Capital & Regional Regulatory News (CAL)

The following amendment has been made to the 'Final Results' announcement released on 5 March 2014 at 07:00 under RNS No 5314B:

· The Ex-dividend date has been corrected from 2 April 2014 to 12 March 2014.

All other details remain unchanged. The full amended text is shown below.

5 March 2014

Capital & Regional plc

Full Year Results to 30 December 2013

CAPITAL & REGIONAL RETURNS TO PROFIT AFTER YEAR OF STRATEGIC AND OPERATIONAL PROGRESS

Capital & Regional plc ("Capital & Regional", the "Group" or the "Company") today announces its full year results to 30 December 2013.

Highlights

Progress in execution of strategy

· Purchase of Mall Fund units during 2013, increasing Group's share from 20.15% to 29.26%

· Successful disposals of Jarman Fields, Hemel Hempstead (£8.5 million) and the Great Northern Warehouse in Manchester (£71.1 million), both non-core Leisure assets

· Sales completed of The Pavilions, Uxbridge and the Gracechurch Centre, Sutton Coldfield by The Mall Fund, reducing its 30 December 2013 LTV to 55% and thereby increasing options for CMBS refinancing

Financial

· Return to profitability with profit before tax of £9.3 million (2012: loss of £12.7 million)

· Recurring pre-tax profitP2 of £14.0 million (2012: £17.0 million) reflecting impact of disposals

· Increase in NAV and EPRA NAV per share to 54p and 56p (2012: 51p and 55p, respectively)

· Repayment of Group's on-balance sheet debt. Proforma see-through net debtP1 to property value fell to 52% compared to 55% at 2012 year end

· Refinancing of €141 million of German debt completed with a new three year facility

· Resumption of dividend payments with total 2013 dividend of 0.65p per share

Operational

· Combination of active asset management programme and attractive and affordable space led to:

o 56 new lettings, adding revenue of £5.0 million; and

o 31 lease renewals adding £1.5 million, at a combined 0.7% above ERV

· Strong retail occupancy across our UK shopping centres at 96.3% at 30 December 2013

· Footfall outperformed national benchmark by 1.2%

· Ongoing progress with redevelopment initiatives:

o Lincoln - phase two of £9 million redevelopment on schedule with 65% of redevelopment space by value already let

o Redditch - Hub leisure concept well advanced with new gym open for trade

Future priorities

· Deliver value from agreed £40 million asset management programme across core portfolio of eight UK shopping centres

· Accelerate realisation of value from the German portfolio and further disposals of other non-core assets to create shareholder value by strengthening our core UK Shopping Centre business

· Conclude refinancing of The Mall Fund CMBS, for which detailed negotiations are ongoing with a number of interested parties

1 P2013 adjusted for £8.4 million Hemel Hempstead net proceeds received in February 2014, 2012 adjusted for £30.6 million X-Leisure proceeds received in January 2013.

2 PAs defined in Note 1 to the financial statements.

3 Change in share price plus dividends paid in the year.

Commenting on the results, John Clare, Chairman, said:

"During the course of the year, the Group continued to make significant progress in the execution of its strategy and I am pleased to report that this was reflected by a 6% increase in NAV per share from 2012, a return to profitability, with profit before tax for the year of £9.3 million, and the resumption of dividend payments. With a much strengthened financial position, we will now be focusing our financial resources and management skills on investing in and actively managing a portfolio of dominant UK community shopping centres, building on our proven track record of recycling capital to consolidate our position as a leading UK retail property company."

Hugh Scott-Barrett, Chief Executive, added:

"We are now seeing a clear uptick in economic conditions which, in turn, has had a positive impact on retailer and consumer confidence. These factors, combined with a much improved investment market, are providing a very supportive background for our UK shopping centre business. We have benefited from an active programme of asset management during the year, which has enhanced our operating performance and valuations towards the end of 2013. We expect this trend to continue in 2014 and therefore look forward to making further progress in our drive to grow the Company and enhance value for investors."

For further information:

Notes to editors:

About Capital & Regional plc

Capital & Regional is a specialist property company with a strong track record of delivering value enhancing retail and leisure asset management opportunities across a £1.2 billion portfolio, primarily in town centre shopping centres.

Capital & Regional founded The Mall in conjunction with Aviva Investors. Capital & Regional acts as Property and Asset Manager for the Mall and holds 29.3% of this fund.

Capital & Regional & Ares Management (formerly known as AREA Property Partners) each hold a 50% interest in a German retail property portfolio which is managed by Garigal Asset Management GmbH, in which Capital & Regional holds a 30% interest.

