TIDMINTU
RNS Number : 8490F
Intu Properties PLC
12 March 2020
LEI: 213800JSNTERD5CJZO95
INTU PROPERTIES PLC
12 MARCH 2020
RESULTS FOR THE YEARED 31 DECEMBER 2019
This press release contains "forward-looking statements"
regarding the belief or current expectations of intu properties
plc, its directors and other members of its senior management about
intu properties plc's businesses, financial performance and results
of operations.
These forward-looking statements are not guarantees of future
performance. Rather, they are based on current views and
assumptions and involve known and unknown risks, uncertainties and
other factors, many of which are outside the control of intu
properties plc and are difficult to predict, that may cause actual
results, performance or developments to differ materially from any
future results, performance or developments expressed or implied by
the forward-looking statements. These forward-looking statements
speak only as at the date of this press release. Except as required
by applicable law, intu properties plc makes no representation or
warranty in relation to them and expressly disclaims any obligation
to update or revise any forward-looking statements contained herein
to reflect any change in intu properties plc's expectations with
regard thereto or any change in events, conditions or circumstances
on which any such statement is based.
Any information contained in this press release on the price at
which shares or other securities in intu properties plc have been
bought or sold in the past, or on the yield on such shares or other
securities, should not be relied upon as a guide to future
performance.
ENQUIRIES
intu properties plc
Matthew Roberts Chief Executive +44 (0)20 7960 1353
Robert Allen Chief Financial Officer +44 (0)20 7960 1360
Adrian Croft Head of Investor Relations +44 (0)20 7960 1212
Public relations
UK: Justin Griffiths, Powerscourt +44 (0)20 7250 1446
Frédéric Cornet,
SA: Instinctif Partners +27 (0)11 447 3030
Results summary 2019
IFRS (GBPm) 2019 2018 Change Key comments
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Revenue 542.3 581.1 (38.8)
* reduction impacted by CVAs and administrations
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Loss for the year (2,021.8) (1,173.7) (848.1)
* adversely impacted by property revaluation deficit
(see below) and change in fair value of financial
instruments
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Basic loss per share (145.1)p (84.3)p (60.8)p
(pence) * in line with IFRS loss for the year
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Net assets attributable 1,904.2 3,811.7 (1,907.5)
to owners of intu * reduction predominantly as a result of property
properties plc revaluation deficit
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Dividends paid (pence) - 4.6p (4.6)p
* no 2019 dividend recommended for payment
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Alternative performance
measures (APM)1
(GBPm) 2019 2018 Change Key comments
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Net rental income 401.6 450.5 (48.9)
* like-for-like reduction of 9.1% (GBP39.6m) driven by
impact of administrations and CVAs
* impact of disposals of GBP10.5m, main contributor
being intu Derby
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Underlying earnings 127.2 193.1 (65.9)
* net rental income reduction of GBP48.9m, see above
* finance costs increased by GBP4.2m, mainly due to
reduced capitalised interest
* increased tax expense of GBP15.7m from current year
estimated underpayment of minimum PID
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Underlying EPS (pence) 9.5p 14.4p (4.9)p
* reduction in line with underlying earnings
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Property revaluation (1,979.7) (1,405.0) (574.7)
deficit * like-for-like reduction of 22.3%
* 95bps outward yield shift from weakening investor
sentiment
* like-for-like ERVs marked down by 13.4% following
higher level of administrations and CVAs
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Market value of 6,633.3 9,167.4 (2,534.1)
investment and development * revaluation deficit of GBP1,979.7m
property
* part disposals of intu Derby GBP353.7m, intu Puerto
Venecia and intu Asturias transferred to held for
sale GBP341.8m
* capital investment of GBP129.2m, mainly on
developments such as intu Lakeside and intu Trafford
Centre
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Net external debt 4,498.4 4,867.2 368.8
2 * reduction from disposal proceeds and transfers to
held for sale
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
EPRA NAV per share 147p 293p (146)p
(pence) 3 * impact of revaluation deficit of 145p
* exceptional finance and administration costs of 6p,
primarily from unallocated swap payments
* partially offset by underlying earnings in year of
10p
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
EPRA NNNAV per share 149p 271p (122)p
(pence) 3 * main movement as above for EPRA NAV per share, offse
t
by 20p movement in fair value of borrowings
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Debt to assets ratio 67.8% 53.1% 14.7%
(per cent) 2 * increase due to revaluation deficit
* reduces to 65.3% when adjusted for expected disposal
proceeds from intu Puerto Venecia and intu Asturias
------------------------------------------------- ----------- --------- --------- ----------------------------------------------------------
Operational performance 2019 2018 Key comments
-------------------------------------------------- ---------- --------- --------- ----------------------------------------------------------
Leasing activity 248
* number 205 GBP39m * level of lettings reduced slightly from economic
GBP26m +6% uncertainty in 2019
+1%
* new rent
* in line with valuers' assumptions
* new rent relative to previous passing rent
* +1% on net effective basis (net of rent frees and
incentives)
-------------------------------------------------- ---------- --------- --------- ----------------------------------------------------------
Rental uplift on rent * 159 settled in year
reviews settled +6% +7%
-------------------------------------------------- ---------- --------- --------- ----------------------------------------------------------
Footfall +0.3% -1.6%
* UK -0.1%; Spain +3.5%
* UK outperformed Springboard benchmark which was down
by 2.5%
-------------------------------------------------- ---------- --------- --------- ----------------------------------------------------------
Occupancy (EPRA basis) 94.9% 96.7%
* lower occupancy due to increased level of
administrations and CVAs, in particular the impact
from prior year processes
-------------------------------------------------- ---------- --------- --------- ----------------------------------------------------------
Net promoter score 75 73
* continued improvement in visitor satisfaction
-------------------------------------------------- ---------- --------- --------- ----------------------------------------------------------
Carbon emission reduction 15% 17%
* continued reduction, total reduction of 69% against
2010 baseline
-------------------------------------------------- ---------- --------- --------- ----------------------------------------------------------
1 All APMs are presented on a proportionately consolidated
basis. See presentation of information section for further APM
details including rationale for all APMs used and reconciliations
between presented figures and IFRS figures.
2 See other financial information for calculations.
3 See EPRA measures section for reconciliations between presented figures and IFRS figures.
Chief Executive's statement
Our five year strategy
In addition to having been a challenging year, 2019 has been a
year of change for intu. I took over as Chief Executive in April
and in the summer I introduced our five-year strategy. With the
pace of change accelerating in our sector, radical transformation
was required, so we carried out a comprehensive review of the
business and tested our findings to develop the strategy.
Our review of the business looked at the risks and opportunities
of the evolving retail market, and along with an assessment of our
underlying strengths, helped formulate our strategy for the next
five years. This will reshape the business by way of four strategic
objectives, detailed below. I am pleased to say we have already
taken steps to deliver this strategy.
However, there are challenges. In the year, we made a loss of
GBP2.0 billion, predominantly due to a property value deficit of 23
per cent, which is now 33 per cent down from the peak in December
2017. This results in our debt to assets ratio increasing to 65 per
cent (adjusted for the Spanish disposals), highlighting the
importance of fixing the balance sheet in our strategy. Although we
were unable to proceed with an equity raise, we have a range of
options including alternative capital structures and asset
disposals.
The store is not dying, it is evolving
The right stores in the right locations will always play a vital
role for retailers but, with all the recent commentary around the
death of the store, you could believe that no one will be going
shopping in the future. Two statistics from recent research by CACI
illustrate the importance of the store. First, around 90 per cent
of all retail spend is influenced by a physical store, and second,
the presence of a physical store can double a retailer's online
sales in that local catchment.
If we look ahead to 2026, research carried out by CACI and Revo
suggests that 77 per cent of transactions will still touch a store,
even with the overall percentage of online sales increasing from
around 20 per cent to 30 per cent. If this is considered with the
expectation that overall store numbers in the UK will decrease,
there will be continued demand from brands for high-quality,
high-footfall locations where they can maximise their productivity
and profitability.
As the role of the store changes, then the relationship with our
retail customers will change too. Data and insight are becoming
increasingly important and it is key that we and our customers join
forces and share data to ensure we both benefit and potentially
share the risk and reward.
Centres are transforming
The transformation of centres is nothing new but the speed of
change is increasing. Our view is that the best locations will
deliver theatre and world class service, maximising footfall and
increasing dwell time. These will be the locations that our
customers focus on as they rationalise their store portfolios.
In addition to the retail and leisure mix, we will also see
further intensification of sites introducing uses including
residential, office and hotels which will cement our centres'
importance at the heart of their communities.
intu's fundamental strengths
There are challenges, but we also have many strengths.
We own nine of the UK's top-20 centres (source: GlobalData), on
average a million people a day visit one of our centres and our
satisfaction scores and brand relevance continue to grow. Our
centres have high occupancy at 95 per cent and we are seen as
innovators - we introduced the first nationwide shopping centre
brand and have been at the forefront of technology in our sector,
from our online shopping mall, intu.co.uk, through to our recent
launch of intu Pocket, our in-store cashback app.
All this means that we are a first stop and major provider of
space in the UK for many global brands, such as Apple, Inditex,
Victoria's Secret and Abercrombie & Fitch, as well as new
digital native brands such as Morphe and AliExpress, which opened
its first European store at intu Xanadú in 2019.
Delivering a strategy for the 2020s
I believe our strategy addresses the challenges and will
position us to take advantage of the opportunities. With a largely
new Board and a restructured executive team, we are already making
progress.
Strategic What have we done
objective Key actions
------------- ----------------------------------------------------------- ---------------------------------------------------------------
Fix the
balance sheet * mitigating any potential covenant breaches, including * no 2018 final or 2019 dividends proposed or paid
To reduce net seeking waivers
external
debt and - disposals of nearly GBP600m
create * considering alternative capital structures, including of assets:
liquidity reviewing the feasibility of a future equity raise * part disposed of intu Derby for GBP186m
to deal with
any
potential * pausing the dividend for the time being * disposed of intu Puerto Venecia for GBP201m (EUR238m)
covenant and intu Asturias for GBP123m (EUR145m)
breaches and
the * disposing and part disposing of assets in the UK and
upcoming Spain * disposed of GBP82m of sundry assets
refinancing
activity,
with the * reducing the capital expenditure pipeline * reduced capital expenditure pipeline by GBP60m
first
material debt
maturities in
early
2021
------------- ----------------------------------------------------------- ---------------------------------------------------------------
Simplify,
enhance * updating management structure for our forward-looking * refreshed the Board since 2018 with four of the seven
and drive strategy members new to intu and one new in role
efficiency
To deliver
our strategy * delivering a thriving culture of happy and * restructured Executive Committee
and reshape high-performing colleagues
intu,
we need to * created customer and centre performance directorates
ensure * considering new approach to incentive plans
we have the
correct * delivered GBP5m of annualised cost savings, of which
leadership * focusing on wellbeing and ESG GBP2m will benefit our customers through lower
team in service charges
place, with
the right
skill sets * signed 'Time to Change' pledge
and teams
to deliver
this vision
------------- ----------------------------------------------------------- ---------------------------------------------------------------
Sharpen
customer * identifying, nurturing and supporting leading brands * CEO meetings with top-30 customers
focus
To improve
our * investing in data and sharing the insight * appointed customer performance director
relationships
with those
who pay * developing new product and service propositions for * created customer performance team with insight,
us to take our customers to reduce their costs, remove hassle digital and sector specialist teams
space, and improve sales
working
closer with * enhanced customer understanding with store-level
them and * leading the way in modernising the lease structure, affordability database
taking a to include store-generated online sales
partnership
approach * multichannel-focused approach to align with retailers
to maximise
returns
for both
parties
------------- ----------------------------------------------------------- ---------------------------------------------------------------
Transform our
centres * focusing on placemaking, so our centres are places * appointed centre performance director
To deliver where people love to be
what future
visitors and * opened intu Lakeside leisure extension
customers * evolving the visitor experience further to increase
want with a footfall and dwell time
project * increased experiential offering: Big Bug Tour and
pipeline for Upside Down House roll-out
new * delivering seamless customer offering to allow new
uses brands easy access to centres
* curated new retail concepts such as Birdhouse
Café and Fashion House
* intensifying our estate, using a capital light model,
introducing new uses
* identified around 6,000 potential residential units
across eight sites, seven potential hotel sites for
around 800 rooms and four flexible working sites
------------- ----------------------------------------------------------- ---------------------------------------------------------------
2019 results
Our results are evidence of the challenges in our market, in
particular structural changes ongoing in the retail sector, with
some weaker retailers struggling to remain relevant in a
multichannel environment. This has led to a higher level of
administrations and CVAs and has been exacerbated by the continued
weak consumer confidence from the political and economic
uncertainty in the UK.
The impact of this can be seen in the reduction in revenue.
Like-for-like net rental income reduced by 9.1 per cent in 2019,
with over half the change coming from CVA and administration
processes which were predominantly agreed in the first half of the
year.
This has also impacted the investment market where 2019 saw the
lowest level of shopping centre transactions since 1993. This weak
sentiment has weighed heavily on valuations. We have seen
reductions in the year of 23 per cent and around 33 per cent from
the peak in December 2017. This property valuation deficit was the
main contributor to the GBP2.0 billion loss for 2019.
Outlook
Looking in to 2020, we would expect like-for-like net rental
income to be down, but by a lower amount than 2019. The Covid-19
situation is rapidly evolving and we are closely monitoring the
impact on our centres (see focus on risk). Our footfall is broadly
unchanged for the first 10 weeks of 2020.
For UK valuations, we would expect some further downward
pressure in 2020, although we believe the decline in values in the
second half of 2019 from the impact of yield and ERV movements
suggests an acceleration towards the point where we believe
valuations should start to stabilise.
In the short term, fixing the balance sheet is our top priority.
The notes accompanying these financial statements indicate a
material uncertainty in relation to intu's ability to continue as a
going concern. However we have options including alternative
capital structures and further disposals to provide liquidity, and
will seek to negotiate covenant waivers where appropriate. These
would address potential covenant remedies and the upcoming
refinancing activities, with the first material debt maturities in
early 2021.
We are focusing all our energies on moving the business forward.
We own many of the best shopping centre locations in the UK, with
dedicated staff looking after our visitors who are coming to our
centres in the same numbers and like intu more than ever. In a
world where it is harder for retailers to increase profits, our
centres offer them the best opportunity and many, such as Next,
Primark and JD Sports, are thriving. But we cannot stand still, and
as we have always done, we will focus on placemaking, curating our
space to ensure it remains the place visitors love to be.
Financial review
Presentation of information
Figures and commentary within the financial review, unless
otherwise stated, are presented including the Group's share of
joint ventures on a proportionately consolidated basis. See
presentation of information section for further details including
rationale for alternative performance measures (APMs) used as well
as reconciliations between presented figures and IFRS figures.
Introduction
2019 was a challenging year for the retail property sector with
the ongoing structural changes and low consumer confidence
impacting some weaker retailers and leading to a higher level of
CVAs and administrations. This impacted our revenue, net rental
income and property valuations, with like-for-like net rental
income down 9.1 per cent and the property revaluation deficit was
GBP1,979.7 million.
Fixing the balance sheet is our top strategic priority and
although the notes accompanying these financial statements indicate
a material uncertainty in relation to intu's ability to continue as
a going concern we have options including alternative capital
structures and further disposals to put us on a stronger financial
footing.
Income statement
GBPm Notes 2019 2018 Change
---------------------------------------------- ------ --------- --------- -------
Net rental income A 401.6 450.5 (48.9)
Administration expenses B (40.5) (44.0) 3.5
Net finance costs C (224.6) (220.4) (4.2)
Tax on underlying profit D (17.6) (0.7) (16.9)
Other underlying amounts2 8.3 7.7 0.6
------------------------------------------------------ --------- --------- -------
Underlying earnings1 127.2 193.1 (65.9)
Revaluation of investment and development
property E (1,979.7) (1,405.0) (574.7)
Change in fair value of financial instruments F (75.3) 86.3 (161.6)
Other finance charges - exceptional G (37.7) (28.4) (9.3)
Other non-underlying amounts3 14.6 21.8 (7.2)
------------------------------------------------------ --------- --------- -------
IFRS loss for the year attributable to
owners of intu properties plc1 (1,950.9) (1,132.2) (818.7)
------------------------------------------------------ --------- --------- -------
IFRS basic loss per share (pence) (145.1)p (84.3)p (60.8)p
------------------------------------------------------ --------- --------- -------
Underlying EPS (pence) 9.5p 14.4p (4.9)p
------------------------------------------------------ --------- --------- -------
1 A reconciliation from the IFRS consolidated income statement
to the underlying earnings amounts presented above is provided in
the presentation of information section.
2 Other underlying amounts includes net other income, share of
underlying profit in associates and any underlying amounts
attributable to non-controlling interests.
3 Other non-underlying amounts includes losses on disposal of
subsidiaries, gains on sale of investment and development property,
write-down on recognition of joint ventures and other assets
classified as held for sale, impairment of goodwill, impairment of
investment in associates, impairment of loan to associate,
exceptional administration expenses, exceptional tax, and any
non-underlying amounts attributable to non-controlling
interests.
The IFRS loss for the year attributable to owners of intu
properties plc increased by GBP818.7 million to GBP1,950.9 million,
with the IFRS basic loss per share increasing by 60.8 pence.
Underlying earnings decreased by GBP65.9 million to GBP127.2
million, with a corresponding reduction in underlying EPS of 4.9
pence. The key drivers of these variances are discussed below.
A Net rental income
Net rental income decreased GBP48.9 million in the year to
GBP401.6 million. This was due primarily to the 9.1 per cent
reduction in like-for-like net rental income of GBP39.6 million and
the impact of disposals of GBP10.5 million (see APM - like-for-like
amounts in the presentation of information section for further
details). The key components of the like-for-like net rental income
movement were:
% 2019 2018
---------------------------------------------------- ---- ----
Rent reviews and improved lettings +0.8 +1.3
Capital investment +1.2 +0.2
Vacancy impact -3.7 -0.1
Administrations and CVAs -4.6 -1.9
Turnover rent -0.6 -
Other (e.g. bad debt; surrender premiums; headlease
adjustments) -2.2 +1.1
---------------------------------------------------- ---- ----
Change in like-for-like net rental income -9.1 +0.6
---------------------------------------------------- ---- ----
- rent increases from rent reviews and new lettings delivered
0.8 per cent rental growth. Rent reviews were settled 6 per cent
ahead of previous rents and lettings were on average up 1 per cent
(see operational performance section for further details)
- capital investment primarily at intu Lakeside and intu Watford delivered growth of 1.2 per cent
- vacancy throughout 2019 was on average around 2 per cent
higher than 2018, resulting in a 3.7 per cent impact on net rental
income from both rent foregone and increased void costs
- the effect of administrations and CVAs was a rental decline of
4.6 per cent, mainly driven by the impact in 2019 from 2018
administrations and CVAs, including House of Fraser, HMV and New
Look Men, and the Debenhams, Arcadia and Monsoon CVAs in 2019
- other was adverse by 2.2 per cent primarily due to surrender
premiums received, with around GBP7 million received in 2018
against around GBP4 million in 2019
In 2019, administrations and CVAs related to 167 stores and
around 9 per cent of our passing rent. By rent, 51 per cent of
these have had no impact, with the customer keeping their stores in
our portfolio open on the existing rent. Of the remainder, 40 per
cent are trading on discounted rents and 9 per cent have closed.
Some of these stores are still considered to be at risk and we
continue to monitor these, including Debenhams which has the
largest concentration of space in the portfolio.
We anticipate 2020 like-for-like net rental income to decline
further, but at a slower rate than in 2019. The effect of the 2019
CVAs are expected to skew the decline in like-for-like net rental
income towards the first half of 2020.
B Administration expenses
Administration expenses reduced by GBP3.5 million in the year
predominantly due to cost savings made in the year:
- in July, we went through a restructuring of headcount
delivering around GBP5 million of annualised savings, of which
around GBP2 million will benefit the service charge. These changes
had a partial impact in 2019, but will deliver a full-year benefit
in 2020
- our EPRA cost ratio (excluding direct vacancy costs) remains
low at 16.1 per cent (see EPRA measures section for detailed
calculation)
C Finance costs
Net finance costs have increased by GBP4.2 million in 2019 to
GBP224.6 million, largely due to lower interest being capitalised
on developments as the extensions of intu Watford and intu Lakeside
have opened.
We would expect the net finance costs run rate for 2020 to be
similar to 2019.
D Tax on underlying profit
Tax on underlying profit includes GBP15.7 million in respect of
corporation tax on the estimated current year underpayment of the
minimum PID.
Current tax relating to the prior year underpayment of the
minimum PID of GBP6.4 million was recognised in 2019 as a one-off
tax expense in respect of prior year profits and so has been
classified as exceptional based on its incidence. See note 5 for
further details.
E Valuation
The property revaluation deficit of GBP1,979.7 million was
driven by increasing yields in the year with a more minor impact
from reduced rental values:
- like-for-like properties were down by 22.3 per cent with most
centres in the range of 20 per cent to 24 per cent. intu Braehead
was an outlier due to a more negative view on Scottish retail, down
33 per cent (see investment and development property section for
centre by centre analysis)
- intu Xanadú was broadly unchanged in the year
Yields expansion was the main factor of the property valuation
deficit, driven predominantly by sentiment:
- the UK shopping centre investment market had the lowest level
of transactions in 2019 since 1993 resulting from factors including
the political and economic uncertainty in the UK and the challenges
facing retailers
- weak market sentiment rather than hard transactional evidence
has been the key driver for the expansion in valuation yields
- intu's weighted average net initial yield (topped-up) - the
expected focus of any potential direct investor - increased by 95
basis points to 5.93 per cent at 31 December 2019. This yield shift
in isolation equates to an approximate 16 per cent reduction in
capital values
Rental values have also been impacted by the higher than normal
levels of administrations and CVAs:
- valuers have reappraised ERVs across the portfolio due to perceived changes in letting demand
- intu's ERVs decreased by 13.4 per cent in the year on a
like-for-like basis, reducing any reversion and bringing them more
in line with current rental values. This is evidenced by the
reduction in the spread between net initial yield (topped-up) and
nominal equivalent yield, which at 31 December 2019 was 23 basis
points, reducing from 46 basis points at 31 December 2018
For the investment market to improve, we believe stabilisation
of income is required with reduced levels of administrations and
CVAs. This should enable potential investors to make more informed
decisions on pricing.
F Change in fair value of financial instruments
The change in fair value of financial instruments related to
fair value movements on our interest rate swaps and our convertible
bonds. Further detail on our interest rate swaps (including detail
on allocated and unallocated interest rate swaps) is provided under
E below within the balance sheet section.
G Other finance charges - exceptional
Other finance charges - exceptional related mainly to interest
payments on unallocated interest rate swaps. Further detail is
provided under E below within the balance sheet section.
IFRS income statement items
Revenue decreased by GBP38.8 million in 2019 to GBP542.3
million, primarily driven by the reduction in rent receivable from
the impact of CVAs and administrations and increased vacancy.
The share of post-tax loss in joint ventures is GBP158.9 million
for 2019, a decrease of GBP116.8 million from 2018. The key driver
in the year relates to property revaluation deficit on joint
ventures of GBP182.9 million, an increase of GBP110.7 million
against the deficit of GBP72.2 million in 2018.
The loss in the year of GBP1,950.9 million was largely driven by
the property revaluation deficit.
