TIDMINTU
RNS Number : 8602E
Intu Properties PLC
23 October 2018
LEI: 213800JSNTERD5CJZO95
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT
JURISDICTION
ALTHOUGH THIS ANNOUNCEMENT REFERS TO THE POSSIBLE OFFER FOR THE
COMPANY BY THE PEEL GROUP, THE OLAYAN GROUP AND BROOKFIELD PROPERTY
GROUP, THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE, NOR AS
TO THE TERMS ON WHICH ANY OFFER WILL BE MADE
23 OCTOBER 2018
INTU PROPERTIES PLC
TRADING UPDATE FOR THE PERIOD FROM 1 JULY 2018 TO 23 OCTOBER
2018
A STRONG AND RESILIENT OPERATIONAL PERFORMANCE
David Fischel, intu Chief Executive, commented:
"intu has continued to deliver a strong and resilient
operational performance through a period which has been
particularly challenging for UK retailers, demonstrating the clear
differentiation between winning destinations such as intu owns and
the rest.
We agreed 84 long-term leases in the period at rental levels 8
per cent above previous passing rent and have increased occupancy
by 0.4 per cent to 97 per cent. Key fashion retailers continue to
be attracted to our winning locations, with names such as Monki,
Bershka and Ralph Lauren signing up in the period.
In September, we opened the GBP180 million retail and leisure
extension of intu Watford, 90 per cent let or in advanced
negotiations, as we constantly innovate and invest to ensure our
business anticipates and adapts to changing consumer trends.
The top twenty shopping centres in the UK(1) account for some
three per cent of UK shoppers' annual spend and we own eight of
them, representing 76 per cent by value of our UK portfolio.
EPRA NNNAV(2) per share amounts to 297p at 30 September 2018,
reduced by 12p from 30 June, following a 3 per cent fall in
like-for-like property valuations between 30 June and 30 September
which reflects current negative investor sentiment towards UK
retail property. We are however confident our business and assets
are resilient and can weather the challenges we are currently
seeing."
1. GlobalData Top 50 UK Shopping Centres, October 2018. Total UK
annual shoppers' spend represents non-food retail, food services
and leisure.
2. EPRA NNNAV adjusts NAV per share (diluted, adjusted) to
reflect the fair value of borrowings, derivative financial
instruments and deferred taxation on revaluation of investment and
development property.
Trading highlights
- continued tenant demand in period, signing 84 long-term leases
(Q3 2017: 73 leases) delivering GBP15 million of annual rent at an
average of 8 per cent above previous passing rent and in line with
valuers' assumptions. Year to date, signed 200 long-term leases
(2017 year to date: 176 leases) delivering GBP32 million of annual
rent at an average of 7 per cent above previous rent, on both a
headline and net effective basis
- rent reviews settled in the period on average 5 per cent above
previous passing rent. Year to date, we have settled 102 rent
reviews for new rent totalling GBP30 million, 8 per cent above
previous passing rents
- expect a further year of like-for-like net rental income
growth, with anticipated full year growth for 2018 to be in the
range of 0 per cent to 1 per cent, impacted by some 1.5 per cent
from tenant failures in 2018
- improved occupancy of 97.0 per cent, a 0.4 per cent increase
since June 2018 and 0.4 per cent ahead of September 2017
- outperformed footfall benchmark by 170 basis points, with
footfall down 1.3 per cent year to date
- year to date capital investment of GBP147 million.
Successfully opened the GBP180 million extension of intu Watford,
on time and on budget with over 90 per cent of the 380,000 sq ft
project now let or in advanced negotiations. On site with projects
to substantially enhance intu Lakeside, intu Trafford Centre,
Madrid Xanadú and Manchester Arndale
- property revaluation deficit of GBP298 million (3.0 per cent)
in the period, reflecting current negative sentiment towards UK
retail property. Portfolio valued at GBP9,580 million at 30
September 2018
- NAVPS (diluted, adjusted) of 344 pence (30 June 2018: 362
pence), the decrease due to the property revaluation deficit. EPRA
NNNAV per share of 297 pence (30 June 2018: 309 pence) with the
property revaluation movement partially offset by an improvement in
mark to market movement of borrowings and financial instruments
- net external borrowings of GBP4,847 million (30 June 2018:
GBP4,792 million). Reflecting reduced property valuation, loan to
value increased to 50.6 per cent from 48.7 per cent at 30 June
2018
- cash and available facilities of GBP665 million at 30
September 2018, has been reduced by the scheduled repayment of a
GBP160 million bond in October 2018
- mixed use opportunities include the potential for 5,000
private rental sector residential units and around 600 hotel
rooms
Conference call
A conference call for analysts and investors will be held today
at 08:00 BST.
