Intu Properties plc 2012 annual results 27 February 2013
Intu Properties plc 2012 annual results • Welcome – David Fischel • Financial performance – Matthew Roberts • Operational review – Mike Butterworth • Strategy and outlook – David Fischel • Questions • Appendices This presentation includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Intu Properties plc to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 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 Page 2
Welcome David Fischel, Chief Executive
Welcome • Delivering our 2012 plans – Out-performed in challenging market background – Progressed active management and major extension projects – Improved financial flexibility – Launched nationwide consumer-facing brand and transformed digital proposition • Acquisition Page 4
Financial performance Matthew Roberts, Finance Director
Key highlights • Valuation up 0.6 per cent (IPD down 5.8 per cent) • Underlying earnings 16.1p (2011 16.5p) - impact of tenant failures • Final dividend 10p; full year dividend 15p • NAV per share 392p; total financial return for the year 4.1 per cent • £300m 6 year convertible bond • Robust financial position: debt to assets ratio 49.5 per cent, 6.1 years average debt maturity and £563m of cash and committed facilities at year end Page 6
Underlying earnings 2012 2011 £m £m Net rental income from continuing operations 362.6 364.0 Administration expenses (26.7) (24.1) Net finance cost (underlying) (204.0) (206.0) Dividend from US investment 6.3 8.3 Other (0.5) (3.6) Underlying earnings 137.7 138.6 Interest cover 1.71x 1.69x Underlying earnings per share (pence) 16.1 16.5 Average shares in issue (million) 853.8 840.9 Dividend per share (pence) 15.0 15.0 Page 7
Net rental income Rental increases offset by tenant failures 2012 £m 12 months to December 2011 364.0 Like-for-like (-2.7%) (10.2) Trafford Centre 7.0 Additions 1.8 362.6 • £5m like-for-like increase created through letting activity, offset by £13m reduction from tenant administrations • Ongoing impact in 2013 from tenants in administration, (66 units (4 per cent of rent) let to tenants in administration, of which 32 (3 per cent of rent) are still trading) Page 8
Underlying earnings “bridge” Page 9
Items excluded from underlying profit 2012 2011 £m £m Continuing operations Property revaluations 40.9 63.0 Change in fair value of financial instruments 30.5 (193.4) Gain on sale of subsidiaries - 40.4 Gain on acquisition of subsidiaries 2.3 52.9 Exceptional finance costs (61.0) (47.8) Exceptional administration expenses (1.1) (20.9) Page 10
Net assets per share 392 pence 4.1% total financial return including dividend Page 11
Recurring operating cash flow 2012 Pence per share Underlying operating cash generated 40.3 Net finance charges paid (22.4) Convertible bond interest (0.7) Net movement in working capital (0.5) Recurring cash flow 16.7 Dividend 15.0 • Recommending continuation of scrip dividend scheme Page 12
Robust financial position Net debt to assets 49.5% 31 December 2012 31 December 2011 Total properties £7,073m £6,960m Net external debt £(3,504)m £(3,374)m Net debt to assets 49.5% 48.5% Cash £188m £91m Undrawn committed corporate facilities £375m £330m Net assets £3,006m £2,946m Adjusted net assets per share 392p 391p Weighted average cost of gross debt 5.2% 5.6% Weighted average maturity of gross debt 6.1 years 7.0 years Page 13
Change in debt £130 million increase in net debt New chart to come • Currently 98 per cent hedged (excluding forward starting swaps) Page 14
Debt maturity as at 31 December 2012 • Weighted average debt maturity of 6.1 years • Largely fixed, weighted average cost 5.2 per cent • £375 million undrawn committed corporate facilities • £563m of cash and committed facilities • 2013-2017 Capex: £50m committed; £200m uncommitted (excludes major extensions) Page 15
Launch of refinancing New secured group structure announced today • New debt funding platform, a secured group structure (“SGS”) – Enables ongoing access to medium and long dated bond markets alongside bank debt – Diversifies sources of funding and lengthens maturities • SGS initially used to refinance four of our prime, wholly owned shopping centres – intu Lakeside, intu Braehead, intu Watford and intu Victoria Centre – Portfolio valued at c £2.3bn – SGS initially to raise c £1,150m, LTV c 50 per cent – Refinancing and maturity extension on c 1/3 of Group’s debt and over 55 per cent of 2015-17 maturing debt – Structured to issue debt capable of being assigned an ‘A’ category rating, ensuring ready access to bond markets Page 16
