Half Yearly Report

30 JULY 2015

INTU PROPERTIES PLC

INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2015

David Fischel, Chief Executive, commented:

"Intu has recorded a strong first half of 2015 with 6 per cent growth in underlying earnings per share and a £162 million (1.9 per cent) revaluation surplus, taking our total property value to £9.5 billion.

We were particularly encouraged by the continued improvement in retailer demand for quality space in pre-eminent destinations, with leases signed in the period in aggregate a healthy 12 per cent above previous passing rent and we have a promising number of further lettings in the pipeline.

Retailers are responding positively to taking space in centres where change and investment are underway. We attract over 400 million customer visits a year and aim to provide them with a great experience which encourages them to come more often, stay for longer and spend more with our retailers. Intu has the UK's most digitally connected centres with an active online marketing database of over two million subscribers.

Our ten year UK investment programme has risen to £1.5 billion. We are on site with leisure and restaurant projects at five separate centres and expect to start the major retail and leisure extension at intu Watford in the final quarter of 2015, turning the centre into a major north of London regional destination.

We continue to seize the significant opportunity we see in Spain to create a quality business of scale in an attractive market. We acquired our second top 10 centre earlier this year - Puerto Venecia in Zaragoza - and exercised our option on land near Malaga where we expect to begin construction next year on a major shopping resort to be called intu Costa del Sol.

On the broader retail landscape, we were pleased with the news from the recent UK Budget that Sunday Trading laws are to be reviewed. Sunday Trading legislation is vastly out of date in today's multi-channel world and creates unfairness amongst retailers. As such, we believe the case for deregulation is overwhelming; it would generate substantial economic growth, create thousands of extra jobs and would benefit our customers, the vast majority of whom are telling us that they want the flexibility to shop where and when they want.

In summary, we are now clearly seeing the benefits of our strategy of the last few years, combining selective quality acquisitions, a focus on tenant mix, improved customer experience, both on and offline, and continuing investment in our existing centres. As previously guided, we remain on track to return to a positive like-for-like rental performance for the full year and are well positioned to deliver a more meaningful uplift in 2016."

Investor conference call

A presentation to analysts and investors will take place at UBS, 1 Finsbury Avenue, London EC2 at 09.30BST on 30 July 2015. The presentation will also be available to international analysts and investors through a live audio call and webcast. The presentation and a copy of this announcement will be available on the Group's website intugroup.co.uk.

Enquiries

First half highlights

1 Including Group share of joint ventures

Please refer to glossary for definition of terms

· Significant increase in net rental income and underlying earnings from recent acquisitions. Encouraging improvement in like-for-like net rental income trend (H1 2015: -1.0 per cent due to units held for redevelopment; 2014: -3.2 per cent)

· Profit for the period of £262 million, including £162 million property revaluation surplus (2014 - £602 million profit, including £573 million of property revaluation surplus)

· Property revaluation surplus of 1.9 per cent like-for-like, partially attributable to rental value growth of 0.6 per cent. Out-performed the IPD monthly retail property index growth of 1.2 per cent which included rental value growth of 0.1 per cent

· Underlying earnings per share increased by 6 per cent to 6.8 pence reflecting not only the positive impact of acquisitions but also lower average finance costs

· Continuing improvement in retailer demand for quality space, both in the UK and Spain, with 107 long term leases signed for £18 million new annual rent, 12 per cent above previous passing rent and in line with valuation assumptions. Strong pipeline of potential lettings

· Robust operating metrics for occupancy and footfall with estimated retailer sales up 3.4 per cent

· Net asset value per share increased to 385 pence, a total financial return for the period of 4 per cent

· Market value of properties increased to £9.5 billion from £9.0 billion with the acquisition of Puerto Venecia in Zaragoza, Spain and revaluation surplus

· Five projects with a total cost of over £100 million are on site including leisure and restaurants at intu Potteries and intu Victoria Centre and major restaurant projects at intu Eldon Square, intu Metrocentre and intu Bromley

· Four major developments at intu Watford, intu Broadmarsh, intu Lakeside and intu Costa del Sol, with a total cost of around £650 million (anticipated Intu cost of £400 million) are on target to commence in the next 18 months

Presentation of information

Amounts are presented including the Group's share of joint ventures. See Financial Review for details.

Contents

About Intu

Intu is the leading owner and manager of prime regional shopping centres in the UK.

A FTSE 100 company, Intu owns and operates many of the UK's biggest and most popular retail and leisure destinations, including nine of the top 20, incorporating super-regional centres such as intu Trafford Centre, intu Lakeside and intu Metrocentre, together with a number of city centre locations from Watford to Newcastle.

With 23 million sq. ft. of space hosting top UK and international retailers from Apple to Zara, Intu centres attract some 400 million customer visits from over half of the UK's population every year.

Intu has a UK investment pipeline of £1.5 billion over the next ten years to add 2.6 million sq. ft. of new retail and leisure space, of which 1.7 million sq. ft. is already consented. Major projects due to be underway soon include the extension and refurbishment at intu Watford and the leisure expansion at intu Lakeside.

Intu also has a growing presence in the Spanish market, owning two of Spain's top 10 centres, intu Asturias in Oviedo, and Puerto Venecia in Zaragoza, a development site near Málaga and development options on a further three sites in Valencia, Palma and Vigo.

intu creates a compelling experience for its customers, both on and offline, delivering on its brand promise to provide the most digitally connected shopping centres, world class service and events with a difference. National initiatives include the annual 'Everyone's Invited' event which in 2014 increased footfall that weekend by an average of 13%. Our objective is for customers to come more often and stay for longer, in turn helping intu's retailers to flourish.

