Liberty International PLC

Transcription

1 THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND REQUIRE YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own personal financial advice immediately from your stockbroker, CSDP, bank manager, solicitor, accountant, fund manager or other appropriate independent financial adviser, who is authorised under the Financial Services and Markets Act 2000 if you are in the UK or, if not, from another appropriately authorised independent financial adviser. If you sell or have sold or otherwise transferred all of your Liberty International Ordinary Shares, please send this Circular, together with the accompanying Form of Proxy, as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for delivery to the purchaser or the transferee, except that such documents should not be sent to any jurisdiction where to do so might constitute a violation of local securities laws or regulations. If you sell or have sold or otherwise transferred part of your holding of Liberty International Ordinary Shares you should retain this Circular and the accompanying Form of Proxy and consult the stockbroker, bank or other agent through whom the sale or transfer was effected. Unless otherwise stated, defined terms in this document have the meaning given to them in the section entitled Definitions. The distribution of this document together with the accompanying Form of Proxy into jurisdictions other than the UK and South Africa may be restricted by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Application will be made to the UKLA and to the London Stock Exchange for the Capital & Counties Ordinary Shares to be admitted to the Official List and to trading on the main market for listed securities of the London Stock Exchange, respectively. Subject to all conditions being fulfilled, the JSE has approved the listing of the Capital & Counties Ordinary Shares on the main board of the JSE. It is expected that dealings will commence in the Capital & Counties Ordinary Shares on the London Stock Exchange at 8.00 a.m. on Monday 10 May 2010 on a when issued basis and that UK Admission will occur at 8.00 a.m. on Monday 17 May All dealings between 8.00 a.m. on Monday 10 May 2010 and 8.00 a.m. on Monday 17 May 2010 on the London Stock Exchange will be on a when issued basis and at the risk of the parties concerned. If UK Admission does not occur by 8.00 a.m. on Monday 17 May 2010, these dealings will be of no effect. It is expected that dealings will commence in the Capital & Counties Ordinary Shares on the JSE at 9.00 a.m. (South African time) on Monday 10 May All of the Capital & Counties Ordinary Shares are to be issued to existing shareholders of Liberty International and no Capital & Counties Ordinary Shares have been marketed to, nor are any available for purchase, in whole or in part, by, the public in the UK or elsewhere in connection with the Admission. This document has been prepared in connection with the demerger of Capital & Counties from Liberty International and, unless the context otherwise requires, assumes that the special resolutions proposed in connection with the Demerger which are set out in the Liberty International Notice of Extraordinary General Meeting at the end of this Circular will be passed at the Liberty International Extraordinary General Meeting to be held on Wednesday 7 April 2010 and that the Demerger is effected. A more detailed description of the Demerger is set out in Part V: Further Details of the Transaction Agreements and the Reductions of Capital. Liberty International PLC (incorporated and registered under the laws of England and Wales with registered No ) Demerger of Capital & Counties Circular and Notice of Extraordinary General Meeting This Circular does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security. This Circular does not constitute a prospectus or prospectus equivalent document. The Prospectus relating to Capital & Counties Properties PLC (including details of the Capital & Counties Ordinary Shares) has been published on Liberty International s website at You should read the whole of this document and any documents incorporated herein by reference. Your attention is drawn to the letter from the Chairman of Liberty International which is set out on pages 7 to 16, which recommends that you vote in favour of the Demerger Resolutions, and to the Liberty International Notice of Extraordinary General Meeting which appears at the end of this Circular. The Liberty International Extraordinary General Meeting will be held on Wednesday 7 April 2010 at a.m. at One Whitehall Place, Westminster, London, SW1A 2HD. A Form of Proxy for use at the Liberty International Extraordinary General Meeting is enclosed and, to be valid, should be completed, signed and returned following the procedures described in Note 1 of the Liberty International Notice of Extraordinary General Meeting set out at the end of this Circular so as to be received by the Company s registrars as soon as possible but, in any event, so as to arrive no later than a.m. on 5 April 2010 (or, in the case of an adjourned meeting, at least 48 hours before the time appointed for holding the adjourned meeting). Completion and return of a Form of Proxy will not prevent members from attending and voting in person should they wish to do so. For a discussion of certain risk factors relating to the Demerger, the Liberty International Group, Capital & Counties and the Capital & Counties Ordinary Shares please see Part II: Risk Factors of this document.

