30 June 31 December Change

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1 PRESS RELEASE 2 August 2011 CAPITAL SHOPPING CENTRES GROUP PLC INTERIM REPORT FOR THE HALF YEAR ENDED 30 JUNE 2011 Six months ended 30 June 2011 (2) 2010 Change Net rental income from continuing operations ( m) Up 32% Underlying earnings ( m) Up 53% Underlying EPS (pence) Up 14% Interim dividend per share (pence) Unchanged Property revaluation surplus ( m) n/a IFRS profit ( m) Down 34% 30 June 31 December Change NAV per share (diluted, adjusted) (pence) Up 1p Market value of investment properties ( m) 6,861 5,099 Up 35% Net external debt ( m) 3,286 2,437 Up 35% Debt to assets ratio (per cent) Unchanged (1) Please refer to glossary for definition of terms (2) 30 June 2011 income data includes Trafford Centre results for the 5 month period since completion SOUND OPERATING PERFORMANCE AND PROGRESS WITH 2011 PRIORITIES Sound operating performance in challenging retail environment: occupancy remains high at 97 per cent continuing footfall growth, up 3 per cent for the third consecutive year 80 long term lettings secured 5m additional rent, in aggregate at 98 per cent of ERV short term lets are a continuing feature of the market given economic conditions Progress on CSC s three priorities for 2011: growth in like-for-like net rental income up 6 per cent mostly reflecting 2010 letting activity progress with active management projects through planning, letting and construction. Major extensions moving towards planning consents The Trafford Centre performing strongly post acquisition footfall up 8 per cent - and integrated into Group s overall activities Financial performance: underlying earnings increased 53 per cent from 43 million to 66 million with net rental income growing from 135 million to 178 million including 5 months of Trafford Centre operations underlying earnings per share increased 14 per cent to 8.0 pence total financial return including dividends 3 per cent robust financial position with debt to assets ratio unchanged at 48 per cent, interest cover improved to 1.7 times Valuation performance: 1.2 per cent like-for-like valuation increase (IPD 1.1 per cent increase) reflecting 11bp yield shift Trafford Centre valuation unchanged David Fischel, Chief Executive Officer of Capital Shopping Centres Group PLC, commented: With 6 per cent growth in like-for-like net rental income and increased footfall at our centres, CSC has delivered a sound operating performance in the first half of The Trafford Centre has proved an excellent addition and the Group has a range of active management projects and extensions in the pipeline to deliver future growth. Although the economic environment remains challenging, large centres such as those owned by CSC with a strong catering and leisure component are continuing to outperform. 1

2 Contents: Page Highlights 1 Operating and Financial Review 3 Directors Responsibility Statement 16 Independent Review Report 17 Unaudited Financial Information 18 Investment and Development Property 37 Other Information 39 Glossary 42 Top Ten Properties 44 Enquiries: Capital Shopping Centres Group PLC: David Fischel Chief Executive +44 (0) Matthew Roberts Finance Director +44 (0) Kate Bowyer Investor Relations Manager +44 (0) Public relations: UK: Michael Sandler/Wendy Baker, Hudson Sandler +44 (0) SA: Morné Reinders, College Hill +27 (0) A presentation to analysts and investors will take place at The Brewery, Chiswell Street, London EC1Y 4SD at 09.30BST on 2 August The presentation will also be available to international analysts and investors through a live audio call and webcast. The presentation and this press release will be available for download from our website NOTES TO EDITORS Capital Shopping Centres is the leading specialist UK regional shopping centre REIT Capital Shopping Centres Group PLC (CSC) is the UK s leading specialist developer, manager and owner of pre-eminent regional shopping centres. With a portfolio of 14 centres representing 16 million sq. ft. of retail space and a valuation of 6.9 billion CSC s assets attract well over 300 million customers a year. CSC s assets comprise five major out-of-town centres including four of the UK s top six The Trafford Centre, Manchester; Lakeside, Thurrock; Metrocentre, Gateshead; Braehead, Glasgow and The Mall at Cribbs Causeway, Bristol and nine intown centres including centres in prime destinations such as Cardiff, Manchester, Newcastle, Norwich and Nottingham. With a dedicated and skilled management team CSC aims to be the landlord of choice for retailers and to provide compelling destinations for shoppers. It is a responsible and environmentally conscious participant in the communities where it invests. In April 2011 CSC was recognised as the UK s Top Shopping Centre Investment Manager in Going Shopping 2011 The Definitive Guide to Shopping Centres published by Trevor Wood Associates. For further information see This press release contains forward-looking statements regarding the belief or current expectations of Capital Shopping Centres Group PLC, its Directors and other members of its senior management about Capital Shopping Centres Group PLC s businesses, financial performance and results of operations. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Capital Shopping Centres Group PLC and are difficult to predict, that may cause actual results, performance or developments to differ materially from any future results, performance or developments expressed or implied by the forward-looking statements. These forward-looking statements speak only as at the date of this press release. Except as required by applicable law, Capital Shopping Centres Group PLC makes no representation or warranty in relation to them and expressly disclaims any obligation to update or revise any forwardlooking statements contained herein to reflect any change in Capital Shopping Centres Group PLC s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Any information contained in this press release on the price at which shares or other securities in Capital Shopping Centres Group PLC have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance. 2

3 OPERATING AND FINANCIAL REVIEW OPERATING REVIEW Introduction Capital Shopping Centres has delivered a sound operating performance in the first half. We have made good progress on our three priorities for 2011: like-for-like net rental income has grown 6.1 per cent, an increase from the 2.1 per cent recorded in 2010, as the effect of two years of intensive letting activity is now being seen in the income statement. value has been created from a range of active management projects which have delivered strong returns at relatively low risk with further projects in the pipeline at most CSC centres, while more substantial extension projects have moved from the feasibility stage to detailed planning. The Trafford Centre has proved an excellent addition. The Trafford Centre management team has taken on increased responsibilities for other centres within the Group and has made a positive start on taking forward opportunities for these assets. Over some 40 years of developing, owning and managing regional shopping centres in the UK, CSC has focused on the highest quality centres with the best long term potential strong catchment and demographics, exceptional accessibility, compelling retail, leisure and catering mix with a view to generating sustained growth in like-for-like net rental income. Our centres have evolved to reflect latest design and city planning concepts and adapted to continuous change in consumer preferences and retailers requirements. As a result CSC s shopping centres suffered less and recovered quicker from the 2008/09 downturn than secondary centres, emerging with high occupancy and a refreshed combination of on-trend UK brands and exciting international retailers. After the setback in the UK s economic recovery in the last quarter of 2010, it became clear during the first half of 2011 that national growth for the period would be weak at best which has been confirmed by reported GDP growth of 0.5 per cent for the first quarter and 0.2 per cent for the second. This has inevitably affected the occupier market and has slowed the pace of improvement in the terms of lettings. Established retailers have been facing the combined effect of reduced household incomes, product cost inflation and the challenge of online retailing and have therefore been carefully analysing their space requirements, with a structural shift towards top destinations offering a broader leisure experience as well as the full range of comparison retail offer. A number of retailers have recently set out plans to reduce their overall space requirement while focusing their attentions more on flagship locations. Dynamic retailers realise that in order to achieve the best growth throughout their multi-channel offer, they need their brand and full range to be showcased where footfall is strongest. International retailers entering the UK have also tended to establish their brands in the most prime destinations, particularly large regional shopping centres near and within the top cities. Consumer confidence has been low throughout the period, reflecting a reduction in real wages, job insecurity and further house price weakness. The dent made by austerity measures and petrol prices in household disposable incomes is driving consumers to seek more value for their money, in the broader sense of overall experience as well as product. With the ability to research and buy online, customers are knowledgeable about product and price and do not need to travel to a shop unless they get something else convenience, physical comparison, a social experience, a good day out. With four of the UK s top six out of town shopping centres, including The Trafford Centre, Manchester acquired earlier this year, and ten of the UK s top 25 shopping centres, CSC s portfolio is focused on those centres which are best placed to gain from this structural change. 3

4 Footfall in CSC s centres in the first six months of 2011 has shown further growth in line with the consistent increases experienced over the last three years, a demonstration of the defensive nature of the business with the visit to a prime retail destination a core recreational activity. The pipeline of new shopping centre space was dramatically curtailed by the property market downturn of 2008 and 2009 with only a limited number of openings in A characteristic of the industry is a long lead time for bringing new space on stream. As a result, 2012 will be the first year with no significant new openings since the start of the shopping centre industry some forty years ago, with a further low level of committed openings anticipated in 2013 and beyond. This lack of supply is a positive factor for existing owners of top quality assets such as CSC. Property investment market background Robust levels of demand for prime shopping centres coupled with limited stock availability provide considerable support to valuations. Unlike prime Central London assets, prime regional shopping centre valuations are still well below peak levels. With top quality assets rarely coming to market, downward pressure on yields remains a positive factor for valuations, particularly given the current low level of interest rates. Against this backdrop and in the absence of prime product, certain of the stronger secondary shopping centres recently brought to the market have attracted encouraging interest. Property valuations First Second First Second First half half half half half Revaluation surplus/(deficit) like-for-like 1.2% 3.1% 7.7% 2.6% (12.8)% IPD monthly index retail capital growth 1.1% 1.1% 6.3% 11.3% (14.0)% Nominal equivalent yield - like-for-like 6.19% 6.30% 6.52% 7.08% 7.37% Nominal equivalent yield - all centres 6.06% Like-for-like change in nominal equivalent yield ( yield shift ) -11bp -22bp -56bp -29bp +70bp Initial yield like-for-like 5.23% 5.32% 5.35% 5.70% 6.30% Initial yield all centres 5.20% Valuation effect of change in aggregate ERV (1)% (1)% (3)% The strongest valuation performance came from Metrocentre, reflecting steps taken to manage pro-actively the forthcoming lease expiry profile and Manchester Arndale where underlying rental levels have improved. The Trafford Centre valuation is unchanged since the acquisition at the end of January ERV in aggregate is unchanged in the period, as rental value growth in some locations, driven by active management or particular sectors such as catering, has been offset by market-wide reductions in some less prime pitches. The Group s independent valuers calculate the ERV of each centre unit by unit on the basis of the evidence of lettings, applying their judgement to determine the reversion. Operating performance: Despite a difficult trading environment, CSC has delivered a sound operating performance. Like-for-like net rental income is up 6 per cent or 8 million compared to the same period of 2010 reflecting lettings undertaken throughout 2010 and further openings at Cardiff. Occupancy has remained high at 97 per cent (31 March per cent, 31 December per cent). The slight increase in vacancy reflects a number of tenant failures around the June quarter date and the seasonal effect following Christmas. Footfall in CSC s centres is estimated to be up 3 per cent year-on-year for the third consecutive year, while Experian data indicates UK retail footfall overall has fallen by around 1 per cent. 80 long term lettings have been achieved in the period for 18 million annual rent, an increase of 5 million over previous rent for those units and in aggregate around 2 per cent below ERV. A number of positive deals on larger units in bigger centres have enhanced the overall terms achieved in the period, with the average of other deals remaining in the range of 90 per cent to 95 per cent of ERV. Long term lettings in the period include 18 new retailers to CSC centres including 4 international brands. We continue to see competitive demand for space in CSC s centres for larger units suitable for flagship stores and well located smaller units for catering outlets. CSC has a strong track record of creative active management and professional project execution to deliver appropriately configured space to meet retailers requirements. Specific examples of income-enhancing new flagship stores are mentioned by centre below. A strong growth area for CSC has been the increase in requirements for catering space. Catering operators now account for 8 per cent of CSC s total rent and some 370 units out of CSC s 2,400. With current deals being struck at higher levels, the aggregate rent of catering units across all CSC centres now averages 43 per square foot. 4

