TIDMBA59
RNS Number : 2796S
Capital Shopping Centres PLC
14 May 2009
14 May 2009
Capital Shopping Centres PLC (the "Company")
ANNUAL FINANCIAL REPORT
Capital Shopping Centres PLC has today published its Annual Report for the year
ended 31 December 2008 ("Annual Report"). The Annual Report is available for
download at www.liberty-international.co.uk.
Two copies of the Annual Report have been submitted to the Financial Services
Authority, and will shortly be available for inspection at the Financial
Services Authority's Document Viewing Facility, which is situated at:
The Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Telephone: 020 7066 8333
In accordance with DTR 6.3.5, the following information is extracted from the
Company's Annual Report in unedited full text.
i) Management Report
Principal Activities
The principal activity of the company is the investment and holding of shares in
companies which own and manage prime regional shopping centres.
Capital Shopping Centres (CSC), incorporated in the UK, is the market leader in
prime UK regional shopping centres and has always focused on retail assets of
the highest quality.
CSC's prime regional centres aim to provide variety, diversity and volume of
shops in a single location containing the most attractive flagship and
department stores, offering the best services and providing a safe, stress-free
and rewarding experience.
Review of Business and Future Developments
The group's results and financial position for the year ended 31 December 2008
are set out in full in the consolidated income statement, the group and company
balance sheets, the statements of recognised income and expense, the statements
of cash flows and the related notes. The Group's loss before taxation was
GBP1,551.1 million (2007 loss GBP166.8 million). Net assets attributable to
equity shareholders at 31 December 2008 were GBP279 million (2007 GBP1,839
million).
The result for the year should be considered in the context of the markedly more
adverse UK financial and economic background. The group's results are dominated
by the GBP1,370 million deficit on revaluation of investment properties, an
overall reduction of approximately 25 per cent. This deficit has driven the fall
in the group's net assets attributable to equity shareholders from GBP1,839
million to GBP279 million.
The result for the year has additionally been adversely affected by a GBP221.6
million charge arising from the change in fair value of derivative financial
instruments. This is a non-cash charge relating to the group's interest rate
swap contracts. The charge was caused by the reduction in UK interest rates that
occurred in 2008, in particular during the last quarter of the year.
Net rental income, a key measure of operational performance fell from GBP239.6
million in 2007 to GBP222.8 million in 2008, a reduction of GBP16.8 million (7.0
per cent). The most significant factor in the reduction was the higher level of
bad and doubtful debts and lease incentive write-offs, as illustrated below,
caused by the increased level of tenants entering administration.
+----------------------------------------------------+------------+--+-------------+
| | Year ended | | Year ended |
+----------------------------------------------------+------------+--+-------------+
| | 31 | | 31 December |
| | December | | |
+----------------------------------------------------+------------+--+-------------+
| | 2008 | | 2007 |
+----------------------------------------------------+------------+--+-------------+
| | GBPm | | GBPm |
+----------------------------------------------------+------------+--+-------------+
| | | | |
+----------------------------------------------------+------------+--+-------------+
| | | | |
+----------------------------------------------------+------------+--+-------------+
| Bad and doubtful debts | (6.6) | | (4.2) |
+----------------------------------------------------+------------+--+-------------+
| Lease incentive write-offs | (6.9) | | - |
+----------------------------------------------------+------------+--+-------------+
| | | | |
+----------------------------------------------------+------------+--+-------------+
| | (13.5) | | (4.2) |
+----------------------------------------------------+------------+--+-------------+
Occupancy levels at year end remained high at 99.2 per cent. However the final
quarter in particular saw a number of additional retailer failures.
The resultant reduced occupancy level, adjusted for units affected by
administrations still to be re-let, was 94.0 per cent at 31 December 2008. Good
progress has been made on re-letting in the first quarter of 2009 with the
occupancy level, adjusted for units affected by administrations still to be
re-let, increasing to 95.1 per cent at 31 March 2009.
The continued health of our retail tenant base is of overriding importance to
the group's long term success. We are dealing proactively with tenant issues
which have emerged in 2008 and will undoubtedly continue to be a factor in 2009
given difficult trading conditions for retailers.
The group's retailer tenant mix is diverse, with no significant concentration
exposure to one major tenant. The quality of the tenant roll can be illustrated
by the fact that national or international multiple retailers represent over 90
per cent of the rent roll.
The winning retailer formats in 2008 were value brands and trusted names with a
strong complementary on-line presence. 2008 saw the disappearance of several
high street names such as Woolworths, The Pier and Zavvi together with a number
of smaller and independent retailers.
The most significant rent review activity in 2009, is the second cycle of rent
reviews scheduled for Braehead, Glasgow in September 2009.
Notable active management initiatives in 2008 have been as follows:
* Upgrade of the leisure and dining facilities in the Yellow and Blue Quadrants at
MetroCentre, Gateshead
* A new 36,000 sq.ft. flagship store for New Look at Braehead, Renfrew, Glasgow
and intended relocation of Sainsbury's to the adjoining retail park
* Remodelling of Bromley High Street units to provide 50,600 sq.ft. of new space
at The Glades.
The group's largest development project, St David's, Cardiff, a joint venture
with Land Securities, is on programme to complete in Autumn this year. The
project will extend the existing St. David's centre by 967,500 sq.ft. to 1.4
million sq.ft overall. Overall around 125 new shops and restaurants are being
developed which, when added to the existing centre, will enlarge St. David's
into one of the UK's largest city centre retail schemes.
We are confident of the future prospects for the enlarged St. David's centre
with the existing centre already attracting 22 million customer visits each
year.
Cardiff is expected to rise to 8th place in the UK retail rankings on completion
of the St. David's development which has already attracted several new retailers
to Wales.
The new library was handed over to Cardiff Council on schedule in December and
John Lewis is currently fitting out its store. Cardiff will be its largest
store outside London.
However, we anticipate the letting market to continue to be challenging in 2009
as retailers approach expansion with caution.
Balance sheet
As noted above the group's net assets attributable to equity shareholders were
reduced from GBP1,839 million to GBP279 million, largely due to the property
revaluation deficit in the year of GBP1,370 million. Net debt increased by
GBP261 million to GBP2,736 million at 31 December 2008. Capital expenditure of
GBP137 million in the year and a dividend payment of GBP89 million were the most
significant factors resulting in the increased net debt in the year. This higher
level of debt was funded through further drawings of existing loan facilities,
in particular the loan secured on the Victoria Centre, Nottingham.
Cash Flow
The group cash flow shows a net inflow of GBP35.4 million in 2008 from operating
activities. This is an increase of GBP52.1 million from 2007 largely due to a
favourable movement in working capital balances. The net outflow from investing
activities reflects the net investment in property assets during 2008.
The major components of the GBP136.8 million expenditure on the purchase and
development of property are the expenditure on the group's major developments at
Cardiff (GBP80.9 million) and Oxford (GBP27.6 million), and GBP18.1 million on
upgrading certain facilities at the MetroCentre.
Financial position
The vast majority, over 90 per cent, of the group's debt has been arranged on a
non-recourse, asset-specific basis. This structure permits the group a higher
degree of financial flexibility in dealing with individual property issues than
a financing structure based on a single group-wide borrowing facility.
In addition to the non-recourse debt, the group had two corporate bonds
outstanding at 31 December 2008. The CSC 2009 bonds of GBP31.5 million were
repaid on 31 March 2009. The remaining outstanding bonds of GBP26.7 million are
due for repayment in 2013.
Net external debt, which excludes the MetroCentre compound financial instrument
of GBP120.3 million, increased from GBP2,432 million at 31 December 2007 to
GBP2,616 million at 31 December 2008. The group had cash of GBP25 million at 31
December 2008. At this date the debt to assets ratio was 65 per cent (31
December 2007 47 per cent).
Financial Covenants
The group has financial covenants that apply to GBP2.6 billion of secured
non-recourse debt. The two main covenants are Loan to Value (LTV) and Interest
Cover (IC). The actual requirements vary and are specific to each loan. At 31
December 2008 GBP886 million of non-recourse loans had no loan to value
requirement. At 31 December 2008 the group is fully compliant in all financial
covenant tests certified to lenders.
Compliance with financial covenants is constantly monitored. In the case of CMBS
related debt and non-recourse bank loans, a potential breach would be discussed
with lenders. This could result in a re-negotiation or possible waiving of the
covenant. Actual covenant breaches can be rectified by a number of remedies such
as additional security, temporary cash deposit or partial repayment before an
event of default occurs.
Fair value of debt and financial instruments
During the first half of 2008 interest rates gradually increased with 10 year
sterling swap rates rising from around 5 per cent to peak at 5.75 per cent in
June. In the third quarter of 2008, long term interest rates receded towards
levels at the start of the year. As markets responded to the crisis in the
banking sector and the resultant government support for banks, a rapid downward
shift in market interest rates emerged. The 10 year sterling swap rate at the
end of September 2008 stood at approximately 5 per cent and fell to end the year
at 3.45 per cent, a decline of 1.55 per cent.
At 31 December 2008 the group's net debt was fixed by interest rate swap
contracts in accordance with the group's policy and lender requirements to
eliminate substantially all short term risk and a proportion of medium to longer
term. Whilst interest rate swaps offer protection from higher interest rates and
provide a high degree of predictability on future cashflows, they provide no
opportunity to gain when interest rates fall. Furthermore, the movement on the
revaluation of derivative financial instruments affects the group's income
statement. For the year ended 31 December 2008 the group recorded a deficit in
the income statement of GBP222 million on the change in the value of financial
instruments. Almost all of this movement was recorded in the last quarter of
2008 in line with the decline in interest rates.
A shift up or down in the yield curve has a great impact on the mark-to-market
valuation of long dated interest rate swaps. At 31 December 2008 a movement of
0.1 per cent in the yield curve would affect the fair value of the group's
derivative financial instruments by approximately plus or minus GBP1.2 million.
As at 31 December 2008 the value of derivative financial instruments recorded on
the balance sheet is a liability of GBP248 million. This total includes all
derivatives entered into by the group to hedge its interest rate risk exposures.