A copy of this announcement is available on our website
intugroup.co.uk.
Enquiries
intu properties plc
David Fischel Chief Executive +44 (0)20 7960 1207
Matthew Roberts Chief Financial Officer +44 (0)20 7960 1353
Adrian Croft Head of Investor Relations +44 (0)20 7960 1212
Public relations
UK: Justin Griffiths, Powerscourt +44 (0)20 7250 1446
SA: Frédéric Cornet, Instinctif Partners
+27 (0)11 447 3030
Valuation and EPRA NNNAV
In the context of the possible offer from the Peel Group, the
Olayan Group and Brookfield Property Group (the Consortium)
announced on 4 October 2018, as further updated in an announcement
by intu on 19 October 2018 (the Possible Offer), and to ensure
shareholders are in possession of the most up-to-date information,
we instructed full external independent property valuations as at
30 September 2018.
The market value of the portfolio is GBP9,580 million at 30
September 2018 (30 June 2018: GBP9,831 million). Reflecting current
negative sentiment towards UK retail property, like-for-like
property values reduced by GBP298 million (down 3.0 per cent) in
this three month period following the reduction of 5.6 per cent in
the six months to 30 June 2018. The three months' valuation deficit
was driven by an increase in yields, with the weighted average net
initial yield (topped-up) increasing by 7 basis points to 4.76 per
cent and weighted average nominal equivalent yield increasing by 9
basis points to 5.31 per cent.
At 30 September 2018, net asset value per share (diluted,
adjusted) decreased by 18 pence to 344 pence (30 June 2018: 362
pence), predominantly due to the movement in property
valuations.
EPRA NNNAV per share at 30 September 2018 is 297 pence, a
reduction of 12 pence from 30 June 2018, with the property
revaluation movement partially offset by an improvement of 6 pence
per share in mark to market movement of borrowings and financial
instruments.
Definitions of net asset value per share (diluted, adjusted) and
EPRA NNNAV per share are shown in the notes section of this
document.
Growing like-for-like net rental income
We are anticipating a further year of growth in like-for-like
net rental income, expected to be in the range of 0 per cent to 1
per cent (subject to no material tenant failures). We estimate that
this is impacted by some 1.5 per cent from tenant failures in 2018,
an increase on the 0.9 per cent in the first half of 2018. Tenant
administrations in the period, in particular the write-off of
balances relating to House of Fraser and Coast, have resulted in a
reduction from previous guidance. Currently, 3 per cent of our rent
roll is from tenants who have entered a CVA or administration
process in 2018.
Considering the portfolio's reversionary potential, the impact
of intu's continued investment programme, improving tenant mix and
ongoing demand for intu's prime space in the UK, we continue to
target growth of 2 to 3 per cent per annum over the medium term of
the next three to five years. For 2019, we anticipate slightly
lower growth of around 1 per cent reflecting the current conditions
in the retail property market.
Like-for-like net rental income operating metrics
Occupancy at 30 September 2018 was 97.0 per cent, a 0.4 per cent
improvement on June 2018 and 0.4 per cent ahead of September
2017.
We continue to see letting activity running at similar levels to
recent years. In the third quarter, we agreed 84 long-term leases,
amounting to GBP15 million annual rent (Q3 2017: 73 leases; GBP13
million of new passing rent). In aggregate, these were 8 per cent
above previous passing rent (like-for-like units) and in line with
valuers' assumptions.
Year to date, we have signed 200 new leases (2017 YTD: 176
leases) producing GBP32 million of new annual rent, 7 per cent
above previous passing rent. On a net effective basis (net of rent
free and incentives), rents were 7 per cent ahead of previous
rents.
