Trading Statement. Released : 23/10/18 07:00:00. Trading highlights LEI: JSNTERD5CJZO95

Transcription

1 Trading Statement Released : 23/10/18 07:00:00 RNS Number : 8602E Intu Properties PLC 23 October 2018 LEI: JSNTERD5CJZO95 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION ALTHOUGH THIS ANNOUNCEMENT REFERS TO THE POSSIBLE OFFER FOR THE COMPANY BY THE PEEL GROUP, THE OLAYAN GROUP AND BROOKFIELD PROPERTY GROUP, THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER WILL BE MADE 23 OCTOBER 2018 INTU PROPERTIES PLC TRADING UPDATE FOR THE PERIOD FROM 1 JULY 2018 TO 23 OCTOBER 2018 A STRONG AND RESILIENT OPERATIONAL PERFORMANCE David Fischel, intu Chief Executive, commented: "intu has continued to deliver a strong and resilient operational performance through a period which has been particularly challenging for UK retailers, demonstrating the clear differentiation between winning destinations such as intu owns and the rest. We agreed 84 long-term leases in the period at rental levels 8 per cent above previous passing rent and have increased occupancy by 0.4 per cent to 97 per cent. Key fashion retailers continue to be attracted to our winning locations, with names such as Monki, Bershka and Ralph Lauren signing up in the period. In September, we opened the 180 million retail and leisure extension of intu Watford, 90 per cent let or in advanced negotiations, as we constantly innovate and invest to ensure our business anticipates and adapts to changing consumer trends. The top twenty shopping centres in the UK 1 account for some three per cent of UK shoppers' annual spend and we own eight of them, representing 76 per cent by value of our UK portfolio. EPRA NNNAV 2 per share amounts to 297p at 30 September 2018, reduced by 12p from 30 June, following a 3 per cent fall in like-for-like property valuations between 30 June and 30 September which reflects current negative investor sentiment towards UK retail property. We are however confident our business and assets are resilient and can weather the challenges we are currently seeing." 1. GlobalData Top 50 UK Shopping Centres, October Total UK annual shoppers' spend represents non-food retail, food services and leisure. 2. EPRA NNNAV adjusts NAV per share (diluted, adjusted) to reflect the fair value of borrowings, derivative financial instruments and deferred taxation on revaluation of investment and development property. Trading highlights - continued tenant demand in period, signing 84 long-term leases (Q3 2017: 73 leases) delivering 15 million of annual rent at an average of 8 per cent above previous passing rent and in line with valuers' assumptions. Year to date, signed 200 long-term leases (2017 year to date: 176 leases) delivering 32 million of annual rent at an average of 7 per cent above previous rent, on both a headline and net effective basis - rent reviews settled in the period on average 5 per cent above previous passing rent. Year to date, we have settled 102 rent reviews for new rent totalling 30 million, 8 per cent above previous passing rents - expect a further year of like-for-like net rental income growth, with anticipated full year growth for 2018 to be in the range of 0 per cent to 1 per cent, impacted by some 1.5 per cent from tenant failures in improved occupancy of 97.0 per cent, a 0.4 per cent increase since June 2018 and 0.4 per cent ahead of September outperformed footfall benchmark by 170 basis points, with footfall down 1.3 per cent year to date - year to date capital investment of 147 million. Successfully opened the 180 million extension of intu Watford, on time and on budget with over 90 per cent of the 380,000 sq ft project now let or in advanced negotiations. On site with projects to substantially enhance intu Lakeside, intu Trafford Centre, Madrid Xanadú and Manchester Arndale

