Annual Financial Report

RNS Number : 2704I

Liberty International PLC

09 March 2010

 

9 March 2010

LIBERTY INTERNATIONAL PLC

 

AUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009

Highlights
Chairman's Statement
Operating and Financial Review
Audited Financial Information
Summary of Investment and Development Properties
Other Information
Glossary

 

Patrick Burgess, Chairman of Liberty International, commented:

 

"The Group is in a substantially stronger financial position than twelve months ago with the loan to value ratio reduced from 58 per cent to 51 per cent and with cash balances of £583 million and undrawn committed facilities of £248 million. After two difficult years in the UK property industry, the Group has considerable recovery prospects. The Directors therefore face the future with a measure of confidence.

The Capital & Counties business has become an attractive central London focused business concentrated on three landmark estates including Covent Garden and Earls Court & Olympia. This business has been almost entirely created in the last five years with the active involvement of its current management team through much of that period.

Capital Shopping Centres is a market leader in the UK regional shopping centre business embracing the highest quality centres with a senior management team whose worth has been proven through several economic cycles. Retail trade in the UK continues to gravitate towards the strongest destinations, the supply pipeline of new retail space has sharply diminished, and this is greatly to the benefit of existing centres.

The Board believes that the demerger announced today into two distinct focused businesses will enable Capital Shopping Centres and Capital & Counties each to achieve their full potential over a period of time".

 

A presentation to analysts and investors will take place at 100 Liverpool Street, London EC2 at 09.30GMT on 9 March 2010. The presentation will also be available to international analysts and investors through a live audio call and webcast.

 

The presentation will be available on the Group's website www.liberty-international.co.uk.

 

Enquiries:

 

Liberty International PLC:
David Fischel	Chief Executive	+44 (0)20 7960 1207
Ian Durant	Finance Director	+44 (0)20 7960 1210
Kate Bowyer	Investor Relations	+44 (0)20 7960 1250
Public relations:
UK:	Michael Sandler, Hudson Sandler	+44 (0)20 7796 4133
SA:	Nicholas Williams, College Hill	+27 (0)11 447 3030

 

 

 

This announcement contains "forward-looking statements" regarding the belief or current expectations of Liberty International PLC, its Directors and other members of its senior management about Liberty International PLC's businesses, financial performance and results of operations. Generally, words such as, but not limited to, "may", "could", "will", "expect", "intend", "estimate", "anticipate", "believe", "plan", "seek", "continue" or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Liberty International PLC and are difficult to predict, that may cause actual results, performance or developments to differ materially from any future results, performance or developments expressed or implied by the forward-looking statements. These forward-looking statements speak only as at the date of this announcement. Except as required by applicable law, Liberty International PLC expressly disclaims any obligation to update or revise any forward-looking statements contained herein to reflect any change in Liberty International PLC's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.   Any information contained in this announcement on the price at which shares or other securities in Liberty International PLC have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance.

 

HIGHLIGHTS

 

Financial Highlights

	Year	Year
	ended	ended
	31 December	31 December
	2009	2008
Net rental income	£371m	£384m
Deficit on revaluation and sale of investment and development property	£(768)m	£(2,057)m
Change in fair value of derivative financial instruments	£417m	£(665)m
Loss before tax	£(329)m	£(2,662)m
Underlying earnings 1	£91m	£105m
Total properties	£6,207m	£7,108m
Net external debt 2	£3,176m	£4,100m
Debt to asset ratio	51%	58%
Net assets (diluted, adjusted)	£2,946m	£2,798m
Adjusted earnings per share	18.3p	29.0p
Dividend per share (including proposed final dividend)	16.5p	16.5p
Net assets per share (diluted, adjusted) 3	464p	745p

 

1 Before valuation and exceptional items

2 Net external debt excludes the £129.9 million (31 December 2008 - £120.3 million) compound financial instrument relating to the 40 per cent third party interest in MetroCentre.

3 Net assets per share (diluted, adjusted) would increase by 49 pence per share to 513 pence at 31 December 2009 (31 December 2008 - by 85 pence to 830 pence) if adjusted for notional acquisition costs amounting to £310 million (31 December 2008 - £320 million).

 

Capital changes

·; Strengthened financial position through £592 million net placing and open offer completed in May 2009

·; Further £274 million net raised through 9.9 per cent share placing completed in October 2009 - to enable resumption of investment in existing prime UK regional shopping centres and central London assets

·; No restatement of prior period data as capital raised through placings and open offer rather than rights issue

·; Capital raises had significant impact on 2009 outcome:

 

	Total	Impact of	2009 movement
	change	new capital	excluding impact of new capital
Adjusted earnings per share	(10.7)p	(7.5)p	(3.2)p	(15)%
Net asset value per share (diluted, adjusted)	(281)p	(165)p	(116)p	(20)%

 

Operational Highlights

·; Resilient net rental income with year on year reduction of only 3 per cent

·; Investment property valuation deficit improved from 12.4 per cent for the six months to 30 June 2009 to an overall 10.6 per cent for the year ended 31 December 2009 as the UK property market recovered

·; Overall outperformance of IPD since start of downturn in June 2007 but large shopping centres and the Earls Court & Olympia exhibition business did not recover as quickly as other UK property asset classes in the second half of 2009

·; Occupancy levels at Capital Shopping Centres' UK regional shopping centres improved to 97.8 per cent (31 December 2008 - 93.6 per cent). Covent Garden, London, occupancy increased to 99 per cent (31 December 2008 - 97 per cent)

·; 1 million sq. ft. expansion of St David's, Cardiff opened October 2009 now over 70 per cent committed by income

·; Increased Earls Court & Olympia ownership to 100 per cent in December 2009 by acquiring partners' interest

 

After year end:

·; £525 million, seven year refinancing of debt secured on Lakeside, Thurrock concluded in January 2010

·; St Andrew's Way mall, the approximately 400,000 sq. ft. extension to Eldon Square, Newcastle, opened fully let in February 2010

·; Conditional contract exchanged in January 2010 for disposal of Westgate, Oxford for £56 million

 

Financial position

·; Cash of £583 million and undrawn committed facilities of £248 million

·; Weighted average debt maturity following Lakeside refinancing of 5.8 years with no UK asset-specific debt refinancings until 2012 (Capital & Counties) and 2014 (Capital Shopping Centres)

 

CHAIRMAN'S STATEMENT

 

Introduction

Shareholders will have gathered from today's announcement of the Group's intention to reorganise by way of demerger into its two distinct divisions, Capital Shopping Centres and Capital & Counties, that the Directors are looking ahead in both businesses with a measure of confidence.

 

The proposed demerger, fuller details of which are announced today, responds to a changing approach to investment in real estate, both in the equity markets and in the property market, requiring greater focus and more active management. It will create two distinct listed businesses with different characteristics and attractions for shareholders. Capital Shopping Centres and Capital & Counties will be positioned to execute their own significant strategic plans, with investors able to select their individual weightings to each of the businesses over time. Both businesses are led by strong management teams and have first class platforms to continue to attract talent to help them to grow over time. The demerger will best position both companies to deliver strong shareholder returns. It is of course subject to the approval of shareholders and of the Court.

 

Neither we, nor our retail tenants, nor the shoppers who made over 300 million visits to our shopping centres and Covent Garden found the year under review an easy year.

 

However, the Group's experience in recent months has been encouraging. In Capital Shopping Centres, we have restored high rates of occupancy and have much scope for active management of our assets, an aspect of our business from which we have in the past derived much of our growth. We have plans, aside from the demerger proposal itself, that will occupy us fully and position us to benefit further from economic recovery. The highly successful openings of our recently completed developments, St David's, Cardiff in October 2009 and the St Andrew's Way mall in Eldon Square, Newcastle in February 2010, testify to the quality and attractiveness of CSC's product.

 

In our central London estate, creative management of the Covent Garden assets has noticeably improved the quality of the tenants and the attractiveness of the area as a whole. At Earls Court & Olympia, we have continued to advance preparations for what will, subject to planning, be a most significant development, one of benefit to the whole of west London, while remaining sensitive to the needs of those residing close by.

 

In 2009, the Board has remained focused on the three objectives set out in the 2008 Annual Report - on occupancy, on rebuilding the balance sheet and on positioning the business for growth. In successfully managing the shopping centres for occupancy, our asset teams have ensured that our prime centres remained attractive to retailers and shoppers alike, with reassuring increases in footfall and plenty of scope for net rental income recovery, while our central London estate has considerable potential. We have satisfactorily rebuilt the balance sheet and the proposed demerger will mark a new phase of corporate development for shareholders, directors and employees.

 

Investment Property Valuations

In 2009, investment property valuations continued to suffer, though not declining at the same rate as in the second half of 2008. Nonetheless, the 22.5 per cent reduction in 2008 combined with the further 12.4 per cent decline in the first half of 2009 presented the Board with the challenge of addressing balance sheet issues, however impermanent the value reduction might in the long term prove to be - and notwithstanding that Liberty International's experience was that our valuations, which declined by 36 per cent from the peak in June 2007 to the trough in June 2009, had not fallen as steeply as the IPD index of capital values (44 per cent).

