1、Capital&Regional plcAnnual report 2003Capital&Regionalplc Annualreport2003Contents1What we do2What we have3How we performed4Chairmans statement5/6Chief Executives review7/9Finance Directors review10/11Shopping centres12/13Retail parks14/15LeisureManagement,governance andcorporate social responsibili
2、ty16/17Directors18Advisers and corporate information19/23Directors remuneration report24/25Directors report26/28 Corporate governance report29Corporate social responsibility30Statement of directors responsibilities31Independent auditors reportFinancial statements32Consolidated profit and loss accoun
3、tNote of historical cost profits and losses33Consolidated balance sheet34Statement of total recognised gains and lossesReconciliation of movements in shareholders funds35Consolidated cash flow statement36Company balance sheet37/56Notes to the accountsAdditional information57Fund portfolio informatio
4、n58Shareholders information59Five-year review60Glossary of termsC&R is a co-investing property asset manager.We manage funds and partnerships in which we hold a significant stake.We have assembled specialist management teams operating in the retail and leisure sectors.This enables our equity and man
5、agement to be leveraged over a large portfolio,and enhances returns to shareholders.Capital&Regional 1Capital&Regional at a glance.what we doShopping centresRetail parksLeisureThe Mall FundThe JunctionFundThe GlasgowFortSwanseaRetail ParkTheX-LeisureFundXscapeGreatNorthernMost of our portfolio is he
6、ld in the form of fund holdings.Our largest investment is in shopping centres.2Capital&RegionalCapital&Regional at a glance.what we haveGroup exposure to property by type Group exposure to property by ownership structureShopping centres 47%Retail parks 34%Leisure 17%Other 2%Joint ventures 19%Fund 73
7、%Wholly owned 8%Capital&Regional 3Capital&Regional at a glance.how we performedOur NAV per share has grown by an average of 13%over the past ten years.Growth in adjusted fully diluted net asset value(NAV)per shareOur dividend per share has grown at an average rate of 20%over the past ten years.Divid
8、end growth199319941995199619971998199920002001200220031086420Pence per share199319941995199619971998199920002001200220036005004003002000100Pence per shareThese results are attributable to the strong generalperformance of the retail property sector during the year,and to the creation of value through
9、 proactive assetmanagement.The property management and performancefees we have earned made a significant contribution to theoverall result.We manage almost 3 billion of retail and leisure propertyassets,with nearly 1 billion of equity investment in ourfunds from third-party institutions.We aim to pr
10、ovide those investors with a combination of proactive propertymanagement skills and investment vehicles and capitalstructures which best meet their needs.4Capital&RegionalChairmans statementManagementWe point to strong management teams in three distinctsectors of the property market:shopping centres
11、,retailparks and urban entertainment complexes.Each has asubstantial portfolio to manage,clear benchmarks andtargets,and strong strategic guidance resulting from ourpartnerships with major institutional fund managers.Both the retail and leisure markets which we serve and thecapital markets through w
12、hich we operate,are fast-moving.Our management team has responded vigorously to thesedynamics and the Companys performance results from theirefforts.I believe that the expertise they have established willcontinue to deliver strong returns from our existing portfolios,and the resulting track record w
13、ill attract new investors toour funds.DirectorsDuring 2003 we appointed two new non-executive directorswho bring significant experience to our main Board.HansMautner is president of the international division of SimonProperty Group,a US REIT with a total market capitalisationin excess of$25 billion
14、invested in retail property assets.He has been appointed Chairman of the RemunerationCommittee.Paul Stobart is the managing director of SageUK.He is a chartered accountant and has been appointedChairman of the Audit Committee.Peter Duffy,who has served nine years as a non-executivedirector this year
15、,will sadly be retiring at the 2004 AGM.He has provided a major contribution to the Company andwill be greatly missed.DividendThe Board is recommending a final dividend of 5p per sharebringing the total for the year to 9p(2002:7p).We plan tocontinue to increase the dividend in line with sustainablee
16、arnings.Tom Chandos ChairmanI am delighted to be able to introduce an excellent set of resultsfor 2003.Our return on equity for 2003 was 37.6%(2002:14.6%).This is well above our ten-year average which stands at close to 16%.ResultsOur 2003 results are the first for a full year of our newbusiness mod
17、el.Financial highlights include:Total returns,including revaluation surplus and after tax,were 101.6 million(2002:37.1 million)providing a return on equity of 37.6%Profit before tax was 26.3 million(2002:2.1 million)Earnings per share were 31.4p(2002:1.3p)Adjusted fully diluted NAV per share was 521
18、p(2002:392p).A 33%increase.Capital&Regional 5Chief Executives reviewOur business modelThe Company has committed itself to its new business model,as a co-investing asset manager,and has now completednearly two years in this shape.92%of our assets are nowinvested through funds or partnerships which we
19、 manageunder management contracts.Our fund model is proving attractive to institutional investors.Both the Mall and Junction funds have nearly doubled in sizeduring the last two years.Following the acquisition of management contracts for threefunds from MWB at the end of January last year,we havenow
20、 merged those three funds into one to be known as the X-Leisure Fund.This fund has initially a 15-year life withan option to extend for a further five years.Hermes hasaccepted the role of fund manager and we have beenappointed as the property asset manager.Our relationships with Morley(fund manager
21、of both the Mall and Junction Funds)and Hermes are proving valuable.They bring a strategic overview and discipline to the funds,thereby enhancing the funds appeal to other investors.We treat our properties as living businesses.We recognisethat our success depends upon occupiers trading profitably.Th
22、e scale of our portfolios is providing our occupiers withthe opportunity to upsize or downsize within our portfoliowith great flexibility.2004 has started very well.There has been much positive activity within the Group and we are optimistic that we will see another year of strong returns.1993 1994
23、19951996 1997 1998 1999 2000 2001 2002 20033,0002,5002,0001,5001,0005000Property under managementProperty value(million)Our portfolioIn the mid to late 1990s we anticipated a period of lowinflation and decided to focus our efforts on properties whichwere visited by the public and where they left beh
24、ind moneyin the tills of our occupiers.By intensively managing theseproperties both in the physical sense and by making themexciting and interesting places to visit and spend time in,we hoped that our occupiers would take more money andtherefore rental values would advance faster than theeconomy as
25、a whole.This is proving to be so.Currently our equity is invested in 15 shopping centres,16 retail parksand 18 urban entertainment complexes.Strong teamsWe are proud of the strength,depth and focus of ourmanagement teams.We have three specialised teamsfocused on shopping centres,retail parks and lei
26、sure.Each is self contained with its own marketing,accountingand facilities management capabilities.The central team is responsible for fund development and expansion,newpartnerships,group accounting and IT.Almost 600 people are employed by the Group and at theproperties which it manages.The asset m
27、anagement modelenables us to demonstrate the productivity of these people.Our Group overhead is covered by our recurring fee income.Performance fees are now substantial and provide a pool forincentivising management.Property investment funds In the Budget on 17 March the Chancellor announced hisinte
28、ntion to consult on the creation of a tax transparentproperty investment fund(PIF).We will follow this processwith considerable interest.The Government has issued a consultation documentinviting responses from interested parties.C&R,both directlyand working through property industry bodies,will bema
29、king strong representations on a number of importantissues.We will be advocating,in particular,an approachwhich allows PIFs to operate in a flexible regulatoryenvironment,similar to that enjoyed by REITs in the US.Issues such as gearing,management structure and the levelof development activity shoul
30、d,to a large extent,bedetermined by the market rather than by regulation.Shareholders may remember that C&R floated its USoperations on the American market as a REIT in 1993 and I have chaired CenterPoint Properties Trust,as the companyis called,since its flotation.Over the ten-year period it hasbee
31、n one of the best performing REITs in America and is now capitalised at over$3 billion.I believe that if the6Capital&RegionalChief Executives reviewGovernment avoids an over-prescriptive vehicle,there will be a ready appetite from investors not only in the UK,but from all over the world,providing at
32、 last significantlong-term equity to the quoted property market.If such long-term equity was available,I believe that theGovernment would find many of its broader objectives met.In particular,it would be easier for the industry to offer flexibleleases to occupiers.One of the problems with a markethe
33、avily dependent upon debt finance is that the longer thelease,the easier it is to finance.A new supply of equitywould help the property industry provide the desired flexibility.Market overviewDuring 2003 we saw substantial rises in the value of retailinvestment properties,driven by increasing instit
34、utionalallocations and low interest rates.These trends maycontinue in 2004,as property still offers income returnswhich exceed interest rates,and the prospect of growth.I cannot recall another time during the past 40 years whenthe argument for investment has been so strong.Future prospects 2004 has
35、started very well.There has been much positiveactivity within the Group and we are optimistic that we willsee another year of strong returns.Martin BarberChief ExecutiveCapital&Regional 7Finance Directors reviewReturn on equityWe follow our total return on equity figure closely for anumber of reason
36、s:It includes revaluation surpluses as well as profit and lossaccount itemsIt is easily measured from the STRGL,a primarystatement(page 34)It is closer than most other measures to reflectingshareholder returns.In 2003 our return on equity was 37.6%.The largestcontribution came from the revaluation s
37、urplus,but this yearaccounting profits were also significant.20032002mmProfit before tax and exceptionals26.310.8Exceptional items(8.7)Gains taken through reserves85.940.2112.242.3Tax(10.6)(5.2)Total return for the year101.637.1Equity shareholders funds270.0253.1Return on equity(see note 31)37.6%14.
