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| Name | Symbol | Market | Type |
|---|---|---|---|
| Atlas 2022-1 60 | LSE:BA59 | London | Bond |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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From Jun 2019 to Jun 2024
TIDMBA59
RNS Number : 3525F
Capital Shopping Centres PLC
21 April 2011
21 April 2011
Capital Shopping Centres PLC ("the Company")
ANNUAL FINANCIAL REPORT
Capital Shopping Centres PLC has today published its Annual Report for the year ended 31 December 2010 ("Annual Report"). The Annual Report is available for download at www.capital-shopping-centres.co.uk.
A copy of the Annual Report has been submitted to the National Storage Mechanism, and will shortly be available for inspection at www.hemscott.com/nsm.do.
In accordance with DTR 6.3.5, the following information is extracted from the company's Annual Report and in unedited full text.
Management Report
Principal Activities
The Capital Shopping Centres PLC group ("the Group") specialises in the ownership, management and development of prime UK regional shopping centres.
The Group's assets comprise four major out-of-town centres being - Lakeside, Thurrock; Metrocentre, Gateshead; Braehead, Glasgow and The Mall at Cribbs Causeway, Bristol - and eight in-town centres including centres in prime destinations such as Cardiff, Manchester, Norwich and Nottingham.
With a dedicated and skilled management team, the Group aims to be the landlord of choice for retailers and to provide compelling destinations for shoppers. The Group is a responsible and environmentally conscious participant in the communities where it invests. The Group focuses on the creation of long term and sustainable growth in net rental income with a view to generating superior returns to its parent company.
Review of Business and Future Developments
The Group's results and financial position for the year ended 31 December 2010 are set out in full in the consolidated income statement, the consolidated statement of comprehensive income, the Group and Company balance sheets, the Group and Company statements of changes in equity, the Group and Company statements of cash flows and the related notes. The Group's profit before taxation was GBP474.0 million (2009 loss GBP324.7 million). The Group's net assets attributable to equity shareholders increased from GBP52.9 million to GBP1,028.1 million, due to a GBP500.0 million capital injection by the parent company and the property revaluation surplus in the year of GBP482.4 million (2009 deficit of GBP425.3 million). Net external debt decreased by GBP176.2 million to GBP2,447.2 million at 31 December 2010.
Prospects and Priorities
The 2010 results demonstrate that the Group's recovery is on track with increased like-for-like net rental income, the key driver of growth in earnings, improved operational performance and property valuation surpluses. The opportunities for value creation through development and active management described below will be vigorously pursued, through the planning stages of major extensions to Victoria Centre, Nottingham, Lakeside, Thurrock and Braehead, Glasgow, as well as embarking on other active management projects. With the demand for space in the top 50 UK shopping centres increasing ahead of supply, a range of return-enhancing organic opportunities, a strongly reinforced corporate position and a reinvigorated approach to ensuring our assets are attractive for the shopping public, the Group is well placed to achieve growth.
The key areas of focus for 2011 to realise that potential are:
-- growth in like-for-like net rental income
-- value creation through continued enhancement of all centres as retail and leisure destinations by progressing our development and active management opportunities
Performance in 2010
The Group has made good progress on its major priority for 2010 - to improve net rental income, particularly from short-term lease re-lettings and larger space renegotiations. Net rental income has increased 17.7 per cent in total and 2 per cent like-for-like, following two years of intense letting activity.
The Group's other major objectives for 2010 were to progress the value-enhancing organic growth opportunities and to progress the initial letting of St David's, Cardiff. Significant progress has been made in enhancing the Group's centres through their active management as retail and leisure destinations. This is discussed in the Major Centres section below.
UK Retail Property Market
The Group's focus is the top 50 million sq. ft. of UK shopping centre locations, some four per cent of the UK's 1.3 billion sq. ft. of retail space of which it owns 26 per cent by area. Such centres are and will remain rare and change hands infrequently. Shopping centres in total represent only around 13 per cent of the UK's 1.3 billion sq. ft. of retail space, the top 50 centres representing only around 4 per cent. The highly regulated planning environment combined with the recent challenging economic environment for financing of new centres has contributed to a limited development pipeline.
The Group's centres can offer retailers flagship stores in top locations. Such stores are increasingly becoming a crucial marketing tool for the retailer's brand. The development of other retail channels such as online shopping reinforce the concentration of physical comparison retailing into the destinations, such as the Group's, most attractive to the shopper for retail and broader entertainment. Online sales comprise only a small but growing proportion of total retail spend - 8 per cent in 2010 according to ONS. The most successful retailers now have an integrated approach to online and in-store sales, with strong evidence of high levels of interaction between the two. This is highlighted by the popularity of "click and collect" and "return to store" facilities, both of which reinforce the need for a physical store and produce incremental sales.
As a result, as successful UK and international retailers look to their growth plans for the next couple of years we expect to see increased competition for high profile, good quality space in those best locations.
Investment Property Valuations
The UK commercial property investment market continued to experience valuation recovery in 2010, following its turning point in mid 2009. In particular, good quality property has continued to perform well while secondary assets have remained under pressure. Prime shopping centres are proving increasingly desirable to major international investors searching for quality UK investments in an environment of low interest rates and relatively attractive currency rates. Yields for prime shopping centres tightened significantly in the first half and, after a cluster of transactions in the autumn, maintained an inward progression while other sub-sectors slowed. Despite the recovery, capital values as measured by the IPD UK monthly retail capital growth index remain well below peak levels, currently at early 2003 levels. We are just over a year on from the largest decline in UK commercial property values for decades and valuation yields remain above the Group's long-run average.
The valuation outcome for the Group's assets for the year was very positive. Values rose by 11.2 per cent for the full year. This represents a significant out-performance of the IPD UK monthly retail capital growth index which produced an increase of 7.5 per cent for the year.
Net Rental Income
The Group's net rental income which increased by 17.7 per cent to GBP263.3 million in the year benefitted from the income generated by the new development at St David's, Cardiff and the full year benefit of the 2009 acquisitions of the Mall and Retail Park at Cribbs Causeway, Bristol; The Chimes Shopping Centre, Uxbridge and Arndale Centre, Manchester. These centres were acquired from another Capital Shopping Centres Group PLC company. Like-for-like net rental income for 2010 is 2.0 per cent above that of 2009.
Occupancy
Occupancy remains high at 97.4 per cent (31 December 2009 - 97.8 per cent) excluding the recently completed extension to St David's, Cardiff. Including this extension, occupancy for the Group was 96.6 per cent (31 December 2009 - 95.9 per cent).
Footfall
Estimated footfall across the Group's 12 centres was over 240 million in the year, up 5 per cent in the year largely due to the successful opening of St David's, Cardiff.
Major Centres
Lakeside, Thurrock, (GBP1,053 million, 18 per cent valuation surplus) has had an excellent year with an extended flagship store for Primark opened and trading well, 20 new long term lettings including Cult, Guess and Panasonic and a broadened catering offer including Ed's Easy Diner and Taco Bell's first UK store. The local regional planning framework, which is due to be adopted in the summer of 2011, indicates scope for significant additional retail space in the Lakeside area.
Metrocentre, Gateshead, (GBP843 million, 8 per cent valuation surplus). The completion of the new leisure and catering offering, including Wagamama, TK Maxx/Homesense and Handmade Burger, has revitalised the yellow quadrant and driven an increase in retail spend. 39 new long term lettings have been completed in 2010 including new brands to Metrocentre, Radley and Office. With the 25th anniversary of opening approaching, good progress is being made in extending leases nearing expiry. Around half of the anticipated peak in the maturity profile has now been renegotiated. In January 2011, an impressive new Next Home store opened on the Retail Park, the first step in the planned evolution of its retail mix.
Braehead, Glasgow, (GBP576 million, 13 per cent valuation surplus) has benefited from the opening of the flagship Primark store in the former Sainsbury's location. In turn, H&M are due in March 2011 to open a flagship store in the former Primark location. Five new brands have been signed up in 2010 including Apple and Hollister, who have chosen to locate flagship stores at Braehead rather than competing retail areas. The broader Braehead destination continues to evolve with the opening shortly of a major garden centre and retail park planning applications in progress.
Arndale, Manchester, (GBP336 million, 16 per cent valuation surplus). The 2006 northern extension has evolved a more aspirational style during 2010 with the addition of brands such as Bose, Pandora and Luke. Further, New Cathedral Street now has the UK flagship Hugo Boss store, opened in November, in place of Heal's.
St David's, Cardiff, (GBP243 million, 19 per cent valuation surplus) achieved footfall of 37 million for 2010, well above target for its first full year after opening. The new extension is now 83 per cent committed by income up from approximately 65 per cent on opening day. 20 of 2010's new lettings are to retailers new to Wales, including Lego, Nike and Carluccios. The Group was delighted that the development was awarded the British Council of Shopping Centres (BCSC) Supreme Gold for Best In-town Retail Scheme in 2010.
Cashflow
The Group cash flow shows a net inflow from operating activities of GBP145.3 million in 2010. This is a decrease of GBP39.1 million from 2009 largely due to the increase in other finance costs, in particular the costs on terminating interest rate swap contracts.
2010 investment in property related assets was mainly limited to existing 2009 commitments, with the most significant expenditure in the period being in respect of St David's, Cardiff (GBP13 million) and Braehead (GBP5 million).
Cash proceeds from the disposal of properties and investments generated GBP64.4 million, including GBP54.3 million net proceeds received from the disposal of Westgate, Oxford.
Financial Position
The Group's debt is largely arranged on an asset-specific basis, with limited or non-recourse from the borrowing entities to other Group companies. This structure permits the Group a high degree of financial flexibility in dealing with debt issues and importantly avoids the concentration of covenant and refinancing risk associated with a single group-wide borrowing.
Net external debt, which excludes the Metrocentre compound financial instrument of GBP138.7 million, decreased from GBP2,623.4 million at 31 December 2009 to GBP2,447.2 million at 31 December 2010. The Group had cash of GBP87.4 million at 31 December 2010 (2009 - GBP53.8 million).