5 At 30 June 2011 CSC had 240 short-term leases which represented 3 per cent of passing rent, 5 per cent of ERV and 3 per cent of space (31 December leases, 2 per cent of passing rent, 7 per cent of ERV, 4 per cent of space). This remains a challenging area, with the slower progress than anticipated in achieving long term re-lettings closer to ERV reflecting economic conditions in the period. Retailer sales in CSC centres increased by an estimated 3 per cent in total out-performing the benchmark on a like-forlike basis. National statistics have continued to confirm the evident weak retail market conditions with the BRC like-forlike non-food index indicating declines of 1.1 and 0.6 per cent respectively for the first and second quarters. Estimated occupancy cost ratio (rent to retailer turnover) of 13.3 per cent excluding anchor stores remains unchanged from Estimates including The Trafford Centre and St. David s Cardiff for the first time indicate a slightly higher ratio of 13.7 per cent. After 2010 s low level of retailer failures, the first half of 2011 has seen a return to a more typical level. The impact on CSC s first half year results has been small at 2.0 per cent of rent roll with 1.1 million of debt and incentives written off (first half per cent and 1.7 million. Tenants occupying 61 units and accounting for 2.0 per cent of rent entered administration in the first half ( units and 1.4 per cent of rent). At the time of writing over half the units affected in 2011 are currently trading. The chart above illustrates the valuers assessment of reversion across the enlarged Group. o Annual property income has increased from 297 million to 382 million in the period. The acquisition of The Trafford Centre added 85 million. Letting activity and ending of rent free periods of 8 million was offset by expiries and tenant failures. o The reversion of 19 per cent of current rent is spread across the Group with two thirds of the upside concentrated in the top five centres by value. o The largest component of the uplift ( 43 million) is anticipated to arise on re-letting of expiries, around a third of which relates to short-term leases. The uplift relating to vacancies has increased marginally in the period due to tenant failures. o The valuers expectation is for two thirds of the reversion to be captured within three years, 80 per cent within five. Major assets activity and value creation Following the acquisition of The Trafford Centre, 64 per cent of CSC s asset valuation and 62 per cent of its annual property income are attributable to CSC s 5 pre-eminent out-of-town regional shopping centres including 4 of the UK s top 6. A further 21 per cent of CSC s asset valuation is attributable to the premier in-town shopping centres of 5 of the UK s top cities and the remaining 15 per cent comprises 4 other centres in the UK s top 50. 5

6 A key area of focus for 2011 is value creation through continued enhancement of all CSC s centres as retail and leisure destinations by progressing development and active management opportunities. Reference was made in the Annual Report to three large opportunities for around 500 million of capital expenditure and 128 million of smaller active management projects. The latter tend to be focused on specific retailer needs and as such are characterised by relatively attractive returns at low risk. Updates for the projects are given below and, for illustration, the six examples at Lakeside, Metrocentre, Braehead, Eldon Square, Newcastle and Glades, Bromley account for 39 million of capital expenditure and are expected to generate an average stabilised initial yield on cost of 10 per cent. The Trafford Centre: Market value 1,650 million, annual property income 85 million The Trafford Centre is one of the most successful retail and leisure destinations in the UK. It is located approximately six miles west of Manchester in the North West of England, immediately adjoining the M60 motorway. Anchored by Selfridges, Debenhams, John Lewis and Marks & Spencer, The Trafford Centre opened to the public in 1998 and annual visitor numbers have grown consistently since then. It is CSC s largest asset by value and income, representing a quarter of the Group s total. Approximately 5 million people live within 45 minutes drive time and an estimated 35 million customer visits are made each year. The Trafford Centre has continued its strong performance since acquisition by CSC on 28 January 2011 with notable progress made in further developing its retail and leisure mix: Footfall has increased by 8 per cent year-on-year with an estimated 6 per cent increase in retailer sales Occupancy has decreased marginally to 96 per cent. New stores have been opened by Thomas Sabo, Boux Avenue and Ted Baker with another new brand to the Centre, Banana Republic, due to open next month. The Circle 360 Champagne Bar opened in July, successfully bringing one of Manchester s most popular venues to The Trafford Centre, and Lego Land s second ride has further increased its popularity. M&S and Debenhams have both opened their extended stores showcasing new ranges and Dune s new concept flagship store follows later this month. Annual property income is 85 million and ERV is 105 million. CSC has plans to invest around 50 million in revenue-enhancing active management projects at The Trafford Centre, including 30 million at Barton Square. An application to part-enclose the central courtyard of Barton Square with a glass roof has been approved and permission has been renewed for the reconfiguration and enclosure for recycling use of two service yards on the south side of the Centre. The Trafford Centre management team have taken additional responsibility for three other CSC centres Manchester Arndale and Cribb s Causeway, Bristol, the two assets jointly owned by CSC and the Prudential, and Braehead, Glasgow. The Trafford Centre team are making good progress on taking forward the opportunities for these assets. Lakeside: Market value 1,071 million, annual property income 58 million Lakeside is a prime regional shopping centre occupying a strong position on the eastern perimeter of London s M25 orbital motorway at the heart of Europe s largest aggregation of retail space with an estimated 25 million customer visits made each year. Lakeside has had a strong start to 2011, the key features of which are: Footfall has increased by 6 per cent year-on-year with an estimated 1 per cent increase in retailer sales Occupancy is 99 per cent. 16 long term lettings have been completed, with unsatisfied demand from MSU, catering, leisure and lifestyle operators. New stores have been opened by, for example, Boux Avenue, La Senza and Confetti & Lace. Annual property income up 1 per cent to 58 million, ERV up 2 per cent to 65 million. 6

7 Active management projects totalling 11 million are underway: Three new flagship stores totalling 100,000 sq. ft. for Forever 21, Top Shop/Top Man and BHS: planning permission has been received for a roof box to create a new 35,000 sq. ft. store for Forever 21 in the existing Top Shop/Top Man unit. Top Shop/Top Man will relocate to a new 31,500 sq. ft. store created from Clinton Cards unit and the upper level of BHS. A fully refitted, new concept BHS will occupy the lower level of its existing store and Clinton Cards is relocating to a new, smaller unit better suited to its business model. New 8,000 sq. ft. fashion anchor for Brompton Walk: 5 units are being amalgamated to create a flagship store opening later this month for Choice, the high end multi-brand retailer, which has upsized four times in its 20 years at Lakeside. A planning application is expected to be lodged in late 2011 for a 360,000 sq. ft. extension: 160,000 sq. ft. department store around 40 new shops and restaurants fully integrated transport hub investment of around 140 to 160 million, anticipated stabilised initial yield on cost 7 to 8.5 per cent Metrocentre: Market value 871 million, annual property income 52 million Metrocentre is the largest covered shopping and leisure centre in Europe and the leading shopping centre in the UK in terms of tenant mix, transport links and catering offer. With 2.1 million sq. ft. of retail space and 9,250 free car parking spaces, it is the premier regional shopping centre destination for north east England attracting an estimated 23 million customer visits a year. Significant activity in the first half of 2011 includes: 12 long term lettings and renewals have been completed, in aggregate 3 million new rent marginally ahead of ERV. The above includes progress with Metrocentre s key 2011/2012 expiry cycle. A further 15 million of rent expires in the remainder of 2011 and 2012, a total of 23 per cent of Metrocentre s rent roll reduced by pro-active management from 54 per cent two years ago. While deals are taking longer to complete as retailers carefully review their space requirements in the current challenging environment, there are a further 2 million of renewals in advanced negotiations, generally at terms a few percentage points below ERV. Primark are fitting out their new 60,000 sq. ft. flagship store for an October 2011 opening, creating a strong new anchor for the yellow and blue malls. Planning permission received for MetrOasis, a 15,000 sq. ft. terrace of new retail and catering of which 75 per cent by income is under offer. Sited between Metrocentre and the retail park, this will improve linkages between the two locations. Braehead: Market value 577 million, annual property income 30 million With around half of Scotland s population within its catchment and an estimated 18 million customer visits per year, the Braehead shopping centre and retail park are at the heart of the successful regeneration area led by CSC which also includes the Xscape leisure destination, Ikea, business parks, new homes, flagship car dealerships and a major garden centre. There is considerable opportunity for Braehead to fulfil its role as a strategic centre and CSC continues to work constructively with the local authority on a master plan for the area which should lead over time to increased economic and social activity. Following the opening in May of H&M s new flagship store and the first full year of the new Primark, footfall at Braehead is up over 5 per cent year-on-year. Hollister and another major US brand are currently fitting out for openings in early September. The first of the new restaurants, Filling Station, is now open on the former non-income producing Fun Ice and the other units are being fitted out for openings later this month. This project demonstrated the strength of appetite by catering operators, with competitive demand increasing the rent achieved for the final unit by more than 15 per cent. Nottingham: Market value 333 million, annual property income 19 million The Victoria Centre, opened in 1972 and now 981,000 sq. ft., is the strongest retail destination in Nottingham, the UK s sixth-ranked city by shopping population. Anchored by John Lewis and House of Fraser and currently 96 per cent occupied, an estimated 23 million shoppers visit the centre each year. Following a highly positive response to the public consultation exercise, a detailed planning application was submitted in June 2011 for a proposed 500,000 sq. ft. extension to the Victoria Centre, providing: an additional department store, 39 shops and enhanced leisure & catering facilities with a cinema and restaurants a new bus station, health club and offices improved pedestrian linkages running north/south and east/west through the city 500 construction jobs and an estimated 2,200 new jobs on an ongoing basis The outline timetable is for detailed planning consent to be granted by the end of 2011, enabling works in 2012 and construction from 2013 to 2015 with an opening for Christmas The capital expenditure of 225 to 250 million is expected to generate ERV of around 17 to 18 million, equivalent to a stabilised initial return on cost of 7 to 8 per cent. Other centres: Recently completed or projects in progress to create value at other centres include: The major extension to St David s, Cardiff, which opened in September 2009, is now 90 per cent committed by income. Since Christmas new commitments have been secured for a first shopping centre store for Cath Kidson, a UK first store for Baci Lingerie and two of the four remaining MSUs. More than half of all stores at St David s are the retailers first in Wales. In Newcastle, Next moved in May from Northumberland Street into Eldon Square, creating a major store with full line merchandise and are delighted with their relocation. In Bromley, design work is underway and a detailed planning application will be submitted later this month for 5 new restaurants in Queen s Gardens, The Glades. 7

