Half-year Report

RNS Number : 1869T

British Land Co PLC

13 November 2019

The British Land Company PLC Half Year Results

13 November 2019

Chris Grigg, Chief Executive said: "Our operational performance has been good and we made further progress on our mixed use strategy, including a resolution to grant planning for a new urban centre at Canada Water in London. We continue to deliver space that our customers want, with 1.3m sq ft of leasing activity across existing and new space, so occupancy remains high at 97% and developments are now 87% pre let or under offer generating £63m of rent when fully let. In a tough market, we have capitalised on opportunities to make retail sales, disposing of £236m of assets ahead of book value.

Looking forward, we expect our markets to remain uneven, but we have kept debt levels low, our balance sheet is strong and flexible and we have a broad spread of expertise across our business. We expect retail to remain challenging, so we'll focus on driving operational performance and maintaining occupancy. We see early signs that some liquidity may be returning to parts of the market, and our focus will remain on thoughtfully progressing our strategy to reduce exposure. In London, we expect the market to remain good, with supply relatively constrained and high quality space, in well-connected, vibrant parts of town continuing to attract demand from a range of businesses. These dynamics are highly supportive of our Campus approach."

Financial summary

· Financial performance

· Underlying EPS down 6.4% to 16.1p following £1.2bn of income producing sales since April 2018, partially mitigated by buybacks contributing 0.5p

· Development programme will add 4.6p to annualised EPS when fully let

· Portfolio value down 4.3%; Retail down 10.7%, Offices up 0.4% and developments up 4.6%

· EPRA NAV down 5.4% at 856p due to valuation declines, with buybacks contributing positive 8p

· Half year dividend up 3.0% at 15.97p; total accounting return -3.7%

· Strong and flexible balance sheet

· £289m of asset sales, including £194m superstore portfolio, overall ahead of book value

· £125m share buyback completed, bringing cumulative buyback to £625m since July 2017

· Maintained low LTV at 30.8% (March 2019: 28.1%), weighted average interest rate reduced to 2.7%

Progress on strategy: Becoming the specialist in mixed use

· Campus-focused London Offices: A compelling, customer-focused offer

· 671,000 sq ft of leasing activity representing £29m of headline rents; 97% occupancy

· Under offer on a further 74,000 sq ft and in negotiations on a further 242,000 sq ft

· Lettings and renewals on the investment portfolio overall 11% ahead of ERV

· Committed developments 87% pre-let/under offer, generating £63m of future rent when fully let

· Significant future optionality within the portfolio. 2.1m sq ft near and medium term development pipeline, including Norton Folgate, where enabling works have commenced

· Storey operational across 297,000 sq ft; further 91,700 sq ft identified

· Smaller, more focused Retail: Driving operational outperformance in a challenging market

· 605,000 sq ft of leasing activity; 1% ahead of passing rents; 96% occupancy

· Significantly outperforming benchmarks: footfall 440 bps ahead; LFL sales 420 bps ahead

· £236m off-strategy assets sold since April 2019, 6% ahead of book value

· Two thirds of store vacancies since April 2017 following CVA or administration are either re-let, under offer or in negotiations

· Secured resolution to grant planning for our Canada Water Masterplan: valuation up 12%

· 53 acre mixed use regeneration scheme including plans for 3,000 homes

· Headlease drawdown expected Spring 2020

· Continued strong performance on Sustainability benchmarks

· GRESB 4* and awarded a green star rating for the 10th consecutive year

· AAA MSCI rating, ranking within the top 9% overall

Summary

Income statement	HY 2018/19	HY 2019/20	Change
Income statement
Underlying earnings per share ²	17.2p	16.1p	(6.4)%
Underlying Profit	£169m	£152m	(10.1)%
IFRS profit/(loss) after tax	£(48)m	£(404)m
IFRS basic earnings per share	(4.9)p	(42.9)p
Dividend per share	15.50p	15.97p	3.0%
Total accounting return ²	(1.3)%	(3.7)%
Balance sheet	31 Mar 2019	30 Sept 2019
Portfolio at valuation (proportionally consolidated)	£12,316m	£11,723m	(4.3)%¹
EPRA Net Asset Value per share²	905p	856p	(5.4)%
IFRS net assets	£8,689m	£7,971m
Loan to value ratio (proportionally consolidated)	28.1%	30.8%
Operational Statistics	HY 2018/19	HY 2019/20
Lettings and renewals	0.9m sq ft	1.3m sq ft
Gross investment activity	£1.1bn	£0.5bn
Committed and recently completed development	1.6m sq ft	1.6m sq ft
Sustainability Performance
MSCI ESG	AAA rating	AAA rating
GRESB	4* and Green Star	4* and Green Star

¹ Valuation movement during the period (after taking account of capex) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales

²See Note 2 to the condensed interim set of financial statements

Results Presentation Conference Call

A presentation of the results will be broadcast via conference call and slides to accompany the call will be displayed along with a live audio broadcast via the website (Britishland.com) at 8.30am on 13 November 2019. The details for the conference call and weblink are as follows:

UK Toll Free Number:	0808 109 0700
Password:	British Land
Click for access:	Audio weblink

A dial in replay will be available later in the day for 7 days. The details are as follows:

Replay number:	020 8196 1998
Passcode:	0248302

The accompanying slides will be made available at britishland.com just prior to the event starting.

For Information Contact

Investor Relations
David Walker, British Land	020 7486 4466

Media
Claire Scicluna, British Land	07469 855 603
Guy Lamming/Gordon Simpson, Finsbury	020 7251 3801

CHIEF EXECUTIVE'S REVIEW

Our operational performance has been good, and we have made further progress with our mixed use strategy, including a resolution to grant planning for a new urban centre at Canada Water. We continue to deliver space that our customers want, with 1.3m sq ft of leasing across existing and new space, so occupancy remains high at 97%. In a tough market, we continue to capitalise on opportunities to make retail sales, disposing of £236m of assets ahead of book value.

Leasing & Operational Performance

Our campus strategy is really resonating with businesses and their employees alike and with occupancy of 97% across our London campuses and 96% in retail, our portfolio remains effectively full. In London, we signed 671,000 sq ft of lettings and renewals. Our developments are now 87% pre-let or under offer, securing £55m pa of future rental income. We are also successfully repurposing existing space to appeal to a broader range of occupier, with lettings to tech companies Monzo and Skyscanner at Broadgate and Regent's Place respectively (post period end) and a renewal to Visa, our biggest occupier at Paddington. Overall, offices values were up 0.4%.

We are committed to ensuring our offer meets the needs of a broad range of occupiers. In London, office customers can choose from a range of product, varied in terms of fit out, flexibility and price. Importantly, customers can tailor their requirements across these products depending on their specific need, as well as change their requirements over time as their businesses evolve. Storey Club, which provides high quality ad hoc meeting and events space is now fully operational at Paddington and we will soon launch our second standalone Storey building in Haggerston. The breadth of this customer offer, underpinned by our campuses, is key to our leasing success.

The retail market remained tough, and we saw this reflected in valuations which were down 10.7%. However, our portfolio delivered positive like for like retailer sales with footfall flat, compared to a market where both metrics were negative. Long term deals were on average 15% ahead of previous passing rent, but we have been pragmatic in our approach, to keep occupancy high and support operational performance. Shorter-term deals are often an effective way to secure a new occupier for space which has become vacant unexpectedly through a CVA or administration. More generally, this trend towards more flexible leasing is reflective of the broader market as occupiers seek seasonal or pop-up sites in different locations on a shorter term basis. We continue to be proactive in our response to CVAs: Over two thirds of store closures since April 2017 are either re-let, under offer or in negotiations. Overall, leasing was 1% ahead of previous passing rent excluding rates mitigation deals and assets being readied for development.

At Canada Water, our valuation increased 12.4% after Southwark Council's Planning Committee unanimously supported our masterplan. This means we have a resolution to grant outline planning permission for our 53-acre mixed use scheme, including detailed permission on the first three buildings. This is a major milestone for our process and is the culmination of five years masterplanning and engagement with the local community, including over 120 public consultations attracting more than 5,000 people. The next key milestone will be the drawdown of the headlease, which we are hopeful will happen in Spring 2020 meaning the earliest possible start on site would be mid-next year.

Capital Allocation & Investments

We have a clear and consistent strategy to build an increasingly mixed use business, focused on three core areas. As part of this, we plan to reduce retail to 30-35% of our portfolio over the medium term and we made further progress with the sale of 12 Sainsbury superstores for £429m (our share £194m). Today, Retail represents 41% of our business and looking forward, we see early signs that some liquidity may be returning to the market, as we commented in our FY2019 results in May. We have a structured approach to disposals and a clear view of the value of our assets, so will remain patient and opportunistic to benefit from pockets of demand.

Our financial position is strong. Despite valuation falls our leverage has remained low with disposals funding a £125m share buyback and investment in developments. We have established a unique network of campuses, to capitalise on good demand for high quality space, in well-connected, vibrant parts of town, and we expect this to continue. We have a clear long term strategy, unmatched development opportunities with optionality built in, and the financial strength and expertise across our team to navigate today’s uneven markets and thrive long term.

MARKET BACKDROP

Macro-economic context

The market backdrop remained uneven and volatile across the half as the Brexit process continued. UK GDP contracted in the second quarter of 2019 for the first time since 2012 with only services providing a positive, albeit slowing, contribution to growth. Consumer confidence has remained subdued, but unemployment remains low at under 4%. In recent months, the likelihood of a no-deal Brexit appears to have reduced, but we now face a General Election in December so the outlook remains uncertain.

London market

The London investment market saw £4.2bn of transactions over the period, below the long term average of £7.4bn. Overseas investors remained understandably cautious pending greater clarity on Brexit before investing in the London office market while vendors continue to seek premia to asset values. However, fundamentals continue to favour London as yields in central London remain attractive compared to many other European markets and cross-border investors benefit from the currency effect.

The occupational market continued to be supportive, with take up in our markets up 7% on last year, and just ahead of the long term average. To help attract the best talent, businesses are seeking high quality space in exceptional environments located in the best-connected areas. For this space, rents were stable at c.£70 psf in the City and up to £110 psf in the West End, with incentives holding steady. Flexibility remains a key theme, with landlords offering a wider variety of space. Flexible office take up continued to be strong at 21% of take up, and is estimated to account for c. 6% of the London office market. Supply remained constrained, particularly for larger space requirements and it is now common for occupiers to start looking for new space up to two years before the end of a ten-year lease. As a result, nearly 60% of development under construction has already been pre-let.

Retail market

Retail investment markets remained challenging, with volumes low, reflecting negative sentiment and a number of sellers are under pressure, encouraging more opportunistic pricing. A number of relatively small retail parks exchanged hands in recent months, although there have been very few transactions for larger lot size assets. In this context, domestic and overseas buyers have started to recognise the value opportunity in the sector, however there remains a gap in pricing expectations where vendors are well positioned. Assets with attractive alternative use potential continue to trade well.

The occupational market remains tough and this has been reflected in the number of operators entering CVA or administration, particularly over the last 18 months. In addition, retailers continue to focus on optimising their store networks in a number of ways, not limited to store closures or rental reductions. Retailers are increasingly focused on their distribution and supply chain capability, where possible utilising existing store networks to ship from store to reduce delivery times. At the same time, many are enlivening existing space with concessions or events to drive footfall or are expanding into areas of high footfall such as transport interchanges. As a result, polarisation continues to accelerate, with assets able to support or enhance these characteristics typically less impacted by the broader challenges.

OUR STRATEGY

Progress on our strategy

Strategic priority	Indicative 5-year business mix	Progress
Campus focused London Offices	55-60% Of which Storey c.5%	· Progressing development on our campuses and de-risking through pre-lets with 87% of our recently completed and committed developments now let or under offer to a broad range of occupiers · Creating options with 567,000 sq ft of planning consents submitted · Storey operational across 297,000 sq ft on all three campuses with further 91,700 sq ft identified · Smart Places team trialling space utilisation technology at our head office and piloting similar technology for a customer
Refocused Retail	30-35%	· £236m assets sold since April 2019, 6% above book value
Residential	c.10%	· Sales at Clarges Mayfair nearly complete; four units completed in the half year and a further unit completed post period end, bringing total completed units to 30, with two further exchanged, one under offer and one remaining · Achieved resolution to grant planning at Canada Water where we have plans for 3,000 homes · Aldgate Phase 2, a BTR scheme delivering 160 units added to our near term pipeline

A Mixed Use Specialist

We have a clear long term strategy to build an increasingly mixed-use business.

Why mixed use?

We recognise that the way people use real estate is changing and that the most effective way to drive enduring demand for our space is to evolve our offer in line with those trends. Central to this is the blurring of boundaries between work and leisure time. Increasingly people expect to be able to socialise, exercise or be entertained near to their office and they want office space which reflects more flexible work patterns. There is also a growing expectation that businesses and places of work have a positive impact on both the environment and the local community. These preferences are an important driver of people's decisions around which companies they work for, the places they shop and spend time. Workspaces which meet these expectations help businesses attract and retain talent and support productivity and effectiveness.

How does it deliver value?

A successful mixed-use strategy is fully aligned to the evolving needs of our customers and how people use our places. By helping drive enduring demand for our space, it supports the delivery of long term sustainable value through rental growth and high occupancy. This makes our income streams more resilient, increasing the value of our assets. At our campuses and multi-let spaces we control not just the buildings, but the spaces between them. As such, investment we make into the broader environment has a positive impact on the value of our individual assets. As long term owners and managers of space, we are also fully incentivised to invest in the local areas and support the local communities in which we operate; we believe that by playing a role within a thriving local community, our places are better able to succeed. Our scale and unique network also mean we have the flexibility to re-allocate uses within our places over time to better reflect the needs of our customers as they change and ensure that we always make the best use of our space.

How are we delivering it?

We have a clear and consistent plan to reshape our business to comprise three core, complementary elements as part of an increasingly mixed use business:

· Campus focused London offices: with a blend of core and flexible space, including the further build out of Storey, integrated alongside a world-class retail and leisure offering

· A smaller, more focused Retail portfolio: high quality, well located assets focused on a smaller number of on average larger, multi-let places, especially those with mixed use potential

· Residential: plans for 3,000 homes at Canada Water with further opportunities within our portfolio

Campus-focused London offices

At our London campuses, we create and manage some of the best connected, most accessible space in London. Located in vibrant and exciting neighbourhoods, they provide world-class, modern and sustainable offices alongside public spaces, with a range of places to spend time outside of work. These unique campus benefits are the result of specific investment over many years and represent a clear attraction to businesses seeking to hire and retain the best people.

Increasingly what differentiates our space is the range of product and depth of services we provide. We have evolved our offer to attract a much broader range of industries and occupiers and to cater to their changing needs over time. Our menu of products spans more traditional core space, typically on long term lease, with a range of services priced on a bespoke basis; to fully fitted and furnished, generally on a short to medium term lease, with a basic package of services; to Storey, our fully serviced, flexible workspace offer.

Storey is deliberately differentiated from other flexible offerings in allowing occupiers to personalise their space through their own branding while benefitting from the shared amenities in the building and on our campuses. It has helped attract new types of occupier to our campuses, particularly tech and creative businesses who benefit from being located around some of the world's leading financial, legal and professional companies. Storey has also become a valued service for existing occupiers on our campuses, providing overflow or project space, and through Storey Club at Paddington, we offer ad hoc meeting and events space to all our Paddington occupiers.

Retail plays an increasingly prominent role within our campuses, notably at Broadgate, where our development pipeline will deliver an additional 395,000 sq ft of non-office space, focused on retail, leisure and dining space. This will predominately be at ground floor, so although the total allocation will be just 12%, it makes a highly visible contribution to the campus, and has been instrumental in helping us sign a more diverse range of occupier.

A smaller, more focused Retail portfolio

In the context of rapid and fundamental structural change in retail, we have a plan to reduce this part of our business to 30-35% of the total portfolio over the medium term. Retail will remain a significant part of British Land reflecting our longer term view that the right assets in the right locations can succeed as part of an increasingly mixed use business.

This view, set out at our recent investor day is based upon the application of realistic assumption ranges about how the UK retail market may evolve. These assumptions are informed by a range of independent, third party forecasts and current operating data. It demonstrates that it is reasonable to expect our retail portfolio will deliver positive like for like sales growth, which could be of the order of 1 - 6% per annum, on a ten year view. This analysis is summarised below; it is a high level, directional range around how the market might evolve, so is not intended as a forecast or prediction.

· Retail Sales will grow: We assume total retail sales in the UK will grow between 2.5% and 4.5% per year on average. This assumption is based on a range of industry forecasts, from Euromonitor at the most pessimistic (2.6%) to CACI at the most optimistic (4.3%)

· Online penetration will increase: We assume online sales will absorb the majority of this sales growth, and internet penetration of retail sales will increase from the current level of 19% to a level of between 35% and 50%

· Applying these assumptions we derive a long term growth rate for physical retail sales of between -2% and +2% per year

· Physical retail space will shrink benefiting trading densities: We assume that the amount of physical retail floorspace in the UK will decline over time as stores close, existing schemes are repurposed to alternate uses and few, if any, new schemes are developed. We assume a reduction of retail floorspace of between 1% to 2% per annum (in line with agents predictions, with JLL at -1.5%)

· Taking all of these assumptions together, we derive a level of physical retail sales per sq ft growth (trading density growth) of -1% to +4% per annum for the market as a whole

· British Land will continue to outperform: Importantly, our portfolio has consistently outperformed the industry in terms of the retail sales growth operators achieve at our assets.