With some 115,000 people employed at Intu's centres in the UK, representing some 4% of the UK's total retail workforce, Intu is fully committed to supporting its local communities and the wider environment and is proud to have received widespread recognition for its Corporate Responsibility achievements, including the coveted BitC CommunityMark. For further information see intugroup.co.uk.

This press release contains "forward-looking statements" regarding the belief or current expectations of Intu Properties plc, its Directors and other members of its senior management about Intu Properties plc's businesses, financial performance and results of operations.

These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Intu Properties plc and are difficult to predict, that may cause actual results, performance or developments to differ materially from any future results, performance or developments expressed or implied by the forward-looking statements. These forward-looking statements speak only as at the date of this press release. Except as required by applicable law, Intu Properties plc makes no representation or warranty in relation to them and expressly disclaims any obligation to update or revise any forward-looking statements contained herein to reflect any change in Intu Properties plc's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Any information contained in this press release on the price at which shares or other securities in Intu Properties plc have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance.

CHIEF EXECUTIVE'S REVIEW

We have had a strong first half of 2015, making progress on all four of our main objectives. Our long-standing focus is on developing, investing in and creatively managing the very best shopping centres. We have recorded further revaluation gains with retailers continuing to look for extra physical space, especially flagship stores in prime centres such as those owned by Intu. With improving conditions, the Group's net asset value per share and underlying earnings per share have increased in the period.

Overview of first half 2015 activity

We are clearly seeing the benefits of our strategy of very selective quality acquisitions in the last few years combined with enhancing existing assets focusing on the retail and leisure tenant mix and improved customer experience.

Specifically, in the period we have progressed each of our key priorities:

· Optimising asset performance

o valuation gains from improved rental values and some yield compression, with particularly strong performance from assets where we have recently been investing

o an encouraging level of lettings completed and a strong pipeline of potential lettings, demonstrating strengthening retailer demand and driving improving trends in net rental income

o continued high level of occupancy at 95 per cent and a 3.4 per cent increase in retailer sales in the period

· Seizing the growth opportunity in Spain

o completed the acquisition of Puerto Venecia, valued at €450.8 million, and, subject to final regulatory approvals, entered into a joint venture agreement with CPPIB to take a 50 per cent stake in the centre

o introduced the intu brand to Spain with intu Asturias, formerly Parque Principado, Oviedo

o delivered positive operating metrics from these two top 10 centres

o exercised option to take ownership of development site and furthered tenant demand for the planned shopping resort development, intu Costa del Sol, near Málaga. We anticipate being on site in 2016

· Making the brand count

o registrants to in-centre Wi-Fi now over two million, with our online active marketing database also over two million subscribers delivering above average industry metrics on email marketing campaigns

o net promoter score continues to improve through world class customer service and the quality of our national events programmes as we benefit from intu's national profile

o ongoing improvements to our transactional website, with visits up 40 per cent in the period

· UK development momentum

o development programme increased from £1.3 billion to £1.5 billion and on track, moving forward with our timetable

o mall refreshment and restaurant quarter at intu Victoria Centre and leisure extension at intu Potteries due to be completed in the latter part of 2015

o commenced three restaurant projects at intu Eldon Square (20 units), intu Metrocentre (11 units) and intu Bromley (five units) due to be completed in 2016

o on target for commencing the extension of intu Watford in late 2015 and starting in 2016 the redevelopment of intu Broadmarsh and introducing significant leisure attractions to intu Lakeside

Our financial position is robust with interest cover at 1.85x, the debt to asset ratio at 45.0 per cent and £500 million cash and available facilities at 30 June 2015.

Outlook and priorities

We are encouraged by the continuing improvement in consumer sentiment and growth in national retail sales. Our pipeline of lettings for both existing space and ongoing projects is indicative of increased retailer appetite for a physical presence in intu centres, particularly those where change and investment are under way.

As we continue to prepare for our larger projects, units held vacant or on flexible terms are now 2 per cent of Group ERV. We highlighted in our 2014 annual results that this factor would continue to impact like-for-like rents in the first half of 2015, but would be more than offset by improvements in the second half of 2015 to deliver a return to like-for-like net rental income growth for the full year assuming no material tenant failures. These results are in line with our expectations set out at the start of the year and we re-iterate this message, positioning ourselves for more meaningful uplifts in 2016.

UK MARKET REVIEW

Investment market

Investment demand remains strong for prime regional shopping centres, an asset class where global institutions are prepared to invest outside of London and the South East.

Shopping centre development remains at low levels with the majority of activity focused on extensions and reconfigurations. The combination of strong investor demand, limited supply and the improving underlying economy should see continued strengthening in valuations.

Occupier market

The majority of economic indicators show improving markets, in particular those that impact on retail. We continue to see wage growth rising faster than inflation providing the customer with more disposable income. The Asda benchmark index shows their measure of household income 11 per cent higher than the previous year.

Consumer confidence continues to rise and is at the highest level for nine years. The proportion of consumers feeling positive about their job prospects and willing to spend money are both at their highest levels for over seven years.

Retail spending, as shown by the British Retail Consortium like-for-like non-food retail sales, continues to show an average growth rate of above 2 per cent against 2014.