Financial Covenants
Financial covenants apply to GBP2.5 billion of secured asset-specific debt. The two main covenants are Loan to Value (LTV) and Interest Cover (IC). The actual requirements vary and are specific to each loan.
In the first half of 2010 the Group made asset-specific loan prepayments of GBP48 million and GBP36 million of swap repayments to reduce financial covenant risk. GBP2 million was injected into Xscape Braehead Partnership in April 2010, as part of a loan prepayment and covenant moderation agreement which included the Loan to Value covenant being waived until 2012.
The Group is in compliance with all of its corporate and asset-specific loan covenants.
Refinancing Activity
The GBP546 million loan and associated CMBS notes secured on Lakeside, Thurrock were scheduled to mature in July 2011 but were re-financed in January 2010 with a new GBP525 million, 7 year loan maturing in 2017 to take advantage of the improvement in bank liquidity and reduce near term refinancing risk.
Key Performance Indicators
The performance of the business is monitored through a number of Key Performance Indicators (KPI's) including both financial and non-financial measures. The main KPI's used by the Board to monitor the business are like-for-like net rental income, occupancy and prime property asset performance. These KPI's can be found in this Directors' Report containing details of our portfolio and operational performance and additionally in the notes to these financial statements, in particular, note 21.
Key Risks and Uncertainties
The key risks and uncertainties facing the Group are set out in the table below:
Hot Features
Premium
Risk Description Impact Mitigation
------------------ ------------------ ------------------ ------------------
Financing
------------------------------------------------------------------------------
Liquidity Reduced Insufficient Regular reporting
availability funds to meet of current and
operational projected
and financing position to the
needs Board Efficient
treasury
management and
active credit
control process
------------------ ------------------ ------------------ ------------------
Economic Property values Impact on Regular
and property decrease covenants and monitoring of
market downturn Reduction in other loan Loan to Value
rental income agreement (LTV) and
Macro economic obligations Interest Cover
conditions Ratio (ICR)
deteriorate covenants and
other obligations
Covenant headroom
monitored and
maintained;
regular market
valuations; focus
on quality
assets.
------------------ ------------------ ------------------ ------------------
Interest Interest rates Lack of certainty Hedging to
cover fluctuate over interest establish
costs long-term
certainty
------------------ ------------------ ------------------ ------------------
Market price Interest rates Potential cash Manage derivative
risk of fixed fluctuate outflow if contracts to
rate derivatives resulting in derivative achieve a balance
significant contract contains between hedging
assets and or break clause interest rate
liabilities on exposure and
derivative minimising
contracts potential cash
calls
------------------ ------------------ ------------------ ------------------
REIT Breach REIT Tax penalty or be Regular
conditions PID forced to leave monitoring of
requirements the REIT regime compliance and
Requirement to tolerances
pay 90 per cent Alternative
of income sources of
restricts ability investment
to retain cash funding
for investment constantly under
review
------------------ ------------------ ------------------ ------------------
Joint ventures Reliance on JV Partners under Agreements are in
partners' perform or place and regular
performance and provide incorrect communication
reporting information with partners
------------------ ------------------ ------------------ ------------------
Asset management
------------------------------------------------------------------------------
Tenants Tenant failure Financial loss Initial and
subsequent
assessment of
tenant covenant
strength Active
credit control
process
------------------ ------------------ ------------------ ------------------
Voids Increased voids, Financial loss Policy of active
failure to let tenant mix
developments management
------------------ ------------------ ------------------ ------------------
Reputation
------------------------------------------------------------------------------
Responsibility Failure of Health Impact on Annual audits
for visitors & Safety reputation or carried out by
to shopping potential external
centres criminal/ civil consultant Health
proceedings & Safety policies
in place
------------------ ------------------ ------------------ ------------------
Business Lost access to Impact on Documented
interruption centres or head footfall and Business Recovery
office tenant income Plans in place
Adverse Security team
publicity training and
procedure in
shopping centres
Terrorist risks
monitored
------------------ ------------------ ------------------ ------------------
People/HR
------------------------------------------------------------------------------
Staff Loss of key staff Adverse impact Succession
on the Group's planning;
performance performance
evaluation;
training and
development;
incentives &
rewards
------------------ ------------------ ------------------ ------------------
Developments
------------------------------------------------------------------------------
Time Planning Securing planning Policy of
consent for sustainable
developments development and
regeneration of
brownfield sites
Constructive
dialogue with
planning
authorities.
------------------ ------------------ ------------------ ------------------
Costs and Construction cost Returns reduced Approval process
letting risk overrun, low by increased based on detailed
occupancy levels costs or delay project costs;
in securing regular
tenants monitoring and
forecasting of
project costs and
rental income;
fixed cost
contracts.
------------------ ------------------ ------------------ ------------------
Strategy
------------------------------------------------------------------------------
Defining Inappropriate Financial loss Experienced
and executing strategy defined Sub-optimal management team
Group' strategy or poor execution returns familiar with
of strategic Reputational shopping centre
plans impact industry Use of
research and
third party
diligence
expertise as
required Board
review process
------------------ ------------------ ------------------ ------------------
Share Capital
Details of share capital are set out in note 22. On 19 July 2010, the Company issued a total of 100,000 shares at a price of GBP5,000 per share in respect of the capitalisation of inter-company debt.
Going Concern
The directors have reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements.
Attention is drawn to the Going Concern disclosure included in Note 1 to the consolidated financial statements.
Dividends
The directors do not recommend a final dividend for the year (2009 - nil).
Creditor Payment Policy
The Group's policy and practice is to pay creditors in accordance with agreed terms of business. The Company does not ordinarily pay its creditors directly as this is carried out by other companies in Capital Shopping Centres Group PLC. As a result, the Company has a nil trade creditor balance and it is not practical to calculate creditor days for the Company as at 31 December 2010 (2009 - nil trade creditor balance).
Directors' Indemnity Provision
A qualifying indemnity provision (as defined in S234 of the Companies Act 2006) is in force for the benefit of the Directors of the Company and its associated companies. The Company's parent, Capital Shopping Centres Group PLC, maintains Directors' and Officers' insurance which is reviewed annually.
Charitable Donations
During the year the Group made charitable donations of GBP79,810 (2009 - GBP109,305) and no political donations (2009 - GBPnil).
Directors
The directors who held office during the year and until the date of this report are given below:
M G Butterworth appointed 11 March 2011
K E Chaldecott
M Ellis
D A Fischel
C Kirby
T Pereira
E M Roberts appointed 13 August 2010
J G Abel resigned 7 May 2010
D P H Burgess resigned 7 May 2010
M Rapp resigned 7 May 2010
L Woodhouse resigned 18 June 2010
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Each of the Directors, whose names and functions are listed in the Directors' Report confirm that, to the best of each person's knowledge and belief:
(a) the Group financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company; and
(b) the Directors' report contained in the annual report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that they face.
Disclosure of Information to Auditors
So far as the Directors are aware, there is no relevant audit information of which the auditors are unaware and each Director has taken all reasonable steps to make himself or herself aware of any relevant audit information and to establish that the auditors are aware of that information.
Auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office and a resolution seeking to reappoint them will be proposed at the forthcoming Annual General Meeting.
