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LBT
LILII
LBT - Liberty International Plc - Interim Report For The Half Year Ended
30 June 2009
LIBERTY INTERNATIONAL PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: LBT
Issuer Code: LILI
LIBERTY INTERNATIONAL PLC
INTERIM REPORT FOR THE HALF YEAR ENDED 30 JUNE 2009
Highlights
- Operating and Financial Review
- Directors` Responsibility Statement
- Auditors` Review Report
- Unaudited Condensed Set of Financial Statements
- Summary of Investment and Development Properties
- Appendices
- Glossary
Patrick Burgess, Chairman of Liberty International, commented:
"Liberty International`s growth over the years has come as much from active
management and redevelopment as other factors, and we already have within our
existing asset base a number of opportunities of this kind, awaiting
appropriate market conditions. Beside the prime nature of our assets, we are
recognised as having a highly effective management, the worth of which the last
few months have more than proven. We are alive to the changing market and
investor environment and in our properties and management team have what we
need to answer successfully to new opportunities to the benefit of
shareholders. We have positioned the group for market recovery in due course,
and believe retail, and thereby prime retail property, is likely to be at the
forefront of such recovery."
Enquiries:
Liberty International PLC:
Patrick Burgess Chairman +44 (0)20 7960 1273
David Fischel Chief Executive +44 (0)20 7960 1207
Ian Durant Finance Director +44 (0)20 7960 1210
Public relations:
UK: Michael Sandler, Hudson Sandler +44 (0)20 7796 4133
SA: Nicholas Williams, College Hill Associates +27 (0)11 447 3030
A presentation to analysts and investors will take place today at 9.30am GMT at
UBS, 1 Finsbury Avenue, London EC2. The presentation will also be available to
international analysts and investors through a live audio call and web cast and
after the event on the group`s website www.liberty-international.co.uk.
A copy of this press release is available for download from our website at
www.liberty-international.co.uk, and hard copies can be requested via the
website or by contacting the company (email feedback@lib-int.com or telephone
+44 (0)20 7960 1406).
This announcement includes statements that are forward-looking in nature.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of Liberty International PLC to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Any information contained in this announcement on
the price at which shares or other securities in Liberty International PLC have
been bought or sold in the past, or on the yield on such shares or other
securities, should not be relied upon as a guide to future performance.
HIGHLIGHTS
30 June 30 June 31 December
2009 2008 2008
GBPm GBPm GBPm
Net rental income 190 194 384
Underlying earnings excluding valuation
items* 47 50 105
Deficit on revaluation of investment
and development property (855) (635) (2,051)
Change in fair value of derivative
financial instruments 417 140 (665)
Loss before tax (452) (458) (2,662)
Total investment and trading properties 6,087 7,987 7,108
Net external debt (3,390) (3,740) (4,100)
Net assets (diluted, adjusted) 2,585 4,122 2,798
Adjusted earnings per share 11.6p 13.9p 29.0p
Net assets per share (diluted, adjusted) 448p 1095p 745p
Debt to asset ratio 56% 46% 58%
* Appendix 2 provides an analysis of underlying profit
Financial highlights
- Resilient group net rental income of GBP190 million, 2 per cent below 2008
first half of GBP194 million; UK regional shopping centres like-for-like 5 per
cent below 2008 first half due to tenant failures
- Investment property valuation decline moderated in the second quarter to 4.3
per cent after approximately 8.5 per cent in the first quarter. Combined 12.4
per cent decline for the six month period and aggregate 36.2 per cent from the
peak at 30 June 2007 compare favourably to the IPD monthly index (13.2 per cent
and 44.1 per cent respectively)
- 86 per cent of the group`s investment properties are prime retail, while UK
regional shopping centres comprise 73 per cent
- GBP592 million new equity raised has increased cash and available facilities
to GBP928 million
- Predominantly non-recourse debt structure - in compliance with all loan
covenants. No major secured debt refinancing until 2011 (Lakeside CMBS)
- Net assets per share (diluted, adjusted) 448p (31 March 2009 pro forma
adjusted for Capital Raising - 493p)
- 5.0p per share interim dividend declared, intended full year dividend of
16.5p (2008 - 16.5p)
Operational highlights
- CSC`s UK regional shopping centre occupancy maintained at 98.3 per cent (31
December 2008 - 98.7 per cent). Improved occupancy excluding tenants in
administration at 96.3 per cent (31 March 2009 -
95.4 per cent, 31 December 2008 - 93.6 per cent) due to re-letting activity and
fewer retailer failures in the second quarter
- Remaining capital commitments GBP172 million. St David`s 2, Cardiff, opening
Autumn 2009, now 64 percent committed by area, 53 per cent by income with a
further 8 per cent in advanced negotiation
- Covent Garden, London, occupancy up to 99 per cent (31 December 2008 - 97 per
cent), with Bedford Chambers handed over for refurbishment for a major new
flagship store opening in 2010
- Cash proceeds of GBP187 million from disposals largely complete the non-core
asset disposal programme commenced when Liberty International became a REIT on
1 January 2007
OPERATING AND FINANCIAL REVIEW
OPERATING REVIEW
INTRODUCTION AND GROUP OVERVIEW
After a two year period of exceptional turmoil, with the real estate downturn
reaching its greatest intensity in the last quarter of 2008 and early months of
2009, we can, with some relief, report to shareholders welcome signs of at
least a measure of stability, if not yet recovery, in property and economic
market conditions.
Since early March 2009, Liberty International`s share price rallied strongly.
This provided the platform for a successful placing and open offer of new
ordinary shares raising GBP592 million net of expenses (the "Capital Raising"),
through a structure which took account of the particular nature of our share
register including the listing in Johannesburg. The extra capital has
substantially improved the group`s financial position in the face of sharp
reductions in investment property values. The Board appreciates the support for
the company and it`s strategy demonstrated by our shareholders.
The fall in investment property values decelerated in the second quarter as
yields, at least for prime assets, began to stabilise with the valuation focus
now shifting from yields to rental values. In Liberty International`s case, the
second quarter saw the property valuation fall reduce to 4.3 per cent from 8.5
per cent in the first quarter amounting to 12.4 per cent overall.
The property investment market even began to strengthen in certain sectors. In
particular, quality assets of smaller lot size have proved attractive to
equity-based investors. This improvement facilitated the disposal by Liberty
International of a further GBP187 million of non-core assets, virtually
completing the disposal programme which Liberty International started on
becoming a UK Real Estate Investment Trust (`REIT`) in January 2007.
However, market liquidity remains thin for assets of larger lot size as debt
markets remain difficult with few active providers of new real estate loans. We
are however pleased to be close to concluding on acceptable terms a new loan
facility secured on St David`s Cardiff, the joint venture development with Land
Securities PLC.
Liberty International is the most specialised of the major UK REITs with prime
retail comprising 86 per cent of the group`s assets. We are encouraged by the
resilience of the business with group net rental income only reduced by 2 per
cent from GBP194 million to GBP190 million in the first half of 2009 compared
with 2008. Non-food retail sales, excluding the household goods sector where
the group has no significant exposure, have held up well year-on-year in the
first six months of 2009, with government statistics showing only a small
overall decline.
Footfall at CSC`s centres has increased by over 3 per cent, indicative of the
continuing attractiveness to the public of our quality centres in strong
locations.
Central London retail has been particularly robust with the Covent Garden
estate now 99 per cent let and trading well.
In terms of the tenant market we encountered an exceptional level of tenant
failures in CSC`s regional shopping centres in the last quarter of 2008 and
first quarter of 2009 amounting in aggregate to over 10 per cent of CSC`s rent
roll. The failure rate slowed down in the second quarter of 2009 and we have
made steady re-letting progress. Occupancy excluding tenants in administration
has increased from 93.6 per cent at 31 December 2008 to 96.3 per cent at 30
June 2009. The majority of re-lettings have been short term lettings of less
than five years at some cost in terms of rental levels achieved but providing
flexibility to benefit from market recovery.
Property Market Conditions
According to the IPD UK monthly property index, UK property capital values,
which started to decline two years ago in the second half of 2007, fell by a
further 13.2 per cent in the first half of 2009 (retail property - minus 14.0
per cent) with the greater part of the decline, 8.9 per cent, occurring in the
first quarter and a lesser 4.7 per cent in the second quarter.
Market values of the group`s investment properties declined overall by 12.4 per
cent as summarised below.
Revaluation
deficit
Market six months
value ended
30 June 30 June
2009 2009
GBPm % %
UK regional shopping centres 4,439 73% (12.8)%
Capco Covent Garden 529 9% (8.8)%
Capco Earls Court 524 8% (8.2)%
Capco GCP 224 4% (15.8)%
Capco Opportunities 10 - (23.5)%
Capco USA 368 6% (14.8)%
Total investment properties 6,094 100% (12.4)%
Nominal equivalent yield
30 June 31 December
2009 2008
UK regional shopping centres 7.37% 6.67%
Capco Covent Garden 5.59% 5.14%
Capco Earls Court
Capco GCP 6.53% 6.32%
Capco Opportunities 12.13% 11.30%
Capco USA
Total investment properties
The cumulative decline from peak for Liberty International`s investment
properties has amounted to 27.2 per cent at 31 December 2008 and 36.2 per cent
at 30 June 2009 outperforming the comparable IPD UK all-property monthly index
declines of 35.6 per cent and 44.1 per cent respectively.
In the six month period, CSC`s UK regional shopping centres saw a further 70
basis points increase in the average equivalent yields applied by the valuers
to 7.37 per cent, a level which is now at the higher end of the historical
trading range for prime centres. Indication from the valuers are that prime
retail yields have now stabilised while more secondary assets may continue to
weaken. The overall estimated rental values (`ERV`) of CSC`s centres reduced by
around 3.5 per cent. The expectation from the valuers is that changes in ERV,
which will be driven by retail market conditions, are likely to be the
significant determinant in forthcoming valuation outcomes in the short term.
Dividend
The directors have resolved to pay an interim dividend of 5.0p per share on 27
October 2009 to shareholders on the register on 2 October 2009. This dividend
will be a property income distribution (`PID`) subject to applicable
withholding tax. In line with the statement made at the time of the Capital
Raising, the directors intend, subject to available resources, to pay a
dividend in respect of 2009 on the enlarged share capital amounting to 16.5p
per share in aggregate (2008 - 16.5p per share).
The dividend policy for future years will be kept under review.
Group Prospects
As noted above, the signs of stability, if not yet recovery, in property and
economic conditions are welcome. However, the scale of the public sector
deficit and the measures required to bring government finances into reasonable
balance are likely to represent a constraining factor on UK growth prospects
for some years to come. Nevertheless, Liberty International has a high quality
and defensive UK regional shopping centre and retail property business, which
includes 9 of the top 30 UK centres and prime Central London sites such as
Covent Garden. Relatively our properties have performed well in capital value
terms since the downturn which began two years ago in the second half of 2007.
Our predominantly non-recourse and asset-specific debt structure as described
in the accompanying Financial Review provides considerable financial
flexibility.
Tenant failures amounting to over GBP30 million of CSC`s passing rent in the
last three quarters will adversely impact underlying earnings, notwithstanding
the satisfactory re-letting progress this year. Furthermore, earnings per share
will be negatively impacted in the short term as the proceeds of the Capital
Raising are for the present largely held in cash earning a low return pending
their most effective deployment, which will depend on property and debt market
conditions, and secondly as the group is now temporarily over-hedged against
interest rate risk.
Growth avenues for the group remain considerable with numerous active
management and development opportunities within existing CSC centres and our
Central London assets to be undertaken when market conditions are appropriate.
In the meantime, our rental income prospects have benefited as the difficult
property and economic conditions have sharply curbed further supply of retail
space in the UK. The group`s larger scale and attractive quality retail
destinations continue to outperform inferior locations.
We have positioned the group for market recovery in due course, and believe
retail, and thereby prime retail property, is likely to be at the forefront of
such recovery.
CAPITAL SHOPPING CENTRES
(investment properties of GBP4.4 billion at 30 June 2009, 73 per cent of the
group total)
The benefit of CSC`s focus on retail assets of the highest quality becomes most
obvious in more difficult periods, with occupancy at high levels and CSC`s
assets performing well operationally compared with retail assets of lower
quality.
CSC`s retailer tenant mix is diverse. The top 20 tenants account for 40 per
cent of CSC`s rent roll with the top 3 (Arcadia, Boots and Next) accounting for
11 per cent. National or international multiple retailers represent over 90 per
cent of the rent roll.
The current winning retailer formats are value brands and trusted names with a
strong complementary online presence.
The second quarter of 2009 saw a slow down in the level of retailer failures to
33 units, out of CSC`s 2,028 units in aggregate, involving passing rent of
GBP4.8 million (first quarter of 2009, 92 units, GBP14.5 million; last quarter
of 2008, 59 units, GBP16.1 million).
While the retail failures in 2008 and 2009 to date have negatively impacted
CSC`s net rental income, CSC`s focus on quality centres in strong locations has
enabled the group to be successful in retaining high profile retailers entering
into and emerging from the administration process who are keen to maintain
their representation in CSC centres.
Key CSC indicators
Key indicators of CSC`s performance in the year to date are as follows:
- Estimated footfall at CSC`s centres in 2009 has continued to show
encouraging strength with our 12 completed centres recording an increase of
over 3 per cent in the year to date.
- Headline occupancy levels at 30 June 2009 have remained high at 98.3 per
cent (31 December 2008 - 98.7 per cent).
- As a result of the positive re-letting activity in the period the occupancy
level, adjusted for units affected by administrations still to be re-let,
has increased to 96.3 per cent compared with 95.4 per cent at 31 March 2009
and 93.6 per cent at 31 December 2008.
