Capital & Regional : Annual Report and Financial Statements 2023

Enhancing community centres with

expertise

& innovation

1. 2022 comparative has been restated for a prior year adjustment to service charge income and expenditure recognised in the period. There has been no change to Profit.

Contents

Business Overview

06 Our Portfolio

10 Chairman's Statement

Strategic Report

1. The Market Backdrop

1. Our Business Model

1. Our Strategy

1. Key Performance Indicators

1. Chief Executive's Statement

1. Operating Review

1. Financial Review

1. Managing Risk

1. Our Stakeholders

1. ESG Report

1. TCFD Disclosure

Governance

121 Board of Directors

1. Senior Leadership Team
2. Corporate Governance Report

1. Nomination Committee Report

1. Audit Committee Report

1. Directors' Remuneration

1. Directors' Remunerations Policy

1. Directors' Remunerations Report

1. Directors' Report

1. Directors' Responsibilities Statement
2. Independent Auditor's Report

Business Overview

Use of Alternative Performance Measures (APMs)

Throughout the results statement, we use a range of financial and non-financial measures to assess our performance. A number of the financial measures, including Net Rental Income, Adjusted Profit, Adjusted Earnings per share, Net Debt and the industry best practice EPRA (European Public Real Estate Association) performance measures are not defined under IFRS, so they are termed APMs. APMs are not considered superior to the relevant IFRS measures, rather management use them alongside IFRS measures to monitor the Group's financial performance because they help illustrate the trading performance and position of the Group. All APMs are defined in the Glossary and further detail on their use is provided within the Financial Review.

Financials

1. Consolidated Income Statement

1. Consolidated Statement of Comprehensive Income
2. Consolidated Balance Sheet
3. Consolidated Statement of Changes in Equity
4. Consolidated Cash Flow Statement
5. Notes to the Financial Statements

1. Company Balance Sheet
2. Statement of Changes in Equity
3. Notes to the Company's Separate Financial Statements

1. Glossary of Terms

1. Five Year Review (Unaudited)
2. Portfolio Information (unaudited)
3. EPRA Performance Measures (unaudited)

1. Advisers and Corporate Information
   230Shareholder Information

Recovery and Growth in

Operational Performance

99.2%

Rent collection in line with historic pre-Covid levels (2022: 97.6% at time of Year End results)

86

New lettings and renewals achieved during the year at a combined average premium of 6.8% to previous rent (2022: 80)

+1.5%

Footfall amounting to 86.7% of pre-Covid levels, with 44.5 million shopper visits

93.4%

Occupancy steady with the marginal decline due to Wilko administration (December 2022: 94.1%)

£23.9m

Net rental Income showing an increase driven primarily by improved occupancy and rent collection (2022: £23.5m)

Continued progression with our Capex programme with investments expected to produce a yield on cost in line with our 8% to 9% target

£16.0m

Total net amount invested by the Group during 2023

£5.3m

Invested into ongoing works for the new 20,000 sq ft NHS facility due to open in Spring 2024 at Ilford

£0.6m

Invested to create the new The Bridge food court which successfully opened in June 2023

£4.8m

Invested in the new 35,000 sq ft TK Maxx anchor unit that opened in November 2023 at Ilford

Progressing with our

ESG commitments

100%

Scope 3 onsite data collected during the period

8%

Total reduced energy consumption compared to 2022

12,627

Trees planted between C&R and Snozone, offsetting 403 tons of CO2

141

Charities supported

Gyle

The £40m acquisition of Gyle Shopping Centre marks the first step towards rescaling our business and fully leveraging our proven skills and management expertise.

Read more about Key performance indicatorson pages 30-33

Why we Exist

We exist to protect and progress the essentials of community life.

We are more than non-discretionary retail, we are spaces for communities to gather. We are the local shopping centre where toddlers have their first meal out, where teens embark on their first jobs, where the older generation come for support and interaction.

We are connection, love, belonging, play, education, participation, knowledge, support, culture, experiences, hope and understanding.

So what does this mean for who we think we are? We are a growth company. We invigorate culture, we fuel commerce and we impact society

In the world we currently live in, we have an increasingly important role. And to deliver on this role and thrive in a modern world we must operate consistently at our best and beyond. To be relevant, impactful, world- class and united.

We have four core principles and twelve behaviours that help us to do that and how we do things:

Business Overview

25.0%

18.3% 21.8%

9.5%

7.8%

30.7%

6.3%

10.0% 10.7%

2017 Customer Proposition

5.6%

6.4%

15.6%

16.8%

15.5%

2023 Customer Proposition

Remerchandising retail offer

In 2023, we prioritised adapting and expediting the remerchandising process towards a greater emphasis on non-discretionary retail and services.

Role of the store

Throughout 2023, we observed sustained recognition of the significance of physical stores, for both consumers and retailers alike. Despite the growth of online retail, the physical store remains a vital and dominant touchpoint for retailers to interact with our guests and foster loyalty.