· Taking our average outperformance for FY16-FY19 of 190 bps and applying it to the derived industry trading density growth suggests that on a long term view, our portfolio could deliver retailer sales per sq ft growth of between 1 - 6% per annum

Over the last 12 months we have made retail disposals of £550m, including £236m in the first half. Underpinning this is a highly structured approach, which involves assessing every asset against a clear set of criteria to determine whether it is one we will invest and grow, maintain or sell. These criteria include external factors such as population trends, catchment quality, local competition and critical mass of the scheme, as well as factors specific to the asset, such as the potential we see for development, particularly mixed use and fulfilment (i.e. last mile delivery). Our assessment generates a score for each asset which represents its alignment to strategy. Generally, assets in London and the South East are most in line with our strategy, so we would expect to make sales from our Solus and Local Retail portfolio (outside of London), with some sales potentially from our Regional portfolio.

However, the retail investment market is currently challenging, and is likely to remain so for the short to medium term. In this context, we will remain patient and opportunistic in our approach, and only progress disposals at the right price, which deliver value and progress our long term strategy.

Residential

Residential is complementary to our existing expertise and longer term will be additive to our mixed use strategy. We see most potential to build exposure in this market at Canada Water where we have potential to deliver 3,000 homes with other opportunities in our portfolio, including Aldgate Phase 2, in our near term pipeline. Building this business organically is the most effective way of ensuring that our product is high quality, reflects our strategy, adheres to the highest standards of safety and sustainability criteria but inevitably means that it will be delivered over a longer time frame.

BUSINESS REVIEW

Key metrics

As at:	31 Mar 2019	30 Sept 2019
Portfolio valuation	£12,316m	£11,723m
Occupancy	97.2%¹	96.8%¹
Weighted average lease length to first break	6.4 yrs	5.8 yrs

6 months to:	30 Sept 2018	30 Sept 2019

Total property return	+0.2%	(2.3)%
· Yield shift	+7 bps	+17 bps
· ERV growth	(0.8)%	(2.3)%
· Valuation movement	(1.9)%	(4.3)%

Lettings/renewals (sq ft)	888,000	1,289,000
Lettings/renewals vs ERV	+5.3%	+9.2%

Gross investment activity	£1,115m	£517m
· Acquisitions	£142m	£51m
· Disposals	£(842)m	£(292)m
· Capital investment	£131m	£174m
Net investment/(divestment)	£(569)m	£(67)m

On a proportionally consolidated basis including the Group's share of joint ventures and funds

¹ Where occupiers have entered CVA or administration but are still liable for rates, these are treated as occupied. If units expected to become vacant are treated as vacant, then the occupancy rate would reduce from 96.8% to 96.4%

Portfolio performance

At 30 September 2019	Valuation £m	Valuation movement %	ERV movement %	Yield shift bps	Total property return %
Offices	6,439	0.4	0.9	-	2.1
Retail	4,790	(10.7)	(4.8)	+37	(8.4)
Residential	147	(2.1)	na	na	(0.8)
Canada Water	347	12.4	na	na	14.4
Total	11,723	(4.3)	(2.3)	+17	(2.3)

The portfolio value was down 4.3% overall, with Retail valuations down 10.7%. Offices were up 0.4%, driven by developments which were up 4.9%. ERV growth in offices was positive reflecting an uplift in the City portfolio, while yields were flat overall, with contraction in the City offsetting mild yield expansion in the West End. All reporting segments were down in retail with the multi-let portfolio declining 12.3% overall reflecting continued negative sentiment, with limited transaction evidence, particularly on larger lot sizes. The average yield movement on our largest 5 assets ranged between 25-50 bps.

Offices performed in line with the London Office benchmark and the All Offices benchmark. Retail underperformed the Retail benchmark, which saw values down overall. Lower-yielding larger assets continue to outperform operationally but are not immune to market yield movements when compared to the benchmark which includes smaller assets which were typically less impacted. As a result and reflecting the continued strength of industrials where we have no exposure, the portfolio underperformed the IPD all property total return index by 310 bps over the period.

Capital activity

From 1 April 2019	Offices	Retail	Residential	Canada Water	Total
	£m	£m	£m	£m	£m
Purchases¹	32	-	19	-	51
Sales²	-	(236)	(56)	-	(292)
Development Spend	125	8	-	5	138
Capital Spend	20	16	-	-	36
Net Investment	177	(212)	(37)	5	(67)
Gross Investment	177	260	75	5	517

On a proportionally consolidated basis including the Group's share of joint ventures and funds

¹ Includes purchase of 6 Orsman Road, Haggerston for £32m which exchanged in period and completed post period end

² Includes Clarges residential sales of £56m, of which £6m exchanged prior to FY20 and completed in the period and £3m of which exchanged and completed post period end

The total gross value of our investment activity since 1 April 2019 was £517m with retail disposals accounting for £236m. Our sale of 12 Sainsbury superstores to Realty Income Corporation in April 2019 for £429m (our share £194m) was the largest single component of this and was achieved at a modest premium to book. In line with strategy, we have continued to make sales from our solus portfolio, including a leisure asset more than 10% ahead of book and we have exchanged on a Homebase ahead of book reflecting its attractive alternative use potential.

At Clarges, we completed on the sale of four units in the half year, and a further unit post period end, bringing total completed units to 30 with receipts totalling £415m. Two of the four remaining units have now exchanged and a further unit is under offer, leaving one unit remaining, valued at £4m. This has been a highly successful scheme for us, having delivered total profits of £200m to date.

At Aldgate, we have acquired Barratt's 50% share in our Phase 2 build-to-rent residential-led scheme which has now been added to our near term pipeline and post period end, have completed on the purchase of 6 Orsman Road, Haggerston for Storey for £32m.

Data and insights

The insights we generate from data and research, help us to understand the needs of our customers. This information can play a real and fundamental role in decision making around leasing, asset management and capital allocation helping to generate incremental value for shareholders and our customers.

In the six months under review, we completed a second wave of the London Office Benchmarking Survey, collating feedback from over 1,300 office workers on their experiences of working in a specific location. We used this data to generate benchmarks from which we could assess our own assets. This exercise provided insight into worker preferences across various demographics to support our leasing and asset management strategies. At Broadgate, we conducted a mobile app analysis to understand how Broadgate functions as a place - how it is used by workers and visitors, where else these people go and how it compares to similar schemes. This exercise highlighted the importance of campus amenities reinforcing our focus on services as a key part of our offer as well as the benefits of being located within an active neighbourhood. At Regent's Place, we held one on one in depth interviews and focus groups amongst existing occupiers, potential occupiers, community partners, agents, and residents to inform our re-brand to ensure it resonated with our target groups.

Smart Places

Our Smart Places team deliver digital placemaking across our London campuses. Progress in the six months included piloting phone-as-pass access controls and sensor-driven space utilisation technology at our head office, where we have increased our occupational density by 35% with minimal impact on the working environment. We have developed and rolled out the StoreyPortal across Storey and Storey Club allowing users to book meeting rooms, arrange catering and simplify the entry procedure for guests to streamline the overall experience. We are actively partnering with our occupiers to help them achieve their goals: we developed the "Smart fit out guide" to help occupiers understand how to make the most of Smart technology in their buildings and are trialling sensor technology for an occupier so we can work with them to ensure they use their space most efficiently.

Sustainability

Sustainability is integral to how we manage our business. Our activities can impact the environment, our customers and local communities and we take seriously our responsibility to manage these well. Improvements in these areas strengthen our relationship with our customers and improve our places, helping us drive sustainable demand for our space.

In September, we were delighted to make a ground-breaking commitment to deliver a net zero carbon portfolio, as part of an industry effort, led by the Better Buildings Partnership, to tackle the challenge of climate change. Building on our 64% reduction in carbon intensity achieved to date versus the 2009 baseline, next year we will publish our pathway for achieving net zero across both our developments and operational portfolio. As part of meeting our more immediate 2020 target of a 55% energy intensity improvement, we have undertaken audits of 40 energy intensive assets in our portfolio and are currently implementing the saving opportunities identified.

We have a good track record of delivering sustainable new buildings, with 92% of new developments on track to receive a minimum of BREEAM very good or excellent rating. At 1 Triton Square, Regent's Place, we are saving 35,600 tonnes of embodied carbon by retaining the existing structure. Through more efficient design, we will also achieve a 40% reduction in operational emissions compared to a typical UK building and are on track to achieve a BREEAM rating of Outstanding. 100 Liverpool Street is on track to achieve a BREEAM Excellent rating, Well Gold certification and a WiredScore platinum rating for internet connectivity.

At Haggerston, Shoreditch, we are experimenting with the management of a new Cross Laminated Timber building, which we acquired for Storey. The development of CLT buildings can result in a much lower embodied carbon footprint, and produce less development waste with a quicker construction time. We are also trialling a "circular" approach to furniture, using more recycled materials. At 338 Euston Road, we re-manufactured and incorporated 246 items from the previous tenant into the new offices, avoiding 2,980 kg of waste and saving £72,000.

Our investment in the prosperity of the communities that host our assets continues, and we have concluded our eighth consecutive year with the National Literacy Trust, to improve reading skills, particularly among the poorest readers. Our Young Readers Programme has now reached 42,692 children, trained 561 teachers, and given out over 128,000 books since its inception in 2011. In the half year, we were delighted that 86 customers collaborated with British Land on this programme and that 91% of teachers reported their "reluctant readers" are showing increased enjoyment of reading with 77% reporting that reluctant readers are reading more often.

Our continued strong sustainability performance is reflected in our rankings in ESG indices, including a green star rating for the tenth consecutive year in our key index, the Global Real Estate Sustainability Benchmark (GRESB), AAA rating in MSCI, and inclusion in FTSE4Good and Dow Jones Sustainability Indices (DJSI) 2019. We have been a signatory to the UN Global Compact since 2009 and will continue to support human rights, fair labour practices, good environmental performance and oppose corruption through our strategy, governance and business operations.

REAL ESTATE PERFORMANCE REVIEW

Campus focused London Offices

Key metrics

As at:	31 Mar 2019	30 Sept 2019
Portfolio Valuation (BL share)	£6,308m	£6,439m
· Of which campuses	£5,047m	£5,263m
Occupancy	97.7%	97.2%
Weighted average lease length to first break	5.7 yrs	5.3 yrs

6 months to:	30 Sept 2018	30 Sept 2019

Total property return	+2.5%	+2.1%
· Yield shift	+1 bp	0 bps
· ERV growth	+0.2%	+0.9%
· Valuation movement	+0.7%	+0.4%

Lettings/renewals (sq ft)	421,000 sq ft	671,000 sq ft
Lettings/renewals vs ERV	+6.5%	+11.1%

On a proportionally consolidated basis including the Group's share of joint ventures and funds

Campus operational and financial highlights

· Portfolio value up 0.4%, with the City up 1.3% and the West End flat

· Yields saw mild contraction in the City -3bps and mild expansion in the West End +2bps

· ERV growth of 0.9% across the portfolio, with the City strong (+2.9%) and the West End was flat

· Activity generating like-for-like income growth of 1.1%

· Leasing activity covering 671,000 sq ft representing £29m of future rents

· Under offer on a further 74,000 sq ft and in negotiations on a further 242,000 sq ft

· Investment lettings and renewals signed 11.1% ahead of ERV

· 294,000 sq ft rent reviews agreed 7% ahead of passing rent adding £0.9m to rents

· Occupancy of 97.2%

Campus operational review

80% of our Offices are located on our three central London campuses, each benefitting from excellent transport connectivity and vibrant local neighbourhoods which are an important part of their appeal. Building on this, our strategy is focused on expanding the mix of uses, to enhance the retail, dining and entertainment offer, embedding our places more firmly within the local community and appealing to a broader mix of occupier.

Enlivenment is an important part of our approach and in September, for the fourth consecutive year, British Land was Headline Partner of the London Design Festival, with both Broadgate and Paddington Central playing host to landmark installations.

Broadgate

Momentum at Broadgate has continued, with leasing success at our developments mirrored in the standing portfolio, where we are successfully repurposing existing space. This demonstrates the strength of the campus offer beyond newly delivered space. Challenger bank Monzo will join the emerging fintech community at Broadgate, taking 122,000 sq ft at Broadwalk House on a five and a half year term (signed post period end).

At 100 Liverpool Street, Bank of Montreal committed to 60,000 sq ft and Japanese Bank SMBCE increased their commitment by 22,000 sq ft taking their total occupation to 184,000 sq ft. In addition, we are allocating 45,000 sq ft to Storey. We have made good progress on the retail side with 13 units now exchanged and a further four in process; new additions in the half included Waterstones, Reiss, L'Occitane and Tech Express. These join a line up including Watches of Switzerland, Kiehls, Neom and Gant.

At 1 Finsbury Avenue (287,000 sq ft), which completed at the end of FY19, Mimecast and Product Madness are already in occupation and the Everyman cinema opened last month. Post period end, we exchanged on a further 30,000 sq ft to Workday, which offers cloud-based finance, HR and planning solutions. Storey accounts for 73,000 sq ft of which 15,000 sq ft has already been let. Retail leasing has continued at pace, with lettings to high quality grab and go lunch operators Farmer J, Nyokee and Butterscotch and Baraka, a Turkish-style restaurant and bar in the half.

At 135 Bishopsgate, we are now under offer on a further 30,000 sq ft leaving only 7,000 sq ft of office space available to let. With space already let to McCann, TP ICAP and Eataly, the building is 97% pre-let or under offer.

Rent reviews were agreed on 41,000 sq ft nearly 15% ahead of passing rent and the campus is virtually full, with occupancy of 97.7%. Overall, the campus saw a valuation uplift of 1.3% reflecting ERV growth of 3.4% with yield contraction of 1bp.

Paddington Central

Existing space is also leasing well at Paddington Central, again demonstrating the unique attractions of our campus proposition. Visa recommitted to 196,000 sq ft at 1 Sheldon Square at a revised rent, with the term extended by six years. We have continued to focus on canal-side enlivenment, with a fourth barge, The Grand Duchess floating restaurant launched and a fifth, The Cheese Bar in the pipeline. Elsewhere on the campus, Pergola will be renewing their lease at 5 Kingdom Street until 2022. This brings total leasing activity at the campus to 200,000 sq ft.

The campus saw a valuation uplift of 2.0%, reflecting yield contraction of 4bps. Although Visa's lease extension increased rental income, the valuers changed their valuation approach from a headline to a net effective basis, resulting in an overall ERV decline for the campus of 1.3%. Occupancy is high at 97.0%.

Regent's Place

Reflecting trends at Broadgate and Paddington, existing space has also let well at Regent's Place, with online travel operator Skyscanner taking 45,000 sq ft of fitted space at 338 Euston Road (post period end). Storey will act as the service provider, for which they will receive a fee, demonstrating the broad range of options we now offer to customers across our core, fitted and Storey space.

In the coming twelve months, we will be delivering a programme of public realm improvements, covering two-thirds of the campus. This will include more green spaces and places to relax and sit or work outside the office, enhancing the community feel. We have opened a café, event and community space at 17-19 Triton Square that is being delivered using sustainable materials and processes. These include recycled wood, work surfaces made from recycled materials including televisions and yoghurt pots, upcycled furniture and re-used kitchen and tableware. It will also offer bookable meeting and event space, and in the evening will host "Sessions" - a series of evening classes based on a successful programme at Meadowhall. Drawing on its location between the Knowledge Quarter, Camden and Fitzrovia, and the significant improvements we have delivered across the broader area, we will be rebranding Regent's Place as a pioneering, responsible neighbourhood, with deep community connections.

With ERVs marginally up and yields flat, the campus valuation overall was flat. Occupancy is high at 97.9%.

Storey: our flexible workspace brand

Storey is now operational across 297,000 sq ft, with space at each of our campuses with a further 91,700 sq ft identified. It was launched more than two years ago as a response to changes in the way people are working and is a deliberately differentiated concept, providing occupiers with high quality workspace, they can brand themselves on a shorter-term basis.

Consistent with this more flexible approach, our offer is evolving and in April we launched Storey Club at 4 Kingdom Street, Paddington. This is a new concept providing ad hoc workspace, additional meeting rooms, private dining venues, event and workshop spaces for all our Paddington occupiers. To date, 79% of Storey occupiers at Paddington have made chargeable bookings alongside other British Land customers and partners. We are looking to roll out the concept to other campuses and standalone buildings, including our 100 Liverpool Street development at Broadgate, where we have allocated total Storey space of 45,000 sq ft. Storey are also taking 73,000 sq ft at 1 Finsbury Avenue, with lettings already to consultants Booz Allen Hamilton and digital financial services company 11:FS who have taken occupation. Consistent with our broader approach to flexibility, Storey can also provide services on our core or fitted space as an additional option.

Storey has proved highly successful at attracting new and different types of occupiers to our buildings. 72% are in the TMT sector. The average lease length is 25 months term certain and occupancy on the stabilised portfolio is 81%. This has fallen in the half due to a material expiry, although the space has now been re-let. We expect occupancy to trend around 90% longer term.