CSC has made 142 re-lettings in 2009 to date involving GBP11.5 million of
new annual passing rent, compared with GBP14.2 million previously. These
tenancy changes in the period included 45 long term lettings, 75 short term
lettings, 13 lettings by our commercialisation business, CSC Enterprises,
and nine turnover-only transactions, with the short term lettings
accounting for the entire rent reduction.
Also included in the adjusted occupancy percentages are 104 units at 30
June 2009 under offer or where terms are agreed.
Short term lettings have generally been agreed below previous rental
levels, but are an important part of the current strategy to manage for
occupancy, maintaining attractiveness of the centres and minimising
exposure to void costs, while providing flexibility for CSC to benefit from
market recovery by longer-term lettings in due course.
- Rent review settlements have continued to be agreed in line with
expectations. Rent reviews prior to 2008 are now mostly agreed while good
progress has been made with the 15 per cent of CSC`s income which was
subject to review in 2008, particularly at The Mall, Cribbs Causeway.
- CSC has only 2 and 3 per cent by rental income of leases expiring in 2009
and 2010 respectively. The first major round of lease expiries is at
MetroCentre in 2011 which management is already addressing pro-actively.
- Excluding tenants in administration, and adjusted for payment plans granted
on the grounds of proven hardship, 98 per cent of the June quarter rent,
the third quarter income for 2009, was collected within 28 days of the
quarter date (March 2009 and December 2008 quarter dates - 98 and 97 per
cent respectively within 28 days). Payment plans, mostly involving monthly
rental payments, represent a small percentage of overall income.
- Net rental income for the six months ended 30 June 2009 reduced by 5.1 per
cent on a like-for-like basis from GBP132.4 million to GBP125.6 million
mostly as a result of tenant failures and associated void costs.
CSC`s development and investment activities
During the period, the group has invested GBP84 million on major developments,
principally St David`s 2, CSC`s joint venture with Land Securities in Cardiff.
Other significant extensions and refurbishments are underway at two existing
centres Eldon Square, Newcastle and MetroCentre, Gateshead. Details of
construction and letting progress are outlined below.
Cumulative Market
expenditure Expenditure value
31 Dec 2009 30 June 2009
2008
GBPm GBPm GBPm
Major developments
St David`s 2, Cardiff 215 51 93
Eldon Square,
Newcastle (60% interest) 45 17 *
MetroCentre yellow
quadrant (54% interest) 12 16 *
Revaluation Further
deficit committed
six months expenditure Expected
30 June 2009 30 June 2009 rent
GBPm GBPm GBPm
Major developments
St David`s 2, Cardiff 47 104 15
Eldon Square,
Newcastle (60% interest) * 22 6
MetroCentre yellow
quadrant (54% interest) * 10 2
* Market value and revaluation movement included in aggregate with existing
centre.
- CSC`s largest development project, St David`s, Cardiff, is on programme
to open in October this year.
The project will extend the existing St David`s centre by 967,500 sq.ft. to 1.4
million sq.ft. overall. Overall around 125 new shops and restaurants are being
developed which, when added to the existing centre, will enlarge St David`s
into one of the UK`s largest city centre retail schemes.
We are confident of the future prospects for the enlarged St David`s centre
with the existing centre already attracting 22 million customer visits each
year.
Cardiff is expected to rise to 8th place in the UK retail rankings on
completion of the St David`s development which has already attracted several
new retailers to Wales.
The new library was handed over to Cardiff Council on schedule in December and
John Lewis is currently fitting out its 260,000 sq.ft. store. Cardiff will be
its largest store outside London.
64 per cent of the area and 53 per cent of anticipated rental income is
currently either exchanged or in solicitors` hands (27 April 2009 - 57 per cent
and 47 per cent). A further 8 per cent by income is in active negotiations or
at heads of terms stage.
In 2008 a significant number of new shopping centres opened during the year
adding over 10 million sq.ft. of retail space, generally well let. In 2009,
only a small number of large retail schemes are due to open including St
David`s Cardiff. Following this, supply will be curtailed sharply, as the
current economic environment has halted many projects in the pipeline. However,
we anticipate the letting market to continue to be challenging as retailers
approach expansion with caution.
- Notable investment initiatives are:
- the upgrade of leisure and dining facilities in the Yellow and Blue
Quadrants at MetroCentre, Gateshead. The first phase of construction is
now complete and several of the restaurants are now open. The new Odeon
Cinema and family entertainment centre are on programme for opening this
Autumn with Phase 3, reconfiguration of the Blue Quadrant, due to complete
in Autumn 2010. Letting progress continues to be encouraging with 70 per
cent by income and 81 per cent by area now committed, and a further 11 per
cent by income under negotiation;
- the third and largest stage of the redevelopment of Eldon Square,
Newcastle, St Andrew`s Way Mall at the southern end of the centre, which
when complete will increase the overall size of the centre to 1.3 million
sq.ft. The new mall due to open in Spring 2010 is 83 per cent let or in
solicitors` hands by income and 85 per cent by area, with a further 9 per
cent of income in detailed negotiation.
CAPITAL & COUNTIES
(investment properties of GBP1.7 billion, 27 per cent of the group total, and
GBP93 million of investments at 30 June 2009)
Capital & Counties has focused on creating large business units in London, the
disposal of non-core assets in the UK, predominantly assets outside Central
London, and the management of overseas investments.
The strategy has enabled Capital & Counties to position itself for a market
recovery and to outperform IPD consistently with UK assets reducing in capital
value by 10.0 per cent in the six months to 30 June 2009 and 26.9 per cent
since 30 June 2007 (IPD - 13.2 per cent and 44.1 per cent respectively).
Total net rental income for the first half of 2009 was GBP57.5 million, an
increase of GBP3.4 million compared with the first half of 2008. Acquisition
activity at Earls Court less asset disposals comprised GBP1.8 million of the
favourable variance. The US business recorded a GBP2.8 million increase due to
positive exchange rate movements offset by a tenant failure.
Capital & Counties will continue to focus on London whilst seeking over time to
reduce aggregate exposure elsewhere. Our three London estates each have the
potential to generate significant value.
In the short term, we expect some downward pressure on rents but the quality
and diversity of the properties will continue to attract demand. The London
investment market has shown strong signs of life in recent months and market
consensus is for an improvement in valuation yields rather than a
deterioration.
We intend the China and India investments to run their course with no
additional funding currently envisaged beyond existing commitments and steps
will be taken to reduce exposure to the USA over time if a tax efficient
solution can be found. The strategic direction adopted in 2006 has proved to be
defensive in the downturn and has positioned Capital & Counties to benefit from
a future improvement in market conditions, particularly in London.
Covent Garden
The estate valued at GBP529 million at 30 June 2009 comprises 750,000 sq.ft. of
accommodation in 44 properties and generated net rental income of GBP12.3
million in the first half of 2009, in line with 2008. We concluded 15 new
lettings and 9 lease renewals in the period. As at 30 June 2009, portfolio
occupancy including units under offer and excluding those subject to
refurbishment was 99 per cent. In the first half of the year, the portfolio
recorded a valuation deficit of 8.8 per cent as equivalent yields increased
45 basis points, while ERV registered a 2 per cent reduction. The medium term
strategy is to drive income through the introduction of an enhanced retail and
hospitality mix with particular focus on locations with low existing rental
levels. In the longer term, numerous refurbishment and enhancement
opportunities exist to drive value further.
Earls Court & Olympia
The underlying operational business performed ahead of expectation with EBITDA
of GBP15.0 million (2008 GBP14.2 million). The property valuation declined 8.8
per cent to GBP335 million during the first half of the year.
Plans for a renovation of Olympia are being considered in the context of a
possible long term redevelopment of Earls Court which sits as the gateway to an
area being considered for comprehensive redevelopment by the local authority
and the GLA.
The Empress State office building adjacent to Earls Court, acquired in the
second half of 2008, generated GBP6.4 million in net rental income in the first
half of 2009 and registered a valuation fall of 6.0 per cent to GBP189 million.
Capital & Counties holds a controlling interest in the Earls Court and Olympia
Group and the Empress State building, therefore the above figures represent 100
per cent whereas the group`s economic interest is 50 per cent.
The Great Capital Partnership (`GCP`)
GCP, the 50 per cent joint venture with Great Portland Estates PLC, comprises
approximately 1 million sq.ft. in 34 buildings in Central London. Two disposals
were completed during the period for a combined value of GBP14 million. As at
30 June 2009, portfolio occupancy was 97 per cent of ERV including 4 per cent
by ERV attributable to areas under development, refurbishment or contracted.
Capital values have reduced by 15.8 per cent to GBP224 million for our 50 per
cent share, ERV by 14.8 per cent, and the average nominal equivalent yield
increased by 21 basis points since 31 December 2008.
International
No new capital has been committed to international investments for 18 months.
In the USA, trading conditions worsened as the recession took hold with tenant
sales in our predominantly retail portfolio falling by an estimated 6 per cent.
As at 30 June 2009, the total portfolio comprising 2.5 million sq.ft. was 93
per cent occupied by area, against 90 per cent at end 2008. Net rental income
increased to GBP12.4 million due to favourable currency translation with local
currency income slightly lower than 2008. The portfolio value fell by 14.8 per
cent to GBP368 million. The US portfolio recorded a fall of 6.8 per cent in the
first quarter which is comparable to the NCREIF TBI index which shows a first
quarter decline in property values of 5.8 per cent. We expect further rental
and valuation deterioration over the coming 18 months and are exploring methods
to mitigate our exposure.
In China, our GBP33 million investment in Harvest Capital`s first fund is
performing positively with investment property held within the fund showing a
14 per cent gain on cost. Our investment in the second fund is being used to
develop a new mall in Chongqing which is on target to open by the end of next
year. In India, our 25 per cent share of Prozone and 5 per cent interest in the
listed parent company, Provogue, is carried at GBP29 million. Prozone`s first
regional mall in Aurangabad is 60 per cent reserved and is scheduled to open by
end 2010 providing a first phase of 680,000 sq.ft. and ultimately 850,000
sq.ft.
Capco Opportunities
At the end of 2006, a substantial pool of non-core assets was identified for
sale, with disposals of GBP437 million achieved to date, of which sale proceeds
of GBP162 million have been realised in 2009. The remaining assets valued at
GBP10 million will be sold in due course.
FINANCIAL REVIEW
Results for the six months ended 30 June 2009
The results for the six months ended 30 June 2009 reflect a continuation of a
very difficult retail environment and significant reductions in property
values.
Underlying profit before tax fell by 13.7 per cent from GBP57.1 million to
GBP49.3 million, and adjusted earnings per share fell by 16.5 per cent to
11.6p.
As in 2008, the 30 June 2009 revaluation to market value of the group`s
investment and development properties resulted in a significant non-cash charge
to the income statement. This charge was in part offset by a surplus on the
mark-to- market of the group`s interest rate swaps, as medium term UK interest
rates increased over the first six months of the year.
Capital Raising
On 27 April 2009 the group announced its intention to raise GBP592 million, net
of expenses, by way of a Firm Placing of 104,839,061 new ordinary shares and a
Placing and Open Offer of 95,161,642 new ordinary shares at 310 pence per new
ordinary share. The Capital Raising was approved by shareholders at the
Extraordinary General Meeting on 22 May 2009 and the cash proceeds were
received at the end of May 2009.
The proceeds were initially used to repay the group`s outstanding revolving
credit facility with the balance currently held as cash on deposit. At 30 June
2009 the group had a total cash balance of GBP568 million. At 30 June these
funds were earning interest at a rate of approximately 0.5 per cent.
Income statement and earnings per share
The reduction in underlying profit is illustrated in a graph format, please see
Press.
The group`s net rental income reduced by 2.1 per cent to GBP190.2 million.
CSC`s net rental income reduced by GBP7.4 million due to lower underlying rent.
Capital & Counties net rental income increased by GBP3.4 million. This increase
reflects the acquisition of the Empress State property in the second half of
2008 (GBP6.4 million in 2009, GBPnil in 2008), partially offset by the impact
of disposals.
Administration expenses reduced by GBP6.4 million to GBP21.8 million in the
first half of 2009. In addition to the absence of the "one-off" reorganisation
costs incurred in the first half of 2008, actions taken in the second half of
2008 have contributed to headcount related costs being GBP4.6 million lower
than the first half of 2008.
Underlying net finance costs increased by GBP11.0 million reflecting increased
average debt compared to the comparable period in 2008, with the proceeds from
the Capital Raising having a minimal impact in the first half of 2009 as they
were received at the end of May 2009.
Balance sheet
30 June 31 December
2009 2008
GBPm GBPm
Investment, development and trading properties 6,087.3 7,107.7
Investments 93.3 128.6
Net external debt (3,389.5) (4,099.5)
Other assets and liabilities (690.6) (1,151.0)
Net assets 2,100.5 1,985.8
Minority interest (10.2) (27.8)
Attributable to equity shareholders 2,090.3 1,958.0
Fair value of derivative financial instruments
(net of tax) 322.5 659.0
Other adjustments 86.8 78.1
Adjusted net assets 2,499.6 2,695.1
Effect of dilution 85.1 102.8
Net assets (diluted, adjusted) 2,584.7 2,797.9
The first half reduction in property on the balance sheet is largely due to the
revaluation deficit of GBP855 million, plus the disposal of properties with a
book value of GBP202 million, partially offset by capital expenditure of GBP101
million.
Net external debt has fallen as a result of the group`s Capital Raising of
GBP592 million, net of expenses, which was completed in May 2009.
The fair value provision for financial derivatives, principally interest rate
swaps, included in other assets and liabilities above, fell by GBP431 million
largely as a consequence of the increase in UK interest rates, in particular
interest swap rates for periods greater than two years. The residual provision
for interest rate swaps, net of tax, of GBP323 million is added-back to arrive
at adjusted net assets.