 

Trends in the yield for prime shopping centres tend to alter slowly and do not immediately follow liquidity driven surges. The current valuation yield basis for our prime UK regional shopping centres has not reduced since June 2009 at the same pace as other UK property asset classes where individual lot sizes are smaller. In our view, the weighted average nominal equivalent yield of 7.08 per cent is still above the long term trend line and therefore may be expected to revert in due course, with commensurate benefit to overall capital values.

 

Valuation is a matter of convention. The current regime constrains the way valuers arrive at their conclusions, particularly in times of market dislocation, even though experience teaches us that crisis conditions, as in late 2008/2009 and mostly untested by actual transactions, are seldom permanent. Crisis valuations beget further crises: banks have to react to the valuations because of their own capital adequacy and loan-to-value issues.

 

In my view, a serious case can be made for reviewing again the workings of the principles which operate to plunge businesses and banks into freefall when, with common sense and a modified approach to the conventions in question, this could be avoided.

 

Balance Sheet

The valuation position made restoring the balance between capital and debt in our balance sheet inevitable, but not so imperative that we could not afford to wait to seize the appropriate moment. Since becoming a REIT in 2007, we had already embarked on a disposal programme of non-core assets. However, the Directors judged that more was called for and the company raised £866 million of equity capital, net of expenses, through two equity capital raises, the first at a lesser discount than our peers had achieved and the second at a premium to net asset value. Our approach of retaining liquidity from those capital raisings, whilst having a negative impact on short term earnings, gave us significant flexibility of response at the end of the year for selective debt repayment.

Despite a savage reduction in new property-related lending, debt finance has become more available for prime assets on reasonable terms, as we have demonstrated by financing St David's Centre, Cardiff in the second half of 2009 and refinancing Lakeside, Thurrock since the year end. At 51 per cent, the Group's net debt to assets ratio has fallen seven percentage points in the year and is now at a level appropriate to this point in the cycle. It is still above the Board's long-stated maximum of 50 per cent, and we would expect to return within this limit as market conditions permit.

 

Dividends

The Directors are recommending a final dividend of 11.5p per share bringing the amount paid and payable in respect of 2009 to 16.5p, the same level as 2008 and covered by the adjusted earnings per share for 2009 of 18.3p. 8.5p of the final dividend will be paid as a Property Income Distribution subject to withholding tax.

 

Corporate Responsibility ('CR')

Both the businesses of Liberty International, CSC and Capital & Counties, have a long-term outlook. Both CSC and Capital & Counties appreciate that they benefit from being part of the communities they seek to serve; so, I hope, do the communities themselves recognise they benefit from our presence. We consider that in certain locations we have a responsibility to provide what is, effectively, a proxy for the village square - an approach that does us, and, we believe, the communities in which we are situated, no harm. The relationship forged with tenants and with the wider groups of stakeholders in the places where our assets are located directly underpins and sustains plans for long-term, high quality growth and development.

 

It is pleasing, particularly because it is an integral factor in both our businesses, that in the property sector the Group continues to be numbered in the first rank across the full range of CR measures. The benchmarking agencies have once again given us a very good assessment so that the Group remains a constituent member of the BITC Corporate Responsibility Index, FTSE4Good, JSE SRI and Dow Jones Sustainability Indices and was listed for the second year running in The Sunday Times list of Best Green Companies.

 

The Board

As announced at the AGM in July 2009, Michael Rapp will be standing down at the 2010 AGM after 24 years on the Board. His sagacity and expertise, particularly in relation to shopping centres, have been invaluable to the development of both of our businesses. We all thank Michael for his unique and lasting contribution to the Group. I am pleased to welcome Andrew Strang and Andrew Huntley to the Board, both having distinguished backgrounds and considerable expertise in the property and investment worlds.

 

Prospects and priorities

In this volatile financial world, a resilient business will be one with inherent flexibility. We believe that Liberty International has demonstrated that in a sure-footed way in the past 18 months.

 

We commend to you the demerger and will shortly be distributing documents giving much greater detail to shareholders. Each business will be well prepared for the growth opportunities provided by our exceptional assets with which we aim to drive superior returns to shareholders into the next decade. There are still uncertainties. In this climate, balance sheets are for safeguarding and opportunities are for nurturing - but business, and the drive for efficiency, continues.

 

I would like to thank my Board colleagues and our very highly committed and skilled staff for their most effective contribution to the Group's progress.

 

 

 

 

 

Patrick Burgess

Chairman

9 March 2010

 

 

 

 

OPERATING REVIEW

INTRODUCTION

 

Outcome for the year

The underlying outcome for the year after stripping out the impact of the equity capital raised was a 20 per cent fall in net assets per share (diluted, adjusted) to 464 pence and a 15 per cent reduction in adjusted earnings per share to 18.3p.

 

The 20 per cent fall in net assets per share reflected the £732 million (10.6 per cent) investment property valuation deficit for the year, a much better outcome than the £2,051 million (22.5 per cent) valuation deficit in 2008 and an improvement on the position at the half year stage when net assets per share (diluted, adjusted) amounted to 448p.

 

Underlying profit excluding valuation items reduced from £105 million to £91 million. Net rental income fell by only 3 per cent from £384 million to £371 million, a resilient outcome in the circumstances. Steps taken in 2008 had a positive impact on administrative expenses which reduced from £63 million to £43 million. However, the overall interest charge increased from £217 million to £241 million reflecting the fixed rate nature of the Group's aggregate borrowings and low returns on cash balances prior to the cash being utilised.

 

Financial and economic background

The UK economy has been through an extended recession lasting six quarters from the second quarter of 2008 until a nominal recovery in the last quarter of 2009. The cumulative fall in GDP amounted to some 6 per cent, an exceptionally severe downturn for a developed Western economy.

 

The property industry as a cyclical sector employing leverage has been hard hit.

 

However, financial market conditions began to improve from March 2009 due to substantial monetary easing from the Government. This drove a recovery in stock markets, improved liquidity in debt markets with spreads narrowing substantially and led to a recovery in the UK direct property investment market to an extent which could not have been anticipated when we were reporting 12 months ago.

 

By way of illustration, the FT 350 Real Estate Index actually increased year on year by 8 per cent and recovered by 88 per cent from its low on 9 March 2009. However, the index at 31 December 2009 still stood at 64 per cent below its peak in early 2007.

 

With UK Government borrowing as a percentage of GDP at a record peace time level, economic growth rates are likely to be restrained for some years as future Governments attempt to reduce the extent of the stimulus whether from public sector expenditure restraint or higher taxes.

 

As a business focused on retail property, we need to plan on the basis of a continued challenging economic background.

 

Key achievements

The Group is in a considerably stronger financial position than 12 months ago with the loan to value ratio reduced from 58 per cent to 51 per cent and with cash balances of £583 million and undrawn committed facilities of £248 million.

 

Notwithstanding market conditions, the Group succeeded in avoiding disposals of core assets at depressed prices.

 

The principal achievements of the year described in greater detail elsewhere in this document were as follows:

 

- £866 million, net of expenses, raised in two equity offerings.

 

- Occupancy levels at CSC's centres re-established at 97.8 per cent after falling substantially below this figure during the year as a result of tenant failures. Occupancy at Covent Garden reached 99 per cent benefiting from our creative management approach.

 

- The 1 million sq.ft. major St David's, Cardiff extension opened successfully in October, now 71 per cent committed by income, 74 per cent by area.

 

- The purchase of the remaining 50 per cent share of Earls Court & Olympia from our former joint venture partner, with a sound operational performance from the business in the year and a £65 million pay down of the related debt facility.

 

- £210 million raised from disposal of non-core assets, completing the programme of disposals commenced when the Group became a REIT in 2007.

 

and since the year end have been:

 

- The £525 million refinancing of Lakeside, Thurrock in January 2010 ahead of the CMBS maturity in mid 2011 and the two year extension of the Group's £248 million revolving credit facility to 2013.

 

- St Andrew's Way mall, the approximately 400,000 sq.ft. extension to Eldon Square, Newcastle opened fully let in February 2010.

 

Capital Shopping Centres' next asset specific debt maturity is not until the second half of 2014 and Capital & Counties' is in 2012.

 

Future investment plans

All uncommitted capital expenditure plans of the Group were put on hold in the second half of 2008 in the light of the market turmoil at the time.

 

While the first £592 million equity capital raising in the first half of 2009 was earmarked for debt repayment in the face of falling property values, the follow-up £274 million placing in the second half of the year enabled the Group to consider resumption of investment plans.

 

At Capital Shopping Centres, ample organic investment opportunities continue to be available to the Group, both shorter-term active management projects and medium-term individual asset expansion plans, which the Group is actively pursuing.

 

In the case of Capital & Counties, each of the three major central London estates, Covent Garden, Earls Court & Olympia and the Great Capital Partnership, has significant investment opportunities.

 

Prospects

After two difficult years, the Group has strong recovery prospects.

 

As set out in the Capital Shopping Centres section below, CSC is focused on converting short-term lets, which were a feature of re-letting activity in 2009, into longer-term lets at higher rents with a view to driving growth in net rental income and yield compression benefiting capital values.

 

As the cash balances of the Group are absorbed in debt repayment, the interest charge should diminish to the benefit of the Income Statement, while the investment plans when implemented should have a positive impact on earnings.

 

We continue to actively explore a tax efficient solution to reduce our US activities over time.