Retailer administrations remain at relatively low levels with USC and Bank, amounting to just over 1 per cent of Intu's rent roll, being the only two material failures in the period.

Changing face of UK retail

Retailers, as ever, focus on their most productive growth strategies. As their multi-channel approach becomes more mature with a greater understanding of the requirements and position of the physical store in this strategy, retailers are particularly targeting larger stores in the best locations.

With minimal new space in the pipeline, this involves targeting the best retail and leisure locations which deliver high footfall, extended dwell time, digital integration and an attractive mix of retail, entertainment and experience.

Existing UK retailers are managing the shape and structure of their existing store portfolios through their lease expiry cycle. Next commented in their 2014/2015 annual results that over the last seven years they have increased their net trading space by 42 per cent whilst only increasing their number of stores by 7 per cent. Over this period they have increased the average size of their stores at intu centres by 33 per cent as they have repositioned to larger format flagship stores in the best retail locations.

International entrants to the UK are able to optimise their store portfolio from inception to get maximum coverage. For example, once Apple entered the UK market, they rapidly expanded across the country and their portfolio stands at 38 stand-alone stores. Around three quarters of these stores are in the top 35 shopping centres and Intu are their largest landlord with one-third of their stores in our centres.

Online retailers are also seeing the benefit and need for a physical presence. One such retailer is Simply Be, originally an online only operator which has built up a portfolio of 16 stores since 2011. They have opened half of their stores in the top 35 shopping centres, a quarter in intu centres.

In the recent UK Budget, the government announced it would consult on devolving powers on extending Sunday trading within set parameters to city mayors and local authorities. We agree that the case for deregulation is overwhelming. It would generate positive economic activity and create thousands of jobs, but first and foremost it's what our customers tell us they want - not necessarily to shop longer but to have the flexibility to shop when they want and where they want.

OPERATING REVIEW

Optimising asset performance

Valuation

The aggregate valuation gains on our investment property including the Group's share of joint ventures was £162.2 million, 1.9 per cent like-for-like in the period, significantly ahead of the IPD monthly index, retail, which reported a 1.2 per cent increase.

The weighted average nominal equivalent yield at 30 June 2015 was 5.25 per cent, a reduction of seven basis points in the period, reflecting our ongoing asset management initiatives and strong investment market conditions. Based on the gross portfolio value, the net initial yield "topped-up" for the expiry of rent free periods was 4.55 per cent.

On a like-for-like basis, ERV increased by 0.6 per cent in the period, outperforming the IPD index which indicated a 0.1 per cent increase.

1 Including Group share of joint ventures

2 IPD monthly index, retail

The majority of our shopping centres have increased in value in the period, with the remainder holding their value. There were three main drivers for these increases:

· our major in-town and city centre locations have seen, on average, a ten basis point yield compression as investor demand for these centres increases

· rental values are increasing across most of our centres as new lettings demonstrate improvements in the occupier market

· at centres where we have carried out improvements and reconfigurations we have seen above average increases in rental values as evidence of lettings at new levels comes through. In particular this can be seen at intu Eldon Square and intu Victoria Centre where our investment programme has delivered considerable benefits

The table below shows the main components of the £162.2 million overall surplus:

· St David's, Cardiff has benefitted from increased rental values as the centre becomes ever more established in its market and progresses on its first series of rent reviews. This has also been reflected in a 56 basis point nominal equivalent yield reduction to reflect a centre which has now achieved super prime status

· intu Lakeside has benefitted from yield tightening reflecting the strengthening of tenant mix and upgraded dining offer

· intu Victoria Centre is now starting to see the benefit of the mall refreshment work delivering higher rents from new lettings and some yield compression reflecting the transformed quality of the centre

· intu Derby has benefitted from higher rental values as demand for space increases and yield compression reflects these improvements. In our first year of ownership the value of this centre has increased by 11 per cent

· intu Eldon Square is seeing the benefit of the substantial programme of investment we have undertaken providing an enhanced environment with key new lettings improving rental tone. Yield compression follows from the enhancement and heightened demand at the centre

· intu Merry Hill has benefitted from yield tightening as the tenant mix evolves and prime zone A rents improve from £150 ITZA to £180 ITZA. In our first year of ownership the value of this centre has increased by 9 per cent

· intu Trafford Centre has benefitted from a small uplift in rental values

· intu Chapelfield, a regionally prime centre, has benefitted from yield improvement and continued to show high occupancy

UK operating metrics

* excluding centres with significant development projects; including all centres +0%

Occupancy is 95 per cent and in line with December 2014. The 5 per cent vacancy rate compares favourably to PMA's unit vacancy measure for 'big shopping centres' of 11 per cent.

Like-for-like net rental income was 1.0 per cent lower than the same period in 2014 due to units held for development at intu Metrocentre, intu Victoria Centre and intu Eldon Square where major restaurant developments are under way. This was in line with our expectation.

http://www.rns-pdf.londonstockexchange.com/rns/5019U_3-2015-7-29.pdf

We agreed 96 new long-term leases in the period, amounting to £17 million new annual rent, at an average of 12 per cent above previous passing rent (like-for-like units) and in line with valuers' assumptions. Significant activity in the period includes:

· 39 restaurant lettings across the portfolio, including Five Guys at intu Braehead, Yo Sushi and Byron at both intu Derby and intu Bromley, Joe's Kitchen at intu Derby and intu Victoria Centre, and Coast to Coast at intu Trafford Centre and intu Potteries

· Retail lettings include Kurt Geiger at intu Lakeside where the tenant mix continues to strengthen, Kiko, Swatch and Tiger at intu Victoria Centre and Thomas Sabo, Skechers, Kiko and Smiggle at intu Eldon Square where retailers continue to respond to the refreshed mall environments at both centres

· 75 new shops opened or refitted in our UK centres in the first half of 2015, around 3 per cent of our 2,800 units. Tenants have invested around £30 million in these stores, a significant demonstration of their commitment to our centres

We settled 78 rent reviews in the period for new rents totalling £19 million, an average uplift of 7 per cent on the previous rents.