Capital & Regional has a number of other joint ventures and wholly-owned properties. For further information see www.capreg.com

Chairman's Statement

Strategy

The Group's strategy is to focus its financial resources and management skills on investing in and actively managing a portfolio of dominant community shopping centres in the UK. The Group intends to build on its proven track record of recycling capital from non-core assets to strengthen its position as a leading UK retail property investment company.

Performance Overview

I am pleased to report an increase in Net Asset Value per share of 6% to 54p and a pre-tax profit of £9.3 million compared to a prior year loss of £12.7 million. The Group has also reported recurring profits of £14.0 million compared to £17.0 million in 2012. This is a robust performance in light of the sale of The Junction and X-Leisure businesses, which contributed recurring pre-tax profits of £2.7 million in 2012, and the loss of income resulting from the sale of three Mall assets in 2012 and 2013.

The performance is all the more encouraging as the operating environment remained challenging, with property values remaining flat or falling modestly across the shopping centre business, for much of the year.

In the fourth quarter of 2013, however, we saw a noticeable pick-up in investment market activity with property valuations in The Mall rising by 1%. This is a positive sign for our property values when combined with improving economic conditions and the resulting impact on consumer sentiment.

During the course of the year, the Group also made further significant progress in the execution of its strategy. The completion of the sale of the Great Northern Warehouse in Manchester for a headline price of £71.1 million and the agreement to sell Jarman Fields, Hemel Hempstead for £8.5 million enabled the Group to recycle the proceeds of these non-core leisure assets to increase its stake in The Mall in 2013 from 20.15% to 29.26%. The £29.3 million investment was made at an overall discount of 5% to year-end values. UK shopping centre activities in general and the Mall Fund in particular now form the core of our business.

Dividend

Our dividend policy links future payments to the Group's cash generating ability. In view of the Group's significantly improved financial position and in anticipation of The Mall's ability to recommence distributions, the Board took the decision to resume dividend payments after five years and pay an interim dividend of 0.25p per share. The Board is now recommending a second interim dividend of 0.40p per share making a total dividend of 0.65p per share for 2013. The Board expects to be able to adopt a progressive approach to dividend payments as its ability to generate cash further improves.

Responsible Business

The Group attaches great importance to maintaining its commitment to responsible business as it believes that by reducing the impact we have on the environment, supporting our employees and serving the communities around us, we contribute to building a stronger and more successful company.

At the beginning of the year, a number of key objectives across The Market Place, The Environment and The Workplace were identified, each with target key performance indicators. In a year of notable achievements, the Group's retention of the ROSPA Gold Award status for a seventh consecutive year and the Mall Fund's rating as number one in the UK for retail in the Global Real Estate Sustainability Benchmark stand out. Targets for reduction in energy, water use and water recycling have again been exceeded. Our shopping centres are now using 35% less energy than five years ago, saving over £1.2 million in energy costs over that time.

Our People

Improving the customer experience and making the retail environment attractive are key ingredients in attracting retailers to the Group's shopping centres thereby boosting footfall and spend. Our management teams' constant focus on operational excellence and adopting an entrepreneurial approach towards asset management and development is one of the Group's key differentiators and I would like to thank all our teams for their efforts in delivering these objectives. This management platform remains critical to the creation of value for our shareholders.

The Board

I would like to thank Xavier Pullen, who stepped down from the Board as an Executive Director after 35 years, for his very significant contribution to the success of the Group. I am pleased that he will continue to assist the Group in the execution of its strategy for Germany as a senior adviser. At the same time, I would like to congratulate Mark Bourgeois on his promotion to the Board as an Executive Director. With his operational and strategic retail property experience, combined with his extensive market knowledge and understanding of advancing technology, Mark will undoubtedly make an important contribution to the Board's discussions.

We look forward to further progress in 2014.

John Clare

Chairman

Chief Executive's Statement

Strategy

The Group made further significant progress in 2013 in focusing Capital & Regional on its core UK shopping centres. Following the sales of The Junction, X-Leisure and Braehead in 2012, the sales of Great Northern and Hemel Hempstead were respectively completed and agreed in 2013 with the result that we were able to recycle the cash from these disposals into the acquisition of Mall units at an attractive point in the investment cycle. Adjusted for the sale of Hemel Hempstead which completed after the year-end, UK shopping centres and available cash account for 75% of the Net Asset Value of Capital & Regional compared to 47% at the beginning of 2012.

Moving forward our core objective is to increase the focus on UK shopping centres with the intention to continue to realise value over time from our retail portfolio in Germany. We will take advantage of any opportunities to increase further our stake in the Mall which remains at the centre of our strategy for UK shopping centres. The anticipated refinancing of the CMBS later this year will provide a sound platform from which to execute our asset management plans.

