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INTU PROPERTIES PLC - Trading Update for the Period from 1 July 2018 to 23 October 2018

Release Date: 23/10/2018 08:00
Code(s): ITU     PDF:  
Wrap Text
Trading Update for the Period from 1 July 2018 to 23 October 2018

INTU PROPERTIES PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: ITU
LEI: 213800JSNTERD5CJZO95

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION

ALTHOUGH THIS ANNOUNCEMENT REFERS TO THE POSSIBLE OFFER FOR THE COMPANY BY THE PEEL
GROUP, THE OLAYAN GROUP AND BROOKFIELD PROPERTY GROUP, THERE CAN BE NO CERTAINTY
THAT AN OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER WILL BE MADE

23 OCTOBER 2018

INTU PROPERTIES PLC

TRADING UPDATE FOR THE PERIOD FROM 1 JULY 2018 TO 23 OCTOBER 2018

A STRONG AND RESILIENT OPERATIONAL PERFORMANCE

David Fischel, intu Chief Executive, commented:
“intu has continued to deliver a strong and resilient operational performance through a period which has been
particularly challenging for UK retailers, demonstrating the clear differentiation between winning destinations such
as intu owns and the rest.
We agreed 84 long-term leases in the period at rental levels 8 per cent above previous passing rent and have
increased occupancy by 0.4 per cent to 97 per cent. Key fashion retailers continue to be attracted to our winning
locations, with names such as Monki, Bershka and Ralph Lauren signing up in the period.
In September, we opened the £180 million retail and leisure extension of intu Watford, 90 per cent let or in advanced
negotiations, as we constantly innovate and invest to ensure our business anticipates and adapts to changing
consumer trends.
The top twenty shopping centres in the UK1 account for some three per cent of UK shoppers’ annual spend and we
own eight of them, representing 76 per cent by value of our UK portfolio.
EPRA NNNAV2 per share amounts to 297p at 30 September 2018, reduced by 12p from 30 June, following a 3 per
cent fall in like-for-like property valuations between 30 June and 30 September which reflects current negative
investor sentiment towards UK retail property. We are however confident our business and assets are resilient and
can weather the challenges we are currently seeing.”
1.   GlobalData Top 50 UK Shopping Centres, October 2018. Total UK annual shoppers’ spend represents non-food retail, food services and leisure.
2.   EPRA NNNAV adjusts NAV per share (diluted, adjusted) to reflect the fair value of borrowings, derivative financial instruments and deferred taxation on revaluation of investment and
     development property.

Trading highlights
— continued tenant demand in period, signing 84 long-term leases (Q3 2017: 73 leases) delivering £15 million of
  annual rent at an average of 8 per cent above previous passing rent and in line with valuers’ assumptions. Year to
  date, signed 200 long-term leases (2017 year to date: 176 leases) delivering £32 million of annual rent at an
  average of 7 per cent above previous rent, on both a headline and net effective basis
— rent reviews settled in the period on average 5 per cent above previous passing rent. Year to date, we have
  settled 102 rent reviews for new rent totalling £30 million, 8 per cent above previous passing rents
— expect a further year of like-for-like net rental income growth, with anticipated full year growth for 2018 to be in
  the range of 0 per cent to 1 per cent, impacted by some 1.5 per cent from tenant failures in 2018
— improved occupancy of 97.0 per cent, a 0.4 per cent increase since June 2018 and 0.4 per cent ahead of
  September 2017
— outperformed footfall benchmark by 170 basis points, with footfall down 1.3 per cent year to date
— year to date capital investment of £147 million. Successfully opened the £180 million extension of intu Watford,
  on time and on budget with over 90 per cent of the 380,000 sq ft project now let or in advanced negotiations. On
  site with projects to substantially enhance intu Lakeside, intu Trafford Centre, Madrid Xanadú and Manchester
  Arndale
— property revaluation deficit of £298 million (3.0 per cent) in the period, reflecting current negative sentiment
  towards UK retail property. Portfolio valued at £9,580 million at 30 September 2018
— NAVPS (diluted, adjusted) of 344 pence (30 June 2018: 362 pence), the decrease due to the property revaluation
  deficit. EPRA NNNAV per share of 297 pence (30 June 2018: 309 pence) with the property revaluation movement
  partially offset by an improvement in mark to market movement of borrowings and financial instruments
— net external borrowings of £4,847 million (30 June 2018: £4,792 million). Reflecting reduced property valuation,
  loan to value increased to 50.6 per cent from 48.7 per cent at 30 June 2018
— cash and available facilities of £665 million at 30 September 2018, has been reduced by the scheduled repayment
  of a £160 million bond in October 2018
— mixed use opportunities include the potential for 5,000 private rental sector residential units and around 600
  hotel rooms


