Intu Properties Plc Annual Report 2013

Intu Properties plc 40 Broadway, London SW1H 0BT

Intu plc Properties Annual Report 2013 Delivering change Delivering great experiences Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 Passionate about providing people with the perfect shopping experience, we help retailers flourish. Creating compelling experiences that surprise and delight our customers, we aim to attract more people, from further, for longer, more often. It’s this that powers our business creating value for our retailers, our communities and our investors driving our long-term success. Contents

Strategic report Governance Overview Board of Directors 66 At a glance 02 Executive management 68 What we’ve done 04 Chairman’s introduction 69 2013 Highlights 06 Corporate governance report 70 Chairman’s statement 08 Directors’ remuneration report 82 Governance and Directors’ report 100 remuneration review 11 Statement of Directors’ Business model and strategy responsibilities 102 Business model 14 Strategy 16 Accounts Chief Executive’s review 18 Independent auditors’ report 104 Top properties 34 Consolidated income statement 107 Key performance indicators 36 Consolidated statement of comprehensive income 108 ry.com Key risks and uncertainties 38 Balance sheets 109 Our people 40 Statements of changes in equity 110 Financial review intu investor centre 2013 Financial review 48 Statements of cash flows 113 intugroup.co.uk/ar2013 Corporate responsibility Notes to the accounts 114 This report contains ‘forward-looking statements’ regarding the belief or current expectations of Intu Properties plc, its Directors and other members of its senior Better together 56 Other information management about Intu Properties plc’s businesses, financial performance and results of operations. These forward-looking statements are not guarantees of future Communities and performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are Investment and development economic contribution 59 outside the control of Intu Properties plc and are difficult to predict, that may cause actual results, performance or developments to differ materially from any future property 154 Environmental efficiency 60 results, performance or developments expressed or implied by the forward-looking statements. These forward-looking statements speak only as at the date of this Financial covenants 156 report. Except as required by applicable law, Intu Properties plc makes no representation or warranty in relation to them and expressly disclaims any obligation to Relationships 62 Underlying profit statement 158 update or revise any forward-looking statements contained herein to reflect any change in Intu Properties plc’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. EPRA performance measures 159 Financial record 163 Any information contained in this report on the price at which shares or other securities in Intu Properties plc have been bought or sold in the past, or on the yield on

Management structure 164 Designed and produced Yeldar by Radley such shares or other securities, should not be relied upon as a guide to future performance. Glossary 165 Dividends 167 Shareholder information 168

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 01 What’s inside this report

Overview Strategic report Page 02 Governance

Business model and strategy Page 12 Financial Corporate review responsibility Page Page 46 54 Accounts

Governance

Page Other information 64

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 02 Strategic report Overview At a glance

Intu owns and operates some of the best shopping centres, in some of the strongest locations, right across the country including 10 of the UK’s top 25 Free Wi-Fi

ENTERTAINMENT

DINING 4

8 3

1 6

14 10

12 RETAIL 11 7 9 2 5 13 15

Super-regional centres (65%) 1 intu Trafford Centre 2 intu Lakeside Occupancy Passing rent Direct employees 3 intu Metrocentre 4 intu Braehead 5 Cribbs Causeway, Bristol Town and city centres (35%) 95% £368m 2,027 6 Manchester Arndale 7 St David’s, Cardiff And over 80,000 8 intu Eldon Square employed in our centres 9 intu Watford 10 intu Victoria Centre 11 Midsummer Place 12 intu Chapelfield 13 intu Uxbridge 14 intu Potteries 15 intu Bromley

See page 34 For more information Over RETAIL DINING AssetAsset valuation valuation 10 of UK’s 2/3 ENTERTAINMENT 14 15 1 13 18m sq. ft. 12 of the UK’s population 11 top 25 live within a 45 minute of retail, catering 10 shopping centres drive time of one of and leisure space 9 our centres 8 £7.6bn 2 7

6 5 3 4

● Super-regional centres (65%) 1 intu Traord Centre (£1,900 million) Intu Properties plc – Annual Report 2013 intugroup.co.uk 2 intu Lakeside (£1,125 million) WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 3 intu Metrocentre (£885 million) 4 intu Braehead (£602 million) 5 Cribbs Causeway, Bristol (£242 million) RETAIL DINING ENTERTAINMENT ● Town and city centres (35%) 6 Manchester Arndale (£399 million) 7 St David’s, Cardi (£272 million) 8 intu Eldon Square (£250 million) 9 intu Watford (£323 million) 10 intu Victoria Centre (£306 million) 11 Midsummer Place (£251 million) 12 intu Chapelﬁeld (£246 million) 13 intu Uxbridge (£214 million) 14 intu Potteries (£163 million) 15 intu Bromley (£159 million) 03 Strategic report Our values Overview Creative Bold Genuine Strategic report

Substantial organic Debt to assets ratio Debt maturity proﬁle (£m) development pipeline 1,200 1,077 £1.2 bn 48.5% 1,000 800 723 675* 595

over 600 Governance 10 years 400 343 343 147 200 23

2014 2015 2016 2017 2018 2019– 2024– 2029+ 2023 2028 * Includes £300m convertible bond

20 years of measured growth (sq. ft., millions) Net rental income (£m) 40 51 80 94 4.6 6.4 6.7 6.7 6.7 7.8 7.8 8.3 8.1 8.1 8.3 104 115 136 147 161 176 181 236 272 289 281 267 277 364 363 370 11.1 12.4 12.7 13.0 14.0 14.1 16.6 16.6 18.2 Accounts 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Our centres attract some Carbon reduction Management and Board

Our senior management team, Other information 350m 18% supported by the Board, combines a customer visits a year since 2011 wealth of knowledge and experience to oversee the implementation of our strategic aims and the day-to-day operations of the Group.

See page 66 For more information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 04 Strategic report Overview What we’ve done April

June

February

World Class Service training starts

intu launched First National Elephant Parade tour starts

Running from June to 2014 March

Acquired Charter Place, Watford

SeaLife Centre opens at intu Trafford Centre Acquired Midsummer Place

Awarded BitC CR Index Gold Award

Hello! magazine brand partnership launched £800m bond launched with innovative secured debt structure First UK Centre to offer 4G

Click and collect live in centres

Free Wi-Fi roll-out starts Centres rebranding starts Running from March to 2014 Running from April to August

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 05 Strategic report Overview

July November

21 September

Issued £485m 10 year bond secured on intu Metrocentre Strategic report

intu Retail Services staffbrought in-house August

Cineworld secured as leisure anchor at intu Potteries Governance

Planning applications submitted December for Charter Place, Watford and intu Lakeside leisure development

Planning permission granted for intu Victoria Centre catering cluster Accounts

intu Eldon Square catering cluster gets go ahead October intu Lakeside food court remodelling starts #twishlist elves national digital brand campaign And lots more Other information to come…

See pages 30 to 33 For more information

Acquired Parque Principado, Spain

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 06 Strategic report Overview 2013 Highlights

Net rental income Underlying earnings Net rental income 2013 £370m 2012 £363m 2011 £364m 2010 £277m £370m £140m Underlying EPS 2012: £363m 2012: £138m 2013 15.0p 2012 16.1p 2011 16.5p 2010 15.4p Property revaluation surplus Profit for the year

Dividend per share 2013 15.0p 2012 15.0p 2011 15.0p 2010 15.0p £126m £364m 2012: £41m 2012: £159m NAV per share 2013 380p 2012 392p 2011 391p Underlying EPS Dividend per share 2010 390p 15.0p 15.0p 2012: 16.1p 2012: 15.0p

Market value of Net external debt investment properties £7,624m £3,698m 2012: £7,073m 2012: £3,504m

NAV per share (diluted, adjusted) Debt to assets ratio

380p 48.5% 2012: 392p 2012: 49.5%

Please refer to glossary for definition of terms Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 07 Strategic report Overview

Robust asset management approach, focused on medium-term total property return Strategic report — high occupancy at 95 per cent — signed 201 long-term leases for £42 million new annual rent at an average four per cent above previous passing rent — encouraging tenant investment in stores – £70 million in 2013 Financial performance affected by repositioning — underlying earnings per share 15.0 pence (2012 – 16.1 pence) reflecting £10 million impact of tenants who entered administration in late 2012 and early 2013 — property valuations increased 1.8 per cent, comparing favourably with IPD index which increased Governance 0.8 per cent — total property return 7.3 per cent (2012 – 6.0 per cent) — net asset value per share (diluted, adjusted) reduced by 12 pence including reduction of 15 pence from early termination of interest rate swaps and 7 pence dilution from equity placing Growth from acquisitions in UK and Spain with substantial organic development pipeline — development pipeline now amounts to £1.2 billion programme over 10 years — representing some 2.6 million sq. ft. of new retail, restaurants and leisure of which 1.8 million sq. ft. (£0.7 billion) has planning approval

— funding will include recycling of existing assets including possible disposals and introduction of partners Accounts Transformed debt structure — £1.8 billion refinanced through bond issues and new bank facilities — achieved 40 basis points reduction in average cost of debt to 4.8 per cent and 2 year increase in weighted average maturity to 8 years — cash, short-term investments and committed facilities of £325 million at 31 December 2013; £110 million further debt raised 2014 to date Launched nationwide consumer-facing brand and digital proposition — customer experience improved, with strong take-up of free Wi-Fi following installation of high capacity fibre-optic networks at nine centres; Intu owns platform and resulting data Other information — previously out-sourced facilities management and customer-facing teams brought in-house; all employees trained in World Class Service — single brand for company and shopping centres bringing operating efficiencies and nationwide business opportunities

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 08 Strategic report Overview Chairman’s statement

A year ago, following our announcement of the new brand and digital initiatives, I commented that we were at the beginning of a new phase in the Group’s life, with our market leadership position in the sector providing many opportunities for growth, both organically and by acquisition. Since then we have oriented the business around the principle that improved customer experience driven by motivated customer service attracting leading retailers is a powerful virtuous circle creating value for our shareholders, employees, communities and partners. Improved customer Overview of 2013 activity experience driven by I am delighted that the cultural change throughout the Group has motivated customer exceeded all expectations – as have other changes associated with our brand. These include new signage, information desks and uniforms, service attracting leading World Class Service training, transfers of employment to Intu Retail retailers is a powerful Services, free Wi-Fi, the launch of an online business, the formation of intu Experiences for promotional activities and national marketing virtuous circle campaigns. We have only just begun to realise the full potential of our Patrick Burgess national consumer brand. Chairman But that was far from all we achieved in 2013. We acquired a great centre, Midsummer Place, Milton Keynes, filling a gap in our national coverage. We strengthened our financial position by raising equity and as capital markets improved we successfully refinanced, ahead of time and on a long-term basis, tranches of borrowings coming due between 2015 and 2017. We appreciate the commitment of our shareholders and lenders. Our asset management and development teams have been exceptionally busy, signing up new tenants, dealing with lease expiries, lodging planning applications and getting capital projects underway. We have plans for every centre. For example, we are on site transforming the malls at intu Eldon Square, remodelling the intu Lakeside food court, refurbishing intu Victoria Centre and reinvigorating what we now call Platinum Mall at intu Metrocentre. Major projects not yet on site, such as the extension of intu Watford into the adjoining Charter Place, are rapidly moving forward. Internationally, the highlight was the acquisition of a leading Spanish centre, Parque Principado, Oviedo, with a top quality partner, Canada Pension Plan Investment Board.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 09 Strategic report Overview

2013 financial performance Strategic report As discussed in the Chief Executive’s Review, the Group’s financial performance for the year reflects some income reduction from tenant failures but robust valuations contributed to a healthy total property return. Looking forward Thinking ahead, how we combine retail, catering and leisure, how we adapt to the digital and smart phone era, how we take our brand forward, how we keep our centres fresh and appealing to customers, the next steps we take to grow our footprint in the UK regional shopping centre industry – these are the themes which will define

our success in the years to come. Governance In that context we will remain focused on achieving strong returns over the medium term from each of our assets individually, including through our significant plans for development, and through their combined power as the only UK national branded network of prime centres. Turning to external factors, it is encouraging to see some signs of recovery, with retailers continuing to address the impact of changing shopping habits on their own business models. In providing customers with fresh experiences in some of the best destinations, we offer retailers compelling opportunities to thrive, driving the total returns from our assets over the long term. Accounts Directors and staff I would like to record my thanks to the Board and all our staff for their commitment and dedication to intu’s values and vision in this year of fast-paced change. Further, I would like to welcome the 1,300 employees of Intu Retail Services who joined the Group in July and October 2013. Including expansion in other areas, we now have a team of over 2,000 people delivering our nationwide brand aspirations and values. Our third annual employee survey showed the overwhelming majority

of our expanded workforce is enthusiastically supporting the evolution Other information of the Group. On behalf of the Group I would like to thank Rob Rowley, who stepped down from the Board on 18 October 2013 after nine years, and Andrew Huntley and Adèle Anderson, who have taken on the roles of Senior Independent Director and Chairman of the Audit Committee respectively.

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 10 Strategic report Overview

Donated to community Corporate responsibility organisations Intu’s award-winning CR programmes reinforce our long-term £1.95m commitment to sustainable and community-minded business practice 2012: £1.92m in the development and promotion of our shopping centres and I take great personal interest and satisfaction from my involvement in many Reduction in CO2 emissions since 2011 of our projects. In 2013 we achieved an impressive seven per cent reduction in carbon 18% emissions, a total of 18 per cent over two years and were awarded Gold in the annual Business in the Community CR Index. Our employees engaged with 12 regional and national community partners to deliver practical help to disadvantaged young people in the communities served by Intu centres and, overall, our projects directly reached almost 2,500 people in 2013. All our projects are subject to thorough evaluation and, as members of the London Benchmarking Group, we carry out an annual appraisal of all our community involvement efforts to ensure a close fit with the core goals of our business. Dividends The Directors are recommending a final dividend of 10.0 pence per share bringing the amount paid and payable in respect of 2013 to 15.0 pence, unchanged from 2012. A scrip dividend alternative will be offered. Details of the apportionment between the PID and non-PID elements per share will be confirmed in due course as the cash dividend is likely to be partly PID and partly non-PID and the scrip alternative wholly non-PID. Responsible corporate behaviour and high quality service are key underlying values which inform our approach to every aspect of our affairs. We take very seriously our responsibility as a good corporate citizen. Our staff work hard to provide real benefit to our customers, partners and the wider communities in which we are based. We know people like to deal with companies they can trust so, as well as intangible benefits, this approach reinforces our ability to provide real returns to our shareholders in the long term.

Patrick Burgess Chairman 28 February 2014

Find out more: intugroup.co.uk/ar2013 Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 11 Strategic report Overview Governance and remuneration review Strategic report Board structure The Governance section on pages 64 to 102 (which includes the Directors’ remuneration report) sets out in detail the governance structure of the Group and the activities of the Board and its Committees during 2013. Chairman 1 Governance and remuneration highlights Executives 2 Non-Executives 7 New statutory format for Directors’ remuneration report Board independence (excl. Chairman) Section Shareholder vote Pages Directors’ remuneration policy Binding 83 to 89 Annual remuneration report Advisory 90 to 99 Changes to Board and Committee composition

Executive 2 Adèle Anderson was appointed as a Non-Executive Director in February Governance Non-Independent 2 Independent 5 2013, and John Abel and Rob Rowley both stepped down as Non- Executive Directors during the year. The following appointments and changes to the composition of Committees were made: Average salary Vote on 2012 Directors’ increase for all staff remuneration report Director Appointed as Andrew Huntley Senior Independent Director 4.2% 91.3% Nomination and Review Committee member in favour Adèle Anderson Non-Executive Director Executive Director Audit Committee Chairman bonus % of salary Remuneration Committee Member 65% 68% Louise Patten Nomination and Review Committee member Chief Executive Finance Director

Boardroom diversity Accounts Our statement on diversity policy is set out in the Nomination and Executive Director salary increases Review Committee report on page 80. We have two female Directors, 0% 2.5% representing 20 per cent of the Board. Chief Executive Finance Director Risk management As described in the Audit Committee report on pages 76 and 77, a comprehensive formal appraisal of risk appetite has been undertaken, UK Corporate Governance significantly enhancing our annual risk management review process. Code Compliance UK Corporate Governance Code compliance We have complied fully with the UK Corporate Governance Code throughout all of 2013.

Performance evaluation Other information Our Board evaluation exercise was carried out by an independent  external consultant and the key areas of focus arising from the exercise were: — revisions to Board and Committee timetable and sequencing of meetings — additional meetings of Remuneration Committee to develop the new format Directors’ remuneration report — more presentations to the Board by Senior Management across the Group on topics of particular relevance

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 12 Strategic report Business model and strategy

Creating destinations with a broader offer We aim to provide the best places to shop, eat, drink and be sociable. To bring people from further, for longer, more often. 11 per cent of our rent now comes from food and leisure operators and with many of our centres now open beyond 6 pm, visitors can enjoy their offers well into the evening. We know that if shoppers enjoy a drink, a meal or an event they stay longer and spend more, helping our retailers to thrive and attracting new brands and investment. So that’s why we are investing in improving the range, quality and environment of our dining and leisure offer. Our £1.2 billion pipeline of development projects over the next ten years includes plans to create 1.5 million sq. ft. of new contemporary catering and leisure space – that’s an 80 per cent increase on today’s. 900,000 sq. ft. has already received planning consent and we have applied for a further 360,000 sq. ft. Projects range from the new food court at intu Lakeside, a new dining quarter at intu Eldon Square, a major leisure destination in the heart of Watford, a street food concept at Midsummer Place to a nine screen cinema at intu Potteries. These reinforce the long-term attractiveness of the assets and, with operators keen to expand into our high footfall destinations, contribute a sound financial return for shareholders.

Find out more: intugroup.co.uk/ar2013

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 13 Strategic report Business model and strategy

Business model and strategy Strategic report

Business model 14 Strategy 16

Chief Executive’s review 18 Governance Top properties 34 Key performance indicators 36 Key risks and uncertainties 38 Our people 40

Accounts Other information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 14 Strategic report Business model and strategy Business model

Our enablers

1 R Providing o s b e u e the perfect s y t shopping c lo a p experience p m it e a l d s e t t r u n c e l t a u T r e 4 2 Generating Establishing value for Our enduring shareholders relationships customers with retailers

a l a n c e s d u a c p o p f ro 3 m a r c e h Delivering -t g to long-term n r o is growth L k

intu brand

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 15 Strategic report Business model and strategy Our focus, scale and quality set us apart allowing us to create value for shoppers, retailers and shareholders.

1 2 3 4 Strategic report We aim to provide Allowing us to Which delivers And generates people with the establish enduring long-term returns for perfect shopping relationships growth for Intu shareholders experience with retailers

With shopping centres The powerful footfall This ensures that Our thriving centres in some of the best that results is a occupancy remains are sought-after locations across compelling attraction strong, reinforcing our investments, creating the country. for retailers. centres’ role as vital hubs sustainable value for for the community and shareholders and And by developing and While we demonstrate Governance providing a valuable supporting access to actively managing these operating excellence, economic contribution capital for re-investment. centres through our managing our centres to to their regions. brand to provide the provide the right trading right mix of retail, leisure environment and the And drives rental income and catering. flexibility to evolve. over the long term. Accounts

Our enablers

Talented employees A robust capital structure Professional, motivated and Astute financial management to empowered teams, specialists in maximise funding options for their field, focused on creating disciplined and shrewd investment. mutually-beneficial opportunities and relationships with partners. See page 40 See page 52 For more information For more information Other information

intu brand A long-term focus A balanced approach to risk Nationwide shopping centre brand Creative and collaborative Risk management is underpinned focused on enriching the customer approach to long-term investment by rigorous analysis in the context experience, providing compelling and growth, facilitated by of potential threats to scale for retailers and other development expertise and strategic objectives. commercial partners. community focus. See page 27 See page 30 See page 38 For more information For more information For more information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 16 Strategic report Business model and strategy We have clear strategic objectives Strategy to ensure the business model is put into action effectively.

1 2

To provide compelling To be the landlord that retailers To create long-term and sustainable To generate superior shareholder destinations for shoppers want to do business with growth in net rental income returns through dividend growth and capital appreciation How we are delivering on our strategy How we are delivering on our strategy How we are delivering on our strategy How we are delivering on our strategy — Finding and showcasing the best mix of retailers — High footfall locations across the UK — Astute investment in improvements — Tight cost control and lean operation — The most accessible locations for shopping and socialising — Specialist and collaborative approach to retail change — Specialist knowledge of emerging occupier and — Efficient use of debt markets — Excellent service, security and facilities — High quality yet cost-effective facilities management management trends — Capital recycling including creative involvement of partners — Marketing events that create theatre and experience — Consistently deliver creative developments — Non-lease income from shopping centres — Innovative and effective marketing — Long-term partnerships with local authorities and communities

nationwide network See Chief Executive’s review on page 30 upcoming maturities — Consistently demonstrated direct benefit to retailers of See Financial review on page 53 — Developed a platform to deliver our signature customer our creative footfall-driving marketing events such as — Launched intu Experiences, building on our nationwide experience with our newly in-sourced facilities management 100,000 attending student nights generating over £2 million network and relationships with major commercial partners — Ranked highly among major UK property companies in and all employees taking part in a programme of workshops incremental sales to introduce high quality promotional activities to enhance the first publication of EPRA-defined cost ratios See Chief Executive’s review on pages 25 and 27 the visitor experience and produce non-rental income — Acquisition of strategically important Midsummer Place in Milton Keynes, with potential to create significant long-term value as well as immediately bringing intu to a new catchment

Risk management in practice Risk management in practice Risk management in practice Risk management in practice — Reinforcing prime status of intu’s centres for digital — Ensuring our retailers can operate ‘business as usual’ — Careful tenant mix management to maintain ERV and drive — Phased approach to business development beyond consumers, shoppers now able to keep in touch on the move throughout our improvement programmes, for example rent reviews UK with highly credible investment partner and local through free Wi-Fi at nine centres, with intu Trafford Centre working overnight to create the new look intu Eldon Square, operational expertise the UK’s most digitally connected centre whilst maintaining the highest safety standards See case study on page 46 See case study on page 31

Ongoing initiatives Ongoing initiatives Ongoing initiatives Ongoing initiatives — 1.5 million sq. ft. of new catering and leisure space planned — Launching a programme to deliver ISO accreditation in — Plans to transform the centre of Watford with a new catering — Increasing financial flexibility for major organic development across the country in the next few years, well over half of 2014/15 across four categories and leisure destination received planning consent in January pipeline through capital recycling and efficient use of a range which has planning consent — Making focused investments to reduce energy costs and 2014, with progress to be made towards obtaining pre-lets of debt instruments See case study on page 12 and vacant possession for a 2015 start to construction waste, with carbon emission and water use reductions of See Chief Executive’s review on pages 32 and 33 — Following trials, our innovative customer lounges will be 30 per cent and 10 per cent targeted from 2011 to 2014 See CR report on page 61 rolled out in 2014, bringing together the digital and physical — intu’s ‘Retail Academy’ will work with community partners to shopping experiences help to skill young people living in the communities in which See Chief Executive’s review on page 22 we operate

See CR report on page 59

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 17 Strategic report Our strategic objectives relate Business model and strategy directly to the stages of our business model, which can be seen on page 14.

3 4 Strategic report To provide compelling To be the landlord that retailers To create long-term and sustainable To generate superior shareholder destinations for shoppers want to do business with growth in net rental income returns through dividend growth and capital appreciation How we are delivering on our strategy How we are delivering on our strategy How we are delivering on our strategy How we are delivering on our strategy — Finding and showcasing the best mix of retailers — High footfall locations across the UK — Astute investment in improvements — Tight cost control and lean operation — The most accessible locations for shopping and socialising — Specialist and collaborative approach to retail change — Specialist knowledge of emerging occupier and — Efficient use of debt markets — Excellent service, security and facilities — High quality yet cost-effective facilities management management trends — Capital recycling including creative involvement of partners — Marketing events that create theatre and experience — Consistently deliver creative developments — Non-lease income from shopping centres — Innovative and effective marketing — Long-term partnerships with local authorities and communities Governance

Progress 2013 Progress 2013 Progress 2013 Progress 2013 — Brought 12 new brands to our shoppers in 2013 including — Launched and rolled out our innovative new brand, providing — Active management projects such as intu Lakeside’s new — Achieved 40 basis points reduction in average cost The White Company, Urban Outfitters and Adidas and recognition of our scale and powerful nationwide network of food court creating incremental rental income at lower risk, of debt at the same time as a two year increase in the introduced more shoppers to compelling brands such as pre-eminent centres to existing and potential retailers by providing the right space for expanding operators in the weighted average maturity and significant broadening Next and Topshop by further flagship openings across our See Chief Executive’s review on page 27 right environment for our shoppers of the sources of funding through timely refinancing of nationwide network See Chief Executive’s review on page 30 upcoming maturities — Consistently demonstrated direct benefit to retailers of See Financial review on page 53 — Developed a platform to deliver our signature customer our creative footfall-driving marketing events such as — Launched intu Experiences, building on our nationwide experience with our newly in-sourced facilities management 100,000 attending student nights generating over £2 million network and relationships with major commercial partners — Ranked highly among major UK property companies in and all employees taking part in a programme of workshops incremental sales to introduce high quality promotional activities to enhance the first publication of EPRA-defined cost ratios See Chief Executive’s review on pages 25 and 27 the visitor experience and produce non-rental income — Acquisition of strategically important Midsummer Place

in Milton Keynes, with potential to create significant Accounts long-term value as well as immediately bringing intu to a new catchment

across the country in the next few years, well over half of 2014/15 across four categories and leisure destination received planning consent in January pipeline through capital recycling and efficient use of a range Other information which has planning consent — Making focused investments to reduce energy costs and 2014, with progress to be made towards obtaining pre-lets of debt instruments See case study on page 12 and vacant possession for a 2015 start to construction waste, with carbon emission and water use reductions of See Chief Executive’s review on pages 32 and 33 — Following trials, our innovative customer lounges will be 30 per cent and 10 per cent targeted from 2011 to 2014 See CR report on page 61 rolled out in 2014, bringing together the digital and physical — intu’s ‘Retail Academy’ will work with community partners to shopping experiences help to skill young people living in the communities in which See Chief Executive’s review on page 22 we operate

See CR report on page 59

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 18 Strategic report Business model and strategy Chief Executive’s review

Introduction Overview of 2013 activity Intu has moved forward markedly in the year with a high level of activity and dynamism. The cultural change we instigated as part of our rebranding has surpassed our expectations, we have reached significant milestones within our project pipeline and we have much improved our financial position with new debt and equity. We end the year better positioned to create long-term value through the opportunities afforded by the changing retail landscape. Significantly, we have: — secured 30 planning consents, including for major extensions at intu Watford and intu Lakeside. Altogether 1.8 million sq. ft. (£0.7 billion) of the 2.6 million sq. ft. pipeline is now consented, over half of which is catering and leisure — reached agreement with Nottingham City Council setting the way forward for David Fischel intu Victoria Centre and intu Broadmarsh Chief Executive — made strategic acquisitions in the UK, including filling a gap in our national 28 February 2014 coverage at Milton Keynes — made a strategic acquisition with a strong partner in Spain, a market with considerable opportunity — refinanced most of the debt falling due in the next three years, reducing the cost of debt and achieving a duration appropriate for our long-term income stream

Improved debt maturity proﬁle (£m)

1,200

1,000

800

600

400

200

2013 2014 2015 2016 2017 2018 2019– 2024– 2029+ 2023 2028 Repayment proﬁle as at 31 December 2012 Repayment proﬁle as at 31 December 2013

— trained our operational and head office staff in World Class Service, initiating a process of cultural change to embed our values in every aspect of operations — launched free Wi-Fi at more than half of our centres with the remainder imminent, and derived operational and infrastructural efficiencies from the fibre- optic platform — rolled out our new brand, demonstrating physical change and new experiences to each visitor and the scale of our operations to retailers

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 19 Strategic report Business model and strategy

Asset valuation A number of the positive actions which we have taken in the year have had the impact Strategic report

14 15 1 13 of reducing some of the 2013 headline financial measures. Total property return was a 12 11 healthy 7.3 per cent supported by robust valuations particularly for our super-regional 10 centres. Net asset value per share reduced by three per cent largely as a result of 9 costs associated with reorganising our debt structure and the equity raising for the 8 £7.6bn 2 acquisition of Midsummer Place in which many of our major shareholders participated. 7 Total financial return was one per cent. 6 5 3 Good operational progress in the form of lettings was disappointingly masked in terms 4 of earnings by the cost of tenants who entered administration in late 2012 and in early ● Super-regional centres (65%) 2013. We continue to take a robust line to ensure that we achieve the right rental level 1 intu Traord Centre (£1,900 million) for our prime product and we are prepared to withstand some short-term reduction in 2 intu Lakeside (£1,125 million) earnings as we continue to improve our centres. 3 intu Metrocentre (£885 million) 4 intu Braehead (£602 million) While we would of course prefer to see unbroken positive trends, we remain confident Governance 5 Cribbs Causeway, Bristol of our strategy for the medium- and long-term performance of our assets and that (£242 million) the underlying business remains on course. ● Town and city centres (35%) 6 Manchester Arndale Outlook and priorities for 2014 (£399 million) We are encouraged that the UK economy has continued to recover during 2013. 7 St David’s, Cardi (£272 million) While household purchasing power remains stretched, there are signs of returning 8 intu Eldon Square (£250 million) consumer confidence and increasing appetite for lending. Well configured space in 9 intu Watford (£323 million) the best shopping centres such as Intu’s will become increasingly important as retail 10 intu Victoria Centre (£306 million) businesses adapt to the challenge of changing shopping habits. 11 Midsummer Place (£251 million) Looking forward to 2014, the relative stability of the second half of 2013 has enabled 12 intu Chapelﬁeld (£246 million) us to prepare for upcoming developments by holding space vacant or on flexible 13 intu Uxbridge (£214 million) 14 intu Potteries (£163 million) terms to enable a timely start to a number of our projects. Altogether 2.4 per cent of 15 intu Bromley (£159 million)

ERV is now held for development, of which around a third is let on short-term leases Accounts for flexibility. Additionally the benefit of 2013’s new lettings will be more than offset by the short-term impact of lease expiry concentrations and the residual impact of 2013 tenant failures. We expect the combination of these factors to create a further year of reducing like-for-like net rental income. However, we are confident that our development projects, tenant mix repositioning and effective asset management approach will significantly enhance the long-term total return of the business. We will continue to focus in 2014 on four main goals which, we believe, will result in strong total returns over the medium term: — optimising the performance of our existing assets, through active asset management — driving forward our £1.2 billion investment programme and, where appropriate

opportunities arise, considering strategic acquisitions Other information — continuing to improve our financial flexibility through debt and capital recycling from existing assets including disposals and possible introduction of partners — reinforcing our brand and digital presence including property management innovation to drive demand for our assets and create broader commercial value

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Market review Investment market The value of UK shopping centre investment transactions in 2013 was well above the previous few years with strong demand pushing yields down. Investor appetite has spread well beyond London with good volumes in several regions. As well as international investors continuing to target the most prime assets, the improvement in macro indicators (see below) has stimulated increased interest in strong secondary assets. Demand from cash–funded investors has been supplemented by a significant improvement during 2013 in the range and depth of debt funding sources to the sector. These have extended to financing assets outside the most prime and should continue to underpin values. Shopping centre development across the UK remains at a fraction of the level of the mid 2000’s, providing limited new supply. Completions in 2013 and the pipeline for 2014 and beyond are focused on extensions and reconfigurations of existing centres.

UK retail construction pipeline – PMA estimate (million sq. ft.)

9 8 7 6 5 4 3 2 1

1986 1990 1994 1998 2002 2006 2010 2014 2018

Source: PMA Complete Under construction Planned/proposed

Occupier market The UK economy showed signs of improvement in 2013, with four quarters of GDP growth and a sharp rebound in consumer confidence towards the end of the year. This has yet to be reflected in any significant increase in UK average household disposable income with the Asda benchmark index showing a rise of 1.8 per cent over the year. Whilst inflation has declined and employment has risen, year-on-year wage growth has fallen to below one per cent. Despite the continued constraints on household finances, consumer spending has been increasing with higher like-for-like non-food retail sales reported by the BRC throughout 2013, aggregating to around two per cent for the year.

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Retailer administrations continued at an elevated level in the early part of 2013 Strategic report according to the Centre for Retail Research but reduced in the middle of the year to end slightly lower overall than the high levels of 2012. This trend was reflected in Intu’s portfolio with no significant tenant failures in the second half of 2013 after four per cent of the rent roll entered administration in the first half. The chart below shows a marginal pick up in vacancy across retail property categories in 2013, with notably lower levels in larger centres such as Intu’s.

Vacancy rate, UK retail property by class (% of units)

15 Governance

2005 2006 2007 2008 2009 2010 2011 2012 2013

Big shopping centres Source: PMA Smaller prime shopping centres Town centres Secondary shopping centres

Changing UK retail Our research shows that, with an increasing number of ways to buy products, customers come to shopping centres for much more than just purchasing. As the Accounts boundaries between shopping, entertainment and dining become blurred, our visitors want a place to socialise, to be entertained and to discover something new. The top shopping centres, such as Intu’s, are better able to offer this range and so it is no surprise that they are attracting an increasing share of national retail footfall and achieving a lower level of vacancy than small centres. With 12 per cent of retail sales conducted online in the last quarter 2013 according to estimates, digital technology is an inseparable part of everyday life. Shopping now is browsing, trying, researching, asking opinions through social media, sharing ideas and transacting on and offline, using digital tools to make life easier. In that context, many successful retailers have developed effective on and offline capabilities and are continuing to review their store networks to best suit multi-

channel strategies. Physical retailing space in the key destination centres is a core Other information part of many business models, with continued space reductions in less core locations. For example Next, which has successfully converted its Directory business to a strong online offer, has made flagship investments at four Intu centres in 2013 and now occupies 650,000 sq. ft. across the portfolio, a third more than in 2008.

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Focusing on customer experience, with technology as an enabler With our rebranding in 2013, we have oriented every aspect of our asset management, operational delivery and property development around the customer experience in our centres. Examples of initiatives implemented during the year and in particular the increasing importance of providing catering and leisure options are discussed in Asset management below. Our digital strategy is to help customers to get more from our shopping centres, when they are physically there and when they are not. Digital connectivity is not a separate process, but an integral part of the physical experience, increasing convenience and widening our reach. Our digital initiatives are focused on using technology for example to help with practicalities and with sharing ideas. We chose to invest in a high quality fibre-optic backbone and Wi-Fi network infrastructure, owned rather than out-sourced, seeing it as the heart of our digital strategy. This means we manage the entire customer journey and the data which results from it. With an encouraging 60 per cent of our Wi-Fi registrants ‘opting in’ to receive marketing information, the potential to make targeted offers is significant, with scope for development of a powerful single customer view across multiple interactions with Intu. Our ownership of the platform enables us to sell services to our commercial partners including both use of the infrastructure and marketing opportunities. We are also benefiting from operating synergies and cost savings as elements of building management, lighting and security systems migrate onto the platform. Other initiatives include a transactional website launched during 2013 offering high quality, editorial content which enables us to engage with customers both away from our shopping centres and within them. Its magazine-style content inspires customers and encourages sharing through social media. This offers our retailers around the clock interaction with our customers and vice versa, with the added convenience of click and collect of multiple retailer purchases at one point in our centres. We have also trialled a customer lounge and intend to roll out a concierge-style concept to other centres during 2014.

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Investment property Strategic report valuation surplus Delivering on our strategy +1.8% 2013 performance: 2012: +0.6% Valuation The aggregate like-for-like market value of our investment property increased by Total property return 1.8 per cent in the year, twice that of the IPD monthly index (up 0.8 per cent), with consistent progress in each of the two halves. This contributed to a robust total 7.3% property return of 7.3 per cent (see Operating metrics below). 2012: 6.0% Comparison of Intu yield and 10 year gilt yield (%)

10.0

8.0 6.74% Governance 5.79% 6.0 4.51%

4.0 3.02%

2.0

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Intu weighted average nominal equivalent yield IPD Monthly Index Retail BBB GBP 10 Year Corporate Bond Index yield Gilts 10 years

The weighted average nominal equivalent yield at 31 December 2013 was 5.79 per Accounts cent, a reduction of 15 basis points in the year, reflecting market conditions and our ongoing asset management initiatives maintaining the prime and resilient nature of our assets. Based on the gross portfolio value, the net initial yield ‘topped up’ for the expiry of rent free periods was 4.97 per cent. The like-for-like change in ERV also continued to out-perform the benchmark with a further marginal increase in the second half of 2013. Full Second First year half half 2013 2013 2013 Group revaluation surplus – like-for-like +1.8% +0.8% +1.0% IPD* capital growth +0.8% +2.0% –1.1%

Group weighted average nominal equivalent yield 5.79% 5.79% 5.85% Other information Like-for-like change in Group nominal equivalent yield –15bp –6bp –9bp IPD* equivalent yield shift –17bp –18bp +1bp

Group ‘topped up’ initial yield (EPRA) 4.97% 4.97% 5.10%

Group change in like-for-like ERV +0.3% +0.1% +0.2% IPD* change in rental value index –1.3% –0.5% –0.8%

* IPD monthly index, retail.

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In general the larger super-regional and major city centres continue to out-perform with stronger valuation surpluses, with slight reductions in some centres where improvement expenditure has not yet been fully reflected in prospective ERVs. Notable changes in individual valuations include: — intu Trafford Centre (+£94 million (H2 £47 million), +5.3 per cent) has benefited from an increase in headline rent and the satisfactory conclusion of 2013 lease expiries and rent reviews as well as market yield improvement for super- regional centres — intu Lakeside (+£26 million (H2 £5 million), +2.4 per cent) has benefited from an earnings-enhancing food court redevelopment as well as market improvement in yield for super-regional centres — intu Eldon Square (–£7 million (H2 –£3 million), –2.9 per cent) has been affected by refurbishment expenditure, the potential effect of which has not yet been reflected in the valuation ERV — St David’s, Cardiff (+£16 million (H2 £7 million), +6.4 per cent) has benefited from continued growth of income in the 2009 extension as well as market yield improvement for top centres in major cities — intu Bromley (–£7 million (H2 –£2 million), –4.1 per cent) has not yet benefited from the valuation impact of committed refurbishment expenditure — Manchester Arndale (+£15 million (H2 £7 million), +3.7 per cent) continues to benefit from national evidence of stronger yields for top centres in major cities — intu Potteries (–£6 million (H2 –£2 million), –3.6 per cent) has been affected by some pockets of ERV reduction as we conclude relettings following the 2013 lease expiries — Cribbs Causeway (+£7 million (H2 £6 million), +2.8 per cent) has benefited from the satisfactory conclusion of 2013 lease expiries, increasing security of income and improving tenant mix, as well as market yield improvement for super- regional centres Operating metrics 2013 2012 Occupancy 95% 96% – of which, occupied by tenants trading in administration 1% 3% Leasing activity – number, new rent 201, £42m 169, £44m – new rent relative to previous passing rent 4% above 7% above Like-for-like change in net rental income –1.9% –2.7%

Total property return 7.3% 6.0% Footfall –2% –1% Retailer sales (like-for-like centres) +0%* +1% Rent to estimated sales (exc. anchors and major space users) 13.5% 13.9%

* excluding impact of trading interruptions during major tenant relocations at intu Braehead and Cribbs Causeway.

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— Occupancy remains firm at the 95 per cent level at which we have operated for Strategic report most of the year and compares favourably to PMA’s vacancy measure for ‘big shopping centres’ of ten per cent. In our view the rent foregone and direct cost of an extra one per cent vacancy in the year is a worthwhile investment in the ongoing quality, tenant mix and, ultimately, value of our prime assets. — We agreed 201 new long-term leases in the year, amounting to £42 million new annual rent, at an average of four per cent above previous passing rent (like-for- like units) and, excluding strategic deals reported in the third quarter, in line with valuers’ assumptions. Significant signings in the year include — new lettings addressing lease expiry concentrations at intu Trafford Centre, Cribbs Causeway and intu Potteries, also some important repositioning ahead of intu Braehead’s 2014 expiry concentration (see below)

— 12 retailers including Urban Outfitters, Adidas, Sealife and The White Company Governance took a unit in an Intu centre for the first time, with a substantial number of others opening further stores in additional centres — 139 new shops opened or refitted in our centres in 2013, around five per cent of our 2,600 units. Tenants have invested around £70 million in these stores, a significant demonstration of their commitment to our centres. As well as major flagship store investments across the portfolio, Next chose intu Watford to launch their new concept Lipsy shopfit in December — Like-for-like net rental income was 1.9 per cent lower in 2013 than 2012, with a narrower 0.9 per cent decrease in the second half. Tenants failing in late 2012 and early 2013 accounted for around £10 million of rent foregone and direct costs. Income interruption around concentrations of lease expiries also temporarily affected earnings from two centres. Accounts

Change in like-for-like net rental income (%)

10.0 8.5 8.5 8.0 6.0 5.3 6.0 4.6 3.5 3.6 4.0 2.3 2.1 2.0

0.0 –2.0 –1.9 –2.7 –3.4 –4.0 –4.3 Other information 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

— At the property level, the total return from Intu’s portfolio has been robust at 7.3 per cent (2012 – 6.0 per cent) compared to the IPD quarterly index, retail, of 8.1 per cent (2012 – 1.5 per cent). The combination of capital value preservation and broadly stable income demonstrates the strength of Intu’s assets over the medium term. — The number of visitors to our centres has reduced marginally year-on-year in 2013, the two per cent decline representing a significant out-performance of Experian’s measure of UK national retail footfall which declined four per cent.

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— Estimated retailer sales in our centres were broadly flat in the year excluding the impact of trading interruptions during major tenant relocations at intu Braehead and Cribbs Causeway. The ratio of rents to estimated sales for standard units marginally reduced in the year to 13.5 per cent, continuing the trend of the previous few years. — The lease expiry cycle, while bringing the risk of some short-term earnings impact, is a good opportunity to effect significant repositioning. In the last two years 21 per cent of rent has been subject to expiry of which all but four per cent has been dealt with. In 2013, for example, six new retailers were introduced to intu Potteries and more than one in five stores were refitted. This gave a significant boost to the overall feel of the centre although the rental tone has settled at the lower level which was anticipated in the December 2012 valuation.

At intu Braehead we created major new stores for Next and JD Sports, providing new anchors for areas of the centre and establishing improvement and change ahead of a concentration of expiries in 2014. The chart below illustrates that the pattern of lease expiries across the portfolio is broadly even, with a weighted average unexpired term of 7.5 years (31 December 2012 – 7.8 years).

Lease expiry proﬁle† (%)

40 38

20 18

10 8 9 10 6 7

2014* 2015 2016 2017 2018 2019– 2024+ 2023 † Expressed as a percentage of rent roll. * Excludes four per cent in respect of leases which have expired of which around three-quarters are in negotiation or solicitors hands.

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Asset management Strategic report We aim to create the best places to eat, drink, shop and socialise. We manage our centres to offer a mix of attractions to encourage our visitors to come from further, for longer, more often. This reinforces their position as must have locations for retailers. Experience As well as offering an evolving mix of the retail brands our customers want to see, with best flagship shopfits, and the catering and leisure options to encourage them to stay into the evening, we are focused on improving their overall experience in our centres including events, quality of service and environment: — we have changed the look and feel of all our directly-managed centres with the roll out of the new brand’s refreshing style in the form of physical signage and new uniforms. More comprehensive refurbishments are also underway or imminent at a

number of centres (see Looking to the future below) Governance — with the in-sourcing of facilities management and World Class Service training, we have aligned our teams with our nationwide brand aspirations and values, allowing us to take more control of the customer experience. Customer rating measured by our first Institute of Customer Services survey exceeded the retail sector benchmark — our fibre-optic infrastructure now provides high quality Wi-Fi in nine centres with the final four to follow in early 2014 (see Market review above) — as the only nationwide branded network of prime UK shopping centres, we can now entertain customers with quality events which offer a unique proposition to commercial partners. During the year we hosted significant footfall-driving events including a weekend-long nationwide performing arts expo, student nights attracting over 100,000 and generating over £2 million incremental sales, Accounts over 125,000 watching our Hello magazine-branded fashion shows, around 40,000 minutes of Cosmo-sponsored style advice plus the nationwide tour of a flagship arts programme, Elephant Parade — with the single name for the Company and our centres, media coverage of events and news has roughly doubled Catering and leisure Across the country, we have well over 400 catering and leisure outlets, which contribute 11 per cent of our rent roll. Our super-regional centres, which have always been day out destinations, have a notably higher proportion than most of those in city centres. Our research shows that those who eat or drink at one of our centres stay much longer and spend significantly more than just the extra dining expense. In 2013, Other information around a third of visitors chose to dine and the amount on average they spent on catering rose by nine per cent.

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Our strategy for providing catering is not just about the volume of outlets – to encourage dwell and dine, we are focused on increasing the diversity of the offer. We offer a wider than ever range of operators with specific spend and dwell niches, regional as well as national and international operators. We have analysed gaps in each of our centres and are working on providing new clusters and zones to fill them. Our pipeline of investments (see below) will almost double the amount of dining and recreation space from 1.9 million sq. ft. to 3.4 million sq. ft., with the vast majority having obtained planning consent. At intu Lakeside, for example, our catering strategy is to close the current gap between the traditional fast food offer of the food court and the casual dining Boardwalk with its roughly three times longer dwell time and spend. We are introducing a range of new operators such as Wasabi, Rhythm Kitchen, Gino D’Acampo and Five Guys in a contemporary environment. Also the fourth champagne bar for our portfolio opened successfully at intu Lakeside just before Christmas. UK acquisitions We believe that our scale and focus is key to our successful development and operation of UK prime regional shopping centres. Such assets are rarely traded, so where opportunities arise to acquire interests, particularly where our operator skills can be applied through our specialist asset and property management teams, we remain keen to consider the value creation opportunities. We announced last month that we were in discussions with Westfield regarding the potential acquisition of its Derby shopping centre and its equity interest in Merry Hill, Dudley. Those discussions continue to progress satisfactorily. If the acquisition were to proceed, it is likely that it would be funded through a combination of new debt and equity raised through a rights issue. However, there can be no certainty that any transaction will be undertaken. In March 2013 we filled a gap in our national coverage, acquiring Midsummer Place, the aspirational fashion quarter of the UK’s number 16 retail destination by catchment spend, central Milton Keynes. Adjacent to centre:MK with the two centres treated as a single destination by shoppers, Midsummer Place’s major tenants include Debenhams, H&M, Apple, Superdry, Zara and Topshop. Since acquisition new retailers and catering operators including Hugo Boss, Timberland and Ed’s Diner have opened and Topshop/ Topman has invested in a new flagship shopfit. In April 2013 we acquired Charter Place, Watford, adjacent to intu Watford, and have subsequently received planning consent for its replacement with a leisure- and catering-focused extension to the main centre (see Looking to the future below).