Details of the performance of individual completed regional shopping centres and
developments
Completed shopping centres
+--+--------------------------------------------------------------------------+
| -| Lakeside, Thurrock |
+--+--------------------------------------------------------------------------+
| | (Market value GBP971 million, 24 per cent of group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Footfall and estimated retail sales were both positive on the previous |
| | year |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Occupancy at 31 December 2008 was 98.6 per cent, 94.7 per cent adjusted |
| | for tenancies in administration. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| -| MetroCentre, Gateshead (excluding Retail Park) |
+--+--------------------------------------------------------------------------+
| | (Market Value GBP790 million, 20 per cent of group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Footfall was marginally down on 2007 as the centre was undergoing |
| | development works in the Yellow and |
+--+--------------------------------------------------------------------------+
| | Blue Quadrants. Estimated retail sales were also marginally below the |
| | previous year for the same reason. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Occupancy at 31 December 2008 was 99.3 per cent, 93.2 per cent adjusted |
| | for tenancies in administration. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Works commenced on site to upgrade the leisure and dining facilities in |
| | both the Yellow and Blue Quadrants. |
+--+--------------------------------------------------------------------------+
| | The project will open in phases between Spring 2009 and Autumn 2010 and |
| | will include 8 new restaurants, a |
+--+--------------------------------------------------------------------------+
| | new Odeon cinema and family entertainment centre. 74 per cent of the |
| | anticipated income from the upgrade |
+--+--------------------------------------------------------------------------+
| | is either exchanged or in solicitors' hands, equating to 83 per cent by |
| | area. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
+--+--------------------------------------------------------------------------+
| -| Braehead, Renfrew, Glasgow |
+--+--------------------------------------------------------------------------+
| | (Market value GBP563 million, 14 per cent of group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Footfall and total estimated retail sales in 2008 were impacted, as |
| | anticipated, by the opening of the nearby |
+--+--------------------------------------------------------------------------+
| | retail development at Silverburn. From similar experience elsewhere in |
| | the UK, we expect this impact to |
+--+--------------------------------------------------------------------------+
| | reduce in 2009 and growth to resume thereafter. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Occupancy at 31 December 2008 was 99.3 per cent, 94.6 per cent adjusted |
| | for tenancies in administration. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | A new 36,000 sq.ft. flagship store for New Look opened prior to |
| | Christmas trading and planning consent was |
+--+--------------------------------------------------------------------------+
| | granted to relocate Sainsbury's from the shopping centre to our |
| | adjacent retail park. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Active negotiations are taking place for the reletting of the |
| | Sainsbury's store in the shopping centre. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| -| The Harlequin, Watford |
+--+--------------------------------------------------------------------------+
| | (Market value GBP379 million, 9 per cent of group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | New retail development openings within The Harlequin's catchment area |
| | have as anticipated had a limited |
+--+--------------------------------------------------------------------------+
| | impact on footfall and sales. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Occupancy at the year end was 100 per cent, 92 per cent adjusted for |
| | tenancies in administration. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Whilst there are no true voids, Watford had 12 units affected by |
| | administrations during the period, reducing |
+--+--------------------------------------------------------------------------+
| | occupancy from 100 per cent to 92.0 per cent. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| -| Victoria Centre, Nottingham |
+--+--------------------------------------------------------------------------+
| | (Market value GBP351 million, 9 per cent of group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Footfall and estimated retail sales were down slightly on 2007, in part |
| | due to repair works to the car park. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Nottingham continues to hold firm as a strong retail destination |
| | despite recent development at Derby and |
+--+--------------------------------------------------------------------------+
| | Leicester. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Occupancy at year end was 100 per cent, 92.4 per cent adjusted for |
| | tenancies in administration. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| -| Chapelfield, Norwich |
+--+--------------------------------------------------------------------------+
| | (Market value GBP248m, 6 per cent of group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Chapelfield which opened in Autumn 2005 has now firmly established |
| | itself as a central part of the City |
+--+--------------------------------------------------------------------------+
| | Centre with consumer shopping patterns responding to the high quality |
| | tenant mix and shopper facilities. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Both footfall and estimated retail sales have seen positive year on |
| | year growth. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | At 31 December 2008, occupancy was 99.8 per cent, 95.5 per cent |
| | adjusted for tenancies in administration. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| -| The Potteries, Hanley, Stoke-on-Trent |
+--+--------------------------------------------------------------------------+
| | (Market value GBP211m, 5 per cent of group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Both footfall and estimated retail sales saw positive growth in 2008. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | With 2 true voids at year end, 12 units in the centre were affected by |
| | administrations. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| -| The Glades, Bromley |
+--+--------------------------------------------------------------------------+
| | (Market value GBP195 million, 5 per cent of the group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | The Glades experienced positive footfall and estimated retail sales in |
| | line with the previous year. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Occupancy at year end was 99.1 per cent, 93.6 per cent adjusted for |
| | tenancies in administration. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | The remodelling of various High Street investment properties to provide |
| | 50,600 sq.ft. of new retail space |
+--+--------------------------------------------------------------------------+
| | opened for trade in May including new stores for H&M, Mango and Body |
| | Shop. |
+--+--------------------------------------------------------------------------+
Development Projects
+--+--------------------------------------------------------------------------+
| -| St David's Centre, Cardiff |
+--+--------------------------------------------------------------------------+
| | (Market value of St David's 1 GBP71 million, development value of St |
| | David's 2 GBP90 million, 4 per cent of the |
+--+--------------------------------------------------------------------------+
| | group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Our retail led development in Cardiff with our joint venture partner |
| | Land Securities is on programme to |
+--+--------------------------------------------------------------------------+
| | complete in Autumn this year. The project will extend the existing St. |
| | David's centre by 967,500 sq.ft. to 1.4 |
+--+--------------------------------------------------------------------------+
| | million sq.ft overall. Overall around 125 new shops and restaurants are |
| | being developed which, when added |
+--+--------------------------------------------------------------------------+
| | to the existing centre, will enlarge St. David's into one of the UK's |
| | largest city centre retail schemes. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | We are confident of the future prospects for the enlarged St. David's |
| | centre with the existing centre already |
+--+--------------------------------------------------------------------------+
| | attracting 22 million customer visits each year. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Cardiff is expected to rise to 8th place in the UK retail rankings on |
| | completion of the St. David's development |
+--+--------------------------------------------------------------------------+
| | which has already attracted several new retailers to Wales. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | The new library was handed over to Cardiff Council on schedule in |
| | December and John Lewis is currently |
+--+--------------------------------------------------------------------------+
| | fitting out its store. Cardiff will be its largest store outside |
| | London. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | In 2008 a significant number of new shopping centres opened during the |
| | year adding over 10 million square |
+--+--------------------------------------------------------------------------+
| | feet of retail space, generally well let. In 2009, only a small number |
| | of large retail schemes are due to open |
+--+--------------------------------------------------------------------------+
| | including St David's Cardiff. Following this, supply will be curtailed |
| | sharply, as the current economic |
+--+--------------------------------------------------------------------------+
| | environment has halted many projects in the pipeline. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | However, we anticipate the letting market to continue to be challenging |
| | in 2009 as retailers approach |
+--+--------------------------------------------------------------------------+
| | expansion with caution. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| -| Westgate Centre, Oxford |
+--+--------------------------------------------------------------------------+
| | (Market value GBP65 million, 2 per cent of group total) |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | Whilst we are positive about the long term prospects for Oxford as a |
| | retail destination, current market |
+--+--------------------------------------------------------------------------+
| | conditions do not meet our criteria for an immediate redevelopment of |
| | the Westgate Centre. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | We therefore took the decision in 2008 to put the major redevelopment |
| | of this centre on hold, with the results |
+--+--------------------------------------------------------------------------+
| | for the year reflecting the impact of writing-off abortive development |
| | costs. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | In terms of the arrangements with our joint venture partner, we have |
| | acquired their residual interest, with |
+--+--------------------------------------------------------------------------+
| | completion of the purchase having taken place on 13 February 2009. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | With the site now under one ownership, in CSC's control, we have |
| | greater flexibility in analysing future |
+--+--------------------------------------------------------------------------+
| | development options. |
+--+--------------------------------------------------------------------------+
| | |
+--+--------------------------------------------------------------------------+
| | In the meantime, we have full control of management with considerable |
| | asset management opportunities to |
+--+--------------------------------------------------------------------------+
| | increase centre attractiveness and income. |
+--+--------------------------------------------------------------------------+
Prospects
2009 will undoubtedly be a further difficult year for the UK economy and the
property industry. However, a combination of important factors which should be
positive for a recovery are in place but have yet to take effect. In particular,
the fall in sterling, lower prices for fuel and commodities, and
Government-induced measures such as lower interest rates, the recapitalisation
of the banking sector and the reduction in VAT from 17.5 per cent to 15 per cent
should in aggregate be beneficial.
Furthermore, while the retail failures in 2008 and early 2009 will have a
negative impact on the group's net rental income for 2009, the process of
eliminating less successful retailers which accelerates when market conditions
are more difficult is ultimately a healthy one. The remaining retailers should
benefit from reduced competition and in due course along with new entrants to
the sector will look to expand to fill the available space, particularly in
quality locations such as we possess. The group anticipates that retail is
likely to be at the forefront of economic recovery in the UK and, given the key
advantage of our close working relationship with the UK's major retailers, the
group should be an early beneficiary.
Key Performance Indicators
The performance of the business is monitored through a number of Key Performance
Indicators (KPI's) including both financial and non-financial measures. These
are included in the appropriate sections of these financial statements with
commentary discussing performance. Certain KPI's can be found in this business
review containing details of our portfolio and operational performance and
additionally in the notes to these financial statements, in particular, note 16.
Directors' responsibility statement
We confirm to the best of our knowledge:
(a) the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the company and the undertakings
included in the consolidation taken as a whole; and
(b) the Review of Business and Future Development and Key risks and
uncertainties include a fair review of the development and performance of the
business and the position of the company and the undertakings included in the
consolidation taken as a whole, together with a description of the principal
risks and uncertainties that they face.
A list of current Directors is maintained on the Liberty International PLC
website www.liberty-international.co.uk.
Signed on behalf of the Board on
13 May 2009
Loraine Woodhouse
Director
Kay Chaldecott
Director
ii) Key Risks and Uncertainties
The key risks and uncertainties facing the group are as set out in the table
below which is reproduced from the Annual Report:
+----------------+---------------------+----------------+-----------------------------+
| Risk | Description | Impact | Mitigation |
+----------------+---------------------+----------------+-----------------------------+
| Financing | | | |
+----------------+---------------------+----------------+-----------------------------+
| These risks are discussed further in note 16. |
+-------------------------------------------------------------------------------------+
| Liquidity | Reduced | Insufficient | Efficient treasury |
| | availability | funds to | management and strict |
+----------------+---------------------+----------------+-----------------------------+
| | | meet | credit control. |
| | | requirements | |
+----------------+---------------------+----------------+-----------------------------+
| Property | Property values | Impact on | Regular monitoring of LTV; |
| values | decrease | covenants | covenant |
+----------------+---------------------+----------------+-----------------------------+
| | | | headroom maintained; |
| | | | regular market |
+----------------+---------------------+----------------+-----------------------------+
| | | | valuations; focus on |
| | | | quality assets; |
+----------------+---------------------+----------------+-----------------------------+
| | | | regular portfolio reviews |
| | | | identifying |
+----------------+---------------------+----------------+-----------------------------+
| | | | properties for disposal. |
+----------------+---------------------+----------------+-----------------------------+
| Economic | Reduction in rental | Impact on | Internal Group limits on |
| | income | covenants | debts to assets |
+----------------+---------------------+----------------+-----------------------------+
| downturn | | | and interest rate ratios. |
+----------------+---------------------+----------------+-----------------------------+
| Interest | Interest rates | Lack of | Hedging to establish |
| cover | fluctuate | certainty over | long-term certainty. |
+----------------+---------------------+----------------+-----------------------------+
| | | interest costs | |
+----------------+---------------------+----------------+-----------------------------+
| REIT | Breach REIT | Tax penalty or | Regular monitoring of |
| | conditions | be | compliance and |
+----------------+---------------------+----------------+-----------------------------+
| | | forced to | tolerances. |
| | | leave the | |
+----------------+---------------------+----------------+-----------------------------+
| | | REIT regime | |
+----------------+---------------------+----------------+-----------------------------+
| Joint | Reliance on JV | Partners under | Agreements are in place and |
| ventures | partners' | | |
+----------------+---------------------+----------------+-----------------------------+
| | performance and | perform or | regular communication with |
| | reporting | provide | partners. |
+----------------+---------------------+----------------+-----------------------------+
| | | incorrect | |
| | | information | |
+----------------+---------------------+----------------+-----------------------------+
| Asset management | | |
+--------------------------------------+----------------+-----------------------------+
| Tenants | Tenant failure | Financial loss | Regular reporting and |
| | | | modelling of |
+----------------+---------------------+----------------+-----------------------------+
| | | | covenant cover; credit |
| | | | control. |
+----------------+---------------------+----------------+-----------------------------+
| Voids | Increased voids, | Financial loss | Policy of active tenant mix |
| | failure to | | management |
+----------------+---------------------+----------------+-----------------------------+
| | let developments | | |
+----------------+---------------------+----------------+-----------------------------+
| Reputation | | | |
+----------------+---------------------+----------------+-----------------------------+
| Responsibility | Failure of Health & | Impact on | Annual audits carried out |
| for | Safety | reputation | by external |
+----------------+---------------------+----------------+-----------------------------+
| visitors to | | or potential | consultants. Health & |
| | | criminal/ | Safety policies in |
+----------------+---------------------+----------------+-----------------------------+
| shopping | | civil | place. |
| centres | | proceedings | |
+----------------+---------------------+----------------+-----------------------------+
| Disaster/ | Effect of natural | Impact on | Security team training and |
| | | footfall and | procedures in |
+----------------+---------------------+----------------+-----------------------------+
| National | disaster/terrorist | retailer | shopping centres. |
| security | strike | income; | |
+----------------+---------------------+----------------+-----------------------------+
| | | adverse | Implementation of NATSCO |
| | | publicity | |
+----------------+---------------------+----------------+-----------------------------+
| | | | recommendations. Security |
| | | | and Health |
+----------------+---------------------+----------------+-----------------------------+
| | | | & Safety policies and |
| | | | procedures in |
+----------------+---------------------+----------------+-----------------------------+
| | | | shopping centres/offices. |
| | | | Terrorist |
+----------------+---------------------+----------------+-----------------------------+
| | | | insurance is in place. |
+----------------+---------------------+----------------+-----------------------------+
+--------------+---------------------+----------------+-----------------------------+
| People/HR | | | |
+--------------+---------------------+----------------+-----------------------------+
| Staff | Key staff | Loss of key | Succession Planning; |
| | | members | performance |
+--------------+---------------------+----------------+-----------------------------+
| | | of the | evaluation; training and |
| | | management | development; |
+--------------+---------------------+----------------+-----------------------------+
| | | team could | incentive reward. |
| | | impact | |
+--------------+---------------------+----------------+-----------------------------+
| | | adversely on | |
| | | the | |
+--------------+---------------------+----------------+-----------------------------+
| | | Group's | |
| | | success | |
+--------------+---------------------+----------------+-----------------------------+
| Development | | | |
+--------------+---------------------+----------------+-----------------------------+
| Time | Planning | Securing | Policy of sustainable |
| | | planning | development and |
+--------------+---------------------+----------------+-----------------------------+
| | | consent for | regeneration of brownfield |
| | | | sites. |
+--------------+---------------------+----------------+-----------------------------+
| | | developments | Constructive dialogue with |
| | | | planning |
+--------------+---------------------+----------------+-----------------------------+
| | | | authorities. |
+--------------+---------------------+----------------+-----------------------------+
| Costs and | Construction cost | Returns | Approval process based on |
| letting | overrun, | reduced by | detailed |
+--------------+---------------------+----------------+-----------------------------+
| risk | low occupancy | increased | project costs; regular |
| | levels | costs or | monitoring and |
+--------------+---------------------+----------------+-----------------------------+
| | | delay in | forecasting of project |
| | | securing | costs and rental |
+--------------+---------------------+----------------+-----------------------------+
| | | Tenants | Income; and fixed cost |
| | | | contracts. |
+--------------+---------------------+----------------+-----------------------------+
iii) Audited Financial Statements
A condensed set of financial statements for the year ended 31 December 2008 are
contained below in unedited full text from the company's annual report
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
+-------------------------------------------------+-------+-----------+--+----------+
| | | 2008 | | 2007 |
+-------------------------------------------------+-------+-----------+--+----------+
| | | GBPm | | GBPm |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Revenue | | 329.4 | | 319.3 |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Rental income | | 268.8 | | 286.6 |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Rental expenses | | (46.0) | | (47.0) |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Net rental income | | 222.8 | | 239.6 |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Property trading profits | | 0.3 | | 1.5 |
+-------------------------------------------------+-------+-----------+--+----------+
| Deficit on revaluation and sale of investment | | | | |
| and | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| development property | | (1,370.7) | | (230.9) |
+-------------------------------------------------+-------+-----------+--+----------+
| Administration expenses | | (7.7) | | (11.3) |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Operating loss | | (1,155.3) | | (1.1) |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Interest payable | | (184.7) | | (167.2) |
+-------------------------------------------------+-------+-----------+--+----------+
| Interest receivable | | 9.3 | | 14.3 |
+-------------------------------------------------+-------+-----------+--+----------+
| Other finance income/(costs) | | 1.2 | | (0.8) |
+-------------------------------------------------+-------+-----------+--+----------+
| Change in fair value of derivative financial | | (221.6) | | (12.0) |
| instruments | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Net finance costs | | (395.8) | | (165.7) |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Loss before tax | | (1,551.1) | | (166.8) |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Current tax | | 1.3 | | 1.3 |
+-------------------------------------------------+-------+-----------+--+----------+
| REIT entry charge | | (2.5) | | (2.5) |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| | | (1.2) | | (1.2) |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Loss for the period | | (1,552.3) | | (168.0) |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Loss attributable to Minority Interest | | 81.5 | | 46.1 |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| Loss for the period attributable to equity | | (1,470.8) | | (121.9) |
| shareholders | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
| | | | | |
+-------------------------------------------------+-------+-----------+--+----------+
The notes form part of these financial statements.
