencies have been
collaborating to ensure the final design
incorporates best practice sustainability
principles such as renewable energy
sources, maximising the use of natural light
and biophilia.
This has resulted in an estimated EPC rating of
A. We also intend to incorporate collaboration
and sustainability into our new leases and
renewals, including scaling up our use of
green lease clauses. A key focus for 2023 is
to increase the collection of occupier data to
enhance this strategy.
This year we also introduced the Net Zero
Carbon Committee. The committee aims to
ensure the effective progress of our net zero
carbon pathway by managing any required
interventions, increasing retailer and occupier
engagement, and planning EPC performance
improvements. The Net Zero Carbon
Committee Wheel of Delivery was launched
across our shopping centre business as part
of our ESG Takeover Day in Q3 2022 and
covers 12 key areas to target. The committee
proactively looks at performance trends
and opportunities that might help progress
towards our net zero commitment. Through
our ESG committee, each centre’s committee
updates are presented quarterly to the Board
to monitor progress.
ESG Report CONTINUED
Environment
In 2022,
shopping centres
achieved a
64%
reduction
in Scope 1
emissions and a
43%
reduction
in Scope 2
emissions
compared to the
2019 baseline.
This is equivalent
to 2,282 tCO2.
Shopping centres are net zero
carbon by 2040
For our shopping centres, we have developed
a robust pathway aligned with the BBP
Climate Commitment and the UK Green
Building Council’s (UKGBC) definition of net
zero. Our commitment covers embodied
carbon associated with refurbishments and
fit-outs and operational carbon from landlord
and occupier energy consumption, along
with other measured emission sources (see
Our pathway to Net Zero Carbon for more
information).
The first step in developing our pathway
was to understand our baseline portfolio
emissions. From this, we then developed our
projections for 2040, identifying opportunities
and targets for emission reductions. These
steps resulted in a pathway that prioritises
the necessary emission reductions up to
our target year and beyond. To support our
carbon pathway, we developed a clear and
actionable implementation plan designed with
all stages of the property lifecycle in mind.
We have ensured that our transition to net
zero carbon is aligned with Snozone’s net zero
carbon pathway and best practice industry
targets, such as the Carbon Risk Real Estate
Monitor (CRREM) and the forthcoming UK Net
Zero Carbon Buildings Standard.
PPM
(Service
charge)
TCFD Audit
Energy
Procurements
Water
Management
EPC
Management
Waste
Management
ESG
Training
NZC COMMITTEE
Shopfits &
Refurbishments
Occupier
Engagements
Strategy
(Scope 3)
ESG
Team
Pledges
Green Leases
NZC
Interventions
(CAPEX)
6666
Stock code: CAL Well done
Snozone for
supporting
the Tree-
Nation
initiative.
We all need
to look after
this wonderful
planet of ours
to ensure
it survives
for us now
and for
generations
to come.
Angela Ireland
(Guest)
Snozone is net zero carbon by 2040
Snozone’s net zero pathway consists of
a comprehensive plan to decarbonise its
portfolio. Targeting an 80% reduction in
operational carbon by 2036 and guided by the
Greenhouse Gas (GHG) Protocol, Snozone’s
net zero plan includes energy consumption
targets as well as the improvement of
energy sourcing.
Snozone has already made strong progress
through investment in its assets and
continues to seek ways to balance the
impact our portfolio has on the environment
through carbon reduction projects. This year
we invested £865,000 in carbon reduction
initiatives: a blast cooler replacement in
Milton Keynes; upgrading of our cooling tower
in Yorkshire; solar panel installation in Madrid;
upgrading of our glycol liquid piping in Milton
Keynes; and installation of LED lighting in
Yorkshire. All three Snozone sites are powered
by 100% renewable energy, comprising both
wind and solar energy generation.
Similar to our shopping centres, the little
control we have over Snozone’s Scope 3
emissions has provided a challenge. Travel to
Snozone venues represents a large proportion
of these emissions, and to overcome this,
several initiatives have been launched. These
include cycle-to-work schemes for team
members and maintenance optimisation such
as consolidating service providers within our
supply chain to reduce venue visit frequency.
Energy
Energy efficiency is critical to achieve our
net zero carbon commitment and therefore
a priority across the business. Due to our
efforts in 2022, we have seen a significant
improvement in our performance. Shopping
centres observed a 24% reduction in electricity
consumption and a 64% reduction in gas
consumption compared to the 2019 baseline.
Reductions were partially achieved due to
an ongoing large-scale LED lighting upgrade
project, which involves the replacement of
lamps with LED lighting in common parts and
car parks by June 2023. It is estimated that this
will result in 50% energy savings on the newly
installed units.
However, the substantial energy savings
in shopping centres is testament to the
determination of onsite staff to implement
operational efficiencies. Despite significant
hikes in energy prices, we saw minimal
overspend on our utilities due to the team’s
onsite energy reduction efforts. At The Mall
Maidstone, for example, our team executed
significant behaviour change, contributing to
a 33% electricity saving compared to 2019.
This was achieved through BMS efficiencies,
out-of-hour load checks and a significant
shift in culture, where all staff changed their
behaviours to mitigate unnecessary energy
use. Similar efforts within Snozone led the
local team in Madrid to reduce its energy
consumption by 9% compared to 2021.
This year, Snozone’s utility consumption
reduction vs. the 2019 baseline year either
met or exceeded all reduction targets. This
included a 6% reduction in electricity and
a 23% reduction in Scope 1 gas. Snozone’s
biggest source of energy consumption is
creating a snow block and maintaining a
temperature of -3ºC. To manage this energy
source more effectively, Snozone has invested
in ammonia-based coolant technologies and
will continue to upgrade this equipment to
deliver significant cost and carbon benefits.
Further to this, the monitoring of chiller
shutdowns by our ESG Officers has resulted
in a reduction in carbon emissions by 8%.
At the Madrid venue, alongside the ski boxes
in the UK, all conventional light fittings have
been retrofitted with LED technology, which
has both lowered heat emissions associated
with the lighting and reduced direct energy
consumption. In 2022, Snozone also
completed the transition of all restaurants
and office space to 100% LED lighting.
Energy Performance
Certificates (EPC)
From 1 April 2023, the regulations around EPC
ratings are tightening. It will be a requirement
for all existing leases to achieve a minimum
EPC rating of E. To achieve this, our shopping
centres are recording EPC ratings at the store
level to increase focus and highlight areas
where ratings need to be improved and we
will work on providing our retailers with tools
to help improve performance. We have also
included EPC management as a key target
area in our Net Zero Carbon Pathway Wheel
of Delivery.
Onsite renewables
As part of both shopping centres’ and
Snozone’s net zero carbon pathways, high-
quality renewable onsite energy generation
will be sought out and installed where
feasible. Our electricity consumption across
all assets is from 100% renewable sources,
with Snozone producing zero emissions from
ammonia refrigerants despite its cooling
requirements.
In 2022, Snozone Madrid had 1,765 solar
panels installed across the roof of the
Xanadu centre, which is estimated to reduce
operational costs by up to 40% per annum.
With an installed capacity of 545 kWh per
panel, in total, this amounts to 962,000 kWh of
solar energy generation.
6767
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report ESG Report CONTINUED
Environment
In 2022, Snozone
reduced
its Scope 1
emissions by
24%
and Scope 2
emissions by
29%
compared to the
2019 baseline,
equivalent to
430 tCO2.
For shopping centres, our Food & Beverage
(F&B) occupiers’ high reliance on gas sources
has created a challenge and we aim to
investigate ways to transition to renewables
in the future. We have actively worked
with CRATE Places UK, our new Market Hall
tenant to design a food offering that will
utilise renewable energy sources, maximise
natural light and incorporate greenery within
the space.
Waste and water
The retail sector in the UK is responsible for
around 12% of all industrial and commercial
waste1. C&R therefore consider the
promotion of circular economy principles
through reducing waste as one of our core
sustainability values. This year, shopping
centres have experienced progress through
initiatives such as the deployment of retailer
waste management training from Don’t Waste,
our waste management consultant, which
has led to a reduction in waste contamination
as well as improved waste disposal controls.
Once again, zero waste was sent to landfill
in 2022.
At all our shopping centre locations, we
collaborate with Don’t Waste to ensure we
continue to achieve this. For example, The
Exchange, Ilford was awarded an International
Green Apple Environment Award this year
for its environmental best practice. The
centre, in partnership with Don’t Waste, made
significant progress on improving its recycling
accuracy onsite. A new signage package,
additional bins, an occupier engagement
programme and a full review of the recycling
process, helped the centre maintain zero
waste to landfill, reduce the frequency of
food waste bin collections as well as improve
rebates, with cardboard rebates offsetting all
waste costs for April 2022.
Our strong performance is also due to the
success of our community events that engage
visitors on waste reduction and recycling.
Disposable coffee cup recycling, a pilot
initiative at our shopping centre in Redditch,
proved to be extremely successful, with
over 1,000 cups collected. These have gone
on to be repurposed as greeting cards or
other products.
As a tenant within a larger leisure scheme,
Snozone is not directly responsible for its
waste management. We do, however, ensure
that we only work with suppliers who share
our waste reduction values, such as those
who do not use single-use plastic packaging.
Our coffee provider, who delivers products
using an electric fleet, supplies their bags
in compostable packages, while all onsite
drinks are provided in aluminium or glass
packaging, which has a higher recycling rate.
Snozone also has ESG Officers at each venue
who help with waste reduction initiatives
such as encouraging the use of recycling bins,
reducing printer paper, and working with food
and beverage teams to reduce food waste.
C&R considers water reduction measures
throughout the business, and our water
management system has been highlighted
as an area of focus moving forward. In
comparison to the 2019 baseline, we saw
water consumption reductions of 11%
in shopping centres and 18% in Snozone
locations, exceeding our 10% reduction target.
Nature
With a nature-positive ambition, C&R aims to
regenerate and increase biodiversity where
possible and reduce the impacts of our
business on nature. With this goal in mind and
to offset its carbon footprint, Snozone has a
partnership with Tree-Nation, supporting the
mission of global reforestation. By planting
trees all around the world, Tree-Nation aids
Snozone in reducing carbon emissions and
restores and regenerates the environment
in places where biodiversity transformation
is required. As part of this initiative, Snozone
has planted 11,500 trees since its partnership
with Tree-Nation began in October 2021, with
8,726 planted in 2022. This means Snozone
has now reforested over 12 hectares of land
and offset over 1,440 tonnes of CO2.
An example of how our shopping centres
foster biodiversity is through the introduction
of beehives at The Mall, Luton. In April 2021,
members of the team created beehives
and an enclosure on the rooftop car parks
to house a delivery of bees from a local
beekeeper. Members of the team work
regularly with the local beekeeper to ensure
that the bees swarm and have now moved
them to a permanent hive on the rooftop, as
well as setting up a pollinating garden.
Climate Risk
Human-induced climate change is already
causing shifts in weather patterns in every
region across the world, with droughts, heavy
precipitation and flooding all projected to
intensify in the coming years. Physical climate
events are being experienced on a now-
regular basis across the UK and awareness is
growing on the significant risk climate change
poses to the entire financial system. This has
contributed to significant policy action across
the UK to support the transition to a low-
carbon economy and mitigate future impacts
of climate change.
1. Fresco Environmental, (2021), Shopping Centres: How You Can Recycle More, Available from: https://frescoenvironmental.com/shopping
6868
Stock code: CAL Society UK. Maidstone Borough Council’s
Climate Change and Biodiversity team also
created a ‘Go Green Information Centre’
within the shopping centre. They took over
an empty unit until the end of September and
used it to help anyone who may be confused,
sceptical or unsure of where to start with
becoming greener and more sustainable.
For three weeks during the summer school
holidays, 17&Central, Walthamstow ran their
sustainable summer camp, teaching children
to be sustainable and offering fun activities
to get involved in. The summer camp helped
children learn how their garden grows and
how they can help make their homes and the
world greener. Grow-Your-Own workshops
were held, where children could make their
own gardening aprons and water bottles, as
well as sustainable interactive story-times,
special games, trials and activities. The camp
aimed to educate children on how small
changes at home can create a big green
difference. In another example, The Tiny
Gardens Project in Ilford displayed different
plants, herbs and small gardens to give
inspiration, hints and tips on how people can
plant indoors or in small outdoor spaces. The
unit was open to the public for two weeks,
where guests could visit and vote for their
favourite garden by placing a coffee bean
into a pot by the garden of their choice. The
team was awarded the Sceptre Award for
Sustainability Initiative of the Year 2022.
There are
resources
to help
people better
understand
the solutions,
products,
and services
already
available that
can help them
lead a more
sustainable
life.
Councillor
David Burton
Leader of Maidstone
Borough Council
To understand the risks associated with
climate-related physical and transition risks
and protect our communities from being
impacted, we have conducted a detailed
assessment of climate risk governance at
C&R and the climate-related risks posed to
the business and portfolio across multiple
climate scenarios and time horizons. To
effectively manage these risks and benefit
from related opportunities, such as reducing
operational costs and capital expenditure
and increasing revenues and asset values, we
have integrated climate-related risks into our
risk management framework and formalised
oversight responsibilities. Climate risk has also
been embedded into our strategic approach
and informs our strategic financial planning
and investment decisions. We have also
started to implement climate risk mitigation
and adaptation measures at the site level to
directly manage climate-related risks.
To learn more about our climate risk
management see pages 90–97 for our second
response to the Task Force on Climate-related
Financial Disclosures.
Environmental Education
We believe in the importance of helping
individuals develop a deeper understanding
of environmental issues and encouraging
responsible behaviour. In 2022, we ran several
community initiatives with this goal in mind.
For example, The Mall Maidstone’s ‘Go Green’
event celebrated Great Big Green Week by
hosting an entire week of free activities, talks
and events, which were open to everyone.
This included a Climate and Healthy Talk with
Councillor Stuart Jeffery, a ‘Small Changes
in Sustainable Living’ workshop as well as a
‘Going Veggie’ talk hosted by The Vegetarian
6969
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report ESG Report CONTINUED
Environment
European Public Real Estate Association (EPRA) Sustainability Best Practices
Recommendations (sBPR)
The EPRA sBPR intend to raise the standards of sustainability reporting for listed real estate companies and provide a
consistent way in which to report environmental, social and corporate impacts. Below we have disclosed our 2022 energy,
carbon, water and waste performance in accordance with the sBPR and has been externally verified by HDR, Inc.
Capital and Regional 2022 Annual Reporting
EPRA Performance Indicator
Elec-Abs
Fuel-Abs
Total electricity
consumption
(kWh)
Total gas
consumption
(kWh)
2022
Retail Portfolio Shopping centres
Redditch
Blackburn*
Luton
Maidstone
Walthamstow
Wood Green
Hemel Hempstead
Ilford*
Total
Snozone**
Milton Keynes
Castleford
Madrid, Spain
Total (Not incl. Madrid)
Total (incl. Madrid)
2021
Retail Portfolio Shopping centres
Redditch
Blackburn*
Luton
Maidstone
Walthamstow
Wood Green
Hemel Hempstead
Ilford
Total
Snozone**
Milton Keynes
Castleford
Madrid, Spain
Total (Not incl. Madrid)
Total (incl. Madrid)
2020
Retail Portfolio Shopping centres
Redditch
Blackburn*
Luton
Maidstone
Walthamstow
Wood Green
Hemel Hempstead
Ilford
Total
Snozone**
Milton Keynes
Castleford
Total
2,015,489
654,647
2,164,026
1,445,766
851,431
2,149,389
903,692
1,948,242
12,132,682
1,852,704
2,634,728
5,156,311
4,487,431
9,643,742
2,203,628
1,034,335
2,187,776
1,431,499
623,465
1,969,431
936,921
1,636,895
12,023,949
1,894,353
2,323,409
4,994,451
4,217,762
9,212,213
2,368,543
1,093,871
2,446,827
1,532,259
494,696
2,053,453
1,030,125
1,685,665
12,705,437
55
n/a
767,018
411,656
n/a
431,921
50,035
–
1,660,685
871,005
426,194
–
1,297,199
1,297,199
55
n/a
1,242,103
519,174
n/a
372,199
128,410
67,615
2,329,556
649,286
343,905
–
993,191
993,191
29,702
n/a
1,865,347
986,226
n/a
1,171,821
285,410.00
291,282.12
4,629,788
1,839,721
1,980,520
3,820,241
488,030
500,938
988,968
7070
Total direct
GHG
emissions
(annual metric
tonnes tCO2e)
Energy - Int GHG-Dir-Abs GHG-Indir-Abs
Total indirect
GHG
emissions
(tCO2e)
Energy
Intensity
(kwh/sqft/year)
GHG Intensity
from
building energy
(kgCO2e/sqft/
year)
GHG-Int
Total weight of
Total weight of
Total weight of
Total weight of
Total weight of
waste by disposal
waste by disposal
waste by disposal
waste by disposal
waste by disposal
Total water
Building water
route (annual
withdrawn from
source (annual m3)
intensity
metric tonnes –
(m3/sqft/ year)
landfill)
route (annual
metric tonnes
– incineration)
route (annual
metric tonnes –
recovery)
route (annual
route (annual metric
metric tonnes
tonnes – anaerobic
– recycled)
digestion)
Water-Abs
Water-Int
Waste-Abs
Waste-Abs
Waste-Abs
Waste-Abs
Waste-Abs
2.0
1.1
3.2
3.7
3.3
4.7
1.4
6.5
2.9
50.9
112.6
179.9
71.7
99
2.2
1.7
3.8
3.9
2.4
4.3
1.6
5.7
3.0
47.5
98.1
166.5
64.6
92
2
2
5
5
2
6
2
7
4
43
91
60
0.01
–
140
75
–
79
9
–
303
159
78
–
237
237
–
–
228
95
n/a
68
24
12
427
119
63
–
182
182
5
n/a
343
181
n/a
215
52
54
851
89.73
92
182
390
127
418
280
165
416
175
377
2,346
358
510
1,005
868
1,873
468
220
465
304
132
418
199
348
2,553
402
493
849
896
1,745
552
255
570
357
115
479
240
393
2,962
429
462
891
0.39
0.21
0.62
0.71
0.63
0.90
0.28
1.26
0.55
6.69
18.75
33.52
10.75
19.06
0.47
0.04
0.76
0.80
0.51
0.88
0.33
1.20
0.62
7.51
18.15
28.30
11.10
15.76
0.56
0.04
1.01
1.08
0.44
1.26
0.44
1.49
0.80
9.69
20.38
13.29
8,250
1,574
10,061
4,019
7,842
14,738
10,971
13,106
70,561
4,056
7,248
15,312
11,304
26,616
7,494
1,687
6,958
4,019
7,565
7,426
13,363
8,866
57,377
2,527
6,096
13,410
8,623
22,033
6,412
1,836
5,684
3,079
5,537
5,738
6,982
14,733
50,000
1,254
5,560
6,814
0.01
0.003
0.01
0.01
0.03
0.03
0.02
0.04
0.01
0.08
0.27
0.51
0.14
0.24
0.01
0.003
0.01
0.01
0.03
0.01
0.02
0.03
0.01
0.05
0.22
0.45
0.11
0.20
0.01
0.003
0.01
0.01
0.02
0.01
0.01
0.05
0.01
0.02
0.20
0.08
136
1,793
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
133
106
287
239
–
36
183
984
–
194
70
182
185
–
35
120
787
–
36
58
162
204
–
10
110
580
82
–
–
–
–
–
–
54
–
–
–
–
–
–
–
55
55
–
–
–
–
–
–
74
31.6
105.3
119
78
320
67
107
929
94
79
144
133
287
157
95
883
91
54
1,845
140
302
264
122
74
865
67
60
1,894
10
44
2
2
4
–
5
4
70
3
14
7
4
2
2
9
52
92
3
8
8
4
–
18
4
27
71
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Stock code: CAL EPRA Performance Indicator
Elec-Abs
Fuel-Abs
Energy - Int GHG-Dir-Abs GHG-Indir-Abs
GHG-Int
Water-Abs
Water-Int
Waste-Abs
Waste-Abs
Waste-Abs
Waste-Abs
Waste-Abs
Notes
London office data has not been used in EPRA reporting. The office accounts for less than 0.5% of electricity consumption across the portfolio.
The London office has been captured in the mandatory reporting figures.
Actual invoice data has been used for reporting wherever possible, however some estimated data has been used where data has not been available.
The information in this report represents the best information available at the time of issue.
* The Blackburn site was disposed of in August 2022, slightly impacting the centres' energy use
** Waste at all Snozone dealt with directly by the landlord, with costs for this including in the service charge. Snozone are not able to obtain accurate
waste figures at this time as the waste bins are shared by all tenants.
Total water
withdrawn from
source (annual m3)
Building water
intensity
(m3/sqft/ year)
Total weight of
waste by disposal
route (annual
metric tonnes –
landfill)
Total weight of
waste by disposal
route (annual
metric tonnes
– incineration)
Total weight of
waste by disposal
route (annual
metric tonnes –
recovery)
Total weight of
waste by disposal
route (annual
metric tonnes
– recycled)
Total weight of
waste by disposal
route (annual metric
tonnes – anaerobic
digestion)
8,250
1,574
10,061
4,019
7,842
14,738
10,971
13,106
70,561
4,056
7,248
15,312
11,304
26,616
7,494
1,687
6,958
4,019
7,565
7,426
13,363
8,866
57,377
2,527
6,096
13,410
8,623
22,033
6,412
1,836
5,684
3,079
5,537
5,738
6,982
14,733
50,000
1,254
5,560
6,814
0.01
0.003
0.01
0.01
0.03
0.03
0.02
0.04
0.01
0.08
0.27
0.51
0.14
0.24
0.01
0.003
0.01
0.01
0.03
0.01
0.02
0.03
0.01
0.05
0.22
0.45
0.11
0.20
0.01
0.003
0.01
0.01
0.02
0.01
0.01
0.05
0.01
–
–
–
–
–
–
–
–
–
–
133
106
287
239
–
36
183
984
82
–
–
–
–
54
–
–
136
119
78
320
67
107
929
94
79
1,793
2
2
10
4
–
44
5
4
70
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
–
–
–
–
–
–
–
–
–
–
194
70
182
185
–
35
120
787
–
–
–
–
–
55
–
–
55
144
133
287
157
95
883
91
54
1,845
3
14
7
4
2
52
2
9
92
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
–
–
–
–
–
–
–
–
–
–
36
58
162
204
–
10
110
580
–
–
–
–
–
74
31.6
–
105.3
140
302
264
122
74
865
67
60
1,894
3
8
8
4
–
18
4
27
71
0.02
0.20
0.08
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
7171
Total electricity
Total gas
consumption
consumption
Energy
emissions
Intensity
(annual metric
GHG
building energy
emissions
(kgCO2e/sqft/
(kWh)
(kWh)
(kwh/sqft/year)
tonnes tCO2e)
(tCO2e)
year)
Total direct
GHG Intensity
GHG
Total indirect
from
12,132,682
1,660,685
1,852,704
2,634,728
5,156,311
4,487,431
9,643,742
871,005
426,194
1,297,199
1,297,199
2,015,489
654,647
2,164,026
1,445,766
851,431
2,149,389
903,692
1,948,242
2,203,628
1,034,335
2,187,776
1,431,499
623,465
1,969,431
936,921
1,636,895
1,894,353
2,323,409
4,994,451
4,217,762
9,212,213
55
n/a
767,018
411,656
n/a
431,921
50,035
–
–
55
n/a
1,242,103
519,174
n/a
372,199
128,410
67,615
649,286
343,905
–
993,191
993,191
2,368,543
1,093,871
2,446,827
1,532,259
494,696
2,053,453
1,030,125
1,685,665
12,705,437
29,702
n/a
1,865,347
986,226
n/a
1,171,821
285,410.00
291,282.12
4,629,788
1,839,721
1,980,520
3,820,241
488,030
500,938
988,968
2.0
1.1
3.2
3.7
3.3
4.7
1.4
6.5
2.9
50.9
112.6
179.9
71.7
99
2.2
1.7
3.8
3.9
2.4
4.3
1.6
5.7
3.0
47.5
98.1
166.5
64.6
92
2
2
5
5
2
6
2
7
4
43
91
60
0.01
–
140
75
–
79
9
–
303
159
78
–
237
237
–
–
228
95
n/a
68
24
12
427
119
63
–
182
182
5
n/a
343
181
n/a
215
52
54
851
89.73
92
182
390
127
418
280
165
416
175
377
2,346
358
510
1,005
868
1,873
468
220
465
304
132
418
199
348
2,553
402
493
849
896
1,745
552
255
570
357
115
479
240
393
429
462
891
2,962
0.39
0.21
0.62
0.71
0.63
0.90
0.28
1.26
0.55
6.69
18.75
33.52
10.75
19.06
0.47
0.04
0.76
0.80
0.51
0.88
0.33
1.20
0.62
7.51
18.15
28.30
11.10
15.76
0.56
0.04
1.01
1.08
0.44
1.26
0.44
1.49
0.80
9.69
20.38
13.29
Retail Portfolio Shopping centres
Total (Not incl. Madrid)
Total (incl. Madrid)
Retail Portfolio Shopping centres
Hemel Hempstead
2022
Redditch
Blackburn*
Luton
Maidstone
Walthamstow
Wood Green
Ilford*
Total
Snozone**
Milton Keynes
Castleford
Madrid, Spain
2021
Redditch
Blackburn*
Luton
Maidstone
Walthamstow
Wood Green
Ilford
Total
Snozone**
Milton Keynes
Castleford
Madrid, Spain
2020
Redditch
Blackburn*
Luton
Maidstone
Walthamstow
Wood Green
Ilford
Total
Snozone**
Milton Keynes
Castleford
Total
Hemel Hempstead
Hemel Hempstead
12,023,949
2,329,556
Total (Not incl. Madrid)
Total (incl. Madrid)
Retail Portfolio Shopping centres
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report ESG Report CONTINUED
Environment
EPRA Performance Indicator
Elec-Abs
Fuel-Abs
Total electricity
consumption
(kWh)
Total gas
consumption
(kWh)
2019
Retail Portfolio Shopping centres
Redditch
Blackburn*
Luton
Maidstone
Walthamstow
Wood Green
Hemel Hempstead
Ilford
Total
Snozone**
Milton Keynes
Castleford
Total
2018
Retail Portfolio Shopping centres
Redditch
Blackburn
Luton
Maidstone
Walthamstow
Wood Green
Hemel Hempstead
Ilford
Total
Snozone**
Milton Keynes
Castleford
Total
3,046,669
1,391,121
3,128,967
2,155,695
549,506
2,596,843
1,040,008
2,103,621
16,012,429
93,230
n/a
1,622,309
1,165,604
n/a
1,240,396
109,412
325,780
4,556,731
2,408,567
2,381,288
4,789,855
1,033,442
658,414
1,691,856
3,182,276
1,449,552
3,068,009
2,406,230
583,924
2,612,918
1,118,218
3,665,083
18,086,210
151,235
n/a
1,270,673
1,668,799
n/a
1,112,720
157,122
160,709
4,521,258
2,395,383
2,485,531
4,880,914
921,558
678,959
1,600,517
Total direct
GHG
emissions
(annual metric
tonnes tCO2e)
Energy - Int GHG-Dir-Abs GHG-Indir-Abs
Total indirect
GHG
emissions
(tCO2e)
Energy
Intensity
(kwh/sqft/year)
GHG Intensity
from
building energy
(kgCO2e/sqft/
year)
GHG-Int
Total weight of
Total weight of
Total weight of
Total weight of
Total weight of
waste by disposal
waste by disposal
waste by disposal
waste by disposal
waste by disposal
Total water
Building water
route (annual
withdrawn from
source (annual m3)
intensity
metric tonnes –
(m3/sqft/ year)
landfill)
route (annual
metric tonnes
– incineration)
route (annual
metric tonnes –
recovery)
route (annual
route (annual metric
metric tonnes
tonnes – anaerobic
– recycled)
digestion)
Water-Abs
Water-Int
Waste-Abs
Waste-Abs
Waste-Abs
Waste-Abs
Waste-Abs
3
2
5
7
2
7
2
8
4
64
112
80
3
2
5
8
2
7
2
13
5
62
116
80
17.14
n/a
298
214
n/a
228
20
60
838
190
121
311
28
n/a
234
307
n/a
205
29
30
832
170
125
294
779
356
800
551
140
664
266
538
4,093
616
609
1,224
901
410
868
681
165
740
317
1,037
5,120
678
704
1,382
0.80
0.59
1.21
1.53
0.54
1.62
0.43
1.99
1.03
15.05
26.85
19.0
0.93
0.68
1.22
1.98
0.64
1.72
0.52
3.56
1.2
15.83
30.48
21
13,973
2,266
10,567
3,079
12,452
10,784
9,391
16,766
79,278
6,718
7,109
13,827
10,120
2,736
13,199
3,079
12,255
10,784
12,701
9,200
74,074
4,703
7,975
12,678
0.01
0.00
0.01
0.01
0.05
0.02
0.01
0.06
0.02
0.13
0.26
0.17
0.01
0.00
0.01
0.01
0.05
0.02
0.02
0.03
0.02
0.09
0.29
0.16
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2
213
76
309
314
37
41
237
1,229
6
–
82
273
252
81
45
212
951
215
297
461
293
137
573
107
70
2,152
275
613
494
340
151
1,303
119
24
3,320
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10
3
–
5
–
–
–
44
62
2
-
9
-
-
-
-
58
69
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Notes
Snozone Madrid has been reported for completeness but lies outside of the UK mandatory reporting. The Madrid site was purchased in
February 2021 therefore the 2021 figure only includes 11 months of usage from when operational control began. While the site purchases
renewable electricity, for consistency with the UK report London office data has not been used in EPRA reporting. The office accounts for
less than 0.5% of electricity consumption across the portfolio. The London office has been captured in the mandatory reporting figure
Actual invoice data has been used for reporting wherever possible, however some estimated data has been used where data has not been
available. The information in this report represents the best information available at the time of issue.
* The Blackburn site was disposed of in August 2022, slightly impacting the centres' energy use
** Waste at all Snozone sites is dealt with directly by the landlord, with costs for this including in the service charge. Snozone are not able to
obtain accurate waste figures at this time as the waste bins are shared by all tenants.
7272
Stock code: CAL Total electricity
Total gas
consumption
consumption
Energy
emissions
Intensity
(annual metric
GHG
building energy
emissions
(kgCO2e/sqft/
(kWh)
(kWh)
(kwh/sqft/year)
tonnes tCO2e)
(tCO2e)
year)
Total direct
GHG Intensity
GHG
Total indirect
from
Total water
withdrawn from
source (annual m3)
Building water
intensity
(m3/sqft/ year)
Total weight of
waste by disposal
route (annual
metric tonnes –
landfill)
Total weight of
waste by disposal
route (annual
metric tonnes
– incineration)
Total weight of
waste by disposal
route (annual
metric tonnes –
recovery)
Total weight of
waste by disposal
route (annual
metric tonnes
– recycled)
Total weight of
waste by disposal
route (annual metric
tonnes – anaerobic
digestion)
EPRA Performance Indicator
Elec-Abs
Fuel-Abs
Energy - Int GHG-Dir-Abs GHG-Indir-Abs
GHG-Int
Water-Abs
Water-Int
Waste-Abs
Waste-Abs
Waste-Abs
Waste-Abs
Waste-Abs
Retail Portfolio Shopping centres
Hemel Hempstead
2019
Redditch
Blackburn*
Luton
Maidstone
Walthamstow
Wood Green
Ilford
Total
Total
2018
Snozone**
Milton Keynes
Castleford
Redditch
Blackburn
Luton
Maidstone
Walthamstow
Wood Green
Ilford
Total
Snozone**
Milton Keynes
Castleford
Total
Notes
Hemel Hempstead
Retail Portfolio Shopping centres
3,046,669
1,391,121
3,128,967
2,155,695
549,506
2,596,843
1,040,008
2,103,621
93,230
n/a
1,622,309
1,165,604
n/a
1,240,396
109,412
325,780
16,012,429
4,556,731
2,408,567
2,381,288
4,789,855
1,033,442
658,414
1,691,856
3,182,276
1,449,552
3,068,009
2,406,230
583,924
2,612,918
1,118,218
3,665,083
151,235
n/a
1,270,673
1,668,799
n/a
1,112,720
157,122
160,709
18,086,210
4,521,258
2,395,383
2,485,531
4,880,914
921,558
678,959
1,600,517
3
2
5
7
2
7
2
8
4
64
112
80
3
2
5
8
2
7
2
5
13
62
116
80
17.14
n/a
298
214
n/a
228
20
60
838
190
121
311
28
n/a
234
307
n/a
205
29
30
832
170
125
294
779
356
800
551
140
664
266
538
4,093
616
609
1,224
901
410
868
681
165
740
317
1,037
5,120
678
704
1,382
0.80
0.59
1.21
1.53
0.54
1.62
0.43
1.99
1.03
15.05
26.85
19.0
0.93
0.68
1.22
1.98
0.64
1.72
0.52
3.56
1.2
15.83
30.48
21
Snozone Madrid has been reported for completeness but lies outside of the UK mandatory reporting. The Madrid site was purchased in
February 2021 therefore the 2021 figure only includes 11 months of usage from when operational control began. While the site purchases
renewable electricity, for consistency with the UK report London office data has not been used in EPRA reporting. The office accounts for
less than 0.5% of electricity consumption across the portfolio. The London office has been captured in the mandatory reporting figure
Actual invoice data has been used for reporting wherever possible, however some estimated data has been used where data has not been
available. The information in this report represents the best information available at the time of issue.
* The Blackburn site was disposed of in August 2022, slightly impacting the centres' energy use
** Waste at all Snozone sites is dealt with directly by the landlord, with costs for this including in the service charge. Snozone are not able to
obtain accurate waste figures at this time as the waste bins are shared by all tenants.
13,973
2,266
10,567
3,079
12,452
10,784
9,391
16,766
79,278
6,718
7,109
13,827
10,120
2,736
13,199
3,079
12,255
10,784
12,701
9,200
74,074
4,703
7,975
12,678
0.01
0.00
0.01
0.01
0.05
0.02
0.01
0.06
0.02
0.13
0.26
0.17
0.01
0.00
0.01
0.01
0.05
0.02
0.02
0.03
0.02
0.09
0.29
0.16
–
–
–
–
–
–
–
–
–
2
213
76
309
314
37
41
237
1,229
–
–
–
–
–
–
–
–
–
215
297
461
293
137
573
107
70
2,152
3
–
10
5
–
–
–
44
62
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
–
–
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
–
–
–
–
–
–
–
–
–
6
–
82
273
252
81
45
212
951
–
–
–
–
–
–
–
–
–
275
613
494
340
151
1,303
119
24
3,320
2
-
9
-
-
-
-
58
69
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
–
–
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
7373
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report ESG Report CONTINUED
Environment
Total electricity
consumption
(kWh)
Like for like
electricity
consumption
(kWh)*
Total gas
consumption
(kWh)
Like for like gas
consumption
(kWh)*
Energy
Intensity
(kwh/sqft/year)
Total direct
GHG
emissions
(annual metric
tonnes tCO2e)
Total indirect
GHG
emissions
(tCO2e)
GHG Intensity
from building
energy
year)
Total water
withdrawn
from
m3)
Like for like
water
withdrawn
(kgCO2e/sqft/
source (annual
source (annual
intensity
metric tonnes
from
Building water
route (annual
m3)
(m3/sqft/year)
– landfill)
incineration)
metric
tonnes –
Recovery)
metric
tonnes –
recycled)
-
anaerobic
digestion)
Total weight of
Total weight of
Total weight of
Total weight of
waste by
disposal
waste by
disposal
waste by
disposal route
disposal
(annual
route (annual
route (annual
route (annual
metric tonnes
Total weight
of waste by
waste by
disposal
metric
tonnes –
Elec-Abs
Elec - Lfl
Fuel-Abs
Fuels - Lfl
Energy - Int GHG-Dir-Abs GHG-Indir-Abs
GHG-Int Water-Abs
Water-Lft
Water-Int Waste-Abs Waste-Abs Waste-Abs Waste-Abs Waste-Abs
12,132,682
12,132,682
1,660,685
1,660,685
2.88
4,487,431
4,487,431
1,297,199
1,297,199
71.67
5,156,311
5,156,311
–
–
171.88
16,620,113
21,776,424
16,620,113
21,776,424
2,957,885
2,957,885
2,957,885
2,957,885
12,023,949
12,023,949
2,329,556
2,329,556
4,217,762
4,217,762
993,191
993,191
4.02
5.05
3.0
64.6
4,994,451
4,994,451
–
–
166.5
16,241,712
21,236,163
16,241,712
21,236,163
3,322,747
3,322,747
3,322,747
3,322,747
12,705,437
3,820,241
16,525,678
12,705,437
3,820,241
16,525,678
4,629,788
988,968
5,618,756
4,629,788
988,968
5,618,756
16,012,429
4,789,855
20,802,284
16,012,429
4,789,855
20,802,284
4,556,731
1,691,856
6,248,587
4,556,731
1,691,856
6,248,587
18,086,210
4,880,914
22,967,123
18,086,210
4,880,914
22,967,123
4,521,258
1,600,517
6,121,774
4,521,258
1,600,517
6,121,774
4.0
5.02
3.6
59.6
4.6
4.3
80.3
5.6
4.7
80.3
6.0
303
237
–
540
540
427
182
–
609
609
851
182
1,033
838
311
1,149
832
294
1,126
2,346
868
1,005
3,214
4,219
2,553
896
849
3,449
4,298
2,962
891
3,853
4,093
1,224
5,317
5,120
1,382
6,501
0.55
70,561
70,561
0.01
984
136
1,793
70
13.69
11,304
11,304
0.14 Not Available Not Available Not Available Not Available Not Available
33.52
15,312
15,312
0.51 Not Available Not Available Not Available Not Available Not Available
0.77
0.97
81,865
97,177
81,865
97,177
0.02
0.02
984
984
136
136
1,793
1,793
0.62
57,377
57,377
0.01
787
55
1,845
13.35
8,623
8,623
0.11 Not Available Not Available Not Available Not Available Not Available
13,410
13,410
0.45 Not Available Not Available Not Available Not Available Not Available
0.03
0.83
1.00
0.80
13.29
1.00
1.03
19.02
1.33
1.24
20.77
1.57
66,000
79,410
66,000
79,410
50,000
6,814
56,814
79,278
13,827
93,105
74,074
12,678
86,752
50,000
6,814
56,814
79,278
13,827
93,105
74,074
12,678
86,752
0.01
0.02
0.01
0.01
0.02
0.02
0.02
0.02
0.08 Not Available Not Available Not Available Not Available Not Available
0.17 Not Available Not Available Not Available Not Available Not Available
787
787
580
580
1,229
1,229
951
951
55
55
1,845
1,845
105.3
1,894
105.3
1,894
0
0
–
–
2,152
2,152
3,320
3,320
0.16 Not Available Not Available Not Available Not Available Not Available
70
70
92
92
92
71
71
62
62
69
69
–
–
–
–
–
–
–
–
–
–
–
–
EPRA Performance
Indicator
2022
Retail Portfolio
Shopping centres
Snozone - UK
Centres**
Snozone - Madrid
Centre, Spain
Total (not incl.
Madrid
Total (incl. Madrid)
2021
Retail Portfolio
Shopping centres
Snozone - UK
Centres**
Snozone - Madrid
Centre, Spain
Total (not incl.
Madrid
Total (incl. Madrid)
2020
Retail Portfolio
Shopping centres
Snozone**
Total
2019
Retail Portfolio
Shopping centres
Snozone**
Total
2018
Retail Portfolio
Shopping centres
Snozone**
Total
Notes
Snozone Madrid has been reported for completeness but lies outside of the UK mandatory reporting. The Madrid site was purchased in February
2021 therefore the 2021 figure only includes 11 months of usage from when operational control began. While the site purchases renewable electricity,
for consistency with the UK reporting a location based factor has been used.
London office data has not been used in EPRA reporting. The office accounts for less than 0.5% of electricity consumption across the portfolio.
The London office has been captured in the mandatory reporting figures.
Actual invoice data has been used for reporting wherever possible, however some estimated data has been used where data has not been available.
The information in this report represents the best information available at the time of issue.
The Blackburn site was disposed of in August 2022, slightly impacting the centres' energy use
* The boundary and portfolio of this assessment have not changed since March 2017 when the Exchange at Ilford was purchased. This means that the
like for like reporting is the same as the absolute values.
** Waste at both Snozone sites is dealt with directly by the landlord, with costs for this including in the service charge. Snozone are not able to obtain
accurate waste figures at this time as the waste bins are shared by all tenants.
7474
Stock code: CAL EPRA Performance
Indicator
2022
Retail Portfolio
Shopping centres
Snozone - UK
Centres**
Snozone - Madrid
Centre, Spain
Total (not incl.
Madrid
2021
Retail Portfolio
Shopping centres
Snozone - UK
Centres**
Snozone - Madrid
Centre, Spain
Total (not incl.
Madrid
Total (incl. Madrid)
2020
Retail Portfolio
Shopping centres
Snozone**
Retail Portfolio
Shopping centres
Snozone**
Total
2019
Total
2018
Retail Portfolio
Shopping centres
Snozone**
Total
Notes
–
–
4,994,451
4,994,451
–
166.5
16,241,712
21,236,163
16,241,712
21,236,163
3,322,747
3,322,747
3,322,747
3,322,747
12,705,437
12,705,437
3,820,241
3,820,241
16,525,678
16,525,678
4,629,788
988,968
5,618,756
4,629,788
988,968
5,618,756
16,012,429
16,012,429
4,789,855
4,789,855
20,802,284
20,802,284
4,556,731
1,691,856
6,248,587
4,556,731
1,691,856
6,248,587
18,086,210
18,086,210
4,880,914
4,880,914
22,967,123
22,967,123
4,521,258
1,600,517
6,121,774
4,521,258
1,600,517
6,121,774
303
237
–
540
540
427
182
–
609
609
851
182
1,033
838
311
1,149
832
294
1,126
2,346
868
1,005
3,214
4,219
2,553
896
849
3,449
4,298
2,962
891
3,853
4,093
1,224
5,317
5,120
1,382
6,501
4.02
5.05
3.0
64.6
4.0
5.02
3.6
59.6
4.6
4.3
80.3
5.6
4.7
80.3
6.0
Snozone Madrid has been reported for completeness but lies outside of the UK mandatory reporting. The Madrid site was purchased in February
2021 therefore the 2021 figure only includes 11 months of usage from when operational control began. While the site purchases renewable electricity,
for consistency with the UK reporting a location based factor has been used.
London office data has not been used in EPRA reporting. The office accounts for less than 0.5% of electricity consumption across the portfolio.
The London office has been captured in the mandatory reporting figures.
Actual invoice data has been used for reporting wherever possible, however some estimated data has been used where data has not been available.
The information in this report represents the best information available at the time of issue.
The Blackburn site was disposed of in August 2022, slightly impacting the centres' energy use
* The boundary and portfolio of this assessment have not changed since March 2017 when the Exchange at Ilford was purchased. This means that the
like for like reporting is the same as the absolute values.
** Waste at both Snozone sites is dealt with directly by the landlord, with costs for this including in the service charge. Snozone are not able to obtain
accurate waste figures at this time as the waste bins are shared by all tenants.