2 No representation or warranty, express or implied, is made by Rothschild (which is authorised and regulated in the UK by the FSA), Rothschild SA (which is an authorised financial services provider (FSP 8435) and is regulated by the financial services board in South Africa) or Merrill Lynch International or any person affiliated with Rothschild, Rothschild SA or Merrill Lynch International as to the accuracy, completeness or verification of the information set forth in this document, in connection with the Company, the Liberty International Ordinary Shares or the Demerger and nothing contained in this document is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. Rothschild, Rothschild SA or Merrill Lynch International have not, nor has any person affiliated with Rothschild, Rothschild SA or Merrill Lynch International, assumed responsibility for the accuracy, completeness or verification of this document and accordingly they disclaim, to the fullest extent permitted by applicable law, any and all liability whether arising in tort, contract or otherwise which they might otherwise be found to have in respect of this document or any such statement. Rothschild is acting exclusively for Liberty International and Capital & Counties Properties PLC and no one else in connection with the Demerger and Admission and Rothschild SA, which is regulated in terms of the Listings Requirements, is acting exclusively for Liberty International, Capital & Counties Properties PLC and the JSE and no one else in connection with the Demerger and Admission and neither Rothschild nor Rothschild SA will regard any other person (whether or not a recipient of this document) as a client in relation to the Demerger and Admission, nor will they be responsible to anyone other than Liberty International and Capital & Counties Properties PLC for providing the protections afforded to their respective clients or for providing advice in connection with the Demerger and the listing of the Capital & Counties Ordinary Shares, any transaction or arrangement referred to in this document or the contents of this document. Merrill Lynch International (a subsidiary of Bank of America Corporation) is acting exclusively for Liberty International and no one else in connection with the Demerger and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Demerger, nor will they be responsible to anyone other than Liberty International for providing the protections afforded to clients of Merrill Lynch International or for providing advice in connection with the Demerger, any transaction or arrangement referred to in this document or the contents of this document. The Capital & Counties Ordinary Shares have not been and are not required to be registered under the US Securities Act. The Capital & Counties Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Capital & Counties Ordinary Shares or the accuracy or adequacy of this document. Any representation to the contrary is a criminal offence in the US. NOTICE TO NEW HAMPSHIRE RESIDENTS: NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. The holding of Capital & Counties Ordinary Shares by an employee benefit plan subject to the US Employee Retirement Income Security Act of 1974 or a plan subject to Section 4975 of the US Internal Revenue Code of 1986, as amended, or by any entity whose assets are treated as assets of any such plan, could result in severe penalties or other liabilities for the holder, Capital & Counties and the Capital & Counties Directors. Each holder and subsequent transferee of Capital & Counties Ordinary Shares will therefore be deemed to have represented and warranted that it is not such a plan or entity unless otherwise agreed by Capital & Counties. This document does not constitute an offer to sell, or a solicitation of an offer to buy, any Capital & Counties Ordinary Shares offered by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation. 2

3 Forward-looking statements This Circular contains forward-looking statements, within the meaning of Section 27A of the US Securities Act and Section 21E of the US Exchange Act, regarding the belief or current expectations of Liberty International, the Liberty International Directors and other members of its senior management about Liberty International s businesses and the transactions described in this Circular, including statements relating to possible future write-downs and Liberty International s capital planning projections. Generally, words such as may, could, will, expect, intend, estimate, anticipate, believe, plan, seek, continue or similar expressions identify forward-looking statements. These statements are further qualified by the risk factors disclosed in this Circular that could cause actual results to differ materially from those in the forward-looking statements. These forward-looking statements speak only as at the date of this Circular. Except as required by the FSA, the London Stock Exchange, the JSE, the Listing Rules, the Prospectus Rules, the Disclosure and Transparency Rules or applicable law, Liberty International does not have any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, further events or otherwise. Except as required by the FSA, the London Stock Exchange, the JSE, the Listing Rules, the Prospectus Rules, the Disclosure and Transparency Rules or applicable law, Liberty International expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty International s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Presentation of Financial Information As required by the Companies Act 2006 and Article 4 of the European Union IAS Regulation, unless otherwise indicated, the financial information in this document has been prepared in accordance with IFRS issued by the IASB and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB as adopted by the European Union. The financial information is in pounds sterling. All unaudited financial information in this document has been extracted without material adjustment from Liberty International s accounting