38、6%Drivers of valueThe strong returns have been driven by a number of factors:Our management and performance feesStrong ERV growth in both the Mall and Junction FundsStamp duty savings benefits arising from our properties in disadvantaged areasA significant contribution from our joint venturedevelopm
39、ent programme,which includes the GlasgowFort and the two Xscapes at Milton Keynes andCastleford.Return on principal investmentsThe total return can also be broken down by investment as follows:WeightedaverageinvestmentTotalReturn onduring 2003returnequity*mminvestedFund investments Mall102.753.151.7
40、%Junction64.524.336.6%Leisure13.01.07.9%Joint venture investments33.918.353.9%Wholly owned investments64.08.413.1%Loan stock CULS(24.6)(1.7)Assets business total253.6103.540.8%Management fees15.7Performance fees13.3Goodwill amortisation(1.2)Snozone profit0.4Earnings business total16.428.3172.6%Total
41、270.0131.748.8%Management expenses(19.5)Taxation(10.6)Total return for the year270.0101.637.6%*Return on equity is calculated on cost at the beginning of the year plus timeweighted additions to share capital(excluding share options)less reductionsin share capital.The table shows how our equity has b
42、een deployed,and thereturns on the different elements.For example the Mall Fundachieved a property level return of 21.7%driven by assetmanagement initiatives and some favourable yield shift.Including fund level gearing this increased to 33.5%.Including gearing at Group level the return on net equity
43、invested was 51.7%.The returns on the earnings business are also high.This is partly because the capital invested is low,primarily thegoodwill arising on the acquisition of the leisure fundmanagement business,and partly because we do notallocate our management expense between the assets andearnings
44、businesses.This section of the annual report comments on the build-up of the figures and highlights the reasons for the strong results.Profit and loss accountThe following table breaks down turnover and profit beforetax into their component streams:20032002mmAsset management fees15.77.3Performance f
45、ees13.32.8Snozone income5.54.0Rental and other income4.912.1Group turnover39.426.2Share of joint ventures and associates35.927.3Direct property expenses(1.3)(2.0)Direct Snozone expenses(5.1)(3.8)Amortisation of goodwill(1.2)Net interest payable non-and limited-recourse(22.5)(15.0)own borrowings(7.0)
46、(10.1)Contribution38.222.7Management expense(19.5)(14.3)Profit on disposals7.62.3Exceptional items(8.7)Profit before taxation26.32.1Asset management fees are earned by Capital&RegionalProperty Management Limited for managing the funds andpartnerships.Performance fees are earned from the Mall and Jun
47、ctionFunds.They represent the managers share of the excessreturn over the benchmark.In both funds the benchmark is the higher of 12%and IPD+1%.The increase over 2002results from the strong outperformance of the Mall Fund,from which we earned a fee of 11.1 million and the firstperformance fee from th
48、e Junction Fund of 2.2 million.Our 2003 performance has an impact on future yearsperformance fees as explained in note 8.Snozone income derives from ticket sales at Milton Keynesand,for the past three months,at Castleford.Its expensesinclude rent paid to the partnerships and payroll costs of1.6 mill
49、ion.Rental and other income comes from the Groups remainingportfolio of wholly owned properties.The correspondingexpenses are shown as direct property expenses.Share of joint ventures and associates is our proportionateshare of fund operating profit.Although we receive quarterlypayments net of inter
50、est,under FRS 9 we are required toshow this gross and the interest separately.8Capital&RegionalFinance Directors reviewAmortisation of goodwill arises because we paid15.7 million for the income stream arising from the MWBfund management business.We are amortising this over12.5 years.Management expen
51、se was 19.5 million.The increase of36%on last year is explained by the acquisition of the MWBasset management business,by the growth of the Mall andJunction portfolios and by increased performance-relatedpayments.Our management expense is now well coveredby the 29 million of fee income.Value of prop
52、erty management businessOver the past two years the Group has built up a flow ofproperty management income The management contractsextend to ten years for the Junction Fund.The Mall Fundcontract was extended to 15 years during 2003,at therequest of a new investor.The three leisure fund contracts,whi
53、ch were due to expire in 2005 and 2006,have now beenconsolidated into one fund with a 15-year life.It is capable of extension for a further five years.Fee income20032002mmOngoing fee income12.06.0Transaction-related fees3.71.2Performance fees13.32.8Total fee income29.010.0The only value attributed t
54、o this income stream in the balancesheet is a relatively small amount of goodwill(15.7 million)arising on the acquisition of the leisure fund managementbusiness.The value of the business built up internally is notincluded.Adjusted net asset value(NAV)per shareAdjusted NAV per share on a fully dilute
55、d basis has increasedfrom 392p per share to 521p per share.There have beenminor adjustments to the way the figure is calculated,asdescribed in note 30.Finance and capital structureOur partnership and property assets are financed in threedifferent ways:Quoted equityQuoted Cumulative Unsecured Loan St
56、ock(CULS)Bank debt.Capital&Regional 9At current share prices our CULS are convertible into sharesat a price of 1.94 per share between 2006 and 2016.At present their 6.75%yield marginally exceeds the dividendyield arising from conversion.For gearing calculations wetreat them as equity rather than deb
57、t.The bank debt on our balance sheet is secured on ourinterests in the Mall and Junction Funds,and our remainingdirectly held properties.At the year end we had drawn only48 million on our main 100 million facility.On balancesheet gearing(debt/equity)is 29%and the average period to repayment is just
58、over four years.We also monitor our gearing on a“see-through”basis,including our share of the fund debt,and the debt held injoint ventures.In the case of the fund debt,there is norecourse to the Group for the debt whatsoever.It is securedon the properties in the funds,held in a limited partnershipst
59、ructure.In the case of joint venture debt,we often give partialguarantees.For example we may guarantee interestshortfalls and cost over-runs in a development joint venture.We also guarantee 20 million of the principal debt securedon the Great Northern retail warehouse.Including our share of fund and
60、 joint venture debt,our gearingis 129%and the average repayment period is 3.3 years.Hedging interest rate riskWe have significant potential exposures to interest ratemovements.Without hedging we would be directly affectedby a rise in interest rates because our fixed income stream is used to pay vari
61、able interest costs.We could also sufferindirect effects such as a rise in interest rates which couldhave an adverse effect on property values and consumerspending.We hedge a large proportion of our direct exposure usinginterest rate swaps or similar derivative instruments.Theswaps are typically mat
62、ched to the periods of the loans.At the year end 71 million of our 111 million on balancesheet bank debt was swapped(64%).On a see-throughbasis 332 million of 398 million was swapped(83%).TaxationWe pay tax on our profits at 30%.The tax on income ismitigated by capital allowances,which are rarely cl
63、awedback on disposal.We provide for deferred tax on them inline with accounting standards,but add it back in calculatingadjusted fully diluted NAV per share,in line with industrypractice.We also pay corporation tax on capital gains at 30%ondisposals and deemed disposals.Deemed disposals ariseas the
64、funds expand and our share is diluted;although wereceive no cash we pay tax on the amount we are“deemed”to have sold to new investors.During 2003 we provided for corporation tax on capital gains of 4.4 million of which3.7 million is put through reserves.Under current accounting standards we do not p
65、rovide for deferred tax on unrealised revaluation surpluses.Wedisclose a contingent tax liability of 32 million which couldcrystallise if all our property and partnership assets weresold at valuation at the year end.International Accounting StandardsInternational Accounting Standards are due to beco
66、memandatory for all listed companies within the EuropeanUnion in 2005.Our June 2005 interim report will have to conform,although some of the new standards will still bevoluntary.Over the next 12 months we will be monitoringclosely the development of best practice surrounding thenew standards.Whateve
67、r the outcome we will endeavour to use the framework provided to explain the business to our shareholders as clearly as possible.William SunnucksFinance DirectorThe Mall FundOn 28 February 2002 all C&Rs covered shopping centreswere transferred into the Mall Fund.At that time it was a 50/50 joint ven
68、ture with Morley Fund Management,which transferred some of its clients shopping centres into the fund.The Mall Fund invests in shopping centres which meetcertain broad criteria:in-town,generally covered,withintegral car parking and good public transport links;aminimum size of 150,000 sq ft suggests
69、these centres eitherdominate their typical core town shopping catchments of100,000 people,or enjoy an established position within alarger metropolitan catchment.As such,the Malls can bepositioned at the heart of their communities.The Mall teamC&Rs shopping centres team is dedicated to managing the M
70、all Funds shopping centres.They are managed asbusinesses and not just as property investments.Theemphasis is on responsible local management.This gives us direct lines of communication with our shoppers,ourretail partners and local communities.The Mall central team supports this local effort by prov
71、idingspecialisms in leasing,marketing,accounting and HR.It alsoharvests economies of scale in areas such as utilities andensures the application of best practice across the businessas a whole.This Mall management system allows for theessential consistency of experience necessary for thesuccessful de
72、velopment of the Mall brand in becoming theUKs leading owner and operator of community shoppingcentres.The top five Mall tenants are:%of rental incomeNumber of unitsArcadia Group2.720Clinton Cards2.515Woolworths2.46Boots2.29Argos1.98The growth of the Mall FundThe Mall enables investors to benefit fr
73、om this specialistmanagement,improved diversification and strong incomeand capital growth.Since inception the fund has almostdoubled in size to circa 1.25 billion.Other investors havejoined the fund,often injecting their own(or their clients)covered shopping centres.Notable examples are:10Capital&Re
74、gionalOperating review:Shopping centresPrudential Property Managers Gracechurch Centre,Sutton ColdfieldISIS Castle Mall,NorwichHermes The Marlands,Southampton.We estimate that there are approximately 225 UK centresthat would qualify as Malls.We expect to grow the Malltowards our initial target of 25
75、 centres(2 billion gross assetvalue)over the coming years through both cash acquisitionsand in-specie injections from current owners.The Mall management styleWe understand that our success depends on our retailerssuccess.They are regarded as true business partners.Weoperate our centres to make them
76、as accessible,entertainingand popular with the shopping public as possible.Our Mallbrand seeks to be at the heart of the community leading theMall to be a social as well as retail venue.By so doing weplan to increase shopping visits and dwell times yielding theprospect of greater sales for our retai
77、lers.Our increasingscale improves our relationships with our multiple retailers.Cross-portfolio negotiations are common.We believe in the benefits of branding.The Mall brand valuesof“caring,dynamic and easy”lie at the heart of ourbusiness:caring because were personal and responsiblewith our business
78、 partners and shoppers;dynamic becausewe create changing,fun and involving environments;andeasy because we strive to offer an accessible,stress-freeshopping experience.The Mall brand is a developingpromotional and media platform,offering national coveragewith local relevance.With approximately 140 m