2 - property revaluation deficit of 298 million (3.0 per cent) in the period, reflecting current negative sentiment towards UK retail property. Portfolio valued at 9,580 million at 30 September NAVPS (diluted, adjusted) of 344 pence (30 June 2018: 362 pence), the decrease due to the property revaluation deficit. EPRA NNNAV per share of 297 pence (30 June 2018: 309 pence) with the property revaluation movement partially offset by an improvement in mark to market movement of borrowings and financial instruments - net external borrowings of 4,847 million (30 June 2018: 4,792 million). Reflecting reduced property valuation, loan to value increased to 50.6 per cent from 48.7 per cent at 30 June cash and available facilities of 665 million at 30 September 2018, has been reduced by the scheduled repayment of a 160 million bond in October mixed use opportunities include the potential for 5,000 private rental sector residential units and around 600 hotel rooms Conference call A conference call for analysts and investors will be held today at 08:00 BST. A copy of this announcement is available on our website intugroup.co.uk. Enquiries intu properties plc David Fischel Chief Executive +44 (0) Matthew Roberts Chief Financial Officer +44 (0) Adrian Croft Head of Investor Relations +44 (0) Public relations UK: Justin Griffiths, Powerscourt +44 (0) SA: Frédéric Cornet, Instinctif Partners +27 (0) Valuation and EPRA NNNAV In the context of the possible offer from the Peel Group, the Olayan Group and Brookfield Property Group (the Consortium) announced on 4 October 2018, as further updated in an announcement by intu on 19 October 2018 (the Possible Offer), and to ensure shareholders are in possession of the most up-to-date information, we instructed full external independent property valuations as at 30 September The market value of the portfolio is 9,580 million at 30 September 2018 (30 June 2018: 9,831 million). Reflecting current negative sentiment towards UK retail property, like-for-like property values reduced by 298 million (down 3.0 per cent) in this three month period following the reduction of 5.6 per cent in the six months to 30 June The three months' valuation deficit was driven by an increase in yields, with the weighted average net initial yield (topped-up) increasing by 7 basis points to 4.76 per cent and weighted average nominal equivalent yield increasing by 9 basis points to 5.31 per cent. At 30 September 2018, net asset value per share (diluted, adjusted) decreased by 18 pence to 344 pence (30 June 2018: 362 pence), predominantly due to the movement in property valuations. EPRA NNNAV per share at 30 September 2018 is 297 pence, a reduction of 12 pence from 30 June 2018, with the property revaluation movement partially offset by an improvement of 6 pence per share in mark to market movement of borrowings and financial instruments. Definitions of net asset value per share (diluted, adjusted) and EPRA NNNAV per share are shown in the notes section of this document. Growing like-for-like net rental income We are anticipating a further year of growth in like-for-like net rental income, expected to be in the range of 0 per cent to 1 per cent (subject to no material tenant failures). We estimate that this is impacted by some 1.5 per cent from tenant failures in 2018, an increase on the 0.9 per cent in the first half of Tenant administrations in the period, in particular the write-off of balances relating to House of Fraser and Coast, have resulted in a reduction from previous guidance. Currently, 3 per cent of our rent roll is from tenants who have entered a CVA or administration process in Considering the portfolio's reversionary potential, the impact of intu's continued investment programme, improving tenant mix and ongoing demand for intu's prime space in the UK, we continue to target growth of 2 to 3 per cent per annum over the medium term of the next three to five years. For 2019, we anticipate slightly lower growth of around 1 per cent reflecting the current conditions in the retail property market. Like-for-like net rental income operating metrics Occupancy at 30 September 2018 was 97.0 per cent, a 0.4 per cent improvement on June 2018 and 0.4 per cent ahead of September We continue to see letting activity running at similar levels to recent years. In the third quarter, we agreed 84 long-term leases, amounting to 15 million annual rent (Q3 2017: 73 leases; 13 million of new passing rent). In aggregate, these were 8 per cent above previous passing rent (like-forlike units) and in line with valuers' assumptions. Year to date, we have signed 200 new leases (2017 YTD: 176 leases) producing 32 million of new annual rent, 7 per cent above previous passing rent. On a net effective basis (net of rent free and incentives), rents were 7 per cent ahead of previous rents.