Balance sheet1
GBPm Notes 2019 2018 Change
------------------------------------------- ------ --------- --------- ---------
Investment and development property A 6,721.6 9,255.7 (2,534.1)
Joint ventures and other assets classified
as held for sale B 163.7 - 163.7
Investment in associates C 53.7 65.6 (11.9)
Net external debt D (4,498.4) (4,867.2) 368.8
Derivative financial instruments E (286.9) (284.0) (2.9)
Other assets and liabilities 2 (307.7) (342.0) 34.3
--------------------------------------------------- --------- --------- ---------
Net assets 1,846.0 3,828.1 (1,982.1)
Non-controlling interest 3 58.2 (16.4) 74.6
--------------------------------------------------- --------- --------- ---------
IFRS net assets attributable to owners
of intu properties plc 1,904.2 3,811.7 (1,907.5)
Other adjustments 4 73.1 135.4 (62.3)
--------------------------------------------------- --------- --------- ---------
EPRA NAV 1,977.3 3,947.1 (1,969.8)
--------------------------------------------------- --------- --------- ---------
EPRA NAV per share (pence) F 147p 293p (146)p
------------------------------------------- ------ --------- --------- ---------
1 A reconciliation from the IFRS consolidated balance sheet to
the amounts presented above is provided in the presentation of
information section. A further reconciliation of EPRA NAV to IFRS
net assets attributable to owners of intu properties plc is
provided within the EPRA measures section.
2 Other assets and liabilities includes property, plant and
equipment, other non-current assets, trade and other receivables,
trade and other payables, current tax liabilities, deferred tax
liabilities and other payables.
3 Relates primarily to our partner's 40 per cent stake in intu
Metrocentre. The amount is considered to be recoverable in view of
the GBP195.4 million owed to the non-controlling interest (which is
included in the Group's borrowings in note 14).
4 Other adjustments relate to fair value of derivative financial
instruments, fair value of convertible bonds, deferred tax on
investment and development property, share of joint ventures'
adjusted items and non-controlling interest recoverable balance not
recognised in EPRA NAV.
The key drivers in the decrease in IFRS net assets attributable
to owners of intu properties plc of GBP1,907.5 million as well as
the decrease in EPRA NAV of GBP1,969.8 million and EPRA NAV per
share of 146 pence in the year are discussed below.
A Investment and development property
Investment and development property has decreased by GBP2,534.1
million:
- deficit on revaluation of GBP1,979.7 million (see E above within the income statement section)
- disposals in the year, including the part disposal of intu
Derby in July 2019, transfer of intu Puerto Venecia and intu
Asturias to assets held for sale (see B below) and sundry asset
disposals
- capital expenditure of GBP129.2 million on projects enhancing
the value and appeal of our centres, including GBP44.5 million on
the Primark anchored intu Trafford Centre's Barton Square
extension, GBP14.5 million on the redevelopment of intu Broadmarsh
and GBP11.2 million on the now completed leisure extension at intu
Lakeside
B Joint ventures and other assets classified as held for
sale
intu Puerto Venecia and intu Asturias were classified as joint
ventures held for sale at 31 December 2019 and recognised at their
expected net proceeds.
intu Puerto Venecia
In December 2019 the Group announced the disposal of its joint
venture interest in intu Puerto Venecia to Generali Shopping Centre
Fund S.C.S. SICAV-SIF and Union Investment Real Estate GMBH for
EUR475.3 million (intu share EUR237.7 million), an 11 per cent
discount to the June 2019 valuation. This is expected to complete
in early April and deliver net proceeds to intu of around GBP95.4
million after repaying asset-level debt, working capital
adjustments, fees and taxation.
intu Asturias
In January 2020 the Group announced and subsequently completed
the disposal of its joint venture interest in intu Asturias to the
ECE Prime European Shopping Centre Fund II for consideration of
EUR290.0 million (intu share EUR145.0 million), a 9 per cent
discount to the June 2019 valuation. The transaction delivered
initial net proceeds of GBP68.3 million after repaying asset-level
debt, working capital adjustments, fees, taxation and including
land and other assets totalling GBP1.0 million within a wholly
owned subsidiary also being sold as part of this transaction.
C Investments in associates
Investments in associates of GBP53.7 million primarily represent
our interests in India, Prozone and Empire, which own and operate
shopping centres in Coimbatore and Aurangabad. See note 10 for
further details.
D Net external debt
Net external debt of GBP4,498.4 million decreased by GBP368.8
million in 2019. The transfer of intu Puerto Venecia and intu
Asturias to held for sale reduced net external debt by GBP123.5
million. The fair value of the convertible bonds reduced net
external debt by GBP60.0 million, with the balance of the reduction
largely from net proceeds from asset sales - the part disposal of
intu Derby and other sundry asset disposals.
E Derivative financial instruments
Derivative financial instruments comprise the fair value of the
Group's interest rate swaps (referred to as allocated and
unallocated swaps). The net liability of GBP286.9 million increased
by GBP2.9 million in 2019, due primarily to decreases in interest
rates, with the Sterling five-year and 10-year swap rates
decreasing by 41bps and 42bps respectively, partially offset by
early termination at the option of the counterparties of some
unallocated swaps of GBP52.2 million and other cash payments in the
year of GBP40.8 million. Of the GBP40.8 million cash payments in
the year, GBP27.0 million were classified within other finance
charges - exceptional as it relates to interest in respect of
unallocated swaps (see below). The balance of the payments has been
included as underlying finance costs as it relates to ongoing
allocated swaps actively used to hedge debt.
We hold a number of interest rate swaps, entered into some years
ago, which are unallocated due to a change in lenders' practice.
Lenders previously would allow the allocation of the Group's
existing long-dated swap portfolio to new debt. However, this
practice changed when lenders began to require lender specific
swaps on new debt to be put in place as a hedge when entering into
new variable interest rate debt. As a consequence of our
significant refinancing activity carried out in recent years (see
financing section below), this historical long-dated swap cover is
no longer acting as a hedge to any debt interests and is therefore
unallocated.
At 31 December 2019 these unallocated swaps had a market value
liability of GBP166.7 million (31 December 2018: GBP184.4 million).
It is estimated that we will make cash payments on these
unallocated swaps of GBP21.7 million in 2020, reducing to around
GBP16.5 million per annum from 2021. Cash payments on these
unallocated swaps will continue until their maturity dates, which
range between 2020 and 2037, but will cease in the event a swap is
terminated early.
F EPRA NAV per share bridge
The key drivers of the 146 pence decrease in EPRA NAV per share
to 147 pence are summarised in the chart below.
http://www.rns-pdf.londonstockexchange.com/rns/8490F_1-2020-3-11.pdf
As noted in previous results, NAV per share continues to include
a timing impact within retained earnings of 4 pence in relation to
our Spanish development partner Eurofund's expected future equity
interest in the intu Costa del Sol development. Subsequent to the
year end, we have received the final ratifications required for
full planning to become effective and therefore we expect the
positive impact on retained earnings to reverse once these
arrangements are formally concluded. In this event EPRA NAV per
share would have been 143 pence.
IFRS balance sheet items
Our total investment in joint ventures was GBP524.1 million at
31 December 2019 (which includes investments in joint ventures of
GBP326.6 million and loans to joint ventures GBP197.5 million), a
decrease of GBP299.8 million from 31 December 2018. The key driver
in the year related to the share of loss of joint ventures of
GBP158.9 million, which primarily included underlying earnings of
GBP27.9 million and a property revaluation deficit of GBP182.9
million, a GBP200.7 million transfer of intu Puerto Venecia and
intu Asturias to held for sale, partially offset by the residual
interest in intu Derby of GBP93.9 million being classified as a
joint venture.
We are exposed to foreign exchange movements on our overseas
investments. At 31 December 2019 the exposure was 24 per cent of
net assets attributable to shareholders, the increase from the 31
December 2018 exposure of 15 per cent being due to the property
revaluation deficit in the UK. Adjusted for the disposals in intu
Puerto Venecia and intu Asturias, this exposure would be reduced to
15 per cent.
Cash flow
GBPm (IFRS Group cash flow) Notes 2019 2018 Change
-------------------------------------- ------ ------- ------ ------
Cash flows from operating activities A 11.1 102.6 (91.5)
Cash flows from investing activities B 75.5 (0.4) 75.9
Cash flows from financing activities C (122.4) (90.8) (31.6)
Net (decrease)/increase in IFRS Group
cash and cash equivalents (35.8) 11.4 n/a
---------------------------------------------- ------- ------ ------
The key drivers of the decrease in cash and cash equivalents of
GBP35.8 million in the year are discussed below.
A Cash flows from operating activities
Cash flows from operating activities of GBP11.1 million were
GBP91.5 million lower than 2018, largely due to the reduction in
underlying earnings of GBP65.9 million (see income statement
section) and the early settlement of interest rate swaps of GBP52.4
million, partially offset by improvements in working capital of
GBP32.2 million.
B Cash flows from investing activities
Cash flows from investing activities mainly reflected cash
inflows related to the part disposal of intu Derby of GBP96.7
million and other sundry disposals of GBP75.3 million, partially
offset by capital expenditure during the year of GBP127.7
million.
C Cash flows from financing activities
Cash flows from financing activities primarily reflected net
borrowings repaid in the year (see debt activity section
below).
Debt measures
Notes 2019 2018 Change
----------------------------------------------- ------ --------- --------- ----------
Debt to assets ratio A 67.8% 53.1% 14.7%
Interest cover B 1.67x 1.91x -0.24x
Weighted average debt maturity 5.0 years 5.8 years -0.8 years
Weighted average cost of gross debt (excluding
RCF) 4.3% 4.2% -0.1%
Proportion of gross debt with interest
rate protection 88% 84% 4%
Immediately available cash and facilities C GBP241.5m GBP246.8m GBP(5.3)m
----------------------------------------------- ------ --------- --------- ----------
A Debt to asset ratio
Our debt to assets ratio increased to 67.8 per cent in 2019 due
to the property revaluation deficit in the year. This reduces to
65.3 per cent when adjusted for expected disposal proceeds from
intu Puerto Venecia and intu Asturias.
B Interest cover
Interest cover of 1.67x remains above our target minimum level
of 1.60x although it has reduced in 2019 as a result of the
reduction in net rental income.
C Immediately available cash and facilities
Immediately available cash and facilities has reduced in the
year by GBP5.3 million to GBP241.5 million at 31 December 2019.
This excludes the rents collected at the end of December 2019 which
relate to the first quarter of 2020 and remain in the debt
structures until interest payments are made. At 10 March 2020,
immediately available cash and facilities was GBP200.3 million,
which will be augmented by the intu Puerto Venecia sales proceeds
expected to be received in early April.
Financing
Central to our strategy is fixing the balance sheet, with the
key aim to increase short-term liquidity and increase headroom to
deal with any potential covenant breaches and the upcoming
financing activity, from early 2021 onwards.
Disposals
In the year we completed or agreed GBP469.4 million of asset
disposals:
- part disposal of intu Derby completed for GBP186.3 million
- disposed of GBP82.1 million of sundry assets, including
Sprucefield retail park (GBP40.0 million), Waterfront business park
at intu Merry Hill (GBP15.5 million) and King George V dock (see
note 21 for further details)
- exchanged contracts on the disposal of intu Puerto Venecia for
GBP201.0 million (EUR237.7 million)
Since the year end we have announced and completed the sale of
intu Asturias for GBP122.6 million (EUR145.0 million).
Debt activity
During the year we undertook the following financing
activity:
- raised debt of GBP150 million on intu Derby at the joint venture level
- removed intu Derby and added the extension of intu Watford to
the SGS debt structure on 28 June 2019 and repaid GBP210 million of
the SGS term loan (maturity 2021)
In our facilities we have the ability to prepay debt in order to
manage LTV against the relevant covenant ratio. Since the year end,
we have utilised around GBP50 million from available resources to
pay down debt in a small number of our facilities.
The chart below illustrates the debt maturity profile as at 31
December 2019 and although the debt market is more cautious at the
moment, we have no major refinancing requirement due until early
2021.
http://www.rns-pdf.londonstockexchange.com/rns/8490F_2-2020-3-11.pdf
Debt structure and covenants
We have carried out significant refinancing activity in recent
years which has resulted in diversified sources of funding,
including:
- secured bonds and syndicated bank debt secured on individual or pools of assets
- limited or no recourse from the borrowing entities to other
Group companies outside of these arrangements
- corporate-level debt limited to the RCF and GBP375 million 2.875 per cent convertible bonds
We have reported on compliance on all our covenants at their
most recent testing dates. Details of all our debt financial
covenants are included in the financial covenants section. We
regularly undertake sensitivity analysis to consider downside risks
to assess the potential impact on our financial covenants:
- as at 31 December 2019, a further 10 per cent fall in property
valuations, equivalent to a fall of 40 per cent from the December
2017 valuation peak, would (taking into account the Spanish sales
proceeds):
- create covenant cure requirements of GBP113 million under the
Group's asset-level borrowings; and
- require cures on the RCF's net worth and borrowings to net
worth covenants, involving repayment of GBP161 million of net
borrowings on this facility
- a further 10 per cent decline from 2019 net rental income
would create a covenant cure requirement of GBP34 million under the
Group's asset-level borrowings
We will, accordingly, be seeking to take timely mitigating
actions (which may include seeking waivers where appropriate) to
deal with any covenant breaches in July 2020.
Our business depends on our ability to continue to access these
sources of funding to refinance debt as it falls due.
Capital commitments
We have Board approved projects of GBP141 million over the next
two years:
Cost to completion
----- --------------------
GBPm Total 2020 2021
---------------------------------------- ----- --------- ---------
intu Broadmarsh - redevelopment 68 40 28
intu Trafford Centre - Barton
Square 20 14 6
intu Watford - extension 11 11 -
intu Merry Hill - external enhancements 10 10 -
intu Lakeside - leisure extension 5 5 -
Placemaking and leasing projects 27 27 -
------------------------------------------ ----- --------- ---------
Total committed 1 141 107 34
Development funding available 42 27 15
------------------------------------------ ----- --------- ---------
Net cost to intu 99 80 19
------------------------------------------ ----- --------- ---------
1 Total committed of GBP141 million represents projects that are
Board approved (31 December 2018: GBP238 million). Of this, GBP75
million (31 December 2018: GBP191 million) is contractually
committed.
- at intu Broadmarsh we commenced construction of the GBP91
million regeneration of the centre in January 2019. This
leisure-led scheme will be anchored by The Light cinema and
Hollywood Bowl, with two-thirds of the units either exchanged or in
advanced negotiations. Of the remaining cost of GBP68 million,
GBP37 million will be funded from development finance
- at intu Trafford Centre, construction is nearing completion for the GBP75 million expansion and transformation of Barton Square which is scheduled to open in spring 2020 and will be anchored by Primark. Of the remaining cost of GBP20 million, GBP5 million will be funded from development finance
- the Revo award-winning extensions at intu Watford and intu
Lakeside are now open, introducing new brands to the centres and
delivering increased footfall. The remaining spend relates to the
final units to be let
- the external enhancement project for intu Merry Hill,
investing GBP12 million, is underway with GBP10 million remaining
on the project
- placemaking and leasing projects total GBP27 million and
include GBP3 million to complete the final design and resolve any
outstanding planning matters at intu Costa del Sol and GBP4 million
to enhance the food court at intu Xanadú
Other
Tax policy position
The Group seeks to minimise its level of tax risk and to comply
fully with relevant regulations and other tax obligations in a way
which upholds intu's reputation as a responsible corporate citizen.
The Group regularly carries out risk reviews, seeking pre-clearance
from taxing authorities in complex areas and actively engaging in
discussions regarding proposed changes in the taxation system that
might affect the Group.
We have updated 'intu's Approach to Tax' for 2019 on the Group's
website intugroup.co.uk which provides further information about
the Group's tax strategy.
The Group has REIT tax exempt status in the UK which provides an
exemption from corporation tax on rental income and gains arising
on property sales, with tax instead being paid at shareholder
level. See glossary for further information on REITs.
A UK REIT is expected to pay dividends (PIDs) of at least 90 per
cent of its taxable profits from its UK property rental business by
the first anniversary of each accounting date. In view of the
announced short-term reduction of dividends there will be an
underpayment of the minimum PID, and therefore under REIT
legislation, the Group will incur UK corporation tax payable at 19
per cent while remaining a REIT. See note 5 for further details.
The Group intends to remain a UK REIT for the foreseeable
future.
In addition to the PID shortfall as described above, we pay tax
directly on overseas earnings, any UK non-property income, business
rates and transaction taxes such as stamp duty land tax. In 2019
the total of such payments to tax authorities was GBP44.2 million
(2018: GBP28.2 million), of which GBP40.9 million (2018: GBP25.4
million) was in the UK (which includes the PID shortfall) and
GBP3.3 million (2018: GBP2.8 million) in Spain. In addition, we
also collect VAT, employment taxes and withholding taxes for HMRC
and the Spanish tax authorities.
Dividends
The directors are not recommending payment of a final dividend
for 2019. Following losses in the year, the Company no longer has
any distributable reserves.
Operational performance
-------------------------------------------------- ------ --------- ---------
Notes 2019 2018
-------------------------------------------------- ------ --------- ---------
Leasing activity A
* number 205 248
* new rent GBP26m GBP39m
* new rent relative to previous passing rent +1% +6%
Investment by customers B GBP125m GBP144m
Rental uplift on rent reviews settled C +6% +7%
Occupancy (EPRA basis) D 94.9% 96.7%
* of which, occupied by tenants trading in
administration 2.8% 2.0%
Unexpired lease term E 6.3 years 7.2 years
Footfall F +0.3% -1.6%
Retailer sales G -1.6% -2.3%
Net promoter score H 75 73
Gross value added of community investment I GBP4.8bn GBP4.8bn
Carbon emission intensity reduction J 15% 17%
-------------------------------------------------- ------- --------- ---------
A Leasing activity
We agreed 205 long-term leases in 2019, amounting to GBP26
million annual rent, at an average of 1 per cent above previous
passing rent (like-for-like units) and in line with valuers'
assumptions. On a net effective basis (net of rent frees and
incentives), rents were also 1 per cent ahead of previous rents.
The upside from these new lettings added to like-for-like net
rental income but was lower in magnitude than the negative impacts
from administrations and CVAs and increased vacancy (see financial
review section).
Our customers continue to focus on increasing their space in
prime, high footfall retail and leisure destinations. Significant
activity in 2019 included:
- pureplay online brands starting to open stores to increase
their physical presence. Morphe, the digital native cosmetics
brand, opened three of its six UK stores at intu Victoria Centre,
intu Eldon Square and Manchester Arndale, and AliExpress, the
consumer platform of Alibaba, opened its first store in Europe at
intu Xanadú
- Harrods taking its first shopping centre store, launching a
new beauty concept, H Beauty, at intu Lakeside
- a new flagship store for Zara at St David's, Cardiff, where it
is moving into the centre from the high street. This follows the
recent upsizing of stores at intu Trafford Centre and intu
Lakeside
- leisure brands increasing their space with Puttshack to open
its fourth venue at intu Watford, following its successful opening
at intu Lakeside. Namco is expanding its range of attractions at
intu Metrocentre with Clip 'n Climb and the first Angry Birds
Adventure Golf in the UK and Rock Up is taking space at intu
Lakeside
- international fashion brands continuing to expand in the UK
with Spanish brand Mango due to open at intu Watford and intu Merry
Hill and Uniqlo and Hollister joining the line up at intu
Watford
B Investment by customers
In the year, 256 units opened or refitted in our centres (2018:
262 stores), representing around 8 per cent of our 3,300 units. Our
customers have invested around GBP125 million in these stores,
which we believe is a significant demonstration of their long-term
commitment to our centres.
C Rent reviews
We settled 159 rent reviews in 2019 for new rents totalling
GBP45 million, an average uplift of 6 per cent on the previous
rents.
D Occupancy
Occupancy was 94.9 per cent, in line with June 2019 (95.1 per
cent), but a reduction against 31 December 2018 (96.7 per cent),
impacted by units closed in the first half of 2019 from tenants who
went into administration or through a CVA process in 2018. This had
a 3.7 per cent negative impact on like-for-like net rental income
in 2019 from both rents foregone and increased void costs.
E Weighted average unexpired lease term
The weighted average unexpired lease term was 6.3 years (31
December 2018: 7.2 years) illustrating the longevity of our income
streams. The reduction against the prior year was primarily due to
new lease terms on department stores that have been through a CVA
or administration process.
F Footfall
Footfall in our centres increased by 0.3 per cent in the year.
UK footfall was flat, significantly outperforming the Springboard
footfall monitor for shopping centres which was down on average by
2.5 per cent. We believe this highlights the continued attraction
of our compelling destinations against the wider market. In Spain,
footfall was up by 3.5 per cent.
G Retailer sales
Estimated retailer sales in our UK centres, which totalled
GBP5.2 billion in 2019, were down 1.6 per cent, impacted by some
larger space users who have had difficulties and been through CVAs
and those brands who operate successful multichannel models where
in-store sales figures take no account of the benefit of the store
to online sales. This compares favourably to the British Retail
Consortium (BRC), where non-food retailer sales in-store were down
3.1 per cent on average in 2019.
The ratio of rents to estimated sales for standard units
remained stable in 2019 at 12.0 per cent. This does not take into
account the benefit to the retailer of their multichannel business,
such as click and collect.
H Net promoter score
Our net promoter score, a measure of visitor satisfaction, ran
consistently high throughout 2019 averaging 75, an increase of 2
over 2018. Visitor satisfaction is paramount to a shopper's
likelihood to visit, which in turn drives footfall and extended
dwell time.
I Gross value added of community investment
Gross value added, the measure of the economic contribution of
intu to the local communities in the UK, remained stable in the
year at GBP4.8 billion.
J Carbon emission intensity reduction
Annual reduction in carbon emission intensity has reduced in
2019. This is due to our continued focus on energy efficiency to
reduce our overall energy demand each year, supported by the
ongoing greening of the electricity grid as we become less reliant
on coal and increase our renewable generation.
Our 2020 target was to reduce carbon emission intensity by 50
per cent, against a 2010 baseline. We reached this target three
years ahead of plan and at the end of 2019, our reduction total was
69 per cent.
Market trends
Economic background
The continuing Brexit uncertainty has weighed heavily on
consumer confidence. The GfK measure of consumer confidence has
been subdued since the EU referendum and remained low through the
whole of 2019 with a slight pick-up in December 2019 following the
general election.
Against this, employment is at its highest level since 1971 and
wage growth has outpaced inflation for nearly two years now.
Economic uncertainty and changes in what customers are spending
their money on have impacted sales growth, with non-food retailer
sales down by 1.3 per cent on average in 2019, according to the
British Retail Consortium (BRC).
Shopping behaviours continue to change. The trend of growth in
online sales (BRC 2019: +3.3 per cent), offset by falling in-store
sales (BRC 2019: -3.1 per cent), has continued but it is clear the
store still plays a vital role, irrespective of how the product is
bought.
Traditional store profitability is under pressure from limited
sales growth and increased costs from business rates, national
living wage and the distribution costs of online sales.
In 2019 administrations and CVAs affected over 2,000 stores,
according to the Centre for Retail Research, marginally lower than
2018, but a higher level than in other recent years. High-profile
closures and CVAs in the year include Debenhams, Arcadia and
Monsoon, adding to the negative retail sentiment.
The uncertainty of Brexit, the structural change in retail and a
higher than normal level of administrations and CVAs have
significantly reduced investment demand for prime shopping centres
in 2019, which is running at the lowest level since 1993.
Following the general election in December 2019, more certainty
in the course of 2020 over what Brexit means, and retailers
addressing the structural changes in their sector, will enable
customers and investors to make better informed decisions.
The future role of the store
The UK retail market is undergoing a number of structural
changes leading to an evolution in the role of the physical store
and impacting the traditional landlord-tenant relationship.
Evolving demands of the consumer and advancing technology
The combination of evolving demands of consumers alongside
advances in technology is transforming the retail landscape, as
consumers' focus shifts from the traditional equation driven by
cost, choice and convenience to an evolving one driven by control
and experience.
Consumers increasingly shop across channels, but the store
remains an important part of this omnichannel journey. For example,
the inspiration for a purchase could come from social media on a
mobile, which could be checked and bought in store or ordered
online and picked up in store by click and collect. Plus, any items
not wanted may be returned to store.
The evolving role of the physical store
The ways consumers shop will impact the future role, purpose and
value of the store. The role of the store has already evolved
beyond purely selling products. It is central to multiple touch
points along a consumer's journey: it serves as a mini fulfilment
centre, handling online returns, provides customer service and acts
as a marketing channel.
Online spend is expected to continue to grow, but even with 50
per cent growth over the next five years, three quarters of
transactions will still touch a store.