Our portfolio of eight UK shopping centres offers a range of investment opportunities from incremental asset management initiatives in Redditch and Lincoln to more significant development opportunities in Camberley, Maidstone and Walthamstow. We are convinced that by continuing to invest in these schemes, we can enhance their attractiveness to retailers and their relevance to consumers thereby ensuring we can create attractive returns for shareholders.

Whilst each of the shopping centres requires significant focus to execute these plans, in the longer term the current management platform has the capacity and expertise to support a larger portfolio of shopping centres which share similar characteristics. Additional critical mass will create further economies of scale and be supportive of enhanced returns for shareholders.

Operations

We have seen a steady improvement in operating conditions in our UK shopping centres as the year progressed. Following a number of administrations in the first half of the year (20 units representing £1.4 million of income), occupancy levels increased as administrations slowed and key lettings were secured. As at 30 December 2013, retail occupancy across our UK shopping centres stood at 96.3% compared to 95.4% at 30 June 2013. Underlying income, as measured by contracted rent, also stabilised in the second half of the year. As at 30 December 2013 there was £1.1 million more rent attributable to tenants in a rent free period than there was at

30 December 2012. As these rent free periods expire the passing rent will increase accordingly.

Footfall across our shopping centres continues to out-perform the national benchmarks. For the year, footfall fell by 2.5% compared to 3.7% for the sector as a whole and the level of out-performance increased as the year ended. Successful marketing campaigns saw strong footfall over Christmas, a trend which has continued into 2014, with both an absolute increase and out-performance of the national benchmark in the year to date.

Asset Management

The improvement in the operating environment has lagged the pick-up in investment market activity and retailers have therefore continued to be well placed to negotiate competitive terms for new space and lease renewals. There are, however, a number of trends which bode well for retailer demand across the Group's shopping centres:

a) It is encouraging to see that where the Group is investing, such as the reconfiguration at Waterside, Lincoln, or the creation of a leisure hub at Redditch, occupiers are keen to take space on accretive terms. The planned refurbishments at Walthamstow and Maidstone are expected to generate a similar response from retailers. The Group's track record in the successful delivery of these asset management initiatives, on budget and on time, is critical to securing retailer support.

b) Success with the asset management initiatives at Lincoln and Redditch confirms that there is still untapped demand from fashion and leisure operators which is crucial to increasing occupancy levels.

c) The Group is able to respond to the multi-channel strategies presented by our retailers through consolidation of smaller units to create larger space. Examples are River Island at Luton, H&M and Next at Lincoln and TK Maxx at Camberley. We see these larger stores as particularly relevant to growing click and collect trends.

d) In the absence of a significant flow of quality new space across the UK, successful retailers are looking to expand their presence in schemes where they already have an established and profitable presence. Examples include Sports Direct in Walthamstow, Costa Coffee in Redditch and New Look in Lincoln.

e) Our ability to grow income from car parks, promotional activity, retail merchandising units ("RMU's"), media and web activity is underpinned by the fully integrated management platform operated across our shopping centre activities.

Active asset management was also critical to facilitating the disposals during the year of Sutton Coldfield, Great Northern and a well-executed and complex development at Hemel Hempstead. This was vital in driving sale price and underpinning the disposal process.

Germany

In our German portfolio we have continued to concentrate on extending the length and quality of income stream to support valuations and maintain the marketability of the portfolio to the institutional investment market. Our assets are managed by Garigal Asset Management, a German retail specialist asset manager in which the Group holds a 30% interest. Garigal has identified a number of asset management initiatives; opportunities either to negotiate early lease extensions with key anchor tenants or delivery and reconfiguration of additional retail space. During 2013 we successfully increased the weighted average lease length by 0.3 years to 8.1 years (2012: 7.8 years).

Financial Position

De-gearing of the Group's balance sheet has been a key strategic objective in recent years and our progress in this regard during 2013 was of paramount strategic importance to the Group.

As a result of the disposals completed during the year, there was no on balance sheet debt at the year end, whilst see-through net debt to property value, adjusted for the sale of Jarman Fields, Hemel Hempstead, which completed in February 2014, fell from 55% to 52%.

The sale of Great Northern Warehouse in October 2013 resulted in the repayment of a £57.6 million debt facility. This facility had full recourse to the Group's balance sheet and its repayment considerably increased the Group's financial strength and flexibility. As at 30 December 2013, the Group had a net cash position of £11.1 million, increasing to £19.5 million adjusted for the sale of Hemel Hempstead that completed in February 2014. The Group's £25 million Revolving Credit Facility which matures in July 2016 remains undrawn.

