Half Yearly Report - Part 2

RNS Number : 9197F

British Land Co PLC

17 November 2015

 



Consolidated income Statement

For the six months ended 30 September 2015

			Six months ended 30 September 2015 Unaudited				Six months ended 30 September 2014 Unaudited2
	Note		Underlying pre-tax1 £m	Capital and other £m	Total £m		Underlying pre-tax1 £m	Capital and other £m	Total £m
Revenue	3		276	15	291		239	38	277
Costs	3		(54)	(7)	(61)		(47)	(37)	(84)
	3		222	8	230		192	1	193
Joint ventures and funds (see also below)	8		63	219	282		64	340	404
Administrative expenses			(47)	-	(47)		(39)	-	(39)
Net valuation movement	4		-	397	397		-	511	511
Profit on disposal of investment properties and investments			-	26	26		-	7	7
Financing costs
- financing income	5		3	-	3		4	25	29
- financing charges	5		(62)	(6)	(68)		(58)	(4)	(62)
			(59)	(6)	(65)		(54)	21	(33)
Profit on ordinary activities before taxation			179	644	823		163	880	1,043
Taxation	6			7	7			(2)	(2)
Profit for the year after taxation					830				1,041
Attributable to non- controlling interests			8	6	14		8	35	43
Attributable to shareholders of the Company			171	645	816		155	843	998
Earnings per share:
- basic	2				79.8p				98.5p
- diluted	2				75.4p				97.9p

All results derive from continuing operations.

				Six months ended 30 September 2015 Unaudited				Six months ended 30 September 2014 Unaudited2
		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 before taxation				63	-	63		64	-	64
Net valuation movement				-	217	217		-	338	338
Profit on disposal of investment properties, trading properties and investments				-	2	2		-	4	4
Financing break costs on property disposals				-	-	-		-	(1)	(1)
Taxation				-	-	-		-	(1)	(1)
		8		63	219	282		64	340	404

1See note 2.

2The prior period comparatives have been re-presented to reflect the presentation adopted in the current period.

Consolidated Statement of Comprehensive Income

For the six months ended 30 September

	Six months ended 30 September 2015 Unaudited £m	Six months ended 30 September 2014 Unaudited £m
Profit for the year after taxation	830	1,041
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Net actuarial (loss) gain on pension scheme	(1)	1
Valuation movements on owner-occupied property	12	8
	11	9
Items that may be reclassified subsequently to profit or loss:
Gains (losses) on cash flow hedges
- Group	8	(23)
- Joint ventures and funds	4	6
	12	(17)
Transferred to the income statement (cash flow hedges)
- Foreign currency derivatives	2	(3)
- Interest rate derivatives	4	5
	6	2
Exchange differences on translation of foreign operations
- Hedging and translation	1	2
- Other	-	(1)
	1	1
Deferred tax on items of other comprehensive income	(5)	-
Other comprehensive profit (loss) for the year	25	(5)
Total comprehensive income for the year	855	1,036
Attributable to non-controlling interests	14	43
Attributable to shareholders of the Company	841	993

Consolidated balance sheet

AT 30 september 2015

	Note		30 September 2015 Unaudited £m	31 March 2015 Audited £m
ASSETS
Non-current assets
Investment and development properties	7		9,446	9,120
Owner-occupied property	7		94	60
			9,540	9,180
Other non-current assets
Investments in joint ventures and funds	8		3,281	2,901
Other investments	9		143	379
Interest rate and currency derivative assets	10		112	139
			13,076	12,599
Current assets
Trading properties	7		302	274
Debtors			70	20
Cash and short-term deposits	10		188	108
			560	402
Total assets			13,636	13,001
LIABILITIES
Current liabilities
Short-term borrowings and overdrafts	10		(174)	(102)
Creditors			(229)	(261)
Corporation tax			(7)	(9)
			(410)	(372)
Non-current liabilities
Debentures and loans	10		(3,754)	(3,847)
Other non-current liabilities			(95)	(79)
Deferred tax liabilities			(12)	(12)
Interest rate and currency derivative liabilities	10		(112)	(126)
			(3,973)	(4,064)
Total liabilities			(4,383)	(4,436)
Net assets			9,253	8,565
EQUITY
Share capital			259	258
Share premium			1,293	1,280
Merger reserve			213	213
Other reserves			(57)	(82)
Retained earnings			7,261	6,563
Equity attributable to shareholders of the Company			8,969	8,232
Non-controlling interests			284	333
Total equity			9,253	8,565
EPRA NAV per share1	2		891p	829p

1As defined in note 2.

Consolidated statement of cash flows

For the six months ended 30 September 2015

	Note		Six months ended 30 September 2015 Unaudited £m	Six months ended 30 September 2014 Unaudited £m
Rental income received from tenants			216	194
Fees and other income received			10	9
Operating expenses paid to suppliers and employees			(65)	(60)
Cash generated from operations			161	143
Net interest paid			(58)	(52)
UK corporation tax paid			(1)	-
Distributions and other receivables from joint ventures and funds	8		30	40
Net cash inflow from operating activities			132	131
Cash flows from investing activities
Development and other capital expenditure			(132)	(73)
Purchase of investment properties			(240)	-
Sale of investment and trading properties			390	137
Payments received in respect of trading properties			16	24
Acquisition of units in Hercules Unit Trust			(55)	(27)
Investment in and loans to joint ventures and funds			(208)	(96)
Capital distributions and loan repayments from joint ventures and funds			323	101
Indirect taxes (paid) recovered in respect of investing activities			(1)	3
Net cash inflow from investing activities			93	69
Cash flows from financing activities
Issue of ordinary shares			2	5
Dividends paid	11		(116)	(95)
Dividends paid by subsidiaries			(9)	(11)
Closeout of interest rate derivatives			13	(2)
Movement in other financial liabilities			(22)	(2)
Decrease in bank and other borrowings			(369)	(313)
Drawdowns on bank and other borrowings			11	168
Drawdown of zero coupon convertible bond			345	-
Net cash outflow from financing activities			(145)	(250)
Net increase (decrease) in cash and cash equivalents			80	(50)
Cash and cash equivalents at 1 April			108	142
Cash and cash equivalents at 30 September			188	92
Cash and cash equivalents consists of:
Cash and short-term deposits			188	92

consolidated statement Of changes in equity

For the six months ended 30 September 2015

Six month movements in equity

	Share capital £m	Share premium £m	Hedging and translation reserve £m	Revaluation reserve £m	Merger reserve £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total equity £m
Balance at 1 April 2015	258	1,280	(76)	(6)	213	6,563	8,232	333	8,565
Total comprehensive income for the period	-	-	11	14	-	816	841	14	855
Share issues	1	13	-	-	-	(10)	4	-	4
Purchase of units from non-controlling interests	-	-	-	-	-	(1)	(1)	(54)	(55)
Fair value of share and share option awards	-	-	-	-	-	6	6	-	6
Dividends payable in period (13.84p per share)	-	-	-	-	-	(141)	(141)	-	(141)
Dividends payable by subsidiaries	-	-	-	-	-	-	-	(9)	(9)
Adjustment for scrip dividend element	-	-	-	-	-	28	28	-	28
Balance at 30 September 2015	259	1,293	(65)	8	213	7,261	8,969	284	9,253
Balance at 1 April 2014	255	1,257	(32)	(38)	213	5,091	6,746	371	7,117
Total comprehensive income for the period	-	-	(19)	13	-	999	993	43	1,036
Share issues	2	15	-	-	-	(12)	5	-	5
Purchase of units from non-controlling interests	-	-	-	-	-	-	-	(35)	(35)
Fair value of share and share option awards	-	-	-	-	-	4	4	-	4
Dividends payable in period (13.50p per share)	-	-	-	-	-	(136)	(136)	-	(136)
Dividends payable by subsidiaries	-	-	-	-	-	-	-	(11)	(11)
Adjustment for scrip dividend element	-	-	-	-	-	44	44	-	44
Balance at 30 September 2014	257	1,272	(51)	(25)	213	5,990	7,656	368	8,024