The potential value of a physical store to a retailer is also
evolving
Retailers are also changing their thinking around the
contribution of a store and the value it creates. This includes the
value of in-store sales, last-mile delivery by ship-from-store,
halo sales in the store's catchment and click and collect, which
lowers distribution costs and adds impulse sales. Returns also play
a part and although they may reduce the net sales, a store
collection hub is a cost-effective way of dealing with them.
The continued value of catering and leisure provision to
customer performance
It remains clear that a strong catering and leisure provision in
UK shopping centres has a positive impact on customer performance,
increasing dwell time and broadening the reasons to visit.
The impact on shopping centres
We are adapting to this retail evolution and the changing role
of the store, including across a number of areas where the impact
of omnichannel retail will be more pronounced:
- redefinition of anchors - leisure, catering and services will
become bigger footfall drivers than traditional anchors
- polarisation of venues - experience against convenience, with the middle squeezed
- additional reasons to visit - the development of a more rounded experience
- fluid and flexible use of space - a reconsideration of the
standard use of space and a shift towards more fluid
environments
- challenges to the traditional rental model - a move towards
shorter leases potentially linked to measures of tenant
performance
- reformatting uses - increasing of mixed use
The quality of our portfolio alongside our strategy gives us the
capability to take advantage from the evolving retail market.
Insights into rent sustainability
With the continued evolution of the retail market, our data and
insight team, working with an external consultant, is at the
forefront of understanding the challenges and its impact on the
rent sustainability of our customers.
The process
We analysed our 13 largest centres, amounting to 1,500 stores.
Starting with traditional occupancy cost ratios (OCRs) of existing
sales performance and rent for a store, we then overlaid the
potential incremental omnichannel sales value. This estimated
omnichannel OCR was then benchmarked against the expected
sustainable OCR for that customer.
Observations
The analysis suggests that over 80 per cent of the space
modelled is at a broadly sustainable level and 71 per cent is at
sustainable levels -
ie where the store is profitable. Of the 29 per cent considered
borderline or unsustainable, 13 per cent is with customers that
analysis suggests have robust covenants, around two thirds with
over five years remaining on their lease. The remaining 16 per cent
is mainly customers who have had a CVA or administration, split 10
per cent department stores and 6 per cent other retailers, mainly
clothing and accessories.
Sensitivity analysis
Modelling rent reductions on the 20 per cent unsustainable
rental levels suggests that the group rent roll would have to
reduce 8 per cent for them to be broadly stable. Moving all the
borderline and unsustainable rents to a sustainable level would
require the Group rent roll to reduce by 16 per cent.
Neither of these sensitivities take into account improving
customer sales performance, the unexpired lease terms, tenants who
run naturally high OCRs (for example, mobile phone operators) or
possible mitigation actions we can take.
Possible mitigating actions
Department stores generally pay a low rent per square foot, on
average GBP11 per square foot across our portfolio, and are usually
positioned at one end of a mall. This gives optionality to
introduce new concepts or reduce the retail footprint and bring in
alternative uses such as residential or hotels.
As a break-even scenario, on the closure of a department store,
we could maintain rental levels by reletting 50 per cent of the
space, before we even consider the opportunities from alternative
uses of the remaining vacant space in the form of a gym, cinema,
grocery store or leisure offering - all paying on average more than
a department store. In addition there is an option of closing the
store and changing its use to residential, hotel or offices.
For other retail space, although the rent may not be sustainable
for the post-CVA customer, there are many other brands looking for
space who can maintain those rental levels. This includes many
London-focused brands who will look to our centres as they expand
across the UK.
Conclusions
We are starting from a strong position. According to market
data, brands trading in our centres typically outperform the UK
chain average sales by 28 per cent and outside London and the south
east, we have the highest performing malls in each region.
Although there may be rental pressure over the short term, our
analysis suggests that if all rents were to become sustainable then
our rent roll would be likely to reduce by 16 per cent. However,
around one-third of this is with financially stable tenants with
over five years to run on their lease. Of the balance, we have
possible mitigating actions available to reduce any impact.
Principal risks and uncertainties
Our Board is responsible for setting the Group's appetite for
risk on the balance of potential risks and returns, and has overall
responsibility for identifying and managing risks. The Board has
undertaken a robust assessment of the principal risks and
uncertainties facing the Group, including those that would impact
the business model, future performance, solvency or liquidity.
Risk appetite and risk management process
The Board determines the nature and extent of the principal
risks that intu is willing to take in order to achieve our
long-term strategic objectives, and for overall risk management.
The effectiveness of the risk management process is monitored and
reviewed by the Audit Committee and through periodic external
review, supported by the internal audit department.
The Audit Committee oversees the risk management process, with
the head of internal audit and risk reporting directly to the Audit
Committee Chairman, ensuring independence and objectivity. Four
risk updates are provided each year.
The risk team provides an overview of key risks to the Board and
Executive Committee. This includes horizon-scanning for new and
emerging risks and highlighting the output of an annual survey of
top perceived risks by the executive and non-executive directors to
help identify risks that could impact the delivery of corporate
objectives.
An assessment of the Group's risk appetite was undertaken in
2019 where the Group's principal risks and uncertainties were
reviewed.
Risk monitoring
The monitoring of risk within our business is underpinned by a
formal risk review process conducted for each area of the business
including each intu-managed centre, each department, selected
internal committees and the Executive Committee. These reviews
provide an opportunity to identify risks and assess their impact
and likelihood. The assessment also includes how quickly the risks
would impact our business and for how long.
The risk registers created through this process are subject to a
minimum of an annual review, facilitated by the risk team.
Operational management is responsible for managing the risks and
for updating risk registers.
In addition to the formal risk review process, risk and
opportunity workshops and specific risk reviews on emerging risks
are also conducted as required.
Principal risks and uncertainties
We have identified principal risks and uncertainties under five
headings: financing; property market; operations; developments; and
corporate reputation and brand. These are discussed in detail on
the following pages. A principal risk is one that has the potential
to significantly affect our strategic objectives, financial
position or future performance and includes both internal and
external factors. We monitor movements in likelihood and severity
so that the risks are appropriately managed in line with the
Group's risk appetite.
Reviews of our principal and emerging risks led to an increased
risk profile in 2019. Increases were identified in financing, both
property market sub-risks, operations - people and developments,
and some changes to the scope of existing principal risks were
made. Emerging risks include changes to off-payroll working rules
and the risks to customers and visitors associated with the
outbreak of Covid-19. The health and safety of our customers and
visitors is our top priority. In addition, we are carefully
monitoring the financial resilience of our centres including the
potential impact on variable income, from reduced footfall, and
future rents receivable. Plans are underway to review existing risk
management processes to help ensure climate-related risks are
integrated where possible.
The UK's decision to withdraw from the European Union continues
to have a negative impact on the macroeconomic risks that the Group
faces, as well as changes in sentiment in the retail and investment
markets in which we operate. Combined, these affect our ability to
execute our strategy.
In addition, operations - health and safety has been broadened
to include anti-social behaviour, violent crime and pandemic or
virus outbreak, and brand now incorporates corporate
reputation.
Risk and impact Mitigation Commentary Opportunity
-------------------------- ----------------------------- ------------------------------- --------------------------
Financing - breach Change: increased Strategic objective affected: All
of covenants and
availability of
funds
Further fall in We are currently seeking For more detailed commentary Explore opportunities
valuations may to take timely mitigating refer to the Viability of alternative
cause breaches actions to provide Statement in the Group's capital structures
of certain covenants additional liquidity, annual report and financial and further asset
which could result including further statements. disposals.
in an acceleration asset disposals, the Actions taken to date Review feasibility
or immediate repayment pricing of which will include asset disposals of an equity
of certain facilities depend on future market of GBP600m, dividend raise.
Reduced availability conditions. paused and capital expenditure
of funds could Actions may also include reduced by GBP60m.
limit liquidity, seeking covenant waivers
leading to restriction where appropriate.
of investing and
operating activities
and/or increase
in funding cost
-------------------------- ----------------------------- ------------------------------- --------------------------
Property market Change: increased Strategic objective affected: All
- macroeconomic
Weakness in the We regularly review The economic outlook Increased customer
macroeconomic the economic outlook during the year has focus on high-quality,
environment could against the business weakened, with the annual high-footfall
impact intu's plan, including the growth of the UK economy locations where
ability to deliver close monitoring and reported to have slowed they can maximise
its strategy, stress-testing of this year. Meanwhile their productivity
customer performance covenant headroom interest and employment and profitability.
and our visitor's and updating of the rates have remained
propensity to Brexit risk review. fairly stable.
visit We remain focused The trend of administrations
on maintaining high-quality and CVAs of customers
shopping centres, has continued, and investors
attracting and retaining have responded by remaining
aspirational customers highly cautious. These
as well as portfolio-wide trends could be exacerbated
marketing events targeted if the UK fails to reach
at attracting footfall. a trade deal with the
EU by the end of 2020.
This has resulted in
lower transaction volumes
and a corresponding
reduction in property
valuations.
-------------------------- ----------------------------- ------------------------------- --------------------------
Property market Change: increased Strategic objective affected: Fix,
- retail environment Sharpen, Transform
Structural and With our new strategy Ongoing structural change Invest further
cyclical changes we will be collaborating is being experienced in data and share
in the retail more closely with within the retail market insights.
environment, including customers, sharing with an increase in Develop new product
the rise in online data and other information administrations and and service proposition
shopping, could so we can adapt better CVAs during the year. to reduce costs,
undermine intu's to their changing A new customer performance remove hassle
ability to attract needs. director has been appointed, and improve sales.
customers and The customer mix is who will lead a team Lead modernisation
visitors and continue proactively managed in sharpening the customer of lease structures.
to put pressure and plans have been focus.
on net rental developed to diversify
income and property use of future vacant
valuations units and land, including
direct retailing,
the building of hotels,
residential units
and flexible office
space.
-------------------------- ----------------------------- ------------------------------- --------------------------
Operations - health Change: unchanged Strategic objective affected: All
and safety
Accidents, pandemic There is a strong Primary Authority audits Develop new approaches
or virus outbreak, safety culture. for both health and to higher-risk
anti-social behaviour, Consistent health safety and fire safety areas such as
violent crime and safety management are being conducted. fire management
or system failure process and procedures These provide assurances and high-frequency
leading to reputational across the portfolio, surrounding compliance. incidents.
loss compliant with OHSAS The rapidly evolving Broaden the impact
18001. situation in respect of occupational
Annual audits of operational of Covid-19 is being health monitoring
standards and crisis closely monitored. We and support.
management and business have well-rehearsed Extend our commitment
continuity plans are plans in place that to the wellbeing
tested and in place. have been reviewed in of staff.
line with Public Health
England's advice.
A slight increase of
anti-social behaviour
in the UK has influenced
the implementation of
new mitigators.
The Group had 26 reportable
accidents during the
year.
-------------------------- ----------------------------- ------------------------------- --------------------------
Risk and impact Mitigation Commentary Opportunity
-------------------------- ------------------------------- ----------------------------- --------------------------
Change: unchanged Strategic objective affected: Fix,
Operations - cybersecurity Sharpen, Transform
Loss of data and We operate robust Significant progress Focus on vulnerability
information or data and cybersecurity has been made in the and anomaly detection
failure of key strategies, subject year. and remediation.
systems resulting to continuous review An information security
in financial and/or and testing - including architect has been appointed
reputational loss assessments performed to develop a sustainable
by CREST-accredited cybersecurity framework.
external consultancies. To reduce intu's threat
A data committee and exposure, new technical
data protection officer and logical security
oversees GDPR compliance. controls have been
Management of third implemented.
parties who hold intu
data.
Employee awareness
campaigns and training.
-------------------------- ------------------------------- ----------------------------- --------------------------
Change: unchanged Strategic objective affected: Fix,
Operations - terrorism Transform
Terrorist incident Robust processes and UK threat level reduced Further promote
at intu or other procedures in place, in 2019. our close relationship
major shopping supported by regular Our Group head of security with the security
centre resulting training and exercises. was appointed as deputy services and
in a decline in We have strong relationships chairman of the Crowded our market-leading
footfall and business with police, NaCTSO, Places Information Exchange. security processes
disruption CPNI and other agencies. This ensures that intu to our visitors.
We are NaCTSO-approved is abreast of the current
to train staff in threats and work undertaken
counter-terrorism by Counter Terrorism
awareness programme policing teams in the
Action Counters Terrorism. UK.
Crisis management Major multiagency security
and business continuity exercises have been
plans in place and held at all five
tested regularly. super-regional
An embedded safety centres within the last
culture. three years and learnings
have been embedded into
the security strategy.
We invested in airport-style
screening technology
which can be deployed
at any centre when required.
-------------------------- ------------------------------- ----------------------------- --------------------------
Operations - people Change: increased Strategic objective affected: All
Failure to attract, Clear recruitment Introduced renewed people For intu to be
retain or develop policies. focus into our new five-year seen as an employer
an appropriate Established appraisal strategy. of choice.
team with the process linked to The Executive Committee Create a comprehensive
key skills to strategy. was reduced and restructured plan to further
deliver intu's Talent management and the overall develop our culture
objectives programme for functional organisational and build high-performing
and personal development. structure simplified. teams.
Regular benchmarking We remodelled the staff
of salaries and benefits. survey, improved employee
Opportunity for two-way communication and started
communication through a review and improvement
forums, surveys and of benefits.
publications. We launched our employee
wellbeing strategy and
signed the Time to Change
pledge.
-------------------------- ------------------------------- ----------------------------- --------------------------
Risk and impact Mitigation Commentary Opportunity
---------------------- ----------------------------- ---------------------------- --------------------------
Change: increased Strategic objective affected: Fix,
Developments Sharpen, Transform
Developments fail Developments pursued The capital expenditure Evolve our centres
to create shareholder based on extensive pipeline has been into living cities,
value research. reduced by GBP60m with the introduction
The Capital Projects and no further projects of residential,
Committee reviews initiated. hotel and office/flexible
detailed appraisals working spaces.
before, and monitors
progress during, significant
projects.
Target levels of pre-lets
are exchanged prior
to commencement of
construction.
Fixed-price construction
contracts are negotiated
for developments and
are agreed with a
clear apportionment
of risk.
---------------------- ----------------------------- ---------------------------- --------------------------
Corporate reputation Change: unchanged Strategic objective affected: All
and brand - integrity
of the brand
The integrity We operate a reputation Increase in general Be known as a brand
of the business management framework, public filming and that promotes compelling
is damaged leading and have robust issue uploading incidents experiences, builds
to financial and/or and crisis management to social media complicates strong sustainable
reputational loss procedures. issue management. communities, underpinned
Staff attend induction We have carried out by high-quality
and training programmes, behavioural economic-based centres and a resilient
and are offered reward training to improve income stream.
and recognition schemes conflict management.
designed to embed New consumer brand-building
brand values and culture campaign launched.
throughout the organisation.
Strict communications
protocols are in place,
supported by comprehensive
media monitoring.
We have clear guidelines
for the use of the
brand and intellectual
property protection.
---------------------- ----------------------------- ---------------------------- --------------------------
Viability statement
Going concern
Full detail in respect of going concern is set out in note
1.
The going concern disclosure details that a material uncertainty
exists that may cast significant doubt on the Group and Company's
ability to continue as a going concern, including:
- continued reductions in asset valuations and net rental income
result in financial covenant breaches on its asset-level financing
arrangements as well as the revolving credit facility (RCF)
- the Group is not able to refinance its borrowings at the same level as currently outstanding
The Directors have considered the following mitigating actions
available to the Group:
- engaging with stakeholders and other potential investors to
explore alternative capital structures or solutions, including
those investors which have expressed an interest in such
transactions. The Group would also continue to keep under review
the feasibility of a substantial equity raise. Some of these
solutions could require shareholder or certain other approvals,
which would be outside of the control of the Group and Company
- the sale and/or part sale of additional assets, which may be
at lower valuations than the valuations at which the relevant
investment was previously recorded and/or the current market
valuation. The asset sales may also not be achievable in the
timescales required in order to ensure sufficient liquidity
- seeking waivers from, or amendments to, the financial
covenants contained in the Group's existing financing arrangements
with lenders (including the lenders under its RCF). These are
likely to be required prior to the covenants being tested in July
2020
- other self-help measures including a reduced level of capital expenditure in the short term
After reviewing the most recent projections and the sensitivity
analysis and having carefully considered the above uncertainty and
the mitigating actions available, the Directors have formed the
judgement that it is appropriate to prepare the financial
statements on the going concern basis.
Viability statement
Introduction
In accordance with provision 31 of the UK Corporate Governance
Code, the Directors have assessed the prospects of the Group and
Company over a longer period than that required in adopting the
going concern basis of accounting. The Directors have previously
determined that the period of five years from the balance sheet
date was appropriate for the purposes of conducting this review.
This period was considered appropriate based on the Group's
strategic plan covering 10 years, with a greater degree of detail
and rigour applied to the rst ve years, the Group's weighted
average unexpired lease term and the Group's weighted average debt
maturity.
Viability period and statement
Given the uncertainty surrounding the successful and timely
execution of the mitigating actions summarised above and detailed
in note 1 over the going concern period, in assessing viability the
Directors are not able to form a reasonable expectation that the
Group and Company will have the ability to continue in operation
and meet its liabilities as they fall due beyond the going concern
period. Therefore, the Directors have concluded that it is
necessary to shorten the viability assessment period to March 2021,
to align to the going concern period.
Whilst it is not possible for the Directors to form a reasonable
assessment of the Group and Company's ability to continue in
operation and meet its liabilities as they fall due beyond the
going concern period, the Group is committed to delivering on its
5-year strategy (see long term prospects below).
Long term prospects
The key area of focus for the Directors is to fix the balance
sheet in order to reduce net external debt and create liquidity to
deal with any potential covenant breaches and the upcoming
refinancing activity. Successful completion of this strategic
objective would, subject to future valuations of the Group's
property portfolio, position the business to deliver the other
elements of its 5-year strategy as well as refinance debts with
maturities beyond the going concern period.
The Group has a concentrated and well-invested portfolio of many
of the UK's best retail and leisure destinations where both
shoppers and customers want to be. Operationally the business is
strong, delivering a resilient rental performance despite ongoing
pressure from CVAs and administrations, with stable occupancy rates
and footfall that consistently outperforms the benchmark. intu's
centres are the best performers in the regions in which they
operate and independent research shows that stores in intu centres
outperform retailers' average sales by nearly 30 per cent. This is
a compelling proposition and one that will stand the test of time.
See further details in the market trends section.
Based on these factors, the Directors believe in the quality of
its asset base and the long-term attractiveness of its space to
retailers.
Statement of directors' responsibilities
in respect of the financial statements
The responsibility statement below has been prepared in
connection with the Group's full annual report for the year ending
31 December 2019. Certain parts thereof are not included within
this announcement.
We confirm to the best of our knowledge:
- the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group and the undertakings
included in the consolidation taken as a whole;
- the financial review and operational performance includes a
fair review of the development and performance of the business and
the position of the Group and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties they face; and
- the annual report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Group's performance,
business model and strategy.
This responsibility statement was approved by the Board of
directors on 12 March 2020 and is signed on its behalf by:
Matthew Roberts
Chief Executive
Robert Allen
Chief Financial Officer
Consolidated income statement
for the year ended 31 December 2019
---------------------------------------------------- ----- --------- -------------
Re-presented1
GBPm Notes 2019 2018
---------------------------------------------------- ----- --------- -------------
Revenue 2 542.3 581.1
---------------------------------------------------- ----- --------- -------------
Net rental income 2 348.1 398.5
Net other income 6.2 5.3
Revaluation of investment and development property 8 (1,796.8) (1,332.8)
Loss on disposal of subsidiaries (6.3) (8.5)
Gain on sale of investment and development property 3.9 1.4
Write-down on recognition of joint ventures
and other assets classified as held for sale 20 (38.0) -
Impairment of goodwill (4.0) -
Impairment of investment in associates 10 (7.4) -
Impairment of loan to associate (5.5) -
Administration expenses - ongoing (39.5) (42.9)
Administration expenses - exceptional 3 (3.4) (13.1)
---------------------------------------------------- ----- --------- -------------
Operating loss (1,542.7) (992.1)
---------------------------------------------------- ----- --------- -------------
Finance costs 4 (220.9) (216.7)
Finance income 4 16.6 14.8
Other finance charges - exceptional 4 (36.9) (32.9)
Change in fair value of financial instruments 4 (72.9) 87.3
---------------------------------------------------- ----- --------- -------------
Net finance costs 4 (314.1) (147.5)
---------------------------------------------------- ----- --------- -------------
Loss before tax, joint ventures and associates (1,856.8) (1,139.6)
Share of post-tax loss of joint ventures 9 (158.9) (42.1)
Share of post-tax (loss)/profit of associates 10 (0.3) 2.3
---------------------------------------------------- ----- --------- -------------
Loss before tax (2,016.0) (1,179.4)
---------------------------------------------------- ----- --------- -------------
Current tax - ongoing 5 (16.0) (0.1)
Current tax - exceptional 5 (6.4) -
Deferred tax 5 16.6 5.8
---------------------------------------------------- ----- --------- -------------
Taxation 5 (5.8) 5.7
---------------------------------------------------- ----- --------- -------------
Loss for the year (2,021.8) (1,173.7)
---------------------------------------------------- ----- --------- -------------
Attributable to:
Owners of intu properties plc (1,950.9) (1,132.2)
Non-controlling interests (70.9) (41.5)
---------------------------------------------------- ----- --------- -------------
(2,021.8) (1,173.7)
---------------------------------------------------- ----- --------- -------------
Basic loss per share 7 (145.1)p (84.3)p
Diluted loss per share 7 (145.1)p (84.3)p
---------------------------------------------------- ----- --------- -------------
1 See note 1 for details of re-presented amounts.
Consolidated statement of comprehensive income
for the year ended 31 December 2019
------------------------------------------------------- ----- --------- ---------
GBPm Notes 2019 2018
------------------------------------------------------- ----- --------- ---------
Loss for the year (2,021.8) (1,173.7)
------------------------------------------------------- ----- --------- ---------
Other comprehensive income
Items that may be reclassified subsequently
to the income statement:
Exchange differences (30.7) 4.1
------------------------------------------------------- ----- --------- ---------
Total items that may be reclassified subsequently
to the income statement (30.7) 4.1
------------------------------------------------------- ----- --------- ---------
Items that will not be reclassified subsequently
to the income statement:
Revaluation of other investments (2.6) (6.4)
Change in fair value of financial instruments 15 75.0 43.4
Total items that will not be reclassified subsequently
to the income statement 72.4 37.0
------------------------------------------------------- ----- --------- ---------
Other comprehensive income for the year 41.7 41.1
------------------------------------------------------- ----- --------- ---------
Total comprehensive loss for the year (1,980.1) (1,132.6)
------------------------------------------------------- ----- --------- ---------
Attributable to:
Owners of intu properties plc (1,909.2) (1,091.1)
Non-controlling interests (70.9) (41.5)
------------------------------------------------------- ----- --------- ---------
(1,980.1) (1,132.6)
------------------------------------------------------- ----- --------- ---------
Consolidated balance sheet
at 31 December 2019
---------------------------------------------- ----- --------- -------------
Re-presented1
GBPm Notes 2019 2018
---------------------------------------------- ----- --------- -------------
Non-current assets
Investment and development property 8 6,026.7 8,138.3
Property, plant and equipment 14.3 11.8
Investment in joint ventures 9 326.6 487.9
Loans to joint ventures 9 197.5 336.0
Investment in associates 10 53.7 65.6
Derivative financial instruments - 4.3
Other non-current assets 1.1 20.7
---------------------------------------------- ----- --------- -------------
6,619.9 9,064.6
---------------------------------------------- ----- --------- -------------
Current assets
Joint ventures and other assets classified as
held for sale 20 163.7 -
Derivative financial instruments - 0.4
Trade and other receivables 11 130.0 138.0
Cash and cash equivalents 12 203.5 239.5
---------------------------------------------- ----- --------- -------------
497.2 377.9
---------------------------------------------- ----- --------- -------------
Total assets 7,117.1 9,442.5
---------------------------------------------- ----- --------- -------------
Current liabilities
Trade and other payables 13 (243.3) (278.4)
Current tax liabilities (5.9) -
Borrowings 14 (71.1) (51.1)
Derivative financial instruments (48.4) (39.0)
---------------------------------------------- ----- --------- -------------
(368.7) (368.5)
---------------------------------------------- ----- --------- -------------
Non-current liabilities
Borrowings 14 (4,663.2) (4,984.2)
Derivative financial instruments (237.1) (246.2)
Deferred tax liabilities 5 (0.9) (18.0)
Other payables (1.2) (1.2)
---------------------------------------------- ----- --------- -------------
(4,902.4) (5,249.6)
---------------------------------------------- ----- --------- -------------
Total liabilities (5,271.1) (5,618.1)
---------------------------------------------- ----- --------- -------------
Net assets 1,846.0 3,824.4
---------------------------------------------- ----- --------- -------------
Equity
Share capital 16 677.5 677.5
Share premium 16 1,327.4 1,327.4
ESOP shares (33.6) (37.0)