8 International On 4 January 2011, CSC completed its transaction with Equity One, a US retail REIT, restructuring its 150 million ($250 million) net investment in Californian property. In exchange for its direct interest, CSC has received 4.1 million shares in Equity One and 11.4 million redeemable units in a new joint venture, in aggregate providing an effective 12 per cent interest in Equity One valued at 179 million based on a share price of $ Equity One has a market capitalisation of $2.3 billion and its annualised dividend is currently $0.88 per share with underlying FFO for 2010 of $1.08 per share. Equity One owns, develops and manages neighbourhood shopping centres anchored by supermarket chains. At 31 March 2011, the company had 177 shopping centres (20.1m sq. ft.) and 25 other properties/development sites. The top 4 geographies, totalling 60 per cent of rent, were South Florida, the San Francisco Bay area, Atlanta and North East, USA. CSC s interests in India comprise a 25 per cent interest in the shopping centre developer, Prozone, and a 9.9 per cent interest in the listed Indian retailer, Provogue, our joint venture partner in Prozone. Prozone s first shopping centre, Aurangabad, is now well established with over 60 per cent occupancy and a number of further tenants fitting out. Footfall has been growing consistently since the launch in the last quarter of Prozone is well underway with preparations for commencing further development projects in Coimbatore, Nagpur and Indore. As Prozone s business has become more established, CSC s results have now incorporated third party direct property valuations producing an encouraging 9 million surplus on CSC s interest. CSC s shareholding in Provogue amounts to 11.4 million shares (9.9 percent) which at 30 June 2011 stood at R37 per share. The share price has come under pressure in the period as India has gone out of favour with international investors and small market capitalisation stocks, particularly real estate-related, have been neglected by investors. Dividends The Directors have declared an interim dividend of 5.0 pence ( pence) per share payable on 22 November 2011 to shareholders on the register on 14 October This dividend will be a property income distribution ( PID ) subject to applicable withholding tax. With effect from December 2010, the rules governing UK REITs were amended such that scrip dividends are now eligible to be classified as a PID. This removes one of the major barriers to CSC offering a scrip alternative. Further, of relevance given CSC s large South African shareholder base, recent changes in the South Africa tax regime are affecting the way that ordinary and PID dividends are taxed in the hands of South African shareholders in a manner positive for likely take up of scrip dividends. We are currently reviewing the options available to the company with a view to offering a scrip alternative for the 2011 dividends, which would result in the requirement to convene an EGM. Prospects CSC is a market-leading business based on the most prime retail assets with strong asset management skills to respond to market changes. The results for the first half of 2011 demonstrate a continuation of recovery by CSC, although a more cautious occupier market is reflecting challenging macro-economic conditions. Our three priorities for 2011 remain: Growth in like-for-like net rental income: after a very strong first half result, the quieter letting market implies a lower increase in the second half of the year. Creation of value from the range of active management projects and more substantial extension projects detailed above, with planning permissions and retailer negotiations providing continuing evidence of progress The Trafford Centre: we look for continued strong performance from this pre-eminent retail and leisure destination and to further access the broader benefits to the Group from this acquisition. 8

9 FINANCIAL REVIEW FINANCING STRATEGY AND FINANCIAL MANAGEMENT In 2011 the Group s financial management has focused on achieving the successful integration of The Trafford Centre and continuing to address the appropriate financial management and medium term funding structure for the Group. Initial work has started on identifying options for re-financing the Group s Revolving Credit Facility ( RCF ) which matures in 2013 and the first significant asset specific debt maturities in Notable financial highlights for the period include: Underlying earnings up by 53 per cent NAV per share at 391 pence; total return for the six months of 3 per cent Trafford Centre acquisition completed. Integration work progressing as planned Debt to assets ratio at 48 per cent in target range of per cent and interest cover for the six months of 170 per cent exceeds target minimum of 160 per cent Acquisition of The Trafford Centre and associated Capital Raising The Group successfully completed the acquisition of The Trafford Centre on 28 January 2011 and therefore these financial statements include the impact of the acquisition for the first time. Details of the opening balance sheet are provided in Note 20. The Income Statement includes the results of The Trafford Centre for the period from 28 January 2011 to 30 June Further details of the contribution in the period are given in the Underlying Profit Statement. As part of the acquisition in January 2011 Peel subscribed 43.7 million for 12.3 million ordinary shares and 23.7 million for convertible bonds with a nominal value of 26.7 million converting into 6.7 million ordinary shares at a conversion price of 400 pence, giving a total cash inflow of 67.4 million. RESULTS FOR THE PERIOD ENDED 30 JUNE 2011 The results for the six months ended 30 June 2011 reflect operational improvements achieved, in particular improved letting terms, since the end of This is most clearly illustrated by the 6 per cent growth in like-for-like net rental income in the period, a strong performance especially given the general retail environment remains challenging. This growth in like-forlike rental income was the main factor in driving the 14 per cent growth over 2010 underlying earnings per share. Income statement The Group recorded a profit for the period of 193 million, compared to the 291 million achieved for the comparable prior year period which included 73 million from the discontinued operations, Capco and C&C US. The 2011 results include a 58 million gain on property valuations and a 22 million non-cash gain on the movement in the fair value of derivative financial instruments. The 2010 profit included a 348 million gain on property valuations, which was partially offset by a 89 million adverse movement in the fair value of derivative financial instruments. Underlying earnings which excludes valuation and exceptional items, increased by 23 million to 66 million, as shown in the chart below. The growth in underlying earnings per share takes into account the issue of the 167 million new shares in connection with the Trafford Centre acquisition, resulting in an increase of 14 per cent from 7.0 pence per share in 2010 to 8.0 pence per share in the current period. The Group s net rental income which increased by 32 per cent to 178 million in the period, benefitted from the 35 million five month contribution from The Trafford Centre. As noted above the Group s existing centres achieved an excellent 6 per cent growth in like-for-like net rental income. More detail on the rental performance is included in the Business Review. Underlying net finance costs, which exclude exceptional items, increased by 16 million in 2011, with the benefit of the interest rate swap amendments undertaken in January 2011 offsetting the 19 million five month cost of the Trafford Centre CMBS notes. Administration expenses, excluding the 16 million exceptional costs, increased from 11 million in 2010 to 12 million in 2011 largely due to inclusion of the Trafford Centre. Administration costs remain under tight control. 9

10 Exceptional costs in the period include finance costs of 34 million incurred in January 2011 on interest rate swap amendment costs. Expenses relating to the acquisition, including financial advice costs in relation to the Simon Property Group s proposal, amounted to 16 million in the period. These costs are classified as exceptional administration costs. As the fair value of the Trafford Centre net assets acquired of 757 million exceeded the 703 million fair value of the consideration, based on the Group s share price on 28 January 2011 of 376 pence per share, negative goodwill of 54 million arose on the acquisition. This is recorded in the Income Statement as gain on acquisition of subsidiaries. A share price of 405 pence per share would have resulted in nil goodwill on the acquisition. As noted in the 2010 annual report the disposal of the C&C US business that was completed in January 2011 resulted in a gain of 40 million before tax. The results for the period also includes a deferred tax provision of 14 million in respect of the investment in Equity One shares and joint venture units received as consideration, giving a net post tax gain of 26 million on the combined impact of this transaction. The income statement also includes two items arising from the Group s interests in India. The 9.0 million share of associate income from Prozone, the shopping centre developer, is offset by the impairment of 8.7 million in the market value of the 9.9 per cent interest in Provogue, the listed Indian retailer, as the Indian stock market came under pressure especially for stocks of small market capitalisation. Balance sheet The Group s net assets attributable to equity shareholders have increased from the 2.3 billion disclosed in the 2010 annual report to 3.1 billion, with the increase largely resulting from the acquisition of The Trafford Centre and the associated equity capital raised. As detailed in the table below, net assets (diluted, adjusted) have increased by 813 million from 31 December 2010 with the Trafford Centre acquisition and the profit for the period less the payment of the 2010 final dividend comprising the majority of the movement. Balance sheet Pro forma (1) 30 June 31 December 31 December m m m Investment, development and trading properties 6, , ,718.9 Investments Net external debt (3,285.7) (2,436.5) (3,188.6) Other assets and liabilities (583.9) (539.2) (650.3) C&C US net assets Net assets 3, , ,098.6 Minority interest (29.6) (19.9) (19.9) Attributable to equity shareholders 3, , ,078.7 Fair value of derivatives (net of tax) Other adjustments Net assets (diluted, adjusted) 3, , ,473.2 (1) The pro forma analysis includes the Trafford Centre and re-classifies the C&C US assets that were held-for-sale to investments. The investments of 222 million as at 30 June 2011 comprise the Group s interests in the US and India. The investment in the US comprises 4.1 million shares in Equity One, and 11.4 million shares in a joint venture with Equity One, that the Group received in exchange for its interest in C&C US. Based on the Equity One share price of $18.64 the Group s investment has been valued at 179 million at 30 June The fair value provision for financial derivatives, principally interest rate swaps, included in other assets and liabilities above, decreased by 15 million largely as a consequence of cash payments made in the period. Adjusted net assets per share As illustrated in the chart below, diluted adjusted net assets per share were 391 pence at 30 June 2011, an increase of 1 pence in the period. The increase is attributable to the property valuation gain, offset by the 2010 final dividend and the exceptional costs. 10