This activity, both in the period and year to date, underlines
the strength of intu centres as the market continues to polarise
with occupiers focusing on flagship stores in prime, high footfall
retail destinations. While the UK letting market is challenging,
our winning destinations continue to be in demand from quality
retailers. Significant activity in the period includes:
- key fashion retailers continuing to roll out their portfolio
of brands, H&M are opening their seventh Monki store in the UK,
and second in the intu portfolio, at intu Eldon Square. Inditex are
also continuing to expand their brands, alongside Zara, opening
Bershka at St David's, Cardiff
- international brands' ongoing appreciation of the attraction
of intu's destination shopping centres. Typo, the Australian
stationery brand, is opening three stores in the intu portfolio at
intu Merry Hill, intu Watford and intu Eldon Square, taking its UK
presence to 12 stores. Ralph Lauren has opened its seventh UK store
at Manchester Arndale and Lego is opening one of its first Spanish
stores at intu Puerto Venecia
- retailers ensuring they are part of our market leading new
developments. JD Sports brands, Tessuti and Scott's, have exchanged
to be part of the GBP17 million Halle Place development at
Manchester Arndale, which is completing shortly
- leisure operators bringing a differentiated offering to our
regional destinations. At Madrid Xanadú, Cinesa has extended its
lease and fully refurbished its cinema. The aquarium and
Nickelodeon theme park expected to open later this year will
further enhance the leisure offer at Madrid Xanadú. This follows
the successful letting of leisure projects at intu Watford and intu
Lakeside, discussed below
We have settled 102 rent reviews in the year to date for new
rents totalling GBP30 million, an average uplift of 8 per cent on
the previous rents.
The weighted average unexpired lease term is 7.4 years (30 June
2018: 7.4 years) illustrating the longevity of our income streams
which in the main are with well financed businesses.
Delivering operational excellence
We monitor our performance through a range of metrics to ensure
we are meeting both our customer and retailer requirements.
The importance of the UK's highest quality shopping centres to
customer and retailer requirements is illustrated in GlobalData's
new 2018 Top 50 UK Shopping Centre Report which takes into account
the views of both tenants and shoppers to provide its comprehensive
assessment on the UK's top shopping centres. GlobalData estimates
that the top 20 centres account for around 3 per cent of the UK
shopper annual spend on non-food retail, food services and leisure.
We own eight of the top 20 centres in the UK, per this report,
representing 76 per cent of our UK portfolio by market value,
illustrating the concentration of our portfolio to the very top
locations in the UK.
Footfall in our centres has been robust considering the unusual
weather events in 2018 with periods of severe snow followed by the
high temperatures through the summer. Overall, our footfall has
decreased by 1.3 per cent year to date, but significantly
outperformed the BRC Springboard footfall monitor for UK shopping
centres which was down on average by 3.0 per cent, highlighting the
continued attraction of our compelling destinations against the
wider market.
Our net promoter score, a measure of customer service, ran
consistently high throughout the year to date averaging 74, an
increase over 2017 (September 2017 year to date: 70), and
demonstrating our in-centre operational excellence.
The public recognition of the brand continues to grow on an
unprompted basis. Of those questioned in 2018, 27 per cent
mentioned intu when asked to name a shopping centre brand
(September 2017 year to date: 24 per cent).
intu Experiences, our in-house team delivering immersive brand
partnerships, mall commercialisation and advertising, is on target
to generate gross income in excess of the GBP22 million delivered
in 2017. In the period, promotional activity included Mazda pop-up
stores at five intu centres offering a virtual reality driving
experience and Stylist Live's first consumer event outside London
at intu Trafford Centre.
In addition to what we provide in centre, our attractive digital
offering through our premium content publisher and shopping
platform, intu.co.uk, continues to grow strongly and support
retailers' physical operations. Year to date online sales for
retailers have grown by 22 per cent, year-on-year, as we continued
to innovate our online shop, including introducing visual search
functionality to the site.
Optimising our winning destinations
Our focus is to ensure our centres continue to be the winning
destinations, where customers and retailers want to be, both now
and in the future. Our near-term pipeline consists of projects that
improve the position of our flagship centres to meet customer and
occupier needs as we evolve the retail environments, enhance the
catering mix and expand the leisure offer.