records. Shareholders should ensure that they read the whole of this document and do not rely only on financial information summarised within it. In this document, certain financial measures, including underlying profit before tax; adjusted earnings per share; net assets per share (adjusted, diluted); as well as revenue, net rental income and certain other income statement figures that are adjusted on a like-for-like capital and like-for-like capital and income basis, and net external debt, are presented in a way which is not recognised by IFRS. These measures are presented because Liberty International believes that they and similar measures are widely used in Liberty International s industry as a means of evaluating financial and operating performance. These measures may not be comparable with similarly titled measures used by other companies and are not measurements under IFRS or any other body of generally accepted accounting principles. Further, certain of these measures do not reflect the impact of items which the Liberty International Directors have determined to be non-recurring. Consequently, these measures should not be considered substitutes for the information contained in Part VII: Historical Financial Information of Capital & Counties and EC&O. All figures described as pro forma in this Circular are sourced from the pro forma report in Part VIII: Pro Forma Financial Information. Use of 12 February 2010 Property Valuation Figures This document uses valuations of Capital & Counties investment and development properties as at 31 December This valuation is not current and has been superseded by valuation figures as at 12 February 2010, as presented in Part IX: Valuation Reports for Capital & Counties as at 12 February As at 12 February 2010, the date of the valuation reports, the investment and development properties were valued at 1,241.6 million, an increase of 2.1 million since 31 December 2009 taking into account asset disposals, capital expenditure and currency movements in the period. Documents incorporated by reference Certain information in relation to the Liberty International Group is incorporated by reference into this document as set out below: 2009 Prospectus Section Pages Liberty International Directors Service Contracts Liberty International Share Plans Liberty International Related Party Transactions

4 TABLE OF CONTENTS EXPECTED TIMETABLE OF PRINCIPAL EVENTS... 5 PART I LETTER FROM THE CHAIRMAN OF LIBERTY INTERNATIONAL... 7 PART II RISK FACTORS PART III DESCRIPTION OF THE CAPITAL SHOPPING CENTRES BUSINESS PART IV DESCRIPTION OF THE CAPITAL & COUNTIES BUSINESS PART V FURTHER DETAILS OF THE TRANSACTION AGREEMENTS AND THE REDUCTIONS OF CAPITAL PART VI TAXATION AND EXCHANGE CONTROL PART VII HISTORICAL FINANCIAL INFORMATION OF CAPITAL & COUNTIES AND EC&O PART VIII PRO FORMA FINANCIAL INFORMATION PART IX VALUATION REPORTS FOR CAPITAL & COUNTIES AS AT 12 FEBRUARY PART X ADDITIONAL INFORMATION DEFINITIONS LIBERTY INTERNATIONAL NOTICE OF EXTRAORDINARY GENERAL MEETING Page 4

5 EXPECTED TIMETABLE OF PRINCIPAL EVENTS The dates given in this expected timetable are based on Liberty International s current expectations and may be subject to change Publication of Prospectus and Circular... Friday 12 March Latest time and date for receipt of Forms of Proxy a.m. on Monday 5 April Liberty International Extraordinary General Meeting a.m. on Wednesday 7 April Court hearing to confirm Liberty International Reduction of Capital... Tuesday 4 May Liberty International Reduction of Capital becomes effective... Friday 7 May Change of name of Liberty International to Capital Shopping Centres Group PLC...close of business on Friday 7 May Court hearing to confirm the Capital & Counties Reduction of Capital... Monday 17 May Capital & Counties Reduction of Capital becomes effective... Tuesday 18 May EXPECTED TIMETABLE FOR LONDON STOCK EXCHANGE DEALINGS Last day of dealings in Liberty International Ordinary Shares on the LSE cum entitlement to participate in the Demerger... Friday 7 May Transfers of Liberty International Ordinary Shares between the principal Liberty International UK Register and the Liberty International SA Register prohibited... close of business on Friday 7 May Commencement of dealings in the Capital & Counties Ordinary Shares on the London Stock Exchange on a when issued basis (2)(3) a.m. on Monday 10 May First day of dealings in Liberty International (now Capital Shopping Centres) Ordinary Shares ex entitlement to participate in the Demerger under LSE code CSCG... Monday 10 May Record Time for the purposes of determining holders of Liberty International Ordinary Shares entitled to participate in the Demerger p.m. on Friday 14 May End of prohibition on transfers of Liberty International Ordinary Shares between the principal Liberty International UK Register and the Liberty International SA Register... close of business on Friday 14 May Admission to trading, listing of and commencement of dealings in the Capital & Counties Ordinary Shares on the London Stock Exchange a.m. on Monday 17 May EXPECTED TIMETABLE FOR JSE DEALINGS Last day to trade Liberty International Ordinary Shares on the JSE in order to participate in the Demerger... Last day to trade under the old name Liberty International (4)... Transfers of Liberty International Ordinary Shares between the principal Liberty International UK Register and the Liberty International SA Register prohibited and registration of transfers of Liberty International Ordinary Shares on the Liberty International SA Register suspended... Listing of and commencement of dealings in the Capital & Counties Ordinary Shares on the JSE... Friday 7 May Friday 7 May close of business on Friday 7 May (South African time) 9.00 a.m. (South African time) on Monday 10 May (3) 5

