Capital & Regional Annual Report 2014

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Cap

ital & R

egional p

lc Annual R

eport and Accounts for the year ended 30 D

ecember 2014

Stock Code: CAL

Annual Report and Accounts for the year ended 30 December 2014

Stock Code: CAL

23714.04 15 April 2015 10:01 AM Proof 8

Capital & Regional plcAnnual Report and Accounts for the year ended 30 December 2014

Stock Code: CAL

Welcome to Capital & Regional

About Us

Capital & Regional is a UK focused specialist property REIT with a strong track record of delivering value enhancing retail and leisure asset management opportunities across a c.£1 billion portfolio of in-town dominant community shopping centres. Capital & Regional owns six Mall shopping centres in Blackburn, Camberley, Luton, Maidstone, Walthamstow and Wood Green. It also has a 20% joint venture interest in the Kingfisher Centre in Redditch and a 50% joint venture in the Buttermarket Centre, Ipswich. Capital & Regional manages these assets, which comprise over 900 retail units and attract c.1.7 million shopping visits each week, through its in-house expert property and asset management platform.

Our AimTo be the leading dominant community shopping centre REIT offering investors:

• Exposuretoahighqualityportfolioofstrongassets,dominantintheirimmediatecatchment

• Ahighlyattractivedividendyield• PotentialtogeneratesignificantincomeandNAVgrowththroughidentifiedassetmanagementinitiatives

• Experiencedandexpertteamwithaproventrackrecordofcreativeassetmanagementviaascalableplatform

• Securitythroughcompetitivelypriceddebtfunding• BenefitofC&Rdrivingsectorconsolidationopportunities

Look out for these icons:

Moreinformationonaparticulartopiccanbefoundwithinthereport.

Viewourcorporatewebsiteat:www.capreg.com

OverviewIFC AboutUs

OurAim01 Highlights

Strategic Report04 Chairman’sStatement06 AtaGlance08 OurMarketplace10 OurBusinessModel12 OurStrategy14 OurStrategyinAction16 ManagingRisk20 ChiefExecutive’sStatement24 OperatingReview26 FinancialReview32 ResponsibleBusiness

Governance40 BoardofDirectors42 CorporateGovernanceReport46 AuditCommitteeReport49 Directors’RemunerationReport65 Directors’Report

Financial Statements70 Directors’ResponsibilitiesStatement71 IndependentAuditor’sReport76 ConsolidatedIncomeStatement76 ConsolidatedStatementof

ComprehensiveIncome77 ConsolidatedBalanceSheet78 ConsolidatedStatementofChanges

inEquity79 ConsolidatedCashFlowStatement80 NotestotheFinancialStatements123 CompanyBalanceSheet124 NotestotheCompanyFinancial

Statements127 FiveYearReview

Other Information130 GlossaryofTerms132 PropertyInformation134 EPRAPerformanceMeasures134 CovenantInformation

Contents

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01

www.capreg.com Overview > Highlights

Highlights

NAV per share

60p2013: 54p

60

54

20142013

EPRA NAV per share

59p2013: 56p

5956

20142013

Total shareholder return

24.7%2013: 53.9%

24.7

53.9

20142013

Operating Profit4

£19.3m2013: £13.0m

19.3

13.0

20142013

Strategic• AcquiredcontrollingstakeinTheMallaheadofincreaseinproperty

valuationsinH22014

• Buy-outofremainingMallminoritiescompletedinDecember2014andfundrestructuredtodeliveratleast£1.5millionofannualisedcostsavings

• Successfuldisposalof€350millionGermanportfoliocompletedinFebruary2015atasmallpremiumto30December2014NAV.Grouprealised£42.1millionfor50%share

• REITconversioncompletedandeffectivefrom31December2014

Financial • 11%increaseinNAVpershareto60p(2013:54p)despitedoublingof

shareholderbase

• Refinancingof£380millionofTheMalldebt,costofdebtatyearendof3.45%

• Proformasee-throughnetdebt1,2of45%(2013:54%)

• Profitbeforetaxof£67.2million(2013:£7.3million)

Operational• Passingrentof£64.5millionincreasedonDecember2013(+0.6%)

andJune2014(+2.7%)

• Strongoccupancyof96.1%at30December2014(2013:95.0%)

• Footfallupby0.9%,outperformingthenationalbenchmarkby1.8%

• Strongprogressindeliveryofenlarged£65millionmulti-yearcapexplan

» WalthamstowrefurbishmentduetocompleteApril2015

» £4.5millionprojecttodelivernewWalthamstowunitsforTKMaxxandSportsDirectontrackforcompletioninQ42015

» AgreedleasesforWoodGreenhotelandgymextensionutilisingsubstantiallyvacantofficespace

• SuccessfulreconfigurationofWatersideLincolnfacilitatingsaleinNovember2014withprofitondisposalof£4.7millionand20%IRR

Future priorities• Deliveryofassetmanagementanddevelopmentprogrammeacross

existingportfolio

• Acquisitionswillfocusonopportunitieswhichboostincomeandsupportaprogressiveapproachtodividendgrowthsuchasnewlyacquired50:50JVofButtermarketCentre,Ipswich

Dividend• 46%increaseintotaldividendto0.95ppersharefor2014(2013:

0.65p)

• CommencementofREITleveldividendfrom2015Interimofatleast90%ofMallOperatingProfit

» Tobepaidapproximately50%asinterimand50%asfinal

» Basedon2014ProformaMallOperatingProfit5weanticipatepayinga2015totaldividendofatleast2.9ppershare

2014 2013

Totalshareholderreturn3 24.7% 53.9%

OperatingProfit4 £19.3m £13.0m

Profitbeforetax £67.2m £7.3m

NAVpershare 60p 54p

EPRANAVpershare 59p 56p

ProformaGroupnetdebt/(netcash)1 £336.6m £(19.5)m

Proformasee-throughnetdebt1,2 45% 54%

1 2014adjustedfor£42.1millionofGermanjointventurenetproceedsreceivedinFebruary2015and£8.9millionofpaymentsdueinrespectofMallperformancefeeandincomeduetoformerunitholders.2013adjustedfor£8.4millionHemelHempsteadnetproceedsreceivedinFebruary2014.

2 See-throughnetdebtdividedbypropertyvaluation.3 Changeinsharepriceplusdividendspaid,weightedaveragetoreflect351.1millionnew

sharesissuedon14July2014.4 AsdefinedinNote1tothefinancialstatements.5 AssetoutintheFinancialReview.

00

StrategicReport

04 Chairman’sStatement06 AtaGlance08 OurMarketplace10 OurBusinessModel12 OurStrategy14 OurStrategyinAction16 ManagingRisk20 ChiefExecutive’sStatement24 OperatingReview26 FinancialReview32 ResponsibleBusiness

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Stock Code: CAL

Chairman’s Statement

StrategyCapital&Regionalhasmadesignificantprogressinthedeliveryofitsstrategicobjectivesthisyear.TheacquisitionofacontrollingstakeinTheMallandthesubsequentsuccessfultenderforunitsheldbyminoritieshasbeentransformationalfortheGroup.ConversiontoaREITattheendof2014whichwasfollowedbythesaleofitsGermanportfolio,completedshortlyaftertheyearend,enablestheGrouptofocusallitsresourcesonitsstatedaimtobecometheUK’sleadingcommunityshoppingcentreREIT.

TheGroupisnowwellpositionedtoachievethisobjectivebasedonitsexposuretoahighqualityportfolioofstrongassets,dominantintheirimmediatecatchment,whichofferthepotentialtogeneratesignificantincomeandNAVgrowthbasedonaprogrammeofexcitingassetmanagementinitiativesacrosstheportfolio.

Performance overviewThetimingoftheMallacquisitionmeansthatbothexistingshareholdersaswellasthosewhoparticipatedinthe£165millionFirmPlacingandPlacingandOpenOfferhavebeenabletobenefitfromtheupswingininvestmentmarketswhichhasgatheredmomentumastheyearhasprogressed.The62.56%stakewasacquiredforaconsiderationof£212millionatadiscountof5%topropertyvaluesasat30June2014.

UKShoppingCentrevaluationshaveincreasedby9.3%,reflectingamixofyieldcompressionandgrowthinvaluedincome.Muchofthisimprovementhastakenplaceinthesecondhalfoftheyearassignificanttransactionalactivityhashighlightedtheattractionsofdominantcommunityshoppingcentreassets,inparticularthestrongincomecharacteristics.Itistheresilienceoftheseassetsandtheirabilitytorespondtochangingconsumerbehaviourandamarketincreasinglydominatedbytheinternet,retailers’requirementsandClick&Collectthatunderpinsthis.

ItisparticularlypleasingthereforetoreportanincreaseinNetAssetValuepershareof11%to60p,anincreasewhich

fullytakesintoaccountadoublingofthenumberofsharesinissue.

Pre-taxprofitwas£67.2millioncomparedtothe£7.3millionreportedin2013.

DividendFor2014,theBoardisproposingafinaldividendof0.60ppersharetakingthefull-yeardividendto0.95ppershare,representinganincreaseof46%comparedtolastyear.

AtthetimeofthecapitalraiseinJune2014,theBoardcommittedtodeliveronthebasisoftheissuepriceof47p,adividendyieldofatleast5%fortheyearending2015,andatleast6%followingacquisitionoftheminoritiesandtherestructuringoftheMallFund.IampleasedtoreportthatallminoritiesweretakenoutbythestartofDecemberandthefundhasbeensuccessfullyrestructured.FollowingconversiontoaREIT,theBoard’spolicyistodistributeatleast90%ofMallOperatingProfit,allocatedapproximatelyequallybetweeninterimandfinaldividendpayments.Basedon2014ProformaMallOperatingProfitweanticipatethiswillresultinafullyeardividendpaymentfor2015ofatleast2.9ppershare.

Our peopleThisyearhasbeenexceptionallychallengingforourmanagementteams.Notonlyhavetheyhadtohandletransactionsofparticularcomplexityatacorporatelevelbuthavehadtoretaintheirfocusondeliveringoperationalexcellencetoourretailandleisureoperatorswhilstrollingoutanambitiousassetmanagementprogrammeacrosstheportfolio.CompletionoftheMalltransactionnowenablestheteamtofocusallitsenergiesonsuccessfuldeliveryofthisplan.AsIhavementionedinthepast,themanagementplatformiskeytodeliveryofourgrowthambitionsandIwouldliketothankallourstafffortheirroleincontributingtothisyear’sprogress.

Responsible businessThevalueweattachtoourpeopleisreflectedinourcontinuingrecognitionasan“InvestorinPeople”.Afurthersuccessfulassessmentreviewwas

FindoutmoreaboutResponsible Businessonpages32to37

UK Shopping Centre valuations have

increased by

9.3%

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www.capreg.com Strategic Report > Chairman’s Statement

completedduringtheyear.Theassessmenthighlightedhighlevelsofengagementwhichhaveagainbeencriticalinimprovingthewayinwhichwesupportourstakeholderswhethertheyareretailers,communitiesoremployees.

AneighthconsecutiveRoSPAGoldAwarddemonstratesourcommitmenttoraisinghealthandoccupationalsafetystandardsacrosstheboard.

A10.2%reductioninelectricityandgasconsumptionnotonlyreducestheGroup’senvironmentalimpactbutcontributestowardsimprovingefficiencywhichdirectlybenefitsourretailersandleisureoperators.FurtherdetailsaresetoutintheResponsibleBusinessreviewintheStrategicReport.

The BoardTheGrouphasfurtherstrengtheneditscorporategovernanceduringtheyearwiththeappointmentofanadditionalindependentnon-executivedirector,inlinewiththecommitmentmadeatthe

timeoftheCapitalRaise.IamdelightedtowelcomeIanKriegerwhojoinedtheBoardon1December2014.Ianbringsawealthofexperiencegainedduringa40yearcareerfirstwithArthurAndersenandthenDeloitte.Ianhassignificantboardroomexperienceintherealestateandretailsectorsandhasworkedwithawidevarietyofcompaniesthroughouthiscareer.IanhasjoinedboththeAuditandRemunerationCommittees.

PhilipNewtonhasindicatedhisintentiontostepdownfromtheBoardattheAGMin2016,bywhichtimehewillhaveservednineyearsasanon-executivedirector.Philipwill,untilthen,continuetobetheSeniorIndependentDirectorandChairmanoftheRemunerationCommittee.

John Clare CBEChairman

Pre-tax profit

£67.2m2013: £7.3m

Net asset value per share

60p2013: 54p

05

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Stock Code: CAL

At a Glance

Blackburn• Leaseholdcoveredshoppingcentre

onthreefloors

• 600,000sqftlettablespace

• 126retailunits

• Principaloccupiers–Primark,Debenhams, H&M,Next,Boots, Argos

Maidstone• Freeholdcoveredshoppingcentreon

threefloorswithofficesextendingto40,000sqft


• 101retailunits

• Principaloccupiers–Boots,NewLook,Wilko,Next,SportsDirect

Camberley• Partleaseholdcoveredshopping

centreononefloor


• 157retailunits

• Principaloccupiers–HouseofFraser,Topshop,Boots,Primark,Sainsbury’s,Argos,RiverIsland

Walthamstow• Leaseholdcoveredshoppingcentre

ontwofloors


• 65retailunits

• Principaloccupiers–Asda,Boots,NewLook,RiverIsland,Topshop

Luton• Leaseholdcoveredshoppingcentre

ontwofloors,officesextendingtoover65,000sqft


• 159retailunits

• Principaloccupiers–Debenhams,Boots,Primark,H&M,Next,Topshop,M&S,Wilko,TKMaxx

Wood Green• Freehold,partiallyopenshopping

centreontwofloorswithnearly40,000sqftofoffices


• 103retailunits

• Principaloccupiers–Primark,Wilko,H&M,Boots,Argos,TKMaxx,WHSmith,NewLook,Next

The Mall Portfolio – The Group now owns 100% of the Mall Portfolio

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www.capreg.com Strategic Report > At a Glance

Kingfisher Shopping Centre, Redditch• C&Rowns20%inJVwithOaktree

CapitalManagement

• Freeholdcoveredshoppingcentreontwoprincipaltradinglevels


• 174retailunits

• Principaloccupiers–Debenhams,M&S,Primark,Next,Arcadia,TKMaxx

Snozone

• 100%subsidiary

• LargestindoorskislopeoperatorintheUK

• OperatingatMiltonKeynesandCastleford

• Inexistencesince2000andhastaughtover1.5millionpeopletoskiorsnowboard

Blackburn

Luton

Redditch

Ipswich

Camberley

Wood Green

Walthamstow

Maidstone

Other Assets

UK Shopping Centres

Scale and Strength1

• Marketvalueof£895million(6.27%NIY)

• Over4msqftlettablefloorspace

• 885retailunits

• 96.1%occupancy

• Over10,000carparkingspaces

• 83.3mvisitorsin2014

1Alldataat31December2014excludingButtermarket,Ipswich

Buttermarket Centre, Ipswich• Acquiredina50:50JVwithDrum

PropertyGroupinMarch2015

• Freeholdcoveredshoppingcentreovertwocoretradinglevels


• 23retailunits

• Principaloccupiers–Boots,NewLook,TKMaxx,LauraAshley

MallAssets

OtherJVAssets

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Stock Code: CAL

Our Marketplace

UK retail consumer spending

£334bnrepresenting 60% of

GDP1

£5.7bnof shopping centre

transactions in 2014

70%of our occupiers

now offer Click & Collect

ThepositiveunderlyingUKeconomicfundamentalshavealsohelpedtodrivearobustretailpropertyinvestmentmarket.Therewereapproximately£5.7billionofshoppingcentretransactionsin2014,25%higherthan2013andthehighestannualtotalsince2006.2

Shoppinghabitscontinuetochangeinamultichannelretailenvironment.In2014BlackFridaywasfirmlyestablishedbutthefailureofCityLinkalongsideprofitwarningsbypureplayonlineoperatorspointtothefragilityofthehomedeliverymodel.ThepopularityofClick&Collecthasincreased,forexampleitnowforms56%ofJohnLewis’onlinesales.AcrosstheC&Rportfolio,70%ofouroccupiersnowofferthisservice(upfrom58%in2013).Sowhilst,accordingtoCBREresearch,over50%ofconsumersfromallagegroupsshoponline,theydosoaspartofamultichannelapproachandtheimportanceofthephysicalstoreremainsclear.

C&RhasbeenattheforefrontofembracinganddevelopingtechnicalinnovationssuchasWi-Fi,websites,appsandsocialmediatobenefitandcomplementthephysicalretailenvironment.WhilstBeacons,AugmentedRealityandWearablespushtheirwayintothepsycheoftheUKconsumer,what’sclearisthatatriptotheshopsengagingallphysicalsensesprovidesagoodantidotetowhatotherwisecouldbeeverydaydigitaloverload.TheneedforthephysicalwasplayedoutthisChristmaswithincreasedsalesofbooksandrecordsreportedbyleadingretailers.

Tobetrulyrelevantwithinacommunity,ourcentresareincreasinglystretchingbeyondretailandcarparks,leisure,office,hotel,gym,andlatterlyresidential

areallpartoftheofferthatwecontinuetodevelop.Withover20%ofourincomenowcomingfromusesbeyondretail,therelevanceandrobustnessofourincomestream,inthecontextofthetowncentre,continuestostrengthen.

Alltheevidencepointstotheimportanceofourschemesasretailledhubs,fulfillingsocialandexperientialneeds,aswellasthemoretraditional,butequallyimportant,requirementsofconvenience,securityandvalue.

1Deloitte‘ChangingFaceofRetail’October2014.2Strutt&Parker.

The UK retail market is a growing and evolving industry, employing 1 in 10 of the workforce (3 million) with consumer spending at £334 billion, representing 60% of GDP.1 Retail sales increased 88% between 1995 and 2014, and are forecast to grow a further 20% by 2019,1 largely due to population growth, higher employment and an improving economy. Over half of all retail expenditure is made in the town centre where public policy continues to support a town centre first agenda.

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www.capreg.com Strategic Report > Our Marketplace

TheMall’sLoveSundayscampaignwaslaunchedinMarch2014withtheobjectiveofincreasingSundayfootfallandaveragespendwhilerewardingourmostloyalRewardMEcustomers.

AllRewardMEmemberswhospent£50inourmallsonanySundaybetweenMarchandOctoberwererewardedwithvariousgifts,fromfreeparkingtofashionitemsandsweettreatssourcedfromourretailers.ThecampaignwasalsosupportedbyaseriesofSundayeventssuchasBeautyandEnviromallDaysinJuneandMallMonsterSummerPartyinAugust.

Over22,000loyaltycardmemberstookpartinthecampaign.AveragepromotionalspendonSundaysduringthecampaignwasmorethandoublethenormalaverageandthishelpeddriveSundayfootfalltoincreaseby5%yearonyearbetweenMarchandOctober.Thecampaignwillbeextendedthrough2015.

TheMallCamberleywasthefirstcommunityshoppingcentreintheUKtoreceivetheCollectPlusserviceallowingcustomerstocollectandreturntheirparcelsfromover260brands.

AswellasdrivingcustomerstoourMalltheservicehelpsustounderstandwhichbrandsourlocalshoppersarebuyingfrom,offeringusefulintelligenceforfutureleasingstrategy.Customerreactiontotheservicehasbeenverypositive.

CollectPluswillberolledouttotheremainderofTheMallportfolioinQ22015.

Love SundaysLaunch of CollectPlus

09

Brilliant service, no more missing a parcel and so easy to collect, I am very pleased with this service thank you.”

The location is very handy. I came just with the intention to collect a parcel but I will stay longer to do more shopping.”

“TheC&RteamhavedeliveredgreatstoresforusinLutonandLincoln

—theyadoptaconstructiveapproachtoproblemsolvingandwe’relookingforwardtodoingmorebusinessinthenearfuture.”

Sam MillerHeadofLeasingUK—H&M

“We’vedonesomegreatbusinesswithC&Rinrecentyears.Theteamhave

beenconsistentlystronginidentifyingandcreatingtherightspacetosupportourUKrollout.”

Rob FieldUKPropertyManager—DeichmannShoes

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Stock Code: CAL

Our Business Model

Our core strength is owning and managing dominant community shopping centres in the UK. Complementing this we also seek to exploit entrepreneurial opportunities across the retail and leisure property sectors. With our experienced team, our strong retailer relationships and our extensive community connections, we seek to generate sustainable income growth by combining active asset management and development with operational excellence.

Our approach to identifying and adding value to a scheme is illustrated as follows:

Webelievethereareanumberofassetsthatmeetourpotentialinvestmentcriteria.Typicallythesewillbeassetsthatareunderperformingintheircatchmentbuthavesignificantassetmanagementordevelopmentopportunities.

Ifsuitablewewillacquire,whereverpossibleleveragingourdeepindustryrelationshipstosecureoffmarkettransactions.

Operational Excellence• Developexcellentlocalteam

• Drivefootfallthroughcreativemarketing

•Maximisecommercialincomeopportunities

• Reducecosts

• Enhancewebsiteanddevelopdigitaldatabase

• IntroduceC&RFinanceProcess

Asset Management/Development• Improveretail/leisuremix

• Buildlocalauthoritypartnerships

• Deliverimprovementstoretailenvironment/refurbish

• Identifyanddeliverdevelopmentopportunities

• Improvedcustomerexperience

• Attractiveretailenvironment

• Relevantretailandleisurespace

• Increasedmarketshare

• Increasedfootfallandspend

AllcontributingtoIncome and Capital Growth

Eachassetisheldinordertogeneratesustainableincomegrowth.Ifanassetisexgrowth,wewilllooktosellandrecycletheproceedsintonewopportunities.

The Result

s s s

Identify Acquire Enhance

10

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www.capreg.com

Shop in store

Buy online collect in store

Buy online deliver to collection

hub

Retail Sales Channel

Buy online deliver to

home Return to

store

CollectPlus hub

Order online in store - deliver

to home

Shops in our malls form an integral part of a retailer’s multichannel sales model. Through the creation and management of excellent retail environments, convenient in their location, we provide accommodation that is central to the contemporary multichannel sales model.

Our ability to successfully deliver our business model and reposition a shopping centre is built on the key skills within our business:

Strategic Report > Our Business Model

• Investment and development and asset management—wehaveatrackrecordofdeliveringcomplexassetmanagementanddevelopmentinitiatives,enhancingassetsthroughrefurbishmentandextension

• Operations management—market-leadingoperatingstandardsthatdeliverhighqualitymallfacilitieswithahighlyefficientcostofoccupation.C&Raverageservicechargeis22%lowerthanJLLOscarbenchmark

• Maximising commercial opportunities—drivingincomefrommanysourcesincludingadvertising,promotionalspace,retailmerchandisingunits,digitalcommerce,giftcardsandtelecoms

• Retailer relations—ourpeoplemanagementexperienceenablesustogenerateastrongretailcultureamongthewholeteam.Wethinklikeretailers,creatingenvironmentsthatareappealingtooccupiersanddeliveranoutstandingshoppingexperience

• Digital innovation —wehavebeenattheforefrontofthesectorincapitalisingontheopportunitiesarrivingfromtechnologicalchange–seeconnectingdigitallypage15

• Responsible management—wehavedevelopedmarketleadingprocessesthatminimiseourimpactontheenvironment–connectingresponsiblypage15andResponsibleBusinessreviewpage34

• Creative marketing—throughtargetedmarketingwecontinuallyengagewithourshoppers,encouragingrepeatvisitsandhigherspend

11

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Stock Code: CAL

Our Strategy

Our strategy is geared towards delivering attractive and sustainable income and capital returns for our shareholders using the key skills within the business as identified on page 11.

Priority Aim Progress and Highlights2015 and Beyond – Key Targets and Milestones

Associated Risks

Invest in our existing portfolio

Continualenhancementofourassetstomaintaintheirrelevanceanddrivesustainableincomegrowth

FiveyearCapexplanforTheMallcommencedduring2014

RedditchLeisureHubopenedandrefurbishmentofEveshamWalkcommenced

SeeOperating Reviewonpage24forfurtherdetails

10%incomereturnon£65mCapexinvestmentinTheMall

SeeOur Strategy in Actiononpage14forfurtherdetails

Propertyinvestmentmarketrisks

Connect with Communities

• Emotionally/physically Ensurewecontinuetodeliverattractiveenvironmentsunderpinningourcentres’roleaskeycommunityhubs

Investmentinrefurbishingandenhancingourcentres

WalthamstowrefurbishmenttocompleteQ22015

MaidstonerefurbishmenttocommenceQ22015

ThreatfromtheInternet

• Digitally Beapioneerofdigitalsolutionstoenhanceshopperexperienceanddrivefootfallandrentalvalue

1stUKportfoliotolaunchresponsivewebsite

RelaunchedRewardMEapp

1stUKcommunityshoppingcentretoworkwithCollectPlus

LaunchElectronicRewardMEcardRolloutCollectPlustowholeportfolio

• Responsibly Beapositiveinfluenceonthecommunitiesweserveandthepeopleweemploy

Energysavingsof10%(£225k)

RetainedGRESBGreenStar

ROSPAGoldAwardfor8thconsecutiveyear

InvestorsinPeoplefor5thconsecutiveyear

ReduceCO2by3.5%

RetainAwards

• Commercially Maintainstrongrelationshipswithretailersandlocalauthorities

Occupancy96.1%atDecember2014

SuccessfuldefenceinMaidstoneagainstproposedoutoftownretail

SeeConnecting with communitiesonpage15andResponsible Business reviewonpages32to37forfurtherdetails

ProgressingCamberley,MaidstoneandWalthamstowextensionproposalswithrelevantlocalauthorities

Focus our business on UK Shopping Centres and grow portfolio

Toseekopportunitiestoreinvestcapitalthatwillboostincomegenerationandsupportcapitalanddividendgrowth

AcquiredcontrollingstakeinTheMall

DisposalofGermanjointventurerealisingcashproceedsof£42.1minFebruary2015

InvestmentinButtermarket,Ipswich

Seekopportunitiesforfurtheroffmarkettransactionstoutiliseplatformcapacity


To be the leading dominant community shopping centre REIT

Todelivercapitalgrowthtogetherwithahighlyattractivedividendyield

Mallminoritiesboughtoutandfundrestructured

REITstatuseffective31December2014

REITleveldividendtocommencefromInterim2015

Anticipated2015totaldividendofatleast2.9ppersharebasedon2014ProformaMallOperatingProfit

ImpactoftheeconomicenvironmentExecutionofbusinessplan

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www.capreg.com Strategic Report > Our Strategy

Priority Aim Progress and Highlights2015 and Beyond – Key Targets and Milestones

Associated Risks

Invest in our existing portfolio

Continualenhancementofourassetstomaintaintheirrelevanceanddrivesustainableincomegrowth

FiveyearCapexplanforTheMallcommencedduring2014

RedditchLeisureHubopenedandrefurbishmentofEveshamWalkcommenced

SeeOperating Reviewonpage24forfurtherdetails

10%incomereturnon£65mCapexinvestmentinTheMall

SeeOur Strategy in Actiononpage14forfurtherdetails


Connect with Communities

• Emotionally/physically Ensurewecontinuetodeliverattractiveenvironmentsunderpinningourcentres’roleaskeycommunityhubs

Investmentinrefurbishingandenhancingourcentres

WalthamstowrefurbishmenttocompleteQ22015

MaidstonerefurbishmenttocommenceQ22015

ThreatfromtheInternet

• Digitally Beapioneerofdigitalsolutionstoenhanceshopperexperienceanddrivefootfallandrentalvalue

1stUKportfoliotolaunchresponsivewebsite

RelaunchedRewardMEapp

1stUKcommunityshoppingcentretoworkwithCollectPlus

LaunchElectronicRewardMEcardRolloutCollectPlustowholeportfolio

• Responsibly Beapositiveinfluenceonthecommunitiesweserveandthepeopleweemploy

Energysavingsof10%(£225k)

RetainedGRESBGreenStar

ROSPAGoldAwardfor8thconsecutiveyear

InvestorsinPeoplefor5thconsecutiveyear

ReduceCO2by3.5%

RetainAwards

• Commercially Maintainstrongrelationshipswithretailersandlocalauthorities

Occupancy96.1%atDecember2014

SuccessfuldefenceinMaidstoneagainstproposedoutoftownretail

SeeConnecting with communitiesonpage15andResponsible Business reviewonpages32to37forfurtherdetails

ProgressingCamberley,MaidstoneandWalthamstowextensionproposalswithrelevantlocalauthorities

Focus our business on UK Shopping Centres and grow portfolio

Toseekopportunitiestoreinvestcapitalthatwillboostincomegenerationandsupportcapitalanddividendgrowth

AcquiredcontrollingstakeinTheMall

DisposalofGermanjointventurerealisingcashproceedsof£42.1minFebruary2015

InvestmentinButtermarket,Ipswich

Seekopportunitiesforfurtheroffmarkettransactionstoutiliseplatformcapacity


To be the leading dominant community shopping centre REIT

Todelivercapitalgrowthtogetherwithahighlyattractivedividendyield

Mallminoritiesboughtoutandfundrestructured

REITstatuseffective31December2014

REITleveldividendtocommencefromInterim2015

Anticipated2015totaldividendofatleast2.9ppersharebasedon2014ProformaMallOperatingProfit

ImpactoftheeconomicenvironmentExecutionofbusinessplan

SeeManaging Riskonpages16to19forfurtherdetails

13

1st UKcommunity shopping centre to work with

CollectPlus

Energy savings of

10%(£225k)

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Stock Code: CAL

Our Strategy in Action

The cornerstone of our business strategy is the five year £65 million Mall capital expenditure plan that commenced in 2014. A significant part of the investment takes place in the next two years as illustrated in the diagram below and we are targeting income returns in excess of 10%.

• RefurbishmentprogrammetocompleteQ22015

• NewlettingtoDorothyPerkins/Burtonwithstronginterestfromotherfashionoccupiers

• ConstructionofnewTKMaxxandSportsDirectunitswithprojectedcostof£4.5mdueforcompletioninQ42015

• Extensionplansforupto100,000sqftretailextensionandinexcessof200homesprogressing.PlanningapplicationQ32015,constructiontargetedH12016

• Travelodge

» Leaseagreedtodelivernewhotel(initially35rooms)fromsubstantiallyvacantofficebuilding

» £1.9mcapitalexpenditure

• EasyGym

» Leaseagreedtoextendintoadjoiningofficebuilding

» £0.7mcapitalexpenditure

• Supermarket

» Termsagreedandlawyersinstructedfor16,000sqftsupermarketonformergaragesitewithreconfigurationandmodernisationofadjoiningretail/markethallspace

» Capitalexpenditureof£5m.

• Expectedincomereturnsinexcessof10%

Walthamstow Refurbishment bearing fruit

Wood Green Activities ‘beyond retail’ contribute to income enhancement

Delivering of development and asset management initiatives

WOOD GREEN Complete works to create EasyGym extension

LUTON Secure occupier for office

WOOD GREEN Deliver construction for new Travelodge

sss

ss

s

s

s

s

s

s

s

s

s s

s

s

201720162015

WALTHAMSTOW Complete refurbishment

WALTHAMSTOW Submit planning application for extension

BLACKBURN Deliver gym and new entrance

WALTHAMSTOW Complete works and hand over to Sports Direct

CAMBERLEY Refurbish existing mall

MAIDSTONE Complete refurbishment and deliver new anchor store

WALTHAMSTOW Commence extension to scheme

WALTHAMSTOW Deliver extension to scheme

LUTON Start construction of new market hall

LUTON Complete reconfiguration and re-letting of market hall

WALTHAMSTOW Complete works and hand over to TK Maxx

14

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www.capreg.com Strategic Report > Our Strategy in Action

Connecting with communitiesCriticaltomaintainingandenhancingtherelevanceandsuccessofourcentresistheroletheyplayinconnectingcommunities.Suchconnectionsmanifestthemselvesindifferentways:

Connecting emotionallyPeoplehaveanaturalaffinitywiththeirhometown.Memoriesaremade,relationshipsformedandfriendshipssealed.Wecreatetherightenvironmentinwhichpeoplefeelcomfortablein‘their’mall-anappreciationofplacethatenablespeopletoengageintheshoppingexperience,aconnectionwhichstrengthensovertime.AttheheartofTheMallareourvalues:caring,dynamicandeasy.Wecareaboutgettingitrightandbeingthebestwecan.Wearedynamicinmeetingtheneedsofourcustomers,alwayslookingforbetterwaysofdoingthings.We’reeasytodealwith,makingsurethatourcustomersalwaysgetaquickresponsetoanyquestionorproblemtheymayhave.

Connecting physicallyOurMallssitatthecentreofthetownswithinwhichweinvestandtypicallydominatethelandscape.Theyconnectphysicallywiththestreetscapeofthetownimmediatelyoutside.Entrancesarelocatedtoprovideconvenientpedestrianaccess.Carparksofferquickentryandaretypicallylocatednearamajorpublictransporthub.Theresultisacentre,permeabletovisitors,withnaturalflowsinandoutfromthewidertowncentreandcommunity.

Connecting digitallyC&Rhavepioneereddigitalinnovationssincewelaunchedthefirstshoppingcentreportfoliowebsite,theMall.co.ukin2006,whichhassinceattractedmorethan10millionhits.OurfreeWi-Fiisenjoyedbycustomers(used2.8milliontimesin2014).Ourcentresareincreasinglybeingviewedasdigitalhubs,wherecustomersarefulfillingsalesusingClick&Collect.Over70%ofourretailersnowofferthisservice.Thecombinationdeliversastrongdigitalconnectiontoourcommunities.

Connecting responsiblyPeopleareattheheartofourbusiness;ourresponsiblebusinessprojectsandcommunitypartnershipsfocusonthemandaredrivenbythem.Byreducingtheimpactwehaveontheenvironment,ouremployees,suppliers,stakeholdersandthecommunitiesaroundreapthebenefitsandfurtherengagewithustomaintainmomentumonthissharedresponsibilityagenda.

Connecting commerciallyManyofouroccupiersareindependentretailerswithlocalheritage.Theseretailersprovidealinkwiththecommunityandrepresentarealpointofdifferenceforshoppers.OurMallteamsknowthecustomersandcareaboutthesuccessoftheirMall,proudtocontributetoitsmanagementanddevelopment.Weareinbusinesswithlocalauthorities,throughheadleasecontractsandlocalplanningarrangements.Thesecommercialconnectionsfurtherlinkustoourcommunities.

A history of pioneering digital innovation

s s s s s

s s s s

s ssss

s

Forward looking2006 2010 2012 2013 2014

RewardME Card launched

1st UK portfolio to launch free wi-fi

1st UK community shopping centre to work with Collect+

Relaunch new RewardME app

1st UK portfolio branded website

Industry leading app launched

Online promo of Click & Collect

1st UK portfolio to launch responsive

website

Electronic RewardME card & parking

payment systems

TheMallCamberleywastheheadlinegoldsponsorofthepenultimatestageofthe2014TourofBritainCycleRaceinCamberleyinSeptember2014.AsCamberleyisalsoaBusinessImprovementDistrict(BID)therewasanopportunitytoworkwiththeotherbusinessesandtheBIDteamtoprovideadditionalactivitiesthroughoutthetowncentreencouragingvisitorstostayinthetowncentreafterthecyclistshadriddenout.Asaresultthefootfallonthedaywasamongstthehighestoftheyearachievinganincreaseof5%on2013,withdwelltimesalsoincreasing.

Tour of Britain

Connecting with communities

15

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16

Stock Code: CAL

Managing Risk

Risk Impact Mitigation

Property risks

Property investments market risks

• Weakeningeconomicconditionsandpoorsentimentincommercialrealestatemarketscouldleadtolowinvestordemandandmarketpricingadjustment

• SmallchangesinpropertymarketyieldshaveasignificanteffectonthevalueofthepropertiesownedbytheGroup

• ImpactofleveragecouldmagnifytheeffectontheGroup’snetassets

• Monitoringofindicatorsofmarketdirectionandforwardplanningofinvestmentdecisions

• Reviewofdebtlevelsandconsiderationofstrategiestoreduceifrelevant

There are a number of risks and uncertainties which could have a material impact on the Group’s future performance and could cause results to differ materially from expectations.

TwiceayeartheGroupundertakesacomprehensiveriskandcontrolsreviewinvolvinginterviewswithrelevantmanagementteams.TheoutputofthisprocessisanupdatedriskmapandinternalcontrolmatrixforeachcomponentofthebusinesswhichisthenaggregatedintoaGroupriskmapandmatrixwhichisreviewedbyexecutivemanagement,theAuditCommitteeandtheBoardandformsthebasisforthedisclosuresmadebelow.Thisprocessclearlyoutlinestheprincipalrisksandconsiderstheirpotentialimpactonthebusiness,thelikelihoodofthemoccurringandtheactionsbeingtakentomanage,andtheindividual(s)responsibleformanaging,thoseriskstothedesiredlevel.

TheGroup’stransactionalactivityintheyear,mostsignificantlytheacquisitionof100%ofTheMallanditsdisposalofitsGermanjointventure(completedinFebruary2015),hasresultedintheremovalofthreeprincipalrisksfromthetablebelowonthebasisthattheyareno

longerrelevantorsignificantlyreducedinrelevance.Theseare:

• Property management income–AstheGroupnowowns100%ofTheMallthelargemajorityofitspropertymanagementincomeiswithintheGroup.

• Nature of investments and relationships with key business partners–GiventheGroupnowowns100%ofTheMallandhasdisposedofitsGermanjointventuretheriskoftheGroup’srelationshipswithkeybusinesspartners,whilestillrelevant,issignificantlyreducedcomparedtopriorperiods.

• Foreign exchange exposure risks–At30December2014theGrouphadhedged94%oftheexpecteddisposalproceedsinrelationtoitsGermanjointventure.FollowingcompletionofthedisposaltheGroupnolongerhasanymaterialforeigncurrencyexposure.

AnewriskofexecutionofbusinessplanhasbeenaddedreflectingtheriskoffailingtodeliverontheGroup’sstatedbusinessplan,primarilythemulti-year£65millioncapitalexpenditureinvestmentwithinTheMall.

ThetwoprincipalcategoriesofrisksremainPropertyRisksandFundingandTreasuryRisks.Inadditiontothespecificmitigatingactionslistedbelow,welooktoreducePropertyRisksbythenatureoftheassetsweinvestinbeingthosethataretypicallydominantintheirlocalcatchment,withstrongfootfallandattractivevalueaddedopportunities.

TheGroup’skeyfocusinmanagingFundingandTreasuryrisksistoseektoensurethatthereisappropriateheadroomoncreditfacilitiesandthattheyarerenewedwellinadvanceofexpiry.Thekeyactionsundertakeninthisregardduringtheyeararedetailedinthe‘Debt’sectionoftheFinancialReview.

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www.capreg.com Strategic Report > Managing Risk


Impact of the economic environment

• Tenantinsolvencyordistress

• Prolongeddownturnintenantdemandandpressureonrentlevels

• Tenantfailuresandreducedtenantdemandcouldadverselyaffectrentalincomerevenues,leaseincentivecosts,voidcosts,availablecashandthevalueofpropertiesownedbytheGroup

• Large,diversifiedtenantbase

• Reviewoftenantcovenantsbeforenewleasessigned

• Longtermleasesandactivecreditcontrolprocess

• Goodrelationshipswith,andactivemanagementoftenants

• Voidmanagementthoughtemporarylettingsandothermitigationstrategies

Threat from the internet

• Thetrendtowardsonlineshoppingmayadverselyimpactconsumerfootfallinshoppingcentres

• Achangeinconsumershoppinghabitstowardsonlinepurchasinganddeliverymayreducefootfallandthereforepotentiallyreducetenantdemandforspaceandthelevelsofrentswhichcanbeachieved

• Stronglocationanddominanceofshoppingcentres(predominantlyLondonandSouthEastEngland)

• Strengthofthecommunityshoppingexperience

• Increasingprovisionof‘Click&Collect’servicesbyretailerswithinourshoppingcentres

• Monitoringoffootfallforevidenceoffallingvisitorstoshoppingcentres

• Monitoringofretailtrendsandshoppingbehaviour

• Mobilesmartphonemarketinginitiatives

Valuation risks

• Intheabsenceofrelevanttransactionalevidence,valuationscanbeinherentlysubjectiveleadingtoadegreeofuncertainty

• Statedpropertyvaluationsmaynotreflectthepricereceivedonsale

• Useofexperiencedexternalvaluers

• UseoftwovaluersonTheMallportfolio

• Valuationsreviewedbyinternalvaluationexperts

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18

Stock Code: CAL

Managing RiskContinued


Concentration and scale risk

• Byhavingalessdiversifiedportfoliothebusinessismoreexposedtospecifictenantsortypesoftenant

• Smallersizeofthebusinessmayreducepurchasingpower

• Tenantfailurescouldhaveagreaterimpactonrentalincomerevenues

• Reducedpurchasingpowercouldimpacttheabilitytodriveeconomiesofscaleandthefeasibilityofcertaininvestmentdecisionsregardingtheoperatingplatform

• Regularmonitoringofretailenvironmentandperformanceofkeytenants

• Maintainingflexibilityinoperatingplatform

• Furtherdiversificationconsideredthroughacquisitionsorjointventures

Funding and Treasury risks

Liquidity and funding

• Inabilitytofundthebusinessortorefinanceexistingdebtoneconomictermswhenneeded

• Inabilitytomeetfinancialobligations(interest,loanrepayments,expenses,dividends)whendue

• Limitationonfinancialandoperationalflexibility

• Costoffinancingcouldbeprohibitive

• DebtrefinancingattheGroup,TheMallandinRedditchin2014improvedliquidityandlongtermsecurity

• Ensuringthattherearesignificantundrawnfacilities

• EfficienttreasurymanagementandregularproactivereportingofcurrentandprojectedpositiontotheBoardtoensuredebtmaturitiesaredealtwithingoodtime

• Optionoffurtherassetsalesifnecessary

Covenant compliance risks

• Breachofanyloancovenantscausingdefaultondebtandpossibleacceleratedmaturity

• Unremediedbreachescantriggerdemandforimmediaterepaymentofloan

• Regularmonitoringandprojectionsofliquidity,gearingandcovenantcompliance

• Reviewoffuturecashflowsandpredictedvaluationstoensuresufficientheadroom

Interest rate exposure risk

• Exposuretorisingorfallinginterestrates

• Ifinterestratesriseandareunhedged,thecostofdebtfacilitiescanriseandICRcovenantscouldbebroken

• HedgingtransactionsusedbytheGrouptominimiseinterestrateriskmaylimitgains,resultinlossesorhaveotheradverseconsequences

• Regularmonitoringoftheperformanceofderivativecontractsandcorrectiveactiontakenwherenecessary

• Useofalternativehedgessuchascaps

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www.capreg.com Strategic Report > Managing Risk


Other risks

Execution of business plan

• Failuretoexecutebusinessplaninlinewithinternalandexternalexpectations

• Potentiallossofincomeorvalueresultinginlowercashflowandpropertyvaluation

• Reputationaldamagenegativelyimpactinginvestormarketperception

• Managementofprojectsandtheindividualshoppingcentresbyexperiencedandskilledprofessionals

• Strongrelationshipswithretailersandrelevantcontractors/suppliers

• Ongoingmonitoringofperformanceagainstplanandkeymilestonesbydirectorsandseniormanagement

Tax risks

• Exposuretonon-compliancewiththeREITregimeandchangesintaxlegislationortheinterpretationoftaxlegislation

• Potentialexposuretotaxliabilitiesinrespectoftransactionsundertakenwherethetaxauthoritiesdisagreewiththetaxtreatmentadopted

• Taxrelatedliabilitiesandotherlossescouldarise

• MonitoringofREITcompliance

• Expertadvicetakenontaxpositionsandotherregulations

• Maintenanceofaregulardialoguewiththetaxauthorities

Regulation risks

• Exposuretochangesinexistingorforthcomingpropertyrelatedorcorporateregulation

• Failuretocomplycouldresultinfinancialpenalties,lossofbusinessorcredibility

• Managementundertaketrainingtokeepawareofregulatorychanges

• Expertadvicetakenoncomplexregulatorymatters

Loss of key management

• DependenceoftheGroup’sbusinessontheskillsofasmallnumberofkeyindividuals

• LossofkeyindividualsoraninabilitytoattractnewemployeeswiththeappropriateexpertisecouldreducetheeffectivenesswithwhichtheGroupconductsitsbusiness

• Keymanagementarepaidmarketsalariesandofferedcompetitiveincentivepackagestoensuretheirretention

• NewLTIPawardsmadein2014

• Successionplanningforkeypositionsisundertaken

• Performanceevaluation,traininganddevelopmentprogrammesareinplacetomaintainandenhancethequalityofstaff

TherisksnotedabovedonotcompriseallthosepotentiallyfacedbytheGroupandarenotintendedtobepresentedinanyorderofpriority.AdditionalrisksanduncertaintiescurrentlyunknowntotheGroup,orwhichtheGroupcurrentlydeemsimmaterial,mayalsohaveanadverseeffectonthefinancialconditionorbusinessoftheGroupinthefuture.TheseissuesarekeptunderconstantreviewtoallowtheGrouptoreactinanappropriateandtimelymannertohelpmitigatetheimpactofsuchrisks.

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20

Stock Code: CAL

Chief Executive’s Statement

The Group’s operational focus is now on the delivery of the multi-year Mall asset management programme announced in conjunction with the Capital Raise in June 2014 which we now expect to total £65 million and deliver income returns of at least 10%.”

8UK shopping centres

Positive operational performanceItisparticularlypleasingthatinayearwhichhasbeendominatedbycorporateactivityandagainstabackdropofoftenchallengingconditionsforourretailers,theGrouphasbeenabletoreportanimprovementinitskeyoperationalmetricsduring2014.

Afteranumberofyearsinwhichshoppernumbershavefallen,footfallwasupacrossthesevenshoppingcentresinabsoluteterms(by0.9%)andcontinuedtooutperformthebenchmark(by1.8%).ThisissupportedbyinformationfromourindicativeC&Rtradeindexwhichshowedretailers’salesacrossourportfoliowereup2.2%in2014comparedtoa0.5%decreasein2013.

Administrationsweresharplylowerin2014comparedto2013.Thishashelpedoccupancygrowfrom95.0%asat30December2013to96.1%attheendof2014onalike-for-likebasis.Thisincreasedoccupancyhasledtoanincreaseinpassingrent,particularlyinthesecondhalfoftheyearfrom£62.8millionasat30June2014to£64.5million,anincreaseof2.7%asat30December2014.

Increased asset management activityCompletionoftheMallacquisitionhasenabledtheGrouptoacceleratedeliveryofanumberofvalueenhancinginitiativesacrosstheportfoliowhichwerepreviouslycompromisedbyuncertaintysurroundingthefutureoftheMallFund.Themuchneededcertaintyprovidedbythetransactionhasresultedinheightenedlevelsofengagementbetweenourassetmanagers,localcouncils,retailersandleisureoperators.TheGroupis,asaconsequence,inamuchstrongerpositiontocommitincreasedinvestmenttoitsshoppingcentreportfolio.Threecleartrendsasweacceleratedeliveryofourplansarevisible:

• Fashionretailersarestilltakingnewspaceinshoppingcentreswhererefurbishmentandreconfigurationhavemadeitattractiveandaffordable.TheverysuccessfulopeningoftheNextandH&MstoresatWaterside,Lincoln,highlightthepotentialthatcanbeunlockedastheselettingsenabledthe

Grouptodisposeoftheassetatayieldof5.88%.

