CAPE TOWN - LEADING UK mall owner Hammerson, hard hit by the pandemic, would be led to safety through further disposals to strengthen the balance sheet, managed refinancing and sharpening the operations to maximise income.
This was according to chief executive Rita-Rose Gagné, who said on Friday that the retail sector, already in the grip of major structural change due to the growth of online sales, had been significantly impacted by pandemic restrictions, and there had been a number of retail failures.
“Combined, this has resulted in the largest fall in net rental income and UK asset values in the group’s history,” she said. Nevertheless, the share price was up 5.51 percent to close at R7.09 on the JSE on Friday.
She said a strategic and organisational review was being worked on to map out a route to future growth, to transform the business, in the context of what would remain a tough economic and structural backdrop.
Results for the year ended December 31 showed the portfolio value down 23.9 percent to £6.34 billion (about R133bn).
A final dividend of 0.2 pence per ordinary share was proposed, and an enhanced scrip dividend alternative of 2 pence per share was offered.
Net rental income fell 41 percent to £158m on a like-for-like basis excluding premium outlets, impacted by Covid-19 closures, tenant restructuring and higher provisions for bad debt and tenant incentives.
“If this pandemic has highlighted anything, it is how much we all crave human contact as inherently social beings. As a business, Hammerson provides the places and social infrastructure where people want and need to be, and I am confident it will have a vital role in shaping neighbourhoods and communities in the future,” said Gagné.
Footfall was severely impacted by Covid-19 closures and city centre locations of flagship centres, but there had been measured recovery during periods of reopening.
Net debt at £2.23bn was reduced by 21 percent due mainly to proceeds from a rights issue and disposal of nearly all of VIA Outlets. Liquidity was healthy at £1.75bn versus £1.21bn in 2019.
A rights issue raised £532m, while proceeds from disposals amounted to £328m. In 2021, £73m would be realised from the sale of Brent South
Shopping Park and exchange of the minority stakes in Espace Saint-Quentin and Nicetoile.
Group occupancy was 94.3 percent versus 97.2 in 2019. Some 76 percent of 2020 rent was collected, a figure that was up from 61 percent at the half year, said CFO James Stenton.
A cash break-even for 2021 would require an average rent collection of about 80 percent, which was anticipated barring any unforeseen events related to the pandemic. He said while they expected a “stepped recovery” post Covid-19 related restrictions, it was at this stage impossible to guess about the possible extent of this.
BUSINESS REPORT