Footfall has increased by 1 per cent in the period, excluding centres where our development projects are having an impact. For all centres, the number of visitors is unchanged to the same period in 2014 with our customer focused events programmes and world class customer service delivering an outperformance of Experian's measure of UK national retail footfall which declined 1 per cent.

Estimated retailer sales in our centres were up 3.4 per cent in the first half of 2015 against the same period in 2014, continuing the trend we saw in 2014 and ahead of the British Retail Consortium trends. The ratio of rents to estimated sales for standard units reduced marginally in the period to 12.3 per cent.

The difference between annual property income (see Glossary) of £458 million and ERV of £535 million represents £42 million from vacant units and reversion of £35 million, 8 per cent, from rent reviews and lease expiry. Of the £35 million, £5 million relates to reversions only realisable on expiry of leases with over 10 years remaining (for example anchor units), leaving £30 million, 7 per cent, from other lease expiries and rent reviews.

The weighted average unexpired lease term is 7.7 years (31 December 2014 - 7.4 years).

Seizing the growth opportunity in Spain

Our strategy is to create a business of scale through acquisition and development. We will concentrate on the top 10 key catchments, aiming to establish a market leading position in the country through ownership and management of prime shopping resorts, such as Puerto Venecia.

We have consolidated this position in the first six months of 2015. We now own two of the top 10 shopping centres in Spain, a development site near Málaga and development options on sites in Valencia, Palma and Vigo. In addition, we have introduced the intu brand to Spain at intu Asturias, formerly Parque Principado, which has already refreshed the mall environment and will deliver the significant benefits of the brand as seen at our centres in the UK.

Acquisitions

In January 2015 we completed the €451 million acquisition of the 200,000 sq. m. Puerto Venecia shopping resort in Zaragoza. The initial €225 million bridging loan has been successfully syndicated and converted to a five year term loan secured on the asset.

We commented at the time of acquisition that we would look to introduce a joint venture partner and in June 2015 we announced the planned formation of a joint venture at Puerto Venecia with CPPIB, our partner at intu Asturias. The joint venture agreement is based on the €451 million acquisition price and subject to certain completion conditions including regulatory approvals.

We exercised in the period the option we acquired in 2012 for the prime development site for a shopping resort near Málaga, now referred to as intu Costa del Sol. This 30 hectare site is ideally positioned on the main Costa del Sol highway with access to a catchment of three million residents and ten million annual tourists. The total cost to date of the land and pre-development expenditure is €55 million.

The proposed development is progressing well with strong interest from retailers and leisure operators, including a signed framework agreement with Hamleys for a children's world mini theme park and toy centre. We await the final planning approval, which is expected in 2016 to enable the development to start on site.

Development pipeline

1 Represents Intu's share of costs at 50% of total (assumes partner).

2 Intu project costs of €218 million of which €55 million has already been spent

Operational performance

The Spanish economy continues to recover with customer confidence at the highest level since 2000, increasing retailer sales and GDP growth. Our two centres, intu Asturias and Puerto Venecia, are benefitting from these improvements with footfall and retailer sales up by 4 per cent and 10 per cent respectively.

Occupancy at intu Asturias is 100 per cent and Puerto Venecia is 94 per cent.

We agreed 11 new long-term lettings in the period, amounting to €1 million new annual rent, at an average of 8 per cent above previous passing rent (like-for-like units) and in line with valuers' assumptions. New names to our centres included Pandora, Levi's, Napapijri and Ilusiona.

Puerto Venecia was valued at €451 million at 30 June 2015, in line with the acquisition price and intu Asturias increased by €12 million, 6 per cent, to €224 million (Intu share 50 per cent).

Making the brand count

At intu we create compelling experiences that surprise and delight our customers. We aim to attract people for longer, more often, which helps our retailers flourish. This powers our business, creating value for our retailers, our communities and our investors and drives our long term success.

With this in mind we aim to continuously improve these compelling experiences. Our efforts have been recognised by the shopping centre industry, winning significant awards including the following:

· BSCS Opal Awards 2015 for commercialisation - three awards including the highest honour, an Aurora Award, for our partnership with Ratchet Clothing to provide a multichannel environment suited to the young retailer's brand ethos including a pop-up at intu Lakeside and online boutique on intu.co.uk

· BSCS Purple Apple Marketing Awards 2015 - eight awards including the Golden Apple Award for intu Metrocentre's launch of 'The Heart of a Thousand Crystals' chandelier

· Sceptre Awards 2015, recognising best practice and best people - six awards including the highest honour, the Grand Prix awarded for best overall owner/managing agent

Digital connectivity

Wi-Fi registrations at our centres are now over two million. We continue to see approximately 60 per cent of these subscribe for marketing, which along with signups through other channels has increased our active marketing database to over 2.2 million individuals.

