Capital and Regional PLC (CAL) 2008年年度報告「LSE」.pdf

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1、Annual Report 2008Capital&Regional Annual Report 200801 Capital&Regional.what we do.business model.corporate structure02 Chairmans statement03 Chief Executives statement04 Operatingreview06 Financial review12 C&R Retail16 C&R Leisure18 C&R Germany20 Joint venture and other interests22 Risks and unce

2、rtainties24 Directors26 Directors report29 Statement of directors responsibilities30 Directors remuneration report40 Corporate governance report43 Responsible business46 Consolidated income statement47 Consolidated balance sheet48 Consolidated statement of recognised incomeand expense48 Reconciliati

3、on of movement in equityshareholders funds49 Consolidated cash flow statement50 Notes to the financial statements93 Independent auditors report Group94 Independent auditors report Company95 Company balance sheet96 Notes to the Company financial statements99 Five-year reviewSection 4Other information

4、100-105100Glossary of terms102Portfolio information103Fund portfolio information(100%figures)104Advisers and corporate information105Shareholder informationSection 1Business review1-23Section 2Governance24-45Section 3Accounts46-99Capital&Regional what we do01Capital&Regional Annual Report 2008 C&R i

5、s a co-investing property asset manager.This means that we manage propertyassets for funds and joint ventures in which we hold a significant stake We aim to build best-of-class specialist management teams for the retail and leisuresectors in which we operatebusiness model We operate asset businesses

6、 and earnings businesses Asset businesses comprise our investments in property funds and joint ventures,and our wholly-owned properties Earnings businesses comprise our property management teams,which managethe funds and German joint venture,and SNO!zonecorporate structure*Agreement was reached to s

7、ell the 50%investment in Capital Retail Park,Cardiff on 23 April 2009.Wholly ownedOtherassociatesand JVsGermanJVThe fundsCurrentC&R share:100%16.7%27.3%48.8%Manchester Arena Xscape Braehead Capital RetailPark,Cardiff*FIX UK Great Northern Leisure World,Hemel Hempstead Lower GrosvenorPlace20%-50%100%

8、19.4%EarningsbusinessesCapital&Regional plcAssetbusinessesSNO!zoneOverviewIn a year of extreme financial and economic turbulence,Capital&Regionals performance in 2008 has been severely affectedby the related fall in property valuations.Nonetheless,howeverdifficult market conditions have been and how

9、ever widespreadtheir impact on property investors,your Board regards the pre-taxloss of 516 million and the resulting 73%fall in triple net dilutednet assets per share as a deeply unsatisfactory outcome.Throughout 2008,however,initiatives have been taken bymanagement,under its new leadership,which h

10、ave enabled theCompany to keep its head above the rising floodwater,and,although this task is not yet complete while further transactionsprogress towards finalisation,the further action being takenpromises to restore the Groups financial resilience.DividendIn the light of the continuing uncertainty

11、in the property market andtheconsequentdesirabilityoftheGroupconservingitscashresources,the Board is not recommending the payment of a final dividend,leaving the total for the year at the 5p paid at the interim stage.The BoardHans Mautner has asked to retire from the Board following thisyears Annual

12、 General Meeting,when he will have completed twothree-year terms.His knowledge of the worldwide property industryand his strong judgement have made him a highly valued Boardmember and we are very grateful for his significant contribution.Responsible businessCapital&Regional has continued to manage r

13、esponsible businessin the same way as it does other operating areas,by allowingoperating divisions autonomy to develop an approach suitablefor them,whilst providing broad strategic direction through aResponsible Business Committee.The statement on responsiblebusiness sets out the Groups achievements

14、 in 2008.Our peopleOur teams have worked tirelessly throughout the year,despite thesevere headwinds the Group has encountered.The restructuringand re-financings undertaken or in train would not be possiblewithout the recognised excellence of their core property assetmanagement skills.I would like to

15、 thank them on your behalffor their efforts.02Chairmans statementCapital&Regional Annual Report 2008OutlookDespitesomeimprovementinsentimentaroundthepropertymarketin recent weeks,valuations have been generally declining in the firstquarter albeit at a slower rate than at the end of 2008 and rentalin

16、come is inevitably being affected to some extent by the economicconditions.In this environment it is therefore important for theCompany to finalise the transactions currently in an advancedstage of negotiation.The Company enjoys partnerships,some long established,othersmore recent,with a number of p

17、owerful financial institutions andthese have proved vital in securing both a more stable immediateposition for the funds and joint ventures and the prospects ofrenewed success in the future.The Board is determined that,in the foreseeable future,shareholdersshould enjoy an improvement in returns,afte

18、r a period of very poorperformance.It continues,therefore,to review and explore a widerange of options,in addition to the transactions currently beingpursued,which could accelerate the achievement of this objective.Tom ChandosChairman“Capital&Regionals performance in 2008 has beenseverely impacted b

19、y the fall in property valuationsresulting from a year of extreme financial andeconomic turbulence.”Tom ChandosChairmanResultsThe last 12 months have seen some of the most difficult conditionsfor the property market in many years.Falling property values havehad a very significant impact on the Group

20、s performancein2008.We have reported a pre-tax loss of 516 million,aresultwhichIknowisdeeplydisappointingnotonlyforshareholders but also for all whowork at Capital&Regional.Recurring profitability,which measures the underlying tenant-facing business,has been more resilient.We have reported recurring

21、pre-tax profits of 27.6 million compared to 32.7 million in 2007,reflecting sound underlying operating performance.Our core skillsare as a property asset manager of complex retail and leisure assets.These strengths have again proven themselves in challengingmarket conditions.As at 30 December 2008,w

22、e continue tomanage a portfolio of just under 4 billion.Whilst the marketenvironment remains uncertain,this franchise provides a solidplatform to grow the business as market conditions stabilise.Property values have fallen significantly further and faster thananticipated at the end of 2007,reflectin

23、g a lack of liquidity ininvestment markets.Valuations at a property level for each of theMall,The Junction and X-Leisure funds have collectively fallen byover 1.5 billion during 2008 and the falls in unit prices have beenproportionally still greater given the gearing levels in the funds.It is this c

24、ombination that has led to a fall in Capital&RegionalsNAV from 10.04 to 2.67 per share over the year.Financial positionAgainst this background,managements focus has been onstrengthening the financial position of the Group and each ofthe funds.We have made solid progress towards achieving thiscritica

25、l objective during the year:Statutory debt(which has some recourse to the Group balancesheet)has fallen from 625 million at 30 December 2007to113 million as at 30 December 2008.This was largely achievedby the sales of 80%of the FIX UK portfolio and 50%of theGerman portfolio.The Malls financial posit

26、ion has been substantiallystrengthened as a result of the 286 million sale of threeshopping centres to Carlyle and the 286 million rights issue.We renegotiated our financial covenants with our principallending bank to provide us with greater covenant headroomwithin our facilities.Actions have been t

27、aken to deliver cost savings of 3 million perannum in 2009 which will help offset the impact on recurringpre-tax profits of disposals,dilution and lower valuations.These actions have ensured that as at 30 December 2008 wewere in compliance with all our key banking covenants at Groupand core fund lev

28、el.Since the year end,we have continued toprogress plans to strengthen the financial position of both TheJunction and X-Leisure funds.X-Leisure has completed the sale ofthe 02 Centre,Finchley Road,for 92.5 million.Both X-Leisure andThe Junction have also announced plans to raise new equity intransac

29、tions which,once approved,will also benefit from revisedbanking arrangements to ensure both funds have the necessaryfinancial resilience.In view ofthewishtomaintainfinancialflexibility,wearealsoinnegotiations with our principal lending bank on furtheramendments to the Groups core revolving credit fa

30、cility.OperationsWe believe that current market conditions will have a long lastingimpact on the relationship between landlord and retailer which willinevitably have an impact on the structure of leases in the mediumterm.The direct management approach adopted by Capital&Regionals Property Asset Mana

31、gement teams is geared to beingresponsive to retailer needs which will be critical in attracting newretailers to the attractive and competitively priced space we offer.OutlookMarket conditions remain fragile.It is therefore important thatthe Group is resilient enough to absorb further falls in prope

32、rtyvalues in 2009.The actions which are under way to strengthenthe financial position of The Junction,X-Leisure and the Groupare indicative of our determination to ensure Capital&Regionalis not only well positioned against further market weakness butcan also begin to take advantage of opportunities

33、as marketconditions improve.I strongly believe that our operating platformhas unique characteristicswhichcanbeleveragedmoreeffectivelyinthefuture.Inparticular,ourspecialistexpertiseandmanagementskillsintheretailandleisuresectorswillgiveusclearadvantagesinthischallengingmarketenvironment.Execution is

34、 key.A number of transactions both at the Fundand Group level have yet to close.Although I believe we are wellon the way to a successful outcome,uncertainty remains untilcompletion.These risks are covered more fully in the risks anduncertainties section.I am realistic about the need for the Group to

35、 consider a wide rangeof financial and strategic options both to strengthen the Groupsfinancial position and to begin the task of rebuilding shareholdervalue.We will therefore continue to focus on de-leveraging theGroup balance sheet,to identify opportunities to recycle capitaland to make selective

36、investment where returns are compelling.Hugh Scott-BarrettChief Executive03Capital&Regional Annual Report 2008Chief Executives statementHugh Scott-BarrettChief Executive“Managements focus has been and remains onstrengthening the financial position of the Group.We have made solid progress towards ach

37、ieving thiscritical objective during the year.”Tenant marketsDespite well-publicised problems in the wider economy and anumber of high-profile failures and administrations,our tenant-facingbusiness has continued to deliver a satisfactory performance,though in the light of the continuing downturn,we

38、closely monitorthe financial position of our tenants.During the year,the part ofthe leisure sector in which we operate was hit less hard than theretail sector,with cinemas and restaurants at the value end of thespectrum continuing to trade reasonably well,and this appearsto have remained the case in

39、 the first quarter of 2009.We thereforebelieve that the Group has the right mix of properties andmanagement skills to work with our tenants through the recession.The Group benefited from the diversification that its German jointventure brings,by providing exposure to a tenant market with adifferent

40、cycle to the UK that has continued to perform stronglyover the year.The operating performance of our tenant markets has thereforeshown resilience in the face of the economic downturn during2008.The key aspects of this performance were as follows:Occupancy levelsWe continue to see satisfactory levels

41、 of occupancy across thethree funds,notwithstanding the increased pressure that tenantsare facing.Where possible we aim to work with tenants who arefacing difficulties so they are able to continue trading.Across thethree main UK funds,occupancy was 94.6%at the year endcompared to 94.8%at the end of

42、2007.In the German jointventure,occupancy remained high at 98.2%at the year endcompared to 98.7%at the end of 2007.Our German portfolio isdefensive in nature with a tenant base comprising a majority offood retailers in established retail locations.Passing rentRental growth is a key measure of demand

43、 for space and thereforean important driver of performance.Notwithstanding the pressuresfrom the wider economy,passing rent fell by only 0.4%on aweighted average like-for-like basis in the three funds during 2008.This fall was driven largely by weakness in the retail market,asThe Mall and The Juncti

44、on saw passing rent falling by 1.7%and0.5%respectively,in contrast to X-Leisure where a combination ofstronger underlying tenant performance and a greater proportionof index-linked leases led to a 4.6%increase in passing rent overthe course of the year.In Germany,where index-linked rents arecommon,p