Like for like
electricity
Total electricity
Total gas
Like for like gas
consumption
consumption
consumption
consumption
Energy
emissions
Intensity
(annual metric
(kWh)
(kWh)*
(kWh)
(kWh)*
(kwh/sqft/year)
tonnes tCO2e)
GHG
emissions
(tCO2e)
Total direct
GHG
Total indirect
GHG Intensity
from building
energy
(kgCO2e/sqft/
year)
Total water
withdrawn
from
source (annual
m3)
Like for like
water
withdrawn
from
source (annual
m3)
Building water
intensity
(m3/sqft/year)
Total weight of
waste by
disposal
route (annual
metric tonnes
– landfill)
Total weight of
waste by
disposal
route (annual
metric
tonnes –
incineration)
Total weight of
waste by
disposal
route (annual
metric
tonnes –
Recovery)
Total weight of
waste by
disposal
route (annual
metric
tonnes –
recycled)
Total weight
of waste by
disposal route
(annual
metric tonnes
-
anaerobic
digestion)
Elec-Abs
Elec - Lfl
Fuel-Abs
Fuels - Lfl
Energy - Int GHG-Dir-Abs GHG-Indir-Abs
GHG-Int Water-Abs
Water-Lft
Water-Int Waste-Abs Waste-Abs Waste-Abs Waste-Abs Waste-Abs
12,132,682
12,132,682
1,660,685
1,660,685
2.88
0.55
70,561
70,561
0.01
–
984
136
1,793
70
4,487,431
4,487,431
1,297,199
1,297,199
71.67
13.69
11,304
11,304
0.14 Not Available Not Available Not Available Not Available Not Available
5,156,311
5,156,311
–
171.88
33.52
15,312
15,312
0.51 Not Available Not Available Not Available Not Available Not Available
Total (incl. Madrid)
21,776,424
21,776,424
16,620,113
16,620,113
2,957,885
2,957,885
2,957,885
2,957,885
0.77
0.97
81,865
97,177
81,865
97,177
0.02
0.02
12,023,949
12,023,949
2,329,556
2,329,556
0.62
57,377
57,377
0.01
–
–
–
984
984
136
136
1,793
1,793
787
55
1,845
70
70
92
4,217,762
4,217,762
993,191
993,191
13.35
8,623
8,623
0.11 Not Available Not Available Not Available Not Available Not Available
0.03
0.83
1.00
0.80
13.29
1.00
1.03
19.02
1.33
1.24
20.77
1.57
13,410
13,410
0.45 Not Available Not Available Not Available Not Available Not Available
66,000
79,410
66,000
79,410
0.01
0.02
–
–
787
787
55
55
1,845
1,845
92
92
50,000
6,814
56,814
79,278
13,827
93,105
74,074
12,678
86,752
50,000
6,814
56,814
79,278
13,827
93,105
74,074
12,678
86,752
0.01
71
0.08 Not Available Not Available Not Available Not Available Not Available
71
0.01
1,894
105.3
105.3
1,894
580
580
–
–
0.02
62
0.17 Not Available Not Available Not Available Not Available Not Available
62
0.02
2,152
1,229
2,152
1,229
0
0
–
–
0.02
69
0.16 Not Available Not Available Not Available Not Available Not Available
69
0.02
3,320
3,320
951
951
–
–
–
–
7575
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report ESG Report CONTINUED
Environment
Streamlined Energy and Carbon Reporting (SECR)
The SECR was introduced to encourage the implementation of energy efficiency measures. The reporting framework
makes it mandatory for large UK businesses to report their energy consumption and greenhouse gas emissions annually.
HDR, Inc. has verified our 2022 performance, which is disclosed below in accordance with SECR requirements.
Capital and Regional 2022 Annual Reporting
2018
2019
2020
2021
2022
% difference
2019 – 2022
Energy Consumption (kWh)
Natural Gas (Scope 1)
Centres2
Snozone
Support Office
Natural Gas (Scope 1) Total
Purchased Electricity (Scope 2)1
Centres2
Snozone
Support Office
Purchased Electricity (Scope 2) Total
4,521,258
1,600,517
n/a
6,121,774
4,556,731
1,691,856
n/a
6,248,587
4,629,788
988,968
n/a
5,618,756
2,329,556
993,191
n/a
3,322,747
1,660,685
1,297,199
n/a
2,957,885
18,086,210
4,880,914
97,200
23,064,323
16,012,429
4,789,855
96,096
20,898,380
12,705,437
3,820,241
96,096
16,621,774
12,023,949
4,217,762
96,096
16,337,808
12,132,682
4,487,431
74,325
16,694,438
Renewable Electricity Consumption3
18,579
9,861
4,290
6,160
746
Total Scope 1 & Scope 2 kWh
29,186,098
27,146,967
22,240,531
19,660,555
19,652,323
Scope 1 & 2 Emissions (tCO2e)4
Natural Gas (Scope 1)
Centres2
Snozone
Support Office
Scope 1 Total tCO2e
Purchased Electricity (Scope 2)
Centres2
Snozone
Support Office
Scope 2 Total tCO2e
Total Scope 1 & Scope 2 tCO2e
Intensity
Scope 1 and 2 kgCO2e/sqft
Reporting outside of UK5
Purchased Electricity (Scope 2)
Snozone – Madrid, Spain (kWh)
Snozone – Madrid, Spain (tCO2e)
832
294
n/a
1,126
5,120
1,382
28
6,529
7,655
838
311
n/a
1,149
4,093
1,224
25
5,342
6,490
851
182
n/a
1,033
2,962
891
22
3,875
4,908
427
182
n/a
609
2,553
896
20
3,469
4,078
303
237
n/a
540
2,346
868
14
3,228
3,768
1.57
1.33
1.01
0.84
0.77
–
–
–
–
–
–
4,994,451
849
5,156,311
1,005
(64)%
(23)%
n/a
(53)%
(24)%
(6)%
(23)%
(20)%
(92)%
(28)%
(64)%
(24)%
n/a
(53)%
(43)%
(29)%
(41)%
(40)%
(42)%
1. The carbon associated with the electricity figures has been calculated using the UK grid average (a location based method). The carbon associated
with any renewable energy consumed has not been included in our totals. (market based method)
2. The Centre figures include the Kingfisher Centre, in which C&R owns 12% in a joint venture and acts as Property and Asset Manager.
3. Renewable energy is generated through Solar PV installed at Walthamstow Centre. The centre has been generating its own energy in 2022 following
repair of the system in 2021. The total generated in 2022 is thought to be more than the stated 746 kWh but this cannot be confirmed due to issues
with the metering data. The site are working to resolve this.
4. Scope definitions
Scope 1: Direct GHG emissions from controlled operations (natural gas consumption)
Scope 2: Indirect GHG emissions from the use of purchased electricity, heat or steam (electricity consumption)
5. Snozone Madrid, Spain has been reported for completeness but lies outside of the UK mandatory reporting. The Madrid site was purchased
in February 2021 therefore the 2021 figure only includes 11 months of usage from when operational control began. While the site purchases
renewable electricity, for consistency with the UK reporting a location based factor has been used.
Emissions factors used for 2021 and 2022 were sourced here: https://www.nowtricity.com/country/spain/
Please note these represent the best information available at the time of issue.
7676
Stock code: CAL
We have applied the 2022 "UK Government
GHG Conversion Factors for Company
Reporting, v2.0" for calculating 2022
carbon emissions.
100% of energy consumption and emissions
related consumption in the UK.
Energy Efficiency
In the period covered with the report
(1 January 2022 – 31 December 2022)
there have been several energy efficiency
improvements. The centres have been making
a concerted effort to reduce gas consumption,
in some cases down to zero, as energy prices
reached unprecedented levels.
There is also a continued improvement in
monitoring throughout the portfolio which is
improving data returns.
Methodology
The reported CO2 emissions for 2022
have been produced with reference to the
Greenhouse Gas Reporting Protocol. The
reporting boundary has been defined using
the operational control approach, reporting
emissions for operations in which Capital
and Regional have control. It does not
account for GHG emissions from operations
in which it owns an interest but has no
operational control.
Energy use from metered sources identified as
fully controlled by third parties (e.g. tenants)
have also been excluded.
Scope 1 emissions account for total gas
consumption of Capital and Regional.
Emissions from emergency equipment
(e.g. standby generators) have been deemed
deminimis and therefore are not included
in the reported figures. Scope 2 emissions
account for the total electricity purchased by
Capital and Regional.
Actual data has been used wherever possible,
some data has been estimated. The reported
emissions represents the best information
available at the time of issue. It should be
noted that the Scope 1 and Scope 2 emissions
(where stated in tCO2e) are absolute
values. The annual figures are not directly
comparable due to changes in emission
factors, and the property portfolio.
Our People
Juliana joined Snozone in 2019 and manages all aspects of
Snozone’s financial reporting relating to cost management
and payment processes for the group. This also includes the
management of over ninety suppliers and contractors throughout
Snozone’s supply chain. In addition, Juliana provides the oversight
for the venue’s stock control systems.
Juliana moved from Brazil to London ten years ago, achieving a
bachelor’s degree in international business as well as her AAT
qualification. Pursuing a career in accountancy, Juliana previously
worked as Finance Manager for Sanders Chartered Accountants
whilst working towards a Chartered Accountant qualification (ACCA).
Throughout 2022 Juliana, alongside her colleagues Julia To-Trinh
and Pilar Barrio Valios, was at the forefront of completing Snozone
Madrid’s systems integration into Snozone’s centralised finance
function, delivering a great synergy and enormous benefit for
the group. Juliana reports into Nigel Lewis, the Snozone Finance
Director, and is based in our Pimlico office.
Juliana has two young children and lives with her family in
south-east London.
7777
Juliana Conci-Mitchell
Management Accountant
– Snozone
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report ESG Report CONTINUED
People
Our people are the foundation
of our business. It is for this
reason that we foster an
empowered culture where our
employees can get the best
out of both their careers and
themselves.
Our culture focuses on adding value, being inclusive and future
looking. 2022 has seen a number of new initiatives introduced across
our businesses. For our shopping centres and Snozone, this includes
improved maternity and paternity pay and a menopause policy as
well as enhanced training opportunities. For Snozone, we introduced
Wagestream, a financial management tool for all staff to utilise and
manage their monthly expenditures of which there was a high uptake.
To attract and retain seasonal staff in a fiercely competitive leisure
market, Snozone paid 3% above the minimum wage. Both initiatives
aim to help protect our most vulnerable employees during this period
of high financial stress. Additionally, Snozone continued to provide
accredited training to staff throughout the UK and Europe, with all
these elements resulting in an annual staff retention of 75%, 30% above
the national average.
Key Highlights
Financial tools and
support offered to staff
across the business
61% of employees
are women across the
shopping centre business
7.9/10 average
Happiness Index score
achieved in shopping
centre staff survey
Disability confident
employer status
accredited to Snozone
75% core team retention
in Snozone
Wellbeing in the workplace
Creating a workplace that supports our employees’ wellbeing is a top priority given
its positive impact on their satisfaction, which can lead to enhanced engagement
and productivity. This involves promoting both their physical and mental health.
For example, we have a long-standing relationship with the Retail Trust, a charitable
organisation that helps care for and protect people who work in retail. Through
our partnership, we provide employees with the support that they need to flourish
in both work and life, offering emotional support, career development advice,
financial health information and assistance for both physical and mental wellbeing.
In addition, we supported World Mental Health Day across the Group, raising
awareness, advocating against associated stigmas and encouraging staff to utilise
our wellbeing rooms.
C&R’s Employee Voice Committee was formed early in 2022 to provide a safe space
that enables everyone’s voices to be heard. The committee is cross-functional,
working with both shopping centre teams and support offices. It creates a space
for committee members to communicate best practice, share ideas and initiatives,
suggest innovative solutions and ensure a consistent approach to our people
practices. These shared practices aim to enhance current employee policies and
help implement new ones. In addition, Employee Voice 24/7 is an online tool that
allows employees to submit anonymous feedback anytime, day or night.
This year we implemented several new initiatives onsite. We extended the Cycle to
Work scheme to our shopping centre staff, now covering all C&R employees, and
ran an 80-day wellbeing challenge, which encouraged staff to increase their step
count by working together to try and travel the world virtually. The aim was to reach
a combined total of 45 million steps, with cyclists also encouraged to get involved.
This was surpassed by nearly 50 million steps, with 177 employees participating.
7878
Stock code: CAL To recognise our
employees remarkable
service and support in
their local communities,
we hosted our National
Sparkle Awards. Sid
Khaliq was awarded 1st
place for his exceptional
use of first aid skills
and experience to save
a guest’s life. Martin
Dewsnap and Lisa Doyle
were also awarded for
their selfless acts of
kindness.
Health and safety
We operate a suite of health and safety
policies for employees and guests, which are
reviewed regularly and updated accordingly.
When incidents occur, we are proactive in
taking the necessary measures to address
them and ensure they are prevented in
the future. In 2022, we were awarded
the Royal Society for the Prevention of
Accidents (RoSPA) Gold award for the 11th
consecutive year. This continuous recognition
demonstrates our excellence in occupational
health and safety management, with the
RoSPA Awards regarded as one of the most
prestigious and recognised schemes in
the world.
Our staff are first aid trained where necessary
and to give them the confidence to act if
someone is having a cardiac arrest, we signed
up to the British Heart Foundation ReviveR
App, a free step-by-step training app to learn
CPR in 15 minutes. 30,000 people have an
out-of-hospital cardiac arrest in the UK every
year and CPR can, in some cases, double
their chances of survival. We aim to roll this
out as an important life skill to all our retail
customers in 2023.
C&R upholds human rights by supporting
the aims of the Modern Slavery Act 2015 to
combat slavery and human trafficking and
improve the transparency of reporting. We
have a zero-tolerance approach and expect
all who have, or seek to have, a business
relationship with us, to familiarise themselves
with our anti-slavery and human trafficking
policy and to always act in a way which is
consistent with the policy. We implement
and enforce effective systems and controls
to ensure modern slavery is not present
anywhere in our business or our supply
chains. C&R marked Anti-slavery Day in
October 2022 by collaborating with Stronger
Together, an impact-driven not-for-profit
organisation, that provided us with training
and resources, raising awareness of modern
slavery, ensuring responsible recruitment and
helping to eradicate all forms of exploitation.
7979
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report ESG Report CONTINUED
People
Diversity and inclusion
We value people’s differences and want to
create a workplace that is free of harassment
and unlawful discrimination. Our Diversity and
Inclusion (D&I) Committee was formed in 2020
to build a diverse and inclusive workforce.
The deployment of an internal survey to
understand how employees feel about the
culture at C&R was one of the committee’s
first actions. The feedback received from
the survey helped inform several new D&I
initiatives which are still being implemented
today. These include the consideration of D&I
when recruiting and a calendar of awareness
days aimed at educating people on different
cultures such as the International Day of
Persons with Disabilities and Pride.
Diversity and Inclusion
The Diversity & Inclusion Committee ran a number of
events in 2022 to further develop our thinking on equality
both individually and as a company.
This included a trip to the Tate Modern for a guided tour
that focused on LGBT+ artists and relevant works.
8080
In our shopping centres, a particular highlight
in 2022, was our celebration of LGBT+ history
month. Additionally, 154 employees took part
in monthly webinars that highlighted various
ways our company can increase inclusivity
through our partnership with Purple 365.
Snozone has a long history of promoting
inclusivity. In 2022, Snozone achieved
Disability Confident Employer status, a
government led scheme where employers
are accredited for recruiting, retaining and
helping to develop employees with disabilities.
Snozone actively looks for ways to improve
and expand the range of talent we are
recruiting from and designs its activities with a
‘sport for all’ approach, tackling social stigmas
surrounding disabilities.
To increase female participation in sports
and ensure women are equally represented
in our workplace, we design our recruitment
process with women in mind, from job
advertisements and female imagery to the
interview and decision-making process. In
2022, we became a 49% female coaching
team in Milton Keynes, significantly above
the industry average of 20%, and Snozone’s
Senior Management Team is also 49% women.
Through our operations, we help women and
girls overcome the barriers they face when
participating in sports. On National Women’s
Day every year, we run an initiative through
This Girl Can, a nationwide campaign from
Sports England, aimed at getting women and
girls involved and re-engaged in sport. The
campaign offers women and girls free lessons
and in 2022, we introduced 400 women and
girls to a sport they had never tried before.
Employee engagement
Engagement plays an important role in
encouraging our employees to get the best
out of themselves. Employee engagement
in our shopping centres, measured as part
of a recent engagement pulse survey and
independently completed with the Happiness
Index, illustrates the success we have had
in driving this. The findings demonstrate
healthy engagement with all C&R values, and
particularly with ESG, diversity and inclusion
and community projects. The survey received
a 98% response rate, significantly above the
average response rate of 74%. Our average
score for the survey was also 7.9 out of 10,
comfortably above the Happiness Index
universe benchmark of 7.4. In addition,
our eNPS (Employer Net Promoter Score)
was +19, which is 14 points above the
index’s benchmark.
Stock code: CAL One of the ways we engage our shopping
centre employees is through programmes
that are tailored to developing their careers.
For example, the Line Manager Programme
embeds both coaching and mentoring
support alongside formal modular learning.
Employees receive training on leadership
development topics to foster behavioural
change. The one-to-one coaching helps
the individual to focus on their specific
development needs, giving it the right space,
attention and reflection through facilitated
conversations and a safe space to share
challenges. To utilise the diverse experience
of line management and leadership within the
SLT, the programme also offers mentoring
support. Mentors are invited to share their
knowledge,expertise and wisdom with their
mentees to help them unlock any business-
related challenges.
The success of Snozone’s employee
engagement is reflected in its most recent
bi-annual survey that measures job
satisfaction, with 88% of staff responding
that they are very satisfied. In addition,
annual core team retention for 2022 was
75%, significantly outperforming the leisure
industry by over 30%, which traditionally
suffers from high turnover rates. One of the
reasons for retention being so high is that
we recognise the direct correlation between
employee training and motivation, with 64%
of Snozone’s staff undertaking accredited
training this year.
Deploying ESG training across
our shopping centres and
head office
To increase employees’ awareness of ESG,
the implications for their role and how
they can take responsibility to support our
ESG strategy, we worked with an external
sustainability expert to conduct ESG
training sessions for our shopping centre
and support office team. For example, the
training provided clarity on what we must do
to achieve the goals set out in our net zero
carbon pathway. The sessions were popular
with our team members and the impact
the training has had is visible through the
Company-wide culture shift and success of
implementation initiatives. An example is our
employees’ dedication to energy reduction
efforts, which saw them integrate operational
excellence throughout our sites, and realise
notable decreases in energy consumption.
Each member of the team was also asked
to make an ESG pledge and share what they
are going to do to help the business reach its
ESG targets.
Myself and 12 colleagues from across the
business embarked on the Line Management
Programme in the Autumn of 2022. This
four-module programme had been specifically
developed for the Group and included
subjects such as performance through people,
motivation, accountability, and being a coach.
It was fantastic to get back into face-to-face
training after such a long period without out
it. The programme included “Learning Circles”
where the Group were able to meet between
modules to embed the learning and share
feedback with each other. Mentoring sessions
with different members of the SLT has been
very beneficial to us all and has encouraged
cross functional interaction.
Roy Greening
General Manager, The Mall Luton
I have been working in the business for more
than 10 years and feel grateful for being part
of a company with such professional standards
and committed to equality. There are no
barriers of opportunities, wages or treatment
across management and operational teams.
With 46% of women in our team, we are very
proud to have gender balance across staff
members, which is very positive. On the other
hand, guests who practice snow sports have
gone from being 60% men/40% women to
being totally equal last year 50/50.
Maria González du Frutus
Head of Marketing and Sales at Snozone Madrid
Edited for grammar and quality
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Community
Our retail and leisure offerings are tailored to the
unique needs of their local communities, supported
by strong and trusted relationships with local
stakeholders and annual community impact targets.
Whilst aiming to drive footfall,
we want to achieve a measurable
social impact in areas such as youth
education, economic inclusion,
charity fundraising and nurturing
inclusive places that everyone can
enjoy. To help pursue these goals,
we invested over c.£300,000 and
spent 1,684 hours engaging with local
community groups.
Community Wheel of
Support
2022 was a year of giving back,
putting our communities and
guests at the core of our initiatives.
Following a successful launch in
2021, the Community Wheel of
Support continued to play a critical
role in encouraging engagement and
supporting our shopping centres to
prioritise areas of impact. We set
out nine KPI targets to align with our
Wheel of Support. Improving from
2021, we saw an 11% increase in the
number of charities supported, a
15% increase in volunteering hours
and a 9% increase in charitable
fundraising, donating over £120,000
across all shopping centres to
important causes.
In 2023, we look forward to
working with The Good Economy
Partnership, who specialises in impact
measurement and management
services. With their support, we will
conduct a social impact assessment
across our portfolio to measure
and quantify the impact we have
on our local communities. This will
also support us to benchmark our
performance and, where relevant,
review our Wheel of Support targets
to ensure they remain ambitious and
aligned with best practice. This will
be an important milestone towards
enhancing our social impact, which
will help shape our 2024 objectives.
The Wheel of Support
The Exchange, Ilford
was awarded Best Large
Business by Ilford BID
and the council
Local
authority
Educational
establishments
Local
culture and
celebrations
Supporting
community
living
Nominating
a charity of
the year
Community
voluntary
groups
Community
sustainability
groups
244 community events
hosted, where cultural
events were recognised
and celebrated
221 community groups
supported with 1,324
volunteering hours
8282
The Mall Luton introduced
a Reading Garden and a
writing competition for
students
The Marlowes, Hemel,
selected Dacorum
Emergency Night Shelter
(DENS) as its charity of
the year, helping it raise
over £24,000
The Mall Luton worked
with the local BID and
ABCD-in Luton (Asset
Based Community
Development) to
complete litter picks
Stock code: CAL 2022 Community
contributions
£129,000+
raised across the business
187
charities supported
across the business
244
community events hosted
27%
increase in centers’
footfall from 2021
36
local businesses supported
across shopping centres
1,600+
hours spent with
community groups
c.£300k
invested in supporting
community services
4,000+
students received free
school uniforms
29%
growth of participation
in Disability and
Adaptive snow sports
lessons
Partner of the
Year 2022
awarded to Snozone by
charity partner Sense
15%
growth in schools
affiliated with
Snozone’s education
programme
24,000
recreational one-hour
lift passes distributed
to NHS staff
Best Sporting
Venue Award
won by Snozone at the
School Travel awards
400
women and girls
introduced to
snow sports on
International Woman’s
Day, free of charge
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Community
Charitable Funding and
Volunteering
To account for local needs, our
shopping centres are given the
responsibility and autonomy to
run their own fundraising events.
In 2022, we hosted a total of 244
events, collectively supporting 186
charities and volunteering more
than 1,300 hours of employees’ time
to important community causes.
Examples include:
• Fighting homelessness:
At The Marlowes Hemel, our staff
volunteered at their Charity of
the Year’s main fundraiser, DENs
– which empowers those facing
homelessness, poverty, and social
exclusion to take the next positive
step in their lives. This cycling
event, which our staff helped
handle registration for, raised over
£21,000.
• Supporting biodiversity:
The Mall Luton worked to make our
temporary beehives permanent.
We saw over 75lbs of honey
produced, which we then bottled
and sold at our centre. The profits
of over £700 were donated to the
Luton Food Bank.
The hospitality and
leisure industries have
had a challenging time
financially and with
recruitment throughout
the pandemic. Despite
this, Snozone remain
committed to being
inclusive and disability
aware and have invested
in new and additional
equipment and training
and actively seek
to create amazing
memories for everyone
as well as genuinely
being engaged and
committed to our cause.
Angela Court-Johnson
Sense Corporate Account Manager
Tracey Bateman, the
business manager for
Luton, was honoured for her
passion and dedication to the
Luton community for more than
14 years by winning the Volunteer
of the Year category at the Luton
and Bedfordshire Community
Awards in November 2022.
For her volunteer work as
a special constable for the
Bedfordshire Police in early
2022, Tracey was awarded the
Platinum Jubilee Medal for deeds
of public service.
Tracey also spends a lot of time
volunteering and organising
volunteers for neighbourhood
charities and activities, as part of
the centre’s Community Wheel
of Support.
• Relieving education costs:
Luton also worked with the Level
Trust, a charity that aims to relieve
education costs for families in
need. Staff volunteered their time
to prepare the “Learning Locker”, a
shop that provided 1,741 children
with free learning resources,
including games and books. In
addition, the ‘Uniform Exchange’,
which was run from an empty
storage unit, provided students of
all ages with free school clothes.
In total, 4,842 children were
supported through the initiative,
with over 7,000 second-hand
uniform items donated, equivalent
to saving 30.4 tCO2 from the
avoidance of buying new clothes.
• Providing education:
During the Easter holiday, over
1,400 children took part in our Dino
series at The Mall Maidstone, where
we offered space to learn about
dinosaurs while getting involved in
art sessions.
• Creating awareness:
At The Exchange, Ilford, we set
up the UK’s largest ball pit, which
provided kids with a chance to play
and acted as a fundraising drive
for Target Ovarian Cancer. The
event brought awareness to the
organisation and the rising rates of
Ovarian cancer.
These are only a few of the many
activities, which not only support
our communities and engage our
guests with important causes, but
also significantly increase footfall by
establishing the shopping centres as
hubs for our local residents.
For the last eight years, Snozone
has partnered with Sense, a charity
that supports deaf/blind children
and adults. This year, we were
recognised by Sense as their Partner
of the Year and raised a total of
£6,000 for the organisation. An
example of our fundraising includes
Snozone’s annual ‘SnoFit’ initiative,
where the team was encouraged to
either walk, run, cycle or ski to raise
money. The team raised over £1,000
by completing almost 1,600 miles.
Throughout the year, Snozone drives
online awareness to Sense across its
social media platforms and provides
donation stations in UK venues. This
year, the donations funded two deaf/
blind children to learn to ski with
free tuition.
8484
Stock code: CAL The Mall Luton worked with the Level Trust
and Luton Foodbank to support the Luton
Smile Campaign, providing food and toys
over Christmas to children in need. The
campaign received over 3,500 donations and
distributed 1,080 Christmas presents. Luton was
responsible for collecting 661 donated presents
alone. The Mall Wood Green also ran a toy drive
and donated to The Salvation Army Toy Appeal.
To enhance the Christmas experience, Bjorn the
Bear and the Snow Queen brought the spirit of
Christmas while offering free performances to
the public.
Since 2020, Snozone has
helped the nationwide
campaign “thank the
NHS” by offering over
24,000 one-hour free lift
passes to staff.
The season of giving
To support those facing a difficult time during
the Christmas period, our shopping centres
and support office created the 5 Days of
Giving fundraising campaign, where we ran
several internal events raising money for three
charities: The I Am Doddie Foundation; Brain
Tumour Research; and Save the Children.
One of the events was the Annual National
Christmas Jumper day, where staff were asked
to donate to Save the Children. Our team at The
Exchange, Ilford took it one step further and
posted photos in their jumpers in storefronts as
a way to promote our retailers.
All centres organised Christmas Grottos and
collectively raised over £16,000 for charities.
At The Marlowes, Hemel, the grotto was a free
event that not only allowed visitors to meet
Santa Claus but gave them a chance to take on
the important role of a North Pole Post Office
elf - sorting the post, caring for the reindeer,
and learning their elf name. The grotto raised
£3,874 for DENS, their Charity of the Year.
To show our support for
those suffering from the
war in Ukraine, the centres
created awareness on social
media and displayed posters
across our locations with QR
codes. The codes provided
guests with donation links,
supporting the DEC’s
(Disasters Emergency
Committee)
15 leading charities.
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Community
Remembering Her Majesty
Offering an emotional outlet for our staff and guests across
our centres, we created a space for people to pay respects to
her majesty the Queen upon her passing in September. We
provided a condolences book for people to sign along with
flowers and a picture of the Queen displayed. Thousands of
guests and staff signed the books and also left floral tributes.
As well as
retaining the
Trip Advisor
Certificate of
excellence,
Snozone’s UK
venues were
once more
awarded the
‘Travellers
Choice’ kite
mark by Trip
Advisor in
2022.
a tight timeframe. The CDC was officially
launched in October 2022 by then Deputy
Prime Minister Therese Coffey, who said
“Sometimes it can take several hours for a
patient to get to a hospital and go through the
diagnostic process but here they are doing a
‘one-stop shop’.”
The CDC is located close to London’s most
diverse and deprived communities, which
have some of the worst public health
outcomes; those aged under 75 have a 50%
higher death rate compared to the average
and Haringey has a 15-year gap in healthy
life expectancy between the richest and least
well-off areas. The CDC therefore has the
potential to impact public health outcomes
by preventing disease prevalence and
reducing case mortality by decreasing time
to diagnosis.
The first patients were seen within 12 months
of the successful bid submission and the
centre is expected to see 300 patients a day,
increasing the footfall of the centre. Already
bringing commercial and economic benefits
to the area, the presence of the CDC in the
centre reimagines health’s relationship with
the high street. In addition, modelling of the
impact suggests there will be significant travel
time savings of up to 30 minutes for Haringey
residents, reducing petrol costs during the
rising cost-of-living crisis. There will also be a
reduction in carbon footprint as better access
for local communities will result in shorter
journeys for service users.
Supporting health and
wellbeing at The Mall
Wood Green
With 40% of children in the area suffering
from period poverty, The Mall Wood Green
sought to help break the stigma behind
the subject and launched a first-of-its-kind
scheme. The scheme was advertised by
posters in the bathroom facilities, where
anyone could visit the Guest Lounge to collect
a ‘package from Florence’ and be given a
free period pack. Given the necessity of the
scheme, it was subsequently made permanent
and free sanitary products were installed in
the restrooms. Aligning with our ESG goals,
Wood Green teamed with Scotland-based
CIC Hey Girls to purchase their products. This
organisation donates a product to someone in
need for every product sold, and products are
certified organic cotton, 100% biodegradable
and plastic free.
In another example and supporting the health
and wellbeing of North London residents, The
Mall Wood Green opened its doors to Wood
Green CDC in the Summer of 2022. Developed
in partnership with Whittington Health NHS
Trust, NHS England has been supported
with funding for its CDC roll-out, making
this the first location in a shopping centre in
the nation.
The CDC offers convenient diagnostic testing,
improving access to healthcare via a purpose-
built space.
The community diagnostic programme is
a high priority for the NHS in tackling the
backlog of elective care, following Covid-19.
It was therefore important to deliver
significant new diagnostic capacity in the very
short term, and C&R worked in partnership
with Whittington Health to achieve this in
8686
Stock code: CAL Enhancing education
On average, travel time to our Snozone
locations takes an hour and forty-five minutes,
making our community extensive. Snozone
maintains its status of being an industry
leader and wholeheartedly supports its large
community. It has continued supporting the
school curriculum outside of school term time
by promoting fundamental elements of ‘good
citizenship’ with its industry, leading School
Holiday Camps that offer lessons in signage
language, conversational Spanish and French
and a first aid course for children called
‘Mini Medics’.
Snozone also assesses the snow sports
components of GCSE & A-Level PE. We are
proud to offer a venue where students can
enhance their education without feeling the
need to travel to ski resorts abroad, making it
more affordable for families and decreasing
travel-related emissions. These efforts have
contributed to Snozone being recognised for
the third time as the ‘Best Sporting Venue’
for children learning outside the classroom
at the School Travel Awards, beating
illustrious nominees including Manchester
United, Silverstone, The London Stadium,
Twickenham and The UK Sailing Academy.
We are also proud to be accredited for both
the Duke of Edinburgh Bronze Award Scheme
and the Learning Outside the Classroom
Quality Badge.
Supporting local start-ups
Acknowledging the role that we can play in the local economy and beyond, we aim
to foster an entrepreneurial ecosystem that supports small businesses through
upskilling, networking and some financial assistance. This creates a space for start-ups
to flourish while contributing to a diverse offering that’s representative of local needs.
We believe in offering all members of our communities, despite income status or
educational background, the chance to provide a better life for their families and
themselves. We have offered 36 small businesses the chance to have their own space
in our centres, whether it’s retail, cosmetic, or culinary. We have even seen a few of
our start-ups grow into multiple locations.
We opened our first two
EverySkin clinics with the
support of C&R. As a new
business and coming out of
COVID-19 lockdown, we were
very fortunate to have C&R’s
backing and guidance to
get off the ground, giving us
the confidence to grow our
independent business to six
clinics in less than 12 months!
Bridget Healy
Co-Owner, EverySkin
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Community
The completed development will
result in the creation of around
350 permanent new jobs in the
community, with a further 500 local
jobs and apprenticeships created
during the construction phases. It is
estimated that increases in council tax
and business rates will contribute up
to £2.5 million to the local economy.
We are creating new places for our
community residents to live and work,
with an extended range of shopping
and leisure facilities for them to
enjoy. Alongside this, we will deliver
a redesigned and enhanced public
space in the current town square,
creating play spaces, event zones and
community gardens. The residential
and commercial proposals have
been developed using a “fabric first”
approach through the ‘be Lean’, ‘be
Clean’, ‘be Green’ energy hierarchy
in accordance with Greater London
Authority policy and Waltham Forest
Local Plan guidelines, embedding
a range of sustainability measures
into the design, construction and
operational stages.
We will continue business as
usual during the duration of the
development and maintain the
running of local initiatives that
reinforce the centre’s role as a
community hub through carefully
designed physical events. At
17&Central, we put a strong
emphasis on the retail calendar and
family events, as well as cultural
celebrations and collaborations to
foster participation and diversity. This
enables us to interact with the village
and increase foot traffic while forging
stronger relationships with retail
customers and guests.
Developing Walthamstow
CRATE Market Hall
At 17&Central, we are working with
CRATE Places UK to provide a new
16,500 sq.ft Market Hall. This space
will include leisure mini-golf, classes
like baby yoga and TED talks, evening
entertainment, seven street-eat
styled operators, an in-house bar and
coffee kiosk.
The space will provide a much-
needed destination for people to
socialise within the centre, experience
the leisure offers and a variety of
cuisines from local small businesses.
This encourages collaboration,
facilitates social inclusion and
unlocks the collective power of
enterprise to promote growth for
everyone. The opening will also
create more jobs within the local
community and drive visits from
local neighbourhoods to support
the growth of the Walthamstow
community.
Town centre regeneration
2022 represented a milestone year
for us at 17&Central, Walthamstow,
with the implementation of the first
phase of the planning consent we
secured in 2021. That consent allows
us to develop and deliver a range
of mixed-use opportunities over a
phased programme including:
• 495 Build to Rent residential units
in the form of two tall towers on a
standalone site
• A new step free London
Underground station entrance
and ticket hall in the heart of the
extension
• A 50,000 sq.ft retail-led commercial
extension
• 43 low-rise build to sell
residential units
• An upgraded public square in the
heart of the town centre
Delivering sustainable developments
with social benefits has been at
the forefront of our design and
implementation considerations
throughout the planning process
and the development has provided
an opportunity to deliver a range
of environmental and social
improvements.
We are pleased to
continue our relationship
with Capital & Regional
as we continue to
work together to bring
new jobs, training
opportunities, and retail
outlets for people to
enjoy. The investment
in Walthamstow town
centre is a key part
of our plans to make
Waltham Forest an even
better place to live, work,
and visit. I look forward
to more successes to
come over the next
few years.
Martin Esom
Chief Executive,
Walthamstow Forest Council
8888
Stock code: CAL My Mum and Dad took me for my first skiing lesson
just after my third birthday. Before I was born, I was
diagnosed with the medical condition Congenital
Diaphragmatic Hernia (CDH). My parents enrolled
me in my local Snozone SnoAcademy to help get
me physically active and to help build up my lung
capacity. I was a bit worried going out into the
snow on my own but once I finished my first lesson
I was hooked! I’ve loved it ever since. I did my first
race in the SnoAcademy, I was nervous at first
but when it started, I just tried to ski quickly and
smoothly and I won my age group!
Olivia
6 years old, This Girl Can
Tackling the cost-of-living crisis:
Playing a large role in our communities, we recognise
the hardships affecting vulnerable guests and we feel
it is our responsibility to provide support to them through
social challenges.
In July, 17&Central hosted a series of Sell or Swap events in an empty
storefront. As a way to relieve some economic stress, this was an
opportunity for customers to donate, trade, sell or repair clothing and
household items.
Our centres also held Beat the Bills events. Partnering with different
community groups, we were able to provide this educational
campaign, offering our guests advice and guidance on financial
planning and additional support in the local area.
In addition, our Retail Trust membership offers retail staff access to
discount vouchers for over 150 retailers, including supermarkets,
hoping to relieve some of their financial stress.
With the UK facing ongoing challenges from the cost of
living and climate crises, this project is about bringing
people together and creating a new community around
saving carbon and cutting costs at the same time. We
want to help residents share, reuse, repair and recycle,
to show that saving the planet and saving money can
be done together and shouldn’t be seen in opposition.
Stella Creasy
MP for Walthamstow
Inclusive spaces
We ensure our assets provide a
welcoming and safe experience for
all visitors. For example, Snozone
provides the only self-operated
indoor disability snow school in
Europe, with all venues fitted with
accessibility in mind. As an accredited
Disability Confident Employer, 40%
of instructors are trained in adaptive
coaching. Our inclusive staff training
allowed us to proudly offer over 1,000
disability and adaptive lessons for
the first time this year. Sign language
lessons are also provided as part
of our industry-leading education@
snozone holiday camps, and our
partnership with This Girl Can (see
page 80 for more information) offered
over 400 women and girls snow
sport introductions on International
Woman’s Day, free of charge.
Across our shopping centres, we have
increased our inclusivity efforts and
established new initiatives for guests
with disabilities:
• Providing an immersive experience:
At The Marlowes, Hemel, Electric
Umbrella opened its first storefront,
the Emporium. The Emporium
provides an immersive experience
to learning disabled people, giving
them the opportunity to work
with professional musicians. The
location also features a wide variety
of musical instruments available
for purchase and workshops where
donated musical instruments
can be repaired, reimagined and
serviced.
• Introducing Quiet Hour: We
introduced Quiet Hour, a more
subdued period, designed to
make the shopping experience
less daunting for those who can
find loud noises and bright lights
overwhelming. During Quiet Hour
there is dimmed lighting, no music
playing and no PA announcements.
To enhance the guest experience,
sensory backpacks, including ear
protectors and sensory toys, are
offered to those who are sensitive
in public environments.
• Creating awareness: The centres
have made changes to their
disability labels to recognise that
not all disabilities are visible and to
remind us that we need to be more
considerate and compassionate.
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1. Governance
1a. The Board’s oversight of climate-related
risks and opportunities
The Board has ultimate responsibility for overseeing risk management
and internal control processes, including assessing the Group’s
principal risks and setting its risk appetite via a biannual risk review.
The Board has fundamental oversight of wider sustainability
matters, including our ESG strategy and targets of its three pillars:
Environmental Sustainability, People and Community. Climate-related
risks have been identified as a principal risk to the business and are
therefore directly overseen by the Board. With climate-related risk
identified as a principal risk, the risk is actively monitored at all levels
of the organisation with updates provided to the Board on at least
a biannual basis as part of the risk review and more often on an
ad-hoc basis. In collaboration with other board - and management-
level committees the Board then determines necessary risk
mitigation actions.
The Audit Committee supports the Board in the management of
principal risks. The committee meets twice a year to review the
effectiveness of the overall risk management strategy and reviews
the principal risks across the Risk Matrix, including the climate-related
principal risk.
The ESG Committee has more specific responsibilities for managing
wider sustainability matters, including developing and reviewing the
Group’s ESG strategy, of which climate risk management is a key
component. The ESG Committee provides quarterly updates to the
Board and Audit Committee on the ESG strategy, targets and ensuring
that any material climate-driven macroeconomic, financial and
regulatory market changes are escalated and integrated into strategic
decision-making.
Lawrence Hutchings
Chief Executive
As part of our commitment to a leading
sustainable business, we are dedicated
to proactively managing our climate-
related risks and publicly reporting
climate-related financial information to
our stakeholders.
Here we disclose the climate-related
risks we have identified to the business
and set out our overarching risk
management approach in line with
the recommendations of the Task
Force on Climate-related Financial
Disclosures (TCFD). In accordance
with LSE Listing Rules published by
the FCA in 2022, and in line with the
Recommendations of TCFD dated June
2017, this report complies with 10 of
the 11 TCFD recommendations and
recommended disclosures.
We have not reported our current
year Scope 3 emissions under
Recommendation 4 (Metrics & Targets
b) Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas
(GHG) emissions and the related risks).
Due to limited improvement in data
availability since the recent publication
of our net zero carbon pathway, we
have decided not to include updated
Scope 3 emissions data in these
disclosures. We, therefore, consider
ourselves to only achieve partial
compliance with this TCFD requirement
at this stage. During 2023, we will
focus on improving our occupier data
collection to enable disclosure in our
2023 Annual Report.
Lawrence Hutchings
Chief Executive
9090
Stock code: CAL TCFD Disclosure
1. Governance
1b. Management’s role in
assessing and managing
climate-related risks and
opportunities
The Senior Leadership Team (SLT) is
responsible for the day-to-day operational
application of the risk management strategy,
including climate risk management. The SLT
supports the Board, Audit Committee and
ESG Committee in identifying and evaluating
principal risks and is directly responsible for
overseeing the climate-related principal risk.
The SLT meet weekly to discuss principal risks
and escalate material issues to the Board and
relevant committees. Additionally, Lawrence
Hutchings, CEO, Sara Jennings, Director
of Operations and Guest Experience for
shopping centres, and Nick Phillips, Managing
Director Snozone, sit on both the ESG
Committee and SLT, ensuring that climate-
related risks are assessed and managed
throughout all levels of the organisation.
The SLT has worked with the ESG committee
to conduct workshops to improve climate
risk awareness and knowledge throughout
all levels of the business. The SLT is also
responsible for reviewing whether acquisitions
and divestments align with our ESG strategy
and go ahead on a deal-by-deal basis.
Our newly formed Net Zero Carbon
Committee is responsible for monitoring and
managing our net zero carbon pathway and
the Net Zero Carbon Committee Wheel of
Delivery (see the environmental sustainability
section for more information). This includes
responsibility over managing net zero carbon
interventions and occupier engagement, as
well as our climate adaptation plan that we
are planning on developing moving forward.
Operational Management is responsible
for the implementation and maintenance
of climate risk mitigation and adaptation
measures, as well as the identification of
climate-related risks at the asset level. Weekly
calls with representatives of the SLT and
Operational Management ensure that the
SLT is aware of risk impacts identified at the
operational level, which are then assessed
and escalated to the Board and Audit and
ESG Committee, as necessary.
More detail on our governance structures
can be found under our Risk Management
Approach.
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Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report TCFD Disclosure CONTINUED
2. Strategy
2a. Climate-related risks and
opportunities identified over the
short, medium, and long-term
We recognise that climate-related risks materialise
over the medium to longer-term and that the assets we
acquire and occupy now will still be here far in the future.
Without appropriate risk management, these risks could
have severe financial and reputational implications. As
such, we conducted a climate risk assessment across
the two climate scenarios RCP 4.5 and RCP 8.5 by the
Intergovernmental Panel on Climate Change (IPCC) to
identify the top climate-related risks to our business over
the short term (2020-2029), medium term (2030-3039) and
long term (>2040), as well as assess their implications and
the necessary actions to manage them. The time horizons
were set to align with our 2040 net zero carbon target, as
well as capture a range of physical and transition climate-
related risks that are expected to materialise near and
long term.
The climate risk assessment covered a broad range of
climate-related risks, selected as appropriate to the
geography of our assets and the asset types in scope,
across the decades 2020-2029, 2030-2039 and 2040-
2049 and across two climate scenarios. Through a
rigorous business and portfolio climate risk assessment
process, we identified the top 10 climate-related risks
and opportunities to our business and portfolio across
each time horizon. We undertook portfolio modelling
to quantify potential financial losses and savings from a
range of climate-related risks and opportunities, including
physical risks such as flooding, heat stress and drought
and transition risks, such as market, legal, reputation and
Climate-related risk matrix
technology risks, across RCP 4.5 and RCP 8.5 emissions
scenarios. This assessment identified the risk profiles of
our assets and the most at-risk assets, allowing us to make
strategic decisions on where to focus mitigation actions
and harness opportunities.
The business level assessment qualitatively assessed
the significance and likelihood of a range of physical and
transition climate-related risks from a scale of 1-5, taking
into consideration the financial losses modelled in the
quantitative portfolio modelling. The significance was
assessed based on the level of disruption, financial impact
and ease/cost of mitigation of the risk. The range was from
minimal or no impact to catastrophic impact threatening
the future of the business. The likelihood was assessed
based on the probability, frequency, duration of impact
and speed at which the risk materialises. This provides
an overall likelihood which ranges from risks with a short
duration that materialise slowly to risk at a high frequency
and duration that persist over a long period of time.