Other reserves 443.9 402.2
(Accumulated losses)/retained earnings (511.0) 1,441.6
---------------------------------------------- ----- --------- -------------
Attributable to owners of intu properties plc 1,904.2 3,811.7
Non-controlling interests (58.2) 12.7
---------------------------------------------- ----- --------- -------------
Total equity 1,846.0 3,824.4
---------------------------------------------- ----- --------- -------------
1 See note 1 for details of re-presented amounts.
Consolidated statement
of changes in equity
for the year ended 31
December 2019
-----------------------------------------------------
Attributable to owners of intu properties
plc
-----------------------------------------------------
Retained
earnings/ Non-
Share Share ESOP Other (accumulated controlling Total
GBPm capital premium shares reserves losses) Total interests equity
------------------------- -------- -------- ------- --------- ------------- --------- ------------ ---------
At 1 January 2019 677.5 1,327.4 (37.0) 402.2 1,441.6 3,811.7 12.7 3,824.4
------------------------- -------- -------- ------- --------- ------------- --------- ------------ ---------
Loss for the year - - - - (1,950.9) (1,950.9) (70.9) (2,021.8)
Other comprehensive
income:
Revaluation of other
investments - - - (2.6) - (2.6) - (2.6)
Change in fair value
of financial
instruments
(note 15) - - - 75.0 - 75.0 - 75.0
Exchange differences - - - (30.7) - (30.7) - (30.7)
Total comprehensive loss
for the year - - - 41.7 (1,950.9) (1,909.2) (70.9) (1,980.1)
------------------------- -------- -------- ------- --------- ------------- --------- ------------ ---------
Share-based payments - - - - 1.8 1.8 - 1.8
Acquisition of ESOP
shares - - (0.1) - - (0.1) - (0.1)
Disposal of ESOP shares - - 3.5 - (3.5) - - -
- - 3.4 - (1.7) 1.7 - 1.7
------------------------- -------- -------- ------- --------- ------------- --------- ------------ ---------
At 31 December 2019 677.5 1,327.4 (33.6) 443.9 (511.0) 1,904.2 (58.2) 1,846.0
------------------------- -------- -------- ------- --------- ------------- --------- ------------ ---------
Attributable to owners of intu properties
plc
------------------------------------------------------------
Non-
Share Share ESOP Other Retained controlling Total
GBPm capital premium shares reserves earnings Total interests equity
----------------------------- -------- -------- ------- --------- --------- --------- ------------ ---------
At 1 January 2018 677.5 1,327.4 (39.1) 361.1 2,748.1 5,075.0 54.2 5,129.2
----------------------------- -------- -------- ------- --------- --------- --------- ------------ ---------
Adjustment on adoption
of new accounting standard - - - - 14.0 14.0 - 14.0
Adjusted 1 January 2018 677.5 1,327.4 (39.1) 361.1 2,762.1 5,089.0 54.2 5,143.2
Loss for the year - - - - (1,132.2) (1,132.2) (41.5) (1,173.7)
Other comprehensive income:
Revaluation of other
investments - - - (6.4) - (6.4) - (6.4)
Change in fair value
of financial instruments
(note 15) - - - 43.4 - 43.4 - 43.4
Exchange differences - - - 4.1 - 4.1 - 4.1
----------------------------- -------- -------- ------- --------- --------- --------- ------------ ---------
Total comprehensive loss
for the year - - - 41.1 (1,132.2) (1,091.1) (41.5) (1,132.6)
----------------------------- -------- -------- ------- --------- --------- --------- ------------ ---------
Dividends (note 6) - - - - (188.1) (188.1) - (188.1)
Share-based payments - - - - 2.8 2.8 - 2.8
Acquisition of ESOP shares - - (0.9) - - (0.9) - (0.9)
Disposal of ESOP shares - - 3.0 - (3.0) - - -
- - 2.1 - (188.3) (186.2) - (186.2)
----------------------------- -------- -------- ------- --------- --------- --------- ------------ ---------
At 31 December 2018 677.5 1,327.4 (37.0) 402.2 1,441.6 3,811.7 12.7 3,824.4
----------------------------- -------- -------- ------- --------- --------- --------- ------------ ---------
Consolidated statement of cash flows
for the year ended 31 December 2019
----------------------------------------------------- ------ ------- -------------
Re-presented1
GBPm Notes 2019 2018
----------------------------------------------------- ------ ------- -------------
Cash generated from operations 18 321.4 319.7
Interest paid (255.4) (236.1)
Payments on termination of interest rate swaps (52.4) -
Interest received 14.1 19.3
Taxation (16.6) (0.3)
----------------------------------------------------- ------ ------- -------------
Cash flows from operating activities 11.1 102.6
----------------------------------------------------- ------ ------- -------------
Cash flows from investing activities
Purchase and development of property, plant
and equipment (127.7) (193.5)
Sale of investment and development property 75.3 24.4
Additions to other investments (0.1) (0.1)
Sale of other investments 8.0 -
Disposal of subsidiaries net of cash sold 19, 21 100.7 143.2
Investment of capital in joint ventures (4.4) (7.7)
Repayments of capital by joint ventures 9 7.7 7.1
Loan advances to joint ventures 9 (4.8) (2.0)
Loan repayments by joint ventures 9 16.2 25.3
Distributions from joint ventures 9 4.6 2.9
----------------------------------------------------- ------ ------- -------------
Cash flows from investing activities 75.5 (0.4)
----------------------------------------------------- ------ ------- -------------
Cash flows from financing activities
Acquisition of ESOP shares (0.1) (0.9)
Borrowings drawn 208.0 302.0
Borrowings repaid (322.1) (204.3)
Equity dividends paid 6 (8.2) (187.6)
----------------------------------------------------- ------ ------- -------------
Cash flows from financing activities (122.4) (90.8)
----------------------------------------------------- ------ ------- -------------
Net (decrease)/increase in cash and cash equivalents (35.8) 11.4
----------------------------------------------------- ------ ------- -------------
Cash and cash equivalents at 1 January 12 239.5 228.0
----------------------------------------------------- ------ ------- -------------
Effects of exchange rate changes on cash and
cash equivalents (0.2) 0.1
----------------------------------------------------- ------ ------- -------------
Cash and cash equivalents at 31 December 12 203.5 239.5
----------------------------------------------------- ------ ------- -------------
1 See note 1 for details of re-presented amounts.
Notes
1 Accounting convention and basis of preparation
The financial information presented does not constitute the
Group's annual report and financial statements for either the year
ended
31 December 2019 or the year ended 31 December 2018, but is
derived from those financial statements. The Group's statutory
financial statements for 2018 have been delivered to the Registrar
of Companies and those for 2019 will be delivered following the
Company's annual general meeting. The auditors' reports on both the
2018 and 2019 financial statements were not qualified or modified,
however the 2019 financial statements drew attention to a material
uncertainty in respect of going concern. The auditors' reports from
both years did not contain any statement under Section 498 of the
Companies Act 2006.
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRS), interpretations issued by the
International Financial Reporting Standards Interpretations
Committee and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS.
These consolidated financial statements have been prepared under
the historical cost convention as modified by investment and
development property, derivative financial instruments and certain
other assets and liabilities that have been measured at fair
value.
A summary of the significant accounting policies as applied to
the Group is set out in note 2 of the Group's annual report and
financial statements.
The accounting policies are consistent with those applied in the
last annual financial statements, as amended when relevant to
reflect the adoption of new standards, amendments and
interpretations which became effective in the year (see detail as
follows). These changes have not had a material impact on the
financial statements.
This is the Group's first set of annual financial statements
where IFRS 16 Leases has been applied. The impact on the financial
statements on adoption of this standard is set out below:
IFRS 16 Leases - the standard requires lessees to recognise a
right-of-use asset representing its right to use the underlying
asset and a lease liability representing its obligation to make
lease payments. Revaluation of the right-of-use asset and finance
costs on the lease liability will be recognised in the income
statement. The application of this standard does not result in
material changes to lessor accounting including current accounting
for rental income earned or related disclosures. The standard
allows for different transition options and the Group has adopted
the modified retrospective approach. On adoption the Group
recognised a right-of-use asset and lease liability of GBP3.5
million. See note 2 of the Group's annual report and financial
statements for the revised accounting policy.
A number of standards and amendments to standards have been
issued but are not yet effective for the current year. These are
not expected to have a material impact on the Group financial
statements.
1 Accounting convention and basis of preparation (continued)
Re-presentation of information
The Group has re-presented the following during the year in
order to add clarity and simplify the primary statements. None of
these re-presentations have had any impact on reported basic or
diluted earnings per share.
- consolidated income statement
The underlying component of other finance charges, being the
amortisation of Metrocentre compound financial instrument, has been
re-presented to finance costs. As a result, other finance charges
now only include exceptional items. These amounts have been
classified as exceptional based on their nature. Following the
change in presentation, at 31 December 2019 finance costs include
GBP5.9 million relating to this amortisation charge. For the year
ended 31 December 2018 finance costs have increased by GBP5.9
million, while other finance charges - exceptional have decreased
by the same amount. See note 4 for disclosure details.
- consolidated balance sheet
Amounts attributable to tenant lease incentives previously
classified as trade and other receivables have been re-presented to
investment and development property. Following the change in
presentation, at 31 December 2019 investment and development
property includes GBP117.4 million relating to tenant lease
incentives. At 31 December 2018 investment and development property
has increased by GBP116.5 million, non-current trade and other
receivables (now presented within other non-current assets) have
decreased by GBP99.3 million and current trade and other
receivables have decreased by GBP17.2 million.
As a result of the above change, total current assets at 31
December 2018 decreased by GBP17.2 million and total non-current
assets increased by the same amount.
Other non-current assets at 31 December 2018 of GBP20.7 million
contains the following amounts presented individually in the 2018
annual report and financial statements: other investments of
GBP10.5 million; goodwill of GBP4.0 million; and non-current trade
and other receivables of GBP6.2 million which remains from the
initial GBP105.5 million after the tenant lease incentives
re-classification of GBP99.3 million (as above).
Amounts attributable to loans to joint ventures previously
classified within investment in joint ventures has been
re-presented to a separate line, loans to joint ventures. Following
the change in presentation, at 31 December 2019 GBP197.5 million
has been separately classified as loans to joint ventures. At 31
December 2018, investment in joint ventures has decreased by
GBP336.0 million, and loans to joint ventures has increased by the
same amount.
- consolidated statement of cash flows
The 2018 consolidated statement of cash flows has been
re-presented to reconcile to total cash and cash equivalents on the
balance sheet as opposed to unrestricted cash. The impact of this
is a GBP2.9 million increase in cash and cash equivalents at 1
January 2018, a GBP1.8 million decrease in the cash outflows from
financing activities and resultant GBP1.1 million increase in cash
and cash equivalents at 31 December 2018.
As a result of these changes, cash flows from financing
activities at 31 December 2018 which was originally an outflow of
GBP89.0 million is now an outflow of GBP90.8 million, cash and cash
equivalents at 1 January 2018 which was originally GBP225.1 million
is now GBP228.0 million, cash and cash equivalents at 31 December
2018 which was originally GBP238.4 million is now GBP239.5 million,
and net increase in cash and cash equivalents which was originally
GBP13.3 million is now GBP11.4 million.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of financial statements in conformity with the
Group and Company's accounting policies requires management to make
judgements and use estimates that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting
period. Although these judgements and estimates are based on
management's best knowledge of the amount, event or action, the
actual result ultimately may differ from those judgements and
estimates. See note 1 of the Group's annual report and financial
statements for details on critical accounting judgements and key
sources of estimation uncertainty.
1 Accounting convention and basis of preparation (continued)
Going concern
- introduction
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the strategic report in the Group's annual report
and financial statements. The financial position of the Group, its
cash flows, liquidity position and borrowing facilities are
described in the financial review section. The principal risks of
the Group are set out in the principal risks and uncertainties
section. In addition, note 27 of the Group's annual report and
financial statements includes the Group's financial risk management
objectives, details of its financial instruments and hedging
activities, its exposure to liquidity risk and details of its
capital structure. The directors have considered these areas
alongside the principal risks and how they may impact going
concern, the assessment of which is considered to be a critical
accounting judgement as set out earlier in note 1 of the Group's
annual report and financial statements.
The most recent forecast used to assess going concern includes
trading and property valuations as at and for the period ended 31
December 2019 as well as 2020 budget assumptions. Included in these
forecasts are assumptions in respect of like-for-like net rental
income, giving particular consideration to the impact of company
voluntary arrangements (CVAs) and administrations and property
valuations (see note 13 of the Group's annual report and financial
statements for illustrative sensitivities in respect of estimated
rental values (ERVs) and nominal equivalent yields and the
corresponding impact on property valuations). The Group has
considered sensitivities for what are believed to be reasonably
possible adverse variations in performance and property valuations,
reflecting the ongoing volatility in the UK retail market as well
as the resulting impact of these changes on the Group's debt
structure, facilities and related financial covenants.
- material uncertainty
Due to the factors described below, a material uncertainty
exists which may cast significant doubt on the Group and Company's
ability to continue as a going concern.
At 31 December 2019 the Group had immediately available cash and
facilities of GBP241.5 million. At 10 March 2020, immediately
available cash and facilities was GBP200.3 million.
The Group expects further short-term falls in net rental income
and property valuations due to the ongoing challenges facing retail
and retail property. In addition, the Covid-19 situation is rapidly
evolving and the impact on intu's centres is being closely
monitored (see further details in the principal risks and
uncertainties section).
- financing and covenant compliance
The Group has a number of secured financing facilities that
contain covenants requiring the Group to maintain specified
financial ratios and comply with certain other financial covenants.
These include loan to value ratios, debt service ratios and, in the
case of the Revolving Credit Facility (RCF), net worth and
borrowings-to-net-worth covenants. These financial covenants are
generally tested quarterly or semi-annually, depending on the
relevant financing arrangement, or otherwise at the direction of
the lender in certain circumstances.
The Group is currently in compliance with its financial
covenants (see details in the financial covenants section). At 31
December 2019, the Group's debt to asset ratio was 67.8 per cent,
which is higher than the directors would want, and a key driver for
the current strategy of fixing its balance sheet as set out in the
Chief Executive's review section. Since 31 December 2019, the Group
utilised approximately GBP50 million from available cash resources
to reduce the leverage levels in a small number of its facilities
in order to meet the relevant loan to value covenants. While the
Group is in compliance with all its covenants, in certain of the
Group's financing arrangements additional operational and financial
restrictions (including limitations on making distributions of
excess cash to other intu group companies by way of repayment of
intra-group debt or otherwise) have been imposed as the Group
approaches the maximum loan to value ratios under those
arrangements.
The Group has experienced a significant reduction in the
valuation of its property portfolio over recent years, with an
approximately 33 per cent like-for-like valuation decline between
31 December 2017 and 31 December 2019 including a 22 per cent
like-for-like valuation decline in 2019, which has contributed to a
significant increase in the Group's debt to asset ratio from 53.1
per cent to 67.8 per cent in 2019. The Group has considered the
impact of further reductions in property valuations on the loan to
value ratios contained in its financing arrangements in the near
term. A further 10 per cent decline in property valuations from 31
December 2019, equivalent to a reduction of 40 per cent from the
December 2017 valuation peak, would (after taking into account the
net proceeds from the intu Asturias disposal and the net proceeds
from the intu Puerto Venecia disposal, which is expected following
certain regulatory approvals):
- create a covenant cure requirement of GBP113.0 million under the Group's asset-level borrowings
- require cures on the RCF's net worth and
borrowings-to-net-worth covenants, involving repayment of GBP161.0
million of net borrowings on this facility
1 Accounting convention and basis of preparation (continued)
Going concern (continued)
The Group has also experienced a reduction in net rental income
over recent years, with an 8 per cent decline in like-for-like net
rental income between 2017 and 2019, which included a 9.1 per cent
decline in like-for-like net rental income in 2019. The Group has
considered the impact of any further reductions in net rental
income on the debt service ratios contained in its asset-level
financing arrangements in the near term. A further 10 per cent
decline from 2019 net rental income would create a covenant cure
requirement of GBP34.0 million.
In addition to maintaining compliance with its financial
covenants, the Group is required to repay or refinance amounts
under its financing arrangements when they come due, which will be
significant over the next two years. GBP331.5 million of borrowings
are due to be repaid or refinanced prior to 31 March 2021
(GBP1,116.7 million by 31 December 2021, including GBP573.2 million
outstanding under its RCF), based on the amounts drawn under the
Group's borrowings as at the date of these results.
Settlement amounts could also become payable on termination of
some of the Group's interest rate swap contracts which are not
actively used as hedges against Group borrowings (unallocated
swaps). At 31 December 2019, for unallocated swaps with break
options occurring up to 31 March 2021 the settlement amounts would
have been approximately GBP93.0 million.
- mitigating actions
The options available to the Company and the Group to address
the material uncertainty in relation to going concern include:
- engaging with stakeholders and other potential investors to
explore alternative capital structures or solutions, including
those investors which have expressed an interest in such
transactions. The Group will also continue to keep under review the
feasibility of a substantial equity raise. Some of these solutions
could require shareholder or certain other approvals, which would
be outside of the control of the Group and Company
- the sale and/or part sale of additional assets, which may be
at lower valuations than the valuations at which the relevant
investment was previously recorded and/or the current market
valuation. The asset sales may also not be achievable in the
timescales required in order to ensure sufficient liquidity
- seeking waivers from, or amendments to, the financial
covenants contained in the Group's existing financing arrangements
with lenders (including the lenders under its RCF). These are
likely to be required prior to the covenants being tested in July
2020
- other self-help measures including a reduced level of capital expenditure in the short term
The successful execution of some or all of these mitigating
actions described above would mean the Group is likely to have cash
available to reduce net external debt in order to provide
appropriate financial covenant headroom, or refinance amounts
coming due under, the borrowings secured by some of the Group's
assets or other Group-wide borrowings. The Group would also likely
be able to fund potential settlement costs in respect of certain
unallocated swaps with break options occurring up to 31 March
2021.
If, however, the Group was unable to complete some or all of
these mitigating actions described above or unable to complete them
in a timely manner it may be unable to cure some or all covenant
breaches that could arise in respect of, or refinance amounts
coming due under, the borrowings secured by some of the Group's
assets or other Group-wide borrowings. This could occur when the
covenants are scheduled to be tested in July 2020. The Group may
also be unable to fund potential settlement costs in respect of
certain unallocated swaps.
In the event of a covenant breach or liquidity shortfall,
amounts outstanding under the relevant financing arrangement would
become due and payable in full (following any relevant cure
periods), and lenders may take possession of one or more secured
assets, which may be sold at a value which leaves no residual value
for the Group. These circumstances could, depending on the
materiality of the relevant financing arrangement, result in a
cross-default in relation to intu's other Group-wide financing
arrangements, including its RCF and/or the 2.875 per cent
convertible bonds, causing amounts outstanding under those
arrangements to become immediately due and payable in full.
- conclusion
The events or conditions described above indicate that a
material uncertainty exists that may cast significant doubt on the
Group's and the Company's ability to continue as a going
concern.
After reviewing the most recent projections and the sensitivity
analysis and having carefully considered the material uncertainty
and the mitigating actions available, the directors have formed the
judgement that it is appropriate to prepare the financial
statements on the going concern basis.
The auditors' report in the Group's annual report and financial
statements refers to this material uncertainty surrounding going
concern.
2 Segmental reporting
Operating segments are determined based on the strategic and
operational management of the Group. The Group is primarily a
shopping centre-focused business and has two reportable operating
segments being the UK and Spain. Although certain areas of business
performance are reviewed and monitored on a centre-by-centre basis,
the operating segments are consistent with the strategic and
operational management of the Group by the Executive Committee (the
chief operating decision-makers of the Group).
Management reviews and monitors the business primarily on a
proportionately consolidated basis. As such, the segmental analysis
has been prepared on a proportionately consolidated basis.
Additional information is provided in the presentation of
information section.
The key driver used to measure performance is net rental income.
An analysis of net rental income is provided below:
2019
----------------------------------------
Group including share
of joint ventures
---------------------------- ----------
Less share
of
joint
GBPm UK Spain Total ventures Group total
-------------------------------------- --------- ------ --------- ---------- -----------
Rent receivable 456.0 32.1 488.1 (64.1) 424.0
Service charge income 116.4 7.6 124.0 (16.7) 107.3
Facilities management income
from joint ventures 7.0 - 7.0 4.0 11.0
-------------------------------------- --------- ------ --------- ---------- -----------
Revenue 579.4 39.7 619.1 (76.8) 542.3
Rent payable (16.2) - (16.2) 1.0 (15.2)
Service charge costs (134.0) (7.9) (141.9) 18.4 (123.5)
Facilities management costs recharged
to joint ventures (7.0) - (7.0) (4.0) (11.0)
Other non-recoverable costs (48.0) (4.4) (52.4) 7.9 (44.5)
-------------------------------------- --------- ------ --------- ---------- -----------
Net rental income 374.2 27.4 401.6 (53.5) 348.1
-------------------------------------- --------- ------ --------- ---------- -----------
Loss for the year (1,942.1) (80.2) (2,022.3) 0.51 (2,021.8)
-------------------------------------- --------- ------ --------- ---------- -----------
2018
---------------------------------------
Group including share
of joint ventures
--------------------------- ----------
Less share
of
joint
GBPm UK Spain Total ventures Group total
-------------------------------------- --------- ----- --------- ---------- -----------
Rent receivable 494.6 33.4 528.0 (60.7) 467.3
Service charge income 113.2 7.3 120.5 (13.5) 107.0
Facilities management income
from joint ventures 4.5 - 4.5 2.3 6.8
-------------------------------------- --------- ----- --------- ---------- -----------
Revenue 612.3 40.7 653.0 (71.9) 581.1
Rent payable (14.6) - (14.6) 1.1 (13.5)
Service charge costs (131.0) (8.0) (139.0) 15.0 (124.0)
Facilities management costs recharged
to joint ventures (4.5) - (4.5) (2.3) (6.8)
Other non-recoverable costs (40.0) (4.4) (44.4) 6.1 (38.3)
-------------------------------------- --------- ----- --------- ---------- -----------
Net rental income 422.2 28.3 450.5 (52.0) 398.5
-------------------------------------- --------- ----- --------- ---------- -----------
(Loss)/profit for the year (1,175.1) 1.9 (1,173.2) (0.5)1 (1,173.7)
-------------------------------------- --------- ----- --------- ---------- -----------
1 Relates to the loss/(profit) attributable to non-controlling
interests within the Group's investment in joint ventures.
There were no transactions within net rental income between
operating segments.
The Group's geographical analysis of non-current assets is
presented below. This represents where the Group's assets reside
and, where relevant, where revenues are generated. In the case of
investments this reflects where the investee is located.