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International Strategic report In October 2013 we acquired with Canada Pension Plan Investment Board (‘CPPIB’) Parque Principado Shopping Centre, Oviedo, a 75,000m2 (approximately 800,000 sq. ft.) prime regional retail destination in Asturias, Northern Spain. One of Spain’s top-ranked retail destinations with nine million visitors in 2013, the well-located and 98 per cent occupied centre is anchored by Primark, Zara, H&M, Cortefiel, C&A, Mango and Eroski hypermarket, with catering and leisure representing around 20 per cent of space. The net initial yield for the property at the implied purchase price of €162 million was 7.2 per cent. The acquisition, on attractive and earnings accretive terms, firmly establishes Intu’s presence on the ground in a country where we see considerable growth opportunities in the regional shopping centre industry and the potential to generate superior total returns over the long term. The market is quite fragmented in terms of ownership and considerable scope exists for improvement, along the lines of regionally pre-eminent Governance destinations in the UK and elsewhere, in the shopping centre provision for many major catchments in Spain. Spain is one of the few major European countries without a committed pipeline of prime shopping centre developments and limited investor competition currently provides a contra-cyclical opportunity to acquire large, high quality centres at historically low pricing. Intu also has a site under option near Malaga in Andalucia, for 80,000m2 of retail space with additional leisure and, as previously announced, has entered into arrangements with Eurofund, a local partner with a track record of successful retail development, for pre-development activity on this site and at two major sites under option, in Valencia and Vigo. We are aiming to attract additional third party capital to assist with funding Intu’s Spanish activities without diverting significant financial resources from Intu’s

organic development pipeline in the UK. Accounts In this context, we are actively investigating the creation of a special purpose investment vehicle for our Spanish activities, such as a Spanish REIT, following a number of recent regulatory improvements to this product. The Group also has the following other investments outside the UK: — 11.4 million redeemable joint venture units in Equity One, a US retail REIT, providing an effective interest of nine per cent. These were received in January 2011 as a result of the restructuring of our previous direct investment in Californian property and are valued at £154 million based on the 31 December 2013 share price of $22.44. Dividends in the year amounted to $0.88 per unit. Equity One owns, develops and manages US neighbourhood shopping centres anchored by supermarket chains and has continued to be active in upgrading

its property portfolio with an ongoing disposal programme of non-core assets. Other information Operational metrics continued to improve in 2013 with leasing spreads on renewals and new leases showing good uplifts relative to previous rental levels — 32 per cent of listed Indian shopping centre developer, Prozone, and ten per cent of its former parent company, the Indian listed retailer Provogue, valued at a combined £37 million at 31 December 2013. Prozone has continued to progress the construction of its mixed-use projects at Coimbatore, Nagpur and Indore. Discussions are progressing with anchor tenants at the proposed Coimbatore shopping centre and an agreement has been signed with the multiplex cinema operator. The operational mall at Aurangabad has showed encouraging increases in tenant sales and footfall in 2013

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Looking to the future We have made significant progress in the year with our pipeline of organic development opportunities: — Two thirds of our 2.6 million sq. ft. of additional space has now received planning consent, including major extension projects in Watford, Nottingham and at intu Lakeside — We have agreed with local authority partners in Watford and Nottingham a firm basis for major development We have improved our financial flexibility to progress these projects by restructuring much of the debt which was to mature in the next few years. Since the end of 2013 we have increased the level of borrowing secured on intu Trafford Centre. Further, we plan to recycle capital from existing assets to reinvest into these organic growth opportunities. This may include asset disposals and/or introducing partners into existing assets. For example intu Uxbridge is currently being marketed. In the case of major extensions and creation of significant new or reconfigured space, we aim to achieve pre-letting of around two thirds of projects by space and the majority of the rent before proceeding with construction. A particular area of focus is investment in improving the range, quality and setting of the dining and leisure options across our centres. These will reinforce the long-term attractiveness of the assets and, with operators keen to expand into our high footfall destinations, are intended to contribute to a superior financial return for shareholders. Our plans include 1.5 million sq. ft. of extra catering and leisure space, an 80 per cent increase on the current level. 900,000 sq. ft. has already received planning consent and we have applied for a further 360,000 sq. ft. Examples include the new food court at intu Lakeside, a new dining quarter at intu Eldon Square, a major new destination in the heart of Watford, a street food concept at Midsummer Place and a nine screen cinema at intu Potteries.

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The table below sets out a summary of the project pipeline. In the case of Strategic report expansionary projects which create additional space for which direct incremental rent can be identified, we would expect most projects to generate a stabilised initial yield on cost in the range of six to ten per cent and at least seven per cent for major projects. Where no significant additional space is created, we assess project return in the context of an internal rate of return based on the overall impact of the expenditure on centre performance through enhancing the ambience, the tenant mix and the rental tone. Indicative Expected Intu Size1 construction investment 000 sq. ft. timing2 £m Refreshing intu Committed Eldon Square intu Lakeside food court refurbishment3 – 2013–14 7 intu Victoria Centre refurbishment4 – 2014–15 40 Governance With intu Eldon Square’s £22 million intu Potteries leisure extension 58 2014–15 19 refurbishment we are refreshing Other committed5 41 2014–15 20 65,000 sq. ft. of malls, replacing 86 13,000 sq. ft. of roof and lights and constructing a new feature entrance Active management pipeline onto Northumberland Street. intu Trafford Centre – Barton Square courtyard enclosure and second floor retail 112 2014–15 40 We are carrying out the majority intu Bromley Queen’s Gardens restaurants 14 2014–15 4 of the work overnight to minimise intu Eldon Square ‘Sidgate’ redevelopment disruption to our shoppers and and restaurants – 2014–15 12 retailers. Each evening the centre is transformed into a hive of intu Metrocentre ‘Qube II’ restaurants – 2014–15 11 6 construction activity with up to 120 intu Lakeside hotel 8 2014–15 7 operatives, scissor lifts, cherry pickers Other active management5 89 2014–18 141 Accounts and cranes operating within the malls. 215 27,000 sq. ft. of structural crash decks, Major projects a temporary roof and 16,000 sq. ft. intu Watford – Charter Place 380 2014–17 100 of shop front hoardings have been intu Broadmarsh redevelopment 51 2015–16 78 put in place for the works. Full life intu Lakeside leisure extension 225 2015–17 80 safety system checks are conducted intu Lakeside Northern extension 438 2016–18 180 each morning to ensure that the intu Braehead extension7 475 2016–18 200 malls can be safely re-opened for the Cribbs Causeway extension8 200 2018–20 30 tens of thousands of people who visit intu Victoria Centre extension 505 2018–20 240 every day. 2,274 908 2,596 1,209 Other information Find out more: 1 Represents net additional floor space of retail, catering and leisure. intugroup.co.uk/ar2013 2 Timing subject to change due to a number of internal and external factors. 3 Total project cost £9 million of which £2 million has already been spent. 4 Total project cost £42 million of which £2 million has already been spent. 5 Smaller committed and pipeline projects do not necessarily involve the creation of additional floor space. 6 Size refers to catering element only. 7 Size excludes arena and hotel. 8 Intu share 33 per cent of total project cost of £90 million.

Intu Properties plc – Annual Report 2013

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Principal projects include: — intu Watford: our plans for a 380,000 sq. ft. extension to create a new shopping, dining and entertainment hub for Watford received planning consent in January 2014. The anchor cinema is under offer and we are encouraged by the level of enquiries for the large format retail and restaurant units. Subject to satisfactory pre-letting, we anticipate that enabling works could be under way by Winter 2014/15 with a target for completion in 2017 — Nottingham: we recently signed a major agreement with Nottingham City Council setting out a way forward for the complementary development of intu Broadmarsh and intu Victoria Centre. Our development of a restaurant quarter and significant refurbishment of intu Victoria Centre is underway. This project has already reignited interest from retailers currently not represented in the city. We will this year initiate public consultation on our leisure- and convenience-led refurbishment and redevelopment of intu Broadmarsh. Subject to legal and commercial preconditions, work could commence in 2015. Further, proposals for a possible extension of intu Victoria Centre have now received planning approval — intu Lakeside: in addition to the food court refurbishment referred to above, we now have planning consent for two major projects which together would add over 600,000 sq. ft. of new retail, catering, leisure and hotel attractions, significantly increasing intu Lakeside’s draw and reach and providing more reasons to stay longer. Given the current high demand from restaurant and entertainment operators for the leisure scheme, we hope to secure sufficient pre-lets to start construction of a first phase in 2015 — intu Trafford Centre: having received planning consent to increase overall space and broaden the range of uses at Barton Square, we are in advanced negotiations with a major fashion retailer currently not represented at intu Trafford Centre for a flagship store on a new second floor. The enabling development, which we expect to start this year to complete in 2015, will include an impressive glass roof to enclose the central courtyard — intu Metrocentre: as well as proceeding with our repositioning of Platinum Mall to create a more aspirational ambience, we have received planning consent for a 45,000 sq. ft. extension to the ‘Qube’ dining area adjacent to the 12 screen Imax Odeon cinema. This will add a further 11 catering outlets and will introduce several new operators to the region. We anticipate securing sufficient pre-letting to start construction this year, to open in 2015 — intu Potteries: with a nine screen Cineworld cinema as a powerful anchor, we now have all five restaurant units exchanged or under offer and anticipate starting construction on the leisure extension shortly, for completion in 2015

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 33 Strategic report Business model and strategy

— intu Eldon Square: our major refurbishment includes refreshing 65,000 sq. ft. Strategic report of malls, replacing 13,000 sq. ft. of roof lights and constructing a new feature entrance from Northumberland Street and is due to complete later this year. We are carrying out the majority of the work overnight to minimise disruption to our shoppers and retailers, with up to 120 operatives on site each evening. Our proposed new restaurant cluster in the ‘Sidgate’ mall area has received strong interest from operators new to the region as well as those already trading locally and, subject to pre-letting, we anticipate starting construction later this year — intu Braehead: we are awaiting the outcome of the public enquiry by the Scottish Government into the Local Development Plan for Renfrew which should, amongst other things, confirm Braehead’s role as a town centre Priorities for 2014

We will continue to focus in 2014 on four main goals which, we believe, will result in Governance strong total returns over the medium term: — Optimising the performance of our existing assets, through active asset management – with customer experience as the focus for our business plan for each centre, we combine development, tenant mix and operational actions to address the needs and potential of each centre — Driving forward our £1.2 billion investment programme – as discussed above, with a majority of planning consents now secured, we will determine the timing of expenditure as we secure pre-lettings with the appropriate mix of retailers and operators to create new attractions for each of the destinations. In addition, where opportunities arise to acquire interests in appropriate assets, we will continue to consider strategic acquisitions

— Continuing to improve our financial flexibility – we will proceed with debt issues and Accounts capital recycling from existing assets including disposals and possible introduction of partners in order to provide the funding at the appropriate time to undertake our investment programme. In February 2014 we issued further notes under the intu Trafford Centre CMBS transaction established in 2000 — Reinforcing our brand and digital presence – following a successful roll out in 2013 we will develop our brand with its unique integration of digital and physical capabilities to drive demand for our assets and create broader commercial value. As well as completing our Wi-Fi installation programme at the final four centres, we are preparing trials of a number of property management and service innovations, analytical tools and upgraded online experience Other information

David Fischel Chief Executive 28 February 2014

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 34 Strategic report Business model and strategy Top properties

Super-regional centres

Size Annual Headline Number ABC1 Market value Occupancy (sq. ft. 000) property income % ownership rent ITZA of stores customers Key stores 4 1 Selfridges, £1,900m 97% 1,973 £86.0m 100% £405 234 66% John Lewis, Next, intu Trafford Centre Superdry, Hollister, Apple, Kurt Geiger, 8 Ted Baker, Banana Republic, Nespresso, 3 Forever 21, Victoria’s Secret, Odeon Cinema, Legoland 1 Discovery Centre 6 2 House of Fraser, £1,125m 95% 1,434 £58.6m 100% £345 253 56% Debenhams, Marks & intu Lakeside Spencer, Hugo Boss, 10 Apple, Topshop, Zara, Primark, Forever 21 3 House of Fraser, £885m 94% 2,092 £48.2m 90% £320 357 53% Marks & Spencer, 7 intu Metrocentre 9 Debenhams, Apple, 2 H&M, Topshop, Zara, 5 Primark 4 Marks & Spencer, £602m 90% 1,135 £29.1m 100% £250 Scottish 124 51% Primark, Apple, Next, intu Braehead English equivalent H&M, Topshop, £335 Hollister, Gap, Sainsbury’s 5 John Lewis, Marks & £242m 92% 1,075 £12.4m 33% £305 153 71% Spencer, Apple, Next, Cribbs Causeway Topshop, Timberland, Jigsaw, Hobbs, Hugo Boss, H&M

Top in-town centres

Size Annual Headline Number ABC1 Market value Occupancy (sq. ft. 000) property income % ownership rent ITZA of stores customers Key stores 6 Harvey Nichols, £399m 97% 1,600 £21.8m 48% £250 249 48% Apple, Burberry, LK Manchester Arndale Bennett, Topshop, Next, UGG, Hugo Boss, Superdry, Zara, Hollister, YO! Sushi, Nando’s 7 John Lewis , £272m 94% 1,391 £16.5m 50% £185 203 66% Debenhams, Marks St. David’s, Cardiff & Spencer, Apple, Hollister, Hugo Boss, H&M, River Island, Hamleys, Armani Exchange, Gap 8 John Lewis, Fenwick, £250m 96% 1,350 £14.6m 60% £250 151 61% Debenhams, intu Eldon Square Waitrose, Apple, Hollister, Topshop, Boots 9 Marks & Spencer, £323m 94% 726 £17.0m 93% £250 140 71% Apple, Zara, Primark, intu Watford Next, Lakeland, Phase Eight, Lego, H&M

10 John Lewis, House of £306m 98% 981 £17.6m 100% £210 120 53% Fraser, Next, Topshop, intu Victoria Centre Monsoon, Boots, Gap, Urban Outfitters

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 35 Strategic report Business model and strategy

Super-regional centres

Size Annual Headline Number ABC1 Market value Occupancy (sq. ft. 000) property income % ownership rent ITZA of stores customers Key stores 1 Selfridges, £1,900m 97% 1,973 £86.0m 100% £405 234 66% John Lewis, Next, intu Trafford Centre Superdry, Hollister, Apple, Kurt Geiger, Ted Baker, Banana Republic, Nespresso, Forever 21, Victoria’s

Secret, Odeon Strategic report Cinema, Legoland Discovery Centre 2 House of Fraser, £1,125m 95% 1,434 £58.6m 100% £345 253 56% Debenhams, Marks & intu Lakeside Spencer, Hugo Boss, Apple, Topshop, Zara, Primark, Forever 21 3 House of Fraser, £885m 94% 2,092 £48.2m 90% £320 357 53% Marks & Spencer, intu Metrocentre Debenhams, Apple, H&M, Topshop, Zara, Primark 4 Marks & Spencer, £602m 90% 1,135 £29.1m 100% £250 Scottish 124 51% Primark, Apple, Next, intu Braehead English equivalent H&M, Topshop, Governance £335 Hollister, Gap, Sainsbury’s 5 John Lewis, Marks & £242m 92% 1,075 £12.4m 33% £305 153 71% Spencer, Apple, Next, Cribbs Causeway Topshop, Timberland, Jigsaw, Hobbs, Hugo Boss, H&M

Top in-town centres

Size Annual Headline Number ABC1 Market value Occupancy (sq. ft. 000) property income % ownership rent ITZA of stores customers Key stores 6 Harvey Nichols, £399m 97% 1,600 £21.8m 48% £250 249 48% Apple, Burberry, LK Manchester Arndale Bennett, Topshop, Accounts Next, UGG, Hugo Boss, Superdry, Zara, Hollister, YO! Sushi, Nando’s 7 John Lewis , £272m 94% 1,391 £16.5m 50% £185 203 66% Debenhams, Marks St. David’s, Cardiff & Spencer, Apple, Hollister, Hugo Boss, H&M, River Island, Hamleys, Armani Exchange, Gap 8 John Lewis, Fenwick, £250m 96% 1,350 £14.6m 60% £250 151 61% Debenhams, intu Eldon Square Waitrose, Apple, Hollister, Topshop, Boots Other information 9 Marks & Spencer, £323m 94% 726 £17.0m 93% £250 140 71% Apple, Zara, Primark, intu Watford Next, Lakeland, Phase Eight, Lego, H&M

10 John Lewis, House of £306m 98% 981 £17.6m 100% £210 120 53% Fraser, Next, Topshop, intu Victoria Centre Monsoon, Boots, Gap, Urban Outfitters

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 36 Strategic report Business model and strategy We measure progress against strategic Key objectives using the following financial performance and non-financial performance measures indicators

1 2 3

To provide To be the landlord To create long-term compelling that retailers want and sustainable destinations to do business with growth in net for shoppers rental income Footfall Occupancy Like-for-like net rental income

+2% –1% –2% 97% 96% 95% 94% +3.6% –2.7% –1.9%

2011 2012 2013 2011 2012 2013

IPD 2011 2012 2013 (retail)

Why is this important? Why is this important? Why is this important? Why is this important? Why is this important? Why is this important? Why is this important? Footfall is an important Intu aims to optimise Measures the organic Combines share price This is a measurement of the Underlying earnings per share Measures the capital return measure of a centre’s the occupancy of its properties growth in income generated movement and dividends to total return movement in the is based on the underlying on the Group’s property popularity with customers. as excess vacant space will from the Group’s properties in produce a direct measure of Group’s balance sheet value income generated in the year assets and compares this with Retailers use this measure adversely impact on a centre’s the year. the movement in shareholder through the change in the which gives an indication the IPD index, a recognised as a key part of their decision trading environment. value in the year. Group’s property valuations of the Group’s ability to industry benchmark. making process on where to and its capital structure. pay dividends. locate their stores.

How is this measured? How is this measured? How is this measured? How is this measured? How is this measured? How is this measured? How is this measured? Footfall numbers across The passing rent of the Removes from the year- Uses the movement in share Uses the movement in Underlying earnings excludes Includes the capital growth Intu’s centres, including those Group’s properties currently on-year movement in net price during the year plus adjusted net asset value per property and derivative on a like-for-like basis from managed by our partners, are occupied expressed as a rental income the impact of dividends paid in the year.† share plus the impact of valuation movements the Group’s properties. captured using a combination percentage of the passing rent acquisitions, developments dividends paid in the year. and exceptional income of person or car counting of occupied and the ERV of and disposals. or charges. * Data source: Bloomberg. cameras located at specific unoccupied properties. † Uses the Intu share price on entrance and exit points within 11 January 2011 as the opening the centre. value for the 2011 shareholder return being the day on which How have we performed? How have we performed? How have we performed? How have we performed? How have we performed? How have we performed? How have we performed? Simon Property Group announced they had no intention to make Although footfall fell slightly in Occupancy is marginally below The reduction in the like-for- Strong share price Total return in the year largely Underlying earnings per share The overall quality of the a firm offer for the Group. This is the year, the Group’s centres the 2012 comparable figure like net rental income was due performance by REIT’s, comprises the dividend fell slightly in the year due Group’s properties was consistent with methodology used continue to out-perform but remains above the IPD to the impact of tenant failures including those with interests paid in the year as despite to the impact of tenant reflected in another year of in previous years. the national benchmark benchmark figure. The small in 2012 and the early part in Central London property, an increase in property administrations more than strong out-performance of the ‡ No peer group comparable data which showed a four per reduction reflects the Group’s of 2013. led to a double-digit increase valuations, the Group’s net offsetting additional rent IPD benchmark. is provided due to the lack of available data on a comparable cent reduction in 2013, as robust asset management in the UK REITs index whereas asset value per share was from new lettings and lower time period. measured by Experian. approach, including holding the Group’s share price impacted by exceptional costs underlying finance costs. units vacant on a short- declined slightly in the year. largely incurred as part of the Earnings in the year covered term basis to attract the significant debt refinancing the total proposed dividend for right tenants. activity in the year. the year. See Corporate responsibility KPIs On page 54 to 63

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 37 Strategic report Our strategic objectives relate Business model and strategy directly to the stages of our business model, which can be seen on page 14.

Current year Historic comparative 4 Benchmark comparative Strategic report To generate superior shareholder returns through dividend growth and capital appreciation

Shareholder return Total ﬁnancial return‡ Income performance Prime property assets

–14% +17% –7% +19% +4% +4% +1% 16.5p 16.1p 15.0p +1.0% +0.6% +1.8% +0.8%

FTSE Governance REIT 2011 2012 2013 Index*

IPD monthly index 2011 2012 2013 2011 2012 2013 2011 2012 2013 (retail)

making process on where to and its capital structure. pay dividends. Accounts locate their stores.

How have we performed? How have we performed? How have we performed? How have we performed? How have we performed? How have we performed? How have we performed?

Although footfall fell slightly in Occupancy is marginally below The reduction in the like-for- Strong share price Total return in the year largely Underlying earnings per share The overall quality of the Other information the year, the Group’s centres the 2012 comparable figure like net rental income was due performance by REIT’s, comprises the dividend fell slightly in the year due Group’s properties was continue to out-perform but remains above the IPD to the impact of tenant failures including those with interests paid in the year as despite to the impact of tenant reflected in another year of the national benchmark benchmark figure. The small in 2012 and the early part in Central London property, an increase in property administrations more than strong out-performance of the which showed a four per reduction reflects the Group’s of 2013. led to a double-digit increase valuations, the Group’s net offsetting additional rent IPD benchmark. cent reduction in 2013, as robust asset management in the UK REITs index whereas asset value per share was from new lettings and lower measured by Experian. approach, including holding the Group’s share price impacted by exceptional costs underlying finance costs. units vacant on a short- declined slightly in the year. largely incurred as part of the Earnings in the year covered term basis to attract the significant debt refinancing the total proposed dividend for right tenants. activity in the year. the year.

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 38 Strategic report Business model and strategy Effective identification and management Key risks and of risk is a major factor in Intu’s ability uncertainties to achieve its strategic objectives

Identify Output Risk list

1 Compelling destinations

Implement 4 2 Analyse Superior Strategic Landlord Output shareholder Objectives retailers want to Output return do business Improved with Prioritised risk profile risk register 3 Long-term sustainable NRI growth

Action Output Risk register action plan

Intu’s risk management framework Intu’s Board has overall responsibility illustrated above, together with our of current controls, are subject to for managing risk across the Group and overall culture of risk management executive challenge. The executive establishing the Group’s appetite to risk to ensure that everyday management team also conducts a strategic based on the balance of potential returns decisions are taken in the context of review of changes in the overall and negative impacts. sound risk management principles as environment which may hinder the well as achieving our strategic objectives. business. Action plans are subject to a Intu recognises that it faces a number of detailed review and challenge process, risks in achieving its strategic objectives. This involves all areas of the business including by the Audit Committee and Effective identification and management in identifying and reviewing risk and Board. Implementation is regularly of these risks is a major factor in Intu’s creating appropriate action plans in monitored and informs the next phase ability to deliver these objectives. Our risk line with the Group’s risk appetite. of identification and analysis. management framework targets the Identify and analyse: Operational early identification of key risks and the The risk management process continues reviews focus on the impact of formation of plans to remove or mitigate to evolve to provide Intu with appropriate changing risks on each function’s them. We apply the methodology of methodology as the operating key objectives and, along with review identify, analyse, action and implement environment changes.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 39 Strategic report Business model and strategy

Change Strategic in level objectives Risk and impact Mitigation of risk 2013 commentary Property market — Focus on prime assets — — Overall increase in valuation of assets, out-performing IPD benchmark 1 Macro environment — Covenant headroom monitored and weakness could stress tested — Reinforcing our prime centres with emerging brands undermine rental and broader offer of leisure and catering, including — Regular monitoring of tenant strength 2 income levels and reconfiguration of space to meet retailer demand and diversity property values, — Digital investment to improve relevance as shopping reducing return on habits change 3 investment and covenant headroom — Improvement in covenant headroom on individual properties during the year See Market review Strategic report For more information

Financing — Regular reporting to Board of current — Major refinancings significantly reduced risk of upcoming and projected funding position maturities – £1.8bn of new facilities in the year 4 Reduced availability of funds could limit — Effective treasury management aimed at — innovative new security platform liquidity leading to balancing long debt maturity profile and — extension of maturity profile restriction of investing diversification of sources of finance and operating activities — diversification of sources — Consideration of financing plans and/or increase in including potential for recycling of capital — reduced cost of debt funding cost before commitment to transactions and See Financial review developments For more information

Operations — Strong business process and procedures — — Significant operational change implemented, with smooth supported by regular training and transition to in-sourced facilities management managed 1 Accidents, system failure exercises through a large scale mobilisation project. Risk of change or external factors could mitigated by detail of contract, choice of culturally aligned Governance threaten the safe and — Annual audits of operational standards and experienced partner and major training programme 2 secure environment carried out by internal and external provided for shoppers consultants — New structure better uses Intu’s scale and efficiently and retailers, leading delivers better control, consistency and application of best — Culture of visitor safety to financial and/or practice, e.g. new Group-wide structure for quality, safety, reputational loss See case study on page 31 health and environment management. Preparation is For more information underway to achieve ISO accreditation in 2014/15 — Rigorous ICT security framework; crisis — Undertaking review of cyber risks in context of new management simulations include cyber digital services security threats — Review of insurance partners, with new appointment — Retailer liaison and briefings better aligned to business structure — Appropriate levels of insurance — Robust crisis management and communication protocols tested and improved with major exercises — Reduced exposure to future energy costs and taxes through award-winning energy reduction initiatives – 18 per cent reduction in carbon emissions since 2011 Accounts See Corporate governance For more information

Strategy and execution — Annual strategic review by Board — Rigorous control and review procedures in place to informed by external research and advice ensure successful implementation of significant strategic 1 Misjudged or poorly initiatives executed in the year including executed strategy fails — Board and management team to create shareholder experienced in shopping centre and — regular reporting to and review by Board of progress 2 value broader retail industry on rebranding, in-sourcing of facilities management, investment in digital infrastructure and services and — Engagement with national and non‑UK expansion 3 international retailers — specialist advice on evolving digital strategy — Specialist advice and extensive research 4 supporting major initiatives — development of KPIs for monitoring of key deliverables — Careful assessment of potential partners See Chief Executive’s review to complement Intu’s skills and resources For more information Other information

Development and — Capital Projects Committee reviews — — Property and market due diligence and detailed business 1 acquisition detailed appraisals before and monitors plans developed before acquisition in Spain progress during significant projects Misjudged or poorly — Significant detailed planning, appraisal and analytical executed project results — Research and third party due diligence exercises underway in advance of committing to major 2 in increased cost or undertaken for transactions extension projects income foregone, — Continued focus on pre-letting space before committing hence fails to create capital to projects 3 shareholder value See Chief Executive’s review 4 For more information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 40 Strategic report Business model and strategy Our employees are fundamental to Our people the success of our business and to the delivery of a high quality service for our occupiers and customers

Our values Creative We look at the familiar and we see something different; we are insightful and imaginative, but not for their own sake, for we never lose sight of what is important and relevant Bold We act confidently and decisively, always knowingly, perhaps at times controversially, but never rashly or without consideration Our people We are committed to providing a working environment which is stimulating and Genuine challenging, giving employees opportunities to reach both personal and professional We are true to ourselves, act fairly and goals whilst delivering business targets. communicate clearly; we say what we mean and we mean what we say. Everyone who works at Intu is passionate about the work carried out and We recognise our obligations to our proud of our reputation as the market leader of the UK shopping centre industry. stakeholders and the wider society, Providing a first‑class service to all of our customers, whether they are shoppers, and commit to put our utmost into retailers or colleagues, is central to our work ethic. In our employee surveys well over everything we do 80 per cent say we put the customer at the heart of everything we do. How are we structured? Our teams are grouped into six core strands to underpin the business model. Asset Management drive the success of the centres by delivering sustainable asset growth through innovation and sound investment and commercial decision-making, including proactive leasing of retail units, dealing with rent reviews and lease renewals, and managing smaller active asset management projects involving the amalgamation or extension of stores. Commercial, Operations and Digital add value to assets through excellence and innovation in the disciplines of Marketing, Customer Experience, Operations and Digital Technology. Marketing ensure that our centres are at the forefront of the minds of both customers and retailers and are portrayed in the best possible light. The Experiences team inspires customers to come more often, stay longer and develop a deeper relationship with their local shopping centre, each of which is led by a dedicated General Manager. The Digital team is responsible for information and communications technology operations and project delivery across the spectrum of digital activity, including our transactional website, intu.co.uk.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 41 Strategic report Business model and strategy

Development and Construction is responsible for the planning, management and Strategic report Intu Retail Services delivery of new build, refurbishment and extension projects across the portfolio from In July 2013 we consolidated the inception through to completion. in-sourced approach to support services (principally customer service, Finance provide commercial support to the business, develop management security, cleaning and technical information and KPIs, facilitate forecasting and budgeting, provide statutory and services) at intu Trafford Centre management reporting, and manage essential transactional processes. and the out-sourced model at our Governance and Support encompasses Legal, Secretariat, Human Resources, other managed centres to create Corporate Responsibility and Communications and Public Relations. a single vehicle for total facilities management, Intu Retail Services, Intu Retail Services is a new venture with Europa providing total facilities a new venture with Europa. management to support the operation of our centres, ensuring the building is properly maintained and that there is a welcoming, clean, safe and secure environment for By the year end Intu Retail Services retailers and customers. employed 1,728 people. Governance There is a dedicated Human Resources 2013 in review and Training team with administrative During the past year Intu has continued its employee proposition that both support and expert services being complements the corporate strategy and stands us out as an employer of choice, supplied by the parent companies, Intu built around five key themes. Properties and Europa. During 2014 the focus will be on restructuring and harmonising processes so that all managed centres Talent are operating within a consistent development* framework to offer an exceptional standard of customer service. This is

backed up by an ongoing programme Accounts of staff development for which accreditation will be sought from both Employee Reward and the Institute of Customer Service and life-cycle recognition Investors in People. HR Strategy

Performance Employee management engagement Other information

* (formerly Learning & Development and Succession Planning)

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 42 Strategic report Business model and strategy Our people continued

Employee numbers Training days Major activities during the year included: Recruitment In addition to the large scale transfer in of staff from our service providers (see 2,027 2,826 section about Intu Retail Services), we have recruited 303 new people into the Group 2012: 645 2012: 1,149 during 2013. Significant new roles include a Customer Experience Director (an industry-leading appointment), Head of Sales for the Promotions team and Group Gender profile Gender profile Treasurer, while our Digital and Technology teams have been strengthened and for senior managers* seven shopping centres have new General Managers (a mixture of internal and Male Male 1,277 (63%) 19 (73%) external appointments). 2012: 53% 2012: 67% Employee engagement Female Female Building on the output of our annual employee survey and the announcement of the 750 (37%) 7 (27%) intu brand in January, we embarked upon a series of engagement workshops in the 2012: 47% 2012: 33% first quarter involving all staff throughout the organisation including those employed (at the time) by our service partners. Managers were provided with a structured toolkit to run tailored programmes concentrating on understanding Intu’s values, Service profile Age profile the challenges we face and helping every member of staff make a positive difference Under 1 year Under 30 to our customer service. 15% 18% Activity has continued throughout the year based around our ten principles 2012: 13% 2012: 21% for internal engagement: 1–10 years 30–50 64% 48% — Optimise communication channels 2012: 64% 2012: 51% — Talk to staff first 10–20 years Over 50 17% 34% — Improve the two-way flow 2012: 21% 2012: 28% — Strongly signal listening and action Over 20 years 4% — Fast and de-layered 2012: 2% — Simplify explanation of the strategy — Build a family — Approachable, familiar people — Make every communication count — Do things differently, do different things Learning and development A major focus for the year has been ensuring employees throughout the organisation have been trained to deliver World Class Service (‘WCS’), whether they are ‘front of house’ in shopping centres or in supporting functions, sometimes with ‘internal customers’. More details of the programme are set out in the case study on page 64. A total of 2,826 man days were devoted to training in 2013 (2012: 1,149), covering technical and people skills and achieving professional qualifications as well as the WCS programme. There is a strong focus on continuing professional development, particularly for the significant number of our staff who hold professional qualifications *Senior managers comprise the Executive Committee, the Operations Director and in a number of disciplines, and training needs are routinely assessed for every their direct reports. individual as part of the performance appraisal process.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 43 Strategic report Business model and strategy

Reward and recognition Strategic report Providing a competitive remuneration structure helps us retain and motivate the best people. As well as base salaries that are benchmarked against our peers in the industry, many employees are eligible for an annual bonus based on corporate measures that reflect the executive remuneration policy (described more fully in the Directors’ remuneration report on pages 82 to 99) and related to individual performance. A proportion of the annual bonus is awarded in deferred shares to encourage focus on the Company’s growth. Managers may also be rewarded with longer-term share options and many staff can join a Share Incentive Plan subject to a qualification period. Having introduced awards for service last year, in 2013 28 employees completed 10 years’ service and two passed the 20-year mark. This does not include Intu Retail Services staff who will be evaluated separately. Governance Looking ahead We continually seek to build on the core strengths of our employees by developing their skills and experience and ensuring they are fully engaged with the business objectives and our values. Whether an individual’s role is strategic, operational or in a support function, their contribution to the business is valued. Everyone works as part of a team; everyone is expected to make a valid contribution to the success of the organisation. A series of projects will continue to improve the employee proposition within the scope of the defined HR strategies. Employee life-cycle — Introduce an employee referral incentive scheme Accounts — Continue the integration of Intu Retail Services: greater harmonisation between shopping centres and consistent processes and policies where appropriate — Adopt a tone and presentation style for employee documentation consistent with the intu brand — Audit employee data in line with enhanced data protection governance and in preparation for a review of HR data systems due in 2015 — Further develop our onboarding processes as we continue to source new staff for a greater variety of disciplines — Learn from the experience of staff who leave us Other information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 44 Strategic report Business model and strategy Our people continued

Talent development Employee surveys in 2013 — Identify high potential individuals for executive and senior management succession We conducted two all-employee surveys in 2013 as well as some — Continue with implementation of tailored personal development plans for targeted gathering of feedback on identified individuals, including cross-functional project experience, coaching/ particular issues. At the end of June mentoring and a planned approach to external high level programmes we ran a ‘Pulse’ survey to gauge initial — Ensure all potential successors have appropriate leadership, finance, presentation reaction to the launch of intu and its and impact skills values. Then, in November, the annual employee survey was conducted over — Review flexible working options to enable increased gender parity, particularly a two-week period with 1,687 out of at senior levels 2,002 eligible employees responding — Encourage ‘work experience’ in other disciplines and at other locations within the (84 per cent). organisation to enhance understanding of the wider picture Both these surveys were open to — Develop next stage of World Class Service training, including non-front line staff all employees of the now enlarged and build into the process for inducting new employees throughout the Group Intu group. Data from surveys in previous years collected by our former Reward and recognition service partners Europa and Inviron is — Senior Managers and Executive Directors to review salaries of their teams against available for benchmarking purposes. agreed parameters and market position and propose individual bonus levels based on performance against objectives during 2013 In the Pulse survey more than 70 per cent of employees agreed — Remuneration Committee to review proposals and approve Senior Manager and or strongly agreed with 8 of the 10 Executive Director salary levels and bonus awards propositions put to them. In the full — Awards are communicated to employees by March and awards paid in March survey in November, an improved and April score was achieved in 23 of the questions which had been measured — Consolidate local recognition schemes to culminate in Group-wide recognition in previous surveys and over half of excellence awards the questions resulted in more — Undertake a market review of pensions and insurance-related benefit schemes than 70 per cent of respondents agreeing or strongly agreeing with — Consider share ownership opportunities for Intu Retail Services staff to the proposition. An independent body enhance engagement produces an overall engagement score from the results of the survey. This has increased year-on-year and now stands at 732 (2012 – 717) with favourable movement in all five domains that make up the engagement index: work environment, reward, development, operating culture and line of sight. 88% Of all staff agree Intu puts customers at the heart of everything we do 81% Of all staff are proud to work for Intu

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 45 Strategic report Business model and strategy

Employee engagement Strategic report — Improve internal communications media, content and processes, ensuring adequate feedback mechanisms — Produce structured action plans to manage the output of the 2013 employee survey — Continue focus groups, engagement workshops and local communication forums at each shopping centre — Facilitate regional and national networks to enable effective two-way communication for employees throughout the Group Human rights — Expand our intranet ‘mint’ and make content accessible to all staff, including Intu At Intu we respect the dignity, liberty Retail Services employees who do not have direct daily access to the Intu network

and equality of everyone we work Governance — Strengthen our policy for whistleblowing and introduce a new policy for use of with. Our policies and procedures social media are consistent with the United Nations’ universal declaration of — Enable staff to participate in the Company’s corporate responsibility, community human rights, which sets “a common support and sustainability programmes at all levels and introduce a volunteering standard of achievement for all policy for charitable activity peoples and all nations”. We are Performance management committed to implementing the UN — At the end of the year we introduced PerformanceHub, an online system for Guiding Principles on Business and appraisal and setting objectives was introduced in the year. This allows closer Human Rights. alignment of personal objectives with corporate strategy through a cascade We only work with people who choose process, greater visibility and regular progress tracking. The process can be further to work freely and we respect their developed in 2014 to include 360 degree appraisal of key staff rights to equal opportunities and

— Employment policies regularly reviewed to ensure they remain up-to-date and in Accounts freedom of association. We work line with best practice. In 2014 we will ensure synergy with policies throughout the with all our suppliers, retailers and Group, including Intu Retail Services where appropriate associated companies to ensure they meet acceptable standards of human — Job descriptions to be overhauled in the light of internal restructuring of a dignity in their own sourcing policies. number of teams and the range of new functions now in the business We will continue to evaluate the pay and conditions of all our employees, in particular new staff on or near to minimum wage, to bring them into line with the rest of our staff in terms of wages and benefits and ensure fair working conditions.

Fair treatment of people who work Other information for Intu or our suppliers is a key focus of our Corporate Responsibility approach. As appropriate our Board CR Committee and CR Management Committee consider the potential human rights risks faced by Intu and assess approaches to mitigate those risks.

Intu Properties plc – Annual Report 2013

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Digitally connected A year ago we announced our strategy to offer a digitally connected shopping centre experience. Today we have high quality Wi-Fi available free to shoppers at nine of our centres and further launches imminent. With almost two million customer connections to date, and well over half of registrants opting in to receive marketing information, feedback on the quality of the service has been strong. intu Trafford Centre is the UK’s most digitally-connected centre, the first in the country to offer 4G which is now being rolled out to eight more intu centres. Our websites attract visits from an annual nine million unique devices, of which around two thirds are now mobile compared to barely none two years ago. We chose to invest in an owned rather than out-sourced fibre-optic backbone and Wi-Fi network infrastructure, seeing it as the heart of our digital strategy. This means we manage the entire digital customer journey and the data which results from it. We also benefit from operating synergies as elements of building management, lighting and security systems migrate onto our robust and scalable platform. And with brands including Sky already contracting to use it, we anticipate many opportunities to increase revenue by offering services to commercial partners.

Find out more: intugroup.co.uk/ar2013

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 47 Strategic report Financial review

Financial review Strategic report

Overview 48 Results for the year ended

31 December 2013 48 Governance Financial position at 31 December 2013 52 Accounts Other information

Intu Properties plc – Annual Report 2013

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Overview Results for the year ended 31 December 2013 In 2013 the Group’s financial management has focused on Income statement creating the financing flexibility to advance the business. The Group recorded a profit for the year of £364 million, an The Group has refinanced £1.8 billion of debt in the year, improvement on the £159 million reported for the year ended significantly de-risking the 2015–2017 debt maturities 31 December 2012. At an underlying level, excluding valuation and demonstrating the Group’s prime assets can be and exceptional items, earnings were £2 million higher at financed at around 50 per cent loan to value at competitive £140 million (2012 – £138 million). interest margins. The major factors in the £205 million increase in profit to In addition to the £1.8 billion of debt financing, the Group issued £364 million are valuation related items, including 86 million new ordinary shares at 325 pence per share raising — an increase in the revaluation gain on property valuations to net proceeds, after costs, of £273 million to fund the acquisition £126 million (2012 – £41 million) of Midsummer Place. — an increase in the credit arising from the change in fair value Key points of note of the Group’s financial instruments. 2013 benefited from a A combination of market conditions and repositioning affected £274 million credit, whereas 2012 included £31 million the financial results for the year (see Results for the year ended 31 December 2013 below) These positive factors were partially offset by — underlying earnings of £140 million, up 2 per cent on 2012, — higher exceptional finance costs of £158 million (2012 giving earnings per share of 15.0 pence, down 7 per cent on – £61 million), largely interest rate swap terminations in 2012 due to higher level of shares in issue connection with the debt refinancing in the year (see below in Interest rate swaps section of this report) — NAV per share at 380 pence; total financial return for the year 1 per cent Underlying earnings, which excludes valuation and exceptional items, were £2 million ahead in 2013 at £140 million as shown Improved financial flexibility (see Financial position at in the chart below and as set out in the Underlying profit 31 December 2013 below) statement. Taking into account additional shares issued as part — debt to assets ratio at 48.5 per cent, below the Group’s of the Midsummer Place acquisition, underlying earnings per target maximum level of 50 per cent. Actual ratio would share reduced by 7 per cent to 15.0 pence. reduce to around 44 per cent were the convertible bonds to convert to equity Underlying earnings bridge (£m) 160 — interest cover ratio at 1.71x, above the Group’s targeted minimum level 1.60x +14 150

–7 +1 –3 –1 140 140 138 –2

130

2012 2013 costs costs Other intu Digital like-for-like acquisitions Net ﬁnance Administration Net rental income – Net rental income –

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The principal components of the change in underlying earnings Balance sheet Strategic report are as follows The Group’s net assets attributable to shareholders have increased by £0.5 billion to £3.5 billion at the end of 2013 due to — while increasing overall due to the impact of the acquisitions equity raised in the year to fund the acquisition of Midsummer of Midsummer Place and Parque Principado, like-for-like Place and the retained profit for the year after payment net rental income reduced by 1.9 per cent largely due to of dividends. the impact of tenant administrations in the first half of the year. This has been partially offset by the favourable impact As detailed in the table below, net assets (diluted, adjusted) of new lettings and rent reviews at intu Trafford Centre, have increased by £289 million from December 2012 to Manchester Arndale and intu Lakeside £3,804 million as at the end of December 2013. — as detailed in the table below the Group’s net rental income 31 December 31 December 2013 2012 margin has remained in line with the 87 per cent achieved £m £m in 2012 with property operating expense reducing, despite Investment, development the acquisitions in the year, offsetting higher void costs. and trading properties 7,551.8 7,011.8 Governance Property operating expenses in the year ended 31 December Investments 190.7 189.7 2013 includes £10 million (2012 – £10 million) in respect of car park operating costs and the Group’s contribution to Net external debt (3,698.4) (3,504.2) shopping centre marketing of £8 million (2012 – £8 million) Other assets and liabilities (423.0) (691.1) Net assets 3,621.1 3,006.2 Year ended Year ended 31 December 31 December Non-controlling interest (102.3) (29.2) 2013 2012 £m £m Attributable to shareholders 3,518.8 2,977.0 Gross rental income 448 442 Fair value of derivatives (net of tax) 198.1 481.8 Head rent payable (24) (25) Other adjustments 83.7 56.6 424 417 Effect of dilution 3.8 – Net service charge expense Net assets (diluted, adjusted) 3,804.4 3,515.4 and void rates (13) (16) Accounts The largest factor in the increase in investment and Bad debt and lease incentive development properties of £540 million is the acquisition write‑offs (9) (10) of Midsummer Place and Parque Principado, valued at Property operating expense (29) (31) £251 million and £145 million respectively at acquisition. The 1.8 per cent valuation gain added £126 million to the Net rental income 370 363 value of the Group’s properties. Net rental income margin 87% 87% The investments of £191 million as at 31 December 2013 comprise the Group’s interests in the US and India. — underlying net finance costs, which exclude exceptional The investment in the US comprises 11.4 million shares in a joint items, reduced by £1 million due to the favourable impact venture with Equity One, a listed US REIT. Based on the Equity of lower interest rates following the debt refinancings that One share price of $22.44 at 31 December 2013 the Group’s were completed in the year offsetting the slightly higher investment has been valued at £154 million. debt levels

— costs related to intu Digital totalling £3 million which were in Other information line with our plans in its first year — the impact of ongoing administration expenses increasing to £28 million (2012 – £27 million), largely due to costs of new employees recruited throughout the year continuing the process of broadening the Group’s skill base

Intu Properties plc – Annual Report 2013

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The remaining investments represent the Group’s interests Cash flow in India, largely comprising a 32 per cent interest in Prozone, The cash flow summary below shows a net decrease in cash a shopping centre developer, listed on the Indian stock and cash equivalents of £26.6 million in the year. market. As Prozone is classified as an associate company of 2013 2012 the Group, the holding is valued as the Group’s percentage £m £m share of the associate’s underlying net assets. The carrying Underlying operating cash generated 338.0 344.3 value of the investment is based on the Group’s accounting Net finance charges paid (180.7) (191.5) policies and therefore includes property valuations undertaken Exceptional finance and other costs (179.2) (62.1) in accordance with ‘Red Book’ guidelines. At 31 December Net movement in working capital 0.8 (4.0) 2013 Prozone’s listed shares were trading at a 75 per cent, £27 million, discount to the Group’s carrying value. We believe Taxation/REIT entry charge (0.7) (11.0) utilising independent valuations is the most appropriate Cash flow from operations (21.8) 75.7 valuation methodology at this time and will continue to monitor Capital expenditure on property the situation. assets (44.6) (81.2) Sale proceeds of property/ The reduction in other assets and liabilities in the year is due to investments 15.6 49.9 the reduction in the provision for fair value of derivative financial instruments largely due to payments made in the year. Other investing activities – (17.2) Acquisition of businesses (391.0) (4.2) The increase in non-controlling interest represents CPPIB’s 49 Cash acquired with businesses 8.9 1.6 per cent interest in Parque Principado. Dividends (90.9) (117.2) Adjusted net assets per share Cash flow before financing As illustrated in the chart below, diluted, adjusted net assets and equity raises (523.8) (92.6) per share were 380 pence at 31 December 2013, a reduction Net debt raised 159.7 192.7 of 12 pence in the year. The most significant factor in the Equity capital raised 273.0 0.1 reduction is the termination of interest rates swaps as part of CPPIB funding of Parque Principado – the debt refinancings in the year. This was partially offset by the 71.1 property valuation gain that contributed 13 pence per share to Other (6.6) (2.3) the Group’s adjusted net assets per share. Net (decrease)/increase in cash and cash equivalents (26.6) 97.9 Total dividends of 15 pence per share were covered by the 15 pence per share of underlying earnings generated for the year. Acquisition of businesses includes £249 million in respect of Net assets per share bridge (pence) Midsummer Place and £142 million on Parque Principado. £71 million was received from CPPIB, the Group’s partner 420 +15 in the acquisition, giving a net outflow of £71 million for the Group’s economic share of the asset. Capital expenditure on +13 property assets includes £8 million in respect of the purchase 400 392 –17 of two properties adjacent to the Group’s interest in Charter –7 380 Place, Watford. Expenditure on existing assets included intu 380 –15 –1 Eldon Square (£5 million), intu Lakeside (£5 million) and intu Metrocentre (£4 million). 360 Net debt raised is discussed in the Debt structure section below.

31 Dec 31 Dec 2012 paid 2013 costs Other Equity surplus placing Dividend earnings Underlying Exceptional Revaluation

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The table below illustrates that recurring cash flow covers the Tax strategy and charge for the year Strategic report 2013 interim dividend of 5.0 pence per share that was paid in Being a Real Estate Investment Trust (REIT) significantly the year and the proposed final dividend of 10.0 pence per share reduces the taxation costs of the Group, but brings with it the that will be paid subject to approval at the Annual General requirement to operate within the rules of the REIT regime. Meeting. The actual cash dividend outlay will be less than the The Group’s approach to taxation is approved by the Board 15 pence per share dividend declared due to the impact of scrip and is subject to regular review. The Group maintains an dividends. The cash saving to the Group in 2013 from the scrip open, up-front and no-surprises policy in dealing with HMRC. take up on the 2012 Final and 2013 Interim dividends amounted The Group seeks pre-clearance from HMRC in complex areas to £56.2 million. and actively engages in discussions on potential or proposed 2013 changes in the taxation system that might affect property tax pence per share and REIT legislation. Underlying operating cash generated 36.1 Since becoming a REIT in 2007 the Group has paid REIT entry

Net finance charges excluding exceptional items (19.3) charge payments of £199 million. Governance Convertible bond coupon (0.6) The Group continues to pay tax on overseas earnings, any UK Net movement in working capital 0.1 non-property income under the REIT rules, business rates, and Recurring cash flow 16.3 transaction taxes such as stamp duty land tax and (until 17 July Dividends paid and proposed for 2013 15.0 2012, when it was abolished) the REIT entry charge. In the year ended 31 December 2013 the total of such payments to tax Capital commitments authorities was £26.5 million, of which £25.0 million was in the The Group has an aggregate cash commitment to capital UK, £0.6 million in the US and £0.9 million in Spain. In addition, projects of £86 million at 31 December 2013. the Group also collects VAT, employment taxes and withholding In addition to the committed expenditure, the Group has an tax on dividends for HMRC. Business rates, principally paid identified uncommitted pipeline of active management projects by tenants, in respect of the Group’s properties amounted to and major extensions that may become committed over the around £261 million in 2013. next five years (see Looking to the future).