• Thereisstillstrongdemandfromleisureoperatorstotakespace.UnusedofficespaceinWoodGreenisnowbeingreconfiguredtosupporttheopeningofbothahotelandtheextensionofagymbytheendof2015.ThecreationofTheHubatRedditch,whichhasattractedagymoperatoraswellasthreerestaurantsalongsidetheVueCinema,hasledtoasignificantincreaseinfootfallacrossthescheme.Atthesametime,therefurbishmentofWorcesterSquareledtoCostatakingasecondunitandattractednewretailerssuchasSwarovski,whichhasopenedwithanexceptionallystrongtradingperformance.

• ChangingdemographicsarehavingasignificantimpactondemandforspaceinandaroundLondon.FashionretailersareexcitedbytheplanstoextendtheWalthamstowschemewhilstresidentialopportunitiesinWalthamstowandWoodGreenseemtohavemuchgreaterpotentialthanoriginallyanticipated.

Innovative technologyTheGrouphas,formanyyears,beenattheforefrontofdevelopingdigitaltechnologytosupportfootfallandspendacrossitsshoppingcentres.Duringthecourseoftheyear,theGroupenteredintoa“Click&Collect”agreementwithCollectPlus,theleadingUKstore-basedparcelservice.Thisisthefirstsuchagreementtoincludedominantcommunityshoppingcentres.InitialtrialsinCamberleyandRedditchhaveprovedtobesuccessful,particularlyastheserviceattractscustomersofretailerswhicharenotrepresentedinourmallsintothecentres.

Aggressive recycling of capitalThesaleoftheGroup’sGermanportfolio(whichcompletedshortlyaftertheyear-end),togetherwiththeearliersaleofitsinterestsinHemelHempsteadandLincoln,reflectayearofaggressiverecyclingofcapital.Incontrasttopreviousyears,theproceedswerere-investedingrowththroughtheacquisitionofacontrollingstakeintheMallFundfromAvivaInvestors.Importantly,recyclinghasbeenwelltimedtotakeadvantage

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www.capreg.com Strategic Report > Chief Executive’s Statement


ofaninvestmentcyclewhichbegantoaccelerateastheyearhasprogressed.

Thekeyhighlightswere:

• ThesaleofLincolnfor£46million.ThenetproceedstotheGroupof£15.7millionrepresentedanupliftof£4.8millionor44%onthe30June2014carryingvalue.

• TheGermanportfoliowassoldatasmallpremiumtoyearendNAVresultinginnetcashproceedsof£42.1million.

• Theacquisitionofa62.56%stakeinTheMallinJuly2014ata5%discounttotheJune2014valuation.

Strengthening of balance sheetFollowingcompletionoftheacquisitionofTheMallandthesaleofLincolnandGermany,theproformasee-throughnetloantovalueoftheGrouphasfallenfrom54%to45%asat30December2014.Withtheexceptionof£15.5millionin

respectoftheRedditchinvestment,alloftheGroup’sproformasee-throughnetdebtof£352.1million,adjustedforthesaleofGermanyandpaymentofTheMallperformancefeeandincomeduetoformerunitholders,isnowonbalancesheet.

InMay2014theMallCMBSwasrefinancedbyenteringintoanew£350millionfiveyearsecuredbankloanandanadditional£25millioncapexfacilityatadayonecostof3.37%.Thestructureofthefacilitywassubsequentlyamended,followingcompletionofour62.56%acquisitiontoenablethetenderfortheminoritiestobefundedfromwithintheMall.

TheGroup’sRevolvingCreditFacility,whichwasincreasedto£50milliontoaccommodatetheofferforTheMall,hasnowbeenreducedto£20millionfollowingcompletionofthesaleofGermanyinFebruary2015.

Occupancy (like-for-like)

96.1%(2013: 95.0%)

C&R retailer sales

+2.2%(2013: -0.5%)

• Acquiredin2011for£24.8min50%JointVenture

• Netexpenditure£8.2m

• Expectedincomegrowth£0.9m(10.9%incomereturn)

• SoldinNovember2014for£46.0m(20%IRRreturn)

Lincoln

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Stock Code: CAL

Chief Executive’s StatementContinued

TheGroupraised£165millionofnewequityduringtheyeartofundtheacquisitionofTheMall.

OutlookIncomegrowthwillbethekeydriverofpropertyvaluations.Thereisstillscopeforfurtheryieldcompressiongiventhecontinuingstrengthininvestmentmarkets,butweexpectgrowthinvaluedincometobeamoresignificantfactorinthefuture.Thiswillbedrivenbythefactthatincreasedconsumerspendingprovidesretailersandleisureoperatorswithconfidencetotakeunitsinschemeswherewehaveshown,andcontinuetodemonstrate,acommitmenttoinvestinthecreationofattractiveandaffordablespacerightacrosstheportfolio.

TheGroup’soperationalfocusisnowonthedeliveryoftheMallassetmanagementprogrammeannouncedinconjunctionwiththeCapitalRaiseinJune2014whichwenowexpecttototal£65million.Asignificantpartoftheinvestmenttakesplaceinthenexttwoyears.Weareexpectingtotalincomereturnsofatleast10%.

KeydecisionsonthetwodevelopmentsatCamberleyandMaidstonecanbeexpectedthisyear.Wearenowentering

aperiodofintensediscussionandnegotiationwithbothlocalcouncilsandanchorretailersonthescopeofthedevelopmentsandexpecttobeabletoclearlydefinebothprojectstogetherwiththeGroup’scommitmentbytheendoftheyear.

AcquisitionswillfocusonopportunitieswhichenabletheGrouptoboostincomeandsupportaprogressiveapproachtodividendgrowth.AtthisstageinthepropertycycleweseeattractiveopportunitiestoacquireassetscomparableinsizetoLincoln(asevidencedbytheannouncementoftheacquisitionoftheButtermarketShoppingCentreinIpswich)whichoffertheopportunityforrepositioningthroughassetmanagementwhichwillfacilitatetheintroductionofnewretailersand/orleisureoperators.

Hugh Scott-BarrettChiefExecutive

Outperformed national benchmark by

1.8%

£

£65mMulti-year Mall

investment

22

23714.04 15 April 2015 10:01 AM Proof 8

www.capreg.com Strategic Report >Chief Executive’s Statement

Mall Cares

£1.2mraised

since 2010

Overthelastfouryearswehaveraisedover£1.2millionthroughourMallCaresprogramme.

Twooftheeventsundertakenin2014bystaffatTheMallLutoncommemoratedthe100thanniversaryoftheGreatWar.

• TheMallLutonpurchaseda100thanniversarysculpturefordisplayinthecentre.WorkinginconjunctionwiththeRoyalBritishLegionandtheSeaCadetsamilitaryservicewasheldon1August2014,andat11.00amtheServiceStandardswereloweredtothesoundofthelastpostasanex-servicemanreadthepoemforthefallen.

• Afterthetwominutesilence,thefirstpoppiestobeplacedonthesculpturewerebytheservicepersonnelpresentandtheMayorofLuton,followedbymallstaff.Overthefollowingfourweekscustomersplacingpoppiesonthesculpturedonatedover£2,700.

• ThesculpturewasusedagainlaterintheyeartosupporttheofficialPoppyAppealhelpingtoraisemorethan£20,000,arecordfortheannualcollectionwithintheMallLuton.

• InAugust2014MarkBroadhead,theGeneralManagerofTheMallLuton,waspartofateamwhocycled225milesfromLutontothebattlefieldsofFlandersinBelgiumraisingmorethan£22,000.

Mall Cares

23


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24

Stock Code: CAL

Operating Review

Thereweretwofundamentalstrategicobjectivesforthegroupin2014,bothofwhichhavebeensuccessfullyachieved.IntheUKtheGroupconsolidateditsownershipoftheMallFundthroughtheacquisitionofalloftheunitsinthefundwhichitdidnotown.InGermanytheGroupexchangedcontractsforthesaleofallofitspropertyinterestsinDecember2014,withcompletionfollowingon10February2015.

AsaresulttheGroupisnowfullyfocusedonitsinvestmentsinUKshoppingcentresthroughtheMallandinitsjointventuresinRedditchandIpswich,followingtheinvestmentinMarch2015.TherewasonedisposalfromtheUKshoppingcentrebusinesswhichwasatLincolnwhere,subsequenttothereconfigurationofthescheme,theGroupanditsjointventurepartnertookadvantageofthestronginvestmentmarkettoselltheassetrealisingaprofitondisposalof£4.7milliontotheGroup.TheGroup’skeyoperatingmetricsaresetoutasfollows:

UK shopping centresRental incomeUKShoppingCentres(Like-for-like)

Dec 2014

£m

June2014£m

Dec2013£m

Contractedrent 67.8 67.3 67.6

Passingrent 64.5 62.8 64.1

Passingrentincreasedby0.6%onalike-for-likebasisduringtheyear,whichwasdrivenbyastronglettingperformanceandincreasedoccupancyacrosstheportfolio.

New lettings, renewals and rent reviews

UK Shopping Centres

Number of new lettings 66

Rentfromnewlettings(£m) 3.7

ComparisontoERV(%)1,2 2.0

Renewals settled 34

Revisedrent(£m) 1.5

ComparisontoERV1(%) 0.1

Rent reviews settled 28

Revisedpassingrent(£m) 3.4

Uplifttopreviousrent(£m) 0.1

ComparisontoERV(%) 9.1

1Forlettingsandrenewalswithatermoffiveyearsorlongerwhichdidnotincludeaturnoverrentelement.

2Excludingdevelopmentdeals.

TherehasbeenanexcellentlevelofleasingactivityacrosstheUKShoppingCentrebusinesswithinexcessof£5millionofannualisedrentalincomeachievedthroughcompletednewlettingsandleaserenewalsduringtheyear.

InCamberley,followingtheopeningofthenewTKMaxxstorein2013,furtherlettingshavebeenachievedwithotherfashionoperators.JonestheBootmakerhastakena10yearleaseona1,400sqftunit.DeichmannandSelecthavealsotaken10yearleasesoverunitsof4,400and5,000sqftrespectively.Costahasupsizedtoa1,900sqftunitalsoona10yearterm.

AtLutonsignificantlettingshavebeenmadewithPoundlandwhichhastakena10,500sqftstorefor10years,andHMVwhohavetakenaleaseto2018ona4,500sqftshop.

TherefurbishmentoftheschemeinWalthamstowiswellprogressedandnotabledealshavebeenconcludedwithTKMaxxtaking27,500sqftofretailspace,whichisbeingcreatedpartlyfromthecarpark,andVodafonetakinga1,900sqftunitona10yearterm.Burton/DorothyPerkinshasalsorelocatedwithintheschemeonanewfiveyeartermtoaunitof5,100sqft.

TherehasbeenastronglevelofactivityatBlackburnwhereB&Mhasopenedina19,000sqftunitonafiveyearterm.WarrenJameshasupsizedtoa1,300sqftunitandtRedshastakena2,700sqftunit,bothfortermsoftenyears.Ed’sDineralsosigneda15yearleaseona5,400sqftunit,whilefurtherdealswereconcludedwithVodafone,TheFragranceStoreandMBitz.

AtWoodGreen,Vodafonehascompleteda10yearleaseona2,000sqftstoreandCostahasopenedanew1,800sqftoutletalsoona10yearterm.InMaidstone,YoursClothingtookafiveyearleaseona2,100sqftunitandrenewalswerecompletedwithHSamuelandCardFactory.

InRedditch,threeofthefournewlycreatedrestaurantunitshaveopenedandthishasgeneratedsignificantletting

interestfromotheroperators.CostahasopenedasecondoutletinWorcesterSquarefollowingitsrefurbishment.TheremainingrefurbishmentworkstothemainfashionpitchinEveshamWalkarescheduledtocompleteearlyinthesecondquarterof2015,addingmomentumtothe600sqftand2,300sqftlettingsmadetoaSwarovskifranchiseandtRedsrespectively.

Occupancy levels

(Like-for-like)1

30 Dec 2014

%

30June2014

%

30Dec2013

%

UKShoppingCentres 96.1 94.3 95.0

1OccupancyatDecember2014andDecember2013includesaseasonalincreaseintemporarylettings.

AdministrationsTherewere20unitsaffectedbyadministrationduringtheyear(2013:31)withpassingrentof£1.2million(2013:£2.0million).

UKShoppingCentres

Year ended

30 Dec 2014

6monthsended30Dec2014

6monthsended

30June2014

Administrations(units) 20 8 12

Passingrent(£m) 1.2 0.7 0.5

At30December2014,therewasoneunitwherethetenantiscontinuingtotradewhilstinadministrationwithapassingrentof£0.2million.

Inthefirsttwomonthsof2015therehavebeennineunitsaffectedbyadministrationwithapassingrentof£0.6million.Ofthisover95%oftherentbyvaluerelatestounitsthatarestillopenandtrading.

FootfallFootfallatCapital&Regional’sUKshoppingcentresoutperformedthenationalfootfallindexby1.8%during2014.Therewasanincreaseinshoppernumbersovertheyearof0.9%comparedtoadeclineof0.9%intheUKbenchmarkindex(ShopperTrak),demonstratingtherelativestrengthoftheportfolio.Thistrendhascontinuedintheyeartodatein2015.

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Temporary lettingsAt30December2014,onalike-for-likebasistherewere116temporarylettings(2013:100)foranetrentof£0.4million(2013:£0.8million)ascomparedtoanERVof£5.3million(2013:£4.6million).

Income securityCreditriskismanagedthroughtheassessmentofthecovenantstrengthofallincomingtenantsandbymonitoringcreditratingsofkeyexistingtenants.Wherepossiblewelooktopre-empttheconsequencesofadministrationsthroughcontingencyplanningandbyactivelyseekingtoreduceexposuretoknownrisks.

Thetenlargestretailoccupiersbyrentalincomeat30December2014were:

UK Shopping Centres %

Boots 5.1

Debenhams 3.9

Primark 2.9

Superdrug 2.4

BHS 2.4

H&M 2.3

NewLook 2.2

Wilko 2.1

SportsDirect 1.9

Arcadia 1.8

RentcollectionratesintheUKShoppingCentres(adjustedfortenantsinadministration)havecontinuedtobestrongthroughouttheyear,with98.3%ofrentbeingpaidwithin14daysoftheduedateforDecember2014.

Investment portfolio performanceThepropertyleveltotalreturnsaresetoutbelow:

30 December 2014

Property valuation

£m

Capital return

%Total return

%Initial yield

%

Equivalent yield

%UKShoppingCentres1 895.7 8.2 14.9 6.27 6.62

1Weightedaveragebyyearendpropertyvaluation

InMay2014SnozoneembarkedonapartnershipwithSense,thecharityfordeafblindpeople,inpursuitofmakingsnowsportsaccessibletoeveryoneregardlessofability(physicalorotherwise).Snozonealsostartedthetrainingofitscoachestobecome‘adaptiveneeds’qualified,sotheycandelivertuitiontodisabledanddeafblindcustomers.

Theworkundertaken,plusthefundraisingthattookplaceoverthecourseoftheyear,sawSnozonenominatedforaSenseawardattheirnationalawardevent,inthe‘PowerfulPartners’category.

Snozone and Sense

25


Acquisition of Buttermarket Centre, IpswichOn3March2015theGroupcompletedtheacquisitionoftheButtermarketCentre,Ipswichina50:50jointventurewithDrumPropertyGroup.Thecentrehasbeenacquiredonafreeholdbasisfor£9.2millionequivalenttoaNetInitialYieldof8.46%.

TheButtermarketCentrehas235,000sqftofretailspaceovertwocoretradinglevelsandanintegrated420spacecarpark.

Webelievethereissignificantpotentialforrepositioningthecentrewithanenhancedmixofretailandleisureandhaveplansfora£26milliondevelopmenttobelargelyfundedfromnewdebtwithinthejointventurestructure.

Other operationsSnozoneSnozone,theskislopeoperator,delivereda33%increaseinitscontributiontotheGroupof£1.2m(2013:£0.9m).Thishasbeenprimarilyduetoyear-on-yearrevenuegrowthinexcessof10%drivenbyamoreeffectivemarketingstrategyandimprovementsincustomerservice,whichhavehelpedgeneratebetterretentionandusage.

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Stock Code: CAL

Financial Review

Key performance indicators 2014 2013

Investment returnsTotalshareholderreturn 24.7% 53.9%Netassetspershare 60p 54pEPRAnetassetspershare 59p 56pReturnonequity 28.1% 5.1%

ProfitabilityOperatingProfit3 £19.3m £13.0mPre-taxprofitfortheyear £67.2m £7.3mBasicearningspershare–continuinganddiscontinuedoperations 15p 3p

FinancingGroupnetdebt/(cash) £369.8m £(11.1)mProformaGroupnetdebt/(cash)1 £336.6m £(19.5)mProformasee-throughnetdebttopropertyvalue1,2 45% 54%

Property under management £0.9 billion £1.2billion

1 2014adjustedfor£42.1millionofGermanjointventurenetproceedsreceivedinFebruary2015and£8.9millionofpaymentsdueinrespectofMallperformancefeesandMallincomeduetoformerunitholders.2013adjustedfor£8.4millionHemelHempsteadnetproceedsreceivedinFebruary2014.

2 See-throughnetdebtdividedbypropertyvaluation.3 AsdefinedinNote1tothefinancialstatements.

Investment returnsThetransactionsandresultsfortheyearhavesignificantlyincreasedthesizeandscaleoftheGroupwithNetAssetValuegrowingfrom£188.7millionat30December2013to£419.0millionat30December2014:

£mNAV

pershareNet Asset Value at 30 December 2013 188.7 54pNew shares issued (net of costs) 160.7

OperatingProfitfortheyear 19.3Revaluation 42.7AcquisitionofMallunits(seeNote25) 8.1ProfitondisposalofWatersideLincoln 4.7Otherincomestatementmovements 0.4Profit for the year 75.2Dividendspaid (3.8)OtherReservemovements (1.8)

(5.6)Net Asset Value at 30 December 2014 419.0 60p

TheOperatingProfitandrevaluationgainsduringtheyearsignificantlyoutweighedthedilutiveimpactofthenewshareissue,drivinganincreaseinNAVpershareof6por11%.Thereturnonequityfortheyearwas28.1%.TheproformaNAVpershareat30December2013,reflectingtheimpactofthecapitalraiseandacquisitionof62.56%ofMallunitsfromAvivaandKarooasifithadtakenplaceatthatdate,was49ppershare.

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www.capreg.com Strategic Report > Financial Review

ThetransformationandsimplificationoftheGroupisreflectedinthetablebelowwhichpresentstheGroup’sbalancesheetintwoseparateways,withthe‘statutory’balancesheetfollowingtheaccountingandstatutoryrules,andthe‘see-through’balancesheetshowingtheGroup’sproportionateeconomicexposuretothedifferentcomponents.

FollowingthesaleofGermanyinFebruary2015theGroup’sbusinessisalmostentirelybasedonUKshoppingcentres.

See-through Statutory See-through Statutory

Property

£mDebt

£mOther

£m

30 December2014

£mProperty

£mDebt£m

Other£m

30December2013£m

TheMall 790.8 (380.0) (33.6) 377.2 214.3 (111.1) (2.8) 100.4KingfisherRedditch 29.8 (16.9) 0.7 13.6 26.9 (17.1) 1.3 11.1Germany1 — — 41.4 41.4 167.9 (119.6) (3.5) 44.8Othernetassets — (23.4) 10.2 (13.2) — — 13.9 13.9WatersideLincoln — — — — 15.7 (6.8) 1.2 10.1HemelHempstead — — — — 8.4 — — 8.4Net assets 820.6 (420.3) 18.7 419.0 433.2 (254.6) 10.1 188.7

1 Heldforsaleat30December2014

ProfitabilityThebreakdownofOperatingProfit,asdefinedinnote1tothefinancialstatements,isasfollows(andassetoutfurtherinnote2a):

Year to30 December

2014£m

Yearto30December

2013£m

TheMall 14.6 4.1OtherUKShoppingCentres 0.3 2.1Snozone 1.2 1.0Group/Central (2.5) (0.8)DiscontinuedOperations 5.7 6.6Operating Profit 19.3 13.0

TheincreaseinOperatingProfitreflectstheimpactoftheacquisitionof70.74%ofMallunitsduringthesecondhalfof2014.ProfitswithinOtherUKShoppingCentresreflectanoperatinglossinLincolnintheperioduntilitsdisposalinNovember2014foraprofitondisposalof£4.7million.ThemovementinGroup/Centralprofitsprimarilyreflects2013benefitingfromthewritebackofa£1.4millionprovision.

Proforma Operating ProfitThefollowingtableprovidesillustrativeannualisedfigurestoshowhowtheMallcontributionfortheyearwouldhavelooked(ona100%basis)iftherefinancingarrangementsthatwereinplaceattheendoftheyear(asdetailedintheDebtsection)andthecostsavingsfromthechangeinOperatorandFundManagerofTheMallwerebothinplaceandeffectiveforthedurationof2014.

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Stock Code: CAL

Financial ReviewContinued

The Mall – Proforma Operating ProfitActual Adjustments Proforma

Year to 30 December 2014 £m £m £m Note £m £mRentalincome 48.5 – 48.5 Carparkincome 6.6 – 6.6 Ancillaryincome 2.4 – 2.4 GrossRentalIncome 57.5 – 57.5

Servicechargeandvoidcosts (3.1) – (3.1)Baddebt (0.7) – (0.7)Operator/FundandAssetManager (5.6) 1.5 1 (4.1)Carparkcosts (3.2) – (3.2)Headleases (2.7) (0.3) 2 (3.0)Headleaseadjustment 3.6 – 3.6 Lettingandrentreviewfees (1.6) – (1.6)Adminexpenses (1.8) – (1.8)Repairsandmaintenance (0.4) – (0.4)Othercosts (1.7) – (1.7) Propertyoperatingexpenses (7.8) (8.1)NetRentalIncome 40.3 1.2 41.5

Interest (12.3) (0.8) 3 (13.1)Feeamortisation (1.9) – (1.9)Headleaseadjustment (3.6) – (3.6) Interestexpense (17.8) (0.8) (18.6)Mall contribution 22.5 0.4 22.9

1 AdjustmenttoreflectcostsavingofchangeinFundManagerandOperatorarrangements.2 Adjustmenttoremoveone-offimpactof£0.3millioncreditinrespectofLuton.3 InterestadjustedtoreflectafullyearchargeonthebasisoftheyearenddebtandinterestpositionforTheMallasreflectedintheDebtsection.

Thetableaboveshowsthebenefitofthesavingofthefundmanagerandoperatorcostsof£1.5millionperannumaspartoftherestructuringofthefund.Managementbelievefurthercostsavingsarelikelytobeachieved.

UsingtheproformacontributioncalculatedaboveforTheMall,thetablebelowshows,basedon2014actualresults,theproformaGroupOperatingProfittakingintoaccountthesalesofGermanyandLincolnandthesavingonthecentraldebtfacilityfollowingthereceiptoftheproceedsofthesesales.

Group Proforma Operating Profit

Year to 30 December 2014Actual

£mAdjustments

£m NoteProforma

£mTheMall 14.6 8.3 1 22.9OtherUKShoppingCentres 0.3 0.5 2 0.8Snozone 1.2 – 1.2Group/Central (2.5) (1.1) 3 (3.6)DiscontinuedOperations 5.7 (5.7) 4 –Operating Profit 19.3 2.0 21.3

1 ProformaOperatingProfitof£22.9millionasdetailedinthetableabove.Theadjustmentfromtheactual2014resultsreflects£7.9millionregardingtheshareofownershipbeingadjustedto100%forthefullyearand£0.4millionofadjustmentsasdetailedinthetableofTheMall–ProformaOperatingProfit.

2 £0.5millionadjustedtoaddbacktheGroup’sshareofoperatinglossesinrespectofTheWatersideShoppingCentre,LincolnwhichwassoldinNovember2014.3 £1.4millionadjustedtoreflecttheimpactofmanagementfeesinrespectofGarigalandLincoln(including£0.9millionofLincolnperformancefees)followingthe

disposalsoftheGroup’sinterestsin2014.InterestontheGroup’sRCFfacilityhasbeenreducedby£0.3million.Thisreflectsaninterestchargeequivalenttothenon-utilisationfeefor12monthsonanundrawn£20millionfacilitygiventhisistheexpectedpositionfollowingthereceiptoftheGermandisposalproceeds.

4 £5.7millionofprofitsinrespectoftheGroup’sGermanjointventureremovedfollowingitsdisposalwhichcompletedinFebruary2015.

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FinancingDebtThevastmajorityoftheGroup’sdebtisnowon-balancesheetwiththeGroupowning100%ofTheMallasof30December2014.Thefollowingsummaryisprovidedonaproformabasisadjustedforthe£42.1millionofnetproceedsreceivedfromthesaleofGermanyinFebruary2015and£8.9millionofpaymentsdueinrespectoftheMallperformancefeeandincomeduetoformerunitholders:

Proforma see-through debt

30 December 2014 Group share

Debt1

£mCash2,4

£mNet debt

£m

Loantovalue3

%

Netdebttovalue3

%

Averageinterestrate

%Fixed

%

Weightedaverage

durationtoloanexpiry

YearsTheMall 380.0 (22.0) 358.0 51 48 3.45 61.1% 4.4GroupRCF – (21.4) (21.4) n/a n/a n/a n/a 1.5On balance sheet debt 380.0 (43.4) 336.6KingfisherRedditch 16.9 (1.4) 15.5 56 51 4.59 100% 4.3Off balance sheet debt 16.9 (1.4) 15.5See-through debt 396.9 (44.8) 352.1 51 45

1 Excludingunamortisedissuecosts.2 Excludingcashbeneficiallyownedbytenants.3 Debtandnetdebtdividedbyinvestmentpropertyatvaluation.4 Cashadjustedfor£42.1millionofGermanjointventurenetproceedsreceivedinFebruary2015and£8.9millionofpaymentsdueinrespectofMallperformancefees

andMallincomeduetoformerunitholders.

The MallTheMallFund’sdebtwasrefinancedon30May2014andfurtheramendedon3November2014,atwhichdatethenew£380millionfacilitywasfullydrawndown.Thisfacilitycomprisesafixedratetrancheof£233.3millionwithinterestfixedat1.86%plusapplicablemarginandafloatingratetranchebasedonthreemonthLIBORof£146.7million.Thefloatingratetranchehasbeenhedgedusinginterestratecapswithastrikeratenohigherthan2.75%.Basedontheprevailingmarketrateattheendof2014theoverallcostofthisfacilitywas3.45%atthatdate.ThedebtmaturesinMay2019.

Group Revolving Credit Facility (RCF)At30December2014theGrouphad£23.4milliondrawnfromatotalfacilityavailableof£35.2million.FollowingcompletionofthesaleoftheGroup’sGermanjointventureinFebruary2015theoutstandingdrawingswerepaidoffinfull.Underthetermsofthefacility,asamendedinJune2014,theavailablelimitreducedto£20millionon11February2015.Interestonthefacilityischargedatamarginof3.2%perannumaboveLIBOR.Anon-utilisationfeeof45%oftheapplicablemarginispayable.Thefacilityisavailableuntil31July2016(butwillbereducedto£15millionfrom1January2016).

Kingfisher RedditchOn5February2014,theKingfisherLimitedPartnershipcompletedarefinancingofitsloanfacilitiesandincreaseditsseniorfacility.Theadditionalfundsraisedwereusedtorepaythepartnership’smezzaninedebt.ThetermofthefacilitywasextendedtoApril2019.Asaresultthepartnership’scostofdebtfellfrom6.2%to4.6%.

CovenantsTheGroupanditsassociatesandjointventureswerecompliantwiththeirbankinganddebtcovenantsat30December2014.Furtherdetailsaredisclosedinthe‘covenantinformation’sectionattheendofthisreport.

Foreign currency exposure managementAt30December2014theGroupusedaforwardforeignexchangecontracttohedgetheexpectedproceedsduefromthesaleofitsGermanjointventure.Thecontractwasfor€50millionatafixedexchangerateof1.2721.Thiswasclosedouton11February2015followingreceiptoftheproceeds.

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Stock Code: CAL

Financial ReviewContinued

Acquisition of Mall unitsTheGroupacquiredthe70.74%ofMallunitsthatitdidnotalreadyown,throughthreetransactionsin2014:

• Acquisitionof62.56%ofMallunitsfromAvivaandKaroofor£212.4millionwhichcompletedinJuly2014

• £28.2millionredemptionbytheMallUnitTrustoftheunitsheldbyeightofthenineremainingminorityunitholderscompletedinOctober2014resultingintheGroup’seffectiveshareholdinginTheMallincreasingfrom91.82%to99.45%

• £2.1millionacquisitionoftheunitsheldbythefinalminorityunitholderinDecember2014.

TheacquisitionoftheAvivaandKaroounitsresultedinanimmediateupliftof£11.5milliontotheGroup’sincomestatementrepresentingthefairvalueoftheunitsacquiredinexcessoftheamountspaid(seeNote25ofthefinancialstatementsforfurtherdetails).

Transactioncostsof£3.1millionwerechargedtotheincomestatement(excluding£4.1millionofcostsdirectlyrelatingtothecapitalraisethatweredeductedfromSharePremium)andafurther£0.3millionofrestructuringcostswereincurredinachievingtheapproximate£1.5millionofannualcostsavingsexpectedtobedeliveredin2015.

DisposalsWaterside Shopping Centre, LincolnOn12November2014,theGroupanditsJVPartner,Karoo,soldtheWatersideShoppingCentre,LincolntoTescoPensionFundTrusteesforanetconsiderationof£46.0millionrepresentinganetinitialyieldof5.88%.ThenetproceedsattributabletotheGroupwere£15.7million(includingperformancefeesof£0.9million)andtheresultingprofitondisposalwas£4.7million.

German joint ventureOn24December2014,theGroupannouncedtheconditionalexchangeofcontractsforthesaleofits50:50GermanjointventuretoclientsandfundsundermanagementofRockspringPropertyInvestmentManagers.UnderthetermsofthetransactiontheGroupwillretainforapproximatelyfiveyearsasmallminoritystake.TheGroup’snetassetsinrespectofGermanyat30December2014were£41.4millionincluding£2.7millionfortheretainedminoritystake.

Thesalecompletedon10February2015.Thenetproceedsreceivedwere€54.6million,thisequatedto£42.1million(afterallcostsandincludingthebenefitoftheGroup’sForwardContract)andisexpectedtoresultinaprofitondisposalaftercostsofapproximately£0.6milliontoberecognisedintheyearending30December2015,subjecttoanyfinaladjustmentsarisingoutofthecompletionaccountsandbeforetheimpactofhedgingandforeignexchangereservereclassifications.

Oncompletion,andincludedwithintheproceeds,theGroupenteredintoalong-termloanpayableof€3.5million(£2.7millionatyearendexchangerateof1.2783)repayableafterfiveyears.Aftercompletionadistributionof€1.5millionwasmadeinrespectoftheretainedminoritystake(reducingthecarryingvalueofthistoapproximately€2.2million),thiswasusedtoreducetheoutstandingamountoftheloanto€2.0million.

REIT conversionImmediatelyaftertheyearend,on31December2014,theGroupconvertedtoaRealEstateInvestmentTrust(REIT).TheREITregimeenablestheGrouptobenefitfromazerocorporationtaxrateonqualifyingpropertyincomeandcapitalgains.

Non-qualifyingprofitsandgainsoftheGroupcontinuetobesubjecttocorporationtaxasnormal.InordertoachieveandretaingroupREITstatus,severalentrancetestshadtobemetandcertainongoingcriteriamustbemaintained.Themaincriteriaareasfollows:

• atthestartofeachaccountingperiod,theassetsofthepropertyrentalbusinesspluscashmustbeatleast75%ofthetotalvalueoftheGroup’sassets;

• atleast75%oftheGroup’stotalprofitsmustarisefromthepropertyrentalbusiness;and

• atleast90%oftheGroup’sUKpropertyrentalprofitsascalculatedundertaxrulesmustbedistributed.

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Property under managementFollowingthedisposaloftheGermanjointventuretheGroup’spropertyinterestisentirelyfocusedonUKShoppingCentres,thevastmajorityofwhicharenowwhollyowned:

100%

Valuation 30 December

2014£m

Valuation30December

2013£m

UKShoppingCentres–whollyowned 745 –UKShoppingCentres–associatesandjointventures 151 851Germanjointventure – 337Property under management 896 1,188

ExcludesTheBroadwalkCentre,EdgwareinwhichtheGrouphasnoinvestmentinterestandfor2014Germany,whichwasheldforsaleat30December2014anddisposalcompletedon10February2015.

Going concernAsstatedinnote1totheconsolidatedfinancialstatements,thedirectorsaresatisfiedthattheGrouphassufficientresourcestocontinueinoperationfortheforeseeablefuture,aperiodofnotlessthan12monthsfromthedateofthisreport.Accordingly,theycontinuetoadoptthegoingconcernbasisinpreparingtheconsolidatedfinancialstatements.

Discontinuation of Interim Management StatementsFollowingrecentchangestoEUregulationonfinancialdisclosure,theFinancialConductAuthorityhasremoveditsrequirementforUKcompaniestopublishInterimManagementStatements(IMSs).Asaresult,andreflectingthelongtermnatureofourbusiness,theBoardhastakenthedecisiontoceasepublicationofformalIMSsinMayandNovember.TheGroupremainscommittedtofullandtransparentdisclosureandwillcontinuewithfull-yearandhalf-yearannouncementsaswellasothermarketupdateswhenappropriate.

DividendFor2014,theBoardisproposingafinaldividendof0.60ppersharetakingthefull-yeardividendto0.95ppersharerepresentinganincreaseof46%comparedtolastyear.AsexplainedintheprospectusissuedatthetimeofthecapitalraiseinJune2014,theearningsfor2014whicharenotdistributedwillbeusedtopartfundtheGroup’songoing£65millioncapitalexpenditureprogrammeinTheMall.

Thekeydatesinrelationtothepaymentofthedividendare:

16April2015 Ex-dividenddate

17April2015 Recorddateforthepaymentoffinaldividend

14May2015 Dividendpaymentdate

FollowingconversiontoaREIT,theBoard’sdividendpolicygoingforward,commencingwiththeinterimdividendin2015whichisexpectedtobepaidinOctober2015,willbetodistributeatleast90%ofMallOperatingProfit.Thiswillbepaidapproximately50%asaninterimdividendand50%asafinaldividend.Basedonthe2014MallProformaOperatingProfitsetoutonpage28weanticipatepayingafullyear2015dividendpaymentofatleast2.9ppershare.

Charles StaveleyGroupFinanceDirector

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Stock Code: CAL

Responsible Business

IntroductionOurintentistocreatesustainablevaluebyconnectingwithourcommunities;meetingbothourshareholdersandstakeholdersexpectations.

Ourshoppingcentrescreatejobsforpeople;providesocialhubsandvenuesforthecommunityaroundthem;createdemandforlocalsuppliersandimprovementsinthephysicalenvironment–justforstarters.Allthisweaimtodoasefficientlyandsustainablyaspossible.Theretailers,venuesandbusinesseswebringtotheshoppingcentresandpropertiesprovidemorejobopportunitiesandhelpfurtherdrivedemandforgoodsandservices.Inturnthisenhancestheappealofthelocation,whichattractsmorepeopleandbusinessestotheareaandintoourspace.

Beingrecognisedasaresponsiblecompanyhasalwaysbeenafundamentalpartofourbusinessandthatdoesn’thappenovernight–youhavetokeepworkingatit–andthatiswhatwearedoing.Weseeresponsiblebusinessaspartofeveryemployee’severydayworkinglife;wealltakethoseresponsibilitiesseriouslyandprideourselvesonourachievementsinthisarea.Thisreportprovidesanupdateonourcontinuingprogressthroughout2014andourtargetsfor2015.

2014 highlights EnvironmentalOnceagainwehavemadegoodprogressagainstourenvironmentaltargetsthisyear:

• OurenergyCO2emissionsweredownby10%in2014and,withthebenefitofthemildestwinteronrecord,ourgasconsumptionalsoreduceddrastically.Ourelectricityusage,whichisnotwinterweatherdependentreducedbyover4%.Thisproducedasavingofover£225,000andfollowedsavingsof£240,000in2013.

• In2014,over5,800tonnesofwastewasgeneratedatourpropertiesandweinitiallydiverted99.8%fromgoingdirecttolandfill;80%wasrecycledbacktothesupplychain,12%wasteusedforenergyand8%senttolandfillaftertreatment.

• WeretainedtheGlobalRealEstateSustainabilityBenchmark(GRESB)GreenStarStatus.

Investors in PeopleWehavebeenrecognisedasanInvestorinPeoplesince2002andundertookourfifthsuccessfulassessmentreviewinJune2014.Whilewearedelightedwiththeassessors’feedbackwewillcontinuetostriveforfurtherimprovement:

“I have visited many organisations with varying degrees of depth of practice, but it is seldom that I meet people who are so enthusiastic and committed to what the organisation is working to achieve.”

RoSPAWeweredelightedtoretaintheRoSPAGoldAwardforthe8thconsecutiveyear.

“The RoSPA Awards encourage the raising of occupational health and safety standards across the board. Organisations that gain recognition such as Capital & Regional, contribute to a collective raising of the bar for other organisations to aspire to, and we offer them our congratulations.”

David Rawlins,RoSPA’sawardsmanager

Enviromall

32

Our2014Enviromallcampaignwaslaunchedon5June2014,onWorldEnvironmentDayandfocusedontheoveruseofplasticbags.Everyyearmorethan10billionplasticbagsareusedbyshopperswiththemajorityendingupinlandfillsitesandtakinghundredsofyearstobreakdown.

TheMallintroducedaGreatBritishBagSwapwherebyforaweekshopperscouldswap10plasticcarrierbagsforfreecottonbagsforlife.Over1,000customerstookpart.Thebagsforlifethatweregivenawaytocustomersweredesignedbylocalschoolchildrenwithsixwinningdesignsbeingprintedfrom1,300entries.

Seeing the bigger pictureShopping as it should be

We don’t just try to save you money.We’re trying to save the planet too.

From 2nd June - 8th June customers who bring 10 plastic carrier bags will be given A FREE BAG FOR LIFE from The Mall

Swap your plastic bags at our Ask Me Point


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www.capreg.com Strategic Report > Responsible Business

The MarketplaceOuraimistoengagewithcustomers,suppliersandstakeholders,tounderstandtheirneedsandidentifywaysofimprovingourcollectiveresponsiblebusinessperformance.Werecognisethepositiveimpactourcustomersandsupplierscanhaveonoursustainabilityeffortsandcontinuetoworkinpartnershiptodeliverourgoals.

2014 Target 2014 Performance

RetentionofRoSPAGoldAward AwardedinJuly2014

Toensureanaveragescoreofover93%intheunannouncedC&RSafeAudit

Achieved–averagescore95.3%

Allsitestoachieveascoreof92%oraboveintheComplianceStructuredSiteVisitwithnoredflags

Achieved–averagescore96%

ToensureallDutyManagershavecompletedour2014SafeProcedurescompetencychecks

Completed

Tocarryout100%oftheJointUnitInspectionsonthenewipadapp Completed

Tosuccessfullyimplementthenewintegratedcontractandexplorefurthercostsavingopportunities.AverageBSPMscoreforallsites>94%

Achieved-averageBrandStandardPerformanceManagement(BSPM)of96.4%

Tore-tenderthewasteandrecyclingcontractsateachcentretoensurebestpracticeoperationsandbestvalueforretailers/tenants

Deferredto2015

Toensureallstatutoryandnon-statutoryrecordsareuptodate,PPMcomplianceisgreaterthan95%atalltimes

Achieved-PPMcomplianceat95%

SuccessfulannualtechnicalStructuredSiteVisitforeachpropertywith90%minimumscore

Oncompletionof75%ofvisitsareviewoftheeffectivenessresultedinarevisedauditbeingdesignedbasedonPASandBSRIA.Continuestobeimplemented

Experimentinonecentrewithaninnovativeapproachtoaqualityassessedinitiativethatdeliverscostsavingswhileimprovingthequalityoftheenvironmentandpersonaldevelopmentopportunitiesforourteams

Trialcompletedintwocentresalthoughthiswillnotbepursued

2015 Target

RetainRoSPAGoldAward

Achieveanaveragescoreofover93%intheunannouncedC&RSafeAudits

Toensure100%oflocallysourcedcontractorshaveundergonetheprequalificationprocess

Reviewproceduresfordaily/weeklyauditcheckstoensureaconsistentstructuredapproachacrossallsites

Tocarryout100%oftheJointUnitInspectionsonthenewlylaunchedPyramidApp

DrivecostefficiencieswithintheintegratedSoftServicesContract.AverageBSPMscoreforbothservicesacrossallsites>94%

RequireourserviceproviderstoparticipateinnationalrecognitionawardssuchasSceptre,BSIAawardsandachieveatleastoneawardin2015

AchieveMallMaintainperformancestandardsoncontractformanagement,plannedandstatutorymaintenanceatstatutoryplannedmaintenance100%andaverageBSPM>94%

100%complianceonmaintenanceandpropertyconditionauditsbasedonPASandBSRIAguidelines

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Stock Code: CAL

Responsible BusinessContinued

The EnvironmentFormanyyearswehaveworkedhardtoreduceourimpactontheenvironmentinthethreekeyareasofwaste,waterandenergy.Inaddition,wecontinuethefocusonreducingthecarbonfootprintofourproperties.Wehavelongrecognisedthatanydevelopmentactivityshouldmirrorthisandhaveproactivelyensuredweminimiseenergyconsumptionandmitigatetheeffectsofclimatechangethroughoutthedesign,refurbishmentorbuildingphase.


Continuetoreduceourenvironmentalimpactthroughoperationalimprovements,rethinkprojects,lowcarbonretrofitandrenewableopportunities

Reduceenergyby3.5%

Reducewaterconsumptionby2%

Electricityandgasconsumptiondown10.2%helpedbytheverymildwinteralthoughelectricitywhichisnotweatherdependentwasreducedby4%.Waterdown1%

Totalcostsavingof£225,000following£240,000savingin2013

Continuetoimproveourwastehandlingandmanagement

Wastetobedivertedfromdirectlandfill95%

85%ofwasterecycledbacktothesupplychain

99.8%divertedinitiallyfromlandfill,8%senttolandfillaftertreatment,12%usedaswastetoenergy.80%recycledbacktotothesupplychain

Thewasterecycledtosupplychaintargetwasnotmethowevertheperformancestillcomparesfavourablytopeers.AsUKrecyclingfacilitiesimprovethiswillbecomemoreachievable

Satisfyallcarbonmanagementandlegislativerequirementsandreducecarbonemissions

Compliantandcarbonemissionsreduced–seeDirectors’Reportforanalysis

RetainGRESBGreenStarrating Achieved

ContributetotheworkoftheBetterBuildingsPartnership(BBP) BBPmemberofworkinggroupsandcontributortoREEBperformancebenchmark

ContinueworkingwithBCSCLowCarbonWorkingGroupandcontributeindustryguidanceandpromotionofbestpractice

MemberofsustainabilityandcommunityengagementcommitteeandChairofLowCarbonWorkingGroup

Reviewouracquisitionduediligenceprocessestoconsiderfurthersustainabilityimprovements

WorkingwithBBPonduediligenceguidanceinrelationtosustainabilityforthepropertyindustry

Establishaframeworkforoursustainabledevelopmentandrefurbishmentworkswithprojectmanagement

Thisisnowbeingdevelopedonaprojectbyprojectbasis,tobefurtherprogressedin2015

Raiseenvironmentalperformanceandawarenessofourcentreswithourtopretailers

Retailerpresentationsandservicechargereportsincludedenvironmentalperformanceandtargets

2015 Target

ReduceCO2by3.5%

Reduceourwaterconsumption(normalisedbyfootfallatlandlordcontrolledfacilities)by2%

Divertatleast95%wastedirectfromlandfilland80%recycledbacktothesupplychain

Satisfyallcarboncompliancereportingandlegislativerequirements

RetainGRESBGreenStarstatusandberecognisedassectorleader

TheCarbonTrustStandard-Retainstandardforenergyandextendtowaterandwaste

ParticipateandcontributeasmemberofBBPandBuildingServicesResearchInformationAssociation(BSRIA)andcontributetotheworkoftheindustrybodies

ParticipateandcontributetoBritishCouncilofShoppingCentres,ChairLowCarbonWorkingGroupandmemberofcommunityengagementandsustainabilitycommittee

Concludeandimplementaframeworkforsustainabledevelopmentandrefurbishmentworks

Meetandpresenttoourtop15retailerstocommunicateenvironmentalperformanceofourcentres

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The WorkplaceOuraimistoengage,developandrewardourpeople,retainingourreputationasanemployerofchoicewithinthesectorsinwhichweoperate.Wewanttoproviderelevant,engagingtrainingforallouremployeesinorderthattheycanmaketheirfullestcontributiontooursuccess.Wesetouttoprovideaworkingenvironmentwhichsupportsthewellbeingandhealthofallourpeople,takingaccountofthediversityofourworkforceandreflectingourvaluesandethics.


DesignanddeliveryofaTeamConferencewithaimtoinform,inspireandequipeveryonetoachievethecorporateobjectivesin2014andmovetheirpersonalcontributionforward

AllGM’sandselectedmanagersattend

>70%positiveevaluation

Teamdayconferencesheldthroughouttheyearforgeneral,operationsandmarketingmanagerscoveringawiderangeoflearningandareas.Thesehaveprovedverysuccessfulinmaintainingcloseworkingrelationshipswithintheoperationsofthebusinessandencouragedthesharingofbestpractice

RetentionofInvestorsinPeople(IIP)accreditations

Achievedwithverypositivereport

Designandimplementabespoketrainingprogrammeforcustomerservicepersonnel

Participationofupto60people

>75%positiveevaluation

Achieved-53peopleattended

Feedback97%positive

“Best training course I’ve been on for any job”

DesignandimplementabespokeInstituteofLeadershipandManagement(ILM)accreditedManagementSkillsProgrammefornewandfirstlinesupervisors

Allmanagerlevelattendance>70%positiveevaluation

Achieved-C&RManagementSkillsProgrammethreeone-dayworkshops:

FivemorepeopleachievedILMqualification,withmoreanticipatedattheconclusionoftheprogramme

Workcloselywithoursoftservicespartner,designandimplementanewbespokestafftrainingpackageandissueadetailedtrainingmatrixforallsecurityandcleaningstaff

ZeroAssaultsProject(ZAP)launchedinJune2014.DetailedTrainingMatrixforoursecurityandcleaningstaffisnowinplace

Throughoursoftservicespartnerimplementbio-metricstaffrecordingtechnologyatallcentrestoensureafairandaccuratesystemofrecordingstaffattendanceandtimeworkedonsite

Timegateimplementationduespring2015andtrainingunderway.Meanwhiletime/attendancebeingrecordedviaVSGphonesystems

2015 Target

FullparticipationinMPowermanagementandleadershipdevelopmentincludingprogrammeofILMmodulesandsuccessfulcompletionofsixmodulesinILMDevelopmentAward

Allrelevantmanagerattendanceand>80%positiveevaluation

Designanddeliveryofthenextphaseofcustomerexperiencetraining

Participationofallrelevantpeopleincreaseinpositiveevaluationto>85%

All-teammeetingsheldaminimumofthreetimesperyearateverysite

Allemployeeattendanceand>70%positivefeedback

Supportthecontinueddevelopmentofthesecurityandcleaningmanagers/supervisors

Supportthedeliveryofoneadditionalsoftservicesmanagerintooperation

Tosupportthedeliveryofadvancedsecuritytrainingonkeytopics(e.g.ZeroAssaultsProject)Zerotargetforseriousaccidents/incidentsinvolvingsecurityteamsorenforcersreDPA

ThroughourMallMaintainpartnerexploreengineeringapprenticeshipopportunitiesforpeopleinourlocalcommunitiesbydesigningandimplementinganapprenticeshipscheme

In2010aspartofourongoingcommitmenttoreducingourenvironmentalimpactandtheenergycostsforourtenantsweinstalledEcoDriverinCamberley.Thisisa‘liveusage’basedreportingsystem,whichprovidesdataonelectricityusageeveryhalfhourtotwolargepublicTVscreens.Thesystemalsoallowsustosetdailyusagetargetsandprovidesavisualdisplayofperformanceagainstthesetargets.

