Wrap Text
Audited Results for the Year Ended 31 December 2014
INTU PROPERTIES PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: ITU
27 FEBRUARY 2015
INTU PROPERTIES PLC
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014
David Fischel, Chief Executive of Intu Properties plc, commented:
"Intu's improved 2014 results demonstrate we are well positioned to benefit further from rising consumer
confidence and strengthening demand from retailers for quality space. As the UK's leading owner and
manager of prime regional shopping centres, we welcome over 400 million customer visits through our
centres each year and our clear focus on delivering outstanding customer experience under the intu brand is
proving a powerful factor in the successful performance of our centres. Following excellent acquisitions both
in the UK and Spain in the last few years, we also look to the organic growth opportunity from driving forward
our GBP1.9 billion development programme".
Enquiries:
Intu Properties plc
David Fischel Chief Executive +44 (0)20 7960 1207
Matthew Roberts Chief Financial Officer +44 (0)20 7960 1353
Adrian Croft Head of Investor Relations +44 (0)20 7960 1212
Public relations
UK: Justin Griffiths, Powerscourt +44 (0)20 7250 1446
SA: Frédéric Cornet, Instinctif Partners +27 (0)11 447 3030
A presentation to analysts and investors will take place at UBS, 1 Finsbury Avenue, London EC2 at 9.30GMT on 27 February 2015.
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 intugroup.co.uk.
A copy of this announcement is available for download from our website intugroup.co.uk.
Contents:
2014 Highlights
Strategic Review
Corporate Responsibility
Interview with the Chief Executive
Market Review
Financial Review
Key Risks and Uncertainties
Statement of Directors' Responsibilities
Financial Information
Investment and Development Property
Financial Covenants
Group Including Share of Joint Ventures
Underlying Profit Statement
Glossary
Dividends
NOTES TO EDITORS
Intu is the leading owner and manager of prime regional shopping centres in the UK.
A FTSE 100 company, Intu owns and operates many of the UK's biggest and most popular retail and leisure destinations, including
nine of the top 20, incorporating super-regional centres such as intu Trafford Centre, intu Lakeside and intu Metrocentre, together
with a number of city centre locations from Watford to Newcastle.
With over 21 million sq. ft. of space hosting top UK and international retailers from Apple to Zara, Intu centres attract some 400
million customer visits every year.
Intu has a UK investment pipeline of GBP1.3 billion over the next ten years. Major projects due to be underway soon include the
extension and refurbishment at intu Watford and leisure expansion at intu Lakeside.
Intu also has a growing presence in the Spanish market, owning two of Spain's top 10 centres: Parque Principado in Oviedo, and
Puerto Venecia in Zaragoza, with development options on a further four sites in Malaga, Palma, Valencia and Vigo.
intu creates a compelling experience for its customers, both on and offline, delivering on its brand promise to provide the most
digitally connected shopping centres, world-class service and events with a difference. National initiatives include the annual
"Everyone's Invited" event which in 2014 increased footfall that weekend by an average of 13 per cent year on year. As a result,
customers are coming more often and staying for longer, which in turn helps Intu's retailers to flourish.
Intu centres support almost 115,000 jobs across the UK, representing some 4 per cent of the UK's total retail workforce. Intu is fully
committed to supporting its local communities and the wider environment and has received widespread recognition for its Corporate
Responsibility achievements, including the coveted BitC CommunityMark.
This announcement contains "forward-looking statements" regarding the belief or current expectations of Intu Properties plc, its Directors and other
members of its senior management about Intu Properties plc's businesses, financial performance and results of operations. 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 Intu Properties 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, Intu
Properties plc makes no representation or warranty in relation to them and expressly disclaims any obligation to update or revise any forward-looking
statements contained herein to reflect any change in Intu Properties 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 Intu Properties 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.
2014 HIGHLIGHTS
Delivering improved returns
- property valuations increased 8.2 per cent (GBP648 million), outperforming the IPD monthly retail index which increased 7.3 per
cent
- total property return, as calculated by IPD, 13.1 per cent (2013 – 7.3 per cent)
- net asset value per share (diluted, adjusted) of 379 pence, giving a total financial return for the year of 17 per cent on the pro
forma opening net asset value per share of 335 pence
- underlying earnings per share 13.3 pence (H1 6.4 pence; H2 6.9 pence) (2013 – 13.7 pence(1) ) reflecting a reduction in like-for-
like net rental income of 3.2 per cent in the year
- signed 210 long-term leases for GBP34 million new annual rent at an average 5 per cent above previous passing rent
Significant corporate activity
- acquired two UK top 20 shopping centres, intu Merry Hill and intu Derby, along with Sprucefield retail park in Northern Ireland in
May 2014 for GBP855 million
- exchanged contracts in December 2014 to acquire a top 10 Spanish shopping centre Puerto Venecia, Zaragoza for €451
million. Acquisition completed in January 2015
- formed a joint venture at intu Uxbridge introducing an 80 per cent partner for GBP175 million, a small premium to the December
2013 book value
- debt financing activity of GBP2 billion; weighted average maturity over eight years
- cash and committed facilities of GBP671 million at 31 December 2014
Making the brand count
- active retailers on our transactional website, intu.co.uk, include John Lewis, Next and Topshop
- almost 40 per cent year-on-year increase in website visits in December 2014 to nearly three million, with an active marketing
database of almost two million individuals
- introduced Tell intu and customer service measurement, with the average Net Promoter Score increasing in the year
Development momentum
- development pipeline of GBP1.9 billion, GBP1.3 billion in the UK and GBP0.6 billion in Spain
- completed the remodelled food court at intu Lakeside, on site with the leisure extension at intu Potteries and mall refurbishment
and catering quarter at intu Victoria Centre
- on target to commence a major GBP110 million extension at intu Watford in 2015
Financial highlights (2)
Year ended 31 December
2014 2013
Net rental income (GBPm)(3) 397 370
Underlying earnings (GBPm) 162 140
Property revaluation surplus (GBPm)(3) 648 126
Profit for the year (GBPm) 600 364
Underlying EPS (pence) 13.3 13.71
Dividend per share (pence) 13.7 13.7(1)
As at 31 December
2014 2013
Market value of investment properties (GBPm)(3) 8,963 7,624
Net external debt (GBPm)(3) 3,963 3,698
NAV per share (diluted, adjusted) (pence) 379 346(1)
Debt to assets ratio (per cent)(3) 44.2 48.5
(1) Adjusted for rights issue bonus factor; 2 Please refer to Glossary for definition of terms; 3 Including Group share of joint ventures.
STRATEGIC REVIEW
Our Strategic review shows how we have performed in the year and how we are positioning ourselves to deliver on our strategy in
the future. Four key themes have shaped our performance in 2014. They are:
- delivering improved returns
- significant corporate activity
- making the brand count
- development momentum
Delivering improved returns
Total property return has increased in 2014 as yields compressed and rental values started to improve.
Valuation
The aggregate like-for-like market value of our investment property increased by 8.2 per cent in the year, outperforming the IPD
monthly retail index (up 7.3 per cent) as we have in each of the last five years. This contributed to a total property return of 13.1 per
cent.
Chart 1 – Intu's Capital Value Movements
[GRAPHIC REMOVED – PLEASE SEE PAGE 4 OF FULL ANNOUNCEMENT WHICH CAN BE FOUND AT INTUGROUP.CO.UK]
The weighted average nominal equivalent yield at 31 December 2014 was 5.32 per cent, a reduction of 47 basis points in the year,
reflecting market conditions and our ongoing asset management initiatives maintaining the prime and resilient nature of our assets.
Based on the gross portfolio value, the net initial yield ‘topped-up' for the expiry of rent free periods was 4.60 per cent.
The like-for-like change in ERV was in line with the IPD benchmark with a further marginal increase in the second half of 2014.
Full Second First
year half half
2014 2014 2014
Group revaluation surplus – like-for-like +8.2% +1.0% +7.6%
IPD* capital growth +7.3% +3.7% +3.5%
Group weighted average nominal equivalent yield 5.32% 5.32% 5.35%
Like-for-like change in Group nominal equivalent yield -47bp -3bp -44bp
IPD* equivalent yield shift -56bp -26bp -30bp
Group ‘topped-up' initial yield (EPRA) 4.60% 4.60% 4.66%
Group change in like-for-like ERV +0.3% +0.1% +0.2%
IPD* change in rental value index +0.3% +0.4% -0.1%
* IPD monthly index, retail.
In general the super-regional centres continue to outperform with stronger valuation surpluses from yield compression and
improvement in rental values. In the case of Intu, yield compression was mostly seen in the first six months of 2014 based on
transactional evidence. The larger city centre locations have seen smaller positive movements, but there has been limited read-
across to date in the smaller centres. Notable changes in individual valuations include:
Market value Surplus/(deficit)
31 December 31 December
2014 2013
GBPm GBPm GBPm %
intu Trafford Centre 2,200 1,900 300 16%
intu Lakeside 1,255 1,125 123 11%
intu Metrocentre 928 885 38 4%
intu Merry Hill 435 – 271 7%
St David's, Cardiff 308 272 38 15%
Manchester Arndale 430 399 30 7%
1
intu Derby 420 – 29 8%
intu Milton Keynes 278 251 26 10%
intu Victoria Centre 314 306 (22) (7)%
Parque Principado 82 1432 14 21%(3)
Others including non like-for-like 2,313 2,343 45 –
Investment and development property
including Group's share of joint ventures 8,963 7,624 648 8%
(1) Since acquisition on 1 May 2014; 2 Treated as subsidiary at 31 December 2013; 3 Based on local currency.
- intu Trafford Centre has benefited from the strong yield improvement seen on super-regional centres and an increase in the
headline rents as a result of evidence from new lettings
- intu Lakeside has benefited from the strong yield improvements on super-regional centres and the completion of the food court
development
- intu Metrocentre has benefited from the strong yield improvement on super-regional centres, but short-term income reductions
in parts of the centre about to undergo redevelopment have affected the overall valuation
- intu Merry Hill has benefited from increases in rental tone evidenced by new lettings since acquisition
- St David's, Cardiff and Manchester Arndale have both benefited from the yield improvement seen in larger city centre shopping
centres with small improvements in rental tone
- intu Derby has benefited from increases in the rental tone, with some yield improvement
- intu Milton Keynes has benefited from the yield improvement seen in larger city centre shopping centres
- intu Victoria Centre has been affected by the short-term income reduction and accrued development expenditure of the ongoing
refurbishment work, with the improvement in yield partially offsetting this reduction
- Parque Principado, Oviedo, has benefited from improvements in yield as investor interest for the best Spanish assets has
increased
Operating metrics
2014 2013
Occupancy 95% 95%
– of which, occupied by tenants trading in administration 1% 1%
Leasing activity – number, new rent 210, GBP34m 201, GBP42m
– new rent relative to previous passing rent +5% +4%
Like-for-like change in net rental income –3.2% –1.9%
Total property return +13.1% +7.3%
Footfall +0% –2%
Retailer sales (like-for-like centres) +2.5% +0%
Rent to estimated sales (exc. anchors and major space users) 12.5% 13.5%
Customer metrics 2014
Estimated dwell time (super-regional) 2 hrs 11 mins
Customer visits (annualised) 400m
Average customer visits per centre 21m
Shopping centre space 21m sq ft
Estimated retailer sales GBP5.5bn
- Occupancy remains firm at the 95 per cent level at which we have operated for most of the year and compares favourably to
PMA's vacancy measure for ‘big shopping centres' of 11 per cent
- Like-for-like net rental income was 3.2 per cent lower in 2014 than 2013, with a narrower 2.8 per cent decrease in the second
half. Income interruption from centre redevelopments accounted for approximately one percentage point of the shortfall, in
particular at intu Victoria Centre and intu Eldon Square. Tenants failing in late 2012 and early 2013 still impacted the first half of
2014, their total impact in 2014 being around one percentage point. The balance of the shortfall was around concentrations of
lease expiries at intu Braehead and intu Potteries.
Chart 2 – Change in Like-For-Like Net Rental Income
[GRAPHIC REMOVED – PLEASE SEE PAGE 6 OF FULL ANNOUNCEMENT WHICH CAN BE FOUND AT
INTUGROUP.CO.UK]
- We agreed 210 new long-term leases in the year, amounting to GBP34 million new annual rent, at an average of 5 per cent
above previous passing rent (like-for-like units) and in line with valuers' assumptions, excluding one strategic leisure letting.
Significant activity in the year includes:
- 58 catering lettings, including Five Guys at intu Trafford Centre, intu Lakeside and intu Metrocentre, Chiquito at intu
Metrocentre, intu Potteries and intu Uxbridge, Coast to Coast at intu Trafford Centre, intu Metrocentre and intu Victoria
Centre and Carluccio's in newly converted space at intu Bromley. Catering and leisure account for 11 per cent of the rent
roll, with a significant increase in the development pipeline
- new brands to individual centres include Superdry and a full-line River Island at intu Victoria Centre, one of Dutch retailer
Hema's first UK stores at intu Bromley, MAC at intu Lakeside, intu Bromley and St David's, Fat Face at intu Watford and intu
Trafford Centre, and Jack Wills at intu Trafford Centre
- previously online only brands creating a physical presence, including a first store for an intu.co.uk retailer, Watch
Warehouse, at intu Watford, a pop-up for Ratchet at intu Lakeside and two new Simply Be stores at intu Chapelfield and intu
Merry Hill
- 275 new shops opened or refitted in our centres in 2014, around 9 per cent of our 3,100 units. Tenants have invested
around GBP90 million in these stores, a significant demonstration of their commitment to our centres. As well as major
flagship store investments, like River Island at intu Metrocentre, JD Sports introduced their new concept shopfit at intu
Trafford Centre, intu Watford and intu Chapelfield
- At the property level, the total return from Intu's portfolio was 13.1 per cent (2013 – 7.3 per cent). The combination of capital
value increases and broadly stable income demonstrates the strength of Intu's assets over the medium and long term
- The number of visitors to our centres has increased marginally year-on-year in 2014, representing an outperformance of
Experian's measure of UK national retail footfall which declined 1 per cent
- Estimated retailer sales in our centres were up 3.1 per cent in the second half of 2014 giving a year-on-year increase of 2.5 per
cent. The ratio of rents to estimated sales for standard units reduced in the year to 12.5 per cent, continuing the trend of the
previous few years
- The difference between annual property income (see Glossary) of GBP436 million and ERV of GBP515 million represents
GBP42 million from vacant units and reversion of GBP37 million, 8 per cent, from rent reviews and lease expiry. Of the GBP37
million, GBP5 million relates to reversions only realisable on expiry of leases with over 10 years remaining (for example anchor
units), leaving GBP32 million, 7 per cent, from other lease expiries and rent reviews
- The lease expiry cycle can bring risk to short-term earnings depending on the volume in a specific centre and when the expiries
fall in the economic cycle, but it also provides the opportunity to introduce, reposition and right-size tenants, improving the
tenant mix. This year we have seen a significant concentration at intu Braehead and intu Potteries. Chart 3 shows the pattern
of lease expiries across the portfolio, with a weighted average unexpired lease term of 7.4 years (31 December 2013 – 7.5
years).
Chart 3 – Lease Expiry Profile
[GRAPHIC REMOVED – PLEASE SEE PAGE 7 OF FULL ANNOUNCEMENT WHICH CAN BE FOUND AT INTUGROUP.CO.UK]
Significant corporate activity
We have undertaken significant corporate activity in 2014 and we believe that our scale and focus is key to our successful
development and operation of prime regional shopping centres. This year we have further consolidated our position in the UK,
acquiring two top 20 centres. In Spain, with the completion of the Puerto Venecia acquisition in January 2015, we now own two top
10 centres which along with the sites we have under option in other key locations position us well to build scale there along similar
lines to our approach in the UK.
UK acquisitions
In May we completed our purchase of interests in two prime UK shopping centres, intu Merry Hill and intu Derby, and Sprucefield
retail park, Northern Ireland, funded by a two for seven rights issue raising GBP500 million (gross) and GBP424 million of new debt
facilities secured on the properties. The final consideration was GBP855 million. We have identified multiple growth opportunities
which reinforce our investment case.
The acquisition was in line with our strategy to focus on the UK's most successful destinations. Such assets are rarely traded, so it is
important to move decisively where opportunities arise to acquire interests, particularly where our operator skills can be applied
through our specialist asset and property management teams. The transaction also established a joint venture with QIC, a major
global investor, at intu Merry Hill. It strengthened Intu's position as the leading owner, developer and manager of prime UK shopping
centres, filled a gap in our national coverage and extended the footprint of our nationwide consumer facing brand.
Since completion we have:
- rebranded the two centres with new signage, websites and World Class Service training for the teams. The intu brand has been
welcomed at both centres
- strengthened our local asset management and operational capabilities
- started work on detailed asset management plans with initial leasing activity positive to acquisition valuations
- at intu Merry Hill, been encouraged by initial discussions with key retailers about opportunities to upsize their presence in the
centre
- at intu Derby, through our early letting activity, increased the zone A rents from GBP110 to GBP125
- at Sprucefield, started the process of unlocking the development potential of this well-located site
New joint venture
In June we entered into a partnership in respect of intu Uxbridge with Kumpulan Wang Persaraan (Diperbadankan) (KWAP), the
GBP19 billion Malaysian pension fund. This transaction established a relationship with another significant overseas investor and
demonstrated the investment demand for prime UK shopping centres under the management of a specialist operator such as Intu.
KWAP acquired an 80 per cent interest in intu Uxbridge for GBP175 million, representing a 2 per cent premium to its 31 December
2013 valuation of GBP214 million (100 per cent basis). We retain a 20 per cent interest and continue to manage the centre under
the intu brand on behalf of the joint venture. The transaction is a useful step in recycling capital into our substantial development
pipeline while retaining the scale of our operations and has a deal structure which could be applicable to other assets.
Spanish acquisitions
In December we exchanged contracts to acquire the Puerto Venecia shopping centre and retail park in Zaragoza, Spain for €451
million. Eurofund, our development partner in Spain, was closely involved in the original development of this 200,000 sq. m.
shopping resort. The centre, which opened in 2012, offers a mix of retail, leisure and restaurants and was recognised by MAPIC in
2013, winning the best worldwide retail and leisure development. This is the template for our shopping resort developments in
Spain.
The acquisition, which completed in January 2015, is funded by a 50 per cent loan to value bridging loan which we can exchange for
a five-year term loan secured on the asset. The balance of the consideration has been met from our existing resources. In 2015 we
will be looking to introduce an investment partner into Puerto Venecia.
The acquisition is expected to be earnings accretive and, following last year's successful acquisition of Parque Principado, Oviedo, is
another high-quality addition for the Group, taking our ownership to two of the top 10 shopping centres in Spain. The transaction
substantially accelerates our activities in Spain, which is a country where we see major opportunities for the type of genuinely
regional destination centre in which Intu specialises.
As we highlighted in October 2013, when we acquired Parque Principado, the Spanish shopping centre market offers opportunities
to create a quality business of scale which has the potential to generate superior total returns over the medium term.
Similar to our approach in the UK, our aim is to be the leading owner, developer and manager of regionally pre-eminent shopping
centre destinations for the major trade areas of Spain. Eighty per cent of the country's retail expenditure comes from 10 key
catchment areas.