The top 10 risks identified in the assessment have been
deemed material to the business and have been adopted
in the following designated climate-related risk matrix
which informs the climate-related principal risk. The
climate-related risk matrix is managed and overseen by
the SLT on an ongoing basis and had been integrated into
our risk management and biannual risk review process
under the climate-related principal risk. The SLT also works
with Operational Management who identify the impacts of
climate-related risks at the site level to inform the climate-
related principal risk.
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Likelihood
Short term (2020-2029)
1 Energy decarbonisation and technology
2 Financial market uncertainty
3 Increased regulation
4 Shifting market and occupier expectation
Medium term (2030-2039)
5 Insurance challengnges
6 Supply chain and resources
7 Flooding
8 Storm damage
Long term (>2040)
9 Water stress and drought
10 Heat stress
9292
Stock code: CAL Physical and transition climate-related risks:
Time horizon
Risk
Risk description
Risk impacts
Mitigating controls
1 Energy
decarbonisation
and technology
2 Financial
market
uncertainty
3 Increased
regulation
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4 Shifting market
and occupier
expectation
The decarbonisation
pathway demands a
shift from fossil fuels
to renewables. This will
stimulate low carbon
technological solutions.
Existing buildings
must adapt using
these technologies to
meet energy efficiency
targets and reduce
rising operational costs
caused by changing
seasonal patterns and
carbon taxes.
Sustained damage from
climate-related physical
impacts or persistent
transition-related
market movements
impact macroeconomic
conditions and threaten
the ability of firms to
produce goods and
services.
Policy mandates
existing building stock
and developments
improve efficiencies and
operational practices
and embed climate
resilience onsite.
Markets shift to meet
growing demand
for low or net zero
carbon assets with
onsite climate
resilience embedded.
Demand may also
shift away from
certain geographies or
sectors, while changing
consumer preferences
could create tenant risk.
• Capex to implement low
carbon technologies
• Increased operational
costs, including impacts
from increased cost
of carbon
• Heightened tenant
default risk due to higher
operating costs causing
loss of income
• Reduced asset value for
poorly performing assets
• Increased cost of
financial capital for high
carbon assets
• Rise in interest rates and
a decrease in economic
growth leading to an
increase in cost of financial
capital
• Less market liquidity
contributing to reduced
transactional and
development activity
• Economic downturn
reducing rental income
and asset value and
increasing tenancy risk
• Capex cost to meet new
standards
• Potential stranded
asset risk and increased
void periods for non-
compliance
• Reduced asset values,
‘brown discount’ or
reduced occupier demand
• Decreased demand for
inefficient assets leading
to lower rental and asset
values
• Stranded asset risk
for assets in high-risk
geographies
• Tenant default risk for
occupiers in carbon
intensive sectors
Implementing net zero carbon
pathway interventions, including
securing high-quality renewable
energy, and improving the
energy efficiency of assets. This
is supported by our Planned
Preventative Maintenance (PPM)
at the centre level for improving
plant and equipment.
Conducting regular market
reviews of the retail
environment, property values
and comparable transactions to
respond to any changes in the
market.
Continuously monitoring the
UK’s EPC regulation road map
and are prepared to adapt our
improvement plans within the
required timescales. Our 10-
year PPM has been designed to
account for upcoming increases
in regulation.
As a retail business, we are
continuously monitoring the
demands of our customers. We
engage with the Building Better
Partnership (BBP) to share best
practice and establish how the
industry will respond to occupier
expectations. We continue
to share our net zero carbon
pathway successes and further
implementation of green lease
requirements.
KEY
Transition risks
Physical risks
9393
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report
TCFD Disclosure CONTINUED
2. Strategy
Time horizon
Risk
Risk description
Risk impacts
Mitigating controls
5 Insurance
challenges
6 Supply chain
and resources
7 Flooding
The physical impacts
of climate change are
extensive and cause the
insurance industry to
reassess premiums or
withdraw cover.
Physical climate
impacts can cause
widespread disruption
to production within
supply chains and cause
resource prices to rise.
Increased duration
and intensity of
precipitation, snow
melt, and rising sea
levels will exacerbate
fluvial (river), pluvial
(surface water) and
coastal flooding.
• Rise in insurance
premiums or difficulty in
securing insurance for
vulnerable assets
• Stranded asset risk and
reduced asset values for
uninsurable assets
• Higher construction and
procurement costs
• Business disruption
causing loss of income
• Repair costs and loss of
access impacting revenues
in a flood event
• Capex to install flood
defence measures
• Reductions in regional
investment and footfall
• Decline in asset value or
stranded asset risk
8 Storm damage
9 Water stress
and drought
• Capex to install adaptation
measures and clean-up
costs in a storm event
• Decline in asset value or
stranded asset risk
• Increased operational costs
• Capex to improve
efficiency
• Reduced asset values for
inefficient assets
Meteorological
phenomena are
becoming more
frequent. Impacts arise
from storms and heavy
wind, exacerbated
by changes to sea
temperatures and
seasonal patterns.
Water becomes
increasingly scarce,
with supply unable
to meet demand. As
temperatures rise,
average drought lengths
could increase, with
implications on water
costs, supply chains and
public health.
10 Heat stress
Rising mean
temperatures and
extreme temperature
highs put pressure
on both people and
infrastructure.
• Degradation of plant and
equipment leading to
increased energy demand
and capex associated with
replacement
• Increased operational costs
• Interrupted business
operations and reduced
workforce productivity
• Negative health and
wellbeing impacts,
which can also lead to
reputational risks
• Reduced tenant demand
for space without energy
efficient cooling and/or
ventilation
Conduct annual insurance
inspections to understand
current insurance statuses and
review whether more beneficial
terms can be secured.
As a retail business, we monitor
the market and impacts on
consumer confidence and
product availability, including
climate-related impacts.
Our PPM at the centre level
ensures proactive maintenance
to protect infrastructure under
which flood preventive measures
are monitored. Additionally,
we monitor weather forecasts
and latest research to identify
changes in risk. We are also
working with the local authorities
and water boards to support
the flood resilience of the local
infrastructure plan and the
implementation of preventative
measures.
Our PPM at the centre level
ensures proactive maintenance
to protect infrastructure from
storm damage. As with flooding,
we monitor weather forecasts
to prepare for storm events
and have started to implement
weather-related emergency
plans.
Our PPM at centre level ensures
proactive maintenance to
maintain and apply water-saving
initiatives. We also monitor
the local water board drought
plans at each centre to better
understand the drought risk for
each site area.
Interventions planned under
our net zero carbon pathway,
supported by our 10-year PPM,
will help improve the operational
efficiency of our assets and
reduce the vulnerability of our
sites to heat stress implications.
We actively monitor heat stress
control measures, including:
• Significant changes in ambient
temperature
• Air pollution
• Ultraviolet exposure
• Extreme weather
• Changes in the built
environment
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Stock code: CAL
Additionally, we have identified opportunities that we
can leverage to deliver outstanding climate-related
performance to our occupiers and guests. These include
proactive investment in low-carbon technologies and
climate adaptation measures to secure long-term
cost savings, achieve our net zero carbon ambitions,
improve brand reputation, increase footfall, and attract
premium occupiers.
2b. Impact of climate-related risks and
opportunities on the organisation’s
businesses, strategy, and financial
planning
Climate-related risks have been embedded into our
business strategy as a component of the environmental
sustainability pillar of our ESG strategy. Energy, water,
and carbon efficiency opportunities as well as other
climate resilience measures are identified within the
business planning process alongside all other business
planning items.
Climate-related risks inform our financial planning and
investment strategy. Throughout the acquisition process,
we undertake surveys to assess the carbon performance
and climate resilience of sites and the capex necessary
to align sites with our net zero carbon pathway and
climate risk management approach. This helps us identify
and implement opportunities to enhance our net zero
carbon readiness and make conscious investment
decisions. We are currently in the process of enhancing
our pre-acquisition sustainability due diligence through
a sustainability acquisition investment checklist. This
will extend our minimum performance standards and
investment decisions thresholds to EPC performance,
net zero carbon operational performance in line with
CRREM stranding year, potential for onsite renewables,
climate risk resilience of building characteristics and the
vulnerability of the location, and to occupiers and their
onsite activities.
Refurbishments provide an opportunity to undertake
climate resilience and net zero carbon upgrades. We
have embedded climate adaptation solutions into our
refurbishment process and seek to deploy energy
efficiency upgrades across each stage of the property life
cycle. Net zero carbon upgrades and maintenance costs
associated with climate-related risks, such as maintaining
ambient temperatures in centres, ensuring adequate
drainage and repairs from climate-related damages,
are priced into the service charge budget (PPM) for
each shopping centre. Additionally, under our Net Zero
Carbon Committee Wheel of Delivery, we are committed
to developing an interventions capex plan and TCFD
audits to further support our decarbonisation and climate
adaptation efforts.
2c. Resilience of the organisation’s
strategy, taking into consideration
different climate-related scenarios,
including a 2°C or lower scenario
Having conducted a climate risk assessment, we
understand the material climate-related risks to our
business and the vulnerability of our assets and business
structure across the IPCC’s RCP 4.5 and RCP 8.5 climate
scenarios and how to effectively manage respective risks
and opportunities going forward. These insights have
already fed into our strategy and decision-making and
we are rolling out new management, mitigation, and
adaptation measures to improve our resilience.
RCP 4.5 and RCP 8.5 have been determined as the climate
scenario for our assessment, as they cover a range of
likely emissions scenarios and associated risks. The RCP
4.5 climate scenario is characterised by significant policy
action and market forces to decarbonise and meet the
Paris Agreement. Capital & Regional’s resilience against
risks associated with the RCP 4.5 climate scenario (low
emissions) is being secured by our NZC pathway and
related activities described in TCFD Recommended
Disclosure – Strategy a). The RCP 8.5 scenario is
characterised by significant changes in weather patterns
and severe physical risks. Our resilience against risks
associated with the RCP 8.5 climate scenario (worst case,
high emissions) is currently secured by our PPM at centre
level and our proactive approach to assessing risks.
Additional climate adaptation plans and measures are
under consideration.
Climate scenarios
Scenario
Scenario 1:
RCP 4.5
Average
temperature rise
1.7 – 3.2°C by
2100
Transition
Impact
Lower emissions scenario where there is
increasing policy action to meet the Paris
Agreement. Transition risks dominate.
Scenario 2:
RCP 8.5
3.2 – 5.4°C by
2100
Higher emissions, business-as-usual
scenario where policy action is negligible
and warming rises drastically. Physical
risks dominate.
Economic: substantial regulatory and
market pressure to decarbonise and
associated costs to meet these demands.
Environmental: Less physical risk, although
ca. 2°C warming still presents substantial
physical climate risks.
Economic: Permanently stunted GDP
growth and severe economic and social
shifts.
Environmental: Chronic changes to
weather patterns and ecosystems causing
severe impacts on a global scale.
9595
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report TCFD Disclosure CONTINUED
3. Risk Management
3a. Describe the
organisation’s processes for
identifying and assessing
climate-related risks
Our two-pronged approach to a climate risk
assessment which includes both the business
and portfolio has enabled us to identify
material climate-related risks, by assessing
their potential significance and likelihood,
relative to each other. These results have
been integrated into a climate-related risk
matrix which underpins the single risk issue
of climate-related risks, which individually is
recognised as a principal risk and therefore
embedded into our risk management and
decision-making processes. Climate-related
risks are informally reviewed on an ongoing
basis by the SLT and formally presented to the
Board as part of the biannual risk review. The
SLT also works closely with the Operational
Teams to remain aware of any significant risk
impacts at the site-level. Moving forward, the
Group has committed to reporting against
TCFD annually and regularly conducting
climate risk assessments. As described above
and throughout our TCFD disclosure, these
may occur in the form of qualitative literature
reviews and quantitative portfolio modelling,
based on latest geospatial and local climate
and vulnerability data, particularly in the event
of material changes to the business and/or
assets in our portfolio.
We have also implemented the following
solutions to actively manage climate-related
risks at the asset level:
• Further installation of LED lighting and
PIR sensors
• Sourced 100% of electricity from
renewable sources
• Increased climate risk awareness for all
operational teams, focusing on preparing
response plans for extreme weather events
• Significant investment into new blast
cooler and glycol liquid piping at Snozone
Milton Keynes
• Installed over 1,000 solar panels to the roof
at Snozone Madrid
Further information on activities completed
in 2022 can be found in the environmental
sustainability section of the report.
3c. Describe how processes
for identifying, assessing, and
managing climate-related
risks are integrated into the
organisation’s overall risk
management
A range of climate-related risks have been
fully integrated into our risk management
framework. As of last year, climate-related
risk has been identified as a principal risk to
the business and forms an integral part of
the Group’s biannual risk review. The climate-
related principal risk is underpinned by a
separate climate-related risk matrix, where
material climate risks have been assessed and
ranked via a rigorous climate risk assessment
(see TCFD Recommended Disclosure –
Strategy a)). The climate-related risk matrix
is managed, overseen and regularly updated
by the SLT, of which members of the
ESG Committee and Board are members
of (see TCFD Recommended Disclosure –
Governance).
3b. Describe the
organisation’s processes for
managing climate-related
risks
A risk review is conducted twice a year by the
Group’s Board, Audit Committee and SLT to
ensure that the Group remains abreast of
identified and emerging risks. Throughout
the risk review, principal risks are ranked
by significance and likelihood across low,
medium, and high levels in a risk matrix,
and individual responsibility and mitigating
controls are determined. Climate-related risks
are also managed via a separate climate-
related risk matrix underpinning the climate-
related principal risk (see TCFD Recommended
Disclosure – Strategy a) for more detail).
In addition to the mitigating controls
described in the TCFD Recommended
Disclosure section – Strategy a) & b), we
have scaled up our green lease clauses and
are engaging with occupiers to improve
their energy efficiency and data sharing to
enhance our ability to manage risks in tenant-
controlled spaces.
9696
Stock code: CAL 4. Metrics and Targets
4a. Disclose the metrics used by the
organisation to assess climate-related
risks and opportunities in line with its
strategy and risk management process
We publicly report on our environmental performance
and use a range of metrics to assess our resource
consumption, energy, and carbon emissions and
determine our exposure to climate-related risks.
These include:
• Scope 1, 2 and 3 emissions in tCO2e, including GHG
intensity from building energy (kgCO2e/m²/year),
calculated using internal data and emissions factors
from the UK Government’s GHG Conversion Factors for
Company Reporting 2020
• Electricity consumption in kWh, including energy
intensity in kWh/m²/year, monitored monthly and
reported per asset
• Water consumption, including occupier water
consumption in m3/year
• Waste disposal in tonnes, split into landfill, incineration,
recovery recycling and anaerobic digestion in
metric tonnes
• Onsite renewable energy generation as a percentage of
total energy consumption
• High quality renewable energy procurement as a
percentage of total energy consumption
• Embodied carbon intensity in tCO2e/m2 GIA for
refurbishments, developments and fit-outs
• Total portfolio embodied carbon in tCO2e
• Offset residual carbon emissions in tCO2e
• EPC ratings and building certifications as a holistic
indicator of the portfolio’s performance
Corporate Accounting and Reporting Standard.
In 2022, we published our net zero carbon pathway
document (available here), in which we disclosed our
2019 baseline Scope 1, 2, and 3 GHG emissions. Our
most material Scope 3 emissions, associated with
occupier energy consumption, were based predominately
on estimations. Due to limited improvement in data
availability since the recent publication of our net zero
carbon pathway, we have decided not to include updated
Scope 3 emissions data in these disclosures. During 2023,
we will focus on improving our occupier data collection to
enable disclosure in our 2023 Annual Report.
4c. Describe the targets used by the
organisation to manage climate-
related risks and opportunities and
performance against targets
For our shopping centres and Snozone venues, we have
set the target of reaching net zero carbon by 2040 and
have developed a net zero carbon pathway formulating
energy efficiency measures and targets based on the
Carbon Risk Real Estate Monitor (CRREM) 1.5°C Global
Pathway for the shopping centres with a separate
strategy for the Snozone venues. The Snozone venues
have a five-year capital plan to significantly reduce
their carbon footprint with new equipment and off-
setting initiatives. We have set short- and medium-term
targets for embodied carbon, operational carbon, onsite
renewable generation, renewable energy procurement,
carbon offsetting and third-party verification across our
operations, refurbishments, and acquisitions processes
to reach our net zero commitment and mitigate transition
climate-related risks. More detail on these targets and
our progress against them is available throughout the
environmental sustainability section of the report.
4b. Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas
(GHG) emissions and the related risks
We report our Scope 1 and 2 GHG emissions in our SECR
and EPRA disclosure available on pages 70–76. These have
been calculated and reported in line with the GHG Protocol
To increase accountability and culturally embed climate
risk management throughout the organisation we have
set remuneration-linked annual objectives for energy and
carbon performance, environmental data collection, tenant
engagement and implementing internal risk management
and control processes for all our employees across all
levels of our business in our corporate ESG objectives
2023. Key climate-related objectives include:
Level
Climate-related Target(s)
Board and SLT
• Establish an internal carbon pricing system to dedicate funding for ESG related initiatives
• Reduce total energy consumption by 5% on 2022 and 10% on 2019 outturn
• Ensure compliance with all sustainability regulations and new technology trends
Commercial team
• Obtain at least 20% of retailers’ energy performance data across the portfolio by year end
• Establish an EPC management plan to future proof against incoming legislation, where the
minimum EPC rating will increase to a C by 2027 and B by 2030
Investment team
• Perform newly developed pre-acquisition sustainability due diligence for all new acquisitions
Operational
management
• Provide 100% of actual Scope 1 and 2 emissions data covering energy, water, waste, and fugitive
emissions
• Increase proportion of energy data covering occupied spaces to improve Scope 3 data coverage
9797
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Strategic Report Governance Report
Contents
Governance Report
100 Chair's Introduction to Governance
101 Board of Directors
103 Senior Leadership Team
104 Compliance statement
105 Board Leadership & Company Purpose
106 Division of Responsibilities
110 Composition, Succession and Evaluation
112 Nomination Committee Report
114 Audit, Risk and Internal Control
120 Directors' Remuneration
122 Directors' Remuneration Policy
129 Directors' Remuneration Report
138 Directors' Report
142 Directors' Responsibilities Statement
143 Independent Auditor's Report
98
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Stock code: CAL
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022
9999
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Chair’s introduction to governance
I am pleased to present
Capital & Regional’s corporate
governance report for 2022.
David Hunter
Chairman
The primary focus of C&R in 2022 was in navigating the
operational recovery of the business from the Covid-19
pandemic, advancing the Group’s ESG agenda and resolving the
position of the Group’s other loan facilities following on from
the successful recapitalisation and restructuring of the Group’s
largest loan facility in November 2021.
The Board remains committed to high
standards of corporate governance, which
it considers to be critical to effective
management and to maintaining investor
confidence. I am satisfied that our approach,
as embedded throughout our business,
delivers this and will continue to evolve and
improve to keep pace with changes in best
practice and regulation.
David Hunter
Chairman
The Board’s activities during the year have
reflected this, with meetings focussed
on transactional activity and updates on
operational progress and sustainability
initiatives.
The composition of the Board, in terms of
diversity and tenure, has been considered by
the Nomination Committee during the year.
The Committee is cognisant of the diversity
targets set by the Financial Conduct Authority
in the changes to the Listing Rules announced
in April 2022 and will work with management
to address the other requirements and
recommendations set out in the new rules
and related guidance. The Committee is also
focused on succession planning in respect of
those Non-Executive Directors who will be due
to retire in 2024 and 2025.
The Board
remains
committed
to high
standards
of corporate
governance.
David Hunter
Chairman
100100
Stock code: CAL Board of Directors
Committee membership
Executive Directors
Non-executive Directors
A Audit Committee
E ESG Committee
N Nomination Committee
R Remuneration Committee
Chair of Committee
Senior Independent
Director
*Independent (as per the UK
Corporate Governance Code).
Lawrence Hutchings
Chief Executive
David Hunter
Chairman of the Board
Committee membership E
Committee membership N
Appointed 2017
Relevant skills and experience
Lawrence joined the Group in 2017
following four years at Blackstone in
Australia, two as Managing Director,
and has over 20 years' experience in the
property industry. Prior to Blackstone,
Lawrence was at Hammerson plc for
four years, the last three as Managing
Director - UK Retail, before which he
spent almost seven years at Henderson
Global Investors.
External appointments
• None
Appointed 2020
Relevant skills and experience
David has many years’ experience in UK and
international real estate markets, including
15 years as an independent adviser and
professional non-executive director. His current
roles include as Chairman at Custodian REIT Plc
and DAR Global plc. His background includes
previous board level positions in the UK and
overseas. He is a Senior Adviser to ICG Real
Estate, a leading real estate debt fund manager.
Prior to 2005, David was Managing Director of
Aberdeen Property Investors and in 2004 he was
President of the British Property Federation.
External appointments
• DAR Global plc (Chairman)
• Custodian REIT plc (Chairman)
• ICG-Longbow (Senior Adviser)
Stuart Wetherly
Group Finance Director
and Company Secretary
Ian Krieger
Non-Executive*
Appointed 2019
Relevant skills and experience
Stuart joined Capital & Regional as
Group Financial Controller in October
2012, and was additionally appointed
Company Secretary in April 2013. He
was appointed Group Finance Director
in March 2019. Prior to joining Capital
& Regional, Stuart spent 12 years at
Deloitte in London where he qualified
as a Chartered Accountant. Stuart
also worked in a group finance role at
Johnson Matthey plc.
External appointments
• None
Committee membership A N R
Appointed 2014
Relevant skills and experience
Ian is the Audit Committee Chairman
and Senior Independent Director at both
Safestore Holdings plc and Primary Health
Properties PLC. Aside from his Non-Executive
Director experience; Ian also brings extensive
financial expertise from having previously
been a senior partner and vice-chairman at
Deloitte until his retirement in 2012.
External appointments
• Safestore Holdings plc (Audit Committee
Chair, Senior Independent Director)
• Primary Health Properties plc (Audit
Committee Chair, Senior Independent
Director)
101
101
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance
Board of Directors
Non-executive Directors
Norbert Sasse
Non-Executive
Panico Theocharides
Non-Executive
Appointed 2019
Relevant skills and experience
Norbert is the Group Chief Executive
Officer of Growthpoint Properties Limited.
He holds a BCom and Honours Degree in
Accounting from Rand Afrikaans University
and is a Chartered Accountant. Norbert has
25 years’ experience in corporate finance,
funds management and all aspects of
listed property, as well as equity and debt
capital market experience. He is a director
of all major Growthpoint subsidiaries and
investments in South Africa, Australia and
the United Kingdom.
External appointments
• Growthpoint Properties Limited
• Growthpoint Properties Australia Limited
• Globalworth Real Estate Investments
Limited
Appointed 2023
Relevant skills and experience
Panico joined Growthpoint in February 2023
as Group: Head of Investments. Panico has
over 20 years’ experience in the real estate,
advisory and investment banking industries.
Prior to joining Growthpoint Panico worked
for five years as an independent property
advisor and previously was Head of Property
Advisory, Corporate Finance at Investec in
South Africa. Before that Panico was the Joint
Chief Executive Officer of Annuity Properties
Limited, a South African focused REIT that was
listed on the Johannesburg Stock Exchange.
External appointments
• Growthpoint Properties Australia Limited
• Globalworth Real Estate Investments
Limited
Committee membership
A Audit Committee
E ESG Committee
N Nomination Committee
R Remuneration Committee
Chair of Committee
Board Diversity
Board composition
(number of Directors)
1
2
2
3
Chairman
Executive Directors
Independent Non-Executive Directors
Non-Executive Directors
(not independent)
Board gender split (%)
25%
Katie Wadey
Non-Executive*
Laura Whyte
Non-Executive
Committee membership A E R
Committee membership A E N R
Appointed 2020
Relevant skills and experience
Katie is the Chief Product and Commercial
Officer at Simplyhealth. Katie has over
20 years of multi-industry experience
across a range of customer and commercial
functions and has held senior roles at
blue chip consumer facing organisations
including BT, LV=, Tesco, British Gas and
Aviva. Katie is also a Trustee of Onside
Youth Zones and Transform Housing
and Support.
Appointed 2020
Relevant skills and experience
Laura had a long and successful career with
John Lewis Partnership where she served on
the Management Board for over ten years,
firstly as Registrar and latterly as HR Director.
Laura is also a Non-Executive Director and
Chair of the Remuneration Committee at
Macfarlane Group PLC, and a Non-Executive
Director of the British Horseracing Authority.
She is a Trustee of The Old Royal Naval
College, Greenwich.
External appointments
• Hammersmith & Fulham Youth Zone
External appointments
• Macfarlane Group PLC
• Transform Housing and Support (Trustee)
• British Horseracing Authority
• Mindmasters Group Limited
• The Old Royal Naval College, Greenwich
(Trustee)
75%
Male
Female
Board tenure
(number of Directors)
4
2
2
1 - 3 years
3 - 6 years
6 - 9 years
102102
Stock code: CAL
Senior Leadership Team
Lawrence Hutchings
Chief Executive
Frankie Chrysanthou
Commercial Director
James Ryman
Investment Director
Frankie joined C&R in 2022 bringing
more than 20 years of experience
across commercial leasing and
business planning and performance.
Her most recent roles were with
leading flexible workspace providers
IWG and Landmark Space. As
Commercial Director, Frankie
supports our community strategy
and is responsible for directing
the leasing team, CML and temp
lettings to drive new retail deals
and execute innovative asset
management strategies to optimise
the use of space across our shopping
centre portfolio.
James joined Capital & Regional in
2007 and prior to that qualified as a
Chartered Surveyor at Donaldsons
Chartered Surveyors where he spent
13 years specialising in all aspects of
shopping centre asset management,
latterly running the Retail Asset
Management team. As Investment
Director, James is responsible for
driving investment performance from
our shopping centre portfolio.
Stuart Wetherly
Group Finance Director
and Company Secretary
Sara Jennings
Director of Operations
& Guest Experience
Nick Phillips
Managing Director,
Snozone
Sara began her retail career
working for House of Fraser in Store
Management before joining C&R
in 2001. She has held a number of
positions within C&R before taking on
the role of Director of Operations &
Guest Experience. Sara is responsible
for the day to day management of
the Group’s shopping centres and
leads the integration process of
new acquisitions.
Nick joined C&R in 2012 as Snozone’s
Managing Director. Nick started
his career with Aldi, joining them
in their embryonic stages in the UK
as a regional New Store Openings
Manager in the northwest. He
then went on to hold a number of
positions with Lidl and Whitbread
PLC as David Lloyd Leisure’s
Regional Director for the south of
England before becoming their
Sales & Operations Director for the
UK & Europe.
103103
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Corporate Governance Report
Compliance statement
Compliance with the UK Corporate Governance Code
The Company has, throughout the year ended
30 December 2022, applied the principles and complied
with the provisions of the 2018 UK Corporate Governance
Code except for (i) Provision 11 - that in light of the
Board featuring two representatives of Growthpoint, the
Company’s majority shareholder, at least half the Board,
excluding the Chair, are not considered to be independent
non-executive directors and (ii) Provision 38 - that
Executive Director pension contributions are not aligned
with the workforce.
In light of the Group’s reduced number of assets under
management following the transactional activity in the year
and cost pressures caused by the current high rates of
inflation the Board has postponed further Non-Executive
Director appointments for the time being, however
the Nomination Committee is committed to ensuring
adequate succession plans are in place for non-executive
directors due to retire in the medium term. The Board will
continue to keep its composition under review and remain
committed to maintaining the appropriate combination
of directors that promotes balanced and robust decision
making. In order to fully comply with Principle G of the
2018 Corporate Governance Code, the Board would need
to recruit one further independent non-executive director.
This would result in a large Board number in comparison
to the current scale and complexity of the Business. In the
Company’s view, the breadth of experience and knowledge
brought to the Board by the Chairman and non-executive
directors coupled with their detachment from the day-to-
day issues within the Company provide for constructive
debate and robust decision making. The Board considers
the current composition to be effective in holding the
executives and the management team to account.
An explanation of the Company’s reasoning in respect
of Provision 38 is set out in the Directors’ Remuneration
Report on pages 129–137. Changes which have taken
effect from 1 January 2023 will ensure compliance in 2023.
Board
leadership
and company
purpose
Division of
responsibilities
How we have applied the Code
The Board has overall responsibility for delivering the long-term sustainable
success of the Group. It also has the responsibility to ensure the Group’s key
stakeholders are clearly identified and that the success is for their benefit and
for the wider community.
The Board has devised a clear purpose of the Business with well-defined
values and strategy that aim to provide a solid platform for achieving this
purpose and instilling the right culture across the Business.
The Board and its four Committees have well-established responsibilities
that are set out in the Schedule of Matters Reserved for Board Approval
and Terms of Reference for each Committee, respectively. The division
of responsibilities between the Chairman, tasked with ensuring the
effectiveness of the Board, and the Chief Executive, who is responsible for the
leadership of the Group’s business, has been clearly defined.
All divisions of responsibilities have been agreed and approved by the Board.
Further information
Read more about
Board Structure on
page 107
Read more about our
Purpose and Strategy
on pages 18–21
Read more about our
Division of
Responsibilities on
pages 106–108
Composition,
succession and
evaluation
The Board, as a whole, keeps under review the composition of the Board
and its Committees. Appointments to the Board are recommended by the
Nomination Committee. The Nomination Committee is also responsible
for ensuring adequate succession planning is in place for Board and senior
management positions. The Nomination Committee is also responsible for
reviewing the Group’s policy on Diversity and Inclusion.
The Board undertakes an annual review of its own effectiveness
Audit, risk
and internal
control
The Board delegates and receives updates from the Audit Committee in
respect of monitoring the integrity of financial statements and ensuring
robust systems and adequate controls are in place to manage risk. The Board
has also tasked the Audit Committee with monitoring and maintaining the
Group’s relationship with the external audit firm.
Remuneration
The Board, through the Remuneration Committee, ensures that
remuneration policies and practices are designed to support the Group’s
strategy and promote long-term sustainable success. The Remuneration
Committee ensure that formal and transparent policies are in place for
determining director and senior management remuneration.
Read more about our
Succession and
Evaluation on
pages 110–111
Read more about our
Group’s Risk
management on
pages 44–51
Read more about our
Audit and Internal
Controls on
pages 114–118
Read more about our
Remuneration on
pages 120–137
Compliance with the Disclosure and Transparency Rules
The disclosures required under DTR 7.2 of the Disclosure
and Transparency Rules are contained in this report,
except for those required under DTR 7.2.6 which are
contained in the Directors’ Report.
Task Force for Climate-Related Financial Disclosures
In accordance with LR 9.8.6(8), details of the Group’s
pathway to providing disclosure consistent with the
recommendations of the Task Force for Climate-
Related Financial Disclosures (TCFD) are provided in the
ESG Report on pages 90–97. The Board is aware of the
importance in reducing the Group’s impact on climate to
further mitigate its direct link to financial risk.
104104
Stock code: CAL Board Leadership & Company Purpose
Board Activity
Main activities undertaken during the financial year:
Strategy
Risk Management & Internal
Controls
Financial Performance
• Reviewed the Group’s
performance against budget
and peers
• Approved the annual business
plan and budget
• Approved interim and full year
results
• Reviewed the dividend policy
and approved the resumption
of dividend payments in the
second half of the year
• Reviewed strategic options
for the further growth and
development of the business
• Received updates on property
cycle and sector trends
including the interaction of
physical and online retail
• Continued to monitor
management’s progress on
positioning the asset portfolio
to increase exposure to
resilient customer categories
in line with changing consumer
demands
• Considered and agreed
the purchase of the Hemel
Hempstead loan facility
at a discount and the
deconsolidation of Luton
• Considered and approved
the disposal of The Mall at
Blackburn and completion of
the sale of land for residential
development at Walthamstow.
• Considered the ongoing risks
associated with the Covid-19
pandemic in particular the
Omicron variant and its impact
on business operations
• Considered the impact on
operations from the cost of
living crisis
• Reviewed the Group’s
emerging and principal risks
and the risk matrix and internal
control systems
• Reviewed the effectiveness
of the material financial,
operational and compliance
controls that mitigate the
Group's key risks.
• Through the Board’s Audit
Committee, met with the
Company’s valuers twice in
the year
Governance
Stakeholders
• Discussed the results of the
• Received updates on
Board evaluation
• Received regular updates
from the Chairs of the Audit,
Remuneration, Nomination
and ESG Committees
interaction with and feedback
from shareholders
• Reviewed employee
engagement survey results and
updates on company culture
• Discussed and reviewed the
• Received updates on key HR
Company’s ESG strategy
and people matters
• Received briefings on key
governance and regulatory
developments
• Completed the annual review
of the Company’s Modern
Slavery Statement
• Received updates on tenant
engagement with regard to
implementing sustainability
initiatives
Read more about
our strategy on pages 18–21
Read more about our
Board evaluation process on
page 111
105105
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Division of Responsibilities
Board
Key Responsibilities
• Collectively responsible
for promoting the
long-term sustainable
success of the Group
for the benefit of its
stakeholders through
the creation of long-
term sustainable
shareholder value and
contribution to wider
society.
• Setting the Group’s
strategic direction
and overseeing
management’s
execution of the
strategy.
• Responsible for
establishing Group
purpose and values, and
for ensuring that our
culture and behaviours
are both appropriate
and consistent.
106106
Audit Committee
Key Responsibilities
• Reviews the clarity, completeness and appropriateness of disclosure in the
Group’s Financial Statements and reports findings to the Board.
• Advises the board on whether the annual report is fair, balanced and
understandable.
• Monitors, reviews and recommends to the Board the need for an Internal
Audit function.
• Recommends the appointment of the External Auditors and reviews their
effectiveness, independence and fees.
• Reviews and approves the Group’s arrangements and policy for its
workforce to raise concerns, in confidence, about possible wrongdoing.
• Delegated by the Board to monitor the internal controls and risk
management process. Ultimate approval remains with the Board.
Read more about the Audit Committee on pages 114–118
Disclosure Committee
Key Responsibilities
• Identifies Inside Information.
• Decides on how and when we should disclose Inside Information in
accordance with the Disclosure Policy and having regard, in particular, to
information previously disclosed by the Company.
Nomination Committee
Key Responsibilities
• Reviews the structure, size and composition of the Board and Board
Committees to ensure that they are appropriately balanced in terms of
diversity, knowledge, skills and experience.
• Reviews and recommends appointments to the Board and to other senior
leadership positions.
Read more about the Nomination Committee on pages 112–113
Remuneration Committee
Key Responsibilities
• Makes recommendations to the Board on the Group’s executive director
Remuneration Policy.
• Oversees the Group’s Remuneration Schemes.
• Reviews and recommends to the Board the Group’s Remuneration Policy.
Read more about the Remuneration Committee on pages 120–121
ESG Committee
Key Responsibilities
• Sets the ESG strategy and ensures that it remains fit for purpose.
• Benchmarking and measuring the Group against national and global
industry standards, in relation to its ESG strategy and goals.
• Ensures that there are appropriate policies in place to support the Group’s
ESG framework.
• Assists on other matters related to ESG as may be referred to it by
the Board
Read more about the ESG Committee on page 61
Stock code: CAL Board balance and independence
Details of the directors including their qualifications,
experience and other commitments are set out
on pages 101–102. The Board currently comprises
the Chairman, two Executive Directors and five
Non-Executive Directors.
The Board reviews the independence of its
Non-Executive Directors on an annual basis. Panico
Theocharides and Norbert Sasse are not considered
independent as they act as representatives of
Growthpoint Properties Limited. The Board has
concluded that all other Non-Executive Directors
continue to demonstrate their independence.
In the Company’s view, the breadth of experience
and knowledge of the Chairman and the Non-
Executive Directors and their detachment from the
day-to-day issues within the Company provide a
sufficiently strong and experienced balance with the
executive members of the Board.
The Company has well established separation
of responsibilities between the Chairman and
Chief Executive and written terms of reference
are available on the Group’s website. The Senior
Independent Director undertakes regular reviews to
ensure the distinction of roles and responsibilities
remains appropriate.
Chairman
Chief Executive
• Responsible for the objective leadership of the
• Responsible for the day-to-day operations and
Board of Directors in the effective directing of the
Company.
• Should maintain a culture of openness and ensure
that time is made for debate and constructive
challenge.
management of the Group’s business.
• Develop and recommend the Group strategy to the
Board and implement the agreed strategy across
the Group.
• Deliver financial performance in line with the agreed
• Continually assess and monitor the collaborative
budgets.
nature of the Board and take the lead in its annual
effectiveness review.
• Set the annual workplan for the Board and set the
agenda, style and tone of each meeting of the Board
• Ensure Directors receive timely, accurate and clear
information in order for them to make informed
collective decisions.
• Oversee the induction process for new directors and
the ongoing training and development of the Board.
• Provide regular updates to the Board on all
operational matters.
• Responsible for recruitment, leadership and
development of the Senior Leadership Team
• Deliver the Group’s ESG strategy.
• Ensure effective communication with the Group’s
shareholders and stakeholders.
Senior Independent Director
Non-Executive Directors
• Acts as a sounding board to the Chairman.
• Serves as an intermediary for Non-Executive
Directors when necessary and available to
shareholders if they wish to raise concerns outside
the usual communication channels of the Chairman,
Chief Executive or other Executive Directors.
• Leads the evaluation of the Chairman’s
performance, as part of the annual Board
evaluation process.
• Remain independent of management and to be free
from any business or other relationships that could
compromise their independence.
• Provide independent judgement, knowledge
and commercial experience to discussions and
decision making.
• Provide constructive challenge to Executive
Directors and scrutinise the performance of
management against key objectives.
• Provide oversight of management’s success in
delivering the agreed strategy within the risk
appetite and control framework agreed by
the Board.
• Through the Board Committees, the independent
Non-Executive Directors are responsible for
managing the delegated tasks given to them by
the Board.
107107
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Corporate Governance Report
Division of Responsibilities CONTINUED
Board and committee meeting attendance
The number of meetings of the Board and its Committees during 2022, and individual attendance by Directors, is set
out below
D Hunter
L Hutchings
S Wetherly
I Krieger
G Muchanya
N Sasse
K Wadey
L Whyte
Scheduled
Audit
Remuneration
Nominations
5/5
5/5
5/5
5/5
5/5
5/5
4/5
5/5
–
–
–
3/3
–
–
3/3
3/3
–
–
–
2/2
–
–
2/2
2/2
1/1
–
–
1/1
–
–
–
1/1
ESG
–
4/4
–
–
–
–
3/4
4/4
* These Directors are not members of the respective Committees but attended meetings as appropriate at the invitation of the Committee Chair.
Prior to Board meetings, each member receives, as
appropriate to the agenda, up-to-date financial and
commercial information, management accounts, budgets
and forecasts, details of potential or proposed acquisitions
and disposals, cash flow forecasts and details of funding
availability. At each scheduled Board meeting, the
Executive Directors provide updates on their key areas of
responsibility. The Committee Chairs also provide updates
on the work of the Committees and highlight any matters
requiring consideration by the full Board. Other matters
for discussion are added to the agenda for scheduled
Board meetings, or discussed at additionally convened
Board meetings, as required.
Time Commitment
The Nomination Committee considers the time
commitments of proposed candidates prior to
appointment to ensure that they are able to dedicate
sufficient time to the role. Directors’ external commitments
are reviewed on a regular basis to ensure they continue
to devote sufficient time to the role. All Directors are
required to obtain prior approval before taking on any
additional external appointments. Directors are expected
to attend all Board and relevant Committee meetings and
attendance in 2022 is set out in the table above. During the
year, the Board held five scheduled meetings. There was
full attendance at Board meetings during the year other
than one incidence where a Board member was unwell
with Covid-19.
108108
Stock code: CAL Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022
109109
Governance Composition, Succession and Evaluation
Ongoing
training
requirements
are reviewed
on a regular
basis and
undertaken
individually,
as necessary
David Hunter
Chairman
Composition
Details of the Directors, including their
skills and experience are outlined on
pages 101–102.
Board succession
Succession planning is led by the Nomination
Committee. Further information is provided
on page 112–113.
Induction and professional development
The Chairman, supported by the Company
Secretary, ensures all new Directors
are provided with induction training.
Comprehensive packs are provided containing
the most recent Board & Committee
materials, recent auditor reports, key business
policies and relevant business KPIs.
New Directors are introduced to the Board
and senior management through one-to-
one meetings, coupled with visits to our
shopping centres and Snozone sites to tour
the trading environments and to meet the
operational teams.
Briefings on governance requirements
and their legal and regulatory obligations
as a Director are delivered and are made
aware of access to the relevant independent
advisers. Ongoing training requirements are
reviewed on a regular basis and undertaken
individually, as necessary.
Updates on area of focus for 2022
Strategy
In the prior year review the Board noted
a desire to dedicate time to reviewing
strategy following the successful
completion of the recapitalisation and
restructuring of the Group’s largest debt
facility in November 2021. Dedicated
strategy sessions were held in June
and December 2022 focusing on the
investment and retail markets with
presentations from industry experts
and discussions that concluded with a
reaffirmation that the Group’s community
shopping centre strategy should remain
its core business focus.
Peer Group
Work was undertaken to identify peer
companies both within the domestic and
overseas markets. Senior management
undertook an exchange of visits with
Wereldhave, a European listed retail
property company, whereby the
respective senior management teams
visited each other and toured assets to
share experiences and knowledge.
People and succession planning
The Board identified a need for increased
focus on the Company’s employees
including the need for succession
planning at Board and at Senior
Leadership level.
An Employee Voice committee was
introduced during the year providing
members of staff from across the
business with a forum for relaying and
discussing views in respect of working for
the Company. This has led to a number
of staff led initiatives and activities.
Management have also sought to increase
the exposure of the Board to members
of staff from outside of the Senior
Leadership Team with other individuals
asked to present and/or observe on
Board meeting presentations where
appropriate during the year.
The Nomination committee has agreed a
plan for succession planning for non-
executive directors in the medium term.
Any further recruitment of non-executive
directors would seek to increase diversity
on the Board.
110110
Stock code: CAL Board evaluation
Stage 1
Led by the Chairman, all Directors of the Board
complete a detailed questionnaire covering:
• Performance of the Board, as a whole, and
as individuals;
• Processes that determine the Board’s effectiveness
(including the Board composition and skills gaps,
experience, independence and knowledge of the
persons on the Board and decision-making);
• Company culture, strategy and risk management;
and Performance of the Board’s Committees.
The Senior Independent Director directly receives
questionnaires completed by the other Directors in
respect of the Chairman’s performance. The Senior
Independent Director then arranges, as and if required,
one-to-one meetings with the other Directors to review
and discuss any matters raised.
The Chairman meets with the Non-Executive Directors
without the presence of the Executive Directors to
evaluate the performance of the Chief Executive.
The Senior Independent Director meets with the
Chairman to discuss the outcome of the review of the
Chairman’s performance.
Stage 2
The completed questionnaires are collated by the
Company Secretarial team and reviewed with the
Chairman to pull out summaries and key findings.
Stage 3
A paper, summarising the key findings with
recommendations and associated actions, is drafted,
and submitted for Board discussion and approval.
The review for 2022 took place at the January 2023
Board Meeting. The Board continues to engage and
provide for robust and collective decision-making.
The Board was comfortable that the Company had
the appropriate controls, processes and approach to
risk management.
Areas of focus for 2023 were identified as improving the
time allocation of meetings, broadening shareholder
engagement to provide major shareholders with
more opportunity to meet with the Chair and other
Non-Executive Directors if they desire, providing more
opportunity for the Board directly to discuss business
culture and providing a broader visibility of investment
opportunities under consideration.