Prior year movements in equity

	Share capital £m	Share premium £m	Hedging and translation reserve £m	Revaluation reserve £m	Merger reserve £m	Retained earnings £m	Total £m	Non-controlling interests £m	Total equity £m
Balance at 1 April 2014	255	1,257	(32)	(38)	213	5,091	6,746	371	7,117
Total comprehensive income for the year	-	-	(44)	32	-	1,698	1,686	53	1,739
Share issues	3	23	-	-	-	(10)	16	-	16
Non-controlling interests on acquisition of subsidiary	-	-	-	-	-	-	-	31	31
Purchase of units from non-controlling interests	-	-	-	-	-	2	2	(103)	(101)
Fair value of share and share option awards	-	-	-	-	-	10	10	-	10
Dividends payable in year (27.30p per share)	-	-	-	-	-	(277)	(277)	-	(277)
Dividends payable by subsidiaries	-	-	-	-	-	-	-	(19)	(19)
Adjustment for scrip dividend element	-	-	-	-	-	49	49	-	49
Balance at 31 March 2015	258	1,280	(76)	(6)	213	6,563	8,232	333	8,565

NOTES TO THE ACCOUNTS

For the six months ended 30 September 2015

1 Basis of preparation

The financial information for the period ended 30 September 2015 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 2015 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 and in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union.
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 2015, which have been prepared in accordance with IFRS as adopted by the European Union.

In the current financial year the Group has adopted the Annual Improvements to IFRSs 2010-2012 cycle, the Annual Improvements to IFRSs 2011-2013 cycle and the amendments to IAS 19 Employee Benefits. Otherwise the same accounting policies, accounting judgements, estimates and methods of computation are followed in the half year report as applied in the Group's latest annual audited financial statements. The adoption of these standards had no impact on the financial position, results or financial disclosures of the Group.

Standards and interpretations issued but not effective for the current accounting period were:

IAS 16 (amended) - Property, plant and equipment

IAS 38 (amended) - Intangible assets

IAS 27 (amended) - Separate financial statements

IFRS 10 (amended) - Consolidated financial statements

IFRS 11 (amended) - Joint arrangements

IFRS 14 - Regulatory deferral accounts

Annual Improvements to IFRSs 2012-2014 cycle

IAS 1 (amended) - Presentation of Financial Statements

IFRS 15 - Revenue from contracts with customers; and

IFRS 9 - Financial Instruments

The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group in future periods except as follows:

IFRS 9 will impact both the measurement and disclosures of financial instruments and is effective for the Group's year ending
31 March 2019. The Group has not yet completed its evaluation of the effect of the adoption.

IFRS 15 does not apply to gross rental income, but does apply to service charge income, other fees and trading property disposals and is effective for the Group's year ending 31 March 2019. The Group does not expect adoption of IFRS 15 to have a material
impact on the measurement of revenue recognition, but additional disclosures will be required with regards to the above sources
of income.

The Group's business activities, financial position, cash flows, liquidity position and financing structure are discussed above. As discussed on  in the financial review, the Directors believe that the Group is well placed to manage its business risks satisfactorily and consider it appropriate to adopt the going concern basis of accounting in preparing the interim financial statements. The Group's business is not seasonal.

The interim financial information was approved by the Board on 16 November 2015.

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 for each performance measure are shown below, and a reconciliation between these is shown within the supplementary disclosures (Table B).

EPRA earnings is the profit after tax excluding investment and development property revaluations and gains or losses on disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation. EPRA earnings (diluted) also takes into account dilution due to the 2012 convertible bond.

Underlying earnings is the EPRA earnings measure, with additional company adjustments. For the six months ended 30 September 2015 there were no company adjustments, however for the six months ended 30 September 2014, the 2012 convertible bond was not treated as dilutive for underlying earnings.

	Six months ended 30 September 2015				Six months ended 30 September 2014
Earnings per share	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	171	1,022	16.7		155	1,013	15.3
Underlying diluted	174	1,086	16.0		155	1,019	15.3
EPRA
EPRA basic	171	1,022	16.7		155	1,013	15.3
EPRA diluted	174	1,086	16.0		158	1,077	14.7
IFRS
Basic	816	1,022	79.8		998	1,013	98.5
Diluted	819	1,086	75.4		998	1,019	97.9

EPRA 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 are shown below. A reconciliation between IFRS net assets and EPRA net assets, and the relevant number of shares for each performance, is shown within the supplementary disclosures (Table B).

The EPRA NAV per share excludes the mark-to-market on effective cash flow hedges and related debt adjustments, mark-to-market on the convertible bonds, deferred taxation on revaluations, and includes the surplus on trading properties and is calculated on a fully diluted basis. The EPRA NAV per share calculation takes into account dilution for the 2012 convertible bond.

	30 September 2015				31 March 2015
Net asset value per share	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	9,755	1,095	891		9,035	1,090	829
EPRA NNNAV	9,220	1,095	842		8,359	1,090	767
IFRS
Basic	9,253	1,026	902		8,565	1,020	840
Diluted	9,253	1,095	845		8,565	1,032	830

Total accounting return

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

		Six months ended 30 September 2015				Six months ended 30 September 2014
		Increase in NAV per share pence	Dividend per share paid pence	Total accounting return		Increase in NAV per share pence	Dividend per share paid pence	Total accounting return
	Total accounting return	62	13.84	9.1%		81	13.50	13.7%

3 Revenue and costs

		Six months ended 30 September 2015			Six months ended 30 September 2014
		Underlying £m	Capital & other £m		Underlying £m	Capital & other £m
Rent receivable		218	-		181	-
Spreading of tenant incentives and guaranteed rent increases		10	-		14	-
Surrender premia		2	-		3	-
Gross rental income		230	-		198	-
Trading property sales proceeds		-	15		-	38
Service charge income		41	-		34	-
Management and performance fees (from joint ventures and funds)		3	-		5	-
Other fees and commissions		2	-		2	-
Revenue		276	15		239	38
Trading property cost of sales		-	(7)		-	(37)
Service charge expenses		(41)	-		(34)	-
Property operating expenses		(13)	-		(13)	-
Costs		(54)	(7)		(47)	(37)
		222	8		192	1

4 Net valuation movements on property

	Six months ended 30 September 2015 £m	Six months ended 30 September 2014 £m
Consolidated income statement
Revaluation of properties	397	511
Net valuation movements of joint ventures and funds accounted for using the equity method	217	338
	614	849
Consolidated statement of comprehensive income
Revaluation of owner-occupied properties	12	8
	626	857

5 Net financing costs

	Six months ended 30 September 2015 £m	Six months ended 30 September 2014 £m
Interest payable on:
Bank loans and overdrafts	20	20
Other loans	46	43
Obligations under finance leases	1	-
	67	63
Development interest capitalised	(5)	(5)
	62	58
Interest receivable on:
Deposits, securities and liquid investments	(1)	(1)
Loans to joint ventures	(2)	(3)
	(3)	(4)
Net financing costs - underlying	59	54
Net financing costs - capital	6	(21)
Net financing costs	65	33
Total financing income	(3)	(29)
Total financing charges	68	62
Net financing costs	65	33

Interest on development expenditure is capitalised at the Group's weighted average interest rate of 3.1% (Six months ended 30 September 2014: 3.6%). The weighted average interest rate on a proportionately consolidated basis at 30 September 2015 was 3.6% (Six months ended 30 September 2014: 4.1%).

