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Annual Report 2023
Strategic Report
1 Welcome from our Chief Executive
2 Hammerson At a Glance
4 Strategy in Action
6 Chair of the Board’s Statement
8 Chief Executive’s Statement
including Strategy
16 Market Overview
18 Our Business Model
20 Our Stakeholders
23 KPIs
24 Our Colleagues
26 Environmental, Social and
Governance (ESG)
31 Task Force on Climate-related Financial
Disclosure (TCFD)
41 Financial Review
54 Risks and Uncertainties
64 Viability Statement
66 Non-financial and Sustainability Information
Statement
Corporate Governance
68 Board of Directors
70 Corporate Governance Report
78 Nomination and Governance
Committee Report
84 Audit Committee Report
90 Directors’ Remuneration Report
110 Directors’ Report
112 Statement of Directors’ Responsibilities
Financial Statements
113 Independent Auditor’s Report to the
members of Hammerson plc
122 Consolidated Financial Statements
127 Notes to the Consolidated Financial
Statements
171 Company Financial Statements
173 Notes to the Company Financial
Statements
Other Information
180 Additional Information
193 Five Year Record
194 Shareholder Information
196 Glossary
Highlights
Our results are evidence of the significant
strategic, operational and financial progress
made in 2023
INCOME STATEMENT
IFRS loss for the year
£(51)m
2022: £(164)m
Adjusted earnings K A
£116m
2022: £105m
BALANCE SHEET
Net assets
£2,463m
2022: £2,586m
Total accounting return K A
(2.1)%
2022: (6.8)%
CREDIT METRICS
LTV: Headline/Fully proportionally
consolidated A
34%/44%
2022: 39%/47%
Net debt:EBITDA K A
8.0 times
2022: 10.4 times
PER SHARE METRICS
Basic/Adjusted EPS A
(1.0)p/2.3p
2022: (3.3)p/2.1p
NTA per share A
51p
2022: 53p
OPERATIONAL METRICS
Leasing activity K
£29.0m
2022: £25.4m
Footfall (like-for-like change) K
2.7%
2022: 38.8%
Passing rent (like-for-like
change) K
2.5%
2022: 1.4%
Carbon emissions (like-for-like
change GHG basis) K
-13.4%
2022: -7.9%
CONTENTS
K KPI A Alternative Performance Measure
This report provides alternative performance measures (APMs). We believe these APMs provide
readers with important additional information on our business. Further explanation of the key
APMs and why we use them is set out in note 1C to the financial statements with a reconciliation to
their IFRS equivalents in note 9. Other APMs are contained in the Additional Information section of
this Annual Report.
Well positioned for growth
and value creation
Rita-Rose Gagné
Chief Executive
Over the last three years, we have
delivered against all strategic milestones.
We now have a core portfolio focused on
urban locations which are evolving into
vibrant, 24/7 multi-use estates. These
destinations are fast growing, and part
of the fabric and infrastructure of the cities
in which we operate.
We are reaping the rewards of the
investments we are making in our core
portfolio alongside best-in-class occupiers,
which underpins the high levels of demand
for our space. We have a strong pipeline of
leasing and repurposing opportunities.
There is still more for us to do, but we are
now entering a time where having the
capability to invest and operate with
discipline and conviction will be rewarded.
1Hammerson plc Annual Report 2023
Strategic Report
Welcome from our Chief Executive
5
4
3
2
1
6
8
1
1
4
1
2
3
4
7
8
5
2
6
Dundrum Town Centre, Dundrum
Les Terrasses du Port, Marseille
7
A city centre business well
positioned for growth
We create exceptional city centre destinations
that realise value for our stakeholders, connect
our communities and deliver a positive impact
for future generations.
Managed portfolio
1
Birmingham Estate, Birmingham
2
Bishopsgate Goodsyard, London
3
Brent Cross, London
4
Bristol Estate, Bristol
5
Eastgate, Leeds
6
The Oracle, Reading
7
Union Square, Aberdeen*
8
Westquay, Southampton
1
Dublin Central, Dublin
2
Dundrum Estate, Dublin
3
Ilac Centre, Dublin
4
Pavilions, Swords
1
Les 3 Fontaines, Cergy
2
Les Terrasses du Port, Marseille
Value Retail
1
Bicester Village, Bicester
2
Fidenza Village, Milan
3
Ingolstadt Village, Munich
4
Kildare Village, Dublin
5
La Roca Village, Barcelona
6
Las Rozas Village, Madrid
7
La Vallée Village, Paris
8
Maasmechelen Village, Brussels
9
Wertheim Village, Frankfurt
* On 26 February 2024, the Company announced the
exchange of contracts for the disposal of Union Square.
2Hammerson plc Annual Report 2023
Strategic Report
Hammerson at a glance
9
3
2
River Clean Up, Brent Cross
Urban Rooftop Farm, Marseille
Our investment proposition
A core portfolio realigned to growing
urban locations; resilient capital
structure ; lean platform; sustainable
earnings and income stream.
Our purpose and values
We create outstanding experiences in
unique city locations. We are Ambitious,
Connected and Respectful.
Our commitment to ESG
Our customer and asset-centric
approach is underpinned by our
commitment to ESG.
Hammerson is a value generating
platform with great opportunities for growth.
Our transformed platform is lean and efficient,
able to source and deploy capital with
discipline. Our balance sheet maintains our IG
credit rating and capacity for investment.
See Strategy in Action on
page 4
See Risks and uncertainties on
page 54
See Financial review on
page 41
Our colleagues are now focused on strategic
value creation as a result of the overhaul of
our operations.
We are building a high performance, high
engagement culture as part of our strategy
to retain and develop key talent.
See Our Colleagues on
page 24
See Governance on
page 70
See Stakeholder engagement on
page 20
The ESG agenda continued to grow in 2023,
with a continued focus on achieving our
targets, addressing both the Climate and
Nature emergencies, whilst continuing to
deliver our Social Value programme.
We commenced our Net Zero Asset Plan
programme of works focusing on
degasification in Ireland, renewable energy
in France, and HVAC and lighting design
in the UK.
See Our Colleagues on
page 24
See ESG on
page 26
See TCFD on
page 31
11
Flagship destinations
11m
Sq ft of lettable area
16
Cities
180m
Shopper visits per year
Figures above as at 31 December 2023
9
Premium outlets
80
Acres of development land
3Hammerson plc Annual Report 2023
Another year of consistent
strategic execution
STRATEGY IN ACTION
Execution enabling growth
Consistent delivery against our strategic
milestones over the last three years means we
now have a focused city centre portfolio which
is well positioned for further investment for
growth and value creation.
Broadening our scope
ESG underpins everything we do. In 2023, we commenced our Net
Zero Asset Plan (NZAP) programme of works focusing on degasification
in Ireland, renewable energy in France, and HVAC and lighting design
in the UK. Our progress was recognised with Pavilions, Swords, winning
a Best Energy Achievement in Retail and Best Overall Achievement at
the Business Energy Achievement Awards 2023 (Ireland) for going gas
free in 2023, four years ahead of schedule.
We also broadened our scope to recognise not only the Climate Crisis,
but also Nature, where we are seeing rapid biodiversity loss which
needs to be addressed to maintain essential ecosystems and to deliver
Repurposing obsolete and underutilised space in Bullring
In 2023, we completed the hand over of former Debenhams space
in Bullring to M&S, which opened in November, and to TOCA Social,
the football themed entertainment operator, which will become their
first operation outside of London when it opens in 2024.
We aim to complete the repositioning of the former Debenhams
store, about 15% of the area in Bullring, by leasing the final space to
a best-in-class operator. The project has concentrated the city centre
pitch and built critical leisure and entertainment mass to complement
openings in 2023, including those to Lane 7, VR Sandbox, Bershka,
JD Sports, Footlocker and Pull and Bear.
Taken together our investment into this repositioning project will be
around £17m (at 100%). This will deliver not only an IRR in excess
of c.40% on our equity investment, but also a positive halo on the
performance and presentation of the asset and the consequent rental
demand and values, which we expect to further capitalise with future
asset management and value creation.
a low carbon future. We have more to do here but this year we gifted
woodland and natural grassland in Lowestoft to the Wildlife Trust,
and commenced work on asset-by-asset plans to address Nature.
We also increased our efforts to improve our Social Value, delivering
asset-centric events to support local communities and boosting
participation in Giving Back Day.
In terms of governance, we were delighted to maintain sector and
regional ratings with ISS ESG and Sustainalytics, regained our Global
Real Estate Sustainability Benchmark (GRESB) 4-star rating, and score
a peer first A for GRESB ESG public disclosure.
The realignment of our portfolio has materially
strengthened the balance sheet. Having
executed complex transactions in volatile
markets, we have already begun to redeploy
capital at attractive rates of return, with a
demonstrable positive impact on footfall
and sales.
At the same time, we have introduced a new
and more efficient operating model, exceeding
our cost reduction targets for three years in a
row. Off this solid base, we are able to focus on
what we do best – value creation – and we see
a wealth of opportunities ahead of us.
Investment for growth and value creation, case study:
Environmental, Social and Governance (ESG)
Bullring ERV YoY:
+5%
Bullring value YoY:
+£35m
Bullring footfall YoY:
+5%
New brands and Flagship opening, Bullring
4Hammerson plc Annual Report 2023
Strategic Report
Strategy in Action
Recycling capital for financial strength and redeployment
Reflective of our operational strength, strategic progress and the
disciplined realignment of the portfolio through our disposals
programme, today we have a resilient balance sheet, ample liquidity,
and have maintained our IG credit rating.
Generating total gross proceeds of £216m, in 2023 we exited minority
stakes in France and non-core land in Croydon and Ireland. In addition,
£125m of secured borrowings have been derecognised in connection
with our exits from non-core assets in Highcross and O’Parinor. We
“tapped” the bond market to extend average maturity.
As a result of another year of prudent financial management and
disciplined capital allocation, the Group has de-risked its refinancing
profile and created capacity for investment.
Embedding a new and more efficient operating model
2023 was another year of intensive change in our ways of working,
both in terms of technology – systems and automation – and in terms
of greater collaboration, encouraging cross pollination of ideas and
practices across the organisation.
By introducing these agile, more efficient ways of working we not
only reduced costs but are creating a highly engaged, high
performance workforce fit for the future, with increasing speed to
market and productivity.
Today, we deliver more leasing and commercialisation activity than
in 2019, with a smaller team, on a more focused portfolio.
Consistent delivery against our
strategic milestones over the last
three years means we now have
a focused city centre portfolio
which is well positioned for
further investment for growth
and value creation.
Sustainable and
resilient capital structure
Agile platform
Net debt reduction YoY:
-23%
Carbon emissions YoY:
-13%
GRESB rating:
4 star
See Environmental, Social and
Governance (ESG) on page 26
Giving Back Day participation:
>90%
Social Value investment:
£2.5m
LFL leasing deal value YoY:
+23%
Liquidity:
£1.2bn
Gross administration cost YoY:
-14%
Diwali, Brent Cross
Open Age, Giving Back Day
5Hammerson plc Annual Report 2023
Business environment
In response to stubbornly high levels of
inflation, central banks spent the first nine
months of 2023 further raising interest rates
to levels not seen since the Global Financial
Crisis, and commencing a period of
quantitative tightening. Falling values across
all asset classes has seen a funding gap
emerge and these factors combined have
resulted in a reduction of debt availability
impacting returns and liquidity, although
values for retail anchored assets have been
relatively insulated due to already higher
spreads over base rates.
The resulting ‘higher for longer’ interest rate
environment and ‘cost of living crisis’ have
dominated headlines. Despite this, job
markets have continued to be tight,
underpinning continued wage growth. Overall,
consumers and occupiers have proved to be
more resilient than anticipated with solid
demand for best-in-class retail anchored city
centre destinations.
Against this backdrop, I am pleased to report
the Hammerson management team has
continued to deliver against its strategy: further
strengthening the balance sheet; building a
more efficient and agile platform for growth;
and investing in our assets. Consistent
execution over the last three years means
that today Hammerson is able to invest for
growth. The Board and I are excited by the
Company’s prospects.
Board changes and evaluation
There has been no change to the Board in
2023, which comprises six non-executive
and two Executive Directors, with an average
tenure of 3.5 years; and no further changes
are currently planned.
Two new directors were proposed by our
largest shareholder at the time, Lighthouse,
ahead of the AGM held in May, together with
the stated intention to vote against at least two
members of the Hammerson Board. Following
the Board’s unanimous recommendation to
vote against Lighthouse’s candidates, and
the overwhelming support of remaining
shareholders, all ordinary Board
recommended resolutions were passed
and Lighthouse’s requisitioned resolutions
did not receive the necessary support.
Two special resolutions relating to the
customary authority to disapply pre-emption
rights, did not achieve the 75% required
threshold to pass, whilst six ordinary
resolutions, largely relating to remuneration
and the election of certain Non-Executive
Directors, received less than 80% of the vote
in favour. In accordance with provision 4 of the
UK Corporate Governance Code, the Board
continued to consult with shareholders to
understand and discuss the reasons behind
the result. Further details can be found on the
Company’s website and on page 73 in the
Corporate Governance Report.
Following 2022’s external evaluation by
Board Alchemy, our 2023 Board evaluation
was internal. The review of the effectiveness
of the Board and its committees included a
questionnaire and confidential one-to-one
interviews between Directors and the General
Counsel and Company Secretary to discuss
key issues and themes in more detail.
Overall, I am pleased to report findings were
positive. Further detail on key themes of the
2023 review and the implementation of
recommendations from our 2022 Board
evaluation can be found on pages 76 to 77
in the Corporate Governance Report.
The Board values its diversity. I’m pleased to
report that 37.5% of the Board are female and
37.5% of the Board identify as non-white.
Further details are contained in the Corporate
Governance and Nomination and Governance
Committee Reports on pages 70 and 78.
ESG and people
The Board is fully committed to the Group’s
continuing recognition as an ESG leader and
ensuring the highest standards of operational
performance and corporate governance.
Hammerson is committed to being a
sustainable business and to reaching net
zero carbon emissions by 2030.
To achieve our aims we need to maintain the
support of our occupiers, customers, partners,
the communities affected by our operations,
our colleagues, and our equity and debt
investors. Collectively, our stakeholders have
numerous and changing demands on the way
the business conducts itself. We endeavour to
maintain the right balance as these demands
continue to evolve, and to treat everyone in line
with our values.
In 2023, building on our progress in 2022
including the introduction of Net Zero Asset
Plans for each of our flagship assets, we
started to address a broader range of ESG
subjects. We continue to focus on our
Climate impacts, taking a risk based
approach, but also recognise that globally
we are experiencing another emergency:
Nature as well as Climate.
Whilst we continue to focus on energy
efficiency, we have also undertaken revised
Physical Climate Risk Assessments and
Nature based action plans to be completed
Chair of the Board’s Statement
Consistent execution over the last three years
means that today Hammerson has a
strengthened balance sheet and is able to
invest for growth.
Robert Noel
Chair of the Board
6Hammerson plc Annual Report 2023
Strategic Report
Chair of the Board’s Statement
London Wildlife Trust, Giving Back DayLate Night Out, Bullring
in early 2024. We have also increased our focus
on Social Value – a key focus for colleagues –
supported by further development of our
governance and reporting approach ahead of
the introduction of the Corporate Sustainability
Reporting Directive (CSRD).
Further details of our plans, materiality
assessment and our ESG performance are
set out on pages 26 to 40, with more detail
available in our ESG Report 2023, which is
available on our website.
Over the last three years, the management
team has transformed Hammerson’s
operating platform and cost base to create
a customer and asset-centric model focused
on growth and value creation. Tough decisions
have been made and a significant reduction
to headcount realised.
At the same time, the key talent required to
be fit for the future has been identified and
either developed internally or brought in.
Hammerson is fast evolving towards a higher
performance, high engagement culture with
an emphasis on strategic value creation.
The Board and I commend the achievements
of all colleagues over the last three years, and
I once again thank them for their commitment,
professionalism and contribution.
Dividend
As announced at the 2023 half year results
and outlined in the 2022 Annual Report, the
Board reinstated a cash dividend in 2023,
declaring an interim cash dividend of 0.72p
in July which was paid entirely as a PID.
At the same time, the Board announced a new
sustainable dividend policy of 60% to 70% of
annual Adjusted earnings to be paid semi-
annually. This policy is based on disciplined
capital allocation seeking to balance returns to
shareholders whilst continuing to invest to drive
growth and value creation in our core assets.
Therefore, the Board recommends a final cash
dividend of 0.78p per share in respect of 2023
to be paid as an ordinary dividend subject to
shareholder approval, which would represent
a full year cash dividend of 1.50p per share and
a payout ratio of 64%, commensurate with the
half year.
The Board recognises dividends are an
important constituent of shareholder returns
and the policy will be kept under review.
Looking ahead
I remain confident that the strategy of
disciplined investment into core city centre
assets in high growth cities will deliver
significant shareholder value in the years
to come.
Following the work on strengthening the
balance sheet; transforming our platform,
operations and ways of working; and
commencing significant reinvestment into our
core assets, Hammerson is well positioned to
invest for further growth over the coming years.
Robert Noel
Chair of the Board
“ I remain confident
that the strategy of
disciplined investment
into core city centre
assets in high growth
cities will deliver
significant shareholder
value in the years
to come.”
Robert Noel
Chair of the Board
7Hammerson plc Annual Report 2023
In 2023, we delivered another year of
significant strategic, operational and financial
progress and growth, reflecting three years of
transformational change for the business. We
are now well positioned to invest for growth
and value creation. Today, the Group is focused
on a core portfolio of city centre destinations in
some of the fastest growing cities in Europe
that are evolving to my vision: 24/7, urban
‘living spaces’. Occupier flight to quality –
fewer, better stores in prime locations – is
undeniable, with high flagship occupancy at
95% following another year of record leasing in
our uniquely located city centre destinations.
We signed 306 leases representing £46m of
headline rent, £29m at our share, split roughly
evenly between: new to portfolio brands, new
concepts, social and entertainment offers; and
renewals with our current occupiers, including
new concepts and upsizes. We attract
best-in-class occupiers who in turn make
significant investments in their physical
footprint. Rental levels have rebased and we
are driving growth with permanent deals
signed 12% ahead of ERV on a net effective
basis, and 37% ahead of previous passing rent,
equating to additional annualised passing rent
of £7m on our £179m flagship rent roll.
The exceptional environments we create for
our occupiers and visitors is reflected in strong
operational fundamentals. Despite the volatile
macroeconomic environment, footfall and
like-for-like sales continue to grow. Notably,
we have seen particularly strong operational
performances at assets where we have made
significant investments in recent years, such
as Bullring, Dundrum and Les 3 Fontaines.
Since 2020, we have transformed our
operating model, and reshaped our
organisation. We have brought in new skills
and talent in asset management, leasing,
commercialisation and placemaking, which
means we can focus our energies on value
creation. On-site property management and
associated accounting services in the UK and
France have largely been consolidated with
proven scale strategic partners.
We have invested to realign and upgrade our IT
and digital platform in areas where speed and
data quality is critical. Today we are a more
agile, resilient and market facing asset-centric
organisation, one that continues to evolve and
reshape our destinations to be fit for the future.
We have again reduced gross administration
costs, down 14% year-on-year and we are
targeting a further 10% reduction in 2024.
We have further realigned our portfolio, exiting
non-controlling minority stakes in Italie Deux
in France, alongside realising value from
standalone development assets in Croydon,
and other non-core land generating £216m in
disposal proceeds in 2023. At the same time,
we have been disciplined in not allocating
capital to assets with secured debt where
these did not meet our location and
catchment, investment or return criteria.
Whilst recognising an impairment of £22m,
£125m of secured debt was derecognised in
the period following exits from Highcross and
O’Parinor, also bringing a sharper focus to
investment opportunities in the core portfolio.
Since the balance sheet date, we have
exchanged on the sale of Union Square, which
will bring to a close our £500m disposal
programme set out at FY 21.
Chief Executive’s Statement
Today, the Group is focused on a core portfolio
of city centre destinations in some of the fastest
growing cities in Europe that are evolving to my
vision: 24/7 urban ‘living spaces’. Recycling
capital to our core assets is generating value
and a positive social impact.
Rita-Rose Gagné
Chief Executive
2023 Highlights
Like-For-Like GRI
+6%
Gross Administration Cost
-14%
Flagship occupancy
95%
Carbon emissions
-13%
Net effective rent vs ERV
+12%
8Hammerson plc Annual Report 2023
Strategic Report
Chief Executive’s Statement
Social and Dining, WestquaySound of Musicals, Westquay
At 31 December 2023, our financial position
was significantly strengthened, with ample
cash and undrawn committed facilities of
£1.2bn, more than covering near term
maturities and providing capital for
investment. We will continue to be disciplined
allocators of capital and select the best returns
for shareholders, mindful of our own cost of
capital and all options for capital deployment
including maintaining balance sheet strength
and flexibility.
FINANCIAL AND OPERATIONAL REVIEW
Adjusted earnings were up 11% to £116m or
2.3p per share, reflecting 6% like-for-like
growth in GRI and 4% growth in like-for-like
NRI, combined with significant further
reductions in gross administration and net
finance costs.
At FY 22, we committed to reduce our gross
administration costs by 20% by FY 24. We
have delivered a 14% reduction in 2023. There
are more efficiencies to come as we pursue
greater automation and digitalisation of our
business, as well as outsourcing and
consolidation of supplier opportunities. We
expect to deliver a further 10% reduction in
2024 which means we are on track to exceed
our target of 20% reduction by 2024, which
would bring cumulative savings of more than
30% since FY 20.
Net debt was down 23% to £1,326m
(FY 22: £1,732m). Headline LTV was 34%
(FY 22: 39%) and 44% (FY 22: 47%) including
the Group’s proportionate share of Value Retail
net debt. Our Net debt: EBITDA improved to
8.0x from 10.4x at FY 22, reflecting both lower
debt and the improved operating performance.
EPRA NTA was 51p per share at 31 December
2023 (FY 22: 53p), with higher earnings in
part offsetting disposal and impairment and
revaluation losses, totalling £167m. Having
been broadly flat for the first three quarters
of the year, we saw some marginal yield
expansion in the fourth quarter in all territories,
which offset incremental flagship ERV growth
in the UK, Ireland and France. Moreover, all but
two of our core flagship assets benefited from
positive ERV movements, and all ten in the
second half of the year. We are starting to
see positive valuation movements on
selected assets.
Overall, the Group recorded an IFRS loss of
£51m (FY 22: £164m loss), and a negative
total accounting return of -2.1%.
Footfall and sales
Footfall and sales performance reflects the
exceptional nature of our destinations and the
improving mix of uses. The recovery in footfall
that we saw across our assets in FY 22
continued through FY 23 with consumers also
increasingly returning to city centres, both for
leisure and work. Footfall was +3% year-on-
year (UK+1%, France +7% and Ireland +4%),
closing the gap on 2019 levels, of which we are
now on average less than 10% below. Average
dwell time was up 5% to 88 minutes.
Overall, total sales and sales densities have
risen by mid-teens percentages since 2019,
with substantial evidence that repurposed
space and new concepts materially
outperform that which it is replacing.
Consumer spending continues to be resilient,
with an improving outlook for 2024. Despite
the ‘cost of living’ crisis, savings built during
the Covid-19 pandemic, high levels of
employment and strong wage growth, which
outpaced inflation in the second half of 2023,
have helped underpin continued consumer
spending, along with evolving lifestyle trends.
Like-for-like sales were up 1% in the UK and
3% for France.
Occupancy
Our core portfolio continues to benefit from
the increasing polarisation in the market and
the flight to quality reflected in the wealth of
key new openings, leasing demand and
tension, and growing footfall and sales. It is
now a fact that online/offline has balanced
and occupiers have now adopted a holistic
view, understanding that a high quality
physical presence is an essential part of the
supply chain.
Flagship portfolio occupancy remained strong
at 95%, broadly flat year-on-year. UK flagship
occupancy stands at 95% and Ireland at 96%,
with some assets in these geographies full.
France was slightly weaker at 93% reflecting
the continuing lease-up at Les 3 Fontaines
extension.
Value Retail
Value Retail delivered another solid
operational performance. Brand sales
increased 10% year-on-year and were 5%
above 2019 levels. Footfall across the Villages
saw a 9% increase year-on-year but remained
below 2019 levels. Sales densities grew
broadly in line with footfall and were marginally
ahead of 2019, whilst spend per visit was up
1% year-on-year and 6% ahead of 2019.
Average occupancy was 95%, marginally up
on 2022 but remaining around one percentage
point below 2019 levels.
Overall, the Group’s share of Adjusted earnings
was £32m (FY 22: £27m). Positive GRI growth
was partially offset by rising finance costs
reflecting the refinancing in FY 22 at Bicester
and La Vallée, and higher administration
costs. Year-to-date, Hammerson has received
£74m of cash distributions from Value Retail,
in part reflecting catch up payments from
2019 to 2023.
9Hammerson plc Annual Report 2023
At 31 December 2023, the Group’s interest in
Value Retail’s property portfolio was £1.9bn,
unchanged year-on-year. Net assets were
£1.1bn, down 6%, primarily due to
distributions paid to the Group. The difference
between gross and net asset value is
principally due to £0.7bn of net debt within the
Villages which is non-recourse to the Group.
The average LTV across the Villages is 39%.
STRATEGY UPDATE
We own city centre destinations and adjacent
land around which we can reshape entire
neighbourhoods. Our strategy recognises the
unique position that we have in our locations
and the opportunities to leverage our
experience and capabilities to create and
manage vibrant 24/7, multi-use, urban
‘living spaces’ that realise value for all our
stakeholders, connects our communities
and delivers a positive impact for generations
to come.
Our aim is simple and clear – to chart a path to
growth that delivers strong income and total
returns for shareholders through consistent
execution against our strategic goals.
Following three years of strategic and
operational progress, we are now investing for
growth and value creation in our core assets.
We are combining targeted leasing with
repurposing and redevelopment
opportunities, which are integral and
complementary to our destinations, directing
capital expenditure to our core estates, where
we are able to realise high returns. This asset
focus is underpinned by our now increasingly
agile platform, our strong capital structure and
by our commitment to ESG.
net effective basis, principal deals were 12%
ahead of ERV (FY 22: +2%), with new leases
+14% and renewals +8%. In terms of mix, just
under half of leasing was to best-in-class and
new fashion concepts, and the balance to
non-fashion, services, leisure, food, workspace
and Printemps in France.
Providing the exceptional spaces with high
footfall, high demand, growing leasing tension
and thereby rental levels which underpins this
leasing performance requires investment:
investment to repurpose obsolete or
underutilised space; investment in time to
select the right brand partners to enhance the
mix and complete works to a high standard;
investment alongside key brand partners in
their offer; investment in public realm to
maintain our appeal to customers and
occupiers whilst ensuring further integration
with the communities we serve; and
investment in key leasing, asset management,
placemaking and marketing talent. From our
investments in the last few years, we’ve
delivered solid returns and created value.
Looking at two key examples that came to
fruition this year:
— In Dundrum, we opened Penneys (Primark)
and Nike Live, to complete the repurposing
of the former House of Fraser space, with
the backfill allowing Dunnes Stores, which
opened in November, to enter the
destination for the first time. Taken as a
whole, the significant increase in rents with
an incremental ERV benefit to adjacent
units generated an IRR in excess of 20%
from an investment of €31m (at 100%).
Elsewhere in Dundrum, we converted
underutilised storage space to modern
workspace and leased it to Western Union,
bringing a new use and income stream to
the asset, as well as incremental customers
to the food and leisure oriented Pembroke
Square area. Dundrum has already seen an
increase in footfall and sales following
these openings in the second half of
the year.
In FY 23, we made significant progress
towards all our goals as follows:
Investment for growth and value creation
The key source of competitive advantage for
Hammerson is the quality and location of our
destinations in some of Europe’s fastest-
growing cites. We have some of the best assets
in the very best prime city centre catchments
and transportation hubs, and, due to the strong
ties we have in the communities in which we
operate, supportive local authorities.
Additionally, our pre-development and
strategic land represent a considerable set of
unrealised long-term opportunities which we
can selectively draw upon.
The consumer and occupier landscape
continues to evolve at pace. Occupiers are
continuing to shift to using physical space for a
broad mix of uses, including: point of sale; last
mile fulfilment; returns; servicing; experiential;
marketing; brand development; education;
workspace; and leisure – ‘living spaces’. At the
same time, visitors demand top quality
environments and experiences. We continue
to invest in our assets to partner with best-in-
class occupiers to cater to the communities
and catchments in which we operate, whether
this be repurposing of obsolete department
store space into leisure and modern retail, or
redevelopment to residential, workspace,
healthcare and lifestyle uses.
Our investments to date have attracted some
of the very best global brands. Our leasing
strategy has evolved from an emphasis on
filling space and increasing occupancy as we
emerged from the Covid-19 pandemic. We
now focus more proactively on a high quality,
diverse and complementary mix and offer for
both occupiers and customers, which in turn
underpins a more diverse, resilient and higher
quality income profile.
Following our best year for leasing in FY 22
since FY 18, our momentum continued in FY
23 with another record year: 306 leases signed
on a more focused portfolio (FY 22: 317),
a volume increase of 10% on a like-for-like
basis, representing £46m of headline rent at
100% (FY 22: £45m), or £29m at share (FY
22: £25m), up 23% like-for-like. In this
context, we saw much greater competitive
tension with occupiers not exercising breaks
to leverage better terms, which meant an
additional £2m of rent retained.
For principal deals, headline rent was 37%
ahead of previous passing rent (FY 22: +34%),
continuing to reflect strong demand, the lease
up of vacant space and the conversion of
temporary leases onto long term deals. On a
“ Providing the
exceptional spaces
with high footfall, high
demand, growing
leasing tension and
thereby rental levels
which underpins this
leasing performance
requires investment.”
Rita-Rose Gagné
Chief Executive
10Hammerson plc Annual Report 2023
Strategic Report
Chief Executive’s Statement continued
Penneys opening, Dundrum Town Centre The Bull, Bullring
— In Bullring, we handed over former
Debenhams space to M&S, which also
opened in November, with an extremely
strong sales performance and establishing
a further consolidation of the city centre into
our estate. We also handed over the top
floor space to TOCA Social – the football
themed entertainment operator – which
will become their first operation outside
London when it opens in 2024. This will
strengthen the critical mass and
complement the entertainment and social
operators we opened in 2023, which
included Lane 7 Bowling, and a new leisure
concept, VR Sandbox. We target to
complete the repositioning of the
Debenhams space – representing about
15% of the total floorspace of the Bullring
– by concluding negotiations with a
best-in-class fashion operator which will
concentrate the retail pitch alongside
openings in 2023, including those to
Bershka, JD Sports, Footlocker, and Pull
and Bear. Taken together we expect our
investment into this repositioning project
will be around £17m (at 100%), which will
deliver not only a high double digit IRR, but
also a positive halo on the performance and
presentation of the asset and the
consequent rental demand and values,
which we expect to further capitalise with
future lettings. Following these openings,
Bullring experienced a particularly strong
Christmas period, with sales and footfall
up in stark contrast to national indices.
Importantly, it also saw an uplift in value of
£35m (at 100%), reflecting a 5% increase
in ERVs year-on-year.
We have a rich set of similar opportunities
in our core portfolio relating to former
department store space. Having proactively
secured vacant possession, we have already
commenced the repurposing of the former
House of Fraser space in The Oracle, having
agreed terms with Hollywood Bowl and TK
Maxx, and are in detailed negotiations with
other key partners. At the other end of the
scheme, we await the outcome of a planning
application for the major regeneration of the
eastern quarter, including the former
Debenhams, with the potential to develop
c.450 residential units in phases alongside
renewed landscaping and other commercial
uses, much in demand in this strong catchment.
In Birmingham, we achieved planning consent
for Drum, an amenity rich workspace led
proposal, which predominantly occupies the
former John Lewis Partnership space at Grand
Central and is directly served by the UK’s most
connected rail station, Birmingham New
Street. Strip out works have been completed,
and we are working with stakeholders to
unlock the next stages of de-risking and
delivering this scheme.
In Cabot Circus, we are working up investment
plans, alongside relevant operators, to
reposition and maximise the value of major
spaces including the House of Fraser
department store at the gateway to the asset
and to replace the cinema operator as part of
the development of a social and entertainment
quarter. Overall, of the department store space
the Group had at FY 19, roughly two-thirds has
been repurposed or is in advanced planning,
and a third has been sold.
Elsewhere, we continue to lease to high quality
brand partners, enhancing the quality of the
mix and bringing new uses to our destinations.
Other than those already mentioned, key deals
and openings in 2023 included:
— Renewals and new deals were secured with
JD Sports, Uniqlo, Decathlon, Olympique de
Marseille, Levi’s, Puma, Hugo Boss, Michael
Kors and Five Guys at Les Terrasses du Port
as we approach the ten year anniversary of
the opening of Marseille’s super prime
destination.
— At Les 3 Fontaines, we opened H&M in
March and brought in New Yorker to an
adjacent unit later in the year, whilst
reconfigurations allowed the entry of
Action, Celio and a new leisure offering from
Smile World. In the extension, additions
comprised increased presence from global
brands including Eden Park and Swarovski.
— In Brent Cross, we signed a deal with Social
Sports Society to bring a padel tennis and
other outside sports facilities to the
underutilised Southern Lands, subject to
planning, alongside reconfigurations that
allowed the renewal of Boots and the
introduction of Superdrug into the scheme.
We also relocated Moorfields Eye Hospital
into an underutilised area of the scheme,
after a period of testing customer appetite
for alternative uses. In 2024, we expect
to create a new market hall offering,
where we have already agreed terms
with three occupiers.
11Hammerson plc Annual Report 2023
Reserved, Brent Cross The Oracle, Reading
— In Bullring, in addition to repurposing
and new leasing related to the former
Debenhams unit, we opened the first Nike
Rise concept outside of London, brought
Footasylum in for the first time, and saw
Goldsmiths undertake a significant refit and
expansion which included the introduction
of a separate Rolex store.
— Westquay saw the delivery of new offers
from premium lifestyle and beauty brands
Sweaty Betty and Space NK, and F&B from
Wingstop and Mettricks.
— Cabot Circus saw four portfolio firsts,
including the introduction of Stradivarius,
bringing another sought-after Inditex brand
into the destination, alongside the debuts of
Lounge, German Donor Kebab and Lids.
— Meanwhile in Ireland, in Dundrum, Space
NK signed a lease to open their second
store in Ireland. Both with minimal vacancy,
it was a quieter year at Pavilions and Ilac,
although the former opened a new leisure
offer from Zero Latency, whilst the latter
signed a new flagship city centre store for
Liverpool FC.
Our approach to leasing works in parallel with
our greater emphasis on placemaking, which
not only serves to enliven space and enhance
the experience and environment for
customers and occupiers, but also increasingly
contributes meaningfully in its own right in
terms of incremental footfall, income, and
engagement across all channels. Key
highlights in the year included:
— Staging our first Late Night Out ticketed
event, bringing the after hours economy
to Bullring.
— We increased our social media presence
and partnerships with local influencers,
contributing to increased visibility and
customer engagement with our destinations.
Turning to other near term projects which are
integral to our existing assets, at Ironworks in
Dundrum, a 122 unit residential development,
construction continued during 2023. We also
agreed a long term indexed lease for the social
housing units that we have built as part of the
scheme and were completed in the year.
In France, we are considering options for an
incremental repurposing of underutilised
space at Cergy 3, to capitalise on strong
demand, following the opening of Les 3
Fontaines extension in March last year, and
are in discussions on heads of terms with
two operators.
During 2023, we have been disciplined with
our resourcing and capital expenditure on our
development projects and pre-development
and strategic lands; focusing on those
initiatives which give short term routes to
value, and those integral projects which add
most value to our wider estate.
The wider development market has been
somewhat fractured during the course of
2023; with viability under pressure due to
ongoing challenges with construction costs,
cost of capital and valuation yield movements,
alongside uncertainty of public policy and
decisions. Nevertheless, structural demand
from occupiers – and therefore rental
performance – remains strong across most
asset classes where we have exposure,
particularly in city centre locations for
best-in-class workplace and purpose-built
rental apartments.
— We brought the Charity Super.Mkt, the UK’s
first shop space bringing multiple charities
under one roof, to Brent Cross, The Oracle
and Cabot Circus, driving incremental
footfall, significant media coverage and
winning us a Revo award for Pop-up of the
Year. We aim to continue working with
Charity Super.Mkt through 2024.
— We had further success bringing digitally
native brands to physical space, most
notably SHEIN to Bullring and Grand
Central, and UK firsts including Trinny
London’s kiosk to Bullring.
— In France, we hosted a two week pop-up
store at Les Terrasses du Port for local
rapper Jul, and then ‘Sunset Live’ later in
the year, which showcased local and
international musical artists on the seafront
terrace, attracting significant media and
influencer attention, and involving 25
brand partners.
— Meanwhile, at Les 3 Fontaines we hosted
the second edition of the 3Festival which
celebrates ‘Art in all its forms’ with local
partners from street art workshops to
culinary battles.
— We continue to exploit underutilised car
parking space with new uses, occupiers
and events, including the UK’s largest Tesla
collection point, the Florescenza garden
centre, and Big Kid Circus at Brent Cross;
Skatepark with Red Bull at Cabot Circus,
and the Supercar Weekend at Dundrum.
— We enlivened our destinations with
summer bars including large external
screens showing major sporting events,
and created winter wonderlands in our
unique outside spaces with Apres ski bars
and ice rinks plus a visit from the much
loved Coca-Cola truck in Bullring and Grand
Central creating high footfall.
12Hammerson plc Annual Report 2023
Strategic Report
Chief Executive’s Statement continued
Charity Super.Mkt, Cabot Circus Le Sunset Live, Les Terrasses du Port
We have continued to advance planning
consents and land assembly agreements
across the portfolio, which is capital light.
In Ireland, we expect the initial planning
consents to be finalised in 2024 at Dublin
Central and there are ongoing discussions
wit1otential end users, while our planning
application for a strategic residential
masterplan at Dundrum Phase II remains
in consideration with the local authority.
At Martineau Galleries, part of the wider
Birmingham Estate, we have been working
closely with Birmingham City Council and
other stakeholders to ensure that we have a
route to prepare for the development of this
multi-use estate which will complement and
benefit from our other holdings in the city.
Lastly, in our longer term development
opportunities, standing alone from existing
destinations, we exited our 50% share of all
land and corporate interests at Croydon at a
narrow discount to book value, as well as some
small land interests in Clonsilla, Dublin,
focusing our core portfolio and creating
additional liquidity for investment. At Eastgate,
Leeds, we have agreed to update an historical
development agreement with the City Council
paving the way to unlock the value of the site.
At Bishopsgate Goodsyard, we are progressing
with detailed design and feasibility, the
procurement of initial demolition and
preparation works, and engagement with
Network Rail.
Looking ahead to FY 24, key priorities for
investment for growth and value creation
include:
— Completing the repurposing of space at
Bullring and advancing accretive projects
integral to our assets across the portfolio
— Maintaining our leasing momentum with
a diverse mix of high quality operators.
— Further increasing our emphasis on
placemaking, commercialisation and
digital marketing.
— Accelerating the realisation of value from
our strategic land, whilst maintaining
capital discipline.
Agile platform
We have transformed our platform and cost
base to create an organisation focused on
growth and value creation. We took decisive
action in 2021 and 2022, shifting from a top
heavy, geographically oriented and siloed
organisation to a simplified, asset-centric
operating model.
In 2023, we continued to drive efficiencies and
adapt our ways of working, both in terms of
technology – systems and automation – and in
terms of greater collaboration, encouraging
cross pollination of ideas and practices
between asset management, leasing,
placemaking and marketing, ESG, strategy
and insights, finance and communications.
We are creating a high performance, high
engagement culture with an emphasis on
strategic value creation focused on asset
management and delivery, placemaking and
the repositioning of our assets. Property
management and associated accounting
services have largely been consolidated to
proven third party partners of scale.
In 2023, we implemented the consolidation of
our property management suppliers in the UK
in February, and similar activity in France in the
second half. Our 164 colleagues are now
focused on strategic tasks as a result of the
overhaul of our operations.
The actions we have taken over the last three
years in realigning our portfolio and business
model as well as introducing new systems,
tools and more efficient ways of working have
necessarily resulted in a reduction of
headcount of 68% since FY 20. This has
delivered a gross administration cost reduction
of 24%.
By introducing these agile, more efficient and
sustainable ways of working we are increasing
speed to market and productivity. Today, we
deliver more leasing and commercialisation
activity than in 2019, with a leaner team, on
a more focused portfolio. Other sources of
savings include reductions in office space in
the UK and France, insurance renewals, and
a rigorous management of costs in general.
We have also increased our efforts on
employee engagement and talent
management as part of our strategy to retain
and develop key talent and we continue to
invest in and promote key talent to be fit for
the future.
Looking ahead to FY 24, key priorities for
our increasingly agile platform include:
— Embedding our new ways of working
and consolidation of suppliers.
— Further improvement of our technology
stack and automation of business
processes, including investment into
new data sources like AICCTV.
— Improve colleague engagement to
encourage retention of key talent and
to instill a high performance culture.
— Reduce gross administration costs
by a further 10%.
13Hammerson plc Annual Report 2023
Birmingham Weekender, Bullring Lane 7, Bullring
Sustainable and resilient capital structure
Our capital allocation framework remains the
same. We will maintain a stable and resilient
capital structure, with an IG credit rating, to
maintain access to capital markets. We are
committed to a sustainable and growing cash
dividend, covered by cashflow, and balanced
with our total returns focus. We are mindful
of our cost of capital, but will remain
opportunistic on capital deployment. After
strengthening of the balance sheet, our priority
is to invest for growth and value creation.
Today, we have a resilient balance sheet,
ample liquidity, and have maintained our IG
credit rating. In 2023, in France we completed
the sale of our 25% share of Italie Deux, and
100% of the Italik extension, and our 50%
share of our interests in Croydon, together
with non-core land in the UK and Ireland,
generating gross proceeds of £216m.
Moreover, £125m of secured debt has been
derecognised in connection with our exits from
non-core assets in Highcross and O’Parinor.
Since the balance sheet date, we have
exchanged unconditional contracts for the
disposal of Union Square to an affiliate of Lone
Star Real Estate Fund VI L.P. for gross proceeds
of £111m, taking total proceeds since FY 21 to
£521m and thereby completing our targeted
£500m disposals programme. In September
2023, we issued a £100m increase of our
existing £200m 7.25% coupon bonds
We commenced our Net Zero Asset Plan
(NZAP) programme of works focusing on
degasification in Ireland, renewable energy in
France, and HVAC and lighting design in the
UK. To support this, we also undertook revised
Physical Climate Risk Assessments in the UK
and Ireland. These combine with our NZAPs to
ensure a diligent, asset-centric approach to
climate risk mitigation. Alongside the delivery
of the NZAP projects across our destinations,
renewable energy purchasing with true
‘additionality’ is a central pillar of our Net Zero
transition and we are proactively seeking
a Corporate Power Purchase Agreement
(CPPA) to support our 2025 interim
carbon target. Overall, our like-for-like scope
1, 2 and landlord 3 carbon emissions are down
13% year-on-year, and 35% since 2019.
Our climate and energy focus continues to
receive external focus with Pavilions, Swords
winning a Best Energy Achievement in Retail
and Best Overall Achievement at the Business
Energy Achievement Awards 2023 (Ireland)
for going gas free in 2023, four years ahead
of schedule.
In addition to this we have launched a
quantifiable program to deliver nature-based
action plans for each asset. This recognises
that globally we are experiencing two
emergencies, Nature and Climate. The rapid
biodiversity loss globally not only needs to be
addressed to maintain essential ecosystems
but also to ensure a low carbon future aligned
maturing in 2028. The new issue was priced
at a yield of 9.1%. In parallel, we redeemed
£100m of our 3.5% coupon bonds maturing
in 2025 and 6.0% coupon bonds maturing
in 2026, at a discount of £4m.
Overall, net debt reduced 23% to £1,326m
at 31 December 2023. Headline LTV stood at
34% (FPC: 44%), down from 39% (FPC: 47%)
at FY 22. Net debt to EBITDA improved to 8.0x
from 10.4x. At 31 December 2023, the Group
had liquidity of £1.2bn in the form of cash
balances (£570m) and undrawn committed
RCFs (£655m), and had no significant
unsecured refinancing requirements until
2026 not covered by existing cash.
Looking ahead to FY 24, key priorities for our
sustainable and resilient capital structure
include:
— Maintaining our IG credit rating and prudent
approach to refinancing of Group debt in
a ‘higher for longer’ interest rate
environment.
— Completing the refinancing of the secured
debt on Dundrum in the ordinary course,
which matures in September 2024.
Environmental, Social and Governance
Our ESG agenda grew in 2023, with a
continued focus on achieving our targets,
addressing both the Climate and Nature
emergencies, whilst continuing to deliver
an expanded Social Value programme.
14Hammerson plc Annual Report 2023
Strategic Report
Chief Executive’s Statement continued
Nike, Dundrum Town CentreBullring, Birmingham
Brown Thomas, Dundrum Town Centre
Dunnes Store, Dundrum Town Centre
to the Paris agreement. In 2023 we took the
step to gift a woodland and natural grassland
in Lowestoft to the Wildlife Trust. This land gift
recognised the natural value of the land over
its commercial value and ensure it is preserved
for nature and the community for the
foreseeable future.
From a Social Value perspective, we delivered
asset-centric events to support the
communities we serve whilst also continuing
to support our corporate charity partner,
LandAid. We also introduced an all-colleague
Giving Back Day which coincided with
volunteering week and will occur annually in
the future. We had very high participation rates
of more than 90%, with 152 colleagues taking
part doing everything from CV workshops to
clearing wetlands.
We continued to focus on benchmarks
identified by our stakeholders as key to their
decision making. We rank as one of the top
property companies in ISS ESG with a score
of C+. We maintained our low-risk rating by
Sustainalytics, making us a regional leader,
and we also regained our 4-star GRESB rating
with a ten-point score improvement to 85
points. We also achieved a related GRESB ESG
public disclosure score of 96/100, scoring us an
A, which ranks us first out of our peers in our
transparency surrounding our ESG practices.
Over time, we have a unique opportunity
to complement our core with a broader mix
of uses by repurposing existing space,
consolidating, and unlocking value on adjacent
land. We have a strong platform with long term
visibility of income. We are confident in our
ability to grow top line and earnings off a new
base, and therefore create value for
shareholders in the years to come.
Rita-Rose Gagné
Chief Executive
CONCLUSION AND OUTLOOK
Since FY 20, we have navigated the Company
through a high-risk period of deleveraging and
repositioning. We have realigned our portfolio
to a core of unique city centre destinations,
started to deliver strong investment returns
in our properties, and we have ample further
opportunity to invest for growth and value
creation. In the wider portfolio, we remain
capital disciplined and have realised value
from our pre-development and strategic lands,
most recently with the exit from Croydon.
At the same time, we have transformed our
platform. We have become leaner and
‘developed muscle’, with headcount and costs
down by more than two-thirds and a quarter
respectively since FY 20, but with speed to
market and performance increased. We
remain committed to a high performance,
high engagement culture with the right talent
to be fit for the future.
Whilst our eyes are open to the current
macro-economic environment, our occupiers
are thriving and our visitor numbers are on the
rise in our realigned portfolio. City centres
remain the dominant locations for commerce
and lifestyle. Our destinations are in high
demand by occupiers and visitors. The
importance of a physical presence in a digitally
integrated strategy for best-in-class operators
is undeniable.
15Hammerson plc Annual Report 2023
Eurovision, Westquay
Market Overview
We are well positioned for growth due to
our focus on prime assets in fast growing,
young cities. These economically vibrant
locations are benefiting from a ‘flight to
quality’ as occupiers reinvest in fewer,
larger, brand building flagship stores.
Economy and customers
Customers were resilient in 2023 with the
outlook for disposable income improving in
2024 and 2025.
Despite the ‘cost of living’ crisis, savings built
up from Covid-19, high levels of employment
and strong wage growth have helped underpin
continued customer spend.
Inflation is now falling quickly, alongside
energy prices, and is anticipated to continue
to do so throughout 2024. Central banks are
expected to start cutting rates over the course
of 2024 supporting continued customer spend
as well as creating liquidity, investment and
growth across business sectors.
There will be continued geopolitical
uncertainty with Ukraine and the Middle East
as well as elections in the USA and UK, but the
outlook is cautiously optimistic.
Beyond the macro-economic outlook,
customers’ lifestyles and spending patterns
are changing too and with it our propositions
must adapt. At Bullring, Birmingham, where
we have repositioned 20% of space in 2023, we
have seen a 5% uplift in footfall with total visitor
numbers for this destination approaching 32
million. In total, Hammerson assets attracted
around 180m visitors in 2023.
Visitors continue to seek out experiences with
the best brands alongside high quality food
and entertainment. All generations are
becoming more environmentally conscious,
with customers increasingly interested in
whether a product, is environmentally friendly,
will last and can be re-sold. Resale has the
benefits of providing a cheaper, ever-changing
wardrobe which allows consumers to buy and
sell, making environmental and financial sense.
These trends were evident in the success we
saw with the pop-up Charity Super.Mkt at
Brent Cross and The Oracle where over 70,000
items were sold, with demand so great at
Cabot Circus that its opening period was
extended four times.
Return to physical
The desire for experiences is driving customers
back to physical destinations. At the same time,
occupiers are recognising that a right-sized
store portfolio is instrumental to truly
profitable multi-channel retail by encouraging
consumers to shop across channels. This is
evidenced most clearly in the published results
of leading multi-channel and pure play
operators showing a marked difference in
operating margins.
Whilst online has enjoyed a long run of strong
revenue growth, profitability especially around
deliveries and returns were overlooked. The
two key differentiators in pure play are speed
of delivery and price, with return rates as high
as 40% in the clothing sector (leading to no
sale). This and the increasing cost of standing
out in a crowded online marketplace, and cost
of customer acquisition, has made many
operators re-evaluate.
As online has become more challenged,
physical space, through rental resets and
falling business rates has become cheaper.
The most successful operators now use their
stores to control the variable costs of online by
incentivising customers to pick-up and return
via stores, with the added opportunity to
on-sell and for brand engagement. This
rebalance between online and store
investment is further underpinned by the
customer desire for better experiences.
As occupiers reinvest they are looking for
fewer, larger, brand building flagship stores
with more experiential fitouts and seamless
technology to support more profitable
multi-channel operations. Our research shows
that in the UK over the last 10 years, clothing
retailers have typically reduced their store
portfolio by 18% but average store size has
increased by 17%, with city centre locations
being the main beneficiary.
“ Years of indecision
had left M&S with a
sprawling store network
… By rotating into new
high productivity
digitally-enabled stores
… we can increase sales
and margins and the
year ahead will see
some exciting new
developments.”
M&S Annual Report 2023
16Hammerson plc Annual Report 2023
Strategic Report
Market Overview
Les Terrasses du Port, Marseille Bullring, Birmingham
Hammerson cities and portfolio
Hammerson’s portfolio is well positioned by
virtue of our focus on assets in fast growing,
young cities. These economically vibrant
locations have outperformed despite recent
headwinds due to their large, fast growing,
relatively affluent catchments.
Our assets occupy prime locations in these
cities, providing flagship destinations for
brands as they invest in fewer, larger
experiential focused stores. Our portfolio gives
occupiers direct access to 20m customers.
The diversity of our offer allows customers the
choice to trade-up or down depending on their
economic situation. This is evidenced by our
positive like-for-like sales performance in 2023.
And this sales growth is seen most clearly in
the outperformance of newer repurposed
space that reflects evolving customer needs.
Real estate outlook
Real estate has seen a delayed recovery in
capital values and investment due to a mix
of tight credit conditions, weak sentiment,
high debt costs, and low risk premiums.
Construction has been impacted by high
material and labour costs.
Despite this subdued investment market,
Hammerson disposed of three assets in
2023 at narrow discounts to book value,
indicating our skill to maximise the market
notwithstanding headwinds.
Investment in the UK Shopping Centres
market in 2023 finished at £1.2bn, down 44%
on 2022 levels according to JLL research with
only five transactions occurring that were
greater than £50m lot sizes. French All Retail
volumes were down 51% at €2.9bn but the
sale of Italie Deux/Italik accounted for 45%
of the €1bn worth of French Shopping
Centre investment.
In a subdued investment market, we raised
£216m through the disposals of Croydon,
Italie Deux and another non-core asset in
2023. In addition, we took a disciplined
approach to capital allocation in assessing our
options on Highcross and O’Parinor, ultimately
handing back the keys on both assets, and
benefiting net debt by £125m, recognising an
impairment charge of £22m. Since the year
end, the Group has exchanged unconditional
contracts for the sale of Union Square,
Aberdeen for £111m.
With the improving economic outlook, there
is cautious optimism across our three markets.
There is an expectation that central banks
will start cutting rates in the first half of 2024.
This will initially encourage activity from
opportunistic investors before the wider
market follows.
Following structural changes driven by
technology, online shopping and Covid-19
alongside a focus on sustainability and the
costs of upgrading buildings, the market will
be increasingly drawn to quality assets in
prime locations.
Oxford Economic
Forecasts
Q4
2024
Inflation
(CPI)
Q4
2024
Interest
Rates
(EOP)
UK 1.5% 4.50%
Ireland 0.9% 3.25%
France 2.1% 3.25%
“ Hammerson have been
an important partner to
us for many years across
the UK, Ireland and
France. The quality of
their schemes and their
people has undoubtedly
allowed our partnership
to flourish, especially
with their ongoing
commitment to
reinvesting and evolving
the assets to introduce
new brands, alongside
improved social and
entertainment offers.”
James Air
Director, JD Sports
17Hammerson plc Annual Report 2023
01
Asset
management
03
Maximising value
from development
opportunities
02
Complementary
development
opportunities
04
Capital cycling
Our Business Model
Our Purpose
We create outstanding
experiences in unique
city locations.
What we do
Our Culture and Values
We are an owner, operator and developer
of sustainable prime urban real estate.
We create vibrant, continually evolving
spaces in and around thriving cities,
where people and brands want to be.
Our destinations sit at the very heart of
communities and in many cases form
part of the city’s very identity.
See How the Board Manages and Monitors
Our Purpose and Culture on pages 71
and 72
Our resources
Expertise in asset management,
placemaking, investment, and
development through our people
and platform
Strong and diverse customer base
with some of Europe’s largest brands
Deep understanding of our occupiers
and what they need to succeed
Access to a broad range of capital
providers
01 02
Asset management
We optimise the use of space by
delivering exceptional occupier
line-up, placemaking and integral
repurposing projects
Complementary
development opportunities
We bring new uses and revenue
streams through developments
which are complementary to our
core destinations and in turn
enhance the proposition of
the whole
03 04
Maximising value from
development opportunities
We unlock the value of our stand-
alone development opportunities
through disciplined risk-adjusted
capital allocation
Capital cycling
We reinvest for growth in the
highest return opportunities
18Hammerson plc Annual Report 2023
Strategic Report
Business Model
Our strategy
INVESTING FOR GROWTH AND VALUE
CREATION
Investing into our destinations to
strengthen and diversify the customer
proposition through repurposing,
leasing with best-in-class operators,
and public realm
AGILE PLATFORM
Focus on strategic asset management,
placemaking and investment through
a transformed, increasingly agile
operating platform
SUSTAINABLE AND
RESILIENT CAPITAL STRUCTURE
We prioritise a strong balance sheet and
maintaining an investment-grade credit
rating. Our capital allocation is disciplined,
with a focus on recycling capital into our
core portfolio.
The value created
FOR OCCUPIERS
We deliver best-in-class destinations through vibrant and exciting
placemaking, and industry leading analytics that attract high footfall
and allow our occupiers to succeed
FOR CUSTOMERS
We create outstanding experiences in unique city locations that surpass
the changing needs of our customers
FOR COLLEAGUES
We promote a high performance, high engagement environment where
colleagues can realise their full potential
FOR COMMUNITIES
We create better places for our communities through improved
infrastructure and public realm, sustainable buildings, exemplary
placemaking, events and local employment
FOR PARTNERS
We create partnerships with our JV and debt investors, suppliers,
local authorities and communities based on a collaboration where each
partner benefits
FOR INVESTORS
We aim to generate attractive returns for our investors over the long
term. We ensure a sustainable capital structure, maintaining our
investment grade credit rating
See Our Stakeholders on
page 20
See KPIs on
page 23
Managing risk and
opportunities
We identify, quantify and monitor risk to the
Group through a systematic review of the
Group’s strategic priorities
Risks and Uncertainties on
page 54
Environmental, Social
and Governance
To ensure we can consistently unlock the
value in our portfolio, we have a strong
governance framework which sets us up
for long-term success.
See ESG on
page 26
19Hammerson plc Annual Report 2023
Our Stakeholders
KEY AREAS OF INTEREST
Stakeholders Key areas of interest How we engage
Occupiers
We deliver best-in-class destinations through vibrant and
exciting placemaking, and industry leading analytics that
attract high footfall and allow our occupiers to succeed
– Shared commercial objectives attracting consumers
– Vibrant and well-operated destinations
– ESG
– Occupancy cost
– Our dedicated leasing team has a leasing strategy for each asset, underpinned by the Group’s strategic objectives
– We hold regular executive management meetings with our occupiers
– We have a targeted programme of engagement for future occupiers and partners
– We run a brand feedback study with our occupiers to gather input on their satisfaction to help drive stronger, mutually beneficial relationships
– We have undertaken an additional series of in-depth interviews with core occupiers to understand what our occupiers value and to help expand our
relationships. The results were presented and discussed at the Board Strategy Day
– A panel of occupiers and consultants who work with our occupiers participated in a moderated panel discussion at the Board Strategy Day
– The Board receives reports from the senior management team on matters relating to occupiers, which are discussed at its meetings
Customers
We create outstanding experiences in unique city locations
that surpass the changing needs of our customers
– Vibrant destinations with engaging occupier mix
– Future winning brands
– Continuous improvement to enhance consumer
engagement and experience
– ESG
– We regularly undertake both quantitative and qualitative insight studies to understand consumer needs
– Our marketing, leasing and asset management strategies are focused on ensuring that we curate vibrant destinations for multi-use estates
– We invest in optimising space and occupier mix and improving customer facilities
– The Board receives regular reports on consumer behaviours and associated needs, including detailed sessions at the Board Strategy Day, which provide
useful insights into emerging trends at a local and national level and will inform investment decisions and identify future revenue drivers
Colleagues
We promote a high performance, high engagement
environment where colleagues can realise their full potential
– Strategic, operational and financial performance
– Colleague engagement
– Reward
– Diversity, equality and inclusion
– Training and development
– Health and wellbeing
– ESG
– High performance
– We hold regular colleague briefings with the Chief Executive and other members of the senior management team
– We undertake all colleague engagement surveys. In 2023, this was followed by workshops with each team across the business. Learnings will be
embedded into goal setting and business processes to drive colleague engagement and a high performance culture
– In addition, during the year, colleague surveys were conducted on discrete areas, including Health & Safety and the move of our office
– Updates on current business and performance is delivered to all colleagues via regular town hall ‘squad’ meetings and other engagement tools
– The Colleague Forum was established in May 2019 and we have a Designated Non-executive Director for Colleague Engagement who attends its meetings
– Affinity Groups, which champion equality, diversity and inclusion (ED&I), cover Race & Ethnicity, LGBTQ+, Women and Wellbeing. These groups drive
our ED&I calendar of colleague engagement activations
– Our comprehensive programme for new joiners includes an online training programme
– The Board receives updates from the designated NED for Colleague Engagement on interactions and reports regarding colleague engagement,
including culture and ED&I
Communities
We create better places for our communities through
improved infrastructure and public realm, sustainable
buildings, exemplary placemaking, events and local
employment
– Measurable positive impact in socio-economic issues
relevant to the communities in which we operate
– ESG
– Community projects focus on four areas:
– Employment and skills
– Local investment and enterprise
– Developing young people
– Health and wellbeing
– Our local community impacts are positive, and our business activities attract significant additional investment into local economies
– We create a localised placemaking strategy for each asset through our asset management programme, reflecting the needs of our communities
– We set community engagement plans that address issues identified as relevant to local communities
– We develop long-term partnerships with organisations that share our focus areas and local authorities
– We consider donations to suitable charities in line with our four focus areas, including charities local to our assets, complementing our ESG goals
– The Board receives regular ESG reports, including progress on social value targets within our sustainability strategy, and has oversight of key ESG policies
Partners
We create partnerships and strive for alignment with our
JV and debt investors, suppliers, local authorities and
communities based on a collaboration where each
partner benefits
– Long-term partnership, collaboration and engagement
– Current and future financial performance
– Operational excellence
– Corporate governance
– Innovation, consumer trends and insight
– Shared objectives and values
– ESG, community projects and impact
– Development and planning
– We seek open and collaborative relationships with our partners
– We hold quarterly joint venture board meetings together with more regular engagement as needed, and approve asset business plans annually, setting
parameters for the next year and over the longer term
– We organise regular meetings with partners to highlight key areas of focus, including ESG, customer experience, innovation and other areas of shared focus
– Active dialogue and engagement with key suppliers
– We are signatories to the Prompt Payment Code, to support our partners, suppliers, local authorities and debt investors
– The Board is regularly updated on engagement with partners and considers relevant matters in the context of ongoing oversight and decision making
– Health & Safety is emphasised as a top priority at all times
Investors
We aim to generate attractive total returns for our investors
over the long term. We ensure a sustainable capital structure,
maintaining our investment grade credit rating
– Current and future financial performance
– Strategy
– Corporate governance
– ESG
– Risk management and capital allocation
– Regular and transparent communication and reporting
– We actively engage with investors through regular meetings, including discussions on strategy, operations, capital allocation, ESG, and governance.
Throughout the year, we meet with institutional shareholders to discuss progress on our strategy, operational updates, capital allocation, as well as
matters of governance. The Chair of the Remuneration Committee consults with major shareholders on remuneration matters
– Key shareholder publications including the annual report, the full year and half year results announcements, operational updates, ESG report, press
releases and other information for investors are available on the Company’s website
– The AGM provides a valuable opportunity for shareholders to engage with Hammerson and vote on resolutions. Shareholders can ask questions
during the meeting or submit inquiries beforehand. Extensive engagement with shareholders and major proxy advisers occurred in the run-up to,
and following the 2023 AGM
– The Board regularly receives reports on investor relations, including engagement updates. Directors actively participate in engagement opportunities
throughout the year
20Hammerson plc Annual Report 2023
Strategic Report
Our Stakeholders
HOW WE ENGAGE
Stakeholders Key areas of interest How we engage
Occupiers
We deliver best-in-class destinations through vibrant and
exciting placemaking, and industry leading analytics that
attract high footfall and allow our occupiers to succeed
– Shared commercial objectives attracting consumers
– Vibrant and well-operated destinations
– ESG
– Occupancy cost
– Our dedicated leasing team has a leasing strategy for each asset, underpinned by the Group’s strategic objectives
– We hold regular executive management meetings with our occupiers
– We have a targeted programme of engagement for future occupiers and partners
– We run a brand feedback study with our occupiers to gather input on their satisfaction to help drive stronger, mutually beneficial relationships
– We have undertaken an additional series of in-depth interviews with core occupiers to understand what our occupiers value and to help expand our
relationships. The results were presented and discussed at the Board Strategy Day
– A panel of occupiers and consultants who work with our occupiers participated in a moderated panel discussion at the Board Strategy Day
– The Board receives reports from the senior management team on matters relating to occupiers, which are discussed at its meetings
Customers
We create outstanding experiences in unique city locations
that surpass the changing needs of our customers
– Vibrant destinations with engaging occupier mix
– Future winning brands
– Continuous improvement to enhance consumer
engagement and experience
– ESG
– We regularly undertake both quantitative and qualitative insight studies to understand consumer needs
– Our marketing, leasing and asset management strategies are focused on ensuring that we curate vibrant destinations for multi-use estates
– We invest in optimising space and occupier mix and improving customer facilities
– The Board receives regular reports on consumer behaviours and associated needs, including detailed sessions at the Board Strategy Day, which provide
useful insights into emerging trends at a local and national level and will inform investment decisions and identify future revenue drivers
Colleagues
We promote a high performance, high engagement
environment where colleagues can realise their full potential
– Strategic, operational and financial performance
– Colleague engagement
– Reward
– Diversity, equality and inclusion
– Training and development
– Health and wellbeing
– ESG
– High performance
– We hold regular colleague briefings with the Chief Executive and other members of the senior management team
– We undertake all colleague engagement surveys. In 2023, this was followed by workshops with each team across the business. Learnings will be
embedded into goal setting and business processes to drive colleague engagement and a high performance culture
– In addition, during the year, colleague surveys were conducted on discrete areas, including Health & Safety and the move of our office
– Updates on current business and performance is delivered to all colleagues via regular town hall ‘squad’ meetings and other engagement tools
– The Colleague Forum was established in May 2019 and we have a Designated Non-executive Director for Colleague Engagement who attends its meetings
– Affinity Groups, which champion equality, diversity and inclusion (ED&I), cover Race & Ethnicity, LGBTQ+, Women and Wellbeing. These groups drive
our ED&I calendar of colleague engagement activations
– Our comprehensive programme for new joiners includes an online training programme
– The Board receives updates from the designated NED for Colleague Engagement on interactions and reports regarding colleague engagement,
including culture and ED&I
Communities
We create better places for our communities through
improved infrastructure and public realm, sustainable
buildings, exemplary placemaking, events and local
employment
– Measurable positive impact in socio-economic issues
relevant to the communities in which we operate
– ESG
– Community projects focus on four areas:
– Employment and skills
– Local investment and enterprise
– Developing young people
– Health and wellbeing
– Our local community impacts are positive, and our business activities attract significant additional investment into local economies
– We create a localised placemaking strategy for each asset through our asset management programme, reflecting the needs of our communities
– We set community engagement plans that address issues identified as relevant to local communities
– We develop long-term partnerships with organisations that share our focus areas and local authorities
– We consider donations to suitable charities in line with our four focus areas, including charities local to our assets, complementing our ESG goals
– The Board receives regular ESG reports, including progress on social value targets within our sustainability strategy, and has oversight of key ESG policies
Partners
We create partnerships and strive for alignment with our
JV and debt investors, suppliers, local authorities and
communities based on a collaboration where each
partner benefits
– Long-term partnership, collaboration and engagement
– Current and future financial performance
– Operational excellence
– Corporate governance
– Innovation, consumer trends and insight
– Shared objectives and values
– ESG, community projects and impact
– Development and planning
– We seek open and collaborative relationships with our partners
– We hold quarterly joint venture board meetings together with more regular engagement as needed, and approve asset business plans annually, setting
parameters for the next year and over the longer term
– We organise regular meetings with partners to highlight key areas of focus, including ESG, customer experience, innovation and other areas of shared focus
– Active dialogue and engagement with key suppliers
– We are signatories to the Prompt Payment Code, to support our partners, suppliers, local authorities and debt investors
– The Board is regularly updated on engagement with partners and considers relevant matters in the context of ongoing oversight and decision making
– Health & Safety is emphasised as a top priority at all times
Investors
We aim to generate attractive total returns for our investors
over the long term. We ensure a sustainable capital structure,
maintaining our investment grade credit rating
– Current and future financial performance
– Strategy
– Corporate governance
– ESG
– Risk management and capital allocation
– Regular and transparent communication and reporting
– We actively engage with investors through regular meetings, including discussions on strategy, operations, capital allocation, ESG, and governance.
Throughout the year, we meet with institutional shareholders to discuss progress on our strategy, operational updates, capital allocation, as well as
matters of governance. The Chair of the Remuneration Committee consults with major shareholders on remuneration matters
– Key shareholder publications including the annual report, the full year and half year results announcements, operational updates, ESG report, press
releases and other information for investors are available on the Company’s website
– The AGM provides a valuable opportunity for shareholders to engage with Hammerson and vote on resolutions. Shareholders can ask questions
during the meeting or submit inquiries beforehand. Extensive engagement with shareholders and major proxy advisers occurred in the run-up to,
and following the 2023 AGM
– The Board regularly receives reports on investor relations, including engagement updates. Directors actively participate in engagement opportunities
throughout the year
21Hammerson plc Annual Report 2023
Section 172(1) statement
Section 172(1) Statement
The Directors of the Company have acted in
a way that they considered, in good faith, to
be most likely to promote the success of the
Company for the benefit of its members as
a whole and, in doing so, had regard, amongst
other matters, to those matters set out in
section 172(1)(a) to (f) of the Companies Act
2006, being:
— The likely consequences of any decision
in the long term
— The interests of the Company’s colleagues
— The need to foster the Company’s business
relationships with partners, consumers
and others
— The impact of the Company’s operations
on the community and the environment
— The desirability of the Company
maintaining a reputation for high standards
of business conduct
— The need to act fairly as between members
of the Company
The Board has identified its key stakeholders
as being its: occupiers; customers; colleagues;
communities; partners; and investors. Building
and nurturing these relationships based on
professionalism, fair dealing and integrity is
critical to our success.
Our extensive engagement efforts help to
ensure that the Board can understand,
consider and balance broad stakeholder
interests when making decisions to deliver
long term sustainable success.
While the Board will engage directly with
stakeholders on certain issues, stakeholder
engagement will often take place at an
operational level with the Board receiving
regular updates on stakeholder views from
the Executive Directors and the senior
management team. Directors receive a
briefing regarding their duties under s172(1)
and board papers for all key decisions include
a specific section reviewing the impact of the
proposal on relevant stakeholder groups, as
well as other s172(1) considerations.
Stakeholder engagement
We seek to deliver value and positive
outcomes for all our stakeholders. The Board is
aware that its actions and decisions impact our
stakeholders including the communities in
which we operate. Effective engagement with
stakeholders is important to the Board as it
strengthens the business and helps to deliver
a positive result for all our stakeholder groups.
In order to comply with Section 172 of the
Companies Act 2006, the Board is required
to take into consideration the interests of
stakeholders and include a statement setting
out the way in which Directors have discharged
this duty during the year.
The Board seeks to understand the needs and
the key areas of interest of each stakeholder
group and consider them during deliberations
and as part of the decision making process.
It reviews the long term consequences of
decisions on relevant stakeholder groups by
ensuring that the Group builds and nurtures
strong working relationships with our
investors, occupiers, suppliers, joint venture
partners, debt capital providers, consumers,
and the wider community and government
agencies which are important to the success of
the Group. It does this by overseeing the work
undertaken by management to maintain and
seek to enhance these relationships. The
Board receives detailed reports and, when
relevant, these include assessments of the
impact that a proposal or project might have on
stakeholders, with appropriate input from the
senior management team. Further information
on the Board’s engagement with, and
consideration of, the Company’s stakeholders
can be found on pages 20 and 22.
The Board is responsible for establishing and
overseeing the Company’s values, strategy
and purpose, all of which centre around the
interests of key stakeholders and other factors
set out in s172(1). The Directors remain
conscious that their decisions and actions
have an impact on stakeholders, including
occupiers, customers, colleagues,
communities, partners and investors, and they
have had regard to stakeholder considerations
and other factors in s172(1) during the year.
Whilst the Board acknowledges that,
sometimes, it may have to take decisions
that affect one or more stakeholder groups
differently, it seeks to treat impacted groups
fairly and with regard to its duty to act in a way
that it considers would be most likely to
promote the success of the Company for the
benefit of its members as a whole, having
regard to the balance of factors set out in
s172(1). Considerations relating to s172(1)
factors are an important part of governance
processes and decision making both at Board
and management level, and more widely
throughout the Company. Necessarily in
a large group, some decisions are taken by
management. These decisions are taken
within parameters set by the Board and there
is a robust framework that ensures ongoing
oversight and monitoring.
22Hammerson plc Annual Report 2023
Strategic Report
Section 172(1) statement
KPIs
Adjusted earnings £m
1
3
R
R
202
1
65.5
202
2
104.9
202
3
116.3
Adjusted earnings grew 11% to £116.3m in 2023. Key factors were underlying rental
growth; lower gross administration and net finance costs; higher Value Retail earnings;
partly offset by income foregone from disposals.
Net debt £m
1
3
R
202
1
1,799
202
2
1,732
202
3
1,326
Net debt reduced 23% in 2023 to £1,326m. The decrease was due to disposal proceeds,
the derecognition of Highcross and O’Parinor secured debt, operating cash flow and
distributions from Value Retail; partly offset by dividend and interest payments and capital
expenditure. See Table 13 in Additional Information for further details.
Total accounting return (‘TAR’) %
1
3
R
202
1
-14.0
202
2
-6.8
202
3
-2.1
New KPI replacing Total property return which is a 2024 remuneration target, is
comparable with the wider real estate sector and a key measure of value creation
The Group recorded a TAR of -2.1% in 2023. The adverse return in 2023 was principally
due to revaluation losses of £126m (2022: £282m losses) and losses/impairments
relating to disposals. See Table 15 in Additional Disclosures for calculation.
EPRA NTA per share pence
1
3
2021
64
202
2
53
202
3
51
NTA per share fell by 2p in 2023 principally due to revaluation losses of £126m, of which
65% was due to outward yield movement with the remainder principally reflecting
lower residual values on our strategic lands. See note 9B to the financial statements for
the calculation.
Passing rent (like-for-like change) %
1
202
1
202
2
1.4
202
3
2.5
-4.0
Amended KPI to reflect the annual change rather than the absolute figure to better
demonstrate underlying performance
Like-for-like passing rent at our Flagship portfolio increased by 2.5% in 2023 driven by
the Group’s strong leasing performance. Further detail can be found in Table 4 of the
Additional Information.
Leasing activity £m
1
202
1
24.7
202
2
25.4
202
3
29.0
2023 was another record leasing year for the Group with £29.0m (or £45.8m at 100%)
secured across the Flagship portfolio, 23% ahead of 2022 on a like-for-like basis. Leases
were signed at an average 12% ahead of ERV and 37% ahead of previous passing rent.
Voluntary colleague turnover %
2
202
1
15.4
202
2
20.0
202
3
11.6
The level of voluntary colleague turnover fell in 2023 as the benefits of the Group’s
digitalisation and automation projects became to be realised and key initiatives to simplify
the Group’s operating model were implemented.
Carbon emissions (like-for-like change) %
1
3
R
R
2021
1.9
202
2
-7.9
202
3
-13.4
New KPI replacing the GHG intensity metric as better aligned to the Group’s 2030
Net zero commitment and 2025 targets in our €700m sustainability linked bond
Our carbon emissions reduced by 13.4% in 2023 reflecting the impact of net zero asset
plan initiatives undertaken in the year and our broader environmental strategy to reduce
energy usage across our portfolio.
Footfall (like-for-like change) %
1
202
1
N/A
202
2
202
3
38.8
2.7
Amended KPI to present the year-on-year change rather than compared to 2019
which was more relevant in the aftermath of Covid-19
Footfall grew by 2.7% in 2023, with growth in all three countries. Our focus on creating the
optimal occupier mix and exciting placemaking enables us to attract a growing number of
visitors to our flagship destinations.
Adjusted Net rental income (‘NRI’) (like-for-like change) %
1
R
202
1
10.4
202
2
29.2
202
3
3.6
New KPI underpinning value creation
On a like-for-like basis, NRI increased by 3.6% in 2023. This was due to growth in
base rent associated with strong leasing and variable rent (turnover rent, car park and
commercialisation income). Further detail is in Table 3 of Additional Information.
Financials Operational
23Hammerson plc Annual Report 2023
Strategic Report
KPIs
Link to strategy:
1
Investment for growth and value creation
2
Agile platform
3
Sustainable and resilient capital structure
Linked to remuneration – 2023
R
Linked to remuneration – 2024
Opening Doors, Hammerson Colleague Volunteering
Our Colleagues
These changes, contributed to a 14%
year-on-year reduction in Gross
Administration Costs.
Delivery through a high performance
culture
In 2023, Hammerson continued to bring
colleagues on a journey to establishing a highly
engaged, high performance culture, alongside
the need to:
— Adapt the operating model
— Continue to reshape the organisation and
reduce costs
— Deliver digital transformation and new ways
of working
By prioritising talent management across the
business, we have been able to better leverage
the expertise of individuals across the Group to
deliver improved results for stakeholders.
The operational and financial progress made
in 2023 is underpinned by the increased
priority and focus given to effective people
management. The stretching targets set by the
Board were translated into a full cascade of
team and personal goals for individuals. These
were monitored during the year with formal
personal reviews undertaken at both the mid
and full year.
At 31 December 2023, we employed 164
colleagues across the Group: 107 were
based in the UK, 22 in Ireland, and 35 in
France. This is a 49% reduction in colleague
numbers from 2022 with a total reduction
in colleague numbers of 68% since 2020.
An agile platform for growth
Since 2020 Hammerson has transformed
into an asset-centric organisation, focused on
value creation. We have continued to build our
talent-base with the critical skills and ambition
to deliver against our purpose – creating
outstanding experiences in unique city locations.
The Group’s structure continued to evolve
over the course of 2023 with the introduction
of a new and more efficient operating model,
with on-site property management and
associated accounting services in the UK and
France being consolidated with proven scale
strategic partners.
Embedding these changes resulted in another
year of intensive change in our ways of working
and technology, both systems and automation,
enabling increased collaboration and speed
of delivery.
The full spectrum of change across the
organisation enables colleagues to focus on
the strategic delivery of asset management,
leasing, placemaking and ESG.
With the pace of change and increasing
expectations of delivery, it was important that
we underpin this journey with culture initiatives
which will support increased levels of employee
engagement and talent retention. Key initiatives
that were introduced in 2023 included:
— Introduction of Hammerson’s new values:
Ambitious, Connected, Respect.
— Re-launch of the Hammerson Colleague
Survey, with an 83% Group-wide
participation rate and an extensive
programme of follow-up workshops
focused on colleague led actions to improve
engagement.
— Re-fresh of the colleague communication
group, The Forum, to give colleagues a
voice with the senior leadership team.
Equality, Diversity, & Inclusion (ED&I)
The most successful businesses from both
a colleague and value creation perspective are
those that champion diversity. It can deliver
greater innovation, a far deeper understanding
of customers, and colleagues develop a more
varied range of skills and outlooks as a result.
Continuing on our journey to shape a more
diverse and inclusive culture at Hammerson
is a priority for both the Group Executive
Committee (GEC) and the Board. We are
committed to accelerating progress in this
important area and our work over the past
12 months continues to shape our colleague
and ED&I strategy.