6 Liberty International Ordinary Shares begin trading under the new name of Capital Shopping Centres Group PLC under JSE code CSO ex entitlement to participate in the Demerger... Record Time for the purposes of determining holders of Liberty International Ordinary Shares entitled to participate in the Demerger and the South African record date for name change... End of prohibition on transfers of Liberty International Ordinary Shares between the principal Liberty International UK Register and the Liberty International SA Register and end of suspension of registration of transfers of Liberty International Ordinary Shares in respect of the Liberty International SA Register... Monday 10 May 7.00 p.m. (South African time) on Friday 14 May close of business on Friday 14 May (South African time) EXPECTED TIMETABLE FOR SETTLEMENT CREST accounts credited with Capital & Counties Ordinary Shares... CSDP and broker accounts credited with Capital & Counties Ordinary Shares... Posting of share certificates for the Capital & Counties Ordinary Shares to Certificated Shareholders (including SA Certificated Shareholders) a.m. on Monday 17 May 9.00 a.m. (South African time) on Monday 17 May bymonday 24 May If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through the Regulatory Information Service of the London Stock Exchange and SENS of the JSE. All times shown in this document are UK times unless otherwise stated. South African time will be one hour ahead of UK time from 28 March Notes: (1) These times and dates are indicative only and will depend, among other things, on the date on which the Court sanctions the Liberty International Reduction of Capital and/or the Capital & Counties Reduction of Capital (as the case may be). (2) Dealings on the London Stock Exchange in Capital & Counties Ordinary Shares will commence at 8.00 a.m. on Monday 10 May 2010 on a when issued basis until UK Admission. Dealings carried out on a when issued basis are in respect of securities which are subject to an application for listing or trading which are entered into before, and conditional upon, listing or trading becoming effective. If UK Admission does not occur by 8.00 a.m. on Monday 17 May 2010, all dealings made in Capital & Counties Ordinary Shares on the London Stock Exchange will be of no effect. Such dealings will be at the sole risk of the parties concerned. (3) Dealings on the London Stock Exchange in Capital & Counties Ordinary Shares on Monday 10 May 2010 and Tuesday 11 May 2010 will settle on UK Admission. (4) Share certificates may not be dematerialised or rematerialised in the name of Liberty International after Friday 7 May Share certificates in the new name may be dematerialised or rematerialised from Monday 17 May Helplines UK Shareholder Helpline If you have further questions, please telephone the UK shareholder helpline on the numbers set out below. This helpline is available from 9.00 a.m. to 5.00 p.m. Monday to Friday (except public holidays) (from inside the UK calls cost 10 pence per minute plus network charges) or (from outside the UK). South African Shareholder Helpline Shareholders in South Africa can also telephone the South African shareholder helpline (from inside South Africa) or (from outside South Africa) between 9.00 a.m. and 5.00 p.m. (South African time) on any South African Business Day. Calls to the number are toll free. Calls to the helpline from outside South Africa will be charged at applicable international rates. 6

7 PART I LETTER FROM THE CHAIRMAN OF LIBERTY INTERNATIONAL Directors Patrick Burgess MBE David Fischel Ian Durant Kay Chaldecott Ian Hawksworth Graeme Gordon Ian Henderson CBE Andrew Huntley Michael Rapp Rob Rowley Neil Sachdev Andrew Strang Dear Shareholders, Chairman Chief Executive 12 March 2010 Recommended proposals for the demerger of Capital & Counties from Liberty International 1 Introduction On 9 March 2010 Liberty International announced its intention to separate into two businesses, Capital Shopping Centres and Capital & Counties. The separation will be effected by way of a demerger of Liberty International s central London focused property investment and development division, to a new company called Capital & Counties Properties PLC, from the rest of the Liberty International Group comprising predominantly the UK shopping centres business. Liberty International will be renamed Capital Shopping Centres Group PLC. The Demerger is expected to become unconditional on Friday 7 May 2010 as set out in the timetable on page 5 of this document. The Demerger will create distinct entities with separate strategic, capital and economic characteristics and management teams: Capital Shopping Centres, a prime regional shopping centre focused UK REIT, aiming to deliver strong longterm returns through income and capital growth; and Capital & Counties, a central London focused, non-reit, property company focusing on total return opportunities in London s real estate market. If the Demerger proceeds, Liberty International shareholders will receive one share in Capital & Counties Properties PLC for each ordinary share in Liberty International that they own at the time of the Demerger and will continue to own their existing Liberty International shares. The Gordon family, whose combined interest in Liberty International is 14.8 per cent, intends to vote in favour of the Demerger and to remain invested in, and will be represented on the boards of, both companies. Capital Shopping Centres Group PLC and Capital & Counties Properties PLC will both have premium listings on the Official List, will be admitted to trading on the London Stock Exchange and will have secondary listings on the JSE. The purpose of this document is: (a) to set out the background to and the reasons for the Demerger; (b) to explain why the Liberty International Board believes the Demerger is in the best interests of Shareholders and why it unanimously supports the Demerger; (c) to explain the resolutions to be put to Shareholders at the Liberty International Extraordinary General Meeting; and (d) to recommend that Shareholders vote in favour of the Demerger Resolutions to be proposed at the Liberty International Extraordinary General Meeting to be held on Wednesday 7 April Liberty International PLC 40 BROADWAY LONDON SW1 H 0BT TELEPHONE: FACSIMILE: REGISTERED IN ENGLAND NO REGISTERED OFFICE: 40 BROADWAY LONDON SW1H 0BT 7