Key milestones and activity in the period include:
- opened the first stores in our GBP180 million extension of
intu Watford. At the end of September, Debenhams opened showcasing
their new branding and store format. This has been followed by
Superdry, H&M, New Look and Jack Wills, with Cineworld and
Hollywood Bowl opening in mid-December. Leases on over 70 per cent
of the space are exchanged, with a further 20 per cent in advanced
negotiations. Our expectation is that the new space will be fully
open and trading by spring 2019
- finished the steel work and cladding on the GBP72 million
leisure extension at intu Lakeside. Pre-lets stand at 85 per cent
of space with a further 6 per cent in advanced negotiations and the
first unit has been handed over to Nickelodeon. The project remains
on budget and on target, with construction expected to be completed
in December 2018 for a spring 2019 opening
- commenced the building contract for the GBP72 million
transformation of Barton Square at intu Trafford Centre which will
be anchored by Primark. Pre-lets stand at 65 per cent, with a
further 11 per cent in advanced negotiations. The project is
expected to be completed in early 2020
- year to date tenants have invested around GBP64 million on 207
new store fit-outs, around 6 per cent of our 3,300 units. This
investment by tenants is a significant demonstration of their
long-term commitment to our centres and is a major part of
providing a fresh and ever-changing experience for our customers.
In the period, we have opened the new 80,000 sq ft Next at intu
Merry Hill and Abercrombie and Fitch's second UK store at intu
Trafford Centre
Mixed use opportunities
In addition to the pipeline above, we continue to look at
opportunities within the portfolio for alternative uses of some of
our available land.
intu has extensive, available land. Our six major out of town
centres comprise some 760 acres of land of which less than 40 per
cent has buildings, multi-storey car parks or distribution roads
upon it, leaving 470 acres of surface car parks and other
potentially developable land. The city centre locations also offer
opportunities for intensification of uses.
Further, we have identified 34 sites or buildings across the
portfolio with negligible income which are valued at a total of
around GBP65 million. The list, for example, includes a city centre
site, which was valued at GBP3 million at 30 June 2018 and is
currently under offer at a sale price of GBP7 million, showing the
substantial potential value within these sites.
Mixed use opportunities being evaluated include residential,
hotels and other uses. Initial work has highlighted the potential
for around 5,000 residential units and nearly 600 hotel rooms, with
further opportunities under consideration.
Initially, private rented sector residential opportunities to
create a total of circa 1,700 units have been identified by intu
which if fully developed could in aggregate produce a yield of
around 5 per cent on total development costs, excluding land, of
around GBP240 million.
In terms of hotels, and by way of illustration, in 2017, a 74
bedroom hotel, let to Travelodge, was completed at intu Lakeside
delivering a stabilised initial yield of 6 per cent on total
development costs of GBP9 million. Room occupancy has been so
strong that we are now looking to add further bedrooms.
In addition to the residential and hotel opportunities listed
above, further mixed use opportunities relating to office, flexible
working spaces, business lounge and service oriented uses have been
identified that could generate attractive incremental returns to
our current rental income stream.
All these opportunities, which are under active consideration,
would create value directly but moreover would increase the overall
attractiveness and catchment of the centres.
Making smart use of capital
We consider the structure of our borrowings, predominantly using
flexible asset specific non-recourse arrangements (86 per cent of
overall debt), to be appropriate for our concentrated portfolio. As
evidenced by our GBP148 million disposal of a 50 per cent interest
in intu Chapelfield in January 2018, we continue to look to finance
capital investment by recycling capital through the disposal of
non-core assets and introducing partners to assets.
Cash and available facilities at 30 September 2018 were GBP665
million, subsequently reduced by the scheduled repayment of a
GBP160 million bond made in October 2018. Loan to value was 50.6
per cent at 30 September 2018 (30 June 2018: 48.7 per cent).
We aim to ensure that our facilities have substantial covenant
headroom. By way of example, a 20 per cent fall in capital values
from the September 2018 valuations, and 10 per cent fall in income
would create a covenant shortfall on our asset specific debt of
only GBP12 million which could be cured from available
facilities.
We have minimal debt maturities before 2021, with a weighted
average debt maturity of 6.0 years at 30 September 2018.
About intu
intu owns and manages some of the best shopping centres, in some
of the strongest locations, in the UK and Spain.
Our UK portfolio is made up of 17 centres, including eight of
the top-20, and in Spain we own three of the country's top-10
centres.