Thesystemgivesusameansofmeasuringinreal-timetheimpactofremedialactionsso,forexample,whenwere-timedtheheating/coolingsystemsorchangedlightingtolowenergyLEDsystemswecouldseethebenefitstraightaway.EcoDriverhashelpedTheMallCamberleyreduceitselectricityusagebyover40%since2010.

Year Energyusage(KWh) %+/-

2010 943,594 –6%2011 750,053 –21%2012 664,833 –11%2013 637,567 –4%2014 548,239 –14%

EcoDriver

35


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Stock Code: CAL

Responsible BusinessContinued

The CommunityOuraimistohaveakeyroleintheongoingdevelopmentofthecommunitiesandenvironmentsinwhichweoperate.Weworkcloselywithkeystakeholderstoensurewelisten,engageandusefeedbacktodeveloporrefineourapproach.Weusesocialmediatocollectfeedbackandrespond.Weaimtoprovidesafe,welcoming,cleanandattractiveshoppingandleisurevenueswherepeoplechoosetoshop,workandsocialise.Weaimtomakeapositivecontributiontoeachlocalcommunitybybeingaresponsible,sociallyawareandproactivepartner.


TomaintainourinvolvementinlocalCrimeReductionPartnershipssupportingthepolicewithtargetedcrimereductionandcommunitysafetycampaignsinordertofurtherreducethelevelsofrecordedcrimeduring2014

Thisareaofthebusinesscontinuestogainmomentum.ForexampletheBlackburnteamwereshortlistedforaNationalAwardbytheNationalAssociationofBusinessCrimePartnerships

Involvementwithlocalcrimepartnershipscontinuestoworkwellacrossallsites

TocompletetheimplementationofbodywornCCTVsystemsattheshoppingcentrestocontinuetopreventcrimeandanti-socialbehaviour.ToalsoimplementanewdetailedauditprocessforCCTVsystemsinstalledattheshoppingcentres

Allcentresexceptonehavepurchasedthesecamerasandtheyhaveprovedverysuccessful.Controlroomproceduresarereviewedmonthlybutamoreformalauditprocessisbeingdeveloped

Toreviewtheroleoffirstaidtrainedstaffinrespondingtoemergenciesbothwithincentresandthetowncentresinwhichweoperateandexploreopportunitiestotrainkeyindividualsasfirstresponders

Thiscontinuestobeexploredbyoursoftservicespartner.Thebusinessalreadyhasseveralfirstrespondersinplace

2015 Target

Toactivelyengagewithlocalcrimereductionpartnerships,policeandotherlocalenforcementagenciestoproactivelytargetprolificshoplifting,anti-socialbehaviour,anddrugtakingoffences.Toachievea5%reductioninrecordedcrimeattheshoppingcentresduring2015

TomaintainanaverageBSPMscoreacrossCleaningandSecurityofabove94%

Toensureallsitesaretrainedintheuseofdefibrillatorsandtheseareavailableinaccessiblelocationsacrossalloursitesincludingheadoffice

Workwithourchosenlocalcharitiestomeetafundraisingtargetof£270,000

Tore-launchtheMallCaresprogramme,includinganewMall-o-metertogaugecustomerengagement

Toincreaseateachcentrecustomerdatabasesby5,000peopleandFacebookfollowersby500withfocusontimelyandhighqualitycontent

SuccessfulrolloutoftheCollectPlusserviceacrossallourmalls

Todevelopfurtherlocalauthorityrelationshipsensuringthattowncentretransportationstudiesarefullyintegratedandtakeaccountoftheeaseofshoppingandaccessdemandedbyourcustomers

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C&RworkscloselywithitsservicespartnerVSGSecurity,todeliverawardwinningservicesinitsmalls.In2014oneofourdedicatedcustomerserviceofficers,RobbieSmithatTheMallMaidstone,receivedtheBSIAawardas‘NationalWinnerforOutstandingAct’.

Robbie,akeyteammemberwithovertenyears’experience,wasondutywhenaninfantstoppedbreathingaftersufferingafit.Respondingtothemother’scallforhelpRobbieactedswiftlyanddecisivelyclearingtheinfant’sairwaysandloweringhertemperature.TheinfantmadeafullrecoveryandthemotherwasveryclearthatRobbie’squickactionhadsavedherdaughter’slife.

InSeptember2014welaunchedacompetitiontoaskourshopperstogetcreativeanddesigntheexclusiveMallChristmasGiftCard.WewerelookingforthebestdesignthatcapturedallthemagicofChristmasandtheoneluckywinnerwouldseetheirpieceofartworkbecome2014’sofficialChristmasGiftCardandreceivetheirownCard,loadedwith£250tospendintheMall.

Although,thefantasticcompetitionwasopentoallages,withhanddrawnandcomputergeneratedentriesaccepted,OpheliaBrooks-BuckinghamagedfourwaschosenastheluckywinnerwithherfantasticSnowmandesignbeatingover150otherentrantsincludinghertwoolderbrothers!

2,500ofthespecialChristmasGiftCardswereorderedandsoldoutwithweekstospare.

Robbie Smith

Christmas Gift Card Competition

Commentingontheeventandtheprestigiousawardhereceived,Robbiesaid:

I was just doing my job, this is what I have been trained for, but it was nice to have such good things said about what I did, especially from the child’s mother”.



Governance

40 BoardofDirectors42 CorporateGovernanceReport46 AuditCommitteeReport49 Directors’RemunerationReport65 Directors’Report

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Stock Code: CAL

Board of Directors

40



Chairman of Nomination Committee, member of Audit and Remuneration Committees

JohnwasGroupChiefExecutiveofDixonsGroupplcbetween1993and2007andaNon-ExecutiveDirectorofHammersonplcbetween1988and2009.HewasalsotheChairmanofJobCentrePlusbetween2006and2012,ChairmanofDreamsPlcbetween2008and2011andtheSeniorIndependentDirectoratDysonGroupbetween2007and2011.JohnwasappointedasadirectorandChairmanoftheCompanyin2010.

Kenneth FordExecutiveDirector

KenFordhasbeeninvolvedincommercialrealestateforover30yearsandhasbeenanExecutiveDirectorsince1997.HehasresponsibilityforthedevelopmentofnewbusinessinitiativesandhasoversightoftheGroup’sjointventures.KenhasaBScinLandEconomicsandisaFellowoftheRoyalInstitutionofCharteredSurveyors.

Mark BourgeoisExecutiveDirector

Member of Responsible Business Committee

MarkbeganhiscareerinauditatKPMG;hethenqualifiedasaCharteredSurveyorwithDonaldsons,wherehebecamepartnerinchargeoftheLondonShoppingCentreManagementteam.MarkjoinedC&Rin1998;hehasbeenresponsibleformanagingtheshoppingcentrebusinesssince2009andwasappointedtotheBoardin2013.MarkisaJuniorVicePresidentoftheBritishCouncilofShoppingCentres(BCSC)andwillbecomeBCSCPresidentin2017.

Hugh Scott-BarrettChiefExecutive

HughhasbeenChiefExecutivesince2008.HewaspreviouslyamemberofABNAMRO’smanagingboardandservedasChiefOperatingOfficerbetween2003and2005andChiefFinancialOfficerfrom2006toJuly2007.Hughbringsover25years’bankingexperiencehavingalsoworkedatSBCWarburgandKleinwortBensonpriortojoiningABNAMRO.HewaseducatedbothinParisandatOxfordUniversity.Hughisanon-executivedirectorofGAMHoldingAG,aSwissassetmanagementcompany,andanon-executivedirectorofTheGoodwoodEstateCompanyLimited.

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Governance > Board of Directorswww.capreg.com

41

Charles StaveleyGroupFinanceDirector

CharlesjoinedtheGroupin2007andwasappointedGroupFinanceDirectorin2008.HequalifiedasaCharteredAccountantwithArthurAndersenandpriortojoiningtheGroupheldseniorfinanceroleswithColtTelecommunications,Novarplc,andTextronInc.HehasBoardresponsibilityfortheSnozonebusinessand,fromthebeginningof2014toitssale,hadresponsibilityfortheGermanjointventure.

Tony Hales CBENon-executiveDirector

Chairman of Audit Committee, member of Nominations and Remuneration Committees

TonyiscurrentlyChairmanoftheCanalandRiverTrustandGreenwichFoundation,SeniorIndependentDirectorofInternationalPersonalFinanceplcandchairsNAAFIPensionFundTrustees.TonywaspreviouslyChiefExecutiveofAlliedDomecqplcandaNon-ExecutiveDirectorofHSBCBankplc,aswellasChairmanofWorkspaceGroupplc.TonywasappointedasadirectoroftheCompanyin2011.

Neno HaasbroekNon-executiveDirector

Nenowasaco-founderanddirectorofAttfundLimited(oneofthelargestprivatepropertyinvestmentcompaniesinSouthAfrica)untilthecompanywasrestructuredandsoldtoHypropInvestmentsLimited(aREITlistedontheJohannesburgStockExchangeinSouthAfrica)in2011.Nenoisaco-founderanddirectorofCampusKey,oneofthelargeststudenthousingprovidersinSouthAfrica.HeisadirectoroftheParkdevGroupofcompanies,andservesontheboardofanumberofothercompanies,includingTheKarooInvestmentFund.HehasaBScBuildingSciencedegreefromtheUniversityofPretoriaandanMBAfromtheUniversityoftheWitwatersrand.NenowasappointedadirectoroftheCompanyin2009.

Louis NorvalNon-executiveDirector

Louiswasaco-founder,ExecutiveChairmanandChiefExecutiveofAttfundLimited(oneofthelargestprivatepropertyinvestmentcompaniesinSouthAfrica)untilthecompanywasrestructuredandsoldtoHypropInvestmentsLimited(aREITlistedontheJohannesburgStockExchangeinSouthAfrica)in2011.Hewasappointedanon-executivedirectorontheboardofHypropInvestmentsLimited. LouisisalsoManagingDirectoroftheParkdevGroupofcompanies,andservesontheboardofanumberofothercompanies.HegraduatedinBSc(QS)(withdistinction)fromtheUniversityofPretoria.LouiswasappointedadirectoroftheCompanyin2009.

Philip NewtonNon-executiveSeniorIndependentDirector

Chairman of Remuneration and Responsible Business Committees and member of Audit and Nominations Committees

PhilipistheformerCEOofMerchantRetailGroupplc,ownersofThePerfumeShop,a150storechainthathedevelopedfromitsbeginnings.HeisChairmanofWindsorVehicleLeasingLimited,avehiclefinanceandfleetmanagementcompanyandaTrusteeandBoardmemberoftheBritishThoroughbredBreedersAssociation.HisearlycareerwasintheDistrictValuer’sOfficeandthenthepropertydevelopmentindustry.PhilipwasappointedasadirectoroftheCompanyin2006.

Ian KriegerNon-executiveDirector

Member of Audit and Remuneration Committees

IanistheAuditCommitteeChairmanandSeniorIndependentDirectoratbothPremierFoodsplcandSafestoreHoldingsplc.HeisalsoaTrusteeandChairmanoftheFinanceCommitteeatNuffieldTrustandaTrusteeandChairmanoftheAuditCommitteeofAnthonyNolan.Ianwaspreviouslyaseniorpartnerandvice-chairmanatDeloitte.IanwasappointedasadirectoroftheCompanyon1December2014.

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Stock Code: CAL

Corporate Governance Report

Chairman’s introductionIampleasedtopresenttheBoard’sannualreportoncorporategovernance.

TheBoardremainscommittedtohighstandardsofcorporategovernancewhichitconsiderstobecentraltotheeffectivemanagementofthebusinessandtomaintainingtheconfidenceofinvestors.ThereportwhichfollowsexplainshowwehaveappliedtheprinciplesofgoodcorporategovernanceadvocatedbytheUKCorporateGovernanceCode2012(‘theCode’)astheyapplytosmaller(i.e.nonFTSE350)companies.

ItistheviewoftheBoardthattheCompanyhasbeencompliantwiththeprinciplesoftheCode,astheyapplytosmallercompanies,duringthepastfinancialyear.

John Clare CBE Chairman

Application of the principlesTheCompanyhasappliedtheprinciplessetoutinsection1oftheCode,includingboththemainprinciplesandthesupportingprinciples,bycomplyingwiththeCodeasreportedabove.FurtherexplanationofhowtheprinciplesandsupportingprincipleshavebeenappliedissetoutbelowandintheDirectors’RemunerationReport.

Role of the BoardTheBoardhasacollectiveresponsibilitytopromotethelong-termsuccessoftheCompanyforitsshareholders.ItsroleincludesreviewingandapprovingkeypoliciesanddecisionsoftheCompany,particularlyinrelationtoGroupstrategyandoperatingplans,governanceandcompliancewithlawsandregulations,businessdevelopmentincludingmajorinvestmentsanddisposalsand,throughitsCommittees,financialreportingandriskmanagement.

TheBoardhasestablishedascheduleofmattersreservedforBoarddecision.ThisscheduledetailskeyaspectsoftheaffairsoftheCompanywhichtheBoarddoesnotdelegate.

TheBoard’sagendaismanagedtoensurethatshareholdervalueandgovernanceissuesplayakeypartinitsdecisionmaking.

Theresponsibilities,whichtheBoardhasdelegated,aregiventocommitteesthatoperatewithinspecifiedtermsofreferenceandauthoritylimits,whicharereviewedannuallyorinresponsetoachangeincircumstances.Theexecutivedirectorstakeoperationaldecisionsandalsoapprovecertaintransactionswithindefinedlimitedparameters.AnExecutiveDirectors’CommitteemeetsonaweeklybasisanddealswithallmajordecisionsoftheGroupnotrequiringfullBoardapprovalorauthorisationbyotherBoardcommittees,minutesofthesemeetingsarecirculatedtotheBoard.TheExecutiveDirectors’Committeeisquoratewiththreeexecutivedirectorsinattendance;ifdecisionsarenotunanimousthematterisreferredtotheBoardforapproval.

TheAuditCommittee,theRemunerationCommitteeandtheNominationCommitteeconsistoftheChairmanandindependentnon-executivedirectors.TheAuditCommitteeandtheRemunerationCommitteemeetatleasttwiceayear,theNominationCommitteemeetsatleastonceayearandasrequired.ThetermsofreferenceoftherespectiveCommitteesareavailableontheGroup’swebsite.

BoardmeetingsarescheduledtocoincidewithkeyeventsintheCompany’sfinancialcalendar,includinginterimandfinalresultsandtheAGM.OthermeetingsduringtheyearwillreviewtheCompany’sstrategyandbudgetsforthenextfinancialyearandtheCompany’skeyrisksaswellasreviewingperformancebytheGroup’soperatingsegments.

Board balance and independenceDetailsofthedirectorsaresetoutbeforetheDirectors’report.TheBoardcurrentlycomprisesoftheChairman,fourexecutivedirectorsandfivenon-executivedirectors.

LouisNorvalandNenoHaasbroekasnon-executivedirectorsarenotconsideredindependentforthepurposesoftheCode,astheyrepresentasignificantshareholderoftheCompany.IanKriegerwasappointedduringtheyearbringingthenumberofIndependentnon-executiveDirectorstothree.

TheBoardandNominationCommitteearesatisfiedthattheBoardcompositionprovidesanappropriatebalanceofpowerandauthoritywithintheCompany.TheBoardbelievesthatallthenon-executivedirectors,excludingLouisNorvalandNenoHaasbroek,areindependentandactindependentlyofmanagementbutwillcontinuetoreviewthisposition.Thetermsandconditionsofappointmentofnon-executivedirectorsareavailableforinspectionattheCompany’sregisteredoffice.


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PhilipNewtoncontinuedtoserveastheSeniorIndependentDirectorthroughouttheyear.

TheCompanyhaswellestablisheddifferentiationbetweentherolesofChairmanandChiefExecutive.Writtentermsofreference,whichhavebeenapprovedbytheBoard,areavailableforinspectionontheGroup’swebsite.

IntheCompany’sview,thebreadthofexperienceandknowledgeoftheChairmanandthenon-executivedirectorsandtheirdetachmentfromtheday-to-dayissueswithintheCompanyprovideasufficientlystrongandexperiencedbalancewiththeexecutivemembersoftheBoard.Theothercommitmentsofthedirectorsaredetailedinthedirectors’biographies.

Information and professional developmentTheBoardschedulesfivemeetingseachyearasaminimum,andarrangesfurthermeetingsasthebusinessrequires.PriortoBoardmeetings,eachmemberreceives,asappropriatetotheagenda,up-to-datefinancialandcommercialinformation,managementaccounts,budgetsandforecasts,detailsofacquisitionsanddisposalsandrelevantappraisals(priorBoardapprovalbeingrequiredforlargetransactions),cashflowforecastsanddetailsoffundingavailability.

InductiontrainingisgiventoallnewdirectorsappointedtotheCompanyandconsistsofanintroductiontotheBoard,onsitevisitstopropertiesmanagedbytheGroup,anintroductiontokeymanagement,aninductionpackandaccesstoindependentadvisers.Theongoingtrainingrequirementsofthedirectorsarereviewedonaregularbasisandundertakenindividually,asnecessary,althoughitisrecognisedthatallmembersoftheBoardexperiencecontinuousprofessionaldevelopmentfromworkingtogether.Thisisachievedbyvirtueofthemixofthedirectors,andtheirsharingofknowledgeandexperiencesgainedfromarangeofcommercialbackgrounds.

Board and committee meetingsThenumberofmeetingsoftheBoardandoftheAudit,RemunerationandNominationCommitteesduring2014,andindividualattendancebydirectors,issetoutbelow.Duetothehighleveloftransactionalactivityduringtheyeartherewereanumberofadhocmeetingscalledatshortnoticeandasaresultfullattendancewasnotalwayspracticable.

Byinvitation,CharlesStaveleyattendedthethreeAuditCommitteemeetings,LouisNorvalandNenoHaasbroekattendedthethreeRemunerationCommitteemeetingsandHughScott-BarrettattendedoneoftheResponsibleBusinessCommitteemeetings.

Attended by:

J Clare

H Scott-Barrett

M Bourgeois

K Ford

C Staveley

N Haasbroek

T Hales

I Krieger1

L Norval

1156

56 11

11

55 10

1/1n/a 1/1

56 11

11

36

56

6

9

46 10

P Newton 46 10

5

1 -3 3

1 43 3

1 -3 3

- 2- -

Attended by:

J Clare

P Newton

T Hales

M Bourgeois

1 IanKriegerjoinedtheBoardinDecember2014,heattendedtheoneBoardmeetingthattookplacebetweenhisappointmentandtheyearend.TherewerenoAuditCommitteeorRemunerationCommitteemeetingsfromthedateofhisappointmenttotheendof2014.

Board meeting attendance in 2014

Other committee meeting attendanceNumber of meetings

Number of meetings

Scheduled

6Ad hoc

5Total

11

AuditCommittee

3Remuneration

Committee

3Nomination Committee

ResponsibleBusiness

Committee

1 4

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Stock Code: CAL

Corporate Governance ReportContinued

Board evaluationAformalprocesshasbeenestablishedfortheannualevaluationoftheperformanceoftheBoard,itsappointedcommitteesandeachdirector,toensurethattheycontinuetoacteffectivelyandtoidentifyanytrainingrequirements.ThisprocesswasledbytheChairmanandeachdirectorcompletedanin-depthquestionnairewhichcovered:

• performanceofindividualsandoftheBoardtogetherasaunit;

• processeswhichunderpintheBoard’seffectiveness(includingconsiderationofthebalanceofskills,experience,independenceandknowledgeofthepersonsontheBoard);

• strategy;and

• performanceoftheBoard’ssub-committees.

ThecompletedquestionnaireswerethencollatedbytheChairmanandconsideredindetailbytheBoardattheNovemberBoardmeeting.Thisyear’sreviewfoundthattheperformanceoftheBoardanditsCommitteescontinuedtobeeffectiveindealingwithbothday-to-dayandongoingstrategicissues;andthattheBoardandCommitteestructureensuredthatthegovernancerequirementsofthebusinessweremet.

TheChairmanalsomeetsasnecessary,butatleastonceeachyear,withthenon-executivedirectorswithouttheexecutivedirectorspresent.Thenon-executivedirectorsmeetannuallywithouttheChairmaninordertoappraisehisperformance.ThismeetingischairedbytheSeniorIndependentDirector.TheChairmanevaluatestheperformanceoftheChiefExecutivehavingreceivedinputfromtheotherdirectors.TheChiefExecutiveevaluatestheperformanceoftheotherExecutivedirectorsandtheresultsoftheappraisalsareanalysedandsummarisedbytheChairman.Subsequently,theresultsarediscussedbytheRemunerationCommitteeandrelevantconsequentialchangesaremadeifrequired.

Shareholder relationsTheCompanyhasalwaysencouragedregulardialoguewithitsshareholdersattheAGM,andthroughcorporatefunctionsandpropertyvisits.TheCompanyalsoattendsroadshows,participatesinsectorconferencesandinOctober2014hostedaCapitalMarketsday.Inaddition,followingtheannouncementoffinalandinterimresults,andthroughouttheyear,asrequested,theCompanyholdsupdatemeetingswithinstitutionalinvestors.Allthedirectorsareaccessibletoallshareholders,andqueriesreceivedverballyorinwritingareaddressedassoonaspossible.

AnnouncementsaremadetotheLondonStockExchangeandthebusinessmediaconcerningbusinessdevelopmentstoprovidewiderdisseminationofinformation.Registeredshareholdersaresentcopiesoftheannualreportandrelevantcirculars.TheGroup’swebsiteiskeptuptodatewithallannouncements,reportsandshareholdercirculars.

Financial reportingTheGroup’sannualreportincludesdetailedreviewsoftheactivitiesofthebusiness,itsfinancialresultsandfinancingposition.InthiswaytheBoardseekstopresentafair,balancedandunderstandableassessmentoftheGroup’spositionandprospects.

Internal control TheBoardisresponsibleformaintainingasoundsystemofinternalcontrolandriskmanagementtosafeguardshareholders’investment.Suchasystemisdesignedtomanage,butnoteliminate,theriskoffailuretoachievebusinessobjectives.Thereareinherentlimitationsinanycontrolsystemand,accordingly,eventhemosteffectivesystemcanprovideonlyreasonable,andnotabsolute,assuranceagainstmaterialmisstatementorloss.

InaccordancewiththerevisedversionoftheTurnbullCommitteeoninternalcontrolandtheCode,anongoingprocesshasbeenestablishedforidentifying,evaluatingandmanagingrisksfacedbytheGroupandtheBoardissatisfiedthatitsprocessaccordswiththeguidanceinthesedocuments.Thisprocesshasbeeninplacefortheyearunderreviewtothedateofapprovalofthesefinancialstatements.EachyeartheBoardconductsareviewoftheeffectivenessofthecurrentsystemofinternalcontrol.TwiceayeartheGroupundertakesacomprehensiveriskandcontrolsreview,thisisdetailedintheManagingRisksectionoftheStrategicReport.

OtherkeyfeaturesoftheGroup’ssystemofinternalcontrolareasfollows:

• DefinedorganisationalresponsibilitiesandauthoritylimitsexistthroughouttheGroup.Theday-to-dayinvolvementoftheexecutivedirectorsintherunningofthebusinessensuresthattheseresponsibilitiesandlimitsareadheredto;

• FinancialandoperatingreportingtotheBoardincludingthepreparationofbudgetsandforecasts,cashmanagement,varianceanalysis,property,taxationandtreasuryreportsandareportonfinancing;

• ReviewandapprovaloftheGroup’sriskmatrixtwiceayearbyseniormanagement,theAuditCommitteeandtheBoardasdetailedintheManagingRisksectionoftheStrategicReport;and

• TheGroup’swhistleblowingpolicy–seetheAuditCommitteereportforfurtherdetails.

Stepsarecontinuouslybeingtakentoembedinternalcontrolandriskmanagementfurtherintotheoperationsofthebusinessandtodealwithareasofimprovementwhichcometomanagement’sandtheBoard’sattention.

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Remuneration CommitteeTheRemunerationCommitteemakesrecommendationstotheBoard,withinexistingtermsofreference,onremunerationpolicyanddetermines,onbehalfoftheBoard,specificremunerationpackagesforeachexecutivedirector.Thestatementofremunerationpolicyanddetailsofeachdirector’sremunerationaresetoutintheDirectors’RemunerationReportonpages49to64.

Nomination CommitteeTheCommitteecomprisesofJohnClare(Chairman),PhilipNewtonandTonyHales.TheNominationCommitteemeetsasrequiredtoselectandrecommendtotheBoardsuitablecandidatesforbothexecutiveandnon-executiveappointmentstotheBoard.Onanannualbasis,theNominationCommitteealsoconsiderssuccessionplanningfortheBoard.

DuringtheyeartheNominationCommitteeconductedtherecruitmentofanewnon-executivedirectorresultingintheappointmentofIanKriegertotheBoardfrom1December2014.TherecruitmentwasconductedinternallywithpotentialcandidatesproposedbyexistingDirectors.TheCommitteewassatisfiedthatthepoolofcandidatesthatresultedwasofappropriatequalityanddiversitysuchthatexternalassistancewasnotrequired.EachofthemembersoftheCommitteemetwitheachoftheshortlistedcandidatesandallotherdirectorsmetwithIanpriortotheBoardapprovinghisappointment.

DiversityWhilstwepursuediversity,includinggenderdiversity,throughoutthebusiness,andtheBoardendorsestheaspirationsoftheDaviesReviewonWomenonBoards,wearenotcommittingtoanyspecifictargets.Instead,whenrelevant,wewillseektouseexecutivesearchfirmswhohavesigneduptothevoluntarycodeofconductsettingoutthesevenkeyprinciplesofbestpracticetoabidebythroughouttherecruitmentprocessandwewillcontinuetofollowapolicyofappointingtalentedpeopleateveryleveltodeliverhighperformance.WewillalsoensurethatourdevelopmentinthisareaisconsistentwithourownstrategicobjectivesandisenhancingintermsofBoardeffectiveness.


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Stock Code: CAL

Audit Committee Report

Tony Hales CBE ChairmanofAuditCommittee

Audit CommitteeTheAuditCommitteeischairedbyTonyHaleswithPhilipNewton,JohnClareandIanKrieger(from1December2014)asmembers.InlinewiththeprovisionsoftheCode,astheyapplytosmallercompanies,theCommitteeincludedatleasttwoindependentnon-executivedirectorsfortheentireyear.

TheBoardissatisfiedthatthecommittee’smembershaverecentandrelevantcommercialandfinancialknowledgeandexperiencetosatisfytheprovisionsoftheCode,byvirtueoftheirholdingorhavingheldvariousexecutiveandnon-executiverolesinotherlistedcompaniesandIanKriegerbeingaqualifiedCharteredAccountant.

ResponsibilitiesTheCommittee’sroleistoassisttheBoardindischargingitsdutiesandresponsibilitiesforfinancialreporting,internalcontrolandtheappointmentandremunerationofanindependentexternalauditor.TheCommitteeisresponsibleforreviewingthescopeandresultsofauditworkanditscosteffectiveness,theindependenceandobjectivityoftheauditorandtheGroup’sarrangementsonwhistleblowing.TheCommittees’termsofreferenceareavailableforinspectionontheGroup’swebsite.

Report on the Committee’s activities during the yearTheCommitteehasascheduleofeventswhichdetailtheissuestobediscussedateachofthemeetingsofthecommitteeintheyear.Theschedulealsoallowsfornewitemstobeincludedintotheagendaofanyofthemeetings.

Duringtheyear,theCommitteedischargeditsresponsibilities,underitstermsofreference,by:

a) reviewingtheGroup’sdraftannualreportandfinancialstatementsanditsinterimresultsstatementpriortodiscussionandapprovalbytheBoard,andreviewingtheexternalauditor’sreportsthereon;

b) reviewingthecontinuingappropriatenessoftheGroup’saccountingpolicies;

c) reviewingDeloitteLLP’splanfortheauditoftheGroup’s2014financialstatements,receivingandreviewingconfirmationsoftheirindependenceandapprovingthetermsoftheirengagementandproposedfeesforthe2014audit;

d) reviewingreportsoninternalcontrolmatterspreparedbymanagement;

e) consideringtheeffectivenessandindependenceoftheexternalauditorandrecommendingtotheBoardthere-appointmentofDeloitteLLPasexternalauditor;

f) reviewingmanagement’sbiannualRiskReviewreport;

g) reviewingtheeffectivenessoftheGroup’swhistleblowingpolicy;

h) reviewingandupdatingtheGroup’spolicyfortheawardofnon-auditworktoitsexternalauditor;

i) meetingwithindividualsfromandreviewingtheWorkingCapitalreportpreparedbyGrantThorntonUKLLPinrelationtotheprospectusforthe£165millioncapitalraisethatwaslaunchedinJune2014;

j) reviewingandapprovingthetransactioncostsinrelationtothe£165millioncapitalraiseandacquisitionof62.56%ofMallUnits;and

k) carryingoutanannualperformanceevaluationexerciseandnotingthesatisfactoryoperationoftheCommittee.

TheAuditCommitteehasreviewedthecontentsofthisyear’sannualreportandaccountsandadvisedtheBoardthat,initsview,thereportisfair,balancedandunderstandableandprovidestheinformationnecessaryforshareholderstoassesstheGroup’sperformance,businessmodelandstrategy.

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Significant issues considered in relation to the financial statementsDuringtheyear,theCommitteeconsideredkeyaccountingmattersandjudgementsinrespectofthefinancialstatementsrelatingto:

Investment property valuation–At30December2014theGroup’spropertyassetsincludingits20%shareoftheKingfisherCentre,Redditchwas£939.7million(seenote10bofthefinancialstatementsforfurtherdetails).Thevaluationofinvestmentpropertyisinherentlyjudgementalandinvolvesarelianceontheworkofindependentprofessionalqualifiedvaluers.TheAuditCommitteeconsideredtheindependenceandqualificationsofthevaluersengagedandreviewedandchallengedthevaluationsateachperiodendtounderstandthebasisforthemandtherationaleformovementsinthecontextofboththeindividualpropertiesandthegeneralpropertyinvestmentmarket.

Accounting for the acquisition of The Mall Fund–TheCommitteeconsideredtheaccountingforthetransactionsthatresultedintheGroupacquiring100%ofTheMallFundduring2014.Thisincludedthecalculationofthegainonacquisitionwhichinvolvedanassessmentofthefairvalueoftheassetsandliabilitiesacquiredandarisingfromthetransactionsandconsiderationoftheclassificationandtreatmentofassociatedtransactioncosts.

Performance fee recognition –TheCommitteeconsideredthebasisandrationaleformanagement’sconclusionthatitwasappropriatetorecogniseaperformancefeeliabilitywithintheMallFundaccountsandtheGroup’sshareofincomewithinCapital&RegionalPropertyManagementasattheyearend(seenote25forfurtherdetails).Thisinvolvedunderstandingtheconditionsoftheunderlyingcontractsandthecalculationandagreementoftheamountsaccrued.

Going concern and covenant compliance–TheCommitteereviewed,challengedandconcludedupontheGroup’sgoingconcernreviewincludinggivingdueconsiderationtotheappropriatenessofkeyjudgements,assumptionsandestimatesunderlyingthebudgetsandprojectionsthatunderpinthereviewandareviewofcompliancewithkeyfinancialcovenants.

Accounting for the conditional exchange on disposal of Germany–In2014theresultsoftheGroup’sGermanjointventurewereclassifiedasDiscontinuedOperations(seenote26forfurtherdetails).TheAuditCommitteereviewedmanagement’srationaleforconcludingthattheseoperationsmetthedefinitionasDiscontinuedOperationsandtheclassificationandvaluationasanassetheldforsaleat30December2014.

Impairment of inter-company investments and receivables –Managementperformanannualreviewofinter-companyinvestmentsandreceivablestodeterminethevaluestobemaintainedinthePlcCompanyonlyandindividualsubsidiarybalancesheets.TheCommitteeconsideredthemovementovertheyearandthekeyassumptionsparticularlywherebalanceswereheldwithreferencetovalueinuseasopposedtonetassetsoftheunderlyingentity.

Oversight of the external auditorTheCommitteecarriedoutareviewoftheeffectivenessoftheexternalauditprocessandconsideredthere-appointmentofDeloitteLLP.ThereviewwasstructuredusingaquestionnairewhichwascompletedbyallCommitteemembersandrelevantseniormanagementwiththeresultsbeingcollatedandaggregatedfordiscussionatthefollowingCommitteemeeting.Thereviewcoveredamongstotherfactors,thequalityofthestaff,theexpertise,theresources,andtheindependenceofDeloitteLLP.TheCommitteereviewstheauditplanfortheyearcarefullyandsubsequentlyconsidershowtheauditorperformedtotheplan.Theyconsiderthequalityofwrittenandoralpresentationsandtheoverallperformanceoftheleadauditpartner.

TheAuditCommitteeisalsoresponsibleforreviewingthecost-effectivenessandthevolumeofnon-auditservicesprovidedtotheGroupbyitsexternalauditor.TheGroupdoesnotimposeanautomaticbanontheGroup’sexternalauditorundertakingnon-auditwork,rathertheGroup’saimisalwaystohaveanynon-auditworkinvolvingtheGroup’sexternalauditorcarriedoutinamannerthataffordsvalueformoneyandensuresindependenceismaintainedbymonitoringthisonacasebycasebasis.

DuringtheyeartheCommitteereviewedandupdateditspolicyontheuseofitsexternalauditorfornon-auditservices.Thechangesmadeincludedstatingthatundernocircumstanceswouldtheexternalauditorbeengagedtoperformvaluationwork,accountingservicesandanyrecruitmentservicesorsecondments.Itwasalsoagreedthatforanypieceofworklikelytoexceed£10,000atleastoneotheralternativefirmprovideaproposalforconsideration.Considerationwasalsogiventothelikelihoodofawithdrawaloftheauditorfromthemarketand,itwasnotedthattherewerenocontractualobligationswhichwouldrestrictthechoiceofanalternativeauditor.

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Stock Code: CAL

Audit Committee ReportContinued

DetailsofthefeespaidtoDeloitteLLPfornon-auditservicesduringtheyearareprovidedinnote6tothefinancialstatements.OtherthantheinterimreviewtheonlyworkforwhichDeloitteLLPwasengagedwastheirroleasReportingAccountantsonthe£165millioncapitalraiseandacquisitionof62.56%ofMallUnitsforwhichtheywerepaid£137,500.Deloitte’sworkprimarilyinvolvedprovidingtherequiredAccountant’sReportonthehistoricalfinancialinformationprovidedinrespectofTheMallandtheunauditedproformafinancialinformation.GrantThorntonLLPwereengagedtoprovideprivatereportsonWorkingCapital,CapitalisationandIndebtednessandFinancialPositionandProspects.TheCommitteeconsideredaproposalbyGrantThorntonLLPtoperformtheworkforwhichDeloittewereengagedbutgivenDeloitteLLP’sroleasauditoritwasconsideredtheywerebestplacedtoperformtheworkbothintermsofeffectivenessandefficiencyespeciallygiventhetimeconstraintsinvolved.

TheCommitteeagreedthatitwasappropriatetorecommendtotheBoardthatDeloitteLLPbereappointedasauditorforafurtheryearand,accordinglyaresolutionwillbeputtoshareholdersatthe2015AnnualGeneralMeeting.

Independence safeguardsInaccordancewithbestpracticeandprofessionalstandards,theexternalauditorisrequiredtoadheretoarotationpolicywherebytheauditengagementpartnerisrotatedatleasteveryfiveyears.2014isthesecondyearthatGeorginaRobbhasactedasleadauditengagementpartner.

DeloitteLLPhavebeenauditorofCapital&Regionalplcsince1998.Theauditwaslastputouttotenderin2009whereDeloittewerere-appointed.TheGroupintendstoputtheauditouttotenderatleastevery10yearsasrecommendedbytheUKCorporateGovernanceCode.

Internal auditTheGroupdoesnothaveaninternalauditfunctionbutmanagesanongoingprocessofcontrolreviewsperformedeitherbystaff,independentofthespecificareabeingreviewed,orbyexternalconsultantswhendeemedappropriate.DuringtheyeartheCommitteereviewedupdatesoncontrolsovertheGroup’sCapitalExpenditurecontrols,ITanddatasecurityandcompliancewiththeGroup’sgiftandhospitalitypolicy.TheCommitteealsoreviewedandagreedaplanandscheduleforreviewsfor2015.

WhiletheCommitteewillcontinuetoreviewthepositionatpresentitcontinuestobelievethatthecurrentsizeandcomplexityoftheGroupdoesnotjustifyestablishinganinternalauditfunction.

WhistleblowingTheGrouphasinplaceawhistleblowingpolicywhichencouragesemployeestoreportanymalpracticeorillegalactsoromissionsormattersofsimilarconcernbyotheremployeesorformeremployees,contractors,suppliersoradvisersusinginternalmechanismsforreporting.Thepolicyactsasamechanismtoreportanyethicalwrongdoingormalpracticeorsuspicionwhichmayamounttoethicalwrongdoingormalpractice.Examplesofethicalwrongdoingormalpracticeincludebribery,corruption,fraud,dishonestyandillegalpracticeswhichmayendangeremployeesorotherparties.Therehavebeennoinstancesofwhistleblowingduringtheyearunderreview.

Tony Hales CBE ChairmanofAuditCommittee

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www.capreg.com

Directors’ Remuneration Report – Annual Statement

Governance > Directors’ Remuneration Report

Philip Newton ChairmanofRemunerationCommittee

Information not subject to audit:Annual Statement

DearShareholder

OnbehalfoftheBoard,IampleasedtopresenttheRemunerationCommittee’sreportoftheDirectorsremunerationfortheyearended30December2014forwhichwewillbeseekingapprovalattheAnnualGeneralMeetingon12May2015.

TheCommitteerecognisesthatexecutiveremunerationcontinuestobeanareaoffocusforshareholdersandthewiderpublicandwearesupportiveofthecontinueddrivetoincreasesimplificationandtransparencyofreportingtoprovideshareholderswithgreaterunderstandingofourpolicyanditsrelationshipwithourstrategy.

StretchingoperationalandfinancialtargetsweresetfortheexecutivedirectorstodrivetheachievementoftheCompany’sstrategicobjectivesin2014.Ithasbeenatransformationalyear.Theexecutivedirectorshaveachievedexcellentresultsinallkeystrategic,financialandoperationalareas:

• Acquisitionof100%ofTheMallandrestructuringthefundtoremoveatleast£1.5millionofannualisedcosts

• SuccessfuldisposalsofGermany(£42.1million)andLincoln(£15.7million)

• £165millioncapitalraiseresultinginenhancedliquidityforshareholders

• Strongprogresson£65millionCapexplanwithinTheMallportfolio

• Footfallupby0.9%outperformingthenationalbenchmarkby1.8%

• REITconversioncompletedandeffective31December2014

• Sharepricegrowthfrom43.6pat30December2013to52.75pat30December2014

• Fullyear2014dividendpaymentof0.95ppershare

Itis,therefore,theCommittee’sviewthattheexecutivedirectors’variableremunerationshouldreflectthestrategicprogressmadethroughoutthispastyearandthatthisandtheexcellent

resultsarereflectedinthevariableremunerationofthebroadermanagementteam.

In2013weundertookconsultationwithkeyshareholdersonmodificationstothelongtermincentiveschemeandannualperformancebonuslevels,thesechangeswerefullyintegratedin2014andfeedbackcontinuestoinformtheCommittee’sprogressivethinking.TheCompanyholdsregularupdatemeetingswithinstitutionalinvestorsandtheRemunerationCommitteemembersareaccessibletoallshareholders;anyqueriesreceivedverballyorinwritingareaddressedimmediately.

DuringtheyeartheCommitteeconductedareviewoftheeffectivenessofthecurrentremunerationandincentivesandhowtheylinktobusinessstrategy.TheCommitteebelievesthattheelementsoffixedandvariableremunerationremainappropriateinthecurrentmarketenvironment.Overalltheincentiveshaveprovidedstrongalignmentbetweenshareholderandexecutiveteam.

TheCommitteeisrecommendingtheRemunerationPolicyforapprovalattheAnnualGeneralMeetingaswebelieveitcontinuestosupporttheCompany’ssuccessandobjectiveofincreasinglongtermshareholdervaluewhilstprovidingsufficientlevelsofremunerationandrewardtoattractandretainourexecutivedirectors.TheCommitteebelievethatthisremunerationpolicystructureisappropriateforCapital&Regional.

Wecontinuetobenchmarkagainstarelevantcomparatorgroup,detailsofthecomparatorgroupareonpage54.Wehavemaintainedourpolicyoftotalcompensationforexecutivedirectorsatthemedianoraboveagainstourcomparatorgroup,withappropriateupwardanddownwardvariabilitybasedonperformance.

For2015ExecutiveDirectorssalarieswillincreaseby2.5%,beingthesamepercentageincreaseprovidedtoemployeesacrossthebusiness.ThisisthefirstincreaseforExecutiveDirectorssince2012,moreinformationonthisisavailableonpage60.

LongTermIncentivePlan(LTIP)awardsweremadetotheExecutiveDirectorsinAugust2014andinMarch2015toreflecttheprogressdetailedabove.

Thepoliciessetoutinthe2013Directors’RemunerationReportreceivedavoteinfavourof85.5%ofvotescastattheAGMandIthankshareholdersfortheircontinuedsupport.

Capital&Regionalremainscommittedtoclearandopencommunication.IamavailabletoshareholderstoraisemattersdirectlyandtheCommitteeremainsopentodiscussionwithshareholdersshouldtherebeanyconcernsthattheywishtoraise.Inrespectofexecutiveremunerationtherehavebeennodeparturesfromnormalpolicy.

ShareholderswillbeinvitedtoapprovethisReportandvoteonthePolicyattheAnnualGeneralMeetingoftheCompanyon12May2015toapplyuntilthe2016AGM.


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Stock Code: CAL

Directors’ Remuneration Report – Policy

Inthissectionweexplainourremunerationstrategyandpolicy;howourremunerationpackagessupportthisstrategy;whywehavechosentheperformanceconditionswehaveandhowtheyalignwithshareholders’interests.

ThisreporthasbeenpreparedinaccordancewiththeprovisionsoftheCompaniesAct2006andSchedule8oftheLargeandMedium-sizedCompaniesandGroups(AccountsandReports)Regulations2008(asamended).ThisreportsetsouttheCompany’scurrentremunerationpolicy,highlightinganychangesfromthatwhichwasapprovedatthe2014AGM.Abindingresolutiontoapprovethisreportwillbeputtoshareholdersattheforthcoming2015AGM.Intermsofanapprovedpolicy,itwilltakeeffectfromthedateitisapprovedbyshareholdersuntilthe2016AGM.

TheCommitteereviewedtheremunerationpolicyduringtheyearandconcludedthatthepolicyisappropriateforthebusiness.TheremaybefurtherenhancementswhichcouldbemadeandtheCommitteewillcontinuetoreviewbestpracticewhichmayfurtherinformthepolicyinfutureyears.

The Remuneration CommitteePhilipNewtonchairstheRemunerationCommittee;heistheSeniorIndependentDirector.TheothermembersoftheCommitteeareTonyHales,JohnClareandIanKrieger(from1December2014).

TheCommitteemetthreetimesduring2014andheldanumberofinformalmeetingstodiscusswiderremunerationissues.InadditiontotheCommitteemembers,theChiefExecutiveandothernon-executivedirectorsareinvitedtoattendmeetingsasrequired,exceptincircumstanceswheretheirownremunerationisbeingdiscussed.

TheRemunerationCommitteeagreestheframeworkfortheremunerationoftheChairmanandtheExecutiveDirectors.Thisincludesthepolicyforallcashremuneration,executiveshareplans,servicecontractsandterminationarrangements.TheCommitteeapprovessalariesandsetsperformanceobjectivesandlevelsofawardforannualcashbonuses.Itsetstheshareawardsconditionsforexecutivedirectors.ItapprovesnewshareplansandanychangestothemandmakesrecommendationstotheBoardonmatterswhichrequireshareholders’approval.TheCommitteealsodeterminesthebasisonwhichawardsaregrantedundertheshareplans.

TheCommitteeengagedindependentremunerationconsultantsPricewaterhouseCooperstoprovideadviceduringtheyearinrelationtoamendmentstotheexistingAugust2013LTIPawardstooffsettheimpactofthe£165millioncapitalraise,feeschargedduring2014were£7,500.

Youcanviewourtermsofreferenceatwww.capreg.com/about-us/board-committees

Summary of performance and remuneration year ended 30 December 2014Business performance components

2014 2013

Totalshareholderreturn1 24.7% 53.9%

OperatingProfit2 £19.3m £13.0m

Profitbeforetax £67.2m £7.3m

NAVpershare 60p 54p

EPRANAVpershare 59p 56p

ProformaGroupnetdebt/(netcash)3 £336.6m £(11.1)m

Proformasee-throughnetdebttopropertyvalue3,4 45% 54%

Sharepriceatyearend 52.75p 43.6p

1 Changeinsharepriceplusdividendspaid,weightedaveragetoreflect351.1millionnewsharesissuedon14July2014.2 Asdefinedinnote1tothefinancialstatements.3 2014adjustedfor£42.1millionofGermanjointventurenetproceedsreceivedinFebruary2015and£8.9millionofpaymentsdueinrespectofMallperformancefee

andincomeduetoformerunitholders;2013adjustedfor£8.4millionHemelHempsteadnetproceedsreceivedinFebruary2014.4 See-throughnetdebtdividedbypropertyvaluation.

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Remuneration philosophy and principlesOurprinciplesaretomaintainacompetitiveremunerationpackagethatwillattract,retainandmotivateahighqualitytopteam,avoidexcessiveorinappropriaterisktakingandaligntheirinterestswiththoseofshareholders.Theseprinciplesaredesignedto:

• Driveaccountabilityandresponsibility

• Provideabalancedrangeofincentiveswhichalignbothshorttermandlongtermperformancewiththevalue/returnsdeliveredtoshareholders

• Applydemandingperformanceconditionstodeliversustainablehighperformance;settingtheseconditionswithdueregardtoactualandexpectedmarketconditionsandbusinesscontext

• Ensurealargepartofpotentialremunerationisdeliveredinsharesinorderthatexecutivesareexpectedtobuildupashareholdingthemselvesandthereforetheyaredirectlyexposedtothesamegainsorlossesasallothershareholders

• Takeaccountoftheremunerationofothercomparatorcompaniesofsimilarsize,scopeandcomplexitywithinourindustrysector

• Keepunderreviewtherelationshipofremunerationtorisk,themembersoftheRemunerationCommitteearethatoftheAuditCommittee

• Ensurethattheincentivestructuredoesnotraiseanyenvironmental,socialorgovernancerisksthroughcompliancewithourResponsibleBusinessethicsandstandardsofoperating

How the Committee sets remuneration

Salary

Fixedcompensation Median

Total=Medianorabove

Pension

Benefits

Bonus Performancebasedcompensation

MedianoraboveShare Awards

TheCommitteebenchmarksremunerationagainstourselectedcomparatorgroupcompanies(seepage54)andensuresthatdirectorsfixedcompensationisaroundthemedianinthecomparatorgroup.