Ownership of the largest Spanish shopping centres is fragmented and many regions do not have a pre-eminent retail and leisure
destination. The committed pipeline of prime shopping centre developments across Spain is at a low level and we believe the
opportunity exists to develop and build new schemes in a number of key regions of Spain.
We also have development options on sites in Malaga, Palma, Valencia and Vigo. It is our intention, subject to shareholder
approval, to exercise the Malaga option in March 2015. We are working to bring the other developments forward to the point where
we can consider exercising the options. We believe such expansion will be beneficial to the Group's overall brand and digital
positioning.
Refinancing activity
Throughout 2014 we have continued to take advantage of the favourable debt markets to refinance the Group's near-term debt.
Through a mix of term loans and long-dated bonds, financed in the last two years, we have, since 2012, increased the tenor of the
debt by two years to eight years whilst reducing the cost of debt to 4.7 per cent. With debt to assets at 44 per cent and available
facilities of GBP671 million we are well positioned to continue with our strategy in Spain and our UK development pipeline.
See Financial review for more details.
Making the brand count
Scale is important and the establishment of the intu brand further enhances our competitive advantage. Our customers are at the
heart of everything we do and providing them with compelling experiences that surprise and delight drives loyalty and in turn dwell
time and spend. This customer focus also ensures that we establish enduring relationships with our retailers.
Brand
When we rebranded in early 2013 we orientated every aspect of our business around the customer experience in our centres. Since
then we have brought more services in-house to ensure we manage every step of the customer experience. A customer visit may
start by looking on intu.co.uk, followed by visiting the centre which offers top-quality retail, with all the major brands present in our
centres, dining and leisure options and national promotional activities. All our staff are trained to the same high standards in
customer service, with the commitment of the intu brand ensuring equivalent standards across all of our centres.
Over half of the UK's population visit an intu centre at some point through the year on or offline.
We have seen an increase in brand recognition which allows us to deliver events and promotions on a national basis. Events in 2014
included Elephant Parade, Everyone's Invited and Student Night. Elephant Parade's national tour visited all intu centres and raised
awareness for The Asian Elephant Foundation as well as entertaining shoppers. Everyone's Invited brought a festival of family fun
to the centres, increasing footfall by 13 per cent year-on-year for that weekend. Promotional partners and commercialisation clients
now recognise our national proposition combined with a multichannel approach and we are seeing a growth in multicentre
campaigns including the use of our intu.co.uk website.
All staff continue to take part in our World Class Service training which is the only national shopping centre programme accredited by
the Institute of Customer Service. To measure the impact of our brand approach we launched Tell intu this year which provides the
Net Promoter Score of centres monthly. The average score has increased from 46 when we launched it in March to 60 over the
Christmas period. Our research, which confirms that happy customers stay longer and spend more, has given considerable impetus
to delivering a number of service improvements.
On the digital side, we have now introduced free Wi-Fi into nearly all of our centres, investing in our own infrastructure rather than
outsourcing. Over 1.5 million people have registered with around 60 per cent opting in to receive marketing information. Along with
registrants on the website, our marketing database now has almost two million active users. Owning the infrastructure allows us to
control this marketing and manage the customer experience.
We enhanced intu.co.uk in September 2014. It is now fully mobile responsive with improved content and an expanded shopping
proposition. Through our affiliates programme most of our major retailers are now on our transactional website, including for
example, John Lewis, Next and Topshop, allowing us to offer shoppers their centre online 24 hours a day. The benefits of these
changes can be seen in the website traffic, with a year-on-year increase of almost 40 per cent in website visits in December 2014, to
nearly 3 million.
Scale
As we discuss in the Market review, the face of retail continues to change with retailers needing to be in the best shopping locations.
Our scale positions us as a key landlord to retailers with nine of the top 20 shopping centres in the UK.
Over the past four years we have expanded significantly with the portfolio now valued at GBP9.0 billion, almost doubling over the
period through the addition of some of the top centres in the UK as well as value creation in our existing centres.
Our scale allows us to benefit from a wealth of experience and knowledge and apply best practice across all the centres. With one
website, intu.co.uk, we can market all the centres more efficiently to a national audience and attract customers to stay for longer and
visit more often.
All of our 18 UK centres exceed 10 million visits each year and the busiest exceeds 40 million.
Over the last few years we have demonstrated that we will not compromise on quality for the sake of improvements in the short-term
occupancy level. This gives retailers confidence in the long-term attractiveness of the centres. We aim to ensure that our mix of
tenants is what the customer wants and that the retailers are appropriately located to maximise their returns.
Development momentum
We have made significant progress in the year with our pipeline of development opportunities:
- completed the active management projects at intu Lakeside (food court), intu Eldon Square (mall upgrade) and intu Metrocentre
(Platinum Mall)
- on site at intu Victoria Centre (mall refurbishment and creation of 12 new restaurants) and intu Potteries (cinema and catering
extension), with both projects due to be completed in the second half of 2015
- about to commence work on catering developments at intu Eldon Square, intu Metrocentre and intu Bromley
- engaged the main contractor at Charter Place, Watford and expect to be on site later in 2015
- received town centre status and planning approval for an extension at intu Braehead
We can finance our GBP1.9 billion pipeline through three main routes:
- available facilities within the business as we have further improved our financial flexibility in 2014 by refinancing much of the
debt which was due to mature in the next few years. At the end of 2014 we had cash and available facilities of GBP0.7 billion
- the major developments are likely to be spread over a number of years. We intend to raise development finance where
appropriate and additional finance from the value created by completed developments to reinvest in the next project
- recycling capital from other assets to reinvest into these growth opportunities at the point where they will deliver superior
returns. This may include introducing partners as we did at intu Uxbridge in 2014
In the case of major extensions and creation of significant new or reconfigured space, we aim to have agreed terms with a sufficient
level of tenants including strategic pre-lets before proceeding with construction.
For expansionary projects which create additional space for which direct incremental rent can be identified, we would expect most
projects to generate a stabilised initial yield on cost in the range of 6 to 10 per cent and a minimum of 7 per cent for major projects.
Where no significant additional space is created, we assess project return in the context of an internal rate of return based on the
anticipated overall impact of the expenditure on centre performance through enhancing the ambience, the tenant mix and the rental
tone.
UK Cost to
planning New space Indicative completion
Description approved (sq. ft. 000)(1) timing(2) GBPm(3)
Committed
intu Victoria Centre Refurbishment and restaurants(4) X – 2015 13
intu Potteries Leisure extension(5) X 60 2015 13
intu Watford Charter Place pre-development X – 2015 3
intu Eldon Square Restaurant development X – 2015-2016 12
intu Metrocentre Restaurant development X – 2015-2016 16
intu Bromley Queens Gardens X 14 2015-2016 4
Other committed projects(6) X 2015-2017 20
81
Active management pipeline
intu Lakeside Hotel X 40 2015-2016 7
intu Bromley Boutique cinema and restaurants X 20 2016-2017 9
intu Trafford Centre Barton Square courtyard enclosure X 112 2016-2018 45
intu Merry Hill Reconfigurations – 2015-2018 20
Other active management projects(6) 2015-2019 156
237
Major extensions
intu Watford Charter Place extension X 380 2015-2017 106
intu Broadmarsh Redevelopment 50 2016-2018 70
intu Lakeside Leisure extension X 225 2016-2019 95
intu Lakeside Retail extension X 440 2017-2019 180
Cribbs Causeway Retail and leisure extension 380 2019-2021 105
intu Braehead Retail and leisure extension X 475 2020-2022 200
intu Victoria Centre Retail and leisure extension X 500 2020-2022 225
981
Total UK 1,299
Spain developments(7)
Malaga Shopping resort 2015-2018 170
Valencia Shopping resort 2019-2020 280
Palma or Vigo Shopping resort 2021-2022 115
Total Spain 565
Total 1,864
(1) Represents net additional floor space of retail, catering and leisure.
(2) Timing subject to change due to a number of internal and external factors.
(3) Represents Intu's share of costs.
(4) Total project costs of GBP42 million of which GBP29 million has already been spent.
(5) Total project costs of GBP19 million of which GBP6 million has already been spent.
(6) Smaller committed and pipeline projects do not necessarily involve the creation of additional floor space.
(7) Represents Intu's share of costs assuming a joint venture partner introduced.
Principal projects include:
- intu Victoria Centre: GBP42 million development of a restaurant quarter and significant refurbishment of intu Victoria Centre is
underway. This project has already reignited interest from retailers, with new lettings to Urban Outfitters, Superdry and River
Island. Pre-lets on the restaurant quarter are approaching 50 per cent, including Tortilla, Ed's Easy Diner, Coast to Coast and
Handmade Burger Co.
- intu Potteries: GBP19 million, 60,000 sq. ft. leisure extension is under construction and due to open in the second half of 2015.
The leases for the nine screen Cineworld cinema and six new restaurants are all exchanged, bringing Nando's, Frankie &
Benny's, Pizza Express, GBK, Coast to Coast and Chiquito to the centre's line up
- intu Metrocentre: GBP18 million extension to the ‘Qube' dining area adjacent to the Imax Odeon cinema, creating 11 new
restaurants. Pre-lets at over 50 per cent including Five Guys, Chiquito, T.G.I. Friday's and Coast to Coast, with another 25 per
cent in solicitors' hands. We have commenced work for openings in early 2016
- intu Eldon Square: GBP25 million dedicated catering destination ‘Grey's Quarter', reconfiguring 80,000 sq. ft. of outdated retail
space to over 20 restaurants. Over 50 per cent is exchanged or in solicitors' hands and we anticipate work to commence on the
project in the first half of 2015
- intu Watford: GBP110 million, 380,000 sq. ft. extension to create a new shopping, dining and entertainment hub for Watford.
Cineworld have exchanged contracts to be the anchor cinema operator and we now have offers on over 50 per cent of the units
by rent. We have engaged the main contractor and, subject to pre-letting, we anticipate that works will be under way this year
with a target for completion in 2017. We project stabilised initial yield on cost of 7.1 per cent
- Malaga: €425 million, 175,000 sq. m. shopping resort development situated on the main Costa del Sol highway. Engagement
with key retailers has indicated a strong interest in the development. We intend, subject to shareholder approval, to exercise the
option in March 2015. The expected stabilised initial yield on costs for the project is over 7 per cent
CORPORATE RESPONSIBILITY
Our corporate responsibility approach is based on three pillars of communities and economic contribution, environmental efficiency
and relationships with our stakeholders.
In 2014 we reached the target of reducing our carbon emissions by 30 per cent compared with 2011 (like-for-like portfolio adjusted
for occupancy). We also diverted over 97 per cent of waste away from landfill, recycled 69 per cent of waste and reduced water use
by 2 per cent compared with 2011.
Our outstanding and sustained performance in energy efficiency was recognised by the Carbon Trust, which awarded us the ‘Best in
continuing carbon reduction' award at the Standard Bearers Awards. The award recognises the challenging 30 per cent reduction
target we set ourselves and the work we have done to achieve this since 2011.
Once again in 2014 we were accredited with the BitC CommunityMark, one of only 52 UK companies to receive the award. The
CommunityMark is a national standard that publicly recognises leadership and excellence in the community.
In our joint community projects we work with local partners to help disadvantaged young people into work. During 2014, we worked
with nine community partners delivering 21 projects at our centres. These projects have directly reached over 1,200 people.
We continue to be included in FTSE4Good and the Dow Jones Sustainability Global Index and we were awarded the Green Star by
GRESB. We have also received a gold ranking in the Mayor of London's Business Energy Challenge for our two centres in Greater
London and our head office.
INTERVIEW WITH THE CHIEF EXECUTIVE
You have a GBP1.3 billion pipeline of developments in the UK. How fast can we expect to see these developments and how
will you fund them?
The development pipeline can be split into active management projects and major extensions. We have several ongoing active
management projects, such as the leisure extension at intu Potteries and the refurbishment and restaurant quarter at intu Victoria
Centre, both of which will be completed in the second half of 2015. We will also be commencing three other restaurant projects in
the next few months. All these projects can be funded from our existing facilities.
intu Watford is our most advanced major extension with planning approved, the anchor cinema let and over 50 per cent of the
expected rent under offer. We anticipate beginning construction this year. The catalyst for our other extensions, the majority of
which have planning approved, will be the required level of tenant interest.
We should not need additional equity to finance these projects. We can finance the extensions from existing available facilities,
raising debt against the value created from completed developments and recycling capital from other assets to reinvest into these
growth opportunities, including introducing partners into existing assets. The major developments are likely to be spread over a
number of years so the proceeds from financing a completed project can be used to help finance the next one.
You have recently acquired a second centre in Spain. Why is Spain such an attractive market for you and why do you think
you can replicate your strategy there?
Spain has very attractive market dynamics with an economy moving out of recession and a sophisticated consumer and retail
market, but a retail sector where ownership of the regional shopping centre market remains highly fragmented and without a large
committed pipeline of new centres. It is a country where we see major opportunities for us to broaden our presence and further
strengthen our position in the market. We believe such expansion will be beneficial to our overall brand and digital positioning.
The country holds huge potential for the creation of genuinely regional destination centres in which we specialise. Eighty per cent of
Spain's retail expenditure comes from 10 key catchments and we aim to be the leading owner, developer and manager of regionally
pre-eminent shopping centre destinations for a significant number of those key areas.
The acquisition of Puerto Venecia in early 2015, after the successful acquisition of Parque Principado in 2013, substantially
accelerates our activities in Spain.
We also have development options on sites in Malaga, Palma, Valencia and Vigo. It is our intention, subject to shareholder
approval, to exercise the Malaga option in March 2015. We are advancing the other sites to the point where we can consider
exercising the options.
You have had a year of negative like-for-like net rental income. What specific actions are you taking to address this and
when can we expect to see a turnaround?
Over the last three years we have successfully repositioned the Group so that we are now well placed to benefit from the improved
confidence of shoppers and retailers. Rather than chasing a target level of occupancy throughout this period, we have instead
concentrated on being selective and ensuring that we have the right tenants in the right space. This means we have not
compromised on the quality of the tenant mix and have maintained or improved the tone of the rents in our prime centres.
While our results still reflect a lingering impact from the administrations of late 2012 and early 2013, it is clear that this active asset
management strategy is starting to pay off. For example, in the case of Republic, we took back all the units rather than let them at
potentially lower rents to tenants who did not fit our desired retail mix. It took a year, but all of these units are now relet to top-quality
brands, such as Hugo Boss, White Stuff, Superdry and Footasylum, at rents in line with the previous passing rent.
The remaining elements of the like-for-like net rental income shortfall in 2014 can be split into two areas. First, with our ongoing
active management projects, in particular at intu Victoria Centre, we had to remove units from generating income while we
reconfigured the centre to maximise rental potential on completion of the project. Secondly, there was a concentration of lease
expiries at intu Braehead and intu Potteries this year. We repositioned key tenants, as we illustrated last year, and have now
addressed the majority of the expiries but have operated with a higher vacancy level in these centres as a result.
Like-for-like net rental income is an important measure, but total property return, the combined income and capital return,
encompasses everything we do and is the overall measure on which we focus. Over the past five years, our annualised total
property return of 9.9 per cent per annum outperformed the IPD UK quarterly retail benchmark of 9.2 per cent.
intu is the only national shopping centre brand. What value does this bring and what evidence of success do you have two
years after the brand was launched?
Intu is one of the UK's biggest retail landlords, and focused on providing a great experience for millions of UK shoppers with,
according to our estimates, over half of the UK's population visiting an intu centre every year.
Our shoppers are at the heart of everything we do and providing them with compelling experiences also ensures that we establish
enduring relationships with our retailers. Our brand enables us to offer scalability to retailers and the size of the Group also helps to
support the brand. Our national brand enables us to deliver experiences and events for the customer that ownership of a single
centre could not, such as the Everyone's Invited family-friendly weekend of events in all our centres which increased footfall for the
weekend year-on-year by around 13 per cent.
Our staff offer an unparalleled service and our digital platform gives customers access to brands in our centres 24 hours a day. Our
online presence is growing rapidly with nearly three million visits to intu.co.uk in December 2014, a year-on-year increase of almost
40 per cent. Our active marketing database is almost two million strong and in 2015 we will focus on developing opportunities for
more regular engagement and, importantly, increased monetisation.
Our scale as owner of nearly half of the top 20 shopping centres in the UK means that we have a strong presence offering key entry
points in the areas where retailers need to be. We recognise that we are competing with other attractions, not just shopping, for our
customers' time and money and need to offer an attractive product on a national basis.
What are your strategic priorities for 2015?
Our focus in 2015 will be on four main goals which we believe will result in strong total returns over the medium term:
- optimising performance of existing assets with the delivery of like-for-like net rental income growth in 2015 and attractive total
property returns
- driving forward the GBP1.3 billion investment programme in UK assets
- making the brand count and demonstrating the benefits of scale
- seizing the growth opportunity in Spain, building on the progress in the last three years
MARKET REVIEW
The investment market is the strongest it has been for some years and we are seeing an upturn in the occupier market, but we are
constantly aware of the evolving demands of the retail market.
Investment market
The weight of money in the retail property market has remained strong and, with the increased availability of debt, has heightened
demand and resulted in downward pressure on yields. The value of UK shopping centre investment transactions in 2014 was the
highest for eight years and well above the long-term yearly average.
Shopping centre development is at low levels offering limited new supply. The majority of activity is focused on extensions and
reconfigurations. The UK supply of new space in the year has declined by 75 per cent, from the peak in 2008, setting the stage for
increased occupancy and robust rental growth.
Occupier market
The UK economy showed signs of continued improvement in 2014, with two full years of quarterly GDP growth and consumer
confidence increasing through the year. This has been supported by an increase in the UK average household disposable income
with the Asda benchmark index showing a rise of 9 per cent over the year. The economy is starting to see year-on-year wage
growth outpacing inflation and a lower oil price, which should give consumers a greater level of disposable income going into 2015.
Consumer spending has also continued to increase with higher like-for-like non-food retail sales reported by the BRC throughout
2014, aggregating to 2.7 per cent for the year.
Retailer administrations in 2014 were at the lowest level since 2010, according to the Centre for Retail Research, with Phones 4U
and La Senza being the largest. They both closed all stores and accounted for approximately 1 per cent of Intu's rent roll. Since the
year end, two multibrand fashion retailers, Bank and USC, have entered administration, but continue to trade and account for
approximately 1 per cent of the rent roll.
Changing face of UK retail
Online sales continue to grow, with the Office of National Statistics estimating that, on average, 11.2 per cent of sales were
conducted online in 2014, an increase from 10.4 per cent in 2013. Retailers need to offer a multichannel approach with shoppers
now expecting consistent pricing and service across the physical store and online.
The UK's most successful brands have generally developed a multichannel offer and understand the power of the physical store in
their strategy. As well as a profitable location in its own right, the store can also function as a showroom for the product or a
distribution location for their online sales. More and more, retailers note that online customers are opting to click and collect,
allowing the retailer to minimise their distribution costs and enhance sales through further purchases once in store.
As well as established physical retailers reviewing their portfolios to have space in the best retail locations, several online retailers
are now seeing the need for a physical presence to improve their sales and marketing, with the likes of Simply Be building up a store
network in key locations. Retailers need fewer stores to cover the UK population than 20 years ago but increasingly need to focus
on prime destinations.