Adjusted net assets per share
Net assets per share (diluted, adjusted) bridge : 31 De c 20 08 to 30 June 2009
This is illustrated in a graph format please see Press for details.
When the Capital Raising was announced it was indicated that the pro-forma net
assets per share, diluted adjusted, was 493 pence per share as shown above. The
reduction from the 31 December 2008 value of 745 pence per share being
attributable to the property valuation deficit to 31 March 2009 (147 pence) and
the impact of the Capital Raising (105 pence).
The most significant factor in the subsequent fall to 30 June 2009 net assets
per share of 448 pence was the property valuation deficit arising from the 30
June 2009 valuations of 57 pence per share.
Cash flow
The cash flow summary below shows a net inflow of GBP76.5 million in 2009. The
net inflow largely reflects the disposal of non-core property assets during
2009.
2009 2008
GBPm GBPm
Underlying operating cash generated 181.1 176.9
Net finance charges paid (141.1) (119.6)
Net movement in working capital (26.7) (11.0)
Recurring cash flow from operations 13.3 46.3
Property development/investments (122.6) (212.2)
Sale proceeds of property/investments 187.1 111.1
REIT entry charge and other tax (1.3) (33.1)
Dividends - (63.5)
Cash flow before financing 76.5 (151.4)
Recurring cash flow from operations has fallen from the comparable period in
2008 largely due to higher finance charges and an adverse movement in the net
working capital balance resulting from a reduction in trade and other payable
balances. The higher finance charges include a loan facility arrangement fee
(GBP5.4 million) and the termination of forward starting interest rates swap
contracts (GBP9.9 million).
As announced in the 2008 annual results the group completed the GBP40 million
acquisition of the remaining 50 per cent interest in Westgate, Oxford in
February 2009. Additionally, cash expenditure on the group`s development at
Cardiff in the period amounted to GBP40.2 million, with the balance of capital
expenditure being at CSC`s MetroCentre and Eldon Square.
The cash proceeds from the disposal of properties and investments resulted in a
cash inflow of GBP187.1 million, with the largest single item being the GBP63.8
million received for the Broadgate development in Leeds. Sales of third party
CMBS notes generated cash proceeds of GBP18.7 million.
Capital commitments
The group has an aggregate commitment to capital projects of GBP172 million.
These commitments will be funded by the group`s cash and available facilities
of GBP928 million.
Financial position
The vast majority, over 90 per cent, of the group`s debt has been arranged on a
non-recourse, asset-specific basis. This structure permits the group a higher
degree of financial flexibility in dealing with individual property issues than
a financing structure based on a single group-wide borrowing facility.
In addition to the non-recourse debt, the group has a corporate revolving
credit facility of GBP360 million, which can be utilised to fund development
and investment opportunities before they reach the stage that they can support
their own financing arrangements. This facility, which is committed to June
2011, was undrawn at 30 June 2009.
Net external debt reduced from GBP4,100 million at 31 December 2008 to GBP3,390
million at 30 June 2009. The Capital Raising, which resulted in an inflow of
GBP592 million, was the major factor in the reduced level of net debt.
The debt to assets ratio was 56 per cent, slightly lower than the 58 per cent
at 31 December 2008 with the reduced debt level compensating for the impact of
the revaluation deficit on the value of the group`s property assets.
The group had cash and available facilities of GBP928 million and is in
compliance with all of its corporate and non- recourse asset-specific loan
covenants.
Group debt ratios were as follows:
30 June 31 December
2009 2008
Debt to assets 56% 58%
Interest cover 147% 145%
Weighted average debt maturity 5.5 years 5.8 years
Weighted average cost of gross debt 6.0% 6.0%
Proportion of gross debt with interest rate
protection 106% 103%
Debt structure and maturity
Debt Maturity Profile is illustrated in a graph format, please see Press for
details.
There are no significant debt repayments due in 2009. GBP32 million of
unsecured bonds were redeemed at their scheduled maturity in March 2009. The
largest element in the balance of the current year is GBP24 million loan
amortisation of non-recourse secured debt.
In 2010, GBP142 million of debt falls due for repayment, including the
outstanding GBP79 million of convertible bonds.
The first significant maturity of secured debt, the Lakeside CMBS, occurs in
July 2011. A detailed breakdown of the group`s debt maturity is shown in note
11 of the condensed financial statements.
Financial Covenants
Full details of the loan financial covenants are shown in Appendix 1.
Financial covenants apply to GBP3.1 billion of secured non-recourse debt. The
two main covenants are Loan to Value (LTV) and Interest Cover (IC). The actual
requirements vary and are specific to each loan. At 30 June 2009 GBP853 million
of non-recourse loans had no loan to value requirement.
As noted previously the group`s debt structure gives a degree of flexibility to
deal with issues on a loan-by-loan basis as they arise. Due to the continued
fall in property valuations certain loan principal prepayments and cash
deposits have been made during July 2009 to ensure that the group`s loans
continue to remain in compliance with specific financial covenants. These
include:
- Loan principal prepayments of GBP10 million and GBP5 million were made on
loans secured on the Bromley and Uxbridge assets respectively. A further
cash payment of approximately GBP1.4 million will be required to cancel
interest rate swap contracts that were used to hedge the GBP15 million of
loans prepaid.
- GBP26.3 million CMBS notes secured on the Watford asset were prepaid.
However, these notes were owned by another group company at cancellation
resulting in the cash outflow from the group being restricted to the
GBP2.0 million that was required to cancel the interest rate swap
contracts relating to the GBP26.3 million notes.
- A cash deposit of GBP0.2 million was made to ensure that the interest
cover covenant on the loan secured on the Chapelfield, Norwich shopping
centre continued to be met. This cash will be released when the interest
cover covenant is met for two consecutive test periods.
- Discussions are on-going with lenders relating to the Nottingham shopping
centre and it is anticipated that, based on the 30 June 2009 property
valuation, a cash deposit of approximately GBP17 million may be lodged
with the lenders later in 2009. This cash deposit may be released back to
the group on a pro-rata basis should the value of the property recover.
There are LTV and IC tests that apply to the group`s GBP515 million of joint
venture borrowing. The joint ventures are in compliance with their financial
covenants.
There are three financial covenant tests that apply to the GBP360 million
secured term and revolving credit bank loan to Liberty International PLC. These
are net worth, interest cover and a borrowings to net worth test. These are
tested semi- annually on a number of the group`s companies, defined as the
Borrower Group, and all tests are currently satisfied.
There is a minimum capital cover and interest cover condition applicable to the
GBP231 million mortgage debenture tested semi-annually. Both tests are
currently satisfied.
Compliance with financial covenants is and will continue to be constantly
monitored.
The table below illustrates the approximate cash payments that could be
required to partially repay certain non-recourse loans in order to remain
within covenant limits, for a range of falls in property valuations from the 30
June 2009 valuations. The potential payments below would be in addition to the
actions listed above in relation to Bromley, Uxbridge, Watford, Norwich and
Nottingham. In certain circumstances, this analysis assumes that a potential
breach would be remedied through granting the lender additional security rather
than partial loan repayment.
Fall in property LTV cash cure
values from requirement in non-
30 June 2009 recourse facilities
% GBPm
5 30
10 90
15 200
Interest rate hedging and fair value of financial instruments
During the first half of 2009 the movement in sterling interest rates diverged
around the three year maturity date, with rates relating to shorter maturities
reducing and those greater than three years increasing. The 10-year sterling
swap rate has increased by 0.75 per cent from 31 December 2008.
This increase in long term interest rates was the major factor in the reduction
in the group`s mark-to-market liability for interest rate derivatives. At 30
June 2009 the value of the derivative financial instruments liability was
GBP358 million.
This liability includes all derivatives entered to hedge both interest rate and
currency risk exposures. Should market rates remain unaltered from their level
recorded at 30 June 2009 the following chart illustrates how the value would
reduce over time, with GBP254 million of the decrease occurring within 2 years.
Financial Derivatives - Carrying Value Time Profile
30th June 2009 Valuation of GBP(358)m - Please see Press for details.
The group`s policy is to eliminate the short and medium term risk arising on
interest rate volatility. This is generally achieved through companies within
the group entering into interest rate swap contracts to hedge the size and
maturity profile of their borrowings. Additionally, the group also holds a
portfolio of forward starting interest rate swaps to provide some certainty
around the market rate applicable on future financings. When re-financings are
undertaken the interest rate swaps would be transferred to the specific group
company undertaking the borrowing. Furthermore, with the sterling interest rate
curve having been predominately negatively sloped, it was possible to fix
forward starting swap contracts at substantially lower levels than the rate on
spot or immediately effective interest rate swaps.
However, as a consequence of the crisis in the financial services sector, the
use of a forward starting interest rate hedging strategy has become less
attractive. Previously, lenders were willing to transfer interest rate swap
contracts from one bank counterparty to another for minimal cost. This position
has radically altered with lenders either unwilling to accept interest rate
swap contracts from another counterparty or only willing to do so at a
substantial cost.
Due to this change in market practice, the group has adjusted its policy on the
level of required forward starting swaps. Therefore, during May and June the
group terminated GBP1.6 billion of forward starting interest rate swaps, which
were not attached to specific debt, for a net payment of GBP10 million, which
represented the market liability value of the swaps at the point of
termination. This net cost has been treated as an exceptional cost in the
current period and excluded from underlying profit.
Interest rates
The group`s current net debt is fully hedged through a combination of fixed
rate debt and interest rate swaps. The following interest rate swap summary
table details the amount of forward hedging in place both in nominal amount and
average rate payable under the swap contract. The group`s cost of debt will
equate to the swap rate payable plus the margin payable to the lender. The
table highlights the reduction in the nominal value of outstanding contracts as
described above:
30 June 2009 31 December 2008
Net amount Net amount
Interest rate swap summary
In effect on or after: GBPm GBPm
1 year 3,599 3,595
2 years 3,590 3,575
5 years 2,442 3,184
10 years 725 2,425
15 years 600 2,100
20 years 600 2,100
25 years 400 1,615
30 June 2009 31 December 2008
Average rate Average rate
Interest rate swap summary
In effect on or after: % %
1 year 5.27 5.28
2 years 5.27 5.27
5 years 5.27 5.16
10 years 5.02 4.69
15 years 4.83 4.58
20 years 4.83 4.58
25 years 4.59 4.40
Disposals
The principal transactions during the six-month period have been the disposals
of a number of the group`s non-core properties and investments, principally
third party CMBS notes. The book value of investment property sold was GBP202
million for cash proceeds of GBP168 million recording a book loss of GBP36
million. Third party CMBS investment disposals in the period raised cash
proceeds of GBP19 million, resulting in a loss against cost of GBP10 million.
Taxation
Since the group became a UK REIT on 1 January 2007 it has benefited from the
tax savings that being a REIT provides.
The financial benefits to date have amounted to GBP153 million, comprising net
rental income and capital gains sheltered from UK tax.
To retain its REIT status, the group is required to comply with a number of
obligations, which it has continued to do throughout the period to 30 June
2009. REIT entry charge payments of GBP1 million have been made in 2009,
bringing the total paid to GBP65 million, with GBP103 million remaining to be
settled in instalments to 2011.
Income and gains from the non-REIT qualifying parts of the group continue to be
subject to taxation, with a net tax charge of GBP43.2 million in the period to
30 June 2009. This is principally due to a GBP42.1 million deferred tax charge
arising in respect of fair value deficits arising on property valuations; fair
value gains arising on derivative financial instruments;
and tax depreciation, all in non-REIT qualifying parts of the group.
Related parties
Related party disclosures are given in note 18.
Key Risks and uncertainties
The key risks and uncertainties facing the group are as set out in the table
below:
Risk Description
Financing
Liquidity Reduced availability
Economic and property market downturn Property values decrease
Reduction in rental Income
Interest cover Interest rates fluctuate
Market price risk of fixed rate derivatives Interest rates fluctuate resulting
in significant assets and or
liabilities on derivative
contracts
REIT Breach REIT conditions
Foreign exchange Certain group investments are not
denominated in sterling
Joint Ventures Reliance on JV partners`
performance and reporting
Asset Management Tenants Tenant failure
Voids Increased voids, failure to let
developments
Reputation
Responsibility for visitors to
shopping centres Failure of Health & Safety
Business interruption Lost access to centres or head
office
People/HR Staff Key staff
Developments Time Planning
Cost and letting risk Construction cost overrun, low
occupancy levels
Impact Mitigation
Insufficient funds to Capital Raising has enhanced liquidity position
meet operational and Regular reporting of current and
financing needs projected position to the Board
Efficient treasury management and strict credit
control
Impact on covenants Regular monitoring of LTV and ICR covenants
Covenant headroom monitored and maintained;
regular market valuations; focus on quality assets
Lack of certainty over Hedging to establish long term certainty
interest costs
Potential cash outflow Manage derivative contracts to achieve a balance
if derivative contract between hedging interest rate exposure and
contains break clause minimising potential cash calls
Tax penalty or be Regular monitoring of compliance and tolerances
forced to leave the
REIT regime
Value of investments Borrowings in local currency and cross
is adversely affected by currency interest rate swaps to partially hedge
movements in exposure
impacted exchange
rates
Partners under - Agreements in place and regular communication
perform or provide with partners
incorrect information
Financial loss Initial assessment of tenant covenant
strength.
