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Market Cap
£3,364.02m
Change Today
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Share Price
930.00p
Update - 1st Quarter Results
Liberty International PLC
07 May 2008
7 May 2008
LIBERTY INTERNATIONAL PLC
QUARTERLY REPORT FOR THE PERIOD ENDED 31 MARCH 2008
Attached is the quarterly report for the period ended 31 March 2008:
Highlights
Summary of Investment and Development Properties
Operating and Financial Review
Unaudited Financial Information
Sir Robert Finch, Chairman of Liberty International, commented:
"Liberty International's net asset value per share (diluted, adjusted) has
declined from 1264p to 1181p reflecting unsettled property market conditions in
the UK.
However, our prime UK regional shopping centres which constitute some 75 per
cent of our business continue to demonstrate their defensive merits with stable
and resilient income streams and a 98.5 per cent occupancy level.
We have substantially expanded the business of Capital & Counties in recent
years and these activities, including the Covent Garden Estate, Earls Court &
Olympia, the Great Capital Partnership and our international businesses,
continue to trade encouragingly.
In addition to the high quality developments on which we are currently engaged,
especially at St David's, Cardiff and Eldon Square, Newcastle, we are pursuing a
broad range of active management initiatives and development prospects within
our existing £8.3 billion of investment properties. While such activity is
subject to suitable market conditions, these prospects provide substantial scope
for future organic growth.
Liberty International has a business of exceptional quality, a high degree of
specialisation on prime retail which constitutes around 90 per cent of our
assets, the benefits of scale and financial strength with a prudent debt to
assets ratio and long-term fixed-rate debt.
We remain confident in the ability of the company to respond to the more
difficult conditions now prevailing in commercial property and retail markets."
7 May 2008
This announcement 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
Liberty International 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 announcement on the price at
which shares or other securities in Liberty International PLC have been bought
or sold in the past, or on the yield on such shares or other securities, should
not be relied upon as a guide to future performance.
A conference call with analysts and investors will take place at 9.30am on 7 May
2008.
Enquiries:
Liberty International PLC:
Sir Robert Finch Chairman +44 (0)20 7960 1273
David Fischel Chief Executive +44 (0)20 7960 1207
Ian Durant Finance Director +44 (0)20 7960 1210
Public relations:
UK: Michael Sandler, Hudson Sandler +44 (0)20 7796 4133
SA: Gareth David, +44 (0)20 7457 2020
College Hill Associates
Nicholas Williams, +27 (0)11 447 3030
College Hill Associates
Background on Liberty International
LIBERTY INTERNATIONAL PLC is one of the UK's largest listed property companies
and a constituent of the FTSE-100 Index of the UK's leading listed companies.
Liberty International converted into a UK Real Estate Investment Trust (REIT) on
1 January 2007.
Liberty International owns 100 per cent of Capital Shopping Centres ("CSC"), the
premier UK regional shopping centre business, and of Capital & Counties, a
retail and commercial property investment and development company.
At 31 December 2007, Liberty International held £8.6 billion of total properties
of which UK regional shopping centres comprised 75 per cent and retail property
in aggregate 88 per cent. Shareholders' funds (diluted, adjusted) amounted to
£4.7 billion. Assets of the group under control or joint control amounted to
£11.0 billion at that date.
CAPITAL SHOPPING CENTRES has interests in 14 UK regional shopping centres
amounting to 12.6 million sq.ft. in aggregate including 8 of the UK's top 21
regional shopping centres with a market value of £6.5 billion at 31 December
2007. CSC's largest centres are Lakeside, Thurrock; MetroCentre, Gateshead;
Braehead, Renfrew, Glasgow; The Harlequin, Watford; and Manchester Arndale. In
addition, CSC has three major development projects in progress or with planning
permission in Cardiff, Newcastle and Oxford.
CAPITAL & COUNTIES owned assets of £2.2 billion at 31 December 2007 amounting to
7.2 million sq.ft. in aggregate. Capital & Counties had around £664 million
invested in the Covent Garden area including the historic Covent Garden Market,
and around £353 million in Central London, primarily through the Great Capital
Partnership, a joint venture with Great Portland Estates plc. Capital & Counties
acquired 50 per cent of EC&O Venues (Earls Court and Olympia Group) in 2007 for
a sum that valued the assets at approximately £375 million. In addition, Capital
& Counties had interests in the USA amounting to £381 million (2.7 million
sq.ft.), predominantly comprising retail assets in California, including the
856,000 sq.ft. Serramonte Shopping Centre, Daly City, San Francisco.
LIBERTY INTERNATIONAL PLC
HIGHLIGHTS
--------------------------------------------------------------------------------
Quarter Quarter Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
--------------------------------------------------------------------------------
Net rental income £104m £91m £374m
Profit before tax (underlying)* £34m £36m £131m
(Deficit)/gain on revaluation and sale of
investment properties £(345)m £156m £(279)m
(Loss)/profit before tax £(335)m £293m £(125)m
Total properties £8,341m ***£8,540m £8,666m
Net debt £3,639m ***£3,293m £3,668m
Net assets (diluted, adjusted) £4,448m £5,190m £4,757m
Basic earnings per share (84.7p) 75.4p (29.0p)
Adjusted earnings per share 8.4p 9.8p 36.0p
Dividend per share 34.1p
Net assets per share (diluted, adjusted)** 1181p 1376p 1264p
--------------------------------------------------------------------------------
* Before valuation and exceptional items.
** Net assets per share (diluted, adjusted) would increase by 100p per share to
1281p at 31 March 2008 (31 March 2007 - by 100p to 1476p, 31 December 2007 -
by 104p to 1368p) if adjusted for notional acquisition costs amounting to
£375 million (31 March 2007 - £377 million, 31 December 2007 - £390 million).
*** Restated numbers for quarter ended 31 March 2007 now include 100 per cent of
MetroCentre, Gateshead rather than the 60 per cent previously reported - see
note 1 to the 31 March 2008 accounts
Note 15 to the 31 March 2008 accounts sets out full details and calculations of
basic and adjusted earnings per share and net assets (diluted, adjusted).
HIGHLIGHTS OF QUARTER ENDED 31 MARCH 2008
• Stable and resilient operating performance of CSC's £6.2 billion UK
regional shopping centres
- like-for-like net rental income growth of 1.8 per cent
- high occupancy level of 98.5 per cent
• Valuation outcome
Quarter ended Year ended
31 March 31 December
2008 2007
- UK regional shopping centres - 4.5% - 3.9%
- UK non-shopping centre properties - 2.0% - 0.2%
- USA - 0.4% + 6.5%
- Total - 4.0% - 3.5%
• Change in valuation yields as follows:
Nominal equivalent yields
-------------------------
31 March 31 December
2008 2007
- UK regional shopping centres + 26bp 5.34% 5.08%
- UK non-shopping centre properties + 7bp 5.23% 5.16%
• Total return for the period minus 6.5 per cent, with net asset value per
share (diluted, adjusted) reduced from 1264p to 1181p.
• Additions of £100 million including £51 million development expenditure
and £30 million as part of the Great Capital Partnership's asset swap with
the Crown Estate.