79、illionshopping visits during 2003,there are emerging commercialopportunities with brand partners who wish to access thisconstituency.PerformanceIn both years,the fund has substantially outperformed itsbenchmarks.As a result C&R has earned significantperformance fees:2003200212 months10 monthsPropert
80、y level return21.7%14.7%Fund level return33.5%21.6%Benchmark15.2%10.6%Performance fees11.1m2.9mPerformance fees are mainly driven by the capital growth,but are paid yearly and deducted from income.The capitalgrowth is attributable to yield shift,stamp duty savings forproperties in disadvantaged area
81、s and strong ERV growth.We understand that our success depends on our retailerssuccess.They are regarded as true business partners.Capital&Regional 11Below Sara Jones,GeneralManager at The Mall,Epsom.Centre left Angela Greenlees,Marketing Manager,The Mall,Wood Green.Centre right Marie Yuille modelst
82、he new cleaning uniform with Elvisat The Mall,Falkirk.Bottom Ken Ford and members of The Mall team.Our MallsSize(sq ft)Aberdeen200,000Barnsley170,000Bexleyheath400,000Birmingham300,000Chester225,000Edgware199,000Epsom350,189Falkirk190,000Ilford300,000Norwich400,000Romford320,000Southampton200,000Sut
83、ton Coldfield500,000Walthamstow280,500Wood Green570,000The retail park team activities during 2003 included:Managing the Junction FundParticipating in the Glasgow Fort joint venturedevelopment with Pillar PropertyCommencing the development of the Morfa Retail Park in SwanseaSelling the Groups remain
84、ing retail parks which were notinjected into the Junction Fund.The Junction FundOn 3 January 2002 C&R injected most of its retail parks intothe Junction Fund,alongside a similar number of retail parksfrom clients of Morley Fund Management.Since inceptionthe fund has more than doubled its size from 3
85、22 million to 757 million.New investors have participated in the fund,diluting C&Rs interest from 50%to 28.4%.The Junction Fund is now the sixth-largest retail park owner in the UK.The scale of ownership provides the opportunityto carry out cross-portfolio deals with tenants allowing themto expand i
86、n some locations and restructure in others.The fund is aiming to become the premier choice for indirectinvestment exposure to actively managed retail park propertyin the UK.It is building a UK-wide portfolio of destinationretail parks with the following characteristics:Minimum size of at least 120,0
87、00 sq ftAt least one“category killer”store such as B&Q orHomebaseDominant scheme,or the opportunity to become thedominant scheme,in the catchment areaOpportunities to add value through asset management.The main Junction tenants are:%of rental incomeB&Q18.0Comet5.8Carpetright4.9Matalan4.4Homebase3.9J
88、JB3.9Acquisitions and disposalsThe Junction portfolio has been actively managed to positionitself for future growth.In February 2003 the prime ChartwellLand portfolio,the largest portfolio to come onto the marketin recent years,was split between the Junction Fund,Pillar,Hercules Unit Trust and Morle
89、y.12Capital&RegionalOperating review:Retail parksOf the four parks acquired by the Junction,one wasimmediately sold and asset management initiatives havealready commenced on the remaining three.The total uplifton this portfolio since acquisition,including the sale,was20 million.In September 2003 the
90、 Oxford Road Retail Park in Readingwas sold for 25.1 million and in November 2003 theDrakehouse Retail Park in Sheffield was sold for 58 million.Significant gains were made on both these properties overtheir historical cost.Planning permissions and developmentsDuring the 1980s and early 1990s the nu
91、mber of retail parks in the UK increased rapidly.More recently planningrestrictions have tightened and it is now very difficult to getplanning permission for substantial new locations.Despite this,there remains considerable scope for improvingand redeveloping the existing Junction portfolio.Thebusin
92、ess plans have identified the potential to invest over200 million in its sites.These developments will normally besubstantially pre-let,with fixed-price building contracts whichreduce the risk borne by the fund.We have achieved notable planning permissions during theyear.Our 190,000 sq ft developmen
93、t at Aylesbury has nowcommenced on site and we anticipate starting on our130,000 sq ft extension/redevelopment to Hull during thesecond half of the year.A planning inquiry for our 430,000sq ft proposal at Oldbury will commence in May this year.Junction retail parksSize(sq ft)Beckton 1190,000Bristol
94、1220,000Glasgow180,000Hull 1200,000Ipswich 210,000Leeds 1140,000Leicester 1170,000Maidstone170,000Oxford140,000Paisley 1180,000Portsmouth160,000Renfrew240,000Junction Thurrock Joint Venture 1,2440,000Wembley260,000Worcester90,0001 Stamp duty disadvantaged area2 The Junction owns 65%of the Junction T
95、hurrock joint ventureThe Junction Fund is now the sixth-largest retail park owner in the UK.Capital&Regional 13Performance fees are mainly driven by the capital growth,but are paid yearly and deducted from income.The capitalgrowth is attributable to strong ERV growth as a result ofasset management i
96、nitiatives,securing planning consents for development and stamp duty savings for properties indisadvantaged areas.Yield shift calculated on a like-for-likebasis was only 0.18%.Glasgow FortIn February 2003 the Auchinlea Partnership acquired this 90-acre site and commenced construction on the first ph
97、aseof 300,000 sq ft of open A1 retail.This is a 50/50 jointventure between C&R and Pillar Property.Building work on the first phase is due for completion inOctober 2004.Lettings have been highly satisfactory withapproximately 61%of the expected rental value alreadycontracted and terms agreed on a fu
98、rther 8%.Totalexpected rental income has risen to 10.5 million and totalproject costs for phase 1 are estimated at 142 million.On 2 April 2004 the Auchinlea Partnership announced theconditional sale of the property to Hercules Unit Trust for194.7 million.SwanseaIn July 2003 C&R acquired a site near
99、the Morfa stadiumfrom the Swansea City Council,and transferred planningconsent for 105,000 sq ft of open A1 retail.Building workstarted in September 2003 and is expected to be complete by September 2004.Lettings are progressing well with 75%of the expectedrental income of 4.9 million either contract
100、ed or termsagreed.Total project costs are anticipated to be 64 million.Below Andrew Lewis-Pratt andmembers of the Junction team.Bottom The Pod at Hull.Junction developmentsExisting areaFurther developmentAylesbury 394,00096,000Bristol phase II 4180,000Hull phase II 380,00050,000Oldbury40,000390,000P
101、aisley phase II95,000Portsmouth phase II80,0003 Planning permission already in place4 Planning permission for 150,000 sq ft already in placePerformanceIn 2003 the Junction Fund outperformed its benchmark andfor the first time earned a performance fee.20032002Property level return17.7%13.3%Fund level
102、 return 28.2%17.8%Benchmark16.6%17.2%Performance fee 2.2mC&Rs leisure team has four major responsibilities:X-Leisure managing the three funds acquired fromMWB last year,which have now been combined underone umbrella fund.At December 2003 the total grossasset value managed was 500.5 million.Xscape de
103、veloper,manager and operator of this sports,leisure and retail destination brand.Following the successof Xscape Milton Keynes the second Xscape atCastleford,Leeds,opened in the autumn.Construction of the third Xscape is due to commence in summer 2004.Further sites are actively being pursued.Snozone
104、operates real snow slopes within the Xscapedestinations,as a tenant to the partnerships which ownthe properties.The Great Northern Warehouse,Manchester this jointventure with AWG is being managed by the leisure team.The X-Leisure FundOn 24 January 2003 C&R took management control of the three X-Leis
105、ure funds from Marylebone Warwick Balfour.C&R bought small stakes in the funds,together with thefund management business,for a total of 31 million.The three funds own 16 leisure parks and three health clubsnationwide.The parks are anchored by multiplex cinemaswith dedicated car parking as well as ty
106、pically bowling,health and fitness,restaurants and bars.Leases areinstitutional in character,and many also enjoy fixed rentaluplifts through the lease term.Since acquisition C&R has brought a business focus to the management of these assets and introduced property-specific business plans.A large num
107、ber of leasing initiativeshave been progressed,but significant capital expenditurehas been postponed until the three funds are consolidatedinto one vehicle with an extended life.The current split ofassets between three separate funds reduces the managersability to exploit cross-portfolio transaction
108、s and economiesof scale and leads to conflicts of interest.Umbrella fund An umbrella fund has now been created witha new life of 15 years.C&R currently owns 10.77%of theumbrella fund,the balance being held by eight institutionalinvestors.The property and asset management has beencontracted to C&R,an
109、d the fund management to Hermes.C&R will be entitled to management fees and toperformance fees as in the Mall and Junction Funds.14Capital&RegionalOperating review:LeisureThis fund is the largest property leisure fund in the UK.Ouraspiration is to grow it to a gross asset value of 1 billion.The team
110、 will continue its focus on creating destinations,increasing footfall and extending dwell times,as has provensuccessful with the Xscape destinations.The intention is to split the leisure park portfolio into two distinct brands large urban entertainment destinations and more traditionalfamily edge-of
111、-town leisure parks.Each property additionallyhas a dedicated business plan ensuring very focusedmanagement.The marketing initiatives undertaken last yearwere also recognised at the Leisure Awards where three ofthe four finalists were X-Leisure campaigns.XscapeXscape at Milton Keynes has continued t
112、o trade well.Footfall exceeded 6 million in 2003,39%up on the 2001level.The centre is fully let with leases changing hands atpremiums.The second Xscape at Castleford,near Leeds,opened inOctober 2003 and has exceeded expectations.Record initial trading levels were reported by many of the restaurantop
113、erators as well as the bowling operator Bowlplex and thesnow slope operation.As at March 2004 82%of the spacewas let or under offer.Construction of the third Xscape in Braehead,near Glasgow,is due to start in summer 2004.This will be built inpartnership with Capital Shopping Centres,the owners of th
114、e neighbouring regional shopping centre.XscapeBraehead will be anchored by a 12-screen Odeon cinema,a 170m snow slope and a 24-lane bowling/familyentertainment centre.Agreements for lease and terms havealready been agreed to take the scheme to 60%pre-let.SnozoneSnozone is the operating business whic
115、h runs the snowslopes within the Xscape destinations and is 100%ownedby C&R,employing 230 full-and part-time members of staff.It leases the snow slopes at Milton Keynes and Castlefordfrom the partnerships which own the buildings on armslength terms and makes an increasingly significant profit.We are
116、 committed to proving that retail,leisure,entertainmentand attractions can be tied together successfully to bring new,unique and highly appealing destinations and experiences to thepublic,as well as good results for our investors.Capital&Regional 15Below Xscape Castleford grandopening ceremony.Centr
117、e Star City a challenge andan opportunity.Bottom The X-Leisure Exec team.Great Northern On 31 May 2003 C&R took a 50%stake in the GreatNorthern Warehouse,Manchester.The building had beenconverted to a high standard and was anchored by an AMCcinema and NCP.However other lettings did not follow andthe
118、 property remained substantially vacant.C&Rs leisureteam has been working with its joint venture partner,AWG,to evaluate the options for leasing the majority of the vacantspace.Urban leisure destinationsSize(sq ft)Xscape MK420,000Xscape Castleford361,000Fountain Park,Edinburgh230,000Tower Park Leisu
119、re Park,Poole181,000Bentley Bridge Leisure Park,Wolverhampton115,000Lockmeadow Leisure Park,Maidstone143,000Weyside Square Leisure Park,Guildford46,000Boldon Leisure Park,Tyne&Wear,Boldon51,000Stack Leisure Park,Dundee153,000StarCity Entertainment Centre,Birmingham393,00002 Centre,Swiss Cottage,Lond
120、on297,000Riverside,Norwich198,000Parrs Wood Leisure Park,Manchester242,000Great North Leisure Park,North Finchley,London96,000Fiveways,Birmingham185,000Grants Entertainment Centre,Croydon149,000Eureka Entertainment Centre,Ashford131,000West India Quay,Docklands,London130,000Health clubsGiffnock,Glas