24Hammerson plc Annual Report 2023
Strategic Report
Our Colleagues
Hammerson Colleague Charity Triathlon Hammerson Green Apple Award
Since their formation, our four colleague-led
Affinity Groups: LGBTQ+, Race & Ethnicity,
Women, and Wellbeing’ have made great
strides in raising awareness, creating
conversations and highlighting educational
resources, sharing personal stories and
support around these important topics. Events
during 2023 organised by the groups were
focused on increasing awareness and
understanding of the unique challenges faced
by our diverse colleague base. These included
events focused on Pride and the LGBTQ+
community, Black History Month, Diwali,
Vaisakhi, Wellbeing and Equality.
A GEC member sponsors each Affinity Group
to drive further momentum and action on
matters of importance to our colleagues,
partners and communities.
We continue to welcome and fully consider
all employment applications irrespective of
gender, race, ethnicity, religion, age, sexual
orientation or disability. Support also exists for
colleagues who become disabled to continue
in their employment or to be retrained for other
suitable roles. Training, career development
and promotion opportunities are equally
applied for all our employees, regardless
of disability.
Looking forward, Hammerson will provide
increased management development focused
on building and leading diverse teams with
a focus on increasing diversity through the
recruitment and promotions processes.
Gender representation
See table below showing the gender
representation across the Group.
Information relating to the Board’s diversity
and the gender diversity of those at senior
management level and their direct reports as
defined by the UK Corporate Governance Code
can be found on page 81.
Gender pay reporting
As an organisation we are clear on our
commitment to all aspects of equality and fair
pay, and reward is a key element of this. For
many years we have undertaken an internal
pay audit to ensure that our reward practices
are fair to all colleagues, particularly those
undertaking like-for-like work.
The results of our 2023 audit continued to
demonstrate the fair reward practices in place.
With regard to our UK Gender Pay Gap, the
table below shows the latest data. There has
been a substantial change in the workforce
between 2022 and 2023 which accounts in
part for the changes in the data. This will be
an area of focus for 2024.
Gender representation (as at 31 December 2023)
2023 2022
Female Male Female Male
Number % Number % Number % Number %
Across the Group 85 51.8 79 48.2 160 50 160 50
At senior manager level* 1 16.7 5 83.3 1 16.7 5 83.3
* as defined in the Companies Act 2006 (being, for this purpose, the GEC excluding Executive Directors).
Gender pay reporting
2023 2022
Difference in mean hourly rate of pay 40.7% 34.8%
Difference in median hourly rate of pay 39.8% 32.7%
Difference in mean bonus pay 37.1% 47.3%
Difference in median bonus pay 58.8% 58.0%
Proportion of male colleagues who received bonus pay 88.6% 90.9%
Proportion of female colleagues who received bonus pay 95.4% 96.7%
Note: The 2022 figures have been restated to exclude the Company’s wholly-owned subsidiary, Hammerson Operations Limited, following the consolidation of on-site property
management services with partner organisations.
25Hammerson plc Annual Report 2023
Environment
— Climate
— Nature
— Carbon emissions
— Community and
volunteering
— Health and safety
— Our people
— Public disclosure
— Strategic management
— Benchmarks
Social Governance
Environmental, Social and Governance (ESG)
Environmental, Social and Governance
(ESG) underpins the Group’s strategy. We
are pleased with the continued progress
made in our ESG activities during 2023,
as we continue on our pathway to being
Net Zero by 2030.
Our ESG focus
In 2023, we covered a broader range of ESG
subjects. This built on our progress in 2022
when we introduced tangible transition plans
to achieve net zero by 2030. As we progress
our ESG strategy we have utilised our 2022
materiality assessment (page 35) and are
actively planning for the evolving ESG
disclosure required by the Corporate
Sustainability Reporting Directive (CSRD).
Our strategy addresses global Climatic
impacts taking a risk-based approach,
however we recognise that globally we are
experiencing two emergencies, Nature and
Climate. The rapid biodiversity loss needs to be
addressed to maintain essential ecosystems
but to also ensure a low carbon future aligned
to the Paris Agreement.
To address this, we continue to reduce our
energy consumption, with clear actions
embedded in our Net Zero Asset Plans
(NZAPs), ensuring we do not separate this
from our climate risk mitigation. We also
undertook revised Physical Climate Risk
Assessments and Nature Asset Plans, to be
completed in early 2024. These will be used
to further inform our climate and nature
transition plan to achieve Net Zero by 2030.
These two new asset specific assessments
when combined with our NZAPs demonstrate
our inclusive approach to ESG. We also
increased our social value focus with the
introduction of our group wide Giving Back Day
in June.
Managing climate risk
In April 2023, in recognition of the latest
scientific research, the Board approved a
change in our climate risk approach. We are
no longer planning our transition aligned to a
steady net zero pathway consistent with the
Paris Agreement. We recognise swift action
is needed to combat the already rapidly
increasing global temperatures and related
climate impacts, so we are planning against
the two more extreme climatic scenarios of
+2
0
C and +4
0
C (page 36) to ensure our
transition is aligned to recent scientific models.
Our NZAPs provide us with a measured
approach to transition and, where feasible, are
being accelerated at several of our assets to
maximise our energy reduction. We continue
to work on the introduction of an impactful
carbon pricing mechanism to support our
developments and to direct funding into
carbon reduction.
Delivering social value
To date our social value activity has centred
around charitable giving and volunteering.
Across the Group, we remain committed to
our corporate charity partnership with
LandAid.
Following the introduction of the Group’s new
property management partners in the UK and
France, we revised our approach to social
value. In 2024, we will further develop our
asset centric social value strategy to continue
to respond to the local needs at our
destinations.
Understanding material impacts
In 2022 we undertook a materiality review and
have used this to inform our strategy. We are
also planning to undertake a more detailed
double materiality review in 2024. With an
extensive suite of ESG disclosure and reporting
requirements coming into effect in the near
term we are reviewing our approach to ensure
we are able to meet our compliance
obligations, and remain at the forefront of our
sector to help drive change.
We participate in key benchmarks identified
by our stakeholders and evolve our approach
to reporting and governance with further
enhancements in our 2023 ESG report. We
rank as one of the top property companies in
ISS ESG with a score of C+. We also maintained
our Sustainalytics low risk rating and we
regained our 4-star GRESB rating with a related
ESG public disclosure score of 96/100. This
make us first out of our peers in our
transparency surrounding ESG practices.
2023 Highlights
Carbon emissions vs 2022 (like-for-like
change)
(Scope 1, 2 and 3 proportionally consolidated)
-13.4%
2022: -7.9%
Carbon emissions v 2019 (like-for-like
change)
(Scope 1, 2 and 3 proportionally consolidated)
-35%
Social value investment
£2.5m
2022: £2.7m
Benchmarks
GRESB
4 stars/Score 85
GRESB Public
Disclosure
96/100 A
ISS ESG
C+
Sustainalytics
Low risk
ESG Pillars
26Hammerson plc Annual Report 2023
Strategic Report
ESG
2023 Highlights
Global emissions intensity, kgCO
2
e/m
2
(Scope 1, 2 and 3, 100% basis)
41.8
2022: 43.1
Carbon emissions vs 2022 (like-for-like
change) waste recycled
(Scope 1 and 2 proportionally consolidated)
-12.3%
2022: -12.4%
Operational waste recycled
(Proportionally consolidated)
57%
2022: 70%
Water consumption (LFL YoY)
(Proportionally consolidated)
-1%
2022: +30%
% of UK portfolio (excluding Union Square)
rated EPC A to C
73%
2022: 68%
Environment
We recognise that Climate and Nature are
two key elements of a global environmental
emergency. We are therefore increasing our
focus on these two interconnected areas.
Climate
Reducing carbon emissions
In 2023 we further reduced our carbon
emissions, which for Scope 1 and 2 emissions
on a proportionally consolidated basis, were
6,021 tCO
2
e, a 12.3% reduction on a like-for-
like portfolio basis. Our GHG emissions, shown
on page 40 and calculated on a 100% basis,
including selected Scope 3 emissions, were
14,001 tCO
2
e (2022: 17,765 tCO
2
e). On a
proportionally consolidated basis, our
like-for-like GHG emissions fell by 13.4% in
the year and are 35% below their 2019 levels.
These reductions are consistent with our
pathway to being Net Zero by 2030.
In 2023, we have also included transmission
and distribution losses into our Scope 3
emissions and have recalculated previous
years’ emissions accordingly. We are also
pursuing opportunities for onsite and offsite
renewables in all countries in which we
operate, which are new to earth and meet our
additionality requirements, which are another
key step towards achieving our ambitions.
Net Zero Asset Plans
In 2023 we began the delivery of our NZAPs at
our assets. We have adopted country based
approaches to ensure economies of scale and
efficient delivery. In Ireland, we have focused
on degasification with two out of three assets
now being gas free in landlord areas and the
remaining asset will be gas free in 2024.
In the UK, we have undertaken a Building
Management System (BMS) review and begun
enhancing our controls. We have also
undertaken lighting surveys and have started
HVAC redesigns which we will deliver from
2024 to 2028. We are also planning three new
PV arrays and continue to pursue a Corporate
Power Purchase Agreement with clear
additionality clauses.
In France, we have completed feasible studies
to increase our onsite renewable energy with
additional PV arrays being commissioned. We
also introduced a biomenthanisation station
at Les Terrasses du Port to reduce our offsite
waste handling and to generate energy. We
also continue to enhance our building controls.
Occupiers
To continue to address our climate impacts
we not only proactively work to reduce our
landlord emissions but also support our
occupiers in reducing their emissions. In 2023
we continued to sign green leases, which set
our minimum environment standards
including our fit out requirements. Our leasing
policy in the UK contains minimum EPC
standards and we continue to strive to achieve
a minimum C rating at all UK assets and exceed
legislative requirements in Ireland and France.
In England, we now have only two F rated EPC
units and these are in spaces we are not
actively seeking to lease. Within our remaining
English portfolio 73% is rated EPC C or above.
Nature
Biodiversity to Nature based solutions
We have had a commitment to biodiversity
and a Board endorsed policy for several years.
We have already begun our transition from
addressing biodiversity in isolation to covering
wider nature-based solutions and linking this
with the other environmental activities and
projects we deliver. In 2023, we appointed
Marsh to undertake a combined piece of work
involving revised Physical Climate Risk
Assessments and Nature Asset Plans for each
asset and these will be completed shortly. We
will combine these plans with our NZAPs to
create a transition plan aligned to both climate
and nature. Our Nature Asset Plans adopt a
risk and opportunities focused output aligned
to the LEAP framework within the Taskforce of
Nature-based Financial Disclosure (TNFD).
Also in 2023 we delivered projects focused on
nature including increasing our green space,
improving bee hive and insect hotel coverage,
and nature based volunteering work as part of
our annual Giving Back Day. We also gifted a
five acre woodland with natural grassland in
Lowestoft to the Suffolk Wildlife Trust. This gift
recognised the value of the land to the local
community and ensures its use will be
protected in the future.
Water & Waste
We remain committed to reducing our water
usage and diverting waste from landfill. In
2023 we recycled 57% of operational waste,
while our water consumption was 1% lower
than 2022 on a like-for-like proportionally
consolidated basis. We continue to improve
our ability to monitor and reduce water usage.
In Dundrum Town Centre we diverted a local
culvert to our Mill Pond saving 14,000 litres of
potable water every day which is over 5m litres
annually. It will also generate savings of
c. €15,000 per year. In Pavilions we have
drilled a well which will serve all public toilets
and meet 50% of mains water demand.
Environment: Climate and nature
27Hammerson plc Annual Report 2023
2023 Highlights
Social value investment
£2.5m
2022: £2.7m
Charities, organisations and groups that
benefitted from the Group’s direct and
indirect contributions
234
2022: 152
Social value cash contributions (£000’s)
725
2022: 247
Social value
Our social value strategy continues to develop
and we seek impactful partnerships. Each of
our destinations in the UK, France and Ireland
are allocated charity bursaries to support their
local communities. Across the Group, we remain
committed to a corporate charity partnership
which is reviewed every three years.
Our 2022-2025 partnership is with LandAid,
the property industry charity working to end
youth homelessness. As a LandAid foundation
partner, we provide an annual corporate
donation and colleagues participate in
fundraisers such as the SleepOut, LandAid
10K and the Tour de LandAid.
All Hammerson colleagues are eligible for
match funding to further their charitable
fundraising initiatives. Throughout 2023,
colleagues fundraised £29,700, including
match-funding, for a range of charities
including Comic Relief, Make-A-Wish
Foundation and Macmillan Cancer Support.
In 2023, our total social value investment was
£2.5m, which has been generated through our
programme of social activity across all our
managed assets. This compares to £2.7m
in 2022 which was generated from a larger
portfolio of assets.
Given our placemaking responsibilities we
seek to make our assets inclusive spaces for
our diverse local communities. As such, each
year our UK assets support various diversity
and inclusion campaigns such as Purple
Tuesday in November. This event focuses on
enhancing the customer experience for
disabled individuals and families. At The
Oracle, Berkshire Vision was in attendance
and visitors had the opportunity to wear
spectacles that simulate different sight loss
conditions. This is designed to help to raise
awareness of the impact of vision lost. At Cabot
Circus, Guide Dogs South West visited to raise
awareness of their services.
Volunteering
In 2023 we introduced an annual all colleague
Giving Back Day which coincided with
Volunteers Week in the UK. Of our 162
available employees at the time of the event
in June 2023, 152 participated, 93 in the UK,
50 in France and 9 in Ireland.
Volunteering opportunities were also
identified locally. For those based in our UK
head office, opportunities were planned in
collaboration with the Marble Arch Partnership
Business Improvement District to ensure we
responded to genuine local needs. To develop
employment and skills in the area, we visited
Marylebone Boys’ School and provided
employment support in the form of practice
interviews, CV advice and a broader careers
discussion. We also worked with Open Age to
prepare, cook and serve a three course meal
for older people living in social isolation.
Colleagues in Ireland volunteered with an
equine charity, the Irish Horse Welfare Trust.
In addition to re-homing horses and ponies in
need the Trust deliver a number of educational
programmes within the local community.
Volunteering support included improving the
paddock and stables areas through grounds
maintenance work, painting and decorating.
While, in France, we collaborated with
La Cravate Solidaire, an organisation that
supports people out of work with their
transition into employment. We donated
50kg of high-quality clothing which we then
sorted for use by recipients of the charity for
professional settings such as interviews
and employment.
Giving Back Day employment support:
“ The feedback we have had from the students
has been amazing. The students who participated
said their interviews and CV sessions were so
insightful and that they loved speaking with their
interviewers.”
Marylebone Boys’ School Teacher
Social value: Community and volunteering
28Hammerson plc Annual Report 2023
Strategic Report
ESG continued
SOCIAL VALUE: COMMUNITY AND VOLUNTEERING CASE STUDIES
With a broad scope of social value focused activities delivered in 2023 the following case studies showcase the breadth of initiatives
across our destinations.
Charity Super.Mkt – Brent Cross, The Oracle and Cabot Circus
During 2023, three of our UK flagship destinations hosted Charity Super.Mkt,
a large-scale pop-up unit space offering a curated selection of second-hand
garments.
The initial launch of Charity Super.Mkt at Brent Cross in January was the first time
that local and national charities had collaborated within a physical retail store.
Following the highly successful launch, Charity Super.Mkt was extended to our
destinations in Reading and Bristol. Across our 2023 charity supermarkets,
40 charities participated, raising £890,000 through the sale of clothes and
Hammerson colleagues also volunteered their time at each supermarket. Given
the success of the scheme, Charity Super.Mkt won the ‘Pop-up of the year’ prize
at the 2023 Revo Awards.
Award Winning Charity Super.Mkt, Brent Cross
CuchulainnHeart Challenge – Dundrum Town Centre and Ilac Centre
In 2023, we again supported the CuchulainnHeart Challenge at secondary
schools local to our Dundrum Town Centre and Ilac Centre destinations engaging
93 pupils. The CuchulainnHeart Challenge is a nationally acclaimed business,
enterprise and citizenship programme designed for school pupils to develop
their skills as future business leaders, responsible citizens and enterprising future
employees. The one day ‘challenge’ involves pupils researching local socio-
economic issues and developing a business plan to deliver an achievable
community action project that benefits the local community.
We continue to deliver this event and citizenship programme in the UK and
Ireland and always receive positive feedback from schools explaining that it is
a highlight in their academic calendar.
CuchulainnHeart Challenge, Dundrum Town Centre
Let’s Garden in the City – Les Terrasses du Port
Les Terrasses du Port is our only destination with a rooftop urban farm and from
12 to 14 May 2023 we hosted a number of events and workshops with A la
Fraiche, a local start up which helped develop the farm. Across the three days, we
held a series of free workshops for all ages to learn about urban food growing and
give participants skills on how to grow food at home.
With over 300 visitors and 164 workshop attendees the event was a huge
success. Workshops covered areas such as how to grow seeds, transplanting
crops, aquaponics and also a seedbomb making sessions where participants
got to take away their own wildflower seedbomb to help spread wildflowers.
Participants enjoyed the event with many enquiring if they could come back to
volunteer and purchase the food grown. Given its success we will be holding more
events in 2024. This event was a great example of the importance of nature and
how engaging the local community in urban growing enhances local biodiversity.
Let’s Garden in the City, Les Terrasses du Port
10,000 Black Interns
During 2023 we were delighted to partner with 10,000 Black Interns, an initiative
which aims to provide opportunities for individuals from under represented
backgrounds in real estate and reduce barriers to entry.
Through a three month programme, we mentored two bright talents, providing
them with first hand experience within asset management and leasing, giving
them an understanding of key facets of commercial real estate. Following the
internship, one of our interns was shortlisted for the Alexander Paul Award which
celebrates the achievements of rising talent within the black and the ethnic
minority community.
Due to the initiative’s success, we have continued our partnership in 2024, with
two new interns starting in the summer.
10,000 Black Interns Workshop, Marble Arch House
29Hammerson plc Annual Report 2023
2023 Highlights
RIDDOR reportable injuries
5
2022: 3
Non-core risks
29
2022: 69
Reduction in risks across the non-core
portfolio
-58%
2022: -91%
Average score in H&S compliance
(UK flagships only)
96%
2022: 93%
The Group is fully committed to achieving
consistently high standards of health, safety,
and security (‘HSS’) management and
performance. We aim to provide a safe and
healthy environment at all our destinations
and workplaces. A key focus is to prevent work
related injury and ill health, to our colleagues,
customers and contractors, and anyone
else who may be affected by our actions
or activities.
We maintained our low level of reportable
injuries with only five RIDDOR incidents in
2023 (2022: three).
Management system
We are accredited to ISO 45001 across the UK
and Ireland assets and in 2023 successfully
gained re-accreditation without any non-
conformities being identified. We aim to build
on this success in 2024 with the inclusion of
our French portfolio.
Property management
In 2023 we mobilised a new health and safety
risk management platform across all properties
in the UK and Ireland. We now have a more
comprehensive and intuitive management of
all risks, statutory maintenance and audits
across these assets. The system is more user
friendly, with better reporting and interactive
dashboards, enabling us to be agile in our
approach to health and safety.
Legal compliance
2023 saw significant changes in the way
residential properties must be managed for
fire and structural risks with new legislation
under the Building Safety Act.
We successfully registered five of our high rise
buildings that are within the scope of high risk
buildings with the Building Safety Regulator.
Key building information has been shared on
their portal and building safety cases are being
prepared ahead of the April 2024 deadline.
The introduction of the Golden Thread of
information has led to data specific modules
being created on our new health and safety
risk management platform.
Focus on people
The health and wellbeing of our colleagues
is critical to us and given that the most
common cause of desk related pain is poor
ergonomics, it is important that our
workstations are set up correctly. To help us
do this, we trialled a new DSE (Display Screen
Assessment) platform, using AI Technology.
The software helps to create the best set up
to reduce musculoskeletal pain, such as back,
neck, and shoulder pain, and prevent desk
related injuries as well as providing a tailored
pain management plan.
Due to the success of the pilot we are adopting
this for roll out in 2024.
Training
In 2023 we undertook training for all
Hammerson colleagues. Defined Duty Holder
and Responsible Persons were identified and
combined with the launch of a new health and
safety training platform to ensure compliance
across key pieces of legislation.
Alongside this we delivered Leadership
training to the Group Executive Committee
members and other senior managers on their
health and safety roles and responsibilities.
Social value: Health and safety
30Hammerson plc Annual Report 2023
Strategic Report
ESG continued
Task Force on Climate-related Financial Disclosures (TCFD)
In recent IPCC reports it is no longer
considered that the Paris Agreement of
limiting global temperature rises to 1.5
o
C is
achievable under the current global policy
framework, and more progressive and timely
action is needed. We believe the way we
operate needs to be aligned to the latest global
research and as such in May 2023 we went to
our Board and recommended we no longer
focus on our climate scenarios 1 (steady state)
and 2 (late policy action) but instead move to
scenarios 2 and 3 (fossil fuelled growth). See
page 36 for further details on the scenarios.
Focusing our strategy on scenarios 2 and 3
accelerates our climate mitigation activities,
Introduction
Our climate management approach has been
guided by the TCFD recommendations since
2018, reporting publicly in line with them since
2020. In 2021, we built on our approach with
climate scenario work that helped us to
identify 12 key risks and 13 key opportunities
for the Group, see pages 37-38. For 2023 we
have enhanced our TCFD public disclosure
which focuses on how we continue to meet the
11 TCFD recommendations and our initiatives
to address the previously identified key risks
and opportunities.
it requires us to transition quicker as risks
scores increase, resulting in mitigating actions
requiring a shorter delivery window.
We are committed to the Paris Agreement,
we believe limiting climate change to 1.5
0
C
remains an essential goal. However, we believe
it is critical that we recognise the latest
research and hence have decided to focus our
climate and nature activities to address the
risks under scenarios 2 and 3.
We will continue to review the risks twice a year
in line with our Group risk methodology with
the output presented to the Audit Committee.
Recommendation Progress Further information
Governance
Describe the Board’s oversight of
climate-related risks and opportunities.
The Board have overall accountability for ESG which includes climate risks and
opportunities. From an operational perspective, the Group Executive committee
is responsible for monitoring performance. The GEC member with overall
responsibility is the CFO.
Page 33
Describe management’s role in
assessing and managing climate-related
risks and opportunities.
The delivery of ESG initiatives and the monitoring of risks and targets is
undertaken by the GEC. There is also ESG representation on both the Group
Management Committee and the Group Investment Committee to ensure that
ESG is embedded across the Group’s activities.
In line with the Group’s risk methodology, climate risks and opportunities,
including transition risks, are reviewed by the Audit Committee twice a year. The
reviews inform our transition plans at both a Group and asset level.
Page 33
Strategy
Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium and
long term.
The Group performed a detailed review in 2021 to assess and plan for climate
change risks and identified 12 key risks and 13 key opportunities. These are
reviewed for suitability annually.
Revised physical climate risk reviews were completed for the UK and Ireland in
2023. We will complete reviews in France in the first half of 2024 which will then
allow us to revise the Group’s consolidated risks and opportunities in 2024.
Pages 37-38
Describe the impact of climate-related
risks and opportunities on the
organisation’s businesses, strategy and
financial planning.
A commitment to mitigate risks and manage opportunities informs our strategic
objectives and underpins the Group’s strategy.
Our primary focus continues to be the reduction of emissions from our
destinations through energy efficiency, with key initiatives planned in each
asset’s Net Zero Asset Plan. These will be supported in the future by our physical
climate risk reviews.
Pages 37-38
Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-related
scenarios, including a 2
0
C or lower
scenario.
The Group assesses risk against three climatic scenarios: 1.5
0
C, 2
0
C and 4
0
C
increases. In May 2023, the Board endorsed a change to our strategy to focus our
TCFD disclosure and related mitigation activities on the 2
0
C and 4
0
C increase
scenarios, aligned to the latest IPCC research. These scenarios reflect the earlier
onset and higher impact and likelihood of climate-related risks.
Page 36
31Hammerson plc Annual Report 2023
Strategic Report
TCFD
Recommendation Progress Further information
Risk management
Describe the organisation’s processes for
identifying and assessing climate-
related risks.
The Group has an overall risk management framework for all operational,
financial, reputational and regulatory risks, which allows the Board to identify,
assess and manage the Group’s key risks including climate-related and ESG
risks. Regular reviews are undertaken throughout the year of all risks, including
climate-related risks as explained in the Risks and Uncertainties section of this
report.
Page 39
Describe the organisation’s process for
managing climate-related risks.
The Board, supported by the Audit Committee, has oversight of the Group’s risks
including climate-related risks. Climate risks and opportunities are reviewed by
the Audit Committee twice a year.
Page 39
Describe how processes for identifying,
assessing, and managing climate-
related risks are integrated into the
organisation’s overall risk management.
Our climate-related risks and opportunities are fed into the Group’s Risk
Framework, reviewed half yearly, and our response is managed by our
governance structure. This addresses both physical and transitional risks.
Page 39
Metrics and targets
Disclose the metrics used by the
organisation to assess climate-related
risks and opportunities in line with its
strategy and risk management.
The Group uses a range of metrics to assess exposure to climate-related risks
and opportunities including energy consumption and Scope 1, 2 and 3 carbon
emissions. We regularly assess and seek feedback on our disclosures and strive
to enhance transparency.
Page 39
Disclose Scope 1, Scope 2, and if
appropriate, Scope 3 greenhouse gas
(GHG) emissions, and the related risks.
Our Scope 1, 2 and selected Scope 3 emissions are disclosed in this report with
further detail provided in our separate 2023 ESG report.
Page 40
Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets.
We are targeting Net Zero by 2030. Within our €700m Sustainability Linked
Bond, which was issued in 2021, we are targeting a 60% reduction in landlord
emissions and a 50% reduction in occupier emissions both by 2025 compared
to a 2019 baseline.
At a Group level we also set annual targets which are underpinned by individual
asset level targets. The Group level emissions reduction target is included in the
Group’s annual incentive plan.
Page 39
Our response to TCFD
We have considered our ‘comply or explain’ obligation under the UK’s Financial Conduct Authority’s (FCA) Listing Rules, and confirm that we have
made disclosures consistent with the TCFD recommended disclosures. We will continue to refine our approach in line with the FCA’s requirements.
In our assessment of the risks under the TCFD requirements, we did not identify any material financial impacts on the Group’s 2023 financial
statements. We will continue to review the risks for new impacts each year as part of our standard ESG governance.
The Board can therefore confirm that it has considered the relevance of climate and transition risks associated with the transition to Net Zero
as part of the preparation of the Annual Report 2023.
In accordance with the Listing Rules, the company has included all the relevant climate-related financial disclosures under the TCFD
recommendations and recommended disclosures within this Annual Report.
32Hammerson plc Annual Report 2023
Strategic Report
TCFD continued
GOVERNANCE
Managing climate and transition risks requires us to embed ESG across the Group and to support our teams in building the capabilities
required to deliver against our ESG strategy.
The Board collectively has overall responsibility for climate risks and wider ESG matters and ensures that risk management is effectively
integrated across the Group, including in its policies, processes, culture and values. The Audit Committee supports the Board in the oversight
of risk and is responsible for reviewing the effectiveness of the risk management and internal control system over the course of the year.
A clear governance structure with ownership at senior level and a set of strong foundations is key to our approach, and the Group’s governance
structure for ESG and TCFD both from a committee and individual (shown in bold) responsibility perspective is shown below.
Board and Committee governance structure for ESG and TCFD as at 31 December 2023
Audit Committee Group Executive Committee Group Management Committee
Chair of the Board
The Board is responsible for TCFD and the overall ESG strategy. Audit Committee
outputs are reported to the Board. The Board also receive an annual ESG update
including TCFD delivered by the Deputy CFO and Head of ESG.
Asset managers
Delivery of the ESG business plans including climate risk mitigation and opportunity delivery.
This includes the NZAP programme of works which commenced in 2023. The ESG team supports
the asset managers and monitors the overall programme progress.
Chair of the Audit Committee
The Audit Committee is responsible
for reviewing the TCFD risks and
opportunities twice a year. The Audit
Committee endorses the approach
adopted to manage climate risks and
opportunities as part of their overall
risk management responsibilities.
This information is prepared by the
Head of ESG.
CFO
Deputy CFO
The GEC meets weekly and is
accountable for the management
of climate-related risks and
opportunities. The CFO is a GEC
member and is responsible for the
Group’s ESG strategy including TCFD
governance, risks, and opportunities.
The Deputy CFO is also a GEC
member and leads the ESG team.
Regular ESG and TCFD updates are
provided to the GEC during the year.
CFO
Deputy CFO
Head of ESG
The Group Management Committee
(‘GMC’) meets weekly and reviews
operational matters in more detail
than the GEC. This includes
considering ESG as part of wider
operational matters. In addition to
our CFO and Deputy CFO, our Head
of ESG is also a GMC member.
Board
Asset level
33Hammerson plc Annual Report 2023
To support the TCFD and wider ESG governance the Group has a suite of ESG policies. These policies form part of the Group’s ISO 14001 and ISO
50001 compliant Environment and Energy Management System and are reviewed annually for suitability and are approved by the GEC and then
Board prior to publication on the corporate website. In our 2024 review we intend to embed our public disclosure commitments more robustly
and further demonstrate our risk and opportunity management.
Policy Description Policy application and outcomes
Climate change policy Sets out the Group’s commitment
to develop and implement climate
change management and
mitigation strategies at a corporate
and asset level as part of TCFD.
Recognising three climatic scenarios
and the risks and opportunities that
arise from these scenarios.
The Group identified colleagues in core roles across the business to
participate in a Climate Scenarios workshop in 2021. To support this, we
introduced Net Zero Asset Plans in 2022 and began delivery of these in
2023. To build on this, throughout 2023 we reviewed risks and
opportunities and mapped these across the assets to confirm the
deliverability of the areas identified. Revised Physical Climate Risk Reviews
were also completed in 2023 to enable us to assess these under a double
materiality lens.
Energy policy Sets out the Group’s commitment
to endeavour to use best practice
in the design and operation of the
Group’s assets to minimise energy
demand across multiple time
horizons and procure energy in
a responsible manner.
The UK and Ireland destinations procured 100% renewable electricity in
2023. We also undertook audits and compliance reviews within the ISO
50001 compliant energy management system. To transition the Group to
Net Zero by 2030 we completed Net Zero Asset Plans for each flagship
asset, identifying projects to address building controls, energy efficiency
and onsite renewable through the application of the energy hierarchy.
Environmental policy Includes the Group’s overarching
commitment to design and build
properties using sustainable
materials and practices and
managing assets under the Group’s
control efficiently to ensure
compliance and continually
improve environmentally.
In 2023, we maintained our ISO 14001 and ISO 50001 accreditation
across the UK, France, and Ireland. To ensure we continue to improve and
ensure consistent management approaches we also began the integration
of our management systems to merge with our ISO 45001 compliant
Health and Safety Management System. In December 2023 the
Environment and Energy management system for Group was externally
audited under this new combined system and retained its certification with
no major non-conformities identified.
Biodiversity policy Aims to ensure that opportunities
to protect, enhance and restore
biodiversity are maximised while
ensuring that any negative impacts
resulting from the Group’s business
operations are minimised.
In 2023 we acknowledged that in order to address our operational impacts
we need to not only focus on climate change but more robustly work on
nature based solutions to ensure we minimise our contribution to the
global biodiversity crisis.
We continue to install beehives and pollinator planting regimes and
encourage education to position our destinations as supporters of nature.
This included us gifting a woodland and wildflower meadow within our
portfolio to the local Wildlife Trust in 2023.
Volunteering policy (internal)
Aims to clarify the volunteering
policy and approach adopted to
align to our wider asset centric
strategy. Serving the communities
in which we operate.
In 2023 we embedded our group-wide Volunteering policy to align our
approach to volunteering across the Group.
This policy reaffirms Hammerson’s asset-centric focus and demonstrates
how volunteering underpins our approach to enhancing social value and
links to our people’s contribution to this.
Charitable donations policy
(internal)
Documents how we support
charitable causes in relation to
donations and match funding.
This is our second social value focused policy which documents our
commitment to match funding for causes our people are passionate about.
In addition to the above, further policies which have wider corporate coverage such as Responsible Procurement, are included in Non-financial
and Sustainability Information Statement on pages 66 and 67.
STRATEGY
We carry out materiality assessments every three years to ensure our ESG strategy and reporting remains focused on the issues most relevant for
our business and addresses the needs of our stakeholders. Our latest review, undertaken in 2022, engaged with both debt and equity investors,
along with key occupiers, joint venture partners, and colleagues to present a view of material issues for the Group both now, and over the coming
decade. In 2024 we will undertake a robust double materiality assessment aligned to CSRD.
Our material issues
Stakeholders were presented with a comprehensive list of issues related to all three ESG pillars. Four of the material issues have a direct link to
TCFD and our materiality assessment not only demonstrates the importance of climate change management but also supports our risk and
opportunities assessments. Our material issues are summarised in the following table and have also been mapped to the United Nations
Sustainable Development Goals (UN SDGs) to provide a global dimension to our focus areas.
34Hammerson plc Annual Report 2023
Strategic Report
TCFD continued
Material issues by area
Tier 1 Tier 2 Tier 3 UN SDGs
Environment Net Zero carbon pathway
for operations and
development*
Water efficiency in operations
and developments
Material use and sustainable
procurement, including
embodied carbon
Energy security, demand and
carbon pricing
Sustainable buildings and building
labels (i.e. BREEAM, EPCs etc.)
Waste management in
operations and
development
Physical climate risks*
CRREM pathways
Social Community engagement Placemaking and community
development
Health, safety and
wellbeing of colleagues
Supply chain
Governance Reporting, including data
and communications*
Ethical business practices
Climate change, risk,
action, transition and
resilience*
Impact of ESG on property valuations
Compliance with legislation and
reporting requirements i.e. TCFD
Meeting stakeholder
ESG objectives
* Direct link to TCFD
The top 10 material issues, which were deemed to be of the greatest material importance in the context of the Group’s strategy during our
stakeholder consultation, are included in the table below. The 2023 completed actions and the 2024 planned actions are provided to
demonstrate our strategic delivery.
No. Material issue Completed/planned actions
1 Reporting, including data and
communications
2023 – Reporting amended to align to ESG strategy and begun preparation for wider ESG disclosures
2024 – Develop CSRD approach including double materiality and investor roadshow.
2 Net Zero carbon pathway for operations
and developments
2023 – Net Zero Asset Plans (NZAPs) implemented across the portfolio with projects in all destinations
2024 – Develop Climate and Nature transition plan
3 Ethical business practices 2023 – Reviewed disclosure requirements to develop a roadmap to publicise activities where appropriate
2024 – Include in double materiality to identify key components
4 Climate change, risk, action, transition
and resilience
2023 – NZAPs embedded and Physical Climate Risk Assessments completed
2024 – Communicate the Physical Climate Risk Assessments
5 Impact of ESG on property valuation 2023 – Reviewed current research on market trends and discussions with external valuers
2024 – Continue to assess market trends and build into strategy if impacts materialise
6 Compliance with legislation and
reporting requirements, i.e. TCFD
2023 – Completed all required disclosures and begun implementation plan for emerging disclosures
2024 – Building emerging disclosures into strategy and work plan including double materiality
7 Meeting stakeholder ESG objectives 2023 – Embedded ESG 2022 materiality outputs in work plan to address priorities
2024 – Deliver double materiality review and investor roadshow
8 Water efficiency in operations
and developments
2023 – Water efficiency included in NZAP programmes
2024 – Identify partnerships to support water efficiency
9 Material use and sustainable
procurement, including
embodied carbon
2023 – Reviewed data integrity
2024 – Consider implication of supply chain impacts aligned to public disclosure requirements
10 Energy security, demand and
carbon pricing
2023 – Extended energy contracts to forward hedge and are progressing procurement of a CPPA
2024 – Review Carbon Pricing mechanisms and deliver CPPA
35Hammerson plc Annual Report 2023
Solar array, Les Terrasses du Port
Climatic scenarios
The physical and transitional risk and opportunities posed by climate change were assessed in 2021 across the Group. The Intergovernmental
Panel on Climate Change (IPCCs) Representative Concentration Pathways (RCPs) were used to inform the short, medium and longer term risks
and opportunities associated with the three climatic scenarios covered below.
In May 2023, the Board approved a shift in focus to Scenarios 2 and 3 to demonstrate our acknowledgement of the latest IPCC reports which
draws into question achieving the global warming below 1.5
0
C, due to current global warming nearing that level already. This resulted in a risk and
opportunities review and updated mitigating activities, including revised Physical Climate Risk Assessments.
Climate Scenarios
Scenario 1 Scenario 2 Scenario 3
Steady state to sustainability Late policy action Fossil-fuelled growth
IPCC RCP RCP 1.9 (<1.5
0
C) RCP 2.6 (<2
0
C) RCP 8.5 (<4
0
C)
Narrative Under the 1.5
0
C scenario the world
takes rapid and drastic policy measure
to meet the Paris Agreement. Low
carbon technologies are implemented
alongside reduced economic growth to
meet net zero by 2050. The Paris
Agreement is achieved.
Under the 2
0
C scenario action to address
climate change is delayed by 10 years. To
compensate this, deeper and more drastic
action is needed and is less coordinated
creating ‘winners’ and ‘losers’. The Paris
Agreement is still met but after the
economy and society experience a
significant degree of disruption and
ultimately damage.
The 4
0
C scenario is a route where the
world continues to use fossil fuels as a
means to achieve economic growth. This
is considered a worse case scenario
where climate disruption and events
increase and result in severe damage.
Governments then adopt resilience plans
as opposed to working towards global
climate commitments. The Paris
Agreement is not met.
Societal
Approach
Globally coordinated decarbonisation
efforts commence in a meaningful way
in the early 2020s and are consistently
achieved to transition to net zero by
2050.
Delayed, disorderly transition to net zero
where drastic and divergent action is
undertaken to limited emissions resulting
in widening inequalities.
Global collaboration focused on
protecting the population from a hostile
climate as opposed to reducing
anthropogenic climate change.
Economy Globally there is a continual shift away
from consumerism. Economic activity is
limited to protect the environment.
Due to the delay in the transition, severe
interventions are required to stay within
the Earth’s remaining carbon budget.
Global economic shocks occur, and
inequality increases.
The economy initially experiences
consistent growth but there is significant
deterioration from 2040 onwards as the
economic toll of climate change increases
in frequency and amplitude.
36Hammerson plc Annual Report 2023
Strategic Report
TCFD continued
Risk Matrix
Impact
Medium HighLow
Likelihood
Medium HighLow
Residual risk
assessment
High risk
Medium risk
Low risk
1 3
106
7
5
4 12 8
11
2 9
Climate risks
The risks were identified in 2021 through
business workshops. We now continue to
assess the impact and likelihood to inform
the mitigating activities and the workplan of
the business to manage our climate risks.
These risks are then combined to understand
the Group’s principal Climate risk. The heat
map represents the climate Scenario 2
risk assessment.
Risks and actions
No. Definition Time Completed/planned actions
1 Climate-related regulation inc. carbon
pricing, planning, climate adaptation
and material choices
Early 2020s 2023 – ISO 14001 and 50001 system rewritten to formally integrate climate
2024 – ISO 14001 and 50001 integration with property management partners
2 Climate induced changes to customer
preferences for retail and leisure
Mid 2020s 2023 – Market reviews of customer preferences
2024 – Increased integration with commercialisation and placemaking
3 Carbon and resource policies
targeting reduced resource use
and improved circularity
2020s 2023 – Updated policies and standards in line with resource efficiency expectations
2024 – Consider supply chain implications and circularity
4 Failure to provide assets in line with
market standards
Mid 2020s 2023 – Updated policies and standards in line with resource efficiency expectations
2024 – Consider supply chain implications and circularity
5 Reduction in the attractiveness of
retail sector investment resulting
in less investment
2030s 2023 – Engaged with investors and assess areas materiality
2024 – Increase investor and joint venture partner engagement as part of a double
materiality assessment and engage Board on outputs
6 Macro-economic shocks and impeded
economic growth due to climate
change or transition
2030s-
2040s
2023 – Revised ESG legal risk register to account for emerging disclosure
requirements, insights deliver macro-economic updates
2024 – Continue to monitor legislative changes and account for macroeconomic
condition
7 Severe and frequent extreme weather
events causing disruption
2020+ 2023 – Revised Physical Climate Risk Assessments undertaken in UK and Ireland
2024 – Undertake revised Physical Climate Risk Assessments for French
destinations and embed outputs for all assessments across the Group
8 Chronic shifts in climate
patterns affecting operations
and consumer patterns
2030s 2023 – GridEdge technology roll out in suitable destinations completed
2024 – Review temperature parameter for asset operations aligned to health and
safety and ESG needs
9 Difficulties insuring assets at risk from
physical impacts of climate change
Late 2020s 2023 – Revised Physical Climate Risk Assessments undertaken in UK and Ireland
2024 – Undertake revised Physical Climate Risk Assessments for French
destinations and embed outputs for all assessments across the Group
10 Failure to act credibly on
climate change
Mid 2020s 2023 – Review external benchmark participation and submission to ensure
inclusive coverage of disclosures
2024 – Keep investors and occupiers informed of ESG strategy
11 Climate induced political activism
or social unrest
2020s 2023 – Critical incident planning in place
2024 – Track attitudes and influence
12 Failure to provide/cost to provide
infrastructure demanded by occupiers
and investor
Late 2020s 2023 – ESG strategy linked to material risks and these are regularly reviewed in line
with the legislative backdrop
2024 – Leverage property management partnerships to identify innovation
37Hammerson plc Annual Report 2023
Opportunities Matrix
Impact
Medium HighLow
Likelihood
Medium HighLow
Residual
opportunities
assessment
High
opportunity
Medium
opportunity
Low
opportunity
1 13
3
10
6
7
5
4
12
8
11
2
9
Climate opportunities
Under TCFD we are required to identify and
manage both risks and opportunities. The
focus needs to be equitable between the risks
and opportunities based on their impact. Our
Group’s opportunities were also were identified
in the business workshops in 2021 and their
scores have been reassessed in 2023 to reflect
our revised climatic Scenario 2 focus.
Opportunities and actions
No. Definition Time Completed/planned actions
1 Portfolio adaption to
changing preference
2030s 2023– Embedded NZAP to transition to net zero.
2024– Ongoing NZAP delivery
2 Priming assets with low
carbon emissions
Late 2020s 2023– NZAPs apply the energy hierarchy to deliver robust interventions
2024– Ongoing NZAP and Physical Risk mitigation delivery
3 Being known as a truly green
real estate business
Early 2020s 2023– Proactively reviewed external benchmarking to understand how our
material impacts are aligned strategically
2024– Undertaking an investor roadshow and increasing internal and external
ESG messaging
4 Capitalising on tax incentives 2020s 2024– Work with advisory groups to understand if this materialises
5
Responding to demand for climate
resilient buildings
2030s 2023– NZAPs produced and embedded in all destinations
2024– Continue to embed NZAPs and ascertain joint venture and occupier
requirements for further activity
6
Leveraging resources in a circular
manner improving profitability
Mid 2020s 2023– Leveraged property management partnerships to engage on resource use
2024– Review market sentiment on circular economy
7
Divest from land and invest
in other assets/options
2030s 2023– Delivered strategy based on prime urban city centre locations
2024– Revise investment ESG framework
8
Upgrade infrastructure to
attract customers
Mid 2020s 2023– NZAP delivery and wider placemaking activities delivered across destinations
2024– Further NZAP delivery
9
Influence and support occupiers
with their own ESG ambitions
Mid 2020s 2023– Delivered tenant engagement to identify collaboration opportunities
2024– Development of inclusive tenant engagement strategy
10
Onsite energy generation Mid 2020s 2023– Delivered occupier engagement to identify collaboration opportunities
2024– Development of inclusive occupier engagement strategy
11
Repurpose car parks for other uses 2030s 2023– Commercialisation opportunities and placemaking being assessed
2024– Ongoing commercialisation and placemaking within car parks
12 Attract new talent from carbon
intensive industries
2030s 2023– Revised purpose, vision and values
2024– Ongoing colleague engagement
13 Low carbon transition could favour
urban locations
Late 2020s 2023– Continued to focus on prime urban city centre locations
2024– Continue to deliver strategy
38Hammerson plc Annual Report 2023
Strategic Report
TCFD continued
RISK MANAGEMENT
The Group’s approach to risk management is
designed to enable the business to deliver its
strategic objectives while effectively managing
differing levels of uncertainty which directly
impact the Group. The Group adopts a
top-down and bottom-up approach to ensure
comprehensive risk identification and risk
appetite is clearly defined. This allows us to
respond quickly to change in our risk profile
and ensures risk management is factored into
strategic decision making whilst embedding a
strong risk management culture amongst
colleagues with clear roles and accountability.
Top-down
The Board has overall responsibility for risk
oversight and determining the Group’s
approach to managing financial, regulatory,
operational and reputational risk, ensuring
consistency with our strategy. This includes
TCFD and ESG risks. It ensures that effective
risk management is integrated throughout the
business and embedded within the Group’s
policies, processes, culture and values. The
Board also sets the Group’s risk appetite.
Where controllable risks are outside the
Group’s risk appetite, the Board seeks to
manage these down by implementing
appropriate mitigations wherever possible.
The Audit Committee supports the Board in
the oversight of risk and is responsible for
reviewing the effectiveness of the risk
management relating to TCFD and ESG. The
Group Executive Committee has overall
accountability for the management of risks
across the business including Climate.
Bottom-up
The effective day-to-day management of risk
is embedded within our operational business
teams. This aligns risk management with
operational responsibility. It also allows
potential new risks to be identified at an early
stage and escalated as appropriate, such that
required mitigating actions can be put in place.
For TCFD and ESG, this is primarily covered by
the ESG team.
METRICS AND TARGETS
To demonstrate the scope of our ESG
activities and enable us to validate how we
are managing our strategic material issues
we publicly disclose our metrics and targets.
These are summarised in the Metrics and
targets table.
To ensure accuracy and transparency our global
greenhouse gas emissions disclosure is subject
to third party assurance (limited assurance in
accordance with ISAE 3410) annually.
Our emissions are summarised within this
TCFD disclosure but further information on our
metrics, targets and supporting data can be
found in our separate ESG report.
The ESG report is aligned to external reporting
standards including EPRA Best Practices
Recommendations on Sustainability Report
and the Global Reporting Initiatives (GRI).
Our third party assurance certificate is also
included in our 2023 ESG report.
As we continue to progress our strategy
and align to emerging public disclosure
requirements, we will be undertaking a double
materiality assessment in 2024 to update
material issues. This is likely to change the
scope and coverage of our metrics and targets
moving forward.
We also participate in public benchmarks,
including but not limited to, the Global Real
Estate Sustainability Benchmark (GRESB),
Sustainalytics and the S&P Global Corporate
Sustainability Assessment (CSA) to maintain
transparency on our ESG activities.
Metrics and targets
2024 2025 2030
Environment 7% reduction year-on-year in energy use.
Maintain annual reduction in water use and set out
formal targets for 2024 onwards
Assess position against Net Gain Biodiversity targets
and set out a Group wide plan
Divert 100% of waste away from landfill, reduce total
waste streams and increase recycling rate
Implement targeted activities identified in Net Zero
Asset Plans (NZAPs)
60% reduction in Scope 1, 2 and
selected Scope 3 landlord controlled
emissions (tCO
2
e) by 31 December
2025 versus a 2019 baseline.
50% reduction in Scope 3 occupier
controlled emissions (tCO
2
e) by
31 December 2025 versus a 2019
baseline
Achieve net zero status by 2030
Social All UK, France and Ireland assets to deliver at least
four social value initiatives
Support all colleagues to undertake a minimum of one
volunteering day
All UK and Ireland assets to host work experience
placements
Through fundraising, raise a minimum of £5,000 for
our corporate charity partner LandAid
Social plans and targets are renewed annually to ensure we continue to
meet local need
Governance Bi-annual climate risk and opportunity assessment.
Embed ISO 14001, 45001 and 50001 across the
Group
Continued implementation of Sustainable Leasing
Policy for occupiers
Maintain high rankings in key investor monitored
industry benchmarks
Meet all outlined Development Design
Standards targeting BREEAM Excellent
All core assets to have accreditation in
place such as BREEAM In-Use
All assets to achieve third party
accreditation to three standards
All occupier space to be EPC
rated B or above
No assets to strand under
CRREM
39Hammerson plc Annual Report 2023
Voluntary non-financial data
Our ESG reporting complies with both GRI
Core Standards and the EPRA Sustainability
Best Practice Reporting Gold Standard. Key
metrics reported under these standards are
included in our non-financial disclosures in our
separate 2023 ESG Report available on the
Group’s website www.hammerson.com.
The 2023 ESG report provides additional
information on our approach to ESG, our
performance, and shares examples of our
delivery model during the year.
Mandatory Greenhouse Gas data
In line with requirements set out in the
Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013, and in
accordance with the Streamlined Energy and
Carbon Reporting (SECR), this statement
reports the Company’s GHG emissions for
2023, including the previous year’s data to
provide a year-on-year comparison. Our GHG
emissions reporting period is the same as the
financial reporting year, in accordance with the
DEFRA Environmental Reporting Guidance.
As explained in the Metrics and targets section
above, our 2023 global GHG emissions
disclosure is subject to third party assurance
(limited assurance in accordance with ISAE
3410) annually. The full assurance statement
is included in our separate ESG Report.
Basis of reporting: Mandatory greenhouse gas data
Standards Calculated and recorded in accordance with the Greenhouse Gas (GHG)
Protocol and ISO 14064; this guidance codifies using both market and
location-based methods for Scope 2 accounting
Baseline year 2019
Boundary summary All assets and facilities under Hammerson’s direct operational control are
included, where we have authority to introduce and implement operating
policies; this includes properties held with third-parties where both
Hammerson and partner approval is required. We have reported 100% of
GHG emissions data for these assets. The reporting excludes the Value
Retail portfolio where we do not have authority to introduce or implement
operating policies. 2022 figures have been amended following more
accurate data becoming available in 2023, such as updated consumption
data and regional specific emission factors. Scope 3 emissions have also
been updated to include transmission and distribution related emissions.
Consistency with
financial statements
Consistency and reporting period are as set out above
Emissions factor data
source
2023 DEFRA GHG Conversion Factors for Company Reporting and
reporting sources including, but not limited to, International Energy Agency
and Equans
Assessment
methodology
GHG Protocol and ISO 14064 (2006) a more detailed Basis of Reporting is
available in our 2023 ESG Report
Materiality threshold Selected activities generating emissions have been excluded. This mainly
relates to Scope 3 categories where emissions are deemed immaterial
(<5%) or accurate data is not available
Intensity ratio Denominator is common parts area of 334,648m
2
(2022: 412,579m
2
)
Emissions disaggregated by country (tCO
2
e)
2023 2022
Source UK France Ireland Global
Global
intensity
(kgCO
2
e/m
2
) UK France Ireland Global
Global
intensity
(kgCO
2
e/m
2
)
Total GHG emissions tonnes (market based) 3,255 1,798 397 5,450 16.3 4,549 2,606 1,182 8,337 20.2
Total GHG emissions tonnes 8,949 1,798 3,254 14,001 41.8 11,114 2,606 4,045 17,765 43.1
Scope 1: Direct emissions from owned/controlled operations
a. Stationary operations 1,918 546 109 2,573 7.7 2,518 712 176 3,406 8.2
b. Mobile combustion – 19 – 19 0.1 5 25 – 30 0.1
c. Fugitive sources 16 – – 16 – 73 – – 73 0.2
Total 1,934 565 109 2,608 7.8 2,596 737 176 3,509 8.5
Scope 2: Indirect emissions from the use of purchased electricity, steam, heating and cooling
a. Electricity (market based) 79 678 – 757 2.3 203 1,040 679 1,922 4.6
a. Electricity 5,773 678 2,857 9,308 27.8 6,768 1,040 3,542 11,350 27.5
b. Steam – – – – – – – – – –
c. Heating 203 287 – 490 1.4 227 277 – 504 1.2
d. Cooling 19 39 – 58 0.2 37 241 – 278 0.7
Total (market based) 301 1,004 – 1,305 3.9 467 1,558 679 2,704 6.5
Total 5,995 1,004 2,857 9,856 29.4 7,032 1,558 3,542 12,132 29.4
Scope 3: Other indirect emissions
Transmission and distribution 510 108 160 778 2.3 632 133 198 963 2.3
Business travel 144 – 5 149 0.5 174 33 10 217 0.5
Waste 284 86 88 458 1.4 612 108 91 811 2.0
Water 82 35 35 152 0.4 68 37 28 133 0.3
Total 1,020 229 288 1,537 4.6 1,486 311 327 2,124 5.2
SECR energy consumption (MWh) 39,476 21,471 9,201 70,148 46,727 28,952 12,031 87,710
40Hammerson plc Annual Report 2023
Strategic Report
TCFD continued
OVERVIEW
2023 has been another year of significant
financial progress.
Adjusted earnings for 2023 of £116m were
11% higher than 2022. Key drivers were
underlying rental growth; lower gross
administration and net finance costs; higher
earnings from Value Retail; partly offset by
income foregone from disposals. We returned
to the payment of cash dividends. In addition
to the interim dividend of 0.72p per share, the
Directors have recommended a final dividend
of 0.78p per share, bringing the full year
dividend to 1.50p per share.
IFRS reported losses decreased to £51m
compared with £164m in 2022. The reduction
was due to lower revaluation losses, principally
associated with outward yield shift, of £127m
in 2023 compared with £282m in 2022.
Net assets at 31 December 2023 were
£2,463m (2022: £2,586m). EPRA NTA per
share was 51p (2022:53p), equivalent to a
total accounting return of -2.1% (2022: -6.8%).
Net debt reduced by £406m, or 23%, to
£1,326m at 31 December 2023 benefiting
from disposal proceeds of £216m, the
derecognition of £125m of secured debt,
£104m of cash generated from operations and
£74m of distributions from Value Retail. The
reduction strengthened the Group’s balance
sheet and credit metrics, with year end
headline LTV of 34% (2022: 39%) and LTV on
a fully proportional consolidation basis of 44%
(2022: 47%). Net debt:EBITDA improved to
8.0x (2022: 10.4x). The Group also has ample
liquidity in cash and undrawn committed
facilities of £1.2bn.
Financial Review
In 2023 we have again delivered a strong set
of financial results. Adjusted earnings were up
11% and the Group’s financial position has
strengthened with net debt 23% lower and
improved credit metrics.
2023 Highlights
Adjusted net rental income growth
(like-for-like) K A
3.6%
2022: 29.2%
Calculation in Table 3 of the Additional information
Net assets
£2,463m
2022: £2,586m
Adjusted earnings K A
£116m
2022: £105m
Calculation in note 2 to the financial statements
EPRA NTA per share K A
51p
2022: 53p
Calculation in note 10C to the financial statements
IFRS loss for the year
£(51)m
2022: £(164)m
Net debt K A
£1,326m
2022: £1,732m
Calculation in Table 13 of the Additional information
Dividend per share
1.50p
2022: 0.2p Cash/2.0p Scrip
LTV: Headline/Fully proportionally
consolidated A
34%/44%
2022: 39%/47%
Calculation in Table 19 of the Additional Information
Himanshu Raja
Chief Financial Officer
K KPI A Alternative Performance Measure
41Hammerson plc Annual Report 2023
Strategic Report
Financial Review
PRESENTATION OF FINANCIAL
INFORMATION
IFRS vs Proportional consolidation
The Group’s property portfolio comprises
properties that are either wholly owned or
co-owned with third parties.
While the Group prepares its financial
statements under IFRS (the ‘Reported Group’),
the Group evaluates the performance of its
portfolio for internal management reporting
by aggregating its wholly owned businesses
together with its share of joint ventures and
associates which are under the Group’s
management (‘Share of Property interests’)
on a proportionally consolidated basis,
line-by-line (in total described as the Group’s
‘Managed portfolio’).
The Group’s investment in Value Retail is
not proportionally consolidated because it
is not under the Group’s management, is
independently financed and has differing
operating metrics to the Group’s Managed
portfolio. Accordingly, it is accounted for
separately as ‘Share of results of associates’ as
reported under IFRS and is also excluded from
the Group’s proportionally consolidated key
metrics such as net debt or like-for-like net
rental income growth.
However, for certain of the Group’s Alternative
Performance Measures (APMs), for enhanced
transparency, we do disclose certain metrics
combining both the Managed portfolio and
Value Retail. These include property valuations,
property returns and certain credit metrics.
Both IFRS and Management reporting bases
are presented in the Group’s financial statements
with supporting analysis and reconciliations
between management and IFRS bases in the
Additional Information section.
Derecognition of Highcross and O’Parinor
During 2023, the Group derecognised its
Highcross and O’Parinor joint ventures in
which it had 50% and 25% interests
respectively at 31 December 2022.
These two joint ventures had a total of £125m
of borrowings secured against their individual
property interests. These borrowings were
non-recourse to the Group. At 31 December
2022, both loans were in breach of certain
conditions and the Group was working
constructively with the respective lenders on
options to realise ‘best value’ for all stakeholders.
On 9 February 2023, a receiver was appointed
by the lenders to administer Highcross for the
benefit of the creditors. As a result of no longer
having joint control, the Group derecognised
its share of assets and liabilities, including
the property value and £80m of secured
borrowings. There was no loss on
derecognition as the Group’s joint venture
investment in Highcross had been fully impaired
at 31 December 2021, from which date the
Group had ceased recognising the results of
this joint venture in the income statement.
On 30 June 2023, the lenders to O’Parinor
took control of the joint venture and the Group
therefore impaired its joint venture investment
by £22m and derecognised its share of assets
and liabilities, including the property value and
£45m of secured borrowings.
Alternative performance measures (APMs)
The Group uses a number of APMs, being
financial measures not specified under IFRS,
to monitor the performance of the business.
Many of these measures are based on the
EPRA Best Practice Recommendations (BPR)
reporting framework which aims to improve
the transparency, comparability and relevance
of the published results of listed European real
estate companies. Details on the EPRA BPR
can be found on www.epra.com and the Group’s
key EPRA metrics are shown in Table 1 of the
Additional Information.
We present the Group’s results on an IFRS basis
but also on an EPRA, Headline and Adjusted
basis as explained in note 1C to the financial
statements. The Adjusted basis enables us
to monitor the underlying operations of the
business on a proportionally consolidated
basis as described in the basis of preparation
and excludes capital and non-recurring items
such as revaluation movements, gains or
losses on the disposal of properties or
investments, as well as other items which the
Directors and management do not consider
to be part of the day-to-day operations of the
business. Such excluded items are in the main
reflective of those excluded for EPRA earnings,
but additionally exclude certain cash and
non-cash items which we deem not to be
reflective of the normal routine operating
activities of the Group. We believe that
disclosing such non-IFRS measures enables
evaluation of the impact of such items on
results to facilitate a fuller understanding of
performance from period to period. These
items, together with EPRA and Headline
adjustments are set out in more detail in
note 9A to the financial statements.
For 2023, adjusting items additional to EPRA
adjusting items comprised:
— Exclusion of a charge of £13.2m
(2022: £5.1m) in respect of business
transformation costs as the Group
continues its implementation of strategic
change and refining its operating model.
This charge comprises mainly non-
capitalisable costs relating to digital
transformation as well as severance and
other costs associated with team and
operational restructuring.
— A charge of £0.3m (2022: credit of £2.4m)
to reverse expected credit losses charged
to the income statement but where the
related income is deferred on the balance
sheet such that the exclusion of this
removes the distortive mismatch
this causes.
Management reporting and IFRS accounting treatment
Comprising properties which are Accounting treatment
Management reporting
Managed portfolio — Wholly owned and Share of Property interests Proportionally consolidated
Value Retail — Held as an associate Single line – results/investment in associates
IFRS
Managed portfolio:
— Reported Group — Wholly owned Fully consolidated
— Jointly owned (Pavilions, Swords and Ilac Centre, Dublin) Consolidation of Group’s ownership share
— Share of Property interests — Held in joint ventures Single line – results/investment in joint ventures
— Held in associates (Italie Deux until disposal in March 2023) Single line – results/investment in associates
Value Retail — Held as an associate Single line – results/investment in associates
42Hammerson plc Annual Report 2023
Strategic Report
Financial Review continued
INCOME STATEMENT
Summary income statement
2023 2022 Change
Proportionally consolidated £m £m £m
Gross rental income 208.4 215.2 (6.8)
Net service charge expenses and cost of sales (40.9) (40.4) (0.5)
Adjusted net rental income 167.5 174.8 (7.3)
Adjusted gross administration expenses (51.5) (59.8) 8.3
Other income 14.9 17.0 (2.1)
Profit from operating activities 130.9 132.0 (1.1)
Value Retail Adjusted earnings 32.1 27.4 4.7
Operating profit 163.0 159.4 3.6
Adjusted net finance costs (45.9) (54.0) 8.1
Tax charge (0.8) (0.5) (0.3)
Adjusted earnings 116.3 104.9 11.4
Revaluation losses – Managed portfolio (119.1) (221.0) 101.9
Revaluation losses – Value Retail (7.7) (60.7) 53.0
(Loss)/profit on sale of properties (17.8) 0.6 (18.4)
Impairment of joint venture (22.2) – (22.2)
Business transformation costs (13.2) (5.1) (8.1)
Other (see note 9A to the financial statements) 12.3 17.1 (4.8)
IFRS Loss for the year (51.4) (164.2) 112.8
(Loss)/earnings per share
pence pence pence
Basic (1.0) (3.3) 2.3
Adjusted 2.3 2.1 0.2
For the year ended 31 December 2023 the Group reported an IFRS loss of £51.4m (2022: £164.2m loss), a reduction of £112.8m. The key
factors in the reduced loss were lower revaluation losses of £154.9m partly offset by the year-on-year change in the loss/profit on sale of
properties of £18.4m and an impairment charge of £22.2m in 2023 in relation to the Group’s O’Parinor joint venture.
On an Adjusted basis, earnings increased by £11.4m to £116.3m (2022: £104.9m). Adjusted net rental income was £7.3m lower, £11.2m was
due to disposals partly offset by £4.8m higher income from the like-for-like Managed portfolio, equivalent to 3.6% growth. Gross administration
costs were £8.3m, or 14%, lower reflecting reduced headcount and corporate costs. The Group’s share of Value Retail Adjusted earnings grew by
£4.7m and adjusted net finance costs were £8.1m lower, reflecting reduced debt levels and increased income from cash deposits benefiting from
the higher interest rate environment.
A detailed reconciliation from Reported Group to the proportionally consolidated basis is set out in note 2 to the financial statements and further
details on reconciling items between Adjusted earnings and IFRS loss are in note 9A to the financial statements.
43Hammerson plc Annual Report 2023
Rental income
Analysis of rental income
Proportionally consolidated
Gross rental
income
£m
Change in
like-for-like
Adjusted
net rental
income
£m
Change in
like-for-like
Year ended 31 December 2022 215.2 174.8
Like-for-like Managed portfolio:
— UK 5.9 6.8% 2.3 3.2%
— France 0.4 1.4% 0.5 1.8%
— Ireland 2.2 5.7% 2.0 6.0%
8.5
5.5%
4.8
3.6%
Disposals (17.8) (11.2)
Developments and other 0.4 (2.7)
Foreign exchange 2.1 1.8
Year ended 31 December 2023 208.4 167.5
Gross rental income decreased by a net £6.8m to £208.4m. Disposals reduced income by £17.8m, principally Silverburn and Victoria Leeds in
2022 and Italie Deux and Croydon in 2023. This was partly offset by growth in like-for-like income of £8.5m, or 5.5%. 60% of the growth was due
to higher base rent consistent with the Group’s strong leasing performance and the remainder was due to year-on-year increases in variable rent
(turnover rent and car park and commercialisation income).
Adjusted net rental income decreased by a net £7.3m to £167.5m. Disposals reduced NRI by £11.2m. From a like-for-like perspective, UK
adjusted NRI grew by 3.2%, with lower void costs and the strong like-for-like GRI growth of 6.8% partly offset by the year-on-year change in bad
debt charges where 2022 benefited from credits due to the reversals of provisions associated with the strong improvement in collections post
Covid-19. Income growth in France of 1.8% was muted due to the adverse impact of a small number of tenants entering administration. Ireland
was the strongest performing country with growth of 6.0%, benefiting from the reversal of prior year bad debt charges as collection rates improved.
Further analysis of net rental income by segment is provided in Table 3 of the Additional Information.
Analysis of rental income
Rental income is further analysed below between the Group’s various ownerships.
2023
Share of Property interests
Proportionally consolidated
Reported
Group
£m
Joint
ventures
£m
Associates
£m
Subtotal
£m
Total
£m
Gross rental income 92.8 114.4 1.2 115.6 208.4
Net service charge expenses and cost of sales (17.2) (24.0) – (24.0) (41.2)
Net rental income 75.6 90.4 1.2 91.6 167.2
Change in provision for amounts not yet recognised in the income statement 0.2 0.1 – 0.1 0.3
Adjusted net rental income 75.8 90.5 1.2 91.7 167.5
2022
Share of Property interests
Reported
Group
£m
Joint
ventures
£m
Associates
£m
Subtotal
£m
Total
£m
Gross rental income 90.2 119.4 5.6 125.0 215.2
Net service charge expenses and cost of sales (12.9) (23.9) (1.2) (25.1) (38.0)
Net rental income 77.3 95.5 4.4 99.9 177.2
Change in provision for amounts not yet recognised in the income statement (0.9) (1.5) – (1.5) (2.4)
Adjusted net rental income 76.4 94.0 4.4 98.4 174.8
44Hammerson plc Annual Report 2023
Strategic Report
Financial Review continued
Administration expenses
Proportionally consolidated
2023
£m
2022
£m
Employee costs – excluding variable costs 25.0 29.2
Variable employee costs 10.3 9.6
Other corporate costs 16.2 21.0
Adjusted gross administration costs 51.5 59.8
Property fee income (8.4) (11.5)
Joint venture and associate management fee income (6.5) (5.5)
Other income (14.9) (17.0)
Adjusted net administration expenses 36.6 42.8
Business transformation costs 13.2 5.1
Net administration expenses 49.8 47.9
During 2023, Adjusted net administration expenses decreased by £6.2m against 2022. Gross administration costs fell by £8.3m reflecting the
Group’s focus on cost reduction, partly offset by a reduction in other income of £2.1m due to disposals, principally in France. The most significant
elements of the cost reduction were:
— Employee costs, including variable costs, were £3.5m (9%) lower reflecting the organisational restructuring and simplification of the Group’s
operating model in 2023. Average headcount, excluding employees recharged to tenants, reduced from 225 in 2022 to 175 in 2023.
— Other corporate costs, comprising mainly professional fees, premises costs and software licences, fell by £4.8m (23%). The two most
significant areas of savings were premises costs, with downsized relocations in both the UK and France during the year; and a decrease of
£1.5m in corporate insurances, with the most significant reduction in Directors and Officers insurance premiums reflecting the strengthening
of the Group’s financial position.
Business transformation costs of £13.2m in 2023 comprised mainly severance costs directly associated with the simplification of the Group’s
operating model and fees for contractors and consultants from the Group’s digitalisation programme, both of these matters were key outputs of
the Group’s strategic and operational review undertaken in 2021 and do not reflect underlying trading.
Disposals and assets held for sale
During 2023, we realised gross proceeds of £216m, relating mainly to the disposals of the Group’s interests in Italie Deux (including the Italik
extension) and our standalone development interests in Croydon. In total, disposals in the year resulted in a loss on disposal of £18m, and these
disposals were at an average 5% discount (based on gross proceeds) to 31 December 2022 book value.
Since the year end, we exchanged contracts for the sale of Union Square, Aberdeen for gross proceeds of £111m, representing an 8% discount to
book value at 31 December 2023. This disposal concludes the Group’s £500m non-core disposal programme commenced in 2022.
Share of results of joint ventures
A listing of our interests in joint ventures is included in note 12 to the financial statements. On an IFRS basis, the Group’s share of results in 2023
was £9.4m (2022: £41.5m loss). The £50.9m improvement was principally due to lower revaluation losses in 2023 of £73.9m compared with
losses of £132.1m in 2022.
On an Adjusted basis, our share of results from joint ventures was £85.0m (2022: £88.1m). The £3.1m year-on-year reduction was principally due
to the disposals of the Group’s investments in Croydon in 2023 and Silverburn in 2022, and the derecognition of O’Parinor in June 2023.
Given that five out of six of our UK flagship destinations and Dundrum, the largest asset of our Ireland flagships, are held in joint ventures the
financial and operating performance of these assets is consistent with the proportionally consolidated performance explained in this Review and
shown in the Additional Information. The two French flagship destinations are wholly owned.
Share of results of associates
Following the sale of the Group’s investment in Italie Deux in March 2023, at 31 December 2023 the Group’s sole associate investment was Value
Retail. On an IFRS basis, the Group’s share of results in 2023 was £16.0m compared with a loss of £7.1m in 2022. The year-on-year increase of
£23.1m was principally due to lower revaluation losses in 2023 of £7.7m compared with losses of £66.9m in 2022 and a year-on-year increase
in profit from operating activities of £6.6m, partly offset by losses on the fair value of derivatives of £11.1m in 2023 compared to gains of £18.1m
in 2022.
On an Adjusted basis, our share of results from associates was £33.3m (Value Retail: £32.1m, Italie Deux: £1.2m) compared with £31.8m (Value
Retail: £27.4m, Italie Deux: £4.4m) in 2022. The £4.7m year-on-year increase in Adjusted earnings from Value Retail was due to £14.4m higher
gross rental income reflecting stronger sales and the benefits from indexed rents. This growth was partly offset by increased administration costs
of £3.4m and finance costs of £7.5m, this latter change relating to the refinancing of the loans secured against La Vallée and Bicester in 2022. The
reduction in Italie Deux reflects its disposal in March 2023.
Value Retail’s Adjusted earnings reflected an effective yield of 2.7% as a percentage of the Group’s investment at the
start of the year (2022: 2.4%).
45Hammerson plc Annual Report 2023
Net finance costs
Proportionally consolidated 2023 2022
Reported
Group
£m
Share of
Property
interests
£m
Total
£m
Reported
Group
£m
Share of
Property
interests
£m
Total
£m
Adjusted finance income 30.9 4.1 35.0 26.4 – 26.4
Finance costs
Gross interest costs (72.0) (8.9) (80.9) (74.9) (6.7) (81.6)
Interest capitalised – – – 1.2 – 1.2
Adjusted finance costs (72.0) (8.9) (80.9) (73.7) (6.7) (80.4)
Adjusted net finance costs (41.1) (4.8) (45.9) (47.3) (6.7) (54.0)
Debt and loan facility cancellation costs – – – (1.3) – (1.3)
Discount on redemption of bonds 4.3 – 4.3 – – –
Change in fair value of derivatives 0.7 (1.8) (1.1) (14.4) 4.1 (10.3)
IFRS net finance costs (36.1) (6.6) (42.7) (63.0) (2.6) (65.6)
Adjusted net finance costs were £45.9m, a decrease of £8.1m compared with 2022. The decrease was driven by the benefits of deleveraging
since the start of 2022, early repayment of debt utilising proceeds from disposals, the related restructuring of hedging derivatives and higher
interest income from cash deposits benefiting from the higher interest rate environment.
In the second half of 2023, we repurchased £12m of the Group’s £350m 3.5% bonds maturing in 2025 and £88m of the Group’s 6.0% bonds
maturing in 2026 at £4.3m below book value. This latter amount has been recognised in finance income in 2023, and given its one-off nature has
been excluded from the Group’s Adjusted earnings.
Tax
Due to the Group having tax exempt status in its principal operating countries the tax charge, on a proportionally consolidated basis, remained low
at £0.8m (2022: £0.5m).
The low tax charge reflects that the Group benefits from being a UK REIT and French SIIC and its Irish assets are held in a QIAIF. The Group is
committed to remaining in these tax exempt regimes and further details on these regimes are given in note 7 to the financial statements. In order
to satisfy the REIT conditions, the Company is required, on an annual basis, to pass certain business tests. The Group is expected to meet all
requirements for maintaining its REIT status for the year ended 31 December 2023.
Dividends
As explained in the Chair of the Board’s Statement, the Group announced a new sustainable dividend policy of 60-70% of annual Adjusted
earnings during the year with an interim cash dividend of 0.72p per share paid in October.
The Board has proposed a final cash dividend of 0.78p per share, payable as an ordinary dividend on 10 May 2024 to shareholders on the register
on 5 April 2024. A dividend reinvestment plan (‘DRIP’) remains available to shareholders.
46Hammerson plc Annual Report 2023
Strategic Report
Financial Review continued
NET ASSETS
A detailed analysis of the balance sheet on a proportionally consolidated basis is set out in Table 12 of the Additional Information with a summary
reconciling to EPRA NTA set out in the table below:
2023 2022
Summary net assets
Reported
Group
£m
Share of
Property
interests
£m
EPRA
adjustments
£m
EPRA NTA
£m
Reported
Group
£m
Share of
Property
interests
£m
EPRA
adjustments
£m
EPRA NTA
£m
Investment and trading properties 1,396 1,380 – 2,776 1,497 1,723 – 3,220
Investment in joint ventures 1,193 (1,193) – – 1,342 (1,342) – –
Investment in associates – Value Retail 1,115 – 79 1,194 1,189 – 52 1,241
– Italie Deux – – – – 108 (108) – –
Net trade receivables 28 15 – 43 23 19 – 42
Net debt a (1,163) (163) – (1,326) (1,458) (274) (1) (1,733)
Other net liabilities (106) (39) – (145) (115) (18) (3) (136)
Net assets 2,463 – 79 2,542 2,586 – 48 2,634
EPRA NTA per share b 51p 53p
a See Table 13 in Additional Information for further details.
b EPRA adjustments in accordance with EPRA best practice, principally in relation to deferred tax, as shown in note 9B to the financial statements.
During 2023, net assets decreased 5% to £2,463m (2022: £2,586m). Net assets, calculated on an EPRA Net Tangible Assets (NTA) basis, were
£2,542m, or 51p per share, a reduction of 2p compared to 31 December 2022 and is equivalent to a total accounting return of
–2.1% (see Table
15 in Additional Information). The key components of the movement in Reported Group net assets and EPRA NTA are shown in the table below:
Movement in net assets
Proportionally consolidated including Value Retail
Group
net assets
£m
EPRA
adjustments
£m
EPRA NTA
£m
1 January 2023 2,586 48 2,634
Property revaluation – Managed portfolio (119) – (119)
– Value Retail (8) – (8)
Adjusted earnings 116 – 116
Disposal and impairment losses (40) – (40)
Change in deferred tax (2) 1 (1)
Dividends (36) – (36)
Foreign exchange and other movements (34) 30 (4)
31 December 2023 2,463 79 2,542
47Hammerson plc Annual Report 2023
PROPERTY PORTFOLIO ANALYSIS
Portfolio valuation
The Group’s external valuations continue to be conducted by CBRE Limited (CBRE), Cushman and Wakefield LLP (C&W) and Jones Lang LaSalle
Limited (JLL), providing diversification of valuation expertise across the Group. At 31 December 2023 the majority of our UK flagship destinations
have been valued by JLL and CBRE, the French portfolio by JLL, and the Irish portfolio, Value Retail and Brent Cross have been valued by C&W. This
is unchanged from 31 December 2022.
There have been a limited number of comparable transactions in the Group’s investment markets during 2023, with the higher interest rate
environment and lower levels of liquidity resulting in an outward movement in valuation yields. However, there has been a growing polarisation
based on asset quality from both an occupational and investment perspective, with the outward yield movements being more pronounced for
less prime assets. Valuers have also begun to differentiate between properties based on future capital expenditure requirements.
At 31 December 2023, the Group’s portfolio was valued at £4,662m, a reduction of £445m since 31 December 2022. This movement was
primarily due to disposals, including the derecognition of Highcross and O’Parinor, of £331m; revaluation losses of £127m; adverse foreign
exchange losses of £61m, partly offset by capital expenditure of £74m. Movements in the portfolio valuation are shown in the table below.
Movements in property valuation
Proportionally consolidated including Value Retail
UK
£m
France
£m
Ireland
£m
Total
flagships
£m
Develop-
ments and
other
£m
Managed
portfolio
£m
Value
Retail
£m
Group
portfolio
£m
At 1 January 2023 871 1,241 676 2,788 432 3,220 1,887 5,107
Capital expenditure 14 14 6 34 13 47 27 74
Disposals – (151) – (151) (55) (206) – (206)
Derecognition of Highcross and O’Parinor – (62) – (62) (63) (125) – (125)
Yield (17) (27) (36) (80) (1) (81) – (81)
Income 1 12 (1) 12 (4) 8 (4) 4
Development and other costs (6) – – (6) (40) (46) (4) (50)
Revaluation losses (22) (15) (37) (74) (45) (119) (8) (127)
Foreign exchange – (24) (15) (39) (2) (41) (20) (61)
At 31 December 2023 863 1,003 630 2,496 280 2,776 1,886 4,662
Capital expenditure
During the year, capital expenditure on the Managed portfolio was £47m, of which £34m was on the Group’s Flagship portfolio reflecting
reconfiguration works, including the repurposing of the former Debenhams at Bullring where M&S and TOCA Social opened in the year, and lease
incentives directly related to the Group’s record leasing volume in 2023. In addition, £13m was invested in the Group’s Developments and other
portfolio, with £5m spent on the on-site development of the Ironworks residential scheme at Dundrum. Other key areas of expenditure were to
advance planning at Bishopsgate Goodsyard and Dublin Central. Table 11 of the Additional Information analyses the spend between the creation
of additional area and that relating to the enhancement of existing space.
Disposals, principally the Group’s share of Italie Deux (including the Italik extension) and Croydon in the first half of the year, reduced the portfolio
by £206m, with a further £125m reduction due to the derecognition of Highcross and O’Parinor.
Revaluation losses
In 2023, we recognised a total revaluation loss across the Group portfolio of £127m, comprising £119m in respect of the Managed portfolio and
£8m in Value Retail. £81m, or 64%, of these losses was due to the Group’s valuers moving out yields to reflect the higher interest rate environment
and lower levels of market liquidity. The remainder of the losses related to development and other cost factors, principally adverse changes to
residual valuations on the Developments and other portfolio associated with outward yield shift on end values and project cost inflation.
UK flagship destinations reported a revaluation deficit of £22m, £17m was due to outward yield shift averaging 10 basis points (‘bps’), with the
remaining £5m associated with capital expenditure, principally the recognition of a cladding allowance at Union Square. Bullring saw a revaluation
gain in the year of £11m, the yield was stable reflecting the recent investment to repurpose the former Debenhams and the strong leasing
performance leading to higher ERVs.
In France, yields moved out by 10bps equivalent to a revaluation deficit of £27m, this was partly offset by income growth, with like-for-like ERVs
2.5% higher, equivalent to a revaluation gain of £12m. While Ireland reported a revaluation deficit of £37m, of which £36m was due to outward
yield shift averaging 30bps.