Conference call
A conference call for analysts and investors will be held today at 08:00 BST.
A copy of this announcement is available on our website intugroup.co.uk.


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




Valuation and EPRA NNNAV
In the context of the possible offer from the Peel Group, the Olayan Group and Brookfield Property Group (the
Consortium) announced on 4 October 2018, as further updated in an announcement by intu on 19 October 2018 (the
Possible Offer), and to ensure shareholders are in possession of the most up-to-date information, we instructed full
external independent property valuations as at 30 September 2018.
The market value of the portfolio is £9,580 million at 30 September 2018 (30 June 2018: £9,831 million). Reflecting
current negative sentiment towards UK retail property, like-for-like property values reduced by £298 million (down
3.0 per cent) in this three month period following the reduction of 5.6 per cent in the six months to 30 June 2018. The
three months’ valuation deficit was driven by an increase in yields, with the weighted average net initial yield
(topped-up) increasing by 7 basis points to 4.76 per cent and weighted average nominal equivalent yield increasing
by 9 basis points to 5.31 per cent.
At 30 September 2018, net asset value per share (diluted, adjusted) decreased by 18 pence to 344 pence (30 June
2018: 362 pence), predominantly due to the movement in property valuations.
EPRA NNNAV per share at 30 September 2018 is 297 pence, a reduction of 12 pence from 30 June 2018, with the
property revaluation movement partially offset by an improvement of 6 pence per share in mark to market
movement of borrowings and financial instruments.
Definitions of net asset value per share (diluted, adjusted) and EPRA NNNAV per share are shown in the notes
section of this document.
Growing like-for-like net rental income
We are anticipating a further year of growth in like-for-like net rental income, expected to be in the range of 0 per
cent to 1 per cent (subject to no material tenant failures). We estimate that this is impacted by some 1.5 per cent
from tenant failures in 2018, an increase on the 0.9 per cent in the first half of 2018. Tenant administrations in the
period, in particular the write-off of balances relating to House of Fraser and Coast, have resulted in a reduction from
previous guidance. Currently, 3 per cent of our rent roll is from tenants who have entered a CVA or administration
process in 2018.
Considering the portfolio’s reversionary potential, the impact of intu’s continued investment programme, improving
tenant mix and ongoing demand for intu’s prime space in the UK, we continue to target growth of 2 to 3 per cent per
annum over the medium term of the next three to five years. For 2019, we anticipate slightly lower growth of around
1 per cent reflecting the current conditions in the retail property market.
Like-for-like net rental income operating metrics
Occupancy at 30 September 2018 was 97.0 per cent, a 0.4 per cent improvement on June 2018 and 0.4 per cent
ahead of September 2017.
We continue to see letting activity running at similar levels to recent years. In the third quarter, we agreed 84 long-
term leases, amounting to £15 million annual rent (Q3 2017: 73 leases; £13 million of new passing rent). In aggregate,
these were 8 per cent above previous passing rent (like-for-like units) and in line with valuers’ assumptions.
Year to date, we have signed 200 new leases (2017 YTD: 176 leases) producing £32 million of new annual rent, 7 per
cent above previous passing rent. On a net effective basis (net of rent free and incentives), rents were 7 per cent
ahead of previous rents.
This activity, both in the period and year to date, underlines the strength of intu centres as the market continues to
polarise with occupiers focusing on flagship stores in prime, high footfall retail destinations. While the UK letting
market is challenging, our winning destinations continue to be in demand from quality retailers. Significant activity in
the period includes:
— key fashion retailers continuing to roll out their portfolio of brands, H&M are opening their seventh Monki store
  in the UK, and second in the intu portfolio, at intu Eldon Square. Inditex are also continuing to expand their
  brands, alongside Zara, opening Bershka at St David’s, Cardiff
— international brands’ ongoing appreciation of the attraction of intu’s destination shopping centres. Typo, the
  Australian stationery brand, is opening three stores in the intu portfolio at intu Merry Hill, intu Watford and intu