We are passionate about creating compelling experiences, in
centre and online, that make our customers smile and help our
retailers flourish.
We attract over 400 million customer visits and over 25 million
website visits a year offering a multichannel approach that truly
supports retail strategies. In 2017, we launched the UK's first
tailor-made promotional services model to help brands as they look
to optimise their portfolio or expand their UK coverage.
Our strategic focus on prime, high-footfall flagship
destinations, combined with the strength and popularity of our
brand, means that intu offers enhanced footfall, dwell time and
loyalty. This helps our retailers flourish, driving occupancy and
income growth.
We are committed to our local communities, with our centres
supporting over 120,000 jobs (representing about 3 per cent of the
total UK retail workforce), and to operating with environmental
responsibility. We have already met or exceeded a significant
number of our 2020 environmental targets.
Valuation and deferred tax liabilities
As required by the City Code on Takeovers and Mergers (the
"Code") the external independent property valuations have been
prepared in accordance with the requirements of Rule 29 of the
Code.
The valuation reports relating to the external independent
valuation as at 30 September 2018 will be made available, subject
to certain restrictions relating to persons resident in restricted
jurisdictions, on intu's website at www.intugroup.co.uk by no later
than 12 noon (London time) on 23 October 2018.
Each of the valuers has given and not withdrawn their consent to
the publication of their valuation reports on the Company's
website.
With the exception of one residential property (for which there
is a deferred tax liability of GBP0.1m), intu would not expect any
tax liability to arise on the sale of its UK properties as a result
of being a UK REIT.
On the sale of intu's Spanish properties, a tax liability would
arise for the period such properties were not owned by a SOCIMI,
which amounted to a deferred tax liability of GBP72.4 million
(including the intu group's share of joint ventures) as fully
provided for as at 30 September 2018.
Without prejudice to the preceding paragraphs, in accordance
with Rule 29.3 of the Code, the intu Directors are not aware of any
significant change which has occurred in the deferred tax liability
of intu relating to its properties since 30 September 2018, being
the date to which the valuations referred to in this announcement
were drawn up.
Profit estimate
Under the City Code the following statement regarding estimated
net asset value ("NAV") per share (diluted, adjusted), EPRA NAV per
share and EPRA NNNAV per share as at 30 September 2018, included in
this announcement, are treated as a profit estimate as it
represents profit for a financial period which has expired and for
which audited results have not yet been published.
Third quarter ended 30 September 2018
Estimated NAV per share (diluted, adjusted) is 344 pence
Estimated EPRA NAV per share is 330 pence
Estimated EPRA NNNAV per share is 297 pence
(the "Profit Estimate")
Notes
The Profit Estimate is based on intu management's estimate of
the results for the three months ended 30 September 2018.
The European Public Real Estate Association ("EPRA") has issued
best practice recommendations for the calculation of certain
information. EPRA NAV per share represents equity shareholders'
funds excluding the fair value of certain financial derivatives,
deferred tax balances and any associated goodwill divided by the
diluted number of shares in issue. NAV (adjusted, diluted) per
share is a non-GAAP measure is presented as it is considered by the
management to be a key measure of the intu group's performance. The
key difference from EPRA NAV, an industry standard comparable
measure, is the exclusion of interest rate swaps not currently used
for economic hedges of debt as, in our view, this better allows
management to review and monitor the intu group's performance. EPRA
NNNAV per share is similar to EPRA NAV except it includes the fair
value of deferred tax liabilities, debt, and financial instruments.
Further information on EPRA, EPRA NAV per share and EPRA NNNAV per
share can be found at www.epra.com.
The Profit Estimate has been prepared on a basis consistent with
the intu group's IFRS accounting policies, which are applicable for
the six months ended 30 June 2018. With effect from 1 January 2018
the intu group has, as required by IFRS, implemented IFRS 15
"Revenue from contracts with customers" and IFRS 9 "Financial
Instruments". As disclosed in the financial statements for the year
ended 31 December 2017, the implementation of IFRS 15 has no
material impact on the intu group's results. The impact of IFRS 9
was disclosed in the unaudited interim results for the six months
ended 30 June 2018. The Profit Estimate has therefore been prepared
on this basis.