• Disposals of £75 million at £1 million surplus to 31 December 2007 book
values
• Committed expenditure to complete current development programme around
£300 million including
- St David's 2, Cardiff opening Autumn 2009
- Eldon Square, South, Newcastle opening Spring 2010
• Robust financial position
- 44 per cent debt to assets ratio
- over £640 million cash and undrawn committed facilities
- no significant debt maturities before 2011
- debt mostly fixed-rate and asset-specific
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES
--------------------------------------------------------------------------------------
Market value Revaluation deficit Net rental income
----------------------------------------------------------------------
31 December 31 March 31 March 31 March
2007 2008 Increase/ 2007 2008 Increase/
£m £m £m (Decrease) £m £m (Decrease)
--------------------------------------------------------------------------------------
UK regional
shopping centres
Lakeside,
Thurrock 1,247.9 1,194.3 (53.3) (4.3)%
MetroCentre,
Gateshead 1,010.0 962.3 (48.7) (4.8)%
Braehead,
Glasgow 730.3 688.3 (46.2) (6.3)%
The Harlequin,
Watford 506.2 481.7 (24.6) (4.9)%
Victoria Centre,
Nottingham 444.8 429.1 (15.8) (3.6)%
Arndale,
Manchester 418.5 400.9 (18.3) (4.3)%
Chapelfield,
Norwich 324.5 311.7 (11.1) (3.5)%
Cribbs Causeway,
Bristol 296.3 282.8 (13.5) (4.5)%
The Potteries,
Stoke-on-Trent 278.3 271.9 (6.6) (2.4)%
The Chimes,
Uxbridge 261.8 255.3 (7.0) (2.7)%
The Glades,
Bromley 257.2 248.2 (10.1) (3.7)%
St David's,
Cardiff 101.2 98.9 (3.2) (3.1)%
Xscape, Braehead 39.8 38.5 (1.9) (5.2)%
--------------------------- -------------------
Like-for-like
capital and income 5,916.8 5,663.9 (260.3) (4.4)% 68.3 69.5 1.8%
Metro Retail
Park 77.0 67.0 (10.0) (13.0)%
Eldon Square,
Newcastle upon
Tyne 258.0 255.9 (9.7) (3.6)%
--------------------------- -------------------
Like-for-like
capital 6,251.8 5,986.8 (280.0) (4.5)% 70.7 73.6 4.1%
Redevelopments
and developments 229.3 232.0 (17.4) (7.0)% 1.1 0.9
--------------------------- -------------------
Total UK regional
shopping centres 6,481.1 6,218.8 (297.4) (4.6%) 71.8 74.5 3.8%
--------------------------- -------------------
UK non-shopping
centre properties
Like-for-like
capital and income 674.5 654.1 (20.9) (3.1)% 8.0 7.7 (3.7)%
Like-for-like other 875.7 897.0 (10.0) (1.1)% 0.4 16.0
--------------------------- -------------------
Like-for-like
capital 1,550.2 1,551.1 (30.9) (2.0)% 8.4 23.7
Acquisitions - 19.1 (2.8) (12.9)% - 0.3
Redevelopments
and developments 151.8 149.7 (14.0) (8.4)% 0.7 0.3
Disposals 71.0 - - 5.4 0.4
--------------------------- -------------------
Total UK
non-shopping
centre Properties 1,773.0 1,719.9 (47.7) (2.7)% 14.5 24.7 70.3%
--------------------------- -------------------
US properties*
Like-for-like
capital and
income 327.8 326.4 (1.2) (0.4)% 4.6 4.6 0.5%
Like-for-like other 53.0 52.7 (0.4) (0.8)% 0.4 0.5
--------------------------- -------------------
Like-for-like
capital 380.8 379.1 (1.6) (0.4)% 5.0 5.1
--------------------------- -------------------
Total US
properties 380.8 379.1 (1.6) (0.4)% 5.0 5.1 2.0%
--------------------------- -------------------
Total investment
properties 8,634.9 8,317.8 (346.6) (4.0)% 91.3 104.3 14.2%
--------------------------- -------------------
*Like-for-like percentage changes are in local currency
Property analysis by use and type
--------------------------------------------------------------------------------
Revaluation
Market value Deficit
------------------------------------ -----------
31 December 31 March
2007 2008 % of total Increase /
£m £m properties (Decrease)
--------------------------------------------------------------------------------
Regional shopping centres and
other retail
UK regional shopping centres 6,481.1 6,218.8 74.8% (4.6)%
UK other retail 807.7 775.5 9.3% (2.2)%
US regional shopping centres 138.6 137.4 1.7% (0.5)%
US other retail 130.0 128.8 1.5% (0.9)%
--------------------------------
Total regional shopping
centres and other retail 7,557.4 7,260.5 87.3% (4.2)%
--------------------------------
Office
UK business space 583.8 553.6 6.7% (4.0)%
US business space 78.6 79.8 1.0% 1.1%
--------------------------------
Total office 662.4 633.4 7.6% (3.4)%
--------------------------------
Exhibition
UK Exhibition 381.4 390.9 4.7% (1.9)%
--------------------------------
Residential
US residential 33.7 33.1 0.4% (1.7)%
--------------------------------
Total investment properties 8,634.9 8,317.8 100.0% (4.0)%
--------------------------------
Analysis of UK non-shopping centres and US properties by location and type
--------------------------------------------------------------------------------
Market value Revaluation deficit Net rental income
-------------------- -------------------- -----------------
31 December 31 March 31 March 31 March 31 March
2007 2008 2008 Increase / 2007 2008
£m £m £m (Decrease) £m £m
--------------------------------------------------------------------------------
UK non-shopping
centre properties
Capco Covent
Garden 663.6 649.4 (15.0) (2.2)% 5.2 6.5
Capco Earls Court 381.4 390.9 (7.4) (1.9)% - 10.9
Capco London (inc.
Great Capital
Partnership) 353.2 352.6 (4.0) (1.1)% 4.2 3.1
Capco Opportunities 220.5 208.7 (10.7) (5.0)% 3.1 3.1
Capco Urban 154.3 118.4 (10.7) (8.4)% 2.0 1.2
-------------------------- ------------------
Total UK non-shopping
centre properties 1,773.0 1,719.9 (47.7) (2.7)% 14.5 24.7
-------------------------- ------------------
US properties
US retail 268.6 266.2 (1.9) (0.7)% 3.7 3.7
US business space 78.6 79.8 0.9 1.1% 1.0 1.1
US residential 33.6 33.1 (0.6) (1.7)% 0.3 0.3
-------------------------- ------------------
Total US properties 380.8 379.1 (1.6) (0.4)% 5.0 5.1
-------------------------- ------------------
2,153.8 2,099.0 (49.4) (2.3)% 19.5 29.8
-------------------------- ------------------
UK investment property valuation data
--------------------------------------------------------------------------------
Market Nominal equivalent Net rental
value yield income ERV
31 March 31 March 31 March
2008 31 December 31 March 2008 2008
£m 2007 2008 £m £m
--------------------------------------------------------------------------------
UK regional shopping
centres
Lakeside, Thurrock 1,194.3 4.90% 5.15%
MetroCentre, Gateshead
(including Retail Park) 1,029.3 5.03% 5.28%
Braehead, Glasgow 688.3 5.02% 5.27%
The Harlequin, Watford 481.7 4.95% 5.25%
Victoria Centre, 429.1 5.00% 5.25%
Nottingham
Arndale, Manchester 400.9 5.13% 5.37%
Chapelfield, Norwich 311.7 5.20% 5.45%
Cribbs Causeway, Bristol 282.8 5.06% 5.29%
The Potteries,
Stoke-on-Trent 271.9 5.50% 5.75%
Eldon Square, Newcastle
upon Tyne 255.9 5.25% 5.60%
The Chimes, Uxbridge 255.3 5.35% 5.60%
The Glades, Bromley 248.2 5.40% 5.65%
St. David's, Cardiff 98.9 5.26% 5.44%
Xscape, Braehead 38.5 6.21% 6.43%
-------
Like-for-like capital 5,986.8 5.08% 5.34% 73.6 341.9
Other 232.0 0.9 5.3
------- -----------------
Total UK regional
shopping centres 6,218.8 74.5 347.2
------- -----------------
UK non-shopping centre
properties
Capco Covent Garden 649.4 4.63% 4.70%
Capco London (inc. Great
Capital Partnership) 305.6 5.68% 5.56%
Capco Opportunities 146.7 6.29% 6.57%
Capco Urban 72.4 5.57% 5.79%
-------
1,174.1 5.16% 5.23% 12.9 71.2
Exhibition 377.0 10.8
------- -----------------
Like-for-like-capital 1,551.1 23.7 71.2
Exhibition - Acquisitions 13.9 0.1
Other 154.9 0.9 15.3
------- -----------------
Total UK non-shopping
centre properties 1,719.9 24.7 86.5
------- -----------------
The passing rent as at 31 March 2008 was £284.5m in respect of the UK Shopping
Centres (£281.3m at 31 December 2007) and £60.7m in respect of UK Non-Shopping
Centres (£61.3m at 31 December 2007).