Regular reporting and modelling of tenant
covenant
Active credit control process
Financial loss Policy of active tenant mix management
Impact on reputation Annual audits carried out by external
or potential criminal/ consultants.
civil proceedings Heath & Safety policies in place
Impact on footfall and Documented Business Recovery Plans in
tenant income place
Adverse publicity Security team training and procedure in
shopping centres
Terrorist Insurance is in place
Security and Health & Safety policies and
procedures in shopping centres/offices
Flu pandemic recovery plan documented
Loss of key members Succession planning; performance
of the management evaluation; training and development;
team could impact incentive reward
adversely on the
group`s success
Securing planning Policy of sustainable development and
consent for regeneration of brownfield sites
developments Constructive dialogue with planning authorities
Returns reduced by Approval process based on detailed project costs;
increased costs or regular monitoring and forecasting of project costs
delay in securing tenants and rental income; and fixed cost contracts
DIRECTORS` RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the condensed set of financial
statements, in accordance with applicable law and regulations. The Directors
confirm that, to the best of their knowledge:
- the condensed set of financial statements on pages 18 to 35 has been
prepared in accordance with IAS 34 "Interim Financial Reporting", as
adopted by the European Union; and
- the condensed set of financial statements on pages 18 to 35 includes a
true and fair review of the information required by Sections DTR 4.2.7R
and DTR 4.2.8R of the Disclosure and Transparency Rules of the United
Kingdom`s Financial Services Authority.
The operating and financial review on pages 3 to 15 refers to important events
which have taken place in the period.
The principal risks and uncertainties facing the business are referred to on
page 15 of the operating and financial review.
Related party transactions are set out in note 18 of the condensed set of
financial statements.
A list of current Directors is maintained on the Liberty International PLC
website: www.liberty-international.co.uk.
By order of the Board
D A Fischel
Chief Executive
I C Durant
Finance Director
31 July 2009
INDEPENDENT REVIEW REPORT TO LIBERTY INTERNATIONAL PLC
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2009, which comprises the consolidated income statement, consolidated statement
of comprehensive income, consolidated balance sheet, consolidated statement of
changes in equity, consolidated statement of cash flows and related notes. We
have read the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors` responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and Transparency
Rules of the United Kingdom`s Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half- yearly financial report based on our
review. This report, including the conclusion, has been prepared for and only
for the company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, `Review of Interim Financial Information
Performed by the Independent Auditor of the Entity` issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2009 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom`s Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
London
31 July 2009
Notes:
a) The maintenance and integrity of the Liberty International PLC website
is the responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and, accordingly,
the auditors accept no responsibility for any changes that may have
occurred to the financial statements since they were initially presented on
the website.
b) Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
CONSOLIDATED INCOME STATEMENT (unaudited)
For the six months ended 30 June 2009
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
Notes GBPm GBPm GBPm
Revenue 2 306.2 308.3 618.2
Rental income 295.9 296.9 607.4
Rental expenses (105.7) (102.7) (223.9)
Net rental income 2 190.2 194.2 383.5
Other income 6.8 1.4 0.5
Deficit on revaluation
and sale of investment
and development
property 3 (890.8) (638.5) (2,057.0)
Profit on sale of
subsidiary - 0.8 0.8
Loss on sale of
investment (10.1) - -
Write down of trading
property (3.0) - (5.8)
Administration expenses (706.9) (442.1) (1,678.0)
Ongoing expenses (21.8) (28.2) (63.2)
Impairment of goodwill - (21.6) (35.0)
Operating loss (728.7) (491.9) (1,776.2)
Interest payable 4 (119.2) (115.4) (230.3)
Interest receivable 3.3 6.0 8.6
Other finance
(costs)/income 4 (24.1) 3.5 0.9
Change in fair value of
derivative financial
instruments 416.8 140.1 (665.1)
Net finance
income/(costs) 276.8 34.2 (885.9)
Loss before tax (451.9) (457.7) (2,662.1)
Current tax 0.2 (1.9) 7.0
Deferred tax (42.1) 7.5 82.2
REIT entry charge (1.3) (1.6) (3.6)
Taxation 5 (43.2) 4.0 85.6
Loss for the period (495.1) (453.7) (2,576.5)
Loss attributable to
minority interests 25.0 27.5 125.2
Loss for the period
attributable to equity
shareholders (470.1) (426.2) (2,451.3)
Basic loss per share 15 (117.0)p (117.9)p (678.1)p
Diluted loss per share 15 (113.5)p (112.9)p (651.1)p
Adjusted earnings per share are shown in note 15.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)
For the six months ended 30 June 2009
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
GBPm GBPm GBPm
Loss for the period (495.1) (453.7) (2,576.5)
Other comprehensive income
Actuarial losses on defined
benefit pension schemes
(Loss)/gain on revaluation of
investments, net exchange - - (8.1)
translation differences and other
movements (3.4) (3.4) 3.9
Net loss recognised in equity due
to minority interests - - (0.5)
Tax on items taken directly to
equity - - 7.6
Net (loss)/gain recognised in
equity (3.4) (3.4) 2.9
Total comprehensive income for
the period (498.5) (457.1) (2,573.6)
Total comprehensive income
attributable to minority
interests 25.0 27.5 125.7
Total comprehensive income
attributable to equity
shareholders (473.5) (429.6) (2,447.9)
CONSOLIDATED BALANCE SHEET (unaudited)
As at 30 June 2009
As at As at As at
30 June 31 December 30 June
2009 2008 2008
Notes GBPm GBPm GBPm
Non-current assets
Goodwill - - 5.3
Investment and
development property 7 6,062.1 7,074.4 7,948.9
Plant and equipment 1.6 1.3 0.7
Investments 63.7 96.3 99.0
Investments in associate
companies 29.6 32.3 28.4
Trade and other
receivables 9 80.8 95.6 84.6
Current assets 6,237.8 7,299.9 8,166.9
Trading property 8 25.2 33.3 38.3
Derivative financial
instruments 13 18.7 29.6 114.7
Trade and other
receivables 9 83.3 97.2 128.4
Cash and cash equivalents 568.4 70.9 117.8
695.6 231.0 399.2
Total assets 6,933.4 7,530.9 8,566.1
Current liabilities
Trade and other payables 10 (287.4) (364.9) (274.8)
Tax liabilities (1.4) (1.9) (5.0)
Borrowings, including
finance leases 11 (61.7) (95.2) (52.1)
Derivative financial
instruments 13 (376.9) (818.5) (42.6)
Non-current liabilities (727.4) (1,280.5) (374.5)
Borrowings, including
finance leases 11 (4,021.0) (4,195.5) (3,805.7)
Deferred tax provision 5 (34.9) - (60.6)
Other provisions (7.3) (7.3) (1.4)
Other payables (42.3) (61.8) (95.0)
(4,105.5) (4,264.6) (3,962.7)
Total liabilities (4,832.9) (5,545.1) (4,337.2)
Net assets 2,100.5 1,985.8 4,228.9
Equity
Called up ordinary share
capital 16 283.3 182.6 181.4
Share premium account 16 1,005.7 993.4 975.6
Treasury shares 17 (9.8) (10.8) (11.7)
Convertible bond reserve 7.6 7.6 9.1
Other reserves 775.7 287.3 274.2
Retained earnings 27.8 497.9 2,583.2
Amounts attributable to
equity shareholders 2,090.3 1,958.0 4,011.8
Minority interests 10.2 27.8 217.1
Total equity 2,100.5 1,985.8 4,228.9
Basic net assets per share 15 370p 538p 1110p
Diluted, adjusted net
assets per share 15 448p 745p 1095p
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)
For the six months ended 30 June 2009
Attributable to equity holders of the company
Share Share Treasury
Capital premium shares
GBPm GBPm GBPm
Balance at 1 January 2009 182.6 993.4 (10.8)
Loss for the period - - -
Other comprehensive
income:
Fair value gains on
available for sale
financial assets - - -
Total comprehensive
income for the period
ended 30 June 2009 - - -
Ordinary shares issued 100.7 - -
Increase in minority
interest (GIC) - - -
Inducement for conversion
of bonds - 12.2 -
Acquisition of own shares - - (0.2)
Disposal of own shares - 0.1 1.2
100.7 12.3 1.0
Balance at 30 June 2009 283.3 1,005.7 (9.8)
Bond Other Retained
reserve reserves * earnings
GBPm GBPm GBPm
Balance at 1 January 2009 7.6 287.3 497.9
Loss for the period - - (470.1)
Other comprehensive
income:
Fair value gains on
available for sale
financial assets - (3.4) -
Total comprehensive
income for the period
ended 30 June 2009 - (3.4) (470.1)
Ordinary shares issued - 504.0 -
Increase in minority
interest (GIC) - - -
Inducement for conversion
of bonds - (12.2) -
Acquisition of own shares - - -
Disposal of own shares - - -
- 491.8 -
Balance at 30 June 2009 7.6 775.7 27.8
Minority Total
Total interest equity
GBPm GBPm GBPm
Balance at 1 January 2009 1,958.0 27.8 1,985.8
Loss for the period (470.1) (25.0) (495.1)
Other comprehensive
income:
Fair value gains on
available for sale
financial assets (3.4) - (3.4)
Total comprehensive
income for the period
ended 30 June 2009 (473.5) (25.0) (498.5)
Ordinary shares issued 604.7 - 604.7
Increase in minority
interest (GIC) - 7.4 7.4
Inducement for conversion
of bonds - - -
Acquisition of own shares (0.2) - (0.2)
Disposal of own shares 1.3 - 1.3
605.8 7.4 613.2
Balance at 30 June 2009 2,090.3 10.2 2,100.5
* Included within other reserves at 30 June 2009 is GBP492 million which has
been transferred to a merger reserve following the 2009 Capital Raising.
Attributable to equity holders of the company
Share Share Treasury
capital premium shares
GBPm GBPm GBPm
Balance at 1 January 2008 181.4 975.6 (9.6)
Loss for the period - - -
Other comprehensive
income:
Fair value gains on
available for sale
financial assets - - -
Total comprehensive
income for the period
ended 30 June 2008 - - -
Dividends paid - - -
Purchase of treasury shares - - (3.5)
Sale of treasury shares - - 1.4
Minority interest additions - - -
Minority interest disposals - - -
Compound financial
instruments - - -
Movement between reserves - - -
- - (2.1)
Balance at 30 June 2008 181.4 975.6 (11.7)
Bond Other Retained
Reserve reserves earnings
GBPm GBPm GBPm
Balance at 1 January 2008 9.1 275.4 3,075.1
Loss for the period - - (426.2)
Other comprehensive
income:
Fair value gains on
available for sale
financial assets - (3.4) -
Total comprehensive
income for the period
ended 30 June 2008 - (3.4) (426.2)
Dividends paid - - (63.5)
Purchase of treasury shares - - -
Sale of treasury shares - - -
Minority interest additions - - -
Minority interest disposals - - -
Compound financial
instruments - - -
Movement between reserves - 2.2 (2.2)
- 2.2 (65.7)
Balance at 30 June 2008 9.1 274.2 2,583.2
Minority Total
Total interest equity
GBPm GBPm GBPm
Balance at 1 January 2008 4,507.0 201.9 4,708.9
Loss for the period (426.2) (27.5) (453.7)
Other comprehensive
income:
Fair value gains on
available for sale
financial assets (3.4) - (3.4)
Total comprehensive
income for the period
ended 30 June 2008 (429.6) (27.5) (457.1)
Dividends paid (63.5) - (63.5)
Purchase of treasury shares (3.5) - (3.5)
Sale of treasury shares 1.4 - 1.4
Minority interest additions - 2.5 2.5
Minority interest disposals - (2.8) (2.8)
Compound financial
instruments - 43.0 43.0
Movement between reserves - - -
(65.6) 42.7 (22.9)
Balance at 30 June 2008 4,011.8 217.1 4,228.9
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
For the six months ended 30 June 2009
Restated
Six months Year Six months
ended ended ended
30 June 31 December 30 June
2009 2008 2008
Note GBPm GBPm GBPm
Cash generated from
operations 12 154.4 362.4 165.9
Interest paid (145.6) (241.6) (125.6)
Interest received 4.5 8.6 6.0
Taxation - 1.8 (3.4)
REIT entry charge paid (1.3) (48.4) (29.7)
Cash flows from
operating activities 12.0 82.8 13.2
Cash flows from
investing activities
Purchase and development
of property (122.5) (270.6) (129.5)
Sale of property 168.4 101.6 106.1
Purchase of subsidiary
companies - (41.3) -
Sale of subsidiary
companies - 5.0 5.0
Sale of investment 18.7 - -
Purchase of non-current
asset investments (0.1) (86.2) (79.9)
Purchase of associate
companies - (2.8) (2.8)
Cash flows from
investing activities 64.5 (294.3) (101.1)
Cash flows from
financing activities
Partnership equity
introduced 7.4 6.5 -
Acquisition of own shares (0.2) (3.8) (3.7)
Issue of shares 591.7 2.5 1.6
Borrowings drawn 210.7 439.0 292.0
Borrowings repaid (387.2) (230.8) (209.1)
Equity dividends paid - (123.0) (63.5)
Cash flows from
financing activities 422.4 90.4 17.3
Effect of exchange rate
changes on cash and cash
equivalents (1.4) 3.6 -
Net increase/(decrease)
in cash and cash
equivalents 497.5 (117.5) (70.6)
Cash and cash
equivalents at beginning
of period 70.9 188.4 188.4
Cash and cash
equivalents at end of
period 568.4 70.9 117.8
NOTES (unaudited)
1 Basis of preparation
The condensed set of financial statements for the six months ended 30 June 2009
is unaudited and does not constitute statutory accounts within the meaning of
s434 of the Companies Act 2006. The condensed set of financial statements has
been prepared in accordance with the Disclosure and Transparency Rules of the
Financial Services Authority and with IAS 34 as adopted by the European Union.
The financial statements for the year ended 31 December 2008 have been filed
with the Registrar of Companies and were prepared in accordance with
International Financial Reporting standards as endorsed by the European Union
("IFRS"), IFRIC interpretations and with those parts of the Companies Act 1985
applicable to companies reporting under IFRS. The auditors` opinion on these
accounts was unqualified and did not contain an emphasis of matter paragraph or
a statement made under Section 237(2) or Section 237(3) of the Companies Act
1985.