Reports
As required by Rule 28.1(a) of the City Code, the Profit
Estimate has been reported on by PricewaterhouseCoopers LLP, as
reporting accountants to intu, and by Rothschild & Co, Merrill
Lynch International and UBS, as financial advisers to intu
(together, the "Financial Advisers").
Parts A and B of this Appendix 1 contain PricewaterhouseCoopers
LLP's and the Financial Advisers' reports on the Profit Estimate,
both of which have been prepared solely for the purpose of Rule
28.1(a) of the City Code.
PricewaterhouseCoopers LLP, Rothschild & Co, Merrill Lynch
International and UBS have given and not withdrawn their consent to
the publication of their reports in the form and context in which
they are included herein.
Appendix 1, Part A
Report on the Profit Estimate from PricewaterhouseCoopers LLP
for the purpose of Rule 28.1(a)(i) of the City Code
The Directors
intu properties plc
40 Broadway
Westminster
London
SW1H 0BT
N M Rothschild & Sons Ltd
New Court
St Swithin's Lane
London
EC4N 8AL
Merrill Lynch International
2 King Edward Street
London
EC1A 1HQ
UBS Limited
5 Broadgate Circle
London
EC2M 2QS
23 October 2018
Dear Sirs
Profit Estimate by intu properties plc
We report on the profit estimate comprising the statement by
intu properties plc (the "Company") and its subsidiaries (together
the "Group") for the three months ended 30 September 2018 (the
"Profit Estimate"). The Profit Estimate and the basis on which it
is prepared are set out in the section entitled "Profit estimate"
of the intu Trading Update For the Period From 1 July 2018 to 23
October 2018 issued by the Company dated 23 October 2018 (the "Q3
Trading Update").
This report is required by Rule 28.1(a)(i) of the City Code on
Takeovers and Mergers issued by the Panel on Takeovers and Mergers
(the "City Code") and is given for the purpose of complying with
that Rule and for no other purpose. Accordingly, we assume no
responsibility in respect of this report to The Peel Group, The
Olayan Group and funds or vehicles which are managed or advised by
Brookfield Property Group (the "Offeror") or any person connected
to, or acting in concert with, the Offeror or to any other person
who is seeking or may in future seek to acquire control of the
Company (an "Alternative Offeror") or to any other person connected
to or acting in concert with an Alternative Offeror.
Responsibilities
It is the responsibility of the directors of the Company (the
"Directors") to prepare the Profit Estimate in accordance with the
requirements of the City Code. In preparing the Profit Estimate the
Directors are responsible for correcting errors that they have
identified which may have arisen in unaudited financial results and
unaudited management accounts used as the basis of preparation for
the Profit Estimate.
It is our responsibility to form an opinion as required by Rule
28.1(a)(i) of the City Code as to the proper compilation of the
Profit Estimate and to report that opinion to you.
Save for any responsibility under Rule 28.1(a)(i) of the City
Code to any person as and to the extent therein provided, to the
fullest extent permitted by law we do not assume any responsibility
and will not accept any liability to any other person for any loss
suffered by any such other person as a result of, arising out of,
or in connection with this report or our statement, required by and
given solely for the purposes of complying with Rule 23.2 of the
City Code, consenting to its inclusion in the Q3 Trading
Update.
Basis of Preparation of the Profit Estimate
The Profit Estimate has been prepared on the basis stated in the
section entitled "Profit estimate" of the Q3 Trading Update and is
based on the unaudited management accounts for the three months
ended 30 September 2018. The Profit Estimate is required to be
presented on a basis consistent with the accounting policies of the
Group.
Basis of Opinion
We conducted our work in accordance with the Standards for
Investment Reporting issued by the Auditing Practices Board in the
United Kingdom. Our work included evaluating the basis on which the
historical financial information for the three months ended 30
September 2018 included in the Profit Estimate has been prepared
and considering whether the Profit Estimate has been accurately
computed using that information and whether the basis of accounting
used is consistent with the accounting policies of the Group.
We planned and performed our work so as to obtain the
information and explanations we considered necessary in order to
provide us with reasonable assurance that the Profit Estimate has
been properly compiled on the basis stated.