Smaller, more focused Retail

Key metrics

As at:	31 Mar 2019	30 Sept 2019
Portfolio valuation (BL share)	£5,577m	£4,790m
· Of which multi-let	£4,737m	£4,180m
Occupancy¹	96.7%	96.3%
Weighted average lease length to first break	7.0 yrs	6.1 yrs

6 months to:	30 Sept 2018	30 Sept 2019

Total property return	(2.1)%	(8.4)%
· Yield shift	+14 bps	+37 bps
· ERV growth	(1.5)%	(4.8)%
· Multi-let ERV growth	(1.6)%	(5.1)%
· Valuation movement	(4.5)%	(10.7)%

Lettings/renewals (sq ft)	457,000	605,000
Lettings/renewals vs ERV	+5.0%	+3.5%

On a proportionally consolidated basis including the Group's share of joint ventures and funds

Retail operational and financial highlights

· Total Retail portfolio value down 10.7% due to weaker investor sentiment, with limited transactional evidence, particularly for larger lot sizes which saw some significant falls

· Yield expansion of 37 bps overall

· ERVs down 4.8%

· Robust leasing activity with lettings/renewals covering 605,000 sq ft, 3.5% ahead of ERV, strong retention rate of 79%

· Further 803,000 sq ft of rent reviews agreed 3.5% ahead of passing rent

· High occupancy maintained at 96%

· Like for like income down 3.2% including the impact of CVAs and administrations

· Footfall marginally down 0.1%, 440 bps ahead of benchmark; like for like sales up 0.5%, 420 bps ahead of benchmark; total retailer sales down 1.0%, 280 bps ahead of benchmark

· £236m non-core assets completed or exchanged since April 2019

Performance review

Leasing

In a challenging environment our business continues to perform. Leasing activity has covered 605,000 sq ft, in line with our long term average. Long term deals were, on average, 3.5% ahead of ERV, 15% ahead of passing rent with an average term of 7.0 years and incentives stable at 6 months. This demonstrates that for the right space, in the right location, retailers are still prepared to pay good rents.

Our focus has been on maintaining high occupancy, so we have been nimble and pragmatic in our approach to leasing space, particularly where vacancies have arisen as a result of CVAs or administration and have been more prepared to let space on a shorter term basis or at a lower rent. In the majority of cases, no incentives are given, but terms were typically below previous passing rent. Overall our core leasing activity (excluding rates mitigation, assets to be developed and commercialisation and car park income) was 1% ahead of passing rent, and occupancy remained high at 96%. Looking forward, the pipeline is healthy although on average terms are below ERV.

We continue to benefit from the investment we have made into Meadowhall, with 29 deals accounting for more than £1m of rent. Here, long term deals were 2.7% ahead of ERV and we have attracted new occupiers including Ritual and Lovisa with a renewal to Laura Ashley. Elsewhere on the portfolio, we have completed 77 rent reviews overall adding £0.6m to rent and continued to attract new concepts, including Lost City Adventure Golf at Hull.

CVAs and administrations

Landlords have been increasingly prepared to vote against and in some cases challenge opportunistic uses of the CVA structure and as a result, we have seen terms improve. We have been pragmatic about re-leasing space affected by CVAs or administrations and have accepted discounts to passing rent where appropriate to maintain occupancy, footfall and drive supply-demand tension. Over two thirds of store closures since April 2017 are either re-let, under offer or in negotiations.

Operational performance

Our focus on keeping the portfolio full with the right type of occupiers has ensured the businesses continues to perform well operationally, and we are expanding our outperformance on both footfall and sales. For the half year, LFL sales were positive, up 0.5%, 420 bps ahead of benchmark and increasing our twelve-month outperformance to 300 bps. Total sales, which captures both additions and improvements we have made in the period as well as the impact of store closures were down 1.0%, 280 bps ahead of benchmark. These figures only capture instore sales and do not consider online sales where the physical store plays a key role. Footfall was down 0.1% in the half, 440 bps ahead of benchmark increasing our twelve-month outperformance to 350 bps.

Capital activity

We have a clear plan to refine our Retail portfolio to deliver a smaller, more focused business, representing 30-35% of the total portfolio. This will comprise assets that meet our criteria including strength of catchment, market position, potential for rental growth and mixed use development.

We made good progress on this in the early part of the year, with the sale of 12 Sainsbury superstores to Realty Income Corporation for £429m (our share £194m) at a modest premium to book and since then have sold or exchanged on two solus assets, both at a premium to book.

As we indicated in our FY 2019 results in May, we have seen early signs that some liquidity may be returning to certain parts of the market, however, sentiment is generally weak and is likely to remain so. In this context, we will remain patient and opportunistic in our approach, and only progress disposals at the right price, which deliver value and progress our long term strategy. We have a good track record on delivering on our strategic goals having reduced our standalone superstore exposure from 11% of the total portfolio in 2014 to 1% today with just six standalone stores remaining. Retail disposals since April 2014 total £3.0bn.

DEVELOPMENT

At 31 September 2019	Sq ft	Current Value	Cost to complete	ERV	ERV let/under offer
	'000	£m	£m	£m	£m
Recently completed	287	171	-	8.3	6.5
Committed	1,329	874	159	54.7	48.2
Near term	1,013	211	533	48.0	-
Medium term	7,255

On a proportionally consolidated basis including the Group's share of joint ventures and funds (except area which is shown at 100%)

Portfolio

Developments are a key element of our investment case as a fundamental driver of sustainable value and growth for the long term. In the current market, there are limited opportunities to acquire assets with development potential, so the capacity to develop is an important competitive advantage. Critical to our approach is the flexibility and optionality we have created, with the majority of space in our development pipeline either income producing or held at low cost, so we have attractive options we can progress as and when appropriate.

We actively manage our development risk and pre-letting our space is an important part of that approach. Reflecting our continued successful leasing activity, 87% of our recently completed and committed developments are pre-let or under offer and speculative exposure remains low at 1.1% of portfolio gross asset value. Including our near term pipeline, this will be 6%, below our internal risk threshold for speculative development of 8%.

Construction cost forecasts continue to suggest that the rate of growth has moderated from the level in recent years given the continued market uncertainty. However, there is a risk that a prolonged delay to Brexit increases material costs and reduces labour supply in 2020/21 potentially increasing cost inflation above the expected 2-4% per annum. To mitigate this risk, 96% of the costs on our committed development programme have been fixed.

Campus developments: further enhancing the mix of uses

Development is an important driver of value, enabling us to refresh our offer through new and refurbished space so we are consistently meeting the needs of today's occupiers. This has a positive impact, beyond the individual building and is reflected in our strong leasing performance on existing space as well as developments.

Completed developments

We reached practical completion at 1 Finsbury Avenue (287,000 sq ft) at the end of FY19 and are now 78% let or under offer by ERV, rising to 97% including the unlet space allocated to Storey.

Committed developments

Our committed office development pipeline covers 1.2m sq ft, of which Broadgate developments account for over two-thirds. These include 100 Liverpool Street (520,000 sq ft), which is 77% let or under offer, following commitments in the half from Bank of Montreal and SMBCE. The building is on track to achieve a BREEAM excellent rating, a Well Gold certification for Wellbeing and a WiredScore platinum rating for internet connectivity. Sustainability has been integral to the design and delivery of this building; by retaining half of the existing structure we have saved 7,200 tonnes of embodied carbon and are on track to save a further 4,100 tonnes through carbon-efficient design and use of low-carbon materials. More than half of the construction spend has been with businesses in the City and neighbouring boroughs, ensuring local people benefit from our development. At 135 Bishopsgate (335,000 sq ft), we went under offer on a further 30,000 sq ft in H1, so we are now 97% let or under offer by ERV, with just 7,000 sq ft remaining.

At 1 Triton Square, Regent's Place, we are fully pre-let on the office space to Dentsu Aegis Network on a 20-year lease. The building topped out in the period and we expect to complete in late 2020.

Near Term pipeline

Our near term pipeline now covers more than 1m sq ft. At Norton Folgate we have consent for a 335,000 sq ft scheme comprising 257,000 sq ft of office space alongside retail and residential space, to create a mixed use development which is in keeping with the historic fabric of the area. Our plans envisage a mix of floorplates, to appeal to small and growing businesses as well as more established organisations, particularly in the technology and creative sectors and we are already seeing good interest. We have commenced enabling works and would expect to begin construction next year.

At 1 Broadgate, we have consent for a 532,000 sq ft scheme, including 153,000 sq ft of retail, leisure and dining space, connecting Finsbury Avenue Square with retail at 100 Liverpool Street and the Broadgate Circle, creating a 350,000 sq ft retail, leisure and dining hub.

The most recent addition to the near term pipeline is Phase 2, Aldgate Place, a build-to-rent residential scheme delivering 160 homes with 20,000 sq ft of office space. We are refining our planning consent, subject to which we expect to start on site in Autumn 2020.

Medium Term Pipeline

We have three campus developments in the medium term pipeline, together covering more than 1m sq ft. These buildings progress our mixed use campus vision and support future income growth.

The most significant scheme is 2-3 Finsbury Avenue at Broadgate where our plans add 374,000 sq ft to the existing space to deliver a 563,000 sq ft office-led scheme. The building is currently generating an income through short term, more flexible lettings, including 51,000 sq ft allocated to Storey.

At 5 Kingdom Street, Paddington Central, we have submitted a revised planning application which would increase our consented scheme from 240,000 sq ft to 429,000 sq ft and are awaiting a decision. The scheme includes the opportunity to develop a former Crossrail works site which reverts to British Land on completion of Crossrail, providing 80,000 sq ft of community, retail, leisure and cultural facilities, reflecting feedback from focus groups and residents who we consulted on how this space could best be used. At the Gateway Building, Paddington, we have consent for a 105,000 sq ft premium hotel.

Retail development: enhancing and repositioning our portfolio for the future

In line with our disciplined approach to capital allocation and reflecting our longer term view on the role of retail within our portfolio, we do not expect to undertake significant retail development in the near term. We do however maintain a range of opportunities across our portfolio which preserve our optionality but would only commit to projects which are aligned with our strategy, most likely comprising a mixed use element, and when market conditions are supportive.

Committed developments

At Drake Circus, Plymouth, our 108,000 sq ft leisure extension completed post period end. It adds a 12-screen cinema and 14 restaurants and is 69% let or under offer.

Medium term pipeline

Our medium term pipeline is focused on mixed use opportunities. At Ealing Broadway, we are working up plans for an exciting new 292,000 sq ft office led mixed use scheme that will sit adjacent to our Ealing Broadway shopping centre, outside the new Crossrail entrance. At Eden Walk, Kingston (jointly owned with USS) our consented mixed use development plans include 380 new homes, alongside shops, restaurants and 35,000 sq ft of flexible office space. At Meadowhall, we have consent for a 333,000 sq ft leisure extension but are undertaking a review of our plans which is expected to conclude towards the end of the year.

Canada Water: 53 acre masterplan for a new urban centre in Central London

Highlights

· Secured resolution to grant planning permission for the Canada Water Masterplan, a 5m sq ft mixed use scheme, unanimously supported by Southwark Council

· Expect to drawdown the headlease in Spring 2020

· Net valuation movement up 12.4% to £347m reflecting progress on planning

At Canada Water, we are working with the London Borough of Southwark to deliver a 5m sq ft mixed use scheme, including 3,000 new homes alongside a mix of commercial, retail and community space. The site is located on the Jubilee line and the London Overground, making it easily accessible from London Bridge, the West End, Canary Wharf, Shoreditch and South West London. It will also be an indirect beneficiary of Crossrail, which will reduce pressure on the Jubilee Line between Canary Wharf and Bond Street. It covers 53 acres including the dock area, providing 48 acres of developable land.

In September we received a resolution to grant outline planning on the entire 5m sq ft masterplan from Southwark Council, including detailed consent on the first three buildings, covering 576,000 sq ft. Following the completion of the S106 Agreement and issue of planning permission, we will be in a position to draw down the headlease in the Spring of next year, under the terms of the Master Development Agreement signed with Southwark Council in May 2018. This will combine the ownership of our assets at Canada Water into a single 500-year headlease, with Southwark Council as the Lessor. At that point, British Land will own 80% of the scheme with Southwark Council owning the remaining 20% and going forward, they will be able to participate in the development, up to a maximum of 20% with returns pro-rated accordingly.

The resolution to grant planning decision, which was unanimously agreed by Southwark Council, is a positive endorsement of our programme of engagement with the local community, which has included over 120 public consultations and local outreach events, attracting over 5,000 individuals. As part of this, we worked with Southwark Council, to develop a Social Regeneration Charter which captures local residents' priorities for the benefits of the development, and proposals for how these will be delivered.

Sustainability has been integral to our approach from the start, and we are committed to a strategy that ensures the masterplan will support low carbon living. In total, a minimum of 35% of the 53 acres will be public open space and we will be planting more than 1,200 additional trees, both on and offsite. Our plans will also benefit the existing and growing local community, with investment into education, health and community facilities in the local area.

The first three buildings will deliver 265 homes, of which 35% will be affordable (split 70:30 between social rent and intermediate housing), as well as a new leisure centre, new public spaces and improved pedestrian connections. Building K1 will be solely residential while building A1 will provide a mix of residential and workspace and building A2 will provide workspace and the new leisure centre. Both A1 and A2 will include retail provision at ground floor.

Potential funding structures will be explored in the new year, ahead of which, we are seeing interest in the space from a range of sectors and discussions are underway on several buildings. In the meantime, the Printworks has become an established live music venue, frequently hosting crowds of up to 5,000 and helping to drive footfall and raise awareness of the area.

The net valuation movement for Canada Water over the half year showed an uplift of 12.4% reflecting the progress made on planning, more than offsetting design costs incurred in masterplanning the scheme.

FINANCE REVIEW

Six months to	30 September 2018	30 September 2019
Underlying earnings per share¹	17.2p	16.1p
Underlying Profit^1,2	£169m	£152m
IFRS profit/(loss) after tax	£(48)m	£(404)m
Dividend per share	15.50p	15.97p
Total accounting return^1,3	(1.3%)	(3.7%)
As at	31 March 2019	30 September 2019
EPRA net asset value per share^1,2	905p	856p
IFRS net assets	£8,689m	£7,971m
LTV ^1,4,5	28.1%	30.8%
Weighted average interest rate ⁵	2.9%	2.7%

¹See Glossary on website for definitions. ²See Table B within supplementary disclosure for reconciliations to IFRS metrics. ³See Note 2 within condensed interim financial statements for calculation. ⁴See Note 10 within condensed interim financial statements for calculation and reconciliation to IFRS metrics. ⁵On a proportionally consolidated basis including the Group's share of joint ventures and funds.

Overview

Financial performance for the period has been resilient in the context of significant sales over the last 18 months, an especially challenging retail environment and an unpredictable UK political backdrop. Underlying earnings per share (EPS) are down 6.4% at 16.1p, while Underlying Profit is down 10.1% at £152m. The impact of lower profits on EPS has been partially mitigated by the impact of share buybacks which added 0.5p this period.

Capital activity (sales net of acquisitions and share buybacks) decreased EPS by 1.1p in the period. Setting this aside, earning were flat, with like-for-like rental growth and financing activities offsetting the impact of CVAs and administrations. Proceeds from sales have been deployed into share buybacks and our value accretive development programme. The recently completed and committed schemes are expected to generate EPS accretion of 4.6p once fully let based on ERV of £63m, of which 87% is already pre-let or under offer.

Since April 2019, we have completed £0.5bn of gross capital activity. This includes £236m sales of income producing assets, primarily the sale of 12 Sainsbury superstores to Realty Income Corporation in April 2019 for £429m (our share £194m). We also completed on £56m of residential sales at Clarges, Mayfair, £6m of which exchanged prior to this financial period and £3m of which exchanged and completed post period end. We have bought back £125m shares in the period, at an average price of 525p adding 8p to NAV.

Valuations have reduced by 4.3% on a proportionally consolidated basis although this was partially offset by the impact of the shares bought back in the period resulting in an overall EPRA net asset value (NAV) per share decline of 5.4%.

Our financial position remains strong. LTV has increased by 270bps during the period to 30.8% with valuation declines contributing 120bps and development spend contributing 110bps. These movements are partially offset by the impact of capital activity which reduced LTV by 40bps. Our weighted average interest rate reduced to a new low of 2.7%.

Presentation of financial information

The Group financial statements are prepared under IFRS where the Group's interests in joint ventures and funds are shown as a single line item on the income statement and balance sheet and all subsidiaries are consolidated at 100%.

Management considers the business principally on a proportionally consolidated basis when setting the strategy, determining annual priorities, making investment and financing decisions and reviewing performance. This includes the Group's share of joint ventures and funds on a line-by-line basis and excludes non-controlling interests in the Group's subsidiaries. The financial key performance indicators are also presented on this basis.

A summary income statement and summary balance sheet which reconcile the Group income statement and balance sheet to British Land's interests on a proportionally consolidated basis are included in Table A within the supplementary disclosures.

Management monitors Underlying Profit as this more accurately reflects the underlying recurring performance of our core property rental activity, as opposed to IFRS metrics which include the non-cash valuation movement on the property portfolio. It is based on the Best Practices Recommendations of the European Public Real Estate Association (EPRA) which are widely used alternate metrics to their IFRS equivalents.