TheCommitteeviewsthatbyputtinganemphasisonperformancerelatedcompensation,executivesareencouragedtoperformtothehighestoftheirabilities.Theperformancebasedcompensationistargetedtobeatmedianorabovewithinthecomparatorgroup.Theoveralleffectisthatourtotalcompensationisatmedianorabove.

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AsummaryoftheindividualelementsthatmakeuptheremunerationpackagesofferedtoourExecutiveDirectorsfollows:

Purpose & link to strategy

Operation Opportunity Performance metrics Changes

Base salary Median

• Toaidrecruitment,retentionandmotivationofhighqualitypeople

• Toreflectexperienceandimportanceofrole

Reviewedannuallyeffective1Januarytoreflect:

• generalincreasesthroughouttheCompanyorchangesinresponsibility

• benchmarkingagainstcomparatorgrouptoensuresalariesareatthemedianlevelandmarketcompetitive

• anynewdirectorappointmentmaybeatasalaryleveldiscounttoreflectexperienceatthatpoint,theCommitteemayincreaseitovertimeontheevidenceofperformanceachievementandmarketconditions

• changesinadirectorsrolemayrequireadjustment

n/a n/a • Nochangestopolicy

• 2.5%increaseforExecutiveDirectorsfor2015inlinewithemployeesacrossthebusiness

Pension Median

• Tohelprecruitandretainhighqualitypeople

• Toprovideanappropriatemarketcompetitiveretirementbenefit

TheCompanydoesnotoperateapensionscheme,allpensionbenefitsarepaideithertodefinedcontributionpensionsschemesofeachdirectorschoiceorasacashsupplement

CEOreceivesapensionallowanceof20%ofbasicsalary

Allotherdirectorsreceive15%ofbasicsalary

n/a n/a Nochange

Benefits Median

• Toaidrecruitmentandretention

• Toprovidemarketcompetitivebenefits

• ToprovideprotectionfortheCompanyanddirectors

TheCompanyoffersapackageincluding:

• privatemedicalinsurance

• criticalillnesscover

• lifeinsurance

• permanenthealthinsurance

• holidayandsickpay

Benefitsarebrokeredandreviewedannually

n/a n/a Nochange

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Annual bonus Median or above

• ToincentivisedeliveryofshorttermbusinesstargetsandindividualobjectivesbasedonannualKPIs

• TorecogniseperformancewhilstcontrollingcostsinreactiontothemarketcontextorCompanyevents

Thebonusplanisreviewedannuallytoensurebonusopportunity,performancemeasuresandweightingsareappropriateandsupportthestatedCompanystrategy

Themaximumcashbonusis100%ofbasicsalary

Targetscalibratedsothatmaximumpayoutwouldrepresentexceptionalperformance

Measuresandweightingsmayvaryfromyeartoyeardependingonstrategicpriorities.

KPI’sfor2014were:

• 80%onGroupobjectives

• incomeandpropertyvaluationmetrics

• salesofspecificassetsattargetNAV

• executionofstrategy

• 20%onindividualobjectives

Nochange

LTIP Median or above

• Toreinforcedeliveryoflong-termbusinessstrategyandtargets

• Toalignparticipantswithshareholders’interests

• Toretaindirectorsandseniorteamoverthelongerterm

Awardslevelsandgrantconditionsarereviewedinadvancetoensuretheyareappropriate

Awardsarebasedonachievingsharepricetargetatendofthreeyearperiod,basedontheaverageshareprice(adjustedfordistributionspaid)overthe30dayperiodpriortothedateofvesting

Anadjustmentoftheawardsmaybemadeinlinewiththeschemerulesintheeventofacapitalraisingoranyothereventthatwouldhaveadilutoryimpact

Planprovidesannualawardsofsharesofupto150%ofsalaryand200%inexceptionalcircumstances

• Sharepricetargetrange

• 25%ofawardwillvestatthresholdlevelsetand100%willvestatmaximumlevelset

• Vestingbetweenpointsonastraight-linebasis

Committeecanexercisediscretiontoallowfullvestingif:

• theperformancetargetshavebeenmetinadvanceofthefullperformanceperiodasaresultofasignificantliquidityevent

• theliquidityeventdoesnotgiverisetoearlyvestingbutinsteadresultsinanexecutiveleavingemployment

Adeferral/holdingperiodapplies:

• 50%ofvestedawardsmustbeheldforoneyearand50%fortwoyears(withpotentialexceptionsinthecaseofaliquidityevent)

Malus/ClawbackPolicyapplies

Detailsoftheperformanceconditionsareavailableonpages61to63

AwardsgrantedinAugust2014andMarch2015:

CEO – 150%

Other Executive directors – 100%

Awardswerealsomadetoagroupofseniormanagement

Deferral/holdingperiodsuchthat50%ofvestedawardsmustbeheldforaperiodofoneyearfollowingvestingwiththeother50%forafurtheryearafterthat.(FortheAugust2013issue100%appliesforoneyear)

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Executive shareholding

TosupportalignmentofExecutiveDirectorswithshareholders

Executivedirectors:

• areexpectedtoownshareswithavaluesetatapercentageofbasesalary

• deferredorotherunvestedshareawardsnotsubjecttoperformanceconditionscancounttowardstheguideline

Allexecutivedirectorsareexpectedtobuildashareholdingtoatleast1×basicannualsalaryvalue(2×forChiefExecutive)basedoncurrentmarketvalueortheaggregatepurchasepriceoftheshares

n/a n/a Amendedfromaguidelinetoanexpectation,measuredonaggregatepurchasepriceorcurrentmarketvalue

Fees Median

TheChairmanandnon-executivedirectorsfeesaresetbytheBoardtakingintoaccount:

• thetimecommitment

• responsibilities

• committeeroles

• skillsandexperience

Currentfeesaresetoutinthetableonpage60

n/a IanKriegerwasappointedasanon-executivedirectoreffective1December2014onafeeof£45,000reflectingmembershipofboththeAuditandRemunerationCommittees

Employee contextTheCommitteeensuresthatemployees’remunerationacrosstheCompanyistakenintoconsiderationwhenreviewingexecutiveremunerationpolicyalthoughnodirectconsultationisperformed.TheCommitteereviewsinternaldatainrelationtoeverylevelofjobandperformanceandissatisfiedthatthelevelofremunerationisappropriate.

Comparator groupTheCommitteerevieweditscomparatorgroupandmadethedecisionitwouldremainunchangedfor2014.ThemajorityofcompaniesrepresentedformpartoftheNumisUKRealEstateValuationSheetandcontinuedtoberelevantcomparators.

Thecomparatorgroupwillbereviewedfor2015toreflectthechangesintheCompanystructureandincreasedfocusonthecorebusinessofUKshoppingcentres.

Thecomparatorgroupisusedasaguidetosetparametersandinthiscontextisonlyoneofanumberoffactorstakenintoaccountwhendeterminingthelevelandelementsofremunerationpolicy.

Theconstituentsofthecomparatorgroupfor2014were:

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• CapCo

• CLSHoldings

• DerwentLondon

• Grainger

• GreatPortlandEstates

• Hansteen

• HelicalBar

• Intu

• LandSecurities

• Mucklow

• NewRiverRetail

• Quintain

• Safestore

• Savills

• UNITE

• Workspace

Malus/Clawback PolicyTheCommitteehasmalus/clawbackarrangementsinplacefortheLTIPawards.TheCommitteehavethediscretiontoreduceorcancelanyoutstandingawardsthathavenotvested,andclawbackanyawardsduringthedeferral/holdingperiod,inanyofthefollowingsituations:

• C&R’sfinancialstatementsorresultsbeingnegativelyrestatedduetotheExecutive’sbehaviour

• AparticipanthavingdeliberatelymisledmanagementorthemarketregardingCompanyperformance

• AparticipantcausingsignificantdamagetotheCompany

• Aparticipant’sactionsamountingtoserious/grossmisconduct

Directors’ service agreements and letters of appointment Detailsoftheservicecontractsoftheexecutivedirectorsandthenon-executivedirectorsareasfollows:

NameUnexpired term of

appointmentDate of

service agreementNotice period

Potential termination payment

Executive DirectorsHScott-Barrett Rollingcontract 9March2008 12months 12monthssalaryandbenefitsvalueKFord Rollingcontract 17May1996 12months 12monthssalaryandbenefitsvalueCStaveley Rollingcontract 1October2008 12months 12monthssalaryandbenefitsvalueMBourgeois Rollingcontract 13August2013 12months 12monthssalaryandbenefitsvalueNon-Executive Directors Date of initial appointmentPNewton Rollingcontract 8August2006 Nonotice NoneNHaasbroek Rollingcontract 15September2009 Nonotice NoneLNorval Rollingcontract 15September2009 Nonotice NoneJClare Rollingcontract 29June2010 Nonotice NoneTHales Rollingcontract 1August2011 Nonotice NoneIKrieger Rollingcontract 1December2014 Nonotice None

Recruitment of ExecutivesInnormalcircumstances,newExecutiveDirectorswillreceivearemunerationpackageinlinewiththeCompany’sremunerationpolicy.Anynewdirectorappointmentmaybeatasalaryleveldiscounttoreflectexperienceatthatpoint;theCommitteemayincreaseitovertimeontheevidenceofperformanceachievementandmarketconditions.AllnewExecutiveDirectorsserviceagreementswillincludemitigationofthepaymentofnoticeasstandard.

Themaximumlevelofvariablecashremunerationreceivedbynewjoinersinyearoneofjoiningwillbe150%ofsalary.Inadditionnewdirectorsmayreceiveshareawardsonjoiningalthoughthesewillnotvestinthefirstyearofjoining.

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Directors’ Remuneration Report – Policy Continued

Exit payment policy WhenconsideringterminationpaymentstheCommitteetakesintoaccountthebestinterestsoftheCompanyandtheindividuals’circumstancesincludingthereasonsfortermination,contractualobligations,bonusandLTIPschemerules.TheRemunerationCommitteewillensurethattherearenounjustifiedpaymentsforfailureonanExecutiveDirector’sterminationofemployment.Thepolicyinrelationtoleaversissummarisedasfollows:

• InnormalcircumstancestheExecutiveDirectorwillworktheirnoticeperiodandreceiveusualremunerationpaymentsandbenefitsduringthistime.TheRemunerationCommitteecanexercisediscretionontheleaverbeingtreatedasagoodleaverforthepurposesoftheLTIPscheme.

• IntheeventoftheterminationofanExecutiveDirector’scontractandtheCompanyrequestingtheexecutiveceaseworkingimmediately,eitheracompensationforlossofofficepaymentwillbemadeorapaymentinlieuofnoticeplusbenefitsmaybemade.Thevalueofthecompensationforlossofofficewillbeequivalenttothecontractualnoticeperiod,pensionandbenefitsvalue.

• TheExecutiveDirectormayalsobeconsideredforaperformancerelatedpayawardupontermination.ThefinancialperformanceoftheCompanyandmeetingofKPIsandtargetsistheprimedriverfordeterminingwhethertomakeanawardandthequantum.TheRemunerationCommitteecanexercisediscretionontheleaverbeingtreatedasagoodleaverforthepurposesofaproratacashbonusaward.

• Intheeventofterminationforgrossmisconduct,neithernoticenorpaymentinlieuofnoticewillbegivenandtheExecutivewillceasetoperformtheirserviceswithimmediateeffect.

IntheeventthattheCommitteeexercisesthediscretiondetailedaboveinthissection,theCommitteewillprovideanexplanationinthenextremunerationreport.

Executive directors’ contracts TheserviceagreementsofHughScott-Barrett,KenFordandCharlesStaveleyentitlethem,onterminationoftheircontractbyC&R,topaymentequaltobasicsalaryandthevalueofbenefitsfor12months.MarkBourgeois’agreemententitleshimtotheearlierof12monthsfromnoticeofterminationorhimobtainingfull-timeemployment.

External appointmentsTheCompanyallowsExecutiveDirectorstotakeupexternalpositionsoutsidetheGroup,providingtheydonotinvolveasignificantcommitmentanddonotcauseconflictwiththeirdutiestotheCompany.TheseappointmentscanbroadentheexperienceandknowledgeoftheDirector,fromwhichtheCompanycanbenefit.Executivesareallowedtoretainallremunerationarisingfromanyexternalposition.Duringtheyearunderreviewthefollowingexternalpositionswereheld:

Executive Appointment HScott-Barrett Non-ExecutiveDirectorGAMHoldingAG

Non-ExecutiveDirectorTheGoodwoodEstateCompanyLtdKFord –CStaveley –MBourgeois JuniorVicePresidentoftheBritishCouncilofShoppingCentres

Non-executive directorsNon-ExecutiveDirectorshavelettersofappointmentforafixedthreeyearterm.AllBoardappointmentsautomaticallyterminateintheeventofadirectornotbeingre-electedbyshareholders.Theappointmentofanon-executivedirectoristerminable(onnotice)bytheCompanywithoutcompensation.Attheendoftheinitialterm,theappointmentmaybecontinuedbymutualagreement.

Detailsofthefeesreceivedbyeachnon-executivedirectorcanbefoundwithintheauditedinformationonpage60.TheindividualswhoaremembersofboththeAuditandRemunerationCommitteesreceiveanadditionalfeeof£5,000perannum.

Senior managementThepolicyforseniormanagementremunerationissetinlinewiththepolicyfortheexecutivedirectors,withadegreeofdiscretionfortheCommitteetotakeintoaccountspecificissuesidentifiedbytheChiefExecutive,suchastheperformanceofaspecificindividualordivision.

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Remuneration Policy in 2015TheCommitteeisnotproposinganychangestotheremunerationstructurein2015howeveritdoesaimtofurtherdevelopthelinkbetweenperformanceandrewardinanywayitcanandtakingintoaccountbestpracticeasitevolveswithinthefieldofexecutiveremuneration.Wewillcontinuetoconsultwithkeyshareholdersonthesematters.

SalaryWhendeterminingthebasesalaryoftheExecutives,themainpointstheCommitteetakesintoconsiderationareasfollows:

• Salarylevelsofthecomparatorgroup

• Performanceoftheexecutivedirector

• Performanceanddevelopmentofthebusiness

• Directors’experienceandresponsibilities

• Payandconditionsthroughoutthebusiness

• Payandconditionsthroughoutoursectorandotherrelevantrecruitmentsources

TheRemunerationCommitteehasaccesstoinformationandbenchmarkingresearchonthepayandconditionsofotheremployeesinthecompanywhendeterminingremunerationfortheExecutiveDirectors.TheRemunerationCommitteeactivelyconsiderstherelationshipbetweengeneralchangestoemployees’payandconditionsandanyproposedchangestoExecutiveDirectorsremuneration.Employeepaylevelswerereviewedandbenchmarkedandaninflationary2.5%increasewasawardedwitheffectfrom1January2015.AbenchmarkingexercisewasalsocompletedagainstourupdatedcomparatorgroupfortheExecutiveDirectors.OnreflectionofthisitwasconcludedthatExecutiveDirectorsalariesfor2015shouldalsoincreasebythesame2.5%awardedtoallemployees.ThisrepresentsthefirstincreaseforExecutiveDirectorssince2012.

Annual bonus TheCommitteepolicypositiononannualbonusiswithintherangeofmedianorabove.ThemaximumbonusopportunityforExecutivesdirectorsis100%ofbasicsalary.ThistoplevelofannualbonusisonlypayableiftheCompany’sfinancialandbusinessperformanceachievesthestretchingobjectivesset,whicharedesignedtodeliverexceptionalresultstoshareholders.

Withintheobjectivesbandingsthedetailedtargetsarebasedonbenchmarksthatreflectstretchinginternalandexternalexpectations.Thebenchmarksforanyyearmayinclude:

• NRIandNetValuedIncome;

• OperatingProfitgrowth;

• Valuationmetrics;

• Valuationsondisposal;

• Returnsfromsalesofassets;

• NAVandEPRANAV;

• Executionofstrategicobjectives;

• Relationshipmanagement;

• Leadershipandmanagementmetrics;and

• TSR/shareholderreturns.

TheCommitteesetchallengingtargetswithintheobjectivesbandingsfor2014whichrequiredstretchinglevelsofperformanceinorderforanybonustobeearned.TheCommitteehasassessedperformanceagainstthebonuscriteriaanddeterminedthatthethresholdsdetailedbelowhavebeenmetinrespectofontargetperformance.

BenefitsTheCompanymakesavailablethenormalbenefitsinkindforExecutivesoftheirlevelsuchasprivatehealthcare,permanenthealthinsurance,lifeinsuranceandcriticalillnesscover.Thebenefitspolicypositionisatthemedianrange.

Pension TheExecutiveDirectorsreceivedeithercashinlieuofpensioncontributionsorcashcontributionsdirectlytotheirownpersonalpensionscheme.Thepensionpolicypositionisatthemedianrange.

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Performance graphThegraphbelowillustratestheCompany’sTSRperformancecomparedtoabroadequitymarketindexandtotheFTSE350SuperSectorRealEstateIndex(£),givenitisawidelyrecognisedsectorindexincorporatingthemajorityofcompaniesinourcomparatorgroup.Performanceismeasuredbytotalshareholderreturn(sharepricegrowthplusdividendspaid).ForcomparisonthesinglefigureremunerationfortheCEOisprovidedfurtherbelow.

160

140

120

100

80

02010 2011 2012 2012

Rebase CAPITAL & REGIONAL to 100Rebase FTSE ALL SHARE to 100Rebase FTSE 350 SS REAL ESTATE £ to 100

2014

CEO remuneration2014£’000

2013£’000

2012£’000

2011£’000

2010£’000

Totalremuneration 833 651 765 536 302AnnualBonus(%ofmax) 85% 40% 69% 70% –LTIP(%ofmax) – – – – –

Percentage increase in remuneration in 2014 compared with remuneration in 2013

CEOEmployee1

groupSalary 0% 2.5%Alltaxablebenefits – –Annualbonuses 113% 37.2%

TheratioofthesalaryoftheChiefExecutivetotheaverageemployeesalary1(excludingDirectors)was6:1(£400,000:£67,000).

1CalculatedwithreferencetoemployeesofCapital&RegionalplcandCapital&RegionalPropertyManagement.

Thefollowingtablesetsoutthetotalremunerationreceivablebydirectorsandotheremployeesanddistributionstoshareholdersbywayofdividendandsharebuyback.

2014£m

2013£m %

TotalDirectors’remuneration 2.7 2.8 –3%TotalDirectors’remunerationexcludinglossofoffice 2.7 2.5 +8%StaffcostsexcludingDirectors1 8.0 7.5 +7%Dividendsandsharebuybacks2 6.6 2.5 +164%

1Staffcostspernote7ofthefinancialstatementsexcludingDirectors,socialsecuritycosts,pensionsandsharebasedpayments.2Totalofinterimandproposedfinaldividendfortherespectiveyear.

TheincreaseinstaffcostsreflectstheinclusionofthestaffwithinTheMallfrom14July2014onwardsfollowingtheGroup’sacquisitionofacontrollingstakeatthatdate.

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Total compensation Thefollowingchartshowsthevalueofeachofthemainelementsoftheremunerationpackageforeachoftheexecutivedirectorspotentiallyavailablein2015dependentonperformancescenarios.

• thelowscenarioisbasedonnilbonus

• themidscenarioisbasedonbonusat50%salary

• themaxscenarioisbasedonbonusat100%salary

TherearenoLTIPawardsthatareanticipatedtovestin2015.

All figures in £’000

10%

£1,000

£900

£800

£700

£600

£500

£400

£300

£200

£100

£0

Low Mid Max Low Mid Max Low Mid Max Low Mid MaxH Scott-Barrett K Ford C Staveley M Bourgeois

■ Salary ■ Bonus ■ Other

81%

19%

£503

£708

£913

£358

£509

£660

£336

£480

£623

£271

£387

£502

58%

29%

13%

45%

45%

10%

85%

15%

59%

30%

11%

46%

46%

8%

85%

15%

60%

30%

10%

46%

46%

8%

85%

15%

60%

30%

46%

46%

8%

Consultation and shareholders’ viewsAsrequiredinadvanceoftheAGM,theChairmanoftheCommitteemayarrangetoconsultwithourkeyshareholderstoprovideinformationonanychangestotheremunerationstructure.Whererequestedfurtherclarificationanddiscussioncanbeprovidedtoassisttheminmakinganinformedvotingdecision.IfanymajorconcernsareraisedbyshareholdersthesecanbediscussedwiththeCommitteeChairmeninthefirstinstanceandtherestoftheCommitteeasappropriate.ThenatitsfirstmeetingfollowingtheAGM,theCommitteewillconsiderallshareholderfeedbackreceivedindeterminingpolicyinthefollowingyear.Thisplusanyadditionalfeedbackreceivedduringanymeetingsorfromcorrespondencefromtimetotime,willthenbeconsideredaspartoftheCommittee’sannualreviewofremunerationpolicyandstructure.

Shareholdervotingat30May2014AGM:

Resolution For Against DiscretionaryTotal Shares

Voted

For/Discretionary as % of Total Shares Voted

Toapprovethedirectors’remunerationpolicy 241,154,479 40,879,554 46,103 282,080,136 85.51%Toapprovethedirectors’remunerationreportfor2013 285,800,794 12,045,108 46,103 297,892,005 95.96%

Committee evaluationTheCommitteereviewsitsperformancewithBoardmembersandotherparticipants,includingthroughtheannualBoardevaluation.


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Audited informationThetablebelowsetsouttheremunerationreceived/receivableinrelationtotheyearended30December2014.Allamountsinthetablebelowweresettledincash,noamountsweredeferred.

£’000 Salary/FeesTaxable

benefits(iii)Other

benefits(iv) Pension(vii) Annualbonus LTIP Lossofoffice TotalExecutive Director 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013HScott-Barrett 400 400 4 4 9 8 80 79 340 160 – – – – 833 651KFord 295 295 4 6 7 4 44 44 222 118 – – – – 572 467CStaveley 280 280 2 3 5 4 42 42 238 112 – – – – 567 441MBourgeois(i) 225 86 3 1 4 1 34 9 180 34 – – – – 446 131XPullen(ii) n/a 295 n/a 5 n/a 4 n/a 52 n/a 118 n/a – n/a 357 n/a 831TOTAL 1,200 1,356 13 19 25 21 200 226 980 542 – – – 357 2,418 2,521

Chairman and Non-Executive DirectorsJClare(Chairman) 125 125 – – – – – – – – – – – – 125 125LNorval 40 40 – – – – – – – – – – – – 40 40NHaasbroek 40 40 – – – – – – – – – – – – 40 40PNewton(v) 45 45 – – – – – – – – – – – – 45 45THales(v) 45 45 – – – – – – – – – – – – 45 45IKrieger(v,vi) 4 – – – – – – – – – – – – – 4 –TOTAL 299 295 – – – – – – – – – – – – 299 295

TOTAL 1,499 1,651 13 19 25 21 200 226 980 542 – – – 357 2,717 2,816

(i) Appointed13August2013. (iv) Includeslifeinsuranceandpermanenthealthinsurance.(ii) Contractended30December2013,paymentforloss

ofofficedetailedonpage63.

(v) Receivesanadditionalfeeof£5,000asamemberoftheAuditandRemunerationCommitteess.(vi) Appointed1December2014.

(iii) Includesprivatemedicalinsuranceandcriticalillnesscover. (vii) Includesamountspaidinlieuofpension.

Basic salary % level growth chart for all Executive Directors:2015 2014 2013 2012 2011 2010

£’000 % £’000 % £’000 % £’000 % £’000 % £’000HScott-Barrett 410 2.5 400 – 400 – 400 27.8 313 4.3 300KFord 302 2.5 295 – 295 – 295 13.0 261 4.4 250CStaveley 287 2.5 280 – 280 – 280 7.3 261 4.4 250MBourgeois(i) 231 2.5 225 – 225 n/a n/a n/a n/a n/a n/aXPullen(ii) – n/a – n/a 295 – 295 41.2 209 4.5 200

(i)Appointed13August2013,tablefor2013showsfullbasicannualsalaryfollowingappointment(ii)Resigned30December2013

From1January2010,theExecutiveDirectors(CEOfrom2009–salaryreducedfrom£360,000in2008)voluntarilyreducedtheirannualsalariesfortwoyearswhilsttheGroupwentthroughaperiodofstrengtheningthebalancesheetandrefocusingthebusiness.Witheffectfrom1January2011,TheCommitteeapprovedaninflationarysalaryincreasefortheExecutiveDirectors,appliedtothereducedlevelofsalaries.

FollowingexpiryofthetwoyearvoluntaryreductioninExecutiveDirectorsalarieson1January2012,theCommitteeconsidereditwasappropriatetoconductareviewofExecutiveDirectorsalaries.Thisreviewusedexternalbenchmarkingdatatoensurethatexecutivedirectorsalariesareinlinewithcurrentmarketratesforsimilarsizedlistedpropertycompaniesanddirectorexperience.TherewasnoincreasetoExecutiveDirectors’salariesbetween2012and2014.AsnotedabovesalariesforExecutiveDirectorsfor2015havebeenincreasedby2.5%inlinewiththeinflationaryincreaseprovidedtoemployees.

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2014 bonuses and achievement of objectivesTotal%

awardedfor2014

Bonus paid2014£’000

Maximumachievable

£’000

HScott-Barrett 85% 340 400KFord 75% 222 295CStaveley 85% 238 280MBourgeois 80% 180 225

In2014,management’sobjectiveswerestructuredaroundachievementofthefollowing:

i. acquisitionofacontrollingstakeinTheMall;

ii. thesaleoftheGroup’sinterestsinGermanyatNAV;

iii. saleofLincolnatNAVorabove;

iv.deliveryofkeyincomeandvaluationbudgettargets;and

v. individualobjectives.

Apay-outratioofbetween75%and85%reflectsayearofverysignificantprogresswiththedeliveryoftheGroup’sstrategicagendaandkeyfinancialtargets.Wedonotpublishdetailsofthethresholdsandtargetsinadvanceasthesearecommerciallyconfidential.

Share awards (LTIP)The share award (LTIP) policy is at the median or above range.TheRemunerationCommitteegrantedLTIPawardstoExecutiveDirectorson14August2014.TheCEOreceivedawardsequivalentto150%ofsalarywithotherExecutiveDirectorsreceivingawardsequivalentto100%.Asmallgroupofmanagementalsoreceivedanaward.

Thenumberofawardsandtheperformanceperiodsaresummarisedinthetablebelowforallexistingissues.Theperformanceperiodfortheseawardsisthreeyearsfromthedateofgrantalthoughthereisthenafurtherdeferral/holdingperiod.Fortheawardsissuedon16August2013thedeferral/holdingperiodisoneyearaftertheperformancedate,fortheawardsissuedon14August2014thedeferral/holdingperiodisoneyearfor50%oftheawardsandtwoyearsfortheremaining50%.

Name Date of award No. of awards % of salaryThreshold/Maximum

vesting share priceVested/lapsed

in yearPerformance

date for vestingHScott-Barrett 16.08.13 2,078,9801 200 40p/70p – 16.08.16

14.08.14 1,283,422 150 60p/85p – 14.08.17KFord 16.08.13 1,149,9351 150 40p/70p – 16.08.16

14.08.14 631,016 100 60p/85p – 14.08.17CStaveley 16.08.13 1,091,4641 150 40p/70p – 16.08.16

14.08.14 598,930 100 60p/85p – 14.08.17MBourgeois 16.08.13 877,0691 150 40p/70p – 16.08.16

14.08.14 481,283 100 60p/85p – 14.08.17

1 Inlinewiththeschemerules,thenumberofawardsgrantedtoeachrecipientwasincreasedby2%inAugust2014tooffsetthedilutiveimpactofthe£165millioncapitalraisethatcompletedinJuly2014.

Thesharepriceatgrantdatewas39.0pforthe16August2013awardand46.8pforthe14August2014award.

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Thetablebelowshowstheproportionofsharesthatwillvestunderthescenarioslistedandthevalueofsharesthatwillaccruetoeachdirectorinthatscenario.

PerformanceTarget %vesting

HScott-Barrett£’000

KFord£’000

CStaveley£’000

MBourgeois£’000

August 2013 issueAt30Dec2014shareprice1 59.4 651 360 342 275Atmaximumvesting(70p)2 100.0 1,434 793 753 605Atthresholdvesting(40p)2 25.0 203 112 106 86August 2014 issueAt30Dec2014shareprice3 – – – – –Atmaximumvesting(85p)2 100.0 1,725 954 906 728

Atthresholdvesting(60p)2 25.0 304 168 160 128

1 Sharepriceof52.75ppluscumulativedividendsfrom16August2013to30December2014of1.00ppershare.2 Calculationassumesnofuturedividendpaymentshoweverinpracticefurtherdividendspaidwillreducethevalueofthefinalawardaswhiletheyarefactoredintowhat

proportionofsharesvestthevalueofthesharesthattherecipientultimatelyreceiveswillbedependentonsharepriceatdateofexercise.3 Sharepriceof52.75ppluscumulativedividendsfrom14August2014to30December2014of0.35ppershare.

TheCommitteeengagedandconsultedwithkeyshareholdersandconsideredcurrentmarketpracticeaheadoftheAugust2013awardwhichwasthefirstofaplannedrollingannualcycleofLTIPawardslinkedtoperformancetargetseachmeasuredoverathreeyearperiod.Awardswerealsomadetoasmallgroupofseniormanagers.

TheperformancetargetsfortheawardsrelatetoabsoluteTSR.Theawardstriggerifthesharepriceattheendofthevestingperiod(adjustedforcumulativedividendsanddistributionspaidintheperformance)iswithinthespecifiedrangebasedontheaveragepriceforthe30dayperiodprecedingthedateofvesting.25%oftheawardwillvestatthreshold(40pfortheAugust2013award,60pfortheAugust2014award)with100%vestingat70pfortheAugust2013awardand85pfortheAugust2014award.Vestingbetweenthethresholdandmaximumpointswillbeonastraight-linebasis.

TheCompanyhasmadesignificantprogressintheexecutionofthetransformationstrategytosimplifyandincreasethefocusofthebusinessthroughdisposalofnon-coreassetsandtherecyclingofcapitalintoitscoreshoppingcentreactivities.TheCommitteeconcludedthatabsoluteshareperformancewasappropriateonthebasisthat:

• Capital&Regionaldifferedfromalmostallotherquotedcompaniesinthesectorduringthistransformation;and

• Thelevelofde-riskingofthebalancesheetmeantthatgearedgrowthpotentialwoulddifferfromothercompaniesinthesector.

Thekeyobjectiveofthebusinessstrategyistodelivervaluetoshareholders.Althoughthismaybeachievedthroughsharepricegrowthandsuperiorreturns,itispossiblethatinseekingtodelivervaluetoshareholders,managementmaylooktocreateasignificantliquidityevent.Itisessentialthatmanagementtaketherightdecisionsforthefutureofthebusinessandintheinterestsoftheshareholders.Ifthisresultsinaliquidityeventbeforetheendofthethreeyearperformanceperiod,managementwillnotbepenalisedforearlydeliveryofthestrategicobjectives.

Ifsuchaneventoccurswiththethreeyearperformanceperiodwhichcausestheawardstovestearly(e.g.takeoverofasignificantliquidityeventwithareturnofcashtoshareholders)andtheTSRperformancetargethasbeenmetatthattimeasaresultofthetransaction,thelevelofthevestingwillnotreducetotakeaccountofthelengthoftheperformanceperiodremaining.AlthoughanyfinaldecisionwillbetakenbasedonthecircumstancesatthetimetheCommitteeintendstoexercisediscretiontoallowfullvestingiftheperformancetargetshavebeenmetinfull.Iftheperformancetargetismetinpart,thevestingschedulewouldbefollowedthroughagainandnoprorationoftheawardswouldapply.Thesameapproachwillbeadoptedifaliquidityeventdoesnotgiverisetoearlyvestingundertherulesbutinsteadresultsinanexecutiveleavingemployment.

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IfthereisnoliquidityeventwithinthethreeyearperformanceperiodbuttheTSRtargetsareachieved,adiscretionaryunderpinwillapplytotheLTIPsuchthattheCommitteemustbesatisfiedthattheTSRperformancegenuinelyreflectsmanagementeffortandactionindeliveringfinancialperformance.

IntheeventofacapitalraisingoranyothersucheventthatwouldhaveadilutiveimpactupontheawardstheRemunerationCommitteemay,inlinewiththeschemerules,adjusttheawardsgrantedtotakeaccountofthis.InAugust2014theawardsgrantedinAugust2013wereincreasedby2%toreflectthedilutiveimpactofthe£165millionCapitalRaisethatcompletedinJuly2014.

Adeferral/holdingperiodappliestovestedLTIPawards.InrespectoftheAugust2013awardsthesemustbeheldforaperiodof12monthsfollowingvesting,fortheAugust2014awards50%mustbeheldforoneyearand50%fortwoyears(deferralperiodswillnotapplyinthecaseofaliquidityeventwithinthreeyears).

TheCompany’sclawbackprovisionsapplyduringthedeferral/holdingperiodwherethelevelofvestingmaybereduced,includingtonil.

Followingtheyearendon6March2015afurthergrantoftheLTIPwasmadeatthefollowinglevels:

% of salary

Awards issued

(no of shares)HScott-Barrett 150% 1,064,935KFord 100% 523,593CStaveley 100% 496,969MBourgeois 100% 399,350

Agroupofseniormanagementalsoreceivedanaward.

Thenumberofshareswasdeterminedbytheclosingsharepriceon4March2015.

Theawardsaresubjecttosimilarabsoluteperformancetargetsasthe2013and2014awardswithathresholdof65pand100%vestingat90poverathreeyearperiod.Thesamedeferralperiodappliesasforthe2014awardssuchthat50%ofvestedawardsmustbeheldforaperiodof12monthsfollowingvestingwiththeother50%beingheldforafurther12monthsafterthat(thiswillnotapplyinthecaseofaliquidityeventwithinthreeyears).

TheCompany’sclawbackprovisionswillapplyduringthedeferral/holdingperiodswherethelevelofvestingmaybereduced,includingtonil.

Payment for loss of officeIn2013theCommitteechosetoexerciseitsrighttomakealossofofficepaymenttoXavierPullenof£356,845(equivalenttooneyear’ssalaryandotherbenefits)andanannualbonusof£118,000.

Executive share ownership TheCommitteebelievesthattheinterestsofexecutivesshouldcloselyalignwithshareholders.Accordinglyallexecutivedirectorsareexpectedtobuildupandmaintainaminimumshareholdingequivalenttooneyear’sbasicsalary(twoyearsfortheChiefExecutive)basedoncurrentmarketvalueoraggregatepurchaseprice.

Thetablebelowdemonstratestheshareholdingstatusasapercentageofsalaryorfee:

Executive DirectorsTime from

appointmentTarget % of salary

Target currently met?

HScott-Barrett 6years9months 200 YesCStaveley 6years2months 100 YesKFord 18years7months 100 YesMBourgeois 1year5months 100 Yes1

1 Targetmetfollowingthepurchasemadeon4March2015,disclosedbelow.


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Interests in sharesThedirectorsand,whererelevant,theirconnectedpersons(withinthemeaningofSection252oftheCompaniesAct2006)werebeneficiallyinterestedintheordinarysharecapitaloftheCompanyatthedatesshowninthetable.

30 December 2014

Shares

30December2013

SharesHScott-Barrett 1,932,054 1,352,055KFord 1,897,842 1,679,432CStaveley 540,475 283,121MBourgeois 389,290 215,000JClare 592,599 296,300NHaasbroek 183,697,765 102,042,913LNorval 199,290,349 102,427,163PNewton 327,600 163,800

THales 299,999 150,000

IKrieger1 – n/a

XPullen2 n/a 1,914,854

1 Appointed1December2014.2 Resigned30December2013.

LNorvalandNHaasbroekareeachbeneficiallyinterestedinthesharesregisteredinthenameofPDIInvestmentHoldingsLimited,KarooInvestmentFundS.C.A.SICAV-SIFandPinelakeInternationalLimited.

Therehavebeennochangestotheaboveshareholdingssince30December2014to23March2015(thelatestpracticabledatepriortotheissueofthisreport)otherthanthefollowingtransactionsallon4March2015unlessotherwisestated:

• MarkBourgeoisacquired50,000shares

• HughScott-Barrettacquired100,000shares

• JohnClareacquired100,000shares

• LouisNorval,throughHomesteadGroupHoldings,acquired250,000shares

• KarooInvestmentFunddisposedof2,200,000sharesreducingthebeneficialinterestsofLouisNorvalandNenoHaasbroekbythatsameamount

• On6March2015KarooInvestmentFunddisposedof1,300,000sharesreducingthebeneficialinterestsofLouisNorvalandNinoHaasbroekbythatsameamount


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Directors’ Report

Governance > Directors’ Report

Business reviewInformationontheGroup’sbusiness,whichisrequiredbysection417oftheCompaniesAct2006,canbefoundintheStrategicReportonpages4to37whichisincorporatedintothisreportbyreference.

ThepurposeofthisannualreportistoprovideinformationtothemembersoftheCompany.Theannualreportcontainscertainforward-lookingstatementswithrespecttotheoperations,performanceandfinancialconditionoftheGroup.Bytheirnature,thesestatementsinvolveuncertaintysincefutureeventsandcircumstancescancauseresultsanddevelopmentstodiffermateriallyfromthoseanticipated.Theforward-lookingstatementsreflectknowledgeandinformationavailableatthedateofpreparationofthisannualreportandtheGroupundertakesnoobligationtoupdatethem.Nothinginthisannualreportshouldbeconstruedasaprofitforecast.

Financial results and dividendsTheresultsfortheyearareshownintheGroupincomestatementonpage76.Eventsafterthebalancesheetdatearedetailedinnote30tothefinancialstatements.

Aninterimdividendof0.35pencepershare(2013:0.25pencepershare)waspaidon26September2014.Thedirectorsrecommendafinaldividendof0.60pencepershare,makingatotaldistributionfortheyearended30December2014of0.95pencepershare(2013:0.65pencepershare).SubjecttoapprovalofshareholdersattheAnnualGeneralMeeting(‘AGM’)on12May2015,thefinaldividendwillbepaidon14May2015toshareholdersappearingontheregisteratthecloseofbusinesson17April2015.Theshareswillbequotedex-dividendon16April2015.

Corporate governanceAreportoncorporategovernanceandcompliancewiththeprovisionsoftheUKCorporateGovernanceCode,whichformspartofthisDirectors’report,issetoutonpages42to45.

Report on greenhouse gas emissionsWehavefollowedtheUKGovernmentenvironmentalreportingguidanceandGHGconversionandemissionfactorsforcompanyreporting2014.Wehaveusedtheoperationalapproachandreportemissionsonanabsolutebasis.Wehavenotreportedlevel3emissionsasthesearedeminimisandexcludedourGermaninterests.Furtherdetailsinrespectofourcommitmentstosustainabilityandanalysisofourperformancearecontainedintheresponsiblebusinessreportcontainedonpages32to37andareavailableonourwebsitewww.capreg.com.

Tonnesofcarbondioxideequivalent(tCO2e)

GlobalGreenhouseGas(GHG)emissionsdata 2014 2013Combustionoffuelandoperationoffacilities(Scope1emissions)

1,475.78 2,437.56

Electricity,heat,steamandcoolingpurchasedforoperationaluseatourfacilities(Scope2emissions)

12,359.41 12,854.61

EmissionsintensitybasedontCO2eforevery1,000sqftofnetlettablearea

2.857 2.955

DirectorsThenamesandbiographicaldetailsofthepresentdirectorsoftheCompanyaregivenonpages40to41.IanKriegerwasappointedon1December2014,allotherDirectorsservedforthefullyear.

Alldirectors,whoservedthroughouttheyear,willretireand,beingeligible,offerthemselvesforre-electionatthe2015AnnualGeneralMeeting.PhilipNewtonhasindicatedhisintentiontostepdownfromtheBoardattheAGMin2016bywhichtimehewillhaveservednineyearsasanon-executivedirector.Philipwill,untilthen,continuetobetheSeniorIndependentDirectorandChairmanoftheRemunerationCommittee.

Directors’interestsinthesharecapitalandequityoftheCompanyattheyearendarecontainedintheremunerationreportonpage64.TherewerenocontractsofsignificancesubsistingduringorattheendoftheyearinwhichadirectoroftheCompanywasmateriallyinterested.NodirectorhadamaterialinterestinthesharecapitalofotherGroupcompaniesduringtheyear.

InconnectionwiththeParkdevInvestors’acquisitionofParkdevFirmPlacedSharesandpursuanttotheRelationshipAgreementthattheParkdevInvestorsandtheCompanyenteredintoin2009,theCompanyagreed,uponrequest,toappointtwonon-executivedirectorsnominatedbyParkdevtotheBoardforsolongastheParkdevInvestorsown20%ormoreoftheissuedordinarysharecapitalintheCompanyandonenon-executivedirectortotheBoardiftheParkdevInvestorsownlessthan20%,butnotlessthan15%oftheissuedordinarysharecapitalintheCompany.LouisNorvalandNenoHaasbroekareParkdevnominatednon-executivedirectors.

TheCompanymaintainsinsuranceforthedirectorsinrespectofliabilitiesarisingfromtheperformanceoftheirduties.

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Substantial shareholdings Asat23March2015(thelatestpracticabledatepriortoissueofthisreport)theCompanyhasbeennotifiedofthefollowinginterestsinitsissuedordinarysharecapitalwhichrepresent3%ormoreofthevotingrightsintheCompany:

Number of shares %

PDIInvestmentHoldings 82,505,610 11.77KarooInvestmentFund 70,040,911 9.995StandardLifeInvestments 68,290,082 9.75HendersonGlobalInvestors 50,665,573 7.23MorganStanleyInvestmentManagement 47,259,878 6.74PinelakeInternational 27,434,881 3.92UBSGlobalAssetManagement 24,383,166 3.48InvestecWealth&Investment 23,566,649 3.36PremierAssetManagement 23,484,630 3.35APGAssetManagement 22,213,598 3.17

Capital structureTheCompanyhasoneclassofordinarysharesof1penceeachwithequalvotingrights.Inaddition,thetrusteesoftheLongTermIncentiveShareSchemehavetherighttovoteonbehalfoftheGroup’semployees.Furtherinformationisgiveninnote19tothefinancialstatements.

Significant contracts or arrangementsTheGrouphasthefollowingsignificantcontractsandagreementsinplacewhichalteruponachangeofcontroloftheCompanyasfollows:

• TheGroup’scorerevolvingcreditfacilitycanbecalledinifthereisachangeofcontroloftheCompany,whichisdefinedtobeeithertheCompanyceasingtoholdnotlessthan100%oftheissuedsharecapitalandvotingrightsoftheborrower,or50%oftheCompany’sissuedsharecapitalbeingheldbyoronbehalfofasingleentityorgroup,or30%oftheissuedsharecapitalbeingheldbyoronbehalfofasingleentityorgroupandmorethan50%ofthedirectorsimmediatelyfollowingthecompletionoftheAmendmentandRestatementofthecurrentfacilityinAugust2012,ceasingtobedirectorsatthetimethe30%limitisbreached.Ifthisoccursthebankhastherighttorepaymentoftheloan.InthecaseofParkdev,the30%limitisignorediftheirholdingexceeds30%andnomandatorytakeoverofferisrequiredasaresultofawhitewashresolutionbeingpassed.

• CertaintaxlossescouldbelostinsomecircumstanceswheretherearevaryingdegreesofchangeofownershipoftheGroup’sshares.

InadditiontheGroupcouldloseitsstatusasaREITasaresultoftheactionsofthirdparties(forexampleintheeventofasuccessfultakeoverbyacompanythatisnotaREITandwhichdoesnotqualifyasaninstitutionalinvestorforREITpurposes)orduetoabreachoftheclosecompanyconditionifitisunabletoremedythebreachwithinaspecifiedperiod.

Purchase of own sharesTheCompanydidnotmakeanypurchasesofitsownsharesduring2014orin2015upto23March2015beingthelatestpracticabledatepriortotheissueofthisreport.

TheCompanywasauthorisedbyshareholdersatthe2014AGMheldon30May2014topurchaseuptoamaximumof10.0%ofitsordinarysharesinthemarket.Thisauthoritywillexpireatthe2015AGMandthedirectorswillbeseekinganewauthorityfortheCompanytopurchaseitsordinaryshares.Thiswillonlybeexercisedifmarketandfinancialconditionsmakeitadvantageoustodoso.

Articles of AssociationVariousamendmentswereagreedtotheCompany’sArticlesofAssociationduring2014inconnectionwiththeCompany’sconversiontoREITstatus.TherevisedArticleswereapprovedbyspecialresolutionatageneralmeetingofshareholderson2December2014andbecameeffectivefrom31December2014beingthedateoftheGroup’sconversiontoREITstatus.

Shares held by Employee Share Ownership TrustTheCapital&RegionalEmployeeShareOwnershipTrustdidnotacquireanysharesin2014.At30December2014theTrustheld1,070,583sharesintheCompany.ThesharesheldbytheTrustareregisteredinthenomineename,ForestNomineesLimitedandadividendwaiverisinplacetocovertheentireholding.

EmployeesTheGroupiscommittedtoapolicythattreatsallofitsemployeesandjobapplicantsequally.Noemployeeorpotentialemployeereceiveslessfavourabletreatmentorconsiderationonthegroundsofrace,colour,religion,nationality,ethnicorigin,sex,sexualorientation,maritalstatus,ordisability.NorisanyemployeeorpotentialemployeedisadvantagedbyanyconditionsofemploymentorrequirementsoftheGroupthatcannotbejustifiedasnecessaryonoperationalgrounds.

Wegivefullconsiderationtoapplicationsforemploymentfromdisabledpersonswheretherequirementsofthejobcanbeadequatelyfulfilledbypeoplewithdisabilities.Weendeavourtoretaintheemploymentof,andarrangesuitableretrainingfor,anyemployeewhobecomesdisabledduringtheiremploymentaswellasprovidingtraining,careerdevelopmentandpromotiontodisabledemployeeswhereverappropriate.

Duringtheyear,theGroupmaintainedarrangementstoprovideemployeeswithinformationonmattersofconcerntothem,toregularlyconsultemployeesforviewsonmattersaffectingthem,toencourageemployeeinvolvementintheGroup’sperformancethroughshareschemes,andtomakeallemployeesawareoffinancialandeconomicfactorsaffectingtheperformanceoftheGroup.

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www.capreg.com Governance > Directors’ Report

At30December2014thetotalnumberofemployeeswasasfollows:

Employees Male Female TotalDirectors1 10 – 10Employees–CRPM 27 30 57Employees–TheMall 24 89 113Employees–Snozone 174 79 253

1 TheGroupdefinesitsseniormanagementasthemembersoftheexecutivecommitteewhichcurrentlyconsistsofthefourexecutivedirectors.

Use of financial derivativesTheuseoffinancialderivativesissetoutinnote18tothefinancialstatements.

Political donationsTheGrouphasnotmadeanypoliticaldonationsduringtheyearandintendstocontinueitspolicyofnotdoingsofortheforeseeablefuture.

Human rightsTheGroupoperatesintheUK,JerseyandGermanyand,assuch,issubjecttotheEuropeanConventiononHumanRightsandtheUKHumanRightsAct1998.