111111
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Nomination Committee Report
Other members:
Ian Krieger
Laura Whyte
David Hunter
Chair of the
Nomination Committee
Meetings held: 1
The Nomination Committee is chaired by David Hunter,
Chair of the Board of Directors. The other members of the
Committee are Ian Krieger and Laura Whyte, both independent
Non-Executive Directors.
Responsibilities
The Nomination Committee meets as required
to select and recommend to the Board
suitable candidates for both Executive and
Non-Executive appointments. The Nomination
Committee also considers succession planning
for the Board and senior leadership positions.
The formal role of the Nomination Committee
is set out in its terms of reference.
The recruitment process for Directors typically
includes starts with the development of a
candidate profile. The Group will then either
utilise the engagement of a professional
search agency (which has no other connection
with the company) or candidate search
through appropriate professional networks.
Candidate profiles are provided to the
Committee, which, after careful consideration,
makes a recommendation to the Board. Any
new Directors are appointed by the Board
and, in accordance with the company’s articles
of association, must stand down for re-
election at the next Annual General Meeting
in order to continue in office. All existing
Directors retire by rotation every year.
Activities of the Committee
during the year
As part of the annual Board evaluation
process all Board members were asked to
consider the composition of the Board and
highlight any areas they viewed were not
being suitably covered. The output of this
exercise has fed into succession planning for
future recruitment to the Board.
The Board will continue to keep its
composition under review and remain
committed to maintaining the appropriate
combination of directors that promotes
balanced and robust decision making. In order
to fully comply with Principle G of the 2018
Corporate Governance Code, the Board would
need to recruit one further independent non-
executive director. This would result in a large
Board number in comparison to the current
scale and complexity of the Business. In the
Company’s view, the breadth of experience
and knowledge brought to the Board by
the Chairman and non-executive directors,
particularly the independent non-executive
directors, coupled with their detachment from
the day-to-day issues within the Company
provide for constructive debate and robust
decision making. The Board considers the
current composition to be effective in holding
the executives and the management team to
account. The Committee will however keep
this under review.
The Committee has begun the process of
orderly succession planning for the next non-
executive directors who will fall due to retire
after they will have served nine years at the
end of 2023 and 2024 respectively.
Diversity Policy
The Nomination Committee, and the Board,
recognises the importance of diversity in its
broadest sense, including gender, ethnicity,
culture, socio-economic background,
disability, sexuality and diversity of thought,
perspective and experience.
Although the Company does not fall within
the FTSE-350, the Committee, and indeed the
Board, is supportive of the Davies Report,
Hampton-Alexander Report and subsequent
Parker Review recommendations. At the
financial year end, the Board had 25% female
representation (2021: 25%), which, has not yet
met the Hampton-Alexander target of at least
one-third female representation on the Board.
The Board has met the Parker Review target
of one ethnic minority Director on the Board,
as at 30 December 2022.
112112
Stock code: CAL The Committee is cognisant of the diversity
targets set by the Financial Conduct Authority
in the changes to the Listing Rules announced
in April 2022, which will apply to the Company
for the financial year beginning 31 December
2022, and will work with management
to address the other requirements and
recommendations set out in the new rules
and related guidance.
The Committee seeks to ensure that all
suitable candidates available are taken
into account when drawing up shortlists
of candidates for possible appointments.
The Committee continues to engage with
executive search firms that are signatories
to the UK Voluntary Code for “Women on
Boards and the Voluntary Code of Conduct
for Executive Search Firms”. The priority of the
Committee and the Board is to ensure that
the Group continues to have the strongest
and most effective Board possible, and
therefore all appointments to the Board are
made on merit against objective criteria.
As a business, we are committed to
maintaining a diverse workforce at all levels
across the Company, and more information
on how we do this, including a description of
the policies relating to diversity and how they
have been implemented, can be found in the
ESG Report on pages 78–81.
The Committee seeks to
ensure that all suitable
candidates available are taken
into account when drawing
up shortlists of candidates
for possible appointments.
The Committee continues to
engage with executive search
firms that are signatories to
the UK Voluntary Code for
“Women on Boards and the
Voluntary Code of Conduct for
Executive Search Firms”.
David Hunter
Chairman
David Hunter
Chairman
113113
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Audit, Risk and Internal Control
Audit Committee Report
Other members:
Katie Wadey
Laura Whyte
Ian Krieger
Chair of the
Audit Committee
Meetings held: 4
The Audit Committee is chaired by Ian Krieger, a Chartered
Accountant with the recent and relevant financial experience
required by the 2018 UK Corporate Governance Code. The other
members of the Committee are Katie Wadey and Laura Whyte,
both independent Non-Executive Directors deemed to have the
relevant sector experience in which the Company operates.
3.6% for the year ending 30 December
2022. The valuation of investment property
is inherently judgemental and involves
a reliance on the work of independent
professional qualified valuers. During
2022, the Audit Committee met with the
valuers, considered their independence
and qualifications and reviewed and
challenged the valuations for both the year
end and interim results dates to understand
the basis for them and the rationale for
movements in the context of both the
individual properties, the impact of wider
macro-economic developments including
the increase in gilt and interest rates and
the general property investment market.
The valuation judgements were deemed to
be in compliance with the RICS Red Book
• REIT regime compliance – The Committee
continued to monitor and consider
the Group’s compliance with the REIT
regulations. The Group resumed dividend
payments for the first time in over two
years with the payment of an Interim
Dividend in October 2022. The divided paid
is sufficient to meet the Group’s estimate of
the minimum PID distribution requirement
for 2021 that was due during 2022 and
given the Group is also compliant with
the other relevant tests the Committee
was satisfied that the Group remained
compliant with REIT regulations for the
period under review.
Stuart Wetherly, Group Finance Director
attended each of the meetings held in the
year apart from those parts of the meeting
reserved for the Committee to meet privately
with the Company’s external Auditor, Deloitte
LLP. Other senior members of Finance and
representatives from Deloitte LLP attended
meetings by invitation. The Company’s
Chairman and Chief Executive also attended
meetings during the year by invitation.
Responsibilities
The Committee’s role is to assist the Board in
discharging its duties and responsibilities for
ensuring the integrity of financial reporting,
advising the Board on whether the annual
report is fair, balanced and understandable,
internal controls and the appointment,
remuneration and relationship management
of the Company’s independent external
Auditor. The Committee is responsible for
reviewing the scope and results of audit work
and its cost effectiveness, the independence
and objectivity of the Auditor and the Group’s
arrangements on whistleblowing.
Significant issues considered in relation to
the financial statements
During the year, the Committee considered
key accounting matters and judgements in
respect of the financial statements relating to:
• Investment property valuation –
At 30 December 2022 the value of the
Group’s investment property assets was
£318.8 million (see Note 10b of the financial
statements for further details). The Group
saw a small increase in property values in
the first half of the year however the fall in
values in the second half of the year saw an
overall like-for-like decline of approximately
114114
Stock code: CAL Report on the Committee’s activities
during the year
The Committee has a schedule of events which detail the issues to
be discussed at each of the meetings of the Committee in the year.
The schedule also allows for new items to be included into the
agenda of any of the meetings.
During the year, the Committee met four times and discharged its
responsibilities by:
a. reviewing and approving the Group’s 2021 annual report and
financial statements and the 2022 interim results statement
prior to discussion and approval by the Board;
b. reviewing the treatment of assets held for sale and the
deconsolidation of the Group’s interest in The Mall, Luton;
c. reviewing the continuing appropriateness of the Group’s
accounting policies including management’s approach to
the reassessment of IFRS 16, the impact on the accounting
treatment of the Group’s lease arrangements and the
presentation of the Group’s Adjusted Profit metric;
d. reviewing Deloitte LLP’s plan for the 2022 Group audit,
approving their terms of engagement and proposed fees and
reviewing and updating the Group’s policy for the award of non-
audit work to its external Auditor;
e. reviewing the Company’s ongoing REIT regime compliance;
f. reviewing reports on internal control tests and assessing
whether a stand-alone internal audit function was required;
g. receiving the results of a review of commission payments
performed by Donald Reid Group, a firm of independent
accountants made in respect of Commercial Leasing
transactions;
h. considering the effectiveness of the external audit process, the
effectiveness and independence of Deloitte LLP as external
Auditor;
i. reviewing management’s biannual Group Risk Review report
and the effectiveness of the material financial, operational and
compliance controls that help mitigate the principle risks;
j. reviewing the effectiveness of the Group’s whistleblowing policy;
k. considering management’s approach to Going Concern in
respect of the year end results announcement, the Annual
Report and the half year results and the viability statement in
the Annual Report;
l. meeting with the responsible individuals from the Group’s
independent valuers, CBRE Limited and Knight Frank LLP to
review and challenge their valuations of the Group’s investment
properties;
m. meeting with Deloitte LLP without management present;
n. carrying out an annual performance evaluation exercise and
noting the satisfactory operation of the Committee; and
o. carrying out an audit tender process and appointing Mazars
LLP as independent auditor for the financial year ending 30
December 2023.
115115
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Audit Committee Report CONTINUED
• Impairment of receivables and inter-
company investments – Management
perform an annual review of inter-
company investments and receivables to
determine the values to be maintained
in the Plc Company only and individual
subsidiary balance sheets. Management
also performed a review at the period end
of outstanding trade receivables assessing
on a tenant-by-tenant basis the need for
provision of outstanding amounts. The
Committee considered the movement
over the year and the key assumptions,
particularly in the case of investments
where balances were held with reference to
value in use as opposed to net assets of the
underlying entity.
Auditor rotation and tender process
Deloitte LLP were re-appointed following a
tender process in 2018. Deloitte LLP have
been Auditor of Capital & Regional plc since
1998 and under legislation and FRC guidance
the last year they could have maintained the
role of Auditor would have been the financial
year ending 30 December 2023. As the audit
engagement partner, Matthew Hall, was due
to rotate following the financial year ending
30 December 2022, it was agreed with Deloitte
LLP to proceed with the audit tender with
a view to instating the new auditor for the
2023 year end.
The Committee ran a competitive tender
process during 2022 in relation to the Group’s
external auditor. The process formally started
in April 2022 with a review of potential audit
firms that were independent and could
therefore participate in a tender, followed
by initial meetings with selected firms. An
invitation to tender was issued in September
and Mazars LLP, MHA Mactintyre Hudson and
PKF Littlejohn all submitted written proposals
and undertook presentations with members
of the Audit Committee and management.
Areas of consideration included individual
and firm audit quality scores, cultural fit, a
demonstrable understanding of the Group’s
business, technical expertise and proposed
fee structure and development. Following a
review by the Audit Committee, Mazars LLP
were selected as the Company’s auditor,
subject to approval by shareholders at the
AGM to be held in May 2023.
• Management override of controls -
The Committee reviewed the risk of
material misstatement due to fraud
through management overriding of
established controls, particularly around
key judgements and estimates made by
management in relation to the valuation of
the investment property portfolio, financial
reporting process, accounting of significant
unusual transactions and the review of top-
side adjustments. The financial statements
were assessed for bias in accounting
judgements and management was asked
about any known fraud situations. Journal
entries and any unusual activity in this
regard was investigated. Board minutes
were assessed for any instances of override
of controls being discussed. The Committee
found no issues of note.
• Reclassification of assets and liabilities as
held for sale - The Committee reviewed the
position of the Group’s investments in the
Blackburn, Hemel Hempstead and Luton
properties. At 30 June 2022 the Committee
reviewed the rationale for reclassifying
the Blackburn property as held for sale on
the basis that the Group had exchanged
contracts on the planned disposal in May
2022. The disposal completed in August
2022. The classification of the Group’s
Hemel Hempstead property was also
reviewed and following the completion of
a transaction where the Group acquired at
a discount the outstanding debt secured
on the asset the decision was made to
reclassify the asset to Investment Assets
and no longer classify it as held for sale.
In the case of The Mall, Luton the
Committee reviewed and agreed the
rationale for deconsolidating the Group’s
interest on the basis that changes made to
the constitution of the Luton entities in May
2022, agreed with the secured lender on the
asset as part of the planned sale process,
resulted in the Group effectively losing
control from that date.
• Going concern and covenant compliance
- The Committee reviewed, challenged and
concluded upon the Group’s going concern
review and consideration of its viability
statement. This process included giving due
consideration to the appropriateness of key
judgements, assumptions and estimates
underlying the budgets and projections
that underpin the review and a review of
compliance with key financial covenants.
The Committee also assessed the non-
recourse nature the Group’s loan facilities
and the opportunity to cure possible
breaches of financial covenants. The use
of reasonable scenarios and sensitivity
analysis by management was reviewed
as part of the process given the volatile
market environment.
116116
Stock code: CAL Effectiveness of the external Auditor
The Committee carried out a review of the
effectiveness of the external audit in terms
of both the performance of the Company’s
external Auditor and Management’s input
into the audit process. The review covered
amongst other factors, the quality of the
staff, the expertise, the resources and
the independence of Deloitte LLP as well
as the quality of information and level of
transparency provided by Management.
The Committee reviews the audit plan for the
year and subsequently considers how the
Auditor performed to the plan. They consider
the quality of written and oral presentations
and the overall performance of the lead
audit partner.
It was determined that the overall work
completed had been to a high standard
and the Committee and Management were
very satisfied with Deloitte’s performance as
Auditor. Strong working relationships had
been maintained between the Committee and
Management and the lead audit engagement
partner and their team.
Auditor Independence
The Committee considers the external
Auditor to be independent. The Audit
Committee is responsible for reviewing the
cost-effectiveness and the volume of non-
audit services provided to the Group by its
external Auditor. The Group does not impose
an automatic ban on the Group’s external
Auditor undertaking non-audit work, other
than for those services that are prohibited
by regulatory guidance. Instead, the Group’s
aim is always to have any non-audit work
involving the Group’s external Auditor carried
out in a manner that affords value for money
and ensures independence is maintained by
monitoring this on a case by case basis.
The Group’s policy on the use of its external
Auditor for non-audit services, which was
reviewed in October 2022, precludes the
external Auditor from being engaged to
perform valuation work, accounting services
or any recruitment services or secondments.
The policy also stipulates that for any piece
of work likely to exceed £20,000 at least one
other alternative firm provide a proposal
for consideration. During the year, the only
non-audit services performed by Deloitte
LLP during the year were its review of the
Half Year Results for which a fee of £85,000
was charged.
Risk Management and internal controls
The Board delegates the responsibility
for monitoring a sound system of internal
control and risk management to the Audit
Committee. An ongoing biannual process is in
place for identifying, evaluating and managing
risk of the Group. This is fed into the Audit
Committee agenda for review and referral to
the Board, which has ultimate oversight and
approval responsibility.
Such a system is designed to manage, but
not eliminate, the risk of failure to achieve
business objectives. There are inherent
limitations in any control system and,
accordingly, even the most effective system
can provide only reasonable, and not
absolute, assurance.
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Audit Committee Report CONTINUED
Key features of the Group’s system of internal
control are as follows:
• Defined organisational responsibilities and
authority limits. The day-to-day involvement
of the Executive Directors in the running
of the business ensures that these
responsibilities and limits are adhered to;
• Financial and operational reporting to
the Board including the preparation of
budgets and forecasts, cash management,
variance analysis, property, taxation and
treasury reports and a report on financing.
Year end and interim financial statements
are reviewed by the Audit Committee and
discussed with the Group’s Auditor, Deloitte,
before being submitted to the Board
for approval;
• Review and approval of the Group’s risk
matrix twice a year by the Group’s Senior
Leadership Team, the Audit Committee
and the Board as detailed on pages
44–51 in the Managing Risk section of the
Strategic Report;
• Review the risk of fraud within the business;
• Anti-Bribery and Corruption policies which
are communicated to all staff and for which
compliance reviews are conducted on an
annual basis; and
• The Group’s whistleblowing policy.
Steps are continuously being taken to embed
internal control and risk management further
into the operations of the business and to
deal with areas of improvement which come
to management’s and the Board’s attention.
During the year the Board, through the
Audit Committee, reviewed the effectiveness
of the material financial, operational and
compliance controls that mitigate the key risks
(as disclosed in the Managing Risk section on
pages 44–51. This review considered each
risk in turn and identified the key mitigating
control. The effectiveness of each control
was then assessed either with reference
to existing evidence or by specific testing.
The review concluded that all material
financial, operational and compliance controls
were operating effectively. A statement of
the Directors’ responsibilities regarding the
financial statements is on page 142.
Internal Audit
The Group does not have a dedicated stand-
alone internal audit function but manages
an ongoing process of control reviews
performed either by staff, independent of the
specific area being reviewed, or by external
consultants, where deemed appropriate.
In accordance with the Committee’s terms
of reference, the Committee conducted
the annual review of the need to establish
an internal audit function in 2022. It was
determined that the current size and
complexity of the Group did not justify
establishing a stand-alone internal audit
function and the existing arrangements
remain appropriate.
Whistleblowing
The Group has in place a whistleblowing
policy which encourages employees to report
any malpractice or illegal acts or omissions
or matters of similar concern by other
employees or former employees, contractors,
suppliers or advisers. The policy provides a
mechanism to report any ethical wrongdoing
or malpractice or suspicion thereof. The
Group’s process provides staff with options to
contact members of senior management, the
Group’s Senior Independent Director and the
Group’s external audit partner.
The Audit Committee on behalf of the Board
reviews the established processes on an
annual basis and last reviewed the policy in
October 2022. The Committee reports to the
Board on the process and any updates arising
from its operation.
Fair, balanced and understandable
The Committee has reviewed the contents
of the Annual Report and Financial
Statements 2022 and concluded that the
disclosures, and the processes and controls
underlying its production, were appropriate
and recommended to the Board that the
Annual Report and Financial Statements
2022, taken as a whole, is fair, balanced and
understandable and provides the necessary
information for shareholders to assess
the Company’s position and performance,
business model and strategy.
Ian Krieger
Chair of the Audit Committee
118118
Stock code: CAL Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022
119119
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Directors' Remuneration
Annual Statement
Our
approach to
remuneration
has been
measured
and balanced,
seeking to
ensure that
a consistent
approach is
taken across
the business.
Laura Whyte
Chair of the
Remuneration
Committee
Other members:
Ian Krieger
Katie Wadey
Laura Whyte
Chair of the
Remuneration Committee
Meetings held: 2
Dear Shareholder,
As Chair of the Remuneration Committee and on behalf of the
Board, I am pleased to present the Directors’ Remuneration
Report for the year ended 30 December 2022.
The primary focus of the business in 2022
was in navigating the operational recovery
of the business from the Covid-19 pandemic,
advancing the Group’s ESG agenda and
resolving the position of the Group’s other
loan facilities following on from the successful
recapitalisation and restructuring of the
Group’s largest loan facility, The Mall in
November 2021.
Our approach to remuneration has been
measured and balanced, seeking to ensure
that a consistent approach is taken across the
business and that executive remuneration
and reward is well aligned with shareholder
objectives and experience.
The Committee met twice during 2022 to
discharge its responsibilities. In addition,
informal meetings and other correspondence
took place to discuss wider remuneration
issues. In addition to the other Committee
members, Ian Krieger and Katie Wadey, both
independent Non-Executive Directors, the
Chief Executive and other Non-Executive
Directors are invited to attend meetings, as
required. In accordance with the Corporate
Governance Code 2018, no Director was
included in the decision-making process for
their own remuneration nor present at any
meeting where the same was being discussed.
Board Policy
Our Remuneration Policy was presented
to shareholders at the Company’s Annual
General Meeting in May 2022 and received a
vote in favour of 96.1%
Board changes
There were no Board changes during the year.
2022 Company Performance
and Combined Incentive
Plan (CIP)
In what has remained a challenging
environment the Group has performed
admirably with a robust recovery in Net Rental
Income (Investment Assets) and Adjusted
Profit supported by strong operational
metrics including improving rent collection to
back around pre-pandemic levels. Progress
was made in reducing the Group’s energy
consumption with a 42% fall in carbon
emissions against the 2019 baseline.
The Group also had a busy year of
transactional activity. In May 2022, it signed
a package of amendments to its Ilford loan
facility to facilitate the investment of more
than £10 million for the creation of the new
NHS Community Healthcare Centre and
anchor unit for TK Maxx, both secured under
new agreements for lease signed at the same
time. Also in May 2022, the Group completed
the acquisition of its debt in respect of
the Marlowes shopping centre in Hemel
Hempstead. The Group acquired the debt at
a discount of approximately 51%, increasing
the Group's Net Asset Value by approximately
£12.3 million. This was partially funded by a
new £4.0 million loan facility provided by BC
Invest, a subsidiary of the Group's strategic
residential partner Far East Consortium.
In July 2022, the Group completed the sale
of land for residential development at its
17&Central community shopping centre in
Walthamstow to Long Harbour for c.£21.65
million and in August 2022, the Group
completed the sale of The Mall, Blackburn for
£40 million, at a premium to the December
2021 valuation. The combined impact of
the transactions was to reduce Net Debt by
120120
Stock code: CAL approximately £60 million and the Group’s key
Net Loan to Value debt ratio by approximately
900 basis points.
Total Shareholder Return for the year was
+9.5% which put the Group towards the top of
UK listed Real Estate companies in 2022.
Reflecting on all of the above the Board
believe management have performed
exceptionally well in guiding the business
through a year of recovery, resolving
successfully the loan positions on Ilford and
Hemel Hempstead and reducing further the
Group’s debt levels with the completion of
the Walthamstow residential transaction
and sale of The Mall, Blackburn. The outturn
of the 2022 CIP objectives for the year was
71% of the maximum which the Committee
considered a fair outcome.
The Committee continues to believe that
the CIP provides the best mechanism to
motivate, reward and retain Executive
Directors. For 2023, the Committee has set
70% financial and 30% non-financial strategic
targets which reflect the key priorities of the
business over the next 12 months and to
properly incentivise executive management.
As per 2022, the Committee will provide
full disclosure of the targets and outcomes
in the 2023 Remuneration Report and
will exercise downward discretion on CIP
outcomes if the Committee view that they
do not reflect corporate performance, the
shareholder experience or create reputational
issues from either an internal or external
stakeholder perspective.
Vesting of first tranche of
2019 CIP awards
The first one third tranche of the 2019 CIP
awards became available for vesting from
1 January 2023. The Committee reviewed
relative TSR performance of the Group against
an agreed peer group of other retail property
companies. The Committee were satisfied
that the Company’s TSR performance satisfied
the requirement of being at median level or
above and consequently approved vesting of
the awards in full. This has resulted in 66,933
and 36,091 shares becoming available for
Lawrence Hutchings and Stuart Wetherly to
exercise respectively.
Retention Award
As detailed in the 2021 Remuneration Report
the Group granted one-off Retention Awards
to the Executive Directors in November 2021
following a consultation with shareholders
and having obtained strong support at an
Extraordinary General Meeting where the
resolution to amend the Remuneration Policy
passed with 93.56% of votes cast in favour.
These awards are due to become payable on
30 September 2023. Further detail is provided
in the Directors Remuneration policy section.
Executive Director
Salary Increases
The Executive Directors have been awarded
a pay rise of 3%. Fees paid to Non-Executive
Directors will also increase by 3%. Both are in
line with the low end of the range of general
pay rises provided to the wider workforce of
between 3 and 5%. In considering the wider
workforce salary increases management
were very focussed on supporting those most
impacted by significant increased costs of
living and thus decided to adopt a range of
salary uplifts to provide greater increases for
the lower paid team members. This is also
reflected in the lower fee uplifts at Director
level providing a consistency of approach
across the organisation.
Pension
Conscious of the focus on pension
contributions made to Executive Directors
relative to the wider workforce the Committee
reduced the Chief Executive’s pension
contribution from 15% to 13% in 2022 and to
8% effective from 1 January 2023. This brings
the Executive Directors contributions in line
with the range of contributions made to the
wider workforce which is now 5%-10% of
salary, having been increased from 4%-8%.
Workforce and senior
management pay
The Committee is regularly updated on
workforce pay and benefits throughout the
Group and considers workforce remuneration
as part of the review of executive
remuneration. The Committee is also tasked
with overseeing major changes in employee
benefit structures. It has responsibility for the
remuneration of the members of the Group’s
Senior Leadership Team and is therefore
able to ensure that the remuneration of
the Executive Directors is in line with senior
management and other colleagues.
Committee Changes
There have been no changes to the committee
membership during the year.
Committee Aims
Our aim as a Committee continues to be
to ensure we recruit and retain talented
individuals who are motivated to deliver
outperformance for shareholders,
receiving a fair base pay with potential for
significant rewards on delivering strong
shareholder returns.
Laura Whyte
Chair of the Remuneration Committee
121121
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Directors’ Remuneration Policy
Remuneration philosophy and principles
Our principles continue to be to maintain a competitive remuneration package that will attract, retain and motivate
a high-quality team, avoid excessive or inappropriate risk taking and align their interests with those of shareholders.
These principles are designed to:
• Drive accountability and responsibility
• Provide incentives which align both short-term and long-term performance with the value/returns delivered
to shareholders
• Apply demanding performance conditions to deliver sustainable high performance; setting these conditions with
due regard to actual and expected market conditions and business context
• Ensure that a large part of potential remuneration is delivered in shares in order that executives are expected
to build up a shareholding themselves and therefore they are directly exposed to the same gains or losses as all
other shareholders
• Take account of the remuneration of other comparator companies of similar size, scope and complexity within our
industry sector
• Keep under review the relationship of remuneration to risk. The members of the Remuneration Committee are also
members of the Audit Committee
• Ensure that the incentive structure does not raise any environmental, social or governance risks through compliance
with our ethics and standards of operating
How the Committee sets remuneration
Salary
Pension
Benefits
Fixed compensation
Median
Total = Median or above
for above median
performance
Combined Incentive Plan
Performance-based
compensation
Median or above for above
median performance
The Committee benchmarks remuneration against our selected comparator group companies and seeks to ensure that
Directors’ fixed compensation is around the median in the comparator group. Remuneration is also dependent on the
skills and experience of the individual and the scope and responsibility of the position.
The Committee’s view is that by putting an emphasis on performance related compensation, executives are encouraged
to perform to the highest of their abilities. The performance-based compensation is targeted to be at median or
above, for above median performance, within the comparator group to ensure that outstanding relative performance
is appropriately rewarded. The overall effect is that our total compensation is at median, or above median, for above
median performance.
The Committee addressed the following factors when determining the remuneration policy and practices, as recommend
by the UK Corporate Governance Code:
Clarity
Simplicity
Risk
The Remuneration Policy and its application in the year is clearly disclosed in the Annual Report.
The Committee engages with shareholders on remuneration matters and is updated on workforce
pay and benefits across the Group.
The remuneration structure comprises of fixed and variable remuneration, with variable
remuneration granted under a single combined scheme, the CIP, clearly outlined in the
Remuneration Policy.
The CIP Rules provide discretion to the Committee to reduce award levels. Awards are subject to
malus and clawback provisions. The Committee has overriding discretion to reduce the formulaic
outcome of the CIP.
Predictability
The range of possible outcomes under the CIP are outlined on page 128.
Proportionality
CIP awards are determined based on a proportion of base salary and stretching targets set to
incentivise Executive Directors. The Committee has overriding discretion to reduce the formulaic
outcome of the CIP.
Alignment to culture
The Committee ensures that personal performance measures under the CIP incentivise behaviours
consistent with the Company’s culture, purpose and values.
122122
Stock code: CAL This part of the report has been prepared in accordance with the provisions of the Companies Act 2006 and Schedule 8 of
the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (“the Act”).
This section of the report contains details of the Directors’ Remuneration Policy that was approved at the Company’s AGM
in May 2022. The approval lasts until the AGM in May 2025.
The Policy was determined following a review of the existing structure provided by the Group’s remuneration advisors,
PwC. This was discussed with the Committee, Executive Management and the Board including the representatives
from the Company’s largest shareholder, Growthpoint. A short consultation with other key stakeholders and major
shareholders was undertaken before concluding on the policy that was presented at the Annual General Meeting.
Purpose &
link to strategy
Operation
Base salary
• To aid recruitment,
Reviewed annually effective 1 January to reflect:
• general increases throughout the Company or changes in
retention and
motivation of high-
quality people
• To reflect
experience and
importance of role
Pension
• To help recruit and
retain high-quality
people
• To provide an
appropriate
market competitive
retirement benefit
responsibility or role; and
• benchmarking against comparator group to ensure salaries
are about the median level and market competitive.
• Salary increases will normally be aligned to the average
increase awarded to the wider workforce.
• Increases may be above this level if there is an increase
in the scale, scope or responsibility of the role or to
allow the basic salary of newly appointed Executives to
move towards market norms as their experience and
contribution increases.
The Company does not operate a defined benefit pension
scheme, all pension benefits are paid either to defined
contribution pensions schemes of each Executive Director’s
choice or as a cash supplement.
Lawrence Hutchings received a pension allowance of 13%
of basic salary during 2022. From 1 January 2023 this was
reduced to 8%.
This is the same level as received by Stuart Wetherly and
compares to a range of pension contributions paid to the UK
workforce of 5% - 10%.
Performance
metrics
n/a
Opportunity
The maximum
increase
applicable in any
year is capped
at 10% of base
salary.
n/a
Executive
Directors receive
a pension
contribution of
8% of salary,
effective from
1 January 2023.
For new
appointments,
the Committee
will ensure
that pension
contributions
are in line with
that of the
workforce of
5%-10%.
Benefits
• To aid recruitment
The Company offers a package to Executive Directors, in line
with local market, including but not limited to:
No maximum
n/a
and retention
• To provide market
competitive
benefits
• To support
physical, mental
and emotional
wellbeing
• private medical insurance;
• critical illness cover;
• life insurance;
• permanent health insurance; and
• holiday and sick pay.
Benefits are brokered and reviewed annually.
123123
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Directors’ Remuneration Policy CONTINUED
Purpose &
link to strategy
Operation
Opportunity
Performance
metrics
Combined Incentive
Plan (CIP)
• To incentivise
delivery of
short-term
business targets
and individual
objectives based on
annual KPIs
• To recognise
performance whilst
controlling costs
in reaction to the
market context or
company events
• To reinforce
delivery of long-
term business
strategy and
targets
• To align
participants with
shareholders’
interests
• To retain Directors
over the longer
term
The plan is reviewed annually to ensure bonus opportunity,
performance measures and weightings are appropriate and
support the stated Company strategy.
All measures and targets will be reviewed and set annually
by the Committee at the beginning of the financial year and
levels of award determined by the Committee after the year
end are determined based on achievement of performance
against the stipulated measures and targets.
One third of the award is paid in cash after one year.
Two thirds of the award is deferred into shares.
Deferred shares will vest in three equal tranches in years
three, four and five and will be subject to the achievement
of a performance underpin. Vested deferred shares will be
subject to an additional holding period to the 5th anniversary
of the date of grant. Upon vesting, sufficient shares can be
sold to pay tax.
Up to 100% of deferred shares will lapse if median relative
TSR performance against the peer group is not achieved.
Malus and Clawback provisions apply such that the
Committee has the discretion to reduce or cancel any
awards that have not been exercised, in any of the following
situations:
• C&R’s financial statements or results being negatively
restated due to the Executive’s behaviour;
• A participant having deliberately misled management or
the market regarding Company performance;
• A participant causing significant reputational damage to
the Company; or
• A participant’s actions amounting to serious / gross
misconduct.
• The discovery that any information used to determine the
Bonus and/or the number of Plan Shares placed under
a Share Award relating to a Bonus Award was based on
error, or inaccurate or misleading information; and/or
• Failure of risk management; and/or corporate failure.
In line with UK corporate governance best practice the
Committee will retain the discretion to adjust the payment
and vesting outcomes (both upwards and downwards) under
the CIP to reflect the overall corporate performance and
shareholder experience. The maximum combined incentive
award potential in any year (300% of salary) will be adjusted
downwards to reflect the year on year reduction in the profit
outturn (if any) or if the shareholder return over the same
period has been negative.
The Committee retains the discretion in exceptional
circumstances to change performance measures and targets
and the weightings attached to performance measures
part-way through a performance if there is a significant and
material event which causes the Committee to believe the
original measures, weightings and targets are no longer
appropriate.
The plan
provides a
combined
annual awards
of up to 250%
of salary for
Executive
Directors / 300%
for the Chief
Executive
Targets
calibrated so
maximum pay-
out represents
exceptional
performance
The maximum
combined
incentive award
potential in
any year may
be adjusted
downwards
to reflect the
year on year
reduction in the
profit outturn
(if any) or if the
shareholder
return over the
same period is
negative.
Performance
targets set
annually based
on a 100%
Group financial
and strategic
performance
targets.
2022 objectives
were weighted
70% on financial
performance
and 30%
strategic and
operational
measures.
Financial metrics
may typically
include metrics
such as profit,
net rental
income and cost
management.
Operational
and strategic
metrics may
include metrics
such as footfall
and strategy
implementation.
Threshold
performance
where relevant
for individual
objectives is
typically set at
50%.
The annual
nature allows
the Company
to link them
directly to
Company
strategy in a
challenging
macro-economic
environment
and ensure
that the
remuneration
principles
agreed by the
Committee will
be met.
124124
Stock code: CAL Purpose &
link to strategy
Operation
Opportunity
Performance
metrics
Long Term
Retention Award
• Aligns the Executive
Directors’ interests
with those of
shareholders.
• Rewards and helps
retain/recruit
executives
Executive
shareholding
• To support
alignment of
Executive Directors
with shareholder
Continued
employment
and not subject
to disciplinary
or performance
procedures.
Lawrence
Hutchings
will receive a
cash award of
£1,000,000.
Stuart Wetherly
will receive a
cash award of
£500,000.
The maximum
entitlement
for any one
participant
will not be
amended to the
participant’s
advantage.
No new Awards
will be made,
but the Awards
made during
2021 will
continue to
vest in line with
the Policy and
scheme rules.
n/a
n/a
A cash based one-off Long-Term Retention Award was
implemented by the Company in November 2021 to
incentivise the retention of the Executive Directors.
The Award was approved by shareholders at a General
Meeting on 1 November 2021 and a one-off award was
granted to Lawrence Hutchings and Stuart Wetherly, which
will vest on 30 September 2023.
The Award is not subject to additional performance measures
outside of continuous employment in order to simplify the
attainment of the Award by the Executive Directors. It is
intended as a method of retention of key individuals within
the business and it was concluded that it should not be
hindered by complex performance measures.
Clawback provisions will apply to the Long Term Retention
Awards if it is discovered within two years of the payment of
a Long Term Retention Award that:
• there has been a material misstatement or miscalculation
in the results of the Company;
• the award holder has committed an act of gross
misconduct;
• the award holder has committed an act which in the
Remuneration Committee’s opinion has given or could give
rise to serious reputational damage to the Group;
• the award holder has committed an act which in the
Remuneration Committee’s opinion deliberately misled the
Board or the market as to the performance of the Group;
• the award holder has committed an act which in the
Remuneration Committee’s opinion has caused the
Company or business in which the award holder is
employed to suffer a material failure of risk management;
and/or
• the Company enters an involuntary administration or
insolvency process or a company voluntary arrangement.
Malus provisions will apply to allow the Remuneration
Committee to reduce the payment under a Long Term
Retention Award if any of the circumstances set out above
occur prior to the payment of the Long Term Retention
Award.
All Executive Directors are expected to build a shareholding
to at least 2 x basic annual salary value based on current
market value or the aggregate purchase price of the shares
over a five year period.
Deferred or other unvested share awards not subject to
performance conditions can count towards the guideline in
line with corporate governance best practice.
There is a 200% base salary post-cessation of employment
shareholding requirement for two years.
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Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Directors’ Remuneration Policy CONTINUED
Opportunity
Performance
metrics
n/a
n/a
Purpose &
link to strategy
Non-Executive
Director
Remuneration
• To reflect
experience and
importance of role
Operation
The Chairman and Non-Executive Directors fees are set
by the Board taking into account the time commitment,
responsibilities, skills and experience and roles on Board
Committees. The fees are reviewed annually.
Details of the fees can be found on page 130. The Senior
Independent Director and individuals who are members of
both the Audit and Remuneration Committees receive an
additional fee per annum.
Non-Executive Directors do not receive any variable
remuneration element or receive any other benefits.
Non-Executive Directors are reimbursed for all reasonable
travelling and subsistence expenses (including any relevant
tax) incurred in carrying out their duties.
Notes to the Policy table
The Remuneration Committee reserves the right to make any remuneration payments and payments for loss of office,
notwithstanding that they are not in line with the policy set out above where the terms of the payment were agreed:
(i) before the policy set out above, or (ii) at a time when a previous policy, approved by was in place provided the payment
is in line with the terms of that policy, or (iii) at a time when the relevant individual was not a Director of the Company and
the payment was not in consideration for the individual becoming a Director of the Company.
Discretion
The Committee has discretion in several areas of Policy as set out in this report. The Committee may also exercise
operational and administrative discretions under relevant plan rules approved by shareholders as set out in those rules.
In addition, the Committee has the discretion to amend Policy with regard to minor or administrative matters where it
would be, in the opinion of the Committee, disproportionate to seek or await shareholder approval.
Employee Context
All permanent employees of the Group, including Executive Directors, receive a basic remuneration package including
basic salary, private medical insurance, travel insurance, income protection, critical illness cover and life assurance. For all
permanent employees below Board level, the Company pays pension contributions of between 4% - 10% into either a
Group Pension Scheme, individual employees’ own pension scheme or by a cash contribution.
The Committee ensures that employees’ remuneration across the Company is taken into consideration when reviewing
executive remuneration policy although no direct consultation is performed. The Committee reviews internal data in
relation to staff remuneration and is satisfied that the level is appropriate.
Recruitment of Executives
New Executive Directors will receive a remuneration package that will reflect the Company’s Remuneration Policy
within the parameters outlined. In certain circumstances, such as an internal promotion, an appointment may be at
a salary level discount to reflect experience at that point; the Committee may increase it over time on the evidence of
performance achievement and market conditions. All new Executive Directors’ service agreements will include mitigation
of the payment of notice as standard.
The Company will not make an ex-gratia award to new joiners. This excludes amounts paid to buy out individuals from
existing performance awards.
Service contracts
Executive Directors are employed on rolling service contracts with notice periods of twelve months from the Company
and from the Executive Director. Copies of the Directors’ service agreements are available to view, upon appointment,
at the Company’s registered office.
Exit payment policy
When considering termination payments, the Committee takes into account the best interests of the Company and
the individual’s circumstances including the reasons for termination, contractual obligations, and CIP scheme rules.
The Remuneration Committee will ensure that there are no unjustified payments for failure on an Executive Director’s
termination of employment. The policy in relation to leavers is summarised in the following table:
126126
Stock code: CAL Salary and benefits
Executive Directors are on notice periods of 12 months.
In cases of an Executive leaving this can be served or
settled with a payment in lieu of notice.
Combined Incentive Plan (CIP)
For leavers during the award year
• Typically, for good leavers, rights to awards under the
CIP will be pro-rated for time in service to termination
as a proportion of the performance period, and will,
subject to performance, be paid at the normal time in
the normal manner (i.e. in cash/deferred awards as
appropriate).
• Typically for other leavers, rights to awards under the
CIP will be forfeited.
For leavers during the deferral period
• Outstanding deferred awards under the CIP will be
paid at the normal time, subject to performance
against the underpin performance condition. The
Committee retains the discretion to apply time pro-
rating (over the deferral period) for good leavers and
to accelerate the vesting and/or release of awards if it
considers it appropriate.
• Typically for other leavers, rights to deferred awards
will be forfeited.
Long-Term Retention Awards
If, prior to the payment date, a participant ceases to be
employed by the Group, his Long-Term Retention Award
will lapse with immediate effect. Where, however, a
participant ceases employment as a “good leaver”, any
Long-Term Retention Award held by that individual will
not lapse and may be retained to the extent that the
Remuneration Committee in its discretion determines
taking into account such factors as the Remuneration
Committee in its discretion determines including the
period of time that the participant was employed from
the award date.
Such retained Long-Term Retention Award will vest on
the normal payment date (unless the Remuneration
Committee in its discretion determines that it will be
settled earlier) and in the normal manner subject to the
other conditions applying to the Long-Term Retention
Award being met.
A participant will be a good leaver if their employment
ceases: a) due to death; b) due to injury, ill-health or
disability (in each case evidenced to the satisfaction of
the Remuneration Committee); c) due to redundancy
or upon the transfer out of the Group of a company
or business by which the participant is employed; or
d) in any other circumstance that the Remuneration
Committee determines (other than dishonesty, fraud,
misconduct or any other circumstance that justifies the
summary dismissal of the participant).
If, prior to the payment date, a participant has given or
received notice to terminate their employment with the
Group, his Long-Term Retention Award will not be paid
unless the Committee is satisfied that the participant has
performed satisfactorily and to have met the reasonable
expectations of the role for which they are employed
during the period from the date of the award to the
payment date.
The Committee will seek to mitigate the cost to the Company. In the event that the Committee exercises the discretion
detailed above to treat an individual as a Good Leaver and/or to make a performance related bonus payment, the
Committee will provide an explanation in the next remuneration report.
Senior Management
The policy for senior management remuneration is set in line with the policy for the Executive Directors, with a degree
of discretion for the Committee to take into account specific issues identified by the Chief Executive, such as the
performance of a specific individual or division.
External Appointments
The Company allows Executive Directors to take up external positions outside the Group, providing they do not involve
a significant commitment and do not cause conflict with their duties to the Company. These appointments can broaden
the experience and knowledge of the Director, from which the Company can benefit. Executives are allowed to retain all
remuneration arising from any external position.
Total Compensation
The minimum scenario is based on nil incentive award;
• The on-target scenario is based on CIP award at 50% of maximum (i.e. 150% of salary for Chief Executive and 125%
of salary for Executive Directors), split into 1/3 cash and 2/3 shares (excluding share price appreciation and accrual of
dividend equivalent payments); and
• The maximum scenario is based on CIP award at 100% of maximum (i.e. 300% salary for Chief Executive and 250%
for Executive Directors) split into 1/3 cash and 2/3 shares (excluding share price appreciation and accrual of dividend
equivalent payments).
127127
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Directors’ Remuneration Policy CONTINUED
• In addition, the maximum scenario is illustrated based on share price increase of 50% for the maximum share element
which could be granted for the CIP.
• The Long-Term Retention Award has been excluded from these calculations.
All figures in £’000
£2,500
£2,000
£1,500
£1,000
£500
£0
Total
£2,220
£1,287
Total
£1,791
£875
£429
£429
Total
£1,141
£424
£212
Total
£504
£429
£429
£429
£429
Total
£1,016
£470
£235
£282
27%
Total
£1,251
£705
£235
£282
22%
Total
£660
£232
£116
£282
42%
Total
£311
£282
87%
Minimum
Target
Maximum
L Hutchings
Maximum
+50% share price
appreciation
Minimum
Target
Maximum
S Wetherly
Maximum
+50% share price
appreciation
Salary
Benefits
Pensions
CIP – Cash
CIP – Shares
L Hutchings
Salary
CIP – Cash
CIP – Shares
Benefits
Pension
Minimum
Target
Maximum
Maximum + 50% share price appreciation
85%
37%
24%
19%
0%
19%
24%
19%
0%
37%
48%
58%
2%
1%
1%
1%
13%
6%
3%
3%
S Wetherly
Salary
CIP – Cash
CIP – Shares
Benefits
Pension
Minimum
Target
Maximum
Maximum + 50% share price appreciation
91%
43%
28%
22%
0%
18%
23%
19%
0%
35%
46%
56%
2%
1%
1%
1%
7%
3%
2%
2%
Total
100%
100%
100%
100%
Total
100%
100%
100%
100%
Consultation and shareholders’ views
In the second half of 2021, the Committee undertook a consultation with its largest shareholders before implementing
the Retention Awards that were proposed at the General Meeting in November 2021. The vote passed with 93.6% of votes
in favour.
Following the decision to essentially retain the same CIP structure as has been in operation a short consultation with
other key stakeholders and major shareholders was undertaken in early 2022 before concluding on the policy that was
presented for approval at the 2022 Annual General Meeting. The policy passed with 96.1% of votes cast in favour.