BALANCE SHEETS
AS AT 31 DECEMBER 2008
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | Restated | | | | Restated |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | Group | | Group | | Company | | Company |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Non current assets | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Investment properties | 3,987.4 | | 5,175.4 | | - | | - |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Investment in group undertakings | - | | - | | 736.8 | | 1,063.0 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Trade and other receivables | 31.7 | | 35.6 | | - | | - |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | 4,019.1 | | 5,211.0 | | 736.8 | | 1,063.0 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Current assets | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Trading properties | 13.3 | | 20.5 | | - | | - |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Derivative financial instruments | - | | 15.9 | | - | | - |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Trade and other receivables | 87.6 | | 260.0 | | 1,267.3 | | 1,484.8 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Cash and cash equivalents | 24.5 | | 59.7 | | 8.6 | | 8.5 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | 125.4 | | 356.1 | | 1,275.9 | | 1,493.3 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Total assets | 4,144.5 | | 5,567.1 | | 2,012.7 | | 2,556.3 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Current liabilities | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Trade and other payables | (804.6) | | (922.0) | | (1,399.4) | | (1,612.0) |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Borrowings | (70.7) | | (31.0) | | (31.5) | | - |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Derivative financial instruments | (248.0) | | (41.1) | | - | | - |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | (1,123.3) | | (994.1) | | (1,430.9) | | (1612.0) |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Non-current liabilities | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Borrowings | (2,689.7) | | (2,503.3) | | (26.7) | | (58.2) |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Deferred tax | 0.1 | | 0.1 | | - | | - |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Other payables | (52.3) | | (79.6) | | (10.9) | | (13.3) |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | (2,741.9) | | (2,582.8) | | (37.6) | | (71.5) |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Total liabilities | (3,865.2) | | (3,576.9) | | (1,468.5) | | (1,683.5) |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Net assets | 279.3 | | 1,990.2 | | 544.2 | | 872.8 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Equity | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Called up ordinary share capital | 197.3 | | 197.3 | | 197.3 | | 197.3 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Share premium account | 646.9 | | 646.9 | | 646.9 | | 646.9 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Capital redemption reserve | 8.3 | | 8.3 | | 8.3 | | 8.3 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Retained earnings | (573.2) | | 986.6 | | (308.3) | | 20.3 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Attributable to equity | 279.3 | | 1,839.1 | | 544.2 | | 872.8 |
| shareholders | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Minority interest | - | | 151.1 | | - | | - |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Total equity | 279.3 | | 1,990.2 | | 544.2 | | 872.8 |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+------------------------------------+-----------+--+-----------+--+-----------+--+-----------+
The notes form part of these financial statements.
STATEMENTS OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31 DECEMBER 2008
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| | | | | | | | Restated |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| | Group | | Group | | Company | | Company |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| | | | | | | | |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| (Loss)/profit for the period | (1,470.8) | | (121.9) | | (239.6) | | 71.1 |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| | | | | | | | |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| | | | | | | | |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| Total recognised income and | | | | | | | |
| expense for the | | | | | | | |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| period | (1,470.8) | | (121.9) | | (239.6) | | 71.1 |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
| | | | | | | | |
+------------------------------------+-----------+-+-----------+-+-----------+-+----------+
The notes form part of these financial statements.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2008
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | Group | Group | Company | Company |
+--------------------------------------+---------+------------+-----------+-------------+
| | | Restated | | | | Restated |
+--------------------------------------+---------+------------+--+--------+--+----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Cash generated from operations | 242.9 | | 164.8 | | 90.6 | | 13.2 |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Interest paid | (191.6) | | (182.0) | | (41.8) | | (3.6) |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Interest received | 9.3 | | 14.3 | | 40.4 | | - |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Tax received/(paid) | 2.0 | | (0.1) | | (0.1) | | 1.2 |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| REIT entry charge paid | (27.2) | | (13.7) | | - | | - |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Cash flows from operating activities | 35.4 | | (16.7) | | 89.1 | | 10.8 |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Purchase and development of property | (136.8) | | (191.0) | | - | | - |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Sale of property | 2.2 | | 26.4 | | - | | - |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Sale of partial interest in property | - | | 192.0 | | - | | - |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Cash flow from investing activities | (134.6) | | 27.4 | | - | | - |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Borrowings repaid | (32.7) | | (192.0) | | - | | (10.0) |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Borrowings drawn | 180.0 | | - | | - | | - |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Partnership equity introduced | 5.7 | | 184.0 | | - | | - |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Equity dividends paid | (89.0) | | - | | (89.0) | | - |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Cash flows from financing activities | 64.0 | | (8.0) | | (89.0) | | (10.0) |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Net (decrease)/increase in cash | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| and cash equivalents | (35.2) | | 2.7 | | 0.1 | | 0.8 |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Cash and cash equivalents at | 59.7 | | 57.0 | | 8.5 | | 7.7 |
| beginning of the year | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| Cash and cash equivalents at end of | 24.5 | | 59.7 | | 8.6 | | 8.5 |
| the year | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
| | | | | | | | |
+--------------------------------------+---------+--+---------+--+--------+--+----------+
The notes form part of these financial statements.
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2008
1. Accounting convention and basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards, as adopted by the European Union ("IFRS"), IFRIC
interpretations and with those parts of the Companies Act 1985 applicable to
companies reporting under IFRS. The directors have taken advantage of the
exemption offered by Section 230 of the Companies Act not to present a separate
income statement for the parent company.
The group's business activities have been affected by the markedly more adverse
UK financial and economic background. A description of the impact and the
factors likely to affect the group's future development, performance and
position are set out in the Review of Business and Future Developments. The
financial position of the group, its cash flows, debt structure, borrowing
facilities and principal financial risks are described in the Review of Business
and Future Developments. In addition the notes to these financial statements
includes the group's financial risk management objectives; details of its
financial instruments and hedging activities; its exposures to liquidity risk
and details of its capital structure.
The group's development and future performance is likely to be affected by the
increased risk of potential breaches of a number of the group's subsidiaries'
non-recourse bank loans, if there are further reductions in commercial property
valuations and net rental income. This may, in turn, increase the risk that
certain group and related companies may request settlement of balances due to
them.
In order to mitigate this risk the group has initiated discussions with
non-recourse lenders where the group considers the arrangements are particularly
sensitive to falls in property valuations or reduction in net rental income. In
addition, the directors have considered the level of financial support that may
be made available to the company by the ultimate controlling entity, Liberty
International PLC.
As a consequence of these actions, the directors believe the company and the
group are able to manage the business risks they face despite the difficult
conditions in the UK commercial property market.
The directors have therefore concluded, based on cash flow projections taking
account of the factors listed above, that there is a reasonable expectation that
the company and the group have adequate resources to continue in operational
existence for the foreseeable future and have therefore prepared the financial
statements on a going concern basis.
The financial statements have been prepared under the historical cost convention
as modified by the revaluation of properties, available for sale investments,
financial assets and liabilities held for trading. A summary of the more
important group accounting policies is set out below, together with an
explanation of where changes have been made to previous policies on the adoption
of new accounting standards in the year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates. Where such judgements are made they are included within
the accounting policies below.
Standards and guidelines relevant to the group that were in issue at the date of
approval of the financial statements but not yet effective for the current
accounting period were:
IFRS 3 (amendment), 'Business Combinations', effective for annual periods
beginning on or after 1 July 2009.
IFRS 8, 'Operating Segments', effective for accounting periods beginning on or
after 1 January 2009.
IAS 23 (Revised) 'Borrowing Costs', effective for accounting periods beginning
on or after 1 January 2009.
IAS 27 (amendment), 'Consolidated and Separate Financial Statements', effective
for accounting periods beginning on or after 1 January 2009.
IAS 39 (amendment), 'Financial Instruments:
Recognition and Measurement', effective for accounting periods beginning on or
after 1January 2009.
These pronouncements, when applied, are not expected to have a material impact
on the financial statements, but will result in changes to presentation or
disclosure. The assessment of new standards, amendments and interpretations
issued but not effective, not included above are not anticipated to have a
material impact on the financial statements.
During 2008, the following accounting standards and guidance were adopted by the
group: IAS 1 (amendment), 'Presentation of Financial Statements', effective for
annual periods beginning on 1 January 2009, but adopted early.
IAS 16 (amendment) 'Property, Plant and Equipment', and IAS 40 (amendment)
'Investment Property' effective for annual periods beginning on 1 January 2009,
but adopted early.
These pronouncements either had no impact on the financial statements or
resulted in changes to presentation and disclosure only.
These accounts include the consolidation of The MetroCentre Partnership, The
Victoria Centre Partnership, The Chapelfield Partnership, The Potteries Shopping
Centre Limited Partnership, The Westgate Partnership, Xscape Braehead
Partnership and St. David's Limited Partnership. The members of these qualifying
partnerships have taken advantage of the exemptions in the Statutory Instrument
1993/1820.
The accounting policies set out in the company's 2007 annual report have been
consistently applied in the preparation of this financial information.
2. Basis of consolidation
The consolidated financial information includes financial information in respect
of the company and its subsidiary undertakings. Subsidiary undertakings are
those entities in which the group has the ability to govern the financial and
operating policies, whether through a majority of the voting rights or
otherwise.
The group's interests in jointly controlled entities are accounted for using
proportional consolidation. The group's share of the assets, liabilities, income
and expenses are combined with the equivalent items in the consolidated
financial statements on a line-by-line basis.
3. Restatement of the prior year comparatives
Derivative financial instruments are classified as held for trading per IAS 39
'Financial Instruments: recognition and measurement', and presented as current
in the balance sheet in accordance with IAS 1 'Presentation of Financial
Statements'. The prior year balances have been restated to provide appropriate
comparison. There is no impact on the income statement for the year ended 31
December 2007 as a result of this reclassification. Derivative current assets
are shown separately on the face of the balance sheet whereas previously they
were aggregated within trade and other receivables.
Additionally, tax liabilities which were previously disclosed on the face of the
balance sheet are now aggregated within trade and other receivables.