The condensed set of financial statements should be read in conjunction with
the financial statements for the year ended 31 December 2008. The accounting
policies set out in pages 45 to 47 of the 2008 Annual Report have been
consistently applied in the preparation of this financial information, except
where stated below.
The condensed financial statements have been prepared under the historical cost
convention as modified for the revaluation of properties, available-for-sale
investments, financial assets held for trading.
The condensed financial statements have been reviewed, not audited.
The largest area of estimation and uncertainty in the condensed set of
financial statements is in respect of the valuation of the property portfolio
and investments, where external valuations were obtained. Other areas of
estimation and uncertainty are referred to in the group`s annual financial
statements.
There is no material seasonal impact on the group`s financial performance.
Taxes on income in interim periods are accrued using tax rates expected to be
applicable to total annual earnings. Except as described below, the condensed
set of financial statements has been prepared using the accounting policies
consistent with those set out in pages 45 to 47 of the 2008 Annual Report.
Standards and guidelines relevant to the group that were in issue at the date
of approval of the condensed financial statements but not yet effective for the
current accounting period were:
IFRS 3 (amendment) `Business Combinations`, and IFRS 5 (amendment) `Non Current
Assets held for sale and discontinued operations`, both effective for annual
periods beginning on or after 1 July 2009.
These pronouncements, when applied, are not expected to have a material impact
on the condensed financial statements, but will result in changes to
presentation and/or disclosure.
The assessment of new standards, amendments and interpretations issued but not
effective, not included above are not anticipated to have a material impact on
the financial statements.
During 2009, the following accounting standards and guidance were adopted by
the group:
IAS 1 (amendment) `Presentation of Financial Statements`;
IAS 16 (amendment) `Property, Plant and Equipment`;
IAS 23 (revised) `Borrowing Costs`;
IAS 27 (amendment) `Consolidated and Separate Financial Statements`;
IAS 32 (amendment) `Financial Instruments: Presentation`;
IAS 39 (amendment) `Financial Instruments: Recognition and Measurement`;
IAS 40 (amendment) `Investment Property`;
IFRS 2 (amendment) `Share-based payment`;
IFRS 8, `Operating Segments`;
IAS 7 (amendment) `Statement of Cash Flows`; and
IAS 34 (amendment) `Interim Financial Reporting`;
All of the above were effective for accounting periods beginning on or after 1
January 2009.
These pronouncements either had no impact on the condensed financial statements
or resulted in changes to presentation and disclosure only.
Going concern basis
The Directors are satisfied that the group has the resources to continue in
operational existence for the foreseeable future, for this reason the financial
statements continue to be prepared on the going concern basis.
Restatement of the prior year comparatives
On the face of the cash flow statement, purchase of associate companies and
purchase of non-current investments are shown separately for the period ended
30 June 2008 whereas previously they were aggregated together as purchase of
non- current investments.
There has been a reallocation between change in trade and other payables and
borrowings of GBP39.0 million. This is to correct the cash flow treatment of
the sale of a subsidiary entity for the period ended 30 June 2008. As a result
cash generated from operations has decreased by GBP39.0 million and cash flow
from financing activities has increased by GBP39.0 million.
2 Segmental reporting
For management and reporting purposes the group is organised into two operating
divisions, CSC, representing the group`s investments in UK shopping centres,
and C&C, representing the group`s other commercial property investments.
Exhibition as a segment forms part of the C&C division but is shown separately
due to its size, business sector and income stream differing to other C&C
investments.
Six months ended 30 June 2009
Group
CSC C&C Exhibition total
GBPm GBPm GBPm GBPm
Revenue 205.6 68.1 32.5 306.2
Rent receivable 171.1 55.8 32.5 259.4
Service charge income 29.4 7.1 - 36.5
200.5 62.9 32.5 295.9
Rent payable (10.2) (0.7) - (10.9)
Service charge and
other non-recoverable
costs (57.6) (22.1) (15.1) (94.8)
Net rental income 132.7 40.1 17.4 190.2
Other income 5.0 1.8 - 6.8
Deficit on revaluation
and sale of investment
and development
property (650.8) (205.2) (34.8) (890.8)
Write down of trading
property - (3.0) - (3.0)
Loss on sale of
investment - (10.1) - (10.1)
Segment result (513.1) (176.4) (17.4) (706.9)
Unallocated
administration costs (21.8)
Operating loss (728.7)
Total assets* 4,569.1 1,474.6 352.9 6,396.6
Total liabilities* (3,367.3) (1,239.9) (270.9) (4,878.1)
1,201.8 234.7 82.0 1,518.5
Unallocated net assets 582.0
Net assets 2,100.5
Other segment items:
Capital expenditure 87.7 11.3 2.2 101.2
Depreciation - 0.2 - 0.2
* Total assets and total liabilities exclude loans between group companies.
2 Segmental reporting
Six months ended 30 June 2008
Group
CSC C&C Exhibition total
GBPm GBPm GBPm GBPm
Revenue 207.4 65.0 35.9 308.3
Rent receivable 166.7 47.6 35.9 250.2
Service charge income 36.1 4.0 - 40.1
Other rental income - 6.6 - 6.6
202.8 58.2 35.9 296.9
Rent payable (10.7) (0.1) - (10.8)
Service charge and
other non-recoverable
costs (52.0) (22.6) (17.3) (91.9)
Net rental income 140.1 35.5 18.6 194.2
Property trading
profits 0.3 0.6 - 0.9
Other income - 0.5 - 0.5
Deficit on revaluation
and sale of investment
and development
property (518.9) (96.6) (23.0) (638.5)
Profit on sale of
subsidiary - 0.8 - 0.8
Impairment of goodwill - (21.6) - (21.6)
Segment result (378.5) (80.8) (4.4) (463.7)
Unallocated
administration costs (28.2)
Operating loss (491.9)
Total assets* 6,292.8 1,744.4 420.5 8,457.7
Total liabilities* (3,151.0) (1,023.7) (266.7) (4,441.4)
3,141.8 720.7 153.8 4,016.3
Unallocated net assets 212.6
Net assets 4,228.9
Other segment items:
Capital expenditure 65.7 68.0 26.5 160.2
Depreciation - 0.2 - 0.2
Year ended 31 December 2008
Revenue 423.6 131.8 62.8 618.2
Rent receivable 338.8 98.8 62.8 500.4
Service charge income 57.8 13.8 - 71.6
Other rental income 21.1 14.3 - 35.4
417.7 126.9 62.8 607.4
Rent payable (23.5) (0.8) - (24.3)
Service charge and other
non-recoverable costs (113.4) (52.0) (34.2) (199.6)
Net rental income 280.8 74.1 28.6 383.5
Property trading profits 0.3 - - 0.3
Other income - 0.2 - 0.2
Deficit on revaluation
and sale of investment
and development
property (1,693.5) (301.7) (61.8) (2,057.0)
Profit on sale of
subsidiary - 0.8 - 0.8
Write down of trading
property - (5.8) - (5.8)
Impairment of goodwill - (26.6) (8.4) (35.0)
Segment result (1,412.4) (259.0) (41.6) (1,713.0)
Unallocated
administration costs (63.2)
Operating loss (1,776.2)
Total assets* 5,149.9 1,918.8 381.0 7,449.7
Total liabilities* (3,539.0) (1,333.9) (278.0) (5,150.9)
1,610.9 584.9 103.0 2,298.8
Unallocated net
liabilities (313.0)
Net assets 1,985.8
Other segment items:
Capital expenditure 208.0 326.3 31.6 565.9
Depreciation - 0.3 - 0.3
* Total assets and total liabilities exclude loans between group companies.
3 Deficit on revaluation and sale of investment and development property
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
GBPm GBPm GBPm
Deficit on revaluation of
investment and development
property (855.1) (634.5) (2,051.1)
Deficit on sale of investment and
development property (35.7) (4.0) (5.9)
Deficit on revaluation and sale
of investment and development
property (890.8) (638.5) (2,057.0)
4 Finance costs
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
GBPm GBPm GBPm
Gross interest payable - recurring 130.5 124.4 248.8
Interest capitalised on
developments (11.3) (9.0) (18.5)
119.2 115.4 230.3
Total interest payable
Interest payable to partner (1.4) - (5.7)
External interest payable 117.8 115.4 224.6
Loss/(profit) on sales/repurchase
of CMBS notes 4.3 (13.2) (13.1)
MetroCentre amortisation of
compound financial instrument 4.5 - 2.0
Exceptional finance costs:
- inducement payments on
conversion of 3.95% convertible
bond - - 3.6
- loan facility arrangement fee 5.4 - -
- costs of termination of
financial instruments 9.9 9.7 6.6
Other finance costs/(income) 24.1 (3.5) (0.9)
5 Taxation
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
GBPm GBPm GBPm
Current tax on profits excluding
exceptional items and property
disposals (0.2) 1.9 (6.5)
Deferred tax:
On investment and development
property (26.3) (12.5) (25.5)
On derivative financial
instruments 68.8 4.4 (59.5)
On other temporary differences (0.4) 0.6 2.8
Deferred tax on profits excluding
exceptional items and property
disposals 42.1 (7.5) (82.2)
Tax charge/(credit) excluding
exceptional items and property
disposals 41.9 (5.6) (88.7)
REIT entry charge 1.3 1.6 3.6
Tax credit on exceptional items
and property disposals - - (0.5)
Taxation charge/(credit) 43.2 (4.0) (85.6)
Under IAS 12 `Income Taxes`, provision is made for the deferred tax assets and
liabilities associated with the revaluation of investment properties at the
corporate tax rate expected to apply to the group at the time of use. For those
UK properties qualifying as REIT properties the relevant tax rate will be 0 per
cent, for other UK properties the relevant tax rate will be 28 per cent and for
overseas properties the relevant tax rate will be the prevailing corporate tax
rate in that country.
Where gains such as revaluation of development properties and other assets and
actuarial movements on pension funds are dealt with in reserves, any deferred
tax is also dealt with in reserves.
The deferred tax asset on the revaluation of investment properties calculated
under IAS 12 is GBP3.8 million at 30 June 2009 (31 December 2008 - provision of
GBP18.3 million, 30 June 2008 - provision of GBP24.2 million). This IAS 12
calculation does not reflect the expected amount of tax that would be payable
if the assets were sold. The group estimates that, calculated on a disposal
basis, the liability is GBP28.6 million at 30 June 2009 (31 December 2008 -
GBP65.5 million, 30 June 2008 - GBP77.0 million). If upon sale the group
retained all the capital allowances, which are within the control of the group,
the deferred tax provision in respect of capital allowances of GBP44.5 million
may also be released.
Revaluation Derivative
investment Capital financial
properties allowances instruments
GBPm GBPm GBPm
Provided deferred tax provision:
At 31 December 2008 18.3 57.6 (79.4)
Recognised in income (18.7) (7.6) 68.8
Recognised in equity (3.4) (5.5) 1.7
At 30 June 2009 (3.8) 44.5 (8.9)
Unprovided deferred tax asset:
At 31 December 2008 (2.9) - (37.4)
Income statement items (9.7) - 20.7
Equity items - - -
At 30 June 2009 (12.6) - (16.7)
Other
temporary
differences Total
GBPm GBPm
Provided deferred tax provision:
At 31 December 2008 3.5 -
Recognised in income (0.4) 42.1
Recognised in equity - (7.2)
At 30 June 2009 3.1 34.9
Unprovided deferred tax asset:
At 31 December 2008 (5.7) (46.0)
Income statement items (3.1) 7.9
Equity items - -
At 30 June 2009 (8.8) (38.1)
6 Dividends
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
GBPm GBPm GBPm
Ordinary shares
Prior period final dividend paid
of nil per share (2008 - 17.6p) - 63.5 63.5
Interim dividend paid of nil per
share (31 December 2008 - 16.5p) - - 59.5
Dividends paid - 63.5 123.0
The Board has proposed an interim dividend of 5.0p per share (interim dividend
30 June 2008 16.5p per share) to be paid on 27 October 2009.
7 Investment and development property
UK Other
shopping commercial
centres properties Total
GBPm GBPm GBPm
At 1 January 2009 4,982.7 2,091.7 7,074.4
Additions 87.7 13.5 101.2
Disposals (5.7) (196.5) (202.2)
Foreign exchange fluctuations - (56.2) (56.2)
Deficit on valuation (649.7) (205.4) (855.1)
At 30 June 2009 4,415.0 1,647.1 6,062.1
UK Other
shopping commercial
centres properties Total
GBPm GBPm GBPm
At 1 January 2008 6,466.0 2,156.8 8,622.8
Additions 207.9 358.0 565.9
Disposals (3.4) (202.4) (205.8)
Foreign exchange fluctuations - 137.7 137.7
Deficit on valuation (1,692.7) (358.4) (2,051.1)
Transfers from trading properties 4.9 - 4.9
At 31 December 2008 4,982.7 2,091.7 7,074.4
As at As at
30 June 31 December
2009 2008
GBPm GBPm
Balance sheet carrying value of investment and
development property 6,062.1 7,074.4
Adjustment in respect of tenant incentives 80.7 88.9
Adjustment in respect of head leases (48.9) (50.5)
Market value of investment and development property 6,093.9 7,112.8
The group`s interests in investment and development properties were valued as
at 30 June 2009 and 31 December 2008 by independent external valuers in
accordance with the Royal Institute of Chartered Surveyors (RICS) Valuation
Standards 6th Edition, on the basis of market value. Market value represents
the figure that would appear in a hypothetical contract of sale between a
willing buyer and a willing seller.
8 Trading property
The estimated replacement cost of trading properties based on market value
amounted to GBP25.7 million (31 December 2008 - GBP33.9 million.