Value Retail values were broadly flat during the year, with capital expenditure offset by a marginal revaluation loss of £8m and adverse foreign
exchange of £20m.
Further valuation analysis is included in Table 9 of the Additional information.
48Hammerson plc Annual Report 2023
Strategic Report
Financial Review continued
Like-for-like ERV*
Flagship destinations
2023
%
2022
%
UK 1.8 (3.8)
France 2.5 (1.6)
Ireland 0.2 0.3
1.7 (2.2)
* Calculated on a constant currency basis for properties owned throughout the relevant reporting period.
Like-for-like ERVs grew by 1.7% during 2023. In the second half of the year ERVs were marked up at all of the Group’s flagship destinations,
equivalent to growth of 1.6%.
UK ERVs were 1.8% higher, reflecting the strong leasing performance and investment to attract ‘best-in-class’ occupiers. Bullring had the
strongest growth at 5.0% over the year with occupiers seeking space following the opening of the repurposed former Debenhams space. We
signed 23 permanent leases at the asset in 2023 at an average net effective rent 9% above prevailing ERVs.
ERVs in France grew by 2.5%, driven by indexation and leasing demand at both of our two wholly owned assets. At Les Terrasses du Port we have
secured over 70% of the expected income from the expiring leases which were signed when the destination opened in 2014. The new deals have
been signed at an average of 6% above ERV.
In Ireland, ERVs were up 0.2%, the lower vacancy levels in the Irish portfolio meant that it was more challenging to provide multiple sources of
evidence for the valuers to mark up ERVs in 2023. However, the leasing pipeline for space remains strong, particularly at Dundrum Town Centre
where there have been a number of major asset management initiatives, the most significant being the opening of Brown Thomas in the former
House of Fraser unit in February 2023.
Property returns analysis
The Group’s managed property portfolio generated a total property return of 1.6%, comprising an income return of 5.9% offset by a capital return
of –4.1%. Incorporating the income and capital returns from the Value Retail portfolio, this brought the Group’s income return to 6.0% and the
capital return to –2.6%, to generate a total return of 3.2% (2022: –0.7%).
2023
Proportionally consolidated including Value Retail
UK
%
France
%
Ireland
%
Flagship
destinations
%
Develop-
ments and
other
%
Managed
portfolio
%
Value
Retail
%
Group
portfolio
%
Income return 8.7 4.6 5.7 6.3 2.7 5.9 6.2 6.0
Capital return (2.4) (4.3) (5.6) (4.0) (6.2) (4.1) (0.4) (2.6)
Total return 6.1 0.1 (0.2) 2.0 (3.6) 1.6 5.8 3.2
2022
Proportionally consolidated including Value Retail
UK
%
France
%
Ireland
%
Flagship
destinations
%
Develop-
ments and
other
%
Managed
portfolio
%
Value
Retail
%
Group
portfolio
%
Income return 7.9 4.8 5.2 6.0 2.3 5.4 5.3 5.3
Capital return (9.4) (4.6) (3.0) (5.9) (14.8) (7.3) (3.1) (5.8)
Total return (2.1) – 2.1 (0.2) (12.8) (2.3) 2.0 (0.7)
Shareholder returns analysis
Return per annum over
Total
shareholder
return
Cash basis
a
%
Total
shareholder
return
Scrip basis
a
%
Benchmark
b
%
One year 22.8 22.8 5.5
Three years 6.6 16.5 (4.6)
a Cash and scrip bases represent the return assuming investors opted for either cash or scrip dividends with the assumption that those opting for scrip dividends
continued to hold the additional shares issued.
b Benchmark is the FTSE EPRA/NAREIT UK index.
The Group’s total shareholder return in 2023 over one year was 22.8%, outperforming the FTSE EPRA/NAREIT UK index of 5.5%. Over three years
the Group also outperformed the benchmark of -4.6% with shareholder returns of 6.6% and 16.5% on a cash and scrip basis, respectively.
49Hammerson plc Annual Report 2023
INVESTMENT IN JOINT VENTURES AND ASSOCIATES
Details of the Group’s joint ventures and associates are shown in notes 12 and 13, respectively to the financial statements.
Reported Group
Joint ventures
During the year, our investment in joint ventures decreased by £149m to £1,193m (2022: £1,342m). £99m of the reduction related to the
disposal of Croydon and derecogntion of O’Parinor; revaluation losses totalled £74m and cash distributions to the Group were £55m. These
reductions were partly offset by the Group’s share of Adjusted earnings of £85m.
Associates
Our investment in associates decreased by £182m to £1,115m (2022: £1,297m). £109m of the reduction was due to the disposal of Italie Deux
in March, a further £74m due to distributions from Value Retail, partly offset by the Group’s share of Adjusted earnings of £33m.
TRADE RECEIVABLES
Collection rates improved over the course of the year such that 96% of the rental income due in 2023 (as at 23 February 2024) has been collected.
As a result we reduced the provisioning rates for amounts overdue by 3–12 months, although this did not have a significant financial impact to
property outgoings.
On a proportionally consolidated basis, net trade receivables at 31 December 2023 were £43m (2022: £42m), reflecting gross trade receivables
of £62m (2022: £74m) against which a provision of £19m (2022: £32m) has been applied.
PENSIONS
On 8 December 2022, the Trustees of the Group’s principal defined benefit pension scheme (‘the Scheme’), with the Company’s support,
purchased a bulk annuity policy (‘buy-in’) with Just Retirement Limited (‘Just’) for a premium of £87.3m. This contract fully insured all future
payments to members of the Scheme, with the premium met from the Scheme’s assets.
During 2023, a data cleansing process was completed and subsequently verified by Just, resulting in a small balancing premium receipt to the
Scheme. Given the successful completion of the buy-in and for the Trustees to trigger the winding-up of the Scheme, on 20 December 2023, the
Company terminated its liability to make further contributions to the Scheme. This initiated a process for the Trustees to assign the bulk annuity
policy to individual Scheme members and to transfer the administration to Just which is expected to take place in the first quarter of 2024, after
which the final steps to wind up the Scheme can be undertaken.
This material balance sheet de-risking exercise is in line with the Group’s long term strategy to strengthen the resilience of the Group’s
balance sheet.
50Hammerson plc Annual Report 2023
Strategic Report
Financial Review continued
FINANCING AND CASH FLOW
Financing strategy
Our financing strategy is to borrow predominantly on an unsecured basis to maintain flexibility. Secured loans are occasionally used, mainly in
conjunction with joint venture partners. Value Retail also uses predominantly secured debt in its financing strategy. All secured debt is non-
recourse to the rest of the Group.
The Group’s debt is arranged to maintain access to short term liquidity and long term financing. Short term liquidity is principally through
syndicated revolving credit facilities. Long term debt comprises the Group’s fixed rate unsecured bonds and private placement notes. At
31 December 2023, the Group also had secured loans in the Dundrum joint venture and Value Retail. Acquisitions may initially be financed using
short term funds before being refinanced with longer term funding depending on the Group’s financing position in terms of maturities, future
commitments or disposals, and market conditions.
Derivative financial instruments are used to manage exposure to fluctuations in foreign currency exchange rates and interest rates but are not
employed for speculative purposes.
The Board regularly reviews the Group’s financing strategy and approves financing guidelines against which it monitors the Group’s financial
structure. Where there is any non-compliance with the guidelines, this should not be for an extended period but the Group objective is to maintain
an investment grade credit rating. The key financing metrics are set out below.
Key financial metrics
Proportionally consolidated unless otherwise stated
Calculation
(References
to Additional
Information) 2023 2022
Net debt Table 13 £1,326m £1,732m
Liquidity £1,225m £996m
Weighted average interest rate – net debt 2.4% 2.4%
Weighted average interest rate – gross debt 3.3% 2.6%
Weighted average maturity of debt 2.5 years 3.4 years
FX hedging 91% 91%
Net debt:EBITDA Table 16 8.0x 10.4x
Loan to value – Headline a Table 19 34% 39%
Loan to value – Full proportional consolidation (of Value Retail) b Table 19 44% 47%
Metrics with associated financial covenants Covenant
Interest cover ≥ 1.25x Table 17 3.91x 3.24x
Gearing – Selected bonds c ≤ 175% Table 18 55% 68%
– Other borrowings and facilities ≤ 150% Table 18 55% 68%
Unencumbered asset ratio ≥ 1.5x Table 20 2.04x 1.74x
Secured debt/equity shareholders’ funds ≤ 50% 11% 15%
Fixed rate debt as a proportion of total debt n/a 84% 84%
a Headline: ‘Loan’ excludes Value Retail net debt and ‘Value’ includes Value Retail net assets.
b Full proportional consolidation of VR: ‘Loan’ includes Value Retail net debt and ‘Value’ includes Value Retail property values.
c Applicable to bonds maturing in 2025 and 2027 (as set out in note 17 to the financial statements).
Credit ratings
During the year, Moody’s and Fitch’s senior unsecured investment grade credit ratings were re-affirmed as Baa3 and BBB+ respectively.
Leverage
At 31 December 2023, the Group’s gearing was 55% (2022: 68%) and Headline loan to value ratio was 34% (2022: 39%).
The Group’s share of net debt in Value Retail totalled £730m (2022: £675m). Fully proportionally consolidating Value Retail’s net debt, the Group’s
loan to value ratio was 44% (2022: 47%).
Calculations for gearing and loan to value are set out in Tables 18 and 19 of the Additional Information, respectively.
Borrowings and covenants
The terms of the Group’s unsecured borrowings contain a number of covenants which provide protection to the lenders and bondholders as set
out in the Key financial metrics table above. At 31 December 2023, the Group had significant headroom against these metrics.
In addition, Dundrum and Value Retail have secured debt facilities which include covenants specific to those properties, including covenants for
loan to value and interest cover. However, there is no recourse to the Group.
51Hammerson plc Annual Report 2023
Managing foreign exchange exposure
The Group’s exposure to foreign exchange translation differences on euro-denominated assets is managed through a combination of euro
borrowings and derivatives. At 31 December 2023, the value of euro-denominated liabilities as a proportion of the value of euro-denominated
assets was 91%, the same level as at the beginning of the year. Interest on euro-denominated debt also acts as a partial hedge against exchange
differences arising on net income from our overseas operations. Sterling strengthened against the euro during the year by 2%.
CASH FLOW AND NET DEBT
Proportionally consolidated net debt
Movement in proportionally consolidated net debt
£m
Opening
net debt
1 January
2023
Cash
generated
from
operations
Value
Retail
distribution
1,800
1,700
1,600
1,500
1,400
1,100
1,200
1,300
Sale of
properties
Derecognition
of JV
secured
debt
Exchange
and other
Dividends Net
interest
Capital
expenditure
Closing
net debt
31 December
2023
1,732
(216)
(125)
(104)
(74)
(6)
43
30
46 1,326
On a proportionally consolidated basis, net debt decreased by 23% to £1,326m (2022: £1,732m). At 31 December 2023 the Group’s net debt
comprised loans of £1,885m and the fair value of currency swaps of £11m, less cash and cash equivalents of £570m, of which £472m is held by
the Reported Group. Disposals during the year generated proceeds of £216m. Cash generated from operations of £104m comprised profit from
operating activities of £117m less a net £13m reduction in working capital and other non-cash items. We also received £74m of distributions from
Value Retail. These cash inflows were partly offset by cash dividends paid of £30m, capital expenditure of £43m and net interest of £46m.
Refinancing
During the first half of the year, £605m of revolving credit facilities were extended by one year such that they now mature in 2026.
In the second half of 2023, we extended our debt maturity profile through the issuance of a £100m bond tap of our existing £200m 7.25% bonds
maturing in 2028 resulting in a new outstanding notional of £300m. The issuance was at a discount of £6.7m, meaning the newly issued bonds
were priced at an effective yield of 9.1%. At the same time a matching tender was launched for the £350m 3.5% bonds maturing in 2025 and the
£300m 6.0% bonds maturing in 2026 for which we repurchased £12m and £88m at yields of 7.7% and 8.1% respectively, in total £4.3m below
book value.
Liquidity
The Group’s liquidity at 31 December 2023, calculated on a proportionally consolidated basis comprising cash of £570m and unutilised committed
facilities of £655m, was £1,225m, £229m higher than at the beginning of the year. This was primarily due to proceeds from disposals.
52Hammerson plc Annual Report 2023
Strategic Report
Financial Review continued
Debt and facility profile
Maturity profile of loans and facilities
Proportionally consolidated at 31 December 2023, £m
1,000
800
600
400
200
0
2024 2025 20272026 2028 2029 2030 2031
50
605
11
5
109
260
337
211
601
292
61
Euro bonds Sterling bonds Senior notes Secured debt Unutilised facilities
The Group’s weighted average maturity of debt is 2.5 years (2022: 3.4 years). The near-term unsecured maturities including the £109m of private
placement notes due in 2024 and the £337m sterling bonds due in 2025 are covered by existing cash with the Group.
Refinancing discussions are progressing in relation to the €600m (Group’s 50% share €300m) secured loan held by the Dundrum joint venture
which matures in September 2024.
Maturity analysis of loans and reconciliation to net debt
Loan Maturity*
2023
£m
2022
£m
Sterling bonds 2025–2028 840.6 846.4
Sustainability-linked eurobond 2027 600.8 612.3
Unamortised facility fees 2024–2026 (2.2) (3.1)
Senior notes (US private placements) 2024–2031 185.3 190.8
Total loans – Reported Group 1,624.5 1,646.4
Share of Property interests 2024 260.0 391.6
Total loans – proportionally consolidated 1,884.5 2,038.0
Cash and cash equivalents (569.6) (336.5)
Fair value of currency swaps 11.4 30.6
Net debt – proportionally consolidated 1,326.3 1,732.1
* Maturity for loans at 31 December 2023
53Hammerson plc Annual Report 2023
Risks and Uncertainties
Governance
The Group’s approach to risk management is
designed to enable the business to deliver its
strategic objectives while effectively managing
differing levels of uncertainty which directly
impact the Group’s activities. The Group
adopts a top-down and bottom-up approach
to ensure comprehensive risk identification
and risk appetite is clearly defined. This allows
the Group to respond quickly to changes in its
risk profile and ensures risk management is
factored into strategic decision making whilst
embedding a strong risk management culture
amongst colleagues with clear roles and
accountability.
Top-down
The key roles and responsibilities for the
Group’s risk management are shown in the
Risk governance structure chart.
The Board has overall responsibility for risk
oversight and determining the Group’s
approach to managing financial, regulatory,
operational and reputational risk. It ensures
that effective risk management is integrated
throughout the business and embedded
within the Group’s policies, processes, culture
and values.
The Board also sets the Group’s risk appetite to
ensure that risks are managed within certain
parameters with an appropriate level of
resource. Where controllable risks are outside
the Group’s risk appetite, the Board seeks to
manage these down by implementing
appropriate mitigations wherever possible.
The Board ensures each year that its risk
appetite is consistent with its strategy.
The Audit Committee supports the Board in
the oversight of risk and is responsible for
reviewing the effectiveness of the risk
management and internal control system over
the course of the year, as well as overseeing
the Group’s Internal Audit activity.
The Group Executive Committee has overall
accountability for the management of risks
across the business.
Risk overview
The Board confirms that during 2023 it has
carried out a robust assessment of the Group’s
emerging and principal risks, including
mitigations, which are presented in this section
of the Annual Report.
The Group has made positive strategic,
operational and financial progress
notwithstanding the uncertain
macroeconomic environment in 2023.
The Group has delivered a strong leasing
performance with a number of high profile
repurposing projects being delivered across
the portfolio and maintained strong
occupancy. The Group’s balance sheet is
significantly strengthened due to disposals
and the derecognition of secured debt. This
positions the Group to be able to focus on
future investment opportunities in the core
portfolio. These positive trends contrast with
the continued high level of macroeconomic
and geopolitical uncertainty and the
associated challenges that both consumers
and businesses face from high inflation and
interest rates and supply chain pressures.
Throughout the year, the Board maintained its
focus on ensuring the Group was effectively
managing its risks. This included a thorough
review exercise involving the Audit Committee
and senior management, covering the Group’s
risks and the associated mitigations. Given the
changing risk environment, the residual risk
level of each principal risk was also re-
assessed. This resulted in an increased
residual risk assessment for three principal
risks; Cyber security, Health and safety, and
Legal and regulatory, and a reduction for one
risk, Partnerships. A detailed summary of
these changes to principal risks during the year
can be found on page 56.
Work was undertaken in the year to formally
align the Group’s internal controls with the
COSO internal control framework which
allowed the Group to set the basis for a strong
assurance programme aligned to its principal
risks, and to continue the promotion of a strong
culture of awareness and accountability for risk
management across the Group.
Bottom-up
The effective day-to-day management of risk
is embedded within our operational business
teams. This aligns risk management with
operational responsibility. It also allows
potential new risks to be identified at an early
stage such that required mitigating actions can
be approved and put in place.
Internal Audit acts as an independent
assurance function by evaluating the
effectiveness of our risk management and
internal control processes.
Through this approach the Group operates
a ‘three lines of defence’ model of risk
management, with operational management
forming the first line, risk management forming
the second line, and finally Internal Audit as
the third line of defence.
Risk review process
The Group’s key risks are derived from a
systematic review of the Group’s strategic
priorities, and recurring work with senior
management and business teams to identify
and quantify key risks. These are reviewed and
monitored during the year by the Group
Executive Committee, the Audit Committee
and approved annually by the Board.
The Group’s principal risks are defined as
those likely to significantly affect the Group’s
strategic objectives, operations, or financial
performance if not effectively managed. The
risks are classed as either ‘external’ risks,
where market factors are the main influence
on change, or ‘operational’ risks which, while
subject to external influence, are more in the
control of management. The level of residual
risk for each principal risk is assessed taking
account of the likelihood of occurrence and
potential impact on the Group, and also
applicable mitigating actions. The assessment
of the Group’s principal risks at the date of this
report is shown on the Residual Risk heat map.
To support the assessment process, the
Group produces a quarterly Risk Dashboard
which comprises several key risk indicators,
both historical and forward-looking, for
each principal risk. The risk indicators help
identify whether those risks are changing and
hence whether mitigating actions need to
be amended.
54Hammerson plc Annual Report 2023
Strategic Report
Risks and Uncertainties
New and emerging risks
New and emerging risks are a particular area
of focus and are explicitly considered as part
of the regular risk review process explained
above. Further identification work is
undertaken through the review of internal
activities and external insights, covering both
the real estate and wider commercial sectors.
During the year several potential emerging
risks were highlighted including; the
development planning process, political risk,
the ongoing war in Ukraine, Israel-Palestine
conflict, financial crime compliance, and
increased regulatory burden particularly
around ESG.
On review, it was determined that these risks
are appropriately captured by the Group’s
existing principal risks or are not significant
enough to be deemed a new principal risk.
As part of the annual risk review, the Board
therefore concluded that no significant
emerging risks have been identified in 2023.
In 2023, the annual exercise to formalise the
Board’s risk appetite found that the Board and
senior management remain aligned in their
risk appetite for each principal risk. It is noted
that there are two principal risks where the
current residual risk rating is deemed ‘high’
as shown on the Residual Risk Heat Map.
This assessment is largely due to external
factors beyond management’s control with
mitigating actions where possible to reduce
the risk assessment.
Assurance activity
As explained in the Audit Committee Report,
the Audit Committee approves the annual
Internal Audit plan. The plan is designed to
cover a number of the Group’s principal risks,
with a focus on those with an elevated residual
risk relative to risk appetite or where activities
are undergoing significant change. In addition,
it includes cyclical reviews of key financial,
reporting, operational and compliance controls.
The scope and finalised audit reports are
reviewed by the Group Executive Committee
and Audit Committee, and agreed actions are
monitored to completion.
Risk governance structure
Bottom-up
Detailed
identification,
monitoring,
assessment,
prioritisation
and active
mitigation of
risks at an
operational
level
Top-down
Determines
risk appetite
and provides
oversight,
monitoring,
identification,
assessment,
and agrees
mitigations of
key risks at a
Group level
Risk
Governance
Board — Overall responsibility for risk management
— Sets overall risk framework for the Group
— Sets risk culture and appetite
— Considers and approves risk and controls work undertaken by Audit Committee
Audit
Committee
— Reviews effectiveness of risk management frameworks
— Oversight of system of internal control
— Approves third line assurance activity by Internal Audit
— Reviews going concern and viability assessment
— Reviews climate risk and TCFD compliance
Risk
Management
Group
Executive
Committee
— First line of defence
— Manages risk day-to-day through policy, process and people
— Embeds risk appetite
— Oversight of third parties under our onsite property management agreements
— Reviews risk mitigation activities
Risk
Management
— Second line of defence
— Works with management to identify principal risks, considering current
and emerging risks
— Monitors and reports on key risk indicators
— Monitors risks and mitigations against risk appetite
Internal
Audit
— Third line of defence
— Designs and delivers the internal audit plan
— Provide assurance on effectiveness of the risk programme, testing key controls
— Tracks and verifies completion of agreed audit actions
Risk
Ownership
Teams and
colleagues
— Identifies, evaluates and mitigates operational risks
— Responsible for operating effectiveness of key controls
— Monitors risks assigned to each team, including escalation of emerging risks
— Monitoring of third parties under our onsite property management agreements
55Hammerson plc Annual Report 2023
Health & Safety (risk I): A slight increase
in the likelihood of a health and safety risk
materialising has been documented in light
of additional requirements going live in 2023
under the Building Safety Act, and recent
issues in the UK with RAAC concrete.
Decrease in risk
Partnerships (risk K): A small decrease in the
impact of the Group’s partnerships risk has
been documented to reflect the Group’s exits
from interests in non-core assets and minority
stakes in the period, as well as ongoing active
engagement to reduce any potential mis-
alignment with remaining partnerships.
Climate risk
The Board has an obligation to assess climatic
risks and opportunities under TCFD, and in
May 2023 the Group received approval from
the Board to transition its public reporting to
focus on the adoption of IPCC Scenarios 2
and 3 which are more reflective of the latest
scientific reports on global climate transition.
Changes to principal risks during the year
Following a detailed review, four movements in
residual risk since 2022 were identified. These
are demonstrated in the Residual Risk Heat
Map and are summarised below:
Increase in risk
Legal & regulatory compliance (risk F):
Requirements for CSRD (Corporate
Sustainability Reporting Directive) regulation
and related disclosures becoming effective
in 2025 significantly increase the Group’s
regulatory burden and associated costs for
mandatory assurance, as well as necessitating
additional work and processes behind the
new reporting. Additional regulation under
the revised Corporate UK Governance Code
becomes effective in 2025. The likelihood
and impact of the Group’s legal and regulatory
compliance risk have therefore been increased
to reflect this.
Cyber Security (risk H): Cyber security risk
has increased generally due to continued
geopolitical tensions and several high-profile
attacks on organisations in 2023, including the
Group’s payroll provider SD Worx. Although no
data was lost and the Group was unaffected,
this risk area has increased.
The risk and opportunities were reassessed
and updated accordingly, noting no material
changes due to the inclusive approach
adopted to date. This will be updated again
in 2024 following the outputs of the Group’s
physical climate risk reviews.
Further details on this important risk area
are in the detailed risk section below, in the
TCFD section on page 31 and the Group’s
separate 2023 ESG Report available on the
Group’s website.
Future outlook
The impact of external factors continues to be
the main concern for the Group, particularly
given the prolonged levels of inflation and high
interest rates.
Nonetheless, the successful delivery of the
Group’s strategic objectives will act to reduce
the level of residual risk and ensure the
longer-term success and viability of the Group
for the benefit of all stakeholders.
Residual Risk Heat Map
Note: Arrows indicate change in risk since 2022 Annual Report.
Impact
Medium HighLow
Likelihood
Medium HighLow
External risks Operational risks
A
Macroeconomic
B
Retail market
C
Investment market
and valuations
D
Climate
E
Tax
F
Legal and
regulatory
compliance
G
Non-retail/
multi-use markets
H
Cyber security
I
Health and safety
J
Capital structure
K
Partnerships
L
Property
development
M
Transformation
N
People
Residual risk assessment
High risk
Medium risk
Low risk
A
J
B
D
E
G
F
H
L
M
N
I
C
K
56Hammerson plc Annual Report 2023
Strategic Report
Risks and Uncertainties continued
A MACROECONOMIC
Residual risk: High Link to strategy: 1, 3
Adverse changes to the geopolitical landscape and macroeconomic
environment in which the Group operates have the potential to hinder
the ability to deliver the strategy and financial performance.
Risk mitigations
— Flagship destinations in the heart of major European cities
— Diversified portfolio (sectors, geography and occupiers) limits
impact of downturn or major market change in a single market
— Near term debt maturities fully covered by existing cash reserves
with limited capital commitments
— Balance sheet strengthened over recent years with strategy and
track record of divesting of non-core assets and early refinancing
— Value Retail Villages in affluent areas with strong tourist appeal
— Monitoring of macroeconomic research and forecasts
— Economic outlook incorporated into annual Business Plan
— Continue strategic divestment and development programme
to decrease market and sector risk as well as increase balance
sheet strength
— Ongoing transformation programme to enhance organisational
agility, and process efficiency and automation to minimise fixed
cost base
— Board annual strategy review
— Regular monitoring and review of financing and capital structure in
the context of various market scenarios by the Chief Financial Officer
and the Executive Committee
Change in year
The macroeconomic environment has endured a challenging 2023
with persistent high inflation levels, high interest rates, limited GDP
growth, supply chain constraints, and continued geopolitical
uncertainty across many regions, contributing to a continued high cost
of living and reduced liquidity in the real estate investment market.
Despite this, the Group continues to successfully deliver its strategic
goals, strong leasing performance and resilient property valuations.
B RETAIL MARKET
Residual risk: Medium Link to strategy: 1, 3
In the context of the ever-evolving retail marketplace, the Group fails to
anticipate and address structural market changes. This could impair
leasing performance, result in a sub-optimal occupier mix and thus
impact the ability to attract visitors, and grow footfall/spend and income
at the Group’s properties.
Risk mitigations
— Flagship destinations in the heart of major European cities
— Diversified portfolio (sectors, geography and occupiers) limits
impact of downturn or major market change in a single market
— High quality, diversified tenant base with weighted average lease
term to first break of 4.6 years
— Disposal programme to focus core portfolio on key city centre
destinations and provide capital for repurposing space away from
challenged retail categories
— The Board and Executive Committee regularly assess the retail
market outlook to identify risks and opportunities
— Greater data insights and analytical capabilities including regular
catchment and occupier analysis
— Improved leasing process and policy to better align to occupier and
visitor requirements
— Clear delegation of authority with Group Management Committee
(GMC) scrutinising all significant leasing transactions
— Recruited new talent to accelerate initiatives around placemaking,
marketing and repositioning of our assets
— Asset centric organisational structure to ensure leasing team
fully aligned with asset management team with approved
property strategies
— Innovation through placemaking, food and entertainment, and
services opportunities reducing exposure to retail market
— Digital innovation strategy to provide detailed customer insight
and communication with our customers
— Use of short term, ‘temporary’ leases to enhance tenant mix,
reduce vacancy costs and incubate new brands
— Active engagement with key brand partners to collaborate on
reducing environmental impacts
Change in year
Whilst the external retail environment has been consistent throughout
the period, the Group continues to see a flight-to-quality for best-in-
class destinations which has seen the Group deliver another record
leasing performance.
Although the market outlook for retailers remains challenging due to
high interest rates, inflation, benign GDP growth, and increased
operating costs, prime retail assets remain in demand which is reflected
in the Group’s strong leasing performance and pipeline, and robust
vacancy rates across the core asset portfolio.
57Hammerson plc Annual Report 2023
Link to strategy
1 Investment for growth and value creation
2 Agile platform
3 Sustainable and resilient capital structure
Risk movement
Increased
Decreased
No change
C INVESTMENT MARKETS AND VALUATIONS
Residual risk: Medium Link to strategy: 1, 3
Investor appetite for retail led assets is reduced due to macroeconomic
or retail market factors including increased borrowing costs, economic
downturn, and consumer and occupier confidence. This could
adversely impact property valuations and risk hindering the liquidity of
the Group’s portfolio. This in turn would reduce the availability of funds
for reinvestment in core assets and/or refinancing of debt.
Risk mitigations
— Diversified portfolio limits impact of downturn in a single market
— Portfolio focuses on high quality flagship destinations in the heart
of major European cities
— Value Retail operates best-in-class premium outlets across Western
Europe with high tourist appeal
— Strong track record of disposing of non-core assets with the Group’s
2022 £500m disposal target achieved with the recently announced
sale of Union Square, Aberdeen which is due to complete in
March 2024
— Strong leasing performance and pipeline to maintain security
of income
— Asset level ESG plans in place with future improvement initiatives
planned to ensure alignment with investors’ environmental
expectations
— Maintenance of solid capital structure prevents forced sales
— Independent valuations performed quarterly
— Investor relations programme to showcase the Group’s assets
and maintain strong relationships with active/potential investors
Change in year
The value of the Group’s property portfolio fell marginally in the year as
yields softened in the latter half of 2023 with investor sentiment and
investment activity being hampered by the cost of debt and inflation
remaining relatively high. Although values could remain under pressure
in the first half of 2024, improved occupational demand, evidence of
ERV growth returning, and forecasts indicating falls in inflation and
interest rates suggest valuations and the investment market should
improve over the medium term.
D CLIMATE
Residual risk: Medium Link to strategy: 1, 3
Climate risks, particularly the reduction in carbon emissions and
addressing the risk of physical impacts to our assets as a result of
climate related incidents, are not appropriately managed. This could
adversely impact valuations and investor sentiment and may result in
an increased final year bond coupon if the Group’s sustainability linked
bond targets are not met. Also, extreme weather events may impact
our properties.
Risk mitigations
— Net Zero Asset Plans in place and being implemented for all
flagship assets
— Clear action plan and quarterly updates provided to Group
Executive Committee and regular updates provided to Audit
Committee and Board
— Established sustainability governance structure, from asset to
Board level, monitoring of key sustainability metrics, including
performance and management of climate related legislative and
regulatory risk
— Senior management and Board provided with TCFD training
— Experienced sustainability team designs and implements our
sustainability strategy in collaboration with the wider business
— Regular engagement with investors and across the wider property
industry on ESG matters
— ISO accredited Energy and Environment Management System
implemented across the Group (ISO 14000 everywhere and
ISO 50001 in the UK and Ireland)
— Insurance in place to cover property damage
— Triennial review of physical climate risk
— Strong governance structure in place (refer to page 33)
Change in year
ESG remains a high area of focus for the Group’s stakeholders and
significant progress was made during 2023 to enhance the execution
of the Group’s ESG strategy with implementation of the Net Zero Asset
Plans (NZAPs) for each of the Group’s flagship destinations starting in
the year. Physical Climate Risk reviews are also being updated and
integrated into the Group’s TCFD assessment.
The Group’s climate risk approach has been guided by the Task Force
on Climate-related Financial Disclosures (TCFD) recommendations
since 2018, reporting publicly in line with them since 2020.
During 2023, the Group’s physical and transitional climate risks and
mitigations were reviewed against three different climate scenarios
aligned with CRREM pathways for future global temperature increases
of 1.5°C, 2°C and 4°C. The review focused primarily on the 2°C and 4°C
scenarios in line with the latest IPCC report that states it no longer
considers the Paris agreement of 1.5°C being achievable.
58Hammerson plc Annual Report 2023
Strategic Report
Risks and Uncertainties continued
E TAX
Residual risk: Medium Link to strategy: 3
The Group suffers financial loss and reputational damage from a new or
increased tax levies or due to non-compliance with local tax legislation.
Risk mitigations
— Focus on maintenance of the Group’s low risk tax status
— Regular meetings with key officials and local tax authorities,
including from HMRC and government
— Regular tax compliance reviews and audits across the Group
— Monitoring and advanced planning for future tax changes
— Potential amendments or re-interpretations to tax laws and their
application to the Group are regularly monitored and, if relevant,
appropriately reflected in the financial statements. Any necessary
actions are taken to ensure ongoing efficiency while remaining fully
in compliance with regulations
— Participation in policy consultations and in industry led dialogue
with policy makers through bodies such as REVO, BPF and EPRA
Change in year
Tax laws that apply to the Group’s businesses continue to be subject
to amendment or change by the relevant authorities. In 2023 the UK
Government continued the business rate freezes which benefits the
majority of our UK tenants, although this is set to change from April
2024 for the majority of our occupiers with rate rises in line with inflation
announced in the Government’s 2023 Autumn Statement.
F LEGAL AND REGULATORY COMPLIANCE
Residual risk: Medium Link to strategy: 1, 3
The failure to comply with laws and regulations relevant to the Group.
These laws and regulations cover the Group’s role as a multi-jurisdiction
listed company; an owner and operator of property; an employer; and
as a developer. Failure to comply could result in the Group suffering
reputational damage, financial penalties and/or other sanctions.
Changes or new requirements may place administrative and cost burdens
on the Group and divert resources away from strategic objectives.
Risk mitigations
— Specialist internal functional support and external advisors engaged
to assist and provide advice on the ongoing management and
assessment of legal and regulatory risk
— Implementing appropriate and proportionate policies and
procedures designed to capture relevant regulatory and legal
requirements
— Internal systems and processes for the monitoring of compliance
with legal and regulatory requirements and for the escalation of
relevant items
— Early planning for CSRD requirements already underway including
engagement with the primary supply chain on CSRD strategy
— Maintaining constructive and positive relationships and dialogue
with regulatory bodies and authorities
— Ongoing engagement with external advisors on the relevant
regulatory horizon
— Zero tolerance approach for bribery, corruption and fraud with
policies and processes in place to manage and monitor such risks
including mandatory training in these areas
— Advanced monitoring and planning for future regulatory changes
and responding in a risk based and proportionate manner to any
changes to the legal and regulatory environment as well as those
driven by strategic or commercial initiatives
— Where appropriate, participation in policy consultations and in
industry led dialogue with policy makers through bodies such as
REVO, BPF and EPRA
— Delivering relevant training to colleagues, including anti-bribery and
corruption, data protection and information security. This is
augmented by tailored training to relevant individuals in key areas
Change in year
Requirements for CSRD regulation and related disclosures will
significantly increase the Group’s administrative burden and associated
costs for mandatory assurance, as well as necessitating additional work
and processes behind the reporting, hence the increased likelihood and
impact of this risk. Work is underway to plan for these changes and
mitigate where possible their impact.
Additional regulation under the revised Corporate UK Governance Code
becomes effective in 2025. Work done in the year by the Group to align
with the COSO internal control framework leaves the Group well
positioned to comply with the updates.
The legal and regulatory landscape has otherwise remained broadly
stable throughout the year with previously imposed UK and EU sanctions
in response to geopolitical uncertainties remaining in place throughout
the period. The Group continues to closely monitor the regulatory
environment and respond to new requirements to ensure compliance.
59Hammerson plc Annual Report 2023
Link to strategy
1 Investment for growth and value creation
2 Agile platform
3 Sustainable and resilient capital structure
Risk movement
Increased
Decreased
No change
G NON-RETAIL MULTI-USE MARKETS
Residual risk: Medium Link to strategy: 1, 3
The Group fails to target the optimal (non-retail) property sectors for
future repurposing or developments or has insufficient access to capital
and the skills required to deliver its urban estates vision. Occupier or
investor demand for non-retail sectors weakens or evolves such that
the Group’s repurposing or development plans are sub-optimal.
Risk mitigations
— Asset-centric visions developed for key urban estates to ensure
new projects complement existing flagship assets and enhance
local communities
— Development plans are focused on ‘capital light’ investments on
land promotion and include monitoring of macro and local economic
research and trends
— Operational activities, talent and systems aligned with the delivery
of the Group’s future strategic objectives and a diversified portfolio
— Engagement with experts and/or advisors to gain a deeper
understanding of alternative sectors and systematically identify
which developments will result in the greatest return and alignment
with the assets
— The Board approves all major commitments and performs formal
development reviews throughout the year
— Hiring of experienced leaders and managers with multi-use and city
centre development experience and backgrounds
— The Board approves all major commitments and performs formal
development reviews throughout the year
Change in year
The adverse macroeconomic environment, particularly the increased
cost of borrowing adversely affects valuation yields and returns for
non-retail sectors. The Group is not currently significantly exposed to
these sectors and there are clear steps to realise value from the
Group’s existing properties and development land through both
repurposing and development activity, principally by securing planning
permissions and land assembly, and in the longer term through
integration across the broader urban estates.
H CYBER SECURITY
Residual risk: Medium Link to strategy: 2
The Group’s information technology systems fail or are subject to an
attack which breaches their technological defences. A failure could
lead to operational disruption, financial, or reputational damage due to
assets being brought down and/or loss of commercially sensitive data.
Risk mitigations
— ISO 27001 aligned cyber policies setting out standards for
penetration testing, vulnerability testing, patch management,
access control and data loss prevention
— Cyber controls framework and cyber strategy implemented and
validated by EY
— Implementation of Cisco Umbrella software to enable same level
of security in remote working locations
— Cyber training for all colleagues and advanced training for higher
risk individuals, as well as periodic cyber awareness campaigns
— Cyber incident response plans in place
— Extensive use of multiple cloud based systems
— Cyber dashboard reviewed quarterly by the Group Executive
Committee with updates also provided to the Audit Committee
and Board
— Externally sourced annual internal audit review of cyber security
across the Group
Change in year
Whilst the Group’s cyber security defences were not breached in the
year, the increased risk is reflective of the higher level of cyber attacks
occurring globally as a result of the rapidly evolving technological
landscape and uncertainty in the geopolitical sphere, with a number
of high profile cyber attacks perpetrated in the UK in 2023.
60Hammerson plc Annual Report 2023
Strategic Report
Risks and Uncertainties continued
I HEALTH AND SAFETY
Residual risk: Medium Link to strategy: 1
There is a risk of serious work-related injury, death and/or ill health to
the Group’s colleagues, customers or contractors, and anyone else who
visits the Group’s properties or premises. This may be due to the
Group’s actions or activities, or from external threats such as terrorism.
In addition, an incident or public health issue, such as a pandemic, is
likely to have an adverse operational impact. Insufficient insight into
health and safety risks and mitigations or a failure to embed a strong
safety culture could increase the Group’s exposure to reputational
damage, fines and sanctions.
Risk mitigations
— Health and safety ISO 45001 management system with annual
external compliance audits
— IS0 45001 accreditation obtained with no findings raised
— Physical security measures implemented and regularly reviewed
— Dialogue with security agencies to assess local and national threat
levels and best practice
— Online incident and risk management tool for UK and Ireland and
incident management in France
— Online CAFM and ePermit system to manage contractors, planned
maintenance and statutory compliance
— Advanced registration of high-rise buildings with the building
safety regulator
— Formalised hierarchy of health and safety roles and responsibilities
for all assets and offices including core crisis group for dealing with
major incidents
— Legal, regulatory and other updates are captured by the Health
and Safety Manager
— Health and safety training programme in place for the Group
Executive Committee and all onsite and corporate starters
— Onsite quarterly health and safety meetings. Monthly operational
meetings with weekly reports to senior management and an annual
update to the Board
— Appropriate insurance cover, including for terrorism and
property damage
Change in year
The Group has a continued focus on operational safety and in 2023
obtained IS0 45001 accreditation. We remain confident that we have
appropriate mitigation actions in place to effectively manage Health
and Safety risk. However a small increase in the likelihood of a health
and safety risk materialising has been documented in light of recent
issues in the UK with RAAC concrete, for which assessments across
the Group’s portfolio are ongoing.
J CAPITAL STRUCTURE
Residual risk: Medium Link to strategy: 1, 3
Lack of access to capital on attractive terms could lead to the Group
having insufficient liquidity to enable the delivery of the Group’s
strategic objectives.
Risk mitigations
— Board approves and monitors key financing guidelines and metrics
and all major investment approvals supported by a financing plan
— Proactive treasury planning to monitor covenant compliance; where
necessary, negotiate waivers and amendments; access debt
markets when available prior to debt maturities to facilitate early
refinancing; and ensure adequate liquidity is maintained relative to
debt maturities
— Proactive engagement with ratings agency to support maintenance
of Investment grade rating
— Annual Business Plan includes a financing plan, scenario modelling
and covenant stress tests
— Continue to pursue disposals of non-core properties and tightly
control new cost commitments to reduce net debt and lower LTV
— Interest rate and currency hedging programmes used to mitigate
market volatility
— Asset roadshows to develop and maintain good relationships with a
wide range of sources of capital
— Ability to access bond market as evidenced through bond tap
Change in year
Significant progress was made in 2023 in strengthening the Group’s
capital structure with £216m raised from disposals, strong cashflow
generated from Value Retail distributions, and a £100m bond tap
executed. These all acted to increase the Group’s flexibility in its options
for capital allocation to either further strengthen the balance sheet or
invest in opportunities. This has resulted in a £406m, or 23% reduction
in net debt over the course of 2023.
Net finance costs also declined during 2023 despite difficult
macroeconomic conditions driven by high inflation and consequential
higher interest rates. This is as a consequence of the Group’s debt being
largely fixed, whilst the interest income on the Group’s cash balances
has grown.
While the Group has no unsecured refinancing required until 2026
which is not covered by existing cash balances, the Group’s weighted
average maturity of debt decreased from 3.4 to 2.5 years. Given the
higher interest rate environment and more challenging capital markets
it was judged that overall, the residual risk for Capital structure would
remain unchanged in 2023.
61Hammerson plc Annual Report 2023
Link to strategy
1 Investment for growth and value creation
2 Agile platform
3 Sustainable and resilient capital structure
Risk movement
Increased
Decreased
No change
K PARTNERSHIPS
Residual risk: High Link to strategy: 1, 2, 3
A significant proportion of the Group’s assets are held in conjunction
with third parties which has the potential to limit the ability to implement
the Group’s strategy and reduces control and therefore liquidity if
partners are not strategically aligned.
Risk mitigations
— Track record of working effectively with diverse range of partners
— Agreements provide liquidity for partners while protecting the
Group’s interests including pre-emption rights and provisions
— Annual joint venture business plans are agreed with joint venture
partners to ensure operational and strategic alignment
— Regular reporting and meetings with joint venture partners to track
performance and maintain alignment
— Proactive covenant monitoring and negotiations with secured
lenders to manage covenant stress and breaches
— The Group operates significant influence through governance rights
and Board representation for its Value Retail investments
— Value Retail is subject to local external audit and valuations, with
oversight by the Audit Committee and the Group’s External Auditor
— Value Retail provides prescribed reporting to the Group on a monthly
and quarterly basis
Change in year
The Group’s strategy of simplification and creating an agile operating
platform focused on a select number of core urban estates and
development opportunities remains. A small decrease in residual
risk has been noted in light of the disposal of the Group’s joint controlled
interests in Croydon and Italie Deux and the loss of control in Highcross
and O’Parinor following action by secured lenders on those assets.
L PROPERTY DEVELOPMENT
Residual risk: Medium Link to strategy: 1, 3
Property development is inherently risky due to its complexity,
management intensity and uncertain outcomes, particularly for major
schemes with multiple phases and long delivery timescales. Unsuccessful
projects result in adverse financial and reputational outcomes.
Risk mitigations
— Utilise expertise and track record of developing iconic destinations
— Development plans and exposure included in annual business
planning process
— Group’s development pipeline provides flexible future delivery
options, such as phasing, and requires limited near term
expenditure to progress to the next decision stages
— Board approves all major commitments and performs formal
development reviews twice yearly
— Capital expenditure is subject to a strict appraisal process which
defines the key investment criteria, the risk assessment process,
key stakeholders, and appropriate delegations of authority
Change in year
While cost inflation and ongoing supply chain issues have adversely
impacted the broader property development market, the Group
remains confident over its ability to realise future value from its
numerous development opportunities in the long term.
Work continued in 2023 at The Ironworks, a 122-unit residential
scheme directly adjacent to Dundrum. Key milestones at schemes in
Dublin, Reading and Birmingham have also been achieved including
planning consent for the ‘Drum’ potential repurposing of the former
department store at Grand Central.
62Hammerson plc Annual Report 2023
Strategic Report
Risks and Uncertainties continued
M TRANSFORMATION
Residual risk: Medium Link to strategy: 2
The Group fails to deliver its strategic objective of creating an agile
platform due to sub-optimal transformation projects. Other issues
could arise due to transformation initiatives being delivered late,
overbudget or causing significant disruption to business-as-usual activity.
Risk mitigations
— Strong governance by Board and senior management to oversee
transformation programme including scope, timings and costs
— Implementation of a strong change management programme
— Full management and communications engagement to motivate
colleagues to drive transformation agenda
— Use of external expertise to leverage best practise and support
existing teams to deliver various initiatives
— Use of standard project delivery methodologies
— Prioritisation of solutions to avoid stress and conflicts
— Engagement with process and business owners to scope and deliver
optimal solutions
Change in year
Substantial progress on the transformation programme was made
in 2023 with a number of projects successfully delivered. Key
achievements include the consolidation of UK and France property
management services to a single supplier and the successful delivery of
a number of IT projects including a new purchase ordering system, an
integrated HR system, and a new customer management and leasing
platform. As these key projects have gone live, the change management
and benefit realisation element of the transformation programme has
become critical to embed changed processes and behaviours.
N PEOPLE
Residual risk: Medium Link to strategy: 2
A failure to retain or recruit key management and other colleagues to
build skilled and diverse teams could adversely impact operational
and corporate performance, culture and ultimately the delivery of the
Group’s strategy. As the Group evolves its strategy it must continue
to motivate and retain people, ensure it offers the right colleague
proposition and attract new skills in a changing market.
Risk mitigations
— Recent refresh of the Group’s purpose, vision and values
— Annual business planning process includes people plans covering
team structures, training, and talent management initiatives
— Succession planning undertaken across the senior management
team and direct reports
— Training and development programmes and twice yearly formal
colleague appraisal process
— Active colleague forum to enable formal Board engagement with
feedback incorporated in management plans
— Affinity groups to promote diversity, equality and inclusion
— Regular tailored colleague surveys to gain feedback, with action
plan in place by function to address colleague feedback
Change in year
The effects of the consolidation of UK and France property management
suppliers was actively managed during 2023 with enhanced activity
on colleague engagement and communications. In the year a talent
management programme was launched across the Group, and the
Hammerson Colleague Survey was successfully re-launched. Although
risk of voluntary attrition remains during the transformation period,
levels of voluntary attrition for 2023 were lower than in 2022 and we
continue to attract and retain strong talent across the Group.
63Hammerson plc Annual Report 2023
Link to strategy
1 Investment for growth and value creation
2 Agile platform
3 Sustainable and resilient capital structure
Risk movement
Increased
Decreased
No change
Viability Statement
Capital structure
The Group’s financial position also
strengthened during 2023. Net debt at
31 December 2023 (on a proportionally
consolidated basis) was £1,326m, £406m,
or 23%, lower than at the start of the year. The
reduction was principally due to proceeds from
disposals of £216m and the derecognition of
£125m of secured debt on the Group’s
investments in Highcross and O’Parinor.
At 31 December 2023, the Group’s weighted
average debt maturity was 2.5 years (2022:
3.4 years) with £728m of unsecured debt
maturing by 31 December 2026. In addition,
the secured debt in Dundrum (Group’s 50%
share £260m) matures in September 2024.
However, the Group has significant liquidity
of £1,225m at 31 December 2023 (2022:
£996m), reflecting cash of £570m and
unutilised committed revolving credit facilities
(‘RCFs’) of £655m. The Group’s current cash
balance covers the unsecured debt maturities
in 2024 and 2025. £605m of the RCFs mature
in 2026 and contain options, subject to lender
consent, which could extend them by a further
12 months into 2027.
In addition, the Group’s share of net debt held
by Value Retail was £730m (2022: £675m).
This comprised secured borrowings of £794m,
which are non-recourse to the Group, less cash
of £64m. The debt has an average maturity of
3.1 years, with £270m of secured loans
maturing by the end of 2026.
Strategy and prospects
The Board annually reviews the Group’s
strategy and also in December assesses and
approves a five year Business Plan (‘the Plan’).
The Plan sets out how the Group will achieve
its strategic objectives and contains financial
forecasts, financing strategies and asset level
and portfolio plans, including potential
disposals and acquisitions, capital expenditure
initiatives and development projects. It also
includes forecasts of financing and debt
covenant metrics including reverse stress
headroom calculations.
Another important factor to consider in
the viability assessment is the diversity
and security of the Group’s income. At
31 December 2023, only 18% (2022: 17%)
of passing rent is derived from the top ten
tenants. Also, only 35% (2022: 40%) of the
Group’s passing rent is subject to a tenant
break or expiry over the next three years,
corresponding to an average unexpired lease
term of 4.6 years (2022: 4.3 years).
Overview
The Directors have assessed the future viability
of the Group.
The assessment factored in the latest
geopolitical, economic and trading outlook,
particularly the financial challenges on both
consumers and businesses from high interest
rates, benign economic growth, inflation and
supply chain pressures.
The Group has a clear strategy with three key
areas of strategic focus:
— Invest for growth and value creation
— A sustainable and resilient capital structure
— An agile platform
The areas of strategic focus are underpinned
by the Group’s commitment to ESG and the
Group has made progress in all these areas
during 2023. Details of this progress,
including details of 2024 strategic priorities
and outlook, are explained in the Chief
Executive’s Statement.
Assessment of prospects
To assess the Group’s viability the Directors
considered the strong operational and
financial performance in 2023; the Group’s
capital structure; strategic objectives, future
prospects; and principal risks.
2023 performance
The Group delivered a strong financial
performance in 2023. Adjusted earnings
increased by 11% in 2023 to £116m driven
by underlying income growth and lower
administration and net financing costs, higher
Adjusted earnings from the Group’s investment
in Value Retail; partly offset by income
foregone from recently sold properties.
From an operational perspective, the Group
delivered another record year of leasing,
maintained robust occupancy, and footfall and
sales were ahead of 2022 levels in all three of
the Group’s operating countries.
Further details on financial performance
are the Financial Review, and details on
operational performance are in the Chief
Executive’s Statement.
Principal risks and Viability period conclusion
While the Group’s performance and financial
position has further improved in 2023, levels
of macroeconomic and geopolitical uncertainty
remain elevated and two of the Group’s
principal risks are currently judged as having
high levels of residual risk. From a viability
perspective, the key principal risks are
“Investment markets & valuations” and
“Capital structure” as these are intrinsically
linked to the Group’s debt covenants
and liquidity.
Having considered all of the above factors,
particularly the weighted average debt
maturity, the Directors have concluded not
to change the three year timescale for the
Group’s viability assessment. This means that
for the year ended 31 December 2023, the
Group’s ‘Viability period’ covers the period to
31 December 2026.
Assessment of viability
Approach
To enable the Board to understand the Group’s
viability a reverse stress test (‘stress test’) of
the Group’s Plan was undertaken to assess the
maximum level that the key variables to the
Group’s unsecured debt covenants could fall
before reaching the covenant thresholds.
The key variables impacting the unsecured
debt covenants are valuations for the gearing
and unencumbered asset ratio covenants,
and net rental income for the interest cover
covenant. Net interest cost also impacts the
interest cover ratio, although at 31 December
2023, 84% of the Group’s gross debt is at fixed
interest rates, which limits the volatility of this
element of the covenant and this position is
not expected to change significantly over the
Viability period.
Financing assumptions
To fully assess the Group’s resilience, a set of
‘worse case’ financing outcomes has been
incorporated into the stress test as follows:
— the secured loans in Dundrum and Value
Retail are not refinanced and the lenders
enforce their security resulting in the Group
derecognising the full value of its equity
investments totalling £541m; and
— the early repayment of £16m of the Group’s
unsecured private placement notes which
do not mature over the Viability period since
these notes have the lowest covenant
headroom to valuation falls, 27% at
31 December 2023, and the Group has
the right to redeem the notes for their
value plus a make-whole amount.
64Hammerson plc Annual Report 2023
Strategic Report
Viability Statement
Climate risk
The Directors also considered climate-related
risks as part of the Viability assessment. The
Group’s climate risk is currently judged to have
a medium level of residual risk and during
2023 the Group has launched various
initiatives contained within each asset’s Net
Zero Asset Plans which provide a clear
pathway to the Group achieving Net Zero by
2030. Overall, given the longer term nature of
climate risk, the Directors have concluded that
this risk does not have a significant impact on
the Viability assessment over the three year
Viability period.
Scenario outcome
Based on the above Viability assumptions, the
outcome of the stress test is shown below:
Level of reduction in key variable to reach
covenant threshold
Key variable Covenant
31 Dec
2023
Viability
period
Valuations
(including VR)
Gearing 34% 31%
Net rental
income
Interest cover 68% 71%
Having reviewed current external forecasts,
recent precedents and possible future adverse
impacts to valuations and net rental income,
the Directors believe it is implausible that the
reductions in valuations or net rental income
shown in the stress test will occur over the
Viability period.
In addition the Group is forecast to have
sufficient liquidity until the maturity of the
RCFs in Q2 2026. As stated above, these
contain a 12 months extension option which
is subject to lender consent. The Directors
believe it is reasonable to assume that the
Group will be able to extend the RCFs or secure
alternative sources of funding such that, even
in the absence of other mitigating actions, the
Group will have sufficient liquidity to cover the
entire Viability period.
Other mitigating actions
There are also a number of key mitigating
actions available to the Group which have not
been factored into the Viability assessment.
These would provide further financial strength
and covenant headroom and include:
— Refinancing of maturing loans in the
ordinary course of business, particularly
in relation to secured debt, as this avoids
the modelled derecognition of these
investments in the stress test. Refinancing
discussions are underway for the Dundrum
secured loan while Value Retail
management remain confident of
refinancing its maturing loans following the
successful refinancing activities of £1.4bn
in 2022 and 2023
— Additional liquidity from further disposals
including the recently contracted sale of
Union Square, Aberdeen for £111m which
is due to complete in March 2024
— Curtailment of uncommitted capital
expenditure plans and other discretionary
cash flows factored into the Plan
Conclusion
Based on their detailed Viability assessment,
the Directors confirm that they have a
reasonable expectation that the Group will
be able to continue in operation and meet its
liabilities as they fall due over the three year
period to 31 December 2026.
65Hammerson plc Annual Report 2023
Non-financial and Sustainability Information Statement
Non-financial and sustainability information
can be found in the following locations
within the Strategic Report (or is incorporated
into the Strategic Report by reference for
these purposes):
Index of non-financial reporting
disclosures
Non-financial information Pages
Business model 18–19
Principal risks 54–63
Non-financial key performance
indicators
23
The Group also applies a range of policies
and procedures relating to colleagues,
environmental and social matters, human
rights and anti-bribery and corruption. The
Group’s energy, environmental, climate
change and biodiversity policies and climate-
related financial disclosures consistent with
all TCFD recommendations are included in
the TCFD section on page 34. A description
of the Group’s other polices, the due diligence
measures we undertake to implement them
and the results of applying these policies,
are all set out in the table below.
Policy Description Policy application and outcomes
Associated
reporting
requirement
Code of conduct Sets out expectations for colleagues’
personal behaviour including treating
others with respect, acting fairly in
dealing with stakeholders, complying
with laws and maintaining integrity
in financial reporting
The Code of conduct is issued to all colleagues across the Group and supported by
training during new colleague induction, as well as being reinforced by the Board’s and
senior leadership’s actions and communications. No material breaches were alleged
or identified during 2023. Also see page 24 for more information on our colleagues.
— Employees
— Social matters
— Anti-bribery
and corruption
Equal
opportunities
policy
Confirms the Group’s commitment to
equal opportunities and diversity and
the Group’s opposition to all forms of
unlawful discrimination
The policy is available to all colleagues and applied in relation to all hiring and
promotion decisions at all levels. No breaches of the policy were alleged or identified
during 2023. The ethos of the policy is supported by four colleague led affinity groups
(LGBTQ+, Race & Ethnicity, Women and Wellbeing), each of which has a sponsor
on the Group Executive Committee and partners with Group Communications and
HR to deliver relevant news, events and initiatives to colleagues across the Group.
Also see page 24 for more information on our colleagues and affinity groups.
— Human rights
— Employees
— Social matters
Health, safety
and security
statement
of intent
Sets out measures designed to ensure a
culture of health and safety best practice
that leads to the elimination or reduction
in risks to health, safety and security of all
associated with the Group
The policy is applied through our robust management system across the UK and
Ireland, which enabled us to gain re-accreditation to ISO 45001 standard in November
2023. The Group undertook a full review of all the centre assessments over the last
three years, and the entire Health, Safety, and Security Management System. As at
31 December 2023, there were no intolerable risks outstanding and no Environmental
Health Officer notices were received during the year. By integrating the non-core
portfolio into the management system, we saw a reduction in the number of open risks.
A continued improvement in health and safety culture was reflected in internal audit
scores with the entire portfolio scoring above 95%. Also see page 30 for more
information on health, safety and security matters.
— Employees
— Social matters
Modern slavery
and human
trafficking
statement
Sets out the approach taken by the Group
to understand the potential modern
slavery risks associated with the Group’s
business and explains the actions taken
to prevent slavery and human trafficking
within the Group’s operations and
supply chains
Modern slavery awareness is maintained across the Group’s operational teams and
specific training is provided to colleagues through the Group’s online training system.
Key risk areas identified are within the Group’s supply chain and relate to construction
activities and low skilled support services – both areas remained low as part of the
Group’s overall risk assessment in 2023. By incorporating modern slavery declarations
in our Source to Contract activities, we have increased compliance and reduced the
risks of using supplier and third party suppliers who do not comply with this legislation.
No incidents of modern slavery or human trafficking were identified or alleged during
2023. The Company’s 2023 Modern Slavery and Human Trafficking Statement was
approved by the Board in June 2023.
— Human rights
— Social matters
Responsible
procurement
policy
Sets out the Group’s objectives to promote
responsible procurement through the
purchase of environmentally and socially
sustainable goods and services and
engage with key suppliers to encourage
better performance and effective
management of environmental and social
risks within the Group’s supply chain
The policy was applied to procurement activities undertaken across both operational
and development activities in 2023. Supplier adherence to this policy is monitored and
enforced at the Request for Information stage of procurement with the most compliant
suppliers being progressed to the next stages of the procurement process. The policy
is also linked to the due diligence process necessary to approve third party consultants,
contractors and suppliers. No material breaches were alleged or identified during 2023.
— Human rights
— Social matters
— Anti-bribery
and corruption
— Environmental
matters
66Hammerson plc Annual Report 2023
Strategic Report
Non-financial and Sustainability Information Statement
Policy Description Policy application and outcomes
Associated
reporting
requirement
Supply chain
code of conduct
and procurement
Outlines a set of best practice standards
that apply to all Group suppliers (covering
legal requirements, labour standards,
health and safety and environmental
responsibility) and explains how the
Group measures and monitors supplier
adherence to such standards
This is fully embedded in the new procurement process – each new supplier to the
Group must subscribe to the code of conduct and complete the accompanying
questionnaire in order to gain Approved Supplier status. Suppliers must be fully
compliant with health and safety, ESG regulations and must be fully insured. RIDDOR
(Reporting of Injuries, Diseases and Dangerous Occurrences Regulations) issued by
the Health and Safety Executive must be fully resolved and disclosed before we can
use such suppliers. This has resulted in only the most compliant suppliers being
selected to reduce risk exposure and associated costs. This is also linked to the due
diligence process necessary to approve third party consultants, contractors and
suppliers. No material breaches were alleged or identified during 2023.
— Human rights
— Social matters
— Anti-bribery
an1orruption
— Environmental
matters
Anti-bribery and
corruption policy*
Sets out the Group’s zero tolerance policy
in relation to bribery and corruption,
including prohibitions on improper and
facilitation payments, and penalties for
breach of policy
The policy is issued to all colleagues across the Group alongside the Gifts and
Entertainment Policy and supported by training delivered during the colleague
induction programme. The Company has also made available to all colleagues an
Anti-Bribery and Corruption Risk Assessment, which provides guidance on carrying
out due diligence when appointing third party consultants, contractors and suppliers.
No incidents of bribery or corruption were alleged or identified during 2023.
— Employees
— Anti-bribery
and corruption
Whistleblowing
policy*
Encourages colleagues to report any
concerns they may have in relation to
health and safety matters, the environment,
or any other unethical, unfair, dangerous
or illegal behaviour, sets out the process
for doing so and confirms that
whistleblowers will not be victimised
The policy is issued to all colleagues across the Group and supported by training
during new colleague inductions. No whistleblowing concerns were raised by
colleagues during 2023.
— Employees
— Anti-bribery
and corruption
Gifts and
entertainment
policy*
Explains the forms of, and circumstances
in which, gifts or entertainment might be
acceptable and the reporting and approval
procedures to follow where colleagues
wish to offer, or receive, hospitality
The policy is issued to all colleagues across the Group and supported by training
as part of new colleague inductions.
Gifts and entertainment registers are maintained across the Group and reviewed
periodically.
— Employees
— Anti-bribery
and corruption
All policies are available on the Company’s website at www.hammerson.com save for those marked with a * which are available to all colleagues
through the Company’s intranet.
2023 Strategic Report
Pages 1 to 67 of this Annual Report constitute the Strategic Report which was approved and signed on behalf of the Board on 28 February 2024.
Rita-Rose Gagné Himanshu Raja
Director Director
67Hammerson plc Annual Report 2023
Executive Directors
Non Executive Directors
Rita-Rose Gagné
Chief Executive
Appointed to the Board
2 November 2020
Rita-Rose has a wealth of experience in global real estate investment,
asset management, M&A and strategy. She has worked in property
markets across the world and her expertise spans across various asset
classes and multi-use assets, including residential, retail, office and
logistics. Prior to Hammerson, she held various executive roles at
the global real estate company, Ivanhoé Cambridge. Most recently,
Rita-Rose was President of Growth Markets, where she managed
over $7.6bn of real estate assets plus development projects across
markets in Asia and Latin America. She is a Non-executive Director
of Value Retail plc.
Habib Annous
Independent Non-executive Director
Appointed to the Board
5 May 2021
Habib brings to the Board over 30 years’ experience in investment
management across a range of sectors. Most recently, he was a partner
at Capital Group, from 2002 to 2020, where he was responsible for
the European Real Estate sector as well as a number of other
industries. He started his career as an equity analyst in 1988 with
responsibility for UK Real Estate. He became a Fund Manager in 1989
at Lazard Investors and then moved to Barclays Global Investors and
subsequently to Merrill Lynch Investment Managers. Habib is an
adviser to the Investor Forum.
Himanshu Raja
Chief Financial Officer
Appointed to the Board
26 April 2021
Himanshu brings to the Board strong financial, strategic and leadership
qualities as well as extensive experience of debt and equity markets
and in business transformation. Before joining Hammerson, Himanshu
served as CFO of listed companies in the FTSE 100 and FTSE 250 for
over 12 years as CFO of Logica plc, G4S plc, and Countrywide plc, and
was CFO of Misys under private equity ownership. Himanshu has
previously held senior roles covering finance, IT, procurement and
capital and cost transformation largely in the telecoms sector.
Himanshu qualified as a Chartered Accountant with Arthur Andersen.
Méka Brunel
Independent Non-executive Director
Appointed to the Board
1 December 2019
Méka has broad experience in the European real estate sector which,
together with her knowledge and skills in property outside of retail,
strengthens the Board’s expertise. Her previous roles include Director
of Strategic Development at Gecina in 2003 and CEO of Eurosic in
2006. In 2009, she joined Ivanhoé Cambridge as European President
before returning to Gecina in 2014 as a Non-executive Director and
was CEO from 2017 to 2022. Méka was Chair of the European Public
Real Estate Association and is a Non-executive Director of ORPEA S.A.
and also chair of the Palladio Foundation, a non-profit organisation.
External Listed Directorships
Non-executive Director of ORPEA S.A
68Hammerson plc Annual Report 2023
Corporate Governance
Board of Directors
Audit Committee
Nomination and Governance
Committee
Remuneration Committee
Committee Chair
Non Executive Directors
Non Executive Directors
Robert Noel
Chair of the Board
Appointed to the Board
1 September 2020 and appointed as Chair on 7 September 2020
Robert brings extensive property industry knowledge and experience
to the Board having built a long and successful career spanning over
30 years in the real estate sector, including at other listed companies.
Most notably, Robert was CEO at Land Securities Group Plc (Landsec)
from 2012 until March 2020. Prior to joining Landsec in 2010, Robert
was Property Director at Great Portland Estates Plc from 2002 to 2009
and from 1992 to 2002 he was a Director of Nelson Bakewell, the
property services group. Robert is a past president of the British
Property Federation. He is the Chair of Taylor Wimpey plc.
External Listed Directorships
Chair of the Board of Taylor Wimpey plc.
Adam Metz
Independent Non-executive Director
Appointed to the Board
22 July 2019
Adam brings to the Board wide ranging knowledge in retail and
commercial real estate, and extensive investment experience gained
at Blackstone Group, TPG Capital and the Carlyle Group. His
comprehensive experience in real estate investment and strategy in
the US, Europe and Asia, through listed companies and private equity,
enables him to make a valuable contribution to our Board.
External Listed Directorships
Chair of Seritage Growth Properties and independent Director of
Morgan Stanley Direct Lending Fund.
Mike Butterworth
Senior Independent Director
Appointed to the Board
1 January 2021
Mike brings to the Board more than 25 years’ experience in senior
finance roles in businesses across a range of sectors including
technology, manufacturing, communications, healthcare and
beverages. Previously he was CFO of Incepta Group plc and Cookson
Group plc. Mike brings wide-ranging non-executive experience,
including as a Non-executive Director at Johnston Press plc, Kin and
Carta Group plc, Stock Spirits Group plc and Cambian Group plc.
Mike is a qualified chartered accountant.
External Listed Directorships
Non-executive Director of Pressure Technologies plc and Focusrite plc.
Carol Welch
Independent Non-executive Director
Appointed to the Board
1 March 2019
Carol brings deep experience in commercial, marketing, innovation
and digital gained while working in senior roles at global businesses,
such as PepsiCo, Cadbury Schweppes, and Associated British Foods.
She also brings insightful leadership, operations and tenant experience
from the leisure, retail and hospitality sectors gained through her
previous roles as Chief Marketing Officer at Costa Coffee, Managing
Director UK and Ireland and European Commercial Officer at ODEON
Cinemas. Carol is currently CEO of A.F. Blakemore & Son Ltd and
Non-executive Director at SPAR UK.
Carol is our Designated Non-executive Director for Colleague
engagement.
You can view details of our Group
Executive Committee members on our
website at www.hammerson.com
Full biographical details for each
Director and full details of external
appointments can be found on our
website at www.hammerson.com
69Hammerson plc Annual Report 2023
Dear Shareholders
I am pleased to present the Corporate
Governance Report for 2023. The Company is
subject to the UK Corporate Governance Code
2018 (the Code), which is available on the
website of the Financial Reporting Council at
www.frc.org.uk. The purpose of the Code is to
promote the highest ethical and governance
standards for UK premium listed businesses to
contribute to long term sustainable success.
The Board considers that, throughout the year,
the Company has applied all of the principles
and complied with all of the provisions of the
Code. The Company’s compliance with the
Code is reported against each of the five main
sections of the Code: Board leadership and
Company purpose; division of responsibilities;
composition, succession and evaluation; audit,
risk and internal control; and remuneration.
The Company’s disclosures on the way it
has applied the principles of the Code can be
found throughout this Annual Report on the
following pages:
Code section Page
Board leadership and Company
purpose
The role of the Board 70
Purpose and strategy 71
Culture and values 72
Stakeholder and workforce engagement 72-73
Division of responsibilities
The roles of the Directors 74
Director commitment 74
Board Committees 75
Board support 75
Composition, succession and
evaluation
Composition and succession 75
Board effectiveness review 76
Nomination and Governance Committee
Report 78
Audit, risk and internal control
Risk management and internal controls 86
Fair, balanced and understandable
assessment 88
Audit Committee Report 84
Remuneration
Directors’ Remuneration Report
90
BOARD LEADERSHIP AND COMPANY
PURPOSE
The role of the Board
The purpose of the Company is to create
exceptional city centre destinations that
realise value for our stakeholders, connect
our communities and deliver a positive impact
for future generations.
The primary duty of the Board is to promote
the long term success of the Company by
setting a clear purpose and strategy which
create long term value for our investors and
other stakeholders. It aligns the Group’s
culture with its strategy, purpose and values
and sets the strategic direction and
governance of the Group. The Board has
ultimate responsibility for the Group’s
management, strategic direction and
performance, and ensures that sufficient
resources are available to enable
management to meet the strategic objectives
set. You can read more about our strategy on
pages 4 to 5 and pages 8 to 15.
The Company’s governance framework
supports strong governance across its
activities, enabling oversight of performance,
delivery against strategic objectives and
effective decision making. As part of this
Corporate Governance Report
Robert Noel
Chair of the Board
70Hammerson plc Annual Report 2023
Corporate Governance
Corporate Governance Report
dividend for the interim 2023 dividend and
setting a new dividend policy
— Strategic projects and initiatives affecting
the Company, including transformation
activity and outcomes in the year
— Completion of a £100m bond tap issuance
for maturities in 2028 and matching tender
offer for shorter dated bond maturities,
together with oversight of other financing
and treasury matters
— The review and approval of the Company’s
strategy and business plans
— Discussing matters relating to risk and
internal control, including consideration of
the principal and emerging risks affecting
the Company and cyber/IT matters
— Colleague developments, including the
results of the Company’s 2023 colleague
engagement survey and matters relating to
succession planning, culture, diversity and
inclusion, and talent development
— Updates and regular reporting on investor
relations activity and shareholder
engagement
— The Company’s purpose, vision and values,
including the embedding of, and
engagement with colleagues on, these
items
— Sustainability and the wider ESG agenda
— Governance matters, including reviewing
group wide policies, arrangements for the
2023 Annual General Meeting and the
reappointment of Directors
— The 2023 internal Board and Committee
effectiveness evaluation
Purpose and strategy
The Board discharged its responsibilities in
relation to strategy and purpose through a
number of activities in the year. These included
the annual Board Strategy Day held in October
2023, which covered a wide range of strategic
issues with input from senior management
and colleagues from across the business. This
year, a range of different external perspectives
were provided at the Strategy Day through the
participation of occupiers, advisers and other
third parties. These perspectives facilitated
discussion in different areas relevant to the
Company’s strategy, operations and markets,
including the identification of potential risks
and opportunities for consideration by the
Board and management.
The Board also considers strategic matters
as part of regular meetings through the year.
At each scheduled meeting, management
provide updates on performance against
strategic goals and initiatives, together with
relevant updates on external developments
and stakeholder perspectives.
Throughout 2023, the Board focused on
providing leadership and support to the
Executive team as well as an objective,
independent and constructive view on the
Company’s strategy and business model, to
ensure they adequately reflect the core
capabilities of the business and the changing
external environment, particularly during a
period of uncertain macroeconomic and
geopolitical conditions. Further detail on how
the Company generates and preserves value
over the long term is set out in the Chief
Executive’s statement on pages 8 to 15 and
Our business model on pages 18 to 19.
Meetings of the Board
Formal meetings of the Board throughout the
year present an opportunity for the Directors to
be updated on, and oversee, the performance
of the business, progress against strategic
objectives, external and internal developments
and stakeholder perspectives, among other
things. As part of these meetings, its annual
Strategy Day and other sessions with
management during the year, the Board
considers opportunities and risks relating
to the future development of the business,
including matters relating to the wider
ESG agenda.
framework, the Company has a Schedule
of Matters Reserved for the Board (Matters
Reserved), which was reviewed and updated
in December 2023, and is available to view at
www.hammerson.com. The Board undertakes
various duties in accordance with the Matters
Reserved, including approving major
acquisitions, disposals, capital expenditure
and financings. The Board also oversees the
Company’s system of internal controls and
risk management, including climate related
risks and opportunities, and approves and
monitors performance against the annual
Business Plan.
Details of the Board of Directors of the
Company as at the date of this report are
set out on pages 68 to 69 and can also
be found on the Company’s website at
www.hammerson.com. Details of the various
Director roles are set out in the ‘Division of
responsibilities’ section on page 74 and details
of Board and Committee composition can be
found in the Nomination and Governance
Committee Report on pages 78 to 83.
Key activities of the Board in 2023
During 2023, among other things, the Board
spent time on:
— Strategic aims and the financial and
operating performance of the Company
— External economic developments,
market changes and other trends relevant
to the Company
— Stakeholder matters, including
consideration of developments relevant to
colleagues, shareholders, partners and
other stakeholders
— Investment and disposal proposals,
planning and execution, including the
disposal of the Company’s interests in
Italie Deux, Italik and Croydon, and the
derecognition of Highcross and O’Parinor
— The Company’s annual and half year
reporting, including the return to a cash
Board and Committee meetings attendance – 2023
Scheduled Board
meetings
Audit Committee
meetings
Nomination and
Governance Committee
meetings
Remuneration
Committee
meetings
Robert Noel 7/7 N/A 3/3 N/A
Rita-Rose Gagné 7/7 N/A N/A N/A
Himanshu Raja 7/7 N/A N/A N/A
Habib Annous 7/7 5/5 3/3 4/4
Méka Brunel 7/7 N/A 3/3 4/4
Mike Butterworth 7/7 5/5 3/3 N/A
Adam Metz 7/7 5/5 3/3 N/A
Carol Welch 7/7 N/A 3/3 4/4
During the year, Directors attend meetings of Committees of which they are not a member by invitation. This includes: (i) the Chair’s attendance at meetings of the
Audit and Remuneration Committees; (ii) the Chief Executive and Chief Financial Officer’s attendance at meetings of the Audit Committee; and (iii) the Chief
Executive’s attendance at meetings of the Remuneration, and Nomination and Governance Committees. This attendance is not reflected in the table above.
71Hammerson plc Annual Report 2023
— Updates to the Board and its Committees
by the Chief Executive and the Chief People
Officer on matters relating to people
and culture.
— The Board discussed plans for, and the
results of, the Company’s colleague
engagement survey, including updates
on engagement with colleagues and
resulting actions.
— The Remuneration Committee’s
consideration of matters relating to values
and culture as part of its remuneration
deliberations.
— The Board’s review of arrangements
relating to whistleblowing, fraud and
anti-bribery and corruption, including with
a view to ensuring that appropriate systems
are in place for colleagues to raise concerns
in confidence.
The Group is committed to complying fully
with all applicable laws and regulations and
has high standards of governance and
compliance. The Code of Conduct has been
prepared to help colleagues and Directors to
fulfil their personal responsibilities to investors
and wider stakeholders. The Code of Conduct
covers the following areas:
— Compliance and accountability
— The required standards of personal
behaviour
— The Group’s dealings with stakeholders
— Measures to prevent fraud, bribery and
corruption
— Share dealing
— Security of information
The colleague induction programme includes
compulsory modules on health and safety,
anti-bribery, cyber security, ESG, protection of
confidential and inside information, and data
protection, which are delivered in the UK,
France and Ireland via the Group’s online
Learning Management System. The content
for these modules was thoroughly reviewed
and refreshed in advance of the relaunch to
all colleagues.
The Directors remain committed to zero
tolerance of bribery and corruption by
colleagues and the Group’s suppliers. The
Audit Committee receives annual Anti-Bribery
and Corruption, Fraud and Whistleblowing
Reports and reviews the arrangements in
place for individuals to raise concerns. In
2023, the Board reviewed and, on the Audit
Committee’s recommendation, approved
updates to the Company’s Anti-Bribery and
Corruption Policy (including enhancements to
the processes for approving and recording gifts
and entertainment) and Anti-Fraud Policy and
Response Plan. The Group’s Whistleblowing
Policy and procedures were also updated to
introduce a third party provider to give
colleagues an additional method to raise
whistleblowing concerns anonymously and
confidentially. There were no allegations of
fraud detected or reported during the year
and no whistleblowing concerns were raised.
The Group’s Modern Slavery and Human
Trafficking Statement is submitted to the
Board for approval each year, and the
statement is published on the Company’s
website at www.hammerson.com.
Engagement with stakeholders
Stakeholder engagement remains a key focus
for the Board. In order to comply with Section
172 of the Companies Act 2006 (the Act), the
Board takes into consideration the interests
of stakeholders when making decisions and
includes a statement setting out the way in
which Directors have discharged this duty
during the year. Further information on the
actions carried out in 2023 by the Board to
comply with its obligations to the Group’s
stakeholders is detailed on pages 20 to 21
and the statement of compliance with Section
172 of the Act is set out on page 22. The
identification of our key stakeholders and the
continuing engagement efforts help to ensure
that the Board can understand, consider and
balance broad stakeholder interests when
making decisions to deliver long term
sustainable success. While the Board will
engage directly with stakeholders on certain
issues, stakeholder engagement will often
take place at an operational level with the
Board receiving regular updates on
stakeholder views from the Executive
Directors and the senior management team.
Board papers requesting a decision from the
Board are required to include a specific
section reviewing the impact of the proposal
on relevant stakeholder groups.
Following a recommendation in the 2022
external board evaluation, during 2023 the
Nomination and Governance Committee spent
time reviewing and discussing a stakeholder
map setting out details of the Company’s
principal stakeholders, how the Company
engages with them and the issues of interest
to them. This discussion was intended to
identify, among other things, whether all key
stakeholders and their interests had been
appropriately identified and potential
opportunities for enhancement in relation
to the Board’s consideration of stakeholder
interests in 2024. Following its discussion,
the Committee was satisfied that all key
stakeholder groups had been appropriately
covered in the exercise and that there was
valuable and informative engagement with
each group, whether by Directors or
management during the year.
The annual schedule of Board meetings is
set well in advance so that, so far as possible,
all Directors are available to attend meetings.
If, in exceptional circumstances, a Director is
unable to attend a meeting, they receive the
papers as usual and have the opportunity to
provide any questions or comments ahead
of the meeting and to discuss the outcome
of the meeting with the Chair or executive
management. The same applies to meetings
of the Board’s committees.
The table in the previous page sets out details
of the attendance at meetings of the Board and
its committees during 2023. In addition to
these scheduled meetings, a number of ad hoc
meetings were held to consider specific items
of business. In addition, all members of the
Board attended the annual Strategy Day in
October 2023.
Each scheduled meeting of the Board includes
time for discussion between the Chair, the
Non-executive Directors and the Chief Executive
Officer, and separately for discussion between
the Chair and the Non-executive Directors
without the Executive Directors present.
Culture and values
The Board recognises the importance that
culture and values play in the long term
success and sustainability of the Company,
and the role of the Board in establishing,
monitoring and assessing culture. During
2023, the contribution of culture and values
has been an important focus for the Board.