In the prior year, amounts paid in relation to REIT entry charges were included
within the change in trade and other payables. An amount of GBP13.7m has been
reclassified to REIT entry charge paid to provide appropriate comparison.
Investments in group undertakings for the year ended 31 December 2007 included
GBP78.3 million relating to CSC (Eldon Square) Limited. This was in fact
disposed during the year, investments in group undertakings have therefore been
restated to correctly reflect this. As the consideration received on sale
remained unpaid at 31 December 2007 this has resulted in an increase in trade
and other receivables of GBP79.9m. Profit arising on the sale of GBP1.6m has
been taken to retained earnings in the balance sheet and profit on sale of
subsidiary and adjusted profit before tax in the cashflow statement.
In the cashflow statement for 31 December 2007, a loss on termination of a
financial instrument of GBP1.3m was misreported as a loss on sale of subsidiary.
The comparatives have therefore been restated to adjust this loss against profit
before tax.
Additionally in the cashflow statement for 31 December 2007, interest paid of
GBP3.6m was omitted as an adjustment to profit before tax and misreported as a
change in trade and other payables. This has been adjusted to provide
appropriate comparison.
The prior year cash flows have been restated to reallocate the net proceeds
received from the sale of partial interest in the MetroCentre Partnership. This
has resulted in restatement for the year to 31 December 2007 of GBP192.0 million
from sale of property to sale of partial interest in property. There is no
impact on the balance sheet or income statement for the year ended 31 December
2007 as a result of this reclassification. Sale of partial interest in property
is shown separately on the face of the cash flow statement whereas previously
this had been included within sale of property.
In 2007 equity dividends paid by the company to its immediate parent were
reported net of dividends received from subsidiary undertakings. As a result
equity dividends paid as disclosed in the analysis of retained earnings for the
company were understated by GBP50.7m with the company's profit for the year as
disclosed in the reconciliation of retained earnings also understated by
GBP50.7m.
The impact on the individual lines is as follows:
+-------------------------------------------------------------------+-----------+
| | Company |
+-------------------------------------------------------------------+-----------+
| | 2007 |
+-------------------------------------------------------------------+-----------+
| | GBPm |
+-------------------------------------------------------------------+-----------+
| Balance sheet | |
+-------------------------------------------------------------------+-----------+
| Decrease in investment in group companies | (78.3) |
+-------------------------------------------------------------------+-----------+
| Increase in current trade and other receivables | 79.9 |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| Increase in retained earnings | 1.6 |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| Cash flow statement | |
+-------------------------------------------------------------------+-----------+
| (Loss)/profit before tax | 53.7 |
+-------------------------------------------------------------------+-----------+
| Profit on sale of subsidiaries | (2.9) |
+-------------------------------------------------------------------+-----------+
| Interest payable | 3.6 |
+-------------------------------------------------------------------+-----------+
| Change in movement in trade and other payables | (54.4) |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
+-------------------------------------------------------------------+-----------+
| | Group |
+-------------------------------------------------------------------+-----------+
| | 2007 |
+-------------------------------------------------------------------+-----------+
| | GBPm |
+-------------------------------------------------------------------+-----------+
| Balance sheet | |
+-------------------------------------------------------------------+-----------+
| Increase in current derivative assets | 15.9 |
+-------------------------------------------------------------------+-----------+
| Decrease in current trade and other receivables | (14.5) |
+-------------------------------------------------------------------+-----------+
| Increase of tax liability | (1.4) |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| Cash flow statement | |
+-------------------------------------------------------------------+-----------+
| Sale of property | (192.0) |
+-------------------------------------------------------------------+-----------+
| Sale of partial interest in property | 192.0 |
+-------------------------------------------------------------------+-----------+
| Change in movement in trade and other payables | 13.7 |
+-------------------------------------------------------------------+-----------+
| Increase in REIT entry charge paid | (13.7) |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
4. Segmental reporting
The group specialises in one business segment with one class of asset in one
geographical location, namely regional shopping centres within the United
Kingdom. The group has one operating division which it manages and reports as
one business.
5. Deficit on revaluation and sale of investment and development property
+----------------------------------------------------------+-----------+--+---------+
| | 2008 | | 2007 |
+----------------------------------------------------------+-----------+--+---------+
| | GBPm | | GBPm |
+----------------------------------------------------------+-----------+--+---------+
| | | | |
+----------------------------------------------------------+-----------+--+---------+
| Deficit on revaluation of investment | (1,370.0) | | (235.7) |
| and development property | | | |
+----------------------------------------------------------+-----------+--+---------+
| | | | |
+----------------------------------------------------------+-----------+--+---------+
| (Deficit)/gain on sale of investment | (0.7) | | 4.8 |
| property | | | |
+----------------------------------------------------------+-----------+--+---------+
| | | | |
+----------------------------------------------------------+-----------+--+---------+
| | | | |
+----------------------------------------------------------+-----------+--+---------+
| Deficit on revaluation and sale of | (1,370.7) | | (230.9) |
| investment property | | | |
+----------------------------------------------------------+-----------+--+---------+
| | | | |
+----------------------------------------------------------+-----------+--+---------+
6. Net finance costs
+--------------------------------------------------+-----------+--+-----------+
| | 2008 | | 2007 |
+--------------------------------------------------+-----------+--+-----------+
| | GBPm | | GBPm |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| On bank overdrafts and loans | (155.0) | | (158.7) |
+--------------------------------------------------+-----------+--+-----------+
| On Eurosterling bonds | (4.0) | | (3.6) |
+--------------------------------------------------+-----------+--+-----------+
| On amounts due to related companies | (38.1) | | (15.6) |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| Gross interest payable | (197.1) | | (177.9) |
+--------------------------------------------------+-----------+--+-----------+
| Interest capitalised on investment properties | 12.4 | | 10.7 |
| under development | | | |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| Interest payable | (184.7) | | (167.2) |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| On amounts due from parent undertaking | 1.1 | | 3.7 |
+--------------------------------------------------+-----------+--+-----------+
| Other | 8.2 | | 10.6 |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| Interest receivable | 9.3 | | 14.3 |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| Other finance income/(costs) | | | |
+--------------------------------------------------+-----------+--+-----------+
| Gain on termination of financial instruments | 3.2 | | - |
+--------------------------------------------------+-----------+--+-----------+
| Amortisation of MetroCentre compound financial | (2.0) | | - |
| instrument | | | |
+--------------------------------------------------+-----------+--+-----------+
| Other | - | | (0.8) |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| | 1.2 | | (0.8) |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| Change in fair value of derivative financial | (221.6) | | (12.0) |
| instruments | | | |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
| Net finance costs | (395.8) | | (165.7) |
+--------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------+-----------+--+-----------+
7. Taxation
Taxation charge for the financial year
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| | | | REIT entry | | | | |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| | Current | | charge | | 2008 | | 2007 |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| | | | | | | | |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| Tax on non-exceptional | 1.3 | | - | | 1.3 | | 1.3 |
| items | | | | | | | |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| Exceptional tax | - | | (2.5) | | (2.5) | | (2.5) |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| | | | | | | | |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| | | | | | | | |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| | 1.3 | | (2.5) | | (1.2) | | (1.2) |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
| | | | | | | | |
+----------------------------+-----------+--+------------+--+-----------+--+----------+
+-------------------------------------------------------+-----------+--+----------+
| Taxation charge for the financial | 2008 | | 2007 |
| year | | | |
+-------------------------------------------------------+-----------+--+----------+
| | GBPm | | GBPm |
+-------------------------------------------------------+-----------+--+----------+
| | | | |
+-------------------------------------------------------+-----------+--+----------+
| Current UK corporation tax at | 0.7 | | 0.6 |
| 28.5% (2007 30%) on profits | | | |
+-------------------------------------------------------+-----------+--+----------+
| Prior year items | (2.0) | | (1.9) |
+-------------------------------------------------------+-----------+--+----------+
| | | | |
+-------------------------------------------------------+-----------+--+----------+
| Current tax credit on profits | | | |
| excluding exceptional items and | | | |
+-------------------------------------------------------+-----------+--+----------+
| property disposals | (1.3) | | (1.3) |
+-------------------------------------------------------+-----------+--+----------+
| | | | |
+-------------------------------------------------------+-----------+--+----------+
| | | | |
+-------------------------------------------------------+-----------+--+----------+
| Tax credit on profits excluding | | | |
| exceptional items and | | | |
+-------------------------------------------------------+-----------+--+----------+
| property disposals | (1.3) | | (1.3) |
+-------------------------------------------------------+-----------+--+----------+
| | | | |
+-------------------------------------------------------+-----------+--+----------+
| REIT entry charge | 2.5 | | 2.5 |
+-------------------------------------------------------+-----------+--+----------+
| | | | |
+-------------------------------------------------------+-----------+--+----------+
| | | | |
+-------------------------------------------------------+-----------+--+----------+
| Total tax charge | 1.2 | | 1.2 |
+-------------------------------------------------------+-----------+--+----------+
| | | | |
+-------------------------------------------------------+-----------+--+----------+
The tax assessed for the period is lower than the standard rate of corporation
tax in the UK. The differences are explained below:
+-----------------------------------------------------+------------+--+------------+
| | | | Restated |
+-----------------------------------------------------+------------+--+------------+
| | 2008 | | 2007 |
+-----------------------------------------------------+------------+--+------------+
| | GBPm | | GBPm |
+-----------------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------------+------------+--+------------+
| Loss before tax | (1,551.1) | | (166.8) |
+-----------------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------------+------------+--+------------+
| Loss on ordinary activities multiplied | | | |
| by the standard rate in the UK | | | |
+-----------------------------------------------------+------------+--+------------+
| (28.5%) (2007 30%) | (442.2) | | (50.0) |
+-----------------------------------------------------+------------+--+------------+
| Capital allowances not reversing on | (3.0) | | (4.6) |
| sale | | | |
+-----------------------------------------------------+------------+--+------------+
| Disposal of properties and investments | 0.3 | | (3.5) |
+-----------------------------------------------------+------------+--+------------+
| Prior year corporation tax items | (2.0) | | (1.9) |
+-----------------------------------------------------+------------+--+------------+
| Expenses disallowed, net of | (3.5) | | (2.6) |
| capitalised interest | | | |
+-----------------------------------------------------+------------+--+------------+
| UK transfer pricing adjustment | 14.4 | | 0.6 |
+-----------------------------------------------------+------------+--+------------+
| Group relief (without payment) | (6.7) | | (0.9) |
+-----------------------------------------------------+------------+--+------------+
| REIT exemption - corporation tax | (12.2) | | (12.6) |
+-----------------------------------------------------+------------+--+------------+
| REIT exemption - deferred tax | 453.6 | | 74.3 |
+-----------------------------------------------------+------------+--+------------+
| REIT exemption - entry charge | 2.5 | | 2.5 |
+-----------------------------------------------------+------------+--+------------+
| Losses utilised | - | | (0.1) |
+-----------------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------------+------------+--+------------+
| Total tax charge | 1.2 | | 1.2 |
+-----------------------------------------------------+------------+--+------------+
| | | | |
+-----------------------------------------------------+------------+--+------------+
Tax items that are taken directly to equity are shown in the Statements of
recognised income and expenses.
Factors that may affect the future tax charges
The ultimate parent company became a REIT on 1 January 2007, and consequently
the majority of the group's profits should no longer be subject to UK
corporation tax.
The conversion to a REIT on 1 January 2007 resulted in the provision for the
payment of the entry charge.
8. Dividends paid
+-----------------------------------------------------+-----------+--+----------+
| | 2008 | | 2007 |
+-----------------------------------------------------+-----------+--+----------+
| | GBPm | | GBPm |
+-----------------------------------------------------+-----------+--+----------+
| Ordinary shares | | | |
+-----------------------------------------------------+-----------+--+----------+
| Prior period final dividend paid of | 89.0 | | 469.7 |
| 22.55p (2007 119.08p) | | | |
+-----------------------------------------------------+-----------+--+----------+
| | | | |
+-----------------------------------------------------+-----------+--+----------+
The board has not proposed a final dividend in respect of 2008 (2007 nil).
9. Profit for the financial year attributable to shareholders of Capital
Shopping Centres PLC
Losses of GBP239.6 million are dealt with in the accounts of the holding company
in respect of the year (2007 restated profit of GBP71.1 million). No income
statement is presented for the company as permitted by Section 230 of the
Companies Act 1985.