3 This activity, both in the period and year to date, underlines the strength of intu centres as the market continues to polarise with occupiers focusing on flagship stores in prime, high footfall retail destinations. While the UK letting market is challenging, our winning destinations continue to be in demand from quality retailers. Significant activity in the period includes: - key fashion retailers continuing to roll out their portfolio of brands, H&M are opening their seventh Monki store in the UK, and second in the intu portfolio, at intu Eldon Square. Inditex are also continuing to expand their brands, alongside Zara, opening Bershka at St David's, Cardiff - international brands' ongoing appreciation of the attraction of intu's destination shopping centres. Typo, the Australian stationery brand, is opening three stores in the intu portfolio at intu Merry Hill, intu Watford and intu Eldon Square, taking its UK presence to 12 stores. Ralph Lauren has opened its seventh UK store at Manchester Arndale and Lego is opening one of its first Spanish stores at intu Puerto Venecia - retailers ensuring they are part of our market leading new developments. JD Sports brands, Tessuti and Scott's, have exchanged to be part of the 17 million Halle Place development at Manchester Arndale, which is completing shortly - leisure operators bringing a differentiated offering to our regional destinations. At Madrid Xanadú, Cinesa has extended its lease and fully refurbished its cinema. The aquarium and Nickelodeon theme park expected to open later this year will further enhance the leisure offer at Madrid Xanadú. This follows the successful letting of leisure projects at intu Watford and intu Lakeside, discussed below We have settled 102 rent reviews in the year to date for new rents totalling 30 million, an average uplift of 8 per cent on the previous rents. The weighted average unexpired lease term is 7.4 years (30 June 2018: 7.4 years) illustrating the longevity of our income streams which in the main are with well financed businesses. Delivering operational excellence We monitor our performance through a range of metrics to ensure we are meeting both our customer and retailer requirements. The importance of the UK's highest quality shopping centres to customer and retailer requirements is illustrated in GlobalData's new 2018 Top 50 UK Shopping Centre Report which takes into account the views of both tenants and shoppers to provide its comprehensive assessment on the UK's top shopping centres. GlobalData estimates that the top 20 centres account for around 3 per cent of the UK shopper annual spend on non-food retail, food services and leisure. We own eight of the top 20 centres in the UK, per this report, representing 76 per cent of our UK portfolio by market value, illustrating the concentration of our portfolio to the very top locations in the UK. Footfall in our centres has been robust considering the unusual weather events in 2018 with periods of severe snow followed by the high temperatures through the summer. Overall, our footfall has decreased by 1.3 per cent year to date, but significantly outperformed the BRC Springboard footfall monitor for UK shopping centres which was down on average by 3.0 per cent, highlighting the continued attraction of our compelling destinations against the wider market. Our net promoter score, a measure of customer service, ran consistently high throughout the year to date averaging 74, an increase over 2017 (September 2017 year to date: 70), and demonstrating our in-centre operational excellence. The public recognition of the brand continues to grow on an unprompted basis. Of those questioned in 2018, 27 per cent mentioned intu when asked to name a shopping centre brand (September 2017 year to date: 24 per cent). intu Experiences, our in-house team delivering immersive brand partnerships, mall commercialisation and advertising, is on target to generate gross income in excess of the 22 million delivered in In the period, promotional activity included Mazda pop-up stores at five intu centres offering a virtual reality driving experience and Stylist Live's first consumer event outside at intu Trafford Centre. In addition to what we provide in centre, our attractive digital offering through our premium content publisher and shopping platform, intu.co.uk, continues to grow strongly and support retailers' physical operations. Year to date online sales for retailers have grown by 22 per cent, year-on-year, as we continued to innovate our online shop, including introducing visual search functionality to the site. Optimising our winning destinations Our focus is to ensure our centres continue to be the winning destinations, where customers and retailers want to be, both now and in the future. Our near-term pipeline consists of projects that improve the position of our flagship centres to meet customer and occupier needs as we evolve the retail environments, enhance the catering mix and expand the leisure offer. Key milestones and activity in the period include: - opened the first stores in our 180 million extension of intu Watford. At the end of September, Debenhams opened showcasing their new branding and store format. This has been followed by Superdry, H&M, New Look and Jack Wills, with Cineworld and Hollywood Bowl opening in mid-december. Leases on over 70 per cent of the space are exchanged, with a further 20 per cent in advanced negotiations. Our expectation is that the new space will be fully open and trading by spring finished the steel work and cladding on the 72 million leisure extension at intu Lakeside. Pre-lets stand at 85 per cent of space with a further 6 per cent in advanced negotiations and the first unit has been handed over to Nickelodeon. The project remains on budget and on target, with construction expected to be completed in December 2018 for a spring 2019 opening - commenced the building contract