Hammerson Logo

KPIs

We monitor Key Performance Indicators, or KPIs, to measure our achievements against our strategic priorities.

The KPIs comprise financial and operational measures and each links to the three pillars of our strategy.

Annual Financial and Operational Metrics (31 Dec 2018)

Financial KPIs

Adjusted EPS growth

-1.6%

Description

Adjusted earnings per share (EPS) is the Group’s primary profit measure and reflects underlying profit divided by the average number of shares in issue and is calculated in line with EPRA guidelines as explained on page 176.

Performance

In 2018, adjusted EPS decreased by 0.5 pence, or 1.6%, to 30.6p. This was principally due to a reduction in NRI associated with disposals in 2017 and 2018 and the impact of tenant failure. These factors were partially offset by higher earnings from our premium outlets, lower net administration costs and a reduction in interest costs due to refinancing activity.

Financial KPIs

Net debt*

£3,406m

Description

Net debt is the measure by which we monitor the indebtedness of our business, and comprises borrowings less cash and deposits.

Performance

During 2018, the Group ’s net debt has reduced by £95 million to £3,406 million. The reduction is principally due to net disposal proceeds received of £553 million and net cash inflow from operations of £203 million, partially offset by capital expenditure of £218 million and share buybacks of £127 million.

As detailed in the Chief Executive ’s review on page 6, we plan to dispose of in excess of £500 million of properties from across our portfolio in 2019 to strengthen the Group ’s financial position.

* In 2018, net debt has replaced the cost ratio as a KPI, reflecting the Group ’s increased focus on capital efficiency

Financial KPIs

Total property return

0.0%

  • Weighted MSCI Benchmark
  • Hammerson Comparative Performance

Description

Total property return (TPR) is the metric we use to measure the income and capital growth of our property portfolio. It is calculated on a monthly time-weighted basis consistent with MSCI ’s methodology. We judge our success in generating superior property returns by comparing our performance with a weighted MSCI All Retail benchmark.

Performance

During 2018, the Group’s properties produced a total return of 0.0%. The Group’s investment and development portfolios produced total returns of -2.8% and 6.2% respectively. Premium outlets produced the highest return of 7.4%. At the date of this report, our MSCI benchmark is unavailable.

Financial KPIs

Like-for-like NRI growth*

-1.3%

Description

Net rental income (NRI) is the Group’s primary revenue measure. Like-for-like NRI growth is key to growing earnings and dividends. Growth is achieved through the implementation of our Product Experience Framework which helps us enliven and enhance our properties.

Performance

Like-for-like NRI declined by 1.3% in 2018. Income at our UK and French flagships declined by 1.3% and 0.9% respectively, whilst NRI at our UK retail parks fell by 4.3%. Irish properties produced growth of 1.6%.

Tenant failure reduced NRI by £7.1 million in 2018. Excluding this impact, like-for-like NRI would have grown by 0.4%

Proportionally consolidating the premium outlets growth of 5.2% would result in Group like-for-like NRI growth of 0.3%.

* Proportionally consolidated, excluding premium outlets. See the Financial review on page 48 for further explanation.

Operational KPIs

Occupancy

97.2%

Description

Keeping our properties occupied ensures we generate rental income and enlivens our destinations. The occupancy ratio measures the amount of space which is currently let. The ratio is calculated in line with EPRA guidance using the estimated rental value (ERV) of occupied space.

Performance

Occupancy remains above our 97.0% target, with 97.2% of the portfolio occupied at the end of 2018. Occupancy fell during the year, impacted by tenant failures during 2018. It was also impacted following the completion of two retail park developments which are not yet fully let and overall occupancy at UK retail parks decreased from 99.4% to 96.9%.

Operational KPIs

Leasing activity

£27.7m

Description

Our leasing strategy is designed to improve brand mix towards winning brands and categories, and differentiate our destinations. This KPI shows the amount of income secured across the investment portfolio including new lettings and lease renewals.

Performance

2018 leasing levels were 17% or £5.6 million below those experienced in 2017, but nonetheless demonstrated a strong performance in a challenging market.

£3.9 million of the reduction was due to lower leasing at UK retail parks.

In total there were 423 lettings comprising 156,600m2 of space. For principal leases, the rent was 6% higher than December 2017 ERVs and 5% higher than the previous passing rent.

Operational KPIs

Global emissions intensity ratio

122 MtCO2e
/£m

Description

Reducing carbon emissions is a key sustainability target. This ratio measures the amount of CO2e emissions from our properties and facilities, including corporate offices. The denominator is adjusted profit before tax for the same period. This ratio demonstrates our progress in decoupling business growth from increasing carbon emissions.

Performance

The ratio has reduced by 19% to 122mtCO2e/£m during 2018. This significant year-on-year improvement has been achieved by investment in cross-portfolio efficiency projects and focused energy management, and supported by grid decarbonisation in the UK.

Operational KPIs

Voluntary staff turnover

13.4%

Description

Our talented people are a key resource and we strive to retain, engage and develop them. We continue to monitor voluntary staff turnover to highlight any potential signs of demotivation or other people-related issues and include both corporate and centre-based employees in this measure.

Performance

In 2018, voluntary staff turnover increased to 13.4%. The increase compared with 2017 was largely due to 11 more leavers from our French office in 2018, whilst UK and Ireland staff turnover fell by 100 basis points. In spite of this increase, the turnover remains low compared to wider industry averages.

Working with Hammerson