TIDMLII
RNS Number : 2704I
Liberty International PLC
09 March 2010
+-----------------------------------------------------------+-----------------+
| | |
| 9 March 2010 | |
| | |
+-----------------------------------------------------------+-----------------+
LIBERTY INTERNATIONAL PLC
AUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009
+-----------------------------------------------------------+------------------+
| | |
+-----------------------------------------------------------+------------------+
| | |
+-----------------------------------------------------------+------------------+
| Highlights | |
+-----------------------------------------------------------+------------------+
| Chairman's Statement | |
+-----------------------------------------------------------+------------------+
| Operating and Financial Review | |
+-----------------------------------------------------------+------------------+
| Audited Financial Information | |
+-----------------------------------------------------------+------------------+
| Summary of Investment and Development Properties | |
+-----------------------------------------------------------+------------------+
| Other Information | |
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| Glossary | |
+-----------------------------------------------------------+------------------+
Patrick Burgess, Chairman of Liberty International, commented:
"The Group is in a substantially stronger financial position than twelve months
ago with the loan to value ratio reduced from 58 per cent to 51 per cent and
with cash balances of GBP583 million and undrawn committed facilities of GBP248
million. After two difficult years in the UK property industry, the Group has
considerable recovery prospects. The Directors therefore face the future with a
measure of confidence.
The Capital & Counties business has become an attractive central London focused
business concentrated on three landmark estates including Covent Garden and
Earls Court & Olympia. This business has been almost entirely created in the
last five years with the active involvement of its current management team
through much of that period.
Capital Shopping Centres is a market leader in the UK regional shopping centre
business embracing the highest quality centres with a senior management team
whose worth has been proven through several economic cycles. Retail trade in
the UK continues to gravitate towards the strongest destinations, the supply
pipeline of new retail space has sharply diminished, and this is greatly to the
benefit of existing centres.
The Board believes that the demerger announced today into two distinct focused
businesses will enable Capital Shopping Centres and Capital & Counties each to
achieve their full potential over a period of time".
A presentation to analysts and investors will take place at 100 Liverpool
Street, London EC2 at 09.30GMT on 9 March 2010. The presentation will also be
available to international analysts and investors through a live audio call and
webcast.
The presentation will be available on the Group's website
www.liberty-international.co.uk.
Enquiries:
+--------------+-----------------------------------+---------------------+
| Liberty International PLC: |
+------------------------------------------------------------------------+
| David | Chief Executive | +44 (0)20 7960 1207 |
| Fischel | | |
+--------------+-----------------------------------+---------------------+
| Ian Durant | Finance Director | +44 (0)20 7960 1210 |
+--------------+-----------------------------------+---------------------+
| Kate Bowyer | Investor Relations | +44 (0)20 7960 1250 |
+--------------+-----------------------------------+---------------------+
| |
+------------------------------------------------------------------------+
| Public relations: |
+------------------------------------------------------------------------+
| UK: | Michael Sandler, Hudson Sandler | +44 (0)20 7796 4133 |
+--------------+-----------------------------------+---------------------+
| | | |
+--------------+-----------------------------------+---------------------+
| SA: | Nicholas Williams, College Hill | +27 (0)11 447 3030 |
+--------------+-----------------------------------+---------------------+
+---------------------------------------------------------------------+
| |
| This announcement contains "forward-looking statements" regarding |
| the belief or current expectations of Liberty International PLC, |
| its Directors and other members of its senior management about |
| Liberty International PLC's businesses, financial performance and |
| results of operations. Generally, words such as, but not limited |
| to, "may", "could", "will", "expect", "intend", "estimate", |
| "anticipate", "believe", "plan", "seek", "continue" or similar |
| expressions identify forward-looking statements. These |
| forward-looking statements are not guarantees of future |
| performance. Rather, they are based on current views and |
| assumptions and involve known and unknown risks, uncertainties and |
| other factors, many of which are outside the control of Liberty |
| International PLC and are difficult to predict, that may cause |
| actual results, performance or developments to differ materially |
| from any future results, performance or developments expressed or |
| implied by the forward-looking statements. These forward-looking |
| statements speak only as at the date of this announcement. Except |
| as required by applicable law, Liberty International PLC expressly |
| disclaims any obligation to update or revise any forward-looking |
| statements contained herein to reflect any change in Liberty |
| International PLC's expectations with regard thereto or any change |
| in events, conditions or circumstances on which any such statement |
| is based. |
| |
| Any information contained in this announcement on the price at |
| which shares or other securities in Liberty International PLC have |
| been bought or sold in the past, or on the yield on such shares or |
| other securities, should not be relied upon as a guide to future |
| performance. |
+---------------------------------------------------------------------+
HIGHLIGHTS
Financial Highlights
+-------------+-----------+-------------+
| | Year | Year |
+-------------+-----------+-------------+
| | ended | ended |
+-------------+-----------+-------------+
| | 31 | 31 |
| | December | December |
+-------------+-----------+-------------+
| | 2009 | 2008 |
+-------------+-----------+-------------+
| | | |
+-------------+-----------+-------------+
| Net | GBP371m | GBP384m |
| rental | | |
| income | | |
+-------------+-----------+-------------+
| | | |
+-------------+-----------+-------------+
| Deficit | GBP(768)m | GBP(2,057)m |
| on | | |
| revaluation | | |
| and sale of | | |
| investment | | |
| and | | |
| development | | |
| property | | |
+-------------+-----------+-------------+
| | | |
+-------------+-----------+-------------+
| Change | GBP417m | GBP(665)m |
| in | | |
| fair | | |
| value | | |
| of | | |
| derivative | | |
| financial | | |
| instruments | | |
+-------------+-----------+-------------+
| | | |
+-------------+-----------+-------------+
| Loss | GBP(329)m | GBP(2,662)m |
| before | | |
| tax | | |
+-------------+-----------+-------------+
| | | |
+-------------+-----------+-------------+
| Underlying | GBP91m | GBP105m |
| earnings 1 | | |
+-------------+-----------+-------------+
| | | |
+-------------+-----------+-------------+
| Total | GBP6,207m | GBP7,108m |
| properties | | |
+-------------+-----------+-------------+
| Net | GBP3,176m | GBP4,100m |
| external | | |
| debt 2 | | |
+-------------+-----------+-------------+
| Debt | 51% | 58% |
| to | | |
| asset | | |
| ratio | | |
+-------------+-----------+-------------+
| Net | GBP2,946m | GBP2,798m |
| assets | | |
| (diluted, | | |
| adjusted) | | |
+-------------+-----------+-------------+
| | | |
+-------------+-----------+-------------+
| Adjusted | 18.3p | 29.0p |
| earnings | | |
| per | | |
| share | | |
+-------------+-----------+-------------+
| Dividend | 16.5p | 16.5p |
| per | | |
| share | | |
| (including | | |
| proposed | | |
| final | | |
| dividend) | | |
+-------------+-----------+-------------+
| Net | 464p | 745p |
| assets | | |
| per | | |
| share | | |
| (diluted, | | |
| adjusted) | | |
| 3 | | |
+-------------+-----------+-------------+
| | | |
+-------------+-----------+-------------+
1 Before valuation and exceptional items
2 Net external debt excludes the GBP129.9 million (31 December 2008 - GBP120.3
million) compound financial instrument relating to the 40 per cent third party
interest in MetroCentre.
3 Net assets per share (diluted, adjusted) would increase by 49 pence per share
to 513 pence at 31 December 2009 (31 December 2008 - by 85 pence to 830 pence)
if adjusted for notional acquisition costs amounting to GBP310 million (31
December 2008 - GBP320 million).
Capital changes
· Strengthened financial position through GBP592 million net placing and
open offer completed in May 2009
· Further GBP274 million net raised through 9.9 per cent share placing
completed in October 2009 - to enable resumption of investment in existing prime
UK regional shopping centres and central London assets
· No restatement of prior period data as capital raised through placings
and open offer rather than rights issue
· Capital raises had significant impact on 2009 outcome:
+----------------------------------+---------+---------+-------------+--------+
| | Total | Impact | 2009 movement |
| | | of | |
+----------------------------------+---------+---------+----------------------+
| | change | new | excluding impact of |
| | | capital | new capital |
+----------------------------------+---------+---------+----------------------+
| | | | | |
+----------------------------------+---------+---------+-------------+--------+
| Adjusted earnings per share | (10.7)p | (7.5)p | (3.2)p | (15)% |
+----------------------------------+---------+---------+-------------+--------+
| Net asset value per share | (281)p | (165)p | (116)p | (20)% |
| (diluted, adjusted) | | | | |
+----------------------------------+---------+---------+-------------+--------+
| | | | | |
+----------------------------------+---------+---------+-------------+--------+
Operational Highlights
· Resilient net rental income with year on year reduction of only 3 per
cent
· Investment property valuation deficit improved from 12.4 per cent for the
six months to 30 June 2009 to an overall 10.6 per cent for the year ended 31
December 2009 as the UK property market recovered
· Overall outperformance of IPD since start of downturn in June 2007 but
large shopping centres and the Earls Court & Olympia exhibition business did not
recover as quickly as other UK property asset classes in the second half of 2009
· Occupancy levels at Capital Shopping Centres' UK regional shopping
centres improved to 97.8 per cent (31 December 2008 - 93.6 per cent). Covent
Garden, London, occupancy increased to 99 per cent (31 December 2008 - 97 per
cent)
· 1 million sq. ft. expansion of St David's, Cardiff opened October 2009
now over 70 per cent committed by income
· Increased Earls Court & Olympia ownership to 100 per cent in December
2009 by acquiring partners' interest
After year end:
· GBP525 million, seven year refinancing of debt secured on Lakeside,
Thurrock concluded in January 2010
· St Andrew's Way mall, the approximately 400,000 sq. ft. extension to
Eldon Square, Newcastle, opened fully let in February 2010
· Conditional contract exchanged in January 2010 for disposal of Westgate,
Oxford for GBP56 million
Financial position
· Cash of GBP583 million and undrawn committed facilities of GBP248 million
· Weighted average debt maturity following Lakeside refinancing of 5.8
years with no UK asset-specific debt refinancings until 2012 (Capital &
Counties) and 2014 (Capital Shopping Centres)
CHAIRMAN'S STATEMENT
Introduction
Shareholders will have gathered from today's announcement of the Group's
intention to reorganise by way of demerger into its two distinct divisions,
Capital Shopping Centres and Capital & Counties, that the Directors are looking
ahead in both businesses with a measure of confidence.
The proposed demerger, fuller details of which are announced today, responds to
a changing approach to investment in real estate, both in the equity markets and
in the property market, requiring greater focus and more active management. It
will create two distinct listed businesses with different characteristics and
attractions for shareholders. Capital Shopping Centres and Capital & Counties
will be positioned to execute their own significant strategic plans, with
investors able to select their individual weightings to each of the businesses
over time. Both businesses are led by strong management teams and have first
class platforms to continue to attract talent to help them to grow over time.
The demerger will best position both companies to deliver strong shareholder
returns. It is of course subject to the approval of shareholders and of the
Court.
Neither we, nor our retail tenants, nor the shoppers who made over 300 million
visits to our shopping centres and Covent Garden found the year under review an
easy year.
However, the Group's experience in recent months has been encouraging. In
Capital Shopping Centres, we have restored high rates of occupancy and have much
scope for active management of our assets, an aspect of our business from which
we have in the past derived much of our growth. We have plans, aside from the
demerger proposal itself, that will occupy us fully and position us to benefit
further from economic recovery. The highly successful openings of our recently
completed developments, St David's, Cardiff in October 2009 and the St Andrew's
Way mall in Eldon Square, Newcastle in February 2010, testify to the quality and
attractiveness of CSC's product.
In our central London estate, creative management of the Covent Garden assets
has noticeably improved the quality of the tenants and the attractiveness of the
area as a whole. At Earls Court & Olympia, we have continued to advance
preparations for what will, subject to planning, be a most significant
development, one of benefit to the whole of west London, while remaining
sensitive to the needs of those residing close by.
In 2009, the Board has remained focused on the three objectives set out in the
2008 Annual Report - on occupancy, on rebuilding the balance sheet and on
positioning the business for growth. In successfully managing the shopping
centres for occupancy, our asset teams have ensured that our prime centres
remained attractive to retailers and shoppers alike, with reassuring increases
in footfall and plenty of scope for net rental income recovery, while our
central London estate has considerable potential. We have satisfactorily
rebuilt the balance sheet and the proposed demerger will mark a new phase of
corporate development for shareholders, directors and employees.
Investment Property Valuations
In 2009, investment property valuations continued to suffer, though not
declining at the same rate as in the second half of 2008. Nonetheless, the 22.5
per cent reduction in 2008 combined with the further 12.4 per cent decline in
the first half of 2009 presented the Board with the challenge of addressing
balance sheet issues, however impermanent the value reduction might in the long
term prove to be - and notwithstanding that Liberty International's experience
was that our valuations, which declined by 36 per cent from the peak in June
2007 to the trough in June 2009, had not fallen as steeply as the IPD index of
capital values (44 per cent).
Trends in the yield for prime shopping centres tend to alter slowly and do not
immediately follow liquidity driven surges. The current valuation yield basis
for our prime UK regional shopping centres has not reduced since June 2009 at
the same pace as other UK property asset classes where individual lot sizes are
smaller. In our view, the weighted average nominal equivalent yield of 7.08 per
cent is still above the long term trend line and therefore may be expected to
revert in due course, with commensurate benefit to overall capital values.
Valuation is a matter of convention. The current regime constrains the way
valuers arrive at their conclusions, particularly in times of market
dislocation, even though experience teaches us that crisis conditions, as in
late 2008/2009 and mostly untested by actual transactions, are seldom
permanent. Crisis valuations beget further crises: banks have to react to the
valuations because of their own capital adequacy and loan-to-value issues.
In my view, a serious case can be made for reviewing again the workings of the
principles which operate to plunge businesses and banks into freefall when, with
common sense and a modified approach to the conventions in question, this could
be avoided.
Balance Sheet
The valuation position made restoring the balance between capital and debt in
our balance sheet inevitable, but not so imperative that we could not afford to
wait to seize the appropriate moment. Since becoming a REIT in 2007, we had
already embarked on a disposal programme of non-core assets. However, the
Directors judged that more was called for and the company raised GBP866 million
of equity capital, net of expenses, through two equity capital raises, the first
at a lesser discount than our peers had achieved and the second at a premium to
net asset value. Our approach of retaining liquidity from those capital
raisings, whilst having a negative impact on short term earnings, gave us
significant flexibility of response at the end of the year for selective debt
repayment.
Despite a savage reduction in new property-related lending, debt finance has
become more available for prime assets on reasonable terms, as we have
demonstrated by financing St David's Centre, Cardiff in the second half of 2009
and refinancing Lakeside, Thurrock since the year end. At 51 per cent, the
Group's net debt to assets ratio has fallen seven percentage points in the year
and is now at a level appropriate to this point in the cycle. It is still above
the Board's long-stated maximum of 50 per cent, and we would expect to return
within this limit as market conditions permit.
Dividends
The Directors are recommending a final dividend of 11.5p per share bringing the
amount paid and payable in respect of 2009 to 16.5p, the same level as 2008 and
covered by the adjusted earnings per share for 2009 of 18.3p. 8.5p of the final
dividend will be paid as a Property Income Distribution subject to withholding
tax.
Corporate Responsibility ('CR')
Both the businesses of Liberty International, CSC and Capital & Counties, have a
long-term outlook. Both CSC and Capital & Counties appreciate that they benefit
from being part of the communities they seek to serve; so, I hope, do the
communities themselves recognise they benefit from our presence. We consider
that in certain locations we have a responsibility to provide what is,
effectively, a proxy for the village square - an approach that does us, and, we
believe, the communities in which we are situated, no harm. The relationship
forged with tenants and with the wider groups of stakeholders in the places
where our assets are located directly underpins and sustains plans for
long-term, high quality growth and development.
It is pleasing, particularly because it is an integral factor in both our
businesses, that in the property sector the Group continues to be numbered in
the first rank across the full range of CR measures. The benchmarking agencies
have once again given us a very good assessment so that the Group remains a
constituent member of the BITC Corporate Responsibility Index, FTSE4Good, JSE
SRI and Dow Jones Sustainability Indices and was listed for the second year
running in The Sunday Times list of Best Green Companies.
The Board
As announced at the AGM in July 2009, Michael Rapp will be standing down at the
2010 AGM after 24 years on the Board. His sagacity and expertise, particularly
in relation to shopping centres, have been invaluable to the development of both
of our businesses. We all thank Michael for his unique and lasting contribution
to the Group. I am pleased to welcome Andrew Strang and Andrew Huntley to the
Board, both having distinguished backgrounds and considerable expertise in the
property and investment worlds.
Prospects and priorities
In this volatile financial world, a resilient business will be one with inherent
flexibility. We believe that Liberty International has demonstrated that in a
sure-footed way in the past 18 months.
We commend to you the demerger and will shortly be distributing documents giving
much greater detail to shareholders. Each business will be well prepared for
the growth opportunities provided by our exceptional assets with which we aim to
drive superior returns to shareholders into the next decade. There are still
uncertainties. In this climate, balance sheets are for safeguarding and
opportunities are for nurturing - but business, and the drive for efficiency,
continues.
I would like to thank my Board colleagues and our very highly committed and
skilled staff for their most effective contribution to the Group's progress.
Patrick Burgess
Chairman
9 March 2010
OPERATING REVIEW
INTRODUCTION
Outcome for the year
The underlying outcome for the year after stripping out the impact of the equity
capital raised was a 20 per cent fall in net assets per share (diluted,
adjusted) to 464 pence and a 15 per cent reduction in adjusted earnings per
share to 18.3p.
The 20 per cent fall in net assets per share reflected the GBP732 million (10.6
per cent) investment property valuation deficit for the year, a much better
outcome than the GBP2,051 million (22.5 per cent) valuation deficit in 2008 and
an improvement on the position at the half year stage when net assets per share
(diluted, adjusted) amounted to 448p.
Underlying profit excluding valuation items reduced from GBP105 million to GBP91
million. Net rental income fell by only 3 per cent from GBP384 million to
GBP371 million, a resilient outcome in the circumstances. Steps taken in 2008
had a positive impact on administrative expenses which reduced from GBP63
million to GBP43 million. However, the overall interest charge increased from
GBP217 million to GBP241 million reflecting the fixed rate nature of the Group's
aggregate borrowings and low returns on cash balances prior to the cash being
utilised.
Financial and economic background
The UK economy has been through an extended recession lasting six quarters from
the second quarter of 2008 until a nominal recovery in the last quarter of 2009.
The cumulative fall in GDP amounted to some 6 per cent, an exceptionally severe
downturn for a developed Western economy.
The property industry as a cyclical sector employing leverage has been hard hit.
However, financial market conditions began to improve from March 2009 due to
substantial monetary easing from the Government. This drove a recovery in stock
markets, improved liquidity in debt markets with spreads narrowing substantially
and led to a recovery in the UK direct property investment market to an extent
which could not have been anticipated when we were reporting 12 months ago.
By way of illustration, the FT 350 Real Estate Index actually increased year on
year by 8 per cent and recovered by 88 per cent from its low on 9 March 2009.
However, the index at 31 December 2009 still stood at 64 per cent below its peak
in early 2007.
With UK Government borrowing as a percentage of GDP at a record peace time
level, economic growth rates are likely to be restrained for some years as
future Governments attempt to reduce the extent of the stimulus whether from
public sector expenditure restraint or higher taxes.
As a business focused on retail property, we need to plan on the basis of a
continued challenging economic background.
Key achievements
The Group is in a considerably stronger financial position than 12 months ago
with the loan to value ratio reduced from 58 per cent to 51 per cent and with
cash balances of GBP583 million and undrawn committed facilities of GBP248
million.
Notwithstanding market conditions, the Group succeeded in avoiding disposals of
core assets at depressed prices.
The principal achievements of the year described in greater detail elsewhere in
this document were as follows:
- GBP866 million, net of expenses, raised in two equity offerings.
- Occupancy levels at CSC's centres re-established at 97.8 per cent after
falling substantially below this figure during the year as a result of tenant
failures. Occupancy at Covent Garden reached 99 per cent benefiting from our
creative management approach.
- The 1 million sq.ft. major St David's, Cardiff extension opened
successfully in October, now 71 per cent committed by income, 74 per cent by
area.
- The purchase of the remaining 50 per cent share of Earls Court & Olympia
from our former joint venture partner, with a sound operational performance from
the business in the year and a GBP65 million pay down of the related debt
facility.
- GBP210 million raised from disposal of non-core assets, completing the
programme of disposals commenced when the Group became a REIT in 2007.
and since the year end have been:
- The GBP525 million refinancing of Lakeside, Thurrock in January 2010
ahead of the CMBS maturity in mid 2011 and the two year extension of the Group's
GBP248 million revolving credit facility to 2013.
- St Andrew's Way mall, the approximately 400,000 sq.ft. extension to Eldon
Square, Newcastle opened fully let in February 2010.
Capital Shopping Centres' next asset specific debt maturity is not until the
second half of 2014 and Capital & Counties' is in 2012.
Future investment plans
All uncommitted capital expenditure plans of the Group were put on hold in the
second half of 2008 in the light of the market turmoil at the time.
While the first GBP592 million equity capital raising in the first half of 2009
was earmarked for debt repayment in the face of falling property values, the
follow-up GBP274 million placing in the second half of the year enabled the
Group to consider resumption of investment plans.
At Capital Shopping Centres, ample organic investment opportunities continue to
be available to the Group, both shorter-term active management projects and
medium-term individual asset expansion plans, which the Group is actively
pursuing.
In the case of Capital & Counties, each of the three major central London
estates, Covent Garden, Earls Court & Olympia and the Great Capital Partnership,
has significant investment opportunities.
Prospects
After two difficult years, the Group has strong recovery prospects.
As set out in the Capital Shopping Centres section below, CSC is focused on
converting short-term lets, which were a feature of re-letting activity in 2009,
into longer-term lets at higher rents with a view to driving growth in net
rental income and yield compression benefiting capital values.
As the cash balances of the Group are absorbed in debt repayment, the interest
charge should diminish to the benefit of the Income Statement, while the
investment plans when implemented should have a positive impact on earnings.
We continue to actively explore a tax efficient solution to reduce our US
activities over time.
Capital & Counties has become an attractive central London focused business
concentrated on three selected landmark estates. This business has been almost
entirely created in the last five years with the active involvement of its
current management team through much of that period.
Capital Shopping Centres is a market leader in the UK regional shopping centre
business with a focus on the highest quality centres. The supply pipeline of new
retail space has sharply diminished as a result of economic conditions, to the
benefit of owners of existing centres. Retail trade in the UK continues to
gravitate towards the strongest destinations. The scale of CSC's activities,
its positioning in a market with high barriers to entry and management expertise
would imply that the value of the business as a whole substantially exceeds the
market value of the individual assets.
The recently announced demerger should unlock the full potential of the Group's
two separate businesses and overall generate greater returns to shareholders
than Liberty International could as a combined business. We believe strongly in
the benefits of specialisation, management focus and independent access to
capital in a manner suited to the individual businesses.
Investment property valuations
After a dismal start to the year, the UK property investment market reached its
trough mid way through 2009, and thereafter has strengthened as the improving
financial background including low short-term interest rates and currency
factors increased the attractiveness of prime UK property as an asset class.
The recovery was a welcome relief after the most torrid UK real estate price
collapse in the living memory of any active market participant, with the IPD
monthly all-property capital index at 30 June 2009 having fallen 44 per cent and
Liberty International's assets 36 per cent since the peak in June 2007.
The eventual 2009 outcome was much better than 2008. Liberty International's
assets fell 10.6 per cent in 2009 compared to 22.5 per cent in 2008 and the IPD
all property capital index fell by 5.6 per cent in 2009 compared to 27.1 per
cent in 2008. Chart 1 shows the extent of the Group's overall outperformance
since the downturn began in June 2007, in particular the strength of the central
London assets with a decline of 25 per cent compared to the IPD's decline of 39
per cent. To view Chart 1, please paste the following URL into the address bar
of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
We look forward to more stable market conditions as confidence returns although,
given the severity of the downturn, recovery is likely to be punctuated by
periods of doubt.
The valuation of the Group's properties as at 31 December 2009 was GBP6.2
billion, down 10.6 per cent for the full year but up 2.0 per cent in the second
half. The table below analyses this outcome between CSC and C&C and between the
first and second halves of the year:
+-----------------+----------+---------------+---------+--------+----------------+----------+
| | | | | |
+-----------------+----------+-------------------------+-------------------------+----------+
| | Market | Revaluation surplus/(deficit) | |
+-----------------+----------+---------------------------------------------------+----------+
| | value | | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | 31 | Year ended | Six months ended | Six months | |
| | December | | | ended | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | 2009 | 31 December | 31 December 2009 | 30 June 2009 | |
| | | 2009 | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | GBPm | % | % | % | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | | | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| Capital | 4,631 | (10.4)% | 2.6% | (12.8)% | |
| Shopping | | | | | |
| Centres | | | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| Capital & | 1,240 | (7.8)% | 3.1% | (10.0)% | |
| Counties UK | | | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| Capital & | 348 | (20.8)% | (7.8)% | (14.8)% | |
| Counties USA | | | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | | | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | | | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | 6,219 | (10.6)% | 2.0% | (12.4)% | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | | | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | | | | | |
+-----------------+----------+---------------+------------------+----------------+----------+
| | | | | | | |
+-----------------+----------+---------------+---------+--------+----------------+----------+
CSC's regional shopping centres have lagged the market recovery which in its
initial stages was generally focused on assets of smaller lot size. The assets
of the Great Capital Partnership recovered strongly in the second half of the
year.