for the 72 million transformation of Barton Square at intu Trafford Centre which will be anchored by Primark. Pre-lets stand at 65 per cent, with a further 11 per cent in advanced negotiations. The project is expected to be completed in early year to date tenants have invested around 64 million on 207 new store fit-outs, around 6 per cent of our 3,300 units. This investment by tenants is a significant demonstration of their long-term commitment to our centres and is a major part of providing a fresh and ever-changing experience for our customers. In the period, we have opened the new 80,000 sq ft Next at intu Merry Hill and Abercrombie and Fitch's second UK store at intu Trafford Centre Mixed use opportunities In addition to the pipeline above, we continue to look at opportunities within the portfolio for alternative uses of some of our available land. intu has extensive, available land. Our six major out of town centres comprise some 760 acres of land of which less than 40 per cent has buildings, multi-storey car parks or distribution roads upon it, leaving 470 acres of surface car parks and other potentially developable land. The city centre locations also offer opportunities for intensification of uses. Further, we have identified 34 sites or buildings across the portfolio with negligible income which are valued at a total of around 65 million. The list, for example, includes a city centre site, which was valued at 3 million at 30 June 2018 and is currently under offer at a sale price of 7 million, showing the substantial potential value within these sites. Mixed use opportunities being evaluated include residential, hotels and other uses. Initial work has highlighted the potential for around 5,000

4 residential units and nearly 600 hotel rooms, with further opportunities under consideration. Initially, private rented sector residential opportunities to create a total of circa 1,700 units have been identified by intu which if fully developed could in aggregate produce a yield of around 5 per cent on total development costs, excluding land, of around 240 million. In terms of hotels, and by way of illustration, in 2017, a 74 bedroom hotel, let to Travelodge, was completed at intu Lakeside delivering a stabilised initial yield of 6 per cent on total development costs of 9 million. Room occupancy has been so strong that we are now looking to add further bedrooms. In addition to the residential and hotel opportunities listed above, further mixed use opportunities relating to office, flexible working spaces, business lounge and service oriented uses have been identified that could generate attractive incremental returns to our current rental income stream. All these opportunities, which are under active consideration, would create value directly but moreover would increase the overall attractiveness and catchment of the centres. Making smart use of capital We consider the structure of our borrowings, predominantly using flexible asset specific non-recourse arrangements (86 per cent of overall debt), to be appropriate for our concentrated portfolio. As evidenced by our 148 million disposal of a 50 per cent interest in intu Chapelfield in January 2018, we continue to look to finance capital investment by recycling capital through the disposal of non-core assets and introducing partners to assets. Cash and available facilities at 30 September 2018 were 665 million, subsequently reduced by the scheduled repayment of a 160 million bond made in October Loan to value was 50.6 per cent at 30 September 2018 (30 June 2018: 48.7 per cent). We aim to ensure that our facilities have substantial covenant headroom. By way of example, a 20 per cent fall in capital values from the September 2018 valuations, and 10 per cent fall in income would create a covenant shortfall on our asset specific debt of only 12 million which could be cured from available facilities. We have minimal debt maturities before 2021, with a weighted average debt maturity of 6.0 years at 30 September About intu intu owns and manages some of the best shopping centres, in some of the strongest locations, in the UK and Spain. Our UK portfolio is made up of 17 centres, including eight of the top-20, and in Spain we own three of the country's top-10 centres. We are passionate about creating compelling experiences, in centre and online, that make our customers smile and help our retailers flourish. We attract over 400 million customer visits and over 25 million website visits a year offering a multichannel approach that truly supports retail strategies. In 2017, we launched the UK's first tailor-made promotional services model to help brands as they look to optimise their portfolio or expand their UK coverage. Our strategic focus on prime, high-footfall flagship destinations, combined with the strength and popularity of our brand, means that intu offers enhanced footfall, dwell time and loyalty. This helps our retailers flourish, driving occupancy and income growth. We are committed to our local communities, with our centres supporting over 120,000 jobs (representing about 3 per cent of the total UK retail workforce), and to operating with environmental responsibility. We have already met or exceeded a significant number of our 2020 environmental targets. Valuation and deferred tax liabilities As required by the City Code on Takeovers and Mergers (the "Code") the external independent property valuations have been prepared in accordance with the requirements of Rule 29 of the Code. The valuation reports relating to the external independent valuation as at 30 September 2018 will be made available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on intu's website at by no later than 12 noon ( time) on 23 October Each of the valuers has given and not withdrawn their consent to the publication of their valuation reports on the Company's website. With the exception of one residential