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Edited Transcript of HMSO.L earnings conference call or presentation 25-Feb-19 9:00am GMT

Full Year 2018 Hammerson PLC Earnings Call

EC4Y 0JP Aug 2, 2019 (Thomson StreetEvents) -- Edited Transcript of Hammerson PLC earnings conference call or presentation Monday, February 25, 2019 at 9:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* David John Atkins

Hammerson plc - CEO & Director

* Nicholas Timothy Drakesmith

Hammerson plc - Director

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Conference Call Participants

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* Alan Carter

* Benjamin Paul Richford

Crédit Suisse AG, Research Division - Research Analyst

* Christopher Richard Fremantle

Morgan Stanley, Research Division - Executive Director

* Colm Lauder

Goodbody Stockbrokers, Research Division - Real Estate Analyst

* Jonathan Sacha Kownator

Goldman Sachs Group Inc., Research Division - Financial Analyst

* Marcus Andrew Phayre-Mudge

BMO Asset Management (Holdings) plc - Head of Property Team and Fund Manager

* Michael Campagna

Moerus Capital Management LLC - Co-Founding Partner & Research Analyst

* Robert Alan Jones

Deutsche Bank AG, Research Division - Research Analyst

* Rubinder Singh Virdee

Green Street Advisors, LLC, Research Division - Analyst of Research

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Presentation

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David John Atkins, Hammerson plc - CEO & Director [1]

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Right. I think we'll make a start. Well, good morning, everyone. It's great to see so many of you here this morning. Those of you who don't know me, my name is David Atkins, I'm Hammerson's Chief Executive. I'm joined Timon Drakesmith, our CFO; and a number of our senior managers.

Now we're going to do things a bit differently today. We're going to give you all of our usual business disclosure. In fact, quite a bit more, but I'm going to start with a quick overview and talk about our 2019 objectives, and Timon is going to run through the detail of our numbers.

Then I want to talk to you about what is really going on in retail, the good, the bad and the ugly, and, most importantly, what we are doing about it. And finally, I want to share with you our conviction on the business, why I think Hammerson is strongly placed to manage through the current turbulence in the near term. I'll give some color about the long-term potential of our assets and how we see a successful future where we can create value for all shareholders, both today and tomorrow.

Here you'll see our agenda. So let's get on with the presentation. So 2018 was a challenging year. Within that context, our diversified business held up pretty well. On this slide, you'll see we've highlighted the challenges that the market has faced and the headlines of how we performed.

While we're seeing a fundamental shift in retail, driven, of course, by online, with continued strong demand for space and occupancy across the group was over 97%. Now clearly rents for some categories are falling. But contrary to commonly held views, we're also seeing rental growth from winning categories and brands, and more on that later.

We've seen this tougher in the U.K., with lower consumer confidence leading to a decline in sales and footfall. But our diversified portfolio, with half of our destinations outside of the U.K., supported overall performance. For example, as you can see, like-for-like NRI in Premium Outlets was up an impressive 5.2%. Now this is important as it underlines that Hammerson has deployed capital wisely across multiple markets and sectors to mitigate risk.

The weakness in the year affected investment markets, with transaction volumes down 41%. Despite that, we made good progress with GBP 570 million of disposals, returning funds to shareholders and paying down debt.

Now you can see the weak investment market in the numbers on this slide. Looking to the left, you can see that transaction volumes across our sectors have dropped significantly year-on-year to just GBP 4 billion in 2018.

To the right, the read-across to our valuations is clear, with U.K. flagships and retail parks bearing the brunt, falling 9.3% and 9.9%, respectively, in the second half. And it's fair to say that sentiment has worsened in the last 6 months. We can feel it as we discuss potential disposals. And while some of the economic indicators like employment are decent, the economy is slowing, consumer confidence is negative and, clearly, Brexit is not helping.

Now I'm mainly talking about the U.K. here. The impact on our European portfolio is less stark. That said, this erosion of confidence across the board has consequences for how we execute our strategy.

So what are we doing about it? Well, we're intensely focused on making sure we run the business in a way that takes account of the realities of the environment we are in. These are the 3 pillars of our strategy, we laid them out last July: capital efficiency, optimized portfolio and operational excellence.

Now I've heard some commentators say that the strategy was not radical enough, but actually, I believe it's far from conservative, with no stone unturned to drive returns to shareholders in an increasingly challenging market.

Given this backdrop, our absolute priority on capital efficiency is now to reduce debt. We will continue to build our balance sheet strength to ensure that we are robust, irrespective of what that market can throw at us. We strongly believe that deleveraging best positions Hammerson now and into the future. Our goal is to bring net debt levels down from GBP 3.4 billion currently to around GBP 3 billion.

To optimize our portfolio, we remain committed to exiting retail parks over the medium term. A further portfolio-wide review has identified additional disposal options across all our markets. We have those options and we're actively pursuing them. And I want to be absolutely clear here, if we get an offer for an asset at an attractive price and we believe it's a good deal for shareholders, we will take that opportunity.

Disposals will also enable us to provide -- prove the value of this business, which we believe is not currently recognized in the market. And it will give us a war chest to benefit from opportunities that will present themselves in the years ahead.

And of course, under operational excellence, we are managing the shift in retail and focusing on maximizing profitability. I'll say more about this later on.

What I really want to get over is that we are out there every single day working hard to drive the business, shaping the portfolio mix and positioning our assets for long-term success.

Now I've said that reducing our debt is absolute priority, it's also worth pausing to look at what that really means. On this slide, we highlight GBP 570 million raised through disposals, of which nearly GBP 340 million was used for CapEx and GBP 127 million for the share buyback. That left around GBP 100 million to pay down debt.

To the right, in 2019, you'll see we are now targeting in excess of GBP 500 million of disposals. We forecast a maximum CapEx of GBP 140 million, with a share buyback program on hold until we achieve our enhanced portfolio disposal target and see greater market certainty. Timon will tell you more about our new net debt reduction target in his section.

Now let's drill further into those disposals. As you know, this is an area where we have an excellent track record. To the left of this chart, you can see that we have, on average, made disposals to the value of around GBP 400 million per annum over the past 5 years. And these disposals have been across multiple asset classes.

I've talked about the GBP 570 million we achieved in 2018 on the previous chart. This was achieved by selling 4 retail parks and a 50% stake in Highcross, Leicester. The sales have made an average of 7% discount to book value, and I believe this is a good result in a tough market.