6 Taxation

	Six months ended 30 September 2015 £m	Six months ended 30 September 2014 £m
Current tax - UK corporation taxation (30 September 2015: 20%; 30 September 2014: 21%):	2	(2)
Total current taxation income (expense)	2	(2)
Deferred taxation on revaluations	5	-
Group total taxation	7	(2)
Attributable to joint ventures and funds	-	(1)
Total taxation	7	(3)

Taxation expense attributable to underlying profits for the six months ended 30 September 2015 was £nil (Six months ended 30 September 2014: £nil).

The deferred taxation charge for the six months ended 30 September 2015 has been calculated using the substantively enacted UK corporation taxation rate at the reporting date of 20% (effective from 1 April 2015).

7 Property

Property reconciliation

	Six months ended 30 September 2015					Year ended 31 March 2015
	Investment and development properties Level 3	Trading properties	Owner-occupied Level 3	Total		Investment and development properties Level 3	Trading properties	Owner-occupied Level 3	Total
Carrying value at the start of the period/year	9,120	274	60	9,454		7,272	271	47	7.590
Additions
- property purchases	238	-	-	238		147	-	-	147
- acquisition of subsidiaries	-	-	-	-		1,000	-	-	1,000
- development expenditure	20	34	-	54		68	46	-	114
- capitalised interest and staff costs	1	3	-	4		-	8	-	8
- capital expenditure on asset management initiatives	50	-	-	50		42	-	-	42
	309	37	-	346		1,257	54	-	1,311
Depreciation	-	-	-	-		-	-	(1)	(1)
Disposals	(378)	(7)	-	(385)		(333)	(45)	-	(378)
Reclassifications	(20)	(2)	22	-		2	(6)	4	-
Revaluations included in income statement	397	-	-	397		884	-	-	884
Revaluation included in SOCIE	-	-	12	12		-	-	10	10
Movement in tenant incentives and contracted rent uplift balances	18	-	-	18		38	-	-	38
Carrying value at the end of the period/year	9,446	302	94	9,842		9,120	274	60	9,454
Plus: surplus on trading properties				91					96
Less: head lease liabilities				(41)					(41)
Total Group property portfolio valuation at the end of the period				9,892					9,509
Non-controlling interests				(323)					(441)
Total Group property portfolio valuation at the end of the period attributable to shareholders				9,569					9,068

The Group's total property portfolio was valued by independent external valuers on the basis of fair value, in accordance with the RICS Valuation - Professional Standards 2014, ninth edition, published by The Royal Institution of Chartered Surveyors. The information provided to the valuers, and the assumptions and valuations model used by the valuers are reviewed by the property portfolio team, the Head of Offices, the Head of Retail 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 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.

Additional property covenant information

Properties valued at £1,900m (31 March 2015: £1,845m) were subject to a security interest and other properties of non-recourse companies amounted to £1,863m (31 March 2015: £1,999m), totalling £3,763m (31 March 2015: £3,844m).

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 2015	2,586	315	2,901	2,598	303	2,901
Additions	204	-	204	4	200	204
Disposals	(2)	(1)	(3)	-	(3)	(3)
Share of profit after taxation	268	14	282	282	-	282
Distributions and dividends:
Capital	-	(47)	(47)	(47)	-	(47)
Revenue	(54)	(7)	(61)	(61)	-	(61)
Hedging and exchange movements	5	-	5	5	-	5
At 30 September 2015	3,007	274	3,281	2,781	500	3,281

Additional investments in joint ventures and funds covenant information

At 30 September 2015 the investments in joint ventures included within the total investments in joint ventures and funds was £3,245m (31 March 2015: £2,869m), being the £3,281m total investment shown above, less the net investment of £36m in PREF, a fund owning a portfolio of retail property in Europe.

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

				Six months ended 30 September 2015			Six months ended 30 September 20141
				£m 100%	£m BL Share		£m 100%	£m BL Share
Revenue				266	133		293	147
Costs				(56)	(28)		(52)	(26)
				210	105		241	121
Administrative expenses				(2)	(1)		(5)	(2)
Net financing costs				(81)	(41)		(116)	(55)
Underlying profit before taxation				127	63		120	64
Net valuation and disposal movements				435	219		679	342
Non-recurring items				-	-		(2)	(1)
Profit on ordinary activities before taxation				562	282		797	405
Taxation				(1)	-		(1)	(1)
Profit on ordinary activities after taxation				561	282		796	404
Profit distributions split between controlling and non-controlling interests
Attributable to non-controlling interests					2			15
Attributable to shareholders of the Company					280			389

1The prior period comparatives have been re-presented to reflect the presentation adopted in the current period.

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

						Six months ended 30 September 2015 £m	Six months ended 30 September 2014 £m
Rental income received from tenants						102	122
Fees and other income received						1	-
Operating expenses paid to suppliers and employees						(9)	(11)
Cash generated from operations						94	111
Interest paid						(44)	(65)
Interest received						-	2
UK corporation tax paid						(3)	(4)
Cash inflow from operating activities						47	44
Cash inflow from operating activities deployed as:
Surplus cash retained within joint ventures and funds						17	4
Revenue distributions per consolidated statement of cash flows						30	40
Revenue distributions split between controlling and non-controlling interests
Attributable to non-controlling interests						2	4
Attributable to shareholders of the Company						28	36

9 Other investments

	30 September 2015 £m	31 March 2015 £m
Investment held for trading	102	99
Loans, receivables and other	41	280
Other investments	143	379

The investment held for trading comprises interests as a trust beneficiary. The trusts' assets comprise freehold reversions in a pool of commercial properties, comprising Sainsbury's superstores. The investment has been categorised as Level 3 in the fair value hierarchy (see note 7). Fair value of the interest has been determined by the Directors, supported by an external valuation from CBRE. The superstore asset valuations are subject to the same inputs as disclosed in note 7.

Included within the loans, receivables and other balance as at 30 September 2015 is £nil (31 March 2015: £243m) in relation to a loan to the Broadgate joint venture, which is carried at amortised cost, and was fully repaid in the period.

10 Net debt

10.1 Fair value and book value of net debt

	30 September 2015			31 March 2015
	Fair value £m	Book value £m		Fair value £m	Book value £m
Debentures and unsecured bonds	1,825	1,773		1,925	1,785
Convertible bonds	839	839		493	493
Bank debt and other floating rate debt	1,334	1,316		1,691	1,671
Gross debt	3,998	3,928		4,109	3,949
Interest rate and currency derivative liabilities	112	112		126	126
Interest rate and currency derivative assets	(112)	(112)		(139)	(139)
	3,998	3,928		4,096	3,936
Cash and short-term deposits	(188)	(188)		(108)	(108)
Net debt	3,810	3,740		3,988	3,828
Net debt attributable to non-controlling interests	(98)	(96)		(192)	(190)
Net debt attributable to shareholders of the Company	3,712	3,644		3,796	3,638

The fair values of debt, debentures and the convertible bonds have been established by obtaining quoted market prices from brokers. The bank debt and loan notes have been valued assuming they 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 have been excluded from the disclosures on the basis that their fair value is equivalent to the book value.