The majority of the year's valuation movement reflected movements in yield:
+---------------------------+--------------+----------------+--------------+
| | |
+---------------------------+----------------------------------------------+
| | Nominal equivalent yield |
+---------------------------+----------------------------------------------+
| | 31 December | 30 June 2009 | 31 December |
| | 2009 | | 2008 |
+---------------------------+--------------+----------------+--------------+
| | % | % | % |
+---------------------------+--------------+----------------+--------------+
| | | | |
+---------------------------+--------------+----------------+--------------+
| Capital Shopping Centres | 7.08 | 7.37 | 6.67 |
+---------------------------+--------------+----------------+--------------+
| | | | |
+---------------------------+--------------+----------------+--------------+
| Capital & Counties UK | | | |
| | | | |
+---------------------------+--------------+----------------+--------------+
| (excluding exhibition | 5.66 | 5.95 | 5.84 |
| business) | | | |
+---------------------------+--------------+----------------+--------------+
| | | | |
+---------------------------+--------------+----------------+--------------+
The reduction in CSC ERV for the year was 4.4 per cent (30 June 2009 - (3.5) per
cent).
At a level of 7.08 per cent, CSC's weighted average nominal equivalent yield is
well above its average since 1994 of 6 per cent and, in the view of the
Directors, the valuation basis is at a defensive level (see Chart 2). CSC
considers that a reduction in the valuation yield is, amongst other factors,
subject to its future performance in converting short-term concessionary lets
into longer-term leases at higher rents. To view Chart 2, please paste the
following URL into the address bar of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
Furthermore, prime regional shopping centre yields are once again defensive in
relative terms compared to other prime retail asset classes with lower average
lot size which have performed more strongly in the second half of 2009 (see
Chart 3). To view Chart 3, please paste the following URL into the address bar
of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
CAPITAL SHOPPING CENTRES
CSC Strategy
CSC's strategy is to maintain a market leading position as an active owner,
manager and developer of prime UK regional shopping centres. CSC undertakes
asset and centre management initiatives across its existing centres, combined
with selective acquisitions and disposals, with the aim of delivering strong
long-term returns for shareholders through income and capital growth.
CSC is committed to active tenant management and ongoing investment in its
shopping centres with the aim of creating, through a mix of retail, catering and
leisure facilities, a compelling choice for both retailers and the shopping
public.
Market overview
CSC's focus is the top 50 million sq.ft. of UK shopping centre locations, some 4
per cent of the UK's 1.3 billion sq. ft. of retail space, of which it owns
nearly 30 per cent. CSC owns 13 centres (excluding Westgate, Oxford) including
9 of the UK's top 30 shopping centres, attracting 275 million customer visits in
2009.
The UK recession, from the second quarter of 2008 to the end of 2009, and
difficult credit market conditions which generated significant retailer failures
inevitably affected all UK shopping centres. However, the lowest falls and
earliest recovery in occupancy have been in the larger prime centres such as
those owned by CSC. Here, a wide range of catering and leisure offerings plus a
strong national and international tenant mix and robust footfall have reinforced
the status of the destinations to retailers reviewing their store strategy.
These assets benefit from the significant barriers to entry imposed by the UK's
restrictive planning environment. The reduction in the supply pipeline of major
retail developments in the UK as a consequence of economic conditions underpins
the scarcity value, with the prospect of limited additional competition in the
short and medium-term.
While online shopping is an important and growing medium, the vast majority of
total UK sales are still achieved across the counter in stores. We have seen
the most successful retailers investing in both physical stores and
transactional websites. For example both John Lewis and River Island have
opened flagship stores in CSC centres in the last six months whilst also
investing online. Clearly customers enjoy the convenience of online shopping
for some products but that does not preclude them from also visiting shopping
centres where they have a wide range of retail and catering comparison.
Occupancy and tenancy changes
Failures amongst CSC's tenants peaked in the last quarter of 2008 and the first
quarter of 2009 (5 per cent and 4 per cent of the rent roll respectively) and
have subsequently slowed to around 1 per cent per quarter. CSC's asset
management team responded energetically to this excess supply, documenting 298
tenancy changes during 2009, 15 per cent of all units. In achieving this
outcome, CSC benefited from its scale as the UK's leading owner of large-scale
shopping centres and its retail-focused relationships.
· Excluding turnover only deals, annual rent associated with new lettings
of GBP20.6 million is just over 20 per cent below previous passing rent
· Nearly half of the deals completed are short term lettings where the rent
shortfall is closer to 35 per cent but CSC retains the flexibility to re-let the
units when the market begins to recover
· 43 retailers were new to CSC centres in 2009 including 6 opening their
first UK or shopping centre stores
As a result, CSC's occupancy has recovered from 93.6 per cent (including 1 per
cent under offer) at 31 December 2008 to 97.8 per cent (including 1.5 per cent
under offer), significantly outperforming the UK large centres market average.
Of this 2.2 per cent vacancy, units let to tenants in administration and not yet
re-let amounts to 1.1 per cent. CSC's occupancy rate is shown in Chart 4. To
view Chart 4, please paste the following URL into the address bar of your
browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
Net rental income
Despite the adverse environment, CSC's like-for-like net rental income only
declined by 3.4 per cent following a 4.3 per cent reduction in 2008. On a ten
year basis, this has reduced the compound annual growth rate to 3.4 per cent.
CSC's like-for-like net rental income is shown in Chart 5. To view Chart 5,
please paste the following URL into the address bar of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
At the gross level, CSC's rental income fell 6 per cent compared to 2008 due to
the tenant failures discussed above, but other income held up well in the
challenging economic environment such that gross rental income fell 4 per cent.
As the retail environment stabilised throughout the year, lease incentive
write-offs reduced driving a significant year on year favourable variance.
Treating rent payable under headleases as a cost, the net effect is that CSC's
net rental income margin remained broadly unchanged at around 67 per cent.
+----------------------+---------+-----------+----------+------------------------+----------+
| | | Year | | Year | |
| | | ended 31 | | ended 31 | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | December | | December | |
| | | 2009 | | 2008 | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | GBPm | | GBPm | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| Rental income | | 308 | | 327 | |
+----------------------+---------+-----------+----------+------------------------+----------+
| Service charge | | 59 | | 58 | |
| income | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| Other income | | 33 | | 33 | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| Gross rental income | | 400 | | 418 | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| Rent payable | | (21) | | (23) | |
+----------------------+---------+-----------+----------+------------------------+----------+
| Service charge | | (63) | | (61) | |
| expense | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| Property operating | | (37) | | (35) | |
| expense | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| Bad debt and lease | | (12) | | (18) | |
| incentive write-offs | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| Net rental income | | 267 | | 281 | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
| | | | | | |
+----------------------+---------+-----------+----------+------------------------+----------+
Other operating performance indicators
· Footfall across CSC's existing centres rose 3 per cent in 2009,
outperforming the estimated overall reduction across the UK according to
Experian & Synovate
· Like-for-like retailer sales are estimated to have decreased marginally
but to have outperformed UK national data (Office for National Statistics
non-food down 2 per cent)
· Weighted average lease maturity increased marginally to 6 years and 8
months. Only 3 per cent of leases by value mature in 2010 and, other than
short-term lettings, the next major round of lease expiries is at the
MetroCentre in 2011 which management have been addressing proactively
Developments and active management projects
St David's, Cardiff, a 50:50 joint venture with Land Securities, had a highly
successful opening of the major extension in October:
· 1.3 million shoppers visited the centre in the first week after launch
with a number of retailers reporting strong sales, many setting UK opening
records
· Ongoing feedback from retailers indicates that a number of shops are now
trading at comparable levels with their strongest performing stores across the
UK
· The 1m sq. ft., 154 unit, extension, now 74 per cent let by area, 71 per
cent by income, has transformed the city centre and elevated Cardiff to number 6
in Experian's ranking of UK retail centres
· 90 shops are now open, including 58 retailers new to Wales and the
largest John Lewis store outside London
· Now that the quality of the centre is evident to retailers and critical
mass has been achieved, we anticipate firmer terms for letting the remainder of
the space
The first two phases of MetroCentre, Gateshead's leisure and catering upgrade
opened during 2009 with the cinema and 8 of the 10 restaurants now either open
or committed. The final phase of a further 56,000 sq. ft. of retail space,
fully let, will open in Autumn 2010.
The St Andrew's Way mall, the approximately 400,000 sq. ft. extension to
Eldon Square, Newcastle, was fully let when it opened in February 2010
increasing the size of the centre to 1.3 million sq. ft. Anchored by Debenhams,
the mall introduces many new retailers to Newcastle including Apple, Hollister,
Superdry and Guess and features flagship or new concept stores for Top Shop, New
Look, Republic and River Island. The food offer in the Centre has also been
extended with the addition of many new outlets including Nando's, Strada and
Wagamama.
Future investment plans
Liberty International's placing conducted in October 2009 enabled CSC to
recommence investment plans that had been put on hold a year earlier. Active
management projects have been identified across most of CSC's centres amounting
to around GBP125 million, the majority of which is expected to be spent or
committed by the end of 2012. These organic projects are individually
incrementally revenue enhancing, often to meet the needs of identified retailers
and include:
· Redevelopment and extension to create a new 60,000 sq. ft. flagship store
for Next at Eldon Square, Newcastle
· Reconfiguration and extension of the former Woolworths store at
MetroCentre, Gateshead, to create a new MSU
· Unit amalgamations for new MSU and roof boxes at Lakeside, Thurrock
· Enhanced catering offering at Braehead, Glasgow from former leisure
facilities
· Reconfiguration at Victoria Centre, Nottingham to create further retail
space
In addition, in line with our strategy of organic growth and recognising the
increasing outperformance of larger centres, CSC is exploring the feasibility of
major extensions to existing centres where there is the potential for
significant additional retail space.
Investment decisions are taken on a case-by-case basis and assessed against
internal return requirements on a risk adjusted basis.
Prospects for net rental income
As illustrated by Chart 6, there is considerable upside potential between
passing rent and the valuers' assessment of ERV, in particular from:
· Vacancies in excess of the normal "running void" rate of GBP23 million,
notably at St David's, Cardiff and
· Lease expiries, especially of temporary lettings in 2010 and 2011 which
represent a GBP20 million opportunity at 2 per cent of rent roll but 7 per cent
of ERV
To view Chart 6, please paste the following URL into the address bar of your
browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
2010 priorities
Our priorities for 2010 are to make significant progress in the following areas,
the financial impact of which in terms of enhanced net rental income is not
likely to be seen until 2011 and beyond:
· Re-letting short term leases closer to ERV
· Large space negotiations where price tension is greater
· Commencing value-enhancing active management projects to create organic
growth opportunities not dependant on acquisition
· Completing the initial letting of St David's, Cardiff
CAPITAL & COUNTIES
Strategy
Capital & Counties has continued to focus on London having completed the exit of
non-core UK properties in 2009. It aims to deliver superior total returns to
shareholders through the active management and development of three prime
central London estates: Covent Garden, Great Capital Partnership and Earls Court
& Olympia ("EC&O") principally by achieving a step change in district rental
levels, the entrepreneurial management of individual properties and the capture
of market yield compression.
Capital & Counties prioritises capital to improving existing investments, to the
selective acquisition or disposal of properties with a view to enhancing overall
returns and to identifying new opportunities consistent with the London focus.
The strategy of focusing on London has enabled Capital & Counties to
significantly outperform IPD over the last 3 years. Capital & Counties now has
assets in the capital of a scale commensurate with independent listed London
specialists.
As at the end of 2009 Capital & Counties had total property assets in London of
GBP1,240 million comprising Covent Garden (GBP548 million, 44 per cent), Earls
Court & Olympia (GBP340 million, 28 per cent) and 50 per cent interests in
Empress State (GBP94 million, 8 per cent) and the Great Capital Partnership
(GBP247 million, 20 per cent).
UK market overview
London is the most active real estate market in the UK and offers significant
attractions to businesses and tourists from its position as a global economic,
cultural and commercial hub. In 2009, London attracted 25 million visitors and
20 million people live within easy access of the city for day trips. This has
contributed to resilient tenant and consumer demand particularly in central
London, where Capital & Counties' retail properties are located and where
like-for-like retail spending growth significantly exceeded the UK average.
The Group's office properties are located in the West End which has historically
outperformed other London markets in terms of rental growth and capital values
due primarily to tight planning laws and scarce supply.
In the second half of 2009, London's commercial property investment market
notably improved as investor appetite for prime properties increased and debt
finance became more available.
UK performance
· Net rental income declined by 3.4 per cent to GBP79.2 million, a decrease
of GBP2.8 million, but an increase of 2.8 per cent on a like-for-like basis
· A full year valuation decline of 7.8 per cent to GBP1,240 million
· Valuation improvement of 3.1 per cent in the second half of the year
In the UK, net rental income fell to GBP79.2 million compared to GBP82.0 million
in 2008. The sale of non-core assets reduced net rental income by GBP9.5
million, with a further GBP0.5 million reduction from disposals in the Great
Capital Partnership. Covent Garden improved by GBP3.6 million to GBP26.5
million through positive rent reviews, a one off surrender premium and reduced
marketing costs. Significant cost savings at Earls Court & Olympia offset a
reduction in top line income of GBP7.0 million producing EBITDA at GBP21.3
million, a creditable improvement on GBP20.4 million in 2008. A full year's
income from the Empress State building of GBP10.3 million contributed an
increase of GBP5.6 million against 2008.
The ERV of the UK property portfolio excluding income from exhibition activities
was GBP56.5 million at the end of 2009 compared with a passing rental of GBP49.4
million, a difference of GBP7.1 million. GBP3.5 million of this relates to rent
free periods at Covent Garden, of which the majority will expire in 2010,
GBP2.3 million is attributable to vacancies and areas under refurbishment and
GBP1.9 million to non-leased and turnover income.
As at 31 December 2009, Capital & Counties held investment properties of
GBP1,240 million, a decline of GBP378 million in the year (see Chart 7). To view
Chart 7, please paste the following URL into the address bar of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
In the second half of 2009, the valuation of Covent Garden and the Great Capital
Partnership improved by 2.9 per cent and 9.8 per cent respectively and Earls
Court & Olympia was unchanged.
Activity in the year
Good progress was made towards fulfilling the business plans of each estate:
· 67 new leases granted generating GBP6.4 million of passing rent
· 34 rent reviews completed with an average uplift of 15 per cent
· Occupancy rate of 98 per cent across the UK property portfolio (excluding
Earls Court & Olympia) at year end
· 21 property sales in the year generating GBP182 million (the Group's
share)
· Acquisition of partners' interest in Earls Court & Olympia for GBP30.2
million plus modest future overage arrangements conditional on planning consent
· Repayment of GBP65 million made on debt secured on Earls Court & Olympia
· Earls Court & Olympia EBITDA improvement to GBP21.3 million
· At 31 December 2009 77 per cent of 2010 budgeted licence fees secured for
Earls Court & Olympia
· Earls Court granted Opportunity Area status in the Draft London Plan
Covent Garden
Our strategy of extending prime across the estate to generate higher income and
value is taking shape. A portfolio of 44 buildings offering 300 tenancies and
750,000 sq.ft. of mixed use accommodation provides a solid platform from which
to operate. Increased footfall, high occupancy, strong retailer demand and
stable prime rents in a difficult year show the resilience and attractiveness of
Covent Garden as a retail and commercial destination.
The highlight of 2009 was the completion of an important letting of the whole of
Bedford Chambers to an iconic global technology brand. The new retail and
office accommodation of 41,000 sq.ft. will open later this year and is expected
to assist in driving footfall and rents confirming the direction of our
enhancement strategy towards higher quality, contemporary brands capable of
trading longer hours.
Eight other new brands were welcomed to the estate and a major planning
application was made for the former Theatre Museum. The refurbished property
will include a new high quality restaurant, a new national art gallery and an
events area.
The improving tenant line up was supported by innovative marketing activities
which included a co-operation with the Tate Modern installing a Jeff Koons piece
in the Market Building, a Real Food Market on the Piazza and the London Fashion
Fringe.
Such initiatives helped improve visitor numbers by 2.0 million in the year to
45.2 million with an exceptionally strong improvement over the Christmas period.
Demand for accommodation was positive with occupancy levels of 99 per cent
taking account of 1.4 per cent held for development. Prime Zone A rents have in
general been maintained as evidenced by the lettings to Sketchers and Kurt
Geiger on James Street at Zone A equivalent rents of GBP585 psf.
The like-for-like valuation improved by 2.9 per cent in the second half to
GBP548 million, a decline of 6.1 per cent in the year.
Great Capital Partnership
The partnership is well positioned to participate in a recovery in rents and
values of prime central London properties owning 34 prime freehold and
leaseholds in the heart of the capital comprising 988,000 sq.ft. Capital &
Counties has a 50 per cent interest in the partnership and participates actively
in its strategic management.
In 2009, the partnership completed a significant head lease re-gear with the
Crown Estate, comprising 132,500 sq.ft. in five buildings forming a single block
fronting Piccadilly and Jermyn Street. The surrendered leases ran for 69 years
with an average annual head rent of 15 per cent of rental value and were
re-geared to a new 125 year term with an average annual head rent reducing to 10
per cent.
Three tactical disposals were completed during the year for a total value of
GBP18.5 million (the Group's share) and one acquisition was made for GBP4
million (the Group's share) in December 2009.
As at 31 December portfolio occupancy was 97 per cent. Income for the year was
broadly in line with 2008 at GBP13.8 million and the valuation, whilst 9.8 per
cent up in the second half, declined by 7.5 per cent in the year.
Earls Court & Olympia
While Earls Court & Olympia marginally increased EBITDA in 2009 to GBP21.3
million benefiting from close control of costs, the UK exhibition and conference
sectors have come under pressure in 2008 and 2009 as businesses have cut back
their marketing budgets due to the economic recession. This will continue to
impact the operational performance of Earls Court & Olympia at least through
2010, although its prime central London location remains attractive to
exhibitors.
The Group has continued to make good progress in the year to date in pursuing a
planning application for the comprehensive redevelopment of Earls Court which is
part of the Earls Court Regeneration Area together with adjacent land owned by
TfL and London Borough of Hammersmith & Fulham. The combined sites were
designated Opportunity Area status in the Draft London Plan and the three
landholders are working closely together to submit a comprehensive planning
application having signed a formal collaboration agreement.
The valuation of Earls Court & Olympia including the 50 per cent interest in
Empress State declined by 9.9 per cent to GBP434.8 million in the year.
Outlook
Throughout the economic downturn, central London has continued to demonstrate
growth in visitor numbers and a stronger level of consumer spending than the
rest of the UK. Investment property values began to recover in the second half
of the year from a trough in values around the middle of 2009 and rental levels
have stabilised.
The weak exhibition market will impact the operational performance of Earls
Court & Olympia at least through 2010. However, currently around 80 per cent of
2010 budgeted exhibition licence fees were contracted. This is a key driver to
a number of ancillary revenue streams such as parking and catering. Good
progress has been made in pursuing a planning application for Earls Court.
Due to relatively low supply of new office space, the greater tenant
diversification and consistent attractiveness of the West End to companies from
a range of industries, the Great Capital Partnership is well positioned to
benefit from economic recovery due to its strategic focus on prime properties
with added value potential.
Occupancy levels, footfall and tenant demand at Covent Garden have been very
encouraging. The major international technology brand opening in the Summer of
2010 on the Piazza in Bedford Chambers is expected to have a positive impact on
the level of trade and increase the attractiveness of the area to other
potential tenants.
Following Demerger, the Group, with its sound financial position and
concentration of assets in three landmark estates in the central London real
estate market, is well placed to pursue its objective of delivering superior
total returns for shareholders.
INTERNATIONAL
USA
US dollar net rental income from the California portfolio fell by a modest 1 per
cent in the year but exchange rate fluctuations resulted in an improved sterling
performance of GBP3.7 million to GBP24.6 million. Valuations declined by a
significant 20.8 per cent to GBP348 million reflecting market conditions.
Retail trading conditions remained weak across the portfolio, for example
like-for-like sales at Serramonte were down 9 per cent in the year and footfall
also fell by around 9 per cent. Total portfolio occupancy at the year end was
at 91 per cent.
The Group continues to actively explore tax efficient options to exit over
time its direct investment in the USA.
Other
In China, our relationship is developing well with Harvest Capital and China
Resources. Our first co-investment in Harvest Capital's fund CR1 is showing a
surplus. In India, our joint venture Prozone Liberty, in which we have a 25 per
cent interest, is working on four major shopping centre projects with the first
in Aurangabad due for completion in 2010. Our other international investments
were valued at GBP77 million at 31 December 2009.
David Fischel
Chief Executive
9 March 2010
FINANCIAL REVIEW
Financing strategy and financial management
In 2009, the Group's management of its funding has focused largely on
strengthening the balance sheet and containing risk. This has involved raising
equity and securing medium-term asset-specific debt together with the management
of non-speculative hedging of interest rates through swaps on a substantial
portion of the Group's floating rate debt. Notable achievements include:
- Completion of two equity capital raises, generating cash proceeds of
GBP866 million net of expenses
- GBP290 million, 5 year joint venture financing for Cardiff completed
in August 2009
- Asset-specific loan prepayments and swap terminations of GBP189
million in 2009 to reduce re-financing and loan financial covenant risk
- GBP525 million, 7 year re-financing for Lakeside secured facility
concluded in January 2010
- Plans to utilise GBP150 million of cash in 2010 to prepay/refinance
loans and terminate interest rate swaps of which GBP100 million spent so far in
2010.
The Group considers that maximising medium and long-term cash returns on capital
is a key priority for delivering added shareholder value. The Group has risk
related investment hurdle rates which have been approved by the Investment
Committee and against which capital expenditure proposals are evaluated. Once a
year strategic plans for each asset are prepared and these assist in determining
capital allocation priorities for the Group which are reflected in the annual
budget. Performance is regularly monitored against key business performance
indicators. Treasury policies are in place and the Board regularly reviews
levels of debt, financial risks and plans to manage its risks.
Capital Raising
The Group successfully completed two equity capital raises in 2009. In May
2009, GBP592 million, net of expenses, was raised by way of a Firm Placing and a
Placing and Open Offer resulting in 200 million new ordinary shares being issued
at 310 pence per share.
In October 2009, 56.1 million new ordinary shares were issued at 500 pence per
new ordinary share raising cash of GBP274.0 million, net of expenses, through a
placing. Following these initiatives the number of shares in issue increased to
623 million.
As the capital raisings were structured as placings rather than rights issues,
no re-statement of prior year comparatives is made.However, the impact of the
additional shares issued as a result of the capital raises contributed 25.9 per
cent, over two thirds, of the 36.9 per cent reduction (7.5 pence) in adjusted
earnings per share in 2009 from 29.0 pence to 18.3 pence. Adjusting the 31
December 2008 net assets per share (diluted, adjusted) of 745 pence per share
for the impact of the capital raises gives a re-based value of 580 pence per
share.
Results for the year ended 31 December 2009
The results for the year ended 31 December 2009 reflect a continuation in the
first half of the difficult market conditions in the UK commercial property
market that characterised 2008. During the second half of the year there was a
significant improvement in market conditions with a reduced level of tenant
administrations and upward movement in property valuations as measured by the
IPD UK monthly property index.
Income statement
The GBP329.1 million loss before tax recorded in 2009 was again largely the
result of unrealised, non-cash property valuation reductions. The second half
included a marked improvement in property valuations, resulting in a gain on
property valuations for the Group of GBP123.0 million, 2 per cent, in the second
half of the year. The movement in fair value of the Group's derivatives, in
particular interest rate swaps, (a charge of GBP665.1 million in 2008) turned to
a gain of GBP416.5 million in 2009 and contributed to a markedly reduced loss
for the year.
Underlying earnings for the year, which excludes valuation and exceptional
items, fell by 13.0 per cent from GBP104.9 million to GBP91.3 million, as
illustrated in Chart 8, and adjusted earnings per share fell by 36.9 per cent to
18.3 pence. To view Chart 8, please paste the following URL into the address
bar of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
The Group's net rental income contracted by 3.3 per cent to GBP370.9 million.
CSC's net rental income reduced by GBP13.5 million due to the impact of tenant
administrations and the subsequent re-letting of vacant units at lower rental
levels. Capital & Counties net rental income increased by GBP0.9 million. This
increase reflects the full year impact of the acquisition of the Empress State
property in the second half of 2008 (GBP10.6 million in 2009, GBP5.0 million in
2008), largely offset by the impact of lower rental income as a result of
property disposals in the year. The divisions' results are described in more
detail in their respective Operating Reviews.