Management also monitors EPRA NAV as this provides a transparent and consistent basis to enable comparison between European property companies. Linked to this, the use of Total Accounting Return allows management to monitor return to shareholders based on movements in a consistently applied metric, being EPRA NAV, and dividends paid.

Loan to value (proportionally consolidated) is also monitored by management as a key measure of the level of debt employed by the Group to meet its strategic objectives, along with a measurement of risk. It also allows comparison to other property companies who similarly monitor and report this measure.

Income statement

1. Underlying Profit

Underlying Profit is the measure that is used internally to assess income performance. This is presented below on a proportionally consolidated basis. No company adjustments have been made in the current or prior period and therefore this is the same as the pre-tax EPRA earnings measure which includes a number of adjustments to the IFRS reported profit before tax.

Six months to	Section	30 September 2018	30 September 2019
		£m	£m
Gross rental income		291	275
Property operating expenses		(24)	(32)
Net rental income	1.2	267	243
Net fees and other income		6	7
Administrative expenses	1.3	(42)	(41)
Net financing costs	1.4	(62)	(57)
Underlying Profit		169	152
Non-controlling interests in Underlying Profit		6	6
EPRA adjustments¹		(223)	(562)
IFRS profit/(loss) after tax	2	(48)	(404)
Underlying EPS	1.1	17.2p	16.1p
IFRS basic EPS	2	(4.9)p	(42.9)p
Dividend per share	3	15.50p	15.97p

¹ EPRA adjustments consist of investment and development property revaluations, gains/losses on investment and trading property disposals, changes in the fair value of financial instruments and associated close out costs. These items are presented in the 'capital and other' column of the consolidated income statement.

1.1 Underlying EPS

Underlying EPS is 16.1p, a decline of 6.4% on the prior period. This reflects Underlying Profit decline of 10.1%, partially offset by the impact of share buybacks which added 0.5p in the period.

1.2 Net rental income

			£m
Net rental income for the six months ended 30 September 2018			267
Sales			(20)
Acquisitions			2
Retail like-for-like rent			(5)
Offices like-for-like rent			1
Developments			(2)
Net rental income for the six months ended 30 September 2019			243

Net sales of income producing assets over the last 18 months was £0.9bn. This has reduced rents by £18m in the period, including £4m from the sale of 5 Broadgate in June 2018, £5m from the sale of the Spirit Pubs portfolio in March 2019 and £5m from superstore sales. As well as funding share buybacks we have completed over the last 18 months, proceeds from these sales are being reinvested in the development pipeline which is expected to deliver £63m in rents in future years and is already 87% pre-let or under offer (£55m).

Retail like-for-like net rental decline is 3.2% in the period, primarily reflecting the impact of CVAs and administrations. The offices portfolio saw like-for-like growth of 1.1% which is lower than the historic run-rate due to material lease expiries. These contributed a 3% decrease to net rents however the space has either been re-let or is to be refurbished. Expiries have been offset by the impact of leasing activity in the period, including a rent review with Visa at 1 Sheldon Square.

1.3 Administrative expenses

Administrative expenses have decreased by 2% this period. The Group's operating cost ratio has increased by 220 bps to 21.7% (H1 2018/19: 19.5%) as a result of lower rental income following sales activity.

1.4 Net financing costs

			£m
Net financing costs for the six months ended 30 September 2018			(62)
Financing activity			2
Net divestment			4
Developments			1
Share buybacks			(2)
Net financing costs for the six months ended 30 September 2019			(57)

Financing activity undertaken over the last 18 months has reduced costs by £2m in the period, including the issuance of a new £100m 2034 USPP note following prepayment of a £98m 2027 note, as well as repayment of £111m (BL share) of secured Broadgate bonds in October 2018.

The reduction in finance costs as a result of proceeds from net divestment and investment in developments has been partially offset by share buybacks.

We have a risk managed approach to interest rates on debt. At 30 September 2019, on average over the next 5 years the interest rate on 75% of our debt is hedged, based on current commitments. On a spot basis we are 83% hedged. Our use of caps as well as swaps means we also benefit if market rates remain low.

2. IFRS profit before tax

The main difference between IFRS profit before tax and Underlying Profit is that IFRS includes the valuation movement on investment and trading properties, fair value movements on financial instruments and capital financing costs. In addition, the Group's investments in joint ventures and funds are equity accounted in the IFRS income statement but are included on a proportionally consolidated basis within Underlying Profit.

The IFRS loss after tax for the year was £404m, compared with a loss after tax for the prior period of £48m. As a result, IFRS basic EPS was (42.9)p per share, compared to (4.9)p per share in the prior period. This primarily reflects an increase in downward valuation movement on the Group's properties of £184m, and an increase in the capital and other income loss from joint ventures and funds of £128m, both driven principally by outward yield shift of 37 bps and ERV decline of 4.8% in the Retail portfolio. In addition, prior period sales of Clarges generated profits of £65m compared £10m in this period.

The basic weighted average number of shares in issue during the period was 941m (H1 2018/19: 981m).

3. Dividends

As previously announced, we have increased the dividend by 3.0% for the six months to 30 September 2019 to 15.97p and propose a full year dividend to 31 March 2020 of 31.93p. The dividend payout ratio is 99%.

The second interim dividend payment for the quarter ended 30 September 2019 will be 7.9825p. Payment will be made on 7 February 2020 to shareholders on the register at close of business on 3 January 2020. The second interim dividend will be a Property Income Distribution and no SCRIP alternative will be offered.

Balance sheet

As at	Section	31 March 2019	30 September 2019
		£m	£m
Properties at valuation		12,316	11,723
Other non-current assets		151	170
		12,467	11,893
Other net current liabilities		(297)	(224)
Adjusted net debt	6	(3,521)	(3,685)
Other non-current liabilities		-	-
EPRA net assets		8,649	7,984
EPRA NAV per share	4	905p	856p
Non-controlling interests		211	168
Other EPRA adjustments¹		(171)	(181)
IFRS net assets	5	8,689	7,971

Proportionally consolidated basis

¹ EPRA net assets exclude the mark-to-market on derivatives and related debt adjustments, the mark-to-market on the convertible bond as well as deferred taxation on property and derivative revaluations. They include the trading properties at valuation (rather than lower of cost and net realisable value) and are adjusted for the dilutive impact of share options. No dilution adjustment is made for the £350m zero coupon convertible bond maturing in 2020. Details of the EPRA adjustments are included in Table B within the supplementary disclosures.

4. EPRA net asset value per share

			pence
EPRA NAV per share at 31 March 2019			905
Valuation performance			(55)
Underlying Profit			16
Dividends			(15)
Financing activity			(2)
Share buyback			8
Other			(1)
EPRA NAV per share at 30 September 2019			856

The 5.4% decrease in EPRA NAV per share reflects a valuation decrease of 4.3% across the portfolio. Valuation gains in the Office portfolio and Canada Water have been more than offset by a fall in Retail values.

Office valuations were up 0.4% driven by strong leasing at our developments which were up 4.9%, including 100 Liverpool Street where values were up 13%, with ERV growth of 0.9% across the standing investments and stable yields.

Valuations in Retail are down 10.7%, with outward yield shift of 37 bps and ERV decline of 4.8%, reflecting weaker occupational demand as well as low transaction volumes, particularly for larger lot sizes. Across our five largest assets, yields have moved between 25-50bps. For smaller retail parks, a number of assets have transacted or gone under offer around the period end which have provided some valuation evidence.

While financing activity has decreased NAV by 2p, it will deliver future interest cost savings. It includes the early repayment of £83m (BL share) of bonds related to the sale of 12 Sainsburys superstores. Completion of the £125m share buyback programme during the period has contributed 8p to EPRA NAV.

5. IFRS net assets

IFRS net assets at 30 September 2019 were £7,971m, a decrease of £718m from 31 March 2019. This was primarily due to IFRS loss after tax of £404m, along with £147m of dividends paid and £125m of share purchases under the share buyback programme.

Cash flow, net debt and financing

6. Adjusted net debt¹

			£m
Adjusted net debt at 31 March 2019			(3,521)
Disposals			218
Acquisitions			(19)
Development and capex			(185)
Net cash from operations			185
Dividends			(152)
Share buyback			(125)
Other			(86)
Adjusted net debt at 30 September 2019			(3,685)

¹ Adjusted net debt is a proportionally consolidated measure. It represents the Group net debt as disclosed in Note 10 to the interim financial statements and the Group's share of joint venture and funds' net debt excluding the mark-to-market on derivatives, related debt adjustments and non-controlling interests. A reconciliation between the Group net debt and adjusted net debt is included in Table A within the supplementary disclosures.

Net sales reduced debt by £199m whilst development spend totalled £157m with a further £28m on capital expenditure related to asset management on the standing portfolio. The value of recently completed and committed developments is £1,046m, with £159m costs to come. Speculative development exposure is 1.1% of the portfolio. There are 1,013,000 sq ft of developments in our near term pipeline with anticipated cost of £533m.

7. Financing

	Group		Proportionally consolidated
	31 March 2019	30 September 2019	31 March 2019	30 September 2019
Net debt / adjusted net debt ¹	£2,765m	£3,026m	£3,521m	£3,685m
Principal amount of gross debt	£2,881m	£3,039m	£3,895m	£3,940m
Loan to value	22.2%	25.4%	28.1%	30.8%
Weighted average interest rate	2.2%	2.1%	2.9%	2.7%
Interest cover	4.9	4.6	3.8	3.7
Weighted average maturity of drawn debt	7.3 years	7.1 years	8.1 years	7.9 years

¹Group data as presented in note 10 of the condensed interim financial statements. The proportionally consolidated figures include the Group's share of joint venture and funds' net debt and exclude the mark-to-market on derivatives and related debt adjustments and non-controlling interests.

At 30 September 2019, our proportionally consolidated LTV was 30.8%, up 270 bps from 28.1% at 31 March 2019. Valuation declines contributed 120 bps of this increase, and development spend contributed 110bps. This was partially offset by the impact of capital activity (sales net of acquisitions and share buybacks) which had reduced LTV by 40 bps. Note 10 of the condensed interim financial statements sets out the calculation of the Group and proportionally consolidated LTV.

During the period, we issued a new £100m 2034 USPP note following prepayment of a £98m 2027 note, extending debt maturity and delivering future interest cost savings. We also extended £810m of committed bank facilities by a further 1 year. The portfolio sale of 12 Sainsburys superstores triggered partial repayment of £83m of bonds (BL share).

Our liability and debt management activity has enabled us to reduce our weighted average interest rate to a new low of 2.7%. Our weighted average debt maturity is 7.9 years.

At 30 September 2019, British Land had £1.8bn of committed unsecured revolving bank facilities, £1.4bn undrawn. Based on our current commitments, these facilities and debt maturities, we have no requirement to refinance until late 2022.

The current uncertain environment reinforces the importance of a strong balance sheet and we have capacity to progress opportunities when the time is right.

Simon Carter

Chief Financial Officer

Notes to Editors

About British Land

Our portfolio of high quality UK commercial property is focused on London Offices and Retail around the UK. We own or manage a portfolio valued at £15.4bn (British Land share: £11.7bn) as at 30 September 2019 making us one of Europe's largest listed real estate investment companies.

Our strategy is to provide places which meet the needs of our customers and respond to changing lifestyles - Places People Prefer. We do this by creating great environments both inside and outside our buildings and use our scale and placemaking skills to enhance and enliven them. This expands their appeal to a broader range of occupiers, creating enduring demand and driving sustainable, long term performance.

Our Offices portfolio comprises three office-led campuses in central London as well as high quality standalone buildings and accounts for 55% of our portfolio. Our Retail portfolio is focused on Regional and Local multi-let centres, and accounts for 41% of our portfolio. Increasingly our focus is on providing a mix of uses and this is most evident at Canada Water, our 53 acre redevelopment opportunity where we have plans to create a new neighbourhood for London.

Sustainability is embedded throughout our business. Our places, which are designed to meet high sustainability standards, become part of local communities, provide opportunities for skills development and employment and promote wellbeing. In April 2016 British Land received the Queen's Award for Enterprise: Sustainable Development, the UK's highest accolade for business success for economic, social and environmental achievements over a period of five years.

Further details can be found on the British Land website at www.britishland.com

RISK MANAGEMENT AND PRINCIPAL RISKS

For British Land, effective risk management is a cornerstone of delivering our strategy and integral to the achievement of our objective of delivering sustainable long term value. The Group's risk appetite and its integrated approach to managing risk remains as set out on pages 54-55 of the Annual Report and Accounts published in May 2019.

The Board believes that since the publication of the Annual Report and Accounts published in May 2019 there has been no material change to the Group's principal risks and the existing mitigating factors and actions remain appropriate (as set out on pages 58-61 of the 2019 Annual Report and Accounts). However, not surprisingly several principal risks continue to be elevated (as set out in the 2019 Annual Report & Accounts), as a result of the challenging external environment, with the increased level of political and economic uncertainty associated with the UK's departure from the European Union ('Brexit') and pending general election, alongside the continued challenging trading conditions in retail.

Whilst it is not possible to predict fully the impact Brexit will have on our business and our markets, the Board has undertaken a comprehensive Brexit review to understand the key risks to our business and taken appropriate action to ensure our business is both resilient and responsive in the short term, and well positioned for the long term. The key operational steps taken include working with our development contractors to minimise cost and delay risk to our development programme, increasing stocks of spare parts to ensure the continued operation of our assets and updating our Crisis Management Plans to improve our response to unpredictable events.

We are mindful of the continued uncertainty; in this context we will benefit from the resilience of our business, the quality of our portfolio and the strength of our finances.

A summary of the Group's principal risks for the second half of the year is provided below.

Principal External Risks

Economic outlook - The UK economic climate and future movements in interest rates present risks and opportunities in property and financing markets and the businesses of our occupiers which can impact both the delivery of our strategy and our financial performance.

Political and regulatory outlook - Significant political events and regulatory changes, including the UK's decision to leave the EU, bring risks both in terms of uncertainty until the outcome is known, and the impact of policies introduced. This could impact the businesses of our occupiers and the wider investment case for the UK.

Commercial property investor demand - Reduction in investor demand for UK real estate may result in falls in asset valuations and could arise from variations in the health of the UK economy, the attractiveness of investment in the UK, availability of finance and the relative attractiveness of other asset classes.

Occupier demand and tenant default - Underlying income, rental growth and capital performance could be adversely affected by weakening occupier demand and occupier failures resulting from variations in the health of the UK economy and corresponding weakening of consumer confidence, business activity and investment. Changing consumer and business practices including the growth of internet retailing, flexible working practices and demand for energy efficient buildings, new technologies, new legislation and alternative locations may result in earlier than anticipated obsolescence of our buildings if evolving occupier and regulatory requirements are not met.

Availability and cost of finance - Reduced availability of finance may adversely impact British Land's ability to refinance debt and/or drive up cost. These factors may also result in weaker investor demand for real estate. Regulation and capital costs of lenders may increase cost of finance.

Catastrophic business event - An external event such as a civil emergency, including a large-scale terrorist attack, cyber crime, extreme weather occurrence, environmental disaster or power shortage could severely disrupt global markets (including property and finance) and cause significant damage and disruption to British Land's portfolio and operations.

Principal Internal Risks

Investment strategy - In order to meet our strategic objectives, we aim to invest in and exit from the right properties at the right time. Underperformance could result from changes in market sentiment as well as inappropriate determination and execution of our property investment strategy, including sector selection and weighting; timing of investment and divestment decisions; exposure to developments; asset, tenant, region concentration; and co-investment arrangements.

Development strategy - Development provides an opportunity for outperformance but usually brings with it elevated risk. This is reflected in our decision-making process around which schemes to develop, the timing of the development, as well as the execution of these projects. Development strategy addresses several development risks that could adversely impact underlying income and capital performance including: development letting exposure; construction timing and costs (including construction cost inflation); major contractor failure; and adverse planning judgements.

Capital structure - leverage - Our capital structure recognises the balance between performance, risk and flexibility. Leverage magnifies capital returns, both positive and negative. An increase in leverage increases the risk of a breach of covenants on borrowing facilities and may increase finance costs.

Finance strategy - Finance strategy addresses risks both to continuing solvency and profits generated. Failure to manage refinancing requirements may result in a shortage of funds to sustain the operations of the business or repay facilities as they fall due.

People - A number of critical business processes and decisions lie in the hands of a few people. Failure to recruit, develop and retain staff and Directors with the right skills and experience may result in significant underperformance or impact the effectiveness of operations and decision making, in turn impacting business performance.

Income sustainability - We are mindful of maintaining sustainable income streams which underpin a stable and growing dividend and provide the platform from which to grow the business. We consider sustainability of our income streams in: execution of investment strategy and capital recycling, notably timing of reinvestment of sale proceeds; nature and structure of leasing activity; and nature and timing of asset management and development activity.

Statement of directors' responsibilities

The directors confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

· An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· Material related party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

The directors of British Land plc are listed on the company website www.britishland.com

By order of the Board

Simon Carter

Chief Financial Officer

12^th November 2019

Independent review report to The British Land Company PLC

Report on the condensed interim financial statements

Our conclusion

We have reviewed The British Land Company PLC's condensed interim financial statements (the "interim financial statements") in the Half year results for the six months ended 30 September 2019 of The British Land Company PLC for the 6 month period ended 30 September 2019. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

· the Consolidated balance sheet as at 30 September 2019;

· the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the period then ended;

· the Consolidated Statement of Cash Flows for the period then ended;

· the Consolidated Statement of Changes in Equity for the period then ended; and

· the explanatory notes to the interim financial statements.