The debt repayment of £168 million by the Mall following the sales of the shopping centres at Sutton Coldfield and Uxbridge reduced outstanding debt from £547.5 million to £379.5 million. Gross gearing therefore fell to below 60%, allowing the recommencement of distributions. As at the end of 2013, gross debt to property value stood at 55% whilst net debt to property value was at 46% meaning the Fund is now in a strong position to take advantage of the more favourable conditions in the banking market in preparation for the refinancing of the CMBS which matures in April 2015.

The German Joint Venture has signed a three-year €141 million financing which supports three of its portfolios, representing 49% of the total German portfolio and covering 12 properties.

The terms of the refinancing are, we believe, very attractive with an all in cost below 3%. That the market is prepared to fund these assets on very competitive terms at LTVs above 70% is a vote of confidence in this business.

Outlook

Improving economic conditions provide a very supportive background for our UK shopping centre business. In particular, rising employment and the potential for real growth in average earnings should provide a boost to consumer sentiment. Footfall through our schemes in the first two months of 2014 shows an absolute increase and outperformance against the relevant index. Whilst the strengthening investment markets have been well documented, it is the improvement in the underlying economy that is the necessary pre-condition for increased retailer confidence, higher occupancy and higher rental income. The significant fall in the level of administrations in 2014 to date compared to recent years also provides a helpful backdrop for letting activity in the rest of the year. Furthermore we have begun to see that the hard work undertaken by our specialist asset management teams has enhanced operating performance and valuations towards the end of 2013 and we expect this trend to continue in 2014.

Recycling of capital remains an important priority. Following on from the sale of the property at Taufkirchen in May 2013 for €6.3 million and exchange on the sale of the vacant Kreuztal property post year end for €1.3 million, in line with and ahead of valuation respectively, we intend to accelerate the realisation of value from the portfolio in 2014. We are currently in advanced talks to dispose of one large property and intend to bring a further tranche of assets to market during the year. Proceeds will be used to reinvest in our UK shopping centre business.

We expect the Mall to refinance its CMBS by the time we announce our interim results. The current attractive conditions in the banking market should ensure that the Fund which has successfully reduced gearing through a targeted programme of disposals can achieve competitive terms having received strong interest from debt providers in the discussions that have taken place to date. This should, in turn, ensure a stable background for the implementation of the asset management programme and that the Mall remains at the heart of our growth strategy for our shopping centre business.

We look forward to making continuing progress in our drive to grow the Company and enhance value for investors in 2014.

Hugh Scott-Barrett

Chief Executive

Our Assets and Operating Strategy

We ensure that our property assets are aligned with the constantly evolving demands of our tenants and shoppers, developments in technology, and consumer behaviour.

The key features we look for in our assets are:

- Dominant community shopping malls - healthy sale densities of £449psf across our portfolio compares favourably to in-town sales densities of £430psf (CBRE research)

- Strong footfall - outperformed the national index by 1.2% in 2013

- Affordable rental levels with potential for growth - rent to sales ratios are strong at 6.4% across The Mall portfolio and rents are affordable at £22psf

- Attractive added value opportunities - see asset by asset table below

- Ownership of car parking and availability of good local transport facilities - our portfolio has over 10,000 car parking spaces.

Our shoppers have demanding expectations of the level of service, convenience, range and quality of facilities, together with a real appreciation of value and local community. These community hubs provide our retailers with a cost effective location from which to serve their customers and sit as an essential element of the multichannel operation. We believe only those shopping centres which can consistently deliver these different elements will continue to be successful.

Continuing investment is essential to maintain and further enhance the relevance of our assets. Across our portfolio of eight centres we have agreed programmes of capex totalling approximately £40 million over the next three years from which we are targeting income returns of at least 10% over the period.

Across the Mall properties we have identified a further £36 million of value adding initiatives and we are also working on exciting masterplan developments for Camberley and Maidstone which would deliver transformational improvements to those towns.

Further details of our current year activities and future plans and opportunities on an asset by asset basis are detailed as follows:

Operating review

The principal focus of management during 2013 has been to continue to execute its strategy of disposing of non-core assets in order to concentrate resources on its core UK Shopping Centre business.

During the year the Group repaid £57.6 million of recourse debt following the sale of the Great Northern Warehouse. Subsequent to the year end it also sold Hemel Hempstead, its last remaining leisure property asset, realising £8.4 million.

In July 2013, The Mall sold Sutton Coldfield and Uxbridge for a combined total of £152.5 million which was used to reduce debt in The Mall. As a consequence The Mall is no longer constrained by its loan covenants from making distributions of income to its unit holders and is well placed to refinance the CMBS debt which matures in April 2015.