45、assing rent increased by 0.6%in 2008.AdministrationsAdministrations are one of the most important indicators by whichthe Group gauges the state of its tenants,and management of theadministration process can be a driver of relative outperformance.During 2008,there were a number of significant tenanta

46、dministrations,particularly in the last quarter of the yearfollowing the rapid decline in sentiment in the economy.The Mall saw administrations in 114 units during the year,withpassing rent of 11.0 million.This represented 7.2%of the rentroll at the start of 2008.Of this,39 units with passing rent o

47、f4.5 million entered administration in the last quarter of theyear.A further 73 units went into administration in the firstquarter of 2009,with passing rent of 5.0 million.37 of thesewere still trading at the end of the quarter with passing rentof 2.9 million.The Junction saw administrations in only

48、 four units duringthe year,but because these were predominantly large tenantsthis represented passing rent of 1.8 million or 3.8%of therent roll at the start of 2008.Three of the units with passingrent of 1.7 million went into administration in the last quarterof the year.A further five units went i

49、nto administration inthe first quarter of 2009,with passing rent of 1.5 million.None of these were still trading at the end of the quarter.X-Leisure saw administrations in 22 units during the year,withpassing rent of 1.7 million or 3.5%of the rent roll at the startof 2008.The last quarter of the yea

50、r accounted for 11 of theseunits,with passing rent of 0.9 million.A further five units wentinto administration in the first quarter of 2009,with passingrent of 0.4 million.One of these was still trading at the endof the quarter with passing rent of 0.1 million.There were minimal administrations in t

51、he German portfolioin the year and in the first quarter of 2009.Administrations are not necessarily an indication of tenant failureas many occupiers are able to continue trading through the process,but where units do close our ability to find replacement tenantsquickly is a key driver of performance

52、.As a result of the increasedlevel of administrations in the last quarter of the year,35%(byvalue of passing rent)of the 2008 administrations were either stilltrading or had been replaced by new lettings by the end of the firstquarter of 2009.Monthly rent paymentsIn Germany,monthly rent payments are

53、 standard but in the UKleases generally provide for quarterly payments.Requests to moveto monthly rent payments are therefore an indicator of increasingtenantdistressasoccupiersseektomanagecashflowinchallengingeconomic times.The Group considers such requests on a case-by-case basis.At the year end,5

54、.2%of passing rent was paid monthlyunder non-contractual concessions across the three funds,comparedto 1.1%at the end of 2007.Contractual concessions(i.e.monthlypaymentplansasatermofthelease)arealsoincreasinglycommonwith 6.7%of passing rent now paid in this way,the majority ofwhich relates to The Ju

55、nction.New lettings and rent reviewsBoth The Mall and X-Leisure continue to make new lettings andsettle many rent reviews above ERV,in contrast to The Junctionwhere the difficulties in the retail warehouse market have led tosettlements on average 3%to 3.5%under ERV.Across the threefunds,180 rent rev

56、iews were settled in the year at passing rentof 24.3 million at 1.3%above ERV,and 255 new lettings weremade at passing rent of 9.9 million,which was 0.9%above ERV.This excludes any temporary lettings in the funds.The Groupsability to attract new tenants and settle rent reviews above ERVin the period

57、 was encouraging.OutlookAs indicated,since the year end,there have been a number offurther administrations,particularly in The Mall and The Junctionat the start of the quarter,and it is expected that tenants in thesefunds will continue to face a difficult trading environment for sometime.We neverthe

58、less believe that in these challenging conditionsour asset and property management skills will stand us in goodstead to generate relative outperformance.Our exposure to theleisure sector and the German marketalsohelpedtooffsettheproblemsfacedbyretailersduring2008,and this trend hascontinued in the f

59、irst quarter of 2009.04Operating reviewCapital&Regional Annual Report 2008The level of incentives that are required to attract new tenantsis likely to increase as their bargaining position is improved.Nevertheless,with a good proportion of retail administrations andinsolvencies continuing to trade,a

60、nd the vast majority of tenantscontinuing to meet their obligations,we believe that the Group iswell placed to withstand the full impact of the recession that willundoubtedly continue to be felt throughout 2009.Property investment marketsSignificant yield shift was the key driver of property investm

61、entmarkets in 2008,affecting the Groups investments in the UK,and to a lesser extent,Germany.The availability of debt fundingdeteriorated through 2008 and essentially dried up at the start ofthe global financial crisis triggered by the collapse of Lehmans.Even where debt funding can be raised,this i

62、s only on margintermswhich are markedly more costly than was previously available.As a result,the yields on the Groups main investments movedoutwards over the course of the year as follows:Yield shift1 Adjusted to be like for like with 2008.2 Nominal equivalent yields in Germany are equal to initial

63、 yields.These rising yields,magnified by gearing at the fund andGerman joint venture level,have resulted in significant negativeperformance in these investments in 2008.Fund and German joint venture performance1 Based on Group exposure to the three funds.2005200620072008MallProperty level returns16.

64、5%17.6%(3.3)%(33.2)%Geared returns22.8%26.3%(13.2)%(65.4)%IPD shoppingcentre index16.3%12.7%(4.3)%(22.0)%JunctionProperty level returns23.3%15.0%(16.8)%(26.1)%Geared returns34.1%18.3%(34.0)%(57.1)%IPD retail parks index22.1%14.7%(9.6)%(25.6)%X-LeisureProperty level returns15.3%19.7%2.1%(21.9)%Geared

65、 returns28.3%30.4%(3.0)%(48.2)%UK weighted average1Property level returns18.9%16.9%(6.1)%(28.2)%Geared returns27.3%23.9%(17.3)%(58.5)%German joint ventureProperty level returns15.2%7.5%(5.2)%Geared returns34.2%16.2%(32.4)%Yield shift200820071in yearInitial yieldsMall7.15%4.81%2.34%Junction6.20%4.44%

66、1.76%X-Leisure6.68%5.06%1.62%UK weighted average6.74%4.76%1.98%German joint venture6.51%5.99%0.52%Nominal equivalent yields2Mall8.44%5.71%2.73%Junction7.12%5.39%1.73%X-Leisure7.68%5.78%1.90%UK weighted average7.84%5.64%2.20%The Malls underperformance against its benchmark was largelyattributable to

67、the prime centres included in IPD,where yield shifthas been less pronounced.In 2007 the differential between primeand secondary stock was minimal but has widened considerablysince,and this has had a negative impact on the relativeperformance of the mainly secondary centres held in the fund.The Junct

68、ion was much closer to its benchmark for the yearfollowing its underperformance in 2007.This year,the amountof yield shift was broadly in line with the wider market but thefunds estimates of falls in ERV have been more pessimisticthan the market.X-Leisure is not measured against a specific benchmark

69、 but hasmoved broadly in line with the IPD All Property return of(22.1)%for the year.It saw much lower falls in values than the other fundsin 2007 and the first half of 2008 but declined significantly in thesecond half of the year.Whilst the German portfolio has seen a smaller fall in value thanthe

70、Groups other portfolios at a property level,the impact of thehigher levels of debt in the portfolio on geared returns has beenmore dramatic.The German property market has historically beenless volatile than the UK market and the returns for the Germanjoint venture highlight the benefits of diversifi

71、cation for the Group.OutlookWe have already seen further falls in value in 2009 due tofurther outward yield shift but also brought about by the impactof tenant failures and weaker occupational demand.Note 36 tothe financial statements sets out the valuations of the propertiesin the three funds at 31

72、 March 2009.This has been exacerbatedby the continued stagnation of the debt markets.Given theexperience to date,it is difficult to predict how far the market willfall but one of the key requirements for the stabilisation of valuesis an improvement in the availability of debt funding and thecost of

73、borrowing.05Capital&Regional Annual Report 2008KPI summaryThe key performance indicators the Group uses to monitorperformance are summarised in the table below and explained inmore detail in the following paragraphs.Key performance indicators*Group debt divided by shareholders equity.Property under

74、managementIn line with the Groups strategy of reducing debt,there were noproperty acquisitions but a number of disposals during 2008.Therewere also reduced levels of capital expenditure on the underlyingassets.The key movements in property under management in theyear were as follows:The Mall dispose

75、d of three properties in Chester,Edgwareand Epsom in July 2008 for 286 million at a net initial yieldof 6.0%.The proceeds of these property disposals and the286 million open offer were used in part to repay in full thefunds banking facility,which left the fund with no effectiveLTV covenant.The balan

76、ce was maintained to cover committedfuture capital expenditure,mainly at Luton and Blackburn.Thefund spent 23 million during the year on reconfigurations andredevelopments.The Junction made three disposals during the year:GreatWestern Retail Park,Glasgow in March 2008 for 58.5 millionat a net initia

77、l yield of 5.75%;Templars Retail Park,Oxfordin August 2008 for 57 million at a net initial yield of 5.7%;and St Georges Retail Park,Leicester in November 2008 for32 million at a net initial yield of 8.2%.Since the year end ithas also sold its non-core property at Victory Industrial Estate,Portsmouth

78、 for 1.65 million at a net initial yield of 9.3%.The proceeds in each case were used to reduce debt in the fund.GermanMall Junction X-LeisureportfolioFIX UKOtherTotal20073,0161,2239474901702896,135Disposals(359)(204)(170)(28)(761)Capitalexpenditure2331813378Revaluation(988)(288)(244)(43)(51)(1,614)E

79、xchangedifference14714720081,6927347215952433,985200620072008Scale of businessProperty under management6.5bn6.1bn4.0bnInvestment returnsTriple net diluted NAV per share12.7210.042.67Total return on equity32%(18)%(72)%Year end share price15.423.920.45Total shareholder return81%(73)%(77)%Profitability

80、Recurring pre-tax profit32.3m32.7m27.6mDividend per share26p27p5pProfit/(loss)before tax251m(167)m(516)mDebtGroup debt460m625m113mOff-balance sheet debt678m709m723mTotal debt1,138m1,334m836mGearingGroup debt to equity ratio*50%89%60%X-Leisure had no disposals in 2008,although in April 2009 thesale o

81、f the O2 Centre,Finchley Road completed for 92.5 millionat a net initial yield of 7.8%.The proceeds were used to reducethe funds debt.There were no acquisitions or disposals in the German portfolioduring the year.Although the Group sold 50%of its Germaninterests to AREA in October 2008,the whole por

82、tfolio is stillincluded in property under management as our German teamcontinue to manage the portfolio.The Group disposed of 80%of its FIX UK portfolio in March 2008for 32.2 million at a net initial yield of 5.8%.The properties areno longer managed by the Group and are therefore no longerincluded i

83、n property under management.The Groups joint venture in Cardiff disposed of the Costco Unitat the Capital Retail Park in December 2008 for 17 millionat a net initial yield of 6.1%.The proceeds were used to paydown debt in the joint venture.In April 2009,the Group agreedto sell its remaining interest

84、 in the joint venture to its partnerfor 1.2 million at an estimated contracted net initial yield of5.9%.This continues our strategy of de-gearing the Group andreleases us from future capital commitments of approximately2 million and a small bank guarantee.The split of the 4 billion property under ma

85、nagement by sectorwas as follows:Investment returnsAll measures of investment returns saw a significant fall in 2008,reflecting the overall loss for the year which was broken downas follows:200620072008mmmRecurring pre-tax profit32.332.727.6Revaluation of investment andtrading properties166.7(164.4)