Where requested, further clarification and discussion can be provided to all shareholders to assist them in making an
informed voting decision. If any major concerns are raised by shareholders these can be discussed with the Committee
Chairman in the first instance and the rest of the Committee as appropriate.
Committee evaluation
The Committee reviews its performance with Board members and other participants, including through the annual
Board evaluation.
128128
Stock code: CAL Directors’ Remuneration Report
This section sets out how the Directors’ Remuneration Policy that was
implemented during 2022. Where stated, disclosures regarding Director’s
remuneration have been audited by the Company’s external auditor Deloitte.
The Remuneration Committee
The Committee met twice during 2022 as well as holding informal meetings and other correspondence to discuss wider
remuneration issues. Committee members include Laura Whyte (Chair), Ian Krieger and Katie Wadey, all independent
Non-Executive Directors. All members of the Committee attended each meeting in the year. The Chief Executive and
other Non-Executive Directors are invited to attend meetings as required, except in circumstances where their own
remuneration is being discussed.
The Remuneration Committee agrees the framework for the remuneration of the Chairman and the Executive Directors.
The Committee approves salaries and sets the levels, conditions and performance objectives for the annual bonus and
share awards for Executive Directors. The Committee also reviews the remuneration of the senior management below
Board level. It also makes recommendations to the Board on matters that require shareholder approval.
The terms of reference of the Committee are available at www.capreg.com/about-us/people/board-committees.
Advisors
In 2022, the Committee received advice from independent remuneration consultants PwC LLP. PwC LLP’s fees charged for
the year were £10,000, which were charged on a time/cost basis. No other services were provided by PwC LLP during the
course of 2022.
PwC LLP is a member of the Remuneration Consultants’ Group, and as such chooses to operate pursuant to a code
of conduct that requires remuneration advice to be given objectively and independently. PwC were appointed by the
Remuneration Committee, following a robust tender process. The Committee is satisfied that the advice provided by PwC
LLP in relation to remuneration matters is objective and independent.
The Committee is satisfied that the members of the PwC LLP team do not have connections with the Company or its
Directors which might impair their independence.
Summary of performance year ended 30 December 2022 (unaudited)
2022
Net Rental Income (Investment Assets)
Adjusted Profit1
Adjusted Earnings per share1
IFRS Profit/(loss) for the period
Total dividend per share
Net Asset Value (NAV) per share
EPRA NAV per share
Group net debt
Net debt to property value
£23.5m
£10.3m
£6.2p
£12.1m
£5.2p
£106p
£103p
£130.9m
41%
2021
£21.7m
£8.8m
7.3p
£(26.4)m
–
102p
102p
£185.3m
49%
1. Adjusted Profit, Adjusted Earnings per share and net debt are as defined in the Glossary. Adjusted Profit incorporates profits from operating
activities and excludes revaluation of properties and financial instruments, gains or losses on disposal, and other non-operational items.
A reconciliation to the equivalent EPRA and statutory measures is provided in Note 9 to the financial statements.
129129
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Directors’ Remuneration Report CONTINUED
Single total figure of remuneration for Directors (audited):
The table below sets out the remuneration received/receivable in relation to the year ended 30 December 2022.
Salary/Fees1
Taxable
benefits1
Other
benefits1
Pension
Total
fixed pay
Annual
bonus2
Other3
Total
variable pay
Total
pay
£’000
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
L Hutchings
S Wetherly
Total
D Hunter
T Hales4
G Muchanya5
I Krieger6
L Norval4
N Sasse5
K Wadey6
L Whyte6
Total
Total all
438
287
725
143
–
–
54
–
–
49
49
295
429
282
711
140
21
–
51
43
–
48
48
351
1,020 1,062
4
2
6
–
–
–
–
–
–
–
–
–
6
4
2
6
–
–
–
–
–
–
–
–
–
6
2
1
3
–
–
–
–
–
–
–
–
–
3
2
1
3
–
–
–
–
–
–
–
–
–
3
58
23
81
–
–
–
–
–
–
–
–
–
81
64
23
87
–
–
–
–
–
–
–
–
–
499
502
308
313
807
815
140
143
21
–
–
–
51
54
43
–
–
–
48
49
48
49
351
295
87 1,110 1,158
311
170
481
–
–
–
–
–
–
–
–
–
481
279
153
432
–
–
–
–
–
–
–
–
–
432
2022 2021 2022
– 1,000
500
–
– 1,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1,500
2021
2021
2022
813 1,778
311 1,279
961
653
170
483
481 1,932 1,296 2,739
140
21
–
51
43
–
48
48
351
481 1,932 1,591 3,090
143
–
–
54
–
–
49
49
295
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1. Taxable benefits include private medical care and critical illness cover; other benefits include life insurance and permanent health insurance.
Taxable benefits include the complete list required in paragraph 11(1) (a) of Schedule 8 of the Regulations.
2. Figures represent the cash bonus element of the Combined Incentive Plan and do not include the element deferred into shares subject to relative
TSR performance.
3. A one-off cash-based award was granted to Lawrence Hutchings (£1,000,000) and Stuart Wetherly (£500,000) on 1 November 2021, which will vest
and become payable on 30 September 2023.
4. T Hales retired and stepped down as a Director on 20 May 2021. L Norval stepped down as a Director on 15 December 2021. As a result, both
received pro-rata sums up to their respective resignation dates.
5. G Muchanya and N Sasse, both serve as Growthpoint’s representatives and do not receive a fee.
6.
I Krieger, K Wadey and L Whyte receive(d) an additional fee of £5,000 per annum as members of the Audit and Remuneration Committees. I Krieger
receives a further fee of £5,000 as Senior Independent Director.
Basic salary increases for Executive Directors
The Executive Directors have been awarded a pay rise of 3%. This in line with the low end of the range of general pay rises
provided to the wider workforce of between 3% and 5%. In considering the wider workforce salary increases management
were very focussed on supporting those most impacted by significant increased costs of living and thus decided to adopt
a range of salary uplifts to provide greater increases for the lower paid team members.
L Hutchings
S Wetherly
C Staveley
2023
£’000
451
296
–
%
3.0
3.0
–
2022
£’000
429
288
–
%
2.0
2.0
–
2021
£’000
429
282
–
20201
£’000
429
282
–
%
–
–
–
%
1.0
2.5
–
2019
£’000
425
275
–
%
1.0
–
–
2018
£’000
383
–
305
%
2.0
–
2.0
1. L Hutchings and S Wetherly took a voluntary 20% reduction in salary for the months of April, May and June 2020, the actual base salary received in
2020 was £407k and £268k respectively.
Non-Executive Director Fees
Non-Executive Director fees will increase by 3% in line with the increase provided to the salaries of Executive Directors
and the lower end of the wider workforce. This will result in a fee of £147,084 for the Chairman and a base fee of
£45,042 for the Non-Executive Directors in 2023. No increase will be applied to the additional £5,000 per annum for
being a member of the Audit and Remuneration Committees nor the additional £5,000 fee per annum paid to the Senior
Independent Director.
The Growthpoint representative Directors (George Muchanya and Norbert Sasse during 2022), in accordance with the
terms of the Growthpoint Relationship agreement, do not receive a fee as Non-Executive Directors.
130130
Stock code: CAL Combined Incentive Plan (CIP) (audited)
The number of awards and the performance periods for all outstanding CIP awards are summarised in the table below.
The Company’s Clawback provisions apply during the holding period where the level of vesting may be reduced, including
to nil. Awards granted in 2020 and 2022 relate to 2019 and 2021 performance respectively, as disclosed in the relevant
Remuneration Reports for those years. No awards were granted in 2021 as the CIP awards for the 2020 financial year
were waived by the Executive Directors.
Name
Date of
Award
No. of
awards1
Type of
award
Face value
at date of
award2
£’000
L Hutchings
S Wetherly
27.04.2020 200,799
Nil cost
option
436
25.04.2022 984,938
Nil cost
option
558
27.04.2020 108,274
Nil cost
option
235
25.04.2022 538,980
Nil cost
option
305
Threshold/
Maximum vesting share price3
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
1/3 of shares subject to median
relative TSR performance
End of
Performance
Period
Holding
period
01.01.2023 2 years
01.01.2024 1 year
01.01.2025 –
01.01.2025 2 years
01.01.2026 1 year
01.01.2027 –
01.01.2023 2 years
01.01.2024 1 year
01.01.2025 –
01.01.2025 2 years
01.01.2026 1 year
01.01.2027 –
1.
Includes dividend equivalent shares subsequently awarded.
2. The awards issued in April 2020 were calculated based on a share price of 253.67 pence, being the average market value of a share over the final
nine dealing days to 30 December 2019. The awards issued in April 2022 were calculated based on a share price of 59.50 pence, being the average
market value of a share over the final twenty dealing days to 30 December 2021. The period used for the April 2020 awards was shorter to exclude
the impact of the equity raise and partial offer transaction within which Growthpoint acquired a majority stake in the Company.
3. Shares will vest subject to the performance underpin of median relative Total Shareholder Return against a retail property comparator group.
Dividend equivalents:
Whenever a dividend or other cash distribution is paid by the Company in respect of Shares, the number of Shares
subject to each Unvested Share Award (as at the time the dividend or other cash distribution is paid) shall be increased by
such number of whole Shares (rounded down to the nearest whole number) as outlined in the CIP Rules.
2022 Combined Incentive Plan and achievement of objectives (audited):
L Hutchings
S Wetherly
Maximum CIP
opportunity
as %
of salary
300%
250%
% of objectives
achieved
Effective %
of maximum
achieved
Cash Bonus
payable
£’000
Deferred Share
award
£’000
71%
71%
213%
177.5%
311
170
622
340
Deferred share awards are subject to the individual remaining in continuing employment (unless they qualify as a Good
Leaver). Up to 100% of deferred shares will lapse if median relative TSR performance is not achieved.
The annual Combined Incentive Plan criteria for 2022 were determined with a weighting of 70% for Financial Objectives
and 30% on Operational and Strategic objectives.
131131
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Group Objectives: Financial Targets (70%)
Threshold
Maximum
Performance
Measure
% of bonus
Required
performance
% of bonus
Required
performance
Adjusted Profit
Net Rental Income
Rent Collection including deferrals
Cost Management (Central Costs)
Balance Sheet management – based
on reducing the Group’s Net Loan to
Value ratio
Total
3.75%
3.75%
2.5%
3.75%
3.75%
17.5%
£9.1m
£20.7m
92%
7.3
<50%
15%
15%
10%
15%
15%
70%
Actual
achieved
£10.3m
£23.2m
97%
Pay-out as %
of max.
13%1
14%1
9%
£10.2m
£23.3m
98%
6.4
£7.2m
4%
45%
41%
13%
53%
1. Payout assessed at £10.0 million for Adjusted profit and £23.2 million for Net Rental Income, excluding the £0.3 million benefits of the prior year
adjustments relating to Expected Credit Losses (see Note 1 to the financial statements for further details).
Group Objectives: Operating Metrics (10%)
Performance
Measure
% of bonus
Required performance
Actual achieved
Operating metrics
10%
Total
10%
5% based on Footfall outperforming
the national index by at least 0.5%
5% based on leasing performance
against ERV and Previous Passing
Rent.
While footfall was +27.4% on 2021
this was 5% below the national index
109 new leases and renewals signed
at average premium to previous rent
of 34% and to ERV of 13.7%.
Group Objectives: Implementation of Strategy (20%)
In assessing the performance against strategy the Committee considered the following:
Pay-out as
% of max.
4%
4%
• The Group secured agreements for lease at Ilford for a new anchor unit for TK Maxx and a new Community Healthcare
Centre with the NHS, co-ordinated with a package of loan amendments to its Ilford loan facility.
• Completion of the acquisition of its debt in respect of the Marlowes shopping centre in Hemel Hempstead at a discount
of approximately 51%, increasing the Group's Net Asset Value by approximately £12.3 million, partially funded by a
new £4.0 million loan facility provided by BC Invest, a subsidiary of the Group's strategic residential partner Far East
Consortium.
• Completion of the sale of land for residential development at its 17&Central community shopping centre in
Walthamstow to Long Harbour for c.£21.65 million.
• Completion of the sale of The Mall, Blackburn for £40 million, at a premium to the December 2021 valuation. The
combined impact of this and the Walthamstow residential receipt was to reduce Net Debt by approximately £60 million
and the Group’s key Net Loan to Value debt ratio by approximately 900 basis points.
• Progress against the Group’s sustainability objectives including reducing the Group's energy consumption with a 42%
fall in carbon emissions against the 2019 baseline.
• Remerchandising in line with Community Centre strategy – in addition to the TK Maxx and NHS lettings completed at
Ilford the Group opened a new diagnostics centre at Wood Green (and subsequently agreed a further extension to it)
and agreed a deal with CRATE to operate the new Food Market at Walthamstow.
In consideration of the significant progress made the Committee concluded to award a payout of 14% of the maximum
20% available.
Overall Committee Assessment of Combined Incentive Plan Payment
The Committee carefully considered the performance against the Financial Targets and determined that the formulaic
outturn would be 53% out of a maximum of 70%. The Committee then reviewed performance against the Operating
Metrics and concluded on a payment of 4 % out of 10%. Finally the Committee considered the Implementation of Strategy
and noted that performance here had been strong, resulting in a payment of 14% out of 20%.
This resulted in a total payout of 71%. The committee considered the trend of key metrics against the prior year and
shareholder experience, noting that Total Shareholder Return for 2022 was +9.5% which put the Group towards the top of
UK listed Real Estate companies in 2022.
Reflecting on all of the above the Board believe management have performed exceptionally well in guiding the business
through a year of recovery, resolving successfully the loan positions on Ilford and Hemel Hempstead and reducing further
the Group’s debt levels with the completion of the Walthamstow residential transaction and sale of The Mall, Blackburn.
The Committee were as a result satisfied that a payout of 71% of maximum was a fair outcome.
132132
Stock code: CAL
CIP Objectives
The Committee will continue to set stretching performance targets based on the Group’s key financial performance
metrics which form at least 70% of the metrics used. The remaining 30% will be subject to strategic and operational
measures, providing a link between financial and strategic out turns.
Adjusted Profit
Net Rental Income
Rent collection
Cost management
Balance sheet resilience
Total Financial:
Operating metrics:
Footfall against benchmark
Leasing performance
ESG including consideration of:
GRESB and EPRA sustainability assessment performance
Reduction in Group Carbon emissions
Social impact measurement and assessment
Strategy Implementation
Total Operational and Strategic:
% of max.
15%
15%
10%
15%
15%
70%
10%
10%
10%
100%
Pay-out levels for threshold performance will remain controlled at a minimum of 25% of the CIP and maximum pay-out
will represent ‘exceptional performance’. Target performance levels of pay-out will be at 50%.
Detailed targets have not been disclosed due to their commercially sensitive nature. The targets and the extent to which
they have been achieved will be published in full in the 2023 Directors Remuneration Report.
Combined Incentive Plan (audited):
Vesting of 2019 Combined Incentive issue
The first one third tranche of the 2019 CIP awards became available for vesting from 1 January 2023. The Committee
reviewed relative TSR performance of the Group against an agreed peer group of other retail property companies. The
Committee were satisfied that the Company’s TSR performance satisfied the requirement of being at median level or
above and consequently approved vesting of the awards in full. This has resulted in 66,933 and 36,091 shares becoming
available for Lawrence Hutchings and Stuart Wetherly to exercise respectively.
Long Term Retention Award (audited):
The number of awards and the performance periods for all outstanding retention awards are summarised below.
November 2021 Award
Lawrence Hutchings was granted a cash award of £1,000,000 on 1 November 2021 with the sole condition of remaining in
continued employment and not being subject to disciplinary or performance procedures at the payment date.
Stuart Wetherly was granted a cash award of £500,000 on 1 November 2021 with the sole condition of remaining in
continued employment and not being subject to disciplinary or performance procedures at the payment date.
The November 2021 cash based Long Term Retention Awards will be paid once the awards vest and become payable on
30 September 2023.
The Company’s Clawback provisions will apply, where the level of vesting may be reduced, including to nil. Malus
provisions will apply to allow the Remuneration Committee to reduce the payment under a Long Term Retention Award if
any of the circumstances set out above occur prior to the payment of the Long Term Retention Award.
Exit payments and payments to past Directors (audited)
No exit payments were awarded to Directors in 2022. Neither were any payments made to past Directors.
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Performance graph
The graph below illustrates the Company’s Total Shareholder Return (i.e. share price growth plus dividends paid)
performance compared to the FTSE All Share and FTSE 350 Real Estate indices as these indices provide a measure of
a sufficiently broad equity market against which the Company considers that it is suitable to compare itself. The graph
shows how the total return on a £100 investment in the Company made on 30 December 2012 would have changed over
the ten-year period measured, compared with the total return on a £100 investment in the comparable indices.
250
200
150
100
50
0
D e c-11
Capital & Regional plc
FTSE All-Share
FTSE 350 UK Real Estate
D e c-12
D e c-13
D e c-14
D e c-15
D e c-16
D e c-17
D e c-18
D e c-19
D e c-2 0
D e c-21
D e c-2 2
The table below sets out the total remuneration of the Chief Executive, over the same period as the Total Shareholder
Return graph. The quantum of Annual Incentive awards granted each year and long-term incentive vesting rates are given
as a percentage of the maximum opportunity available.
Total remuneration
(L Hutchings)
Total remuneration
(H Scott-Barrett)
Annual bonus (% of max)
(L Hutchings)
Annual bonus (% of max)
(H Scott-Barrett)
LTIP/CIP vesting (% of max)
(L Hutchings)
LTIP vesting (% of max)
(H Scott-Barrett)
2013
£’000
2014
£’000
2015
£’000
2016
£’000
2017
£’000
2018
£’000
2019
£’000
2020
£’000
2021
£’000
2022
£’000
n/a
n/a
n/a
n/a
393
752
718
481
1,778
813
651
833
796
2,112
564
–
–
–
–
–
n/a
n/a
n/a
n/a
n/a
45%
53%
51%
65%
71%
69%
40%
85%
70%
70%
n/a
n/a
n/a
n/a
n/a
–
–
–
91.85% 35.26%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
–
–
–
n/a
n/a
n/a
n/a
134134
Stock code: CAL Annual change in pay for Directors verses the wider workforce in 2022
The percentage change in the remuneration of Directors compared to that of employees generally is included below. The
year-on-year movement in salary for Directors and employees reflects the annual review applied as effective from January
2022. Non-Executive Directors do not receive any benefits.
2021
Salary
Bonus
Benefits
2022
Salary
Bonus
Benefits
Employee
Group1
Executive Directors
Non-Executive Directors
L Hutchings
S Wetherly
D Hunter
I Krieger G Muchanya3
N Sasse3
K Wadey
L Whyte
–
–
–
n/a2
n/a2
No change No change No change
n/a2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Employee
Group1
3–5%
Executive Directors
Non–Executive Directors
L Hutchings
S Wetherly
D Hunter
I Krieger G Muchanya2
N Sasse2
K Wadey
L Whyte
3%
3%
8.4%
11%
No change No change No change
11%
2%
–
–
2%
–
–
–
–
–
–
–
–
2%
–
–
2%
–
–
1. Calculated on a like for like basis with reference to employees of Capital & Regional plc and Capital & Regional Property Management Limited who
have been at the Companies for the entirety of the current and prior years.
2. No bonuses were paid in 2020 and hence the percentage change cannot be calculated.
3. G Muchanya and N Sasse do not receive a fee.
Chief Executive pay ratio
The Company has fewer than 250 employees and is therefore not required to disclose the ratio between the Chief
Executive’s pay and the pay of other employees in the Company, as outlined in the Companies (Miscellaneous
Reporting) Regulations 2018. However, the ratio of the Chief Executive’s pay to the average employees’ pay is taken into
consideration when setting Executive remuneration and for full transparency we therefore disclose the ratio of the salary
of the Chief Executive to the average employee salary (excluding Directors) which was 6.4:1 (£437,835: £68,5071). The
equivalent ratios in 2021 and 2020 were 6.3:1 and 6.5:1 respectively.
1. Calculated with reference to employees of Capital & Regional plc and Capital & Regional Property Management.
Relative importance of spend on pay compared to distributions to shareholders
Executive Director’s remuneration
Employee costs (per Note 7 of the financial statements)
Dividends paid (Total of Interim and Final Dividend for the respective year)
2022
£m
1.3
13.8
4.7
2021
£m
2.71
11.0
–
%
-51.9%
+25.5%
–
1. 2021 includes a one-off cash-based award that was granted to Lawrence Hutchings (£1,000,000) and Stuart Wetherly (£500,000) on
1 November 2021, which will vest and become payable on 30 September 2023.
Directors’ service agreements and letters of appointment
Name
Executive Directors
L Hutchings
S Wetherly
Unexpired term of
appointment
Date of service agreement
Notice period
Potential termination payment
Rolling contract
Rolling contract
13 June 2017
11 March 2019
12 months
12 months
12 months’ salary and benefits value
12 months’ salary and benefits value
Non-Executive Directors
D Hunter
I Krieger
L Whyte
G Muchanya
N Sasse
K Wadey
Rolling contract
Rolling contract
Rolling contract
Rolling contract
Rolling contract
Rolling contract
Date of initial appointment
9 March 2020
1 December 2014
1 December 2015
9 December 2019
9 December 2019
20 October 2020
6 months
No notice
No notice
No notice
No notice
No notice
None
None
None
None
None
None
Non-Executive Directors are all appointed on rolling contracts with no notice period save for David Hunter who
as Chairman has a six-month notice period. All Directors stand for re-election annually and Board appointments
automatically terminate in the event of a Director not being re-elected by shareholders. Copies of the Directors’ service
agreements are available to view at the Company’s registered office.
135135
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External Appointments
Executive Directors may accept external appointments as Non-Executive Directors of other companies and retain any
related fees paid to them, subject to the approval of the Board in each case. No external appointments were undertaken
by the Executive Directors during 2022.
Workforce Engagement
The Committee is regularly updated on workforce pay and benefits throughout the Group and considers workforce
remuneration as part of the review of executive remuneration. Laura Whyte, the Chair of the Committee periodically
attends staff Town Hall meetings and other staff sub-committee meetings where performance management and the
interaction with pay of both staff and executive management is discussed. In addition the Committee reviews feedback
from employee surveys and takes this into account when setting pay.
The Committee is also tasked with overseeing major changes in employee benefit structures. It has responsibility
for the remuneration of the members of the Group Senior Leadership Team and is therefore able to ensure that the
remuneration decisions made in respect of the Executive Directors are made with consideration of, and in line with,
senior management and other employees. The Committee also reviews the proposed pay awards and bonus payments
made to the wider workforce to ensure alignment and consistency with the principles set in determining executive pay.
Interests in shares (audited)
The Directors and, where relevant, their connected persons (within the meaning of Section 252 of the Companies
Act 2006) were beneficially interested in the ordinary share capital of the Company at the dates shown in the table.
This excludes unvested CIP share awards, these are disclosed separately on page 131.
D Hunter
L Hutchings
S Wetherly
I Krieger
G Muchanya
N Sasse
K Wadey
L Whyte
30 December
2022 Shares
30 December
2021 Shares
109,145
12,439
36,813
17,630
–
62,187
–
32,207
105,442
12,017
35,603
17,032
–
62,187
–
31,115
There were no changes to Directors’ shareholdings from 30 December 2022 to 19 April 2023, being the latest practicable
date prior to the issue of this report.
All Executive Directors are expected to build a shareholding to at least 2 x basic annual salary value, based on current
market value or the aggregate purchase price of the shares, over a five year period.
There is no set timescale for Executive Director to reach the prescribed target but they are expected to retain net shares
received on the vesting of long-term incentive awards until the target is achieved. Shares that count towards the holding
guideline are unfettered and beneficially owned by the Executive Directors and their connected persons.
Executive Directors
L Hutchings
S Wetherly
Time from appointment
as Executive Director
Target % of
salary
Target
currently met?
4 year 6 months
2 year 9 months
200
200
No
No
Post cessation shareholding requirements
There is a 200% base salary post-cessation of employment shareholding requirement for two years. Shares awarded but
subject to further deferral periods or performance conditions are included for the purposes of the calculation.
Committee evaluation
The Committee reviewed its performance with Board members and other participants, including through the annual
Board evaluation.
136136
Stock code: CAL Consultation and shareholders’ views
The Chair corresponds with shareholders and also engages with governance agencies including ISS and the Investment
Association.
Shareholder voting on the Directors’ Remuneration Policy and Remuneration Report, which were tabled at the 19 May
2022 AGM, were as follows:
Resolution
To approve the Directors’
Remuneration Policy
To approve the Directors’
Remuneration Report
For
% For
Against
% Against
Total Shares
Voted
% Shares
Voted
Votes
Withheld
125,803,575
96.10
5,107,180
3.90 130,910,755
79.15
22,019
125,765,219
96.07
5,147,202
3.93 130,912,421
79.15
20,353
Shareholder voting on the Long-Term Retention Awards, which was tabled at the 1 November 2021 EGM, was as follows:
Resolution
For
% For
Against
% Against
Total Shares
Voted
% Shares
Voted
Votes
Withheld
To approve the Long-Term
Retention Awards
74,164,267
93.56
5,107,522
6.44
79,272,149
70.97
84,550
Laura Whyte
Chair of the Remuneration Committee
137137
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Directors' Report
Business review
In accordance with section 414C (11) of the Companies Act 2006 disclosures regarding employee involvement; the
employment of disabled people; the future development, performance and position of the Group can be found in
the Strategic Report, which is incorporated into this report by reference. This also includes our statutory reporting
on greenhouse gas emissions. A report on corporate governance and compliance with the provisions of the 2018 UK
Corporate Governance Code and Disclosure and Transparency Rules, which forms part of this Directors’ Report, is set out
on page 100.
The results for the year are shown in the Group income statement on page 104. Post balance sheet events are disclosed
in Note 31 to the financial statements. The use of financial derivatives is set out in Note 19 to the financial statements.
The purpose of this annual report is to provide information to the members of the Company. The annual report
contains certain forward-looking statements with respect to the operations, performance and financial condition of the
Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results
and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and
information available at the date of preparation of this annual report and the Group undertakes no obligation to update
them. Nothing in this annual report should be construed as a profit forecast.
Dividends
An interim dividend of 2.5 pence per share (the "Dividend") was paid on 7 October 2022 (2021 - nil) 100% as a property
income distribution ("PID").
The Directors recommend a final dividend of 2.75 pence per share all to be paid as a Property Income Distribution (PID).
This will result in a total distribution for the year ended 30 December 2022 equivalent to 5.25 pence per new share
(2021: nil).
Subject to approval of shareholders at the Annual General Meeting (AGM) on Thursday, 25 May 2023, the final dividend
will be paid on 2 June 2023. The key dates are set out as below:
• Confirmation of ZAR equivalent dividend and Scrip dividend pricing
Friday, 31 March 2023
• Last day to trade on Johannesburg Stock Exchange (JSE)
Tuesday, 11 April 2023
• Shares trade ex-dividend on the JSE
Wednesday, 12 April 2023
• Shares trade ex-dividend on the London Stock Exchange (LSE)
Thursday, 13 April 2023
• Record date for LSE and JSE and last election for Scrip
• Annual General Meeting
• Dividend payment date
Friday, 14 April 2023
Thursday, 25 May 2023
Friday, 2 June 2023
The dividend will be paid 100% as a PID. South African shareholders are advised that the final dividend will be regarded
as a foreign dividend. Further details relating to Withholding Tax for shareholders on the South African register will be
provided within the announcement detailing the currency conversion rate on Friday, 21 April 2023. Share certificates
on the South African register may not be dematerialised or rematerialised between Wednesday, 3 June 2023 and
Friday, 5 June 2023, both dates inclusive. Transfers between the UK and South African registers may not take place
between Friday, 21 April 2023 and Friday, 5 May 2023, both dates inclusive.
Property Income Distributions (PIDs)
As a UK REIT, Capital & Regional plc is exempt from corporation tax on rental income and gains on UK investment
properties but is required to pay Property Income Distributions (PIDs). UK shareholders will be taxed on PIDs received at
their full marginal tax rates. A REIT may in addition pay normal dividends.
For most shareholders, PIDs will be paid after deducting withholding tax at the basic rate. However, certain categories
of UK shareholder are entitled to receive PIDs without withholding tax, principally UK resident companies, UK public
bodies, UK pension funds and managers of ISAs, PEPs and Child Trust Funds. Further information on UK REITs is available
on the Company’s website, including a form to be used by shareholders to certify if they qualify to receive PIDs without
withholding tax.
PIDs paid to shareholders on the South African share register are subject to UK withholding tax at 20%. South
African shareholders may apply to His Majesty’s Revenue and Customs after payment of the PID for a refund of the
difference between the 20% withholding tax and the prevailing UK/South African double tax treaty rate. Other overseas
shareholders may be eligible to apply for similar refunds of UK withholding tax under the terms of the relevant
tax treaties.
138138
Stock code: CAL Directors
The names and biographical details of the present Directors of the Company are given on pages 101–102. All Directors
served for the full year. George Muchanya resigned as one of Growthpoint’s nominated Non-Executive Directors on
22 February 2023 and was replaced by Panico Theocharides.
All current Directors will retire and being eligible, offer themselves for re-election at the 2023 Annual General Meeting.
Directors’ interests in the share capital and equity of the Company at the year-end are contained in the Directors’
Remuneration Report. There were no contracts of significance subsisting during or at the end of the year in which a
Director of the Company was materially interested. No Director had a material interest in the share capital of other Group
companies during the year.
Pursuant to the Growthpoint Relationship Agreement that the Company entered into in 2019, the Company agrees,
upon request, to appoint two Non-Executive Directors nominated by Growthpoint to the Board for so long as they
own 20% or more of the issued ordinary capital in the Company and one Non-Executive Director to the Board if they
own less than 20%, but not less than 15%. Panico Theocharides and Norbert Sasse are the Growthpoint Nominated
Non-Executive Directors.
All other Directors are appointed in a personal capacity.
The Company maintains insurance for the Directors in respect of liabilities arising from the performance of their duties.
Listing Rule 9.8.4R disclosures
The following table sets out where disclosures required in compliance with Listing Rule 9.8.4R are located.
Interest capitalised and tax relief
Details of long-term incentive schemes
Waiver of emoluments by a Director
Waiver of future emoluments by a Director
Non pre-emptive issues of equity for cash
Non pre-emptive issues of equity for cash by major subsidiary undertakings
Parent company participation in a placing by a listed subsidiary
Contracts of significance
Provision of services by a controlling shareholder
Shareholder waivers of dividends
Shareholder waivers of future dividends
Agreements with controlling shareholders
n/a
Page 131–133
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Shares held by Employee Share
Ownership Trust – see section below
Shares held by Employee Share
Ownership Trust – see section below
Page 140
Substantial shareholdings
As at 30 December 2022 (the accounting reference date of this report), the Company was notified of the following
interests in its issued ordinary share capital:
GrowthPoint Properties Limited
Black Crane Capital
Mstead Limited
No. of shares
104,035,718
6,902,813
5,742,052
%
61.49
4.08
3.39
As at 19 April 2023 (the latest practicable date prior to the issue of this report) the Company has been notified of the
following interests in its issued ordinary share capital:
GrowthPoint Properties Limited
Black Crane Capital
Mstead Limited
No. of shares
104,035,718
6,902,813
5,742,052
%
61.49
4.08
3.39
Shares held by Employee Share Ownership Trust
At 30 December 2022 the Capital & Regional Employee Share Ownership Trust held 31,876 shares in the Company. The
shares held by the Trust are registered in the nominee name, Forest Nominees Limited, and a dividend waiver is in place
to cover the entire holding.
139139
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Directors' Report CONTINUED
Purchase of own shares
The Company did not make any purchases of its own shares during 2022 or up to 19 April 2023 being the latest
practicable date prior to the issue of this report.
The Company was authorised by shareholders at the 2022 AGM held on 19 May 2022 to purchase up to a maximum of
10.0% of its ordinary shares in the market. This authority will expire at the 2023 AGM and the directors will be seeking
a new authority for the Company to purchase its ordinary shares. This will only be exercised if market and financial
conditions make it advantageous to do so.
Share capital
As at 30 December 2022 the Company’s total issued share capital was 169,191,918 ordinary shares of 10 pence each, all
with equal voting rights. The changes in the Company’s Issued share capital during 2022 are detailed in Note 20 to the
financial statements.
The Company has a Secondary Listing of shares on the Johannesburg Stock Exchange (JSE). At 30 December 2022,
7,565,067 of the Company’s shares were held on the JSE share register representing 4.47% of the total shares in issue.
Controlling shareholder
Growthpoint, through its nominees, holds 61.49% of the issued share capital of the Company. The Relationship
Agreement, entered into on 17 October 2019, incorporates those terms required by the Listing Rules as a result of
Growthpoint becoming a controlling shareholder. It remains effective as long as Growthpoint and any of its nominees
hold at least 20% of the voting rights in the Company. The Relationship Agreement provides various rights including the
ability to appoint two Non-Executive Directors nominated by Growthpoint to the Board for so long as they own 20% or
more of the issued ordinary capital in the Company and one Non-Executive Director to the Board if they own less than
20%, but not less than 15%. The Directors believe that the terms of the Relationship Agreement enable the Group to
carry on its business independently of Growthpoint. A copy of the Relationship Agreement is available on the Company’s
website at capreg.com.
Change in control
The Group’s £39 million debt facility in respect of The Exchange Centre, Ilford allows the lender to potentially demand
repayment of the facility with 120 days’ notice if there is a change in control resulting in an individual or entity acquiring
control of 50% or more of Capital & Regional Plc’s shares.
In addition certain potential tax liabilities could be crystallised in some circumstances where there are varying degrees of
change of ownership of the Group’s shares.
Furthermore the Group could lose its status as a REIT as a result of the actions of third parties (for example, in the event
of a successful takeover by a company that is not a REIT and which does not, unlike Growthpoint Properties Limited,
qualify as an ‘institutional investor’ for REIT purposes) or due to a breach of the close company condition if it is unable to
remedy the breach within a specified period.
Articles of Association
The rules governing the appointment and replacement of Directors are contained in the Company’s Articles of
Association. Changes to the Articles of Association must be approved by shareholders in accordance with the legislation
in force from time to time.
Human rights
The Group operates in the UK and Jersey and, as such, is subject to the European Convention on Human Rights and the
UK Human Rights Act 1998.
The Group respects all human rights and in conducting its business the Group regards those rights relating to non-
discrimination, fair treatment and respect for privacy to be the most relevant and to have the greatest potential impact on
its key stakeholder groups of customers, employees and suppliers.
The Board has overall responsibility for ensuring the Group upholds and promotes respect for human rights. The Group
seeks to anticipate, prevent and mitigate any potential negative human rights impacts as well as enhance positive
impacts through its policies and procedures and, in particular, through its policies regarding employment, equality and
diversity, treating its stakeholders and customers fairly and information security. Group policies seek to ensure that
employees comply with the relevant legislation and regulations in place to promote good practice. The Group’s policies
are formulated and kept up to date and communicated to all employees through the Staff Policy Manual. The Group has
not been made aware of any incident in which the organisation’s activities have resulted in an abuse of human rights.
The Group publishes a Modern Slavery Act Statement. This is available on the ESG section of the Group’s website at
capreg.com.
140140
Stock code: CAL Employees
The Group is committed to a policy that treats all of its employees and job applicants equally. No employee or
potential employee receives less favourable treatment or consideration on the grounds of race, colour, religion,
nationality, ethnic origin, sex, sexual orientation, marital status, or disability. Nor is any employee or potential employee
disadvantaged by any conditions of employment or requirements of the Group that cannot be justified, as necessary, on
operational grounds.
We give full consideration to applications for employment from disabled persons where the requirements of the job
can be adequately fulfilled by people with disabilities. We endeavour to retain the employment of, and arrange suitable
retraining for, any employee who becomes disabled during their employment as well as providing training, career
development and promotion to disabled employees wherever appropriate.
During the year, the Group maintained arrangements to provide employees with information on matters of concern
to them, to regularly consult employees for views on matters affecting them, to encourage employee involvement in
the Group’s performance through share schemes, and to make all employees aware of financial and economic factors
affecting the performance of the Group.
At 30 December 2022, the total number of employees was as follows:
Employees
Directors
Senior Leadership Team
Senior Leadership Team direct reports
Employees – Support Office
Employees – Assets
Employees - Snozone
Male
6
4
12
15
18
225
Female
2
3
9
16
40
125
Total
8
7
21
31
58
350
Political donations
The Group has not made any political donations during the year and intends to continue its policy of not doing so for the
foreseeable future.
Auditor’s information
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company’s Auditor is unaware; and each Director has taken all the
steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the
Company’s Auditor is aware of that information. This confirmation is given, and should be interpreted, in accordance with
the provisions of s418 of the Companies Act 2006. A resolution to appoint Mazars LLP as the Company’s Auditor will be
proposed at the forthcoming Annual General Meeting.
Annual General Meeting
The Company’s Annual General Meeting is due to be held on 25 May 2023. The Notice of Annual General Meeting 2023,
accompanies this report, which accounts for and explains the business to be covered at the Annual General Meeting of
the Company.
The Directors Report was approved by the Board of Directors on 20 April 2023 and is signed on its behalf by:
Stuart Wetherly
Company Secretary
20 April 2023
Registered Company name: Capital & Regional plc
Registered Company number: 01399411
Registered office: 22 Chapter Street, London, SW1P 4NP
141141
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Directors' Responsibilities Statement
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in accordance with United Kingdom adopted International
Accounting Standards and Article 4 of the IAS Regulation and have elected to prepare the parent Company financial
statements in accordance with FRS 101, as published by the Financial Reporting Council, and applicable law in the United
Kingdom. Under company law the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year.
In preparing the parent Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed
and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
In preparing the Group financial statements, International Accounting Standard 1 requires that Directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other events and conditions on the entity’s financial position and
financial performance; and
• make an assessment of the Company’s ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company, and to
enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Directors’ responsibilities statement
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 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.
This responsibility statement was approved by the Board of Directors on 20 April 2023 and is signed on its behalf by:
Lawrence Hutchings
Chief Executive
Stuart Wetherly
Group Finance Director
142142
Stock code: CAL Independent Auditor’s Report
To the members of Capital & Regional Plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
• the financial statements of Capital & Regional PLC (the ‘parent Company’) and its subsidiaries (the ‘Group’) give a
true and fair view of the state of the Group’s and of the parent Company’s affairs as at 30 December 2022 and of
the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with United Kingdom adopted
international accounting standards;
• the parent Company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure
Framework”; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated and parent Company balance sheets;
• the consolidated and parent Company statements of changes in equity;
• the consolidated cash flow statement; and
• the related notes 1 to 32 and parent Company related notes A to F.
The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law and United Kingdom adopted international accounting standards. The financial reporting framework
that has been applied in the preparation of the parent Company financial statements is applicable law and United
Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted
Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Group and the parent Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard
as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services provided to the Group and parent Company for the year are disclosed in note 6 to
the financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical
Standard to the Group or the parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
143143
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Independent Auditor’s Report
To the members of Capital & Regional Plc
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Valuation of investment properties.
• Going concern.
• Impairment of parent Company investments and intercompany debtors.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
Scoping
The materiality that we used for the Group financial statements was £3.60m (2021: £3.38m) which
was determined on the basis of 2% (2021: 2%) of net assets. We applied a lower threshold of £0.50
million (2021: £0.38 million) for testing of all balances impacting Adjusted Profit (as defined in note
1 of the Group financial statements), which is 5% (2021: 5%) of Adjusted Profit.
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including Group-wide controls, and assessing the risks of material misstatement at the Group and
component levels. Our audit scoping provides audit coverage of 99% (2021: 98%) of net assets,
93% (2021: 100%) of revenue and 98% of the Group’s profit (2021: 100% of the Group’s loss).
Our component audit work was executed at levels of materiality applicable to each individual
component which were lower than Group materiality.
Significant changes in
our approach
There have been no significant changes in our audit approach in the current year.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and parent Company’s ability to continue to adopt the going
concern basis of accounting is discussed in section 5.2.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group's and parent Company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
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 do not provide a separate opinion on these matters.
144144
Stock code: CAL 5.1. Valuation of investment properties
Key audit matter
description
Investment properties have a carrying value of £320.1 million at 30 December 2022
(30 December 2021: £376.4 million), comprising 76% (30 December 2021: 59%) of the Group’s
assets. The portfolio consists of five (30 December 2021: five) shopping centres within the Group.
During the year the Group sold the Blackburn property and management have deconsolidated the
Luton entity, as the Group ceded control of the property in May 2022.
We assessed the fair value of the Group’s property portfolio to be a significant area of focus due to
the level and nature of the judgements and estimates that form inputs into the valuation process
performed by the Group’s independent valuers, such as yields and sustainability of the cash
flows. The liquidity within the shopping centre investment sector is still relatively limited and the
valuations continued to be impacted by the current retail climate.
Changes in these assumptions and judgements could lead to significant movements in property
values and consequently unrealised gains or losses in the consolidated income statement.
There is also a risk of fraud in relation to the valuation of the property portfolio, where the use of
valuation methodology and model, large volume of data involved and assumptions and judgements
applied are more critical and could be subject to undue influence by management.
The accounting policy for investment property is set out in note 1 to the Group financial statements
including Directors’ assessment of this as a key source of estimation uncertainty.
The Audit Committee’s discussion of this key audit matter is set out on page 114. The investment
property portfolio is disclosed in note 10 of the Group financial statements.
How the scope of our
audit responded to
the key audit matter
• We obtained an understanding of the Group’s relevant controls around investment
property valuations.
• We evaluated the competence, capabilities and objectivity of the Group’s independent
valuers.
• We met with the Group’s independent valuers appointed by management to value the
property portfolio and challenged the significant judgements and assumptions applied in
their valuation model.
• We analysed the individual property valuations to understand significant movements
against prior year and comparative market evidence considered by the valuers.
• We considered contradictory evidence across the work performed.
• We evaluated the integrity of the methodology, model and data transfer.
• We tested the integrity of the information provided to the valuers by management
pertaining to rental income, purchasers’ costs and occupancy.
• We verified movements in the key judgements and assumptions and we benchmarked and
discussed yields in detail with the valuers and our own in-house valuation specialists, who
are members of the Royal Institution of Chartered Surveyors. We determined whether the
trend and sentiment on each specific asset was in line with expectations relevant to that
asset and its location, prospects and expected cash flows. Where possible, market evidence
was also used to corroborate yield assumptions.
• To test the sustainability of the cash flows we have performed our audit procedures on
revenue and expected credit losses. Additionally we have tested specifically the void
assumptions, tenant incentives, cash collection as well as variable income and car park
income of each of the properties to conclude that the assumptions used in the assessment
of sustainability of the cash flows are reasonable.
• We tested the disposal of Blackburn property and assessed whether any of the assets of
the Group should be classified as held for sale at year end.
• We reviewed the associated disclosures within the financial statements and focus on any
additional requirements that may be necessary, for example, the FRC’s expectations in
relation to sensitivity disclosures in note 10.
Key observations
We concur with the assumptions adopted by Directors in the valuation were reasonable and the
methodology applied was appropriate
145145
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Independent Auditor’s Report
To the members of Capital & Regional Plc
5.2. Going concern
Key audit matter
description
The Group operates in the retail and leisure sectors, which have led to significant pressure on
cash flows and property valuations. Going concern is a significant area of focus, particularly due
to the impact of ongoing retail sector restructuring and adverse macroenomic factors on property
valuations and their underlying cash flows.
At 30 December 2022, Group’s borrowings totalled £181.8 million (30 December 2021:
£238.2 million). At the year end, the Group had cash and cash equivalents of £55.5 million
(30 December 2021: £58.5 million), of which £28.1 million was maintained centrally and without any
restriction (30 December 2021: £32.5 million).