Our focus has been to further enhance our centres as day-out family-friendly destinations offering unrivalled shopping, leisure and
catering, supported by intu.co.uk and other digital and marketing opportunities. This has positioned us well to benefit from these
changes.
Outlook
The retail sector has been changing at a rapid pace and change is likely to continue in 2015 as the UK economy continues to
strengthen. The outlook for retail spending in 2015 is positive due to a combination of low inflation, reviving growth in earnings and
resilience in the labour market, indicating that households' real disposable income should increase over the course of the year.
We are strongly positioned to take advantage of increased demand from retailers. The supply of new space is limited. In 2008, a
record year, over 8 million sq. ft. of new shopping centre space was built in the UK. Levels fell with an all-time low in 2014 and even
by 2019 the supply is only expected to have reached around 3 million sq. ft.
Across the sector we are expecting to see a focus in 2015 on improving the customer experience, with seamless multichannel
engagement and an increasing sense of personalisation, showrooming and convenience. We believe that our active asset
management and unique focus on creating the best possible customer experience will enable us to emerge as the leader of this
trend among retail landlords.
We recognise that the influence of digital technology will continue to dominate tactical and strategic decision-making across the
industry. At Intu, we see the rise of multichannel retail – online, in-store, click and collect – as an opportunity rather than a threat.
We have always striven to be at the forefront of technological advances and 2015 will be no different as we begin to develop further
ways to utilise data gathered from our digital network.
TOP PROPERTIES
Annual Headline
Market Size % Number Property rent ABC1
value (sq. ft. 000) ownership of stores Income ITZA customers Key stores
Super-regional centres
1 intu Trafford Centre GBP2,20 1,973 100% 233 GBP86. GBP41 65% Selfridges, John Lewis, Next,
0m 9m 5 Superdry, Hollister, Apple, Kurt
Geiger, Ted Baker, Banana
Republic, Nespresso, Forever 21,
Victoria's Secret, Odeon Cinema,
Legoland Discovery Centre, H&M,
Hamleys, Marks & Spencer
2 intu Lakeside GBP1,25 1,435 100% 251 GBP59. GBP35 72% House of Fraser, Debenhams,
5m 7m 0 Marks & Spencer, Hugo Boss,
Topshop, Zara, Primark, Forever
21, Guess, Vue Cinema
3 intu Metrocentre GBP928 2,085 90% 344 GBP46. GBP30 55% House of Fraser, Marks &
m 8m 0 Spencer, Debenhams, Apple,
H&M, Topshop, Zara, Primark,
River Island, Odeon Cinema
4 intu Braehead GBP599 1,136 100% 121 GBP25. GBP25 62% Marks & Spencer, Primark, Apple,
m 5m 0* Next, H&M, Topshop, Hollister,
Superdry, Sainsbury's
5 intu Merry Hill GBP435 1,671 50% 264 GBP23. GBP15 43% Marks & Spencer, Debenhams,
m 1m 0 BHS, Primark, Sainsbury's, Next,
ASDA, Boots, H&M
6 Cribbs Causeway GBP243 1,075 33% 153 GBP12. GBP30 76% John Lewis, Marks & Spencer,
m 6m 5 Apple, Next, Topshop, Timberland,
Jigsaw, Hobbs, Hugo Boss, H&M
In-town centres
7 Manchester Arndale GBP430 1,600 48% 249 GBP21. GBP25 57% Harvey Nichols, Apple, Burberry,
m 7m 0 LK Bennett, Topshop, Next, UGG,
Hugo Boss, Superdry, Zara,
Hollister, YO! Sushi, Nando's
8 intu Derby GBP420 1,300 100% 180 GBP28. GBP12 53% Marks & Spencer, Debenhams,
m 4m 5 Sainsbury's, Next, Boots,
Topshop, Cinema de Lux
9 St Davids, Cardiff GBP308 1,391 50% 203 GBP16. GBP18 66% John Lewis, Debenhams, Marks &
m 2m 5 Spencer, Apple, Hollister, Hugo
Boss, H&M, River Island, Hamleys,
Armani Exchange, Gap
10 intu Eldon Square GBP273 1,350 60% 151 GBP14. GBP30 60% John Lewis, Fenwick, Debenhams,
m 0m 0 Waitrose, Apple, Hollister,
Topshop, Boots, River Island, Next
11 intu Watford GBP335 726 93% 140 GBP17. GBP25 83% John Lewis, Marks & Spencer,
m 3m 0 Apple, Zara, Primark, Next,
Lakeland, Phase Eight, Lego,
H&M, Topshop/Topman
12 intu Victoria Centre GBP314 981 100% 104 GBP16. GBP23 54% House of Fraser, John Lewis,
m 9m 0 Next, Topshop, River Island,
Boots, Urban Outfitters, Superdry,
Office
Annual
Market Size % Number Property
value (sq. m. 000) ownership of stores Income Key stores
Spanish centres
13 Puerto Venecia** €451m 119 100% 202 €22.4m El Corte Ingles, Primark, IKEA,
Apple, Decathlon
14 Parque Principado €106m 77 50% 161 €7.8m Primark, Zara, H&M, MediaMart,
Cinesa, Eroski
* The amount presented is on the Scottish ITZA basis, the English equivalent is GBP335.
** The Group completed the acquisition of Puerto Venecia on 19 January 2015.
FINANCIAL REVIEW
Presentation of information
Joint ventures
The Group has adopted IFRS 11 Joint Arrangements in 2014. This new standard requires that all joint ventures, which the Group
previously chose to account for on a proportional consolidation basis, are equity accounted. This means that the income statement
and the balance sheet now include single lines with the Group's total share of post-tax profit and the net investment in joint ventures
respectively. The Group's profit for the year and total equity are unaffected by these changes. Further details of the impact of
adopting this accounting policy are given in note 32.
The new standard has a greater impact following the transactions in the year which created joint ventures in respect of intu Merry
Hill, Parque Principado and intu Uxbridge. Further details of these transactions are given in notes 26 and 27.
Management both review and monitor the business, including the Group's share of joint ventures, on an individual line basis not on a
post-tax profit or net investment basis and therefore the figures and commentary presented are consistent with this management
approach. Note 32 and the Other information section give reconciliations between the two bases.
Rights issue
In April 2014 the Company issued 278.2 million shares by way of a rights issue. Further details are included in note 24. Following a
rights issue accounting standards require an adjustment to be made to the number of shares previously used to calculate earnings
per share and in the Group's case, to be consistent, an adjustment is also made to the number of shares used to calculate the
dividend and net asset value per share. A bonus adjustment factor of 1.098 has been used to adjust the comparative figures in
these results using the Company's closing ex-div share price on 28 March 2014 of 301 pence per share and the theoretical ex-rights
price of 274 pence per share.
Overview
- Strong growth in property valuations has resulted in a substantial increase in the profit for the year. This valuation increase has
not yet been reflected in net rental income as the Group holds units to facilitate future development plans and completes
reletting units from 2013 administrations and lease expiries:
- underlying earnings of GBP162 million, up 15 per cent on 2013 reflecting the acquisitions in the year, with earnings
per share of 13.3 pence, down 3 per cent on 2013, impacted by the reduction in like-for-like net rental income
- NAV per share at 379 pence; total financial return for the year of 14 per cent based on the bonus factor adjusted
opening NAV per share of 346 pence and 17 per cent based on the pro forma opening NAV of 335 pence
- Financing metrics improved due to higher property valuations and refinancing activity:
- debt to assets ratio at 44.2 per cent (2013 – 48.5 per cent), below the Group's target maximum level of 50 per cent
- interest cover ratio at 1.82x (2013 – 1.71x), above the Group's target minimum level of 1.60x
- cash and available facilities increased to GBP671 million (2013 – GBP325 million)
- Major transactions:
- in May the Group completed the acquisition of intu Merry Hill, intu Derby and Sprucefield for GBP855 million.
Exceptional costs related to the acquisition totalled GBP12 million. The acquisition contributed GBP27 million to the
underlying earnings of the Group
- in June 2014 the Group sold 80 per cent of its interest in intu Uxbridge for consideration of GBP175 million, before
expenses. The Group retains a 20 per cent interest which has been accounted for as a joint venture from 20 June
2014
- in December the Group exchanged contracts to acquire Puerto Venecia, Zaragoza with the acquisition completing in
January 2015. The 31 December 2014 balance sheet includes the deposit paid of €22.5 million within restricted cash.
The acquisition will be consolidated from the date of completion. See Strategic review for further details
RESULTS FOR THE YEAR
Income statement
Year ended Year ended
31 December 31 December
2014 2013
Profit for the year (GBPm) 600 364
Underlying earnings (GBPm) 162 140
Underlying EPS (pence) 13.3 13.7(2)
Net rental income(1)(GBPm) 397 370
(1) Including Group share of joint ventures
(2) Adjusted for the rights issue bonus factor
The Group recorded a profit for the year of GBP600 million, a substantial increase on the GBP364 million reported for the year
ended 31 December 2013. This increase was primarily due to:
- an increase in the revaluation gain on property valuations to GBP648 million including the Group's share of joint ventures
(2013 – GBP126 million)
- lower exceptional finance costs of GBP51 million (2013 – GBP158 million), largely due to the lower level of interest rate
swap terminations in connection with debt refinancing
These positive factors were partially offset by:
- negative movement of GBP431 million in the change in fair value of the Group's financial instruments. 2014's results
include a charge of GBP157 million including the Group‘s share of joint ventures whereas 2013 benefited from a GBP274
million credit
Underlying earnings increased by GBP22 million to GBP162 million with underlying earnings per share, which takes into account the
shares issued to part-fund the acquisition of intu Merry Hill and intu Derby, decreasing by 3 per cent to 13.3 pence. Underlying
earnings exclude valuation movements, exceptional items and related tax and are presented as they are considered to be a key
measure of the Group's performance and an indication of the extent to which dividend payments are supported by underlying
earnings. The underlying profit statement is presented in full in the Other information section.
Chart 4 – Underlying Earnings Bridge 2013-2014
[GRAPHIC REMOVED – PLEASE SEE PAGE 17 OF FULL ANNOUNCEMENT WHICH CAN BE FOUND AT
INTUGROUP.CO.UK]
The principal components of the change in underlying earnings are as follows:
- net rental income increases due to acquisitions totalled GBP43 million reflecting the acquisitions of intu Merry Hill and intu
Derby in 2014 and a full year contribution of intu Milton Keynes and Parque Principado acquired part way through 2013.
This is offset by a GBP5 million reduction due to the sale of 80 per cent of intu Uxbridge
- like-for-like net rental income reduced by GBP11 million, 3.2 per cent (see Strategic review)
- underlying net finance costs increased by GBP3 million with the cost of debt drawn in the year to part-fund the acquisitions
of intu Merry Hill and intu Derby partially offset by the favourable impact of lower interest rates following debt refinancings,
in particular on the intu Metrocentre facility that was concluded at the end of 2013
- ongoing administration expenses increased by GBP3 million, largely due to costs related to management of recent
acquisitions, including new employees and professional fees
- our partner's share of the reduction in finance costs following the intu Metrocentre debt refinancing has been the main factor
reducing the non-controlling interest credit by GBP3 million compared to 2013
As detailed in the table below, the Group's net rental income margin including share of joint ventures is in line with 2013 at 87 per
cent with higher void costs offset by lower bad debts. Property operating expense in the year ended 31 December 2014 includes
GBP11 million (2013 – GBP10 million) in respect of car park operating costs and the Group's contribution to shopping centre
marketing of GBP8 million (2013 – GBP8 million). The Group's ratio of total costs to income, as calculated in accordance with EPRA
guidelines, remains low at 19 per cent.
Year ended Year ended
31 December 31 December
2014 2013
GBPm GBPm
Gross rental income 480 448
Head rent payable (23) (24)
457 424
Net service charge expense and void rates (21) (16)
Bad debt and lease incentive write-offs (7) (9)
Property operating expense (32) (29)
Net rental income 397 370
Net rental income margin 87% 87%
EPRA cost ratio (including direct vacancy costs) 19% 19%
Balance sheet
The Group's net assets attributable to shareholders have increased by GBP1.0 billion to GBP4.5 billion at the end of 2014 due to
equity raised in the year to fund the acquisition of the intu Merry Hill and intu Derby shopping centres and the retained profit for the
year including the GBP648 million gain on the revaluation of the Group's properties.
As detailed in the table below, net assets (diluted, adjusted) have increased by GBP1,165 million from 31 December 2013 to
GBP4,969 million as at 31 December 2014.
31 December
31 December 2014 2013
Group Share of Group including Group including
balance sheet joint share of joint share of joint
as presented ventures ventures ventures
GBPm GBPm GBPm GBPm
Investment and
development property 8,020 869 8,889 7,551
Investments 1,079 (851) 228 191
Net external debt (3,958) (5) (3,963) (3,698)
Derivative financial
instruments (347) – (347) (206)
Other assets and
liabilities (197) (13) (210) (217)
Net assets 4,597 – 4,597 3,621
Non-controlling interests (73) – (73) (102)
Attributable to
shareholders 4,524 – 4,524 3,519
Fair value of derivatives
(net of tax) 333 – 333 198
Other adjustments 90 – 90 83
Effect of dilution 22 – 22 4
Net assets (diluted, adjusted) 4,969 – 4,969 3,804
Investment and development property has increased by GBP1,338 million primarily due to the acquisition of intu Merry Hill, intu
Derby and Sprucefield, valued at GBP866 million on acquisition, and the GBP648 million valuation gain in the year.
Investments of GBP228 million as at 31 December 2014 principally comprise the Group's interests in the US and India. The US
investment of 11.4 million shares in a joint venture with Equity One, a listed US REIT, is valued at GBP185 million based on the 31
December 2014 Equity One share price. The India investment largely comprises a 32 per cent interest in Prozone, a shopping
centre developer listed on the Indian stock market, included at GBP38 million on the Group's balance sheet at 31 December 2014.
Net external debt is discussed in the cash flow and net external debt section below.
Derivative financial instruments comprises the fair value of the Group's interest rate swaps. The net liability at 31 December 2014 is
GBP347 million, an increase of GBP141 million in the year. This can be largely attributed to a movement in the interest rate yield
curve. Cash payments in the year totalled GBP70 million, GBP44 million of which has been classified as an exceptional finance cost
as it relates to the termination of swaps (GBP17 million) or payments in respect of unallocated swaps (GBP27 million). The balance
of the payments has been included as underlying finance costs as they relate to ongoing interest rate swaps used to hedge debt.
As previously detailed, the Group has a number of interest rate swaps, entered into some years ago, which are unallocated as, due
to a change in lenders' practice, they cannot be used for hedging the Group's borrowings. At 31 December 2014 these swaps have
a market value liability of GBP242 million (2013 – GBP143 million). It is estimated the Group will be required to make cash
payments on these swaps of GBP25 million in 2015 in line with the level of payments made in 2014. The balance sheet shows
GBP73 million of these as current liabilities reflecting mutual options to break during 2015. Since the year end we have confirmed
that no cash outflows will be required in respect of these breaks.
Non-controlling interests at 31 December 2014 relate to our partner's 40 per cent stake in intu Metrocentre and increased during the
year due to its share of profit and additional investment in capital projects. The net reduction in the overall non-controlling interest
balance reflects Parque Principado moving from being a subsidiary with a non-controlling interest to a joint venture. See note 27 for
further details.
The Group is exposed to foreign exchange movements on its overseas investments in Spain, the US and India. The Group's policy
is to ensure that the net exposure to foreign currency is less than 10 per cent of the Group's equity attributable to owners of the
Company. At 31 December 2014 the exposure was 6 per cent, lower than at 31 December 2013, because during the year the
Group's Parque Principado joint venture borrowed Euro denominated debt secured on the centre. The Group's acquisition of Puerto
Venecia in January will increase the Group's exposure to around 8 per cent after the mitigating impact of Euro denominated debt
drawn to fund the acquisition.
Adjusted net assets per share
As illustrated in Chart 5, diluted, adjusted net assets per share after the bonus factor adjustment were 346 pence at 31 December
2013. Taking into account the full impact of the rights issue, the pro forma opening position for 2014 was 335 pence per share. The
increase from the pro forma figure to the 31 December 2014 value of 379 pence per share was driven by the property valuation gain
of 50 pence per share.
Chart 5 – Adjusted Net Assets Per Share Bridge 2013-2014
[GRAPHIC REMOVED – PLEASE SEE PAGE 19 OF FULL ANNOUNCEMENT WHICH CAN BE FOUND AT
INTUGROUP.CO.UK]
Cash flow and net external debt
2014 2013
GBPm GBPm
Group cash flow as reported
Cash flow from operating activities 56 (35)
Cash flow from investing activities (719) (417)
Cash flow from financing activities 724 423
Net increase/(decrease) in Group cash and cash equivalents 61 (29)
Net external debt (including Group's share of joint ventures)
Cash (including Group's share of joint ventures) 260 166
Debt (including Group's share of joint ventures) (4,223) (3,933)
Short-term investments – 69
Net external debt (including Group's share of joint ventures) (3,963) (3,698)
Change in net external debt (265) (194)
During 2014 the Group has recorded an increase in cash of GBP61 million. Cash flow from operating activities of GBP56 million is
GBP91 million better than 2013, primarily due to the lower level of exceptional swap termination costs compared to 2013.
Cash flow from investing activities reflects the cash outflows for the acquisition of intu Merry Hill, intu Derby and Sprucefield of
GBP855 million, net of GBP175 million cash received on disposal of 80 per cent of intu Uxbridge.
Cash flow from financing activities includes an inflow of GBP492 million from the rights issue undertaken to part-fund the acquisitions
in May and an inflow from net borrowings drawn of GBP314 million. This includes GBP424 million of facilities to part-fund the
acquisitions in the year and the repayment of GBP146 million as part of the disposal of 80 per cent of the Group's interest in intu
Uxbridge. Dividends paid in cash during the year were GBP90 million.
Net external debt (including Group's share of joint ventures) has increased by GBP265 million. Cash including the Group's share of
joint ventures has increased by GBP94 million, which includes the Group's share of the proceeds from raising new finance on
Parque Principado in August. Debt has increased by GBP290 million reflecting the key transactions above.
FINANCING
Debt structure
A large proportion of the Group's debt has been refinanced in the last two years, as a result of which the Group has significantly
diversified its sources of funding. The range of debt instruments now includes CMBS and other secured bonds plus syndicated bank
debt secured on individual or pools of assets, with limited or non-recourse from the borrowing entities to other Group companies
outside of these arrangements. Corporate-level debt remains limited to the revolving credit facility and the GBP300 million
convertible bond.
During the year there was a significant amount of financing activity, including:
- in February the Group raised GBP110 million through the issuance of further notes under the intu Trafford Centre CMBS.