The interim financial statements included in the Half year results for the six months ended 30 September 2019 have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Half year results for the six months ended 30 September 2019, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half year results for the six months ended 30 September 2019 in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the Half year results for the six months ended 30 September 2019 based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, 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.

What a review of interim financial statements involves

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, 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.

We have read the other information contained in the Half year results for the six months ended 30 September 2019 and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

London

12 November 2019

Financial Statements

Consolidated Income Statement

For the six months ended 30 September 2019

		Six months ended 30 September 2019 Unaudited			Six months ended 30 September 2018 Unaudited
	Note	Underlying pre-tax¹ £m	Capital and other £m	Total £m	Underlying pre-tax¹ £m	Capital and other £m	Total £m
Revenue	3	275	53	328	282	217	499
Costs	3	(81)	(43)	(124)	(75)	(152)	(227)
Operating profit	3	194	10	204	207	65	272

Joint ventures and funds (see also below)	8	38	(154)	(116)	42	(26)	16
Administrative expenses		(41)	-	(41)	(41)	-	(41)
Valuation movement	4	-	(436)	(436)	-	(252)	(252)
Profit (loss) on disposal of investment properties and investments		-	10	10	-	(6)	(6)
Net financing costs
- financing income	5	-	3	3	-	4	4
- financing charges	5	(33)	(31)	(64)	(33)	(2)	(35)
		(33)	(28)	(61)	(33)	2	(31)
Profit (loss) on ordinary activities before taxation		158	(598)	(440)	175	(217)	(42)
Taxation	6		(1)	(1)	-	(19)	(19)
Loss for the period after taxation				(441)			(61)
Attributable to non-controlling interests		6	(43)	(37)	6	(19)	(13)
Attributable to shareholders of the Company		152	(556)	(404)	169	(217)	(48)
Earnings per share:
- basic	2			(42.9p)			(4.9p)
- diluted	2			(42.9p)			(4.9p)

All results derive from continuing operations.

		Six months ended 30 September 2019 Unaudited			Six months ended 30 September 2018 Unaudited
	Note	Underlying pre-tax¹ £m	Capital and other £m	Total £m	Underlying pre-tax¹ £m	Capital and other £m	Total £m
Results of joint ventures and funds accounted for using the equity method
Underlying Profit		38	-	38	42	-	42
Valuation movement	4	-	(140)	(140)	-	(13)	(13)
Capital financing costs		-	(15)	(15)	-	(19)	(19)
Profit on disposal of investment properties, trading properties and investments		-	1	1	-	6	6
Taxation		-	-	-	-	-	-
	8	38	(154)	(116)	42	(26)	16

1. See definition in note 2.

Consolidated Statement
of Comprehensive Income

For the six months ended 30 September 2019

	Six months ended 30 September 2019 Unaudited £m	Six months ended 30 September 2018 Unaudited £m
Loss for the period after taxation	(441)	(61)
Other comprehensive (expense) income:
Items that will not be reclassified subsequently to profit or loss:
Net actuarial gain on pension scheme	1	-
Valuation movements on owner-occupied properties	(2)	4
	(1)	4
Items that may be reclassified subsequently to profit or loss:
Gains on cash flow hedges
- Group	-	-
- Joint ventures and funds	-	-
	-	-
Items recycled through the consolidated income statement (cash flow hedges)
- Interest rate derivatives - joint ventures	(1)	18
	(1)	18

Deferred tax on items of other comprehensive income	-	-

Other comprehensive (expense) income for the period	(2)	22
Total comprehensive expense for the period	(443)	(39)
Attributable to non-controlling interests	(37)	(13)
Attributable to shareholders of the Company	(406)	(26)

Consolidated balance sheet

As at 30 September 2019

	Note	30 September 2019 Unaudited £m	31 March 2019 Audited £m
ASSETS
Non-current assets
Investment and development properties	7	8,686	8,931
Owner-occupied property	7	71	73
		8,757	9,004
Other non-current assets
Investments in joint ventures and funds	8	2,380	2,560
Other investments	9	136	129
Property, plant and equipment		34	22
Deferred tax assets		2	1
Interest rate and currency derivative assets	10	227	154
		11,536	11,870
Current assets
Trading properties	7	45	87
Debtors		84	57
Cash and short-term deposits	10	160	242
		289	386
Total assets		11,825	12,256
LIABILITIES
Current liabilities
Short-term borrowings and overdrafts	10	(671)	(99)
Creditors		(255)	(289)
Corporation tax		(23)	(25)
		(949)	(413)
Non-current liabilities
Debentures and loans	10	(2,573)	(2,932)
Other non-current liabilities		(163)	(92)
Interest rate and currency derivative liabilities	10	(169)	(130)
		(2,905)	(3,154)
Total liabilities		(3,854)	(3,567)
Net assets		7,971	8,689
EQUITY
Share capital		234	240
Share premium		1,305	1,302
Merger reserve		213	213
Other reserves		34	37
Retained earnings		6,017	6,686
Equity attributable to shareholders of the Company		7,803	8,478
Non-controlling interests		168	211
Total equity		7,971	8,689


EPRA NAV per share*		856p	905p

* See definition in note 2.

Consolidated Statement of Cash Flows

For the six months ended 30 September 2019

	Note	Six months ended 30 September 2019 Unaudited £m	Six months ended 30 September 2018 Unaudited £m
Rental income received from tenants		211	203
Fees and other income received		30	25
Operating expenses paid to suppliers and employees		(90)	(92)
Sale of trading properties		50	145
Cash generated from operations		201	281

Interest paid		(40)	(30)
Interest received		4	3
Corporation tax (payments) repayments		(4)	7
Distributions and other receivables from joint ventures and funds	8	24	27
Net cash inflow from operating activities		185	288

Cash flows from investing activities
Development and other capital expenditure		(130)	(87)
Purchase of investment properties		-	(97)
Sale of investment properties		21	99
Sale of investments		5	11
Purchase of investments		(4)	(4)
Purchase of remaining share of Aldgate JV		(21)	-
Investment in and loans to joint ventures and funds		(80)	(81)
Capital distributions from joint ventures and funds		90	260
Loan repayments from joint ventures and funds		-	247
Indirect taxes received (paid) in respect of investing activities		4	(2)
Net cash (outflow) inflow from investing activities		(115)	346

Cash flows from financing activities
Issue of ordinary shares		4	2
Purchase of ordinary shares		(125)	(50)
Dividends paid		(152)	(148)
Dividends paid to non-controlling interests		(7)	(8)
Capital payments in respect of interest rate derivatives		(6)	(6)
Decrease in bank and other borrowings		(550)	(829)
Drawdown on bank and other borrowings		684	416
Net cash outflow from financing activities		(152)	(623)

Net (decrease) increase in cash and cash equivalents		(82)	11
Cash and cash equivalents at 1 April		242	105
Cash and cash equivalents at 30 September		160	116

Cash and cash equivalents consists of:
Cash and short-term deposits		160	116

Consolidated Statement of Changes in Equity

For the six months ended 30 September 2019

Six month movements in equity

	Share capital £m	Share premium £m	Hedging and translation reserve £m	Re- valuation reserve £m	Merger reserve £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total equity £m
Balance at 1 April 2019	240	1,302	11	26	213	6,686	8,478	211	8,689
Total comprehensive expense for the period	-	-	-	(3)	-	(403)	(406)	(37)	(443)
Share issues	-	3	-	-	-	-	3	-	3
Purchase of own shares	(6)	-	-	-	-	(119)	(125)	-	(125)
Dividends paid in period (15.50p per share)	-	-	-	-	-	(147)	(147)	-	(147)
Dividends paid to non-controlling interests	-	-	-	-	-	-	-	(6)	(6)
Balance at 30 September 2019	234	1,305	11	23	213	6,017	7,803	168	7,971

Balance at 1 April 2018	248	1,300	11	22	213	7,458	9,252	254	9,506
Total comprehensive expense for the period	-	-	-	22	-	(48)	(26)	(13)	(39)
Share issues	-	2	-	-	-	-	2	-	2
Fair value of share and share option awards	-	-	-	-	-	(2)	(2)	-	(2)
Purchase of own shares	(1)	-	-	-	-	(49)	(50)	-	(50)
Dividends paid in period (15.04p per share)	-	-	-	-	-	(148)	(148)	-	(148)
Dividends paid to non-controlling interests	-	-	-	-	-	-	-	(8)	(8)
Balance at 30 September 2018	247	1,302	11	44	213	7,211	9,028	233	9,261

Prior year movements in equity

	Share capital £m	Share premium £m	Hedging and translation reserve £m	Re- valuation reserve £m	Merger reserve £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total equity £m
Balance at 1 April 2018	248	1,300	11	22	213	7,458	9,252	254	9,506
Total comprehensive expense for the period	-	-	-	4	-	(274)	(270)	(29)	(299)
Share issues	-	2	-	-	-	-	2	-	2
Fair value of share and share option awards	-	-	-	-	-	(4)	(4)	-	(4)
Purchase of own shares	(8)	-	-	-	-	(196)	(204)	-	(204)
Dividends paid in year (30.54p per share)	-	-	-	-	-	(298)	(298)	-	(298)
Dividends paid to non-controlling interests	-	-	-	-	-	-	-	(14)	(14)
Balance at 31 March 2019	240	1,302	11	26	213	6,686	8,478	211	8,689

Notes to the Accounts

For the six months ended 30 September 2019

1 Basis of preparation

The financial information for the period ended 30 September 2019 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 March 2019 has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The financial information included in this announcement has been prepared on a going concern basis using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the European Union, in accordance with IAS 34 Interim Financial Reporting, and in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority. The current period financial information presented in this document has been reviewed, not audited.

The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 March 2019, which have been prepared in accordance with IFRS as adopted by the European Union.

The same accounting policies, estimates, presentation and methods of computation are followed in the half year report as applied in the Group's latest annual audited financial statements, with the exception of updating accounting policies to reflect changes required by the adoption of IFRS 16 (see below), and the tax policy, which for the interim period is as follows: The current tax charge is calculated on profits arising in the period and in accordance with legislation which has been enacted or substantially enacted at the balance sheet date.

During the period the Group adopted the following standards:

IFRS 16 - Leases

The new standard results in almost all leases held as lessee being recognised on the balance sheet, as the distinction between operating and finance leases is removed. IFRS 16 applies to leases previously classified as operating leases where the Group is lessee. IFRS 16 has not impacted operating leases held by the Group where the Group is lessor, therefore the standard does not have a material impact on the Group. The accounting for lessors has not significantly changed.

The cumulative quantitative impact for the period ended 30 September 2019 upon the adoption of this new accounting policy is an increase in investment property of £43m and a corresponding increase in liabilities of £50m. The transitional impact of IFRS 16 is a £17m increase in investment property and a corresponding increase in liabilities of £17m. The impact of IFRS 16 relating to new leases in the year is a £26m increase in investment property and a £33m increase in liabilities. The difference is due to a capital contribution. The net impact on profit/(loss) after taxation is immaterial.

IFRS 16 outlines several options for initial recognition on adoption of the standard. The Group has adopted IFRS 16 in accordance with IFRS 16 C8. In accordance with this option, comparative amounts are not restated and adjustments in opening retained earnings have not been recognised. The lease liability is calculated as the present value of the outstanding rental payments, discounted using the Group's incremental borrowing rate at the date of initial application. The right of use asset is then set as being equal to the liability therefore the impact on net assets on adoption is nil.

The adoption of IFRS 16 has a nil impact on net assets and an immaterial impact on underlying profit/(loss) before tax. Therefore the adoption of IFRS 16 will have an immaterial impact on alternative performance measures.

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective for the current accounting period. None of these are expected to have a material impact on the consolidated financial statements of the Group.

The general risk environment in which the Group operates has heightened during the period, which is largely due to the continued level of uncertainty associated with the future impact of the UK's exit from the EU, the significant deterioration in the UK retail market and weaker investment markets.

Having assessed the Principal Risks, the Directors believe that the Group is well placed to manage its financing and other business risks satisfactorily, and have a reasonable expectation that the Company and the Group have adequate resources to continue in operation for at least 12 months from the signing date of these financial statements. They therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

The interim financial information was approved by the Board on 12 November 2019.

2 Performance measures

Earnings per share

The Group measures financial performance with reference to underlying earnings per share, the European Public Real Estate Association (EPRA) earnings per share and IFRS earnings per share. The relevant earnings and weighted average number of shares (including dilution adjustments) for each performance measure are shown below, and a reconciliation between these is shown within the supplementary disclosures (Table B).

EPRA earnings per share is calculated using EPRA earnings, which is the IFRS profit after taxation attributable to shareholders of the Company excluding investment and development property revaluations, gains/losses on investing and trading property disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation.

In the current period, diluted EPRA earnings per share did not include the dilutive impact of the 2015 convertible bond, as the Company's share price was below the current exchange price of 991.08 pence. IFRS diluted earnings per share would include the dilutive impact as IAS 33 ignores this hurdle to conversion, however due to the loss for the period, this would be anti-dilutive and therefore no adjustment has been made. In the prior period, both measures exclude the dilutive impact of the 2015 convertible bond, for the same reasons.

Underlying earnings per share is calculated using Underlying Profit adjusted for underlying taxation (see note 6). Underlying Profit is the pre-tax EPRA earnings measure, with additional Company adjustments. No Company adjustments were made in either the current or prior period.

	Six months ended 30 September 2019			Six months ended 30 September 2018
	Relevant earnings £m	Relevant number of shares million	Earnings per share pence	Relevant earnings £m	Relevant number of shares million	Earnings per share pence
Underlying
Underlying basic	152	941	16.2	169	981	17.2
Underlying diluted	152	944	16.1	169	984	17.2
EPRA
EPRA basic	152	941	16.2	169	981	17.2
EPRA diluted	152	944	16.1	169	984	17.2
IFRS
Basic	(404)	941	(42.9)	(48)	981	(4.9)
Diluted	(404)	941	(42.9)	(48)	981	(4.9)

Net asset value

The Group measures financial position with reference to EPRA net asset value (NAV) per share and EPRA triple net asset value (NNNAV) per share. The net asset value and number of shares for each performance measure is shown below. A reconciliation between IFRS net assets and EPRA net assets, and the relevant number of shares for each performance measure, is shown within the supplementary disclosures (Table B). EPRA net assets is a proportionally consolidated measure that is based on IFRS net assets excluding the mark-to-market on derivatives and related debt adjustments, the mark-to-market on the convertible bonds as well as deferred taxation on property and derivative valuations. They include the valuation surplus on trading properties and are adjusted for the dilutive impact of share options.

As at 30 September 2019, EPRA NAV and NNNAV did not include the dilutive impact of the 2015 convertible bond, as the Company's share price was below the current exchange price of 991.08 pence. IFRS net assets also does not include the convertible impact following the treatment of IFRS earnings per share. In the prior year period, EPRA and IFRS NAV measures excluded the dilutive impact of the 2015 convertible bond, for the same reasons.

	30 September 2019			31 March 2019
	Relevant net assets £m	Relevant number of shares million	Net asset value per share pence	Relevant net assets £m	Relevant number of shares million	Net asset value per share pence
EPRA
EPRA NAV	7,984	933	856	8,649	956	905
EPRA NNNAV	7,412	933	794	8,161	956	854
IFRS
Basic	7,971	927	860	8,689	949	916
Diluted	7,971	933	854	8,689	956	909

Total accounting return

The Group also measures financial performance with reference to total accounting return. This is calculated as the movement in EPRA net asset value per share and dividend paid in the period as a percentage of the EPRA net asset value per share at the start of the period.

	Six months ended 30 September 2019			Six months ended 30 September 2018
	Decrease in NAV per share pence	Dividend per share paid pence	Total accounting return	Decrease in NAV per share pence	Dividend per share paid pence	Total accounting return
Total accounting return	(49)	15.50	(3.7%)	(28)	15.04	(1.3%)

3 Revenue and costs

	Six months ended 30 September 2019			Six months ended 30 September 2018
	Underlying £m	Capital and other £m	Total £m	Underlying £m	Capital and other £m	Total £m
Rent receivable	221	-	221	223	-	223
Spreading of tenant incentives and guaranteed rent increases	(8)	-	(8)	(3)	-	(3)
Gross rental income	213	-	213	220	-	220
Trading property sales proceeds	-	53	53	-	217	217
Service charge income	47	-	47	38	-	38
Management and performance fees	5	-	5	3	-	3
(from joint ventures and funds)
Other fees and commissions	10	-	10	21	-	21
Revenue	275	53	328	282	217	499

Trading property cost of sales	-	(43)	(43)	-	(152)	(152)
Service charge expenses	(47)	-	(47)	(38)	-	(38)
Property operating expenses	(26)	-	(26)	(19)	-	(19)
Other fees and commissions expenses	(8)	-	(8)	(18)	-	(18)
Costs	(81)	(43)	(124)	(75)	(152)	(227)
	194	10	204	207	65	272

4 Valuation movements on property

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Consolidated income statement
Revaluation of properties	(436)	(252)
Revaluation of properties held by joint ventures and funds accounted for using the equity method	(140)	(13)
	(576)	(265)
Consolidated statement of comprehensive income
Revaluation of owner-occupied properties	(2)	4
	(578)	(261)

5 Net financing costs

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Underlying

Financing charges
Bank loans and overdrafts	(12)	(11)
Derivatives	15	14
Other loans	(38)	(36)
Obligations under head leases	(2)	(1)
	(37)	(34)
Development interest capitalised	4	1
	(33)	(33)
Financing income
Deposits, securities and liquid investments	-	-
Net financing charges - underlying	(33)	(33)

Capital and other

Financing charges
Valuation movements on fair value debt	(55)	(14)
Valuation movements on fair value derivatives	56	15
Capital financing costs	-	(3)
Fair value movement on convertible bonds	(3)	-
Fair value movement on non-hedge accounted derivatives	(29)	-
	(31)	(2)
Financing income
Capital financing income	3	-
Fair value movement on non-hedge accounted derivatives	-	4
	3	4
Net financing (charges) income - capital	(28)	2


Total financing income	3	4
Total financing charges	(64)	(35)
Net financing costs	(61)	(31)

Interest on development expenditure is capitalised at the Group's weighted average interest rate of 2.1% (Six months ended 30 September 2018: 2.0%). The weighted average interest rate on a proportionately consolidated basis at 30 September 2019 was 2.7% (Six months ended 30 September 2018: 2.9%).