TheGrouprespectsallhumanrightsandinconductingitsbusinesstheGroupregardsthoserightsrelatingtonon-discrimination,fairtreatmentandrespectforprivacytobethemostrelevantandtohavethegreatestpotentialimpactonitskeystakeholdergroupsofcustomers,employeesandsuppliers.

TheBoardhasoverallresponsibilityforensuringtheGroupupholdsandpromotesrespectforhumanrights.TheGroupseekstoanticipate,preventandmitigateanypotentialnegativehumanrightsimpactsaswellasenhancepositiveimpactsthroughitspoliciesandproceduresand,inparticular,throughitspoliciesregardingemployment,equalityanddiversity,treatingitsstakeholdersandcustomersfairlyandinformationsecurity.Grouppoliciesseektoensurethatemployeescomplywiththerelevantlegislationandregulationsinplacetopromotegoodpractice.TheGroup’spoliciesareformulatedandkeptuptodateandcommunicatedtoallemployeesthroughtheStaffPolicyManual.TheGrouphasnotbeenmadeawareofanyincidentinwhichtheorganisation’sactivitieshaveresultedinanabuseofhumanrights.

Going concern ThestrategicreviewdiscussestheGroup’sbusinessactivities,togetherwiththefactorslikelytoaffectitsfuturedevelopment,performanceandpositionandsetsoutthefinancialpositionoftheGroup,itscashflowsandliquidity.Note18ofthefinancialstatementssetsouttheGroup’sobjectives,policiesandprocessesformanagingcapitalanditsfinancialriskmanagementobjectives,togetherwithdetailsoffinancialinstrumentsandexposuretocreditriskandliquidityrisk.

TheGrouphasavailablefinancialfacilitiesandapositivecashposition.TheBoardhaspreparedforecasts,includingsensitivityanalysis,whichdemonstratesthattheGroupwillcontinuetooperatewithinitsavailableresources.AfterreviewingthisanalysistheBoardbelievesthattheCompanyandGrouphaveadequateresourcesandfacilitiestocontinueinoperationalexistencefortheforeseeablefutureandthereforethefinancialstatementsarepreparedonthegoingconcernbasis.

Auditor’s informationThedirectorswhoheldofficeatthedateofapprovalofthisDirectors’reportconfirmthat,sofarastheyareeachaware,thereisnorelevantauditinformationofwhichtheCompany’sauditorisunaware;andeachdirectorhastakenallthestepsthattheyoughttohavetakenasadirectortomakethemselvesawareofanyrelevantauditinformationandtoestablishthattheCompany’sauditorisawareofthatinformation.

Thisconfirmationisgivenandshouldbeinterpretedinaccordancewiththeprovisionsofs418oftheCompaniesAct2006.

Aresolutiontore-appointDeloitteLLPastheCompany’sauditorwillbeproposedattheforthcomingAGM.

2015 Annual General MeetingAseparatedocument,theNoticeofAnnualGeneralMeeting2015,coveringtheAnnualGeneralMeetingoftheCompanytobeheldon12May2015at10:00am,willbesentormadeavailabletoallshareholdersandwillcontainanexplanationofthebusinessbeforethatmeeting.

Electronic proxy votingRegisteredshareholdershavetheopportunitytosubmittheirvotes(orabstain)onallresolutionsproposedattheAnnualGeneralMeetingbymeansofanelectronicvotingfacilityoperatedbytheCompany’sregistrar,EquinitiLimited.Thisfacilitycanbeaccessedbyvisitingwww.sharevote.co.uk.CRESTmembersmayappointaproxyorproxiesbyusingtheCRESTelectronicappointmentservice.

Electronic copies of the annual report and financial statements and other publicationsCopiesofthe2014annualreportandfinancialstatements,thenoticeofAnnualGeneralMeeting,othercorporatepublications,pressreleasesandannouncementsareavailableontheGroup’swebsiteatcapreg.com.

ByorderoftheBoard

Stuart Wetherly CompanySecretary26March2015

RegisteredCompanyname:Capital&RegionalplcRegisteredCompanynumber:01399411Registeredoffice:52GrosvenorGardens,LondonSW1W0AU

00

FindoutmoreaboutLorem Ipsumonpages••and••

FindoutmoreaboutLorem Ipsumat:www.capreg.com

FinancialStatements

70 Directors’ResponsibilitiesStatement71 IndependentAuditor’sReport76 ConsolidatedIncomeStatement76 ConsolidatedStatementof

ComprehensiveIncome77 ConsolidatedBalanceSheet78 ConsolidatedStatementofChanges

inEquity79 ConsolidatedCashFlowStatement80 NotestotheFinancialStatements123 CompanyBalanceSheet124 NotestotheCompanyFinancial

Statements127 FiveYearReview

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Stock Code: CAL

Directors’ Responsibilities Statement

ThedirectorsareresponsibleforpreparingtheAnnualReportandthefinancialstatementsinaccordancewithapplicablelawandregulations.

Companylawrequiresthedirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawthedirectorsarerequiredtopreparetheGroupfinancialstatementsinaccordancewithInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnionandArticle4oftheIASRegulationandhaveelectedtopreparetheparentcompanyfinancialstatementsinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice(UnitedKingdomAccountingStandardsandapplicablelaw).UndercompanylawthedirectorsmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsoftheCompanyandoftheprofitorlossoftheCompanyforthatyear.

Inpreparingtheparentcompanyfinancialstatements,thedirectorsarerequiredto:

• selectsuitableaccountingpoliciesandthenapplythemconsistently;

• makejudgementsandaccountingestimatesthatarereasonableandprudent;

• statewhetherapplicableUKAccountingStandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;and

• preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheCompanywillcontinueinbusiness.

InpreparingtheGroupfinancialstatements,InternationalAccountingStandard1requiresthatDirectors:

• properlyselectandapplyaccountingpolicies;

• presentinformation,includingaccountingpolicies,inamannerthatprovidesrelevant,reliable,comparableandunderstandableinformation;

• provideadditionaldisclosureswhencompliancewiththespecificrequirementsinIFRSsareinsufficienttoenableuserstounderstandtheimpactofparticulartransactions,othereventsandconditionsontheentity’sfinancialpositionandfinancialperformance;and

• makeanassessmentoftheCompany’sabilitytocontinueasagoingconcern.

ThedirectorsareresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshowandexplaintheCompany’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandtoenablethemtoensurethatthefinancialstatementsandtheDirectors’RemunerationReportcomplywiththeCompaniesAct.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.

ThedirectorsareresponsibleforthemaintenanceandintegrityofthecorporateandfinancialinformationincludedontheCompany’swebsite.LegislationintheUKgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.

Directors’ responsibility statementWeconfirmthattothebestofourknowledge:

• thefinancialstatements,preparedinaccordancewiththerelevantfinancialreportingframework,giveatrueandfairviewoftheassets,liabilities,financialpositionandprofitorlossoftheCompanyandtheundertakingsincludedintheconsolidationtakenasawhole;and

• theStrategicReportincludesafairreviewofthedevelopmentandperformanceofthebusinessandthepositionoftheCompanyandtheundertakingsincludedintheconsolidationasawhole,togetherwithadescriptionoftheprincipalrisksanduncertaintiesthattheyface;and

• theannualreportandfinancialstatements,takenasawhole,arefair,balancedandunderstandableandprovidetheinformationnecessaryforshareholderstoassesstheCompany’sperformance,businessmodelandstrategy.

ThisresponsibilitystatementwasapprovedbytheBoardofdirectorson26March2015andissignedonitsbehalfby:

Hugh Scott-Barrett ChiefExecutive

Charles Staveley GroupFinanceDirector26March2015

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www.capreg.com Financial Statements > Independent Auditor’s Report

Independent Auditor’s Reportto the members of Capital & Regional plc

Opinion on financial statements of Capital & Regional plcInouropinion:

• thefinancialstatementsgiveatrueandfairviewofthestateoftheGroup’sandoftheparentcompany’saffairsasat30December2014andoftheGroup’sprofitfortheyearthenended;

• theGroupfinancialstatementshavebeenproperlypreparedinaccordancewithInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnion;

• theparentcompanyfinancialstatementshavebeenproperlypreparedinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice;and

• thefinancialstatementshavebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006and,asregardstheGroupfinancialstatements,Article4oftheIASRegulation.

ThefinancialstatementscomprisetheConsolidatedIncomeStatement,theConsolidatedStatementofComprehensiveIncome,theConsolidatedBalanceSheet,theConsolidatedStatementofChangesinEquity,theConsolidatedCashFlowStatement,therelatednotes1to32,theCompanyBalanceSheetandtherelatednotesAtoG.ThefinancialreportingframeworkthathasbeenappliedinthepreparationoftheGroupfinancialstatementsisapplicablelawandIFRSsasadoptedbytheEuropeanUnion.ThefinancialreportingframeworkthathasbeenappliedinthepreparationoftheparentcompanyfinancialstatementsisapplicablelawandUnitedKingdomAccountingStandards(UnitedKingdomGenerallyAcceptedAccountingPractice).

Going concernAsrequiredbytheListingRuleswehavereviewedthedirectors’statementcontainedwithinthedirectors’reportonpage67thattheGroupisagoingconcern.Weconfirmthat:

• wehaveconcludedthatthedirectors’useofthegoingconcernbasisofaccountinginthepreparationofthefinancialstatementsisappropriate;and

• wehavenotidentifiedanymaterialuncertaintiesthatmaycastsignificantdoubtontheGroup’sabilitytocontinueasagoingconcern.

However,becausenotallfutureeventsorconditionscanbepredicted,thisstatementisnotaguaranteeastotheGroup’sabilitytocontinueasagoingconcern.

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Stock Code: CAL

Independent Auditor’s Report to the members of Capital & Regional plc Continued

Our assessment of risks of material misstatementTheassessedrisksofmaterialmisstatementdescribedbelowarethosethathadthegreatesteffectonourauditstrategy,theallocationofresourcesintheauditanddirectingtheeffortsoftheengagementteam:

Risk Our response

Property valuationsThevaluationofinvestmentpropertyisdependentuponanumberofassumptionsandjudgements,suchasoccupancyrates,leaseincentives,breakclausesandyields.Changesintheseassumptionsandjudgementscouldleadtosignificantmovementsinpropertyvaluesandconsequentlyunrealisedgainsorlossesintheconsolidatedincomestatement.

Theaccountingpolicyforinvestmentpropertyissetoutinnote1totheGroupfinancialstatements.

• Wemetwiththethirdpartyvaluersappointedbymanagementtovaluethepropertyportfolioandchallengedthesignificantjudgementsandassumptionsappliedintheirvaluationmodel.Weverifiedmovementsinthekeyjudgementsandbenchmarkedtheinputsagainstmarketdata.Weassessedeachindividualpropertyvaluationwithinthepropertyportfolios.

• Weassessedtheintegrityoftheinformationprovidedtothevaluersbymanagementpertainingtorentalincome,purchasers’costsandoccupancy.

• Weconsideredthecompetenceandindependenceoftheexternalvaluers.

Acquisition of control of the Mall fundTheaccountingtreatmentfortheacquisitionofcontrolovertheMallfundin2014andthecalculationofgoodwillarisingonacquisitionhassignificantlyimpactedtheresultoftheGroupfortheyearended30December2014.Thishasbeenidentifiedasanewsignificantriskthisyear.

TheMallfundhadnetassetsof£370.6millionat14July2014,thedateofacquisitionofcontrol,and£377.2millionat30December2014.Disclosureoftheacquisitionissetoutinnote25totheGroupfinancialstatements.Theaccountingpolicyforacquisitionsissetoutinnote1totheGroupfinancialstatements.

• Weauditedthebasisofaccountingfortheacquisition,includingthecalculationofthegoodwillarisingonacquisition.

• WeobtainedandreviewedthelegaldocumentationpreparedfortheacquisitionofcontrolofTheMallfundbytheGroup.

• Weperformedsubstantiveauditproceduresupontheacquisitionbalancesheet.Thisincludedauditingthecarryingvaluesofinvestmentpropertyandothermaterialbalancestoassesswhethertheacquiredbalancesweremateriallycorrect.

• WeauditedtheconsiderationpayablefortheacquisitionofcontrolofTheMallthroughinspectionofpaymentsmadeandagreementtosalescontracts.

Going concern and covenant compliance TheacquisitionofcontrolofTheMallfundwasinpartfinancedthroughutilisationofexternalloanfacilitiesavailabletotheGroup,andtheacquisitionresultedintheGroupacquiringadditionalexternaldebtheldbyTheMallfund.

TheexistenceofcovenantsonexternalloansheldbytheGroupandtheabilityoftheGrouptomeetthecovenantrequirementsbothduringtheyearandforaperiodofoneyearfromthedateofthisAuditor’sReportisidentifiedasasignificantrisk.Externalborrowingshadacarryingvalueof£396.8millionat30December2014.

Management’sconsiderationofthegoingconcernbasisofpreparationissetoutinnote1totheGroupfinancialstatements.

• Wechallengedthejudgementsandassumptionsappliedbymanagementintheirgoingconcernassessmentandassociatedforecastsoffinancialperformance,financialpositionandcovenantcomplianceincludingexaminingcurrentbusinessandeconomictrendsandsignificantdevelopmentsduringandsubsequenttotheyearended30December2014.

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Risk Our response

Revenue recognitionRevenuerecognition,includingthepotentialrecognitionandprovisionofmanagementperformancefeesandtheaccuracyoftheircalculationinrespectofthepropertyportfoliosandaccountingforleaseincentivesisidentifiedasasignificantrisk.Thecalculationofleaseincentivesinvolvescomplexcalculationsandtherecognitionofperformancefeesrequiresjudgementastowhentherecognitioncriteriaaremet,includingtheperformanceofthepropertyportfolioagainstabenchmarkindex.Theaccuracyoftheperformancefeeandleaseincentivecalculationsareidentifiedassignificantrisksoverrevenue.

PerformancefeeswithintheGrouptotal£6.8millionin2014,disclosedinnote2btotheGroupfinancialstatements.Leaseincentiveshadacarryingvalueof£19.3millionat30December2014,disclosedinnote13totheGroupfinancialstatements.Theaccountingpoliciesforperformancefeesandleaseincentivesaresetoutinnote1totheGroupfinancialstatements.

• WechallengedtheappropriatenessoftheGroup’srevenuerecognitioninrespectofperformancefees.Wehaveagreedtherequiredinternalrateofreturnfortherecognitionofaperformancefeeforeachmanagementcontracttotheunderlyingagreementandcompareditagainstthecurrentforecastinvestmentreturnbasedonthepropertyvaluationsat30December2014andforecastvaluemovements.

• Wehaveperformedouraudittestingforleaseincentivesbyverifyingthemechanicalaccuracyofcalculationsandagreeinginputstotheleasecontacts.OurworkwasfocuseduponidentifyingunusualorcomplexleasecontractstoconsiderwhethertheywerecorrectlyaccountedforunderIAS17:‘Leases’,andnewcontractstoassessthecompletenessoftheleaseincentivecalculations.

Impairment of company only investmentsThereisariskofimpairmentoftheinvestmentsandintercompanydebtorsintheparentCompanybalancesheet.Inparticular,thisrelatestothereasonablenessofcashflowforecastswhichsupportinvestmentsheldatabovenetassetvalueofthesubsidiaries.

Investmentshadacarryingvalueof£333.5millionat30December2014,comprising70%oftheparentcompany’sassets.Intercompanydebtorshadacarryingvalueof£138.9millionat30December2014,comprising29%oftheparentcompany’sassets.TheaccountingpoliciesforbothinvestmentsandintercompanydebtorsaresetoutinnoteAtotheparentcompanyfinancialstatements.

• Wechallengedmanagement’sinvestmentimpairmentmodelandthecashflowforecastsemployedthereinincludingcomparisonoftheinputassumptionstoexternallyandinternallyderiveddata.Theinputsconsideredincludedthecashflowprojectionsanddiscountrates.

• Weconsideredthesensitivityofthemodeltochangesinkeyassumptions.

• Wealsoassessedwhethertheforecastsemployedareconsistentwiththoseusedtosupportotherjudgementsinthefinancialstatements.

ThedescriptionofrisksaboveshouldbereadinconjunctionwiththesignificantissuesconsideredbytheAuditCommitteeasdetailedonpage47.

Ourauditproceduresrelatingtothesemattersweredesignedinthecontextofourauditofthefinancialstatementsasawhole,andnottoexpressanopiniononindividualaccountsordisclosures.Ouropiniononthefinancialstatementsisnotmodifiedwithrespecttoanyoftherisksdescribedabove,andwedonotexpressanopinionontheseindividualmatters.

Our application of materialityWedefinematerialityasthemagnitudeofmisstatementinthefinancialstatementsthatmakesitprobablethattheeconomicdecisionsofareasonablyknowledgeablepersonwouldbechangedorinfluenced.Weusematerialitybothinplanningthescopeofourauditworkandinevaluatingtheresultsofourwork.

WedeterminedmaterialityfortheGrouptobe£6million,whichisbelow2%oftotalequityattributabletoequityholdersoftheparent.Fortheauditofthefinancialstatementsfortheyearended30December2013,weappliedamaterialityof£3million,whichwasbelow2%oftotalequityattributabletoequityholdersoftheparent.TheincreaseinthematerialityresultsfromthefullconsolidationofTheMallfundforthefirsttimefortheyearended30December2014,significantlyincreasingthenetassetsoftheGroup.

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Stock Code: CAL

Independent Auditor’s Report to the members of Capital & Regional plc Continued

Our application of materiality continuedAsaresultoftheacquisitionwehavereconsideredtheappropriatebasisfordeterminingmateriality.Inadditiontoequitydescribedabove,wealsoconsiderOperatingProfit(asdefinedinnote1totheGroupfinancialstatements)tobeacriticalfinancialperformancemeasurefortheGrouponthebasisthatitisakeymetricusedbymanagement,isthebasisofthediscussionoffinancialperformanceintheStrategicReportandisametricusedbyanalysts.Weappliedalowerthresholdof£0.9millionfortestingofallbalancesimpactingthisfinancialperformancemeasure,whichis5%ofOperatingProfitattributabletoequityholdersoftheparent.

WeagreedwiththeAuditCommitteethatwewouldreporttotheCommitteeallauditdifferencesinexcessof£120,000(2013:£60,000)aswellasdifferencesbelowthatthresholdthat,inourview,warrantedreportingonqualitativegrounds.WealsoreporttotheAuditCommitteeondisclosuremattersthatweidentifiedwhenassessingtheoverallpresentationofthefinancialstatements

An overview of the scope of our auditOurGroupauditwasscopedbyobtaininganunderstandingoftheGroupanditsenvironment,includingGroup-widecontrols,andassessingtherisksofmaterialmisstatementattheGroupandcomponentlevels.

OurGroupauditscopefocusedprimarilyontheauditworkonthemajorlinesofbusiness.ThesemajorlinesofbusinessareTheMallLimitedPartnership,theGermanyjointventureheldforsaleat30December2014andSnozoneLimited,whichareindividualIFRS8segmentsasdisclosedinnote2totheGroupfinancialstatements.OthermajorlinesofbusinessforscopingpurposesincludetheKingfisherLimitedPartnership,incorporatedintotheOtherUKShoppingCentresegment,andCapital&RegionalPropertyManagementLimited,whichisincorporatedintotheGroup/Centralsegmentinnote2totheGroupfinancialstatements.TheWatersideLincolnLimitedPartnership,formerlyincorporatedintotheOtherShoppingCentresegment,wasdisposedofon12November2014andwassubjecttoourauditprocedurestothatdate.GarigalAssetManagementGmbH,formerlyincorporatedintotheGroup/Centralsegmentinnote2totheGroupfinancialstatements,wasdisposedofon4October2014andwassubjecttoreviewprocedurestothatdate.

AlloftheaboveweresubjecttoafullscopeauditwiththeexceptionoftheGermanyjointventure,GarigalAssetManagementGmbHandtheKingfisherLimitedPartnership,whichweresubjecttospecificauditproceduresaroundsignificantauditrisksandkeybalancesincludinginvestmentpropertyandloanspayable.

Thebusinessessubjecttoafullauditorspecificauditproceduresaccountfor97%oftheGroup’snetassets(2013:100%),99%oftheGroup’srevenue(2013:100%)and99%oftheGroup’sOperatingProfit(2013:100%).Allinvestmentpropertieshavebeenincludedwithinthescopeofourwork.Theywerealsoselectedtoprovideanappropriatebasisforundertakingauditworktoaddresstherisksofmaterialmisstatementidentifiedabove.TheGermanyjointventureisauditedbyacomponentauditorwhichfollowsinstructionbytheGroupauditteamandisvisitedannuallybyaseniormemberoftheGroupauditteam.TheGermanjointventureaccountsfor30%ofOperatingProfitand10%ofnetassetsintheyear.TheremainingcomponentsareauditedbytheGroupauditteam.Ourauditworkateachcomponentwasexecutedatlevelsofmaterialityapplicabletoeachindividualentitywhichwerebetween3%and95%ofGroupmateriality.

Attheparententitylevelwealsotestedtheconsolidationprocessandcarriedoutanalyticalprocedurestoconfirmourconclusionthattherewerenosignificantrisksofmaterialmisstatementoftheaggregatedfinancialinformationoftheremainingcomponentsnotsubjecttoauditorauditofspecifiedaccountbalances.

Opinion on other matters prescribed by the Companies Act 2006 Inouropinion:

• thepartoftheDirectors’RemunerationReporttobeauditedhasbeenproperlypreparedinaccordancewiththeCompaniesAct2006;and

• theinformationgivenintheStrategicReportandtheDirectors’Reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.

Matters on which we are required to report by exceptionAdequacy of explanations received and accounting recordsUndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion:

• wehavenotreceivedalltheinformationandexplanationswerequireforouraudit;or

• adequateaccountingrecordshavenotbeenkeptbytheparentcompany,orreturnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or

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• theparentcompanyfinancialstatementsarenotinagreementwiththeaccountingrecordsandreturns.

Wehavenothingtoreportinrespectofthesematters.Directors’ remuneration UndertheCompaniesAct2006wearealsorequiredtoreportifinouropinioncertaindisclosuresofdirectors’remunerationhavenotbeenmadeorthepartoftheDirectors’RemunerationReporttobeauditedisnotinagreementwiththeaccountingrecordsandreturns.Wehavenothingtoreportarisingfromthesematters.

Corporate Governance StatementUndertheListingRuleswearealsorequiredtoreviewthepartoftheCorporateGovernanceStatementrelatingtotheCompany’scompliancewithtenprovisionsoftheUKCorporateGovernanceCode.Wehavenothingtoreportarisingfromourreview.

Our duty to read other information in the Annual Report UnderInternationalStandardsonAuditing(UKandIreland),wearerequiredtoreporttoyouif,inouropinion,informationintheannualreportis:

• materiallyinconsistentwiththeinformationintheauditedfinancialstatements;or

• apparentlymateriallyincorrectbasedon,ormateriallyinconsistentwith,ourknowledgeoftheGroupacquiredinthecourseofperformingouraudit;or

• otherwisemisleading.

Inparticular,wearerequiredtoconsiderwhetherwehaveidentifiedanyinconsistenciesbetweenourknowledgeacquiredduringtheauditandthedirectors’statementthattheyconsidertheannualreportisfair,balancedandunderstandableandwhethertheannualreportappropriatelydisclosesthosemattersthatwecommunicatedtotheAuditCommitteewhichweconsidershouldhavebeendisclosed.Weconfirmthatwehavenotidentifiedanysuchinconsistenciesormisleadingstatements.

Respective responsibilities of directors and auditorAsexplainedmorefullyintheDirectors’ResponsibilitiesStatement,thedirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.OurresponsibilityistoauditandexpressanopiniononthefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.WealsocomplywithInternationalStandardonQualityControl1(UKandIreland).Ourauditmethodologyandtoolsaimtoensurethatourqualitycontrolproceduresareeffective,understoodandapplied.Ourqualitycontrolsandsystemsincludeourdedicatedprofessionalstandardsreviewteamandindependentpartnerreviews.

ThisreportismadesolelytotheCompany’smembers,asabody,inaccordancewithChapter3ofPart16oftheCompaniesAct2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Scope of the audit of the financial statementsAnauditinvolvesobtainingevidenceabouttheamountsanddisclosuresinthefinancialstatementssufficienttogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorerror.Thisincludesanassessmentof:whethertheaccountingpoliciesareappropriatetotheGroup’sandtheparentcompany’scircumstancesandhavebeenconsistentlyappliedandadequatelydisclosed;thereasonablenessofsignificantaccountingestimatesmadebythedirectors;andtheoverallpresentationofthefinancialstatements.Inaddition,wereadallthefinancialandnon-financialinformationintheannualreporttoidentifymaterialinconsistencieswiththeauditedfinancialstatementsandtoidentifyanyinformationthatisapparentlymateriallyincorrectbasedon,ormateriallyinconsistentwith,theknowledgeacquiredbyusinthecourseofperformingtheaudit.Ifwebecomeawareofanyapparentmaterialmisstatementsorinconsistenciesweconsidertheimplicationsforourreport.

Georgina Robb FCA (Seniorstatutoryauditor)forandonbehalfofDeloitteLLPCharteredAccountantsandStatutoryAuditorLondon,UnitedKingdom26March2015

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Stock Code: CAL

Consolidated Income StatementFor the year ended 30 December 2014

Notes2014

£m20131

£m

Continuing operations Revenue 3 46.6 17.6Costofsales 4 (18.2) (8.0)Gross profit 28.4 9.6Administrativecosts (11.0) (11.5)Shareofprofitinassociatesandjointventures 14a 10.2 8.3AcquisitionofMallunits 25 8.1 –Gainonrevaluationofinvestmentproperties 10a 36.9 –Othergainsandlosses 6 4.4 1.0Profit on ordinary activities before financing 77.0 7.4Financeincome 5 0.4 0.3Financecosts 5 (10.2) (0.4)Profit before tax 6 67.2 7.3Taxcredit 8a 2.5 0.2Profit for the year from continuing operations 69.7 7.5Discontinued operationsProfitfortheyearfromdiscontinuedoperations 26 5.5 1.6Profit for the year 75.2 9.1Attributable to:Equityholdersoftheparent 73.7 9.1Non-controllinginterest 1.5 –

75.2 9.1Continuing operationsBasicearningspershare 9a 14p 2pDilutedearningspershare 9a 13p 2p

Continuing and discontinued operationsBasicearningspershare 9a 15p 3pDilutedearningspershare 9a 15p 3p

Consolidated Statement of Comprehensive IncomeFor the year to 30 December 2014

2014£m

2013£m

Profit for the year 75.2 9.1Other comprehensive income:Items that may be reclassified subsequently to profit or loss:Exchangedifferencesontranslationofforeignoperations (2.8) 0.8Gain/(loss)onahedgeofanetinvestmenttakentoequity 1.7 (0.7)Total items that may be reclassified subsequently to profit or loss: (1.1) 0.1

Total comprehensive income for the year 74.1 9.2

Attributable to:Equityholdersoftheparent 72.6 9.2Non-controllinginterest 1.5 –

74.1 9.2

Therearenoitemsinothercomprehensiveincomethatmaynotbereclassifiedtoprofitorloss.

1 2013resultshavebeenrestatedtoseparatediscontinuedoperationsasexplainedinNote26.

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Financial Statementswww.capreg.com

Consolidated Balance SheetAt 30 December 2014

Note2014

£m2013£m

Non-current assetsInvestmentproperties 10 790.8 –Plantandequipment 11 0.7 0.7Fixedassetinvestments 26 2.7 –Receivables 13 17.9 22.8Investmentinassociates 14b 13.6 112.1Investmentinjointventures 14c – 32.3Total non-current assets 825.7 167.9Current assetsReceivables 13 16.1 6.8Cashandcashequivalents 15 42.6 11.1Assetsclassifiedasheldforsale 26 39.5 8.5Total current assets 98.2 26.4Total assets 2b 923.9 194.3Current liabilitiesTradeandotherpayables 16 (41.8) (4.3)Currenttaxliabilities – (0.2)Liabilitiesdirectlyassociatedwithassetsheldforsale 26 (0.8) (0.1)Total current liabilities (42.6) (4.6)Net current assets 55.6 21.8Non-current liabilitiesBankloans 17a (396.8) –Otherpayables 16 (0.1) (0.1)Obligationsunderfinanceleases 27 (65.4) –Deferredtaxliabilities 8d – (0.9)Total non-current liabilities (462.3) (1.0)Total liabilities 2b (504.9) (5.6)Net assets 419.0 188.7EquitySharecapital 19 7.0 9.9Sharepremium 157.2 –Otherreserves 61.5 62.6Capitalredemptionreserve 4.4 4.4Ownsharesheld 21 (0.6) (0.7)Retainedearnings 189.5 112.5Equity shareholders’ funds 419.0 188.7Basicnetassetspershare 23 £0.60 £0.54EPRAtriplenetassetspershare 23 £0.59 £0.54EPRAnetassetspershare 23 £0.59 £0.56

ThesefinancialstatementswereapprovedbytheBoardofdirectors,authorisedforissueandsignedontheirbehalfon26March2015by:

Charles Staveley GroupFinanceDirector

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Stock Code: CAL

Consolidated Statement of Changes in EquityFor the year ended 30 December 2014

Otherreserves

Sharecapital

£m

Sharepremium

£m

Mergerreserve

£m

Acquisitionreserve

£m

Foreigncurrencyreserve

£m

Netinvestment

hedgingreserve

£m

Capitalredemption

reserve£m

Ownshares

held£m

Retainedearnings

£mTotal£m

Non-controlling

interest£m

Totalequity

£m

Balance at 30 December 2012 9.9 – 60.3 9.5 3.6 (1.4) 4.4 (0.7) 94.0 179.6 – 179.6Profitfortheyear – – – – – – – – 9.1 9.1 – 9.1Othercomprehensiveincomefortheyear – – – – 0.8 (0.7) – – – 0.1 – 0.1Total comprehensive income for the year – – – – 0.8 (0.7) – – 9.1 9.2 – 9.2Credittoequityforequity-settledshare-basedpayments(note20) – – – – – – – – 0.8 0.8 – 0.8Deferredtaxonshare-basedpayments(note8b) – – – – – – – – 0.2 0.2 – 0.2Transferbetweenreserves – – – (9.5) – – – – 9.5 – – –Dividendspaid – – – – – – – – (0.9) (0.9) – (0.9)Othermovements – – – – – – – – (0.2) (0.2) – (0.2)Balance at 30 December 2013 9.9 – 60.3 – 4.4 (2.1) 4.4 (0.7) 112.5 188.7 – 188.7Profitfortheyear – – – – – – – – 73.7 73.7 1.5 75.2Othercomprehensivelossfortheyear – – – – (2.8) 1.7 – – – (1.1) – (1.1)Total comprehensive income for the year – – – – (2.8) 1.7 – – 73.7 72.6 1.5 74.1Credittoequityforequity-settledshare-basedpayments(note20) – – – – – – – – 0.5 0.5 – 0.5Deferredtaxonshare-basedpayments(note8b) – – – – – – – – (0.2) (0.2) – (0.2)Newsharesissued(note19) 3.5 157.2 – – – – – – – 160.7 – 160.7Dividendspaid(note32) – – – – – – – – (3.8) (3.8) – (3.8)Repurchaseandcancellationofdeferredshares(note19) (6.4) – – – – – – – 6.4 – – –Adjustmentarisingfromchangeinnon-controllinginterest – – – – – – – – 0.5 0.5 (1.5) (1.0)Othermovements – – – – – – – 0.1 (0.1) – – –Balance at 30 December 2014 7.0 157.2 60.3 – 1.6 (0.4) 4.4 (0.6) 189.5 419.0 – 419.0

Themergerreserveof£60.3millionaroseontheGroup’scapitalraisingin2009whichwasstructuredsoastoallowtheCompanytoclaimmergerreliefundersection612oftheCompaniesAct2006ontheissueofordinaryshares.Themergerreserveisavailablefordistributiontoshareholders.

Theacquisitionreserveof£9.5millionrelatedtothepurchaseoftheentireordinarysharecapitalofMorrisonMerlinLimitedin2005,priortowhichithadbeenajointventureinwhichtheGrouphada50%interest.ThereservewastransferredtoretainedearningsondisposalofMorrisonMerlinLimitedinOctober2013.

Theforeigncurrencyreserveof£1.6millionandthenetinvestmenthedgingreservedeficitof£(0.4)millionrespectivelyshowforeignexchangetranslationdifferencesfromtheGroup’sinvestmentinitsGermanjointventureandthenetinvestmenthedgeofthatinvestment.

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Consolidated Cash Flow StatementFor the year ended 30 December 2014

Note2014

£m2013£m

Operating activitiesNetcashfromoperations 22 22.5 (1.4)Distributionsreceivedfromassociates 14b 1.5 1.7Distributionsreceivedfromjointventures 14c 5.3 0.2Interestpaid (8.7) (4.2)Interestreceived 0.4 0.2Incometaxesreceived/(paid) 0.4 (1.2)Cash flows from operating activities 21.4 (4.7)Investing activitiesAcquisitionofMallunits(netofcashacquiredwithinTheMall) (220.1) –DisposalofWatersideLincolnLimitedPartnership 14c 14.8 –DisposalofLeisureWorld,HemelHempstead 26 8.4 –DisposalofMorrisonMerlinLimited 26 – 12.0DisposalofinterestinX-Leisure 26 – 30.6Otherdisposals 0.2 1.0Purchaseofplantandequipment 11 (0.4) (0.2)Capitalexpenditureoninvestmentproperties (2.4) –Investmentinjointventures (0.4) –Investmentinassociates 14b – (29.3)Loanstojointventures (0.5) (1.0)Loansrepaidbyjointventures 0.8 0.2Cash flows from investing activities (199.6) 13.3Financing activitiesDividendspaid 32 (3.8) (0.9)Bankloansdrawndown 68.1 –Bankloansrepaid (14.7) (1.0)Loanarrangementcosts (1.5) –Proceedsonissueofnewshares 19 160.7 –Repurchaseofownshares – (0.3)Settlementofforwardforeignexchangecontract 0.9 (0.6)Cash flows from financing activities 209.7 (2.8)Net increase in cash and cash equivalents 31.5 5.8Cashandcashequivalentsatthebeginningoftheyear 11.1 5.3Cash and cash equivalents at the end of the year 15 42.6 11.1

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Stock Code: CAL

Notes to the Financial StatementsFor the year ended 30 December 2014

1 Significant accounting policiesGeneral informationCapital&RegionalplcisaCompanydomiciledandincorporatedintheUnitedKingdomundertheCompaniesAct2006.Theaddressoftheregisteredofficeis52GrosvenorGardens,London,SW1W0AU.ThenatureoftheGroup’soperationsanditsprincipalactivitiesaredisclosedinnote2aandintheOperatingandFinancialReviews.

Basis of accountingThefinancialstatementscomprisetheconsolidatedincomestatement,theconsolidatedstatementofcomprehensiveincome,theconsolidatedbalancesheet,theconsolidatedstatementofchangesinequity,theconsolidatedcashflowstatementandnotes1to32.Theyarepreparedonthehistoricalcostbasisexceptfortherevaluationofcertainpropertiesandfinancialinstrumentsthataremeasuredatrevaluedamountsorfairvaluesattheendofthereportingyear,asexplainedintheaccountingpoliciesbelow.Otherthanasnotedinthe‘Accountingdevelopmentsandchanges’sectionbelow,theaccountingpolicieshavebeenappliedconsistentlytotheresults,othergainsandlosses,assets,liabilities,incomeandexpenses.

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate,regardlessofwhetherthatpriceisdirectlyobservableorestimatedusinganothervaluationtechnique.Inestimatingthefairvalueofanassetorliability,theGrouptakesintoaccountthecharacteristicsoftheassetorliabilityifmarketparticipantswouldtakethosecharacteristicsintoaccountwhenpricingtheassetorliabilityatthemeasurementdate.Fairvalueformeasurementand/ordisclosurepurposesinthesefinancialstatementsisdeterminedonsuchbasis,exceptforsharebasedpaymentsthatarewithinthescopeofIFRS2,leasingtransactionsthatarewithinthescopeofIAS17,andmeasurementsthathavesomesimilaritiestofairvaluebutarenotfairvalue,suchasnetrealisablevalueinIAS2orvalueinuseinIAS36.

Inaddition,forfinancialreportingpurposes,fairvaluemeasurementsarecategorisedintoLevel1,2or3basedonthedegreetowhichtheinputstothefairvaluemeasurementsareobservableandthesignificanceoftheinputstothefairvaluemeasurementinitsentirety,whicharedescribedasfollows:

• Level1inputsarequotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities• Level2inputsareinputsotherthanquotedpricesincludedwithinLevel1,thatareobservablefortheassetorliability,either

directly(i.e.asprices)orindirectly(i.e.derivedfromprices)• Level3inputsareunobservableinputsfortheassetorliability.

ThefinancialstatementsarepresentedinpoundssterlingbecausethatisthecurrencyoftheprimaryeconomicenvironmentinwhichtheGroupoperates.Foreignoperationsareincludedinaccordancewiththeaccountingpoliciessetoutbelow.

Statement of complianceTheconsolidatedfinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnion(EU)andthereforetheGroupfinancialstatementscomplywithArticle4oftheEUIASRegulation.

Accounting developments and changesTheaccountingpoliciesareconsistentwiththoseappliedintheyearended30December2013,asamendedtoreflecttheadoptionofthenewStandards,AmendmentstoStandardsandInterpretationswhicharemandatoryfortheyearended30December2014.

Thefollowingaccountingstandardsorinterpretationswereadoptedfortheyearended30December2014buthavenothadamaterialimpactontheGroup:

• IAS1(amendment)‘PresentationofFinancialStatements’• IAS12(amendment)‘IncomeTax’• IAS19(revised)‘EmployeeBenefits’• IFRS7(amendment)‘FinancialInstruments:Disclosures’(offsettingrequirementandconvergeddisclosure)• IFRS13‘FairValueMeasurement’

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1 Significant accounting policies continuedAccounting developments and changes continuedBelowaredetailsofaccountingstandardsandinterpretationswhichhavebeenissuedbutarenotyeteffective,orhavenotyetbeenendorsedbytheEU,whichmayberelevanttotheGroup.NoneofthesestandardsorinterpretationshavebeenearlyadoptedbytheGroup.TheGroupisintheprocessofassessingtheimpactofthesenewstandardsandinterpretationsonitsfinancialreporting.NoneofthesestandardsareexpectedtohaveasignificantimpactontheGroup’sreporting,althoughsomemayrequireadditionaldisclosurestobeincludedinthenotestothefinancialstatements.

Issued,notyeteffectiveandnotyetendorsedforuseintheEU:

• IFRS9‘FinancialInstruments’• IFRS15‘Revenuefromcontractswithcustomers’

IssuedandendorsedforuseintheEU,butnotyeteffective:

• IAS36(amendment)‘ImpairmentofAssets’• IAS39(amendment)‘FinancialInstruments:RecognitionandMeasurement’• IFRS10‘ConsolidatedFinancialStatements’IFRS11‘JointArrangements’• IFRS12‘DisclosureofInterestsinOtherEntities’• IAS27(revised)‘SeparateFinancialStatements’• IAS28(revised)‘AssociatesandJointVentures’• IAS32(amendment)‘Financialinstruments:Presentation’(assetsandliabilityoffsetting)• AmendmentstoIFRS10,IFRS11,IFRS12(transitionguidance)• IAS24(amendmentsresultingfromAnnualImprovements2010-2012Cycle)• IAS40(amendmentsresultingfromAnnualImprovements2011-2013Cycle)• IAS16(amendmentsregardingtheclarificationofacceptablemethodsofdepreciationandamortisation)

Going concernTheGrouppreparescashflowandcovenantcomplianceforecaststodemonstratethatithasadequateresourcesavailabletocontinueinoperationfortheforeseeablefuture,beingatleast12monthsfromthedateofthisreport.IntheseforecaststhedirectorsspecificallyconsideranticipatedfuturemarketconditionsandtheGroup’sprincipalrisksanduncertainties.ThedirectorsbelievethattheGroupandtheCompanyhaveadequateresourcestocontinueinoperationalexistencefortheforeseeablefutureandaccordinglycontinuetoadoptthegoingconcernbasisinpreparingtheannualreportandfinancialstatements.

FurtherdetailiscontainedwithintheFinancialReview.TheGroup’sborrowingfacilitiesanditsfinancialriskmanagementobjectives;detailsofitsfinancialinstrumentsandhedgingactivities;anditsexposuretocreditriskandliquidityrisksareprovidedinnotes17and18ofthefinancialstatements.

Critical accounting judgements and key sources of estimation uncertainty Thepreparationoffinancialstatementsrequiresthedirectorstomakejudgements,estimatesandassumptionsthatmayaffecttheapplicationofaccountingpoliciesandthereportedamountsofassetsandliabilities,incomeandexpenses.

ThefollowingarethecriticaljudgementsthatthedirectorshavemadeintheprocessofapplyingtheGroup’saccountingpoliciesandthathavethemostsignificanteffectontheamountsrecognisedinthefinancialstatements:

Property valuationRelianceupontheworkundertakenat30December2014byindependentprofessionalqualifiedvaluers,asdisclosedinnote10c,inassessingthefairvalueofcertainoftheGroup’sinvestmentproperties.

Derivative financial instrumentsRelianceupontheworkundertakenat30December2014byindependentthirdpartyexpertsinassessingthefairvaluesoftheGroup’sderivativefinancialinstruments,whicharedisclosedinnotes13and18f.

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Notes to the Financial Statements continued

For the year ended 30 December 2014

1 Significant accounting policies continuedCritical accounting judgements and key sources of estimation uncertainty continuedLease classificationConsiderationofthepotentialtransferofrisksandrewardsofownershipinaccordancewithIAS17Leasesforallpropertiesleasedtotenants.Thedirectorshavedeterminedthatallsuchleasesareoperatingleases.

Performance feesConsiderationoftheamountsliableand/orreceivableunderPerformanceFeeorothersimilarincentivearrangements.Seenote31forfurtherdetails.

TaxationAnassessmentofthelikelihoodthatpotentialhistorictaxliabilitieswillariseaswellastheimpactofchangesinrecentlegislation,caselawandaccountingstandards,alongwithfutureprojectionsfortheGroup,indeterminingthecurrentanddeferredtaxassets,liabilitiesandchargetotheincomestatement,asdisclosedinnote8.

Compliance with Real Estate Investment Trust (REIT) taxation regimeImmediatelyaftertheyearendtheGroupconvertedtoagroupREITon31December2014.Asaresult,theGroupwillnolongerpayUKcorporationtaxontheprofitsandgainsfromqualifyingrentalbusinessintheUKprovideditmeetscertainconditions(thesearesummarisedinnote8).AjudgementisthereforerequiredthattheGroupwillcontinuetomeetthequalifyingconditions.

Basis of consolidationTheconsolidatedfinancialstatementsincorporatethefinancialstatementsoftheCompanyat30December.ControlisachievedwheretheCompanyhasthepowertogovernthefinancialandoperatingpoliciesofaninvesteeentitysoastoobtainbenefitsfromitsactivities.

TheMallFundhasbeenconsolidatedfrom14July2014beingthedateuponwhichtheGroupcompletedtheacquisitionofacontrollingstake(seenote25forfurtherdetails).UpuntilthatdateitwasaccountedforasanAssociate.Theresultsofsubsidiariesacquiredordisposedofduringtheyearareincludedintheconsolidatedincomestatementfromtheeffectivedateofacquisitionoruptotheeffectivedateofdisposal.Thereportingyearforsubsidiariesandaffiliatesendson31Decemberandtheirfinancialstatementsareconsolidatedfromthisdate.Allintra-grouptransactions,balances,incomeandexpensesareeliminatedonconsolidation.

Business combinationsAcquisitionsofsubsidiariesandbusinessesareaccountedforusingtheacquisitionmethod.Theconsiderationforeachacquisitionismeasuredattheaggregateatthedateofexchangeofthefairvaluesofassetsacquired,liabilitiesincurredorassumed,andequityinstrumentsissuedbytheGroupinexchangeforcontroloftheacquiree.Acquisition-relatedcostsarerecognisedintheincomestatementasincurred.Whereabusinesscombinationisachievedinstages,theGroup’spreviously-heldinterestsintheacquiredentityareremeasuredtofairvalueattheacquisitiondate(i.e.thedatetheGroupattainscontrol)andtheresultinggainorloss,ifany,isrecognisedintheincomestatement.

Iftheinitialaccountingforabusinesscombinationisincompletebytheendofthereportingyearinwhichthecombinationoccurs,theGroupreportsprovisionalamountsfortheitemsforwhichtheaccountingisincomplete.Thoseprovisionalamountsareadjustedduringtheremeasurementperiodoradditionalassetsorliabilitiesarerecognisedtoreflectnewinformationobtainedaboutfactsandcircumstancesthatexistedasoftheacquisitiondatethat,ifknown,wouldhaveaffectedtheamountsrecognisedasofthatdate.ThemeasurementperiodistheperiodfromthedateofacquisitiontothedatetheGroupobtainscompleteinformationandissubjecttoamaximumofoneyear.

Assets held for saleAssetsheldforsalearemeasuredatthelowerofcarryingamountandrealisablevaluewithassociatedcostsofsaleshownseparatelyasliabilities.Assetsareclassifiedasheldforsaleiftheircarryingamountwillberecoveredthroughasaletransactionratherthanthroughcontinuinguse.Thisconditionisregardedasmetonlywhenthesaleishighlyprobableandtheassetisavailableforimmediatesaleinitspresentcondition.Managementmustbecommittedtothesalewhichshouldbeexpectedtoqualifyforrecognitionasacompletedsalewithinoneyearofthedateofclassification.

TheGroupconsidersallofitsassetsheldforsaletofallwithin‘Level2’,asdefinedinnote1.

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1 Significant accounting policies continuedInvestments in associates and joint ventures AjointventureisanentityoverwhichtheGrouphasjointcontrol,whichisthecontractuallyagreedsharingofcontroloveraneconomicactivitywhichexistswhenthestrategicfinancialandoperatingdecisionsrelatingtotheactivityrequiretheunanimousconsentofthepartiessharingcontrol.AnassociateisanentityoverwhichtheGrouphassignificantinfluenceandthatisneitherasubsidiarynoraninterestinajointventure.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutisnotcontrolorjointcontroloverthosepolicies.

InaccordancewithIAS28InvestmentsinAssociatesandIAS31InterestsinJointVentures,associatesandjointventuresareaccountedforundertheequitymethod,wherebytheconsolidatedbalancesheetandincomestatementincorporatetheGroup’sshareofnetassetsandprofitsorlossesaftertax.Theprofitsorlossesincluderevaluationmovementsoninvestmentproperties.LossesofanassociateorjointventureinexcessoftheGroup’sinterestinthatassociateorjointventure(whichincludesanylong-termintereststhat,insubstance,formpartoftheGroup’snetinvestmentintheassociateorjointventure)arerecognisedonlytotheextentthattheGrouphasincurredlegalorconstructiveobligationsormadepaymentsonbehalfoftheassociateorjointventure.

AnyexcessofthecostofacquisitionovertheGroup’sshareofthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesofanassociaterecognisedatthedateofacquisitionisrecognisedasgoodwill.Thegoodwillisincludedwithinthecarryingamountoftheassociateandisassessedforimpairmentaspartofthatinvestment.AnyexcessoftheGroup’sshareofthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesoftheassociateoverthecostofacquisition,afterreassessment,isrecognisedimmediatelyintheincomestatement.