10.2 Loan to value                                                                                                                  

	30 September 2015 £m	31 March 2015 £m
Principal value of gross debt	3,710	3,717
Less the relevant portion of the borrowings of the partly owned subsidiary (non-controlling interests)	(127)	(200)
Less cash and short-term deposits (balance sheet)	(188)	(108)
Plus the relevant portion of the cash and deposits of the partly owned subsidiary (non-controlling interests)	31	10
Total Group net debt for LTV calculation	3,426	3,419
Total Group property portfolio valuation (note 7)	9,892	9,509
Investments in joint ventures and funds (note 8)	3,281	2,901
Other investments (note 9)	143	379
Less property and investments attributable to non-controlling interests	(360)	(528)
Total Group property for LTV calculation	12,956	12,261
Group LTV	26%	28%

10.3 British Land Unsecured Financial Covenants

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

	30 September 2015 £m	31 March 2015 £m
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves	36%	38%
Net Borrowings
Principal amount of gross debt	3,710	3,717
Less the relevant proportion of borrowings of the partly-owned subsidiary (non-controlling interests)	(127)	(200)
Less cash and deposits (balance sheet)	(188)	(108)
Plus the relevant proportion of cash and deposits of the partly-owned subsidiary (non-controlling interests)	31	10
Net Borrowings	3,426	3,419
Adjusted Capital and Reserves
Share capital and reserves (balance sheet)	9,253	8,565
EPRA deferred tax adjustment (EPRA Table A)	12	13
Trading property surpluses (EPRA Table A)	97	96
Exceptional refinancing charges (see below)	294	300
Fair value adjustments of financial instruments (EPRA Table A)	234	257
Less reserves attributable to non-controlling interests (balance sheet)	(284)	(333)
Adjusted Capital and Reserves	9,606	8,898

In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £294m
(31 March 2015: £300m) to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended 31 March 2005, 2006 and 2007.

			30 September 2015 £m	31 March 2015 £m
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets			29%	28%
Net Unsecured Borrowings
Principal amount of gross debt			3,710	3,717
Less cash and deposits not subject to a security interest (being £168m less the relevant proportion of cash and deposits of the partly owned subsidiary of £28m)			(140)	(77)
Less principal amount of secured and non-recourse borrowings			(1,756)	(1,906)
Net Unsecured Borrowings			1,814	1,734
Unencumbered Assets
Properties (note 7)			9,892	9,509
Investments in joint ventures and funds (note 8)			3,281	2,901
Other investments (note 9)			143	379
Less investments in joint ventures (note 8)			(3,245)	(2,869)
Less encumbered assets (note 7)			(3,763)	(3,844)
Unencumbered Assets			6,308	6,076

10.4 2012 Convertible bond

On 10 September 2012 British Land (Jersey) Limited (the 2012 Issuer), a wholly-owned subsidiary of the Group, issued £400 million 1.5% guaranteed convertible bonds due 2017 (the 2012 bonds) at par. The 2012 Issuer is fully guaranteed by the Company in respect of the 2012 bonds.

Subject to their terms, the 2012 bonds are convertible into preference shares of the 2012 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 can exercise their right at any time up to (but excluding) the 20th dealing day before 10 September 2017 (the maturity date).

The initial exchange price was 693.07 pence per ordinary share. The exchange price is adjusted based on certain events. 

From 25 September 2015, the Company has the option to redeem the 2012 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 2012 bonds have been converted, redeemed, or purchased and cancelled. The 2012 bonds will be redeemed at par on 10 September 2017 (the maturity date) if they have not already been converted, redeemed or purchased and cancelled.

10.5 2015 Convertible bond                                                                                                                    

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 2015 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. From 20 July 2015 up to and including 29 June 2018, a bondholder may exercise its conversion right if the share price has traded at a level exceeding 130% of the exchange price for a specified period. Thereafter, and 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 14.18 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.                                                                                                  

10.6 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 2015					31 March 2015
	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	-	(112)	-	(112)		-	(139)	-	(139)
Investment held for trading	-	-	(102)	(102)		-	-	(99)	(99)
Assets	-	(112)	(102)	(214)		-	(139)	(99)	(238)
Interest rate and currency derivative liabilities	-	112	-	112		-	126	-	126
Convertible bonds	839	-	-	839		493	-	-	493
Liabilities	839	112	-	951		493	126	-	619
Total	839	-	(102)	737		493	(13)	(99)	381

There have been no transfers between levels in the period. A £3m valuation gain in relation to the investment held for trading has been recorded in the six months ended 30 September 2015. Further disclosures in relation to the valuation of the investment held for trading are included within Note 9.

11 Dividend

The 2016 second quarter dividend of 7.09 pence per share, totalling £73m, is payable on 12 February 2016 to shareholders on the register at close of business on 8 January 2016.

The Board will announce the availability of the Scrip Dividend Alternative via the Regulatory News Service and on its website (www.britishland.com), no later than 4 business days before the ex-dividend date of 7 January 2016. The Board expects to announce the split between PID and non-PID income at that time. A Scrip Dividend Alternative will not be enhanced. 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 2015 first quarter dividend of 7.09 pence per share, totalling £73m, was paid on 6 November 2015. 30% of shareholders opted for the Scrip Dividend Alternative. Both the cash dividend and Scrip Dividend Alternative were treated as PIDs. The total cash paid by the Group was £53m, being £43m paid to shareholders, £8m of withholding tax on the cash dividend and £2m of withholding tax on the Scrip Dividend Alternative.

The Consolidated Statement of Changes in Equity shows total dividends in the six months to 30 September 2015 of £141m, £70m being the third quarter 2015 PID dividend of 6.92 pence per share paid on 6 May 2015, and the fourth quarter 2015 PID dividend of 6.92 pence per share, paid on 7 August 2015, totalling £71m. A scrip alternative was offered in lieu of cash for the fourth quarter dividend, which was 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 two principal sectors are currently Offices and Retail. The Office sector includes residential, as this is often incorporated into Office schemes, and Retail includes leisure, for a similar rationale.

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 whch 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 administration expenses. No customer exceeded 10% of the Group's revenues in either year.

Segment result

	Six months ended 30 September
	Offices & residential			Retail & leisure			Other / unallocated			Total
	2015 £m	2014 £m		2015 £m	2014 £m		2015 £m	2014 £m		2015 £m	2014 £m
Gross rental income
British Land Group	66	59		153	129		-	-		219	188
Share of joint ventures and funds	54	43		51	73		2	5		107	121
Total	120	102		204	202		2	5		326	309
Net rental income
British Land Group	61	55		145	122		-	-		206	177
Share of joint ventures and funds	52	41		49	70		2	4		103	115
Total	113	96		194	192		2	4		309	292
Operating result
British Land Group	51	50		136	115		(26)	(27)		161	138
Share of joint ventures and funds	54	43		50	71		2	6		106	120
Total	105	93		186	186		(24)	(21)		267	258

	Six months ended 30 September 2015 £m	Six months ended 30 September 2014 £m
Reconciliation to underlying profit before taxation
Operating result	267	258
Net financing costs	(96)	(103)
Underlying profit before taxation	171	155
Reconciliation to profit before taxation
Underlying profit before taxation	171	155
Capital and other	644	880
Underlying profit attributable to non-controlling interests	8	8
Total profit on ordinary activities before taxation	823	1,043

Of the total gross rental income above, £2m (Six months ended 30 September 2014: £5m) was derived from outside the UK.