10. Investment and development properties
+-----------------------------------------+----------+--+-------------+--+-----------+
| | | | Leasehold | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| Group | | | over 50 | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | Freehold | | years | | Total |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | GBPm | | GBPm | | GBPm |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| At 31 | 3,250.4 | | 1,925.0 | | 5,175.4 |
| December | | | | | |
| 2007 | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| Additions | 151.2 | | 33.7 | | 184.9 |
+-----------------------------------------+----------+--+-------------+--+-----------+
| Disposals | (2.9) | | - | | (2.9) |
+-----------------------------------------+----------+--+-------------+--+-----------+
| Deficit on | (893.3) | | (476.7) | | (1,370.0) |
| valuation | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| At 31 | 2,505.4 | | 1,482.0 | | 3,987.4 |
| December | | | | | |
| 2008 | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| At 31 | 3,216.7 | | 2,218.0 | | 5,434.7 |
| December | | | | | |
| 2006 | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| Additions | 195.7 | | 13.9 | | 209.6 |
+-----------------------------------------+----------+--+-------------+--+-----------+
| Disposals | (18.2) | | (215.0) | | (233.2) |
+-----------------------------------------+----------+--+-------------+--+-----------+
| Deficit on | (143.8) | | (91.9) | | (235.7) |
| valuation | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| At 31 | 3,250.4 | | 1,925.0 | | 5,175.4 |
| December | | | | | |
| 2007 | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
| | | | | | |
+-----------------------------------------+----------+--+-------------+--+-----------+
Included within additions is GBP12.4 million (2007 GBP10.7 million) of interest
capitalised on developments and redevelopments in progress.
+---------------------------------------------------------+----------+--+----------+
| Group | 2008 | | 2007 |
+---------------------------------------------------------+----------+--+----------+
| | GBPm | | GBPm |
+---------------------------------------------------------+----------+--+----------+
| | | | |
+---------------------------------------------------------+----------+--+----------+
| Balance sheet carrying | 3,987.4 | | 5,175.4 |
| value of investment and | | | |
| development properties | | | |
+---------------------------------------------------------+----------+--+----------+
| Adjustment in respect | 31.9 | | (51.6) |
| of head leases and | | | |
| incentives | | | |
+---------------------------------------------------------+----------+--+----------+
| | | | |
+---------------------------------------------------------+----------+--+----------+
| | | | |
+---------------------------------------------------------+----------+--+----------+
| Market value of | 4,019.3 | | 5,123.8 |
| investment and | | | |
| development properties | | | |
+---------------------------------------------------------+----------+--+----------+
| | | | |
+---------------------------------------------------------+----------+--+----------+
The group's interests in investment and development properties were valued as at
31 December 2008 by independent external valuers in accordance with the Royal
Institute of Chartered Surveyors (RICS) Valuation Standards 6th Edition, on the
basis of market value. Market value represents the figure that would appear in a
hypothetical contract of sale between a willing buyer and a willing seller.
The main assumptions underlying the valuations are in relation to market rent,
taking into account forecast growth rates and yields based on known transactions
for similar properties and likely incentives offered to tenants.
There are certain restrictions on the realisability of investment property when
a credit facility is in place. In most circumstances the group can realise up to
50% without restriction providing the group continues to manage the asset.
Realising an amount in excess of this would trigger a change of control and
mandatory repayment of the facility.
11. Investments in group undertakings
+-------------------------------------------------------------------+-----------+
| Company | GBPm |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| At 31 December 2007 | 1,141.3 |
+-------------------------------------------------------------------+-----------+
| Prior year adjustment | (78.3) |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| At 31 December 2007 - restated | 1,063.0 |
+-------------------------------------------------------------------+-----------+
| Impairment charge for the year | (326.2) |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
| At 31 December 2008 | 736.8 |
+-------------------------------------------------------------------+-----------+
| | |
+-------------------------------------------------------------------+-----------+
Investments are reviewed at least annually for impairment. Where there exists an
indication of impairment an assessment of the recoverable amount is performed.
The recoverable amount is based on the higher of the investments continued value
in use or its fair value less cost to sell. The impairment charge taken above
arose due to the carrying value of the asset exceeding its recoverable amount.
This was determined based on the assets' fair value less cost to sell. Fair
value less costs to sell is derived from the subsidiaries' net asset value at
the balance sheet date.
The principal investments in group undertakings are listed below. All
subsidiaries are wholly owned by the company and are registered in England and
Wales. Investments in group undertakings are carried in the balance sheet at
historic cost less provision for impairment.
(i) Companies engaged in property investment, management and development:
+---------------------------------------+------------------------------+
| Braehead Park Investments Limited | Ordinary shares of GBP1 each |
| (property) | |
+---------------------------------------+------------------------------+
| Braehead Park Estates Limited | Ordinary shares of GBP1 each |
| (property) | |
+---------------------------------------+------------------------------+
| Chapelfield LP Limited (property) | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
| CSC Harlequin Limited (property) | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
| CSC Lakeside Limited (property) | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
| CSC Enterprises Limited (commercial | Ordinary shares of GBP1 each |
| promotion) | |
+---------------------------------------+------------------------------+
| CSC MetroCentre Limited (property) | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
| CSC Properties Investments Limited | Ordinary shares of GBP1 each |
| (property) | |
+---------------------------------------+------------------------------+
| CSC Bromley Limited (property) | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
| CSC Potteries Limited (property) | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
| CSC The Hayes Limited | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
| MetroCentre (GP) Limited acting as | Ordinary shares of GBP1 |
| General Partner of The MetroCentre | each** |
| Partnership | |
+---------------------------------------+------------------------------+
| CSC Properties Limited | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
** By virtue of their interest in The MetroCentre Partnership, GIC Real Estate
is entitled to appoint 40 per cent of the directors of MetroCentre (GP) Limited.
(ii) Companies engaged in the provision of management services:
+---------------------------------------+------------------------------+
| Broadway Retail Leisure Limited | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
| CSC Enterprises Limited | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
| CSC Property Management Limited | Ordinary shares of GBP1 each |
+---------------------------------------+------------------------------+
(iii) The company disposed of its investment in CSC (Eldon Square) Limited in
November 2007 to Capital & Counties Debenture PLC, a fellow subsidiary
undertaking of Liberty International PLC, for GBP79.9 million, realising a
surplus of GBP1.6 million.
12. Trading properties
+---------------------------------------------------+----------+--+----------+
| Group | 2008 | | 2007 |
+---------------------------------------------------+----------+--+----------+
| | GBPm | | GBPm |
+---------------------------------------------------+----------+--+----------+
| | | | |
+---------------------------------------------------+----------+--+----------+
| At 31 December | 13.3 | | 20.5 |
+---------------------------------------------------+----------+--+----------+
| | | | |
+---------------------------------------------------+----------+--+----------+
Trading properties represent surplus undeveloped land at Braehead, Glasgow, held
for resale. The land is held at the lower of cost and net realisable value. The
estimated market value of trading properties amounted to GBP13.3 million (2007
GBP20.5 million).
13. Trade and other receivables
+------------------------------+----------+-+----------+-+----------+-+----------+
| | | | | | | | Restated |
+------------------------------+----------+-+----------+-+----------+-+----------+
| | Group | | Group | | Company | | Company |
+------------------------------+----------+-+----------+-+----------+-+----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+------------------------------+----------+-+----------+-+----------+-+----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+------------------------------+----------+-+----------+-+----------+-+----------+
| Falling due within one year: | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
| Rents receivable | 13.6 | | 15.5 | | - | | - |
+------------------------------+----------+-+----------+-+----------+-+----------+
| Amounts due from group | - | | - | | 1,228.1 | | 1,267.3 |
| undertakings | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
| Amounts due from related | 35.5 | | 207.9 | | 36.3 | | 215.9 |
| companies | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
| Other debtors | 3.6 | | 8.0 | | 1.8 | | 0.2 |
+------------------------------+----------+-+----------+-+----------+-+----------+
| Prepayments and accrued | 34.1 | | 27.2 | | 0.4 | | - |
| income | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
| Corporation tax recoverable | 0.8 | | 1.4 | | 1.5 | | 1.4 |
+------------------------------+----------+-+----------+-+----------+-+----------+
| | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
| | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
| | 87.6 | | 260.0 | | 1,267.3 | | 1,484.8 |
+------------------------------+----------+-+----------+-+----------+-+----------+
| | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
| | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
| Falling due after more than | | | | | | | |
| one year: | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
| Other debtors | 31.7 | | 35.6 | | - | | - |
+------------------------------+----------+-+----------+-+----------+-+----------+
| | | | | | | | |
+------------------------------+----------+-+----------+-+----------+-+----------+
Amounts due from group undertakings and related companies are unsecured and
repayable on demand.
14. Trade and other payables
+---------------------------------+----------+-+----------+-+----------+-+----------+
| | Group | | Group | | Company | | Company |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| Falling due within one year: | | | | | | | |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| Amounts due to related | 585.3 | | 722.5 | | 577.1 | | 715.2 |
| companies | | | | | | | |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| Amounts due to group | - | | - | | 796.5 | | 871.4 |
| undertakings | | | | | | | |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| Other taxation and social | 34.0 | | 38.4 | | 13.4 | | 12.2 |
| security | | | | | | | |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| Other creditors | 27.4 | | 21.9 | | 8.5 | | 6.9 |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| Rents receivable in advance | 62.0 | | 63.9 | | - | | - |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| Accruals and deferred income | 95.9 | | 75.3 | | 3.9 | | 6.3 |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| | | | | | | | |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| | | | | | | | |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| | 804.6 | | 922.0 | | 1,399.4 | | 1,612.0 |
+---------------------------------+----------+-+----------+-+----------+-+----------+
| | | | | | | | |
+---------------------------------+----------+-+----------+-+----------+-+----------+
Amounts due to group undertakings and related companies are unsecured, interest
free and payable on demand.