9 Trade and other receivables
As at As at
30 June 31 December
2009 2008
GBPm GBPm
Amounts falling due within one year
Rents receivable 20.7 16.0
Other receivables 19.8 37.2
Prepayments and accrued income 42.8 44.0
83.3 97.2
Amounts falling due after more than one year
Other receivables 27.2 33.4
Prepayments and accrued income 53.6 62.2
80.8 95.6
10 Trade and other payables
As at As at
30 June 31 December
2009 2008
GBPm GBPm
Amounts falling due within one year
Rents received in advance 94.3 105.2
Accruals and deferred income 94.8 156.0
Other payables 33.0 57.9
Other taxes and social security 65.3 45.8
287.4 364.9
11 Borrowings, including finance leases
As at 30 June 2009
Carrying
value Secured Unsecured
GBPm GBPm GBPm
Amounts falling due within one year
Bank loans and overdrafts 20.9 20.9 -
Commercial mortgage backed securities
("CMBS")
notes 34.3 34.3 -
Borrowings, excluding finance leases 55.2 55.2 -
Finance lease obligations 6.5 6.5 -
Amounts falling due within one year 61.7 61.7 -
Amounts falling due after more than one
year
CMBS notes 2011 479.7 479.7 -
CMBS notes 2015 1,043.1 1,043.1 -
Bank loan 2011 100.0 100.0 -
Bank loan 2012 216.1 216.1 -
Bank loans 2013 715.2 715.2 -
Bank loan 2014 24.4 24.4 -
Bank loans 2016 825.6 825.6 -
Bank loan 2017 117.4 117.4 -
Debentures 2027 226.4 226.4 -
CSC bonds 2013 26.7 - 26.7
3.95% convertible bonds due 2010 79.2 - 79.2
Borrowings excluding MetroCentre compound
financial instrument and finance leases 3,853.8 3,747.9 105.9
MetroCentre compound financial instrument 124.8 - 124.8
Finance lease obligations 42.4 42.4 -
Amounts falling due after more than one
year 4,021.0 3,790.3 230.7
Total borrowings 4,082.7 3,852.0 230.7
Cash and cash equivalents (568.4)
Net debt 3,514.3
Fixed Floating Fair
rate rate value
GBPm GBPm GBPm
Amounts falling due within one year
Bank loans and overdrafts 3.2 17.7 20.9
Commercial mortgage backed securities
("CMBS")
notes - 34.3 22.3
Borrowings, excluding finance leases 3.2 52.0 43.2
Finance lease obligations 6.5 - 6.5
Amounts falling due within one year 9.7 52.0 49.7
Amounts falling due after more than one year
CMBS notes 2011 - 479.7 323.4
CMBS notes 2015 - 1,043.1 640.0
Bank loan 2011 - 100.0 100.0
Bank loan 2012 - 216.1 216.1
Bank loans 2013 197.2 518.0 715.5
Bank loan 2014 - 24.4 24.4
Bank loans 2016 - 825.6 825.6
Bank loan 2017 - 117.4 117.4
Debentures 2027 226.4 - 169.5
CSC bonds 2013 26.7 - 24.1
3.95% convertible bonds due 2010 79.2 - 72.5
Borrowings excluding MetroCentre compound
financial instrument and finance leases 529.5 3,324.3 3,228.5
MetroCentre compound financial instrument - 124.8 124.8
Finance lease obligations 42.4 - 42.4
Amounts falling due after more than one year 571.9 3,449.1 3,395.7
Total borrowings 581.6 3,501.1 3,445.4
Cash and cash equivalents
Net debt
Net external debt (adjusted for MetroCentre compound financial instrument) at
30 June 2009 was GBP3,389.5 million.
As at 31 December 2008
Carrying
value Secured Unsecured
GBPm GBPm GBPm
Amounts falling due within one year
Bank loans and overdrafts 23.3 21.4 1.9
Commercial mortgage backed securities
("CMBS")
notes 34.3 34.3 -
CSC bonds 2009 31.5 - 31.5
Borrowings, excluding finance leases 89.1 55.7 33.4
Finance lease obligations 6.1 6.1 -
Amounts falling due within one year 95.2 61.8 33.4
Amounts falling due after more than one
year
CMBS notes 2011 483.4 483.4 -
CMBS notes 2015 1,038.4 1,038.4 -
Bank loan 2011 100.0 100.0 -
Bank loan 2012 217.2 217.2 -
Bank loans 2013 737.2 737.2 -
Bank loan 2014 24.5 24.5 -
Bank loans 2016 827.6 827.6 -
Bank loan 2017 117.3 117.3 -
Debentures 2027 226.3 226.3 -
CSC bonds 2013 26.6 - 26.6
Other loans 140.0 - 140.0
3.95% convertible bonds due 2010 92.3 - 92.3
Borrowings excluding MetroCentre compound
financial instrument and finance leases 4,030.8 3,771.9 258.9
MetroCentre compound financial instrument 120.3 - 120.3
Finance lease obligations 44.4 44.4 -
Amounts falling due after more than one
year 4,195.5 3,816.3 379.2
Total borrowings 4,290.7 3,878.1 412.6
Cash and cash equivalents (70.9)
Net debt 4,219.8
Fixed Floating Fair
rate rate value
GBPm GBPm GBPm
Amounts falling due within one year
Bank loans and overdrafts 5.4 17.9 23.3
Commercial mortgage backed securities
("CMBS")
notes - 34.3 24.6
CSC bonds 2009 31.5 - 32.2
Borrowings, excluding finance leases 36.9 52.2 80.1
Finance lease obligations 6.1 - 6.1
Amounts falling due within one year 43.0 52.2 86.2
Amounts falling due after more than one year
CMBS notes 2011 - 483.4 387.2
CMBS notes 2015 - 1,038.4 703.9
Bank loan 2011 - 100.0 100.0
Bank loan 2012 - 217.2 217.2
Bank loans 2013 218.0 519.2 735.1
Bank loan 2014 - 24.5 24.5
Bank loans 2016 - 827.6 827.6
Bank loan 2017 - 117.3 117.3
Debentures 2027 226.3 - 204.0
CSC bonds 2013 26.6 - 23.5
Other loans - 140.0 140.0
3.95% convertible bonds due 2010 92.3 - 60.2
Borrowings excluding MetroCentre compound
financial instrument and finance leases 563.2 3,467.6 3,540.5
MetroCentre compound financial instrument - 120.3 120.3
Finance lease obligations 44.4 - 44.4
Amounts falling due after more than one year 607.6 3,587.9 3,705.2
Total borrowings 650.6 3,640.1 3,791.4
Cash and cash equivalents
Net debt
Net external debt (adjusted for MetroCentre compound financial instrument) at
31 December 2008 was GBP4,099.5 million.
12 Cash generated from operations
Restated
Six months Year Six months
ended ended ended
30 June 31 December 30 June
2009 2008 2008
Notes GBPm GBPm GBPm
Loss before tax (451.9) (2,662.1) (457.7)
Adjustments for:
Deficit on revaluation
of investment and
development
property 3 855.1 2,051.1 634.5
Deficit on sale of
investment property 3 35.7 5.9 4.0
Profit on sale of
subsidiary - (0.8) (0.8)
Loss on sale of
investment 10.1 - -
Write down of trading
property 3.0 5.8 -
Depreciation 0.2 0.3 0.2
Profit on sale of
trading properties (0.2) - -
Amortisation of lease
incentives and other
direct costs 5.9 15.0 9.3
Impairment of goodwill - 35.0 21.6
Interest payable 4 119.2 230.3 115.4
Interest receivable (3.3) (8.6) (6.0)
Other finance
costs/(income) 4 24.1 (0.9) (3.5)
Change in fair value of
derivative financial
instruments (416.8) 665.1 (140.1)
Changes in working
capital
Change in trading
properties 3.5 5.9 5.4
Change in trade and
other receivables 4.2 22.1 (5.9)
Change in trade and
other payables (34.4) (1.7) (10.5)
Cash generated from
operations 154.4 362.4 165.9
13 Classification of financial assets and liabilities
The table below sets out the group`s accounting classification of each class of
financial assets and liabilities, and their fair values at 30 June 2009 and 31
December 2008.
The fair values of quoted borrowings are based on the asking price. The fair
values of derivative financial instruments are determined from observable
market prices or estimated using appropriate yield curves at 30 June and 31
December each year by discounting the future contractual cash flows to the net
present values.
Carrying To income
value Fair value statement To equity
GBPm GBPm GBPm GBPm
30 June 2009
Derivative financial
instrument asset 18.7 18.7 - -
Total held for trading
assets 18.7 18.7 - -
Trade and other
receivables 164.1 164.1 - -
Cash and cash
equivalents 568.4 568.4 - -
Total loans and
receivables 732.5 732.5 - -
Investments 63.7 63.7 - 9.3
Total
available-for-sale
investments 63.7 63.7 - 9.3
Derivative financial
instrument liabilities (376.9) (376.9) 416.8 26.4
Total held for trading
liabilities (376.9) (376.9) 416.8 26.4
Trade and other
payables (329.7) (329.7) - -
Borrowings (4,082.7) (3,445.4) - -
Total loans and
payables (4,412.4) (3,775.1) - -
13 Classification of financial assets and liabilities (continued)
Carrying To income
value Fair value statement To equity
GBPm GBPm GBPm GBPm
31 December 2008
Derivative financial
instrument asset 29.6 29.6 - -
Total held for trading
assets 29.6 29.6 - -
Trade and other
receivables 192.8 192.8 - -
Cash and cash
equivalents 70.9 70.9 - -
Total loans and
receivables 263.7 263.7 - -
Investments 96.3 99.5 - (15.1)
Total
available-for-sale
investments 96.3 99.5 - (15.1)
Derivative financial
instrument liabilities (818.5) (818.5) (665.1) 4.3
Total held for trading
liabilities (818.5) (818.5) (665.1) 4.3
Trade and other
payables (420.6) (420.6) - -
Borrowings (4,290.7) (3,791.4) - -
Total loans and
payables (4,711.3) (4,212.0) - -
14 Capital commitments and contingent liabilities
At 30 June 2009, the group was contractually committed to GBP172.4 million (31
December 2008 - GBP238.8 million) of future expenditure for the purchase,
construction, development and enhancement of investment property.
At 30 June 2009, the group has a contingent commitment to provide a future
investment of GBP52.8 million (31 December 2008 - GBP60.5 million), into the
Harvest Capital Funds. The conditions include a resolution by the fund manager
to make an investment decision. The group has two representatives on the board
of the fund manager.
The group`s joint venture with Land Securities, the St David`s Limited
Partnership, has currently been operating on the assumption of making a GBP2.5
million per annum rental payment in respect of land to be used for car parking
space.. If this assumption of making rental payments were proved incorrect the
partnership w
ould be liable to compulsorily purchase the
land. The group has a 50 per cent interest in the partnership.
15 Per share details
(a) (Loss)/earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
millions millions millions
Weighted average ordinary shares
in issue for calculation of basic
(loss)/earnings per share 401.8 361.6 361.5
Weighted average ordinary shares
to be issued on conversion of
bonds and
under employee incentive
arrangements 11.8 14.6 14.5
Weighted average ordinary shares
in issue for calculation of
diluted
(loss)/earnings per share 413.6 376.2 376.0
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2009 2008 2008
GBPm GBPm GBPm
Loss used for calculation of
basic loss per share (470.1) (426.2) (2,451.3)
Reduction in interest charge from
conversion of bonds, net of tax 0.8 1.5 3.1
Loss used for calculation of
diluted loss per share (469.3) (424.7) (2,448.2)
Basic loss per share (pence) (117.0)p (117.9)p (678.1)p
Diluted loss per share (pence) (113.5)p (112.9)p (651.1)p
Loss used for calculation of
basic loss per share (470.1) (426.2) (2,451.3)
Add back deficit on revaluation
and sale of investment and
development
property 890.8 638.5 2,057.0
Less profit on sale of subsidiary - (0.8) (0.8)
Less exceptional other income (5.3) - -
Add back loss on sale of
investment 10.1 - -
Add back impairment of goodwill - 21.6 35.0
Add back/(less) other finance
costs/(income) 19.6 (3.5) 3.6
(Less)/add back change in fair
value of derivative financial
instruments (416.8) (140.1) 665.1
Less deferred tax in respect of
investment and development
property (18.7) (6.6) (22.4)
Add back/(less) deferred tax in
respect of derivative financial
instruments 68.8 4.4 (59.5)
Less deferred tax on capital
allowances (7.6) (5.9) (3.6)
Add back REIT entry charge 1.3 1.6 3.6
Less amounts above due from
minority interests (25.3) (32.8) (121.8)
Earnings used for calculation of
adjusted earnings per share 46.8 50.2 104.9
Adjusted earnings per share
(pence) 11.6p 13.9p 29.0p
Earnings used for calculation of
adjusted earnings per share 46.8 50.2 104.9
Reduction in interest charge from
conversion of bonds, net of tax 0.8 1.5 3.1
Earnings used for calculation of
adjusted, diluted earnings per
share 47.6 51.7 108.0
Adjusted, diluted earnings per
share (pence) 11.5p 13.7p 28.7p
(b) Net assets
As at As at As at
30 June 31 December 30 June
2009 2008 2008
GBPm GBPm GBPm
Basic net asset value used for
calculation of basic net assets per
share 2,090.3 1,958.0 4,011.8
Fair value of derivative financial
instruments (net of tax) 322.6 659.0 (82.4)
Deferred tax on revaluation surpluses (3.8) 18.3 24.2
Deferred tax on capital allowances 44.5 57.7 43.4
Unrecognised surplus on trading
properties (net of tax) 0.6 0.6 (0.1)
Minority interests on the above (38.4) (46.9) 1.8
Add back minority interest recoverable
balance not recognised 83.8 48.4 -
Adjusted net asset value 2,499.6 2,695.1 3,998.7
Effect of dilution:
On conversion of bonds 79.2 92.3 111.3
On exercise of options 5.9 10.5 11.6
Diluted, adjusted net asset value used
for calculation of diluted,
adjusted net assets per share 2,584.7 2,797.9 4,121.6
Basic net assets per share (pence) 370p 538p 1110p
Diluted, adjusted net assets per share
(pence) 448p 745p 1095p
(c) Shares in issue
As at As at As at
30 June 31 December 30 June
2009 2008 2008
millions millions millions
Shares in issue, excluding treasury
shares and shares held by ESOP
trust and treated as cancelled 565.4 363.7 361.3
Effect of dilution:
On conversion of bonds 11.1 11.5 13.9
On exercise of options 0.8 0.5 1.2
Diluted, adjusted, number of shares 577.3 375.7 376.4
(d) Convertible debt
3.95 per cent convertible bonds due 2010
At 30 June 2009, 3.95 per cent convertible bonds with a nominal value of
GBP79.2 million were in issue (31 December 2008 - GBP92.3 million, 30 June 2008
- GBP111.3 million).