Segment assets

	Offices & residential			Retail & leisure			Other / unallocated			Total
	30 September 2015 £m	31 March 2015 £m		30 September 2015 £m	31 March 2015 £m		30 September 2015 £m	31 March 2015 £m		30 September 2015 £m	31 March 2015 £m
Property assets
British Land Group	3,986	3,550		5,583	5,518		-	-		9,569	9,068
Share of joint ventures and funds	2,755	2,530		2,060	2,039		43	40		4,858	4,609
Total	6,741	6,080		7,643	7,557		43	40		14,427	13,677

Reconciliation to net assets

	30 September 2015 £m	31 March 2015 £m
British Land Group
Property assets	14,427	13,677
Other non-current assets	141	256
Non-current assets	14,568	13,933
Other net current liabilities	(216)	(307)
Adjusted net debt	(4,908)	(4,918)
Other non-current liabilities	(89)	(73)
EPRA net assets (undiluted)	9,355	8,635
Dilution for 2012 convertible bond	400	400
EPRA net assets (diluted)	9,755	9,035
Non-controlling interests	284	333
EPRA adjustments	(786)	(803)
Net assets	9,253	8,565

13 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.

14 Related party transactions

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

15 Share capital

At 30 September 2015, of the issued 25p ordinary shares, 1m were held in the ESOP Trust (31 March 2015: 1m), 11m were held as Treasury shares (31 March 2015: 11m) and 1,025m shares were in free issue (31 March 2015: 1,020m; 30 September 2014: 1,018m). All shares are fully paid.

	£m	Ordinary shares of 25p each
Issued, called and fully paid
At 1 April 2015	258	1,031,788,286
Issues	1	5,443,183
At 30 September 2015	259	1,037,231,469

Supplementary Disclosures

Table A: Summary income statement and balance sheet

Summary income statement based on proportional consolidation for the six months ended 30 September 2015

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. The underlying profit before taxation and underlying profit after taxation are the same as presented in the consolidated income statement.

	Six months ended 30 September 2015					Six months ended 30 September 2014
	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	230	110	(14)	326		198	125	(14)	309
Property operating expenses	(13)	(5)	1	(17)		(13)	(4)	-	(17)
Net rental income	217	105	(13)	309		185	121	(14)	292
Administrative expenses	(47)	(1)	1	(47)		(39)	(2)	-	(41)
Fees and other income	5	-	-	5		7	-	-	7
Ungeared Income Return	175	104	(12)	267		153	119	(14)	258
Net interest	(59)	(41)	4	(96)		(54)	(55)	6	(103)
Underlying profit before taxation	116	63	(8)	171		99	64	(8)	155
Underlying taxation				-					-
Underlying profit after taxation	116	63	(8)	171		99	64	(8)	155
Underlying earnings per share - diluted basis				16.0p					15.3p
Valuation movement and profit on disposal				642					826
Other capital and taxation (net)*				3					17
Capital and other				645					843
Total return				816					998

See note 2 for the basis of calculation of underlying EPS.

*  Includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV.

Summary balance sheet based on proportional consolidation as at 30 September 2015

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

	Group £m	Share of joint ventures & funds £m	Less non-controlling interest £m	Share options £m	Deferred tax £m	Mark-to-market on effective cash flow hedges and related debt adjustments £m	Head leases £m	Convertible bond adjustment £m	Valuation surplus on trading properties £m	EPRA Net assets 30 September 2015 £m	EPRA Net assets 31 March 2015 £m
Retail properties	5,933	2,143	(400)	-	-	-	(33)	-	-	7,643	7,557
Office properties	3,909	2,749	-	-	-	-	(14)	-	97	6,741	6,080
Other properties	-	43	-	-	-	-	-	-	-	43	40
Total properties	9,842	4,935	(400)	-	-	-	(47)	-	97	14,427	13,677
Investments in joint ventures and funds	3,281	(3,281)	-	-	-	-	-	-	-	-	-
Other investments	143	(2)	-	-	-	-	-	-	-	141	256
Other net (liabilities) assets	(273)	(137)	3	43	12	-	47	-	-	(305)	(380)
Net debt	(3,740)	(1,515)	113	-	-	234	-	-	-	(4,908)	(4,918)
Dilution due to 2012 convertible bond	-	-	-	-	-	-	-	400	-	400	400
Net assets	9,253	-	(284)	43	12	234	-	400	97	9,755	9,035
EPRA NAV per share (note 2)										891p	829p

EPRA Net Assets Movement

	30 September 2015			31 March 2015
	£m	Pence per share		£m	Pence per share
Opening EPRA NAV	9,035	829		7,027	688
Income return	171	16		313	31
Capital return	662	59		1,523	145
Dividend paid	(113)	(13)		(228)	(27)
Dilution due to 2012 convertible bond	-	-		400	(8)
Closing EPRA NAV	9,755	891		9,035	829

Table B: EPRA Performance measures

EPRA Performance measures summary table

			Six months ended 30 September 2015			Six months ended 30 September 2014
			£m	Pence per share		£m	Pence per share
	EPRA Earnings	- basic	171	16.7		155	15.3
		- diluted	174	16.0		158	14.7
	EPRA Net Initial Yield			4.1%			4.4%
	EPRA 'topped-up' Net Initial Yield			4.6%			5.0%
	EPRA Vacancy Rate			2.6%			4.3%

		30 September 2015			31 March 2015
		£m	Pence per share		£m	Pence per share
	EPRA NAV	9,755	891		9,035	829
	EPRA NNNAV	9,220	842		8,359	767

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

	Six months ended 30 September 2015 £m	Six months ended 30 September 2014 £m
Profit attributable to the shareholders of the Company	816	998
Exclude:
Group - taxation	(7)	2
Joint ventures and funds - taxation	-	1
Group - net valuation movement	(397)	(511)
Group - profit on disposal of investment properties and investments	(26)	(7)
Group - profit on disposal of trading properties	(8)	(1)
Joint ventures and funds - net valuation movement (including result on disposals)	(219)	(342)
Net financing costs - capital	6	(21)
Financing break costs on property disposals	-	1
Non-controlling interests in respect of the above	6	35
EPRA and underlying earnings (basic)	171	155
Dilutive effect of 2012 converitble bond	3	-
Underlying earnings (diluted)	174	155
Dilutive effect of 2012 convertible bond	-	3
EPRA earnings (diluted)	174	158
Profit attributable to the shareholders of the Company	816	998
Dilutive effect of 2012 convertible bond	3	-
IFRS earnings (diluted)	819	998

	Six months ended 30 September 2015 Number million	Six months ended 30 September 2014 Number million
Weighted average number of shares	1,033	1,024
Adjustment for Treasury shares	(11)	(11)
IFRS and EPRA weighted average number of shares (basic)	1,022	1,013
Dilutive effect of share options	2	2
Dilutive effect of ESOP shares	4	4
Dilutive effect of 2012 convertible bond	58	-
IFRS weighted average number of shares (diluted)	1,086	1,019
Dilutive effect of 2012 convertible bond	-	58
EPRA weighted average number of shares (diluted)	1,086	1,077

Net assets per share

	30 September 2015			31 March 2015
	£m	Pence per share		£m	Pence per share
Balance sheet net assets	9,253			8,565
Deferred tax arising on revaluation movements	12			13
Mark-to-market on effective cash flow hedges and related debt adjustments	234			257
Dilution effect of share options	43			37
Surplus on trading properties	97			96
Convertible bond adjustment	400			400
Less non-controlling interests	(284)			(333)
EPRA NAV	9,755	891		9,035	829
Deferred tax arising on revaluation movements	(12)			(13)
Mark-to-market on effective cash flow hedges and related debt adjustments	(234)			(257)
Mark-to-market on debt	(289)			(406)
EPRA NNNAV	9,220	842		8,359	767