8 The size of the Demerger and the various legal actions which are being effected in connection with the Demerger means that Shareholders are required to vote on the Demerger Resolutions pursuant to the Listing Rules, the Companies Act and the Liberty International Articles of Association. It is expected that dealings will commence in the Capital & Counties Ordinary Shares on the London Stock Exchange at 8.00 a.m. on Monday 10 May 2010 on a when issued basis and that UK Admission will occur at 8.00 a.m. on Monday 17 May It is expected that dealings will commence in the Capital & Counties Ordinary Shares on the JSE at 9.00 a.m. (South African time) on Monday 10 May Summary of the Demerger and what Shareholders will receive The Demerger will be effected through a reduction of Liberty International s capital (under the Companies Act 2006). This will involve the cancellation of Liberty International s share premium account, which currently amounts to 1,005,680,998. Following such cancellation, the Demerger Assets will be transferred to Capital & Counties Properties PLC in consideration for which Capital & Counties Properties PLC will issue to Shareholders who are on the Liberty International UK Register or the Liberty International SA Register at the Record Time: One Capital & Counties Ordinary Share for each Liberty International Ordinary Share Shareholders will also continue to hold their existing shares in Liberty International, which will be renamed Capital Shopping Centres Group PLC. The Demerger is conditional (amongst other things) on: the approval by Shareholders of the Demerger Resolutions; and the confirmation of the Liberty International Reduction of Capital by the Court. All material third party consents necessary to effect the Demerger, including from lenders where appropriate, have been obtained. It should be noted that, although it is currently Liberty International s intention that the Demerger should be concluded, Liberty International is entitled to decide not to proceed with the Demerger at any time prior to the Liberty International Reduction of Capital becoming effective if it determines that it would not be in the interests of Shareholders. The Demerger is not conditional on the Admission of Capital & Counties Properties PLC. Following the Demerger, Capital & Counties Properties PLC will also reduce its share capital to create distributable reserves for the purpose of facilitating the future payment of its dividends and to meet its other needs. Below is the current expected timetable for the principal Demerger events: Liberty International Extraordinary General Meeting a.m. on Wednesday 7 April 2010 Last day to trade Liberty International Ordinary Shares on the LSE and the JSE under the old name of Liberty International PLC cum entitlement to participate in the Demerger... Friday 7 May 2010 Liberty International Reduction of Capital becomes effective... Friday 7 May 2010 Change of name of Liberty International to Capital Shopping Centres Group PLC close of business on Friday 7 May 2010 Commencement of dealings in the Capital & Counties Ordinary Shares on the LSE on a when issued basis and listing of and commencement of dealings in the Capital & Counties Ordinary Shares on the JSE a.m. on Monday 10 May 2010 First day of dealings in Liberty International (now Capital Shopping Centres) Ordinary Shares ex entitlement to participate in the Demerger... Monday 10 May 2010 Record Time for purposes of determining holders of Liberty International Ordinary Shares entitled to participate in the Demerger and the South African record date for the name change p.m. on Friday 14 May 2010 Admission to trading, listing of and commencement of dealings in the Capital & Counties Ordinary Shares on the London Stock Exchange a.m. on Monday 17 May 2010 Settlement on the LSE and JSE a.m. on Monday 17 May 2010 Capital & Counties Reduction of Capital becomes effective... Tuesday 18 May

9 Further information on the Demerger is set out in Part V: Further Details of the Transaction Agreements and the Reductions of Capital. 3 Background to and reasons for the Demerger Capital Shopping Centres and Capital & Counties are distinct businesses with different risk and reward profiles and capital requirements. The Demerger will enable existing shareholders of Liberty International to continue to participate in both of the businesses with the same initial economic weighting whilst providing flexibility for investors to select their own weighting to each of Capital Shopping Centres and Capital & Counties over time. Each business will be able to attract the most appropriate shareholder base to provide optimal support to continue its own strategic development. The Liberty International Board believes that the Demerger will enable Capital Shopping Centres and Capital & Counties to achieve greater value for Shareholders over time than the current Liberty International would as one combined business. Further information on Capital Shopping Centres is set out in Part III: Description of the Capital Shopping Centres Business and further information on Capital & Counties is set out in Part IV: Description of the Capital & Counties Business. Historical financial information for Capital & Counties is set out in Part VII: Historical Financial Information of Capital & Counties and EC&O. Information on the financial impact of the Demerger on Liberty International is set out in Part VIII: Pro Forma Financial Information. Property valuations for Capital & Counties are set out in Part IX: Valuation Reports for Capital & Counties as at 12 February Capital Shopping Centres (formerly Liberty International) Upon Demerger, Capital Shopping Centres will be the only UK REIT focused on prime regional shopping centres and one of a small number of prime regional shopping centre REITs globally. Capital Shopping Centres has interests in 13 UK shopping centres (excluding Westgate, Oxford), which include nine of the UK s top 30 regional shopping centres. Liberty International exchanged contracts in January for the conditional sale of Westgate, Oxford for gross proceeds of 56 million. The sale is expected to complete in the first half of In addition to its UK shopping centre assets, Capital Shopping Centres will own Liberty International s US assets (which are predominantly retail and currently reported as Capco USA), and the investment in Indian shopping centre developments. The US and Indian property related assets were valued at 348 million and 32 million, respectively, as at 31 December 2009 representing in aggregate approximately 8 per cent. of Capital Shopping Centres property assets on a pro forma basis. Capital Shopping Centres continues to actively explore a tax efficient solution to reduce exposure to the United States over time. As at 31 December 2009, Capital Shopping Centres had investment and development properties of 5.0 billion on a pro forma basis. Capital Shopping Centres strategy is to maintain a market-leading position as an active owner, manager and developer of prime UK regional shopping centres. Capital Shopping Centres undertakes asset and centre management initiatives across its existing centres, combined with selective asset acquisitions and disposals, with the aim of delivering strong long-term returns for its shareholders through income and capital growth. On a pro forma basis, adjusting for the Demerger, as at 31 December 2009 Capital Shopping Centres had gross external debt of 3.0 billion, cash balances of 0.3 billion and net external debt of 2.7 billion, giving a loan-to-value ratio of 55 per cent. 5 Capital & Counties Upon Demerger, Capital & Counties Properties PLC will be one of the largest listed central London focused investment and development property companies, with 81 investment properties held directly or through joint ventures located predominantly in West London and the West End and with limited exposure to the City and Midtown. Capital & Counties share of these properties was valued at 1.2 billion as at 31 December

10 Capital & Counties has a concentration of assets in three landmark estates in the central London real estate market, with the potential for substantial active asset management to drive superior total returns for Capital & Counties shareholders. Capital & Counties assets principally comprise: Covent Garden London, which has property assets of 548 million (as at 31 December 2009); Earls Court & Olympia, an exhibition business with property assets of 340 million (as at 31 December 2009), which is wholly owned by Capital & Counties following the recent buyout of its partners shares; a 50 per cent. interest in the Empress State Building, an office building adjacent to Earls Court which is held in a joint venture with Land Securities Group plc, with a value of 94 million (as at 31 December 2009) for Capital & Counties interest; and a 50 per cent. interest in the Great Capital Partnership, a joint venture with Great Portland Estates plc focused predominantly on the West End, particularly Regent Street and Piccadilly, with Capital & Counties share of the property assets valued at 247 million (as at 31 December 2009). Capital & Counties assets generated net rental income of 79 million in the year ended 31 December This included 1.4 million of income from assets that have since been sold and 4.0 million of income attributable to Capital & Counties joint venture partner in respect of the Empress State Building, which was fully consolidated in Capital & Counties accounts until an accounting treatment change on 12 August As at 31 December 2009, these assets related to, in aggregate, 3.5 million sq. ft., of which retail space accounted for 20 per cent., office space accounted for 41 per cent., exhibition space accounted for 35 per cent. and residential space accounted for 4 per cent. Capital & Counties also has investments in two real estate investment funds focused on China valued at 46 million as at 31 December On a pro forma basis, adjusting for the Demerger, as at 31 December 2009 Capital & Counties had borrowings of 726 million in the form of debt facilities secured against specific property assets, cash balances of 263 million, amounting to net external debt of 463 million, giving a group loan-to-value ratio of around 37 per cent. For the full year ended 31 December 2009 Capital & Counties had a loss before tax of 127 million. Capital & Counties will not initially be a REIT. Given the initial composition of assets and plans for active management, the Directors believe that the business will have greater operating flexibility as a listed non-reit property company. This means that it will need to recognise current tax on rental profits and deferred tax on revaluation surpluses accrued in respect of those assets currently within the Liberty International REIT business (Covent Garden London, and its interests in the Empress State Building and Great Capital Partnership joint ventures) following the Demerger. Earls Court & Olympia and the China investments are not currently part of the Liberty International REIT business. The Capital & Counties Articles of Association are substantially the same as the Liberty International Articles of Association except for certain differences which have been incorporated to reflect recent changes in UK company law and market practice (including the Companies (Shareholders Rights) Regulations 2009) and certain requirements of the JSE. The Capital & Counties Articles of Association also contain standard REIT related provisions, but these will only become applicable if Capital & Counties elects in the future to become a REIT. In addition, the borrowing limit for Capital & Counties Directors will be four times the adjusted capital and reserves, as determined by the Capital & Counties Properties PLC s audited, consolidated balance sheet, or a sum of 1,000,000,000 until the first such audited, consolidated balance sheet is produced. A small number of investors currently hold their interests in approximately 188,965 Liberty International Ordinary Shares in the form of Liberty International ADRs. The Directors have determined not to establish an ADR programme for Capital & Counties Properties PLC. Under the terms of the Deposit Agreement, the Depositary is expected to sell the Capital & Counties Ordinary Shares that it receives in connection with the Demerger and distribute the proceeds on a pro rata basis to the holders of Liberty International ADRs. Any holders of Liberty International ADRs should contact the Depositary on BNY-ADRS for further details. 10