The bonds had an average maturity of nine years and an all-in cost of 4.6 per cent
- in April the Group's partnership with CPPIB signed a €95 million, five-year term loan secured on Parque Principado, Spain
- in May debt was raised to part-fund the acquisition of intu Merry Hill, intu Derby and Sprucefield. This involved three new
two and a half year debt facilities secured on the intu Derby and Sprucefield properties and the equity interest in intu Merry
Hill (GBP203 million, GBP30 million and GBP191 million respectively). The debt secured on intu Derby was refinanced
later in 2014 (see below). At intu Merry Hill, the intention is that the Group and our partner QIC will jointly refinance at the
asset level when the QIC CMBS matures in 2016
- in June the debt secured on intu Uxbridge of GBP146 million was repaid as part of the disposal process
- in August the facility in our St David's, Cardiff, joint venture was repaid and a new term loan of GBP120 million plus a
revolving credit facility of GBP41 million was put in place, secured against the Group's interest in the joint venture
- in October the Group's revolving credit facility was extended from GBP375 million to GBP600 million bringing in a further
two banks and extending the maturity to 2019 with the ability to extend this by a further two years. The margin has reduced
by between 25 and 50 basis points. The combination of this and a lower commitment fee means that we expect to pay a
lower all-in cost based on planned utilisation levels despite the larger facility size
- in November the debt on intu Derby and intu Chapelfield was refinanced and these assets were added into the Group's
Secured Group Structure which issued GBP350 million 4.25 per cent bonds with maturity in 2030
Following the refinancing activity in the year, Chart 6 illustrates that there is a minimal refinancing requirement in 2015 and no major
refinancing due in 2016.
Chart 6 – Debt Maturity Profile
[GRAPHIC REMOVED – PLEASE SEE PAGE 20 OF FULL ANNOUNCEMENT WHICH CAN BE FOUND AT
INTUGROUP.CO.UK]
The table below summarises the Group's main debt measures, all including the Group's share of joint ventures.
31 December 31 December
2014 2013
Debt to assets 44.2% 48.5%
Interest cover 1.82x 1.71x
Weighted average debt maturity 8.4 years 8.0 years
Weighted average cost of gross debt 4.7% 4.8%
Proportion of gross debt with interest rate protection 88% 92%
Cash and available facilities GBP671m GBP325m
The debt to assets has reduced significantly from 2013 largely due to the property valuation gain in the year and remains below the
Group's target maximum level of 50 per cent.
Interest cover of 1.82x has increased partly due to the favourable impact of lower interest rates following recent debt refinancing and
remains above the Group's targeted minimum level of 1.60x.
The weighted average maturity has increased to 8.4 years with the benefit from the GBP350 million bonds issued in November,
which mature in 2030, being partly offset by the shorter term debt related to the acquisition of intu Merry Hill.
The weighted average cost of gross debt has reduced to 4.7 per cent reflecting the lower rates achieved on refinancing activity in the
year.
The Group uses interest rate swaps to fix interest obligations, reducing cash flow volatility caused by changes in interest rates.
The proportion of debt with interest rate protection has reduced slightly in the year to 88 per cent within the Group's policy range of
between 75 per cent and 100 per cent. The reduction is due to the impact of the floating rate debt secured against intu Merry Hill
and Sprucefield which has not been hedged as it is short-term, partly offset by a lower level of borrowing against the Group's
revolving credit facility.
Cash and available facilities have increased to GBP671 million at 31 December 2014. This comprises cash of GBP260 million in
addition to undrawn facilities of GBP411 million. The increase on 2013 primarily reflects the increase in the Group's revolving credit
facility from GBP375 million to GBP600 million.
Covenants
Full details of the loan financial covenants are included in the Financial covenants section of this report. The Group is in compliance
with all of its covenants. Headroom over the minimum levels of LTV covenants has generally increased in the year reflecting the
strong valuation increases.
Capital commitments
The Group has an aggregate cash commitment to capital projects of GBP81 million at 31 December 2014 (including the Group's
share of joint ventures).
In addition to the committed expenditure, the Group has an identified uncommitted pipeline of active management projects and major
extensions that may become committed over the next five years (see Strategic review).
OTHER INFORMATION
Tax policy position
As a Real Estate Investment Trust (REIT), tax on property operating profits is paid at shareholder level to the UK government rather
than by Intu itself. REIT status brings with it the requirement to operate within the rules of the REIT regime (for further information
see Glossary).
As a good corporate citizen we believe that paying and collecting taxes is an important part of our role as a business and our wider
contribution to society.
Intu does not employ tax avoidance strategies, or undertake transactions whose sole purpose is to abuse the tax system. We are
committed to acting with integrity and transparency in all tax matters and have an open, up front and no surprises policy in dealing
with HMRC. The Group seeks pre-clearance from HMRC in complex areas and actively engages in discussions on potential or
proposed changes in the taxation system that might affect property tax and REIT legislation.
The Group pays tax directly on overseas earnings, any UK non-property income under the REIT rules, business rates, and
transaction taxes such as stamp duty land tax. In the year ended 31 December 2014 the total of such payments to tax authorities
was GBP26 million, of which GBP25 million was in the UK, GBP0.5 million in the US and GBP0.5 million in Spain. In addition, the
Group also collects VAT, employment taxes and withholding tax on dividends for HMRC and the Spanish tax authorities. Business
rates, principally paid by tenants, in respect of the Group's UK properties amounted to around GBP297 million in 2014.
Dividends
The Directors are recommending a final dividend of 9.1 pence per share bringing the amount paid and payable in respect of 2014 to
13.7 pence, unchanged from 2013 as adjusted to reflect the 2014 rights issue (see note 11). A scrip dividend alternative will
continue to be offered. Details of the apportionment between the PID and non-PID elements per share will be confirmed in due
course.
Matthew Roberts
Chief Financial Officer
27 February 2015
KEY RISKS AND UNCERTAINTIES
Successful risk management underpins Intu's ability to achieve its strategic objectives
Chart 7 – Intu's Business Strategy
[GRAPHIC REMOVED – PLEASE SEE PAGE 23 OF FULL ANNOUNCEMENT WHICH CAN BE FOUND AT
INTUGROUP.CO.UK]
Intu's Board has responsibility for establishing the Group's appetite for risk based on the balance of potential risks and returns, and
has overall responsibility for managing risks. Risk management is embedded in Intu's culture so that all employees play a part. This
may be cleaners making sure that the centres are free of hazards or the construction team ensuring the right contractors are
selected for developments.
Risks are considered in the day-to-day decisions made by the business and this assessment of risk is underpinned by a formal risk
review process conducted by each centre, each department and the Executive team. These reviews identify risks and assess them
for controllability and stability.
Risks are measured for impact and likelihood; gross risk being the worst case scenario if there were no controls in place; net risk
being the risk as it stands today; and target risk being after any further planned risk reducing measures are implemented. An
assessment is also made of how quickly the risks would impact the business. Impact and likelihood change as businesses and
external factors evolve. Intu's ongoing risk management ensures that changes in impact and likelihood are identified and managed
appropriately.
The key risks and uncertainties facing the Group are as set out in the table:
Risk and impact Mitigation 2014 commentary
Property market - Focus on prime assets, upgrading Likelihood and severity of potential impact
Macro environment assets and aligning the offering with have reduced during 2014 versus 2013 due to
weakness could undermine demand, for example by increasing a number of factors including focus on tenant
rental income levels and leisure offering mix and increased property values
property values, reducing - Covenant headroom monitored and - Strong valuation increases for most centres
return on investment and stress-tested resulting in improved LTV headroom
covenant headroom - Active management of tenant mix - Tenant administrations reduced compared
to 2013
- Regular monitoring of tenant strength
and diversity
- Lobbying on key policies, for example - Significant progress on planning and pre-
business rates letting of pipeline, more than half of which is
leisure and catering. Leisure and catering
space to increase by almost 50 per cent by
2018
- Digital investment to improve relevance as
shopping habits change
Financing - Funding strategy regularly reported to Likelihood has reduced during 2014 versus
Reduced availability of funds Board with current and projected 2013 due to the refinancing activity in the year.
could limit liquidity, leading to funding position Severity of potential impact is unchanged
restriction of investing and - Effective treasury management aimed - Financing activity during 2014 raised gross
operating activities and/or at balancing long debt maturity profile debt of GBP1.1 billion including Group's
increase in funding cost and diversification of sources of finance share of joint ventures
- Consideration of financing plans - Revolving credit facility increased from
including potential for recycling of GBP375 million to GBP600 million during
capital before commitment to the year
transactions and developments - Refinancing of intu Derby and intu
- Strong relationships with Chapelfield during 2014 demonstrated
lenders/shareholders flexibility of Secured Group Structure
funding platform
Operations - Strong business process and Overall likelihood and severity of potential
Accidents, system failure or procedures, supported by regular impact has increased due to external factors.
external factors could training and exercises, designed to However continuing improvement and
threaten the safe and adapt and respond to changes in risk consistency of operational procedures through
secure environment levels intu Retail Services mitigate changes in
provided for shoppers and - Annual audits of operational standards external risk factors
retailers, leading to financial carried out internally and by external - Operations of acquired centres have been
and/or reputational loss consultants successfully integrated
- Culture of visitor safety - Continuing group-wide cyber security project
- Crisis management and business with key focus being proactive monitoring of
continuity plans in place and tested, technical infrastructure to mitigate cyber
including cyber security threats threats
- Retailer liaison and briefings - Work started towards achieving ISO 9001,
- Appropriate levels of insurance 14001, 18001 and 55001 accreditation
- Staff succession planning and - intu Retail Services has continued to deliver
development in place to ensure improvements in systems and processes,
continued delivery of World Class including investment in in-house fire and
Service health and safety structure and a significant
- Strong relationships and frequent increase in centre management employees
liaison with Police, NaCTSO and other holding formal health and safety
agencies qualifications
- Reduced exposure to future energy costs
and taxes through award-winning energy
reduction initiatives – 30 per cent reduction
in carbon emissions since 2011
Strategy and execution - Annual strategic review by Board Likelihood and severity of potential impact
Misjudged or poorly informed by external research and have remained unchanged versus 2013 with
executed strategy fails to advice no significant new strategies implemented in
create shareholder value - Board and management team the year
experienced in shopping centre and - New asset management structure
broader retail industry implemented to enhance delivery of
- Engagement with national and strategic goals
international retailers - Extending reach through introduction of new
- Specialist advice and extensive joint venture partners
research supporting major initiatives - Partnership agreements designed to
- Careful assessment of potential address both partners' interests and ensure
partners to complement Intu's skills, efficient asset management
experience and resources
- Rigorous control and review procedures
in place to ensure successful
implementation of strategy
Development and - Capital Projects Committee reviews Likelihood and severity of potential impact
acquisition detailed appraisals before and monitors have remained unchanged in 2014 versus
Misjudged or poorly progress during significant projects 2013
executed project results in - Research and third party due diligence - Substantial property and financial due
increased cost or income undertaken for transactions including diligence undertaken before acquisitions
foregone, hence fails to local specialists in Spain completed in the year
create shareholder value - Fixed price contracts for developments - Property management and financial
- Local partner in Spain with market activities in respect of centres acquired in
specialist knowledge the year integrated with the Group's existing
processes and policies
- Detailed appraisal work and significant pre-
lets continuing ahead of starting major
development projects
Brand - Intellectual property protection Brand has continued to gain momentum
The integrity of the brand is - Strong guidelines for use of brand during the year and higher profile results in
damaged or the - Strong underlying operational controls greater risks versus 2013 for both likelihood
commercial benefits of the and crisis management procedures and severity of potential impact
brand are not realised - Major training programme and rewards - World Class Service training embedding
and recognition schemes designed to brand and values
embed brand values and culture - External evidence of brand value evidenced
throughout the organisation by disposal of 80 per cent interest in intu
- Media monitoring Uxbridge
- Tell intu customer feedback programme
of customer feedback collection and
analysis
Statement of Directors' Responsibilities
The Group's Annual Report for the year ended 31 December 2014 contains the following statement of Directors' responsibilities.
Certain parts of the Annual Report are not included within this announcement.
The Directors are responsible for preparing the Annual Report, the Directors' remuneration report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have
prepared the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group
and Company for that period. In preparing these financial statements, the Directors are required to:
(a) select suitable accounting policies and then apply them consistently
(b) make judgements and accounting estimates that are reasonable and prudent
(c) state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures
disclosed and explained in the financial statements
(d) prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Company will
continue in business
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable
them to ensure that the financial statements and the Directors' remuneration report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the financial and corporate governance information as provided on
the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's and the Group's performance, business model and strategy.
Each of the Directors, whose names and functions are listed in the Governance section of the Annual Report confirm that, to the best
of their knowledge:
(a) the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial position and profit of the Group
(b) the Directors' report contained in the Governance section of the Annual Report 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 27 February 2015
David Fischel
Chief Executive
Matthew Roberts
Chief Financial Officer
Consolidated income statement
for the year ended 31 December 2014
Re-presented
2014 2013
Notes GBPm GBPm
Revenue 3 536.4 511.6
Net rental income 3 362.6 356.2
Net other income 4 4.8 3.7
Revaluation of investment and development property 14 567.8 109.9
Gain on acquisition of businesses 26 1.6 –
Gain on disposal of subsidiaries 27 0.6 –
Administration expenses – ongoing (30.8) (27.6)
Administration expenses – exceptional 5 (13.8) (21.2)
Operating profit 892.8 421.0
Finance costs 6 (197.1) (192.6)
Finance income 7 11.9 0.6
Other finance costs 8 (56.8) (164.5)
Change in fair value of financial instruments 9 (157.6) 272.3
Net finance costs (399.6) (84.2)
Profit before tax, joint ventures and associates 493.2 336.8
Share of post-tax profit of joint ventures 15 99.7 26.1
Share of post-tax profit of associates 16 0.8 0.5
Profit before tax 593.7 363.4
Current tax 10 (0.5) (0.8)
Deferred tax 10 6.6 1.4
Taxation 10 6.1 0.6
Profit for the year 599.8 364.0
Attributable to:
Owners of Intu Properties plc 586.2 359.8
Non-controlling interests 13.6 4.2
599.8 364.0
Basic earnings per share 12 48.0p 34.5p
Diluted earnings per share 12 46.3p 32.0p
Details of underlying earnings are presented in the underlying profit statement in the Other information section. Underlying earnings
per share are shown in note 12(c).
Consolidated statement of comprehensive income
for the year ended 31 December 2014
2014 2013
Notes GBPm GBPm
Profit for the year 599.8 364.0
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Revaluation of other investments 17 21.1 8.1
Exchange differences 7.0 (8.1)
Tax relating to components of other comprehensive income 10 (6.6) (1.6)
Total items that may be reclassified subsequently to profit or loss 21.5 (1.6)
Other comprehensive income for the year 21.5 (1.6)
Total comprehensive income for the year 621.3 362.4
Attributable to:
Owners of Intu Properties plc 608.1 359.2
Non-controlling interests 13.2 3.2
621.3 362.4
Consolidated balance sheet
as at 31 December 2014
Re-presented
2014 2013
Notes GBPm GBPm
Non-current assets
Investment and development property 14 8,019.6 7,278.7
Plant and equipment 5.1 5.5
Investment in joint ventures 15 851.5 209.5
Investment in associates 16 38.0 35.8
Other investments 17 189.7 154.9
Goodwill 4.0 8.2
Derivative financial instruments 9.0 25.1
Trade and other receivables 18 99.7 99.2
9,216.6 7,816.9
Current assets
Trading property – 0.2
Trade and other receivables 18 114.7 78.1
Derivative financial instruments 0.7 0.7
Short-term investments – 69.3
Cash and cash equivalents 19 230.0 156.7
345.4 305.0
Total assets 9,562.0 8,121.9
Current liabilities
Trade and other payables 20 (251.5) (238.1)
Current tax liabilities (0.6) (0.9)
Borrowings 21 (21.3) (70.9)
Derivative financial instruments (80.7) (10.1)
(354.1) (320.0)
Non-current liabilities
Borrowings 21 (4,332.7) (3,944.0)
Derivative financial instruments (275.8) (220.5)
Other payables (2.6) (4.3)
Deferred tax 23 – (12.0)
(4,611.1) (4,180.8)
Total liabilities (4,965.2) (4,500.8)
Net assets 4,596.8 3,621.1
Equity
Share capital 24 658.4 486.9
Share premium 24 1,222.0 695.6
Treasury shares 25 (45.1) (48.2)
Convertible bonds 22 – 143.7
Other reserves 358.0 500.5
Retained earnings 2,330.7 1,740.3
Attributable to owners of Intu Properties plc 4,524.0 3,518.8
Non-controlling interests 72.8 102.3
Total equity 4,596.8 3,621.1
Consolidated statement of changes in equity
for the year ended 31 December 2014
Attributable to owners of Intu Properties plc
Non-
Share Share Treasury Convertible Other Retained controlling Total
capital premium shares bonds reserves earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2014 486.9 695.6 (48.2) 143.7 500.5 1,740.3 3,518.8 102.3 3,621.1
Profit for the year – – – – – 586.2 586.2 13.6 599.8
Other comprehensive income:
Revaluation of other
investments (note 17) – – – – 21.1 – 21.1 – 21.1
Exchange differences – – – – 7.4 – 7.4 (0.4) 7.0
Tax relating to components
of other comprehensive
income (note 10) – – – – (6.6) – (6.6) – (6.6)
Total comprehensive
income for the year – – – – 21.9 586.2 608.1 13.2 621.3
Conversion of bond (note 22) 21.2 122.5 – (143.7) – – – – –
Other ordinary shares issued 150.3 403.9 – – – – 554.2 – 554.2
Dividends (note 11) – – – – – (155.9) (155.9) – (155.9)
Interest on convertible
bonds (note 22) – – – – – (2.9) (2.9) – (2.9)
Share-based payments – – – – – 2.5 2.5 – 2.5
Acquisition of treasury shares – – (1.0) – – – (1.0) – (1.0)
Disposal of treasury shares – – 4.1 – – (3.9) 0.2 – 0.2
Non-controlling interest
additions – – – – – – – 27.2 27.2
Distribution to non-controlling
interest – – – – – – – (1.2) (1.2)
Disposal of subsidiaries
(note 27) – – – – – – – (68.7) (68.7)
Realisation of merger reserve – – – – (164.4) 164.4 – – –
171.5 526.4 3.1 (143.7) (164.4) 4.2 397.1 (42.7) 354.4
At 31 December 2014 658.4 1,222.0 (45.1) – 358.0 2,330.7 4,524.0 72.8 4,596.8
Consolidated statement of changes in equity
for the year ended 31 December 2013
Attributable to owners of Intu Properties plc
Non-
Share Share Treasury Convertible Other Retained controlling Total
capital premium shares bonds reserves earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2013 434.2 577.4 (43.9) 143.7 336.7 1,528.9 2,977.0 29.2 3,006.2
Profit for the year – – – – – 359.8 359.8 4.2 364.0
Other comprehensive income:
Revaluation of other
investments (note 17) – – – – 8.1 – 8.1 – 8.1
Exchange differences – – – – (7.1) – (7.1) (1.0) (8.1)
Tax relating to components
of other comprehensive
income (note 10) – – – – (1.6) – (1.6) – (1.6)
Total comprehensive
income for the year – – – – (0.6) 359.8 359.2 3.2 362.4
Ordinary shares issued 52.7 118.2 – – 164.4 – 335.3 – 335.3
Dividends (note 11) – – – – – (142.1) (142.1) – (142.1)
Interest on convertible
bonds (note 22) – – – – – (5.8) (5.8) – (5.8)
Share-based payments – – – – – 2.0 2.0 – 2.0
Acquisition of treasury shares – – (7.0) – – – (7.0) – (7.0)
Disposal of treasury shares – – 2.7 – – (2.5) 0.2 – 0.2
Non-controlling interest
additions – – – – – – – 71.1 71.1
Distribution to non-controlling
interest – – – – – – – (1.2) (1.2)
52.7 118.2 (4.3) – 164.4 (148.4) 182.6 69.9 252.5
At 31 December 2013 486.9 695.6 (48.2) 143.7 500.5 1,740.3 3,518.8 102.3 3,621.1
Consolidated statement of cash flows
for the year ended 31 December 2014
Re-presented
2014 2013
Notes GBPm GBPm
Cash generated from operations 30 292.7 300.6
Interest paid (244.6) (335.2)
Interest received 8.8 0.6
Taxation (0.4) (0.7)
Cash flows from operating activities 56.5 (34.7)
Cash flows from investing activities
Purchase and development of property, plant and equipment (69.7) (44.1)
Sale of property – 0.1
Acquisition of businesses net of cash acquired 26 (851.3) (382.1)
Acquisitions of other investments (3.8) –
Realisation of short-term investments 69.3 –
Cash received on part disposal of intu Uxbridge net of cash sold with business 27 174.1 –
Parque Principado cash received net of cash reclassified 27 (11.6) –
Investments in joint ventures 15 (0.4) (0.5)
Repayment of capital by joint venture 15 14.3 –
Loan advances to joint ventures 15 (97.6) (0.4)
Loan repayments by joint ventures 15 52.7 9.4
Distributions from joint ventures 15 4.9 –
Cash flows from investing activities (719.1) (417.6)
Cash flows from financing activities
Issue of ordinary shares 492.0 273.0
Acquisition of treasury shares (1.0) (0.9)
Sale of treasury shares 0.2 0.2
Non-controlling interest funding received 27.2 71.1
Cash transferred to restricted accounts (15.9) –
Borrowings drawn 989.4 2,051.6
Borrowings repaid (675.1) (1,875.3)
Interest on convertible bonds 22 (2.9) (5.8)
Equity dividends paid (89.8) (90.9)
Cash flows from financing activities 724.1 423.0
Effects of exchange rate changes on cash and cash equivalents (0.1) (0.1)
Net increase/(decrease) in cash and cash equivalents 61.4 (29.4)
Cash and cash equivalents at 1 January 19 151.1 180.5
Cash and cash equivalents at 31 December 19 212.5 151.1
Notes
1 Accounting convention and basis of preparation
The financial information presented does not constitute the Group's financial statements for either the year ended 31 December 2014
or the year ended 31 December 2013, but is derived from those financial statements. The Group's statutory financial statements for
2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Company's annual general
meeting. The auditors' reports on both the 2013 and 2014 financial statements were not qualified or modified; did not draw attention to
any matters by way of an emphasis of matter; and did not contain any statement under Section 498 of the Companies Act 2006.