Administration expenses reduced by GBP19.8 million to GBP43.4 million for 2009,
below our target of GBP45 million outlined in the 2008 annual report. The
saving largely resulted from the absence in 2009 of the "one-off" reorganisation
costs (GBP11.6 million in 2008) and headcount related costs which were
approximately GBP11 million lower than 2008. Costs of GBP1.9 million in
relation to the proposed de-merger of Capital & Counties are included in the
2009 administration costs.
Underlying net finance costs, which exclude exceptional items of GBP44.0
million, increased by GBP23.5 million in 2009. Average gross debt increased
compared to 2008 with the proceeds from the two capital raises largely being
held as cash to mitigate continued uncertainty on property valuations and the
resultant loan covenant and re-financing risk. The interest rate received on
these cash deposits was approximately 0.5 per cent, significantly lower than the
Group's average debt cost of 5.9 per cent. The interest income received on the
Group's holdings of floating rate CMBS notes, secured on a number of its
shopping centre assets, reduced by GBP10 million in 2009. A GBP7.6 million
higher non-cash charge on the debt component of MetroCentre compound financial
instrument comprised the majority of the additional higher net finance cost.
Balance Sheet
As detailed in the table below, net assets (diluted, adjusted) have increased by
GBP148 million since 31 December 2008. The significant factors in this growth
were the two features dominating this year's results, namely the beneficial
effect of the two capital raises, totalling GBP866 million, net of expenses,
which more than offset the further reduction in property values experienced in
the first half of 2009, resulting in a full year property revaluation deficit of
GBP732 million. Non-core properties with a carrying value of GBP222 million
were disposed of in the year.
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| Balance sheet | 31 | | 31 | |
| | December | | December | |
+------------------------------+-----------+----------+-----------+----------+
| | 2009 | | 2008 | |
+------------------------------+-----------+----------+-----------+----------+
| | GBPm | | GBPm | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| Investment, development and | 6,206.8 | | 7,107.7 | |
| trading properties | | | | |
+------------------------------+-----------+----------+-----------+----------+
| Investments | 85.1 | | 128.6 | |
+------------------------------+-----------+----------+-----------+----------+
| Net external debt | (3,176.2) | | (4,099.5) | |
+------------------------------+-----------+----------+-----------+----------+
| Other assets and liabilities | (694.6) | | (1,151.0) | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| Net assets | 2,421.1 | | 1,985.8 | |
+------------------------------+-----------+----------+-----------+----------+
| Minority interest | - | | (27.8) | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| Attributable to equity | 2,421.1 | | 1,958.0 | |
| shareholders | | | | |
+------------------------------+-----------+----------+-----------+----------+
| Fair value of derivatives | 335.5 | | 659.0 | |
| (net of tax) | | | | |
+------------------------------+-----------+----------+-----------+----------+
| Other adjustments | 88.0 | | 78.1 | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| Adjusted net assets | 2,844.6 | | 2,695.1 | |
+------------------------------+-----------+----------+-----------+----------+
| Effect of dilution | 101.3 | | 102.8 | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| Net assets (diluted, | 2,945.9 | | 2,797.9 | |
| adjusted) | | | | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
| | | | | |
+------------------------------+-----------+----------+-----------+----------+
The fair value provision for financial derivatives, principally interest rate
swaps, included in other assets and liabilities above, improved by GBP418
million largely as a consequence of increased medium-term UK interest rates.
The residual provision for interest rate swaps, net of tax, of GBP336 million is
excluded from adjusted net assets.
Adjusted net assets per share
Adjusted net assets per share of 464 pence at 31 December 2009 represents a
reduction of 38 per cent from the 31 December 2008 value of 745 pence. The
reduction is attributable to the impact of the two capital raises (22 per cent)
and then to the property valuation deficit (20 per cent). The reduction in net
assets per share is shown in Chart 9. To view Chart 9, please paste the
following URL into the address bar of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
Cash flow
The cash flow summary below shows a net outflow before financing of GBP62.8
million, a substantial improvement from 2008, driven by cash proceeds from the
disposals of non-core property assets during 2009 and lower expenditure on
property related assets.
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| | 2009 | | 2008 | |
+------------------------------------+---------+----------+---------------+-+
| | GBPm | | GBPm | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| Underlying operating cash | 342.5 | | 336.1 | |
| generated | | | | |
+------------------------------------+---------+----------+---------------+-+
| Net finance charges paid | (274.5) | | (233.0) | |
+------------------------------------+---------+----------+---------------+-+
| Net movement in working capital | (6.8) | | 26.3 | |
+------------------------------------+---------+----------+---------------+-+
| Taxation | 0.1 | | 1.8 | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| Cash flow from operations | 61.3 | | 131.2 | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| Property | (257.1) | | (400.9) | |
| development/investments/minority | | | | |
| interest | | | | |
+------------------------------------+---------+----------+---------------+-+
| Sale proceeds of | 210.3 | | 106.6 | |
| property/investments | | | | |
+------------------------------------+---------+----------+---------------+-+
| REIT entry charge | (38.8) | | (48.4) | |
+------------------------------------+---------+----------+---------------+-+
| Pension buy-out | (15.5) | | - | |
+------------------------------------+---------+----------+---------------+-+
| Dividends | (23.0) | | (123.0) | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| Cash flow before financing and | (62.8) | | (334.5) | |
| equity raises | | | | |
+------------------------------------+---------+----------+---------------+-+
| Net debt (repaid)/drawn | (301.9) | | 208.2 | |
+------------------------------------+---------+----------+---------------+-+
| Equity capital raised | 865.7 | | 2.5 | |
+------------------------------------+---------+----------+---------------+-+
| Others | (9.2) | | 6.3 | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
| Net increase/(decrease) in cash | 491.8 | | (117.5) | |
| and cash equivalents | | | | |
+------------------------------------+---------+----------+---------------+-+
| | | | | |
+------------------------------------+---------+----------+---------------+-+
Cash flow from operations has fallen from the comparable period in 2008 largely
due to higher finance charges. The higher finance charges include exceptional
outflows in respect of revolving credit facility arrangement fees (GBP5.4
million) and the termination of derivative financial instruments (GBP34.3
million). Adjusting for these items, which are of a non-recurring nature, gives
an underlying operating cash flow of GBP101.0 million.
The table below illustrates that underlying operating cash flow generated covers
the paid and proposed dividends (totalling 16.5 pence per share) for 2009.
+------------------------------------------+---------+----------+
| | | |
+------------------------------------------+---------+----------+
| Dividends - cash cover | 2009 | |
+------------------------------------------+---------+----------+
| | GBPm | |
+------------------------------------------+---------+----------+
| | | |
+------------------------------------------+---------+----------+
| Underlying operating cash generated | 342.5 | |
+------------------------------------------+---------+----------+
| Net finance charges excluding | (234.8) | |
| exceptional cash items of GBP39.7 | | |
| million | | |
+------------------------------------------+---------+----------+
| Net movement in working capital | (6.8) | |
+------------------------------------------+---------+----------+
| Taxation | 0.1 | |
+------------------------------------------+---------+----------+
| | | |
+------------------------------------------+---------+----------+
| | | |
+------------------------------------------+---------+----------+
| Underlying operating cash generated | 101.0 | |
+------------------------------------------+---------+----------+
| | | |
+------------------------------------------+---------+----------+
| | | |
+------------------------------------------+---------+----------+
| Paid and proposed 2009 dividends of | (99.7) | |
| 16.5p | | |
+------------------------------------------+---------+----------+
| | | |
+------------------------------------------+---------+----------+
| | | |
+------------------------------------------+---------+----------+
A one-off cash payment of GBP15.5 million was made to facilitate an insurance
company buyout of the Liberty International PLC defined benefit pension fund in
December 2009, thus eliminating the future funding liabilities for the company.
2009 investment in property related assets was mainly restricted to existing
commitments in response to prevailing market conditions. The most significant
expenditure was on completion of the St David's, Cardiff development (GBP89.2
million), which opened in October 2009. Other expenditure in the year included
the completion of the Westgate, Oxford centre purchase (GBP41.6 million), Eldon
Square (GBP27.8 million) and MetroCentre (GBP20.0 million).
Cash proceeds from the disposal of properties and investments generated cash of
GBP210.3 million, with the largest transactions being GBP63.6 million received
for the Broadgate development in Leeds and GBP26.8 million for a property in
Manchester sold to Primark, the existing occupier. Sales of third party CMBS
notes generated cash proceeds of GBP18.7 million.
Net debt repayments of GBP302 million are discussed in the debt structure
section below. Net proceeds of the two completed capital raises resulted in the
significant increase in the Group's cash balance at the end of 2009.
Capital commitments
The Group has an aggregate commitment to capital projects of GBP142 million,
which includes GBP13 million for commitments in respect of investments in China.
GBP76 million of the outstanding commitments are in respect of remaining
payments for the extension to St David's, Cardiff and associated residential
development. Based on current development plans it is anticipated that GBP123
million of these commitments will be funded in 2010.
Financial position
The Group's debt has been largely arranged on an asset-specific basis, with
limited or non-recourse to the Group. This structure permits the Group a high
degree of financial flexibility in dealing with individual property issues,
compared to a financing structure based on a single Group-wide borrowing
facility. This flexibility has proved to be advantageous in the difficult debt
and commercial property markets experienced in the past two years.
In addition to the asset-specific debt, the Group has a corporate revolving
credit facility of GBP248 million, which can be utilised to fund development and
investment opportunities before they reach the stage that they can support their
own financing arrangements. This facility, which has recently been extended to
June 2013, is currently undrawn.
Net external debt reduced from GBP4,100 million at 31 December 2008 to GBP3,176
million at 31 December 2009. The two capital raises, discussed previously, were
the major factor in the reduction in net external debt. In addition, non-cash
movements resulted in the gross debt position reducing by a further GBP109
million.
The Group had cash of GBP583 million at 31 December 2009, and has an undrawn
revolving credit facility of GBP248 million as detailed above. The Group is in
compliance with all of its corporate and asset-specific loan covenants other
than Xscape Braehead LTV covenant referred to below.
+-----------------------------------+----------+----------+----------+-+
| | | | | |
+-----------------------------------+----------+----------+----------+-+
| Group debt ratios were as | 31 | | 31 | |
| follows: | December | | December | |
+-----------------------------------+----------+----------+----------+-+
| | 2009 | | 2008 | |
+-----------------------------------+----------+----------+----------+-+
| | | | | |
+-----------------------------------+----------+----------+----------+-+
| Debt to assets | 51% | | 58% | |
+-----------------------------------+----------+----------+----------+-+
| Interest cover | 142% | | 145% | |
+-----------------------------------+----------+----------+----------+-+
| Weighted average debt maturity | 5.1 | | 5.8 | |
| | years | | years | |
+-----------------------------------+----------+----------+----------+-+
| Weighted average cost of gross | 5.9% | | 6.0% | |
| debt | | | | |
+-----------------------------------+----------+----------+----------+-+
| Proportion of gross debt with | 102% | | 103% | |
| interest rate protection | | | | |
+-----------------------------------+----------+----------+----------+-+
| | | | | |
+-----------------------------------+----------+----------+----------+-+
The debt to assets ratio was 51 per cent, down from 58 per cent at 31 December
2008, with the impact of the equity capital raised more than compensating for
the impact of the revaluation deficit on the value of the Group's property
assets.
Following the Lakeside facility re-financing that was completed in January 2010:
· The weighted average debt maturity increased to 5.8 years from 5.1 years
as at 31 December 2009
· The weighted average cost of gross debt reduced to 5.8 per cent from 5.9
per cent as at 31 December 2009
· Proportion of gross debt with interest rate protection fell to 99 per
cent from 102 per cent at 31 December 2009
· The next significant date for repayment of CMBS related debt is now 2015
Debt structure and maturity
The Group's debt maturity profile is shown in Chart 10. To view Chart 10, please
paste the following URL into the address bar of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
During 2009, the Group repaid a net GBP302 million of debt. Scheduled loan
repayments were GBP78 million with an additional GBP139 million of other
principal prepayments largely relating to the facilities secured on the Lakeside
(GBP58.5 million) and the Earls Court & Olympia (GBP65 million) properties. The
corporate revolving bank facility, of which GBP140 million was drawn at 31
December 2008, was repaid in the year and remains undrawn.
In 2010, GBP141 million of debt is due for repayment, including the GBP79
million of convertible bonds, with the balance being standard principal
amortisation. Following the successful re-financing of Lakeside, the next
significant secured debt maturity is the Earls Court & Olympia bank loan which
occurs in February 2012. A detailed breakdown of the Group's debt maturity is
shown in the notes to the financial statements.
Financial covenants
Full details of the loan financial covenants are shown in the other information
section of this report.
Financial covenants apply to GBP3.0 billion of secured asset-specific debt. The
two main covenants are Loan to Value (LTV) and Interest Cover (IC). The actual
requirements vary and are specific to each loan. The Group is fully compliant
in all financial covenant tests certified to lenders on this secured
asset-specific debt.
As previously noted, the Group's debt has been largely arranged on an
asset-specific basis, with limited or non-recourse to the Group. The
flexibility this gives in permitting asset specific issues to be dealt with has
proved to be advantageous in the difficult debt and commercial property markets
experienced in the past two years.
During 2009, the Group made partial asset-specific loan prepayments with
associated swap termination costs of GBP18.3 million and cash deposits of
GBP19.8 million. Cash deposits can be recovered by the Group when financial
covenants return to the required level.
There are LTV and IC tests that apply to the Group's GBP252 million of joint
venture borrowing. The joint ventures are in compliance with their financial
covenants with the exception of the Xscape Braehead Partnership. The 31
December 2009 annual valuation of GBP52 million for the Xscape Braehead
property, which is owned by the Xscape Braehead Partnership, a 50 per cent joint
venture between Capital Shopping Centres and a subsidiary of Capital & Regional
plc, indicated a loan to value ratio in excess of that specified in the GBP49
million loan facility secured on the property. Following submission of the
valuation to the lender, they served a notice of breach on the Partnership,
triggering the cure period. Discussions between the lender and the Partnership
as to potential solutions to the breach are in progress.
There are three financial covenant tests that apply to the Group's new GBP248
million secured term and revolving credit bank facility. These are tested
semi-annually on a number of the Group's companies, defined as the Borrower
Group, and all tests are currently satisfied.
There is a minimum capital cover and interest cover condition applicable to the
GBP231 million mortgage debenture tested semi-annually. Both tests were
satisfied at 31 December 2009, the latest test date. Compliance with financial
covenants is and will continue to be constantly monitored.
Refinancing activity
Lakeside
The existing loan secured on the Lakeside, Thurrock Shopping Centre was due to
mature in July 2011. To take advantage of an improvement in bank liquidity and
to eliminate refinancing risk this loan was replaced in January 2010 by a 7 year
GBP525 million facility with a consortium of 7 banks. In preparation for this
refinancing GBP58.5 million was prepaid in December 2009.
The prepaid loan had a funding cost of 5.5 per cent. The hedging arrangements of
the new loan require progressively greater levels of interest rate protection
over time. Based on prevailing interest rates, the Group should incur an
interest cost of 4.26 per cent in 2010 on this loan.
Earls Court & Olympia
In December 2009 the loan facility secured on the Earls Court & Olympia
properties was re-negotiated, with the Loan To Value (LTV) covenant being
removed and the interest cover covenant, which previously included a number of
calculations based on loan tranches, being simplified to one interest cover
covenant of 110 per cent. A loan prepayment of GBP65 million was made with
associated swap termination costs of GBP5.2 million.
Interest rate hedging and fair value of financial instruments
At 31 December 2009 the fair value liability of the Group's derivative financial
instruments was GBP371 million. This liability includes all the Group's
derivatives contracts to hedge interest rate and currency risk. The liability
reduced by GBP418 million from the end of 2008. This reduction was largely due
to the increase in sterling interest rates for maturity periods greater than
three years, with rates for shorter maturities actually falling from the
December 2008 levels.
During the year the Group terminated GBP1.6 billion of forward starting interest
rate swaps, unattached to asset-specific debt, for a net payment of GBP10
million, representing the market value liability at the point of termination.
Forward hedging of interest rates
The Group's current net debt is fully hedged through a combination of fixed rate
debt and interest rate swaps. The following interest rate swap summary table
details the amount of forward hedging in place both in nominal amount and
average rate payable under the swap contract. The Group's cost of debt will
equate to the swap rate payable plus the margin payable to the lender. The
re-profiling of interest rate hedges in 2009 reduced forward interest hedging
commitments as shown below.
+------------------+-------------+-------------+-------------+-------------+
| | | | | |
+------------------+-------------+-------------+-------------+-------------+
| | 31 December | 31 December | 31 December | 31 December |
| | 2009 | 2008 | 2009 | 2008 |
+------------------+-------------+-------------+-------------+-------------+
| Interest rate | Net amount | Net amount | Average | Average |
| swap summary | | | rate | rate |
+------------------+-------------+-------------+-------------+-------------+
| In effect on or | GBPm | GBPm | % | % |
| after: | | | | |
+------------------+-------------+-------------+-------------+-------------+
| | | | | |
+------------------+-------------+-------------+-------------+-------------+
| 1 year | 3,206 | 3,595 | 5.25 | 5.28 |
+------------------+-------------+-------------+-------------+-------------+
| 2 years | 2,918 | 3,575 | 5.18 | 5.27 |
+------------------+-------------+-------------+-------------+-------------+
| 5 years | 2,325 | 3,184 | 5.27 | 5.16 |
+------------------+-------------+-------------+-------------+-------------+
| 10 years | 625 | 2,425 | 5.16 | 4.69 |
+------------------+-------------+-------------+-------------+-------------+
| 15 years | 500 | 2,100 | 4.97 | 4.58 |
+------------------+-------------+-------------+-------------+-------------+
| 20 years | 500 | 2,100 | 4.97 | 4.58 |
+------------------+-------------+-------------+-------------+-------------+
| 25 years | 125 | 1,615 | 4.57 | 4.40 |
+------------------+-------------+-------------+-------------+-------------+
| | | | | |
+------------------+-------------+-------------+-------------+-------------+
Accounting for Empress State
In August 2009, following the expiry of the option to buy the 50 per cent
interest in the Empress State Partnership owned by Land Securities PLC, under
IAS 27 "Consolidated and Separate Financial Statements", the Group lost deemed
control of the Partnership. This resulted in the accounting treatment for the
Group's interest moving from consolidating 100 per cent of the Partnership, with
the partner's 50 per cent interest accounted for as a minority interest, to
proportionally consolidating the Group's 50 per cent share in the Partnership's
assets and liabilities. This resulted in a deemed disposal of GBP94.4 million
of investment property and reduced the Group's gross debt by GBP78 million.
Earls Court & Olympia minority interest buy-out
In December 2009, the Group acquired the 50 per cent minority interest from the
former partners in Earls Court & Olympia. The consideration comprised a cash
payment of GBP25.0 million and the waiving of a GBP5.2 million receivable from
one of the former partners. The agreement contains a deferred consideration
payment clause, based on a number of factors including the granting of planning
permission for the Earls Court & Olympia properties. This deferred
consideration has been estimated at GBP3.8 million after discounting as it is
not envisaged that any payment will be due until 2012.
Taxation
Since the Group became a UK REIT on 1 January 2007, it has benefited from the
tax savings that REIT status provides. The financial benefits to date have
amounted to GBP163 million, comprising net rental income and capital gains
sheltered from UK tax.
REIT entry charge payments of GBP39 million were made in 2009, bringing the
total paid to date to GBP103 million, with GBP65 million remaining to be settled
in instalments to 2011.
Income and gains from the non-REIT qualifying parts of the Group continue to be
subject to taxation, with a net tax charge of GBP41.0 million in the year to 31
December 2009. This is principally due to a net GBP43.1 million deferred tax
charge arising in respect of fair value gains on derivative financial
instruments partially offset by a deferred tax credit arising on investment
property valuation deficits in non-REIT qualifying parts of the Group.
Underlying earnings for 2009 have benefited from a net tax credit of GBP3.0
million, which includes prior year adjustments following agreement with the tax
authorities of prior year tax computations.
Ian Durant
Finance Director
9 March 2010
Key risks and uncertainties
The key risks and uncertainties facing the Group are as set out in the table
below:
+----------------+----------------+--------------+--------------------------------+
| Risk | Description | Impact | Mitigation |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Financing | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Liquidity | Reduced | Insufficient | Capital raisings have enhanced |
| | availability | funds to | liquidity position |
+----------------+----------------+--------------+--------------------------------+
| | | meet | Regular reporting of current |
| | | operational | and projected position |
| | | and | |
+----------------+----------------+--------------+--------------------------------+
| | | financing | to the Board |
| | | needs | |
+----------------+----------------+--------------+--------------------------------+
| | | | Efficient treasury management |
| | | | and strict credit control |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Economic | Property | Impact on | Regular monitoring of LTV and |
| and | values | covenants | ICR covenants |
| | decrease | | |
+----------------+----------------+--------------+--------------------------------+
| property | | | Covenant headroom monitored |
| market | | | and maintained; |
+----------------+----------------+--------------+--------------------------------+
| downturn | Reduction in | | regular market valuations; |
| | rental income | | focus on quality assets |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Interest | Interest rates | Lack of | Hedging to establish long term |
| cover | fluctuate | certainty | certainty |
| | | over | |
+----------------+----------------+--------------+--------------------------------+
| | | interest | |
| | | costs | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Market | Interest rates | Potential | Manage derivative contracts to |
| price risk | fluctuate | cash outflow | achieve a balance |
| of | | | |
+----------------+----------------+--------------+--------------------------------+
| fixed rate | resulting in | if | between hedging interest rate |
| | significant | derivative | exposure and |
| | | contract | |
+----------------+----------------+--------------+--------------------------------+
| derivatives | assets and or | contains | minimising potential cash |
| | liabilities | break clause | calls |
+----------------+----------------+--------------+--------------------------------+
| | on derivative | | |
| | contracts | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| REIT | Breach REIT | Tax penalty | Regular monitoring of |
| | conditions | or be forced | compliance and tolerances |
+----------------+----------------+--------------+--------------------------------+
| | | to leave the | |
| | | REIT regime | |
+----------------+----------------+--------------+--------------------------------+
| | PID | Requirement | Alternative sources of |
| | requirements | to pay 90 | investment funding constantly |
+----------------+----------------+--------------+--------------------------------+
| | | per cent of | under review |
| | | income | |
+----------------+----------------+--------------+--------------------------------+
| | | restricts | |
| | | ability to | |
| | | retain | |
+----------------+----------------+--------------+--------------------------------+
| | | cash for | |
| | | investment | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Group's | The Group's | Additional | Professional advice sought in |
| ordinary | ordinary | complexity | both jurisdictions to |
+----------------+----------------+--------------+--------------------------------+
| shares are | shares are | when | ensure Group capital needs are |
| dual- | listed on the | assessing | met in optimal |
+----------------+----------------+--------------+--------------------------------+
| listed | London and | options for | manner |
| | | capital | |
+----------------+----------------+--------------+--------------------------------+
| | Johannesburg | raising | |
| | stock | | |
+----------------+----------------+--------------+--------------------------------+
| | exchanges | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Joint | Reliance on JV | Partners | Agreements in place and |
| Ventures | partners' | under - | regular communication |
+----------------+----------------+--------------+--------------------------------+
| | performance | perform or | with partners |
| | and | provide | |
+----------------+----------------+--------------+--------------------------------+
| | reporting | incorrect | |
| | | information | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Asset Management | | |
+---------------------------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Tenants | Tenant failure | Financial | Initial assessment of tenant |
| | | loss | covenant strength |
+----------------+----------------+--------------+--------------------------------+
| | | | Regular reporting and |
| | | | modelling of tenant covenant |
+----------------+----------------+--------------+--------------------------------+
| | | | Active credit control process |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Voids | Increased | Financial | Policy of active tenant mix |
| | voids, failure | loss | management |
+----------------+----------------+--------------+--------------------------------+
| | to let | | |
| | developments | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Reputation | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Responsibility | Failure of | Impact on | Annual audits carried out by |
| for | Health & | reputation | external |
| | Safety | | |
+----------------+----------------+--------------+--------------------------------+
| visitors | | or potential | consultants |
| to | | criminal/ | |
| shopping | | | |
+----------------+----------------+--------------+--------------------------------+
| centres | | civil | Heath & Safety policies in |
| | | proceedings | place |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Business | Lost access to | Impact on | Documented Business Recovery |
| | centres | footfall and | Plans in place |
+----------------+----------------+--------------+--------------------------------+
| interruption | or head office | tenant | Security team training and |
| | | income | procedure in |
+----------------+----------------+--------------+--------------------------------+
| | | Adverse | shopping centres |
| | | publicity | |
+----------------+----------------+--------------+--------------------------------+
| | | | Terrorist Insurance is in |
| | | | place |
+----------------+----------------+--------------+--------------------------------+
| | | | Flu pandemic recovery plan |
| | | | documented |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| People/HR | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Staff | Key staff | Loss of key | Succession planning; |
| | | members | performance |
+----------------+----------------+--------------+--------------------------------+
| | | of the | evaluation; training and |
| | | management | development; |
+----------------+----------------+--------------+--------------------------------+
| | | team could | incentive reward |
| | | impact | |
+----------------+----------------+--------------+--------------------------------+
| | | adversely on | |
| | | the | |
+----------------+----------------+--------------+--------------------------------+
| | | Group's | |
| | | success | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Developments | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Time | Planning | Securing | Policy of sustainable |
| | | planning | development and regeneration |
+----------------+----------------+--------------+--------------------------------+
| | | consent for | of brownfield sites |
+----------------+----------------+--------------+--------------------------------+
| | | developments | Constructive dialogue with |
| | | | planning authorities |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
| Cost and | Construction | Returns | Approval process based on |
| letting | cost | reduced by | detailed project costs; |
+----------------+----------------+--------------+--------------------------------+
| risk | overrun, low | increased | regular monitoring and |
| | | costs or | forecasting of project costs |
+----------------+----------------+--------------+--------------------------------+
| | occupancy | delay in | and rental income; and fixed |
| | levels | securing | cost contracts |
| | | tenants | |
+----------------+----------------+--------------+--------------------------------+
| | | | |
+----------------+----------------+--------------+--------------------------------+
Directors' responsibilities
Statement of Directors' responsibilities
The statement Directors' responsibilities has been prepared in relation to the
Group's full Annual Report for the year ended 31 December 2009. Certain parts
of the Annual Report are not included within this announcement.