 

Capital & Counties has become an attractive central London focused business concentrated on three selected landmark estates. This business has been almost entirely created in the last five years with the active involvement of its current management team through much of that period.

 

Capital Shopping Centres is a market leader in the UK regional shopping centre business with a focus on the highest quality centres. The supply pipeline of new retail space has sharply diminished as a result of economic conditions, to the benefit of owners of existing centres. Retail trade in the UK continues to gravitate towards the strongest destinations. The scale of CSC's activities, its positioning in a market with high barriers to entry and management expertise would imply that the value of the business as a whole substantially exceeds the market value of the individual assets.

 

The recently announced demerger should unlock the full potential of the Group's two separate businesses and overall generate greater returns to shareholders than Liberty International could as a combined business. We believe strongly in the benefits of specialisation, management focus and independent access to capital in a manner suited to the individual businesses.

 

Investment property valuations

After a dismal start to the year, the UK property investment market reached its trough mid way through 2009, and thereafter has strengthened as the improving financial background including low short-term interest rates and currency factors increased the attractiveness of prime UK property as an asset class.

 

The recovery was a welcome relief after the most torrid UK real estate price collapse in the living memory of any active market participant, with the IPD monthly all-property capital index at 30 June 2009 having fallen 44 per cent and Liberty International's assets 36 per cent since the peak in June 2007.

 

The eventual 2009 outcome was much better than 2008. Liberty International's assets fell 10.6 per cent in 2009 compared to 22.5 per cent in 2008 and the IPD all property capital index fell by 5.6 per cent in 2009 compared to 27.1 per cent in 2008. Chart 1 shows the extent of the Group's overall outperformance since the downturn began in June 2007, in particular the strength of the central London assets with a decline of 25 per cent compared to the IPD's decline of 39 per cent. To view Chart 1, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf 

 

We look forward to more stable market conditions as confidence returns although, given the severity of the downturn, recovery is likely to be punctuated by periods of doubt.

 

The valuation of the Group's properties as at 31 December 2009 was £6.2 billion, down 10.6 per cent for the full year but up 2.0 per cent in the second half. The table below analyses this outcome between CSC and C&C and between the first and second halves of the year:

 

	Market	Revaluation surplus/(deficit)
	value
	31 December	Year ended	Six months ended		Six months ended
	2009	31 December 2009	31 December 2009		30 June 2009
	£m	%	%		%
Capital Shopping Centres	4,631	(10.4)%	2.6%		(12.8)%
Capital & Counties UK	1,240	(7.8)%	3.1%		(10.0)%
Capital & Counties USA	348	(20.8)%	(7.8)%		(14.8)%
	6,219	(10.6)%	2.0%		(12.4)%

 

CSC's regional shopping centres have lagged the market recovery which in its initial stages was generally focused on assets of smaller lot size. The assets of the Great Capital Partnership recovered strongly in the second half of the year.

 

The majority of the year's valuation movement reflected movements in yield:

 

	Nominal equivalent yield
	31 December 2009	30 June 2009	31 December 2008
	%	%	%
Capital Shopping Centres	7.08	7.37	6.67
Capital & Counties UK
(excluding exhibition business)	5.66	5.95	5.84

 

The reduction in CSC ERV for the year was 4.4 per cent (30 June 2009 - (3.5) per cent).

 

At a level of 7.08 per cent, CSC's weighted average nominal equivalent yield is well above its average since 1994 of 6 per cent and, in the view of the Directors, the valuation basis is at a defensive level (see Chart 2). CSC considers that a reduction in the valuation yield is, amongst other factors, subject to its future performance in converting short-term concessionary lets into longer-term leases at higher rents. To view Chart 2, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf

 

Furthermore, prime regional shopping centre yields are once again defensive in relative terms compared to other prime retail asset classes with lower average lot size which have performed more strongly in the second half of 2009 (see Chart 3). To view Chart 3, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf

 

 

CAPITAL SHOPPING CENTRES

 

CSC Strategy

CSC's strategy is to maintain a market leading position as an active owner, manager and developer of prime UK regional shopping centres. CSC undertakes asset and centre management initiatives across its existing centres, combined with selective acquisitions and disposals, with the aim of delivering strong long-term returns for shareholders through income and capital growth.

 

CSC is committed to active tenant management and ongoing investment in its shopping centres with the aim of creating, through a mix of retail, catering and leisure facilities, a compelling choice for both retailers and the shopping public.

 

Market overview

CSC's focus is the top 50 million sq.ft. of UK shopping centre locations, some 4 per cent of the UK's 1.3 billion sq. ft. of retail space, of which it owns nearly 30 per cent. CSC owns 13 centres (excluding Westgate, Oxford) including 9 of the UK's top 30 shopping centres, attracting 275 million customer visits in 2009.

 

The UK recession, from the second quarter of 2008 to the end of 2009, and difficult credit market conditions which generated significant retailer failures inevitably affected all UK shopping centres. However, the lowest falls and earliest recovery in occupancy have been in the larger prime centres such as those owned by CSC. Here, a wide range of catering and leisure offerings plus a strong national and international tenant mix and robust footfall have reinforced the status of the destinations to retailers reviewing their store strategy.

 

These assets benefit from the significant barriers to entry imposed by the UK's restrictive planning environment. The reduction in the supply pipeline of major retail developments in the UK as a consequence of economic conditions underpins the scarcity value, with the prospect of limited additional competition in the short and medium-term.

 

While online shopping is an important and growing medium, the vast majority of total UK sales are still achieved across the counter in stores. We have seen the most successful retailers investing in both physical stores and transactional websites. For example both John Lewis and River Island have opened flagship stores in CSC centres in the last six months whilst also investing online. Clearly customers enjoy the convenience of online shopping for some products but that does not preclude them from also visiting shopping centres where they have a wide range of retail and catering comparison.

 

Occupancy and tenancy changes

Failures amongst CSC's tenants peaked in the last quarter of 2008 and the first quarter of 2009 (5 per cent and 4 per cent of the rent roll respectively) and have subsequently slowed to around 1 per cent per quarter. CSC's asset management team responded energetically to this excess supply, documenting 298 tenancy changes during 2009, 15 per cent of all units. In achieving this outcome, CSC benefited from its scale as the UK's leading owner of large-scale shopping centres and its retail-focused relationships.

 

·; Excluding turnover only deals, annual rent associated with new lettings of £20.6 million is just over 20 per cent below previous passing rent

·; Nearly half of the deals completed are short term lettings where the rent shortfall is closer to 35 per cent but CSC retains the flexibility to re-let the units when the market begins to recover

·; 43 retailers were new to CSC centres in 2009 including 6 opening their first UK or shopping centre stores

As a result, CSC's occupancy has recovered from 93.6 per cent (including 1 per cent under offer) at 31 December 2008 to 97.8 per cent (including 1.5 per cent under offer), significantly outperforming the UK large centres market average. Of this 2.2 per cent vacancy, units let to tenants in administration and not yet re-let amounts to 1.1 per cent. CSC's occupancy rate is shown in Chart 4. To view Chart 4, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf

 

 

Net rental income

Despite the adverse environment, CSC's like-for-like net rental income only declined by 3.4 per cent following a 4.3 per cent reduction in 2008. On a ten year basis, this has reduced the compound annual growth rate to 3.4 per cent. CSC's like-for-like net rental income is shown in Chart 5. To view Chart 5, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf

 

At the gross level, CSC's rental income fell 6 per cent compared to 2008 due to the tenant failures discussed above, but other income held up well in the challenging economic environment such that gross rental income fell 4 per cent. As the retail environment stabilised throughout the year, lease incentive write-offs reduced driving a significant year on year favourable variance. Treating rent payable under headleases as a cost, the net effect is that CSC's net rental income margin remained broadly unchanged at around 67 per cent.

 

		Year ended 31		Year ended 31
		December 2009		December 2008
		£m		£m
Rental income		308		327
Service charge income		59		58
Other income		33		33
Gross rental income		400		418
Rent payable		(21)		(23)
Service charge expense		(63)		(61)
Property operating expense		(37)		(35)
Bad debt and lease incentive write-offs		(12)		(18)
Net rental income		267		281

 

Other operating performance indicators

·; Footfall across CSC's existing centres rose 3 per cent in 2009, outperforming the estimated overall reduction across the UK according to Experian & Synovate

·; Like-for-like retailer sales are estimated to have decreased marginally but to have outperformed UK national data (Office for National Statistics non-food down 2 per cent)

·; Weighted average lease maturity increased marginally to 6 years and 8 months. Only 3 per cent of leases by value mature in 2010 and, other than short-term lettings, the next major round of lease expiries is at the MetroCentre in 2011 which management have been addressing proactively

 

Developments and active management projects

St David's, Cardiff, a 50:50 joint venture with Land Securities, had a highly successful opening of the major extension in October:

 

·; 1.3 million shoppers visited the centre in the first week after launch with a number of retailers reporting strong sales, many setting UK opening records

·; Ongoing feedback from retailers indicates that a number of shops are now trading at comparable levels with their strongest performing stores across the UK

·; The 1m sq. ft., 154 unit, extension, now 74 per cent let by area, 71 per cent by income, has transformed the city centre and elevated Cardiff to number 6 in Experian's ranking of UK retail centres

·; 90 shops are now open, including 58 retailers new to Wales and the largest John Lewis store outside London

·; Now that the quality of the centre is evident to retailers and critical mass has been achieved, we anticipate firmer terms for letting the remainder of the space

 

The first two phases of MetroCentre, Gateshead's leisure and catering upgrade opened during 2009 with the cinema and 8 of the 10 restaurants now either open or committed. The final phase of a further 56,000 sq. ft. of retail space, fully let, will open in Autumn 2010.