86、(397.4)Performance fees62.6(52.8)(9.9)Gain/(loss)on disposal11.11.6(42.3)Deemed disposal(28.8)Revaluation of financial instruments23.5(7.0)(47.8)Other non-recurring items(45.3)22.9(17.7)Tax and reserves movements(27.0)1.913.6Total returns223.9(165.1)(502.7)As%of opening equity31.6%(18.1)%(71.5)%Shop

87、pingcentres42.5%Retail parks19.4%Leisure23.2%Germany14.9%Property under management06Financial reviewCapital&Regional Annual Report 2008The main factors behind the significant loss in the year were:revaluation losses and losses on disposals across the Groupsportfolio,reflecting valuation movements in

88、 the overall propertyinvestment market in both the UK and Germany.As describedin the operating review the key driver behind the movementsduring the year was yield shift,in particular the sharp falls seenin the last three months of the year.a deemed disposal that represented the dilution caused by th

89、eGroups decision not to participate in the Malls capital raising.This decision has been supported by the fact that the valueof fund units has since fallen below the open offer unit price.losses on the Groups interest rate swaps,which have beendriven by the sharp falls in interest rates towards the e

90、nd of theyear.As a result,the floating rates receivable under the swapsare now lower than the fixed rates payable,creating a balancesheet liability for accounting purposes.The other non-recurring items include the Groups share ofperformance fees repaid as an investor in the funds,impairments,one-off

91、 expenses and the costs of the Groups various managementincentive schemes.These items are described in more detail innote 2 to the financial statements.ProfitabilityThe Groups recurring profit is derived from its two segments,being:Asset businesses:comprising our share of the net rent less netintere

92、st arising from interests in associates,joint ventures andwholly-owned entities,in both the UK and Germany.Earnings businesses:property management fees less fixedmanagement expenses,and the profit from its SNO!zoneoperating business.Recurring pre-tax profitProperty investment:the Group earns profits

93、 from its share ofthe net rental income less net interest payable in its investments.The cost of managing its wholly-owned investment and tradingproperties is allocated to the property investment business.The fall in UK profit is largely the result of lower net rental incomefrom The Mall,following t

94、he sale of three properties in the yearand dilution of the Groups share in the fund following therights issue;significant loan renegotiation costs incurred byThe Junction;and the part disposal of FIX UK.200620072008mmmProperty investment UK11.310.26.1Property investment Germany5.89.611.1Managing pro

95、perty funds13.410.88.9SNO!zone1.82.11.5Recurring pre-tax profit32.332.727.6The increase in profit from the German portfolio is the resultof favourable foreign exchange movements,which more thanoffset the fall in income in the last quarter that resulted fromthe part-disposal in October 2008.Managing

96、property funds:a subsidiary of the Group,Capital&Regional Property Management Limited(“CRPM”)earns feesfrom managing the funds and joint ventures and employs all theGroups staff.This property management business continued tobe profitable at an operational level in 2008 as follows:CRPM income stateme

97、nt*Excluding overhead allocated to property investment business.The decline in CRPM recurring profit over the year was primarilytheresultoffallingfundvaluationsand,toalesserextent,disposalsin The Mall and The Junction which reduced the base on whichasset management fees are calculated.This was parti

98、ally offsetby a fall in fixed management expenses,which reflects part ofthe benefit of an ongoing programme of cost reduction to ensurethat CRPMs property management business will continueto generate profits for the Group despite the falls in propertyunder management.CRPMs income statement also refl

99、ects performance fees which,as discussed in more detail below,were a net repayment to thefunds in 2008.We have also impaired the carrying value of thegoodwill associated with the X-Leisure fund,reflecting the factthat falling valuations will reduce the income stream we expectto receive from the fund

100、 over the remainder of its life anduncertainty as to whether the funds life will be extended in2018.Amounts shown under“other non-recurring items”include costs relating to The Mall rights issue,to which CRPMcontributed as the property manager;the change of ChiefExecutive during the year;and redundan

101、cies under the costreduction programme mentioned above.CRPM income arises principally from management contractson The Mall,The Junction and X-Leisure funds.During 2008,as part of the negotiations around the capital restructuringof the fund,the contract for The Mall was amended to includean expiry da

102、te of 31 December 2012 if not extended by acontinuation vote in June 2011,in line with the requirementto refinance the funds bonds in 2012.The expiry date ofthe contract for The Junction is also currently subject torenegotiation as part of the restructuring described in note 36to the financial state

103、ments.200620072008mmmAsset management fees17.018.614.9Service charge fees4.64.44.9Other fees5.83.03.0Fixed management expenses*(14.0)(15.2)(13.9)CRPM recurring profit13.410.88.9Performance fees62.6(52.8)(9.9)Variable overheads(18.3)7.90.1Impairment of goodwill(8.0)Other non-recurring items(2.1)(5.6)

104、Profit/(loss)before tax55.6(34.1)(14.5)07Capital&Regional Annual Report 2008In addition to the amended expiry dates and in light of thefunds recent underperformance,the fee basis on each of thefunds is also subject to further negotiation.While any newcalculation for The Mall is expected to generate

105、income forCRPM at a similar rate to the old,fees for The Junction will belower,as described in note 36 to the financial statements.Wehavealready looked to reduce costs in line with this anticipated fall.SNO!zone is the UKs premier real snow indoor ski slopeoperating business,based at three sites in

106、Group propertiesat Milton Keynes,Castleford and Braehead.With virtually norequirement for capital from the Group it has been generatingstrong cash flows since its inception in 2001.SNO!zone income statementDespite a challenging trading environment,SNO!zone revenueincreased over the year,driven by a

107、strong performance at MiltonKeynes,but this was offset by higher costs at all three sites.The largest increases were in salaries and marketing,wherespending was increased in order to maintain revenue,and rent,following the commencement of a turnover rent in Milton Keynesand a rent increase in Castle

108、ford.Performance feesCRPM has historically received performance fees from the fundsit manages,based on complex formulae designed to deliver a shareof any outperformance over a three-year period compared to adefined IPD benchmark(in the case of The Mall and The Junction)and an absolute 12%hurdle retu

109、rn.Fees can be positive or negative,but negative fees are capped at the amount received over theprevious two years.Over the five years to 30 December 2006,the Group earned161 million in performance fees.In 2007,however,fallingproperty valuations caused negative geared returns and resultedin signific

110、ant clawback of prior years performance fees.Provisionswere made in 2007 for the return of all of the performance feesearned from The Mall and The Junction in 2006 and no feeswere accrued for X-Leisure due to the likelihood of clawback.As a consequence,the only fees that could potentially beclawed b

111、ack in 2008 were the X-Leisure fees earned in 2006.The continued negative performance of the funds in 2008 hasmeant that the Group has earned no performance fees this year.The 2008 performance of the X-Leisure fund has resulted in theclawback of 9.9 million of the 2006 performance fees.No furtheramo

112、unts can be clawed back but given the continuing falls inproperty values and the impact this has on fund performance,we are not anticipating that any performance fees will be earnedin 2009.200620072008mmmIncome9.314.314.9Cost of sales and operating expenses(7.6)(11.5)(13.1)Cash profit1.72.81.8Tenant

113、 incentives(0.7)(0.3)Accounting profit1.72.11.5A new basis for calculating performance fees is also expectedto be agreed as part of the fee negotiations on The Junctionand X-Leisure funds discussed above.The basis for calculatingThe Malls performance fee may also change when discussionstake place re

114、garding management fees later in 2009.Balance sheet summariesThe Group presents its balance sheet in three ways:the enterprise balance sheet shows everything the Groupmanages;the“see through”balance sheet shows the Groups economicexposure to the different property portfolios;andthe statutory balance

115、 sheet follows the accounting andstatutory rules.Three balance sheets at 30 December 2008NAV per share is 2.67 on a triple net basis,down from 10.04at December 2007.As noted above under the commentary oninvestment returns,the major causes of this were:the adverse shift in valuation yields which led

116、to losses onrevaluation and on disposal of investment properties;the one-off impact of the Mall rights issue and the dilutionfollowing the Groups decision not to participate;andthe fall in interest rates which led to a loss on revaluationof interest rate swaps.EnterpriseSee throughStatutorymmmFund p

117、ropertiesMall1,80030186Junction71219458X-Leisure72014039Joint venture propertiesGermany59529740Other joint ventures14360(5)Wholly-owned propertiesGreat Northern,Hemel Hempsteadand others999999Total property4,0691,091317Working capital etc(115)(69)(18)Debt(2,947)(836)(113)Net assets1,007186186C&R sha

118、reholders186186186Fund and other joint venture investors821Total equity1,00718618608Financial review continuedCapital&Regional Annual Report 2008DebtDuring the year,Group debt fell from 625 million to 113 million,largely as a result of the disposals of 80%of FIX UK and 50%of theGerman portfolio.The

119、Groups share of the FIX UK and German jointventure debt is now included in the value of its associates and jointventures and in both cases is non-recourse to Capital&Regional plc.As a result,despite the net repayment of debt within associatesand joint ventures,off balance sheet debt has increased sl

120、ightlyin the year.A summary of the movements in Group debt and offbalance sheet debt is as follows:*Including foreign exchange movements and impairments.In the case of the German joint venture the Group has agreedto provide a 5 million loan facility if required for working capital.This facility was

121、undrawn at 30 December 2008.The breakdown of Group debt at the end of the year was as follows:Group debtIn August 2008,the Group reached agreement with its principallending bank in relation to the covenants on its core revolvingcredit facility.In return for a reduction in the amount of the facilityf

122、rom 175.5 million to 125.5 million and an increase in interestmargin from 0.9%to 1.4%,the bank amended the see throughgearing covenant so that only debt with recourse to the Group isincluded.This removed all fund,German and other non-recoursedebt from the calculation as no Group guarantees have been

123、 givenin respect of these facilities.The new covenant is set at 200%.The central facility is supported by the Groups investments in TheMall,The Junction and X-Leisure funds and the cash flows arisingfrom SNO!zone and CRPM.In addition to the amended gearingcovenant described above,interest cover must

124、 be greater than150%and asset cover greater than 2:1,meaning that the carryingvalue of our investments,based on the fund unit prices at certaindates,cannot fall below 200%of the amount drawn.Debt atAverage30 DecemberinterestDuration Duration to2008rateFixedof fixing loan expirym%(months)(months)Core

125、 revolvingcredit facility276.452382425Great Northern debt676.391042121Hemel Hempstead debt116.271008810 LGP debt87.14n/a101136.451282120Off-balanceGroupsheetTotaldebtdebtdebtmmmAs at 30 December 20076257091,334Net repayments*(18)(197)(215)Part sale of FIX UK(120)24(96)Part sale of German portfolio(3

126、74)187(187)As at 30 December 2008113723836The facility was 27.4 million drawn at 30 December 2008.The status of the covenants at the end of the year was as follows:Because of the restrictions of the asset cover covenant,only101 million of the facility was actually available at the endof the year.In

127、view of the wish to maintain financial flexibility,we are alsoin negotiations with our principal lending bank on furtheramendments to the Groups core revolving credit facility.Off balance sheet debtThe breakdown of off balance sheet debt at the end of the yearwas as follows:Off balance sheet debt*Ex

128、cluding FIX UK where the Group has conservatively written down its investmentto nil.The Malls financial stability was improved by raising new equityin June 2008 and selling three shopping centres as describedabove.At 30 December 2007 the fund had debt of 1,698million made up of 1,435 million in bond

129、s and 263 millionof bank debt.At 30 December 2008 that debt had been reduced,leaving 1,246 million of bond financing.The proceeds of therights issue were used to pay off the entire outstanding balanceon the RBS facility,so removing the 60%LTV covenant.Theremaining 23 million was retained to fund com