Glossary
----------
ERV (Estimated Rental Value)
The external valuers' estimates of the group's share of the current annual
market rent of all lettable space net of any non-recoverable charges, before bad
debt provision and adjustments to comply with International Accounting Standards
regarding tenant lease incentives.
Like-for-like income
The category of investment properties which have been owned throughout both
periods without significant capital expenditure in either period, so both income
and capital can be compared on a like-for-like basis.
Like-for-like capital
The category of investment properties which includes like-for-like income
properties, plus those which have been owned throughout the current period but
not the whole of the prior period, without significant capital expenditure in
the current period, so capital values but not income can be compared on a
like-for-like basis.
Net rental income
The group's share of net rents receivable as shown in the Income Statement,
having taken due account of non-recoverable charges, bad debt provisions and
adjustments to comply with International Accounting Standards regarding tenant
lease incentives.
Nominal equivalent yield
Effective annual yield to a purchaser from the assets individually at market
value after taking account of notional acquisition costs but assuming rent is
receivable annually in arrears rather than reflecting the actual rental cash
flows.
Passing Rent
The group's share of contracted annual rents receivable at the balance sheet
date. This takes no account of accounting adjustments made in respect of rent
free periods or tenant incentives, the reclassification of certain lease
payments as finance charges or any irrecoverable costs and expenses, and does
not include excess turnover rent, additional rent in respect of unsettled rent
reviews or sundry income such as from car parks etc.
OPERATING AND FINANCIAL REVIEW
CAPITAL SHOPPING CENTRES ('CSC')
CSC's prime regional shopping centres are demonstrating their stability and
resilience in the more difficult retail market conditions currently being
experienced.
We have continued to conclude lettings with retailers keen to acquire well
configured space in CSC's prime locations.
Occupancy levels remain high. As at 31 March 2008, the occupancy level was 98.5
per cent, compared with 98.7 per cent at 31 December 2007.
Progress with settlement of 2006 and 2007 rent reviews has continued to be
positive with the bulk of reviews now concluded and at anticipated levels. We
are currently engaged in 2008 reviews which predominantly relate to The Mall at
Cribbs Causeway, Bristol.
The two major regional shopping centre developments under construction are the
967,500 sq.ft. St David's, Cardiff extension, anchored by the John Lewis
Partnership, opening in Autumn 2009 and the 480,000 sq.ft. redevelopment of
Eldon Square, Newcastle where the largest phase opens in Spring 2010.
At St David's, Cardiff, lettings continue to progress satisfactorily with over
40 per cent of the space either exchanged or in solicitors' hands (27 per cent
by income). At Eldon Square, over 60 per cent of the largest phase, the Southern
Gateway, is committed by income.
The compulsory purchase order to facilitate the redevelopment of the Westgate
Centre in Oxford has now been confirmed. We are currently reviewing our
financing options for this project following the rearrangement of the
partnership structure in 2007 which increased our participation in the project.
We are engaged on a considerable number of other active management and expansion
projects across our CSC centres notably at The Glades, Bromley; MetroCentre,
Gateshead; Braehead, Glasgow and Cribbs Causeway, Bristol.
CAPITAL & COUNTIES
Capital & Counties has had a good start to 2008.
We are progressively implementing our masterplan for the £650 million Covent
Garden Estate.
The Great Capital Partnership, our £660 million joint venture with Great
Portland Estates, has reported a substantial and positive restructuring with The
Crown Estate involving over £350 million of assets. The partnership has also
concluded a £225 million non-recourse secured loan maturing in 2013 to refinance
the partners' equity investment in the joint venture and also provide financial
resources for asset repositioning and investment projects.
The Earls Court & Olympia business is trading well and we are actively pursuing
the opportunity to intensify use at these locations.
Aggregate disposals for the period amounted to £75 million at a surplus of £1
million over 31 December 2007 book values, including £45 million of non-core
assets held by Capco Urban and Capco Opportunities and £30 million as part of
the restructuring of Great Capital Partnership assets with the Crown Estate.
In the USA, our business is performing very satisfactorily and we have recorded
a $10 million disposal of a non-core asset.
In addition to the group's activities in the USA, other international
initiatives in India and China progressed well. Our joint venture in India,
Prozone Liberty, is focused on delivering its first regional shopping centre in
Aurangabad in 2009 and is planning to commence work on three similar projects in
other major second-tier Indian cities. In China, our first investment alongside
China Resources in a real estate fund managed by Harvest Capital progressed
positively and further co-operation with our partners is anticipated.
PROPERTY VALUATIONS AND NET ASSET VALUE ESTIMATE
We noted on 13 February 2008 when announcing Liberty International's 2007 annual
results that upward pressure on commercial property valuation yields had
continued into 2008.
The group's first quarter results to 31 March 2008 contain full details of
property valuations.
At our UK regional shopping centres, which at 31 December 2007 comprised 75 per
cent of Liberty International's aggregate £8.6 billion of investment properties,
the nominal equivalent yields used for valuations (which averaged 5.08 per cent
at the year end) increased by 26 basis points in the quarter to 5.34 per cent.
UK shopping centre valuations reduced by 4.5 per cent, with 5.1 per cent
attributable to the change in yields offset by a 0.6 per cent rise in rental
values used by the valuers.
The remaining 25 per cent of the group's assets held by Capital & Counties saw
an overall reduction in valuation in the first quarter of a more modest 2.3 per
cent with strong performances from Central London assets and the US business.
In aggregate, predominantly reflecting valuation movements, adjusted net asset
value per share reduced from 1264p at 31 December 2007 to 1181p at 31 March
2008.
Although shareholders buying our shares only pay stamp duty at 0.5 per cent on
share transactions, the assumption contained within the valuations is that our
assets would be sold individually to purchasers who would pay the full 4 per
cent stamp duty land tax applicable to large property transactions and other
notional acquisition costs. This factor would have increased net asset value at
31 March 2008 by around £375 million, representing around 100p per share over
and above the adjusted net asset value per share of 1181p (31 December 2007 -
104p per share over the published figure of 1264p per share).
BASIS OF PREPARATION OF RESULTS FOR THE QUARTER ENDED 31 MARCH 2008
The comparative columns for the first quarter of 2007 have been restated to
reflect fully consolidated accounting for the group's interest in the
MetroCentre Partnership with a minority interest rather than the proportionate
consolidation shown in the first quarter last year. This revised treatment
reflects the contractual relationship between the parties.