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 2015 Number million	31 March 2015 Number million
Number of shares at period / year end	1,037	1,031
Adjustment for treasury shares	(11)	(11)
Number of shares (basic)	1,026	1,020
Dilutive effect of share options	4	4
Dilutive effect of ESOP shares	7	8
Dilutive effect of 2012 convertible bond	58	-
IFRS number of shares (diluted)	1,095	1,032
Dilutive effect of 2012 convertible bond	-	58
EPRA number of shares (diluted)	1,095	1,090

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

		30 September 2015 £m	30 September 2014 £m
	Investment property - wholly-owned	9,569	7,708
	Investment property - share of joint ventures and funds	4,815	5,093
	Less developments, residential and land	(805)	(1,009)
	Completed property portfolio	13,579	11,792
	Allowance for estimated purchasers' costs	846	720
	Gross up completed property portfolio valuation	14,425	12,512
	Annualised cash passing rental income	594	564
	Property outgoings	(8)	(8)
	Annualised net rents	586	556
	Rent expiration of rent-free periods and fixed uplifts1	76	68
	'Topped-up' net annualised rent	662	624
	EPRA Net Initial Yield	4.1%	4.4%
	EPRA 'topped-up' Net Initial Yield	4.6%	5.0%
	Including fixed/minimum uplifts received in lieu of rental growth	25	27
	Total 'topped-up' net rents	687	651
	Overall 'topped-up' Net Initial Yield	4.8%	5.2%
	'Topped-up' net annualised rent	662	624
	ERV vacant space	18	28
	Reversions	25	2
	Total ERV	705	654
	Net Reversionary Yield	4.9%	5.2%

1 The weighted average period over which rent-free periods expire is 1 year (30 September 2014: 1 year).

The above is stated for the UK portfolio only.

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 2015, 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 unrented, lettable space as a proportion of the total rental value of the completed

property portfolio.

EPRA Vacancy Rate

	30 September 2015 £m	30 September 2014 £m
Annualised potential rental value of vacant premises	18	28
Annualised potential rental value for the completed property portfolio	708	657
EPRA Vacancy Rate	2.6%	4.3%
The above is stated for the UK portfolio only.

EPRA Cost Ratios

		Six months ended	Six months ended
		30 September 2015 £m	30 September 2014 £m
Property outgoings		12	13
Administrative expenses		46	39
Share of joint ventures and funds expenses		6	6
Less:	Performance & management fees (from joint ventures & funds)	(3)	(5)
	Other fees and commission	(2)	(2)
	Ground rent costs	(1)	(2)
EPRA Costs (including direct vacancy costs) (A)		58	49
Direct vacancy costs		(5)	(7)
EPRA Costs (excluding direct vacancy costs) (B)		53	42
Gross Rental Income less ground rent costs		218	170
Share of joint ventures and funds (GRI less ground rent costs)		107	137
Total Gross Rental Income (C)		325	307
EPRA Cost Ratio (including direct vacancy costs) (A/C)		17.8%	16.0%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C)		16.3%	13.7%
Overhead and operating expenses capitalised (including share of joint ventures and funds)		2	-

In the current period, employee costs in relation to staff time on development projects are capitalised into the base cost of relevant developments assets.

Table C: Gross rental income

Calculation of gross rental income

	Six months ended 30 September 2015 £m	Six months ended 30 September 2014 £m
Rent receivable	304	292
Spreading of tenant incentives and guaranteed rent increases	20	14
Surrender premia	2	3
Gross rental income	326	309

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 2015				Year ended 31 March 2015
	Group £m	Joint ventures and funds £m	Total £m		Group £m	Joint ventures and funds £m	Total £m
Acquisitions	238	-	238		147	-	147
Development	49	11	60		64	83	147
Like-for-like portfolio	47	4	51		67	23	90
Other	16	4	20		25	8	33
Total property related capex	350	19	369		303	114	417

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 £14m (Year ended 31 March 2015: £18m), capitalised fees of £2m (Year ended 31 March 2015: £nil) and capitalised interest of £4m (Year ended 31 March 2015: £15m).

SUPPLEMENTARY TABLES

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

Portfolio Valuation
At 30 September 2015	Group	JVs & Funds1	Total	Change²
	£m	£m	£m	%	£m
Shopping parks	2,213	1,102	3,315	1.1	36
Shopping centres	1,157	1,125	2,282	3.9	86
Superstores	221	685	906	(1.6)	(15)
Department stores	609	1	610	2.9	17
Leisure	527	3	530	2.8	15
Retail & Leisure3	4,727	2,916	7,643	1.8	139
Of which Multi-let	3,119	2,236	5,355	2.2	121
West End	3,669	-	3,669	8.1	285
City	104	2,709	2,813	8.5	221
Provincial	3	-	3	2.6	-
Offices	3,776	2,709	6,485	8.3	506
Residential4	210	46	256	6.5	17
Offices & Residential3	3,986	2,755	6,741	8.2	523
Total	8,713	5,671	14,384	4.7	662
Standing Investments	8,050	5,618	13,668	4.5	602
Developments	663	53	716	8.5	60
Table shows UK total, excluding assets held in Europe. Total portfolio valuation including Europe of £14.4bn at year end, +4.7% valuation movement.
1 Group's share of properties in joint ventures and funds including HUT at ownership share
2 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
³ Including committed developments
4 Stand-alone residential

Portfolio Yield & ERV Movements1,2
At 30 September 2015	EPRA net initial yield %	EPRA topped up net initial yield %3	Overall topped up net initial yield %4	Net equivalent yield %	Net equivalent yield compression5	Net reversionary yield %	ERV Growth %5 6
Shopping parks	4.7	5.0	5.1	5.1	5	5.1	0.9
Shopping centres	4.5	4.7	4.8	4.9	14	5.0	1.9
Superstores	5.3	5.3	5.3	5.2	(5)	5.2	(0.9)
Department stores	4.0	4.0	5.9	4.4	12	3.7	0.0
Leisure	4.9	4.9	6.1	5.3	22	4.0	0.3
Retail & Leisure	4.7	4.9	5.1	5.0	8	4.9	0.9
Of which Multi-let	4.5	4.8	4.8	4.9	9	5.0	1.4
West End	3.3	4.0	4.0	4.4	24	4.6	4.1
City	3.2	4.5	4.5	4.4	16	5.2	5.1
Offices	3.3	4.2	4.3	4.4	20	4.9	4.5
Total	4.1	4.6	4.8	4.7	13	4.9	2.3
Table shows UK total, excluding assets held in Europe.
1 Including notional purchaser's costs
2 Excluding developments under construction and assets held for development
3 Including rent contracted from expiry of rent-free periods and contracted uplifts not in lieu of growth
4 Including fixed/minimum uplifts (excluded from EPRA definition)
5 6 months to 30 September 2015
6 As calculated by IPD

Total Property Return (as calculated by IPD, excluding Europe)
6 mths to 30 September 2015	Retail		Offices		Total
%	British Land	IPD	British Land	IPD	British Land	IPD
Capital Return	1.8	1.9	8.3	7.2	4.7	4.4
- ERV Growth	0.9	0.8	4.5	4.4	2.3	2.2
- Yield Compression1	8 bps	11 bps	20 bps	12 bps	13 bps	15 bps
Income Return	2.6	2.5	1.6	2.0	2.1	2.4
Total Property Return	4.4	4.4	10.0	9.3	6.9	6.8
1 Net equivalent yield movement