Following the review and relaunch of
Hammerson’s values in 2022, the senior
management team spent time in 2023
working with colleagues to ensure that those
values were embraced and embedded into
the Company’s culture. Workshops were held
throughout the year to obtain feedback and
actively engage with colleagues to consider
what those values mean to them and the
difference they can make at an individual and
team level to ensure they are embedded
efficiently. The Board received updates on the
results of these sessions via the Nomination
and Governance Committee and will continue
to monitor progress in 2024. You can read
more on this in the Our Colleagues section
on page 24.
During 2023, the Board monitored, assessed
and promoted the Company’s culture and
values through a number of different activities,
including:
— Asset visits and tours and attendance by
Directors at various colleague events and
meetings. This included a visit of the Board
to the Company’s assets in Birmingham in
June 2023, involving meetings with
colleagues, occupiers and other stakeholders.
72Hammerson plc Annual Report 2023
Corporate Governance
Corporate Governance Report continued
In 2023, the Forum’s focus has been on how
to truly embed Hammerson’s values as the
foundation of the Company’s culture as well as
discussing and understanding the results of
the colleague survey. The Company also has
four colleague-led affinity groups (LGBTQ+,
Women, Race & Ethnicity, Wellbeing) which
are integrated with the Forum to support
colleague engagement and diversity and
inclusion activities throughout the year. Each
of the groups has a designated GEC sponsor to
provide senior leadership support for its work.
You can read more about the work of the
Forum and the affinity groups in the Our
Colleagues section on pages 24 to 25.
The Board values the benefits of engagement
with, and input from, colleagues and
acknowledges its important contribution to
Board discussion and decision making. As part
of this engagement, throughout the year,
Directors and senior management provide
employees with regular updates and information
through a range of channels on matters of
interests, including internal developments
and the performance of the business.
Further details on colleagues, including our
approach to investing in and rewarding our
workforce as well as the policies and
procedures applicable to colleagues, can be
found on pages 20 to 21, 24 to 25 and 66 to 67.
Engagement with shareholders
The Company undertakes a broad range of
investor relations (IR) activity to ensure that
current and potential investors, as well as
financial analysts, are kept informed of
performance and have appropriate access to
management to understand the Company’s
business and strategy.
The Board is regularly updated on IR matters
and feedback received from investors. The
Board believes it is important to maintain open
and constructive relationships with investors
and for them to have opportunities to share
their views with the Board. The Chief Executive
and Chief Financial Officer engage with the
Company’s major institutional investors on a
regular basis. As Chair of the Board, I offer to
meet with major institutional investors and
proxy advisors ahead of our Annual General
Meeting (AGM) to discuss matters such as
corporate governance and succession
planning. The Chair of the Remuneration
Committee takes part in consultations with
major institutional investors on remuneration
issues from time-to-time, including an
extensive consultation in the first quarter of
2023 as part of the Committee’s review of the
Directors’ Remuneration Policy. The Board
also regards the Company’s AGM as an
important opportunity for investors to engage
directly with Directors.
The Senior Independent Director is available
to investors if they have any issues or concerns
which cannot be resolved through the normal
channels of the Chair of the Board, Chief
Executive and Chief Financial Officer, or for
which such contact would be inappropriate.
In advance of, and following, the Company’s
AGM in May 2023, the Board undertook
extensive engagement with shareholders
on the business of the meeting. In particular,
and in accordance with the Code, after the
AGM the Board engaged with relevant
investors to discuss the voting outcome on
those resolutions which received more than
20% of votes cast against the Board’s
recommendation. The voting outcomes
principally reflected votes cast against the
Board’s recommendation on these resolutions
by a group of shareholders connected with
Lighthouse Properties plc. Following
engagement with our investors, the Company
published a detailed update on 3 November
2023, including the outcome of that
engagement in identifying the reasons for the
result and different investor feedback. The full
statement issued pursuant to the Code can be
found on our website www.hammerson.com.
The Board would like to thank shareholders
who took part in the engagement process
since the AGM and for the insight this provided.
Additional relevant information, including the
context of resolutions to be proposed at the
Company’s 2024 AGM, will be set out in the
Notice of Meeting to be sent to shareholders
in due course.
Conflicts of interest and concerns
The Board has a well-established and detailed
process for the management of conflicts of
interest. The Directors are required to avoid a
situation where they have, or could have, a
direct or indirect conflict with the interests of
the Company. Prior to appointment and during
their term in office, Directors are required to
disclose any conflicts or potential conflicts to
me, as Chair, and the General Counsel and
Company Secretary. At each scheduled
meeting of the Board, a register is reviewed,
containing details of conflicts or potential
conflicts of interest for each Director, noting
any changes or matters for authorisation. As
part of the year end reporting, each Director
reviews the Conflict of Interest Register in
respect of their disclosed conflicts and
confirms its accuracy to the General Counsel
and Company Secretary.
Engagement with colleagues
Our colleagues are central to the business and
their performance is critical to its long term
sustainable success. Colleague engagement in
our business is therefore high on our agenda at
both Board and senior management levels.
The Colleague Forum (the Forum) enhances
two way dialogue between the Board and
colleagues, offering a structured environment
for the Board to listen to feedback from our
colleagues allowing issues to be highlighted
and inform future Board decision making.
Carol Welch is our Designated Non-executive
Director for Colleague Engagement. The
purpose of the role is to:
— Act as the Board’s eyes and ears to
understand colleagues’ views on Company
culture, and the degree to which behaviours
and values in the business are aligned with
culture and values agreed by the Board
— Provide guidance and feedback, with
insight gained from the Forum and from
separate sessions held with colleagues, on
achieving effective internal communication
— Provide independent advice and guidance
to the Chief Executive, Chief People Officer
and other Group Executive Committee
(GEC) members on matters of colleague
engagement
— Speak on behalf of the Board at the
Forum’s events
— Assist the Board in understanding
colleagues’ views based on insight from the
Forum and colleague sessions, and provide
guidance to the Board on how their
decisions may impact colleagues
Carol attends quarterly meetings with the
Forum in addition to separate discussions with
its chair and the Chief People Officer, and
monthly sessions with the Chief People Officer.
In November 2023, Carol and Habib Annous,
Chair of the Remuneration Committee, carried
out an engagement session with the Forum
specifically to discuss executive remuneration
and its alignment with the wider Company pay
policy. The feedback received in that session
was then discussed at the Remuneration
Committee the following month.
Carol’s annual report on colleague
engagement in 2023 included an assessment
of progress made against 2023 objectives and
her recommendations for engagement
priorities for 2024, which were reviewed by
the Nomination and Governance Committee
in December 2023.
73Hammerson plc Annual Report 2023
management performance against objectives.
I also hold meetings with the Non-executive
Directors as part of every Board meeting
without the Executive Directors present.
Mike Butterworth is our Senior Independent
Director and is available to discuss shareholders’
concerns on governance and other matters. He
can deputise as Chair of the Board in my
absence, act as a sounding board and serve as
an intermediary for other Board members. His
full role is clearly defined in writing as part of
the division of responsibilities document which
is available on the Company’s website.
Directors’ time commitment and additional
appointments
All Directors are thoroughly engaged with the
work of the Group, as evidenced by their
attendance at Board and Committee meetings
during the year, which is disclosed in the Board
and Committee meetings attendance table,
set out on page 71. In addition to Board and
Committee meeting attendance, Non-
executive Directors also visited the Company’s
assets during the year.
As part of the selection process for any
potential new Directors, any significant
external time commitments are considered
before an appointment is agreed. The Board
has adopted a Directors’ Overboarding Policy
(Overboarding Policy) to set limits on the
number of external appointments which can
be held by Directors in line with the guidelines
published by Institutional Shareholder
Services (ISS). The Overboarding Policy was
reviewed most recently in December 2023
to ensure it continues to reflect best practice
requirements in the Code and latest guidance
issued by ISS. Directors are required to consult
with the Chair of the Board and obtain the
approval of the Board before taking on
additional appointments. Executive Directors
are not permitted to take on more than one
external appointment as a director of a FTSE
100 listed company or any other significant
appointment.
The Overboarding Policy states that Non-
executive Directors may hold up to five
mandates on publicly-listed companies
(including their role as a Director of the
Company). For the purpose of calculating
this limit:
— A non-executive directorship counts
as one mandate
— A non-executive chair counts as
two mandates
— A position as executive director
(or comparable role) is counted
as three mandates
None of the Directors’ external directorships
exceed the limit in the Overboarding
Policy. The Overboarding Policy is available
to view on the Company’s website at
www.hammerson.com.
In line with the Code, during the year, the Board
considered significant external appointments
proposed to be undertaken by certain
Directors. These were (i) Méka Brunel’s
proposed appointment as a non-executive
director of ORPEA S.A. and (ii) Carol Welch’s
proposed appointment as CEO of A.F.
Blakemore & Son Ltd. For each appointment,
the Board considered (among other things)
the time commitment, impact on the relevant
Director’s ability to continue to serve
effectively as a member of the Board and
whether it presented a conflict of interest. In
each case, the Board concluded that there
were no concerns in this regard. It therefore
approved each of the proposed appointments
and was satisfied that neither of them would
restrict the relevant Director from carrying out
their duties as a Director of the Company. The
relevant Director did not participate in the
decision or discussion with respect to their
own proposed appointments.
Non-executive Directors’ independence
The Board has assessed the independence
of each of the Non-executive Directors. All
of the Company’s Non-executive Directors
are considered to be independent as at the
date of this Report, in accordance with the
provisions of the Code. I was independent on
appointment to the Board in September 2020
for the purpose of the Code. The Company has
therefore complied with the Code provision
that at least half of the Board, excluding the
Chair, should comprise independent Non-
executive Directors.
In accordance with provision 10 of the Code,
the Board considers factors and circumstances
which are likely to impair, or could appear to
impair, a Non-executive Director’s
independence, together with consideration,
among other things, of whether they are
independent in character and judgment,
how they conduct themselves in Board and
committee meetings and whether they have
any interests which may give rise to an actual
or perceived conflict of interest.
There is regular dialogue between Directors
outside Board meetings on any important
issues that require discussion and resolution.
If necessary, any unresolved matters that are
raised with the Chair of the Board, the Senior
Independent Director and the General
Counsel and Company Secretary would be
recorded in the minutes of the next Board
meeting. As Chair of the Board, I encourage a
culture of open and inclusive debate, challenge
and discussion at meetings and outside of the
formal environment. This helps to ensure that
any concerns can be considered and resolved.
DIVISION OF RESPONSIBILITIES
Role of the Chair of the Board and the
Chief Executive
The Chair of the Board and the Chief Executive
have separate roles and responsibilities which
are clearly defined and set out in writing. The
division of responsibilities document is
reviewed annually by the Nomination and
Governance Committee and recommended
to the Board for approval. The latest version
is available on the Company’s website.
As Chair of the Board, I am responsible for the
overall effectiveness of the Board in directing
the Company and for ensuring that the Board
receives accurate, timely and clear information.
The conclusion of the 2023 Board effectiveness
review was that Board meetings were chaired
well, that the views of all Directors are sought
and that all members of the Board participated
in and contributed to Board discussions
equally. The results and actions arising from
the Board effectiveness review carried out in
2023 are summarised on pages 76 to 77.
The Chief Executive leads and manages the
business in line with the strategy, policies and
parameters set by the Board. To ensure the
effective day-to-day running of the business,
authority for operational management of the
Group has been delegated to the Chief
Executive and some powers are further
delegated by her to senior managers across
the Group.
Role of the Non-executive Directors and the
Senior Independent Director
The Non-executive Directors are identified in
their biographies on pages 68 to 69 and play a
key role in providing constructive challenge to
management and offering strategic guidance
through their participation at Board and
Committee meetings. The Non-executive
Directors hold a meeting without me present
annually, led by the Senior Independent
Director, to discuss my performance, in
addition to playing a key role in appointing and
removing Executive Directors and scrutinising
74Hammerson plc Annual Report 2023
Corporate Governance
Corporate Governance Report continued
Board and Committee Governance Structure as at 31 December 2023
Audit
Committee
Nomination and Governance
Committee
Remuneration
Committee
Group Executive Committee
Group Management Committee Group Investment Committee
BoardBoard
Board support
The Chair and the General Counsel and
Company Secretary are always available for
the Directors to discuss any issues concerning
the operation of the Board and other
governance matters.
The Company Secretary, whose appointment
or removal is decided by all Directors, provides
independent advice to the Board on legal and
governance matters and ensures that the
Board has the policies, process, information,
time and resources it needs in order to function
effectively. This includes ensuring that the
Board regularly receives training and updates
on relevant legal and governance
developments as well as assisting with the
induction of new Directors.
COMPOSITION, SUCCESSION AND
EVALUATION
Composition and succession
Appointments to the Board are subject to a
formal, rigorous and transparent procedure
based on merit and objective criteria, which
is overseen by the Board’s Nomination and
Governance Committee. The Nomination and
Governance Committee also oversees the
effective succession planning of the Directors
and the process for succession planning to
the senior management team.
Following a review of composition, it was
determined that the Board and its Committees
have an appropriate and diverse combination
of skills, experience and knowledge that are
relevant to the Group in its operating context.
For further detail of each Director’s skills,
experience and knowledge, see the Board
Skills Matrix on page 79.
The Board has confirmed that each Director
continues to be effective and demonstrate
commitment to their role. On the
recommendation of the Nomination and
Governance Committee, the Board will
therefore be recommending that all serving
Directors be reappointed by shareholders
at the 2024 AGM.
Further information on composition,
succession and the work of the Nomination
and Governance Committee can be found in
the Committee’s Report on pages 78 to 83.
The Board acknowledges the benefits that
diversity and inclusion can bring to the Board
and to all levels of the Company’s operations.
As such, the Board is committed to the
promotion of diversity and inclusion across the
Company and ensuring that all employees are
treated fairly. Further information on the
Board’s approach to diversity and inclusion,
and the consideration of relevant matters
during 2023 can be found in the Nomination
and Governance Committee Report.
Induction
On appointment all new directors receive a
comprehensive and personalised induction
programme. The programme is developed
and overseen by the General Counsel and
Company Secretary to familiarise new
directors with the Group and the market,
risk and governance framework within which
it operates.
Board Committees
The Board has delegated certain
responsibilities to its Audit, Remuneration,
and Nomination and Governance Committees,
each of which reports regularly to the Board.
Each of these Committees’ terms of reference
is available on the Company’s website at
www.hammerson.com.
Further detail on the work of each of the Audit,
Nomination and Governance, and
Remuneration Committees can be found on
pages 84, 78 and 90, respectively.
The Board is also supported by three further
committees, the principal of which is the Group
Executive Committee (GEC), which provides
executive management of the Group within
the agreed strategy and Business Plan. The
GEC is chaired by the Chief Executive and
comprises the senior leadership team. The
members of the GEC and their biographies are
available to view on the Group’s website at
www.hammerson.com. The GEC manages the
operation of the business on a day-to-day
basis, sets financial and operational targets,
oversees the Group’s risk management and
has responsibility for the Company’s
sustainability objectives. The GEC is supported
in turn by the Group Investment Committee,
which supports the GEC and the Board in the
execution of their respective capital allocation
responsibilities, and by the Group Management
Committee which supports the GEC in the
execution of its operational duties.
75Hammerson plc Annual Report 2023
In order to produce a set of objective data
to form the basis of future comparison, a
questionnaire covering the Board and each of
its Committees was completed by Directors.
This was followed by confidential one-to-one
interviews between Directors and the General
Counsel and Company Secretary to discuss
key issues and themes in more detail.
Alongside this, there was an assessment of
progress against the recommendations from
the 2022 external valuation.
The scope of the evaluation was broad and
focused on a range of different areas relevant
to Board and Committee effectiveness and
corporate governance, having regard to the
FRC’s guidance on board effectiveness,
including:
— Board composition, skills and diversity
— Board behaviours and dynamics
— Oversight of business performance and
strategy and culture
— Board responsibilities and independence
— Board meetings and information
— The operation and contribution of
Committees
— Stakeholder engagement
The findings
The results of the evaluation, progress against
the 2022 recommendations and proposed
recommendations for 2024 were first
discussed by the Chair and the General
Counsel and Company Secretary, before being
presented to the Board for discussion and
approval in December 2023. Overall, the
results were positive, with the key outcomes
summarised below:
— The Board and its Committees continued
to operate effectively in 2023, with clarity
as to their role and purpose
— There remains a good range of relevant
skills and experiences on the Board, and
the composition demonstrates good
diversity in terms of gender and ethnicity
— Board and Committee papers are of high
quality, clear and delivered in good time
ahead of meetings
— The Board and its Committees are chaired
well, with all members given sufficient
opportunity to contribute to discussions,
which involve an appropriate balance of
constructive challenge and support
— The training and development sessions
held throughout the year were valued by
Directors with universal requests for these
to be maintained going forward
— There was thoughtful, balanced and
extensive consideration of matters relating
to the new Remuneration Policy by the
Remuneration Committee during the year,
including engagement with shareholders
and proxy advisers to inform the
Committee’s decision making
— The enhanced stakeholder engagement
programme was valued by the Board,
which appreciated the benefit of
opportunities during 2023 to meet and
engage with a range of stakeholders,
including through asset tours, stakeholder
meetings, the Board Strategy Day and
regular Board meetings.
Implementation of the findings of the
2022 evaluation
Progress was made against the
recommendations arising from the 2022
externally facilitated evaluation throughout
the year, resulting in all of the actions being
completed by year end with relevant items
embedded as part of ongoing Board and
Committee processes. Some of the key
recommendations and the actions
implemented during the year are summarised
in the table opposite.
Recommendations from the 2023
evaluation
The Board welcomes the positive conclusions
of the 2023 evaluation and will focus during
2024 on the recommendations made, with
the aim of further improving the effectiveness
of the Board and its Committees. The
recommendations identified in this year’s
evaluation include: to consider the balance
between time spent in Board and Committee
meetings on presentations and discussion; to
refresh the cover sheets used for Board and
Committee papers to identify key specific
areas on which management would like
Directors to focus and provide input at the
meeting; to arrange further opportunities for
Board asset visits; and to continue with the
programme of training and development
sessions at the Nomination and Governance
Committee in 2023, including further updates
in areas such as the UK political environment
(given the forthcoming general election),
macro technology developments and external
viewpoints on the Company and its markets.
Induction programmes are tailored to a
Director’s particular requirements, but
typically include site visits, one-to-one
meetings with Executive Directors, the General
Counsel and Company Secretary and senior
management, and meetings with the
Company’s key advisors. Directors also receive
guidance on their statutory and regulatory
responsibilities, together with a range of
relevant current and historical information
about the Group and its business. A key aim
of the induction is to ensure that new Board
members are equipped to contribute to the
Group and the work of the Board as quickly
as possible.
Training and development
Directors receive training and presentations
during the course of the year to keep their
knowledge current and enhance their
experience. The Nomination and Governance
Committee is responsible for overseeing the
training and development needs of the Board
and agrees the topics of the training sessions
to be held during the year to support the
ongoing development and skills of the
Directors. This year, these sessions included
presentations from external parties on artificial
intelligence, economic and political
developments, the legal and regulatory
landscape, directors’ duties, process
digitalisation and the evolution of working
practices following the pandemic.
In addition to these sessions, the Board is
regularly briefed on business related matters,
investor relations, and legal, regulatory and
governance developments. The Audit and
Remuneration Committees receive updates
on relevant accounting and remuneration
changes, evolving market trends and evolving
disclosure requirements from external
advisers and management.
Board and Committee effectiveness review
The process
The Board undertakes a formal and rigorous
annual evaluation of its effectiveness and the
performance of the whole Board, its individual
Directors and its Committees. The Board’s
policy, in line with the Code, is to carry out an
externally facilitated Board effectiveness
review every three years.
In 2022, an externally facilitated evaluation
was carried out by Board Alchemy. Accordingly,
in 2023, the evaluation was undertaken
internally and was led by the Chair and the
General Counsel and Company Secretary.
76Hammerson plc Annual Report 2023
Corporate Governance
Corporate Governance Report continued
Director performance
During the year, as Chair, I held meetings with
individual Directors at which, among other
things, their individual performance is
discussed. Informed by my ongoing
observation of individual Directors, these
discussions form part of the basis for
recommending the reappointment of
Directors at the AGM and cover matters such
as the Director’s contribution to the Board and
its Committees and their time commitment.
Chair performance
As in previous years, the Senior Independent
Director led an annual assessment process
in respect of my performance as Chair. This
involved meeting with other members of the
Board and the Company Secretary without me
being present and consideration of relevant
findings from the 2023 Board Evaluation
and other relevant matters. The Senior
Independent Director subsequently provided
feedback to me.
AUDIT, RISK AND INTERNAL CONTROL
Financial statements and audit
The Board has established formal and
transparent policies and procedures in relation
to the production of the financial statements
and the audit functions. The Audit Committee
oversees the Group’s financial reporting and
monitors the independence and effectiveness
of the internal and external audits. The
Committee oversees the valuation of the
property portfolio and is responsible for the
relationship with the External Auditor. Further
information can be found in the Audit
Committee Report on pages 84 to 89.
Fair, balanced and understandable
assessment
The Board is responsible for presenting a fair,
balanced and understandable assessment of
the Company’s position and prospects. The full
statement confirming this can be found in the
Statement of Directors’ responsibilities on
page 112. Additionally, the Group’s Viability
Statement can be found on pages 64 to 65
and the going concern statement can be found
on page 128.
Risk management and internal controls
The Board recognises that it has overall
responsibility for monitoring risk management
and internal control systems so as to protect
the assets of the Group and ensure risks are
appropriately managed. Further information
on the Group’s approach to risk can be found
on pages 54 to 63 and in the Audit Committee
Report on pages 84 to 89.
During the year, the Board and its Committees
discuss and review a range of matters relevant
to the overall assessment of risk management
and internal controls. This included a thorough
review by the Audit Committee and the Board
of the principal and emerging risks to which the
Group is subject and consideration of risk
appetite. Activity in these areas forms a key
part of the Board’s processes to identify,
evaluate and manage the principal risks faced
by the Company, and relevant mitigating
actions. As part of its assessment of risk, the
Board considers relevant internal and external
factors, including developments in 2023 as
a result of economic and political factors
relevant to the Company, its operations and
the markets in which it operates.
The Board and its Committees have continued
to monitor closely external and regulatory
developments in relation to risk management
and internal control, including ongoing activity
by the UK Government and FRC in relation to
audit and corporate governance reforms.
REMUNERATION
Remuneration Committee
The Remuneration Committee is responsible
for establishing a remuneration policy which is
designed to support the Company’s strategy
and promote its long term sustainable
success. The Committee sets the
remuneration for the Chair of the Board,
Executive Directors and members of the GEC.
It also oversees remuneration policies and
practices across the Group. The Committee is
responsible for the alignment of reward,
incentives and culture and approves bonus
plans and long term incentive plans for the
Executive Directors and members of the GEC.
During 2023, the Committee considered a
broad range of matters within its Terms of
Reference. Further information can be found in
the Remuneration Committee Report on pages
90 to 109.
Robert Noel
Chair of the Board
28 February 2024
Progress against recommendations from the 2022 Board evaluation
Key recommendation Summary of actions taken
Continue to create opportunities for informal
interaction between Board members
Board calendars have been reviewed to build in further opportunities throughout the year for
Directors to have informal interactions with each other, including through asset tours and other
events.
Create additional opportunities for Directors
to meet a wider range of management and
staff in a structured way
A wide range of colleagues below GEC level present at Board and Committee meetings
throughout the year. Asset tours have also continued to take place which allow the Directors to
meet a broad range of colleagues. The October 2023 Strategy Day provided further opportunities
for the Board to engage with colleagues throughout the business as part of the presentations and
discussion.
Continue to focus on the Company’s
long-term strategy including in relation to
ESG matters
The Directors continued to focus on longer-term strategy and strategic initiatives in 2023,
through Board discussions and the annual Strategy Day. The Board received specific presentations
on ESG matters throughout the year. A commitment to ESG continues to underpin the
Company’s strategic decisions. The Board’s focus in these areas was supported by the training
and development programme in 2023, including discussion of topics such as the economic and
political context, transformation initiatives and trends impacting the world of work.
Enable ongoing Board oversight of technology
and systems changes in the years ahead
The Board received detailed briefings on transformation and operational/system changes as
part of the 2023 strategy day as well as at its formal meetings. Presentations were also provided
on macro technology trends, for example artificial intelligence, as part of the wider training
programme for the Board. Further sessions will continue to be arranged during 2024 and beyond.
77Hammerson plc Annual Report 2023
Dear Shareholders
On behalf of the Board, I am pleased to present
the Report of the Nomination and Governance
Committee (the Committee) covering the
work of the Committee during 2023. This
report provides an overview of the roles and
responsibilities of the Committee and its main
activities during the year.
Following changes introduced in the previous
year, 2023 was the first full year that the
Committee operated with a broader remit,
including a wider range of corporate governance-
related responsibilities that had previously
been the responsibility of the full Board. The
change has been valuable, as evidenced by
feedback in this year’s Board evaluation.
The Committee comprises all our Non-
executive Directors and its terms of reference
can be found on the Company’s website at
www.hammerson.com. The Chief Executive
and Chief People Officer attend meetings by
invitation, together with the General Counsel
and Company Secretary, who acts as Secretary
to the Committee.
The Committee is responsible for
recommending appointments to the Board
and its Committees, and ensures that plans
are in place for the orderly succession to
the Board, its Committees and the senior
management team. This includes the
development of a pipeline of potential
candidates to the Board and the senior
management team with the necessary skills
and experience, while taking into account
diversity and inclusion. The Committee is
also responsible for overseeing the Board
effectiveness review and monitoring
developments relating to corporate
governance, bringing any issues to the
attention of the Board.
Key activities in 2023
During the year the Committee met three
times and its activities included:
— Considering Board composition and
succession, and assessing the composition
and responsibilities of the Board’s
committees
— Reviewing talent and executive
management succession planning
— The annual review of the Board’s Diversity &
Inclusion Policy and Overboarding Policy
— Assessing the Directors’ skill sets,
knowledge and experience to ensure that
an appropriate balance of skills, knowledge
and experience has been maintained
— Reviewing the Non-executive Directors’
independence
— Monitoring external corporate governance
developments and horizon scanning,
including proposed changes to the UK’s
listing regime, new reporting requirements
relating to diversity and inclusion, and the
UK government’s audit and corporate
governance reforms
— Establishing the process for the 2023
internal Board effectiveness review led by
the Chair and the General Counsel and
Company Secretary
— Overseeing the Board’s post-AGM investor
engagement plan in line with the
requirements of the Code
— Considering Board training and
development, and discussing topics to be
covered as part of the training sessions held
throughout the year to support the ongoing
development and skills of the Directors
— Receiving reports from the Board’s
Designated Non-executive Director for
Colleague Engagement
Nomination and Governance
Committee Report
Overseeing matters related to corporate governance,
Board composition and succession planning, ensuring
the Board and its Committees have the right
combination of skills, experience and knowledge.
Robert Noel
Chair of the Nomination and Governance
Committee
Committee members
Robert Noel (Chair)
Habib Annous
Méka Brunel
Mike Butterworth
Adam Metz
Carol Welch
78Hammerson plc Annual Report 2023
Corporate Governance
Nomination and Governance Committee Report
The Committee is also satisfied that the Board
is comprised of an appropriate combination of
Executive and Non-executive Directors, and
that the overall size of the Board remains
appropriate given the complexity and scale of
the Company’s operations. All Non-executive
Directors are currently considered to be
independent for the purposes of the Code as at
the date of this Report. On appointment to the
Board, I was considered to be independent in
accordance with the terms of the Code.
All Directors are subject to annual re-election
by shareholders at the AGM. Prior to the
Company’s AGM each year, the Committee
considers, and makes recommendations to
the Board concerning the reappointment of
Directors, having regard to their performance,
suitability, time commitment and ability to
continue to contribute to the Board. Following
this year’s review in advance of the 2024 AGM,
the Committee has recommended to the
Board that all Directors be reappointed at
the AGM.
The biographies of the Directors, set out on
pages 68 and 69, contain more information on
the reasons why the Board recommends the
re-election of each Director. Directors are
expected to devote sufficient time to the
Company’s affairs to enable them to fulfil their
duties as Directors effectively. The attendance
at the meetings for each Director during 2023
is shown in the Board and Committee Meetings
Attendance table on page 71. Details of the
Company’s Overboarding Policy and decisions
made during the year in relation to Directors’
additional external appointments are set out
on page 74. The Committee remains satisfied
that each Director continues to devote an
appropriate amount of time to the Company
and to their responsibilities as a Director.
Board Diversity and Inclusion Policy
and objectives
Diversity and inclusion has continued to
be an important focus of the Committee,
with consideration during the year of
relevant developments and activities at
Board level, across senior management and
within our wider workforce. The Committee
is mindful of the diverse communities within
which the Company’s destinations are located,
and of the advantages of promoting diversity,
in its broadest sense, at all levels of the
Company’s operations.
In December 2023, the Committee reviewed
the Board Diversity & Inclusion Policy, with an
updated version subsequently approved by
the Board. The policy sets out the Company’s
approach to diversity and inclusion in respect
of the Board and senior management team.
The Board recognises the benefits of diversity
and inclusion in their broadest sense in the
boardroom and that the skills, knowledge
and backgrounds collectively represented on
the Board should reflect the environment in
which the business operates. The policy can
be read in full on the Group’s website at
www.hammerson.com.
The Directors believe that the benefits of
a diverse and inclusive Board, and wider
workforce, will bring different perspectives
and build a broad range of capabilities
necessary for the Company to achieve its
strategic objectives. Set out in the table below
is a summary of some of the progress made
in 2023 against the specific requirements of
the Board Diversity and Inclusion Policy.
— Reviewing how the Company identifies and
engages with its key stakeholder groups
— As part of wider activity in relation to
diversity and inclusion, setting the
Company’s 2027 target, as required by the
Parker Review, for the percentage of senior
management who identify as being from
an ethnic minority.
Board balance, composition and skills
The composition of the Board was unchanged
during 2023. It currently comprises eight
Directors: the Chair of the Board, two Executive
Directors and five Non-executive Directors.
During the year and in accordance with its
usual practice, the Committee reviewed the
composition and balance of the Board and its
Committees, having regard to requirements
under the UK Corporate Governance Code (the
Code). The review considered: each Director’s
skills, experience and knowledge; the
membership of the Committees of the Board;
the balance on the Board between Executive
and Non-executive Directors; the tenure of
individual Directors and the Board as a whole;
multiple forms of diversity on the Board; and the
independence of the Non-executive Directors.
As demonstrated by the skills and experience
summarised in the biographies of the Directors
on pages 68 and 69, and the Board Skills
Matrix above, the Board members have a wide
range of relevant skills gained in diverse
business environments and different sectors
and geographies. This gives the Board varying
perspectives during discussions and enhances
its decision making and oversight of
management. The Committee is satisfied that
the Board has the necessary mix of skills and
experience to fulfil its role effectively (as
confirmed by the internally facilitated Board
effectiveness review conducted in 2023 – see
pages 76 and 77).
Board Skills Matrix
Rita-Rose
Gagné
Himanshu
Raja
Robert
Noel
Habib
Annous
Mike
Butterworth
Méka
Brunel
Adam
Metz
Carol
Welch
Risk Management; Audit E N N N N
Finance, Banking; Financial Services; Fund Management E N N N
Investment; Mergers & Acquisitions E E N N N N N
Asset and Property Management, Regeneration & Development E N N N
Business Transformation; Strategy E E N N N N
Retail E N N N
Media; Marketing N
Digital; Customer Service & Customer Behaviours E E N
International Business & Markets E N N N
Environmental, Social & Governance E E N N N N
E – Executive Director
N – Non-executive Director
79Hammerson plc Annual Report 2023
At the end of 2023, the Board continued to be diverse: three of the Board’s eight members were women (37.5%) and the Board exceeded the
Parker Review target of having at least one Director from a minority ethnic group with three of its eight members (37.5%) identifying as non-white.
The Board recognises that due to its relatively small size, the appointment or departure of a single Director can have a significant impact on the
achievement of particular numerical targets with respect to the Board’s composition. However, considerations relating to diversity of gender and
ethnicity will continue to be important factors for any future Board-level recruitment searches.
Board Diversity & Inclusion Policy objective Progress update
Consider diversity and inclusion, including gender and
ethnicity, when reviewing the composition and balance
of the Board and when conducting the annual Board
effectiveness review.
Diversity and inclusion is carefully considered as part of
the Board’s annual review of both Board and
Committee composition. Diversity and inclusion on the
Board was an area of consideration for the internally
facilitated Board effectiveness review during the year,
which concluded that there continues to be good
diversity represented on the Board.
Aim to maintain female representation on the Board of at
least 33% and, over time as opportunities arise, seek to
achieve female representation of at least 40%. Specifically,
the Board will aim to maintain the current position where at
least one of the Chair of the Board, the Senior Independent
Director, CEO or CFO is female.
At the date of this report, the Board comprises 37.5%
women Directors and the Chief Executive Officer is
female. The composition of the Board in this regard
continues to be in line with the requirements of the
policy. The policy objectives will be a key consideration
for future Board-level recruitment searches.
Aim at all times to have at least one non-white director on
the Board.
At the date of this report, the composition of the Board
exceeds the requirement of the policy and the Parker
Review. The Company responded to the Department
for Business and Trade’s Ethnic Diversity Voluntary
Census in December 2023 and continues to monitor
wider developments in this area.
Encourage and monitor the development of internal
employees to help support the internal talent pipeline for
succession at both Board and senior management level.
The Committee spent considerable time on this area in
2023 with detailed updates on the Company’s plans
presented for discussion, including plans for talent
development at Board and senior management level
and more widely in the organisation.
Oversee plans for diversity and inclusion and assess
progress annually by monitoring gender and ethnic diversity
of the members of the Company’s GEC and direct reports to
GEC (excluding executive assistants).
The Committee has reviewed plans to further improve
diversity and inclusion in 2024. This has included
updates on initiatives across the Company in this area,
including the work of the Company’s Affinity Network
and involvement in setting the Company’s new 2027
target for the percentage of the senior management
group who identify as being from an ethnic minority.
In discussions on Board composition and appointments,
continue to have regard to relevant best practice and the
recommendations of relevant industry reviews in the areas
of diversity and inclusion.
In 2023, the Committee received updates on
developing market practice and regulatory
requirements in this area from the General Counsel
and Company Secretary, and the Chief People Officer,
including changes under the Listing Rules and the
Parker Review.
80Hammerson plc Annual Report 2023
Corporate Governance
Nomination and Governance Committee Report continued
Although there were no recruitment searches at Board-level undertaken in 2023 and the composition of the Board was unchanged throughout
the year, the Committee remains committed in future searches to (i) engaging only executive search firms who have signed up to the Voluntary
Code of Conduct on gender diversity and best practice and (ii) ensuring that candidate lists for Board positions are compiled by drawing from
a broad and diverse range of candidates (including candidates who may not have prior listed company experience).
During the year, the Committee specifically considered the Company’s diversity in the context of the new Listing Rules requirements on diversity
reporting, which apply to the Company for the first time in this Annual Report. Further information and the relevant disclosures follow in the
sections below. The Committee will continue to monitor compliance with the targets in the Listing Rules, as well as considering diversity in the
Company’s senior manager population. As part of this it will continue to be updated on, and discuss, initiatives across the Company in relation to
diversity and inclusion.
Gender identity reporting under LR9.8.6R(9) and LR9.8.6R(10)
As at 31 December 2023, being the relevant reference date for the purposes of Listing Rule 9.8.6R(9)(a):
— three of the Board’s eight members identified as female (37.5%). This is slightly below the target of 40% in the Listing Rules. This requirement
will be an important consideration for future Board-level appointments. In line with the Board Diversity and Inclusion Policy, the Board will seek
to achieve female representation of 40% as opportunities arise as part of future recruitment searches; and
— the position of Chief Executive, being one of the senior positions identified in the Listing Rules (together with the Chair of the Board, the Senior
Independent Director and the Chief Financial Officer), was held by a woman.
The Board’s commitments in these areas are formalised within the Board Diversity and Inclusion Policy.
Number
of board
members
Percentage
of the board
Number of
senior positions
on the board
(CEO, CFO, SID
and Chair)
Number in
executive
management
1
Percentage
of executive
management
1
Men 5 62.5% 3 6 75%
Women 3 37.5% 1 2 25%
Not specified/prefer not to say
1 In accordance with Listing Rule 9.8.6R(10), executive management for these purposes are the members of the Group Executive Committee.
2 The data in the table was collected via written submissions completed by each relevant individual within scope of the reporting requirements set out in Listing
Rule 9.8.6R(10).
Male 62.5 (5)
Female 37.5 (3)
Board: Gender diversity
%
Male 69.4 (25)
Female 30.6 (11)
Senior management and direct
reports*: Gender diversity %
Male 48.2 (79)
Female 51.8 (85)
Workforce: Gender diversity
%
All data as at 31 December 2023
* as defined in the UK Corporate Governance Code (excluding executive assistants)
81Hammerson plc Annual Report 2023
Parker Review – Board and senior
management
As noted above, three of the Board’s members
(37.5%) identify as non-white. This exceeds
the current target set by the Parker Review.
During 2023, the Committee considered
developments arising from the ongoing work
and reporting of the Parker Review. Among
other things, it discussed the new requirement
for FTSE 250 companies to set a target for the
percentage of their senior management who
self-identify as being from an ethnic minority
in December 2027. Based on the relevant
population of senior managers (being, for the
Company, the members of the Group
Executive Committee and those senior
managers who report directly to them) of 24,
the Company has set a target of 10% by
December 2027. This is considered to be a
meaningful and stretching target that will build
on the percentage of relevant colleagues who
identified as being from an ethnic minority as
at 31 December 2023 (4%). In setting the
target, the Committee was also mindful of the
reduced size of the organisation and the
anticipated opportunities for recruitment in the
years ahead and the approach taken by peers
in the sector in which the Company operates,
among other factors. The Committee will
monitor the target in the years ahead, including
consideration of progress and ongoing actions
to deliver compliance by December 2027. This
will include regular reports from the Chief
People Officer on the Company’s participation
in sector wide activities and discussions in
this area.
You can read more about the management
development plans that we have in place to
encourage and support achieving this target
and creating a diverse and inclusive pipeline
more broadly in the Our Colleagues section
on page 24 and 25.
Workforce diversity, colleague
engagement, and succession planning
In December 2023, the Committee
considered the Company’s Annual HR Report,
including a report on culture and engagement,
talent development, progress with diversity
and inclusion objectives across the Group, the
UK gender pay gap and wider HR initiatives for
2024. The Committee takes seriously its role
in overseeing the development of a diverse
pipeline for senior management positions and
the link between diversity and inclusion, and
delivery of the Company’s purpose, values and
strategic aims. It received updates during the
year on diversity and inclusion initiatives
across the Company, including management’s
work with diversity and inclusion campaign
groups, and the activities of the Company’s
Affinity Network.
In line with the Code, the Committee discloses
that the gender balance of those in senior
management (being the members of the GEC)
and their direct reports (excluding executive
assistants) at 31 December 2023 was 30.6%
(11) female (2022: 30.2%% (13)) and 69.4%
(25) male (2022: 69.8%% (30)).
Further details of gender diversity at senior
manager level (as defined in the Companies
Act 2006) and across the workforce can be
found on page 81. The above charts illustrate
the gender diversity at Board level and with
respect to senior management and their
direct reports (as defined in the Code) and
also the overall workforce, in each case as at
31 December 2023.
The Committee continues to be involved in
overseeing colleague engagement activities.
In 2023, the Company gathered feedback
from colleagues via participation in an all
Colleague survey. The results of that exercise,
including the short, medium and long term
actions that it highlighted, were presented to
the Committee in December 2023.
In June and December 2023, Carol Welch,
as Designated Non-executive Director for
Colleague Engagement, also reported to the
Committee on her activities during 2023, and
on her engagement with colleagues and, in
particular, with the colleague forum (The
Forum). Carol’s report included, among other
things, perspectives on actions in 2023 to
embed the Company’s new purposes, vision
and values, the development of the talent
pipeline, and colleague engagement and
communication initiatives. In June 2023, the
Chief People Officer presented an update on
the work of The Forum, including its focus
areas for 2023 and priorities for the period
ahead. You can read further details on this
on page 24.
Ethnic background identity reporting under LR9.8.6R(9) and LR9.8.6R(10)
As at 31 December 2023, being the relevant reference date for the purposes of Listing Rule 9.8.6R(9)(a), three of the Board’s eight members
identified as non-white (37.5%), exceeding the target set in the Listing Rules, the Parker Review and the Board Diversity and Inclusion Policy.
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
1
Percentage
of executive
management
1
White British or other White (including minority-white groups) 5 62.5% 3 7 87.5%
Mixed/Multiple Ethnic Groups 1 12.5%
Asian/Asian British 1 12.5% 1 1 12.5%
Black/African/Caribbean/Black British
Other ethnic group, including Arab 1 12.5%
Not specified/ prefer not to say
1 In accordance with Listing Rule 9.8.6R(10), executive management for these purposes are the members of the Group Executive Committee.
2 The data in the table was collected via written submissions completed by each relevant individual within scope of the reporting requirements set out in Listing
Rule 9.8.6R(10).
82Hammerson plc Annual Report 2023
Corporate Governance
Nomination and Governance Committee Report continued
The Committee plays an important role in
monitoring the Company’s culture. In 2023
it received information and data from the
Chief People Officer in relation to culture and
activities across the organisation to ensure that
culture remains aligned with the Company’s
purpose, values and strategy. This will remain
an area of focus during 2024.
Governance
The Committee is responsible for certain
governance-related matters, including:
— Monitoring the Board’s corporate
governance arrangements to ensure that
both the Company and the Board operate
in a manner consistent with corporate
governance best practice
— Monitoring director conflicts of interest
— Reviewing and approving the process for
the annual effectiveness review of the
Board and its Committees, including
approval of the appointment of any external
evaluator and monitoring progress against
any relevant recommendations arising from
any such effectiveness review
— Monitoring training and development
needs of the Board and individual Directors
— Reviewing the Company’s delegation of
authority policy and making such
recommendations as required to the Board
for approval
— Considering the process to be followed for
the annual appraisal of the Chair
During 2024, the Committee will continue to
monitor external governance developments
and in particular, oversee the Company’s
preparations to ensure compliance with, and
effective reporting against, the new UK
Corporate Governance Code, which was
published by the FRC in January 2024. The
new Code will first apply to the Company in its
financial year beginning on 1 January 2025.
Committee effectiveness
As described in more detail on pages 76 and
77, an internal evaluation of the effectiveness
of the Board and its Committees was
undertaken during the year in line with the
requirements of the Code. The Committee
considers that during the year it continued to
have access to sufficient resources to enable it
to carry out its duties and has continued to
perform effectively. In 2023, the Committee
reviewed and updated its terms of reference
to ensure that they remain appropriate.
Robert Noel
Chair of the Nomination and Governance
Committee
28 February 2024
83Hammerson plc Annual Report 2023
Dear Shareholders
As Chair of the Audit Committee (the
Committee), I am pleased to present my
report for the year ended 31 December 2023.
This report sets out the activities undertaken
by the Committee during 2023 and offers
insight into how the Committee has discharged
the responsibilities delegated to it by the Board
and its key areas of focus.
COMMITTEE GOVERNANCE
The Committee plays a key governance role for
the Group and in meeting its responsibilities,
the Committee continues to consider the
provisions of the UK Corporate Governance
Code (the Code) and the Financial Reporting
Council’s (FRC) Guidance on Audit
Committees, including the minimum
standards published by the FRC in May 2023.
The Committee’s terms of reference are
available to view at www.hammerson.com.
Membership and meetings
The Committee continues to be comprised
exclusively of independent Non-executive
Directors with the necessary financial
experience and sector specific knowledge to
fulfil their responsibilities. There were no
changes in the membership of the Committee
during the year.
The Committee met five times during the year.
To ensure the Committee addresses all its
required responsibilities, the agenda for each
meeting is planned around the Group’s annual
reporting cycle and includes particular matters
for the Committee’s consideration. Following
each meeting, the Board is appraised of
matters arising from the Committee.
The Chair of the Board, the Chief Executive, the
Chief Financial Officer and other members of
the senior finance team, together with senior
representatives of the Company’s External
Auditor, PricewaterhouseCoopers LLP (PwC),
are invited to attend all or part of meetings as
appropriate. In order to fulfil its duties as set
out in its terms of reference, the Audit
Committee receives presentations and
reviews reports from the Group’s senior
management and from the Group’s external
valuers, CBRE Ltd, Cushman and Wakefield
LLP, Jones Lang LaSalle Ltd (the Valuers),
consulting as necessary with PwC.
The Committee meets, with no Company
management present, at least once a year
with PwC, and at least once with the Group’s
members of management responsible for
internal audit, enterprise risk and ESG.
The Valuers and PwC have full access to one
another, and I personally spoke with the
Valuers and PwC separately to discuss the half
year and year end valuation process to ensure
each was satisfied that there had been a full
and open exchange of information and views.
Audit Committee Report
Overseeing matters related to the integrity, accuracy
and transparency of the Group’s financial and narrative
reporting; its compliance with laws and regulations,
the internal control and risk management systems; and
managing the external and internal audit processes.
Mike Butterworth
Chair of the Audit Committee
Committee members
Mike Butterworth (Chair)
Habib Annous
Adam Metz
84Hammerson plc Annual Report 2023
Corporate Governance
Audit Committee Report
KEY COMMITTEE ACTIVITIES IN 2023
Core duties
The Committee assists the Board in fulfilling
its oversight responsibilities by acting
independently from the Executive Directors.
There is an annual schedule of items which
are allocated to the meetings across the
year to ensure that those items within the
Committee’s terms of reference are covered
fully and that sufficient time is allocated to
allow for thorough discussion and challenge.
These items are supplemented and, time
allocations amended, throughout the year
as key matters arise.
The principal duties of the Committee
undertaken in 2023 included:
Accounting and financial reporting matters
— Monitoring the integrity of the Annual
Report and Accounts and the Interim
Statement to ensure clarity and
completeness of disclosures, including
those relating to alternative performance
measures
— Reviewing matters of accounting
significance, including financial reporting
issues, judgements and estimates
— Advising the Board on whether, as a whole,
the Annual Report and Accounts are fair,
balanced and understandable
— Reviewing the Group’s valuation
process and valuations of the Group’s
property portfolio
— Considering and reviewing the basis for the
going concern and longer term viability
statements in light of financial plans and
reverse stress tests
— Reviewing the impact of climate risk on
the financial statements and the Group’s
TCFD disclosures
Risk management and internal control
— Reviewing the Group’s financial controls
and internal control effectiveness
and maturity
— Reviewing and monitoring the Group’s risk
management systems, processes and risk
appetite, including those to identify
emerging risks, to ensure the Group has
an effective internal controls environment
and complies with the applicable laws
and regulations
— Ensuring that management has systems
and procedures in place to ensure the
integrity and accuracy of financial
information
— Debating and agreeing changes to the
Group’s principal risks
Internal audit
— Monitoring and reviewing the adequacy,
effectiveness and independence of the
Internal Audit and Risk functions
— Considering the whistleblowing
mechanisms by which colleagues may
raise concerns about possible improprieties
in financial reporting or other matters
— Considering the major findings of
internal audit investigations and the
response of senior management to
any recommendations arising from
those findings
— Monitoring the resolution of agreed actions
from previous internal audit reviews
— Reviewing and approving the 2024 Group
internal audit plan, which comprises a five
year cyclical and risk-based annual internal
audit plan
External audit
— Approving the annual audit plan presented
by the External Auditor
— Reviewing the results and conclusions of
work performed by the External Auditor
— Reviewing and monitoring the relationship
with the External Auditor, including their
independence, objectivity, effectiveness,
terms of engagement and level of fees
— Reviewing and approving the policy on the
engagement of the External Auditor to
supply non-audit services
— Engaging with PwC and senior
management in relation to the selection
of a new lead audit partner
— Making recommendations for the
reappointment of the External Auditor
General matters
— Reviewing and approving the Group’s tax
strategy and accompanying statement
— Reviewing and recommending to the Board
for adoption the Group’s policies on
Anti-Bribery and Corruption, Anti-Money
Laundering, Whistleblowing and Fraud
— Referring matters to the Board which, in its
opinion, should be addressed at a meeting
of the Board
— Evaluating its own performance and
effectiveness and as part of this, reviewing
its constitution and terms of reference,
recommending changes to the Board
for approval
Independence and experience
The Board continues to be satisfied that the
Committee members provide an appropriate
depth of financial reporting, risk management
and commercial experience across different
industries including commercial real estate
and in listed companies. This combined
knowledge and experience enables the
Committee to undertake its duties properly
and act independently of management.
The Board has also confirmed that it is
satisfied that being a chartered accountant
and having held other senior finance
appointments, I meet the Code requirement
that at least one member has recent and
relevant financial experience.
More information about the Committee
members’ skills and experience is set out in
the Director biographies on pages 68 and 69
and in the Board Skills Matrix on page 79.
Annual review of effectiveness
For 2023, the review of the Audit Committee’s
effectiveness was carried out internally, led by
the Chair of the Board and the General Counsel
and Company Secretary. I can confirm that
this review concluded that the Committee
continues to perform its role effectively with
no significant concerns or improvement
recommendations.
The private sessions of the Committee,
in which members meet without the presence
of management, also provide further
opportunities to discuss matters in connection
with its effectiveness and to highlight any areas
for improvement or change.
External advice
The Board makes funds available to the
Committee to enable it to take independent
legal, accounting or other advice if or when the
Committee believes it necessary to do so.
85Hammerson plc Annual Report 2023
RISK MANAGEMENT AND INTERNAL
CONTROL
Risk management
The Audit Committee continued to review the
Group’s approach to risk management. As
explained in the Risk and uncertainties section
on page 54, the Group uses a number of tools
to review the Group’s risk management
processes including the Group’s Risk
Management Framework, Residual Risk Heat
Map and Risk Dashboard. These tools are
reviewed regularly by senior management to
ensure that risks, both existing and emerging,
are properly identified and managed and the
potential impact on the Group assessed. The
Committee also supported the Board in its
annual review of the Group’s risk appetite.
Climate risk
As as part of the Group’s Task Force on
Climate-related Financial Disclosures (TCFD)
response, the impact of climate risk was
assessed in the context of the financial
statements. Further details on the Group’s
TCFD response is given on pages 31 to 40.
For the year ended 31 December 2023, while
recognising the Group’s commitment to
achieving Net Zero by 2030 as part of the wider
ESG strategy, it was judged that climate risk
has not had a material impact on the financial
reporting estimates and judgements.
Key areas of the financial statements in which
climate risk has been assessed were:
— Property valuations which are stated at fair
value as determined by the Group’s
external valuers in accordance with RICS
Valuation – Global Standards. RICS has
previously published a guidance note
“Sustainability and ESG in Commercial
Property Valuation” and the implications
of this for the Group’s valuations were
discussed with the Valuers. We have also
shared the Group’s Net Zero Asset Plans
with the Valuers to enable them to fully
understand the planned programme of
works which are a key element of the
Group’s Net Zero commitment
— Going concern and Viability: Given the
longer term nature of climate risk there is
not expected to be a material impact on the
Group’s financial projections over the
shorter going concern and Viability periods
— Contingent liabilities: As explained in note
17 to the financial statements, in 2021 the
Group issued €700m sustainability-linked
bonds maturing in 2027. The bonds contain
two emissions reduction targets, both of
which will be tested in 2025 against a 2019
benchmark. If the targets are not met, a
total of 37.5 basis points per annum,
equivalent to £2.3m per target, will be
payable in addition to the final year’s
coupon. Given the continued progress
made in reducing emissions these potential
penalties have been treated as contingent
liabilities in the 2023 financial statements.
Further details of the Group’s approach to
climate risk can be found on pages 37 and 58.
Internal control
The Committee assists the Board in fulfilling
its responsibilities relating to the adequacy
and effectiveness of the Group’s control
environment.
During the year, the Committee received
regular updates on the Group’s internal control
systems covering financial, operational and
compliance controls. The Group’s internal
controls provide reasonable but not absolute
assurance against material misstatement or
loss. The review of the controls involves
analysis and evaluation of the key risks to the
Group, including a review of all the material
controls. This includes the plans for the
continuity of the Group and its operations
in the event of unforeseen interruption.
During the year work was undertaken to
implement an internationally recognised
internal control framework, the COSO 2013
internal control framework. This will enhance
both the Group’s control environment and
assurance programme ensuring alignment to
principal risks. It will also further promote a
strong culture of awareness and accountability
for risk management across the Group.
In addition, the Committee reviewed the
Group’s approach to compliance with
legislation and the prevention of fraud,
anti-money laundering and anti-bribery and
corruption. The Committee also oversaw
enhancements made to the Group’s
arrangements relating to Whistleblowing,
which ensures that appropriate systems are
in place for colleagues to raise concerns in
confidence. I am pleased to confirm that
no allegations of fraud or whistleblowing
concerns were raised in 2023.
The Committee confirms that its review
of the control environment in 2023 was
able to demonstrate that the Group
continues to operate an effective internal
control environment.
86Hammerson plc Annual Report 2023
Corporate Governance
Audit Committee Report continued
Significant issues, judgements and estimates
The Committee received reports from management and the External Auditor setting out the significant accounting and financial reporting matters
and judgements in respect of the financial statements as well as how these matters were addressed. The following sets out the main areas of
judgement considered by the Committee. For each area, the Committee was satisfied with the accounting and disclosures in the Annual Report
and Accounts.
Matter considered The committee’s review and conclusion
Valuation of the Group’s property portfolio
The valuation of the Group’s property portfolio
is a key recurring judgement due to its
significance in the context of the Group’s net
asset value.
Valuations are inherently subjective due to the
assumptions and judgements made by the
Valuers. Key inputs to the valuations are
capitalisation yields and market rental income
(ERV). Although the Valuers also consider
other factors including the location, physical
attributes of the property, and environmental
and structural conditions.
Valuations are undertaken by the Group’s
three external valuers and are thoroughly
reviewed by management.
The external valuers each presented their year end valuations to the Committee in January
2024. These were scrutinised, challenged and debated with a focus on the key judgements
adopted. It was acknowledged that the Group’s leasing performance provided good evidence
to support the Valuer’s ERV assumptions. However, the low levels of transactions, relative to
long term averages, meant that yield judgements were more subjective with outward yield
movements, particularly in the second half of the year, reflecting the higher interest rate
environment and the availability and terms of financing.
The Committee Chair also held private meetings with each valuer to discuss and challenge the
valuation process and asked the Valuers to highlight any disagreements with management
during the valuation process. This allowed the Committee to satisfy itself that the valuation
process was independent and objective.
The Committee also received a report from the External Auditor detailing their assessment of
the valuation process and year end values. Based on the work undertaken, the Committee was
satisfied that the valuations had been carried out in an appropriate manner with reference to the
widest range of available evidence and was therefore suitable for inclusion in the Group’s
financial statements.
Accounting for property transactions
(including classification of assets held
for sale)
The accounting treatment of property
transactions is a recurring judgement for the
Group because of the financial significance
and potential complexity of such transactions.
For property transactions, judgement can be
required to determine the point at which
assets should be reclassified as ‘held for sale’.
The Committee reviewed management’s accounting treatment and disclosures for the two
property disposals completed during 2023 as well as ongoing property transactions including
Union Square where a contract for disposal was exchanged in February 2024. The principal
areas of discussion included the sales which completed during the year and an assessment as
to whether any of the Group’s properties fell under the definitions of assets held for sale at year
end or required disclosure as a post balance sheet event.
The Committee reviewed and challenged management’s proposed accounting treatments
and was satisfied that no material transactions met the reclassification criteria under IFRS5
Non-current Assets Held for Sale and Discontinued Operations to be ‘held for sale’ at
31 December 2023. It was also in agreement with the disclosures adopted in relation to
disposals and post balance sheet events in the financial statements.
Derecognition of Highcross and O’Parinor
During the first half of 2023, secured loans
held by two of the Group’s joint ventures,
Highcross and O’Parinor, were in breach of
certain conditions.
The lenders on both loans acted to enforce
their security resulting in the Group losing
control of the joint venture entities.
The Committee reviewed management’s paper in relation to both secured loans which set out
the nature of the loan breaches and the impact of the actions taken by the lenders. It also set out
the required accounting treatment whereby the asset and liabilities of the joint venture entities
are derecognised, with the investments being fully impaired resulting in a £22m impairment
charge in 2023.
The Committee discussed management’s paper with PwC and was satisfied with the proposed
accounting treatment and associated disclosures in the financial statements and Annual Report.
Going concern and viability
An assessment is required to recommend to
the Board that the Group’s financial
statements be prepared on a going concern
basis. A further assessment is also required to
support the Group’s Viability Statement.
The Committee, in conjunction with the Board, reviewed management’s assessments of going
concern and viability. The assessments both contained a Base scenario derived from the Group’s
Business Plan and took account of the Group’s principal risks and the latest geopolitical,
economic and trading outlook. The assessments contained earnings, balance sheet, cash flow,
liquidity and credit metric projections, including key covenants. The assessment also contained
reverse stress tests to appraise the Group’s absolute resilience to adverse changes to key
variables (valuations and net rental income) impacting debt covenants.
The Committee reviewed and challenged the financial forecasts and their underlying
assumptions and were satisfied that management had conducted a robust assessment which
clearly demonstrated the Group’s resilience. The Committee also agreed with retaining the three
year Viability period and explanations of the assessments and judgement as set in the Going
concern and Viability statements.
87Hammerson plc Annual Report 2023
Internal audits completed during the year
included, but were not limited to:
Cyclical:
— Accounts receivable
— Capital expenditure controls
— Balance sheet reconciliations
— Supplier selection and management
— Outsourcing arrangements
— Cyber security
— Lease management
— Purchase to pay
Risk based:
— Business continuity
— Commercialisation activities
— Property valuations
Recommendations for improvements are
agreed with management with clear timelines
and responsibilities for implementation.
Progress updates on actions arising from
current and prior reports are and have been
provided at Committee meetings throughout
the year. The Committee is satisfied that the
internal audit programme remains risk
focused, is functioning satisfactorily across
the Group, and that management is open to
reviews and takes action on recommendations
on a timely basis.
Accordingly, it has been concluded that the
Group’s internal audit arrangements provide
effective assurance over the Group’s risk and
control environment and that the function has
adequate resources and appropriate access
to information to enable it to perform its role
effectively and efficiently. The Committee
continues to review how the internal audit
function may need to evolve in future years.
INTERNAL AUDIT
The Group’s internal audit function provides
independent and objective assurance over
the design and operating effectiveness of
the system of internal control though a risk
focused approach. The function reports into
the CFO, but has an independent reporting line
directly into the Committee.
Internal audit activities are predominantly
carried out internally, with co-sourcing support
provided by BDO for more complex reviews.
This arrangement also ensures that the
function has access to a dedicated resource
pool and specialist skills.
Prior to the start of each financial year, the
Committee reviews and approves the annual
group internal audit plan. A further review
occurs during the year to take account of any
necessary revisions. The plan takes account of
the Group’s Risk Management Framework and
in particular any heightened principal risks
affecting the Group with audits split between
a cyclical annual plan and risk based audits.
Other key factors for consideration are key
areas of change for the Group which have not
been subject to recent audit.
Following the adoption of the COSO 2013
internal control framework in 2023, an
assurance map has been developed which
enables the Group to determine a five year
cyclical internal audit plan based on the risk
profile of identified material areas. The
Committee reviewed and approved the first
five year cycle at its meeting in December
2023 and I look forward to providing an update
against this plan in next year’s report.
EXTERNAL AUDITOR
Independence and objectivity
Both the Board and the External Auditor (PwC)
have safeguards in place to protect the
independence and objectivity of the External
Auditor. The Committee receives details of
any relationships between the Company
and PwC that may have a bearing on their
independence. These were reviewed by the
Committee during the year and remain
satisfactory. In accordance with International
Standards on Auditing (UK), PwC formally
confirmed to the Committee and to the Board
its independence as auditor of the Company.
Auditor effectiveness
The effectiveness of the audit process is
subject to ongoing monitoring and the
Committee has considered this as part of
the 2023 year end process. The Committee
considered a number of factors, including
the quality and scope of the audit plan
and reporting.
The Committee also sought the views of
key members of the finance team, senior
management and the Directors regarding the
audit process and the quality and experience
of the audit partner engaged in the audit. Their
overall feedback was positive and that the
External Auditor provides an appropriate level
of challenge to management. It was agreed
that the audit team had continued to be
responsive and cooperative and had
demonstrated flexibility and adaptability in
working with management day-to-day to
address any issues arising during the year.
Confirmation was also sought that the fee
payable for the annual audit is sufficient to
enable PwC to perform its obligations in
accordance with the scope of the audit.
The Committee has concluded that taken
as a whole, PwC has carried out its audit for
2023 effectively and efficiently.
Matter considered The committee’s review and conclusion
Fair, balanced and understandable
The Group uses a number of Alternative
Performance Measures (APMs), being
financial measures not specified under IFRS,
to monitor the performance of the business.
Management principally reviews the Group on
a proportionally consolidated basis, except for
Value Retail.
Judgement is required to ensure disclosures
and associated commentary explain clearly
the performance of the business and provide
reconciliations to IFRS.
The Committee reviewed management papers which explained management’s judgement
that the Annual Report was fair, balanced and understandable. In relation to APMs, the paper
explained that APMs:
— are not given more prominence than measures under IFRS
— are properly explained, including the rationale for their use
— where relevant, are reconciled to IFRS
Following its review, the Committee was satisfied that the Annual Report and financial
statements were fair, balanced and understandable and recommended this conclusion to
the Board.
Significant issues, judgements and estimates continued
88Hammerson plc Annual Report 2023
Corporate Governance
Audit Committee Report continued
Auditor appointment
PwC has served as the Group’s External
Auditor since being appointed at the AGM in
April 2017 after a full tender process was
undertaken in 2016. The current audit partner,
Sonia Copeland, in accordance with the FRC’s
Ethical Standard, will be subject to a
mandatory rotation from the Hammerson
account following the conclusion of the 2023
audit. During the year, the Committee worked
closely with PwC to identify a successor to
Sonia. After considering a number of
candidates with varying specialist areas of
expertise and following a thorough interview
process, which included meeting with
members of senior management and myself
as Chair of the Committee, Christopher
Richmond has been identified as the preferred
candidate to take over from Sonia for the 2024
financial year audit and beyond. Chris attended
the January and February 2024 Committee
meetings in an observational capacity and
shadowed Sonia on the conclusion of the 2023
audit to ensure an orderly handover.
The external audit contract will be put out
to tender at least every 10 years and the
Committee currently expects to conduct an
external audit tender in 2026. There are no
contractual obligations that restrict the
Committee’s choice of External Auditor.
PwC’s objectivity, independence and
performance remain strong and, accordingly,
the Committee has recommended to the
Board that PwC be re-appointed as External
Auditor for the 2024 financial year, subject to
approval at the AGM to be held on Thursday,
25 April 2024.
The Committee is in compliance with The
Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of
Competitive Processes and Audit Committee
Responsibilities) Order 2014, published by
the Competition and Markets Authority.
Non-audit services
The Committee has put in place a robust
auditor engagement policy to ensure that the
External Auditor remains objective and
independent. It considers how such objectivity
might be, or appear to be, compromised
through the provision of non-audit services
by the External Auditor.
The Group’s non-audit services policy can
be found on the Company’s website at
www.hammerson.com and reflects the
requirements of the Financial Reporting
Council (FRC’s) Revised Ethical Standard
2019 such that:
— The External Auditor may only provide
services which are included on the FRC’s
‘whitelist’ of services
— Non-audit services with fees up to £50,000
are assessed and, as appropriate,
authorised by the Chair of the Committee.
Services with fees above this level are
considered by the Committee as a whole
— The provision of non-audit services is
monitored closely to ensure compliance
with the 70% non-audit services cap
calculated as the average of the fees paid
for audit services in the last three
consecutive financial years
During the year, PwC received £0.1m for
non-audit services (2022: £nil) this related to
reporting accounting work to support the
Group’s £100m bond issue and was agreed
with myself as Chair of the Committee prior to
commencement of their work. For 2023, this
represented 4% of the Group’s audit fee for the
year (2022: 1%) and further analysis of fees
paid to the External Auditor is set out in note 5E
to the financial statements.
CONCLUSIONS
The Committee’s oversight of financial
reporting, external and internal audit, and the
further development of the risk and control
environments have continued to be key areas
of focus. These are likely to remain so for the
2024 financial year as the Group continues to
deliver its strategic objectives.
The Committee remains focused on ensuring
that finance and risk capability is appropriate
to the scale of the business, whilst also
acknowledging an increasingly regulated
environment. As the UK’s regulatory landscape
continues to evolve, the Committee will
continue to monitor developments from the
review led by the Department for Business and
Trade (previously part of the Department for
Business, Energy and Industrial Strategy
(BEIS)) into restoring trust in audit and
corporate governance, and the impact the
recommendations may have on the Group.
In particular, the Committee will spend time
working with management to prepare to report
on the updated UK Corporate Governance
Code, published by the FRC on 22 January
2024, with particular attention to the changes
introduced to Section 4 in respect of audit,
risk and internal control. The Committee
and management are committed to ensuring
that we respond positively to these changes
in the regulatory environment, particularly
in the context of the Group’s digital
transformation programme.
Mike Butterworth
Chair of the Audit Committee
28 February 2024
89Hammerson plc Annual Report 2023
Dear Shareholders
I am pleased to present our Directors’
Remuneration Report (the Report) for the
year ended 31 December 2023.
Context for the Committee’s decisions
The external environment throughout 2023
provided significant headwinds. Interest rates
continued to rise, reaching 5.25% in the UK
and 4% in the Eurozone by the end of the
summer, as central banks sought to bring
inflation under control. The ongoing war in
Ukraine and developments in the Middle East
impacted business and consumer sentiment.
All three of the economies where our flagship
assets are based were in, or close to being in,
technical recession as the year ended.
Despite these external factors, the Company
delivered a strong financial performance and
significant strategic and operational progress
building on the improvements we have seen
in the last three years.
In 2023, our Adjusted Earnings Per Share is
up by 10% to 2.33p reflecting a 4% growth in
like-for-like Net Rental Income. We continued
to transform our cost base with Gross
Administration Costs reducing by 14% as we
pivoted to an agile platform. Management have
also made good progress in strengthening the
Group’s balance sheet primarily through the
disposal of non-core assets with net debt
down 23% to £1,326m.
The recent announcement of the agreed
disposal of Union Square will, when
completed, deliver on the £500m disposal
programme set out in our strategy.
Successful delivery of our strategic goals over
the last three years means we are now well
positioned to invest for growth and value
creation whilst retaining our commitment to
sustainability. We have committed to
shareholders to keep the Annual Incentive
Plan (AIP) measures under review to ensure
they remain appropriate to Hammerson’s
evolution. For 2024, we are replacing the
Gross Administration Costs and Net Debt
performance measures within the AIP with
Relative Total Accounting Return (TAR) and
Net Rental Income (NRI) relative to our
Business Plan. In choosing these measures
we have sought to reflect the key pillars of the
Company’s growth.
Throughout the year, we have consulted
extensively with shareholders. These
discussions have helped the Committee in
selecting the new measures. We have retained
the Adjusted Earnings Per Share (EPS)
measure introduced in 2023.
Short term incentive arrangement
As outlined above and elsewhere in the Annual
Report, this was another successful year for
the Group with significant progress having
been made operationally, financially and
strategically in our transformation.
Directors’ Remuneration Report
Aligning remuneration with our strategy and
stakeholder interests. Ensuring our remuneration
reflects market conditions and supports the ongoing
focus on transforming and growing our business.
Habib Annous
Chair of the Remuneration Committee
Committee members
Habib Annous (Chair)
Méka Brunel
Carol Welch
90Hammerson plc Annual Report 2023
Corporate Governance
Directors’ Remuneration Report
Chair’s annual statement
As disclosed in previous Remuneration
Reports, the first grant under the RSS was
made to Rita-Rose Gagné as a recruitment
award. The award was over shares then worth
1.5 times her salary in November 2020 on her
appointment as Chief Executive. As RSS
awards are subject to a performance underpin
three years after grant, 2023 was the year
when the award was due to be assessed.
The Committee assessed the underpin in
the 2020 grant in December 2023 and
determined that the underpin had been met
and, therefore, that the award should be
allowed to vest in accordance with the rules.
The Committee thoroughly discussed all
aspects of the Group’s performance over the
three years since grant, and concluded that
the successful delivery of the strategy during
this period should result in a full vesting. The
Committee noted that on the basis of
performance in the period, the outcome does
not reflect any element of windfall. Among
other things, the Committee considered the
significant debt reduction, organisational and
operational transformation, and positive Total
Shareholder Return (TSR) of 83.6% (on an
enhanced scrip dividend basis).
Following the assessment of the underpin, the
total 2020 award is now included in full in the
single figure table, which has, as expected,
resulted in a significant increase in the single
figure number for 2023.
A key feature of our approach to remuneration
is ensuring alignment between the interests
of our Executive Directors and shareholders.
The impact of dividends and share price
growth since November 2020 means that the
amount for the 2020 RSS award included in
the single figure table is nearly double the
value originally awarded.
It is worth noting that the grant of the 2020
award is fully included in this year’s numbers
even though only one-third vested during
2023, with a second third contingent on
employment to November 2024 and a final
third contingent on employment to November
2025. As the award is also subject to a two year
holding period, none of it is capable of release
before November 2025 and, therefore, it is not
yet part of Rita-Rose’s actual ‘take home pay’.
Remuneration alignment to strategy
All aspects of remuneration are regularly
considered by the Committee to ensure they
support and are aligned to strategy.
To support the changed focus to growing the
business, the Committee has determined that
the 2024 AIP financial performance measures
be revised to comprise an equal weighting of
Net Rental Income (being a key measure of
the health of demand for our destinations),
Adjusted Earnings Per Share and Relative Total
Accounting Return (essentially comparing our
net assets plus dividends to other listed
property companies). The non-financial
component will continue to include a 10%
weighting on emissions reduction alongside
the 25% for Personal/Strategic objectives.
Net Rental Income 21.67%
Adjusted Earnings Per Share 21.67%
Relative Total Accounting Return 21.67%
Emissions Reduction 10%
Personal/Strategic Objectives 25%
Result of the 2023 AGM and shareholder
engagement
All remuneration related resolutions were
passed by a clear majority of shareholders
at the 2023 AGM, including the Directors’
Remuneration Policy (the Policy), albeit not
with the level of support which we would have
ideally liked. This was impacted by the decision
of one of our largest shareholders not to
support these resolutions.
It is worth noting that our remuneration
arrangements are consistent with institutional
shareholder ‘best practice’ guidelines in all
material respects.
Following the AGM, I engaged extensively with
many of our largest shareholders who together
represented around 60% of our share register.
While the majority of our shareholders (and the
related proxy agencies) support our Policy,
some shareholders hold different views and
would prefer to see the RSS replaced by a
more traditional Long-Term Incentive Plan
(LTIP). I understand the different shareholder
viewpoints that we have in this area.
Consistent with this, there was substantial
delivery against the targets set for the AIP.
The financial performance measures in
2023 were focused on Adjusted Earnings
Per Share, reduction of Net Debt and Gross
Administration Costs.
Adjusted Earnings Per Share performance was
fully achieved with performance ahead of the
on-target level.
The Net Debt target was achieved at just over
the on-target level with an achievement at
56.1%.
Delivery against the Gross Administration
Costs target was materially ahead, achieving
a payout of 90%.
The reduction in CO
2
emissions (Scope 1 and
2) of 12.3% (on a like-for-like basis) resulted
in a 100% achievement against the carbon
emissions reduction measure. This strong
performance is due to the delivery of energy
efficiency works at several assets and an
increased focus on energy saving actions
and controls.
Personal/Strategic objectives were based
on the Business Plan and Strategy with
substantial progress being made in 2023
across the five strategic objectives as detailed
on page 96.
Particular achievements included:
— The continued reinvigoration of our assets,
signing 306 leases at an average of 12%
above Estimated Rental Value (ERV)
— Delivery of the cost reduction programme
while also achieving higher colleague
retention and increasing the score for
customer satisfaction
— Delivering significant progress against the
digital transformation programme
Performance against the Personal/Strategic
objectives was assessed at 95% for the Chief
Executive Officer and 89% for the Chief
Financial Officer.
Long term incentive arrangements
Consistent with market practice, our approach
is to make annual grants of long term incentives
awards through the Restricted Share Scheme
(RSS). In line with the Policy, Rita-Rose Gagné
and Himanshu Raja received annual RSS
awards equivalent to 100% and 75% of base
salary, respectively, on 20 March 2023.
91Hammerson plc Annual Report 2023
Exercise of discretion and judgement
The Remuneration Committee considered the
AIP outturn and the satisfaction of the RSS
underpin to be appropriate and to reflect
a strong performance against the majority of
objectives despite the challenging backdrop.
As such, the Remuneration Committee did not
exercise its discretion to override formulaic
variable pay outturns in the year.
Conclusion
After another year of consistent strategic
execution and operational progress,
Hammerson is a stronger business. This is
reflected in the remuneration outcomes
for 2023.
In summary:
— The AIP delivered between 87.1% and
85.6% of the maximum for the Executive
Directors, with 40% of each award deferred
in shares for two years.
— The Committee assessed the underpin
for the CEO’s 2020 RSS grant, awarded on
her appointment as CEO in November
2020. It determined that the award should
be allowed to vest in accordance with the
relevant rules.
— The CEO and CFO received RSS awards for
2023 over shares worth 100% and 75% of
salary, respectively.
— Recognising the need to balance the impact
of high inflation with the continuing focus on
cost control, a 4% salary increase has been
awarded to the Executive Directors which is
below the average awarded to colleagues
more generally.
Following the three years of transformational
change for the business, Hammerson is well
positioned to invest for sustainable growth.
The Committee remains focused on ensuring
that our remuneration structures and
outcomes remain aligned with the strategy
and Business Plan set by the Board.
At the 2024 AGM, the Remuneration Report
will be submitted to shareholders. I am
grateful for the engagement provided by
shareholders during the year and I look
forward to receiving your continued support
at the AGM.
Habib Annous
Chair of the Remuneration Committee
We note that there is some external debate
amongst institutional shareholder bodies
and other stakeholders, such as the Capital
Markets Industry Taskforce, generally
regarding approaches to executive
remuneration. We will continue to stay abreast
of the debate and to consider the position in
light of developments in best practice.
Reflecting the evolution in our strategy and
feedback from the engagement process, we
have changed some of the metrics in our
bonus scorecard and concluded that the
current approach, with these modifications,
is appropriate for 2024. As I explained in my
letter to shareholders last year, the Committee
will continue to consider the views of our
shareholders whilst ensuring that the Policy
supports the development of the strategy
agreed by the Board and remains aligned to
stakeholder interests.
Once again, I would like to thank shareholders
who have engaged with me on remuneration
matters. The insight and feedback provided is
an important input to the Committee’s
discussions and decision making.
Colleague engagement
We communicate with, and receive feedback
from, the Company’s colleagues through a
variety of channels, notably through The
Colleague Forum (the Forum) which you can
read about on page 73. Carol Welch, a member
of the Remuneration Committee and
Designated Non-executive Director for
Colleague Engagement, and I met with the
Forum in November 2023 to discuss executive
remuneration and explain how it aligns with
the wider Company pay policy. This informed
a valuable discussion on this topic at the
Committee’s meeting in December.
The Committee is regularly updated on
Group-wide colleague pay and benefits and
considers colleague remuneration, as well as
feedback from Carol Welch, as part of its
review of executive remuneration.
2024 pay approach
The Committee approved a 4% salary increase
for each of the Executive Directors, noting that
this is below the average (5%) to be awarded
to colleagues generally.
92Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Chair’s annual statement continued
Activities and decisions of the Committee in 2023
Salary and benefits — 2023 review of Executive Directors’ pay and the fee for the Chair of the Board
— 2023 review of GEC members’ salaries
Annual Incentive Plan
and Long Term Incentive
Schemes
— Consideration of AIP 2022 outturn
— Review and approval of 2023 AIP structure, performance targets and personal objectives
— Review of likely 2023 AIP outturn and potential targets for 2024
— Review and approval of the 2023 RSS award levels
— Review and approval of the underpin for the 2020 RSS award
— Review of RSP awards for GEC members
— Review of AIP for GEC members
Policy renewal — Consideration of the policy against developments in market and best practice
— Consideration of changes to the policy
— Engagement with shareholders and proxy agencies on proposed changes to the policy and
extensive discussion of feedback received in advance of the 2023 AGM
Governance — Review of AGM season remuneration report results, and shareholders’ and proxy agencies’
views on remuneration
— Review of the Remuneration Committee’s terms of reference
— Post AGM engagement with shareholders on remuneration matters
Other — Review of Directors’ Remuneration Report
— Employee share plan award activity
— Review of remuneration consultant costs and re-appointment
— Review of emerging remuneration practice
— In consultation with the Designated Non-executive Director for Colleague Engagement,
engagement with the wider workforce on how executive pay aligns with pay for the
wider workforce
93Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Annual Remuneration Report
The Directors’ Remuneration Report (the Report) sets out how the Directors’ Remuneration Policy (the Policy) was put into practice in 2023 and
how we intend to implement it in 2024. It is divided into three sections:
— Section 1: Single figure tables
— Section 2: Further information on 2023 remuneration
— Section 3: Implementation of Remuneration Policy in 2024
The Group’s External Auditors have reported on certain sections of this Report and stated whether, in their opinion, those sections have been
properly prepared.
The Policy was approved by shareholders at the AGM held on 4 May 2023 and is available to view on the investor relations section of the
Company’s website at www.hammerson.com. A summary of the key provisions for each element of the Directors’ Remuneration Policy is set out
in this Report.
SECTION 1: SINGLE FIGURE TABLES
This section contains the single figure tables showing 2023 remuneration for the Executive Directors and Non-executive Directors, and
information that relates directly to the composition of these figures.
All figures highlighted in GREEN in the Report relate directly to a figure that is found in the Single Figure Table below.