In addition, the results reflect an impairment charge of £21.6 million relating
to the goodwill associated with the Covent Garden restaurants, acquired in the
last quarter of 2007. The acquisition of these restaurants provided the access
to leases which will in time be reflected in the uplift of the property values.
In the meantime in accordance with IAS 36, the cashflow from these units has
been reviewed and the group has determined that it is not appropriate to
maintain the goodwill on the balance sheet.
UNDERLYING PROFIT BEFORE TAX
The underlying profit before tax and excluding valuation and exceptional items
was as follows:
Three months ended Three months ended Year ended
31 March 2008 31 March 2007 31 December 2007
£m £m £m
Net rental income 104.3 91.3 374.3
Other income 1.5 0.4 2.0
Administration expenses (14.5) (7.4) (45.2)
Interest payable less
receivable (57.4) (48.4) (200.5)
-------------------------------------------------------
Underlying profit
before tax 33.9 35.9 130.6
=======================================================
Net rental income increased by 14 per cent from £91.3 million in the first
quarter of 2007 to £104.3 million in 2008 with the bulk of the increase coming
from recent Capital & Counties' acquisitions, especially Earls Court and Olympia
which contributed £10.9 million in the quarter (31 March 2007 - nil, 31 December
2007 - £10.1 million).
Underlying finance costs increased from £48.4 million in the first quarter of
2007 to £57.4 million (year ended 31 December 2007 - £200.5 million) reflecting
investment expenditure in 2007.
Including £2.5 million from Earls Court and Olympia, administration expenses
increased to £14.5 million (31 March 2007 - £7.4 million, 31 December 2007 -
£45.2 million including £5.2 million from Earls Court and Olympia).
The increased administration expenses also reflect CSC's active development
programme and the substantial recent expansion of the activities of Capital &
Counties, with the recruitment of experienced personnel to pursue active
management and development opportunities within Covent Garden, Earls Court and
Olympia, Capco Urban, and overseas activities. Administration expenses in the
first quarter of 2007 benefited from the write-back of excess provisions from
the previous year.
Reflecting the above factors, underlying profit before tax reduced from £35.9
million for the quarter ended 31 March 2007 to £33.9 million for the quarter
ended 31 March 2008 (year ended 31 December 2007 - £130.6 million). After taking
account of tax and minority interests, adjusted earnings per share for the
quarter amounted to 8.4p (31 March 2007 - 9.8p, 31 December 2007 - 36.0p).
FINANCIAL POSITION
Liberty International has a strong financial position with unutilised committed
financial facilities at 31 March 2008 of £510 million and cash balances of £130
million, substantially in excess of our commitments.
The group's debt structure is robust with predominantly fixed-rate,
asset-specific and non-recourse financing with no significant maturities before
2011.
At 31 March 2008, Liberty International's net debt was £3,639 million,
representing a debt to assets ratio of 44 per cent (31 December 2007 - 42 per
cent).
The weighted average maturity of the group's debt was 6.6 years and the weighted
average cost of debt was approximately 6.0 per cent and fully hedged against
interest rate movements.
The group's borrowings are predominantly secured on property assets on a
non-recourse basis. The market value of charged property assets was £6,979
million (31 December 2007 - £6,894 million) with attached debt of £3,540 million
(31 December 2007 - £3,501 million), giving rise to a loan to value ratio of 51
per cent (31 December 2007 - 51 per cent).
At 31 March 2008, the market value of the uncharged property assets or interests
was £1,339 million (31 December 2007 - £1,805 million) with unsecured net debt
of £99 million (31 December 2007 - £124 million).
During the first quarter of 2008, the spreads on traded Commercial
Mortgage-Backed Securities ('CMBS') debt widened significantly and the group
repurchased £95.4 million nominal of bonds related to certain of CSC's shopping
centres for a consideration of £83.6 million. These bonds will be held by the
group as part of its ongoing treasury operations and the £11.8 million profit
earned was recognised in the Income Statement in the quarter ended 31 March 2008
as exceptional finance income.
At 31 March 2008 long-term interest rates were little changed from the level of
31 December 2007, with the 10 year sterling swap rate decreasing by 7 basis
points from 5.02 per cent to 4.95 per cent. As a result, there was no
significant valuation movement on the group's derivative financial instruments
during the first quarter.
DEVELOPMENTS
Contemporary development demands a rigorous approach to the creation of large
scale composite projects. The group has been a leader in this area for many
years and possesses extensive experience in all aspects of development and
project-execution skill sets. These have now been focused respectively in the
newly-formed business units of Liberty International Developments and Liberty
International Project Management which will spearhead future initiatives in
retail-led mixed-use development.
The group's investment and development commitments at 31 March 2008 amounted to
£328 million.
Details of redevelopment and development properties are set out below:
Property Development Revaluation for Market Value Cost to complete
expenditure in quarter ended 31 March 2008 as at 31 March
quarter ended 31 March 2008 2008
31 March 2008
£m £m £m £m
Capital Shopping
Centres
St David's 2,
Cardiff 14.2 (7.8) 145.2 178.0
Westgate, Oxford 6.0 (7.4) 35.0 Uncommitted at
31 March 2008
Other - (2.2) 51.8 Uncommitted at
31 March 2008
-------------------------------------------------------------
20.2 (17.4) 232.0 178.0
Capital & Counties 11.7 (14.0) 149.7 31.0
-------------------------------------------------------------
Redevelopments and
developments 31.9 (31.4) 381.7 209.0
-------------------------------------------------------------
In addition, £6.7 million was incurred in the quarter on the Southern Gateway
redevelopment at Eldon Square, Newcastle which is included within completed
investment properties, with CSC's share of costs to complete amounting to £50
million at 31 March 2008.
Other commitments at 31 March 2008 amounted to £69 million including £37 million
for overseas investments and £32 million on existing completed investment
properties.
PROSPECTS
In the view of the directors of Liberty International, further upward movement
in valuation yields may well be experienced in 2008 as investment property
markets remain unsettled in the light of ongoing uncertainty in financial
markets and the general tightening of credit conditions. It is currently too
early to assess the full impact of these factors on the general performance of
the UK economy and specifically for the property industry. In particular, rental
levels are likely in the next few years to become an increasingly important
factor in valuation performance.
In addition to the high quality developments on which we are currently engaged,
especially at St David's, Cardiff and Eldon Square, Newcastle, we are pursuing a
broad range of active management initiatives and development prospects within
our existing £8.3 billion of investment properties. While such activity is
subject to suitable market conditions, these prospects provide substantial scope
for future organic growth.
The directors believe that Liberty International's continued focus on
predominantly retail assets of the highest quality positions the company well in
the more difficult real estate market conditions now prevailing.