121、gow38,000Cannons,St Albans59,000Cricket Ground,Pentagon,Derby49,00016 Capital&RegionalDirectors Tom ChandosMartin BarberHans MautnerXavier PullenWilliam SunnucksDavid CherryPeter DuffyAndrew Lewis-PrattKenneth FordPY GerbeauPaul StobartCapital&Regional 17Tom Chandos Non-executiveChairman,51 Member o
122、f Nomination CommitteeTom is a director of NorthbridgeManagement,which is a fundmanagement company specialising in hedge funds and other alternativeinvestments.He is a non-executivedirector of Global Nature Energy plcand a director of a number of privatecompanies,including Cine-UK Limitedand Hudson
123、Sandler Limited.He wasappointed as a director of the Companyin 1993 and as Chairman in 2000.Martin Barber Chief Executive,59 Member of Nomination CommitteeMartin was a founder director of theCompany in 1979 and has beeninvolved in commercial property as a developer and investor for over 30 years.Mar
124、tin is also Chairman ofCenterPoint Properties Trust,a realestate investment trust,listed on theNew York Stock Exchange and formerlya subsidiary of Capital&Regional.William Sunnucks Finance Director,47 William was appointed Group FinanceDirector in October 2002.He has beenFinance Director of a number
125、 of largecompanies,including SecurumInternational and English,Welsh andScottish Railways.He is a charteredaccountant and has an MBA from theLondon Business School.William hasresponsibility for the Groups finances,including funding,reporting andfinancial control.Xavier Pullen Deputy Chief Executive,5
126、2 Xavier was a founder director of theCompany in 1979 and has been activein the property industry for over 30years.Xavier focuses primarily on thesupervision of the Groups fundmanagement business together with theco-ordination of all property matters.Hans Mautner Non-executive,66 Chairman of Remuner
127、ation CommitteeHans is President of the InternationalDivision of Simon Property Group(SPG),the worlds largest publiclytraded retail real estate company.Inaddition,Hans is Chairman of SimonGlobal Limited,SPGs London-basedentity.SPG currently carries out itsownership/development in Europethrough two s
128、eparate entities in whichit has investments:Gallerie CommercialiItalia and European Retail Enterprises.Hans is Chairman of both theseorganisations.Through its investmentin ERE/Groupe BEG,of which he isalso Chairman,SPG is currently activein the ownership/development ofshopping centres in Europe.Hans
129、 was appointed as a director of theCompany in 2003.David Cherry Non-executive,66 Member of Audit and RemunerationCommitteesDavid is the former Senior Partner of Donaldsons,a national firm ofcommercial chartered surveyors with asignificant reputation in retail property.He has wide experience in the U
130、Kproperty market and was head of theorganisation for eight years.He wasappointed as a director of theCompany in 1997.Peter Duffy Non-executive,67Member of Audit and NominationCommitteesPeter was previously ManagingDirector of TR Property InvestmentTrust plc and Chairman of EuropeanCity Estates N.V.H
131、e is a director ofNightingale Square Properties plc.He was appointed as a director of the Company in 1995.Andrew Lewis-Pratt BSc ARICS Managing Director of Retail Parks,46 Andrew has been a director of Capital&Regional since 1997 and,as ChiefExecutive of The Junction,is responsiblefor the funds reta
132、il park portfolio.Andrew has over 20 years experiencewithin the retail and leisure sector.Paul Stobart Non-executive,46 Chairman of Audit Committee andmember of Remuneration CommitteeAfter qualifying as a charteredaccountant with Price Waterhouse,Paul spent five years in corporatefinance with Hill S
133、amuel before joiningInterbrand,an international marketingservices consultancy,in 1988.Hejoined Sage in 1996 as BusinessDevelopment Director,becoming ChiefOperating Officer in 2000.In 2001 Paul was appointed a non-executivedirector of Planet Holdings plc.Paulwas appointed as a director of theCompany
134、in 2003.PY Gerbeau Managing Director of Leisure,38 PY was appointed to the Board in2003,and as Chief Executive of X-Leisure.He has over 15 yearsexperience in the leisure industry.PYs career to date has included Vice President of Park Operations at Disneyland Paris and Chief Executiveof the Dome.PY h
135、as an MBA from oneof Frances leading business schoolsand teaches on the MBA programmeat the London Business School.Kenneth Ford BSc FRICS Managing Director of ShoppingCentres,50 Ken has been a director of Capital&Regional since 1997 and,as ChiefExecutive of The Mall,is responsible forthe funds shopp
136、ing centre portfolio.Ken has been involved in commercialproperty for 29 years.He founded theEaster Management Group Scotland in1991 prior to joining Capital&Regional.AuditorsDeloitte&Touche LLPHill House1 Little New StreetLondon EC4A 3TRInvestment bankersCredit Suisse First Boston1 Cabot Square,Cana
137、ry WharfLondon E14 4QJUBS Warburg1 and 2 Finsbury AvenueLondon EC2M 2PPPrincipal legal advisersOlswang90 High HolbornLondon WC1V 6XXBerwin Leighton PaisnerAdelaide House,London BridgeLondon EC4R 9HANabarro NathansonLacon House,84 Theobalds RoadLondon WC1X 8RWMaclay Murray&Spens151 St Vincent StreetG
138、lasgow G2 5NJPrincipal lending banksBank of Scotland plcNew Uberior House11 Earl Grey Street Edinburgh EH3 9BNRoyal Bank of Scotland plc135 BishopsgateLondon EC2N 3URBarclays Bank plcProperty Team,Business Banking54 Lombard StreetLondon EC3V 9EXPrincipal valuersDTZ Debenham Tie LeungOne Curzon Stree
139、t,London W1A 5PZKing Sturge7 Stratford PlaceLondon W1C 1STRegistered office10 Lower Grosvenor PlaceLondon SW1W OENTelephone:020 7932 8000Facsimile:020 7802 Registered number139941118Capital&RegionalAdvisers and corporate informationIncentive schemes The Company has four incentive schemes under which
140、 awardscurrently subsist:The 1988 Share Option Schemes(“the Closed Schemes”)The 1998 Share Option Schemes(“the 1998 Schemes”)The Long Term Incentive Plan(LTIP)The Capital Appreciation Plan(CAP).Shareholder approval for the Closed Schemes expired in May 1998and no further options may be granted under
141、 those schemes.No further awards will be made under the 1998 Schemes toparticipants in the LTIP.All the present executive directors are participants in the LTIP.In addition,other key executives are also participants in the LTIP.The terms of the LTIP permit the Committee to make conditionalawards of
142、shares annually to key executives with a market value not exceeding 100%of the participants basic salary.In 2003,atotal of 498,750 shares were conditionally awarded to the executivedirectors and other key executives.The conditions of exercise of the LTIP are designed to motivate the key executives a
143、nd retainthem in the Companys employment.Details of the awards made in 2003 and a summary of the exercise conditions are set out underthe heading“Long Term Incentive Plan”below.All the present executive directors are participants in the CAP.Other key executives are also participants in the CAP.The t
144、erms ofthe CAP permit the Committee to make awards annually to keyexecutives which will entitle them to receive payments in aggregateof up to 30%of the performance fees receivable by the Companyfrom the Mall and Junction Funds.A total of 3.99 million has beenawarded to the executive directors and ot
145、her key executives inrespect of the performance fees earned in 2003;the individualentitlements for 2003 will be reduced by 80%of the value of theshares awarded under the LTIP to the extent that the awards vest.Details of the awards made in respect of 2003,and a summary ofthe conditions affecting pay
146、ment,are set out under the heading“Capital Appreciation Plan”below.Capital&Regional 19Directors remuneration reportUnaudited informationRemuneration Committee The Company has a Remuneration Committee appointed by theBoard,consisting entirely of non-executive directors.At thebeginning of the year the
147、 members were Martin Gruselle(Chairman),Tom Chandos and David Cherry.During the year Hans Mautner was appointed Chairman and Paul Stobart became a member.Tom Chandos and Martin Gruselle resigned from the Committee.The Committee is responsible for setting the remuneration policy for the executive dir
148、ectors and senior employees.The Committeedetermines the terms of the service agreements,salaries anddiscretionary bonus payments,as well as deciding on the awards to be made to all participants in the Long Term Incentive Plan and Capital Appreciation Plan.Advice from independent externaladvisers is
149、obtained when required.Remuneration policy The Committee,using published data and market research,seeksto ensure that the total remuneration received by the executivedirectors under their contracts is competitive within the propertyindustry and will motivate them to perform at the highest level.In o
150、rder to align the interests of executive directors with the interestsof shareholders,a significant proportion of directors remuneration isperformance-related through the use of annual bonus and incentiveschemes.Basic salaries The Committees policy is to set the basic salaries of each executivedirect
151、or at levels which reflect their roles,experience and thepractices in the employment market.Annual bonus scheme For 2003 and future years,the Committee will award cash bonusesto the executive directors based on an assessment of their individualachievements during the year.Pension arrangements The Co
152、mpany makes contributions(at differing rates of basic salary)to defined contribution pension schemes of each executivedirectors choice except that in the cases of M Barber and X Pullen48,857 and 46,192 salary in lieu of pension contributions werepaid to them respectively.Other benefits Benefits comp
153、rise private medical insurance cover,permanenthealth insurance cover,critical illness cover and additional salary in lieu of a company car.Service contracts Each of the present executive directors has a service agreementwhich can be terminated on one years notice by either party,except in the case o
154、f W Sunnucks who can terminate his serviceagreement by giving six months notice.In the event of early termination of an executive directorsagreement,the Committee determines the amount of compensation(if any)to be paid by reference to the circumstances of the case at the time.It is the Committees po
155、licy not to reward poorperformance and to take account of the executive directors duty to mitigate loss.The dates of the executive directors agreements are as follows:M Barber 28 October 1993X Pullen 28 October 1993K Ford 17 May 1996A Lewis-Pratt 20 January 1998W Sunnucks 15 October 2002PY Gerbeau14
156、 April 2003Non-executive directors remuneration Each non-executive director currently receives fees of 27,000 perannum.The Chairman receives additional fees of 63,000 perannum and the Chairman of each of the Audit and RemunerationCommittees receives an additional fee of 5,000 per annum.The non-execu
157、tive directors are not entitled to bonuses,benefits,pension contributions or to participate in any incentive schemes.None has a service agreement and all are appointed for three-yearfixed terms.Performance graph The graph below is prepared in accordance with The DirectorsRemuneration Report Regulati
158、ons 2002 and illustrates theCompanys performance compared to a broad equity market Index.As the Company is a constituent of the FTSE Real Estate Index,this index is considered to be the appropriate comparator for thispurpose.Performance is measured by total shareholder return(share price growth plus
159、 dividends paid).20Capital&RegionalDirectors remuneration report5010015020025030025/12/9825/12/9925/12/0025/12/0131/12/0231/12/03Capital&RegionalFTSE All Share IndexFTSE Real Estate Index TSR Index at 26/12/98=100Capital&Regional 21Audited informationLong Term Incentive Plan Shares have been conditi
160、onally awarded to the directors under theLong Term Incentive Plan as set out below:MarketSharesprice onAs atconditionallydate ofEnd ofAs at31 Decemberawardedawardqualifying 31December2002in year(p)period2003M Barber84,138310.531/12/0484,13868,750394.531/12/0568,750X Pullen79,459310.531/12/0479,45965
161、,000394.531/12/0565,000W Sunnucks30,596310.531/12/0430,59650,000394.531/12/0550,000K Ford76,490310.531/12/0476,49062,500394.531/12/0562,500A Lewis-Pratt 76,490310.531/12/0476,49062,500394.531/12/0562,500PY Gerbeau58,132310.531/12/0458,13256,250394.531/12/0556,250In addition,133,750 shares were award