The holders of the 3.95 per cent bonds have the option to convert their bonds
into ordinary shares at any time on or up to 23 September 2010 at 716p per
ordinary share. The conversion price of the bonds was adjusted from 800p per
ordinary share with effect from 28 May 2009. The 3.95 per cent bonds may be
redeemed at par at the company`s option, subject to Liberty International PLC
ordinary share price having traded at 120 per cent of the conversion price for
a specified period, or at any time once 85 per cent by nominal value of the
bonds originally issued have been converted or cancelled. Unless otherwise
converted, cancelled or redeemed the 3.95 per cent bonds will be redeemed by
Liberty International PLC at par on 30 September 2010.
16 Share capital and share premium
Six months Year
ended ended
30 June 31 December
2009 2008
GBPm GBPm
Authorised
900,000,000 ordinary shares of 50p each (2008 -
500,000,000 ordinary
shares of 50p each) 450.0 250.0
Share Share
capital premium
GBPm GBPm
Issued and fully paid
At 30 June 2008 - 362,772,673 ordinary shares of 50p
each 181.4 975.6
Shares issued 1.2 17.8
At 31 December 2008 - 365,147,798 ordinary shares of
50p each 182.6 993.4
Shares issued 100.7 12.3
At 30 June 2009 - 566,778,501 ordinary shares of 50p
each 283.3 1,005.7
On 27 April 2009 the group announced its intention to raise GBP592 million, net
of expenses, by way of a Firm Placing of 104,839,061 new ordinary shares and a
Placing and Open Offer of 95,161,642 new ordinary shares at 310 pence per new
ordinary share (the "Capital Raising"). The Capital Raising was approved by
shareholders at the Extraordinary General Meeting on 22 May 2009 and the cash
proceeds were received at the end of May 2009. As a result, share capital
increased by GBP100.0 million with the balance of the proceeds being
transferred to a merger reserve.
Full details of the rights and obligations attaching to the ordinary shares are
contained in the company`s Articles of Association. These rights include an
entitlement to receive the company`s report and accounts, to attend and speak
at General Meetings of the company, to appoint proxies and to exercise voting
rights. Holders of ordinary shares may also receive dividends and may receive a
share of the company`s assets on the company`s liquidation. There are no
restrictions on the transfer of the ordinary shares.
At 31 July 2009, the company had an unexpired authority to repurchase shares up
to a maximum of 56,572,850 shares with a nominal value of GBP28.3 million, and
the Directors have an unexpired authority to allot up to a maximum of
188,576,167 shares with a nominal value of GBP94.3 million.
16 Share capital and share premium (continued)
Included within the issued share capital as at 30 June 2009 are 289,448
ordinary shares (31 December 2008 - 364,327, 30 June 2008 - 418,003, held by
the Trustee of the Employee Share Ownership Plan ("ESOP") which is operated by
the company (note 18) and 1,050,000 treasury shares (31 December 2008 -
1,050,000, 30 June 2008 - 1,050,000). The nominal value of these shares is
GBP0.7 million (31 December 2008 - GBP0.7 million).
17 Treasury shares and Employee Share Ownership Plan (ESOP)
No shares were purchased by the Company during the period.
The cost of shares in Liberty International purchased in the market and held by
the Trustee of the Employee Share Ownership Plan ("ESOP") operated by the
Company is also accounted for as treasury shares.
The purpose of the ESOP is to acquire and hold shares which will be transferred
to employees in the future under the group`s employee incentive arrangements.
Six months ended Year ended
30 June 2009 31 December 2008
Number GBPm Number GBPm
At 1 January 1.4 (10.8) 1.3 (9.6)
Acquired in the year 0.1 (0.2) 0.4 (3.8)
Disposed of on exercise of options (0.2) 1.2 (0.3) 2.6
At 30 June 2009 and 31 December 2008 1.3 (9.8) 1.4 (10.8)
18 Related party transactions
Key management* compensation
Six months Year ended
ended ended
30 June 31 December
2009 2008
GBPm GBPm
Salaries and short term employee benefits 2.4 6.0
Pensions and other post-employment benefits 0.3 0.7
Share-based payment - 0.4
Other long term payments - 0.2
Termination benefits - 1.7
2.7 9.0
* Key management comprises the Directors of Liberty International, and those
group employees who have been designated as Persons Discharging Managerial
Responsibilities ("PDMR").
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES
UK investment property valuation data
Market Nominal Initial
value equivalent yield yield
30 June
2009 30 June 31 December 30 June
GBPm 2009 2008 2009
UK regional shopping centres
Lakeside, Thurrock 877.0 7.00% 6.45% 6.21%
MetroCentre, Gateshead
(including Retail Park) 733.4 7.35% 6.58% 6.74%
Braehead, Glasgow 487.2 7.39% 6.59% 5.48%
The Harlequin, Watford 327.0 7.35% 6.60% 6.10%
Victoria Centre, Nottingham 315.0 7.15% 6.55% 6.06%
Arndale, Manchester 281.2 7.41% 6.61% 7.06%
Chapelfield, Norwich 209.6 7.60% 6.75% 6.35%
Eldon Square, Newcastle
upon Tyne 201.6 7.65% 6.91% 4.46%
Cribbs Causeway, Bristol 194.5 7.32% 6.62% 6.08%
The Chimes, Uxbridge 192.8 7.45% 6.95% 7.15%
The Potteries,
Stoke-on-Trent 191.3 8.10% 7.30% 7.45%
The Glades, Bromley 170.2 7.85% 7.15% 6.01%
St David`s, Cardiff 58.5 7.55% 6.88% 7.28%
Xscape, Braehead 27.5 9.00% 8.00% 8.54%
Like-for-like capital 4,266.8 7.37% 6.67% 6.30%
Other 172.1
Total UK regional shopping
centres 4,438.9
UK non-shopping centre
properties
Capco Covent Garden 528.7 5.59% 5.14% 5.01%
Capco GCP 217.8 6.53% 6.32% 6.39%
Capco Opportunities 9.8 12.13% 11.30% 9.84%
756.3 5.95% 5.58% 5.47%
Capco Earls Court 524.2
Like-for-like capital 1,280.5
Other 6.3
Total UK non-shopping
centre properties 1,286.8
* All market values given above reflect the percentage interest included in the
condensed financial statements.
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES (continued)
Property analysis by use and type
Market value
30 June 31 December Passing
2009 2008 % of total rent
GBPm GBPm properties GBPm
Regional shopping centres
and other retail
UK regional shopping
centres 4,438.9 5,009.6 72.9% 264.2
UK other retail 518.4 665.0 8.5% 26.4
US regional shopping
centres 124.5 173.9 2.0% 10.0
US other retail 135.9 169.4 2.2% 10.1
Total regional shopping
centres and other retail 5,217.7 6,017.9 85.6% 310.7
Office
UK business space 433.0 584.4 7.1% 28.0
US business space 79.2 104.2 1.3% 8.3
Total office 512.2 688.6 8.4% 36.3
Exhibition
UK exhibition 335.4 367.9 5.5% -
Residential
US residential 28.6 38.4 0.5% 2.4
Total investment
properties 6,093.9 7,112.8 100.0% 349.4
Revaluation
Net Deficit
rental
ERV income
GBPm GBPm Decrease
Regional shopping centres
and other retail
UK regional shopping centres 351.6 132.7 (12.8)%
UK other retail 33.1 13.3 (9.1)%
US regional shopping centres 11.3 4.2 (20.0)%
US other retail 13.2 4.5 (9.7)%
Total regional shopping
centres and other retail 409.2 154.7 (12.6)%
Office
UK business space 31.1 14.3 (11.5)%
US business space 9.9 3.0 (14.0)%
Total office 41.0 17.3 (11.9)%
Exhibition
UK exhibition - 17.5 (9.4)%
Residential
US residential 2.5 0.7 (15.7)%
Total investment properties 452.7 190.2 (12.4)%
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES (continued)
Investment property like-for-like income and revaluation analysis
Market value
30 June 31 December
2009 2008
GBPm GBPm
UK regional shopping centres
Like-for-like capital and income 4,065.2 4,591.9
Other 201.6 223.4
Like-for-like capital 4,266.8 4,815.3
Redevelopments and developments 172.1 194.3
Total UK regional shopping
centres 4,438.9 5,009.6
UK non-shopping centre
properties
Like-for-like capital and income 1,066.8 1,151.1
Like-for-like capital only 213.7 227.4
Like-for-like capital 1,280.5 1,378.5
Redevelopments and developments 6.3 45.2
Disposals - 193.6
Total UK non-shopping centre
properties 1,286.8 1,617.3
US properties*
Like-for-like capital and income 368.2 485.9
Total US properties 368.2 485.9
Total investment properties 6,093.9 7,112.8
Revaluation deficit
30 June
2009
GBPm Decrease
UK regional shopping centres
Like-for-like capital and income (544.2) (11.9)%
Other (38.2) (16.0)%
Like-for-like capital (582.4) (12.1)%
Redevelopments and developments (67.3) (28.1)%
Total UK regional shopping
centres (649.7) (12.8)%
UK non-shopping centre
properties
Like-for-like capital and income (126.3) (10.6)%
Like-for-like capital only (13.9) (6.1)%
Like-for-like capital (140.2) (9.8)%
Redevelopments and developments (2.9) (31.5)%
Disposals - -
Total UK non-shopping centre
properties (143.1) (10.0)%
US properties*
Like-for-like capital and income (62.3) (14.8)%
Total US properties (62.3) (14.8)%
Total investment properties (855.1) (12.4)%
Net rental income
30 June 30 June
2009 2008 Increase/
GBPm GBPm (Decrease)
UK regional shopping centres
Like-for-like capital and income 125.6 132.4 (5.1)%
Other 5.0 5.8
Like-for-like capital 130.6 138.2 (5.5)%
Redevelopments and developments 2.1 1.9
Total UK regional shopping
centres 132.7 140.1 (5.3)%
UK non-shopping centre
properties
Like-for-like capital and income 36.3 37.7 (3.7)%
Like-for-like capital only 6.7 0.5
Like-for-like capital 43.0 38.2
Redevelopments and developments 0.4 0.3
Disposals 1.7 5.9
Total UK non-shopping centre
properties 45.1 44.4 1.6%
US properties*
Like-for-like capital and income 12.4 9.7 (2.7)%
Total US properties 12.4 9.7 (2.7)%
Total investment properties 190.2 194.2 (2.1)%
* Like-for-like percentage changes are in local currency.
Analysis of UK non-shopping centres and US properties by location and type
Market value
30 June 31 December
2009 2008
GBPm GBPm
UK non-shopping centre properties
Capco Covent Garden 528.7 590.3
Capco Earls Court 524.2 568.9
Capco GCP 224.1 275.4
Total Capco London 1,277.0 1,434.6
Capco Opportunities 9.8 182.7
Total UK non-shopping centre properties 1,286.8 1,617.3
Capco USA
Retail 260.4 343.3
Business space 79.2 104.2
Residential 28.6 38.4
Total Capco USA 368.2 485.9
1,655.0 2,103.2
Revaluation deficit
30 June
2009
GBPm Decrease
UK non-shopping centre properties
Capco Covent Garden (50.9) (8.8)%
Capco Earls Court (47.0) (8.2)%
Capco GCP (43.2) (15.8)%
Total Capco London (141.1) (9.9)%
Capco Opportunities (2.0) (23.5)%
Total UK non-shopping centre properties (143.1) (10.0)%
Capco USA
Retail (44.4) (15.0)%
Business space (12.6) (14.0)%
Residential (5.3) (15.7)%
Total Capco USA (62.3) (14.8)%
(205.4) (11.1)%
Net rental income
30 June 30 June
2009 2008
GBPm GBPm
UK non-shopping centre properties
Capco Covent Garden 12.3 12.7
Capco Earls Court 23.9 18.6
Capco GCP 6.8 6.7
Total Capco London 43.0 38.0
Capco Opportunities 2.1 6.4
Total UK non-shopping centre properties 45.1 44.4
Capco USA
Retail 8.7 6.6
Business space 3.0 2.5
Residential 0.7 0.6
Total Capco USA 12.4 9.7
57.5 54.1
APPENDIX 1
FINANCIAL COVENANTS
Financial covenants on non-recourse debt excluding joint ventures
Loan
outstanding at
31 July 2009 (1) LTV
Maturity GBPm covenant
Lakeside 2011 628.4 90%
Covent Garden (10) 2013 252.5 75%
MetroCentre 2015 566.7 (8) 90%
Braehead 2015 380.5 N/A
Watford 2015 260.1 N/A
Nottingham 2016 300.0 90%
Chapelfield 2016 212.6 N/A
Uxbridge 2016 163.1 85%
Bromley 2016 140.8 85%
Covent Garden (10) 2017 118.0 70%
Total 3,022.7
Loan to Interest Interest
30 June 2009 cover cover
Market value (2) covenant actual (3)
Lakeside 72% 120.0% 142.8%
Covent Garden (10) 74% 115.0% (4) 119.3%
MetroCentre 82% 120.0% 133.3%
Braehead N/A 120.0% 139.6%
Watford N/A 120.0% 133.8% (5)
Nottingham 95% (7) 110.0% 132.2%
Chapelfield N/A 110.0% 110.8% (6)
Uxbridge 85% (6) 120.0% (4) 151.8%
Bromley 83% (6) 120.0% (4) 125.2%
Covent Garden (10) 63% 100.0% 159.3%
Financial covenants on joint ventures non-recourse debt
Loan
outstanding at
31 July 2009 (1) LTV
Maturity GBPm covenant
EC&O Venues 2012 221.3 (8) 75%
Empress State 2013 156.8 (8) N/A
GCP 2013 112.5 (9) 70%
Xscape 2014 24.5 (9) 85%
Total 515.1
Loan to Interest Interest
30 June 2009 cover cover
Market value (2) covenant actual (3)
EC&O Venues 69% 140.0% 175.0%
Empress State N/A 110.0% 126.8%
GCP 52% 130.0% 221.4%
Xscape 89% (11) 120.0% 163.1%
Financial covenant on corporate facilities at 30 June 2009
Interest
Net worth cover Interest cover Borrowings/
covenant* Actual covenant* actual Net worth* Actual
GBP850m GBP1,734m 120% 135.8% 110% 8.6%
* Tested on the Borrower group which excludes, at the group`s election,
specific subsidiaries with non-recourse finance. The facility is secured on the
group`s investments in the Manchester, Arndale and Cribbs Causeway centres. The
facility matures in June 2011.