The St Andrew's Way mall, the approximately 400,000 sq. ft. extension to Eldon Square, Newcastle, was fully let when it opened in February 2010 increasing the size of the centre to 1.3 million sq. ft. Anchored by Debenhams, the mall introduces many new retailers to Newcastle including Apple, Hollister, Superdry and Guess and features flagship or new concept stores for Top Shop, New Look, Republic and River Island. The food offer in the Centre has also been extended with the addition of many new outlets including Nando's, Strada and Wagamama.

 

Future investment plans

Liberty International's placing conducted in October 2009 enabled CSC to recommence investment plans that had been put on hold a year earlier. Active management projects have been identified across most of CSC's centres amounting to around £125 million, the majority of which is expected to be spent or committed by the end of 2012. These organic projects are individually incrementally revenue enhancing, often to meet the needs of identified retailers and include:

 

·; Redevelopment and extension to create a new 60,000 sq. ft. flagship store for Next at Eldon Square, Newcastle

·; Reconfiguration and extension of the former Woolworths store at MetroCentre, Gateshead, to create a new MSU

·; Unit amalgamations for new MSU and roof boxes at Lakeside, Thurrock

·; Enhanced catering offering at Braehead, Glasgow from former leisure facilities

·; Reconfiguration at Victoria Centre, Nottingham to create further retail space

 

In addition, in line with our strategy of organic growth and recognising the increasing outperformance of larger centres, CSC is exploring the feasibility of major extensions to existing centres where there is the potential for significant additional retail space.

 

Investment decisions are taken on a case-by-case basis and assessed against internal return requirements on a risk adjusted basis.

 

Prospects for net rental income

As illustrated by Chart 6, there is considerable upside potential between passing rent and the valuers' assessment of ERV, in particular from:

 

·; Vacancies in excess of the normal "running void" rate of £23 million, notably at St David's, Cardiff and

·; Lease expiries, especially of temporary lettings in 2010 and 2011 which represent a £20 million opportunity at 2 per cent of rent roll but 7 per cent of ERV

 

To view Chart 6, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf

 

 

2010 priorities

Our priorities for 2010 are to make significant progress in the following areas, the financial impact of which in terms of enhanced net rental income is not likely to be seen until 2011 and beyond:

 

·; Re-letting short term leases closer to ERV

·; Large space negotiations where price tension is greater

·; Commencing value-enhancing active management projects to create organic growth opportunities not dependant on acquisition

·; Completing the initial letting of St David's, Cardiff

CAPITAL & COUNTIES

 Strategy 

Capital & Counties has continued to focus on London having completed the exit of non-core UK properties in 2009. It aims to deliver superior total returns to shareholders through the active management and development of three prime central London estates: Covent Garden, Great Capital Partnership and Earls Court & Olympia ("EC&O") principally by achieving a step change in district rental levels, the entrepreneurial management of individual properties and the capture of market yield compression.

 

Capital & Counties prioritises capital to improving existing investments, to the selective acquisition or disposal of properties with a view to enhancing overall returns and to identifying new opportunities consistent with the London focus. The strategy of focusing on London has enabled Capital & Counties to significantly outperform IPD over the last 3 years. Capital & Counties now has assets in the capital of a scale commensurate with independent listed London specialists.

 

As at the end of 2009 Capital & Counties had total property assets in London of £1,240 million comprising Covent Garden (£548 million, 44 per cent), Earls Court & Olympia (£340 million, 28 per cent) and 50 per cent interests in Empress State (£94 million, 8 per cent) and the Great Capital Partnership (£247 million, 20 per cent).

 

UK market overview

London is the most active real estate market in the UK and offers significant attractions to businesses and tourists from its position as a global economic, cultural and commercial hub. In 2009, London attracted 25 million visitors and 20 million people live within easy access of the city for day trips. This has contributed to resilient tenant and consumer demand particularly in central London, where Capital & Counties' retail properties are located and where like-for-like retail spending growth significantly exceeded the UK average.

 

The Group's office properties are located in the West End which has historically outperformed other London markets in terms of rental growth and capital values due primarily to tight planning laws and scarce supply.

 

In the second half of 2009, London's commercial property investment market notably improved as investor appetite for prime properties increased and debt finance became more available.

 

UK performance

 

·; Net rental income declined by 3.4 per cent to £79.2 million, a decrease of £2.8 million, but an increase of 2.8 per cent on a like-for-like basis

·; A full year valuation decline of 7.8 per cent to £1,240 million

·; Valuation improvement of 3.1 per cent in the second half of the year

 

In the UK, net rental income fell to £79.2 million compared to £82.0 million in 2008. The sale of non-core assets reduced net rental income by £9.5 million, with a further £0.5 million reduction from disposals in the Great Capital Partnership. Covent Garden improved by £3.6 million to £26.5 million through positive rent reviews, a one off surrender premium and reduced marketing costs. Significant cost savings at Earls Court & Olympia offset a reduction in top line income of £7.0 million producing EBITDA at £21.3 million, a creditable improvement on £20.4 million in 2008. A full year's income from the Empress State building of £10.3 million contributed an increase of £5.6 million against 2008.

 

The ERV of the UK property portfolio excluding income from exhibition activities was £56.5 million at the end of 2009 compared with a passing rental of £49.4 million, a difference of £7.1 million. £3.5 million of this relates to rent free periods at Covent Garden, of which the majority will expire in 2010, £2.3 million is attributable to vacancies and areas under refurbishment and £1.9 million to non-leased and turnover income.

 

As at 31 December 2009, Capital & Counties held investment properties of £1,240 million, a decline of £378 million in the year (see Chart 7). To view Chart 7, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf

 

In the second half of 2009, the valuation of Covent Garden and the Great Capital Partnership improved by 2.9 per cent and 9.8 per cent respectively and Earls Court & Olympia was unchanged.

Activity in the year

Good progress was made towards fulfilling the business plans of each estate:

 

·; 67 new leases granted generating £6.4 million of passing rent

·; 34 rent reviews completed with an average uplift of 15 per cent

·; Occupancy rate of 98 per cent across the UK property portfolio (excluding Earls Court & Olympia) at year end

·; 21 property sales in the year generating £182 million (the Group's share)

·; Acquisition of partners' interest in Earls Court & Olympia for £30.2 million plus modest future overage arrangements conditional on planning consent

·; Repayment of £65 million made on debt secured on Earls Court & Olympia

·; Earls Court & Olympia EBITDA improvement to £21.3 million

·; At 31 December 2009 77 per cent of 2010 budgeted licence fees secured for Earls Court & Olympia

·; Earls Court granted Opportunity Area status in the Draft London Plan

 

Covent Garden

Our strategy of extending prime across the estate to generate higher income and value is taking shape. A portfolio of 44 buildings offering 300 tenancies and 750,000 sq.ft. of mixed use accommodation provides a solid platform from which to operate. Increased footfall, high occupancy, strong retailer demand and stable prime rents in a difficult year show the resilience and attractiveness of Covent Garden as a retail and commercial destination.

 

The highlight of 2009 was the completion of an important letting of the whole of Bedford Chambers to an iconic global technology brand. The new retail and office accommodation of 41,000 sq.ft. will open later this year and is expected to assist in driving footfall and rents confirming the direction of our enhancement strategy towards higher quality, contemporary brands capable of trading longer hours.

 

Eight other new brands were welcomed to the estate and a major planning application was made for the former Theatre Museum. The refurbished property will include a new high quality restaurant, a new national art gallery and an events area.

 

The improving tenant line up was supported by innovative marketing activities which included a co-operation with the Tate Modern installing a Jeff Koons piece in the Market Building, a Real Food Market on the Piazza and the London Fashion Fringe.

 

Such initiatives helped improve visitor numbers by 2.0 million in the year to 45.2 million with an exceptionally strong improvement over the Christmas period.

 

Demand for accommodation was positive with occupancy levels of 99 per cent taking account of 1.4 per cent held for development. Prime Zone A rents have in general been maintained as evidenced by the lettings to Sketchers and Kurt Geiger on James Street at Zone A equivalent rents of £585 psf.

 

The like-for-like valuation improved by 2.9 per cent in the second half to £548 million, a decline of 6.1 per cent in the year.

 

Great Capital Partnership

The partnership is well positioned to participate in a recovery in rents and values of prime central London properties owning 34 prime freehold and leaseholds in the heart of the capital comprising 988,000 sq.ft. Capital & Counties has a 50 per cent interest in the partnership and participates actively in its strategic management.

 

In 2009, the partnership completed a significant head lease re-gear with the Crown Estate, comprising 132,500 sq.ft. in five buildings forming a single block fronting Piccadilly and Jermyn Street. The surrendered leases ran for 69 years with an average annual head rent of 15 per cent of rental value and were re-geared to a new 125 year term with an average annual head rent reducing to 10 per cent.