11 6 Current trading and prospects Capital Shopping Centres The business of Capital Shopping Centres has continued to progress satisfactorily since 31 December Occupancy has been maintained at around the year end level with substantially fewer tenant failures in the post- Christmas period than in the first quarter of 2009 and closer to the experience in the second half of Estimated footfall has been sustained in aggregate at approximately 2009 levels. Capital Shopping Centres has continued to achieve lettings in the recently opened St David s, Cardiff development and across the established centres is in active negotiation with tenants as short-term lettings, which were a feature of 2009, reach maturity. Demand for catering units has been particularly positive. The St. Andrew s Way mall at Eldon Square, Newcastle opened fully let in February Anchored by Debenhams, the approximately 400,000 sq.ft. extension increased the size of the centre to 1.3 million sq. ft., introducing many new retailers to Newcastle, including Apple, Hollister, Superdry and Guess, and features flagship or new concept stores for Top Shop, New Look, Republic and River Island. The food offering in the centre has also been extended with the addition of many new outlets including Nando s, Strada and Wagamama. Capital Shopping Centres is a market leader in the UK shopping centre business with a focus on the highest quality centres. The supply pipeline of new retail space has sharply diminished as a result of economic conditions, to the benefit of owners of existing centres. Retail trade in the UK continues to gravitate towards the strongest destinations. The scale of Capital Shopping Centres activities, its positioning in a market with high barriers to entry and Capital Shopping Centres management expertise ensure that it has strong prospects. Capital Shopping Centres continues to actively explore a tax efficient solution to reduce its exposure in the United States over time. Capital & Counties Throughout the economic downturn, central London has continued to demonstrate growth in visitor numbers and a stronger level of consumer spending than the rest of the UK. Investment property values are showing signs of stability following the recovery in the period to 31 December 2009 from the trough in values around the middle of Although EC&O EBITDA increased in 2009 as it benefited from tight control of costs, the UK exhibition and conference sectors came under pressure in 2008 and 2009 as businesses cut back their marketing budgets owing to the economic recession. Capital & Counties has continued to make progress in the year to date in pursuing the planning consent for the comprehensive redevelopment of Earls Court. The Directors believe that GCP is well positioned to benefit from economic recovery owing to its strategic focus on prime located properties with added value potential. Occupancy levels at Covent Garden London have been maintained since the year end whilst footfall has improved on 2009 levels in 2010 to date. The Directors consider that following the Demerger, Capital & Counties, with its sound financial position and concentration of assets in three landmark estates in the London real estate market, is well placed to pursue its objective of delivering superior total returns for Shareholders. 11

12 7 Effects of the Demerger The expected benefits of the Demerger are set out in paragraph 3 of this Part I: Letter from the Chairman of Liberty International. The illustrative effect on Liberty International s assets and liabilities as at 31 December 2009 would be to reduce net assets by million to 1.7 billion on a pro forma basis. Additionally, for illustrative purposes, had the Demerger been effective for the full year to 31 December 2009, Liberty International s net rental income would have been 292 million. A summary of pro forma information, adjusting for the Demerger, is set out below: Pro forma adjustments 31 Dec 2009 Demerger Demerger costs Pro forma m m m m Net rental income (79.2) Adjusted earnings per share p 15.1p Investment and development properties... 6,206.8 (1,240.5) 4,966.3 Cash and cash equivalents (263.3) Net external debt... 3,176.2 (463.1) 2,713.1 Net assets... 2,421.1 (733.7) (7.3) 1,680.1 Net assets (adjusted, diluted)... 2,945.9 (791.2) (7.3) 2,147.4 Net assets per share (adjusted, diluted) p 339p Further information on the effect of the Demerger on Liberty International s assets and income is set out in the pro forma financial information for Capital Shopping Centres in Part VIII: Pro Forma Financial Information. 