# Hammerson report a strong first half and return to cash dividend

- Link: https://www.directorstalkinterviews.com/hammerson-report-a-strong-first-half-and-return-to-cash-dividend/4121124289
- Published: 2023-07-27T09:07:58+01:00
- Author: Jacob Brown

> **Rita-Rose Gagné, Chief Executive of Hammerson plc (LON:HMSO), said:**
> _“We are pleased to have delivered a strong first half and announce a return to
> a cash dividend as we look to the future with  confidence.  Our leasing momentum
> in 2022 has continued into the first half of 2023 and we have a strong pipeline
> for the second half.  Our core portfolio continues to attract the best occupiers
> which, combined with our emphasis on commercialisation and placemaking, is creating
> exceptional destinations for customers.  At the same time, we continue to transform
> our operating model and platform, bringing more integrated and efficient ways 
> of working while reducing costs._
> _We have further simplified our portfolio with the exit from minority stakes in
> France, our standalone development interests in Croydon, and other non-core land,
> generating £215m in disposal proceeds, further strengthening the balance sheet
> whilst bringing a sharper focus to investment opportunities in the core portfolio._
> _Our strategy is driven by the repositioning of our unique city centre destinations
> in some of Europe’s fastest-growing cities from traditional retail-anchored footprints
> to a broader mix of uses.  Today we are a more agile, market facing, asset-centric
> Hammerson that continues to reshape our urban destinations to be fit for future
> lifestyles.”_

**Operational momentum continues**

·    Footfall and like-for-like sales remain strong, with the former up +4% year-
on-year (UK +2%, France and Ireland +7%) and the latter up +3% in the UK, +7% in
France, and +2% in Ireland

·    134 leasing deals concluded in the period representing £18.3m of headline rent(
£10.7m at our share, ) (+13% LFL)

−      Principal leasing +20% ahead of previous passing rent (HY 22: +31%)

−      Net effective rent +8% vs ERV (HY 22: +1%)

−      WAULB 7.1 years; 9.4 years WAULT

−      Strong leasing pipeline for the second half, with a further £15m deals in
solicitors’ hands

·    Flagship occupancy up +1% point year-on-year to 95%

·    Rent collection: FY 22 now at 98%; HY 23 95%

·    Value Retail GRI up +13%, 156 leases signed and 55 new openings, footfall and
sales up +13% and +14% year-on-year respectively

**Robust financial performance**

·    Adjusted earnings up +15% to £56m (HY 22: £48m) benefitting from:

−      Like-for-like GRI up +3% reflecting the continuation of strong leasing trends;
like-for-like NRI up +2% YoY

−      Gross administration costs down -12% year-on-year to £26m, on track to meet
target of reducing costs by -20% by FY 24, which will bring cumulative savings of
30% since FY 20

−      Net finance costs -13% reflecting debt retirement and increased interest 
receipts from cash

·    Adjusted earnings per share up 0.1p to 1.1p; basic loss per share of 0.0p (
HY 22 earnings per share: 1.0p)

·    Value Retail adjusted earnings of £13.4m (HY 22: £13.7m): GRI growth offset
by higher finance and operational costs

·    Value Retail cash distribution of £43m received

·    Interim cash dividend per share of 0.72p per share, to be paid entirely as 
a PID, new dividend policy announced

·    Group portfolio value of £4.7bn (FY 22: £5.1bn), values broadly stable, reduction
principally due to disposals

−      Capital return -0.3% (HY 22 -0.4%); Total return +2.5% (HY 22: 2.1%)

·    IFRS loss of £1m (HY 22: £50m profit)

·    EPRA NTA per share 52p (FY 22: 53p)

**Stronger balance sheet**

·    Net debt down 24% to £1,318m (FY 22: £1,732m):

−       Completed £215m disposals in the first half, bringing total since start 
of FY 22 to £410m. Remain on track to complete £500m programme by end of FY 23

−       Derecognition of £125m of secured debt following exit from Highcross and
O’Parinor joint ventures

·    Headline LTV 33% (FY 22: 39%), fully proportionally consolidated (FPC) LTV 
43% (FY 22: 47%)

·    Net debt to EBITDA of 7.7x (FY 22: 10.4x)

·    Ample liquidity of £1.2bn (FY 22: £1.0bn), including undrawn committed facilities
and £563m of cash

**Outlook**

Whilst the macroeconomic outlook remains uncertain, we have strong leasing and operational
momentum and are well placed to deliver another year of robust adjusted earnings
and cash flow.  We have maintained our strong operational grip on the business and
are on track for both our cost reduction and disposals targets.  Given our progress
of the last few years, we are returning to a cash dividend.

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