The tax credit in the year of £0.6 million comprises current Accounts It is anticipated that a total of approximately £70 million will be tax expenses on the Group’s US and Spanish investments of spent on capital projects in 2014. £0.6 million and £0.2 million respectively, offset by a deferred tax credit of £1.4 million largely on the revaluation of interest rate swaps and investments. Other information

Intu Properties plc – Annual Report 2013

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Financial position at 31 December 2013 During the year there was a significant amount of financing activity, including: At 31 December 2013, the Group had net external debt of £3,698 million, an increase of £194 million compared to In February the Group established a new debt funding platform 31 December 2012. In addition to cash balances of £166 million (‘Secured Group Structure’) by contributing £2.3 billion of the Group had undrawn facilities of £90 million and £69 million assets into a flexible, ring-fenced security pool and raising of CMBS notes issued by intu Metrocentre which were received £1.15 billion of bond and bank debt secured on it. The inaugural as cash in February 2014. This gave total headroom at the end bond issue was highly successful with strong demand resulting of 2013 of £325 million. in two tranches of ‘A’ rated bonds totalling £800 million being issued with the balance of £350 million provided by a five year Debt structure bank loan. The bond tranches of £450 million and £350 million A significant proportion of the Group’s debt has been mature in 2023 and 2028 respectively. The debt was raised at a refinanced in the year. The majority of the debt still remains blended cost of 4.4 per cent, in line with previous funding cost of largely arranged on an asset-specific basis, with limited or non- debt secured on the four assets, whilst extending the weighted recourse from the borrowing entities to other Group companies. maturity on these assets from 2 years to 10 years. As a result of the refinancings the Group has diversified its sources of funding. The range of debt instruments now The structure has a tiered operating covenant regime giving includes CMBS and other bonds plus syndicated bank debt with the Group a significant degree of flexibility when the covenant corporate-level debt remaining limited to the revolving credit measures are below certain levels. In higher tiers the level of facility and convertible bond. flexibility is reduced. Further details are given in the Financial covenants section of this report. Debt maturity proﬁle (£m) In July the Group arranged a £125 million facility secured on 1,200 1,077 Midsummer Place. The facility is for a term of three years and three months with the possibility of being extended up to 1,000 a further two years subject to both parties agreeing. 800 723 675* In November the Group issued a £485 million bond secured on 595 intu Metrocentre the proceeds being used to repay the existing 600 facility secured on the centre. The bond was a single issue 400 343 343 10 year tranche at a rate of 4.125 per cent and represented a 55 per cent loan to value ratio. The cost of borrowing of the 147 200 new bond represented a saving of 160 basis points compared 23 to the previous facility. In connection with the repayment 2014 2015 2016 2017 2018 2019– 2024– 2029+ of the previous bonds £31 million of cash payments were 2023 2028 * Includes £300m convertible bond required to terminate interest rate swaps and are included in the £158 million exceptional finance cost in the year.

Following the refinancing activity in the year the above chart illustrates that there is a minimal refinancing requirement in the next two years.

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31 December 31 December The fair value net liability of these interest rate swaps at Strategic report 2013 2012 31 December 2013 is £206 million, a reduction of £287 million Debt to assets 48.5% 49.5% from the £493 million at 31 December 2012. This movement Interest cover 1.71x 1.69x in the liability can be largely attributed to cash payments in Weighted average debt maturity 8.0 years 6.1 years respect of the reduction in the nominal value described above. Cash payments in the year in respect of interest rate swaps Weighted average cost of gross debt 4.8% 5.2% totalled £215 million of which £153 million has been classified Proportion of gross debt with as an exceptional finance cost as it relates to the termination interest rate protection 92% 95% of swaps (£128 million) or payments in respect of unallocated The table above summarises the Group’s main debt measures, swaps (£25 million). The balance of the payments have been with the average maturity increasing and the average included as underlying finance costs as they relate to ongoing cost decreasing as a result of the refinancings in the year. interest rate swaps used to hedge debt. The proportion of debt with interest rate protection has The majority of the additional reduction in the fair value liability reduced due to drawings of £285 million of the unhedged of £72 million is due to a movement in the interest rate yield Governance revolving credit facility at 31 December 2013. This facility curve reducing the required fair value provision for the ongoing was not drawn at the end of 2012. interest rate swaps. Interest rate swaps As previously detailed, the Group has a number of interest Just over 40 per cent of the Group’s debt is floating rate. rate swaps which are unallocated as, due to a change in The Group uses interest rate swaps to fix short- and medium- lenders’ practice, they cannot be used for hedging the Group’s term interest obligations, reducing cash flow volatility caused by borrowings. Using the 31 December 2013 forward interest rate changes in interest rates. Combining the impact of this hedging yields, these swaps have a market value liability of £143 million and the fixed rate debt the Group’s debt is effectively 92 per (2012 – £199 million). Based on these rates and values, it is cent fixed. estimated the Group will be required to make cash payments The table below sets out the nominal amount and average rate on these swaps of £25 million in 2014 in line with the level of of hedging, excluding lenders’ margins, in place under current payments made in 2013. and forward starting swap contracts. Covenants Accounts Nominal Full details of the loan financial covenants are included in amount Average rate the Financial covenants section of this report. The Group is In effect on or after: £m % in compliance with all of its corporate and asset-specific loan 1 year 1,791 3.39 covenants. As detailed in that analysis, the headroom over the 2 years 1,862 3.45 minimum covenant levels has generally increased in the year. 5 years 804 4.99 10 years 678 4.82 15 years 668 4.83 20 years 443 4.59 Matthew Roberts The nominal value of interest rate swap contracts has reduced Finance Director by £1.1 billion to £2.1 billion at 31 December 2013 due to 28 February 2014 terminations associated with refinancings completed in the Other information year. The majority of new debt raised in the year is fixed rate therefore terminated swaps have not been replaced.

Intu Properties plc – Annual Report 2013

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intu entertains the herd Since July 2013 elephants have been marching through intu’s shopping centres in a country-wide, 375 day, tour. Elephant Parade sponsored and hosted by intu has brought artists, celebrities and businesses together to create a herd of vibrant hand-painted elephants. Supporting the Elephant Parade exhibition has allowed us to entertain and enthral our shoppers whilst raising awareness for The Asian Elephant Foundation. Elephant Parade chose to partner with intu as the breadth of our brand offered the opportunity for the parade to reach more people in more locations than any previous tour. And it is not only for our shoppers, 75 schools across the UK are being brought into the herd. Young people are being educated on conservation issues and each school is being given the chance to design an elephant to be displayed at their local intu centre. So far approximately 4,000 designs have been submitted.

Find out more: intugroup.co.uk/ar2013

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Corporate responsibility Strategic report

Better together 56 Communities and

economic contribution 59 Governance Environmental efficiency 60 Relationships 62

Accounts Other information

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Highlights

Support provided to UK communities Waste diverted from landfill

£1.95m 96% 2012: £1.92m 2012: 97%

Almost 2,500 people directly reached Reduction in CO2 emissions since our by our community projects 2011 base year 2,500 18%

Bringing people and communities together – and helping them flourish – delivers shared benefits With two thirds of the UK We know, however, that our long- population within easy reach of one term success is linked not just to of our centres, we touch the lives the vitality and well-being of the of people right across the country. communities on our doorstep, For them we are not just shopping but also to what happens in the destinations, but places to go with wider world. The people who family and friends to enjoy life – come to our centres expect us meeting, eating, drinking, relaxing, to carefully manage our impact being entertained, sharing secrets, on the environment. So, we are swapping gossip and having committed to measuring how a laugh. we’re doing and taking the right steps to do things better. This not So yes, we help build social only saves us money, but protects togetherness, giving people our reputation. a stronger sense of place and belonging. We also make an important contribution to the economic life within and beyond these communities, providing jobs for local people and community programmes for the young and disadvantaged.

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Our approach CR governance Strategic report At Intu we believe that corporate The Intu Board takes responsibility responsibility must be driven by the for determining policy and strategic strategic aims of the company and direction on CR topics. The strategic subject to the same types of governance direction of our CR programme is led controls as other areas of the business. by the CR Board Committee while the CR Management Committee takes Our Corporate Responsibility (CR) responsibility for progress against our approach is based on three key operational objectives. Both Committees pillars: communities and economic met three times in 2013. contribution, environmental efficiency and relationships with our stakeholders. Find out more: This strategic approach to CR allows us intugroup.co.uk/cr2013 to target stakeholder concerns and issues that are most material to our business. Governance

governanc Relationships CR e Communities

Providing and economic Accounts the perfect shopping contribution experience

Generating Establishing value for enduring shareholders relationships with retailers

Delivering long-term growth Other information

Environmental efﬁciency

Intu Properties plc – Annual Report 2013

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External recognition What drives our CR activities? Understanding our stakeholders views Benchmarking against our peers — Securing our licence to operate: In the autumn of 2013 we conducted a through indices such as the Dow Our centres cannot be developed or stakeholder review to better understand Jones Sustainability Indices and CDP marketed without engagement with the corporate responsibility issues that ensures that we remain focused on best local stakeholders. Our CR initiatives our stakeholders, both internal and practice and continuous improvement. work to bring partnerships together, external, believe are material to our We monitor the actions of our UK including our employees, and foster business. As a result of this work our REIT competitors and work with them relationships which contribute to stakeholder views have been more on important industry issues through achievement of our longer-term formally considered in our approach membership of organisations such business objectives. to corporate responsibility reporting. as the British Council of Shopping Further details can be found in the 2013 — Protects and enhances our reputation: Centres (‘BCSC’). Corporate Responsibility Report. Many retailers already have their own CR programmes. Many of those Improvements and targets who use our shopping centres expect We work together with our stakeholders us to operate with a sustainable to improve all areas of our CR mindset. By demonstrating a strong performance and set relevant goals and commitment to all of our stakeholders targets in order to allow us to critically we can deepen retailer, shopper and monitor progress. For example, our community relationships. centres continue to roll-out leading technology solutions and supporting — Helps to manage risk: By working to energy management plans to optimise identify compliance and reputational efficient energy use and explore new risks ahead of time our CR programme ways to bear down on our energy works to ensure our current business demands, costs and our corporate model and operations are managing carbon footprint. the issues now that could harm our business in the future. — Contributing to cost management and protecting shareholder value: Our approach to environmental and facilities management underpins our broader desire to operate in an environmentally responsible manner. It also contributes substantial cost savings.

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Why it matters In support of young people and Strategic report Our shopping centres are integral to the acknowledging the high percentage of communities they serve providing places entrants to retail careers aged under for people to come together to meet, 25, we continue to fund projects which eat, drink and socialise. They support support retail education under the charities and community organisations banner of our ‘Retail Academy’. In 2013 that address fundamental issues in that included Retail Gold a three- modern society which are important to way partnership between intu, our the long-term success of our business. retailers and local Education Business Our joint community projects focus on Partnerships to provide retail placements youth, education and the prevention of undertaken as a key part of their Engaging students anti-social behaviour. school/college course learning. We also in community issues supported West College Scotland What we’re doing to provide a retail training course at Governance The Youth Philanthropy Initiative (YPI) Working together in long-term Kirklandneuk Community Centre. project works to engage young people community partnerships is a key feature with local charities in their communities. of our community strategy. During 2013, In recognition of our community In 2013 intu supported YPI across three we continued to work with 12 community efforts, we are currently one of only of our shopping centres; intu Bromley, partners delivering 22 projects at our 40 UK companies holding the BitC intu Uxbridge and intu Watford, funding centres. These projects have directly CommunityMark. Our community the inclusion of over 600 students at reached almost 2,500 participants. activities during 2013 were supported three schools. Students were challenged by total donations of £1,951,000 Since 2011 we have commissioned to work in teams to select a local cash equivalent, including facilitated Nathaniel Lichfield & Partners to analyse charity to advocate for with their efforts donations, supporting a variety of the beneficial economic contribution of culminating in a final presentation charities that represent Young People our shopping centres. We believe that competition; with the winning team & Education, Arts & Culture, Health, recognising these impacts and outputs receiving £3,000 for their chosen charity. Economic Development, Environment

will enable us to; better understand, Accounts Students learnt skills including research, and Emergency Relief. and respond to, our community communication and how to deliver footprint, help to underpin our planning What we plan to do presentations. Our centre Marketing applications and allow us to demonstrate — increase employee volunteering Managers shared their expertise on to investors the strength of our position. across our business how to effectively deliver presentations. According to the report in 2013 Intu Following the YPI course, feedback shows — further our use of the London and its retailers directly employed over that students continue to engage with Benchmarking Group framework 82,000 people and indirectly supported charitable causes. and introduce this approach to our over 23,000 jobs. Find out more: community partners intugroup.co.uk/cr2013 2013 was the fourth year of the — expand our retail education Chairman’s CR Prize, open to all programmes under the banner of directly managed centres to showcase 2013 Community donations intu’s ‘Retail Academy’ the community projects they have

undertaken alongside our corporate Other information projects. Winners receive a financial reward to present to their nominated charity or community group. intu Bromley won First Prize in 2013 for their work with Bromley Mencap.

Cash 18% Gifts in kind 47% Time 4% Facilitated donations 31%

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 60 Strategic report Corporate responsibility Environmental efficiency

Absolute energy use (thousand MWh) and Why it matters In 2012, we began the roll-out of LED GHG emissions (thousand tonnes) We have a responsibility not just to lighting to replace inefficient fluorescent at directly-managed centres manage and minimise our day-to-day lighting in the common parts of 10 of 140 55 environmental impacts but also to share our 12 directly-managed centres. In 2013 good practices and influence our delivery we rolled-out phase two of this project 120 50 partners, retailers and visitors towards focusing on lighting mall areas and back 100 45 more sustainable behaviour. Ultimately, offices at eight of our directly-managed 80 40 we want to create a more sustainable centres. The results of this LUX award- operating environment. winning programme are expected to save 60 35 £1 million in energy costs per annum and What we’re doing 40 30 approximately 8,000 tonnes of carbon Our environmental initiatives typically dioxide equivalent (CO e) emissions per 20 25 focus on the areas of our shopping 2 annum. A new third phase of this project centres where we have the greatest 000 2011 2012 2013 000 is being rolled out in 2014 and will bring ability to implement changes – namely MWh tonnes further savings.  Electricity (thousand MWh) in the common parts that we manage.  Gas (thousand MWh) In 2011 we set challenging targets to As part of our commitment to CRC  District heating (thousand MWh) reduce our carbon emissions by 30 per Energy Efficiency Scheme compliance, CO2e emissions (thousand tonnes) cent, to divert 95 per cent of waste from we have achieved and renewed the landfill, to recycle 75 per cent of waste Carbon Trust Standard Certification. and to reduce our water consumption by Transport remains a key concern for 10 per cent all by the end of 2014. By the our business given the reliance of end of 2013, we had reduced our carbon shoppers and retailer employees on emissions by 18 per cent compared with public transport and private vehicles to 2011 (like-for-like portfolio), diverted over reach our centres. We have appointed 95 per cent of waste away from landfill a Transport Champion at each centre in 2012 and 2013, recycled 71 per cent to work alongside intu’s Sustainable of waste in 2013 and had reduced water Travel Manager. We continue to partner use intensity by 3 per cent compared in six of the Government’s Plugged with 2011. in Places programmes designed to Underpinning our commitment to increase electric vehicle use and required environmental efficiency is a robust infrastructure. In 2013 we installed the monitoring system which tracks our first rapid charging point for electric energy, carbon, waste and water cars in a Scottish shopping centre at performance across each centre. intu Braehead. To improve this even further, we have been rolling out portfolio-wide automatic metering to improve our understanding and control of energy use. This year we have reduced our carbon emissions by seven per cent and increased the proportion of waste recycled to 71 per cent.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 61 Strategic report Corporate responsibility

Water use at directly-managed centres (m3) Greenhouse Gas emissions from Scope 2 – indirect emissions – includes Strategic report intu’s directly-managed shopping purchased electricity and district heating, 350,000 1400 centres 2013 for our 40 Broadway head office and landlord-controlled common parts 340,000 1380 Absolute Tonnes CO2e CO2e per £m areas of the shopping centres including emissions net rental car parks that are directly-managed 330,000 1360 Emission type (tonnes) income by intu. In a small number of cases, Scope 1 5,557 17 where separate meters are not in place, 320,000 1340 Scope 2 39,762 124 some tenant energy is included in the calculation. 310,000 1320 Greenhouse Gas (GHG) emissions reported are for our head office and For further details of our approach to m3 2011 2012 2013 m3/m for those shopping centres and leisure carbon emissions management and a visits facilities under direct management by breakdown of our emissions per shopping 3  Water used (m ) intu as these are the operations where centre please see our 2013 Corporate Governance Waste used (m3/million visits) intu has the opportunity to directly Responsibility Report. influence emissions levels. As such What we plan to do data from the following centres is — reduce absolute carbon emissions by Waste disposal at directly-managed excluded: The Mall at Cribbs Causeway, centres (tonnes and %) 30 per cent by the end of 2014 from a Manchester Arndale, St. David’s, Cardiff 2011 base 25,000 100 and Parque Principado. Emissions have been normalised by net rental income — reduce absolute water consumption 20,000 80 generated by those shopping centres by 10 per cent by end of 2014 from a under direct management control. 2011 base 15,000 60 Data for Midsummer Place, which was — maintain diversion of 95 per cent of acquired in late March 2013, is included 10,000 40 waste away from landfill from April onwards. GHG emissions

are calculated based on DECC’s — increase recycling rate to 75 per cent Accounts 5,000 20 Carbon Reduction Commitment by end 2014 (CRC) conversion factors. tonnes 2011 2012 2013 % — complete roll-out of phase three of Emissions included: our LED lighting scheme at 10 of  Waste recycled (tonnes) Scope 1 – direct emissions – includes our directly-managed centres and at  Waste to landﬁll (tonnes) gas data, for our 40 Broadway head 40 Broadway  Waste to energy (tonnes) Waste diverted from landﬁll (%) office and the common parts of our directly-managed shopping centres and — update travel plans for all centres on leisure facilities. In a small number of an ongoing basis cases, where separate meters are not in place, some tenant energy is included in the calculation. Fugitive emissions and company vehicles have not been

calculated as they are considered to be Other information negligible for our operations.

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 62 Strategic report We need to understand the needs and expectations Corporate responsibility of a wide range of stakeholders in order to provide Relationships a business that offers a great shopping experience with informed investors, passionate employees and well supported communities. A key part of our Corporate Responsibility is managing and developing relationships with key stakeholders and engaging on relevant issues.

Stakeholder How we engaged in 2013 Outcomes Customers To maintain our — Focus group sessions — intu is well informed of competitive edge shoppers’ needs and wants — Off peak and peak shopper we must understand interviews — We are able to evaluate our what our shoppers are customer strategy against looking for in a perfect — Postcode surveys customer opinion shopping experience from retailer mix to customer service expectations. Broadening our support Retailers Maintaining strong — Intu Senior Management met with — Corporately as well as at for The Passage relationships and open key directors of many top retailers centre level we are well dialogue with our retailers in 2013 informed of retailer wants intu employees have continued to and other occupiers is and needs and so are able to — Merchants association meetings support The Passage, which is a charity a prime focus of our consider this in any planning business. We work to — Feedback from shopper dedicated to helping homeless people in — Retailers are kept well connect with them engagement provided to all retailers Westminster. For several years we have informed of the opinions to ensure that we are of shoppers in each of our co-ordinated a quarterly work clothes providing the high quality centres and are able to tailor service they need. collection amongst intu employees for their approach to that clients of The Passage who are seeking to re-enter work and are applying for Investors jobs. In 2013 intu has offered further Constructive engagement — Active engagement with all investor — Inclusion in FTSE4Good and support in a variety of ways including with our shareholders enquiries including a number of Dow Jones Sustainability and potential investors, enquiries from ethical funds Global Index being sponsors of The Passage’s annual bankers and other — Active participation in responsible — Business in the Community fundraising event ‘A Night Under the organisations on socially investor indices and tools such as CR Index Gold Status responsible investment Stars’, holding internal fundraising events CDP climate change survey and donating almost £9,000 of printers matters helps to raise — Increased our CDP score for awareness of how we’re the fourth year running and toners to the charity. managing material — For an outline of our environmental and approach to managing In 2014 we will be offering a range social risks. of volunteering opportunities to intu relations with shareholders, see page 78 employees at The Passage’s day centre. Our people

Our employees are — Comprehensive induction — Increased understanding of fundamental to the programme for new employees employee views on workplace success of our business including specific CR module and company issues and to the delivery of — Feedback from 2012 employee — Employees are kept a high quality service. survey provided and 2013 informed of all key business We believe that employee survey conducted developments employee engagement is key to maintaining a — Presentations of annual and — For further details of our motivated workforce. interim results approach to people see page 40 — Annual CR presentation — Employee recognition fund 44 per cent utilised

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 63 Strategic report Corporate responsibility Strategic report

Stakeholder How we engaged in 2013 Outcomes Local authorities and government Local authorities grant us — We conduct government — A Group-wide database permission to grow our engagement through industry-wide supports a co-ordinated portfolio. Fostering strong organisations programme of engagement relationships with local on issues of relevance to our — General managers and others authorities, town centre business such as business within the business maintain and management bodies and rates and national/regional develop links with local stakeholders other community business planning policy issues partnerships is therefore — Work with local authorities on — We publish details of vital to our centres updating of travel plans Lights, camera, action our policy positions on continued success. — Included a council leader in our our website Tyneside Cinema worked with intu CR stakeholder review Eldon Square and intu Metrocentre to Governance Suppliers engage a diverse group of 15–18 year We recognise the wide — In March 2013 we announced our — Suppliers have greater olds from Newcastle and Gateshead in range of potential impacts plans to launch a new venture understanding of intu’s documentary filmmaking. The Northern arising from our supply with Europa Support Services, approach to CR Stars Documentary Academy enabled chain and therefore the who we were working with as part — Further developed need to engage with our of the Facilities Alliance. The new 17 young people from around the relationships between suppliers across a range venture Intu Retail Services Ltd region to work with professional key suppliers and of issues. was created to deliver total facilities relevant colleagues filmmakers, gain training and experience management services to all intu in documentary film production, and to shopping centres across the UK shoot their own short films about people — Included key suppliers in relevant internal meetings such as and places in local areas of importance to CR Management Committee and them. Based in the Pop Up Film School Energy Champions Forum at intu Eldon Square, participants also

Communities travelled around Newcastle, Gateshead Accounts and the wider region to create their It is imperative that we — During 2013 we conducted — We are able to include maintain good links formal community consultations community feedback in our short films. The participants edited and with our communities regarding planned developments planning process produced their films which received a and that we undertake at our centres — We are one of only 40 UK special screening at the Tyneside Cinema. significant community — For further details of our approach companies to hold the BitC consultations as part to communities see page 59 and CommunityMark Find out more: of our process for any the 2013 CR Report intugroup.co.uk/cr2013 planned developments. Other information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 64 Governance

World Class Service We are focused on providing our customers with an excellent experience at all of our centres and during 2013 we implemented a Group-wide ‘World Class Service’ training programme. The World Class Service training programme has been an enormous success throughout the Group, embracing Intu’s values of Creative, Bold and Genuine while focusing on delivery of world class customer service at all of our centres. We recruited dedicated regional trainers who ran half-day workshops at every shopping centre over a period spanning nine months. Employees at Intu’s Head Office at 40 Broadway London, including Directors and Senior Management, also attended the workshops, where possible at our shopping centres, to bring together employees from a range of disciplines. At the end of each workshop every member of staff set a personal commitment to take forward to the next session, as well as personal goals to achieve in the future. The benefits of World Class Service training have been far reaching with highly positive feedback from our employees. The majority of our shopping centre staff are hugely enthusiastic about delivering World Class Service and are enjoying the interaction and positive feedback from our customers. All of our centre staff now have smart new vibrant uniforms, new customer reception desks are being installed and creative new seating for customers is being trialled, as well as a number of additional initiatives designed to help make every customer visit more enjoyable. All staff are encouraged to ‘go the extra mile’ and make a positive difference to the experience of our customers. We intend to continue to develop and evolve our World Class Service programme with regular refresher sessions and updates to be provided across the Group during 2014.

Find out more: intugroup.co.uk/ar2013

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 65 Governance

Governance Strategic report

Board of Directors 66 Executive management 68

Chairman’s introduction 69 Governance Corporate governance report 70 Directors’ remuneration report 82 Directors’ report 100 Statement of Directors’ responsibilities 102

Accounts Other information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 66 Governance Board of Directors

Chairman, Deputy Chairman and Executive Directors

1 1 Patrick Burgess MBE 3 David Fischel Chairman Chief Executive Age 69 Age 55 Appointed to the Board: Appointed as a Appointed to the Board: Appointed Finance Non‑Executive Director of the Group in 2001 Director in 1988, Managing Director in 1992 and and Chairman on 1 August 2008. Chief Executive in March 2001. Career: Patrick Burgess qualified as a solicitor in Career: David Fischel qualified as a chartered 1972 and became a partner in Gouldens in 1974, accountant in 1983 at Touche Ross & Co before serving as head of the Corporate Department for joining the Group in 1985. 14 years and as Senior Partner for six, culminating Skills and experience: At Touche Ross, David 2 with the merger of Gouldens with Jones Day worked in the corporate finance department with in 2003, from which he retired in 2007. He has experience in acquisitions, flotations and capital also been active in a number of charitable and raisings. During his 28 year career with Intu, David community organisations. has gained significant executive experience in Skills and experience: At Jones Day, Patrick numerous aspects of the shopping centre industry specialised in mergers and acquisitions and including shopping centre acquisitions and corporate re‑structuring. He has considerable developments. He has also been closely involved experience in compliance, regulatory and stock with the Group’s corporate development including exchange matters. equity and debt financings and a wide range of other corporate transactions, including the 2010 Other appointments: Non-Executive Director of demerger of Capital & Counties from Intu. 3 Standard Bank PLC. Other appointments: Non-Executive Director Chairman of the Capital Projects Committee of Equity One, Inc and Prozone Capital Shopping Chairman of the Nomination and Review Committee Centres Limited. Chairman of the Corporate Responsibility Committee

2 John Whittaker 4 Matthew Roberts Deputy Chairman Finance Director Age 50 Age 71 Appointed to the Board: Appointed as Finance Appointed to the Board: Appointed as Deputy 4 Director on 3 June 2010. Chairman and a Non-Executive Director on 28 January 2011. Career: Matthew Roberts was previously the Finance Director of Debenhams plc from 1996 Career: John Whittaker is the Chairman of the Peel to 2003, and Chief Financial Officer of Gala, Group which he founded in 1971 and developed subsequently Gala Coral Group Ltd, from 2004 into a leading UK infrastructure, transport and real to 2008. estate enterprise. Skills and experience: Matthew is a Fellow of the Skills and experience: John is a highly regarded Institute of Chartered Accountants in England real estate investor, and has overseen the growth and Wales, and has gained significant executive of the Peel Group across many sectors such as level finance experience in his previous positions at land, real estate, ports, airports, renewable energy Debenhams plc, where he managed its 1998 IPO and media. John is an experienced property and ran its international business and property developer and business leader illustrated by projects function, and at Gala where he led a number of such as The Trafford Centre and MediacityUK. acquisitions and fundraisings including the creation His appointment to the Board followed the of a £3 billion debt package following the acquisition acquisition by Intu of The Trafford Centre from the of Coral. Peel Group. Other appointments: Chairman of the Peel Group.

Audit Committee Remuneration Committee Nomination and Review Committee Executive Committee Corporate Responsibility Committee Capital Projects Committee

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 67 Governance

Non-Executive Directors

5 5 Adèle Anderson 8 Louise Patten Age 48 Age 60 Appointed to the Board: Appointed as a Appointed to the Board: Appointed as a Non‑Executive Director on 22 February 2013. Non‑Executive Director on 22 September 2011. Career: Adèle Anderson commenced her career Career: Louise Patten began her career at Citibank, at KPMG where she became a partner and working mainly in retail financial services until she held a number of senior roles, including Chief joined global strategy advisers Bain & Company Financial Officer. She is currently Chairman of the Inc in 1993 where since 1997 she has been a Strategic report Audit Committee of Save the Children International Senior Adviser. and a member of the easyJet plc Audit Committee. Skills and experience: Louise Patten has extensive 6 Skills and Experience: Adèle graduated from board level experience at a number of retail and Kent University with BSc Hons in Mathematics property companies including as Chairman of and Computer Science. She is a qualified ACA. Brixton plc and Interim Chairman of Somerfield She has gained extensive financial experience plc, and Non-Executive roles at Marks and throughout her career and has significant Audit Spencer plc, where she chaired the Remuneration Committee experience. Committee, GUS plc, Hilton Group plc and Harveys Furnishings plc. Other appointments: Non-Executive Director of easyJet plc; a member of the Board of Trustees Other appointments: Non-Executive Director of of both Save the Children UK and Save the Control Risks Group. Children International. 7 Chairman of the Audit Committee 9 Neil Sachdev Age 55 Appointed as a 6 Richard Gordon Appointed to the Board: Governance Age 55 Non‑Executive Director in November 2006. Appointed to the Board: Appointed as a Career: Neil Sachdev joined Tesco PLC in 1978, Non‑Executive Director in May 2010. where he was Property Director before joining J Sainsbury PLC as Commercial Director in March Career: Richard Gordon previously served as a 2007. He was subsequently appointed Property Non‑Executive Director of Intu Shopping Centres Director of J Sainsbury PLC in June 2010. plc between 1996 and 2006 and was appointed as 8 an alternate Director in respect of Graeme Gordon’s Skills and experience: Neil Sachdev has an MBA directorship of the Group in 2001. from Stirling University and has gained significant experience in retail, environment and property Skills and experience: He also served on the boards matters throughout his career. of a number of companies within the Liberty Life group and various companies within the commercial Other appointments: Neil is a member of the and residential real estate sector, mainly in Business Innovation and Skills Board on Green South Africa. Construction and the Construction Leadership Council. He was also appointed to the Joint Advisory Board of the Grantham Institute for Climate Change 7 Andrew Huntley in 2010. 9 Age 75 Chairman of the Remuneration Committee Accounts Appointed to the Board: Appointed as a Non‑Executive Director on 8 July 2009 and Senior Independent Director with effect from 10 Andrew Strang 1 August 2013. Age 61 Career: Andrew Huntley’s career commenced some Appointed to the Board: Appointed as a 40 years ago with Richard Ellis where he served Non‑Executive Director on 8 July 2009. as Chairman from 1993 until 2002. He was a Non- Career: Andrew Strang started his career with Executive Director of Pillar Property plc from 2000 Richard Ellis 39 years ago. He served as Managing to 2005 and Chairman of Metric Property Plc from Director of Threadneedle Property Investments 2010 until 2013. 10 Limited for 17 years until January 2008. He was Skills and experience: Andrew Huntley Chairman of Hermes Real Estate Investment is a Chartered Surveyor and experienced Management from 2009 to 2011. He was a Director property adviser. of the British Property Federation from 1994 to 2013, and is a current member of the Norges Bank Other appointments: Non-Executive Director of Investment Management Real Estate Advisory Capital & Counties Properties PLC. Board and a member of the Investment and Governance Committees at AEW UK. Other information Skills and experience: Andrew is a Chartered Surveyor and has substantially focused on property investment throughout his career. Other appointments: Non-Executive Director of Capital & Counties Properties PLC.

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 68 Governance Executive management

Executive Committee*

Martin Ellis Trevor Pereira Construction Director Digital and Commercial Director Appointed as a Director of Intu Shopping Joined the Group in 2007 as Commercial Director, Centres plc on 1 October 2005. Initially joined Intu Shopping Centres plc. He was appointed the Group in 1990 and was appointed in 2008 Group Commercial Director in October 2011 and as Managing Director, Liberty International Digital and Commercial Director in November 2013. Construction and Development Limited. Previously worked for airport group BAA plc for Following the demerger of the Capital & Counties 21 years, latterly as Retail and Commercial Director business in May 2010, he reverted to being Intu’s for Heathrow Airport. Construction Director responsible for development and construction projects. Mike Butterworth Peter Weir Chief Operating Officer Group Financial Controller Hugh Ford Appointed as Chief Operating Officer on 3 October Joined the Group in October 2008 as Group 2011. A Fellow of the Royal Institution of Chartered General Corporate Counsel Financial Controller. Previously worked in a number Surveyors, Mike joined the Manchester Ship Canal Appointed General Corporate Counsel to the of finance roles in both listed and privately owned Company, now part of the Peel Group, in 1981, and Group in 2003. Previously he was General Manager companies, lastly before joining the Group as became Property Director of Peel Holdings in 2002. Legal at Virgin Atlantic Airways, and before that Finance Director-Europe at Fidelity International. He has extensive experience in the shopping centre a commercial lawyer with British Airways Plc. A member of ICAS. industry having served as Managing Director of The He qualified as a solicitor in 1992 with Freshfields. Trafford Centre Limited from 1996, responsible for the opening of the centre in 1998, until 2011 when The Trafford Centre was acquired by Intu. Susan Marsden Group Company Secretary Joined the Group as Company Secretary in 2000. Fellow of the Institute of Chartered Secretaries and Administrators. Commenced her career at the London Stock Exchange, and has been Company Secretary of two FTSE real-estate sector companies prior to joining the Group.

Executive management Biographies of the senior management team are available on our website at: intugroup.co.uk/who-we-are/our-people/ executive-management/

* Additional members of the Executive Committee are the Chief Executive (Chairman of the Committee) and the Finance Director, whose biographies are set out on page 66.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 69 Governance Introduction by the Chairman of the Board

The following report, and the reports UK Corporate Governance Code of the Audit Committee, Nomination & Compliance – Last year, we indicated Review Committee and Remuneration that steps would be taken to address Committee, set out in detail the the additional obligations placed on governance framework and key the Board and Audit Committee under matters addressed by the Board and its the Code relating to the integrity of Committees during the year. In particular, the Annual Report and Accounts. Strategic report I would like to highlight the following key Further to a formal request from the areas of focus during 2013: Board as envisaged by Code provision C.3.4, the Audit Committee has Board and Committee composition – confirmed to the Board that in its opinion, Patrick Burgess John Abel and Rob Rowley stepped down Chairman the Annual Report and Accounts for as Directors during 2013. Adèle Anderson the year ended 31 December 2013, was appointed as a Non‑Executive taken as a whole, is fair, balanced and Dear Shareholder, Director replacing Rob Rowley as understandable and provides the Chairman of the Audit Committee, and I am pleased to introduce Intu’s information necessary for shareholders. Corporate Governance report for 2013. Andrew Huntley replaced Rob as Senior Independent Director. We also made a Our approach to good governance 2013 was a year of rapid and dynamic number of changes to terms of reference continues to be robust and, we believe, change in the business, with a major for the Committees and changed their highly effective. Our governance Governance rebranding exercise, three major composition, all of which has served procedures are kept under close scrutiny acquisitions, a new debt funding platform to improve the effectiveness of the by the Board, and we react quickly, where established, transformational strides Committees and the communication appropriate, to introduce changes in best into the digital retailing world including between the Committees and the Board. practice and regulation. I am confident installation of Wi-Fi in our centres and that our attitude and approach to good Risk management – As a result of the launch of a transactional website, the governance is embedded throughout rapid changes to the business including formation of a new venture with Europa the business and remains of the highest especially the increased focus on digital to directly employ all facilities staff at standard. Intu has complied fully with services and the expansion of operations our centres – an additional headcount the UK Corporate Governance Code into Spain, the Audit Committee has of approximately 1,300 staff, and throughout all of 2013. World Class Service training across the overseen an evolution of the Group’s entire workforce. risk management methodology to ensure all risks are identified and The Board has sought to provide the

prioritised appropriately. In 2013, the risk Accounts right environment to allow the Group management process was stripped back to flourish and pursue its strategic to the basics and a comprehensive formal Patrick Burgess aims, while supporting management appraisal of risk appetite undertaken. Chairman and maintaining a rigorous governance All existing and new risks were analysed, framework. The Non-Executive Directors discussed and reviewed with the Board 28 February 2014 continue to provide meaningful and and Senior Management. Each risk was constructive challenge as well as bringing assessed as to potential impact and independent views and experience from probability and categorised accordingly. their diverse business backgrounds, Further information on the Group’s risks while embracing the Intu values and can be found on pages 38 and 39. Compliance Statement strategic vision. Compliance with the UK Corporate Governance Code

The Company has, throughout the year Other information ended 31 December 2013, complied with all provisions of the UK Corporate Governance Code. Compliance with the Disclosure and Transparency Rules The disclosures required under DTR 7.2 of the Disclosure and Transparency Rules are contained in this report, except for those required under DTR 7.2.6 which are contained in the Directors’ report.

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 70 Governance Corporate governance report Leadership

The Board

Audit Committee* Remuneration Committee* Nomination and Review Committee*

Chairman Key responsibilities Chairman Key responsibilities Chairman Key responsibilities Adèle Anderson Monitoring the integrity Neil Sachdev Setting remuneration policy Patrick Burgess To ensure that the Board of financial statements, for all Executive Directors is comprised of individuals Members internal controls and risk Members and the Chairman and Members with an appropriate balance Neil Sachdev management process and Louise Patten recommending and Andrew Huntley of skills, knowledge and Andrew Strang reviewing the effectiveness Adèle Anderson monitoring the level and Neil Sachdev experience. of the internal and external structure of remuneration Louise Patten auditors. for senior management. More information Nomination and Review More information More information Committee Report – Audit Committee report – Directors’ remuneration pages 79 to 81. pages 74 to 77. report – pages 82 to 99.

Executive Committee Corporate Responsibility Committee

Chairman Key responsibilities Chairman Key responsibilities David Fischel Considers investment proposals, reviews progress on Patrick Burgess Oversee the management of the Group’s Corporate projects and project expenditure in detail and receives Responsibility activities. Members updates on other business matters. Has delegated Members Matthew Roberts authority, within limits, to authorise initiatives and David Fischel Number of meetings in 2013 Mike Butterworth expenditure. Neil Sachdev Three. Martin Ellis Alexander Nicoll Hugh Ford Meets fortnightly (CR Director) More information Susan Marsden Jennifer Sandars Corporate responsibility report – pages 54 to 63. Trevor Pereira (CR Manager) Peter Weir

Capital Projects Committee

Chairman Key responsibilities Patrick Burgess Reviews new projects and project expenditure in detail and, as appropriate, comments on certain projects for Members the Board. Has no power to approve proposals or John Whittaker authorise expenditure. David Fischel Matthew Roberts The Capital Projects Committee is not a formal Mike Butterworth committee of the Board. Martin Ellis * Terms of reference of the Audit, Andrew Huntley Remuneration and Nomination and Neil Sachdev Review Committees are available on the Company’s website.

The Board Led by the Chairman, the Board’s overarching objective is governance framework which underpins the culture of the to provide effective leadership to the Group underpinning the Group. This framework consists of committees with specific business model described on pages 14 and 15 to ultimately delegated responsibilities (as shown in the diagram above), deliver long-term growth and generate sustainable returns and internal policies, procedures and controls (including for its shareholders. It does this by setting and implementing delegated authority limits) which are regularly reported on, strategy, ensuring that its employees are professional, reviewed and updated by the Board and the relevant Board motivated and focused, and establishing a balanced approach Committees. The internal processes are communicated to to risk within the framework of established controls. all staff and are available at all times on the Group’s intranet. Delegated authority limits apply at all levels of the business and Appropriate and effective corporate governance is taken their application is incorporated into the standard procedures extremely seriously and is intrinsic to all aspects of the for the execution of all leases, licences, contracts and other Board’s activities. The Board is accountable to the Company’s relevant documentation by the Group. The Board considers that shareholders and other stakeholders for the good conduct the way in which both the Board and the Group function meets of the Company’s affairs. It has therefore established a the highest standards of accountability and probity.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 71 Governance Corporate governance report

The Company’s approach to corporate responsibility is a key Matters reserved for the Board element of its overall governance culture. We have consistently Responsibility for the day-to-day management of the Group demonstrated a strong commitment to high standards of is delegated to certain Board Committees, the Executive corporate responsibility, particularly focused on the local Directors (with the support of the Chief Operating Officer) and communities surrounding our shopping centres and details of senior management. These delegated powers are supported our CR activities are set out in the CR report on pages 54 to 63, by delegated authority limits which are documented and kept which we strongly recommend shareholders to read, and on the under review by the Board. Strategic report Company’s website. Certain matters have been reserved for decision by the whole Structure of the Board and independence Board and a schedule setting out a list of these is reviewed regularly. These include, but are not limited to Board structure — strategy — the application of the Board protocol for dealing with related-party matters — dividend policy Chairman 1 Executives 2 — major acquisitions and disposals, other capital expenditure Non-Executives 7 and controls

Board independence (excl. Chairman) — risk management Governance — shareholder circulars and other documents required by the listing rules The Board also receives regular reports on the proceedings of its Committees and considers their recommendations. Executive 2 It has been the Board’s custom over many years to ensure Non-Independent 2 Independent 5 that major decisions are taken after a reiterative process which involves examination and review at several levels. In part, Gender split this examination and review process is dealt with by the Board and other Committees mentioned below. The Chairman and Chief Executive The roles of the Chairman, Patrick Burgess, and of the Chief Executive, David Fischel, are separate and have been defined Accounts Women 2 by the Board. In summary, the Chairman’s responsibilities Men 8 include leading the Board, setting its agenda and ensuring its effectiveness on all aspects of its role. He also ensures that the Length of tenure of Non-Executive Directors Board maintains effective communication with shareholders and management. The Chief Executive’s key responsibilities include day-to-day management of the Group’s operations in the most effective way possible, implementing the policies and strategies developed by the Board and developing the abilities and skills of the Group’s personnel to the maximum potential. 0-3 years 3 3-6 years 3 6-9 years 1 Non-Executive Directors The Non-Executive Directors bring an external and independent view to the Board’s discussions, providing constructive Other information challenge to executive management when appropriate. Biographical details of each Director are set out on pages 66 and 67.

Intu Properties plc – Annual Report 2013

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The Senior Independent Director Board meetings Rob Rowley stepped down as Senior Independent Director on The Board meets regularly during the course of the year, and 31 July 2013, and Andrew Huntley was appointed as Senior met a total of eight times in 2013. There were five scheduled Independent Director in his place. In this role, Andrew provides meetings as well as a Directors’ Away Day focused on plans and advice and additional support and experience to the Chairman strategy for 2014. A further two unscheduled meetings were as required, and is available to act as an intermediary for the held, both of which were necessarily convened at short notice other Directors if necessary. Andrew also leads the appraisal to deal with matters arising between the scheduled meetings. of the Chairman’s performance annually in discussion with the At each scheduled meeting, the Executive Directors, Chief other Non-Executive Directors, and is available as an additional Operating Officer and Company Secretary give reports on point of contact for shareholders should they feel that their key areas of responsibility. In addition, the chairmen of the communication through the normal channels of the Chairman, Audit, Remuneration and Nomination and Review Committees Chief Executive, Secretariat or Investor Relations team has give an update on the discussions of those Committees, failed or is otherwise inappropriate. highlighting any areas requiring escalation to, or consideration Alternate Directors by, the full Board. Other matters for discussion are added to John Whittaker and Richard Gordon have appointed Steven the agenda for scheduled Board meetings, or discussed at Underwood and Raymond Fine respectively as their alternates additional Board meetings, as required. under the terms of the Company’s Articles of Association. The Board has generally invited the alternate Directors to Key matters discussed/approved by the Board in 2013 attend Board meetings. — strategic acquisitions in the UK, including the acquisition of Midsummer Place, Milton Keynes, to fill a gap in our national coverage, and the acquisition of Charter Place, The attendance of Directors at all Board meetings held in 2013 Watford is set out in the table below: — refinancing of debt falling due in the next three years, in particular raising £1.15bn of bond and bank debt Board under the new debt funding platform established in Scheduled Additional February 2013 and the £485m bond issue secured on (5 meetings) (2 meetings) intu Metrocentre in November 2013 A B A B — progress of development projects including major Patrick Burgess 5 5 2 2 extensions at intu Watford and intu Lakeside David Fischel 5 5 2 2 Matthew Roberts 5 5 2 2 — strategic acquisition of Parque Principado, Oviedo, Spain John Whittaker1 5 4 2 2 with a strong partner John Abel2 2 2 – – — the rebranding to intu and roll-out of the brand and new Adèle Anderson 5 5 2 2 digital infrastructure across our centres Richard Gordon 5 5 2 2 Andrew Huntley 5 5 2 2 Louise Patten3 5 5 2 1 Rob Rowley4 3 3 2 2 Neil Sachdev3 5 5 2 1 Andrew Strang3 5 5 2 1

A = Maximum number of meetings the Director was eligible to attend. B = Number of meetings actually attended. 1 Unable to attend the Board meeting in February 2013 due to personal commitments. 2 Stepped down from the Board on 8 May 2013. 3 Unable to attend an additional meeting convened at short notice due to prior commitments. 4 Stepped down from the Board on 18 October 2013.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 73 Governance Corporate governance report

Communication between Board meetings Time commitment, external activities and conflicts of interest Directors are kept fully informed of progress on matters Non-Executive Directors are generally appointed for a three- between formal meetings, in particular by way of scheduled year period and their continuing service thereafter is subject conference calls in every month when there is not a formal to review by the Board. Their annual time commitment will Board meeting, ad hoc meetings and other communications vary according to their membership of Board Committees on a regular basis. and the activities of the business in any given year. The terms of appointment of the Non-Executive Directors set out the Strategic report The Chairmen of the Audit Committee and Remuneration minimum expectation of preparation for and attendance Committee communicate regularly with relevant staff and at all Board meetings, Board Committee meetings where advisers including the Head of Risk and Internal Audit, the appropriate, ad-hoc meetings and the annual Board ‘Away Day’. Company Secretary and the Remuneration Consultants. Non-Executive Directors are required to confirm on accepting Effectiveness their appointment, and annually following each accounting year end, that they are able to allocate sufficient time to meet the Balance, composition and culture expectations of the role. The Nomination and Review Committee regularly reviews the balance (including skills and experience) and composition of The terms of appointment for each of the Non-Executive the Board to ensure that it operates efficiently. The Board has Directors are available for inspection at the Company’s therefore determined that candidates for the role of Non- registered office, or on written request from the Executive Director should have relevant qualifications and Company Secretary. experience notably in property, retail, and finance, areas that Directors have a statutory duty to avoid situations in which Governance are well represented by the current Non-Executive Directors they have or may have interests that conflict with those of Intu, (see biographies on page 67). including when a Director takes up a position with another The appropriate balance of skills, independence, experience company, unless that conflict is first authorised by the Board. and knowledge does not in itself ensure the efficient operation The Board has adopted a formal procedure for the identification of a Board. To this end, the role of the Chairman is essential in of conflicts under which Directors must notify the Chairman of creating an environment where the Non-Executive Directors any potential conflicts. The Chairman then decides whether a are able to draw on their own experience to constructively conflict exists and recommends its authorisation by the Board challenge the views of the executive management. where appropriate. In certain circumstances, the conflicted The Chairman works closely with the Company Secretary to Director may be required to recuse himself from the Board’s ensure that all Directors are provided with fully accurate and discussions on a matter in which he or she is conflicted. timely information to facilitate informed discussion at Board Directors must also notify the Chairman when they take on meetings. The Chairman is particularly mindful that the views any additional responsibilities or external appointments, and of all Directors should be taken into consideration and that the it is their responsibility to ensure that such appointments Accounts range of experience of our Non-Executive Directors must be will not prevent them from meeting the time commitments drawn upon to provide insight and alternative perspectives to discussed above. aid the Board’s decisions on key strategic matters. In addition, the Board has implemented a ‘Related Party The Board reviews the independence of its Non-Executive Protocol’ for situations where a proposed transaction could Directors on an annual basis. With the exception of John be captured by the related party provisions of the Listing Rules Whittaker and Richard Gordon, both representatives of or by the Companies Act 2006. major shareholders, the Board has concluded that all other Non-Executive Directors continue to demonstrate their independence. The balance of the Board is illustrated on page 71. Other information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 74 Governance Corporate governance report Audit Committee

Dear Shareholder, I am pleased to present to you the Audit Committee report Finally, in recognition of the requirements of the revised for 2013. I joined the Committee on 22 February 2013 and Corporate Governance Code and, in part, resulting from succeeded Rob Rowley as Chair of the Committee on 1 August recommendations arising from the Board’s external 2013. I would like to record the Committee’s sincere thanks performance evaluation, we have sought to further improve to Rob for his effective Chairmanship over the last five years. the focus and efficiency of Audit Committee meetings by updating the Committee’s terms of reference, overhauling the In addition to its core activities, the Committee has this year agenda and improving the effectiveness of routine reporting for focused particularly on enhancing the Group’s approach to risk the meetings. management; increasing the transparency and helpfulness of the Annual Report and financial statements.