C&C Mortgage Debenture PLC at 30 June 2009
Capital Interest Interest
Loan cover Capitalcover cover cover
Maturity GBPm covenant actual covenant actual
2027 231.4 167% 169% 100.0% 104.2%
The debenture is currently secured on the group`s interests in The Potteries
and Eldon Square centres.
Should the capital cover or interest cover test be breached C&C Debenture PLC
(the issuer) has three months from the date of delivery of the valuation or the
latest certificate to the Trustees to make good any deficiencies. The issuer
may withdraw property secured on the debenture by paying a sum of money or
through the substitution of alternative property provided that the loan to
value and income tests are satisfied immediately following the substitution.
There are currently no financial covenant tests on $330 million (GBP200 million
equivalent) of borrowings entered into by the group`s US subsidiary.
(1) The loan values are the actual principal balances outstanding at 31
July 2009, which take into account any principal repayments made in
July 2009.
The accounting/balance sheet value of the loans includes any
unamortised fees.
(2) The Loan to 30 June 2009 Market Value provides an indication of the
impact the 30 June 2009 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 30 June 2009 and 31 July
2009.
The calculations are loan specific and include a variety of historic,
forecast and in certain instances a combined historic and forecast
basis.
(4) Covenant cover has increased from the December 2008 requirement in
accordance with loan agreement.
(5) Includes the impact of the cancellation of GBP26.25m CMBS notes on 27
July 2009 that were owned by a group company.
(6) Includes principal prepayments or cash deposits made to ensure
continued compliance with covenants. Details are included in financial
review.
(7) Discussions are on-going with lenders and it is anticipated that a cash
deposit of approximately GBP17 million may be lodged with the lenders
later in 2009.
(8) 100 per cent of the debt is shown which is consistent with accounting
treatment, however the group`s economic interest is 50 per cent, except
for MetroCentre where the group`s economic interest is 60 per cent.
(9) 50 per cent of the debt is shown which is consistent with accounting
treatment and the group`s economic interest.
(10) There are two separate loans on the Covent Garden properties.
(11) Discussions are ongoing with lenders.
APPENDIX 2
UNDERLYING PROFIT STATEMENT (unaudited)
For the six months ended 30 June 2009
Six months Six months Six months Year
ended ended ended ended
30 June 30 June 31 31 December
December
2009 2008 2008 2008
GBPm GBPm GBPm GBPm
UK shopping centres 132.7 140.1 140.7 280.8
Other commercial
properties 57.5 54.1 48.6 102.7
Net rental income 190.2 194.2 189.3 383.5
Other
income/(expense) 1.3 0.5 (0.3) 0.2
191.5 194.7 189.0 383.7
Administration
expenses (21.8) (28.2) (35.0) (63.2)
Operating profit
(underlying*) 169.7 166.5 154.0 320.5
Interest payable (119.2) (115.4) (114.9) (230.3)
Interest receivable 3.3 6.0 2.6 8.6
Other finance
(costs)/income (4.5) - 4.5 4.5
Net finance costs
(underlying*) (120.4) (109.4) (107.8) (217.2)
Profit before tax
(underlying*) 49.3 57.1 46.2 103.3
Write down of
trading properties (3.0) - (5.8) (5.8)
Property trading
profit/(loss) 0.2 0.9 (0.6) 0.3
Tax on adjusted
profit 0.6 (2.5) 6.2 3.7
Minority interest (0.3) (5.3) 8.7 3.4
Underlying
earnings (used for
calculation
of adjusted
earnings per
share) 46.8 50.2 54.7 104.9
Adjusted earnings
per share (pence) 11.6 13.9 15.1 29.0
* Before property trading and valuation items.
APPENDIX 3
DIVIDENDS
The Directors of Liberty International PLC have announced an interim dividend
per ordinary share (ISIN GB0006834344) of 5.0p (2008 -16.5p) payable on 27
October 2009 (see salient dates below). This dividend will be paid totally as a
Property Income Distribution ("PID") and will be wholly subject to a 20 per
cent withholding tax unless exemptions apply (please refer to the SPECIAL NOTE
below).
Dates
The following are the salient dates for the payment of the interim dividend:
Wednesday, 16 September 2009 Sterling/Rand exchange rate struck.
Thursday, 17 September 2009 Sterling/Rand exchange rate and dividend amount
in SA currency announced.
Monday, 28 September 2009 Ordinary shares listed ex-dividend on the JSE,
Johannesburg
Wednesday, 30 September 2009 Ordinary shares listed ex-dividend on the London
Stock Exchange.
Friday, 2 October 2009 Record date for interim dividend in London and
Johannesburg.
Friday, 2 October 2009 UK shareholders only: Last date for receipt of
Tax Exemption Declaration forms to permit
dividends to be paid gross.
Tuesday, 27 October 2009 Dividend payment day for shareholders
(Note: Payment to ADR holders will be made on
25 September 2009).
South African shareholders should note that, in accordance with the
requirements of Strate, the last day to trade cum-dividend will be Friday, 25
September 2009 and that no dematerialisation or rematerialisation of shares
will be possible from Monday, 28 September to Friday, 2 October 2009 inclusive.
No transfers between the UK and South African registers may take place from
Wednesday, 16 September to Sunday, 4 October 2009 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 Liberty International website
(www.liberty-international.co.uk), or on request to our UK registrars, Capita
Registrars. Validly completed forms must be received by Capita Registrars no
later than the Record Date, Friday 2 October 2009, 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%. Other non-UK shareholders may be able to make
similar claims. Refund application forms for all non- UK shareholders are
available for download from the "Investors" section of the Liberty
International website (www.liberty- international.co.uk), or on request to our
SA registrars, Computershare, or HMRC. Refunds are not claimable from Liberty
International, the South African Revenue Service or other national authorities,
only from the UK`s HMRC.
For South African shareholders, a helpline for questions relating to the
withholding tax is available until 11 December 2009 on 0800 006 497 (+27 11 870
8218 if calling from outside South Africa). Calls from within South Africa are
toll-free.
The above does not constitute advice and shareholders should seek their own
professional guidance. Liberty International does not accept liability for any
loss suffered arising from reliance on the above.
GLOSSARY
ERV (Estimated Rental Value)
The external valuers` estimates of the group`s share of the current annual
market rent of all lettable space net of any non-recoverable charges, before
bad debt provision and adjustments required by International Accounting
Standards regarding tenant lease incentives.
Interest Cover Ratio (ICR)
Net rental income less administration costs divided by the net finance cost
excluding the change in fair value of derivatives and any exceptional finance
costs
IPD (Investment Property Databank Ltd)
IPD is the producer of an independent benchmark of property returns.
Interest rate swap
A derivative financial instrument where two parties agree to exchange an
interest rate obligation for a predetermined amount of time.
These are used by the group to convert floating rate debt to fixed rates.
Initial Yield
Annualised net rent (after deduction of revenue costs such as head rent,
running void, service charge after shortfalls, empty rates and merchant
association contribution) on investment properties expressed as a percentage of
the net market value.
Like-for-like capital and income
The category of investment properties which have been owned throughout both
periods without significant capital expenditure in either period, so both
income and capital can be compared on a like-for-like basis.
Like-for-like capital
The category of investment properties which have been owned throughout the
current period but not the whole of the prior period, without significant
capital expenditure in the current period, so capital values but not income can
be compared on a like-for-like basis.
Loan-to-value (LTV)
LTV is the ratio of attributable debt to the market value of an investment
property.
Net asset value (NAV) per share
Net assets of the group attributable to equity shareholders of the Company
divided by the number of ordinary shares in issue at the period end.
Net rental income
The group`s share of net rents receivable as shown in the income statement,
having taken due account of non-recoverable charges, bad debt provisions and
adjustments to comply with International Accounting Standards regarding tenant
lease incentives.
Nominal equivalent yield
Effective annual yield to a purchaser from the assets individually at market
value after taking account of notional acquisition costs assuming rent is
receivable annually in arrears, reflecting estimated rental values (ERV) but
disregarding potential changes in market rents.
Occupancy rate
The estimated rental value of let and under offer units expressed as a
percentage of the total estimated rental value of the portfolio, excluding
development properties.
Passing rent
The group`s share of contracted annual rents receivable at the balance sheet
date. This takes no account of accounting adjustments made in respect of rent
free periods or tenant incentives, the reclassification of certain lease
payments as finance charges or any irrecoverable costs and expenses, and does
not include excess turnover rent, additional rent in respect of unsettled rent
reviews or sundry income such as from car parks etc. Contracted annual rents in
respect of tenants in administration are excluded.
Property Income Distribution (PID)
A dividend by a REIT to its shareholders which is paid from the tax exempt
profits of its property rental business. These are generally subject to UK
withholding tax at the basic rate of income tax, although certain classes of
shareholder may qualify to receive the dividend gross. The group can in
addition make normal (non-PID) dividend payments which are not subject to UK
withholding tax.
Adjusted earnings per share (EPS)
EPS consists of underlying profit after tax divided by the weighted average
number of shares in issue during the period.
Underlying profit before tax
Profit before taxation after excluding amortisation of intangible assets and
impairment charges, net valuation gains/losses (including profits/losses on
disposals), net refinancing charges and swap close out costs.
Real Estate Investment Trust (REIT)
A listed property company which qualifies for and has elected into a tax
regime, which exempts qualifying UK property rental income and gains on
investment property disposals from corporation tax.
Tenant (or lease) incentives
Any incentives offered to occupiers to enter into a lease. Typically the
incentive will be an initial rent-free period, or a cash contribution to
fit-out or similar costs. Under accounting rules the value of incentives
granted to tenants is amortised through the income statement on a straight-line
basis to the earliest lease termination date.
Trading properties
Properties held for trading purposes and shown as current assets in the balance
sheet.
Yield shift
A movement (usually expressed in basis points) in the equivalent yield of a
property asset.
NOTE FOR EDITORS: BACKGROUND ON LIBERTY INTERNATIONAL
LIBERTY INTERNATIONAL PLC is one of the UK`s largest listed property companies
and a constituent of the FTSE-100 Index of the UK`s leading listed companies.
Liberty International converted into a UK Real Estate Investment Trust (REIT)
on 1 January 2007.
Liberty International owns 100 per cent of Capital Shopping Centres ("CSC"),
the premier UK regional shopping centre business, and of Capital & Counties, a
retail and commercial property investment and development company.
At 30 June 2009, Liberty International owned GBP6.1 billion of properties of
which UK regional shopping centres comprised 73 per cent and retail property in
aggregate 86 per cent. Adjusted, diluted shareholders` funds amounted to GBP2.6
billion.
CAPITAL SHOPPING CENTRES has interests in 14 UK regional shopping centres
amounting to some 13 million sq.ft. in aggregate including 9 of the UK`s top 30
regional shopping centres with a market value of GBP4.4 billion at 30 June
2009. CSC`s largest centres are Lakeside, Thurrock;
MetroCentre, Gateshead; Braehead, Glasgow; The Harlequin, Watford; and Arndale,
Manchester.
CSC has a 50 per cent share in the extension of St David`s, Cardiff, which is
due to complete in Autumn 2009.
CAPITAL & COUNTIES held assets of GBP1.7 billion at 30 June 2009, amounting to
7.4 million sq.ft. in aggregate, of which GBP1,277 million was invested in
Central London. Capital & Counties had GBP529 million invested in the Covent
Garden area including the historic Covent Garden Market, and a further GBP224
million in London`s West End, primarily through the Great Capital Partnership,
a joint venture with Great Portland Estates plc. Capital & Counties owns 50 per
cent of the Earls Court and Olympia Group and of the Empress State building in
Earls Court amounting to aggregate assets of GBP524 million. In addition,
Capital & Counties has interests in the USA amounting to GBP368 million (2.6
million sq.ft.), predominantly comprising retail assets in California,
including the 856,000 sq.ft. Serramonte Shopping Centre, Daly City, San
Francisco.
31 July 2009
Sponsor
Merrill Lynch South Africa (Pty) Limited
Date: 31/07/2009 08:07:10 Produced by the JSE SENS Department.
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