By order of the Board on
D A Fischel T Pereira
Director Director
15 April 2011 15 April 2011
i) Audited Financial Statements
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
Notes GBPm GBPm
Revenue 2 389.9 336.0
======= =======
Net rental income 2 263.3 223.7
Net other income 4 0.7 4.9
Revaluation and sale of investment and
development property 5 479.0 (425.2)
Administration expenses (11.1) (2.4)
Impairment of goodwill (3.1) -
------- -------
Operating profit/(loss) 728.8 (199.0)
------- -------
Finance costs 6 (173.1) (154.1)
Finance income 7 2.3 3.6
Other finance costs 8 (50.6) (20.8)
Change in fair value of derivative financial
instruments (33.4) 45.6
------- -------
Net finance costs (254.8) (125.7)
------- -------
Profit/(loss) before tax 9 474.0 (324.7)
Current tax 10 1.2 0.1
Deferred tax 10 (0.1) -
REIT entry charge 10 (3.0) (2.6)
------- -------
Taxation (1.9) (2.5)
------- -------
Profit/(loss) for the year 472.1 (327.2)
======= =======
Attributable to:
Equity shareholders of Capital Shopping
Centres PLC 455.3 (315.4)
Non-controlling interest 16.8 (11.8)
------- -------
472.1 (327.2)
======= =======
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
GBPm GBPm
Profit/(loss) for the year 472.1 (327.2)
Total comprehensive income for the year 472.1 (327.2)
===== =======
Attributable to:
Equity shareholders of Capital Shopping
Centres PLC 455.3 (315.4)
Non-controlling interest 16.8 (11.8)
----- -------
Total comprehensive income for the year 472.1 (327.2)
===== =======
BALANCE SHEETS
AS AT 31 DECEMBER 2010
Group Group Company Company
2010 2009 2010 2009
Notes GBPm GBPm GBPm GBPm
Non-current assets
Investment and development
property 13 4,807.5 4,361.2 - -
Investment in group
companies 14 - - 1,024.4 918.6
Derivative financial
instruments 21 4.6 - - -
Trade and other receivables 17 69.5 41.1 - -
Deferred tax - 0.1 - -
--------- --------- --------- ---------
4,881.6 4,402.4 1,024.4 918.6
--------- --------- --------- ---------
Current assets
Trading property 16 25.5 13.9 - -
Trade and other receivables 17 48.2 54.7 1,911.8 1,793.2
Cash and cash equivalents 24 87.4 53.8 52.3 1.9
--------- --------- --------- ---------
161.1 122.4 1,964.1 1,795.1
--------- --------- --------- ---------
Total assets 5,042.7 4,524.8 2,988.5 2,713.7
--------- --------- --------- ---------
Current liabilities
Trade and other payables 18 (1,085.1) (1,415.1) (1,739.7) (2,085.5)
Borrowings 19 (45.5) (76.2) - -
(1,130.6) (1,491.3) (1,739.7) (2,085.5)
--------- --------- --------- ---------
Non-current liabilities
Borrowings 19 (2,627.8) (2,730.9) (26.7) (26.7)
Derivative financial
instruments 21 (251.0) (224.7) - -
Other payables (5.2) (25.0) (4.9) (8.8)
(2,884.0) (2,980.6) (31.6) (35.5)
--------- --------- --------- ---------
Total liabilities (4,014.6) (4,471.9) (1,771.3) (2,121.0)
Net assets 1,028.1 52.9 1,217.2 592.7
========= ========= ========= =========
Equity
Share capital 22 197.3 197.3 197.3 197.3
Share premium 1,146.9 646.9 1,146.9 646.9
Other reserves 8.3 8.3 8.3 8.3
Retained earnings (344.3) (799.6) (135.3) (259.8)
--------- --------- --------- ---------
Attributable to equity
shareholders of Capital
Shopping Centres PLC 1,008.2 52.9 1,217.2 592.7
Non-controlling interest 19.9 - - -
--------- --------- --------- ---------
Total equity 1,028.1 52.9 1,217.2 592.7
========= ========= ========= =========
The notes form part of these consolidated financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
Group
Share Non-
Share premium Other Retained controlling Total
capital account reserves earnings Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January
2009 197.3 646.9 8.3 (573.2) 279.3 - 279.3
Loss for the
year - - - (315.4) (315.4) (11.8) (327.2)
-------- -------- --------- --------- -------- ------------ --------
Total
comprehensive
income for the
year - - - (315.4) (315.4) (11.8) (327.2)
-------- -------- --------- --------- -------- ------------ --------
Dividends paid - - - 89.0 89.0 - 89.0
-------- -------- --------- --------- -------- ------------ --------
Non-controlling
interest
additions - - - - - 11.8 11.8
-------- -------- --------- --------- -------- ------------ --------
At 31 December
2009 197.3 646.9 8.3 (799.6) 52.9 - 52.9
======== ======== ========= ========= ======== ============ ========
At 1 January
2010 197.3 646.9 8.3 (799.6) 52.9 - 52.9
Profit for the
year - - - 455.3 455.3 16.8 472.1
-------- -------- --------- --------- -------- ------------ --------
Total
comprehensive
income for the
year - - - 455.3 455.3 16.8 472.1
-------- -------- --------- --------- -------- ------------ --------
Ordinary shares
issued - 500.0 - - 500.0 - 500.0
Non-controlling
interest
additions - - - - - 3.1 3.1
-------- -------- --------- --------- -------- ------------ --------
At 31 December
2010 197.3 1,146.9 8.3 (344.3) 1,008.2 19.9 1,028.1
======== ======== ========= ========= ======== ============ ========
Company Share
Share premium Other Retained
capital account reserves earnings Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2009 197.3 646.9 8.3 (308.3) 544.2
Loss for the year - - - (40.5) (40.5)
-------- -------- --------- --------- --------
Total comprehensive
income for the year - - - (40.5) (40.5)
-------- -------- --------- --------- --------
Dividends paid - - - 89.0 89.0
-------- -------- --------- --------- --------
At 31 December 2009 197.3 646.9 8.3 (259.8) 592.7
======== ======== ========= ========= ========
At 1 January 2010 197.3 646.9 8.3 (259.8) 592.7
Profit for the year - - - 124.5 124.5
-------- -------- --------- --------- --------
Total comprehensive
income for the year - - - 124.5 124.5
-------- -------- --------- --------- --------
Ordinary shares issued - 500.0 - - 500.0
-------- -------- --------- --------- --------
At 31 December 2010 197.3 1,146.9 8.3 (135.3) 1,217.2
======== ======== ========= ========= ========
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
Group Group Company Company
2010 2009 2010 2009
Notes GBPm GBPm GBPm GBPm
Cash generated from
operations 23 388.4 387.2 58.2 (66.3)
Interest paid (210.2) (174.9) (63.8) (15.5)
Interest received 2.3 3.6 56.0 17.8
Tax received/(paid) 1.4 (0.1) - (0.1)
REIT entry charge paid (36.6) (31.4) - -
Cash flows from operating
activities 145.3 184.4 50.4 (64.1)
-------- -------- -------- --------
Purchase and development
of property (27.4) (101.5) - -
Sale of property 64.4 0.7 - -
Other derivative instruments (7.3) - - -
Cash flows from investing
activities 29.7 (100.8) - -
-------- -------- -------- --------
Borrowings repaid (663.2) (190.6) - (31.6)
Borrowings drawn 518.7 35.5 - -
Cash transferred from/(to)
restricted accounts 24 19.8 (19.8) - -
Partnership equity introduced 3.1 11.8 - -
Equity dividends 11 - 89.0 - 89.0
-------- -------- -------- --------
Cash flows from financing
activities (121.6) (74.1) - 57.4
-------- -------- -------- --------
Net increase/(decrease) in
cash and cash
equivalents 53.4 9.5 50.4 (6.7)
Cash and cash equivalents
1 January 34.0 24.5 1.9 8.6
-------- -------- -------- --------
Cash and cash equivalents
at 31 December 24 87.4 34.0 52.3 1.9
======== ======== ======== ========
The notes form part of these consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
1. Principal accounting policies
Accounting convention and basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards, as adopted by the European Union (IFRS), IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Directors have taken advantage of the exemption offered by Section 408 of the Companies Act not to present a separate income statement for the Company.
The financial statements have been prepared under the historical cost convention as modified by the revaluation of properties, available-for-sale investments, financial assets and liabilities held for trading. A summary of the more important Group accounting policies is set out below.
The accounting policies used are consistent with those applied in the last annual financial statements, as amended to reflect the adoption of new standards, amendments, and interpretations which became effective in the year. During 2010, the following standards, amendments and interpretations endorsed by the EU are effective for the first time for the Group's 31 December 2010 year end:
IFRS 2 Share-based Payment (amendment);
IFRS 3 Business Combinations;
IAS 27 Consolidated and Separate Financial Statements;
IAS 39 Financial Instruments: Recognition and Measurement (amendment);
IFRIC 12 Service Concession Arrangements;
IFRIC 15 Arrangements for Construction of Real Estate;
IFRIC 16 Hedges of a Net Investment in a Foreign Operation;
IFRIC 17 Distributions of Non-cash Assets to Owners; and
Amendments arising from the 2008 and 2009 annual improvements project.
These either had no material impact on the financial statements or only resulted in changes to presentation and disclosure.
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Where such judgements are made they are included within the accounting policies below.
Comparative information is re-presented for the income statement and statement of cash flows but not the balance sheet. Balance sheet comparatives have been re-presented to classify derivative financial instruments according to their maturity date.
The following standards and interpretations have been issued and adopted by the EU but are not effective for the year ended 31 December 2010 and have not been adopted early:
IAS 24 Related Party Disclosures;
IAS 32 Financial Instruments: Presentation (amendment);
IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (amendment); and
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments.
These pronouncements are not expected to have a material impact on the financial statements, but will result in changes to presentation or disclosure where they are applicable.
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Directors' Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are also described in the Directors' Report. In addition note 21 includes the Group's risk management objectives, details of its financial instruments and hedging activities, its exposures to liquidity risk and details of its capital structure.
The Directors have undertaken a review of the projected financial position of the Company and the Group, which includes reasonable assumptions about future trading and cash flows. This review included an assessment of cash balances, the debt maturity profile, the economic conditions faced by tenants and the financial position of the Group's parent company, Capital Shopping Centres Group PLC.
The Directors have therefore concluded, based on the Group's forecasts and projections and taking into account reasonably possible changes in trading performance along with the factors listed above, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Basis of consolidation
These accounts include the consolidation of The Metrocentre Partnership. The Victoria Centre Partnership. The Chapelfield Partnership, The Potteries Shopping Centre Limited Partnership, Xscape Braehead Partnership and St. David's Limited Partnership. The members of these qualifying partnerships have taken advantage of the exemptions in The Partnerships (Accounts) Regulations 2008.
The consolidated financial information includes the Company and its subsidiaries and their interests in joint ventures.
All intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation.
- subsidiaries
Subsidiary undertakings are those entities for which the Group has the ability to govern the financial and operating policies, whether through a majority of the voting rights or otherwise. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases.
The Company's investment in Group companies is carried at cost less accumulated impairment losses.
- joint ventures
A joint venture is an entity over which the Group, either directly or indirectly, is in a position to jointly control the financial and operating policies of the entity.
The Group's interest in joint ventures is accounted for using proportional consolidation.
The Group's share of the assets, liabilities, income and expenses are combined with the equivalent items in the consolidated financial statements on a line-by-line basis
- non-controlling interest
A non-controlling interest is the equity in a subsidiary not owned, directly or indirectly, by the Company. Non-controlling interests are presented in the balance sheet within equity, separately from the amounts attributable to equity shareholders of the Company. Profit or loss and each component of other comprehensive income is attributed to equity shareholders of the Company and to non-controlling interests.
Revenue recognition
The Group recognises revenue on an accruals basis, when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the Group.
- property revenue
Gross rental income is calculated on an accruals basis. Rental income receivable is spread evenly over the period from lease commencement to expiry. Directly attributable lease incentives are recognised within net rental income on the same straight-line basis as rental income.
Contingent rents, being those lease payments that are not fixed at the inception of a lease, for example increases arising on rent reviews or rents linked to tenant revenues, are recorded as income in the periods in which they are earned.
Rent reviews are recognised as income from the date of the rent review, based on management's estimates, when they can be measured reliably. Estimates are derived from knowledge of market rents for comparable properties determined on an individual property basis and updated for progress of negotiations.
Service charge income is recognised on an accruals basis in line with the service being provided.