Thereportingyearforassociatesandjointventuresendson31Decemberandtheirfinancialstatementsareequityaccountedtothisdate.InaccordancewithIAS39FinancialInstruments:RecognitionandMeasurement,associatesandjointventuresarereviewedattheendofthereportingyeartodeterminewhetheranyimpairmentlossshouldberecognised.

GoodwillGoodwillarisinginabusinesscombinationisrecognisedasanassetatthedatethatcontrolisacquiredandismeasuredastheexcessofthesumofconsiderationtransferred,theamountofanynon-controllinginterestintheacquireeandthefairvalueofanyequityinterestintheentityalreadyheldbytheacquireroverthenetoftheacquisitiondateamountsofidentifiableassetsacquiredandliabilitiesassumed.

Goodwillisnotamortisedbutisreviewedforimpairmentatleastannually.Theimpairmentiscalculatedonthevalueinuseofthegoodwillandisrecognisedimmediatelyintheincomestatementandnotsubsequentlyreversed.

Negativegoodwillarisingonanacquisitionisrecogniseddirectlyintheincomestatement.

Foreign currencyForeign currency transactionsTransactionsinforeigncurrenciesaretranslatedintosterlingatexchangeratesapproximatingtotheexchangeraterulingatthedateofthetransaction.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesatthebalancesheetdatearetranslatedtosterlingattheexchangeraterulingatthatdateand,unlesstheyrelatetothehedgingofthenetinvestmentinforeignoperations,differencesarisingontranslationarerecognisedintheincomestatement.

Financial statements of foreign operationsTheassetsandliabilitiesofforeignoperations,includinggoodwillandfairvalueadjustmentsarisingonconsolidation,aretranslatedintosterlingattheexchangeratesrulingatthebalancesheetdate.Theoperatingincomeandexpensesofforeignoperationsaretranslatedintosterlingattheaverageexchangeratesfortheyear.Significanttransactions,suchaspropertysales,aretranslatedattheforeignexchangeraterulingatthedateofeachtransaction.Theprincipalexchangerateusedtotranslateforeigncurrencydenominatedamountsinthebalancesheetistherateattheendoftheyear:£1=€1.2783(2013:£1=€1.1995).Theprincipalexchangerateusedfortheincomestatementistheaverageratefortheyear:£1=€1.2402(2013:£1=€1.1775).

Net investment in foreign operationsExchangedifferencesarisingfromthetranslationofthenetinvestmentinforeignoperationsaretakentotheforeigncurrencyreserveandtheeffectiveportionsofrelatedforeigncurrencyhedgesaretakentothenetinvestmenthedgingreserve.Thenetinvestmentinforeignoperationsincludestheequityoftheunderlyingentitiesandtheportionofshareholderloanstothoseentitiesthatistreatedasequitywherethereisnointentionofrepaymentintheforeseeablefuture.Allexchangedifferencespreviouslyaccumulatedinequityaretransferredtotheincomestatementupondisposalor,wherecontrolislost,part-disposaloftheforeignoperation.

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1 Significant accounting policies continuedPlant and equipmentPlantandequipmentisstatedatthelowerofcostorvaluation,netofdepreciationandanyprovisionforimpairment.Depreciationisprovidedonalltangiblefixedassets,otherthaninvestmentpropertiesandland,onastraight-linebasisovertheirexpectedusefullives:

• Leaseholdimprovements–overthetermofthelease• Fixturesandfittings–overthreetofiveyears• Motorvehicles–overfouryears

Property portfolioInvestment propertiesInvestmentpropertiesarepropertiesownedorleasedunderfinanceleaseswhichareheldeitherforlong-termrentalincomeorforcapitalappreciationorboth.Investmentpropertyisinitiallyrecognisedatcost(includingdirectlyrelatedtransactioncosts)andisrevaluedatthebalancesheetdatetofairvalue,beingthemarketvaluedeterminedbyprofessionallyqualifiedexternalordirectorvaluers,withchangesinfairvaluebeingincludedintheincomestatement.Valuationsaregenerallycarriedouttwiceayear.InaccordancewithIAS40InvestmentProperty,nodepreciationisprovidedinrespectofinvestmentproperties.

Leasehold propertiesLeaseholdpropertiesthatareleasedtotenantsunderoperatingleasesareclassifiedasinvestmentpropertiesordevelopmentproperties,asappropriate,andincludedinthebalancesheetatfairvalue.

Refurbishment expenditureRefurbishmentexpenditureinrespectofmajorworksiscapitalised.Renovationandrefurbishmentexpenditureofarevenuenatureisexpensedasincurred.

Property transactionsAcquisitionsanddisposalsareaccountedforatthedateoflegalcompletion.Investmentpropertiesarereclassifiedasheldforsaleoncecontractshavebeenexchangedandaretransferredbetweencategoriesattheestimatedmarketvalueonthetransferdate.Propertiesheldforsaleareshownatfairvaluelesscostsofdisposal.

Trading propertiesPropertiesheldwiththeintentionofdisposalarevaluedatthelowerofcostandnetrealisablevalue.Anyimpairmentinthevalueoftradingpropertiesisshownwithinthecostofsaleslineintheincomestatement.

LeasesLeasesareclassifiedasfinanceleaseswheneverthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownershiptothelessee.Allotherleasesareclassifiedasoperatingleases.

The Group as lessorRentalincomefromoperatingleasesisrecognisedonastraight-linebasisoverthetermoftherelevantlease.Initialdirectcostsincurredinnegotiatingandarranginganoperatingleaseareaddedtothecarryingamountoftheleasedassetandrecognisedonastraight-linebasisovertheleaseterm.Incentivesandcostsassociatedwithenteringintotenantleasesareamortisedonastraight-linebasisoverthetermofthelease.

The Group as lesseeAssetsheldunderfinanceleasesarerecognisedasassetsattheirfairvalueor,iflower,atthepresentvalueoftheminimumleasepayments,eachdeterminedattheinceptionofthelease.Thecorrespondingliabilitytothelessorisincludedinthebalancesheetasafinanceleaseobligation.

Leasepaymentsareapportionedbetweenfinanceexpensesandreductionoftheleaseobligationsoastoachieveaconstantrateofinterestontheremainingbalanceoftheliability.Financeexpensesarerecognisedimmediatelyinprofitorloss,unlesstheyaredirectlyattributabletoqualifyingassets,inwhichcasetheyarecapitalisedinaccordancewiththeGroup’sgeneralpolicyonborrowingcosts.Contingentrentalsarerecognisedasexpensesintheyearsinwhichtheyareincurred.

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1 Significant accounting policies continuedLeases continuedHead leasesWhereaninvestmentpropertyisheldunderaheadlease,theheadleaseisinitiallyrecognisedasanassetatthepresentvalueoftheminimumgroundrentpayableunderthelease.Thecorrespondingrentliabilitytotheleaseholderisincludedinthebalancesheetasafinanceleaseobligation.

Fixed asset investmentsFixedassetinvestmentsarestatedatcost,togetherwithsubsequentcapitalcontributions,lessprovisionsforanyimpairmentinvalue.

Financial instrumentsFinancialassetsandfinancialliabilitiesarerecognisedintheGroup’sbalancesheetwhentheGroupbecomespartytothecontractualprovisionsoftheinstrument.

Financial assetsFinancialassetsareclassifiedintothefollowingspecifiedcategories:financialassets‘atfairvaluethroughprofitorloss’(FVTPL),‘heldtomaturity’investments,‘availableforsale’financialassetsand‘loansandreceivables’.Theclassificationdependsonthenatureandpurposeofthefinancialassetsandisdeterminedatthetimeofinitialrecognition.

Effective interest rate methodTheeffectiveinterestratemethodisamethodofcalculatingtheamortisedcostofadebtinstrumentandofallocatingtheinterestincomeovertherelevantperiod.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashreceipts(includingallfeesandpointspaidorreceivedthatformanintegralpartoftheeffectiveinterestrate,transactioncostsandotherpremiumsordiscounts)throughtheexpectedlifeofthedebtinstrument,or,whereappropriate,ashorterperiod,tothenetcarryingamountininitialrecognition.

Loans and receivablesLoansandotherreceivablesthathavefixedordeterminablepaymentsthatarenotquotedinanactivemarketareclassifiedas‘loansandreceivables’.Loansandreceivablesaremeasuredatamortisedcostusingtheeffectiveinterestmethod,lessanyimpairment.Interestincomeisrecognisedbyapplyingtheeffectiveinterestrate,exceptforshorttermreceivableswhentherecognitionofinterestwouldbeimmaterial.

Trade receivablesTradereceivablesarecarriedattheoriginalinvoiceamountlessallowancesmadefordoubtfulaccounts.AnallowancefordoubtfulaccountsisrecordedforthedifferencebetweenthecarryingvalueandtherecoverableamountwherethereisobjectiveevidencethattheGroupwillnotbeabletocollectallamountsdue.Discountsandsimilarallowancesarerecordedonanaccrualbasisconsistentwiththerecognitionoftherelatedsales,usingestimatesbasedonexistingcontractualobligations,historicaltrendsandtheGroup’sexperience.Long-termaccountsreceivablearediscountedtotakeintoaccountthetimevalueofmoney,wherematerial.

Cash and cash equivalentsCashandcashequivalentsincludecashonhandanddemanddepositsandothershort-termhighlyliquidinvestmentsthatarereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangesinvalue.

Financial liabilitiesFinancialliabilitiesareclassifiedaseitherfinancialliabilities‘atFVTPL’or‘otherfinancialliabilities’.

BorrowingsBorrowingsareinitiallymeasuredatfairvalue,netoftransactioncosts.Borrowingsaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,withinterestexpenserecognisedonaneffectiveyieldbasis.InaccordancewithIAS39FinancialInstruments:RecognitionandMeasurement,asubstantialmodificationofthetermsofanexistingborrowingisaccountedforasanextinguishmentoftheoriginalliabilityandtherecognitionofanewliability.Wherethetermsofthemodificationarenotsubstantiallydifferent,anycostspaidinconnectionwiththemodificationaretreatedasanadjustmenttothecarryingamountoftheliabilityandareamortisedovertheremaininglifeofthemodifiedliability.

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1 Significant Accounting Policies continuedFinancial liabilities continuedDerivative financial instrumentsDerivativesareinitiallyrecognisedatfairvalueatthedateaderivativecontractisenteredintoandaresubsequentlyremeasuredtotheirfairvalueateachbalancesheetdate.Thefairvalueofforwardforeignexchangecontractsiscalculatedbyreferencetospotandforwardexchangeratesatthebalancesheetdate.Thefairvalueofinterestrateswapsiscalculatedbyreferencetoappropriateforecastsofyieldcurvesbetweenthebalancesheetdateandthematurityoftheinstrument.Changesinfairvalueareincludedasfinanceincomeorfinancecostsintheincomestatement,exceptforgainsorlossesontheportionofaninstrumentthatisaneffectivehedgeofthenetinvestmentinaforeignoperation,whicharerecognisedinthenetinvestmenthedgingreserve.Derivativefinancialinstrumentsareclassifiedasnon-currentwhentheyhaveamaturityofmorethantwelvemonthsandarenotintendedtobesettledwithinoneyear.

Trade payables Tradepayablesarecarriedatfairvalue,withanygainsorlossesarisingonremeasurementrecognisedintheincomestatement.

TaxationIncometaxontheprofitfortheyearcomprisescurrentanddeferredtax.Currenttaxisthetaxpayableonthetaxableincomefortheyearandanyadjustmentinrespectofpreviousyears.Deferredtaxisprovidedinfullusingthebalancesheetliabilitymethodontemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheamountsusedfortaxationpurposes.Deferredtaxisdeterminedusingtaxratesthathavebeenenactedorsubstantivelyenactedbythereportingdateandareexpectedtoapplywhentheassetisrealisedortheliabilityissettled.

Noprovisionismadefortemporarydifferences(i)arisingontheinitialrecognitionofassetsorliabilities,otherthanonabusinesscombination,thataffectneitheraccountingnortaxableprofitand(ii)relatingtoinvestmentsinsubsidiariestotheextentthattheywillnotreverseintheforeseeablefuture.

Employee benefitsPension costsPensionliabilities,allofwhichrelatetodefinedcontributionschemes,arechargedtotheincomestatementasincurred.

Share-based payments TheGrouphasappliedthearrangementsofIFRS2Share-basedPayment.Equitysettledshare-basedpaymentsaremeasuredatfairvalueatthedateofgrant.ThefairvaluesoftheLTIPandtheSAYEschemearecalculatedusingMonteCarlosimulationsortheBlack-Scholesmodelasappropriate.Thefairvaluesaredependentonfactorsincludingtheexerciseprice,expectedvolatility,periodtoexerciseandriskfreeinterestrate.Marketrelatedperformanceconditionsarereflectedinthefairvaluesatthedateofgrantandareexpensedonastraight-linebasisoverthevestingperiod.Non-marketrelatedperformanceconditionsarenotreflectedinthefairvaluesatthedateofgrant.Ateachreportingdate,theGroupestimatesthenumberofshareslikelytovestundernon-marketrelatedperformanceconditionssothatthecumulativeexpensewillultimatelyreflectthenumberofsharesthatdovest.Whereawardsarecancelled,includingwhenanemployeeceasestopaycontributionsintotheSAYEscheme,theremainingfairvalueisexpensedimmediately.

Own sharesOwnsharesheldbytheGroupareshownasadeductionfromshareholders’fundsandincludedinotherreserves.Thecostofownsharesistransferredtoretainedearningswhensharesintheunderlyingincentiveschemesvest.ThesharesareheldinanEmployeeShareOwnershipTrust.

Revenue TheGrouprecognisesrevenueonanaccrualsbasis,whentheamountofrevenuecanbereliablymeasuredanditisprobablethatfutureeconomicbenefitswillflowtotheGroup.

Gross rental incomeGrossrentalincomeisrentalincomeadjustedfortenantincentives,recognisedonastraight-linebasisoverthetermoftheunderlyinglease.

Ancillary incomeAncillaryincomecomprisesrentandotherincomefromshorttermtenanciesofmobileunits,carparkincomeandothersundryincomeandisrecognisedovertheperiodofthelettingsandcontracts.

Service chargeServicechargeincomerepresentsrechargesoftherunningcostsoftheshoppingcentresmadetotenants.

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1 Significant Accounting Policies continuedRevenue continuedManagement feesManagementfeesarerecognised,inlinewiththepropertymanagementcontracts,intheyeartowhichtheyrelate.TheyincludeincomeinrelationtoservicesprovidedbyCRPMtoassociatesandjointventuresforassetandpropertymanagement,projectco-ordination,procurement,andmanagementofservicechargesanddirectlyrecoverableexpenses.

Dividend and interest incomeDividendincomefrominvestmentsisrecognisedwhentheshareholders’righttoreceivepaymenthasbeenestablished.Interestincomeisaccruedonatimebasis,byreferencetotheprincipaloutstandingandattheeffectiveinterestrateapplicable,whichistheratethatexactlydiscountsestimatedfuturecashreceiptsthroughtheexpectedlifeofthefinancialassettothatasset’snetcarryingamount.

Performance feesPerformancefeesarerecognisedasrevenuebytheGrouportherelevantassociateorjointventurewhenboththeamountofperformancefeeandthestageofcompletionoftherelevantperformanceconditionscanbemeasuredreliably,andwhenitisprobablethattheperformancefeewillbereceived.

Provisionsforperformancefeespayablebytheunderlyingsubsidiary,associateorjointventurearemadewhenthereisapresentobligationtosettletheperformancefee,itsamountcanbemeasuredreliablyanditisprobablethatitwillbepaid.Furtherdisclosureonperformancefeesisincludedinnote31.

Finance costsAllborrowingcostsarerecognisedunderfinancecostsintheincomestatementintheyearinwhichtheyareincurred.Financecostsalsoincludetheamortisationofloanissuecosts,anylossinthevalueoftheGroup’swholly-ownedinterestrateswapsandanylossintheineffectiveportionoftheGroup’shedgeofitsnetinvestmentinaforeignoperation.

Operating segmentsTheGroup’sresultsfortheyearfromitsGermanysegmenthavebeenclassifiedasDiscontinuedOperationswiththeprioryearcomparativesrestatedfollowingitsreclassificationasheldforsaleat24December2014anditssubsequentdisposal.TheresultsofDiscontinuedOperationsintheprioryearalsoincludetheGroup’sshareofresultsfromitsLeisuresegmentconsistingofitsinterestsinGreatNorthernWarehouseandHemelHempstead.Seenote26forfurtherdetails.

FollowingtheacquisitionofacontrollingstakeinTheMallandthedisposaloftheGroup’sinterestinGarigalAssetManagementGmbHthesignificantmajorityofPropertyManagementincomeisnowgeneratedintraGroupandassuchithasbeenconcludedthatmaintainingitasadistinctoperatingsegmentisnolongerappropriate.Theresultsarethereforenowpresentedtogetherwithwhatwaspreviously‘Groupitems’as‘Group/Central’.ThisreflectsthemannerinwhichmanagementaccountinformationispresentedtotheBoard.Theresultsfortheyearended30December2013innote2ahavebeenrestatedonthisbasis.

AsaresultoftheabovechangestheGroup’sremainingreportablesegmentsunderIFRS8areTheMall,OtherUKShoppingCentresconsistingofTheWatersideLincolnLimitedPartnershipuntilitsdisposalandKingfisherLimitedPartnership(Redditch),SnozoneandGroup/Central.Group/Centralincludesmanagementfeeincome,GroupoverheadsincurredbyCapital&RegionalPropertyManagement,Capital&RegionalplcandothersubsidiariesandtheinterestexpenseontheGroup’scentralborrowingfacility.

TheMallandOtherUKShoppingCentresderivetheirrevenuefromtherentalofinvestmentandtradingproperties.TheSnozoneandGroup/Centralsegmentsderivetheirrevenuefromtheoperationofindoorskislopesandthemanagementofpropertyfundsorschemesrespectively.ThesplitofrevenuebetweentheseclassificationssatisfiestherequirementofIFRS8toreportrevenuesfromdifferentproductsandservices.Depreciationandchargesinrespectofshare-basedpaymentsrepresenttheonlysignificantnon-cashexpenses.

TheGroup’sinterestsintheassets,liabilitiesandprofitorlossofitsassociatesandjointventuresareproportionatelyconsolidatedandarealsoshownonasee-throughbasisasthisishowtheyarereportedtotheBoardofdirectors.Therearenodifferencesbetweenthemeasurementsofthesegments’assets,liabilitiesandprofitorlossastheyarereportedtotheBoardofdirectorsandtheirpresentationundertheGroup’saccountingpolicies.

Inter-segmentrevenueandexpensesrepresentitemseliminatedonconsolidationandareaccountedforonanarm’slengthbasis.Managementfeesandotherrevenueitemsinthepropertymanagementsegmentareearnedfromtheassetbusinesssegments,wheretheyareincludedunderpropertyandvoidcosts.Wheretheserelatetoassetsthatareproportionatelyconsolidated,thecostsdonoteliminateagainsttheincomeandhavethereforenotbeensplitoutseparatelyasinter-segmentexpenses.

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1 Significant Accounting Policies continuedOperating ProfitOperatingProfitisthetotalofContributionfromTheMallandtheGroup’sjointventuresandassociates,theprofitfromSnozoneandpropertymanagementfeeslesscentralcosts(includinginterest,excludingnon-cashchargesinrespectofshare-basedpayments)beforetax.OperatingProfitexcludesrevaluationofproperties,profitorlossondisposalofpropertiesorinvestments,gainsorlossesonfinancialinstrumentsandexceptionalone-offitems.ResultsfromDiscontinuedOperationsareincludedupuntilthepointofdisposalorreclassificationasheldforsale.

2a Operating segments

Year to 30 December 2014 Note

UKShoppingCentres

TheMall£m

OtherUKShoppingCentres

£mSnozone

£m

Group/Central

£m

TotalContinuingOperations

£m

DiscontinuedOperations

£m

Total

£mRentalincomefromexternalsources 2b 35.6 3.1 – –

38.711.6 50.3

Propertyandvoidcosts (10.4) (1.1) – – (11.5) (2.1) (13.6)Netrentalincome 25.2 2.0 – – 27.2 9.5 36.7Interestincome – – – – – – –Interestexpense (10.6) (1.3) – – (11.9) (3.8) (15.7)Contribution 14.6 0.7 – – 15.3 5.7 21.0Managementfees/Snozoneincome 2b – – 9.9 7.3 17.2 – 17.2Managementexpenses – – (8.6) (8.4) (17.0) – (17.0)Depreciation – – (0.1) (0.1) (0.2) – (0.2)Interestexpenseoncentralfacility – – – (1.1) (1.1) – (1.1)Variableoverhead(excludingnon-cashitems) – – – (1.1) (1.1) – (1.1)Lincolnperformancefees – (0.4) – 0.9 0.5 – 0.5Operating Profit/(Loss) 14.6 0.3 1.2 (2.5) 13.6 5.7 19.3Inter-segmenteliminations 2b 2.6 – – (2.6) – – –AcquisitionofMallunits(includingMallperformancefees) 25 5.3 – – 2.8 8.1 – 8.1Sharebasedpayments – – – (0.7) (0.7) – (0.7)Revaluationofproperties 42.0 1.2 – – 43.2 (0.5) 42.7Profitondisposal 0.1 4.7 – – 4.8 – 4.8(Loss)/gainonfinancialinstruments (0.3) (0.3) – – (0.6) 0.9 0.3Otheritems – (0.2) – (1.0) (1.2) (0.6) (1.8)Profit/(loss)beforetax 64.3 5.7 1.2 (4.0) 67.2 5.5 72.7Taxcredit 8a 2.5 2.5 – 2.5(Loss)/profit after tax (1.5) 69.7 5.5 75.2

Totalassets 2b 857.6 32.1 2.7 7.8 900.2 42.2 942.4Totalliabilities 2b (480.4) (18.5) (1.7) (22.0) (522.6) (0.8) (523.4)Net assets/(liabilities) 377.2 13.6 1.0 (14.2) 377.6 41.4 419.0

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2a Operating segments continued

Year to 30 December 20131 Note

UKShoppingCentres

TheMall£m


£mSnozone

£m

Group/Central

£m

TotalContinuingOperations

£m

DiscontinuedOperations

£m

Total

£mRentalincomefromexternalsources 2b 13.6 4.5 – – 18.1 18.5 36.6Propertyandvoidcosts (4.4) (0.9) – – (5.3) (3.2) (8.5)Netrentalincome 9.2 3.6 – – 12.8 15.3 28.1Interestincome – – – – – 0.6 0.6Interestexpense (5.1) (1.5) – – (6.6) (9.2) (15.8)Contribution 4.1 2.1 – – 6.2 6.7 12.9Managementfees/Snozoneincome 2b – – 9.0 9.9 18.9 – 18.9Managementexpenses – – (7.9) (9.5) (17.4) – (17.4)Depreciation – – (0.1) (0.1) (0.2) – (0.2)Interestexpenseoncentralfacility – – – (0.2) (0.2) – (0.2)Variableoverhead(excludingnon-cashitems) – – – (1.0) (1.0) – (1.0)Operating Profit/(Loss) 4.1 2.1 1.0 (0.9) 6.3 6.7 13.0Inter-segmenteliminations 2b – – – 0.1 0.1 (0.1) –Share-basedpayments – – – (0.8) (0.8) – (0.8)Revaluationofproperties (0.5) 1.2 – – 0.7 (2.5) (1.8)(Loss)/profitondisposal (4.2) – – 1.0 (3.2) (2.4) (5.6)ImpairmentofEuroB-Note – – – – – (2.4) (2.4)Gainonfinancialinstruments 2.9 0.6 – – 3.5 3.0 6.5Otheritems 2.0 – (0.1) (1.2) 0.7 (0.8) (0.1)Profit/(loss)beforetax 4.3 3.9 0.9 (1.8) 7.3 1.5 8.8Taxcredit 8a 0.2 0.2 0.1 0.3(Loss)/profit after tax (1.6) 7.5 1.6 9.1

Totalassets 2b 243.7 54.6 2.5 16.8 317.6 198.0 515.6Totalliabilities 2b (143.3) (33.3) (1.1) (4.6) (182.3) (144.6) (326.9)Net assets/(liabilities) 100.4 21.3 1.4 12.2 135.3 53.4 188.7

1 2013resultshavebeenrestatedtoseparatediscontinuedoperationsasexplainedinnote26.

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2b Reconciliations of reportable revenue, assets and liabilities

Revenue Note

Year to30 December

2014£m

Yearto30December

20131

£mRentalincomefromexternalsources 2a 38.7 18.1Servicechargeincome 5.4 0.1Managementfees 2a 7.3 9.9Performancefees 6.8 –Snozoneincome 2a 9.9 9.0Revenueforreportablesegments–continuingoperations 68.1 37.1Eliminationofinter-segmentrevenue 2a (2.6) –Eliminationofinter-segmentperformancefees (5.9) –Rentalincomeearnedbyassociatesandjointventures (12.2) (18.1)Managementfeesearnedbyassociatesandjointventures (0.8) (1.4)Revenue per consolidated income statement – continuing operations 3 46.6 17.6

Revenue for reportable segments by country – continuing operationsUK 67.3 35.7Germany 0.8 1.4Revenueforreportablesegments–continuingoperations 68.1 37.1


Revenueisattributedtocountriesonthebasisofthelocationoftheunderlyingproperties.RevenuefromtheGroup’smajorcustomerwasmanagementfeeincomefromTheMallLPhoweverfollowingtheGrouptakingcontrolofTheMallfrom14July2014thishasbeeneliminatedonconsolidation.Thetotalincludedinthepropertymanagementsegmentuptothatdatewas£2.8million(2013:£7.3million)oftheGroup’stotalrevenueof£46.6million(2013:£17.6million).Furtherinformationonrelatedpartytransactionsisdisclosedinnote31tothefinancialstatements.

Assets Note2014

£m2013£m

Totalassetsofreportablesegments 2a 942.4 515.6Adjustmentforassociatesandjointventures (18.5) (321.3)Group assets 923.9 194.3

LiabilitiesTotalliabilitiesofreportablesegments 2a (523.4) (326.9)Adjustmentforassociatesandjointventures 18.5 321.3Group liabilities (504.9) (5.6)

Net assets by countryUK 377.6 143.3Germany(heldforsaleat30December2014) 41.4 45.4Group net assets 419.0 188.7

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3 Revenue

Statutory Note

Year to30 December

2014£m

Yearto30December

2013£m

Grossrentalincome 22.2 –Ancillaryincome 4.3 –

26.5 –Servicechargeincome 5.4 –Managementfees 4.8 8.6Snozoneincome 2a 9.9 9.0Revenue per consolidated income statement – continuing operations 2b 46.6 17.6

ManagementfeesrepresentrevenueearnedbytheGroup’swholly-ownedCRPMsubsidiary.FeeschargedtoTheMallafter14July2014,beingthedatetheGrouptookcontroloftheMallFund,havebeeneliminatedonconsolidation.

4 Cost of sales

Year to30 December

2014£m

Yearto30December

2013£m

Propertyandvoidcosts (4.1) –Servicechargecosts (5.4) –Snozoneexpenses (8.7) (8.0)Total cost of sales (18.2) (8.0)

5 Finance income and costs

Year to30 December

2014£m

Yearto30December

20131

£mFinance incomeInterestreceivable 0.4 0.3Total finance income 0.4 0.3Finance costsAmortisationofdeferredloanarrangementfees (1.0) –Interestpayableonbankloansandoverdrafts (6.1) –Otherinterestpayable (0.3) (0.4)Financeleasecosts (1.7) –Lossinfairvalueoffinancialinstruments: Interestratecaps (1.1) –Total finance costs (10.2) (0.4)


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6 Profit before taxTheprofitbeforetaxhasbeenarrivedatafterchargingthefollowingitems:

Note

Year to30 December

2014£m

Yearto30December

2013£m

Operatingleasecharge 1.6 1.9Othergainsandlosses 4.4 1.0Depreciationofplantandequipment 11 0.3 0.3Staffcosts 7 12.3 12.1Auditor’sremunerationforauditservices(seebelow) 0.2 0.2

InthecurrentyearothergainsandlossesrelatetotheprofitonthesaleoftheGroup’sinterestinTheWatersideLincolnLimitedPartnershipof£4.7millionlessthe£0.3millionlossondisposaloftheGroup’sinterestinGarigalAssetManagementGmbH(seenote14).Othergainsandlossesintheprioryearrelatedtoprofitonthesaleoflandof£0.5millionandprofitonthesaleoftheGroup’sinterestinFIXUKof£0.5million.

Auditor’s remunerationTheanalysisoftheauditor’sremunerationisasfollows:

Year to30 December

2014£’000

Yearto30December

2013£’000

FeespayabletotheCompany’sauditoranditsassociatesfortheauditoftheCompany’sannualfinancialstatements 104 114FeespayabletotheCompany’sauditoranditsassociatesforotherservicestotheGroup–theauditoftheCompany’ssubsidiaries 71 25Total audit fees for the Company and its subsidiaries 175 139FeespayabletotheCompany’sauditoranditsassociatesforotherservicestotheGroup–theauditoftheCompany’saffiliates – 52Total audit fees 175 191Auditrelatedassuranceservices(ReviewofInterimReport) 43 40Corporatefinanceservices(ReportingAccountantsonMallAcquisition) 138 –Total non-audit fees 181 40Total fees paid to auditor and their associates 356 231

ThefeesinrelationtotheauditoftheCompany’saffiliateshavebeendisclosedgrossandhavenotbeenpro-ratedtoreflecttheCompany’sequityinvestmentpercentage.Nofeeswerechargedinthecurrentorprioryearpursuanttocontingentfeearrangements.

7 Staff costs

Note

Year to30 December

2014£m

Yearto30December

2013£m

Salaries 9.1 8.6Lossofoffice/redundancypayments 0.3 0.6Discretionarybonuses 1.1 0.9Share-basedpayments 20 0.5 0.8

11.0 10.9Socialsecurity 1.2 1.0Otherpensioncosts 0.1 0.2 12.3 12.1

Exceptforthedirectors,theCompanyhasnoemployees.Thecostsofthedirectorsshowninthedirectors’remunerationreportarebornebyCRPMandappropriateamountsrechargedtotheCompany.£1.1millionofthetotalstaffcostschargedin2014relatestostaffwithinTheMall,thecostsofwhicharefullyrecoveredintheservicecharge.Inadditiontotheabove,£0.4millionofbonushavebeenchargedastransactioncostswhentheirpaymentwasdependentonthesuccessfulcompletionoftherelevanttransaction.

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7 Staff costs continuedStaff numbersThemonthlyaveragenumberofemployees(includingexecutivedirectors),beingfull-timeequivalents,employedbytheGroupduringtheyearwasasfollows:

Year to30 December

2014Number

Yearto30December

2013Number

CRPM/PLC 62 68TheMall 88 –Snozone 145 151Total staff numbers 295 219

Themonthlyaveragenumberoftotalemployees(includingexecutivedirectors)employedwithintheGroupduringtheyearwas399(CRPM–64,TheMall–88,Snozone-247)comparedto351in2013(CRPM–70,Snozone–281).TheMallnumberhasnotbeenpro-ratedfortheGroup’speriodofownership.

8 Tax8a Tax credit

Note

Year to30 December

2014£m

Yearto30December

2013£m

Current taxUKcorporationtax–continuingoperations – –UKcorporationtax–discontinuedoperations – –Adjustmentsinrespectofprioryears–continuingoperations (1.0) (0.9)Foreigntax–continuingoperations – 0.4Totalcurrenttaxcredit (1.0) (0.5)Deferred tax Originationandreversaloftemporarytimingdifferences (1.3) 0.3Deferredtaxcredit–discontinuedoperations 8d – (0.1)Adjustmentsinrespectofprioryears–continuingoperations (0.2) –Totaldeferredtax(credit)/charge 8d (1.5) 0.2Total tax credit (2.5) (0.3)Total tax credit – continuing operations 8c (2.5) (0.2)Total tax credit – discontinued operations – (0.1)

£nil(2013:£nil)ofthetaxchargerelatestoitemsincludedinothercomprehensiveincome.

8b Tax charge to equity

Note

Year to30 December

2014£m

Yearto30December

2013£m

Current taxExcesstaxdeductionsrelatedtoshare-basedpaymentsonexercisedoptions – –Deferred taxArisingontransactionswithequityparticipants:Changeinestimatedexcesstaxdeductionsrelatedtoshare-basedpayments 0.2 (0.2)Total income tax recognised directly in equity 8d 0.2 (0.2)

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8 Tax continued8c Tax charge reconciliation

Note

Year to30 December

2014£m

Yearto30December

2013£m

Profitbeforetaxoncontinuingoperations 67.2 7.3ProfitmultipliedbytheUKcorporationtaxrateof 21.5%(2013:23.25%) 14.4 1.7Non-allowableexpensesandnon-taxableitems (4.4) (0.7)Utilisationoftaxlosses (0.7) –Taxonrealisedgains 0.1 0.5Unrealisedlossesoninvestmentpropertiesnottaxable (9.1) (0.1)Temporarytimingandcontrolledforeigncompaniesincome (1.6) (0.7)Adjustmentsinrespectofprioryears (1.2) (0.9)Total tax credit 8a (2.5) (0.2)

8d Deferred taxThefollowingarethemajordeferredtaxassetsandliabilitiesrecognisedbytheGroupandmovementsduringthecurrentandprecedingyear.

Note

Capitalallowances

£m

Othertimingdifferences

£m

Totaldeferred tax

asset/liability£m

At30December2012 (1.8) 0.9 (0.9)Deferredtaxcredit/(charge)–continuingoperations 8a 0.4 (0.7) (0.3)Deferredtaxchargetoequity–continuingoperations 8b – 0.2 0.2Deferredtaxcredit–discontinuedoperations 8a – 0.1 0.1At30December2013 (1.4) 0.5 (0.9)Deferredtaxcredit/(charge)–continuingoperations 1.5 (0.2) 1.3Deferredtaxchargetoequity–continuingoperations – (0.3) (0.3)Deferredtaxcredit–discontinuedoperations 8a – – –At 30 December 2014 0.1 – 0.1

Thetaxratewasreducedfrom23%to21%(effectivefrom1April2014)andafurtherreductionto20%(effectivefrom1April2015)wassubstantivelyenactedon2July2013.Consequently,theUKcorporationtaxrateatwhichdeferredtaxisbookedinthefinancialstatementsis 20%(2013:20%).

Nodeferredtaxassethasbeenrecognisedinrespectoftemporarydifferencesarisingfrominvestmentsorinvestmentsinassociatesandinterestsinjointventuresof£0.3million(2013:£0.4million)asitisnotcertainthatadeductionwillbeavailablewhentheassetcrystallises.

8e Unused tax lossesTheGrouphas£7.6million(2013:£6.6million)ofunusedrevenuetaxlosses,allofwhichareintheUK.Nodeferredtaxassethasbeenrecognisedinrespectoftheselossesduetotheunpredictabilityoffutureprofitstreamsandotherreasonswhichmayrestricttheutilisationofthelosses(2013:£0.2millionrecognisedinrespectof£0.8millionoflosses).TheGrouphasunusedcapitallossesof£40.6 million(2013:£26.4million)thatareavailableforoffsetagainstfuturegainsbutsimilarlynodeferredtaxhasbeenrecognisedinrespectoftheselossesowingtotheunpredictabilityoffuturecapitalgainsandotherreasonswhichmayrestricttheutilisationofthelosses.Thelossesdonothaveanexpirydate.

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8 Tax continued8e REIT conversionImmediatelyaftertheyearendtheGroupconvertedtoagroupREITon31December2014.Asaresult,theGroupwillnolongerpayUKcorporationtaxontheprofitsandgainsfromqualifyingrentalbusinessintheUKprovideditmeetscertainconditions.Non-qualifyingprofitsandgainsoftheGroupcontinuetobesubjecttocorporationtaxasnormal.InordertoachieveandretaingroupREITstatus,severalentrancetestshadtobemetandcertainongoingcriteriamustbemaintained.Themaincriteriaareasfollows:

• atthestartofeachaccountingyear,thevalueoftheassetsofthepropertyrentalbusinesspluscashmustbeatleast75%ofthetotalvalueoftheGroup’sassets;

• atleast75%oftheGroup’stotalprofitsmustarisefromthepropertyrentalbusiness;and• atleast90%oftheGroup’sUKpropertyrentalprofitsascalculatedundertaxrulesmustbedistributed.

ThedirectorsintendthattheGroupshouldcontinueasagroupREITfortheforeseeablefuture,withtheresultthatdeferredtaxisnolongerrecognisedontemporarydifferencesrelatingtothepropertyrentalbusiness.

9 Earnings per shareTheEuropeanPublicRealEstateAssociation(‘EPRA’)hasissuedrecommendationsforthecalculationofearningspershareinformationasshowninthefollowingtables:

9a Earnings per share calculationYear to 30 December 2014 Yearto30December20131

Note Basic DilutedEPRA

diluted Basic DilutedEPRAdiluted

Profit (£m)Profitfortheyearfromcontinuingoperations 69.7 69.7 69.7 7.5 7.5 7.5Revaluationofinvestmentproperties 9b – – (43.2) – – (0.7)Profitondisposalofinvestmentproperties(netoftax) 9b – – (4.8) – – 2.5Negativegoodwill 25 – – (11.5) – – –Acquisitioncosts 25 – – 3.1 – – –Movementinfairvalueoffinancialinstruments(netoftax) 9b – – 1.0 – – (3.0)Deferredtaxcreditoncapitalallowances 8d – – (1.5) – – (0.4)Profit from continuing operations 69.7 69.7 12.8 7.5 7.5 5.9Discontinuedoperations 5.5 5.5 5.1 1.6 1.6 2.6Profit 75.2 75.2 17.9 9.1 9.1 8.5

Weighted average number of shares (m)Ordinarysharesinissue 19 514.2 514.2 514.2 349.8 349.8 349.8Ownsharesheld (1.1) (1.1) (1.1) (1.3) (1.3) (1.3)Dilutivecontingentlyissuablesharesandshareoptions – 4.6 4.6 – 2.8 2.8

513.1 517.7 517.7 348.5 351.3 351.3Earnings per share (pence) 15p 15p 3p 3p 3p 2pEarnings per share (pence) – continuing operations 14p 13p 2p 2p 2p 2p


Attheendoftheyear,theGrouphad8,823,758(2013:5,358,855)shareoptionsandcontingentlyissuablesharesgrantedundershare-basedpaymentschemesthatcouldpotentiallyhavedilutedbasicearningspershareinthefuturebutwhichhavenotbeenincludedinthecalculationbecausetheyarenotdilutiveortheconditionsforvestinghavenotbeenmet.

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9 Earnings per share continued9b Reconciliation of earnings figures included in earnings per share calculations

Note

Year to 30 December 2014 Yearto30December20131

Revaluationmovements

£m

Profit/(loss)on disposal of

investment properties

£m

Movementin fair valueof financial

instruments£m

Revaluationmovements

£m

Profit/(loss)ondisposalof

investmentproperties

£m

Movementinfairvalueoffinancialinstruments

£m

Associates 14d 7.4 0.1 0.3 (0.2) (4.2) 3.4Jointventures (1.1) 4.7 0.1 0.9 – 0.1Wholly-owned 36.9 – (1.0) – 1.0 –Taxeffect – – (0.4) – 0.7 (0.5)Total 9a 43.2 4.8 (1.0) 0.7 (2.5) 3.0


10 Investment properties10a Wholly-owned properties

Freeholdinvestmentproperties

£m

Leaseholdinvestmentproperties

£m

Sub-totalinvestmentproperties

£m

Freeholdtrading

properties£m

Totalproperty

assets£m

CostorvaluationAt30December2012 – 8.4 8.4 70.0 78.4Capitalexpenditure – – – 0.5 0.5Disposaloffreeholdtradingproperties – – – (70.2) (70.2)Impairmentoftradingproperties – – – (0.3) (0.3)Transfertoheldforsale(note26) – (8.4) (8.4) – (8.4)At30December2013 – – – – –Acquiredinbusinesscombination(TheMall) 240.3 511.8 752.1 – 752.1Capitalexpenditure 0.3 1.5 1.8 – 1.8Valuationsurplus 16.1 20.8 36.9 – 36.9At 30 December 2014 256.7 534.1 790.8 – 790.8

10b Property assets summary

Note

30 December 2014

Valuation£m

30December2013

Valuation£m

Wholly-ownedInvestmentpropertiesatfairvalue 744.7 –Headleasestreatedasfinanceleasesoninvestmentproperties 65.4 –Unamortisedtenantincentivesoninvestmentproperties (19.3) –

790.8 –Joint ventures (100%)Investmentpropertiesatfairvalue – 368.5Unamortisedtenantincentivesoninvestmentproperties – (1.3)

14e – 367.2Associates (100%)Investmentpropertiesatfairvalue 151.0 819.7Headleasestreatedasfinanceleasesoninvestmentproperties – 65.5Unamortisedtenantincentivesoninvestmentproperties (2.1) (18.4)

14d 148.9 866.8

TheGroup’swholly-ownedpropertiesat30December2014arethesixshoppingcentreswithinTheMall(classifiedasAssociatesat30December2013).IncludedintheassetsshowninJointVenturesat30December2013werethosewithintheGroup’sGermanjointventurewhichwasreclassifiedtoheldforsaleon24December2014andhenceexcludedfromthisnote.

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10 Investment properties continued10c ValuationsExternalvaluationsat30December2014werecarriedoutonallofthegrosspropertyassetsdetailedinthetableabove.TheGroup’sshareofthetotalinvestmentpropertiesatfairvaluewas£774.9millionof£895.7million(2013:£411.6millionof£1,188.2million).

ThevaluationswerecarriedoutbyindependentqualifiedprofessionalvaluersfromCBRELimitedandCushman&WakefieldLLPinaccordancewithRICSstandards.ThesevaluersarenotconnectedwiththeGroupandtheirfeesarechargedonafixedbasisthatisnotdependentontheoutcomeofthevaluations.

Thevaluationsperformedbytheindependentvaluersarereviewedinternallybyseniormanagement,thisincludesdiscussionsoftheassumptionsusedbytheexternalvaluers,aswellasareviewoftheresultingvaluations.Thevaluers’opinionoffairvaluewasprimarilyderivedusingcomparablerecentmarkettransactionsonarm’slengthtermsandusingappropriatevaluationtechniques.

TheGroupconsidersallofitsinvestmentpropertiestofallwithin‘Level3’,asdefinedinnote1.ThetablebelowsummarisesthekeyunobservableinputsusedinthevaluationoftheGroup’swholly-ownedinvestmentpropertiesat30December2014:

Estimatedrentalvalue£persqft Equivalentyield%

MarketValue

£m Low Portfolio High Low Portfolio High

The Mall 744.7 15.23 19.42 23.45 5.99 6.54 8.21

SensitivitiesThefollowingtableillustratestheimpactofchangesinkeyunobservableinputs(inisolation)onthefairvalueoftheGroup’sproperties:

Impactonvaluationsof5%changeinestimated

rentalvalue

Impactonvaluationsof25bpschangeinequivalentyield

Increase

£mDecrease

£mIncrease

£mDecrease

£m

The Mall 33.1 (32.6) (30.0) 30.0

11 Plant and equipment

Year to30 December

2014£m

Yearto30December

2013£m

Cost or valuationAtthestartoftheyear 2.9 2.7Additions 0.4 0.2Disposals (0.1) –Attheendoftheyear 3.2 2.9Accumulated depreciationAtthestartoftheyear (2.2) (1.9)Chargefortheyear (0.3) (0.3)Attheendoftheyear (2.5) (2.2)Carrying amountAttheendoftheyear 0.7 0.7

12 SubsidiariesAlistofthesignificantinvestmentsinsubsidiaries,includingthename,countryofincorporation,andproportionofownershipinterestisgiveninnoteGtotheCompanyfinancialstatements.

ThetermsoftheGroup’scentralborrowingfacilitymayrestricttheabilityofCapital&RegionalHoldingsLimitedanditssubsidiariestomakecashdistributionsorrepayloansandadvancestotheCompanyorelsewhereintheGroupiftheywouldtherebycauseadefaultonthefacility.

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Stock Code: CAL



13 Receivables

30 December2014

£m

30December2013£m

Amounts falling due after one year:Financial assetsLoanstojointventures – 22.8Non-derivativefinancialassets – 22.8Interestratecap 1.3 –

1.3 22.8Non-financial assetsUnamortisedtenantincentives 6.1 –Unamortisedrentfreeperiods 10.5 –

17.9 22.8Amounts falling due within one year:Financial assetsTradereceivables(netofallowances) 4.0 0.3Amountsowedbyassociates 0.1 1.3Deferredtaxasset 0.1 –Otherreceivables 3.5 3.6Accruedincome 0.4 0.7Non-derivativefinancialassets 8.1 5.9Financialassetscarriedatfairvaluethroughtheprofitorloss:-Foreignexchangeforwardcontract 2.2 0.1

10.3 6.0Non-financial assetsPrepayments 3.1 0.8Unamortisedtenantincentives 1.1 –Unamortisedrentfreeperiods 1.6 –

16.1 6.8

LoanstotheGermanjointventureshavebeenreclassifiedasheldforsaleasof24December2014.Interestremainspayableontheseloansatnormalcommercialrates.TheGrouphaspledgedloanstojointventureswithacarryingamountof£14.2million(2013:£15.5million)tosecurebankingfacilitiesgrantedtotheGroup.

Includedinthenon-derivativefinancialassetsbalancearereceivableswithacarryingamountof£2.3million(2013:£0.2million)whicharepastdueatthereportingdateforwhichtheGrouphasnotprovided,astherehasnotbeenasignificantchangeincreditqualityandtheamountsarestillconsideredrecoverable.TheGroupholdscollateralof£0.6million(2013:£nil)overtradereceivablesassecuritydepositsheldinrentaccounts.Theaverageageoftradereceivablesis34days(2013:35days).

30 December2014

£m

30December2013£m

Analysis of non-derivative current financial assetsNotpastdue 5.5 5.5Pastduebutnotindividuallyimpaired: Lessthan1month 1.8 0.1 1to3months 0.1 0.3 3to6months 0.3 – Over6months 0.4 – 8.1 5.9

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13 Receivables continued

30 December2014

£m

30December2013£m

Allowances for doubtful receivablesAtthestartoftheyear 0.4 0.2AcquiredwithinTheMall 0.8 –Additionalallowancescreated 0.6 0.9Utilisedduringtheyear (0.8) (0.7)Unusedamountsreversed (0.1) –Attheendoftheyear 0.9 0.4

14 Investment in associates and joint ventures14a Share of results

Note

Year to30 December

2014£m

Yearto30December

20131

£mShareofresultsofassociates 14d 11.7 6.0Shareofresultsofjointventures–continuingoperations 14e (1.5) 2.3

10.2 8.3


14b Investment in associates

Note

30 December2014

£m

30December2013£m

Atthestartoftheyear 112.1 80.7Investmentinassociates – 29.3Shareofresultsofassociates 14d 11.7 6.0Shareofresultsofassociateswithindiscontinuedoperations – (2.4)Dividendsandcapitaldistributionsreceived (1.5) (1.7)ReclassificationoftheMallFundasasubsidiary (108.4) –DisposalofinterestinGarigalAssetManagementGmbH (0.3) –Foreignexchangedifferences – 0.2Attheendoftheyear 14d 13.6 112.1

TheGroup’sassociatesat30December2014were:

Groupinterest

Atthestartoftheyear

%

Averageduringtheyear/untildisposal

%

Attheendoftheyear

%KingfisherLimitedPartnership 20.00 20.00 20.00GarigalAssetManagementGmbH(‘Garigal’) 30.06 30.06 –EuroB–NoteHoldingLimited 49.90 49.90 49.90

TheMallLimitedPartnershipwasaccountedforasanAssociateuntil14July2014beingthedatetheGrouptookcontrolandbeganconsolidatingitsresults,seenote25.TheGroup’sinvestmentinGarigalwasdisposedofinOctober2014fornilconsiderationaspartoftherenegotiationofthepropertyandassetmanagementarrangementsfortheGroup’sGermanjointventureinadvanceofitssale.