property (for which there is a deferred tax liability of 0.1m), intu would not expect any tax liability to arise on the sale of its UK properties as a result of being a UK REIT. On the sale of intu's Spanish properties, a tax liability would arise for the period such properties were not owned by a SOCIMI, which amounted to a deferred tax liability of 72.4 million (including the intu group's share of joint ventures) as fully provided for as at 30 September Without prejudice to the preceding paragraphs, in accordance with Rule 29.3 of the Code, the intu Directors are not aware of any significant change which has occurred in the deferred tax liability of intu relating to its properties since 30 September 2018, being the date to which the valuations referred to in this announcement were drawn up. Profit estimate Under the City Code the following statement regarding estimated net asset value ("NAV") per share (diluted, adjusted), EPRA NAV per share and EPRA NNNAV per share as at 30 September 2018, included in this announcement, are treated as a profit estimate as it represents profit for a financial period which has expired and for which audited results have not yet been published. Third quarter ended 30 September 2018 Estimated NAV per share (diluted, adjusted) is 344 pence Estimated EPRA NAV per share is 330 pence Estimated EPRA NNNAV per share is 297 pence (the "Profit Estimate") Notes

5 The Profit Estimate is based on intu management's estimate of the results for the three months ended 30 September The European Public Real Estate Association ("EPRA") has issued best practice recommendations for the calculation of certain information. EPRA NAV per share represents equity shareholders' funds excluding the fair value of certain financial derivatives, deferred tax balances and any associated goodwill divided by the diluted number of shares in issue. NAV (adjusted, diluted) per share is a non-gaap measure is presented as it is considered by the management to be a key measure of the intu group's performance. The key difference from EPRA NAV, an industry standard comparable measure, is the exclusion of interest rate swaps not currently used for economic hedges of debt as, in our view, this better allows management to review and monitor the intu group's performance. EPRA NNNAV per share is similar to EPRA NAV except it includes the fair value of deferred tax liabilities, debt, and financial instruments. Further information on EPRA, EPRA NAV per share and EPRA NNNAV per share can be found at The Profit Estimate has been prepared on a basis consistent with the intu group's IFRS accounting policies, which are applicable for the six months ended 30 June With effect from 1 January 2018 the intu group has, as required by IFRS, implemented IFRS 15 "Revenue from contracts with customers" and IFRS 9 "Financial Instruments". As disclosed in the financial statements for the year ended 31 December 2017, the implementation of IFRS 15 has no material impact on the intu group's results. The impact of IFRS 9 was disclosed in the unaudited interim results for the six months ended 30 June The Profit Estimate has therefore been prepared on this basis. Reports As required by Rule 28.1(a) of the City Code, the Profit Estimate has been reported on by PricewaterhouseCoopers LLP, as reporting accountants to intu, and by Rothschild & Co, Merrill Lynch International and UBS, as financial advisers to intu (together, the "Financial Advisers"). Parts A and B of this Appendix 1 contain PricewaterhouseCoopers LLP's and the Financial Advisers' reports on the Profit Estimate, both of which have been prepared solely for the purpose of Rule 28.1(a) of the City Code. PricewaterhouseCoopers LLP, Rothschild & Co, Merrill Lynch International and UBS have given and not withdrawn their consent to the publication of their reports in the form and context in which they are included herein. Appendix 1, Part A Report on the Profit Estimate from PricewaterhouseCoopers LLP for the purpose of Rule 28.1(a)(i) of the City Code The Directors intu properties plc 40 Broadway Westminster SW1H 0BT N M Rothschild & Sons Ltd New Court St Swithin's Lane EC4N 8AL Merrill Lynch International 2 King Edward Street EC1A 1HQ UBS Limited 5 Broadgate Circle EC2M 2QS 23 October 2018 Dear Sirs Profit Estimate by intu properties plc We report on the profit estimate comprising the statement by intu properties plc (the "Company") and its subsidiaries (together the "Group") for the three months ended 30 September 2018 (the "Profit Estimate"). The Profit Estimate and the basis on which it is prepared are set out in the section entitled "Profit estimate" of the intu Trading Update For the Period From 1 July 2018 to 23 October 2018 issued by the Company dated 23 October 2018 (the "Q3 Trading Update"). This report is required by Rule 28.1(a)(i) of the City Code on Takeovers and Mergers issued by the Panel on Takeovers and Mergers (the "City Code") and is given for the purpose of complying with that Rule and for no other purpose. Accordingly, we assume no responsibility in respect of this report to The Peel Group, The Olayan Group and funds or vehicles which are managed or advised by Brookfield Property Group (the "Offeror") or any person connected to, or acting in concert with, the Offeror or to any other person who is seeking or may in future seek to acquire control of the Company (an "Alternative Offeror") or to any other person connected to or acting in concert with an Alternative Offeror. Responsibilities It is the responsibility of the directors of the Company (the "Directors") to prepare the Profit Estimate in accordance with the requirements of the City Code. In preparing the Profit Estimate the Directors are responsible for correcting errors that they have identified which may have arisen in unaudited financial results and unaudited management accounts used as the basis of preparation for the Profit Estimate.