And our centres remain dedicated to fulfilling the essential shopping needs and services of our guests.

residential, medical and office uses

Our Portfolio

1

Shopping centres

Snozone

8

7

5

6 34

2

1. Gyle, Edinburgh
2. • Freehold partially open shopping centre on two floors
   • 415,000 sq ft
   • 71 lettable units
   • Principal occupiers: Marks & Spencer, Morrisons, Next, Boots
3. The Mall, Maidstone
4. • Freehold covered shopping centre on three floors
   • 500,000 sq ft
   • 102 lettable units
   • Principal occupiers: B&M, Matalan, PureGym, Boots, Sports Direct, Iceland, Next
5. 17&Central, Walthamstow
6. • Leasehold covered shopping centre on two floors
   • 260,000 sq ft
   • 63 lettable units
   • Principal occupiers: Lidl, Asda, Boots, The Gym, TK Maxx, Sports Direct
7. The Exchange, Ilford
8. • Predominantly freehold covered shopping centre on three floors
   • 300,000 sq ft
   • 83 lettable units
   • Principal occupiers: Next, H&M, NHS, TK Maxx
9. The Marlowes, Hemel Hempstead
10. • Freehold covered shopping centre and high street parade
    • 340,000 sq ft
    • 90 lettable units
    • Principal occupiers: B&M, Sports Direct, PureGym, Tesco Express
11. The Mall, Wood Green
12. • Freehold partially open shopping centre on two floors
    • 540,000 sq ft
    • 114 lettable units
    • Principal occupiers: Primark, Lidl, H&M, Boots, TK Maxx, Travelodge, Cineworld

Snozone

• 100% subsidiary
• Largest indoor ski slope operator in the UK
• Operating in 7 Milton Keynes,

• 8 Yorkshire and 9 Madrid

• In existence since 2000 and has taught over four million people to ski or snowboard.

See pages 42-43 for more details.

1 Gyle, Edinburgh

Shopping centre size

In September 2023 we completed the acquisition of Gyle for

£40 million, excluding acquisition costs. The shopping centre spans 415,000 sq ft and compromises of 88 retail units.

Gyle offers 2,800 free car parking spaces in a strategic location serving two affluent residential areas, alongside the bustling commercial districts of South Gyle and Edinburgh Park.

Tenant mix

Gyle is anchored by Marks & Spencer and Morrisons supermarket and is strategically located on a 50-acre site. This acquisition aligns with our long-standing community shopping centre strategy, introduced back in December 2017.

Strong transport links

Gyle stands as a thriving hub of community life. It also benefits from the convenience of a nearby tram system, connecting the airport to Edinburgh City centre, thus enhancing accessibility and driving footfall.

Centre statistics

2.7 2,800

2 The Mall, Maidstone

Shopping centre size

This freehold covered shopping centre, spans three floors and encompasses 500,000 sq ft.

Tenant mix

The Mall, Maidstone includes brands such as B&M, Matalan, PureGym, Boots, Sports Direct and Iceland.

Sustainable initiatives

At The Mall, all our electricity comes from renewable energy sources - helping us to take an even more sustainable approach as we move to the future. In terms of service to people, The Mall participates in Purple Tuesday every year to support inclusivity and accessibility for guests with disabilities. On this day, we turn off centre music to create a calm shopping environment for those with sensory issues and decorate with purple.

Centre statistics

500,000 sq ft

Total sq ft

98

Retail units

245,647

Core catchment

Business Overview

3 17&Central, Walthamstow

Shopping centre size

17&Central is a leasehold covered shopping centre spanning two floors and encompassing 290,000 sq ft. Our recent launch of the new food and events hall in Walthamstow, spanning 16,000 sq ft on a mezzanine level, demonstrates our dedication to enhancing community engagement by providing grab-and-go food options, a bar and versatile event spaces.

Tenant mix

17&Central has 67 lettable units with occupiers including Lidl, Asda, Boots, The Gym, TK Maxx, and Sports Direct.

Residential development

17&Central also has ongoing construction work on a residential development project. Long Harbour are on site creating 495 Build to Rent residential apartments in two towers that are scheduled to complete

in 2025.

Building strong transport links

We are introducing a new Victoria Line tube station entrance and public spaces, aligning with our strategy

of creating holistic and community- centric destinations.

Centre statistics

290,000

Total sq ft

67

Retail units

495

Build to Rent apartments being developed

4 The Exchange, Ilford

Shopping centre size

This predominantly freehold covered shopping centre spans three floors, with 310,000 sq ft and 81 lettable units. The Exchange includes principal occupiers such as the NHS, Next, H&M and TK Maxx.

Sustainable initiatives

Our commitment to sustainability is exemplified by the green initiatives within the Exchange. Through collaboration with Don't Waste, we have made commendable strides in improving recycling accuracy on-site. The Exchange was also recognised as the best large business by Ilford Business Improvement District (BID) and the council, further emphasising the centres integral role within the local community.

Investment in community healthcare facilities

In line with our continuous commitment to serve our communities, we have invested in a new 20,000 sq ft NHS facility due to open in late Spring 2024.

Centre statistics

310,000

Total sq ft

£4.8m

Investment in

NHS facilities

81

Retail units

The Marlowes,

5 Hemel Hempstead

Shopping centre size

A freehold covered shopping centre with a high street parade, The Marlowes occupies 320,000 sq ft and accommodates 89 lettable units.

Tenant mix

Key anchor tenants include B&M, Sports Direct, PureGym and Tesco Express. Hemel Hempstead is a strong South East commuter town located just outside of the M25. The opportunity exists to reposition this asset and potentially consolidate it with other retail properties adjoining the scheme, as part of a regeneration of the wider town centre.

Centre statistics

320,000

Total sq ft

151,837

Core catchment

89

Retail units

6 The Mall, Wood Green

Shopping centre size

A freehold partially open shopping centre spanning two floors and with 630,000 sq ft of retail space.

Tenant mix

It houses a diverse range of 106 lettable units, including prominent occupiers such as Primark, Lidl, H&M, Boots, TK Maxx, Travelodge, and Cineworld.

Food catering offering

The Bridge, opened in June 2023, is a thriving and vibrant food court, underscoring our dedication to enhancing community engagement and delivering an exceptional shopping and dining experience.

Centre statistics

630,000

Total sq ft

£12m

Investment by the

NHS

106

Retail units