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Stock Code: CAL



14 Investment in associates and joint ventures continued14b Investment in associates continuedKingfisher Limited PartnershipOn1May2012,theGroupcompleteditsacquisitionofa20%interestintheKingfisherShoppingCentreinRedditchforatotalconsiderationof£10.6millioninpartnershipwithfundsmanagedbyOaktreeCapitalManagementLP.TheKingfisherCentrewaspurchasedfor£130.0millionatan8%netinitialyield.TheGroupexercisessignificantinfluencethroughitsrepresentationontheGeneralPartnerboardandthroughactingasthepropertyandassetmanager.

Euro B-Note Holding LimitedTheGroupfullyimpaireditsinvestmentinEuroB-NoteHoldingduring2013.

14c Investment in joint ventures

Note

30 December2014

£m

30December2013£m

Atthestartoftheyear 32.3 25.7Shareofresultsofjointventureswithincontinuingoperations 14e (1.5) 2.3Shareofresultsofjointventureswithindiscontinuedoperations 14e 4.6 4.1Dividendsandcapitaldistributionsreceived 31 (5.3) (0.2)Reclassifiedasheldforsale(Germany) (26.8) –DisposalofWatersideLincolnLimitedPartnership (1.3) –Foreignexchangedifferences (2.0) 0.4Attheendoftheyear 14e – 32.3

TheGrouphadnosignificantjointventuresat30December2014.

German joint ventureTheGroup’sinvestmentinitsGermanjointventurewasreclassifiedasheldforsaleon24December2014onsigningofaconditionalexchangeforitsdisposal,theGroup’sshareofresultsfortheyearhavebeenclassifiedasDiscontinuedOperations.Seenote26forfurtherdetails.

Waterside Lincoln Limited PartnershipOn12November2014,theGroupanditsJVPartner,Karoo,soldtheWatersideShoppingCentreLincolntoTescoPensionFundTrusteesforanetconsiderationof£46.0millionrepresentinganetinitialyieldof5.88%.ThenetproceedsattributabletotheGroupwere£14.8millionresultinginaprofitondisposalof£4.7million.InadditiontheGroupearnedperformancefeesof£0.9m.

Cash distributionsDistributionsreceivedfromJointVenturesandAssociatesaredisclosedinnote31.

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14 Investment in associates and joint ventures continued14d Analysis of investment in associates

TheMall1

£m


£mOther

£m

Year to30 December

2014Total

£m

Yearto30December

2013Total£m

Income statement (100%)Revenue–grossrent 31.0 12.0 – 43.0 77.9Propertyandmanagementexpenses (8.0) (2.2) – (10.2) (19.2)Voidcosts (1.6) (0.9) – (2.5) (4.4)Netrent 21.4 8.9 – 30.3 54.3Netinterestpayable (10.1) (5.1) – (15.2) (30.4)Contribution 11.3 3.8 – 15.1 23.9Revenue–managementfees – – 2.6 2.6 4.6Managementexpenses – – (1.3) (1.3) (2.6)Revaluationofinvestmentproperties 17.6 11.3 – 28.9 (0.8)Lossonsaleofinvestmentproperties 0.3 – – 0.3 (19.9)Fairvalueofinterestrateswaps 2.6 (2.0) – 0.6 16.4ImpairmentofEuroB-Note – – – – (4.7)Profitbeforetax 31.8 13.1 1.3 46.2 16.9Tax – (0.7) (0.4) (1.1) (0.6)Profitaftertax 31.8 12.4 0.9 45.1 16.3Balance sheet (100%)Investmentproperties – 148.9 – 148.9 866.8Otherassets – 11.6 – 11.6 116.6Currentliabilities – (6.4) – (6.4) (39.7)Non-currentliabilities – (86.0) – (86.0) (542.8)Net assets (100%) – 68.1 – 68.1 400.9Income statement (Group share)Revenue–grossrent 9.1 2.4 – 11.5 16.2Propertyandmanagementexpenses (2.3) (0.4) – (2.7) (4.1)Voidcosts (0.5) (0.2) – (0.7) (0.9)Netrent 6.3 1.8 – 8.1 11.2Netinterestpayable (3.0) (1.0) – (4.0) (6.3)Contribution 3.3 0.8 – 4.1 4.9Revenue–managementfees – – 0.8 0.8 1.4Managementexpenses – – (0.8) (0.8) (1.1)Revaluationofinvestmentproperties 5.1 2.3 – 7.4 (0.2)Lossonsaleofinvestmentproperties 0.1 – – 0.1 (4.2)Fairvalueofinterestrateswaps 0.7 (0.4) – 0.3 3.4ImpairmentofEuroB-Note – – – – (2.4)GainrecognisedoninvestmentinMall – – – – 2.0Profitbeforetax 9.2 2.7 – 11.9 3.8Tax – (0.1) (0.1) (0.2) (0.2)Profit/(loss)aftertax 9.2 2.6 (0.1) 11.7 3.62

Balance sheet (Group share)Investmentproperties – 29.8 – 29.8 241.2Otherassets – 2.3 – 2.3 32.9Currentliabilities – (1.3) – (1.3) (11.0)Non-currentliabilities – (17.2) – (17.2) (151.0)Net assets (Group share) – 13.6 – 13.6 112.1

1 TheresultsofTheMallrepresentthosefrom1Januaryto14July2014beingtheperiodinwhichtheGroupaccountedforitasanAssociate.2 Profitaftertaxof£3.6millionincludes£6.0millioninrespectofcontinuingoperationsandalossof£2.4millionwithindiscontinuedoperations.

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14 Investment in associates and joint ventures continued14e Analysis of investment in joint ventures

OtherUKShoppingCentres1

£m

Discontinuedoperations

Year to30 December

2014Total

£m

Yearto30December

2013Total£m

Germanportfolio

£mIncome statement (100%)Revenue–grossrent 1.4 23.2 24.6 30.5Propertyandmanagementexpenses (1.5) (3.9) (5.4) (4.2)Voidcosts (0.3) – (0.3) (0.8)Netrent (0.4) 19.3 18.9 25.5Netinterestpayable (0.6) (8.6) (9.2) (10.9)Contribution (1.0) 10.7 9.7 14.6Revaluationofinvestmentproperties (2.1) (1.0) (3.1) (2.9)Profit/(loss)onsaleofinvestmentproperties – 0.1 0.1 (0.5)Fairvalueofinterestrateswaps 0.1 0.7 0.8 3.1(Loss)/profitbeforetax (3.0) 10.5 7.5 14.3Tax – (1.3) (1.3) (1.6)(Loss)/profitaftertax (3.0) 9.2 6.2 12.7Balance sheet (100%)Investmentproperties – – – 327.3Investmentpropertiesheldforsale – – – 39.9Otherassets – – – 16.3Currentliabilities – – – (34.1)Non-currentliabilities – – – (284.8)Net assets (100%) – – – 64.6Income statement (Group share)Revenue–grossrent 0.7 11.6 12.3 15.2Propertyandmanagementexpenses (0.7) (2.0) (2.7) (2.0)Voidcosts (0.2) – (0.2) (0.4)Netrent (0.2) 9.6 9.4 12.8Netinterestpayable (0.3) (4.3) (4.6) (5.4)Contribution (0.5) 5.3 4.8 7.4Revaluationofinvestmentproperties (1.1) (0.5) (1.6) (1.4)Profit(loss)onsaleofinvestmentproperties – 0.1 0.1 (0.3)Fairvalueofinterestrateswaps 0.1 0.4 0.5 1.5(Loss)/profitbeforetax (1.5) 5.3 3.8 7.2Tax – (0.7) (0.7) (0.8)(Loss)/profitaftertax (1.5) 4.6 3.1 6.4Balance sheet (Group share)Investmentproperties – – – 163.7Investmentpropertiesheldforsale – – – 19.9Otherassets – – – 8.2Currentliabilities – – – (17.1)Non-currentliabilities – – – (142.4)Net assets (Group share) – – – 32.3

1 TheresultsoftheWatersideShoppingCentreLincoln(OtherUKShoppingCentres)areincludedupto12November2014,thedateofitsdisposal.TheresultsoftheGermanportfolioareincludedupto24December2014,thedateofitsreclassificationasheldforsale.

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15 Cash and cash equivalents

30 December 2014

£m

30December2013£m

Cashatbankandinhand 33.6 10.8Securitydepositsheldinrentaccounts 0.6 –Otherrestrictedbalances 8.4 0.3 42.6 11.1

OtherrestrictedbalancesincludeamountssubjecttoachargeagainstvariousborrowingsandmaythereforenotbeavailableforgeneralusebytheGroup.

Theanalysisofcashandcashequivalentsbycurrencyisasfollows:

30 December 2014

£m

30December2013£m

Sterling 42.6 10.4Euro – 0.7 42.6 11.1

16 Trade and other payables

30 December 2014

£m

30December2013£m

Amounts falling due after one year:Financial liabilitiesAccruals 0.1 0.1Non-derivativefinancialliabilities 0.1 0.1

Amounts falling due within one year:Financial liabilitiesTradepayables 1.2 0.3Accruals 29.8 2.3Payabletoassociates – 0.7Othercreditors 0.2 0.3Non-derivativefinancialliabilities 31.2 3.6

Non-financial liabilitiesDeferredincome 9.8 0.3Othertaxationandsocialsecurity 0.8 0.4 41.8 4.3

Theaverageageoftradepayablesis27days(2013:11days),noamountsincurinterest(2013:£nil).

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17 Bank loans17a Summary of borrowingsTheGroupborrowsonasecuredbasisandborrowingsarearrangedtoensureanappropriatematurityprofileandtomaintainshorttermliquidity.TherewerenodefaultsorotherbreachesoffinancialcovenantsthatwerenotwaivedunderanyoftheGroupborrowingsduringthecurrentyearortheprecedingyear.

Borrowings at amortised cost Note

30 December 2014

£m

30December2013£m

SecuredFixedandswappedbankloans 17d 233.3 –Variableratebankloans 17d 170.1 –Totalborrowingsbeforecosts 403.4 –Unamortisedissuecosts (6.6) –Total borrowings after costs 396.8 –Analysis of total borrowings after costsCurrent – –Non-current 396.8 –Total borrowings after costs 396.8 –

TheGroupconsidersallofitsborrowingstofallwithin‘Level2’,asdefinedinnote1.

Mall Fund debt facilityOn30May2014,theMallFundcompletedtherefinancingofitsCMBSbyenteringintoanewfive-yearsecuredfacilitycomprisinga£350milliontermloanandadditional£25millioncapitalexpenditurefacility.TheCMBS,alongwithanassociated£10.7millioninterestrateswapliabilitytriggeredonrepayment,wassettledfromacombinationofthenew£350milliontermloanandexistingcashresources.Afurtheramendmentwasagreedon3November2014toincreasethefacilityby£5millionandtoconverttheundrawn£25millioncapexfacilitytoatermloan.

The£380millionloan,whichwasfullydrawndownat30December2014,comprisesafixedratetrancheof£233.3millionwithinterestfixedat1.86%plusapplicablemarginandafloatingratetranchebasedon3monthLIBORof£146.7million.Thelattertranchehasbeenhedgedusinginterestratecapswithaweightedaveragestrikerateof2.65%.

Costsof£6.9millionwereincurredinrespectoftherefinancingswhichwillbeamortisedoverthetermofthefacility.Inaddition,costsof£0.3millionwereincurredwhichwerechargedtotheincomestatementoftheMallFund.

Group revolving credit facilityInJune2014,theGroupagreedanamendmentandrestatementofitsexistingrevolvingcreditfacilityincludingthefollowingamendments:

• Therevolvingcreditfacilitywasincreasedto£50million(separatedintotwotranches,thefirst£25millionbeing‘TrancheA’andthesecond£25millionbeing‘TrancheB’).

• TrancheB’sinitialavailabilitywasdependentonitbeingusedforanacquisitionthatresultedintheGroupowningatleast80%oftheentireissuedUnitsoftheMallFund.

• Anarrangementfeeof£625,000waspayableonthedrawdownofTrancheB.• InterestonTrancheAisatamarginof3.2%perannumaboveLIBORandTrancheBatamarginof4.2%.Anon-utilisationfeeof

45%oftheapplicablemarginispayable.• AnyproceedsofthesaleofanyofthepropertiesheldbytheGroup’sGermanjointventureoranysaleoftheWatersideShopping

Centre,Lincolnshallbeusedtoreducethefacilitylimittoaminimumof£20millionuntil31December2015.• TrancheAisavailableuntil31July2016(butwillbereducedto£15millionfrom1January2016)andTrancheBuntil31

December2015.

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17 Bank loans continued17a Summary of borrowings continuedTherevisedfacilitybecameeffectiveon14July2014whentheGroupdrewdownatotalof£34.6million(includingpaymentofthe£625,000arrangementfee)inrelationtoitsacquisitionof62.56%ofunitsintheMallFund.FollowingthedisposaloftheWatersideShoppingCentre,LincolntheGrouppaiddownproceedsof£14.8millionwhichreducedthetotalfacilitylimitto£35.2million.Thisremainedthefacilitylimitat30December2014ofwhich£23.4millionwasdrawnatthatdate.

ThisfacilityissecuredbychargesovertheunitstheGroupholdsinTheMallcarriedat£377.2 millionat30December2014(2013:£100.4million),chargesovercertainholdingsinandloanstotheGermanjointventurecarriedat£38.7 million(2013:£39.6million)andguaranteesbytheCompany.

On11February2015,followingcompletionofthesaleoftheGroup’sGermanjointventure,theGroupfullyrepaidtheamountdrawndown.Inlinewiththerevisedtermsdetailedabovethelimitofthefacilityreducedto£20millionasofthatdate.ThechargesinrelationtotheGermanjointventurewerereleasedoncompletion.

17b Maturity of borrowings

Note

30 December 2014

£m

30December2013£m

Fromonetotwoyears 23.4 –Fromtwotofiveyears 380.0 –Dueaftermorethanoneyear 403.4 –Current – – 17a 403.4 –

17c Undrawn committed facilities

Note

30 December 2014

£m

30December2013£m

Expiringbetweenoneandtwoyears 11.8 –Expiringbetweentwoandfiveyears – 25.0

TheArticlesoftheCompanyincludesomerestrictionsonborrowingbutthisdidnotlimittheamountavailablefordrawdownontheabovefacilityduringthecurrentyearortheprecedingyear.

17d Interest rate and currency profile of borrowings

Note

30 December 2014

£m

30December2013£m

Fixed and swapped rate borrowings1%to2% 233.3 –

17a 233.3 –Floating rate borrowings TheMallFund 17a 146.7 – Grouprevolvingcreditfacility 17a 23.4 – 403.4 –

FloatingrateborrowingsbearinterestbasedonthreemonthLIBOR.

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18 Financial instruments and risk management18a OverviewCapital risk managementTheGroupmanagesitscapitaltoensurethatallentitiesintheGroupwillbeabletocontinueasgoingconcernswhilemaximisingthereturnstoshareholdersthroughtheoptimisationofthedebtandequitybalance.TheoverallstrategyofreducingtheGroup’slevelsofbalancesheetandsee-throughdebtremainsunchangedfrom2013.

ThecapitalstructureoftheGroupconsistsofdebt,whichincludestheborrowingsdisclosedinnote17a;cashandcashequivalentsasdisclosedinnote15;andequityattributabletoequityholdersoftheparent,comprisingissuedsharecapital,reservesandretainedearningsasdisclosedintheStatementofchangesinequity.Forthepurposeofcalculatinggearingratios,debtisdefinedaslongandshorttermborrowings(excludingderivatives)excludingunamortisedissuecosts.EquityincludesallcapitalandreservesoftheGroupattributabletoequityholdersoftheCompany.

TheGroupisnotsubjecttoexternallyimposedcapitalrequirements.TheBoardreviewsthecapitalstructureandcostofcapitalonanannualbasisbutdoesnotsetspecifictargetsforgearingratios.TherisksassociatedwitheachclassofcapitalarealsoconsideredaspartoftheriskreviewspresentedtotheAuditCommitteeandtheBoard.TheGrouphasmetitsobjectivesformanagingcapitalduring2014bymitigatingtheimpactofincreaseddebtdrawdownattheGroupandwithinTheMallbythedisposalofnon-coreassets.

Gearing ratios

Statutory Note

30 December 2014

£m

30December2013£m

Debtbeforeunamortisedissuecosts 17a 403.4 –Cashandcashequivalents 15 (33.6) (11.1)Groupnetdebt 369.8 (11.1)Equity 419.0 188.7Debttoequityratio 96% –Netdebttoequityratio 88% –

See-through Note

30 December 2014

£m

30December2013£m

Debtbeforeunamortisedissuecosts 18f 420.3 254.6Cashandcashequivalents (35.0) (36.5)See-throughnetdebt1 385.3 218.1

Equity 419.0 188.7Debttoequityratio 100% 135%Netdebttoequityratio 92% 116%

Propertyassets–whollyowned 10a 790.8 –Investmentproperties–associates 14d 29.8 241.2Investmentproperties–jointventures1 14e – 163.7Propertyvalue 820.6 404.9Debttopropertyvalueratio 51% 63%Netdebttopropertyvalueratio 47% 54%

1 BalanceswithintheGermanjointventurehavebeenexcludedfromthisnotefollowingitsreclassificationasheldforsaleon24December2014andsubsequentdisposalon

10February2015.

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18 Financial instruments and risk management continued18a Overview continuedCategories of financial assets/(liabilities)

2014 2013

Note

Carrying value

£m

Gain/(loss) to income

£m

Gainto equity

£m

Carryingvalue£m

Gain/(loss)toincome

£m

(Loss)/gaintoequity

£m

Financial assets Loanstojointventures 13 – – – 22.8 0.6 0.2 Currentreceivables 13 8.1 – – 6.0 – – Cashandcashequivalents 15 42.6 0.4 – 11.1 (0.3) –Loans and receivables 50.7 0.4 – 39.9 0.3 0.2

Foreignexchangeforwardcontracts 13 2.2 0.5 1.7 0.1 (0.2) (0.7)Derivatives in effective hedges 2.2 0.5 1.7 0.1 (0.2) (0.7)

Interestratecap 1.3 (1.3) – – – –Assets at fair value held for trading 1.3 (1.3) – – – –Financial liabilities Currentpayables 16 (31.2) – – (3.6) – – Non-currentpayables 16 (0.1) – – (0.1) – – Non-currentborrowings 17a (396.8) (8.8) – – – –Liabilities at amortised cost (428.1) (8.8) – (3.7) – –

Interestrateswaps – (1.1) – – 1.8 –Liabilities at fair value held for trading – (1.1) – – 1.8 –

Total financial (liabilities)/assets (373.9) (10.3) 1.7 36.3 1.9 (0.5)

Significant accounting policiesDetailsofthesignificantaccountingpoliciesadoptedinrespectofeachclassoffinancialasset,financialliabilityandequityinstrument,includingthecriteriaforrecognition,thebasisofmeasurementandthebasisonwhichincomeandexpensesarerecognised,aredisclosedintheaccountingpoliciesinnote1.

Financial risk management objectivesExposuretocredit,interestrateandcurrencyrisksariseinthenormalcourseoftheGroup’sbusiness.TheGroupseekstominimisetheeffectoftheserisksbyusingderivativefinancialinstrumentstomanageexposuretofluctuationsininterestratesandforeigncurrencyexchangerates.Suchinstrumentsarenotemployedforspeculativepurposes.TheuseofanyderivativesisapprovedbytheBoard,whichprovidesguidelinesontheacceptablelevelsofinterestraterisk,creditrisk,foreignexchangeriskandliquidityrisk,andtherangesofhedgingrequiredagainsttheserisks.

18b Interest rate riskTheGroupmanagesitsinterestrateriskthroughacombinationoffixedrateloansandinterestratederivatives,typicallyinterestrateswapsorcaps.TheGroup’sobjectiveinmanagingitsinterestrateriskistoensurethatitalwaysmaintainssufficientheadroomtocoverinterestpaymentsfromanticipatedcashflowsandthedirectorsregularlyreviewtheratiooffixedtofloatingratedebttoassistthisprocess.TheGroupdoesnothedgeaccountitsinterestratederivativesandstatesthematfairvaluewithchangesinfairvalueincludedintheincomestatement.

ThefollowingtableshowsasummaryoftheMallFund’sinterestratecapcontractsandtheirmaturitydates:

Maturity

dateNotionalprincipal

Contractfixedrate

30December2014Fair

valueInterestratecap 30May2019 £116,666,667 2.75% £0.3mInterestratecap 30May2019 £30,000,000 2.25% £1.0m

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18 Financial instruments and risk management continued18b Interest rate risk continuedSensitivity analysisThefollowingtableshowstheGroup’ssensitivitytoa1%increaseordecreaseinSterlingandEurointerestrates.Tocalculatetheimpactontheincomestatementfortheyeartheinterestratesonallexternalfloatingrateinterestbearingloansandborrowingsandinterestearningcash,includingloansandcashwithinassociatesandjointventures,havebeenincreasedordecreasedby1%.Theincomestatementimpactincludestheeffectofa1%decreaseorincreaseininterestratesonthemarketvaluesofinterestratederivatives.

1% increase in interest rates

1% decrease in interest rates

Year to30 December

2014£m

Yearto30December

2013£m

Year to30 December

2014£m

Yearto30December

2013£m

Floatingrateloansandcash–(loss)/gain (1.3) – 1.3 –Interestratederivatives–gain/(loss) 0.9 3.5 (0.9) (3.5)Impactontheincomestatement–(loss)/gain (0.4) 3.5 0.4 (3.5)Impactonequity–(loss)/gain (0.4) 3.5 0.4 (3.5)

18c Credit riskTheGroup’sprincipalfinancialassetsareloanstojointventures,bankandcashbalances,shorttermdeposits,tradeandotherreceivablesandinvestments.Creditrisk,beingtheriskthatacounterpartywilldefaultonitscontractualobligationsresultinginfinanciallosstotheGroup,isprimarilyattributabletoloanstojointventures,andtradeandotherreceivables,whichareprincipallyamountsduefromassociatesandjointventuresandfromtenants.AsaresultthereisaconcentrationofcreditriskarisingfromtheGroup’sexposuretotheseassociatesandjointventuresbuttheGroupdoesnotconsiderthisrisktobematerialasitismitigatedbythesignificantinfluencethatitisabletoexercisethroughitsholdingsandmanagementresponsibilitiesinrelationtothoseassociatesandjointventures.CreditriskarisingfromtenantsismitigatedastheGroupmonitorscreditratingsforsignificanttenantsandthereisanallowancefordoubtfulreceivablesthatrepresentstheestimateofpotentiallossesinrespectoftradereceivables.

Thecreditriskonshorttermdepositsandderivativefinancialinstrumentsislimitedbecausethecounterpartiesarebankswithhighcreditratingsassignedbyinternationalcredit-ratingagencies.TheGroupisnotexposedtosignificantcreditriskonitsotherfinancialassets.

18d Currency riskTheGrouppublishesitsconsolidatedfinancialstatementsinSterlingbuthasinvestmentsandloanstoitsGermanjointventureportfoliowhichhavetheEuroastheirfunctionalcurrency.WhiletheseinvestmentsandloanswerereclassifiedasheldforsaleattheyearendtheGroupremainedexposedtocurrencyriskat30December2014astheproceedsreceivedonsaleweredenominatedinEuros.TheGroupthereforemaintaineditspolicyofhedgingthecurrencyriskduetoexchangeratemovements.

Net investment hedgeAt30December2014theGroupusedaforwardforeignexchangecontracttohedgetheexpectedproceedsduefromthesaleoftheGermanjointventure.Thecontractwasfor€50million(2013:€35million)atafixedexchangerateof1.2721 (2013:1.19254)whichhedged94%(2013:65%)oftheGroup’sGermaninvestmentuntil27February2015(2013:65%until31December2014).

Hedgeaccountinghasnotbeenappliedontheforwardcontractmaturingon27February2015butwasappliedonthecontracttheGrouphadinplacefor€35millionwhichmaturedon31December2014.Inrespectofthisonlythespotelementofthecontractwasdesignatedasthehedginginstrument,determinedastheundiscounteddifferencebetweenthespotrateonthetradedateandthespotrateontherevaluationdateappliedtothenotional.Theunhedgedforwardelementofthefairvalueisdeterminedasthetotalfairvaluelessthespotelement.Changesintheforwardelementofthefairvaluearereportedthroughtheincomestatementasfinanceincomeorfinancecosts.Duringtheyear,thischangeintheunhedgedelementofthefairvaluewasagainof£0.3m(2013:£nil).Duringtheyear,theineffectiveportionofthehedgeresultedinacreditof£0.2million(2013:chargeof£0.5million)totheincomestatement.BothoftheseamountshavebeenclassifiedasdiscontinuedoperationsastheyrelatetotheGroup’sinvestmentinGermany.

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18 Financial instruments and risk management continued18d Currency risk continuedSensitivity analysisThefollowingtableshowswhattheGroup’ssensitivitytoa10%strengtheningorweakeninginSterlingagainsttheEurowouldhavebeenat30December2014.Tocalculatetheimpactontheincomestatementfortheyeartheaverageexchangeratehasbeendecreasedorincreasedby10%.ThetranslationaleffectonequityislimitedduetotheEurohedginginplace.Theeffectonequityiscalculatedbydecreasingorincreasingtheclosingexchangeratewithanadjustmentforthemovementinthecurrencyhedge.Itisassumedthatthenetinvestmenthedgewillbe100%effective.

10% strengthening in Sterling

10% weakening in Sterling

Year to30 December

2014£m

Yearto30December

2013£m

Year to30 December

2014£m

Yearto30December

2013£m

Impactontheincomestatement–(loss)/gain (0.6) (0.5) 0.5 0.3Impactonequity–(loss)/gain (0.4) (1.2) 1.1 2.2

18e Liquidity riskLiquidityriskreflectstheriskthattheGroupwillhaveinsufficientresourcestomeetitsfinancialliabilitiesastheyfalldue.Theday-to-dayoperationsoftheGrouparelargelyfundedthroughtheitemsincludedinthebreakdownofOperatingProfitincludedinnote2a.ThemajorityofincomewithinOperatingProfitisreceivedquarterly,sincetheinflowsandoutflowsfromnetrentalincomeandnetinterestpayablegenerallycoincidewithEnglishquarterdays,andpropertymanagementfeesarebilledquarterly.Asaresult,theGroupnormallyhassufficientfundstocoverrecurringadministrativeexpenseswhichoccurthroughouttheyear.Liquidityriskthereforearisesprincipallyfromtheneedtomakepaymentsfornon-recurringitems,suchastaxpaymentsandthecloseoutofderivativefinancialinstruments.

TheGroup’sobjectiveinmanagingliquidityriskistoensurethatithassufficientfundstomeetallitspotentialliabilitiesastheyfalldue,bothinnormalmarketconditionsandwhenconsideringnegativeprojectionsagainstexpectedoutcomes,soastoavoidtheriskofincurringcontractualpenaltiesordamagingtheGroup’sreputation.TheGroup’streasurydepartmentmaintainsarollingeighteenmonthforecastofanticipatedrecurringandnon-recurringcashflowsunderdifferentscenarios.ThisiscomparedtoexpectedcashbalancesandamountsavailablefordrawdownontheGroup’scorerevolvingcreditfacilitytoensurethatanypotentialshortfallsinfundingareidentifiedandmanaged.TheGroup’sprimarymeansofmanagingliquidityriskisthecorerevolvingcreditfacility,expiringinJuly2016,whichhad£11.8millionfullyavailableat30December2014asdisclosedinnote17c.

Thefollowingtableshowsthematurityanalysisofnon-derivativefinancialassets/(liabilities)atthebalancesheetdateand,whereapplicable,theireffectiveinterestrates.

2014 Note

Effectiveinterest rate

%

Less than1 year

£m1–2 years

£m2–5 years

£m

More than5 years

£mTotal

£mFinancial assetsCurrentreceivables 13 10.3 – – – 10.3Cashandcashequivalents 15 0.4% 42.6 – – – 42.6

52.9 – – – 52.9Financial liabilitiesBorrowings 3.5% – (22.9) (373.9) – (396.8)Currentpayables 16 (31.2) – – – (31.2)Non-currentpayables 16 – – – (0.1) (0.1) (31.2) (22.9) (373.9) (0.1) (428.1)

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18 Financial instruments and risk management continued18e Liquidity risk continued

Note

Effectiveinterestrate

%

Lessthan1year

£m1-2years

£m2-5years

£m

Morethan5years

£mTotal£m2013

Financial assetsNon-currentreceivables 13 3.5 – – 22.8 – 22.8Currentreceivables 13 6.0 – – – 6.0Cashandcashequivalents 15 0.8 11.1 – – – 11.1

17.1 – 22.8 – 39.9Financial liabilitiesCurrentpayables 16 (3.6) – – – (3.6)Non-currentpayables 16 – (0.1) – – (0.1) (3.6) (0.1) – – (3.7)

ThefollowingtablesdetailtheGroup’sremainingcontractualmaturityforitsnon-derivativefinancialliabilities.Thetableshavebeendrawnupbasedontheundiscountedcashinflows/(outflows)offinancialliabilitiesbasedontheearliestdateonwhichtheGroupcanberequiredtopay,includingbothinterestandprincipalcashflows.

2014

Less than1 year

£m1–2 years

£m2–3 years

£m3–4 years

£m4–5 years

£m

More than5 years

£mTotal

£mBorrowings–fixedbankloans – – – – (229.6) – (229.6)Borrowings–floatingbankloans – (22.9) – – (144.3) – (167.2)Non-interestbearing (31.2) – – – – (0.1) (31.3) (31.2) (22.9) – – (373.9) (0.1) (428.1)

2013

Lessthan1year

£m1–2years

£m2–3years

£m3–4years

£m4–5years

£m

Morethan5years

£mTotal£m

Non-interestbearing (3.6) (0.1) – – – – (3.7) (3.6) (0.1) – – – – (3.7)

ThefollowingtablesdetailtheGroup’sremainingcontractualmaturityforitsderivativefinancialassets/(liabilities),allofwhicharenetsettled,basedontheundiscountednetcashinflows/(outflows).Whentheamountpayableorreceivableisnotfixed,ithasbeendeterminedbyreferencetotheprojectedinterestandforeigncurrencyratesasillustratedbytheyieldcurvesexistingatthereportingdate.

2014

Less than1 year

£m1–2 years

£m2–3 years

£m3–4 years

£m4–5 years

£m

More than5 years

£mTotal

£mNet settledInterestratecaps – – – – 1.3 – 1.3Foreignexchangeforwardcontract 2.2 – – – – – 2.2 2.2 – – – 1.3 – 3.5

2013

Lessthan1year

£m1–2years

£m2–3years

£m3–4years

£m4–5years

£m

Morethan5years

£mTotal£m

Net settledForeignexchangeforwardcontract – 0.1 – – – – 0.1 – 0.1 – – – – 0.1

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18 Financial instruments and risk management continued18f Fair values of financial instrumentsThefairvaluesoffinancialinstrumentstogetherwiththeircarryingamountsinthebalancesheetareasfollows:

Note

Notionalprincipal

£m

2014Book value

£m

2014Fair value

£m

2013Bookvalue

£m

2013Fairvalue

£mFinancial liabilities not at fair value through income statementSterlingdenominatedloans 18a (403.4) (409.0) – –Totalonbalancesheetborrowings (403.4) (409.0) – –Groupshareofassociateborrowings (16.9) (16.9) (128.1) (128.1)Groupshareofjointventureborrowings – – (126.5) (127.2)Total see-through borrowings 18a (420.3) (425.9) (254.6) (255.3)Derivative assets/(liabilities) at fair value through income statementInterestratecaps 13 146.7 1.3 1.3 – –Foreignexchangeforwardcontracts 13 39.1 2.2 2.2 0.1 0.1Totalonbalancesheetderivatives 3.5 3.5 0.1 0.1GroupshareofSterlinginterestrateswapsinassociatesandjointventures 16.9 (0.5) (0.5) (4.2) (4.2)GroupshareofEurointerestrateswapsinjointventures – – – (1.4) (1.4)Total see-through derivatives 3.0 3.0 (5.5) (5.5)Lessforeignexchangeforwardcontracts (2.2) (2.2) (0.1) (0.1)Total see-through interest rate derivatives 0.8 0.8 (5.6) (5.6)

Thefairvalueofborrowingshasbeenestimatedonthebasisofquotedmarketprices.Thefairvalueoftheforwardforeignexchangecontracthasbeenestimatedbyapplyingthequotedforwardforeignexchangeratetotheundiscountedcashflowsatmaturity.

DetailsoftheGroup’scashanddepositsaredisclosedinnote15andtheirfairvaluesareequaltotheirbookvalues.

Fair value measurements recognised in the consolidated balance sheetThefollowingtableprovidesananalysisoffinancialinstrumentsthataremeasuredsubsequenttoinitialrecognitionatfairvalue,groupedintoLevels1to3basedonthedegreetowhichthefairvalueisobservable,asdefinedinnote1.

2014

NoteLevel 2

£mLevel 3

£mTotal

£mFinancial assetsInterestratecaps 13 1.3 – 1.3Foreignexchangeforwardcontracts 13 2.2 – 2.2

3.5 – 3.5

2013

NoteLevel2

£mLevel3

£mTotal£m

Financial assetsForeignexchangeforwardcontracts 13 0.1 – 0.1

TherewerenotransfersbetweenLevelsintheyear.

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19 Share capitalNumber of shares

issued and fully paidNominal value of shares

issued and fully paid2014

Number2013

Number2014

£m2013£m

Ordinary shares of 1p eachAtthestartoftheyear 349,688,796 350,612,754 3.5 3.5Repurchasedandcancelled – (923,958) – –IssuedinCapitalRaising 351,063,830 – 3.5 –Attheendoftheyear 700,752,626 349,688,796 7.0 3.5Deferred shares of 9p eachAtthestartoftheyear 71,348,933 71,348,933 6.4 6.4Cancelledduringtheyear (71,348,933) – (6.4) –Attheendoftheyear – 71,348,933 – 6.4Total called-up share capital 700,752,626 421,037,729 7.0 9.9

Ordinary sharesTheCompanyhasoneclassofOrdinaryshareswhichcarryvotingrightsbutnorighttofixedincome.

On20June2014theCompanyannouncedafirmplacingandfullyunderwrittenopenoffer(the‘CapitalRaise’).TheCapitalRaisewasapprovedbyshareholdersatageneralmeetingon9July2014andcompletedon14July2014.

TheCompanyissued351,063,830sharesof1pat47p(a2.1%discounttotheClosingPriceon19June2014anda0.7%premiumtotheonemonthvolumeweightedaveragepriceon19June2014)asfollows:

• 70,253,131sharesthroughafirmplacingforconsiderationof£33.0million;and• 280,810,699sharesthroughaplacingandopenofferforconsiderationof£132.0million.

TheAdmission(comprisingtheadmissionofthe351,063,830NewOrdinarySharesandRe-admissionofthe349,688,796existingOrdinaryshares)ofsharesoccurredon14July2014.

Outofthetotalconsiderationof£165.0million,£3.5million(representingthenominalvalueoftheshares)wascreditedtosharecapital.Thebalanceof£157.2million,(afterissuecostsandexpensesof£4.3million)wascreditedtosharepremium.

Deferred sharesDuringtheyeartheCompanyboughtbackandcancelledthe71,348,933Deferredsharesforconsiderationof1pperholding.Thedifferencebetweenthenominalvalueandtheamountpaidof£6.4millionhasbeentransferredtoretainedearnings.TheDeferredsharescarriedneithervotingnordividendrights.

20 Share-based paymentsTheGroup’sshare-basedpaymentscomprisetheSAYEschemeandthe2008LTIP.FulldetailsoftheschemesaredisclosedintheDirectors’remunerationreport.InaccordancewithIFRS2,thefairvalueofequity-settledshare-basedpaymentstoemployeesisdeterminedatthedateofgrant,calculatedusingeitheraBlack-ScholesoptionpricingmodeloraMonteCarlosimulation.

Analysis of income statement charge

Year to 30 December

2014£m

Yearto30December

2013£m

2008LTIP 0.5 0.8Equity-settledshare-basedpayments 0.5 0.8

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20 Share-based payments continuedMovements during the year

Number of Options Weighted average exercise

price penceSAYE

Invitation II 2008 LTIP TotalOutstandingat30December2012 396,377 13,500,000 13,896,377 1.04Grantedduringtheyear – 7,789,101 7,789,101 –Exercisedduringtheyear – – – –Forfeited/lapsed/expiredduringtheyear (72,881) (13,500,000) (13,572,881) 0.19Outstandingat30December2013 323,496 7,789,101 8,112,597 1.45Grantedduringtheyear – 5,375,458 5,375,458 –Adjustmenttopreviouslyissuedawards1 2,991 155,775 158,766 0.68Exercisedduringtheyear (248,618) – (248,618) 36.31Forfeited/lapsed/expiredduringtheyear (20,883) – (20,883) 36.31Outstandingat30December2014 56,986 13,320,334 13,377,320 0.15Exercisableattheendoftheyear 56,986 – 56,986 36.31

1 Adjustmentmadeinlinewiththerespectiveschemerulestooffsetthedilutiveimpactofthe£165millionCapitalRaising.

SAYEOn1November2014,thesecondSAYEschemeinvitation(‘InvitationII’)maturedandparticipantswereeligibletoexercisetheiroptionsforuptosixmonths.

LTIPOn14August2014anewawardwasmadeunderthe2008LTIP.Theassumptionsofwhichareshownbelowalongsidethosefortheawardmadeon16August2013.On8June2013allofthe2008LTIPawardsissuedon8June2010lapsedastheperformancecriteriawerenotmet.FurtherdetailsaredisclosedintheDirectors’remunerationreport.

AssumptionsThekeyassumptionsandinputsusedinthefairvaluemodelsare:

SAYE scheme

Invitation II

2008 LTIP

August 2013

issueAugust 2014

issueSharepriceatgrantdate 34.0p 39.0p 46.8pExerciseprice 36.31p 0.0p 0.0pExpectedvolatility 56% 35% 36%Expectedlife(years) 3.00 3.00 3.00Riskfreerate 3.51% 0.86% 0.96%Expecteddividendyield 14.7% 2.44% 4.53%Lapserate 2% 0% 0%Fairvalueofawardatgrantdatepershare 5p 15p 13p

ExpectedvolatilityisbasedonthehistoricalvolatilityoftheGroup’ssharepriceoverthethreeyearstothedateofgrant.Theriskfreerateistheyieldatthedateofgrantonagilt-edgedstockwitharedemptiondateequivalenttotheexpectedlifeoftheoptionortheperformanceperiodoftherelevantscheme.Optionsareassumedtobeexercisedattheearliestpossibledate.

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21 Own shares

Own shares

£mAtthestartoftheyear 0.7Disposedofonexerciseofoptions (0.1)At the end of the year 0.6

TheownsharesreserverepresentsthecostofsharesintheCompanypurchasedinthemarket.At30December2014,theCapital&Regionalplc2002EmployeeShareTrust(the‘ESOT’)held1,070,583 (2013:1,314,024)sharestoassisttheGroupinmeetingtheoutstandingshareawardsundertheschemesdescribedabove.Therighttoreceivedividendsontheseshareshasbeenwaived.Themarketvalueofthesesharesat30December2014was£0.6 million(2013:£0.6million).

22 Reconciliation of net cash from operations

Note

Year to30 December

2014£m

Yearto30December

2013£m

Profitfortheyear 75.2 9.1Adjustedfor:Financeincome–continuinganddiscontinuedoperations (1.4) (2.6)Financeexpense–continuinganddiscontinuedoperations 10.2 4.7Incometaxexpense–continuingoperations 8a (2.5) (0.2)Incometaxexpense–discontinuedoperations 8a – (0.1)AcquisitionofMallunits (8.1) –Profitondisposalofassociatesandjointventures (4.8) –Lossondisposalofwhollyownedproperties–discontinuedoperations 26 – 2.1(Profit)/lossonrevaluationofwhollyownedproperties (36.9) 0.2Shareof(profit)/lossinassociatesandjointventures 14a (10.2) (8.3)Shareof(profit)/lossinassociatesandjointventures–discontinuedoperations 26 (4.6) (1.7)Profitondisposalofotherassets – (1.0)Depreciationofotherfixedassets 11 0.3 0.3Decreaseinreceivables 5.8 0.2Decreaseinpayables (1.2) (4.9)Non-cashmovementrelatingtoshare-basedpayments 0.7 0.8Net cash from operations 22.5 (1.4)

23 Net assets per shareEPRAhasissuedrecommendedbasesforthecalculationofcertainnetassetspershareinformationasshowninthefollowingtable:

Note

30 December 2014 30December2013

Netassetspershare

(£)Net assets

£m

Number ofshares

(m)

Net assetsper share

(£)Basic net assets 419.0 700.8 0.60 0.54Ownsharesheld 21 (1.1)Dilutivecontingentlyissuablesharesandshareoptions 4.6Fairvalueoffixedrateloans(netoftax) (4.5)EPRA triple net assets 414.5 704.3 0.59 0.54Excludefairvalueoffixedrateloans(netoftax) 4.5Excludefairvalueofsee-throughinterestratederivatives 18f (0.8)Excludedeferredtaxonunrealisedgainsandcapitalallowances (0.1)EPRA net assets 418.1 704.3 0.59 0.56

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24 Return on equity

30 December 2014

£m

30December2013£m

Totalcomprehensiveincomeattributabletoequityshareholders 74.1 9.2Openingequityshareholders’fundsplustimeweightedadditions 264.0 179.6Returnonequity 28.1% 5.1%

25 Acquisition of units in the Mall Unit Trust and Capital RaiseOn20June2014theGroupannouncedithadenteredintoconditionalagreementstoacquire62.56%ofunitsintheMallFundforaninitialgrosscashconsiderationof£213.1million(‘theAcquisition’)tobefundedbyavailablecashanddebtfundingandanassociatedFirmPlacingandPlacingandOpenOffer(the‘CapitalRaise’)toraisegrossproceedsof£165millionbytheissueof351,063,830sharesat47penceperNewOrdinaryShare.TheGroupexpectstorecover£0.7millionof£7.4millionthatwaspaidintoescrowandthereforetheexpectedfinalconsiderationis£212.4million.ShareholderapprovalwasobtainedattheGeneralMeetingheldon9July2014andtheshareswereadmittedtolistingandtheAcquisitioncompletedon14July2014.

OncompletionoftheAcquisitiontheGroupowned91.82%oftheMallFund.At30December2014followingsubsequenttransactions,summarisedintheSubsequent acquisitions of minority unitssectionbelow,theGroupowned100%.

Details of the AcquisitionUnderthetermsoftheAcquisition,whichconstitutedareversetakeoverundertheListingRules,theGroupacquired:

• 490,300,237UnitsfromAvivaLife&PensionsUKandotherrelatedholdings(‘Aviva’),representing52.04%oftheMallFund,foraconsiderationof£177.2million.

• 99,069,410unitsfromKarooInvestmentFund(‘Karoo’),representing10.52%oftheMallFund,foranexpectedconsiderationof£35.1million,subjecttofinalescrowadjustment.

• Theremaining50%ofTheMall(GeneralPartner)LimitedthatitdidnotalreadyownfromNorwichUnion(MallGP)for£77,712.

TheUnitswereacquiredviaCapital&Regional(EuropeHolding5)LimitedandtheinterestinTheMall(GeneralPartner)LimitedviaCapital&Regional(MallGP)Limited,both100%ownedsubsidiariesofCapital&Regionalplc.TheconsiderationpaidwasbasedontheMallFundNAVperunitat31March2014adjustedforinterestrateswapliabilitiesandestimatedperformancefeesandrepresenteda6.7%NetInitialYieldontheunderlyingproperties.

TheliabilitytopaytheperformancefeewastriggeredontheredemptionofferbeingmadetoallremainingunitholdersinSeptember2014(seeSubsequent acquisitions of minority unitssectionbelow).Thetotalamountpayablewas£11.8million(excl.VAT),tobesplitequallybetweenAvivaInvestorGlobalServices,theFundManager,andCapital&RegionalPropertyManagementLimited(‘CRPM’),thePropertyandAssetManager.TheperformancefeewasaccruedintheMallFundfinancialstatementsat30December2014.TheentriesrelatingtoCRPMhavebeeneliminatedonconsolidationintheGroupfinancialstatementsforyearended30December2014.

InadditiontothecashconsiderationpayableAvivaandKaroowillreceivetheirpro-ratashareoftheMallFund’sincomefortheperiodfrom1April2014to13July2014,beingthedateimmediatelypriortocompletion.ThiswillbepaidtothemupondistributionsbeingmadebytheMallUnitTrustatsuchtimeastheMallUnitTrustresolvestopaysuchdistributions.At30December2014anaccrualof£3.0millionhasbeenrecognisedinrespectofthisamount.

Strategic rationaleTheDirectorsbelievethattheAcquisitionmarkedasignificantsteptowardscompletingtheGroup’sstrategicobjectiveoffocusingonitscoreUKshoppingcentrebusinessandpositioningitselfastheleadingdominantcommunityshoppingcentreownerintheUK.TheBoardbelievestheAcquisitionprovidestheGroupwith:

• controloftheunderlyingassetsinitscoreinvestment,theMallFund;• theabilitytogeneratecompellingreturnsfromthestrongcashgeneratingabilityofitsshoppingcentresandoffershareholdersa

highlyattractivedividendyieldrelativetothesector;• theopportunitytofurtherleverageitscorestrengthsofmanagingorowninginterestsindominantUKcommunityshopping

centres;• theabilitytofacilitatethedeliveryofattractivevalueandassetmanagementopportunities;• amoreefficientcapitalstructure;and• astrongplatformthathasenabledtheGrouptoconverttoaREITeffective31December2014.

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25 Acquisition of units in the Mall Unit Trust and Capital Raise continuedCapital Raise and funding of the AcquisitionThegrossproceedsfromtheCapitalRaisewere£165million(seenote19).Totaltransactioncostswere£7.4millionofwhich£4.3millionspecificallyrelatedtotheCapitalRaiseandhavebeendeductedfromSharePremium.Theremaining£3.1millionhasbeenchargedtotheincomestatement.

InadditiontothenetproceedsoftheCapitalRaisetheGroupmadeadrawdownonitsamendedandrestatedrevolvingcreditfacilityof£34.6million(seenote17aforfurtherdetails)andutilisedexistingcashresourcesforthebalanceoffundingrequired.

Accounting for the AcquisitionFollowingthecompletionoftheAcquisition,theGroupowned91.82%oftheMallFundandheldthreeofthesixdirectorseatsofTheMall(GeneralPartner)Limited.InadditionthroughtheGroup’s100%ownershipofTheMall(GeneralPartner)Limiteditwas(andis)abletoappointandremovetheindependentdirectors,givingittheabilitytoappointamajorityofTheMall(GeneralPartner)Limited’sBoardandhenceexercisecontrolovertheMallFund.TheGroupthereforeconsolidatedtheoperationsofTheMallfrom14July2014.PriortothisdatetheGroupequityaccountedforitsinterestintheMallFundasanAssociate.