    Eldon Square, taking its UK presence to 12 stores. Ralph Lauren has opened its seventh UK store at Manchester
    Arndale and Lego is opening one of its first Spanish stores at intu Puerto Venecia
— retailers ensuring they are part of our market leading new developments. JD Sports brands, Tessuti and Scott’s,
  have exchanged to be part of the £17 million Halle Place development at Manchester Arndale, which is
  completing shortly
— leisure operators bringing a differentiated offering to our regional destinations. At Madrid Xanadú, Cinesa has
  extended its lease and fully refurbished its cinema. The aquarium and Nickelodeon theme park expected to open
  later this year will further enhance the leisure offer at Madrid Xanadú. This follows the successful letting of
  leisure projects at intu Watford and intu Lakeside, discussed below
We have settled 102 rent reviews in the year to date for new rents totalling £30 million, an average uplift of 8 per cent
on the previous rents.
The weighted average unexpired lease term is 7.4 years (30 June 2018: 7.4 years) illustrating the longevity of our
income streams which in the main are with well financed businesses.
Delivering operational excellence
We monitor our performance through a range of metrics to ensure we are meeting both our customer and retailer
requirements.
The importance of the UK’s highest quality shopping centres to customer and retailer requirements is illustrated in
GlobalData’s new 2018 Top 50 UK Shopping Centre Report which takes into account the views of both tenants and
shoppers to provide its comprehensive assessment on the UK’s top shopping centres. GlobalData estimates that the
top 20 centres account for around 3 per cent of the UK shopper annual spend on non-food retail, food services and
leisure. We own eight of the top 20 centres in the UK, per this report, representing 76 per cent of our UK portfolio by
market value, illustrating the concentration of our portfolio to the very top locations in the UK.
Footfall in our centres has been robust considering the unusual weather events in 2018 with periods of severe snow
followed by the high temperatures through the summer. Overall, our footfall has decreased by 1.3 per cent year to
date, but significantly outperformed the BRC Springboard footfall monitor for UK shopping centres which was down
on average by 3.0 per cent, highlighting the continued attraction of our compelling destinations against the wider
market.
Our net promoter score, a measure of customer service, ran consistently high throughout the year to date averaging
74, an increase over 2017 (September 2017 year to date: 70), and demonstrating our in-centre operational excellence.
The public recognition of the brand continues to grow on an unprompted basis. Of those questioned in 2018, 27 per
cent mentioned intu when asked to name a shopping centre brand (September 2017 year to date: 24 per cent).
intu Experiences, our in-house team delivering immersive brand partnerships, mall commercialisation and
advertising, is on target to generate gross income in excess of the £22 million delivered in 2017. In the period,
promotional activity included Mazda pop-up stores at five intu centres offering a virtual reality driving experience
and Stylist Live’s first consumer event outside London at intu Trafford Centre.
In addition to what we provide in centre, our attractive digital offering through our premium content publisher and
shopping platform, intu.co.uk, continues to grow strongly and support retailers’ physical operations. Year to date
online sales for retailers have grown by 22 per cent, year-on-year, as we continued to innovate our online shop,
including introducing visual search functionality to the site.
Optimising our winning destinations
Our focus is to ensure our centres continue to be the winning destinations, where customers and retailers want to be,
both now and in the future. Our near-term pipeline consists of projects that improve the position of our flagship
centres to meet customer and occupier needs as we evolve the retail environments, enhance the catering mix and
expand the leisure offer.
Key milestones and activity in the period include:
— opened the first stores in our £180 million extension of intu Watford. At the end of September, Debenhams
  opened showcasing their new branding and store format. This has been followed by Superdry, H&M, New Look
  and Jack Wills, with Cineworld and Hollywood Bowl opening in mid-December. Leases on over 70 per cent of the