The Committee has overseen a comprehensive risk review process, in part to address the changing nature of the risks we face as we move into a new operating environment, with Adèle Anderson the focus on digital and a new jurisdiction with our activities Chairman of the Audit Committee in Spain. The review included the introduction of a more structured assessment of risk appetite across the Group. The results of the risk review were discussed by the full Board at its annual Away Day and the Group’s risk management framework is described in detail on page 38. Chairman Following the introduction of the Revised Corporate Adèle Anderson* (Independent Non-Executive Director) Governance Code, the Board asked the Audit Committee Members to advise it on whether the annual report is fair, balanced Neil Sachdev (Independent Non-Executive Director) and understandable and allows shareholders to make an Andrew Strang (Independent Non-Executive Director) assessment of the Company’s performance, business model and strategy. The Audit Committee reviewed drafts of Meetings in 2013 the annual report, taking into account the opinions of the Audit Committee1 external auditor and key executives of the Group in making (4 meetings) its judgement and advising the Board accordingly. A B Adèle Anderson (Chairman)2 3 3 In relation to audit tendering, the Committee is keeping Rob Rowley3 3 3 under review the ongoing legislative proposals from the EU and the Competition Commission following which the FRC Neil Sachdev 4 4 has stated that it intends to remove the reference to audit Andrew Strang 4 4 tendering from the provisions of the UK Corporate Governance A = Maximum number of meetings eligible to attend. Code. Following our annual review of auditor quality and B = Number of meetings actually attended. independence, we have determined that it is not necessary 1 The Audit Committee normally invites the Chairman, Chief Executive and to tender the audit contract for the time being, and have Finance Director to attend meetings and they attended all four meetings of the Committee in 2013. recommended that PwC be reappointed for the 2014 audit. 2 Appointed to the Audit Committee from 22 February 2013. 3 Stepped down from the Audit Committee on 31 July 2013.

* The Board considers that Adèle Anderson has significant recent and relevant financial experience, as required by the UK Corporate Governance Code.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 75 Governance Corporate governance report

Responsibilities In reviewing the independence of the external auditor, the The Audit Committee’s key responsibilities are to monitor Audit Committee considered a number of factors, including and review the experience and tenure of the external auditor; the nature and level of services provided by the external auditor; and — the integrity of the financial statements, including a review confirmation from the external auditor that it has remained in of the significant financial reporting judgements and compliance with relevant UK independence standards.

accounting policies Strategic report The Chairman of the Audit Committee also met privately with — the effectiveness of the Group’s internal control and the lead audit partner on several occasions outside of the Audit risk management Committee meetings. — the effectiveness of the internal audit function, including The Audit Committee continues to monitor the ongoing the work programme undertaken by the function legislative proposals on audit tendering and rotation from — the Group’s policy on whistleblowing the EU and the Competition Commission. These proposals have effectively superseded the comply-or-explain provisions — the Group’s overall approach to monitoring areas of risk in the UK Corporate Governance Code which would otherwise — the Company’s relationship with the external auditor, have applied to the Group for the first time this year. including its independence PricewaterhouseCoopers LLP has been the Company’s audit Main activities during the year firm since 1998 and during this period its effectiveness and In addition to its key responsibilities, the Audit Committee also independence has been annually assessed by the Audit Governance considered the following matters in 2013 Committee which has not considered it necessary to require the firm to tender for the audit work, and a resolution to — the 2013 Internal Audit Plan and Audit Charter re‑appoint PricewaterhouseCoopers LLP for the 2014 audit — accounting treatment of the most significant transactions in will be proposed at the 2014 AGM. the year including the acquisitions of Midsummer Place and The Committee will continue to review the effectiveness and Parque Principado, Spain and the newly established venture, independence of PricewaterhouseCoopers LLP each year. Intu Retail Services Key financial reporting and significant judgements — discussion on the appropriateness of those items classified During the year the Committee discussed the planning, as ‘exceptional’ in the year and therefore excluded from the progress and final conclusions of the external audit calculation of underlying earnings process. The audit plan was reviewed and approved at the July — the results of an impairment review of the carrying value of 2013 Committee meeting. The significant risk areas identified the Group’s investment in Prozone due to the market value were: investment property valuations; revenue recognition; of the shares trading at a discount to the Group’s carrying and management override of controls. International Standards Accounts value based on share of net assets. The review concluded on Auditing (UK and Ireland) identify these latter two risks as that no impairment was required at this time significant for all companies. These issues were discussed by the Committee following finalisation of the year end audit. — risks associated with the creation of the Group’s new venture Intu Retail Services, that resulted in the Group in‑sourcing The Committee takes into account the views of the external facilities management auditor in understanding and assessing whether suitable accounting policies have been adopted and whether — risks associated with the launch of the transactional website management has made appropriate estimates and judgements, intu.co.uk and whether disclosures are balanced and fair. The main issues — changes to accounting standards and their potential impact discussed by the Committee in the current year were: on the Group Valuation of investment properties — the Group Whistleblowing policy, resulting in amendments For both the Interim results at 30 June 2013 and the full

to the policy and procedures around its application year’s audited results included in this report the Committee Other information reviewed and discussed with management and auditor — tendering of the external audit contract the key assumptions and results of the valuation process External auditor undertaken by the independent third party valuers. The Audit Committee has assessed the effectiveness of the The review included understanding which general factors had external auditor, PricewaterhouseCoopers LLP, based on its influenced the valuers in concluding on appropriate yields to performance against the audit plan and half year and full year use in the valuations. This involved factors effecting both the reporting, taking into account feedback from management. investment and occupier markets and recent comparable The effectiveness of the audit process was also reviewed on market transactions. the basis of meetings with finance, internal audit staff and other senior executives.

Intu Properties plc – Annual Report 2013

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Particular emphasis was given to understanding the factors As a result of its considerations the Committee is satisfied that had resulted in individual property valuations being either that, taken as a whole, the Annual Report is fair, balanced significantly above or below the average movement in the and understandable. Group’s valuations. Non-audit services Due to the overall importance of the valuations to the Group’s The Company has a policy to ensure that the provision of any results, the Board also invited DTZ, the firm that undertakes the non-audit services by the incumbent external auditor does largest proportion of the Group’s valuations, to participate in its not impair the external auditor’s independence or objectivity. consideration on the valuations, utilising the detailed property The term ‘non-audit services’ does not include reference to any sector experience of the Board to ensure a thorough review of advice on tax. the valuation outcome. The Audit Committee has considered the option of putting Going concern material non-audit work out to tender. While recognising that The Company’s ‘going concern’ review which is based on the circumstances of a particular transaction may make it an 18 month cash flow projection, with particular focus on inappropriate to use a firm other than the incumbent external the next twelve months, was discussed with management. auditor for such work (for example where the nature of the The projections cover the major trading cash flows, being rental transaction would not allow a new firm sufficient time to income, interest expense and capital expenditure plans in the assimilate the requisite knowledge of the Company’s operations context of the latest debt maturity profile. in order to carry out the non-audit work), the Audit Committee has recommended that non-audit work should be put to tender Stress tests of the projections were considered, covering wherever possible. reductions in net rental income levels and the value of the Group’s properties and what impact such changes may have The Audit Committee has delegated to the Executive on both the Group’s liquidity and its ability to meet the financial Directors the authority to contract for non-audit services covenants on its debt facilities. The discussion also considered with the external auditor subject to observing certain what actions were available to the Group to mitigate the impact guidelines including of such reductions on the cash flow projections. (a) Executive Directors have the authority to commission Following discussions with management, the Committee agreed the external auditor to undertake non-audit work up to a with the conclusions reached and the treatments relating to the specified value; above issues adopted in these financial statements. (b) the Executive Directors must consider whether the proposed Fair, balanced and understandable arrangements will maintain audit independence; and At the request of the Board, the Committee considered (c) the external auditor must satisfy the Company that it is whether the 2013 Annual Report was fair, balanced and acting independently. understandable and whether it provided the necessary information for shareholders to assess Intu’s performance, Details of the amounts paid to the external auditor for business model and strategy. As part of its considerations audit and non-audit services are included in note 11 on the Committee took into account the preparation process page 120 to the financial statements. The Company engaged detailed below PricewaterhouseCoopers LLP to carry out certain non-audit work in 2013 including assurance services in respect of the — at an early stage, a matrix is produced identifying key themes Group’s 2013 interim report and work in relation to the and the sections in which those themes should be reflected prospectuses that were required to be published as part of the — individual sections of Annual Report are drafted by listing requirements in respect of the Secured Group Structure appropriate senior management with regular review and Metrocentre bonds that were issued in the year. The above meetings to ensure consistency across the whole document safeguards were adhered to when awarding the non-audit work. Fees paid to PricewaterhouseCoopers in respect of non-audit — a verification process is undertaken to ensure that work represented 61 per cent of the total fees paid. information contained is appropriately supported and factually accurate Risk management and internal control The Board has overall responsibility to oversee the Group’s — detailed reviews of drafts of the Report are undertaken system of internal control and to keep its effectiveness under by members of the Executive Committee and other review, as well as to determine the nature and extent of the senior management risks it is willing to take in achieving its strategic objectives — drafts are discussed with the Group’s legal advisors based on the balance of potential returns and negative and brokers impacts. The ongoing risk management process is described in detail on page 38 and is designed to manage, rather than — a final draft is reviewed by the Audit Committee and eliminate, the risk of failure to achieve business objectives and discussed with senior management prior to consideration by can provide only a reasonable, rather than absolute, assurance the Board against material misstatement or loss.

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During 2013, the Group’s risk management methodology The most significant areas addressed in 2013 were: Shopping has been further developed including in the introduction of Centre Healthchecks (or follow up reviews) at intu Lakeside, intu a new approach to identifying and prioritising risks, and a Eldon Square, intu Broadmarsh, Midsummer Place, Braehead formal assessment of risk appetite. The risk management Leisure, and St David’s Dewi Sant; accounts payable review; process continues to evolve to provide Intu with appropriate a review of self-certification at the centres and Head Office; methodology as the operating environment changes. a review of data held in the business; intu Digital compliance; reviews of lease data and lease systems; and corporate Strategic report Key elements of the Group’s internal control system relating to responsibility reviews at four centres. Additionally, annual financial reporting are as follows assurance activities were performed. The Audit Committee — the Group has a comprehensive system for reporting regularly reviews the effectiveness of the risk and internal audit financial results to the Board; detailed regular financial function and in particular ensures that the function remains reports with comparisons to prior year/historic performance sufficiently independent of the wider business to ensure it can and against budget and forecasts are provided to the Board. carry out its work effectively. An independent review of the Risk The Board reviews these for the Group as a whole and takes and Internal Audit function was performed at the end of 2013. action when appropriate Whistleblowing policy — the Group undertakes a detailed financial reporting process The Audit Committee reviews the Group’s arrangements by on a quarterly basis. This process is carried out using the which staff can confidentially raise concerns about possible policies and practices that apply to the control environment improprieties (whether financial or otherwise) within the on an ongoing basis, and is largely undertaken by the Group’s Group. Any whistleblowing incidents are reported to the Governance financial reporting team, which comprises appropriately Audit Committee; there were no incidents during 2013. qualified finance professionals. Detailed planning is The Audit Committee has reviewed the Group’s approach to undertaken prior to the period end. As part of this process, whistleblowing and various measures have recently been taken significant business risks and their potential impact on to reinforce Intu’s commitment to an effective whistleblowing the financial reporting process and results are considered, policy and its awareness among staff, including including the effect of any changes in the business activities — re-drafting the existing whistleblowing policy to make it or accounting standards and matters arising from the more user friendly, incorporate new avenues for raising underlying information systems. The preparation of the concerns (i.e. via an online facility), communicate the role of consolidated financial results involves a number of review the Audit Committee in the process, reflect Chief Executive stages. One of these stages includes a technical accounting endorsement, and emphasise the protections afforded review by an internal technical specialist, who has primary to informants responsibility for ensuring that financial accounting developments are appropriately dealt with in the Group’s — improving accessibility to whistleblowing information and financial reporting process. After various internal review advice via the Group’s intranet Accounts stages, draft financial reports, with narrative commentary on — creating an online form to register concerns new technical requirements or issues requiring a significant level of judgement, are prepared for review and approval by — updating and improving the welcome message on the the Audit Committee. This review stage involves the Audit whistleblowing hotline Committee discussing the consolidated financial results and — enhancing publicity of the whistleblowing policy throughout significant judgements with senior management and, where the Group appropriate, the external auditor Audit Committee effectiveness The Board has conducted a review of the effectiveness, on the As part of the Board evaluation process, the Audit Committee basis of criteria set out in the 2005 Financial Reporting Council’s reviewed its own effectiveness and the results were overall internal control guidance for Directors, of systems of internal highly positive. The Committee took the opportunity to financial control and risk management for the year ended streamline the agenda and papers submitted for its meetings 31 December 2013 and has confirmed that there have been no to improve efficiency and decision making. Other information material developments affecting their review which have taken place since the year end.

Internal audit The Group has a risk and internal audit function which reports to the Audit Committee. The risk and internal audit Adèle Anderson function reviews internal controls, and reports to the Audit Chairman of the Audit Committee Committee on whether such controls are in place and are being 28 February 2014 operated effectively.

Intu Properties plc – Annual Report 2013

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Relations with shareholders Overall approach Intu places considerable emphasis on maintaining an open — Investor conferences: Several investment banks hold and frank dialogue with investors. Our programme of investor conferences for investors and companies in the real estate relations activities is based around the financial reporting sector. They are a good opportunity for the executive team calendar and seeks to to meet a large number of current and potential investors in a mixture of group and one-to-one meetings and informally. — develop existing and potential investors’ understanding Intu attended six such conferences in 2013 in the UK, Europe of Intu’s business strategy, operations, performance and and the US investment case — General meetings: The Annual General Meeting (‘AGM’), — provide to the Board and executive team an insight into the usually held in May, gives the opportunity for all shareholders differing views of Intu’s shareholders (private and institutional) to ask questions of the Board, With these objectives in mind, the executive team (including, including the Chairmen of both the Audit and Remuneration on occasion, the Chairman) met with representatives of 120 Committees. The entire Board is also available to talk to investment institutions during 2013 to keep them informed of shareholders before and after the meeting. The results of our performance and plans, to answer their specific questions all shareholder votes are announced via the London and and to understand their views. In addition our website provides Johannesburg stock exchanges and are available on the to all shareholders a great deal of immediate as well as general Company’s website information and a feedback facility. Regular visits to our — Interaction with ‘sell side’ analysts: Many investors develop properties enable investors to see our operations close up. their understanding of the Company partly through Key components of the investor relations programme discussions with independent analysts. Intu engages with — One-on-one meetings with principal shareholders: The analysts from around 25 institutions in order to improve Chairman is available to meet with key investors to answer the accuracy and insight of their research. The Board is kept their questions and to better understand their views, informed of analyst commentary and recommendations. particularly with regard to governance matters A list of the analysts publishing material on Intu can be found at intugroup.co.uk/investors/shareholders-bondholders/ — Results-related meetings: Institutional shareholders are analysts/ invited to a presentation with question and answer session by the executive team on the day of announcement of final — Debt investors: Representatives of Intu’s key relationship and interim results. They can choose to attend in person, by banks are invited to the bi-annual results presentations by phone or join the webcast. The Chairman and a number of the executive team and meet periodically with the Finance the Non-Executives also attend these presentations Director. Institutional investors in certain of the Group’s listed debt are invited to periodic updates on the Group’s business — Road shows: In the few weeks following results and performance. We welcome the moves by some credit announcements, executive management conduct side institutional investors towards more openness regarding a series of one-to-one and group meetings with holdings of debt instruments and ‘road show’-style one-to- institutional shareholders in the UK, South Africa, one meetings. Europe and the US, giving the opportunity to meet other fund managers as well as the sector specialist of each institution. Unattributable feedback from these meetings collected by our brokers is provided to the Board — Investor and analyst property visits: Institutional shareholders are invited to attend at least one property visit each year with presentations on Intu’s business. This gives an opportunity for formal and informal interaction with the executive team and the ‘next tier’ of operational management. In 2013, investors visited intu Trafford Centre, intu Lakeside, intu Braehead, intu Metrocentre and intu Eldon Square to see recent changes and to hear about significant planned projects. Such presentations are available for download from the Investors section of our website intugroup.co.uk

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 79 Governance Corporate governance report Nomination and Review Committee Strategic report

Dear Shareholder, Chairman I am pleased to present to you the report of the Nomination Patrick Burgess (Chairman of the Board) and Review Committee for the year ended 31 December 2013. Members The main focus of the Committee in the year was the Andrew Huntley (Independent Non-Executive Director) composition of the Board and its Committees, in particular Louise Patten (Independent Non-Executive Director) ensuring that suitable appointments were made to replace Neil Sachdev (Independent Non-Executive Director) Rob Rowley as Senior Independent Director and to fill the Meetings in 2013

various Committee membership positions which Rob held. Governance Adèle Anderson was appointed as a Non-Executive Director Nomination and Review Committee (4 meetings) and Chair of the Audit Committee (replacing Rob Rowley). She also serves as a member of the Remuneration Committee. A B Patrick Burgess (Chairman) 3 3 The terms of reference for the Nomination and Review Andrew Huntley1 – – Committee were reviewed and updated, and the composition Louise Patten2 3 3 of the Committee was reviewed and adjusted. Rob Rowley3 3 3 The Committee approved the introduction of a comprehensive Neil Sachdev 4 4 succession planning and leadership development programme across the Group, identifying appropriate internal succession A = Maximum number of meetings eligible to attend. paths and establishing a programme for talent development. B = Number of meetings actually attended. 1 Appointed to the Nomination and Review Committee from The Committee also initiated the formal Board performance 1 December 2013. 2 Appointed to the Nomination and Review Committee from 1 April 2013. evaluation process which was undertaken this year by an Accounts 3 Stepped down from the Nomination and Review Committee from external facilitator, Claire Howard Consultancies, the outcome 18 October 2013. of which is summarised on page 81. Finally, I am pleased to report that female representation on the Intu Board currently stands at 20 per cent, which keeps us ahead of recently reported figures for the FTSE 250 generally. Our statement on our diversity policy is set out on page 80.

Patrick Burgess

Chairman Other information

Intu Properties plc – Annual Report 2013

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Responsibilities and how they were discharged in 2013 Appointment of Adèle Anderson The principal role of the Nomination and Review Committee is Adèle Anderson was appointed as a Non-Executive Director on to evaluate the skills available on the Board and to determine 22 February 2013 following a rigorous appointment process when appointments and retirements are appropriate. described in full in our 2012 Annual Report. In addition to its key responsibilities set out above, the Succession planning Committee is also responsible for carrying out the annual Succession planning and the development of talent in performance evaluation of the Board, its Committees and the business was considered by the Committee and a individual Directors, as well as making recommendations comprehensive talent and leadership development programme, to the Board on appointments to the Board, including the including succession planning, has been implemented across induction programme for newly appointed Directors, and the entire Group from the Board down. The Committee will on succession planning. monitor the progress of the programme at every meeting. The Committee met four times in 2013 with its main focus Renewal of Non-Executive appointments on the composition of the Board and succession planning. All Directors will submit themselves for re-election at the forthcoming Annual General Meeting in May 2014. Statement on diversity policy The Nomination and Review Committee, and the Board, Induction for new Directors recognises the importance of boardroom diversity, not just There is a comprehensive induction programme for new gender specific, and the Committee’s policy is to seek to Directors which is tailored by the Chairman, in consultation ensure that all available suitable candidates are taken into with the Chief Executive and Company Secretary, depending account when drawing up shortlists of candidates for possible on the type of appointment but includes meetings with Board appointments to the Board. However, the priority of the members, senior management and external advisers as well as Committee and the Board is to ensure that the Group continues a high-level review of all current projects, Board strategy and an to have the strongest and most effective Board possible, and in-depth review of the Group’s assets. therefore all appointments to the Board are made on merit Where required, the Company Secretary provides guidance, against objective criteria. The Board is supportive of the Davies or facilitates the provision of training on Directors’ individual Report recommendations in relation to board diversity and is duties under the Companies Act 2006 and on legal, regulatory pleased to report that there are two female Non-Executive and governance matters with which the Company, Board and Directors on the Board. Female representation on the Board individual Directors must comply. stands at 20 per cent.

Board composition The Committee’s discussions regarding the composition of the Board continued to be framed by the previously stated goal of reducing the overall size of the Board. Following changes to the Board composition during the year, the Committee is satisfied that the balance of skills, knowledge and experience on the Board and its Committees is appropriate and no further appointments are currently planned or envisaged.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 81 Governance Corporate governance report

Education and development 2013 performance evaluation The Chairman, with the assistance of the Nomination The 2013 performance evaluation was conducted by and Review Committee, regularly considers the need for an external facilitator, Claire Howard Consultancies, in Directors to update and expand their skills and knowledge. accordance with provision B.6.2 of the UK Corporate Training is provided for Non-Executive Directors in the form Governance Code. The evaluation took the form of of presentations at Board meetings, as well as attendance at

confidential one-to-one meetings between the facilitator, Strategic report relevant seminars and courses. Ms Howard, and each Board Director and other Board The Board also recognises the need for Directors to keep up meeting attendees. Ms Howard prepared a report to the to date with relevant legislative and regulatory developments Board following these interviews with key points identified as well as changes to corporate governance best practice and under the broad headings of: Communications, transparency investor expectations. The Company Secretary reports to and boardroom dynamics; Alignment on the Board’s strategy; each Board meeting on these matters, drawing attention to and Board composition and succession planning. The key any issues of particular relevance. In addition, the Company points identified formed the basis for recommendations which Secretary maintains an up-to-date comprehensive schedule the Board used to establish an action plan for 2014. The main summarising legislative and regulatory developments relevant areas covered by the action plan for attention in 2014 are to the Company and rated according to risk/impact on the — revisions to Board and Committee timetable and Group, which is available to the Board and Senior Management. sequencing of meetings Performance evaluation — additional meetings of Remuneration Committee to Every year, the Board conducts an evaluation of its own Governance develop the new format Directors’ remuneration report performance and of the performance of the Chairman and each of the Board Committees. In addition, the Chairman reviews — more presentations to the Board by Senior Management the performance of each individual Director and the Senior across the Group on topics of particular relevance Independent Director oversees the review of the Chairman’s performance. The evaluation process conducted during 2012 generated three areas requiring attention during 2013 and progress against those areas is shown in the table below: Area identified for attention in 2013 Action taken Patrick Burgess More frequent Nomination and — Additional meetings (four Chairman Review Committee meetings in total; 2012 – one) held and a revised composition in 2013 28 February 2014 — Terms of reference updated Accounts — Composition of Committees revised Still more frequent — Increased frequency of communication Board updates between meetings — Introduction of electronic Board papers Further measures to improve — More Board events such as the Board’s cohesiveness visits and presentations at our shopping centres Other information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 82 Governance Directors’ remuneration report Annual Statement by Chairman of the Remuneration Committee

Dear Shareholder, Our long-term incentive plan has time how remuneration is linked to performance. horizons extending to five years, and 50 per In line with the new remuneration I am pleased to present Intu’s 2013 cent of our annual bonus is deferred into disclosure regulations this report is Directors’ remuneration report to shares, aligning pay with Intu’s success over divided into you, which has been prepared by the the longer term. Remuneration Committee and approved 1. a forward-looking Directors’ by the Board. We have adopted the Government’s new remuneration policy which details regulations on remuneration reporting, Intu’s remuneration policies, and will Results and context of remuneration including additional disclosures and the be subject to a binding vote; and for 2013 Executive Directors’ remuneration policy 2013 has been a year of significant activity 2. an annual remuneration report, which will be subject to a binding vote at and change within the Group, with a major which focuses on the remuneration the 2014 AGM. In the binding report we rebranding exercise; significant progress arrangements and outcomes for the have set out the key terms of our policy, with the project pipeline; and an improved year under review, as well as how our formulating it sufficiently broadly to ensure financial position with new debt and policy will be applied for 2014. our policy remains relevant and aligned equity. A number of positive actions in the with business objectives over the next Shareholder Annual General Meeting year have had the effect of temporarily three years. The Directors’ remuneration policy report reducing some of our headline financial and the annual remuneration report will measures. Whilst total property return was The key decisions made in applying be put to the shareholder vote at our 2014 a healthy 7 per cent, net asset value per our policies in 2013 and for 2014 were AGM and we look forward to receiving your share reduced by 3 per cent such that total as follows views and support. financial return was 1 per cent. — the annual bonus awarded to the Summary of key areas of focus and Executive Directors for the year ended decisions for 2013 31 December 2013 was 55 per cent to We undertook a comprehensive review 57 per cent of maximum opportunity, of executive remuneration ahead of the based on EPS performance against Neil Sachdev 2013 AGM. As part of this process we budget in the year and the achievement Chairman of the Remuneration Committee discussed our new approach with our major of key, strategic objectives, including 28 February 2014 shareholders, and took into account their the performance of the Group’s existing feedback. The Committee was delighted assets, progress with the development with the level of shareholder support we pipeline, successful launch of a received for the approach last year. corporate identity change, introduction Compliance statement Against that background we have made no of Wi-Fi services into shopping centres, This is the Directors’ remuneration report substantial changes to our remuneration refinancing of debt maturities and of the Company which has been produced policy in the year under review. progress in international expansion pursuant to, and in accordance with, the Our remuneration policy for Executive — the Chief Executive has declined to have Listing Rules, section 420 of the Companies Directors includes a significant portion of a salary increase this year Act 2006 and Schedule 8 to the Large and pay linked to the performance of the Group. Medium-sized Companies and Groups — the salary of the Finance Director has Executive Director total pay is linked to (Accounts and Reports) Regulations 2008 been increased by 2.5 per cent with (as amended 2013). The Company has effect from 1 April 2014, broadly in line — out-performance of TSR against also followed the requirements of the UK with increases across the Group our peers Corporate Governance Code 2010 (the — delivering absolute total return for How to read this report ‘Code’). This report sets out the remuneration our shareholders This report contains both auditable and policy for the Executive and Non-Executive — annual EPS performance non-auditable information. The information Directors of Intu, describes the individual subject to audit is set out in the Annual remuneration of the Directors for the year — achievement of our strategic initiatives Remuneration Report, in sections marked ended 31 December 2013 and, in particular, that will build value for the longer term with §.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 83 Governance Directors’ remuneration report Directors’ remuneration policy

This section sets out the Directors’ remuneration policy of the Company. In accordance with section 439A of the Companies Act, a binding shareholder resolution to approve this report will be proposed at the 2014 Annual General Meeting of the Company. The policy will apply from the 2014 AGM subject to shareholder approval.

Key principles of remuneration policy The Company’s remuneration policy aims to attract, motivate and retain high calibre executives by rewarding them appropriately with competitive compensation and benefit packages. The policy seeks to align the interests of Executive Directors with the performance of the Company and the interests of its shareholders. Our incentive arrangements are designed to reward performance on our key performance indicators. Our aim is to focus

management on delivering sustainable long-term performance and support the retention of critical talent. Strategic report Future policy table The table below describes the policy in relation to the components of remuneration for Executive Directors and, at the bottom of the table, the policy for the Non-Executive Directors.

Element and link to strategy Operation Maximum potential value Performance metrics

Executive Directors Base salary To provide an appropriately Reviewed annually. Salaries for 2014 are: None. competitive level of base pay Salary levels take account of: — David Fischel: £545,480 to attract and retain talent. — Size and nature of the — Matthew Roberts: £430,090

responsibilities of each role Governance Base salary increases may be applied, — Market pay levels for the role taking into account the factors considered as part of the annual — Increases for the rest of the Group review. There is no maximum increase — The executive’s experience or opportunity. — Changes to the size and complexity For new appointments salaries may be of the Group set at a lower level. In such cases, there may be scope for higher than usual — Implications for total remuneration salary increases in the first three years — Overall affordability as the individual progresses in the role. — Individual and Company performance The Committee may award an out-of-cycle increase if it considers it appropriate. Accounts Pension To help provide for an appropriate The Company operates an approved Company pension contribution is None. retirement benefit. defined contribution pension 24 per cent of base salary. arrangement. The Chief Executive receives an A cash alternative may be offered in additional 6 per cent of salary in certain circumstances, for example recognition of the additional value of where HMRC statutory limits have the benefit foregone on the closure been reached. of the defined benefit scheme. This amount was actuarially determined to be cost-neutral to the Company. Other benefits To provide an appropriately Benefits include a car allowance, Car allowance of up to £18,000 per None. competitive level of benefits. private medical insurance, life annum. assurance and long-term sickness The cost of insurance benefits may insurance. Other benefits may be vary from year to year depending on Other information provided if the Committee considers it the individual’s circumstances. appropriate. There is no overall maximum benefit In the event that an Executive Director value but the Committee aims to is required by the Group to relocate, ensure that the total value of benefits benefits may include, but are not remains proportionate. limited to, relocation allowance and housing allowance.

Intu Properties plc – Annual Report 2013

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Element and link to strategy Operation Maximum potential value Performance metrics Short-term incentive To align annual reward with Intu operates a short-term incentive Maximum annual opportunity of Executives’ performance is measured annual performance and to arrangement with a maximum 120 per cent of salary. relative to targets in key financial, support retention and alignment individual opportunity. operational and strategic objectives with shareholders’ interests in the year. A proportion of any earned bonus through significant deferral of is normally deferred in Intu shares, The measures selected and their bonus into shares. vesting over two years and three years, weightings vary each year according subject to continued employment. to the strategic priorities, however at least two thirds will be based on Group The Committee awards dividend financial measures or quantitative equivalents in respect of dividends over reported key performance indicators the deferral period which may assume reinvestment on a cumulative basis. Entry award level for financial measures is normally between 0 and The Committee has discretion to 25 per cent of maximum. apply malus to unvested deferred bonus awards in certain circumstances including if there is a material misstatement in the annual financial statements or a material failure of risk management. Long-term incentives To reward good long-term Intu operates a Performance Share Normal maximum grant size of Long-term incentive performance decisions which help grow the Plan (‘PSP’), which was approved by 250 per cent of salary per annum. conditions are reviewed on an annual value of Intu over a three to shareholders at the 2013 AGM. basis, and are chosen to be aligned In exceptional circumstances five-year horizon and support the with the long-term success of the Grants are made to eligible employees opportunity of up to 375 per cent of retention of critical executives. business. at the discretion of the Committee. salary. To ensure that participants were not unduly disadvantaged as a The intention is that measures will be Awards can be made as performance result of the move towards longer time one or more of TSR, total return/NAV shares, nil-cost options or jointly horizons, the first award under the plan growth, EPS growth, relative total owned equity, and vest one third, had an opportunity of 375 per cent. property return or return on capital. one‑third, one third after three, four and five years respectively. For 2014, awards will be based The Committee awards dividend — 50 per cent on relative TSR equivalents in respect of dividends over — 50 per cent on total return the vesting period, which may assume (NAV growth plus dividends) reinvestment on a cumulative basis. If the Committee considers that The Committee has discretion to the level of vesting based on the apply malus to unvested awards in extent to which the performance certain circumstances including if conditions have been satisfied is not there is a material misstatement in a fair reflection of underlying financial the annual financial statements or a performance, the Committee may material failure of risk management by adjust the level of vesting (upwards the Company. or downwards) accordingly. For the current performance measures this applies to the TSR portion only. Entry vesting is 25 per cent of maximum. All employee share plans To align interests of employees Executive Directors may participate Participants can contribute up to the None. with Company performance. in the HMRC approved Share relevant HMRC limit. Incentive Plan on the same basis as all employees.

Legacy share awards Payments can also be made to Executive Directors under the legacy share option plan and equivalent jointly owned equity arrangements, which were the predecessor arrangements to the current PSP and were approved by shareholders in 1999. Under this plan, market value share option grants were made, with vesting based on EPS growth. It is not intended that this plan will be used to grant any future awards to the Executive Directors. Details of legacy share awards are set out in the Annual Remuneration Report.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 85 Governance Directors’ remuneration report

Element and link to strategy Operation Performance metrics

Non-Executive Directors Fees Independent Non-Executive Directors

To remunerate Non-Executive The Chairman’s fees are determined by the Remuneration Committee. None. Strategic report Directors. The Non-Executive Directors’ fees are determined by the Board. The level of fees takes into account the time commitment, responsibilities, market levels and the skills and experience required. Non-Executive Directors normally receive a basic fee and an additional fee for specific Board responsibilities, including membership and chairmanship of committees. The Chairman is entitled to receive certain benefits in addition to fees as detailed on page 87. Additional fees may be paid to Non-Executive Directors on a per diem basis to reflect increased time commitment in certain limited circumstances. Expenses incurred in the performance of non-executive duties for the Company may be reimbursed or paid for directly by the Company, as appropriate, including any tax due on the expenses. Governance Other Non-Executive Directors In addition to the above, in certain circumstances Non-Executive Directors None. (other than those deemed to be independent) may receive a fee in relation to consultancy services (including Alternate Directors). Such fees may be provided directly to the Director or, in certain circumstances, paid to a third party company under a consultancy services agreement. Such agreements may provide for the payment of an annual fee and reimbursement of expenses. Such an agreement is currently in place with the Peel Group for the provision of Non-Executive Director services (including Alternative Director services).

The Company also operates a shareholding policy – details can be found on pages 94 and 95 of the Annual remuneration report. The Performance Share Plan shall be operated in accordance with the rules of the plan as approved by shareholders in 2013 and

amended from time to time in accordance with those rules. In accordance with the rules of the PSP, the performance condition Accounts may be replaced or varied if an event occurs or circumstances arise which cause the Committee to determine that the performance conditions have ceased to be appropriate, in which case the Committee can vary or replace the performance condition provided that the amended performance condition is in its opinion, fair, reasonable and no more or less difficult than the original condition when set. The plan rules provide for adjustments in certain circumstances. For example, awards may be adjusted in the event of any variation of the Company’s share capital, any consolidation of profits or reserves or special dividend. Malus applies where stated in the above table. Other elements of remuneration are not subject to recovery provisions. The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any discretions available to it in connection with such payments) that are not in line with the policy where the terms of the payment were agreed: (i) before the policy came into effect (including the 2012 deferred bonus award); or (ii) at a time when the relevant individual was not a Director of the Company and, in the opinion of the Committee, the payment Other information was not in consideration for the individual becoming a Director of the Company. For these purposes ‘payments’ includes the Committee satisfying awards of variable remuneration and an award over shares is ‘agreed’ at the time the award is granted.

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 86 Governance Directors’ remuneration report Directors’ remuneration policy continued

Performance measures and targets Annual bonus Annual bonus metrics and targets are selected to provide an appropriate balance between incentivising Directors to meet financial objectives for the year and achieve strategic operational objectives. Annual bonus metrics and targets are chosen in line with the following principles — the targets set for financial measures should be incentivising and appropriately stretching. Targets may be adjusted by the Committee to take into account significant capital transactions during the year — strategic and operational objectives should include quantitatively assessed financial and operational measures and these are weighted to each role — there should be flexibility to change the measures and weightings year-on-year in line with the needs of the business PSP Performance conditions and targets are determined by the Committee to reflect the Group’s strategy and having regard to market practice within the Company’s business sector. Measuring performance one third over years three, four and five provides a balance between the typical executive time horizon and the longer time horizon of shopping centre investments. For 2014 awards the measures were selected taking into account that — absolute total return (NAV growth plus dividends) is considered by the Company to be the best internal indicator of value creation — total shareholder return is a key objective of most of our shareholders Remuneration arrangements throughout the Group Differences in the policies for Executive Directors and other employees in the Group generally reflect differences in market practice taking into account role and seniority. The remuneration policies for Executive Directors and the senior executive team are consistent in terms of structure and the performance measures used. An annual bonus plan operates below the senior team for head office, asset management staff and Intu centre staff management. The bonus is based on corporate and personal performance. As with the senior team, a portion of bonus is generally deferred into Intu shares including SIP shares. Below the senior team, employees may be awarded long-term incentives in the form of options granted under the Company’s share option schemes. Pay for performance: scenario analysis The following charts show the potential split between the different elements of the Executive Directors’ remuneration under three different performance scenarios: ‘Minimum’, ‘Target’ and ‘Stretch’ (see table below).

Scenario analysis chart (£000)

Chief Executive Finance Director

Stretch Stretch Target Target Minimum Minimum 0 500 1,000 1,500 2,000 2,500 3,000 0 500 1,000 1,500 2,000 2,500

Fixed remuneration Annual bonus Performance share plan

Component ‘Minimum’ ‘Target’ ‘Stretch’ Base salary Annual base salary 30 per cent of salary for Chief Executive, Fixed remuneration Pension 24 per cent of salary for Finance Director Benefits Taxable value of annual benefits provided in 2013 Annual bonus 60 per cent of salary 120 per cent of salary (cash and deferred shares*) 0 per cent of salary (target opportunity) (maximum opportunity) Performance share plan* 0 per cent vesting 25 per cent vesting 100 per cent vesting

*Excludes share price growth and dividends.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 87 Governance Directors’ remuneration report

Approach to recruitment remuneration In the event that the Group appointed a new Executive Director, remuneration would be determined in line with the following principles — the Committee will take into account all relevant factors, including the calibre and experience of the individual and the market from which they are recruited, whilst being mindful of the best interests of the Group and its shareholders and seeking not to

pay more than is necessary Strategic report — so far as practical the Committee will look to align the remuneration package for any new appointment with the remuneration policy set out in the table above — salaries may be higher or lower than the previous incumbent but will be set taking into account the review principles set out in the policy table. Where appropriate the salaries may be set at an initially lower level with the intention of increasing salary at a higher than usual rate as the executive gains experience in the role. For interim positions a cash supplement may be paid rather than salary (for example a Non-Executive Director taking on an executive function on a short-term basis) — to facilitate recruitment the Committee may need to ‘buy out’ remuneration arrangements forfeited on joining the Company. Any buy-out would take into account the terms of the arrangements forfeited, in particular any performance conditions and the time over which they would vest. The overriding principle would be that the value of any replacement buy-out awards should be no more than the commercial value of awards which have been forfeited. The form of any award would be determined at the time and the Committee may make buy-out awards under LR 9.4.2 of the Listing Rules (for buy-out awards only) Governance — PSP opportunity will be no more than the plan rules maximum set out in the policy table. The exceptional maximum may be used for the purpose of recruitment — the maximum variable pay opportunity on recruitment (excluding buy-outs) is in line with the policy table above, comprising a maximum annual bonus of 120 per cent of salary and a maximum initial grant of LTIP not exceeding 375 per cent of salary. The Committee retains the flexibility to determine that for the first year of appointment any annual incentive award will be subject to such terms as it may determine Where an executive is appointed from within the Company, the normal policy would be to honour any legacy arrangements in line with the original terms and conditions. Where an executive is appointed following corporate activity/reorganisation (e.g. merger with another company) legacy terms and conditions would also be honoured. Where the recruitment requires relocation of the individual, the Committee may provide additional costs and benefits. Accounts Details of Directors’ service contracts Executive Directors Executive Directors have rolling service contracts which are terminable on 12-months’ notice on either side. None of the existing service contracts for Executive Directors makes any provision for termination payments, other than for payment of salary and benefits in lieu of notice. The Executive Directors’ service contracts contain provisions relating to salary, car allowance, pension arrangements, salary continuance in the event of extended absence due to illness, holiday and sick pay, life insurance, personal accident, medical insurance, dependants’ pensions, and the reimbursement of reasonable out of pocket expenses incurred by the Executive Directors while on Company business. The following service contracts in respect of Executive Directors who were in office during the year are rolling service contracts and therefore have no end date:

Date of commencement of contract Notice period Other information David Fischel 24 June 1999 12 months Matthew Roberts 17 May 2010 12 months

Chairman The terms of the Chairman’s appointment broadly reflect the terms of the three-year appointments of the Non-Executive Directors. However, the Chairman’s appointment is subject to a 12-month notice period. During the Chairman’s period of service, he is also entitled to the following benefits: office support (for Company business), a car and driver (for Company business), private medical insurance and personal accident and travel insurance. The Chairman does not currently take all benefits to which he is entitled. The Chairman may also receive independent professional advice of a value of up to £2,500 when such expenditures are authorised by the Chief Executive.

Intu Properties plc – Annual Report 2013

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Non-Executive Directors All Non-Executive Directors have been appointed on fixed terms of two or three years, subject to renewal thereafter. Mr R.M. Gordon is deemed to have served for more than nine years and is now subject to a one-year term. All are subject to annual re-election by shareholders. The Non-Executive Directors have letters of appointment which include provisions for early termination in specified circumstances. Non-Executive Directors receive no benefits from their office other than fees and reimbursement of expenses incurred in performance of their duties, including any tax due on the expenses. They are not eligible to participate in Group pension arrangements. In the event of a takeover of the Company, and exceptionally on other occasions, Non-Executive Directors would be entitled to an additional payment to reflect any additional time spent on Company affairs, over and above that normally expected in the performance of ordinary duties as a Non-Executive Director. The payment will be calculated by reference to the amount of additional time spent at a rate per diem. The following table sets out the dates of appointment for the Non-Executive Directors: Date of appointment Current term expires Adèle Anderson 22 February 2013 2016 AGM Richard Gordon 7 May 2010 2014 AGM Andrew Huntley 8 July 2009 2014 AGM Louise Patten 22 September 2011 2014 AGM Neil Sachdev 1 November 2006 2016 AGM Andrew Strang 8 July 2009 2015 AGM John Whittaker 28 January 2011 2014 AGM

Directors’ service contracts are kept available for inspection at the Company’s registered office. Loss of office payment policy In the event that the employment of an Executive Director is terminated, any compensation payable will be determined by reference to the terms of the service contract between the Company and the employee, as well as the rules of any incentive plans. The Committee may structure any compensation payments in such a way as it deems appropriate taking into account the circumstances of departure. In the event of the Company terminating an Executive Director’s contract, the level of compensation would be subject to mitigation if considered appropriate. Payment in lieu of notice The Company may at its discretion make termination payments in lieu of notice based on base salary and benefits only. The notice period for both Executive Directors is one year. Bonus There is no automatic entitlement to annual bonus. The Committee retains discretion to award bonuses for leavers taking into account the circumstances of departure. Any bonus would normally be subject to performance and time pro-rating. Deferred bonus Deferred bonus awards will lapse if the executive ceases to be employed before the normal vesting date except in good leaver circumstances, which include retirement, redundancy, a transfer of the business or company by which the individual is employed, ill-health, death or any other reason at the discretion of the Committee.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 89 Governance Directors’ remuneration report

Performance share plan In the event an executive is a good leaver any outstanding PSP awards will be pro-rated for time and will vest based on performance to the end of the performance period unless the Committee determines an alternative level of vesting in its discretion. Good leaver circumstances are reasons of injury, disability, ill-health, redundancy, retirement, the sale of the individual’s employing company or businesses out of the Group or for any other reason at the discretion of the Committee. For JSOP awards under the PSP time and pro-rating applies below the threshold only. The Committee may adjust the number of shares vesting below the threshold in order to apply an appropriate overall pro-rating for the award. Strategic report In the event of death, early vesting is permitted, based either on the Committee’s assessment of performance against the performance condition to date of death, or 50 per cent vesting. The award would also be subject to time pro-rating. However, the Committee has discretion to adjust the level of vesting. Award under LR 9.4.2 Were an award to be made under LR 9.4.2 then the leaver provisions would be determined at the time of award. Other circumstances Under the PSP on a change-of-control or winding up of the Company, PSP awards may vest in accordance with the rules of the plan. Vesting would be subject to pro-rating for time and performance, unless the Committee determines otherwise. Bonuses may be paid in respect of the year in which the change of control or winding up of the Company occurs, if the Committee considers this appropriate. The Committee may determine the level of bonus taking into account any factors it considers appropriate. Governance Deferred bonus awards, which have been earned in respect of previous performance periods, will normally vest in full on a change of control or winding up. Legacy share option plan All awards granted under the legacy share option plan were made prior to 27 June 2012. Vesting would be in accordance with the plan rules. On voluntary resignation, awards granted less than three years before cessation lapse and other subsisting awards are exercisable within 6 months of cessation (subject to any performance conditions). In other leaving circumstances subsisting options may be exercised within 6 months of cessation (subject to any performance conditions) or 12 months in the case of death. However, in the above cases the Committee has discretion to decide alternative vesting and may impose other conditions. Both unvested and vested awards will lapse if the Director leaves for reasons involving misconduct, impropriety and inefficiency (as determined by the Committee). Consideration of conditions elsewhere in the Group In making remuneration decisions, the Committee also considers the pay and employment conditions elsewhere in the Group. Accounts Prior to the annual pay review, the Committee receives a detailed report from the HR Director setting out changes to broader employee pay. This forms part of the basis for determining Executive Director remuneration. The Company does not consult with employees on Executive Director remuneration, but does consult with employees as part of an annual employee survey, which includes questions regarding the Company’s approach to reward and recognition. Consideration of shareholder views When determining remuneration, the Committee takes into account the guidelines of investor bodies and shareholder views. The remuneration policy was developed following extensive consultation with major shareholders and their views were taken into account during its formation. The Committee seeks to have an ongoing dialogue with shareholders on executive remuneration matters. Minor changes

The Committee may make minor amendments to the policy set out above (for regulatory, exchange control, tax, administrative Other information purposes or to take account of a change in legislation) without obtaining shareholder approval for that amendment.

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 90 Governance Directors’ remuneration report Annual remuneration report

This section sets out how the Directors’ remuneration policy of the Company has been applied in the year and details of how the Committee intends to apply the policy going forward. In accordance with section 439 of the Companies Act, an advisory shareholder resolution to approve this report will be proposed at the 2014 Annual General Meeting of the Company. Subsections marked with § have been audited in accordance with the relevant statutory requirements.