The power of this database is now allowing us to target our marketing, with well above the industry standards for email performance, including open rates and click through rates. We now have over 250 affiliate retailers trading on our transactional website, giving customers access to the majority of our retailers online and in centre.

These factors are in turn producing increased sales through intu.co.uk and demand from retailers for email marketing campaigns by intu on their behalf.

Website traffic continues to grow with 19 million website visits in the last 12 months, an increase of over 40 per cent over the prior year period.

Events with a difference

Our nationwide events programme aims to attract people for longer and more often.

All centres participated in our third annual 'Everyone's Invited' weekend. The event focuses heavily on our family audience and delivered a programme of party themed activities. Customer feedback through our tell intu programme showed net promoter scores increasing by around 25 per cent for the weekend.

Following on from the hugely successful Elephant Parade in 2014, we have teamed up with the RSPB for our 2015/2016 UK-wide touring event, The Big Birdhouse Tour. The tour will visit 15 intu shopping centres exhibiting larger than life birdhouses individually designed by well-known personalities raising awareness of and money for the RSPB.

With over half of the UK's population visiting an intu centre at some point through the year on or offline we are now able to work on a national basis with global brands providing high quality promotional events, both physically and digitally, to our customers. In February 2015 we worked with 20th Century Fox to launch their film Home. Following on from the success of this we will be promoting the new Snoopy film for 20th Century Fox in the autumn and we have a summer tie up with a leading children's comic across all our centres providing family orientated activities throughout the school summer holidays.

World Class Service

Our net promoter scores continue to improve as we constantly aim to improve the customer experience in our centres. Net promoter scores for the four months to June 2015, where we have like-for-like research, are running at higher levels than the same period in 2014. We are taking our world class customer service training to the next stage with all intu staff undergoing additional training in 2015.

Commitment to the community

Our corporate responsibility approach is based on three pillars of communities and economic contribution, environmental efficiency and relationships with our stakeholders.

Our shopping centres are embedded in the communities they serve and we provide support for charities and community organisations that address issues important to the long term success of our centres in their communities. We work with charities and community organisations on a local and national level, including The Outward Bound Trust, Retail Gold and Green Gyms. Environmentally we strive to continue to reduce carbon emissions and divert waste from landfills.

We remain the only shopping centre operator, and one of only 36 companies nationally, to achieve the Business in the Community CommunityMark award which recognises our integrated and strategic approach to community investment and that we are making a measurable difference to communities through our commitments.

 UK development momentum

We have made significant progress in the period with our pipeline of development opportunities:

· on track in the second half of 2015 for the completion of projects at intu Victoria Centre (mall refurbishment and creation of 11 new restaurants) and intu Potteries (cinema and catering extension)

· on site at intu Eldon Square, intu Metrocentre and intu Bromley with major restaurant projects, all due to open in early 2016

· received planning approval for the redevelopment of intu Broadmarsh

· identified additional active management projects at intu Merry Hill and Manchester Arndale and we will work with our partners to take these opportunities forward

1 Represents net additional floor space of retail, catering and leisure

2 Timing subject to change due to a number of internal and external factors

3 Represents Intu's share of costs

4 Total project costs of £43 million of which £36 million has already been spent

5 Total project costs of £19 million of which £13 million has already been spent

6 Total project costs of £10 million of which £3 million has already been spent

7 Total project costs of £5 million of which £1 million has already been spent

8 Total project costs of £14 million of which £2 million has already been spent

9 Smaller committed and pipeline projects do not necessarily involve the creation of additional floor space

Principal projects include:

· intu Victoria Centre: Clock tower restaurants, mall refurbishment and external enhancements are due to be completed in the final quarter of 2015. Adding to the new retailers in 2014 we have also introduced Kiko, Swatch and Tiger to the centre in 2015. Demand for the 11 restaurants remains high with five now pre-let and four under offer. The £43 million development will deliver £2.4 million of rent from the redeveloped areas along with increasing the tone across the whole centre as evidenced by headline ITZA rents increasing from £230 to £250

· intu Potteries: The Hive, a 60,000 sq ft leisure extension on the site of a previous car park is on target to open in late 2015. It consists of a nine screen Cineworld cinema, and a pedestrian boulevard with seven restaurants all pre-let. The £19 million development is expected to deliver a 7 per cent stabilised initial yield on cost

· intu Metrocentre: The extension to the highly successful Qube dining area adjacent to the IMAX Odeon cinema commenced in February 2015. This £17 million development will reconfigure a previous themed side mall and build out over a service yard adding 15,000 sq ft of additional space. The 11 new restaurants are all under offer with all but the final two exchanged. The enhanced dining area is due to open in January 2016 and deliver an 8 per cent return on cost 

· intu Eldon Square: Grey's Quarter is a £24 million redevelopment converting 80,000 sq. ft. of out dated retail space into the new dining destination for Newcastle. The quarter will include over 20 new restaurants facing Grey's Monument in the heart of the city centre. Works commenced in May 2015 and are due to be completed in late 2016. Over 50 per cent is now pre-let with a further 35 per cent under offer. The project is expected to deliver a return of over 7 per cent

· intu Lakeside: £7 million hotel development, pre-let to Travelodge, is due to start construction in late 2015 for an opening in late 2016 delivering an expected 7 per cent stabilised initial yield on cost