11 Cash flow The cash flow summary below shows a reduction in the Group s cash balance in the period. This can be attributed to the payments made in respect of exceptional costs ( 50 million) and the REIT entry charge ( 21 million) in the period. Six months Six months to June to June m m Underlying operating cash generated Net finance charges paid (100.4) (84.3) Exceptional finance and other costs (49.9) (74.4) Net movement in working capital 2.3 (4.8) Taxation/REIT entry charge (23.1) (18.2) Cash flow from operations (4.1) (59.4) Property development/investments (11.3) (30.5) Sale proceeds of property/investments Other derivative financial instruments (8.3) (19.5) Cash acquired with businesses 37.6 Cash sold with businesses (20.3) Dividends (90.9) (66.9) Cash flow before financing and equity raises (95.6) (110.6) Net debt repaid (52.2) (79.4) Equity capital raised Impact of discontinued operations (256.5) Others (1.8) (54.1) Net decrease in cash and cash equivalents (81.2) (498.8) Investment in property related assets was mainly limited to existing commitments in the period, with the most significant expenditure in the period being in respect of Eldon Square ( 2 million) and Braehead ( 2 million). The cash acquired/sold with businesses relates to the Trafford Centre and C&C US respectively. Net debt repayments of 52 million are discussed in the Debt structure section below. The table below illustrates that recurring operating cash flow covers the proposed interim dividend. Six months to Dividends cash cover June 2011 pence per share Underlying operating cash generated 20.2 Net finance charges excluding exceptional items (12.2) Convertible bond coupon (0.3) Net movement in working capital 0.3 Recurring cash flow proposed Interim dividend

12 Capital commitments The Group has an aggregate commitment to capital projects of 55 million at 30 June 2011, down from the 90 million at 31 December The most significant element of the reduction is due to the majority of costs to complete the St. David s, Cardiff project, including land assembly costs, now accrued on the balance sheet. In addition to the committed expenditure, the Group has an identified project pipeline of 134 million. It is anticipated that 30 million relating to capital projects will be incurred in the balance of Group debt ratios were as follows: 30 June 31 December Debt to assets 48% 48% Interest cover 170% 156% Weighted average debt maturity 7.5 years 5.8 years Weighted average cost of gross debt 5.6% 5.7% Proportion of gross debt with interest rate protection 98% 94% Financial position and financing structure At 30 June 2011, the Group had net external debt of 3,286 million, an increase of 97 million compared to the 31 December 2010 pro forma of 3,189 million. In addition to cash balances of 165 million the Group had undrawn facilities of 275 million at 30 June 2011, the 248 million revolving credit facility and 27 million on the St David s, Cardiff, joint venture loan facility, giving total headroom of 440 million. Debt structure The Group s debt is largely arranged on an asset-specific basis, with limited or non-recourse from the borrowing entities to other Group companies. It is largely syndicated bank debt and CMBS structures with corporate-level debt limited to the revolving credit facility. The flexibility of this structure was evidenced by the absence of lender issues during the demerger of Capco. The revolving credit facility matures in mid 2013 and we have started approaching banks that we consider have the ability to provide similar corporate level facilities, with a view to putting these in place by the end of the first half of These banks would then be in place to assist with the longer term funding strategy. The above table shows that the value of maturities peaks in Over the last few months consideration has been given to replacing some facilities early but it has been concluded that the associated one-off costs would outweigh the benefit of longer maturities. Given the high quality of our assets we consider we should have funding optionality from a variety of debt funding sources such as secured bonds and bank loans, CMBS-linked notes, unsecured bonds and bank loans, and private placements. During the period net debt repayments of 52 million were made, the most significant item being the repayment of the 81 million loan secured on Barton Square. An additional 56 million has been drawn on the St David s, Cardiff joint venture loan facility, with the balance of the net repayment being due to scheduled debt amortisation payments. Hedging The majority of the Group s debt is floating rate. The Group uses interest rate swaps to fix short and medium-term interest obligations, reducing cash flow volatility caused by changes in interest rates. The Group is currently effectively fully hedged, with a small forecast excess in 2012 to

13 The table below sets out the nominal amount and average rate of hedging in place under current and forward starting swap contracts: Average Nominal amount rate In effect on or after: m % 1 year 2, years 2, years 1, years years years years Since 2009, the Group has reduced the number of forward starting swaps as anticipated borrowing requirements have been reduced by capital raisings and market practice relating to swaps has changed. Costs of rescheduling and terminating such instruments have been treated as exceptional finance charges as incurred. Currently 555 million nominal amount of forward starting swaps remain, carrying a market value liability of around 72 million. As lenders practice no longer allows the use of existing hedging contracts in new facilities, these contracts are and will remain surplus, unrelated to the current or anticipated borrowing needs. As such, the estimated annual cash payments from 2012 of around 14 million, reducing to 10 million by 2015, will be reported as an exceptional finance charge and will impact NAV (diluted, adjusted) as incurred. Covenants Full details of the loan financial covenants are included in the Other Information section of this report. The Group is in compliance with all of its corporate and asset-specific loan covenants. As detailed in that analysis, as a result of improved property valuations and rental income levels, the headroom over the minimum covenant levels has generally increased in the period. Taxation Since the Group became a UK REIT on 1 January 2007, the Group has made REIT entry charge payments of 168 million, with 21 million paid in the period. This now completes all payments due in respect of the Group s original REIT charges. Payments in respect of the Trafford Centre totalling 33 million will be made in the next twelve months. The cash flow benefits to date have amounted to 176 million, comprising net rental income and capital gains sheltered from UK tax. 13

14 Key risks and uncertainties The key risks and uncertainties facing the Group are as set out in the table below: Risk Description Impact Mitigation Financing Liquidity Reduced availability Insufficient funds to Regular reporting of current and projected position meet operational and to the Board financing needs Efficient treasury management and strict credit control process Economic and Property values decrease Impact on covenants Regular monitoring of LTV and ICR covenants property market Covenant headroom monitored and maintained downturn Reduction in rental income Regular market valuations Macro economic Focus on quality assets conditions deteriorate Interest cover Interest rates fluctuate Lack of certainty over Hedging to establish high degree of certainty interest costs throughout term of loan Market price risk Interest rates fluctuate Potential cash outflow Manage derivative contracts to achieve a balance of fixed rate resulting in significant if derivative contract between hedging interest rate exposure and derivatives assets and/or liabilities contains break clause minimising potential cash calls on derivative contracts REIT Breach REIT conditions Tax penalty or be forced Regular monitoring of compliance and tolerances to leave the REIT regime PID requirements Requirement to pay 90 Alternative sources of investment funding constantly per cent of income under review restricts ability to retain cash for investment Group s ordinary The Group s ordinary Additional complexity Professional advice sought in both jurisdictions to shares are dual shares are listed on the when assessing ensure Group capital needs are met in optimal listed London and options for capital manner Johannesburg stock raising exchanges Joint Ventures Reliance on JV partners Partners under Agreements in place and regular communication performance and perform or provide with partners reporting incorrect information Asset Management Tenants Tenant failure Financial loss Initial and subsequent assessment of tenant covenant strength Active credit control process Voids Increased voids, failure Financial loss Policy of active tenant mix management to let developments Active management to minimise financial impact if voids should arise. Reputation Responsibility for Failure of Health & Safety Impact on reputation Annual audits by external consultants visitors to or potential criminal/ Health & Safety policies in place shopping centres civil proceedings Business Lost access to centres Impact on footfall and Documented Business Recovery Plans in place interruption or head office tenant income Security team training and procedure in Adverse publicity shopping centres Terrorist Insurance is in place People/HR Staff Loss of key staff Adverse impact on the Succession planning Group s performance Performance evaluation Training and development Incentives and rewards 14

15 Developments Time Planning Securing planning Policy of sustainable development and regeneration consent for of brownfield sites developments Constructive dialogue with planning authorities Cost and letting Construction cost Returns reduced by Approval process based on detailed project costs risk overrun, low increased costs or Regular monitoring and forecasting of project costs occupancy levels delay in securing and rental income tenants Fixed cost contracts Strategy Defining and Inappropriate strategy Financial loss Experienced management team familiar with executing the defined or poor execution shopping centre industry Group s strategy of strategic plans Sub-optimal returns Use of research and third party diligence expertise as required Reputational impact Board review process 15

16 DIRECTORS RESPONSIBILITY STATEMENT The Directors are responsible for preparing the condensed set of financial statements, in accordance with applicable law and regulations. The Directors confirm that, to the best of their knowledge: this condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union; and this condensed set of financial statements includes a fair review of the information required by Sections DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules of the United Kingdom s Financial Services Authority. The operating and financial review refers to important events which have taken place in the period. The principal risks and uncertainties facing the business are referred to in the operating and financial review. Related party transactions are set out in note 22 of the condensed set of financial statements. A list of current Directors is maintained on the Capital Shopping Centres Group PLC website: By order of the Board D A Fischel Chief Executive M Roberts Finance Director 2 August

17 INDEPENDENT REVIEW REPORT TO CAPITAL SHOPPING CENTRES GROUP PLC Introduction We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated statement of cash flows and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. Directors responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union. Our responsibility Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, 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. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. PricewaterhouseCoopers LLP Chartered Accountants London 2 August 2011 Notes: (a) (b) The maintenance and integrity of the Capital Shopping Centres Group PLC 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. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 17