Key responsibilities Chairman The principal role of the Remuneration Committee is to Neil Sachdev (Independent Non-Executive Director) determine and agree with the Board the framework and policy Members for the remuneration of the Chief Executive, the Finance Louise Patten (Independent Non-Executive Director) Director, the Chairman of the Company and such other members of the executive management as it is designated Rob Rowley (stepped down October 2013, Independent to consider. Non-Executive Director) Summary of changes made to remuneration Adèle Anderson (appointed September 2013, Independent arrangements in 2013 Non-Executive Director) As disclosed in last year’s remuneration report, a root Meetings in 2013 and branch remuneration review was carried out by the Remuneration Committee1 Remuneration Committee in 2012. The changes to Executive (6 meetings) Director remuneration approved by shareholders at the 2013 A B AGM included Neil Sachdev (Chairman) 6 6 — rebalancing incentives to long-term performance by Adèle Anderson 3 3 reducing the maximum annual bonus opportunity from Louise Patten 6 6 150 per cent of salary to 120 per cent, and replacing the Rob Rowley 3 3 long-term incentive award of up to 200 per cent of salary in options with up to 250 per cent in performance shares A = Maximum number of meetings eligible to attend. B = Number of meetings actually attended. — deferring 50 per cent of any earned bonus, and increasing 1 In addition to the six scheduled meetings, members of the Remuneration the deferral period from two years to half for two years and Committee attended several sessions focused on the drafting of the Directors’ remuneration report. The Committee normally invites the half for three years Chairman and the Chief Executive to attend the scheduled meetings. The Chairman attended all of the scheduled meetings in 2013. The Chief — lengthening of the performance period under the long‑term Executive attended five of the six scheduled meetings. The Finance incentive plan to one third over three years, one third over Director was invited to, and attended, one scheduled meeting of the four years and one third over five years Committee in 2013. No individual is present when his or her remuneration is being determined. — reducing entry vesting from 33 per cent to 25 per cent — increasing executive share ownership requirements from 100 per cent of salary to 200 per cent for the Chief Executive and to 150 per cent for the Finance Director — introducing ‘clawback’ (malus) on unvested deferred bonus and LTIP awards Against the background of the significant review undertaken leading to a new policy in 2013, the Committee determined that, for 2014, there would be no substantial changes to the remuneration policy.

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Total remuneration in 2013 § The table below sets out the total remuneration received by each Director for the year to 31 December 2013 together with the 2011 ESOS awards which are subject to performance to 31 December 2013 but expected to vest in 2014. Annual bonus Long-term (cash and incentive Total Salary or fees Benefits deferred shares) (ESOS) Pension remuneration

£000 £000 £000 £000 £000 £000 Strategic report Director 2013 2012 2013 2012 2013 2012 2013 20121 2013 2012 2013 2012 Executive David Fischel 540 514 20 20 359 546 – 575 162 155 1,081 1,810 Matthew Roberts 415 392 20 20 287 420 – 127 99 94 821 1,053 Chairman Patrick Burgess 400 400 6 6 – – – – – – 406 406 Independent Non-Executive Adèle Anderson (appointed 22.02.13) 58 – – – – – – – – – 58 – Andrew Huntley 62 55 – – – – – – – – 62 55 Louise Patten 65 60 – – – – – – – – 65 60

Neil Sachdev 85 79 – – – – – – – – 85 79 Governance Andrew Strang 62 60 – – – – – – – – 62 60 Other Non-Executive Richard Gordon 57 55 – – – – – – – – 57 55 John Whittaker2 – – – – – – – – – – – – Former Non-Executives John Abel (stepped down 08.05.13) 46 66 – – – – – – – – 46 66 Rob Rowley (stepped down 18.10.13) 92 89 – – – – – – – – 92 89 Total 1,882 1,770 46 46 646 966 – 702 261 249 2,835 3,733

1 Figures have been calculated to show value on vesting date and are therefore different to those set out in the 2012 Annual Report.

2 John Whittaker did not receive any remuneration in 2013 or 2012 in connection with his position as Deputy Chairman and Non-Executive Director of the Company. Accounts See page 98 for further details. The figures have been calculated as follows: — Base salary: amount earned for the year. — Benefits: the taxable value of annual benefits received in the year. — Pension: the value of the Company’s contribution during the year (30 per cent salary supplement in lieu of contributions for the Chief Executive, 24 per cent SIPP contribution, party taken as a salary supplement, for the Finance Director). — Annual bonus: cash and deferred: the value at grant of the annual incentive payable for performance over 2013. — ESOS: awards made in 2011, subject to a three-year vesting period, vest subject to EPS performance to 31 December 2013. These awards are expected to lapse on 3 March 2014. Awards have been valued based on embedded gain and the three-month average share price to 31 December 2013. Other information

Intu Properties plc – Annual Report 2013

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Directors’ remuneration and incentives Base salary Salaries of Executive Directors and other staff are reviewed annually in the light of competitive market practice, including reference to comparable data of other companies of a similar size and companies in the real estate sector. When determining executive remuneration, the Committee takes careful account of pay and employment conditions in the Company as a whole. The current salaries for Executive Directors are set out below. Matthew Roberts’s salary will be increased with effect from 1 April 2014 by 2.5 per cent. Executive Director 2013 salary 2014 salary % increase David Fischel £545,480 £545,480 0 Matthew Roberts £419,600 £430,090 2.5

Benefits § The main benefits are life assurance, long-term sickness insurance, private healthcare and company car cash allowance. The value of the company car cash allowance is £18,000. Pension Company pension contribution for Executive Directors is 24 per cent of base salary. The Chief Executive receives an additional 6 per cent of salary in recognition of the additional value of the benefit foregone on the closure of the defined benefit scheme. This amount was actuarially determined to be cost-neutral to the Company. Annual bonus § The maximum award for both the Chief Executive and Finance Director in 2013 was 120 per cent of salary. This will remain unchanged for 2014. Annual bonus payments are based on pre-determined performance measures. Two thirds is based on adjusted EPS performance in the year, split evenly between performance versus budget figures and prior year achievement. The remaining third is based on achievement of strategic and operational objectives against a scorecard of measures. The Remuneration Committee considers the objectives carefully each year to align with Intu’s strategic objectives, and include quantitatively assessed financial and operational measures and milestones. Each objective relates directly to the strategic plan. Under the scorecard approach, the weightings of each objective vary between Executive Directors to reflect their roles and responsibilities. For 2014, the scorecard will include objectives in the following key areas — optimising assets — branding and customer relationships — financial achievements, including financing and focus on financial flexibility — corporate development — talent development Annual bonus – 2013 out-turn § Performance against the targets for the 2013 short-term incentive arrangements is given below:

Target 2013 Out-turn Performance element Weighting Threshold Target Maximum performance (% max element) Adjusted EPS vs. budget 33% 13.9p 14.6p 15.3p 15.0p 77% Adjusted EPS vs. prior year 33% 100% 102.5% 105% 93.2% 0%

Scorecard of strategic and David Fischel Matthew Roberts operational measures 33% See details of scorecard below 87% 94% Total 55% 57%

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For 2013, the scorecard weightings and out-turns were as follows: Scorecard Weighting Out-turn David Matthew (Including specific objectives under each area of focus) Fischel Roberts 0% 100% Corporate development, digital and branding 25% 15% l Financial operations 10% 40% l Strategic report Operational 20% 15% l Scale and scope – international and acquisitions 35% 20% l Corporate culture 10% 10% l Achievements against objectives included — total return performance of existing assets, progress with lettings and lease expiries, obtaining planning permissions and other progress on the £1bn development pipeline — successful launch of corporate identity change, including creation of a nationwide consumer-facing shopping centre brand — introduction of Wi-Fi services to nine shopping centres — launch of intu.co.uk, a transactional, fashion-focused, mobile-enabled website — implementation of a new venture, Intu Retail Services, to deliver total facilities management to all intu shopping centres, with significant impact on customer experience — acquisition of Midsummer Place — refinancing of 2015–17 debt maturities and Secured Group Structure Governance — establishment of a joint venture in Spain with Eurofund — acquisition of Parque Principado, a top 10 centre in Spain, via joint partnership with Canada Pension Plan Investment Board — staff survey results demonstrated outstanding staff engagement

The lower overall score in some areas, such as digital, reflects items where good progress was achieved in 2013 but completion of the overall objective is in part deferred into 2014. The Directors consider that more granular details of the strategic objectives are commercially sensitive. The resulting total short-term incentive payouts for David Fischel and Matthew Roberts in respect of 2013 were 66 per cent and 68 per cent of salary (55 per cent and 57 per cent of maximum opportunity), respectively. Deferral into shares

50 per cent of the 2013 short-term incentive for both David Fischel and Matthew Roberts was deferred into Intu shares. Accounts Executive Directors must remain in employment with the Company for a period of two years (half of award) and three years (half of award) after the date of award before such shares are released. Long-term incentives § Awards with performance periods ending in the year – Executive Share Option Scheme (ESOS) The LTIP awards shown in the single figure relate to 2011 ESOS awards which were due to vest in March 2014. The performance condition was as follows: The Company’s adjusted earnings are to grow over a three-year period at a rate in excess of 5 per cent per annum compound. Adjusted earnings means the percentage increase in underlying earnings per share, adjusted by (a) excluding exceptional and valuation items and (b) limiting trading or non-recurring items to 10 per cent of profit before tax. Actual adjusted EPS growth over the period to 31 December 2013 has been calculated as –0.9 per cent per annum compound.

As the performance condition has not been met, the Remuneration Committee has determined that the 2011 ESOS awards will Other information lapse in March 2014. The ESOS does not form part of the forward looking policy for Executive Directors, and in 2013 the Company adopted the Performance Share Plan.

Intu Properties plc – Annual Report 2013

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Awards granted during the year – Performance Share Plan (PSP) § In May 2013, David Fischel and Matthew Roberts were granted performance share awards of 375 per cent of salary under the PSP. These awards only vest, subject to the achievement of stretching performance conditions over three, four and five years, as follows:

Face value of award* % vesting at Performance period end Individual Type of interest £ % of salary threshold 3 years 4 years 5 years David Fischel Nil-cost 2,045,545 375% 25% 31 Dec 2015 31 Dec 2016 31 Dec 2017 Matthew Roberts options 1,573,491 375% 25% 31 Dec 2015 31 Dec 2016 31 Dec 2017

* Face value calculated using share price at date of grant of £3.57. Vesting of these awards is based on TSR and NAV performance with performance measured one third over three years, one third over four years and one third over five years. Half of awards vest by reference to absolute total return (25 per cent minimum vesting for 6 per cent per annum; full vesting for 10 per cent per annum; straight-line vesting in between.) Half of awards vest by reference to TSR relative to the top-five UK-listed REITS (25 per cent minimum vesting for TSR in line with the third-ranked company; full vesting for TSR in line with the top-ranked company; straight-line vesting in between), subject to a Committee-operated discretionary assessment of underlying financial performance. As permitted under the rules of the PSP, both David Fischel and Matthew Roberts elected to receive their awards through a Joint Ownership Structure which required them to make an upfront contribution to acquire an interest in Intu shares. Awards for 2014 Awards for 2014 will be 250 per cent of salary. It is intended that the performance measures and targets for PSP awards for 2014 will be in line with those granted in 2013 (see above). Other share schemes The Company operates an Employee Share Ownership Plan (‘ESOP’) which has in the past used funds provided to purchase shares required under the annual bonus scheme. The Company operates a Share Incentive Plan (‘SIP’) for all eligible employees, including Executive Directors, who may receive up to £3,000 worth of shares as part of their annual bonus arrangements. The SIP arrangements offer worthwhile tax advantages to employees and to the Company. Also, as part of the SIP arrangements, the Company offers eligible employees the opportunity to participate in a ‘Partnership’ share scheme, the terms of which are governed by HM Revenue & Customs regulations. Season ticket loan All employees of the Group are entitled to an interest-free travel season ticket loan which is repaid over the year via deductions from salary. Neither David Fischel nor Matthew Roberts received a season ticket or other loan from the Group during 2013. Chief Executive pay increase in relation to all employees The table below sets out details of the percentage change in salary, benefits and annual bonus for Chief Executive and wider employee comparator group. For these purposes, head office employees (who have been in employment over both periods) have been used as a comparator group as this is considered to be a reasonable, practical sub-set of the all-employee population. Percentage change in remuneration from 31/12/2012 to 31/12/2013 Percentage change in base salary Percentage change in benefits Percentage change in annual bonus Chief Executive +4.9% –0.4% –34.4% Head office employees +6.7% +1.4% +25.6%

Shareholding and share interests § As part of the root-and-branch review of policy carried out in 2012, the Committee introduced new, higher shareholding requirements effective from 1 January 2013. Executive Directors must build up, over a period of three to five years, a holding of Intu shares with a value equivalent to 200 per cent of salary (David Fischel) and 150 per cent of salary (Matthew Roberts). The graph below illustrates the shareholdings of the Executive Directors as a percentage of salary. Note that only actual holdings count towards the shareholding requirements. Shares subject to deferral and/or performance conditions have also been shown for reference.

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Shareholdings at 31 December 2013 against requirements are shown below §:

Shareholding of Intu ordinary shares as at 31 December 2013 (% of salary) 1,400

1,200 Strategic report 1,000

800

600

400

200

David Fischel Matthew Roberts

 Actual shareholding (counts towards shareholding requirement)  Deferred shares  Shares subject to performance conditions Shareholding requirement Governance

As shown above, David Fischel’s shareholding clearly exceeds his shareholding requirement. Matthew Roberts was appointed in May 2010, and has until May 2015 to build up the required shareholding. The table below sets out the Directors’ interests in shares as at 31 December 2013 (or the date of cessation, if earlier). Number of Unvested awards Vested awards shares owned (including Conditional shares not connected subject to performance persons) conditions PSP Options Held in SIP Held in SIP subject to subject to Unexercised Unexercised Options Own trust for Deferred trust for performance performance unapproved approved exercised in name > 5 years Shares < 5 years conditions1 conditions2 options3 options the year Executive David Fischel 666,987 4,628 277,078 6,813 572,982 659,000 1,256,648 11,041 0 Accounts Matthew Roberts 64,699 0 207,796 4,172 440,754 488,000 437,416 9,584 0

1 PSP awards held as fixed-value zero-cost options and jointly owned shares. 2 Held as jointly owned shares. 3 Held as jointly owned shares with underlying ‘Capped’ unapproved options. Non-Executive Directors’ interests in shares are set out in note 50 on page 151. Details of the outstanding share awards are as follows: Vested 2009 ESOS awards Awards of market value share options, with an exercise price of 271.69 pence. These awards became exercisable on 28/02/2013 and may be exercised until 28/05/19.

2010 ESOS awards Awards of market value share options, with an exercise price of 313 pence. These awards became exercisable on 26/05/2013 and may be exercised until 26/05/20. Other information Unvested 2011 ESOS awards Award of market value share options, granted in March 2011 with an exercise price of 387 pence. Vesting is based on three-year EPS growth (5 per cent p.a. compound) to 31 December 2013. These awards are due to lapse in full (see section on long-term incentives above for more detail).

2012 ESOS award Award of market value share options, granted in March 2012 with an exercise price of 336 pence. Vesting is based on three-year EPS growth to 31 December 2014 (ranging from 4 per cent p.a. to 6 per cent p.a.). Any awards that vest would be exercisable between 05/03/15 to 05/03/22.

2013 PSP award Award of performance shares, granted on 21 May 2013. Vesting is based on TSR (relative to the top five UK-listed REITS ) and absolute total return performance (ranging from 6 per cent p.a. to 10 per cent p.a.), in three equal tranches over three, four and five years. Any awards that vest will be exercisable to 21 May 2023. Intu Properties plc – Annual Report 2013

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Five-year TSR chart The following graph shows the Total Shareholder Return (‘TSR’) for Intu Properties plc over the five-year period ended 31 December 2013, compared with our closest comparator group for this purpose, the FTSE 350 Real Estate Index. TSR is defined as share price growth plus reinvested dividends.

Five-year total shareholder return (TSR) performance

250

200

150

100

2009 2010 2011 2012 2013 2014

Intu FSTE 350 Real Estate

Chief Executive historic remuneration The table below sets out details of historic Chief Executive pay. 2009 2010 2011 2012 2013 Chief Executive single figure of total remuneration £1,044k £1,350k £1,275k £1,810k £1,081k Annual bonus payout (% maximum) 50% 100% 83% 70% 55% Long-term incentive plan vesting in year (% maximum) 0% 0% 0% 100% 0%

Shareholder context The table below shows the advisory vote on the 2012 Directors’ remuneration report and binding vote on the approval of the Performance Share Plan at the 2013 AGM. It is the Committee’s policy to consult with major shareholders prior to any major changes, and to maintain an ongoing dialogue on executive remuneration matters. For Against Abstentions 2012 DRR – votes 91.33% 8.67% 4.0m Performance Share Plan 2013 – votes 96.52% 3.48% 0.1m

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Additional disclosures Other directorships Executive Directors are not generally encouraged to hold external directorships unless the Chairman determines that such appointment is in the Group’s interest and does not cause any conflict of interest. Where such appointments are approved and held, it is a matter for the Chairman to agree whether fees paid in respect of the appointment are retained by the individual or paid to the Company. Strategic report David Fischel currently holds three external directorships. In two cases he receives and retains the fees. His principal external appointment is as a Non-Executive Director of US company Equity One, Inc, in which Intu retains an investment through a joint venture company EQY-CSC LLC. David Fischel also holds another external appointment as a Non-Executive Director of Marlowe Investments (Kent) Limited, a UK private company which relates to his family affairs and does not require any significant time commitment and does not conflict in any way with his role as Chief Executive of Intu. David Fischel is also a Non‑Executive Director of Prozone Capital Shopping Centres Limited, an Indian shopping centre owner and developer in which Intu has a 33 per cent interest. He does not receive a fee in respect of this appointment. During 2013, David Fischel received a fee of $47,500 in respect of his directorship of Equity One, Inc. He retained the fees paid in respect of his appointment. In addition to his fee, restricted stock in Equity One, Inc. awarded to David Fischel vested during the year with a value on vesting of $74,349. He also received and retained a fee of £5,000 in respect of his non-executive directorship of Marlowe Investments (Kent) Limited. Payments to former Directors § Governance A Life Presidency fee of £150,000 per annum (2012 – £150,000) was paid to Sir Donald Gordon, the Group’s Life President and former Chairman who founded the Company in 1980. The Life Presidency fee was agreed by the Board at the time of his retirement in June 2005 in recognition of his outstanding contribution to the Group. The payment is payable for the remainder of Sir Donald’s life, and is secured by Deed. Rob Rowley served as a Non-Executive Director during the year. He stepped down from the Board on 18 October 2013. To enable a smooth handover of responsibilities Rob continued to provide services to the Company until the end of the year at equivalent fee levels. Total fees paid in respect of these services were £18,392. Alternate Directors § Steven Underwood and Raymond Fine serve as Alternate Directors to John Whittaker and Richard Gordon respectively. Neither Steven Underwood nor Raymond Fine received any fees in 2013 in respect of their appointment as Alternate Directors. Raymond Fine received a fee of £159,250 in respect of consultancy services provided to the Company in connection with South African tax and shareholder issues (particularly in respect of South African dividends tax), liaison with the Gordon Family and other related matters. Accounts Other information

Intu Properties plc – Annual Report 2013

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Distribution statement The table below shows the percentage change in profit after tax, dividends, and total employee compensation spend from the financial year ended 31 December 2012 to the financial year ended 31 December 2013.

Total employee Underlying earnings (£m) Dividend (£m) pay expenditure (£m) 150 £138m £140m +2% 150 £142m +11%* 60 +45%** £128m 125 125 50 £44.3m

100 100 40 £30.5m 75 75 30

50 50 20

25 25 10

2012 2013 2012 2013 2012 2013 * increase due to increased issued share capital. ** includes increased costs associated with Dividend per share was £0.15 (2012 – £0.15). the establishment of Intu Retail Services. Average increase in sta salaries for 2013 was 4.2 per cent.

The Group employed a total of 2,027 staff as at 31 December 2013 (2012 – 645). Chairman and Non-Executive Director fees § The Chairman receives a fee of £400,000 per annum. This fee remained unchanged during the year. The current base fee for Non-Executive Directors is £56,375 per annum. The Senior Independent Director receives an additional fee of £10,000 per annum. Committee chairmen receive £15,000 per annum, and Committee members receive £5,000 per annum. Fees were last increased in April 2013. John Whittaker does not receive a fee in respect of his position as Deputy Chairman and Non-Executive Director. The Board has authorised the payment of a management fee of £200,000 per year to Peel Management Limited for the provision by Peel of management and advisory services, including the provision of a Non-Executive Director and an Alternate Director, together with reasonable costs and out of pocket expenses. The agreement is for an initial period of one year although it is anticipated that it will be renewed annually thereafter by agreement between the parties. This payment is disclosed in the related party transactions note on page 146. Remuneration Committee membership in 2013 The principal responsibilities of the Committee, which take full account of the recommendations contained within the Code, include: — Determining the remuneration policy for the Company’s Executive Directors and senior executives — Determining individual remuneration packages for the Chairman, Executive Directors and senior executives — Setting appropriately stretching and achievable targets for the Company’s incentive schemes in order to motivate executives to deliver high levels of performance in the interests of our shareholders, customers and employees — Overseeing any significant changes to remuneration policy for the wider employee population The full duties and responsibilities are set out in the terms of reference of the Committee which are available on the Company’s website. The Remuneration Committee currently comprises three independent Non-Executive Directors. Throughout the year the Committee consisted of Neil Sachdev (Chairman) and Louise Patten. Adèle Anderson was appointed to the Committee in September 2013. Rob Rowley was a member of the Committee until October 2013. The Chairman, Chief Executive, Company Secretary and HR Director are invited to attend Committee meetings to contribute to the Committee in its deliberations. However, no individual is present when his or her remuneration is being determined. The Remuneration Committee met a total of nine times in 2013, including six scheduled meetings and three additional drafting meetings which focused on improving disclosure through adoption of the new remuneration disclosure regulations. A summary of attendance at each scheduled meeting is set out on page 90.

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Advisers to the Committee The Committee appointed and received advice from Kepler Associates, a remuneration consultancy firm, for the nine months to October 2013. The Committee appointed Deloitte LLP as the Committee’s independent remuneration advisers, with effect from October 2013, in place of Kepler Associates. During the year, Kepler Associates provided advice on market trends, incentive design, and other remuneration matters that

materially assisted the Committee. The fees paid to Kepler in respect of this work in 2013 totalled £69,662. Kepler Associates Strategic report does not provide any other services to the Company. During the year, Deloitte provided advice on new reporting regulations, market data and other remuneration matters that materially assisted the Committee. The fees paid to Deloitte in respect of this work in 2013 totalled £49,550. Deloitte also provided tax advisory services to the Group in respect of South African taxation of dividends and carried out the statutory audit of the annual financial statements of the Trafford Centre Limited Retirement Benefit Scheme (the trustee-based money purchase scheme operated for intu Trafford Centre employees). Total fees paid to Deloitte in respect of these services were £12,950. Both firms are founding members of the Remuneration Consultants Group, and adhere to its code of conduct. In each case the firms were appointed directly by the Committee, and the Committee is satisfied that the advice received was objective and independent. The Committee has also appointed and been advised by Norton Rose LLP and Keystone Law during the year on various Governance remuneration matters. Norton Rose and Keystone Law do not advise the Company on any other matters. The fees paid to Norton Rose LLP in respect of this work in 2013 totalled £55,400, and the fees paid to Keystone Law in 2013 totalled £21,000. The Committee also makes use of various published surveys to help determine appropriate remuneration levels. On behalf of the Board

Neil Sachdev Chairman of the Remuneration Committee 28 February 2014 Accounts Other information

Intu Properties plc – Annual Report 2013

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The Directors have pleasure in presenting their Annual Report and the audited financial statements of the Group and Company for the year ended 31 December 2013.

Pages 1 to 102 inclusive of this Annual Report comprise the The Company is not party to any other significant agreements Directors’ report that has been drawn up and presented in that would take effect, alter or terminate following a change of accordance with English Company Law and the liabilities of control of the Company. the Directors in connection with that report will be subject to The Company does not have any agreements with any Executive the limitations and restrictions provided by such law. Director or employee that would provide compensation for Use of Financial Instruments loss of office or employment resulting from a takeover except The Financial review on pages 46 to 53, accounting policies that provisions of the Company share schemes may cause on pages 115 to 117 and note 35 on pages 135 to 140 contain options and awards outstanding under such schemes to vest information on the use of financial instruments. on a takeover. The terms of appointment of the Non-Executive Directors currently provide that in the event of change of Dividends control, the Directors will be compensated for any additional The Directors declared an interim ordinary dividend of 5.0 time commitment in certain limited circumstances, to be pence (2012 – 5.0 pence) per share on 1 August 2013, which calculated on a per diem basis. was paid on 19 November 2013, and have recommended a final ordinary dividend of 10.0 pence per share (2012 – 10.0 pence). Going concern After making enquiries, the Directors have reasonable Share capital and control of the Company expectation that the Company and the Group have adequate Details of the Company’s share capital including changes resources to continue in operational existence for the during the year in the issued share capital and details of the foreseeable future. For this reason they continue to adopt the rights attaching to the Company’s ordinary shares are set going concern basis in preparing the financial statements. out in note 37 on page 141. No shareholder holds securities carrying special rights with regards to control of the Company. Shareholders’ attention is drawn to the going concern disclosure Shares held by the Company’s Employee Share Ownership Plan contained in the notes to the accounts on page 114. rank pari passu with the shares in issue and have no special Internal control rights, but voting rights and rights of acceptance of any offer The statement on corporate governance on pages 70 to 81 relating to the shares rest with the Plan’s Trustee and are not includes the Board’s assessment following a review of internal exercisable by the employees. controls and consideration of the 2005 Financial Reporting There are no restrictions on voting rights or any arrangements Council’s internal control guidance for Directors. by which, with the Company’s co-operation, financial rights are Directors held by a person other than the shareholder, or any agreements The Directors of Intu who held office during the year were between shareholders known to the Company which may result as follows: in restrictions on the transfer of shares or on voting rights. Chairman Under a £375 million Revolving Facility agreement dated Patrick Burgess 25 February 2009 (as amended by amendment agreements dated 2 October 2009 and 19 February 2010, and further Deputy Chairman amended and restated on 18 November 2011) between, John Whittaker1 amongst others, the Company and HSBC Bank PLC (as ‘Agent’), Executive on a change of control, if directed by a lender, the Agent may by David Fischel notice to the Company cancel the commitment of that lender Matthew Roberts and declare the participation of that lender in all outstanding loans, together with accrued interest and all other amounts Non-Executive accrued and owing to that lender under the finance documents, Adèle Anderson (appointed 22 February 2013) immediately due and payable. Richard Gordon1 Andrew Huntley Under the terms and conditions of the £300 million 2.5 per Louise Patten cent Guaranteed Convertible Bonds issued on 4 October 2012 Neil Sachdev by Intu (Jersey) Limited (formerly Capital Shopping Centres Andrew Strang (Jersey) Limited) (the ‘Issuer’) and guaranteed by the Company, on a change of control of the Company bondholders would Retired during the year have a right for a limited period of 60 days to exercise their John Abel (effective 8 May 2013) exchange rights at an enhanced exchange price (i.e. lower than Rob Rowley (effective 18 October 2013) the prevailing exchange price). In addition, bondholders would 1 John Whittaker and Richard Gordon have appointed Steven Underwood become entitled for a limited period of 60 days to require the and Raymond Fine respectively as their alternates under the terms of the Issuer to redeem their bonds at their principal amount, together Company’s Articles of Association. with accrued and unpaid interest. In accordance with provision B.7.1 of the UK Corporate Governance Code, all Directors are subject to re-election at the forthcoming Annual General Meeting.

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Pursuant to the Articles of Association of the Company, the Intu encourages the continuous development and training of Company has indemnified the Directors to the full extent its employees and the provision of equal opportunities for the allowed by law. The Company maintains Directors’ and training and career development of disabled employees and Officers’ insurance which is reviewed annually. those with protected characteristics. Additional information relating to the Directors can be found Further information relating to employees is given on pages

in note 50 on pages 151 and 152 on Directors’ interests, in the 40 to 45 and in note 10 on page 119. The Group provides Strategic report Governance section on pages 65 to 81, and in the Directors’ retirement benefits for the majority of its employees. remuneration report on pages 82 to 99. Details of the Group pension arrangements are set out in note 48 on page 150. The powers of the Directors are determined by UK legislation and the Articles of Association of the Company, together with The environment any specific authorities that may be given to the Directors We have developed a Corporate Responsibility (‘CR’) strategy by shareholders from time to time, such as the power to and details of our policies and the Group’s aims alongside the allot shares and the power to make market purchases of the latest full version of our annual CR report are to be found Company’s shares which are described in note 37 on page 141. on the Company’s website. An overview of the Group’s CR activity (which includes disclosures relating to greenhouse gas Articles of Association emissions) is printed on pages 54 to 63, and a summary booklet The rules governing the appointment and replacement is also available for download from the website or on request of Directors are contained in the Company’s Articles of from the Company Secretary’s office. Association. Changes to the Articles of Association must be Governance approved by shareholders in accordance with the legislation The Company recognises the importance of minimising the in force from time to time. adverse impact on the environment of its operations and the obligation to carefully manage energy and water consumption Substantial shareholdings and waste recycling. As at 21 February 2014 Intu had been notified of the following substantial holdings of voting rights over ordinary shares of Intu: The Company strives continuously to improve its environmental performance. The Environmental Management System and — The Peel Group 188,946,817 (19.78 per cent) associated Environmental Policy and Guide are regularly — Coronation Asset Management (Pty) Limited 137,204,631 reviewed to ensure that the Company maintains its (14.09 per cent) commitment to environmental matters. — The family interests of Sir Donald Gordon 92,143,204 Directors’ disclosure of information to the auditors (9.46 per cent) So far as the Directors are aware, there is no relevant audit information of which the auditors are unaware and each

— BlackRock, Inc. 52,301,369 (5.37 per cent) Accounts Director has taken all reasonable steps to make himself or — Public Investment Corporation 35,565,906 (3.65 per cent) herself aware of any relevant audit information and to establish that the auditors are aware of that information. Employees Intu actively encourages employee involvement and Auditors consultation and places emphasis on keeping its employees The auditors, PricewaterhouseCoopers LLP, have indicated informed of the Company’s activities and financial performance their willingness to continue in office and a resolution seeking by such means as employee briefings and publication to all staff to reappoint them will be proposed at the forthcoming Annual of relevant information and corporate announcements. In 2013, General Meeting. Intu conducted two all employee surveys covering a range of Annual General Meeting topics. More details are provided in the Our people section on The notice convening the 2014 Annual General Meeting page 44. of the Company will be published separately and will be The annual bonus arrangements help develop employees’ available on the Company’s website and distributed to those interest in the Company’s performance; full details of these shareholders who have elected to receive hard copies of Other information arrangements are given in the Directors’ remuneration report shareholder information. on pages 82 to 99. Note 47 on pages 147 to 150 contains details By order of the Board of conditional awards of shares under the annual bonus scheme and bonus shares currently outstanding. Intu operates a non-discriminatory employment policy and full and fair consideration is given to applications for employment Susan Marsden from people with disabilities or other protected characteristics Secretary under the Equality Act where they have the appropriate skills and abilities and to the continued employment of staff who 28 February 2014 become disabled.

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 102 Governance Statement of Directors’ responsibilities

The Directors are responsible for preparing the Annual Report, The Directors are responsible for keeping adequate accounting the Directors’ remuneration report and the financial statements records that are sufficient to show and explain the Company’s in accordance with applicable law and regulations. transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable Company law requires the Directors to prepare financial them to ensure that the financial statements and the Directors’ statements for each financial year. Under that law the Directors remuneration report comply with the Companies Act 2006 have prepared the Group and Company financial statements and, as regards the Group financial statements, Article 4 of the in accordance with International Financial Reporting Standards IAS Regulation. They are also responsible for safeguarding the (‘IFRSs’) as adopted by the European Union. Under company assets of the Company and the Group and hence for taking law the Directors must not approve the financial statements reasonable steps for the prevention and detection of fraud and unless they are satisfied that they give a true and fair view of the other irregularities. state of affairs of the Group and the Company and of the profit or loss of the Group and Company for that period. In preparing The Directors are responsible for the maintenance and integrity these financial statements, the Directors are required to of the financial and corporate governance information as provided on the Company’s website. Legislation in the United (a) select suitable accounting policies and then apply Kingdom governing the preparation and dissemination them consistently of financial statements may differ from legislation in (b) make judgements and accounting estimates that are other jurisdictions. reasonable and prudent The Directors consider that the Annual Report and Accounts, (c) state whether applicable IFRSs as adopted by the taken as a whole, is fair, balanced and understandable and European Union have been followed, subject to any provides the information necessary for shareholders to assess material departures disclosed and explained in the the Company’s and the Group’s performance, business model financial statements and strategy. (d) prepare the financial statements on the going concern basis, Each of the Directors, whose names and functions are listed in unless it is inappropriate to presume that the Company will the Governance section on pages 66 and 67 confirm that, to the continue in business best of their knowledge: (a) the Group financial statements, which have been 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 (b) the Directors’ report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces Signed on behalf of the Board on 28 February 2014

David Fischel Matthew Roberts Chief Executive Finance Director

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 103 Accounts

Accounts Strategic report

Independent auditors’ report to the members of Intu Properties plc 104 Governance Consolidated income statement 107 Consolidated statement of comprehensive income 108 Balance sheets 109 Statements of changes in equity 110

Statements of cash flows 113 Accounts Notes to the accounts 114

Other information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 104 Accounts Independent auditors’ report to the members of Intu Properties plc

Independent auditors’ report to the Members of Intu Properties plc (company registration number 3685527)

Report on the financial statements Our opinion In our opinion: — the financial statements, defined below, give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2013 and of the Group’s profit and the Group’s and Company’s cash flows for the year then ended; — the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; — the Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and — the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. This opinion is to be read in the context of what we say in the remainder of this report. What we have audited The Group financial statements and Company financial statements (the ‘financial statements’), which are prepared by Intu Properties plc, comprise: — the Group consolidated income statement and consolidated statement of comprehensive income for the year then ended; — the Group and Company balance sheets as at 31 December 2013; — the Group and Company statements of changes in equity and statements of cash flows for the year then ended; and — the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information. The financial reporting framework that has been applied in their preparation comprises applicable law and IFRSs as adopted by the European Union and, as regards the Company, as applied in accordance with the provisions of the Companies Act 2006. What an audit of financial statements involves We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (ISAs (UK & Ireland)). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: — whether the accounting policies are appropriate to the Group’s and Company’s circumstances and have been consistently applied and adequately disclosed; — the reasonableness of significant accounting estimates made by the Directors; and — the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report for the year ended 31 December 2013 (‘Annual Report’) to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Overview of our audit approach Materiality and scope We set certain thresholds for materiality. These helped us to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole. Based on our professional judgement, we determined materiality for the Group financial statements as a whole to be £82 million. In arriving at this judgement we have had regard to the carrying value of the Group’s assets, acknowledging that the primary measurement attribute of the Group is the carrying value of investment property. Our overall materiality figure represents 1 per cent of total assets. We set a specific materiality level of £7 million for rental income and expenses. In arriving at this judgement we have had regard to underlying profit before tax and associates acknowledging that this is a secondary measurement attribute of the Group. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £8 million (£1 million in relation to rental income and expenses) as well as misstatements below these amounts that, in our view, warranted reporting for qualitative reasons. The Group is structured as a single reporting unit so the whole business was subject to the same audit scope. In establishing the overall approach to our audit, we assessed the risk of material misstatement, taking into account the nature, likelihood and potential magnitude of any misstatement. Following this assessment, we applied professional judgement to determine the extent of testing required over each balance in the financial statements. Areas of particular audit focus In preparing the financial statements, the Directors made a number of subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. We primarily focused our work in these areas by assessing the Directors’ judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 105 Accounts

In our audit, we tested and examined information, using sampling and other auditing techniques, to the extent we considered necessary to provide a reasonable basis for us to draw conclusions. We obtained audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both. We considered the following areas to be those that required particular focus in the current year. This is not a complete list of all risks or areas of particular audit focus identified by our audit. We discussed these areas of focus with the Audit Committee. Their report on those matters that they considered to be significant issues in relation to the financial statements is set out on pages 107 to 113.

Area of focus How the scope of our audit addressed the area of focus Strategic report Valuation of Investment Properties We considered whether, as a whole, the properties held by the Group were valued on a consistent basis and using appropriate methods. The valuation of the Group’s property portfolio is inherently subjective due to, among other factors, the We performed testing over data provided by the Group to the external valuers, including individual nature of each property, its location and the lease data. expected future rental revenues for that particular We also assessed the controls over the external valuation process and met with the property. The assumptions on which the property external valuers to understand and challenge their assumptions and conclusions. values are based include matters such as the tenure and tenancy details for the properties, prevailing market yields and comparable market transactions. Revaluation of investment and development properties is a significant risk in our audit. Revenue recognition We evaluated the relevant IT systems and tested the internal controls over the completeness, accuracy and timing of revenue recognised in the financial statements ISAs (UK & Ireland) presume there is a risk of fraud in

and tested journal entries posted to revenue accounts to identify unusual or irregular Governance revenue recognition because of the pressure items. management may feel to achieve the planned results. Our tests also include matching standard revenue transactions from inception through to the year end accounts receivable balance or cash.

Risk of management override of internal controls We assessed the overall control environment of the Group, including the arrangements for staff to ‘whistle-blow’ inappropriate actions, and interviewed senior management ISAs (UK & Ireland) require that we consider this. and the Group’s internal audit function. We examined the significant accounting estimates and judgements relevant to the financial statements for evidence of bias by the Directors that may represent a risk of material misstatement due to fraud. We also tested journal entries. Going concern The main areas of focus in our review were the debt maturity profile and available liquidity, as set out in the Group’s latest Board approved forecasts. This was considered to be an area of audit focus due to the Group’s recent financing activities. We evaluated the key judgements within the forecast, including property valuations and

rental income levels. We considered the adequacy of the Group’s financing structure, Accounts including forecast compliance with financial covenants, and assessed the sensitivity of the Directors’ calculations to changes in key inputs, including property valuations and rental income. Our conclusion on going concern is below.

Going Concern Under the Listing Rules we are required to review the Directors’ statement, set out on page 114, in relation to going concern. We have nothing to report having performed our review. As noted in the Directors’ statement, the Directors have concluded that it is appropriate to prepare the Group’s and Company’s financial statements using the going concern basis of accounting. The going concern basis presumes that the Group and Company have adequate resources to remain in operation, and that the Directors intend them to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concluded that the Directors’ use of the going concern basis is appropriate. However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Group’s and the Company’s ability to continue as a going concern. Other information Opinions on matters prescribed by the Companies Act 2006 In our opinion: — the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and — the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 106 Accounts Independent auditors’ report to the members of Intu Properties plc continued

Other matters on which we are required to report by exception Adequacy of accounting records and information and explanations received Under the Companies Act 2006 we are required to report to you if, in our opinion: — we have not received all the information and explanations we require for our audit; or — adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or — the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Directors’ remuneration Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of Directors’ remuneration specified by law have not been made, and under the Listing Rules we are required to review certain elements of the report to shareholders by the Board on Directors’ remuneration. We have no exceptions to report arising from these responsibilities. Corporate Governance Statement Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to the Company’s compliance with nine provisions of the UK Corporate Governance Code (‘the Code’). We have nothing to report having performed our review. On page 69 of the Annual Report, as required by the Code Provision C.1.1, the Directors state that they consider the Annual Report taken as a whole to be fair, balanced and understandable and provides the information necessary for members to assess the Group’s performance, business model and strategy. On pages 75 to 76, as required by C.3.8 of the Code, the Audit Committee has set out the significant issues that it considered in relation to the financial statements, and how they were addressed. Under ISAs (UK & Ireland) we are required to report to you if, in our opinion: — the statement given by the Directors is materially inconsistent with our knowledge of the Group acquired in the course of performing our audit; or — the section of the Annual Report describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee. We have no exceptions to report arising from this responsibility. Other information in the Annual Report Under ISAs (UK & Ireland), we are required to report to you if, in our opinion, information in the Annual Report is: — materially inconsistent with the information in the audited financial statements; or — apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group and Company acquired in the course of performing our audit; or — is otherwise misleading. We have no exceptions to report arising from this responsibility. Responsibilities for the financial statements and the audit Our responsibilities and those of the Directors As explained more fully in the Statement of Directors’ responsibilities set out on page 102, the Directors are responsible for the preparation of the Group and Company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the Group and Company financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Ranjan Sriskandan (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 28 February 2014 Notes (a) The maintenance and integrity of the Group’s website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 107 Accounts Consolidated income statement for the year ended 31 December 2013

2013 2012 Notes £m £m

Revenue 4 533.2 525.7 Net rental income 5 369.5 362.6 Net other income 6 3.8 6.3 Revaluation and sale of investment and development property 7 125.8 40.9 Strategic report Gain on acquisition of subsidiaries 40 – 2.3 Sale of other investments – 1.4 Impairment of goodwill – (8.8) Distribution of shares received from Provogue 24 – 10.2 Administration expenses – ongoing (27.7) (26.7) Administration expenses – exceptional 8 (21.2) (1.1) Operating profit 450.2 387.1 Finance costs 12 (197.2) (197.3) Finance income 0.6 0.2 Other finance costs 13 (164.5) (67.9) Change in fair value of financial instruments 14 273.8 30.5 Net finance costs (87.3) (234.5)

Profit before tax and associates 362.9 152.6 Governance Current tax 15 (0.8) (0.5) Deferred tax 15 1.4 5.6 Taxation 15 0.6 5.1 Share of profit of associates 24 0.5 0.9 Profit for the year 364.0 158.6

Attributable to: Owners of Intu Properties plc 359.8 155.9 Non-controlling interests 4.2 2.7 364.0 158.6

Basic earnings per share 18 37.8p 17.6p

Diluted earnings per share 18 35.1p 17.3p Accounts Details of underlying earnings are presented in the underlying profit statement on page 158. Underlying earnings per share are shown in note 18(c).

Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 108 Accounts Consolidated statement of comprehensive income for the year ended 31 December 2013

2013 2012 Notes £m £m Profit for the year 364.0 158.6 Other comprehensive income Items that may be reclassified subsequently to profit or loss: Revaluation of other investments 25 8.1 28.7 Recognised in sale of other investments – 2.7 Exchange differences (8.1) (7.4) Tax relating to components of other comprehensive income 15 (1.6) (6.0) Total items that may be reclassified subsequently to profit or loss (1.6) 18.0 Other comprehensive income for the year (1.6) 18.0 Total comprehensive income for the year 362.4 176.6

Attributable to: Owners of Intu Properties plc 359.2 173.9 Non-controlling interests 3.2 2.7 362.4 176.6

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 109 Accounts Balance sheets as at 31 December 2013

Group Group Company Company 2013 2012 2013 2012 Notes £m £m £m £m Non-current assets Investment and development property 20 7,551.4 7,009.7 – – Plant and equipment 21 5.5 5.6 4.2 4.7

Investment in group companies 22 – – 2,511.0 2,225.5 Strategic report Investment in associate companies 24 35.8 40.9 – – Other investments 25 154.9 148.8 – – Goodwill 26 8.2 4.0 – – Derivative financial instruments 29 25.1 21.2 – – Trade and other receivables 27 111.2 104.0 – 0.4 7,892.1 7,334.2 2,515.2 2,230.6 Current assets Trading property 0.4 2.1 – – Derivative financial instruments 29 0.7 0.7 – – Trade and other receivables 27 81.6 66.6 1,129.4 680.5 Short-term investments 31 69.3 – – – Cash and cash equivalents 28 165.5 188.1 0.3 0.3 317.5 257.5 1,129.7 680.8 Governance Total assets 8,209.6 7,591.7 3,644.9 2,911.4

Current liabilities Trade and other payables 30 (245.8) (220.9) (555.9) (344.6) Current tax liabilities (1.2) (0.6) – – Borrowings 31 (149.2) (94.2) – – Derivative financial instruments 29 (11.4) (19.1) – – (407.6) (334.8) (555.9) (344.6) Non-current liabilities Borrowings 31 (3,944.0) (3,751.6) (285.0) – Derivative financial instruments 29 (220.5) (495.8) (12.8) (11.0) Other payables (4.4) (3.3) – – Deferred tax (12.0) – – – (4,180.9) (4,250.7) (297.8) (11.0) Accounts Total liabilities (4,588.5) (4,585.5) (853.7) (355.6) Net assets 3,621.1 3,006.2 2,791.2 2,555.8

Equity Share capital 37 486.9 434.2 486.9 434.2 Share premium 695.6 577.4 695.6 577.4 Treasury shares 39 (48.2) (43.9) (48.2) (43.9) Convertible bonds 33 143.7 143.7 143.7 143.7 Other reserves 38 500.5 336.7 225.8 61.4 Retained earnings 1,740.3 1,528.9 1,287.4 1,383.0 Attributable to owners of Intu Properties plc 3,518.8 2,977.0 2,791.2 2,555.8 Non-controlling interests 102.3 29.2 – –

Total equity 3,621.1 3,006.2 2,791.2 2,555.8 Other information These consolidated financial statements have been approved for issue by the Board of Directors on 28 February 2014.