6 It is our responsibility to form an opinion as required by Rule 28.1(a)(i) of the City Code as to the proper compilation of the Profit Estimate and to report that opinion to you. Save for any responsibility under Rule 28.1(a)(i) of the City Code to any person as and to the extent therein provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 23.2 of the City Code, consenting to its inclusion in the Q3 Trading Update. Basis of Preparation of the Profit Estimate The Profit Estimate has been prepared on the basis stated in the section entitled "Profit estimate" of the Q3 Trading Update and is based on the unaudited management accounts for the three months ended 30 September The Profit Estimate is required to be presented on a basis consistent with the accounting policies of the Group. Basis of Opinion We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included evaluating the basis on which the historical financial information for the three months ended 30 September 2018 included in the Profit Estimate has been prepared and considering whether the Profit Estimate has been accurately computed using that information and whether the basis of accounting used is consistent with the accounting policies of the Group. We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Profit Estimate has been properly compiled on the basis stated. However the Profit Estimate has not been audited. The actual results reported, therefore, may be affected by revisions required to accounting estimates due to changes in circumstances, the impact of unforeseen events and the correction of errors in the underlying financial information. Consequently we can express no opinion as to whether the actual results achieved will correspond to those shown in the Profit Estimate and the difference may be material. Opinion In our opinion, the Profit Estimate has been properly compiled on the basis of the assumptions made by the Directors and the basis of accounting used is consistent with the accounting policies of the Group. Yours faithfully PricewaterhouseCoopers LLP Chartered Accountants PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business. Appendix 1, Part B Financial Advisers' report on the Profit Estimate for the purpose of Rule 28.1(a)(ii) of the City Code The Board of Directors intu properties plc 40 Broadway Westminster SW1H 0BT 23 October 2018 Dear Sirs, intu properties plc profit estimate in respect of the financial quarter ended 30 September 2018 in connection with an offer under the City Code on Takeovers and Mergers (the "Transaction") We refer to the profit estimate made by intu properties plc ("intu") as set out in the announcement dated 23 October 2018 (the "Announcement") of which this letter forms part (the "Profit Estimate"), for which the board of directors of intu (the "intu Board") is solely responsible under Rule 28.3 of the City Code on Takeovers and Mergers (the "City Code"). We have discussed the Profit Estimate (including the bases for belief and assumptions on which it is made), with the intu Board, the intu officers and executives who prepared the management's estimate of the results for the 3 months ended 30 September 2018, and PricewaterhouseCoopers LLP as intu's reporting accountants. The Profit Estimate is subject to uncertainty as described in the Announcement and our work did not involve an independent examination or verification of any of the financial or other information underlying the Profit Estimate. We have also reviewed the work carried out by PricewaterhouseCoopers LLP on the Profit Estimate and have discussed with them the opinion set out in the appendix of the Announcement addressed to yourselves and ourselves on this matter and the accounting policies and bases of calculation for the Profit Estimate. We have relied upon the accuracy and completeness of all the financial and other information provided to us by, or on behalf of, intu, or otherwise discussed with or reviewed by us, in connection with the Profit Estimate, and we have assumed such accuracy and completeness for the purposes of providing this letter. In particular, we have assumed that the Profit Estimate made available to us has been reasonably prepared on bases reflecting the best currently available estimates and judgments of the intu Board.