162、ed to key executives at 394.5p;total conditional awards held by key executives at 31 December 2003 amounted to 251,544 shares.The qualifying(“vesting”)conditions for all awards under the plancan be summarised as follows:The extent to which shares conditionally awarded in 2003 will vest isdetermined
163、by reference to the level of the Groups average post-taxreturn on equity(ROE)for the financial years ended 31 December2003,2004 and 2005.None of the shares will vest if the ROE isless than 10%;20%of the shares will vest if the ROE is 10%;100%of the shares will vest if the ROE is 18%or above.If ROE f
164、allsbetween 10%and 18%the percentage of shares will vest at adifferential rate.ROE is calculated by dividing the total of profit attributable to shareholders and all gains and losses included in the statementof total recognised gains and losses for the relevant year by theamount of the equity shareh
165、olders funds on the first day of therelevant year,adding the results for the three years,dividing by three and multiplying the result by 100.Adjustments to the amount ofequity shareholders funds will be made to reflect changes in theamount of the issued share capital,share premium account orcapital
166、reserves occurring during the relevant financial year.Capital Appreciation PlanIn accordance with the terms of the plan,the directors have beenawarded the following interests in the performance fees receivableby the Group in respect of the financial year 2003.The interests awarded will only be paid
167、in full if none of the sharesconditionally awarded under the LTIP in 2003 vest in 2006.Thevalue of the initial award will be reduced pro rata to the extent thatany part of the performance fees received by the Group in respectof 2003 are clawed back as a result of under-performance of thefunds in 200
168、4 or 2005.Consequently,no payments will be made in respect of the 2003 awards until 2006,when this right lapses.InterestValue of Maximumawardedinitial awardMaximumoffset carried in respect in respect amountforward fromof 2003of 2003of offsetprevious year%Note 1Note 2M Barber4.89650,000273,019X Pulle
169、n4.50600,000235,880K Ford6.00800,000197,250A Lewis-Pratt4.50600,000296,869W Sunnucks2.40320,000212,912PY Gerbeau2.49330,000232,668In addition,5.22%interests with a value of 695,130 were awardedin respect of 2003 to key executives who were not directors.The same key executives received LTIP awards wh
170、ose maximumgross aggregate offset amounted to 547,855.Note 1 The amount of the offset represents 80%of the LTIP awardmade in 2003 plus the offset carried forward from 2002;it will bereduced pro rata to the extent that the shares conditionally awardedunder the LTIP do not vest in full.Note 2 If the f
171、inally determined amount of the offset exceeds thevalue of the CAP award in any one year,the excess will be carriedforward to be offset against future awards under the CAP.Whereparticipants have offset carried forward from previous years this isaggregated with the maximum offset.22Capital&RegionalDi
172、rectors remuneration reportInterests in shares The directors and,where relevant,their connected persons(withinthe meaning of Section 346 of the Companies Act 1985)werebeneficially interested in the ordinary share capital of the Companyat the dates shown in the table opposite.There have been no chang
173、es to the directors interests in sharessince 31 December 2003 other than:A Lewis-Pratt exercised 125,000 share options andsubsequently sold the shares.X Pullen exercised 154,845 share options.Directors remunerationThe remuneration of the directors who served in the year ended 31 December 2003 is ana
174、lysed below:2003Salary DiscretionaryPensionOther2002and feesbonus contributionsbenefitsTotalTotal000000000000000000M Barber27524849*27599612X Pullen26023446*21561591K Ford2502253821534549A Lewis-Pratt2502253820533549W Sunnucks200180251942492PY Gerbeau161145133191,3961,2571961212,9702,393T Chandos 90
175、9098M Gruselle151535D Cherry272725P Duffy272725H Mautner1111P Stobart1414184184183Total1,5801,2571961213,1542,576*48,857 was paid to M Barber as salary in lieu of pension contributions in 2003(2002:49,000)*46,192 was paid to X Pullen as salary in lieu of pension contributions in 2003(2002:18,500)Ord
176、inary shares 6.75%convertible subordinated of 10p eachunsecured loan stock 2006/1631 December31 December 31 December31 December2003200220032002SharesSharesM Barber2,290,2442,146,36635,39435,394X Pullen917,421809,54523,69323,693W Sunnucks9,185K Ford382,001381,951A Lewis-Pratt14,15314,153PY GerbeauT C
177、handos45,00045,0005,00015,000P DuffyD Cherry5,5804,138P StobartH Mautner3,663,5843,401,15364,08774,087During the year,the share price ranged from a high of 403p to a lowof 249.5p.The share price as at 31 December 2003 was 403p.No share options were granted during 2003 and no further awardswill be ma
178、de under these schemes to participants of the LTIP.Approval This report was approved by the Board of Directors and signed onits behalf by:F Desai Company Secretary8 April 2004Capital&Regional 23Interests in share optionsMarket price As at As at Exerciseat date of Earliest LatestExercise 31 December3
179、1 Decemberpriceexercise exercise exercise condition2002Exercised2003(p)(p)datedatemetM Barber136,878136,878168.9367.522/12/9622/12/03Yes104,263104,263131.428/10/9722/10/04Yes50,58250,582226.418/06/0018/06/04Yes50,00050,000211.513/09/0313/09/10Yes341,723204,845X Pullen136,878136,878168.9373.522/12/96
180、22/12/03Yes104,263104,263131.428/10/9722/10/04Yes50,58250,582226.418/06/0018/06/04Yes100,000100,000279.518/05/0118/05/08Yes50,00050,000211.513/09/0313/09/10Yes441,723304,845K Ford13,00013,000226.4326.518/06/0018/06/07Yes138,747138,747226.4326.518/06/0018/06/04Yes175,000175,000279.518/05/0118/05/08Ye
181、s75,00075,000191.518/02/0218/02/07Yes50,00050,000211.513/09/0318/09/10Yes451,747300,000A Lewis-Pratt13,00013,000226.4303.018/06/0018/06/07Yes138,747138,747226.4303.018/06/0018/06/04Yes175,000175,000279.5367.518/05/0118/05/08Yes75,00075,000191.518/02/0218/02/07Yes50,00050,000211.513/09/0318/09/10Yes4
182、51,747125,000The directors present their report together with the audited financialstatements for the year ended 31 December 2003.Results and proposed dividends The consolidated profit and loss account is set out on page 32 andshows a profit on ordinary activities after taxation of 19,381,000.The di
183、rectors recommend the payment of a final dividend of 5.0p perordinary share on 18 June 2004 to members on the register at theclose of business on 23 April 2004,which together with an interimdividend of 4.0p per ordinary share,paid in 2003,makes a total of 9.0p for the year.Principal activities,tradi
184、ng review and futuredevelopments The principal activity of the Group is that of a co-investing propertymanager.A review of the activities and prospects of the Group is given in the Chairmans statement,the Chief Executives review,the Finance Directors review and the Operating review on pages 4 to 15.
185、Directors The directors of the Company during the year were:M Barber,T Chandos,D Cherry,P Duffy,K Ford,PY Gerbeau,M Gruselle,A Lewis-Pratt,H Mautner,X Pullen,P Stobart and W Sunnucks.P Duffy will retire from the Board at the Annual General Meeting.All directors served throughout the year with the ex
186、ception of PY Gerbeau(appointed on 14 April 2003),H Mautner,P Stobart(both appointed on 24 July 2003)and M Gruselle(resigned on 30 May 2003).In accordance with the Articles of Association,H Mautner and P Stobart,having been appointed after the last Annual GeneralMeeting,will retire by rotation and,b
187、eing eligible,offer themselvesfor re-appointment.T Chandos and M Barber will retire from theBoard by rotation and will also offer themselves for re-election.The Company maintains insurance for the directors in respect of liabilities arising from the performance of their duties.Directors interests Th
188、e directors and,where relevant,their connected persons(within the meaning of Section 346 of the Companies Act 1985)are interested in 3,663,584 issued shares representing 5.8%of theissued ordinary share capital of the Company as detailed in thedirectors remuneration report on page 22.Save as set out
189、in note 34 to the accounts there were no contracts of significance subsisting during or at the end of the year in which a director of the Company was materially interested.Share options Details of outstanding options granted to the directors,under thesame schemes,are contained in the directors remun
190、eration reporton page 23.Long Term Incentive Plan(LTIP)and CapitalAppreciation Plan(CAP)The Company established the plans on 18 December 2002 for thebenefit of the executive directors and key executives.Details of theplans and awards made are contained in the directors remunerationreport on page 21.
191、Substantial shareholdings In addition to the interests of the directors,the Company has been notified pursuant to Sections 198 to 202 of the CompaniesAct 1985,as amended,of the following notifiable interests in itsissued share capital as at 1 April 2004(the latest practicable dateprior to the issue
192、of this report):Shares%The Capital Group Companies Inc.5,120,0008.10Neuberger&Berman,LLC5,032,9567.96Henderson Global Investors3,964,4586.27United Nations Pension Fund3,936,1206.23Isis Asset Management plc3,807,4376.02UBS Global Asset Management3,189,6055.05Legal&General Investment Management2,770,5
193、154.38Morley Fund Management2,739,9784.34Kempen Capital Management2,461,9003.90ABP Pensions2,448,7123.8724Capital&RegionalDirectors reportCharitable donations During the year the Group contributed 3,700(2002:6,296)to UK charities.Payment of suppliers The policy of the Company is to settle supplier i
194、nvoices within theterms of trade agreed with individual suppliers.Where no specificterms have been agreed payment is usually made within one monthof receipt of the goods or service.At the year end the Company hadan average of 27 days(2002:28 days)purchases outstanding.Compliance with Combined Code A
195、 statement on corporate governance is set out on pages 26 to 28.Stakeholder pensions As a result of the Governments introduction of stakeholder pensionsin April 2001,employers must provide their employees with accessto a stakeholder pension scheme.The Company has appointedconsultants who have put su
196、ch a scheme in place and theCompany has also nominated a stakeholder pension provider.Employees have had access to join this scheme since May 2001.Dividend Reinvestment PlanThe Company introduced,for the 1999 interim dividend,and forsubsequent dividends,a service whereby shareholders can use theirca
197、sh dividends to buy more shares in the Company.The plan wasintroduced for those shareholders preferring capital appreciationrather than income from their shareholding.The timetable for the 2003 final dividend is set out on page 58.Details of the terms and conditions of the Dividend ReinvestmentPlan
198、can be obtained by contacting the Company Secretary at theregistered office.Post balance sheet events Post balance sheet events are set out in note 35 to the accounts.Auditors On 1 August 2003,Deloitte&Touche,the Companys auditors,transferred their business to Deloitte&Touche LLP,a limited liability
199、partnership incorporated under the Limited Liability Partnerships Act 2000.The Companys consent has been given to treat theappointment of Deloitte&Touche as extending to Deloitte&ToucheLLP under the provisions of Section 26(S)of the Companies Act1989.Deloitte&Touche LLP have expressed their willingn
200、ess to continue in office and a resolution to re-appoint them will beproposed at the Annual General Meeting.Special business of the Annual General MeetingAuthority to allot securities,Section 80 of the Companies Act 1985,requires shareholders authority for the directors to allot new sharesor convert
201、ible securities,other than shares which may be allottedunder employee share schemes.Under resolution 9,which isproposed as an ordinary resolution,the directors seek authority to allot shares having a nominal value of 2,037,333 representingone third of the nominal value of the Companys issued shareca
202、pital.The authority will expire at the conclusion of the CompanysAnnual General Meeting in 2005.The directors have no presentintention of exercising this authority.Pre-emption rights Shares allotted for cash must normally first be offered to shareholdersin proportion to their existing shareholdings.