We confirm to the best of our knowledge:
· the Group financial statements, which have been prepared in accordance
with IFRSs as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and loss of the Group; and
· the Operating and Financial Review includes a fair review of the
development and performance of the business and the position of the Group,
together with a description of the principal risks and uncertainties that it
faces.
Signed on behalf of the Board on 9 March 2010
David Fischel
Chief Executive
Ian Durant
Finance Director
Consolidated income statement
for the year ended 31 December 2009
+------------------------------------------------+-------+---------+-----------+
| | | 2009 | 2008 |
+------------------------------------------------+-------+---------+-----------+
| | Notes | GBPm | GBPm |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Revenue | 2 | 578.9 | 618.2 |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Rental income | | 568.4 | 607.4 |
+------------------------------------------------+-------+---------+-----------+
| Rental expenses | | (197.5) | (223.9) |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Net rental income | 2 | 370.9 | 383.5 |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Other income | 3 | 6.8 | 0.5 |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Deficit on revaluation and sale of investment | 4 | (768.2) | (2,057.0) |
| and development property | | | |
+------------------------------------------------+-------+---------+-----------+
| Profit on sale of subsidiary | | - | 0.8 |
+------------------------------------------------+-------+---------+-----------+
| Loss on sale and impairment of investments | 5 | (10.4) | - |
+------------------------------------------------+-------+---------+-----------+
| Write down of trading property | | (4.6) | (5.8) |
+------------------------------------------------+-------+---------+-----------+
| Impairment of other receivables | 6 | (12.0) | - |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | (417.5) | (1,678.0) |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Administration expenses | | (43.4) | (63.2) |
+------------------------------------------------+-------+---------+-----------+
| Impairment of goodwill | | - | (35.0) |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Operating loss | | (460.9) | (1,776.2) |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Finance costs | 7 | (237.4) | (230.3) |
+------------------------------------------------+-------+---------+-----------+
| Finance income | | 6.3 | 8.6 |
+------------------------------------------------+-------+---------+-----------+
| Other finance (costs)/income | 7 | (53.6) | 0.9 |
+------------------------------------------------+-------+---------+-----------+
| Change in fair value of derivative financial | | 416.5 | (665.1) |
| instruments | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Net finance income/(costs) | | 131.8 | (885.9) |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Loss before tax | | (329.1) | (2,662.1) |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Current tax | | 2.7 | 7.0 |
+------------------------------------------------+-------+---------+-----------+
| Deferred tax | | (40.6) | 82.2 |
+------------------------------------------------+-------+---------+-----------+
| REIT entry charge | | (3.1) | (3.6) |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Taxation | 8 | (41.0) | 85.6 |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Loss for the year | | (370.1) | (2,576.5) |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Loss attributable to: | | | |
+------------------------------------------------+-------+---------+-----------+
| Equity shareholders | | (338.8) | (2,451.3) |
+------------------------------------------------+-------+---------+-----------+
| Minority interests | | (31.3) | (125.2) |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Earnings per share from continuing operations | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Basic loss per share | 19 | (68.1)p | (678.1)p |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Diluted loss per share | 19 | (66.1)p | (651.1)p |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
| Weighted average number of shares | | 497.7m | 361.5m |
+------------------------------------------------+-------+---------+-----------+
| | | | |
+------------------------------------------------+-------+---------+-----------+
Adjusted earnings per share are shown in note 19.
Consolidated statement of comprehensive income
for the year ended 31 December 2009
+----------------------------------------------------------+---------+-----------+
| | 2009 | 2008 |
+----------------------------------------------------------+---------+-----------+
| | GBPm | GBPm |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| Loss for the year | (370.1) | (2,576.5) |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| Other recognised income and expense in the year | | |
+----------------------------------------------------------+---------+-----------+
| Actuarial loss on defined benefit pension schemes | (14.5) | (8.1) |
+----------------------------------------------------------+---------+-----------+
| Exchange differences | 2.2 | 14.0 |
+----------------------------------------------------------+---------+-----------+
| Fair value losses on investments | (5.3) | (10.1) |
+----------------------------------------------------------+---------+-----------+
| Net loss recognised in equity due to minority interests | (0.3) | (0.5) |
+----------------------------------------------------------+---------+-----------+
| Tax on items taken directly to equity | (2.8) | 7.6 |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| Other comprehensive (expense)/income for the year | (20.7) | 2.9 |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| Total comprehensive expense for the year | (390.8) | (2,573.6) |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| Attributable to: | | |
+----------------------------------------------------------+---------+-----------+
| Equity shareholders | (359.2) | (2,447.9) |
+----------------------------------------------------------+---------+-----------+
| Minority interests | (31.6) | (125.7) |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
| Total comprehensive expense for the year | (390.8) | (2,573.6) |
+----------------------------------------------------------+---------+-----------+
| | | |
+----------------------------------------------------------+---------+-----------+
Consolidated balance sheet
as at 31 December 2009
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | 2009 | 2008 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | Notes | GBPm | GBPm |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Non-current assets | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Investment and development property | | | 10 | 6,182.6 | 7,074.4 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Plant and equipment | | | | 1.9 | 1.3 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Investments | | | | 58.3 | 96.3 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Investments in associate companies | | | | 26.8 | 32.3 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Trade and other receivables | | | 12 | 69.8 | 95.6 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | 6,339.4 | 7,299.9 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Current assets | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Trading property | | | 11 | 24.2 | 33.3 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Derivative financial instruments | | | 17 | 15.0 | 29.6 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Tax assets | | | | 1.1 | - |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Trade and other receivables | | | 12 | 86.1 | 97.2 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Cash and cash equivalents | | | 13 | 582.5 | 70.9 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | 708.9 | 231.0 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Total assets | | | | 7,048.3 | 7,530.9 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Current liabilities | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Trade and other payables | | | 14 | (285.2) | (364.9) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Tax liabilities | | | | - | (1.9) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Borrowings | | | 15 | (148.5) | (95.2) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Derivative financial instruments | | | 17 | (386.1) | (818.5) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | (819.8) | (1,280.5) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Non-current liabilities | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Borrowings | | | 15 | (3,740.1) | (4,195.5) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Deferred tax provision | | | 8 | (37.1) | - |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Other provisions | | | | (8.6) | (7.3) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Other payables | | | | (21.6) | (61.8) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | (3,807.4) | (4,264.6) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Total liabilities | | | | (4,627.2) | (5,545.1) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Net assets | | | | 2,421.1 | 1,985.8 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Equity | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Ordinary shares | | | 21 | 311.3 | 182.6 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Share premium | | | 21 | 1,005.7 | 993.4 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Treasury shares | | | 22 | (9.7) | (10.8) |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Convertible bond reserve | | | | 6.7 | 7.6 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Other non-distributable reserves | | | | 286.9 | 287.3 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Retained earnings | | | | 820.2 | 497.9 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Attributable to equity shareholders | | | | 2,421.1 | 1,958.0 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Minority interests | | | | - | 27.8 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
| Total equity | | | | 2,421.1 | 1,985.8 |
+-------------------------------------------+----+-+-------+-----------+-----------+
| | | | | | |
+-------------------------------------------+----+-+-------+-----------+-----------+
Consolidated statement of changes in equity
for the year ended 31 December 2009
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | Attributable to equity holders of the | | |
| | Group | | |
+------------------+-----------------------------------------------------------------------------+----------+---------+
| | | | | | Other | | | | |
| | | | | | non- | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | Share | Share | Treasury | Bond | distributable | Retained | | Minority | Total |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | capital | premium | shares | reserve | reserves | earnings | Total | interest | equity |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Balance at 1 | 182.6 | 993.4 | (10.8) | 7.6 | 287.3 | 497.9 | 1,958.0 | 27.8 | 1,985.8 |
| January 2009 | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Loss for the | - | - | - | - | - | (338.8) | (338.8) | (31.3) | (370.1) |
| year | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Other | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income: | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Fair value | | | | | | | | | |
| losses on | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| investments | - | - | - | - | (5.3) | - | (5.3) | - | (5.3) |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Exchange | - | - | - | - | 2.2 | - | 2.2 | - | 2.2 |
| differences | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Actuarial loss | | | | | | | | | |
| on defined | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| benefit pension | - | - | - | - | - | (14.5) | (14.5) | (0.3) | (14.8) |
| schemes | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Tax on items | | | | | | | | | |
| taken directly | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| to equity | - | - | - | - | (2.0) | (0.8) | (2.8) | - | (2.8) |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Total | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| for the year | | | | | | | | | |
| ended | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| 31 December 2009 | - | - | - | - | (5.1) | (354.1) | (359.2) | (31.6) | (390.8) |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Transactions | | | | | | | | | |
| with equity | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| shareholders | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Ordinary shares | 128.0 | - | - | - | 737.7 | - | 865.7 | - | 865.7 |
| issued | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Realisation of | - | - | - | - | (737.7) | 737.7 | - | - | - |
| merger reserve | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Dividends paid | - | - | - | - | - | (28.2) | (28.2) | - | (28.2) |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Total reserve | | | | | | | | | |
| transfers, | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| contributions | | | | | | | | | |
| from and | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| distributions to | 128.0 | - | - | - | - | 709.5 | 837.5 | - | 837.5 |
| shareholders | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Changes in | | | | | | | | | |
| ownership | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| interest | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Conversion of | 0.7 | 12.3 | - | (0.9) | - | 0.9 | 13.0 | - | 13.0 |
| bonds | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Loss of control | | | | | | | | | |
| of deemed | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| subsidiary | - | - | - | - | - | - | - | (8.0) | (8.0) |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Increase in | - | - | - | - | - | 0.3 | 0.3 | - | 0.3 |
| partner capital | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Minority | - | - | - | - | - | - | - | 11.8 | 11.8 |
| interest | | | | | | | | | |
| additions | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Purchase of | - | - | - | - | - | (34.3) | (34.3) | - | (34.3) |
| minority | | | | | | | | | |
| interest | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Realise | | | | | | | | | |
| revaluation | | | | | | | | | |
| reserve on | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| disposal of | - | - | - | - | 4.5 | - | 4.5 | - | 4.5 |
| investments | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Fair value of | | | | | | | | | |
| share based | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| payments | - | - | - | - | 0.2 | - | 0.2 | - | 0.2 |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Acquisition of | - | - | (0.2) | - | - | - | (0.2) | - | (0.2) |
| treasury shares | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Disposal of | - | - | 1.3 | - | - | - | 1.3 | - | 1.3 |
| treasury shares | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Total | | | | | | | | | |
| transactions | | | | | | | | | |
| with | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| shareholders | 0.7 | 12.3 | 1.1 | (0.9) | 4.7 | (33.1) | (15.2) | 3.8 | (11.4) |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| Balance at 31 | 311.3 | 1,005.7 | (9.7) | 6.7 | 286.9 | 820.2 | 2,421.1 | - | 2,421.1 |
| December 2009 | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+----------+---------+----------+---------+
Consolidated statement of changes in equity
for the year ended 31 December 2008
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | Attributable to equity holders of the | | |
| | Group | | |
+------------------+--------------------------------------------------------------------------------+----------+-----------+
| | | | | | Other | | | | |
| | | | | | non- | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | Share | Share | Treasury | Bond | distributable | Retained | | Minority | Total |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | capital | premium | shares | reserve | reserves | earnings | Total | interest | equity |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Balance at 1 | 181.4 | 975.6 | (9.6) | 9.1 | 275.4 | 3,075.1 | 4,507.0 | 201.9 | 4,708.9 |
| January 2008 | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Loss for the | - | - | - | - | - | (2,451.3) | (2,451.3) | (125.2) | (2,576.5) |
| year | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Other | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income: | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Fair value | | | | | | | | | |
| losses on | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| investments | - | - | - | - | (10.1) | - | (10.1) | - | (10.1) |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Exchange | - | - | - | - | 14.0 | - | 14.0 | - | 14.0 |
| differences | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Actuarial loss | | | | | | | | | |
| on defined | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| benefit pension | - | - | - | - | - | (8.1) | (8.1) | (0.5) | (8.6) |
| schemes | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Tax on items | | | | | | | | | |
| taken directly | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| to equity | - | - | - | - | 5.6 | 2.0 | 7.6 | - | 7.6 |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Total | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| for the year | | | | | | | | | |
| ended | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| 31 December 2008 | - | - | - | - | 9.5 | (2,457.4) | (2,447.9) | (125.7) | (2,573.6) |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Transactions | | | | | | | | | |
| with equity | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| shareholders | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Dividends paid | - | - | - | - | - | (123.0) | (123.0) | - | (123.0) |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Total reserve | | | | | | | | | |
| transfers, | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| contributions | | | | | | | | | |
| from and | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| distributions to | - | - | - | - | - | (123.0) | (123.0) | - | (123.0) |
| shareholders | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Changes in | | | | | | | | | |
| ownership | | | | | | | | | |
| interest | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Conversion of | 1.2 | 17.8 | - | (1.5) | - | 1.5 | 19.0 | - | 19.0 |
| bonds | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Minority | - | - | - | - | - | - | - | 33.7 | 33.7 |
| interest | | | | | | | | | |
| additions | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Minority | - | - | - | - | - | - | - | (2.7) | (2.7) |
| interest | | | | | | | | | |
| disposals | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Compound | - | - | - | - | - | - | - | (75.3) | (75.3) |
| financial | | | | | | | | | |
| instruments | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Movement between | - | - | - | - | 2.4 | (2.4) | - | - | - |
| reserves | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Preferred | | | | | | | | | |
| dividend | | | | | | | | | |
| relating to | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Earls Court | - | - | - | - | - | 4.1 | 4.1 | (4.1) | - |
| acquisition | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Acquisition of | - | - | (3.8) | - | - | - | (3.8) | - | (3.8) |
| treasury shares | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Disposal of | - | - | 2.6 | - | - | - | 2.6 | - | 2.6 |
| treasury shares | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Total | | | | | | | | | |
| transactions | | | | | | | | | |
| with | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| shareholders | 1.2 | 17.8 | (1.2) | (1.5) | 2.4 | 3.2 | 21.9 | (48.4) | (26.5) |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| Balance at 31 | 182.6 | 993.4 | (10.8) | 7.6 | 287.3 | 497.9 | 1,958.0 | 27.8 | 1,985.8 |
| December 2008 | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
| | | | | | | | | | |
+------------------+---------+---------+----------+---------+---------------+-----------+-----------+----------+-----------+
Consolidated statement of cash flows
for the year ended 31 December 2009
+------------------------------------------------+------+-----------+---------+
| | | 2009 | 2008 |
+------------------------------------------------+------+-----------+---------+
| | Note | GBPm | GBPm |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Cash generated from operations | 16 | 335.7 | 362.4 |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Interest paid | | (293.1) | (241.6) |
+------------------------------------------------+------+-----------+---------+
| Interest received | | 18.6 | 8.6 |
+------------------------------------------------+------+-----------+---------+
| Taxation | | 0.1 | 1.8 |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Cash flows from operating activities | | 61.3 | 131.2 |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Cash flows from investing activities | | | |
+------------------------------------------------+------+-----------+---------+
| Purchase and development of property, plant & | | (227.5) | (270.6) |
| equipment | | | |
+------------------------------------------------+------+-----------+---------+
| Sale of property | | 180.2 | 101.6 |
+------------------------------------------------+------+-----------+---------+
| REIT entry charge paid | | (38.8) | (48.4) |
+------------------------------------------------+------+-----------+---------+
| Sale of interest in subsidiary companies | | - | 5.0 |
+------------------------------------------------+------+-----------+---------+
| Purchase of minority interest | | (25.0) | - |
+------------------------------------------------+------+-----------+---------+
| Sale of investments | | 30.1 | - |
+------------------------------------------------+------+-----------+---------+
| Purchase of subsidiary companies | | - | (41.3) |
+------------------------------------------------+------+-----------+---------+
| Loss of deemed control of former subsidiary | | (3.7) | - |
+------------------------------------------------+------+-----------+---------+
| Purchase of non-current investments | | (0.9) | (86.2) |
+------------------------------------------------+------+-----------+---------+
| Purchase of associate companies | | - | (2.8) |
+------------------------------------------------+------+-----------+---------+
| Purchase of pension insurance policy | | (15.5) | - |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Cash flows from investing activities | | (101.1) | (342.7) |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Cash flows from financing activities | | | |
+------------------------------------------------+------+-----------+---------+
| Partnership equity introduced | | 12.0 | 6.5 |
+------------------------------------------------+------+-----------+---------+
| Issue of shares | | 865.7 | 2.5 |
+------------------------------------------------+------+-----------+---------+
| Acquisition of treasury shares | | (0.2) | (3.8) |
+------------------------------------------------+------+-----------+---------+
| Cash transferred to restricted accounts | 13 | (19.8) | - |
+------------------------------------------------+------+-----------+---------+
| Borrowings drawn | | 246.1 | 439.0 |
+------------------------------------------------+------+-----------+---------+
| Borrowings repaid | | (548.0) | (230.8) |
+------------------------------------------------+------+-----------+---------+
| Equity dividends paid | | (23.0) | (123.0) |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Cash flows from financing activities | | 532.8 | 90.4 |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Effect of exchange rate changes on cash and | | (1.2) | 3.6 |
| cash equivalents | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Net increase/(decrease) in cash and cash | | 491.8 | (117.5) |
| equivalents | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Cash and cash equivalents at 1 January | | 70.9 | 188.4 |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
| Cash and cash equivalents at 31 December | 13 | 562.7 | 70.9 |
+------------------------------------------------+------+-----------+---------+
| | | | |
+------------------------------------------------+------+-----------+---------+
Notes
1 Accounting convention and basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards, as adopted by the European Union ("IFRS"), IFRIC
interpretations and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The Directors have taken advantage of the
exemption offered by Section 408 of the Companies Act not to present a separate
income statement for the parent company.
The financial statements have been prepared in sterling, which is the functional
currency of the Group.
The financial statements have been prepared under the historical cost convention
as modified by the revaluation of properties, available-for-sale investments,
financial assets and liabilities held for trading. A summary of the more
important Group accounting policies is set out below.
The Group's business activities have been affected by the adverse UK financial
and economic background. A description of the impact and the factors likely to
affect the Group's future development, performance and position are set out in
the Chairman's Statement on pages 3 - 4 and the Operating Review on pages 5 -
14. The financial position of the Group, its cash flows, debt structure,
borrowing facilities and principal financial risks are described in the
Financial Review on pages 15 - 21. In addition note 33 to the Annual Report
includes the Group's financial risk management objectives; details of its
financial instruments and hedging activities; its exposures to liquidity risk
and details of its capital structure.
In response to the on-going turbulent conditions that existed in the UK
commercial property market in the first half of 2009, the Group re-negotiated
its main corporate loan facility and completed, in May 2009, a capital raising
of GBP592 million, net of expenses. Subsequently in October 2009, the Group
raised a further GBP274 million, net of expenses, of equity share capital to
fund investment in its prime UK regional shopping centres and central London
assets.
In January 2010, the Group re-financed the loan facility secured on the Lakeside
Shopping Centre that was due to mature in July 2011, eliminating the short term
refinancing risk associated with this facility. The facility was replaced by a
new GBP525 million, seven year facility which improved the Group's overall debt
maturity profile.
As a consequence of these actions, the Directors believe that the Group is well
placed to manage its business risks despite the current challenging economic
environment.
The Directors have therefore concluded, based on cash flow projections which
take account of the factors listed above, that there is a reasonable expectation
that the company and the Group have adequate resources to continue in
operational existence for the foreseeable future and have therefore prepared the
financial statements on a going concern basis.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates. Where such judgements are made they are included within
the accounting policies below.
The accounting policies used are consistent with those applied in the last
annual financial statements, as amended to reflect the adoption of new
standards, amendments, revisions and interpretations which became effective in
the year.
· IAS 1 Presentation of Financial Statements (revised)
· IAS 23 Borrowing Costs (revised)
· IFRS 2 Share-based Payment (amendment)
· IFRS 7 Financial Instruments: Disclosures (amendment)
· IFRS 8 Operating Segments
· IAS 40 Investment Property (revised)
These pronouncements either had no impact on the financial statements or
resulted in changes to presentation and disclosure only.
In respect of IAS 23, the Group's existing accounting policy was to capitalise
borrowing costs, therefore this revision had no accounting impact for the Group.
The following standards and interpretations have been issued but are not
effective for the year end 31 December 2009 and have not been adopted early:
· IAS 1 Presentation of Financial Statements (amendment)
· IAS 27 Consolidated and Separate Financial Statements (revised)
· IAS 36 Impairment of Assets (amendment)
· IAS 38 Intangible Assets (amendment)
· IFRS 2 Share-Based Payment (amendment)
· IFRS 3 Business Combinations (revised)
· IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
(amended)
· IFRIC 17 Distribution of Non-cash Assets to Owners
These pronouncements are not expected to have a material impact on the financial
statements, but will result in changes to presentation or disclosure where they
are applicable.
2 Segmental reporting
Operating segments are determined based on the internal reporting and
operational management of the Group. The Group is organised into operating
divisions being Capital Shopping Centres (CSC) and Capital & Counties (C&C).
CSC is a market leader in prime UK regional shopping centres while C&C engages
principally in non-shopping centre investments with a focus on central London.
Revenue represents total income from tenants and net rental income is the
principal profit measure used to measure performance. The segment result is
also monitored, however is not the principal profit measure. Unallocated
expenses are costs incurred centrally which are neither directly nor reasonably
attributable to individual segments.
+-------------------------------------------------------+-----------+-----------+-----------+
| | 2009 |
+-------------------------------------------------------+-----------------------------------+
| | | | Group |
+-------------------------------------------------------+-----------+-----------+-----------+
| | CSC | C&C | total |
+-------------------------------------------------------+-----------+-----------+-----------+
| | GBPm | GBPm | GBPm |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Revenue | 405.0 | 173.9 | 578.9 |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Rent receivable | 341.1 | 99.8 | 440.9 |
+-------------------------------------------------------+-----------+-----------+-----------+
| Service charge income | 58.9 | 12.8 | 71.7 |
+-------------------------------------------------------+-----------+-----------+-----------+
| Exhibition income | - | 55.8 | 55.8 |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | 400.0 | 168.4 | 568.4 |
+-------------------------------------------------------+-----------+-----------+-----------+
| Rent payable | (21.4) | (1.4) | (22.8) |
+-------------------------------------------------------+-----------+-----------+-----------+
| Service charge and other non-recoverable costs | (111.3) | (63.4) | (174.7) |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Net rental income | 267.3 | 103.6 | 370.9 |
+-------------------------------------------------------+-----------+-----------+-----------+
| Other income | 5.0 | 1.8 | 6.8 |
+-------------------------------------------------------+-----------+-----------+-----------+
| Deficit on revaluation and sale of investment and | (535.7) | (232.5) | (768.2) |
| development property | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Write down of trading property | (0.1) | (4.5) | (4.6) |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Segment result | (263.5) | (131.6) | (395.1) |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Unallocated costs | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Impairment charges | | | (22.4) |
+-------------------------------------------------------+-----------+-----------+-----------+
| Administration expenses | | | (43.4) |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Operating loss | | | (460.9) |
+-------------------------------------------------------+-----------+-----------+-----------+
| Net finance income (1) | | | 131.8 |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Loss before tax | | | (329.1) |
+-------------------------------------------------------+-----------+-----------+-----------+
| Taxation | | | (41.0) |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Loss for the year | | | (370.1) |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Total segment assets (2) | 4,773.6 | 1,831.8 | 6,605.4 |
+-------------------------------------------------------+-----------+-----------+-----------+
| Total segment liabilities (2) | (3,025.4) | (1,398.6) | (4,424.0) |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | 1,748.2 | 433.2 | 2,181.4 |
+-------------------------------------------------------+-----------+-----------+-----------+
| Unallocated net assets (3) | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Cash and cash equivalents | | | 496.4 |
+-------------------------------------------------------+-----------+-----------+-----------+
| Derivative financial instruments | | | (371.1) |
+-------------------------------------------------------+-----------+-----------+-----------+
| Other net assets | | | 114.4 |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Net assets | | | 2,421.1 |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Other segment items: | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
| Capital expenditure | 161.6 | 45.4 | 207.0 |
+-------------------------------------------------------+-----------+-----------+-----------+
| Depreciation | - | 0.5 | 0.5 |
+-------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+-------------------------------------------------------+-----------+-----------+-----------+
(1) The Group operates a central treasury function which manages and monitors
the Group's Finance income/(costs) on a net basis.