7 May 2008
CONSOLIDATED INCOME STATEMENT (unaudited)
For the three months ended 31 March 2008
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
Notes £m £m £m
--------------------------------------------------------------------------------
Revenue 2 172.0 129.0 574.6
--------------------------------------------------------------------------------
Rental income 162.9 128.7 546.7
Rental expenses (58.6) (37.4) (172.4)
--------------------------------------------------------------------------------
Net rental income 2 104.3 91.3 374.3
Other income 1.5 0.4 2.0
Gain/ (deficit) on revaluation and
sale of investment and development
property 3 (345.5) 156.3 (279.1)
--------------------------------------------------------------------------------
(239.7) 248.0 97.2
Administration expenses
Ongoing expenses (14.5) (7.4) (45.2)
Impairment of goodwill 4 (21.6) - -
--------------------------------------------------------------------------------
Operating profit / (loss) (275.8) 240.6 52.0
--------------------------------------------------------------------------------
Interest payable 5 (58.4) (49.7) (209.3)
Interest receivable 1.0 1.3 8.8
Exceptional finance income/ (costs) 5 2.1 (8.3) (3.3)
Change in fair value of derivative
financial instruments (3.5) 109.2 27.0
--------------------------------------------------------------------------------
Net finance costs (58.8) 52.5 (176.8)
--------------------------------------------------------------------------------
Profit/(loss) before tax (334.6) 293.1 (124.8)
--------------------------------------------------------------------------------
Taxation 6 3.6 (20.4) (30.4)
--------------------------------------------------------------------------------
Profit/(loss) for the period (331.0) 272.7 (155.2)
Minority interests 7 24.8 - 50.2
--------------------------------------------------------------------------------
Profit/(loss) for the period
attributable to equity shareholders (306.2) 272.7 (105.0)
--------------------------------------------------------------------------------
Ordinary dividends - paid and proposed - - 123.3
- pence per share - - 34.1p
--------------------------------------------------------------------------------
Basic earnings per share 15 (84.7)p 75.4p (29.0)p
--------------------------------------------------------------------------------
Diluted earnings per share 15 (81.2)p 72.8p (26.6)p
--------------------------------------------------------------------------------
Adjusted earnings per share are shown in note 15.
CONSOLIDATED BALANCE SHEET (unaudited)
As at 31 March 2008
-------------------------------------------------------------------------------
As at As at As at
31 March 31 March 31 December
2008 2007 2007
Notes £m £m £m
-------------------------------------------------------------------------------
Non-current assets
Goodwill 4 5.2 - 26.6
Investment and development property 9 8,303.0 8,492.1 8,622.8
Plant and equipment 1.0 0.9 1.2
Investments 52.8 7.5 51.0
Trade and other receivables 11 78.1 69.0 78.5
-------------------------------------------------------------------------------
8,440.1 8,569.5 8,780.1
-------------------------------------------------------------------------------
Current assets
Trading property 10 37.6 47.7 43.7
Trade and other receivables 11 180.6 345.8 160.3
Cash and cash equivalents 129.9 60.5 188.4
-------------------------------------------------------------------------------
348.1 454.0 392.4
-------------------------------------------------------------------------------
Total assets 8,788.2 9,023.5 9,172.5
-------------------------------------------------------------------------------
Current liabilities
Trade and other payables (331.4) (230.1) (341.7)
Tax liabilities (4.0) (0.2) (5.7)
Borrowings, including finance leases 12 (74.7) (152.8) (152.3)
Derivative financial instruments (94.6) (45.0) (97.8)
-------------------------------------------------------------------------------
(504.7) (428.1) (597.5)
-------------------------------------------------------------------------------
Non-current liabilities
Borrowings, including finance leases 12 (3,694.5) (3,200.7) (3,704.0)
Deferred tax provision 6 (69.8) (62.3) (73.7)
Other provisions (1.4) (3.7) (1.4)
Other payables (95.0) (143.8) (87.0)
-------------------------------------------------------------------------------
(3,860.7) (3,410.5) (3,866.1)
-------------------------------------------------------------------------------
Total liabilities (4,365.4) (3,838.6) (4,463.6)
-------------------------------------------------------------------------------
Net assets 4,422.8 5,184.9 4,708.9
-------------------------------------------------------------------------------
Equity
Called up share capital and reserves 4,201.1 5,008.5 4,507.0
Minority interests 221.7 176.4 201.9
-------------------------------------------------------------------------------
Total equity 16 4,422.8 5,184.9 4,708.9
-------------------------------------------------------------------------------
Diluted, adjusted net assets per 15 1181p 1376p 1264p
share
Basic net assets per share 15 1161p 1384p 1246p
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (unaudited)
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Profit/(loss) for the period as per the
consolidated income statement
before minority interest (331.0) 272.7 (155.2)
Other recognised income and expense in the
period:
Actuarial losses on defined benefit
pension schemes - - (2.0)
Tax on items taken directly to equity - - 0.5
Gains on revaluation of investments, net
exchange translation differences and
other movements 0.2 2.3 6.4
Net losses recognised in equity due to
minority interests (on the above) - - (0.7)
--------------------------------------------------------------------------------
Net gains recognised in equity 0.2 2.3 4.2
--------------------------------------------------------------------------------
Total recognised income and (expense) for
the period (330.8) 275.0 (151.0)
Total recognised expense attributable to
minority interests 24.8 - 50.9
--------------------------------------------------------------------------------
Total recognised income and (expense) for
the period attributable to
equity shareholders (306.0) 275.0 (100.1)
--------------------------------------------------------------------------------
A summary of changes in group equity is shown in note 16.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Cash flows from operating activities
Operating profit/(loss) (275.8) 240.6 52.0
Adjustments for non-cash items:
Unrealised net revaluation (gains)/
losses on investment property 346.6 (140.2) 316.5
Profit on sale of investment property (1.1) (16.1) (37.4)
Depreciation and amortisation 0.1 - 0.3
Impairment of goodwill 21.6 - -
Amortisation of lease incentives and
other direct costs (1.9) 0.9 (1.6)
--------------------------------------------------------------------------------
Cash flows from operations before
changes in working capital 89.5 85.2 329.8
Change in trade and other receivables 15.3 9.4 (6.4)
Change in trading properties 6.1 (14.6) 8.5
Change in trade and other payables 23.3 (63.5) (65.1)
--------------------------------------------------------------------------------
Cash generated from operations 134.2 16.5 266.8
Interest paid (61.3) (48.4) (222.0)
Interest received 1.1 1.6 9.8
Tax paid (23.1) - (12.9)
--------------------------------------------------------------------------------
Cash flows from operating activities 50.9 (30.3) 41.7
--------------------------------------------------------------------------------
Cash flows from investing activities
Purchase and development of property (85.5) (170.1) (575.5)
Sale of property 0.7 10.5 459.2
Purchase of subsidiary companies - - (80.0)
Purchase of non-current asset investments (3.5) (7.5) (39.2)
--------------------------------------------------------------------------------
Cash flows from investing activities (88.3) (167.1) (235.5)
--------------------------------------------------------------------------------
Cash flows from financing activities
Issue and repurchase of shares 0.1 1.1 (3.1)
Borrowings drawn 142.5 115.0 382.6
Borrowings repaid (79.2) (180.0) (197.0)
Repurchase of CMBS notes (84.5) - -
Equity dividends paid - - (122.1)
--------------------------------------------------------------------------------
Cash flows from financing activities (21.1) (63.9) 60.4
--------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (58.5) (261.3) (133.4)
Cash and cash equivalents at beginning
of period / year 188.4 321.8 321.8
--------------------------------------------------------------------------------
Cash and cash equivalents at end of
period / year 129.9 60.5 188.4
--------------------------------------------------------------------------------
NOTES TO THE ACCOUNTS (unaudited)
1 Basis of preparation
The Interim Report is unaudited and does not constitute statutory accounts
within the meaning of s240 of the Companies Act 1985. The auditor's opinion on
the statutory accounts for 2007, which were prepared in accordance with
International Financial Reporting Standards as endorsed by the European Union
("IFRS"), IFRIC interpretations and with those parts of the Companies Act 1985
applicable to companies reporting under IFRS, was unqualified and did not
contain a statement made under s237(2) or s237(3) of the Companies Act 1985.