203、Under resolution 10,which is proposed as a special resolution,the directors seek to renewtheir annual authority to allot shares for cash as if the pre-emptionrights contained in Section 89(1)of the Companies Act 1985 did notapply up to a maximum of 5%of the Companys issued share capital.Authority to
204、 purchase own shares At the Annual General Meeting in 2003,the Company was grantedauthority to make purchases in the market of its own shares,subject to specified limits.This authority,none of which has yetbeen exercised,expires at the conclusion of the Companys AnnualGeneral Meeting for this year a
205、nd by resolution 11,which isproposed as a special resolution,the Company is seeking to renewthis authority.The Company may cancel any bought-in sharesimmediately or hold them in treasury.The authority is sought until the conclusion of the 2005 AnnualGeneral Meeting,or for 15 months after the date on
206、 which theresolution is passed,whichever is the earlier.Details of the currentissued share capital are set out in note 28 to the accounts.Thedirectors will only exercise this authority if they consider that it willresult in an increase in asset value per share for the remainingshareholders and that
207、it will be in the best interests of the Companyto do so.By Order of the BoardF Desai Company Secretary8 April 2004 Capital&Regional 25The Board of Directors is accountable to the Companysshareholders for the management and control of the Companysactivities and is committed to high standards of corpo
208、rategovernance.This report and the directors remuneration report set out on pages 19 to 23 describe how the Company complieswith the provisions of The Combined Code Principles of GoodGovernance and Code of Best Practice(“the Combined Code”).Statement of complianceThe Company has complied throughout
209、the year ended 31 December 2003 with the Code provisions set out in Section 1 of the Combined Code issued by the Financial Services Authority in June 2000.In July 2003 the Financial Reporting Council issued a revised Combined Code.This first applies to the Company for the year ending 31 December 200
210、4.The Board is aware of therequirements of the revised Combined Code and has taken variousactions in light of its guidance.Application of the principlesThe Board of DirectorsDetails of the directors are set out on pages 16 and 17.TheCompany is controlled through the Board of Directors whichcomprises
211、 the Chairman,six executive and four non-executivedirectors,thus providing an appropriate balance of power andauthority.All the Companys non-executive directors actindependently of management.The terms and conditions ofappointment of non-executive directors are available for inspectionat the Company
212、s registered office.There is a clear division of responsibility between the Chairman andChief Executive.In the Companys view,the breadth of experienceand knowledge of the Chairman and the non-executive directorsdetachment from the day-to-day issues within the Company providea sufficiently strong and
213、 experienced balance with the executivemembers of the Board.The breadth of experience attributed to thenon-executive directors,allied to the management informationprovided by the Company,enables them to assess and advise thefull Board on the major risks faced by the Company.The Companybelieves that
214、shareholders should regard all its non-executivedirectors as independent.The Board reviews the schedule of matters reserved to it fordecision at least once a year.Board approval is required for allsignificant or strategic decisions including major acquisitions,disposals and financing transactions.A
215、procedure for directors totake independent professional advice if necessary has been agreedby the Board and formally confirmed to all directors.The Board meets at least quarterly and each member receives up-to-date financial and commercial information in respect of the three divisions prior to each
216、meeting,in particular,quarterlymanagement accounts and schedules of income and outgoings(each with comparisons against budget),schedules of acquisitionsand disposals and relevant appraisals(prior Board approval beingrequired for large transactions)and cash flow forecasts and detailsof funding availa
217、bility.The directors have delegated certain of their responsibilities to committees that operate within specified terms of reference and authority limits that are reviewed annually or in response tochanged circumstances.An Executive Directors Committee,whose members include seven executives(one of w
218、hom is not a main Board director),meets on a weekly basis and deals with all major decisions of the Group not requiring full Board approval orauthorisation by other Board committees.The Executive DirectorsCommittee is quorate with four directors in attendance;if decisionsare not unanimous the matter
219、 is referred to the Board for approval.Notes and action points from Executive Directors Committeemeetings are circulated to the Board.The Audit and RemunerationCommittees,which consist solely of non-executive directors,meetat least twice a year.All members of the Board are subject to the re-election
220、 provisions ofthe Articles which require them to offer themselves for re-election atleast once every three years and,on appointment,at the first AnnualGeneral Meeting(AGM)after appointment.Details of those directorsoffering themselves for re-appointment are set out in the directorsreport on pages 24
221、 and 25.Peter Duffy was nominated as thesenior independent director as required by the Combined Code forthe year ended 31 December 2003.As Peter Duffy retires at theAGM on 11 June 2004,Paul Stobart will be nominated as the seniorindependent director.A performance evaluation of the Board was conducte
222、d for the year ended 31 December 2003.The Chairmans performance wasevaluated by the senior non-executive director,the Chief Executivesperformance was evaluated by the Chairman,and both theChairman and Chief Executive together evaluated the performanceof the remaining directors.Training is available
223、for new directors andother directors as necessary.Nomination CommitteeThe committee comprises T Chandos,M Barber and P Duffy.Following P Duffys retirement at the AGM,P Stobart will beappointed as the new committee member.The Nomination26Capital&RegionalCorporate governance reportCommittee meets as r
224、equired to select and recommend to theBoard suitable candidates for both executive and non-executiveappointments to the Board.The Board is given an opportunity to meet the individual concerned prior to any formal decision.During the year,two non-executive directors,Hans Mautner andPaul Stobart,were
225、appointed to the Board following a consultationprocess involving external consultants.The directors also appointedPY Gerbeau to the Board,which was an internal promotion.The terms of reference of the Nomination Committee are availablefor inspection at the Companys registered office.Board and committ
226、ee meetingsThe number of meetings of the Board and of the Audit,Remuneration and Nomination Committees,and individualattendance by directors,is set out below.Board meetingsAttendanceT Chandos9M Barber9X Pullen9W Sunnucks9K Ford8A Lewis-Pratt8PY Gerbeau(appointed April 2003)4M H Gruselle(retired June
227、 2003)4P Duffy8D Cherry8P Stobart(appointed July 2003)2H Mautner(appointed July 2003)2There were nine meetings during the year.Audit CommitteeAttendanceM H Gruselle(retired June 2003)2D Cherry5P Stobart(appointed July 2003)3P Duffy5There were five meetings during the year.Remuneration CommitteeAtten
228、danceT Chandos3M H Gruselle(retired June 2003)2P Stobart(appointed July 2003)1D Cherry3H Mautner(appointed July 2003)1There were three meetings during the year.Nomination CommitteeAttendanceT Chandos3M Barber3P Duffy3There were three meetings during the year.Directors remuneration The Remuneration C
229、ommittee makes recommendations to theBoard,within existing terms of reference,on remuneration policyand determines,on behalf of the Board,specific remunerationpackages for each executive director.The terms of reference of the Remuneration Committee are available for inspection at theCompanys registe
230、red office.A proportion of all executive directorsremuneration consists of cash bonuses(linked to corporate andindividual performance achievements)the levels of which aredetermined by the Remuneration Committee.All the executivedirectors are eligible to participate in the Long Term Incentive Plan(LT
231、IP)and Capital Appreciation Plan(CAP)which were both established on 18 December 2002 following shareholderconsultation and approval.The fees of the non-executive directorsare reviewed by the Board at regular intervals.The statement ofremuneration policy and details of each directors remuneration are
232、set out in the directors remuneration report on pages 19 to 23.Shareholder relationsThe Company has always encouraged regular dialogue with its institutional shareholders and private investors at the AGM,through corporate functions and property visits.Update meetingsare held with institutional share
233、holders following announcement of preliminary and interim results and as requested throughout the year.Directors are accessible to all shareholders and queriesreceived verbally or in writing are immediately addressed.Directors are introduced to shareholders at the AGM including the identification of
234、 non-executives and committee chairmen.Announcements are made to the London Stock Exchange and thebusiness media concerning business developments to provide widerdissemination of information.Registered shareholders are sent copiesof both the annual report and accounts and the interim report.Capital&
235、Regional 27Accountability and auditFinancial reportingThe Companys annual report and accounts includes detailedreviews of the activity in relation to each division,together with a detailed review of its financial results and financing position.In this way,and as required by the Combined Code,the Boa
236、rdseeks to present a balanced and understandable assessment of the Companys position and prospects.Internal controlThe Board is responsible for maintaining a sound system of internalcontrol to safeguard shareholders investment and for reviewing its effectiveness.Such a system is designed to manage,b
237、ut noteliminate,the risk of failure to achieve business objectives.There are inherent limitations in any control system and,accordingly,eventhe most effective system can provide only reasonable,and notabsolute,assurance against material misstatement or loss.In accordance with the guidance of the Tur
238、nbull Committee oninternal control,an ongoing process has been established foridentifying,evaluating and managing risks faced by the Company.This process has been in place from the start of the financial yearunder review to the date of approval of these financial statements.In November 2003,the dire
239、ctors carried out their review of theeffectiveness of the current system of internal control and updatedthe documentation of controls in place.Such a review is carried out once a year.The risks for each of the divisions in the Group(Mall,Junction,Xscape/X-Leisure and Corporate)are classified into fi
240、nancial/administration risks,property risks and operational risks.The keyfeatures of the Companys system of internal control are as follows:Control documents for each area of risk which identify the keyrisks,the probability of those risks occurring,their impact if theydo occur and the actions being
241、taken to manage those risks tothe desired level.Clearly defined organisational responsibilities and authority limitsthroughout the Group.The day-to-day involvement of theexecutive directors in the running of the business ensures thatthese responsibilities and limits are adhered to.Financial reportin
242、g to the Board including quarterly reports fromthe Fund Manager of the Mall and Junction Funds and for theGroup as a whole,including the preparation of budgets andforecasts,cash management,variance analysis,property,taxation and treasury reports and a report on financing.An Audit Committee which mee
243、ts with the auditors and dealswith any significant internal control matter.In the year underreview the Committee met with the auditors on five occasionsand received a paper on the internal controls of the Company.Due to the size of the Group it does not have an internal auditfunction and the Company
244、 believes that a need for such a functiondoes not currently exist,although this is periodically reviewed.Audit CommitteeThe Audit Committee consists of three non-executive directorswhose details are set out on pages 16 and 17.The role of the AuditCommittee is to maintain a relationship with the Grou
245、ps auditorsand review,in depth,the Companys financial statements,internalfinancial control and risk management systems and circulars toshareholders.The terms of reference of the Audit Committee areavailable for inspection at the Companys registered office.The AuditCommittee is also responsible for r
246、eviewing the cost-effectivenessand the volume of non-audit services provided to the Group.TheCompany does not impose an automatic ban on the Groupsauditor undertaking non-audit work.The Groups aim is always to have any non-audit work involving accountancy firms carried outin a manner that affords va
247、lue for money.The accounting firm mustnot be in a position of conflict in respect of the work in question andmust have the skill,competence and integrity to carry out the workin the best interests of the Group.The Audit Committee meets priorto Board meetings to consider the interim and annual result
248、s and on an ad hoc basis at other times during the year.In 2003,theCommittee met five times.Going concern In compliance with the Listing Rules of the Financial ServicesAuthority the directors can report that,based on the Groupsbudgets and financial projections,they have satisfied themselvesthat the
249、business is a going concern.The Board has a reasonableexpectation that the Company and Group have adequate resourcesand facilities to continue in operational existence for the foreseeablefuture and therefore the accounts are prepared on a going concernbasis.F Desai Company Secretary8 April 2004 28 C