TodeterminetheassetsandliabilitiesacquiredatthedateofcompletiontheGrouphaveusedthe30June2014balancesheetwithanadjustmentmadetodeferredincometoreflecttheprorataprofitsfortheperiodto14July2014,thedateoftheAcquisition.Thisisonthebasisthatthevaluationandotherbalancesheetcaptionswouldnotbeexpectedtosignificantlychangeduringsuchashortperiodoftime.Thefollowingprovidesabreakdownoftheassetandliabilitiesacquired:

£mInvestment properties 752.1Cash 25.1Tradedebtors(netofprovisionsof£0.8million) 4.3Prepaymentsandaccruedincome 3.0Otherdebtors 24.0Other assets 56.4

Tradecreditors (1.2)Othercreditors (10.7)Accrualsanddeferredincome (17.0)Current liabilities (28.9)

Bankloans (343.6)Otherliabilities(HeadLeases) (65.4)Non-current liabilities (409.0)Net Assets (100%) 370.6

Theonlyfairvalueadjustmentsmadeonacquisitionrelatetotheperformancefee(reflectingtheexpectationofthisbeingtriggeredsubsequentlyintheyear)andtheaccrualforestimatedprofitsduetothevendorfrom1April2014tothedateofcompletion.

£mNetAssetsacquired(62.56%of£370.6million) 231.8Accrualfor1Aprilto14July2014profitsduetovendor (3.0)PerformanceFeenetliabilityarisingoncompletion (4.9)Totalidentifiableassets(provisional) 223.9

ConsiderationCashpaidtoAvivaandKaroo (205.7)CashpaidtoEscrow (7.4)Cashconsiderationout (213.1)ExpectedrecoveryfromEscrow 0.7TotalexpectedConsideration (212.4)

NegativeGoodwilltobetakentoincomestatement(provisional) 11.5

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25 Acquisition of units in the Mall Unit Trust and Capital Raise continuedAccounting for the Acquisition continuedThenegativeGoodwillarisesduetothevaluationdrivenincreaseinnetassetvalueofTheMallFundat30June2014comparedto31March2014,astheacquisitionpricewascalculatedwithreferencetothelatter.

Subsequent acquisitions of minority interestsInOctober2014theMallFundcompletedaredemptionoftheunitsofeightofthenineremainingunitholders.UnderthetermsofthisredemptiontheFundacquiredandthencancelledtheoutstandingunitsatatotalcashcostof£28.2million.ThishadtheeffectofincreasingtheGroup’seffectiveshareholdinginTheMallfrom91.82%to99.45%.

On1December2014Capital&Regional(EuropeHolding5)Limited,a100%subsidiaryofCapital&Regionalplc,acquiredtheunitsheldbythesoleremainingminorityunitholderforcashconsiderationof£2.1million.

Theimpactofthesetransactionshasbeenreflectedasamovementinthestatementofchangesinequity.

FollowingthesetransactionstheGroupowned100%ofTheMallFundfrom1December2014.SubsequenttothisdatethetwoindependentdirectorsofTheMall(GeneralPartner)LimitedresignedleavingthethreeCapital&RegionaldirectorsandtheChairmanasthefourservingdirectorsat30December2014.

Amounts credited/charged to the income statementThefollowingtablesummarisestheamountscreditedorchargedtotheincomestatementinrespectoftheacquisitionsofMallUnits,thecapitalraiseandthesubsequentrestructuringoftheMallFund.

£mNegativeGoodwillcreditedonacquisitionof62.56%ofMallUnits 11.5Transactioncostschargedtoincomestatement (3.1)RestructuringoftheMallFund (0.3)Total 8.1

£31.9millionofrevenueand£47.0millionofprofitbeforetaxinrespectofTheMallhasbeencreditedtotheincomestatementintheyearpostacquisition.IftheGrouphadconsolidatedtheresultsofTheMallfrom31December2013,beingthefirstdayofitsaccountingperiod,theGroup’srevenuesfortheyearwouldhavebeen£80.8millionandprofitbeforetaxwouldhavebeen£89.7million.

26 Discontinued OperationsGerman joint ventureOn24December2014,theGroupannouncedtheconditionalexchangeofcontractsforthesaleofits50:50GermanjointventurewitharealestatefundmanagedbyAresManagement,LPtoclientsandfundsundermanagementofRockspringPropertyInvestmentManagers.UnderthetermsofthetransactiontheGroupwillretainforapproximatelyfiveyearsa5.1%minoritystakeineachofthefiveGermanportfolios.

Consideringthesaletobehighlyprobableat24December2014managementreclassifiedthebalancesrelatedtotheGermanjointventurefromreceivablesfromjointventures(£14.2million)andinterestsinjointventures(£27.3million)toassetsheldforsale(£39.5million),liabilitiesinrespectofassetsheldforsale(£(0.8)million)andfixedassetinvestments(£2.7million-inrespectoftheminoritystakesretained).Thereclassificationsweremadeatcarryingvaluebeingthelowerofcarryingamountandexpectedfairvaluelesscoststosell.

Thetransactioncompletedon10February2015.Thenetproceedsreceivedwere€54.6million,thisequatedaftercoststo£42.1million(afterallcostsandincludingthebenefitoftheGroup’sForwardContractwhichhedged€50millionat1.2721)andisexpectedtoresultinaprofitondisposalofapproximately£0.6milliontoberecognisedintheyearending30December2015subjecttoanyfinaladjustmentsarisingoutofthecompletionaccountsandbeforetheimpactofhedgingandforeignexchangereservesreclassifications.Oncompletion,andincludedwithintheproceeds,theGroupenteredintoalong-termloanpayableof€3.5million(£2.7millionatyearendexchangerateof1.2783)repayableafterfiveyears.Aftercompletionadistributionof€1.5millionwasmadeinrespectoftheretainedminoritystakes(reducingthistoapproximately€2.2million),thiswasusedtoreducetheoutstandingamountoftheloanto€2.0million.

GivenGermanywaspreviouslytreatedasaseparateoperatingsegmentitsresultshavebeenreclassifiedasdiscontinuedoperationsin2014andthe2013resultssimilarlyrestated.

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26 Discontinued Operations continuedLeisure World, Hemel HempsteadOn14February2014,theGroupcompletedthesaleoftheLeisureWorldproperty,HemelHempsteadfornetconsiderationof£8.4million(£8.5millionofconsiderationless£0.1millionofassociatedcosts).Onthebasisthatat30June2013and30December2013thesalewasconsideredhighlyprobable,thepropertyhadbeenclassifiedasanassetheldforsaleatboththosedates.

Morrison Merlin (Great Northern Warehouse)On31October2013,theGroupcompletedthesaleofMorrisonMerlinLimited,theGroupcompanythatownedtheGreatNorthernWarehouse,foraheadlinepriceof£71.1million.AtthedateofdisposalthenetassetsofMorrisonMerlinLimitedwere£14.1million.Thenetcashconsiderationreceivedaftertransactioncostsof£0.1millionwas£12.0millionresultinginalossondisposalaftertaxof£2.1million.

GiventhedisposalofMorrisonMerlinandLeisureWorld,HemelHempsteadformedpartoftheGroup’sstrategicplantoexittheLeisuremarket,theresultsfor2013werepresentedasdiscontinuedoperationsinthefinancialstatementsfortheyearended30December2013.

X-LeisureOn16January2013theGroupcompletedthesaleofits11.9%stakeintheX-LeisureFundandits50%interestinX-LeisureLimitedtoasubsidiaryofLandSecuritiesGroupplcfornetproceedsof£30.6million.

Theresultsofthesediscontinuedoperations,whichhavebeenincludedintheconsolidatedincomestatement,wereasfollows:

Note

Year ended30 December

2014£m

Yearended30December

2013£m

Revenue – 5.1Costofsales 0.2 (1.2)Administrativecosts (0.3) –Financeincome 1.0 2.3Financecosts – (4.3)Shareofjointventuresandassociates 4.6 1.7Attributablecurrenttaxcredit – 0.1Shareofprofitafterattributabletax 5.5 3.7Lossondisposalofdiscontinuedoperations – (2.1)Profitfromdiscontinuedoperations 2a 5.5 1.6

Thelossondisposalofdiscontinuedoperationsof£nil(2013:lossof£2.1million)isstatedafterDeferredTaxcreditsof£nil(2013:creditsof£0.1million)relatingtoDeferredTaxliabilitiesextinguishedondisposal.

Duringtheyear,discontinuedoperationscontributed£5.2 million(2013:£4.3million)inrespectoftheGroup’snetoperatingcashflows,contributed£8.8million(2013:£42.8million)inrespectofinvestingactivities(disposalproceeds)andreceived£0.9million(2013:paid£0.6million)inrespectoffinancingactivities.

Assetsheldforsalecomprise:

30 December 2014

£m

30December2013£m

InterestsinGermanjointventure 39.5 –LeisureWorld,HemelHempstead – 8.5

39.5 8.5

£0.8million(2013:£0.1million)ofbalancesheetliabilitiesassociatedwiththeseassetshavebeenrecognisedat30December2014representingexpectedtransactioncosts.

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27 Lease arrangementsThe Group as lessee – operating leasesAtthebalancesheetdate,theGroup’sfutureminimumleasepaymentsandsubleasereceiptsundernon-cancellableoperatingleasesrelatedtolandandbuildingswereasfollows:

2014

£m2013£m

Lease paymentsWithinoneyear (1.9) (2.0)Betweenoneandfiveyears (7.4) (7.5)Afterfiveyears (16.1) (17.9)

(25.4) (27.4)

OperatingleasepaymentsaredenominatedinSterlingorEurosandhaveanaverageremainingleaselengthof12 years(2013:13years)andrentalsarefixedforanaverageofoneyear(2013:twoyears).Duringtheyeartherewerenocontingentrents(2013:£nil)andtheGroupincurredleasepaymentsrecognisedasanexpenseof£1.6million(2013:£1.9million).

The Group as lessee – finance leasesAtthebalancesheetdate,theGroup’sfutureminimumleasepaymentsunderfinanceleaseswereasfollows:

2014

£m2013£m

Lease paymentsWithinoneyear 3.6 –Betweenoneandfiveyears 14.4 –Afterfiveyears 398.4 –

416.4 –Futurefinancechargesonfinanceleases (351.0) –Presentvalueoffinanceleaseliabilities 65.4 –

Financeleaseliabilitiesareinrespectofheadleasesoninvestmentproperty.Theseleasesprovideforpaymentofcontingentrent,usuallyaproportionofnetrentalincome,inadditiontotherentsabove.

The Group as lessor TheGroupleasesoutallofitsinvestmentpropertiesunderoperatingleasesforaverageleasetermsofeightyears(2013:eightyears)toexpiry.Themostsignificantleasingarrangementsaresummarisedinthefundportfolioinformation.Thefutureaggregateminimumrentalsreceivableundernon-cancellableoperatingleasesareasfollows:

Unexpiredaverage

leasetermYears

Lessthan

1year£m

2–5years£m

6–10years£m

11–15years£m

16–20years£m

Morethan20years

£m

30 December2014Total

£m

30December2013Total£m100%figures

TheMall 7.8 47.4 139.4 96.5 34.6 22.9 101.4 442.2 469.3Group 47.4 139.4 96.5 34.6 22.9 101.4 442.2 –Redditch 7.9 10.2 34.3 24.2 6.1 2.4 17.1 94.3 76.8Totalassociates 10.2 34.3 24.2 6.1 2.4 17.1 94.3 546.1Germanportfolio1 – – – – – – – 183.6Otherjointventures – – – – – – – 8.8Totaljointventures – – – – – – – 192.4Total 57.6 173.7 120.7 40.7 25.3 118.5 536.5 738.5

1 TheGermanportfoliohasbeenexcludedfromtheaboveanalysisfollowingitsreclassificationasanassetheldforsaleandsubsequentdisposalpostyearend(Seenote26).HemelHempsteadwassimilarlyexcludedfromtheGroupanalysisin2013(seenote26forfurtherdetails).

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28 Capital commitmentsAt30December2014,theGroup’sshareofthecapitalcommitmentsofitsassociates,jointventuresandwhollyownedpropertieswas£3.2million(2013:£2.6million).Thiscomprised£3.1million(2013:£0.5million)relatingtoTheMalland£0.1million(2013:£2.1million)relatingtootherassets.

29 Contingent liabilitiesGerman joint ventureUnderthetermsoftheGermanjointventuredisposal,Capital&RegionalplcgavecertaincustomarywarrantiesastotheirtitletotherelevantsharesandcertainwarrantiesinrelationtotheGermanjointventuregenerally.InadditionCapital&RegionalplchaveprovidedanindemnitytothepurchaserforpotentialGermanRealEstateTransferTax(RETT)liabilitiesiftheyariseoutofactionsundertakenbytheGrouppostcompletion.AllsuchactionscoveredbytheindemnityarewithintheGroup’scontrol,themaximumRETTliabilitybasedonthe30December2014propertyvaluationwasapproximately€20million.

Morrison MerlinUnderthetermsoftheMorrisonMerlinLimiteddisposal,Capital&RegionalplcgavecertaincustomarywarrantiesastotheirtitletotherelevantsharesandcertainwarrantiesinrelationtoMorrisonMerlinLimitedgenerally.ThemaximumliabilityofCapital&Regionalplcinrespectofthewarrantiesis£7million.Anyclaimsinrespectofthewarrantiesmustbebroughtwithin24monthsofcompletion,or30monthsinrespectofthetaxwarranties.

X-Leisure UnderthetermsoftheX-Leisuredisposalagreements,Capital&Regionalgavecertaincustomarywarrantiesastocapacity,titletothedisposedassets,solvency,accountingandfinancialmatters,litigation,compliancewithlawsandregulatoryconsentsandtaxation.

Theaggregateliabilityofthesellersinrespectofbreachesofcertainwarrantiesincludingthoserelatingtotitleandcapacityandauthorityshallnotexceedanamountequaltotheconsiderationreceivedbythatseller.Otherthaninthecaseoffraud,theaggregateliabilityoftheSellersandtheManagerinrespectofclaimsunderthedisposalagreementsshallnotexceed£30million.

The Junction FundUnderthetermsoftheGroup’sdisposalofitsinterestinTheJunctionFund,Capital&RegionalUnitsLLPandCapital&Regional(JunctionGP)LimitedgavecertaincustomarywarrantiesastotheirtitletotherelevantunitsandsharesandcertainwarrantiesinrelationtotheJunctionFundgenerallyandtheGPsellersgavewarrantiesinrelationtotheJunctionGP.Anyclaimsinrespectofthewarrantiesmustbebroughtwithin12monthsofthedateoftheagreement,being19October2012,otherthaninrespectofcertainclaimsrelatingtotaxation,wheretheclaimsmustbebroughtwithineither24monthsorsixyearsfromthedateofagreement.TherelevantwarrantiesweregivenonaseveralbasisandthemaximumliabilityofCapital&RegionalUnitsLLPinrespectoftheoutstandingwarrantiesis£3.5millionandthemaximumliabilityofCapital&Regional(JunctionGP)Limitedinrespectoftheoutstandingwarrantiesis£3.5million.

TheobligationsofCapital&RegionalUnitsLLPundertheagreementwereguaranteedbyCapital&RegionalHoldingsLimited.

30 Events after the balance sheet dateGerman joint venture disposalOn10February2015theGroup’sdisposalsofinterestsinitsGermanjointventurecompleted,seenote26forfurtherdetails.

TheGroupusedtheproceedstorepaytheoutstandingbalanceonitsrevolvingcreditfacilityon11February2015.Inlinewiththetermsdetailedinnote17athelimitofthefacilityreducedto£20millionasofthatdate.

IpswichOn3March2015theGroupcompletedtheacquisitionoftheButtermarketCentre,Ipswichina50:50jointventurewithDrumPropertyGroup.Thecentrehasbeenacquiredonafreeholdbasisfor£9.2millionequivalenttoaNetInitialYieldof8.46%.

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31 Related party transactionsTransactionsbetweentheCompanyanditssubsidiaries,whicharerelatedparties,havebeeneliminatedonconsolidationandarenotdisclosedinthisnote.ThisincludestransactionsbetweentheCompanyandTheMallLimitedPartnershipfrom14July2014onwards,beingthedateitbecameasubsidiary.TransactionsbetweentheGroupanditsassociatesandjointventures,allofwhichoccurredatnormalmarketrates,aredisclosedbelow.

Interest received Distributions received

Year to30 December

2014£m

Yearto30December

2013£m

Year to30 December

2014£m

Yearto30December

2013£m

AssociatesGarigal – – – 0.5TheMallLimitedPartnership(until14July2014) – – 1.3 1.2

– – 1.3 1.7Joint venturesGermanjointventurecompanies 0.5 0.6 5.3 0.2

0.5 0.6 5.3 0.2

ThepreviousborrowingarrangementsofTheMallrestrictedtheabilitytomakecashdistributionsofprofittotheGroupwhileitsLTVwasabove60%anditsdebtabove£600million.InJuly2013theMall’sLTVanddebtlevelsfellbelowtheselevelsandremainedsofortheremainderof2013andallof2014.

The£1.2millionreceivedduring2013relatedtoadistributiontocovertaxtobepaidontheshareofprofitsfortheperiod.

Fee income and rent income/(expense)

Net amounts receivable from

As at30 December

2014£m

Asat30December

2013£m

As at30 December

2014£m

Asat30December

2013£m

AssociatesTheMallLimitedPartnership(until14July2014) 2.1 7.3 – 1.2KingfisherLimitedPartnership(Redditch) 0.7 0.7 0.1 0.1

2.8 8.0 0.1 1.3Joint venturesGermanjointventurecompanies1 – – 14.2 15.5WatersideLincolnLimitedPartnership 1.0 0.2 – 7.4

1.0 0.2 14.2 22.9

1 Reclassifiedtoassetsheldforsalefrom24December2014.

Amountsreceivablefromassociatesareunsecuredanddonotincurinterestandtheyarepayableondemandandsettledincash.

AmountsreceivablefromtheGermanjointventureincurinterestatcommercialrateswhichispayableondemand.Thebalancesareunsecuredandsettledincash.AmountsreceivablefromtheWatersideLincolnLimitedPartnership,priortoitsdisposal,wereinterestfreeandrepayableondemand.

ManagementfeesarereceivedbyCapital&RegionalPropertyManagementLimitedandarepayableondemand.Theyareunsecured,donotincurinterestandaresettledincash.

Waterside Lincoln Limited PartnershipDuring2011theGroupformedajointventurewithKarooInvestmentFundIIS.C.ASICAV-SIF(‘Karoo’)byselling50%oftheGroup’sinterestinTheWatersideShoppingCentreinLincoln.AstheGroupandKaroohavecommonsignificantshareholderstheformationofthejointventurewasconditionaluponshareholderapprovalwhichwasgrantedon1April2011.Includedwithinloanstojointventureswasanamountof£7.4millionrelatedtotheWatersideLincolnLimitedPartnership,thiswasrepaidonthedisposaloftheWatersideLincolnLimitedPartnershipon12November2014.

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31 Related party transactions continuedAcquisition of units in the Mall from Karoo Investment Fund and subscription of shares in Capital & Regional plcKarooisdeemedtobearelatedpartyonaccountofLouisNorvalandNenoHaasbroek’srespectiveinterests.Accordingly,theCompany’sacquisitionofunitsfromKarooandKaroo’ssubscriptionsfor73,540,911sharesinthePlacing,whichbothcompletedon14July2014,wererelatedpartytransactionsforwhichspecificshareholderapprovalwasobtainedattheGeneralMeetingon9July2014.

Inaddition,aspartoftheCapitalRaise,InvestecWealth&InvestmentLimited,onbehalfofaconnectedpersonofLouisNorval,acquired15,424,697NewOrdinarySharesandPinelakeInternational,aconnectedpartyofLouisNorvalandNenoHaasbroek,acquired8,510,638,bothaspartofthePlacing.

Performance feesCertainentitiesintheGroupmayreceiveperformancefeeswheninvestorsrealisetheirinterestsintheunderlyingfundsorjointventures,eitherattheendofthelifeofthefund,onthesaleofsomeoralloftheunderlyingproperties,orthroughanotherrealisationmechanismsuchasalisting.Exceptwherestatedbelow,noperformancefeeswerereceivedfromorpaidineitherthecurrentorprecedingyear.

The Mall FundAperformancefeeliabilitywastriggeredinSeptember2014ontheredemptionofferbeingmadetoallremainingminorities(seenote25).£5.9millionofthetotalof£11.8millionpayablewasduetoCRPMandhasbeeneliminatedonconsolidation.

Kingfisher Limited Partnership CRPMwillearnanadditionalequityreturnifdistributionsresultinagearedreturninexcessofa15%IRR.PartofanyreceiptmaybepayabletocertainkeyCRPMmanagementandstaffaspartoftheirincentiveplans.TheGroupwillbear20.00%ofthecostbyvirtueofitsinvestmentinthePartnership.

Waterside Lincoln Limited PartnershipCRPMearnedsaleandperformancefeesof£0.9milliononthesaleoftheWatersideLincolnLimitedPartnershipon12November2014.TheGroupbore50.00%ofthecostbyvirtueofitsinvestmentinthePartnership.

Broadwalk Shopping Centre, Edgware WithrespecttotheBroadwalkShoppingCentre,Edgware,CRPMwillearnapromotefeeifdevelopmentprofitsrelatingtothecentreexceed£10million.

Transactions with key personnelInaccordancewithIAS24,keypersonnelareconsideredtobetheexecutiveandnon-executivedirectorsastheyhavetheauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesoftheGroup.Theirremunerationintheincomestatementisasfollows:

Year to30 December

2014£m

Yearto30December

2013£m

Shorttermemploymentbenefits 2.5 2.3Post-employmentbenefits 0.2 0.3Paymentforlossofoffice – 0.4Share-basedpayments1 0.3 0.5 3.0 3.5

1 Share-basedpaymentsrelatetoamountsawardedunderthe2008LTIP.

32 Dividends

Year to30 December

2014£m

Yearto30December

2013£m

Interimdividendpersharepaidforyearended30December2013of0.25p – 0.9Secondinterimdividendpersharepaidforyearended30December2013of0.40p 1.4 –Interimdividendpersharepaidforyearended30December2014of0.35p 2.4 –Amountsrecognisedasdistributionstoequityholdersintheyear 3.8 0.9Proposedfinaldividendpershareforyearended30December2014of0.60p1 4.2 –

1 InlinewiththerequirementsofIAS10–‘EventsaftertheReportingPeriod’,thisdividendhasnotbeenincludedasaliabilityinthesefinancialstatements.

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Company Balance SheetAs at 30 December 2014

Registerednumber:01399411

PreparedinaccordancewithUKGAAP

Note2014

£m2013£m

Fixed assetsInvestments C 333.5 77.8

Current assetsDebtors–amountsfallingduewithinoneyear D 126.5 160.2Debtors–amountsfallingdueaftermorethanoneyear D 13.6 14.8Cashanddeposits – –Total current assets 140.1 175.0

Creditors – amounts falling due within one yearTradeandothercreditors E (73.6) (65.2)Total current liabilities (73.6) (65.2)

Net current assets 66.5 109.8

Net assets 400.0 187.6

Capital and reservesCalled-upsharecapital F 7.0 9.9Sharepremium F 157.2 –Mergerreserve F 60.3 60.3Capitalredemptionreserve F 4.4 4.4Retainedearnings F 171.1 113.0Shareholders’ funds 400.0 187.6

ThesefinancialstatementswereapprovedbytheBoardofdirectors,authorisedforissueandsignedontheirbehalfon26March2015by:

Charles Staveley GroupFinanceDirector

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A Accounting policiesAlthoughtheGroupconsolidatedfinancialstatementsarepreparedunderIFRS,theCompanyfinancialstatementsforCapital&RegionalplcpresentedinthissectionarepreparedunderUKGAAP.Themainaccountingpolicieshavebeenappliedconsistentlyinthecurrentyearandtheprecedingyear.

Investments,amountsowedbysubsidiariesandamountsowedbyassociatesandjointventuresarestatedatcostlessprovisionforimpairment.Wherethereisanindicationthataninvestmentisimpaired,animpairmentreviewiscarriedoutbycomparingthecarryingvalueoftheinvestmentagainstitsrecoverableamount,whichisthehigherofitsestimatedvalueinuseandfairvalue.Thisreviewinvolvesaccountingjudgementsaboutthefuturecashflowsfromtheunderlyingassociatesandjointventuresand,inthecaseofCRPM,estimatedassetmanagementfeeincomelessestimatedfixedandvariableexpenses.

TransactionsinforeigncurrenciesaretranslatedintoSterlingatexchangeratesapproximatingtotheexchangeraterulingatthedateofthetransaction.MonetaryassetsandliabilitiesdenominatedinforeigncurrenciesatthebalancesheetdatearetranslatedtoSterlingattheexchangeraterulingatthatdateanddifferencesarisingontranslationarerecognisedintheincomestatement.

TheCompany’srelatedpartytransactionsaredescribedinnote31totheGroupfinancialstatements.ExceptfortheDirectors,theCompanyhadnodirectemployeesduringtheyear(2013:none).Informationonthedirectors’emoluments,shareoptions,long-termincentiveschemesandpensioncontributionsisshownintheDirectors’RemunerationReport.

B Profit for the yearAspermittedbysection408oftheCompaniesAct2006,theprofitandlossaccountoftheCompanyisnotpresentedaspartofthesefinancialstatements.Theprofitfortheyearattributabletoequityshareholderswas£55.5million(2013:£10.1million).

C Fixed asset investments

Subsidiaries

£m

Jointventures

£m

Otherinvestments

£mTotal

£mAtthestartoftheyear 76.8 1.0 – 77.8Investment 209.5 – – 209.5Reversalofimpairmentofinvestments 46.2 – – 46.2Attheendoftheyear 332.5 1.0 – 333.5

NoteGshowstheprincipalsubsidiaries,associatesandjointventuresheldbytheGroupandtheCompany.

D Debtors

Amounts falling due within one year 2014

£m2013£m

Amountsowedbysubsidiaries 125.3 159.1Otherreceivables 1.2 1.1 126.5 160.2

Amounts falling due after more than one year 2014

£m2013£m

Amountsowedbyjointventures 13.6 14.8 13.6 14.8

Notes to the Company Financial StatementsFor the year ended 30 December 2014

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E Trade and other creditors

Amounts falling due within one year 2014

£m2013£m

Amountsowedtosubsidiaries 72.9 64.4Tradepayables – 0.1Accrualsanddeferredincome 0.7 0.7 73.6 65.2

F Called-up share capital

Non-distributable Distributable

Sharecapital

£m

SharePremium

£m

Capitalredemption

reserve£m

Retainedearnings

£m

Retainedearnings

£m

Mergerreserve

£mTotal

£mAtthestartoftheyear 9.9 – 4.4 2.6 110.4 60.3 187.6Retainedprofitfortheyear – – – 0.3 55.2 – 55.5Newsharesissued 3.5 157.2 – – – – 160.7Repurchaseandcancellationofdeferredshares (6.4) – – – 6.4 – –Dividendspaid – – – – (3.8) – (3.8)Attheendoftheyear 7.0 157.2 4.4 2.9 168.2 60.3 400.0

TheCompany’sauthorised,issuedandfullypaid-upsharecapitalisdescribedinnote19totheGroupfinancialstatements.TheotherreservesaredescribedintheconsolidatedstatementofchangesinequityintheGroupfinancialstatements.

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G Principal subsidiaries, associates and joint ventures

Natureofbusiness

Shareofvoting

rightsIncorporated/registered and operating in Great BritainCapital&RegionalEarningsLimited Propertyinvestment 100%Capital&RegionalIncomeLimited Propertyinvestment 100%Capital&RegionalHoldingsLimited Propertyinvestment 100%*Capital&RegionalPropertyManagementLimited Propertymanagement 100%Capital&RegionalUnitsLLP Propertyinvestment 100%SnozoneLimited Operatorofindoorskislopes 100%KingfisherLimitedPartnership Propertyinvestment 20%Incorporated/registered and operating in JerseyCapital&RegionalCapitalPartnerLimited Propertyinvestment 100%Capital&Regional(EuropeHolding5)Limited Propertyinvestment 100%Capital&Regional(EuropeLP)Limited Propertyinvestment 50%*1

Capital&Regional(EuropeLP2)Limited Propertyinvestment 50%*1




EuroB-NoteHoldingLimited Finance 49.90%*TheMallUnitTrust Propertyinvestment 100%Incorporated/registered in Jersey and operating in Great BritainCapital&Regional(Jersey)Limited Propertyinvestment 100%Capital&RegionalHemelHempstead(Jersey)Limited Propertyinvestment 100%*Capital&RegionalOverseasHoldingsLimited Propertyinvestment 100%

* HelddirectlybytheCompanyor,inthecaseoftheEuropeLPs,part-helddirectlybytheCompanyandpart-heldthroughasubsidiaryandinthecaseofEuroB-NoteHoldingLimited,partheldthroughasubsidiaryandpartheldthroughtheESOT.

1 Holdingreducedto5.1%on10February2015.

ThesharesofvotingrightsareequivalenttothepercentagesofordinarysharesorunitsheldbytheGroup.

Toavoidastatementofexcessivelength,detailsofinvestmentswhicharenotsignificanthavebeenomitted.Alloftheaboveprincipalsubsidiaries,associatesandjointventureshavebeenconsolidatedintheGroupfinancialstatements.Investmentsinassociatesandjointventuresareanalysedinnotes14dand14etotheGroupfinancialstatements.

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Five year review

2014

£m20131

£m20121

£m2011£m

2010£m

Balance sheetPropertyassets 790.8 – 78.4 80.0 80.8Othernon-currentassets 21.3 23.5 24.4 34.3 27.1Intangibleassets – – – 1.8 1.9Investmentinjointventures – 32.3 25.7 27.2 25.7Investmentinassociates 13.6 112.1 80.7 120.2 110.8Cashatbank 42.6 11.1 5.3 20.0 25.7Assetsclassifiedasheldforsale 39.5 8.5 32.2 – –Othernetcurrentliabilities (26.5) 2.2 (7.2) (13.0) (10.2)Bankloansgreaterthanoneyear (396.8) – (58.3) (61.6) (68.8)Othernon-currentliabilities (65.5) (1.0) (1.6) (12.9) (18.5)Net assets 419.0 188.7 179.6 196.0 174.5Financed byCalledupsharecapital 7.0 9.9 9.9 9.9 9.9Sharepremiumaccount 157.2 – – – –Otherreserves 65.3 66.3 75.2 70.4 147.9Retainedearnings 189.5 112.5 94.5 115.7 16.7Capital employed 419.0 188.7 179.6 196.0 174.5Return on equity Returnonequity(%) 28.1% 5.1% (8.5)% 11.9% 33.9%Increase/(decrease)innetassetspershare+dividend(%) 12.1% 5.8% (8.4)% 11.8% 35.1%Totalshareholderreturn 24.7% 53.9% (9.5)% (3.8)% (2.2)%Yearendshareprice(pence) 53p 44p 29p 32p 33pTotal returnTotalcomprehensiveincome/(expense) 74.1 9.2 (16.6) 20.7 44.0Net assets per share (pence) Basicnetassetspershare 60p 54p 51p 56p 50p EPRAtriplenetassetspershare 59p 54p 51p 56p 50p EPRAnetassetspershare 59p 56p 55p 63p 57pGearing(%) 96.3% – 32.6% 34.3% 40.4%Gearing(%)onaseethroughbasis 100.3% 134.9% 179.2% 253.6% 305.0%

Income statement1

Grouprevenue 46.6 17.6 22.0 28.9 30.7Grossprofit 28.4 9.6 13.1 17.2 20.3Profit/(loss)onordinaryactivitiesbeforefinancing 77.0 7.4 (13.3) 16.2 52.6Netinterestpayable (9.8) (0.1) 0.6 (3.4) (6.2)Profit/(loss)beforetax 67.2 7.3 (12.7) 12.8 46.4Taxcredit/(charge) 2.5 0.2 0.9 (2.0) (2.0)Profit/(loss)aftertax 69.7 7.5 (11.8) 10.8 44.4OperatingProfit 19.3 13.0 16.3 15.0 13.6Interestcover(x) 4.4 3.9 3.7 5.5 4.1Earnings per share (pence) Basic2 15p 3p (5)p 6p 13p Diluted2 15p 3p (5)p 6p 13p EPRA2 3p 2p 1p 5p 4pDividendspershare 0.95p 0.65p – – –

1 2013and2012resultshavebeenrestatedfromthoseoriginallypresentedinthoserespectiveyearstoseparatediscontinuedoperationsasexplainedinnote26.2 Continuinganddiscontinuedoperations.

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OtherInformation

130 GlossaryofTerms132 PropertyInformation134 EPRAPerformanceMeasures134 CovenantInformation

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130

Stock Code: CAL

Glossary of Terms

CRPMisCapital&RegionalPropertyManagementLimited,asubsidiaryofCapital&Regionalplc,whichearnsmanagementandperformancefeesfromTheMallandcertainassociatesandjointventuresoftheGroup.

Contracted rent ispassingrentandthefirstrentreservedunderaleaseorunconditionalagreementforleasebutwhichisnotyetpayablebyatenant.

Contributionisnetrentlessnetinterest,includingunhedgedforeignexchangemovements.

Capital returnisthechangeinvalueduringtheyearforpropertiesheldatthebalancesheetdate,aftertakingaccountofcapitalexpenditureandexchangetranslationmovements,calculatedonatimeweightedbasis.

Debt isborrowings,excludingunamortisedissuecosts.

EPRA earnings per share (EPS)istheprofit/(loss)aftertaxexcludinggainsonassetdisposalsandrevaluations,movementsinthefairvalueoffinancialinstruments,intangibleassetmovementsandthecapitalallowanceeffectsofIAS12IncomeTaxeswhereapplicable,lesstaxarisingontheseitems,dividedbytheweightedaveragenumberofsharesinissueduringtheyearexcludingownsharesheld.

EPRA net assets per shareincludethedilutiveeffectofshare-basedpaymentsbutignorethefairvalueofderivatives,anydeferredtaxprovisionsonunrealisedgainsandcapitalallowances,anyadjustmenttothefairvalueofborrowingsnetoftaxandanysurplusonthefairvalueoftradingproperties.

EPRA triple net assets per shareincludethedilutiveeffectofshare-basedpaymentsandadjustallitemstomarketvalue,includingtradingpropertiesandfixedratedebt.

Estimated rental value (ERV)istheGroup’sexternalvaluers’opinionastotheopenmarketrentwhich,onthedateofvaluation,couldreasonablybeexpectedtobeobtainedonanewlettingorrentreviewofaunitorproperty.

ERV growthisthetotalgrowthinERVonpropertiesownedthroughouttheyearincludinggrowthduetodevelopment.

GearingistheGroup’sdebtasapercentageofnetassets.SeethroughgearingincludestheGroup’sshareofnon-recoursedebtinassociatesandjointventures.

Interest rate cover (ICR) istheratioofeither(i)OperatingProfit(beforeinterest,tax,depreciationandamortisation);or(ii)netrentalincometotheinterestcharge.

IPD isInvestmentPropertyDatabankLimited,acompanythatproducesanindependentbenchmarkofpropertyreturns.

Like for like figuresexcludetheimpactofpropertypurchasesandsalesonyeartoyearcomparatives.

Loan to value (LTV) istheratioofdebtexcludingfairvalueadjustmentsfordebtandderivatives,tothefairvalueofproperties(includingadjustmentsfortenantincentivesandheadleases).

Market valueisanopinionofthebestpriceatwhichthesaleofaninterestinapropertywouldcompleteunconditionallyforcashconsiderationonthedateofvaluationasdeterminedbytheGroup’sexternalorinternalvaluers.Inaccordancewithusualpractice,thevaluersreportvaluationsnet,afterthedeductionoftheprospectivepurchaser’scosts,includingstampduty,agentandlegalfees.

Net assets per share (NAV) areshareholders’fundsdividedbythenumberofsharesheldbyshareholdersattheyearend,excludingownsharesheld.

Net initial yield (NIY)istheannualisednetrentgeneratedbytheportfolioexpressedasapercentageoftheportfoliovaluation,excludingdevelopmentproperties,whichisinlinewithEPRA’sbestpracticerecommendations.

Net debt to property valueisdebtlesscashandcashequivalentsdividedbythepropertyvalue.

Net interestistheGroup’sshare,onasee-throughbasis,oftheinterestpayablelessinterestreceivableoftheGroupanditsassociatesandjointventures.

Net rentistheGroup’sshare,onasee-throughbasis,oftherentalincome,lesspropertyandmanagementcosts(excludingperformancefees)oftheGroupanditsassociatesandjointventures.

Nominal equivalent yieldisaweightedaverageofthenetinitialyieldandreversionaryyieldandrepresentsthereturnapropertywillproducebaseduponthetimingoftheincomereceived,assumingrentisreceivedannuallyinarrearsongrossvaluesincludingtheprospectivepurchaser’scosts.

Passing rentisgrossrentcurrentlypayablebytenantsincludingcarparkprofitbutexcludingincomefromnon-tradingadministrationsandanyassumedupliftfromoutstandingrentreviews.

Property under management isthevaluationofpropertiesforwhichCRPMistheassetmanager.

Operating Profit isthetotalofContributionfromTheMallandtheGroup’sjointventuresandassociates,theprofitfromSnozoneandpropertymanagementfeeslesscentralcosts(includinginterest,excludingnon-cashchargesinrespectofshare-basedpayments)beforetax.OperatingProfitexcludesrevaluationofproperties,profitorlossondisposalofpropertiesorinvestments,gainsorlossesonfinancialinstrumentsandexceptionalone-offitems.ResultsfromDiscontinuedOperationsareincludedupuntilthepointofdisposalorreclassificationasheldforsale.

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131

www.capreg.com Other Information > Glossary of Terms

REIT –RealEstateInvestmentTrust

Return on equityisthetotalreturn,includingrevaluationgainsandlosses,dividedbyopeningequityplustimeweightedadditionstoandreductionsinsharecapital,excludingshareoptionsexercised.

Reversionary percentageisthepercentagebywhichtheERVexceedsthepassingrent.

Reversionary yieldistheanticipatedyieldtowhichthenetinitialyieldwillriseoncetherentreachestheERV.

See-through balance sheetistheproformaproportionatelyconsolidatedbalancesheetoftheGroupanditsassociatesandjointventures.

See-through income statement istheproformaproportionatelyconsolidatedincomestatementoftheGroupanditsassociatesandjointventures.

Temporary lettings arethoselettingsforoneyearorless.

Topped-up net initial yieldisthenetinitialyieldadjustedfortheexpirationofrent-freeperiodsorotherunexpiredleaseincentives.

Total returnistheGroup’stotalrecognisedincomeorexpensefortheyearassetoutintheconsolidatedstatementofcomprehensiveincomeexpressedasapercentageofopeningequityshareholders’funds.

Total shareholder return (TSR)isaperformancemeasureoftheGroup’ssharepriceovertime.Itiscalculatedasthesharepricemovementfromthebeginningoftheyeartotheendoftheyearplusdividendspaid,dividedbysharepriceatthebeginningoftheyear.

Vacancy rateistheERVofvacantpropertiesexpressedasapercentageofthetotalERVoftheportfolio,excludingdevelopmentproperties,inlinewithEPRA’sbestpracticerecommendations.

Variable overhead includesdiscretionarybonusesandthecostsofawardstodirectorsandemployeesmadeunderthe2008LTIPandSAYEschemeswhicharespreadovertheperformanceperiod.

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132

Stock Code: CAL

Property Under Management

30 December 2014

£m

30December2013£m

30December2012£m

30December2011£m

30December2010£m

Whollyowned 745 – 81 81 82Associates 151 820 983 1,824 2,132Jointventures – 368 365 576 547Otherproperty – – – – 71Total 896 1,188 1,429 2,481 2,832

ExcludesTheBroadwalkCentre,EdgwareinwhichtheGrouphasnoinvestmentinterest.Figuresexcludeadjustmentstopropertyvaluationsfortenantincentivesandheadleasestreatedasfinanceleases.Tradingpropertiesareincludedatthelowerofcostandnetrealisablevalue.

Property InformationAt 30 December 2014

The Mall properties

Property Description

Lettable space

(sq feet)Car park

spaces Principal occupiers

Number of lettable

unitsValued at £125m plusTheMall,Luton Leaseholdcoveredshoppingcentre

ontwofloors,officesextendingtoover65,000sqft

900,000 1,706 Debenhams,Boots,Primark,H&M,Next,Topshop,Marks&Spencer,Wilko,TKMaxx

159

TheMall,WoodGreen Freehold,partiallyopenshoppingcentre,ontwofloorswithnearly40,000sqftofoffices

540,000 1,500 Primark,Wilko,H&M,Boots,Argos,TKMaxx,WHSmith,NewLook,Next

103

Valued at £70m to £125mTheMall,Blackburn Leaseholdpartiallycoveredshopping

centreonthreefloors600,000 1,304 Primark,Debenhams,H&M,

Next,Boots,Argos126

TheMall,Maidstone Freeholdcoveredshoppingcentreonthreefloorswithofficesextendingto40,000sqft

500,000 1,050 Boots,NewLook,Wilko,Next,SportsDirect

101

TheMall,CamberleyPartleaseholdcoveredshoppingcentreononefloor

390,000 1,040 HouseofFraser,Topshop,Boots,Primark,Sainsbury’s,Argos,RiverIsland

157

TheMall,Walthamstow Leaseholdcoveredshoppingcentreontwofloors

260,000 850 Asda,Boots,NewLook,RiverIsland,Topshop

65

Other propertiesValued at above £125m plusKingfisherShoppingCentre,Redditch(20%)

Freeholdcoveredshoppingcentreontwoprincipaltradinglevels

900,000 2,639 Debenhams,Marks&Spencer,Primark,Next,Arcadia,TKMaxx

174

Property InformationAs at 30 December 2014

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133

www.capreg.com Other Information > Property Information

Mall Portfolio Information (100% Figures)At 30 December 2014

Physical dataNumberofproperties 6Numberoflettableunits 711Lettablespace(sqfeet–‘000s) 3,220Valuation dataPropertiesatindependentvaluation(£m) 744.7Adjustmentsforheadleasesandtenantincentives(£m) 46.1Properties as shown in the financial statements (£m) 790.8Revaluationintheyear(£m) 42.0Initialyield 6.3%Equivalentyield 6.5%Propertylevelreturn 14.8%Reversionary 16.3%Loantovalueratio 51.0%Netdebttovalueratio1 48.1%Lease length (years)Weightedaverageleaselengthtobreak 7.8Weightedaverageleaselengthtoexpiry 8.9Passing rent (£m) of leases expiring in:2015 7.72016 5.42017–2019 9.5ERV (£m) of leases expiring in:2015 8.82016 5.52017–2019 10.3Passing rent (£m) subject to review in:2015 7.22016 4.02017–2019 8.1ERV (£m) of passing rent subject to review in:2015 7.42016 3.72017–2019 8.3Rental DataContractedrentatyearend(£m) 56.6Passingrentatyearend(£m) 53.5ERVatyearend(£mperannum) 62.3ERVmovement(%) 0.5%Vacancyrate(%) 3.4%Like for like net rental income (100%)Current year net rental income (£m)Propertiesownedthroughout2013/2014 47.9Disposals 0.2Net rental income 48.1Prioryearnetrentalincome(£m)Propertiesownedthroughout2013/2014 47.9Disposals 4.8Net rental income 52.7

1 Adjustedfor£8.9millionofpaymentsdueinrespectofMallperformancefeesandMallincomeduetoformerunitholders.

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134

Stock Code: CAL

EPRA Performance MeasuresAs at 30 December 2014

2014 2013EPRAearnings(£m)1 17.9 8.5EPRAearningspershare1 3p 2pEPRAnetassets(£m) 418.1 195.3EPRAnetassetspershare 59p 56pEPRAtriplenetassets(£m) 414.5 188.7EPRAtriplenetassetspershare 59p 54pEPRAnetinitialyield 5.7% 6.3%EPRAtopped-upnetinitialyield 6.1% 6.7%EPRAvacancyrate(UKportfolioonly) 3.6% 4.4%

Reconciliation of EPRA net initial yield and EPRA topped-up net initial yield

2014

£m2013£m

Investmentproperty–whollyowned 744.7 8.5Investmentproperty–shareofjointventuresandassociates 30.2 411.5Lessdevelopments – (8.4)Completedpropertyportfolio 774.9 411.6Allowanceforcapitalcosts 27.7 8.2Allowanceforestimatedpurchasers’costs 44.8 14.3Grossedupcompletedpropertyportfoliovaluation 847.4 434.1Annualisedcashpassingrentalincome 58.9 32.3Propertyoutgoings (10.2) (4.9)Annualisednetrents 48.7 27.4Add:notionalrentexpirationofrentfreeperiodsorotherleaseincentives 3.1 1.5Toppedupannualisedrent 51.8 28.9EPRAnetinitialyield 5.7% 6.3%EPRAtopped-upnetinitialyield 6.1% 6.7%

1 Continuinganddiscontinuedoperations.

Covenant InformationBased on data as at 30 December 2014

See through borrowings£m Covenant

30 December2014 Future changes

Core revolving credit facility (100%)Assetcover 23.4 Greaterthan200% 863%Gearing Lessthan50% 6%ICR Greaterthan150% 2000%

The Mall (100%)LTV 380.0 75% 57%1

ICR Greaterthan125% 244%

Redditch (20%)LTV 16.9 73% 56% Reducingto69%inMay2015ICR Greaterthan175% 230% Reducingto200%inMay2015Debttorent2 <1000% 956%

420.3

1 Basedonbankvaluationat31March2014,updatedannually.2 Agreementhasbeenreachedwiththebankstoremovethiscovenant.

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www.capreg.com

Advisers and Corporate Information

Auditor Principal valuersDeloitte LLP CBRE LimitedCharteredAccountantsandStatutoryAuditor KingsleyHouse2NewStreetSquare 1aWimpoleStreetLondonEC4A3BZ LondonW1G0RE

Investment bankers/brokers Cushman & Wakefield LLPJP Morgan Cazenove 43/45PortmanSquare25BankStreet LondonW1A3BGCanaryWharfLondonE145JP

Numis Securities LimitedTheLondonStockExchangeBuilding10PaternosterSquareLondonEC4M7LT

Principal legal advisorsOlswang LLP90HighHolbornLondonWC1V6XX

Principal lending bankersBank of Scotland Plc part of Lloyds Banking Group25GreshamStreetLondonEC2V7HN

Registered office Registered number52GrosvenorGardens 01399411LondonSW1W0AUTelephone:+44(0)2079328000Facsimile:+44(0)2078025600www.capreg.com

Shareholder InformationRegistrars Equiniti Limited AspectHouse SpencerRoad Lancing WestSussex BN996DA Telephone:08713842438*Internationaldialling:+44(0)1214157047

*Callsto0871telephonenumbersarechargedat8pperminuteplusnetworkextras.Linesopen08:30-17:30,MondaytoFriday,excludingbankholidays.

2015 financial calendar AnnualGeneralMeeting –12May2015 2015interimresults –August2015 2015annualresults –March2016

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52 Grosvenor Gardens, London, SW1W 0AU. Telephone: +44 (0)20 7932 8000 www.capreg.com

Cap

ital & R

egional p

lc Annual R

eport and Accounts for the year ended 30 D

ecember 2014

Stock Code: CAL

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