Re-presented1
GBPm 2019 2018
------ ------- -------------
UK 6,261.8 8,399.0
Spain 304.4 599.6
India 53.7 66.0
------ ------- -------------
6,619.9 9,064.6
------ ------- -------------
1 See note 1 for details of re-presented amounts.
2 Segmental reporting (continued)
An analysis of investment and development property, capital
expenditure and revaluation (deficit)/surplus are presented
below:
Investment and
development property Capital expenditure Revaluation (deficit)/surplus
----------------------- --------------------- -------------------------------
Re-presented1
GBPm 2019 2018 2019 2018 2019 2018
----------------------------- -------- ------------- ---------- --------- --------------- --------------
UK 6,315.8 8,394.6 108.4 171.8 (1,899.8) (1,406.6)
Spain 405.8 861.1 20.8 29.2 (79.9) 1.6
----------------------------- -------- ------------- ---------- --------- --------------- --------------
Group including share
of joint ventures 6,721.6 9,255.7 129.2 201.0 (1,979.7) (1,405.0)
Less share of joint ventures (694.9) (1,117.4) (3.1) (5.8) 182.9 72.2
----------------------------- -------- ------------- ---------- --------- --------------- --------------
Group 6,026.7 8,138.3 126.1 195.2 (1,796.8) (1,332.8)
----------------------------- -------- ------------- ---------- --------- --------------- --------------
1 See note 1 for details of re-presented amounts.
3 Administration expenses - exceptional
Exceptional administration expenses in the year total GBP3.4
million and relate principally to costs incurred in respect of the
revised strategy work undertaken by the Group. The 2018 costs of
GBP13.1 million related principally to costs associated with the
aborted offers for the Group made by Hammerson plc and the
consortium (comprised of the Peel Group, the Olayan Group and
Brookfield Property Group). These amounts have been classified as
exceptional (see accounting policy in note 2 of the Group's annual
report and financial statements) based on their incidence.
4 Net finance costs
GBPm 2019 2018
----------------------------------------------------------- ------ ------
Interest on bank loans, overdrafts and allocated interest
rate swaps 206.4 203.1
Less: finance costs capitalised to developments3 (6.7) (10.5)
On convertible bonds (note 15) 10.8 13.8
On lease liabilities 4.5 4.4
Amortisation of Metrocentre compound financial instrument1 5.9 5.9
----------------------------------------------------------- ------ ------
Finance costs1 220.9 216.7
----------------------------------------------------------- ------ ------
Interest receivable on loans to joint ventures (13.7) (12.2)
Other finance income (2.9) (2.6)
----------------------------------------------------------- ------ ------
Finance income (16.6) (14.8)
----------------------------------------------------------- ------ ------
Interest on unallocated interest rate swaps and other
costs 36.9 31.8
Foreign currency movements - 1.1
----------------------------------------------------------- ------ ------
Other finance charges - exceptional1/2 36.9 32.9
----------------------------------------------------------- ------ ------
Loss/(gain) on derivative financial instruments4 57.9 (67.5)
Loss/(gain) on convertible bonds designated as at
fair value through profit or loss (note 15) 15.0 (19.8)
----------------------------------------------------------- ------ ------
Change in fair value of financial instruments 72.9 (87.3)
----------------------------------------------------------- ------ ------
Net finance costs 314.1 147.5
----------------------------------------------------------- ------ ------
1 See note 1 for details of re-presented amounts.
2 Exceptional finance costs include interest on unallocated
interest rate swaps, amounts associated with modifications and
extinguishments of borrowings, foreign currency movements and other
fees. These amounts have been classified as exceptional (see
accounting policy in note 2 of the Group's annual report and
financial statements) based on their nature.
3 Finance costs are capitalised to developments at interest
rates that are specific to the development and are between 4.2 and
4.5 per cent.
4 Included within the loss/(gain) on derivative financial
instruments are gains totalling GBP36.6 million (2018: GBP40.1
million) resulting from interest payments on interest rate swaps
during the year. Of these GBP27.0 million (2018: GBP28.1 million)
relate to unallocated interest rate swaps.
The cash flow statement also includes payments on termination of
interest rate swaps of GBP52.4 million in 2019, of which GBP52.2
million relates to unallocated interest rate swaps.
5 Taxation
Income statement
Taxation for the year:
GBPm 2019 2018
------------------------------------------ ------ -----
Current tax:
UK taxation 15.7 -
Overseas taxation 0.3 0.1
Current tax - ongoing 16.0 0.1
------------------------------------------ ------ -----
Current tax - exceptional 6.4 -
Deferred tax:
On investment and development property (16.4) (5.5)
On other temporary differences (0.2) (0.3)
------------------------------------------ ------ -----
Deferred tax (16.6) (5.8)
------------------------------------------ ------ -----
Total tax expense/(credit) 5.8 (5.7)
------------------------------------------ ------ -----
Factors that may affect future current and total tax charges
Management uses judgement in assessing compliance with REIT
legislation.
The Group believes it continued to operate as a UK REIT
throughout the year, under which any profits and gains from the UK
property investment business are exempt from corporation tax,
provided certain conditions continue to be met. The Group believes
that these UK REIT conditions have been fulfilled throughout the
year.
In view of the announced short-term reduction of dividends there
will be an underpayment of the minimum PID, and therefore under
REIT legislation, the Group will incur UK corporation tax payable
at 19 per cent while remaining a REIT.
The ongoing current tax expense in the year of GBP16.0 million
includes GBP15.7 million relating to corporation tax on the
estimated current period underpayment of the minimum PID. This
amount has been included within the Group's measure of underlying
earnings as it relates to a tax expense on current year UK rental
income.
The UK exceptional current tax expense in the year of GBP6.4
million represents in full the corporation tax arising in the
current year in respect of the prior year underpayment of the
minimum PID. This one-off tax expense in respect of prior year
profits has been classified as exceptional (see accounting policy
in note 2 of the Group's annual report and financial statements)
based on its incidence, and so is excluded from the Group's measure
of underlying earnings.
Balance sheet
Movements in the provision for deferred tax:
Investment Other
and development temporary
GBPm property differences Total
----------------------------------------- ---------------- ------------ ------
Provided deferred tax provision/(asset):
At 1 January 2018 24.6 (0.9) 23.7
Recognised in the income statement (5.5) (0.3) (5.8)
Foreign exchange movements 0.1 - 0.1
At 31 December 2018 19.2 (1.2) 18.0
Recognised in the income statement (16.4) (0.2) (16.6)
Foreign exchange movements (0.5) - (0.5)
At 31 December 2019 2.3 (1.4) 0.9
------------------------------------------- ---------------- ------------ ------
The net deferred tax provision of GBP0.9 million predominantly
arises in respect of the revaluation of development property at
intu Costa del Sol, partially offset by associated tax losses.
5 Taxation (continued)
There are unrecognised deferred tax assets on the following
temporary differences (presented below before the application of
the relevant tax rate) due to uncertainty over the level of profits
in the non-REIT elements of the Group in future periods:
GBPm 2019 2018
----------------------------------------- ----- -----
Revenue losses - UK 398.4 300.8
Capital losses - UK 34.5 34.2
Derivative financial instruments 172.7 184.9
Other temporary differences 20.1 9.7
------------------------------------------ ----- -----
Total unrecognised temporary differences 625.7 529.6
------------------------------------------ ----- -----
The Company recognises no deferred tax asset or liability (2018:
nil).
6 Dividends
GBPm 2019 2018
------------------------------------------------ ---- -----
Ordinary shares:
2017 final dividend paid of 9.4 pence per share - 126.3
2018 interim dividend paid of 4.6 pence per
share - 61.8
------------------------------------------------- ---- -----
Dividends paid - 188.1
------------------------------------------------- ---- -----
The directors are not recommending a final dividend for 2019.
See note 5 for further information on the associated tax
consequences of not declaring and paying dividends in accordance
with REIT legislation.
Additional information on distributable reserves is provided in
the financial review section.
The 2019 cash flow statement outflow in respect of equity
dividends paid relates to GBP8.2 million of withholding tax paid in
respect of the 2018 interim dividend.
7 Earnings per share
(a) Basic and diluted earnings per share
2019 2018
--------- --------- -------- -------- --------- -------- --------
Loss per Loss per
Loss Shares share Loss Shares share
GBPm million pence GBPm million pence
--------- --------- -------- -------- --------- -------- --------
Basic1 (1,950.9) 1,344.5 (145.1)p (1,132.2) 1,343.7 (84.3)p
Diluted2 (1,950.9) 1,344.5 (145.1)p (1,132.2) 1,343.7 (84.3)p
--------- --------- -------- -------- --------- -------- --------
1 The weighted average number of shares used has been adjusted
to remove shares held in the ESOP.
2 Diluted shares include the impact of any dilutive convertible
bonds, share options and share awards.
During 2017 the Group incurred a GBP49.4 million share related
charge in relation to its Spanish development partner Eurofund's
future interests in the share capital of the intu Costa del Sol
development company. The positive impact of this share related
charge on equity attributable to owners of intu properties plc is a
credit to retained earnings of GBP49.4 million. Subsequent to 31
December 2019, the Group has received the final ratifications
required for full planning to become effective and therefore we
expect the positive impact on retained earnings to reverse, once
these arrangements are formally concluded.
7 Earnings per share (continued)
(b) Headline earnings per share
Headline earnings per share is an APM and has been calculated
and presented as required by the Johannesburg Stock Exchange
listing requirements.
2019 2018
------------------ ------------------
GBPm Gross Net1 Gross Net1
--------------------------------------------- ------- --------- ------- ---------
Basic loss (1,950.9) (1,132.2)
Adjusted for:
Revaluation of investment and development
property (note 8) 1,796.8 1,713.0 1,332.8 1,289.3
Loss on disposal of subsidiaries 6.3 6.3 8.5 8.5
Gain on sale of investment and development
property (3.9) (3.9) (1.4) (1.4)
Write-down on recognition of joint ventures
and other assets
classified as held for sale (note 20) 38.0 38.0 - -
Impairment of goodwill 4.0 4.0 - -
Impairment of investment in associates (note
10) 7.4 7.4 - -
Impairment of loan to associate 5.5 5.5 - -
Share of joint ventures' adjusted items 182.4 183.7 72.4 74.6
Share of associates' adjusted items 1.2 1.2 (2.2) (2.2)
--------------------------------------------- ------- --------- ------- ---------
Headline earnings 4.3 236.6
Dilution2 - -
--------------------------------------------- ------- --------- ------- ---------
Diluted headline earnings 4.3 236.6
--------------------------------------------- ------- --------- ------- ---------
Weighted average number of shares (million) 1,344.5 1,343.7
Dilution2 - -
--------------------------------------------- ------- --------- ------- ---------
Diluted weighted average number of shares
(million) 1,344.5 1,343.7
--------------------------------------------- ------- --------- ------- ---------
Headline earnings per share (pence) 0.3p 17.6p
--------------------------------------------- ------- --------- ------- ---------
Diluted headline earnings per share (pence) 0.3p 17.6p
--------------------------------------------- ------- --------- ------- ---------
1 Net of tax and non-controlling interests.
2 The same dilution impact is required to be included as
calculated in note 7(a) even where this is dilutive for headline
earnings per share.
8 Investment and development property
Investment Development
GBPm property property Total
-------------------------------------------------- ---------- ----------- ---------
At 1 January 2018 (re-presented1) 8,853.7 434.9 9,288.6
Additions 64.3 130.9 195.2
Disposals (21.7) - (21.7)
Disposal of development property to joint venture - (1.2) (1.2)
Transfer 165.5 (165.5) -
Deficit on revaluation (1,268.8) (64.0) (1,332.8)
Effect of movement in tenant lease incentives 5.9 1.5 7.4
Foreign exchange movements - 2.8 2.8
-------------------------------------------------- ---------- ----------- ---------
At 31 December 2018 (re-presented1) 7,798.9 339.4 8,138.3
Additions 48.3 77.8 126.1
Disposals (63.1) (8.3) (71.4)
Disposal of investment and development property
to joint venture (353.7) (8.1) (361.8)
Transfer 6.6 (6.6) -
Deficit on revaluation (1,699.9) (96.9) (1,796.8)
Transfer to assets classified as held for sale - (0.8) (0.8)
Effect of movement in tenant lease incentives 4.9 0.4 5.3
Foreign exchange movements - (12.2) (12.2)
-------------------------------------------------- ---------- ----------- ---------
At 31 December 2019 5,742.0 284.7 6,026.7
-------------------------------------------------- ---------- ----------- ---------
1 See note 1 for details of re-presented amounts.
8 Investment and development property (continued)
A reconciliation to market value is given in the table
below:
GBPm 2019 2018
----------------------------------------------------------- ------- -------
Balance sheet carrying value of investment and development
property 6,026.7 8,138.3
Head leases on investment property (80.2) (80.2)
Market value of investment and development property 5,946.5 8,058.1
----------------------------------------------------------- ------- -------
Included within investment and development property are tenant
lease incentive balances totalling GBP117.4 million (2018: GBP116.5
million).
The fair value of the Group's investment and development
property at 31 December 2019 was determined by independent external
valuers at that date other than certain development land as
detailed below. The valuations are in accordance with the Royal
Institution of Chartered Surveyors (RICS) Valuation - Global
Standards 2017 incorporating the International Valuation Standards
and the UK National Supplement 2018 (the Red Book) and were arrived
at by reference to market transactions for similar properties and
rent profiles. Fair values for investment properties are calculated
using the present value income approach.
In respect of development valuations, deductions are made for
anticipated costs, including an allowance for developer's profit
and any other assumptions before arriving at a valuation.
Development property not valued externally relates to certain
early stage development projects. These amounts have been reviewed
internally and it has been concluded that the carrying amount is a
reasonable approximation of its fair value and so no valuation
adjustment is needed. As the developments advance these will be
valued by independent external valuers. These costs will be
adjusted if the developments are no longer being pursued.
In respect of the intu Costa del Sol development site near
Málaga, Spain, as the General Plan of Torremolinos was approved in
December 2017, with the remaining consents expected in the coming
months, the Group obtained an independent external valuation at 31
December 2017 as cost was no longer an appropriate approximation of
fair value. Consistent with the 31 December 2018 valuation, the 31
December 2019 valuation is based on the assumption that planning
approval is in place at the valuation date. Subsequent to 31
December 2019, the Group has received the final ratifications
required for full planning to become effective.
The valuation methodology is unchanged from the prior year.
Details on individual properties is provided in the investment and
development property section, including market value, occupancy as
well as the assumptions used in the valuation of the core portfolio
and key unobservable inputs.
Capital commitments
At 31 December 2019 the Board had approved GBP131.6 million
(2018: GBP233.0 million) of future expenditure for the purchase,
construction, development and enhancement of investment property.
Of this, GBP67.7 million (2018: GBP188.5 million) is contractually
committed. The majority of this is expected to be spent during
2020.
Capital commitments in respect of joint ventures is provided in
note 9.
9 Investment in and loans to joint ventures
The Group's principal joint ventures own and manage investment
and development property.
2019
------------------------ ----------- ------ ------------ ----------- ------------ --------- ------ -------
St David's, intu Intu intu Puerto intu intu
GBPm Cardiff Derby Chapelfield Venecia Xanadú Asturias Other1 Total
------------------------ ----------- ------ ------------ ----------- ------------ --------- ------ -------
At 1 January 2019 296.4 - 134.7 145.7 125.3 91.2 30.6 823.9
Acquisition of
joint venture interest
(note 19) - 93.9 - - - - - 93.9
Group's share of
underlying earnings 11.6 3.2 4.6 2.5 4.8 0.8 0.4 27.9
Group's share of
other net loss (63.4) (56.7) (27.3) (18.7) (1.5) (5.9) (13.3) (186.8)
------------------------ ----------- ------ ------------ ----------- ------------ --------- ------ -------
Group's share of
(loss)/profit (51.8) (53.5) (22.7) (16.2) 3.3 (5.1) (12.9) (158.9)
Investment of capital - - - - 8.7 - - 8.7
Repayment of capital - - - - (7.7) - - (7.7)
Distributions - - (3.9) - - - (0.7) (4.6)
Loan advances - - - 2.0 - - 2.8 4.8
Loan repayments (12.9) - - - - (3.3) - (16.2)
Transfer to assets
classified
as held for sale
(note 20) - - - (123.0) - (77.7) - (200.7)
Foreign exchange
movements - - - (8.5) (5.1) (5.1) (0.4) (19.1)
At 31 December
2019 231.7 40.4 108.1 - 124.5 - 19.4 524.1
------------------------ ----------- ------ ------------ ----------- ------------ --------- ------ -------
Represented by:
Loans to joint
ventures 56.7 - 74.0 - 55.0 - 11.8 197.5
Group's share of
net assets 175.0 40.4 34.1 - 69.5 - 7.6 326.6
------------------------ ----------- ------ ------------ ----------- ------------ --------- ------ -------
2018
----------- ------------ ----------- ------------ --------- ------ ------
St David's, intu intu Puerto intu intu
GBPm Cardiff Chapelfield Venecia Xanadú Asturias Other1 Total
------------------------------- ----------- ------------ ----------- ------------ --------- ------ ------
At 1 January 2018 347.0 - 133.9 119.4 95.6 39.6 735.5
Acquisition of joint venture
interest - 151.9 - - - - 151.9
Group's share of underlying
earnings 13.2 5.3 2.0 5.1 3.2 0.4 29.2
Group's share of other
net (loss)/profit (49.8) (20.3) 9.8 (0.8) 0.5 (10.7) (71.3)
------------------------------- ----------- ------------ ----------- ------------ --------- ------ ------
Group's share of (loss)/profit (36.6) (15.0) 11.8 4.3 3.7 (10.3) (42.1)
Investment of capital - - - 7.7 - - 7.7
Repayment of capital - - - (7.1) - - (7.1)
Distributions - (2.2) - - - (0.7) (2.9)
Loan advances - - - - - 2.0 2.0
Loan repayments (14.0) - (2.0) - (9.3) - (25.3)
Foreign exchange movements - - 2.0 1.0 1.2 - 4.2
------------------------------- ----------- ------------ ----------- ------------ --------- ------ ------
At 31 December 2018 296.4 134.7 145.7 125.3 91.2 30.6 823.9
------------------------------- ----------- ------------ ----------- ------------ --------- ------ ------
Represented by:
Loans to joint ventures 69.6 74.0 98.3 58.5 26.0 9.6 336.0
Group's share of net assets 226.8 60.7 47.4 66.8 65.2 21.0 487.9
------------------------------- ----------- ------------ ----------- ------------ --------- ------ ------
1 Other primarily includes the Group's interest in intu Uxbridge and developments in Spain.
Capital commitments
At 31 December 2019, the boards of joint ventures had approved
GBP9.8 million (2018: GBP5.0 million) of future expenditure for the
purchase, construction, development and enhancement of investment
property. Of this, GBP7.3 million (2018: GBP2.7 million) is
contractually committed. These amounts represent the Group's
share.
9 Investment in and loans to joint ventures (continued)
Set out below is the summarised information of the Group's joint
ventures with financial information presented at 100 per cent.
2019
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
St David's, intu intu intu Puerto intu intu
GBPm Cardiff Derby1 Chapelfield Venecia2 Xanadú Asturias2 Other4 Total
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Summary information
Group's interest 50% 26%(5) 50% 50% 50% 50%
Principal place
of business Wales England England Spain Spain Spain
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Summarised income
statement
Revenue 38.0 22.4 21.6 26.0 32.0 17.4 18.1 175.5
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Net rental income 23.3 10.4 14.4 19.8 22.3 12.7 11.5 114.4
Revaluation of
investment and
development property (126.8) (56.2) (54.5) (33.6) - (11.9) (53.7) (336.7)
Administration
expenses - ongoing - (0.1) (0.4) (1.8) (2.0) (1.2) (2.2) (7.7)
Finance costs - (2.7) (4.9) (12.8) (9.6) (7.7) (6.0) (43.7)
Other finance charges
- exceptional - - - (1.6) - - - (1.6)
Change in fair
value of financial
instruments - (0.5) - (3.4) (0.4) (0.3) 0.3 (4.3)
Taxation - - - (0.1) (3.7) (1.9) - (5.7)
(Loss)/profit (103.5) (49.1) (45.4) (33.5) 6.6 (10.3) (50.1) (285.3)
Attributable to
non-controlling
interests3 - - - 1.1 - 0.1 - 1.2
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
(Loss)/profit
attributable
to owners (103.5) (49.1) (45.4) (32.4) 6.6 (10.2) (50.1) (284.1)
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Group's share of
(loss)/profit (51.8) (53.5) (22.7) (16.2) 3.3 (5.1) (12.9) (158.9)
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Summarised balance
sheet
Investment and
development property 465.7 297.7 212.3 - 467.0 - 167.9 1,610.6
Other non-current
assets 0.1 1.6 0.6 - 81.9 - 2.9 87.1
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Total non-current
assets 465.8 299.3 212.9 - 548.9 - 170.8 1,697.7
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Cash and cash equivalents 8.4 11.3 7.9 - 12.9 - 7.6 48.1
Other current assets 16.5 4.1 1.1 - 1.6 - 15.6 38.9
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Total current assets 24.9 15.4 9.0 - 14.5 - 23.2 87.0
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Current financial
liabilities (0.1) (0.9) (0.9) - (7.1) - (1.3) (10.3)
Other current liabilities (11.1) (9.9) (4.8) - (1.2) - (136.1) (163.1)
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Total current liabilities (11.2) (10.8) (5.7) - (8.3) - (137.4) (173.4)
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Partners' loans (113.3) - (148.0) - (110.0) - (23.6) (394.9)
Non-current financial
liabilities - (147.9) - - (223.3) - - (371.2)
Other non-current
liabilities (16.2) - - - (82.8) - - (99.0)
Total non-current
liabilities (129.5) (147.9) (148.0) - (416.1) - (23.6) (865.1)
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
Net assets 350.0 156.0 68.2 - 139.0 - 33.0 746.2
Group's share of
net assets 175.0 40.4 34.1 - 69.5 - 7.6 326.6
------------------------- ----------- ------- ------------ ----------- ------------ ---------- ------- -------
1 intu Derby is presented for the period from 9 July 2019, the
date at which it ceased being a 100 per cent owned subsidiary of
the Group.
2 intu Puerto Venecia and intu Asturias are presented for the
period to 15 December 2019, the date at which they became
classified as joint ventures held for sale.
3 Represents non-controlling interests directly within the joint venture.
4 Other primarily includes the Group's interest in intu Uxbridge and developments in Spain.
5 Represents the Group's economic interest at 31 December 2019
after considering our joint venture partners' structured equity
interest.