New secured group structure Increases flexibility and diversifies funding sources • Balances flexibility with lender/bondholder credit protections – Operational flexibility to contribute or substitute assets, issue new debt and fund development capex – Financial flexibility - able to access diverse range of debt products • Tiered covenant regime – Permits full operational flexibility at low leverage – Increasing restrictions to protect lenders at high leverage (see appendix for further details) • Initial c £1,150m debt raising – Benchmark sterling bond offering, bank debt and bridge facility – Bond roadshow from Monday 4 March – Bridge facility refinanced through further capital market issuances as market conditions allow • SGS is anticipated to lower the Group’s medium term average cost of funding; initial marginal increase due to funding accelerated swap payments Page 17
SGS overview High quality, well known assets selected for SGS Market Existing Debt Value to be Refinanced Maturity £1,093m £509m 2017 Benchmark Bond (1) £582m £315m 2015 SGS Bridge £324m £245m 2015 Term Loan (1) £307m £237m 2016 Total c £1,150m £2,306m £1,306m (LTV: c 50%) • £36m of £1,306m existing debt held by Intu • Break costs of existing swaps of £60-70m which will reduce adjusted, diluted NAV by c 7p • c £200m contribution (funded by existing cash and facilities) to cover the swap break costs, transaction costs and refinancing the existing debt on the SGS assets (1) Excludes certain properties adjacent to intu Victoria Centre and intu Braehead that are valued as part of the centres for reporting purposes but are excluded from the SGS Page 18
Operational review Mike Butterworth, Chief Operating Officer
Key performance indicators remain robust • Occupancy 96% (2011 – 97 per cent) • Footfall -1% (CAGR 3 per cent previous three years) • Retailer sales (est.) +1% • 169 new long term leases £44m +7% • Like for like capital value +£41m (IPD index = minus 5.8 per cent) +0.6% Page 20
Driving superior operating performance • Progress lease renewal programme • Protect/enhance values • Improve tenant mix • Address temporary lets • Secure high quality shop fit • Strategic investment in – our properties – our people – the future • Key purchases • Pursue consents Page 21
Braehead Bringing it all together Architect visual – for illustration only • New flagship retailers • Improved food and beverage offer • “Town centre” - major planning application submitted • “World Class Service” • WiFi rollout July 2013 Page 22
Lakeside Becoming a must-have location for retailers • Improved tenant mix • Food Court expansion • Major extension consented – to create a point of difference Page 23
Trafford Centre Continuously improving the tenant mix Page 24
Metrocentre Enhancing the experience • New Platinum Mall • Wider catering offer, for example MetrOasis • Strategic acquisition of adjacent site Page 25
Other major projects Revitalising the estate to drive long term value Architect visual – for illustration only Architect visual – for illustration only The Potteries, Stoke-on-Trent Watford – Charter Place • consent received for leisure and catering • larger format units • catering and leisure extension • overall 1.4m sq ft destination for Watford Page 26
£1 billion investment pipeline over 10 years Page 27
Strategy and outlook David Fischel, Chief Executive
Opportunities in a changing marketplace • Continuing benefit of focus on prime • Footfall, dwell time and spend concentrating on top centres • Food and beverage offer reinforcing destinations • Technology as an enabler • Opportunities for Intu to deliver more to customers • Sector consolidation Page 29
Seizing the opportunity • National consumer brand – visual changes • Digitally connected – free WiFi – transactional website • World class service – moments of surprise and delight • Creative events and national marketing Page 30
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