We identified a key audit matter relating to the ability of the group to continue trading as a going
concern. The Group going concern assessment is built on cashflow projections, considering
only the cash readily available to the Group, together with the Group’s ability to meet covenant
requirements.
Operationally, the Group has demonstrated sufficient cash to trade for the lookout period of
12 months and this would enable them to still operate as going concern. In addition to considering
cash flow forecasts, the ability of the Group to meet the loan covenant requirements relating to
loan to value and interest rate cover during the year and for a period of at least one year from the
date when the financial statements are authorised for issue is also relevant, as the Group does not
have waivers in place for any breaches that could occur in the future under certain scenarios. The
Directors have also prepared a downside scenario that considers lower levels of income and rental
collection.
The covenants of the Mall, Ilford and Hemel Hempstead were all met as at the year end. In the
downside case scenario some of the covenants may be breached in which case Group would have
sufficient cash to cure them with the cash available to the Group. If some of the covenants were
not met, and if the Group decided not to cure them or would not be able to do so, the Group could
consider surrending the asset to the lenders. This would involve the surrender of ring-fenced asset
to the relevant lenders instead of curing the associated breach of covenant. This course of action is
available due to the fact that none of the facilities are cross-default and any of the facilities can be
in default without recourse to the other ring-fenced facilities in the Group.
Director’s consideration of the going concern basis of preparation is set out in the Going Concern
statement on page 42 and note 1. Directors have adopted the going concern basis of accounting for
the Group and parent Company and have concluded that there are no material uncertainties that
may cast significant doubt over the Group’s and parent Company’s ability to adopt going concern
basis for a period of at least twelve months from the date when the financial statements are
authorised for issue.
The Audit Committee’s discussion of this key audit matter is set out on page 116.
How the scope of our
audit responded to
the key audit matter
• We obtained an understanding of the Group’s relevant controls around the risk of non-
compliance with covenants and the going concern status of the Group.
• We assessed the judgements and assumptions applied by Directors in their going concern
assessment and associated forecasts of financial performance and financial position.
• We considered the reasonableness of assumptions included in the downside scenario
regarding lower rental income and lower collection levels.
• We evaluated the cash and borrowings forecast for the next two years including the
assessment of the viability statement of the Group and obtained an understanding and
relevant support for material cash movements.
• We evaluated the Group’s modelling of alternative scenarios taking into consideration
projected capital expenditure, discount rates applied to future cash flows, current business
and economic trends and significant developments during and subsequent to the year
ended 30 December 2022.
• We assessed key loan documentation to understand the principal terms, including financial
covenants and current waivers in place, and performed an assessment of the Group’s
existing and forecast compliance with debt covenants and any associated equity cures and
cash traps.
• We assessed the availability of further mitigating actions available to management as presented
in Note 1 and assessed the sufficiency of the disclosures made in the annual report.
• We assessed the non-recourse and no cross-default nature of the facilities in place.
Key observations
We concur with Directors’ conclusion to prepare the Group and parent Company financial
statements on a going concern basis.
146146
Stock code: CAL 5.3. Impairment of parent Company investments and intercompany debtors
Key audit matter
description
How the scope of our
audit responded to
the key audit matter
There is a risk that the carrying value of the investments and intercompany debtors cannot be
supported. The accuracy of forecast future cash flow model to support the carrying values of the
investments is a key area of judgement and is identified as a key audit matter. In particular, this
relates to the reasonableness of cash flow forecasts, long-term growth rates and the discount rates
applied in the discounted cash flow calculations used to support investments held at above net
asset value of the subsidiaries.
Investments had a carrying value of £161.1 million at 30 December 2022 (30 December 2021:
£144.3 million), comprising 74% (30 December 2021: 82%) of the parent Company’s
assets. Intercompany debtors had a carrying value of £37.3 million at 30 December 2022
(30 December 2021: £37.0 million), comprising 17% (30 December 2021: 14%) of the parent
Company’s assets.
Investments are subject to an impairment review using a discount rate of 16.1% (2021: 16.3%).
Directors have assessed the recoverability of investments on the basis of nil growth. The
recoverability of the Group debtors of the parent Company is determined using the expected credit
loss model. Following the assessment of intercompany debtors recoverability no provision (30
December 2021: nil) has been booked in the parent Company’s financial statements.
The accounting policies for both investments and intercompany debtors are set out in note A to
the parent Company financial statements including Directors’ assessment of this as a key source
of estimation uncertainty. The Audit Committee’s discussion of this key audit matter is set out on
page 116.
• We obtained an understanding of the parent Company’s relevant controls to address the
risk of impairment of investments and intercompany debtor balances.
• We challenged Group’s discounted cash flow model and the cash flow forecasts employed
therein, including comparison of the input assumptions to externally and internally derived
data with the involvement of our internal valuations specialists. The inputs considered
included the cash flow projections, long-term growth rates and discount rates.
• We also assessed whether the forecasts employed are consistent with those used to
support other judgements in the financial statements.
• We assessed the recoverability of the Group debtors of the parent Company and how
expected credit loss model has been applied.
• We assessed the disclosures included in the annual report.
Key observations
We consider that the carrying value of parent Company investment and intercompany debtor
balances is appropriate.
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Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Independent Auditor’s Report
To the members of Capital & Regional Plc
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent Company financial statements
Materiality
£3.60 million (2021: £3.38 million)
£3.24 million (2021: £3.04 million)
Basis for determining
materiality
We determined materiality to be 2% of net
assets (2021: 2% of net assets).
Rationale for the
benchmark applied
We applied a lower threshold of £0.50
million (2021: £0.38 million) for testing of
all balances impacting Adjusted Profit (as
defined in Note 1 to the Group financial
statements), which is 5% of Adjusted Profit
(2021: 5% of Adjusted Profit).
We used net assets as a benchmark when
determining materiality as it is considered to be
the most critical financial performance measure
for the Group.
We applied a lower threshold of £0.50 million
(2021: £0.38 million) for testing of all balances
impacting Adjusted Profit on the basis that it is
a key metric used by management, is the basis
of the discussion of the financial performance
in the strategic report and is a metric used
by analysts and other users of the financial
statements.
Parent Company materiality equates to 2%
of net assets (2021: 2% of net assets), which
is capped at 90% of Group materiality (2021:
capped at 90% of Group materiality).
We used net assets as a benchmark when
determining materiality as it is considered
to be the most critical financial performance
measure for the parent Company as a
holding company.
Group
materiality
£3.6m
Component
materiality
range £0.16m
to £3.24m
Audit Committee
reporting threshold
£0.18m
Net assets
£179.1m
Net assets
Group materiality
148148
Stock code: CAL 6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the financial statements as a whole.
Performance
materiality
Basis and rationale
for determining
performance
materiality
Group financial statements
Parent Company financial statements
70% (2021: 70%) of Group materiality
70% (2021: 70%) of parent Company materiality
In determining performance materiality, we considered the following factors:
a. the changes in the business have been factored into the level of materiality;
b. control environment of the Group and our ability to rely on controls; and
c. our past experience of the audit, which has indicated a low number of corrected and
uncorrected misstatements identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £0.18
million (2021: £0.17 million), as well as differences below that threshold that, in our view, warranted reporting on
qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the
overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide
controls, and assessing the risks of material misstatement at the Group and component levels.
Our Group audit scope focused primarily on the audit work on the major lines of business. These major lines of business
are Shopping Centres, Snozone and Group/Central. These are included within individual IFRS 8 “Operating Segments”
segments as disclosed in note 2 to the Group financial statements.
The businesses subject to a full scope audit or specified audit procedures account for 99% (2021: 98%) of the Group’s
net assets, 93% (2021: 100%) of the Group’s revenue and 98% of the Group’s profit (2021: 100% of the Group’s loss).
All investment properties consolidated in Group accounts have been included within the scope of our work. On the
Luton entity, which has been deconsolidated during the year, we have performed analytical review procedures. The
businesses subject to a full scope audit or specific audit procedures were also selected to provide an appropriate basis for
undertaking audit work to address the key audit matters. Our audit work was executed at levels of materiality applicable
to each individual entity which were between 4% and 90% (2021: 4% and 90%) of Group materiality, which corresponds to
component materiality of between £0.16 million and £3.24 million (2021: between £0.12 million and £3.04 million).
At the Group level we also tested the consolidation process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material misstatement of the aggregated financial information of the
remaining components not subject to full scope audit or specific audit procedures.
7.2 Our consideration of the control environment
We have obtained an understanding of the relevant controls such as those relating to the financial reporting cycle, and
those in relation to our key audit matters. We tested the operating effectiveness of key revenue controls and obtained
controls reliance in this business cycle as part of our year-end audit.
Our audit approach was fully substantive except for the revenue business cycle where we adopted a controls reliance
approach and relied upon the operating effectiveness of the key controls.
7.3 Our consideration of climate-related risks
In planning our audit, we have considered the impact of climate change on the Group’s operations and impact on its financial
statements. As a part of our audit, we have obtained management’s climate-related risk assessment and held discussions with
management to understand the process of identifying climate-related risks, the determination of mitigating actions and the
impact on the Group’s financial statements. The Directors has assessed that there is currently no material impact arising from
climate change on the judgements and estimates determining the valuations within the financial statements.
We performed our own assessment of the potential impact of climate change on the Group’s account balances and
classes of transaction and did not identify any reasonably possible risks of material misstatement. We particularly
considered how climate change risks could impact the assumptions, such as capital expenditure, made in the valuation of
investment property. Our procedures also included reading disclosures included in the Strategic Report and Task Force
on Climate-Related Financial Disclosures (TCFD) to consider whether they are materially consistent with the financial
statements and our knowledge obtained in the audit.
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Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Independent Auditor’s Report
To the members of Capital & Regional Plc
8. Other information
The other information comprises the information included in the annual report other than the financial statements and
our auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as
the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent Company’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the
Group’s remuneration policies, key drivers for Directors’ remuneration, bonus levels and performance targets;
• the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error that was
approved by the Board on 23 February 2023;
• results of our enquiries of management, the Directors and the audit committee about their own identification and
assessment of the risks of irregularities, including those that are specific to the Group’s sector;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures
relating to:
− identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of
non-compliance;
− detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged
fraud; and
− the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
• the matters discussed among the audit engagement team and relevant internal specialists, including tax, valuations,
IT, and industry specialists regarding how and where fraud might occur in the financial statements and any potential
indicators of fraud.
150150
Stock code: CAL As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for
fraud and identified the greatest potential for fraud in the significant judgements and assumptions used in the valuation
of investment properties. In common with all audits under ISAs (UK), we are also required to perform specific procedures
to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing
on provisions of those laws and regulations that had a direct effect on the determination of material amounts and
disclosures in the financial statements. The key laws and regulations we considered in this context included the UK
Companies Act, REIT legislation, Listing Rules, RICS standards and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial
statements but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material
penalty. These included the Group’s environmental regulations.
11.2. Audit response to risks identified
As a result of performing the above, we identified valuation of investment properties as a key audit matter related to the
potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes
the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management, the audit committee and external legal counsel concerning actual and potential litigation
and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
• reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries
and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a
potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the
normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and the parent Company and their environment
obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the
Directors’ report.
151151
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Independent Auditor’s Report
To the members of Capital & Regional Plc
13. Corporate Governance Statement
The Listing Rules require us to review the Directors' statement in relation to going concern, longer-term viability and that
part of the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
• the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting
and any material uncertainties identified set out on page 42;
• the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and
why the period is appropriate set out on page 43;
• the Directors' statement on fair, balanced and understandable set out on page 142;
• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out
on page 44–51;
• the section of the annual report that describes the review of effectiveness of risk management and internal
control systems set out on pages 117-118; and
• the section describing the work of the audit committee set out on pages 114–118.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent Company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’
remuneration have not been made or the part of the Directors’ remuneration report to be audited is not in agreement
with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by Directors on 19 January 1998 to audit
the financial statements for the year ending 25 December 1997 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and reappointments of the firm is 26 years, covering the years
ending 25 December 1997 to 30 December 2022.
15.2. Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in
accordance with ISAs (UK).
152152
Stock code: CAL 16. Use of our report
This report is made solely 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 this report, or for
the opinions we have formed.
As required by the Financial Conduct Authority
(FCA) Disclosure Guidance and Transparency
Rule (DTR) 4.1.14R, these financial statements
form part of the European Single Electronic
Format (ESEF) prepared Annual Financial
Report filed on the National Storage
Mechanism of the UK FCA in accordance
with the ESEF Regulatory Technical Standard
(‘ESEF RTS’). This auditor’s report provides no
assurance over whether the annual financial
report has been prepared using the single
electronic format specified in the ESEF RTS.
Matthew Hall FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
20 April 2023
153153
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Governance Financials
Contents
Financials
156 Consolidated Income Statement
156 Consolidated Statement of Comprehensive Income
157 Consolidated Balance Sheet
158 Consolidated Statement of Changes in Equity
159 Consolidated Cash Flow Statement
160 Notes to the Financial Statements
193 Company Balance Sheet
194 Statement of Changes in Equity
195 Notes to the Company’s Separate Financial Statements
199 Glossary of Terms
201 Five Year Review (Unaudited)
202 Portfolio Information (Unaudited)
203 EPRA Performance Measures (Unaudited)
205 Advisers and Corporate Information
206 Shareholder Information
154154
Stock code: CAL
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022
155
Financials Consolidated Income Statement
For the year to 30 December 2022
Continuing operations
Revenue
Other income
Expected credit loss
Cost of sales
Gross profit
Administrative costs
Loss on revaluation of investment properties
Other gains and losses
Profit/(loss) on ordinary activities before financing
Finance income
Finance costs
Profit/(loss) before tax
Tax
Profit/(loss) for the year from continuing operations
Profit/(loss) for the period from period from discontinued operations
Profit/(loss) for the year
Continuing operations
Basic earnings per share
Diluted earnings per share
Continuing and discontinued operations
Basic earnings per share
Diluted earnings per share
EPRA earnings per share
EPRA basic earnings per share
EPRA diluted earnings per share
Note
3
3
6
4
10a
6
5
5
6
8a
16
2a
9a
9a
9a
9a
2022
£m
60.6
–
0.4
(32.8)
28.2
(10.9)
(19.6)
15.6
13.3
1.1
(9.4)
5.0
0.3
5.3
6.8
12.1
3.2p
3.2p
7.3p
7.2p
5.3p
5.3p
2021
Restated1
£m
54.6
2.5
(1.8)
(27.9)
27.4
(12.7)
(35.0)
14.0
(6.3)
4.6
(12.9)
(14.6)
(3.1)
(17.7)
(6.4)
(24.1)
(14.8)p
(14.8)p
(20.0)p
(20.0)p
3.5p
3.5p
1 2021 comparative figures have been restated to present discontinued operations separately. Discontinued operations are discussed in note 16.
2021 comparative figures have also been restated for a prior year adjustment to the treatment of rent concessions as explained in note 1.
Consolidated statement of comprehensive income
For the year to 30 December 2022
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income/(expense) for the year
2022
£m
12.1
–
12.1
2021
Restated
£m1
(24.1)
–
(24.1)
1 2021 comparative figures have been restated for a prior year to the treatment of expected credit loss as explained in note 1.
The results for the current and preceding year are fully attributable to equity shareholders.
The EPRA alternative performance measures used throughout this report are industry best practice performance
measures established by the European Public Real Estate Association (EPRA). They are defined in the Glossary to
the Financial Statements. EPRA Earnings and EPRA EPS are shown in Note 9 to the Financial Statements. EPRA net
reinstatement value (NRV), net tangible assets (NTA) and net disposal value (NDV) are shown in Note 25 to the Financial
Statements. We consider EPRA NTA to be the most relevant measure for our business.
156156
Stock code: CAL
Consolidated balance sheet
At 30 December 2022
Non-current assets
Investment properties
Plant and equipment
Right of use assets
Fixed asset investments
Receivables
Total non-current assets
Current assets
Receivables
Cash and cash equivalents
Assets classified as held for sale
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax
Lease liabilities
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Net current assets
Non-current liabilities
Bank loans
Other payables
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Capital redemption reserve
Own shares reserve
Retained earnings
Equity shareholders’ funds
Basic net assets per share
EPRA net reinstatement value per share
EPRA net tangible assets per share
EPRA net disposal value per share
2022
£m
320.1
1.8
21.6
–
9.6
353.1
14.4
55.5
–
69.9
423.0
(31.0)
(1.0)
(3.0)
–
(35.0)
34.9
(181.8)
–
(27.1)
(208.9)
(243.9)
179.1
16.9
1.7
60.3
–
–
100.2
179.1
105.9p
103.4p
103.4p
115.1p
2021
Restated1
£m
376.4
1.7
24.5
0.1
8.8
411.5
19.6
58.5
146.4
224.5
636.0
(29.3)
(1.1)
(2.8)
(165.8)
(199.0)
25.5
(238.2)
(0.3)
(30.1)
(268.6)
(467.6)
168.4
16.5
266.1
60.3
4.4
–
(178.9)
168.4
101.8p
101.6p
101.6p
101.0p
Note
10
11
12
14
14
15
16
2b
17
27
16
18a
17
27
2b
20
20
22
25
25
25
1 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions as explained in Note 1.
These financial statements were approved by the Board of Directors, authorised for issue and signed on their behalf on
20 April 2023 by:
Stuart Wetherly
Group Finance Director
157157
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
Consolidated Statement of Changes in Equity
For the year to 30 December 2022
Share
capital
£m
11.2
Share
premium1
£m
244.3
Merger
reserve2
£m
60.3
Capital
redemption
reserve1
£m
4.4
–
–
–
–
–
5.3
16.5
–
–
–
–
–
–
0.4
16.9
–
–
–
–
–
21.8
266.1
–
–
–
(266.1)
–
–
1.7
1.7
–
–
–
–
–
–
60.3
–
–
–
–
–
–
–
60.3
–
–
–
–
–
–
4.4
–
–
–
(4.4)
–
–
–
–
Own
shares
reserve3
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£m
(155.4)
Total
equity
£m
164.8
(24.1)
(24.1)
–
–
(24.1)
(24.1)
0.6
–
–
(178.9)
0.6
–
27.1
168.4
12.1
12.1
–
–
12.1
12.1
270.5
0.5
(4.0)
–
100.2
–
0.5
(4.0)
2.1
179.1
Balance at 30 December 20205
Loss for the year5
Other comprehensive income for
the year
Total comprehensive expense for
the year5
Credit to equity for equity-settled
share-based payments (Note 21)
Dividends paid, net of scrip
Shares issued, net of costs (Note 20)
Balance at 30 December 2021
Profit for the year
Other comprehensive income for
the year
Total comprehensive income for
the year
Capital reduction4
Credit to equity for equity-settled
share-based payments (Note 21)
Dividends paid, net of scrip
Shares issued, net of costs (Note 20)
Balance at 30 December 2022
Notes:
1
2
These reserves are not distributable.
The merger reserve of £60.3 million arose on the Group’s capital raising in 2009 which was structured so as to allow the Company to claim merger
relief under section 612 of the Companies Act 2006 on the issue of ordinary shares. The merger reserve is available for distribution to shareholders.
3 Own shares relate to shares purchased out of distributable profits and therefore reduce reserves available for distribution.
4
In June 2022 a capital reduction was completed transferring the remaining reserves from share premium and the capital redemption reserve to
retained earnings.
5 2020 comparative figures have been restated for prior year adjustment to the treatment of expected credit loss as explained in note 1.
158158
Stock code: CAL
Consolidated Cash Flow Statement
For the year to 30 December 2022
Note
23
10
Operating activities
Net cash from operations
Distributions received from fixed asset investments
Interest paid
Interest received
Income tax paid
Cash flows from operating activities
Investing activities
Disposal of investment properties
Purchase of plant and equipment
Capital expenditure on investment properties
Cash flows from investing activities
Financing activities
Dividends paid (net of scrip) including withholding tax
Bank loans drawn down
Bank loans repaid
Derivatives settled
Loan arrangement costs
Issue of ordinary shares (net of costs)
Fixed payments under head leases
Cash flows from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Transfer from/(to) assets classified as held for sale
Cash and cash equivalents excluding assets classified as held for sale
15
2022
£m
25.3
–
(8.0)
–
(0.1)
17.2
59.1
(0.7)
(10.6)
47.8
(1.2)
4.0
(70.8)
–
(1.6)
–
(0.4)
(70.0)
(5.0)
58.5
53.5
2.0
55.5
2021
£m
25.1
0.7
(14.4)
–
(2.5)
8.9
11.3
(0.4)
(8.3)
2.6
–
35.0
(84.9)
(0.2)
(0.7)
27.1
(1.4)
(25.1)
(13.6)
84.1
70.5
(12.0)
58.5
159159
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
Notes to the Financial Statements
For the year to 30 December 2022
1 Significant Accounting Policies
General information
Capital & Regional plc is a public company limited by shares domiciled and incorporated in England, United Kingdom
under the Companies Act 2006. The address of the registered office is 22 Chapter Street, London, SW1P 4NP. The Group
is a specialist real estate investor and asset manager, focused on dominant in-town community shopping centres. Further
information on the Group’s operations is disclosed in Note 2a and the operating and financial reviews.
Basis of accounting
The financial statements comprise the consolidated income statement, the consolidated statement of comprehensive
income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash
flow statement and notes 1 to 32. They are prepared on the historical cost basis except for the revaluation of certain
properties and financial instruments that are measured at revalued amounts or fair values at the end of the reporting
year, as explained in the accounting policies below. Other than as noted in the “Accounting developments and changes”
section below, the accounting policies have been applied consistently to the results, other gains and losses, assets,
liabilities, income and expenses.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or liability, the Group takes into
account the characteristics of the asset or liability if market participants would take those characteristics into account
when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in
these financial statements is determined on such basis, except for share-based payments that are within the scope of
IFRS 2, leasing transactions that are within the scope of IFRS 16, and measurements that have some similarities to fair
value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 inputs are inputs other than quoted prices included within Level 1, that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 inputs are unobservable inputs for the asset or liability.
The financial statements are presented in pounds sterling because that is the currency of the primary economic
environment in which the Group operates. Foreign operations are included in accordance with the accounting policies set
out below.
Statement of compliance
The consolidated financial statements have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards as adopted
by the United Kingdom.
Accounting developments and changes
The accounting policies used in these financial statements are consistent with those applied in the last annual financial
statements, as amended where relevant to reflect the adoption of new standards, amendments and interpretations
which became effective during the year.
Prior year restatement
In October 2022, the IASB finalised the agenda decision approved by the IFRS Interpretation Committee (IFRS IC) on
‘Lessor Forgiveness of Lease Payments (IFRS 9 and IFRS 16)’. The agenda decision addresses the accounting from the
perspective of the lessor, and whether to apply the derecognition requirements in IFRS 9 or the lease modification
requirements in IFRS 16 when accounting for the rent concession.
When the lease payments are forgiven, the Committee concluded that the lessor should apply the derecognition
requirements in IFRS 9 to the operating lease receivables and apply the lease modification requirements in IFRS 16 to
future lease payments, including accrued lease payments, as discussed further below.
In applying the requirements in IFRS 9, the lessor should derecognise the operating lease receivable, including any
associated ECL allowance.
In adopting the above treatment the Group has restated the 2021 results for a prior year adjustment. This restatement
derecognises the rent free debtor associated with rent concessions granted specifically relating to Covid 19, which has an
associated knock-on impact on the investment properties balance, given valuations are adjusted for such amounts. The
Group has also restated the 2021 expected credit loss to include amounts billed relating to future periods in line with IFRS
9. This impacts retained earnings brought forward and expected credit loss during the year by £2.3 million. The Group’s
Adjusted Profit for 2022 is £0.3 million higher than it would have been without this adjustment.
160160
Stock code: CAL 1 Significant Accounting Policies CONTINUED
The following table summarises the impact of the change in policy on the financial statements of the Group. The total
impact on net assets is £nil.
Consolidated income statement
Revenue
Expected credit loss
Adjusted profit
Loss on revaluation of investment properties
Loss for the period
Consolidated balance sheet
Investment properties
Receivables
Basic earnings per share (continuing operations)
Diluted earnings per share (continuing operations)
Consolidated statement of changes in equity
Retained earnings balance at 30 December 2020
Loss for the year
30 December
2021
£m
(1.6)
2.3
0.7
1.6
2.3
30 December
2021
£m
1.6
(1.6)
1.9
1.9
(2.3)
2.3
New and revised standards issued but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS
Standards that have been issued but are not yet effective:
IFRS 17 Insurance Contracts including Amendments to IFRS 17
Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures—Sale
or Contribution of Assets between an Investor and its Associate or Joint Venture
Amendments to IFRS 3—References to the Conceptual Framework
Amendments to IAS 16—Property, Plant and Equipment—Proceeds before Intended Use
Amendments to IAS 37—Onerous Contracts—Cost of Fulfilling a Contract
Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 Annual Improvements to IFRS Standards 2018-2020
Amendments to IAS 1—Classification of Liabilities as Current or Non-current including Classification of Liabilities as
Current or Non-current
Amendments to IAS 12—Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Amendments to IAS 1 and IFRS Practice Statement 2—Disclosure of Accounting Policies
Amendments to IAS 8—Definition of Accounting Estimates
None of these standards are anticipated to have a material impact upon the Group’s results.
Critical accounting judgements
The preparation of financial statements requires the Directors to make the following judgement that may affect the
application of accounting policies.
Going concern
Under the UK Corporate Governance Code the Board needs to report whether the business is a going concern. In making
its assessment of Going Concern, the Group has considered the general risk environment and the specific risks that relate
to the Group and its sector. This has incorporated considering the current macro-economic inflationary pressures as well
as the ongoing impacts and speed of recovery from Covid-19 as well as the structural trends that were already under way
in the retail industry.
At 30 December 2022, the Group had total cash at bank on balance sheet of £52.1 million. Of the £52.1 million there was
£28 million held centrally outside of secured loan arrangements. This provides a significant cash contingency to cover any
reasonable disruption to operations in both the base and reasonable worst case scenarios that have been modelled for at
least the period of the next 18 months that is considered for going concern purposes.
161161
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials 1 Significant Accounting Policies CONTINUED
As part of the restructure of The Mall debt facility that completed in November 2021, the lender provided covenant
waivers that run until November 2023 and modifications to cash trap provisions that run until May 2023. The Group is
currently compliant with all covenant tests on the facility and hence not reliant on the waivers or modifications. On the
Ilford facility, as noted, the Group had covenant waivers that ran until January 2023 and has improved covenant terms
that extend beyond the end of 2024. The Mall loan facility matures in January 2027 with a one-year conditional extension
option. The Ilford loan matures in March 2024 with an 18-month conditional extension option dependent upon meeting a
debt yield and net loan to value covenant test in Q4 of 2023.
On Hemel Hempstead, the Group drew down on a new £4 million loan facility in early July 2022. The Group’s forecasts
demonstrate a reasonable level of covenant headroom on the Loan to Value and Projected Interest Cover Ratio tests that
are relevant to the new agreement.
All of the Group’s asset backed loan facilities are ring-fenced within their own SPV structures with no recourse to Capital
& Regional plc and no cross-default provisions. The Group continues to work with the lenders on its Luton loan facility on
a disposal of the investment. While this is likely to realise less than the value of the net debt outstanding, due to the ring-
fenced SPV structure, the net liability of Capital & Regional plc is effectively capped at nil.
In making its assessment of Going Concern, the Group has run updated forecasts on both a base case and downside
basis. In the latter, the Group has sensitised rent collection to 90% collection, reduced car park and ancillary income
by 10% and removed any contribution from Snozone to reflect how a downturn in expected trading, such as might be
caused by a further wave of Government restrictions, could impact cashflows. The Group has also considered a 15%
reduction in property valuations. The Group’s headroom on The Mall and Hemel Hempstead is sufficient to withstand this
level of decline.
On Ilford, such a decline would breach the LTV covenant level however the cash earmarked for capital expenditure
investment into the asset would be sufficient to theoretically cure although in such a scenario the Group would seek to
agree with the lender to invest the funds to develop the asset. The same position applies in respect of the LTV condition
that is required in order to trigger the 18-month extension to the loan’s maturity. Ultimately given the ring-fenced nature
of the loan facility if the Group decided not to cure any breach and could not agree a compromise with the lender it could,
in extremis, effectively surrender the asset and not face any recourse to the Group. The Group’s cashflow forecasts over
the period considered for Going Concern purposes assume it is a net investor into Ilford to fund the masterplan initiatives
and hence such a scenario would not reduce the amount of cash available to the Group.
In coming to its Going Concern conclusion, the Group has also considered, but not relied upon, other options available
to generate or conserve additional cash, to reduce debt levels and to fund value accretive capital expenditure and letting
initiatives. These include but are not limited to: the potential disposal of assets either in whole or part; the opportunity to
reduce or suspend dividend payments (or offer a Scrip alternative); and the potential raising of additional funds.
Having due regard to all of the above matters and after making appropriate enquiries, the Directors have a reasonable
expectation that the Group and the Company have adequate resources to continue in operational existence for
the foreseeable future. Therefore, the Board continues to adopt the Going Concern basis in preparing the financial
statements.
Key sources of estimation uncertainty
The preparation of financial statements requires the Directors to make estimates that may affect the reported amounts
of assets and liabilities, income and expenses. The following are the key sources of estimation uncertainty that have the
most significant effect on the amounts recognised in the financial statements:
Property valuation
The valuation of the Group’s property portfolio is inherently subjective due to, among other factors, the individual nature
of each property, its location and the expected future rental revenues from that particular property. As a result, the
valuations the Group places on its property portfolio are subject to a degree of uncertainty and are made on the basis of
assumptions which may not prove to be accurate. We are now in a phase of the valuation cycle where there is persistent
negative sentiment and low transactional evidence as such greater judgement has been applied.
The investment property valuation contains a number of assumptions upon which the valuation of the Group’s properties
as at 30 December 2022 was based. The assumptions on which the property valuation reports have been based include,
but are not limited to, matters such as the tenure and tenancy details for the properties, the condition of the properties,
prevailing market yields and comparable market transactions. These assumptions are market standard and accord with
the Royal Institution of Chartered Surveyors (RICS) Valuation – Professional Standards UK 2014 (revised January 2022).
If the assumptions upon which the valuation was based prove to be inaccurate, this may have an impact on the value
of the Group’s investment properties, which could in turn have an effect on the Group’s financial position and results.
Estimated rental values and equivalent yields are considered key assumptions. Note 10c provides sensitivity analysis
estimating the impact that changes in the estimated rental values or equivalent yields would have on the Group’s
property valuations.
162162
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL 1 Significant Accounting Policies CONTINUED
Increase in credit risk
When measuring expected credit loss the Group uses reasonable and supportable forward looking information, which
is based on assumptions for the future movement of different economic drivers and how these drivers will affect each
other. In assessing whether the credit risk of an asset has significantly increased the Group takes into account qualitative
and quantitative reasonable and supportable forward looking information. Probability of default constitutes a key input in
measuring expected credit losses (ECL). Probability of default is an estimate of the likelihood of default over a given time
horizon, the calculation of which includes historical data, assumptions and expectations of future conditions. Sensitivity of
the expected credit loss to probability of default is disclosed in note 14.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries at
30 December. Control of subsidiaries is achieved where the Company has the power over the investee, is exposed, or has
rights, to variable return from its involvement with the investee and has the ability to use its power to affect its returns.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement
from the effective date of acquisition or up to the effective date of disposal. The reporting year for all material
subsidiaries and affiliates ends on 31 December and their financial statements are consolidated from this date.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Subsidiaries
The results of subsidiaries acquired or disposed of during the year are included from the effective date of acquisition or
up to the effective date of disposal. Accounting practices of subsidiaries which differ from Group accounting policies are
adjusted on consolidation. All intra group transactions, balances, income and expenses are eliminated on consolidation.
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated into sterling at exchange rates approximating to the exchange rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance
sheet date are translated to sterling at the exchange rate ruling at that date and differences arising on translation are
recognised in the income statement.
Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation,
are translated into sterling at the exchange rates ruling at the balance sheet date. The operating income and expenses of
foreign operations are translated into sterling at the average exchange rates for the year. Significant transactions, such as
property sales, are translated at the foreign exchange rate ruling at the date of each transaction. 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 =
€1.1317 (2021: £1 = €1.1918). The principal exchange rate used for the income statement is the average rate for the year:
£1 = €1.1733 (2021: £1 = €1.1727).
Property, plant and equipment
Group/central
Property, plant and equipment (PPE) is stated at cost, net of depreciation and any provision for impairment. Depreciation
is provided on all PPE, other than investment properties and land, on a straight-line basis over their expected useful lives:
• Leasehold improvements – over the term of the lease
• Fixtures and fittings – over three to five years
• Motor vehicles – over four years
Snozone
PP&E is stated at cost or valuation, net of depreciation and any provision for impairment. Cost includes the original
purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Depreciation is provided so as to write off the cost of the assets, less their estimated residual values, on a straight-line
basis over their expected useful lives, which are given below as a general rule, however as part of the day to day running
of the business there may be some assets which fall outside of this, these assets are treated the same and are always
depreciated on a straight-line basis over their expected useful lives. The expected useful lives of the assets are reassessed
periodically in the light of experience.
Snow Equipment 20% – 100% or 1 – 5 years
Computer Equipment 20% – 50% or 2 – 5 years
Office Equipment 20% – 50% or 2 – 5 years
Operations Equipment 20% – 50% or 2 – 5 years
163163
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials 1 Significant Accounting Policies CONTINUED
Property portfolio
Investment properties
Investment properties are properties owned or leased which are held either for long-term rental income or for capital
appreciation or both. Investment property is initially recognised at cost (including directly related transaction costs) and
is revalued at the balance sheet date to fair value, being the market value determined by professionally qualified external
valuers, with changes in fair value being included in the income statement. Valuations are generally carried out twice a
year. In accordance with IAS 40 Investment Property, no depreciation is provided in respect of investment properties.
Leasehold properties
Leasehold properties that are leased to tenants under operating leases are classified as investment properties or
development properties, as appropriate, and included in the balance sheet at fair value.
Capital expenditure
Refurbishment expenditure in respect of major works is capitalised. Renovation and refurbishment expenditure of a
revenue nature is expensed as incurred. 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 capitalised subject to meeting certain criteria related to the degree of time spent on and the nature of
specific projects.
Property transactions
Acquisitions and disposals are accounted for at the date of legal completion. Investment properties are reclassified as
held for sale once it is highly probable that a transaction will be completed within the next 12 months.
Leases
The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term. Incentives and costs associated with entering into tenant leases
are amortised on a straight-line basis over the term of the lease.
The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-
of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for
short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets
and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease
payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is
more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by using the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise fixed lease payments (including in-substance
fixed payments), less any lease incentives receivable.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
• The lease term has changed or there is a significant event or change in circumstances resulting in a change in the
assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised
lease payments using a revised discount rate.
• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an
unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case
a revised discount rate is used).
A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a
revised discount rate at the effective date of the modification.
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or
before the commencement day, less any lease incentives received and any initial direct costs.
164164
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL 1 Significant Accounting Policies CONTINUED
The right of use assets are amortised on a straight line basis over the length of each lease. To assess for impairment of
the right of use asset the directors have considered whether the group can reasonably expect to recover the costs of each
lease through operation. No indication of impairment has been deemed to exist.
Fixed asset investments
Fixed asset investments are stated at cost, together with subsequent capital contributions, less provisions for any
impairment in value.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes party to the
contractual provisions of the instrument.
Financial assets
Financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss”
(FVTPL),”fair value through other comprehensive income (FVOCI)” and “amortised cost”. The classification depends on the
nature and purpose of the financial assets and is determined at the time of initial recognition.
Effective interest rate method
The effective interest rate method is a method of calculating the amortised cost of a debt instrument and of allocating
the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees and points paid or received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where
appropriate, a shorter period, to the net carrying amount in initial recognition.
Debt instruments that have fixed or determinable payments that are not quoted in an active market are classified as
amortised cost. These are measured at amortised cost using the effective interest method less any impairment. Interest
income is recognised by applying the effective interest rate, except for short term receivables when the recognition of
interest would be immaterial.
Trade receivables
Trade receivables are carried at the original invoice amount less provision for impairment (credit losses). Discounts and
similar allowances are recorded on an accrual basis, consistent with the recognition of the related sales, using estimates
based on existing contractual obligations, historical trends and the Group’s experience. Long-term accounts receivables
are discounted to take into account the time value of money, where material.
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses (“ECLs”).
The Group calculates impairment of trade receivables using the expected credit loss model as required by IFRS 9. ECLs
are calculated by: (a) identifying scenarios in which a loan or receivable defaults; (b) estimating the cash shortfall that
would be incurred in each scenario if a default were to happen; (c) multiplying that loss by the probability of the default
happening; and (d) summing the results of all such possible default events. The Group has adopted the simplified
“provision matrix” approach to calculate expected credit losses on trade receivables. The Group loss allowance is based
on the expected credit loss as calculated using the provision matrix approach and a forward looking component based on
individual tenant profiles. The Group considers a financial asset to be in default when the borrower is unlikely to pay its
credit obligations to the Group in full. The Group writes off trade receivables when there is no reasonable expectation of
recovery, receivables are written off after six months.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and demand deposits and other short-term highly liquid investments
that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Restricted cash balances relate to amounts held by the group on behalf of tenants including ring fenced service charge
funds and tenant deposits.
Financial liabilities
Borrowings
Borrowings are initially measured at fair value net of transaction costs. Borrowings are subsequently measured at
amortised cost using the effective interest method with interest expense recognised on an effective yield basis.
Derivative financial instruments
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each balance sheet date. The fair value of forward foreign exchange contracts is
calculated by reference to spot and forward exchange rates at the balance sheet date. The fair value of interest rate
swaps is calculated by reference to appropriate forecasts of yield curves between the balance sheet date and the maturity
of the instrument. Changes in fair value are included as finance income or finance costs in the income statement.
Derivative financial instruments are classified as non-current when they have a maturity of more than twelve months and
are not intended to be settled within one year. As the group does not apply hedge accounting, the provisions of IFRS 9 do
not apply.
165165
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials 1 Significant Accounting Policies CONTINUED
Trade payables
Trade payables are carried at fair value with any gains or losses arising on remeasurement recognised in the income
statement.
Taxation
Income tax on the profit for the year comprises current and deferred tax. Current tax is the tax payable on the taxable
income for the year and any adjustment in respect of previous years. Deferred tax is provided in full using the balance
sheet liability method on timing differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax is determined using tax rates that have been
enacted or substantively enacted by the reporting date and are expected to apply when the asset is realised or the liability
is settled.
No provision is made for timing differences (i) arising on the initial recognition of assets or liabilities, other than on a
business combination, that affect neither accounting nor taxable profit and (ii) relating to investments in subsidiaries to
the extent that they will not reverse in the foreseeable future.
Employee benefits
Pension costs
Pension liabilities, all of which relate to defined contribution schemes, are charged to the income statement as incurred.
Share-based payments
Equity settled share-based payments are measured at fair value at the date of grant. The fair values of the LTIP are
calculated using Monte Carlo simulations and the Black-Scholes model as appropriate. The fair values are dependent
on factors including the exercise price, expected volatility, period to exercise and risk-free interest rate. Market related
performance conditions are reflected in the fair values at the date of grant and are expensed on a straight-line basis over
the vesting period. Non-market related performance conditions are not reflected in the fair values at the date of grant.
At each reporting date, the Group estimates the number of shares likely to vest under non-market related performance
conditions so that the cumulative expense will ultimately reflect the number of shares that do vest. Where awards are
cancelled the remaining fair value is expensed immediately.
Own shares
Own shares held by the Group are shown as a deduction from shareholders’ funds and included in other reserves. The
cost of own shares is transferred to retained earnings when shares in the underlying incentive schemes vest. The shares
are held in an Employee Share Ownership Trust.
Revenue
The Group recognises revenue on an accruals basis, when the amount of revenue can be reliably measured and it is
probable that future economic benefits will flow to the Group.
Gross rental income – Gross rental income is rental income, adjusted for tenant incentives, recognised on a straight-line
basis over the term of the underlying lease. Contingent rents, being lease payments that are not fixed at the inception
of a lease, for example turnover rents, are recorded as income in the periods in which they are earned. Lease incentives
are capitalised and amortised over the length of the lease. Amortisation is offset against rental income. Contracted rental
income is recognised on satisfaction of the Group’s performance obligation for each lease; to provide a readily useable
lettable space.
The Group receives payments from tenants based on a billing schedule, as established in each lease contract. Primarily
tenants are billed in advance of the period being billed. Trade receivables are recognised when the right to consideration
becomes unconditional on issue of invoice. As amounts are billed in advance, contract liabilities arise when the period
billed extends beyond the reporting date. These are recorded as deferred income. Contract liabilities are recognised as
revenue as the period progresses.
Ancillary income – Ancillary income comprises rent and other income from short term tenancies of mobile units, car park
income and other sundry income and is recognised over the period of the lettings and contracts.
Service charge – Service charge income represents recharges of the running costs of the shopping centres made to
tenants and is recognised on an accruals basis, when the amount of revenue can be reliably measured and it is probable
that future economic benefits will flow to the Group.
Management fees – Management fees are recognised, in line with the property management contracts, in the year to
which they relate. They include income in relation to services provided by Capital & Regional Property Management
Limited (“CRPM”) to associates or third party assets for asset and property management, project co-ordination,
procurement, and management of service charges and directly recoverable expenses.
166166
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL 1 Significant Accounting Policies CONTINUED
Dividend and interest income – Dividend income from investments is recognised when the shareholders’ right to receive
payment has been established. Interest income is accrued on a time basis, by reference to the principal outstanding and
at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount.
Snozone income – Revenue arises from the operation of indoor ski operations. Revenue represents the amounts
received from customers (excluding sales taxes) for admissions tickets, membership, retail, food and beverage sales and
sponsorship. Ticket revenue is recognised at point of entry. Revenue from the sale of memberships is deferred and then
recognised over the period that the membership is valid. Retail and food and beverage sales revenues are recognised at
the point of sale. Sponsorship revenue is recognised over the relevant contract term.
Government grants
Government grants relate to the coronavirus job retention scheme and are not recognised until there is reasonable
assurance that the Group will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises
as expenses the related costs for which the grants are intended to compensate. Government grants that are receivable
as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the
Group with no future related costs are recognised in profit or loss in the period in which they become receivable, offset
against the expense they are intended to compensate where applicable.
Finance costs
All borrowing costs are recognised under Finance costs in the income statement in the year in which they are incurred.
Finance costs also include the amortisation of loan issue costs and any loss in the value of the Group’s wholly-owned
interest rate swaps.
Operating segments
Following the reclassification of Hemel Hempstead and Luton as ‘Held for Sale’ as at 30 December 2021 the segment of
Shopping Centres – Managed Assets that included those assets in the prior year is no longer relevant. As a consequence
the Group’s operating segments are now Shopping Centres, Snozone and Group/Central. Shopping Centres includes
the results of the Group’s centres at Ilford and Hemel Hempstead (from 11 April 2022 being the date an agreement to
buy back its loan was reached) and those centres within The Mall loan facility, namely Blackburn (until it was sold on 9
August 2022), Maidstone, Walthamstow and Wood Green. The Group deconsolidated its interest in Luton on 20 May
2022 reflecting changes that took place on that date to constitution of the Luton entities including the appointment of an
independent director with specific rights regarding the proposed sale process for the asset.
Group/Central includes management fee income, Group overheads incurred by Capital & Regional plc, Capital & Regional
Property Management and other subsidiaries and the interest expense on the Group’s central borrowing facility.
The Shopping Centres segments derive their revenue from the rental of investment properties. The Snozone and Group/
Central segments derive their revenue from the operation of indoor ski slopes and the management of property funds
or schemes respectively. The split of revenue between these classifications satisfies the requirement of IFRS 8 to report
revenues from different products and services. Depreciation and charges in respect of share-based payments represent
the only significant non-cash expenses. Prior period comparatives have also been restated as a result.