- interest and other income
Revenue in respect of investments and other income represents investment income, earned on an accruals basis and profits or losses recognised on investments held for the short term. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate.
- dividend income
Dividend income is recognised when the shareholders' right to receive payment has been established.
- trading property income
Revenue on the sale of trading property is recognised when the significant risks and rewards of ownership have been transferred to the buyer. This will normally take place on exchange of contracts.
Income taxes
Current tax is the amount payable on the taxable income for the year and any adjustment in respect of prior years. It is calculated using rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax, on non-REIT items, is provided using the balance sheet liability method in respect of temporary differences between the carrying amounts of assets and liabilities in the financial statements and the amounts used in the computation of taxable profit, with the exception of deferred tax on revaluation surpluses where the tax basis used is the accounts' historic cost.
Temporary differences are not provided on the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will not reverse in the foreseeable future.
Deferred tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that management believe it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are offset only when they relate to taxes levied by the same authority and the Group intends to settle them on a net basis.
Tax is included in the income statement except when it relates to items recognised in other comprehensive income, or directly in equity, in which case the related tax is also recognised in other comprehensive income or directly in equity.
Investment and development property
Investment and development properties are owned or leased by the Group and held for long-term rental income and capital appreciation.
The Group has elected to use the fair value model. Properties are initially recognised at cost and subsequently revalued at the balance sheet date to fair value as determined by professionally qualified external valuers on the basis of market value. Valuations conform with the Royal Institution of Chartered Surveyors ("RICS"), Valuation Standards 6th Edition and IVS1 of International Valuation Standards.
The main estimates and judgements underlying the valuations are in relation to market rent, taking into account forecast growth rates and yields based on known transactions for similar properties and likely incentives offered to tenants.
Property held under leases are stated gross of the recognised finance lease liability.
The cost of investment and development property includes capitalised interest and other directly attributable outgoings incurred during development, except in the case of properties and land where no development is imminent, in which case no interest is included. Interest is capitalised (before tax relief), on the basis of the average rate of interest paid on the relevant debt outstanding, until the date of practical completion.
Gains or losses arising from changes in the fair value of investment and development property are recognised in the income statement. Depreciation is not provided in respect of investment and development property.
When the use of a property changes from that of investment to trading, the property's deemed cost for subsequent accounting in accordance with IAS 2 Inventories is its fair value at the date of change in use.
Gains or losses arising on the sale of investment and development property are recognised when the significant risks and rewards of ownership have been transferred to the buyer. This will normally take place on exchange of contracts. The gain or loss recognised is the proceeds received less the carrying value of the property and costs directly associated with the sale.
Impairment of assets
The Group's assets are reviewed at each balance sheet date to determine whether events or changes in circumstances exist that indicate that their carrying amount may not be recoverable. If such an indication exists, the asset's recoverable amount is estimated. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. An impairment loss is recognised in the income statement for the amount by which the asset's carrying amount exceeds its recoverable amount. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (referred to as cash generating units).
Leases
Leases are classified according to the substance of the transaction. A lease that transfers substantially all the risks and rewards of ownership to the lessee is classified as a finance lease. All other leases are normally classified as operating leases.
- Group as lessee:
Finance leases of investment property are accounted for as finance leases and recognised as an asset and an obligation to pay future minimum lease payments. The investment property asset is included in the balance sheet at fair value, gross of the recognised finance lease liability.
Other finance lease assets are capitalised at the lower of the fair value of the leased asset or the present value of the minimum lease payments and depreciated over the shorter of the lease term and the useful life of the asset.
Lease payments are allocated between the liability and finance charges so as to achieve a constant financing rate.
Rentals payable under operating leases are charged to the income statement on a straight-line basis over the lease term.
- Group as lessor:
Properties are leased out under operating leases, with rental income being recognised on a straight-line basis over the lease term. For more detail see the revenue recognition policy.
Trading property
Trading property comprises those properties either intended for sale or in the process of construction for sale. Where such properties were previously categorised as investment and development property they are transferred at their fair value which forms their deemed cost. Trading property is carried at the lower of cost and net realisable value.
Trade receivables
Trade receivables are recognised and subsequently measured at amortised cost.
The Directors' exercise judgement as to the collectability of the trade receivables and determines if it is appropriate to impair these assets. Factors such as days past due, credit status of the counterparty and historical evidence of collection are considered.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits with banks, whether restricted or unrestricted and other short-term liquid investments with original maturities of three months or less.
Trade payables
Trade payables are recognised and subsequently measured at amortised cost.
Borrowings
Borrowings are recognised initially at their net proceeds on issue and subsequently carried at amortised cost. Any transaction costs and premiums or discounts are recognised over the contractual life using the effective interest method.
In the event of early repayment, all unamortised transaction costs are recognised immediately in the income statement.
Derivative financial instruments
The Group uses derivative financial instruments to manage exposure to interest rate and foreign exchange risk. They are initially recognised on the trade date at fair value and subsequently re-measured at fair value based on market price.
Changes in fair value are recognised directly in the income statement.
Compound instruments
At the date of issue of compound instruments, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-compound debt. The difference between the proceeds of issue and the fair value of the liability is included in equity. Issue costs are apportioned between the liability and equity components based on their relative initial carrying values. The liability element of compound instruments is subsequently measured using the expected interest rate method. The value of the equity component is not re-measured in subsequent periods.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds.
Current/non-current classification
Current assets include assets held primarily for trading purposes, cash and cash equivalents, and assets expected to be realised in, or intended for sale or consumption in, the course of the Group's operating cycle. All other assets are classified as non-current assets.
Current liabilities include liabilities held primarily for trading purposes, liabilities expected to be settled in the course of the Group's operating cycle and those liabilities due within one year from the reporting date. All other liabilities are classified as non-current liabilities.
2. Segmental reporting
The Group operates a single business activity in a single economic environment, namely the development and management of regional shopping centres within the United Kingdom. The Group manages the portfolio through a single operating division which it manages and reports as one business. The single segment described represents the information used by the Board to make operating decisions.
2010 2009
GBPm GBPm
Revenue 389.9 336.0
======== =======
Rent receivable 326.0 277.3
Service charge income 53.6 53.8
-------- -------
379.6 331.1
Rent payable (15.1) (13.8)
Service charge and other non-recoverable costs (101.2) (93.6)
-------- -------
Net rental income 263.3 223.7
======== =======
3. Operating leases
The Group earns rental income by leasing its investment properties to tenants under operating leases.
In the UK, the standard shopping centre lease is for a term of 10 to 15 years. Standard lease provisions include service charge payments, recovery of other direct costs and review every five years to market rent. Standard turnover based leases have a turnover percentage agreed with each lessee which is applied to a retail unit's annual sales and any excess between the resulting turnover rent and the minimum rent is receivable by the Group.
The future minimum lease amounts receivable under non-cancellable operating leases are as follows:
2010 2009
GBPm GBPm
Not later than one year 325.7 325.0
Later than one year and not later than five
years 1,062.2 1,065.0
Later than five years 1,359.7 1,137.1
2,747.6 2,527.1
======= =======
4. Net other income
2010 2009
GBPm GBPm
Sale of trading property 10.3 -
Cost of sales (9.3) -
------ ------
Profit on sale of trading property 1.0 -
Write down of trading property (0.3) (0.1)
Insurance recovery - 5.0
------ ------
0.7 4.9
====== ======
5. Revaluation and sale of investment and development property
2010 2009
GBPm GBPm
Revaluation of investment and development
property 482.4 (425.3)
Sale of investment property (3.4) 0.1
------ --------
479.0 (425.2)
====== ========
6. Finance costs
2010 2009
GBPm GBPm
On bank loans and overdrafts 134.2 145.9
On amounts due to related companies 36.2 18.2
On obligations under finance leases 3.7 3.8
------ -------
Gross finance costs 174.1 167.9
Interest capitalised on development (1.0) (13.8)
------ -------
173.1 154.1
====== =======
Interest is capitalised, before tax relief, on the basis of the average rate of interest paid on the relevant debt, applied to the cost of developments during the year.
7. Finance income
2010 2009
GBPm GBPm
On amounts due from related companies 2.2 3.5
Other 0.1 0.1
----- -----
2.3 3.6
===== =====
8. Other finance costs
2010 2009
GBPm GBPm
Metrocentre amortisation of compound financial
instrument 8.8 9.7
Costs on termination of financial instruments 41.8 11.1
50.6 20.8
===== =====
9. Profit/(loss) before tax
Group:
The profit before tax of GBP474.0 million (2009 loss GBP324.7 million) is arrived at after charging:
2010 2009
GBP'000 GBP'000
Fees payable to the company's auditor for
the audit of the Company and
consolidated accounts - 3
Fees payable for the audit of company's subsidiaries
pursuant to legislation - 150
-------- --------
- 153
======== ========
Auditors' remuneration is in respect of the statutory audit of the company and consolidated accounts. Auditors' remuneration of GBP70,000 (2009 - GBPnil) was settled on behalf of the Company by its ultimate parent Capital Shopping Centres Group PLC and has not been recharged.
10. Taxation
Taxation charge for the year
2010 2009
GBPm GBPm
Current UK corporation tax at 28% (2009 28%) - -
Prior year items (1.2) (0.1)
------ ------
Current tax (1.2) (0.1)
Deferred tax 0.1 -
REIT entry charge 3.0 2.6
Total tax charge 1.9 2.5
====== ======
The tax charge for the year is lower (2009 - higher) than the standard rate of corporation tax in the UK. The differences are explained below:
2010 2009
GBPm GBPm
Profit/(loss) before tax 474.0 (324.7)
-------- --------
Profit/(loss) before tax multiplied by the
standard
rate in the UK of 28% (2008 28%) 132.7 (90.9)
Capital allowances not reversing on sale (3.7) (3.5)
Disposal of properties and investments (18.3) -
Prior year corporation tax items (1.2) (0.1)
Expenses disallowed, net of capitalised interest 3.1 (3.8)
UK transfer pricing adjustment 3.3 8.7
Group relief (without payment) 1.3 (5.3)
REIT exemption - corporation tax 7.3 (11.5)
REIT exemption - deferred tax (125.7) 106.3
REIT exemption - entry charge 3.0 2.6
Losses utilised in the period 0.1
Total tax charge 1.9 2.5
======== ========
Tax items that are taken directly to equity are shown in the consolidated statement of comprehensive income.