UK Shopping Centres

Occupancy levels

P1 POccupancy at December 2013 and December 2012 includes a seasonal increase in temporary lettings.

4TWe continue to focus on maintaining high levels of occupancy in order to create shopping destinations which are appealing to shoppers and tenants and which act as a springboard for growth in rental values. The decrease in year on year occupancy is due primarily to a fall in the level of temporary lettings of approximately 1.0% of total occupancy.

New lettings, renewals and rent reviews

There has been good letting activity across the portfolio.

1For lettings which did not include a turnover rent

Lettings to new occupiers continued at an encouraging level during the year and it is particularly pleasing to see new tenants such as Nando's taking space in our schemes and fashion retailers such as River Island, H&M and Next making significant commitments. The key lettings on an asset by asset basis are as outlined above.

Administrations

There were 32 units affected by administration during the year (2012: 48) with passing rent of £2.0 million (2012: £4.3 million).

At 30 December 2013, there were three units where tenants were continuing to trade whilst in administration with a passing rent of £0.2 million.

In the first two months of 2014 there have been eight units affected by administration with a passing rent of £0.3 million. This compares to 12 units with a passing rent of £1.0 million in the equivalent period of 2013.

Income security

Credit risk is managed through the assessment of the covenant strength of all incoming tenants and by monitoring credit ratings of key existing tenants. Where possible we look to pre-empt the consequences of administrations through contingency planning and by actively seeking to reduce exposure to known risks. The 10 largest occupiers by rental income at 30 December 2013 were:

Rent collection rates in the UK shopping centres (adjusted for tenants in administration) have continued to be strong throughout the year, with 96.7% of rent being paid within 14 days of the due date for December 2013.

Footfall

The UK Shopping Centres' footfall (excluding Lincoln, owing to its redevelopment) has outperformed the national footfall index by 1.2% during 2013. There was a fall in shopper numbers over the year of 2.5% compared to a decline of 3.7% in the UK benchmark index (ShopperTrak), demonstrating the relative strength of the portfolio. In 2014 UK Shopping Centre footfall has continued to outperform the benchmark, registering an absolute year on year increase of 3.0% in the first seven weeks of 2014 which is 3.6% ahead of the benchmark.

Temporary lettings

At 30 December 2013, on a like for like basis there were 102 temporary lettings (2012: 106) for a net rent of £0.8 million (2012: £1.32 million) as compared to an ERV of £4.7 million (2012: £5.7 million).

Rental income

Contracted rent across our UK portfolio decreased marginally.

As at 30 December 2013, there was £1.1 million more rent attributable to tenants in a rent free period than there was at 30 December 2012. As these rent free periods expire the passing rent will increase accordingly.

Investment portfolio performance

The property level total returns are set out below:

1 Weighted average by year end property valuation

Other Operations

Snozone

Snozone delivered a contribution of £0.9 million in line with 2012. Further cost reductions offset the impact of lower income due to the impact of snow during peak season trading, the good summer weather and a leisure environment that remains highly competitive.

German portfolio

The Group's commercial retail property portfolio in Germany is in a joint venture with Ares Management (formerly AREA Property Partners) and is held in five joint venture portfolios.

The key portfolio property data at 30 December 2013 is as follows:

The movement in German properties (on a like for like basis) is as follows:

In our German portfolio we have continued to concentrate on extending the length of its income stream to maintain and increase valuation.

We have successfully increased the weighted average lease length by 0.3 years to 8.1 years (2012: 7.8 years)

There was a fall in contracted rent of €0.6 million in 2013 to €31.3 million (2012: €31.9 million). This was principally as a result of the downsizing of the anchor tenant at their lease expiry at Oschersleben. This however, was mitigated by active asset management activity to re-let the remaining space successfully to a DIY operator. Excluding Oschersleben, contracted rent was in line with the prior year.

The key asset management initiatives undertaken in the year were:

· Brühl (20,200 sq m)

Real has extended their lease to 2019 on their 17,525 sq m anchor unit.

· Bochum-Wattenscheid (10,000 sq m)

Following on from the 2,500 sq m letting to FitX in 2012 further progress has been made in transforming the location from a struggling 10,000 sq m retail property into a leisure destination. A Chinese restaurant has signed a ten year lease of 1,600 sq m and an indoor children's play area has taken 1,640 sq m. These tenants will commence their fit-outs once the building permissions are granted. Additionally, we are in advanced discussions with a sports bar to take 800 sq m of space, leaving only one 800 sq m unit (8% by lettable area) left to let.