Our target for 2019 is to exceed GBP 500 million, and we are open-minded about the upper limit of this disposal program. We're already in active discussions with a broad range of potential buyers concerning transactions, which have a total value of over GBP 900 million. These potential transactions are in the form of portfolio sales, joint ventures and individual asset disposals from multiple sectors and territories.

So I've summarized the key elements of our evolved strategy with a clear focus on delivering a strengthened balance sheet, driven by disposals. We're delivering on this strategy, moving even further, even faster than before to deliver long-term value.

Now I'll hand over to Timon who'll talk through the numbers, and then I'll dive a bit deeper into how we manage the business in this challenging market. Timon?

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Nicholas Timothy Drakesmith, Hammerson plc - Director [2]

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Well, good morning, everybody. Thank you, David. First, some overview remarks. Hammerson's financial performance has been impacted by the tough retail and property market here in the U.K. These are mixed results, but they are in line with our expectations.

Property sales and tenant failures have reduced NRI and, therefore, earnings. Our U.K. property portfolio experienced substantial valuation declines which pulled down NAV per share and worsened credit ratios. Encouragingly, disposals have reduced net debt, particularly since June, and funded nearly GBP 130 million of share buyback.

So let's look at the headline numbers. Net rental income of GBP 347.5 million is down 6.2% on 2017, principally due to significant disposals as well as a negative underlying like-for-like movement. Adjusted profit is down 2.4% on 2017 due to disposals, although partly mitigated by lower costs and higher Premium Outlet profits. This translates into an earnings per share figure of 30.6p of 1.6% on 2017. The final dividend of 14.8p per share is maintained at 2017's final level, taking the total dividend to 25.9p a share, up 1.6% year-on-year.

Final dividend is flat year-on-year and this is designed to maintain a high-income return for shareholders, and the dividend decision also signals our confidence in the 2019 disposal program. NAV per share came out at GBP 7.38, down nearly 5% on December 2017, mainly due to portfolio valuation declines of over 10% in the U.K. portfolio.

Net debt of GBP 3.4 billion at December 2018 was down GBP 100 million on the end of 2017, and almost GBP 200 million on June 30. So in the next 10 minutes, I'll look in detail at these main conclusions.

So let's start with the property valuation, and here we segmented the portfolio by sector. The changes in values are shown in constant currency. And as you can see, the first section is flagship shopping centers.

In the U.K., our flagship portfolio is down 10.6% over the year with 9.3% of declines in the second half. In France, our portfolio is down 1.7% for 2018. Shown in the next row is our Ireland portfolio, up 0.9%, although values fell slightly in the second half. Premium Outlets generated capital growth of 2.4%. In the bottom row, you can see that U.K. retail parks saw a capital decline of 13.2% in 2018, of which almost 10% came in H2.

So overall, the total portfolio had a negative capital return of 4.3%. And it's a mixed picture, reflecting quite different market dynamics.

Now here we show the specific drivers of valuation movements in the terms of yield, ERV and comparables. The U.K. flagships had 37 basis point of average yield shift over the year, and this reflects comparable evidence from several transactions, including our own center in Leicester. ERVs are marked down 2%.

Our valuers, Cushman & Wakefield, took account of the recent guidance from RICS. For France, the main driver was a slight uplift in ERV due to positive leasing in Marseille. And our Dublin properties had stable yields over the year and nearly 3% growth in ERV.

In outlets, yields tightened a little and income growth was up 1.7%. In retail parks, there was 53 basis points of yield increases and 2.7% of ERV reduction. As you're aware, there were several relevant parks deals in 2018. So Hammerson has a diverse and attractive retail property portfolio, and we believe the December 2018 book value is appropriate.

So this page shows our solid financing position and all the key ratios are within our internal guidelines. The middle column shows the net debt at December 2018 was GBP 3.4 billion, a decline from GBP 3.5 billion during 2018, mainly due to disposals.

Gearing at December 2018 was 63%, up 5 percentage points from December '17. This was below both our guideline of 85% and way below the covenant of 150%. The headline LTV ratio at December '18 was 38% and the fully proportionally consolidated LTV was 43%, up from 40% at the end of 2017. We had substantial liquidity for GBP 729 million, and we have no debt maturities in the next 2 years.

The bottom half of the table shows additional financing ratios, which are broadly in line with the position at the beginning of the year.

The net debt-to-EBITDA ratio has increased slightly to 9.5x, and we plan to reduce debt levels with the proceeds of the 2019 disposal program, which is likely to move debt to EBITDA towards 9x. In summary, we are aiming to shift the leverage ratios to a stronger position versus our guidelines.

As I mentioned earlier, Hammerson's net debt fell by GBP 95 million over the year and this chart shows the main movements. It was a very busy year for disposals, generating GBP 570 million, and operating cash flow delivered GBP 203 million. The company returned a total of GBP 331 million to shareholders in the form of dividends and share buybacks, and that's the equivalent of around 12% of today's market capitalization.

We also spent GBP 230 million on CapEx and GBP 117 million of Premium Outlets acquisitions and other items, which influenced the year-end debt levels.

Looking forward to 2019, we are guiding to a similar level of disposals, but lower CapEx. Share buybacks are on hold for the time being until major disposals are delivered and there is greater market certainty. So we are looking to reduce net debt to around GBP 3 billion by the end of 2019, as you can see from the dotted blue bar on the right.

We are managing capital expenditure very carefully. We continue to progress our committed on-site development, the extensions at Cergy and Italie Deux in Paris. The total committed CapEx will fall in 2019 to GBP 95 million and in 2020 to GBP 80 million.

Discretionary expenditure will target flagship center enhancements, occupier mix transformations and City Quarters projects. In total, CapEx is forecast to be around about GBP 140 million level for 2019 and 2020, which will support the appeal of our flagship centers but also allow for deleveraging.

So next, an update on like-for-like net rental income movements, and the bars show changes in NRI over 2018. And there are a wide range of performances, although these are generally in line with the guidance we provided last July.

For retail parks, the headline like-for-like NRI change is minus 4.3%, with major CVA and tenant failure impact of 4.7%. For U.K. flagships, tenant restructuring CVAs have hit NRI, so the sector saw a 1.3% decline. In our October update, we highlighted an NRI impact of GBP 6 million in 2018 across our U.K. portfolio from those tenant restructurings. For flagship destinations, the impact was equivalent to 2.1%, and without this, NRI would have grown by almost 1%.

Turning to France, the NRI movement is minus 0.9%. This is due to lower occupancy during the year and backdated turnover into Marseille in the prior year. Ireland had another positive year with NRI growth of 1.6% due to good leasing at Pavilions and Ilac Centres. And outlets generated excellent uplifts, with like-for-like NRI growth of 4.1% for Value Retail and 10.4% in VIA.