9 Investment in and loans to joint ventures (continued)
2018
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
St David's, intu intu Puerto intu intu
GBPm Cardiff Chapelfield1 Venecia Xanadú Asturias Other3 Total
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Summary information
Group's interest 50% 50% 50% 50% 50%
Principal place of business Wales England Spain Spain Spain
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Summarised income statement
Revenue 41.0 22.2 26.6 32.6 18.0 17.9 158.3
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Net rental income 26.6 15.1 20.3 23.0 13.5 11.4 109.9
Revaluation of investment
and development property (99.6) (40.7) 11.4 4.3 1.7 (50.0) (172.9)
Administration expenses
- ongoing (0.1) (0.1) (2.0) (2.0) (1.3) (2.6) (8.1)
Administration expenses
- exceptional - - - (0.1) - - (0.1)
Finance costs - (4.4) (14.2) (9.7) (5.7) (5.9) (39.9)
Other finance income -
exceptional - - 9.4 - - - 9.4
Change in fair value of
financial instruments - - (0.5) (1.2) (0.8) 1.3 (1.2)
Taxation - - - (5.7) 0.1 - (5.6)
(Loss)/profit (73.1) (30.1) 24.4 8.6 7.5 (45.8) (108.5)
Attributable to non-controlling
interests2 - - (0.8) - (0.2) - (1.0)
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
(Loss)/profit attributable
to owners (73.1) (30.1) 23.6 8.6 7.3 (45.8) (109.5)
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Group's share of (loss)/profit (36.6) (15.0) 11.8 4.3 3.7 (10.3) (42.1)
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Summarised balance sheet
Investment and development
property 592.1 266.6 480.7 485.5 288.3 221.4 2,334.6
Other non-current assets 0.2 0.4 1.1 82.0 5.1 2.5 91.3
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Total non-current assets 592.3 267.0 481.8 567.5 293.4 223.9 2,425.9
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Cash and cash equivalents 9.7 7.0 13.4 19.8 16.7 5.9 72.5
Other current assets 19.4 2.6 2.1 1.1 0.9 13.6 39.7
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Total current assets 29.1 9.6 15.5 20.9 17.6 19.5 112.2
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Current financial liabilities (0.1) (0.9) (10.4) (9.5) (4.7) (1.8) (27.4)
Other current liabilities (12.4) (6.4) (5.4) (7.0) (1.7) (7.7) (40.6)
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Total current liabilities (12.5) (7.3) (15.8) (16.5) (6.4) (9.5) (68.0)
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Partners' loans (139.1) (148.0) (196.6) (116.9) (52.2) (19.4) (672.2)
Non-current financial
liabilities - - (186.1) (236.1) (107.5) (130.5) (660.2)
Other non-current liabilities (16.2) - - (85.3) (11.4) - (112.9)
Total non-current liabilities (155.3) (148.0) (382.7) (438.3) (171.1) (149.9) (1,445.3)
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Net assets 453.6 121.3 98.8 133.6 133.5 84.0 1,024.8
Non-controlling interests(2) - - (4.1) - (3.2) - (7.3)
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Net assets attributable
to owners 453.6 121.3 94.7 133.6 130.3 84.0 1,017.5
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
Group's share of net assets 226.8 60.7 47.4 66.8 65.2 21.0 487.9
-------------------------------- ----------- ------------- ----------- ------------ --------- ------- ---------
1 intu Chapelfield is presented for the period from 1 February
2018, the date at which it ceased being a 100 per cent owned
subsidiary of the Group.
2 Represents non-controlling interests directly within the joint venture.
3 Other primarily includes the Group's interest in intu Uxbridge and developments in Spain.
10 Investment in associates
GBPm 2019 2018
---------------------------------------------- ----- -----
At 1 January 65.6 64.8
Share of post-tax (loss)/profit of associates (0.3) 2.3
Impairment (7.4) -
Foreign exchange movements (4.2) (1.5)
---------------------------------------------- ----- -----
At 31 December 53.7 65.6
---------------------------------------------- ----- -----
Investment in associates comprises a 32.4 per cent holding in
the ordinary shares of Prozone Intu Properties Limited (Prozone), a
listed Indian shopping centre developer, and a 26.8 per cent direct
holding in the ordinary shares of Empire Mall Private Limited
(Empire) - Empire also forms part of the Prozone group giving the
Group an effective ownership of 38.0 per cent. Both companies are
incorporated in India.
The equity method of accounting is applied to the Group's
investments in Prozone and Empire in line with the requirements of
IAS 28 Investments in Associates and Joint Ventures. The results
for the year to 30 September have been used as 31 December
information is not available in time for these financial
statements. Those results are adjusted to be in line with the
Group's accounting policies and include the most recent property
valuations, determined at 30 September 2019, by independent
professionally qualified external valuers in line with the
valuation methodology described in note 8.
The market price per share of Prozone at 31 December 2019 was
INR19 (31 December 2018: INR29), valuing the Group's interest at
GBP9.9 million (31 December 2018: GBP16.4 million) compared with
the Prozone carrying value pre-impairment of GBP41.5 million (31
December 2018: GBP45.1 million). As the share price of Prozone is
lower than its carrying value, a review of the carrying value of
Prozone and the Group's direct interest in Empire (as it also forms
part of the Prozone group) has been undertaken. Underpinning the
impairment assessment (where the fair value less costs to sell was
considered) were the independent third-party valuations received
for the investment and development properties, representing the
underlying value of the associate's net assets. Assumptions were
also made for tax and other costs that would be reasonably expected
if these assets were to be disposed of. Following this review, an
impairment of GBP7.4 million was recognised.
11 Trade and other receivables
Re-presented1
GBPm 2019 2018
--------------------------------- --- --- ----- -------------
Trade receivables 39.9 35.8
Amounts owed by joint ventures 5.1 8.5
Other receivables 17.0 16.3
Net investment in finance leases 0.4 0.4
Prepayments 37.2 46.6
Accrued income 30.4 30.4
------------------------------------------- ----- -------------
Trade and other receivables 130.0 138.0
------------------------------------------- ----- -------------
1 See note 1 for details of re-presented amounts.
12 Cash and cash equivalents
GBPm 2019 2018
-------------------------- ----- -----
Unrestricted cash 185.6 238.4
Restricted cash 17.9 1.1
-------------------------- ----- -----
Cash and cash equivalents 203.5 239.5
-------------------------- ----- -----
A number of the Group's borrowing arrangements place certain
restrictions on the rent received each quarter. These do not
prevent access to or use of this funding within the borrowing
entities, however they do place certain restrictions on moving
those funds around the wider group, typically requiring debt
servicing costs to be paid before restrictions are lifted.
Excluding these amounts, at 31 December 2019 immediately available
cash and facilities is GBP241.5 million (31 December 2018: GBP246.8
million).
13 Trade and other payables
GBPm 2019 2018
-------------------------------- ----- -----
Rents received in advance 84.8 103.4
Trade payables 8.4 3.2
Amounts owed to joint ventures 0.2 0.4
Accruals 117.9 141.2
Other payables 6.8 2.5
Other taxes and social security 25.2 27.7
---------------------------------- ----- -----
Trade and other payables 243.3 278.4
---------------------------------- ----- -----
14 Borrowings
2019 2018
------------- ------------ --------- ------- -------- -------
Fixed
rate
Secured / floating Carrying Fair Carrying Fair
GBPm / unsecured rate value value value value
-------------------------------------- ------------- ------------ --------- ------- -------- -------
Current
Commercial mortgage backed securities
(CMBS) notes Secured Fixed 28.8 33.9 46.7 51.1
Bank loans Secured Floating 37.0 37.0 - -
-------------------------------------- ------------- ------------ --------- ------- -------- -------
Current borrowings, excluding finance
leases 65.8 70.9 46.7 51.1
Lease liabilities Secured Fixed 5.3 5.3 4.4 4.4
-------------------------------------- ------------- ------------ --------- ------- -------- -------
71.1 76.2 51.1 55.5
----------------------------------------------------------------- --------- ------- -------- -------
Non-current
Revolving credit facility 20211 Secured Floating 420.6 420.6 393.9 393.9
CMBS notes 2022 Secured Fixed 22.9 25.0 33.4 37.1
CMBS notes 2024 Secured Fixed 88.7 92.5 88.3 96.8
CMBS notes 2029 Secured Fixed 61.5 70.9 67.5 77.0
CMBS notes 2033 Secured Fixed 280.5 354.6 296.3 364.7
CMBS notes 2035 Secured Floating 197.3 217.4 195.1 201.9
Bank loan 2020 Secured Floating - - 25.0 25.0
Bank loans 2021 Secured Floating 461.5 461.5 668.7 668.7
Bank loan 2022 Secured Fixed 248.2 277.9 247.5 282.8
Bank loan 2022 Secured Floating 8.6 8.6 - -
Bank loan 2023 Secured Floating 68.3 68.3 73.1 73.1
Bank loan 2024 Secured Floating 432.4 432.4 473.8 473.8
3.875% bonds 2023 Secured Fixed 445.8 406.7 444.6 454.7
4.125% bonds 2023 Secured Fixed 480.5 448.7 479.5 496.9
4.625% bonds 2028 Secured Fixed 343.4 302.3 342.9 363.0
4.250% bonds 2030 Secured Fixed 345.7 301.8 345.3 349.7
Debenture 2027 Secured Fixed 229.4 183.5 229.1 247.2
2.875% convertible bonds 2022 (note
15) Unsecured Fixed 254.9 254.9 314.9 314.9
-------------------------------------- ------------- ------------ --------- ------- -------- -------
Non-current borrowings, excluding
finance leases and Metrocentre
compound financial instrument 4,390.2 4,327.6 4,718.9 4,921.2
Metrocentre compound financial
instrument2 Unsecured Fixed 195.4 195.4 189.5 189.5
Lease liabilities Secured Fixed 77.6 77.6 75.8 75.8
-------------------------------------- ------------- ------------ --------- ------- -------- -------
4,663.2 4,600.6 4,984.2 5,186.5
----------------------------------------------------------------- --------- ------- -------- -------
Total borrowings 4,734.3 4,676.8 5,035.3 5,242.0
Cash and cash equivalents (note
12) (203.5) n/a (239.5) n/a
------------------------------------------------------------------- --------- ------- -------- -------
Net debt 4,530.8 n/a 4,795.8 n/a
------------------------------------------------------------------- --------- ------- -------- -------
1 Facility includes GBP84.6 million (2018: GBP89.9 million) drawn in euros.
2 Represents funding from the Group's partner to The Metrocentre
Partnership equal to their 40 per cent ownership interest (intu's
portion of funding to The Metrocentre Partnership equal to the
Group's residual 60 per cent ownership interest has been eliminated
on consolidation). The funding has been classified as a compound
financial instrument due to the equity-like features of the
instrument.
14 Borrowings (continued)
At 31 December 2019 the total carrying value of secured
borrowings is GBP4,284.0 million (2018: GBP4,530.9 million) and the
total carrying value of unsecured borrowings is GBP450.3 million
(2018: GBP504.4 million). The total carrying value of fixed rate
borrowings is GBP3,108.6 million (2018: GBP3,205.7 million) and the
total carrying value of floating rate borrowings is GBP1,625.7
million (2018: GBP1,829.6 million).
Analysis of the Group's net external debt is provided in the
other financial information including share of joint ventures
section.
The Group substantially eliminates its interest rate exposure to
floating rate debt through interest rate swaps as described in note
27 of the Group's annual report and financial statements.
The market value of investment property secured, either directly
or indirectly, as collateral against borrowings at 31 December 2019
is GBP6,428.7 million including GBP681.6 million of investment
property held within joint ventures (2018: GBP8,774.6 million
including GBP1,096.8 million held within joint ventures). In most
circumstances the Group can dispose of up to 50 per cent of its
interest in an asset without restriction providing the Group
continues to manage the asset. Disposing of an interest in excess
of this may trigger a change of control and mandatory repayment of
the facility.
The fair values of fixed rate borrowings and CMBS are assessed
based on quoted market prices, and as such are categorised as Level
1 in the fair value hierarchy (see note 27 of the Group's annual
report and financial statements for definition). The fair values of
unlisted floating rate borrowings are equal to their carrying
values and are categorised as Level 2 in the fair value
hierarchy.
The maturity profile of debt (excluding lease liabilities) is as
follows:
GBPm 2019 2018
------------------------------------------------------------ ------- -------
Repayable within one year 65.8 46.7
Repayable in more than one year but not more than two years 901.8 30.5
Repayable in more than two years but not more than five
years 2,114.2 2,722.0
Repayable in more than five years 1,569.6 2,155.9
------------------------------------------------------------ ------- -------
4,651.4 4,955.1
------------------------------------------------------------ ------- -------
Certain borrowing agreements contain financial and other
conditions that, if contravened, could alter the repayment profile
(further information is provided in the financial covenants
section).
At 31 December 2019 the Group had committed undrawn borrowing
facilities of GBP238.5 million (2018: GBP274.2 million), maturing
in 2021 and 2022. This includes GBP42.1 million of undrawn
facilities in respect of development finance.
15 Convertible bonds
In 2016 the Group issued GBP375.0 million 2.875 per cent
Guaranteed Convertible Bonds (2.875 per cent bonds) due 2022 at
par, all of which remain outstanding at 31 December 2019. Under the
terms of the 2.875 per cent bonds, the exchange price is adjusted
upon certain events including the payment of dividends by the
Company over a certain threshold. At 31 December 2019 the exchange
price was GBP3.7506 (31 December 2018: GBP3.7506) per ordinary
share.
The 2.875 per cent bonds are designated as at fair value through
profit or loss and so are presented on the balance sheet at fair
value. Gains and losses in respect of own credit risk (driven by
market movement in our debt rating) are recognised in other
comprehensive income (2019: gain of GBP75.0 million; 2018: gain of
GBP43.4 million) and all other gains and losses are recognised in
the income statement through change in fair value of financial
instruments line (2019: loss of GBP15.0 million; 2018: gain of
GBP19.8 million).
At 31 December 2019, the fair value of the 2.875 per cent bonds
was GBP254.9 million (2018: GBP314.9 million). During the year
interest of GBP10.8 million (2018: GBP10.8 million) in respect of
these bonds has been recognised within finance costs. 2018 finance
costs also included GBP3.0 million of interest related to the 2.5
per cent convertible bonds, which matured in October 2018.
16 Share capital and share premium
Share Share
GBPm capital premium
-------------------------------------------------------- -------- --------
Authorised, issued and fully paid:
At 31 December 2019 and 31 December 2018: 1,355,040,243
ordinary shares of 50 pence each 677.5 1,327.4
-------------------------------------------------------- -------- --------
17 Employee Share Ownership Plan (ESOP)
The cost of shares in intu properties plc held by the Trustee of
the ESOP operated by the Company is accounted for as a deduction
from equity.
The purpose of the ESOP is to acquire and hold shares which will
be transferred to employees in the future under the Group's
employee incentive arrangements as described in note 7 of the
Group's annual report and financial statements including joint
ownership of shares in its role as Trustee of the Joint Share
Ownership Plan. During 2019, no dividends in respect of these
shares have been waived by agreement (2018: GBP1.6 million).
2019 2018
--------------- ---------------
Shares Shares
million GBPm million GBPm
--------------- -------- ----- -------- -----
At 1 January 11.2 37.0 11.6 39.1
Acquisitions 0.2 0.1 0.6 0.9
Disposals (1.1) (3.5) (1.0) (3.0)
--------------- -------- ----- -------- -----
At 31 December 10.3 33.6 11.2 37.0
--------------- -------- ----- -------- -----
18 Cash generated from operations
GBPm Notes 2019 2018
---------------------------------------------------- ----- --------- ---------
Loss before tax, joint ventures and associates (1,856.8) (1,139.6)
Adjusted for:
Revaluation of investment and development property 8 1,796.8 1,332.8
Loss on disposal of subsidiaries 6.3 8.5
Gain on sale of investment and development property (3.9) (1.4)
Write-down on recognition of joint ventures
and other assets classified as held for sale 20 38.0 -
Impairment of goodwill 4.0 -
Impairment of investment in associates 10 7.4 -
Impairment of loan to associate 5.5 -
Depreciation 5.5 4.3
Share-based payments 1.8 2.8
Lease incentives and letting costs (3.6) (9.3)
Net finance costs 4 314.1 147.5
Changes in working capital:
Change in trade and other receivables (0.5) (5.3)
Change in trade and other payables 6.8 (20.6)
---------------------------------------------------- ----- --------- ---------
Cash generated from operations 321.4 319.7
---------------------------------------------------- ----- --------- ---------
19 Disposal of intu Derby
On 8 July 2019 the Group completed the part disposal of a
structured equity interest in intu Derby, a wholly owned
subsidiary, to Cale Street Investments LP (Cale Street) for final
cash consideration of GBP113.3 million before expenses of GBP6.5
million. Following this transaction intu Derby ceased to be
accounted for as a subsidiary and is now a joint venture. Therefore
the assets and liabilities of intu Derby are no longer recorded at
100 per cent in the Group's balance sheet but the remaining
interest is included in investment in joint ventures at an initial
value of GBP93.9 million. As a result of this transaction the Group
has recorded a loss on disposal of GBP6.5 million in the income
statement. The cash flow statement records a net inflow of GBP96.7
million (included within disposal of subsidiaries net of cash sold)
comprising the cash consideration received of GBP113.3 million less
cash in the business of GBP10.1 million reclassified to investment
in joint ventures and expenses of GBP6.5 million.
The accounting for the part disposal of intu Derby in the year
is a critical judgement as referenced in note 1 of the Group's
annual report and financial statements. Due to the complexity
caused by Cale Street's structured equity interest, the Group has
assessed the key terms set out in the shareholders agreement,
including joint venture board discretion over any payment of
distributions. As a result, the part disposal has been accounted
for as an equity arrangement as opposed to a financing arrangement
following completion.
The assets and liabilities of the subsidiaries disposed of, at
100 per cent, are set out below:
GBPm
Assets
Investment and development property 350.1
Cash and cash equivalents 10.1
Trade and other receivables 8.0
--------------------------------------- -------
Total assets 368.2
--------------------------------------- -------
Liabilities
Trade and other payables (13.3)
Borrowings (147.7)
Total liabilities (161.0)
--------------------------------------- -------
Net assets 207.2
--------------------------------------- -------
Net assets (at share disposed) 113.3
--------------------------------------- -------
Fair value of consideration received 106.8
--------------------------------------- -------
Loss on disposal of subsidiaries 6.5
--------------------------------------- -------
20 Joint ventures and other assets classified as held for
sale
intu Puerto Venecia
In December 2019 the Group announced the disposal of its joint
venture interest in intu Puerto Venecia to Generali Shopping Centre
Fund S.C.S. SICAV-SIF and Union Investment Real Estate GMBH for
consideration of EUR475.3 million (intu share EUR237.7 million) and
will deliver net proceeds to intu of around EUR115.0 million after
repaying asset-level debt, working capital adjustments and
taxation.
The transaction is expected to complete in the first half of
2020 following the successful conclusion of certain regulatory
approvals. As a result, from 15 December 2019, being the date the
Board approved the transaction, the Group classified its joint
venture interest in intu Puerto Venecia (which is part of the Spain
operating segment) as held for sale.
The joint venture interest has been recognised at its expected
net proceeds of GBP95.4 million, as opposed to its carrying amount
of GBP123.0 million (see note 9).
intu Asturias
In January 2020 the Group announced and subsequently completed
the disposal of its joint venture interest in intu Asturias to the
ECE European Prime Shopping Centre Fund II for EUR290.0 million
(intu share EUR145.0 million) and has delivered initial net
proceeds to intu of GBP68.3 million after repaying asset-level
debt, working capital adjustments, fees and taxation.
As a result, at 15 December 2019, being the date the Board
approved the transaction, the Group classified its joint venture
interest in intu Asturias (which is part of the Spain operating
segment) as held for sale.
The joint venture interest has been recognised at its expected
net proceeds of GBP67.3 million, as opposed to its carrying amount
of GBP77.7 million (note 9) alongside land and other assets
totalling GBP1.0 million within a wholly owned subsidiary also
being sold as part of the transaction.
21 Related party transactions
Key management1 compensation
GBPm 2019 2018
-------------------------------------------- ---- ----
Salaries and short-term employee benefits 4.7 4.9
Pensions and other post-employment benefits 0.3 0.8
Share-based payments 1.5 1.7
6.5 7.4
-------------------------------------------- ---- ----
1 Key management comprises the directors of intu properties plc
and the Executive Committee who have been designated as persons
discharging managerial responsibility (PDMR).
During 2017 the Group's joint ventures in intu Puerto Venecia
and intu Asturias sold shares in subsidiaries, previously wholly
owned by the respective joint ventures, listed on the Spanish MaB
to PDMRs of the Group. The total value of the shares at 31 December
2019 is EUR1.0 million for each joint venture, representing 1 per
cent of the respective outstanding share capital. The sale of
shares in these entities was required to comply with Spanish MaB
free float listing requirements. The Group provided an
interest-free loan to PDMRs to enable them to purchase the shares.
The loans are treated as a taxable benefit which accordingly is
included in the above table. In line with the terms of the relevant
loan agreements entered into, the loans are repayable in full upon
cessation of employment or the sale of the underlying assets.
Further to the exchange of contracts in respect of the sale of intu
Puerto Venecia in December 2019 and of intu Asturias in January
2020, the relevant PDMRs sold these shareholdings in January 2020
and February 2020 respectively. All outstanding loans in respect of
the above arrangements have been repaid to the Company in full or
in part. For those loans which have been partially repaid, the
outstanding balance has been written off by the Company.
Transactions with Peel Group (Peel)
As John Whittaker, deputy chairman and non-executive director of
intu properties plc, is the Chairman of the Peel Group (Peel),
members of Peel are considered to be related parties. Total
transactions between the Group and members of Peel are shown
below:
GBPm 2019 2018
------------ ----- -----
Income 0.9 1.3
Expenditure (0.6) (0.7)
------------ ----- -----
Income predominantly relates to leases of office space and
contracts to provide advertising services. Expenditure
predominantly relates to costs incurred under a management services
agreement and the supply of utilities. All contracts are on an
arm's length basis at commercial rates.
Balances outstanding between the Group and members of Peel at 31
December 2019 and 31 December 2018 are shown below:
GBPm 2019 2018
-------------------------------- ----- -----
Net investment in finance lease 0.8 1.2
Amounts owed by members of Peel 0.3 0.3
Amounts owed to members of Peel (0.1) (0.1)
-------------------------------- ----- -----
Under the terms of the Group's acquisition of intu Trafford
Centre from Peel in 2011, Peel has provided a guarantee in respect
of Section 106 planning obligation liabilities at Barton Square
which at 31 December 2019 totalled GBP13.0 million (2018: GBP12.4
million).
The net investment in finance leases above relate to three
advertising services agreements related to digital screens with
Peel Advertising Limited (a member of Peel) under which Peel will
procure advertising on behalf of the Group. The minimum fixed
payments in these agreements have been classified as a finance
lease.
During the year intu shareholders approved, at a General Meeting
held on 31 May 2019, the sale to the Peel Group of a 30.96 acre
site near intu Braehead known as King George V docks (West) and
additional plots of adjacent ancillary land for cash consideration
of GBP6.1 million.
Other transactions
During the year, the Group sold a wholly owned subsidiary, which
holds a plot of sundry land near intu Xanadú, to the intu Xanadú
joint venture for consideration of GBP8.6 million. Consideration
includes cash consideration of GBP4.3 million and a retained
interest in the entity through the intu Xanadú joint venture. The
cash flow statement records a net inflow of GBP4.0 million
comprising the cash consideration less cash in the business of
GBP0.3 million.
23 General information
The Company is a public limited company incorporated in England
and Wales and domiciled in the UK. The address of its registered
office is 40 Broadway, London SW1H 0BT.
The Company has its primary listing on the London Stock
Exchange. The Company has a secondary listing on the Johannesburg
Stock Exchange, South Africa.
Presentation of information (unaudited)
Overview
The Group presents alternative performance measures (APMs) (see
glossary) within these results. In presenting APMs, management have
applied the 'European Securities and Markets Authority Guidelines
on Alternative Performance Measures'.
The most significant APMs used to measure the Group's
performance including the rationale for their use are summarised
before the presentation of each APM on the following pages. EPRA
performance measures, which are industry standard APMs, are
detailed in the EPRA measures section.
During the year the Group has reviewed its use of APMs and will
no longer present NAV (diluted, adjusted) as management no longer
believe this is the most relevant metric in assessing the Group's
performance. The Group will continue to present EPRA NAV and EPRA
NNNAV, which are industry standard APMs, in order to standardise
the Group's disclosures with other entities in the sector.
APM - proportionately consolidated amounts
The Group accounts for its interests in joint ventures using the
equity method as required by IFRS 11 Joint Arrangements. This means
that the income statement and the balance sheet as prepared in
accordance with IFRS include single lines for the Group's total
share of post-tax profit/loss and the net investment in joint
ventures respectively.