Executive Directors’ remuneration: Single Figure Table (audited)
Salary
£000
Benefits
£000
Pension
£000
Fixed Total
£000
Annual
Bonus
(AIP)
£000
Restricted
Share
Scheme
(RSS)(1)
£000
Variable
Total
£000
Total
£000
Rita-Rose Gagné 2023 706 21 71 798 1,241 2,025 3,266 4,064
2022 682 25 68 775 1,120 – 1,120 1,895
Himanshu Raja 2023 452 20 45 517 585 – 585 1,102
2022 436 25 44 505 529 – 529 1,034
Total 2023 1,158 41 116 1,315 1,826 2,025 3,851 5,166
2022 1,118 50 112 1,280 1,649 – 1,649 2,929
1 See summary of RSS immediately below.
Commentary on the Single Figure Table (audited)
Restricted Share Scheme (RSS)
In 2023, Rita-Rose Gagné’s first RSS award (made on her appointment as CEO in November 2020) met its performance underpin with the
Company achieving a positive TSR of 83.6% (on an enhanced scrip dividend basis) over the reference period (being the three years from 2
November 2020) and making significant progress against the strategy set in early 2021. Key highlights over the reference period included a
reduction in net debt of £876m (39%), multiple disposals raising £843m of gross proceeds, significant cost reductions, and substantial internal
transformation and team restructuring, leading the Committee to determine that the underpin had been met and that the award should be
allowed to vest in accordance with the relevant rules. The award ceases to be contingent on employment as to one-third on each of the third,
fourth and fifth anniversaries of grant in November 2020, and was therefore not immediately payable in 2023. The award is then exercisable only
from the fifth anniversary of grant and ceases to be exercisable on the seventh anniversary of grant.
The single figure table above shows the full 2020 RSS award (and, for the avoidance of doubt, not solely the one-third which ceased to be
contingent on employment on the third anniversary of grant).
The value of the 2020 RSS award has been calculated using the closing share price on the third anniversary of grant date for the one-third of the
RSS award which ceases to be contingent on employment (24.70p). The value of the remaining two-thirds of the awards has been calculated
using the share price over the last quarter of the financial year (25.80p). The total value includes dividend equivalents of £589,819. £427,908 of
the total value is attributable to share price appreciation in the period between grant in November 2020 and November 2023 based on the grant
price of 17.71p.
94Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Annual Remuneration Report continued
Annual bonus for 2023
The Annual Incentive Plan (AIP) is the Company’s annual bonus scheme. The bonus awards are based on performance conditions that were
approved by the Committee. For 2023, the AIP bonus was split 65% for performance against financial measures, 10% for emissions reduction
and 25% for performance against personal objectives. The Committee has the ability to override the indicative formulaic outturn if it considers
that not to be appropriate given the Company’s performance during the year.
The performance targets were not disclosed in advance of the year, as they were considered by the Board to be commercially sensitive
information, but full details of the conditions and performance against them are now set out below.
Financial
measures
(% of bonus
achieved,
max 65%)
ESG
measures
(% of bonus
achieved,
max 10%)
Personal/
Strategic
measures
(% of bonus
achieved,
max 25%)
Total vesting
percentage
(%, max
100%)
Vesting
amount as %
of salary
AIP amount
(Shown in
Single
Figure Table)
£000
Rita-Rose Gagné (max bonus – 200% of salary) 53.3% 10.0% 23.75% 87.1% 174.1% 1,241
Himanshu Raja (max bonus – 150% of salary) 53.3% 10.0% 22.25% 85.6% 128.4% 585
AIP OUTTURN
Performance against targets
a
Bonus achieved
Performance measures
Entry threshold
(% vesting at
threshold)
On-target
(50%
vesting)
Full vesting
target (100%
vesting)
Result
achieved
Vesting
percentage
against
maximum
Weighting
(% of max
bonus
available)
% of max
bonus
achieved
Adjusted earnings per share b 1.91p 2.12p 2.33p 2.33p 100% 21.67% 21.67%
Net debt c £1,685m £1,342 £1,217m £1,326m 56.1% 21.67% 12.16%
Gross admin costs £55.0m £53.1m £51.1m £51.5m 90.0% 21.67% 19.50%
ESG – emissions reduction
vs 2022 d 3% 5% 7% 12.3% 100.0% 10.0% 10.00%
Personal/Strategic
objectives
Rita-Rose Gagné e See summary of progress
in the table below
95% CEO
25% 23.75%
Personal/Strategic
objectives
Himanshu Raja e 89% CFO
25% 22.25%
Total CEO 87.1%
Total CFO 85.6%
a Each of the AIP performance conditions is subject to a straight line payment scale between threshold, on-target and full vesting points.
b Consistent with established practice, the original performance targets for Adjusted Earnings Per Share are, where relevant, adjusted for variances in the timing
of planned disposals.
c Net debt is as shown in Table 13 of the Additional information. Again, consistent with established practice, the original targets were adjusted to reflect changes
in foreign exchange rates in the year.
d Reduction in emissions is assessed on a like for like basis based on Scope 1 and 2 emissions.
e Personal/Strategic objectives for the CEO and CFO were based on the Business Plan and Strategy with substantial progress made across the five strategic
objectives, as summarised in the table overleaf.
95Hammerson plc Annual Report 2023
Performance against AIP Personal/Strategic Objectives
Value Creation – Further realigned our portfolio with the sale of non-core assets
– The success of the continued reinvigoration of our assets and placemaking activities, resulted in the
signing of 306 leases, with £46m of headline rent (£29m at our share) at 12% above ERV, maintaining
strong flagship occupancy
– Repositioning of Bullring, resulting in an uplift to ERV of 5% in 2023
– Delivered like-for-like GRI growth of 6% and NRI growth of 4%
– Improved the headline loan to value ratio to 34%, enabling us to invest for growth
Cost Management – 49% reduction in headcount from December 2022
– Alongside cost management initiatives, surveyed occupiers to ensure that we continue to provide a
superior proposition with overall customer satisfaction increased (as confirmed by our external provider)
– 14% year-on-year reduction in Gross Administration Costs
Sustainability – Regained 4* GRESB scoring
– Launched a new colleague engagement survey with 83% participation which will provide the basis for
tracking future trends
– Prioritising broader social impact with new partners, including being the first destination to be used by
Charity Supr.Mkt
– Integrated net zero pathways into our asset management plans
– 90% of colleagues participated in the Hammerson Giving Back Day
– Delivering a strong investment in social value of £2.5m
Organisation – Further integration of the new simplified, asset-centric operating model, removing inefficiencies and
leveraging the strength of our portfolio to further consolidate our suppliers to enhance our support for
our occupiers and customers
– Consolidation of UK-based offices to a new London head office in Marble Arch, achieving cost savings
and high levels of colleague engagement with 83%+ positive feedback on the move
– Implementation of coaching and development plans for colleagues across the organisation to support
growth and retention
– High levels of colleague engagement in Affinity group activities and successful refresh of The
Colleague Forum
Digitalisation – Implemented a new enhanced leasing platform which achieves a faster and more efficient leasing
process both for us and our occupiers
– Engaging with customers both directly and through social media to attract new customers and
increase revenue streams through ticketed placemaking activations such as the Sound of Musicals
event at Westquay and the first Late Night Out event at the Bullring
– Increased automation of internal enterprise systems, to improve the agility of our processes
The Committee assessed individual contribution to these common objectives and, in light of the exceptional achievements made to complete the
transformation project and return the Company to a value creation and growth strategy, concluded that the individual outturns at 95% and 89%
for the CEO and CFO respectively were reasonable.
Against this backdrop, a scorecard outturn of 87.1% of maximum for the CEO and 85.6% of maximum for the CFO was proposed to the Committee
which, following due consideration, was approved without adjustment. 40% of the outturn is deferred into shares for two years, generally
contingent on continued employment.
96Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Annual Remuneration Report continued
Fixed Remuneration
Salary
This represents salary earned in respect of the year. From 1 April 2023, salaries increased by 4%.
Benefits
The taxable benefits shown in the Single Figure Table include a car allowance (£16,000), private health insurance and permanent health
insurance for both Executive Directors.
Executive Directors are eligible to participate in the Company’s all-employee share plan arrangements (SIP and Sharesave). Himanshu Raja’s
benefits also include amounts received in respect of his participation in the SIP in 2023.
Pension
Executive Directors receive a salary supplement in lieu of pension benefits. Rita-Rose Gagné and Himanshu Raja each received a salary
supplement of 10% of base salary which is consistent with the rate available to new joiners and below the rate for longer-serving employees.
All salary supplements paid to Executive Directors in lieu of pension benefits are subject to deductions required for income tax and employees’
national insurance contributions in the UK.
Non-executive Directors: Single Figure Table (audited)
The table below shows the remuneration of Non-executive Directors for the year ended 31 December 2023 and the comparative figures for the
year ended 31 December 2022. The figures for 2022 only include directors who served for part of 2023 and, therefore, do not equate to the totals
for 2022 as reported in last year’s report.
Non-executive Directors’ remuneration for the year ended 31 December 2023
Committee membership and other responsibilities Fees Benefits Total
Audit
Committee
Remuneration
Committee Other
2023
£000
2022
£000
2023
£000
2022
£000
2023
£000
2022
£000
Robert Noel Chair of the Board 300 300 3 3 303 303
Habib Annous a
Chair of the Remuneration
Committee
82 78 - – 82 78
Méka Brunel b
67 67 5 2 72 69
Mike Butterworth c
Senior Independent Director and
Chair of the Audit Committee
87 83 1 – 88 83
Adam Metz d
67 67 92 70 159 137
Carol Welch
Designated Non-Executive Director
for Colleague Engagement
75 75 1 – 76 75
Total e 678 670 102 75 780 745
a Habib Annous was appointed Chair of the Remuneration Committee on 28 April 2022.
b Méka Brunel is based in France. This is reflected in her benefits figure – see Benefits note below.
c On 29 April 2022, Mike Butterworth was appointed as Senior Independent Director.
d Adam Metz is based in the USA. This is reflected in his benefits figure – see Benefits note below.
e All Non-executive Directors are members of the Nomination and Governance Committee. No fee is payable for being Chair or a member of that Committee.
Benefits
Benefits disclosed relate to the reimbursement of travel and accommodation expenses incurred in attending Board meetings at the Company’s
head office. For those Non-executive Directors based outside the UK, this includes the cost of international travel and accommodation. In
accordance with the Policy, any tax arising is settled by the Company. Robert Noel is entitled to private medical insurance which is taxed as a
benefit in kind. The grossed-up value of relevant amounts has been disclosed.
Fees payable to Chair of the Board and Non-executive Directors – 2023 annual fees
£
Chair of the Board 300,000
Non-executive Director 61,500
Senior Independent Director 10,000
Audit Committee Chair 15,000
Remuneration Committee Chair 15,000
Audit/Remuneration Committee Member 5,000
Designated Non-executive Director for Colleague Engagement 8,000
97Hammerson plc Annual Report 2023
SECTION 2: FURTHER INFORMATION ON 2023 REMUNERATION
Directors’ shareholdings and share plan interests (audited)
Summary of all Directors’ shareholdings and share plan interests as at 31 December 2023 (including Persons Closely Associated)
Outstanding scheme interests at
31 December 2023 Actual shares held
Unvested
(subject to
performance
measures)
a
Unvested
(not subject
to
performance
measures)
b
Vested but
unexercised
scheme
interests
c
Total shares
subject to
outstanding
scheme
interests
At
1 January
2023
d
At
31 December
2023
e
Total of all
scheme
interests
and share-
holdings at
31 December
2023
e
Executive Directors
Rita-Rose Gagné 8,204,843 8,623,558 2,654,716 19,483,117 322,201 329,448 19,812,565
Himanshu Raja 3,797,241 1,460,465 – 5,257,706 263,357 284,368 5,542,074
Non–executive Directors
Robert Noel – – – – 1,206,177 1,240,089 1,240,089
Habib Annous – – – – 842,002 861,793 861,793
Méka Brunel – – – – 31,514 65,184 65,184
Mike Butterworth – – – – 211,317 211,317 211,317
Adam Metz – – – – 1,126,950 1,152,297 1,152,297
Carol Welch – – – – 52,587 52,587 52,587
a RSS awards.
b DBSS, Sharesave and RSS awards (that have completed any underpin period).
c RSS awards that have vested but remain unexercised plus any notional dividend shares.
d Or joining date if later.
e Or leaving date if earlier.
f DBSS and RSS awards are nil cost options, satisfied through market purchase. The DBSS awards are exercisable from the second anniversary of grant until the
seventh anniversary of grant. The RSS awards are subject to an employment contingency vesting one third on each of the third, fourth and fifth anniversaries
of grant (to the extent the performance underpin is met following the third anniversary of grant). The RSS awards are exercisable from the fifth anniversary of grant
and cease to be exercisable on the seventh anniversary of grant.
Between 1 January 2024 and 27 February 2024 (being the latest practicable date prior to publication of this document) the Executive and
Non-executive Directors’ beneficial interests in the table above remained unchanged.
98Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Annual Remuneration Report continued
Directors’ share ownership guidelines (audited)
The chart below shows the Executive Directors actual share ownership compared with the current share ownership guidelines. Executive
Directors are normally expected to achieve the minimum shareholding guidelines within seven years of appointment. Non-executive Directors
are also encouraged to acquire a shareholding in the Company.
Directors’ share ownership guidelines
Rita-Rose Gagné
Policy
Shares Shares
Policy Shares counting towards the guidelines
as at 31 Dec 2023
Shares counting towards the guidelines
as at 31 Dec 2023
Policy
250%
251%
Policy
250%
63%
Himanshu Raja
* The shareholding as a percentage of salary is as at the share price of 28.4p on 31 December 2023. Shares under award are granted on a gross basis but only
credited to the ownership requirement on a net of tax basis, as shown above.
Rita-Rose Gagné achieved the share ownership guidelines in 2023. During the year the 2020 RSS underpin was met and, therefore, consistent
with the Investment Association’s guidelines, those shares now count (on a net of tax basis) against her ownership requirement.
Himanshu Raja was appointed as Chief Financial Officer on 26 April 2021 and is required to achieve the share ownership guidelines by April 2028.
In practice, it is currently anticipated that the guidelines should be met earlier than this. Assuming the 2021 RSS underpin is met during 2024, his
holding for the purposes of the guidelines is likely to increase to at least one time’s salary during the year.
Executive Directors’ share plan interests (including share options) (audited)
The table overleaf sets out the Executive Directors’ interests under the Deferred Bonus Share Scheme (DBSS) and the Restricted Share Scheme
(RSS). No Executive Director holds awards under the LTIP.
Performance conditions and form of awards (audited)
Awards under the DBSS are not subject to any performance conditions (other than continued employment on the vesting date). The RSS awards
are subject to a material underperformance underpin. RSS awards were made on 20 March 2023 over shares worth 100% of salary to Rita-Rose
Gagné and over shares worth 75% of salary to Himanshu Raja. These awards were granted subject to a broad underpin (measured at the third
anniversary of grant) in respect of the entire awards so that the Remuneration Committee may reduce the level of vesting if it feels that it is not
appropriate in all the circumstances and may have regard to the various factors mentioned in the Policy in so determining. The underpin requires
that the Group’s performance and delivery of strategy is sufficient to justify vesting having regard to factors such as absolute and relative TSR, Net
Debt and TPR over the underpin period.
Awards to Executive Directors under the RSS and DBSS are made in the form of nil-cost options.
Accrual of dividend shares
DBSS and RSS awards accrue notional dividend shares to the date of vesting (including any holding period).
Face values (audited)
Face values for the DBSS and RSS awards are calculated by multiplying the number of shares granted during 2023 by the average share price for
the five business days preceding the awards. Notional dividend shares are not included in the face value calculations.
99Hammerson plc Annual Report 2023
Dilution limits
Current in flight DBSS awards and Sharesave (SAYE) grants are satisfied using market purchased shares. RSS awards are also satisfied using
market purchased shares (whether via a trust or treasury). It is expected that the 2024 RSS and DBSS awards will be satisfied in a similar way.
The Committee may grant awards with new issued shares and will comply with the dilution limits as set out in the rules of the Company’s share
incentive plans during the year. The Company operates within the Investment Association’s guidelines with reference to share dilution not
exceeding 10% of the issued ordinary share capital in any rolling 10-year period under all-employee plans and 5% under its discretionary plans
(counting both new issue and treasury shares).
Executive Directors’ share plan interests 2023 (audited)
Date of
award
Vesting
date
Number of
awards held
at
1 January
2023 Awarded
Notional
dividend
shares
accrued
Exercised/
vested Lapsed
Number of
awards held
at 31
December
2023
Grant
price
pence
d
Face value
of awards
granted/
purchased
during 2023
£000
Rita-Rose Gagné
RSS a 02 Nov 2020 02 Nov 2023 7,782,944 – 181,204 2,654,716 – 5,309,432 17.710 –
RSS a 31 Mar 2021 31 Mar 2024 2,558,171 – 59,560 – – 2,617,731 33.590 –
RSS a 22 Mar 2022 22 Mar 2025 2,502,074 58,524 – – 2,560,598 31.660 –
RSS a 20 Mar 2023 20 Mar 2026 – 2,957,917 68,867 – – 3,026,784 24.100 713
DBSS b 22 Mar 2022 22 Mar 2024 1,380,568 – 32,143 – – 1,412,711 31.660 –
DBSS b 20 Mar 2023 20 Mar 2025 – 1,858,153 43,262 – – 1,901,415 24.100 448
Himanshu Raja
RSS a 27 Apr 2021 27 Apr 2024 1,090,539 – 25,390 – – 1,115,929 37.810 –
RSS
a 22 Mar 2022 22 Mar 2025 1,200,771 – 27,956 – – 1,228,727 31.660 –
RSS a 20 Mar 2023 20 Mar 2026 – 1,419,535 33,050 – – 1,452,585 24.100 342
DBSS b 22 Mar 2022 22 Mar 2024 453,496 – 10,558 – – 464,054 31.660 –
DBSS b 20 Mar 2023 20 Mar 2025 – 878,099 20,444 – – 898,543 24.100 212
Sharesave c 07 Jul 2022 01 Aug 2025 97,868 – – – – 97,868 21.894
a RSS awards vest as to one-third on each of the third, fourth and fifth anniversaries of the date of award. The performance period for the purpose of the
performance conditions is the period of three years from grant. RSS awards were made on 20 March 2023 over shares worth 100% of salary to Rita-Rose Gagné
and over shares worth 75% of salary to Himanshu Raja.
b DBSS awards vest on the second anniversary of the date of award. DBSS awards were made on 20 March 2023 over shares worth 40% of the prior year bonus to
Rita-Rose Gagné and Himanshu Raja.
c The exercise price for the Sharesave award is 18.39p. This refers to the share price on the business day preceding the start of the Sharesave invitation period of
22.99p, with the exercise price set at 80% of this.
d The grant price refers to the average closing price over the five days prior to grant consistent with the general approach to determining the awards.
Executive Directors’ SIP interests (audited)
The Executive Directors’ interests in ordinary shares of the Company under the Share Incentive Plan (SIP) as at 31 December 2023 (or at their
leaving date if earlier) are shown in the table below. The shares are held in a SIP trust.
Total SIP
shares
1 January
2023
Partnership
shares
purchased
Matching
shares
awarded
Free shares
awarded
Dividend
shares
awarded
Total SIP
shares 31
December
2023
Himanshu Raja 27,712 6,726 6,726 – 959 42,123
100Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Annual Remuneration Report continued
Total Shareholder Return
The chart below shows the Total Shareholder Return (TSR) in respect of the Company’s ordinary shares of 5p each for the 10 years ended
31 December 2023 against the return of the FTSE EPRA/NAREIT UK Index, which comprises shares of a number of the Company’s peers.
The total shareholder return is rebased to 100 at 31 December 2013. The other points shown on the chart are the values at intervening financial
year ends.
Total Shareholder return index
0
50
100
150
200
250
31 Dec 202331 Dec 202231 Dec 202131 Dec 202031 Dec 201931 Dec 201831 Dec 201731 Dec 201631 Dec 201531 Dec 201431 Dec 2013
FTSE EPRA/NAREIT UK Hammerson (Enhanced Scrip Dividend Basis)
Remuneration of the Chief Executive over the last 10 years
The table below shows the remuneration of the holder of the office of Chief Executive.
Chief Executive’s remuneration history
As a % of maximum
Total
remuneration
£000
Annual
bonus
RSS/LTIP
vesting
2023 Rita-Rose Gagné 4,064 87.1% 100%
2022 Rita-Rose Gagné 1,895 81.7% n/a
2021 Rita-Rose Gagné 2,106 70.4% n/a
2020 (Rita-Rose Gagné) from 2 November 2020 148 0.0% n/a
2020 (David Atkins) to 2 November 2020 617 0.0% 0.0%
2019 David Atkins 1,408 37.1% 29.7%
2018 David Atkins 1,109 n/a 51.5%
2017 David Atkins 1,795 47.5% 56.4%
2016 David Atkins 2,681 65.3% 64.9%
2015 David Atkins 2,147 77.3% 0.0%
2014 David Atkins 1,568 65.3% 0.0%
Relative importance of spend on pay
The table below shows the Company’s total employee costs compared with dividends paid.
Total employee costs compared with dividends paid
Note*
2023
£m
2022
£m Change
Employee costs 5B 35.3 42.8 -17.5%
Dividends 21 35.9 140.3 -74.4%
* Note references are to the financial statements
101Hammerson plc Annual Report 2023
Remuneration for the Executive Directors and Non-executive Directors compared with UK employees of the Hammerson Group
The tables show the percentage change from 31 December 2022 to 31 December 2023 in base salary, taxable benefits and bonus for the
Executive and Non-executive Directors compared with other employees of the Hammerson Group in the UK. Hammerson Plc does not have any
employees. This data has been prepared using the employees of the UK subsidiaries only. The Executive Directors have been excluded from the
UK employees’ calculation.
Given the number of Directors who had not served for the whole of the two years being compared, any part year has been annualised on the basis
of days served on the Board. While this is slightly simplistic, it provides a fairer overall position of the year-on-year changes than taking the
unadjusted earnings in each year.
Following the significant reduction in UK headcount from 196 to 107 during 2023, we have updated the approach to calculating the percentage
change for total UK employees shown in the tables below. The new approach is based on the weighted average change in salary, benefits and
annual bonus for all employees who were employed throughout both 2022 and 2023, with pay being calculated on a full time equivalent basis.
The prior year figures have not been restated.
Percentage change in the Executive Directors’ base salary, taxable benefits and bonus
Change % (2022 to 2023) Change % (2021 to 2022) Change % (2020 to 2021) Change % (2019 to 2020)
Salary Benefits
Annual
bonus Salary Benefits
Annual
Bonus Salary Benefits
Annual
bonus Salary Benefits
Annual
bonus
Rita-Rose Gagné (CEO) 3.5% -16.0% 10.8% 1.5% -94.1% 18.4% — 180.5% n/a n/a n/a n/a
Himanshu Raja (CFO) 3.7% -20.0% 10.6% 1.4% 5.4% 13.4% n/a n/a n/a n/a n/a n/a
Total UK employees 6.6% 3.6% 22.3% 12.3% 15.5% 32.1% 9.5% 18.6% 324.7% 3.7% -5.3%
-73.8%
Percentage change in the Non-executive Directors’ fee and taxable benefits
Change % (2022 to 2023) Change % (2021 to 2022) Change % (2020 to 2021) Change % (2019 to 2020)
Salary Benefits
Annual
bonus Salary Benefits
Annual
bonus Salary Benefits
Annual
bonus Salary Benefits
Annual
Bonus
Robert Noel
— — N/A — -20.2% n/a 3.8% 19.0% n/a n/a n/a n/a
Habib Annous 5.1% N/A N/A 11.1% n/a n/a n/a n/a n/a n/a n/a n/a
Méka Brunel — 150% N/A 0.0% n/a n/a 7.4% -100.0% n/a -1.9% -87.7% n/a
Mike Butterworth 4.8% 100% N/A 13.9% n/a n/a n/a n/a n/a n/a n/a n/a
Adam Metz — 31.4% N/A — 3,271.5% n/a 7.4% -93.7% n/a -1.7% -77.8% n/a
Carol Welch — 100% N/A — n/a n/a 17.9% n/a n/a -4.3% — n/a
Total UK employees 6.6% 3.6% 22.3% 12.3% 15.5% 32.1% 9.5% 18.6% 324.7% 3.7% -5.3% -73.8%
The table below shows the ratio of Chief Executive pay to that of the UK employees whose pay is at the 25th percentile, median and
75th percentile.
Chief Executive pay ratio
Year Method
25th
percentile
pay ratio
Median pay
ratio
75th
percentile
pay ratio
2023 Option A 47:1 34:1 20:1
2022 Option A 41:1 26:1 15:1
2021 Option A 48:1 30:1 18:1
2020 Option A 21:1 13:1 7:1
2019 Option A 36:1 22:1 12:1
102Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Annual Remuneration Report continued
Total UK employee pay and benefits figures used to calculate the 2023 Chief Executive Pay Ratio
Year
25th
percentile
pay
£000
Median pay
£000
75th
percentile
pay
£000
Salary 58 83 121
Total UK employee pay and benefits 86 121 201
Supporting information for the Chief Executive Pay Ratio
The Company has chosen the Option A methodology to prepare the pay ratio calculation as this is the most statistically robust method and is in line
with the general preference of institutional investors.
As ratios could be unduly impacted by joiners and leavers who may not participate in all remuneration arrangements in the year of joining and
leaving, the Committee has modified the statutory basis to exclude any employee not employed throughout the whole financial year.
Employee pay data is based on full-time equivalent (FTE) pay for UK employees as at 31 December 2023. For each employee, total pay is
calculated in line with the single figure methodology (i.e. fixed pay accrued during the financial year and the value of performance based incentive
awards vesting in relation to the performance year). Leavers and joiners are excluded. Employees on maternity or other extended leave are
included on the basis of their FTE salary and benefits and pro-rata short term incentives. No other calculation adjustments or assumptions have
been made.
The primary reason for the increase in the Chief Executive pay ratios from 2022 to 2023 was that the single figure disclosures for Rita-Rose Gagné
include the value of the 2020 RSS award as it is included when the performance underpin is met even though it is only capable of release to her
after another two years and two-thirds of the award remains contingent on further employment.
Each of the three individuals identified was a full-time employee during the year and received remuneration in line with the Policy.
Generally, the Remuneration Policy supports a greater variable pay opportunity the more senior the employee as these employees are able
to influence Company performance more directly. Executive Directors participate in the RSS linked to long term strategy whilst other employees
may participate in the Restricted Share Plan (RSP). The individuals identified this year for median and the 75th percentile pay were participants
in the RSP and all three individuals received an annual bonus for 2023. The median pay ratio is consistent with the pay, reward and progression
policies for the Company’s UK employees, reflecting the Company’s policy to pay market based levels of fixed rewards to its employees with an
opportunity to benefit from the annual bonus plan. With a significant proportion of the Executive Directors’ pay linked to performance and share
price over the longer term, it is expected that the ratio will depend to a significant extent on RSS and RSP outcomes each year, and accordingly
may fluctuate from year-to-year.
Payments to past Directors (audited)
No LTIP awards vested in 2023 to former Executive Directors. There were no payments to past Directors.
Payments for loss of office (audited)
There were no payments to past Directors for loss of office.
Service contracts and notice periods
The dates of the appointments of the Executive Directors in office as at 31 December 2023 are set out below.
Rita-Rose Gagné Himanshu Raja
Date of service contract 29 September 2020 19 April 2021
Notice period 12 months’ notice (both from and to the Executive Director).
Payment in lieu of notice (PILON) Employment can be terminated by the Company with immediate effect by making a PILON in respect
of the outstanding notice period comprising base salary and the value of benefits in respect of pension,
private medical insurance and car allowance.
No PILON in event of gross misconduct.
The Company has the discretion to make any PILON on a phased basis, subject to mitigation.
103Hammerson plc Annual Report 2023
The dates of the appointments of the Non-executive Directors in office as at 31 December 2023 are set out below.
Date of original
appointment to Board
Commencement date
of current term
Unexpired term as at
April 2024
Robert Noel 1 September 2020 1 September 2023 2 years, 4 months
Habib Annous 5 May 2021 5 May 2021 1 month
Méka Brunel 1 December 2019 1 December 2022 1 year, 8 months
Mike Butterworth 1 January 2021 1 January 2024 2 years, 8 month
Adam Metz 22 July 2019 22 July 2022 1 year, 3 months
Carol Welch 1 March 2019 1 March 2022 11 months
Non-executive Directors are generally entitled to three months’ notice.
External board appointments
Where Board approval is given for an Executive Director to accept an external non-executive directorship, the individual is entitled to retain any
fees received. Rita-Rose Gagné and Himanshu Raja do not currently hold any external non-executive directorships.
Committee process
In order to avoid any conflict of interest, remuneration is managed through well-defined processes ensuring no individual is involved in the
decision making process related to their own remuneration. In particular, the remuneration of all Executive Directors is set and approved by the
Committee; none of the Executive Directors are involved in the determination of their own remuneration arrangements. The Committee also
receives support from external advisors and evaluates the support provided by those advisors annually to ensure that advice is independent,
appropriate and cost effective.
Committee membership and meetings
The Committee continues to be comprised exclusively of independent Non-executive Directors and its terms of reference can be found on the
Company’s website at www.hammerson.com. The members of the Committee are shown at the start of this report.
The Committee met five times during the year. The agenda for each meeting is planned around the Group’s reporting cycle and includes particular
matters for the Committee’s consideration. Following each meeting, the Board is appraised of matters arising from the Committee. The Chair of
the Board, Chief Executive, Chief People Officer and external remuneration consultant attend meetings by invitation, together with the General
Counsel and Company Secretary, who acts as secretary to the Committee.
Committee effectiveness
In line with the 2018 Code’s requirements, an internal evaluation of the effectiveness of the Board and its committees was undertaken in 2023
(following an external evaluation in 2022). Further information on the 2023 evaluation can be found on page 76. The Committee considers that it
continues to function effectively and in accordance with its terms of reference. In 2023, the Committee reviewed its terms of reference to ensure
that they remain appropriate.
Advisors
The Committee appointed FIT Remuneration Consultants (FIT) in August 2011. FIT has no other connection with the Company or its Directors.
Directors may serve on the remuneration committees of other companies for which FIT acts as remuneration consultants. The Committee is
satisfied that all advice given was objective and independent having regard to their experience of working with advisors. FIT is a member of the
Remuneration Consultants Group and subscribes to its Code of Conduct. Fees paid for services to the Committee in 2023 totalled £107,723
(2022: £87,283). FIT does not provide any other services to the Company. Terms of engagement (available on request to shareholders) specify
that FIT will only provide advice expressly authorised by or on behalf of the Remuneration Committee. FIT fees were charged on the basis of the
time spent advising the Company.
Slaughter and May provides legal advice and Lane Clark & Peacock LLP provides actuarial advice to the Company. The Committee may seek advice
from both firms where it relates to matters within its remit.
Statement of voting at Annual General Meeting
The table below shows votes cast by proxy at the AGM held on 4 May 2023 in respect of the Directors’ Remuneration Report and Directors’
Remuneration Policy.
Statement of voting on remuneration
Votes for Votes against
Votes withheld
numberNumber Number
2022 Remuneration Report (at the 2023AGM) 2,507,121,900 61.01% 1,602,373,868 38.99% 100,227,947
2023 Remuneration Policy (at the 2023 AGM) 2,546,605,548 60.67% 1,651,063,011 39.33% 12,055,156
104Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Annual Remuneration Report continued
As indicated in the Committee Chair’s statement, while all remuneration related resolutions were passed at the 2023 AGM, this was not with the
level of support which the Company would have ideally liked. This was impacted by the decision of one of the Company’s largest shareholders not
to support these resolutions. Following the 2023 AGM, the Chair of the Remuneration Committee undertook further engagement with
shareholders. More information can be found in his letter on pages 91 and 92.
SECTION 3: IMPLEMENTATION OF REMUNERATION POLICY IN 2024
This section sets out information on how the Remuneration Policy will be implemented in 2024.
In implementing the Remuneration Policy, the Committee will continue to take into account factors such as remuneration packages available
within comparable companies: the Group’s overall performance; internal relativities; achievement of corporate objectives; individual performance
and experience; published views of institutional investors; and general market and wider economic trends.
Summary of planned implementation of the Remuneration Policy during 2024
Salary
Policy
Purpose and link to strategy Performance measures Operation
To continue to retain and attract quality leaders
To recognise accountabilities, skills, experience
and value
Not applicable Reviewed but not necessarily increased annually by
the Committee
The base salary for any existing Executive Director will not
exceed £850,000 (or the equivalent if denominated in a
different currency), with this limit increasing annually at the
rate of UK CPI from the date of the 2017 AGM
Implementation
An increase of 4% was approved for each of the Executive Directors to take effect on 1 April 2024.
2024 Executive Directors’ salaries £000
Rita-Rose Gagné 741
Himanshu Raja 474
Benefits
Policy
Purpose and link to strategy Performance measures Operation
To provide a range of benefits in line with
market practice
To continue to retain and attract quality leaders
Not applicable The aggregate value received by each Executive Director
(based on value of P11D tax calculations or equivalent basis
for a non-UK based Executive Director) will not exceed
£100,000, with this maximum increasing annually at the rate
of UK CPI from the date of the 2017 AGM
Implementation
In 2024, these benefits will continue to include a car allowance, enhanced sick pay, private medical insurance, permanent health insurance and
life assurance.
Pension
Policy
Purpose and link to strategy Performance measures Operation
To provide market competitive retirement
benefits to continue to retain and attract
quality leaders
Not applicable Executive Directors receive a 10% non-contributory allowance
(Pension Choice) to be paid as, or as a combination of:
– an employer contribution to the Group’s defined
contribution pension plan;
– a payment to a personal pension plan; or
– a salary supplement.
Implementation
Executive Directors will continue to receive a 10% salary supplement by way of pension provision.
105Hammerson plc Annual Report 2023
Annual Incentive Plan (AIP) and deferral under the Deferred Bonus Share Scheme (DBSS)
Policy
Purpose and link to strategy Performance measures Operation
To align Executive Director remuneration with
annual financial and Company strategic targets
as determined by the Company’s Business Plan
To differentiate appropriately, in the view of
the Committee, on the basis of performance
The partial award in shares aligns interests with
shareholders and supports retention
The annual bonus operates by
reference to financial and personal
performance measures assessed
over one year. The weighting of
financial measures will be at least
60% of the total opportunity
Awards are paid in a mix of cash and deferred shares, with
the deferred shares element being at least 40% of the total
award. The deferral period is at least two years. Awards are
subject to clawback and malus provisions
Implementation
The AIP maximum will remain at 200% of base salary for the Chief Executive and 150% of base salary for the CFO.
Performance measures for the AIP for Executive Directors in 2024 are set out in the table below. They have been amended to replace Gross
Administrative Costs and Net Debt with Net Rental Income and Relative Total Accounting Return. Adjusted Earnings Per Share has been retained
as a measure.
The key focus for the Group in 2024 is to move from transformation to growth. 2024 will see an increase in repurposing and other asset initiatives
such as placemaking investment. These activities are critical to underpin future growth over the medium term and therefore the committee
believes that the introduction of a net rental income target is appropriate.
Total Accounting Return will be assessed on a relative basis compared to a wide peer group containing the FTSE 350 real estate companies
(excluding agencies) plus key continental European property companies such as Unibail-Rodamco-Westfield, Klépierre and Eurocommercial.
Net Rental Income 21.67%
Adjusted Earnings Per Share 21.67%
Relative Total Accounting Return 21.67%
Emissions Reduction 10%
Personal/Strategic Objectives 25%
The personal/strategic objectives will be focused on three key areas, which include more detailed and measurable targets:
— Value Creation: Invest for growth and value creation – investing in repurposing obsolete and under-utilised space alongside the right partners
and in the public realm to enhance the mix and maintain our appeal to customers and occupiers.
— Customer and Colleague Engagement: Continuing to focus on talent management and colleague engagement initiatives and ensuring the
delivery of high levels of customer satisfaction.
— Sustainability: Increasing the focus on the full breadth of sustainability and broader environmental factors, internal diversity planning and
community-based engagement.
The Committee designs the financial targets and personal/strategic objectives to align with the Group’s strategy, as well as to the Business Plan
and the priorities for the coming year. It is therefore felt that the specific financial targets and important personal objectives are commercially
sensitive such that, having considered this carefully, the Board is of the view that it is in the Company’s interests not to disclose this information
in advance.
Further details of the specific targets and key personal/strategic objectives set will be disclosed in the 2024 Annual Report.
40% of the 2024 AIP vesting will be deferred by making an award of shares under the DBSS, with a deferral period of two years. No change to
current arrangements is proposed for 2024.
Restricted Share Scheme
Policy
Purpose and link to strategy Performance measures Operation
To incentivise the creation of long term returns
for shareholders
To align interests of Executive Directors with
shareholders and support retention to create
alignment with the workforce
Subject to underpin as described in full in the
Remuneration Policy. The underpin requires that
the Group’s performance and delivery of strategy
is sufficient to justify vesting against the
consideration of absolute and relative TSR, net
debt and TPR
A discretionary annual award up to a value of
100% of base salary. The Committee reserves
the discretion to increase the maximum award
to 150% of base salary in exceptional
circumstances. Awards are subject to clawback
and malus provisions
106Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Annual Remuneration Report continued
Implementation
Annual award of 100% of base salary for the Chief Executive and 75% of base salary for the CFO. Vesting of the award is subject to the underpin
described above.
Participation in all-employee arrangements
Policy
Purpose and link to strategy Performance measures Operation
In order to be able to offer participation in all-employee plans
to employees generally, the Company is either required by the
relevant UK and French legislation to allow Executive Directors
to participate on the same terms or chooses to do so
Not generally applicable. Any award
of free shares under the SIP may
be subject to a Company
performance target
Executive Directors are eligible to participate in
all-employee incentive arrangements on same
terms as other employees
Implementation
All-employee arrangements currently offered in the UK are Sharesave and SIP share awards. The opportunity to participate in all-employee
arrangements continues on the same basis as for all staff in the UK. No change to current arrangements is proposed for 2024.
Share ownership guidelines
The Company has in place a share ownership policy for the Executive Directors. Executive Directors are normally required to achieve the minimum
shareholding requirement within seven years of the date of appointment. An annual calculation as a percentage of salary is made against the
guidelines as at 31 December each year based on the middle-market value share price on the last business day in December. Executive Directors
are expected to accumulate and maintain a holding in ordinary shares in the Company equivalent to no less than 250% of base salary. The
Company has a post-cessation share ownership guideline of 250% of salary for two years after termination of employment. This includes vested
shares and shares which are unvested but have met the performance conditions or underpins on a net of tax basis.
Implementation
250% of base salary for the Chief Executive and all other Executive Directors.
Illustration of application of the Policy
Set out below is an illustration of the reward mix for the Executive Directors for 2024 at minimum, on-target and maximum performance.
Illustration of application of the Policy (£000s)
Rita-Rose Gagné
2024 fixed
2024 on-target
2024 maximum
2024 maximum
+ share price growth
(based on value of award)
Fixed Annual variable Long-term incentives 50% Share price growth
836 (100%) £836
836 (36%)
836 (27%)
836 (24%)
741 (32%) £2,319741 (32%)
1,483 (49%)
1,483 (43%)
741 (24%) £3,060
741 (22%) 371 (11%) £3,431
Illustration of application of the Policy
(£000s)
Himanshu Raja
2024 fixed
2024 on-target
2024 maximum
2024 maximum
+ share price growth
(based on value of award)
Fixed Annual variable Long-term incentives 50% Share price growth
542 (100%) £542
542 (44%)
542 (34%)
542 (30%)
356 (28%) £1,254356 (28%)
712 (44%)
712 (40%)
356 (22%) £1,609
356 (20%) 178 (10%) £1,788
107Hammerson plc Annual Report 2023
Assumptions: Executive Director remuneration scenarios 2024
Element Approach/Policy
Fixed Consists of base salary, contractual and non-contractual benefits, pension and participation in the UK
all-employee share plans.
Base salary is the salary to apply after salary increases to take effect on 1 April 2024.
Benefits are as shown in the Single Figure Table for 2023 in the Annual Remuneration Report.
Pension contributions are based on salary after salary increases to take effect on 1 April 2024.
Base Salary
£000
Benefits
£000
Pension
£000
Total Fixed
£000
Rita-Rose Gagné 741 21 74 836
Himanshu Raja 474 20 47 542
On-target Based on what the Executive Director would receive if performance was in line with expectation
(excluding share price appreciation and accrual of dividend equivalent payments):
AIP: consists of on-target levels (50% of maximum bonus opportunity).
RSS: Assumes maximum vesting of awards granted in 2024 (using the face value of awards based on
100% of salary for the CEO and 75% for the CFO).
Maximum Based on the maximum remuneration receivable (excluding share price appreciation and accrual of
dividend equivalent payments):
AIP: consists of the maximum bonus opportunity (200% of base salary for CEO, 150% of base salary
for the CFO).
RSS: assumes maximum vesting of awards granted in 2024 (using the face value of awards based on
100% of salary for the CEO and 75% for the CFO).
Impact of share price appreciation 50% of maximum RSS award value (using the face value of awards granted in 2024).
Chair of the Board and Non-executive Directors’ Fees
Policy
Purpose and link to strategy Performance measures Operation
To ensure the Company continues to attract and
retain high-quality Chair and Non-executive
Directors by offering market competitive fees
Not applicable The Chair of the Board’s fee is determined by the Committee.
Other Non-executive Directors’ fees are determined by the
Board on the recommendation of the Executive Directors.
Aggregate total fees payable annually to all Non-executive
Directors are subject to the limit stated in the Company’s
Articles of Association (currently £1,000,000)
Implementation
Chair and Non-executive Directors’ 2024 annual fees £
Chair of the Board 300,000
Non-executive Director 64,575
Senior Independent Director 10,500
Audit Committee Chair 15,750
Remuneration Committee Chair 15,750
Audit/Remuneration Committee Member 5,250
Designated Non-executive Director for Colleague Engagement 8,400
The Chair of the Board’s fee was reviewed by the Committee in December 2023 and the Non-executive Directors’ fees were reviewed by the Board
in December 2023 (with relevant individuals recusing themselves from discussion and decision-making). Although fees are subject to periodic
review: (i) the Chair of the Board’s fee has not changed since his appointment to the Board in 2020; (ii) the Non-executive Directors’ fees (excluding
the Chair and the introduction of a fee payable to the Designated Non-executive Director for Colleague Engagement in 2021) had not increased
since 2018.
108Hammerson plc Annual Report 2023
Corporate governance
Directors’ Remuneration Report
Annual Remuneration Report continued
Following the reviews undertaken in 2023: (i) no change has been made to the Chair of the Board’s fee in 2024; and (ii) the Non-Executive
Directors’ fees were increased by 5% with effect from 1 January 2024. Among other things when considering the increase in the Non-Executive
Directors’ fees, the Board reviewed relevant benchmarking and had regard to factors such as the increase in the time commitment and broader
responsibilities of Non-Executive Directors in recent years and the period since when changes were last made to fees.
There is no fee for the Chair, or membership, of the Nomination and Governance Committee.
Remuneration for employees below Board level in 2024
Remuneration packages for all Group employees may comprise both fixed and variable elements. Generally, the more senior the individual,
the greater the variable pay offer as a proportion of overall pay due to the ability of senior managers to impact more directly upon the Group’s
performance. As well as assessing the remuneration packages of the Executive Directors, the Committee reviews the remuneration of the senior
management team and is kept informed of remuneration developments and principles for pay and reward across the Group. This includes any
salary increases and benefits of the wider employee population and considers them in relation to the implementation of the Remuneration Policy
for Executive Directors, ensuring there is an appropriate degree of alignment throughout the Group. The Designated Non-executive Director for
Colleague Engagement is a member of the Remuneration Committee and attended meetings of the Company’s employee forum in the year,
including one specifically focused on discussing executive remuneration to explain how executive remuneration aligns with the wider company
pay policy, as required by the UK Corporate Governance Code. This latter meeting was also attended by the Chair of the Remuneration Committee.
2018 UK Corporate Governance Code (Code) considerations
The Committee has considered the factors set out in provision 40 of the Code. In the Committee’s view, the Policy addresses those factors
as set out below:
Factor How addressed
Clarity – remuneration arrangements should be
transparent and promote effective engagement
with shareholders and the workforce
Remuneration policy and arrangements are clearly disclosed each year in the Annual Report.
The Committee proactively seeks engagement with shareholders on remuneration matters and is
regularly updated on workforce pay and benefits across the Group during the course of its activity.
Simplicity – remuneration structures should
avoid complexity and their rationale and
operation should be easy to understand
Our remuneration structure is comprised of fixed and variable remuneration, with the performance
conditions for variable elements clearly communicated to, and understood by, participants. The RSS
provides a mechanism for aligning Executive Director and shareholder interests, removes the
difficult challenge of setting robust, appropriately challenging and easily understandable
performance targets in a volatile market which could lead to potentially unintended remuneration
outcomes and significantly reduces the maximum pay available to Executive Directors.
Risk – remuneration arrangements should
ensure that reputational and other risks from
excessive rewards, and behavioural risks that can
arise from target-based incentive plans, are
identified and mitigated
The rules of the AIP and RSS provide discretion to the Committee to reduce award levels and
awards are subject to malus and clawback provisions. The Committee also has overriding discretion
to reduce awards to mitigate against any reputational or other risk from such awards being
considered excessive. The RSS reduces the risk of unintended remuneration outcomes associated
with complex performance conditions.
Predictability – the range of possible reward
values to individual directors and any other limits
or discretions should be identified and explained
at the time of approving the policy
The RSS increases the predictability of reward values (removing the risk of potentially unintended
outcomes). Maximum award levels and discretions are set out in the illustration and application
of policy chart on page 107.
Proportionality – the link between individual
awards, the delivery of strategy and the long term
performance of the Group should be clear.
Outcomes should not reward poor performance
Variable performance related elements represent a significant proportion of the total remuneration
opportunity for the Executive Directors. The Committee considers the appropriate financial and
personal performance measures each year to ensure that there is a clear link to strategy. Discretions
available to the Committee ensure that awards can be reduced if necessary to ensure that
outcomes do not reward poor performance.
Alignment to culture – incentive schemes
should drive behaviours consistent with company
purpose, values and strategy
The Committee seeks to ensure that personal performance measures under the AIP incentivise
behaviours consistent with the Group’s culture, purpose and values. The RSS clearly aligns
Executive Director interests with those of shareholders by ensuring a focus on delivering against
strategy to generate long term value for shareholders.
By order of the Board
Habib Annous
Chair of the Remuneration Committee
28 February 2024
109Hammerson plc Annual Report 2023
Articles of Association
The Company’s Articles of Association
(Articles) may be amended by special
resolution in accordance with the Act and
are available at www.hammerson.com.
2024 Annual General Meeting
The Company’s 2024 Annual General Meeting
(AGM) will be held at 9:00 am (UK time) on
25 April 2024. The resolutions to be proposed
at the AGM will be set out in the Notice of AGM
sent to the Company’s shareholders.
Auditors
PricewaterhouseCoopers LLP (PwC) has
indicated its willingness to remain in office
and, on the recommendation of the Audit
Committee, a resolution to reappoint PwC as
the Company’s Auditor will be proposed at
the AGM.
Authority to allot shares in the Company
At the 2023 AGM, the Company was granted
authority by shareholders to allot shares up to
an aggregate nominal value of £83,242,906.
This authority will expire on the earlier of
4 August 2024 or the conclusion of the 2024
AGM, at which a resolution will be proposed
for its renewal. The Company made no
allotments of shares during the year pursuant
to this authority.
Branches
Details of the Company’s French branch are
provided on page 176.
Colleagues
Colleagues receive regular briefings and
updates from the Board and management,
including via all-employee meetings, email
and the Group’s intranet, to inform them of the
performance of the business and opportunities
to participate in employee share schemes.
Further details of engagement with colleagues
can be found on pages 20, 21, 24, 25 and 73.
Corporate Governance Statement
The Directors’ Report (including the
information specified as forming part of this
Report) fulfils the requirements of the
Corporate Governance Statement for the
purposes of DTR 7.2.
Directors and their share interests
Details of the Directors who served during the
year ended 31 December 2023 and continue
to serve at the date of approval of the Directors’
Report are set out on pages 68 to 69.
Directors are appointed and replaced in
accordance with the Articles, the Act and the
UK Corporate Governance Code. The powers
of the Directors are set out in the Articles and
the Act.
The Directors’ interests in ordinary shares in
the Company are set out in the table in the
Directors’ Remuneration Report on page 98.
Dividends
The Board has recommended a final 2023
cash dividend of 0.78p per share (2022: nil)
bringing the total dividend for 2023 to 1.50p
per share (2022: 0.2p per share cash/2p per
share for the enhanced scrip dividend
alternative). If approved by shareholders at the
2024 AGM, the final dividend will be paid as a
non-Property Income Distribution, and treated
as an ordinary UK company dividend.
The ex-dividend date for the final dividend will
be 4 April 2024, the record date will be 5 April
2024 and the payment date will be 10 May
2024, subject to shareholder approval.
Further information on the final dividend
recommended by the Board can be found
on page 7.
Indemnification of and insurance for
Directors and officers
The Company has in place directors’ and
officers’ liability insurance, which is reviewed
annually. The Company’s Directors and officers
are appropriately insured in accordance with
standard practice. Directors are also
indemnified under the Articles and through a
Deed Poll of Indemnity. Qualifying third party
indemnity provisions for the purposes of
section 234 of the Companies Act 2006 were
accordingly in force during the course of the
year, and remain in force at the date of this
Annual Report.
Political donations
It is the Company’s policy not to make political
donations and no political donations,
contributions or political expenditure were
made in the year ended 31 December 2023.
The Directors of the Company present their
report together with the audited consolidated
financial statements for the year ended
31 December 2023. This report has been
prepared in accordance with requirements
outlined within The Large and Medium-sized
Companies and Groups (Accounts and
Reports) Regulations 2008 and the Directors’
Report forms part of the management report
as required under the Disclosure Guidance
and Transparency Rules (DTR).
The Company has chosen, in accordance with
Section 414C(11) of the Companies Act 2006
(the Act), to include certain information in the
Strategic Report that would otherwise be
required to be included in this Directors’
Report, as follows:
Information Pages
Likely future developments in the
Company 8-15
Information about dividends 7
Employment of disabled persons 25
Engagement with colleagues 24 and 73
Engagement with customers,
suppliers and other external
stakeholders
20-22 and
72-73
Going concern and Viability
Statements
128 and
64-65
The Strategic Report is set out on pages 1 to 67
is incorporated into this Directors’ Report by
reference. Other information, which forms part
of this Directors’ Report by reference, can be
found in the following sections:
Information Pages
Corporate Governance 68-112
Financial instruments and risk
management 158-163
Statement of Directors’
responsibilities, including
confirmation of disclosure of
information to the Auditors 112
Subsidiaries and other related
undertakings outside the UK 176-178
Disclosures concerning greenhouse
gas emissions and energy
consumption 40
Shareholder information 194-195
110Hammerson plc Annual Report 2023
Corporate Governance
Directors’ Report
Interests disclosed under DTR 5
As at 31 December 2023, the following
information had been received by the
Company, in accordance with Chapter 5 of the
DTRs, from holders of notifiable interests in the
Company’s issued share capital. It should be
noted that these holdings may have changed
since they were notified to the Company.
Substantial shareholders do not have different
voting rights from those of other shareholders.
Number of voting
rights
% of issued
share capital
carrying
voting rights
*
APG Asset
Management
N.V. 997,468,698 19.97%
Lighthouse
Properties plc 846,594,294 16.95%
BlackRock, Inc. 309,149,612 6.18%
Richmond Group 139,449,066 3.02%
* Percentages based on ordinary shares in issue,
excluding treasury shares, as at the date the
notification was received by the Company.
On 8 January 2024, the Company received
an additional notification of interests in
accordance with Chapter 5 of the DTRs from
Lighthouse Properties plc with respect to a
decrease in voting rights from 846,594,294
to
796,452,156 (representing 15.94% of the
Company’s issued share capital carrying voting
rights as at the date of that notification). The
Company received no other notifications
between 1 January 2024 and 27 February
2024 (the last practicable date before
publication of this Report).
Research and development activities
During the normal course of business, the
Group continues to invest in new technology
and systems and to develop new products and
services to improve operating efficiency and
strengthen its proposition for occupiers,
customers and partners.
Share capital
Details of the Company’s share capital and
structure are set out in note 20A to the
financial statements. The rights and
obligations attached to the Company’s shares
are set out in the Articles, in addition to those
conferred on shareholders by law. All of the
Company’s shares rank equally in all respects.
On a show of hands, each member of the
Company has the right to one vote at general
meetings of the Company. On a poll, each
member would be entitled to one vote for
every share held. The shares carry no rights to
fixed income. No person has any special rights
of control over the Company’s share capital
and all shares are fully paid. The Articles and
applicable legislation provide that the
Company can decide to restrict the rights
attaching to shares in certain circumstances,
including where a person has failed to comply
with a notice issued by the Company under
section 793 of the Act.
There are no restrictions on the transfer of
shares except the UK Real Estate Investment
Trust restrictions and certain restrictions
imposed by the Articles, law and the
Company’s Share Dealing Policy. The Articles
set out certain circumstances in which the
Directors of the Company can refuse to register
a transfer of shares. The Company is not aware
of any agreements between holders of
securities that may result in restrictions on the
transfer of securities or on voting rights. No
dividends are paid in respect of shares held
in treasury.
Shares held in the Employee Share
Ownership Plan
The Trustees of the Hammerson Employee
Share Ownership Plan hold Hammerson plc
shares in trust to satisfy awards under the
Company’s employee share plans. The
Trustees have waived their right to receive
dividends on shares held in the Company. As
at 31 December 2023, 15,850,507 ordinary
shares were held in trust for employee share
plans purposes.
Listing Rule 9.8.4R disclosures
The table below sets out where disclosures
required by Listing Rule 9.8.4R are located and
these disclosures are incorporated into this
Directors’ Report by reference.
LR 9.8.4R requirement Page
Interest capitalised and tax relief 139-140
Details of long term incentive
schemes 138
Shareholder waivers of dividends 111
Shareholder waivers of future
dividends 111
By order of the Board
Alex Dunn
General Counsel and Company Secretary
28 February 2024
Post balance sheet events
Details of post balance sheet events can be
found in note 27 to the financial statements.
Provisions on change of control
A change of control of the Company,
following a takeover, may cause a number of
agreements to which the Company is party to
take effect, alter or terminate. These include
certain insurance policies, joint venture and
associated agreements, financing
arrangements and employee share plans.
The Company’s share plans contain provisions
which could result in options and awards
vesting or becoming exercisable on a change
of control, in accordance with the rules of the
plans. There are no agreements between the
Company and its Directors or employees
providing for compensation for loss of office
or employment or otherwise that occurs
specifically because of a takeover.
A number of joint venture, investment and
associated arrangements to which members
of the Group are party could allow the
counterparties to terminate or alter those
arrangements or exercise certain rights in the
event of a change of control of the Company,
or the rights of relevant members of the Group
under those arrangements may change in
such circumstances.
The Group has a number of borrowing facilities
provided by various lenders. These facilities
generally include provisions that may require
any outstanding borrowings to be repaid or the
amendment or termination of the facilities
upon the occurrence of a change of control of
the Company.
Purchase of own shares
At the 2023 AGM, the Company was granted
authority by shareholders to purchase up to
499,457,436 ordinary shares of 5 pence each
(representing approximately 10% of the
Company’s issued ordinary share capital as at
30 March 2023). This authority will expire at
the conclusion of the 2024 AGM, at which a
resolution will be proposed for its renewal, or, if
earlier, on 4 August 2024. The Company made
no purchases of its own shares into treasury
during the year pursuant to the above
authority. As at 31 December 2023, the
Company held 7,691,247 ordinary shares
in treasury.
111Hammerson plc Annual Report 2023
The Directors are responsible for safeguarding
the assets of the Group and Company and
hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.
The Directors are also responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group’s and
Company’s transactions and disclose with
reasonable accuracy at any time the financial
position of the Group and Company and enable
them to ensure that the financial statements
and the Directors’ Remuneration Report
comply with the Companies Act 2006.
The Directors are responsible for the
maintenance and integrity of the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report
and financial statements, taken as a whole,
is fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Group’s and
Company’s position and performance,
business model and strategy.
Each of the Directors, whose names and
functions are listed in the Corporate
Governance Report, confirms that to the
best of their knowledge:
— The Group financial statements, which
have been prepared in accordance with
UK-adopted international accounting
standards and international financial
reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies
in the European Union, give a true and fair
view of the assets, liabilities, financial
position and loss of the Group
— The Company financial statements, which
have been prepared in accordance with
United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair
view of the assets, liabilities and financial
position of the Company
— The Strategic Report includes a fair review
of the development and performance of the
business and the position of the Group and
Company, together with a description of the
principal risks and uncertainties that it faces
Provision of information to the Auditor
In the case of each Director in office at the date
the Directors Report is approved:
— So far as the Director is aware, there is
no relevant audit information of which
the Group and Company’s Auditors
are unaware
— They have taken all the steps that they
ought to have taken as a Director in order
to make themselves aware of any relevant
audit information and to establish that the
Group’s and Company’s Auditors are aware
of that information
This confirmation is given, and should be
interpreted in accordance with, the provisions
of Section 418 of the Companies Act 2006.
By order of the Board
Rita-Rose Gagné
Chief Executive
Himanshu Raja
Chief Financial Officer
28 February 2024
Directors’ responsibilities in respect of the
preparation of the financial statements
The Directors are responsible for preparing the
Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have prepared
the Group financial statements in accordance
with UK-adopted international accounting
standards and the Company financial
statements in accordance with United
Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced
Disclosure Framework”, and applicable law).
The Group has also prepared financial
statements in accordance with international
financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union.
Under Company law, Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair view
of the state of affairs of the Group and
Company and of the profit or loss of the Group
for that period. In preparing the financial
statements, the Directors are required to:
— Select suitable accounting policies and
then apply them consistently
— State whether applicable UK-adopted
international accounting standards and
international financial reporting standards
adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European
Union have been followed for the Group
financial statements and United Kingdom
Accounting Standards, comprising FRS 101
have been followed for the Company
financial statements, subject to any
material departures disclosed and
explained in the financial statements
— Make judgements and accounting
estimates that are reasonable and prudent
— Prepare the financial statements on the
going concern basis unless it is
inappropriate to presume that the Group
and Company will continue in business
112Hammerson plc Annual Report 2023
Corporate Governance
Statement of Directors’ responsibilities
In our opinion, the Group financial statements
have been properly prepared in accordance
with international financial reporting standards
adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK)
(“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities for
the audit of the financial statements section of
our report. We believe that the audit evidence
we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Independence
We remained independent of the Group in
accordance with the ethical requirements that
are relevant to our audit of the financial
statements in the UK, which includes the FRC’s
Ethical Standard, as applicable to listed public
interest entities, and we have fulfilled our other
ethical responsibilities in accordance with
these requirements.
To the best of our knowledge and belief, we
declare that non-audit services prohibited by
the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 5E, we have
provided no non-audit services to the Company
or its controlled undertakings in the period
under audit.
Our audit approach
Overview
Audit scope
— The UK, French, Irish and Value Retail
components were subject to a full scope
audit. We also performed audit procedures
over specific large balances in Bishopsgate
Goodsyard. Together these components
account for approximately 100% of the
Group’s total assets
Key audit matters
— Valuation of investment property, either
held directly or within joint ventures (Group)
— Accounting for the investment in Value
Retail and valuation of investment property
held by Value Retail (Group)
— Valuation of investments in subsidiary
companies and amounts owed by
subsidiaries and other related undertakings
(Company)
Materiality
— Overall Group materiality: £32.5m
(2022: £34.0m) based on 0.75% of
Group’s total assets.
— Specific Group materiality: £5.8m
(2022: £5.3m) based on 5% of the Group’s
FY23 adjusted earnings.
— Overall Company materiality: £44.0m
(2022: £44.5m) based on 0.75% of the
Company’s total assets.
— Overall performance materiality: £24.4m
(2022: £25.5m) (Group); Specific
performance materiality: £4.4m (2022:
£3.9m) (Group) and Company performance
materiality: £33.0m (2022: £33.4m)
(Company).
The scope of our audit
As part of designing our audit, we determined
materiality and assessed the risks of material
misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in
the auditors’ professional judgement, were of
most significance in the audit of the financial
statements of the current period and include
the most significant assessed risks of material
misstatement (whether or not due to fraud)
identified by the auditors, including those
which had the greatest effect on: the overall
audit strategy; the allocation of resources in
the audit; and directing the efforts of the
engagement team. These matters, and any
comments we make on the results of our
procedures thereon, were addressed in the
context of our audit of the financial statements
as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on
these matters.
This is not a complete list of all risks identified
by our audit.
The key audit matters below are consistent
with last year.
REPORT ON THE AUDIT OF THE
FINANCIAL STATEMENTS
Opinion
In our opinion:
— Hammerson plc’s Group financial
statements and Company financial
statements (the ‘financial statements’)
give a true and fair view of the state of the
Group’s and of the Company’s affairs as
at 31 December 2023 and of the Group’s
loss and the Group’s cash flows for the
year then ended;
— the Group financial statements have been
properly prepared in accordance with
UK-adopted international accounting
standards as applied in accordance with
the provisions of the Companies Act 2006;
— the Company financial statements have
been properly prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, including FRS 101
‘Reduced Disclosure Framework’, and
applicable law); and
— the financial statements have been
prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements,
included within the Annual Report, which
comprise: the Consolidated and Company
Balance Sheets as at 31 December 2023;
the Consolidated Income Statement and the
Consolidated Statement of Comprehensive
Income, the Consolidated Cash Flow
Statement, and the Consolidated and
Company Statements of Changes in Equity
for the year then ended; and the notes to the
financial statements, which include a description
of the significant accounting policies.
Our opinion is consistent with our reporting to
the Audit Committee.
Separate opinion in relation to international
financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union
As explained in note 1B to the financial
statements, the Group, in addition to applying
UK-adopted international accounting
standards, has also applied international
financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union.
113Hammerson plc Annual Report 2023
Financial Statements
Independent Auditor’s Report to the members of Hammerson plc
Key audit matter How our audit addressed the key audit matter
Valuation of investment property, either held directly or within
joint ventures (Group)
Refer to page 87 (Audit Committee Report), page 130 (Principal
accounting policies), pages 132 (Significant estimates – Property
valuations) and pages 146 to 152 (Notes to the Consolidated Financial
Statements – notes 11 and 12).
The Group directly owns, or owns via joint ventures or associates, a
property portfolio which includes shopping centres, developments and
premium outlets. The total value of this portfolio as at 31 December
2023 was £4,661.8m (2022: £5,107.1m) and has been impacted by
the uncertainty in the macroeconomic environment.
Of this portfolio £1,396.2m (2022: £1,461.0m) is held by subsidiaries
within ‘Investment properties’, and £1,379.9m (2022: £1,620.0m) is
held by joint ventures within ‘Investment in joint ventures’. Together
these properties are spread across the UK, French, Irish and
Bishopsgate Goodsyard components.
The remainder of the portfolio is held within associates, £1,885.7m
(2022: £1,989.9m), with a balance of £1,885.7m (2022: £1,887.0m)
held in Value Retail and £nil (2022: £102.9m) held in Italie Deux. The
valuation of Value Retail’s property is discussed within the subsequent
key audit matter.
This was identified as a key audit matter given the valuation of the
investment property portfolio is inherently subjective and complex
due to, among other factors, the individual nature of each property,
its location, and the expected future rental streams for that particular
property, together with considerations around the impact of climate
change. The wider challenges currently facing the retail real estate
occupier and investor markets, including the relative lack of comparable
transactions and macroeconomic uncertainty, has further contributed
to the subjectivity. As a result significant subjectivity remains within
these valuations for the year ended 31 December 2023.
The closing valuations were carried out by CBRE, Jones Lang LaSalle
and Cushman & Wakefield (the ‘external valuers’), in accordance
with the RICS Valuation – Professional Standards and the Group
accounting policies which incorporate the requirements of
International Accounting Standard 40, ‘Investment Property’ and
IFRS 13 ‘Fair value measurement’.
Whilst no material valuation uncertainty clauses were included in
the external valuations of the properties in the Group’s portfolio as
at 31 December 2023, the valuers continue to include wording
suggested by RICS to describe market uncertainty and highlighting
the importance of the valuation date.
The properties’ fair value is primarily determined by their investment
value reflecting the fact that the properties are largely existing
operational properties currently generating rental income. Shopping
centres are primarily valued using the income capitalisation method.
Given the inherent subjectivity involved in the valuation of investment
properties, the need for deep market knowledge when determining
the most appropriate assumptions and the technicalities of valuation
methodology, we engaged our internal valuation experts (qualified
chartered surveyors) to assist us in our audit of this matter.
Assessing the valuers’ expertise and objectivity
We assessed each of the external valuers’ qualifications and expertise
and read their terms of engagement with the Group to determine
whether there were any matters that might have affected their
objectivity or may have imposed scope limitations upon their work.
We also considered fee arrangements between the external valuers
and the Group, and other engagements which might exist between
the Group and the valuers. We found no evidence to suggest that the
objectivity of the external valuers, in their performance of the
valuations, was compromised.
Data provided to the valuers
We checked the accuracy of the underlying lease data and capital
expenditure used by the external valuers in their valuation of the
portfolio by tracing the data back to the relevant component
accounting records and signed leases on a sample basis. No
exceptions were identified from this work.
Assumptions and estimates used by the valuers
We read the external valuation reports for the properties and
confirmed that the valuation approach for each was in accordance with
RICS standards and suitable for use in determining the final value for
the purpose of the financial statements.
We held discussions with each of the external valuers to challenge the
valuation process, the key assumptions, and the rationale behind the
more significant valuation movements during the year. It was evident
from our interaction with the external valuers, and from our review of
the valuation reports, that close attention had been paid to each
property’s individual characteristics at a detailed, tenant by tenant
level, as well as considering the property specific factors such as the
latest leasing activity, tenant mix, vacancy levels, the impact of CVAs
and administrations, geographic location and the desirability of the
asset as a whole. We also questioned the external valuers as to the
extent to which recent market transactions and expected rental values
which they made use of in deriving their valuations took into account
the impact of climate change and related ESG considerations.
In addition we performed the following procedures for each type of
property. We were able to obtain sufficient evidence to support the
valuation and did not identify any material issues during our work.
114Hammerson plc Annual Report 2023
Financial Statements
Independent Auditor’s Report to the members of Hammerson plc continued
Key audit matter How our audit addressed the key audit matter
Valuation of investment property, either held directly or within
joint ventures (Group) continued
Those development properties that are subject to active ongoing
development are valued using the residual valuation approach. Certain
operational properties, which have development potential and are
included in developments, are valued under the income capitalisation
method but adjusted to account for development potential.
Development land is valued on a value per acre basis.
Shopping centres
In determining the valuation of a shopping centre the valuers take into
account property specific information such as the current tenancy
agreements and rental income. They then apply judgemental
assumptions such as estimated rental value (ERV) and yield, which
are influenced by prevailing market yields and where available,
comparable market transactions and leasing evidence, to arrive at
the final valuation. Due to the unique nature of each property the
judgemental assumptions to be applied are determined having regard
to the individual property characteristics at a detailed, tenant by tenant
level, as well as considering the qualities of the property as a whole.
Developments
In determining the valuation of development property under a residual
valuation method the valuers take into account the property specific
information such as the development plans for the site. They then
apply a number of judgemental assumptions including ERV and yield
within the gross development value, estimated costs to complete and
developers profit to arrive at the valuation. Due to the unique nature of
an ongoing development the judgemental assumptions to be applied
are determined having regard to the nature and risks associated with
each development.
In determining the valuation of operational properties with
development potential the valuers initially follow the same
methodology as described previously to arrive at an income
capitalisation value. Having regard to the unique nature of each
property, the likelihood of the development progressing and the status
of planning consents for the development, the valuers then make
adjustments to the valuation to reflect development potential.
In determining the value of development land the valuers primarily
have regard for the value per acre achieved by recent comparable
land transactions.
— Shopping centres
For shopping centres we obtained details of each property and
set an expected range for yield and capital value movement,
determined by reference to published benchmarks and using our
experience and knowledge of the market. We compared the yield
and capital movement of each property with our expected range.
We also considered the reasonableness of other assumptions that
are not so readily comparable with published benchmarks. Where
assumptions were outside the expected range or otherwise
appeared unusual we undertook further investigations and,
when necessary, obtained corroborating evidence to support
explanations received. This enabled us to assess the property
specific factors that had an impact on value, including recent
comparable transactions and leasing evidence where available,
and to conclude on the reasonableness of the assumptions utilised.
— Developments
For significant ongoing developments valued via the residual
valuation method we obtained the development appraisal and
assessed the reasonableness of the valuers’ key assumptions.
This included comparing the yield to comparable market
benchmarks, comparing the costs to complete estimates to
development plans and contracts, and considering the
reasonableness of other assumptions that are not so readily
comparable with published benchmarks, such as ERV, cost
contingencies and developers profit. Where assumptions appeared
unusual we undertook further investigations and, when necessary,
obtained corroborating evidence to support explanations received.
For operational properties with development potential we performed
the same procedures as described previously for shopping centres.
We also considered the reasonableness of any additional value
recognised for development potential by reviewing the stage of
progress of the proposed development including verifying any
planning consents obtained.
For development land valued on a per acre basis we obtained details of
the comparable land transactions utilised by the valuers. We verified
the value of these transactions to supporting evidence and considered
their comparability to the asset being valued.
Overall findings
We found that the assumptions used in the valuations were
predominantly consistent with our expectations and comparable
benchmarking information for the asset type, and that the assumptions
were applied appropriately and reflected available comparable market
transactions and leasing evidence. Where assumptions did not fall
within our expected range, after challenging the valuers, we were
satisfied that variances were due to property specific factors such as
location and tenant mix. We concluded that the assumptions used in
the valuations by the external valuers were supportable.
115Hammerson plc Annual Report 2023
Key audit matter How our audit addressed the key audit matter
Accounting for the investment in Value Retail and valuation of
investment property held by Value Retail (Group)
Refer to page 127 (Basis of consolidation), page 132 (Significant
estimates – Property valuations) and pages 152 to 154 (Notes to the
Consolidated Financial Statements – note 13).
The Group has an investment in Value Retail, a separate group owning
a number of premium outlets in the United Kingdom and across
Europe. The Group equity accounts for its interest in Value Retail as an
associate. The Group’s investment as at 31 December 2023 was
£1,115.0m (2022: £1,189.4m).
Investment property valuation
The valuation of the Group’s investment in Value Retail is
predominantly driven by the valuation of the property assets within
the Value Retail portfolio. The total value of the properties was
£5,142.1m as at 31 December 2023 (2022: £5,151.0m). The Group’s
share of the Value Retail property, which is included within the wider
Group portfolio of £4,661.8m (2022: £5,107.1m), was £1,885.7m
(2022: £1,887.0m).
The year end valuation was carried out by Cushman & Wakefield, in
accordance with the RICS Valuation – Professional Standards and the
Group accounting policies which incorporate the requirements of
International Accounting Standard 40, ‘Investment Property’ and
IFRS 13 ‘Fair value measurement’. The premium outlets’ fair value is
determined by their investment value utilising a discounted cash flow
(DCF) basis.
In determining the valuation of a premium outlet, the valuers take
into account property specific information such as current tenancy
agreements, rental income generated by the asset, as well as property
operating costs. They then apply judgmental assumptions such as
yield, discount rate and expected rental income levels and subsequent
growth rates, which are influenced by prevailing market yields and
where appropriate comparable market transactions, to arrive at the
final valuation. Due to the unique nature of each property the
judgmental assumptions to be applied are determined having regard
to the individual property characteristics at a detailed, unit by unit level,
as well as considering the qualities of the property as a whole.
Accounting for the investment in Value Retail
Value Retail has a complex ownership structure whereby each
investing party owns differing proportions of each of the entities, and
hence properties, within the Value Retail group. As such this creates
significant complexity in determining the overall investment in Value
Retail held within the Group Consolidated Financial Statements.
Therefore, on the basis of the significant judgement and estimation
uncertainty within the investment property valuation, and the
complexity in determining the overall investment in Value Retail,
we identified this as a key audit matter.
Investment property valuation
As Group auditors we formally instructed the component auditors of
Value Retail to perform a full scope audit over the financial information
of Value Retail. This included audit work over the valuation of investment
property within Value Retail.
Our component auditors obtained details of each property. They
assessed the reasonableness of each property’s key assumptions
comparing its yield, discount rate and expected rental income and
subsequent growth rates to comparable market benchmarks. In doing
so they had regard to property specific factors and knowledge of the
market, including comparable transactions and leasing evidence
where appropriate. They obtained corroborating evidence to support
explanations received from the valuers where appropriate.
The Group audit team participated in the meeting held between
Cushman & Wakefield and the component auditors. We have obtained
reporting from the component auditors and have reviewed the results
and underlying working papers over investment property valuation.
We have no issues to report and we are satisfied that we have obtained
sufficient audit evidence over the investment property balances within
the Value Retail financial information.
Accounting for the investment in Value Retail
In respect of the complexity within the calculation of the Group’s
investment in Value Retail, we obtained the ownership structure for
Value Retail as at 31 December 2023. We instructed the component
auditor to verify the Group’s percentage ownership of each entity
within the Value Retail group. We have obtained reporting from the
component auditors on this procedure and have reviewed the results
and their underlying working papers.
We have tested the adjustments made within the Group consolidation
in accordance with IAS 28 ‘Investments in associates and joint
ventures’, in arriving at the Group’s equity accounted investment in
Value Retail to determine whether they are appropriate.
We have no issues to report in respect of this work.
116Hammerson plc Annual Report 2023
Financial Statements
Independent Auditor’s Report to the members of Hammerson plc continued
Key audit matter How our audit addressed the key audit matter
Valuation of investments in subsidiary companies and amounts
owed by subsidiaries and other related undertakings (Company)
Refer to page 173 (Principal accounting policies) and pages 173 and
174 (Notes to the Company Financial Statements – notes C3 and C4).
The Company has investments in subsidiary companies of £1,086.1m
(2022: £1,322.4m) and amounts owed by subsidiaries and other
related undertakings of £4,324.3m (2022: £4,395.0m) as at
31 December 2023. This is following the recognition of a £236.1m
(2022: £42.5m gain) revaluation loss on investments in subsidiary
companies and an Expected Credit Loss provision balance of £606.5m
(2022: £595.9m) recognised on amounts owed by subsidiaries and
other related undertakings as at 31 December 2023.
The Company’s accounting policy for investments is to hold them at
fair value, while amounts owed by subsidiaries and other related
undertakings are carried at amortised cost but subject to the Expected
Credit Loss impairment requirements. Given the inherent judgement
and complexity in assessing both the fair value of a subsidiary
company, and the Expected Credit Loss of amounts owed by
subsidiaries and other related undertakings, this was identified as
a key audit matter for our audit of the Company.
The primary determinant and key judgement within both the fair
value of each subsidiary company and the Expected Credit Loss
assessment of amounts owed by subsidiaries and other related
undertakings is the value of the investment property held by each
investee/counterparty. As such it was over this area that we applied
the most focus and audit effort.
We obtained the Directors’ valuation for the value of investments held
in subsidiary companies and their Expected Credit Loss assessment of
amounts owed by subsidiaries and other related undertakings as at
31 December 2023.
We assessed the accounting policies for investments and amounts
owed by subsidiaries and other related undertakings to verify they
were compliant with FRS 101 ‘Reduced Disclosure Framework’.
We verified that the methodology used by the Directors in arriving at
the fair value of each subsidiary, and the Expected Credit Loss ‘general
approach’ provision for amounts owed by subsidiaries and other
related undertakings, was compliant with FRS 101 ‘Reduced
Disclosure Framework’.
We identified the key judgement within both the valuation of
investments held in subsidiary companies and amounts owed by
subsidiaries and other related undertakings to be the valuation
of investment property held by each investee/counterparty. For details
of our procedures over investment property valuations please refer to
the related Group key audit matter above.
We have no issues to report in respect of this work.
How we tailored the audit scope
We tailored the scope of our audit to ensure
that we performed enough work to be able to
give an opinion on the financial statements as
a whole, taking into account the structure of
the Group and the Company, the accounting
processes and controls, and the industry in
which they operate.
The Group owns and invests in a number of
shopping centres, developments and premium
outlets across the United Kingdom and
Europe. These are held within a variety of
subsidiaries, joint ventures and associates.
Based on our understanding of the Group
we focussed our audit work primarily on five
components being: UK, France, Ireland,
Bishopsgate Goodsyard and Value Retail.
Four components being UK, France, Ireland,
and Value Retail were subject to a full scope
audit given their financial significance to the
Group. We performed audit procedures over
specific large balances in Bishopsgate
Goodsyard.
The UK, French, Irish, Bishopsgate Goodsyard
and Value Retail components account for
approximately 100% (2022: UK, French, Irish
and Value Retail components accounted for
100%) of the Group’s total assets.
The UK, Irish and Bishopsgate Goodsyard
components were audited by the Group team.
The French and Value Retail components were
audited by component teams.
Detailed instructions were sent to both
component teams. These instructions covered
the significant areas that should be addressed
by the component auditors (which included
the relevant risks of material misstatement)
and set out the information required to be
reported back to the Group audit team. In
addition, regular meetings were held with the
component audit teams, with the Group audit
team attending the clearance meeting for all
component audits. Finally the Group audit
team performed a detailed review of the
working papers of all component teams to
ensure the work performed was appropriate
and in line with our instructions.
These procedures, together with additional
procedures performed at the Group level
(including audit procedures over the
consolidation and consolidation adjustments),
gave us the evidence we needed for our
opinion on the Group financial statements
as a whole.
In respect of the audit of the Company, the
Group audit team performed a full scope
statutory audit.
The impact of climate risk on our audit
The Directors have made commitments for
the Group to be Net Zero by 2030 and Net Zero
Asset Plans exist for each shopping centre
within the Hammerson portfolio (excluding
Value Retail).
The key areas of the financial statements
where management evaluated that climate
risk could have a potential significant impact
are: the valuation of investment properties, the
coupon rate on its €700m sustainability-linked
bond and cash flow assumptions in the going
concern assessment.
Using our knowledge of the business, we
evaluated management’s risk assessment, its
estimates as set out in note 1F of the financial
statements and resultant disclosures where
significant. We considered the following areas
to potentially be materially impacted by
climate risk and consequently we focused our
audit work on climate change in these areas:
— Valuation of investment properties;
— The coupon rate on the €700m
sustainability-linked bond; and
— Cash flow assumptions in the going
concern assessment.
117Hammerson plc Annual Report 2023
To respond to the audit risks identified in these
areas we tailored our audit approach to
address these, in particular:
— We made enquiries of management to
understand the process management
adopted to assess the extent of the
potential impact of climate risk on the
Group’s financial statements and support
the disclosures made within the
financial statements;
— We challenged the completeness of
management’s climate risk assessment
by challenging the consistency of
management’s climate impact assessment
with internal climate plans (including the
Net Zero Asset Plans), and reading the
entity’s external communications for
details of climate-related impacts;
— We evaluated, with assistance from
our internal valuation experts, how
management’s external experts had
considered the impact of ESG and climate
change within the valuations of the Group’s
investment properties (refer to our key
audit matter over the valuation of
investment properties);
— We performed independent sensitivity
analysis to determine the financial impact
of not complying with the sustainability
requirements linked to the €700m bond;
and
— We challenged whether the impact of
climate risk, and the Group’s Net Zero by
2030 commitment, had been factored
into the Directors’ assessments and
disclosures surrounding going concern.