· Heide (4,600 sq m)

We have made significant progress to replace the units that became vacant in 2012 and 2013 upon lease expiry, as improved access to the property has helped the leasing process. Woolworths has taken a five year lease on the 1,023 sq m anchor unit vacated by ALDI, and we have let a further 977 sq m to tenants on permanent leases. Schupark Facscies, a shoe retailer, has taken a five year lease (441 sq m) having been trading from this location on a temporary basis while Fressnapf, a pet food retailer, has signed a 10 year lease, of the former 536 sq m unit that Schupark previously occupied. We are also in advanced negotiations with a fashion retailer to take the 744 sq m vacated by EDEKA in November 2013.

· Herne

This property has been extended with the food anchor Toom taking an extra 285 sq m of space on a new 15 year lease. As part of this initiative four further units were created and let with a combined area of 264 sq m.

· Aachen

At Aachen, in advance of Praktiker's lease expiry in July 2013, we agreed a back to back lease with Hammer on a 10 year lease and avoided any impact from Praktiker's administration.

· Moerfelden-Walldorf

A small part of this property which comprises offices is covered by a rental guarantee that expires at the end of 2014. We have recently let 100 sq m which should provide momentum to let the remaining 450 sq m. There were two lease extensions for a combined 1,843 sq m agreed with Penny-Markt, which has extended its lease to 2023 and Dänisches Bettenlager ,which has extended its lease to 2020.

Following on from the sale of the property at Taufkirchen in May 2013 for €6.3 million and the notarisation of the vacant Kreuztal property disposal post year end for €1.3 million (ahead of the year end valuation and expected to complete shortly), we intend to accelerate the realisation of value from the portfolio in 2014. We are currently in advanced talks to dispose of one large property and intend to bring a further tranche of assets to market during the year. Financial review

Key performance indicators

The key performance indicators we use to measure our performance against our strategy and objectives are:

P1P2013 adjusted for £8.4 million Hemel Hempstead net proceeds, received in February 2014. 2012 figure adjusted for £30.6 million X-Leisure proceeds received in January 2013.

P2PSee-through debt and see-through net debt divided by IFRS property value.

Investment returns

Net assets per share increased in the year to 54p, up 3p or 6% since 30 December 2012, and EPRA net assets per share increased to 56p, up 1p, or 2% since 30 December 2012. The change in net assets resulted in a 5.1% return on equity for the year.

To provide a greater understanding of the composition of the business, the Group presents its balance sheet in two separate ways, with the "statutory" balance sheet following the accounting and statutory rules, and the "see-through" balance sheet showing the Group's proportionate economic exposure to the different property portfolios. These are shown below as at 30 December 2013:

P1 PFor 2013 Hemel Hempstead shown at net realisable value of £8.4 million. For 2012, X-Leisure shown at net realisable value of £32.2 million less related costs of £1.6 million. See note 13 for further details.

Financing

Following the disposal of the Great Northern Warehouse on 31 October 2013, the Group repaid all of its on-balance sheet debt. At 30 December 2013 the Group had cash of £11.1 million (2012: net debt outstanding of £53.3 million).

Group debt

The Group maintains a £25 million core revolving credit facility. This was utilised during the year to the extent that the maximum amount drawn down under it was £1.0 million (2012: £14.8 million). At 30 December 2013, there were no drawings on the central facility. The forecast covenant tests indicate that there is sufficient headroom for the full £25 million facility to be available.

At 30 December 2013, the Group had cash balances of £11.1 million (2012: £5.3 million).

Off balance sheet debt

Off balance sheet debt, which is non-recourse to the Group, fell by £8.7 million to £254.6 million at 30 December 2013 (2012: £263.3 million) as a consequence of asset disposals.

The proforma breakdown of the Group's share of off balance sheet debt and net debt at 30 December 2013 was as follows:

1Excluding unamortised issue costs

2 Excluding cash beneficially owned by tenantsP 

3PDebt and net debt divided by investment property at fair value

The Mall Fund's debt was reduced by £191.4 million to £379.5 million at 30 December 2013 (2012: £570.9 million). This decrease was due to debt repayments from the sale proceeds of Uxbridge and Sutton Coldfield and from cash generated from operations. Following these debt repayments the Mall's gross LTV at the end of 2013 was 55% which is below the 60% threshold at which the Fund can distribute.

On 5 February 2014, the Kingfisher Limited Partnership completed a refinancing of its loan facilities and increased its senior facility. The additional funds raised were used to repay the partnership's mezzanine debt. The term of the facility was extended to April 2019. As a result the partnership's cost of debt fell from 6.2% to 4.6%.