 

Three tactical disposals were completed during the year for a total value of £18.5 million (the Group's share) and one acquisition was made for £4 million (the Group's share) in December 2009.

 

As at 31 December portfolio occupancy was 97 per cent. Income for the year was broadly in line with 2008 at £13.8 million and the valuation, whilst 9.8 per cent up in the second half, declined by 7.5 per cent in the year.

 

Earls Court & Olympia

While Earls Court & Olympia marginally increased EBITDA in 2009 to £21.3 million benefiting from close control of costs, the UK exhibition and conference sectors have come under pressure in 2008 and 2009 as businesses have cut back their marketing budgets due to the economic recession. This will continue to impact the operational performance of Earls Court & Olympia at least through 2010, although its prime central London location remains attractive to exhibitors.

 

The Group has continued to make good progress in the year to date in pursuing a planning application for the comprehensive redevelopment of Earls Court which is part of the Earls Court Regeneration Area together with adjacent land owned by TfL and London Borough of Hammersmith & Fulham. The combined sites were designated Opportunity Area status in the Draft London Plan and the three landholders are working closely together to submit a comprehensive planning application having signed a formal collaboration agreement.

 

The valuation of Earls Court & Olympia including the 50 per cent interest in Empress State declined by 9.9 per cent to £434.8 million in the year.

 

Outlook 

Throughout the economic downturn, central London has continued to demonstrate growth in visitor numbers and a stronger level of consumer spending than the rest of the UK. Investment property values began to recover in the second half of the year from a trough in values around the middle of 2009 and rental levels have stabilised.

 

The weak exhibition market will impact the operational performance of Earls Court & Olympia at least through 2010. However, currently around 80 per cent of 2010 budgeted exhibition licence fees were contracted. This is a key driver to a number of ancillary revenue streams such as parking and catering. Good progress has been made in pursuing a planning application for Earls Court.

 

Due to relatively low supply of new office space, the greater tenant diversification and consistent attractiveness of the West End to companies from a range of industries, the Great Capital Partnership is well positioned to benefit from economic recovery due to its strategic focus on prime properties with added value potential.

 

Occupancy levels, footfall and tenant demand at Covent Garden have been very encouraging. The major international technology brand opening in the Summer of 2010 on the Piazza in Bedford Chambers is expected to have a positive impact on the level of trade and increase the attractiveness of the area to other potential tenants.

 

Following Demerger, the Group, with its sound financial position and concentration of assets in three landmark estates in the central London real estate market, is well placed to pursue its objective of delivering superior total returns for shareholders.

 

INTERNATIONAL

 

USA 

US dollar net rental income from the California portfolio fell by a modest 1 per cent in the year but exchange rate fluctuations resulted in an improved sterling performance of £3.7 million to £24.6 million. Valuations declined by a significant 20.8 per cent to £348 million reflecting market conditions.

 

Retail trading conditions remained weak across the portfolio, for example like-for-like sales at Serramonte were down 9 per cent in the year and footfall also fell by around 9 per cent. Total portfolio occupancy at the year end was at 91 per cent.

The Group continues to actively explore tax efficient options to exit over time its direct investment in the USA.

 

Other 

In China, our relationship is developing well with Harvest Capital and China Resources. Our first co-investment in Harvest Capital's fund CR1 is showing a surplus. In India, our joint venture Prozone Liberty, in which we have a 25 per cent interest, is working on four major shopping centre projects with the first in Aurangabad due for completion in 2010. Our other international investments were valued at £77 million at 31 December 2009.

 

 

 

 

David Fischel

Chief Executive

9 March 2010

 

FINANCIAL REVIEW

 

Financing strategy and financial management

In 2009, the Group's management of its funding has focused largely on strengthening the balance sheet and containing risk. This has involved raising equity and securing medium-term asset-specific debt together with the management of non-speculative hedging of interest rates through swaps on a substantial portion of the Group's floating rate debt. Notable achievements include:

 

- Completion of two equity capital raises, generating cash proceeds of £866 million net of expenses

 

- £290 million, 5 year joint venture financing for Cardiff completed in August 2009

 

- Asset-specific loan prepayments and swap terminations of £189 million in 2009 to reduce re-financing and loan financial covenant risk

 

- £525 million, 7 year re-financing for Lakeside secured facility concluded in January 2010

 

- Plans to utilise £150 million of cash in 2010 to prepay/refinance loans and terminate interest rate swaps of which £100 million spent so far in 2010.

 

The Group considers that maximising medium and long-term cash returns on capital is a key priority for delivering added shareholder value. The Group has risk related investment hurdle rates which have been approved by the Investment Committee and against which capital expenditure proposals are evaluated. Once a year strategic plans for each asset are prepared and these assist in determining capital allocation priorities for the Group which are reflected in the annual budget. Performance is regularly monitored against key business performance indicators. Treasury policies are in place and the Board regularly reviews levels of debt, financial risks and plans to manage its risks.

 

Capital Raising

The Group successfully completed two equity capital raises in 2009. In May 2009, £592 million, net of expenses, was raised by way of a Firm Placing and a Placing and Open Offer resulting in 200 million new ordinary shares being issued at 310 pence per share.

 

In October 2009, 56.1 million new ordinary shares were issued at 500 pence per new ordinary share raising cash of £274.0 million, net of expenses, through a placing. Following these initiatives the number of shares in issue increased to 623 million.

 

As the capital raisings were structured as placings rather than rights issues, no re-statement of prior year comparatives is made. However, the impact of the additional shares issued as a result of the capital raises contributed 25.9 per cent, over two thirds, of the 36.9 per cent reduction (7.5 pence) in adjusted earnings per share in 2009 from 29.0 pence to 18.3 pence. Adjusting the 31 December 2008 net assets per share (diluted, adjusted) of 745 pence per share for the impact of the capital raises gives a re-based value of 580 pence per share.

 

Results for the year ended 31 December 2009

The results for the year ended 31 December 2009 reflect a continuation in the first half of the difficult market conditions in the UK commercial property market that characterised 2008. During the second half of the year there was a significant improvement in market conditions with a reduced level of tenant administrations and upward movement in property valuations as measured by the IPD UK monthly property index.

 

Income statement

The £329.1 million loss before tax recorded in 2009 was again largely the result of unrealised, non-cash property valuation reductions. The second half included a marked improvement in property valuations, resulting in a gain on property valuations for the Group of £123.0 million, 2 per cent, in the second half of the year. The movement in fair value of the Group's derivatives, in particular interest rate swaps, (a charge of £665.1 million in 2008) turned to a gain of £416.5 million in 2009 and contributed to a markedly reduced loss for the year.

 

Underlying earnings for the year, which excludes valuation and exceptional items, fell by 13.0 per cent from £104.9 million to £91.3 million, as illustrated in Chart 8, and adjusted earnings per share fell by 36.9 per cent to 18.3 pence. To view Chart 8, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf

 

 

The Group's net rental income contracted by 3.3 per cent to £370.9 million. CSC's net rental income reduced by £13.5 million due to the impact of tenant administrations and the subsequent re-letting of vacant units at lower rental levels. Capital & Counties net rental income increased by £0.9 million. This increase reflects the full year impact of the acquisition of the Empress State property in the second half of 2008 (£10.6 million in 2009, £5.0 million in 2008), largely offset by the impact of lower rental income as a result of property disposals in the year. The divisions' results are described in more detail in their respective Operating Reviews.

 

Administration expenses reduced by £19.8 million to £43.4 million for 2009, below our target of £45 million outlined in the 2008 annual report. The saving largely resulted from the absence in 2009 of the "one-off" reorganisation costs (£11.6 million in 2008) and headcount related costs which were approximately £11 million lower than 2008. Costs of £1.9 million in relation to the proposed de-merger of Capital & Counties are included in the 2009 administration costs.

 

Underlying net finance costs, which exclude exceptional items of £44.0 million, increased by £23.5 million in 2009. Average gross debt increased compared to 2008 with the proceeds from the two capital raises largely being held as cash to mitigate continued uncertainty on property valuations and the resultant loan covenant and re-financing risk. The interest rate received on these cash deposits was approximately 0.5 per cent, significantly lower than the Group's average debt cost of 5.9 per cent. The interest income received on the Group's holdings of floating rate CMBS notes, secured on a number of its shopping centre assets, reduced by £10 million in 2009. A £7.6 million higher non-cash charge on the debt component of MetroCentre compound financial instrument comprised the majority of the additional higher net finance cost.

 

Balance Sheet

As detailed in the table below, net assets (diluted, adjusted) have increased by £148 million since 31 December 2008. The significant factors in this growth were the two features dominating this year's results, namely the beneficial effect of the two capital raises, totalling £866 million, net of expenses, which more than offset the further reduction in property values experienced in the first half of 2009, resulting in a full year property revaluation deficit of £732 million. Non-core properties with a carrying value of £222 million were disposed of in the year.