15. Borrowings
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Group | 2008 |
+----------------------------------------+--------------------------------------------------------------------------------------------------------+
| | Carrying | | | | | | Fixed | | Floating | | Fair |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | value | | Secured | Unsecured | | rate | | rate | | value |
+----------------------------------------+----------+--------+---------+-----------------+--------+--------+--------+----------+--------+---------+
| Amounts | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| within | | | | | | | | | | | |
| one | | | | | | | | | | | |
| year: | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Secured | | | | | | | | | | | |
| borrowings | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Bank | 2.4 | | 2.4 | | - | | - | | 2.4 | | 2.4 |
| loans | | | | | | | | | | | |
| and | | | | | | | | | | | |
| overdrafts | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Commercial | | | | | | | | | | | |
| mortgage | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| backed | | | | | | | | | | | |
| securities | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| ("CMBS") | 34.3 | | 34.3 | | - | | - | | 34.3 | | 24.6 |
| notes | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| CSC | 31.5 | | - | | 31.5 | | 31.5 | | - | | 32.2 |
| bonds | | | | | | | | | | | |
| 2009 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Borrowings | | | | | | | | | | | |
| excluding | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| finance | 68.2 | | 36.7 | | 31.5 | | 31.5 | | 36.7 | | 59.2 |
| leases | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Finance | 2.5 | | 2.5 | | - | | 2.5 | | - | | 2.5 |
| lease | | | | | | | | | | | |
| obligations | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Amounts | | | | | | | | | | | |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| within | 70.7 | | 39.2 | | 31.5 | | 34.0 | | 36.7 | | 61.7 |
| one | | | | | | | | | | | |
| year | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Amounts | | | | | | | | | | | |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
| after | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| more | | | | | | | | | | | |
| than | | | | | | | | | | | |
| one | | | | | | | | | | | |
| year: | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| CMBS | 523.9 | | 523.9 | | - | | - | | 523.9 | | 419.6 |
| notes | | | | | | | | | | | |
| 2011 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| CMBS | 1,219.6 | | 1,219.6 | | - | | - | | 1,219.6 | | 826.7 |
| notes | | | | | | | | | | | |
| 2015 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Bank | 100.0 | | 100.0 | | - | | - | | 100.0 | | 100.0 |
| loans | | | | | | | | | | | |
| 2011 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Bank | 24.5 | | 24.5 | | - | | - | | 24.5 | | 24.5 |
| loan | | | | | | | | | | | |
| 2014 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Bank | 660.4 | | 660.4 | | - | | - | | 660.4 | | 660.4 |
| loans | | | | | | | | | | | |
| 2016 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| CSC | 26.7 | | - | | 26.7 | | 26.7 | | - | | 23.5 |
| bonds | | | | | | | | | | | |
| 2013 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Borrowings | | | | | | | | | | | |
| excluding | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| finance | | | | | | | | | | | |
| leases | | | | | | | | | | | |
| and | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| partnership | 2,555.1 | | 2,528.4 | | 26.7 | | 26.7 | | 2,528.4 | | 2,054.7 |
| debt | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| MetroCentre | | | | | | | | | | | |
| compound | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| financial | 120.3 | | - | | 120.3 | | - | | 120.3 | | 120.3 |
| instrument | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Finance | 14.3 | | 14.3 | | - | | 14.3 | | - | | 14.3 |
| lease | | | | | | | | | | | |
| obligations | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Amounts | | | | | | | | | | | |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
| after | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| more | 2,689.7 | | 2,542.7 | | 147.0 | | 41.0 | | 2,648.7 | | 2,189.3 |
| than | | | | | | | | | | | |
| one year | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Total | 2,760.4 | | 2,581.9 | | 178.5 | | 75.0 | | 2,685.4 | | 2,251.1 |
| borrowings | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Cash | (24.5) | | | | | | | | | | |
| and | | | | | | | | | | | |
| cash | | | | | | | | | | | |
| equivalents | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Net | 2,735.9 | | | | | | | | | | |
| debt | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| Company | 2008 |
+----------------------------------------+-------------------------------------------------------------------------------------------------------+
| | Carrying | | | | | | Fixed | | Floating | | Fair |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| | value | | Secured | Unsecured | | rate | | rate | | value |
+----------------------------------------+----------+--------+---------+-----------------+--------+--------+--------+----------+--------+--------+
| | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| Amounts | | | | | | | | | | | |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| within | | | | | | | | | | | |
| one | | | | | | | | | | | |
| year: | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| Secured | | | | | | | | | | | |
| borrowings | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| CSC | 31.5 | | - | | 31.5 | | 31.5 | | - | | 32.2 |
| bonds | | | | | | | | | | | |
| 2009 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| Amounts | | | | | | | | | | | |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
| after | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| more | | | | | | | | | | | |
| than | | | | | | | | | | | |
| one | | | | | | | | | | | |
| year: | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| CSC | 26.7 | | - | | 26.7 | | 26.7 | | - | | 23.5 |
| bonds | | | | | | | | | | | |
| 2013 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| Total | 58.2 | | - | | 58.2 | | 58.2 | | - | | 55.7 |
| borrowings | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| Cash | (8.6) | | | | | | | | | | |
| and | | | | | | | | | | | |
| cash | | | | | | | | | | | |
| equivalents | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| Net | 49.6 | | | | | | | | | | |
| debt | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+--------+
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Group | 2007 |
+----------------------------------------+--------------------------------------------------------------------------------------------------------+
| | Carrying | | | | | | Fixed | | Floating | | Fair |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | value | | Secured | Unsecured | | rate | | rate | | value |
+----------------------------------------+----------+--------+---------+-----------------+--------+--------+--------+----------+--------+---------+
| Amounts | GBPm | | GBPm | | GBPm | | GBPm | | GBPm | | GBPm |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| within | | | | | | | | | | | |
| one | | | | | | | | | | | |
| year | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Bank | 2.1 | | 2.1 | | - | | | | | | |
| loans | | | | | | | | | | | |
| and | | | | | | | | | | | |
| overdrafts | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Commercial | | | | | | | - | | 2.1 | | 2.1 |
| mortgage | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| backed | | | | | | | | | | | |
| securities | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| ("CMBS") | 27.5 | | 27.5 | | - | | | | 27.5 | | 26.3 |
| notes | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Borrowings | | | | | | | | | | | |
| excluding | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| finance | 29.6 | | 29.6 | | - | | - | | 29.6 | | 28.4 |
| leases | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Finance | 1.4 | | 1.4 | | - | | 1.4 | | - | | 1.4 |
| lease | | | | | | | | | | | |
| obligations | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Amounts | | | | | | | | | | | |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| within | 31.0 | | 31.0 | | - | | 1.4 | | 29.6 | | 29.8 |
| one | | | | | | | | | | | |
| year | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Amounts | | | | | | | | | | | |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
| after | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| more | | | | | | | | | | | |
| than | | | | | | | | | | | |
| one | | | | | | | | | | | |
| year: | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| CMBS | 533.7 | | 533.7 | | - | | - | | 533.7 | | 499.7 |
| notes | | | | | | | | | | | |
| 2011 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| CMBS | 1,242.5 | | 1,242.5 | | - | | - | | 1242.5 | | 865.3 |
| notes | | | | | | | | | | | |
| 2015 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Bank | 100.0 | | 100.0 | | - | | - | | 100.0 | | 100.0 |
| loans | | | | | | | | | | | |
| 2011 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Bank | 27.4 | | 27.4 | | - | | - | | 27.4 | | 27.4 |
| loan | | | | | | | | | | | |
| 2014 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Bank | 482.5 | | 482.5 | | - | | - | | 482.5 | | 482.5 |
| loans | | | | | | | | | | | |
| 2016 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Bank | 31.5 | | - | | 31.5 | | 31.5 | | - | | 31.5 |
| loans | | | | | | | | | | | |
| 2009 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| CSC | 26.7 | | - | | 26.7 | | 26.7 | | - | | 23.5 |
| bonds | | | | | | | | | | | |
| 2013 | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Borrowings, | | | | | | | | | | | |
| excluding | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Finance | | | | | | | | | | | |
| leases | | | | | | | | | | | |
| and | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| partnership | 2,444.3 | | 2,386.1 | | 58.2 | | 58.2 | | 2,386.1 | | 2,029.9 |
| debt | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| MetroCentre | | | | | | | | | | | |
| compound | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| financial | 43.0 | | - | | 43.0 | | - | | 43.0 | | 43.0 |
| instrument | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Finance | 16.0 | | 16.0 | | - | | 16.0 | | - | | 16.0 |
| lease | | | | | | | | | | | |
| obligations | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Amounts | | | | | | | | | | | |
| falling | | | | | | | | | | | |
| due | | | | | | | | | | | |
| after | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| more | 2,503.3 | | 2,402.1 | | 101.2 | | 74.2 | | 2,429.1 | | 2,088.9 |
| than | | | | | | | | | | | |
| one year | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Total | 2,534.3 | | 2,433.1 | | 101.2 | | 75.6 | | 2,458.7 | | 2,118.7 |
| borrowings | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Cash | (59.7) | | | | | | | | | | |
| and | | | | | | | | | | | |
| cash | | | | | | | | | | | |
| equivalents | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| Net | 2,474.6 | | | | | | | | | | |
| debt | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
| | | | | | | | | | | | |
+----------------------------------------+----------+--------+---------+--------+--------+--------+--------+--------+----------+--------+---------+
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| Company | 2007 |
+----------------------------------------+---------------------------------------------------------------+
| | Carrying | | | | Fixed | | Floating | | Fair |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| | value | | Unsecured | | rate | | rate | | value |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| Amounts | GBPm | | GBPm | | GBPm | | GBPm | | GBPm |
| falling | | | | | | | | | |
| due | | | | | | | | | |
| after | | | | | | | | | |
| more | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| than | | | | | | | | | |
| one | | | | | | | | | |
| year | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| CSC | 58.2 | | 58.2 | | 58.2 | | - | | 58.2 |
| bonds | | | | | | | | | |
| 2009/2013 | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| Cash | (8.5) | | | | | | | | |
| and | | | | | | | | | |
| cash | | | | | | | | | |
| equivalents | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| Net | 49.7 | | | | | | | | |
| debt | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
| | | | | | | | | | |
+----------------------------------------+----------+--+-----------+--+--------+--+----------+---+-------+
The group substantially eliminates its exposure to floating rate debt as
illustrated in note 16.
16. Financial instruments
Market Risk
The group is exposed to a variety of risks arising from the group's operations.
Market risk (including interest rate risk and market price risk), liquidity risk
and credit risk.
Risk management is carried out by the group treasury department and the policies
for managing each of these risks and the principal effects of these policies on
the results for the year are summarised below.
a) Interest rate risk
Interest rate risk comprises of both cash flow and fair value risks:
Cash flow interest risk is the risk that the future cash flows of a financial
instrument will fluctuate due to changes in market interest rates. Fair value
risk is the risk that the fair value of financial instruments will fluctuate as
a result of changes in market interest rates.
The group's interest rate risk arises from borrowings issued at variable rates
which expose the group to cash flow interest rate risk, whereas borrowings
issued at fixed interest rates expose the group to fair value interest rate
risk.
Bank debt is typically at floating rates linked to LIBOR. Bond debt and other
capital market debt are generally at fixed rates.
The group's policy is to eliminate substantially all short and medium-term
exposure to interest rate fluctuations in order to establish certainty over
medium-term cash flows by using floating to fixed interest rate swaps. Such
swaps have the economic effect of converting borrowings from floating to fixed
rates. As a consequence, the group is exposed to market price risk in respect of
the fair value of its fixed rate derivative financial instruments, as discussed
in the financial review.
The below table shows the effects of interest rate swaps on the group borrowings
profile of the group:
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| | Fixed | | Floating | | Fixed | | Floating |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| | 2008 | | 2008 | | 2007 | | 2007 |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| | | | | | | | |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| Borrowings | 75.0 | | 2,685.4 | | 94.5 | | 2,429.0 |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| Derivative | 2,369.7 | | (2,369.7) | | 2,399.2 | | (2,399.2) |
| impact | | | | | | | |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| | | | | | | | |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| | | | | | | | |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| Net | 2,444.7 | | 315.7 | | 2,493.7 | | 29.8 |
| borrowings | | | | | | | |
| profile | | | | | | | |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
| | | | | | | | |
+---------------------------------------+----------+--+-----------+--+----------+--+-----------+
The weighted average rate of interest rates contracted through interest rates
swaps is 5.3 per cent (2007 5.3 per cent).
The approximate impact of a 50 basis point shift upwards in the level of
interest rates would be a positive movement of GBP59.8 million (2007 GBP60.5
million) in the fair value of derivatives. The approximate impact of a 50 basis
point shift downwards in the level of interest rates would be a negative
movement of GBP61.7 million (2007 GBP62.6 million) in the fair value of
derivatives. Movements in the fair value of derivatives are dealt with in the
income statement. In practice, a parallel shift in the yield curve is highly
unlikely. However, the above sensitivity analysis is a reasonable illustration
of the possible effect from the changes in slope and shifts in the yield curve
that may actually occur. Because the fixed rate derivative financial instruments
are matched by short-term floating rate debt, the overall effect on group cash
flow of such a movement would be very small.
The notional principal amount of the outstanding swap agreements at 31 December
2008 is GBP2,369.7 million (2007 GBP2,399.2 million).
b) Market price risk
The financial results are subject to movements in the value of underlying
investment properties.
Liquidity risk
Liquidity risk is managed to ensure that the group is able to meet future
payment obligations when financial liabilities fall due. Liquidity analysis is
conducted to ensure that sufficient headroom is available to meet the group's
operational requirements and committed investments. The group treasury policy
also includes maintaining adequate cash and marketable securities, as well as
maintaining adequate committed facilities. The group's policy is to seek to
optimise its exposure to liquidity risk by balancing its exposure to interest
risk and to refinancing risk. In effect the group seeks to borrow for as long as
possible at the lowest acceptable cost.
At 31 December 2008, the maturity profile of group debt showed an average
maturity of six years (2007 seven years). The group regularly reviews the
maturity profile of its financial liabilities and seeks to avoid bunching of
maturities through the regular replacement of facilities and by using a
selection of maturity dates. Re-financing risk may be reduced by re-borrowing
prior to the contracted maturity date, effectively switching liquidity risk for
market risk.
The group will often pre-fund capital expenditure by arranging facilities or
raising debt in the capital markets and then placing surplus funds on deposit
until required for the project. Efficient treasury management and strict credit
control minimise the costs and risk associated with this policy which ensures
that funds are available to meet commitments as they fall due.
The tables below set out the maturity analysis of the group's financial
liabilities based on the undiscounted contractual obligations to make payments
of interest and to repay principal. Where interest payment obligations are based
on a floating rate the rates used are those implied by the par yield curve.