Portfolio Weighting
At 30 September	2014	2015	2015	2015
		(current)	(current)	(pro-forma1)
	%	%	£m	%
Shopping parks	23.4	23.0	3,315	22.4
Shopping centres	15.5	15.9	2,282	15.4
Superstores	10.1	6.3	906	5.7
Department stores	4.7	4.2	610	4.1
Leisure	2.8	3.7	530	3.6
Retail & Leisure	56.5	53.1	7,643	51.2
Of which Multi-let	36.0	37.2	5,355	36.0
West End	23.1	25.5	3,669	27.2
City	17.8	19.6	2,813	19.0
Provincial	0.7	-	3	-
Offices	41.6	45.1	6,485	46.2
Residential2	1.9	1.8	256	2.6
Offices & Residential	43.5	46.9	6,741	48.8
Total	100.0	100.0	14,384	100.0
Table shows UK total, excluding assets held in Europe.
1 Pro forma for developments under construction at estimated end value (as determined by the Group's external valuers) and post  period end transactions
2 Stand-alone residential

Annualised Rent & Estimated Rental Value (ERV)1
At 30 September 2015	Annualised rent (valuation basis) £m2			ERV £m	Average rent £psf
	Group	JVs & Funds	Total	Total	Contracted3,4	ERV3
Shopping parks	115	54	169	181	25.5	25.9
Shopping centres	64	52	116	128	29.5	31.4
Superstores	12	38	50	49	21.6	21.2
Department stores	25	-	25	24	15.1	14.0
Leisure	27	-	27	23	14.4	11.9
Retail & Leisure	243	144	387	405	23.7	23.8
Of which Multi-let	158	108	266	293	27.6	28.8
West End	113	-	113	155	50.9	57.0
City	4	90	94	155	50.5	57.7
Offices	117	90	207	310	50.6	57.2
Residential5	4	-	4	3
Offices & Residential	121	90	211	313
Total	364	234	598	718	29.2	31.2
Table shows UK total, excluding assets held in Europe.
1 Excluding developments under construction and assets held for development
2 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
3 Office average rent & ERV £psf is based on office space only
4 Annualised rent, plus rent subject to rent free
5 Stand-alone residential

Gross Rental Income1
Accounting Basis £m	6 mths to 30 September 2015			Annualised as at 30 September 2015
	Group	JVs & Funds2	Total	Group	JVs & Funds2	Total
Shopping parks	59	31	90	114	55	169
Shopping centres	34	27	61	63	51	114
Superstores	6	19	25	12	38	50
Department stores	14	-	14	29	-	29
Leisure	16	-	16	31	-	31
Retail & Leisure	129	77	206	249	144	393
Of which Multi-let	83	57	140	158	107	265
West End	60	-	60	117	-	117
City	2	54	56	4	113	117
Offices	62	54	116	121	113	234
Residential3	3	-	3	3	-	3
Offices & Residential	65	54	119	124	113	237
Total	194	131	325	373	257	630
Table shows UK total, and includes completed developments.
1 Gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental  uplifts and lease incentives
2 Group's share of properties in joint ventures and funds including HUT at share
3 Stand-alone residential

Lease Length & Occupancy1
At 30 September 2015	Average lease length yrs		Occupancy rate %
	To expiry	To break	Occupancy	Occupancy (underlying)2
Shopping parks	8.7	7.7	97.3	98.1
Shopping centres	8.7	7.7	96.9	98.2
Superstores	14.3	14.0	100.0	100.0
Department stores	21.0	20.9	100.0	100.0
Leisure	18.3	18.3	100.0	100.0
Retail & Leisure	10.9	10.1	97.8	98.6
Of which Multi-let	8.6	7.5	97.0	98.1
West End	10.0	8.2	96.1	98.5
City	10.6	8.8	97.7	97.7
Provincial	16.5	6.5	100.0	100.0
Offices	10.3	8.5	96.9	98.1
Total	10.6	9.4	97.4	98.4
Table shows UK total, excluding assets held in Europe.
1 Excluding developments under construction and assets held for development
2 Including accommodation under offer or subject to asset management

Rent Subject to Lease Break or Expiry1
At 30 September 2015	2016	2017	2018	2019	2020	2016-18	2016-20
For period to 31 March	£m	£m	£m	£m	£m	£m	£m
Shopping parks	8	6	10	12	15	24	51
Shopping centres	7	9	9	6	10	25	41
Superstores	-	-	-	-	-	-	-
Department stores	-	-	1	-	-	1	1
Leisure	-	-	-	-	-	-	-
Retail & Leisure	15	15	20	18	25	50	93
Of which Multi-let	14	15	19	17	25	48	90
West End	1	8	9	10	4	18	32
City	-	19	-	17	13	19	49
Offices2	1	27	9	27	17	37	81
Total	16	42	29	45	42	87	174
% of contracted rent	2.4%	6.1%	4.1%	6.6%	6.2%	12.6%	25.4%
Potential uplift at current ERV3	1	9	1	7	3	11	21
Table shows UK total, excluding assets held in Europe.
1 Excluding developments under construction
2 Based on office space only 3 As determined by the Group's valuers

Rent Subject to Open Market Rent Review1
At 30 September 2015	2016	2017	2018	2019	2020	2016-18	2016-20
For period to 31 March	£m	£m	£m	£m	£m	£m	£m
Shopping parks	12	14	22	24	16	48	88
Shopping centres	4	12	15	14	8	31	53
Superstores	7	5	4	9	15	16	40
Department stores	-	-	-	-	-	-	-
Leisure	-	-	2	-	-	2	2
Retail & Leisure	23	31	43	47	39	97	183
Of which Multi-let	11	26	38	38	23	75	136
West End	3	8	19	20	14	30	64
City	11	1	6	14	14	18	46
Offices	14	9	25	34	28	48	110
Total	37	40	68	81	67	145	293
Potential uplift at current ERV	1	-	1	3	1	2	6
Table shows UK total, excluding assets held in Europe.
1 Excluding developments under construction and assets held for development

Major Property Holdings
At 30 September 2015	BL Share	Sq ft	Rent	Occupancy	Lease
(excl. developments under construction)	%	'000	£m pa1	rate %2	length yrs3
Broadgate, London EC2	50	4,721	225	99.3	8.3
Regent's Place, London NW1	100	1,590	73	98.8	8.2
Meadowhall Shopping Centre, Sheffield	50	1,393	82	97.2	7.2
Paddington Central	100	808	33	99.8	8.2
Sainsbury's Superstores4	50	2,526	59	100.0	14.2
The Leadenhall Building5	50	602	35	86.7	12.0
Debenhams, Oxford Street	100	363	11	100.0	23.5
Tesco Superstores4	65	1,243	27	100.0	14.3
Teeside Shopping Park, Stockton-on-Tees	100	478	15	95.7	6.5
Drake Circus Shopping Centre, Plymouth	100	412	16	99.6	5.9

¹ Annualised EPRA contracted rent including 100% of Joint Ventures & Funds

² Includes accommodation under offer or subject to asset management at 30 September 2015

³ Weighted average to first break                                                                                                                  

⁴ Comprises stand-alone assets/properties                                                                                                                  

⁵ 90.8% occupancy rate Including post period end activity

Top 40 Occupiers by Total Contracted Rent
At 30 September 2015	% of total rent			% of total rent
Tesco plc	6.1		New Look	0.9
UBS AG1	5.7		Gazprom	0.9
Debenhams	5.4		Vodafone plc	0.9
J Sainsbury plc	4.8		Sports Direct	0.9
Kingfisher (B&Q)	2.6		Aon Plc	0.8
Home Retail Group	2.4		Asda Group	0.8
Next plc	2.3		JPMorgan	0.7
HM Government	2.2		Reed Smith	0.7
Virgin Active	1.8		Children's World Ltd (Mothercare)	0.7
Spirit Group	1.6		H&M Hennes & Mauritz AB	0.7
Alliance Boots	1.5		Deutsche Bank AG	0.7
Dixons Carphone	1.4		JD Sports	0.7
Visa Inc	1.4		Mayer Brown	0.7
Marks & Spencer plc	1.4		ICAP Plc	0.6
Arcadia Group	1.3		Steinhoff	0.6
Aegis Group	1.3		Lewis Trust (River Island)	0.6
Herbert Smith	1.2		MondaysTopCo (TGI Fridays)	0.6
Royal Bank of Scotland	1.1		Pets at Home	0.5
TJX Cos Inc (TK Maxx)	0.9		Credit Agricole	0.5
Facebook	0.9		BridgeStreet	0.5
1 Temporary increase due to 5 Broadgate lease commencement and 1-3 Finsbury Avenue/100 Liverpool Street lease run off