130、mitted capitalexpenditure.The proceeds of the Carlyle sale were used to paydown 189 million of The Malls bonds and the remainder hasalso been set aside to cover future capital expenditure.The only remaining LTV restriction is in the partnership deedand only operates on an“incurrence basis”.This mean

131、s thatno remedy was required once falling valuations caused theLTV limit to be exceeded at the end of the year,although noadditional borrowing can take place until the LTV falls backbelow 60%.At 30 December the LTV was 66.1%.The Mall bonds contain an interest cover covenant set at 130%.For the year

132、to 30 December 2008,interest cover was 195%.Debt atAverage30 DecemberinterestDuration Duration to2008rateFixedof fixing loan expirym%(months)(months)Mall(16.7%share)2085.011004040Junction(27.3%share)1385.921003727X-Leisure(19.4%)945.88912939German joint venture(48.8%share)2284.681003232Other JVs and

133、 associates(20%-50%share)*556.376329377235.29963535CovenantActualGearingLess than 200%38%Interest coverGreater than 150%462%Asset coverGreater than 200%738%09Capital&Regional Annual Report 2008The Junction continued to pay down debt with the proceedsof disposals.At 30 December 2007 the fund had debt

134、 of649 million from one bank facility.At 30 December 2008,this had reduced to 506 million following the receipt of148 million from the three property sales described aboveunder“Property under management”.The fund also reached agreement with its banks in October2008 to extend the LTV covenant from 60

135、%to 70%for a periodof 12 months.At 30 December 2008,this covenant stood at69.0%and in view of the limited headroom,investors agreed tomove to quarterly valuations in January 2009 to allow time fora long-term financial solution to be found for the fund.An LTVwaiver has now been agreed with the banks

136、until 1 June 2009and a refinancing package has been agreed which will put thefund on a secure financial footing.The refinancing is subjectto new equity being injected as further discussed in note 36to the financial statements.The existing facility also has an interest cover covenantof 127.5%.For the

137、 year to 30 December 2008,interest coverwas 161%.X-Leisure has three property level banking facilities and a415 million central facility.At 30 December 2007 485 millionwas drawn down under these facilities and since there wereno acquisitions or disposals during the year,the amount drawndown at 30 De

138、cember 2008 was virtually unchanged at487 million.There were a number of changes to the facilities in the year,with the refinancing of the Milton Keynes property and theaddition of the previously uncharged property at Norwichto the asset pool for the main facility.The LTV covenant on this main facil

139、ity is 70%and at30 December 2008 this stood at 69.7%.In view of the limitedheadroom,investors agreed to move to quarterly valuationsin January 2009 to allow time for a long-term financial solutionto be found for the fund.Discussions are ongoing with investorsabout a capital raise and the fund is see

140、king to amend theterms of its banking arrangements to create additional financialflexibility.An LTV waiver has now been agreed with the banksuntil 31 May 2009 in order to facilitate the implementation ofthis strategy.The existing facility also has an interest cover covenantof 130%.For the year to 30

141、 December 2008,interest coverwas 177%.The German portfolio is financed by six facilities denominatedin euros.At 30 December 2008 the underlying debt was484million,whichwasvirtuallyunchangedfromthecomparativefigure of 485 million for 2007,but the treatment in the financialstatements is now different.

142、In 2007,the portfolio was majorityowned and the borrowings were included in Group debt.At theprevailing 2007 year-end exchange rate this was equivalent to355 million.Following the disposal of half the Groups interest,this debt is now shown off balance sheet and the Groups seethrough share is 48.8%.A

143、t the prevailing 2008 exchange rate,this was equivalent to 228million.SincetheinvestmentinGermanyislargelyhedged,the significant difference arisingfrom foreign exchange movements is predominantly shownthrough reserves.All LTV and ICR covenants on the German debt were met at theyear end.FIX UK has de

144、bt of 135 million,of which the Groups shareis 20%.The Group is not exposed to any further drawdownsthat may be required if valuations threaten the LTV covenantson this debt.As explained in note 18b to the financial statements,at the end of the year the Group had conservatively written offthe value o

145、f its remaining interest in FIX UK so the debt hasbeen excluded from the figures above.Other JVs include the investments in Braehead,Cardiff and theMEN Arena.The Group continued to provide cost overrun andinterest guarantees on Cardiff in the year though,following thesale of the Costco unit,16.4 mil

146、lion of the relevant loan wasrepaid.As described above,the sale of our remaining jointventure interest in Cardiff will release the Group from anyfurther obligations under this loan.The Braehead development is now complete and the relevantloan has been transferred into long-term investment finance,as

147、 a consequence of which the Group guarantee has expired.Interest rate hedgingThe Group has a number of interest rate swaps against loans on itswholly-owned properties and the core revolving credit facility.It isalso exposed to a share of interest rate swaps held by its associatesand joint ventures.T

148、he effect of these swaps is to fix the amountof interest payable on the loans but,as a result of the dramatic fallsin interest rates in the latter part of 2008,the change in fair valueof these swaps has led to an unrealised loss of 47.8 million forthe year.The recognition of this loss is required by

149、 accountingstandards but it should be noted that it will not be crystallisedunless the underlying swaps are closed out.10Financial review continuedCapital&Regional Annual Report 2008Foreign exchange hedgingDuring the year,the Group entered into a forward currency contractfor 115 million to be settle

150、d in April 2009 as a hedge of its netinvestment in its German portfolio.On the disposal of 50%of thisportfolio,half of this hedge was closed out by an offsetting tradeto purchase 57.5 million on the same maturity date.Owing to thestrengthening of the euro against sterling in the latter part of 2008,

151、the value of the net hedge at the year end was a liability of14.2 million.Since the year end,the Group has entered further forward contractsto fix the amount payable on the expiry of these initial contractsas protection against further changes in exchange rates,and toextend the life of the hedge to

152、April 2010 but in the reducedamount of 47 million.The cash settlement on 30 April 2009as a consequence of these transactions is 8.8 million.To the extent the hedge is effective under accounting rules,valuation movements on the forward contracts are shown inreserves where they partially offset the ga

153、in in the value of theGroups German investments.TaxThe Group tries to ensure that its corporate structure remains astax efficient as possible under current legislation.During 2008there was a current tax credit of 1.1 million and a deferred taxcredit of 13.0 million,reflecting the reversal of previou

154、s deferredtax liabilities arising on financial instrument revaluations in 2008.The Group has significant tax losses which may be available foroffset against future profits and is carrying a small deferred taxasset in respect of these.DividendsIn the light of the continuing uncertainty in the propert

155、ymarketandtheconsequentdesirabilityoftheGroupconservingitscashresources,the Board is not recommending the payment of a final dividend,leaving the total for the year at the 5p paid on 17 October 2008.Despite recurring pre-tax profit remaining strong,impairmentscaused by falls in the value of the Grou

156、ps investment and tradingproperties have exhausted the Companys distributable reservesat the end of the year.The Company would therefore have beenunable to pay a final dividend in any event.Although a capital restructuring has been approved byshareholders to convert the Companys share premium accoun

157、tinto distributable reserves,this will not become effective untilapproved by the Court.Before approving the reduction,the Courtwill look to see that the creditors of the Company have eitherconsented to it or that protections have been put in place tosafeguard their position.Court approval will be so

158、ught once theposition of the Companys creditors can be satisfactorily agreed.Charles StaveleyGroup Finance Director11Capital&Regional Annual Report 200812C&R RetailCapital&Regional Annual Report 2008IntroductionThe evolution of our divisional retail management team into theunified C&R Retail managem

159、ent platform recognises increasingoperational and market synergies available to us across theretail sector.C&R Retail brings together the wealth of experience and talentwithin the Group to both better deliver on our existing commitmentsand also take advantage of additional co-investment opportunitie

160、s,in a market that is increasingly recognising the importanceof direct,experienced and motivated management to stabilisingand growing relative value.The Mall FundThe Mall is the UKs leading Community Shopping Centre brand.The fund owns 21 shopping centres throughout the UK with a totalfloor space of

161、 7.8 million sq ft,offering a local,community based,value focused shopping proposition.Following the 2008 open offer,Capital&Regional holds 16.7%of the fund and acts as Propertyand Asset Manager.Aviva Investors(formerly Morley FundManagement)acts as Fund Manager.Steps have also been takento further

162、strengthen the corporate governance structure of thefund with the appointment of an independent Chairman,Sir RobertFinch,and an independent director,David White.Investors hold units in a Jersey Property Unit trust(JPUT)whichallows exposure to a diversified portfolio of properties withoutdirect inves

163、tment and the ability to transfer units without incurringStamp Duty Land Tax.The funds investment criteria are as follows:Town centre locations.Dominant in localised town catchments.Minimum 250,000 sq ft lettable area.Car park or public transport facilities.Covered,or able to be.Tenant profile“mass

164、market”or“value”retail.Revenue and capital growth potential.StrategyIn 2008,the fund has sought to stabilise its capital structure andreduce gearing,in part through the disposal of 286 million ofassets and also through an open offer in June 2008 which raiseda further 286 million.The majority of the

165、proceeds were usedto pay down debt,including a bank facility which was entirelyrepaid to remove a restrictive covenant.The balance of theproceeds are largely earmarked for both committed developmentsand revenue generative initiatives arising from the continuingactive management of the portfolio.Mana

166、gement is focused on protecting and,where possible,growingnet revenue.A realistic approach to maintaining occupancy levelswhilst at the same time being rigorous on delivering value-for-moneyservice charges has long been a recognised hallmark of The Mallmanagement model and this has never been more i

167、mportant thanin the current economic climate.OutlookAt the fund level,the revamped General Partner board,underthe chairmanship of Sir Robert Finch,is well equipped to givestrategic direction to The Mall in these difficult times for indirectinvestment vehicles.At the asset level,The Malls local commu

168、nity and value propositionis displaying some resilience both with the shopper and the retailerin these recessionary times.Our direct management model is cost-effective for our retailerswhere our longstanding relationships are helping to maintainoccupancy levels whilst protecting cash flow and mainta

169、iningflexibility for recovery.Allied to this,our imaginative marketingand promotional campaigns remain focused on delivering morecustomers and sales,reinforcing our community and valuepositioning to our shoppers.The Mall key statistics*Like for like.Top five tenants by rental income(2008)Units%Boots

170、183.19Arcadia333.14Debenhams72.40Clinton Cards292.31New Look152.14At 30 December 2008At 30 December 2007Gross property asset value1,692m3,016mNumber of properties2124Number of units2,2002,504Initial yield7.15%4.81%*Equivalent yield8.44%5.71%*C&R share16.7%24.2%Total debt(excluding amortised costs)1,

171、246m1,698m12Capital&Regional Annual Report 2008The C&R Retail teamFrom left:Ken Ford,Mark Bourgeois,Gaynor Gillespie,Graham Inglis“The bringing together of our market-leading retail teams,under the C&R Retail banner,enhances our capability to both deliveron our existing commitments and to better tak

172、e advantage ofnew opportunities.”Ken Ford13Capital&Regional Annual Report 2008The Junction FundThe Junction Fund is a specialist retail park fund,owning 11 coreretail parks and three industrial properties(one of which was soldin April 2009)throughout the UK,and as at 30 December 2008 hada total floo