11. Dividends
2010 2009
GBPm GBPm
Ordinary shares
Prior period final dividend repaid - (89.0)
==== ======
The Board has not proposed a final dividend in respect of 2010 (2009 nil). In 2008 a dividend of 22.55 pence per share was paid, this was subsequently repaid to Capital Shopping Centres PLC during 2009.
12. Profit for the financial year attributable to shareholders of Capital Shopping Centres PLC
A profit of GBP124.5 million is dealt with in the accounts of the holding company in respect of the year (2009 loss GBP40.5 million). No income statement is presented for the company as permitted by Section 408 of the Companies Act 2006.
13. Investment and development property
Group Freehold Leasehold Total
GBPm GBPm GBPm
At 1 January 2009 2,505.4 1,482.0 3,987.4
Reclassification (173.1) 173.1 -
Addition from acquisition of
subsidiary
companies 230.4 431.0 661.4
Additions from subsequent
expenditure 25.6 112.7 138.3
Disposals (0.6) - (0.6)
Deficit on revaluation (212.9) (212.4) (425.3)
--------- ---------- --------
At 31 December 2009 2,374.8 1,986.4 4,361.2
Addition from acquisition of
subsidiary
companies 27.0 - 27.0
Additions from subsequent
expenditure 12.1 8.1 20.2
Transferred to trading property - (16.1) (16.1)
Disposals (36.1) (31.1) (67.2)
Surplus on revaluation 302.1 180.3 482.4
--------- ---------- --------
At 31 December 2010 2,679.9 2,127.6 4,807.5
========= ========== ========
Included within additions is GBP1.0 million (2009 GBP13.8 million) of interest capitalised on developments in progress.
Group 2010 2009
GBPm GBPm
Balance sheet carrying value of investment
and development property 4,807.5 4,361.2
Adjustment in respect of tenant incentives 79.0 64.4
Adjustment in respect of head leases (36.7) (37.9)
Market value of investment and development
property 4,849.8 4,387.7
======= =======
The fair value of the Group's investment and development properties as at 31 December 2010 was determined by independent external valuers at that date. The valuations conform with the Royal Institution of Chartered Surveyors ("RICS") Valuation Standards 6th Edition and with IVS 1 of International Valuation Standards, and were arrived at by reference to market transactions for similar properties.
The main assumptions underlying the valuations are in relation to market rent, taking into account forecast growth rates and yields based on known transactions for similar properties and likely incentives offered to tenants.
There are certain restrictions on the realisability of investment property when a credit facility is in place. In most circumstances the Group can realise up to 50 per cent without restriction providing the Group continues to manage the asset. Realising an amount in excess of this would trigger a change of control and mandatory repayment of the facility.
14. Investments in Group companies
Accumulated
Cost impairment Net
GBPm GBPm GBPm
At 1 January 2009 1,056.3 (319.5) 736.8
Acquisitions 224.5 - 224.5
Impairment charge for the year - (42.7) (42.7)
-------- ------------ --------
At 31 December 2009 1,280.8 (362.2) 918.6
Acquisitions 9.9 - 9.9
Impairment reversed in the year - 95.9 95.9
-------- ------------ --------
At 31 December 2010 1,290.7 (266.3) 1,024.4
======== ============ ========
IAS 36 Impairment of Assets allows for reversal of impairment charges providing the reversal is calculated on a consistent basis to the original impairment. At 31 December 2010, this resulted in a reversal of GBP95.9 million.
In March 2010, Capital Shopping Centres PLC acquired two subsidiary companies from Capital Shopping Centres Debenture PLC, a subsidiary of Capital Shopping Centres Group PLC, full details can be found in note 29 on Business Combinations.
The principal subsidiary undertakings are listed below. All subsidiaries are wholly owned by the company and are registered in England and Wales unless otherwise stated. All subsidiary undertakings have been included in the consolidated results.
Company and principal
activity Class of share capital % held
Belside Limited (property) Ordinary shares of
(Jersey) GBP1 each 100
Braehead Glasgow Limited "A" ordinary shares
(property) of GBP1 each 100
"B" ordinary shares
of 1.3 Euros
each 100
Braehead Park Investments Ordinary shares of
Limited (property) GBP1 each 100
Braehead Park Estates Ordinary shares of
Limited (property) GBP1 each 100
Chapelfield GP Limited
acting as General Partner
of The Chapelfield Ordinary shares of
Partnership (property) GBP1 each 100
Chelmsford Property
Investments Limited Ordinary shares of
(property) GBP1 each 100 1
CSC Harlequin Limited Ordinary shares of
(property) GBP1 each 100
CSC Lakeside Limited Ordinary shares of
(property) GBP1 each 100
CSC Enterprises (commercial Ordinary shares of
promotion) GBP1 each 100
CSC Properties Investments Ordinary shares of
Limited (property) GBP1 each 100
CSC Bromley Limited Ordinary shares of
(property) GBP1 each 100
CSC Uxbridge (Jersey)
Limited (property) Ordinary shares of
(Jersey) GBP1 each 100
Curley Limited (property) Ordinary shares of
(Jersey) GBP1 each 100
Metrocentre (GP) Limited
acting as General Partner
of The Metrocentre Ordinary shares of
Partnership (property) GBP1 each 100 2
WRP Management Limited Ordinary shares of
(property) GBP1 each 100 3
1 Chelmsford Property Investments Limited was acquired on 2 March 2010 from Capital Shopping Centres Debenture PLC, a subsidiary of Capital Shopping Centres Group PLC, for consideration of GBP1.
2 By virtue of their 40% interest in The Metrocentre Partnership, GIC Real Estate is entitled to appoint 40 per cent of the Directors of Metrocentre (GP) Limited. The non-controlling interest balance of GBP19.9 million balance shown in the Group balance sheet as at 31 December 2010 relates to GIC Real Estate's interest in The Metrocentre Partnership and is calculated in accordance with IAS 27 Consolidated and Separate Financial Statements.
3 WRP Management Limited was acquired on 25 March 2010 from Capital Shopping Centres Debentures PLC, a subsidiary of Capital Shopping Centres Group PLC, for a consideration of GBP9.9 million.
15. Joint ventures
2010
Xscape St David's
Braehead Limited
Partnership Partnership Other Total
GBPm GBPm GBPm GBPm
Summarised income
statements
Gross rental income 0.9 13.4 0.9 15.2
------------ ------------ ------ --------
Net rental income 0.5 6.6 0.2 7.3
Net other income - 1.0 - 1.0
Revaluation and sale of
investment and
development property 0.6 39.3 - 39.9
Administration expenses - (0.1) - (0.1)
Net finance costs (1.5) (3.1) - (4.6)
Profit/(loss) for the
year (0.4) 43.7 0.2 43.5
============ ============ ====== ========
Summarised balance sheets
Investment and
development property 22.6 231.0 - 253.6
Other non-current assets 2.4 0.2 - 2.6
Current assets 1.9 35.9 0.2 38.0
Partners loans (8.4) (102.3) - (110.7)
Current liabilities (2.9) (28.5) - (31.4)
Non-current liabilities (24.0) (37.8) - (61.8)
------------
Net assets/(liabilities) (8.4) 98.5 0.2 90.3
============ ============ ====== ========
2009
Xscape St David's
Braehead Limited
Partnership Partnership Other Total
GBPm GBPm GBPm GBPm
Summarised income
statements
Gross rental income 1.9 6.4 0.7 9.0
------------ ------------ ------ -------
Net rental income 1.6 3.9 0.7 6.2
Net other income 5.0 - - 5.0
Revaluation and sale of
investment and
development property (4.3) (65.1) - (69.4)
Administration expenses - (0.3) (0.3)
Net finance costs (1.9) 2.3 0.4
Tax - - (0.1) (0.1)
Profit/(loss) for the year 0.4 (58.9) 0.3 (58.2)
============ ============ ====== =======
Summarised balance sheets
Investment and development
property 22.4 209.2 - 231.6
Other non-current assets 3.2 1.2 - 4.4
Current assets 2.7 5.1 0.1 7.9
Partners loans (7.4) (84.6) - (92.0)
Current liabilities (4.2) (40.3) (44.5)
Non-current liabilities (24.5) (35.9) - (60.4)
------------
Net assets/(liabilities) (7.8) 54.7 0.1 47.0
============ ============ ====== =======
Joint ventures are accounted for in the consolidated accounts using proportional consolidation. The Group's share of the assets, liabilities, income and expenditure shown above are included in the consolidated financial statement on a line-by line basis.
Joint ventures principally comprise the Xscape Braehead Partnership and the St David's Limited Partnership. The Xscape Braehead Partnership was established in 2004, for investment in the Xscape Leisure Scheme at Braehead, Renfrew, Glasgow and has a 31 December year end. The St David's Limited Partnership was established in 2004 for investment in the existing St David's shopping centre, Cardiff, and development of a 967,500 sq. ft. retail-led mixed-use extension and has a 31 December year end. Full details of all joint ventures will be attached to the company's annual return to be filed with the Registrar of Companies.
All joint ventures are held equally with other joint venture investors on a 50:50 basis.
16. Trading property
Group 2010 2009
GBPm GBPm
Undeveloped sites 11.5 13.9
Property in development 11.1 -
Completed properties 2.9 -
---- ----
25.5 13.9
==== ====
The estimated replacement of cost of trading properties based on market value amounted to GBP27.4 million (2009 GBP13.9 million).