250、apital&RegionalCorporate governance reportCapital&Regional plc recognises and acknowledges the conduct ofits business has an impact on its employees,its partners,its tenantsand suppliers and the community and environment of the propertyportfolio it manages.The Companys corporate governance report is
251、 set out on pages 26 to 28.The Companys relationship with itskey stakeholders,its shareholders,is noted on page 27.Employees The Company is committed to a policy of equal opportunities for allemployees,regardless of their sex,race or disability.The Companyacknowledges the value of the contribution o
252、f its staff.Employeesare encouraged to develop within the Company and,to facilitatethis,training is encouraged and each employee is regularlyappraised with a view to maximising his or her potential andcontribution.The Company places considerable value upon the involvement of itsemployees,at all leve
253、ls,in its affairs and has continued its practiceof keeping them regularly and systematically informed on matters of concern affecting them as employees and on the financial and economic factors affecting the Companys performance.Consultations with them or their representatives take place on a regula
254、r basis so that their views can be taken into account whendecisions are made which are likely to affect their interests.This is achieved by regular meetings between management andemployees at all levels.Health and safety in the Group The Companys aim is to develop a culture throughout its organisati
255、onthat is committed to the prevention of injuries to,and ill health of,its employees or others that may be affected by its activities.The Group has a nationally co-ordinated health and safety initiativewhich is contracted out.Procedures are reviewed at monthlymanagement meetings with centre manageme
256、nt by the RetailDevelopment Managers.All properties are adequately insured tocover potential risks and annual risk assessments are carried out bythe Group in consultation with the Group contractor and insurers.The Company is committed to providing relevant information andnecessary ongoing training t
257、o employees in respect of risks to healthand safety which may arise out of their activities at the workplace.All employees are offered private medical insurance as well aslong-term disability cover.Environmental policy The Company is committed to delivering the highest standards ofenvironmental poli
258、cy implementation in the management of its retailand leisure property portfolio.The Company consults employees,shareholders,suppliers and customers alike to maintain highstandards.The Company strives to achieve compliance with currentlegislation,particularly in the areas of energy and its efficient
259、use andimpact on the environment,recycling practices,water managementand minimisation of use.For example,during 2003,the Mall division achieved portfolio-widereductions in the consumption of electricity,gas and water comparedto the previous year.In each area,the actual reduction wasachieved by refin
260、ing measures already in place,for example,setting Mall lighting to match exact occupancy times and half-hourlyelectricity monitoring and targeting for all malls.The Mall divisionalso recycles cardboard/paper generated by retailers,which hasproduced many financial benefits mainly less waste to landfi
261、ll sitesand a return for tonnage in cardboard recycled.The Mall in 2003recycled over 1,900 tonnes of cardboard.During 2004,the Malldivision will participate in a national environmental benchmarkingexercise with Upstream for all their malls,to compare performancewith other shopping centre operators.T
262、he Company also endeavours to include environmentalconsiderations in the design and refurbishment of properties,applying and installing wherever practicable current best practicetechnology.The Company is committed to continuous monitoring and feedback in order to adopt a responsible and positive app
263、roach to environmental issues.Capital&Regional 29Corporate social responsibility In respect of the preparation of financial statementsUnited Kingdom company law requires the directors to preparefinancial statements for each financial year which give a true and fairview of the state of affairs of the
264、 Company and Group as at the endof the financial year and of the profit or loss of the Group for thatperiod.In preparing those financial statements,the directors arerequired to:select suitable accounting policies and then apply themconsistently;make judgements and estimates that are reasonable andpr
265、udent;andstate whether applicable accounting standards have beenfollowed.The directors are responsible for keeping proper accounting recordswhich disclose with reasonable accuracy at any time the financialposition of the Company and enable them to ensure that thefinancial statements comply with the
266、Companies Act 1985.They arealso responsible for the system of internal control,for safeguardingthe assets of the Company and hence for taking reasonable stepsfor the prevention and detection of fraud and other irregularities.30 Capital&RegionalStatement of directors responsibilitiesWe have audited t
267、he financial statements of Capital&Regional plcfor the year ended 31 December 2003 which comprise theconsolidated profit and loss account,the note of historical cost profitsand losses,the consolidated balance sheet,the statement of totalrecognised gains and losses,the reconciliation of movements ins
268、hareholders funds,the consolidated cash flow,the Company balancesheet and the related notes 1 to 36.These financial statements havebeen prepared under the accounting policies set out therein.Wehave also audited the information in the part of the directorsremuneration report that is described as havi
269、ng been audited.This report is made solely to the Companys members,as a body,inaccordance with Section 235 of the Companies Act 1985.Our auditwork has been undertaken so that we might state to the Companysmembers those matters we are required to state to them in anauditors report and for no other pu
270、rpose.To the fullest extentpermitted by law,we do not accept or assume responsibility toanyone other than the Company and the Companys members as a body,for our audit work,for this report,or for the opinions we have formed.Respective responsibilities of directors and auditorsAs described in the stat
271、ement of directors responsibilities,theCompanys directors are responsible for the preparation of thefinancial statements in accordance with applicable United Kingdomlaw and accounting standards.They are also responsible for thepreparation of the other information contained in the annual reportinclud
272、ing the directors remuneration report.Our responsibility is to audit the financial statements and the part of the directorsremuneration report described as having been audited inaccordance with relevant United Kingdom legal and regulatoryrequirements and auditing standards.We report to you our opini
273、on as to whether the financial statementsgive a true and fair view and whether the financial statements andthe part of the directors remuneration report described as havingbeen audited have been properly prepared in accordance with the Companies Act 1985.We also report to you if,in our opinion,the d
274、irectors report is not consistent with the financial statements,if the Company has not kept proper accounting records,if we have not received all the information and explanations we require for our audit,or if information specified by law regarding directorsremuneration and transactions with the Com
275、pany and othermembers of the Group is not disclosed.We review whether the corporate governance statement reflects theCompanys compliance with the seven provisions of the CombinedCode specified for our review by the Listing Rules of the FinancialServices Authority,and we report if it does not.We are
276、not requiredto consider whether the Boards statements on internal controlcover all risks and controls,or form an opinion on the effectivenessof the Groups corporate governance procedures or its risk andcontrol procedures.We read the directors report and the other information contained in the annual
277、report for the above year as described in the contentssection including the unaudited part of the directors remunerationreport and consider the implications for our report if we becomeaware of any apparent misstatements or material inconsistencieswith the financial statements.Basis of audit opinionW
278、e conducted our audit in accordance with United Kingdomauditing standards issued by the Auditing Practices Board.An auditincludes examination,on a test basis,of evidence relevant to theamounts and disclosures in the financial statements and the part of the directors remuneration report described as
279、having beenaudited.It also includes an assessment of the significant estimatesand judgements made by the directors in the preparation of thefinancial statements and of whether the accounting policies areappropriate to the circumstances of the Company and the Group,consistently applied and adequately
280、 disclosed.We planned and performed our audit so as to obtain all theinformation and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonableassurance that the financial statements and the part of the directorsremuneration report described as havi
281、ng been audited are free frommaterial misstatement,whether caused by fraud or other irregularityor error.In forming our opinion,we also evaluated the overalladequacy of the presentation of information in the financialstatements and the part of the directors remuneration reportdescribed as having bee
282、n audited.OpinionIn our opinion:the financial statements give a true and fair view of the state ofaffairs of the Company and the Group as at 31 December 2003and of the profit of the Group for the year then ended;andthe financial statements and part of the directors remunerationreport described as ha
283、ving been audited have been properlyprepared in accordance with the Companies Act 1985.Deloitte&Touche LLPChartered Accountants and Registered AuditorsLondon13 April 2004Capital&Regional 31Independent auditors report to the members of Capital&Regional plcYear to Period to 31 December31 December20032
284、002Notes000000Turnover:Group income and share of joint ventures turnover44,01034,998Less:Share of joint ventures turnover(4,554)(8,788)Group turnover239,45626,210Cost of sales(6,445)(5,763)Gross profit33,01120,447Profit on sale of trading and development properties 25499Exceptional loss on write-off
285、 of European development properties4(1,522)Total profit/(loss)on disposal of trading and development properties 325(1,023)Administrative expenses(20,650)(14,261)Group operating profit12,3865,163Share of operating profit in joint ventures and associates19a35,86327,298Total operating profit48,24932,46
286、1Exceptional costs of a fundamental reorganisation4(7,184)Profit/(loss)on sale of investment properties and investments35,242(789)Profit on sale of investment properties in joint ventures and associates 32,3852,609Profit on ordinary activities before interest55,87627,097Interest receivable and simil
287、ar income51,1421,043Interest payable and similar charges Group6(7,287)(10,649)share of associates6(19,789)(12,451)share of joint ventures6(3,595)(2,967)(30,671)(26,067)Profit on ordinary activities before taxation726,3472,073Taxation on profit on ordinary activities11(6,966)(1,220)Profit on ordinary
288、 activities after taxation19,381853Equity minority interests(8)Profit attributable to the shareholders of the Company19,381845Equity dividends paid and payable13(5,602)(4,333)Profit/(loss)retained in the year2913,779(3,488)Earnings per share1431.4p1.3pEarnings per share diluted1427.3p1.2pThe results
289、 of the Group for the year related entirely to continuing operations.32Capital&Regional plcConsolidated profit and loss accountfor the year ended 31 December 2003Note of historical cost profits and lossesfor the year ended 31 December 2003Year toPeriod to31 December31 December20032002000000Reported
290、profit on ordinary activities before taxation26,3472,073Realisation of property revaluation surplus of previous years7,86646,762Realisation of property revaluation surplus of previous years in joint ventures and associates2,2561,111Historical cost profit on ordinary activities before taxation36,4694
291、9,946Historical cost profit for period retained after taxation,minority interests and dividends20,24940,829(Restated see note 1)31 December31 December20032002Notes000000Fixed assetsIntangible assets1514,540Property assets1651,45755,475Other fixed assets1712,28212,93478,27968,409Investment in joint v
292、entures share of gross assets183,76977,857 share of gross liabilities(127,277)(53,168)19c56,49224,689Investment in associates19b372,676286,367507,447379,465Current assetsProperty assets207,9417,773Debtors amounts falling due after more than one year2127484 amounts falling due within one year2124,202
293、27,241Cash at bank and in hand224,4754,15936,89239,257Creditors:Amounts falling due within one year23(37,232)(28,946)Net current(liabilities)/assets(340)10,311Total assets less current liabilities507,107389,776Creditors:Amounts falling due after more than one year(including convertible debt)24(137,7
294、80)(117,041)Provisions for liabilities and charges27(2,201)(2,397)Net assets2367,126270,338Capital and reservesCalled-up share capital286,3116,175Share premium account29165,574162,752Revaluation reserve29145,24574,006Other reserves292,4684,069Profit and loss account2947,52823,336Equity shareholders
295、funds367,126270,338Net assets per share 30591p438pAdjusted fully diluted net assets per share30521p392pThe financial statements were approved by the Board of Directors and signed on its behalf on 8 April 2004 by:M BarberW SunnucksCapital&Regional plc 33Consolidated balance sheetas at 31 December 200
296、334Capital&Regional plcYear toPeriod to31 December31 December20032002Notes000000Profit before tax26,3472,073Movements in revaluation reserve on investment properties1,111509 on other fixed assets(620)(920)on properties held in joint ventures and associates80,87038,302Gains on deemed disposals4,4982,
297、377Minority interests(8)Total gains before tax112,20642,333Tax shown in profit and loss account(6,966)(1,220)Tax on revaluation surplus realised(3,651)(3,556)Deferred tax(485)Total tax charge(10,617)(5,261)Total recognised gains and losses for the year101,58937,072Return on equity for the year 3137.