Management reviews and monitors performance as well as
determines the strategy of the business primarily on a
proportionately consolidated basis. This includes the Group's share
of joint ventures on an individual line-by-line basis rather than a
post-tax profit/loss or net investment basis. The figures and
commentary presented in the annual report and financial statements
are consistent with this management approach as management believes
this provides a more relevant and reliable analysis of the Group's
performance to users. A reconciliation of the income statement and
balance sheet between the two bases is provided below:
Proportionately consolidated income statement
Re-presented1
2019 2018
Group including
Group including share
Group income Share of share of Group income Share of of joint
GBPm statement joint ventures joint ventures statement joint ventures ventures
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Revenue 542.3 76.8 619.1 581.1 71.9 653.0
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Net rental income 348.1 53.5 401.6 398.5 52.0 450.5
Net other income 6.2 (2.6) 3.6 5.3 (2.4) 2.9
Revaluation of
investment
and development
property (1,796.8) (182.9) (1,979.7) (1,332.8) (72.2) (1,405.0)
Loss on disposal of
subsidiaries (6.3) - (6.3) (8.5) - (8.5)
Gain on sale of
investment
and development
property 3.9 - 3.9 1.4 - 1.4
Write-down on
recognition
of joint ventures and
other assets
classified
as held for sale (38.0) - (38.0) - - -
Impairment of goodwill (4.0) - (4.0) - - -
Impairment of
investment
in associates (7.4) - (7.4) - - -
Impairment of loan to
associate (5.5) - (5.5) - - -
Administration
expenses
- ongoing (39.5) (1.0) (40.5) (42.9) (1.1) (44.0)
Administration
expenses
- exceptional (3.4) - (3.4) (13.1) (0.1) (13.2)
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Operating loss (1,542.7) (133.0) (1,675.7) (992.1) (23.8) (1,015.9)
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Finance costs (220.9) (6.6) (227.5) (216.7) (6.3) (223.0)
Finance income 16.6 (13.7) 2.9 14.8 (12.2) 2.6
Other finance charges
- exceptional (36.9) (0.8) (37.7) (32.9) 4.5 (28.4)
Change in fair value
of financial
instruments (72.9) (2.4) (75.3) 87.3 (1.0) 86.3
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Net finance costs (314.1) (23.5) (337.6) (147.5) (15.0) (162.5)
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Loss before tax, joint
ventures
and associates (1,856.8) (156.5) (2,013.3) (1,139.6) (38.8) (1,178.4)
Share of post-tax
(loss)/profit
of joint ventures (158.9) 158.9 - (42.1) 42.1 -
Share of post-tax
(loss)/profit
of associates (0.3) - (0.3) 2.3 - 2.3
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Loss before tax (2,016.0) 2.4 (2,013.6) (1,179.4) 3.3 (1,176.1)
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Current tax - ongoing (16.0) (1.6) (17.6) (0.1) (0.6) (0.7)
Current tax -
exceptional (6.4) - (6.4) - - -
Deferred tax 16.6 (1.3) 15.3 5.8 (2.2) 3.6
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Taxation (5.8) (2.9) (8.7) 5.7 (2.8) 2.9
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
(Loss)/profit for the
year (2,021.8) (0.5) (2,022.3) (1,173.7) 0.5 (1,173.2)
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Non-controlling
interests 70.9 0.5 71.4 41.5 (0.5) 41.0
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
Loss for the year
attributable
to owners of intu
properties
plc (1,950.9) - (1,950.9) (1,132.2) - (1,132.2)
---------------------- ------------ --------------- --------------- ------------ --------------- ---------------
1 See note 1 for details on re-presented amounts.
Interest cover on a proportionately consolidated basis is
presented in the other financial information including share of
joint ventures section.
Proportionately consolidated balance sheet
Re-presented1
2019 2018
------------- --------------- --------------- ------------- --------------- ---------------
Group including
Group including share
Group balance Share of share of Group balance Share of of joint
GBPm sheet joint ventures joint ventures sheet joint ventures ventures
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Non-current assets
Investment and
development
property 6,026.7 694.9 6,721.6 8,138.3 1,117.4 9,255.7
Property, plant and
equipment 14.3 0.1 14.4 11.8 0.1 11.9
Investment in joint
ventures 326.6 (326.6) - 487.9 (487.9) -
Loans to joint
ventures 197.5 (197.5) - 336.0 (336.0) -
Investment in
associates 53.7 - 53.7 65.6 - 65.6
Derivative financial
instruments - 0.3 0.3 4.3 - 4.3
Other non-current
assets 1.1 40.8 41.9 20.7 42.9 63.6
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
6,619.9 212.0 6,831.9 9,064.6 336.5 9,401.1
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Current assets
Joint ventures and
other
assets classified
as
held for sale 163.7 - 163.7 - - -
Derivative financial
instruments - - - 0.4 - 0.4
Trade and other
receivables 130.0 10.6 140.6 138.0 7.8 145.8
Cash and cash
equivalents 203.5 19.5 223.0 239.5 34.8 274.3
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
497.2 30.1 527.3 377.9 42.6 420.5
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Total assets 7,117.1 242.1 7,359.2 9,442.5 379.1 9,821.6
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Current liabilities
Trade and other
payables (243.3) (16.5) (259.8) (278.4) (27.7) (306.1)
Current tax
liabilities (5.9) - (5.9) - (0.1) (0.1)
Borrowings (71.1) (25.9) (97.0) (51.1) - (51.1)
Derivative financial
instruments (48.4) (0.3) (48.7) (39.0) (0.2) (39.2)
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
(368.7) (42.7) (411.4) (368.5) (28.0) (396.5)
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Non-current
liabilities
Borrowings (4,663.2) (156.6) (4,819.8) (4,984.2) (295.7) (5,279.9)
Derivative financial
instruments (237.1) (1.4) (238.5) (246.2) (3.3) (249.5)
Deferred tax
liabilities (0.9) (41.4) (42.3) (18.0) (48.4) (66.4)
Other payables (1.2) - (1.2) (1.2) - (1.2)
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
(4,902.4) (199.4) (5,101.8) (5,249.6) (347.4) (5,597.0)
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Total liabilities (5,271.1) (242.1) (5,513.2) (5,618.1) (375.4) (5,993.5)
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Net assets 1,846.0 - 1,846.0 3,824.4 3.7 3,828.1
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Non-controlling
interests 58.2 - 58.2 (12.7) (3.7) (16.4)
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
Net assets
attributable
to owners of intu
properties
plc 1,904.2 - 1,904.2 3,811.7 - 3,811.7
-------------------- ------------- --------------- --------------- ------------- --------------- ---------------
1 See note 1 for details on re-presented amounts.
A reconciliation to market value of investment and development
property is given in the table below:
GBPm 2019 2018
----------------------------------------------------------- ------- -------
Balance sheet carrying value of investment and development
property 6,721.6 9,255.7
Head leases on investment property (88.3) (88.3)
Market value of investment and development property 6,633.3 9,167.4
----------------------------------------------------------- ------- -------
Net external debt and debt to assets ratio on a proportionately
consolidated basis are presented in the other financial information
including share of joint ventures section.
APM - like-for-like amounts
Like-for-like amounts are presented as they measure operating
performance as distinct from the impact of acquisitions or
disposals. In respect of net rental income, the like-for-like
measure relates to property that has been owned throughout both
years without significant capital expenditure in either year, so
that income can be compared on a like-for-like basis. For the
purposes of comparison of capital values, this will also include
assets owned at the previous reporting year end but not throughout
the prior year. A reconciliation of the like-for-like measure for
net rental income as well as investment and development property
including the Group's share of joint ventures is provided
below:
Year ended 31 December Movement
------------------------ --------------
2019 2018
GBPm GBPm GBPm %
-------------------------------------------- ----------- ----------- ------ ------
Like-for-like property 395.2 434.8 (39.6) (9.1)
Part disposal: intu Derby (8 July 2019) - 7.5 (7.5) n/a
Part disposal: intu Chapelfield (31 January
2018) - 0.6 (0.6) n/a
Held for sale: intu Puerto Venecia and
intu Asturias (15 December 2019) - 0.7 (0.7) n/a
Other disposals 4.0 5.7 (1.7) n/a
Developments 2.4 1.2 1.2 n/a
-------------------------------------------- ----------- ----------- ------ ------
Net rental income 401.6 450.5 (48.9) (10.9)
-------------------------------------------- ----------- ----------- ------ ------
Market value Revaluation deficit
---------------- ---------------------
2019 2018 2019 2019
GBPm GBPm GBPm %
---------------------------------------- ------- ------- ------------ -------
Like-for-like property 6,290.8 7,970.6 (1,795.7) (22.3)
Part disposal: intu Derby (8 July 2019) - 276.2 (25.9) (20.8)
Held for sale: intu Puerto Venecia and
intu Asturias (15 December 2019) - 397.0 (32.7) (11.1)
Other investment property disposals - 81.3 (4.7) (5.8)
Spain developments 177.3 217.0 (45.7) (20.5)
UK other including developments1 165.2 225.3 (75.0) (32.6)
---------------------------------------- ------- ------- ------------ -------
Investment and development property 6,633.3 9,167.4 (1,979.7) (23.1)
---------------------------------------- ------- ------- ------------ -------
1 UK other including developments represents valuation movements
on investment and development property valued below GBP200 million
each.
APM - underlying earnings
Underlying earnings (used to calculate underlying EPS) as
presented is based on EPRA earnings (used to calculate EPRA EPS),
an industry standard APM considered a key measure of recurring
performance, but adjusted for certain items (listed below) which
management believes are necessary in order to better present the
Group's recurring performance and therefore provide an indication
of the extent to which dividend payments are supported by
underlying operations (see underlying profit statement section).
Underlying earnings excludes property and derivative movements,
exceptional items and related tax. The key differences to EPRA
earnings relate to the following adjustments:
- with the exception of termination costs on allocated interest
rate swaps and costs related to acquisitions, which are both
excluded from EPRA earnings and underlying earnings, other finance
charges - exceptional (as detailed in note 4), administration
expenses - exceptional (as detailed in note 3) and current tax -
exceptional (as detailed in note 5) are included in EPRA earnings
but are excluded from the Group's measure of underlying earnings.
In accordance with the Group's definition for exceptional items
(see glossary), the Group considers these costs to be exceptional
based on their nature and incidence, which create volatility in
earnings
- fair value movements on interest rate swaps not currently used
for economic hedges of debt (referred to as unallocated swaps) are
included in EPRA earnings but are excluded from the Group's measure
of underlying earnings. The Group does not hold unallocated swaps
for speculative purposes. Management currently intends to hold
these unallocated swaps for the foreseeable future, therefore the
period on period volatility created by their fair value movements
is unlikely to crystallise until such hedges are settled at
maturity
A reconciliation from the IFRS profit/loss for the year
attributable to owners of intu properties plc to EPRA earnings is
provided in the EPRA measures section, which also provides
additional details on EPRA and related measures. A reconciliation
from the consolidated income statement including the Group's share
of joint ventures to underlying earnings is provided below:
2019 2018
---------- ---------- -------------- ---------- ---------- --------------
Group Group
including including
share Non-underlying share Non-underlying
of joint Underlying (loss)/ of joint Underlying (loss)/
GBPm ventures earnings earnings ventures earnings earnings
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
Net rental income 401.6 401.6 - 450.5 450.5 -
Net other income 3.6 3.6 - 2.9 2.9 -
Revaluation of investment and
development
property (1,979.7) - (1,979.7) (1,405.0) - (1,405.0)
Loss on disposal of subsidiaries (6.3) - (6.3) (8.5) - (8.5)
Gain on sale of investment and
development
property 3.9 - 3.9 1.4 - 1.4
Write-down on recognition of joint
ventures and other assets classified
as held for sale (38.0) - (38.0) - - -
Impairment of goodwill (4.0) - (4.0) - - -
Impairment of investment in associates (7.4) - (7.4) - - -
Impairment of loan to associate (5.5) - (5.5) - - -
Administration expenses - ongoing (40.5) (40.5) - (44.0) (44.0) -
Administration expenses - exceptional (3.4) - (3.4) (13.2) - (13.2)
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
Operating (loss)/profit (1,675.7) 364.7 (2,040.4) (1,015.9) 409.4 (1,425.3)
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
Finance costs (227.5) (227.5) - (223.0) (223.0) -
Finance income 2.9 2.9 - 2.6 2.6 -
Other finance charges - exceptional (37.7) - (37.7) (28.4) - (28.4)
Change in fair value of financial
instruments (75.3) - (75.3) 86.3 - 86.3
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
Net finance costs (337.6) (224.6) (113.0) (162.5) (220.4) 57.9
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
(Loss)/profit before tax and
associates (2,013.3) 140.1 (2,153.4) (1,178.4) 189.0 (1,367.4)
Share of post-tax (loss)/profit of
associates (0.3) 1.0 (1.3) 2.3 1.2 1.1
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
(Loss)/profit before tax (2,013.6) 141.1 (2,154.7) (1,176.1) 190.2 (1,366.3)
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
Current tax - ongoing (17.6) (17.6) - (0.7) (0.7) -
Current tax - exceptional (6.4) - (6.4) - - -
Deferred tax 15.3 - 15.3 3.6 - 3.6
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
Taxation (8.7) (17.6) 8.9 2.9 (0.7) 3.6
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
(Loss)/profit for the year (2,022.3) 123.5 (2,145.8) (1,173.2) 189.5 (1,362.7)
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
Non-controlling interests 71.4 3.7 67.7 41.0 3.6 37.4
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
(Loss)/profit for the year
attributable
to owners of intu properties plc (1,950.9) 127.2 (2,078.1) (1,132.2) 193.1 (1,325.3)
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
Underlying earnings per share (pence)
1 n/a 9.5p n/a n/a 14.4p n/a
-------------------------------------- ---------- ---------- -------------- ---------- ---------- --------------
1 Calculated using basic shares. See note 7(a) for details on
the weighted average number of shares.
Investment
and
development
property
(unaudited)
------------- ------- ----------- -------- ----------- ---------- --------- --------- ---------- ------- ------ -------- -------- ---------
Net Gross
Market initial 'Topped-up' Nominal area Number Annual Headline
At 31 value Revaluation yield NIY equivalent Occupancy Form of million of property rent ABC1
December 2019 GBPm deficit (EPRA) (EPRA) yield (EPRA) Ownership OwnershipH sq ftI stores income ITZA customers
------------- ------- ----------- -------- ----------- ---------- --------- --------- ---------- ------- ------ -------- -------- ---------
Subsidiaries
and
joint
operations
intu Trafford
Centre 1,669.5 -22% 5.2% 5.3% 5.3% 92% 100% FH 2.0 229 GBP93.4 GBP400 66%
intu Lakeside 1,000.0 -22% 4.8% 5.2% 5.5% 96% 100% FH 1.6 257 GBP54.8 GBP300 69%
intu
Metrocentre 676.8 -20% 5.5% 6.0% 6.6% 92% 90%E LH 2.1 304 GBP43.7 GBP280 54%
intu Merry
Hill 587.6 -24% 5.5% 5.7% 6.2% 95% 100% FH 1.7 268 GBP39.2 GBP200 48%
intu Braehead 288.9 -33% 8.5% 8.5% 7.8% 98% 100% FH 1.1 125 GBP27.6 GBP150 66%
intu Watford 324.9 -20% 4.0% 4.5% 6.1% 97% 93% LH 1.1 173 GBP18.5 GBP170 84%
Manchester
Arndale 309.0 -24% 5.5% 6.0% 6.2% 95% 48%F LH 1.8 258 GBP20.1 GBP285 57%
intu Eldon
Square 214.1 -24% 5.4% 5.7% 6.2% 97% 60% FH/LH 1.3 145 GBP13.1 GBP285 55%
intu Milton
Keynes 212.5 -18% 5.6% 5.7% 5.8% 97% 100% FH 0.4 57 GBP12.7 GBP200 68%
intu Victoria
Centre 201.0 -24% 6.7% 7.0% 7.4% 98% 100% FH 1.0 118 GBP17.8 GBP200 60%
Cribbs
Causeway 159.3 -27% 6.5% 6.6% 6.2% 98% 33%G FH/LH 1.1 154 GBP11.9 GBP250 74%
OtherB 302.9
------------- ------- ----------- -------- ----------- ---------- --------- --------- ---------- ------- ------ -------- -------- ---------
Total IFRS 5,946.5
Joint
ventures
St David's,
Cardiff 230.0 -21% 5.6% 6.1% 6.0% 95% 50% FH/LH 1.4 203 GBP15.3 GBP212 71%
intu
Xanadú 233.8 -1%A 4.8% 5.0% 5.8% 96% 50% FH 1.3J 207 EUR14.4 n/a n/a
intu
Chapelfield 106.5 -20% 5.9% 6.1% 6.0% 98% 50% FH 0.5 92 GBP7.6 GBP175 64%
intu Derby 77.3 -21% 7.5% 7.7% 7.7% 95% 26% FH/LH 1.3 208 GBP7.2 GBP75 45%
OtherC 39.2
------------- ------- ----------- -------- ----------- ---------- --------- --------- ---------- ------- ------ -------- -------- ---------
Total
including
Group's
share of
joint 5.93% 6.16%
ventures 6,633.3 5.66%(D) (D) (D) 95%
------------- ------- ----------- -------- ----------- ---------- --------- --------- ---------- ------- ------ -------- -------- ---------
Total at 31
December
2018
including
Group's
share of
joint 4.75% 4.98% 5.44%
ventures 9,167.4 (D) (D) (D) 97%
------------- ------- ----------- -------- ----------- ---------- --------- --------- ---------- ------- ------ -------- -------- ---------
A Calculated in local currency. G The Group's interest is through a joint
B Includes the Group's interests in intu Potteries, operation ownership of a 66 per cent interest
intu Broadmarsh, Soar at intu Braehead and in The Mall at Cribbs Causeway and a 100 per
development land in Spain. cent interest in The Retail Park, Cribbs Causeway.
C Includes the Group's interest in intu Uxbridge. H Form of ownership is shown as either freehold
D Weighted average yields exclude developments. (FH), leasehold (LH) or freehold and leasehold
E Interest shown is that of The Metrocentre (FH/LH).
Partnership in intu Metrocentre (90 per cent) I Area shown is not adjusted for the proportion
and the Metro Retail Park (100 per cent). The of ownership.
Group has a 60 per cent interest in The Metrocentre J Excludes owner occupied space.
Partnership which is consolidated as a subsidiary
of the Group.
F The Group's interest is through a joint operation
ownership of a 95 per cent interest in Manchester
Arndale, and a 90 per cent interest in New
Cathedral Street, Manchester.
Other property information
31 December 31 December
GBPm 2019 2018
-------------------------------------- ----------- -----------
Passing rent 389.2 428.9
Annual property income 411.9 474.1
ERV 449.6 566.3
Weighted average unexpired lease term 6.3 years 7.2 years
-------------------------------------- ----------- -----------
Amounts presented include the Group's share of joint
ventures.
Top 20 customers
Number Rent roll
of leases %
Rank Customer 2019 2019
---- ---------------------- ---------- ---------
1 Next 19 4%
2 Boots 21 3%
3 Arcadia 26 3%
4 Debenhams 10 3%
5 H&M 20 3%
6 Primark 11 2%
7 Dixons Carphone 29 2%
8 New Look 15 2%
9 JD Sports 20 2%
10 River Island 16 2%
11 A S Watson 42 2%
12 Marks & Spencer 16 2%
13 Signet Group 33 2%
14 Superdry 17 1%
15 Sainsbury's/Argos 13 1%
16 Watches of Switzerland 23 1%
17 Inditex 11 1%
18 Clarks 14 1%
19 Apple 12 1%
20 Frasers Group 13 1%
---- ---------------------- ---------- ---------
Financial covenants (unaudited)
The actual LTV and interest cover covenants are based on the
latest certified figures, calculated in accordance with the loan
agreements. The calculations are loan specific. Since the year end,
we have utilised around GBP50 million from available resources to
reduce the leverage levels in a small number of our facilities,
including to manage the relevant LTV covenants.
For LTV covenants, the timing and manner of testing varies and
for interest cover covenants the calculations include a variety of
historical, forecast and in certain instances a combination of
historical and forecast basis.
Intu (SGS) Finance plc and Intu (SGS) Finco Limited (Secured
Group Structure)
Interest Interest
Loan LTV LTV cover cover
GBPm Maturity covenant actual covenant actual
--------------------- ------- -------- --------- ------- --------- --------
Term loan 141.8 2021
3.875 per cent bonds 450.0 2023
4.625 per cent bonds 350.0 2028
4.250 per cent bonds 350.0 2030
--------------------- ------- -------- --------- ------- --------- --------
1,291.8 80.0% 70.1% 125.0% 184.5%
--------------------- ------- -------- --------- ------- --------- --------
Covenants are tested on the Security Group, the principal assets
of which are intu Lakeside, intu Braehead, intu Watford and intu
Victoria Centre. During the year, intu Derby was withdrawn and the
extension of intu Watford was added to the Secured Group Structure.
Following this exchange, on 1 July 2019 GBP210.0 million of the SGS
term loan was repaid.
The structure has a tiered operating covenant regime giving the
Group a significant degree of flexibility when the covenants are
below certain levels. In higher tiers the level of flexibility is
reduced. The Group retains operating control at loan to value below
72.5 per cent and interest cover above 1.4x. No financial covenant
default occurs unless the loan to value exceeds 80 per cent or the
interest cover falls below 1.25x.
The Trafford Centre Finance Limited
There are no financial covenants on the intu Trafford Centre
debt (CMBS) of GBP697.8 million at 31 December 2019. However, as
this debt is amortising and the amortisation payments are included
in the definition of finance costs, the affordability of the
amortisation payments in relation to the cash generated by the
asset is assessed quarterly. The Group has the ability to
contribute cash into the structure in order to meet ongoing finance
cost obligations. No additional contribution of cash has been
required in 2019.
Intu Metrocentre Finance plc
Interest Interest
Loan LTV LTV cover cover
GBPm Maturity covenant actual covenant actual
--------------------- ----- -------- --------- ------- --------- --------
4.125 per cent bonds 485.0 2023 100.0% 71.4% 125.0% 193.8%
--------------------- ----- -------- --------- ------- --------- --------
The structure's covenant regime gives the Group a significant
degree of flexibility when the covenants are below certain levels.
The Group retains operating control at loan to value below 70 per
cent and interest cover above 1.4x. No financial covenant default
occurs unless loan to value exceeds 100 per cent or the interest
cover falls below 1.25x.
As the loan to value is above 70 per cent, a cash trap is now in
effect which restricts payments outside of the security group.
Intu Debenture plc
Capital Capital Interest Interest
Loan cover cover cover cover
GBPm Maturity covenant actual covenant actual
----- -------- --------- ------- --------- --------
231.4 2027 150.0% 150.0% 100.0% 102.5%
----- -------- --------- ------- --------- --------
The debenture is currently secured on a number of the Group's
properties including intu Eldon Square, intu Potteries and Soar at
intu Braehead.
Should the capital cover or interest cover test be breached,
Intu Debenture plc (the 'Issuer') has three months from the date of
delivery of the valuation or the latest certificate to the Trustees
to make good any deficiencies. Subsequent to year end, the Group
has placed GBP15.0 million of additional security in a charged
account.
The Issuer may withdraw property secured on the debenture by
paying a sum of money or through the substitution of alternative
property provided that the capital cover and interest cover tests
are satisfied immediately following the substitution.
Financial covenants on corporate facilities
Interest Interest Borrowings/net
Net worth Net worth cover cover worth Borrowings/net
covenant actual covenant actual covenant worth actual
--------------------------- ------------ ------------ --------- -------- -------------- --------------
GBP600m facility, maturing
in 20211 GBP1,200.0m GBP1,235.2m 120.0% 165.8% 125.0% 118.7%
GBP375m 2.875 per cent
convertible
bonds, due in 2022 (note
15)2 n/a n/a n/a n/a 175.0% 33.3%
--------------------------- ------------ ------------ --------- -------- -------------- --------------
1 Tested on the Borrower Group which excludes, at the Group's
election, certain subsidiaries with asset-specific finance. The
facility is secured on the Group's investments in Manchester
Arndale and Cribbs Causeway.
2 Tested on the Group excluding, at the Group's election, the
borrowings on certain subsidiaries with asset-specific finance.