· intu Watford: £148 million extension and mall refurbishment is due to commence in Q4 2015. Project costs have increased as we have re-defined the scope to include existing mall refurbishments and improved ancillary services, such as upgraded car parks. In addition, cost inflation from the construction demand in the London area has increased the expected build costs. With quality restaurant and retailer demand, this project is expected to deliver a stabilised initial yield on cost of at least 7 per cent

· intu Broadmarsh: We received planning approval for this project in June 2015 and we are now in detailed discussions with potential retail and leisure tenants for this development. Our current expectation is to start this project in 2016

We can finance our UK and Spanish pipeline through three main routes:

· available facilities within the business. At the end of June 2015 we had cash and available facilities of £0.5 billion

· the major developments are likely to be spread over a number of years. We intend to raise development finance where appropriate and additional finance from the value created by completed developments to reinvest in the next project

· recycling capital from other assets to reinvest into these growth opportunities at the point where they will deliver superior returns. This may include introducing partners as we did at intu Uxbridge in 2014

In the case of major extensions and creation of significant new or reconfigured space, we aim to have agreed terms with a sufficient level of tenants including strategic pre-lets before proceeding with construction.

For expansionary projects which create additional space for which direct incremental rent can be identified, we would expect most projects to generate a stabilised initial yield on cost in the range of 6 to 10 per cent and a minimum of 7 per cent for major projects. Where no significant additional space is created, we assess project return in the context of an internal rate of return based on the anticipated overall impact of the expenditure on centre performance through enhancing the ambience, the tenant mix and the rental tone.

TOP PROPERTIES

*The amount presented is on the Scottish ITZA basis, the English equivalent is £335.

FINANCIAL REVIEW

Presentation of information

The Group accounts for its interests in joint ventures using the equity method as required by IFRS 11 Joint Arrangements. This means that the income statement and the balance sheet include single lines for the Group's total share of post-tax profit and the net investment in joint ventures respectively.

Management review and monitor the business, including the Group's share of joint ventures, on an individual line basis not a post-tax profit or net investment basis and therefore the figures and commentary in this report are presented on that basis, consistent with this management approach. The Other information section includes reconciliations between the two bases.

OVERVIEW

Recent acquisitions and continued positive movements in asset values have resulted in increases to both underlying earnings and NAV per share:

· underlying earnings of £88.7 million, up 23 per cent on 2014 reflecting the acquisition of Puerto Venecia, Zaragoza in January and a full impact from the acquisitions and disposals in the first half of 2014. Earnings per share of 6.8 pence, up 6 per cent on 2014

· NAV per share of 385 pence; total financial return for the period of 4 per cent

Financing metrics remain strong due to property valuation increases and recent refinancing activity:

· debt to assets ratio at 45.0 per cent (31 December 2014 - 44.2 per cent), below the Group's target maximum level of 50 per cent

· interest cover ratio of 1.85x (31 December 2014 - 1.82x), above the Group's target minimum level of 1.60x

· cash and available facilities of £499.5 million (31 December 2014 - £670.8 million) remains high but has reduced due to acquisitions and capital expenditure in the period

Major transactions:

· in January the Group completed the acquisition of Puerto Venecia, Zaragoza for €450.8 million. Total consideration net of debt and other net assets acquired was €273.5 million. The acquired debt was refinanced on acquisition with €225 million of debt raised. In June the Group announced that CPPIB will acquire 50 per cent of this interest with the transaction expected to complete in September

· in June the Group renegotiated the £351.8 million term loan within the Secured Group Structure (SGS), extending this by two years to March 2020 and reducing the interest rate margin by 1.5 per cent

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015

Income statement

1 Including Group share of joint ventures.

The Group recorded a profit for the period of £262.3 million, a reduction on the £602.3 million reported for the six months ended 30 June 2014. This was primarily due to a lower gain on property valuations of £162.2 million including the Group's share of joint ventures (2014 - £573.3 million), partially offset by:

· a positive movement in the change in fair value of the Group's financial instruments. 2015 includes a credit of £32.2 million including the Group's share of joint ventures (2014 - charge of £15.6 million)

· lower exceptional administration costs of £0.6 million (2014 - £11.9 million). 2014 included costs in relation to the acquisition of intu Merry Hill, intu Derby and Sprucefield

Underlying earnings increased by £16.7 million to £88.7 million with underlying earnings per share increasing by 6 per cent to 6.8 pence. Underlying earnings exclude valuation movements, exceptional items and related tax and are presented as they are considered to be a key measure of the Group's performance and an indication of the extent to which dividend payments are supported by underlying earnings. The underlying profit statement is presented in full in the Other information section.

http://www.rns-pdf.londonstockexchange.com/rns/5019U_4-2015-7-29.pdf

The principal components of the change in underlying earnings are as follows:

· net rental income increase of £20.1 million due to the acquisition of Puerto Venecia, Zaragoza in 2015 and a full impact from 2014 acquisitions and disposals

· like-for-like net rental income reduced by £1.7 million, 1.0 per cent (see Operating Review)

· underlying net finance costs increased by £7.2 million reflecting the full impact of funding 2014 acquisitions and the acquisition of Puerto Venecia, Zaragoza in 2015 which are partially offset by the favourable impact of lower interest rates following debt refinancings

· ongoing administration expenses increased by £1.4 million, largely due to the management of recent acquisitions

· other includes a saving of £2.9m following the conversion of convertible bonds in July 2014 and an increase due to minority interests including the change in ownership structure of intu Asturias in the first half of 2014

As detailed in the table above, the Group's net rental income margin including share of joint ventures is in line with 2014 at 86 per cent. Property operating expense largely comprises car park operating costs and the Group's contribution to shopping centre marketing programmes. The Group's ratio of total costs to income, as calculated in accordance with EPRA guidelines, remains low at 20.2 per cent.

