Hammerson finds solace in second half recovery during 2009

In the company’s full-year results, Hammerson (LSE: HMSO) chairman John Nelson said 2009 was a year of intense activity in volatile conditions. For the twelve months ended 31 December, adjusted and recurring group pre-tax profit increased by 14%, up £16m to £130m.

On a per-share basis, group earnings fell by 23.6% to 19.7p, compared with 25.8p in the previous year. The figures represent the equity dilution following Hammerson’s £585m 7-for-5 rights issue, as 400m new shares were issued in March 2009. Consequently, Hammerson said the rights issue and the year’s property disposals, which totalled £767m, addressed the company’s level of gearing. Net debt reduced by £1.2 billion and at 31 December 2009, net debt was £2.1 billion and gearing was 72%.

Overall Hammerson reported a £453.1m loss, including large one-off items and valuation changes, reflecting a £818.5m loss in H1 and a turn-around in H2 where the company reports a £365.4m profit as property valuations recovered. "Recently there has been a recovery in property markets, supported by strong investor demand and the policy of central banks supporting financial markets” Nelson commented.

UK property values increased during the second half 2009, which supported Hammerson’s property portfolio somewhat, with a 6% H2 rise partially offsetting earlier declines. Overall Hammerson's portfolio fell in value by 9% over the year. Although net rental income was down 2.1% on 2008, the company said this principally reflects the disposals during 2009, and as such net rental income remained resilient. Hammerson ended the year with occupancy rates of 95%, consistent with 2008. The investment portfolio returned like-for-like income growth of 1.1% in year.

Hammerson declared a second interim dividend of 8.5p per share, and offered a scrip alternative payable on 1 April 2010. Subsequently the total 2009 dividend will be 15.45p, which is covered 1.3 times by adjusted earnings.

“The economic outlook, however, remains uncertain, and against this background the Board intends to maintain a prudent approach to financing”. Hammerson’s said in 2010, it is focusing on maximising income and improving operational efficiency. “We rigorously evaluate the projected performance of our properties against financial benchmarks and will progress selected developments. We will continue to capitalise on opportunities which are being presented by the markets. This is likely to lead to more active management and evolution of our portfolio".

http://www.proactiveinvestors.co.uk/companies/news/13586/hammerson-finds-solace-in-second-half-recovery-during-2009-13586.html