So the group total was 0.3%, shown in the bottom. This is lower than we would like. So over the medium term, we will adjust the portfolio and occupier mix, as David will explain later. And we continue to target a group like-for-like NRI growth rate of 2%.

So on to Premium Outlets, and we are often asked for more information on the special business, which, as you know, I manage. Here is a 5-year history showing the spectacular growth of income, profits, property valuations and net assets, as you can see from the right-hand column.

Compound annual growth rates range from 21% to 27%. These figures are Hammerson's share of Value Retail and VIA. I'd like to point out some particular features. Marketing expenditure on the third row has increased significantly to GBP 34 million last year, although the ratio to GRI is stable in the low 20%, as shown in the blue row. The EBIT margin at 43% has also been consistent over the last 4 years.

Property values reached GBP 2.5 billion at the end of 2018, driven by revaluation over these 5 years of GBP 700 million. And this provided a total return on investment of over 16% per annum.

EPRA net assets were GBP 1.8 billion at December 2018, make up 31% of the whole group. So in summary, these exceptional growth rates have really benefited Hammerson.

More detail on outlets and this time on valuations, which are prepared by a specialist valuation team at Cushman & Wakefield. Outlet capital values are highly correlated to sales densities, and centers like Bicester Village with ultrahigh sales densities and nearly EUR 40,000 per square meter are very desirable.

We've categorized our 20 outlet centers into 3 groups determined by sales density shown in the bars, starting from the top group in green. This higher sales density group has a yield range of 3% to 5%, supported by exceptional levels of rental growth I've just mentioned.

You can see that yields increased as sales density falls. The specific villages are identified in the notes and generally, the less-mature VIA centers are in the medium sales density category in blue. We've been successful in increasing densities, which triggers yield compression and the weighted average yield of our outlet portfolio is 4.7%, reflecting our appealing growth prospects.

So finally from me, a review of earnings per share trends. And starting with the bar chart on the left, EPS during 2018 has been impacted by declines in like-for-like net rental income and, of course, major disposals, and you can see that in the red bars.

Developments, cost reductions and outlets did support earnings per share, so the year-on-year fall was only 1.6%. Looking forward, our strategy will dampen EPS over a 2-year deleveraging phase and this is shown in the middle column.

The significant disposal program will have a major negative effect on net rental income and, therefore, earnings. Being cautious, like-for-like net rental income movement could also be negative during this time, particularly in the U.K., as the impact of tenant failure and repurposing is worked through.

There could be EPS uplifts from refinancing in the cost-reduction program as well as Premium Outlets, as shown in the green bars. Overall, we believe EPS is likely to be down during this deleveraging phase. After 2021, EPS growth could return as the more-focused portfolio stabilizes NRI levels and the Cergy and Italie developments complete.

Earlier, I stated that the final dividend for 2018 was held at the 2017 level, and going forward, guidance for the deleveraging period is that we will seek to have a stable dividend.

So that's it from me, and now back to David.

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David John Atkins, Hammerson plc - CEO & Director [3]

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Thanks, Timon. So as you've just heard, our performance, although in line with expectations, have been mixed, which is I think unsurprising. It's tough out there and the markets are undoubtedly difficult, but not all of the macro themes are against us. So in the next section, I want to show you both how we're tackling the challenges and that we're well positioned to maximize returns from the themes that favor us.

Now before I go further, it's worth reminding ourselves of that diversified nature of our portfolio across different markets in Europe. As you can see from the pie chart, around half of our portfolio is outside of the U.K.

Now if you look to the right, let's consider the wider consumer and retail markets. While it is tough in the U.K., the picture is better in France, Ireland and the across Continental Europe as a whole. Online penetration is not as advanced in these markets and consumer spending is more robust. This all reads through to rental income growth, which will be positive in core markets outside the U.K. and strongest overall in Premium Outlets.

So on this slide, I want to give you an overview of those macro themes I mentioned, and I want to pick out 4. The first in the top left is a structural shift in retail. It's real, it's happening and it's not going to stop any time soon. This has challenges for our business, but I'll also show you that it's not all bad news.

There are other themes that are more supportive for us, like the fact that people increasingly want to spend money on experiences. Next, there was a strong growth at the luxury end of the market bolstered by the rise of international tourism and consumers' desire to buy luxury brands.

And finally, thriving cities. Economic growth is not uniform. Key cities are growing as never before, becoming wealthier and attracting more people. We are located in those cities.

Let's now look at each of these themes in turn and the plans that we have developed to maximize our performance. And the most obvious and important theme I'm going to talk about is the structural shift in retail. As you can see on the left, there's been a steady linear progression on online -- of online penetration in the U.K. over the last 7 years, which will continue.

As a fairly direct consequence, we have seen material store closures over the same time frame, as shown on the right. Now this is painful, but it is not the death of physical retail. Different types of retail are affected in different ways, as you can see on our next slide.

The impact to that structural shift shows up in the footfall and sales performance of our U.K. flagship destinations as shown on the left. Footfall declined by 1.8%, although we outperformed the benchmark. Sales also declined by some 2.9%. And here, we are broadly in line with the benchmark.

Of course, we are clear that these numbers do not reflect the true value of sales influenced by stores in our destinations. They don't, for example, include online catchment sales or click & collect picked up in store. Conversely, they do often include returns to stores, which negatively impacts store sales. All helping to explain why despite negative headline sales, we continue to post good leasing and rental numbers.

Now looking at the main chart on the right, you can see that underneath the headline numbers, there is a huge variation in retailer performance. At a category label, luxury department stores and leisure are the standout winners, with traditional high street fashion being the most challenged.

Many categories are red, highlighting sales declines, but that is only half the story. The other half, which you can see from the gray lines, is that there are lots of retailers in almost every category that are growing strongly. This is the Zaras and Tommy Hilfigers of the world. Our job is to pick out those winners.

As you know, there was a record number of retail failures during 2018, and we wanted to give you good sight of where we stand with CVAs. As Timon explained earlier, in the U.K., we lost GBP 6 million of NRI due to these failures. Now that's not great, but to put that number into context, it's only 1.7% of our group passing rent. And through careful management of the process, the vast majority of these units remain trading.

Year-to-date, we have had just 6 units impacted and only 1 has closed. It's early days, of course, but reassuringly, we're still seeing good levels of demand for space from winning retailers.