7 We do not express any opinion as to the achievability of the Profit Estimate, whether on the basis identified by the intu Board, or otherwise. This letter is provided to you solely having regard to the requirements of, and in connection with, Rule 28.1(a)(ii) of the City Code and for no other purpose. We accept no responsibility to intu or its shareholders or any person other than the intu Board in respect of the contents of this letter. We are acting exclusively as financial advisers to intu and no one else and it was for the purpose of complying with Rule 28.1(a)(ii) of the City Code that intu requested us to prepare this letter relating to the Profit Estimate. No person other than the intu Board can rely on the contents of, or the work undertaken in connection with, this letter, and to the fullest extent permitted by law, we exclude and disclaim all liability (whether in contract, tort or otherwise) to any other person, in respect of this letter, its contents, or the work undertaken in connection with this letter, or any of the results or conclusions that may be derived from this letter or any written or oral information provided in connection with this letter, and any such liability is expressly disclaimed except to the extent that such liability cannot be excluded by law. On the basis of the foregoing, we consider that the Profit Estimate, for which you as the intu Board are solely responsible, has been prepared with due care and consideration. Yours faithfully, Rothschild & Co Merrill Lynch International UBS Limited Merrill Lynch International is a private unlimited company incorporated in England with company number and its registered address at 2 King Edward Street,, United Kingdom, EC1A 1HQ. N M Rothschild & Sons Limited is a private limited company incorporated in England with company number and its registered address at New Court, St Swithin's Lane,, United Kingdom, EC4N 8AL. UBS Limited is a private limited company incorporated in England with company number and its registered address at 5 Broadgate,, United Kingdom, EC2M 2QS. Overseas Shareholders The release, publication or distribution of this announcement in jurisdictions other than in the United Kingdom and South Africa may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom or South Africa should inform themselves about, and observe, any applicable requirements. The information disclosed in this announcement may not be the same as that which would have been disclosed in this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom. Any failure to comply with applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons whose names appear in this announcement disclaim any responsibility or liability for the violation of such requirements by any person. Notice related to financial advisers N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for intu and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than intu for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement. Merrill Lynch International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for intu and no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than intu for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement. UBS Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as corporate broker and financial adviser to intu and no one else in connection with the offer. In connection with such matters, UBS Limited, its affiliates and their respective directors, officers, employees and agents will not regard any other person as their client, nor will they be responsible to any other person for providing the protections afforded to their clients or for providing advice in relation to the offer, the contents of this announcement or any other matter referred to herein. Forward Looking Statements This announcement contains certain forward-looking statements, beliefs or opinions, with respect to the financial condition, results of operations and business of intu. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or other words of similar meaning. These statements are based on assumptions and assessments made by intu, in light of its experience and its perception of historical trends, current conditions, future developments and other factors it believes appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this document could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement. Except as required by applicable law, intu makes no representation or warranty in relation to them and expressly disclaims any obligation to update or revise any forward-looking statements contained herein to reflect any change in intu's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations and dispositions. Other than the Profit Estimate, no statement in this announcement is intended as a profit forecast or profit estimate for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per ordinary share of intu for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per ordinary share for intu, as appropriate. Rounding

8 Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different sections may vary slightly and figures shown as totals may not be an arithmetic aggregation of the figures that precede them. Publication on Website In accordance with the Code: - a copy of this document; and - the valuation reports relating to the external independent valuation as at 30 September 2018, will be made available subject to certain restrictions relating to persons resident in restricted jurisdictions on intu's website at by no later than 12 noon ( time) on 23 October For the avoidance of doubt, the contents of this website are not incorporated into and do not form part of this document. You may request a hard copy of this document by contacting Link Asset Services on +44 (0) (or, in the case of shareholders resident in South Africa, Link Market Services, South Africa on +27 (0) ). You may also request that all future documents, announcements and information to be sent to you in relation to this situation should be in hard copy form. This information is provided by RNS, the news service of the Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit END TSTGUBDGSDDBGIX