We also considered the consistency of the
disclosures in relation to climate change
(including the disclosures in the Task Force on
Climate-related Financial Disclosures (TCFD)
section) within the Annual Report with the
financial statements and our knowledge
obtained from our audit.
Our procedures did not identify any material
impact in the context of our audit of the financial
statements as a whole, or our key audit matters,
for the year ended 31 December 2023.
Materiality
The scope of our audit was influenced by
our application of materiality. We set certain
quantitative thresholds for materiality. These,
together with qualitative considerations,
helped us to determine the scope of our audit
and the nature, timing and extent of our audit
procedures on the individual financial
statement line items and disclosures and in
evaluating the effect of misstatements, both
individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement,
we determined materiality for the financial
statements as a whole as follows:
Financial statements – Group Financial statements – Company
Overall materiality £32.5m (2022: £34.0m). £44.0m (2022: £44.5m).
How we determined it Based on 0.75% of Group’s total assets Based on 0.75% of the Company’s total assets
Rationale for
benchmark applied
We determined materiality based on total assets given the
valuation of investment properties, whether held directly or
through joint ventures and associates, is the key determinant
of the Group’s value.
This materiality was utilised in the audit of investing and
financing activities.
Given the Hammerson plc entity is primarily a holding
company we determined total assets to be the
appropriate benchmark.
Specific materiality £5.8m (2022: £5.3m). Not applicable.
How we determined it 5% of the Group’s FY23 adjusted earnings (2022: 5% of
the Group’s FY22 adjusted earnings).
Not applicable.
Rationale for
benchmark applied
In determining this materiality we had regard to the fact
that adjusted earnings is a secondary financial indicator of
the Group (refer to note 9A of the financial statements
which includes a reconciliation between IFRS and
adjusted earnings).
This materiality was utilised in the audit of operating activities.
Not applicable.
118Hammerson plc Annual Report 2023
Financial Statements
Independent Auditor’s Report to the members of Hammerson plc continued
— We evaluated the key assumptions within
the projections, namely forecast property
valuations and the levels of forecast net
rental income, under the base scenario. We
did so with reference to available third party
data sources, contractual rental income,
together with the most recent data on levels
of expected rental concessions/tenant
failure, and considered how the Group’s
Net Zero by 2030 climate commitment had
been factored into the cash flow projections.
We also considered the appropriateness
of the key variables sensitised under the
Group’s reverse stress tests and
recalculated and assessed the headroom
available against each covenant threshold;
— We examined the minimum committed
facility headroom under the base scenario
and reverse stress tests, and evaluated
whether the Directors’ conclusion, that
sufficient liquidity headroom existed to
continue trading operationally throughout
the period to 30 June 2025, was
appropriate;
— We reviewed the terms of financing
agreements to determine whether forecast
covenant calculations were in line with those
agreements and to determine whether the
maturity profile of the debt included within
the projections was accurate;
— We obtained and reperformed the Group’s
forecast covenant compliance calculations,
under both the base scenario and reverse
stress test to assess the Directors’
conclusions on covenant compliance;
— We obtained reporting from our component
auditors in respect of going concern and
considered the impact of their conclusions
in our procedures. One component auditor
within their reporting to us, drew attention
to a material uncertainty in respect of going
concern for their component that had been
identified by the component management
team. We verified Group management
appropriately factored this conclusion into
their Group going concern assessment; and
— We reviewed the disclosures relating to the
going concern basis of preparation and we
found that these provided an explanation
of the Directors’ assessment that was
consistent with the evidence we obtained.
Based on the work we have performed, we
have not identified any material uncertainties
relating to events or conditions that, individually
or collectively, may cast significant doubt on
the Group’s and the Company’s ability to
continue as a going concern for a period of at
least 12 months from when the financial
statements are authorised for issue.
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate.
However, because not all future events or
conditions can be predicted, this conclusion
is not a guarantee as to the Group’s and the
Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how
they have applied the UK Corporate Governance
Code, we have nothing material to add or draw
attention to in relation to the Directors’
statement in the financial statements about
whether the Directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of
the Directors with respect to going concern are
described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the
information in the Annual Report other than
the financial statements and our auditors’
report thereon. The Directors are responsible
for the other information. Our opinion on the
financial statements does not cover the other
information and, accordingly, we do not
express an audit opinion or, except to the
extent otherwise explicitly stated in this report,
any form of assurance thereon.
For each component in the scope of our Group
audit, we allocated a materiality that is less
than our overall Group materiality. The range
of overall materiality allocated across
components was £1.3m to £30.8m. The range
of overall materiality allocated across
components for operating activities was
£0.2m to £5.5m.
We use performance materiality to reduce to
an appropriately low level the probability that
the aggregate of uncorrected and undetected
misstatements exceeds overall materiality.
Specifically, we use performance materiality
in determining the scope of our audit and the
nature and extent of our testing of account
balances, classes of transactions and
disclosures, for example in determining sample
sizes. Our performance materiality for investing
and financing activities was 75% (2022: 75%)
of overall materiality, amounting to £24.4m
(2022: £25.5m) for the Group financial
statements and £33.0m (2022: £33.4m)
for the Company financial statements.
Our performance materiality for operating
activities was 75% (2022: 75%) of Specific
materiality, amounting to £4.4m (2022:
£3.9m) for the Group financial statements.
In determining the performance materiality,
we considered a number of factors – the
history of misstatements, risk assessment and
aggregation risk and the effectiveness of
controls – and concluded that an amount at the
upper end of our normal range was appropriate.
We agreed with the Audit Committee that we
would report to them misstatements identified
during our audit above £1.6m (Group audit)
(2022: £1.7m) for investing and financing
activities, £0.6m (Group audit) (2022: £0.5m)
for operating activities, and £2.2m (Company
audit) (2022: £2.2m) as well as misstatements
below those amounts that, in our view,
warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment
of the Group’s and the Company’s ability to
continue to adopt the going concern basis of
accounting included:
— We agreed the underlying cash flow
projections to Board approved forecasts
and assessed how these forecasts were
compiled. We compared the prior year
forecasts to actual performance to assess
management’s ability to forecast accurately;
119Hammerson plc Annual Report 2023
Based on the work undertaken as part of our
audit, we have concluded that each of the
following elements of the corporate
governance statement, included within the
Corporate Governance Report is materially
consistent with the financial statements and
our knowledge obtained during the audit, and
we have nothing material to add or draw
attention to in relation to:
— The Directors’ confirmation that they have
carried out a robust assessment of the
emerging and principal risks;
— The disclosures in the Annual Report that
describe those principal risks, what
procedures are in place to identify emerging
risks and an explanation of how these are
being managed or mitigated;
— The Directors’ statement in the financial
statements about whether they considered
it appropriate to adopt the going concern
basis of accounting in preparing them, and
their identification of any material
uncertainties to the Group’s and Company’s
ability to continue to do so over a period of
at least 12 months from the date of
approval of the financial statements;
— The Directors’ explanation as to their
assessment of the Group’s and Company’s
prospects, the period this assessment
covers and why the period is appropriate;
and
— The Directors’ statement as to whether
they have a reasonable expectation that
the Company will be able to continue in
operation and meet its liabilities as they fall
due over the period of its assessment,
including any related disclosures drawing
attention to any necessary qualifications
or assumptions.
Our review of the Directors’ statement
regarding the longer-term viability of the Group
and Company was substantially less in scope
than an audit and only consisted of making
inquiries and considering the Directors’
process supporting their statement; checking
that the statement is in alignment with the
relevant provisions of the UK Corporate
Governance Code; and considering whether
the statement is consistent with the financial
statements and our knowledge and
understanding of the Group and Company
and their environment obtained in the course
of the audit.
In addition, based on the work undertaken as
part of our audit, we have concluded that each
of the following elements of the corporate
governance statement is materially consistent
with the financial statements and our
knowledge obtained during the audit:
— The Directors’ statement that they consider
the Annual Report, taken as a whole, is fair,
balanced and understandable, and provides
the information necessary for the members
to assess the Group’s and Company’s
position, performance, business model
and strategy;
— The section of the Annual Report that
describes the review of effectiveness of risk
management and internal control systems;
and
— The section of the Annual Report describing
the work of the Audit Committee.
We have nothing to report in respect of our
responsibility to report when the Directors’
statement relating to the Company’s
compliance with the Code does not properly
disclose a departure from a relevant provision
of the Code specified under the Listing Rules
for review by the auditors.
Responsibilities for the financial
statements and the audit
Responsibilities of the Directors for the
financial statements
As explained more fully in the Statement of
Directors’ responsibilities, the Directors are
responsible for the preparation of the financial
statements in accordance with the applicable
framework and for being satisfied that they
give a true and fair view. The Directors are also
responsible for such internal control as they
determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the
Directors are responsible for assessing the
Group’s and the Company’s ability to continue
as a going concern, disclosing, as applicable,
matters related to going concern and using
the going concern basis of accounting unless
the Directors either intend to liquidate the
Group or the Company or to cease operations,
or have no realistic alternative but to do so.
In connection with our audit of the financial
statements, our responsibility is to read the
other information and, in doing so, consider
whether the other information is materially
inconsistent with the financial statements
or our knowledge obtained in the audit,
or otherwise appears to be materially
misstated. If we identify an apparent material
inconsistency or material misstatement, we are
required to perform procedures to conclude
whether there is a material misstatement of
the financial statements or a material
misstatement of the other information.
If, based on the work we have performed, we
conclude that there is a material misstatement
of this other information, we are required to
report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and
Directors’ Report, we also considered whether
the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of
the audit, the Companies Act 2006 requires us
also to report certain opinions and matters as
described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken
in the course of the audit, the information given
in the Strategic Report and Directors’ Report
for the year ended 31 December 2023 is
consistent with the financial statements and
has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding
of the Group and Company and their
environment obtained in the course of the
audit, we did not identify any material
misstatements in the Strategic Report and
Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’
Remuneration Report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the
Directors’ statements in relation to going
concern, longer-term viability and that part of
the corporate governance statement relating
to the Company’s compliance with the
provisions of the UK Corporate Governance
Code specified for our review. Our additional
responsibilities with respect to the corporate
governance statement as other information
are described in the Reporting on other
information section of this report.
120Hammerson plc Annual Report 2023
Financial Statements
Independent Auditor’s Report to the members of Hammerson plc continued
— Designing audit procedures to incorporate
unpredictability into our testing;
— Evaluation of the Group’s compliance with
the REIT requirements;
— Challenging assumptions and judgements
made by management in their significant
accounting estimates, in particular in relation
to the valuation of investment property
(see related key audit matters above);
— Identifying and testing journal entries,
in particular any journal entries posted to
revenue with unusual account combinations
or posted by senior management; and
— Reviewing financial statement disclosures
and testing to supporting documentation to
assess compliance with applicable laws
and regulations.
There are inherent limitations in the audit
procedures described above. We are less
likely to become aware of instances of
non-compliance with laws and regulations
that are not closely related to events and
transactions reflected in the financial
statements. Also, the risk of not detecting a
material misstatement due to fraud is higher
than the risk of not detecting one resulting
from error, as fraud may involve deliberate
concealment by, for example, forgery
or intentional misrepresentations,
or through collusion.
Our audit testing might include testing
complete populations of certain transactions
and balances, possibly using data auditing
techniques. However, it typically involves
selecting a limited number of items for testing,
rather than testing complete populations.
We will often seek to target particular items
for testing based on their size or risk
characteristics. In other cases, we will use
audit sampling to enable us to draw a
conclusion about the population from which
the sample is selected.
A further description of our responsibilities for
the audit of the financial statements is located
on the FRC’s website at: www.frc.org.uk/
auditors responsibilities. This description
forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been
prepared for and only for the Company’s
members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act
2006 and for no other purpose. We do not,
in giving these opinions, accept or assume
responsibility for any other purpose or to any
other person to whom this report is shown
or into whose hands it may come save
where expressly agreed by our prior consent
in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
— we have not obtained all the information and
explanations we require for our audit; or
— adequate accounting records have not
been kept by the Company, or returns
adequate for our audit have not been
received from branches not visited by us; or
— certain disclosures of Directors’
remuneration specified by law are not
made; or
— the Company financial statements and the
part of the Directors’ Remuneration Report
to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from
this responsibility.
Appointment
Following the recommendation of the Audit
Committee, we were appointed by the
members on 25 April 2017 to audit the
financial statements for the year ended
31 December 2017 and subsequent financial
periods. The period of total uninterrupted
engagement is seven years, covering the
years ended 31 December 2017 to
31 December 2023.
Other matter
In due course, as required by the Financial
Conduct Authority Disclosure Guidance and
Transparency Rule 4.1.14R, these financial
statements will form part of the ESEF-
prepared annual financial report filed on the
National Storage Mechanism of the Financial
Conduct Authority in accordance with the ESEF
Regulatory Technical Standard (“ESEF RTS”).
This auditors’ report provides no assurance
over whether the annual financial report will
be prepared using the single electronic format
specified in the ESEF RTS.
Sonia Copeland (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
28 February 2024
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes
our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee
that an audit conducted in accordance with
ISAs (UK) will always detect a material
misstatement when it exists. Misstatements
can arise from fraud or error and are considered
material if, individually or in the aggregate, they
could reasonably be expected to influence the
economic decisions of users taken on the basis
of these financial statements.
Irregularities, including fraud, are instances
of non-compliance with laws and regulations.
We design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent to
which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the Group and
industry, we identified that the principal risks
of non-compliance with laws and regulations
related to tax legislation including the Real
Estate Investment Trust (“REIT”)
requirements, UK Companies Act 2006
requirements and listing requirements
including the UK FCA Listing Rules, and we
considered the extent to which non-
compliance might have a material effect on the
financial statements. We evaluated
management’s incentives and opportunities
for fraudulent manipulation of the financial
statements (including the risk of override of
controls), and determined that the principal
risks were related to posting inappropriate
journal entries to increase revenue, and
management bias in accounting estimates.
The Group engagement team shared this risk
assessment with the component auditors so
that they could include appropriate audit
procedures in response to such risks in their
work. Audit procedures performed by the
Group engagement team and/or component
auditors included:
— Discussions with management, internal
audit and those charged with governance,
including consideration of known or
suspected instances of non-compliance
with laws and regulation and fraud;
— Reviewing minutes of meetings of those
charged with governance;
— Evaluation of management’s controls
designed to prevent and detect
irregularities;
121Hammerson plc Annual Report 2023
20232022
Notes£m£m
Revenue
2,4
134.3
131.4
Profit from operating activities *
2
26.2
29.7
Revaluation loss on properties
2
(45.2)
(82.7)
Other net gains
2
1.2
0.6
Share of results of joint ventures
12B
9.4
(41.5)
Impairment of joint ventures
8B
(22.2)
–
Share of results of associates
13B
16.0
(7.1)
Operating loss
(14.6)
(101.0)
Finance income
6
35.2
26.1
Finance costs
6
(71.3)
(89.1)
Loss before tax
(50.7)
(164.0)
Tax charge
7
(0.7)
(0.2)
Loss for the year attributable to equity shareholders
(51.4)
(164.2)
Basic and diluted loss per share
10B
(1.0)p
(3.3)p
* Includes a charge of £9.4 m (2022: £4.0m) and a corresponding credit of £8.0 m (2022: credit of £10.7m) relating to provisions for impairment of trade (tenant)
receivables as set out in note 14E.
122Hammerson plc Annual Report 2023
Financial Statements
Consolidated Income Statement
Year ended 31 December 2023
20232022
£m£m
Loss for the year
(51.4)
(164.2)
Recycled through the profit or loss on disposal of overseas property interests
Exchange gain previously recognised in the translation reserve
(100.3)
–
Exchange loss previously recognised in the net investment hedge reserve
80.2
–
Net exchange loss relating to equity shareholders
a
(20.1)
–
Items that may subsequently be recycled through profit or loss, net of tax
Foreign exchange translation differences
(49.3)
130.6
Gain/(loss) on net investment hedge
39.3
(103.4)
Net gain/(loss) on cash flow hedge
0.2
(1.9)
Share of other comprehensive (loss)/gain of associates
(8.8)
23.3
(18.6)
48.6
Items that will not subsequently be recycled through profit or loss, net of tax
Net actuarial losses on pension schemes
(1.4)
(26.7)
Total other comprehensive (loss)/income
b
(40.1)
21.9
Total comprehensive loss for the year
(91.5)
(142.3)
a Relates to the sale of Italie Deux and the derecognition of O’Parinor as described in note 8.
b All items within total other comprehensive (loss)/income relate to continuing operations.
123Hammerson plc Annual Report 2023
Financial Statements
Consolidated Statement of Comprehensive Income
Year ended 31 December 2023
20232022
Note£m£m
Non-current assets
Investment properties
11
1,396.2
1,461.0
Interests in leasehold properties
32.7
34.0
Right-of-use assets
3.9
9.5
Plant and equipment
0.9
1.4
Investment in joint ventures
12C
1,193.2
1,342.4
Investment in associates
13C
1,115.0
1,297.1
Other investments
8.8
9.8
Trade and other receivables
14A
1.9
3.2
Derivative financial instruments
18A
–
7.0
Restricted monetary assets
15
21.4
21.4
3,774.0
4,186.8
Current assets
Trading properties
11
–
36.2
Trade and other receivables
14B
74.1
85.9
Derivative financial instruments
18A
5.2
0.1
Restricted monetary assets
15
2.2
8.6
Cash and cash equivalents
472.3
218.8
553.8
349.6
Total assets
4,327.8
4,536.4
Current liabilities
Trade and other payables
16
(129.8)
(168.3)
Obligations under head leases
19
(0.1)
(0.2)
Loans
17A
(108.6)
–
Tax
(0.3)
(0.5)
Derivative financial instruments
18A
(2.3)
(16.1)
(241.1)
(185.1)
Non-current liabilities
Trade and other payables
16
(55.5)
(56.3)
Obligations under head leases
19
(37.3)
(38.1)
Loans
17A
(1,515.9)
(1,646.4)
Deferred tax
(0.4)
(0.4)
Derivative financial instruments
18A
(15.0)
(23.7)
(1,624.1)
(1,764.9)
Total liabilities
(1,865.2)
(1,950.0)
Net assets
2,462.6
2,586.4
Equity
Share capital
20A
250.1
250.1
Share premium
1,563.7
1,563.7
Other reserves
20B
105.5
135.4
Retained earnings
549.7
646.0
Investment in own shares
(6.4)
(8.8)
Equity shareholders’ funds
2,462.6
2,586.4
EPRA net tangible assets value per share
10C
51p
53p
These financial statements were approved by the Board on 28 February 2024 and signed on its behalf by:
Rita-Rose Gagné Himanshu Raja
Chief Executive Chief Financial Officer
Financial Statements
Consolidated Balance Sheet
As at 31 December 2023
124Hammerson plc Annual Report 2023
CapitalInvest-Equity
redemp-ment share-Non-con-
ShareShare Mergertion OtherRetained in ownholders’ trolling Total
capitalpremium reservereservereservesearnings sharesfundsinterestsequity
abcda
£m £m £m £m £m £m £m £m £m£m
At 1 January 2022
221.0
1,593.2
374.1
198.2
110.0
252.9
(3.5)
2,745.9
0.1
2,746.0
Foreign exchange translation differences
–
–
–
–
130.7
–
–
130.7
(0.1)
130.6
Loss on net investment hedge
–
–
–
–
(103.4)
–
–
(103.4)
–
(103.4)
Gain on cash flow hedge
–
–
–
–
6.3
–
–
6.3
–
6.3
Gain on cash flow hedge recycled to net finance costs
–
–
–
–
(8.2)
–
–
(8.2)
–
(8.2)
Share of other comprehensive gain of associates
–
–
–
–
–
23.3
–
23.3
–
23.3
Net actuarial losses on pension schemes
–
–
–
–
–
(26.7)
–
(26.7)
–
(26.7)
Loss for the year
–
–
–
–
–
(164.2)
–
(164.2)
–
(164.2)
Total comprehensive income/(loss)
–
–
–
–
25.4
(167.6)
–
(142.2)
(0.1)
(142.3)
Transfer
–
–
(374.1)
(198.2)
–
572.3
–
–
–
–
Share-based employee remuneration
–
–
–
–
–
3.0
–
3.0
–
3.0
Cost of shares awarded to employees
–
–
–
–
–
(1.4)
1.4
–
–
–
Purchase of own shares
–
–
–
–
–
–
(6.7)
(6.7)
–
(6.7)
Dividends
–
–
–
–
–
(140.3)
–
(140.3)
–
(140.3)
Scrip dividend related share issue
29.1
(29.1)
–
–
–
127.1
–
127.1
–
127.1
Scrip dividend related share issue costs
–
(0.4)
–
–
–
–
–
(0.4)
–
(0.4)
At 31 December 2022
250.1
1,563.7
–
–
135.4
646.0
(8.8)
2,586.4
–
2,586.4
Recycled exchange gains on disposal of overseas
property interests
–
–
–
–
(20.1)
–
–
(20.1)
–
(20.1)
Foreign exchange translation differences
–
–
–
–
(49.3)
–
–
(49.3)
–
(49.3)
Gain on net investment hedge
–
–
–
–
39.3
–
–
39.3
–
39.3
Loss on cash flow hedge
–
–
–
–
(3.4)
–
–
(3.4)
–
(3.4)
Loss on cash flow hedge recycled to net finance costs
–
–
–
–
3.6
–
–
3.6
–
3.6
Share of other comprehensive loss of associates
–
–
–
–
–
(8.8)
–
(8.8)
–
(8.8)
Net actuarial losses on pension schemes
–
–
–
–
–
(1.4)
–
(1.4)
–
(1.4)
Loss for the year
–
–
–
–
–
(51.4)
–
(51.4)
–
(51.4)
Total comprehensive loss
–
–
–
–
(29.9)
(61.6)
–
(91.5)
–
(91.5)
Share-based employee remuneration
–
–
–
–
–
3.6
–
3.6
–
3.6
Cost of shares awarded to employees
–
–
–
–
–
(2.4)
2.4
–
–
–
Dividends
–
–
–
–
–
(35.9)
–
(35.9)
–
(35.9)
As at 31 December 2023
250.1
1,563.7
–
–
105.5
549.7
(6.4)
2,462.6
–
2,462.6
a Share capital includes shares held in treasury and shares held in an employee share trust, which are held at cost and excluded from equity shareholders’ funds
through ‘Investment in own shares’ with further information set out in note 20A.
b The merger reserve arose in September 2014 from a placing of new shares using a structure which resulted in merger relief being taken under Section 612 of the
Companies Act 2006. Following receipt of the proceeds in 2014 and the relevant criteria enabling use of the reserve having been satisfied, the amounts in the
merger reserve are deemed distributable and accordingly the balance of this reserve was transferred to retained earnings.
c The capital redemption reserve comprised £14.3m relating to share buybacks which arose over a number of years up to 2019 and £183.9m resulting from the
cancellation of the Company’s shares as part of the reorganisation of share capital in 2020. Following approval by the Court on 22 November 2022, this reserve
was reclassified as available for distribution to shareholders in accordance with ICAEW Technical Release 02/17BL section 2.8A and as a result was transferred
to retained earnings.
d Other reserves comprises Translation, Net investment hedge and Cash flow hedge reserves as set out in note 20B.
125Hammerson plc Annual Report 2023
Financial Statements
Consolidated Statement of Changes in Equity
Year ended 31 December 2023
20232022
Note£m£m
Profit from operating activities
2
26.2
29.7
Net movements in working capital and restricted monetary assets
23A
(4.7)
2.6
Non-cash items
23A
2.8
(0.8)
Cash generated from operations
24.3
31.5
Interest received
39.1
18.1
Interest paid
(80.8)
(69.1)
Debt and loan facility issuance and extension fees
(1.0)
(2.8)
Premiums on hedging derivatives
–
(3.9)
Tax (paid)/repaid
(0.9)
0.3
Distributions and other receivables from joint ventures
57.6
89.5
Distributions from joint ventures reclassified as assets held for sale
–
6.0
Cash flows from operating activities
38.3
69.6
Investing activities
Capital expenditure
(18.7)
(36.4)
Sale of properties (including trading properties)
49.0
124.0
Sale of investments in joint ventures
69.0
67.9
Sale of investments in associates
96.7
–
Advances to joint ventures
12D
(8.3)
(4.0)
Distributions and capital returns received from associates
73.6
2.6
Cash flows from investing activities
261.3
154.1
Financing activities
Share issue expenses
–
(0.5)
Proceeds from award of own shares
–
0.1
Purchase of own shares
–
(6.7)
Proceeds from new borrowings
96.0
–
Repayment of borrowings
(111.1)
(302.4)
Equity dividends paid
21
(29.9)
(13.2)
Cash flows from financing activities
(45.0)
(322.7)
Increase/(decrease) in cash and cash equivalents
254.6
(99.0)
Opening cash and cash equivalents
23B
218.8
315.1
Exchange translation movement
23B
(1.1)
2.7
Closing cash and cash equivalents
23B
472.3
218.8
Financial Statements
Consolidated Cash Flow Statement
Year ended 31 December 2023
126Hammerson plc Annual Report 2023
A. GENERAL INFORMATION
Hammerson plc is a UK public company limited by shares incorporated
under the Companies Act and is registered in England and Wales.
The address of the Company’s registered office is Marble Arch House,
66 Seymour Street, London W1H 5BX.
The Group’s principal activities are as an owner, operator and developer of
sustainable prime urban real estate. The Group owns and invests in flagship
destinations, developments and other properties, and premium outlets
across the United Kingdom and Europe. The significant accounting policies
are described below.
B. BASIS OF PREPARATION AND CONSOLIDATION
Basis of preparation
The consolidated financial statements have been prepared in accordance
with both UK adopted international accounting standards and International
Financial Reporting Standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the EU, (IFRS adopted by the EU as at
31 December 2020), as well as SAICA Financial Reporting Guides as issued
by the Accounting Practices committee and those parts of the Companies
Act 2006 as applicable to companies reporting under IFRS.
New accounting standards, amendments to standards and IFRIC
interpretations which became applicable during the year or have been
published but are not yet effective, were either not relevant or had no, or are
not expected to have a material impact on the Group’s results or net assets.
In addition to the above, an assessment has been undertaken on the Pillar 2
tax legislation (effective 1 January 2024), which is based around undertaxed
profits. The Group is not expected to meet the minimum threshold in place
for the legislative rules to apply.
The financial statements are prepared on the historical cost basis, except
that investment properties, other investments and derivative financial
instruments are stated at fair value. Accounting policies have been applied
consistently.
Basis of consolidation
The consolidated financial statements incorporate the financial statements
of the Company and entities controlled by the Company (its subsidiaries).
Control is achieved where the Company has the power over the investee,
is exposed, or has rights, to variable return from its involvement with the
investee and has the ability to use its power to affect its returns.
The results of subsidiaries, joint ventures or associates are included in the
consolidated income statement when control is achieved, which is usually
from the effective date of acquisition, or up to the effective date of disposal
which is usually on completion of the transaction. All intragroup transactions,
balances, income and expenses are eliminated on consolidation. Where
necessary, adjustments are made to bring the accounting policies used into
line with those used by the Group.
Business combinations are accounted for using the acquisition method
where any excess of the purchase consideration over the fair value of the
assets, liabilities and contingent liabilities acquired and the resulting
deferred tax thereon is recognised as goodwill which is then reviewed
annually for impairment. Acquisition related costs are expensed.
Joint operations, joint ventures and associates
The accounting treatment for joint operations, joint ventures and associates
requires an assessment to determine the degree of control or influence that
the Group may exercise over them and the form of that control.
The Group’s interest in joint arrangements is classified as either:
– a joint operation: not operated through an entity but by joint controlling
parties which have rights to the assets and obligations for the liabilities; or
– a joint venture: whereby the joint controlling parties have rights to the net
assets of the arrangement.
The Group’s interests in its joint arrangements are commonly driven by the
terms of partnership agreements, which ensure that control is shared
between the partners.
Associates are those entities over which the Group is in a position to exercise
significant influence, but not control or jointly control.
The Group’s share of interests in joint operations is proportionally
consolidated into the Group financial statements.
The results, assets and liabilities of joint ventures and associates are accounted
for using the equity method. Investments in joint ventures and associates
are carried in the consolidated balance sheet at cost as adjusted for post
acquisition changes in the Group’s share of the net assets of the joint
venture or associate, less any impairment. Loans to joint ventures and
associates are aggregated into the Group’s investment in the consolidated
balance sheet. The Group eliminates upstream and downstream transactions
with its joint ventures, including interest and management fees.
Any losses of joint ventures or associates are initially recognised against
the equity investment. However, if in excess of the Group’s equity interest,
losses are recognised only to the extent that the Group has incurred legal
or constructive obligations or made payments on behalf of the other entity.
If the Group’s equity investment is £nil, the share of losses is recognised
against other long term interests or if such interests are not available,
losses are simply restricted to leave the Group’s equity investment
remaining at £nil.
Distributions and other income received from joint ventures are included
within cash flows from operating activities owing to their association with
the underlying profits of the joint venture whereas all other cash flows are
recognised as investing activities. Distributions from associates are included
in investing activities. Distributions reduce the carrying value of the Group’s
investments in joint ventures and associates .
C. ALTERNATIVE PERFORMANCE MEASURES (APMs)
The Group uses a number of performance measures which are non-IFRS.
The key measures comprise the following:
– Adjusted measures: Used by the Directors and management to monitor
business performance internally and exclude the same items as for EPRA
earnings, but also certain cash and non-cash items which they believe are
not reflective of the normal day-to-day operating activities of the Group.
Furthermore, the Group evaluates the performance of its portfolio by
aggregating its share of joint ventures and associates which are under the
Group’s management (‘Share of Property interests’) on a proportionally
consolidated basis. The Directors believe that disclosing such non-IFRS
measures enables a reader to isolate and evaluate the impact of such
items on results and allows for a fuller understanding of performance
from year-to-year. Adjusted performance measures may not be directly
comparable with other similarly titled measures used by other companies.
1. Basis of preparation, consolidation and principal accounting policies
127Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
Assessment approach
Consistent with the Group’s strong financial position, the Base scenario
projections forecast that the Group will maintain significant covenant
headroom and liquidity over the going concern period.
To further determine the Group’s ability to continue as a going concern, a reverse
stress test (‘stress test’) was undertaken on the Base scenario to assess the
maximum level that valuations and net rental income could fall over the going
concern period before the Group reaches its key unsecured debt covenant
thresholds. The stress test adopted valuation yields and ERVs as at
31 December 2023. However, to fully assess the impact on the going concern
assessment the stress test adopted the following worse case assumptions:
– the secured loans in Dundrum and Value Retail are not refinanced and
the lenders enforce their security resulting in the Group derecognising the
full value of its equity investments totalling £508m; and
– the early repayment of £77m of the Group’s unsecured private
placement notes which do not mature over the going concern period. This
assumption has been adopted as the unencumbered asset ratio, which is
only applicable to these notes, has the lowest covenant headroom to
valuation falls at 31 December 2023 of 27% and hence would breach
before the gearing covenant shown below. In practice, this potential issue
can be avoided as the Group has the right to redeem the notes for their
value plus a make whole amount.
Factoring in these assumptions, the results of the stress test are as follows:
Level of reduction in key variable at each date to reach covenant threshold
30 Jun
31 Dec 2025
2023 Stress
Key variable
Covenant
Actual test
Valuations (incl. Value Retail)
Gearing
34%
31%
Net rental income
Interest cover
68%
70%
Having reviewed the results of the stress tests, current external forecasts,
recent precedents and plausible future adverse impacts to valuations and
net rental income, the Directors are satisfied that the Group has sufficient
covenant headroom over the going concern period.
The Group is also forecast to retain significant liquidity over the going
concern period, such that liquidity in the stress tests remains above £800m
over the going concern period.
Mitigating actions
The going concern assessment explained above excludes the beneficial
impact of potential mitigating actions which would provide the Group with
further financial strength and covenant headroom. These include:
– Refinancing of maturing loans in the ordinary course of business,
particularly in relation to secured debt, as this avoids the modelled
derecognition of these investments in the stress test. Refinancing
discussions are progressing for the Dundrum secured loan while Value
Retail management remain confident of refinancing its maturing loans
following the major refinancing activities of £1.4bn in 2022 and 2023.
– Additional liquidity from further disposals including the recently
contracted sale of Union Square, Aberdeen for £111m which is due to
complete in March 2024.
– Curtailment of uncommitted capital expenditure plans and other
discretionary cash flows factored into the assessment.
Conclusion
The going concern assessment described above demonstrates that the
Group is forecast to remain in a robust financial position over the going
concern period with significant liquidity and debt covenant headroom. The
Directors have therefore concluded that it is appropriate to prepare the
financial statements on a going concern basis.
– EPRA earnings and EPRA net assets: Calculated in accordance with
guidance issued by the European Public Real Estate Association
recommended bases.
– Headline earnings: Calculated in accordance with the requirements of
the Johannesburg Stock Exchange listing requirements.
A reconciliation between reported and the above alternative earnings and
net asset measures is set out in note 9.
D. GOING CONCERN
Introduction
In order to prepare the financial statements for the year ended
31 December 2023 on a going concern basis the Directors have undertaken
a detailed assessment of the Group’s principal risks and current and
projected financial position over the period to 30 June 2025 (‘the going
concern period’). This period has been selected as it coincides with the first
six monthly covenant test date for the Group’s unsecured debt facilities
falling due after the minimum 12 months going concern period.
The assessment included the preparation of a Base scenario which
contained earnings, balance sheet, cash flow, liquidity and credit metric
projections. The Base scenario was derived from the Group’s 2024
Business Plan, which was approved by the Board in December 2023, with
amendments to exclude certain uncommitted transactions such as
disposals. The Business Plan projections assumed further improvements in
the Group’s near term operational performance, supported by the Group’s
strong leasing pipeline; collections performance; robust occupancy; and
footfall and sales growth seen in 2023. The projections also factored in the
latest geopolitical, economic and trading outlook, particularly the financial
challenges on both consumers and businesses from high interest rates,
benign economic growth, inflation and supply chain pressures.
Financial position
Over the course of 2023, the Group’s net debt has reduced by £406m to
£1,326m. The Group also has significant liquidity of £1,225m (2022:
£997m), comprising cash of £570m and undrawn revolving credit facilities
of £655m. The net debt reduction was principally due to disposal proceeds
in the year of £216m and the derecognition of the Group’s investment in
Highcross and O’Parinor which included £125m of secured debt. This
reduction has led to an improvement in the Group’s credit metrics as
detailed on page 51 of the Financial Review. Over the going concern period,
there is only £109m of unsecured debt maturities, relating solely to a
proportion of the Group’s £185m private placement notes.
The Group has three principal unsecured debt covenants: gearing, interest
cover and unencumbered asset ratio, with the latter covenant only
applicable to the private placement notes. It also has a covenant relating to
the amount of secured debt as a percentage of equity shareholders’ funds
which must remain below 50%. This was 11% at 31 December 2023 and is
forecast to remain broadly unchanged over the going concern period.
The key variables impacting the three principal covenants are valuation
movements for the gearing and unencumbered asset ratio covenants, and
changes in net rental income for the interest cover covenant. Net interest
cost also impacts the interest cover ratio, although at 31 December 2023,
84% of the Group’s gross debt is at fixed interest rates, which limits the
volatility of this element of the covenant over the going concern period.
The Group also has secured debt in its Dundrum joint venture and its
associate, Value Retail. These secured facilities are non-recourse to the rest
of the Group and subject to covenants, principally relating to loan to value
and interest cover. The loan secured against Dundrum and three of the loans
held by Value Retail mature over the going concern period. In total the
Group’s share of these maturing loans was £513m at 31 December 2023.
1. Basis of preparation, consolidation and principal accounting policies continued
128Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
E. PRINCIPAL ACCOUNTING POLICIES
Revenue
Revenue comprises gross rental income (consisting of base and turnover
rents, income from car parks and commercialisation activities, lease
incentive recognition and other rental income), service charge income,
property fee income and joint venture and associate management fees.
These income streams are recognised in the period to which they relate as
set out below.
Rental income from investment property is recognised as revenue on
a straight line basis over the lease term. Lease incentives and costs
associated with entering into tenant leases are amortised over the lease
term as a reduction in rental income. Lease modifications are accounted for
as a new lease from the effective date of the modification, considering any
prepaid or accrued lease payments relating to the original lease as part of
the lease payments for the new lease. On entering into a lease modification
any initial direct costs associated with the lease, including surrender premia
previously paid, are derecognised through rental expense in the year. Rent
reviews are recognised when such reviews have been agreed with tenants.
Contingent rents, being those lease payments that are not fixed at the
inception of a lease, such as increases arising on rent reviews and turnover
rent, are variable considerations and are recorded as income using the most
reliable estimates of such considerations in the periods in which they are
earned. Income from rent reviews is recognised from the period it is
secured.
Under IFRS 15, the Group’s revenue from contracts with customers
includes service charge income, property fee income, car park income
and joint venture and associate management fees and is recognised in
accordance with the following performance obligations:
– Service charge income, property fee income and joint venture and
associate management fees are recognised over the period the
respective services are provided
– Car park income is recognised at the point in time when the customer
has completed use of their car parking space
Retirement benefit costs
Defined contribution pension plans
The cost of defined contribution schemes is expensed as incurred.
The Group has no further payment obligations once the contributions
have been paid.
Defined benefit pension plans
The Group has one funded plan where assets are held in separate trustee
administered funds. The Group also provides other unfunded pension
benefits to certain members. The funded plan was de-risked in December
2022 when the Trustees of the Plan purchased a bulk annuity policy. In
December 2023 a process was started to transfer the annuity policy to
individual members and wind-up the Plan in 2024.
The Group’s net obligation comprises the amount of future benefit that
employees have earned, discounted to determine a present value, less the
fair value of the pension plan assets. The cost of providing benefits under
defined benefit arrangements are determined separately for each plan
using the projected unit credit method, with valuations being carried out
by the Group’s external actuary.
The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of high
quality corporate bonds that have terms to maturity approximating to the
terms of the related pension obligation. A net pension asset is only
recognised to the extent that it is expected to be recoverable in the future
and the asset is limited to the present value of any future refunds from the
plan or reduction in future contributions to the plan.
The net interest cost is calculated by applying the discount rate to the net
balance of the defined benefit obligation and the fair value of the plan
assets. Actuarial gains and losses arising from experience adjustments
and changes in actuarial assumptions are charged or credited to other
comprehensive income in the period in which they arise.
Share-based payments
Equity settled share-based employee remuneration is determined with
reference to the fair value (excluding the effect of non-market-based vesting
conditions) of the equity instruments at the date of grant and is expensed
over the vesting period on a straight line basis.
The fair value of share options which are subject only to internal performance
criteria or service conditions are measured using input factors including the
exercise price, expected volatility, option life and risk-free interest rate. For
all schemes, the number of options expected to vest is recalculated at each
balance sheet date, based on expectations of leavers prior to vesting. The
fair value of the market-based element of the Restricted Share Plan is
calculated using the Monte Carlo model which is dependent on factors
including the expected volatility, vesting period and risk-free interest rate.
Finance costs
Net finance costs
Net finance costs include interest payable on debt, derivative financial
instruments, interest on head leases and other lease obligations, debt and
loan facility cancellation costs, net of interest capitalised, interest receivable
on funds invested and derivative financial instruments, and changes in the
fair value of derivative financial instruments.
Capitalisation of interest
Interest is capitalised if it is directly attributable to the acquisition,
construction or production of development properties or the significant
redevelopment of investment properties. Capitalisation commences when
the activities to develop the property start on site and continues until the
property is substantially ready for its intended use, normally practical
completion. Capitalised interest is calculated with reference to the actual
rate payable on loans for development purposes or, for that part of the
development cost financed out of general funds, at the Group’s weighted
average interest rate.
Tax
Tax exempt status
The Company has elected for UK REIT, French SIIC and Irish QIAIF status.
To continue to benefit from these tax regimes, the Group is required to
comply with certain conditions as outlined in note 7A. Management intends
that the Group will continue as a UK REIT, a French SIIC and an Irish QIAIF
for the foreseeable future.
Current and deferred tax
Tax is included in the consolidated income statement except to the extent
that it relates to items recognised directly in equity, in which case the related
tax is recognised in equity.
Current tax is the expected tax payable on the non-tax exempt income for
the period, net of allowable expenses and tax deductions, using the tax
rate(s) prevailing during the accounting period, together with any adjustment
in respect of previous periods.
Deferred tax is provided using the balance sheet liability method, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for tax
purposes. The following temporary differences are not provided for:
– Goodwill not deductible for tax purposes
– The initial recognition of assets or liabilities, with the exception of leases,
that at the time of the transaction affects neither accounting nor taxable
profit/(tax loss)
1. Basis of preparation, consolidation and principal accounting policies continued
129Hammerson plc Annual Report 2023
E. PRINCIPAL ACCOUNTING POLICIES continued
Investment properties and trading properties
Investment properties are stated at fair value, being market value determined
by professionally qualified external valuers, and changes in fair value are
included in the consolidated income statement. Accordingly, no depreciation
is provided.
Expenditure incurred on investment properties is capitalised where it is
probable that the future economic benefits associated with the investment
property will flow to the entity and the cost can be reliably measured. This
includes the recognition of capitalised tenant incentives, less amortisation
and impairment, capitalised interest and other capital expenditure.
Investment properties held for future sale are reclassified to Trading
properties within current assets at the fair value at the date of transfer and
subsequently measured at the lower of cost and net realisable value.
Interests in leasehold properties
The Group owns a number of properties on long leaseholds under leases
from freeholders or superior leaseholders which are depreciated over the
lease term. At the commencement of a lease, the Group recognises lease
liabilities for the buildings element of the leasehold, disclosed as obligations
under head leases, at the present value of the minimum lease payments to
be made over the term of the lease. Payments to the freeholder or superior
leaseholder are apportioned between a finance charge and a reduction of
the outstanding liability. The finance charge is allocated to each period
during the lease term so as to produce a constant periodic rate of interest on
the remaining balance of the liability.
Contingent rents and variable rents payable which are not dependent on an
index, such as rent reviews or those related to rental income, are expensed
in the period to which they relate. Where at inception, or at some point during
the course of the lease, rents are fixed, or are in substance fixed, a right-of-
use asset is created and a corresponding liability for the present value of the
minimum future lease payments recognised on the balance sheet.
Right-of-use assets
The Group has leases for each of its corporate offices in the UK, France and
Ireland. Leased assets are capitalised on inception of the lease as right-of-
use assets and depreciated over the shorter of the non-cancellable lease
period and any extension options that are considered reasonably certain to
be taken, or the useful life of the asset.
A corresponding lease liability, representing the present value of the lease
payments is also recognised. The discounted lease liability is calculated
where possible using the interest rate implicit in the lease or where this is
not attainable the incremental borrowing rate is utilised. The incremental
borrowing rate is the rate the Group would have to pay to borrow the funds
necessary to obtain a similar asset under similar conditions. The Group
calculates the incremental borrowing rate using the risk free rate of the
country where the asset is held, adjusted for length of the lease and
a risk premium.
Lease payments are allocated against the principal and finance cost.
Finance costs, representing the unwinding of the discount on the lease
liability are expensed to produce a constant periodic rate of interest on the
remaining liability.
Plant and equipment
Such assets are stated at cost less accumulated depreciation and, where
appropriate, provision for impairment in value. Depreciation is charged
to the consolidated income statement on a straight line basis over the
estimated useful life, generally between three and five years.
– For investments in subsidiaries that at the time of the transaction do not
give rise to equal taxable and deductible temporary differences.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates that are expected to apply in the period when the liability is
settled or the asset is realised. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available against
which the asset can be utilised.
Foreign currency
Income statement
Transactions in foreign currencies are translated into sterling at exchange
rates approximating to the exchange rate ruling at the date of the transaction.
The operating income and expenses of foreign operations are translated
into sterling at the average exchange rates for the year. Significant
transactions, such as property sales, are translated at the foreign exchange
rate ruling at the date of each transaction.
Transactions with joint ventures including distributions, interest and
management fees are eliminated on a proportionate basis. The Group’s
financial performance is not materially impacted by seasonality.
Balance sheet
Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated into sterling at the exchange rate ruling
at that date and, unless they relate to the hedging of the net investment in
foreign operations, differences arising on translation are recognised in the
consolidated income statement.
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated into sterling at
the exchange rates ruling at the balance sheet date.
Net investment in foreign operations
Exchange differences arising from the translation of the net investment in
foreign operations are taken to the translation reserve. They are released to
the consolidated income statement upon disposal of the foreign operation.
Exchange rates
The principal foreign currency denominated balances are in euro where the
translation exchange rates used are:
Consolidated income statement
Year ended Year ended
31 December 31 December
Average rate 2023 2022
Quarter 1
€1.133
€1.195
Quarter 2
€1.150
€1.179
Quarter 3
€1.163
€1.168
Quarter 4
€1.154
€1.150
Consolidated balance sheet
31 December 31 December
2023 2022
Year end rate
€ 1.153
€1.128
1. Basis of preparation, consolidation and principal accounting policies continued
130Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
Cloud software license agreements and intangible assets
When the Group incurs configuration and customisation costs as part of
a cloud based software-as-a-service (SaaS) agreement, and where this
does not result in the creation of an asset which the Group has control over,
such costs are expensed. Licence agreements to use cloud software are
treated as service contracts and expensed, unless the Group has both a
contractual right to take possession of the software at any time without
significant penalty, and the ability to run the software independently of the
host vendor. In such cases the licence agreement is capitalised as software
within intangible assets.
Software and licenses which are capitalised include costs incurred to
acquire the assets as well as any internal infrastructure and design costs
incurred in the development of software in order to bring the assets into
use. Capitalised software costs include external direct costs of goods and
services, as well as directly attributable internal payroll related costs for
employees who are associated with the project. Computer software under
development is held at cost less any recognised impairment loss.
Software is stated at cost less accumulated amortisation and, where
appropriate, provision for impairment in value or estimated loss on disposal.
Amortisation is provided to write off the cost of assets on a straight line basis
between three and six years, and is recorded in administration expenses.
Other investments
Other investments are initially recognised at fair value and
subsequently remeasured, with changes recognised in the
consolidated income statement.
Disposals
Properties are treated as disposed when control transfers to the buyer
which typically occurs on completion.
Gains or losses on the sale of properties are calculated by reference to
the carrying value at the end of the previous year, adjusted for subsequent
capital expenditure, unless reclassified to assets held for sale prior to
disposal. Where a corporate entity, whose primary asset is a property,
is disposed, the associated gains or losses on the sale of the entity are
disclosed as profit or loss on sale of properties.
Trade and other receivables
Trade and other receivables are initially measured at fair value,
subsequently measured at amortised cost and, where the effect is material,
discounted to reflect the time value of money. Trade and other receivables
are shown net of any loss allowance provision. In order to calculate any loss
allowance for trade receivables the Group applies the simplified approach
under IFRS 9 to determine the Expected Credit Loss (ECL).
In addition the Group makes provisions against receivables in the current
period in respect of income not yet recognised in the income statement,
but instead deferred on the balance sheet to be released to the income
statement in a future period, to match the period to which the income relates.
Other non-trade receivables include loans receivable which are financial
assets and are initially measured at fair value, plus acquisition costs, and are
subsequently measured at amortised cost, using the effective interest
method, less any impairment, determined using the general approach in
IFRS 9.
Estimates made in assessing the provisions for impairment of trade (tenant)
receivables require consideration of future events which therefore make the
provisions inherently subjective. The Group applies the simplified approach
under IFRS 9 by adopting a provisioning matrix to determine the Expected
Credit Loss (ECL), grouping receivables dependent on risk level. In making
these assessments, key factors the Group takes into account include:
– Credit ratings
– Latest information on occupiers’ financial standing including the relative
risk of the retail subsector in which they operate
– Historical default rates
– Ageing
– Rent deposits (included as part of payables) an d guarantees held
– The probability that tenants will serve out the remainder of the
contractual terms of their leases
Specific higher provisioning levels may be applied where information is
available which suggests this is required, for instance if the likelihood of
default or tenant failure is deemed to be very high a full provision is applied.
Trade receivables are written off when there is no feasible possibility of
recovery and enforcement activity has ceased.
Some small differences in provision rates across segments exist which
reflect the typically experienced local collection rates by age category.
However, the effect on overall provisioning rate on the total gross balance
by segment is not material.
Cash and cash equivalents and restricted monetary assets
Cash and cash equivalents comprise cash and short term bank
deposits with an original maturity of three months or less which are
readily accessible.
Restricted monetary assets relate to cash balances which legally belong to
the Group but which the Group cannot readily access owing to restrictions
imposed by law or legislation and include cash and monies held in escrow
accounts for a specified purpose. These do not meet the definition of cash
and cash equivalents and consequently are presented separately in the
consolidated balance sheet.
Financial liabilities
Financial liabilities are those which involve a contractual obligation to deliver
cash or other financial asset to external parties at a future date.
Loans
Loans are recognised initially at fair value, after taking account of any
discount on issue and attributable transaction costs. Subsequently, loans
are held at amortised cost, such that discounts and costs are charged as
finance costs to the consolidated income statement over the term of the
borrowing at a constant return on the carrying amount of the liability.
Trade and other payables
Trade payables (excluding derivative financial liabilities) are non-interest
bearing and are stated at cost which equates to their fair value.
Derivative financial instruments
The Group uses derivative financial instruments to economically hedge its
exposure to foreign currency movements and interest rate risks. These
instruments are recognised initially at fair value, which equates to cost and
subsequently remeasured at fair value, with changes in fair value being
included in the consolidated income statement, except where hedge
accounting is applied.
Derivative financial instruments are presented as current assets or liabilities
if they are expected to be settled within 12 months after the end of the
reporting period, otherwise they are held as non-current assets or liabilities.
1. Basis of preparation, consolidation and principal accounting policies continued
131Hammerson plc Annual Report 2023
Significant estimates
Property valuations
Backdrop
The valuation of the Group’s property portfolio is the most material area of
estimation due to its inherent subjectivity, reliance on assumptions and
sensitivity to market fluctuations. The portfolio is valued by external valuers
in accordance with RICS Valuation – Global Standards.
The 31 December 2023 reports include a general commentary on wider
issues including uncertainty caused by the war in Ukraine and associated
cost, supply chain, high interest rates and inflationary pressures. Key areas
of estimate highlighted included:
– Estimation of market rents based on an increased level of activity
– Yield assumptions recognising the selective return of investor appetite
towards the retail sector, and the limited comparable transactions
Other non-key factors considered included the appropriate levels of void
costs and rent-free period, and the impact of shortening lease lengths.
Methodology
Investment properties, excluding trading properties and properties held for
development, are valued by adopting the ‘investment method’ of valuation.
This approach involves applying capitalisation yields to estimated future
rental income streams reflecting contracted income reverting to market
rental income (ERV) with appropriate adjustments for income voids arising
from vacancies, lease expiries or rent-free periods. These capitalisation
yields (nominal equivalent yield) and future income streams are derived
from comparable property and leasing transactions and are considered to
be the key inputs to the valuations.
Where comparable evidence of yield movement is lacking, valuers are
reliant on sentiment or the movement of less comparable assets. Factors
that have been taken into account include, but are not limited to, the location
and physical attributes of the property, tenure, tenancy details, lease expiry
profile, rent collection, local taxes, structural and environmental conditions.
With regards to the latter factor, the valuers comply with the RICS Guidance
Note Sustainability and ESG in Commercial Property Valuation, which took
effect from 31 January 2022, although make limited explicit adjustment to
their valuations in respect of ESG matters. However, both the Group and the
valuers anticipate that ESG will have a greater influence on valuations in the
future as investment markets place a greater emphasis on this topic.
A tailored approach is taken to the valuation of development properties due
to their unique nature. In the case of on-site developments, the approach
applied is the ‘residual method’ of valuation, which is the investment
method of valuation (as described above), with a deduction for all costs
necessary to complete the development together with an allowance for risk
and developers’ profit. Properties held for future development are valued
using the highest and best use method, by adopting the higher of the
residual method of valuation allowing for all associated risks, and the
investment method of valuation for the existing asset.
Valuations of the Group’s premium outlets held by Value Retail are calculated
on a discounted cash flow basis, utilising key assumptions such as net
operating income, exit yield, discount rate and forecast sales density growth.
Inputs to the valuations, some of which are ‘unobservable’ as defined by
IFRS 13, include capitalisation yields and ERV. These are dependent on
individual market characteristics. With other factors remaining constant, an
increase in ERV would increase valuations, whilst increases in capitalisation
yields and discount rates would reduce values and vice versa. However,
there are interrelationships between unobservable inputs as they are
determined by market conditions. For example, an increase in rents may
be offset by an increase in yield, resulting in no net impact on values.
A sensitivity analysis, showing the impact on values of changes in yields
and rental income is in note 11A.
Hedge accounting is applied in respect of net investments in foreign
operations and of debt raised in non-functional currencies. The fair value
gain or loss on remeasurement of derivative financial instruments and the
exchange differences on non-derivative financial instruments that are
designated in a net investment hedge are recognised in the net investment
hedge reserve in total comprehensive income, to the extent they are
effective, and the ineffective portion is recognised in the consolidated
income statement within net finance costs. Amounts are reclassified from
the net investment hedge reserve to the consolidated income statement
when the associated hedged item is disposed of.
Hedge accounting is also applied in respect of the foreign exchange
exposure on US Dollar loans. The fair value gain or loss on re-measurement
of derivative financial instruments that are designated in a cash flow hedge
are recognised in the cash flow hedge reserve in total comprehensive
income, to the extent they are effective, and the ineffective portion is
recognised in the consolidated income statement within net finance costs.
Amounts are reclassified from the cash flow hedge reserve to the
consolidated income statement when the associated hedged transaction
affects the consolidated income statement.
Disclosures in the cash flow statement are consistent with the Group’s
definition of Borrowings which includes currency swaps,
F. SIGNIFICANT JUDGEMENTS AND ESTIMATES
The preparation of financial statements requires management to
make judgements, estimates and assumptions about the application
of its accounting policies which affect the reported amounts of assets,
liabilities, income and expenses. Actual amounts and results may differ
from those estimates.
Judgements and estimates are evaluated regularly and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
Any revisions to accounting estimates are recognised in the period in
which the estimate is revised.
Significant judgements
Impairment of non-financial assets and liabilities
Most of the Group’s non-financial assets are investment properties and
are already carried at their fair value under IAS 40. Investments in joint
ventures and associates fall within the scope of IAS 28 and are therefore
only assessed for impairment where one or more events cause an indicator
of impairment versus the original investment.
Joint ventures and associates are accounted for under the equity method,
which equates to the Group’s share of the entity’s Net Asset Value (NAV).
NAV is based on the fair value of the assets and liabilities, measured in
accordance with IFRS 13 ‘Fair Value Measurement’. There are no indicators
falling outside of NAV which are considered to be grounds for further
impairment review.
Climate risk
As part of the Group’s Task Force on Climate-related Financial Disclosures
(TCFD) response, the impact of climate risk in the context of the financial
statements has been assessed. While recognising the Group’s commitment
to achieving Net Zero by 2030 as part of the wider ESG strategy, climate risk
has not had a material impact on the financial reporting estimates and
judgements in these financial statements.
Further information on the assessment is in the Audit Committee report
on page 86.
1. Basis of preparation, consolidation and principal accounting policies continued
132Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
2. Profit/(loss) for the year
As described in note 3, the Group evaluates the performance of its portfolio by aggregating its share of joint ventures (see note 12) and associates
(see note 13) which are under the Group’s management (‘Share of Property interests’) on a proportionally consolidated basis with its wholly owned
portfolio in its ‘Reported Group’.
Adjusted earnings, which are also calculated on a proportionally consolidated basis, is the Group’s primary profit measure and this is the basis of information
which is reported to the Board. The following table sets out a reconciliation from Reported earnings to Adjusted earnings.
2023
Proportionally consolidated
Share of Sub-total
Reported Property before Capital and
Group interests adjustments other Adjusted
a
Note £m £m £m £m £m
Revenue
4
134.3
132.4
266.7
–
266.7
Gross rental income
b
3A, 4
92.8
115.6
208.4
–
208.4
Service charge income
4
26.6
17.1
43.7
–
43.7
119.4
132.7
252.1
–
252.1
Service charge expenses
(29.1)
(20.4)
(49.5)
–
(49.5)
Cost of sales
5A
(14.7)
(20.7)
(35.4)
0.3
(35.1)
Net rental income
75.6
91.6
167.2
0.3
167.5
Gross administration costs
5A
(64.3)
(0.4)
(64.7)
13.2
(51.5)
Other income
4
14.9
–
14.9
–
14.9
Net administration expenses
(49.4)
(0.4)
(49.8)
13.2
(36.6)
Profit from operating activities
26.2
91.2
117.4
13.5
130.9
Revaluation losses on properties
11
(45.2)
(73.9)
(119.1)
119.1
–
Disposals
– Profit/(loss) on sale of properties
8A
1.3
(19.1)
(17.8)
17.8
–
– Recycled exchange gains on disposal of overseas interests
20.1
–
20.1
(20.1)
–
Change in fair value of other investments
(1.1)
–
(1.1)
1.1
–
Loss on sale of joint ventures and associates
(19.1)
19.1
–
–
–
Other net gains
1.2
–
1.2
(1.2)
–
Share of results of joint ventures
12B
9.4
(9.4)
–
–
–
Impairment of joint venture
8B
(22.2)
–
(22.2)
22.2
–
Share of results of associates
13B
16.0
(1.2)
14.8
17.3
32.1
Operating (loss)/profit
(14.6)
6.7
(7.9)
170.9
163.0
Net finance costs
6
(36.1)
(6.6)
(42.7)
(3.2)
(45.9)
(Loss)/profit before tax
(50.7)
0.1
(50.6)
167.7
117.1
Tax charge
7A
(0.7)
(0.1)
(0.8)
–
(0.8)
(Loss)/profit for the year attributable to equity shareholders
(51.4)
–
(51.4)
167.7
116.3
a Adjusting items, described above as ‘Capital and other’, are set out in note 9A.
b Proportionally consolidated figure includes £13.6m (2022: £13.7m) of contingent rents calculated by reference to tenants’ turnover.
133Hammerson plc Annual Report 2023
2. Profit/(loss) for the year continued
2022
Proportionally consolidated
Share of Sub-total
Reported Property before Capital and
Group interests adjustments other Adjusted
a
Note £m £m £m £m £m
Revenue
4
131.4
143.6
275.0
–
275.0
Gross rental income
b
3A, 4
90.2
125.0
215.2
–
215.2
Service charge income
4
24.2
18.6
42.8
–
42.8
114.4
143.6
258.0
–
258.0
Service charge expenses
(27.8)
(22.5)
(50.3)
–
(50.3)
Cost of sales
5A
(9.3)
(21.2)
(30.5)
(2.4)
(32.9)
Net rental income
77.3
99.9
177.2
(2.4)
174.8
Gross administration costs
5A
(64.6)
(0.3)
(64.9)
5.1
(59.8)
Other income
4
17.0
–
17.0
–
17.0
Net administration expenses
(47.6)
(0.3)
(47.9)
5.1
(42.8)
Profit from operating activities
29.7
99.6
129.3
2.7
132.0
Revaluation losses on properties
11
(82.7)
(138.3)
(221.0)
221.0
–
Disposals and assets held for sale
– Profit/(loss) on sale of properties
8A
0.7
(0.1)
0.6
(0.6)
–
– Income from assets held for sale
8A
–
(1.6)
(1.6)
1.6
–
Change in fair value of other investments
(0.1)
–
(0.1)
0.1
–
Other net gains/(losses)
0.6
(1.7)
(1.1)
1.1
–
Share of results of joint ventures
12B
(41.5)
41.5
–
–
–
Share of results of associates
13B
(7.1)
1.8
(5.3)
32.7
27.4
Operating (loss)/profit
(101.0)
2.9
(98.1)
257.5
159.4
Net finance costs
6
(63.0)
(2.6)
(65.6)
11.6
(54.0)
(Loss)/profit before tax
(164.0)
0.3
(163.7)
269.1
105.4
Tax charge
7A
(0.2)
(0.3)
(0.5)
–
(0.5)
(Loss)/profit for the year attributable to equity shareholders
(164.2)
–
(164.2)
269.1
104.9
For footnotes see page 133.
134Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
3. Segmental analysis
The Group’s reportable segments are determined by the internal performance reported to the Chief Operating Decision Makers which has been
determined to be the Chief Executive Officer and the Group Executive Committee. Such reporting is both by sector and geographic location as these
demonstrate different characteristics and risks, are managed by separate teams and are the basis on which resources are allocated.
The Group evaluates the performance of its portfolio by aggregating its wholly owned properties and joint operations in the ‘Reported Group’ with share of
joint ventures and associates which are under the Group’s management (‘Share of Property interests’) on a proportionally consolidated line-by-line basis.
The Group does not proportionally consolidate the Group’s investment in Value Retail as this is not under the Group’s management, and instead monitors
the performance of this investment separately as its share of results of associates as reported under IFRS.
The Group’s activities presented on a proportionally consolidated basis including Share of Property interests are:
– Flagship destinations
– Developments and other
Total assets are not monitored by segment and resource allocation is based on the distribution of property assets between segments.
A. INCOME BY SEGMENT
Gross rental income Adjusted net rental income
2023 2022 2023 2022
£m £m £m £m
Flagship destinations
UK
92.8
90.5
72.9
74.3
France
58.6
61.8
49.4
53.8
Ireland
40.0
37.3
36.3
33.6
191.4
189.6
158.6
161.7
Developments and other
17.0
25.6
8.9
13.1
Managed portfolio – proportionally consolidated
208.4
215.2
167.5
174.8
Less Share of Property interests
(115.6)
(125.0)
Reported Group
92.8
90.2
135Hammerson plc Annual Report 2023
3. Segmental analysis continued
B. INVESTMENT AND DEVELOPMENT PROPERTY ASSETS BY SEGMENT
2023
2022
Property Capital Revaluation Property Capital Revaluation
valuation expenditure losses valuation expenditure losses
Note £m £m £m £m £m £m
Flagship destinations
UK
863.1
13.9
(21.8)
871.0
12.8
(90.2)
France
1,003.3
14.3
(15.2)
1,241.0
33.3
(57.2)
Ireland
629.7
5.4
(37.5)
676.4
4.9
(20.1)
2,496.1
33.6
(74.5)
2,788.4
51.0
(167.5)
Developments and other
280.0
13.3
(44.6)
431.7
21.9
(53.5)
Managed portfolio – proportionally consolidated
2,776.1
46.9
(119.1)
3,220.1
72.9
(221.0)
Value Retail
1,885.7
27.5
(7.7)
1,887.0
6.6
(60.7)
Group portfolio
4,661.8
74.4
(126.8)
5,107.1
79.5
(281.7)
Less Value Retail
13C
(1,885.7)
(27.5)
7.7
(1,887.0)
(6.6)
60.7
Less Share of Property interests
a
12C
(1,379.9)
(27.3)
73.9
(1,722.9)
(35.2)
138.3
Less trading properties
b
–
–
–
(36.2)
–
–
Reported Group
11
1,396.2
19.6
(45.2)
1,461.0
37.7
(82.7)
a The property valuation of Share of Property interests comprises UK Flagship destinations: £741.8m (2022: £738.6m); France flagship destinations: £nil
(2022: £166.8m), Ireland flagship destinations: £485.2m (2022: £525.0m) and Developments and other £152.9m (2022: £292.5m).
b In December 2019, the Group exchanged contracts for the forward sale of Italik, subject to completion of the development which was opened in 2021, resulting
in the sale becoming unconditional although in accordance with a contractually allowed option and subsequent agreement, the purchaser deferred completion to
2023. At 31 December 2022, the 75% of Italik contracted for sale was included within Trading properties at the agreed sale price less forecast costs to complete
with final completion occurring on 11 March 2023 as explained in note 8.
C. ANALYSIS OF NON-CURRENT ASSETS
2023 2022
£m £m
UK
1,116.6
1,135.4
Continental Europe
a
2,165.5
2,518.0
Ireland
491.9
533.4
b
3,774.0
4,186.8
a Includes the Group’s associate stake in Value Retail which has interests across Europe, including UK and Ireland.
b Includes financial instruments of £30.2m (2022: £38.2m) of which £21.4m (2022: £28.4m) relates to the UK and the remainder of £8.8m (2022: £9.8m) to
Continental Europe.
4. Revenue
2023 2022
Note £m £m
Base rent
69.6
68.2
Turnover rent
4.7
5.5
Car park income
* 10.9
10.8
Lease incentive recognition
3.2
2.7
Other rental income
4.4
3.0
Gross rental income
2
92.8
90.2
Service charge income
* 26.6
24.2
Other income
– Property fee income
* 8.4
11.5
– Joint venture and associate management fees
6.5
5.5
*
14.9
17.0
134.3
131.4
* Revenue for those categories marked * amounted to £52.4m (2022: £52.0m) and is recognised under IFRS 15 ‘Revenue from Contracts with Customers’.
All other revenue is recognised in accordance with IFRS 16 ‘Leases’.
136Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
5. Costs
A. PROFIT FROM OPERATING ACTIVITIES IS STATED AFTER CHARGING:
2023 2022
Cost of sales £m £m
Ground and equity rents payable
1.1
0.7
Inclusive lease costs recovered through rent
2.8
3.1
Other property outgoings
a
10.6
6.4
Change in provision for amounts not yet recognised in the income statement
0.2
(0.9)
14.7
9.3
2023 2022
Gross administration costs
Note
£m £m
Employee costs
5B
35.2
42.0
Depreciation of plant and equipment
0.6
1.0
Depreciation of right-of-use assets
2.4
3.1
Other costs
b
12.9
13.4
Business transformation costs
9A
13.2
5.1
64.3
64.6
a Includes charges and credits in respect of expected credit losses as set out in note 14D.
b Comprises predominantly professional fees (mainly audit, valuation and legal), Corporate office costs and insurances and IT related costs.
B. EMPLOYEE COSTS
2023 2022
£m £m
Wages and salaries (including bonuses)
24.4
31.3
Social security
4.9
5.5
Other pension costs
2.4
3.0
Share-based remuneration
3.6
3.0
*
35.3
42.8
Capitalised into development properties
(0.1)
(0.8)
Total
35.2
42.0
* Share-based remuneration comprises the share element of performance related bonuses (where the other element is paid in cash) and longer term share plans,
some of which contain performance conditions and where further information is provided in the Directors’ Remuneration report.
C. EMPLOYEE NUMBERS
2023 2022
number number
Average number of employees
199
370
Number of employees whose costs are recharged to occupiers, included above
24
145
137Hammerson plc Annual Report 2023
5. Costs continued
D. SHARE-BASED PAYMENTS
Share-based remuneration charge comprises a number of equity settled share schemes which the Group operates for certain employees of the Group.
At 31 December 2023, there were no shares exercisable under any of these schemes (2022: none). Details of each scheme are as follows:
Restricted Share Schemes (RSS and RSSBB) and Long Term Incentive Plan (LTIP)
The RSS applies to the Executive Directors, through the grant of £nil cost options, which vest one third each on the third, fourth and fifth anniversaries of
the date of the award (with an additional two years minimum holding period). There is a vesting performance underpin which is measured at the end of
the third anniversary. The RSS superseded the Company’s LTIP in 2019. The RSSBB is a new scheme in 2023 which applies to members of the Group
Executive Committee, excluding Executive Directors, also through the grant of £nil cost options but which vest in total on the third anniversary of the date
of the award. In common with the RSS there is also a vesting performance underpin measured at the end of the third anniversary.
2023 2022
number number
1 January
15,576,073
11,100,742
Granted
11,855,560
5,244,132
Lapsed
(441,574)
(768,801)
31 December
26,990,059
15,576,073
Weighted average
2023
2022
Fair value of awards granted
24p
32p
Share price at date of exercise
n/a
n/a
Remaining contractual life
2.1 years
2.3 years
Restricted Share Plan (RSP)
UK eligible employees are granted £nil cost options which have a vesting period of three years from the date of the award. There are no performance criteria
to be satisfied for the awards to vest, the employee only needs to be in employment on the third anniversary from the date of the award.
2023 2022
number number
1 January
18,410,753
16,570,535
Granted
4,192,451
7,273,007
Exercised
(8,735,735)
(1,210,999)
Forfeited
(1,428,812)
(4,221,790)
31 December
12,438,657
18,410,753
Weighted average
2023
2022
Fair value of awards granted
24p
32p
Share price at date of exercise
23p
32p
Remaining contractual life
1.2 years
1.3 years
Deferred Bonus Share Scheme (DBSS)
The DBSS is open to Executive Directors and senior management where a deferred element of their annual performance related incentive plan is settled in
shares which are deferred for a period of two years from the date of the award and where the other element of this plan is settled in cash. The share awards
are satisfied through the grant of £nil cost options.
2023 2022
number number
1 January
2,761,940
714,478
Granted
4,705,583
2,761,940
Exercised
–
(714,478)
31 December
7,467,523
2,761,940
Weighted average
2023
2022
Fair value of awards granted
24p
32p
Share price at date of exercise
n/a
31p
Remaining contractual life
1.1 years
1.3 years
138Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
5. Costs continued
D. SHARE-BASED PAYMENTS continued
Other schemes
French share scheme
Eligible employees in France are granted £nil cost options which have a vesting period of two years, and a further holding period of two years, from the date
of the award. There are no performance conditions to be satisfied for the awards to vest, the employee only needs to be in employment on the second
anniversary of the date of the award.
Share Incentive Plan (SIP)
Eligible UK employees are invited to invest up to £1,800 per annum tax free in SIP partnership shares. As an incentive to participants, the Company will
match each partnership share with one matching share. The vesting period is three years from the date of the award.
Savings related share option scheme
UK eligible employees may participate in this scheme by choosing to enter into one or more contracts for a three or five year term and save up to a total of
£500 per month. At the end of the contract employees may exercise an option to purchase shares in the Company at the option price, which is set at the
beginning of the contract at a discount of up to 20% of the prevailing share price at the time the invitation is launched.
E. AUDITOR REMUNERATION
2023 2022
£m £m
Audit of the Group and Company financial statements
1.0
0.9
Audit of subsidiaries
0.5
0.5
Audit related assurance services, including interim review
0.3
0.3
1.8
1.7
Non-audit services
a
0.1
–
Total auditor remuneration
b
1.9
1.7
a 2023: Related to reporting accountant work in respect of the £100m bond issue.
b Excludes the additional amounts of £0.2m (2022: £0.2m) incurred in respect of the Group’s share of audit services undertaken on behalf of its joint ventures.
6. Net finance costs
2023 2022
Note £m £m
Discount on redemption of bonds
9A,17A
4.3
–
Interest receivable on derivatives
12.8
21.4
Bank and other interest receivable
18.1
4.7
Finance income
35.2
26.1
Interest on bank loans and overdrafts
(4.5)
(4.6)
Interest on bonds and related charges
(59.2)
(61.4)
Interest on senior notes and related charges
(5.4)
(6.0)
Interest on obligations under head leases
(2.1)
(2.1)
Interest on other lease obligations
(0.1)
(0.1)
Other interest payable
(0.7)
(0.4)
Gross interest costs
(72.0)
(74.6)
Interest capitalised in respect of properties under development
–
1.2
(72.0)
(73.4)
Debt and loan facility cancellation costs
9A
–
(1.3)
Fair value gains/(losses) on derivatives
9A
0.7
(14.4)
Finance costs
(71.3)
(89.1)
Net finance costs
(36.1)
(63.0)
139Hammerson plc Annual Report 2023
7. Tax charge
A. TAX CHARGE
2023 2022
£m £m
Foreign current tax
0.7
0.2
Tax charge
0.7
0.2
The Group’s tax charge remains low because it has tax exempt status in its principal operating countries. The Group has been a REIT in the UK since 2007
and a SIIC in France since 2004. These tax regimes exempt the Group’s property income and gains from corporate taxes, provided a number of conditions
in relation to the Group’s activities are met. These conditions include, but are not limited to, distributing at least 90% of the Group’s UK tax exempt profits
as property income distributions (PID) with equivalent tests of 95% on French tax exempt property profits and 70% of tax exempt property gains. Based
on preliminary calculations, the Group has met the REIT and SIIC conditions for 2023. The residual businesses in both the UK and France are subject to
corporation tax as normal. The Irish assets are held in a QIAIF which provides similar tax benefits to those of a UK REIT but which subjects dividends and
certain excessive interest payments to a 20% withholding tax. The Group is committed to remaining in these tax exempt regimes.
The Group operates in a number of jurisdictions and is subject to periodic reviews and challenges by local tax authorities on a range of tax matters during its
normal course of business. Tax impacts can be uncertain until a conclusion is reached with the relevant tax authority or through a legal process. The Group
uses in-house expertise when assessing uncertain tax positions and seeks the advice of external professional advisors where appropriate. The Group
believes that its tax liability accruals are adequate for all open tax years based on its assessment of many factors, including tax laws and prior experience.
B. TAX CHARGE RECONCILIATION
2023 2022
Note £m £m
Loss before tax
2
(50.7)
(164.0)
(Profit)/loss after tax of joint ventures
12B
(9.4)
41.5
(Profit)/loss after tax of associates
13B
(16.0)
7.1
Loss on ordinary activities before tax
(76.1)
(115.4)
Tax at the UK corporation tax rate of 25% (2022: 19%)
(19.0)
(21.9)
UK REIT tax exemption
12.8
6.2
French SIIC tax exemption
4.0
6.4
Irish QIAIF tax exemption
2.3
1.2
Losses for the year not utilised
–
7.1
Non-deductible and other items
0.6
1.2
Tax charge
0.7
0.2
C. UNRECOGNISED DEFERRED TAX
A deferred tax asset is not recognised for UK revenue losses or capital losses where their future utilisation is uncertain. At 31 December 2023, the total of
such losses was £556m (2022: £601m) and £645m (2022: £650m) respectively, and the potential tax effect of these was £139m (2022: £150m) and
£161m (2022: £162m) respectively.
Deferred tax is not provided on potential gains on investments in subsidiaries and joint ventures when the Group can control whether gains crystallise and
it is probable that gains will not arise in the foreseeable future. At 31 December 2023, the total of such gains was £133m (2022: £133m) and the potential
tax effect before the offset of losses was £33m (2022: £33m).
If a UK REIT sells a property within three years of completion of development, the REIT exemption will not apply. However, the Group had no completed
properties falling within this timeframe but also has available capital losses to cover taxes arising if the circumstance were to arise.
Deferred tax is also not recognised in respect of withholding tax on taxable events on the basis the Group controls when such taxable events may occur.
140Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
8. Disposals and impairment
A. DISPOSALS
Year ended 31 December 2023
On 31 March 2023, the Group raised gross proceeds of €164m (£144m) from the disposal of its 25% associate stake in Italie Deux in Paris and the wholly
owned Italik extension. 75% of the Italik extension had been classified as a trading property up to the point of disposal.
On 21 April 2023, the Group completed the sale of its 50% joint venture investment in Centrale and Whitgift in Croydon for gross proceeds of £70m. Also
during the year the Group raised further gross proceeds of £2m from the sale of ancillary non-core land.
In total these disposals resulted in a loss on sale of £19.1m as included in the Share of Property Interests in note 2. In addition there was a profit on sale of
properties of £1.3m in the Reported Group.
Year ended 31 December 2022
The profit on the sale of properties of £0.7m includes the disposal of Victoria, Leeds which was sold on 25 February 2022 for gross proceeds of £120m and
several post completion adjustments arising mainly from historical disposals in prior periods.
Also, on 15 March 2022, the Group completed the sale of its joint venture investment in Silverburn for gross proceeds of £70m. The Group had exchanged
contracts for this sale on 14 December 2021 such that this investment was classified as assets held for sale at 31 December 2021 at £71.4m. In 2022,
£nil gain/loss on disposal was recognised. However, income generated during the period of £1.6m was included in Adjusted earnings as shown in note 9A.
B. IMPAIRMENT ON DERECOGNITION OF JOINT VENTURES
Year ended 31 December 2023
At 31 December 2022, the Group’s Highcross and O’Parinor joint ventures, in which the Group had 50% and 25% interests respectively had £125m of
debt secured against the property interests which was non-recourse to the Group. In both cases the loans were in breach of certain conditions and the
Group had been working constructively with the respective lenders on options to realise “best value” for all stakeholders.
On 9 February 2023, a receiver was appointed to administer Highcross for the benefit of the creditors and, as a result of no longer having joint control the
Group derecognised its share of assets and liabilities, including the property value and £80m of debt. There was no loss on derecognition as the Group’s
joint venture investment in Highcross had been fully impaired at 31 December 2021, from which date the Group had ceased recognising the results of this
joint venture in the consolidated income statement.
On 30 June 2023, the lenders for O’Parinor took control of the joint venture. The Group therefore fully impaired its joint venture investment by £22.2m and
derecognised its share of assets and liabilities, including the property value of £61m and £45m of secured debt. The impairment has increased by £0.1m
from 30 June 2023 due to additional costs of disposal.
141Hammerson plc Annual Report 2023
9. Key alternative performance measures
Headline earnings has been calculated in accordance with the requirements of the Johannesburg Stock Exchange listing requirements. EPRA earnings
and EPRA net assets are calculated in accordance with guidance issued by the European Public Real Estate recommended bases. Reconciliations from
Reported Group (IFRS) earnings after tax and Net assets attributable to equity shareholders to these measures are set out below.