(2) Total assets and total liabilities exclude loans between Group companies.
(3) Unallocated net assets represent balances controlled at a corporate level
rather than within the Group's two operating divisions.
The adoption of IFRS 8 during the year has changed the segments recognised.
Fewer segments are now recognised, as this better reflects the operational
structure and management of the Group.
2 Segmental reporting (continued)
+------------------------------------------------------+-----------+-----------+-----------+
| | 2008 |
+------------------------------------------------------+-----------------------------------+
| | | | Group |
+------------------------------------------------------+-----------+-----------+-----------+
| | CSC | C&C | total |
+------------------------------------------------------+-----------+-----------+-----------+
| | GBPm | GBPm | GBPm |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Revenue | 423.6 | 194.6 | 618.2 |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Rent receivable | 359.9 | 113.1 | 473.0 |
+------------------------------------------------------+-----------+-----------+-----------+
| Service charge income | 57.8 | 13.8 | 71.6 |
+------------------------------------------------------+-----------+-----------+-----------+
| Exhibition income | - | 62.8 | 62.8 |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | 417.7 | 189.7 | 607.4 |
+------------------------------------------------------+-----------+-----------+-----------+
| Rent payable | (23.5) | (0.8) | (24.3) |
+------------------------------------------------------+-----------+-----------+-----------+
| Service charge and other non-recoverable costs | (113.4) | (86.2) | (199.6) |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Net rental income | 280.8 | 102.7 | 383.5 |
+------------------------------------------------------+-----------+-----------+-----------+
| Property trading profits | 0.3 | - | 0.3 |
+------------------------------------------------------+-----------+-----------+-----------+
| Other income | - | 0.2 | 0.2 |
+------------------------------------------------------+-----------+-----------+-----------+
| Deficit on revaluation and sale of investment and | (1,693.5) | (363.5) | (2,057.0) |
| development property | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Profit on sale of subsidiary | - | 0.8 | 0.8 |
+------------------------------------------------------+-----------+-----------+-----------+
| Write down of trading property | - | (5.8) | (5.8) |
+------------------------------------------------------+-----------+-----------+-----------+
| Impairment of goodwill | - | (35.0) | (35.0) |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Segment result | (1,412.4) | (300.6) | (1,713.0) |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Unallocated costs | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Administration expenses | | | (63.2) |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Operating loss | | | (1,776.2) |
+------------------------------------------------------+-----------+-----------+-----------+
| Net finance costs (1) | | | (885.9) |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Loss before tax | | | (2,662.1) |
+------------------------------------------------------+-----------+-----------+-----------+
| Taxation | | | 85.6 |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Loss for the year | | | (2,576.5) |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Total segment assets (2) | 5,150.9 | 2,392.7 | 7,543.6 |
+------------------------------------------------------+-----------+-----------+-----------+
| Total segment liabilities (2) | (3,273.4) | (1,614.7) | (4,888.1) |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | 1,877.5 | 778.0 | 2,655.5 |
+------------------------------------------------------+-----------+-----------+-----------+
| Unallocated net liabilities | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Derivative financial instruments | | | (788.9) |
+------------------------------------------------------+-----------+-----------+-----------+
| Other net assets | | | 119.2 |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Net assets | | | 1,985.8 |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Other segment items: | | | |
+------------------------------------------------------+-----------+-----------+-----------+
| Capital expenditure | 208.0 | 358.0 | 566.0 |
+------------------------------------------------------+-----------+-----------+-----------+
| Depreciation | - | 0.3 | 0.3 |
+------------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------------+-----------+-----------+-----------+
(1) The Group operates a central treasury function which manages and monitors
the Group's Finance income/(costs) on a net basis.
(2) Total assets and total liabilities exclude loans between Group companies.
The Group's geographical segments are set out below. This represents where the
Group's assets and revenues are predominantly domiciled.
Revenue represents income from tenants and total assets primarily constitute
investment property. Revenue is the principal performance measure.
+----------------------------+-------+-------+---------+---------+-------+-------+
| | Revenue | Total assets | Capital |
| | | | expenditure |
+----------------------------+---------------+-------------------+---------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
+----------------------------+-------+-------+---------+---------+-------+-------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------------+-------+-------+---------+---------+-------+-------+
| | | | | | | |
+----------------------------+-------+-------+---------+---------+-------+-------+
| United Kingdom | 538.3 | 571.8 | 6,668.2 | 7,009.4 | 201.8 | 559.8 |
+----------------------------+-------+-------+---------+---------+-------+-------+
| United States | 40.6 | 46.4 | 380.1 | 521.5 | 5.2 | 6.2 |
+----------------------------+-------+-------+---------+---------+-------+-------+
| | | | | | | |
+----------------------------+-------+-------+---------+---------+-------+-------+
| | | | | | | |
+----------------------------+-------+-------+---------+---------+-------+-------+
| | 578.9 | 618.2 | 7,048.3 | 7,530.9 | 207.0 | 566.0 |
+----------------------------+-------+-------+---------+---------+-------+-------+
| | | | | | | |
+----------------------------+-------+-------+---------+---------+-------+-------+
3 Other income
+-------------------------------------------------------------+-------+------+
| | 2009 | 2008 |
+-------------------------------------------------------------+-------+------+
| | GBPm | GBPm |
+-------------------------------------------------------------+-------+------+
| | | |
+-------------------------------------------------------------+-------+------+
| Sale of trading property | 4.2 | - |
+-------------------------------------------------------------+-------+------+
| Cost of sales | (4.0) | - |
+-------------------------------------------------------------+-------+------+
| | | |
+-------------------------------------------------------------+-------+------+
| | | |
+-------------------------------------------------------------+-------+------+
| Profit on sale of trading properties | 0.2 | - |
+-------------------------------------------------------------+-------+------+
| Management fee | - | 0.1 |
+-------------------------------------------------------------+-------+------+
| Dividend income | 1.3 | - |
+-------------------------------------------------------------+-------+------+
| Insurance recovery | 5.0 | - |
+-------------------------------------------------------------+-------+------+
| Other income | 0.3 | 0.4 |
+-------------------------------------------------------------+-------+------+
| | | |
+-------------------------------------------------------------+-------+------+
| | | |
+-------------------------------------------------------------+-------+------+
| Total other income | 6.8 | 0.5 |
+-------------------------------------------------------------+-------+------+
| | | |
+-------------------------------------------------------------+-------+------+
4 Deficit on revaluation and sale of investment and development property
+------------------------------------------------------------+---------+-----------+
| | 2009 | 2008 |
+------------------------------------------------------------+---------+-----------+
| | GBPm | GBPm |
+------------------------------------------------------------+---------+-----------+
| | | |
+------------------------------------------------------------+---------+-----------+
| Deficit on revaluation of investment and development | (732.1) | (2,051.1) |
| property | | |
+------------------------------------------------------------+---------+-----------+
| Deficit on sale of investment property | (36.1) | (5.9) |
+------------------------------------------------------------+---------+-----------+
| | | |
+------------------------------------------------------------+---------+-----------+
| | | |
+------------------------------------------------------------+---------+-----------+
| Deficit on revaluation and sale of investment and | (768.2) | (2,057.0) |
| development property | | |
+------------------------------------------------------------+---------+-----------+
| | | |
+------------------------------------------------------------+---------+-----------+
5 Loss on sale and impairment of investments
+------------------------------------------------------------+--------+------+
| | 2009 | 2008 |
+------------------------------------------------------------+--------+------+
| | GBPm | GBPm |
+------------------------------------------------------------+--------+------+
| | | |
+------------------------------------------------------------+--------+------+
| Loss on sale of investments | (6.5) | - |
+------------------------------------------------------------+--------+------+
| Impairment of investments in associate companies | (3.9) | - |
+------------------------------------------------------------+--------+------+
| | | |
+------------------------------------------------------------+--------+------+
| | | |
+------------------------------------------------------------+--------+------+
| Loss on sale and impairment of investments | (10.4) | - |
+------------------------------------------------------------+--------+------+
| | | |
+------------------------------------------------------------+--------+------+
6 Impairment of other receivables
Impairment of other receivables of GBP12.0 million (2008 - nil) has arisen
following an impairment review of loan notes receivable by the Group. The
impairment charge has been calculated with reference to the market value of
certain property assets that the Group would have priority over in the event of
default.
7 Finance costs/(income)
+------------------------------------------------------------+--------+--------+
| | 2009 | 2008 |
+------------------------------------------------------------+--------+--------+
| | GBPm | GBPm |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
| Finance costs | | |
+------------------------------------------------------------+--------+--------+
| On bank overdrafts and loans | 248.9 | 239.0 |
+------------------------------------------------------------+--------+--------+
| On convertible debt | 2.9 | 4.4 |
+------------------------------------------------------------+--------+--------+
| On obligations under finance leases | 4.6 | 5.4 |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
| Gross finance costs | 256.4 | 248.8 |
+------------------------------------------------------------+--------+--------+
| Interest capitalised on developments | (19.0) | (18.5) |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
| Finance costs | 237.4 | 230.3 |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
| MetroCentre amortisation of compound financial instrument | 9.6 | 2.0 |
+------------------------------------------------------------+--------+--------+
| Loss/(profit) on sales/repurchase of CMBS notes(1) | 4.3 | (13.1) |
+------------------------------------------------------------+--------+--------+
| Inducement payments on conversion of 3.95% convertible | - | 3.6 |
| bond | | |
+------------------------------------------------------------+--------+--------+
| Revolving credit facility arrangement fee(1) | 5.4 | - |
+------------------------------------------------------------+--------+--------+
| Costs of termination of derivative financial | 34.3 | 6.6 |
| instruments(1) | | |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
| Other finance costs/(income) | 53.6 | (0.9) |
+------------------------------------------------------------+--------+--------+
| | | |
+------------------------------------------------------------+--------+--------+
(1) Treated as exceptional and therefore excluded from the calculation of
adjusted earnings for the year ended 31 December 2009.
Interest is capitalised, before tax relief, on the basis of the average rate of
interest paid of 6.25 per cent (2008 - 6.25 per cent) on the relevant debt,
applied to the cost of developments during the year.
8 Taxation
+-----------------------------------------------------------+--------+--------+
| | 2009 | 2008 |
+-----------------------------------------------------------+--------+--------+
| Taxation charge/(credit) for the financial year | GBPm | GBPm |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| Current UK corporation tax at 28.0% (2008 - 28.5%) on | - | 0.7 |
| profits | | |
+-----------------------------------------------------------+--------+--------+
| Prior year items - UK corporation tax | (1.6) | (8.1) |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| | (1.6) | (7.4) |
+-----------------------------------------------------------+--------+--------+
| Overseas taxation (including GBP1.1 million (2008 - | (1.1) | 0.9 |
| GBP0.5 million) of prior year items) | | |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| Current tax on profits excluding exceptional items and | (2.7) | (6.5) |
| property disposals | | |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| Deferred tax: | | |
+-----------------------------------------------------------+--------+--------+
| On investment and development property | (26.9) | (25.5) |
+-----------------------------------------------------------+--------+--------+
| On derivative financial instruments | 70.0 | (59.5) |
+-----------------------------------------------------------+--------+--------+
| On other temporary differences | (0.3) | 2.8 |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| Deferred tax on profits excluding exceptional items and | 42.8 | (82.2) |
| property disposals | | |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| Tax charge/(credit) excluding exceptional items and | 40.1 | (88.7) |
| property disposals | | |
+-----------------------------------------------------------+--------+--------+
| REIT entry charge | 3.1 | 3.6 |
+-----------------------------------------------------------+--------+--------+
| Tax credit on exceptional items and property disposals | | |
+-----------------------------------------------------------+--------+--------+
| - current tax | - | (0.5) |
+-----------------------------------------------------------+--------+--------+
| - deferred tax | (2.2) | - |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
| Total tax charge/(credit) | 41.0 | (85.6) |
+-----------------------------------------------------------+--------+--------+
| | | |
+-----------------------------------------------------------+--------+--------+
Factors affecting the tax charge/(credit) for the year
The tax charge for the year is higher (2008 - lower) than the standard rate of
corporation tax in the UK. The differences are explained below:
+-----------------------------------------------------------+---------+-----------+
| | 2009 | 2008 |
+-----------------------------------------------------------+---------+-----------+
| | GBPm | GBPm |
+-----------------------------------------------------------+---------+-----------+
| | | |
+-----------------------------------------------------------+---------+-----------+
| Loss before tax | (329.1) | (2,662.1) |
+-----------------------------------------------------------+---------+-----------+
| | | |
+-----------------------------------------------------------+---------+-----------+
| | | |
+-----------------------------------------------------------+---------+-----------+
| Loss on ordinary activities multiplied by the standard | (92.1) | (758.7) |
| rate in the UK of 28.0% (2008 - 28.5%) | | |
+-----------------------------------------------------------+---------+-----------+
| UK capital allowances not reversing on sale | (5.8) | (5.9) |
+-----------------------------------------------------------+---------+-----------+
| Disposals of properties and investments | (16.8) | 16.6 |
+-----------------------------------------------------------+---------+-----------+
| Prior year corporation tax items | (2.6) | (7.6) |
+-----------------------------------------------------------+---------+-----------+
| Prior year deferred tax items | 2.7 | (0.4) |
+-----------------------------------------------------------+---------+-----------+
| Expenses disallowed, net of capitalised interest | (2.6) | (3.4) |
+-----------------------------------------------------------+---------+-----------+
| REIT exemption - corporation tax | 9.9 | (19.9) |
+-----------------------------------------------------------+---------+-----------+
| REIT exemption - deferred tax | 148.2 | 644.5 |
+-----------------------------------------------------------+---------+-----------+
| REIT exemption - entry charge | 3.1 | 3.6 |
+-----------------------------------------------------------+---------+-----------+
| Utilisation of losses brought forward | - | (0.1) |
+-----------------------------------------------------------+---------+-----------+
| Unutilised losses carried forward | 3.8 | - |
+-----------------------------------------------------------+---------+-----------+
| Overseas taxation | (0.6) | (0.2) |
+-----------------------------------------------------------+---------+-----------+
| Unprovided deferred tax | (6.2) | 46.0 |
+-----------------------------------------------------------+---------+-----------+
| Reduction in deferred tax following cut in corporate tax | - | (0.1) |
| rate | | |
+-----------------------------------------------------------+---------+-----------+
| | | |
+-----------------------------------------------------------+---------+-----------+
| | | |
+-----------------------------------------------------------+---------+-----------+
| Total tax charge/(credit) | 41.0 | (85.6) |
+-----------------------------------------------------------+---------+-----------+
| | | |
+-----------------------------------------------------------+---------+-----------+
Tax items that are taken directly to equity are shown in the statement of other
comprehensive income.
8 Taxation (continued)
Under IAS 12 "Income Taxes", provision is made for the deferred tax assets and
liabilities associated with the revaluation of investment properties at the
corporate tax rate expected to apply to the Group at the time of use. For those
UK properties qualifying as REIT properties the relevant tax rate will be 0 per
cent (2008 - 0 per cent), for other UK non-REIT properties the relevant tax rate
will be 28 per cent (2008 - 28 per cent) and for overseas properties the
relevant tax rate will be the prevailing corporate tax rate in that country.
The deferred tax provision on non-REIT investment properties calculated under
IAS 12 is GBP42.8 million at 31 December 2009 (2008 - GBP75.9 million). This
IAS 12 calculation does not reflect the expected amount of tax that would be
payable if the assets were sold. The Group estimates that calculated on a
disposal basis the maximum tax liability would be GBP49.5 million at 31 December
2009 (2008 - GBP108.8 million).
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | Investment | Derivative | Other | |
| | | and | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | development | financial | temporary | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | properties | instruments | differences | Total |
+---------------------------+--------+-------------+-------------+-------------+--------+
| Movements in the | | GBPm | GBPm | GBPm | GBPm |
| provision for deferred | | | | | |
| tax | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| Provided deferred tax | | | | | |
| provision: | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| At 1 January 2008 | | 85.7 | (14.7) | 2.7 | 73.7 |
+---------------------------+--------+-------------+-------------+-------------+--------+
| Recognised in income | | (25.5) | (59.5) | 2.8 | (82.2) |
+---------------------------+--------+-------------+-------------+-------------+--------+
| Recognised in equity | | 21.3 | (5.2) | (2.0) | 14.1 |
+---------------------------+--------+-------------+-------------+-------------+--------+
| Sale of subsidiaries | | (5.6) | - | - | (5.6) |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| At 31 December 2008 | | 75.9 | (79.4) | 3.5 | - |
+---------------------------+--------+-------------+-------------+-------------+--------+
| Recognised in income | | (26.9) | 70.0 | (2.5) | 40.6 |
+---------------------------+--------+-------------+-------------+-------------+--------+
| Recognised in equity | | (6.2) | 2.0 | 0.7 | (3.5) |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| At 31 December 2009 | | 42.8 | (7.4) | 1.7 | 37.1 |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| Unrecognised deferred tax | | | | | |
| asset: | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| At 1 January 2009 | | (2.9) | (37.4) | (5.7) | (46.0) |
+---------------------------+--------+-------------+-------------+-------------+--------+
| Income statement items | | (9.9) | 23.0 | (6.9) | 6.2 |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
| At 31 December 2009 | | (12.8) | (14.4) | (12.6) | (39.8) |
+---------------------------+--------+-------------+-------------+-------------+--------+
| | | | | | |
+---------------------------+--------+-------------+-------------+-------------+--------+
In accordance with the requirements of IAS 12 "Income Taxes", the deferred tax
asset has not been recognised in the Group financial statements due to
uncertainty on the level of profits that will be available in the non-REIT
businesses in future periods.
9 Dividends
+------------------------------------------------------------+------+-------+
| | 2009 | 2008 |
+------------------------------------------------------------+------+-------+
| | GBPm | GBPm |
+------------------------------------------------------------+------+-------+
| | | |
+------------------------------------------------------------+------+-------+
| Ordinary shares | | |
+------------------------------------------------------------+------+-------+
| Prior period final dividend paid of nil pence per share | - | 63.5 |
| (2008 - 17.6p) | | |
+------------------------------------------------------------+------+-------+
| Interim dividend paid of 5p per share (2008 - 16.5p) | 28.2 | 59.5 |
+------------------------------------------------------------+------+-------+
| | | |
+------------------------------------------------------------+------+-------+
| | | |
+------------------------------------------------------------+------+-------+
| Dividends paid | 28.2 | 123.0 |
+------------------------------------------------------------+------+-------+
| | | |
+------------------------------------------------------------+------+-------+
| | | |
+------------------------------------------------------------+------+-------+
| Proposed final dividend of 11.5p per share (2008 - nil) | 71.5 | - |
+------------------------------------------------------------+------+-------+
| | | |
+------------------------------------------------------------+------+-------+
Details of the shares in issue and dividends waived are given in notes 21 and
22.
10 Investment and development property
+------------------------------------+--------+----------+-----------+-----------+
| | | Freehold | Leasehold | Total |
+------------------------------------+--------+----------+-----------+-----------+
| | | GBPm | GBPm | GBPm |
+------------------------------------+--------+----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+----------+-----------+-----------+
| At 1 January 2008 | | 4,805.3 | 3,817.5 | 8,622.8 |
+------------------------------------+--------+----------+-----------+-----------+
| Reclassification | | (180.0) | 180.0 | - |
+------------------------------------+--------+----------+-----------+-----------+
| Additions from acquisitions | | 2.2 | 42.8 | 45.0 |
+------------------------------------+--------+----------+-----------+-----------+
| Additions from subsequent | | 99.2 | 199.5 | 298.7 |
| expenditure | | | | |
+------------------------------------+--------+----------+-----------+-----------+
| Additions from acquisition of | | 222.2 | - | 222.2 |
| subsidiary companies | | | | |
+------------------------------------+--------+----------+-----------+-----------+
| Transfers from trading properties | | 4.9 | - | 4.9 |
+------------------------------------+--------+----------+-----------+-----------+
| Disposals of subsidiaries | | (45.3) | (19.5) | (64.8) |
+------------------------------------+--------+----------+-----------+-----------+
| Other disposals | | (98.5) | (42.5) | (141.0) |
+------------------------------------+--------+----------+-----------+-----------+
| Foreign exchange movements | | 137.7 | - | 137.7 |
+------------------------------------+--------+----------+-----------+-----------+
| Deficit on valuation | | (945.9) | (1,105.2) | (2,051.1) |
+------------------------------------+--------+----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+----------+-----------+-----------+
| At 31 December 2008 | | 4,001.8 | 3,072.6 | 7,074.4 |
+------------------------------------+--------+----------+-----------+-----------+
| Additions from acquisitions | | - | 1.5 | 1.5 |
+------------------------------------+--------+----------+-----------+-----------+
| Additions from subsequent | | 94.4 | 109.3 | 203.7 |
| expenditure | | | | |
+------------------------------------+--------+----------+-----------+-----------+
| Loss of deemed control of former | | (94.4) | - | (94.4) |
| subsidiary | | | | |
+------------------------------------+--------+----------+-----------+-----------+
| Other disposals | | (212.9) | (8.6) | (221.5) |
+------------------------------------+--------+----------+-----------+-----------+
| Foreign exchange movements | | (49.0) | - | (49.0) |
+------------------------------------+--------+----------+-----------+-----------+
| Deficit on valuation | | (376.3) | (355.8) | (732.1) |
+------------------------------------+--------+----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+----------+-----------+-----------+
| At 31 December 2009 | | 3,363.6 | 2,819.0 | 6,182.6 |
+------------------------------------+--------+----------+-----------+-----------+
| | | | | |
+------------------------------------+--------+----------+-----------+-----------+
+-------------------------------------------------------+---------+---------+
| | 2009 | 2008 |
+-------------------------------------------------------+---------+---------+
| | GBPm | GBPm |
+-------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------+---------+---------+
| Balance sheet carrying value of investment and | 6,182.6 | 7,074.4 |
| development property | | |
+-------------------------------------------------------+---------+---------+
| Adjustment in respect of tenant incentives | 83.2 | 88.9 |
+-------------------------------------------------------+---------+---------+
| Adjustment in respect of head leases | (47.1) | (50.5) |
+-------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------+---------+---------+
| Market value of investment and development property | 6,218.7 | 7,112.8 |
+-------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------+---------+---------+
+-------------------------------------------------------+---------+---------+
| Geographical analysis: | 2009 | 2008 |
| | | |
+-------------------------------------------------------+---------+---------+
| | GBPm | GBPm |
+-------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------+---------+---------+
| United Kingdom | 5,844.6 | 6,600.7 |
+-------------------------------------------------------+---------+---------+
| United States | 338.0 | 473.7 |
+-------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------+---------+---------+
| Total | 6,182.6 | 7,074.4 |
+-------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------+---------+---------+
Included within investment and development property additions during the year is
GBP19.0 million (2008 - GBP18.5 million) of interest capitalised on developments
and redevelopments in progress.
The fair value of the Group's investment and development properties as at 31
December 2009 was determined by independent external valuers at that date. The
valuation conforms with the Royal Institution of Chartered Surveyors (RICS)
Valuation Standards 6th Edition and with IVS 1 of International Valuation
Standards, and was arrived at by reference to market transactions for similar
properties.
The main assumptions underlying the valuations are in relation to market rent,
taking into account forecast growth rates and yields based on known transactions
for similar properties and likely incentives offered to tenants.
There are certain restrictions on the realisability of investment property when
a credit facility is in place. In most circumstances the Group can realise up to
50 per cent without restriction providing the Group continues to manage the
asset. Realising an amount in excess of this would trigger a change of control
and mandatory repayment of the facility.
11 Trading property
+------------------------------------------------------------+--------+-------+
| | Group | Group |
+------------------------------------------------------------+--------+-------+
| | 2009 | 2008 |
+------------------------------------------------------------+--------+-------+
| | GBPm | GBPm |
+------------------------------------------------------------+--------+-------+
| | | |
+------------------------------------------------------------+--------+-------+
| Undeveloped sites | 24.2 | 29.4 |
+------------------------------------------------------------+--------+-------+
| Completed properties | - | 3.9 |
+------------------------------------------------------------+--------+-------+
| | | |
+------------------------------------------------------------+--------+-------+
| | | |
+------------------------------------------------------------+--------+-------+
| | 24.2 | 33.3 |
+------------------------------------------------------------+--------+-------+
| | | |
+------------------------------------------------------------+--------+-------+
The estimated replacement cost of trading properties based on market value
amounted to GBP25.0 million (2008 - GBP33.9 million).