However the Profit Estimate has not been audited. The actual
results reported, therefore, may be affected by revisions required
to accounting estimates due to changes in circumstances, the impact
of unforeseen events and the correction of errors in the underlying
financial information. Consequently we can express no opinion as to
whether the actual results achieved will correspond to those shown
in the Profit Estimate and the difference may be material.
Opinion
In our opinion, the Profit Estimate has been properly compiled
on the basis of the assumptions made by the Directors and the basis
of accounting used is consistent with the accounting policies of
the Group.
Yours faithfully
PricewaterhouseCoopers LLP
Chartered Accountants
PricewaterhouseCoopers LLP is a limited liability partnership
registered in England with registered number OC303525. The
registered office of PricewaterhouseCoopers LLP is 1 Embankment
Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised
and regulated by the Financial Conduct Authority for designated
investment business.
Appendix 1, Part B
Financial Advisers' report on the Profit Estimate for the
purpose of Rule 28.1(a)(ii) of the City Code
The Board of Directors
intu properties plc
40 Broadway
Westminster
London
SW1H 0BT
23 October 2018
Dear Sirs,
intu properties plc profit estimate in respect of the financial
quarter ended 30 September 2018 in connection with an offer under
the City Code on Takeovers and Mergers (the "Transaction")
We refer to the profit estimate made by intu properties plc
("intu") as set out in the announcement dated 23 October 2018 (the
"Announcement") of which this letter forms part (the "Profit
Estimate"), for which the board of directors of intu (the "intu
Board") is solely responsible under Rule 28.3 of the City Code on
Takeovers and Mergers (the "City Code").
We have discussed the Profit Estimate (including the bases for
belief and assumptions on which it is made), with the intu Board,
the intu officers and executives who prepared the management's
estimate of the results for the 3 months ended 30 September 2018,
and PricewaterhouseCoopers LLP as intu's reporting accountants. The
Profit Estimate is subject to uncertainty as described in the
Announcement and our work did not involve an independent
examination or verification of any of the financial or other
information underlying the Profit Estimate.
We have also reviewed the work carried out by
PricewaterhouseCoopers LLP on the Profit Estimate and have
discussed with them the opinion set out in the appendix of the
Announcement addressed to yourselves and ourselves on this matter
and the accounting policies and bases of calculation for the Profit
Estimate.
We have relied upon the accuracy and completeness of all the
financial and other information provided to us by, or on behalf of,
intu, or otherwise discussed with or reviewed by us, in connection
with the Profit Estimate, and we have assumed such accuracy and
completeness for the purposes of providing this letter. In
particular, we have assumed that the Profit Estimate made available
to us has been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the intu Board.
We do not express any opinion as to the achievability of the
Profit Estimate, whether on the basis identified by the intu Board,
or otherwise.
This letter is provided to you solely having regard to the
requirements of, and in connection with, Rule 28.1(a)(ii) of the
City Code and for no other purpose. We accept no responsibility to
intu or its shareholders or any person other than the intu Board in
respect of the contents of this letter. We are acting exclusively
as financial advisers to intu and no one else and it was for the
purpose of complying with Rule 28.1(a)(ii) of the City Code that
intu requested us to prepare this letter relating to the Profit
Estimate. No person other than the intu Board can rely on the
contents of, or the work undertaken in connection with, this
letter, and to the fullest extent permitted by law, we exclude and
disclaim all liability (whether in contract, tort or otherwise) to
any other person, in respect of this letter, its contents, or the
work undertaken in connection with this letter, or any of the
results or conclusions that may be derived from this letter or any
written or oral information provided in connection with this
letter, and any such liability is expressly disclaimed except to
the extent that such liability cannot be excluded by law.
On the basis of the foregoing, we consider that the Profit
Estimate, for which you as the intu Board are solely responsible,
has been prepared with due care and consideration.
Yours faithfully,
Rothschild & Co
Merrill Lynch International
UBS Limited
Merrill Lynch International is a private unlimited company
incorporated in England with company number 02312079 and its
registered address at 2 King Edward Street, London, United Kingdom,
EC1A 1HQ.
N M Rothschild & Sons Limited is a private limited company
incorporated in England with company number 00925279 and its
registered address at New Court, St Swithin's Lane, London, United
Kingdom, EC4N 8AL.
UBS Limited is a private limited company incorporated in England
with company number 02035362 and its registered address at 5
Broadgate, London, United Kingdom, EC2M 2QS.