Adjusted Profit
Adjusted Profit is the total of Contribution from wholly-owned assets, the profit from Snozone and property management
fees less central costs (including interest, excluding non-cash charges in respect of share-based payments) after tax.
Adjusted Profit excludes revaluation of properties, profit or loss on disposal of properties or investments, gains or losses
on financial instruments and adjusting one-off items for example gains from debt repurchase. Results from Discontinued
Operations are included in adjusted profit up until the point of disposal or reclassification as held for sale. Further detail
on the use of Adjusted Profit and other Alternative Performance Measures is provided within the Financial Review.
Adjusted profit within Snozone is Leisure EBITDA. Leisure EBITDA is an alternative performance measure for the Snozone
business. It excludes Depreciation, Amortisation, (notional) Interest, Tax and non-operational one-off items. It includes
rent expense, based on contractual payments adjusted for rent free periods. This provides a measure of Snozone trading
performance which removes the profiling impact of IFRS 16 that would otherwise see a significantly higher charge in early
years of a lease and significantly lower net charge in later years.
A reconciliation of Adjusted Profit to the statutory result is provided in Note 2a and, on a per share basis, in Note 9, where
EPRA earnings figures are also provided.
167167
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials 2a Operating segments
Year to 30 December 2022
Rental income from external sources
Property and void costs1
Net rental income
Net interest expense
Snozone income/Management fees2
Management expenses
Depreciation
Variable overhead
Adjusted Profit/(loss)
Revaluation of properties
Profit on disposal
Snozone depreciation and
amortisation
Notional interest (net of rent expense
within EBITDA)
Gain on financial instruments
Long-term incentives
Tax credit
Other items
Gain on debt repurchase
Profit/(loss)
Total assets
Total liabilities
Net assets/(liabilities)
1
Includes expected credit loss.
Shopping
Centres
– Investment
Assets
£m
Shopping
Centres
– Managed
Assets
(discontinued
operations)
£m
Snozone
£m
Group/
Central
£m
34.7
(11.2)
23.5
(9.3)
–
–
–
–
14.2
(19.6)
1.5
–
–
1.1
–
–
1.6
12.5
11.3
365.5
(210.6)
154.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6.8
–
6.8
–
–
–
–
–
–
–
13.0
(11.6)
–
–
1.4
–
–
(2.1)
0.8
–
–
–
–
–
0.1
27.1
(28.9)
(1.8)
–
–
–
–
3.3
(6.7)
(0.3)
(1.6)
(5.3)
–
–
–
–
–
(0.5)
0.3
(0.6)
–
(6.1)
30.4
(4.4)
26.0
Note
3b
3b
6,16
6,16
3b
3b
Total
£m
34.7
(11.2)
23.5
(9.3)
16.3
(18.3)
(0.3)
(1.6)
10.3
(19.6)
1.5
(2.1)
0.8
1.1
(0.5)
0.3
7.8
12.5
12.1
423.0
(243.9)
179.1
2 Asset management fees of £2.5 million charged from the Group’s Capital & Regional Property Management entity to wholly owned assets have
been excluded from the table above.
168168
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL Shopping
Centres
– Investment
Assets
£m
Shopping
Centres
– Managed
Assets5
£m
Snozone
£m
Group/
Central
£m
Note
3b
3b
2a Operating segments CONTINUED
Year to 30 December 2021 (Restated)6
Rental income from external sources
Property and void costs1
Net rental income
Net interest expense
Snozone income/Management fees2
Other income4
Management expenses
Depreciation
Variable overhead
Adjusted Profit/(loss)
Revaluation of properties
Loss on disposal
Snozone depreciation and
amortisation
Notional interest (net of rent expense
within EBITDA)
Gain on financial instruments
Long-term incentives
Tax charge
Prior period tax3
Other items
Gain on debt repurchase
(Loss)/Profit
Total assets
Total liabilities
Net assets/(liabilities)
1
Includes expected credit loss.
34.1
(12.4)
21.7
(10.8)
–
–
–
–
–
10.9
(27.8)
(1.4)
–
–
2.7
–
–
–
–
–
(15.6)
14.0
(6.0)
8.0
(5.4)
–
–
–
–
–
2.6
(19.8)
(1.1)
–
–
3.2
–
–
–
–
–
(15.1)
–
–
–
–
6.8
2.5
(8.5)
–
–
0.8
–
–
(2.5)
0.5
–
–
0.2
1.4
(0.7)
–
(0.3)
3b
3b
425.6
(267.9)
157.7
146.4
(165.8)
(19.4)
29.0
(31.2)
(2.2)
Total
£m
48.1
(18.4)
29.7
(16.4)
9.2
2.5
(15.0)
(0.3)
(0.9)
8.8
(47.6)
(2.5)
(2.5)
0.5
5.9
(0.9)
0.2
(1.9)
(2.5)
18.4
(24.1)
636.0
(467.6)
168.4
–
–
–
(0.2)
2.4
(6.5)
(0.3)
(0.9)
(5.5)
–
–
–
–
–
(0.9)
–
(3.3)
(1.8)
18.4
6.9
35.0
(2.7)
32.3
2 Asset management fees of £3.6 million charged from the Group’s Capital & Regional Property Management entity to wholly owned assets have
been excluded from the table above.
3 £1.4 million in Snozone relates to a reclaim of VAT
4 Other income includes £2.5 million insurance proceeds
5
Shopping Centres – Managed Assets includes £(6.4) million from discontinued operations
6 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions and expected credit loss as
explained in note 1.
169169
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials 2b Reconciliations of reportable revenue, assets and liabilities
Revenue and other income
Rental income from external sources
Other revenue
Service charge income
Management fees
Snozone income
Revenue for reportable segments
Elimination of inter-segment revenue
Revenue and other income per consolidated income statement
Revenue and other income by country
UK
Spain
Revenue and other income per consolidated income statement
Note
2a
2a
2a
2a
3
Year to
30 December
2022
£m
Year to
30 December
2021
Restated1
£m
34.7
–
10.5
3.4
13.0
61.6
(1.0)
60.6
57.1
3.5
60.6
34.5
2.5
9.6
2.4
6.8
55.8
(1.2)
54.6
52.5
2.1
54.6
1 2021 comparative figures have been restated to present discontinued operations separately. Discontinued operations are discussed in note 16.
2021 comparative figures have also been restated for a prior year adjustment to the treatment of rent concessions as explained in note 1.
Assets
Investment assets
Snozone
Group/Central
Assets classified as held for sale
Total assets of reportable segments and Group assets
Liabilities
Investment assets
Snozone
Group/Central
Liabilities directly associated with assets classified as held for sale
Total liabilities of reportable segments and Group liabilities
Net assets by country
UK
Spain
Group net assets
Note
2a
2a
2022
£m
365.5
27.1
30.4
–
423.0
(210.6)
(28.9)
(4.4)
–
(243.9)
177.8
1.3
179.1
2021
£m
425.6
29.0
35.0
146.4
636.0
(267.9)
(31.2)
(2.7)
(165.8)
(467.6)
167.8
0.6
168.4
170170
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL 3 Revenue
Gross rental income
Car Park and ancillary income
Income from external sources
Service charge income
External management fees
Snozone income
Other income
Revenue and other income per consolidated income statement
Year to
30 December
2022
£m
Year to
30 December
20211
£m
Note
26.7
8.0
34.7
10.5
2.4
13.0
–
60.6
30.3
7.1
37.4
9.6
0.8
6.8
2.5
57.1
2a
2b
2a
2a
2b
1 2021 comparative figures have been restated to present discontinued operations separately. Discontinued operations are discussed in note
16. 2021 comparative figures have also been restated for a prior year adjustment to the treatment of rent concessions as explained in note 1.
Management fees represent revenue earned by Capital & Regional Plc and the Group’s wholly owned Capital & Regional Property Management
subsidiary. Fees charged to wholly owned assets have been eliminated on consolidation.
4 Cost of sales
Property and void costs
Service charge costs
Snozone expenses
Total cost of sales
Year to
30 December
2022
£m
Year to
30 December
20211
£m
(10.4)
(9.5)
(12.9)
(32.8)
(11.7)
(8.4)
(7.8)
(27.9)
1 2021 comparative figures have been restated to present discontinued operations separately. Discontinued operations are discussed in note 16.
5 Finance income and costs
Finance income
Gain in fair value of financial instruments:
– Interest rate swaps
Total finance income
Finance costs
Amortisation of deferred loan arrangement fees
Interest payable on bank loans and overdrafts
Other interest payable
Lease liabilities
Total finance costs
Year to
30 December
2022
£m
Year to
30 December
20211
£m
1.1
1.1
(0.6)
(8.3)
(0.1)
(0.4)
(9.4)
4.6
4.6
(0.8)
(10.6)
(0.2)
(1.3)
(12.9)
1 2021 comparative figures have been restated to present discontinued operations separately. Discontinued operations are discussed in note 16.
171171
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
6 Profit/(loss) before tax
The profit/(loss) before tax has been arrived at after charging/(crediting) the following items:
Variable lease payments not capitalised under IFRS 16
Expected credit loss
Other gains and losses (see below)
Depreciation of plant and equipment
Depreciation of right of use assets
Staff costs
Auditor’s remuneration for audit services (see below)
Year to
30 December
2022
£m
Year to
30 December
20211
£m
Note
14
11
12
7
0.5
(0.4)
(15.6)
0.6
2.0
13.8
0.5
0.3
1.8
(14.0)
0.5
2.2
11.0
0.4
1 2021 comparative figures have been restated to present discontinued operations separately. Discontinued operations are discussed in note 16.
2021 comparative figures have also been restated for a prior year adjustment to the treatment of expected credit loss as explained in note 1.
Other gains and losses
Discount on purchase of loan net of costs
Gain on settlement of insurance debtor
Gain/(loss) on disposal of investment property
Foreign exchange loss
Impairment of investment
Investment income
Total other gains and losses
Auditor’s remuneration
The analysis of the Auditor’s remuneration is as follows:
Note
16
Year to
30 December
2022
£m
Year to
30 December
2021
£m
12.5
1.6
1.5
–
–
–
15.6
16.7
–
(2.5)
(0.2)
(0.7)
0.7
14.0
Fees payable to the Company’s Auditor and its associates for the audit of the Company’s annual
financial statements
Fees payable to the Company’s Auditor and its associates for other services to the Group – the
audit of the Company’s subsidiaries
Total audit fees for the Company and its subsidiaries
Fees payable to the Company’s Auditor and its associates for other services to the Group –
reporting to parent company auditors
Audit related assurance services - Review of Interim Report
Other assurance services
Total non-audit fees
Total fees paid to Auditor and their associates
Year to
30 December
2022
£’000
Year to
30 December
2021
£’000
263
112
375
26
59
–
85
460
231
88
319
26
52
–
78
397
172172
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
7 Staff costs
Salaries
Discretionary bonuses
Share-based payments
Social security
Other pension costs
Note
21
Year to
30 December
2022
£m
Year to
30 December
2021
£m
9.7
2.0
0.5
12.2
1.3
0.3
13.8
7.7
1.3
0.6
9.6
1.1
0.3
11.0
Staff costs amounting to £nil (2021: £nil) have been capitalised as development costs during the year.
Staff numbers
The monthly average number of employees (including Executive Directors), being full-time equivalents, employed by the
Group during the year was as follows:
CRPM/PLC
Shopping centres
Snozone
Total staff numbers
Year to
30 December
2022
Number
Year to
30 December
2021
Number1
41
49
158
248
40
56
113
209
1 2021 comparative staff numbers have been restated to include Snozone Madrid employees.
The monthly average number of total employees (including Executive Directors) employed within the Group during the
year was 364 (CRPM – 41, Shopping centres – 63, Snozone – 260) compared to 300 in 2021 (CRPM – 44, Shopping centres
– 65, Snozone – 191). These do not agree to the table above as they are average total employees not adjusted for full time
equivalents.
There were no employees (2021: nil) employed by the Company during 2022.
The Group has received £nil in funds from HMRC for furloughed employees between January to December 2022 (2021:
£0.2m comprising CRPM - £nil, Shopping centres - £nil, Snozone - £0.2m).
8 Tax
8a Tax credit/(charge)
Current tax
UK corporation tax
Adjustments in respect of prior years
Total current tax credit/(charge)
Deferred tax
Prior year adjustments
Origination and reversal of temporary timing differences
Total deferred tax
Total tax credit/(charge)
£nil (2021: £nil) of the tax charge relates to items included in other comprehensive income.
Year to
30 December
2022
£m
Year to
30 December
2021
£m
(0.4)
0.4
–
–
0.3
0.3
0.3
(1.0)
(2.6)
(3.6)
(0.1)
0.6
0.5
(3.1)
173173
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
8 Tax CONTINUED
8b Tax credit/(charge) reconciliation
Profit/(loss) before tax on continuing operations
Expected tax (charge)/credit at 19% (2021: 19%)
REIT exempt income and gains
Non-allowable expenses and non-taxable items
Excess tax losses
Other adjustments
Prior year adjustments
Effect of tax rate change on deferred tax
Actual tax credit/(charge)
Year to
30 December
2022
£m
Note
Year to
30 December
2021
Restated1
£m
5.0
(1.0)
2.1
(1.4)
–
–
0.4
0.2
0.3
(14.6)
2.7
(1.9)
(0.1)
(0.3)
(1.0)
(2.7)
0.2
(3.1)
8a
1 2021 comparative figures have been restated to present discontinued operations separately. Discontinued operations are discussed in note 16.
2021 comparative figures have also been restated for a prior year adjustment to the treatment of expected credit loss as explained in note 1.
8c Deferred tax
The Finance Act 2020 enacted provisions maintaining the main rate of UK corporation tax at 19% for the years starting
1 April 2020 and 1 April 2021. On 10 June 2021 Finance Act 2021 received Royal Assent and enacted provisions
maintaining the main corporation tax rate at 19% for the year commencing 1 April 2022 and increasing the rate to 25%
for the year commencing 1 April 2023.
Consequently the UK corporation tax rate at which deferred tax is booked in the Financial Statements is 25%
(December 2021: 19%).
The Group has recognised a deferred tax asset of £1.1 million (30 December 2021: £0.7m). The group has recognised
deferred tax assets for the non-REIT profit entities in respect of head lease payments and capital allowances to the extent
that future matching taxable profits are expected to arise.
No deferred tax asset has been recognised in respect of temporary differences arising from investments or investments
in associates in the current or prior years as it is not certain that a deduction will be available when the asset crystallises.
The Group has £12.1 million (30 December 2021: £24.1 million) of unused revenue tax losses, all of which are in the UK.
No deferred tax asset has been recognised in respect of these losses due to the unpredictability of future taxable profit
streams and other reasons which may restrict the utilisation of the losses (30 December 2021: £nil). The Group has
unused capital losses of £24.2 million (30 December 2021: £24.9 million) that are available for offset against future gains
but similarly no deferred tax has been recognised in respect of these losses owing to the unpredictability of future capital
gains and other reasons which may restrict the utilisation of the losses. The losses do not have an expiry date.
8d REIT compliance
The Group converted to a group REIT on 31 December 2014. Therefore, the Group does not pay UK corporation tax on
the profits and gains from qualifying rental business in the UK provided it meets certain conditions. Non-qualifying profits
and gains of the Group continue to be subject to corporation tax as normal. In order to retain group REIT status certain
ongoing criteria must be maintained. The main criteria are as follows:
• at the start of each accounting year, the value of the assets of the property rental business plus cash must be at least
75% of the total value of the Group’s assets;
• at least 75% of the Group’s total profits must arise from the property rental business; and
• at least 90% of the Group’s UK property rental profits as calculated under tax rules must be distributed.
The Directors intend that the Group should continue as a group REIT for the foreseeable future, with the result that
deferred tax is no longer recognised on temporary differences relating to the property rental business.
174174
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
9 Earnings per share
The European Public Real Estate Association (“EPRA”) has issued recommendations for the calculation of earnings per
share information as shown in the following tables:
9a Earnings per share calculation
Year to 30 December 2022
Year to 30 December 2021
Note
Profit
EPRA
Adjusted
Profit
Loss3
EPRA
(Restated)3
Adjusted
Profit
(Restated)3
Profit (£m)
Profit/(loss) for the year
Revaluation loss on investment
properties (net of tax)
(Profit)/Loss on disposal (net of tax)
Changes in fair value of financial
instruments1
Share-based payments
Other items2
Profit/(loss) (£m)
Earnings per share (pence)
Diluted earnings per share (pence)
9b
9b
9b
2a
12.1
–
–
–
–
–
12.1
7.3
7.2
12.1
19.6
(1.5)
(1.1)
–
(20.3)
8.8
5.3
5.3
12.1
19.6
(1.5)
(1.1)
0.5
(19.3)
10.3
6.2
6.1
(24.1)
(24.1)
(24.1)
–
–
–
–
–
(24.1)
(20.0)
(20.0)
47.6
2.5
(5.9)
–
(15.9)
4.2
3.5
3.5
47.6
2.5
(5.9)
0.9
(12.2)
8.8
7.3
7.3
£6.8 million (30 Dec 2021: £(6.4) million) of the current earnings related to discontinued operations.
Weighted average number of shares (m)
Ordinary shares in issue
Own shares held
Basic
Dilutive contingently issuable shares
and share options
Diluted
Note
21
Year to
30 December
2022
Year to
30 December
2021
166.3
–
166.3
2.4
168.7
119.9
–
119.9
0.3
120.2
1 2021 includes £0.2 million cost related to the termination of interest rate swap liabilities within The Mall loan facility.
2 Other Items in 2022 includes the £12.5 million gain on repurchase of Hemel Hempstead debt at a discount and £6.8m gain on the deconsolidation
of Luton. Other items in 2021 includes the £18.4 million gain on repurchase of debt at a discount and other non-operating transactional costs.
3 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions as explained in note 1.
2021 comparative figures have also been restated for a prior year adjustment to the treatment of expected credit loss as explained in note 1.
At the end of the year, the Group had nil (2021: nil) share options and contingently issuable shares granted under
share-based payment schemes that could potentially dilute earnings per share in the future, but which have not been
included in the calculation because they are not dilutive or the conditions for vesting have not been met.
175175
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials 9 Earnings per share CONTINUED
9b Headline earnings per share
Headline earnings per share is an alternative performance measure as required by the JSE Listing Requirements. It has
been calculated and presented in line with the JSE guidance.
Profit (£m)
Profit/(loss) for the year
Revaluation loss on investment properties (including tax)
(Profit)/Loss on disposal (net of tax)
Other items
Headline earnings
Weighted average number of shares (m)
Ordinary shares in issue
Own shares held
Dilutive contingently issuable shares and share options
Year to 30 December 2022
Year to 30 December 2021
(Restated)1
Basic
Diluted
Basic
Diluted
12.1
19.6
(1.5)
(20.3)
9.9
166.3
–
–
166.3
12.1
19.6
(1.5)
(20.3)
9.9
166.3
–
2.4
168.7
(24.1)
47.6
2.5
(15.9)
10.1
119.9
–
–
119.9
(24.1)
47.6
2.5
(15.9)
10.1
119.9
–
0.3
120.2
Headline Earnings per share (pence) Basic/Diluted
6.0
5.9
8.4
8.4
1 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions as explained in note 1. 2021
comparative figures have also been restated for a prior year adjustment to the treatment of expected credit loss as explained in note 1.
10 Investment properties
10a Wholly owned properties
Cost or valuation
At 30 December 2020
Capital expenditure (excluding capital contributions)
Disposal2
Valuation deficit1
Transfer to held for sale
At 30 December 2021 (Restated)3
Capital expenditure (excluding capital contributions)
Disposals2
Valuation gain/(deficit)1
Remeasurement of head lease
Transfer from held for sale
At 30 December 2022
Freehold
investment
properties
£m
Leasehold
investment
properties
£m
Total
property
assets
£m
Note
280.1
1.6
(13.3)
(31.1)
(10.2)
227.1
3.2
–
(3.8)
–
10.2
236.7
256.0
7.3
–
(16.5)
(97.5)
149.3
5.8
(54.9)
(16.2)
(0.6)
–
83.4
536.1
8.9
(13.3)
(47.6)
(107.7)
376.4
9.0
(54.9)
(20.0)
(0.6)
10.2
320.1
16
16
1 £19.6 million per Income statement and Note 2a includes letting fee amortisation adjustment of £(0.4) million (2021: £0.1million).
2
This represents the net book value including tenant incentives.
3 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions as explained in note 1.
On 18 May 2022 the Group completed the acquisition of its debt in respect of the Marlowes shopping centre in Hemel
Hempstead as a consequence the Freehold property was transferred back from held for sale. On 23 May 2022 the Group
exchanged on the sale of its Mall shopping centre in Blackburn and as such the Leasehold property was transferred to
held for sale at that date.
As part of the agreement to run a consensual sale process changes to the constitution of the Luton entities were made
including the appointment of an independent director with specific rights regarding the sale process. These changes took
effect from 23 May 2022 and the effective loss of control that they triggered have resulted in the Group deconsolidating
its interest in Luton from that date.
In May 2022, the Group exchanged contracts for the sale of The Mall, Blackburn to the retail arm of the Adhan Group of
Companies for £40 million, representing a premium to the December 2021 valuation of £38.2 million. The sale completed
on 9 August 2022 delivering cash proceeds of £39.4 million.
176176
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
10 Investment properties CONTINUED
On 11 July 2022, the Group completed the sale of land for residential development at its 17&Central community
shopping centre in Walthamstow to Long Harbour for £21.65 million. The head lease at The Mall Walthamstow has been
remeasured as a result of an extension of the lease term effective 23 June 2022.
10b Property assets summary
Investment properties at fair value as reported by the valuer
Add back of lease liabilities
Unamortised tenant incentives on investment properties
IFRS Property Value
30 December
2022
£m
30 December
2021
(Restated)1
£m
322.8
5.4
(8.1)
320.1
380.1
6.0
(9.7)
376.4
1 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions as explained in note 1.
As described in note 1 summary of significant accounting policies, where the valuation obtained for investment property
is net of all payments to be made, it is necessary to add back the lease liability to arrive at the carrying amount of
investment property at fair value.
10c Valuations
External valuations at 30 December 2022 were carried out on all of the gross property assets detailed in the table above.
The fair value was £322.8 million (2021: £380.1 million). External valuations were carried out on all of the property assets
detailed in the table above. The valuations at 30 December 2022 were carried out by independent qualified professional
valuers from CBRE Limited and Knight Frank LLP in accordance with RICS standards. These valuers are not connected with
the Group and their fees are charged on a fixed basis that is not dependent on the outcome of the valuations.
Real estate valuations are complex and derived from data that is not widely publicly available and involves a degree of
judgement. For these reasons, the valuations are classified as Level 3 in the fair value hierarchy as defined by IFRS 13.
The valuations are sensitive to changes in rent profile and yields.
The Group considers all of its investment properties to fall within “Level 3”, as defined in Note 1. The table below
summarises the key unobservable inputs used in the valuation of the Group’s wholly owned investment properties at
30 December 2022:
Estimated rental value £ per sq ft
Equivalent yield %
Market Value
£m
322.8
Low
9.5
Portfolio
17.7
High
28.3
Low
7.0
Portfolio
8.6
High
17.5
Sensitivities
The following table illustrates the impact of reasonably possible changes in key unobservable inputs (in isolation) on the
fair value of the Group’s properties:
Impact on valuations of 5% change
in estimated rental value
Impact on valuations of 25bps
change in equivalent yield
Impact on valuations of 50bps
change in equivalent yield
Increase
£m
13.0
Decrease
£m
(12.8)
Increase
£m
(10.8)
Decrease
£m
11.8
Increase
£m
(21.2)
Decrease
£m
24.3
Impact on valuations of 100bps
change in equivalent yield
Increase
£m
(40.0)
Decrease
£m
52.3
177177
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
11 Plant and equipment
Cost
At the start of the year
Additions
Disposals
At the end of the year
Accumulated depreciation
At the start of the year
Additions
Charge for the year
Eliminated on disposal
At the end of the year
Carrying amount
At the end of the year
12 Leases
Right of use Assets
Cost
At the start of the year
Additions
Remeasurement
At the end of the year
Accumulated depreciation
At the start of the year
Charge for the year
Disposals
At the end of the year
Carrying value
At the end of the year
30 December
2022
£m
30 December
2021
£m
5.8
0.7
–
6.5
(4.1)
–
(0.6)
–
(4.7)
1.8
5.9
0.7
(0.8)
5.8
(4.1)
(0.2)
(0.6)
0.8
(4.1)
1.7
30 December
2022
£m
30 December
2021
£m
28.9
–
(0.8)
28.1
(4.4)
(2.1)
–
(6.5)
14.4
3.3
11.2
28.9
(2.2)
(2.2)
–
(4.4)
21.6
24.5
Lease commitments relate to the leasing of the Group’s registered office and the leases of the Snozone business on
its Castleford, Milton Keynes and Madrid sites. The lease at Snozone Basingstoke expired as at 30 December 2022, the
leases at Milton Keynes and Castleford were revalued following the annual lease payable review. During 2022 the Group
signed an extension of its registered office lease of one year. The lease liability was remeasured as a result. During 2021
the group signed amendments to the lease agreements for the Castleford and Milton Keynes sites within its Snozone
business, resulting in the remeasurement of the right of use asset and the related lease liability. Additions for that year
relate to the lease acquired on acquisition of Snowzone Madrid.
The maturity analysis of lease liabilities is presented in note 27.
Amounts recognised in profit and loss
Depreciation expense on right–of–use assets
Interest expense on lease liabilities
Year ended
30 December
2022
£m
Year ended
30 December
2021
£m
2.0
1.4
2.2
1.0
178178
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
13 Subsidiaries
A list of the subsidiaries of the Group, including the name, country of incorporation, and proportion of ownership interest
is given in Note F to the Company financial statements.
14 Receivables
Non current:
Non-financial assets
Deferred tax
Interest rate swap
Unamortised tenant incentives
Unamortised rent free periods
Current:
Financial assets
Trade receivables (net of allowances)
Other receivables
Accrued income
Current financial assets
Non-financial assets
Prepayments
Unamortised tenant incentives
Unamortised rent free periods
Current non-financial assets
30 December
2022
£m
30 December
2021
(restated)1
£m
1.1
1.7
2.1
4.7
9.6
7.7
–
1.5
9.2
4.0
0.5
0.7
5.2
14.4
0.7
–
2.1
6.0
8.8
8.9
4.2
0.9
14.0
4.0
0.4
1.2
5.6
19.6
1 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions as explained in note 1.
Credit losses are calculated at an amount equal to lifetime expected credit losses. The expected credit losses on trade
receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis
of the debtor’s current financial position, adjusted for factors that are specific to the debtor and an assessment of both
the current as well as the forecast direction of conditions at the reporting date.
There has been no change in the estimation techniques or significant assumptions made during the current reporting
period.
The group writes off a trade receivable when there is information indicating that there is no realistic prospect of recovery.
Changes in expected credit loss allowance arise from increase in calculated expected credit loss, as well as amounts
written off. The group does not recognise revenue where collectability is not reasonably expected. In the case of rental
income this relates to tenants who are insolvent and closed.
The following table details the risk profile of trade receivables based on the Group’s provision matrix.
2022
Not past due
1–30 days
31–60 days
61–90 days
>90 days
Expected credit loss rate (%)
Estimated total gross carrying
amount at default (£m)
Lifetime ECL (£m)
Adjustment for forward looking
estimate
Total expected credit loss
39.3
42.9
52.3
76.4
55.2
1.8
(0.7)
(0.3)
(1.0)
2.8
(1.3)
–
(1.3)
–
–
–
–
–
–
–
–
3.6
(1.9)
–
(1.9)
Total
47.41
8.2
(3.9)
(0.3)
(4.2)
179179
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
14 Receivables CONTINUED
2021
Expected credit loss rate (%)
Estimated total gross carrying
amount at default (£m)
Lifetime ECL (£m)
Adjustment for forward looking
estimate
Total expected credit loss
Not past due
1–30 days
31–60 days
61–90 days
>90 days
19.4
35.5
31.5
60.4
45.0
4.2
(0.8)
(0.8)
(1.6)
2.7
(1.0)
–
(1.0)
0.3
(0.1)
–
(0.1)
0.1
(0.1)
–
(0.1)
6.8
(3.0)
–
(3.0)
Total
35.31
14.1
(5.0)
(0.8)
(5.8)
1
This represents the total lifetime expected credit loss as a percentage of total group receivables.
Allowances for credit loss
At the start of the year
Additional allowances created
Utilised during the year
Unused amounts reversed
Transfer to held for sale
At the end of the year
The following table illustrates the impact of a 5% change in the rate of expected credit loss.
30 December
2022
£m
30 December
2021
£m
5.8
1.1
(0.6)
(2.1)
–
4.2
8.4
3.7
(1.8)
(3.6)
(0.9)
5.8
Expected credit loss
15 Cash and cash equivalents
Cash at bank and in hand
Security deposits held in rent accounts
Other restricted balances
Provision at
30 December
2022
£m
Impact of a
5% increase
£m
Impact of a
5% decrease
£m
4.2
0.4
(0.4)
30 December
2022
£m
30 December
2021
£m
52.1
0.8
2.6
55.5
53.7
0.7
4.1
58.5
Cash at bank and in hand include amounts subject to a charge against various borrowings and may therefore not be
immediately available for general use by the Group. Of the cash at bank and in hand £28.1 million was held on short
term deposit and immediately available free of any restrictions or conditions at the year end date (30 December 2021
- £32.5 million). The remaining balances are subject to meeting conditions or having passed through relevant waterfall
calculations within relevant loan facilities. All of the above amounts at 30 December 2022 were held in Sterling other than
£0.6 million which was held in Euros (30 December 2021: £0.6 million).
180180
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
16 Assets and liabilities held for sale
As at 30 December 2021, the Group concluded that Hemel Hempstead and Luton, met the criteria to be reclassified as
‘Held for Sale’. This conclusion was reached as the Group, in conjunction with the respective lenders had decided to seek
to dispose of whole or part of the investments as at that date.
The Marlowes, Hemel Hempstead - on 11 April 2022 the Group reached agreement with the respective lender to acquire
its outstanding debt liabilities of £24 million for a discounted amount of £11.8 million. The acquisition subsequently
completed on 18 May 2022. The Group has reclassified its interest in Hemel Hempstead from Held for Sale as of
11 April 2022. A book value of £10.2 million was transferred back at this date being the fair value of £10.5m plus tenant
incentives of -£0.3 million. The transaction has resulted in an increase to Net Asset Value of approximately £12.5 million
being the amount of the discount less related transaction costs.
The Mall, Luton - The Group has been working closely with the lender on Luton to explore a disposal of the majority or
all of the investment or asset. This process was completed on 16 March 2023 as discussed in note 31. As part of the
agreement to run a consensual sale process changes to the constitution of the Luton entities were made including the
appointment of an independent director with specific rights regarding the sale process. Two existing directors were
required to step down as part of the agreement. These changes took effect from 23 May 2022 and the effective loss
of control that they triggered have resulted in the Group deconsolidating its interest in Luton from that date. This has
increased the Group’s Net Asset Value by £6.8 million being the net liability at the point of deconsolidation.
The loss for the period from Luton up to the date of deconsolidation is broken down as follows:
Revenue
Expected Credit loss
Cost of sales
Gross profit
Loss on revaluation of investment properties
Other gains and losses
Loss on ordinary activities before financing
Finance income
Finance costs
Loss before tax
Tax credit/(charge)
Loss for the period
Period to
23 May
2022
£m
Year to
30 December
2021
£m
4.2
–
(1.4)
2.8
(2.8)
(0.3)
(0.3)
1.7
(1.7)
(0.3)
–
(0.3)
13.8
(0.8)
(5.5)
7.5
(12.6)
–
(5.1)
3.1
(4.4)
(6.4)
–
(6.4)
The gain on disposal as at 23 May 2022 is £6.8 million being the write off of the liability held for sale as at
30 December 2021.
During the period, Luton Limited Partnership generated £2.5 million (2021: £5.4 million) of net operating cash flows, paid
£1.3 million (2021: £3.2 million) in respect of investing activities and paid £4.8 million (2021: £1.0 million) in respect of
financing activities.
181181
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials 17 Trade and other payables
Amounts falling due after one year:
Financial liabilities
Accruals
Other creditors
Non-derivative financial liabilities
Amounts falling due within one year:
Financial liabilities
Trade payables
Accruals
Other creditors
Non-derivative financial liabilities
Non-financial liabilities
Deferred income
Other taxation and social security
30 December
2022
£m
30 December
2021
£m
–
–
–
–
2.4
10.4
11.6
24.4
5.8
0.8
31.0
0.3
–
0.3
0.3
1.4
8.0
11.0
20.4
7.3
1.6
29.3
The average age of trade payables is 11 days (2021: 9 days). No amounts incur interest (2021: £nil).
18 Bank loans
18a Summary of borrowings
The Group’s borrowings are arranged to ensure an appropriate maturity profile and to maintain short-term liquidity.
There were no defaults or other breaches of financial covenants that were not waived under any of the Group borrowings
during the current year or the preceding year.
Borrowings at amortised cost
Secured
Fixed and swapped loans
Variable rate loans
Total borrowings before costs
Unamortised issue costs
Total borrowings after costs
Analysis of total borrowings after costs
Current
Non-current
Total borrowings after costs
Note
18c
18c
30 December
2022
£m
30 December
2021
£m
179.0
4.0
183.0
(1.2)
181.8
–
181.8
181.8
239.0
–
239.0
(0.8)
238.2
–
238.2
238.2
On 7 July 2022, the Group drew down a new £4 million facility with BC Invest, a subsidiary of the Group’s strategic
residential partner, Far East Consortium. The new debt has been provided for an initial period of three years at a margin
of 5.95%. It is secured on the Marlowes Centre on a non-recourse basis.
182182
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
18 Bank loans CONTINUED
The movement of Secured loans in the year is summarised in the table below:
Secured bank loans at 30 December 2021
Repayment of The Mall B2 loan facility
Repayment of The Mall A loan facility
Drawdown of new Hemel Hempstead loan facility
£m
239.0
(35.0)
(25.0)
4.0
183.0
All loans are maintained in separate ring-fenced Special Purpose Vehicle (SPV) structures secured against the property
interests and other assets within each SPV. There is no recourse to other Group companies outside of the respective SPV
and no cross-default provisions.
18b Maturity of borrowings
Between one to two years
From two to five years
Greater than five years
Due after more than one year
Current
18c Interest rate profile of borrowings
Fixed and swapped rate borrowings
Between 2% and 3%
Between 3% and 4%
Between 6% and 7%
Variable rate borrowings
30 December
2022
£m
30 December
2021
£m
Note
39.0
4.0
140.0
183.0
–
183.0
–
39.0
200.0
239.0
–
239.0
18a
30 December
2022
£m
30 December
2021
£m
Note
–
179.0
–
179.0
4.0
183.0
39.0
165.0
35.0
239.0
–
239.0
18a
18a
183183
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
19 Financial instruments and risk management
19a Overview
Capital risk management
The capital structure of the Group consists of debt, which includes the borrowings disclosed in Note 17a; cash and cash
equivalents as disclosed in Note 15; and equity attributable to equity holders of the parent, comprising issued share
capital, reserves and retained earnings as disclosed in the Statement of changes in equity. For the purpose of calculating
gearing ratios, debt is defined as long and short-term borrowings (excluding derivatives) excluding unamortised issue
costs. Equity includes all capital and reserves of the Group attributable to equity holders of the Company.
The Group is not subject to externally imposed capital requirements. The risks associated with each class of capital are
also considered as part of the risk reviews presented to the Audit Committee and the Board.
Gearing ratios
Statutory
Debt before unamortised issue costs
Cash and cash equivalents
Group net debt
Equity
Net debt to equity ratio
Categories of financial (liabilities)/assets
Note
18a
15
30 December
2022
£m
30 December
2021
£m
183.0
(52.1)
130.9
179.1
73.1%
239.0
(53.7)
185.3
168.4
109.9%
Financial assets
Current receivables
Cash and cash equivalents
Financial assets
measured at amortised cost
Financial liabilities
Current payables
Current borrowings
Non-current payables
Non-current borrowings
Financial liabilities
measured at amortised cost
Interest rate swaps
Total financial liabilities
Note
14
15
17
18a
17
18a
14
2022
2021
Carrying
value
£m
Gain/(loss) to
income
£m
Gain
to equity
£m
Carrying
value
£m
Gain/(loss) to
income
£m
Gain
to equity
£m
9.2
55.5
64.7
(24.4)
–
–
(181.8)
(206.2)
1.7
(139.8)
–
–
–
–
–
–
(0.6)
(0.6)
1.1
0.5
–
–
–
–
–
–
–
–
–
–
14.0
58.5
72.5
(20.4)
–
(0.3)
(238.2)
(258.9)
–
(186.4)
–
–
–
–
–
–
(2.7)
(2.7)
7.6
4.9
–
–
–
–
–
–
–
–
–
–
Significant accounting policies
Details of the significant accounting policies adopted in respect of each class of financial asset, financial liability and equity
instrument, including the criteria for recognition, the basis of measurement and the basis on which income and expenses
are recognised, are disclosed in the significant accounting policies in Note 1.
Financial risk management objectives
Exposure to credit, interest rate and currency risks arise in the normal course of the Group’s business. The Group seeks to
minimise the effect of these risks by using derivative financial instruments to manage exposure to fluctuations in interest
rates. Such instruments are not employed for speculative purposes. The use of any derivatives is approved by the Board,
which provides guidelines on the acceptable levels of interest rate risk, credit risk, foreign exchange risk and liquidity risk,
and the ranges of hedging required against these risks.
184184
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
19 Financial instruments and risk management CONTINUED
19b Interest rate risk
The Group manages its interest rate risk through a combination of fixed rate loans and interest rate derivatives, typically
interest rate swaps or caps. The Group’s objective in managing its interest rate risk is to ensure that it always maintains
sufficient headroom to cover interest payments from anticipated cash flows and the directors regularly review the ratio of
fixed to floating rate debt to assist this process. The Group does not hedge account its interest rate derivatives and states
them at fair value with changes in fair value included in the income statement.
The following table shows a summary of the Group’s interest swap contracts and their maturity dates:
Loan facility Maturity date
Notional
principal
Contract fixed
rate
30 December
2022 fair value
£m
Asset/
(liability)
Interest rate swap
The Exchange, Ilford 8 March 2024
£39,000,000
1.00%
1.7
Sensitivity analysis
The following table shows the Group’s sensitivity to a 100bps increase or decrease in interest rates. To calculate the
impact on the income statement for the year the interest rates on all external floating rate interest bearing loans and
borrowings and interest earning cash, have been increased or decreased by 100bps. The income statement impact
includes the estimated effect of a 100bps decrease or increase in interest rates on the market values of interest rate
derivatives.
Floating rate loans and cash – gain/(loss)
Interest rate derivatives - gain/(loss)
Impact on the income statement - gain/(loss)
Impact on equity - gain/(loss)
100bps increase in interest rates 100bps decrease in interest rates
Year to
30 December
2022
£m
Year to
30 December
2021
£m
Year to
30 December
2022
£m
Year to
30 December
2021
£m
–
0.4
0.4
0.4
–
0.8
0.8
0.8
–
(0.4)
(0.4)
(0.4)
–
(0.8)
(0.8)
(0.8)
19c Credit risk
The Group’s principal financial assets are bank and cash balances, short-term deposits, trade and other receivables and
investments. Credit risk, being the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group, is primarily attributable to loans and trade and other receivables, which are principally amounts due
from tenants. Credit risk arising from tenants is mitigated as the Group receives most rents in advance, monitors credit
ratings for significant tenants and makes an allowance for expected credit loss that represents the estimate of potential
losses in respect of trade receivables. The Group’s expected credit loss allowance disclosed in Note 14 to the financial
statements is considered to represent the Group’s best estimate of the exposure to credit risk associated to trade
receivables, calculated in accordance with IFRS 9. The group recalculates expected credit losses each year, with reference
to forward looking information, changes in credit risk, including improvements, are identified as part of this process. The
Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase
in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in
credit risk before the amount becomes past due.
The credit risk on short-term deposits and derivative financial instruments is limited because the counterparties are
banks with high credit ratings assigned by international credit rating agencies. The Group is not exposed to significant
credit risk on its other financial assets.
185185
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials 19 Financial instruments and risk management CONTINUED
19d Liquidity risk
Liquidity risk reflects the risk that the Group will have insufficient resources to meet its financial liabilities as they
fall due. The day-to-day operations of the Group are largely funded through the items included in the breakdown
of Adjusted Profit included in Note 2a. The majority of income within Adjusted Profit is received quarterly, since the
inflows and outflows from net rental income and net interest payable generally coincide with English quarter days, and
property management fees are billed quarterly. As a result, the Group normally has sufficient funds to cover recurring
administrative expenses which occur throughout the year. Liquidity risk therefore arises principally from the need to
make payments for non-recurring items, such as tax payments and the close out of derivative financial instruments.
The Group’s objective in managing liquidity risk is to ensure that it has sufficient funds to meet all its potential liabilities as
they fall due, both in normal market conditions and when considering negative projections against expected outcomes, so
as to avoid the risk of incurring contractual penalties or damaging the Group’s reputation. The Group maintains a rolling
18 month forecast of anticipated recurring and non-recurring cash flows under different scenarios. This is compared to
expected cash balances and amounts available for drawdown on the Group’s core revolving credit facility to ensure that
any potential shortfalls in funding are identified and managed. The Group’s primary means of managing liquidity risk are
its cash reserves and its long-term debt facilities.
The following table shows the maturity analysis of non-derivative financial assets/(liabilities) at the balance sheet date
and, where applicable, their effective interest rates
2022
Financial assets
Current receivables
Cash and cash equivalents
Non-current receivables
Financial liabilities
Borrowings – bank loans
Borrowings – other loans
Current payables
Non-current payables
2021
Financial assets
Current receivables
Cash and cash equivalents
Non-current receivables
Financial liabilities
Borrowings – bank loans
Borrowings – other loans
Current payables
Non-current payables
Note
14
15
14
18a
18
16
16
Note
14
15
14
18a
18
16
16
Effective
interest rate
%
Less than
1 year
£m
1–2 years
£m
2–5 years
£m
More than
5 years
£m
n/a
0%
n/a
3.7%
n/a
n/a
n/a
9.2
55.5
–
64.7
–
–
(24.4)
–
(24.4)
–
–
–
–
(38.8)
–
–
–
(38.8)
–
–
–
–
(143.0)
–
–
–
(143.0)
–
–
–
–
–
–
–
–
–
Effective
interest rate
%
Less than
1 year
£m
1–2 years
£m
2–5 years
£m
More than
5 years
£m
n/a
0%
n/a
3.7%
n/a
n/a
n/a
14.0
58.5
–
72.5
–
–
(20.4)
–
(20.4)
–
–
–
–
–
–
–
(0.3)
(0.3)
–
–
–
–
(38.8)
–
–
–
(38.8)
–
–
–
–
(199.4)
–
–
–
(199.4)
Total
£m
9.2
55.5
–
64.7
(181.8)
–
(24.4)
–
(206.2)
Total
£m
14.0
58.5
–
72.5
(238.2)
–
(20.4)
(0.3)
(258.9)
186186
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
19 Financial instruments and risk management CONTINUED
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables
have been drawn up based on the undiscounted cash inflows/(outflows) of financial liabilities based on the earliest date
on which the Group can be required to pay, including both interest and principal cash flows.