18 CONSOLIDATED INCOME STATEMENT (unaudited) For the six months ended 30 June 2011 Six months Six months Year ended ended ended 30 June 30 June 31 December Notes m m m Continuing operations Revenue Net rental income Net other income Revaluation and sale of investment and development property Gain on acquisition of subsidiaries Gain on sale of subsidiaries Sale and impairment of other investments (8.7) (2.6) Administration expenses ongoing (11.8) (11.2) (23.0) Administration expenses exceptional 20 (15.5) (8.1) (15.6) Operating profit Finance costs 6 (98.1) (82.3) (165.4) Finance income Other finance costs 7 (38.4) (70.7) (75.1) Change in fair value of derivative financial instruments 21.7 (89.1) (50.0) Net finance costs (114.2) (240.8) (287.4) Profit before tax and associates Current tax 8 (0.7) (0.1) Deferred tax REIT entry charge 8 (1.7) (3.3) Taxation 8 (0.5) (0.9) (0.6) Share of profit of associates 9.0 Profit for the period from continuing operations Profit for the period from discontinued operations Profit for the period Attributable to: Equity shareholders of CSC Group PLC Continuing operations Discontinued operations Non-controlling interest 9.7 (1.3) Basic earnings per share From continuing operations p 35.4p 68.3p From discontinued operations p 13.2p 21.8p 47.0p 81.5p Diluted earnings per share From continuing operations p 34.8p 67.5p From discontinued operations p 13.0p 21.3p 46.3p 80.5p 18

19 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited) For the six months ended 30 June 2011 Six months Six months Year ended ended ended 30 June 30 June 31 December m m m Profit for the period Other comprehensive income: Revaluation of other investments Recognised in impairment of other investments 8.7 Recognised in gain on disposal of subsidiaries (note 21) (10.9) Realised revaluation reserve on disposal of other investments 2.6 Exchange differences (3.4) (1.9) (1.1) Tax on items taken directly to other comprehensive income (0.2) (0.8) (2.8) Other comprehensive income for the period (5.2) Total comprehensive income for the period Attributable to: Equity shareholders of CSC Group PLC Non-controlling interest 9.7 (1.3) Total comprehensive income attributable to equity shareholders of CSC Group PLC arises from: Continuing operations Discontinued operations

20 CONSOLIDATED BALANCE SHEET (unaudited) As at 30 June 2011 As at As at As at 30 June 31 December 30 June Notes m m m Non-current assets Investment and development property 12 6, , ,886.7 Plant and equipment Investments in associate companies Other investments Derivative financial instruments Trade and other receivables , , ,002.6 Current assets Trading property Current tax assets Trade and other receivables Derivative financial instruments 0.1 Cash and cash equivalents C&C US assets Total assets 7, , ,663.0 Current liabilities Trade and other payables (267.3) (194.4) (213.8) Borrowings 15 (65.3) (46.0) (115.5) Derivative financial instruments (0.8) (9.3) (19.0) C&C US liabilities (276.6) (285.6) (333.4) (526.3) (633.9) Non-current liabilities Borrowings 15 (3,527.6) (2,751.5) (2,769.0) Derivative financial instruments (346.8) (354.6) (394.5) Other provisions (1.1) (1.2) (1.4) Other payables (0.1) (0.3) (2.2) (3,875.6) (3,107.6) (3,167.1) Total liabilities (4,209.0) (3,633.9) (3,801.0) Net assets 3, , ,862.0 Equity Share capital Share premium Treasury shares (29.6) (29.9) (5.4) Convertible bonds Other reserves Retained earnings 1, , ,209.7 Amounts attributable to equity shareholders of CSC Group PLC 3, , ,860.2 Non-controlling interest Total equity 3, , ,

21 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited) For the six months ended 30 June 2011 Attributable to equity shareholders of CSC Group PLC Share Share Treasury Convertible Other Retained controlling Total capital premium shares bonds reserves earnings Total interest equity m m m m m m m m m At 1 January (29.9) , , ,293.3 Profit for the period Other comprehensive income: Revaluation of other investments Recognised in impairment of other investments Recognised in gain on disposal of subsidiaries (10.9) (10.9) (10.9) Exchange differences (3.4) (3.4) (3.4) Tax on items taken directly to other comprehensive income (0.2) (0.2) (0.2) Total comprehensive income for the period (5.2) Ordinary shares issued Dividends paid (note 9) (85.2) (85.2) (85.2) Convertible bonds issued Interest on convertible bonds (2.4) (2.4) (2.4) Disposal of treasury shares 0.3 (0.2) Share-based payments (86.1) At 30 June (29.6) , , ,166.6 Non- 21

22 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited) For the year ended 31 December 2010 Attributable to equity shareholders of CSC Group PLC Share Share Treasury Convertible Other Retained controlling Total capital premium shares bonds reserves earnings Total interest equity m m m m m m m m m At 1 January ,005.7 (9.7) , ,421.1 Profit for the year Other comprehensive income: Revaluation of other investments Realised revaluation reserve on disposal of other investments Exchange differences (1.1) (1.1) (1.1) Tax on items taken to other comprehensive income (2.8) (2.8) (2.8) Total comprehensive income for the year Ordinary shares issued Dividends paid (note 9) (102.8) (102.8) (102.8) Redemption and conversion of convertible bonds (6.7) 6.7 Non-controlling interest additions Share-based payments Acquisition of treasury shares (20.9) (20.9) (20.9) Disposal of treasury shares Other Reduction of capital (1,005.7) 1,005.7 Demerger effected by way of repayment of capital 38.6 (838.4) (799.8) (799.8) 35.0 (985.3) (20.2) (6.7) (675.4) 3.1 (672.3) At 31 December (29.9) , , ,293.3 Non- 22

23 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited) For the six months ended 30 June 2010 Attributable to equity shareholders of CSC Group PLC Share Share Treasury Convertible Other Retained controlling Total capital premium shares bonds reserves earnings Total interest equity m m m m m m m m m At 1 January ,005.7 (9.7) , ,421.1 Profit/(loss) for the period (1.3) Other comprehensive income: Revaluation of other investments Exchange differences (1.9) (1.9) (1.9) Tax on items taken to other comprehensive income (0.8) (0.8) (0.8) Total comprehensive income for the period (1.3) Ordinary shares issued Dividends paid (note 9) (71.4) (71.4) (71.4) Conversion of bonds (0.6) 0.6 Non-controlling interest additions Acquisition of treasury shares (1.5) (1.5) (1.5) Disposal of treasury shares Share-based payments Reduction of capital (1,005.7) 1,005.7 Demerger effected by way of repayment of capital 38.6 (838.4) (799.8) (799.8) 0.4 (1,004.3) 4.3 (0.6) (864.6) 3.1 (861.5) At 30 June (5.4) , , ,862.0 Non- 23

24 CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) For the six months ended 30 June 2011 Six months Six months Year ended ended ended 30 June 30 June 31 December Notes m m m Cash flows from continuing operations Cash generated from operations Interest paid (135.4) (151.5) (229.1) Interest received Taxation (2.0) REIT entry charge (21.1) (19.7) (40.1) Cash flows from operating activities (4.1) (59.4) (38.7) Cash flows from investing activities Purchase and development of property, plant & equipment (11.3) (26.6) (47.4) Sale of property Sale of other investments Purchase of other investments (3.9) (4.2) Cash sold with businesses (20.3) Cash acquired with businesses 37.6 Other derivative financial instruments (8.3) (19.5) (26.2) Cash flows from investing activities (0.6) 15.7 (3.0) Cash flows from financing activities Partnership equity introduced Issue of ordinary shares Issue of convertible bonds 23.7 Acquisition of treasury shares (0.6) (1.4) Sale of treasury shares Cash transferred from/(to) restricted accounts 0.5 (56.6) 19.8 Borrowings drawn Borrowings repaid (108.5) (597.9) (690.3) Interest on convertible bonds (2.4) Equity dividends paid (90.9) (66.9) (102.2) Cash flows from financing activities (76.5) (198.6) (29.7) Net decrease in cash and cash equivalents from continuing operations (81.2) (242.3) (71.4) Cash flows from discontinued operations Operating activities (12.0) 0.3 Investing activities (3.1) (1.2) Financing activities (63.2) (69.0) Cash and cash equivalents transferred on demerger (179.2) (179.2) Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents from discontinued operations (256.5) (248.7) Net decrease in cash and cash equivalents (81.2) (498.8) (320.1) Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

25 NOTES (unaudited) 1 Basis of preparation The condensed set of financial statements for the six months ended 30 June 2011 is unaudited and does not constitute statutory accounts within the meaning of s434 of the Companies Act The condensed set of financial statements has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 as adopted by the European Union. The comparative information presented for the year ended 31 December 2010 is not the Group s statutory accounts for that year. Those accounts have been reported on by the Group s auditors and delivered to the registrar of companies. The auditors opinion on those accounts was unqualified and did not contain an emphasis of matter paragraph or a statement made under Section 498 (2) or (3) of the Companies Act The condensed set of financial statements should be read in conjunction with the Group s statutory accounts for the year ended 31 December 2010 which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expense. Actual results may differ from these estimates. Except as described below, in preparing the condensed set of financial statements, the significant judgements made by management in applying the Group accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December The largest area of estimation and uncertainty in the condensed set of financial statements is in respect of the valuation of the property portfolio, where external valuations were obtained. The Directors have concluded, based on the Group s forecasts and projections and taking into account reasonably possible changes in trading performance, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. 2 Accounting policies Except as described below, the accounting policies applied are consistent with those of the Group s statutory accounts for the year ended 31 December 2010 as set out on pages 69 to 72 of the Annual Report. Taxes on income in interim periods are accrued using tax rates expected to be applicable to total annual earnings. The following standards, amendments and interpretations endorsed by the EU are effective for the first time for the Group s 31 December 2011 year end: IAS 24 Related Party Disclosures; IAS 32 Financial Instruments: Presentation (amendment); IFRIC14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction; IFRIC 19 Extiguishing Financial Liabilities with Equity Instruments; and Amendments arising from the 2010 annual improvements projects. These either had no material impact on the condensed financial statements or resulted in changes to presentation and disclosure only. 3 Seasonality and cyclicality There is no material seasonality or cyclicality impacting interim financial reporting. 25