Overseas Shareholders
The release, publication or distribution of this announcement in
jurisdictions other than in the United Kingdom and South Africa may
be restricted by law and therefore any persons who are subject to
the laws of any jurisdiction other than the United Kingdom or South
Africa should inform themselves about, and observe, any applicable
requirements. The information disclosed in this announcement may
not be the same as that which would have been disclosed in this
announcement had been prepared in accordance with the laws of
jurisdictions outside the United Kingdom. Any failure to comply
with applicable requirements may constitute a violation of the laws
and/or regulations of any such jurisdiction. To the fullest extent
permitted by applicable law, the companies and persons whose names
appear in this announcement disclaim any responsibility or
liability for the violation of such requirements by any person.
Notice related to financial advisers
N.M. Rothschild & Sons Limited ("Rothschild & Co"),
which is authorised and regulated by the Financial Conduct
Authority in the United Kingdom, is acting exclusively for intu and
for no one else in connection with the subject matter of this
announcement and will not be responsible to anyone other than intu
for providing the protections afforded to its clients or for
providing advice in connection with the subject matter of this
announcement.
Merrill Lynch International, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting exclusively for intu and no one else in
connection with the subject matter of this announcement and will
not be responsible to anyone other than intu for providing the
protections afforded to its clients or for providing advice in
connection with the subject matter of this announcement.
UBS Limited, which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority in the United Kingdom, is acting as
corporate broker and financial adviser to intu and no one else in
connection with the offer. In connection with such matters, UBS
Limited, its affiliates and their respective directors, officers,
employees and agents will not regard any other person as their
client, nor will they be responsible to any other person for
providing the protections afforded to their clients or for
providing advice in relation to the offer, the contents of this
announcement or any other matter referred to herein.
Forward Looking Statements
This announcement contains certain forward-looking statements,
beliefs or opinions, with respect to the financial condition,
results of operations and business of intu. These forward-looking
statements can be identified by the fact that they do not relate
only to historical or current facts. Forward looking statements
often use words such as "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", "hope", "aims",
"continue", "will", "may", "should", "would", "could", or other
words of similar meaning. These statements are based on assumptions
and assessments made by intu, in light of its experience and its
perception of historical trends, current conditions, future
developments and other factors it believes appropriate. By their
nature, forward-looking statements involve risk and uncertainty,
because they relate to events and depend on circumstances that will
occur in the future and the factors described in the context of
such forward-looking statements in this document could cause actual
results and developments to differ materially from those expressed
in or implied by such forward-looking statements. Although it is
believed that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such
expectations will prove to have been correct and you are therefore
cautioned not to place undue reliance on these forward-looking
statements which speak only as at the date of this announcement.
Except as required by applicable law, intu 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's expectations with
regard thereto or any change in events, conditions or circumstances
on which any such statement is based.
There are several factors which could cause actual results to
differ materially from those expressed or implied in
forward-looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward-looking statements are changes in global, political,
economic, business, competitive, market and regulatory forces,
future exchange and interest rates, changes in tax rates and future
business combinations and dispositions.
Other than the Profit Estimate, no statement in this
announcement is intended as a profit forecast or profit estimate
for any period and no statement in this announcement should be
interpreted to mean that earnings or earnings per ordinary share of
intu for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per
ordinary share for intu, as appropriate.
Rounding
Certain figures included in this Announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different sections may vary slightly
and figures shown as totals may not be an arithmetic aggregation of
the figures that precede them.
Publication on Website
In accordance with the Code:
- a copy of this document; and
- the valuation reports relating to the external independent
valuation as at 30 September 2018,
will be made available subject to certain restrictions relating
to persons resident in restricted jurisdictions on intu's website
at www.intugroup.co.uk by no later than 12 noon (London time) on 23
October 2018. For the avoidance of doubt, the contents of this
website are not incorporated into and do not form part of this
document.
You may request a hard copy of this document by contacting Link
Asset Services on +44 (0) 371 664 0300 (or, in the case of
shareholders resident in South Africa, Link Market Services, South
Africa on +27 (0) 861 546572). You may also request that all future
documents, announcements and information to be sent to you in
relation to this situation should be in hard copy form.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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