+--------------------------------------------+-----+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Group | 2008 |
+--------------------------------------------------+-----------------------------------------------------------------------------------------------------------------+
| | Within 1 | 1-2 years | 3-5 years | Over 5 years | Totals |
| | year | | | | |
+--------------------------------------------------+---------------------+----------------------+----------------------+----------------------+----------------------+
| | Interest | Principal | Interest | Principal | Interest | Principal | Interest | Principal | Interest | Principal |
+--------------------------------------------+---------------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Secured | | | | | | | | | | |
| | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| borrowings | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| non-recourse | (86.7) | (37.7) | (59.2) | (41.2) | (207.6) | (704.6) | (114.2) | (1,578.6) | (467.7) | (2,362.1) |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Unsecured | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| borrowings | (2.8) | (31.6) | (1.8) | - | (4.6) | (26.9) | - | - | (9.2) | (58.5) |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Finance | | | | | | | | | | |
| lease | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| obligations | (0.7) | (1.9) | (0.7) | (1.8) | (2.7) | (4.8) | (16.5) | (8.3) | (20.6) | (16.8) |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Interest | | | | | | | | | | |
| rate | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| derivatives | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| payable | (124.5) | - | (122.5) | - | (291.5) | - | (145.9) | - | (684.4) | - |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Interest | | | | | | | | | | |
| rate | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| derivatives | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| receivable | 84.1 | - | 55.1 | - | 204.6 | - | 116.8 | - | 460.6 | - |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | (130.6) | (71.2) | (129.1) | (43.0) | (301.8) | (736.3) | (159.8) | (1,586.9) | (721.1) | (2,437.4) |
+--------------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+--------------------------------------------+-----+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
+---------------------------------------+-----+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Group | 2007 |
+---------------------------------------------+-----------------------------------------------------------------------------------------------------------------+
| | Within 1 | 1-2 years | 3-5 years | Over 5 years | Totals |
| | year | | | | |
+---------------------------------------------+---------------------+----------------------+----------------------+----------------------+----------------------+
| | Interest | Principal | Interest | Principal | Interest | Principal | Interest | Principal | Interest | Principal |
+---------------------------------------+---------------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Secured | | | | | | | | | | |
| | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| borrowings | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| non-recourse | (155.4) | (29.5) | (138.0) | (36.7) | (356.0) | (720.3) | (254.9) | (1,572.1) | (904.3) | (2,358.6) |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Unsecured | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| borrowings | (3.7) | - | (2.8) | (31.6) | (5.5) | - | (0.9) | (26.6) | (12.9) | (58.2) |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Finance | | | | | | | | | | |
| lease | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| obligations | (0.4) | (1.0) | (0.5) | (1.4) | (2.0) | (3.7) | (23.1) | (11.4) | (26.0) | (17.5) |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Interest | | | | | | | | | | |
| rate | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| derivatives | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| payable | - | - | (12.1) | - | (23.3) | - | (13.9) | - | (49.3) | - |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Interest | | | | | | | | | | |
| rate | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| derivatives | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| receivable | 14.1 | - | 0.2 | - | 1.5 | - | 1.2 | - | 17.0 | - |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | (145.4) | (30.5) | (153.2) | (69.7) | (385.3) | (724.0) | (291.6) | (1,610.1) | (975.5) | (2,434.3) |
+---------------------------------------------+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+---------------------------------------+-----+---------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
+----------------------------------------+----+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Company | 2008 |
+---------------------------------------------+---------------------------------------------------------------------------------------------------------------+
| | Within 1 | 1-2 years | 3-5 years | Over 5 years | Totals |
| | year | | | | |
+---------------------------------------------+-------------------+----------------------+----------------------+----------------------+----------------------+
| | Interest | Principal | Interest | Principal | Interest | Principal | Interest | Principal | Interest | Principal |
+----------------------------------------+------------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------------------------------------+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+---------------------------------------------+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Unsecured | | | | | | | | | | |
+---------------------------------------------+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| borrowings | (2.8) | (31.6) | (1.8) | - | (4.6) | (26.9) | - | - | (9.2) | (58.5) |
+---------------------------------------------+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+----------------------------------------+----+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
+----------------------------------------+----+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Company | 2007 |
+---------------------------------------------+---------------------------------------------------------------------------------------------------------------+
| | Within 1 | 1-2 years | 3-5 years | Over 5 years | Totals |
| | year | | | | |
+---------------------------------------------+-------------------+----------------------+----------------------+----------------------+----------------------+
| | Interest | Principal | Interest | Principal | Interest | Principal | Interest | Principal | Interest | Principal |
+----------------------------------------+------------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------------------------------------+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+---------------------------------------------+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| Unsecured | | | | | | | | | | |
+---------------------------------------------+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| borrowings | (3.7) | - | (2.8) | (31.6) | (5.5) | - | (0.9) | (26.6) | (12.9) | (58.2) |
+---------------------------------------------+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
| | | | | | | | | | | |
+----------------------------------------+----+-------+-----------+----------+-----------+----------+-----------+----------+-----------+----------+-----------+
Credit risk
Credit risk arises primarily from finance leases and trade receivables and is
also inherent in derivative contracts, cash and cash equivalents, the group
considers that there are no significant concentrations of credit risk due to the
diversification of the tenant base.
Credit risk is minimised by the review process conducted for potential tenants,
in certain circumstances, deposits or guarantors are obtained for certain
tenants. The amount of deposits held at 31 December 2008 is GBP0.8 million (2007
GBP2.5 million).
The amounts of trade receivables presented in the balance sheet are net of
allowances for doubtful receivables. As at 31 December 2008, trade receivables
of GBP13.6 million (2007 GBP15.5 million) were past due but not impaired. These
relate to customers for whom there is no recent history of default.
The ageing analysis of these trade receivables is as follows:
+------------------------------------------------------------+--------+--+----------+
| | Group | | Group |
+------------------------------------------------------------+--------+--+----------+
| | 2008 | | 2007 |
+------------------------------------------------------------+--------+--+----------+
| | GBPm | | GBPm |
+------------------------------------------------------------+--------+--+----------+
| | | | |
+------------------------------------------------------------+--------+--+----------+
| Up to three months | 11.9 | | 14.9 |
+------------------------------------------------------------+--------+--+----------+
| Three to six months | 0.9 | | 0.6 |
+------------------------------------------------------------+--------+--+----------+
| Greater than six months | 0.8 | | - |
+------------------------------------------------------------+--------+--+----------+
| | | | |
+------------------------------------------------------------+--------+--+----------+
| | | | |
+------------------------------------------------------------+--------+--+----------+
| Trade receivables | 13.6 | | 15.5 |
+------------------------------------------------------------+--------+--+----------+
| | | | |
+------------------------------------------------------------+--------+--+----------+
Due to the nature of tenants being managed individually by asset managers, it is
group policy to calculate any impairment specifically on each contract.
The group aims to mitigate the credit risk in liquid funds and derivative
financial instruments by transacting with a number of institutions and the group
aims to transact with counterparties that have a high percentage of tier one
capital and strong credit ratings assigned by international credit rating
agencies.
Classification of financial assets and liabilities
The table below sets out the group's accounting classification of each class of
financial assets and liabilities, and their fair values at 31 December 2008 and
31 December 2007.
The fair values of quoted borrowings are based on the asking price. The fair
values of financial instruments are determined from observable market prices or
estimated using appropriate yield curves at 31 December each year by discounting
the future contractual cash flows to the net present values.
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | Gain/(loss) | | |
+---------------------------------+-----------+--+-----------+--------------+--+-------------+
| | Carrying | | Fair | | to income | | Gain/(loss) |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | value | | value | | statement | | to equity |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| 2008 | GBPm | | GBPm | | GBPm | | GBPm |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| Trade receivables | 119.3 | | 119.3 | | - | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| Cash and cash | 24.5 | | 24.5 | | - | | - |
| equivalents | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| Total loans and | 143.8 | | 143.8 | | - | | - |
| receivables | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| Derivative liabilities | (248.0) | | (248.0) | | (221.6) | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| Total held for trading | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| liabilities | (248.0) | | (248.0) | | (221.6) | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| Trade payables | (856.9) | | (856.9) | | - | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| Borrowings | (2,760.4) | | (2,251.1) | | - | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| Total loans and | (3,617.3) | | (3,108.0) | | - | | - |
| payables | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-------------+
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| 2007 | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Trade receivables | 295.6 | | 295.6 | | - | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Cash and cash | 59.7 | | 59.7 | | - | | - |
| equivalents | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Total loans and | 355.3 | | 355.3 | | - | | - |
| receivables | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Derivative liabilities | 15.9 | | 15.9 | | 15.9 | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Total held for trading | 15.9 | | 15.9 | | 15.9 | | - |
| assets | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Derivative assets | (41.1) | | (41.1) | | (3.9) | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Total held for trading | (41.1) | | (41.1) | | (3.9) | | - |
| liabilities | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Trade payables | (1,001.6) | | (1,001.6) | | - | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Borrowings | (2,534.3) | | (2,118.7) | | - | | - |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| Total loans and | (3,535.9) | | (3,120.3) | | - | | - |
| payables | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
| | | | | | | | |
+---------------------------------+-----------+--+-----------+--+-----------+--+-----------+
Capital structure
The group seeks to enhance shareholder value both by investing in the business
so as to improve the return on investment and by managing the capital structure.
The group uses a mix of equity, debt and hybrid financial instruments and aims
to access both debt and equity capital markets with maximum efficiency and
flexibility.
The key ratios used to monitor the capital structure of the group are the debt
to assets ratio and the interest coverage ratio. The group aims not to exceed an
underlying debt to assets ratio of 50 per cent and to maintain interest cover
above 160 per cent. These targets have not been met during the period due to
current conditions in the UK commercial property market. These are discussed in
the Review of Business and Future Developments.
+--------------------------------------------------------+---------+--+----------+
| | Group | | Group |
+--------------------------------------------------------+---------+--+----------+
| | 2008 | | 2007 |
+--------------------------------------------------------+---------+--+----------+
| Debt to assets ratio | | | |
+--------------------------------------------------------+---------+--+----------+
| Investment property | 3,987.4 | | 5,175.4 |
+--------------------------------------------------------+---------+--+----------+
| Trading property | 13.3 | | 20.5 |
+--------------------------------------------------------+---------+--+----------+
| | | | |
+--------------------------------------------------------+---------+--+----------+
| | 4,000.7 | | 5,195.9 |
+--------------------------------------------------------+---------+--+----------+
| Net external debt | 2,615.6 | | 2,354.3 |
+--------------------------------------------------------+---------+--+----------+
| | | | |
+--------------------------------------------------------+---------+--+----------+
| | 65% | | 45% |
+--------------------------------------------------------+---------+--+----------+
| | | | |
+--------------------------------------------------------+---------+--+----------+
| Interest cover | | | |
+--------------------------------------------------------+---------+--+----------+
| Interest payable | (184.7) | | (167.2) |
+--------------------------------------------------------+---------+--+----------+
| Interest receivable | 9.3 | | 14.3 |
+--------------------------------------------------------+---------+--+----------+
| Other finance income/(costs) | 1.2 | | (0.8) |
+--------------------------------------------------------+---------+--+----------+
| | | | |
+--------------------------------------------------------+---------+--+----------+
| | (174.2) | | (153.7) |
+--------------------------------------------------------+---------+--+----------+
| Net rental income | 222.8 | | 239.6 |
+--------------------------------------------------------+---------+--+----------+
| Administrative expenses | (7.7) | | (11.3) |
+--------------------------------------------------------+---------+--+----------+
| | | | |
+--------------------------------------------------------+---------+--+----------+
| | | | |
+--------------------------------------------------------+---------+--+----------+
| Underlying operating profit | 215.1 | | 228.3 |
+--------------------------------------------------------+---------+--+----------+
| | | | |
+--------------------------------------------------------+---------+--+----------+
| | 123% | | 149% |
+--------------------------------------------------------+---------+--+----------+
| | | | |
+--------------------------------------------------------+---------+--+----------+
The maximum debt to assets ratio for the period was 65 per cent and occurred on
31 December 2008. The maximum interest coverage ratio for the period was 123 per
cent and occurred on 31 December 2008.
17. Deferred tax
Under IAS 12 (Income Taxes), provision is made for the deferred tax liability
associated with the revaluation of investment properties at the corporate tax
rate expected to apply to the group at the time of use. For those properties
qualifying as REIT properties the relevant tax rate will be 0 per cent (2007 0
per cent), for other UK properties the relevant tax rate will remain 28 per cent
(2007 28 percent).
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| | At | | | | | | At |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| | 31 December | | Recognised | | Recognised | | 31 December |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| | 2007 | | in income | | in equity | | 2008 |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| Group: | | | | | | | |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| Capital allowances | (0.1) | | - | | - | | (0.1) |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| | | | | | | | |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| | | | | | | | |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| Group | (0.1) | | - | | - | | (0.1) |
| total | | | | | | | |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
| | | | | | | | |
+------------------------------+--------------+--+------------+--+------------+--+--------------+
All deferred tax assets are expected to be recovered after more than one year.