A. ALTERNATIVE EARNINGS MEASURES
2023 2022
£m £m
Reported Group
Loss after tax
(51.4)
(164.2)
Adjustments:
Revaluation losses on managed portfolio
119.1
221.0
Disposals
– Loss/(profit) on sale of properties
a
17.8
(0.6)
– Recycled exchange gains on disposal of overseas property interests
b
(20.1)
–
Joint venture related
– Impairment of investment
c
22.2
–
Associates (Value Retail):
– Revaluation losses
d
7.7
60.7
– Deferred tax
d, e
7.4
0.1
– Change in fair value of financial assets
d
0.2
(0.2)
Sub-total: Adjustments for Headline earnings
154.3
281.0
Associates (Value Retail):
– Change in fair value of derivatives
d, f
11.1
(18.1)
– Change in fair value of participative loans
d, f
(9.1)
(9.8)
Included in Financing:
– Discount on redemption of bonds
g
(4.3)
–
– Debt and loan facility cancellation costs
g
–
1.3
– Change in fair value of derivatives
g
1.1
10.3
Change in fair value of other investments
h
1.1
0.1
Sub-total: Adjustments for EPRA earnings
154.2
264.8
Included in profit from operating activities:
– Business transformation costs
i
13.2
5.1
– Change in provision for amounts not yet recognised in the income statement
j
0.3
(2.4)
– Income from assets held for sale
k
–
1.6
Total: Adjustments for Adjusted earnings
167.7
269.1
Headline earnings
102.9
116.8
EPRA earnings
102.8
100.6
Adjusted earnings
116.3
104.9
a As shown in note 2, includes profit on the sale of properties of £1.3m (2022: loss of £0.6m) and losses on the sale of joint venture and associates of £19.1m
(2022: £nil) principally relating to the sales of Italie Deux and Croydon. See note 8 for further details.
b Exchange gains previously recognised in equity until disposal, principally in relation to Italie Deux and O’Parinor.
c Impairment resulting from derecognition of O’Parinor joint venture, see note 8 for details.
d Adjustments in respect of associates. Total for 2023 is £17.3m (2022: £32.7m).
e In accordance with EPRA guidance, the tax effects of EPRA adjustments (including those for disposals) are excluded.
f Change in fair value of derivatives and participative loans: such items are excluded because they represent gains and losses arising from market rather than
settlement revaluation methodologies which differ from the accruals basis upon which all other non-investment property related assets and liabilities are
measured. Such a treatment is a form of revaluation gain or loss created by an assumption that the derivatives or loans will be settled before their maturity.
Such gains and losses are excluded from Adjusted earnings as they are unrealised and conflict with the commercial reasons for entering into such arrangements
and are expected to be held to maturity.
142Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
9. Key alternative performance measures continued
g Financing items comprise:
2023
2022
Share of Share of
Reported Property Reported Property
Group interests Total Group interests Total
£m £m £m £m £m £m
Discount on redemption of bonds
(4.3)
–
(4.3)
–
–
–
Debt and loan facility cancellation costs
–
–
–
1.3
–
1.3
Change in fair value of derivatives
f
(0.7)
1.8
1.1
14.4
(4.1)
10.3
(5.0)
1.8
(3.2)
15.7
(4.1)
11.6
The write off of up-front fees arising on early cancellation or early repayment redemption premiums are considered outside of day-to-day financing activities and
are accordingly excluded from Adjusted earnings.
h Relates to the fair value movement in a small residual investment in VIA Outlets.
i Business transformation costs comprise:
2023 2022
£m £m
Employee severance
6.3
3.4
System related costs
2.9
1.7
Consultancy costs
4.0
–
13.2
5.1
Such costs relate to the strategic and operational review undertaken by the new management team and which is an integral part of the Group’s strategy
announced during 2021. The related costs are incremental and do not form part of underlying trading. These costs have been incurred since the announcement
of the strategy and further transformation activities will take place in 2024.
j The Group makes a charge for expected credit losses in accordance with the technical interpretation of IFRS 9 irrespective of whether the income to which the
provision relates has been recognised in the income statement or is deferred on the balance sheet. Because of the mismatch this causes between the cost of
provision being recognised in one accounting period and the related revenue being recognised in a different accounting period, the adjustment eradicates this
distortion. For 2023 the adjustment of £0.3m (2022: £(2.4m)) is split £0.2m (2022: £(0.9m)) for the Reported Group and £0.1m (2022: (£1.5m)) for Share of
Property interests.
k Income from assets held for sale in 2022 relates to the Group’s joint venture investment in Silverburn, which was transferred to assets held for sale as at
31 December 2021 and where the sale completed in March 2022. A £nil gain/loss was generated on the sale which comprised certain additional costs and
accruals of £1.6m which were offset by net income generated in the period up to the point of disposal (after taking account of distributions) of £1.6m. The Group
excludes losses on disposal from its EPRA and Adjusted earnings, and because this offset of income generated in the period against the loss causes the income to
be excluded, the income is added back as an adjusting item in order to reflect the fact that the property remained under the Group’s ownership and management
up until completion of the disposal and is therefore considered to form part of underlying earnings. There were no assets held for sale as at 31 December 2023.
143Hammerson plc Annual Report 2023
9. Key alternative performance measures continued
B. ALTERNATIVE NET ASSET MEASURES
The Group uses the EPRA best practice guidelines incorporating three measures of net asset value: EPRA Net Tangible Assets (NTA), Net Reinstatement
Value (NRV) and Net Disposal Value (NDV). EPRA NTA is considered to be the most relevant measure for the Group.
A reconciliation between IFRS net assets and the three EPRA net asset valuation metrics is set out below.
2023
Share of
Reported Property
Group interests Value Retail Total
£m £m £m £m
Reported balance sheet net assets (equity shareholders’ funds)
2,462.6
–
–
2,462.6
Change in fair value of borrowings
a
36.7
(0.2)
–
36.5
EPRA NDV
2,499.1
Deduct change in fair value of borrowings
a
(36.7)
0.2
–
(36.5)
Deferred tax – 50% share
b
0.2
0.1
100.7
101.0
Fair value of currency swaps as a result of interest rates
c
1.0
–
–
1.0
Fair value of interest rate swaps
0.7
(1.3)
(22.0)
(22.6)
EPRA NTA
2,542.0
Deferred tax – remaining 50% share
b
0.2
–
100.7
100.9
Purchasers’ costs
d
302.9
–
–
302.9
EPRA NRV
2,945.8
2022
Share of
Reported Property
Group interests Value Retail Total
£m £m £m £m
Reported balance sheet net assets (equity shareholders’ funds)
2,586.4
–
–
2,586.4
Change in fair value of borrowings
a
216.2
(0.7)
–
215.5
EPRA NDV
2,801.9
Deduct change in fair value of borrowings
a
(216.2)
0.7
–
(215.5)
Deferred tax – 50% share
b
0.2
0.1
99.4
99.7
Fair value of currency swaps as a result of interest rates
c
(0.9)
–
–
(0.9)
Fair value of interest rate swaps
2.1
(6.3)
(47.3)
(51.5)
EPRA NTA
2,633.7
Deferred tax – remaining 50% share
b
0.2
–
99.4
99.6
Purchasers’ costs
d
330.0
–
–
330.0
EPRA NRV
3,063.3
a Applicable for EPRA NDV calculation only and hence the adjustment is reversed for EPRA NTA and EPRA NRV.
b EPRA guidance stipulates exclusion of 50% of deferred tax for EPRA NTA purposes.
c Excludes impact of foreign exchange.
d Represents property transfer taxes and fees payable should the Group’s entire property portfolio, (including Value Retail), be acquired at year end market values.
144Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
10. (Loss)/earnings per share and net asset value per share
The calculations of the (loss)/earnings per share (EPS) measures set out below are based on (loss)/profit after tax, Headline profit after tax, EPRA profit
after tax and Adjusted profit after tax attributable to owners of the parent and the weighted average number of shares in issue during the year.
Headline earnings per share has been calculated in accordance with the requirements of the Johannesburg Stock Exchange listing requirements. EPRA
has issued recommended bases for the calculation of certain per share information which includes net asset value per share as well as earnings per share.
The calculation of Headline, EPRA and Adjusted earnings which includes a reconciliation to Reported IFRS earnings is set out in note 9A.
Basic EPS measures are calculated by dividing the earnings attributable to the equity shareholders of the Company by the weighted average number of
shares outstanding during the year. Diluted EPS measures are calculated on the same basis as basic EPS but with a further adjustment to the weighted
average number of shares outstanding to assume conversion of all potentially dilutive ordinary shares. Such potentially dilutive ordinary shares comprise
share options and awards granted to colleagues where the exercise price is less than the average market price of the Company’s ordinary shares during the
year and any unvested shares which have met, or are expected to meet, the performance conditions at the end of the year. To the extent that there is no
dilution, this arises due to the anti-dilutive effect of all such shares.
Net assets per share comprise net assets calculated in accordance with EPRA guidelines, as set out in note 9B, divided by the number of shares in issue.
A. NUMBER OF ORDINARY SHARES FOR PER SHARE CALCULATIONS
31 December 31 December
2023 2022
million million
Shares in issue (for purposes of net asset per share calculations)
5,002.3
5,002.3
Year ended Year ended
31 December 31 December
2023 2022
Weighted average number of shares
For purposes of basic EPS
4,971.4
4,938.9
Effect of potentially dilutive shares (share options)
10.6
10.3
For purposes of diluted EPS (excluding Reported Group)
4,982.0
4,949.2
B. (LOSS)/EARNINGS PER SHARE
(Loss)/earnings
(Loss)/earnings per share
Basic
Diluted
Year ended Year ended Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December 31 December 31 December
2023 2022 2023 2022 2023 2022
Note £m £m pence pence pence pence
Reported Group
(51.4)
(164.2)
(1.0)p
(3.3)p
(1.0)p
(3.3)p
Headline
9A
102.9
116.8
2.1p
2.4p
2.1p
2.4p
EPRA
9A
102.8
100.6
2.1p
2.0p
2.1p
2.0p
Adjusted
9A
116.3
104.9
2.3p
2.1p
2.3p
2.1p
C. NET ASSET VALUE PER SHARE
Net asset value Net asset value per share
31 December 31 December 31 December 31 December
2023 2022 2023 2022
Note £m £m pence pence
EPRA NDV
9B
2,499.1
2,801.9
50p
56p
EPRA NTA
9B
2,542.0
2,633.7
51p
53p
EPRA NRV
9B
2,945.8
3,063.3
59p
61p
145Hammerson plc Annual Report 2023
11. Properties
2023
2022
Investment Trading Investment Trading
properties properties Total properties properties Total
£m £m £m £m £m £m
At 1 January
1,461.0
36.2
1,497.2
1,561.4
34.3
1,595.7
Revaluation losses
(45.2)
–
(45.2)
(82.7)
–
(82.7)
Capital expenditure
19.6
–
19.6
37.7
–
37.7
Capitalised interest
–
–
–
1.2
–
1.2
Disposals (see note 8)
(11.9)
(36.2)
(48.1)
(125.3)
–
(125.3)
Exchange adjustment
(27.3)
–
(27.3)
68.7
1.9
70.6
At 31 December
1,396.2
–
1,396.2
1,461.0
36.2
1,497.2
2023
2022
Long Long
Freehold leasehold Total Freehold leasehold Total
£m £m £m £m £m £m
Valuation analysis by tenure
734.0
662.2
1,396.2
805.3
691.9
1,497.2
Properties are stated at fair value, valued by professionally qualified external valuers in accordance with RICS Valuation – Global Standards as follows:
Valuer
Properties
CBRE
UK flagships, Developments and other properties
Jones Lang LaSalle
UK flagships, French flagships, Developments and other properties
Cushman and Wakefield
Brent Cross, Irish flagships, Development and other, Value Retail (not included in the table above)
As detailed in note 1F due to the estimation and judgement required in the valuations which are derived from data that is not publicly available, consistent
with EPRA’s guidance, these valuations are classified as Level 3 in the IFRS 13 fair value hierarchy. A reconciliation of the Group portfolio valuation to
Reported Group is shown in note 3B. A listing of properties is in Table 22 of the Additional Information.
A. INVESTMENT PROPERTIES – SENSITIVITY ANALYSIS ON VALUATIONS
Estimated rental value
As at 31 December 2023
Valuation
Nominal equivalent yield
(ERV)
-100bp +100bp +10% -10%
Proportionally consolidated – including Value Retail
£m
£m £m £m £m
Flagship destinations
UK
863
121
(94)
86
(86)
France
1,003
246
(165)
100
(100)
Ireland
630
132
(93)
63
(63)
2,496
499
(352)
249
(249)
Developments and other
280
n/a
n/a
n/a
n/a
Managed portfolio
2,776
n/a
n/a
n/a
n/a
Value Retail
1,886
310
(216)
*
186
(186)
Group portfolio
4,662
As at 31 December 2023
Nominal equivalent yield
ERV p/m
Minimum Maximum Average Minimum Maximum Average
Key unobservable inputs % % % £ £ £
Flagship destinations
UK
7.3
9.8
8.1
230
440
350
France
4.8
7.5
5.1
180
560
470
Ireland
5.7
7.4
5.8
420
590
550
Value Retail
5.3
6.5
5.6
1,000
*
5,600
2,300
2
* Nominal equivalent yield and ERV are not key observable inputs for Value Retail. Exit yields and net operating income have therefore been used as proxies.
Valuations are performed on a discounted cash flow basis with discount rates used ranging from 9% to 11% (average of 9.9%).
146Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
11. Properties continued
B. TENANT INCENTIVES
Unamortised tenant incentives are included within capital expenditure and impaired as appropriate whereby the provision is calculated in accordance with
the considerations described in note 18D.
Proportionally
Reported Group consolidated
2023 2022 2023 2022
£m £m £m £m
Unamortised tenant incentives
13.0
13.2
26.6
29.4
Provision
(1.9)
(2.4)
(3.5)
(5.3)
11.1
10.8
23.1
24.1
C. JOINT OPERATIONS
Investment properties included a 50% interest in the Ilac Centre, Dublin and a 50% interest in Pavilions, Swords totalling £144.5m (2022: £151.4m).
These properties are jointly controlled in co-ownership with Irish Life Assurance plc.
12. Investment in joint ventures
The Group’s investments in joint ventures form part of the Share of Property interests to arrive at management’s analysis of the Group on a proportionally
consolidated basis as explained in note 3 and set out in note 2.
The Group and its partners invest principally by way of equity investment. However, where applicable, non-equity (loan) balances have been included
within non-current other payables as a liability of the joint venture. Joint ventures comprise prime urban real estate consisting of Flagship destinations and
Developments and other properties.
A. INVESTMENTS AT 31 DECEMBER 2023
Joint venture
Partner
Principal property
Share
United Kingdom
Bishopsgate Goodsyard Regeneration Limited
Ballymore Properties
The Goodsyard
50%
Brent Cross Partnership
Aberdeen Standard Investments
Brent Cross
41%
Bristol Alliance Limited Partnership
AXA Real Estate
Cabot Circus
50%
Grand Central Limited Partnership
CPP Investments
Grand Central
50%
The Bull Ring Limited Partnership
CPP Investments
Bullring
50%
The Oracle Limited Partnership
ADIA
The Oracle
50%
The West Quay Limited Partnership
GIC
Westquay
50%
Ireland
Dundrum Retail Limited Partnership/Dundrum Car Park
PIMCO
Dundrum
50%
Limited Partnership
The results of disposals of interests in joint ventures are included up to the point of disposal except for where such disposals form part of assets held for sale
whereby they are excluded for the whole year.
During the year, and as explained in note 8, the Group disposed of its 50% interest in Croydon and also derecognised its 50% investment in Highcross and
25% investment in O’Parinor.
Figures in the following tables include, where applicable, adjustments to align to the Group’s accounting policies and exclude balances which are
eliminated on consolidation. For 2023, Goodsyard, Croydon (up to its disposal in April 2023), Highcross (up to date of derecognition in February 2023)and
O’Parinor (up to date of derecognition in June 2023) are included in ‘Other’. Croydon is separately disclosed in 2022.
147Hammerson plc Annual Report 2023
B. RESULTS
2023
100% share
Grand
Brent Cross Cabot Circus Bullring Central The Oracle Westquay Dundrum Other Total Group share
£m £m £m £m £m £m £m £m £m £m
Gross rental income
28.6
29.4
48.5
8.0
23.5
28.9
59.2
17.5
243.6
114.4
Net rental income
24.1
22.8
39.7
4.4
14.7
23.2
52.6
13.7
195.2
90.4
Administration expenses
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.3)
–
(0.9)
(0.4)
Profit from operating activities
24.0
22.7
39.6
4.3
14.6
23.1
52.3
13.7
194.3
90.0
Revaluation (losses)/gains on properties
(9.6)
(6.1)
21.3
(13.8)
(22.3)
(2.8)
(74.4)
(41.8)
(149.5)
(73.9)
Operating profit/(loss)
14.4
16.6
60.9
(9.5)
(7.7)
20.3
(22.1)
(28.1)
44.8
16.1
Finance income
0.4
0.4
0.5
–
0.2
0.7
4.6
2.9
9.7
4.1
Finance costs
(0.4)
(0.7)
–
(0.1)
–
(0.4)
(17.1)
(7.4)
(26.1)
(10.7)
Profit/(loss) before tax
14.4
16.3
61.4
(9.6)
(7.5)
20.6
(34.6)
(32.6)
28.4
9.5
Tax charge
–
–
–
–
(0.1)
–
–
–
(0.1)
(0.1)
Profit/(loss) for the year
a
14.4
16.3
61.4
(9.6)
(7.6)
20.6
(34.6)
(32.6)
28.3
9.4
Share of distributions received by the Group
9.8
7.5 10.0 14.9 2.0 – 3.5 – 47.7 47.7
C. ASSETS AND LIABILITIES
2023
100% share
Grand
Brent Cross Cabot Circus Bullring Central The Oracle Westquay Dundrum Other Total Group share
£m £m £m £m £m £m £m £m £m £m
Non-current assets
Investment properties
388.0
234.9
575.0
67.0
184.1
283.5
1,011.0
89.0
2,832.5
1,379.9
Other non-current assets
12.8
13.6
0.3
2.6
–
4.2
2.2
–
35.7
16.7
400.8
248.5
575.3
69.6
184.1
287.7
1,013.2
89.0
2,868.2
1,396.6
Current assets
Cash and cash equivalents
16.9
18.8
28.8
9.0
14.8
31.3
77.8
0.6
198.0
97.3
Other current assets
5.4
6.0
7.5
9.9
4.3
7.9
8.0
0.1
49.1
23.6
22.3
24.8
36.3
18.9
19.1
39.2
85.8
0.7
247.1
120.9
Current liabilities
Loans – secured
–
–
–
–
–
–
(520.0)
–
(520.0)
(260.0)
Other payables
(14.9)
(13.1)
(22.0)
(10.8)
(8.9)
(17.0)
(9.1)
(0.5)
(96.3)
(46.0)
(14.9)
(13.1)
(22.0)
(10.8)
(8.9)
(17.0)
(529.1)
(0.5)
(616.3)
(306.0)
Non-current liabilities
Obligations under head leases
(12.8)
(14.1)
–
(2.8)
–
(4.2)
–
–
(33.9)
(15.8)
Other payables – due to Group companies
b
–
–
–
–
–
(348.2)
–
(49.3)
(397.5)
–
– other parties and deferred tax
(0.9)
(0.2)
(0.6)
(0.4)
(0.4)
(348.9)
(1.0)
(49.5)
(401.9)
(2.5)
(13.7)
(14.3)
(0.6)
(3.2)
(0.4)
(701.3)
(1.0)
(98.8)
(833.3)
(18.3)
Net assets/(liabilities)
b
394.5
245.9 589.0 74.5 193.9 (391.4) 568.9 (9.6) 1,665.7 1,193.2
a Following the impairment of Highcross to £nil in 2021, the Group ceased to equity account for its investment in this joint venture such that although gross balance
sheet items on a proportionally consolidated basis remain included in the Group’s figures, it was excluded from all income statement metrics including revaluation
losses. The effect of this is that the Group’s share of results was £nil and the cumulative losses restricted shown on the balance sheet therefore represents the
Group’s share of losses which exceed the Group’s investment of £nil.
b The Group’s long term loan due from Westquay of £348.2m (2022: £348.2m) has been impaired by its share of the net liabilities of Westquay of £195.7m
(2022: £201.1m). The Group’s total loans due from joint ventures set out in notes 18A and 26A are shown net of this impairment.
12. Investment in joint ventures continued
148Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
B. RESULTS
2023
100% share
Grand
Brent Cross Cabot Circus Bullring Central The Oracle Westquay Dundrum Other Total Group share
£m £m £m £m £m £m £m £m £m £m
Gross rental income
28.6
29.4
48.5
8.0
23.5
28.9
59.2
17.5
243.6
114.4
Net rental income
24.1
22.8
39.7
4.4
14.7
23.2
52.6
13.7
195.2
90.4
Administration expenses
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.3)
–
(0.9)
(0.4)
Profit from operating activities
24.0
22.7
39.6
4.3
14.6
23.1
52.3
13.7
194.3
90.0
Revaluation (losses)/gains on properties
(9.6)
(6.1)
21.3
(13.8)
(22.3)
(2.8)
(74.4)
(41.8)
(149.5)
(73.9)
Operating profit/(loss)
14.4
16.6
60.9
(9.5)
(7.7)
20.3
(22.1)
(28.1)
44.8
16.1
Finance income
0.4
0.4
0.5
–
0.2
0.7
4.6
2.9
9.7
4.1
Finance costs
(0.4)
(0.7)
–
(0.1)
–
(0.4)
(17.1)
(7.4)
(26.1)
(10.7)
Profit/(loss) before tax
14.4
16.3
61.4
(9.6)
(7.5)
20.6
(34.6)
(32.6)
28.4
9.5
Tax charge
–
–
–
–
(0.1)
–
–
–
(0.1)
(0.1)
Profit/(loss) for the year
a
14.4
16.3
61.4
(9.6)
(7.6)
20.6
(34.6)
(32.6)
28.3
9.4
Share of distributions received by the Group
9.8
7.5
10.0
14.9
2.0
–
3.5
–
47.7
47.7
C. ASSETS AND LIABILITIES
2023
100% share
Grand
Brent Cross Cabot Circus Bullring Central The Oracle Westquay Dundrum Other Total Group share
£m £m £m £m £m £m £m £m £m £m
Non-current assets
Investment properties
388.0
234.9
575.0
67.0
184.1
283.5
1,011.0
89.0
2,832.5
1,379.9
Other non-current assets
12.8
13.6
0.3
2.6
–
4.2
2.2
–
35.7
16.7
400.8
248.5
575.3
69.6
184.1
287.7
1,013.2
89.0
2,868.2
1,396.6
Current assets
Cash and cash equivalents
16.9
18.8
28.8
9.0
14.8
31.3
77.8
0.6
198.0
97.3
Other current assets
5.4
6.0
7.5
9.9
4.3
7.9
8.0
0.1
49.1
23.6
22.3
24.8
36.3
18.9
19.1
39.2
85.8
0.7
247.1
120.9
Current liabilities
Loans – secured
–
–
–
–
–
–
(520.0)
–
(520.0)
(260.0)
Other payables
(14.9)
(13.1)
(22.0)
(10.8)
(8.9)
(17.0)
(9.1)
(0.5)
(96.3)
(46.0)
(14.9)
(13.1)
(22.0)
(10.8)
(8.9)
(17.0)
(529.1)
(0.5)
(616.3)
(306.0)
Non-current liabilities
Obligations under head leases
(12.8)
(14.1)
–
(2.8)
–
(4.2)
–
–
(33.9)
(15.8)
Other payables – due to Group companies
b
–
–
–
–
–
(348.2)
–
(49.3)
(397.5)
–
– other parties and deferred tax
(0.9)
(0.2)
(0.6)
(0.4)
(0.4)
(348.9)
(1.0)
(49.5)
(401.9)
(2.5)
(13.7)
(14.3)
(0.6)
(3.2)
(0.4)
(701.3)
(1.0)
(98.8)
(833.3)
(18.3)
Net assets/(liabilities)
b
394.5
245.9
589.0
74.5
193.9
(391.4)
568.9
(9.6)
1,665.7
1,193.2
a Following the impairment of Highcross to £nil in 2021, the Group ceased to equity account for its investment in this joint venture such that although gross balance
sheet items on a proportionally consolidated basis remain included in the Group’s figures, it was excluded from all income statement metrics including revaluation
losses. The effect of this is that the Group’s share of results was £nil and the cumulative losses restricted shown on the balance sheet therefore represents the
Group’s share of losses which exceed the Group’s investment of £nil.
b The Group’s long term loan due from Westquay of £348.2m (2022: £348.2m) has been impaired by its share of the net liabilities of Westquay of £195.7m
(2022: £201.1m). The Group’s total loans due from joint ventures set out in notes 18A and 26A are shown net of this impairment.
12. Investment in joint ventures continued
149Hammerson plc Annual Report 2023
B. RESULTS continued
2022
100% share
Grand
Brent Cross Cabot Circus Bullring Central The Oracle Westquay Croydon Highcross Dundrum Other Total Group share
£m £m £m £m £m £m £m £m £m £m £m £m
Gross rental income
28.0
27.8
45.2
9.9
22.1
29.1
14.3
20.6
55.0
21.4
273.4
119.4
Net rental income
26.5
23.9
37.2
6.4
15.7
24.5
0.5
14.3
48.1
22.6
219.7
95.5
Administration expenses
–
–
0.1
(0.1)
–
–
(0.2)
(0.3)
(0.4)
(0.1)
(1.0)
(0.3)
Profit from operating activities
26.5
23.9
37.3
6.3
15.7
24.5
0.3
14.0
47.7
22.5
218.7
95.2
Revaluation losses on properties
(35.8)
(30.0)
(35.0)
(4.6)
(44.1)
(29.3)
(54.2)
(52.1)
(34.2)
(12.5)
(331.8)
(132.1)
Adjustment for income from assets held for sale
c
–
–
–
–
–
–
–
–
–
(3.2)
(3.2)
(1.6)
Operating (loss)/profit
(9.3)
(6.1)
2.3
1.7
(28.4)
(4.8)
(53.9)
(38.1)
13.5
6.8
(116.3)
(38.5)
Finance income
–
–
0.3
–
0.1
–
0.2
7.4
–
–
8.0
0.3
Finance costs
(0.3)
(0.5)
–
(0.1)
–
(0.2)
–
(5.0)
(1.9)
(5.7)
(13.7)
(3.0)
(Loss)/profit before tax
(9.6)
(6.6)
2.6
1.6
(28.3)
(5.0)
(53.7)
(35.7)
11.6
1.1
(122.0)
(41.2)
Tax charge
–
–
–
–
–
–
(0.5)
–
–
–
(0.5)
(0.3)
(Loss)/profit for the year
a
(9.6)
(6.6)
2.6
1.6
(28.3)
(5.0)
(54.2)
(35.7)
11.6
1.1
(122.5)
(41.5)
Share of distributions received by the Group
11.8
15.8 23.9 – 9.3 – – – 2.6 – 63.4 63.4
C. ASSETS AND LIABILITIES
2022
100% share
Grand
Brent Cross Cabot Circus Bullring Central The Oracle Westquay Croydon Highcross Dundrum Other Total Group share
£m £m £m £m £m £m £m £m £m £m £m £m
Non-current assets
Investment properties
396.6
237.3
540.5
78.5
201.1
285.3
108.9
125.7
1,088.9
379.3
3,442.1
1,620.0
Other non-current assets
12.8
13.5
2.7
2.6
–
4.2
0.6
6.1
8.9
–
51.4
26.7
409.4
250.8
543.2
81.1
201.1
289.5
109.5
131.8
1,097.8
379.3
3,493.5
1,646.7
Current assets
Cash and cash equivalents
13.0
24.1
18.0
24.7
11.6
16.5
13.9
22.2
73.3
13.9
231.2
110.9
Other current assets
d
4.2
7.1
9.8
19.0
3.6
3.9
65.4
5.0
3.7
19.5
141.2
61.3
17.2
31.2
27.8
43.7
15.2
20.4
79.3
27.2
77.0
33.4
372.4
172.2
Current liabilities
Loans – secured
–
–
–
–
–
–
–
(158.8)
–
(186.4)
(345.2)
(126.1)
Other payables
(13.6)
(21.3)
(20.9)
(7.3)
(9.7)
(10.9)
(16.0)
(35.7)
(14.9)
(11.8)
(162.1)
(80.7)
(13.6)
(21.3)
(20.9)
(7.3)
(9.7)
(10.9)
(16.0)
(194.5)
(14.9)
(198.2)
(507.3)
(206.8)
Non-current liabilities
Loans – secured
–
–
–
–
–
–
–
–
(530.9)
–
(530.9)
(265.5)
Obligations under head leases
(12.8)
(14.1)
–
(2.8)
–
(4.2)
–
–
–
–
(33.9)
(15.8)
Other payables – due to Group companies
b, e
–
–
–
–
–
(348.2)
(25.3)
–
–
(45.4)
(418.9)
–
– other parties and deferred tax
e
(0.8)
(0.6)
(1.0)
(0.6)
(0.7)
(348.8)
(43.3)
(0.2)
(0.9)
(55.8)
(452.7)
(6.3)
(13.6)
(14.7)
(1.0)
(3.4)
(0.7)
(701.2)
(68.6)
(0.2)
(531.8)
(101.2)
(1,436.4)
(287.6)
Cumulative losses restricted
a
–
–
–
–
–
–
–
35.7
–
–
35.7
17.9
Net assets/(liabilities)
b
399.4
246.0 549.1 114.1 205.9 (402.2) 104.2 – 628.1 113.3 1,957.9 1,342.4
c Comprises income in respect of Silverburn as described in note 9A.
d Other current assets in Croydon included restricted monetary assets of £41.8m relating to cash held in escrow for specified development costs.
e Dundrum loans of £42.6m at 100%, previously included in ‘other payables’ were reclassified to equity.
12. Investment in joint ventures continued
150Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
B. RESULTS continued
2022
100% share
Grand
Brent Cross Cabot Circus Bullring Central The Oracle Westquay Croydon Highcross Dundrum Other Total Group share
£m £m £m £m £m £m £m £m £m £m £m £m
Gross rental income
28.0
27.8
45.2
9.9
22.1
29.1
14.3
20.6
55.0
21.4
273.4
119.4
Net rental income
26.5
23.9
37.2
6.4
15.7
24.5
0.5
14.3
48.1
22.6
219.7
95.5
Administration expenses
–
–
0.1
(0.1)
–
–
(0.2)
(0.3)
(0.4)
(0.1)
(1.0)
(0.3)
Profit from operating activities
26.5
23.9
37.3
6.3
15.7
24.5
0.3
14.0
47.7
22.5
218.7
95.2
Revaluation losses on properties
(35.8)
(30.0)
(35.0)
(4.6)
(44.1)
(29.3)
(54.2)
(52.1)
(34.2)
(12.5)
(331.8)
(132.1)
Adjustment for income from assets held for sale
c
–
–
–
–
–
–
–
–
–
(3.2)
(3.2)
(1.6)
Operating (loss)/profit
(9.3)
(6.1)
2.3
1.7
(28.4)
(4.8)
(53.9)
(38.1)
13.5
6.8
(116.3)
(38.5)
Finance income
–
–
0.3
–
0.1
–
0.2
7.4
–
–
8.0
0.3
Finance costs
(0.3)
(0.5)
–
(0.1)
–
(0.2)
–
(5.0)
(1.9)
(5.7)
(13.7)
(3.0)
(Loss)/profit before tax
(9.6)
(6.6)
2.6
1.6
(28.3)
(5.0)
(53.7)
(35.7)
11.6
1.1
(122.0)
(41.2)
Tax charge
–
–
–
–
–
–
(0.5)
–
–
–
(0.5)
(0.3)
(Loss)/profit for the year
a
(9.6)
(6.6)
2.6
1.6
(28.3)
(5.0)
(54.2)
(35.7)
11.6
1.1
(122.5)
(41.5)
Share of distributions received by the Group
11.8
15.8
23.9
–
9.3
–
–
–
2.6
–
63.4
63.4
C. ASSETS AND LIABILITIES
2022
100% share
Grand
Brent Cross Cabot Circus Bullring Central The Oracle Westquay Croydon Highcross Dundrum Other Total Group share
£m £m £m £m £m £m £m £m £m £m £m £m
Non-current assets
Investment properties
396.6
237.3
540.5
78.5
201.1
285.3
108.9
125.7
1,088.9
379.3
3,442.1
1,620.0
Other non-current assets
12.8
13.5
2.7
2.6
–
4.2
0.6
6.1
8.9
–
51.4
26.7
409.4
250.8
543.2
81.1
201.1
289.5
109.5
131.8
1,097.8
379.3
3,493.5
1,646.7
Current assets
Cash and cash equivalents
13.0
24.1
18.0
24.7
11.6
16.5
13.9
22.2
73.3
13.9
231.2
110.9
Other current assets
d
4.2
7.1
9.8
19.0
3.6
3.9
65.4
5.0
3.7
19.5
141.2
61.3
17.2
31.2
27.8
43.7
15.2
20.4
79.3
27.2
77.0
33.4
372.4
172.2
Current liabilities
Loans – secured
–
–
–
–
–
–
–
(158.8)
–
(186.4)
(345.2)
(126.1)
Other payables
(13.6)
(21.3)
(20.9)
(7.3)
(9.7)
(10.9)
(16.0)
(35.7)
(14.9)
(11.8)
(162.1)
(80.7)
(13.6)
(21.3)
(20.9)
(7.3)
(9.7)
(10.9)
(16.0)
(194.5)
(14.9)
(198.2)
(507.3)
(206.8)
Non-current liabilities
Loans – secured
–
–
–
–
–
–
–
–
(530.9)
–
(530.9)
(265.5)
Obligations under head leases
(12.8)
(14.1)
–
(2.8)
–
(4.2)
–
–
–
–
(33.9)
(15.8)
Other payables – due to Group companies
b, e
–
–
–
–
–
(348.2)
(25.3)
–
–
(45.4)
(418.9)
–
– other parties and deferred tax
e
(0.8)
(0.6)
(1.0)
(0.6)
(0.7)
(348.8)
(43.3)
(0.2)
(0.9)
(55.8)
(452.7)
(6.3)
(13.6)
(14.7)
(1.0)
(3.4)
(0.7)
(701.2)
(68.6)
(0.2)
(531.8)
(101.2)
(1,436.4)
(287.6)
Cumulative losses restricted
a
–
–
–
–
–
–
–
35.7
–
–
35.7
17.9
Net assets/(liabilities)
b
399.4
246.0
549.1
114.1
205.9
(402.2)
104.2
–
628.1
113.3
1,957.9
1,342.4
c Comprises income in respect of Silverburn as described in note 9A.
d Other current assets in Croydon included restricted monetary assets of £41.8m relating to cash held in escrow for specified development costs.
e Dundrum loans of £42.6m at 100%, previously included in ‘other payables’ were reclassified to equity.
12. Investment in joint ventures continued
151Hammerson plc Annual Report 2023
12. Investment in joint ventures continued
D. RECONCILIATION OF MOVEMENTS IN INVESTMENT IN JOINT VENTURES
2023 2022
£m £m
At 1 January
1,342.4
1,451.8
Share of results of joint ventures
9.4
(41.5)
Advances
8.3
4.0
Cash distributions (including interest)
a
(55.0)
(84.0)
Other receivables
(6.8)
(5.3)
Disposals (see note 8)
(98.9)
–
Exchange and other movements
(6.2)
17.4
At 31 December
1,193.2
1,342.4
a Comprises distributions of £47.7m (2022: £63.4m) and interest previously accrued of £7.3m (2022: £20.6m).
13. Investment in associates
A. PERCENTAGE SHARE
2023 2022
Principal property Share Share
Value Retail
Various Villages across Europe
a
40%
40%
Italie Deux
Italie Deux, Paris
b
–
25%
a Interest is calculated based on the share of profits to which the Group is entitled and excludes individual interests which are loss making.
b The Group disposed of its 25% interest in Italie Deux on 31 March 2023. See note 8 for further details.
Analysis of the results and assets and liabilities of the Group’s investment in associates is set out below and with the exception of Value Retail, these results
form part of the Share of Property interests to arrive at management’s analysis of the Group on a proportionally consolidated basis as explained in note 3
and set out in note 2.
B. RESULTS
2023
Value Retail
Italie Deux
Total
100% share Group share 100% share Group share 100% share Group share
£m £m £m £m £m £m
Gross rental income
482.7
162.4
4.8
1.2
487.5
163.6
Net rental income
330.6
114.5
4.6
1.2
335.2
115.7
Administration expenses
(156.9)
(51.4)
–
–
(156.9)
(51.4)
Profit from operating activities
173.7
63.1
4.6
1.2
178.3
64.3
Revaluation gains/(losses) on properties
15.8
(7.7)
–
–
15.8
(7.7)
Operating profit
189.5
55.4
4.6
1.2
194.1
56.6
Interest costs
(97.0)
(35.2)
–
–
(97.0)
(35.2)
Fair value losses on derivatives
(47.5)
(11.1)
–
–
(47.5)
(11.1)
Fair value gains on participative loans
–
15.6
–
–
–
15.6
Net finance costs
(144.5)
(30.7)
–
–
(144.5)
(30.7)
Profit before tax
45.0
24.7
4.6
1.2
49.6
25.9
Current tax charge
(12.9)
(2.5)
–
–
(12.9)
(2.5)
Deferred tax charge
(28.9)
(7.4)
–
–
(28.9)
(7.4)
Profit for the year
3.2
14.8
4.6
1.2
7.8
16.0
Adjusted earnings – Value Retail
32.1
Adjusted earnings – Italie Deux
1.2
Adjusted earnings – Total
33.3
152Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
13. Investment in Associates continued
B. RESULTS continued
2022
Value Retail
Italie Deux
Total
100% share Group share 100% share Group share 100% share Group share
£m £m £m £m £m £m
Gross rental income
434.1
148.0
22.4
5.6
456.5
153.6
Net rental income
288.5
101.3
17.8
4.4
306.3
105.7
Administration expenses
(144.3)
(48.0)
(0.1)
–
(144.4)
(48.0)
Profit from operating activities
144.2
53.3
17.7
4.4
161.9
57.7
Revaluation losses on properties
(98.1)
(60.7)
(24.8)
(6.2)
(122.9)
(66.9)
Operating profit/(loss)
46.1
(7.4)
(7.1)
(1.8)
39.0
(9.2)
Interest costs
(79.6)
(27.7)
(0.1)
–
(79.7)
(27.7)
Fair value gains on derivatives
57.0
18.1
–
–
57.0
18.1
Fair value gains on participative loans
–
15.0
–
–
–
15.0
Net finance (costs)/income
(22.6)
5.4
(0.1)
–
(22.7)
5.4
Profit/(loss) before tax
23.5
(2.0)
(7.2)
(1.8)
16.3
(3.8)
Current tax charge
(15.3)
(3.2)
–
–
(15.3)
(3.2)
Deferred tax charge
(8.8)
(0.1)
–
–
(8.8)
(0.1)
Loss for the year
(0.6)
(5.3)
(7.2)
(1.8)
(7.8)
(7.1)
Adjusted earnings – Value Retail
27.4
Adjusted earnings – Italie Deux
4.4
Adjusted earnings – Total
31.8
C. ASSETS AND LIABILITIES
2023
2022
100% share
100% share
Value Group Value Italie Group
Retail share Retail Deux Total share
£m £m £m £m £m £m
Non-current assets
Investment properties
5,142.1
1,885.7
5,151.0
411.6
5,562.6
1,989.9
Other non-current assets
321.3
93.0
370.7
–
370.7
114.2
5,463.4
1,978.7
5,521.7
411.6
5,933.3
2,104.1
Current assets
Cash and cash equivalents
193.8
64.4
288.6
27.4
316.0
93.6
Other current assets
116.0
43.2
98.9
11.8
110.7
40.7
309.8
107.6
387.5
39.2
426.7
134.3
Total assets
5,773.2
2,086.3
5,909.2
450.8
6,360.0
2,238.4
Current liabilities
Loans
(159.3)
(87.8)
(314.7)
–
(314.7)
(108.1)
Other payables
(143.2)
(103.2)
(148.4)
(17.0)
(165.4)
(104.6)
(302.5)
(191.0)
(463.1)
(17.0)
(480.1)
(212.7)
Non-current liabilities
Loans
(1,973.1)
(706.1)
(1,787.1)
–
(1,787.1)
(653.6)
Participative loans
(398.5)
(98.5)
(387.1)
–
(387.1)
(95.7)
Other payables, including deferred tax
(665.7)
(188.1)
(650.7)
(3.1)
(653.8)
(185.2)
(3,037.3)
(992.7)
(2,824.9)
(3.1)
(2,828.0)
(934.5)
Total liabilities
(3,339.8)
(1,183.7)
(3,288.0)
(20.1)
(3,308.1)
(1,147.2)
Net assets
2,433.4
902.6
2,621.2
430.7
3,051.9
1,091.2
Reverse participative loans
398.5
212.4
387.1
–
387.1
205.9
2,831.9
1,115.0
3,008.3
430.7
3,439.0
1,297.1
153Hammerson plc Annual Report 2023
D. RECONCILIATION OF MOVEMENTS IN INVESTMENT IN ASSOCIATES
2023
2022
Value Italie Value Italie
Retail Deux Total Retail Deux Total
£m £m £m £m £m £m
At 1 January
1,189.4
107.7
1,297.1
1,140.8
106.2
1,247.0
Share of results of associates
14.8
1.2
16.0
(5.3)
(1.8)
(7.1)
Capital return
–
–
–
–
(2.0)
(2.0)
Distributions
(66.3)
–
(66.3)
(4.4)
(0.6)
(5.0)
Share of other comprehensive (loss)/gain of associate
a
(8.8)
–
(8.8)
23.3
–
23.3
Disposals
–
(108.6)
(108.6)
–
–
–
Exchange and other movements
(14.1)
(0.3)
(14.4)
35.0
5.9
40.9
At 31 December
b
1,115.0
–
1,115.0
1,189.4
107.7
1,297.1
a Relates to the change in fair value of derivative financial instruments in an effective hedge relationship within Value Retail.
b Includes accumulated impairment to the investment in Value Retail of £94.3m (2022: £94.3m) which was recognised in the year ended 31 December 2020 and
is equivalent to the notional goodwill on this investment.
14. Trade and other receivables
A. TRADE AND OTHER RECEIVABLES – NON-CURRENT
2023 2022
£m £m
Net pension asset (see note 22C)
–
1.4
Other receivables
1.9
1.8
1.9
3.2
B. TRADE AND OTHER RECEIVABLES – CURRENT
2023 2022
£3 £m
Trade receivables
* 27.6
23.4
VAT receivable
9.5
16.7
Balances due from joint venture entities
1.4
8.3
Accrued interest receivable
11.0
11.6
Other receivables
21.3
23.9
Corporation tax
0.1
0.1
Prepayments
3.2
1.9
74.1
85.9
* Credit risk is explained further in note 18D.
154Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
14. Trade and other receivables continued
C. TRADE (TENANT) RECEIVABLES – AGEING ANALYSIS AND PROVISIONING
2023
2022
Gross trade Net trade Gross trade Net trade
receivables Provision receivables receivables Provision receivables
£m £m £m £m £m £m
Not yet due
11.9
(1.2)
10.7
3.2
(0.6)
2.6
0–3 months overdue
5.5
(1.0)
4.5
4.0
(0.8)
3.2
3–12 months overdue
8.1
(2.6)
5.5
8.1
(2.3)
5.8
More than 12 months overdue
16.1
(9.2)
6.9
25.7
(13.9)
11.8
41.6
(14.0)
27.6
41.0
(17.6)
23.4
D. TRADE (TENANT) RECEIVABLES – SEGMENTAL ANALYSIS AND PROVISIONING
2023
2022
Gross trade Net trade Gross trade Net trade
receivables Provision receivables receivables Provision receivables
Proportionally consolidated £m £m £m £m £m £m
UK
25.7
(6.1)
19.6
29.1
(12.5)
16.6
France
29.5
(10.7)
18.8
40.0
(17.2)
22.8
Ireland
4.6
(1.8)
2.8
5.0
(2.6)
2.4
Managed portfolio
59.8
(18.6)
41.2
74.1
(32.3)
41.8
Less Share of Property interests
(18.2)
4.6
(13.6)
(33.1)
14.7
(18.4)
Reported Group
41.6
(14.0)
27.6
41.0
(17.6)
23.4
Provisions against trade receivables includes £0.9m (2022: £0.2m) against receivables whereby the income has been deferred on the balance sheet.
On a proportionally consolidated basis, a further £1.0m (2022: £1.4m) relates to Share of Property interests. The charge made for making these provisions
is excluded from Adjusted earnings as described in note 9A.
E. ANALYSIS OF MOVEMENTS IN PROVISIONS
2023 2022
Loss allowance £m £m
At 1 January
17.6
27.4
Additions to provisions charged to the income statement
9.4
4.0
Disposals
–
(1.3)
Release of provisions
(8.0)
(10.7)
Utilisation
(5.4)
(2.8)
Exchange
0.4
1.0
At 31 December
14.0
17.6
155Hammerson plc Annual Report 2023
15. Restricted monetary assets
2023
2022
Current Non-current Current Non-current
£m £m £m £m
Cash held in respect of tenants and co-owners
a
2.2
–
8.6
–
Cash held in escrow
b
–
21.4
–
21.4
2.2
21.4
8.6
21.4
a Comprises amounts held to meet future services charge costs and related expenditure such as marketing expenditure, where local laws or regulations restrict the
use of such cash.
b Comprises funds placed in escrow in 2020 by Hammerson plc to satisfy potential obligations under indemnities granted in favour of Directors and officers to the
extent that such obligations are not already satisfied by the Company or covered by Directors’ and Officers’ liability insurance. The funds will remain in trust until
the later of December 2026, or, if there are outstanding claims at that date, the date on which all claims are resolved.
16.Trade and other payables
2023
2022
Current Non-current Current Non-current
£m £m £m £m
Trade payables
14.3
–
22.7
–
Pension liability
1.0
7.3
0.9
7.8
VAT payable
12.6
–
17.8
–
Balances due to joint venture entities
3.9
–
23.1
–
Balances due to co-owners
a
2.2
–
8.7
–
Accruals – interest
35.9
–
37.6
–
– capital expenditure
12.3
–
14.0
–
– withholding tax
6.0
–
–
–
– other
20.1
–
33.6
–
Deferred income
3.1
–
1.1
–
Distributions received in advance from Value Retail
–
25.1
–
18.1
Guarantee and tenant deposits
2.4
11.1
–
11.1
Lease liabilities
b
1.2
2.7
2.7
6.9
Employee severance provision
c
5.3
–
–
–
Other payables
9.5
9.3
6.1
12.4
129.8
55.5
168.3
56.3
a Reflects the liability associated with restricted monetary assets held on behalf of co-owners in order to meet future service charge costs and related expenditure.
b Of the non-current portion of £2.7m (2022: £6.9m), £0.6m (2022: £1.8m) is payable between one to two years, £1.2m (2022: £2.4m) from two to five years and
£0.9m (2022: £2.7m) in more than five years.
c Provision for employee severance costs included in business transformation costs in note 5.
156Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
17. Loans
A. LOAN PROFILE
2023 2022
£m £m
Unsecured
£300.0m (2022: £200m) 7.25% sterling bonds due 2028
a
292.2
199.0
€700.0m 1.75% eurobonds due 2027
b
600.8
612.3
£211.2m (2022: £300.0m) 6% sterling bonds due 2026
a
211.1
299.1
£338.3m (2022: £350.0m) 3.5% sterling bonds due 2025
a
337.3
348.3
Unamortised facility fees
(2.2)
(3.1)
Senior notes due 2031
5.0
5.1
Senior notes due 2028
11.0
11.3
Senior notes due 2026
60.7
62.0
Senior notes due 2024
–
112.4
c
1,515.9
1,646.4
Senior notes due 2024 – shown in current liabilities
108.6
–
1,624.5
1,646.4
a On 31 August 2023 the Group issued £100m of bonds (at a discount of £6.7m), adding to the existing £200m, 7.25% sterling bond issue due 2028. The newly
issued bonds therefore having an effective interest rate of 9.1%. The proceeds were used to redeem £88.8m of the 6% sterling bonds due in 2026, and £11.7m of
the 3.5% sterling bonds due in 2025 by way of a tender. The tendered bonds were redeemed at a discount, and after associated costs, the Group recognised a net
gain of £4.3m which is shown in finance income in note 6, this discount has been excluded from the Group’s Adjusted earnings as shown in note 9A.
b The coupon is linked to two sustainability performance targets, both of which will be tested in December 2025 against a 2019 benchmark. If the targets are not
met, a total of 37.5 basis points per annum, or €2.625m (£2.3m) per target, will be payable in addition to the final year’s coupon. The Group has made certain
assumptions which support not increasing the effective interest rate, as a result of the possibility of failing to meet the targets. Planned future initiatives which will
assist the Group in achieving the targets include the introduction of energy efficient projects, the generation of additional on or offsite energy and driving
compliance with relevant energy performance legislation. The Group continues to make steady progress against both targets.
c Maturity analysis is set out in note 18G.
B. UNDRAWN COMMITTED FACILITIES
The Group has the following revolving credit facilities (RCF), which are all in sterling unless otherwise indicated, expiring as follows:
2023 2022
£m £m
2021
RCF expiring 2024
50.0
150.0
2021
JPY7.7bn RCF expiring 2026
a
43.2
48.9
2021/22 RCF expiring 2026
a
563.0
463.0
b
656.2
661.9
a On 29 April 2023, the Group exercised its option to extend the maturity of these RCFs by one year from 2025 to 2026.
b £0.8m (2022: £2.1m) of RCFs have been utilised (although not drawn) to support ancillary facilities leaving £655.4m (2022: £659.8m) available to the Group.
C. MATURITY ANALYSIS OF UNDRAWN COMMITTED FACILITIES
2023 2022
Expiry £m £m
Within one year
50.0
–
Within one to two years
–
50.0
Within two to five years
606.2
611.9
656.2
661.9
157Hammerson plc Annual Report 2023
18. Financial Instruments and Risk Management
A. FINANCIAL RISK MANAGEMENT AND STRATEGY
The Group’s financial risk management strategy seeks to set financial limits for treasury activity to ensure they are in line with the risk appetite of the Group.
The Group’s activities expose it to certain financial risks comprising liquidity risk, market risk (comprising interest rate and foreign currency risk), credit risk
and capital risk.
The Group’s treasury function, which operates under treasury policies approved by the Board, maintains internal guidelines for interest cover, gearing,
unencumbered assets and other credit ratios and both the current and projected financial position against these guidelines are monitored regularly.
To manage the risks set out above, the Group uses certain derivative financial instruments to mitigate potentially adverse effects on the Group’s financial
performance. Derivative financial instruments are used to manage exposure to fluctuations in foreign currency exchange rates and interest rates but are
not employed for speculative purposes.
Financial instruments are grouped and accounted for as set out in the table below.
2023
2022
Current Non-current Total Current Non-current Total
Note £m £m £m £m £m £m
Balances due from joint ventures
–
201.8
201.8
–
239.1
239.1
Trade and other receivables
a
14A,14B
61.3
1.9
63.2
67.2
1.8
69.0
Restricted monetary assets
15
2.2
21.4
23.6
8.6
21.4
30.0
Cash and cash equivalents
472.3
–
472.3
218.8
–
218.8
Financial assets at amortised cost
760.9
556.9
Investment in associates: participative loans
13C
–
212.4
212.4
–
205.9
205.9
Other investments
–
8.8
8.8
–
9.8
9.8
Assets at fair value through profit and loss
b
221.2
215.7
Derivative financial instruments – assets
5.2
–
5.2
0.1
7.0
7.1
Derivative financial instruments – liabilities
(2.3)
(15.0)
(17.3)
(16.1)
(23.7)
(39.8)
Derivatives at fair value through profit and loss
c
(12.1)
(32.7)
Trade and other payables
d
16
(101.8)
(48.2)
(150.0)
(148.5)
(48.5)
(197.0)
Loans
17
(108.6)
(1,515.9)
(1,624.5)
–
(1,646.4)
(1,646.4)
Obligations under head leases
19
(0.1)
(37.3)
(37.4)
(0.2)
(38.1)
(38.3)
Financial liabilities at amortised cost
(1,811.9)
(1,881.7)
a Excludes net pension asset, VAT, corporation tax and prepayments of £12.8m (2022: £20.1m).
b Gain of £14.5m (2022: £15.0m) recognised in income statement.
c Gain of £13.5m (2022: £15.2m) recognised in income statement.
d Excludes pension liabilities, VAT, withholding tax, deferred income and provisions totalling £35.3m (£27.6m).
B. LIQUIDITY RISK
Cash levels are monitored to ensure sufficient resources are available to meet the Group’s operational requirements. Short term money market deposits
are used to manage cash resources to maximise the rate of return, giving due consideration to risk.
Liquidity requirements are met with an appropriate mix of short and longer term debt whereby the Group borrows predominantly on an unsecured basis in
order to maintain operational flexibility at a low operational cost. Loans and facilities are arranged to maintain short term liquidity and ensure an appropriate
maturity profile. Long term debt comprises mainly the Group’s fixed rate unsecured bonds and private placement senior notes. Short term funding is raised
principally through syndicated revolving credit facilities from a range of banks and financial institutions with which the Group maintains strong working
relationships. Analysis of the Group’s loans and facilities together with their maturity is set out in note 17.
158Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
18. Financial Instruments and Risk Management continued
C. INTEREST RATE AND CURRENCY RISK
Interest rate risk
Interest rate swaps are used to manage the interest rate basis of the Group’s debt, allowing changes from fixed to floating rates or vice versa. Clear
guidelines exist for the Group’s ratio of fixed to floating debt, interest cover, gearing, unencumbered assets and other credit ratios. The interest rate profile
is measured regularly against these guidelines.
The Group has interest swap agreements totalling £300m which mature in February 2024. Interest is paid at a rate linked to SONIA, and received at a fixed
rate of 6% per annum. The Group defines Borrowings as loans and currency swaps and excludes the fair value of the interest rate swaps as the fair value
crystallises over the life of the instruments rather than at maturity. The Group does not apply hedge accounting to its interest rate swaps.
2023
2022
Sterling US Dollar Euro Total Sterling US Dollar Euro Total
Interest rate profile £m £m £m £m £m £m £m £m
Borrowings (loans and currency swaps)
– Fixed rate
521.5
–
1,114.8
1,636.3
227.1
–
1,136.9
1,364.0
– Floating rate
(611.7)
(4.5)
615.8
(0.4)
(495.9)
(4.9)
813.8
313.0
(90.2)
(4.5)
1,730.6
1,635.9
(268.8)
(4.9)
1,950.7
1,677.0
Offsetting
After taking into account the netting impact included within the Group’s International Swap and Derivatives Association (ISDA) agreements with each
counterparty (which are enforceable on the occurrence of future credit events such as a default), the positions, including accrued interest, would be
derivative financial assets of £3.7m (2022: £6.2m) and derivative financial liabilities of £8.4m (2022: £29.3m). The combined value of derivative financial
instruments was therefore a liability of £4.7m (2022: liability of £23.1m).
Currency risk
The currency profile of the Group’s loans is as follows:
2023
2022
Sterling US Dollar Euro Total Sterling US Dollar Euro Total
£m £m £m £m £m £m £m £m
Bonds
840.6
–
600.8
1,441.4
846.4
–
612.3
1,458.7
Unamortised facility fees
(2.2)
–
–
(2.2)
(3.1)
–
–
(3.1)
Senior notes
30.9
60.3
94.1
185.3
30.9
63.9
96.0
190.8
869.3
60.3
694.9
1,624.5
874.2
63.9
708.3
1,646.4
Hedging
The Group enters into cash flow hedge and net investment relationships to mitigate its exposure to currency risk. The ratio for hedging instruments
designated in both net investment and cash flow hedge relationships was 1:1. Ineffectiveness could be recognised on either hedging relationship due to
significant changes in counterparty credit risk or a reduction in the notional amount of the hedged item during the designated hedging period. However,
no ineffectiveness was recognised in 2023 or 2022.
2023
2022
Current Non-current Total Current Non-current Total
Maturity of fair value of currency swaps £m £m £m £m £m £m
Assets
5.2
–
5.2
–
7.0
7.0
Liabilities
(1.6)
(15.0)
(16.6)
(16.1)
(21.5)
(37.6)
3.6
(15.0)
(11.4)
(16.1)
(14.5)
(30.6)
Cash flow hedges
US dollar loans comprise elements of the Group’s Senior notes as set out above. To manage the impact of foreign exchange movements on these loans,
the Group has used derivatives at an average hedged exchange rate of £1 = $1.387 (2022: £1 = $1.387), to swap all the cash flows to either euro or sterling
where the sterling element is designated as a cash flow hedge with the critical terms of the loans being the same as the related derivatives.
The carrying value of derivatives designated in a cash flow hedge was an asset of £4.9m (2022: £8.3m). This designation allows exchange differences on
hedging instruments to be recognised in the cash flow hedge reserve and then recycled to net finance costs in the consolidated income statement, to offset
against the exchange differences on US dollar loans also recognised in net finance costs.
The cash flow hedge reserve includes a loss of £nil (2022: £0.2m) in respect of continuing cash flow hedges. The cash flows are expected to occur in 2024.
159Hammerson plc Annual Report 2023
18. Financial Instruments and Risk Management continued
C. INTEREST RATE AND CURRENCY RISK continued
Net investment hedges
To manage the foreign currency exposure on its net investments in euro-denominated entities, the Group has designated all euro loans or synthetic euro
loans, including euro-denominated bonds, senior notes and currency swaps, as net investment hedges.
This designation allows exchange differences on hedging instruments to be recognised directly in equity which acts as an offset against the exchange
differences on net investments in euro-denominated entities which are also recognised in equity. The notional and carrying amount of such euro-
denominated liabilities and the average hedged rate is set out below.
2023
2022
Average Average
Euro hedged Euro hedged
notional Carrying exchange notional Carrying exchange
amount amount rate amount amount rate
€m £m € €m £m €
Bonds
700.0
600.8
1.163
700.0
612.3
1.163
Senior notes
108.5
94.1
1.152
108.5
96.0
1.152
Cross currency swaps
484.0
14.2
1.194
484.0
22.2
1.194
Foreign exchange swaps
710.0
0.8
1.154
918.0
16.4
1.151
Total
2,002.5
709.9
2,210.5
746.9
The euro notional amount represents the amount due at maturity without netting any receivable of different currency under the same instrument.
The net investment hedge reserve includes £20.3m (2022: £60.8m) in respect of continuing net investment hedges whereby these are due to mature
between 2024 and 2031.
Sensitivity analysis
Interest risk sensitivity analysis
In managing interest rate and currency risks, the Group aims to reduce the impact of short term fluctuations on the Group’s results. Changes in foreign
exchange and interest rates may have an impact on consolidated earnings over the longer term. The sensitivity has been calculated by applying the interest
rate change to the loans net of their related interest rate swaps.
2023
2022
Change in interest rate
Change in interest rate
+ 1% – 1% + 1% – 1%
Interest rate sensitivity on earnings £m £m £m £m
Income statement
(0.8)
0.8
6.2
(6.3)
Currency risk sensitivity analysis
The sensitivity of the Group’s financial instruments to changes in exchange rates shows the impact on results and other comprehensive income of a 10%
change in the sterling exchange rate against euro by retranslating the year end euro-denominated financial instruments, taking into account forward
foreign exchange contracts. 10% represents management’s assessment of a reasonably possible change in foreign exchange rates over a 12 month
period. The analysis does not reflect the exposure and inherent risk during the year.
2023
2022
Change in exchange rate
Change in exchange rate
+ 10% – 10% + 10% – 10%
Euro currency sensitivity impact on earnings £m £m £m £m
Income statement
–
0.1
(0.4)
0.5
Other comprehensive income
157.3
(192.3)
177.2
(216.6)
The effect on the net gains taken to equity would be more than offset by the effect of exchange rate changes on the euro-denominated assets included
in the Group’s financial statements.
The Group does not have a material currency risk exposure to US dollar transactions and balances.
160Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
18. Financial Instruments and Risk Management continued
D. CREDIT RISK
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss.
The Group’s credit risk arises from trade and other receivables, unamortised tenant incentives, restricted monetary assets, cash and cash
equivalents, balances due from joint ventures and associates, other investments, loans receivable, participative loans to associates and derivative
financial instruments.
Trade (tenant) receivables
The Group’s greatest exposure to credit risk arises principally from trade (tenant) receivables which all have due dates within 12 months. The Group
determines and monitors regularly the level of risk associated with trade receivables and applies the IFRS 9 simplified approach to measuring expected
credit losses applying the methodology, judgements and estimates set out in note 1E and by reference to changes in the levels of default experienced,
tenant credit ratings and wider macroeconomic factors. Analysis of the provision is set out in note 14.
For many trade receivables, the Group obtains security in the form of rental deposits or guarantees which can be called upon if the counterparty is in
default. Both of these serve to limit the potential exposure to credit risk.
Unamortised tenant incentives
Provisioning rates against unamortised tenant incentives are lower than those against trade receivables as the credit risk of tenants not paying rent for
future periods, and hence unamortised tenant incentives not being recovered, is lower than the credit risk on trade receivables currently overdue. The
Group determines and monitors regularly the level of risk and assesses impairment of such balances accordingly and by reference to changes in the levels
of default experienced, tenant credit ratings and wider macroeconomic factors. Details of the provision is set out in note 11B.
Other balances
The credit risk associated with restricted monetary assets, cash and cash equivalents, derivative financial instruments and amounts due from joint
ventures and associates (including loans and participative loans receivable, which are carried at fair value based on the underlying assets) is considered
low, with an assessment of each category set out as follows:
Restricted monetary assets, cash and cash equivalents and derivative financial instruments
Such balances are held with counterparties which are banks that are committed lenders to the Group with high credit ratings assigned by international
credit rating agencies.
Amounts due from joint ventures and associates
Balances due from joint ventures comprise loans from the Group to establish and fund the partnerships which form part of the total investment in joint
ventures. The credit risk of loans due from joint ventures and also associates is monitored by reference to changes in the underlying assets, principally
driven by investment property valuation changes. The most material balance, relating to loans due from The West Quay Limited Partnership (see note 12),
is repayable on demand, although the Group does not expect this loan to be recalled in the foreseeable future. Consequently, the expected credit loss has
been calculated by discounting the outstanding loan balance over the period until it is anticipated that the cash will be realised at the interest rate implicit
in the loan. The resultant expected credit loss was not material to the Group. Accordingly no loss has been recognised.
Investments
The carrying value of investments in joint ventures and associates equates to the Group’s share of the underlying net assets of the investment. The most
significant component of underlying net assets is investment properties, which are carried at fair value meaning that there is no residual credit risk.
Other receivables
Other receivables are grouped based on type, contractual terms, ageing and financial standing of the debtor using the same methodologies and
considerations as for trade receivables. Dependent on the nature of the receivable the credit risk ranges from low to moderate. However, the resulting
provisions are not significant.
E. CAPITAL RISK
The capital structure of the Group comprises of equity and debt, including cash and cash equivalents. The Group’s financing policy is to optimise the weighted
average cost of capital by using an appropriate mix of debt and equity. Further information on loans is provided in note 17 and information on share capital
and reserves is set out in note 20 and the Consolidated statement of changes in equity. The Group reviews regularly its loan covenant compliance.
161Hammerson plc Annual Report 2023
18. Financial Instruments and Risk Management continued
F. FINANCIAL INSTRUMENTS HELD AT FAIR VALUE
Definitions
The Group’s financial instruments are categorised by level of fair value hierarchy prescribed by accounting standards. The different levels are defined
as follows:
– Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
– Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (actual prices) or indirectly
(derived from actual prices)
– Level 3: inputs for the asset or liability that are not based on observable market data (from unobservable inputs)
Fair value valuation technique
Financial instrument
Valuation technique for determining fair value
Unsecured bonds
Quoted market prices
Senior notes
Present value of cash flows discounted using prevailing market interest rates
Unsecured bank loans and overdrafts
Present value of cash flows discounted using prevailing market interest rates
Fair value of currency swaps and interest rate swaps
Present value of cash flows discounted using prevailing market interest rates
Other investments including participative loans to Value Retail
Underlying net asset values of the interests in Villages/centre *
* The assets of the Villages/centre comprise mainly investment properties held at fair value determined by professional valuers.
Fair value hierarchy analysis
2023
2022
Carrying Carrying
amount Fair value amount Fair value
Hierarchy £m £m £m £m
Unsecured bonds
Level 1
1,441.4
1,407.4
1,458.7
1,249.5
Senior notes
Level 2
185.3
180.4
190.8
180.7
Unamortised facility fees
Level 2
(2.2)
–
(3.1)
–
Fair value of currency swaps
Level 2
11.4
11.4
30.6
30.6
Borrowings
1,635.9
1,599.2
1,677.0
1,460.8
Fair value of interest rate swaps
Level 2
0.7
0.7
2.1
2.1
Participative loans to Value Retail
Level 3
212.4
212.4
205.9
205.9
Fair value of other investments
Level 3
8.8
8.8
9.8
9.8
Analysis of movements in Level 3 financial instruments
2023
2022
Participative Other Participative Other
loans investments Total loans investments Total
Level 3 financial instruments £m £m £m £m £m £m
At 1 January
205.9
9.8
215.7
184.8
9.5
194.3
Total gains/(losses) in
– share of results of associates
15.6
–
15.6
15.0
–
15.0
– consolidated income statement
–
(1.1)
(1.1)
–
–
–
– other comprehensive income
(4.4)
0.1
(4.3)
10.5
0.3
10.8
Other movements – advances
(4.7)
–
(4.7)
(4.4)
–
(4.4)
At 31 December
212.4
8.8
221.2
205.9
9.8
215.7
All other factors remaining constant, an increase of 5% in the net asset values of the Villages/centre would increase the carrying amount of the Level 3
financial instruments by £11.8m. Similarly, a decrease of 5% would decrease the carrying amount by £11.8m. The fair values of all other financial assets
and liabilities equate to their book values.
162Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
18. Financial Instruments and Risk Management continued
G. MATURITY ANALYSIS OF FINANCIAL LIABILITIES
The remaining contractual non-discounted cash flows for financial liabilities are as follows:
2023
Less than One to Two to Five to More than
one year two years five years 25 years 25 years Total
Note £m £m £m £m £m £m
Trade and other payables
a
16
101.8
6.6
2.0
39.6
–
150.0
Derivative financial liability cash inflows
(12.7)
(362.3)
–
–
–
(375.0)
Derivative financial liability cash outflows
8.9
372.2
–
–
–
381.1
Loans
b
17
108.6
338.3
1,190.5
5.0
–
1,642.4
Interest
60.2
58.2
100.5
0.3
–
219.2
Obligations under head leases
19
2.2
2.2
6.7
44.8
65.8
121.7
2022
Less than One to Two to Five to More than
one year two years five years 25 years 25 years Total
Note £m £m £m £m £m £m
Trade and other payables
a
16
148.5
10.2
3.3
35.0
–
197.0
Derivative financial liability cash inflows
(13.3)
(30.8)
(362.3)
–
–
(406.4)
Derivative financial liability cash outflows
34.7
18.7
380.9
–
–
434.3
Loans
b
17
–
112.6
1,332.6
216.4
–
1,661.6
Interest
61.1
59.6
127.2
15.1
–
263.0
Obligations under head leases
19
2.3
2.3
6.8
45.2
69.4
126.0
a As defined in note 18A.
b Before taking into account unamortised borrowing costs of £17.9m (2022: £15.2m).
19. Obligations under head leases
2023
2022
Present
value Present value
Minimum of minimum Minimum of minimum
lease Effect of lease lease Effect of lease
payments discounting payments payments discounting payments
Due £m £m £m £m £m £m
Within one year
2.2
(2.1)
0.1
2.3
(2.1)
0.2
Between one and two years
2.2
(2.1)
0.1
2.3
(2.1)
0.2
Between two and five years
6.7
(6.3)
0.4
6.8
(6.4)
0.4
Between five and 25 years
44.8
(39.3)
5.5
45.2
(40.0)
5.2
More than 25 years
65.8
(34.5)
31.3
69.4
(37.1)
32.3
More than one year
119.5
(82.2)
37.3
123.7
(85.6)
38.1
163Hammerson plc Annual Report 2023
20. Share Capital and Other Reserves
A. SHARE CAPITAL
2023
2022
number
£m
number
£m
Called up, allotted and fully paid
Ordinary shares of 5p each
5,002,265,607
250.1
5,002,265,607
250.1
Share capital includes 7,691,247 shares (2022: 7,691,247 shares) held in treasury and 15,850,507 shares (2022: 25,512,208 shares) held in an
employee share trust whereby during the year, purchases of 50,000 shares were made with the balance being issued to employees.
B. OTHER RESERVES
Net
Translation investment Cash flow Total other
reserve hedge hedge reserves
£m £m £m £m
At 1 January 2022
471.1
(362.8)
1.7
110.0
Foreign exchange translation differences
130.7
–
–
130.7
Loss on net investment hedge
–
(103.4)
–
(103.4)
Gain on net investment hedge
–
–
6.3
6.3
Gain on cash flow hedge recycled to net finance costs
–
–
(8.2)
(8.2)
Total comprehensive gain/(loss)
130.7
(103.4)
(1.9)
25.4
At 31 December 2022
601.8
(466.2)
(0.2)
135.4
Recycled exchange gain on disposal of overseas property
(100.3)
80.2
–
(20.1)
Foreign exchange translation differences
(49.3)
–
–
(49.3)
Gain on net investment hedge
–
39.3
–
39.3
Loss on cash flow hedge
–
–
(3.4)
(3.4)
Loss on cash flow hedge recycled to net finance costs
–
–
3.6
3.6
Total comprehensive (loss)/gain
(149.6)
119.5
0.2
(29.9)
At 31 December 2023
452.2
(346.7)
–
105.5
The translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations and also
includes the translation of liabilities that hedge the Company’s net investment in a foreign subsidiary.
Hedging reserves comprise cumulative gains and losses representing the effective portion of the cumulative net change in the fair value of cash flow and
foreign currency hedging instruments.
164Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
21. Dividends
Enhanced
Cash scrip
dividend per alternative 2023 2022
share per share £m £m
2021 final dividend
– Cash
a
0.2p
–
11.8
– Enhanced scrip alternative
b
2.0p
–
51.4
2022 interim dividend
– Cash
0.2p
–
1.4
– Enhanced scrip alternative
b
2.0p
–
75.7
2023 interim dividend
– Cash
a, c
0.72p
35.9
–
35.9
140.3
Cash flow analysis:
Cash dividend
d
29.9
2.6
Withholding tax – 2021 final dividend
a
–
10.6
29.9
13.2
Total cash dividends per share in respect of the year
0.72p
0.2p
a Dividends paid as a PID are subject to withholding tax which is paid approximately two months after the dividend itself is paid.
b Calculated as the market value of shares issued to satisfy the enhanced scrip dividend alternative.
c 2023 interim dividend paid on 2 October 2023 less £6.0m of withholding tax which was paid in January 2024. No final 2022 dividend was paid as the Group had
satsified its 2022 PID obligations.
d Comprises cash payments after deduction of withholding tax (see note c above), where applicable.
A final 2023 dividend of 0.78p per share payable in cash, was recommended by the Board on 28 February 2024 and, subject to approval by shareholders
at the 2024 AGM, is payable on 10 May 2024 to shareholders on the register at the close of business on 5 April 2024. The dividend will be paid entirely as
a non-PID, and treated as an ordinary company dividend.
165Hammerson plc Annual Report 2023
22. Pensions
The Group operates a number of defined benefit and defined contribution pension schemes. The principal scheme is a UK funded defined benefit pension
scheme (‘the Scheme’) where assets are held in a separate fund administered by the Scheme Trustees. The Scheme is valued by a qualified actuary at
least every three years and contributions are assessed in accordance with the actuary’s advice. The Scheme closed to new entrants in 2002 and to future
accrual in 2014. As described in note 22D in December 2022, the Scheme purchased a bulk annuity policy (‘buy-in’) to fully insure all future payments to
members of the Scheme. In December 2023, given the successful completion of the buy-in and for the Trustee to trigger the winding-up of the Scheme,
the Company terminated its liability to make contributions to the Scheme. This initiated a process for the Trustee to assign the bulk annuity policy to
individual Scheme members and to transfer the administration to Just, which is expected to take place in the first quarter of 2024, after which the final
steps to wind-up of the Scheme can be undertaken.
The Group also operates three Unfunded Unapproved Retirement Schemes. Two provide pension benefits to two former Executive Directors, and the other
meets pension obligations in respect of former US employees.
A. DEFINED CONTRIBUTION PENSION SCHEME
The charge in respect of the Group’s UK funded defined contribution pension scheme was £2.4m (2022: £3.0m).
B. PRINCIPAL ASSUMPTIONS USED FOR THE SCHEME
2023 2022
Financial % %
Discount rate for accrued benefits
4.5
4.8
Inflation (retail price index)
3.0
3.2
Rate of increase in pensions in payment
3.0
3.2
Demographic
Years
Years
Life expectancy from age 60:
– Pensioner aged 60 *
28.4
28.7
– Non-pensioner currently aged 40 *
29.9
30.1
Weighted average maturity
Years
Years
The Scheme
13.5
14.0
Other schemes
Up to 10.3
Up to 10.8
* The Group uses demographic assumptions underlying the most recent formal actuarial valuation of the Scheme as at 31 December 2021. The base mortality
assumptions are based on the S3NA tables, with adjustments to reflect the Scheme’s population. Future mortality improvements for 2024 are CMI 2022
projections with a long term rate of improvement of 1.25% p.a. together with weighting parameters ‘w2020’ and ‘w2021’ of 0% and ‘w2022’ of 40%, which
adjust for evidence of negative impacts of non-Covid-19 mortality expected to continue in the future (2022: CMI 2021 projections with a long term rate of
improvement of 1.25% p.a. also with the w2020 and w2021 weighting parameters of 10%).
166Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
22. Pensions continued
C. DEFINED BENEFIT PENSION SCHEMES – CHANGES IN PRESENT VALUE
2023
2022
Obligations Assets Net Obligations Assets Net
Note £m £m £m £m £m £m
At 1 January
(82.4)
75.1
(7.3)
(115.9)
122.6
6.7
Recognised in the consolidated income statement:
– interest (cost)/income
a
(3.9)
3.5
(0.4)
(2.2)
2.5
0.3
– administration costs (accrued expenses)
(0.6)
–
(0.6)
–
–
–
Recognised in other comprehensive income – actuarial
(losses)/gains:
– experience adjustments
(0.9)
–
(0.9)
(7.5)
–
(7.5)
– changes in financial assumptions
(0.5)
–
(0.5)
34.4
–
34.4
– changes in demographic assumptions
0.8
–
0.8
1.7
–
1.7
– actual return on plan assets
–
(0.5)
(0.5)
–
(55.3)
(55.3)
– asset limit
–
(0.3)
(0.3)
–
–
–
(5.1)
2.7
(2.4)
28.6
(55.3)
(26.7)
Employer contributions
b
–
0.3
0.3
–
12.4
12.4
Benefits paid
5.1
(4.2)
0.9
7.9
(7.1)
0.8
Exchange gains/(losses)
0.2
–
0.2
(0.8)
–
(0.8)
At 31 December
(82.2)
73.9
(8.3)
(82.4)
75.1
(7.3)
Analysed as:
– Present value of the Scheme
c
14A
(73.6)
73.6
–
(73.3)
74.7
1.4
– Present value of Unfunded Retirement Schemes
16
(8.6)
0.3
(8.3)
(9.1)
0.4
(8.7)
(82.2)
73.9
(8.3)
(82.4)
75.1
(7.3)
a Included in net finance costs in note 6.
b Owing to the wind-up process triggered in the year described above and in note 22D, the Group will not expect to make contributions to the Scheme in 2024.
c As permitted by IFRIC 14 the Group recognised the pension surplus on the Scheme in 2022 as it has a legal right to receive that surplus on winding up.
D. ANALYSIS OF THE SCHEME ASSETS – ALL UNQUOTED
2023 2022
£m £m
Cash and other net current assets
–
1.4
Buy-in insurance policy
a
73.6
73.3
73.6
74.7
a On 8 December 2022, the Scheme purchased a bulk annuity policy (‘buy-in’) with Just Retirement Limited (‘Just’) for a premium of £87.3m. This contract fully
insured all future payments to members of the Scheme, with the premium met from the Scheme’s assets. On 20 December 2023 the Group terminated its liability
to make contributions to the Scheme and the Trustees subsequently triggered the wind-up of the Scheme. This initiated a process for the Trustees to assign the
annuity policy to individual Scheme members, to transfer the administration to Just and to wind-up the Scheme. As wind-up has been triggered, the Company is
no longer able to recognise the asset on its balance sheet in respect of the Scheme and as a result an asset limit has been applied at year end.
E. SENSITIVITY ON PRINCIPAL ASSUMPTIONS USED TO MEASURE THE SCHEME’S LIABILITIES
2023 2022
Positive/(negative) effect £m £m
Discount rate
+0.1%
0.9
1.0
Inflation
+0.1%
(0.9)
(0.9)
Long term improvements in longevity
+ 1 year
(2.5)
(2.4)
167Hammerson plc Annual Report 2023
23. Notes to the Cash flow Statement
A. ANALYSIS OF ITEMS INCLUDED IN OPERATING CASH FLOWS
2023 2022
£m £m
Net movements in working capital and restricted monetary assets
Movements in working capital:
– Decrease/(increase) in receivables
8.8
(6.0)
– Decrease in payables
(19.8)
(17.4)
(11.0)
(23.4)
Decrease in restricted monetary assets
6.3
26.0
(4.7)
2.6
2023 2022
£m £m
Non-cash items
Increase in accrued rents receivable
(3.2)
(3.5)
Increase/(decrease) in loss allowance provisions *
1.0
(2.6)
Amortisation of lease incentives and other costs
0.6
1.2
Depreciation (note 5)
3.0
4.1
Other non-cash items including share-based payment charge
1.4
–
2.8
(0.8)
* Comprises movement in provisions against trade (tenant) receivables and unamortised tenant incentives.
B. ANALYSIS OF MOVEMENTS IN NET DEBT
2023
2022
Cash and Cash and
cash cash
equivalents Borrowings Net debt equivalents Borrowings Net debt
£m £m £m £m £m £m
At 1 January
218.8
(1,677.0)
(1,458.2)
315.1
(1,878.9)
(1,563.8)
Cash flow
254.6
(15.1)
239.5
(99.0)
302.4
203.4
Change in fair value of currency swaps
–
(1.9)
(1.9)
–
8.4
8.4
Exchange and other non-cash movements
(1.1)
58.1
57.0
2.7
(108.9)
(106.2)
At 31 December
472.3
(1,635.9)
(1,163.6)
218.8
(1,677.0)
(1,458.2)
Borrowings at 31 December 2023 reflects loans of £1,624.5m (2022: £1,646.4m) and fair value of currency swaps of £11.4m (2022: £30.6m).
168Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
24. Contingent liabilities and commitments
A. CONTINGENT LIABILITIES
2023 2022
£m £m
Reported Group:
– guarantees given
23.1
45.3
– claims arising in the normal course of business
15.6
34.0
Share of Property interests – claims arising in the normal course of business
12.4
6.5
Proportionally consolidated
51.1
85.8
In addition, the Group operates in a number of jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the
normal course of business. The tax impact can be uncertain until a conclusion is reached with the relevant tax authority or through a legal process. The
Group addresses this by closely monitoring these potential instances, seeking independent advice and maintaining transparency with the authorities it
deals with as and when any enquiries are made. As a result, the Group has identified a potential tax exposure attributable to the ongoing applicability of tax
treatments adopted in respect of certain tax structures within the Group. The range of potential outcomes is a possible outflow of minimum £nil and
maximum £122m (2022: minimum £nil and maximum £145m). The Directors have not provided for this amount because they do not believe an outflow
is probable.
B. CAPITAL COMMITMENTS ON INVESTMENT PROPERTIES
2023 2022
£m £m
Reported Group
0.4
0.4
Share of Property interests
45.5
51.4
45.9
51.8
25. Operating leases as a lessor
The Group leases its investment properties to occupiers under operating leases with a weighted average lease term for the Reported Group properties of
3.5 years (2022: 3.2 years).
2023 2022
Future minimum rentals receivable under non-cancellable leases £m £m
Within one year
61.6
68.8
Between one and two years
49.9
58.9
Between two and five years
80.6
46.9
More than five years
79.2
71.7
271.3
246.3
169Hammerson plc Annual Report 2023
26. Related Parties
A. JOINT VENTURES AND ASSOCIATES
Transactions between the Group’s subsidiary undertakings, which are related parties, have been eliminated on consolidation and are accordingly not
disclosed. The Group had the following transactions with its joint ventures and associates, which comprise primarily management fees, interest receivable,
loan balances and other amounts due.
2023
2022
Joint Joint
ventures Associates ventures Associates
Note £m £m £m £m
Income statement
Management fees
6.0
0.5
4.9
0.5
Net interest receivable
9.9
0.1
11.0
0.1
Share of distributions
12B/13D
47.7
66.3
63.4
5.0
Capital return
13D
–
–
–
2.0
Balance sheet – amounts due from/(to)
Loans
a
12C
201.4
1.7
239.1
1.8
Advances
b
12D
8.3
–
4.0
–
Participative loans
13C
–
212.4
–
205.9
Cash held on behalf of tenants and co-owners
15
2.2
–
8.6
–
Balances due from joint ventures
14B
1.4
–
8.3
–
Balances due to joint ventures
16
(3.9)
–
(23.1)
–
Balances due to co-owners
16
(2.2)
–
(8.7)
–
Distributions received in advance
16
–
(25.1)
–
(18.1)
a Loans shown net of impairments. Loans due from associates comprise €2.0m (£1.7m) (2022: €2.0m (£1.8m)) due to an intermediate holding company of Value
Retail which is secured against a number of Value Retail assets and matures on 30 November 2043.
b Represents movements in advances during the year.
B. KEY MANAGEMENT
Full details of the Directors’ emoluments, as required by the Companies Act 2006, are disclosed in the audited sections of the Directors’ Remuneration
report on pages 94 to 103. The Company did not grant any credits, advances or guarantees of any kind to its Directors during the current and
preceding years.
The remuneration of the Directors and other members of the Group Executive Committee (GEC), who are the key management of the Group, is set out
below in aggregate.
2023 2022
£m £m
Salaries and short term benefits
5.9
5.9
Post employment benefits
0.3
0.3
Share-based payments
2.8
2.0
9.0
8.2
27. Post Balance Sheet Events
On 23 February 2024, the Group exchanged contracts for the sale of Union Square, Aberdeen for gross proceeds of £111m, with completion due in March
2024. At the balance sheet date this asset did not meet the criteria for reclassification to assets held for sale under IFRS 5 as it was not being actively
marketed and substantive terms had yet to be agreed such that a sale was not considered highly probable. Consequently as at 31 December 2023 it was
included within investment properties at its fair value of £121m.
170Hammerson plc Annual Report 2023
Financial Statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
Note
2023
£m
2022
£m
Non-current assets
Investments in subsidiaries
C3 1,086.1 1,322.4
Trade and other receivables
C4 4,326.0 4,396.8
Derivative financial instruments
C6 – 7.0
Restricted monetary assets
15A 21.4 21.4
5,433.5 5,747.6
Current assets
Trade and other receivables 18.5 16.2
Derivative financial instruments
C6 5.2 0.1
Cash and cash equivalents 415.7 172.9
439.4 189.2
Total assets 5,872.9 5,936.8
Current liabilities
Loans
C6 (108.6) –
Trade and other payables
C5 (2,369.3) (2,276.5)
Derivative financial instruments
C6 (2.3) (16.1)
(2,480.2) (2,292.6)
Non-current liabilities
Loans
C6 (915.1) (1,034.1)
Derivative financial instruments
C6 (15.0) (23.7)
(930.1) (1,057.8)
Total liabilities (3,410.3) (3,350.4)
Net assets 2,462.6 2,586.4
Equity
Share capital
20A 250.1 250.1
Share premium 1,563.7 1,563.7
Revaluation reserve (1,030.7) (794.6)
Retained earnings * 1,685.9 1,576.0
Investment in own shares (6.4) (8.8)
Equity shareholders’ funds 2,462.6 2,586.4
* Profit for the year attributable to equity shareholders was £146.0m (2022: loss of £183.8m).
These financial statements were approved by the Board on 28 February 2024 and signed on its behalf by:
Rita-Rose Gagné Himanshu Raja
Chief Executive Chief Financial Officer
Financial Statements
Company Balance Sheet
As at 31 December 2023
171Hammerson plc Annual Report 2023
Note
Share
capital
a
£m
Share
premium
£m
Merger
reserve
b
£m
Capital
redemption
reserve
c
£m
Revaluation
reserve
£m
Retained
earnings
£m
Investment
in own
shares
a
£m
Equity
share-
holders’
funds
£m
At 1 January 2022 221.0 1,593.2 374.1 198.2 (837.1) 1,200.1 (3.5) 2,746.0
Revaluation gains on investments
in subsidiaries
C3 – – – – 42.5 – – 42.5
Foreign exchange translation
differences on net investment
in subsidiaries
C3 – – – – – 0.6 – 0.6
Loss for the year attributable to equity
shareholders – – – – – (183.8) – (183.8)
Total comprehensive income/(loss) – – – – 42.5 (183.2) – (140.7)
Transfer b,c – – (374.1) (198.2) – 572.3 – –
Cost of shares awarded to employees – – – – – – 1.4 1.4
Purchase of own shares – – – – – – (6.7) (6.7)
Dividends
21 – – – – – (140.3) – (140.3)
Scrip dividend related share issue 29.1 (29.1) – – – 127.1 – 127.1
Scrip dividend related share issue
costs – (0.4) – – – – – (0.4)
At 31 December 2022 250.1 1,563.7 – – (794.6) 1,576.0 (8.8) 2,586.4
Revaluation loss on investments
in subsidiaries
C3 – – – – (236.1) – – (236.1)
Foreign exchange translation
differences on net investment
in subsidiaries
C3 – – – – – (0.2) – (0.2)
Profit for the year attributable to
equity shareholders – – – – – 146.0 – 146.0
Total comprehensive (loss)/income – – – – (236.1) 145.8 – (90.3)
– –
Cost of shares awarded to employees – – – – – – 2.4 2.4
Dividends
21 – – – – – (35.9) – (35.9)
At 31 December 2023 250.1 1,563.7 – – (1,030.7) 1,685.9 (6.4) 2,462.6
a Share capital includes shares held in treasury which are then excluded from equity shareholders’ funds through ‘Investment in own shares’, which are stated at
cost and are held in the employee share trust.
b The merger reserve arose in September 2014 from a placing of new shares using a structure which resulted in merger relief being taken under Section 612 of the
Companies Act 2006. Following receipt of the proceeds in 2014 and the relevant criteria enabling use of the reserve having been satisfied, the amounts in the
merger reserve were deemed distributable and accordingly the balance of this reserve was transferred to retained earnings in 2022.
c The capital redemption reserve comprised £14.3m relating to share buybacks which arose over a number of years up to 2019 and £183.9m resulting from the
cancellation of the Company’s shares as part of the reorganisation of share capital in 2020. Following approval by the Court on 22 November 2022, this reserve
was reclassified as available for distribution to shareholders in accordance with ICAEW Technical Release 02/17BL section 2.8A and as a result was transferred
to retained earnings in 2022.
172Hammerson plc Annual Report 2023
Financial Statements
Company Statement of Changes in Equity
Year ended 31 December 2023
A. GENERAL INFORMATION
The Company is incorporated in the United Kingdom and the separate
financial statements of the Company have been presented as required by
the Companies Act 2006.
The financial statements are prepared on the historical cost basis, except
that investments in subsidiaries and derivative financial instruments are
stated at fair value. The accounting policies have been applied consistently
year-on-year, however, in order to enhance the users’ understanding,
certain figures have been re-presented as described in the applicable parts
of the financial statements as well as certain other presentational changes.
The Company meets the definition of a qualifying entity under FRS 100
(Financial Reporting Standard 100) issued by the Financial Reporting
Council. Accordingly, the financial statements have been prepared in
accordance with FRS 101 ‘Reduced Disclosure Framework’ and in
accordance with the Companies Act 2006 as applicable to companies
using FRS 101.
As permitted by FRS 101, the Company has taken advantage of the
disclosure exemptions available under that standard in relation to:
– A statement of cash flows
– Certain comparative information as otherwise required by IFRS
– Certain disclosures in respect of financial instruments
– Share-based payments
– The effects of new but not yet effective IFRSs
– Certain related party transactions including with those with subsidiaries
The above disclosure exemptions have been adopted because equivalent
disclosures are included in the consolidated financial statements into
which the Company is consolidated.
B. GOING CONCERN
The Company has net current liabilities, due primarily to amounts owed to
its subsidiaries and other related undertakings. The Company from a going
concern perspective is inextricably linked to the Group. As explained in note
1D to the consolidated financial statements, the Directors have concluded
that it is appropriate to prepare the consolidated financial statements on a
going concern basis. This conclusion also applies to the preparation of the
Company’s financial statements for the reasons set out in that note.
C. PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies relevant to the Company are the same as
those set out in the accounting policies for the Group in note 1, except for
significant judgements and key estimates, investments in subsidiaries,
which are included at fair value with movements recognised within the
revaluation reserve, and amounts owed by subsidiaries and other related
undertakings which are held at amortised cost but are subject to a credit
loss impairment assessment which is based on the net asset values of the
borrowing entity.
D. SIGNIFICANT JUDGEMENTS AND ESTIMATES
The preparation of the Company financial statements in conformity with
FRS 101 requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and the disclosure of
contingent assets and liabilities at the date of the Company’s financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which
the estimate is revised.
There were no significant areas of judgement, but the Company’s key areas
of estimation uncertainty are in respect of the valuation of investments in
subsidiaries and the impairment of amounts due from subsidiaries as
detailed below.
The Directors determine the valuations of investments in subsidiaries with
reference to the net assets of the entities. The principal assets of the entities
are the investment properties held either by the subsidiary or its fellow
group undertakings which are valued by professional external valuers.
The Directors ensure they are satisfied that the carrying amount of the
Company’s investment in subsidiaries is appropriate. The basis of valuation
of the Group’s investment properties is set out in the notes 1F and 11 to the
consolidated financial statements. Consistent with the Group’s deferred tax
recognition treatment, as explained in note 7C, in calculating the net asset
values of the subsidiaries, no deduction is made for deferred tax.
Additionally, as required by IFRS 9, management has assessed the
recoverability of amounts due to the Company from its subsidiaries and
other related undertakings, including joint ventures, by considering the
value of the underlying assets, incorporating any illiquidity impact in the
event of an immediate recovery being required.
C2. Income statement
In accordance with the exemption permitted by section 408 of the
Companies Act 2006, the Company has elected not to present its own
income statement or statement of comprehensive income for the year.
C3. Investment in subsidiaries
2023 2022
Cost
£m
Valuation
£m
Cost
£m
Valuation
£m
At 1 January 2,083.1 1,322.4 2,082.5 1,279.3
Exchange adjustment (1.4) (0.2) 0.6 0.6
Revaluation (loss)/gain – (236.1) – 42.5
At 31 December 2,081.7 1,086.1 2,083.1 1,322.4
A list of the subsidiary and other related undertakings is included in note C7.
C1. Basis of preparation, consolidation and principal accounting policies
173Hammerson plc Annual Report 2023
Financial Statements
Notes to the Company Financial Statements
For the year ended 31 December 2023
C4. Trade and other receivables – non-current
2023
£m
2022
£m
Amounts owed by subsidiaries and other related undertakings * 4,324.3 4,395.0
Loans receivable from associate 1.7 1.8
4,326.0 4,396.8
* Includes an expected credit loss impairment provision of £606.5m (2022: £595.9m). The movement in the year comprises an additional impairment provision
of £122.4m (2022: £124.3m) and a reduction of the provision in 2023 of £111.8m (2022: £nil), primarily related to disposed entities.
Amounts owed by subsidiaries and other related undertakings are unsecured and bear interest at floating rates based on SONIA/EURIBOR. This includes
amounts which are repayable on demand. However, there are no intentions to seek repayment of these amounts before 31 December 2024.
C5. Trade and other payables – current
2023
£m
2022
£m
Amounts owed to subsidiaries and other related undertakings 2,333.1 2,244.9
Accruals 36.2 31.6
2,369.3 2,276.5
The amounts owed to subsidiaries and other related undertakings are unsecured, repayable on demand and bear interest at floating rates based on SONIA/
EURIBOR.
C6. Loans and derivative financial instruments
The Company’s loans are the same as those for the Reported Group except for the €700.0m (£600.8m (2022: £612.3m)) 1.75% eurobonds due 2027
whereby the borrower is a subsidiary undertaking, but where the proceeds were transferred to the Company such that the amount is included within
amounts owed to subsidiaries and other related undertakings. An analysis of the loans is set out in note 17A to the consolidated financial statements.
Details on the Company’s derivatives, which are the same as those for the Reported Group, are set out in notes 18A, 18C and 18F to the consolidated
financial statements.
C7. Subsidiaries and other related undertakings
A. Subsidiaries and wholly owned entities
The Company has a 100% direct or indirect interest in the ordinary share capital (unless a Limited Partnership where no shares are in issue) of the following
entities, which are registered/operate in the countries as shown:
England and Wales
Registered office: Marble Arch House, 66 Seymour Street, London W1H 5BX, unless otherwise indicated
280 Bishopsgate Investments Limited Hammerson (Coventry) Limited
Bull Ring (GP2) Limited Hammerson (Cramlington I) Limited
Crocusford Limited Hammerson (Cricklewood) Limited
Governeffect Limited Hammerson (Croydon) Limited
Grantchester Developments (Birmingham) Limited Hammerson (Euston Square) Limited
Grantchester Group Limited Hammerson (Folkestone) Limited
Grantchester Holdings Limited Hammerson (Milton Keynes) Limited
Grantchester Limited Hammerson (Newcastle) Limited
Grantchester Properties (Gloucester) Limited Hammerson (Renfrew) Limited
Grantchester Properties (Sunderland) Limited Hammerson (Telford) Limited
Hammerson (Brent Cross) Limited Hammerson (Value Retail Investments) Limited
Hammerson (Brent South) Limited Hammerson (Victoria Investments) Limited
Hammerson (Bristol Investments) Limited Hammerson (Victoria Quarter) Limited
Hammerson (Bristol) Limited Hammerson (Watermark) Limited
Hammerson (Cardiff) Limited Hammerson Birmingham Properties Limited
174Hammerson plc Annual Report 2023
Financial Statements
Notes to the Company Financial Statements continued
For the year ended 31 December 2023
C7. Subsidiaries and other related undertakings continued
A. Subsidiaries and wholly owned entities continued
England and Wales
Registered office: Marble Arch House, 66 Seymour Street, London W1H 5BX, unless otherwise indicated
Hammerson Bull Ring Limited Hammerson Share Option Scheme Trustees Limited
Hammerson Bull Ring 2 Limited Hammerson Sheffield (NRQ) Limited
Hammerson Company Secretarial Limited Hammerson Shelf Co 13 Limited
Hammerson Croydon (GP1) Limited Hammerson Shelf Co 14 Limited
Hammerson Croydon (GP2) Limited Hammerson UK Properties Limited
Hammerson Employee Share Plan Trustees Limited Hammerson Via No 1 Limited
Hammerson Group Management Limited Hammerson Via No 2 Limited
Hammerson Group Limited Hammerson Wrekin LLP
Hammerson International Holdings Limited London & Metropolitan Northern
Hammerson Investments (No. 12) Limited Martineau Galleries (GP) Limited
Hammerson Investments (No. 16) Limited Martineau Galleries No. 1 Limited
Hammerson Investments (No. 23) Limited Martineau Galleries No. 2 Limited
Hammerson Investments (No. 26) Limited Precis (1474) Limited (Ordinary and Deferred)
Hammerson Investments Limited RT Group Developments Limited
Hammerson Junction (No. 3) Limited RT Group Property Investments Limited
Hammerson Martineau Galleries Limited Spitalfields Developments Limited
Hammerson MGLP Limited Spitalfields Holdings Limited (Ordinary and Preference)
Hammerson MGLP 2 Limited The Junction (General Partner) Limited
Hammerson Moor House (LP) Limited The Junction (Thurrock Shareholder GP) Limited
Hammerson Operations Limited The Junction Limited Partnership
Hammerson Oracle Investments Limited The Junction Thurrock (General Partner) Limited
Hammerson Oracle Investments 1 Limited The Junction Thurrock Limited Partnership
Hammerson Oracle Investments 2 Limited The Martineau Galleries Limited Partnership
Hammerson Oracle Properties Limited West Quay (No. 1) Limited
Hammerson Pension Scheme Trustees Limited West Quay (No. 2) Limited
Hammerson Project Management Limited West Quay Shopping Centre Limited
Hammerson Renewable Energy Limited Westchester Holdings Limited
Hammerson Retail Parks Holdings Limited
175Hammerson plc Annual Report 2023
Scotland
Registered office: 1 West Regent Street, Glasgow, G2 1AP
Union Square Developments Limited
France
Registered office: 36 Rue de Châteaudun, Paris 75009
Cergy Expansion 1 SAS SCI Cergy Cambon SCI
Hammerson plc – French branch SCI Cergy Capucine SCI
Hammerson SAS SCI Cergy Honoré SCI
Hammerson Asset Management SAS SCI Cergy Lynx SCI
Hammerson Centre Commercial Italie SAS SCI Cergy Madeleine SCI
Hammerson Cergy SASU SCI Cergy Office 1 SCI
Hammerson Cergy 1 SCI SCI Cergy Office 2 SCI
Hammerson Cergy 2 SCI SCI Cergy Office 3 SCI
Hammerson Cergy 4 SCI SCI Cergy Office 4 SCI
Hammerson Cergy 5 SCI SCI Cergy Office 5 SCI
Hammerson Développement SCI SCI Cergy Office 6 SCI
Hammerson Fontaine SCI SCI Cergy Opéra SCI
Hammerson France SAS SCI Cergy Paix SCI
Hammerson Holding France SAS SCI Cergy Royale SCI
Hammerson Marketing et Communication SAS SCI Cergy Trois SCI
Hammerson Marseille SCI SCI Cergy Tuileries SCI
Hammerson Property Management SAS SCI Cergy Vendôme SCI
Hammerson Troyes SCI SCI Nevis SCI
Les Pressing Réunis SARL SCI Paris Italik SCI
RC Aulnay 3 SCI SNC Cergy Expansion 2
Ireland
Registered office: Riverside One, Sir John Rogerson’s Quay, Dublin 2, DO2 X576, unless otherwise indicated
Dublin Central GP Limited Hammerson Group Management Limited – Irish branch
Dublin Central Limited Partnership Hammerson Ireland Finance Designated Activity Company
Dundrum R&O Park Management Limited Hammerson Ireland Investments Limited
Dundrum Town Centre Management Limited Hammerson Operations (Ireland) Limited
Dundrum Village Management Company Limited The Hammerson ICAV *
* Registered office: 1-2 Victoria Buildings, Haddington Road, Dublin 4, Ireland.
Jersey
Registered office: 47 Esplanade, St Helier, Jersey JE1 0BD, unless otherwise indicated
Hammerson Birmingham Investments Limited * Hammerson VIA (Jersey) Limited
Hammerson Highcross Investments Limited Hammerson VRC (Jersey) Limited
Hammerson Junction (No. 1) Limited The Junction Thurrock Unit Trust
Hammerson Junction (No. 2) Limited The Junction Unit Trust
* Registered office: 44 Esplanade, St. Helier, Jersey JE4 9WG.
C7. Subsidiaries and other related undertakings continued
176Hammerson plc Annual Report 2023
Financial Statements
Notes to the Company Financial Statements continued
For the year ended 31 December 2023
A. Subsidiaries and wholly owned entities continued
Isle of Man
Registered office: First Names House, Victoria Road, Douglas, Isle of Man, IM2 4DF
Hammerson (Silverburn) Limited
Northern Ireland
Registered office: 50 Bedford Street, Belfast, United Kingdom, BT2 7FW
Abbey Retail Park Limited
Germany
Registered office: Schlossstraße 1, 12163 Berlin, Germany
BFN10 GmbH
Netherlands
Registered office: Albatroshof 41, 2872 BG Schoonhoven, Netherlands
Hammerson Europe BV
Zweibrucken NL Holdco BV *
* 66% interest in the ordinary share capital. Registered office: Van Heuven Goedhartlaan 935 A 1181 LD, Amstelveen, Noord-Holland, Netherlands.
United States
Registered office: 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, United States; country of operation is the United Kingdom
Hammerson LLC
B. Joint ventures
Unless otherwise indicated, the Company has an indirect 50% interest in the ordinary share capital (unless a Partnership, Limited Partnership or Unit Trust
where no shares are in issue) of the following entities, which are registered/operate in the countries as shown:
England and Wales
Registered office: Marble Arch House, 66 Seymour Street, London W1H 5BX
Bishopsgate Goodsyard Regeneration Limited Highcross Leicester (GP) Limited
Brent Cross Partnership (41% interest) Highcross Leicester Holdings Limited
Bristol Alliance (GP) Limited Highcross Leicester Limited Partnership
Bristol Alliance Limited Partnership Highcross Residential (Nominees 1) Limited
Bristol Alliance Nominee No. 1 Limited Highcross Residential (Nominees 2) Limited
Bristol Alliance Nominee No. 2 Limited Highcross Shopping Centre Limited
BRLP Rotunda Limited Oracle Nominees (No. 1) Limited
Bull Ring (GP) Limited Oracle Nominees (No. 2) Limited
Bull Ring No. 1 Limited Oracle Nominees Limited
Bull Ring No. 2 Limited Oracle Shopping Centre Limited
Grand Central (GP) Limited Reading Residential Properties Limited
Grand Central Limited Partnership The Bull Ring Limited Partnership
Grand Central No 1 Limited The Highcross Limited Partnership
Grand Central No 2 Limited The Oracle Limited Partnership
Highcross (GP) Limited The West Quay Limited Partnership
C7. Subsidiaries and other related undertakings continued
177Hammerson plc Annual Report 2023
Ireland
Registered office: Riverside One, Sir John Rogerson’s Quay, Dublin 2, DO2 X576 Ireland
Dundrum Car Park GP Limited Dundrum Residential Owners Management Company Limited *
Dundrum Car Park Limited Partnership Dundrum Retail Limited Partnership
Dundrum Retail GP Designated Activity Company
* Limited by guarantee.
Jersey
Registered office: 47 Esplanade, St Helier, Jersey JE1 0BD, unless otherwise stated
Grand Central Unit Trust * Highcross (No. 1) Limited
Highcross Leicester Limited Highcross (No. 2) Limited
* Registered office: 44 Esplanade, St Helier, Jersey JE4 9WG.
France
Registered office: 7 Place d’Estienne d’Orves – 2, Rue de Clichy – 75001 Paris, unless otherwise stated
RC Aulnay 1 SCI 25% RC Aulnay 2 SCI 25%
Société Civile de Développement du Centre Commercial de la
Place des Halles SDPH SC* 65%
* Registered office: 36 Rue de Châteaudun, Paris 75009.
C. Associates
Country of
registration
or operation
Class of
share held
Ownership
%
Bicester Investors Limited Partnership Bermuda a N/A 25%
Bicester Investors II Limited Partnership Bermuda a N/A 25%
Master Holding BV Netherlands b Ordinary 44%
Value Retail Investors Limited Partnership Bermuda a N/A 79%
Value Retail Investors II Limited Partnership Bermuda a N/A 89%
Value Retail Investors III Limited Partnership Bermuda a N/A 50%
Value Retail PLC UK d Ordinary 24%
VR European Holdings BV Netherlands b Ordinary 25%
Value Retail Barcelona SL Spain e Ordinary 58%
Value Retail Madrid SL Spain f Ordinary 51%
VR Franconia GmbH Germany g Ordinary 66%
VR Ireland BV Netherlands b Ordinary 57%
VR La Vallée BV Netherlands b Ordinary 28%
VR Maasmechelen Tourist Outlets Comm. VA Belgium h B-shares 29%
Registered offices:
a Victoria Place, 31 Victoria Street, Hamilton, HM10, Bermuda.
b TMF, Luna Arena, Herikerbergweg 238, 1101 CM Amsterdam, Netherlands.
c 36 Rue de Châteaudun, Paris 75009.
d 19 Berkeley Street, London W1J 8ED.
e La Roca Village, Santa Agnès de Malanyanes, 08430 La Roca del Vallès, Barcelona, Spain.
f Calle Juan Ramon Jiménez, 3, Las Rozas Village, 28232 Las Rozas de Madrid, Madrid, Spain.
g Almosenberg, 97877, Wertheim, Germany.
h Zetellaan 100, 3630 Maasmechelen, Belgium.
C7. Subsidiaries and other related undertakings continued
178Hammerson plc Annual Report 2023
Financial Statements
Notes to the Company Financial Statements continued
For the year ended 31 December 2023
D. Exemption from audit
The following subsidiaries are exempt from the requirements of the Companies Act 2006 relating to the audit of individual financial statements by virtue
of Section 479A of that Act.
Company
registration
number
Company
registration
number
Grantchester Developments (Birmingham) Limited 4295332 Hammerson Croydon (GP2) Limited 8284202
Grantchester Group Limited 1887040 Hammerson Group Management Limited 574728
Grantchester Holdings Limited 4035681 Hammerson International Holdings Limited 666151
Grantchester Limited 2489293 Hammerson Investments (No. 23) Limited 4186905
Grantchester Properties (Gloucester) Limited 3691896 Hammerson Investments Limited 3109232
Hammerson (Brent Cross) Limited 3377460 Hammerson Martineau Galleries Limited 4161246
Hammerson (Brent South) Limited 6644658 Hammerson MGLP Limited 3768311
Hammerson (Bristol Investments) Limited 6663404 Hammerson MGLP 2 Limited 9084398
Hammerson (Cardiff) Limited 6668272 Hammerson Operations Limited 4125216
Hammerson (Cricklewood) Limited 4789711 Hammerson Oracle Investments Limited 3289109
Hammerson (Croydon) Limited 4044457 Hammerson UK Properties Limited 298351
Hammerson (Milton Keynes) Limited 6671304 Hammerson Via No. 2 Limited 12279332
Hammerson (Renfrew) Limited 8180149 Martineau Galleries (GP) Limited 3744383
Hammerson (Value Retail Investments) Limited 6654800 RT Group Developments Limited 3699545
Hammerson (Victoria Investments) Limited 8047957 RT Group Property Investments Limited 4357520
Hammerson (Victoria Quarter) Limited 8230241 Spitalfields Developments Limited 2025411
Hammerson (Watermark) Limited 6763965 The Junction (General Partner) Limited 4278233
Hammerson Bull Ring Limited 5447873 West Quay Shopping Centre Limited 643320
Hammerson Croydon (GP1) Limited 8230396
The following partnerships are exempt from the requirements to prepare, publish and have audited individual financial statements by virtue of regulation 7
of the Partnerships (Accounts) Regulations 2008. The results of these partnerships are consolidated within these consolidated financial statements.
The Junction Thurrock Limited Partnership The Martineau Galleries Limited Partnership
The Junction Limited Partnership
C8. Contingent Liabilities
The Company has subsidiaries and related parties that operate in a number of jurisdictions and is subject to periodic challenges by local tax authorities
on a range of tax matters during the normal course of business. The tax impact can be uncertain until a conclusion is reached with the relevant tax authority
or through a legal process. The Company addresses this by closely monitoring these potential instances, seeking independent advice, and maintaining
transparency with the authorities it deals with as and when any enquiries are made. As a result, the Company has identified a potential tax exposure
attributable to the ongoing applicability of tax treatments adopted in respect of the Company’s tax structures. The range of potential outcomes is a possible
outflow of minimum £nil and maximum £122m (2022: minimum £nil and maximum £145m). The Directors have not provided for this amount because
they do not believe an outflow is probable.
C7. Subsidiaries and other related undertakings continued
179Hammerson plc Annual Report 2023
Table Table
Summary EPRA performance measures 1 Balance sheet information
Balance sheet 12
Portfolio analysis Net debt 13
Adjusted net rental income 2 Movement in net debt 14
Net rental income 3 Total accounting return 15
Rental data 4 Financing metrics
Vacancy 5 Net debt : EBITDA 16
Lease expiries and breaks 6 Interest cover 17
Top ten tenants 7 Gearing 18
Cost ratio 8 Loan to value 19
Valuation analysis 9 Unencumbered asset ratio 20
Net initial yield 10 EPRA loan to value 21
Capital expenditure 11 Key properties 22
Hammerson is a member of the European Public Real Estate Association (EPRA) and has representatives who actively participate in a number of EPRA
committees and initiatives. This includes working with peer group companies, real estate investors and analysts and the large audit firms, to improve the
transparency, comparability and relevance of the published results of listed real estate companies in Europe.
As with other real estate companies, we have adopted the EPRA Best Practice Recommendations (BPR) and were again awarded a Gold Award for
compliance with the EPRA BPR for our 2022 Annual Report. Further information on EPRA and the EPRA BPR can be found on their website www.epra.com.
Details of our key EPRA metrics are shown in Table 1.
SUMMARY EPRA PERFORMANCE MEASURES
Table 1
Performance measure Note/Table 2023 2022
Earnings 9A £102.8m £100.6m
Earnings per share (EPS) 10B 2.1p 2.0p
Cost ratio (including vacancy costs) Table 8 41.2% 38.0%
2023 2022
Net Disposal Value (NDV) per share 10C 50p 56p
Net Tangible Assets value (NTA) per share 10C 51p 53p
Net Reinstatement Value (NRV) per share 10C 59p 61p
Net Initial Yield (NIY) Table 10 5.9% 5.8%
Topped-up Net Initial Yield Table 10 6.3% 6.0%
Vacancy rate Table 5 5.8% 4.8%
Loan to value Table 21 48.1% 49.2%
Other Information
Additional Information – Unaudited
180Hammerson plc Annual Report 2023
PORTFOLIO ANALYSIS
Where applicable, the information presented within the ‘Development and other’ segment only reflects available data in relation to the investment
properties within this segment.
Adjusted net rental income
Table 2
Proportionally consolidated
2023
£m
2022
£m
Base rent 149.8 159.2
Turnover rent 13.6 13.7
Car park income 28.1 27.9
Commercialisation income 9.8 9.5
Surrender premiums 0.4 0.8
Lease incentive recognition 4.3 0.9
Other rental income 2.4 3.2
Gross rental income 208.4 215.2
Ground rents payable (1.8) (1.3)
Inclusive lease costs recovered through rent (6.4) (9.1)
Other property outgoings (32.7) (30.0)
Cost of sales (40.9) (40.4)
Adjusted net rental income 167.5 174.8
Net rental income
Table 3
Like-for-like net rental income (NRI) is calculated as the percentage change in NRI for investment properties owned throughout both the current and prior
year and at constant exchange rates. Properties which have undergone or are undergoing a significant extension project are excluded from this calculation
for both the current and prior periods.
2023
Proportionally consolidated
Properties
owned
throughout
2022/23
£m
Change in
like-for-like
NRI
%
Disposals
£m
Develop-
ments
and other
£m
Total
Adjusted
NRI
£m
Change in
provision
£m
Total
NRI
£m
UK 73.5 3.2 – (0.6) 72.9 (0.3) 72.6
France 28.1 1.8 3.4 17.9 49.4 – 49.4
Ireland 36.3 6.0 – – 36.3 – 36.3
Flagship destinations 137.9 3.6 3.4 17.3 158.6 (0.3) 158.3
Developments and other – n/a – 8.9 8.9 – 8.9
Managed portfolio 137.9 3.6 3.4 26.2 167.5 (0.3) 167.2
2022
Proportionally consolidated
Properties
owned
throughout
2022/23
£m
Exchange
£m
Disposals
£m
Develop-
ments
and other
£m
Total
Adjusted
NRI
£m
Change in
provision
£m
Total
NRI
£m
UK 71.2 – 3.7 (0.6) 74.3 1.7 76.0
France 27.6 (1.0) 10.6 16.6 53.8 – 53.8
Ireland 34.3 (0.7) – – 33.6 0.2 33.8
Flagship destinations 133.1 (1.7) 14.3 16.0 161.7 1.9 163.6
Developments and other – (0.1) 0.3 12.9 13.1 0.5 13.6
Managed portfolio 133.1 (1.8) 14.6 28.9 174.8 2.4 177.2
The Managed portfolio value on which like-for-like growth is based was £2,008m (2022: £2,244m).
181Hammerson plc Annual Report 2023
Rental data
Table 4
2023
Proportionally consolidated
Gross rental
income
£m
Adjusted net
rental
income
£m
Vacancy rate
a
%
Average
rents
passing
b
£/m
2
Rents
passing
c
£m
Estimated
rental value
d
£m
Rents
passing for
reversion
e
£m
Reversion/
(over-
rented)
f
%
UK 92.8 72.9 4.9 400 87.3 82.3 83.7 (1.8)
France 58.6 49.4 6.9 450 53.0 61.3 54.2 13.2
Ireland 40.0 36.3 3.8 480 39.0 39.5 37.1 6.4
Flagship destinations 191.4 158.6 5.4 430 179.3 183.1 175.0 4.6
Developments and other 17.0 8.9 13.6 190 8.5 10.0 9.2 8.9
Managed portfolio 208.4 167.5 5.8 400 187.8 193.1 184.2 4.8
2022
UK 90.5 74.3 3.6 420 84.0 80.8 80.6 0.4
France 61.8 53.8 4.4 430 65.9 75.5 67.0 12.5
Ireland 37.3 33.6 2.3 500 38.8 39.9 36.9 8.1
Flagship destinations 189.6 161.7 3.7 440 188.7 196.2 184.5 6.3
Developments and other 25.6 13.1 16.0 170 21.6 21.6 21.8 (1.4)
Managed portfolio 215.2 174.8 4.8 380 210.3 217.8 206.3 5.5
a See Table 5 for analysis of vacancy.
b Average rents passing at the year end before deducting head rents and excluding rents passing from anchor units, car parks and commercialisation.
c Rents passing are the annual rental income receivable at the year end from an investment property, after any rent-free periods and after deducting head rents and
car parking and commercialisation running costs totalling £12.6m (2022: £14.2m).
d The estimated rental value (ERV) at the year end calculated by the Group’s valuers. At 31 December 2023, includes ERV for vacant space of £9.9m (2022: £9.2m)
as per Table 5 and ERV for space undergoing reconfiguration of £2.6m – UK £2.3m, Ireland £0.3m (2022: £2.6m – UK £2.2m, Ireland £0.4m). ERVs in the above
table are included within the unobservable inputs to the portfolio valuations as defined by IFRS 13.
e Rents passing for reversion is rents passing adjusted for tenant incentives and inclusive costs, to give a better comparison with ERV which is on a net effective basis.
f We have amended the reversion/(over-rented) figures (and restated 2022 figures) to show a direct comparison between the valuers’ ERV and rents passing for
reversion, with both sets of figures being on a net effective basis. The reversion/(over-rented) figures therefore show the future change in the Group’s rental
income from the settlement of rent reviews or a combination of letting:
– units at prevailing ERVs at the next lease event i.e. break or expiry (see Table 6)
– vacant units (see Table 5)
– units undergoing reconfiguration (see note d above)
Other Information
Additional Information – Unaudited continued
182Hammerson plc Annual Report 2023
PORTFOLIO ANALYSIS continued
Vacancy
Table 5
2023 2022
Proportionally consolidated
ERV of
vacant
space
£m
Total ERV for
vacancy
a
£m
Vacancy
rate
%
ERV of
vacant
space
£m
Total ERV for
vacancy
a
£m
Vacancy
rate
%
UK 3.2 65.9 4.9 2.3 64.2 3.6
France 4.2 60.6 6.9 3.2 72.5 4.4
Ireland 1.3 35.2 3.8 0.8 35.7 2.3
Flagship destinations 8.7 161.7 5.4 6.3 172.4 3.7
Developments and other 1.2 8.5 13.6 2.9 17.9 16.0
Managed portfolio 9.9 170.2 5.8 9.2 190.3 4.8
a Total ERV for vacancy differs from Table 4 due to the exclusion of car park ERV and head rents payable, which distort the vacancy metric.
Lease expiries and breaks at 31 December 2023
Table 6
Rental income based on passing rents
that expire/break in ERV of leases that expire/break in
Weighted average
unexpired
lease term
Proportionally consolidated
Out-
standing
£m
2024
£m
2025
£m
2026
£m
Total
£m
Out-
standing
£m
2024
£m
2025
£m
2026
£m
Total
£m
to break
years
to expiry
years
UK 2.7 14.4 8.6 10.5 36.2 3.8 12.9 7.2 8.8 32.7 5.8 7.9
France 3.6 6.2 1.7 1.6 13.1 3.4 6.2 2.0 1.8 13.4 2.6 5.9
Ireland 0.9 5.0 1.6 3.0 10.5 1.3 5.1 1.4 2.8 10.6 5.4 6.9
Flagship destinations 7.2 25.6 11.9 15.1 59.8 8.5 24.2 10.6 13.4 56.7 4.6 6.9
Developments and other 1.3 1.0 2.2 0.7 5.2 1.0 0.9 1.5 0.6 4.0 6.1 7.6
Managed portfolio 8.5 26.6 14.1 15.8 65.0 9.5 25.1 12.1 14.0 60.7 4.6 7.0
The table above compares rents passing (as per Table 4) on a headline basis for those units with leases expiring or subject to a tenant break in each year
compared to the ERV of those units determined by the Group’s valuers on a net effective basis (as per Table 4).
Top ten tenants at 31 December 2023 (ranked by passing rents)
Table 7
Proportionally consolidated
Passing rent
£m
% of total
passing rent
Inditex 9.6 5.1
H&M 3.8 2.0
Next 3.4 1.8
Selfridges 3.2 1.7
River Island 2.8 1.5
CK Hutchison Holdings 2.6 1.4
JD Sports 2.5 1.4
Boots 2.3 1.2
Watches of Switzerland 2.2 1.2
Signet 2.1 1.1
34.5 18.4
183Hammerson plc Annual Report 2023
PORTFOLIO ANALYSIS continued
Cost ratio
Table 8
Proportionally consolidated
2023
£m
2022
£m
Adjusted gross administration costs 51.5 59.8
Business transformation costs A 13.2 5.1
Gross administration costs 64.7 64.9
Property fee income (8.4) (11.5)
Management fee receivable (6.5) (5.5)
Property outgoings 39.1 39.1
Less inclusive lease costs recovered through rent (6.4) (9.1)
Total operating costs B 82.5 77.9
Less vacancy costs (8.6) (12.3)
Total operating costs excluding vacancy costs C 73.9 65.6
Gross rental income 208.4 215.2
Ground rents payable (1.8) (1.3)
Less inclusive lease costs recovered through rent (6.4) (9.1)
Gross rental income D 200.2 204.8
Cost ratio including vacancy costs B/D 41.2% 38.0%
Cost ratio excluding vacancy costs C/D 36.9% 32.0%
Cost ratio including vacancy costs (excluding business transformation costs) (B-A)/D 34.6% 35.5%
The Group’s business model for developments is to use a combination of in-house resource and external advisors. The cost of external advisors is
capitalised to the cost of developments. The cost of employees working on developments is generally expensed, but capitalised subject to meeting certain
criteria related to the degree of time spent on and the stage of progress of specific projects. Employee costs of £0.1m (2022: £0.8m) were capitalised as
development costs and are not included within ‘Gross administration costs’.
184Hammerson plc Annual Report 2023
Other Information
Additional Information – Unaudited continued
Valuation analysis
Table 9
2023
Proportionally consolidated – including
Value Retail
Properties
at valuation
£m
Revaluation
losses in the
year
£m
Income
return
a
%
Capital
return
a,b
%
Total
return
a,b
%
Initial
yield
%
True
equivalent
yield
%
Nominal
equivalent
yield
c
%
UK 863.1 (21.8) 8.7 (2.4) 6.1 7.8 8.5 8.1
France 1,003.3 (15.2) 4.6 (4.3) 0.1 4.4 5.3 5.1
Ireland 629.7 (37.5) 5.7 (5.6) (0.2) 5.4 6.0 5.8
Flagship destinations 2,496.1 (74.5) 6.3 (4.0) 2.0 5.8 6.6 6.3
Developments and other 280.0 (44.6) 2.7 (6.2) (3.6) 8.2 10.2 9.6
Managed portfolio 2,776.1 (119.1) 5.9 (4.1) 1.6
5.9 6.7 6.4
Value Retail 1,885.7 (7.7) 6.2 (0.4) 5.8
Group portfolio 4,661.8 (126.8) 6.0 (2.6) 3.2
2022
Proportionally consolidated – including
ValueRetail
Properties
at valuation
£m
Revaluation
losses in the
year
£m
Income
return
a
%
Capital
return
a,b
%
Total
return
a,b
%
Initial
yield
%
True
equivalent
yield
%
Nominal
equivalent
yield
c
%
UK 871.0 (90.2) 7.9 (9.4) (2.1) 7.7 8.4 8.0
France 1,241.0 (57.2) 4.8 (4.6) – 4.4 5.2 5.0
Ireland 676.4 (20.1) 5.2 (3.0) 2.1 5.3 5.7 5.5
Flagship destinations 2,788.4 (167.5) 6.0 (5.9) (0.2) 5.7 6.3 6.1
Developments and other 431.7 (53.5) 2.3 (14.8) (12.8) 7.0 10.3 9.7
Managed portfolio 3,220.1 (221.0) 5.4 (7.3) (2.3)
5.8 6.6 6.3
Value Retail 1,887.0 (60.7) 5.3 (3.1) 2.0
Group portfolio 5,107.1 (281.7) 5.3 (5.8) (0.7)
a Returns included 100% of Italik, 75% of which was classified as a trading property until its sale in March 2023.
b Capital and Total return figures include the losses on disposal and impairment charges on derecognised assets (Highcross and O’Parinor).
c Nominal equivalent yields are included within the unobservable inputs to the portfolio valuations as defined by IFRS 13. The nominal equivalent yield for the
Reported Group was 5.7% (2022: 5.7%).
185Hammerson plc Annual Report 2023
PORTFOLIO ANALYSIS continued
Net Initial Yield
Table 10
Investment portfolio
Proportionally consolidated
Note/
Table
2023
£m
2022
£m
Wholly owned a 3B 1,396.2 1,461.0
Share of Property interests
3B 1,379.9 1,722.9
Trading properties
3B – 36.2
Net investment portfolio valuation on a proportionally consolidated basis
3B 2,776.1 3,220.1
Less: Developments b (192.3) (249.0)
Completed investment portfolio 2,583.8 2,971.1
Purchasers’ costs c 171.9 197.2
Grossed up completed investment portfolio A 2,755.7 3,168.3
Annualised cash passing rental income 182.4 207.1
Non-recoverable costs (15.5) (21.1)
Rents payable (4.1) (3.8)
Annualised net rent B 162.8 182.2
Add:
Notional rent expiration of rent-free periods and other lease incentives d 7.8 3.2
Future rent on signed leases 1.7 3.8
Topped-up annualised net rent C 172.3 189.2
Add back: Non-recoverable costs 15.5 21.1
Passing rents
Table 4 187.8 210.3
Net initial yield B/A 5.9% 5.8%
‘Topped-up’ net initial yield C/A 6.3% 6.0%
a 31 December 2022 figure included 100% of Italik, 75% of which is part of trading properties. The Group’s 100% interest was sold in March 2023.
b Included within the Developments and other portfolio.
c Purchasers’ costs equate to 6.7% (2022: 6.7%) of the value of the completed investment portfolio.
d Weighted average remaining rent-free period is 0.5 years (2022: 0.7 years).
Capital expenditure
Table 11
2023 2022
Proportionally consolidated Note
Reported
Group
£m
Share of
Property
interests
£m
Propor-
tionally
consoli-
dated
£m
Reported
Group
£m
Share of
Property
interests
£m
Propor-
tionally
consoli-
dated
£m
Developments 3 10 13 5 10 15
Capital expenditure – creating area 1 – 1 14 – 14
Capital expenditure – no additional area 12 13 25 3 24 27
Tenant incentives 4 4 8 16 1 17
Total
3B 20 27 47 38 35 73
Conversion from accruals to cash basis (1) (3) (4) (2) 5 3
Total on cash basis 19 24 43 36 40 76
186Hammerson plc Annual Report 2023
Other Information
Additional Information – Unaudited continued
BALANCE SHEET INFORMATION
Note 2 to the financial statements shows the Group’s proportionally consolidated income statement. The Group’s proportionally consolidated balance
sheet and net debt are shown in Tables 12 and 13 respectively. As explained in note 3 to the financial statements, the Group’s interest in Value Retail is not
proportionally consolidated as it is not under the Group’s management.
Balance sheet
Table 12
2023 2022
Note
Reported
Group
£m
Share of
Property
interests
£m
Propor-
tionally
consoli-
dated
£m
Reported
Group
£m
Share of
Property
interests
£m
Propor-
tionally
consoli-
dated
£m
Non-current assets
Investment properties 1,396.2 1,379.9 2,776.1 1,461.0 1,722.9 3,183.9
Interests in leasehold properties 32.7 15.4 48.1 34.0 15.4 49.4
Right-of-use assets 3.9 – 3.9 9.5 – 9.5
Plant and equipment 0.9 – 0.9 1.4 – 1.4
Investment in joint ventures 1,193.2 (1,193.2) – 1,342.4 (1,342.4) –
Investment in associates 1,115.0 – 1,115.0 1,297.1 (107.7) 1,189.4
Other investments 8.8 – 8.8 9.8 – 9.8
Trade and other receivables 1.9 1.3 3.2 3.2 5.0 8.2
Derivative financial instruments – – – 7.0 6.3 13.3
Restricted monetary assets 21.4 – 21.4 21.4 – 21.4
3,774.0 203.4 3,977.4 4,186.8 299.5 4,486.3
Current assets
Trading properties – – – 36.2 – 36.2
Trade and other receivables 74.1 22.0 96.1 85.9 43.4 129.3
Derivative financial instruments 5.2 1.4 6.6 0.1 – 0.1
Restricted monetary assets 2.2 0.2 2.4 8.6 21.0 29.6
Cash and cash equivalents 472.3 97.3 569.6 218.8 117.7 336.5
553.8 120.9 674.7 349.6 182.1 531.7
Total assets 4,327.8 324.3 4,652.1 4,536.4 481.6 5,018.0
Current liabilities
Trade and other payables (129.9) (46.0) (175.9) (168.5) (66.8) (235.3)
Loans (108.6) (260.0) (368.6) – (126.1) (126.1)
Tax (0.3) – (0.3) (0.5) (0.3) (0.8)
Derivative financial instruments (2.3) – (2.3) (16.1) – (16.1)
(241.1) (306.0) (547.1) (185.1) (193.2) (378.3)
Non-current liabilities
Trade and other payables (55.5) (2.4) (57.9) (56.3) (7.0) (63.3)
Obligations under head leases (37.3) (15.8) (53.1) (38.1) (15.8) (53.9)
Loans (1,515.9) – (1,515.9) (1,646.4) (265.5) (1,911.9)
Deferred tax (0.4) (0.1) (0.5) (0.4) (0.1) (0.5)
Derivative financial instruments (15.0) – (15.0) (23.7) – (23.7)
(1,624.1) (18.3) (1,642.4) (1,764.9) (288.4) (2,053.3)
Total liabilities (1,865.2) (324.3) (2,189.5) (1,950.0) (481.6) (2,431.6)
Net assets 2,462.6 – 2,462.6 2,586.4 – 2,586.4
EPRA adjustment 9B 79.4 47.3
EPRA NTA 10C 2,542.0 2,633.7
EPRA NTA per share 10C 51p 53p
187Hammerson plc Annual Report 2023
BALANCE SHEET INFORMATION continued
Net debt
Table 13
2023 2022
Proportionally consolidated
Reported
Group
£m
Share of
Property
interests
£m
Total
£m
Reported
Group
£m
Share of
Property
interests
£m
Total
£m
Cash and cash equivalents 472.3 97.3 569.6 218.8 117.7 336.5
Loans (1,624.5) (260.0) (1,884.5) (1,646.4) (391.6) (2,038.0)
Fair value of currency swaps (11.4) – (11.4) (30.6) – (30.6)
Net debt (1,163.6) (162.7) (1,326.3) (1,458.2) (273.9) (1,732.1)
Movement in net debt
Table 14
Proportionally consolidated
2023
£m
2022
£m
Opening net debt (1,732.1) (1,798.8)
Profit from operating activities 117.3 129.3
Decrease in receivables and restricted monetary assets 16.5 27.5
(Decrease)/increase in payables (31.0) 8.2
Adjustment for non-cash items 0.7 0.7
Cash generated from operations 103.5 165.7
Interest received 43.6 16.8
Interest paid (93.5) (73.5)
Early redemption of bonds 4.3 –
Debt and loan facility issuance and extension fees (0.6) (2.8)
Operating distributions from Value Retail 73.6 –
Premiums on hedging activities – (3.9)
Tax (paid)/repaid (0.4) 0.1
Cash flows from operating activities 130.5 102.4
Investing activities
Capital expenditure (42.9) (76.3)
Derecognition of JV cash (15.6) –
Derecognition of JV secured debt 125.0 –
Cash held within sold or derecognised entities (8.4) –
Sale of properties 216.4 191.9
Cash flows from investing activities 274.5 115.6
Financing activities
Share issue expenses – (0.5)
Purchase of own shares – (6.7)
Proceeds from awards of own shares 0.1 0.1
Equity dividends paid (30.0) (13.2)
Cash flows from financing activities (29.9) (20.3)
Exchange translation movement 30.7 (131.0)
Closing net debt (1,326.3) (1,732.1)
188Hammerson plc Annual Report 2023
Other Information
Additional Information – Unaudited continued
BALANCE SHEET INFORMATION continued
Total accounting return
Table 15
2023 2022
NTA
£m
NTA per
share
pence
NTA
£m
NTA per
share
pence
EPRA NTA at 1 January 2,633.7 52.7 2,840.1 64.3
Scrip dividend dilution in NTA per share in the year – – – (7.5)
EPRA NTA at 1 January rebased to reflect scrip dividends in the year A 2,633.7 52.7 2,840.1 56.8
EPRA NTA at 31 December 2,542.0 50.8 2,633.7 52.7
Reduction in NTA (91.7) (1.9) (206.4) (4.1)
Cash dividends in the year 35.9 0.7 13.2 0.3
B (55.8) (1.2) (193.2) (3.8)
Total accounting return B/A (2.1)% (6.8)%
FINANCING METRICS
Net debt : EBITDA
Table 16
Proportionally consolidated
Note/
Table
2023
£m
2022
£m
Adjusted operating profit 163.0 159.4
Amortisation of tenant incentives and other items within net rental income (3.6) (0.1)
Share-based remuneration 3.6 3.0
Depreciation 3.0 4.1
EBITDA A 166.0 166.4
Net debt B
Table 13 1,326.3 1,732.1
Net debt : EBITDA B/A 8.0x 10.4x
Interest cover
Table 17
Proportionally consolidated Note
2023
£m
2022
£m
Adjusted net rental income 2 167.5 174.8
Less net rental income in associates: Italie Deux
13B (1.1) (4.4)
A 166.4 170.4
Adjusted net finance costs
2 45.9 54.0
Less interest on lease obligations and pensions (3.3) (2.6)
Add back capitalised interest
6 – 1.2
B 42.6 52.6
Interest cover A/B 3.91x 3.24x
Gearing
Table 18
Proportionally consolidated
Note/
Table
2023
£m
2022
£m
Net debt Table13 1,326.3 1,732.1
Unamortised borrowing costs 18.4 15.9
Cash held within investments in associates: Italie Deux – 6.8
Net debt for gearing A 1,344.7 1,754.8
Equity shareholders’ funds – Consolidated net tangible worth B 2,462.6 2,586.4
Gearing A/B 54.6% 67.8%
189Hammerson plc Annual Report 2023
FINANCING METRICS continued
Loan to value
Table 19
Proportionally consolidated
Note/
Table
2023
£m
2022
£m
Net debt – ‘Loan’ A Table 13 1,326.3 1,732.1
Managed property portfolio B
3B 2,776.1 3,220.1
Investment in Value Retail
13D 1,115.0 1,189.4
‘Value’ C 3,891.1 4,409.5
Loan to value – Headline A/C 34.1% 39.3%
Net debt – Value Retail D 729.6 674.9
Property portfolio – Value Retail E
3B 1,885.7 1,887.0
Loan to value – Full proportional consolidation of Value Retail (A+D)/(B+E) 44.1% 47.1%
Net payables – Managed Portfolio 110.9 160.3
Net payables – Value Retail 76.4 14.2
Net payables – Group F 187.3 174.5
Loan to value – EPRA (A+D+F)/(B+E)
Table 21 48.1% 49.2%
Unencumbered asset ratio
Table 20
Proportionally consolidated
Note/
Table
2023
£m
2022
£m
Managed property portfolio 3B 2,776.1 3,220.1
Adjustments:
– Properties held in associates: Italie Deux – (102.9)
– Encumbered assets * (487.7) (651.0)
Total unencumbered assets A 2,288.4 2,466.2
Net debt – proportionally consolidated
Table 13 1,326.3 1,732.1
Adjustments:
– Cash held within investments in associates: Italie Deux – 6.8
– Cash held within investments in encumbered joint ventures * 39.4 50.8
– Unamortised borrowing costs – Group 18.4 15.9
– Encumbered debt * (260.2) (392.3)
Total unsecured debt B 1,123.9 1,413.3
Unencumbered asset ratio A/B 2.04x 1.74x
* At 31 December 2023 encumbered assets and debt relate to Dundrum. At 31 December 2022 they also included Highcross and O’Parinor where the lenders
took control of the secured properties in 2023 at which point we derecognised the assets and liabilities of these entities.
190Hammerson plc Annual Report 2023
Other Information
Additional Information – Unaudited continued
EPRA LONG TERM VALUE METRIC
Table 21
Proportionally consolidated 2023
Reported
Group
£m
Share of
joint
ventures
£m
Share of
associates
£m
Non-
controlling
interests
£m
Total
£m
Include:
Loans 1,624.5 260.0 793.9 – 2,678.4
Foreign currency derivatives 11.4 – – – 11.4
Net payables
a
87.0 23.9 76.4 – 187.3
Exclude:
Cash and cash equivalents (472.3) (97.3) (64.4) – (634.0)
Net debt A 1,250.6 186.6 805.9 – 2,243.1
Include:
Investment properties at fair value 1,396.2 1,379.9 1,885.7 – 4,661.8
Total property value B 1,396.2 1,379.9 1,885.7 – 4,661.8
EPRA Long Term Value A/B 48.1%
Proportionally consolidated 2022
Reported
Group
£m
Share of joint
ventures
£m
Share of
associates
£m
Non-
controlling
interests
£m
Total
£m
Include:
Loans 1,646.4 391.6 674.9 – 2,712.9
Foreign currency derivatives 30.6 – – – 30.6
Net payables
a
101.0 14.7 82.8 – 198.5
Exclude:
Cash and cash equivalents (218.8) (117.7) (93.6) – (430.1)
Net debt A 1,559.2 288.6 664.1 – 2,511.9
Include:
Investment properties at fair value 1,461.0 1,722.9 1,887.0 – 5,070.8
Properties held for sale – 36.2 – – 36.2
Total property value B 1,461.0 1,759.1 1,887.0 – 5,107.0
EPRA Long Term Value A/B 49.2%
Rows with zero balances have intentionally been excluded from the EPRA specified format in the above tables.
a Net payables includes the following balance sheet accounts: interests in leasehold properties, right-of-use assets, trade and other receivables (current and non-
current), restricted monetary assets (current and non-current), trade and other payables (current and non-current), obligations under head leases (current and
non-current), tax and deferred tax (at 50%).
191Hammerson plc Annual Report 2023
KEY PROPERTIES
Key property listing at 31 December 2023
Table 22
Managed portfolio Location
Accounting
classification
where not
wholly-owned Ownership Area, m
2
No. of
tenants
Passing rent
£m
Flagship destinations
UK
Brent Cross London Joint venture 41% 94,000 114 12.8
Bullring Birmingham Joint venture a 50% 117,000 152 23.9
Cabot Circus Bristol Joint venture b 50% 106,300 109 10.8
The Oracle Reading Joint venture 50% 72,100 98 10.4
Union Square Aberdeen 100% 51,800 72 15.9
Westquay Southampton Joint venture 50% 94,400 110 13.6
France
Les 3 Fontaines Cergy c 100% 76,600 197 21.9
Les Terrasses du Port Marseille 100% 62,800 166 30.3
Ireland
Dundrum Town Centre Dublin Joint venture 50% 125,600 152 27.5
Ilac Centre Dublin Joint operation 50% 27,900 64 4.1
Pavilions Swords Joint operation 50% 44,400 94 7.2
Developments and other (key properties)
Bristol Broadmead Bristol Joint venture b 50% 34,800 62 2.9
Dublin Central Dublin 100% n/a n/a n/a
Dundrum Phase II Dublin Joint venture 50% n/a n/a n/a
Grand Central Birmingham Joint venture a 50% 39,000 53 3.7
Eastgate Leeds 100% n/a n/a n/a
Martineau Galleries Birmingham a 100% 35,200 41 2.0
Pavilions land Swords 100% n/a n/a n/a
The Goodsyard London Joint venture 50% n/a n/a n/a
Value Retail Associate d Ownership Area, m
2
No. of
tenants
Income
£m
Bicester Village Bicester 50% 28,000 159 77.9
La Roca Village Barcelona 41% 25,900 146 23.5
Las Rozas Village Madrid 38% 15,600 99 14.8
La Vallée Village Paris 26% 21,600 109 25.5
Maasmechelen Village Brussels 27% 20,000 106 6.3
Fidenza Village Milan 34% 21,100 117 7.3
Wertheim Village Frankfurt 45% 20,900 116 11.0
Ingolstadt Village Munich 15% 21,000 112 3.9
Kildare Village Dublin 41% 21,600 117 11.7
a Collectively known as the Birmingham Estate.
b Collectively known as the Bristol Estate.
c Property includes areas held under co-ownership; figures above reflect the Group’s ownership interests only.
d Passing rent for Value Retail represents annualised base and turnover rent at the Group’s ownership share.
192Hammerson plc Annual Report 2023
Other Information
Additional Information – Unaudited continued
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
Income statement – Proportionally consolidated a
Revenue 266.7 275.0 322.2 368.2 457.8
Gross rental income 208.4 215.2 250.4 288.2 361.0
Net rental income 167.5 177.2 182.5 148.5 308.5
Profit from operating activities 117.4 129.3 122.5 104.4 260.2
Other net losses including revaluation and impairments (140.1) (222.1) (466.2) (1,598.6) (1,197.9)
Share of results of joint ventures – – – (20.7) 34.3
Share of results of associates 14.8 (5.3) 20.0 (135.8) 210.6
Net finance costs (42.7) (65.6) (103.6) (83.6) (86.2)
Loss before tax (50.6) (163.7) (427.3) (1,734.3) (779.0)
Tax charge (0.8) (0.5) (1.8) (0.6) (2.2)
Loss after tax (51.4) (164.2) (429.1) (1,734.9) (781.2)
Adjusted earnings 116.3 104.9 65.5 27.4 214.0
Balance sheet – Proportionally consolidated
Investment and development properties 2,776.1 3,183.9 3,375.3 4,413.8 5,667.7
Investment in joint ventures – – – – 379.0
Investment in associates 1,115.0 1,189.4 1,140.8 1,154.1 1,355.3
Cash and cash equivalents 569.6 336.5 449.8 521.7 123.1
Borrowings b (1,895.9) (2,068.6) (2,253.2) (2,743.0) (2,939.9)
Other assets 191.4 299.0 404.5 320.0 250.1
Other liabilities (293.6) (353.8) (371.2) (457.7) (458.3)
Net assets 2,462.6 2,586.4 2,746.0 3,208.9 4,377.0
Movement in net debt – Proportionally consolidated
Opening net debt (1,732.1) (1,798.8) (2,215.4) (2,816.8) (3,376.0)
Cash flows from operating activities 130.5 102.4 (17.7) (40.9) 194.1
Cash flows from investing activities 274.5 115.6 328.1 232.3 391.5
Cash flows from financing activities (29.9) (20.3) (30.8) 518.3 (202.0)
Foreign exchange 30.7 (131.0) 137.0 (108.3) 175.6
Closing net debt (1,326.3) (1,732.1) (1,798.8) (2,215.4) (2,816.8)
Per share data c
Basic loss per share (1.0)p (3.3)p (8.7)p (62.4)p (46.6)p
Adjusted earnings per share 2.3p 2.1p 1.3p 1.3p 12.8p
Dividend per share – cash basis 1.5p 0.2p 0.4p 0.4p 5.1p
Net tangible asset value (NTA) per share 51p 53p 64p 82p 116p
a Income statement for 2021 and 2020 includes discontinued operations.
b Borrowings comprise loans and currency swaps.
c Comparative per share data has been restated following the rights issue in September 2020. Earnings per share metrics for 2021 and 2020 have been restated
in respect of the bonus element of scrip dividends.
193Hammerson plc Annual Report 2023
Other Information
Five year record
Registered office and principal UK address
Hammerson plc
Marble Arch House
66 Seymour Street
London W1H 5BX
Registered in England No. 360632
+44 (0)20 7887 1000
Principal address in France
Hammerson France SAS
36 Rue de Châteaudun
Paris 75009
+33 (0)156 69 30 00
Principal address in the Republic of Ireland
Hammerson Group Management Limited
Building 10, Pembroke District
Dundrum Town Centre, Dundrum
Dublin D16 A6P2
Advisers
Valuers CBRE Limited
Cushman and Wakefield LLP
Jones Lang LaSalle Limited
Auditor PricewaterhouseCoopers LLP
Joint Brokers and
Financial Advisers
Barclays Bank plc
Morgan Stanley & Co. International plc
Financial Adviser Lazard Ltd
Primary and secondary listings
The Company has its primary listing on the London Stock Exchange and
secondary inward listings on the Johannesburg Stock Exchange and on
Euronext Dublin. Our secondary listing equity sponsors are Investec
Bank Limited in respect of the Johannesburg Stock Exchange and
Goodbody Stockbrokers UC in respect of the Euronext Dublin listing.
Shareholder administration
For assistance with queries about the administration of shareholdings,
such as lost share certificates, change of address, change of ownership
or dividend payments, please contact the relevant Registrar or Transfer
Secretaries.
UK Registrar
Link Group
10th Floor, Central Square
29 Wellington Street
Leeds LS1 4DL
shareholderenquiries@linkgroup.co.uk
www.signalshares.com
+44 (0)371 664 0300
Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the UK will be charged at the applicable
international rate. Lines are open between 9:00 am to 5:30 pm,
Monday to Friday, excluding public holidays in England and Wales.
South African Transfer Secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Avenue
Rosebank 2196
South Africa
or
Private Bag X9000
Saxonwold 2132
South Africa
0861 100 933 (local in South Africa)
web.queries@computershare.co.za
Annual General Meeting
The Annual General Meeting will be held at 9:00 am (UK time) on
25 April 2024. Details of the Annual General Meeting and the
resolutions to be voted upon can be found in the Notice of Meeting
which is available on our website at www.hammerson.com.
Payment of dividends
UK shareholders who do not currently have their dividends paid direct
to a bank or building society account and who wish to do so, should
complete a mandate instruction available from the Registrar or register
their mandate at www.signalshares.com. Shareholders outside the UK
may be able to have dividends in excess of £10 paid into their bank
account directly in their local currency via the Link Group international
payments service. Details and terms and conditions may be viewed at
ww2.linkgroup.eu/ips.
ShareGift
Shareholders with a small number of shares, the value of which makes
it uneconomic to sell them, may wish to consider donating them to
charity through ShareGift, a registered charity (registered charity no:
1052686). Further information about ShareGift is available at
www.sharegift.org, by email at help@sharegift.org, by calling on
+44 (0)207 930 3737 or by writing to ShareGift, PO Box 72253,
London, SW1P 9LQ. To donate shares, please contact ShareGift.
Strate Charity Shares
South African shareholders for whom the cost of selling their shares
would exceed the market value of such shares may wish to consider
donating them to charity. An independent non-profit organisation called
Strate Charity Shares has been established to administer this process.
For further details or donations contact the Strate Charity Shares’
toll-free helpline on 0800 202 363 (if calling from South Africa) or
+27 11 870 8207 (if calling from outside South Africa), email
charityshares@computershare.co.za, or visit www.strate.co.za.
194Hammerson plc Annual Report 2023
Other Information
Shareholder Information
Shareholder security
Share fraud includes scams where fraudsters cold call investors offering
them overpriced, worthless or non-existent shares, or offer to buy
shares owned by investors at an inflated price. We advise shareholders
to be vigilant of unsolicited mail or telephone calls regarding buying or
selling shares. For more information visit www.fca.org.uk/scams or
call the FCA Consumer Helpline on +44(0)800 111 6768. This is a
freephone number from the UK. Lines are open Monday to Friday,
8:00 am to 6:00 pm, and Saturday, 9:00 am to 1:00 pm.
Unsolicited mail
Hammerson is obliged by law to make its share register available
on request to other organisations. This may result in shareholders
receiving unsolicited mail. To limit the receipt of unsolicited mail,
UK shareholders may register with the Mailing Preference Service,
an independent organisation whose services are free, by visiting
www.mpsonline.org.uk. Once a shareholder’s name and address
details have been registered, the Mailing Preference Service will advise
companies and other bodies that subscribe to the service not to send
unsolicited mail to the address registered.
UK Real Estate Investment Trust (REIT) taxation
As a UK REIT, Hammerson plc is exempt from corporation tax on rental
income and gains on UK investment properties but is required to pay
Property Income Distributions (PIDs). UK shareholders will be taxed on
PIDs received at their full marginal tax rates. A REIT may in addition pay
normal dividends.
For most shareholders, PIDs will be paid after deducting withholding
tax at the basic rate. However, certain categories of UK shareholder are
entitled to receive PIDs without withholding tax, principally UK resident
companies, UK public bodies, UK pension funds and managers of ISAs,
PEPs and Child Trust Funds. Further information on UK REITs is
available on the Company’s website, including a form to be used by
shareholders to certify if they qualify to receive PIDs without
withholding tax.
PIDs paid to overseas shareholders are subject to withholding tax at
20%. South African shareholders may apply to His Majesty’s Revenue
and Customs after payment of a PID for a refund of the difference
between the 20% withholding tax and the prevailing UK/South African
double tax treaty rate. Other overseas shareholders may be eligible to
apply for similar refunds of UK withholding tax under the terms of the
relevant tax treaties.
Normal dividends paid to overseas shareholders are paid gross but may
be subject to taxation in the shareholder’s country of residence. For
South African shareholders, dividends tax at 20% will be withheld and
paid over to the South African Revenue Service on the shareholders’
behalf. Certain shareholders, including South African tax resident
companies, retirement funds and approved public benefit
organisations, are exempt from dividends tax but it is the responsibility
of each shareholder to seek their own advice. Dividends tax does not
apply to scrip dividends, whether paid as a PID or a normal dividend.
Forward-looking statements
Certain statements made in this Annual Report are forward-looking and
are based on current expectations concerning future events which are
subject to a number of assumptions, risks and uncertainties. Many of
these assumptions, risks and uncertainties relate to factors that are
beyond the Group’s control and which could cause actual results to
differ materially from any expected future events or results referred to
or implied by these forward-looking statements. Any forward-looking
statements made are based on the knowledge and information
available to Directors on the date of publication of this Annual Report.
Unless otherwise required by applicable laws, regulations or
accounting standards, the Group does not undertake any obligation to
update or revise any forward-looking statements, whether as a result of
new information, future developments or otherwise. Accordingly, no
assurance can be given that any particular expectation will be met and
reliance should not be placed on any forward-looking statement.
Nothing in this Annual Report should be regarded as a profit estimate
or forecast.
195Hammerson plc Annual Report 2023
Adjusted earnings Reported amounts excluding certain items in accordance with EPRA guidelines and also certain cash and
non-cash items which the Directors believe are not reflective of the normal day-to-day operating activities of
theGroup.
Annual Incentive Plan (AIP) Annual bonus plan for all employees, including Executive Directors.
Average cost of debt or weighted
average interest rate (WAIR)
The cost of finance expressed as a percentage of the weighted average debt (can be calculated on both a net and
gross debt basis) during the period.
Borrowings The aggregate of loans and currency swaps but excluding the fair value of the interest rate swaps, as the fair value
crystallises over the life of the instruments rather than at maturity.
BREEAM An environmental rating assessed under the Building Research Establishment Environmental
AssessmentMethod.
Capital return The change in property value during the period after taking account of capital expenditure, calculated on a
monthly time-weighted and constant currency basis.
Compulsory Voluntary
Arrangement (CVA)
A legally binding agreement with creditors to restructure liabilities, including future lease liabilities.
Corporate Sustainability
Reporting Directive (CSRD)
A new directive requiring large companies to disclose ESG information based on the European Sustainability
Reporting Standards (ESRS). The Group is expecting to report under CSRD in 2025.
Dividend cover Adjusted earnings per share divided by dividend per share.
EBITDA Earnings before interest, tax, depreciation and amortisation.
EPRA The European Public Real Estate Association, a real estate industry body, of which the Company is a member.
This organisation has issued Best Practice Recommendations with the intention of improving the transparency,
comparability and relevance of the published results of listed real estate companies in Europe.
Equivalent yield (true and
nominal)
The capitalisation rate applied to future cash flows to calculate the gross property value. The cash flows reflect
future rents resulting from lettings, lease renewals and rent reviews based on current ERVs. The true equivalent
yield (TEY) assumes rents are received quarterly in advance, while the nominal equivalent yield (NEY) assumes
rents are received annually in arrears. These yields are determined by the Group’s external valuers.
ERV The estimated market rental value of the total lettable space in a property calculated by the Group’s external
valuers on a net effective basis.
ESG Using environmental, social and governance factors to evaluate companies and countries on how far advanced
they are with sustainability.
F&B Food and beverage.
Gearing Net debt expressed as a percentage of equity shareholders’ funds calculated as per the covenant definition in the
Group’s unsecured bank loans and facilities and private placements.
Gross property value or Gross
asset value (GAV)
Property value before deduction of purchasers’ costs, as provided by the Group’s external valuers.
Gross rental income (GRI) Income from leases, car parks and commercialisation, after amortising lease incentives.
Headline rent The annual rental income derived from a lease, including base and turnover rent but after rent-free periods.
Inclusive lease A lease, often for a short period, under which the rent includes costs such as service charge, rates and utilities.
Instead, the landlord incurs these costs as part of the overall commercial arrangement.
Income return Income derived from property taken as a percentage of the property value on a time-weighted and constant
currency basis after taking account of capital expenditure.
Initial yield (or Net initial yield
(NIY))
Annual cash rents receivable (net of head rents and the cost of vacancy, and, in the case of France, net of an
allowance for costs of approximately 5%, primarily for management fees), as a percentage of gross property
value, as provided by the Group’s external valuers. Rents receivable following the expiry of rent-free periods are
not included. Rent reviews are assumed to have been settled at the contractual review date at ERV.
Interest cover Adjusted net rental income excluding associates, divided by Adjusted net finance costs before capitalised
interest and interest charges on lease obligations and pensions.
Interest rate or currency swap
(or derivatives)
An agreement with another party to exchange an interest or currency rate obligation for a pre-determined period.
Joint venture and associate
management fees
Fees charged to joint ventures and associates for accounting, secretarial, asset and development
management services.
196Hammerson plc Annual Report 2023
Other Information
Glossary
Leasing Comprises new lettings and renewals.
Leasing vs Passing rent A comparison of Headline rent from new leases and renewals to the Passing rent at the most recent balance
sheet date.
Like-for-like (LFL) GRI/NRI The percentage change in GRI/NRI for flagship properties owned throughout both current and prior periods,
calculated on a constant currency basis. Properties undergoing a significant extension project are excluded from
this calculation during the period of the works. For interim reporting periods properties sold between the balance
sheet date and the date of the announcement are also excluded from this metric.
Loan to value (LTV) Net debt expressed as a percentage of property portfolio value. The Group has three measures of LTV: Headline,
which includes the Group’s investment in Value Retail; Full proportional consolidation of Value Retail (FPC),
which incorporates the Group’s share of Value Retail’s net debt and property values; and EPRA, which includes an
adjustment for net payables.
Net effective rent (NER) Annual rent from a unit calculated by taking the total rent payable over the term of the lease to the earliest
termination date and deducting all tenant incentives.
Net rental income (NRI) GRI less net service charge expenses and cost of sales. Additionally, the change in provision for amounts not yet
recognised in the income statement is also excluded to calculate Adjusted NRI.
NTA (EPRA) EPRA Net Tangible Assets: An EPRA net asset per share measure calculated as equity shareholders’ funds with
adjustments made for the fair values of certain financial derivatives, deferred tax and any goodwill balances.
Occupancy rate The ERV of the area in a property or portfolio, excluding developments, which is let, expressed as a percentage of
the total ERV, excluding the ERV for car parks, of that property or portfolio.
Occupational cost ratio (OCR) The proportion of retailer’s sales compared with the total cost of occupation, including rent, local taxes
(i.e.business rates) and service charge. Calculated excluding department stores.
Over-rented The amount, or percentage, by which the ERV falls short of rent passing for reversion.
Passing rents or rents passing The annual rental income receivable from an investment property after rent-free periods, head rents, car park
costs and commercialisation costs.
Pre-let A lease signed with a tenant prior to the completion of a development or other major project.
Principal lease A lease signed with a tenant with a secure term of greater than one year.
Property fee income Amounts recharged to tenants or co-owners for property management services including, but not limited to
service charge management and rent collection fees.
Property Income Distribution
(PID)
A dividend, generally subject to withholding tax, that a UK REIT is required to pay from its tax-exempt property
rental business and which is taxable for UK-resident shareholders at their marginal tax rate.
Property interests (Share of) The Group’s non-wholly owned properties which management proportionally consolidate when reviewing the
performance of the business. These exclude Value Retail which is not proportionally consolidated.
Property outgoings The direct operational costs and expenses incurred by the landlord relating to property ownership and
management. This typically comprises void costs, net service charge expenses, letting related costs, marketing
expenditure, repairs and maintenance, tenant incentive impairment, bad debt expense relating to items
recognised in the income statement and other direct irrecoverable property expenses. These costs are included
within the Group’s calculation of like-for-like NRI and the cost ratio.
Proportional consolidation The aggregation of the financial results of the Reported Group and the Group’s Share of Property interests under
management (i.e. excluding Value Retail) as set out in note 2 to the financial statements.
QIAIF Qualifying Investor Alternative Investment Fund. A regulated tax regime in the Republic of Ireland which
exempts participants from Irish tax on property income and chargeable gains subject to certain requirements.
REIT Real Estate Investment Trust. A tax regime which in the UK exempts participants from corporation tax both on UK
rental income and gains arising on UK investment property sales, subject to certain requirements.
Rent collection Rent collected as a percentage of rent due for a particular period after taking account of any rent concessions
granted for the relevant period.
Rents passing for reversion Passing rent adjusted for tenant incentives and inclusive costs to be on a net effective basis. This will increase or
decrease due to changes to rents passing at rent review or the next lease event (i.e. expiry or break), or by leasing
vacant space or space undergoing reconfiguration.
Reported Group The financial results as presented under IFRS.
Reversionary or under-rented The amount, or percentage, by which the ERV exceeds the rent passing for reversion.
197Hammerson plc Annual Report 2023
RIDDOR A health and safety reporting obligation to report deaths, injuries, diseases and ‘dangerous occurrences’ at work,
including near misses, under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013.
Scope 1 emissions Direct emissions from owned or controlled sources.
Scope 2 emissions Indirect emissions from the generation of purchased energy.
Scope 3 emissions All indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including
both upstream and downstream emissions.
SAICA South African Institute of Chartered Accountants.
SIIC Sociétés d’Investissements Immobiliers Côtées. A tax regime in France which exempts participants from the
French tax on property income and gains subject to certain requirements.
SONIA Sterling Overnight Index Average.
Task Force on Climate-related
Financial Disclosures (TCFD)
An organisation established with the goal of developing a set of voluntary climate-related financial risk
disclosures to be adopted by companies to inform investors and the public about the risks they face relating to
climate change.
Temporary lease A lease with a period of one year or less, measured to the earlier of lease expiry or tenant break.
Total accounting return (TAR) The growth in EPRA NTA per share plus dividends paid, expressed as a percentage of EPRA NTA per share at the
beginning of the period. The return excludes the dilution impact from scrip dividends.
Total development cost All capital expenditure on a development or other major project, including capitalised interest.
Total property return (TPR)
(ortotal return)
NRI, excluding the change in provision for amounts not yet recognised in the income statement, and capital
growth expressed as a percentage of the opening book value of property adjusted for capital expenditure,
calculated on a monthly time-weighted and constant currency basis.
Total shareholder return (TSR) Dividends and capital growth in a Company’s share price, expressed as a percentage of the share price at the
beginning of the period.
Transitional risk Business risk posed by regulatory and policy changes implemented to tackle climate change.
Turnover rent Rental income which is linked to an occupier’s revenues.
Vacancy rate The ERV of the area in a property, or portfolio, excluding developments, which is currently available for letting,
expressed as a percentage of the ERV of that property or portfolio.
WAULB/WAULT Weighted Average Unexpired Lease to Break/Term.
Yield on cost Passing rents expressed as a percentage of the total development cost of a property.
198Hammerson plc Annual Report 2023
Other Information
Glossary continued
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Hammerson plc
Marble Arch House
66 Seymour Street
London
W1H 5BX
www.hammerson.com
info@hammerson.com
+44 (0) 20 7887 1000