12 Trade and other receivables
+--------------------------------------------------------------+------+------+
| | 2009 | 2008 |
+--------------------------------------------------------------+------+------+
| | GBPm | GBPm |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| Amounts falling due within one year | | |
+--------------------------------------------------------------+------+------+
| Rents receivable | 27.8 | 16.0 |
+--------------------------------------------------------------+------+------+
| Other receivables | 20.3 | 37.2 |
+--------------------------------------------------------------+------+------+
| Prepayments and accrued income | 38.0 | 44.0 |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| | 86.1 | 97.2 |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| Amounts falling due after more than one year | | |
+--------------------------------------------------------------+------+------+
| Other receivables | 11.3 | 33.4 |
+--------------------------------------------------------------+------+------+
| Prepayments and accrued income | 58.5 | 62.2 |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| | 69.8 | 95.6 |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
Included within prepayments and accrued income are tenant lease incentives of
GBP83.2 million (2008 - GBP88.9 million).
13 Cash and cash equivalents
+------------------------------------------------+------+------+-------+------+
| | | | 2009 | 2008 |
+------------------------------------------------+------+------+-------+------+
| | | | GBPm | GBPm |
+------------------------------------------------+------+------+-------+------+
| | | | | |
+------------------------------------------------+------+------+-------+------+
| Unrestricted cash | | | 562.7 | 70.9 |
+------------------------------------------------+------+------+-------+------+
| Restricted cash | | | 19.8 | - |
+------------------------------------------------+------+------+-------+------+
| | | | | |
+------------------------------------------------+------+------+-------+------+
| | | | | |
+------------------------------------------------+------+------+-------+------+
| | | | 582.5 | 70.9 |
+------------------------------------------------+------+------+-------+------+
| | | | | |
+------------------------------------------------+------+------+-------+------+
Restricted cash relates to amounts placed on deposit to ensure continued
compliance with certain loan facility financial covenants.
14 Trade and other payables
+--------------------------------------------------+------+------+-------+-------+
| | | | 2009 | 2008 |
+--------------------------------------------------+------+------+-------+-------+
| | | | GBPm | GBPm |
+--------------------------------------------------+------+------+-------+-------+
| | | | | |
+--------------------------------------------------+------+------+-------+-------+
| Amounts falling due within one year | | | | |
+--------------------------------------------------+------+------+-------+-------+
| Rents received in advance | | | 98.7 | 105.2 |
+--------------------------------------------------+------+------+-------+-------+
| Accruals and deferred income | | | 99.9 | 156.0 |
+--------------------------------------------------+------+------+-------+-------+
| Other payables | | | 31.2 | 57.9 |
+--------------------------------------------------+------+------+-------+-------+
| Other taxes and social security | | | 55.4 | 45.8 |
+--------------------------------------------------+------+------+-------+-------+
| | | | | |
+--------------------------------------------------+------+------+-------+-------+
| | | | | |
+--------------------------------------------------+------+------+-------+-------+
| | | | 285.2 | 364.9 |
+--------------------------------------------------+------+------+-------+-------+
| | | | | |
+--------------------------------------------------+------+------+-------+-------+
15 Borrowings
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | As at 31 December 2009 |
+----------------------------------+-------------------------------------------------------------+
| | Carrying | | | Fixed | Floating | Fair |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | value | Secured | Unsecured | rate | rate | value |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Amounts falling due within one | | | | | | |
| year | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loans and overdrafts | 30.0 | 30.0 | - | 11.5 | 18.5 | 30.0 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Commercial mortgage backed | 33.5 | 33.5 | - | - | 33.5 | 25.8 |
| securities ("CMBS") notes | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| 3.95% convertible bonds due 2010 | 79.2 | - | 79.2 | 79.2 | - | 79.3 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Borrowings, excluding finance | 142.7 | 63.5 | 79.2 | 90.7 | 52.0 | 135.1 |
| leases | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Finance lease obligations | 5.8 | 5.8 | - | 5.8 | - | 5.8 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Amounts falling due within one | 148.5 | 69.3 | 79.2 | 96.5 | 52.0 | 140.9 |
| year | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Amounts falling due after more | | | | | | |
| than one year | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| CMBS notes 2011 | 417.7 | 417.7 | - | - | 417.7 | 376.1 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| CMBS notes 2015 | 1,030.6 | 1,030.6 | - | - | 1,030.6 | 744.0 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loan 2011 | 100.0 | 100.0 | - | - | 100.0 | 100.0 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loan 2012 | 147.0 | 147.0 | - | - | 147.0 | 147.0 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loans 2013 | 633.4 | 633.4 | - | 192.7 | 440.7 | 633.4 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loan 2014 | 60.0 | 60.0 | - | - | 60.0 | 60.0 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loans 2016 | 809.3 | 809.3 | - | - | 809.3 | 809.3 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loan 2017 | 117.5 | 117.5 | - | - | 117.5 | 117.5 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Debentures 2027 | 226.6 | 226.6 | - | 226.6 | - | 165.9 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| CSC bonds 2013 | 26.8 | - | 26.8 | 26.8 | - | 28.8 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Borrowings excluding finance | | | | | | |
| leases and MetroCentre | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| compound financial instrument | 3,568.9 | 3,542.1 | 26.8 | 446.1 | 3,122.8 | 3,182.0 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| MetroCentre compound financial | 129.9 | - | 129.9 | - | 129.9 | 129.9 |
| instrument | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Finance lease obligations | 41.3 | 41.3 | - | 41.3 | - | 41.3 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Amounts falling due after more | 3,740.1 | 3,583.4 | 156.7 | 487.4 | 3,252.7 | 3,353.2 |
| than one year | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Total borrowings | 3,888.6 | 3,652.7 | 235.9 | 583.9 | 3,304.7 | 3,494.1 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Cash and cash equivalents | (582.5) | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Net debt | 3,306.1 | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
Net external debt (adjusted for MetroCentre compound financial instrument) at 31
December 2009 was GBP3,176.2 million.
15 Borrowings (continued)
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | As at 31 December 2008 |
+----------------------------------+-------------------------------------------------------------+
| | Carrying | | | Fixed | Floating | Fair |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | value | Secured | Unsecured | rate | rate | value |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Amounts falling due within one | | | | | | |
| year | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loans and overdrafts | 23.3 | 21.4 | 1.9 | 5.4 | 17.9 | 23.3 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Commercial mortgage backed | 34.3 | 34.3 | - | - | 34.3 | 24.6 |
| securities ("CMBS") notes | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| CSC bonds 2009 | 31.5 | - | 31.5 | 31.5 | - | 32.2 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Borrowings, excluding finance | 89.1 | 55.7 | 33.4 | 36.9 | 52.2 | 80.1 |
| leases | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Finance lease obligations | 6.1 | 6.1 | - | 6.1 | - | 6.1 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Amounts falling due within one | 95.2 | 61.8 | 33.4 | 43.0 | 52.2 | 86.2 |
| year | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Amounts falling due after more | | | | | | |
| than one year | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| CMBS notes 2011 | 483.4 | 483.4 | - | - | 483.4 | 387.2 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| CMBS notes 2015 | 1,038.4 | 1,038.4 | - | - | 1,038.4 | 703.9 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loan 2011 | 100.0 | 100.0 | - | - | 100.0 | 100.0 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loan 2012 | 217.2 | 217.2 | - | - | 217.2 | 217.2 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loans 2013 | 737.2 | 737.2 | - | 218.0 | 519.2 | 735.1 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loan 2014 | 24.5 | 24.5 | - | - | 24.5 | 24.5 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loans 2016 | 827.6 | 827.6 | - | - | 827.6 | 827.6 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Bank loan 2017 | 117.3 | 117.3 | - | - | 117.3 | 117.3 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Debentures 2027 | 226.3 | 226.3 | - | 226.3 | - | 204.0 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| CSC bonds 2013 | 26.6 | - | 26.6 | 26.6 | - | 23.5 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Other loans | 140.0 | - | 140.0 | - | 140.0 | 140.0 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| 3.95% convertible bonds due 2010 | 92.3 | - | 92.3 | 92.3 | - | 60.2 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Borrowings excluding finance | | | | | | |
| leases and MetroCentre | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| compound financial instrument | 4,030.8 | 3,771.9 | 258.9 | 563.2 | 3,467.6 | 3,540.5 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| MetroCentre compound financial | 120.3 | - | 120.3 | - | 120.3 | 120.3 |
| instrument | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Finance lease obligations | 44.4 | 44.4 | - | 44.4 | - | 44.4 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Amounts falling due after more | 4,195.5 | 3,816.3 | 379.2 | 607.6 | 3,587.9 | 3,705.2 |
| than one year | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Total borrowings | 4,290.7 | 3,878.1 | 412.6 | 650.6 | 3,640.1 | 3,791.4 |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Cash and cash equivalents | (70.9) | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| Net debt | 4,219.8 | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
| | | | | | | |
+----------------------------------+----------+---------+-----------+-------+----------+---------+
Net external debt (adjusted for MetroCentre compound financial instrument) at 31
December 2008 was GBP4,099.5 million.
15 Borrowings (continued)
+-----------------------------------------------+-------------+------------+------------+-----------+
| | Cash | | Non- | |
| | and | | | |
+-----------------------------------------------+-------------+------------+------------+-----------+
| | cash | Current | current | Net |
+-----------------------------------------------+-------------+------------+------------+-----------+
| | equivalents | borrowings | borrowings | debt |
+-----------------------------------------------+-------------+------------+------------+-----------+
| Analysis of movement in net debt for the year | GBPm | GBPm | GBPm | GBPm |
| ended 31 December 2009 | | | | |
+-----------------------------------------------+-------------+------------+------------+-----------+
| | | | | |
+-----------------------------------------------+-------------+------------+------------+-----------+
| Balance at 1 January 2009 | 70.9 | (95.2) | (4,195.5) | (4,219.8) |
+-----------------------------------------------+-------------+------------+------------+-----------+
| Borrowings repaid | (548.0) | 79.5 | 468.5 | - |
+-----------------------------------------------+-------------+------------+------------+-----------+
| Borrowings drawndown | 246.1 | - | (246.1) | - |
+-----------------------------------------------+-------------+------------+------------+-----------+
| Proceeds from capital raises | 865.7 | - | - | 865.7 |
+-----------------------------------------------+-------------+------------+------------+-----------+
| Other net cash movements | (47.3) | - | - | (47.3) |
+-----------------------------------------------+-------------+------------+------------+-----------+
| Other non-cash movements | (1.2) | (133.9) | 155.8 | 20.7 |
+-----------------------------------------------+-------------+------------+------------+-----------+
| Loss of deemed control of former subsidiary | (3.7) | 1.1 | 77.2 | 74.6 |
+-----------------------------------------------+-------------+------------+------------+-----------+
| | | | | |
+-----------------------------------------------+-------------+------------+------------+-----------+
| | | | | |
+-----------------------------------------------+-------------+------------+------------+-----------+
| Balance at 31 December 2009 | 582.5 | (148.5) | (3,740.1) | (3,306.1) |
+-----------------------------------------------+-------------+------------+------------+-----------+
| | | | | |
+-----------------------------------------------+-------------+------------+------------+-----------+
+----------------------------------------------+-------------+------------+------------+-----------+
| | Cash | | Non- | |
| | and | | | |
+----------------------------------------------+-------------+------------+------------+-----------+
| | cash | Current | current | Net |
+----------------------------------------------+-------------+------------+------------+-----------+
| | equivalents | borrowings | borrowings | debt |
+----------------------------------------------+-------------+------------+------------+-----------+
| Analysis of movement in net debt for the | GBPm | GBPm | GBPm | GBPm |
| year ended 31 December 2008 | | | | |
+----------------------------------------------+-------------+------------+------------+-----------+
| | | | | |
+----------------------------------------------+-------------+------------+------------+-----------+
| Balance at 1 January 2008 | 188.4 | (152.3) | (3,704.0) | (3,667.9) |
+----------------------------------------------+-------------+------------+------------+-----------+
| Borrowings repaid | (230.8) | 121.0 | 109.8 | - |
+----------------------------------------------+-------------+------------+------------+-----------+
| Borrowings drawndown | 439.0 | - | (439.0) | - |
+----------------------------------------------+-------------+------------+------------+-----------+
| Other net cash movements | (329.3) | - | - | (329.3) |
+----------------------------------------------+-------------+------------+------------+-----------+
| Other non-cash movements | 3.6 | (63.9) | (162.3) | (222.6) |
+----------------------------------------------+-------------+------------+------------+-----------+
| | | | | |
+----------------------------------------------+-------------+------------+------------+-----------+
| | | | | |
+----------------------------------------------+-------------+------------+------------+-----------+
| Balance at 31 December 2008 | 70.9 | (95.2) | (4,195.5) | (4,219.8) |
+----------------------------------------------+-------------+------------+------------+-----------+
| | | | | |
+----------------------------------------------+-------------+------------+------------+-----------+
The market value of assets secured as collateral against borrowings is
GBP6,116.5 million.
The fair values of financial assets and liabilities have been established using
the market value, where available. For those instruments without a market value,
a discounted cash flow approach has been used. If the fair values of the Group
net borrowings were used the increase, after credit for tax relief, to the net
diluted net assets per share (which does not require adjustment for the fair
value of convertible bonds) would amount to 40 pence (2008 - 68 pence).
The maturity profile of gross debt (excluding finance leases) is as follows:
+--------------------------------------------------------------+---------+---------+
| | Group | Group |
+--------------------------------------------------------------+---------+---------+
| | 2009 | 2008 |
+--------------------------------------------------------------+---------+---------+
| | GBPm | GBPm |
+--------------------------------------------------------------+---------+---------+
| | | |
+--------------------------------------------------------------+---------+---------+
| Wholly repayable within one year | 142.7 | 89.1 |
+--------------------------------------------------------------+---------+---------+
| Wholly repayable in more than one year but not more than two | 617.0 | 191.1 |
| years | | |
+--------------------------------------------------------------+---------+---------+
| Wholly repayable in more than two years but not more than | 836.0 | 1,622.3 |
| five years | | |
+--------------------------------------------------------------+---------+---------+
| Wholly repayable in more than five years | 2,245.8 | 2,337.7 |
+--------------------------------------------------------------+---------+---------+
| | | |
+--------------------------------------------------------------+---------+---------+
| | | |
+--------------------------------------------------------------+---------+---------+
| | 3,841.5 | 4,240.2 |
+--------------------------------------------------------------+---------+---------+
| | | |
+--------------------------------------------------------------+---------+---------+
Certain borrowing agreements contain financial and other conditions that, if
contravened, could alter the repayment profile.
The 31 December 2009 annual valuation of GBP52 million for the Xscape Braehead
property, which is owned by the Xscape Braehead Partnership, a 50 per cent joint
venture between Capital Shopping Centres and a subsidiary of Capital & Regional
plc, indicated a loan to value ratio in excess of that specified in the GBP49
million loan facility secured on the property. Following submission of the
valuation to the lender, they served a notice of breach on the Partnership,
triggering the cure period. Discussions between the lender and the Partnership
as to potential solutions to the breach are in progress.
The Group has various undrawn committed borrowing facilities. The facilities
available at 31 December in respect of which all conditions precedent had been
met were as follows:
+--------------------------------------------------+------+------+-------+-------+
| | | | 2009 | 2008 |
+--------------------------------------------------+------+------+-------+-------+
| | | | GBPm | GBPm |
+--------------------------------------------------+------+------+-------+-------+
| | | | | |
+--------------------------------------------------+------+------+-------+-------+
| Expiring in one to two years(1) | | | 360.0 | 170.0 |
+--------------------------------------------------+------+------+-------+-------+
| Expiring in more than two years | | | 107.8 | 50.0 |
+--------------------------------------------------+------+------+-------+-------+
| | | | | |
+--------------------------------------------------+------+------+-------+-------+
(1) In February 2010, the Group renegotiated its revolving credit facility
resulting in a new undrawn facility of GBP248 million with a maturity date of
June 2013.
These undrawn facilities are available at floating rates based on LIBOR plus
applicable margin.
16 Cash generated from operations
+---------------------------------------+---------+-------+----------+-----------+
| | | | 2009 | 2008 |
+---------------------------------------+---------+-------+----------+-----------+
| | | Notes | GBPm | GBPm |
+---------------------------------------+---------+-------+----------+-----------+
| | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Loss before tax | | | (329.1) | (2,662.1) |
+---------------------------------------+---------+-------+----------+-----------+
| | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Adjustments for: | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Deficit on revaluation of investment | | | 732.1 | 2,051.1 |
| and development property | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Deficit on sale of investment | | | 36.1 | 5.9 |
| property | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Profit on sale of subsidiary | | | - | (0.8) |
+---------------------------------------+---------+-------+----------+-----------+
| Loss on sale of investments | | | 6.5 | - |
+---------------------------------------+---------+-------+----------+-----------+
| Impairment of investment in associate | | | 3.9 | - |
| company | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Impairment of other receivables | | | 12.0 | - |
+---------------------------------------+---------+-------+----------+-----------+
| Write down of trading property | | | 4.6 | 5.8 |
+---------------------------------------+---------+-------+----------+-----------+
| Depreciation | | | 0.5 | 0.3 |
+---------------------------------------+---------+-------+----------+-----------+
| Profit on sale of trading properties | | | (0.2) | - |
+---------------------------------------+---------+-------+----------+-----------+
| Amortisation of lease incentives and | | | 7.9 | 15.0 |
| other direct costs | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Impairment of goodwill | | | - | 35.0 |
+---------------------------------------+---------+-------+----------+-----------+
| Interest payable | | | 237.4 | 230.3 |
+---------------------------------------+---------+-------+----------+-----------+
| Interest receivable | | | (6.3) | (8.6) |
+---------------------------------------+---------+-------+----------+-----------+
| Other finance costs/(income) | | | 53.6 | (0.9) |
+---------------------------------------+---------+-------+----------+-----------+
| Change in fair value of derivative | | | (416.5) | 665.1 |
| financial instruments | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Changes in working capital: | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Change in trading properties | | | 3.0 | 5.9 |
+---------------------------------------+---------+-------+----------+-----------+
| Change in trade and other receivables | | | (0.1) | 22.1 |
+---------------------------------------+---------+-------+----------+-----------+
| Change in trade and other payables | | | (9.7) | (1.7) |
+---------------------------------------+---------+-------+----------+-----------+
| | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| | | | | |
+---------------------------------------+---------+-------+----------+-----------+
| Cash generated from operations | | | 335.7 | 362.4 |
+---------------------------------------+---------+-------+----------+-----------+
| | | | | |
+---------------------------------------+---------+-------+----------+-----------+
17 Fair values of financial instruments
The tables below set out the Group's accounting classification of each class of
financial assets and liabilities, and their fair values at 31 December 2009 and
31 December 2008.
The fair values of quoted borrowings are based on the asking price. The fair
values of derivative financial instruments are determined from observable market
prices or estimated using appropriate yield curves at 31 December each year by
discounting the future contractual cash flows to the net present values.
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | (Loss)/gain | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | Carrying | | to | Gain |
| | | | income | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | value | Fair | statement | to |
| | | value | | equity |
+--------------------------------------+-----------+-----------+-------------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------+-----------+-----------+-------------+--------+
| 2009 | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Derivative financial instrument | 15.0 | 15.0 | - | - |
| assets | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Total held for trading assets | 15.0 | 15.0 | - | - |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Trade and other receivables | 155.9 | 155.9 | - | - |
+--------------------------------------+-----------+-----------+-------------+--------+
| Cash and cash equivalents | 582.5 | 582.5 | - | - |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Total cash and receivables | 738.4 | 738.4 | - | - |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Investments | 58.3 | 58.3 | (6.5) | 3.8 |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Total available-for-sale investments | 58.3 | 58.3 | (6.5) | 3.8 |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Derivative financial instrument | (386.1) | (386.1) | 416.5 | 1.1 |
| liabilities | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Total held for trading liabilities | (386.1) | (386.1) | 416.5 | 1.1 |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Trade and other payables | (306.8) | (306.8) | - | - |
+--------------------------------------+-----------+-----------+-------------+--------+
| Borrowings | (3,888.6) | (3,494.1) | - | - |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
| Total loans and payables | (4,195.4) | (3,800.9) | - | - |
+--------------------------------------+-----------+-----------+-------------+--------+
| | | | | |
+--------------------------------------+-----------+-----------+-------------+--------+
17 Fair value of financial instruments (continued)
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | Loss | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | Carrying | | to | (Loss)/gain |
| | | | income | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | value | Fair | statement | to |
| | | value | | equity |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------+-----------+-----------+-----------+-------------+
| 2008 | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Derivative financial instrument | 29.6 | 29.6 | - | - |
| assets | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Total held for trading assets | 29.6 | 29.6 | - | - |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Trade and other receivables | 192.8 | 192.8 | - | - |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Cash and cash equivalents | 70.9 | 70.9 | - | - |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Total cash and receivables | 263.7 | 263.7 | - | - |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Investments | 96.3 | 99.5 | - | (15.1) |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Total available-for-sale investments | 96.3 | 99.5 | - | (15.1) |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Derivative financial instrument | (818.5) | (818.5) | (665.1) | 4.3 |
| liabilities | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Total held for trading liabilities | (818.5) | (818.5) | (665.1) | 4.3 |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Trade and other payables | (420.6) | (420.6) | - | - |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Borrowings | (4,290.7) | (3,791.4) | - | - |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
| Total loans and payables | (4,711.3) | (4,212.0) | - | - |
+--------------------------------------+-----------+-----------+-----------+-------------+
| | | | | |
+--------------------------------------+-----------+-----------+-----------+-------------+
18 Capital commitments
At 31 December 2009, the Group was contractually committed to GBP142.4 million
(2008 - GBP238.8 million) of future expenditure for the purchase, construction,
development and enhancement of investment property. Of the GBP142.4 million,
GBP123.0 million is committed 2010 expenditure.
The Group's share of joint venture commitments included above at 31 December
2009 was GBP75.6 million (2008 - GBP134.0 million).
19 Earnings per share and net assets per share
(a) (Loss)/earnings per share
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | 2009 | 2008 |
+----------------------------+------------------------------+--------------------------------+
| | Earnings | Shares | Pence | Earnings | Shares | Pence |
| | | | per | | | per |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | GBPm | million | share | GBPm | million | share |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Basic loss per share (1) | (338.8) | 497.7 | (68.1)p | (2,451.3) | 361.5 | (678.1)p |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Dilutive convertible bonds | 1.5 | 12.3 | | 3.1 | 14.5 | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Diluted loss per share | (337.3) | 510.0 | (66.1)p | (2,448.2) | 376.0 | (651.1)p |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Loss used for calculation | (338.8) | | | (2,451.3) | | |
| of basic loss per share | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Adjustments: | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Revaluation and sale of | | | | | | |
| investment and | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| development property | 768.2 | | | 2,057.0 | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Profit on sale of | - | | | (0.8) | | |
| subsidiary | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Exceptional other income | (5.3) | | | - | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Impairment of goodwill | - | | | 35.0 | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Exceptional finance | 44.0 | | | 3.6 | | |
| charges | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Loss on sale of investment | 6.5 | | | - | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Impairment of investments | 3.9 | | | - | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Impairment of other | 12.0 | | | - | | |
| receivables | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Fair value movement on | | | | | | |
| derivative financial | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| instruments | (416.5) | | | 665.1 | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Deferred tax adjustments | 41.0 | | | (85.5) | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| REIT entry charges | 3.1 | | | 3.6 | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Minority interests in | (26.8) | | | (121.8) | | |
| respect of the above | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| EPRA adjusted earnings per | 91.3 | 497.7 | 18.3p | 104.9 | 361.5 | 29.0p |
| share | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Reduction in interest | | | | | | |
| charge from conversion of | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| bonds (net of tax) | 1.5 | 12.3 | | 3.1 | 14.5 | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| Adjusted, diluted earnings | 92.8 | 510.0 | 18.2p | 108.0 | 376.0 | 28.7p |
| per share | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
| | | | | | | |
+----------------------------+----------+---------+---------+-----------+---------+----------+
(1) Shares in issue for the calculation of basic loss per share have been
adjusted for shares held in the ESOP and treasury shares.