2022
Borrowings – fixed
bank loans
Borrowings – variable
loans
Non-interest bearing
2021
Borrowings – fixed
bank loans
Borrowings – other
fixed loans
Non-interest bearing
(0.4)
(24.4)
(31.0)
Less than
1 year
£m
(8.9)
–
(20.4)
(29.3)
Less than
1 year
£m
1–2 years
£m
2–3 years
£m
3–4 years
£m
4–5 years
£m
(6.2)
(44.1)
(4.8)
(0.4)
–
(5.2)
(4.8)
(4.2)
–
(9.0)
(140.3)
–
–
(140.3)
(0.4)
–
(44.5)
1–2 years
£m
2–3 years
£m
3–4 years
£m
4–5 years
£m
(8.9)
–
(0.3)
(9.2)
(47.1)
–
–
(47.1)
(7.9)
–
–
(7.9)
(208.3)
–
–
(208.3)
More than
5 years
£m
–
–
–
–
More than
5 years
£m
–
–
–
–
Total
£m
(200.2)
(5.4)
(24.4)
(230.0)
Total
£m
(281.1)
–
(20.7)
(301.8)
The following tables detail the Group’s remaining contractual maturity for its derivative financial assets/(liabilities), all of
which are net settled, based on the undiscounted net cash inflows/(outflows). When the amount payable or receivable is
not fixed, it has been determined by reference to the projected interest rates as illustrated by the yield curves existing at
the reporting date.
2022
Net settled
Interest rate swaps
2021
Net settled
Interest rate swaps
Less than
1 year
£m
1–2 years
£m
2–3 years
£m
3–4 years
£m
4–5 years
£m
More than
5 years
£m
–
–
1.7
1.7
–
–
–
–
–
–
–
–
Less than
1 year
£m
1–2 years
£m
2–3 years
£m
3–4 years
£m
4–5 years
£m
More than
5 years
£m
–
–
–
–
–
–
–
–
–
–
–
–
Total
£m
1.7
1.7
Total
£m
–
–
187187
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
19 Financial instruments and risk management CONTINUED
19e Fair values of financial instruments
The fair values of financial instruments excluding receivables and payables together with their carrying amounts in the
balance sheet are as follows:
Note
18a
Financial liabilities not at fair value
through income statement
Sterling denominated loans
Total on balance sheet borrowings
Derivative assets/(liabilities) at fair
value through income statement
Interest rate caps
Interest rate swaps
Total on balance sheet derivatives
Notional
principal
£m
2022
Book value
£m
2022
Fair value
£m
2021
Book value
£m
2021
Fair value
£m
(183.0)
(183.0)
(164.6)
(164.6)
(239.0)
(239.0)
(240.0)
(240.0)
39.0
–
1.7
1.7
–
1.7
1.7
–
–
–
–
–
–
The fair value of borrowings has been estimated on the basis of quoted market prices. Details of the Group’s cash
and deposits are disclosed in Note 15 and their fair values are equal to their book values. All of the above financial
instruments are measured, subsequent to initial recognition, at fair value. All instruments were considered to be Level 2,
as defined in Note 1. There were no transfers between Levels in the year.
20 Share capital
Ordinary shares of 10p each
At the start of the year
Shares issued
Total called-up share capital
Number of shares
issued and fully paid
Nominal value of shares
issued and fully paid
2022
Number
2021
Number
165,399,863
3,792,055
169,191,918
111,819,626
53,580,237
165,399,863
2022
£m
16.5
0.4
16.9
2021
£m
11.2
5.3
16.5
The Company has one class of Ordinary shares which carry voting rights but no right to fixed income.
The Company maintains a Secondary Listing on the Johannesburg Stock Exchange (“JSE”) in South Africa. At 30 December
2022, 7,565,067 (2021: 7,690,574) of the Company’s shares were held on the JSE register. The table below outlines the
movements of shares in the year:
Brought forward at 31 December 2021
Capital reduction
Shares issued on 7 October 2022
Carried forward at 30 December 2022
Price per share
(Pence)
No. of shares
Total No. of
shares
Nominal value
(£m)
Share premium
(£m)
56.9
3,792,055
165,399,863
169,191,918
169,191,918
16.5
0.4
16.9
266.1
(266.1)
1.7
1.7
188188
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
21 Share-based payments
The Group’s share-based payments comprise the 2018 LTIP and the Executive Directors’ deferred bonus share scheme
(DBSS) and the combined incentive plan (CIP). Further details are disclosed in the Directors’ Remuneration Report. Awards
under the Combined Incentive Plan are nil cost deferred shares that vest in equal thirds on the third, fourth and fifth
anniversaries of the award date. The awards can be reduced by up to 100% if TSR performance does not achieve the
median of performance against the Company’s relevant peer group.
In accordance with IFRS 2, the fair value of equity-settled share-based payments to employees is determined at the date
of grant. For options with market based conditions these are calculated using either a Black-Scholes option pricing model
or a Monte Carlo simulation. For the elements of options that include non-market based conditions an initial estimate is
made of the likely qualifying percentage. This is subsequently updated at each reporting date.
Income statement charge
Equity-settled share-based payments – 2018 LTIP & CIP
The figures above exclude a National Insurance credit in the year of £nil (2021: credit of £nil).
Year to
30 December
2022
£m
Year to
30 December
2021
£m
0.5
0.6
Movements during the year
Outstanding at 30 December 2020
Granted during the year
Exercised during the year1
Forfeited during the year
Outstanding at 30 December 2021
Granted during the year
Exercised during the year1
Forfeited during the year
Outstanding at 30 December 2022
Exercisable at the end of the year
Number of Options
Deferred
Bonus Share
Scheme
5,636
–
(5,636)
–
–
–
–
–
–
–
LTIP
378,983
–
(37,341)
(341,642)
–
668,310
–
(66,006)
602,304
–
CIP
294,300
–
–
–
294,300
1,538,691
–
–
1,832,991
–
1
The weighted average share price of the options exercised under the deferred bonus scheme during 2021 was 58.0p. The weighted average share
price of the options exercised under the LTIP in 2021 was 60.0p.
All options in the tables above have a nil exercise price.
LTIP Assumptions
Share price at grant date
Exercise price
Expected volatility
Expected life including holding period (years)
Average life remaining including holding period (years)
Risk free rate
Expected dividend yield
Lapse rate
Fair value of award at grant date per share
April
2018
53.5p
0.0p
16%
5.00
4.30
1.14%
6.80%
0%
21p
June
2022
60.6p
0.0p
n/a
1.5
1.0
n/a
n/a
n/a
60.6p
Expected volatility is based on the historical volatility of the Group’s share price over the three years to the date of grant.
The 10 year UK Gilt rate at time of grant is used for estimating the risk free rate. Options are assumed to be exercised at
the earliest possible date.
The June 2022 awards were issued as a retention award, there are no performance conditions other than individuals need
to remain in valid employment for the 18 months period following the date of issue.
189189
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials 22 Own shares held
The own shares reserve represents the cost of shares in the Company purchased in the market. At 30 December 2022,
the Capital & Regional plc 2002 Employee Share Trust (the “ESOT”) held 31,876 (2021: 31,876) shares to assist the Group
in meeting the outstanding share awards under the schemes described above. The right to receive dividends on these
shares has been waived. The market value of these shares at 30 December 2022 was £19,763 (2021: £18,775).
23 Reconciliation of net cash from operations
Profit/(loss) for the year
Adjusted for:
Income tax (credit)/charge
Finance income
Finance expense
Finance lease costs (head lease)
Loss on revaluation of wholly owned properties
Depreciation of other fixed assets
Other gains
Decrease/(increase) in receivables
Increase in payables
Non-cash movement relating to share-based payments
Net cash from operations
Note
8a
Year to
30 December
2022
£m
Year to
30 December
2021
(Restated)1
£m
12.1
(24.1)
(0.3)
(1.1)
9.4
(0.3)
19.6
0.3
(22.4)
4.5
3.0
0.5
25.3
3.1
(7.6)
17.3
(1.1)
47.6
0.5
(14.0)
(2.5)
5.5
0.4
25.1
1 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions. Loss on revaluation of investment
properties has been reduced by £1.6 million and the increase in receivables has been reduced by the same amount as described in Note 1. 2021
comparative figures have also been restated for a prior year adjustment to the treatment of expected credit loss as explained in note 1.
24 Changes in liabilities arising from financing activities
2022
Bank loans
Lease liabilities
Total liabilities from financing activities
2021
Bank loans
Interest rate swaps
Lease liabilities
Total liabilities from financing activities
Note
18a
Note
18a
17
Non–cash changes
Financing
cash flows
Fair value
adjustments
Other
changes
30 December
2022
(68.4)
–
(68.4)
–
–
–
12.0
(2.8)
9.2
181.8
30.1
211.9
Non–cash changes
Financing
cash flows
Fair value
adjustments
Other
changes
30 December
2021
(69.7)
(0.2)
–
(69.9)
–
(8.8)
–
(8.8)
(116.0)
0.1
(6.7)
(122.6)
238.2
–
32.9
271.1
Opening
238.2
32.9
271.1
Opening
423.9
8.9
39.6
472.4
190190
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
25 Net assets per share
IFRS Equity attributable to
shareholders
Exclude fair value of financial
instruments
Include fair value of fixed
interest rate debt
Net asset value
Fully diluted number of shares
Net asset value per share
EPRA NRV
£m
30 Dec 2022
EPRA NTA
£m
EPRA NDV
£m
EPRA NRV
£m
30 Dec 2021
EPRA NTA
£m
EPRA NDV
£m
179.1
179.1
179.1
168.4
168.4
168.4
(1.7)
(1.7)
–
–
177.4
171.6
103.4
–
177.4
171.6
103.4
18.4
197.5
171.6
115.1
–
–
168.4
165.7
101.6
–
–
168.4
165.7
101.6
–
(1.0)
167.4
165.7
101.0
The number of ordinary shares issued and fully paid at 30 December 2022 was 169,191,918 (30 December 2021:165,399,863).
There have been no changes to the number of shares from 30 December 2022 to the date of this annual report.
26 Return on equity
Total comprehensive income/(expense) attributable to equity shareholders
Opening equity shareholders’ funds plus time weighted additions
Return on equity
30 December
2022
£m
30 December
2021
£m
12.1
168.9
7.2%
(24.1)
168.9
(14.3)%
27 Lease arrangements
The Group as lessee
At the balance sheet date, the Company had outstanding commitments for future minimum lease payments under
non-cancellable leases related to land and buildings, which fall due as set out below. These leases relate to its office
premises and the Snozone business’ Basingstoke, Castleford, Milton Keynes and Madrid sites, as well as two leasehold
investment properties.
Lease payments
Within one year
Between one and five years
After five years
2022
£m
(3.0)
(10.0)
(126.2)
(139.2)
2021
£m
(3.9)
(15.1)
(125.2)
(144.2)
Lease payments are denominated in Sterling and have an average remaining lease length of 48 years (2021: 31 years)
excluding head leases, rentals are fixed for an average of 2 years (2021: 2 years). The Group’s leasehold investment
property is variable based on a percentage of performance, with a minimum payment per year of £0.4 million (2021: £0.3
million). The head lease at The Mall Walthamstow has been remeasured as a result of an extension of the lease term to
250 years, effective 23 June 2022.
The Group as lessor
The Group leases out all of its investment properties under operating leases for average lease terms of 7 years (2021:
9 years) to expiry. The leasing arrangements are summarised in the portfolio information on page 202. The future
aggregate minimum rentals receivable under non-cancellable operating leases are as follows:
Unexpired
average
lease
term
Years
6.9
8.9
Less
than 1
year
£m
17.5
22.0
2 – 5
years
£m
36.1
49.2
6 – 10
years
£m
17.6
24.4
11 – 15
years
£m
4.3
11.0
16 – 20
years
£m
0.8
6.1
More
than 20
years
£m
9.7
32.5
Total
£m
86.0
145.2
30 December 2022
30 December 2021
28 Capital commitments
At 30 December 2022, the Group’s share of the capital commitments of its associates and wholly-owned properties was
£14.9 million (2021: £4.5 million) relating to capital expenditure projects for the development of the Group’s investment
properties. The Group also had £0.1 million relating to contractual commitments for the acquisition of property, plant and
equipment (2021: £0.1 million).
191191
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
29 Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note. Transactions between the Group and its associates, all of which occurred at normal
market rates, are disclosed below.
Kingfisher Limited Partnership (Redditch)
The Mall (Luton) Limited Partnership
Fee income
Net amounts
receivable from
Year to
30 December
2022
£m
Year to
30 December
2021
£m
As at
30 December
2022
£m
As at
30 December
2021
£m
0.7
1.4
0.5
1.4
–
0.1
–
–
Amounts receivable from associates are unsecured and do not incur interest and they are payable on demand and
settled in cash. Management fees are received by Capital & Regional Property Management Limited (CRPM) and are
payable on demand. They are unsecured, do not incur interest and are settled in cash.
Property Management incentive arrangements
CRPM will earn an additional equity return from Kingfisher Limited Partnership if distributions result in a geared return in
excess of a 15% IRR. The Group will bear 12% of the cost by virtue of its investment in the Partnership. No performance
fee has been recognised during the year (2021: none) as the criteria have currently not been met.
Transactions with key management personnel
In accordance with IAS 24, key personnel are considered to be the executive directors and Non-Executive Directors and
members of the Executive Committee as they have the authority and responsibility for planning, directing and controlling
the activities of the Group. Their remuneration in the income statement is as follows:
Short-term employment benefits
Post-employment benefits
Share-based payments
Year to
30 December
2022
£m
Year to
30 December
2021
£m
1.1
–
0.5
1.6
1.2
0.1
0.4
1.7
In both years the highest paid Director was the Chief Executive whose remuneration is disclosed in the Directors’
Remuneration Report on page 130. There are no directors included in a company pension scheme (2021: nil).
30 Dividends
The dividends shown below are gross of any take-up of Scrip offer.
Interim dividend per share for year ended 30 December 2022 of 2.5p
Amounts recognised as distributions to equity holders in the year
Proposed final dividend for year ended 30 December 2022 of 2.75p
Year to
30 December
2022
£m
Year to
30 December
2021
£m
4.1
4.1
4.7
–
–
–
31 Events after the balance sheet date
Following a sale process undertaken with consent of the secured lender on the loan facility, the sale of The Mall Luton
and its corporate structure completed on 16 March 2023. The Group had previously deconsolidated its interest in The
Mall, Luton and therefore the transaction does not result in any profit or loss on disposal to the Group. The Group’s
involvement as Property and Asset Manager, for which it generated fees of £1.4 million in 2022, has ceased, effective from
the date of the disposal.
32 Ultimate controlling party
Growthpoint Properties Limited (“Growthpoint”) holds 61.5% of the issued share capital of the Company. As such
Growthpoint is the ultimate controlling party of the Company and the largest group into which the results of the Company
are consolidated. The registered office of Growthpoint Properties Limited is The Place, 1 Sandton Drive, Sandton, 2196,
Johannesburg, South Africa. The financial statements of Growthpoint are available at this address.
192192
Notes to the Financial Statements CONTINUEDFor the year to 30 December 2022Stock code: CAL
Company balance sheet
As at 30 December 2022
Registered number: 01399411
Prepared in accordance with FRS 101
Non-current assets
Investments
Receivables – amounts falling due after one year
Total non-current assets
Current assets
Receivables – amounts falling due within one year
Cash and deposits
Total current assets
Total assets
Current liabilities
Trade and other payables
Net current assets
Non-current liabilities
Other payables
Net assets
Equity
Share capital
Share premium
Merger reserve
Capital redemption reserve
Retained earnings
Shareholders’ funds
Note
C
D
D
2022
£m
161.1
37.3
198.4
0.4
17.6
18.0
2021
£m
144.3
37.0
181.3
0.4
30.0
30.4
216.4
211.7
E
(21.8)
(20.5)
(3.8)
10.0
–
(0.2)
194.6
191.0
16.9
1.7
60.3
–
115.7
194.6
16.5
266.1
60.3
4.4
(156.3)
191.0
The profit for the year attributable to equity shareholders was £5.0 million (2021: £6.2 million loss).
These financial statements were approved by the Board of Directors, authorised for issue and signed on their behalf
on 20 April 2023 by:
Stuart Wetherly
Group Finance Director
193193
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
Statement of changes in equity
For the year to 30 December 2022
Non–distributable
Distributable
Balance at 30 December 2020
Retained profit for the year
Total comprehensive profit for
the year
Dividends paid, net of Scrip
Credit to equity for equity-settled
share-based payments
Shares issued, net of costs
Balance at 30 December 2021
Retained profit for the year
Total comprehensive profit for
the year
Capital reduction1
Dividends paid, net of Scrip
Credit to equity for equity-settled
share-based payments
Shares issued, net of costs
Balance at 30 December 2022
Share
capital
£m
11.2
–
Share
Premium
£m
244.3
–
–
–
–
5.3
16.5
–
–
–
–
–
0.4
16.9
–
–
–
21.8
266.1
–
–
(266.1)
–
–
1.7
1.7
Capital
redemption
reserve
£m
Retained
earnings
£m
4.4
–
–
–
–
–
4.4
–
–
(4.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£m
(150.3)
(6.2)
Merger
reserve
£m
60.3
–
(6.2)
–
0.2
–
(156.3)
5.0
5.0
270.5
(4.0)
0.5
–
115.7
–
–
–
–
60.3
–
–
–
–
–
–
60.3
Total
£m
169.9
(6.0)
(6.0)
–
0.2
27.1
191.0
5.0
5.0
–
(4.0)
0.5
2.1
194.6
1
In June 2022 a capital reduction was completed transferring the remaining reserves from share premium and the capital redemption reserve to
retained earnings.
The Company’s authorised, issued and fully paid-up share capital is described in Note 20 to the Group financial
statements. The Company’s dividends are as described in Note 30 to the Group financial statements. The other reserves
are described in the consolidated statement of changes in equity in the Group financial statements.
The merger reserve of £60.3 million arose on the Group’s capital raising in 2009 which was structured so as to allow the
Company to claim merger relief under section 612 of the Companies Act 2006 on the issue of ordinary shares. The merger
reserve is available for distribution to shareholders.
194194
Stock code: CAL
Notes to the Company’s separate financial statements
For the year to 30 December 2022
A Accounting policies
The domicile and legal form of the entity, its country of incorporation and the address of its registered office can be found
in note 1 of the consolidated financial statements. A description of the nature of the entity’s operations and its principal
activities can be found in the strategic report on pages 2-5 of the consolidated financial statements.
The Company’s separate financial statements for the year ended 30 December 2022 are prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting
standards. The main accounting policies have been applied consistently in the current year and the preceding year.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard
in relation to business combinations, share-based payments, non-current assets held for sale, financial instruments,
capital management, presentation of comparative information in respect of certain assets, presentation of an income
statement, cash-flow statement, impairment of assets and related party transactions.
The Company’s financial statements are presented in Pounds Sterling.
Trade payables are carried at fair value, with any gains or losses arising on remeasurement recognised in the income
statement.
Transactions in foreign currencies are translated into sterling at exchange rates approximating to the exchange rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance
sheet date are translated to sterling at the exchange rate ruling at that date and differences arising on translation are
recognised in the income statement.
The Company’s related party transactions are described in Note 29 to the Group financial statements. Except for the
Directors, the Company had no direct employees during the year (2021: none). Information on the Directors’ emoluments,
share options, long-term incentive schemes and pension contributions is shown in the Directors’ Remuneration Report.
Further disclosures regarding the nature of the share-based payment schemes operated by the Group are included in
Note 21 to the Group’s financial statements.
Accounting developments and changes
The accounting policies used in these financial statements are consistent with those applied in the last annual financial
statements, there have been no new standards, amendments or interpretations which became effective during the year
affecting these financial statements.
Key sources of estimation uncertainty
The preparation of financial statements requires the Directors to make estimates that may affect the reported amounts
of assets and liabilities, income and expenses. The following are the key sources of estimation uncertainty that have the
most significant effect on the amounts recognised in the financial statements:
Impairment of investments and intercompany receivables
Investments and amounts owed by subsidiaries are stated at cost less provision for expected credit loss under IFRS
9. Where there is an indication that an investment is impaired, an impairment review is carried out by comparing the
carrying value of the investment against its recoverable amount, which is the higher of its estimated value in use and fair
value less costs of disposal. This review involves accounting judgements about the future cash flows from the underlying
associates and, in the case of CRPM, estimated asset management fee income less estimated fixed and variable expenses.
Disclosure of accounting policy for expected credit losses can be found in note 1 to the group financial statements.
Sensitivities
The following table shows the sensitivity of investment and intercompany receivable impairment to a 5% change in future
cashflows and a 2% change in the discount rate used. The directors consider these reasonably possible.
Reversal of impairment of investments
Impairment of intercompany receivables
Impact of 5% change in
future cashflows
Impact of a 2% change in
discount rate
Increase
£m
Decrease
£m
Increase
£m
Decrease
£m
0.4
–
(0.3)
–
0.1
–
(0.1)
–
There are no critical accounting judgements that affect these financial statements
195195
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials Notes to the Company’s separate financial statements
CONTINUED
For the year to 30 December 2022
B Loss for the year
As permitted by section 408 of the Companies Act 2006, the profit and loss account of the Company is not presented as
part of these financial statements.
The fees payable to the Company’s Auditor for the audit of the Company and Group financial statements are disclosed in
Note 6 to the Group financial statements.
C Fixed asset investments
Cost
At the start of the year
Additions
Disposals
At the end of the year
Impairment
At the start of the year
Reversal of impairment of investments
At the end of the year
Carrying value
30 December 2022
30 December 2021
Subsidiaries
£m
Other
investments
£m
1,207.4
7.8
–
1,215.2
(1,063.1)
9.0
(1,054.1)
161.1
144.3
13.9
–
–
13.9
(13.9)
–
(13.9)
–
–
Total
£m
1,221.3
7.8
–
1,229.1
(1,077.0)
9.0
(1,068.0)
161.1
144.3
Investments are subject to an impairment review using a pre tax discount rate of 16.1% (2021: 16.3%). Impairment is
recognised after comparing the carrying value of the investment against its recoverable amount, which is the higher of
its estimated value in use and fair value less costs to sell. During the year the Company made an additional investment in
Capital &Regional Holdings Limited.
Note F shows the subsidiaries, associates held by the Group and the Company.
D Receivables
Amounts falling due after one year
Amounts owed by subsidiaries
Amounts falling due within one year
Trade receivables
Other receivables
Taxation and social security
2022
£m
37.3
37.3
2022
£m
0.1
0.1
0.2
0.4
2021
£m
37.0
37.0
2021
£m
–
0.3
0.1
0.4
Amounts owed by subsidiaries are stated after impairment of £nil (2021: £nil) and are unsecured and repayable on
demand. Impairment is recognised after comparing the carrying value of the receivable against its recoverable amount,
which is the higher of its estimated value in use and fair value less costs of disposal. Interest is charged at 3.5% above
Bank of England base rate per annum.
196196
Stock code: CAL
E Trade and other payables
Amounts falling due within one year
Amounts owed to subsidiaries
Trade payables
Accruals and deferred income
2022
£m
18.9
–
2.9
21.8
2021
£m
19.2
0.2
1.1
20.5
Amounts owed to subsidiary companies are unsecured and repayable on demand. Interest is charged at 3.5% above Bank
of England base rate per annum.
F Subsidiaries at 30 December 2022
Subsidiaries
Capital & Regional (Europe Holding 5) Limited 2
Capital & Regional (Jersey) Limited 2
Capital & Regional (Mall GP) Limited
Capital & Regional (Projects) Limited
Capital & Regional (Shopping Centres) Limited 2
Capital & Regional Earnings Limited
Capital & Regional Holdings Limited
Capital & Regional Ilford Limited 2
C&R Ilford Limited Partnership
C&R Ilford Nominee 1 Limited
C&R Ilford Nominee 2 Limited
C&R Ilford (General Partner) Limited
Capital & Regional Income Limited 1,3
Capital & Regional Property Management Limited
Green-Sinfield Limited
Lancaster Court (Hove) Limited
Lower Grosvenor Place London One Limited
Mall Nominee One Limited
Mall Nominee Two Limited
Mall Nominee Three Limited 5
Mall Nominee Four Limited 5
Mall People Limited
Mall Ventures Limited
Marlowes Hemel Limited 2
MB Roding (Guernsey) Limited 4
Selborne One Limited
Selborne Two Limited
Selborne Walthamstow Limited 2
Snozone Holdings Limited
Snowzone S.L.U6
Snozone Leisure Limited
Snozone Limited
The Mall (General Partner) Limited
The Mall (Luton) (General Partner) Limited 5
The Mall Limited Partnership
The Mall (Luton) Limited Partnership 5
The Mall REIT Limited
The Mall Shopping Centres Limited
The Mall Unit Trust 2
Nature of
business
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment
Dormant
Dormant
Property investment
Property investment
Property management
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Property management
Dormant
Property investment
Dormant
Dormant
Dormant
Dormant
Operator of indoor ski slopes
Operator of indoor ski slopes
Operator of indoor ski slopes
Operator of indoor ski slopes
Property investment
Property investment
Property investment
Property investment
Dormant
Dormant
Property investment
Country of
incorporation
Jersey
Jersey
Great Britain
Great Britain
Jersey
Great Britain
Great Britain
Jersey
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Jersey
Guernsey
Great Britain
Great Britain
Jersey
Great Britain
Spain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Great Britain
Jersey
Share of
voting
rights
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
197197
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
Notes to the Company’s separate financial statements
CONTINUED
For the year to 30 December 2022
F Subsidiaries at 30 December 2022 CONTINUED
The Mall Walthamstow One Limited
The Mall Walthamstow Two Limited
Wood Green London Limited 2
Wood Green One Limited
Wood Green Two Limited
Principal associate entities
Euro B-Note Holding Limited 2
1
In liquidation/being dissolved.
Nature of
business
Dormant
Dormant
Dormant
Dormant
Dormant
Country of
incorporation
Great Britain
Great Britain
Jersey
Great Britain
Great Britain
Share of
voting
rights
100%
100%
100%
100%
100%
Finance
Jersey
39.90%
2 Registered office at 47 The Esplanade, St Helier, Jersey JE1 0BD.
3 Registered office at Griffins, Tavistock House South, Tavistock Square, London WC1H 9LG.
4 Registered office at PO Box 186, Royal Chambers, St Julian’s Avenue, St Peter Port, Guernsey GY1 4HP.
5
These entities remain legal subsidiaries but are no longer consolidated in to the results of the Group following a loss of control (see Note 16 to the
Group Financial Statements for further details).
6 Registered office at Pista de Nieve en el Centro Comercial Madrid Xanadü,, Ctra. A5. Salidas 22 y 25, km 23,, Arroyomolinos, Madrid, 28939,
The registered office of all subsidiaries, unless otherwise noted is 22 Chapter Street, London, SW1P 4NP.
The shares of voting rights are equivalent to the percentages of ordinary shares or units held directly or indirectly by
the Group.
198198
Stock code: CAL
Glossary of terms
Adjusted Profit is the total of Contribution from wholly-
owned assets and the Group’s joint ventures and
associates, Snozone EBITDA and property management
fees less central costs (including interest but excluding
non-cash charges in respect of long-term incentive
awards) after tax. Adjusted Profit excludes revaluation
of properties, profit or loss on disposal of properties or
investments, gains or losses on financial instruments and
exceptional one-off items. Results from Discontinued
Operations are included up until the point of disposal or
reclassification as held for sale.
Adjusted Earnings per share is Adjusted Profit divided by
the weighted average number of shares in issue during the
year excluding own shares held.
C&R is Capital & Regional plc, also referred to as the Group
or the Company.
CRPM is Capital & Regional Property Management
Limited, a subsidiary of Capital & Regional plc, which earns
management and performance fees from the Mall assets
and certain associates and joint ventures of the Group.
Contracted rent is passing rent and the first rent reserved
under a lease or unconditional agreement for lease but
which is not yet payable by a tenant.
Contribution is net rent less net interest, including
unhedged foreign exchange movements.
Capital return is the change in market value during the
year for properties held at the balance sheet date, after
taking account of capital expenditure calculated on a time
weighted basis.
Debt is borrowings, excluding unamortised issue costs.
EPRA earnings per share (EPS) is the profit / (loss) after
tax excluding gains on asset disposals and revaluations,
movements in the fair value of financial instruments,
intangible asset movements and the capital allowance
effects of IAS 12 “Income Taxes” where applicable, less tax
arising on these items, divided by the weighted average
number of shares in issue during the year excluding own
shares held.
EPRA net disposal value represents net asset value
under a disposal scenario, where deferred tax, financial
instruments and certain other adjustments are calculated
to the full extent of their liability, net of any resulting tax.
EPRA net reinstatement value is net asset value
adjusted to reflect the value required to rebuild the entity
and assuming that entities never sell assets. Assets and
liabilities, such as fair value movements on financial
derivatives are not expected to crystallise in normal
circumstances and deferred taxes on property valuation
surpluses are excluded.
Estimated rental value (ERV) is the Group’s external
valuers’ opinion as to the open market rent which, on
the date of valuation, could reasonably be expected to
be obtained on a new letting or rent review of a unit or
property.
ERV growth is the total growth in ERV on properties
owned throughout the year including growth due to
development.
Gearing is the Group’s debt as a percentage of net assets.
See through gearing includes the Group’s share of non-
recourse debt in associates and joint ventures.
Interest cover is the ratio of Adjusted Profit (before
interest, tax, depreciation and amortisation) to the interest
charge (excluding amortisation of finance costs and
notional interest on head leases).
Like-for-like figures, unless otherwise stated, exclude the
impact of property purchases and sales on year to year
comparatives.
Leisure EBITDA or EBITDA is an alternative performance
measure for the Snozone business. It excludes
Depreciation, Amortisation, (notional) Interest, Tax and
non-operational one-off items. It includes rent expense,
based on contractual payments adjusted for rent free
periods. This provides a measure of Snozone trading
performance which removes the profiling impact of IFRS
16 that would otherwise see a significantly higher charge in
early years of a lease and significantly lower net charge in
later years.
Loan to value (LTV) is the ratio of debt excluding fair
value adjustments for debt and derivatives, to the Market
value of properties.
Market value is an opinion of the best price at which
the sale of an interest in a property would complete
unconditionally for cash consideration on the date of
valuation as determined by the Group’s external or
internal valuers. In accordance with usual practice, the
valuers report valuations net, after the deduction of the
prospective purchaser’s costs, including stamp duty, agent
and legal fees.
Net Administrative Expenses to Gross Rent is the ratio
of Administrative Expenses net of external fee income to
Gross Rental income including the Group’s share of Joint
Ventures and Associates.
Net assets per share (NAV per share) are shareholders’
funds divided by the number of shares held by
shareholders at the year end, excluding own shares held.
Net initial yield (NIY) is the annualised current rent, net of
revenue costs, topped-up for contractual uplifts, expressed
as a percentage of the capital valuation, after adding
notional purchaser’s costs.
EPRA net tangible assets is a proportionally consolidated
measure, representing the IFRS net assets excluding
the mark-to-market on derivatives and related debt
adjustments, the mark-to-market on the convertible
bonds, the carrying value of intangibles as well as deferred
taxation on property and derivative valuations.
Net debt to property value is debt less cash and cash
equivalents divided by the property value.
Net interest is the Group’s share, on a see-through basis,
of the interest payable less interest receivable of the
Group and its associates and joint ventures.
199199
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials Glossary of terms CONTINUED
Net rent or Net rental income (NRI) Net Rental Income
is rental income from properties, less provisions for
expected credit losses, property and management costs. It
is a standard industry measure.
Nominal equivalent yield (NEY) is a weighted average of
the net initial yield and reversionary yield and represents
the return a property will produce based upon the timing
of the income received, assuming rent is received annually
in arrears on gross values including the prospective
purchaser’s costs.
Occupancy cost ratio is the proportion of a retailer’s sales
compared with the total cost of occupation being: rent,
business rates, service charge and insurance. Retailer sales
are based on estimates by third party consultants which
are periodically updated and indexed using relevant data
from the C&R Trade Index.
Occupancy rate is the ERV of occupied properties
expressed as a percentage of the total ERV of the portfolio,
excluding development voids.
Passing rent is gross rent currently payable by tenants
including car park profit but excluding income from non-
trading administrations and any assumed uplift from
outstanding rent reviews.
Rent to sales ratio is Contracted rent excluding car park
income, ancillary income and anchor stores expressed as a
percentage of net sales.
REIT – Real Estate Investment Trust.
Return on equity is the total return, including revaluation
gains and losses, divided by opening equity plus time
weighted additions to and reductions in share capital,
excluding share options exercised.
Reversionary percentage is the percentage by which the
ERV exceeds the passing rent.
Reversionary yield is the anticipated yield to which the
net initial yield will rise once the rent reaches the ERV.
Temporary lettings are those lettings for one year or less.
Total property return incorporates net rental income
and capital return expressed as a percentage of the
capital value employed (opening market value plus capital
expenditure) calculated on a time weighted basis.
Total return is the Group’s total recognised income
or expense for the year as set out in the consolidated
statement of comprehensive income expressed as a
percentage of opening equity shareholders’ funds.
Total shareholder return (TSR) is a performance
measure of the Group’s share price over time. It is
calculated as the share price movement from the
beginning of the year to the end of the year plus dividends
paid, divided by share price at the beginning of the year.
Variable overhead includes discretionary bonuses and
the costs of awards to Directors and employees made
under the 2018 LTIP and other share schemes which are
spread over the performance period.
200200
Stock code: CAL Five year review (Unaudited)
Balance sheet
Property assets
Other non-current assets
Investment in associates
Cash at bank
Assets classified as held for sale
Other net current (liabilities)/assets
Bank loans greater than one year
Other non-current liabilities
Net assets
Financed by
Called-up share capital
Share premium account
Other reserves
Retained earnings
Capital employed
Return on equity
Return on equity
(Decrease)/increase in NAV per share + dividend
Total shareholder return
Year end share price2
Total return
Total comprehensive (expense)/income
Net assets per share
Basic net assets per share3
EPRA triple net assets per share4
EPRA net assets per share4
EPRA Net reinstatement value
EPRA Net tangible assets
EPRA net disposal value
Gearing
Income statement1
Group revenue
Gross profit
Profit/(loss) on ordinary activities before financing
Net interest payable
Profit/(loss before tax
Tax credit/(charge)
Profit/(loss) after tax
Adjusted Profit
Adjusted Earnings per share3
Interest cover
Earnings per share3
Basic
Diluted
EPRA
Dividends per share
2022
£m
320.1
33.0
–
55.5
–
(20.6)
(181.8)
(27.1)
179.1
16.9
1.7
60.3
100.2
179.1
(7.2)%
(26.7)%
12.2%
62.0p
20211
£m
376.4
35.1
–
58.5
(19.4)
(13.7)
(238.2)
(30.3)
168.4
16.5
266.1
64.7
(178.9)
168.4
(14.3)%
(32.1)%
(16.1)%
58.9p
20202
£m
536.1
29.1
–
84.1
–
(9.6)
(423.9)
(48.7)
167.1
11.2
244.3
64.7
(153.1)
167.1
(54.4)%
(55.6)%
(68.0)%
70.2p
2019
£m
770.9
18.1
–
95.9
–
(20.3)
(422.8)
(66.7)
375.1
10.4
238.0
64.7
62.0
375.1
(27.7)%
(37.2)%
(2.0)%
25.4p
2018
£m
898.2
21.3
–
32.0
–
(21.8)
(432.9)
(63.8)
433.0
7.3
166.5
64.7
194.5
433.0
(5.3)%
(5.5)%
(46.5)%
27.6p
(12.1)
(24.1)
(203.9)
(121.0)
(25.6)
105.9p
–
–
103.4p
103.4p
115.1p
102%
60.6
28.2
13.3
(8.3)
5.0
0.3
5.3
10.3
6.2p
2.4
7.3p
7.2p
5.3p
5.25p
102p
–
–
102p
102p
101p
142%
54.6
27.4
(6.3)
(8.3)
(14.6)
(3.1)
(17.7)
8.8
7.3p
2.4
(20.0)p
(20.0)p
3.5p
–
149.5p
–
–
157.0p
157.0p
138.8p
255%
72.7
37.5
(181.7)
(22.4)
(204.1)
0.2
(203.9)
11.0
10.2p
2.0
36p
36p
36p
363.3p
363.3p
355.8p
114%
89.0
53.6
(97.5)
(23.5)
(121.0)
–
(121.0)
27.4
37.0p
3.2
(188.8)p
(188.8)p
(8.8p)
–
(162.3)p
(162.3)p
(3.5)p
21.0p
60p
59p
59p
591.0p
591.0p
593.4p
101%
91.0
56.1
(9.7)
(15.8)
(25.5)
(0.1)
(25.6)
30.5
42.0p
3.4
(35.4)p
(35.4)p
4.0p
2.42p
1 2021 results have been restated to present discontinued operations separately. 2021 comparative figures have been restated for a prior year
adjustment to the treatment of rent concessions and expected credit loss as explained in note 1.
2 2020 results have been restated for a prior year adjustment to the treatment of SaaS configuration costs as explained in Note 1. Prior years are
other than in this case as originally presented, no adjustment has been made to restate prior years for changes in IFRS standards that have been
adopted in subsequent years.
3 Prior year numbers are other than where stated have not been adjusted for the 10:1 share consolidation subsequent to year end. A multiple of 10
must be applied to arrive at the comparative figures.
EPRA net asset metrics no longer in use.
4
201201
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
Portfolio information (Unaudited)
At 30 December 2022
Physical data1
Number of properties
Number of lettable units
Size (sq ft – million)
Valuation data
Properties at independent valuation (£m)
Adjustments for head leases and tenant incentives (£m)
Properties as shown in the financial statements (£m)
Revaluation loss in the year (£m)
Initial yield (%)
Equivalent yield (%)
Reversion (%)
Lease length (years)
Weighted average lease length to break
Weighted average lease length to expiry
Passing rent (£m) of leases expiring in:
2023
2024
2025-2027
ERV (£m) of leases expiring in:
2023
2024
2025-2027
Passing rent (£m) subject to review in:
2023
2024
2025-2027
ERV (£m) of passing rent subject to review in:
2023
2024
2025-2027
Rental Data
Contracted rent (£m)
Passing rent (£m)
ERV (£m per annum)
ERV movement (like-for-like) (£m)
Occupancy (%)
5
547
2.0
322.8
(2.7)
320.1
(19.6)
7.2
8.6
12.9
4.1
6.9
7.2
1.7
6.6
7.0
1.9
6.7
1.5
0.8
1.9
1.1
0.7
1.9
26.5
24.5
34.4
1.0
94.2
202202
Stock code: CAL EPRA performance measures (Unaudited)
At 30 December 2022
EPRA earnings (£m)
EPRA earnings per share (diluted)
EPRA reinstatement value (£m)
EPRA net reinstatement value per share
EPRA net tangible assets (£m)
EPRA net tangible assets per share
EPRA net disposal value (£m)
EPRA net disposal value per share
EPRA LTV
EPRA cost ratio (including direct vacancy costs)
EPRA cost ratio (excluding vacancy costs)
Like-for-like ERV growth (£m)1
EPRA vacancy rate
Estimated rental value of vacant space
Estimated rental value of whole portfolio
EPRA vacancy rate2
EPRA net initial yield and EPRA topped-up net initial yield
Investment property
Completed property portfolio
Allowance for capital costs
Allowance for estimated purchasers’ costs
Grossed up completed property portfolio valuation
Annualised cash passing rental income
Property outgoings
Annualised net rents
Add: notional rent expiration of rent free periods or other lease incentives
Topped up annualised rent
EPRA net initial yield
EPRA topped-up net initial yield
Note
9a
9a
25
25
25
25
25
25
2022
8.8
5.3p
177.4
103p
177.4
103p
197.5
115p
2021
Restated3
4.2
3.5p
168.4
102p
168.4
102p
167.4
101p
44.4%
64.1%
48.6%
37.8%
53.1%
44.2%
1.0
2022
£m
2.6
33.4
7.7%
2022
£m
322.8
322.8
16.8
21.9
361.4
30.5
(6.7)
23.8
1.3
25.1
6.6%
7.0%
1.1
2021
£m
3.9
53.8
7.2%
2021
£m
473.1
473.1
(10.1)
31.4
494.4
56.2
(13.7)
42.5
0.6
43.1
8.1%
8.3%
1
2
Like-for-like ERV growth is based on the Group’s portfolio of five properties with fair value of £322.8 million.
Further detail on occupancy is given on page 31
3 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions and expected credit loss as
explained in note 1
203203
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials
EPRA performance measures (Unaudited)
At 30 December 2022
EPRA Cost ratios
Cost of sales (adjusted for IFRS head lease differential)
Administrative costs
Service charge income
Management fees
Snozone (indoor ski operation) costs
Less inclusive lease costs recovered through rent
EPRA costs (including direct vacancy costs)
Direct vacancy costs
EPRA costs (excluding direct vacancy costs)
Gross rental income
Less ground rent costs
Less inclusive lease costs recovered through rent
Gross rental income
EPRA cost ratio (including direct vacancy costs)
EPRA cost ratio (excluding vacancy costs)
2022
£m
32.1
10.9
(10.5)
(2.3)
(12.9)
(1.5)
15.8
(3.5)
12.3
34.7
(0.7)
(1.5)
32.5
2021
(Restated)1
£m
35.8
12.7
(12.7)
(0.8)
(8.5)
(4.0)
22.5
(3.8)
18.7
48.1
(1.7)
(4.0)
42.4
48.6%
37.8%
58.5%
49.6%
1 2021 comparative figures have been restated for a prior year adjustment to the treatment of rent concessions and expected credit loss as
explained in note 1
Property related capital expenditure
Acquisitions
Development
Investment properties:
Incremental letting space
No incremental letting space
Other
Total Capital expenditure
Conversion from accrual to cash basis
Total capital expenditure on cash basis
Note
10
10
10
2022
£m
–
5.8
–
3.2
–
9.0
1.6
10.6
2021
£m
–
4.1
–
4.8
–
8.9
(0.6)
8.3
Capital tenant incentives of £0.9 million were paid during the year (2021: £0.3 million). Amortisation of £0.6 million was
recognised in the P&L (2021: £0.4 million).
Capital expenditure
Refurbishment expenditure in respect of major works is capitalised. Renovation and refurbishment expenditure of a
revenue nature is expensed as incurred. 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 capitalised subject to meeting certain criteria related to the degree of time spent on and the nature of
specific projects. Staff costs amounting to £nil (2021: £nil) have been capitalised as development costs during the year.
204204
Stock code: CAL Advisers and corporate information
Auditor
Deloitte LLP
Statutory Auditor
2 New Street Square
London EC4A 3BZ
Principal valuers
CBRE Limited
Henrietta House
Henrietta Place
London W1G 0NB
Knight Frank LLP
55 Baker Street
London W1U 8AN
Investment bankers/brokers
Java Capital Trustees and Sponsors Proprietary Limited Numis Securities Limited
(JSE sponsor)
6A Sandown Valley Crescent
Sandown, Sandton 2196
South Africa
45 Gresham Street
London
EC2V 7EH
Principal legal advisers
CMS Cameron McKenna Nabarro Olswang LLP
Cannon Place
78 Cannon Street
London EC4N 6AF
Registered office
22 Chapter Street
London SW1P 4NP
Telephone: +44 (0)20 7932 8000
capreg.com
Panmure Gordon
40 Gracechurch St,
London
EC3V 0BT
Registered number
01399411
205205
Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Capital & Regional PLC Annual Report and Accounts for the year ended 30 December 2022Financials Shareholder information
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Telephone: +44 (0) 371 384 2438*
JSE Investor Services (Proprietary) Limited
(South African Transfer Secretaries)
PO Box 4844
Johannesburg, 2000
South Africa
Helpline Number:
086 147 2644 (SA callers)
+27 11 713 0800 (if calling from outside South Africa)
info@jseinvestorservices.co.za
* Lines open 08:30 - 17:30, Monday to Friday, excluding bank holidays in England and Wales.
206206
Stock code: CAL The production of this report supports the work of the
Woodland Trust, the UK’s leading woodland conservation
charity. Each tree planted will grow into a vital carbon
store, helping to reduce environmental impact as well as
creating natural havens for wildlife and people.
CAPITAL & REGIONAL PLC
22 Chapter Street
London SW1P 4NP
Tel: +44 (0)20 7932 8000
CAPREG.COM