 

Balance sheet	31 December		31 December
	2009		2008
	£m		£m
Investment, development and trading properties	6,206.8		7,107.7
Investments	85.1		128.6
Net external debt	(3,176.2)		(4,099.5)
Other assets and liabilities	(694.6)		(1,151.0)
Net assets	2,421.1		1,985.8
Minority interest	-		(27.8)
Attributable to equity shareholders	2,421.1		1,958.0
Fair value of derivatives (net of tax)	335.5		659.0
Other adjustments	88.0		78.1
Adjusted net assets	2,844.6		2,695.1
Effect of dilution	101.3		102.8
Net assets (diluted, adjusted)	2,945.9		2,797.9

 

The fair value provision for financial derivatives, principally interest rate swaps, included in other assets and liabilities above, improved by £418 million largely as a consequence of increased medium-term UK interest rates. The residual provision for interest rate swaps, net of tax, of £336 million is excluded from adjusted net assets.

 

Adjusted net assets per share

Adjusted net assets per share of 464 pence at 31 December 2009 represents a reduction of 38 per cent from the 31 December 2008 value of 745 pence. The reduction is attributable to the impact of the two capital raises (22 per cent) and then to the property valuation deficit (20 per cent). The reduction in net assets per share is shown in Chart 9. To view Chart 9, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf

 

 

Cash flow

The cash flow summary below shows a net outflow before financing of £62.8 million, a substantial improvement from 2008, driven by cash proceeds from the disposals of non-core property assets during 2009 and lower expenditure on property related assets.

 

	2009		2008
	£m		£m
Underlying operating cash generated	342.5		336.1
Net finance charges paid	(274.5)		(233.0)
Net movement in working capital	(6.8)		26.3
Taxation	0.1		1.8
Cash flow from operations	61.3		131.2
Property development/investments/minority interest	(257.1)		(400.9)
Sale proceeds of property/investments	210.3		106.6
REIT entry charge	(38.8)		(48.4)
Pension buy-out	(15.5)		-
Dividends	(23.0)		(123.0)
Cash flow before financing and equity raises	(62.8)		(334.5)
Net debt (repaid)/drawn	(301.9)		208.2
Equity capital raised	865.7		2.5
Others	(9.2)		6.3
Net increase/(decrease) in cash and cash equivalents	491.8		(117.5)

 

Cash flow from operations has fallen from the comparable period in 2008 largely due to higher finance charges. The higher finance charges include exceptional outflows in respect of revolving credit facility arrangement fees (£5.4 million) and the termination of derivative financial instruments (£34.3 million). Adjusting for these items, which are of a non-recurring nature, gives an underlying operating cash flow of £101.0 million.

 

The table below illustrates that underlying operating cash flow generated covers the paid and proposed dividends (totalling 16.5 pence per share) for 2009.

 

Dividends - cash cover	2009
	£m
Underlying operating cash generated	342.5
Net finance charges excluding exceptional cash items of £39.7 million	(234.8)
Net movement in working capital	(6.8)
Taxation	0.1
Underlying operating cash generated	101.0
Paid and proposed 2009 dividends of 16.5p	(99.7)

 

A one-off cash payment of £15.5 million was made to facilitate an insurance company buyout of the Liberty International PLC defined benefit pension fund in December 2009, thus eliminating the future funding liabilities for the company.

 

2009 investment in property related assets was mainly restricted to existing commitments in response to prevailing market conditions. The most significant expenditure was on completion of the St David's, Cardiff development (£89.2 million), which opened in October 2009. Other expenditure in the year included the completion of the Westgate, Oxford centre purchase (£41.6 million), Eldon Square (£27.8 million) and MetroCentre (£20.0 million).

 

Cash proceeds from the disposal of properties and investments generated cash of £210.3 million, with the largest transactions being £63.6 million received for the Broadgate development in Leeds and £26.8 million for a property in Manchester sold to Primark, the existing occupier. Sales of third party CMBS notes generated cash proceeds of £18.7 million.

 

Net debt repayments of £302 million are discussed in the debt structure section below. Net proceeds of the two completed capital raises resulted in the significant increase in the Group's cash balance at the end of 2009.

 

Capital commitments

The Group has an aggregate commitment to capital projects of £142 million, which includes £13 million for commitments in respect of investments in China. £76 million of the outstanding commitments are in respect of remaining payments for the extension to St David's, Cardiff and associated residential development. Based on current development plans it is anticipated that £123 million of these commitments will be funded in 2010.

 

Financial position

The Group's debt has been largely arranged on an asset-specific basis, with limited or non-recourse to the Group. This structure permits the Group a high degree of financial flexibility in dealing with individual property issues, compared to a financing structure based on a single Group-wide borrowing facility. This flexibility has proved to be advantageous in the difficult debt and commercial property markets experienced in the past two years.

 

In addition to the asset-specific debt, the Group has a corporate revolving credit facility of £248 million, which can be utilised to fund development and investment opportunities before they reach the stage that they can support their own financing arrangements. This facility, which has recently been extended to June 2013, is currently undrawn.

 

Net external debt reduced from £4,100 million at 31 December 2008 to £3,176 million at 31 December 2009. The two capital raises, discussed previously, were the major factor in the reduction in net external debt. In addition, non-cash movements resulted in the gross debt position reducing by a further £109 million.

 

The Group had cash of £583 million at 31 December 2009, and has an undrawn revolving credit facility of £248 million as detailed above. The Group is in compliance with all of its corporate and asset-specific loan covenants other than Xscape Braehead LTV covenant referred to below.

 

Group debt ratios were as follows:	31 December		31 December
	2009		2008
Debt to assets	51%		58%
Interest cover	142%		145%
Weighted average debt maturity	5.1 years		5.8 years
Weighted average cost of gross debt	5.9%		6.0%
Proportion of gross debt with interest rate protection	102%		103%

 

The debt to assets ratio was 51 per cent, down from 58 per cent at 31 December 2008, with the impact of the equity capital raised more than compensating for the impact of the revaluation deficit on the value of the Group's property assets.

Following the Lakeside facility re-financing that was completed in January 2010:

 

·; The weighted average debt maturity increased to 5.8 years from 5.1 years as at 31 December 2009

·; The weighted average cost of gross debt reduced to 5.8 per cent from 5.9 per cent as at 31 December 2009

·; Proportion of gross debt with interest rate protection fell to 99 per cent from 102 per cent at 31 December 2009

·; The next significant date for repayment of CMBS related debt is now 2015

 

Debt structure and maturity

 

The Group's debt maturity profile is shown in Chart 10. To view Chart 10, please paste the following URL into the address bar of your browser:

 

http://www.rns-pdf.londonstockexchange.com/rns/2704I_-2010-3-8.pdf

 

 

During 2009, the Group repaid a net £302 million of debt. Scheduled loan repayments were £78 million with an additional £139 million of other principal prepayments largely relating to the facilities secured on the Lakeside (£58.5 million) and the Earls Court & Olympia (£65 million) properties. The corporate revolving bank facility, of which £140 million was drawn at 31 December 2008, was repaid in the year and remains undrawn.

 

In 2010, £141 million of debt is due for repayment, including the £79 million of convertible bonds, with the balance being standard principal amortisation. Following the successful re-financing of Lakeside, the next significant secured debt maturity is the Earls Court & Olympia bank loan which occurs in February 2012. A detailed breakdown of the Group's debt maturity is shown in the notes to the financial statements.

 

Financial covenants

Full details of the loan financial covenants are shown in the other information section of this report.

 

Financial covenants apply to £3.0 billion of secured asset-specific debt. The two main covenants are Loan to Value (LTV) and Interest Cover (IC). The actual requirements vary and are specific to each loan. The Group is fully compliant in all financial covenant tests certified to lenders on this secured asset-specific debt.

 

As previously noted, the Group's debt has been largely arranged on an asset-specific basis, with limited or non-recourse to the Group. The flexibility this gives in permitting asset specific issues to be dealt with has proved to be advantageous in the difficult debt and commercial property markets experienced in the past two years.

 

During 2009, the Group made partial asset-specific loan prepayments with associated swap termination costs of £18.3 million and cash deposits of £19.8 million. Cash deposits can be recovered by the Group when financial covenants return to the required level.

 

There are LTV and IC tests that apply to the Group's £252 million of joint venture borrowing. The joint ventures are in compliance with their financial covenants with the exception of the Xscape Braehead Partnership. The 31 December 2009 annual valuation of £52 million for the Xscape Braehead property, which is owned by the Xscape Braehead Partnership, a 50 per cent joint venture between Capital Shopping Centres and a subsidiary of Capital & Regional plc, indicated a loan to value ratio in excess of that specified in the £49 million loan facility secured on the property. Following submission of the valuation to the lender, they served a notice of breach on the Partnership, triggering the cure period. Discussions between the lender and the Partnership as to potential solutions to the breach are in progress.

 

There are three financial covenant tests that apply to the Group's new £248 million secured term and revolving credit bank facility. These are tested semi-annually on a number of the Group's companies, defined as the Borrower Group, and all tests are currently satisfied.

 

There is a minimum capital cover and interest cover condition applicable to the £231 million mortgage debenture tested semi-annually. Both tests were satisfied at 31 December 2009, the latest test date. Compliance with financial covenants is and will continue to be constantly monitored.

Refinancing activity

Lakeside

The existing loan secured on the Lakeside, Thurrock Shopping Centre was due to mature in July 2011. To take advantage of an improvement in bank liquidity and to eliminate refinancing risk this loan was replaced in January 2010 by a 7 year £525 million facility with a consortium of 7 banks. In preparation for this refinancing £58.5 million was prepaid in December 2009.