  space are exchanged, with a further 20 per cent in advanced negotiations. Our expectation is that the new space
  will be fully open and trading by spring 2019
— finished the steel work and cladding on the £72 million leisure extension at intu Lakeside. Pre-lets stand at 85 per
  cent of space with a further 6 per cent in advanced negotiations and the first unit has been handed over to
  Nickelodeon. The project remains on budget and on target, with construction expected to be completed in
  December 2018 for a spring 2019 opening
— commenced the building contract for the £72 million transformation of Barton Square at intu Trafford Centre
  which will be anchored by Primark. Pre-lets stand at 65 per cent, with a further 11 per cent in advanced
  negotiations. The project is expected to be completed in early 2020
— year to date tenants have invested around £64 million on 207 new store fit-outs, around 6 per cent of our 3,300
  units. This investment by tenants is a significant demonstration of their long-term commitment to our centres
  and is a major part of providing a fresh and ever-changing experience for our customers. In the period, we have
  opened the new 80,000 sq ft Next at intu Merry Hill and Abercrombie and Fitch’s second UK store at intu
  Trafford Centre
Mixed use opportunities
In addition to the pipeline above, we continue to look at opportunities within the portfolio for alternative uses of
some of our available land.
intu has extensive, available land. Our six major out of town centres comprise some 760 acres of land of which less
than 40 per cent has buildings, multi-storey car parks or distribution roads upon it, leaving 470 acres of surface car
parks and other potentially developable land. The city centre locations also offer opportunities for intensification of
uses.
Further, we have identified 34 sites or buildings across the portfolio with negligible income which are valued at a total
of around £65 million. The list, for example, includes a city centre site, which was valued at £3 million at 30 June 2018
and is currently under offer at a sale price of £7 million, showing the substantial potential value within these sites.
Mixed use opportunities being evaluated include residential, hotels and other uses. Initial work has highlighted the
potential for around 5,000 residential units and nearly 600 hotel rooms, with further opportunities under
consideration.
Initially, private rented sector residential opportunities to create a total of circa 1,700 units have been identified by
intu which if fully developed could in aggregate produce a yield of around 5 per cent on total development costs,
excluding land, of around £240 million.
In terms of hotels, and by way of illustration, in 2017, a 74 bedroom hotel, let to Travelodge, was completed at intu
Lakeside delivering a stabilised initial yield of 6 per cent on total development costs of £9 million. Room occupancy
has been so strong that we are now looking to add further bedrooms.
In addition to the residential and hotel opportunities listed above, further mixed use opportunities relating to office,
flexible working spaces, business lounge and service oriented uses have been identified that could generate
attractive incremental returns to our current rental income stream.
All these opportunities, which are under active consideration, would create value directly but moreover would
increase the overall attractiveness and catchment of the centres.
Making smart use of capital
We consider the structure of our borrowings, predominantly using flexible asset specific non-recourse arrangements
(86 per cent of overall debt), to be appropriate for our concentrated portfolio. As evidenced by our £148 million
disposal of a 50 per cent interest in intu Chapelfield in January 2018, we continue to look to finance capital
investment by recycling capital through the disposal of non-core assets and introducing partners to assets.
Cash and available facilities at 30 September 2018 were £665 million, subsequently reduced by the scheduled
repayment of a £160 million bond made in October 2018. Loan to value was 50.6 per cent at 30 September 2018 (30
June 2018: 48.7 per cent).
We aim to ensure that our facilities have substantial covenant headroom. By way of example, a 20 per cent fall in
capital values from the September 2018 valuations, and 10 per cent fall in income would create a covenant shortfall
on our asset specific debt of only £12 million which could be cured from available facilities.
We have minimal debt maturities before 2021, with a weighted average debt maturity of 6.0 years at 30 September
2018.