The refinancing of €141 million of German debt, covering three of the five portfolios, was completed in December 2013 on a new three year facility at an all in cost of below 3%. Total German debt decreased by €17.4 million to €289.3 million at 30 December 2013 (2012: €306.7 million). At the applicable exchange rates this was equivalent to £241.2 million (2012: £250.5 million).

Maturity analysis

The table below shows the maturity profile of the see-through debt and undrawn core credit facility at 30 December 2013:

Covenants

The Group and its associates and joint ventures were compliant with their banking and debt covenants at 30 December 2013. Further details are disclosed in the 'covenant information' section at the end of this report.

Interest rate hedging

The majority of current borrowing, both at Group level and in the funds and joint ventures, continues to be covered by interest rate swaps or caps. At 30 December 2013, the see-through valuation of the Group's swaps and caps was a liability of £5.6 million (2012: £14.4 million) which will not be crystallised unless the underlying contracts are closed out before their expiry date. During the year, The Mall terminated swaps at a total cash cost of £9.7 million, of which the Group's share was £2.0 million.

Cash distributions

The Group received total cash distributions of £1.9 million during the year comprising a £1.2 million tax distribution from The Mall Fund and £0.7 million from its German investments.

Profitability

Recurring pre-tax profit

The Group's recurring pre-tax profit decreased by £3.0 million to £14.0 million for the year ended 30 December 2013 (2012: £17.0 million). The breakdown of recurring pre-tax profit, as defined in Note 1, is as follows (and as set out further in Note 2a):

1This includes the results of Great Northern Warehouse and Hemel Hempstead for 2013 and X-Leisure, Xscape Braehead and The Junction Fund for 2012.

The increase in recurring pre-tax profit from UK Shopping Centres reflects the full year impact of the acquisition of The Kingfisher Centre, Redditch and income from additional Mall units during the period. The impact of this was reduced by the disposal by the Mall of the centres at Sutton Coldfield and Uxbridge. The fall in recurring profitability in Germany principally reflects the loss of income from Portfolio 4 after 30 June 2012. Recurring profits within Property Management have increased due to the net impact of the loss of fees in respect of Mall disposals being offset by cost reductions, the expiry and write back of a provision of £1.4 million and the full year effect of fees arising from The Kingfisher Centre.

Profit for the year

The profit for the year ended 30 December 2013 was £9.1 million (2012: loss of £16.0 million) and is analysed below:

As well as the recurring pre-tax profit discussed above, the other main factors behind the result for the year were:

· Loss on disposal within funds - primarily relating to the sale of Uxbridge and Sutton Coldfield within The Mall.

· Loss on disposal of Group properties - relating to the loss on sale of Great Northern Warehouse partially offset by profit on the sale of land and FIX UK.

· Impairments in respect of German portfolio 4 - the remaining £2.4 million of the Group's investment in the Euro B-note was impaired to £nil at 30 June 2013 following one of the major tenants of the underlying portfolio entering administration.

· Financial instruments revaluation - the valuation of the Group's financial instruments improved as the time remaining on the out of the money interest rate swaps has eroded.

· Gain on investment in The Mall related to the Group's purchase of 85.8 million units in The Mall Fund as detailed below.

Tax

The tax credit for the year on continuing operations was £0.2 million compared to £0.9 million in the prior year consisting of a current tax credit of £0.5 million and a £0.3 million deferred tax charge (2012: £1.4 million of current tax credit and £0.5 million of deferred tax charge).

The current tax asset was £0.5 million at year end (2012: liability of £1.3 million).

Property under management

During the year, property under management fell due to the disposal of the wholly owned Great Northern Warehouse and disposals by The Mall of Sutton Coldfield and Uxbridge. The overall impact on property under management is set out below.

P1 PValuation excludes adjustments to property valuations for tenant incentives and head leases treated as finance leases and trading properties are included at the lower of cost and net realisable value.

P2 PHemel Hempstead has been excluded following classification as held for sale during the year. Sale was completed in February 2014.

The split of property under management by sector has changed as a result of property disposals. The sector analysis at 30 December 2013 and prior year end is as follows:

Disposals

On 12 July 2013, The Mall sold The Pavilions, Uxbridge and The Gracechurch Centre, Sutton Coldfield for a combined £152.5 million at a net initial yield of 7.7%. The net sale proceeds were used to repay debt within The Mall.

In August 2013, the Group exchanged contracts for the sale of Jarman Fields, Hemel Hempstead. The disposal was completed in February 2014 with net proceeds of £8.4 million received.

On 31 October 2013, the Group disposed of the Great Northern Warehouse, Manchester for an initial consideration of £71.1 million. A debt repayment of £57.5 million was made from these proceeds.