The financial information has been prepared using the accounting policies set
out on pages 26 and 27 of the Group's Annual Report for 2007.
In the financial accounts for the year ended 31 December 2007 the MetroCentre
Partnership was consolidated as a subsidiary, with effect from the formation
date of 25 March 2007, reflecting the control exercised by Liberty
International. This had previously been treated on a proportional consolidation
basis. The directors therefore believe it to be appropriate that this revised
treatment is reflected in the figures for 31 March 2007 and have re-stated the
figures accordingly.
The overall impact on net asset value of the group is £nil. However, the impact
on the individual lines is as follows:
--------------------------------------------------------------------------------
Three months Six months Nine months
ended ended ended
31 March 30 June 31 September
2007 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Balance sheet
Increase in property value 423.7 436.8 436.8
Increase in current assets - IFRS
adjustment 2.3 2.3 2.3
Increase in current liabilities (16.0) (16.0) (43.0)
Increase in finance loan (233.6) (232.8) (232.0)
Overall increase in minority interest 176.4 190.3 164.1
--------------------------------------------------------------------------------
Income statement
Decrease in profit on sale of property (16.0) (16.0) (16.0)
Increase in property valuation gain 16.0 16.0 16.0
Increase in net rental income - 5.2 9.6
Increase in valuation movement - 2.4 0.4
Increase in finance interest charge - (3.6) (7.2)
Movement in minority interest - 4.0 2.8
--------------------------------------------------------------------------------
No adjustment has been made to the net income generated for the period from the
partnership formation on 25 March 2007 to 31 March 2007 the end of quarter one
as it is not considered to be material.
2 Segmental analysis
--------------------------------------------------------------------------------
Three months ended 31 March 2008
-----------------------------------------------------
UK Other
shopping commercial Other Group
centres properties Exhibition activities total
£m £m £m £m £m
--------------------------------------------------------------------------------
Revenue 118.7 33.3 19.5 0.5 172.0
--------------------------------------------------------------------------------
Rental income including
service charge and other
income 114.0 29.4 19.5 - 162.9
Rent payable and
other outgoings (39.5) (10.5) (8.6) - (58.6)
--------------------------------------------------------------------------------
Net rental income 74.5 18.9 10.9 - 104.3
Property trading
profits 0.3 0.6 - - 0.9
Other income - 0.1 - 0.5 0.6
Deficit on revaluation and
sale of investment and
development property (297.3) (40.8) (7.4) - (345.5)
--------------------------------------------------------------------------------
Segment result before
overheads and finance
costs (222.5) (21.2) 3.5 0.5 (239.7)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Three months ended 31 March 2007
----------------------------------------------------
UK Other
shopping commercial Other Group
centres properties Exhibition activities total
£m £m £m £m £m
--------------------------------------------------------------------------------
Revenue 104.6 24.1 - 0.3 129.0
--------------------------------------------------------------------------------
Rental income including
service charge and other
income 104.6 24.1 - - 128.7
Rent payable and
other outgoings (32.8) (4.6) - - (37.4)
--------------------------------------------------------------------------------
Net rental income 71.8 19.5 - - 91.3
Other income - 0.1 - 0.3 0.4
Gain on revaluation and sale
of investment and
development property 126.2 30.1 - - 156.3
--------------------------------------------------------------------------------
Segment result before
overheads and finance
costs 198.0 49.7 - 0.3 248.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Year ended 31 December 2007
----------------------------------------------------
UK Other
shopping commercial Other Group
centres properties Exhibition activities total
£m £m £m £m £m
--------------------------------------------------------------------------------
Revenue 424.8 126.3 24.7 (1.2) 574.6
--------------------------------------------------------------------------------
Rental income including
service charge and other
income 411.7 110.3 24.7 - 546.7
Rent payable and
other outgoings (122.9) (34.9) (14.6) - (172.4)
--------------------------------------------------------------------------------
Net rental income 288.8 75.4 10.1 - 374.3
Property trading profits 1.5 1.4 - - 2.9
Other income - 0.3 - (1.2) (0.9)
Gain/ (deficit) on revaluation
and sale of investment and
development property (284.5) 0.6 4.8 - (279.1)
--------------------------------------------------------------------------------
Segment result before
overheads and finance
costs 5.8 77.7 14.9 (1.2) 97.2
--------------------------------------------------------------------------------
3 Gain/ (deficit) on revaluation and sale of investment and development property
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Gain/ (deficit) on revaluation of
investment and development property (346.6) 156.2 (316.5)
Gain on sale of investment property 1.1 0.1 37.4
--------------------------------------------------------------------------------
Gain/ (deficit) on revaluation and sale of
investment and development property (345.5) 156.3 (279.1)
--------------------------------------------------------------------------------
4 Impairment of goodwill
Following an impairment test, required under IAS 36, the goodwill arising on the
acquisition of the Covent Garden Restaurants has been written off in full. As a
result, a charge of £21.6million has been made to the Income Statement in the
quarter. This is due to the advanced state of the plans to reconfigure the
buildings in which they are located. These plans are however, subject to
commercial agreement.
5 Finance costs
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Gross interest payable - recurring 63.0 52.8 224.4
Interest capitalised on developments (4.6) (3.1) (15.1)
--------------------------------------------------------------------------------
Interest payable 58.4 49.7 209.3
--------------------------------------------------------------------------------
Costs of termination of financial
instruments 9.7 7.4 2.0
Profit on repurchase of CMBS notes (11.8) - -
Issue costs written off on redemption
of loans - 0.9 1.3
--------------------------------------------------------------------------------
Exceptional finance (income)/ costs (2.1) 8.3 3.3
--------------------------------------------------------------------------------
6 Taxation
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Current tax on profits excluding
exceptional items and property disposals (0.4) 0.7 2.7
--------------------------------------------------------------------------------
Deferred tax:
On investment and development properties (7.7) 1.9 8.7
On derivative financial instruments 2.7 20.2 15.6
On other temporary differences 0.9 (0.2) (0.5)
--------------------------------------------------------------------------------
Deferred tax on profits excluding
exceptional items and property disposals (4.1) 21.9 23.8
--------------------------------------------------------------------------------
Tax on profits excluding exceptional
items and property disposals (4.5) 22.6 26.5
REIT entry charge 0.9 0.9 3.9
Tax on exceptional items and property
disposals:
- current tax - (3.1) -
--------------------------------------------------------------------------------
Exceptional tax and tax on exceptional
items and property disposals - (3.1) -
--------------------------------------------------------------------------------
Taxation (credit)/charge (3.6) 20.4 30.4
--------------------------------------------------------------------------------
Under IAS 12 (Income Taxes), provision is made for the deferred tax liability
associated with the revaluation of investment properties at the corporate tax
rate expected to apply to the group at the time of use. For those properties
qualifying as REIT properties the relevant tax rate will remain 0 per cent, for
other properties the relevant tax rate will remain 28 per cent.
The deferred tax provision on the revaluation of investment properties
calculated under IAS 12 is £32.7 million at 31 March 2008 (31 December 2007 -
£35.8 million, 31 March 2007 - £34.1 million). This IAS 12 calculation does not
reflect the expected amount of tax that would be payable if the assets were
sold. The group estimates that calculated on a disposal basis the liability is
£76.9 million at 31 March 2008 (31 December 2007 - £86.8 million, 31 March 2007
- £50.4 million). If upon sale the group retained all the capital allowances,
which is within the control of the group, the deferred tax provision in respect
of capital allowances of £45.5 million may also be released, and further capital
allowances of £24.6 million may be available to reduce the amount of tax payable
on sale.