About intu
intu owns and manages some of the best shopping centres, in some of the strongest locations, in the UK and Spain.
Our UK portfolio is made up of 17 centres, including eight of the top-20, and in Spain we own three of the country’s
top-10 centres.
We are passionate about creating compelling experiences, in centre and online, that make our customers smile and
help our retailers flourish.
We attract over 400 million customer visits and over 25 million website visits a year offering a multichannel approach
that truly supports retail strategies. In 2017, we launched the UK’s first tailor-made promotional services model to
help brands as they look to optimise their portfolio or expand their UK coverage.
Our strategic focus on prime, high-footfall flagship destinations, combined with the strength and popularity of our
brand, means that intu offers enhanced footfall, dwell time and loyalty. This helps our retailers flourish, driving
occupancy and income growth.
We are committed to our local communities, with our centres supporting over 120,000 jobs (representing about 3 per
cent of the total UK retail workforce), and to operating with environmental responsibility. We have already met or
exceeded a significant number of our 2020 environmental targets.


Valuation and deferred tax liabilities
As required by the City Code on Takeovers and Mergers (the "Code") the external independent property
valuations have been prepared in accordance with the requirements of Rule 29 of the Code.
The valuation reports relating to the external independent valuation as at 30 September 2018 will be made available,
subject to certain restrictions relating to persons resident in restricted jurisdictions, on intu’s website at
www.intugroup.co.uk by no later than 12 noon (London time) on 23 October 2018.
Each of the valuers has given and not withdrawn their consent to the publication of their valuation reports on the
Company’s website.
With the exception of one residential property (for which there is a deferred tax liability of £0.1m), intu would not
expect any tax liability to arise on the sale of its UK properties as a result of being a UK REIT.
On the sale of intu’s Spanish properties, a tax liability would arise for the period such properties were not owned by a
SOCIMI, which amounted to a deferred tax liability of £72.4 million (including the intu group’s share of joint ventures)
as fully provided for as at 30 September 2018.
Without prejudice to the preceding paragraphs, in accordance with Rule 29.3 of the Code, the intu Directors are not
aware of any significant change which has occurred in the deferred tax liability of intu relating to its properties since
30 September 2018, being the date to which the valuations referred to in this announcement were drawn up.


Profit estimate
Under the City Code the following statement regarding estimated net asset value (“NAV”) per share (diluted,
adjusted), EPRA NAV per share and EPRA NNNAV per share as at 30 September 2018, included in this
announcement, are treated as a profit estimate as it represents profit for a financial period which has expired and for
which audited results have not yet been published.


Third quarter ended 30 September 2018
Estimated NAV per share (diluted, adjusted) is 344 pence
Estimated EPRA NAV per share is 330 pence
Estimated EPRA NNNAV per share is 297 pence
(the "Profit Estimate")


Notes
The Profit Estimate is based on intu management's estimate of the results for the three months ended 30 September
2018.

The European Public Real Estate Association ("EPRA") has issued best practice recommendations for the calculation
of certain information. EPRA NAV per share represents equity shareholders' funds excluding the fair value of certain
financial derivatives, deferred tax balances and any associated goodwill divided by the diluted number of shares in
issue. NAV (adjusted, diluted) per share is a non-GAAP measure is presented as it is considered by the management
to be a key measure of the intu group’s performance. The key difference from EPRA NAV, an industry standard
comparable measure, is the exclusion of interest rate swaps not currently used for economic hedges of debt as, in our
view, this better allows management to review and monitor the intu group’s performance. EPRA NNNAV per share is
similar to EPRA NAV except it includes the fair value of deferred tax liabilities, debt, and financial instruments. Further
information on EPRA, EPRA NAV per share and EPRA NNNAV per share can be found at www.epra.com.

The Profit Estimate has been prepared on a basis consistent with the intu group's IFRS accounting policies, which are
applicable for the six months ended 30 June 2018. With effect from 1 January 2018 the intu group has, as required by
IFRS, implemented IFRS 15 "Revenue from contracts with customers" and IFRS 9 "Financial Instruments". As disclosed
in the financial statements for the year ended 31 December 2017, the implementation of IFRS 15 has no material
impact on the intu group's results. The impact of IFRS 9 was disclosed in the unaudited interim results for the six
months ended 30 June 2018. The Profit Estimate has therefore been prepared on this basis.