 

The prepaid loan had a funding cost of 5.5 per cent. The hedging arrangements of the new loan require progressively greater levels of interest rate protection over time. Based on prevailing interest rates, the Group should incur an interest cost of 4.26 per cent in 2010 on this loan.

 

Earls Court & Olympia

In December 2009 the loan facility secured on the Earls Court & Olympia properties was re-negotiated, with the Loan To Value (LTV) covenant being removed and the interest cover covenant, which previously included a number of calculations based on loan tranches, being simplified to one interest cover covenant of 110 per cent. A loan prepayment of £65 million was made with associated swap termination costs of £5.2 million.

Interest rate hedging and fair value of financial instruments

At 31 December 2009 the fair value liability of the Group's derivative financial instruments was £371 million. This liability includes all the Group's derivatives contracts to hedge interest rate and currency risk. The liability reduced by £418 million from the end of 2008. This reduction was largely due to the increase in sterling interest rates for maturity periods greater than three years, with rates for shorter maturities actually falling from the December 2008 levels.

 

During the year the Group terminated £1.6 billion of forward starting interest rate swaps, unattached to asset-specific debt, for a net payment of £10 million, representing the market value liability at the point of termination.

 

Forward hedging of interest rates

The Group's current net debt is fully hedged through a combination of fixed rate debt and interest rate swaps. The following interest rate swap summary table details the amount of forward hedging in place both in nominal amount and average rate payable under the swap contract. The Group's cost of debt will equate to the swap rate payable plus the margin payable to the lender. The re-profiling of interest rate hedges in 2009 reduced forward interest hedging commitments as shown below.

 

	31 December 2009	31 December 2008	31 December 2009	31 December 2008
Interest rate swap summary	Net amount	Net amount	Average rate	Average rate
In effect on or after:	£m	£m	%	%
1 year	3,206	3,595	5.25	5.28
2 years	2,918	3,575	5.18	5.27
5 years	2,325	3,184	5.27	5.16
10 years	625	2,425	5.16	4.69
15 years	500	2,100	4.97	4.58
20 years	500	2,100	4.97	4.58
25 years	125	1,615	4.57	4.40

 

Accounting for Empress State

In August 2009, following the expiry of the option to buy the 50 per cent interest in the Empress State Partnership owned by Land Securities PLC, under IAS 27 "Consolidated and Separate Financial Statements", the Group lost deemed control of the Partnership. This resulted in the accounting treatment for the Group's interest moving from consolidating 100 per cent of the Partnership, with the partner's 50 per cent interest accounted for as a minority interest, to proportionally consolidating the Group's 50 per cent share in the Partnership's assets and liabilities. This resulted in a deemed disposal of £94.4 million of investment property and reduced the Group's gross debt by £78 million.

 

Earls Court & Olympia minority interest buy-out

In December 2009, the Group acquired the 50 per cent minority interest from the former partners in Earls Court & Olympia. The consideration comprised a cash payment of £25.0 million and the waiving of a £5.2 million receivable from one of the former partners. The agreement contains a deferred consideration payment clause, based on a number of factors including the granting of planning permission for the Earls Court & Olympia properties. This deferred consideration has been estimated at £3.8 million after discounting as it is not envisaged that any payment will be due until 2012.

 

Taxation

Since the Group became a UK REIT on 1 January 2007, it has benefited from the tax savings that REIT status provides. The financial benefits to date have amounted to £163 million, comprising net rental income and capital gains sheltered from UK tax.

 

REIT entry charge payments of £39 million were made in 2009, bringing the total paid to date to £103 million, with £65 million remaining to be settled in instalments to 2011.

 

Income and gains from the non-REIT qualifying parts of the Group continue to be subject to taxation, with a net tax charge of £41.0 million in the year to 31 December 2009. This is principally due to a net £43.1 million deferred tax charge arising in respect of fair value gains on derivative financial instruments partially offset by a deferred tax credit arising on investment property valuation deficits in non-REIT qualifying parts of the Group.

 

Underlying earnings for 2009 have benefited from a net tax credit of £3.0 million, which includes prior year adjustments following agreement with the tax authorities of prior year tax computations.

 

 

Ian Durant

Finance Director

9 March 2010 Key risks and uncertainties

The key risks and uncertainties facing the Group are as set out in the table below:

 

Risk	Description	Impact	Mitigation
Financing
Liquidity	Reduced availability	Insufficient funds to	Capital raisings have enhanced liquidity position
		meet operational and	Regular reporting of current and projected position
		financing needs	to the Board
			Efficient treasury management and strict credit control
Economic and	Property values decrease	Impact on covenants	Regular monitoring of LTV and ICR covenants
property market			Covenant headroom monitored and maintained;
downturn	Reduction in rental income		regular market valuations; focus on quality assets
Interest cover	Interest rates fluctuate	Lack of certainty over	Hedging to establish long term certainty
		interest costs
Market price risk of	Interest rates fluctuate	Potential cash outflow	Manage derivative contracts to achieve a balance
fixed rate	resulting in significant	if derivative contract	between hedging interest rate exposure and
derivatives	assets and or liabilities	contains break clause	minimising potential cash calls
	on derivative contracts
REIT	Breach REIT conditions	Tax penalty or be forced	Regular monitoring of compliance and tolerances
		to leave the REIT regime
	PID requirements	Requirement to pay 90	Alternative sources of investment funding constantly
		per cent of income	under review
		restricts ability to retain
		cash for investment
Group's ordinary	The Group's ordinary	Additional complexity	Professional advice sought in both jurisdictions to
shares are dual-	shares are listed on the	when assessing	ensure Group capital needs are met in optimal
listed	London and	options for capital	manner
	Johannesburg stock	raising
	exchanges
Joint Ventures	Reliance on JV partners'	Partners under -	Agreements in place and regular communication
	performance and	perform or provide	with partners
	reporting	incorrect information
Asset Management
Tenants	Tenant failure	Financial loss	Initial assessment of tenant covenant strength
			Regular reporting and modelling of tenant covenant
			Active credit control process
Voids	Increased voids, failure	Financial loss	Policy of active tenant mix management
	to let developments
Reputation
Responsibility for	Failure of Health & Safety	Impact on reputation	Annual audits carried out by external
visitors to shopping		or potential criminal/	consultants
centres		civil proceedings	Heath & Safety policies in place
Business	Lost access to centres	Impact on footfall and	Documented Business Recovery Plans in place
interruption	or head office	tenant income	Security team training and procedure in
		Adverse publicity	shopping centres
			Terrorist Insurance is in place
			Flu pandemic recovery plan documented
People/HR
Staff	Key staff	Loss of key members	Succession planning; performance
		of the management	evaluation; training and development;
		team could impact	incentive reward
		adversely on the
		Group's success
Developments
Time	Planning	Securing planning	Policy of sustainable development and regeneration
		consent for	of brownfield sites
		developments	Constructive dialogue with planning authorities
Cost and letting	Construction cost	Returns reduced by	Approval process based on detailed project costs;
risk	overrun, low	increased costs or	regular monitoring and forecasting of project costs
	occupancy levels	delay in securing tenants	and rental income; and fixed cost contracts

Directors' responsibilities

 

Statement of Directors' responsibilities

The statement Directors' responsibilities has been prepared in relation to the Group's full Annual Report for the year ended 31 December 2009. Certain parts of the Annual Report are not included within this announcement.

 

We confirm to the best of our knowledge:

 

·; the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Group; and

 

·; the Operating and Financial Review includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

 

Signed on behalf of the Board on 9 March 2010

 

 

 

 

David Fischel

Chief Executive

 

 

 

 

Ian Durant

Finance Director

 

 

 

Consolidated income statement for the year ended 31 December 2009

 

		2009	2008
	Notes	£m	£m
Revenue	2	578.9	618.2
Rental income		568.4	607.4
Rental expenses		(197.5)	(223.9)
Net rental income	2	370.9	383.5
Other income	3	6.8	0.5
Deficit on revaluation and sale of investment and development property	4	(768.2)	(2,057.0)
Profit on sale of subsidiary		-	0.8
Loss on sale and impairment of investments	5	(10.4)	-
Write down of trading property		(4.6)	(5.8)
Impairment of other receivables	6	(12.0)	-
		(417.5)	(1,678.0)
Administration expenses		(43.4)	(63.2)
Impairment of goodwill		-	(35.0)
Operating loss		(460.9)	(1,776.2)
Finance costs	7	(237.4)	(230.3)
Finance income		6.3	8.6
Other finance (costs)/income	7	(53.6)	0.9
Change in fair value of derivative financial instruments		416.5	(665.1)
Net finance income/(costs)		131.8	(885.9)
Loss before tax		(329.1)	(2,662.1)
Current tax		2.7	7.0
Deferred tax		(40.6)	82.2
REIT entry charge		(3.1)	(3.6)
Taxation	8	(41.0)	85.6
Loss for the year		(370.1)	(2,576.5)
Loss attributable to:
Equity shareholders		(338.8)	(2,451.3)
Minority interests		(31.3)	(125.2)
Earnings per share from continuing operations
Basic loss per share	19	(68.1)p	(678.1)p
Diluted loss per share	19	(66.1)p	(651.1)p
Weighted average number of shares		497.7m	361.5m

Adjusted earnings per share are shown in note 19.