6 Taxation

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Taxation (expense) income
Current taxation
Current period UK corporation taxation (30 September 2019: 19%; 30 September 2018: 19%)	(1)	(20)
Adjustments in respect of prior periods	-	-
Total current taxation expense	(1)	(20)
Deferred taxation on revaluations and derivatives	-	1
Group total taxation	(1)	(19)
Attributable to joint ventures and funds	-	-
Total taxation expense	(1)	(19)

Taxation expense attributable to Underlying Profits for the six months ended 30 September 2019 was £nil (Six months ended 30 September 2018: £nil).

7 Property

Property reconciliation

	Six months ended 30 September 2019				Year ended 31 March 2019
	Investment and development properties Level 3 £m	Trading properties £m	Owner-occupied Level 3 £m	Total £m	Investment and development properties Level 3 £m	Trading properties £m	Owner-occupied Level 3 £m	Total £m
Carrying value at the start of the period/year	8,931	87	73	9,091	9,507	328	90	9,925
Additions
- property purchases	41	-	-	41	185	-	-	185
- development expenditure	81	-	-	81	172	11	-	183
- capitalised interest and staff costs	4	-	-	4	5	-	-	5
- capital expenditure on asset management initiatives	29	-	-	29	42	-	-	42
- head lease assets and right of use assets	64	-	-	64	36	-	-	36
	219	-	-	219	440	11	-	451
Depreciation	-	-	-	-	-	-	(1)	(1)
Disposals	(19)	(42)	-	(61)	(412)	(252)	-	(664)
Reclassifications	-	-	-	-	19	-	(19)	-
Revaluations included in income statement	(436)	-	-	(436)	(620)	-	-	(620)
Revaluations included in OCI	-	-	(2)	(2)	-	-	3	3
Movement in tenant incentives and contracted rent uplift balances	(9)	-	-	(9)	(3)	-	-	(3)
Carrying value at the end of the period/year	8,686	45	71	8,802	8,931	87	73	9,091
Head lease liabilities				(112)				(92)
Lease liabilities net of capital contribution				(43)				-
Valuation surplus on trading properties				19				29
Group property portfolio valuation at the end of the period/year				8,666				9,028
Non-controlling interests				(232)				(267)
Group property portfolio valuation at the end of the period/year attributable to shareholders				8,434				8,761

The Group's total property portfolio was valued by external valuers on the basis of fair value, in accordance with the RICS valuation - Professional Standards 2014, ninth edition, published by The Royal Institute of Chartered Surveyors. The information provided to the valuers, and the assumptions and valuations models used by the valuers are reviewed by the property portfolio team, the Head of Real Estate and the Chief Financial Officer. The valuers meet with the external auditors and also present directly to the Audit Committee on a half yearly basis.

Property valuations are inherently subjective as they are made on the basis of significant unobservable inputs, including assumptions made by the valuer which may not prove to be accurate. For these reasons, and consistent with EPRA's guidance, we have classified the valuations of our property portfolio as Level 3 as defined by IFRS 13. There were no transfers between levels in the period. Inputs to the valuation, including equivalent yields, rental values and costs to complete, are 'unobservable' as defined by IFRS 13.

During the current financial period, the Group adopted the new accounting standard IFRS 16, Leases. The right-of-use asset recognised on adoption is included within the investment and development property line item. The value of right-of-use assets included within the line is £43m. An adjustment is made to strip out the value of head lease liabilities and lease liabilities net of capital. This is done in order to reconcile the carrying value of investment and development properties to the Group property portfolio valuation at the end of the period.

Additional property covenant information

Properties valued at £1,019m (year ended 31 March 2019: £1,019m) were subject to a security interest and other properties of non-recourse companies amounted to £966m (year ended 31 March 2019: £1,115m), totalling £1,985m (year ended 31 March 2019: £2,134m).

8 Joint ventures and funds

Summary movement for the period of the investments in joint ventures and funds

	Joint ventures £m	Funds £m	Total £m	Equity £m	Loans £m	Total £m
At 1 April 2019	2,330	230	2,560	2,112	448	2,560
Additions	85	2	87	4	83	87
Disposals	(22)	-	(22)	(22)	-	(22)
Share of loss after taxation	(93)	(23)	(116)	(116)	-	(116)
Distributions and dividends:
- Capital	(91)	-	(91)	(91)	-	(91)
- Revenue	(31)	(6)	(37)	(37)	-	(37)
Hedging and exchange movements	(1)	-	(1)	(1)	-	(1)
At 30 September 2019	2,177	203	2,380	1,849	531	2,380

Summary income statement for the period of the investments in joint ventures and funds

	Six months ended 30 September 2019		Six months ended 30 September 2018
	£m 100%	£m BL Share	£m 100%	£m BL Share
Revenue	198	99	196	98
Costs	(72)	(37)	(50)	(25)
	126	62	146	73

Net financing costs	(48)	(24)	(62)	(31)
Underlying Profit before taxation	78	38	84	42

Valuation movement	(280)	(140)	(26)	(13)
Capital financing costs	(30)	(15)	(38)	(19)
Profit on disposal of investment properties, trading properties and investments	2	1	12	6
(Loss) profit on ordinary activities before taxation	(230)	(116)	32	16

Taxation	-	-	-	-
(Loss) profit on ordinary activities after taxation	(230)	(116)	32	16

(Loss) profit split between controlling and non-controlling interests
Attributable to non-controlling interests		(5)		(3)
Attributable to shareholders of the Company		(111)		19

Operating cash flows of joint ventures and funds (Group share)

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Rental income received from tenants	68	76
Operating expenses paid to suppliers and employees	(17)	(13)
Cash generated from operations	51	63
Interest paid	(30)	(38)
UK corporation tax paid	(2)	-
Cash inflow from operating activities	19	25
Cash inflow from operating activities deployed as:
Cash deficit following revenue distributions	(5)	(2)
Revenue distributions per consolidated statement of cash flows	24	27
Revenue distributions split between controlling and non-controlling interests
Attributable to non-controlling interests	1	1
Attributable to shareholders of the Company	23	26

9 Other investments

	30 September 2019 £m	31 March 2019 £m
Fair value through profit or loss	121	114
Amortised cost	4	5
Intangible assets	11	10
	136	129

Included within fair value through profit or loss is £102m comprising interests as a trust beneficiary. The trust's assets comprise freehold reversions in a pool of commercial properties, comprising Sainsburys superstores. The interest was categorised as Level 3 in the fair value hierarchy, is subject to the same inputs as those disclosed in note 7, and its fair value was determined by the Directors, supported by an external valuation. The remaining amount included in the fair value through profit or loss relate to private equity/venture capital investments (£2m) which are categorised as Level 3 in the fair value hierarchy and government bonds (£17m) which are classified as Level 1. The fair value of private equity/venture capital investments are determined by the Directors.

10 Net debt

10.1 Fair value and book value of net debt

	30 September 2019			31 March 2019
	Fair value £m	Book value £m	Difference £m	Fair value £m	Book value £m	Difference £m
Debentures and unsecured bonds	2,121	1,963	158	2,036	1,910	126
Convertible bonds	346	346	-	343	343	-
Bank debt and other floating rate debt	942	935	7	784	778	6
Gross debt	3,409	3,244	165	3,163	3,031	132
Interest rate and currency derivative liabilities	169	169	-	130	130	-
Interest rate and currency derivative assets	(227)	(227)	-	(154)	(154)	-
Cash and short-term deposits	(160)	(160)	-	(242)	(242)	-
Net debt	3,191	3,026	165	2,897	2,765	132
Net debt attributable to non-controlling interests	(106)	(106)	-	(105)	(104)	(1)
Net debt attributable to shareholders of the Company	3,085	2,920	165	2,792	2,661	131

The fair values of debentures, unsecured bonds and the convertible bonds have been established by obtaining quoted market prices from brokers. The bank debt and other floating rate debt has been valued assuming it could be renegotiated at contracted margins. The derivatives have been valued by calculating the present value of expected future cash flows, using appropriate market discount rates, by an independent treasury advisor. Short-term debtors and creditors and other investments (see note 9) have been excluded from the disclosures on the basis that the fair value is equivalent to the book value.

10.2 Loan to value

Group loan to value (LTV)

	30 September 2019 £m	31 March 2019 £m
Group loan to value (LTV)	25.4%	22.2%

Principal value of gross debt	3,039	2,881
Less debt attributable to non-controlling interests	(120)	(112)
Less cash and short-term deposits (balance sheet)	(160)	(242)
Plus cash attributable to non-controlling interests	14	9
Total net debt for LTV calculation	2,773	2,536
Group property portfolio valuation (note 7)	8,666	9,028
Investments in joint ventures and funds (note 8)	2,380	2,560
Other investments (note 9) and property, plant and equipment	170	151
Less property attributable to non-controlling interests	(281)	(317)
Total assets for LTV calculation	10,935	11,422
Proportionally consolidated loan to value (LTV)

	30 September 2019 £m	31 March 2019 £m
Proportionally consolidated loan to value (LTV)	30.8%	28.1%

Principal value of gross debt	4,060	4,007
Less attributable to non-controlling interests	(120)	(112)
Less cash and short-term deposits	(288)	(402)
Plus cash attributable to non-controlling interests	16	9
Total net debt for proportional LTV calculation	3,668	3,502
Group property portfolio valuation (note 7)	8,666	9,028
Share of property of joint ventures and funds	3,338	3,605
Other investments (note 9) and property, plant and equipment	170	151
Less property attributable to non-controlling interests	(281)	(317)
Total assets for proportional LTV calculation	11,893	12,467

10.3 British Land Unsecured Financial Covenants

The two financial covenants applicable to the Group unsecured debt including convertible bonds are shown below:

	30 September 2019 £m	31 March 2019 £m
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves	34%	29%

Principal amount of gross debt	3,039	2,881
Less the relevant proportion of borrowings of the partly-owned subsidiary / non-controlling interests	(120)	(112)
Less cash and deposits (balance sheet)	(160)	(242)
Plus the relevant proportion of cash and deposits of the partly-owned subsidiary / non-controlling interests	14	9
Net Borrowings	2,773	2,536
Share capital and reserves (balance sheet)	7,971	8,689
EPRA deferred tax adjustment (EPRA Table A)	6	5
Trading property surpluses (EPRA Table A)	19	29
Exceptional refinancing charges (see below)	210	216
Fair value adjustments of financial instruments (EPRA Table A)	137	113
Less reserves attributable to non-controlling interests (balance sheet)	(168)	(211)
Adjusted Capital and Reserves	8,175	8,841

In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £210m (31 March 2019: £216m) to reflect the cumulative net amortised exceptional items relating to refinancing in the years ended 31 March 2005, 2006 and 2007.

	30 September 2019 £m	31 March 2019 £m
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets	25%	21%

Principal amount of gross debt	3,039	2,881
Less cash and deposits not subject to a security interest (being £152m less the relevant proportion of cash and deposits of the partly owned subsidiary of £12m)	(140)	(221)
Less principal amount of secured and non-recourse borrowings	(1,190)	(1,158)
Net Unsecured Borrowings	1,709	1,502
Properties (note 7)	8,666	9,028
Investments in joint ventures (note 8)	2,380	2,560
Other investments (note 9) and property, plant and equipment	170	151
Less investments in joint ventures (note 8)	(2,380)	(2,560)
Less encumbered assets (note 7)	(1,985)	(2,134)
Unencumbered Assets	6,851	7,045

10.4 Convertible bond

0% Convertible bond 2015 (maturity 2020)

On 9 June 2015 British Land (White) 2015 Limited (the 2015 Issuer), a wholly owned subsidiary of the Group, issued £350 million zero coupon guaranteed convertible bonds due 2020 (the 2015 bonds) at par. The 2015 Issuer is fully guaranteed by the Company in respect of the 2015 bonds.

Subject to their terms, the 2015 bonds are convertible into preference shares of the Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or, at the Company's election, any combination of ordinary shares and cash. Bondholders may exercise their conversion right at any time up to but excluding the 7th dealing day before 9 June 2020 (the maturity date), a bondholder may convert at any time.

The initial exchange price was 1103.32 pence per ordinary share. The exchange price is adjusted based on certain events, such as the Company paying dividends in any year above a threshold amount in pence-per-ordinary-share. As at 30 September 2019 the exchange price was 991.08 pence per ordinary share.

From 30 June 2018, the Company has the option to redeem the 2015 bonds at par if the Company's share price has traded above 130% of the exchange price for a specified period, or at any time once 85% by nominal value of the 2015 bonds have been converted, redeemed, or purchased and cancelled. The 2015 bonds will be redeemed at par on 9 June 2020 (the maturity date) if they have not already been converted, redeemed or purchased and cancelled.

10.5 Fair value hierarchy

The table below analyses financial instruments carried at fair value, by the valuation method. The different levels are defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	30 September 2019				31 March 2019
	Level 1 £m	Level 2 £m	Level 3 £m	Total £m	Level 1 £m	Level 2 £m	Level 3 £m	Total £m
Interest rate and currency derivative assets	-	(227)	-	(227)	-	(154)	-	(154)
Other investments - fair value through profit and loss	(17)	-	(104)	(121)	(14)	-	(100)	(114)
Assets	(17)	(227)	(104)	(348)	(14)	(154)	(100)	(268)
Interest rate and currency derivative liabilities	-	169	-	169	-	130	-	130
Convertible bonds	346	-	-	346	343	-	-	343
Liabilities	346	169	-	515	343	130	-	473
Total	329	(58)	(104)	167	329	(24)	(100)	205

There have been no transfers between levels in the period. A £5m revaluation gain in relation to other investments held at fair value through profit has been recorded in the six months ended 30 September 2019 (30 September 2018: no gain or loss). Further disclosures in relation to the valuation of the other investments are included within note 9.

11 Dividend

The 2020 second quarter dividend of 7.9825 pence per share is payable on 7 February 2020 to shareholders on the register at close of business on 3 January 2020.

The second interim dividend will be a Property Income Distribution ('PID') and no SCRIP alternative will be offered. PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate. Certain classes of shareholders may be able to elect to receive dividends gross. Please refer to our website (www.britishland.com) for details.

The 2020 first quarter dividend of 7.9825 pence per share, totalling £74m was paid on 8 November 2019. The whole of the first quarter dividend was a PID and no scrip alternative was offered. £63m was paid to shareholders, and £11m of withholding tax was retained.

The Consolidated Statement of Changes in Equity shows total dividends in the six months to 30 September 2019 of £147m, £74m being the third quarter 2019 PID dividend of 7.75 pence per share paid on 3 May 2019, and the fourth quarter 2019 half PID, half non-PID dividend of 7.75 pence per share, paid on 2 August 2019, totalling £73m. No scrip alternatives were offered for the third or fourth quarters and the fourth quarter dividend was half PID and half non-PID.

12 Segment information

Operating segments

The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its three principal sectors are Offices, Retail and Canada Water. The Retail sector includes leisure, as this is often incorporated into Retail schemes. The Other /unallocated sector includes residential properties.

The relevant gross rental income, net rental income, operating result and property assets, being the measures of segment revenue, segment result and segment assets used by the management of the business, are set out below. Management reviews the performance of the business principally on a proportionally consolidated basis, which includes the Group's share of joint ventures and funds on a line-by-line basis and excludes non-controlling interests in the Group's subsidiaries. The chief operating decision maker for the purpose of segment information is the Executive Committee.

Gross rental income is derived from the rental of buildings. Operating result is the net of net rental income, fee income and administrative expenses. No customer exceeded 10% of the Group's revenues in either period.