8 Board structures, corporate governance and ongoing relationships between Capital Shopping Centres and Capital & Counties Following the Demerger, Patrick Burgess MBE, the current chairman of Liberty International, will be chairman of Capital Shopping Centres Group PLC, with David Fischel, the current chief executive of Liberty International, as chief executive, and Kay Chaldecott, the current managing director of the Capital Shopping Centres business, as executive director of property. The non-executive directors will be Rob Rowley (senior independent director), Ian Henderson CBE, Andrew Huntley, Neil Sachdev and Andrew Strang (all of whom are existing Liberty International Directors), Richard Gordon (who is replacing Graeme Gordon), and John Abel (formerly a director of Liberty International, who will rejoin the board at the next annual general meeting of the Company). The recruitment of a new finance director of Capital Shopping Centres is underway to replace Ian Durant, who is to become chairman of Capital & Counties, and who will stand down from his role at Capital Shopping Centres after a transitionary period. As previously announced, Michael Rapp will retire from the Liberty International Board at this year s annual general meeting, and upon Demerger Ian Hawksworth will stand down from the Liberty International Board. Following the Demerger, Ian Durant, the current finance director of Liberty International, will be chairman of Capital & Counties Properties PLC, with Ian Hawksworth, the current managing director of Capital & Counties, as chief executive, Soumen Das as finance director and Gary Yardley as investment director. The non-executive directors will be Ian Henderson CBE (deputy chairman and senior independent director), David Fischel, Graeme Gordon, Andrew Huntley and Andrew Strang. A search for an additional independent non-executive director of Capital & Counties Properties PLC is underway. The biographies of the members of the boards of both companies are set out in paragraph 4 of Part X: Additional Information. Capital & Counties Properties PLC and Capital Shopping Centres Group PLC will operate as separate companies and neither company will have a shareholding in the other. The common directors will be David Fischel, Ian Henderson CBE, Andrew Huntley and Andrew Strang, as well as Ian Durant until he steps down from his position at Capital Shopping Centres Group PLC as described above. Although the board of Capital & Counties Properties PLC will not be compliant with the Combined Code at inception, it is the intention of the Capital & Counties Directors that it will become fully compliant over time. 12

13 Pursuant to the Demerger Agreement and related documents, amongst other matters, Liberty International will provide certain services to Capital & Counties, including, amongst other things, certain accounting, company secretarial, information technology and taxation services, until 30 June Further information on the Demerger Agreement and related documents is set out in Part V: Further Details of the Transaction Agreements and the Reductions of Capital. 9 Dividend policies As previously indicated, the Liberty International Board intends to pay a final dividend of 11.5 pence per Liberty International Ordinary Share for the full year ended 31 December 2009, bringing the full year dividend to 16.5 pence per Liberty International Ordinary Share in aggregate, which is the same level as for With respect to the year ending 31 December 2010, if the Demerger proceeds, it is currently intended that Capital Shopping Centres Group PLC will pay a total dividend of not less than 15 pence per ordinary share and Capital & Counties Properties PLC will pay a total dividend of not less than 1.5 pence per Capital & Counties Ordinary Share. Subject to performance and available resources, Capital Shopping Centres Group PLC will in future years seek to grow its dividend from the level of 15 pence per ordinary share. Any growth in Capital & Counties Properties PLC s dividend in future years will depend on the level of net operating income (before exceptional items) while taking into account asset realisations and its active management plans and commitments within the central London market. 10 Potential risks Shareholders should consider carefully the risks and uncertainties set out in Part II: Risk Factors relating to the Demerger, the Liberty International Group, Capital & Counties and the Capital & Counties Ordinary Shares, along with all of the information set out in this document. If any or a combination of these risks actually occurs, the market price of shares in Capital Shopping Centres Group PLC and/or Capital & Counties Properties PLC may decline. 11 Convertible Bonds In relation to the Convertible Bonds, of which 79.2 million are currently outstanding, the conversion price will be adjusted following completion of the Demerger in accordance with the terms and conditions of the Convertible Bonds to reflect the Demerger. Liberty International has also agreed with the Convertible Bonds Trustee to grant to bondholders a put option in respect of the Convertible Bonds, to be exercisable at any time until shortly before maturity, at par plus accrued interest, and will deposit in a trust account with the Convertible Bonds Trustee an amount equal to the outstanding principal amount due on maturity plus the interest payment due on the final interest payment date. This amount will be used to meet any redemptions of Convertible Bonds on exercise of the put option, or on maturity. The put option will come into effect on deposit of the amount. Liberty International has agreed with the Convertible Bond Trustee to make such deposit at least five business days before the effective date of the Demerger. 12 Share schemes and incentive plans Impact of the Demerger on Liberty International share schemes generally Following completion of the Demerger, the Liberty International Directors intend to make appropriate adjustments to the outstanding awards under Liberty International s share option schemes. Adjustments may be made to the number of shares comprising, and the option price of, any award. As determined by the remuneration committee of Liberty International, conditional awards of shares under Liberty International s bonus scheme (the Liberty International Bonus Scheme ) vested on 10 March No awards remain outstanding under the Liberty International Bonus Scheme. Capital & Counties Ordinary Shares issued in respect of Liberty International Ordinary Shares held in Liberty International s share incentive plan will be held in trust, along with the original Liberty International Ordinary Shares, and will be deemed to have been awarded at the same time as the original shares. The existing Liberty International share schemes will continue for Capital Shopping Centres. 13