173、r space of 3.1 million sq ft.Capital&Regional currentlyholds 27.3%of the fund and acts as Property and Asset Manager.Aviva Investors(formerly Morley Fund Management)currentlyacts as Fund Manager.Investors hold units in a Jersey Property Unit Trust(JPUT)whichallows exposure to a diversified portfolio

174、 of properties withoutdirect investment and the ability to transfer units without incurringStamp Duty Land Tax.The funds current investment criteria are as follows:At least 80,000 sq ft multi-let retail park,freehold orlong leasehold.Planning consent for open A1,bulky goods,or a mix thereof.Asset ma

175、nagement opportunities.Either the dominant scheme in a local catchment areaor the ability to become so.The Junction specialises in prime mixed-use retail parks.Open A1consent allows any sort of retailing(including fashion)whereasbulky goods consent typically only allows the sale of goods thatcannot

176、easily be carried away by the customer.This includes DIYchains,furniture and carpet retailers,and electrical outlet stores.The portfolio is broadly split 40%to open A1 and 60%tobulky goods.StrategyAs with The Mall,managements focus is to maintain and,wherepossible,grow income streams whilst minimisi

177、ng the costs ofvoid units.Our retailer relationships enable realistic and informeddecisions to be made on support whether through monthlyor concessionary rents.Whilst revenue is the priority,the fundcontinues to maintain its position in key development opportunitiesat Oldbury and Thurrock.As discuss

178、ed above,the fund has sought to de-gear during the yearas rising yields have threatened the LTV covenants on its bank debt.OutlookOn 20 April 2009 we announced The Junctions intention to raise65 million of capital through a deeply discounted fundraising.Further details of the fundraising can be foun

179、d in note 36 to thefinancial statements.The Junctions banks have also agreed to a waiver of the LTV testuntil 1 June 2009 to allow for the capital restructuring to beapproved by unitholders and implemented.The vote for unitholdersisscheduledfor29April2009anditisenvisagedthatthetransactionwill comple

180、te following a successful vote by the end of May.A restructuring of the financing arrangements for the fund hasbeen agreed with the lending banks but is contingent upon theinjection of new capital.Together,these will ensure the fund canoperate on a firm financial footing going forward.With an approp

181、riate capital structure to see the fund throughthe current adverse markets we believe the quality of the assetsand the management will enable the fund to generate attractivereturns over its remaining life.The Junction key statistics*Like for like.Top five tenants by rental income(2008)Units%B&Q412.8

182、Home Retail Group78.1DSG87.2Comet65.3DFS44.4At 30 December 2008At 30 December 2007Gross property asset value734m1,223mNumber of properties(core)1114Number of units196223Initial yield6.20%4.44%*Equivalent yield7.12%5.39%*C&R share27.3%27.3%Total debt(excl amortised costs)507m649mThe C&R Retail team(c

183、ontinued)From left:Jo Lord,Richard Stubbs,John Wood14Capital&Regional Annual Report 200814C&R Retail continuedCapital&Regional Annual Report 2008The Mall locationsAberdeenBarnsleyBexleyheathBlackburnBristolCamberleyFalkirkGloucesterIlfordLutonMaidstoneMiddlesbroughNorwichPrestonRomfordSouthamptonSut

184、ton ColdfieldUxbridgeWalthamstowWood GreenSizeCar parkNumber ofDescription(sq ft)spacesPrincipal occupierslettable unitsValued at over 130 millionThe Mall,LutonLeasehold covered shopping centre on two floors,956,0002,300Debenhams,Boots,Primark,Next,Top Shop163offices extending to over 65,000 sq ftan

185、d Top Man,Marks&SpencerThe Mall,Wood GreenFreehold,partially open shopping centre,on two floors 590,0001,500Cineworld,TK Maxx,Wilkinson,Peacocks,158with nearly 40,000 sq ft of officesH&M,HMV,Boots,Argos,WHSmithValued at 75 million to 130 millionThe Mall,MiddlesbroughFreehold single level covered sho

186、pping centre424,000550Boots,BHS,WHSmith,Top Shop,95with offices extending to over 50,000 sq ftNew Look,H&MThe Mall,BexleyheathFreehold single level covered shopping centre420,000800M&S,BHS,WHSmith,Boots,HMV,Next92The Mall,BlackburnLeasehold partially covered shopping centre609,0001,078Debenhams,Tesc

187、o,Boots,Argos,BHS141on three floorsThe Mall,BristolLeasehold covered shopping centre on three floors350,0001,000TK Maxx,Boots,Argos,WHSmith,Waterstones 165The Mall,CamberleyPart leasehold covered shopping centre on one floor398,0001,040Argos,Army&Navy,Boots,188Littlewoods,SainsburysThe Mall,IlfordFr

188、eehold covered shopping centre on three floors294,0001,200Marks&Spencer,Debenhams,HMV,108TK Maxx,WHSmithThe Mall,MaidstoneFreehold covered shopping centre on three floors553,0001,050Boots,BHS,TJ Hughes,Wilkinson122with offices extending to 40,000 sq ftThe Mall,NorwichFreehold covered shopping centre

189、 on six floors371,000800Argos,Boots,TK Maxx,Mothercare,132New Look,Vue CinemasThe Mall,PrestonFreehold covered shopping centre on three floors287,000400Marks&Spencer,H&M,Superdrug,117New Look,Wallis,Vision Express,Peacocks,WHSmithThe Mall,Sutton ColdfieldFreeholdpartiallyopenshoppingcentreonasinglel

190、evel 550,000960House of Fraser,BHS,Marks&Spencer,132with offices extending to approximately 30,000 sq ftBoots,Argos,WHSmithThe Mall,UxbridgeLeasehold single level covered shopping centre482,0001,150Marks&Spencer,Tesco,TK Maxx,123with 40,000 sq ft of officesPeacocks,WilkinsonValued at below 75 millio

191、nBroadway Square,BexleyheathLeasehold hybrid retail warehouse scheme135,000345Sainsburys,TK Maxx,Wilkinson,Peacocks8The Mall,AberdeenFreehold single level covered shopping centre190,000400Debenhams,Argos,HMV,37Superdrug,WaterstonesThe Mall,BarnsleyLeasehold covered shopping centre on two floors180,0

192、00519TK Maxx,Wilkinson,Next,Primark49The Mall,FalkirkFreehold covered shopping centre,on two floors170,000400Marks&Spencer,Debenhams Desire,74Argos,River Island,Boots,HMVThe Mall,GloucesterLeasehold covered shopping centre,on two floors187,000400H&M,Marks&Spencer,Republic,Sports Soccer 73The Mall,Ro

193、mfordLeasehold covered shopping centre on three floors180,0001,000Asda,Wilkinson,Peacocks,McDonalds,56Toni&Guy,SuperdrugThe Mall,SouthamptonFreehold covered shopping centre on two floors202,000810Matalan,Poundland95The Mall,WalthamstowFreehold covered shopping centre on two floors260,000870Asda,BHS,

194、Boots,Dixons,HMV,72Top Shop,Top ManThe Mall properties15Capital&Regional Annual Report 2008SizeCar parkNumber ofDescription(sq ft)spacesPrincipal occupierslettable unitsValued at over 100 millionThe Junction West ThurrockOpen A1 non-food and leisure retail park555,8682,398Decathlon,M&S Outlet,Asda L

195、iving,31Retail Park,EssexTK Maxx,Furniture VillageValued at 50 million to 100 millionThe Junction Imperial Park,BristolMixed bulky and open A1 non-food retail338,6671,200B&Q,Tesco Home Plus,Next,JJB,Argos21warehouse parkThe Junction Telford ForgeOpen A1 non-food retail warehouse park312,9621,343Next

196、,Tesco Home Plus,Arcadia,TK Maxx,Boots 19Retail Park,TelfordThe Junction St Andrews Quay,HullBulky retail warehouse park350,5211,315B&Q,DFS,Comet,DSG22The Junction MorfaMixed bulky and open A1 non-food retail warehouse339,5681,042B&Q,TK Maxx,Next,New Look,Sportsworld20Retail Park,Swanseapark,adjacen

197、t to a Morrisons supermarketThe Junction South AylesfordBulky retail warehouse park166,784551Homebase,Comet,BHS,Halfords,Currys10Retail Park,MaidstoneThe Junction Slough Retail Park,SloughMixed bulky and open A1 non-food retail152,929546Homebase,Wickes,DFS7warehouse parkThe Junction Cambridge CloseB

198、ulky retail warehouse park199,120650Wickes,Comet,Argos,Sportsworld17Retail Park,AylesburyThe Junction Ocean Retail Park andBulky retail warehouse park with adjacent233,926705Homebase,DSG,Halfords,Toys R Us19Victory Industrial Estate,Portsmouth*industrial estateValued at below 50 millionThe Junction

199、KittybrewsterOpen A1 non-food retail warehouse park141,493626TK Maxx,Halfords,Sportsworld,DFS13Retail Park,AberdeenThe Junction AbbotsinchBulky retail warehouse park184,581694B&Q,DFS,Comet7Retail Park,PaisleyBroadwell Industrial Estate,OldburyMixed use development site with consent for bulky37,065NA

200、6and open A1 non-food retail and leisureRenfrew Retail Park,RenfrewshireMixed bulky retail warehouse and industrial scheme57,089NAPets at Home4The Junction propertiesThe Junction locationsAberdeenAylesburyBristolHullMaidstoneOldburyPaisleyPortsmouthRenfrewshireSloughSwanseaTelford ForgeThurrock*Vict

201、ory Industrial Estate was sold in April 2009.100%figures.The Junction owns a 65%share in the property.16C&R LeisureCapital&Regional Annual Report 2008X-Leisure FundThe X-Leisure Fund is the largest specialist fund investing in UKleisure property,owning 18 properties throughout the UK(afterthe sale o

202、f the 02 Centre),and as at 30 December 2008 had atotal floor space of 3.7 million sq ft.Capital&Regional currentlyholds 19.4%of the fund and acts as Property and Asset Manager.Hermes Investment Management acts as Fund Manager.Investors hold units in a Jersey Property Unit Trust(JPUT)whichallows expo

203、sure to a diversified portfolio of properties withoutdirect investment and the ability to transfer units without incurringStamp Duty Land Tax.The funds investment criteria are as follows:50%or more of rental income generated from leisure operators.Either is,or is able to be,anchored by a cinema.Eith

204、er is the dominant scheme in a local catchment area or hasthe ability to become so.Has asset management opportunities or has latent potentialto deliver required performance.StrategyThe current strategy of the X-Leisure fund is to protect andmaintain the income stream,and minimise the void elementthr

205、ough active management.The fund has completed a number of key asset managementprojects in the year,including the letting of the former Healthlandshealth club at Bentley Bridge to AMF for a bowling and familyentertainment centre and the completion of the refurbishmentof the O2 Centre.The O2 Centre wa

206、s subsequently sold inApril 2009 and the proceeds used to pay down debt.OutlookX-Leisures banks have agreed to a waiver of the funds LTV testuntil 31 May 2009.The fund is also seeking to amend the terms ofits banking arrangements to create additional financial flexibility.The steps are intended to l

207、eave the fund well placed to benefit fromrecovery in the leisure property market.X-Leisure key statisticsTop five tenants by rental income(2008)Units%Cine UK1215.8Vue Entertainment46.7Sainsburys14.3Virgin Active(including Holmes Place)53.6Mitchells&Butlers62.9At 30 December 2008At 30 December 2007Gr