Segment result

	Six months ended 30 September
	Offices		Retail		Canada Water		Other/unallocated		Total
	2019 £m	2018 £m	2019 £m	2018 £m	2019 £m	2018 £m	2019 £m	2018 £m	2019 £m	2018 £m
Gross rental income
British Land Group	82	74	117	132	4	5	2	2	205	213
Share of joint ventures and funds	34	36	36	42	-	-	-	-	70	78
Total	116	110	153	174	4	5	2	2	275	291

Net rental income
British Land Group	69	67	106	120	4	4	2	3	181	194
Share of joint ventures and funds	29	34	33	39	-	-	-	-	62	73
Total	98	101	139	159	4	4	2	3	243	267

Operating result
British Land Group	69	67	107	117	2	2	(25)	(23)	153	163
Share of joint ventures and funds	26	31	30	37	-	-	-	-	56	68
Total	95	98	137	154	2	2	(25)	(23)	209	231

Reconciliation to Underlying Profit before taxation	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Operating result	209	231
Net financing costs	(57)	(62)
Underlying Profit	152	169
Reconciliation to profit on ordinary activities before taxation
Underlying Profit	152	169
Capital and other	(598)	(217)
Underlying Profit attributable to non-controlling interests	6	6
Total loss on ordinary activities before taxation	(440)	(42)

Of the operating result above, £nil (six months ended 30 September 2018: £nil) was derived from outside the UK.

Segment assets

	Offices		Retail		Canada Water		Other / unallocated		Total
	30 September 2019 £m	31 March 2019 £m	30 September 2019 £m	31 March 2019 £m	30 September 2019 £m	31 March 2019 £m	30 September 2019 £m	31 March 2019 £m	30 September 2019 £m	31 March 2019 £m
Property assets
British Land Group	4,322	4,296	3,618	4,053	347	303	147	109	8,434	8,761
Share of funds and joint ventures	2,117	2,012	1,172	1,524	-	-	-	19	3,289	3,555
Total	6,439	6,308	4,790	5,577	347	303	147	128	11,723	12,316

Reconciliation to net assets - Unaudited

British Land Group	30 September 2019 £m	31 March 2019 £m
Property assets	11,723	12,316
Other non-current assets	170	151
Non-current assets	11,893	12,467

Other net current liabilities	(224)	(297)
Adjusted net debt	(3,685)	(3,521)
Other non-current liabilities	-	-
EPRA net assets	7,984	8,649
Non-controlling interests	168	211
EPRA adjustments	(181)	(171)
Net assets	7,971	8,689

13 Related party transactions

There have been no material changes in the related party transactions described in the last annual report.

14 Contingent liabilities

The Group, joint ventures and funds have contingent liabilities in respect of legal claims, guarantees and warranties arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from contingent liabilities.

15 Share capital and reserves

	£m	Ordinary shares of 25p each
Issued, called and fully paid
At 1 April 2019	240	960,589,072
Issues	-	1,091,064
Repurchased and cancelled	(6)	(23,795,110)
At 30 September 2019	234	937,885,026

At 30 September 2019, of the issued 25p ordinary shares, 7,376 shares were held in the ESOP trust (31 March 2019: 7,376), 11,266,245 shares were held as treasury shares (31 March 2019: 11,266,245) and 926,611,405 shares were in free issue (31 March 2019: 949,315,451). No treasury shares were acquired by the ESOP trust during the year. All issued shares are fully paid.

In the six months ended 30 September 2019, the Company repurchased and cancelled 23,795,110 ordinary shares. The weighted average share price of repurchases was 525 pence.

Supplementary Disclosures

Unaudited

Table A: Summary income statement and balance sheet

Summary income statement based on proportional consolidation for the six months ended 30 September 2019

The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the results of the Group, with its share of the results of joint ventures and funds included on a line by line basis and excluding non-controlling interests.

	Six months ended 30 September 2019				Six months ended 30 September 2018
	Group £m	Joint ventures and funds £m	Less non-controlling interests £m	Proportionally consolidated £m	Group £m	Joint ventures and funds £m	Less non-controlling interests £m	Proportionally consolidated £m
Gross rental income	213	70	(8)	275	220	80	(9)	291
Property operating expenses	(26)	(8)	2	(32)	(19)	(7)	2	(24)
Net rental income	187	62	(6)	243	201	73	(7)	267

Administrative expenses	(41)	-	-	(41)	(41)	-	(1)	(42)
Net fees and other income	7	-	-	7	6	-	-	6
Ungeared Income Return	153	62	(6)	209	166	73	(8)	231

Net financing costs	(33)	(24)	-	(57)	(33)	(31)	2	(62)
Underlying Profit	120	38	(6)	152	133	42	(6)	169
Underlying taxation	-	-	-	-	-	-	-	-
Underlying Profit after taxation	120	38	(6)	152	133	42	(6)	169

Summary balance sheet based on proportional consolidation as at 30 September 2019

The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the results of the Group, with its share of the results of joint ventures and funds included on a line-by-line basis and excluding non-controlling interests.

	Group £m	Share of joint ventures & funds £m	Less non-controlling interests £m	Share options £m	Deferred tax £m	Mark-to-market on derivatives and related debt adjustments £m	Head leases £m	Valuation surplus on trading properties £m	EPRA Net assets 30 September 2019 £m	EPRA Net assets 31 March 2019 £m
Retail properties	3,905	1,237	(281)	-	-	-	(71)	-	4,790	5,577
Office properties	4,367	2,112	-	-	-	-	(59)	19	6,439	6,308
Canada Water properties	383	-	-	-	-	-	(36)	-	347	303
Other properties	147	-	-	-	-	-	-	-	147	128
Total properties	8,802	3,349	(281)	-	-	-	(166)	19	11,723	12,316
Investments in joint ventures and funds	2,380	(2,380)	-	-	-	-	-	-	-	-
Other investments	136	-	-	-	-	-	-	-	136	130
Other net (liabilities) assets	(321)	(68)	8	19	6	-	166	-	(190)	(276)
Net debt	(3,026)	(901)	105	-	-	137	-	-	(3,685)	(3,521)
Net assets	7,971	-	(168)	19	6	137	-	19	7,984	8,649
EPRA NAV per share (note 2)									856p	905p

	30 September 2019		31 March 2019
	£m	Pence per share	£m	Pence per share
Opening EPRA NAV	8,649	905	9,560	967
Income return	152	16	340	35
Capital return	(545)	(58)	(749)	(77)
Dividend paid	(147)	(15)	(298)	(30)
Purchase of own shares	(125)	8	(204)	10
Closing EPRA NAV	7,984	856	8,649	905

Table B: EPRA Performance measures

EPRA Performance measures summary table

		Six months ended 30 September 2019		Six months ended 30 September 2018
		£m	Pence per share	£m	Pence per share
EPRA Earnings	- basic	152	16.2	169	17.2
	- diluted	152	16.1	169	17.2
EPRA Net Initial Yield			4.5%		4.4%
EPRA 'topped-up' Net Initial Yield			4.8%		4.7%
EPRA Vacancy Rate			5.6%		2.7%

	30 September 2019		31 March 2019
	Net assets £m	Net asset value per share pence	Net assets £m	Net asset value per share pence
EPRA NAV	7,984	856p	8,649	905
EPRA NNNAV	7,412	794p	8,161	854

Calculation and reconciliation of EPRA/IFRS earnings and EPRA/IFRS earnings per share

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Loss attributable to the shareholders of the Company	(404)	(48)
Exclude:
Group - taxation	1	19
Group - valuation movement	436	252
Group - (profit) loss on disposal of investment properties and investments	(10)	6
Group - profit on disposal of trading properties	(10)	(65)
Joint ventures and funds - valuation movement (including result on disposals)	139	7
Joint ventures and funds - capital financing costs	15	19
Changes in fair value of financial instruments and associated close-out costs	28	(2)
Non-controlling interests in respect of the above	(43)	(19)
EPRA earnings - basic	152	169
Dilutive effect of 0% convertible bond	-	-
EPRA earnings - diluted	152	169

Loss attributable to the shareholders of the Company	(404)	(48)
Dilutive effect of 0% convertible bond	-	-
IFRS earnings - diluted	(404)	(48)

	Six months ended 30 September 2019 Number million	Six months ended 30 September 2018 Number million
Weighted average number of shares	952	992
Adjustment for Treasury shares	(11)	(11)
IFRS/EPRA weighted average number of shares (basic)	941	981
Dilutive effect of share options	-	1
Dilutive effect of ESOP shares	3	2
EPRA weighted average number of shares (diluted)	944	984
Remove dilutive effect of anti-dilutive share options	(3)	(3)
IFRS weighted average number of shares (diluted)	941	981

Net assets per share

	30 September 2019		31 March 2019
	£m	Pence per share	£m	Pence per share
Balance sheet net assets	7,971		8,689
Deferred tax arising on revaluation movements	6		5
Mark-to-market on derivatives and related debt adjustments	137		113
Dilution effect of share options	19		24
Surplus on trading properties	19		29
Less non-controlling interests	(168)		(211)
EPRA NAV	7,984	856	8,649	905
Deferred tax arising on revaluation movements	(9)		(11)
Mark-to-market on derivatives and related debt adjustments	(137)		(113)
Mark-to-market on debt	(426)		(364)
EPRA NNNAV	7,412	794	8,161	854

EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of the debt and derivatives and to include the deferred taxation on revaluations and derivatives.

	30 September 2019 Number million	31 March 2019 Number million
Number of shares at period/year end	938	960
Adjustment for treasury shares	(11)	(11)
IFRS/EPRA Number of shares (basic)	927	949
Dilutive effect of share options	3	2
Dilutive effect of ESOP shares	3	5
IFRS/ EPRA number of shares (diluted)	933	956

EPRA Net Initial Yield and 'topped-up' Net Initial Yield

	30 September 2019 £m	30 September 2018 £m
Investment property - wholly-owned	8,434	9,314
Investment property - share of joint ventures and funds	3,289	3,542
Less developments, residential and land	(1,255)	(1,158)
Completed property portfolio	10,468	11,698
Allowance for estimated purchasers' costs	673	760
Gross up completed property portfolio valuation (A)	11,141	12,458
Annualised cash passing rental income	521	565
Property outgoings	(17)	(11)
Annualised net rents (B)	504	554
Rent expiration of rent-free periods and fixed uplifts	35	27
'Topped-up' net annualised rent (C)	539	581
EPRA Net Initial Yield (B/A)	4.5%	4.4%
EPRA 'topped-up' Net Initial Yield (C/A)	4.8%	4.7%
Including fixed/minimum uplifts received in lieu of rental growth	5	11
Total 'topped-up' net rents (D)	544	592
Overall 'topped-up' Net Initial Yield (D/A)	4.9%	4.8%
'Topped-up' net annualised rent	539	581
ERV vacant space	34	17
Reversions	22	29
Total ERV (E)	595	627
Net Reversionary Yield (E/A)	5.3%	5.0%

1. The weighted average period over which rent-free periods expire is 1 year (30 September 2018: 1 year).

EPRA Net Initial Yield (NIY) basis of calculation

EPRA NIY is calculated as the annualised net rent (on a cash flow basis), divided by the gross value of the completed property portfolio. The valuation of our completed property portfolio is determined by our external valuers as at 30 September 2019, plus an allowance for estimated purchaser's costs. Estimated purchaser's costs are determined by the relevant stamp duty liability, plus an estimate by our valuers of agent and legal fees on notional acquisition. The net rent deduction allowed for property outgoings is based on our valuers' assumptions on future recurring non-recoverable revenue expenditure.

In calculating the EPRA 'topped-up' NIY, the annualised net rent is increased by the total contracted rent from expiry of rent-free periods and future contracted rental uplifts where defined as not in lieu of growth. Overall 'topped-up' NIY is calculated by adding any other contracted future uplift to the 'topped-up' net annualised rent.

The net reversionary yield is calculated by dividing the total estimated rental value (ERV) for the completed property portfolio, as determined by our external valuers, by the gross completed property portfolio valuation.

The EPRA vacancy rate is calculated as the ERV of the un-rented, lettable space as a proportion of the total rental value of the completed
property portfolio.

EPRA Vacancy Rate

	30 September 2019 £m	30 September 2018 £m
Annualised potential rental value of vacant premises	34	17
Annualised potential rental value for the completed property portfolio	605	636
EPRA Vacancy Rate	5.6%	2.7%

EPRA Cost Ratios

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Property operating expenses	24	17
Administrative expenses	41	42
Share of joint ventures and funds expenses	8	7
Less: Performance & management fees (from joint ventures & funds)	(5)	(3)
Other fees and commissions	(2)	(3)
Ground rent costs and operating expenses de facto included in rents	(8)	(4)
EPRA Costs (including direct vacancy costs) (A)	58	56
Direct vacancy costs	(12)	(8)
EPRA Costs (excluding direct vacancy costs) (B)	46	48

Gross Rental Income less ground rent costs and operating expenses de facto included in rents	197	209
Share of joint ventures and funds (Gross Rental Income less ground rent costs and operating expenses de facto included in rents)	70	78
Total Gross Rental Income (C)	267	287

EPRA Cost Ratio (including direct vacancy costs) (A/C)	21.7%	19.5%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C)	17.2%	16.7%

Overhead and operating expenses capitalised (including share of joint ventures and funds)	3	3

In the current and prior periods employee costs in relation to staff time on development projects are capitalised into the base cost of relevant development assets.

Table C: Gross rental income

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Rent receivable	284	297
Spreading of tenant incentives and guaranteed rent increases	(10)	(7)
Surrender premia	1	1
Gross rental income	275	291

The current and prior period information is presented on a proportionally consolidated basis, excluding non-controlling interests.

Table D: Property related capital expenditure

	Six months ended 30 September 2019			Year ended 31 March 2019
	Group	Joint ventures and funds	Total	Group	Joint ventures and funds	Total
Acquisitions	41	-	41	185	15	200
Development	81	57	138	183	91	274
Like-for-like portfolio	24	12	36	35	19	54
Other	9	7	16	12	8	20
Total property related capex	155	76	231	415	133	548

The above is presented on a proportionally consolidated basis, excluding non-controlling interests and business combinations. The 'Other' category contains amounts owing to tenant incentives of £8m (31 March 2019: £7m), letting fees of £1m (31 March 2019: £5m), capitalised staff costs of £3m (31 March 2019: £6m) and capitalised interest of £4m (31 March 2019: £3m).

SUPPLEMENTARY TABLES

Data includes Group's share of Joint Ventures and Funds (includes Hercules Unit Trust)

Since 1 April 2019		Price (100%)	Price (BL Share)	Annual Passing Rent
Sales	Sector	£m	£m	£m¹
Completed
Portfolio of Sainsbury's stores	Retail	429	194	12
David Lloyd Croydon	Retail	22	22	1
Clarges²	Residential	56	56	-

Exchanged
Homebase Walton on Thames	Retail	20	20	1

Total		527	292	14
¹BL share of annualised rent topped up for rent frees
²£6m of which exchanged prior to HY20 and completed in the period and £3m of which exchanged and completed post period end

Since 1 April 2019		Price (100%)	Price (BL Share)	Annual Passing Rent
Purchases	Sector	£m	£m	£m¹
Completed
Aldgate Place, Phase 2	Residential	19	19	-
6 Orsman Road, Haggerston²	Offices	32	32	-

Total		51	51	-
¹BL share of annualised rent topped up for rent frees
²Exchanged in period and completed post period end

Portfolio Valuation by Sector
At 30 September 2019	Group	JVs & Funds	Total	H1 Change¹
	£m	£m	£m	%	£m
West End	4,066	-	4,066	(0.1)	(4)
City	256	2,117	2,373	1.3	30
Offices	4,322	2,117	6,439	0.4	26
Regional	649	1,536	2,185	(13.2)	(334)
Local	1,673	322	1,995	(11.1)	(250)
Multi-let	2,322	1,858	4,180	(12.3)	(584)
Department Stores and Leisure	301	-	301	(0.1)	-
Superstores	84	50	134	(1.5)	(5)
Solus and Other	175	-	175	(5.4)	(10)
Retail	2,882	1,908	4,790	(10.7)	(599)
Residential²	147	-	147	(2.1)	(3)
Canada Water	347	-	347	12.4	38
Total	7,698	4,025	11,723	(4.3)	(538)
Standing Investments	6,993	3,514	10,507	(5.2)	(591)
Developments	705	511	1,216	4.6	53
¹ Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales
² Stand-alone residential

Retail Portfolio Valuation - Previous Classification Basis
At 30 September 2019	Group	JVs & Funds	Total	H1 Change¹
	£m	£m	£m	%	£m
Shopping Parks	1,384	899	2,283	(12.4)	(322)
Shopping Centres	927	942	1,869	(11.8)	(250)
Superstores	84	50	134	(1.5)	(5)
Department Stores	62	-	62	(10.5)	(7)
High Street	153	1	154	(9.7)	(17)
Leisure	272	16	288	0.8	2
Retail	2,882	1,908	4,790	(10.7)	(599)
¹ Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales

Gross Rental Income¹
Accounting Basis £m	6 months to 30 September 2019			Annualised as at 30 September 2019
	Group	JVs & Funds	Total	Group	JVs & Funds	Total
West End	75	-	75	140	-	140
City	7	34	41	12	63	75
Offices	82	34	116	152	63	215
Regional	32	45	77	58	85	143
Local	44	12	56	89	22	111
Multi-let	76	57	133	147	107	254
Department Stores and Leisure	8	-	8	21	-	21
Superstores	3	3	6	5	3	8
Solus and Other	6	-	6	12	-	12
Retail	93	60	153	185	110	295
Residential²	2	-	2	4	-	4
Canada Water	4	-	4	8	-	8
Total	181	94	275	349	173	522
¹Gross rental income will differ from annualised valuation rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives
² Stand-alone residential