Reports
As required by Rule 28.1(a) of the City Code, the Profit Estimate has been reported on by PricewaterhouseCoopers
LLP, as reporting accountants to intu, and by Rothschild & Co, Merrill Lynch International and UBS, as financial
advisers to intu (together, the "Financial Advisers").
Parts A and B of this Appendix 1 contain PricewaterhouseCoopers LLP's and the Financial Advisers' reports on the
Profit Estimate, both of which have been prepared solely for the purpose of Rule 28.1(a) of the City Code.

PricewaterhouseCoopers LLP, Rothschild & Co, Merrill Lynch International and UBS have given and not withdrawn
their consent to the publication of their reports in the form and context in which they are included herein.
Appendix 1, Part A

Report on the Profit Estimate from PricewaterhouseCoopers LLP for the purpose of Rule 28.1(a)(i) of the City Code

The Directors
intu properties plc
40 Broadway
Westminster
London
SW1H 0BT

N M Rothschild & Sons Ltd
New Court
St Swithin’s Lane
London
EC4N 8AL

Merrill Lynch International
2 King Edward Street
London
EC1A 1HQ

UBS Limited
5 Broadgate Circle
London
EC2M 2QS

23 October 2018

Dear Sirs


Profit Estimate by intu properties plc

We report on the profit estimate comprising the statement by intu properties plc (the "Company") and its subsidiaries
(together the "Group") for the three months ended 30 September 2018 (the "Profit Estimate"). The Profit Estimate and the
basis on which it is prepared are set out in the section entitled "Profit estimate" of the intu Trading Update For the Period
From 1 July 2018 to 23 October 2018 issued by the Company dated 23 October 2018 (the "Q3 Trading Update").

This report is required by Rule 28.1(a)(i) of the City Code on Takeovers and Mergers issued by the Panel on Takeovers and
Mergers (the "City Code") and is given for the purpose of complying with that Rule and for no other purpose. Accordingly,
we assume no responsibility in respect of this report to The Peel Group, The Olayan Group and funds or vehicles which are
managed or advised by Brookfield Property Group (the “Offeror”) or any person connected to, or acting in concert with, the
Offeror or to any other person who is seeking or may in future seek to acquire control of the Company (an “Alternative
Offeror”) or to any other person connected to or acting in concert with an Alternative Offeror.

Responsibilities

It is the responsibility of the directors of the Company (the "Directors") to prepare the Profit Estimate in accordance with
the requirements of the City Code. In preparing the Profit Estimate the Directors are responsible for correcting errors that
they have identified which may have arisen in unaudited financial results and unaudited management accounts used as the
basis of preparation for the Profit Estimate.
It is our responsibility to form an opinion as required by Rule 28.1(a)(i) of the City Code as to the proper compilation of the
Profit Estimate and to report that opinion to you.

Save for any responsibility under Rule 28.1(a)(i) of the City Code to any person as and to the extent therein provided, to the
fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for
any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement,
required by and given solely for the purposes of complying with Rule 23.2 of the City Code, consenting to its inclusion in the
Q3 Trading Update.

Basis of Preparation of the Profit Estimate
The Profit Estimate has been prepared on the basis stated in the section entitled "Profit estimate" of the Q3 Trading Update
and is based on the unaudited management accounts for the three months ended 30 September 2018. The Profit Estimate
is required to be presented on a basis consistent with the accounting policies of the Group.

Basis of Opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board
in the United Kingdom. Our work included evaluating the basis on which the historical financial information for the three
months ended 30 September 2018 included in the Profit Estimate has been prepared and considering whether the Profit
Estimate has been accurately computed using that information and whether the basis of accounting used is consistent with
the accounting policies of the Group.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to
provide us with reasonable assurance that the Profit Estimate has been properly compiled on the basis stated.