26 NOTES (unaudited) (continued) 4 Segmental reporting Operating segments are determined based on the internal reporting and operational management of the Group. The Group has one main reportable operating segment being UK Shopping Centres. Revenue represents total income from tenants and net rental income is the principal profit measure used to measure performance. A more detailed analysis of net rental income is given below. Six months Six months Year ended ended ended 30 June 30 June 31 December m m m Revenue Rent receivable Service charge income Rent payable (13.0) (11.7) (23.7) Service charge and other non-recoverable costs (57.2) (54.4) (109.4) Net rental income Revaluation and sale of investment and development property Six months Six months Year ended ended ended 30 June 30 June 31 December m m m Revaluation of investment and development property Sale of investment property 0.1 (3.5) (3.4) Revaluation and sale of investment and development property Finance costs Six months Six months Year ended ended ended 30 June 30 June 31 December m m m On bank loans and overdrafts On convertible debt On obligations under finance leases Gross finance costs Interest capitalised on developments (1.6) (1.7) Finance costs

27 NOTES (unaudited) (continued) 7 Other finance costs Six months Six months Year ended ended ended 30 June 30 June 31 December m m m Amortisation of Metrocentre compound financial instrument Revolving credit facility arrangement fee (1) Costs of termination of derivative financial instruments (1) Other finance costs (1) Amounts totalling 34.4 million for the six months ended 30 June 2011 are treated as exceptional and therefore excluded from the calculation of underlying earnings (six months ended 30 June million, year ended 31 December million). 8 Taxation Taxation charge for the period: Six months Six months Year ended ended ended 30 June 30 June 31 December m m m Current tax Deferred tax: On derivative financial instruments (12.5) (1.2) (2.6) On other temporary differences On other investments 13.4 On exceptional items (1.2) (0.2) (0.6) Deferred tax (0.2) (0.8) (2.8) REIT entry charge Total tax charge

28 NOTES (unaudited) (continued) 8 Taxation (continued) Movements in the provision for deferred tax: Derivative Other Other financial temporary investments instruments differences Total m m m m Deferred tax provision: At 1 January 2011 (4.2) 4.2 Recognised in the income statement 13.4 (12.5) (1.1) (0.2) Recognised in other comprehensive income (0.1) At 30 June (16.4) 3.1 Unrecognised deferred tax asset: At 1 January 2011 (15.7) (13.9) (29.6) Income statement items 13.3 (0.9) 12.4 At 30 June 2011 (2.4) (14.8) (17.2) 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 on the level of profits that will be available in the non-reit elements of the Group in future periods. 9 Dividends Six months Six months Year ended ended ended 30 June 30 June 31 December m m m Ordinary shares Final dividend paid of 10.0 pence per share ( pence per share) Interim dividend paid of 5 pence per share 31.4 Dividends paid Proposed interim dividend of 5 pence per share

29 NOTES (unaudited) (continued) 10 Earnings per share (a) Earnings per share Basic and diluted earnings per share as calculated in accordance with IAS 33 Earnings per Share. Six months ended Six months ended Year ended 30 June June December 2010 Pence Pence Pence Earnings Shares per Earnings Shares per Earnings Shares per m million share m million share m million share Continuing operations: Basic earnings per share (1) p p p Dilutive convertible bonds, share options and share awards Diluted earnings per share p p p Discontinued operations: Basic earnings per share (1) p p Dilutive convertible bonds, share options and share awards Diluted earnings per share p p Continuing and discontinued operations: Basic earnings per share (1) p p p Dilutive convertible bonds, share options and share awards Diluted earnings per share p p p (1) The weighted average number of shares used for the calculation of basic earnings per share has been adjusted for shares held in the ESOP and treasury shares. Basic earnings per share are stated after deducting interest on convertible bonds recognised directly in equity of 2.4 million in the six months ended 30 June (b) Headline earnings per share Headline earnings per share has been calculated and presented as required by the Johannesburg Stock Exchange listing requirements and is given for continuing plus discontinued operations. Six months ended Six months ended Year ended 30 June June December 2010 Gross Net (1) Gross Net (1) Gross Net (1) m m m m m m Basic earnings Remove: Revaluation and sale of investment and development property (58.4) (48.8) (417.9) (406.2) (580.5) (547.5) Gain on acquisition of subsidiaries (54.3) (54.3) Gain on sale of subsidiaries (40.4) (25.9) Sale and impairment of other investments Headline earnings/(loss) 60.6 (113.7) (33.1) Dilution (2) Diluted headline earnings/(loss) 63.0 (112.6) (31.4) Weighted average number of shares Dilution (2) Diluted weighted average number of shares Headline earnings/(loss) per share (pence) 7.3p (18.3)p (5.3)p Diluted headline earnings/(loss) per share (pence) 7.3p (17.7)p (4.9)p (1) Net of tax and non-controlling interest (2) The dilution impact is required to be included as for earnings per share as calculated in note 10(a) even where this is not dilutive for headline earnings per share. 29

30 NOTES (unaudited) (continued) 10 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 operating results and indication of the extent to which dividend payments are supported by current earnings. Six months ended Six months ended Year ended 30 June June December 2010 Pence Pence Pence Earnings Shares per Earnings Shares per Earnings Shares per m million share m million share m million share Basic earnings per share from continuing operations (1) p p p Remove: Revaluation and sale of investment and development property (58.4) (7.1)p (344.8) (55.5)p (497.2) (79.2)p Share of associates revaluation of investment and development property (9.1) (1.1)p Sale and impairment of other investments p p Gain on acquisition of subsidiaries (54.3) (6.6)p Gain on sale of subsidiaries (40.4) (4.9)p Exceptional administration costs p p p Exceptional finance charges p p p Change in fair value of derivative financial instruments (21.7) (2.6)p p p Tax on the above (0.2) (1.0) (0.2)p (2.8) (0.4)p REIT entry charge p p Non-controlling interest in respect of the above p (0.4) (0.1)p p Add: C&C US underlying earnings included within discontinued operations p p Underlying earnings per share p p p Dilutive convertible bonds, share options and share awards Underlying, diluted earnings per share p p p (1) The weighted average number of shares used for the calculation of basic earnings per share has been adjusted for shares held in the ESOP and treasury shares. Basic earnings per share are stated after deducting interest on convertible bonds recognised directly in equity of 2.4 million in the six months ended 30 June

31 NOTES (unaudited) (continued) 11 Net assets per share As at 30 June 2011 As at 31 December 2010 As at 30 June 2010 Net NAV per Net NAV per Net NAV per assets Shares share assets Shares share assets Shares share m million (pence) m million (pence) m million (pence) NAV attributable to equity shareholders of CSC Group PLC (1) 3, p 2, p 1, p Dilutive convertible bonds, share options and share awards Diluted NAV 3, p 2, p 1, p Add: Unrecognised surplus on trading properties (net of tax) Remove: Fair value of derivative financial instruments (net of tax) p p p Deferred tax on investment and development property and other investments p p p Non-controlling interest on the above (30.2) (3)p (31.7) (5)p (35.9) (6)p Add: Non-controlling interest recoverable balance not recognised p p p NAV per share (diluted, adjusted) 3, p 2, p 2, p (1) The number of shares used has been adjusted for shares held in the ESOP and treasury shares. 31

32 NOTES (unaudited) (continued) 12 Investment and development property At 1 January ,051.0 Trafford Centre acquisition 1,650.0 Additions from subsequent expenditure 34.9 Transfer from trading properties 11.5 Disposals (1.6) Surplus on revaluation 58.3 At 30 June ,804.1 m As at As at As at 30 June 31 December 30 June m m m Balance sheet carrying value of investment and development property 6, , ,886.7 Adjustment in respect of tenant incentives Adjustment in respect of head leases (38.3) (38.7) (39.3) Market value of investment and development property 6, , ,919.0 The fair value of the Group s investment and development properties as at 30 June 2011 was determined by independent external valuers at that date. The valuation conforms with the Royal Institution of Chartered Surveyors (RICS) Valuation Standards 7th Edition and with IVS 1 of International Valuation Standards, and was arrived at by reference to market transactions for similar properties. The main assumptions underlying the valuations are in relation to market rent, taking into account forecast growth rates and yields based on known transactions for similar properties and likely incentives offered to tenants. 13 Other investments At 1 January Additions Reclassification to intercompany (6.3) Revaluation 0.6 Foreign exchange movements (5.4) At 30 June Additions are the consideration received for C&C US consisting of million joint venture shares and 4.05 million shares in Equity One (note 21). The reclassification to intercompany results from the Trafford Centre acquisition and the elimination of the Group s investment in Trafford CMBS. m 14 Cash and cash equivalents As at As at As at 30 June 31 December 30 June m m m Unrestricted cash Restricted cash Cash and cash equivalents per the statement of cash flows: Unrestricted cash C&C US classified as held for sale Restricted cash at 30 June 2011 reflects amounts held to match the 2014 loan notes shown within borrowings. Restricted cash at 30 June 2010 relates to amounts deposited in a trust account equal to the outstanding principal plus interest due on maturity which was used to settle the 3.95 per cent convertible bonds on maturity in September

33 NOTES (unaudited) (continued) 15 Borrowings As at As at As at 30 June 31 December 30 June m m m Current borrowings Bank loans and overdrafts Commercial mortgage backed securities ( CMBS ) notes Loan notes % convertible bonds due Borrowings excluding finance leases Finance lease obligations Current borrowings Non-current borrowings CMBS notes , , ,018.9 CMBS notes CMBS notes CMBS notes CMBS notes Bank loan Bank loans Bank loan Debentures CSC bonds Borrowings excluding finance leases and Metrocentre compound financial instrument 3, , ,599.8 Metrocentre compound financial instrument Finance lease obligations Non-current borrowings 3, , ,769.0 Total borrowings 3, , ,884.5 Cash and cash equivalents (164.5) (222.3) (127.7) Net debt 3, , ,756.8 Net external debt (adjusted for Metrocentre compound financial instrument) at 30 June 2011 was 3,285.7 million (31 December ,436.5 million, 30 June ,622.4 million). 33