Other asset-specific debt
Interest Interest
Loan LTV LTV cover cover
Term facilities GBPm Maturity covenant actual covenant actual
-------------------------- --------- --------- -------------- ------------ ------------------ ------------------
intu Uxbridge (1) 20.0 (5) 2020 70.0% 64.1% 125.0% 314.0%
St David's, Cardiff 145.2 2021 65.0% 63.1% 150.0% 208.0%
intu Milton Keynes 137.5 2021 65.0% 64.7% 150.0% 213.9%
intu Trafford Centre,
Barton Square (2) 25.0 2021 65.0% 28.6% 150.0% 401.1%
103.0%
intu Trafford Centre 250.0 2022 65.0% 60.6% (3) 104.9%
intu Chapelfield 69.0 (6) 2023 65.0% 64.8% 150.0% 186.4%
intu Merry Hill 435.9 (4) 2024 75.0% 74.3% 150.0% 254.0%
intu Derby (1) 38.8 2024 58.5% 50.2% (7) 250.0% 416.1%
intu Xanadú (1)(EUR) 131.5 2022 65.0% 48.6% 150.0% 452.8%
Held for sale
intu Asturias1 (EUR) 60.5 2021 65.0% 39.3% 150.0% 649.6%
intu Puerto Venecia1
(EUR) 112.5 2025 65.0% 45.0% 150.0% 486.5%
-------------------------- --------- --------- -------------- ------------ ------------------ ------------------
Loan to Loan to Loan to Loan to
Loan development development gross development gross development
Development facilities GBPm Maturity cost covenant cost value covenant actual
intu Trafford Centre,
Barton Square2 19.9 2021 34.0% 26.5% 65.0% 35.9%
intu Broadmarsh 9.4 2022 60.0% 10.5% 55.0% 50.0%
-------------------------- --------- --------- -------------- ------------ ------------------ ------------------
1 Debt shown is consistent with the Group's economic interest.
For intu Derby, this is the Group's economic interest at 31
December 2019 after considering our joint venture partner's
structured equity interest.
2 In addition to the GBP25.0 million term facility, we have a
committed development funding facility of GBP25.0 million of which
GBP19.9 million was drawn at 31 December 2019.
3 Covenant is a debt service cover ratio (includes interest and scheduled debt repayments).
4 Loan is stated after a partial repayment of GBP25.0 million on 20 January 2020.
5 Loan is stated after a partial repayment of GBP6.0 million on 31 January 2020.
6 Loan is stated after a partial repayment of GBP5.0 million on 14 February 2020.
7 Figure presented based on 31 December 2019 valuation. LTV
covenant tested against initial valuation.
Interest rate swaps
It is Group policy, and often a requirement of the Group's
lenders, to eliminate substantially all exposure to interest rate
fluctuations by using floating to fixed interest rate swaps in
order to establish certainty over cash flows. These swaps have the
economic effect of converting borrowings from floating to fixed
rates.
The table below sets out the nominal amount and average rate of
hedging, excluding lenders' margins, in place under current and
forward-starting swap contracts including the Group's share of
joint ventures adjusted for swap repayments up to the date of these
results:
Nominal Average
amount rate
GBPm %
----------------------- ------- -------
In effect on or after:
1 year 1,896.4 2.66%
2 years 1,720.2 2.81%
5 years 592.6 5.03%
10 years 582.3 5.01%
15 years 400.2 4.76%
----------------------- ------- -------
Other financial information including share of joint ventures
(unaudited)
for the year ended 31 December 2019
Net external debt
The table below provides a reconciliation between the components
of net debt included on the Group's balance sheet and net external
debt including the Group's share of joint ventures' debt and
cash.
GBPm 2019 2018
----------------------------------------------- ------- -------
Total borrowings 4,916.8 5,331.0
Cash and cash equivalents (223.0) (274.3)
----------------------------------------------- ------- -------
Net debt 4,693.8 5,056.7
Less Metrocentre compound financial instrument (195.4) (189.5)
Net external debt 4,498.4 4,867.2
----------------------------------------------- ------- -------
Analysed as:
Debt including Group's share of joint ventures 4,721.4 5,141.5
Cash including Group's share of joint ventures (223.0) (274.3)
----------------------------------------------- ------- -------
Net external debt 4,498.4 4,867.2
----------------------------------------------- ------- -------
Debt to assets ratio
GBPm 2019 2018
---------------------------------------------------- --------- ---------
Market value of investment and development property 6,633.3 9,167.4
Net external debt (4,498.4) (4,867.2)
---------------------------------------------------- --------- ---------
Debt to assets ratio 67.8% 53.1%
---------------------------------------------------- --------- ---------
Taking into account the net proceeds from the sale of intu
Asturias and intu Puerto Venecia of GBP163.7 million (see note 20),
the debt to assets ratio would be 65.3 per cent.
Interest cover
GBPm 2019 2018
---------------------------------------------------- ------- -------
Finance costs (227.5) (223.0)
Less amortisation of Metrocentre compound financial
instrument 5.9 5.9
Finance income 2.9 2.6
---------------------------------------------------- ------- -------
(218.7) (214.5)
---------------------------------------------------- ------- -------
Underlying operating profit 364.7 409.4
Interest cover 1.67x 1.91x
---------------------------------------------------- ------- -------
EPRA measures (unaudited)
1 Summary
The EPRA Best Practice Recommendations identify six key
performance measures, including the EPRA cost ratios. The measures
are deemed to be of importance for investors in European property
companies and aim to encourage more consistent and widespread
disclosure. The Group is supportive of this initiative but
continues to disclose additional APMs throughout this report which
it believes are more appropriate to the Group's current
circumstances. These EPRA measures are calculated in accordance
with the EPRA Best Practices Recommendations Guidelines.
In 2019, the Group retained its EPRA Gold Award for exceptional
compliance with the EPRA Best Practice Recommendations.
The EPRA measures are summarised below and detailed in the
tables following and notes referenced:
Section 2019 2018
------------------------------------------------- ------- ----------- -----------
EPRA cost ratio (including direct vacancy costs) 2 22.6% 20.1%
EPRA cost ratio (excluding direct vacancy costs) 2 16.1% 15.3%
EPRA earnings 3 GBP33.1m GBP210.5m
* per share 3 2.5p 15.7p
EPRA NAV 4 GBP1,977.3m GBP3,947.1m
* per share 4 147p 293p
EPRA NNNAV 4 GBP2,005.2m GBP3,640.7m
* per share 4 149p 271p
EPRA NIY 5 5.7% 4.8%
EPRA 'topped-up' NIY 5 5.9% 5.0%
EPRA vacancy rate 6 5.1% 3.3%
------------------------------------------------- ------- ----------- -----------
Details of the Group's performance against the EPRA Best
Practice Recommendations on Sustainability Reporting can be found
in full in the 2019 sustainability report. In 2019, the Group
retained its Gold EPRA Sustainability Best Practice Recommendations
award.
2 EPRA cost ratios
GBPm 2019 2018
------------------------------------------------- ------ ------
Administration expenses - ongoing 39.5 42.9
Net service charge costs 16.2 17.0
Other non-recoverable costs 44.5 38.3
Share of joint ventures' adjusted items 10.1 8.4
Remove:
Service charge costs recovered through rents (4.6) (4.3)
------------------------------------------------- ------ ------
EPRA costs - including direct vacancy costs 105.7 102.3
Direct vacancy costs (27.1) (21.4)
Share of joint ventures' adjusted items (3.3) (2.9)
------------------------------------------------- ------ ------
EPRA costs - excluding direct vacancy costs 75.3 78.0
------------------------------------------------- ------ ------
Rent receivable 424.0 467.3
Rent payable (15.2) (13.5)
Share of joint ventures' adjusted items 62.5 59.3
------------------------------------------------- ------ ------
Gross rental income less ground rent payable 471.3 513.1
Remove:
Service charge costs recovered through rents (4.6) (4.3)
------------------------------------------------- ------ ------
Gross rental income 466.7 508.8
------------------------------------------------- ------ ------
EPRA cost ratio (including direct vacancy costs) 22.6% 20.1%
------------------------------------------------- ------ ------
EPRA cost ratio (excluding direct vacancy costs) 16.1% 15.3%
------------------------------------------------- ------ ------
3 EPRA earnings per share
GBPm 2019 2018
Loss attributable to owners of intu properties
plc (1,950.9) (1,132.2)
Adjusted for:
Revaluation of investment and development property
(note 8) 1,796.8 1,332.8
Loss on disposal of subsidiaries 6.3 8.5
Gain on sale of investment and development property (3.9) (1.4)
Write-down on recognition of joint ventures and
other assets classified as held for sale (note
20) 38.0 -
Impairment of goodwill 4.0 -
Administration expenses - exceptional (EPRA defined)1 - 8.0
Other finance charges - exceptional (EPRA defined)1 1.3 -
Change in fair value of financial instruments (EPRA
defined)2 38.0 (36.6)
Tax on the above items3 (16.6) (5.8)
Share of joint ventures' adjusted items 186.1 77.1
Share of associates' adjusted items 1.2 (2.2)
Non-controlling interests in respect of the above (67.2) (37.7)
------------------------------------------------------ --------- ---------
EPRA earnings - basic 33.1 210.5
Dilutive convertible bonds, share options and share
awards - -
------------------------------------------------------ --------- ---------
EPRA earnings - diluted 33.1 210.5
------------------------------------------------------ --------- ---------
Per share - basic4 (pence) 2.5p 15.7p
------------------------------------------------------ --------- ---------
Per share - diluted4 (pence) 2.5p 15.7p
------------------------------------------------------ --------- ---------
A reconciliation from EPRA earnings to the Group's APM of
underlying earnings is provided below:
GBPm 2019 2018
EPRA earnings - basic 33.1 210.5
Adjusted for:
Impairment of investment in associates 7.4 -
Impairment of loan to associate 5.5 -
Administration expenses - exceptional (non-EPRA
defined) 3.4 5.1
Other finance charges - exceptional (non-EPRA defined) 35.6 32.9
Change in fair value of financial instruments (unallocated
swaps) 34.9 (50.7)
Other exceptional tax 6.4 -
Share of joint ventures' adjusted items 0.8 (5.8)
Share of associates' adjusted items 0.1 1.1
Underlying earnings - basic 127.2 193.1
----------------------------------------------------------- ----- ------
Per share - basic4 (pence) 9.5p 14.4p
----------------------------------------------------------- ----- ------
1 With the exception of termination costs on allocated interest
rate swaps and costs related to acquisitions, which are both
excluded from EPRA earnings, exceptional finance costs (as detailed
in note 4) and exceptional administration expenses (as detailed in
note 3) are included in EPRA earnings.
2 Fair value movements on interest rate swaps not currently used
for economic hedges of debt (referred to as unallocated swaps) are
included in EPRA earnings.
3 The tax expense in respect of the prior year minimum PID
shortfall has been included within EPRA earnings.
4 See note 7(a) for the weighted average number of shares.
4 EPRA NAV per share and EPRA NNNAV per share
2019 2018
---------------- ----------------
EPRA EPRA EPRA EPRA
GBPm NAV NNNAV NAV NNNAV
----------------------------------------------- ------- ------- ------- -------
Net assets attributable to owners of
intu properties plc 1,904.2 1,904.2 3,811.7 3,811.7
Adjusted for:
Fair value of derivative financial instruments
(net of tax) (EPRA defined)1 118.8 - 96.8 -
Fair value of convertible bonds (120.1) - (60.1) -
Difference in fair value of debt over
book value - 57.5 - (206.7)
Deferred tax on investment and development
property 0.9 - 18.0 -
Share of joint ventures' adjusted items 2.2 (40.5) 9.4 (42.6)
Non-controlling interest included in
the above amounts - 12.7 - 7.0
Non-controlling interest recoverable
balance not recognised 71.3 71.3 71.3 71.3
Net assets 1,977.3 2,005.2 3,947.1 3,640.7
----------------------------------------------- ------- ------- ------- -------
Per share - diluted2 (pence) 147p 149p 293p 271p
----------------------------------------------- ------- ------- ------- -------
1 Fair value movements on interest rate swaps not currently used
for economic hedges of debt (referred to as unallocated swaps) are
included in EPRA NAV.
2 The diluted number of shares used of 1,346.1 million (2018:
1,345.6 million) has been adjusted to remove shares held in the
ESOP and includes the impact of any dilutive convertible bonds,
share options and share awards.
5 EPRA NIY and 'topped-up' NIY
GBPm 2019 2018
---------------------------------------------------- ----- -----
Investment and development property 6,633 9,167
Less developments (287) (342)
---------------------------------------------------- ----- -----
Completed property portfolio 6,346 8,825
Allowance for estimated purchasers' costs 392 609
---------------------------------------------------- ----- -----
Gross up completed property portfolio valuation 6,738 9,434
---------------------------------------------------- ----- -----
Annualised cash passing rental income 412 474
Property outgoings (31) (25)
---------------------------------------------------- ----- -----
Annualised net rents 381 449
Notional rent on expiration of rent-free periods or
other lease incentives 19 25
---------------------------------------------------- ----- -----
Topped-up net annualised rent 400 474
---------------------------------------------------- ----- -----
EPRA NIY 5.7% 4.8%
---------------------------------------------------- ----- -----
EPRA 'topped-up' NIY 5.9% 5.0%
---------------------------------------------------- ----- -----
EPRA NIY and 'topped-up' NIY by property is given in the
investment and development property section.
6 EPRA vacancy rate
% 2019 2018
--------------------- ---- ----
intu Trafford Centre 7.6 2.1
intu Lakeside 4.3 2.9
intu Metrocentre 8.2 5.1
intu Merry Hill 5.4 6.6
intu Braehead 2.1 1.3
intu Watford 3.5 3.9
Manchester Arndale 4.9 1.7
intu Eldon Square 2.7 1.4
intu Milton Keynes 3.0 1.7
intu Victoria Centre 1.6 1.8
Cribbs Causeway 2.4 2.6
St David's, Cardiff 4.5 7.8
intu Xanadú 3.9 2.3
intu Chapelfield 2.3 0.7
intu Derby 5.1 4.8
intu Puerto Venecia1 n/a 0.5
intu Asturias1 n/a 1.1
5.1 3.3
--------------------- ---- ----
1 Classified as held for sale at 31 December 2019 (see note 20).
Underlying profit statement (unaudited)
The underlying profit information in the table below shows the
Group including share of joint ventures on a line-by-line
basis:
Re-presented1 Re-presented1
Re-presented1 Six months Six months Six months Six months
Year ended Year ended ended ended ended ended
31 December 31 December 31 December 31 December 30 June 30 June
GBPm 2019 2018 2019 2018 2019 2018
--------------------------- ------------ ------------- ------------ ------------- ---------- -------------
Net rental income 401.6 450.5 196.4 227.4 205.2 223.1
Net other income 3.6 2.9 2.2 0.9 1.4 2.0
Administration expenses (40.5) (44.0) (19.7) (22.3) (20.8) (21.7)
--------------------------- ------------ ------------- ------------ ------------- ---------- -------------
Underlying operating
profit 364.7 409.4 178.9 206.0 185.8 203.4
--------------------------- ------------ ------------- ------------ ------------- ---------- -------------
Finance costs (227.5) (223.0) (112.5) (114.4) (115.0) (108.6)
Finance income 2.9 2.6 1.4 1.3 1.5 1.3
Underlying net finance
costs (224.6) (220.4) (111.1) (113.1) (113.5) (107.3)
--------------------------- ------------ ------------- ------------ ------------- ---------- -------------
Underlying profit before
tax and associates 140.1 189.0 67.8 92.9 72.3 96.1
Tax on underlying profit (17.6) (0.7) (8.9) (0.3) (8.7) (0.4)
Share of underlying profit
of associates 1.0 1.2 0.4 0.6 0.6 0.6
Remove underlying amounts
attributable to
non-controlling interests 3.7 3.6 1.5 1.4 2.2 2.2
--------------------------- ------------ ------------- ------------ ------------- ---------- -------------
Underlying earnings 127.2 193.1 60.8 94.6 66.4 98.5
--------------------------- ------------ ------------- ------------ ------------- ---------- -------------
Underlying EPS (pence) 9.5p 14.4p 4.5p 7.0p 4.9p 7.3p
--------------------------- ------------ ------------- ------------ ------------- ---------- -------------
Weighted average number
of shares (million) 1,344.5 1,343.7 1,344.7 1,343.8 1,344.3 1,343.6
--------------------------- ------------ ------------- ------------ ------------- ---------- -------------
1 See note 1 for details of re-presented amounts.
Glossary
ABC1 visitors Proportion of visitors within UK social groups A,
B and C1, defined as members of households whose chief earner's
occupation is professional, higher or intermediate management, or
supervisory.
APM (alternative performance measure) Financial measure of
historical or future financial performance, position or cash flows
of the Group that are not defined or specified in IFRS. See
presentation of information section for further details.
Annual property income The Group's share of passing rent plus
the independent external valuers' estimate of annual excess
turnover rent and sundry income such as from car parks and mall
commercialisation.
CACI Provides market research on intu's visitors and UK-wide
location analysis.
Debt to assets ratio Net external debt divided by the market
value of investment and development property. Calculated including
the Group's share of joint ventures.
Diluted figures Reported amounts adjusted to include the effects
of dilutive potential shares issuable under convertible bonds and
employee incentive arrangements.
EPS (earnings per share) Profit/loss for the year attributable
to owners of intu properties plc divided by the weighted average
number of shares in issue during the year.
EPRA European Public Real Estate Association, the publisher of
Best Practice Recommendations intended to make financial statements
of public real estate companies in Europe clearer, more transparent
and comparable.
EPRA cost ratios The ratio of administration and operating costs
(including and excluding direct vacancy costs) divided by gross
rental income, as calculated in accordance with EPRA Best Practice
Recommendations. See EPRA measures section for further details.
EPRA earnings IFRS profit/loss adjusted to exclude valuation
movements, certain exceptional items and related tax, as calculated
in accordance with EPRA Best Practice Recommendations. Per share
measure calculated on basic and diluted shares. See EPRA measures
section for further details.
EPRA NAV IFRS NAV adjusted to remove the fair value of
derivatives (net of tax), goodwill resulting from the recognition
of deferred tax liabilities and deferred tax on investment and
development property as calculated in accordance with EPRA Best
Practice Recommendations. Per share measure calculated on diluted
shares. See EPRA measures section for further details.
EPRA net initial yield (NIY) Annualised net rent on investment
property (after deduction of revenue costs such as head rent,
running void, service charge after shortfalls, empty rates and
merchant association contribution) expressed as a percentage of the
gross market value before deduction of theoretical acquisition
costs, as calculated in accordance with EPRA Best Practice
Recommendations and as provided by the Group's independent external
valuers.
EPRA NNNAV EPRA NAV adjusted to reflect the fair value of
borrowings, derivative financial instruments and deferred tax on
revaluation of investment and development property, as calculated
in accordance with EPRA Best Practice Recommendations. See EPRA
measures section for further details.
EPRA 'topped-up' NIY EPRA NIY adjusted for the expiration of
rent-free periods and other unexpired lease incentives.
EPRA vacancy rate The ERV of vacant space divided by total
ERV.
ERV (estimated rental value) The independent external valuers'
estimate of the Group's share of the current annual market rent of
all lettable space after expiry of concessionary periods.
Exceptional items Items that in the directors' view are required
to be separately disclosed by virtue of their size, nature or
incidence. These include administration expenses - exceptional (as
disclosed in note 3), other finance charges - exceptional (as
disclosed in note 4) and current tax - exceptional (as disclosed in
note 5). Underlying earnings is considered to be a key measure in
understanding the Group's financial performance and excludes
exceptional items.
Headline rent ITZA Annual contracted rent per square foot after
expiry of concessionary periods in terms of Zone A.
Interest cover Underlying operating profit/loss divided by the
net finance costs excluding the change in fair value of financial
instruments, other finance charges - exceptional and amortisation
of the Metrocentre compound financial instrument. Calculated
including the Group's share of joint ventures.
Interest rate protection The proportion of debt where interest
obligations are fixed (including debt where interest rate swaps are
used to fix interest obligations) expressed as a percentage of
total debt excluding finance leases and the Metrocentre compound
financial instrument.
Interest rate swap A derivative financial instrument enabling
parties to exchange interest rate obligations for a predetermined
period. These are used by the Group to convert floating rate debt
to fixed rates.
Like-for-like amounts Investment property which has been owned
throughout both periods without significant capital expenditure in
either period, so that income can be compared on a like-for-like
basis. For the purposes of comparison of capital values, this will
also include assets owned at the previous reporting period end but
not throughout the prior period. See presentation of information
section for further details.
Long-term lease A lease with a term certain of at least five
years.
LTV (loan to value) The ratio of attributable debt to the market
value of an investment property.
MSCI Producer of an independent benchmark of property
returns.
NAV (diluted, adjusted) IFRS NAV adjusted to remove the fair
value of derivatives (net of tax), goodwill resulting from the
recognition of deferred tax liabilities, and deferred tax on
investment and development property and other investments. Per
share measure calculated on a diluted basis.
NAV (net asset value) per share Net assets attributable to
owners of intu properties plc divided by the number of ordinary
shares in issue at the period end.
Net external debt Total borrowings less cash and cash
equivalents and the Metrocentre compound financial instrument
calculated including the Group's share of joint ventures.
Net rental income (NRI) The Group's share of net rents
receivable as shown in the income statement, having taken due
account of non-recoverable costs, bad debt provisions and
adjustments to comply with IFRS including those regarding tenant
incentives.
Nominal equivalent yield Effective annual yield to a purchaser
from an asset at market value before taking account of notional
acquisition costs assuming rent is receivable annually in arrears,
reflecting ERV but disregarding potential changes in market rents,
as determined by the Group's independent external valuers.
Occupancy The ERV of let and under-offer units divided by total
ERV, excluding development and recently completed properties. Units
let to tenants in administration and still trading are treated as
let and those no longer trading are treated as un-let.
Occupancy cost ratio (OCR) The ratio of a unit's occupancy costs
(rent, rates and service charge) against the sales generated.
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.
Contracted annual rents in respect of tenants in administration are
excluded.
PMA Property Market Analysis LLP, a producer of property market
research and forecasting.
PID (Property Income Distribution) A dividend, generally subject
to UK withholding tax at the basic rate of income tax, that a UK
REIT pays to its shareholders from its qualifying rental profits.
Certain classes of shareholder may qualify to receive a PID gross;
shareholders should refer to intugroup.co.uk for further
information. The Group can also pay non-PID dividends that are not
subject to UK withholding tax.
REIT (Real Estate Investment Trust) REITs are internationally
recognised property investment vehicles which have now been
introduced in many countries around the world. Each country has its
own rules, but the broad intention of REITs is to encourage
investment in domestic property by removing tax distortions for
investors.
In order for profits of UK property rental businesses to be
exempt from corporation tax, a REIT must meet certain ongoing rules
and regulations, including the requirement to distribute at least
90 per cent of qualifying rental profits to shareholders.
Withholding tax of 20 per cent is deducted from these PIDs. Profits
from a REIT's non-property business remain subject to normal
corporation tax. The Group elected for REIT status in the UK with
effect from 1 January 2007.
Scrip Dividend Scheme The Group may offer shareholders the
opportunity to participate in the Scrip Dividend Scheme. This
enables participating shareholders to receive shares instead of
cash when a Scrip Alternative is offered for a particular
dividend.
Short-term lease A lease with a term certain of less than five
years.
Tenant (or lease) incentives Any incentives offered to occupiers
to enter into a lease. Typically, incentives are in the form of an
initial rent-free period and/or a cash contribution to fit out the
premises. Under IFRS the value of incentives granted to tenants is
amortised through the income statement on a straight-line basis
over the lease term.
'Topped-up' NIY Equivalent to EPRA 'topped-up' NIY (see
definition).
Total property return (TPR) The change in capital value, less
any capital expenditure incurred, plus net income in the year
expressed as a percentage of the capital employed (opening capital
value plus capital expenditure incurred) in the year as calculated
by MSCI.
Underlying earnings IFRS profit/loss adjusted to exclude
valuation movements, exceptional items and related tax. Per share
measure calculated on basic shares. See presentation of information
section for further details.
Underlying operating profit/loss Consists of net rental income,
net other income and administration expenses - ongoing. Calculated
including the Group's share of joint ventures.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KKDBPBBKBNND
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March 12, 2020 03:00 ET (07:00 GMT)
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