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KPIs

Monitoring value creation. We use our key performance indicators to ensure we are delivering our strategy.

They are split between financial and operational measures, and each link to our three strategic elements.

Strategy

Create differentiated destinations

Focus on growing consumer markets

Promote financial efficiency and partnerships

Annual Financial and Operational Metrics (31 Dec 2017)

Financial KPIs

Annual Total Property Return

6.8%

  • Weighted IPD Benchmark
  • Hammerson Comparative Performance

Description

Total property return (TPR) is the main 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 IPD’s methodology. We judge our success in generating superior property returns by comparing our performance with a weighted IPD All Retail benchmark.

Performance

During 2017, the Group’s properties produced a total return of 6.8%. The Group’s investment and development portfolios produced total returns of 4.3% and 6.9% respectively. Premium outlets produced the highest return of 16.8%.

At the date of this report, our IPD benchmark is unavailable.

Aligned to Strategy

Financial KPIs

Annual Growth in like-for-like NRI *

1.7%

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 grew by 1.7% in 2017, slightly below our target of 2.0%. Income at our UK and French shopping centres grew by 1.8% and 2.6% respectively, whilst NRI at our UK retail parks fell by 2.5%.

The Group performance of 1.7% includes growth of 7.4% from our Irish centres. Prior to the conversion of our secured loans the underlying property income was classified as finance income.

* Proportionally consolidated excluding premium outlets. See the Financial Review on page 53 of the Annual Report for further explanation.

Aligned to Strategy

Financial KPIs

Growth in adjusted EPS

6.5%

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.

Performance

In 2017, adjusted EPS increased by 1.9 pence, or 6.5%, to 31.1p. This was driven by increased net rental income, particularly from our Irish shopping centres, higher earnings from our premium outlets and favourable foreign exchange movements. This was partly offset by income foregone from property disposals during 2016 and 2017.

Aligned to Strategy

Financial KPIs

Cost Ratio *

21.6%

Description

The EPRA cost ratio is the measure by which we monitor the operational efficiency of our business. It is calculated as total operating costs, being property outgoings and net administration costs, as a percentage of gross rental income for our property portfolio.

Performance

During 2017, the ratio has reduced by 100bp to 21.6%. The reduction is principally due to lower property costs, which, as a percentage of the gross rental income denominator, have fallen from 10.7% to 9.7%. The administration costs proportion of the ratio is unchanged at 11.9%.

* Proportionally consolidated excluding premium outlets. See the Financial Review on page 53 of the Annual Report for further explanation.

Aligned to Strategy

Operational KPIs

Occupancy

98.3%

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 the portfolio 98.3% occupied at the end of 2017. This was higher than the prior year due to the strong leasing performance during 2017. The most significant increase was in France, where the level of occupancy increased from 96.5% to 97.9%.

Aligned to Strategy

Operational KPIs

Global Emissions Intensity Ratio

150 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, and is calculated over the 12 months ended 30 September with the denominator being adjusted profit before tax for the same period.

Performance

The ratio has reduced by 3% to 150 MtCO2e/£m during 2017 due to an increase in the Group’s adjusted profit before tax and lower emissions in the UK. These factors were partly offset by increased emissions from gas for heating our French assets and newly acquired Irish properties where property ownership was secured during 2016 and 2017.

Aligned to Strategy

Operational KPIs

Leasing Activity

£33.3m

Description

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

Performance

2017 was a record year for leasing, with increased volumes at each of our sectors. During the year we secured £33.3 million of income, which is £8.4 million, or 34%, higher than 2016.

In total we signed 460 leases representing 167,400m2 of space. For principal leases, the rent was 8% higher than December 2016 ERVs and 7% higher than the previous passing rent.

Aligned to Strategy

Operational KPIs

Voluntary Staff Turnover

12.0%

Description

Our talented people are a key resource and we strive to retain, engage and develop them. Since 2014 we have monitored voluntary staff turnover to highlight any potential signs of demotivation or other people-related issues and include both corporate and shopping centre-based employees in this measure.

Performance

In 2017, voluntary staff turnover remained low at 12.0%. The slight increase compared with 2016 was due to nine additional leavers from our London and Reading offices when compared to the prior year. However, the turnover remains low compared to wider industry averages.

Aligned to Strategy

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