34 NOTES (unaudited) (continued) 16 Cash generated from operations Six months Six months Year ended ended ended 30 June 30 June 31 December Notes m m m Continuing operations Profit before tax Remove: Revaluation and sale of investment and development property 5 (58.4) (344.8) (497.2) Gain on acquisition of subsidiaries 20 (54.3) Gain on sale of subsidiaries 21 (40.4) Sale and impairment of other investments Depreciation Share-based payments Amortisation of lease incentives and other direct costs (4.3) (2.1) (5.3) Finance costs Finance income (0.6) (1.3) (3.1) Other finance costs Change in fair value of derivative financial instruments (21.7) Changes in working capital: Change in trading property Change in trade and other receivables (5.7) (10.8) (21.1) Change in trade and other payables Cash generated from operations Share capital Issued and fully paid At 31 December ,673,009 ordinary shares of 50p each Shares issued 83.9 At 30 June ,347,169 ordinary shares of 50p each On 28 January 2011 the Company issued 155,000,000 ordinary shares as part of the consideration for the acquisition of The Trafford Centre (note 20). As a condition of the acquisition the Company issued to the Peel Group a further 12,316,817 ordinary shares for cash at 3.55 per share. During the period the Company issued a total of 357,343 ordinary shares in connection with the exercise of options by former employees under the Capital Shopping Centres Group PLC Approved Share Option Scheme and the Capital Shopping Centres Group PLC Unapproved Share Option Scheme. m 18 Convertible bonds On 28 January 2011 the Company issued million, 3.75 per cent perpetual subordinated convertible bonds (the convertible bonds ) as part of the consideration for the acquisition of The Trafford Centre (note 20). As a condition of the acquisition the Company also issued to the Peel Group 25.7 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 million convertible bonds were issued and remain outstanding at 30 June These are accounted for as equity at their fair value on issue which totalled million. The convertible 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 convertible bonds may be redeemed at their principal amount at the Company s option on 28 January 2014 or any subsequent interest payment date thereafter, or at any time once 85 per cent or more of the principal amount of the bonds originally issued have been converted or cancelled. 19 Capital commitments At 30 June 2011, the Group was contractually committed to 54.5 million (31 December million, 30 June million) of future expenditure for the purchase, construction, development and enhancement of investment property. The Group s share of joint venture commitments included above at 30 June 2011 was 21.0 million (31 December million, 30 June million). 34

35 NOTES (unaudited) (continued) 20 Acquisition of The Trafford Centre On 28 January 2011 the Group acquired 100% of the share capital of Tokenhouse Holdings Limited (renamed CSC Trafford Centre Group Limited) for consideration consisting of million ordinary shares in the Company and million, 3.75 per cent perpetual subordinated convertible bonds (the convertible bonds ). As a condition of the acquisition the Company also issued to the Peel Group 12,316,817 ordinary shares for 3.55 each and convertible bonds with a nominal value of 26.7 million convertible into 6,679,250 ordinary shares, for a subscription amount of 23.7 million and an implied issue price of the underlying shares of 3.55 each. Total exceptional administration expenses associated with the acquisition are 19.5 million of which 4.0 million were recognised in 2010 and the balance of 15.5 million in Through its subsidiaries CSC Trafford Centre Group Limited owns and operates The Trafford Centre in Manchester. Further details of the business are given in the Operating and Financial Review. The fair value of the consideration paid has been assessed as million, consisting of million in respect of the ordinary shares and million in respect of the convertible bonds. The fair value has been assessed using the Capital Shopping Centres Group PLC opening share price on 28 January 2011 of 3.76, being the share price at the point the acquisition took place. The fair value of assets and liabilities acquired is set out in the table below. Fair value Book value adjustments Fair value m m m Assets Investment and development property 1,653.6 (3.6) 1,650.0 Plant and equipment Cash and cash equivalents (including restricted cash of 3.6 million) Trade and other receivables 18.8 (12.9) 5.9 Total assets 1,714.0 (16.5) 1,697.5 Liabilities Borrowings (833.3) (16.6) (849.9) Trade and other payables (88.7) 15.6 (73.1) Derivative financial instruments (17.5) (17.5) Total liabilities (939.5) (1.0) (940.5) Net assets (17.5) Fair value of consideration paid Gain on acquisition of subsidiaries 54.3 The book values disclosed are under IFRS and after allowing for the impact of joining the REIT regime. The trade and other liabilities book value includes the REIT entry charge of 33.0 million. The fair value of the assets and liabilities acquired exceeds the fair value of the consideration and as a result a gain of 54.3 million is recognised in the income statement on acquisition. This gain reflects the CSC share price at the date of the acquisition of 3.76 which, in accordance with IFRS 3 Business Combinations, is required to be used to assess the fair value of the consideration for acquisition accounting purposes. The acquisition was however agreed based on an issue price of the CSC Group ordinary shares of The difference between the agreed issue price of 4.00 and the share price at the date the acquisition was completed of 3.76 is the principal reason for recording an accounting gain on the acquisition. During the period the acquired companies contributed 42.6 million to the revenue of the Group and 8.1 million to the profit for the period. Had the acquisition taken place at 1 January 2011 the revenue of the Group for the period would have been million and the profit for the period would have been million. 21 Disposal of C&C US In 2010 the Group entered into an agreement with Equity One, pursuant to which Equity One agreed to acquire the Group s interests in its US subsidiaries (C&C US), through a joint venture with CSC. The transaction was completed on 4 January Consideration consisted of approximately million shares in the joint venture and 4.05 million shares in Equity One common stock. Based on the Equity One share price on 4 January of $18.15 and an exchange rate on that day of 1.56, the consideration had a fair value of million at the date of the transaction and the net assets exchanged had a book value of million including a deferred tax liability on investment property of 47.7 million. After taking into account costs of the transaction of 2.5 million, and the transfer of related hedging and foreign currency balances from equity of 10.9 million, a profit of 40.4 million has been recognised in the income statement as summarised in the table below. Fair value of consideration received Book value of net assets (147.3) Costs of the transaction (2.5) Cumulative foreign currency and hedging balances transferred from reserves 10.9 Gain on sale of subsidiaries 40.4 m 35

36 NOTES (unaudited) (continued) 22 Related party transactions There have been no related party transactions during the period that require disclosure under Section DTR R of the Disclosure and Transparency Rules or under IAS34 Interim Financial Reporting except those disclosed elsewhere in this condensed set of financial statements. 36

37 INVESTMENT AND DEVELOPMENT PROPERTY (unaudited) Property data Gross Market Initial* Nominal* area value yield equivalent million m Ownership Notes (EPRA) yield Occupancy* sq. ft. E As at 30 June 2011 The Trafford Centre, Manchester 1, % 5.09% 5.62% 95.8% 1.9 Lakeside, Thurrock 1, % 5.00% 5.69% 98.7% 1.4 Metrocentre, Gateshead % A 5.55% 6.03% 98.5% 2.1 Braehead, Glasgow % 5.08% 6.12% 96.1% 1.1 The Harlequin, Watford % 5.09% 6.65% 95.1% 0.7 Manchester, Arndale % B 5.51% 5.97% 97.7% 1.6 Victoria Centre, Nottingham % 5.19% 6.40% 95.9% 1.0 St David s, Cardiff % 3.92% 5.85% 89.0% 1.4 Eldon Square, Newcastle upon Tyne % 4.41% 6.76% 96.1% 1.4 Chapelfield, Norwich % 5.40% 6.80% 96.3% 0.5 Cribbs Causeway, Bristol % C 5.48% 6.04% 97.0% 1.0 The Chimes, Uxbridge % 5.95% 6.45% 98.6% 0.4 The Potteries, Stoke-on-Trent % 6.89% 7.25% 99.8% 0.6 The Glades, Bromley % 5.70% 7.25% 96.7% 0.5 Other 64.5 D 0.4 Total investment and development property 6, % 6.06% 96.8% 16.0 Total investment and development property (excluding The Trafford Centre) 5, % 6.19% 97.1% 14.1 As at 31 December 2010 Total investment and development property 5, % 6.30% 98.6% 14.1 * As defined in glossary. Notes A Interest shown is that of the Metrocentre Partnership in the 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 Includes the Group s 50 per cent economic interest in Xscape, Braehead. E Area shown is not adjusted for the proportional ownership. As at As at 30 June 31 December m m Passing rent ERV Weighted average unexpired lease 7.6 years 7.0 years Analysis of capital return in the period Market value 30 June 31 December Revaluation surplus * June 2011 m m m % Like-for-like property 5, , The Trafford Centre 1,650.0 (2.0) (0.1) Transferred from trading property 11.2 (0.4) (3.4) Developments (3.2) (39.5) Total investment and development property 6, , * Revaluation surplus includes amortisation of lease incentives and fixed head leases. 37

38 INVESTMENT AND DEVELOPMENT PROPERTY (unaudited) (continued) Analysis of net rental income in the period Six months Six months ended ended 30 June 30 June Change m m % Like-for-like property The Trafford Centre Disposals 1.0 (100.0) Developments Total investment and development property

39 OTHER INFORMATION FINANCIAL COVENANTS (unaudited) Financial covenants on asset-specific debt excluding joint ventures Loan Loan to outstanding at 30 June Interest Interest 31 July 2011 (1) Maturity m covenant market value LTV 2011 cover cover (2) covenant actual (3) Metrocentre % 62% 120% 136% Braehead N/A 57% 120% 173% Watford N/A 71% 120% 135% Nottingham % 75% 120% 230% Chapelfield N/A 88% 120% 146% Uxbridge % 73% 120% 145% Bromley % 76% 120% 143% Lakeside % 48% 140% 196% Total 2,394.0 The Trafford Centre There are no financial covenants on the Trafford Centre debt. However a debt service charge ratio is assessed quarterly and where this falls below specified levels certain restrictions come into force. The loan to market value ratio is 48 per cent. Financial covenants on joint ventures asset-specific debt Loan outstanding at Loan to 31 July 30 June Interest Interest 2011 (1) LTV 2011 cover cover Maturity m covenant market value (2) covenant actual (3) Cardiff (4) Xscape (4) Total % 34% 150% 250% n/a (5) 89% 120% 170% Notes (1) (2) (3) (4) (5) The loan values are the actual principal balances outstanding at 31 July 2011, which take into account any principal repayments made in July The balance sheet value of the loans includes any unamortised fees. The Loan to 30 June 2011 market value provides an indication of the impact the 30 June 2011 property valuations undertaken for inclusion in the condensed financial statements could have on the LTV covenants. The actual timing and manner of testing LTV covenants varies and is loan specific. Based on latest certified figures, calculated in accordance with loan agreements, which have been submitted between 30 June 2011 and 31 July The calculations are loan specific and include a variety of historic, forecast and in certain instances a combined historic and forecast basis. 50 per cent of the debt is shown which is consistent with accounting treatment and the Group's economic interest. The Xscape LTV covenant is suspended until 1 April Financial covenants on corporate facilities at 30 June 2011 Interest Interest Borrowings/ Borrowings/ Net worth Net worth cover cover net worth net worth covenant* actual covenant* actual covenant* actual 248m facility, maturing in m 1,353m 120% 155% 110% 31% * 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 Arndale, Manchester and Cribbs Causeway, Bristol. Capital Shopping Centres Debenture PLC at 30 June 2011 Capital Capital Interest Interest Loan cover cover cover cover Maturity m covenant actual covenant actual % 198% 100% 117% The debenture is currently secured on the Group's interests in The Potteries, Stoke-on-Trent and Eldon Square, Newcastle. Should the capital cover or interest cover test be breached Capital Shopping Centres 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 loan to value and income tests are satisfied immediately following the substitution. 39