Despite that shakeout, there's been an increase in the total number of brands that want to take physical space. It's up some 11% from 5 years ago as in the region of 500 new brands wanting physical space. This is because brands want visibility, which is increasingly important for digital retailers like Swoon and, new entrant, Morphe, where online penetration is difficult and expensive. We expect physical demand from retail brands like these to grow further.

As will direct-to-consumer brands like Samsung, Nespresso and Ray-Ban. Car manufacturers are also attracted by our high-fall locations with VW, Tesla and Mercedes all taking space in our destinations.

And finally, omnichannel retailer models underpin demand, too. So operators like John Lewis and Zara use stores to both improve service levels and drive down costs on fulfillment and returns. Stores also increase online sales in the catchment area by anything from 15% to 30%.

The demand from brands is evident in our leasing numbers. 2018 group leasing volumes in the dark blue showed another strong year with over GBP 24 million of income secured, and this is broadly in line with 2017's record performance.

This key facts box on the bottom right shows that group leasing versus ERV was up 6%, and leasing versus previous passing up 5%. In the U.K., we saw a 7% uplift from settled rent reviews. In short it is clear that brands like & Other Stories, ARKET, Polo Rapha Lauren, Jo Malone and Bose want high-footfall, high-quality venues. This underpins demand in our flagship destinations and our continued confidence in them.

Now here's some color on our leasing strategy in the U.K. We've used this slide before with you, and I really like it. The columns to the left show the current retail category mix in our destinations and the shift in the mix that we will deliver to ensure that our venues are full of winning brands, meeting customer demand and driving performance. The right-hand 2 columns show the strategy and action through our leasing performance in 2018.

As I said at the start, rents are falling for some categories. But this chart clearly demonstrates there is rental growth available in others. And for example, by shifting the mix towards aspirational fashion and consumer brands, we are making sure that we capture it.

As the mix changes, the rental profile also changes. Less department store space in the future is an opportunity to significantly grow income, in some cases, from GBP 10 a square foot to GBP 50 a square foot, whilst also enhancing the shopper experience, and we have great examples of having done this.

At Cabot Circus, we repurposed the former Bhs store and relet it to TK Maxx and Metro Bank, increasing income by GBP 1.1 million and the yield on cost just over 9%. And although it's not shown here, you might also remember that last year we reopened the reconfigured former House of Fraser store in Leicester, and here we doubled the rent in the process.

Right now we're actively planning for further department store repurposing. An example at the bottom of this slide, based on one of our existing department stores, we're looking at a combination of retail, leisure, F&B and coworking space, and we're confident this will deliver income uplifts of at least 50%.

Let me move on to the next theme, elevating the experience. This chart details how people spend their free time. Meeting friends and family, eating out, shopping and the big day out are all huge. Nothing in this data says that physical stores are finished.

Real experiences attract people. Birmingham was headline news around the world in January when YouTuber, James Charles, made a personal appearance at the new store at the Bullring for the digital makeup brand, Morphe. We had 77,000 applications for the meet and greet and 12,000 of his sisterhood turned up in person, absolutely phenomenal.

Morphe, a brand for the Instagram generation; James, a YouTuber, coming together in real life at Bullring, and that's an experience you cannot create online and why retailers want our space.

F&B is a big part of the experience. Beyond the category, suffering from short-term rental declines as a result of over expansion of CVAs, we see a major shift happening in the type of F&B that consumers want.

More than half of our U.K. leasing in this area last year was to high-quality of the local and regional independent brands, so all but the best formulaic brands are biting the dust. Instead, we have Indian street food from Mowgli, or vegan fast food joint, Miami Burger, and we expect to see more brands like these. They create buzz and excitement.

And talking of buzz, we're thinking hard about events, making our destinations places that people want to spend their time in. The Festival of Light at Westquay, that you can see in the picture to the left, increased footfall by 11%. And so we plan to invest another GBP 2 million in experiential events like this to drive footfall in 2019.

And to enhance the overall shopper experience, we're also making some smart digital investments, like our transactional websites, which support product sales for our retailers. Launched already at Bullring, Westquay and Brent Cross, they've been a real success and we're rolling them out across the U.K. And we anticipate a sales turnover of GBP 10 million this year, supporting retailers that are in our centers.

The next thing -- theme we like is the outperformance of our off-price luxury. Here, the message is simple, and Timon has already partly covered it. Growth rates are strong and forecast to average over 6% a year in the foreseeable future. Off-price channels are particularly popular with luxury premium brands because they offer high profitability and access to new customers.

Again, as Timon said, our outlets are differentiated by sales density. Hammerson's interests are heavily weighted towards those most successful venues, with more than 65% of our income derived from our top 6 outlets. In Bicester, Paris, Barcelona, Madrid, Lisbon and Mallorca, these provide a high-end brand offer across our portfolio, maximizing benefits from luxury spending growth, which will continue to drive portfolio performance in the future.

Now we come to the last theme that supports our business. This, very simply, is that our flagship destinations are located in thriving European cities. These are cities where affluence is growing most strongly. Out of the top 5 fastest growing cities in the U.K., we are in 3, and all of our French destinations are in the top 10.

Now Hammerson has a long and successful heritage of mixed-use developments, from flagship retail destinations to offices, hotels and residential units. You'll be well aware of our existing development program. In France, we're on site with the extensions of both Les 3 Fontaines in Cergy and the Italik at Italie Deux in Paris. Major projects in the U.K. include Brent Cross in North London and Croydon to the south.

And I've talked about the challenges surrounding the economic and political outlook and the structural changes facing retail. Given these, we are reviewing our plans with our partners to ensure that these proposed developments respond to changing customer needs and are appropriate for the future.

And we'll review these developments through a City Quarter lens. The thriving cities that we're in need retail, but they also need other things. And Hammerson has one great advantage here, our footprint. We have 97 acres of land around our flagship destinations and our other major developments. We have the opportunity to break down the walls between our flagships and the cities we're in, in a way others cannot. That is what City Quarters is about.

And to give you an idea of the long-term potential, this slide shows a scale of what's possible, and it's very significant: 6,600 residential units, 1,200 hotel rooms, more than 200,000 square meters of workspace, 9 parks and amazing public spaces.

But this is not all about the future, we have some clear and targeted developments where we can create value in short order. In Dublin, we have the opportunity to build 100-unit residential building. In Leeds, a hotel. And in Birmingham, we plan to upgrade a vacant office building into flexi work and hotel space.

These types of developments are attractive in their own right, but they also drive footfall and spending to our flagships, making them even more attractive. We aim to get planning for at least 2 sites this year with initial delivery by the end of 2021. Longer term, the opportunity will be for us to maximize our footprint by creating thriving neighborhoods where people can work, live and play.