298、6%14.6%The total recognised gains and losses since the last annual report,including the prior year adjustment of 335,000(see note 1),are 101,924,000.Reconciliation of movements in shareholders fundsfor the year ended 31 December 2003(Restated)Year toPeriod to31 December31 December20032002Notes000000
299、Profit for the period attributable to shareholders of the Company19,381845Equity dividends paid and payable(5,602)(4,333)Profit/(loss)retained in the period13,779(3,488)Share capital and share premium issued in the year(net of expenses)2,958868Share capital purchased and cancelled in the year(includ
300、ing expenses)(50,845)Other recognised gains and losses relating to the year82,20836,227Purchase of own shares(3,341)(220)LTIP credit in respect of profit and loss charge1,184555Net increase in/(reduction to)shareholders funds96,788(16,903)Opening shareholders funds as previously reported270,003287,2
301、41Prior year adjustment 1335Opening shareholders funds as restated270,338Closing shareholders funds367,126270,338Statement of total recognised gains and lossesfor the year ended 31 December 2003Capital&Regional plc 35(Restated)Year toPeriod to31 December31 December20032002Notes000000Net cash inflow
302、from operating activities33a28,9472,251Dividends received from joint ventures3503,355Dividends received from associates14,3449,41814,69412,773Returns on investments and servicing of financeInterest received329447Interest paid(7,867)(15,158)Loan arrangement costs(382)(374)(7,920)(15,085)35,721(61)Tax
303、ationUK corporation tax paid(6,432)(7,679)UK corporation tax recovered93673(5,496)(7,606)30,225(7,667)Capital expenditure and financial investmentPayments for additions to investment properties(43,169)(18,510)additions to properties held as current assets(911)(9,544)additions to other tangible asset
304、s(290)(280)loans to joint ventures(850)Receipts from sale of investment properties52,158645,842 sale of properties held as current assets64128,122 sale of other tangible assets126 sale of investments120,203 repayment of loans by joint ventures8,0508,442673,03938,667665,372Acquisitions and disposals
305、and exceptional itemAdditions to joint ventures and associates(16,851)(262,203)Costs of fundamental reorganisation(7,016)Acquisitions15(31,357)(48,208)(269,219)(9,541)396,153Equity dividends paid(4,985)(4,623)Cash(outflow)/inflow before financing(14,526)391,530FinancingIssue of ordinary share capita
306、l2,958868Share capital purchased and cancelled in the year(50,845)Purchase of own shares(3,338)(220)Bank loans received79,972118,800Bank loans repaid(64,750)(464,541)14,842(395,938)Increase/(decrease)in cash33b/c316(4,408)Consolidated cash flow statementfor the year ended 31 December 200320032002Not
307、es000000Fixed assetsOther investments18126,313121,596Current assetsDebtors amounts falling due after more than one year2113,50013,500 amounts falling due within one year21252,088249,220Cash at bank and in hand478348266,066236,068Creditors:Amounts falling due within one year23(131,865)(116,745)Net cu
308、rrent assets134,201146,323Total assets less current liabilities260,514267,919Creditors:Amounts falling due after more than one year(including convertible debt)24(34,997)(50,401)Net assets225,517217,518Capital and reservesCalled-up share capital286,3116,175Share premium account29165,634162,812Other r
309、eserves294,2894,289Profit and loss account2949,28344,242Equity shareholders funds225,517217,518The financial statements were approved by the Board of Directors and signed on its behalf on 8 April 2004 by:M BarberW Sunnucks36Capital&Regional plcCompany balance sheetas at 31 December 2003Notes to the
310、accountsfor the year ended 31 December 20031 Accounting policiesBasis of preparationThe financial statements have been prepared in accordance with applicable UK accounting standards and,except for the non-depreciationof investment properties referred to below,with the Companies Act 1985.The financia
311、l statements have been prepared under the historicalcost convention,as modified by the revaluation of properties and investments,using the following principal accounting policies.These havebeen applied consistently,with the exception of UITF 38,“Accounting for ESOP trusts”,which has been adopted for
312、 the first time in thesefinancial statements.The financial statements have been prepared for the year ended 31 December 2003.The comparative figures are for the 53-week periodended 31 December 2002.Basis of consolidationThe consolidated financial statements incorporate the financial statements of Ca
313、pital&Regional plc and its consolidated entities,associatedcompanies and joint ventures for the year ended 31 December 2003.Where necessary,the financial statements of associated companiesand joint ventures are adjusted to conform with the Groups accounting policies.Subsidiaries have been consolidat
314、ed under the acquisitionmethod of accounting and the results of companies acquired during the period are included from the date of acquisition.Goodwill onconsolidation represents the difference between the purchase consideration and the fair value of net assets acquired and is capitalised in the per
315、iod in which it arises and is amortised over its useful economic life.GoodwillGoodwill,being the difference between the cost of businesses acquired and the fair value of their separable net assets,is included in thebalance sheet as an intangible asset and is amortised over its useful economic life.J
316、oint ventures and associatesIn accordance with FRS 9,“Associates and joint ventures”,joint ventures are included in the accounts under the gross equity method ofaccounting,and associates under the net equity method.DepreciationDepreciation is provided on all tangible fixed assets,other than investme
317、nt properties and land,over their expected useful lives:Buildings over fifty years,on a straight-line basisFixtures and fittings over three to five years,on a straight-line basisMotor vehicles over four years,on a straight-line basis.Investment propertiesInvestment properties are included in the fin
318、ancial statements at valuation less any unamortised tenant incentives.The aggregate surplus ortemporary deficit below cost arising from such valuations is transferred to a revaluation reserve.Deficits that are expected to be permanentare charged to the profit and loss account.The Groups policy is to
319、 value investment properties twice a year.On realisation any gain or loss is calculated by reference to the carryingvalue at the last financial year-end balance sheet date and is included in the profit and loss account.Any balance in the revaluation reserve is transferred to the profit and loss rese
320、rve.In accordance with SSAP 19,“Accounting for investment properties”,no depreciation or amortisation is provided in respect of freeholdinvestment properties and leasehold investment properties with over 20 years unexpired.The Companies Act 1985 requires all properties to be depreciated,but that req
321、uirement conflicts with the generally accepted principle set out in SSAP 19.Depreciation is only one of manyfactors reflected in the annual valuation of properties and the amount of depreciation or amortisation,which might otherwise have beencharged,cannot be separately identified or quantified.Prop
322、erties under developmentInterest and directly attributable internal and external costs incurred during the period of development are capitalised.Interest is capitalisedgross before deduction of related tax relief.Interest is calculated on the development expenditure by reference to specific borrowin
323、gs whererelevant.A property ceases to be treated as being under development when substantially all activities that are necessary to get the propertyready for use are complete.Refurbishment expenditureRefurbishment expenditure in respect of major works is capitalised.Renovation and refurbishment expe
324、nditure of a revenue nature is writtenoff as incurred.Capital&Regional plc 37Notes to the accounts1 Accounting policies continuedProperty transactionsAcquisitions and disposals are accounted for at the date of legal completion.Properties are transferred between categories at the estimatedmarket valu
325、e on the transfer date.Current property assetsProperties held with the intention of disposal and properties held for development are valued at the lower of cost and net realisable value.Tenant incentivesIn accordance with UITF 28,“Operating lease incentives”,rent frees given to tenants are credited
326、to the profit and loss account and amortisedover the earlier of either the period of the lease,or to when the rent is adjusted to the prevailing market rate,usually the first rent review.Capital contributions given to tenants are shown as a current asset,and amortised over the earlier of either the
327、period of the lease,or to when the rent is adjusted to the prevailing market rate,usually the first rent review.On the disposal of properties,the balance of theunamortised tenant incentives is charged to the disposal of investment properties.Loan arrangement costsCosts relating to the raising of gen
328、eral corporate loan facilities and loan stock are amortised over the estimated life of the loan and charged to the profit and loss account as part of the interest expense.The bank loans and loan stock are disclosed net of unamortised loan issue costs.Operating leasesAnnual rentals under operating le
329、ases are charged to the profit and loss account as incurred.Deferred taxationDeferred tax is provided in accordance with FRS 19,“Deferred tax”,on all timing differences which have originated but not reversed at thebalance sheet date.Deferred tax is measured on a non-discounted basis.On disposal of a
330、 property,any provision for deferred tax no longerrequired will be released to the profit and loss account.Deferred tax is not provided on revaluation gains unless by the balance sheet datethere is a binding agreement to sell the assets,and the gain or loss arising on sale has been recognised in the
331、 financial statements.Pension costsPension liabilities,all of which relate to defined contribution schemes,are charged to the profit and loss account in the year in which they accrue.Long Term Incentive Plan(LTIP)For share schemes that contingently award shares at no cost to the participant,a charge
332、 is recognised systematically in the profit and lossaccount over the LTIP performance period based on the directors estimate of the extent that the related performance criteria will be met,with a corresponding credit in the profit and loss reserve.Own sharesIn accordance with UITF 38,own shares held
333、 by the Group are shown as a deduction from shareholders funds,and included in otherreserves.The cost of own shares is transferred from other reserves to the profit and loss reserve systematically over the LTIP performanceperiod.The comparatives have been restated to comply with the requirements of UITF 38.The effects of this restatement on the current andprior years are summarised below.There has
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