208、oss property asset value721m947mNumber of properties1919Number of units360365Initial yield6.68%5.06%Equivalent yield7.68%5.78%C&R share19.4%19.4%Total debt(excluding amortised costs)485m485m16Capital&Regional Annual Report 2008The C&R Leisure teamFrom left:PY Gerbeau,Pierre Hardy,Robert Warner,Polly

209、 Farrell,Alastair Bell“Parts of the leisure sector continue to trade well despite the adverseeconomic environment.”PY Gerbeau17Capital&Regional Annual Report 2008*Sold in April 2009.SizeNumber ofDescription(sq ft)Principal occupierslettable unitsValued at over 50 millionXscape,Milton KeynesThis dest

210、ination is anchored by one of the UKs largest indoor423,770SNO!zone,Cineworld,Virgin Active,39real snow slopesSpirit Group,Ellis BrighamXscape,CastlefordThis destination is anchored by one of the UKs largest indoor363,385SNO!zone,Cine UK,Bowlplex,Ellis Brigham47real snow slopesBrighton Marina,Bright

211、onThe marina combines a mix of retail,leisure and residential,334,951Cine UK,Bowlplex,David Lloyd75a working harbour and yacht moorings02,Finchley Road,London*This modern urban entertainment centre contains a multiplex275,200Vue Cinema,Sainsburys,Homebase,25cinema,health club,a mix of bars and resta

212、urants and retailHabitat,EsportaValued at 25 million to 50 millionCambridge Leisure Park,CambridgeThis centre has a nine screen multiplex cinema,health club,149,219Cine UK,LA Fitness,Tenpin19bowling,a hotel and range of international bars and restaurantsTower Park,PooleComprises a range of attractio

213、ns,including a multiplex cinema,199,358Empire,Bowlplex,LA Fitness17bowling,bingo,health club,water park and family restaurantsFountain Park,EdinburghScotlands largest entertainment destination237,739Cine UK,Tenpin,Virgin Active,12Mecca Bingo,Stanley CasinosRiverside,NorwichThis entertainment centre

214、comprises bars,restaurants,210,209UCI13nightclubs,multiplex cinema and bowlingParrs Wood,ManchesterThis centre has a mixture of facilities,including family231,907Cine UK,Virgin Active,Ten Pin11restaurants,health and fitness,bowling,multiplex cinema,bingo,childrens entertainment and a hotelGrants,Cro

215、ydonThis modern urban entertainment centre is constructed149,002Vue Cinema,Virgin Active,Tiger Tiger,10behind a restored listed faade and contains a multiplex cinema,Mitchells&Butlerhealth club,bars,nightclubs and restaurantsFiveways,BirminghamIn central Birmingham,Fiveways comprises a cinema,casino

216、,186,345Cine UK,Grosvenor Casino11restaurants and late night barsCardigan Fields,LeedsThis scheme is approximately 1.5 miles from Leeds city centre.216,191Vue,Hollywood Bowl,Virgin Active,14It comprises a cinema,bowling,health club and numerousSpirit Grouprestaurants.Included within the 14 units are

217、 two industrial unitsValued at below 25 millionBoldon Leisure Park,TynesideCinema&restaurant complex adjacent to Asda56,777Cine UK4Bentley Bridge,WolverhamptonComprises a multiplex cinema,restaurants and canal-side pub98,609Cine UK,AMF Bowling10Queens Links,AberdeenThis leisure park,adjoining The Be

218、ach Esplanade,128,884Cine UK,Gala11features a cinema and numerous restaurantsGreat North Leisure Park,Comprising a multiplex cinema,bowling,restaurants and88,185Vue Cinema,Hollywood Bowl7North Finchley,Londona local authority swimming poolEureka Park,AshfordThis centre comprises multiplex cinema,fam

219、ily restaurants,120,194Cine UK,Travelodge,Bannatyne8health and fitness,nightclub,hotel,and free parkingWest India Quay,Docklands,This listed building contains bars,restaurants,multiplex cinema,71,986Cine UK,LA Fitness,Tattersall Castle Group17London(50%)health and fitness centre and the Museum of Do

220、cklandsLockmeadow,MaidstoneThis destination is home to the 700 year old Maidstone139,484Odeon Cinema,Luminar Leisure,David Lloyd10Lockmeadow marketX-Leisure propertiesX-Leisure locationsAberdeenAshfordBirminghamBrightonCambridgeCastlefordCroydonEdinburghLeedsLondonMaidstoneManchesterMilton KeynesNor

221、th Finchley*NorwichPooleTynesideWest India Quay,LondonWolverhampton18C&R GermanyCapital&Regional Annual Report 2008Capital&Regional began to develop a portfolio of German propertyin 2005.The portfolio now stands at 50 properties throughoutGermany and as at 30 December 2008 had a total floor spaceof

222、469,000 sq m,98%fully let and occupied.The investmentcriteria are as follows:Established out-of-town retail locations.Large standalone hypermarkets and retail parks with sales areasof more than 3,500 sq m with substantial land and car parkings.70%of passing rent anchored by food retailers with stron

223、gfinancial covenants.Strongly cash generative with additional asset managementopportunities.The properties are held through a series of Jersey companies,whicheither own the properties directly or through interests in Germanlimited partnerships.As at 30 December 2007,the portfolio was91.4%owned by Ca

224、pital&Regional.In October 2008 we sold 50%of our investment in Jersey toan investment fund managed by AREA.This disposal followedour strategy of building portfolios to a critical mass and creatinga track record before divesting part of the investment to enhanceourco-investing asset management busine

225、ss model.The transactionwas structured such that the existing bank debt and interest rateswaps remained in place.As there were change of control provisionson the bank debt supporting one of the underlying portfolios,weinitially sold 49.9%of our interest in this Jersey company andsubsequently introdu

226、ced joint control once bank approval hadbeen obtained at the end of 2008.As part of the transaction the joint venture then bought out theequity interest that the Hahn group owned in the portfolio andas a result,Capital&Regionals share is now 48.8%of the totalproperty portfolio with various minority

227、shareholders in theunderlying German entities.StrategyWe continue to manage the properties from a strategic perspectivewith our in-house team based in the UK.Local German specialistproperty managers provide the day-to-day management servicessuch as rent collection and service charge accounting.In ad

228、dition,we employ specialist asset managers to implement property-specific business plans within the joint venture.OutlookWe believe the portfolio is very defensive and well placed towithstand the negative effects of the recession.Our tenant base has strong defensive qualities:just under 70%of passin

229、g rent is anchored by food retailers with what we believeto be affordable rents,and our portfolio occupies establishedretail locations.We are also confident about future demand for out-of-town retailand food stores in Germany which continues to be underpinned bythe expansionary moves of a number of

230、our retailers,who see thedownturn as an opportunity to increase their market presence.In the short term the German economy will be adversely affectedby the global recession but the peak-to-trough fall in the Germanproperty market has typically been far less pronounced than theUK market and it did no

231、t see the same level of inward yield shift inthe past few years.For this reason and because of the defensivenature of the portfolio,we therefore expect the impact of therecession on our portfolio to be less marked than in the UK.Germany key statisticsTop five tenants by rental income(2008)%Metro37.4

232、Rewe10.1Edeka9.1Coop eG7.0Praktiker6.1At 30 December 2008At 30 December 2007Gross property asset value615m668mNumber of properties5050Number of units193193Initial yield(including land)6.51%5.99%Initial yield(excluding land)6.62%6.13%Equivalent yieldn/an/aC&R share48.8%91.4%Total debt484m485m18Capita

233、l&Regional Annual Report 2008The C&R Germany teamFrom left:Xavier Pullen,Wilhelm zu Wied,Christoph Friedrich“The defensive qualities of the German portfolio benefitedthe Group in 2008.”Xavier Pullen19Capital&Regional Annual Report 2008Germany locations*BalingenBremen(Haferwende)Bochum LangendreerBrh

234、lCottbusDortmundElchingenHamelnHerneIngelheimKrefeldKln GrembergLauchhammerLbeckMarlMrfeldenOscherslebenRangsdorfSinzheimSobernheimStadthagenTnisvorstTrier KennSizeDescription(sq m)Principal occupierJV shareValued at 50 million to 100 millionDortmundRetail park32,978Real95%TnisvorstRetail park20,603

235、Real100%Valued at 20 million to 50 millionLbeckHypermarket29,077Plaza100%Bremen HaferwendeLogistics54,391MGL100%CottbusRetail park29,884Praktiker100%HamelnRetail park16,893Kaufland95%MrfeldenRetail park12,140REWE95%Trier KennHypermarket11,634Real100%Valued at 10 million to 20 millionBrhlSupermarket1

236、7,525Real95%BalingenDIY7,457Toom95%RangsdorfFurniture store18,506Roller100%Bochum LangendreerHypermarket6,388Kaufland85%ElchingenHypermarket7,433Real100%KrefeldDIY11,697Praktiker100%HerneHypermarket7,412Toom100%SinzheimHypermarket16,536Real95%IngelheimHypermarket10,245Real95%Kln GrembergHypermarket8

237、,300Real100%LauchhammerRetail park17,675Marktkauf95%MarlRetail park8,795Kaufland100%OscherslebenRetail park10,484Marktkauf95%SobernheimHypermarket7,387Real95%StadthagenDIY10,913Hagebau100%Valued at less than 10 million27 propertiesVarious94,276VariousOver 85%German properties*Valued at 10 million an

238、d above.20Joint venture and other interestsCapital&Regional Annual Report 2008Capital&Regional holds a number of other retail and leisureproperty investments on its own account and through associatesand joint ventures.Great Northern Warehouse,ManchesterGreat Northern Warehouse is a wholly-owned conv

239、erted Victorianwarehouse in the heart of Manchester including bars,restaurants,shopsandamultiplexcinema.It generates a positive income returnbut following a period of active asset management it is beingactively marketed for sale,either in whole or by way of introducinga new joint venture partner.Lei

240、sure World,Hemel HempsteadLeisure World is a wholly-owned leisure park,which was acquiredfor its refurbishment/redevelopment potential but is now beingactively marketed for sale.Capital Retail Park,CardiffThe Capital Retail Park is a 50:50 joint venture with PMG Estates,whichinvolvedtheconstructiono

241、fCardiffShoppingPark,a280,000sqftretail park which achieved practical completion in July 2008.The local council is constructing a new football stadium for CardiffCity Football Club on an adjacent site,due for completion insummer 2009.In December 2008,the unit on the site let to Costco was sold toa p

242、rivate investor for 16.95 million.The price represented a netinitial yield of 6.1%and the proceeds were used to pay down debt.As described in note 36 to the financial statements,the Group hasagreed to sell its remaining share in the joint venture to PMGEstates for 1.2 million.Xscape Braehead,Glasgow

243、Xscape Braehead is a 50:50 joint venture with Capital ShoppingCentres next to the Braehead Shopping Centre on the outskirtsof Glasgow.It offers indoor snow skiing,bowling,dining,cinemaand a range of other leisure activities.As described in note 36tothefinancialstatements,inApril2009thejointventurese

244、ttleda long-standing litigation claim involving problems with thecinemas roof.MEN ArenaThe Group owns 30%of the Manchester Evening News Arenain a joint venture with GE Real Estate.The property is locatedon an eight acre site in the heart of Manchester city centre andcomprises the 20,000 seat arena,t

245、he largest indoor arena in theUK,together with office and retail space.PartnersGroup shareGreat Northern Warehouse,Manchester100%Leisure World,Hemel Hempstead100%Capital Retail Park,CardiffPMG Estates50%Xscape Braehead,GlasgowCapital Shopping Centres50%MEN ArenaGE Real Estate30%FIX UK portfolioVario