So let's wrap up. We're intensely focused on making sure we run the business in a way that takes account of the realities of the environment we are in. It's tough, but we have strong occupancy and leasing, and many reasons to be confident about the long-term success of our business.

In the short term, investment sentiment is pretty poor, so we're running a tight ship. We'll pay down debt, we're committed to exiting retail parks sector and we're actively pursuing other portfolio-wide disposals with an open mind. We are fully focused on execution in every aspect of what we do.

To create value, we are managing change in shaping the business. We will continue to evolve our spaces. We are actively rotating the brand lineup. We're enhancing the experience for shoppers.

Finally, we are thinking beyond retail. We are starting the journey to break down those walls of our flagships and unlock the value of our landholdings, both short term for immediate value, but also long term as we tap into the needs of the thriving cities we're in.

You should all have absolute conviction that in this tough market, no stone will be left unturned, and our strategy will help us to outperform and maximize value for all shareholders.

Thank you for listening, and let's now take your questions.

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Questions and Answers

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Benjamin Paul Richford, Crédit Suisse AG, Research Division - Research Analyst [1]

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Ben Richford from Crédit Suisse. Just wondered if you could elaborate a little bit more on this agreement with -- with Elliott this morning, you haven't referenced it in the presentation. One observation is that they don't have a particularly big shareholding, so how were they able to influence you to such degree? And are they -- what's their goal in appointing these new nonexecutives?

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David John Atkins, Hammerson plc - CEO & Director [2]

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We've been in discussions with all of our major shareholders in recent weeks and months, including Elliott. We've come to the conclusion that we need to be more on front foot with disposals, and in particular, make it clear what we're trying to achieve and what the level of our ambition is and what our absolute focus in the business is, which is reducing debt. I think the addition of 2 nonexecutive directors, which should be absolute crystal clear, are Hammerson appointments, our headhunter, our decision is a sensible idea. And creating an Investment Committee, again, is not uncommon for companies, certainly real estate companies, and I think it -- what that tells you is that we're absolutely focused on those disposals. So I think this is a positive engagement. We've had a constructive dialogue with them, as indeed we have with all of our major shareholders, some positive statements by Elliott and 1 or 2 other shareholders this morning. So I think this makes absolute sense for the business.

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Benjamin Paul Richford, Crédit Suisse AG, Research Division - Research Analyst [3]

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So will -- is it their control, this new committee, to decide what to dispose of and can they dispose of more than GBP 900 million, for example? Was it board decisions for disposals still?

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David John Atkins, Hammerson plc - CEO & Director [4]

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Other than normal engagement with them, as with all shareholders, there is no influence over that committee. It is chaired by Andrew Formica, he will be an existing NED. We'll have a number of NEDs on it. Obviously, we will attend it as part of our normal executive duties. We drive that disposal program. We have decided what we're going to sell and we'll update the markets as we do that.

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Benjamin Paul Richford, Crédit Suisse AG, Research Division - Research Analyst [5]

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Okay. And just one other question. You've referenced the 7% discount to book value as being a good outcome. And obviously, values have reset downward. As we look forward to next year, what will the disposals be at versus the FY '18 book value? And how do you see that as being a good outcome?

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David John Atkins, Hammerson plc - CEO & Director [6]

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Well, if you don't mind and as you might imagine, if we're in the middle of a major disposals program and we've given quite a lot of visibility on the quantum, it doesn't seem sensible to outline what my expectations on pricing is at this stage. You'll clearly understand that. We're not going to give sort of a blow-by-blow account of these disposals, but we will report once they're done.

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Jonathan Sacha Kownator, Goldman Sachs Group Inc., Research Division - Financial Analyst [7]

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Jonathan Kownator from Goldman Sachs. Two questions, if I may. To come back to the disposal programs where you've announced a target of over GBP 500 million for '19, you said you have, obviously, ambitions and be clear about what you want to do. You've given target for 1 year, so for 2019, and you, I think, indicated there's limited retail parks in your discussions currently. What should we expect beyond that? You have a cap in terms of LTV, but you don't seem to have a target. Should we assume that you want to go back to 35% consolidated? Or what should that be on the proportionately consolidated basis as well?

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David John Atkins, Hammerson plc - CEO & Director [8]

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So in the disposal program, there are a handful of retail parks in the current GBP 900 million that we've outlined, but we've also affirmed our ambition to exit retail parks as we've always said over the medium term, next 2 to 3 years, and there's about another GBP 800 million today of retail parks that we have to dispose of. So that gives you a guide of where further disposals will come from. But in terms of LTV, we've said before and we say again that our ambition is to bring LTV down to the mid-30s.

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Jonathan Sacha Kownator, Goldman Sachs Group Inc., Research Division - Financial Analyst [9]

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Okay. And so on retail parks, obviously, you've tested the market, you've written down your valuation by 13%. Are you expecting to find a better market in 1 or 2 years' times? Or are you expecting, effectively, to have to write down more of your valuations before you're able to sell those business parks?

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David John Atkins, Hammerson plc - CEO & Director [10]

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To be clear, we're not waiting 2 to 3 years to sell our retail parks. If we find buyers at what we believe are attractive prices that add value for our shareholders, and I referenced the share price today, then we'll take it. So I think we will execute those disposals. The time frame will be from now through 2 to 3 years. We've sold 4 last year. So I don't -- I'm not saying we won't sell them, but I'm just being open-minded about the exact time frame.

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Jonathan Sacha Kownator, Goldman Sachs Group Inc., Research Division - Financial Analyst [11]

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Okay. One more question, if I may. On your like-for-like rental guidance, so at 1H '18, you said effectively that from 2020, it would become positive again. I think this time you are saying that it's going to be from 2021. Can you confirm the change in view and what is driving this sort of further temporary weakness?

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David John Atkins, Hammerson plc - CEO & Director [12]

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Timon, do you want to just cover the detail of NRI?

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Nicholas Timothy Drakesmith, Hammerson plc - Director [13]

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That keyword is cautious. And the comments I made about earnings per share, I said being cautious about net rental income, particularly in the U.K., that could be negative for 2019 and possibly for 2020. These are volatile times. I think it's dangerous for us to predict with too much accuracy what happens to major tenants. We're in the midst of quite a significant restructuring of our occupier mix, and that may have temporarily short-term negative impacts on NRI. So we're reflecting, since July, Jonathan, a worsening of market conditions, particularly in the U.K. occupational market.