Mall unit purchases

The Group acquired a total of 85.9 million units in The Mall during 2013, representing 9.11% of the Fund at an aggregate cost of £29.3 million. As a result the Group's interest in The Mall has increased during the year to 29.26% at 30 December 2013 (2012: 20.15%).

Foreign currency exposure management

The Group uses a forward foreign exchange contract as a hedge of its net investment in the German joint ventures. At 30 December 2013, this was achieved through a contract for €35 million (2012: €47.0 million) at a fixed exchange rate of 1.19254 (2012: 1.1797) which hedges 65% (2012: 97%) of the Group's German investment. At 30 December 2013, the value of the contract was an asset of £0.1 million (2012: asset of £1.4 million).

To the extent the hedge is effective under accounting rules, valuation movements on the forward contract is shown in reserves, where they partially offset the gain or loss in the value of the net investment in the Group's German joint ventures.

Financing strategy

Our financing structure needs to be flexible and cost effective and this has been achieved through having cash of £11.1 million and a central revolving credit facility of £25 million at 30 December 2013 which was undrawn at that date. This gives the Group the scope to fund future property investments as opportunities arise.

At an associate and joint venture level, debt has been raised from a variety of sources with a spread of maturities to mitigate refinancing risk as set out in the debt maturity analysis chart. Debt held in associates and joint ventures is non-recourse to the Group.

Dividend

Our dividend policy links future payments to the Group's cash generating ability. In view of the Group's significantly improved financial position and in anticipation of the Mall's ability to recommence distributions, the Board took the decision to resume dividend payments after five years and pay an interim dividend of 0.25p per share in September 2013. The Board is now recommending a second interim dividend of 0.40p per share, in lieu of a final dividend, making a total dividend of 0.65p per share for 2013. The Board expects to be able to adopt a progressive approach to dividend payments as its ability to generate cash further improves.

The key dates in relation to the payment of the dividend are:

Going concern

As stated in note 1 to the consolidated financial statements, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the consolidated financial statements.

Charles Staveley

Group Finance Director

Principal risks and uncertainties

There are a number of risks and uncertainties which could have a material impact on the Group's future performance and could cause actual results to differ materially from expected and historical results. References to "the Group" in this context include the funds and joint ventures in which Capital & Regional has an interest.

The Group carries out a regular review of the major risks it faces. This is a bottom-up process starting with divisional management and monitors and allocates responsibilities for the controls that have been put in place to mitigate the risks identified.

The two principal categories of risks are Property Risks and Funding and Treasury Risks. In addition to the specific mitigating actions listed below we look to mitigate Property Risks by the nature of the assets we invest in. The characteristics of these assets are outlined in the 'Our Assets and Operating Strategy' where we also outline the specific initiatives planned on an asset by asset basis to protect and enhance value. The group's key focus in managing Funding and Treasury risks is to seek to ensure that there is appropriate headroom on credit facilities and that they are renewed well in advance of expiry. The key actions undertaken in this regard during the year are detailed in the 'Group debt' and 'Off balance sheet debt' sections of the Financial Review.

The risks noted above do not comprise all those potentially faced by the Group and are not intended to be presented in any order of priority. Additional risks and uncertainties currently unknown to the Group, or which the Group currently deems immaterial, may also have an adverse effect on the financial condition or business of the Group in the future. These issues are kept under constant review to allow the Group to react in an appropriate and timely manner to help mitigate the impact of such risks.

1 2012 results have been restated to separate discontinued operations as explained in Note 13. 

The profit for the current year and the loss for the preceding year, including amounts from discontinued operations, are fully attributable to equity shareholders.

The total comprehensive income for the current year and preceding year is fully attributable to equity shareholders. There are no items in other comprehensive income that may not be reclassified to profit or loss.

The merger reserve of £60.3 million arose on the Group's capital raising in 2009 which was structured so as to allow the Company to claim merger relief under section 612 of the Companies Act 2006 on the issue of Ordinary shares. The merger reserve is available for distribution to shareholders.

The acquisition reserve of £9.5 million related to the purchase of the entire ordinary share capital of Morrison Merlin Limited in 2005, prior to which it had been a joint venture in which the Group had a 50% interest. The balance on the reserve arose from the difference at the date of acquisition between the carrying value of the Group's existing interest and its fair value. The reserve was transferred to retained earnings on disposal of Morrison Merlin Limited in October 2013.

The foreign currency reserve of £4.4 million and the net investment hedging reserve deficit of £2.8 million respectively show foreign exchange translation differences from the Group's investment in its German joint venture and the net investment hedge of that investment.