17. Trade and other receivables
Group Group Company Company
2010 2009 2010 2009
GBPm GBPm GBPm GBPm
Current:
Rents receivable 13.7 17.6 - -
Amounts owed by subsidiary
undertakings - - 1,908.9 1,786.9
Amounts owed by related companies 5.0 - - -
Tax recoverable - 0.2 - 0.9
Other receivables 10.0 4.7 2.4 1.1
Prepayments and accrued income 19.5 32.2 0.5 4.3
48.2 54.7 1,911.8 1,793.2
===== ===== ======= =======
Non-current:
Prepayments and accrued income 69.5 41.1 - -
===== ===== ======= =======
Amounts owed by subsidiary undertakings and related companies are unsecured, repayable on demand and for amounts falling within formalised loan agreements, interest bearing.
Included within prepayments and accrued income are tenant lease incentives of GBP79.0 million (2009 GBP64.4 million).
18. Trade and other payables
Group Group Company Company
2010 2009 2010 2009
GBPm GBPm GBPm GBPm
Current:
Rents received in advance 69.1 71.9 - -
Amounts owed to subsidiary
undertakings - - 805.7 850.5
Amounts owed to related companies 926.4 1,236.9 926.1 1,230.1
Accruals and deferred income 38.8 46.9 3.1 2.2
Other payables 17.0 13.0 3.6 1.9
Other tax and social security 33.8 46.4 1.2 0.8
1,085.1 1,415.1 1,739.7 2,085.5
======= ======= ======= =======
Amounts owed to subsidiary undertakings and related companies are unsecured and payable on demand.
19. Borrowings
Group 2010
Carrying Fixed Floating Fair
value Secured Unsecured rate rate value
GBPm GBPm GBPm GBPm GBPm GBPm
Current
Bank loans
and
overdrafts 16.5 16.5 - - 16.5 16.5
Commercial
mortgage
backed
securities
("CMBS")
notes 25.4 25.4 - - 25.4 20.0
Borrowings
excluding
finance
leases 41.9 41.9 - 41.9 36.5
Finance
lease
obligations 3.6 3.6 - 3.6 - 3.6
--------- -------- ---------- ------ --------- --------
45.5 45.5 - 3.6 41.9 40.1
========= ======== ========== ====== ========= ========
Non-current
CMBS notes
2015 1,110.7 1,110.7 - - 1,110.7 852.7
Bank loans
2014 58.4 58.4 - - 58.4 58.4
Bank loans
2016 749.1 749.1 - - 749.1 749.1
Bank loans
2017 511.1 511.1 - - 511.1 511.1
CSC bonds
2013 26.7 - 26.7 26.7 - 27.3
--------- -------- ---------- ------ --------- --------
Borrowings
excluding
finance
leases and
Metrocentre
compound
instrument 2,456.0 2,429.3 26.7 26.7 2,429.3 2,198.6
Metrocentre
compound
financial
instrument 138.7 - 138.7 138.7 138.7
Finance
lease
obligations 33.1 33.1 - 33.1 - 33.1
--------- -------- ---------- ------ --------- --------
2,627.8 2,462.4 165.4 59.8 2,568.0 2,370.4
========= ======== ========== ====== ========= ========
Total
borrowings 2,673.3 2,507.9 165.4 63.4 2,609.9 2,410.5
========= ======== ========== ====== ========= ========
Cash and
cash
equivalents (87.4)
---------
Net debt 2,585.9
=========
Net external debt (adjusted for the Metrocentre compound financial instrument) at 31 December 2010 was GBP2,447.2 million.
The Group substantially eliminates its interest rate exposure to floating rate debt as illustrated in note 21.
Company 2010
Carrying Fixed Floating Fair
value Secured Unsecured rate rate value
GBPm GBPm GBPm GBPm GBPm GBPm
Non-current
CSC bonds
2013 26.7 - 26.7 26.7 - 27.3
--------- -------- ---------- ------ --------- ------
Total
borrowings 26.7 - 26.7 26.7 - 27.3
========= ======== ========== ====== ========= ======
Cash and
cash
equivalents (52.3)
Net cash (25.6)
=========
19. Borrowings (continued)
Group 2009
Carrying Fixed Floating Fair
value Secured Unsecured rate rate value
GBPm GBPm GBPm GBPm GBPm GBPm
Current
Bank loans
and
overdrafts 4.3 4.3 - - 4.3 4.3
Commercial
mortgage
backed
securities
("CMBS")
notes 67.4 67.4 - - 67.4 50.6
Borrowings
excluding
finance
leases 71.7 71.7 - - 71.7 54.9
Finance
lease
obligations 4.5 4.5 - 4.5 - 4.5
--------- -------- ---------- ------ --------- --------
76.2 76.2 - 4.5 71.7 59.4
========= ======== ========== ====== ========= ========
Non-current
CMBS notes
2011 436.0 436.0 - - 436.0 357.3
CMBS notes
2015 1,135.5 1,135.5 - - 1,135.5 738.0
Bank loans
2011 100.0 100.0 - - 100.0 100.0
Bank loan
2014 60.0 60.0 - - 60.0 60.0
Bank loans
2016 809.3 809.3 - - 809.3 809.3
CSC bonds
2013 26.7 - 26.7 26.7 - 28.8
--------- -------- ---------- ------ --------- --------
Borrowings
excluding
finance
leases and
Metrocentre
compound
instrument 2,567.5 2,540.8 26.7 26.7 2,540.8 2,093.4
Metrocentre
compound
financial
instrument 129.9 - 129.9 - 129.9 129.9
Finance
lease
obligations 33.5 33.5 - 33.5 - 33.5
--------- -------- ---------- ------ --------- --------
2,730.9 2,574.3 156.6 60.2 2,670.7 2,256.8
========= ======== ========== ====== ========= ========
Total
borrowings 2,807.1 2,650.5 156.6 64.7 2,742.4 2,316.2
========= ======== ========== ====== ========= ========
Cash and
cash
equivalents (53.8)
---------
Net debt 2,753.3
=========
Net external debt (adjusted for the Metrocentre compound financial instrument) at 31 December 2009 was GBP2,623.4 million.
The Group substantially eliminates its interest rate exposure to floating rate debt as illustrated in note 21.
Company 2009
Carrying Fixed Floating Fair
value Secured Unsecured rate rate value
GBPm GBPm GBPm GBPm GBPm GBPm
Non-current
CSC bonds
2013 26.7 - 26.7 26.7 - 28.8
--------- -------- ---------- ------ --------- ------
Total
borrowings 26.7 - 26.7 26.7 - 28.8
========= ======== ========== ====== ========= ======
Cash and
cash
equivalents (1.9)
Net debt 24.8
=========
20. Finance lease obligations
Group Group
2010 2009
GBPm GBPm
Minimum lease payments under finance leases
fall due:
Not later than one year 3.6 4.5
Later than one year and not later than five
years 17.8 17.6
Later than five years 65.9 69.1
------ ------
87.3 91.2
Future finance charges on finance leases (50.6) (53.2)
------ ------
Present value of finance lease liabilities 36.7 38.0
====== ======
Present value of minimum finance lease obligations
Not later than one year 3.6 4.5
Later than one year and not later than five
years 14.0 13.8
Later than five years 19.1 19.7
36.7 38.0
====== ======
Finance lease liabilities are in respect of leasehold investment property. Many leases provide for payment of contingent rent in addition to the rents above, usually a proportion of net rental income.
Finance lease liabilities are effectively secured obligations, as the rights to the leased asset revert to the lessor in the event of default.
21. Financial risk management
Market risk
The Group is exposed to a variety of risks arising from the Group's operations, these are principally market risk (including interest rate risk and market price risk), liquidity risk and credit risk.
The majority of the Group's financial risk management is carried out by Capital Shopping Centres Group PLC's treasury department and the policies for managing each of these risks and the principal effects of these policies on the results for the year are summarised below.
Interest rate risk
Interest rate risk comprises both cash flow and fair value risks:
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Fair value interest rate risk is the risk that the fair value of financial instruments will fluctuate as a result of changes in market interest rates.
The Group's interest rate risk arises from borrowings issued at variable rates that expose the Group to cash flow interest rate risk, whereas borrowings issued at fixed interest rates expose the Group to fair value interest rate risk.
Bank debt is typically issued at floating rates linked to LIBOR. Bond debt and other capital market debt are generally issued at fixed rates.
It is Group policy, and often a requirement of the Group's lenders, to eliminate substantially all short and medium-term exposure to interest rate fluctuations in order to establish certainty over medium-term cash flows by using floating to fixed interest rate swaps. Such swaps have the economic effect of converting borrowings from floating to fixed rates. As a consequence, the Group is exposed to market price risk in respect of the fair value of its fixed interest rate swaps.
The below table shows the effects of interest rate swaps on the Group borrowings profile of the Group:
Fixed Floating Fixed Floating
2010 2010 2009 2009
GBPm GBPm GBPm GBPm
Borrowings 63.4 2,609.9 64.7 2,742.4
Derivative impact 2,222.4 (2,222.4) 2,571.7 (2,571.7)
-------- ---------- -------- ----------
Net borrowings profile 2,285.8 387.5 2,636.4 170.7
-------- ---------- -------- ----------
Interest rate
protection
on floating debt 85.2% 93.8%
======== ========== ======== ==========
The weighted average rate of interest rates contracted through interest rates swaps is 4.9 per cent (2009 5.3 per cent).
The approximate impact of a 50 basis point shift upwards in the level of interest rates would be a positive movement of GBP53.6 million (2009 GBP87.9 million) in the fair value of derivatives. The approximate impact of a 50 basis point shift downwards in the level of interest rates would be a negative movement of GBP54.6 million (2009 GBP92.3 million) in the fair value of derivatives. In practice, a parallel shift in the yield curve is highly unlikely. However, the above sensitivity analysis is a reasonable illustration of the possible effect from the changes in slope and shifts in the yield curve that may actually occur. Because the fixed rate derivative financial instruments are matched by floating rate debt, the overall effect on Group cash flow of such a movement would be very small.