40 OTHER INFORMATION (continued) UNDERLYING PROFIT STATEMENT (unaudited) For the six months ended 30 June 2011 Six months Six months Six months Year ended ended ended ended 30 June 30 June 31 December 31 December m m m m Net rental income Net other income Administration expenses (11.8) (11.2) (11.8) (23.0) Underlying operating profit Finance costs (98.1) (82.3) (83.1) (165.4) Finance income Other finance costs (4.0) (4.4) (4.4) (8.8) Underlying net finance costs (101.5) (85.4) (85.7) (171.1) Underlying profit before tax Tax on adjusted profit (0.7) (0.2) 0.1 (0.1) Remove amounts attributable to non-controlling interest Share of underlying loss of associates (0.1) C&C US underlying earnings included within discontinued operations Interest on convertible bonds deducted directly in equity (2.4) Underlying earnings Underlying earnings per share (pence) 8.0p 7.0p 8.4p 15.4p Included within underlying earnings for the six months ended 30 June 2011 are the following amounts related to the Trafford Centre acquisition. Net rental income 35.4 Administration expenses (0.6) Underlying operating profit 34.8 Underlying net finance costs (19.5) Underlying profit before tax 15.3 Interest on convertible bonds deducted directly in equity (2.4) Underlying earnings 12.9 m 40

41 DIVIDENDS The Directors of Capital Shopping Centres Group PLC have announced an interim dividend per ordinary share (ISIN GB ) of 5 pence ( pence) payable on 22 November 2011 (see salient dates below). This dividend will be paid totally as a Property Income Distribution ( PID ) and will be wholly subject to a 20 per cent withholding tax unless exemptions apply (please refer to the SPECIAL NOTE below). Dates The following are the salient dates for the payment of the interim dividend: Thursday, 29 September 2011 Friday, 30 September 2011 Monday, 10 October 2011 Wednesday, 12 October 2011 Friday, 14 October 2011 Friday, 14 October 2011 Tuesday, 22 November 2011 Sterling/Rand exchange rate struck. Sterling/Rand exchange rate and dividend amount in SA currency announced. Ordinary shares listed ex-dividend on the JSE, Johannesburg Ordinary shares listed ex-dividend on the London Stock Exchange. Record date for interim dividend in London and Johannesburg. UK shareholders only: Last date for receipt of Tax Exemption Declaration forms to permit dividends to be paid gross. Dividend payment day for shareholders South African shareholders should note that, in accordance with the requirements of Strate, the last day to trade cumdividend will be Friday, 7 October 2011 and that no dematerialisation or rematerialisation of shares will be possible from Monday, 10 October to Friday, 14 October 2011 inclusive. No transfers between the UK and South African registers may take place from Thursday, 29 September to Sunday, 16 October 2011 inclusive. 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 REITs page of the Investors section of the Capital Shopping Centres Group website ( or on request to our UK registrars, Capita Registrars, or HMRC. Validly completed forms must be received by Capita Registrars no later than the Record Date, Friday 14 October 2011; 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 also be able to claim a refund of withholding tax (either as an individual or as a company) from HMRC subject to the terms of a double tax treaty, if any, between the UK and the country in which the shareholder is relevant. Refund application forms for all non-uk shareholders are available for download from the REITs page of the Investors section of the Capital Shopping Centres Group website ( or on request to our SA registrars, Computershare, or HMRC. UK withholding tax refunds are not claimable from Capital Shopping Centres Group, the South African Revenue Service ( SARS ) or other national authorities, only from the UK s HMRC. NOTE: The taxation of PIDs in South Africa for South African resident shareholders changed on 1 January 2011 and they are therefore advised to contact their own tax advisers or SARS to confirm the current tax treatment. Neither Capital Shopping Centres Group nor Computershare are able to provide any guidance at this time as the effect of the change is a matter to be determined between South African resident shareholders and SARS. The above does not constitute advice and shareholders should seek their own professional guidance. Capital Shopping Centres Group does not accept liability for any loss suffered arising from reliance on the above. 41

42 GLOSSARY Adjusted, diluted net asset value per share NAV per share adjusted to exclude the fair value of derivative instruments and related tax and deferred tax on investment and development property and other investments and to include any unrecognised post tax surplus on trading properties. Annual property income The Group s share of passing rent plus the external valuers estimate of annual excess turnover rent, additional rent in respect of unsettled rent reviews and sundry income such as that from car parks and mall commercialisation. Debt to assets ratio Net external debt divided by the balance sheet value of investment and development property plus trading property. Diluted figures Reported amounts adjusted to include the effects of dilutive potential shares issuable under convertible bonds and employee incentive arrangements. Earnings per share Profit for the period attributable to equity shareholders of CSC Group PLC divided by the weighted average number of shares in issue during the period. EPRA European Public Real Estate Association, the publisher of Best Practice Recommendations intended to make financial statements of public real estate companies in Europe clearer, more transparent and comparable. ERV (estimated rental value) 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, before bad debt provision and adjustments required under IFRS regarding tenant lease incentives. Exceptional items Exceptional items are those items that in the Directors view are required to be separately disclosed by virtue of their size or incidence to enable a full understanding of the Group s financial performance. Initial yield to the Group Annualised net rent (as net initial yield (EPRA)) on investment properties expressed as a percentage of the net market value, representing the yield that would be foregone by the Group were the asset to be sold. Interest cover Underlying operating profit excluding trading property related items divided by the net finance cost plus interest on convertible bonds recognised in equity excluding the change in fair value of derivatives, exceptional finance costs and amortisation of compound financial instruments. Interest rate swap A derivative financial instrument enabling parties to exchange interest rate obligations for a predetermined period. These are used by the Group to convert floating rate debt to fixed rates. IPD Investment Property Databank Ltd, producer of an independent benchmark of property returns. Like-for-like properties Investment properties which have been owned throughout both periods without significant capital expenditure in either period, so both income and capital can be compared on a like-for-like basis. For the purposes of comparison of capital values, this will also include assets owned at the previous reporting period end but not throughout the prior period. Loan-to-value (LTV) LTV is the ratio of attributable debt to the market value of an investment property. Net asset value (NAV) per share Net assets attributable to equity shareholders of CSC Group PLC divided by the number of ordinary shares in issue at the period end. Net external debt Net debt after removing the Metrocentre compound financial instrument. Net initial yield (EPRA) Annualised net rent (after deduction of revenue costs such as head rent, running void, service charge after shortfalls, empty rates and merchant association contribution) on investment properties expressed as a percentage of the gross market value before deduction of theoretical acquisition costs, consistent with EPRA s net initial yield. Net rental income The Group s share of net rents receivable as shown in the income statement, having taken due account of non-recoverable charges, bad debt provisions and adjustments to comply with IFRS including those regarding tenant lease incentives. Nominal equivalent yield Effective annual yield to a purchaser from the assets individually at market value after taking account of notional acquisition costs assuming rent is receivable annually in arrears, reflecting estimated rental values (ERV) but disregarding potential changes in market rents. Occupancy The passing rent of let and under offer units expressed as a percentage of the passing rent of let and under offer units plus ERV of un-let units, excluding development and recently completed properties and treating units let to tenants in administration as un-let. 42

43 GLOSSARY Passing rent The Group s share of contracted annual rents receivable at the balance sheet date. This takes no account of accounting adjustments made in respect of rent free periods or tenant incentives, the reclassification of certain lease payments as finance charges or any irrecoverable costs and expenses, and does not include excess turnover rent, additional rent in respect of unsettled rent reviews or sundry income such as from car parks etc. Contracted annual rents in respect of tenants in administration are excluded. Property Income Distribution (PID) 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 from its qualifying rental profits. Certain classes of shareholder may qualify to receive a PID gross shareholders should refer to for further information. The Group can also pay non-pid dividends which are not subject to UK withholding tax. Real Estate Investment Trust (REIT) A tax regime which exempts from corporation tax the rental profits and capital gains of the REIT s qualifying investment property activities. In the UK, the regime must be elected into and the REIT must meet certain ongoing qualifications, including the requirement to distribute at least 90 per cent of qualifying rental profits to shareholders. The Group elected for REIT status with effect from 1 January Tenant (or lease) incentives Any incentives offered to occupiers to enter into a lease. Typically incentives are in the form of an initial rent free period and/or a cash contribution to fit out the premises. Under IFRS the value of incentives granted to tenants is amortised through the income statement on a straight-line basis over the lease term. Total financial return The change in adjusted NAV per share plus dividends per share paid in the period expressed as a percentage of opening NAV per share less dividends paid in the period. Trading property Properties held for trading purposes rather than to earn rentals or for capital appreciation and shown as current assets in the balance sheet. Underlying earnings per share (EPS) Earnings per share adjusted to exclude valuation movements, exceptional items and related tax. Underlying figures Amounts described as underlying exclude valuation movements, exceptional items and related tax. Yield shift A movement (usually expressed in basis points) in the yield of a property asset. 43

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