Balance sheet

The Group's net assets attributable to shareholders have increased by £197.9 million to £4,721.9 million at 30 June 2015 reflecting the retained profit for the period.

As detailed in the table, net assets (diluted, adjusted) have increased by £168.3 million from 31 December 2014 to £5,137.2 million as at 30 June 2015.

Investment and development property has increased by £546.1 million primarily due to the acquisition of Puerto Venecia, Zaragoza, valued at £344.2 million on acquisition, and the £162.2 million valuation gain in the period.

Investments of £207.4 million principally comprise the Group's interests in the US and India. The US investment of 11.4 million shares in a joint venture with Equity One, a listed US REIT, is valued at £168.5 million based on the 30 June 2015 Equity One share price. The India investment largely comprises a 32 per cent interest in Prozone, a shopping centre developer listed on the Indian stock market, included at £38.3 million on the Group's balance sheet at 30 June 2015. See notes 16 and 17 for further details.

Net external debt is discussed in the cash flow and net external debt section.

Derivative financial instruments comprise the fair value of the Group's interest rate swaps. The net liability at 30 June 2015 is £318.0 million, a reduction of £29.2 million in the period. Cash payments in the period totalled £21.3 million, £11.7 million of which has been classified as an exceptional finance cost as it relates to payments in respect of unallocated swaps. The balance of the payments has been included as underlying finance costs as it relates to ongoing interest rate swaps used to hedge debt.

As previously detailed, the Group has a number of interest rate swaps, entered into some years ago, which are unallocated as, due to a change in lenders' practice we are now required to take out new swaps. At 30 June 2015 these swaps have a market value liability of £228.6 million (31 December 2014 - £242.5 million). It is estimated the Group will be required to make cash payments on these swaps of £14 million in the second half of 2015.

The non-controlling interest at 30 June 2015 relates to our partner's 40 per cent stake in intu Metrocentre.

The Group is exposed to foreign exchange movements on its overseas investments in Spain, the US and India. The Group's policy is to ensure that the net exposure to foreign currency is less than 10 per cent of the Group's net assets attributable to shareholders. At 30 June 2015 the exposure was 9.1 per cent, higher than at 31 December 2014 due to the Group's acquisition of Puerto Venecia, Zaragoza in January and the exercise of the Málaga option. This exposure would reduce to less than 8 per cent were the sale of a 50 per cent interest in Puerto Venecia, Zaragoza to CPPIB to complete as expected.

Adjusted net assets per share

As illustrated in the chart below, diluted, adjusted net assets per share have increased from 379 pence per share at 31 December 2014 to 385 pence per share at 30 June 2015. The increase was driven by the property valuation gain of 12 pence per share.

http://www.rns-pdf.londonstockexchange.com/rns/5019U_2-2015-7-29.pdf

Cash flow and net external debt

During the six months ended 30 June 2015 the Group recorded an increase in cash of £21.1 million.

Cash flow from operating activities of £94.0 million is £68.4 million above 2014, reflecting the higher underlying profit, a lower level of interest cash flows and positive working capital movements.

Cash flow from investing activities reflects the cash outflow for the acquisition of Puerto Venecia, Zaragoza of £203.1 million and capital expenditure during the period of £60.2 million which includes the exercise of the option over land in Málaga.

Cash flow from financing activities includes net debt drawdowns of £194.8 million primarily to fund the acquisition of Puerto Venecia, Zaragoza. Dividends paid in cash during the period were £63.4 million.

Net external debt (including Group share of joint ventures) has increased by £312.4 million. Cash including the Group's share of joint ventures has reduced by £0.5 million. Gross debt has increased by £311.9 million reflecting the key cash flows above.

FINANCING

Debt structure

As a result of the significant refinancing activity in recent years, the Group has significantly diversified its sources of funding. We now have a range of debt instruments including CMBS and other secured bonds plus syndicated bank debt secured on individual or pools of assets, with limited or non-recourse from the borrowing entities to other Group companies outside of these arrangements. Corporate-level debt remains limited to the revolving credit facility and the £300 million convertible bond.

During 2015 the main financing activities undertaken include:

· in January, €225 million of new debt was secured against Puerto Venecia, Zaragoza refinancing the acquired debt

· in June the Group renegotiated its £351.8 million Secured Group Structure term loan, extending the maturity by two years to March 2020 and reducing the margin being paid by 150 basis points

http://www.rns-pdf.londonstockexchange.com/rns/5019U_1-2015-7-29.pdf

The above chart illustrates that there is no major refinancing requirement due until 2017. The majority of debt payments due in 2016 relate to the £113.1 million loan secured on intu Bromley and discussions are currently underway to refinance this.

The table below summarises the Group's main debt measures, all including the Group's share of joint ventures.

The debt to assets ratio has increased slightly since 31 December 2014 with the increase in property valuations offset by the increases in net external debt resulting from the acquisition of Puerto Venecia, Zaragoza and capital expenditure in the period. The debt to assets ratio remains below the Group's target maximum level of 50 per cent. Proforma for the completion of the expected sale of 50 per cent of our interest in Puerto Venecia, Zaragoza to CPPIB the debt to asset ratio would reduce by around 1 per cent.