The 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 financial statements have been prepared under the historical cost convention as modified by the revaluation of property, available-
for-sale investments, and certain other financial assets and liabilities. A summary of the more important Group accounting policies is
set out in note 2 of the Group's financial statements.
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 and interpretations which became effective in the year. During 2014, the following relevant
standards, amendments and interpretations endorsed by the EU became effective for the first time for the Group's 31 December 2014
financial statements:
- IFRS 10 Consolidated Financial Statements;
- IFRS 11 Joint Arrangements;
- IFRS 12 Disclosure of Interests in Other Entities;
- IAS 27 Separate Financial Statements (revised);
- IAS 28 Investments in Associates and Joint Ventures (revised);
- IAS 32 Financial Instruments: Presentation (amendment);
- IAS 36 Impairment of Assets (amendment); and
- Amendments to IFRS 10, IFRS 11 and IFRS 12 (transition guidance).
IFRS 11 removes the choice of accounting treatments previously available under IAS 31 Interests in Joint Ventures. This has impacted
the Group's accounting policy in respect of joint ventures but has had no impact for joint operations. The Group's interests in joint
ventures are now accounted for using the equity method with the income statement and balance sheet showing a single line for the
Group's share of profit and the net investment in joint ventures respectively, rather than proportionally consolidating the Group's share
of assets, liabilities, income and expenses on a line-by-line basis. The Group's interest in joint operations is accounted for by including
its interest in assets, liabilities, income and expenses on a line-by-line basis. This change in accounting policy has had no impact on
net assets or profit for the year ended 31 December 2013. The comparatives have been re-presented for the changes in classification
and further details are provided in note 32.
Other pronouncements have not had a material impact on the financial statements, but have resulted in changes to presentation or
disclosure.
A number of standards have been issued but are not yet adopted by the EU and so are not available for early adoption. The most significant
of these are IFRS 9 Financial Instruments along with related amendments to other IFRSs, and IFRS 15 Revenue from Contracts with
Customers. Based on the Group's current circumstances, these standards are not expected to have a material impact on the financial
statements.
Use of estimates and assumptions
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 income 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. In particular, significant judgement is required in the
use of estimates and assumptions in the valuation and accounting for investment and development property and derivative financial
instruments. Additional detail on these two areas is provided in the relevant accounting policy in note 2 and in other notes to the
Group's financial statements, such as investment properties and derivatives.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in
the Strategic review. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the
Financial review. In addition, note 35 to the Group's financial statements includes the Group's risk management objectives, details of
its financial instruments and hedging activities, its exposures to liquidity risk and details of its capital structure.
The Group prepares regular forecasts and projections which include sensitivity analysis taking into account a number of downside risks
to the forecast including reasonably possible changes in trading performance and asset values and assesses the potential impact of
these on the Group's liquidity position and available resources.
In preparing the most recent projections, factors taken into account include GBP260 million of cash (including the Group's share of
cash in joint ventures of GBP30 million) and GBP411 million of undrawn facilities at 31 December 2014. The refinancing of debt
completed in the year, extending the Group's debt maturity profile to 8.4 years, along with the relatively long-term and stable nature of
the cash flows receivable under tenant leases were also factored into the forecasts.
After reviewing the most recent projections and the sensitivity analysis, the Directors have concluded that there is a reasonable
expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus we continue
to adopt the going concern basis of accounting in preparing the Group's financial statements.
2 Segmental reporting
Operating segments are determined based on the internal reporting and operational management of the Group. The Group is primarily a
UK shopping centre focused business and has one reportable operating segment.
The principal profit indicator used to measure performance is net rental income. An analysis of net rental income is given in note 3.
The Group's geographical segments are set out below. This represents where the Group's assets reside and where revenues are
generated. In the case of investments this reflects where the investee is located.
Revenue Non-current assets(1)
Re-presented Re-presented
2014 2013 2014 2013
GBPm GBPm GBPm GBPm
United Kingdom 532.7 508.2 8,934.4 7,453.2
Spain 3.7 3.4 49.7 147.9
United States – – 184.7 153.9
India – – 38.8 36.8
536.4 511.6 9,207.6 7,791.8
(1) Non-current assets excluding financial instruments.
3 Net rental income
Re-presented
2014 2013
GBPm GBPm
Rent receivable 441.1 430.3
Service charge income 88.2 81.3
Facilities management income from joint ventures 7.1 –
Revenue 536.4 511.6
Rent payable (22.2) (22.4)
Service charge costs (98.7) (91.8)
Facilities management costs recharged to joint ventures (7.1) –
Other non-recoverable costs (45.8) (41.2)
Net rental income 362.6 356.2
4 Net other income
Re-presented
2014 2013
GBPm GBPm
Dividends received from other investments 6.1 6.3
Management fees 1.6 –
intu Digital (2.9) (2.6)
Net other income 4.8 3.7
5 Administration expenses – exceptional
Exceptional administration expenses in the year totalled GBP13.8 million (2013 – GBP21.2 million). This includes costs relating to
corporate transactions, principally the acquisition of intu Merry Hill, intu Derby and Sprucefield (GBP11.8 million, including GBP3.8 million
of stamp duty). See Glossary for definition.
6 Finance costs
Re-presented
2014 2013
GBP GBPm
On bank loans and overdrafts 186.0 181.7
On convertible bonds (note 22) 7.5 7.5
On obligations under finance leases 3.6 3.4
Finance costs 197.1 192.6
7 Finance income
Re-presented
2014 2013
GBP GBPm
Interest receivable on loans to joint ventures 10.7 –
Other finance income 1.2 0.6
Finance income 11.9 0.6
8 Other finance costs
2014 2013
GBP GBPm
Amortisation of Metrocentre compound financial instrument 6.1 6.5
Cost of termination of derivative financial instruments and other costs(1) 48.4 158.5
Foreign currency movements(1) 2.3 (0.5)
Other finance costs 56.8 164.5
(1) Amounts totalling GBP50.7 million in the year ended 31 December 2014 are treated as exceptional items, as defined in the Glossary (2013 – GBP158.0 million). These
finance costs include termination of interest rate swaps on repayment of debt, payments on unallocated swaps and other fees.
9 Change in fair value of financial instruments
Re-presented
2014 2013
GBPm GBPm
Loss/(gain) on derivative financial instruments 144.8 (274.1)
Loss on convertible bonds designated as at fair value through profit or loss (note 22) 12.8 1.8
Change in fair value of financial instruments 157.6 (272.3)
Included within the change in fair value of derivative financial instruments are gains totalling GBP70.3 million resulting from the
payment of obligations under derivative financial instruments during the year. Of these GBP17.1 million relate to the termination of
swaps in the year and GBP27.0 million to unallocated swaps (see note 8).
10 Taxation
Taxation for the year:
2014 2013
GBPm GBPm
Overseas taxation 0.5 0.8
Current tax 0.5 0.8
Deferred tax:
On investment and development property – 0.2
On other investments (0.9) (1.9)
On derivative financial instruments (5.6) 3.2
On other temporary differences (0.1) (2.9)
Deferred tax (6.6) (1.4)
Total tax credit (6.1) (0.6)
The tax credits for 2014 and 2013 are lower than the standard rate of corporation tax in the UK. The differences are explained
below:
Re-presented
2014 2013
GBPm GBPm
Profit before tax, joint ventures and associates 493.2 336.8
Profit before tax multiplied by the standard rate in the UK of 21.5% (2013 – 23.25%) 106.0 78.3
Additions and disposals of property and investments (0.8) 4.0
REIT exemption – corporation tax (32.7) (8.3)
REIT exemption – deferred tax (109.5) (78.6)
Non-deductable and other items 1.5 1.5
Overseas taxation 0.5 0.7
Unprovided deferred tax 28.9 1.8
Total tax credit (6.1) (0.6)
Tax relating to components of other comprehensive income is analysed as:
2014 2013
GBPm GBPm
Deferred tax:
On other investments 6.6 1.6
Tax relating to components of other comprehensive income 6.6 1.6
11 Dividends
2014 2013
GBPm GBPm
Ordinary shares
Prior year final dividend paid of 9.1(1) pence per share (2013 – 9.1(1) pence per share) 96.2 94.4
Interim dividend paid of 4.6 pence per share (2013 – 4.6(1) pence per share) 59.7 47.7
Dividends declared 155.9 142.1
Proposed final dividend of 9.1 pence per share 119.8
(1) Adjusted for the rights issue bonus factor, see note 12.
In 2014, the Company offered shareholders the option to receive ordinary shares instead of cash for the 2013 final and 2014 interim
dividends of 9.1 pence (as adjusted by the bonus factor) and 4.6 pence respectively under the Scrip Dividend Scheme. As a result
of elections made by shareholders 16,442,684 new ordinary shares of 50 pence each were issued on 20 May 2014 and 5,257,861
new ordinary shares of 50 pence each were issued on 25 November 2014 in lieu of dividends otherwise payable. This resulted in
GBP62.2 million of cash being retained in the business.
In 2013, the Scrip Dividend Scheme resulted in GBP56.2 million of cash being retained in the business.
Details of the shares in issue and dividends waived are given in notes 24 and 25.
12 Earnings per share
On 22 April 2014, the Company issued 278,241,628 new ordinary shares of 50 pence each through a rights issue. Further details of the
rights issue are provided in note 24. To reflect the rights issue, the number of shares previously used to calculate basic, diluted, headline
and underlying earnings per share have been amended in the table shown below. An adjustment factor of 1.098 has been applied, based
on the ratio of an adjusted (ex-dividend) closing share price of 301.1 pence per share on 28 March 2014, the business day before the
shares started trading ex-rights and the theoretical ex-rights price at that date of 274.2 pence per share. The adjusted share price has
been calculated based on the Company's share price of 311.1 pence per share on 28 March 2014 less the 2013 final dividend of 10
pence per share which the rights issue shares were not entitled to.
(a) Earnings per share
Basic and diluted earnings per share as calculated in accordance with IAS 33 Earnings per Share:
Re-presented
2014 2013
Earnings Shares Pence per Earnings Shares Pence per
GBPm million share GBPm million share
Profit for the year attributable to owners of
Intu Properties plc 586.2 359.8
Interest on convertible bonds recognised direct in
equity (note 22) (2.9) (5.8)
Basic earnings per share(1) 583.3 1,214.6 48.0p 354.0 1,027.1 34.5p
Dilutive convertible bonds, share options and share awards 23.2 96.4 13.3 122.4
Diluted earnings per share 606.5 1,311.0 46.3p 367.3 1,149.5 32.0p
(1) The weighted average number of shares used for the calculation of basic earnings per share has been adjusted to remove shares held in the ESOP.
(b) Headline earnings per share
Headline earnings per share has been calculated and presented as required by the Johannesburg Stock Exchange listing requirements.
Re-presented
2014 2013
Gross Net(1) Gross Net(1)
GBPm GBPm GBPm GBPm
Basic earnings 583.3 354.0
Remove:
Revaluation of investment and development property (567.8) (552.9) (109.9) (108.8)
Gain on acquisition of businesses (1.6) (1.6) – –
Gain on disposal of subsidiaries (0.6) (0.6) – –
Share of joint ventures' items (80.4) (80.4) (15.9) (15.9)
Share of associates' items (0.8) (0.8) (0.5) (0.5)
Headline (loss)/earnings (53.0) 228.8
Dilution(2) 23.2 13.3
Diluted headline (loss)/earnings (29.8) 242.1
Weighted average number of shares 1,214.6 1,027.1
Dilution2 96.4 122.4
Diluted weighted average number of shares 1,311.0 1,149.5
Headline (loss)/earnings per share (pence) (4.4)p 22.3p
Diluted headline (loss)/earnings per share (pence) (2.3)p 21.1p
(1) Net of tax and non-controlling interests.
(2) The dilution impact is required to be included as calculated in note 12(a) even where this is not dilutive for headline earnings per share.
(c) Underlying earnings per share
Underlying earnings per share is a non–GAAP measure but has been included as it is considered to be a key measure of the Group's
performance and an indication of the extent to which dividend payments are supported by underlying earnings (see underlying profit
statement in the Other information section).
Re-presented
2014 2013
Earnings Shares Pence per Earnings Shares Pence per
GBPm million share GBPm million share
Basic earnings per share (per note 12(a)) 583.3 1,214.6 48.0p 354.0 1,027.1 34.5p
Remove:
Revaluation of investment and development
property (note 14) (567.8) (46.7)p (109.9) (10.7)p
Gain on acquisition of businesses (1.6) (0.1)p – –
Gain on disposal of subsidiaries (0.6) – – –
Exceptional administration expenses (note 5) 13.8 1.1p 21.2 2.0p
Exceptional finance costs (note 8) 50.7 4.2p 158.0 15.4p
Change in fair value of financial instruments (note 9) 157.6 13.0p (272.3) (26.5)p
Tax on the above (6.7) (0.6)p (1.5) (0.1)p
Share of joint ventures' adjusting items (81.1) (6.7)p (17.4) (1.7)p
Share of associates' adjusting items (0.8) (0.1)p (0.5) -
Non-controlling interest in respect of the above 14.9 1.2p 8.6 0.8p
Underlying earnings per share 161.7 1,214.6 13.3p 140.2 1,027.1 13.7p
Dilutive convertible bonds, share options and share awards 10.4 96.4 13.3 122.4
Underlying, diluted earnings per share 172.1 1,311.0 13.1p 153.5 1,149.5 13.4p
13 Net asset value per share
As for earnings per share, the comparative number of shares used to calculate each measure of net assets per share has been
adjusted by the bonus factor of 1.098 to reflect the rights issue. See note 12 for more details.
(a) NAV per share (diluted, adjusted)
NAV per share (diluted, adjusted) is a non-GAAP measure but has been included as it is considered to be a key measure of the Group's
performance.
Re-presented
2014 2013
Net NAV per Net NAV per
assets Shares share assets Shares share
GBPm million pence GBPm million pence
NAV per share attributable to owners of
Intu Properties plc(1) 4,524.0 1,303.7 347p 3,518.8 1,055.5 333p
Dilutive convertible bonds, share options and awards 22.2 8.6 3.8 45.1
Diluted NAV per share 4,546.2 1,312.3 347p 3,522.6 1,100.6 320p
Remove:
Fair value of derivative financial instruments (net of tax) 333.2 26p 196.8 18p
Deferred tax on investment and development
property and other investments 14.1 1p 20.4 2p
Goodwill resulting from recognition of deferred tax liabilities – – (4.2) –
Share of joint ventures' adjusting items 4.1 – 1.3 –
Non-controlling interests in respect of the above – – (3.8) –
Add:
Non-controlling interest recoverable balance not
recognised 71.3 5p 71.3 6p
NAV per share (diluted, adjusted) 4,968.9 1,312.3 379p 3,804.4 1,100.6 346p
(1) The number of shares used has been adjusted to remove shares held in the ESOP.
Restated NAV per share (diluted, adjusted) for 31 December 2013 is 346 pence per share. Adjusting the previously reported 31
December 2013 figures for the cash raised and the shares issued in the rights issue gives a pro forma NAV per share (diluted,
adjusted) of 335 pence per share.
(b) NNNAV per share (diluted, adjusted)
NNNAV per share (diluted, adjusted) is a non-GAAP measure but has been included as it is considered to be an industry standard
comparable measure.
Re-presented
2014 2013
Net NAV per Net NAV per
assets Shares share assets Shares share
GBPm million pence GBPm million pence
NAV per share (diluted, adjusted) 4,968.9 1,312.3 379p 3,804.4 1,100.6 346p
Fair value of derivative financial instruments (net of tax) (333.2) (26)p (196.8) (18)p
Excess of fair value of debt over book value (310.2) (24)p (56.9) (5)p
Deferred tax on investment and development
property and other investments (14.1) (1)p (20.4) (2)p
Share of joint ventures' adjusting items (6.0) – (1.3) –
Non-controlling interests in respect of the above 17.0 1p 6.3 –
NNNAV per share (diluted, adjusted) 4,322.4 1,312.3 329p 3,535.3 1,100.6 321p
14 Investment and development property
Freehold Leasehold Total
GBPm GBPm GBPm
At 1 January 2013 – re-presented 4,508.2 2,226.0 6,734.2
Midsummer Place acquisition 250.5 – 250.5
Parque Principado acquisition 144.7 – 144.7
Additions – re-presented 24.1 17.9 42.0
Disposals – re-presented – (0.1) (0.1)
Surplus on revaluation – re-presented 113.1 (3.2) 109.9
Foreign exchange movements – re-presented (2.5) – (2.5)
At 31 December 2013 – re-presented 5,038.1 2,240.6 7,278.7
Acquisition of intu Derby and Sprucefield (note 26) 458.4 – 458.4
Additions 48.5 17.5 66.0
Disposal of subsidiaries(1) (350.4) – (350.4)
Surplus on revaluation 468.9 98.9 567.8
Foreign exchange movements (0.9) – (0.9)
At 31 December 2014 5,662.6 2,357.0 8,019.6
(1) Disposal of subsidiaries relates to Parque Principado (GBP142.2 million) and intu Uxbridge (GBP208.2 million). See note 27.