Consolidated statement of comprehensive income

for the year ended 31 December 2009

 

	2009	2008
	£m	£m
Loss for the year	(370.1)	(2,576.5)
Other recognised income and expense in the year
Actuarial loss on defined benefit pension schemes	(14.5)	(8.1)
Exchange differences	2.2	14.0
Fair value losses on investments	(5.3)	(10.1)
Net loss recognised in equity due to minority interests	(0.3)	(0.5)
Tax on items taken directly to equity	(2.8)	7.6
Other comprehensive (expense)/income for the year	(20.7)	2.9
Total comprehensive expense for the year	(390.8)	(2,573.6)
Attributable to:
Equity shareholders	(359.2)	(2,447.9)
Minority interests	(31.6)	(125.7)
Total comprehensive expense for the year	(390.8)	(2,573.6)

 

  Consolidated balance sheet

as at 31 December 2009

 

				2009	2008
			Notes	£m	£m
Non-current assets
Investment and development property			10	6,182.6	7,074.4
Plant and equipment				1.9	1.3
Investments				58.3	96.3
Investments in associate companies				26.8	32.3
Trade and other receivables			12	69.8	95.6
				6,339.4	7,299.9
Current assets
Trading property			11	24.2	33.3
Derivative financial instruments			17	15.0	29.6
Tax assets				1.1	-
Trade and other receivables			12	86.1	97.2
Cash and cash equivalents			13	582.5	70.9
				708.9	231.0
Total assets				7,048.3	7,530.9
Current liabilities
Trade and other payables			14	(285.2)	(364.9)
Tax liabilities				-	(1.9)
Borrowings			15	(148.5)	(95.2)
Derivative financial instruments			17	(386.1)	(818.5)
				(819.8)	(1,280.5)
Non-current liabilities
Borrowings			15	(3,740.1)	(4,195.5)
Deferred tax provision			8	(37.1)	-
Other provisions				(8.6)	(7.3)
Other payables				(21.6)	(61.8)
				(3,807.4)	(4,264.6)
Total liabilities				(4,627.2)	(5,545.1)
Net assets				2,421.1	1,985.8
Equity
Ordinary shares			21	311.3	182.6
Share premium			21	1,005.7	993.4
Treasury shares			22	(9.7)	(10.8)
Convertible bond reserve				6.7	7.6
Other non-distributable reserves				286.9	287.3
Retained earnings				820.2	497.9
Attributable to equity shareholders				2,421.1	1,958.0
Minority interests				-	27.8
Total equity				2,421.1	1,985.8

Consolidated statement of changes in equity

for the year ended 31 December 2009

 

	Attributable to equity holders of the Group
					Other non-
	Share	Share	Treasury	Bond	distributable	Retained		Minority	Total
	capital	premium	shares	reserve	reserves	earnings	Total	interest	equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2009	182.6	993.4	(10.8)	7.6	287.3	497.9	1,958.0	27.8	1,985.8
Loss for the year	-	-	-	-	-	(338.8)	(338.8)	(31.3)	(370.1)
Other comprehensive income:
Fair value losses on
investments	-	-	-	-	(5.3)	-	(5.3)	-	(5.3)
Exchange differences	-	-	-	-	2.2	-	2.2	-	2.2
Actuarial loss on defined
benefit pension schemes	-	-	-	-	-	(14.5)	(14.5)	(0.3)	(14.8)
Tax on items taken directly
to equity	-	-	-	-	(2.0)	(0.8)	(2.8)	-	(2.8)
Total comprehensive income
for the year ended
31 December 2009	-	-	-	-	(5.1)	(354.1)	(359.2)	(31.6)	(390.8)
Transactions with equity
shareholders
Ordinary shares issued	128.0	-	-	-	737.7	-	865.7	-	865.7
Realisation of merger reserve	-	-	-	-	(737.7)	737.7	-	-	-
Dividends paid	-	-	-	-	-	(28.2)	(28.2)	-	(28.2)
Total reserve transfers,
contributions from and
distributions to shareholders	128.0	-	-	-	-	709.5	837.5	-	837.5
Changes in ownership
interest
Conversion of bonds	0.7	12.3	-	(0.9)	-	0.9	13.0	-	13.0
Loss of control of deemed
subsidiary	-	-	-	-	-	-	-	(8.0)	(8.0)
Increase in partner capital	-	-	-	-	-	0.3	0.3	-	0.3
Minority interest additions	-	-	-	-	-	-	-	11.8	11.8
Purchase of minority interest	-	-	-	-	-	(34.3)	(34.3)	-	(34.3)
Realise revaluation reserve on
disposal of investments	-	-	-	-	4.5	-	4.5	-	4.5
Fair value of share based
payments	-	-	-	-	0.2	-	0.2	-	0.2
Acquisition of treasury shares	-	-	(0.2)	-	-	-	(0.2)	-	(0.2)
Disposal of treasury shares	-	-	1.3	-	-	-	1.3	-	1.3
Total transactions with
shareholders	0.7	12.3	1.1	(0.9)	4.7	(33.1)	(15.2)	3.8	(11.4)
Balance at 31 December 2009	311.3	1,005.7	(9.7)	6.7	286.9	820.2	2,421.1	-	2,421.1

Consolidated statement of changes in equity

for the year ended 31 December 2008

 

	Attributable to equity holders of the Group
					Other non-
	Share	Share	Treasury	Bond	distributable	Retained		Minority	Total
	capital	premium	shares	reserve	reserves	earnings	Total	interest	equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2008	181.4	975.6	(9.6)	9.1	275.4	3,075.1	4,507.0	201.9	4,708.9
Loss for the year	-	-	-	-	-	(2,451.3)	(2,451.3)	(125.2)	(2,576.5)
Other comprehensive income:
Fair value losses on
investments	-	-	-	-	(10.1)	-	(10.1)	-	(10.1)
Exchange differences	-	-	-	-	14.0	-	14.0	-	14.0
Actuarial loss on defined
benefit pension schemes	-	-	-	-	-	(8.1)	(8.1)	(0.5)	(8.6)
Tax on items taken directly
to equity	-	-	-	-	5.6	2.0	7.6	-	7.6
Total comprehensive income
for the year ended
31 December 2008	-	-	-	-	9.5	(2,457.4)	(2,447.9)	(125.7)	(2,573.6)
Transactions with equity
shareholders
Dividends paid	-	-	-	-	-	(123.0)	(123.0)	-	(123.0)
Total reserve transfers,
contributions from and
distributions to shareholders	-	-	-	-	-	(123.0)	(123.0)	-	(123.0)
Changes in ownership interest
Conversion of bonds	1.2	17.8	-	(1.5)	-	1.5	19.0	-	19.0
Minority interest additions	-	-	-	-	-	-	-	33.7	33.7
Minority interest disposals	-	-	-	-	-	-	-	(2.7)	(2.7)
Compound financial instruments	-	-	-	-	-	-	-	(75.3)	(75.3)
Movement between reserves	-	-	-	-	2.4	(2.4)	-	-	-
Preferred dividend relating to
Earls Court acquisition	-	-	-	-	-	4.1	4.1	(4.1)	-
Acquisition of treasury shares	-	-	(3.8)	-	-	-	(3.8)	-	(3.8)
Disposal of treasury shares	-	-	2.6	-	-	-	2.6	-	2.6
Total transactions with
shareholders	1.2	17.8	(1.2)	(1.5)	2.4	3.2	21.9	(48.4)	(26.5)
Balance at 31 December 2008	182.6	993.4	(10.8)	7.6	287.3	497.9	1,958.0	27.8	1,985.8

 

 

 

Consolidated statement of cash flows

for the year ended 31 December 2009

 

 

		2009	2008
	Note	£m	£m
Cash generated from operations	16	335.7	362.4
Interest paid		(293.1)	(241.6)
Interest received		18.6	8.6
Taxation		0.1	1.8
Cash flows from operating activities		61.3	131.2
Cash flows from investing activities
Purchase and development of property, plant & equipment		(227.5)	(270.6)
Sale of property		180.2	101.6
REIT entry charge paid		(38.8)	(48.4)
Sale of interest in subsidiary companies		-	5.0
Purchase of minority interest		(25.0)	-
Sale of investments		30.1	-
Purchase of subsidiary companies		-	(41.3)
Loss of deemed control of former subsidiary		(3.7)	-
Purchase of non-current investments		(0.9)	(86.2)
Purchase of associate companies		-	(2.8)
Purchase of pension insurance policy		(15.5)	-
Cash flows from investing activities		(101.1)	(342.7)
Cash flows from financing activities
Partnership equity introduced		12.0	6.5
Issue of shares		865.7	2.5
Acquisition of treasury shares		(0.2)	(3.8)
Cash transferred to restricted accounts	13	(19.8)	-
Borrowings drawn		246.1	439.0
Borrowings repaid		(548.0)	(230.8)
Equity dividends paid		(23.0)	(123.0)
Cash flows from financing activities		532.8	90.4
Effect of exchange rate changes on cash and cash equivalents		(1.2)	3.6
Net increase/(decrease) in cash and cash equivalents		491.8	(117.5)
Cash and cash equivalents at 1 January		70.9	188.4
Cash and cash equivalents at 31 December	13	562.7	70.9

 

Notes