David Fischel Matthew Roberts Chief Executive Finance Director Notes on pages 114 to 152 form part of these consolidated financial statements.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 110 Accounts Statements of changes in equity for the year ended 31 December 2013

Attributable to owners of Intu Properties plc Non- Share Share Treasury Convertible Other Retained controlling Total capital premium shares bonds reserves earnings Total interests equity Group £m £m £m £m £m £m £m £m £m At 1 January 2013 434.2 577.4 (43.9) 143.7 336.7 1,528.9 2,977.0 29.2 3,006.2 Profit for the year – – – – – 359.8 359.8 4.2 364.0 Other comprehensive income: Revaluation of other investments (note 25) – – – – 8.1 – 8.1 – 8.1 Exchange differences – – – – (7.1) – (7.1) (1.0) (8.1) Tax relating to components of other comprehensive income (note 15) – – – – (1.6) – (1.6) – (1.6) Total comprehensive income for the year – – – – (0.6) 359.8 359.2 3.2 362.4 Ordinary shares issued 52.7 118.2 – – 164.4 – 335.3 – 335.3 Dividends (note 17) – – – – – (142.1) (142.1) – (142.1) Interest on convertible bonds (note 33) – – – – – (5.8) (5.8) – (5.8) Share-based payments (note 47) – – – – – 2.0 2.0 – 2.0 Acquisition of treasury shares – – (7.0) – – – (7.0) – (7.0) Disposal of treasury shares – – 2.7 – – (2.5) 0.2 – 0.2 Non-controlling interest additions (note 40) – – – – – – – 71.1 71.1 Distribution to non-controlling interest – – – – – – – (1.2) (1.2) 52.7 118.2 (4.3) – 164.4 (148.4) 182.6 69.9 252.5 At 31 December 2013 486.9 695.6 (48.2) 143.7 500.5 1,740.3 3,518.8 102.3 3,621.1

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 111 Accounts Statements of changes in equity for the year ended 31 December 2013 continued

Attributable to owners of Intu Properties plc Non- Share Share Treasury Convertible Other Retained controlling Total capital premium shares bonds reserves earnings Total interest equity Group £m £m £m £m £m £m £m £m £m At 1 January 2012 430.2 564.1 (29.5) 143.7 318.7 1,494.9 2,922.1 23.5 2,945.6 Profit for the year – – – – – 155.9 155.9 2.7 158.6 Strategic report Other comprehensive income: Revaluation of other investments (note 25) – – – – 28.7 – 28.7 – 28.7 Recognised in sale of other investments – – – – 2.7 – 2.7 – 2.7 Exchange differences – – – – (7.4) – (7.4) – (7.4) Tax relating to components of other comprehensive income (note 15) – – – – (6.0) – (6.0) – (6.0) Total comprehensive income for the year – – – – 18.0 155.9 173.9 2.7 176.6 Ordinary shares issued 4.0 22.3 – – – – 26.3 – 26.3 Dividends (note 17) – – – – – (127.8) (127.8) – (127.8) Transfer relating to scrip dividends – (9.0) – – – 9.0 – – – Governance Interest on convertible bonds (note 33) – – – – – (5.8) (5.8) – (5.8) Share-based payments (note 47) – – – – – 3.8 3.8 – 3.8 Acquisition of treasury shares – – (15.6) – – – (15.6) – (15.6) Disposal of treasury shares – – 1.2 – – (1.1) 0.1 – 0.1 Non-controlling interest additions – – – – – – – 3.0 3.0 4.0 13.3 (14.4) – – (121.9) (119.0) 3.0 (116.0) At 31 December 2012 434.2 577.4 (43.9) 143.7 336.7 1,528.9 2,977.0 29.2 3,006.2

Accounts Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 112 Accounts Statements of changes in equity for the year ended 31 December 2013 continued

Attributable to owners of Intu Properties plc Share Share Treasury Convertible Other Retained capital premium shares bonds reserves earnings Total Company £m £m £m £m £m £m £m At 1 January 2013 434.2 577.4 (43.9) 143.7 61.4 1,383.0 2,555.8 Profit for the year – – – – – 52.8 52.8 Total comprehensive income for the year – – – – – 52.8 52.8 Ordinary shares issued 52.7 118.2 – – 164.4 – 335.3 Dividends (note 17) – – – – – (142.1) (142.1) Interest on convertible bonds (note 33) – – – – – (5.8) (5.8) Share-based payments (note 47) – – – – – 2.0 2.0 Acquisition of treasury shares – – (7.0) – – – (7.0) Disposal of treasury shares – – 2.7 – – (2.5) 0.2 52.7 118.2 (4.3) – 164.4 (148.4) 182.6 At 31 December 2013 486.9 695.6 (48.2) 143.7 225.8 1,287.4 2,791.2

Attributable to owners of Intu Properties plc Share Share Treasury Convertible Other Retained capital premium shares bonds reserves earnings Total Company £m £m £m £m £m £m £m At 1 January 2012 430.2 564.1 (29.5) 143.7 61.4 1,481.1 2,651.0 Profit for the year – – – – – 23.8 23.8 Total comprehensive income for the year – – – – – 23.8 23.8 Ordinary shares issued 4.0 22.3 – – – – 26.3 Dividends (note 17) – – – – – (127.8) (127.8) Transfer relating to scrip dividends – (9.0) – – – 9.0 – Interest on convertible bonds (note 33) – – – – – (5.8) (5.8) Share-based payments (note 47) – – – – – 3.8 3.8 Acquisition of treasury shares – – (15.6) – – – (15.6) Disposal of treasury shares – – 1.2 – – (1.1) 0.1 4.0 13.3 (14.4) – – (121.9) (119.0) At 31 December 2012 434.2 577.4 (43.9) 143.7 61.4 1,383.0 2,555.8

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 113 Accounts Statements of cash flows for the year ended 31 December 2013

Group Group Company Company 2013 2012 2013 2012 Notes £m £m £m £m

Cash generated from operations 43 317.6 339.2 (254.5) 180.7 Interest paid (339.3) (252.7) (7.9) (11.8)

Interest received 0.6 0.2 – – Strategic report Taxation (0.7) 4.2 – – REIT entry charge – (15.2) – – Cash flows from operating activities (21.8) 75.7 (262.4) 168.9 Cash flows from investing activities Purchase and development of property, plant and equipment (44.6) (81.2) (1.0) (1.2) Sale of property 15.6 1.2 – – Sale of other investments – 48.7 – – Acquisition of businesses net of cash acquired (382.1) (2.6) – – Investment in subsidiaries – – (197.2) – Other investing activities – (17.2) – – Cash flows from investing activities (411.1) (51.1) (198.2) (1.2) Cash flows from financing activities Issue of ordinary shares 273.0 0.1 273.0 0.1 Governance Issue of convertible bonds 33 – 300.0 – – Acquisition of treasury shares (0.9) (0.1) (0.9) (0.1) Sale of treasury shares 0.2 0.1 0.2 0.1 Non-controlling interest funding received 40 71.1 – – – Partnership equity introduced – 3.0 – – Cash transferred from restricted accounts – 0.5 – – Borrowings drawn 2,051.6 – 285.0 – Borrowings repaid (1,891.9) (107.3) – (45.0) Interest on convertible bonds (5.8) (5.8) (5.8) (5.8) Equity dividends paid (90.9) (117.2) (90.9) (117.2) Cash flows from financing activities 406.4 73.3 460.6 (167.9) Effects of exchange rate changes on cash and cash equivalents (0.1) – – – Net (decrease)/increase in cash and cash equivalents (26.6) 97.9 – (0.2) Accounts Cash and cash equivalents at 1 January 28 186.1 88.2 0.3 0.5 Cash and cash equivalents at 31 December 28 159.5 186.1 0.3 0.3

Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 114 Accounts Notes to the accounts

Other pronouncements are not expected to have a material impact 1 Accounting convention and basis on the financial statements, but may result in changes to presentation or of preparation disclosure. Additionally a number of standards have been issued but are not yet These consolidated financial statements have been prepared in adopted by the EU and so are not available for early adoption. The most accordance with International Financial Reporting Standards, as adopted significant of these is IFRS 9 Financial Instruments along with related by the European Union (‘IFRS’), IFRIC interpretations and with those amendments to other IFRSs and the impact on the Group of these parts of the Companies Act 2006 applicable to companies reporting standards is being reviewed. under IFRS. The Directors have taken advantage of the exemption offered by Section 408 of the Companies Act not to present a Use of estimates and assumptions separate income statement or statement of comprehensive income The preparation of financial statements in conformity with generally for the Company. accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities The consolidated financial statements have been prepared under the at the date of the financial statements and the reported amounts of historical cost convention as modified by the revaluation of property, revenues and expenses during the reporting period. Although these available-for-sale investments, and certain other financial assets and estimates are based on management’s best knowledge of the amount, liabilities. A summary of the more important Group accounting policies event or actions, actual results ultimately may differ from those is set out in note 2. estimates. In particular significant judgement is required in the use of The accounting policies used are consistent with those applied in the last estimates and assumptions in the valuation and accounting for annual financial statements, as amended to reflect the adoption of new investment and development property and derivative financial standards, amendments, and interpretations which became effective in instruments. Additional detail on these two areas is provided in the the year. During 2013, the following relevant standards, amendments relevant accounting policy in note 2 and in other notes to the financial and interpretations endorsed by the EU became effective for the first statements. time for the Group’s 31 December 2013 financial statements: Going concern — IFRS 7 Financial Instruments: Disclosures (amendment); The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the — IFRS 13 Fair Value Measurement; Strategic Report on pages 1 to 63. The financial position of the Group, its — IAS 1 Presentation of Financial Statements (amendment); cash flows, liquidity position and borrowing facilities are described in the — IAS 12 Income Taxes (amendment); and Financial review on pages 48 to 53. In addition note 35 includes the Group’s risk management objectives, details of its financial instruments — IAS 19 Employee Benefits (revised). and hedging activities, its exposures to liquidity risk and details of its These have resulted in changes to presentation or disclosure only. capital structure. The following relevant standards have been issued and adopted by the The Group prepares regular forecasts and projections which include EU but are not effective until 1 January 2014 and have not been sensitivity analysis taking into account a number of downside risks to the adopted early: forecast including reasonably possible changes in trading performance and asset values and assesses the potential impact of these on the — IFRS 10 Consolidated Financial Statements; Group’s liquidity position and available resources. — IFRS 11 Joint Arrangements; In preparing the most recent projections factors taken into account — IFRS 12 Disclosure of Interests in Other Entities; include the Group’s £166 million of cash, £69 million of short-term investments and £90 million of undrawn facilities at 31 December 2013. — IAS 27 Separate Financial Statements (revised); The significant refinancing of debt completed in the year, extending the — IAS 28 Investments in Associates and Joint Ventures (revised); Group’s debt maturity profile to eight years, along with the relatively long-term and stable nature of the cash flows receivable under tenant — IAS 32 Financial Instruments: Presentation (amendment); leases were also factored into the forecasts. — IAS 36 Impairment of Assets (amendment); and After reviewing the most recent projections and the sensitivity analysis, — Amendments to IFRS 10, IFRS 11 and IFRS 12 (transition guidance). the Directors have concluded that there is a reasonable expectation that IFRS 11 removes the choice of accounting treatments currently available the Group has adequate resources to continue in operational existence under IAS 31 Interests in Joint Ventures. This will impact the Group’s for the foreseeable future. Thus they continue to adopt the going existing accounting policy in respect of joint ventures but the accounting concern basis of accounting in preparing the Group’s financial for joint operations will remain unchanged. The Group’s interest in joint statements. ventures will be accounted for using the equity method rather than proportionally consolidating the Group’s share of assets, liabilities, income and expenses on a line-by-line basis. This change will reduce total assets and total liabilities as currently presented, with no change expected in net assets.

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Contingent rents, being those lease payments that are not fixed at the 2 Accounting policies – Group and Company inception of a lease, for example increases arising on rent reviews or Basis of consolidation rents linked to tenant revenues, are recorded as income in the periods The consolidated financial information includes the Company and its in which they are earned. Rent reviews are recognised as income subsidiaries and their interests in joint ventures and associates. from the date of the rent review, based on management’s estimates. Estimates are derived from knowledge of market rents for comparable All intra-group transactions, balances and unrealised gains on properties determined on an individual property basis and updated for transactions between Group companies are eliminated on consolidation. progress of negotiations. Strategic report – subsidiaries Service charge income is recognised on an accruals basis in line with the A subsidiary is an entity for which the Company has the ability, either service being provided. directly or indirectly, to govern the financial and operating policies, whether through a majority of the voting rights or otherwise. – trading property income Subsidiaries are fully consolidated from the date on which control is Revenue on the sale of trading property is recognised when the transferred to the Group and are de-consolidated from the date that significant risks and rewards of ownership have been transferred control ceases. to the buyer. This will normally take place on exchange of contracts. The Company’s investment in group companies is carried at cost less Interest income accumulated impairment losses. Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate. – joint ventures A joint venture is an entity or operation for which the Company, either Dividend income directly or indirectly, is in a position to jointly control the financial and Dividend income is recognised when the right to receive payment has operating policies of the entity or operation. been established. The Group’s interest in a joint venture is accounted for using Share-based payments proportional consolidation. The Group’s share of the assets, liabilities, The cost of granting share options and other share-based remuneration Governance income and expenses are combined with the equivalent items in the is recognised through the income statement with reference to the fair consolidated financial statements on a line-by-line basis. value of the equity instrument, assessed at the date of grant. This cost is charged to the income statement over the vesting period of the awards. – associates All awards are accounted for as equity settled with the credit entry being An associate is an entity over which the Company, either directly taken directly to equity. For awards with non-market related criteria, the or indirectly, is in a position to exercise significant influence by charge is reversed if it appears probable that the performance criteria participating in, but without control or joint control of, the financial will not be met. and operating policies of the entity. For share options an option pricing model is used applying assumptions The Group’s interest in an associate is accounted for using the around expected yields, forfeiture rates, exercise price and volatility. equity method. Where the share awards have non-market related performance criteria – non-controlling interest the Group has used the Black-Scholes option valuation model to A non-controlling interest is the equity in a subsidiary not attributable, establish the relevant fair values. Where the share awards have a TSR directly or indirectly, to the Company. Non-controlling interests are market related performance criteria the Group has used the Monte- presented within equity, separately from the amounts attributable Carlo simulation valuation model to establish the relevant fair values. to equity owners of the Company. Profit or loss and each component Investments held in the Company’s own shares in connection with Accounts of other comprehensive income is attributed to equity owners employee share plans and other share-based payment arrangements of the Company and to non-controlling interests in the are accounted for as treasury shares (see accounting policy below). appropriate proportions. Exceptional items Foreign currencies Exceptional items are those items that in the Directors’ view are required Items included in the financial statements of each of the Group’s entities to be separately disclosed by virtue of their size or incidence to enable a are measured using the currency of the primary economic environment full understanding of the Group’s financial performance. in which it operates. The consolidated financial statements are presented in pounds sterling, which is the Group’s presentation currency. Taxation Current tax is the amount payable on the taxable income for the year The assets and liabilities of foreign entities are translated into pounds and any adjustment in respect of prior years. It is calculated using rates sterling at the rate of exchange ruling at the reporting date and their that have been enacted or substantively enacted by the balance income statement and cash flows are translated at the average rate sheet date. for the period. Exchange differences arising are dealt with in other comprehensive income. Deferred tax is provided using the balance sheet liability method in respect of temporary differences between the carrying amounts of At entity level, transactions in currencies other than an entity’s assets and liabilities in the balance sheet and their tax bases.

functional currency are recorded at the exchange rate prevailing at the Other information transaction dates. Foreign exchange gains and losses resulting from Temporary differences are not provided on the initial recognition settlement of these transactions and from retranslation of monetary of assets or liabilities that affect neither accounting nor taxable profit, assets and liabilities denominated in foreign currencies are recognised and differences relating to investments in subsidiaries to the extent that in the income statement except for some types of hedging arrangement they will not reverse in the foreseeable future. which are dealt with in other comprehensive income. Deferred tax is determined using tax rates that have been enacted Revenue recognition or substantively enacted by the balance sheet date and are expected to The Group recognises revenue when the amount of revenue can be apply when the related deferred tax asset is realised or the deferred tax reliably measured and it is probable that future economic benefits will liability is settled. flow to the Group. – property revenue Rental income receivable is recognised on a straight-line basis over the term of the lease. Directly attributable lease incentives are recognised within rental income on the same basis.

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Lease payments are allocated between the liability and finance charges 2 Accounting policies – Group and Company so as to achieve a constant financing rate. (continued) Rentals payable under operating leases are charged to the income statement on a straight-line basis over the lease term. Deferred tax assets are recognised only to the extent that management believe it is probable that future taxable profit will be available against – Group as lessor which the temporary differences can be utilised. Deferred tax assets and Investment properties are leased to tenants under operating leases, with liabilities are offset only when they relate to taxes levied by the same rental income being recognised on a straight-line basis over the lease authority and the Group intends to settle them on a net basis. term. For more detail see the revenue recognition accounting policy. Tax is included in the income statement except when it relates to items Plant and equipment recognised directly in other comprehensive income or equity, in which Plant and equipment consists of vehicles, fixtures, fittings and other case the related tax is also recognised directly in other comprehensive equipment. Plant and equipment is stated at cost less accumulated income or equity. depreciation and any accumulated impairment losses. Investment and development property Depreciation is charged to the income statement on a straight-line basis Investment and development property is owned or leased by the Group over an asset’s estimated useful life up to a maximum of five years. and held for long-term rental income and capital appreciation. Other investments The Group has elected to use the fair value model. Properties are initially Available-for-sale investments, being investments intended to be held for recognised at cost and subsequently revalued at the balance sheet date an indefinite period, are initially and subsequently measured at fair value. to fair value as determined by professionally qualified external valuers on For listed investments, fair value is the current bid market value at the the basis of market value. Valuations conform with the Royal Institution reporting date. For unlisted investments where there is no active market, of Chartered Surveyors (‘RICS’), Valuation – Professional Standards 2012. fair value is assessed using an appropriate methodology. The main estimates and judgements underlying the valuations are Gains or losses arising from changes in fair value are included in other described in note 20. comprehensive income, except to the extent that losses are considered to represent a permanent impairment, in which case they are recognised Properties held under leases are stated gross of the recognised finance in the income statement. lease liability. Upon disposal, accumulated fair value adjustments are recycled from The cost of investment and development property includes capitalised reserves to the income statement. interest and other directly attributable outgoings incurred during development. Interest is capitalised on the basis of the average rate of Goodwill interest paid on the relevant debt outstanding. Interest ceases to be Goodwill arising on business combinations is carried at cost less capitalised on the date of practical completion. accumulated impairment losses. Goodwill is assessed for impairment on an annual basis. Gains or losses arising from changes in the fair value of investment and development property are recognised in the income statement. Impairment of assets The Group’s assets are reviewed at each balance sheet date to determine Depreciation is not provided in respect of investment and whether events or changes in circumstances exist that indicate that their development property. carrying amount may not be recoverable. If such an indication exists, the Gains or losses arising on the sale of investment and development asset’s recoverable amount is estimated. The recoverable amount is the property are recognised when the significant risks and rewards of higher of an asset’s fair value less costs to sell and its value in use. An ownership have been transferred to the buyer. This will normally take impairment loss is recognised in the income statement for the amount place on exchange of contracts. The gain or loss recognised is the by which the asset’s carrying amount exceeds its recoverable amount. proceeds received less the carrying value of the property and costs For the purposes of assessing impairment, assets are grouped at the directly associated with the sale. lowest levels for which there are separately identifiable cash flows. Leases At each balance sheet date the Group reviews whether there is any Leases are classified according to the substance of the transaction. indication that an impairment loss recognised in previous periods may A lease that transfers substantially all the risks and rewards of ownership have decreased. If such an indication exists the asset’s recoverable to the lessee is classified as a finance lease. All other leases are normally amount is estimated. An impairment loss recognised in prior periods is classified as operating leases. reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount. In this case the asset’s – Group as lessee carrying amount is increased to its recoverable amount but not Finance leases of investment property are accounted for as finance exceeding the carrying amount that would have been determined had leases and recognised as an asset and an obligation to pay future no impairment loss been recognised. The reversal of an impairment loss minimum lease payments. The investment property asset is included is recognised in the income statement. No impairment reversals are in the balance sheet at fair value, gross of the recognised finance permitted to be recognised on goodwill. lease liability. Contingent rents are recognised as they accrue. Trading property Other finance lease assets are capitalised at the lower of the fair value Trading property comprises those properties either intended for sale or of the leased asset or the present value of the minimum lease payments in the process of construction for sale. Trading property is carried at the and depreciated over the shorter of the lease term and the useful life lower of cost and net realisable value. of the asset.

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Share capital 2 Accounting policies – Group and Company Ordinary shares are classified as equity. Incremental costs directly (continued) attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds. Trade receivables Dividends Trade receivables are recognised initially at fair value and subsequently Dividends are recognised when they become legally payable. In the case measured at amortised cost. of interim dividends to owners, this is the date of payment. In the case of Strategic report The Directors exercise judgement as to the collectability of trade final dividends, this is when declared by shareholders at the AGM. receivables and determine if it is appropriate to impair these assets. Convertible bonds Factors such as days past due, credit status of the counterparty and Convertible bonds are assessed on issue, as to whether they should be historical evidence of collection are considered. classified as a financial liability, as equity or as a compound financial Cash and cash equivalents instrument with both debt and equity components. This assessment Cash and cash equivalents comprise cash in hand, deposits with banks, is based on the terms of the bond and in accordance with IAS32. Each whether restricted or unrestricted, and other short-term liquid bond is assessed separately and the detailed accounting treatment investments with original maturities of three months or less. of each is given in note 33. Trade payables Treasury shares Trade payables are recognised initially at fair value and subsequently Investments held in the Company’s own shares are deducted from measured at amortised cost. equity at cost. Where such shares are subsequently sold, any consideration received is recognised directly in equity. Pensions The costs of defined contribution schemes and contributions to personal Current/non-current classification plans are charged to the income statement in the year in which they Current assets include assets held primarily for trading purposes,

are incurred. The Group has no defined benefit scheme. cash and cash equivalents, and assets expected to be realised in, Governance or intended for sale or consumption in, the course of the Group’s Borrowings operating cycle. All other assets are classified as non-current assets. Borrowings are recognised initially at their net proceeds on issue and subsequently carried at amortised cost with the exception of certain Current liabilities include liabilities held primarily for trading purposes, convertible bonds as detailed in note 33. Any transaction costs and liabilities expected to be settled in the course of the Group’s operating premiums or discounts are recognised over the contractual life using cycle and those liabilities due within one year from the reporting date. the effective interest method. All other liabilities are classified as non-current liabilities. In the event of early repayment, all unamortised transaction costs are Business combinations recognised immediately in the income statement. Business combinations are accounted for in accordance with IFRS 3 Business Combinations using the acquisition method of accounting. The Derivative financial instruments consideration transferred for the acquisition of a subsidiary is the fair The Group uses derivative financial instruments to manage exposure to values of the assets transferred, the liabilities incurred and the equity interest rate and foreign exchange risk. They are initially recognised on interests issued by the Group. The consideration transferred includes the the trade date at fair value and subsequently re-measured at fair value. fair value of any asset or liability resulting from a contingent In assessing fair value the Group uses its judgement to select suitable consideration arrangement. Costs associated with the acquisition are valuation techniques and make assumptions which are mainly based on expensed as incurred. Identifiable assets and liabilities assumed in a market conditions existing at the balance sheet date. The fair value of Accounts business combination are measured initially at their fair values at the interest rate swaps is calculated by discounting estimated future cash acquisition date. flows based on the terms and maturity of each contract and using market interest rates for similar instruments at the measurement date. Goodwill arising on an acquisition comprises the excess of the These values are tested for reasonableness based upon broker or consideration over the fair value of the identifiable assets and liabilities counterparty quotes. acquired. Where the fair value of the identifiable assets and liabilities acquired exceeds the consideration this difference is recognised in the Amounts paid under derivative financial instruments (currently for the income statement at the date of the acquisition. Group this relates to interest rate swaps), both on obligations as they fall due and on early settlement, are recognised in the income statement as finance costs. Fair value movements on revaluation of derivative financial instruments are shown in the income statement through changes in fair value of financial instruments. The Group does not currently apply hedge accounting to its interest rate swaps. Other information

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3 Segmental reporting

Operating segments are determined based on the internal reporting and operational management of the Group. The Group is primarily a UK shopping centre focused business and has one reportable operating segment. The principal profit indicator used to measure performance is net rental income. An analysis of net rental income is given in note 5. The Group’s geographical segments are set out below. This represents where the Group’s assets reside and where revenues are generated. In the case of investments this reflects where the investee is located.

Revenue Non-current assets1 2013 2012 2013 2012 £m £m £m £m United Kingdom 529.8 525.7 7,528.4 7,123.3 Spain 3.4 – 147.9 – United States – – 153.9 146.9 India – – 36.8 42.8 533.2 525.7 7,867.0 7,313.0 1 Non-current assets excluding financial instruments and deferred tax assets.

4 Revenue

2013 2012 £m £m Rent receivable and service charge income 531.4 520.1 Sale of trading property 1.8 5.6 Revenue 533.2 525.7

5 Net rental income

2013 2012 £m £m Rent receivable 447.6 441.4 Service charge income 83.8 78.7 531.4 520.1 Rent payable (23.5) (24.7) Service charge costs (94.5) (87.0) Other non-recoverable costs (43.9) (45.8) Net rental income 369.5 362.6

6 Net other income

2013 2012 £m £m Sale of trading property 1.8 5.6 Cost of sales (1.7) (5.5) Profit on sale of trading property 0.1 0.1 Write down of trading property – (0.1) Dividends received from other investments 6.3 6.3 intu Digital (2.6) – Net other income 3.8 6.3

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7 Revaluation and sale of investment and development property

2013 2012 £m £m Revaluation of investment and development property (note 20) 125.8 40.8 Sale of investment property – 0.1

Revaluation and sale of investment and development property 125.8 40.9 Strategic report

8 Administration expenses – exceptional

Exceptional administration expenses in the year totalled £21.2 million (2012 – £1.1 million). This includes costs relating to the acquisition of Midsummer Place of £11.2 million, being predominantly stamp duty, £6.8 million of costs relating to the rebranding of the Group, and £2.0 million relating to the acquisition of Parque Principado with the remainder relating to other corporate finance activities of the Group. These administration expenses are considered to be exceptional items and have been disclosed separately from ongoing administration expenses as, due to the size or incidence of these items, separate disclosure is required to enable a full understanding of the Group’s financial performance.

9 Operating profit

2013 2012 £m £m

Operating profit is arrived at after charging: Governance Staff costs (note 10) 44.3 30.5 Depreciation 1.8 1.5 Remuneration paid to the Company’s auditors (note 11) 0.9 0.4 Staff costs in the year increased due to the creation of Intu Retail Services Limited (see note 10).

10 Employees’ information

Group Group 2013 2012 £m £m Wages and salaries 36.5 23.1 Social security costs 3.9 2.4

Other pension costs 1.9 1.2 Accounts Share-based payments (note 47) 2.0 3.8 44.3 30.5

At 31 December 2013 the number of persons employed by the Group was 2,027 (2012 – 645). The Company had no employees during the year (2012 – nil). The monthly average number of persons employed by the Group during the year was:

2013 2012 Number Number Head Office 203 144 Shopping Centres 1,077 494 1,280 638

The Group’s staff costs and numbers increased in the year following the creation of Intu Retail Services Limited, a subsidiary whose role is to deliver facilities management to all intu branded shopping centres across the UK. These services were previously provided by external service providers. As a result, 1,112 staff joined the Group on 1 July 2013 and a further 163 staff joined on 1 October 2013. Other information

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11 Auditors’ remuneration

2013 2012 £000 £000 Fees payable to the Company’s auditors and their associates for: The audit of the Company’s annual accounts 197 202 Other services to the Group – statutory audit of the Company’s subsidiaries 173 136 Fees related to the audit of the Company and its subsidiaries 370 338 Audit-related assurance services1 40 40 Total fees for audit and audit related services 410 378 Other assurance services2 533 18 Corporate finance advisory services – 50 Total non-audit related services 533 68 Total fees 943 446

Fees payable to PricewaterhouseCoopers LLP and their associates for non-audit services to the Company are not required to be disclosed separately as they are included on a consolidated basis. 1 Relates to fees in respect of the review of the Group’s Interim Report. 2 In 2013, fees payable to the principal auditors for other assurance services includes £505,000 in respect of work required for the Group to raise listed debt within the Secured Group Structure and on intu Metrocentre. PwC were selected to undertake this work after consideration of the impact this may have on their independence, which it was concluded would not be impinged by undertaking the work. A further consideration in the decision was that, given their prior knowledge of the Group’s activities and the nature of the work undertaken, PwC were best placed to carry out the work, taking into account general efficiency and cost effectiveness. Fees of this type are ad hoc in nature and occur in respect of major corporate events.

12 Finance costs

2013 2012 £m £m On bank loans and overdrafts 186.3 191.7 On convertible bonds (note 33) 7.5 1.8 On obligations under finance leases 3.4 3.8 Finance costs 197.2 197.3 No finance costs were capitalised in the year ended 31 December 2013 (2012 – £nil).

13 Other finance costs

2013 2012 £m £m Amortisation of Metrocentre compound financial instrument 6.5 6.9 Cost of termination of derivative financial instruments and other fees1 158.5 59.9 Foreign currency movements1 (0.5) 1.1 Other finance costs 164.5 67.9 1 Amounts totalling £158.0 million in the year ended 31 December 2013 were treated as exceptional and excluded from the calculation of underlying earnings (2012 – £61.0 million). These finance costs include termination of interest rate swaps on repayment of debt, payments on unallocated swaps and other fees. They are considered to be exceptional items due to their size and incidence and are identified separately in order to enable a full understanding of the Group’s financial performance.

14 Change in fair value of financial instruments

2013 2012 £m £m On derivative financial instruments 275.6 41.5 On convertible bonds designated as at fair value through profit or loss (note 33) (1.8) (11.0) Change in fair value of financial instruments 273.8 30.5

Included within the change in fair value of derivative financial instruments are amounts totalling £215.2 million resulting from the payment of obligations under derivative financial instruments during the year. Of these £127.5 million relate to the termination of swaps in the year and £25.0 million to unallocated swaps (see note 13).

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15 Taxation

Taxation for the year:

2013 2012 £m £m Overseas taxation 0.8 0.5 Current tax 0.8 0.5 Strategic report Deferred tax: On investment and development property 0.2 – On other investments (1.9) (1.9) On derivative financial instruments 3.2 (3.2) On other temporary differences (2.9) (0.5) Deferred tax (1.4) (5.6) Total tax credit (0.6) (5.1) The tax credits for 2013 and 2012 are lower than the standard rate of corporation tax in the UK. The differences are explained below:

2013 2012 £m £m Profit before tax and associates 362.9 152.6 Profit before tax multiplied by the standard rate in the UK of 23.25% (2012 – 24.5%) 84.4 37.4 Governance Additions and disposals of property and investments 4.0 (0.5) REIT exemption – corporation tax (8.9) (29.7) REIT exemption – deferred tax (83.4) (25.2) Non-deductable and other items 0.8 (0.7) Overseas taxation 0.7 0.2 Unprovided deferred tax 1.8 13.4 Total tax credit (0.6) (5.1) Tax relating to components of other comprehensive income is analysed as:

2013 2012 £m £m Current tax: On disposal of other investments – 0.4 Deferred tax: Accounts On other investments 1.6 5.6 Tax relating to components of other comprehensive income 1.6 6.0

16 Profit for the year attributable to owners of Intu Properties plc

Profits of £52.8 million are recorded in the accounts of the Company in respect of the year (2012 – profits of £23.8 million). No income statement or statement of comprehensive income is presented for the Company as permitted by Section 408 of the Companies Act 2006. Other information

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17 Dividends

2013 2012 £m £m Ordinary shares Prior year final dividend paid of 10.0 pence per share (2012 – 10.0 pence per share) 94.4 85.4 Interim dividend paid of 5.0 pence per share (2012 – 5.0 pence per share) 47.7 42.4 Dividends declared 142.1 127.8 Proposed final dividend of 10.0 pence per share 96.1 During 2013, the Company offered shareholders the option to receive ordinary shares in lieu of the cash 2012 final and 2013 interim dividends of 10 pence and 5 pence respectively under the Scrip Dividend Scheme. As a result of elections made by shareholders 10,693,407 new ordinary shares of 50 pence each were issued on 4 June 2013 and 6,837,832 new ordinary shares of 50 pence each were issued on 19 November 2013 in lieu of dividends otherwise payable. This resulted in £56.2 million of cash being retained in the business. In 2012, the Company offered shareholders the option to receive ordinary shares in lieu of the cash 2012 interim dividend of 5 pence under the Scrip Dividend Scheme. As a result of elections made by shareholders 3,268,230 new ordinary shares of 50 pence each were issued on 20 November 2012 in lieu of dividends otherwise payable. This resulted in £10.6 million being retained in the business. Details of the shares in issue and dividends waived are given in notes 37 and 39.

18 Earnings per share

(a) Earnings per share Basic and diluted earnings per share as calculated in accordance with IAS 33 Earnings per Share:

2013 2012

Earnings Shares Pence per Earnings Shares Pence per £m million share £m million share Basic earnings per share1 354.0 935.3 37.8p 150.1 853.8 17.6p Dilutive convertible bonds, share options and share awards 13.3 111.5 7.6 56.2 Diluted earnings per share 367.3 1,046.8 35.1p 157.7 910.0 17.3p 1 The weighted average number of shares used for the calculation of basic earnings per share has been adjusted to remove shares held in the ESOP. Basic earnings per share are stated after deducting interest on convertible bonds recognised directly in equity of £5.8 million in the year ended 31 December 2013 (2012 – £5.8 million) in accordance with IAS 33 Earnings per Share. (b) Headline earnings per share Headline earnings per share has been calculated and presented as required by the Johannesburg Stock Exchange listing requirements.

2013 2012 Gross Net1 Gross Net1 £m £m £m £m Basic earnings 354.0 150.1 Remove: Revaluation and sale of investment and development property (including associates) (126.3) (125.2) (41.5) (40.1) Sale of other investments – – (1.4) (1.8) Gain on acquisition of subsidiaries – – (2.3) (2.3) Impairment of goodwill – – 8.8 8.8 Headline earnings 228.8 114.7 Dilution2 13.3 7.6 Diluted headline earnings 242.1 122.3 Weighted average number of shares 935.3 853.8 Dilution2 111.5 56.2 Diluted weighted average number of shares 1,046.8 910.0 Headline earnings per share (pence) 24.5p 13.4p Diluted headline earnings per share (pence) 23.1p 13.4p 1 Net of tax and non-controlling interests. 2 The dilution impact is required to be included as calculated in note 18(a) even where this is not dilutive for headline earnings per share.

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18 Earnings per share (continued)

(c) Underlying earnings per share Underlying earnings per share is a non-GAAP measure but has been included as it is considered to be a key measure of the Group’s performance and an indication of the extent to which dividend payments are supported by underlying earnings (see underlying profit statement on page 158).

2013 2012

Earnings Shares Pence per Earnings Shares Pence per Strategic report £m million share £m million share Basic earnings per share1 354.0 935.3 37.8p 150.1 853.8 17.6p Remove: Revaluation and sale of investment and development property (note 7) (125.8) (13.5)p (40.9) (4.8)p Share of associates’ revaluation of investment and development property (note 24) (0.5) – (0.6) (0.1)p Exceptional administration expenses (note 8) 21.2 2.3p 1.1 0.2p Exceptional finance costs (note 13) 158.0 16.9p 61.0 7.2p Change in fair value of financial instruments (note 14) (273.8) (29.3)p (30.5) (3.6)p Gain on acquisition of subsidiaries – – (2.3) (0.3)p Sale of other investments – – (1.4) (0.2)p Impairment of goodwill – – 8.8 1.0p Distribution of shares received from Provogue – – (10.2) (1.2)p Governance Tax on the above (1.5) (0.1)p (5.9) (0.7)p Non-controlling interests in respect of the above 8.6 0.9p 8.5 1.0p Underlying earnings per share 140.2 935.3 15.0p 137.7 853.8 16.1p Dilutive convertible bonds, share options and share awards 13.3 111.5 7.6 56.2 Underlying, diluted earnings per share 153.5 1,046.8 14.7p 145.3 910.0 16.0p 1 The weighted average number of shares used for the calculation of basic earnings per share has been adjusted to remove shares held in the ESOP. Basic earnings per share are stated after deducting interest on convertible bonds recognised directly in equity of £5.8 million in the year ended 31 December 2013 (2012 – £5.8 million) in accordance with IAS 33 Earnings per Share.

19 Net asset value per share

(a) NAV per share (diluted, adjusted) NAV per share (diluted, adjusted) is a non-GAAP measure but has been included as it is considered to be a key measure of the Group’s performance.

2013 2012 Accounts Net NAV per Net NAV per assets Shares share assets Shares share £m million pence £m million pence NAV per share attributable to owners of Intu Properties plc1 3,518.8 961.2 366p 2,977.0 857.1 347p Dilutive convertible bonds, share options and awards 3.8 41.1 – 39.6 Diluted NAV per share 3,522.6 1,002.3 351p 2,977.0 896.7 332p Remove: Fair value of derivative financial instruments (net of tax) 198.1 20p 481.8 54p Deferred tax on investment and development property and other investments 20.4 2p 8.7 1p Goodwill resulting from recognition of deferred tax liabilities (4.2) – – – Non-controlling interests in respect of the above (3.8) – (23.4) (3)p Add:

Non-controlling interest recoverable balance not recognised 71.3 7p 71.3 8p Other information NAV per share (diluted, adjusted) 3,804.4 1,002.3 380p 3,515.4 896.7 392p 1 The number of shares used has been adjusted to remove shares held in the ESOP.

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19 Net asset value per share (continued)

(b) NNNAV per share (diluted, adjusted) NNNAV per share (diluted, adjusted) is a non-GAAP measure but has been included as it is considered to be an industry standard comparable measure.

2013 2012 Net NAV per Net NAV per assets Shares share assets Shares share £m million pence £m million pence NAV per share (diluted, adjusted) 3,804.4 1,002.3 380p 3,515.4 896.7 392p Fair value of derivative financial instruments (net of tax) (198.1) (20)p (481.8) (54)p Excess of fair value of debt over book value (56.9) (6)p (2.4) – Deferred tax on investment and development property and other investments (20.4) (2)p (8.7) (1)p Non-controlling interests in respect of the above 6.3 1p (5.3) (1)p NNNAV per share (diluted, adjusted) 3,535.3 1,002.3 353p 3,017.2 896.7 336p

20 Investment and development property

Freehold Leasehold Total £m £m £m At 1 January 2012 4,395.2 2,501.0 6,896.2 Additions 62.0 11.8 73.8 Disposals (0.6) (0.5) (1.1) Surplus on revaluation 63.7 (22.9) 40.8 At 31 December 2012 4,520.3 2,489.4 7,009.7 Midsummer Place acquisition (note 40) 250.5 – 250.5 Parque Principado acquisition (note 40) 144.7 – 144.7 Additions 24.1 14.6 38.7 Disposals – (15.6) (15.6) Surplus on revaluation 113.4 12.4 125.8 Foreign exchange movements (2.4) – (2.4) At 31 December 2013 5,050.6 2,500.8 7,551.4

2013 2012 £m £m Balance sheet carrying value of investment and development property 7,551.4 7,009.7 Tenant incentives included within trade and other receivables (note 27) 108.4 100.4 Head leases included within finance leases in borrowings (note 31) (36.0) (37.0) Market value of investment and development property 7,623.8 7,073.1

All investment properties measured at fair value in the consolidated balance sheet are categorised as Level 3 in the fair value hierarchy (see note 35 for definition) as one or more inputs to the valuation are partly based on unobservable market data. Transfers into and transfers out of the fair value hierarchy levels are recognised on the date of the event or change in circumstances that caused the transfer. There were no transfers in or out of Level 3 for investment properties during the year. The market value of investment and development property at 31 December 2013 includes £29.3 million in respect of property considered to be developments. These are accounted for as investment property and are valued using the same methodology as other investment property. The Group has only one class of investment and development property asset. All the Group’s significant investment and development property relates to prime shopping centres which share similar nature, characteristics and risks.

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20 Investment and development property (continued)

Valuation methodology The fair value of the Group’s investment and development property as at 31 December 2013 was determined by independent external valuers at that date. The valuations are in accordance with the Royal Institution of Chartered Surveyors (‘RICS’) Valuation – Professional Standards 2012 and were arrived at by reference to market transactions for similar properties. Fair values for investment properties are calculated using the present value income approach. The main assumptions underlying the valuations are in relation to rent profile and yields as discussed below. Strategic report The key driver of the property valuations is the terms of the leases in place at the valuation date. These determine the majority of the cash flow profile of the property for a number of years and therefore form the base of the valuation. The valuation assumes adjustments from these rental values to current market rent at the time of the next rent review (where a typical lease allows only for upward adjustment) and as leases expire and are replaced by new leases. The current market level of rent is assessed based on evidence provided by the most recent relevant leasing transactions and negotiations. This is based on evidence available at the date of valuation and does not assume future increases in market rent. The nominal equivalent yield is applied as a discount rate to the rental cash flows which, after taking into account other input assumptions such as vacancies and costs, generates the market value of the property. The nominal equivalent yield applied is assessed by reference to market transactions for similar properties and takes into account, amongst other things, any risks associated with the rent uplift assumptions. Annual property income as disclosed in the table below reflects current annualised gross income. Full definitions of nominal equivalent yield and annual property income are provided in the glossary. The net initial yield is calculated as the current net income over the gross market value of the asset and is used as a sense check and to compare against market transactions for similar properties. A full definition of net initial yield is provided in the glossary. The valuation output, along with inputs and assumptions, are reviewed to ensure these are in line with what a market participant would use when

pricing each asset. Governance A significant change in the nominal equivalent yield in isolation, would result in a significant change in the value of investment and development property. A decrease in nominal equivalent yield of 50 basis points would result in an increase in the total market value of £747 million, while a 50 basis point increase would result in a decrease in the total market value of £635 million. The table below provides details of the 31 December 2013 assumptions used in the valuation and key unobservable inputs:

Annual property Market value Net initial Nominal income £m yield (EPRA) equivalent yield £m intu Trafford Centre 1,900.0 4.2% 5.1% 86.0 intu Lakeside 1,124.5 4.8% 5.5% 58.6 intu Metrocentre 885.2 5.0% 5.8% 48.2 intu Braehead 602.3 4.4% 5.9% 29.1 Manchester Arndale 399.0 5.0% 5.5% 21.8 intu Watford 323.0 4.7% 6.5% 17.0 intu Victoria Centre 306.0 4.7% 6.6% 17.6 Accounts St David’s, Cardiff 272.2 5.2% 5.7% 16.5 Midsummer Place 251.0 5.1% 5.5% 13.9 intu Eldon Square 250.2 4.8% 6.6% 14.6 intu Chapelfield 245.5 5.7% 6.4% 15.3 Cribbs Causeway 241.5 4.2% 5.8% 12.4 intu Uxbridge 213.9 5.4% 6.4% 12.3 intu Potteries 162.6 6.1% 7.6% 10.7 intu Bromley 159.2 5.5% 7.5% 9.9 Parque Principado 143.1 6.9% 7.2% 11.5

Valuation process It is the Group's policy to engage independent external valuers to determine the market value of its investment and development property at both 30 June and 31 December. The Group provides data to the valuers, including current lease and tenant data along with asset specific business plans. The valuers use this and other inputs including market transactions for similar properties to produce valuations. These valuations and the Other information assumptions they have made are then discussed and reviewed with the Group's asset management team and Directors.

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20 Investment and development property (continued)

The Group engages a number of independent valuation experts to undertake the Group’s property valuations. A summary of the valuers and the value of property assets they are responsible for valuing is given below:

2013 2012 £m £m DTZ 4,113.0 4,056.2 Cushman & Wakefield 1,900.0 1,800.0 CBRE 1,188.6 936.1 Knight Frank 272.2 275.8 Jones Lang LaSalle 143.1 – Others 6.9 5.0 7,623.8 7,073.1 Valuation fees are a fixed amount agreed between the Group and the valuers in advance of the valuation and are not linked to the valuation output.

21 Plant and equipment

2013 2012 Accumulated Accumulated Cost depreciation Net Cost depreciation Net Group £m £m £m £m £m £m At 1 January 11.8 (6.2) 5.6 9.8 (4.7) 5.1 Additions 1.7 – 1.7 2.0 – 2.0 Charge for the year – (1.8) (1.8) – (1.5) (1.5) At 31 December 13.5 (8.0) 5.5 11.8 (6.2) 5.6

2013 2012 Accumulated Accumulated Cost depreciation Net Cost depreciation Net Company £m £m £m £m £m £m At 1 January 8.0 (3.3) 4.7 6.8 (1.9) 4.9 Additions 1.0 – 1.0 1.2 – 1.2 Charge for the year – (1.5) (1.5) – (1.4) (1.4) At 31 December 9.0 (4.8) 4.2 8.0 (3.3) 4.7 Plant and equipment consists of vehicles, fixtures, fittings and other office equipment.

22 Investment in group companies

2013 2012 Accumulated Accumulated Cost impairment Net Cost impairment Net Company £m £m £m £m £m £m At 1 January 3,130.9 (905.4) 2,225.5 3,130.9 (963.0) 2,167.9 Additions 197.2 – 197.2 – – – Impairment reversed in the year – 88.3 88.3 – 57.6 57.6 At 31 December 3,328.1 (817.1) 2,511.0 3,130.9 (905.4) 2,225.5 Details of principal subsidiary undertakings are provided in note 44.

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23 Joint ventures

2013 St David’s Limited Partnership Other Total £m £m £m Summarised income statement Strategic report Revenue 20.7 5.4 26.1 Net rental income 12.5 0.8 13.3 Revaluation and sale of investment and development property 15.6 0.3 15.9 Net finance costs (3.1) – (3.1) Profit for the year 25.0 1.1 26.1 Summarised balance sheet Investment and development property 260.2 12.5 272.7 Other non-current assets 11.3 0.7 12.0 Current assets 10.7 3.0 13.7 Partners’ loans (62.4) – (62.4) Current liabilities (86.3) (1.3) (87.6) Non-current liabilities (1.4) (0.6) (2.0) Net assets 132.1 14.3 146.4 Governance

2012 St David’s Braehead Limited Leisure Partnership Partnership Other Total £m £m £m £m Summarised income statement Revenue 24.1 2.4 0.5 27.0 Net rental income 11.2 1.5 0.7 13.4 Revaluation and sale of investment and development property (4.4) 1.6 (0.5) (3.3) Net finance costs (4.6) (1.4) – (6.0) Profit for the year 2.2 1.7 0.2 4.1

Summarised balance sheet Accounts Investment and development property 263.4 – 12.2 275.6 Other non-current assets 11.5 – – 11.5 Current assets 10.4 – 0.9 11.3 Partners’ loans (72.0) – – (72.0) Current liabilities (10.2) – (0.1) (10.3) Non-current liabilities (96.1) – – (96.1) Net assets 107.0 – 13.0 120.0

Joint ventures are accounted for in the consolidated financial statements using proportional consolidation therefore the Group’s share of the assets, liabilities, income and expenditure of joint ventures is included on a line-by-line basis. The joint ventures include the St David’s Limited Partnership which was established in 2004 for investing in St David’s, Cardiff. The principal component of the ‘Other’ category above is Centaurus Retail LLP which was established on 20 April 2012 for investment in the Centaurus Retail Park, Bristol adjacent to Cribbs Causeway.

On 24 December 2012 the Group acquired the remaining 50 per cent interest in the Braehead Leisure Partnership (see note 40) from which date this Other information entity has been accounted for as a subsidiary. All joint ventures are held with other joint venture investors on a 50:50 basis.

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24 Investment in associate companies

Group Group 2013 2012 £m £m At 1 January 40.9 32.5 Share of profit of associates 0.5 0.9 Distribution of shares received from Provogue – 10.2 Foreign exchange movements (5.6) (2.7) At 31 December 35.8 40.9

Investment in associates comprises a 32.4 per cent holding in the ordinary shares of Prozone Capital Shopping Centres Limited (‘Prozone’) (incorporated in India) and a 20 per cent holding in the ordinary shares of Lewis’s Liverpool LLP. In 2012, Provogue (India) Limited, in which the Group holds a 9.9 per cent stake, undertook a demerger of its 75 per cent holding in Prozone Capital Shopping Centres Limited. The demerger was achieved by way of a distribution of shares in Prozone. The receipt of additional shares was treated as a distribution valued at £10.2 million. The demerger increased the Group’s holding in Prozone from 25 per cent to 32.4 per cent. The equity method of accounting is applied using the results of Prozone for the year to 30 September as 31 December information is not available in time for these financial statements. Those results are adjusted to be in line with the Group’s accounting policies and include the most recent property valuations, as at 31 March 2013, determined by professionally qualified external valuers in line with the valuation methodology described in note 20. The market price per share at 31 December 2013 was INR18 (31 December 2012 – INR41), valuing the Group's interest at £8.8 million. Following an impairment review it was concluded no impairment was required at this time. Summarised financial information relating to the Group’s investment in Prozone is given in the table below.

2013 2012 £m £m Summarised income statement Revenue 1.9 2.5 Profit for the year1 0.5 0.9 Summarised balance sheet Investment and development property 55.4 59.4 Other non-current assets 1.1 2.3 Current assets 5.5 4.3 Current liabilities (2.0) (1.3) Non-current liabilities (5.1) (4.6) Non-controlling interests (19.1) (19.2) Net assets 35.8 40.9 1 Included within profit for the year is revaluation of investment and development property of £0.5 million (2012 – £0.6 million).