A reconciliation to market value is given in the table below:
Re-presented
2014 2013
GBPm GBPm
Balance sheet carrying value of investment and development property 8,019.6 7,278.7
Tenant incentives included within trade and other receivables (note 18) 96.9 96.4
Head leases included within finance leases in borrowings (note 21) (34.9) (36.0)
Market value of investment and development property 8,081.6 7,339.1
The fair value of the Group's investment and development property as at 31 December 2014 was determined by independent external
valuers at that date. The valuations are in accordance with the Royal Institution of Chartered Surveyors Valuation – Professional
Standards 2014 and were arrived at by reference to market transactions for similar properties. Fair values for investment properties are
calculated using the present value income approach. The main assumptions underlying the valuations are in relation to rent profile and
yields.
15 Joint ventures
The Group's principal investments in joint ventures own and manage investment properties.
2014
St David's, intu Parque
Cardiff Merry Hill Principado Other Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2014 – re-presented 194.6 – – 14.9 209.5
Acquisition of intu Merry Hill (note 26) – 403.8 – – 403.8
intu Uxbridge (note 27) – – – 43.0 43.0
Parque Principado (note 27) – – 71.3 – 71.3
Other additions – – – 0.4 0.4
Share of underlying profit 11.3 5.1 0.4 1.8 18.6
Share of other net profit 38.8 26.8 13.9 1.6 81.1
Share of profit 50.1 31.9 14.3 3.4 99.7
Distributions – (2.7) – (2.2) (4.9)
Repayment of capital – – (14.3) – (14.3)
Loan advances 79.7 – 17.1 0.8 97.6
Loan repayments (13.5) – (39.2) – (52.7)
Foreign exchange movements – – (1.9) – (1.9)
At 31 December 2014 310.9 433.0 47.3 60.3 851.5
Represented by:
Loans to joint venture 128.6 386.2 31.6 1.9 548.3
Equity 182.3 46.8 15.7 58.4 303.2
Re-presented
2013
St David's,
Cardiff Other Total
GBPm GBPm GBPm
At 1 January 2013 179.0 12.9 191.9
Share of underlying profit 7.9 0.8 8.7
Share of other net profit 17.1 0.3 17.4
Share of profit 25.0 1.1 26.1
Investment in share capital – 0.5 0.5
Loan advances – 0.4 0.4
Loan repayments (9.4) – (9.4)
At 31 December 2013 194.6 14.9 209.5
Represented by:
Loans to joint venture 62.4 0.6 63.0
Equity 132.2 14.3 146.5
At 31 December 2014, the Boards of joint ventures had approved GBP0.5 million (2013 – GBPnil) of future expenditure for the purchase,
construction, development and enhancement of investment property. Of this, GBP0.1 million is contractually committed. These amounts
represent the Group's share.
Set out below is the summarised information of the Group's joint ventures with financial information presented at 100 per cent. The
summarised income statements are presented for the period from acquisition or becoming a joint venture:
2014
St David's, intu Parque
Cardiff Merry Hill Principado Other Total
GBPm GBPm GBPm GBPm GBPm
Summary information
Group's interest 50% 50% 50%
Principal place of business Wales England Spain
Summarised income statement
Revenue 38.8 43.0 10.5 12.0 104.3
Net rental income 27.2 29.6 6.8 8.7 72.3
Net other income 1.2 – – – 1.2
Revaluation of investment and development
property 75.5 53.7 28.8 1.5 159.5
Administration expenses (0.1) (0.7) (0.7) (0.8) (2.3)
Net finance costs (3.6) (18.7) (6.2) – (28.5)
Profit for the year 100.2 63.9 28.7 9.4 202.2
Group's share of profit for the year 50.1 31.9 14.3 3.4 99.7
Summarised balance sheet
Investment and development property 594.1 868.9 164.4 245.1 1,872.5
Other non-current assets 20.6 0.5 4.4 2.3 27.8
Current assets excluding cash and cash equivalents 7.5 5.9 1.6 1.9 16.9
Cash and cash equivalents 13.1 30.0 12.1 9.0 64.2
Current financial liabilities (0.3) (17.8) (3.8) (1.6) (23.5)
Other current liabilities (13.3) (21.4) (0.9) (5.3) (40.9)
Non-current financial liabilities – – (72.0) – (72.0)
Other non-current liabilities – – (11.2) – (11.2)
Partners' loans (257.2) (772.5) (63.2) (1.4) (1,094.3)
Net assets 364.5 93.6 31.4 250.0 739.5
Group's share of net assets 182.3 46.8 15.7 58.4 303.2
Re-presented
2013
St David's,
Cardiff Other Total
GBPm GBPm GBPm
Summary information
Group's interest 50%
Principal place of business Wales
Summarised income statement
Revenue 41.4 10.8 52.2
Net rental income 25.0 1.6 26.6
Revaluation of investment and development property 31.2 0.6 31.8
Net finance costs (6.2) – (6.2)
Profit for the year 50.0 2.2 52.2
Group's share of profit for the year 25.0 1.1 26.1
Summarised balance sheet
Investment and development property 520.4 25.0 545.4
Other non-current assets 22.6 1.4 24.0
Current assets excluding cash and cash equivalents 8.0 1.8 9.8
Cash and cash equivalents 13.6 4.2 17.8
Current financial liabilities (172.6) (2.5) (175.1)
Other current liabilities – (0.1) (0.1)
Non-current financial liabilities (2.8) (1.2) (4.0)
Partners' loans (124.8) – (124.8)
Net assets 264.4 28.6 293.0
Group's share of net assets 132.2 14.3 146.5
16 Investment in associates
2014 2013
GBPm GBPm
At 1 January 35.8 40.9
Share of profit of associates 0.8 0.5
Foreign exchange movements 1.4 (5.6)
At 31 December 38.0 35.8
17 Other investments
2014 2013
GBPm GBPm
At 1 January 154.9 148.8
Additions 3.8 –
Revaluation 21.1 8.1
Foreign exchange movements 9.9 (2.0)
At 31 December 189.7 154.9
18 Trade and other receivables
Re-presented
2014 2013
GBPm GBPm
Current
Trade receivables 24.6 16.0
Amounts owed by joint ventures 20.5 0.5
Other receivables 16.8 18.8
Prepayments and accrued income 52.8 42.8
Trade and other receivables – current 114.7 78.1
Non-current
Other receivables 11.4 8.9
Prepayments and accrued income 88.3 90.3
Trade and other receivables – non-current 99.7 99.2
Included within prepayments and accrued income for the Group of GBP141.1 million (2013 – GBP133.1 million) are tenant lease
incentives of GBP96.9 million (2013 – GBP96.4 million).
19 Cash and cash equivalents
Re-presented
2014 2013
GBPm GBPm
Unrestricted cash 212.5 151.1
Restricted cash 17.5 5.6
Cash and cash equivalents 230.0 156.7
In 2014, restricted cash is the deposit paid in relation to the acquisition of Puerto Venecia, Zaragoza. In 2013, restricted cash
primarily reflected amounts held to match the 2014 loan notes shown within borrowings and cash deposited against a Spanish local
property tax included within trade and other payables.
A number of the Group's borrowing arrangements place certain restrictions on the rent received each quarter. These do not prevent
access to or use of this funding within the borrowing entities, however they do place certain restrictions on moving those funds
around the wider group, typically requiring debt servicing costs to be paid before restrictions are lifted.
20 Trade and other payables
Re-presented
2014 2013
GBPm GBPm
Current
Rents received in advance 97.2 95.3
Trade payables 2.7 5.0
Amounts owed to joint ventures 2.7 –
Accruals and deferred income 110.7 97.8
Other payables 11.6 17.7
Other taxes and social security 26.6 22.3
Trade and other payables 251.5 238.1
21 Borrowings
2014
Carrying Fixed Floating Fair
value Secured Unsecured rate rate value
GBPm GBPm GBPm GBPm GBPm GBPm
Current
Bank loans and overdrafts 1.7 1.7 – – 1.7 1.7
Commercial mortgage backed securities ("CMBS") notes 16.5 16.5 – 13.3 3.2 19.1
Current borrowings, excluding finance leases 18.2 18.2 – 13.3 4.9 20.8
Finance lease obligations 3.1 3.1 – 3.1 – 3.1
21.3 21.3 – 16.4 4.9 23.9
Non-current
Revolving credit facility 2019 230.0 230.0 – – 230.0 230.0
CMBS notes 2019 19.5 19.5 – 19.5 – 20.3
CMBS notes 2022 51.2 51.2 – 51.2 – 62.8
CMBS notes 2024 87.4 87.4 – 87.4 – 95.4
CMBS notes 2029 88.6 88.6 – 88.6 – 101.9
CMBS notes 2033 351.8 351.8 – 351.8 – 429.5
CMBS notes 2035 186.2 186.2 – – 186.2 208.4
Bank loans 2016 330.8 330.8 – – 330.8 330.8
Bank loan 2017 166.5 166.5 – – 166.5 166.5
Bank loan 2018 347.9 347.9 – – 347.9 347.9
Bank loan 2021 120.3 120.3 – – 120.3 120.3
3.875% bonds 2023 440.2 440.2 – 440.2 – 474.1
4.125% bonds 2023 475.8 475.8 – 475.8 – 518.4
4.625% bonds 2028 340.6 340.6 – 340.6 – 392.7
4.250% bonds 2030 344.5 344.5 – 344.5 – 376.8
Debenture 2027 227.9 227.9 – 227.9 – 241.0
2.5% convertible bonds 2018 (note 22) 325.6 – 325.6 325.6 – 325.6
Non-current borrowings, excluding finance leases
and Metrocentre compound financial instrument 4,134.8 3,809.2 325.6 2,753.1 1,381.7 4,442.4
Metrocentre compound financial instrument 166.1 – 166.1 166.1 – 166.1
Finance lease obligations 31.8 31.8 – 31.8 – 31.8
4,332.7 3,841.0 491.7 2,951.0 1,381.7 4,640.3
Total borrowings 4,354.0 3,862.3 491.7 2,967.4 1,386.6 4,664.2
Cash and cash equivalents (230.0)
Net debt 4,124.0
Re-presented
2013
Carrying Fixed Floating Fair
value Secured Unsecured rate rate value
GBPm GBPm GBPm GBPm GBPm GBPm
Current
Bank loans and overdrafts 49.3 49.3 – – 49.3 49.3
Commercial mortgage backed securities ("CMBS") notes 16.5 16.5 – 12.3 4.2 17.6
Loan notes 2014 1.6 – 1.6 1.6 – 1.6
Current borrowings, excluding finance leases 67.4 65.8 1.6 13.9 53.5 68.5
Finance lease obligations 3.5 3.5 – 3.5 – 3.5
70.9 69.3 1.6 17.4 53.5 72.0
Non-current
Revolving credit facility 2017 285.0 285.0 – – 285.0 285.0
CMBS notes 2015 3.1 3.1 – – 3.1 3.2
CMBS notes 2022 51.6 51.6 – 51.6 – 59.2
CMBS notes 2029 93.2 93.2 – 93.2 – 99.8
CMBS notes 2033 364.1 364.1 – 364.1 – 401.7
CMBS notes 2035 184.0 184.0 – – 184.0 189.7
Bank loans 2016 586.9 586.9 – – 586.9 586.9
Bank loan 2017 41.9 41.9 – – 41.9 41.9
Bank loan 2018 346.6 346.6 – – 346.6 346.6
3.875% bonds 2023 439.4 439.4 – 439.4 – 438.3
4.125% bonds 2023 475.2 475.2 – 475.2 – 476.2
4.625% bonds 2028 340.1 340.1 – 340.1 – 349.7
Debenture 2027 227.6 227.6 – 227.6 – 216.3
2.5% convertible bonds 2018 (note 22) 312.8 – 312.8 312.8 – 312.8
Non-current borrowings, excluding finance leases
and Metrocentre compound financial instrument 3,751.5 3,438.7 312.8 2,304.0 1,447.5 3,807.3
Metrocentre compound financial instrument 160.0 – 160.0 160.0 – 160.0
Finance lease obligations 32.5 32.5 – 32.5 – 32.5
3,944.0 3,471.2 472.8 2,496.5 1,447.5 3,999.8
Total borrowings 4,014.9 3,540.5 474.4 2,513.9 1,501.0 4,071.8
Cash and cash equivalents (156.7)
Net debt 3,858.2
Details of the Group's net external debt are provided in the Other Information section.
The fair values have been established using the market value, where available. For those instruments without a market value, a
discounted cash flow approach has been used.
The maturity profile of debt (excluding finance leases) is as follows:
Re-presented
2014 2013
GBPm GBPm
Repayable within one year 18.2 67.4
Repayable in more than one year but not more than two years 328.4 14.4
Repayable in more than two years but not more than five years 1,148.1 1,601.3
Repayable in more than five years 2,824.4 2,295.8
4,319.1 3,978.9
Certain borrowing agreements contain financial and other conditions that, if contravened, could alter the repayment profile. During
the year there were no breaches of these conditions (see Financial covenants section).
As at 31 December 2014 the Group had committed borrowing facilities of GBP640.7 million, GBP600.0 million expiring in 2019 and
GBP40.7 million expiring in 2021. At 31 December 2014, GBP410.7 million was undrawn (2013 – facilities GBP375.0 million,
undrawn GBP90.0 million).
Finance lease disclosures:
2014 2013
GBPm GBPm
Minimum lease payments under finance leases fall due:
Not later than one year 4.2 4.7
Later than one year and not later than five years 17.0 17.0
Later than five years 64.3 66.2
85.5 87.9
Future finance charges on finance leases (50.6) (51.9)
Present value of finance lease liabilities 34.9 36.0
Present value of finance lease liabilities:
Not later than one year 3.1 3.5
Later than one year and not later than five years 13.5 13.0
Later than five years 18.3 19.5
34.9 36.0
Finance lease liabilities are in respect of head leases on investment property. A number of these leases provide for payment of
contingent rent, usually a proportion of net rental income, in addition to the rents above.
22 Convertible bonds
2.5 per cent convertible bonds ("the 2.5 per cent bonds")
On 4 October 2012 Intu (Jersey) Limited (the "Issuer") issued GBP300.0 million 2.5 per cent Guaranteed Convertible Bonds due 2018 at
par all of which remain outstanding at 31 December 2014. At 31 December 2014 the exchange price was GBP3.5759 per ordinary share.
The Company has unconditionally and irrevocably guaranteed the due and punctual performance by the Issuer of all of its obligations
(including payments) in respect of the 2.5 per cent bonds and the obligations of the Company, as Guarantor, constitute direct,
unsubordinated and unsecured obligations of the Company.
Subject to certain conditions, the 2.5 per cent bonds are convertible into preference shares of the Issuer which are automatically
transferred to the Company in exchange for ordinary shares in the Company or (at the Company's election) any combination of ordinary
shares and cash. The 2.5 per cent bonds can be converted at any time from 14 November 2012 up to the 20th dealing day before the
maturity date.
The initial exchange price was GBP4.3752 per ordinary share, a conversion rate of approximately 22,856 ordinary shares for every
GBP100,000 nominal of the 2.5 per cent bonds. Under the terms of the 2.5 per cent bonds, the exchange price is adjusted upon certain
events including the rights issue on 22 April 2014 and the payment of dividends by the Company.
The 2.5 per cent bonds may be redeemed at par at the Company's option subject to the Company's ordinary share price having traded at
30 per cent above the conversion price for a specified period, or at any time once 85 per cent by nominal value of the 2.5 per cent bonds
originally issued have been converted or cancelled. If not previously converted, redeemed or purchased and cancelled, the 2.5 per cent
bonds will be redeemed at par on 4 October 2018.
The 2.5 per cent bonds are designated as at fair value through profit or loss and so are presented on the balance sheet at fair value with
all gains and losses taken to the income statement through the changes in fair value of financial instruments line. At 31 December 2014,
the fair value of the 2.5 per cent bonds was GBP325.6 million (2013 – GBP312.8 million), with the change in fair value reflected in note 9.
The 2.5 per cent bonds are listed on the Professional Securities Market of the London Stock Exchange.
During the year interest of GBP7.5 million (2013 – GBP7.5 million) in respect of these bonds has been recognised within finance costs.
3.75 per cent convertible bonds ("the 3.75 per cent bonds")
In 2011 the Company issued GBP154.3 million, 3.75 per cent perpetual subordinated convertible bonds, with a conversion price of
GBP4.00 per ordinary share, in connection with the acquisition of intu Trafford Centre. These were accounted for as equity at their
fair value on issue which totalled GBP143.7 million. Following the rights issue on 22 April 2014, the conversion price was adjusted
to GBP3.64 per ordinary share. On 2 July 2014 a conversion notice was issued for all the bonds resulting in 42,394,779 new
ordinary shares being issued.
During the year interest of GBP2.9 million (2013 – GBP5.8 million) has been recognised on these bonds directly in equity. This is
deducted in arriving at earnings per share (see note 12).
23 Deferred tax provision
Under IAS 12 Income Taxes, provision is made for the deferred tax assets and liabilities associated with the revaluation of assets
and liabilities at the corporate tax rate expected to apply to the Group at the time the temporary differences are expected to reverse.
For those UK assets and liabilities benefitting from REIT exemption, the relevant tax rate will be 0 per cent (2013 – 0 per cent), for
other UK assets and liabilities the relevant rate will be 21.5 per cent (2013 – 20 per cent) and for other assets and liabilities the
relevant tax rate will be the prevailing corporate tax rate in the relevant country.
Movements in the provision for deferred tax:
Investment
and Derivative Other
development Other financial temporary
property investments instruments differences Total
GBPm GBPm GBPm GBPm GBPm
Provided deferred tax provision/(asset):
At 1 January 2013 – 8.7 (11.2) 2.5 –
Acquisition of subsidiaries 12.0 – – – 12.0
Recognised in the income statement 0.2 (1.9) 3.2 (2.9) (1.4)
Recognised in other comprehensive income – 1.6 – – 1.6
Foreign exchange movements (0.2) – – – (0.2)
At 31 December 2013 12.0 8.4 (8.0) (0.4) 12.0
Recognised in the income statement – (0.9) (5.6) (0.1) (6.6)
Recognised in other comprehensive income – 6.6 – – 6.6
Disposal of subsidiaries (note 27) (12.0) – – – (12.0)
At 31 December 2014 – 14.1 (13.6) (0.5) –
Unrecognised deferred tax asset:
At 1 January 2014 (0.3) – (23.1) (45.8) (69.2)
On acquisition of subsidiaries – – – (1.0) (1.0)
Income statement items (0.2) – (16.9) (8.9) (26.0)
At 31 December 2014 (0.5) – (40.0) (55.7) (96.2)
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 over the level of profits that will be available in the non-REIT elements of the Group in future periods.