Interest cover ratio of 1.85x has increased slightly during the period reflecting the impact of recent acquisitions and lower interest rates following recent debt refinancing and remains above the Group's targeted minimum level of 1.60x.

The weighted average debt maturity has reduced to 8.1 years and includes the benefit from the extension of the SGS term loan.

The weighted average cost of gross debt has reduced to 4.5 per cent (excluding the revolving credit facility) reflecting the lower rates achieved on refinancing activity in the period.

The Group uses interest rate swaps to fix interest obligations, reducing cash flow volatility caused by changes in interest rates. The proportion of debt with interest rate protection has reduced slightly in the period to 85 per cent within the Group's policy range of between 75 per cent and 100 per cent. The reduction is due to the higher level of borrowing against the Group's revolving credit facility.

Cash and available facilities have reduced to £499.5 million at 30 June 2015. This comprises cash of £259.6 million in addition to undrawn facilities of £239.9 million. The reduction from 31 December 2014 primarily reflects the acquisition of Puerto Venecia, Zaragoza and capital expenditure in the period.

Covenants

Full details of the debt financial covenants are included in the Financial covenants section of this report. The Group is in compliance with all of its covenants.

Capital commitments

The Group has an aggregate cash commitment to capital projects of £65.2 million at 30 June 2015.

In addition to the committed expenditure, the Group has an identified uncommitted pipeline of active management projects, major extensions and developments that may become committed over the next five years (see Operating Review).

OTHER INFORMATION

Tax

As a Real Estate Investment Trust (REIT), tax on property operating profits is paid at shareholder level to the UK government rather than by Intu itself. REIT status brings with it the requirement to operate within the rules of the REIT regime (for further information see Glossary).

The Group pays tax directly on overseas earnings, any UK non-property income under the REIT rules, business rates, and transaction taxes such as stamp duty land tax. In the six months ended 30 June 2015 the total of such payments to tax authorities was £12.5 million, of which £9.3 million was in the UK, £0.3 million in the US and £2.9 million in Spain.

Dividends

The Directors are recommending an interim dividend of 4.6 pence per share in line with the 2014 interim dividend. A scrip dividend alternative will continue to be offered. Details of the apportionment between the PID and non-PID elements per share will be confirmed in due course.

KEY RISKS AND UNCERTAINTIES

Successful risk management underpins Intu's ability to achieve its strategic objectives

Intu's Board has responsibility for establishing the Group's appetite for risk based on the balance of potential risks and returns, and has overall responsibility for managing risks. Risk management is embedded in Intu's culture so that all employees play a part. This may be cleaners making sure that the centres are free of hazards or the construction team ensuring the right contractors are selected for developments.

Risks are considered in the day-to-day decisions made by the business and this assessment of risk is underpinned by a formal risk review process conducted by each centre, each department and the Executive team. These reviews identify risks and assess them for controllability and stability.

Risks are measured for impact and likelihood; gross risk being the worst case scenario if there were no controls in place; net risk being the risk as it stands today; and target risk being after any further planned risk reducing measures are implemented. An assessment is also made of how quickly the risks would impact the business. Impact and likelihood change as businesses and external factors evolve. Intu's ongoing risk management ensures that changes in impact and likelihood are identified and managed appropriately.

KEY RISKS AND UNCERTAINTIES (continued)

KEY RISKS AND UNCERTAINTIES (continued)

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors are responsible for preparing the interim report and condensed consolidated set of interim financial statements (interim financial statements), in accordance with applicable law and regulations. The Directors confirm that, to the best of their knowledge:

· the interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union; and

· the interim report includes a fair review of the information required by Sections DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

The Operating and Financial Reviews refer to important events which have taken place in the period.

The principal risks and uncertainties facing the business are referred to in the Operating and Financial Reviews.

Related party transactions are set out in note 26 of the interim financial statements.

A list of current Directors is maintained on the Intu Properties plc website: intugroup.co.uk.

On behalf of the Board

David Fischel

Chief Executive

Matthew Roberts

Chief Financial Officer

30 July 2015

INDEPENDENT REVIEW REPORT TO INTU PROPERTIES PLC

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed the condensed consolidated interim financial statements, defined below, in the interim report of Intu Properties plc for the six months ended 30 June 2015. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

This conclusion is to be read in the context of what we say in the remainder of this report.

What we have reviewed

The condensed consolidated interim financial statements, which are prepared by Intu Properties plc, comprise:

· the consolidated balance sheet as at 30 June 2015;

· the consolidated income statement and consolidated statement of comprehensive income for the period then ended;

· the consolidated statement of cash flows for the period then ended;

· the consolidated statement of changes in equity for the period then ended; and

· the explanatory notes 1 to 26 to the condensed consolidated interim financial statements.

As disclosed in note 1, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The condensed consolidated interim financial statements included in the interim report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of condensed consolidated financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.

Responsibilities for the condensed consolidated interim financial statements and the review

Our responsibilities and those of the directors

The interim report, including the condensed consolidated interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the interim report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopers LLPChartered AccountantsLondon30 July 2015

Notes:

(a) The maintenance and integrity of the Intu Properties plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

CONSOLIDATED INCOME STATEMENT (unaudited)

For the six months ended 30 June 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)

For the six months ended 30 June 2015

CONSOLIDATED BALANCE SHEET (unaudited)

As at 30 June 2015