Liquidity risk
Liquidity risk is managed to ensure that the Group is able to meet future payment obligations when financial liabilities fall due. Liquidity analysis is conducted to ensure that sufficient headroom is available to meet the Group's operational requirements and committed investments. The Group treasury policy aims to meet this objective through maintaining adequate cash, marketable securities and committed facilities to meet these requirements. The Group's policy is to seek to optimise its exposure to liquidity risk by balancing its exposure to interest rate risk and to refinancing risk. In effect the Group seeks to borrow for as long as possible at the lowest acceptable cost.
The maturity profile of Group debt showed an average maturity of five years (2009 - six years). The Group regularly reviews the maturity profile of its financial liabilities and seeks to avoid bunching of maturities through the regular replacement of facilities and by using a selection of maturity dates. Refinancing risk may be reduced by re-borrowing prior to the contracted maturity date, effectively switching liquidity risk for market risk.
The Group may pre-fund capital expenditure by arranging facilities or raising debt in the capital markets and then placing surplus funds on deposit until required for the project. Efficient treasury management and strict credit control minimise the costs and risk associated with this policy which ensures that funds are available to meet commitments as they fall due.
The tables below set out the maturity analysis of the Group's financial liabilities based on the undiscounted contractual obligations to make payments of interest and to repay principal. Where interest payment obligations are based on a floating rate the rates used are those implied by the par yield curve.
Group 2010
Within
1 1-2 3-5 over 5
year years years years Totals
GBPm GBPm GBPm GBPm GBPm
Borrowings
(including
interest) (89.6) (101.2) (1,547.2) (1,148.3) (2,886.3)
Tax and other
payables (50.8) (1.9) (2.8) (0.5) (56.0)
Finance lease
obligations (3.7) (4.4) (13.4) (65.9) (87.4)
Derivatives
payments (103.8) (105.9) (279.6) (31.8) (521.1)
Derivative
receipts 19.4 28.1 187.6 33.8 268.9
-------- -------- ---------- ---------- ----------
(228.5) (185.3) (1,655.4) (1,212.7) (3,281.9)
======== ======== ========== ========== ==========
Group 2009
Within
1 1-2 3-5 over 5
year years years years Totals
GBPm GBPm GBPm GBPm GBPm
Borrowings
(including
interest) (200.5) (694.4) (622.3) (2,477.6) (3,994.8)
Tax and other
payables (61.3) (19.7) (2.8) (0.5) (84.3)
Finance lease
obligations (4.5) (4.5) (13.1) (69.1) (91.2)
Derivatives
payments (229.5) (180.2) (448.7) (607.4) (1,465.8)
Derivative
receipts 100.1 90.3 384.8 550.2 1,125.4
-------- -------- -------- ---------- ----------
(395.7) (808.5) (702.1) (2,604.4) (4,510.7)
======== ======== ======== ========== ==========
Company 2010
Within
1 1-2 3-5 over 5
year years years years Totals
GBPm GBPm GBPm GBPm GBPm
Borrowings (including
interest) (1.8) (1.8) (27.8) - (31.4)
Tax and other payables (4.8) (1.7) (2.8) (0.4) (9.7)
------- ------ ------- ------- -------
(6.6) (3.5) (30.6) (0.4) (41.1)
======= ====== ======= ======= =======
Company 2009
Within over
1 1-2 3-5 5
Year years years years Totals
GBPm GBPm GBPm GBPm GBPm
Borrowings (including
interest) (1.8) (1.8) (29.6) - (33.2)
Tax and other payables (2.0) (3.5) (2.8) (0.5) (8.8)
------- ------ ------- ------ -------
(3.8) (5.3) (32.4) (0.5) (42.0)
======= ====== ======= ====== =======
Credit risk
Credit risk is the risk of financial loss if a tenant or counterparty fails to meet an obligation under a contract. Credit risk arises primarily from trade receivables relating to tenants but also from the Group's holdings of assets with counterparties such as cash deposits, loans and derivative instruments.
Credit risk associated with trade receivables is actively managed; tenants are managed individually by asset managers, who continuously monitor and work with tenants, anticipating and, wherever possible, identifying and addressing risks prior to default.
Prospective tenants are assessed via a review process, including obtaining credit ratings and reviewing financial information which is conducted internally. As a result deposits or guarantors may be obtained. The amount of deposits held as collateral at 31 December 2010 is GBP2.2 million (2009 GBP2.2 million).
Due to the nature of tenants being managed individually by asset managers, it is Group policy to calculate any impairment specifically on each tenant receivable balance.
The ageing analysis of the Group's trade receivables is as follows:
Group Group
2010 2009
GBPm GBPm
Up to three months 11.0 15.0
Three to six months 2.7 2.6
Trade receivables 13.7 17.6
===== =====
In 2010 trade receivables impaired amounted to GBP2.5 million (2009 GBP3.7 million), this is considered to be within an acceptable range given current economic conditions.
The credit risk relating to cash, deposits and derivative financial instruments is actively managed centrally by Capital Shopping Centres Group PLC, the Company's ultimate parent. Relationships are maintained with a number of tier one institutional counterparties, ensuring compliance with Capital Shopping Centres Group PLC Group policy relating to limits on the credit ratings of counterparties (between BBB+ and AAA).
Excessive credit risk is avoiding through adhering to authorised limits for all counterparties.
Classification of financial assets and liabilities
The table below sets out the Group's accounting classification of each class of financial assets and liabilities, and their fair values at 31 December 2010 and 31 December 2009.
The fair values of quoted borrowings are based on the ask price. The fair values of derivative financial instruments are determined from observable market prices or estimated using appropriate yield curves at 31 December each year by discounting the future contractual cash flows to the net present values.
Gain/(loss)
Carrying Fair to income
value value statement
2010 GBPm GBPm GBPm
Derivative financial
instrument assets 4.6 4.6 -
---------- ---------- ------------
Total held for trading
assets 4.6 4.6 -
Trade and other
receivables 117.7 117.7 -
Cash and cash equivalents 87.4 87.4 -
---------- ---------- ------------
Total cash and receivables 205.1 205.1 -
---------- ---------- ------------
Derivative financial
instrument liabilities (251.0) (251.0) (33.4)
---------- ---------- ------------
Total held for trading
liabilities (251.0) (251.0) (33.4)
---------- ---------- ------------
Trade and other payables (1,090.3) (1,090.3) -
Borrowings (2,673.3) (2,410.5) -
---------- ---------- ------------
Total loans and payables (3,763.6) (3,500.8) -
========== ========== ============
2009
Trade and other receivables 95.8 95.8 -
Cash and cash equivalents 53.8 53.8 -
---------- ---------- -----
Total cash and receivables 149.6 149.6 -
---------- ---------- -----
Derivative financial
instrument liabilities (224.7) (224.7) 45.6
---------- ---------- -----
Total held for trading
liabilities (224.7) (224.7) 45.6
---------- ---------- -----
Trade and other payables (1,440.1) (1,440.1) -
Borrowings (2,807.1) (2,316.3) -
---------- ---------- -----
Total loans and payables (4,247.2) (3,756.4) -
========== ========== =====
Capital structure
The company is a wholly owned subsidiary of Capital Shopping Centres Group PLC and owns the majority of Capital Shopping Centres Group PLC's property investments.
The Company's capital structure has been designed to ensure an appropriate balance is achieved between permitting all subsidiary companies to operate effectively and allowing the ultimate parent company the ability to allocate capital across the larger group in a flexible and efficient manner. The Group uses a mix of equity, third party and intergroup debt to achieve these aims.
During the year Capital Shopping Centres Group PLC capitalised an intercompany balance of GBP500 million, substantially increasing the capital base of the Company.
The only financial assets and liabilities of the company recognised at fair value are derivative financial instruments. These are all held at fair value through profit or loss and are categorised as level 2 in the fair value hierarchy as explained below.
Fair value hierarchy
Level 1: valuation based on quoted market prices traded in active markets.
Level 2: valuation techniques are used, maximising the use of observable market data, either directly from market prices or derived from market prices.
Level 3: where one or more inputs to valuation are not based on observable market data. Valuations at this level are more subjective and therefore more closely managed, including sensitivity analysis of inputs to valuation models. Such testing has not indicated that any material difference would arise due to a change in input variables.
22. Share capital
Share Capital
GBP000
Issued and fully paid
At 31 December 2009 - 394,551,178 ordinary shares
of 50p each 197,276
Shares issued 50
At 31 December 2010 - 394,651,178 ordinary shares
of 50p each 197,326
==============
On 19 July 2010, the Company issued a total of 100,000 shares at a price of GBP5,000 per share in respect of the capitalisation of inter-company debt.
Under saving provisions, the current maximum number of shares which may be issued by the company is 600,000,000 ordinary shares of 50p each.
23. Cash generated from operations
Group Group Company Company
2010 2009 2010 2009
GBPm GBPm GBPm GBPm
Profit/(loss) before tax 474.0 (324.7) 125.5 (39.7)
Adjustments for:
Revaluation and sale of
investment
and development property (479.0) 425.2 - -
Amortisation of lease
incentives
and other direct costs (1.2) 5.0 0.5 -
Net impairment of financial assets
- - - 0.2
Impairment of investments in group
companies - - (95.9) 42.8
Finance costs 173.1 154.1 63.8 15.8
Finance income (2.3) (3.6) (56.0) (17.8)
Other finance costs 50.6 20.8 - -
Impairment of goodwill 3.1 - - -
Change in fair value of
derivative
financial instruments 33.4 (45.6) - -
Changes in working
capital:
Change in trading property 4.5 (0.6) - -
Change in trade and other
receivables (27.4) 13.0 (130.0) (526.8)
Change in trade and other
payables 159.6 143.6 150.3 459.2
-------- -------- -------- --------
Cash generated from
operations 388.4 387.2 58.2 (66.3)
======== ======== ======== ========
24. Cash and cash equivalents
Group Group Company Company
2010 2009 2010 2009
GBPm GBPm GBPm GBPm
Unrestricted cash 87.4 34.0 52.3 1.9
Restricted cash - 19.8 - -
------ ------ -------- --------
87.4 53.8 52.3 1.9
====== ====== ======== ========
Restricted cash at 31 December 2009 related to amounts placed on deposit to ensure continued compliance with certain loan facility financial covenants.