24 Share capital and share premium
Share Share
capital premium
GBPm GBPm
Issued and fully paid
At 31 December 2013 – 973,845,701 ordinary shares of 50p each 486.9 695.6
Ordinary shares issued on conversion of bonds (note 22) 21.2 122.5
Other ordinary shares issued 150.3 403.9
At 31 December 2014 – 1,316,838,051 ordinary shares of 50p each 658.4 1,222.0
During the year the Company issued a total of 655,398 ordinary shares in connection with the exercise of options by employees and
former employees under the Intu Properties plc Approved Share Option Scheme and the Intu Properties plc Unapproved Share Option
Scheme. As a result the Company's share capital increased by GBP0.3 million and share premium by GBP1.3 million.
On 22 April 2014, the Company undertook a two for seven rights issue of 278,241,628 new ordinary shares at an issue price of 180.0
pence per share. Shareholders did not take up their rights for 2,747,838 shares, approximately one per cent of the total rights issue
shares. These shares were placed at 289.5 pence per share. The combined impact was that the Company raised a total of GBP502.4
million, before GBP12.0 million of expenses, and as a result the Company's share capital increased by GBP139.1 million and share
premium by GBP351.3 million net of expenses charged to share premium.
On 20 May 2014 and 25 November 2014, the Company issued 16,442,684 and 5,257,861 new ordinary shares respectively to
shareholders who elected to receive their 2013 final and 2014 interim dividends in shares under the Scrip Dividend Scheme. The value of
the Scrip Shares was calculated in accordance with the terms of the Scrip Dividend Scheme, being the average middle market quotations
for each day between 31 March to 4 April 2014 inclusive and between 3 October to 9 October 2014 respectively less the gross amount of
dividend payable. As a result the Company's share capital increased by GBP10.9 million and share premium by GBP51.3 million.
On 7 July 2014, the Company issued 42,394,779 new ordinary shares following conversion of 3.75 per cent convertible bonds (see note
22). Utilising the convertible bonds equity reserve of GBP143.7 million, the Company's share capital increased by GBP21.2 million and
share premium by GBP122.5 million.
At 27 February 2015, the Company had an unexpired authority to repurchase shares up to a maximum of 125,208,732 shares with a
nominal value of GBP62.6 million, and the Directors have an unexpired authority to allot up to a maximum of 353,267,119 shares with a
nominal value of GBP176.6 million.
Included within the issued share capital as at 31 December 2014 are 13,131,185 ordinary shares (2013 – 12,620,925) held by the Trustee
of the ESOP which is operated by the Company (note 25). The nominal value of these shares at 31 December 2014 is GBP6.6 million
(2013 – GBP6.3 million).
25 Employee Share Ownership Plan ("ESOP")
The cost of shares in Intu Properties plc held by the Trustee of the Employee Share Ownership Plan operated by the Company is
accounted for as a deduction from equity.
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 including joint ownership of shares in its role as Trustee of the Joint Share Ownership Plan.
Dividends of GBP1.4 million (2013 – GBP1.8 million) in respect of these shares have been waived by agreement.
2014 2013
Shares Shares
million GBPm million GBPm
At 1 January 12.6 48.2 11.4 43.9
Adjustment for rights issue 1.3 – – –
Acquisitions 0.3 1.0 2.0 7.0
Disposals (1.1) (4.1) (0.8) (2.7)
At 31 December 13.1 45.1 12.6 48.2
26 Business combinations
On 1 May 2014 the Group acquired interests in a number of entities for a consideration of GBP854.9 million. These entities together
hold a 100 per cent interest in intu Derby, a 50 per cent joint venture interest in intu Merry Hill and a 100 per cent interest in
Sprucefield retail park in Northern Ireland. The transaction is accounted for as a single business combination as this was announced
as one deal, from one ultimate vendor and completed on the same day. Consideration was in cash and totalled GBP854.9 million,
consisting of a payment on completion of GBP867.8 million less GBP12.9 million received following final agreement of the
completion balance sheet. The cash flow statement reflects the GBP854.9 million less the cash acquired of GBP3.6 million.
Acquisition related costs of GBP11.8 million have been incurred in the year and recognised in the income statement in exceptional
administration expenses. Further details of the acquisition are given in the Strategic review.
The fair value of assets and liabilities acquired is set out in the table below:
Fair value
GBPm
Assets
Investment and development property 458.4
Investment in joint venture – intu Merry Hill 403.8
Cash and cash equivalents 3.6
Trade and other receivables 2.8
Total assets 868.6
Liabilities
Trade and other payables (12.1)
Total liabilities (12.1)
Net assets 856.5
Fair value of consideration paid 854.9
Gain on acquisition of businesses 1.6
The fair value of the assets, investment in joint venture and liabilities acquired exceeds the fair value of the consideration and as a
result a gain of GBP1.6 million is recognised in the income statement on acquisition.
The acquired companies contributed GBP28.7 million to the revenue of the Group and GBP76.9 million to the profit of the Group for
the year.
27 Disposal of subsidiaries
On 20 June 2014, the Group sold 80 per cent of its interest in Intu Uxbridge Limited, a wholly owned subsidiary, for consideration of
GBP174.6 million, before expenses of GBP1.3 million. The Group retains a 20 per cent interest in the company and as a result of
the terms governing the management of the business, this interest has been accounted for as a joint venture from 20 June 2014. As
a result of this transaction the Group has recorded a gain on disposal of GBP0.6 million in the income statement. The cash flow
statement records a net inflow of GBP174.1 million being cash received of GBP174.6 million net of cash in the business of GBP0.5
million.
During the year CPPIB, who held a 49 per cent non-controlling interest in Parque Principado S.à r.l., exercised an option allowing
them to acquire an additional one per cent holding and certain rights relating to the management of the business. This has resulted
in Parque Principado, previously accounted for as a subsidiary, being accounted for as a joint venture from that date. As a result the
assets and liabilities of Parque Principado, previously recorded in the balance sheet at 100 per cent, and the related non-controlling
interest in reserves of GBP68.7 million, have been reclassified to investments in joint ventures. The cash flow statement shows an
outflow of GBP11.6 million representing cash in the business of GBP12.9 million, which is reclassified as part of the investment in
joint ventures, net of consideration received on exercise of the option of GBP1.3 million. No gain or loss arose on exercise of the
option.
28 Capital commitments
At 31 December 2014, the Board had approved GBP80.1 million (2013 – GBP86.1 million) of future expenditure for the purchase,
construction, development and enhancement of investment property. Of this, GBP30.7 million (2013 – GBP54.3 million) is
contractually committed. The majority of this is expected to be spent in 2015.
29 Contingent liabilities
At 31 December 2014, the Group has no material contingent liabilities other than those arising in the normal course of business.
30 Cash generated from operations
Re-presented
2014 2013
Notes GBPm GBPm
Profit before tax, joint ventures and associates 493.2 336.8
Remove:
Revaluation of investment and development property 14 (567.8) (109.9)
Gain on acquisition of businesses 26 (1.6) –
Gain on disposal of subsidiaries 27 (0.6) –
Depreciation 2.1 1.8
Share-based payments 2.5 2.0
Lease incentives and letting costs (8.3) (11.5)
Finance costs 6 197.1 192.6
Finance income 7 (11.9) (0.6)
Other finance costs 8 56.8 164.5
Change in fair value of financial instruments 9 157.6 (272.3)
Changes in working capital:
Change in trade and other receivables (29.6) (4.3)
Change in trade and other payables 3.2 1.5
Cash generated from operations 292.7 300.6
31 Related party transactions
Key management(1) compensation is analysed below:
2014 2013
GBPm GBPm
Salaries and short-term employee benefits 5.4 4.8
Pensions and other post-employment benefits 0.4 0.4
Share-based payments 1.6 1.3
7.4 6.5
(1) Key management comprise the Directors of Intu Properties plc and employees who have been designated as persons discharging managerial responsibility.
As John Whittaker, Deputy Chairman and Non-Executive Director of Intu, is the Chairman of the Peel Group, members of the Peel
Group are considered to be related parties. Total transactions between the Group and members of the Peel Group are shown
below:
2014 2013
GBPm GBPm
Income 1.6 2.7
Expenditure (0.9) (1.0)
Income predominantly relates to leases of office space and a contract to provide advertising services. Expenditure predominantly
relates to costs incurred under a management services agreement and the supply of utilities. All contracts are on an arm's length
basis at commercial rates.
Additionally, as part of the rights issue on 22 April 2014, the Peel Group agreed to underwrite their rights for which the Group paid an
underwriting fee of GBP1.0 million.
Balances outstanding between the Group and members of the Peel Group as at 31 December 2014 are shown below:
2014 2013
GBPm GBPm
Amounts owed by members of the Peel Group 0.2 0.1
Amounts owed to members of the Peel Group – (0.1)
Under the terms of the Group's acquisition of intu Trafford Centre from the Peel Group, the Peel Group have provided a guarantee in
respect of Section 106 planning obligation liabilities at Barton Square which as at 31 December 2014 totalled GBP11.6 million (2013
– GBP11.3 million).
In 2012, the Group acquired for €2.5 million, alongside a refundable deposit of €7.5 million, a three year option to purchase two
parcels of land in the province of Malaga, Spain from Peel Holdings Limited. The option was subsequently extended, for no
additional consideration, to 6 March 2015 and it is the Group's intention, subject to shareholder approval, to exercise this option in
March 2015. During the year the Group paid GBP3.1 million towards costs associated with pre-development activity.
Richard Gordon, a Non-Executive Director of Intu, is the Gordon Family Interest's representative on the Board, therefore those
companies comprising the Gordon Family Interest are considered to be related parties. As part of the rights issue on 22 April 2014,
the Gordon Family Shareholders agreed to underwrite part of their rights for which the Group paid an underwriting fee of GBP0.2
million.
32 Change in accounting policy
As described in note 1 the Group has adopted IFRS 11 Joint Arrangements in preparing these financial statements. The tables
below show the impact on the income statements and balance sheets for the periods presented in these financial statements. The
adoption of IFRS 11 Joint Arrangements has no impact on the profit for the year attributable to owners of Intu Properties plc and
non-controlling interests, basic earnings per share and diluted earnings per share, the consolidated statement of comprehensive
income or statement of changes in equity for current or comparative periods.
Details of the Group's principal investments in joint ventures are given in note 15.
Before adoption Impact of As presented
2014 IFRS 11 2014
Consolidated income statement GBPm GBPm GBPm
Revenue 582.2 (45.8) 536.4
Net rental income 396.6 (34.0) 362.6
Net other income 4.8 – 4.8
Revaluation of investment and development property 648.2 (80.4) 567.8
Gain on acquisition of businesses 1.6 – 1.6
Gain on disposal of subsidiaries 0.6 – 0.6
Administration expenses – ongoing (31.1) 0.3 (30.8)
Administration expenses – exceptional (13.9) 0.1 (13.8)
Operating profit 1,006.8 (114.0) 892.8
Finance costs (201.2) 4.1 (197.1)
Finance income 1.2 10.7 11.9
Other finance costs (56.8) – (56.8)
Change in fair value of financial instruments (157.0) (0.6) (157.6)
Net finance costs (413.8) 14.2 (399.6)
Profit before tax, joint ventures and associates 593.0 (99.8) 493.2
Share of post-tax profit of joint ventures – 99.7 99.7
Share of post-tax profit of associates 0.8 – 0.8
Profit before tax 593.8 (0.1) 593.7
Current tax (0.6) 0.1 (0.5)
Deferred tax 6.6 – 6.6
Taxation 6.0 0.1 6.1
Profit for the year 599.8 – 599.8
As previously presented Impact of Re-presented
2013 IFRS 11 2013
Consolidated income statement GBPm GBPm GBPm
Revenue 533.2 (21.6) 511.6
Net rental income 369.5 (13.3) 356.2
Net other income 3.8 (0.1) 3.7
Revaluation of investment and development property 125.8 (15.9) 109.9
Administration expenses – ongoing (27.7) 0.1 (27.6)
Administration expenses – exceptional (21.2) – (21.2)
Operating profit 450.2 (29.2) 421.0
Finance costs (197.2) 4.6 (192.6)
Finance income 0.6 – 0.6
Other finance costs (164.5) – (164.5)
Change in fair value of financial instruments 273.8 (1.5) 272.3
Net finance costs (87.3) 3.1 (84.2)
Profit before tax, joint ventures and associates 362.9 (26.1) 336.8
Share of post-tax profit of joint ventures – 26.1 26.1
Share of post-tax profit of associates 0.5 – 0.5
Profit before tax 363.4 – 363.4
Current tax (0.8) – (0.8)
Deferred tax 1.4 – 1.4
Taxation 0.6 – 0.6
Profit for the year 364.0 – 364.0
Before adoption Impact of As presented
2014 IFRS 11 2014
Consolidated balance sheet GBPm GBPm GBPm
Non-current assets
Investment and development property 8,888.8 (869.2) 8,019.6
Plant and equipment 5.1 – 5.1
Investment in joint ventures – 851.5 851.5
Investment in associates 38.0 – 38.0
Other investments 189.7 – 189.7
Goodwill 5.9 (1.9) 4.0
Derivative financial instruments 9.0 – 9.0
Trade and other receivables 113.8 (14.1) 99.7
9,250.3 (33.7) 9,216.6
Current assets
Trading property 0.1 (0.1) –
Trade and other receivables 128.1 (13.4) 114.7
Derivative financial instruments 0.7 – 0.7
Cash and cash equivalents 260.1 (30.1) 230.0
389.0 (43.6) 345.4
Total assets 9,639.3 (77.3) 9,562.0
Current liabilities
Trade and other payables (270.8) 19.3 (251.5)
Current tax liabilities (0.7) 0.1 (0.6)
Borrowings (21.3) – (21.3)
Derivative financial instruments (80.7) – (80.7)
(373.5) 19.4 (354.1)
Non-current liabilities
Borrowings (4,368.3) 35.6 (4,332.7)
Derivative financial instruments (276.2) 0.4 (275.8)
Other payables (18.9) 16.3 (2.6)
Deferred tax (5.6) 5.6 –
(4,669.0) 57.9 (4,611.1)
Total liabilities (5,042.5) 77.3 (4,965.2)
Net assets 4,596.8 – 4,596.8
As previously presented Impact of Re-presented
2013 IFRS 11 2013
Consolidated balance sheet GBPm GBPm GBPm
Non-current assets
Investment and development property 7,551.4 (272.7) 7,278.7
Plant and equipment 5.5 – 5.5
Investment in joint ventures – 209.5 209.5
Investment in associates 35.8 – 35.8
Other investments 154.9 – 154.9
Goodwill 8.2 – 8.2
Derivative financial instruments 25.1 – 25.1
Trade and other receivables 111.2 (12.0) 99.2
7,892.1 (75.2) 7,816.9
Current assets
Trading property 0.4 (0.2) 0.2
Trade and other receivables 81.6 (3.5) 78.1
Derivative financial instruments 0.7 – 0.7
Short-term investments 69.3 – 69.3
Cash and cash equivalents 165.5 (8.8) 156.7
317.5 (12.5) 305.0
Total assets 8,209.6 (87.7) 8,121.9
Current liabilities
Trade and other payables (245.8) 7.7 (238.1)
Current tax liabilities (1.2) 0.3 (0.9)
Borrowings (149.2) 78.3 (70.9)
Derivative financial instruments (11.4) 1.3 (10.1)
(407.6) 87.6 (320.0)
Non-current liabilities
Borrowings (3,944.0) – (3,944.0)
Derivative financial instruments (220.5) – (220.5)
Other payables (4.4) 0.1 (4.3)
Deferred tax (12.0) – (12.0)
(4,180.9) 0.1 (4,180.8)
Total liabilities (4,588.5) 87.7 (4,500.8)
Net assets 3,621.1 – 3,621.1
33 Events after the reporting period
On 19 January 2015 the Group completed the acquisition of Puerto Venecia Investments SOCIMI SA which owns the Puerto
Venecia shopping centre in Zaragoza, Spain. Initial consideration was €215.5 million which will be adjusted to reflect the finalisation
of the completion balance sheet. Additionally, loans of €59.1 million were acquired from the vendor. The value of investment
properties on acquisition was €450.8 million and loan liabilities of €180.9 million were acquired and refinanced on completion. An
exercise is being undertaken to assess the fair value of assets and liabilities acquired but has not been completed at the date of
signing these financial statements.
34 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 Johannesburg
Stock Exchange, South Africa.
OTHER INFORMATION (unaudited)
INVESTMENT AND DEVELOPMENT PROPERTY (unaudited)
Market Revaluation Net initial "Topped Nominal
value surplus/ yield -up" NIY equivalent
GBPm Note (EPRA) Occupancy
deficit % Ownership (EPRA) yield
As at 31 December 2014
Subsidiaries
intu Trafford Centre 2,200.0 +16% 100% 3.9% 4.0% 4.5% 95%
intu Lakeside 1,255.0 +11% 100% 4.2% 4.4% 5.0% 96%
intu Metrocentre 928.1 +4% 90% A 4.3% 4.7% 5.4% 96%
intu Braehead 599.3 –1% 100% 3.7% 4.1% 5.9% 92%
Manchester Arndale 430.2 +7% 48% B 4.6% 4.7% 5.2% 96%
Intu Derby 420.0 +8% E 100% 6.3% 6.6% 6.2% 100%
intu Watford 335.0 +3% 93% 4.5% 4.8% 6.3% 92%
intu Victoria Centre 314.0 –7% 100% 4.0% 4.6% 6.2% 93%
intu Milton Keynes 277.5 +10% 100% 4.5% 4.6% 4.9% 99%
intu Eldon Square 272.6 +7% 60% 4.1% 4.9% 6.1% 95%
intu Chapelfield 261.0 +7% 100% 5.0% 5.5% 6.0% 97%
Cribbs Causeway 242.9 +5% 33% C 4.1% 4.3% 5.5% 90%
intu Bromley 170.7 +5% 64% 5.3% 5.6% 7.1% 86%
intu Potteries 164.5 –3% 100% 5.3% 5.4% 7.5% 95%
Other 210.8 D
Investment and development
property excluding Group's
share of joint ventures 8,081.6
Joint ventures
St David's, Cardiff 308.0 +15% 50% 4.7% 4.9% 5.2% 93%
intu Merry Hill 434.8 +7% E 50% 5.1% 5.2% 5.1% 95%
Parque Principado 82.2 +21% F 50% 5.7% 6.5% 6.0% 99%
Other 56.8 D
Investment and development
property including Group's
share of joint ventures 8,963.4 4.36% 4.60% 5.32% 95%
As at 31 December 2013 including
Group's share of joint ventures 7,623.8 4.74% 4.97% 5.79% 95%
Notes
A Interest shown is that of the Metrocentre Partnership in intu Metrocentre (90 per cent) and the Metro Retail Park (100 per cent). The Group
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 operation ownership of a 95 per cent interest in Manchester Arndale, and a 90 per cent interest
in New Cathedral Street, Manchester.
C The Group's interest is through a joint operation 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 interests in intu Broadmarsh, Soar at intu Braehead, Sprucefield and intu Uxbridge.
E Revaluation surplus assessed from date of acquisition.
F Calculated in local currency.
31 December 31 December
2014 2013
GBPm GBPm
Passing rent 401.4 367.9
Annual property income 436.2 402.1
ERV 515.3 476.0
Weighted average unexpired lease term 7.4 years 7.5 years
Please refer to the Glossary for definitions.