19 Earnings per share and net assets per share (continued)
(b) Net assets per share
+----------------------------+---------+---------+---------+---------+---------+---------+
| | 2009 | 2008 |
+----------------------------+-----------------------------+-----------------------------+
| | Net | | NAV | Net | | NAV |
| | | | per | | | per |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | assets | Shares | share | assets | Shares | share |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | GBPm | million | (pence) | GBPm | million | (pence) |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Net assets attributable to | | | | | | |
| equity holders of the | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Group | 2,421.1 | 621.5 | 390p | 1,958.0 | 363.7 | 538p |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Adjustments: | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Effect of dilution | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| On conversion of bonds | 79.2 | 11.2 | | 92.3 | 11.5 | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| On exercise of options | 22.1 | 1.6 | | 10.5 | 0.5 | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Diluted | 2,522.4 | 634.3 | 398p | 2,060.8 | 375.7 | 549p |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Fair value of derivative | | | | | | |
| financial instruments | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| (net of tax) | 335.5 | | 53 | 659.0 | | 175 |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Unrecognised surplus on | | | | | | |
| trading properties | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| (net of tax) | 0.9 | | - | 0.6 | | - |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Deferred tax on | 28.7 | | 5 | 18.3 | | 5 |
| revaluation surpluses | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Deferred tax on capital | 14.2 | | 2 | 57.7 | | 15 |
| allowances | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Minority interests on the | (27.1) | | (5) | (46.9) | | (12) |
| above | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Add back minority interest | | | | | | |
| recoverable balance | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| not recognised | 71.3 | | 11 | 48.4 | | 13 |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Diluted EPRA NAV | 2,945.9 | 634.3 | 464p | 2,797.9 | 375.7 | 745p |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Fair value of derivative | | | | | | |
| financial instruments | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| (net of tax) | (335.5) | | (53) | (659.0) | | (175) |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Excess of fair value of | 394.5 | | 63 | 499.3 | | 132 |
| debt over book value | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
| Diluted EPRA NNNAV | 3,004.9 | 634.3 | 474p | 2,638.2 | 375.7 | 702p |
+----------------------------+---------+---------+---------+---------+---------+---------+
| | | | | | | |
+----------------------------+---------+---------+---------+---------+---------+---------+
20 Convertible debt
3.95 per cent convertible bonds due 2010 ("the 3.95 per cent bonds")
On 16 October 2003, the company issued GBP240 million nominal 3.95 per cent
bonds raising GBP233.5 million after costs. At the time of issue, the holders of
the 3.95 per cent bonds had the option to convert their bonds into ordinary
shares at any time on or up to 23 September 2010 at GBP8.00 per ordinary share,
a conversion rate of 125 ordinary shares for every GBP1,000 nominal of 3.95 per
cent bonds. On 28 May 2009, following the Firm Placing and Placing and Open
Offer, the conversion price was adjusted to GBP7.16 per share, a conversion rate
of approximately 139.66 ordinary shares for every GBP1,000 nominal of 3.95 per
cent bonds. On 5 October 2009, following a placing of shares, the conversion
price was adjusted to GBP7.08 per share, a conversion rate of approximately
141.24 ordinary shares for every GBP1,000 nominal of 3.95 per cent bonds. The
3.95 per cent bonds may be redeemed at par at the company's option subject to
the Liberty International PLC ordinary share price having traded at 120 per cent
of the conversion price for a specified period, or at anytime once 85 per cent
by nominal value of the bonds originally issued have been converted or
cancelled. Unless otherwise converted, cancelled or redeemed the 3.95 per cent
bonds will be redeemed by Liberty International PLC at par on 30 September 2010.
On 2 January 2009, notices were accepted by the company in respect of GBP13.0
million of bonds representing 14.1 per cent of the 3.95 per cent bonds
outstanding on 31 December 2008. The bonds converted into 1.7 million new
ordinary shares.
The net proceeds received from the initial issue of the convertible bonds was
split between the liability element and an equity component, representing the
fair value of the embedded option to convert the liability into equity as
follows:
+--------------------------------------------------+------+------+---------+---------+
| | | | 2009 | 2008 |
+--------------------------------------------------+------+------+---------+---------+
| | | | GBPm | GBPm |
+--------------------------------------------------+------+------+---------+---------+
| | | | | |
+--------------------------------------------------+------+------+---------+---------+
| Net proceeds of convertible bonds issued | | | 233.5 | 233.5 |
+--------------------------------------------------+------+------+---------+---------+
| Equity component | | | (19.6) | (19.6) |
+--------------------------------------------------+------+------+---------+---------+
| | | | | |
+--------------------------------------------------+------+------+---------+---------+
| | | | | |
+--------------------------------------------------+------+------+---------+---------+
| Liability at date of issue | | | 213.9 | 213.9 |
+--------------------------------------------------+------+------+---------+---------+
| Cumulative amortisation | | | 19.2 | 19.2 |
+--------------------------------------------------+------+------+---------+---------+
| Cumulative conversions | | | (153.9) | (140.8) |
+--------------------------------------------------+------+------+---------+---------+
| | | | | |
+--------------------------------------------------+------+------+---------+---------+
| | | | | |
+--------------------------------------------------+------+------+---------+---------+
| Liability at 31 December | | | 79.2 | 92.3 |
+--------------------------------------------------+------+------+---------+---------+
| | | | | |
+--------------------------------------------------+------+------+---------+---------+
The effective interest rate on the liability element at 31 December 2009 was
3.95 per cent (2008 - 3.95 per cent).
21 Share capital and share premium
At 31 December 2008, the company's authorised capital was 500,000,000. On 22
May 2009, the authorised share capital of the company was increased by
400,000,000 ordinary shares of 50p each to 900,000,000 ordinary shares of 50p
each.
The Companies Act 2006 removed the concept of authorised share capital with
effect from 1 October 2009.
+-------------+---------+---------+
| | Share | Share |
+-------------+---------+---------+
| | capital | premium |
+-------------+---------+---------+
| | GBPm | GBPm |
+-------------+---------+---------+
| | | |
+-------------+---------+---------+
| Issued | | |
| and | | |
| fully | | |
| paid | | |
+-------------+---------+---------+
| At 31 | 182.6 | 993.4 |
| December | | |
| 2008 - | | |
| 365,147,798 | | |
| ordinary | | |
| shares of | | |
| 50p each | | |
+-------------+---------+---------+
| Shares | 128.7 | 12.3 |
| issued | | |
+-------------+---------+---------+
| | | |
+-------------+---------+---------+
| | | |
+-------------+---------+---------+
| At 31 | 311.3 | 1,005.7 |
| December | | |
| 2009 - | | |
| 622,878,501 | | |
| ordinary | | |
| shares of | | |
| 50p each | | |
+-------------+---------+---------+
| | | |
+-------------+---------+---------+
On 2 January 2009, the company issued 1.7 million shares on the conversion of
3.95 per cent convertible bonds as described in note 20.
On 27 April 2009, the Group announced its intention to raise GBP592 million, net
of expenses, by way of a Firm Placing of 104,839,061 new ordinary shares and a
Placing and Open Offer of 95,161,642 new ordinary shares at 310 pence per share
(the "Capital Raising"). The Capital Raising was approved by shareholders at
the Extraordinary General Meeting on 22 May 2009 and the cash proceeds were
received at the end of May 2009. As a result, share capital increased by GBP100
million with the balance of the proceeds being transferred to a merger reserve.
On 23 September 2009, the Group announced its intention to raise GBP274 million
net of expenses by way of a placing of 56,100,000 new ordinary shares at 500
pence per share. The placing represented in aggregate 9.9 per cent of the
issued share capital of Liberty International prior to the placing. The cash
proceeds were received on 5 October 2009. As a result, share capital increased
by GBP28 million with the balance of the proceeds being transferred to a merger
reserve.
Subsequent to both capital raises, the merger reserve balances have been treated
as realised and transferred to retained earnings.
Full details of the rights and obligations attaching to the ordinary shares are
contained in the company's Articles of Association. These rights include an
entitlement to receive the company's report and accounts, to attend and speak at
General Meetings of the company, to appoint proxies and to exercise voting
rights. Holders of ordinary shares may also receive dividends and may receive a
share of the company's assets on the company's liquidation. There are no
restrictions on the transfer of the ordinary shares.
At 9 March 2010, the company had an unexpired authority to repurchase shares up
to a maximum of 56,572,850 shares with a nominal value of GBP28.3 million, and
the Directors have an unexpired authority to allot up to a maximum of
132,476,167 shares with a nominal value of GBP66.2 million.
Included within the issued share capital as at 31 December 2009 are 288,070
ordinary shares (2008 - 364,327) held by the Trustee of the Employee Share
Ownership Plan ("ESOP") which is operated by the company (note 22) and 1,050,000
treasury shares (2008 - 1,050,000). The nominal value of these shares is GBP0.7
million (2008 - GBP0.7 million).
22 Treasury shares and Employee Share Ownership Plan (ESOP)
The cost of shares in Liberty International PLC purchased in the market and held
either as treasury shares by the Trustee of the Employee Share Ownership Plan
("ESOP") operated by the company is accounted for as treasury shares.
The purpose of the ESOP is to acquire and hold shares which will be transferred
to employees in the future under the Group's employee incentive arrangements.
Dividends of GBP0.01 million (2008 - GBP0.2 million) have been waived by
agreement.
+--------------------------------------------------+---------+--------+---------+--------+
| | 2009 | 2008 |
+--------------------------------------------------+------------------+------------------+
| | Shares | | Shares | |
+--------------------------------------------------+---------+--------+---------+--------+
| | million | GBPm | million | GBPm |
+--------------------------------------------------+---------+--------+---------+--------+
| | | | | |
+--------------------------------------------------+---------+--------+---------+--------+
| At 1 January | 1.4 | (10.8) | 1.3 | (9.6) |
+--------------------------------------------------+---------+--------+---------+--------+
| Acquired in the year | 0.1 | (0.2) | 0.4 | (3.8) |
+--------------------------------------------------+---------+--------+---------+--------+
| Disposed of on exercise of options | (0.2) | 1.3 | (0.3) | 2.6 |
+--------------------------------------------------+---------+--------+---------+--------+
| | | | | |
+--------------------------------------------------+---------+--------+---------+--------+
| | | | | |
+--------------------------------------------------+---------+--------+---------+--------+
| At 31 December | 1.3 | (9.7) | 1.4 | (10.8) |
+--------------------------------------------------+---------+--------+---------+--------+
| | | | | |
+--------------------------------------------------+---------+--------+---------+--------+
23 Contingent liabilities
As at 31 December 2009, the Group has a contingent commitment to provide future
investment of GBP39 million, (2008 - GBP60.5 million) into one of the real
estate investment funds in which the Group has previously invested. The
Directors' current expectation, following discussions with Harvest Capital
Partners, the managers of the fund, is that this further investment will not be
required as the fund's managers have wound down marketing efforts in relation to
the specific fund that the Group had committed investment funds.
24 Related party transactions
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation for the Group.
Significant transactions between the parent company and its subsidiaries are
shown below:
+----------------------------+--------------------------+----+------+------+
| | | | 2009 | 2008 |
+----------------------------+--------------------------+----+------+------+
| Subsidiary | Nature of transaction | | GBPm | GBPm |
+----------------------------+--------------------------+----+------+------+
| | | | | |
+----------------------------+--------------------------+----+------+------+
| Libtai Holdings (Jersey) | Dividend | | - | -(1) |
| Limited | | | | |
+----------------------------+--------------------------+----+------+------+
| Liberty International | Dividend | | - | -(1) |
| Holdings Limited | | | | |
+----------------------------+--------------------------+----+------+------+
| Conduit Insurance Holdings | Dividend | | - | -(1) |
| Limited | | | | |
+----------------------------+--------------------------+----+------+------+
| C&C Properties UK Limited | Re-charges | | 1.5 | 1.5 |
+----------------------------+--------------------------+----+------+------+
| Capital & Counties | Dividend | | - | -(1) |
| Debenture PLC | | | | |
+----------------------------+--------------------------+----+------+------+
| Greenhaven Industrial | Dividend | | - | 1.0 |
| Properties Limited | | | | |
+----------------------------+--------------------------+----+------+------+
| Capital Shopping Centres | Dividend | | - | -(1) |
| PLC | | | | |
+----------------------------+--------------------------+----+------+------+
| | Re-charges | | 4.3 | 4.0 |
+----------------------------+--------------------------+----+------+------+
| | | | | |
+----------------------------+--------------------------+----+------+------+
(1)Dividend declared in 2008 was repaid
Significant balances outstanding between the parent company and its subsidiaries
are shown below:
+--------------------------------------+---------+---------+----------+--------+
| | Amounts owed by | Amounts owed to |
| | subsidiaries | subsidiaries |
+--------------------------------------+-------------------+-------------------+
| | 2009 | 2008 | 2009 | 2008 |
+--------------------------------------+---------+---------+----------+--------+
| Subsidiary | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------+---------+---------+----------+--------+
| | | | | |
+--------------------------------------+---------+---------+----------+--------+
| Liberty International Group Treasury | 2,373.9 | 1,929.5 | - | - |
| Limited | | | | |
+--------------------------------------+---------+---------+----------+--------+
| Capital & Counties Limited | 14.4 | 14.4 | (60.0) | (60.0) |
+--------------------------------------+---------+---------+----------+--------+
| Conduit Insurance Holdings Limited | 16.0 | 16.0 | - | - |
+--------------------------------------+---------+---------+----------+--------+
| Liberty International Holdings | 132.8 | 132.8 | - | - |
| Limited | | | | |
+--------------------------------------+---------+---------+----------+--------+
| TAI Investments Limited | - | - | (5.0) | (42.6) |
+--------------------------------------+---------+---------+----------+--------+
| Capital Shopping Centres PLC | 5.1 | 5.1 | - | - |
+--------------------------------------+---------+---------+----------+--------+
| Libtai Holdings (Jersey) Limited | - | 37.6 | - | - |
+--------------------------------------+---------+---------+----------+--------+
| Liberty International Capital (Five) | - | - | 3.2 | - |
| Limited | | | | |
+--------------------------------------+---------+---------+----------+--------+
| Liberty International Capital (Six) | - | - | 10.0 | - |
| Limited | | | | |
+--------------------------------------+---------+---------+----------+--------+
| Nailsfield Limited | 22.6 | - | - | - |
+--------------------------------------+---------+---------+----------+--------+
| | | | | |
+--------------------------------------+---------+---------+----------+--------+
+--------------------------------------------------------------+------+------+
| | 2009 | 2008 |
+--------------------------------------------------------------+------+------+
| Key management(1) compensation | GBPm | GBPm |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| Salaries and short-term employee benefits | 7.2 | 6.0 |
+--------------------------------------------------------------+------+------+
| Pensions and other post-employment benefits | 0.5 | 0.7 |
+--------------------------------------------------------------+------+------+
| Share-based payment | - | 0.4 |
+--------------------------------------------------------------+------+------+
| Other long-term payments | - | 0.2 |
+--------------------------------------------------------------+------+------+
| Termination benefits | - | 1.7 |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
| | 7.7 | 9.0 |
+--------------------------------------------------------------+------+------+
| | | |
+--------------------------------------------------------------+------+------+
(1) Key management comprises the Directors of Liberty International PLC and
those employees who have been designated as persons discharging managerial
responsibility.
25 Events after the reporting period
The Group announced on 9 March 2010 its intention to reorganise by way of
demerger into two groups, Capital Shopping Centres and Capital & Counties. This
reorganisation is subject to both shareholders' and Court approval.
Certain other events that have occurred after the reporting period are detailed
in the Financial Review.
26 General information
The company is a public limited company incorporated in England and Wales and
domiciled in the UK. The address of its registered office is 40 Broadway,
London SW1H 0BT.
The company has its primary listing on the London Stock Exchange. The company
has a secondary listing on the JSE, South Africa.
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES (unaudited)
Property data as at 31 December 2009
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | Weighted | |
+----------------------+---------+-----------+------+-----------------------+------------------+------------+-----------+---------+
| | | | | | | | average | Gross |
| | | | | | | | | |
+----------------------+---------+-----------+------+-----------------------+------------------+------------+-----------+---------+
| | Market | | | Initial* | Nominal* | Passing* | | | unexpired | area |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | value | | | yield | equivalent | rent | ERV* | | lease | million |
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | GBPm | Ownership |Note | (EPRA) | yield | GBPm | GBPm | Occupancy* | years | sq |
| | | | | | | | | | | ft |
| | | | | | | | | | | I |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| UK regional shopping | | | | | | | | | | |
| centres | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Lakeside, Thurrock | 890.0 | 100% | | 5.80% | 6.75% | | | 97.8% | | 1.4 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| MetroCentre, | 775.2 | 90% | A | 6.38% | 6.99% | | | 97.8% | | 2.1 |
| Gateshead | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Braehead, Glasgow | 504.8 | 100% | | 5.45% | 7.04% | | | 99.8% | | 1.1 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| The Harlequin, | 335.0 | 93% | | 5.65% | 7.00% | | | 95.3% | | 0.7 |
| Watford | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Victoria Centre, | 315.0 | 100% | | 5.73% | 6.90% | | | 98.2% | | 1.0 |
| Nottingham | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Arndale, Manchester | 289.1 | 48% | B | 6.23% | 6.87% | | | 99.1% | | 1.6 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Chapelfield, Norwich | 219.5 | 100% | | 6.00% | 7.35% | | | 95.5% | | 0.5 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Eldon Square, | 217.6 | 60% | | 4.03% | 7.51% | | | 97.5% | | 1.0 |
| Newcastle upon Tyne | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| St David's, Cardiff | 210.5 | 50% | | 2.39% | 7.46% | | | 94.5%G | | 1.4 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Cribbs Causeway, | 204.9 | 33% | C | 5.27% | 6.78% | | | 99.5% | | 1.0 |
| Bristol | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| The Chimes, Uxbridge | 196.2 | 100% | | 6.51% | 7.20% | | | 98.8% | | 0.4 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| The Potteries, | 191.5 | 100% | | 7.00% | 7.70% | | | 98.5% | | 0.6 |
| Stoke-on-Trent | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| The Glades, Bromley | 170.2 | 64% | | 5.68% | 7.56% | | | 95.2% | | 0.5 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Other | 111.6 | | D | | | | | | | 0.7 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Total UK regional | 4,631.1 | | | 5.70% | 7.08% | 271.1 | 363.4 | 97.8% | 6.7 | 14.0 |
| shopping centres | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| UK non-shopping | | | | | | | | | | |
| centres | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Capco Covent Garden | 548.4 | 100% | | 4.86% | 5.42% | | | 98.9% | 7.8 | 0.7 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Capco Earls Court | 434.8 | 100% | E | | | | | | | 1.7 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Capco GCP | 247.3 | 50% | | 5.35% | 5.96% | | | 96.9% | 5.6 | 1.0 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Capco Other | 9.0 | 100% | | | | | | | | 0.1 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Total UK | 1,239.5 | | | | | 49.4 | 56.5 | | 7.5H | 3.5 |
| non-shopping centres | | | | | | | H | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Capco USA | 348.1 | 100% | F | | | 31.1 | 35.0 | 91.2% | 4.3 | 2.6 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| Total investment and | | | | | | | | | | |
| development | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| properties | 6,218.7 | | | | | | | | | 20.1 |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
| | | | | | | | | | | |
+----------------------+---------+-----------+------+----------+------------+----------+-------+------------+-----------+---------+
* As defined in glossary.
Notes
+--+---------------------------------------------------------------------------+
| A| Interest shown is that of the MetroCentre Partnership in the MetroCentre |
| | (90 per cent) and the Metro Retail Park (100 per |
+--+---------------------------------------------------------------------------+
| | cent). Capital Shopping Centres has a 60 per cent interest in the |
| | MetroCentre Partnership which is consolidated as a |
+--+---------------------------------------------------------------------------+
| | subsidiary of the Group. |
+--+---------------------------------------------------------------------------+
| B| The Group's interest is through a joint venture ownership of a 95 per |
| | cent interest in The Arndale, Manchester, and 90 per cent |
+--+---------------------------------------------------------------------------+
| | interest in New Cathedral Street, Manchester. |
+--+---------------------------------------------------------------------------+
| C| The Group's interest is through a joint venture ownership of a 66 per |
| | cent interest in The Mall at Cribbs Causeway and a 100 |
+--+---------------------------------------------------------------------------+
| | per cent interest in The Retail Park, Cribbs Causeway. |
+--+---------------------------------------------------------------------------+
| D| Includes the Group's 100 per cent economic interest in Westgate, Oxford |
| | and also the Group's 50 per cent economic interest |
+--+---------------------------------------------------------------------------+
| | in Xscape, Braehead. |
+--+---------------------------------------------------------------------------+
| E| Includes Earls Court, which as from December 2009 is 100 per cent owned |
| | and also the Group's 50 per cent economic |
+--+---------------------------------------------------------------------------+
| | interest in the Empress State building (GBP94.4 million). |
+--+---------------------------------------------------------------------------+
| F| The Group holds 13 investment properties in the USA. For four of these, |
| | which approximate to 20 per cent of the market |
+--+---------------------------------------------------------------------------+
| | value, the Group's interest ranges from 50 per cent to 58 per cent. |
+--+---------------------------------------------------------------------------+
| G| Excludes the recently completed extension to St David's, Cardiff. |
+--+---------------------------------------------------------------------------+
| H| Earls Court Exhibition centre does not report a passing rent, ERV or |
| | lease maturity due to the nature of its Exhibition |
+--+---------------------------------------------------------------------------+
| | business. |
+--+---------------------------------------------------------------------------+
| I| Area shown is the gross area of the property, this is not adjusted for |
| | the proportional ownership. |
+--+---------------------------------------------------------------------------+
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES (unaudited)
Analysis of Capital & Counties properties by use
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| | 31 December 2009 Market Value | 31 December 2009 ERV |
+--------------+------------------------------------------------------+----------------------------------------------------+
| | Retail | Office | Exhibition | Residential | Total | Retail | Office | Exhibition | Residential | Total |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| | | | | | | | | | | |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| Capco Covent | 476.4 | 61.2 | - | 10.8 | 548.4 | 28.9 | 4.2 | - | 0.1 | 33.2 |
| Garden | | | | | | | | | | |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| Capco Earls | - | 94.4 | 340.4 | - | 434.8 | - | 5.9 | - | - | 5.9 |
| Court | | | | | | | | | | |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| Capco GCP | 83.7 | 147.8 | - | 15.8 | 247.3 | 5.2 | 10.2 | - | 0.8 | 16.2 |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| Capco Other | 0.5 | 7.0 | - | 1.5 | 9.0 | 0.1 | 1.1 | - | - | 1.2 |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| Capco USA | 249.7 | 72.5 | - | 25.9 | 348.1 | 23.2 | 9.4 | - | 2.4 | 35.0 |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| | | | | | | | | | | |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| | | | | | | | | | | |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| | 810.3 | 382.9 | 340.4 | 54.0 | 1,587.6 | 57.4 | 30.8 | - | 3.3 | 91.5 |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
| | | | | | | | | | | |
+--------------+--------+--------+------------+-------------+---------+--------+--------+------------+-------------+-------+
Analysis of capital return in the period
Like-for-like properties
+----------------------------------+----------+----------+----------+----------+----------+
| | Market value | | Revaluation |
| | | | deficit* |
+----------------------------------+---------------------+----------+---------------------+
| | 31 | 31 | | 31 | |
| | December | December | | December | |
+----------------------------------+----------+----------+----------+----------+----------+
| | 2009 | 2008 | | 2009 | |
+----------------------------------+----------+----------+----------+----------+----------+
| | GBPm | GBPm | | GBPm | Decrease |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| UK regional shopping centres | 4,389.5 | 4,815.2 | | (473.0) | (9.8)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco Covent Garden | 548.4 | 575.6 | | (35.7) | (6.1)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco Earls Court | 434.8 | 468.4 | | (41.6) | (8.7)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco GCP | 243.3 | 248.2 | | (20.0) | (7.6)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco Other | 9.0 | 9.2 | | (1.9) | (23.0)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco USA | 348.1 | 485.9 | | (91.9) | (20.8)% |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| Total like-for-like properties | 5,973.1 | 6,602.5 | | (664.1) | (10.1)% |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| Acquisitions | 4.0 | - | | (0.3) | - |
+----------------------------------+----------+----------+----------+----------+----------+
| Disposals | - | 306.8 | A | (6.1) | - |
+----------------------------------+----------+----------+----------+----------+----------+
| Redevelopments and developments | 241.6 | 203.5 | | (61.6) | - |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| Total investment properties | 6,218.7 | 7,112.8 | | (732.1) | (10.6)% |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| All properties | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| UK regional shopping centres | 4,631.1 | 5,009.6 | | (534.7) | (10.4)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco Covent Garden | 548.4 | 590.3 | | (35.7) | (6.1)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco Earls Court | 434.8 | 568.9 | | (47.7) | (9.9)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco GCP | 247.3 | 275.4 | | (20.2) | (7.6)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco Other | 9.0 | 182.7 | | (1.9) | (23.0)% |
+----------------------------------+----------+----------+----------+----------+----------+
| Capco USA | 348.1 | 485.9 | | (91.9) | (20.8)% |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| Total investment properties | 6,218.7 | 7,112.8 | | (732.1) | (10.6)% |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------------+----------+----------+----------+----------+----------+
A Includes loss of deemed control of former subsidiary and conversion to
proportional consolidation of the Empress State building of GBP100.5 million.
* Revaluation deficit includes amortisation of lease incentives and fixed head
leases.