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25 Other investments

Group Group 2013 2012 £m £m At 1 January 148.8 171.2 Disposal of Equity One shares – (44.4) Strategic report Revaluation 8.1 28.7 Foreign exchange movements (2.0) (6.7) At 31 December 154.9 148.8

The Group holds 11.4 million units in a US venture controlled by Equity One, convertible into Equity One shares, and a 9.9 per cent stake in Provogue (India) Limited. In 2012, the Group disposed of its 4.1 million shares in Equity One for £48.7 million. All these investments are available-for-sale investments and are analysed by type of investment as follows:

Group Group 2013 2012 £m £m Listed securities – equity 1.0 1.9 Unlisted securities – equity 153.9 146.9 154.9 148.8

Listed investments are accounted for at fair value using the bid market value at the reporting date. The Group’s unlisted securities all relate to the Governance 11.4 million units convertible into Equity One Share and therefore the fair value of the investment is measured by reference to the Equity One listed share price.

26 Goodwill

Group Group 2013 2012 £m £m At 1 January 4.0 8.8 Additions 4.2 4.0 Impairment in the year – (8.8) At 31 December 8.2 4.0 Additions in the year are in respect of the acquisition of Parque Principado (see note 40). Accounts 27 Trade and other receivables

Group Group Company Company 2013 2012 2013 2012 £m £m £m £m Current Trade receivables 17.3 16.8 – – Amounts owed by subsidiary undertakings – – 1,126.4 678.3 Other receivables 20.3 18.3 1.0 0.8 Prepayments and accrued income 44.0 31.5 2.0 1.4 Trade and other receivables – current 81.6 66.6 1,129.4 680.5 Non-current Other receivables 9.8 8.9 – 0.4 Other information Prepayments and accrued income 101.4 95.1 – – Trade and other receivables – non-current 111.2 104.0 – 0.4 Included within prepayments and accrued income for the Group are tenant lease incentives of £108.4 million (2012 – £100.4 million). Amounts owed by subsidiary undertakings are unsecured and repayable on demand.

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28 Cash and cash equivalents

Group Group Company Company 2013 2012 2013 2012 £m £m £m £m Unrestricted cash 159.5 186.1 0.3 0.3 Restricted cash 6.0 2.0 – – Cash and cash equivalents 165.5 188.1 0.3 0.3

Restricted cash primarily reflects amounts held to match the 2014 loan notes shown within borrowings and cash deposited against a Spanish local property tax included within trade and other payables. A number of the Group’s borrowing arrangements place certain restrictions on the rent received each quarter. These do not prevent access to or use of this funding within the borrowing entities, however they do place certain restrictions on moving those funds around the wider group, typically requiring debt servicing costs to be paid before restrictions are lifted.

29 Derivative financial instruments

All derivative financial instruments held by the Group relate to interest rate swaps which are classified as held for trading (see note 35). The derivative financial instrument held by the Company relates to the Bondholder option (see note 33) and is classified as held for trading.

30 Trade and other payables

Group Group Company Company 2013 2012 2013 2012 £m £m £m £m Current Rents received in advance 95.5 95.0 – – Trade payables 5.0 2.0 – – Amounts owed to subsidiary undertakings – – 544.6 329.7 Accruals and deferred income 104.5 78.1 8.1 6.5 Other payables 17.8 17.6 – 0.3 Other taxes and social security 23.0 28.2 3.2 8.1 Trade and other payables 245.8 220.9 555.9 344.6 Amounts owed to subsidiary undertakings are unsecured and repayable on demand.

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31 Borrowings

2013 Carrying Fixed Floating Fair value Secured Unsecured rate rate value Group £m £m £m £m £m £m

Current Strategic report Bank loans and overdrafts 127.6 127.6 – – 127.6 127.6 Commercial mortgage backed securities (‘CMBS’) notes 16.5 16.5 – 12.3 4.2 17.6 Loan notes 2014 1.6 – 1.6 1.6 – 1.6 Current borrowings, excluding finance leases 145.7 144.1 1.6 13.9 131.8 146.8 Finance lease obligations 3.5 3.5 – 3.5 – 3.5 149.2 147.6 1.6 17.4 131.8 150.3 Non-current Revolving credit facility 2017 285.0 285.0 – – 285.0 285.0 CMBS notes 2015 3.1 3.1 – – 3.1 3.2 CMBS notes 2022 51.6 51.6 – 51.6 – 59.2 CMBS notes 2029 93.2 93.2 – 93.2 – 99.8 CMBS notes 2033 364.1 364.1 – 364.1 – 401.7 Governance CMBS notes 2035 184.0 184.0 – – 184.0 189.7 Bank loans 2016 586.9 586.9 – – 586.9 586.9 Bank loan 2017 41.9 41.9 – – 41.9 41.9 Bank loan 2018 346.6 346.6 – – 346.6 346.6 3.875% bonds 2023 439.4 439.4 – 439.4 – 438.3 4.125% bonds 2023 475.2 475.2 – 475.2 – 476.2 4.625% bonds 2028 340.1 340.1 – 340.1 – 349.7 Debenture 2027 227.6 227.6 – 227.6 – 216.3 2.5% convertible bonds 2018 (note 33) 312.8 – 312.8 312.8 – 312.8 Non-current borrowings, excluding finance leases and Metrocentre compound financial instrument 3,751.5 3,438.7 312.8 2,304.0 1,447.5 3,807.3 Metrocentre compound financial instrument 160.0 – 160.0 160.0 – 160.0

Finance lease obligations 32.5 32.5 – 32.5 – 32.5 Accounts 3,944.0 3,471.2 472.8 2,496.5 1,447.5 3,999.8 Total borrowings 4,093.2 3,618.8 474.4 2,513.9 1,579.3 4,150.1 Cash and cash equivalents (165.5) Net debt 3,927.7 Metrocentre compound financial instrument (160.0) Short-term investments1 (69.3) Net external debt 3,698.4

1 Short-term investments represent £69.3 million of CMBS notes issued in respect of intu Metrocentre and received as cash in February 2014 following the refinancing of this borrowing. The fair values have been established using the market value, where available. For those instruments without a market value, a discounted cash flow approach has been used. The Group substantially eliminates its interest rate exposure to floating rate debt through interest rate swaps as described in note 35. Other information The market value of assets secured as collateral against borrowings at 31 December 2013 is £7,429.4 million. There are certain restrictions on the realisability of investment property where a credit facility secured on that property 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. The Company had non-current borrowings of £285.0 million at 31 December 2013 consisting of a revolving credit facility expiring in 2017 (2012 – no borrowings). This debt is floating rate, secured and its fair value is equal to book value.

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31 Borrowings (continued)

2012 Carrying Fixed Floating Fair value Secured Unsecured rate rate value Group £m £m £m £m £m £m Current Bank loans and overdrafts 21.2 21.2 – – 21.2 21.2 Commercial mortgage backed securities (‘CMBS’) notes 40.8 40.8 – 6.6 34.2 41.3 Loan notes 2014 2.0 – 2.0 2.0 – 2.0 CSC bonds 2013 26.8 – 26.8 26.8 – 26.9 Current borrowings, excluding finance leases 90.8 62.0 28.8 35.4 55.4 91.4 Finance lease obligations 3.4 3.4 – 3.4 – 3.4 94.2 65.4 28.8 38.8 55.4 94.8 Non-current CMBS notes 2015 960.6 960.6 – – 960.6 907.4 CMBS notes 2022 51.8 51.8 – 51.8 – 58.8 CMBS notes 2029 97.9 97.9 – 97.9 – 111.0 CMBS notes 2033 375.4 375.4 – 375.4 – 441.1 CMBS notes 2035 181.8 181.8 – – 181.8 172.0 Bank loan 2014 135.4 135.4 – – 135.4 135.4 Bank loans 2016 720.7 720.7 – – 720.7 720.7 Bank loan 2017 502.5 502.5 – – 502.5 502.5 Debentures 2027 227.4 227.4 – 227.4 – 206.5 2.5% convertible bonds 2018 (note 33) 311.0 – 311.0 311.0 – 311.0 Non-current borrowings, excluding finance leases and Metrocentre compound financial instrument 3,564.5 3,253.5 311.0 1,063.5 2,501.0 3,566.4 Metrocentre compound financial instrument 153.5 – 153.5 153.5 – 153.5 Finance lease obligations 33.6 33.6 – 33.6 – 33.6 3,751.6 3,287.1 464.5 1,250.6 2,501.0 3,753.5 Total borrowings 3,845.8 3,352.5 493.3 1,289.4 2,556.4 3,848.3 Cash and cash equivalents (188.1) Net debt 3,657.7 Metrocentre compound financial instrument (153.5) Net external debt 3,504.2

The maturity profile of gross debt (excluding finance leases) is as follows:

Group Group 2013 2012 £m £m Repayable within one year 145.7 90.8 Repayable in more than one year but not more than two years 14.4 194.6 Repayable in more than two years but not more than five years 1,601.3 2,180.2 Repayable in more than five years 2,295.8 1,343.2 4,057.2 3,808.8

Certain borrowing agreements contain financial and other conditions that, if contravened, could alter the repayment profile. During the year there were no breaches of these conditions (see Financial covenants section on pages 156 and 157). As at 31 December 2013 the Group had committed borrowing facilities of £375.0 million, expiring in 2017, of which £90.0 million was undrawn (2012 – undrawn £375.0 million).

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31 Borrowings (continued)

Finance lease disclosures:

Group Group 2013 2012 £m £m

Minimum lease payments under finance leases fall due: Strategic report Not later than one year 4.7 4.8 Later than one year and not later than five years 17.0 17.4 Later than five years 66.2 68.1 87.9 90.3 Future finance charges on finance leases (51.9) (53.3) Present value of finance lease liabilities 36.0 37.0

Present value of finance lease liabilities: Not later than one year 3.5 3.4 Later than one year and not later than five years 13.0 13.2 Later than five years 19.5 20.4 36.0 37.0

Finance lease liabilities are in respect of head leases on investment property. A number of these leases provide for payment of contingent rent, Governance usually a proportion of net rental income, in addition to the rents above.

32 Movement in net debt

2013 Cash and Non- cash Current current Net equivalents borrowings borrowings debt Group £m £m £m £m Balance at 1 January 2013 188.1 (94.2) (3,751.6) (3,657.7) Acquisition of businesses (391.0) – – (391.0) Acquired with businesses (including restricted cash of £4.1 million) 13.0 – – 13.0 Borrowings drawn down 2,051.6 – (2,051.6) –

Borrowings repaid (1,891.9) 89.2 1,733.4 (69.3) Accounts Issue of ordinary shares 273.0 – – 273.0 Other net cash movements (77.3) – – (77.3) Other non-cash movements – (144.2) 125.8 (18.4) Balance at 31 December 2013 165.5 (149.2) (3,944.0) (3,927.7)

2012 Cash and Non- cash Current current Net equivalents borrowings borrowings debt Group £m £m £m £m Balance at 1 January 2012 90.7 (65.4) (3,546.1) (3,520.8) Acquired with businesses 1.6 (1.4) (21.4) (21.2) Borrowings repaid (107.3) 62.3 45.0 – Issue of convertible bonds 300.0 – (300.0) – Other information Other net cash movements (96.9) – – (96.9) Other non-cash movements – (89.7) 70.9 (18.8) Balance at 31 December 2012 188.1 (94.2) (3,751.6) (3,657.7)

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33 Convertible bonds

2.5 per cent convertible bonds (‘the 2.5 per cent bonds’) On 4 October 2012 Intu (Jersey) Limited (the ‘Issuer’) issued £300.0 million 2.5 per cent Guaranteed Convertible Bonds due 2018 at par. The Company has unconditionally and irrevocably guaranteed the due and punctual performance by the Issuer of all of its obligations (including payments) in respect of the 2.5 per cent bonds and the obligations of the Company, as Guarantor, constitute direct, unsubordinated and unsecured obligations of the Company. Subject to certain conditions, the 2.5 per cent bonds are convertible into preference shares of the Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or (at the Company’s election) any combination of ordinary shares and cash. The 2.5 per cent bonds can be converted at any time from 14 November 2012 up to the 20th dealing day before the maturity date. The initial exchange price was £4.3752 per ordinary share, a conversion rate of approximately 22,856 ordinary shares for every £100,000 nominal of the 2.5 per cent bonds. Under the terms of the 2.5 per cent bonds, the exchange price is adjusted on the happening of certain events including the payment of dividends by the Company. Accordingly, subsequent dividend adjustments resulted in an exchange price at 31 December 2013 of £4.1199 per ordinary share. The 2.5 per cent bonds may be redeemed at par at the Company’s option subject to the Company’s ordinary share price having traded at 30 per cent above the conversion price for a specified period, or at any time once 85 per cent by nominal value of the 2.5 per cent bonds originally issued have been converted or cancelled. If not previously converted, redeemed or purchased and cancelled, the 2.5 per cent bonds will be redeemed at par on 4 October 2018. A total of £300.0 million nominal of the 2.5 per cent bonds were issued and remain outstanding at 31 December 2013. The 2.5 per cent bonds are designated as at fair value through profit or loss and so are presented on the balance sheet at fair value with all gains and losses taken to the income statement through the changes in fair value of financial instruments line. At 31 December 2013, the fair value of the 2.5 per cent bonds was £312.8 million (2012 – £311.0 million), with the change in fair value presented in note 14. The 2.5 per cent bonds are listed on the Professional Securities Market of the London Stock Exchange. During the year interest of £7.5 million (2012 – £1.8 million) in respect of these bonds has been recognised within finance costs. 3.75 per cent convertible bonds (‘the 3.75 per cent bonds’) On 28 January 2011 the Company issued £127.6 million, 3.75 per cent perpetual subordinated convertible bonds as part of the consideration for the acquisition of intu Trafford Centre. As a condition of the acquisition the Company also issued to the Peel Group £26.7 million of convertible bonds for a subscription amount of £23.7 million and an implied issue price of the underlying shares of £3.55 per share. A total of £154.3 million of the 3.75 per cent bonds were issued and remain outstanding at 31 December 2013 (2012 – £154.3 million). These are accounted for as equity at their fair value on issue which totalled £143.7 million (2012 – £143.7 million). The 3.75 per cent bonds can be converted at the option of the bondholder at any time from 28 January 2013 at £4.00 per ordinary share, a conversion rate of 250 ordinary shares for every £1,000 nominal. Full conversion would result in 38,579,250 ordinary shares being issued. The 3.75 per cent bonds became redeemable at their principal amount at the Company’s option from 28 January 2014 on any subsequent interest payment date, or at any time once 85 per cent or more of the principal amount of the bonds originally issued have been converted or cancelled. During the year interest of £5.8 million (2012 – £5.8 million) has been recognised on these bonds directly in equity. This is deducted in arriving at earnings per share (note 18).

34 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 for continuing operations are as follows:

2013 2012 £m £m Not later than one year 426.7 413.5 Later than one year and not later than five years 1,332.5 1,326.8 Later than five years 1,552.9 1,649.0 3,312.1 3,389.3

The income statement includes £3.2 million (2012 – £0.7 million) recognised in respect of expected increased rent resulting from outstanding reviews where the actual rent will only be determined on settlement of the rent review.

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35 Financial risk management

The Group is exposed to a variety of financial risks arising from the Group’s operations being principally market risk (including interest rate risk, and foreign exchange risk), liquidity risk and credit risk. The majority of the Group’s financial risk management is carried out by the Group 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.

Market risk Strategic report a) Interest rate risk Interest rate risk comprises of 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 rate interest rate swaps, as discussed in the Financial review on pages 48 to 53.

The table below shows the effects of interest rate swaps on the borrowings profile of the Group: Governance

Fixed Floating Fixed Floating 2013 2013 2012 2012 £m £m £m £m Borrowings1 2,292.8 1,640.6 1,041.5 2,611.5 Derivative impact (nominal value of interest rate swaps) 1,311.8 (1,311.8) 2,440.4 (2,440.4) Net borrowings profile 3,604.6 328.8 3,482.0 171.0 Interest rate protection 91.6% 95.3% 1 Borrowings are stated at nominal value and exclude the Metrocentre compound financial instrument. At 31 December 2013 they include the £285.0 million (2012 – £nil) drawn under the revolving credit facility which incurs interest at a variable rate. Excluding the revolving credit facility borrowing interest rate protection is 98.8 per cent (2012 – 95.3 per cent). Group policy is to target interest rate protection within the range of 75 per cent to 100 per cent. The weighted average rate for interest rate swaps currently effective is 2.70 per cent (2012 – 3.95 per cent). Unallocated and forward starting swaps are excluded from the above calculation. The nominal value of these swaps is £746.7 million of which £125.0 million are forward starting. Their fair value of £142.9 million is included as a liability in the balance sheet. Accounts The approximate impact of a 50 basis point shift upwards in the level of interest rates would be a positive movement of £73.9 million (2012 – £101.9 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 £78.9 million (2012 – £108.3 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. Where 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. b) Foreign exchange risk Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a functional currency other than sterling. The Group’s policy is to ensure the Group’s net exposure to foreign currency is less than 10 per cent of the Group’s equity attributable to owners of the Company. At 31 December 2013 the Group’s exposure amounted to 7.6 per cent of equity attributable to owners of the Company (31 December 2012 – 6.4 per cent). Other information

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35 Financial risk management (continued)

The table summarises the Group’s exposure to foreign currency risk at 31 December 2013:

2013 2012 2013 2012 2013 2012 €m €m INRm INRm US$m US$m Net exposure 90.2 – 3,766.2 3,815.4 254.9 238.6 The following foreign exchange rates apply to the Group’s foreign exchange risk at 31 December:

2013 2012 2013 2012 2013 2012 €m €m INRm INRm US$m US$m Foreign exchange rate risk 1.2020 1.2330 102.4470 89.0612 1.6563 1.6255

The approximate impact of a 10 per cent appreciation in foreign exchange rates would be positive movement of £29.5 million (2012 – £21.1 million) to equity attributable to owners of the Company. The approximate impact of a 10 per cent depreciation in foreign exchange rates would be a negative movement of £24.2 million (2012 – £17.2 million) to equity attributable to owners of the Company.

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. Undrawn borrowing facilities are detailed in note 31. 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. Group policy is to maintain a weighted average debt maturity of over five years. As at 31 December 2013, the maturity profile of Group debt showed an average maturity of eight years (2012 – six years). The Group regularly reviews the maturity profile of its borrowings and seeks to avoid bunching of maturities through the regular replacement of facilities and by arranging 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 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 for the relevant currency. Where payment obligations are in foreign currencies, the spot exchange rate ruling at the balance sheet date is used.

2013 Within 1 year 1–2 years 2–5 years Over 5 years Total Group £m £m £m £m £m Borrowings (including interest) (302.4) (180.6) (2,056.3) (3,045.5) (5,584.8) Finance lease obligations (4.7) (4.3) (12.7) (66.2) (87.9) Other financial liabilities (22.8) (4.4) – – (27.2) Derivative payments (71.4) (71.6) (141.8) (518.0) (802.8) Derivative receipts 19.7 29.6 96.5 417.0 562.8 (381.6) (231.3) (2,114.3) (3,212.7) (5,939.9)

2012 Within 1 year 1–2 years 2–5 years Over 5 years Total Group £m £m £m £m £m Borrowings (including interest) (192.2) (295.6) (2,427.1) (1,806.8) (4,721.7) Finance lease obligations (4.8) (4.8) (12.6) (68.1) (90.3) Other financial liabilities (19.7) (3.3) – – (23.0) Derivative payments (134.4) (133.9) (209.5) (558.1) (1,035.9) Derivative receipts 24.4 26.2 56.8 400.7 508.1 (326.7) (411.4) (2,592.4) (2,032.3) (5,362.8)

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35 Financial risk management (continued)

2013 Within 1 year 1–2 years 2–5 years Over 5 years Total Company £m £m £m £m £m Borrowings (including interest) (11.2) (11.2) (307.3) – (329.7)

Other financial liabilities (0.2) – – – (0.2) Strategic report Amounts owed to subsidiary undertakings (544.5) – – – (544.5) (555.9) (11.2) (307.3) – (874.4)

2012 Within 1 year 1–2 years 2–5 years Over 5 years Total Company £m £m £m £m £m Other financial liabilities (0.3) – – – (0.3) Amounts owed to subsidiary undertakings (329.7) – – – (329.7) (330.0) – – – (330.0)

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 and derivative instruments. Governance Credit risk associated with trade receivables is actively managed; tenants are managed individually by asset managers, who continuously monitor and work with tenants, aiming wherever possible to identify and address 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 guarantees may be obtained. The amount of deposits held as collateral at 31 December 2013 is £4.0 million (2012 – £2.7 million). It is Group policy to calculate any impairment of receivables specifically on each contract. The ageing analysis of trade receivables is as follows:

Group Group 2013 2012 £m £m Up to three months 14.6 15.9 Three to six months 2.7 0.9 Trade receivables 17.3 16.8 Accounts At 31 December 2013 trade receivables are shown net of provisions totalling £8.6 million (2012 – £6.8 million). The credit risk relating to cash deposits and derivative financial instruments is actively managed by the Group’s treasury department. Relationships are maintained with a number of tier one institutional counterparties, ensuring compliance with Group policy relating to limits on the credit ratings of counterparties (between BBB+ and AAA). Excessive credit risk concentration is avoided through adhering to authorised limits for all counterparties.

Group Exposure 31 December Authorised 2013 Counterparty Credit rating limit £m Counterparty #1 AA– 100.0 94.8 Counterparty #2 A 100.0 51.5 Counterparty #3 BBB* 20.0 14.4 Counterparty #4 A– 100.0 8.1 Other information Counterparty #5 A 75.0 1.9 Sum of five largest exposures 170.7 Sum of cash deposits and derivative financial instrument assets 191.3 Five largest exposures as a percentage of risk 89.2% * Relates to cash deposits in recently acquired entities and compliance with the Group's counterparty risk policy will be addressed as part of integrating the business.

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35 Financial risk management (continued)

Classification of financial assets and liabilities The tables below set out the Group’s accounting classification of each class of financial assets and liabilities, and their fair values at 31 December 2013 and 31 December 2012. 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.

2013 Profit to Profit/(loss) to other Carrying Fair income comprehensive value value statement income £m £m £m £m Derivative financial instrument assets 25.8 25.8 3.4 – Total held for trading assets 25.8 25.8 3.4 – Trade and other receivables 44.7 44.7 – – Short-term investments 69.3 69.3 – – Cash and cash equivalents 165.5 165.5 – – Total cash and receivables 279.5 279.5 – – Other investments 154.9 154.9 – 8.1 Total available-for-sale investments 154.9 154.9 – 8.1 Derivative financial instrument liabilities (231.9) (231.9) 272.2 – Total held for trading liabilities (231.9) (231.9) 272.2 – Trade and other payables (131.8) (131.8) – – Borrowings (4,093.2) (4,150.1) (1.8) – Total loans and payables (4,225.0) (4,281.9) (1.8) –

2012 Profit to Profit/(loss) to other Carrying Fair income comprehensive value value statement income £m £m £m £m Derivative financial instrument assets 21.9 21.9 – – Total held for trading assets 21.9 21.9 – – Trade and other receivables 41.6 41.6 – – Cash and cash equivalents 188.1 188.1 – – Total cash and receivables 229.7 229.7 – – Other investments 148.8 148.8 1.4 31.4 Total available-for-sale investments 148.8 148.8 1.4 31.4 Derivative financial instrument liabilities (514.9) (514.9) 41.5 – Total held for trading liabilities (514.9) (514.9) 41.5 – Trade and other payables (94.5) (94.5) – – Borrowings (3,845.8) (3,848.3) (11.0) – Total loans and payables (3,940.3) (3,942.8) (11.0) –

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35 Financial risk management (continued)

The table below presents the Group’s financial assets and liabilities recognised at fair value.

2013 Level 1 Level 2 Level 3 Total £m £m £m £m

Assets Strategic report Derivative financial instruments: – Fair value through profit or loss – 25.8 – 25.8 Available for sale investments 1.0 153.9 – 154.9 Total assets 1.0 179.7 – 180.7

Liabilities Convertible bonds: – Designated as at fair value through profit or loss 312.8 – – 312.8 Derivative financial instruments: – Fair value through profit or loss – 231.9 – 231.9 Total liabilities 312.8 231.9 – 544.7

Governance 2012 Level 1 Level 2 Level 3 Total £m £m £m £m Assets Derivative financial instruments: – Fair value through profit or loss – 21.9 – 21.9 Available for sale investments 1.9 146.9 – 148.8 Total assets 1.9 168.8 – 170.7

Liabilities Convertible bonds: – Designated as at fair value through profit or loss 311.0 – – 311.0 Derivative financial instruments: – Fair value through profit or loss – 514.9 – 514.9 Accounts Total liabilities 311.0 514.9 – 825.9

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 unobservable. 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. Transfers into and transfers out of the fair value hierarchy levels are recognised on the date of the event or change in circumstances that caused the transfer. There were no transfers in or out for the above financial assets and liabilities during the year. Valuation techniques for level 2 hierarchy financial assets and liabilities are presented in the accounting policies.

Other information

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35 Financial risk management (continued)

Capital structure The Group seeks to enhance shareholder value both by investing in the business so as to improve the return on investment and by managing the capital structure. The capital of the Group consists of equity, debt and hybrid financial instruments. The Group aims to access both debt and equity capital markets with maximum efficiency and flexibility. The key ratios used to monitor the capital structure of the Group are the debt to assets ratio and interest cover. The Group’s stated medium to long- term preference is for the debt to assets ratio to be within the 40–50 per cent range and interest cover to be greater than 1.60x. At 31 December 2013 the debt to asset ratio remains within the preferred range and the interest cover ratio continues to be above the preferred level.

Group Group 2013 2012 Debt to assets ratio £m £m Market value of investment and development property 7,623.8 7,073.1 Net external debt (3,698.4) (3,504.2) Debt to assets ratio 48.5% 49.5%

Group Group 2013 2012 Interest cover £m £m Interest payable (197.2) (197.3) Interest receivable 0.6 0.2 Interest on convertible bonds recognised directly in equity (5.8) (5.8) (202.4) (202.9) Underlying operating profit 345.6 342.2 Remove trading property related items (0.1) – 345.5 342.2 Interest cover 1.71x 1.69x

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36 Deferred tax provision

Under IAS 12 Income Taxes, provision is made for the deferred tax assets and liabilities associated with the revaluation of assets and liabilities at the corporate tax rate expected to apply to the Group at the time the temporary differences are expected to reverse. For those UK assets and liabilities benefitting from REIT exemption, the relevant tax rate will be 0 per cent (2012 – 0 per cent), for other UK assets and liabilities the relevant rate will be 20 per cent (2012 – 23 per cent) and for other assets and liabilities the relevant tax rate will be the prevailing corporate tax rate in the relevant country. Strategic report Movements in the provision for deferred tax:

Investment and Derivative Other development Other financial temporary property investments instruments differences Total £m £m £m £m £m Provided deferred tax provision/(asset): At 1 January 2012 – 5.0 (8.0) 3.0 – Recognised in the income statement – (1.9) (3.2) (0.5) (5.6) Recognised in other comprehensive income – 5.6 – – 5.6 At 31 December 2012 – 8.7 (11.2) 2.5 – On acquisition of subsidiaries (note 40) 12.0 – – – 12.0 Recognised in the income statement 0.2 (1.9) 3.2 (2.9) (1.4) Recognised in other comprehensive income – 1.6 – – 1.6 Foreign exchange movements (0.2) – – – (0.2) Governance At 31 December 2013 12.0 8.4 (8.0) (0.4) 12.0 Unrecognised deferred tax asset: At 1 January 2013 (0.2) – (37.1) (36.4) (73.7) Income statement items (0.1) – 14.0 (9.4) 4.5 At 31 December 2013 (0.3) – (23.1) (45.8) (69.2)

In accordance with the requirements of IAS 12 Income Taxes, the deferred tax asset has not been recognised in the Group financial statements due to uncertainty over the level of profits that will be available in the non-REIT elements of the Group in future periods.

37 Share capital

£m Issued and fully paid Accounts At 1 January 2012 – 860,347,169 ordinary shares of 50p each 430.2 Shares issued 4.0 At 31 December 2012 – 868,473,001 ordinary shares of 50p each 434.2 Shares issued 52.7 At 31 December 2013 – 973,845,701 ordinary shares of 50p each 486.9

During the year the Company issued a total of 119,797 ordinary shares in connection with the exercise of options by employees and former employees under the Intu Properties plc Approved Share Option Scheme and the Intu Properties plc Unapproved Share Option Scheme. Additionally, in connection with joint ownership elections by participants under the Company’s Joint Share Ownership Plan (‘JSOP’) a total of 1,721,664 ordinary shares were issued on 22 May 2013 to the Trustee of the Employee Share Ownership Plan (‘ESOP’). On 27 February 2013 the Company announced a placing of 86 million new ordinary shares at a price of 325 pence per share. The placing represented in aggregate approximately 9.9 per cent of the Company’s issued share capital immediately prior to the placing. 28 per cent of the placing shares were denominated in Rand. As a result, share capital increased by £43.0 million, share premium by £65.3 million and merger reserve by £164.4 million. Other information On 4 June 2013 and 19 November 2013 the Company issued 10,693,407 and 6,837,832 new ordinary shares respectively to shareholders who elected to receive their 2012 final and 2013 interim dividends in shares under the Scrip Dividend Scheme. The value of the Scrip Shares was calculated in accordance with the terms of the Scrip Dividend Scheme, being the average middle market quotations for each day between 5 April to 11 April 2013 inclusive and between 27 September to 3 October 2013 inclusive respectively less the gross amount of dividend payable. Full details of the rights and obligations attaching to the ordinary shares are contained in the Company’s Articles of Association. These rights include an entitlement to receive the Company’s report and financial statements, to attend and speak at General Meetings of the Company, to appoint proxies and to exercise voting rights. Holders of ordinary shares may also receive dividends and may receive a share of the Company’s assets on the Company’s liquidation. There are no restrictions on the transfer of the ordinary shares. At 28 February 2014, the Company had an unexpired authority to repurchase shares up to a maximum of 95,447,300 shares with a nominal value of £47.7 million, and the Directors have an unexpired authority to allot up to a maximum of 300,626,428 shares with a nominal value of £150.3 million. Included within the issued share capital as at 31 December 2013 are 12,620,925 ordinary shares (2012 – 11,351,172) held by the Trustee of the ESOP which is operated by the Company (note 39). The nominal value of these shares at 31 December 2013 is £6.3 million (2012 – £5.7 million).

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38 Other reserves

Capital Translation redemption reserve Other Total Group £m £m £m £m At 1 January 2012 61.4 7.2 250.1 318.7 Revaluation of other investments – – 28.7 28.7 Recognised in sale of other investments – – 2.7 2.7 Exchange differences – (7.4) – (7.4) Tax relating to components of other comprehensive income – – (6.0) (6.0) At 31 December 2012 61.4 (0.2) 275.5 336.7 Revaluation of other investments – – 8.1 8.1 Exchange differences – (7.1) – (7.1) Tax relating to components of other comprehensive income – – (1.6) (1.6) Ordinary shares issued – – 164.4 164.4 At 31 December 2013 61.4 (7.3) 446.4 500.5

Capital Merger redemption reserve Total Company £m £m £m At 1 January 2012 61.4 – 61.4 At 31 December 2012 61.4 – 61.4 Ordinary shares issued – 164.4 164.4 At 31 December 2013 61.4 164.4 225.8

39 Employee Share Ownership Plan (‘ESOP’)

The cost of shares in Intu Properties plc held by the Trustee of the Employee Share Ownership Plan operated by the Company is accounted for as a deduction from equity. The purpose of the ESOP is to acquire and hold shares which will be transferred to employees in the future under the Group’s employee incentive arrangements as described in note 47 and the Director’s remuneration report on pages 82 to 99, including joint ownership of shares in its role as Trustee of the Joint Share Ownership Plan. Dividends of £1.8 million (2012 – £1.7 million) in respect of these shares have been waived by agreement.

Group and Company 2013 2012 Shares 2013 Shares 2012 million £m million £m At 1 January 11.4 43.9 6.8 29.5 Acquisitions 2.0 7.0 4.8 15.6 Disposals (0.8) (2.7) (0.2) (1.2) At 31 December 12.6 48.2 11.4 43.9

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40 Business combinations

Acquisitions during 2013 Acquisition of Midsummer Place On 25 March 2013, the Group acquired 100 per cent of the Midsummer Place Shopping Centre with certain integrated activities, assets and liabilities for cash consideration of £248.6 million. Assets and liabilities acquired consisted of investment property with book and fair value of £250.5 million, along with other payables with book and fair value of £1.9 million. Consideration was equal to the fair value of assets and liabilities acquired and so no goodwill arose. Acquisition related costs of £11.2 million were incurred and recognised in the income statement in exceptional administration Strategic report expenses. During the year the acquired business contributed £11.4 million to the revenue and £9.3 million to the profit of the Group. Acquisition of Parque Principado In 2013, the Group and CPP Investment Board Real Estate Holdings Inc. (CPPIB) together established Parque Principado S.à r.l., set up for the purpose of acquiring Parque Principado. On 4 October 2013 a 100 per cent owned subsidiary of Parque Principado S.à r.l., acquired 100 per cent of the share capital of Parque Principado S.L. and other properties for total cash consideration of €168.6 million (£142.6 million). The businesses acquired form Parque Principado, a shopping centre in Oviedo, Spain. Acquisition related costs of £2.0 million were incurred and recognised in the income statement in exceptional administration expenses. CPPIB hold a 49 per cent non-controlling interest in Parque Principado S.à r.l., the holding company for the Group’s Parque Principado investment, and provided funding of £71.1 million. In 2014, following the successful completion of certain preconditions including regulatory approval, CPPIB exercised an option allowing them to acquire an additional one per cent of debt and equity, on terms in line with the original acquisition. At the date of signing these financial statements this transaction has not completed. The exercise of this option results in Parque Principado S.à r.l. becoming a joint venture.

The fair value of assets and liabilities acquired is set out in the table below: Governance

Fair value £m Assets Investment property 144.7 Trade and other receivables 1.1 Cash and cash equivalents (including restricted cash of £4.1 million) 13.0 Total assets 158.8 Liabilities Trade and other payables (8.4) Deferred tax liabilities (12.0) Total liabilities (20.4) Net assets 138.4

The fair value of the consideration of £142.6 million exceeded the fair value of the assets and liabilities acquired resulting in the recognition of Accounts goodwill of £4.2 million in the balance sheet on acquisition. The goodwill arose due to the recognition of a deferred tax liability. The deferred tax liability is calculated, as required under IFRS, on the basis of the tax gain that would arise in the acquired company were it to dispose of the asset. During the year the acquired businesses contributed £3.4 million to the revenue and £2.8 million to the profit of the Group. Acquisitions during 2012 On 19 December 2012 the Group acquired 100 per cent of the share capital of StyleMeTV Limited (renamed IntuDigital Limited) for total consideration with a fair value of £3.4 million including £3.2 million of contingent consideration which is subject to the satisfaction of various performance conditions. The fair value of net liabilities acquired was £0.6 million resulting in goodwill of £4.0 million being recognised on the acquisition. On 24 December 2012 the Group acquired 100 per cent of the share capital of Capital & Regional (Braehead) Limited (renamed Intu Braehead Limited), which holds a 50 per cent interest in the Xscape Braehead Partnership (renamed Braehead Leisure Partnership) for consideration of £4.0 million. As a result of this transaction, the Group’s interest in the Xscape Braehead Partnership is now 100 per cent. Assets with a fair value of £30.3 million and liabilities with a fair value of £24.0 million were acquired with the difference from the consideration being included in the income statement. Other information

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41 Capital commitments

At 31 December 2013, the Board had approved £86.1 million (2012 – £50.0 million) of future expenditure for the purchase, construction, development and enhancement of investment property. Of this, £54.3 million (2012 – £20.0 million) is contractually committed. The majority of this is expected to be spent in 2014. None of these capital commitments relate to the Group's interest in joint ventures.

42 Contingent liabilities

As at 31 December 2013, the Group has no material contingent liabilities other than those arising in the normal course of business.

43 Cash generated from operations

Group Group Company Company 2013 2012 2013 2012 Notes £m £m £m £m Profit before tax and associates 362.9 152.6 53.0 24.3 Remove: Revaluation and sale of investment and development property 7 (125.8) (40.9) – – Gain on acquisition of subsidiaries – (2.3) – – Sale of other investments – (1.4) – – Impairment of goodwill – 8.8 – – Distribution of shares received from Provogue – (10.2) – – Depreciation 1.8 1.5 1.5 1.4 Share-based payments 2.0 3.8 2.0 3.8 Lease incentives and letting costs (11.4) (3.2) – – Reversal of impairment of investment in group companies 22 – – (88.3) (57.6) Finance costs 12 197.2 197.3 17.4 6.0 Finance income (0.6) (0.2) (8.0) (6.6) Other finance costs 13 164.5 67.9 0.8 8.7 Change in fair value of financial instruments 14 (273.8) (30.5) 2.0 11.0 Changes in working capital: Change in trading property 1.7 5.4 – – Change in trade and other receivables (4.9) (0.7) (450.9) (111.0) Change in trade and other payables 4.0 (8.7) 216.0 300.7 Cash generated from operations 317.6 339.2 (254.5) 180.7

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44 Principal subsidiary undertakings

Company and principal activity Class of share capital % held5 — Barton Square Limited1 (property) Ordinary shares of £1 each 100 — Intu Shopping Centres plc (property) and its principal subsidiary undertakings: Ordinary shares of 50p each 100 Belside Limited (property) (Jersey) Ordinary shares of £1 each 100 Strategic report Braehead Park Estates Limited (property) Ordinary shares of £1 each 100 Broadmarsh Retail General Partner Limited1 acting as General Partner of The Broadmarsh ‘A’ Ordinary shares of £1 each 100 Retail Limited Partnership (property) ‘B’ Ordinary shares of £1 each 100 Chapelfield GP Limited acting as General Partner of The Chapelfield Partnership (property) Ordinary shares of £1 each 100 Curley Limited (property) (Jersey) Ordinary shares of £1 each 100 IntuDigital Limited1 (online shopping centre) (31 March year end) Ordinary shares of £1 each 100 Intu Braehead Limited as partner in the Braehead Leisure Partnership (property) Ordinary shares of £1 each 100 Intu Braehead Leisure Limited as partner in the Braehead Leisure Partnership (property) Ordinary shares of £1 each 100 Intu Bromley Limited (property) Ordinary shares of £1 each 100 Intu Experiences Limited (commercial promotion) Ordinary shares of £1 each 100 Intu Midsummer Limited (property) Ordinary shares of £1 each 100 Intu Retail Services Limited (facilities management services) (31 March year end) Ordinary shares of £1 each 514 Intu Uxbridge Limited (property) (Jersey) Ordinary shares of £1 each 100 1,3 Parque Principado S.à r.l. (holding company) (Luxembourg) and its principal wholly owned Governance subsidiary undertakings: Ordinary shares of €1 each 71 Parque Principado S.L. (property) (Spain) Ordinary shares of €1 each 71 Principado Número Dos S.L. (property) (Spain) Ordinary shares of €1 each 71 — Intu (SGS) Limited1 (holding company) and its principal subsidiary undertakings: Braehead Glasgow Limited (property) ‘A’ Ordinary shares of £1 each 100 ‘B’ Ordinary shares of €1.3 each 100 Braehead Park Investments Limited (property) Ordinary shares of £1 each 100 Intu Lakeside Limited (property) Ordinary shares of £1 each 100 Intu Properties Investments Limited (property) Ordinary shares of £1 each 100 Intu (SGS) Finco Limited (finance) Ordinary shares of £1 each 100 Intu Watford Limited (property) Ordinary shares of £1 each 100 VCP (GP) Limited acting as General Partner of The Victoria Centre Partnership (property) Ordinary shares of £1 each 100

— Intu Debenture plc (finance) and its principal subsidiary undertakings: Ordinary shares of £1 each 100 Accounts Intu Eldon Square Limited (formerly CSC (Eldon Square) Limited) (property) Ordinary shares of £1 each 100 Potteries (GP) Limited acting as General Partner of The Potteries Shopping Centre Limited Partnership (property) Ordinary shares of £1 each 100 Steventon Limited (property) (Jersey) Ordinary shares of £1 each 100 WRP Management Limited (property) Ordinary shares of £1 each 100 — Intu (Jersey) Limited (finance) (Jersey) Ordinary shares of £100 each 100 1 — Liberty International Group Treasury Limited (treasury management) Ordinary shares of £1 each 100 1 — Liberty International Holdings Limited (holding company) Ordinary shares of 50p each 100 1 — Metrocentre (GP) Limited acting as General Partner of The Metrocentre Partnership (property) Ordinary shares of £1 each 1002 — Nailsfield Limited (holding company) (Mauritius) Ordinary shares of US$1 each 100 1 — The Trafford Centre Finance Limited (finance) (Cayman Islands) Ordinary shares of £1 each 100 1 — The Trafford Centre Limited (property) Ordinary shares of £1 each 100 Other information ‘A’ Preference shares of 17p each 100 ‘B’ Preference shares of £1 each 100 1 Shareholdings in these companies are held by intermediate subsidiary undertakings except for Liberty International Holdings Limited where 40.2 per cent is held by Intu Properties plc, 31.1 per cent is held by Conduit Insurance Holdings Limited and 28.7 per cent is held by TAI Investments Limited. 2 By virtue of their 40 per cent interest in The Metrocentre Partnership, GIC Real Estate is entitled to appoint 40 per cent of the Directors of Metrocentre (GP) Limited. £33.0 million of the non-controlling interest shown in the balance sheet as at 31 December 2013 (2012 – £29.2 million) relates to GIC Real Estate’s interest. 3 CPPIB have, by way of their share of equity and debt, a 49 per cent economic interest in Parque Principado S.à r.l. resulting in a non-controlling interest balance in the balance sheet as at 31 December 2013 of £69.3 million relating to their economic interest. 4 Europa Support Services Limited hold a 49 per cent interest in Intu Retail Services Limited. At 31 December 2013 an amount of nil is included within the non-controlling interest balance in the balance sheet relating to their interest. 5 Percentage held is the Group's effective interest in the subsidiaries listed.

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44 Principal subsidiary undertakings (continued)

Companies are incorporated and registered in England and Wales and have a 31 December year end unless otherwise stated. The companies listed are those subsidiary undertakings whose results or financial position, in the opinion of the Directors, principally affected the figures in the Company’s consolidated financial statements. A full list of related undertakings will be annexed to the Company’s next annual return. Intu (SGS) Finance plc and Intu Metrocentre Finance plc are consolidated as subsidiaries in these financial statements but are not listed in the table above as the Group does not own the shares in these companies. These companies are vehicles used to issue some of the Group’s listed debt and the Group’s obligations under this means that it is considered that the Group is deemed to have control of these entities.

45 Related party transactions

Key management1 compensation is analysed below:

2013 2012 £m £m Salaries and short-term employee benefits 4.8 4.6 Pensions and other post-employment benefits 0.4 0.4 Share-based payments 1.3 2.2 6.5 7.2 1 Key management comprise the Directors of Intu Properties plc and employees who have been designated as persons discharging managerial responsibility. As John Whittaker, Deputy Chairman and Non-Executive Director of Intu, is the Chairman of the Peel Group, members of the Peel Group are considered to be related parties. Total transactions between the Group and members of the Peel Group are shown below:

2013 2012 £m £m Income 2.7 2.4 Expenditure (1.0) (0.6)

Income predominantly relates to leases of office space and a contract to provide advertising services. Expenditure predominantly relates to costs incurred under a management services agreement and the supply of utilities. All contracts are on an arm’s length basis at commercial rates. Balances outstanding between the Group and members of the Peel Group as at 31 December 2013 are shown below:

2013 2012 £m £m Amounts owed by members of the Peel Group 0.1 – Amounts owed to members of the Peel Group (0.1) (0.1)

Under the terms of the Group’s acquisition of intu Trafford Centre from the Peel Group, the Peel Group have provided a guarantee in respect of Section 106 planning obligation liabilities at Barton Square which as at 31 December 2013 totalled £11.3 million (2012 – £11.0 million). In 2012, the Group acquired for €2.5 million, alongside a refundable deposit of €7.5 million, a three year option to purchase two parcels of land in the province of Malaga, Spain from Peel Holdings Limited. In 2013 this option was extended for a further year for no consideration as provided for in the original terms. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation in the Group's financial information. Significant transactions between the Company and its subsidiaries are shown below:

2013 2012 £m £m Interest paid (10.3) (1.8) Interest received 7.9 6.6 Investment in subsidiaries 197.2 – The Company has provided Intu (Jersey) Limited a guarantee over obligations in relation to the 2.5 per cent convertible bonds (see note 33). Significant balances outstanding between the Company and its subsidiaries are shown below:

2013 2012 £m £m Amounts owed by subsidiary undertakings 1,126.4 678.3 Amounts owed to subsidiary undertakings (544.6) (329.7)

46 Directors’ emoluments

The details of individual Directors’ remuneration and pension benefits as set out in the tables contained in the Directors’ remuneration report on pages 82 to 99 form part of these financial statements.

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47 Share-based payment

The Group operates a number of share-based payment arrangements providing employee benefits and incentives. All schemes are equity settled, and as such the expense recognised in the income statement is based on the fair value of the equity instruments awarded as determined at their grant date. The expense is recognised on a straight-line basis over the vesting period based on Group estimates of the number of shares that are expected to vest.