Analysis of capital return in the year
Market value Revaluation
surplus/(deficit)
2014 2013 2014
GBPm GBPm GBPm %
Like-for-like property 7,839.7 7,187.5 587.7 8.2
Acquisitions 923.2 – 56.3 n/a
Part disposals 126.1 357.0 15.5 n/a
Developments 74.4 79.3 (11.3) n/a
Total investment and development property 8,963.4 7,623.8 648.2 n/a
FINANCIAL COVENANTS (unaudited)
Intu (SGS) Finance plc and Intu (SGS) Finco Limited ("Secured Group Structure")
Interest Interest
Loan LTV LTV cover cover
GBPm Maturity covenant* actual covenant* actual
Term loan 351.8 2018
3.875 per cent bonds 450.0 2023
4.625 per cent bonds 350.0 2028
4.250 per cent bonds 350.0 2030
1,501.8 80% 47% 125% 241%
* Tested on the Security Group, the principal assets of which are intu Lakeside, intu Braehead, intu Watford, intu Victoria Centre, intu Chapelfield and
intu Derby. Further details on the operating covenant regime are included in the 2014 Annual Report.
The structure has a tiered operating covenant regime giving the Group a significant degree of flexibility when the covenants are
below certain levels. In higher tiers the level of flexibility is reduced. The Group retains operating control below loan to value of 72.5
per cent and interest cover above 1.4x. No financial covenant default occurs unless the loan to value exceeds 80 per cent or the
interest cover falls below 1.25x.
The Trafford Centre Finance Limited
There are no financial covenants on the intu Trafford Centre debt of GBP812.7 million at 31 December 2014. However a debt
service cover ratio is assessed quarterly and where this falls below specified levels restrictions come into force. The loan to 31
December 2014 market value ratio is 38 per cent. No restrictions are in place at present.
Intu Metrocentre Finance plc
Interest Interest
Loan LTV LTV cover cover
*
GBPm Maturity covenant actual covenant actual
4.125 per cent bonds 485.0 2023 100% 52% 125% 212%
The structure's covenant regime gives the Group a significant degree of flexibility when the covenants are below certain levels. The
Group retains operating control below loan to value of 70 per cent and interest cover above 1.4x. No financial covenant default occurs
unless loan to value exceeds 100 per cent or interest cover falls below 1.25x.
Other asset-specific debt
Loan
outstanding at Loan to Interest Interest
31 January 2015(1) LTV 31 December 2014 cover cover
GBPm Maturity covenant market value(2) covenant actual(3)
intu Bromley 114.1 2016 80% 67% 120% 198%
Sprucefield 30.0 2016 65% 44% 150% 509%
intu Merry Hill 191.3 2016 65% 44% 150% 338%
intu Milton Keynes(4) 125.3 2017 65% 45% 150% 242%
Barton Square 42.5 2017 65% 49% 175% 205%
St David's, Cardiff 122.5 2021 65% 40% 150% 298%
Parque Principado(5) €94.7m 2019 65% 51% 150% 273%
(1) The loan values are the actual principal balances outstanding at 31 January 2015, which take into account any principal
repayments made in January 2015.
(2) The loan to 31 December 2014 market value provides an indication of the impact the 31 December 2014 property valuations
undertaken for inclusion in the condensed 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 31
December 2014 and 31 January 2015. The calculations are loan specific and include a variety of historic, forecast and in certain
instances a combined historic and forecast basis.
(4) During the year, the loan facility was extended by one year.
(5) 50 per cent of the debt is shown which is consistent with the Group's economic interest.
Intu Debenture plc
Capital Capital Interest Interest
Loan cover cover cover cover
GBPm Maturity covenant actual covenant actual
231.4 2027 150% 231% 100% 114%
The debenture is currently secured on a number of the Group's properties including intu Potteries, intu Eldon Square, intu
Broadmarsh and Soar at intu Braehead.
Should the capital cover or interest cover test be breached, Intu 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 capital
cover and interest cover tests are satisfied immediately following the substitution.
Financial covenants on corporate facilities
Interest Interest Borrowings/ Borrowings/
Net worth Net worth cover cover net worth net worth
covenant actual covenant actual covenant actual
GBP600m facility, maturing in GBP750m GBP2,575.3m 120% 192% 110% 57%
2019*
GBP300m due 2018 2.5 per cent
convertible bonds** n/a n/a n/a n/a 175% 10%
* 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 Manchester Arndale and Cribbs Causeway.
** Tested on the Group excluding, at the Group's election, the borrowings on certain subsidiaries with asset-specific finance.
Interest rate swaps
The table below sets out the nominal amount and average rate of hedging, excluding lenders' margins, in place under
current and forward starting swap contracts.
Average
Nominal amount rate
GBPm %
In effect on or after:
1 year 1,678.3 3.20
2 years 1,382.4 3.41
5 years 926.8 4.62
10 years 675.9 4.82
15 years 665.6 4.83
20 years 283.5 4.53
GROUP INCLUDING SHARE OF JOINT VENTURES (unaudited)
The information below is presented to show the Group including share of joint ventures. A reconciliation from the amounts shown in
the Group's income statement and balance sheet is also shown.
Underlying profit for the year ended 31 December 2014
Group
Group's Share of including
income joint share of joint
statement ventures ventures
GBPm GBPm GBPm
Rent receivable 441.1 39.3 480.4
Service charge income 88.2 9.5 97.7
Facilities management income from joint ventures 7.1 (3.0) 4.1
Revenue 536.4 45.8 582.2
Net rental income 362.6 34.0 396.6
Net other income 4.8 – 4.8
Administration expenses (30.8) (0.3) (31.1)
Underlying operating profit 336.6 33.7 370.3
Finance costs (197.1) (4.1) (201.2)
Finance income 11.9 (10.7) 1.2
Other finance costs (6.1) – (6.1)
Underlying net finance costs (191.3) (14.8) (206.1)
Underlying profit before tax, joint ventures
and associates 145.3 18.9 164.2
Tax on underlying profit (0.6) (0.3) (0.9)
Share of underlying profit of joint ventures 18.6 (18.6) –
Remove amounts attributable to non-controlling interests 1.3 – 1.3
Interest on convertible bonds deducted directly in equity (2.9) – (2.9)
Underlying earnings 161.7 – 161.7
Balance sheet as at 31 December 2014
Group
Group's Share of including
balance joint share of joint
sheet ventures ventures
GBPm GBPm GBPm
Assets
Investment and development property 8,019.6 869.2 8,888.8
Investments in joint ventures 851.5 (851.5) –
Derivative financial instruments 9.7 – 9.7
Cash and cash equivalents 230.0 30.1 260.1
Other assets 451.2 29.5 480.7
Total assets 9,562.0 77.3 9,639.3
Liabilities
Borrowings (4,354.0) (35.6) (4,389.6)
Derivative financial instruments (356.5) (0.4) (356.9)
Other liabilities (254.7) (41.3) (296.0)
Total liabilities (4,965.2) (77.3) (5,042.5)
Net assets 4,596.8 – 4,596.8
Net external debt
The table below provides a reconciliation between the components of net debt included on the Group's balance sheet and net
external debt including the Group's share of joint ventures' debt and cash.
2014 2013
GBPm GBPm
Total borrowings 4,354.0 4,014.9
Cash and cash equivalents (230.0) (156.7)
Net debt 4,124.0 3,858.2
Metrocentre compound financial instrument (166.1) (160.0)
Short-term investments(1) – (69.3)
Net external debt – before Group's share of joint ventures 3,957.9 3,628.9
Add share of borrowing of joint ventures 35.6 78.3
Less share of cash of joint ventures (30.1) (8.8)
Net external debt – including Group's share of joint ventures 3,963.4 3,698.4
Analysed as:
Debt including Group's share of joint ventures 4,223.5 3,933.2
Cash including Group's share of joint ventures (260.1) (165.5)
Short-term investments(1) – (69.3)
Net external debt – including Group's share of joint ventures 3,963.4 3,698.4
(1) Short-term investments represent CMBS notes issued in respect of intu Metrocentre and received as cash in February 2014 following refinancing of this debt.
Debt to assets ratio
2014 2013
GBPm GBPm
Market value of investment and development property 8,963.4 7,623.8
Net external debt (3,963.4) (3,698.4)
Debt to assets ratio 44.2% 48.5%
Interest cover
2014 2013
GBPm GBPm
Finance costs (201.2) (197.2)
Finance income 1.2 0.6
Interest on convertible bonds recognised directly to equity (2.9) (5.8)
(202.9) (202.4)
Underlying operating profit 370.3 345.6
Less trading property related items (0.6) (0.1)
369.7 345.5
Interest cover 1.82x 1.71x
UNDERLYING PROFIT STATEMENT (unadited)
For the year ended 31 December 2014
The underlying profit information in the table below shows the Group including its share of joint ventures which have been included
on a line-by-line basis.
Six months Six months Six months Six months
Year ended Year ended ended ended ended ended
31 December 31 December 31 December 31 December 30 June 30 June
2014 2013 2014 2013 2014 2013
GBPm GBPm GBPm GBPm GBPm GBPm
Net rental income 396.6 369.5 207.4 188.5 189.2 181.0
Net other income 4.8 3.8 2.8 1.4 2.0 2.4
401.4 373.3 210.2 189.9 191.2 183.4
Administration expenses (31.1) (27.7) (16.2) (13.8) (14.9) (13.9)
Underlying operating profit 370.3 345.6 194.0 176.1 176.3 169.5
Finance costs (201.2) (197.2) (103.5) (98.7) (97.7) (98.5)
Finance income 1.2 0.6 0.7 – 0.5 0.6
Other finance costs (6.1) (6.5) (3.0) (3.2) (3.1) (3.3)
Underlying net finance costs (206.1) (203.1) (105.8) (101.9) (100.3) (101.2)
Underlying profit before
tax and associates 164.2 142.5 88.2 74.2 76.0 68.3
Tax on underlying profit (0.9) (0.9) (0.6) (0.6) (0.3) (0.3)
Share of underlying
profit/(loss) of associates – – – (0.1) – 0.1
Remove amounts
attributable to non-controlling
interests 1.3 4.4 2.1 1.5 (0.8) 2.9
Interest on convertible bonds
deducted directly in equity (2.9) (5.8) – (2.9) (2.9) (2.9)
Underlying earnings 161.7 140.2 89.7 72.1 72.0 68.1
Underlying earnings per
share (pence) 13.3p 13.7p 6.9p 6.9p 6.4p 6.8p
Weighted average number
of shares (million) 1,214.6 1,027.1 1,297.9 1,049.7 1,129.5 1,004.0
For the reconciliation from basic earnings per share see note 12.
EPRA Cost Ratios
2014 2013
GBPm GBPm
Other non-recoverable costs 49.1 43.9
Administration expenses – ongoing 31.1 27.7
Net service charge costs 11.3 10.7
Remove:
Service charge costs recovered through rents (3.3) (2.5)
EPRA costs – including direct vacancy costs 88.2 79.8
Direct vacancy costs (17.9) (13.5)
EPRA costs – excluding direct vacancy costs 70.3 66.3
Rent receivable 480.4 447.6
Rent payable (23.4) (23.5)
Gross rental income less ground rent payable 457.0 424.1
Remove:
Service charge costs recovered through rents (3.3) (2.5)
Gross rental income 453.7 421.6
EPRA cost ratio (including direct vacancy costs) 19.4% 18.9%
EPRA cost ratio (excluding direct vacancy costs) 15.5% 15.7%
GLOSSARY
ABC1 customers
Proportion of customers within UK social groups A, B and C1, defined as members of households whose chief earner's
occupation is professional, higher or intermediate management, or supervisory.
Annual property income
The Group's share of passing rent plus the external valuers' estimate of annual excess turnover rent and sundry income such
as that from car parks and mall commercialisation.
Debt to assets ratio
Net external debt divided by the market value of investment and development property.
Diluted figures
Reported amounts adjusted to include the effects of dilutive potential shares issuable under convertible bonds and
employee incentive arrangements.
Earnings per share
Profit for the period attributable to owners of Intu 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 under IFRS regarding tenant lease incentives.
Exceptional items
Exceptional items are those items that in the Directors' view are required to be separately disclosed by virtue of their size, nature
or incidence to enable a full understanding of the Group's financial performance.
Headline rent ITZA
Annual contracted rent per square foot after expiry of concessionary periods in terms of zone A.
Interest cover
Underlying operating profit excluding trading property related items divided by the net finance cost plus interest on
convertible bonds recognised in equity excluding the change in fair value of financial instruments, exceptional finance costs and
amortisation of compound financial instruments.
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.
IPD
Investment Property Databank Limited, producer of an independent benchmark of property returns.
Like-for-like property
Investment property which has been owned throughout both periods without significant capital expenditure in either period, so
that income 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.
Long-term lease
A lease with a term certain of at least five years.
LTV (loan to value)
The ratio of attributable debt to the market value of an investment property.
NAV per share (diluted, adjusted)
NAV per share calculated on a diluted basis and adjusted to reflect any unrecognised surplus on trading properties (net of
tax), to remove the fair value of derivatives (net of tax), to remove goodwill resulting from the recognition of deferred tax liabilities,
and to remove deferred tax on investment and development property and other investments.
Net asset value (‘NAV') per share
Net assets attributable to owners of Intu Properties plc divided by the number of ordinary shares in issue at the
period end.
Net external debt
Net debt after removing the Metrocentre compound financial instrument and, for 31 December 2013, short-term investments
representing CMBS notes issued in respect of intu Metrocentre and received as cash in February 2014.
Net initial yield (EPRA)
Annualised net rent on investment property (after deduction of revenue costs such as head rent, running void, service
charge after shortfalls, empty rates and merchant association contribution) expressed as a percentage of the gross market
value before deduction of theoretical acquisition costs, consistent with EPRA's net initial yield, and as provided by the Group's
independent external valuers.
Net rental income
The Group's share of net rents receivable as shown in the income statement, having taken due account of non-recoverable
costs, bad debt provisions and adjustments to comply with IFRS including those regarding tenant lease incentives.
NNNAV per share (diluted, adjusted)
NAV per share (diluted, adjusted) adjusted to include the fair values of derivatives, debt and deferred taxes.
Nominal equivalent yield
Effective annual yield to a purchaser from an asset at market value before taking account of notional acquisition costs assuming rent
is receivable annually in arrears, reflecting ERV but disregarding potential changes in market rents, as determined by the Group's
independent external valuers.
Occupancy
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. Units let to tenants in administration and still
trading are treated as let and those no longer trading are treated 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.
PMA
Property Market Analysis LLP, a producer of property market research and forecasting.
Property Income Distribution (‘PID')
A dividend, generally subject to UK withholding tax at the basic rate of income tax, that a UK REIT is required to pay to its
shareholders from its qualifying rental profits. Certain classes of shareholder may qualify to receive a PID gross,
shareholders should refer to intugroup.co.uk for further information. The Group can also pay non-PID dividends which are
not subject to UK withholding tax.
Real Estate Investment Trust (‘REIT')
REITs are internationally recognised property investment vehicles which have now been introduced in many countries around the
world. Each country has its own rules, but the broad intention of REITs is to encourage investment in domestic property by removing tax
distortions for investors. In the UK, REITs must meet certain ongoing rules and regulations, including the requirement to distribute at
least 90 per cent of qualifying rental profits to shareholders. Withholding tax of 20 per cent is deducted from these Property Income
Distributions (see Glossary). Profits from a REIT's non-property business remain subject to normal corporation tax. The Group elected for
REIT status in the UK with effect from 1 January 2007.
Scrip Dividend Scheme
The Group offers shareholders the opportunity to participate in the Scrip Dividend Scheme. This enables participating shareholders
to receive shares instead of cash when a Scrip Alternative is offered for a particular dividend.
Short-term lease
A lease with a term certain of less than five years.
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 IFRS the value of incentives granted to tenants is amortised
through the income statement on a straight-line basis over the lease term.
Topped-up NIY (EPRA)
Net initial yield adjusted for the expiration of rent free periods and other unexpired lease incentives.
Total financial return
The change in NAV per share (diluted, adjusted) plus dividends per share paid in the period expressed as a percentage of
opening NAV per share (diluted, adjusted).
Total property return
The change in capital value, less any capital expenditure incurred, plus net income in the year expressed as a percentage of the capital
employed (opening capital value plus capital expenditure incurred) in the year as calculated by IPD.
Trading property
Property held for trading purposes rather than to earn rentals or for capital appreciation and shown as a current asset in the
balance sheet.
Underlying earnings per share (‘EPS')
Earnings per share adjusted to exclude valuation movements, exceptional items and related tax.
Underlying figures
Amounts described as underlying exclude valuation movements, exceptional items and related tax.
Vacancy rate (EPRA)
The ERV of vacant space divided by total ERV.
Yield shift
A movement (usually expressed in basis points) in the yield of a property asset.
DIVIDENDS
The Directors of Intu Properties plc have proposed a final dividend per ordinary share (ISIN GB0006834344) of 9.1 pence (2013 –
9.1 pence as adjusted for the rights issue bonus factor) to bring the total dividend per ordinary share for the year to 13.7 pence (2013
– 13.7 pence as adjusted for the rights issue bonus factor). A scrip dividend alternative will continue to be offered.
The dividend may be partly paid as a Property Income Distribution (‘PID') and partly paid as a non-PID. The PID element will be
subject to deduction of a 20 per cent withholding tax unless exemptions apply (please refer to the PID special note below). Any non-
PID element will be treated as an ordinary UK company dividend. For South African shareholders, non-PID cash dividends may be
subject to deduction of South African Dividends Tax at 15 per cent.
The following are the salient dates for the payment of the proposed final dividend.
Tuesday 31 March 2015
Sterling/Rand exchange rate struck
Wednesday 1 April 2015
Sterling/Rand exchange rate and dividend amount in SA currency announced
Monday 13 April 2015
Ordinary shares listed ex-dividend on the Johannesburg Stock Exchange
Thursday 16 April 2015
Ordinary shares listed ex-dividend on the London Stock Exchange
Friday 17 April 2015
Record date for 2014 final dividend in London and Johannesburg
Thursday 28 May 2015
Dividend payment date for shareholders
South African shareholders should note that, in accordance with the requirements of Strate, the last day to trade cum-dividend will
be Friday 10 April 2015 and that no dematerialisation or rematerialisation of shares will be possible from Monday 13 April 2015 to
Friday 17 April 2015 inclusive. No transfers between the UK and South African registers may take place from Thursday 31 March
2015 to Sunday 19 April 2015 inclusive.
PID SPECIAL NOTE:
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 Intu
Properties plc website (intugroup.co.uk), or on request to our UK registrars, Capita Asset Services. Validly completed forms must be
received by Capita Asset Services no later than the dividend Record Date, to be advised; 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 for a refund of UK withholding tax deducted. Refund application forms for all non-UK shareholders are available
for download from the ‘Investors' section of the Intu Properties plc website (intugroup.co.uk), or on request to our South African
registrars, Computershare, or HMRC. UK withholding tax refunds are not claimable from Intu Properties plc, the South African
Revenue Service (‘SARS') or other national authorities, only from the UK's HMRC.
Additional information on PIDs can be found at intugroup.co.uk/investors/shareholders-bondholders/real-estate-investment-trust/.
The above does not constitute advice and shareholders should seek their own professional guidance. Intu Properties plc does not
accept liability for any loss suffered arising from reliance on the above.
Sponsor:
Merrill Lynch South Africa Proprietary Limited
Date: 27/02/2015 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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