246、us20%SNO!zone100%Capital&Regional Property Management100%FIX UKFIX UK is a portfolio of trade centres that was built up by Capital&Regional.In March 2008 the Group sold 80%of its investmentto a number of investors,including Paradigm Real Estate Managerswho took over day-to-day management responsibil

247、ities.The Groupretains a minority share but following the continuing fall in propertyvalues after the date of disposal has written the value of thisremaining investment down to zero.SNO!zoneSNO!zone is the ski operator which rents the real snow slopes inthe three Xscapes.It is wholly-owned by Capita

248、l&Regional,whichbuilt it up out of the bankruptcy of Leisurenet in 2001.It is thelargest indoor ski operator in the UK,but is now seeing morecompetition from new operators and venues.Capital&Regional Property Management(CRPM)CRPM is the company which employs our specialist propertymanagement teams.I

249、t also holds the management contractswith each of the three funds and the German joint venture,thoughas noted in the financial review some of these are currently underrenegotiation.It earns a regular stream of fee income,which coversthe cost of the specialist teams and corporate overheads and weexpe

250、ct it to generate a profit.20Capital&Regional Annual Report 2008*Exchanged for sale in April 2009.21Capital&Regional Annual Report 2008Joint venture and other interestsIn addition,the Group owns its main office at 10 Lower Grosvenor Place,London,and a number of other small investments includingits r

251、emaining share in the future profits of Glasgow Fort,which is included as an asset in the financial statements.SizeNumber ofDescription(sq ft)Principal occupierslettable unitsValued at over 100 millionFIX UKPortfolio of trade centres throughout the UK1,793,456Wolseley Centres,Multi Tile,282MKM Build

252、ing SuppliesValued at 50 million to 100 millionXscape Braehead,GlasgowThis newest Xscape has all the extreme sports of Xscape Castleford373,977Odeon,SNO!zone,Bowlplex,Ellis Brigham36and Milton Keynes but also includes golf and football attractionsGreat Northern,ManchesterLocated in Manchester city c

253、entre,this converted Victorian360,293AMC Cinema,Virgin Active,44warehouse includes bars,restaurants,a health and fitness centre,London Clubs Internationalshops and a multiplex cinemaManchester Evening News ArenaLargest indoor arena in the UK with additional mixed use154,749SMG(UK),Network Rail,5and

254、retail spaceJD Williams&CoValued at 25 million to 50 millionCapital Retail Park,Cardiff*Recently-constructed retail park adjacent to new football144,500Marks&Spencer,JJB Sports,17stadium for Cardiff City Football ClubSmyths Toys,NextValued at below 25 millionLeisure World,Jarman Fields,First generat

255、ion leisure park acquired in 2005 for156,000Luminar Leisure,Odeon Cinema2Hemel Hempsteadredevelopment or refurbishmentThere are a number of principal risks and uncertainties which couldhave a material impact on the Groups future performance andcould cause actual results to differ materially from exp

256、ected andhistorical results.We have identified the following principal riskareas which the Group could face in the future.References to theGroup include the funds and joint ventures in which Capital&Regional has an interest.Funding and treasury risksFunding risksThe Group has a significant amount of

257、 indebtedness that maylimit its financial and operational flexibility.The Groups abilityto generate sufficient cash flow and to refinance its indebtednesswhen due will depend on its future financial performance,whichover the longer term will be affected by a range of economic,competitive and busines

258、s factors,many of which are outsidethe Groups control.Given the existing level of indebtedness ofthe Group,and the significant deterioration in the credit markets,there can be no assurance that the Group will be able to refinanceits existing debt when it matures or obtain additional debtfinancing on

259、 economic terms.Covenant complianceThe various borrowings of the Group contain covenants.A breachof any of these restrictions or covenants,whether as a result ofdeclining property values or otherwise,could cause a default withrespect to the debt and,if unremedied,result in the acceleratedmaturity of

260、 some or all of the indebtedness of the Group.If overthe longer term the Group is unable to dispose of sufficient assetsto fund repayment of debt due in the event of an acceleration ofmaturity,the Group risks becoming insolvent or otherwise ceasingits operations.Foreign exchange rate risksThe Group

261、may incur losses as a result of fluctuations in theexchange rate between the pound and the euro in respect of itsGerman joint venture for which it has not,or not effectively,hedgedits risk.The underlying exposure on the euro value of its Germanjoint venture properties is partially hedged by funding

262、their purchasewith eurodenominated debt.The Group hedges part of the remainingexposure through the use of derivatives such as forward contracts,which may limit gains,result in losses or have other adverseconsequences.There may be a timing difference on the cashsettlement of a gain or loss on the der

263、ivative and the realisationof the equal and opposite gain on the investment being hedged,which will only arise when that asset is sold.Interest rate hedging risksThe expiration of interest rate swaps,entering into certaintransactions for which hedging is not available on commerciallyreasonable terms

264、(if it all),or the inaccurate hedging of interestrate exposure,may expose the Group to market interest rate risk.The hedging transactions used by the Group to minimise interestrate risk may limit gains,result in losses or have other adverseconsequences.Where interest rate swaps are treated as liabil

265、itiesbecause the contracted interest rate is above the current marketrate,if the underlying asset is sold before the swap matures it canresult in the realisation of significant losses.Because a significantproportion of the Groups indebtedness has been incurred at a fixedrate of interest,the Group wi

266、ll not fully benefit from the current lowinterest rate environment.In addition,the Group is potentiallysubject to credit risk in the current economic environment basedon hedge counterparties inability to perform their obligations.Property risksProperty investment market risksThe Groups business is d

267、ependent on economic conditions andcommercial real estate markets,which have recently experiencedsignificant distress.Small changes in property market yields canhave a significant effect on the value of the properties owned bythe Group.The effect of the significant levels of debt fundingmagnifies th

268、e impact of valuation movements.The real estatemarkets in the UK and,to a lesser extent,Germany have beenadversely impacted by the ongoing global banking crisis,withproperty values demonstrating substantial and continuing declines.Itisnotclearforhowlongortheextenttowhicheconomicconditionswill contin

269、ue to impact these markets adversely,or to what degreeeconomic conditions will deteriorate further.Tenant risksThe Group is subject to the credit risks associated with tenants andis specifically dependent on the retail and leisure sectors,which areexposed to declining consumer spending in the curren

270、t economicclimate.A significant decline in overall retail and leisure tenantrevenues,or the bankruptcy or insolvency of significant individualtenants,or of a substantial number of smaller tenants,wouldmaterially decrease revenues(including SNO!zone revenues)andavailable cash,and could also materiall

271、y lower the value of theproperties owned by the Group.Retail tenants are also facingincreasing competition from major supermarkets andhypermarkets as they expand the range of products offered andfrom the increased penetration of online and discount retailers.Any resulting trade diversion from tradit

272、ional retail outlets to theinternet and major supermarkets could adversely affect the Groupstenants,with the risk that tenant defaults and voids could increase.22Risks and uncertaintiesCapital&Regional Annual Report 2008Property management fee risksA significant part of the Groups income is derived

273、from propertyand asset management fees,which its wholly-owned subsidiaryCRPM earns as property and asset manager pursuant tomanagement contracts with each of the three funds in which it hasinvestments.This income is to a large extent based upon propertyvaluations and as property values have fallen,s

274、o has the incomederived from this activity.These long-term management contractscan be terminated under certain circumstances,including amongstother things,underperformance of the property portfolio over aperiod of time,failure to hold the minimum number of fund unitsrequired,change of control,or neg

275、ligence.Nature of investmentsIt may not be possible for the Group to realise its investments inassociates and joint ventures at the net asset values carried in theGroups accounts.The Groups principal investments comprise unitsin the funds and the shares in its German joint venture.The marketfor thes

276、e units and shares is illiquid.There may also be otherrestrictions on the ability to sell these investments in the jointventure agreements and fund management agreements,such asthe requirement to hold a minimum number or value of the unitsin a given fund so long as the Group acts as property and ass

277、etmanager for that fund.Tax and regulationThe Group is exposed to changes in tax legislation or theinterpretation of tax legislation,particularly changes in the basisof taxation or those directed at offshore structures.In addition,theGroup is potentially exposed to tax liabilities in respect of prev

278、ioustransactions it has undertaken where the tax authorities disagreewith the tax treatment adopted.One such exposure is the potential19.5 million tax and interest liability resting upon the outcomeof current litigation as described in note 10 to the financialstatements,which whilst provided for,wou

279、ld need to be funded.Changes in property-related regulations could also adversely affectthe Group.Loss of key managementThe Groups business is dependent on the skills of a small numberof key individuals.Whilst the Group has ongoing serviceagreements with each of these individuals,their retention can

280、notbe guaranteed.Equally,the ability to attract new employees withthe appropriate expertise and skills cannot be guaranteed.The risks noted above do not comprise all those potentially facedby the Group and are not intended to be presented in any order ofpriority.Additional risks and uncertainties cu

281、rrently unknown tothe Group,or which the Group currently deems immaterial,mayalso have an adverse effect on the financial condition or businessof the Group in the future.These issues are kept under constantreview to allow the Group to react in an appropriate and timelymanner to help mitigate the imp

282、act of such risks.Going concernThestatementofthedirectorsinrespectofgoingconcernisincludedin the corporate governance report.The basis of preparation of thefinancialstatementsisexplainedinnote1tothefinancialstatements.Detailed disclosures regarding the liquidity risk of the Group areincluded in note

283、s 23 and 24 to the financial statements.Current economic conditions have created uncertainty acrossmany business sectors including the property investment market.In particular the Group has suffered significant decreases in thevalue of its property assets.The availability of finance to the sectorhas

284、 become significantly restricted and the terms on which financeis made available have become markedly more stringent.The Group prepares cash flow and covenant compliance forecaststo demonstrate that it has adequate resources available to continueinoperationfortheforeseeablefuture,beingatleast12month

285、sfromthe date of this report.In these forecasts the directors specificallyconsider anticipated future market conditions and the Groupsprincipal risks and uncertainties.The directors consider that a material uncertainty exists aroundthe continuing availability of satisfactory levels of bank and other

286、funding to the Group in the light of the current adverse conditionsin the property market and the wider economy,and the possibilitythat these could deteriorate further.This material uncertaintyreflects thepotentialforfurtherfallsinpropertyvaluationstocausebreaches ofvariousfinancingcovenants,eithera

287、tGroup,fundorjointventure level.InparticulartheGroupisdependentuponitscorecentralfacility which has asset cover and gearing covenants.This material uncertainty may cast significant doubt on the Groupsability to continue as a going concern,such that it may be unableto realise itsassetsanddischargeits

288、liabilitiesinthenormalcourseofbusiness.As described in the Chairmans statement,the Chief Executivesstatement and the financial review,the Group is working on plansto minimise the effects of further adverse market conditions andstrengthen its financial position through:the completion of fundraisings

289、and renegotiation of bankingfacilities in The Junction and X-Leisure;the refinance or sale of some or all of its wholly-ownedproperties;andthe completion of a satisfactory renegotiation of the Groupscore revolving credit facility,including providing headroom inthe facility should the potential tax l

290、iability described in note 10to the financial statements become due for payment.The directors are confident that the transactions described abovecan be successfully completed.However,if this were not to be thecase then the directors believe that the funding and covenantswould need to be further rene