However the Profit Estimate has not been audited. The actual results reported, therefore, may be affected by revisions
required to accounting estimates due to changes in circumstances, the impact of unforeseen events and the correction of
errors in the underlying financial information. Consequently we can express no opinion as to whether the actual results
achieved will correspond to those shown in the Profit Estimate and the difference may be material.

Opinion

In our opinion, the Profit Estimate has been properly compiled on the basis of the assumptions made by the Directors and
the basis of accounting used is consistent with the accounting policies of the Group.

Yours faithfully


PricewaterhouseCoopers LLP
Chartered Accountants

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The
registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers
LLP is authorised and regulated by the Financial Conduct Authority for designated investment business.


Appendix 1, Part B

Financial Advisers' report on the Profit Estimate for the purpose of Rule 28.1(a)(ii) of the City Code

The Board of Directors
intu properties plc
40 Broadway
Westminster
London
SW1H 0BT

23 October 2018
Dear Sirs,

intu properties plc profit estimate in respect of the financial quarter ended 30 September 2018 in connection with an
offer under the City Code on Takeovers and Mergers (the "Transaction")

We refer to the profit estimate made by intu properties plc ("intu") as set out in the announcement dated 23 October 2018
(the "Announcement") of which this letter forms part (the "Profit Estimate"), for which the board of directors of intu (the
"intu Board") is solely responsible under Rule 28.3 of the City Code on Takeovers and Mergers (the "City Code").

We have discussed the Profit Estimate (including the bases for belief and assumptions on which it is made), with the intu
Board, the intu officers and executives who prepared the management's estimate of the results for the 3 months ended 30
September 2018, and PricewaterhouseCoopers LLP as intu's reporting accountants. The Profit Estimate is subject to
uncertainty as described in the Announcement and our work did not involve an independent examination or verification of
any of the financial or other information underlying the Profit Estimate.

We have also reviewed the work carried out by PricewaterhouseCoopers LLP on the Profit Estimate and have discussed with
them the opinion set out in the appendix of the Announcement addressed to yourselves and ourselves on this matter and
the accounting policies and bases of calculation for the Profit Estimate.

We have relied upon the accuracy and completeness of all the financial and other information provided to us by, or on behalf
of, intu, or otherwise discussed with or reviewed by us, in connection with the Profit Estimate, and we have assumed such
accuracy and completeness for the purposes of providing this letter. In particular, we have assumed that the Profit Estimate
made available to us has been reasonably prepared on bases reflecting the best currently available estimates and judgments
of the intu Board.

We do not express any opinion as to the achievability of the Profit Estimate, whether on the basis identified by the intu
Board, or otherwise.

This letter is provided to you solely having regard to the requirements of, and in connection with, Rule 28.1(a)(ii) of the City
Code and for no other purpose. We accept no responsibility to intu or its shareholders or any person other than the intu
Board in respect of the contents of this letter. We are acting exclusively as financial advisers to intu and no one else and it
was for the purpose of complying with Rule 28.1(a)(ii) of the City Code that intu requested us to prepare this letter relating
to the Profit Estimate. No person other than the intu Board can rely on the contents of, or the work undertaken in connection
with, this letter, and to the fullest extent permitted by law, we exclude and disclaim all liability (whether in contract, tort or
otherwise) to any other person, in respect of this letter, its contents, or the work undertaken in connection with this letter,
or any of the results or conclusions that may be derived from this letter or any written or oral information provided in
connection with this letter, and any such liability is expressly disclaimed except to the extent that such liability cannot be
excluded by law.

On the basis of the foregoing, we consider that the Profit Estimate, for which you as the intu Board are solely responsible,
has been prepared with due care and consideration.

Yours faithfully,

Rothschild & Co

Merrill Lynch International

UBS Limited


JSE Sponsor: Merrill Lynch South Africa (Pty) Limited



Merrill Lynch International is a private unlimited company incorporated in England with company number 02312079 and its registered
address at 2 King Edward Street, London, United Kingdom, EC1A 1HQ.
N M Rothschild & Sons Limited is a private limited company incorporated in England with company number 00925279 and its registered
address at New Court, St Swithin’s Lane, London, United Kingdom, EC4N 8AL.