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Alan Carter, [14]

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Alan Carter, Stifel. Can we just come back, sorry, to these disposals, because originally the target was to reduce and then completely exit the retail park portfolio? The tone of what you said today about disposals is that they will be 4 different types of assets, obviously within retail, across different territories. That kind of smacks of whatever you can sell, you would sell at the moment. So is that the overriding consideration to reduce net debt? And then back to this Elliott thing. You say subject to certain terms and conditions on this standalone agreement for the 12 months. Are you in any way able to share what those special terms and conditions may be? And then finally, just an observation, bearing in mind Timon mentioned the RICS valuation directive at the end of last year, I think in connection with the Premium Outlet business, you referred to the fact that the net initial yield on that portfolio was 4.7%, reflecting the very strong rental growth prospects. I just wondered how your valuers referred to the U.K. portfolio, where the net -- shopping center portfolio, where the net initial yield is 10 basis points higher, but the ERV performance is negative. That just seems to be slightly inconsistent to me.

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David John Atkins, Hammerson plc - CEO & Director [15]

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So if I take the first couple. The disposal program is planned. We earmarked the GBP 600 million last year, we pretty much achieved that. The GBP 500 million this year, we've expanded. We are targeting disposals. We're not sitting waiting for the phone to ring, Alan. So we know what we want to sell. But we're saying that if we get other approaches, we certainly would consider those based on the pricing and whether we felt it added true value to shareholders. But as we sit here today, we know what we want to sell. In terms of the other conditions with the Elliott agreement and let's take the positive. This is a positive agreement with Elliott. This is constructive. They're relatively minor conditions, genuinely nothing there of substance. I'm not really proposing to go through line by line of it. But I'm very confident that we have a stable agreement and relationship with Elliott for the foreseeable future, and that gives us an ability to execute our business plan, get on with it and add value to shareholders. Ultimately, we're all in this together. We're trying to prove the value of this company, which I believe is understated by the stock market today. And do you want to cover the income...

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Nicholas Timothy Drakesmith, Hammerson plc - Director [16]

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Yes, I think it's a good observation, Alan. The initial yields for our U.K. shopping centers are almost exactly the same as our outlook portfolio, 4.7%, 4.8%. It's a bit apples and pears, though, bearing in mind the dispersed location of our outlets, ranging from Ireland to the Czech Republic, from Norway to Portugal, so you've got quite different markets. You've got quite different sizes. Some of our outlets are extremely big, some of them are quite modest. So I think it's coincidence. I don't think you should draw too much conclusion other than to make the obvious observation that outlets are a specialist industry and often they are valued using DCF techniques. Whereas, mainstream shopping centers have more comparables, admittedly less in 2018 than in previous years, but there are comparables that Cushman & Wakefield look at. So I think for me, it's just a happenchance they're very, very similar, but I do want to reinforce that we are very comfortable with the yields of all parts of our business, and we've undergone a lot of scrutiny to evaluate that.

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Colm Lauder, Goodbody Stockbrokers, Research Division - Real Estate Analyst [17]

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Colm Lauder in Goodbody. Just a question for this further clarity on the disposals program. Obviously, the GBP 500 million target for this year perhaps rolling forward to GBP 900 million under the open-minded outlook, and then the retail parks on top of that. Is that additional GBP 400 million, is that in addition to the broader retail parks view or perhaps could you give a bit of guidance in terms of the proportional breakdown of that GBP 500 million or GBP 900 million versus retail parks? So the additional uplift, would that be an acceleration of the retail parks disposals or of...

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David John Atkins, Hammerson plc - CEO & Director [18]

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The GBP 900 million you mean?

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Colm Lauder, Goodbody Stockbrokers, Research Division - Real Estate Analyst [19]

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Yes, correct.

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David John Atkins, Hammerson plc - CEO & Director [20]

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No. So the GBP 900 million includes a small handful of retail parks. So we are increasing our overall target for 2019 from GBP 500 million to GBP 900 million. In the main, you should take that because that's obviously assets that are not retail parks, and we have, as we've said, reaffirmed our ambition to exit retail parks at the medium term, which is up to GBP 800 million, albeit some of that is in the GBP 900 million.

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Colm Lauder, Goodbody Stockbrokers, Research Division - Real Estate Analyst [21]

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Okay. So to be clear then, to add the 2 together, effectively, we're looking at potential disposals about GBP 1.5 billion on a medium-term view.

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David John Atkins, Hammerson plc - CEO & Director [22]

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Well, there's overlap between retail parks and the current disposals, but you're probably not far wrong, yes.

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Colm Lauder, Goodbody Stockbrokers, Research Division - Real Estate Analyst [23]

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Okay. And then just one other point as well, particularly through the teasing out the City Quarters concept, the 6,000 potential residential units, the broader schemes in terms of the alternative use size. From sort of a CapEx, are these projects Hammerson would take on from a development perspective or are these farmed out through a joint venture, forward sold? What's your ambition around that?

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David John Atkins, Hammerson plc - CEO & Director [24]

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Yes, in the short term, it's about getting planning permissions. We certainly will start 1 or 2 of those smaller projects I outlined, individual hotel and workspace buildings. That's well within our budgeting. Workup is a few million pounds. This landholding is in our books, it's sort of over GBP 300 million. We think we'll get a good uplift on planning permission. But I think in terms of funding that wider pipeline, clearly, it's significant, but that is a decision for another day. And our business is heavily joint ventured, we've got some amazing partners, all of whom love many of those sectors. So I think we've got plenty of options.

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Marcus Andrew Phayre-Mudge, BMO Asset Management (Holdings) plc - Head of Property Team and Fund Manager [25]

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Marcus Phayre-Mudge, BMO Global Asset Management. A number of questions, if I can just ask you to answer each one in turn rather than give you all the questions in one go. To Timon's earlier comment that he's very comfortable with the yields that are ball-parked for the value of your business. Could you confirm that your valuers have had sight of every single offer that you've received on any asset over the last few months? I mean, clearly, the market is aware that you've been asking – or trying to keep buildings that you are marketing kind of under wraps as it were, there've been talks of NDAs, et cetera. Have you received offers wildly outside of the current valuation? I mean, it's that -- valuation is an art, not a science, I accept that. But what we're -- the reason for the question is to try and prepare myself, as a shareholder, for the sort of write-down that I'm going to be occurring.