Where gains such as revaluation of development properties and other assets and
actuarial movements on pension funds are dealt with in reserves, any deferred
tax is also dealt with in reserves.
Movements in the provision for deferred tax
--------------------------------------------------------------------------------
As at As at
31 December Recognised Recognised 31 March
2007 in income in equity 2008
£m £m £m £m
--------------------------------------------------------------------------------
Revaluation of investment
and development property 35.8 (3.2) 0.1 32.7
Capital allowances 49.9 (4.5) 0.1 45.5
Derivative financial
instruments (14.7) 2.7 - (12.0)
Other temporary differences 2.7 0.9 - 3.6
--------------------------------------------------------------------------------
Net deferred tax provision 73.7 (4.1) 0.2 69.8
--------------------------------------------------------------------------------
All deferred tax liabilities are expected to have a maturity of more than one
year.
7 Minority interests
Minority interests comprise third party shares of the MetroCentre, the
Exhibition business and other assets; £3.0 million underlying profit and £27.8
million deficit on revaluation after taxation (31 December 2007 - loss of £1.9
million and £48.3 million deficit on revaluation after taxation).
8 Dividends
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Ordinary shares
Prior period final dividend paid of nil
per share (31 December 2007 - 17.25p) - - 62.4
Interim dividend paid of nil per share
(31 December 2007 - 16.5p) - - 59.7
--------------------------------------------------------------------------------
Dividends paid - - 122.1
--------------------------------------------------------------------------------
Proposed dividend of nil per share
(31 December 2007 - 17.6p) - - 63.6
--------------------------------------------------------------------------------
9 Investment and development property
--------------------------------------------------------------------------------
UK Other
shopping commercial
centres properties Total
£m £m £m
--------------------------------------------------------------------------------
At 31 December 2007 6,466.0 2,156.8 8,622.8
Additions 35.0 65.0 100.0
Disposals (1.2) (72.6) (73.8)
Foreign exchange fluctuations - 0.6 0.6
Deficit on valuation (297.3) (49.3) (346.6)
--------------------------------------------------------------------------------
At 31 March 2008 6,202.5 2,100.5 8,303.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UK Other
shopping commercial
centres properties Total
£m £m £m
--------------------------------------------------------------------------------
At 31 December 2006 6,542.8 1,644.3 8,187.1
Additions 17.6 142.8 160.4
Disposals (4.8) (5.6) (10.4)
Foreign exchange fluctuations - (1.2) (1.2)
Surplus on valuation 126.2 30.0 156.2
--------------------------------------------------------------------------------
At 31 March 2007 6,681.8 1,810.3 8,492.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UK Other
shopping commercial
centres properties Total
£m £m £m
--------------------------------------------------------------------------------
At 31 December 2006 6,542.8 1,644.3 8,187.1
Additions 226.8 835.0 1,061.8
Disposals (14.2) (289.2) (303.4)
Foreign exchange fluctuations - (6.2) (6.2)
Deficit on valuation (289.4) (27.1) (316.5)
--------------------------------------------------------------------------------
At 31 December 2007 6,466.0 2,156.8 8,622.8
--------------------------------------------------------------------------------
The group's interests in investment and development properties were valued as at
31 March 2008, 31 December 2007 and 31 March 2007 by independent external
valuers in accordance with the Appraisal and Valuation Manual of RICS, on the
basis of market value. Market value represents the figure that would appear in a
hypothetical contract of sale between a willing buyer and a willing seller.
--------------------------------------------------------------------------------
As at As at As at
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Balance sheet carrying value of investment
and development property 8,303.0 8,492.1 8,622.8
Adjustment in respect of head leases and
incentives 14.8 19.9 12.1
--------------------------------------------------------------------------------
Market value of investment and development
property 8,317.8 8,512.0 8,634.9
--------------------------------------------------------------------------------
10 Trading property
The estimated replacement cost of trading properties based on market value
amounted to £39.2 million (31 December 2007 - £46.1 million, 31 March 2007 -
£52.6 million).
11 Trade and other receivables
--------------------------------------------------------------------------------
As at As at As at
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Amounts falling due after more than one year:
Other receivables 17.7 12.8 17.9
Prepayments and accrued income 60.4 56.2 60.6
--------------------------------------------------------------------------------
78.1 69.0 78.5
--------------------------------------------------------------------------------
Amounts falling due within one year:
Rents receivable 33.7 21.1 27.3
Derivative financial instruments 20.4 42.9 25.4
Other receivables 81.1 236.6 60.4
Prepayments and accrued income 45.4 45.2 47.2
--------------------------------------------------------------------------------
180.6 345.8 160.3
--------------------------------------------------------------------------------
12 Borrowings, including finance leases
--------------------------------------------------------------------------------
As at As at As at
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Amounts falling due within one year:
Secured borrowings
Bank loans and overdrafts 39.8 124.6 118.8
Commercial mortgage backed securities
("CMBS") notes 29.2 21.6 27.4
Finance lease obligations 5.7 6.6 6.1
--------------------------------------------------------------------------------
Amounts falling due within one year 74.7 152.8 152.3
--------------------------------------------------------------------------------
Amounts falling due after more than one year:
Secured borrowings - non recourse
CMBS notes 2015 1,062.0 1,165.6 1,131.3
CMBS notes 2011 599.7 638.6 633.7
Bank loans 2017 117.2 - 117.2
Bank loans 2016 681.2 511.8 652.2
Bank loans 2013 251.3 251.1 251.2
--------------------------------------------------------------------------------
2,711.4 2,567.1 2,785.6
Other secured borrowings
Debentures 2027 226.1 225.8 226.1
Other loans 540.4 183.5 428.9
--------------------------------------------------------------------------------
3,477.9 2,976.4 3,440.6
Unsecured borrowings
CSC bonds 2013 26.6 26.6 26.6
CSC bonds 2009 31.4 41.4 31.4
Other loans - - 43.0
--------------------------------------------------------------------------------
3,535.9 3,044.4 3,541.6
£111.3 million 3.95% convertible bonds due
2010 111.3 109.5 111.3
Finance lease obligations 47.3 46.8 51.1
--------------------------------------------------------------------------------
Amounts falling due after more than one year 3,694.5 3,200.7 3,704.0
--------------------------------------------------------------------------------
Total borrowings, including finance leases 3,769.2 3,353.5 3,856.3
Cash and cash equivalents (129.9) (60.5) (188.4)
--------------------------------------------------------------------------------
Net borrowings 3,639.3 3,293.0 3,667.9
--------------------------------------------------------------------------------
13 Fair values of financial instruments
--------------------------------------------------------------------------------
As at As at As at
31 March 2008 31 March 2007 31 December 2007
-------------------- ------------------- ------------------
Balance Fair Balance Fair Balance Fair
sheet value value sheet value value sheet value value
£m £m £m £m £m £m
--------------------------------------------------------------------------------
Debentures and
other fixed rate
loans
Sterling
C&C 5.562%
debenture 2027 226.1 296.3 225.8 345.0 226.1 342.0
CSC 6.875%
unsecured
bonds 2013 26.6 27.3 26.6 26.2 26.6 26.2
CSC 5.75%
unsecured
bonds 2009 31.4 31.4 41.4 40.4 31.4 31.5
US dollars
Fixed rate
loans 160.7 161.4 158.1 159.8 161.0 160.6
--------------------------------------------------------------------------------
444.8 516.4 451.9 571.4 445.1 560.3
--------------------------------------------------------------------------------
Convertible bonds
- fixed rate 111.3 140.9 109.5 174.4 111.3 152.7
--------------------------------------------------------------------------------
The adjustment in respect of the above, after credit for tax relief, to the
diluted net assets per share (which does not require adjustment for the fair
value of convertible bonds) would amount to 13p per share (31 December 2007 -
21p, 31 March 2007 - 22p).