UBS Limited is a private limited company incorporated in England with company number 02035362 and its registered address at 5
Broadgate, London, United Kingdom, EC2M 2QS.



Overseas Shareholders

The release, publication or distribution of this announcement in jurisdictions other than in the United Kingdom
and South Africa may be restricted by law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom or South Africa should inform themselves about, and observe, any
applicable requirements. The information disclosed in this announcement may not be the same as that which
would have been disclosed in this announcement had been prepared in accordance with the laws of jurisdictions
outside the United Kingdom. Any failure to comply with applicable requirements may constitute a violation of
the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the
companies and persons whose names appear in this announcement disclaim any responsibility or liability for the
violation of such requirements by any person.

Notice related to financial advisers

N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is authorised and regulated by the Financial Conduct Authority
in the United Kingdom, is acting exclusively for intu and for no one else in connection with the subject matter of this
announcement and will not be responsible to anyone other than intu for providing the protections afforded to its clients or
for providing advice in connection with the subject matter of this announcement.

Merrill Lynch International, which is authorised by the Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for intu and no one
else in connection with the subject matter of this announcement and will not be responsible to anyone other than intu for
providing the protections afforded to its clients or for providing advice in connection with the subject matter of this
announcement.

UBS Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority
and the Prudential Regulation Authority in the United Kingdom, is acting as corporate broker and financial adviser to intu
and no one else in connection with the offer. In connection with such matters, UBS Limited, its affiliates and their respective
directors, officers, employees and agents will not regard any other person as their client, nor will they be responsible to any
other person for providing the protections afforded to their clients or for providing advice in relation to the offer, the contents
of this announcement or any other matter referred to herein.

Forward Looking Statements
This announcement contains certain forward-looking statements, beliefs or opinions, with respect to the financial
condition, results of operations and business of intu. These forward-looking statements can be identified by the fact that
they do not relate only to historical or current facts. Forward looking statements often use words such as “anticipate”,
“target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “hope”, “aims”, “continue”, “will”, “may”, “should”,
“would”, “could”, or other words of similar meaning. These statements are based on assumptions and assessments made
by intu, in light of its experience and its perception of historical trends, current conditions, future developments and other
factors it believes appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they
relate to events and depend on circumstances that will occur in the future and the factors described in the context of such
forward-looking statements in this document could cause actual results and developments to differ materially from those
expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been
correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only
as at the date of this announcement. Except as required by applicable law, intu 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’s expectations with regard thereto or any change in events, conditions or circumstances
on which any such statement is based.
There are several factors which could cause actual results to differ materially from those expressed or implied in forward-
looking statements. Among the factors that could cause actual results to differ materially from those described in the
forward-looking statements are changes in global, political, economic, business, competitive, market and regulatory
forces, future exchange and interest rates, changes in tax rates and future business combinations and dispositions.
Other than the Profit Estimate, no statement in this announcement is intended as a profit forecast or profit estimate for
any period and no statement in this announcement should be interpreted to mean that earnings or earnings per ordinary
share of intu for the current or future financial years would necessarily match or exceed the historical published earnings or
earnings per ordinary share for intu, as appropriate.


Rounding
Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown
for the same category presented in different sections may vary slightly and figures shown as totals may not be an
arithmetic aggregation of the figures that precede them.


Publication on Website
In accordance with the Code:
     - a copy of this document; and
     - the valuation reports relating to the external independent valuation as at 30 September 2018,
will be made available subject to certain restrictions relating to persons resident in restricted jurisdictions on intu’s website
at www.intugroup.co.uk by no later than 12 noon (London time) on 23 October 2018. For the avoidance of doubt, the
contents of this website are not incorporated into and do not form part of this document.

You may request a hard copy of this document by contacting Link Asset Services on +44 (0) 371 664 0300 (or, in the
case of shareholders resident in South Africa, Link Market Services, South Africa on +27 (0) 861 546572). You may also
request that all future documents, announcements and information to be sent to you in relation to this situation should
be in hard copy form.

Date: 23/10/2018 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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