18. Share capital
+--------------------------------------------------+--------------+--+-------------+
| Company and group | 2008 & 2007 | | 2008 & 2007 |
+--------------------------------------------------+--------------+--+-------------+
| | Number | | GBPm |
+--------------------------------------------------+--------------+--+-------------+
| Authorised | | | |
+--------------------------------------------------+--------------+--+-------------+
| Ordinary shares of 50p each: | 600,000,000 | | 300.0 |
+--------------------------------------------------+--------------+--+-------------+
| | | | |
+--------------------------------------------------+--------------+--+-------------+
| | | | |
+--------------------------------------------------+--------------+--+-------------+
| Issued, called up and fully paid | 394,551,178 | | 197.3 |
+--------------------------------------------------+--------------+--+-------------+
| | | | |
+--------------------------------------------------+--------------+--+-------------+
19. Share premium account
+-------------------------------------------------------------------+-------------+
| Group and company | GBPm |
+-------------------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------------------+-------------+
| At 31 December 2007 and 2008 | 646.9 |
+-------------------------------------------------------------------+-------------+
| | |
+-------------------------------------------------------------------+-------------+
20. Retained earnings
+--------------------------------------------------------+-----------+--+-----------+
| | Restated | | Restated |
+--------------------------------------------------------+-----------+--+-----------+
| | Group | | Company |
+--------------------------------------------------------+-----------+--+-----------+
| | GBPm | | GBPm |
+--------------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------------+-----------+--+-----------+
| At 31 December 2006 | 1,578.2 | | 418.9 |
+--------------------------------------------------------+-----------+--+-----------+
| (Loss)/profit for the period | (121.9) | | 71.1 |
+--------------------------------------------------------+-----------+--+-----------+
| Dividend paid | (469.7) | | (469.7) |
+--------------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------------+-----------+--+-----------+
| At 31 December 2007 | 986.6 | | 20.3 |
+--------------------------------------------------------+-----------+--+-----------+
| Loss for the period | (1,470.8) | | (239.6) |
+--------------------------------------------------------+-----------+--+-----------+
| Dividend paid | (89.0) | | (89.0) |
+--------------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------------+-----------+--+-----------+
| At 31 December 2008 | (573.2) | | (308.3) |
+--------------------------------------------------------+-----------+--+-----------+
| | | | |
+--------------------------------------------------------+-----------+--+-----------+
21. Summary of changes in equity
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | Restated |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | Group | | Group | | Company | | Company |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| (a) Equity shareholders | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Opening equity | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| shareholders' funds | 1,839.1 | | 2,430.7 | | 872.8 | | 1,271.4 |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Recognised income and | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| expense for the period | (1,470.8) | | (121.9) | | (239.6) | | 71.1 |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Dividend paid | (89.0) | | (469.7) | | (89.0) | | (469.7) |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Shareholders' funds | 279.3 | | 1,839.1 | | 544.2 | | 872.8 |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| (b) Minority interests | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Opening minority interests | 151.1 | | - | | - | | - |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Additions | 5.7 | | 197.2 | | - | | - |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Compound financial instrument | (75.3) | | - | | - | | - |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | 81.5 | | 197.2 | | - | | - |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Total recognised expense for | (81.5) | | (46.1) | | - | | - |
| the year | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Closing minority interest | - | | 151.1 | | - | | - |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| Total equity | 279.3 | | 1,990.2 | | 544.2 | | 872.8 |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+-----------+--+-----------+
The proceeds from the investment by a third party of a 40 per cent interest in
the MetroCentre Partnership in 2007 are required under IFRS to be allocated
between debt and minority interest. The amount included in debt at 31 December
2008 is GBP120.3 million (31 December 2007 GBP43.0 million). The balance of the
proceeds is included in minority interest. The movement in the amount allocated
as debt from 31 December 2007 is due to a refined valuation methodology.
22. Cash generated from operations
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | | | Restated | | | | Restated |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | Group | | Group | | Company | | Company |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | GBPm | | GBPm | | GBPm | | GBPm |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Cash flows from operating | | | | | | | |
| activities | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| (Loss)/profit before tax | (1,551.1) | | (166.8) | | (239.6) | | 69.7 |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Adjustments for: | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Deficit on revaluation and | | | | | | | |
| sale of | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| investment and development | 1,370.7 | | 230.9 | | - | | - |
| property | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Amortisation of lease | | | | | | | |
| incentives and | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| other direct costs | 11.1 | | 3.1 | | (0.2) | | (8.7) |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Profit on sale of subsidiaries | - | | - | | - | | (8.6) |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Write down of investment | - | | - | | 326.2 | | - |
| Interest | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| payable | 184.7 | | 167.2 | | 42.1 | | 3.6 |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Interest receivable | (9.3) | | (14.3) | | (40.4) | | - |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Other finance (income)/costs | (1.2) | | 0.8 | | - | | - |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Change in fair value of | | | | | | | |
| derivative | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| financial instruments | 221.6 | | 12.0 | | - | | - |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | 226.5 | | 232.9 | | 88.1 | | 56.0 |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Changes in working capital | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Change in trading properties | 2.3 | | 2.0 | | - | | - |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Change in trade and other | 161.6 | | 22.1 | | 217.6 | | 0.3 |
| receivables | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Change in trade and other | (147.5) | | (92.2) | | (215.1) | | (43.1) |
| payables | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Cash generated from operations | 242.9 | | 164.8 | | 90.6 | | 13.2 |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
23. Directors' emoluments
The aggregate emoluments of the directors were GBP1,448,894 (2007 GBP1,271,216).
An aggregated GBP90,000 was also awarded under long term incentive schemes. In
previous years conditional share awards comprising "restricted" shares and
"additional" shares, were made. The restricted and additional shares will be
released respectively two and four years after the date of the award provided
the individual director has remained in service. During the year, restricted and
additional shares awarded in previous years were released to four (2007 four)
directors - including the highest paid director.
During the year, GBP475,920 was paid to one former director in connection with
the termination of his employment by CSC Management Services Limited.
Two directors were members of a defined benefit pension arrangement. Four
directors are members of a money purchase pension arrangement. A company
contribution in aggregate of GBP68,000 (2007 GBP42,250) was paid in respect of
directors who were members of money purchase arrangements.
The highest paid director received aggregate emoluments of GBP333,727 (2007
GBP343,262) and had accrued by 31 December 2008 a pension of GBP106,831 per
annum (2007 GBP86,420pa) in a defined benefit scheme.
24. Capital commitments
At 31 December 2008 the group was contractually committed to GBP175.3 million
(2007 GBP218.0 million) of future expenditure for the purchase, construction and
enhancement of investment property.
25. Sale of partial interest in property
There were no sales of partial interests in property during the year ended 31
December 2008.
On 25 March 2007 the group sold 40 per cent of its interest in MetroCentre,
Gateshead to EuroCore Property Limited. The MetroCentre Partnership was
constituted by three partners CSC MetroCentre Limited, MetroCentre (GP) Limited
(both subsidiaries of the Liberty International PLC) and EuroCore Property
Limited (a GIC Real Estate company). Partners' capital and loan contributions
made by subsidiaries of Liberty International PLC resulted in the group's
ownership proportion being 60 per cent of the Partnership. This, together with
the group's ability to govern the financial and operating policies of the
general partner established the Partnership as a subsidiary of the group.
The minority's investment at 31 December 2007 was GBP240 million. This amount is
repayable after 20 years and bears a rate of interest linked to the value of the
property help by the Partnership. It was determined that the interest rate was
considerably lower than the Partnership would have to pay in the marketplace for
similar financing, therefore in accordance with IAS 32 Financial Instruments:
presentation this amount was split between its debt and equity components with
GBP43.0 million recorded within liabilities in the group's balance sheet and
GBP197.0 million recorded within minority interest.
26. Related party transactions
Transactions between the company and its subsidiaries, which are related
parties, have been eliminated on consolidation for the group.
Amounts due from and to related companies by group companies are disclosed in
aggregate in notes 13 and 14 respectively.
Significant transactions between the parent company and its subsidiaries are
shown below:
+----------------------------------------+-------------------------+---------+--+--------+
| | | 2008 | | 2007 |
+----------------------------------------+-------------------------+---------+--+--------+
| Subsidiary | Nature of transaction | GBPm | | GBPm |
+----------------------------------------+-------------------------+---------+--+--------+
| | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| CSC | Interest receivable | 15.7 | | 16.0 |
| MetroCentre | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| CSC | Interest receivable | 11.1 | | 10.7 |
| Harlequin | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| CSC | Interest receivable | 10.7 | | 11.0 |
| Lakeside | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| Chapelfield | Interest receivable | 13.6 | | 12.7 |
| LP Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| CSC | Interest receivable | 2.2 | | 2.1 |
| Potteries | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| CSC | Interest receivable | 8.2 | | 5.0 |
| The | | | | |
| Hayes | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| CSC | Interest receivable | 12.9 | | 10.9 |
| Properties | | | | |
| Investment | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| CSC | Interest payable | 38.4 | | 39.6 |
| Properties | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| The | Interest payable | 2.2 | | - |
| MetroCentre | | | | |
| Partnership | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| Braehead | Interest payable | 6.3 | | 6.2 |
| Glasgow | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| CSC | Dividend receivable | 39.0 | | 47.8 |
| Properties | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| CSC | Dividend receivable | - | | 2.4 |
| The | | | | |
| Hayes | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| Braehead | Dividend receivable | 20.0 | | - |
| Park | | | | |
| Investments | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| Braehead | Dividend receivable | 21.0 | | - |
| Glasgow | | | | |
| Limited | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
| | | | | |
+----------------------------------------+-------------------------+---------+--+--------+
Significant balances outstanding are shown below:
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Company | Amounts owed | | Amounts owed |
+-----------------------------------------+------------------+--+----------------------+
| | by subsidiaries | | to subsidiaries |
+-----------------------------------------+------------------+--+----------------------+
| | 2008 | | 2007 | | 2008 | | 2007 |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Subsidiary | GBPm | | GBPm | | GBPm | | GBPm |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| | | | | | | | |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Properties Limited | - | | - | | (611.7) | | (611.0) |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| The St David's Partnership | 14.8 | | - | | - | | (122.3) |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Braehead Glasgow Limited | - | | - | | (80.2) | | (107.5) |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Braehead Park Investments Limited | 5.7 | | - | | - | | (14.3) |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Braehead Park Estates Limited | - | | - | | (11.8) | | (6.8) |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Uxbridge Limited | - | | - | | (0.6) | | (4.6) |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC MetroCentre Property Management | - | | - | | (0.5) | | - |
| Limited | | | | | | | |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Lakeside Property Management | - | | - | | (0.2) | | (2.6) |
| Limited | | | | | | | |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Manchester JV Limited | - | | - | | (4.9) | | (1.6) |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Braehead Property Management | - | | - | | - | | (1.5) |
| Limited | | | | | | | |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Chapelfield Limited Partnership | 12.9 | | - | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC The Hayes Limited | 309.5 | | 372.0 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC MetroCentre Limited | 227.3 | | 235.7 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Potteries Limited | 190.3 | | 199.8 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Harlequin Limited | 189.1 | | 175.6 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Lakeside Limited | 185.8 | | 176.3 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Westgate Oxford Investments Limited | 16.9 | | 53.5 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Properties Investment Limited | - | | 25.7 | | (82.4) | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Chapelfield Residential Limited | 7.3 | | 8.7 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Broadway Retail Leisure Limited | 9.4 | | 7.8 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Braehead Leisure Limited | 12.2 | | 6.6 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| The MetroCentre Partnership | 23.7 | | 4.8 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| CSC Bromley Limited | 16.9 | | 4.3 | | - | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
| Cribbs Causeway JV Limited | - | | - | | (3.5) | | - |
+-----------------------------------------+-------+--+-------+--+---------+--+---------+
+----------------------------------------------------------+----------+--+--------+
| | 2008 | | 2007 |
+----------------------------------------------------------+----------+--+--------+
| Key management compensation | GBPm | | GBPm |
+----------------------------------------------------------+----------+--+--------+
| | | | |
+----------------------------------------------------------+----------+--+--------+
| Salaries and short-term employee benefits | 1.5 | | 1.3 |
+----------------------------------------------------------+----------+--+--------+
| Pensions and other post-employment benefits | 0.2 | | 0.2 |
+----------------------------------------------------------+----------+--+--------+
| Share based payment | - | | 0.6 |
+----------------------------------------------------------+----------+--+--------+
| Long term incentives | 0.1 | | - |
+----------------------------------------------------------+----------+--+--------+
| Termination benefits | 0.5 | | - |
+----------------------------------------------------------+----------+--+--------+
| | | | |
+----------------------------------------------------------+----------+--+--------+
| | | | |
+----------------------------------------------------------+----------+--+--------+
| | 2.3 | | 2.1 |
+----------------------------------------------------------+----------+--+--------+
| | | | |
+----------------------------------------------------------+----------+--+--------+
Key management comprise the Managing Director of Capital Shopping Centres PLC,
and those Executive Directors of Capital Shopping Centres PLC who are not also
directors of Liberty International PLC.
27. Contingent liabilities
The group's joint venture with Land Securities, the St. David's Limited
Partnership, currently makes annual rental payments of approximately GBP2.5
million per annum in respect of land to be used for car parking space. If this
arrangement were to cease, the partnership would be liable to make a payment of
approximately GBP58 million to compulsorily purchase the land, 50 per cent,
which represents the group's interest in the partnership, may have to be funded
by the group.
28. Ultimate parent company
The immediate and ultimate parent company is Liberty International PLC, a
company incorporated and registered in England and Wales, copies of whose
accounts may be obtained from the Company Secretary, 40 Broadway, London, SW1H
0BT.
29. 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 0BU.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EALSLFDENEFE
Atlas 2022-1 60 (LSE:BA59)
과거 데이터 주식 차트
부터 1월(1) 2025 으로 2월(2) 2025
Atlas 2022-1 60 (LSE:BA59)
과거 데이터 주식 차트
부터 2월(2) 2024 으로 2월(2) 2025