All other financial assets and liabilities included in the balance sheet are
stated at fair values.
Derivative financial instruments
--------------------------------------------------------------------------------
As at As at As at
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Current assets (note 11) 20.4 42.9 25.4
Current liabilities (94.6) (45.0) (97.8)
--------------------------------------------------------------------------------
(74.2) (2.1) (72.4)
--------------------------------------------------------------------------------
Interest rate swaps
--------------------------------------------------------------------------------
Notional principal Average contracted rate
--------------------------------------------------------------------------------
31 March 31 March 31 December 31 March 31 March 31 December
2008 2007 2007 2008 2007 2007
£m £m £m % % %
Effective on or
after:
1 year 3,313 2,642 3,319 5.27 5.31 5.27
5 years 3,211 2,818 3,220 5.16 5.10 5.16
10 years 2,425 2,350 2,543 4.69 4.68 4.72
15 years 2,100 2,025 2,100 4.58 4.57 4.58
20 years 2,100 2,025 2,100 4.58 4.57 4.58
25 years 1,625 1,550 1,625 4.40 4.38 4.40
--------------------------------------------------------------------------------
14 Capital commitments
At 31 March 2008, the group was contractually committed to £327.8 million of
future expenditure for the purchase, construction, development and enhancement
of investment property (31 December 2007 - £317.0 million, 31 March 2007 -
£375.6 million).
15 Per share details
(a) Earnings per share
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
Number Number Number
millions millions millions
--------------------------------------------------------------------------------
Weighted average ordinary shares in issue
for calculation of basic earnings per
share 361.6 361.7 361.7
Weighted average ordinary shares to be
issued on conversion of bonds and
under employee incentive arrangements 14.6 14.8 14.7
--------------------------------------------------------------------------------
Weighted average ordinary shares in issue
for calculation of diluted earnings per
share 376.2 376.5 376.4
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Earnings used for calculation of basic
earnings per share (306.2) 272.7 (105.0)
Reduction in interest charge from
conversion of bonds, net of tax 0.8 1.3 5.0
--------------------------------------------------------------------------------
Earnings used for calculation of diluted
earnings per share (305.4) 274.0 (100.0)
--------------------------------------------------------------------------------
Basic earnings per share (pence) (84.7)p 75.4p (29.0)p
--------------------------------------------------------------------------------
Diluted earnings per share (pence) (81.2)p 72.8p (26.6)p
--------------------------------------------------------------------------------
Earnings used for calculation of basic
earnings per share (306.2) 272.7 (105.0)
Add back exceptional finance (income)/
costs (2.1) 8.3 3.3
Add back REIT entry charge 0.9 0.9 3.9
Less other exceptional tax - (3.1) -
(Less)gain/ add back deficit on revaluation
and sale of investment and
development property 345.5 (156.3) 279.1
Add back/ (less) fair value movement on
derivative financial instruments 3.5 (109.2) (27.0)
Add back/(less) deferred tax in respect of
investment and development property (3.2) 2.2 4.2
Add back deferred tax in respect of
derivative financial instruments 2.7 20.2 15.6
Add back/(less) deferred tax on capital
allowances (4.5) (0.3) 4.5
Add back impairment of goodwill 21.6 - -
Less amounts above due to minority
interests (27.8) - (48.3)
--------------------------------------------------------------------------------
Earnings used for calculation of adjusted
earnings per share 30.4 35.4 130.3
--------------------------------------------------------------------------------
Adjusted earnings per share (pence) 8.4p 9.8p 36.0p
--------------------------------------------------------------------------------
Earnings used for calculation of adjusted
earnings per share 30.4 35.4 130.3
Reduction in interest charge from
conversion of bonds, net of tax 0.8 1.3 5.0
--------------------------------------------------------------------------------
Earnings used for calculation of adjusted,
diluted earnings per share 31.2 36.7 135.3
--------------------------------------------------------------------------------
Adjusted, diluted earnings per share (pence) 8.3p 9.7p 35.9p
--------------------------------------------------------------------------------
(b) Net assets
--------------------------------------------------------------------------------
As at As at As at
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Basic net asset value 4,201.1 5,008.5 4,507.0
Fair value of derivative financial
instruments (net of tax) 62.2 (9.8) 57.7
Deferred tax on revaluation surpluses 32.7 34.1 35.8
Deferred tax on capital allowances 45.5 31.3 49.9
Unrecognised surplus on trading properties
(net of tax) 1.4 4.9 1.7
Minority interests on the above (18.0) - (15.9)
--------------------------------------------------------------------------------
4,324.9 5,069.0 4,636.2
Effect of dilution:
On conversion of bonds 111.3 109.5 111.3
On exercise of options 11.6 11.6 9.7
--------------------------------------------------------------------------------
Diluted, adjusted net asset value 4,447.8 5,190.1 4,757.2
--------------------------------------------------------------------------------
(c) Shares in issue
--------------------------------------------------------------------------------
As at As at As at
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Shares in issue, excluding those held by
ESOP trust and treated as cancelled 361.6 361.8 361.6
Effect of dilution:
On conversion of bonds 13.9 13.9 13.9
On exercise of options 1.2 1.4 1.0
--------------------------------------------------------------------------------
Diluted shares in issue 376.7 377.1 376.5
--------------------------------------------------------------------------------
(d) Convertible debt
3.95 per cent convertible bonds due 2010
At 31 March 2008, 31 December 2007 and 31 March 2007 3.95 per cent convertible
bonds with a nominal value of £111.3 million were in issue.
The holders of the 3.95 per cent bonds have the option to convert their bonds
into ordinary shares at any time on or up to 23 September 2010 at 800p per
ordinary share. The 3.95 per cent bonds may be redeemed at par at the company's
option after 14 October 2008 subject to the Liberty International ordinary share
price having traded at 120 per cent of the conversion price of 800p per share
for a specified period.
16 Summary of changes in equity
--------------------------------------------------------------------------------
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
£m £m £m
--------------------------------------------------------------------------------
Opening equity shareholders' funds 4,507.0 4,732.4 4,732.4
Issue of shares 0.1 1.1 4.7
Cancellation of shares - - (7.9)
--------------------------------------------------------------------------------
4,507.1 4,733.5 4,729.2
Total recognised income and (expense)
for the period (306.0) 275.0 (100.1)
--------------------------------------------------------------------------------
4,201.1 5,008.5 4,629.1
Dividends paid - - (122.1)
--------------------------------------------------------------------------------
Closing shareholders' equity 4,201.1 5,008.5 4,507.0
--------------------------------------------------------------------------------
Minority interest
Opening minority interest 201.9 - -
Additions 1.6 176.4 252.8
Reclassification of debt 43.0 - -
--------------------------------------------------------------------------------
Total recognised income and (expense)
for the period (24.8) - (50.9)
--------------------------------------------------------------------------------
Closing minority interest 221.7 176.4 201.9
--------------------------------------------------------------------------------
Total equity 4,422.8 5,184.9 4,708.9
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---ENDS---
This information is provided by RNS
The company news service from the London Stock Exchange