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David John Atkins, Hammerson plc - CEO & Director [26]

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I think, Marcus -- I mean, we've sold half of Highcross. We had different offers on that building worth -- some were worth, clearly, than the ultimate price we achieved. We have had a range of very indicative proposals, but we've got GBP 900 million where we're in active discussions. So we have a lot of visibility on those. Look, I think in the U.K. it's clear that values are falling. I just don't want to be precise and speculate about exactly what that level will be. Genuinely, for obvious reasons, I think it would be not in our interest, your interest or the market in general, to define what that is. In the same way when values are increasing, we can all come up with numbers. So I don't want to be unhelpful, but I don't think we should be any more specific. In terms of the wider discussions, we do have an open dialogue with our valuers. In the same way they see rental offers, they know what concessions we might be offering some tenants at times. And they are certainly aware of the general tone. I can't say every single offer, but the vast majority, they are fully aware of.

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Marcus Andrew Phayre-Mudge, BMO Asset Management (Holdings) plc - Head of Property Team and Fund Manager [27]

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Okay. Next question, what percentage of the retail warehouse portfolio, today's portfolio, was actually originally the junction portfolio that you bought after the sale of the city office portfolio to Brookfield, i.e. is it the majority of that retail warehouse portfolio?

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David John Atkins, Hammerson plc - CEO & Director [28]

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No, it's not. It would be, I think, 3 assets are left, maybe 2. We've sold a couple last year out of Junction portfolio, so something like that. Remember, Marcus, when we sold the office portfolio to Brookfield, one of the main things we did with the money was to invest in Premium Outlets, which has shown an ungeared IRR of about 28% since investment. So I take the criticism about the shift to offices, but I don't think people are really seeing through exactly where we put the majority of that money.

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Marcus Andrew Phayre-Mudge, BMO Asset Management (Holdings) plc - Head of Property Team and Fund Manager [29]

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Correct. No, it's useful. Which brings me onto the Premium Outlets question. Timon, according to Table 14 on Page 66, I appreciate it's not on the presentation, but the debt levels are up 30%. Obviously, there's an in-line increase in the deferred tax. Can we see that this is the sort of debt level that you're happy with in these vehicles going forward given you're trying to reduce debt elsewhere?

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Nicholas Timothy Drakesmith, Hammerson plc - Director [30]

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Yes, it's a good question, Marcus. So at VIA, we have an LTV of about 38%, in Value Retail it's about 36%. You're absolutely correct to say that over the last 18 months, particularly in Value Retail, there's been some refinancing to extend the debt facilities to pay for some extensions like Bicester Village and also cheapen up the cost of debt. There will always be some refinancings in both businesses, but the outlook is more of a stable debt level for both platforms. So I think it's okay in the mid-30s, and I don't see it materially increasing. Meanwhile, we have some exciting extensions and remodeling projects, which are expressed at the back of the presentation, and I think that will help capital values continue to rise in outlets.

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Marcus Andrew Phayre-Mudge, BMO Asset Management (Holdings) plc - Head of Property Team and Fund Manager [31]

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Okay. And 2 more questions. First is a statement, is a plea from a bruised and battered shareholder. Can we go back to a proper LTV level so we can see all the debt? It's 43%, not 38%. Stop messing around with that. And last question...

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David John Atkins, Hammerson plc - CEO & Director [32]

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Hang on, if that's a question, does it deserve an answer? I mean...

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Marcus Andrew Phayre-Mudge, BMO Asset Management (Holdings) plc - Head of Property Team and Fund Manager [33]

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No, it wasn't a question. It was a statement. I mean, it's 43%...

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David John Atkins, Hammerson plc - CEO & Director [34]

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Well, okay it's not a question Marcus.

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Marcus Andrew Phayre-Mudge, BMO Asset Management (Holdings) plc - Head of Property Team and Fund Manager [35]

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43% is on the back page of the present...

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Nicholas Timothy Drakesmith, Hammerson plc - Director [36]

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We're being transparent, Marcus. Thank you.

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Marcus Andrew Phayre-Mudge, BMO Asset Management (Holdings) plc - Head of Property Team and Fund Manager [37]

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No, you are, you're there. It is on the last page, it says 43%. On the front page, it's 38%. I'm just making -- it was an observation rather than a question.

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David John Atkins, Hammerson plc - CEO & Director [38]

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I know, Marcus, but it's in our presentation, so everyone can see it. I don't really want...

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Marcus Andrew Phayre-Mudge, BMO Asset Management (Holdings) plc - Head of Property Team and Fund Manager [39]

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Absolutely. Yes -- no, I'm sorry -- yes, I'm sorry to highlight it. So last point, just back to this Elliott situation. I mean, I have to say, I've been doing this for quite a long time and this is quite a strange corporate governance where there's a -- a committee has been set up. So effectively, this committee, just so I'm clear, it's just -- it's everybody -- it's the NEDS except the management team, is that the point of this structure? So you guys are there as representatives, but you're not on that committee. Is that a -- difference between that and a standard board meeting.

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David John Atkins, Hammerson plc - CEO & Director [40]

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It's a committee of the board, exactly the same way the Audit Committee is a committee of the board, that I don't formally sit on nor does any Chief Executive in a listed business. It's there to give an added level of focus. Clearly, myself and my colleagues will attend that committee because we're the ones who are executing the strategy but it's just to give people externally a bit of comfort that we are absolutely focused on this, nothing more.

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Michael Campagna, Moerus Capital Management LLC - Co-Founding Partner & Research Analyst [41]

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Michael Campagna, Moerus Capital. You guys have expanded the disposal program in multiple assets and territories. Is that inclusive potentially of any of the VIA retail or any of the outlet stuff?

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David John Atkins, Hammerson plc - CEO & Director [42]

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Well look, I've said we are looking at multiple territories, multiple sectors. I'm not going to specify individual disposals, but we are open-minded about some disposals from each one of our sectors and all of our territories.

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Robert Alan Jones, Deutsche Bank AG, Research Division - Research Analyst [43]

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It's Rob Jones, Deutsche Bank. Just a couple of quick questions as most of mine have been answered. Just on the divi outlook, Timon, you said stable. Should I think of that in terms of my model as keeping the payment for the last 12 months the same in the next couple of years? And if so, how does your -- how do you kind of think about your payout ratio going forward in relation to that? And then secondly, just back to Elliott again, apologies for touching on this again, but what I don't understand genuinely is there's a number of things that they've said they will and won't do per your comments today. But I don't quite understand what it's in it for them if they can't influence the 2 NED appointments, et cetera, et cetera. And then the final one on Elliott is, it's difficult to tell based on the various different kind of data providers that we get, kind of FactSet, Bloomberg, et cetera. But it's my understanding that they hold 9% of the company, is that your understanding as well?