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES (unaudited)
Analysis of income in the period
Like-for-like properties
+--------------------------------------+----------+----------+----------+------+
| | 31 | 31 | | |
| | December | December | | |
+--------------------------------------+----------+----------+----------+------+
| | 2009 | 2008 | Change | |
+--------------------------------------+----------+----------+----------+------+
| | GBPm | GBPm | % |NOTE |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| UK regional shopping centres | 252.7 | 261.7 | (3.4)% | |
+--------------------------------------+----------+----------+----------+------+
| Capco Covent Garden | 26.5 | 22.8 | 15.8% | |
+--------------------------------------+----------+----------+----------+------+
| Capco Earls Court | 25.9 | 28.2 | (8.2)% | |
+--------------------------------------+----------+----------+----------+------+
| Capco GCP | 13.4 | 12.9 | 3.9% | |
+--------------------------------------+----------+----------+----------+------+
| Capco Other | 0.6 | 0.7 | (14.2)% | |
+--------------------------------------+----------+----------+----------+------+
| Capco USA | 24.4 | 20.7 | (1.3)% | A |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| Like-for-like properties | 343.5 | 347.0 | (1.0)% | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| Disposals | 1.8 | 12.2 | (85.2)% | |
+--------------------------------------+----------+----------+----------+------+
| Like-for-like capital | 20.1 | 19.6 | 2.6% | B |
+--------------------------------------+----------+----------+----------+------+
| Redevelopments and developments | 5.5 | 4.7 | 17.0% | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| | 27.4 | 36.5 | | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| Total investment properties | 370.9 | 383.5 | (3.3)% | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| All properties | | | | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| UK regional shopping centres | 267.3 | 280.8 | (4.8)% | |
+--------------------------------------+----------+----------+----------+------+
| Capco Covent Garden | 26.5 | 23.4 | 13.2% | |
+--------------------------------------+----------+----------+----------+------+
| Capco Earls Court | 36.8 | 33.3 | 10.5% | |
+--------------------------------------+----------+----------+----------+------+
| Capco GCP | 13.8 | 14.0 | (1.4)% | |
+--------------------------------------+----------+----------+----------+------+
| Capco Other | 2.1 | 11.3 | (81.4)% | |
+--------------------------------------+----------+----------+----------+------+
| Capco USA | 24.4 | 20.7 | (1.3)% | A |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
| Total investment properties | 370.9 | 383.5 | (3.3)% | |
+--------------------------------------+----------+----------+----------+------+
| | | | | |
+--------------------------------------+----------+----------+----------+------+
A Percentage change is shown for income in local currency.
B Like-for-like capital defined as comparable investment value in both current
and comparative period, but not like-for-like ownership period.
UNDERLYING PROFIT STATEMENT (unaudited)
For the year ended 31 December 2009
+-----------------------+----------+----------+----------+----------+---------+---------+
| | Year | Year | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | ended | ended | Six | Six | Six | Six |
| | | | months | months | months | months |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | 31 | 31 | 31 | 31 | 30 | 30 |
| | December | December | December | December | June | June |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| UK shopping centres | 267.3 | 280.8 | 134.6 | 140.7 | 132.7 | 140.1 |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Other commercial | 103.6 | 102.7 | 46.1 | 48.6 | 57.5 | 54.1 |
| properties | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Net rental income | 370.9 | 383.5 | 180.7 | 189.3 | 190.2 | 194.2 |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Other | 1.4 | 0.2 | 0.1 | (0.3) | 1.3 | 0.5 |
| income/(expense) | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | 372.3 | 383.7 | 180.8 | 189.0 | 191.5 | 194.7 |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Administration | (43.4) | (63.2) | (21.6) | (35.0) | (21.8) | (28.2) |
| expenses | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Operating profit | 328.9 | 320.5 | 159.2 | 154.0 | 169.7 | 166.5 |
| (underlying*) | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Interest payable | (237.4) | (230.3) | (118.2) | (114.9) | (119.2) | (115.4) |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Interest receivable | 6.3 | 8.6 | 3.0 | 2.6 | 3.3 | 6.0 |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Other finance | (9.6) | 4.5 | (5.1) | 4.5 | (4.5) | - |
| (costs)/income | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Net finance costs | (240.7) | (217.2) | (120.3) | (107.8) | (120.4) | (109.4) |
| (underlying*) | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Profit before tax | 88.2 | 103.3 | 38.9 | 46.2 | 49.3 | 57.1 |
| (underlying*) | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Write down of trading | (4.6) | (5.8) | (1.6) | (5.8) | (3.0) | - |
| property | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Property trading | 0.2 | 0.3 | - | (0.6) | 0.2 | 0.9 |
| profit/(loss) | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Tax on adjusted | 3.0 | 3.7 | 2.4 | 6.2 | 0.6 | (2.5) |
| profit | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Minority interests | 4.5 | 3.4 | 4.8 | 8.7 | (0.3) | (5.3) |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Underlying earnings | | | | | | |
| (used for | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| calculation of | | | | | | |
| adjusted earnings | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| per share) | 91.3 | 104.9 | 44.5 | 54.7 | 46.8 | 50.2 |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| Adjusted earnings per | 18.3 | 29.0 | 8.9 | 15.1 | 11.6 | 13.9 |
| share (pence) | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
| | | | | | | |
+-----------------------+----------+----------+----------+----------+---------+---------+
* before property trading and valuation items
FINANCIAL COVENANTS (unaudited)
Financial covenants on asset-specific debt excluding joint ventures
+--------------+-+----------+-------------+------+----------+----------+----------+------+-------------+----------+----------+----------+-----+
| | | Loan | | | Loan to | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | outstanding | | | 31 | | Interest | | Interest | |
| | | at | | | December | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | 31 | (1) | LTV | 2009 | | cover | | cover | |
| | | January | | | | | | | | |
| | | 2010 | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | Maturity | GBPm | | covenant | Market | (2) | covenant | | actual | (3) |
| | | | | | value | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| EC&O Venues | 2012 | 154.3 | | N/A | N/A | | 110% | | 129% | (5) |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Covent Garden | 2013 | 252.5 | | 75% | 71% | | 120% | | 122% | (8) |
| (11) | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| MetroCentre | 2015 | 561.0 | (9) | 90% | 76% | | 120% | | 142% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Braehead | 2015 | 341.9 | (7) | N/A | N/A | | 120% | | 163% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Watford | 2015 | 258.0 | (6) | N/A | N/A | | 120% | | 133% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Nottingham | 2016 | 300.0 | (8) | 90% | 90% | | 110% | | 148% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Chapelfield | 2016 | 212.6 | | N/A | N/A | | 110% | | 111% | (8) |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Uxbridge | 2016 | 162.0 | | 85% | 83% | | 120% | | 150% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Bromley | 2016 | 139.7 | | 85% | 82% | | 120% | | 120% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Covent Garden | 2017 | 118.0 | | 70% | 61% | | 100% | | 143% | |
| (11) | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Lakeside | 2017 | 525.0 | (4) | 75% | 59% | | 140% | | 195% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Total | | 3,025.0 | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Financial covenants on joint ventures asset-specific debt | | | | | |
+---------------------------------------------------------------------------------+------+-------------+----------+---------------------+-----+
| | | Loan | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | outstanding | | | Loan to | | Interest | | Interest | |
| | | at | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | 31 | | | 31 | | | | | |
| | | January | | | December | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | 2010 | (1) | LTV | 2009 | | cover | | cover | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | Maturity | GBPm | | covenant | Market | (2) | covenant | | actual | (3) |
| | | | | | value | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Empress State | 2013 | 78.2 | (10) | N/A | N/A | | 115% | | 128% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| GCP | 2013 | 112.5 | (10) | 70% | 47% | | 120% | | 213% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Cardiff | 2014 | 37.2 | (10) | 75% | 18% | | 150% | | 187% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Xscape | 2014 | 24.5 | (10) | 85% | 93% | (12) | 120% | | 160% | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Total | | 252.4 | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+----------------+----------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| Financial covenants on corporate facilities at 31 December | | | | | | |
| 2009 | | | | | | |
+----------------------------------------------------------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | Interest | Interest | | | | | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | Net | | | cover | cover | | Borrowings/ | | | |
| | worth | | | | | | | | | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | covenant* | Actual | | covenant* | Actual | | Net | | Actual | |
| | | | | | | | worth* | | | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | GBP850m | GBP1,782m | | 120% | 136% | | 110% | | 11% | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| | | | | | | | | | | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+----------+---------------------+-----+
| * Tested on the Borrower Group which excludes, at the Group's election, certain subsidiaries with asset-specific finance. |
| The facility is secured on |
+---------------------------------------------------------------------------------------------------------------------------------------------+
| the Group's investments in the Arndale, Manchester and Cribbs Causeway, Bristol. |
+---------------------------------------------------------------------------------------------------------------------------------------------+
| The above facility was re-negotiated in February 2010 in connection with the proposed demerger. The new GBP248 million |
| facility matures in June |
+---------------------------------------------------------------------------------------------------------------------------------------------+
| 2013. The interest cover and borrowing/net worth covenants remain as stated above but the net worth covenant reduces to |
| GBP600 million. |
+---------------------------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | |
+--------------+------------+-------------+-----------------+----------+----------+------+-------------+---------------------+----------+-----+
| | | | | | | | | | | |
+--------------+------------+-------------+-----------------+----------+----------+------+-------------+---------------------+----------+-----+
| C&C Mortgage Debenture PLC at 31 December 2009 | |
+---------------------------------------------------------------------------------------------------------------------------------------+-----+
| | | | | Capital | Capital | | Interest | | Interest | |
| | | | | | | | | | | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+---------------------+----------+-----+
| | | Loan | | cover | cover | | cover | | cover | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+---------------------+----------+-----+
| | Maturity | GBPm | | covenant | actual | | covenant | | actual | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+---------------------+----------+-----+
| | | | | | | | | | | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+---------------------+----------+-----+
| | 2027 | 231.4 | | 167% | 176% | | 100% | | 103% | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+---------------------+----------+-----+
| | | | | | | | | | | |
+--------------+------------+-------------+------+---------------------+----------+------+-------------+---------------------+----------+-----+
| | | | | | | | | | | | | | |
+--------------+-+----------+-------------+------+----------+----------+----------+------+-------------+----------+----------+----------+-----+
The debenture is currently secured on the Group's interests in The Potteries and
Eldon Square, Newcastle.
Should the capital cover or interest cover test be breached C&C Debenture PLC
(the issuer) has three months from the date of delivery of the valuation or the
latest certificate to the Trustees to make good any deficiencies. The issuer
may withdraw property secured on the debenture by paying a sum of money or
through the substitution of alternative property provided that the loan to value
and income tests are satisfied immediately following the substitution.
There are currently no financial covenant tests on $330 million (GBP204 million
equivalent) of borrowings entered into by the Group's US subsidiary.
Notes
(1) The loan values are the actual principal balances outstanding at 31
January 2010, which take into account any principal repayments made in January
2010. The accounting/balance sheet value of the loans includes any unamortised
fees.
(2) The Loan to 31 December 2009 Market Value provides an indication of
the impact of the 31 December 2009 property valuations undertaken for inclusion
in the financial statements could have on the LTV covenants. The actual timing
and manner of testing LTV covenants varies and is loan specific.
(3) Based on latest certified figures, calculated in accordance with loan
agreements, which have been submitted between 30 December 2009 and 31 January
2010. The calculations are loan specific and include a variety of historic,
forecast and in certain instances a combined historic and forecast basis.
(4) Based on the new seven year GBP525 million loan facility that was
completed in January 2010. The LTV covenant reduces to 70 per cent for the
final two years of the facility.
(5) The EC&O Venues facility was amended in December 2009. This resulted
in the number of financial covenants being reduced. The LTV covenant no longer
applies and the interest cover covenant has been amended, including the covenant
now being set at 110 per cent. A GBP65 million principal repayment was also
made in December 2009.
(6) Includes the impact of the cancellation of GBP26.25 million CMBS
notes on 27 July 2009 that were owned by a Group company.
(7) Includes the impact of the cancellation of GBP34 million CMBS notes
on 25 January 2010 that were owned by a Group company.
(8) Includes principal prepayments or cash deposits made to ensure
continued compliance with covenants.
(9) 100 per cent of the debt is shown which is consistent with accounting
treatment, however the Group's economic interest is 60 per cent.
(10) 50 per cent of the debt is shown which is consistent with accounting
treatment and the Group's economic interest.
(11) There are two separate loans on the Covent Garden properties.
(12) Discussions are ongoing with lenders, further details are included in
the Financial Review in this document.
Dividends
The Directors of Liberty International PLC have proposed a final dividend per
ordinary share (ISIN GB0006834344) of 11.5 pence (2008 - nil) to bring the total
dividend per ordinary share for the year to 16.5 pence (2008 - 16.5 pence).
This dividend will be partly paid as a Property Income Distribution ("PID") with
a gross value of 8.5 pence per share and partly paid as a non-PID with a value
of 3.0 pence per share. The PID element will be subject to deduction of a 20
per cent withholding tax unless exemptions apply (please refer to the Special
note below). The non-PID element will be treated as an ordinary UK company
dividend.
The following are the salient dates for the payment of the proposed final
dividend:
Thursday 6 May 2010
Sterling/Rand exchange rate struck
Friday 7 May 2010
Sterling/Rand exchange rate and dividend amount in SA currency announced.
Monday 17 May 2010
Ordinary shares listed ex-dividend on the JSE, Johannesburg
Wednesday 19 May 2010
Ordinary shares listed ex-dividend on the London Stock Exchange
Friday 21 May 2010
Record date for 2009 final dividend in London and Johannesburg
Wednesday 9 June 2010
Dividend payment day for shareholders
(Note: Payment to ADR holders will be made on 23 June 2010)
South African shareholders should note that, in accordance with the requirements
of Strate, the last day to trade cum-dividend will be Friday 14 May 2010 and
that no dematerialisation or rematerialisation of shares will be possible from
Monday 17 May to Friday 21 May 2010 inclusive. No transfers between the UK and
South African registers may take place from Thursday 6 May to Sunday 23 May 2010
inclusive.
PID Special note:
The following applies to the PID element only of the 2009 Final Dividend:
UK shareholders: For those who are eligible for exemption from the 20 per cent
withholding tax and have not previously registered for exemption, an HM Revenue
& Customs ("HMRC") Tax Exemption Declaration is available for download from the
"Investors" section of the Liberty International website
(www.liberty-international.co.uk), or on request to our UK registrars, Capita
Registrars: Validly completed forms must be received by Capita Registrars no
later than the Record Date, Friday 21 May 2010, otherwise the dividend will be
paid after deduction of tax.
South African and other non-UK shareholders: South African shareholders may
apply to HMRC after payment of the dividend for a refund of the difference
between the 20 per cent withholding tax and the UK/South African double taxation
treaty rate of 15 per cent. Other non-UK shareholders may be able to make
similar claims. Refund application forms for all non-UK shareholders are
available for download from the "Investors" section of the Liberty International
website (www.liberty-international.co.uk), or on request to our SA registrars,
Computershare, or HMRC. Refunds are not claimable from Liberty International,
the South African Revenue Service or other national authorities, only from the
UK's HMRC.
For South African shareholders, a helpline for questions relating to the
withholding tax is available until 31 July 2010 on 0861 100 915 (+27 11 373 0056
if calling from outside South Africa). Calls from within South Africa are
toll-free.
The above does not constitute advice and shareholders should seek their own
professional guidance. Liberty International does not accept liability for any
loss suffered arising from reliance on the above.
Chart 11 shows an analysis of CSC's top 10 properties. To view Chart 11, please
paste the following URL into the address bar of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
Chart 12 shows an analysis of Capital & Counties' key estates. To view Chart 12,
please paste the following URL into the address bar of your browser:
http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf
GLOSSARY
+----------------------------------------------------------------------------+
| Adjusted earnings per share (EPS) |
+----------------------------------------------------------------------------+
| Earnings per share adjusted to exclude non-recurring and valuation items |
| and related tax. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Adjusted, diluted net asset value per share (NAV) |
+----------------------------------------------------------------------------+
| NAV per share adjusted to exclude the fair value of derivative instruments |
| and related tax and deferred tax on capital allowances and |
+----------------------------------------------------------------------------+
| revaluation gains and to include any unrecognised post tax surplus on |
| trading properties. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Annual property income |
+----------------------------------------------------------------------------+
| The Group's share of passing rent plus the external valuers' estimate of |
| annual excess turnover rent, additional rent in respect of |
+----------------------------------------------------------------------------+
| unsettled rent reviews and sundry income such as that from car parks and |
| mall commercialisation. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Diluted figures |
+----------------------------------------------------------------------------+
| Reported amounts adjusted to include the effects of potential shares |
| issuable under convertible bonds and employee incentive |
+----------------------------------------------------------------------------+
| arrangements. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Earnings per share |
+----------------------------------------------------------------------------+
| Profit after tax divided by the weighted average number of shares in issue |
| during the period. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| EPRA |
+----------------------------------------------------------------------------+
| European Public Real Estate Association, the publisher of Best Practice |
| Recommendations intended to make financial statements of |
+----------------------------------------------------------------------------+
| public real estate companies in Europe clearer, more transparent and |
| comparable. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| ERV (estimated rental value) |
+----------------------------------------------------------------------------+
| The external valuers' estimate of the Group's share of the current annual |
| market rent of all lettable space net of any non-recoverable |
+----------------------------------------------------------------------------+
| charges, before bad debt provision and adjustments required by |
| International Financial Reporting Standards regarding tenant lease |
+----------------------------------------------------------------------------+
| incentives. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Interest cover ratio (ICR) |
+----------------------------------------------------------------------------+
| Net rental income less administration costs divided by the net finance |
| cost excluding the change in fair value of derivatives and any |
+----------------------------------------------------------------------------+
| exceptional finance costs. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| IPD |
+----------------------------------------------------------------------------+
| Investment Property Databank Ltd, producer of an independent benchmark of |
| property returns. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Interest rate swap |
+----------------------------------------------------------------------------+
| A derivative financial instrument enabling parties to exchange interest |
| rate obligations for a predetermined period. These are used by |
+----------------------------------------------------------------------------+
| the Group to convert floating rate debt to fixed rates. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Initial yield (EPRA) |
+----------------------------------------------------------------------------+
| Annualised net rent (after deduction of revenue costs such as head rent, |
| running void, service charge after shortfalls, empty rates and |
+----------------------------------------------------------------------------+
| merchant association contribution) on investment properties expressed as a |
| percentage of the gross market value before deduction of |
+----------------------------------------------------------------------------+
| theoretical acquisition costs, consistent with EPRA's net initial yield. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Initial yield to the Group |
+----------------------------------------------------------------------------+
| Annualised net rent (as initial yield (EPRA)) on investment properties |
| expressed as a percentage of the net market value, representing |
+----------------------------------------------------------------------------+
| the yield that would be foregone by the Group were the asset to be sold. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Like-for-like properties |
+----------------------------------------------------------------------------+
| Investment properties which have been owned throughout both periods |
| without significant capital expenditure in either period, so both |
+----------------------------------------------------------------------------+
| income and capital can be compared on a like-for-like basis. For the |
| purposes of comparison of capital values, this will also include |
+----------------------------------------------------------------------------+
| assets owned at the previous reporting period end but not throughout the |
| prior period. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Loan-to-value (LTV) |
+----------------------------------------------------------------------------+
| LTV is the ratio of attributable debt to the market value of an investment |
| property. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Net asset value (NAV) per share |
+----------------------------------------------------------------------------+
| Net assets attributable to equity shareholders divided by the number of |
| ordinary shares in issue at the period end. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Net rental income |
+----------------------------------------------------------------------------+
| The Group's share of net rents receivable as shown in the income |
| statement, having taken due account of non-recoverable charges, |
+----------------------------------------------------------------------------+
| bad debt provisions and adjustments to comply with International Financial |
| Reporting Standards regarding tenant lease incentives. |
+----------------------------------------------------------------------------+
+----------------------------------------------------------------------------+
| Nominal equivalent yield |
+----------------------------------------------------------------------------+
| Effective annual yield to a purchaser from the assets individually at |
| market value after taking account of notional acquisition costs |
+----------------------------------------------------------------------------+
| assuming rent is receivable annually in arrears, reflecting estimated |
| rental values (ERV) but disregarding potential changes in market |
+----------------------------------------------------------------------------+
| rents. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Occupancy rate |
+----------------------------------------------------------------------------+
| The passing rent of let and under offer units expressed as a percentage of |
| the passing rent of let and under offer units plus ERV of |
+----------------------------------------------------------------------------+
| un-let units, excluding development and recently completed properties and |
| treating units let to tenants in administration as un-let. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Passing rent |
+----------------------------------------------------------------------------+
| The Group's share of contracted annual rents receivable at the balance |
| sheet date. This takes no account of accounting adjustments |
+----------------------------------------------------------------------------+
| made in respect of rent free periods or tenant incentives, the |
| reclassification of certain lease payments as finance charges or any |
+----------------------------------------------------------------------------+
| irrecoverable costs and expenses, and does not include excess turnover |
| rent, additional rent in respect of unsettled rent reviews or |
+----------------------------------------------------------------------------+
| sundry income such as from car parks etc. Contracted annual rents in |
| respect of tenants in administration are excluded. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Property Income Distribution (PID) |
+----------------------------------------------------------------------------+
| A dividend by a REIT to its shareholders paid from tax-exempt profits of |
| its UK property rental business. These are generally subject |
+----------------------------------------------------------------------------+
| to UK withholding tax at the basic rate of income tax, although certain |
| classes of shareholder may qualify to receive the dividend gross. |
+----------------------------------------------------------------------------+
| The company can in addition make normal (non-PID) dividend payments which |
| are not subject to UK withholding tax. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Underlying profit before tax |
+----------------------------------------------------------------------------+
| Profit before taxation after excluding amortisation of intangible assets |
| and impairment charges, net valuation gains/losses (including |
+----------------------------------------------------------------------------+
| profits/losses on disposals), net refinancing charges and swap close out |
| costs. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Real Estate Investment Trust (REIT) |
+----------------------------------------------------------------------------+
| A listed property company which qualifies for and has elected into a tax |
| regime which exempts qualifying UK property rental income |
+----------------------------------------------------------------------------+
| and gains on investment property disposals from corporation tax. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Tenant (or lease) incentives |
+----------------------------------------------------------------------------+
| Any incentives offered to occupiers to enter into a lease. Typically |
| incentives are in the form of an initial rent free period and/or a cash |
+----------------------------------------------------------------------------+
| contribution to fit-out the premises. Under International Financial |
| Reporting Standards the value of incentives granted to tenants is |
+----------------------------------------------------------------------------+
| amortised through the income statement on a straight-line basis to the |
| earliest lease termination date. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Trading properties |
+----------------------------------------------------------------------------+
| Properties held for trading purposes and shown as current assets in the |
| balance sheet. |
+----------------------------------------------------------------------------+
| |
+----------------------------------------------------------------------------+
| Yield shift |
+----------------------------------------------------------------------------+
| A movement (usually expressed in basis points) in the nominal equivalent |
| yield of a property asset. |
+----------------------------------------------------------------------------+
+--------------------------------------------------------------------------+
| Background on Liberty International |
| |
| LIBERTY INTERNATIONAL PLC is the UK's third largest listed property |
| company and a constituent of the FTSE-100 Index of the UK's leading |
| listed companies. Liberty International converted into a UK Real Estate |
| Investment Trust (REIT) on 1 January 2007. |
| |
| Liberty International owns 100 per cent of Capital Shopping Centres |
| ("CSC"), the premier UK regional shopping centre business, and of |
| Capital & Counties, one of the UK's largest central London focused |
| property investment and development companies. |
| |
| At 31 December 2009, Liberty International owned GBP6.2 billion of |
| properties of which UK regional shopping centres comprised 74 per cent |
| and retail property in aggregate 89 per cent. Adjusted, diluted |
| shareholders' funds amounted to GBP2.9 billion. Assets of the Group |
| under control or joint control amounted to GBP8.4 billion at that date. |
| |
| CAPITAL SHOPPING CENTRES has interests in 13 UK regional shopping |
| centres amounting to 13.8 million sq.ft. in aggregate including 9 of the |
| UK's top 30 regional shopping centres with a market value of GBP4.6 |
| billion at 31 December 2009. CSC's largest centres are Lakeside, |
| Thurrock; MetroCentre, Gateshead; Braehead, Renfrew, Glasgow; Manchester |
| Arndale and St David's, Cardiff. |
| |
| CAPITAL & COUNTIES held assets of GBP1.6 billion at 31 December 2009, |
| GBP1.2 billion (3.5 million sq.ft.) located predominantly in west London |
| and the West End and GBP0.3 billion (2.6 million sq. ft.) located in |
| California, USA. Capital & Counties had GBP548 million invested in the |
| Covent Garden area including the historic Covent Garden Market, and a |
| further GBP242 million in London's West End, primarily through the Great |
| Capital Partnership, a joint venture with Great Portland Estates plc. |
| Capital & Counties owns the Earls Court and Olympia Group and 50 per |
| cent of the Empress State building in Earls Court amounting to aggregate |
| assets of GBP435 million. |
| |
+--------------------------------------------------------------------------+
---ENDS---
This information is provided by RNS
The company news service from the London Stock Exchange
END
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