Share Option Schemes Strategic report Options to subscribe for ordinary shares may be awarded under the Intu Properties plc Approved Share Option Scheme and the Intu Properties plc Unapproved Share Option Scheme. Certain grants are subject to an earnings per share (‘EPS’) performance condition. The performance condition for options granted up to 2011 requires Intu Group ‘smoothed’ earnings to grow over a three year period commencing with the year of grant at a rate in excess of 5 per cent per annum compound. ‘Smoothed’ earnings growth means the percentage increase in underlying earnings per share, adjusted by (a) excluding exceptional and valuation items and (b) limiting trading or non-recurring items to 10 per cent of profit before tax. Options granted to members of the Executive Committee in 2012 are subject to a sliding scale performance condition based on EPS growth of between 4–6 per cent per annum over a three year period. Options granted to staff who are not members of the Executive Committee 2012 are not subject to a performance condition. Except in the case of a ‘good’ leaver, options may not be exercised within three years of grant and before satisfaction or waiver of any applicable performance condition, and are forfeited if the employee leaves the Group before the options become capable of exercise. The options automatically lapse if not exercised within 10 years of the date of grant. In 2012, individuals who received awards of unapproved options in 2011 and 2012 were given the option to exchange their awards for jointly owned shares under the Joint Share Ownership Plan (‘the JSOP’). As required by IFRS 2 Share-based Payment, the fair value of the award is measured immediately before the modification and immediately after and any increase in fair value must be recognised as an expense through the income Governance statement over the performance period. Under this test an additional £0.1 million is being charged over the remaining vesting period. Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

2013 2012 Weighted average Weighted average Number of options exercise price (pence) Number of options exercise price (pence) Outstanding at 1 January 6,202,036 312 10,047,091 332 Awarded during the year 1,565,000 335 2,976,465 336 Forfeited during the year (234,417) 346 – – Transferred to JSOP ––(4,788,154) 360 Lapsed during the year (93,016) 389 (675,892) 409 Exercised during the year (1,571,906) 294 (1,357,474) 293 Outstanding at 31 December 5,867,697 320 6,202,036 312

Exercisable at 31 December 3,744,305 307 245,402 458 Accounts The weighted average share price at the date of exercise during the year was 334p (2012 – 328p). The number of options outstanding at 31 December 2013 includes a total of 3,817,931 (2012 – 4,252,205) which are subject to a capped gain. 3,154,739 (2012 – 3,569,537) are subject to a capped price of £3.339 per share and 663,192 (2012 – 682,668) are subject to a capped price of £3.584 per share. If the market price of shares at the date of exercise exceeds the capped price, the maximum gain the holder of such options can realise is the difference between exercise price and the capped price per share. Share options outstanding at 31 December 2013 had exercise prices between 272p and 528p (2012 – between 272p and 528p) and a weighted average remaining contractual life of approximately seven years (2012 – seven years). More detail by exercise price ranges is shown below:

2013 Weighted average remaining Exercise price (pence) Number of options contractual life 272 to 346 5,331,069 7 387 to 528 536,628 5 Other information

2012 Weighted average remaining Exercise price (pence) Number of options contractual life 272 to 346 5,562,392 7 387 to 528 639,644 6

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47 Share-based payment (continued)

The weighted average fair value of options granted during the year, determined using the Black-Scholes option pricing model, was £0.34 per option (2012 – £0.62). The significant inputs to the model for the majority of options granted during the year were as follows:

2013 2012 Share price and exercise price at grant date £3.35 £3.36 Expected option life in years 4 years 4 years Risk free rate 0.9% 1.4% Expected volatility 22.0% 33.8% Expected dividend yield 4.5% 4.5% Expected dividend yield is based on public pronouncements about future dividend levels. All other measures are based on historical data. Performance Share Plan The Company operates a Performance Share Plan (‘the PSP’) for eligible employees at the discretion of the Remuneration Committee. The PSP was approved by shareholders at the 2013 Annual General Meeting. Awards may be made in the form of nil cost options, a conditional share award or a joint share ownership award and fixed value zero cost option, and eligible employees may be granted any combination of such awards subject to any individual limits. Vesting of PSP awards made in 2013 is based on Total Shareholder Return (TSR) and Absolute Total Return (TR) with performance measured one third over three years, one third over four years and one third over five years. Half of the awards vest by reference to TR (25 per cent vesting for 6 per cent per annum return; full vesting for 10 per cent per annum; straight line vesting in between). The remaining half of the awards vest by reference to TSR relative to the top 5 UK-listed REITS (25 per cent return vesting for TSR in line with the third rated company; full vesting for TSR in line with the top rated company; straight line vesting in between) subject to a Remuneration Committee operated discretionary assessment of underlying financial performance. The fair value of TSR options granted during the year was determined using the Monte-Carlo option pricing model. The fair value of the TR options granted during the year was determined using the Black-Scholes option pricing model. The fair values per option granted in the year were as follows:

2013 Performance period TSR TR 3 years £0.72 £0.89 4 years £0.98 £0.89 5 years £1.42 £0.89 The significant inputs to the valuation model for the TSR options granted during the year were as follows:

2013 TSR TSR TSR Performance period 3 years 4 years 5 years Share price at grant date £3.57 £3.57 £3.57 Expected option life in years 2.5 years 3.5 years 4.5 years Risk free rate 0.38% 0.58% 0.81% Expected volatility 23% 27% 43% Expected competitor volatility 20%-23% 24%-27% 41%-52% Average correlation 72% 74% 78% The fair value of the TR options, before taking account of the performance condition, is equal to the share price at the date of grant of £3.57 as these awards accumulate dividends over the performance period. A 25 per cent vesting has been assumed resulting in a fair value per share of £0.89 as above. A total of 1,913,145 PSP options were awarded in the year and all remain outstanding as at 31 December 2013.

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47 Share-based payment (continued)

Joint Share Ownership Plan Eligible employees may be invited to participate in the Joint Share Ownership Plan (‘JSOP’) which forms part of the Intu Properties plc Unapproved Share Option Scheme and the PSP. Under the JSOP shares are held jointly by the employee and the Employee Share Ownership Plan Trustee with any increases in the share price and dividends paid on those shares being allocated between the joint owners in accordance with the terms of the scheme. Strategic report Conditions for exercise (including satisfaction of the same performance condition), forfeiture and lapsing are as set out above for options or PSP generally. In 2012, individuals who received awards of unapproved options in 2011 and 2012 were given the option to exchange their awards for jointly owned shares under the JSOP. In 2013, participants in the PSP were given the option to take their awards in the form of jointly owned shares under the JSOP and fixed value zero cost options. Bonus Share Scheme Under the Company’s Bonus Scheme (the ‘Bonus Scheme’), deferred shares may be awarded as part of any bonus. Such awards comprise ‘Restricted’ shares and ‘Additional’ shares. Where awarded, Additional shares are equal to 50 per cent of the Restricted shares and SIP shares (see below) combined. The vesting of deferred share awards is not dependent on the achievement of any further performance conditions other than that participants remain employed by the Group for a specified time from the date of the award, typically two years in the case of Restricted shares and four years in the case of Additional shares. The fair value of Restricted shares granted during the year, determined using the Black-Scholes option pricing model, was £3.06 per share (2012 – £3.07 per share). The significant inputs to the model were as follows:

2013 2012

Share price at grant date £3.35 £3.36 Governance Expected option life in years 2 years 2 years Risk free rate 0.6% 1.2% Expected volatility 14.2% 22.9% Expected dividend yield 4.5% 4.5%

Movements in shares awarded under the Bonus Share Scheme are as follows:

2013 2012 Year of grant Restricted Additional Restricted Additional Outstanding at 1 January 995,099 – 444,853 – Awarded during the year 545,219 – 578,073 – Forfeited during the year (32,885) – (6,361) – Vested during the year (422,147) – (21,466) –

Outstanding at 31 December 1,085,286 – 995,099 – Accounts Other information

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47 Share-based payment (continued)

Share incentive plan (‘SIP’) The Company operates a SIP for all eligible employees, who may receive up to £3,000 (£3,600 from the tax year 2014/15) worth of shares as part of their annual bonus arrangements. The SIP arrangements offer worthwhile tax advantages to employees and to the Company. The SIP Bonus shares can be released three years after the date of the award, provided the individual employee has remained in employment, but the shares must then be held in trust for a further two years in order to qualify for tax advantages. The fair value of shares granted during the year, determined using the Black-Scholes option pricing model, was £3.35 per share (2012 – £3.36 per share). As these awards accumulate dividends, the fair value of each share awarded is equal to the share price at the date of grant of £3.35. As part of the SIP arrangements, the Company also offers eligible employees the opportunity to participate in a ‘Partnership’ share scheme, under which employees can save up to £125 a month (£150 a month from the tax year 2014/15). The Group offers one free Matching share for every two Partnership shares purchased by the employee at the end of a 12 month saving period. Matching shares are forfeited if the employee leaves the Group within three years of the date of award, and qualify for tax advantages if they are held in the SIP for five years. The fair value of Matching shares is determined by the market price at the grant date. The dividend payable in respect of the shares held in the SIP is used to purchase additional shares, known as Dividend Shares, which are also held in trust and allocated to individuals and are subject to the same conditions of release. Movements in SIP bonus shares granted are as follows:

2013 2012 Outstanding at 1 January 147,935 68,854 Awarded during the year 84,956 90,082 Forfeited during the year (8,148) (7,081) Vested during the year1 – (3,920) Outstanding at 31 December2 224,743 147,935 1 May still be held in trust. 2 Shares that remain within their three year holding period.

48 Pensions

The Group operates defined contribution group pension plans for its head office and centre management staff. Additionally the Group makes contributions to self-invested personal pension arrangements (‘SIPPs’) on behalf of an Executive Director. All contributions are invested in funds administered outside of the Group. During the year, the Group also operated for Trafford Centre employees a trustee-based money purchase scheme (The Trafford Centre Limited Retirement Benefits Scheme) and a stakeholder scheme. From 1 October 2013, the Group’s subsidiary, Intu Retail Services Limited has operated a defined contribution group pension plan for its staff, including previous members of The Trafford Centre Limited Retirement Benefit Scheme. Since 1 October 2013, the Group has made no further contribution to The Trafford Centre Limited Retirement Benefits Scheme, which no longer has any active members. The pension charge for the Group’s contributions to these arrangements is the actual amount paid which totalled £1.9 million for the year ended 31 December 2013 (2012 – £1.2 million).

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49 Events after the reporting period

There have been no events after the reporting period that require disclosure in these financial statements.

50 Directors’ interests

(a) In shares in the Company Strategic report The number of ordinary shares of the Company in which the Directors were beneficially interested were:

2013 2012 Chairman: Patrick Burgess 29,266 29,266 Deputy Chairman: John Whittaker* 192,102,358 174,131,209 Executive: David Fischel 666,987 556,010 Matthew Roberts 64,499 30,000 Non-Executive: Adèle Anderson (appointed 22 February 2013) 13,712 – Richard Gordon 5,436,526 5,436,526 Andrew Huntley 18,000 12,000 Governance Louise Patten 10,000 10,000 Neil Sachdev – – Andrew Strang – – Past Directors: John Abel (retired 8 May 2013) 122,221 122,221 Rob Rowley (resigned 18 October 2013) 1,260 1,260 * Total beneficial interest includes shares held by subsidiaries of the Peel Group of which John Whittaker is the chairman. In addition, the 3.75 per cent convertible bonds issued on 28 January 2011, which are explained in detail in note 33, are held by the Peel Group and therefore constitute an interest of John Whittaker. John Whittaker’s total interest in ordinary shares of the Company (including shares issuable on conversion of the 3.75 per cent convertible bonds) is therefore 230,681,608, representing 23.69 per cent of issued share capital following such conversion. During the year, interest on the 3.75 per cent convertible bonds, recognised directly in equity totalled £5.8 million (2012 – £5.8 million). Conditional awards of shares have previously been made to Executive Directors under the Company’s annual bonus scheme. The awards comprise ‘Restricted’ shares and ‘Additional’ shares, the latter equal to 50 per cent of the Restricted and Share Incentive Plan shares Accounts combined. Executive Directors were required to retain the shares, net of shares sold to meet tax and PAYE deductions, which vested ahead of the normal vesting date. Other information

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50 Directors’ interests (continued)

Awards to Executive Directors under the scheme since January 2011 are as follows:

Number of Number of shares at Number of Number of Number of shares at Market price at Original Market price at 31 December shares lapsed shares awarded shares vested 31 December Award date award (pence) vesting date vesting (pence) 2012 during 2013 during 2013 during 2013 2013 David Fischel 03/03/2011 387 03/03/2013 327 158,784 – – 158,784 – 05/03/2012 336 05/03/2014 – 153,795 – – – 153,795 07/03/2013 335 07/03/2015 – – – 123,283 – 123,283

Matthew Roberts 03/03/2011 387 03/03/2013 327 65,470 – – 65,470 – 05/03/2012 336 05/03/2014 – 113,170 – – – 113,170 07/03/2013 335 07/03/2015 – – – 94,626 – 94,626 Details of Restricted and Additional shares awarded in respect of the year ended 31 December 2013 are given in the Directors’ remuneration report on pages 82 to 99. Awards may also be made under the Company’s Share Incentive Plan (‘SIP’). The SIP shares can be released three years after the date of the award provided the individual Director has remained in employment but the shares must be held in trust for a further two years in order 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.

Partnership, At matching and At 31 December Removed dividend 31 December 1 2012 from trust Lapsed Awarded shares 2013 Current Directors: David Fischel 9,580 – – 895 1,103 11,578 Matthew Roberts 2,488 – – 895 839 4,222 1 SIP shares in respect of the year ended 31 December 2012 awarded in March 2013. Details of SIP shares awarded in respect of the year ended 31 December 2013 are given in the Directors’ remuneration report on pages 82 to 99. (b) In share options in the Company Executive Directors interests in share options and the PSP are given in the Directors’ remuneration report on pages 82 to 99. (c) Other disclosures No Director had any dealings in the shares of any Group company between 31 December 2013 and 28 February 2014, being a date less than one month prior to the date of the notice convening the Annual General Meeting. Other than as disclosed in these accounts, no Director of the Company had a material interest in any contract (other than service contracts), transaction or arrangement with any Group company during the year ended 31 December 2013.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 153 Other information

Other information Strategic report

Investment and development property 154

Financial covenants 156 Governance Underlying profit statement 158 EPRA performance measures 159 Financial record 163 Management structure 164 Glossary 165 Dividends 167 Shareholder information 168 Accounts

Other information

Intu Properties plc – Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 154 Other information Investment and development property (unaudited)

1 Property data

Market value Net initial ‘Topped-up’ NIY Nominal £m yield (EPRA) (EPRA) equivalent yield Occupancy As at 31 December 2013 intu Trafford Centre 1,900.0 4.2% 4.6% 5.1% 97% intu Lakeside 1,124.5 4.8% 4.9% 5.5% 95% intu Metrocentre 885.2 5.0% 5.2% 5.8% 94% intu Braehead 602.3 4.4% 4.6% 5.9% 90% Manchester Arndale 399.0 5.0% 5.1% 5.5% 97% intu Watford 323.0 4.7% 4.9% 6.5% 94% intu Victoria Centre 306.0 4.7% 4.8% 6.6% 98% St David’s, Cardiff 272.2 5.2% 5.6% 5.7% 94% Midsummer Place 251.0 5.1% 5.1% 5.5% 98% intu Eldon Square 250.2 4.8% 4.9% 6.6% 96% intu Chapelfield 245.5 5.7% 5.7% 6.4% 94% Cribbs Causeway 241.5 4.2% 4.6% 5.8% 92% intu Uxbridge 213.9 5.4% 5.8% 6.4% 95% intu Potteries 162.6 6.1% 6.4% 7.6% 92% intu Bromley 159.2 5.5% 5.6% 7.5% 87% Parque Principado 143.1 6.9% 7.1% 7.2% 98% Other 144.6 Total investment and development property 7,623.8 4.74% 4.97% 5.79% 95% As at 31 December 2012 7,073.1 5.04% 5.24% 5.94% 96%

31 December 31 December 2013 2012 £m £m Passing rent 367.9 357.5 ERV 476.0 456.0 Weighted average unexpired lease term 7.5 years 7.8 years Please refer to the glossary for the definition of terms.

2 Analysis of capital return in the year

Market value Revaluation surplus 2013 2012 2013 £m £m £m % Like-for-like property 7,199.6 7,051.2 124.9 1.8 Acquisitions 394.9 – 1.3 0.3 Developments 29.3 21.9 (0.4) (1.5) Total investment and development property 7,623.8 7,073.1 125.8 1.7

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 155 Other information

3 Additional property information

Gross area Form of million Year Acquisition Ownership Note ownershipI sq. ft.F opened dateG As at 31 December 2013 intu Trafford Centre 100% FH 2.0 1998 2011 Strategic report intu Lakeside 100% FH 1.4 1990 – intu Metrocentre 90% A LH 2.1 1986 1995 intu Braehead 100% FH 1.1 1999 – Manchester Arndale 48% B LH 1.6 1976 2005 intu Watford 93% LH 0.7 1992 – intu Victoria Centre 100% FH 1.0 1972 2002H St David’s, Cardiff 50% FH/LH 1.4 2009 2006 Midsummer Place 100% FH 0.4 2000 2013 intu Eldon Square 60% FH/LH 1.4 1976 – intu Chapelfield 100% FH 0.5 2005 – Cribbs Causeway 33% C FH/LH 1.1 1998 2005 intu Uxbridge 100% FH 0.4 2001 – intu Potteries 100% FH 0.6 1998 – Governance intu Bromley 64% LH 0.5 1991 – Parque Principado 100% D FH 0.8 2001 2013 Other E 1.2 Total investment and development property 18.2 As at 31 December 2012 16.6 Notes A Interest shown is that of the Metrocentre Partnership in intu Metrocentre (90 per cent) and the Metro Retail Park (100 per cent). The Group has a 60 per cent interest in the Metrocentre Partnership which is consolidated as a subsidiary of the Group. B The Group’s interest is through a joint venture ownership of a 95 per cent interest in Manchester Arndale, and a 90 per cent interest in New Cathedral Street, Manchester. C The Group’s interest is through a joint venture ownership of a 66 per cent interest in The Mall at Cribbs Causeway and a 100 per cent interest in The Retail Park, Cribbs Causeway. D Interest shown is that of the wholly owned subsidiaries of Parque Principado S.à r.l. in which the Group has a 51 per cent economic interest and which

is consolidated as a subsidiary of the Group. Accounts E Includes the Group’s 67 per cent economic interest in intu Broadmarsh and the Group’s 100 per cent interest in Braehead Leisure. F Area shown is not adjusted for the proportional ownership. G The acquisition date is presented only where the centre was not built by the Group. H Intu held a 20 per cent stake in intu Victoria Centre, Nottingham prior to 2002 when it acquired the remaining 80 per cent to take its holding to 100 per cent. I Form of ownership is shown as either freehold (‘FH’), leasehold (‘LH’) or freehold and leasehold (‘FH/LH’).

Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 156 Other information Financial covenants (unaudited)

Intu (SGS) Finance plc and Intu (SGS) Finco Limited (‘Secured Group Structure’) Interest Interest Loan LTV LTV cover cover £m Maturity covenant* actual covenant* actual Term loan 351.8 2018 3.875 per cent bonds 450.0 2023 4.625 per cent bonds 350.0 2028 1,151.8 80% 48% 125% 231%

* Tested on the Security Group, the principal assets of which are intu Lakeside, intu Braehead, intu Watford and intu Victoria Centre. The structure has a tiered operating covenant regime giving the Group a significant degree of flexibility when the covenants are below certain levels. In higher tiers the level of flexibility is reduced. The Group retains operating control below loan to value of 72.5 per cent and interest cover above 1.4x. No financial covenant default occurs unless the loan to value exceeds 80 per cent or the interest cover falls below 1.25x. The Trafford Centre Finance Limited There are no financial covenants on the intu Trafford Centre debt of £719.7 million at 31 December 2013. However a debt service cover ratio is assessed quarterly and where this falls below specified levels restrictions come into force. The loan to 31 December 2013 market value ratio is 40 per cent. Intu Metrocentre Finance plc Interest Interest Loan LTV LTV cover cover £m Maturity covenant actual covenant actual* 4.125 per cent bonds 485.0 2023 100% 55% 125% 222%

* Calculation presented based on a full 12 month period of income and finance costs, not just the period since the issue of the bond. The structure’s covenant regime gives the Group a significant degree of flexibility when the covenants are below certain levels. The Group retains operating control below loan to value of 70 per cent and interest cover above 1.4x. No financial covenant default occurs unless loan to value exceeds 100 per cent or interest cover falls below 1.25x. Intu Debenture plc Loan Capital cover Capital cover Interest cover Interest cover £m Maturity covenant actual covenant actual 227.6 2027 150% 204% 100% 106%

The debenture is currently secured on a number of the Group’s properties including intu Potteries, intu Eldon Square and intu Broadmarsh. Should the capital cover or interest cover test be breached, Intu Debenture plc (the ‘issuer’) has three months from the date of delivery of the valuation or the latest certificate to the Trustees to make good any deficiencies. The issuer may withdraw property secured on the debenture by paying a sum of money or through the substitution of alternative property provided that the capital cover and interest cover tests are satisfied immediately following the substitution.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 157 Other information

Other asset-specific debt Loan outstanding Loan to at 31 January 31 December 20141 2013 Interest cover Interest cover 2 3 £m Maturity LTV covenant market value covenant actual intu Chapelfield 204.9 2016 n/a 83% 120% 160%

intu Uxbridge 147.0 2016 80% 69% 120% 181% Strategic report Midsummer Place 125.3 2016 65% 50% 150% 329% intu Bromley 116.0 2016 80% 73% 120% 191% St David’s, Cardiff4 78.6 2014 65% 29% 180% 341% Braehead Leisure 42.9 2014 80% 75% 120% 260% Barton Square 42.5 2017 65% 54% 175% 202%

1 The loan values are the actual principal balances outstanding at 31 January 2014, which take into account any principal repayments made in January 2014. The balance sheet value of the loans includes any unamortised fees. 2 The loan to 31 December 2013 market value provides an indication of the impact the 31 December 2013 property valuations could have on the LTV covenants. The actual timing and manner of testing LTV covenants varies and is loan specific. 3 Based on latest certified figures, calculated in accordance with loan agreements, which have been submitted between 31 December 2013 and 31 January 2014. The calculations are loan specific and include a variety of historic, forecast and, in certain instances, a combined historic and forecast basis. 4 50 per cent of the debt is shown which is consistent with the accounting treatment and the Group’s economic interest. Financial covenants on corporate facilities at 31 December 2013 Governance Net worth Net worth Interest cover Interest cover Borrowings/net Borrowings/net covenant actual covenant actual worth covenant worth actual £375m facility, maturing in 2017* £750m £1,909m 120% 195% 110% 81% £300m due in 2018 2.5 per cent convertible bonds** n/a n/a n/a n/a 175% 12% * Tested on the Borrower Group which excludes, at the Group’s election, certain subsidiaries with asset-specific finance. The facility is secured on the Group’s investments in Manchester Arndale and Cribbs Causeway. ** Tested on the Group excluding, at the Group’s election, the borrowings on certain subsidiaries with asset-specific finance. Accounts Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 158 Other information Underlying profit statement (unaudited) for the year ended 31 December 2013

Six months Six months Six months Six months Year ended Year ended ended ended ended ended 31 December 31 December 31 December 31 December 30 June 30 June 2013 2012 2013 2012 2013 2012 £m £m £m £m £m £m Net rental income 369.5 362.6 188.5 180.8 181.0 181.8 Net other income 3.8 6.3 1.4 3.2 2.4 3.1 373.3 368.9 189.9 184.0 183.4 184.9 Administration expenses (27.7) (26.7) (13.8) (13.4) (13.9) (13.3) Underlying operating profit 345.6 342.2 176.1 170.6 169.5 171.6 Finance costs (197.2) (197.3) (98.7) (98.8) (98.5) (98.5) Finance income 0.6 0.2 – 0.1 0.6 0.1 Other finance costs (6.5) (6.9) (3.2) (3.4) (3.3) (3.5) Underlying net finance costs (203.1) (204.0) (101.9) (102.1) (101.2) (101.9) Underlying profit before tax and associates 142.5 138.2 74.2 68.5 68.3 69.7 Tax on underlying profit (0.9) (0.8) (0.6) (0.3) (0.3) (0.5) Remove amounts attributable to non-controlling interests 4.4 5.8 1.5 2.8 2.9 3.0 Share of underlying profit/(loss) of associates – 0.3 (0.1) 0.1 0.1 0.2 Interest on convertible bonds deducted directly in equity (5.8) (5.8) (2.9) (2.9) (2.9) (2.9) Underlying earnings 140.2 137.7 72.1 68.2 68.1 69.5 Underlying earnings per share (pence) 15.0p 16.1p 7.5p 8.0p 7.4p 8.1p Weighted average number of shares (million) 935.3 853.8 955.9 854.0 914.3 853.6 For the reconciliation from basic earnings per share see note 18(c).

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 159 Other information EPRA performance measures (unaudited)

1 Summary

The EPRA Best Practice Recommendations identify six key performance measures which includes the EPRA Cost Ratios that were published during the year. The measures are deemed to be of importance for investors in property companies and aim to encourage more consistent and widespread disclosure. The Group is supportive of this initiative but continues to disclose additional measures throughout this report which it believes are more appropriate to the Group’s current circumstances.

The EPRA measures as calculated for the Group are summarised below and detailed in the tables following: Strategic report

Table 2013 2012 EPRA cost ratio (including direct vacancy costs) 2 18.9% 19.0% EPRA cost ratio (excluding direct vacancy costs) 2 15.7% 16.4% EPRA earnings 3 £134.6m £139.6m – per share 3 14.4p 16.4p EPRA NAV 4(a) £3,669.5m £3,515.4m – per share 4(a) 366p 392p EPRA NNNAV 4(b) £3,535.3m £3,017.2m – per share 4(b) 353p 336p EPRA net initial yield 5 4.7% 5.0% EPRA ‘topped-up’ NIY 5 5.0% 5.2% EPRA vacancy rate 6 3.0% 1.9%

Details of the Group’s performance against the EPRA Best Practice Recommendations on Sustainability Reporting can be found in full in the 2013 Governance Corporate Responsibility Report.

2 EPRA Cost Ratios

2013 2012 £m £m Other non-recoverable costs 43.9 45.8 Administration expenses – ongoing 27.7 26.7 Net service charge costs 10.7 8.3 Remove: Service charge costs recovered through rents (2.5) (2.2) EPRA costs – including direct vacancy costs 79.8 78.6

Direct vacancy costs (13.5) (10.8) Accounts EPRA costs – excluding direct vacancy costs 66.3 67.8

Rent receivable 447.6 441.4 Rent payable (23.5) (24.7) Gross rental income less ground rent payable 424.1 416.7 Remove: Service charge costs recovered through rents (2.5) (2.2) Gross rental income 421.6 414.5

EPRA cost ratio (including direct vacancy costs) 18.9% 19.0% EPRA cost ratio (excluding direct vacancy costs) 15.7% 16.4%

Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 160 Other information EPRA performance measures (unaudited) continued

3 EPRA earnings

EPRA earnings per share has been presented as recommended by EPRA which seeks to assist comparison between European property companies. However, we believe that our measure of underlying earnings per share is more appropriate than the EPRA measure in the context of our business as set out in note 18(c). The key difference relates to the adjustments in respect of exceptional items where EPRA is prescriptive about the adjustments that can be made. A reconciliation of EPRA earnings per share to the Group’s measure of underlying earnings per share is provided below.

2013 2012 Earnings Shares Pence per Earnings Shares Pence per £m million share £m million share Basic earnings per share from continuing operations 354.0 935.3 37.8p 150.1 853.8 17.6p Remove: Revaluation and sale of investment and development property (125.8) (13.5)p (40.9) (4.8)p Share of associates revaluation and sale of investment and development property (0.5) – (0.6) (0.1)p Sale of other investments ––(1.4) (0.2)p Impairment of goodwill ––8.8 1.0p Gain on acquisition of subsidiaries ––(2.3) (0.3)p Change in fair value of financial instruments (273.8) (29.3)p (30.5) (3.6)p Exceptional administration costs – acquisition related 13.2 1.4p 1.1 0.2p Exceptional finance charges – termination of derivative financial instrument 155.1 16.6p 52.1 6.1p Profits on sale and write down of trading property (0.1) – – 0.0p Tax on the above 3.4 0.4p (5.3) (0.6)p Non-controlling interest in respect of the above 9.1 1.0p 8.5 1.1p EPRA earnings per share 134.6 935.3 14.4p 139.6 853.8 16.4p Reconciliation to the Group’s measure of underlying earnings per share Remove: Exceptional items 10.9 1.1p 8.9 1.0p Other exceptional tax (4.9) (0.5)p (0.6) (0.1)p Distribution of shares received from Provogue ––(10.2) (1.2)p Add: Profits on sale and write down of trading property 0.1 – – – Non-controlling interest in respect of the above (0.5) – – – Underlying earnings per share 140.2 935.3 15.0p 137.7 853.8 16.1p

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 161 Other information

4 EPRA NAV

(a) EPRA NAV EPRA NAV has been presented as recommended by EPRA which seeks to assist comparison between European property companies. However, we believe that our measure of NAV per share (diluted, adjusted) is more appropriate than the EPRA measure in the context of our business as set out in note 19(b). The key difference is the swaps not currently used for economic hedges of debt which are excluded in the Group's definition of NAV per share (diluted, adjusted). The adjustment in respect of the non-controlling interest recoverable balance not recognised is due to historic accounting practices and is required, in our view, to give a more appropriate value of net assets attributable to equity owners of the Group. A reconciliation of Strategic report EPRA NAV to the Group’s measure of NAV per share (diluted, adjusted) is provided below.

2013 2012 Net assets Shares NAV per share Net assets Shares NAV per share £m million pence £m million pence NAV attributable to owners of Intu Properties plc 3,518.8 961.2 366p 2,977.0 857.1 347p Dilutive convertible bonds, share options and awards 3.8 41.1 – 39.6 Diluted NAV 3,522.6 1,002.3 351p 2,977.0 896.7 332p Remove: Fair value of derivative financial instruments (excluding swaps not currently used for economic hedges of debt and net of tax) 63.2 6p 293.4 33p Deferred tax on investment and development properties and investments 20.4 2p 8.7 1p Goodwill resulting from recognition of deferred tax Governance liabilities (4.2) – – – Non-controlling interest in respect of the above (3.8) – (23.4) (3)p Add: Non-controlling interest recoverable balance not recognised 71.3 7p 71.3 8p EPRA NAV 3,669.5 1,002.3 366p 3,327.0 896.7 371p Reconciliation to the Group’s measure of underlying earnings per share Remove: Swaps not currently used for economic hedges of debt (net of tax) 134.9 14p 188.4 21p NAV per share (diluted, adjusted) 3,804.4 1,002.3 380p 3,515.4 896.7 392p

Accounts (b) EPRA NNNAV The Group’s measure of NNNAV per share (diluted, adjusted) disclosed in note 19(b) is equal to the EPRA NNNAV measure presented below.

2013 2012 Net assets Shares NAV per share Net assets Shares NAV per share £m million pence £m million pence EPRA NAV 3,669.5 1,002.3 366p 3,327.0 896.7 371p Fair value of derivative financial instruments (net of tax) (63.2) (6)p (293.4) (33)p Excess of fair value of debt over book value (56.9) (6)p (2.4) – Deferred tax (20.4) (2)p (8.7) (1)p Non-controlling interest in respect of the above 6.3 1p (5.3) (1)p EPRA NNNAV 3,535.3 1,002.3 353p 3,017.2 896.7 336p

Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 162 Other information EPRA performance measures (unaudited) continued

5 EPRA net initial yield and ‘topped-up’ NIY

2013 2012 £m £m Investment and development property 7,624 7,073 Less developments (29) (7) Completed property portfolio 7,595 7,066 Allowance for estimated purchasers costs 361 340 Gross up completed property portfolio valuation 7,956 7,406

Annualised cash passing rental income 397 386 Property outgoings (20) (19) Annualised net rents 377 367 Notional rent on expiration of rent free periods or other lease incentives 17 19 Topped-up net annualised rent 394 386

EPRA net initial yield 4.7% 5.0% EPRA ‘topped-up’ NIY 5.0% 5.2% EPRA net initial yield and ‘topped-up’ NIY by property is given in the Investment and development property section.

6 EPRA vacancy rate

2013 2012 % % intu Trafford Centre 2.7 0.5 intu Lakeside 2.3 1.8 intu Metrocentre 3.5 2.6 intu Braehead 3.1 2.5 Manchester Arndale 2.7 1.0 intu Watford 1.1 2.3 intu Victoria Centre 2.4 4.0 St David’s, Cardiff 4.9 2.8 Midsummer Place 1.8 n/a intu Eldon Square 2.9 2.1 intu Chapelfield 3.8 1.3 Cribbs Causeway 5.8 4.5 intu Uxbridge 1.1 0.0 intu Potteries 4.4 0.0 intu Bromley 4.7 3.9 Parque Principado 2.5 n/a 3.0 1.9 EPRA vacancy rate is the ERV of vacant space divided by total ERV.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 163 Other information Financial record 2009 – 2013

20091 2010 2011 2012 2013 Net rental income £267m £277m £364m £363m £370m Underlying earnings £75m £97m £139m £138m £140m Underlying earnings per share 15.1p 15.4p 16.5p 16.1p 15.0p Dividend per share 15.0p 15.0p 15.0p 15.0p 15.0p Property revaluation (deficit)/surplus £(535)m £501m £63m £41m £126m Strategic report

NAV per share (diluted, adjusted) 339p 390p 391p 392p 380p Market value of investment and development property £4,631m £5,099m £6,960m £7,073m £7,624m Net external debt £2,522m £2,437m £3,374m £3,504m £3,698m

Debt to assets ratio 54.5% 48.0% 48.5% 49.5% 48.5% Interest cover 1.41x 1.56x 1.71x 1.69x 1.71x

Change in like-for-like net rental income (3.4)% 2.1% 3.6% (2.7)% (1.9)% Occupancy 98% 98% 97% 96% 95% Growth in footfall (like-for-like) 3% 3% 2% (1)% (2)% 1 2009 figures are re-presented to remove the impact of the Capital & Counties business following the demerger in May 2010 and to present the C&C US business as held for sale. Governance

Accounts Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 164 Other information Management structure

Intu Properties plc

Chairman, Deputy Chairman and Executive Directors Centre Managers Patrick Burgess, Chairman intu Braehead John Whittaker, Deputy Chairman (Alternate – Steven Underwood) intu.co.uk/braehead David Fischel, Chief Executive Gary Turnbull 0141 885 1441 Matthew Roberts, Finance Director intu Broadmarsh Non-Executive Directors intu.co.uk/broadmarsh Adèle Anderson Adam Tamsett 0115 840 4555 Richard Gordon (Alternate – Raymond Fine) Andrew Huntley (Senior Independent Director) intu Bromley Louise Patten intu.co.uk/bromley Neil Sachdev Marc Myers 020 8313 9292 Andrew Strang intu Chapelfield Executive Committee* intu.co.uk/chapelfield Mike Butterworth, Chief Operating Officer Davina Tanner 01603 753344 Martin Ellis, Construction Director intu Eldon Square Hugh Ford, General Corporate Counsel Susan Marsden, Group Company Secretary intu.co.uk/eldonsquare Trevor Pereira, Digital and Commercial Director Philip Steele 0191 261 1891 Peter Weir, Group Financial Controller intu Lakeside Asset Management intu.co.uk/lakeside Martin Breeden, Asset Management Director Kate Miller 01708 869933 Kate Grant, Asset Management Director intu Metrocentre Julian Wilkinson, Asset Management Director intumetrocentre.co.uk Operations Gavin Prior 0191 493 0200 Gordon McKinnon, Operations Director intu Potteries Roger Binks, Customer Experience Director intu.co.uk/potteries Construction and Development Paul Francis 01782 289822 Charles Forrester, Director of Project Management Julie Pears, Director of Development intu Trafford Centre Group Treasury and Tax intu.co.uk/traffordcentre Mike Wallace, Group Treasurer Richard Paxton 0161 746 7777 Gary Hoskins, Head of Tax intu Uxbridge Internal Audit intu.co.uk/uxbridge Claire Combes, Head of Risk and Internal Audit Shelley Peppard 01895 819400 Human Resources intu Victoria Centre Bernie Kingsley, Human Resources Director intu.co.uk/victoriacentre Investor Relations Janine Bone 0115 912 1111 Kate Bowyer, Business Relations Director intu Watford Corporate Responsibility intu.co.uk/watford Alexander Nicoll, Director of Corporate Responsibility Howard Oldstein 01923 250292 Information Systems The Mall, Cribbs Causeway, Bristol Gian Fulgoni, Chief Information Systems Officer mallcribbs.com PR and Communications Jonathan Edwards 0117 915 5555 Amanda Campbell, Communications Director Manchester Arndale Corporate Finance manchesterarndale.com Dushyant Sangar, Director of Corporate Finance David Allinson 0161 833 9851 intu Digital Midsummer Place, Milton Keynes Karen Harris, Managing Director midsummerplace.co.uk Intu Retail Services Limited Martin Hindson 01908 557001 Brian Boundy, Managing Director St David’s, Cardiff Geoff Grateley, Operations Director stdavidscardiff.com Regional Centre Directors Steven Madeley 029 2039 6041 Peter Beagley Paul Lancaster Parque Principado parqueprincipado.net * Additional members of the Executive Committee are the Chief Executive Enrique Echeverria Suarez +34 985 266 856 (Chairman of the Committee) and the Finance Director.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 165 Other information Glossary

ABC1 customers Interest cover Proportion of customers within UK social groups A, B and C1, defined as Underlying operating profit excluding trading property related members of households whose chief earner’s occupation is professional, items divided by the net finance cost plus interest on convertible higher or intermediate management, or supervisory. bonds recognised in equity excluding the change in fair value of financial instruments, exceptional finance costs and amortisation of compound Annual property income financial instruments. The Group’s share of passing rent plus the external valuers’ estimate of annual excess turnover rent and sundry income such as that from car Interest rate swap Strategic report parks and mall commercialisation. A derivative financial instrument enabling parties to exchange interest rate obligations for a predetermined period. These are used by the Group Debt to assets ratio to convert floating rate debt to fixed rates. Net external debt divided by the market value of investment and development property. IPD Investment Property Databank Ltd, producer of an independent Diluted figures benchmark of property returns. Reported amounts adjusted to include the effects of dilutive potential shares issuable under convertible bonds and employee incentive Like-for-like property arrangements. Investment property which has been owned throughout both periods without significant capital expenditure in either period, so that income Earnings per share can be compared on a like-for-like basis. For the purposes of comparison Profit for the period attributable to owners of Intu divided by the of capital values, this will also include assets owned at the previous weighted average number of shares in issue during the period. reporting period end but not throughout the prior period.

EPRA Long-term lease Governance European Public Real Estate Association, the publisher of Best Practice A lease with a term certain of at least five years. Recommendations intended to make financial statements of public real estate companies in Europe clearer, more transparent and comparable. LTV (loan to value) The ratio of attributable debt to the market value of an investment ERV (estimated rental value) property. The external valuers’ estimate of the Group’s share of the current annual market rent of all lettable space net of any non-recoverable charges, NAV per share (diluted, adjusted) before bad debt provision and adjustments required under IFRS NAV per share calculated on a diluted basis and adjusted to reflect regarding tenant lease incentives. any unrecognised surplus on trading properties (net of tax), to remove the fair value of derivatives (net of tax), to remove goodwill resulting Exceptional items from the recognition of deferred tax liabilities, and to remove deferred Exceptional items are those items that in the Directors’ view are required tax on investment and development property and other investments. to be separately disclosed by virtue of their size or incidence to enable a full understanding of the Group’s financial performance. Net asset value (‘NAV’) per share Net assets attributable to owners of Intu Properties plc divided by the

Headline rent ITZA number of ordinary shares in issue at the period end. Accounts Annual contracted rent per square foot after expiry of concessionary periods in terms of zone A. Net external debt Net debt after removing the Metrocentre compound financial instrument and, for 31 December 2013, short-term investments representing CMBS notes issued in respect of intu Metrocentre and received as cash in February 2014. Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 166 Other information Glossary continued

Net initial yield (‘EPRA’) Real Estate Investment Trust (‘REIT’) Annualised net rent on investment property (after deduction of revenue A tax regime which exempts from corporation tax the rental profits costs such as head rent, running void, service charge after shortfalls, and capital gains of the REIT’s qualifying investment property activities. empty rates and merchant association contribution) expressed as a In the UK, the regime must be elected into and the REIT must meet percentage of the gross market value before deduction of theoretical certain ongoing qualifications, including the requirement to distribute acquisition costs, consistent with EPRA’s net initial yield, and as provided at least 90 per cent of qualifying rental profits to shareholders. by the Group’s independent external valuers. The Group elected for REIT status with effect from 1 January 2007.

Net rental income Scrip Dividend Scheme The Group’s share of net rents receivable as shown in the income The Group offers shareholders the opportunity to participate in the statement, having taken due account of non-recoverable costs, bad debt Scrip Dividend Scheme. This enables participating shareholders provisions and adjustments to comply with IFRS including those to receive shares instead of cash when a Scrip Alternative is offered regarding tenant lease incentives. for a particular dividend.

NNNAV per share (diluted, adjusted) Short-term lease NAV per share (diluted, adjusted) adjusted to include the fair values of A lease with a term certain of less than five years. derivatives, debt, and deferred taxes. Tenant (or lease) incentives Nominal equivalent yield Any incentives offered to occupiers to enter into a lease. Typically Effective annual yield to a purchaser from an asset at market value incentives are in the form of an initial rent free period and/or a cash before taking account of notional acquisition costs assuming rent is contribution to fit-out the premises. Under IFRS the value of incentives receivable annually in arrears, reflecting ERV but disregarding potential granted to tenants is amortised through the income statement on a changes in market rents, as determined by the Group’s independent straight-line basis over the lease term. external valuers. Topped-up NIY (‘EPRA’) Occupancy Net initial yield adjusted for the expiration of rent free periods and other The passing rent of let and under offer units expressed as a percentage unexpired lease incentives. of the passing rent of let and under offer units plus ERV of un-let units, excluding development and recently completed properties. Units let to Total financial return tenants in administration and still trading are treated as let and those no The change in NAV per share (diluted, adjusted) plus dividends per share longer trading are treated as un-let. paid in the period expressed as a percentage of opening NAV per share (diluted, adjusted). Passing rent The Group’s share of contracted annual rents receivable at the balance Trading property sheet date. This takes no account of accounting adjustments made in Property held for trading purposes rather than to earn rentals or for respect of rent free periods or tenant incentives, the reclassification of capital appreciation and shown as a current asset in the balance sheet. certain lease payments as finance charges or any irrecoverable costs and expenses, and does not include excess turnover rent, additional rent in Underlying earnings per share (‘EPS’) respect of unsettled rent reviews or sundry income such as from car Earnings per share adjusted to exclude valuation movements, parks etc. Contracted annual rents in respect of tenants in administration exceptional items and related tax. are excluded. Underlying figures PMA Amounts described as underlying exclude valuation movements, Property Market Analysis LLP, a producer of property market research exceptional items and related tax. and forecasting. Vacancy rate (‘EPRA’) Property Income Distribution (‘PID’) The ERV of vacant space divided by total ERV. A dividend, generally subject to UK withholding tax at the basic rate of income tax, that a UK REIT is required to pay to its shareholders Yield shift from its qualifying rental profits. Certain classes of shareholder A movement (usually expressed in basis points) in the yield of a may qualify to receive a PID gross, shareholders should refer to property asset. intugroup.co.uk for further information. The Group can also pay non-PID dividends which are not subject to UK withholding tax.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 167 Other information Dividends

The Directors of Intu Properties plc have proposed a final dividend per ordinary share (ISIN GB0006834344) of 10 pence (2012 – 10 pence) to bring the total dividend per ordinary share for the year to 15 pence (2012 – 15 pence). A scrip dividend alternative will be offered. The dividend may be partly paid as a Property Income Distribution (‘PID’) and partly paid as a non-PID. The PID element will be subject to deduction of a 20 per cent withholding tax unless exemptions apply Strategic report (please refer to the PID special note below). Any non-PID element will be treated as an ordinary UK company dividend. For South African shareholders, non-PID cash dividends may be subject to deduction of South African Dividends Tax at 15 per cent. The precise timetable for the proposed dividend payment, and details of the apportionment between the PID and non-PID elements per share, will be confirmed in due course and made available on the Company’s website. PID SPECIAL NOTE: UK shareholders For those who are eligible for exemption from the 20 per cent withholding tax and have not previously registered for exemption, an HM Revenue & Customs (‘HMRC’) Tax Exemption Declaration is available for download from the ‘Investors’ section of the Intu Properties plc website

(intugroup.co.uk), or on request to our UK registrars, Capita Asset Governance Services. Validly completed forms must be received by Capita Asset Services no later than the dividend Record Date, to be advised; otherwise the dividend will be paid after deduction of tax. South African and other non-UK shareholders South African shareholders may apply to HMRC after payment of the dividend for a refund of the difference between the 20 per cent withholding tax and the UK/South African double taxation treaty rate of 15 per cent. Other non-UK shareholders may be able to make similar claims for a refund of UK withholding tax deducted. Refund application forms for all non-UK shareholders are available for download from the ‘Investors’ section of the Intu Properties plc website (intugroup.co.uk), or on request to our South African registrars, Computershare, or HMRC. UK withholding tax refunds are not claimable from Intu Properties plc, the South African Revenue Service (‘SARS’) or other national authorities,

only from the UK’s HMRC. Accounts Additional information on PIDs can be found at intugroup.co.uk/investors/shareholders-bondholders/real-estate- investment-trust/. The above does not constitute advice and shareholders should seek their own professional guidance. Intu Properties plc does not accept liability for any loss suffered arising from reliance on the above. Other information

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 168 Other information Shareholder information

Registered Office Share dealing 40 Broadway, London SW1H 0BT Existing UK shareholders may trade Intu Properties plc shares through Registered in England & Wales no. 3685527 Capita Share Dealing Services who provide an easy to use, real-time online, telephone and postal dealing service. Websites Contact details are: capitadeal.com intugroup.co.uk Telephone (within UK) 0871 664 0364 (calls cost 10p per minute plus intu.co.uk network extras; lines are open 8.00 am – 4.30 pm Monday – Friday) (Ireland) Lo-call 1 890 946 375 (outside UK) +44 20 3367 2686 Registrars Existing South African shareholders whose shares are held in electronic All enquiries concerning shares or shareholdings, including notification of format through Computershare CSDP may trade Intu Properties plc change of address, queries regarding loss of a share certificate and shares through Computershare’s low cost telephone share dealing dividend payments should be addressed to: service on 0861 100 950 (SA calls only).

For shareholders registered in the UK Capita Asset Services Sharegift The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU Shareholders with a small number of shares, which may be uneconomic Telephone (within UK) 0871 664 0300 (calls cost 10p per minute plus to sell on a commission basis, may wish to consider donating them to the network extras; lines are open 9.00 am – 5.30 pm Monday – Friday) charity Sharegift (registered charity no. 1052686). Further information Telephone (outside UK) +44 20 8639 3399 can be found on Sharegift’s website sharegift.org or by calling them on Email: [email protected] 020 7930 3737. capitashareportal.com

For shareholders registered in South Africa Computershare Investor Services (Pty) Ltd Strate Charity Shares 70 Marshall Street, Johannesburg 2001 SA shareholders for whom the cost of selling their shares would exceed South Africa the market value of such shares may wish to consider donating them to Postal address: charity. An independent non-profit organisation called Strate Charity PO Box 61051 Shares has been established to administer this process. The South Marshalltown 2107, South Africa African Revenue Service (SARS) has advised Strate Charity Shares that Telephone +27 11 370 5000 the value of any shares donated may be deducted from taxable income, Facsimile +27 11 688 5221 as the scheme is registered under section 18A of the Income Tax Act. For Email: [email protected] further details, queries and/or donations contact the Strate Share Care computershare.com toll free help line on 0800 202 363 or +2711 373 0038 if you are phoning from outside South Africa or email [email protected]. Payment of dividends Shareholders who wish to have their dividends paid directly into a bank or building society account should complete a mandate form available Electronic communication from the appropriate registrars. The Company supplies information such as the Annual Report via its website to shareholders who have consented to such communication. Shareholders will be notified by email or post when new information is Share price information available on the website. The latest information on the Intu Properties plc share price is available Shareholders can at any time revoke a previous instruction in order on the website intugroup.co.uk. to receive hard copies of shareholder information. UK shareholders may register to receive email alerts by logging on to the website of the UK Registrars (capitashareportal.com) and following the Web-based enquiry service for shareholders instructions given to register an email address. SA shareholders may Shareholders registered in the UK can go to capitashareportal.com register to receive email alerts by written instruction to the SA Registrar, to obtain details of their shareholdings and dividends. The shareholder’s Computershare, sent either by email ([email protected]) or surname, Investor Code (found on any correspondence from registrars) by facsimile (+27 11 688 5248). Once registered, shareholders are sent a and postcode are required to use this service. Shareholders may also ‘Notice of Availability’ email highlighting that the Annual Report or other use this service to amend or change their address and dividend information is available for viewing on the website. mandate details. Shareholders registered in South Africa can go to computershare.com/investor to obtain details of their shareholdings. Shareholders will need to follow a registration process in order to access such information. Unfortunately, due to South African legal requirements, shareholders may not update records, but will be able to view their entire holding of shares globally. Please note that the Computershare company code for Intu Properties plc is ITUZ.

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 Passionate about providing people with the perfect shopping experience, we help retailers flourish. Creating compelling experiences that surprise and delight our customers, we aim to attract more people, from further, for longer, more often. It’s this that powers our business creating value for our retailers, our communities and our investors driving our long-term success. Contents

Intu Properties plc – Annual Report 2013 intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961 Intu Properties plc 40 Broadway, London SW1H 0BT

Intu plc Properties Annual Report 2013 Delivering change Delivering great experiences Annual Report 2013

intugroup.co.uk WorldReginfo - e4552c24-32df-4cd7-9bae-037710100961