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David John Atkins, Hammerson plc - CEO & Director [44]

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So on the shareholding, I think they hold their interest through multiple derivative arrangements. So factually, we are not aware of exactly what their shareholding is. Under the regulatory requirement, they have to declare an interest above 5%. Next time they have to declare an interest, it would be above 10%. So clearly, they have somewhere between 5% and 10%. But I wouldn't want to speculate or discuss shareholder levels beyond that. And sorry, Rob, your other question on Elliott was...

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Robert Alan Jones, Deutsche Bank AG, Research Division - Research Analyst [45]

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It was just around the fact that there's a lot of things in the statement that they say they kind of will vote on and the things that they say that they won't do. But I don't understand why they would make -- have an agreement with you if there's no kind of benefit for them on their side as well.

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David John Atkins, Hammerson plc - CEO & Director [46]

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Well, the benefit is that they believe we're getting on and managing the business that we think is right, they think is right and other shareholders think is right. So there's quite a lot in there. And I think what that shows you is, in the first line of their announcement, a constructive dialogue. And they're happy to confirm to the market that they're in accordance with our strategy and that we've got a period of stability to get on and executed it. So I think it's a positive statement to the market. It's quite unusual, but it shows you the relationship we have with them.

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Robert Alan Jones, Deutsche Bank AG, Research Division - Research Analyst [47]

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Okay. And then just the divi as well.

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Nicholas Timothy Drakesmith, Hammerson plc - Director [48]

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So on the divi, Rob, on Page 18, this is the outline of the drivers of future earnings. And it's fair to say that if we execute a very large disposal program, that's clearly going to pull down earnings per share. That's why we are issuing guidance of a flat dividend going forward during the deleveraging phase. Clearly, you can do your own modeling. I think that we are comfortable using our own forecast that there'll be appropriate dividend cover for a flat dividend. A lot of it depends on the scale and the source of those disposals. Selling lots of high-yield retail parks quickly is going to be negative for earnings per share. Spreading disposals across the portfolio from some areas with say a 4% yield, will not be so negative. But I think the sensible cautious guidance is a flat dividend, which has got appropriate cover.

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David John Atkins, Hammerson plc - CEO & Director [49]

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I'm conscious we're probably going to have some calls over the line. We'll come back we've got time to cover, I mean a couple more in the room. But can we just, at this point, go perhaps to people who are on the call who have been waiting patiently, and then we'll come back to any final questions in the room, is that all right?

Oh, we have no questions on the call, all right. Well, that's easy. We will have, I think, a couple of final questions here.

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Rubinder Singh Virdee, Green Street Advisors, LLC, Research Division - Analyst of Research [50]

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It's Rob Virdee from Green Street Advisors. Just on capital allocation, your share buyback report that you've done at the moment, just can you give me some color on how you're thinking about that? When do you look to reinstate it, is it once you've finished your disposal program or once you've seen how the transactions in the markets are going? And then, also, on any developments or committed developments and how you view that in this deleveraging phase, particularly with some of the mixed-use developments you've been talking about today.

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David John Atkins, Hammerson plc - CEO & Director [51]

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Want to cover the share buyback, Timon, I'll cover CapEx...

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Nicholas Timothy Drakesmith, Hammerson plc - Director [52]

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Yes. So last year, as you know, we had GBP 570 million of disposals. We used the money to retire debt, pay down debt, to fund the CapEx and do about GBP 130 million of share buybacks. That was accretive to EPS and NAV. Market conditions have worsened over the last 6 months, so we've put that on hold. And I think we've been pretty clear this morning in saying the share buyback is unlikely to be restarted until we achieve our disposal target and market conditions stabilize. So we're not ruling out restarting it, but unlikely in the near term.

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David John Atkins, Hammerson plc - CEO & Director [53]

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And on the CapEx, we've got about, it's in the presentation, GBP 95 million committed for 2019, a further GBP 50 million of more discretionary CapEx, but -- so significantly down on last year. And obviously, as I've said, we're keeping quite a tight rein on capital. But we think it's important to continue to invest into our flagships that Mark and Jean-Philippe run. These are centers that require that investment. They generate more footfall and income, so we'll keep that running.

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Christopher Richard Fremantle, Morgan Stanley, Research Division - Executive Director [54]

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Chris Fremantle from Morgan Stanley. Just a couple of quick modeling questions just so we can get the earnings impact right. First, on the cost reductions, I think you mentioned some cost reductions. Can you just clarify what those are and what the phasing is? That's the first question. The second question is on the use of proceeds from disposals. You're not the first retail property company to announce more disposals, but it can make quite a different to the earnings whether you're paying down short-term or long-term debt, or paying down debt across the capital structure. So can you just confirm that you're paying down short-term revolver, and tell us what the cost of debt is on the nonrevolver part of your debt?

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Nicholas Timothy Drakesmith, Hammerson plc - Director [55]

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Okay. Shall I do both of those?

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David John Atkins, Hammerson plc - CEO & Director [56]

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Yes, go on.

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Nicholas Timothy Drakesmith, Hammerson plc - Director [57]

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All right. So you can turn to Page 58, while I'm talking about debt, that would be the cost reduction program, please. I think, Chris, the safest thing is to assume that we retire our revolving credit facilities. We still are drawn on those to quite a large extent, and therefore, that will save us around about a 1% interest charge. Now we could elect to do some liability management as we've done in the past, and those other companies have done, and buy back expensive bonds. However, that would entail crystallizing a negative mark-to-market. So I think the safest thing for modeling is assume we retire RCFs at a marginal cost of 1%. Meanwhile, on Page 58, we've set out the cost-saving program, and we've done pretty well so far to hit the majority of our GBP 7 million cost-reduction campaign. It's important, however, to mention that we're going to reinvest a high proportion of that cost savings in enhancing our customer experience. You can see that through technology and innovation as well as super events. So the net saving is probably going to be about GBP 3 million per annum from this year onwards, 2019 onwards.

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David John Atkins, Hammerson plc - CEO & Director [58]

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Right. I think that looks like all the questions. So thank you very much for those questions. Can I just finish by saying, clearly, this has been a difficult year for the business? Myself, the board, we are frustrated as you are with the share price, but to give you the assurance we are absolutely doing everything we can to improve that. I think the plan we've set out today will have -- will come through in the share price in due course. And I do appreciate your forbearance as we come through this period, but I think we're on it. We're not immune to the issues and hope to deliver some better numbers in due course. But thank you for coming.

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Nicholas Timothy Drakesmith, Hammerson plc - Director [59]

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Thank you.