25. Directors' emoluments
The aggregate emoluments of the directors were GBP1,388,694 (2009 GBP1,877,836). Under the annual bonus scheme for the year ended 31 December 2010, four directors were awarded a bonus in 2011. Part of the bonus was taken in cash, part in the form of shares under the Capital Shopping Centres Group PLC Share Incentive Plan ("SIP"), and a further part as conditional awards of shares in Capital Shopping Centres Group PLC. The SIP shares are held in trust for a period of five years to qualify for tax advantages. The dividend payable in respect of the shares held in trust is used to purchase additional shares, known as Dividend Shares, which are also held in trust. The Dividend Shares are generally required to be held in trust for a minimum period of three years from the date of acquisition. The conditional awards comprise "restricted" shares. The restricted shares will be released two years after the date of the award provided the individual director remains in service. In aggregate, 3,100 (2009 nil) SIP shares and 123,253 (2009 nil) restricted shares were awarded.
In previous years, conditional share awards comprising "restricted" and "additional" shares were made. The restricted and additional shares were to be released respectively two and four years after the date of the award provided the director remained in service. As noted in the Directors' Remuneration Report contained in Capital Shopping Centres Group PLC's 2009 Annual Report, the Remuneration Committee of Capital Shopping Centres Group PLC decided that all outstanding deferred bonus shares held by directors and staff should vest in March 2010. Accordingly, restricted and additional shares awarded in previous years were released to four directors, including the highest paid director.
During the year, GBP178,141 was paid to one former director in connection with the termination of her employment by CSC Management Services Limited.
During the year, four directors were granted options to acquire Capital Shopping Centres Group PLC shares. The options were granted under the Capital Shopping Centres Group PLC Unapproved Share Option Scheme and are subject to a performance condition in respect of the smoothed earnings growth of Capital Shopping Centres Group PLC. The award of options made to the highest paid director is disclosed in the Capital Shopping Centres Group PLC 2010 Annual Report.
Four directors were members of a money purchase pension arrangement. A company contribution in aggregate of GBP77,167 (2009 GBP81,000) was paid in respect of directors who were members of money purchase arrangements.
The highest paid director received aggregate emoluments of GBP532,798 (2009 GBP660,100). In 2009, the highest paid director elected to cease accruing benefit in the Liberty International PLC defined benefit scheme. The highest paid director receives an actuarially determined payment subject to PAYE and NI deductions. This amount is included in the aggregate emoluments figure above. The awards of SIP and conditional shares made to this director under the annual bonus scheme are disclosed in the Capital Shopping Centres Group PLC 2010 Annual Report.
26. Employees information
At 31 December 2010 the number of persons employed was nil (2009 4). The average number of employees during the year was 1 (2009 14).
UK salaried employees are contracted with a related company, CSC Management Services Limited, and the salary and related costs are shown in the accounts of CSC Management Services Limited. Costs of employees are as follows:
2010 2009
GBP'000 GBP'000
Wages and salaries 25.2 185.8
Social security costs 0.7 7.8
Pension contributions - 6.7
------- -------
25.9 200.3
======= =======
27. Pensions
The company participates in Group pension arrangements as disclosed in the notes to the report and accounts of Capital Shopping Centres Group PLC, the ultimate parent company. Pension costs, representing contributions payable by the company to the Group pension arrangements, totalled GBP89 (2009 GBP6,670).
28. Capital commitments
At 31 December 2010 the Group was contractually committed to GBP86.2 million (2009 GBP100.3 million) of future expenditure for the purchase, construction, development and enhancement of investment property. All of the GBP86.2 million committed is expected to be spent in 2011.
29. Business combinations
Chelmsford Property Investments Limited
On 2 March 2010 the company acquired 100% of the issued share capital of Chelmsford Property Investments Limited from Capital Shopping Centres Debenture PLC, a fellow subsidiary undertaking of Capital Shopping Centres Group PLC, for a consideration of GBP1. The fair value of the net liabilities acquired was GBP3.1 million resulting in goodwill of GBP3.1 million which was immediately written off.
WRP Management Limited
On 25 March 2010 the company acquired 100% of the issued share capital of WRP Management Limited from Capital Shopping Centres Debenture PLC, a fellow subsidiary undertaking of Capital Shopping Centres Group PLC, for a consideration of GBP9.9 million. The fair value of the net assets acquired at 25 March 2010 were GBP9.9 million.
30. Key management compensation
2010 2009
GBPm GBPm
Salaries and short-term employee benefits 1.5 1.9
Pensions and other post-employment benefits 0.1 0.1
Share based payment 0.2 -
Long term incentives - -
Termination benefits 0.2 -
----- -----
2.0 2.0
===== =====
Key management comprise the Managing Director of Capital Shopping Centres PLC, and those Executive Directors of Capital Shopping Centres PLC who are not also directors of Capital Shopping Centres Group PLC. These directors are paid by a related company and not the Group.
31. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation for the Group.
Group
Transactions between the Group and its related companies are shown below:
Nature of 2010 2009
Related company transaction GBPm GBPm
Liberty International Group
Treasury Limited Interest receivable 2.2 2.0
Interest payable 36.2 18.1
CSC (Eldon Square) Limited Interest receivable - 1.2
Company
Transactions between the parent company and its subsidiaries and related companies are shown below:
Nature of 2010 2009
Subsidiary transaction GBPm GBPm
CSC Bromley Limited Interest receivable 2.1 1.3
CSC Harlequin Limited Interest receivable 14.9 12.7
CSC Lakeside Limited Interest receivable 20.7 12.2
CSC Metrocentre Limited Interest receivable 18.0 17.0
CSC Potteries Limited Interest receivable 2.6 4.7
WRP Management Limited Interest receivable 0.3 -
Whitesun Limited Interest receivable 0.1 -
Xscape Braehead Partnership Interest receivable 0.5 0.6
Braehead Glasgow Limited Interest payable 2.1 4.9
Braehead Park Estates Limited Interest payable 0.9 0.7
CSC Properties Limited Interest payable 42.1 39.4
The Metrocentre Partnership Interest payable 3.4 1.1
CSC Uxbridge (Jersey) Limited Interest payable 1.0 -
Dividend receivable 66.0 -
Braehead Glasgow Limited Dividend receivable 10.0 -
Braehead Park Investments
Limited Dividend receivable 2.8 -
Nature of 2010 2009
Related company transaction GBPm GBPm
Liberty International Group
Treasury Limited Interest receivable 2.2 2.0
Interest payable 36.2 18.2
CSC (Eldon Square) Limited Interest receivable - 1.2
Group
Balances outstanding between the Group and related companies are shown below:
Amounts owed Amounts owed
by subsidiaries to subsidiaries
2010 2009 2010 2009
Related company GBPm GBPm GBPm GBPm
Capital Shopping Centres Group PLC
- - (5.1) (5.1)
Liberty International
Group
Treasury Limited - - (921.3) (1,227.5)
Liberty Payments Limited 5.0 - - -
Company
Balances outstanding between the parent company and its subsidiaries and related companies are shown below:
Amounts owed Amounts owed
by subsidiary to subsidiary
2010 2009 2010 2009
Subsidiary GBPm GBPm GBPm GBPm
Belside Limited 134.8 133.0 - -
Braehead Glasgow
Limited - - (8.1) (70.6)
Braehead Park Estates
Limited - - (17.8) (12.1)
Braehead Park
Investments Limited - 5.7 - -
Broadway Retail
Leisure Limited 10.9 10.4 - -
Chapelfield LP
Limited - 19.5 (14.0) -
Chelmsford Property
Investments Limited 2.6 - - -
Cribbs Causeway JV
Limited - - (5.9) -
CSC Braehead Leisure
Limited 7.9 7.7 - -
CSC Bromley Limited 37.3 29.3 - -
CSC Chapelfield
Residential Limited 7.3 7.1 - -
CSC Enterprises
Limited 2.8 2.8 - -
CSC Harlequin Limited 252.2 232.7 - -
CSC Lakeside Limited 346.8 279.7 - -
CSC Metrocentre
Limited 304.7 280.2 - -
CSC Potteries Limited 174.2 183.2 - -
CSC Properties
Investment Limited - - (48.1) (29.2)
CSC Properties
Limited - - (702.1) (664.9)
CSC The Hayes Limited 383.7 368.3 - -
CSC Uxbridge (Jersey)
Limited 5.3 - - (60.8)
Curley Limited 201.2 198.2 - -
Manchester JV Limited - - (8.2) (6.3)
The Metrocentre
Partnership - 0.7 - -
Westgate Oxford
Investments Limited 16.9 16.8 - -
Whitesun Limited 2.4 - - -
WRP Management
Limited 8.1 - - -
Xscape Braehead
Partnership 9.4 7.8 - -
Amounts owed Amounts owed
by related company to related company
Related company 2010 2009 2010 2009
GBPm GBPm GBPm GBPm
Capital Shopping
Centres Group PLC - - (5.1) (5.1)
Liberty International
Group Treasury
Limited - - (921.0) (1,225.0)
32. Contingent liabilities
As at 31 December 2010, the Group has no material contingent liabilities other than those arising in the normal course of business.
33. Ultimate parent company
The immediate and ultimate parent company is Capital Shopping Centres Group PLC, a company incorporated and registered in England and Wales, copies of whose consolidated financial statements may be obtained from the Company Secretary, 40 Broadway, London, SW1H 0BT.
34. General information
The company is a public limited company incorporated in England and Wales and domiciled in the UK. The address of its registered office is 40 Broadway, London SW1H 0BU.
--- ENDS ---
This information is provided by RNS
The company news service from the London Stock Exchange
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