Portfolio Net Yields^1,2
As at 30 September 2019	EPRA net initial yield %	EPRA topped up net initial yield %³	Overall topped up net initial yield %⁴	Net equivalent yield %	Net equivalent yield movement bps	Net reversionary yield %	ERV Growth %⁵
West End	3.7	4.1	4.1	4.3	2	4.8	(0.2)
City	3.4	4.0	4.0	4.7	(3)	5.5	2.9
Offices	3.6	4.0	4.0	4.4	-	5.0	0.9
Regional Lifestyle	5.3	5.5	5.6	5.7	41	5.8	(5.5)
Local Lifestyle	5.9	6.1	6.2	6.3	39	6.1	(4.7)
Multi-let	5.6	5.8	5.9	6.0	40	6.0	(5.1)
Department Stores & Leisure	5.7	5.7	6.1	5.6	15	5.0	1.1
Superstores	5.8	5.8	5.8	5.2	3	5.1	(6.6)
Solus & Other	6.5	6.7	6.7	5.8	20	4.6	(5.1)
Retail	5.6	5.8	5.9	5.9	37	5.8	(4.8)
Canada Water	3.3	3.3	3.3	4.0	11	4.0	(2.9)
Total	4.5	4.8	4.9	5.1	17	5.3	(2.3)
On a proportionally consolidated basis including the Group's share of joint ventures and funds
¹Including notional purchaser's costs
²Excluding committed developments, assets held for development and residential assets
³Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu of rental growth
⁴ Including fixed/minimum uplifts (excluded from EPRA definition)
⁵As calculated by IPD

Total Property Return (as calculated by IPD)
6 months to 30 September 2019	Offices		Retail		Total
%	British Land	IPD	British Land	IPD	British Land	IPD
Capital Return	0.5	0.2	(11.0)	(5.3)	(4.3)	(1.3)
- ERV Growth	0.9	1.3	(4.8)	(2.1)	(2.3)	0.0
- Yield Movement¹	0 bps	3 bps	37 bps	14 bps	17 bps	5 bps
Income Return	1.6	1.9	2.9	2.6	2.1	2.2
Total Property Return	2.1	2.1	(8.4)	(2.8)	(2.3)	(0.8)
On a proportionally consolidated basis including the Group's share of joint ventures and funds ¹Net equivalent yield movement

Top 20 Tenants by Sector
As at 30 September 2019	% of retail rent		% of office rent
Retail		Offices
Tesco¹	7.6	Government	6.9
Next	4.8	Facebook²	4.9
Kingfisher	3.4	Dentsu Aegis³	4.8
Walgreens (Boots)	3.4	Visa	4.4
Sainsbury's	3.1	Debenhams²	4.1
Marks & Spencer	3.1	Herbert Smith Freehills	3.5
Debenhams	2.8	Gazprom	2.8
Dixons Carphone	2.8	Microsoft	2.5
TJX (TK Maxx)	2.1	Vodafone	2.2
JD Sports	2.0	Deutsche Bank	2.1
Arcadia	2.0	Reed Smith	1.9
Sports Direct	1.9	Henderson	1.8
New Look	1.9	Mayer Brown	1.6
Asda	1.7	Mimecast	1.4
Virgin	1.6	Aramco	1.3
Homebase	1.5	Credit Agricole	1.3
Steinhoff	1.5	Kingfisher	1.3
TGI Fridays	1.4	Misys	1.1
CK Hutchinson	1.3	Capula	1.1
H&M	1.3	Accor	1.1

¹Includes £3.4m at Surrey Quays Shopping Centre

²Debenhams reduces to 0% following vacancy of 10 Brock Street and Facebook increases to 9.9% once they assume occupancy in November 2019

³Taking into account their pre-let of 310,000 sq ft at 1 Triton Square, % of contracted rent would rise to 13.0%. As part of this new letting, Dentsu Aegis have an option to return their existing space at 10 Triton Street in 2021. If this option is exercised, there is an adjustment to the rent free period in respect of the letting at 1 Triton Square to compensate British Land.

Major Holdings
As at 30 September 2019	BL Share	Sq ft	Rent (100%)	Occupancy	Lease
	%	'000	£m pa^1,4	rate %^2,4	length yrs^3,4
Broadgate	50	4,133	138	97.7	5.8
Regent's Place	100	1,740	77	97.9	3.9
Paddington Central	100	958	45	97.0	6.2
Meadowhall, Sheffield	50	1,500	85	97.4	5.2
Drake's Circus, Plymouth	100	1,082	19	96.0	5.6
Glasgow Fort	78	510	21	98.0	5.8
Ealing Broadway	100	540	15	92.7	4.3
Portman Square	100	134	10	98.2	5.9
Teesside, Stockton	100	569	16	94.6	4.3
New Mersey, Speke	68	502	14	92.8	6.1
¹Annualised EPRA contracted rent including 100% of Joint Ventures & Funds
² Includes accommodation under offer or subject to asset management
³ Weighted average to first break
⁴ Excludes committed and near term developments

Lease Length & Occupancy
As at 30 September 2019	Average lease length yrs		Occupancy rate %
	To expiry	To break	EPRA Occupancy	Occupancy^1,2,3
West End	6.2	5.0	97.0	97.3
City	7.0	5.9	84.8	97.1
Offices	6.5	5.3	92.6	97.2
Regional	6.9	5.6	95.4	96.1
Local	6.6	5.3	95.0	95.8
Multi-let	6.8	5.4	95.2	95.9
Department Stores and Leisure	14.8	12.3	99.5	99.5
Superstores	9.2	9.1	100.0	100.0
Solus and Other	10.1	10.1	100.0	100.0
Retail	7.5	6.1	95.7	96.3
Canada Water	5.2	5.1	99.7	99.9
Total	7.0	5.8	94.3	96.8
¹Space allocated to Storey is shown as occupied where there is a Storey tenant in place otherwise it is shown as vacant. Total occupancy would rise from 96.8% to 97.3% if Storey space were assumed to be fully let. ²Includes accommodation under offer or subject to asset management ³Where occupiers have entered administration or CVA but are still liable for rates, these are treated as occupied. Reflecting units currently occupied but expected to become vacant, then the occupancy rate for Retail would reduce from 96.3% to 95.6%, and total occupancy would reduce from 96.8% to 96.4%

Portfolio Weighting
As at 30 September	2018	2019	2019

	%	%	£m
West End	31.9	34.7	4,066
City	15.8	20.2	2,373
Offices	47.7	54.9	6,439
Regional Lifestyle	22.9	18.7	2,185
Local Lifestyle	17.2	17.0	1,995
Multi-let	40.1	35.7	4,180
Department Stores & Leisure	4.2	2.6	301
Superstores	2.8	1.1	134
Solus & Other	1.9	1.5	175
Retail	49.0	40.9	4,790
Residential¹	1.0	1.2	147
Canada Water	2.3	3.0	347
Total	100.0	100.0	11,723
London Weighting	58%	65%	7,623
¹ Stand-alone residential

Annualised Rent & Estimated Rental Value (ERV)
As at 30 September 2019	Annualised rent (valuation basis) £m¹			ERV £m	Average rent £psf
As at 30 September 2019	Group	JVs & Funds	Total	Total	Contracted²	ERV
West End³	141	-	141	183	60.8	67.4
City³	7	57	64	104	50.5	58.7
Offices³	148	57	205	287	57.0	64.0
Regional Lifestyle	44	87	131	142	30.3	31.7
Local Lifestyle	110	24	134	139	22.8	23.1
Multi-let	154	111	265	281	26.0	26.7
Department Stores & Leisure	18	-	18	16	15.0	13.3
Superstores	4	4	8	7	22.3	19.8
Solus & Other	13	-	13	9	20.5	14.7
Retail	189	114	304	313	24.6	24.7
Residential⁴	4	-	4	4	45.2	37.7
Canada Water⁵	8	-	8	9	18.0	21.1
Total	349	172	521	613	30.6	33.8
¹ Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group's external valuers), less any ground rents payable under head leases, excludes contracted rent subject to rent free and future uplift
² Annualised rent, plus rent subject to rent free
³ £psf metrics shown for office space only
⁴ Stand-alone residential
⁵ Reflects standing investment only

Rent Subject to Open Market Rent Review
For period to 31 March	2020	2021	2022	2023	2024	2020-22	2020-24
As at 30 September 2019	£m	£m	£m	£m	£m	£m	£m
West End	7	10	9	23	7	26	56
City	2	9	-	-	15	11	26
Offices	9	19	9	23	22	37	82
Regional	5	18	12	11	8	35	54
Local	5	12	6	17	5	23	45
Multi-let	10	30	18	28	13	58	99
Department Stores and Leisure	-	-	-	-	2	-	2
Superstores	3	-	-	2	1	3	6
Solus and Other	-	-	-	-	-	-	-
Retail	13	30	18	30	16	61	107
Residential	-	-	1	-	-	1	1
Canada Water¹	-	-	-	-	-	-	-
Total	22	49	28	53	38	99	190

On a proportionally consolidated basis including the Group's share of joint ventures and funds

¹ Reflects standing investment only

Rent Subject to Lease Break or Expiry¹
For period to 31 March	2020	2021	2022	2023	2024	2020-22	2020-24
As at 30 September 2019	£m	£m	£m	£m	£m	£m	£m
West End	15	17	22	16	15	54	85
City	2	13	2	4	12	17	33
Offices	17	30	24	20	27	71	118
Regional Lifestyle	11	12	13	18	20	36	74
Local Lifestyle	11	11	14	12	19	36	67
Multi-let	22	23	27	30	39	72	141
Department Stores & Leisure	-	-	3	-	-	3	3
Superstores	-	-	-	2	-	-	2
Solus & Other	1	-	-	-	-	1	1
Retail	23	23	30	32	39	76	147
Residential	-	3	-	-	-	3	3
Canada Water	-	1	-	1	2	1	4
Total	40	57	54	53	68	151	272
% of contracted rent	7.3	10.3	9.9	9.6	12.3	27.5	49.4
On a proportionally consolidated basis including the Group's share of joint ventures and funds ¹ Reflects standing investment only

Recently Completed and Committed Developments
As at 30 September 2019	Sector	BL Share	100% sq ft	PC Calendar Year	Current Value	Cost to come	ERV	Let & Under Offer
As at 30 September 2019		%	'000	PC Calendar Year	£m	£m¹	£m²	£m

1 Finsbury Avenue	Office	50	287	Q1 2019	171	-	8.3	6.5
Total Recently Completed			287		171	-	8.3	6.5

100 Liverpool Street	Office	50	520	Q1 2020	317	55	19.2	14.9
135 Bishopsgate	Office	50	335	Q1 2020	184	22	9.7	9.4
1 Triton Square³	Office	100	366	Q4 2020	340	77	22.7	21.8
Plymouth (Leisure)	Retail	100	108	Q4 2019	33	6	3.1	2.1
Total Committed			1,329		874	159	54.7	48.2
Retail Capital Expenditure⁴						65
¹ From 1 October 2019. Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate
² Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)
³ERV let & under offer of £21.8m represents space taken by Dentsu Aegis. As part of this letting, Dentsu Aegis have an option to return their existing space at 10 Triton Street in 2021. If this option is exercised, there is an adjustment to the rent free period in respect of the letting at 1 Triton Square to compensate British Land
⁴ Capex committed and underway within our investment portfolio relating to leasing and asset management

Near Term Development Pipeline
As at 30 September 2019	Sector	BL Share	100% sq ft	Expected Start On Site	Current Value	Cost to Come	ERV	Let & Under Offer	Planning Status
As at 30 September 2019	Sector	%	'000		£m	£m¹	£m²	£m	Planning Status

Norton Folgate	Office	100	335	Q1 2020	83	243	23.0	-	Consented
1 Broadgate	Office	50	532	Q4 2020	91	204	19.0	-	Consented
Aldgate Place, Phase 2	Residential	100	146	Q4 2020	37	86	6.0		Consented
Total Near Term			1,013		211	533	48.0	-
Retail Capex ³						45
¹ From 1 October 2019. Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate
² Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)
³ Forecast capital commitments within our investment portfolio over the next 12 months relating to leasing and asset enhancement

	Medium Term Development Pipeline
As at 30 September 2019		Sector	BL Share %	100% Sq ft	Planning Status
				'000

2-3 Finsbury Avenue		Office	50	563	Consented
Gateway Building		Leisure	100	105	Consented
5 Kingdom Street¹		Office	100	429	Consented
Meadowhall (Leisure)		Retail	50	333	Consented
Ealing - 10-40 The Broadway		Retail	100	292	Pre-submission
Eden Walk Retail & Residential		Mixed Use	50	533	Consented
Canada Water²		Mixed Use	100	5,000	Resolution to grant planning
Total Medium Term				7,255
	¹Planning consent for previous 240,000 sq ft scheme
	²On drawdown of the Master Development Agreement, ownership reduces to 80% with LBS owning 20%. LBS ownership will adjust over time depending on level of investment by Southwark

Forward-looking statements

This Press Release has been prepared in relation to the financial results for the six month period ending on 30 September 2019. This information is not audited and does not contain sufficient detail to allow a full understanding of the results of the British Land group.

This Press Release contains certain 'forward-looking' statements. These forward-looking statements include all matters that are not historical fact. Such statements reflect current views, expectations and beliefs of British Land on, among other things, our markets, activities, projections, strategy, plans, objectives, performance, financial condition and prospects, as well as assumptions about future events. Such 'forward-looking' statements can sometimes, but not always, be identified by their reference to a date or point in the future, the future tense, or the use of 'forward-looking' terminology, including terms such as 'believes', 'considers', 'estimates', 'anticipates', 'expects', 'forecasts', 'intends', 'continues', 'due', 'potential', 'possible', 'plans', 'seeks', 'projects', 'goal', 'outlook', 'schedule', 'budget', 'target', 'aim', 'may', 'likely to', 'will', 'would', 'could', 'should' or similar expressions or in each case their negative or other variations or comparable terminology. By their nature, forward-looking statements involve inherent known and unknown risks, assumptions and uncertainties because they relate to future events and circumstances and depend on circumstances which may or may not occur and may be beyond our ability to control, predict or estimate. Forward-looking statements should be regarded with caution as actual outcomes or results, or plans or objectives, may differ materially from those expressed in or implied by such statements. Recipients should not place reliance on, and are cautioned about relying on, any forward-looking statements.

Important factors that could cause actual results (including the payment of dividends), performance or achievements of British Land to differ materially from any outcomes or results expressed or implied by such forward-looking statements include, among other things: (a) general business and political, social and economic conditions globally, (b) the consequences of the referendum on Britain leaving the EU, (c) industry and market trends (including demand in the property investment market and property price volatility), (d) competition, (e) the behaviour of other market participants, (f) changes in government and other regulation including in relation to the environment, health and safety and taxation (in particular, in respect of British Land's status as a Real Estate Investment Trust), (g) inflation and consumer confidence, (h) labour relations and work stoppages, (i) natural disasters and adverse weather conditions, (j) terrorism and acts of war, (k) British Land's overall business strategy, risk appetite and investment choices in its portfolio management, (l) legal or other proceedings against or affecting British Land, (m) reliable and secure IT infrastructure, (n) changes in occupier demand and tenant default, (o) changes in financial and equity markets including interest and exchange rate fluctuations, (p) changes in accounting practices and the interpretation of accounting standards and (q) the availability and cost of finance. The Company's principal risks are described in greater detail in the "Risk Management and Principal Risks" section of the Company's latest annual report and accounts (which can be found at www.britishland.com) at pages 29 to 35 (inclusive) (as updated or supplemented by the section of this Press Release headed "Risk Management and Principal Risks"). Forward-looking statements in this Press Release, the latest annual report and accounts, or the British Land website or made subsequently, which are attributable to British Land or persons acting on its behalf, should therefore be construed in light of all such factors.

Information contained in this Press Release relating to British Land or its share price or the yield on its shares are not guarantees of, and should not be relied upon as an indicator of, future performance, and nothing in this Press Release should be construed as a profit forecast or profit estimate, or be taken as implying that the earnings of British Land for the current year or future years will necessarily match or exceed the historical or published earnings of British Land. Any forward-looking statements made by or on behalf of British Land speak only as of the date they are made. Such forward-looking statements are expressly qualified in their entirety by the factors referred to above and no representation, assurance, guarantee or warranty is given in relation to them (whether by British Land or any of its associates, directors, officers, employees or advisers), including as to their completeness, accuracy, fairness, reliability, or the basis on which they were prepared, or their achievement or reasonableness.

Other than in accordance with our legal and regulatory obligations (including under the UK Financial Conduct Authority's Listing Rules, Disclosure Guidance and Transparency Rules, the EU Market Abuse Regulation and the requirements of the Financial Conduct Authority and the London Stock Exchange), British Land does not intend or undertake any obligation to update or revise publicly forward-looking statements to reflect any changes in British Land's expectations with regard thereto or any changes in information, events, conditions, circumstances or other information on which any such statement is based. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of British Land since the date of this document or that the information contained herein is correct as at any time subsequent to this date.

Nothing in this document shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase any securities or other financial instruments, nor shall it constitute a recommendation, invitation or inducement, or advice, in respect of any securities or other financial instruments or any other matter.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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