291、gotiated with the appropriate lendersin line with the changed circumstances of the Group and marketenvironment.Therefore,after making enquiries,and considering the likelihoodof completion of the transactions set out above,the directors havea reasonable expectation that the Group and the Company have

292、adequate resources to continue in operational existence for theforeseeable future.Accordingly the directors continue to adopt thegoing concern basis in preparing the annual report and accounts.23Capital&Regional Annual Report 2008Executive directorsHugh Scott-Barrett,Chief Executive,50Hugh has been

293、Chief Executive since 1 April 2008.He waspreviously a member of ABN AMROs Managing Board and servedas Chief Operating Officer between 2003 and 2005 and ChiefFinancial Officer from 2006 to July 2007.Hugh brings over 25 yearsbanking experience having also worked at SBC Warburg andKleinwort Benson prio

294、r to joining ABN AMRO.He was educated bothin Paris and at Oxford University.Ken Ford BSc FRICS,Managing Director of Retail,55Ken has been a director of Capital&Regional since 1997 and,as Managing Director of Retail,is responsible for the Groupsshopping centre and retail park portfolios.Ken has been

295、involvedin commercial property for over 30 years.PY Gerbeau,Managing Director of Leisure,43PY was appointed to the Board in 2003,and as Chief Executiveof X-Leisure in the same year.He has over 15 years experience inthe leisure industry.PYs career to date has included Vice Presidentof Park Operations

296、 at Disneyland Paris and Chief Executive ofthe Dome.PY has an MBA from one of Frances leading businessschools,teaches on the MBA programme at the London BusinessSchool and has a Chair of Entrepreneurship at the ImperialCollege,running a module on the Experienced Economy andCorporate Rescue.Xavier Pu

297、llen,Deputy Chief Executive,57Member of Responsible Business CommitteeXavier was a founder director of the Company in 1979 and has beenactive in the property industry for over 30 years.Xavier focusesprimarily on the supervision of the Groups fund co-investmentbusiness together with the co-ordination

298、 of all property mattersand the development of new and joint venture business initiativesincluding Germany.Charles Staveley,Group Finance Director,46Charles was appointed to the Board as Group Finance Directorin October 2008.He qualified as a Chartered Accountant withArthur Andersen and has addition

299、al tax and treasury qualifications.Before joining the Company he was Head of Tax and Treasury atCOLT Telecommunication Group.Prior to that he held roles withvarious other companies,including De La Rue Group plc,Textron Incand Novar Group plc.24DirectorsCapital&Regional Annual Report 2008From left:Hu

300、gh Scott-Barrett,Ken Ford,PY Gerbeau,Xavier Pullen,Charles StaveleyNon-executive directorsTom Chandos,Chairman,56Chairman of Nomination CommitteeTom is Chairman of Invista European Real Estate Trust and QueensWalk Investment.He is also on the board of a number of privatecompanies.In addition to his

301、board positions,he has worked ininvestment banking and alternative investment areas such asventure capital and hedge funds.He is a Labour member of theHouse of Lords.Tom was appointed as a director of the Companyin 1993 and as Chairman in 2000.Alan Coppin,Non-executive,58Chairman of Responsible Busi

302、ness Committee and memberof Audit CommitteeAlan is currently Chairman of Redstone plc,the telecoms and ITsolutions provider and a non-executive director of both BerkeleyGroup Holdings plc,the urban regenerator and residential developer,and Air Command(Royal Air Force).His previous positions haveincl

303、udedbeingChiefExecutiveofWembleyplcand,inthecharitysector,ChairmanofThePrincesFoundationfortheBuiltEnvironment.Alan was appointed a director of the Company in 2004.Hans Mautner,Non-executive,71Hans is President of the International Division of Simon PropertyGroup(SPG),the worlds largest publicly tra

304、ded retail real estatecompany.In addition,Hans is Chairman of Simon Global Limited,SPGs London-based entity.He is also a director of a number ofDreyfus Corporation managed funds.Hans was appointed as adirector of the Company in 2003 and will retire from the Boardat the Annual General Meeting.Philip

305、Newton,Non-executive,60Chairman of Remuneration CommitteePhilip is the former CEO of Merchant Retail Group plc,owners ofThe Perfume Shop,a 150-store chain that he developed from itsbeginnings.He is Chairman of Windsor Vehicle Leasing Ltd,a vehiclefinance and fleet management company,and Cornish Kitc

306、hen,afast food retail business with 20 stores.His early career was in theDistrict Valuers Office and then the property development industry.Philip was appointed as a director of the Company in 2006.Paul Stobart,Non-executive,51Senior Independent Director and member of Audit,Remuneration and Nominati

307、on CommitteesAfter qualifying as a chartered accountant with Price Waterhouse,Paul spent five years in corporate finance with Hill Samuel beforejoining Interbrand,an international marketing services consultancy,in 1988.He joined The Sage Group plc in 1996 as BusinessDevelopment Director,becoming Chi

308、ef Executive Officer,UK andIreland,in 2003.Paul was appointed as a director of the Companyin 2003.Manjit Wolstenholme,Non-executive,44Chairman of Audit Committee and Member of Remunerationand Nomination CommitteesAfter qualifying as a Chartered Accountant with Coopers&Lybrand,Manjit spent 13 years a

309、t Dresdner Kleinwort Wasserstein,latterlyas co-Head of Investment Banking,where she was responsible formanaging the division as well as advising clients on a wide rangeof transactions.She is also a non-executive director of ProvidentFinancial plc,the specialist non-standard lender.Manjit wasappointe

310、d as a director of the Company in 2006.25Capital&Regional Annual Report 2008From left:Tom Chandos,Alan Coppin,Hans Mautner,Philip Newton,Paul Stobart,Manjit WolstenholmeIntroductionThe directors present their annual report on the results of the Grouptogether with the audited financial statements for

311、 the year ended30 December 2008.Results and proposed dividendsThe consolidated income statement shows a loss on ordinaryactivities after taxation of 502.2 million(2007:loss of166.8 million).An interim dividend of 5p per ordinary share was paid on17 October 2008.Due to a lack of distributable reserve

312、s,no finaldividend will be paid.As far as future dividend policy is concerned,the directors will take a decision on whether or not to pay a dividendin future based on the financial circumstances of the Companyat that future date,and its ability to legally pay a dividend.Shareholders have given appro

313、val to the conversion of theCompanys share premium account into distributable reserves,and Court approval will be sought once the agreement of theCompanys creditors is obtained.Principal activities,trading review and future developmentsThe principal activity of the Group is that of a co-investingass

314、et manager.A review of the activities and prospects of the Group is givenin the Chairmans statement,the Chief Executives statementand the operating review and financial review.Business reviewThe information that fulfils the requirements of the businessreview including key performance indicators can

315、be found in theoperating review and financial review which are incorporated inthis report by reference.Events after the reporting period are set out in note 36 to thefinancial statements.More detail on the financial risks facing the Company is set outin note 24 to the financial statements.The purpos

316、e of this annual report is to provide information to themembers of the Company.The annual report contains certainforward-looking statements with respect to the operations,performance and financial condition of the Group.By their nature,these statements involve uncertainty since future events andcirc

317、umstances can cause results and developments to differmaterially from those anticipated.The forward-looking statementsreflect knowledge and information available at the date ofpreparation of this annual report and the Company undertakesno obligation to update them.Nothing in this annual report shoul

318、dbe construed as a profit forecast.DirectorsThe directors of the Company during the period were:H Scott-Barrett(appointed 1 April 2008),M Barber(retired 31 March 2008),T Chandos,A Coppin,K Ford,PY Gerbeau,H Mautner,P Newton,X Pullen,C Staveley(appointed 1 October 2008),P Stobart,W Sunnucks(resigned

319、30 September 2008)and M Wolstenholme.H Mautner will retire from the Board at the Annual General Meeting.In accordance with the Articles of Association,PY Gerbeau,P Stobart and M Wolstenholme will retire from the Board byrotation and offer themselves for re-election.C Staveley,whohaving been appointe

320、d by the Board would vacate office at theconclusion of the AGM also offers himself for re-election.The Company maintains insurance for the directors in respectof liabilities arising from the performance of their duties.Directors interestsThe directors and,where relevant,their connected persons(withi

321、n the meaning of Section 252 of the Companies Act 2006)are interested in 2,653,635 issued shares representing 3.72%of the issued ordinary share capital of the Company as detailedin the directors remuneration report.There were no contracts of significance subsisting during or at theend of the year in

322、 which a director of the Company was materiallyinterested.No director had a material interest in the share capitalof other Group companies during the year.Share optionsDetails of outstanding share options granted to the directors underthe 1998 Share Option Schemes are disclosed in the directorsremun

323、eration report.Substantial shareholdingsIn addition to the interests of the directors,the Company hasbeen notified pursuant to Section DTR5 of the FSA Disclosure&Transparency Rules of the following notifiable interests in its issuedshare capital as at 17 April 2009(the latest practicable date priort

324、o the issue of this report):Capital structureThe Company has one class of ordinary shares with equalvoting rights.In addition,the trustees of the Long TermIncentive Share Scheme have the right to vote on behalfof the Companys employees.The Company has agreements in place which alter upon a changeof

325、control of the Company as follows:The current asset management agreements the Company hasin respect of its three funds can be terminated by the fundpartnerships if there is a change of control of the Company,whichis defined to be either 50%of its issued share capital being held byor on behalf of a s

326、ingle entity or group or 30%or more of its issuedshare capital being held by or on behalf of a single entity or groupif,in addition,one half or more of its executive directors over theprevious 12 months cease to be the executive directors.A similar definition applies to the 125.5 million core revolv

327、ingcredit facility.The 30%change of control provision differs andrequires that more than 50%of the directors at February 2006cease to be directors,or to constitute 50%of the Board.If thisoccurs the bank has the right to repayment of the loan.Number of shares%RREEF Real Estate7,800,65310.93Morgan Sta

328、nley Investment Management6,588,5359.23Henderson Global Investors3,423,9284.80United Nations Pensions3,270,0004.58APG Asset Management3,243,7254.55Legal&General Investment Management3,036,6664.26Dimensional Fund Advisors2,993,5224.20Goldman Sachs collateral account2,408,6903.38Mr Martin Barber2,378,

329、5673.3326Directors reportCapital&Regional Annual Report 2008Use of financial derivativesThe use of financial derivatives is set out in note 24 to thefinancial statements.Charitable donationsThe main thrust of charitable support is at local level through fundinvestments.At Group level small donations

330、 have been made duringthe year totalling 22,898(2007:18,364).Payment of suppliersThe policy of the Company is to settle supplier invoices within theterms of trade agreed with individual suppliers.Where no specificterms have been agreed,the Company endeavours to makepayment within one month of the re

331、ceipt of the goods or service.At the year end,the Company had an average of 38 days(2007:114 days)purchases outstanding.Compliance with combined codeA statement on corporate governance is set out in the corporategovernance report.Responsible businessThe responsible business statement is set out in t

332、he responsiblebusiness report.EmployeesThe Company is committed to a policy that treats all of itsemployees and job applicants equally.No employee or potentialemployee receives less favourable treatment or considerationon the grounds of race,colour,religion,nationality,ethnic origin,sex,sexual orien

333、tation,marital status,or disability.Nor is anyemployee or potential employee disadvantaged by any conditionsof employment or requirements of the Company that cannot bejustified as necessary on operational grounds.During the year,the Company maintained arrangements to provideemployees with information on matters of concern to them,toregularly consult employees for views on matters affecting themand