Acquisitions and Disposals

From 1 April 2015				Price (Gross)	Price     (BL Share)	Annual Passing Rent
Acquisitions		Area		£m	£m	£m2
Completed
1 Sheldon Square	Offices	London		210	210	10
Hercules Unit Trust unit purchase1	Retail	Various		95	95	5
19-33 Liverpool Street	Offices	London		22	22	1
Teesside Leisure Park	Retail	North East		2	2	-
Total				329	329	16
1 Units purchased over the course of the period. £95m represents purchased GAV
2 BL share of net rent topped up for rent frees
From 1 April 2015				Price (Gross)	Price     (BL Share)	Annual Passing Rent
Disposals			Area	£m	£m	£m1
Completed
Parkgate Shopping Park, Rotherham	Retail		Yorkshire	170	120	6
39 Victoria Street	Offices		London	139	139	5
Birstall Shopping Park, Leeds	Retail		Yorkshire	107	31	2
Hatters Way, Luton & Hylton Riverside, Sunderland	Retail		Various	44	33	2
The Hempel Collection	Residential		London	16	16	-
Superstore disposals	Retail		Various	14	14	1
Bedford Street	Residential		London	4	4	-
Exchanged
Tesco, Bursledon	Retail		South	60	60	3
Aldgate Place	Residential		London	16	8	-
The Hempel Collection	Residential		London	6	6	-
Total				576	431	19
1 BL share of net rent topped up for rent frees

Recently Completed & Committed Developments
At 30 September 2015	Sector	BL Share	Sq ft	PC Calendar Year	Current Value	Cost to complete	ERV	Let & Under Offer	Resi End Value
		%	'000		£m	£m1	£m2	£m	£m3
5 Broadgate	Offices	50	710	Completed	453	16	19.2	19.2	-
Whiteley Leisure, Fareham	Retail	50	58	Completed	12	1	0.6	0.6	-
Glasgow Fort, M&S & Retail Terrace	Retail	75	112	Completed	33	3	1.9	1.7	-
Total Completed in Period			880		498	20	21.7	21.5	-
Yalding House	Offices	100	29	Q4 2015	32	3	1.7	-	-
4 Kingdom Street	Offices	100	147	Q2 2017	57	76	8.9	-	-
Clarges Mayfair	Mixed Use	100	192	Q3 2017	360	138	6.0	-	463
Glasgow Fort (MSCP & Additional retail / leisure units)	Retail	75	12	Q3 2016	1	7	0.4	-	-
The Hempel Phase 1	Residential	100	25	Q1 2016	32	1	-	-	51
The Hempel Phase 2 4	Residential	100	32	Q2 2016	48	13	-	-	74
Aldgate Place, Phase 1 5	Residential	50	221	Q2 2016	30	27	-	-	81
Total Under Construction			658		560	265	17.0	-	669
Retail Capex6						80
Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%)
1 From 1 October 2015
2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)
3 Residential development of which £332m completed or exchanged and a further £10m under offer
4 Now excludes 17 Craven Hill Gardens - sold separately
5 End value excludes sale of hotel site, receipts of £6m (BL Share). Sale now completed
6 Capex committed and underway within our investment portfolio relating to leasing & asset enhancement

Near-Term Pipeline
At 30 September 2015	Sector	BL Share	Sq ft	Start On Site	Total Cost1	Status
			'000		£m
5 Kingdom Street 2	Offices	100	240	2016	209	Consented
100 Liverpool Street 3	Offices	50	509	2017	260	Consented
1 Finsbury Avenue	Offices	50	303	2017	150	Consented5
1 Triton Square	Offices	100	217	2017	340	Pre-submission
Blossom Street, Shoreditch	Mixed Use	100	347	2016	242	Submitted
Plymouth Leisure	Retail	100	102	2016	39	Consented
New Mersey Shopping Park, Speke - Leisure	Retail	65	66	2016	17	Consented
Forster Retail Park, Bradford, Phase 3	Retail	100	63	2016	18	Pre-submission
Aldgate Place, Phase 2	Residential	50	145	2016	58	Consented
54 The Broadway, Ealing	Residential	100	34	2016	18	Consented
Total Near-Term			2,026		1,351
Retail Capex4					110
1 Total cost including site value. Excludes notional interest as interest is capitalised individually on each development at our capitalisation  rate
2 210,000 sq ft of which is consented
3 Planning granted for 517,000 sq ft, but currently considering options to enhance design and mix
4 Forecast capital commitments within our investment portfolio over the next 2 years relating to leasing & asset enhancement
5 Resolution to grant planning consent

Medium-Term Pipeline
At 30 September 2015	Sector	BL Share	Sq ft	Status
			'000
Eden Walk Shopping Centre, Kingston	Mixed Use	50	562	Submitted
Canada Water Masterplan 1	Mixed Use	100	5,500	Pre-submission
2 - 3 Finsbury Avenue 2	Offices	50	189	Pre-submission
Meadowhall Leisure	Retail	50	330	Pre-submission
Putney High Street	Mixed Use	100	110	Consented
Total Medium-Term			6,691
1 Assumed net area based on gross area of up to 7m sq ft
2 Existing net areas, scheme in early design stages

Residential development programme
At 30 September 2015	Sq Ft	No. Market Units	PC Date/ Status	BL Share	Current Value1	Cost To complete2	End Value	Sales Exchanged3
	'000			%	£m	£m	£m	£m
Clarges Mayfair4	103	34	Q3 2017	100	265	107	463	259
Mixed use	103	34			265	107	463	259
The Hempel Phase 1	25	15	Q1 2016	100	32	1	51	26
The Hempel Phase 2	32	19	Q2 2016	100	48	13	74	-
Aldgate Place Phase 1	221	154	Q2 2016	50	30	27	81	47
Residential-led	278	188			110	41	206	73
Aldgate Place Phase 2	145		Consented	50
54 The Broadway, Ealing	34		Submitted	100
Near Term prospective	179
Total Committed Residential	381	222			375	148	669	332
Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%)
1 Excluding completed sales
2 From 1 October 2015. Cost to complete excludes notional interest as interest is capitalised individually on each development  at our capitalisation rate
3 Of which £16m completed at The Hempel Phase 1. Excludes completed sale of hotel site at Aldgate Place for £6m (BL Share)
4 Includes 9,500 sq ft of affordable housing (11 units)

Superstores
	Stand-alone Superstores1				In Shopping Centres & Shopping Parks2				Total Exposure1,2,3
Store Size '000 sq ft	No of Stores	Valuation (BL share) £m	Capital Value psf	WALL to FB	No of Stores	Valuation (BL share) £m	Capital Value psf	WALL to FB	No of Stores	Valuation (BL share) £m	Capital Value psf	WALL to FB
>100	8	179	345	12.9	5	367	552	13.5	13	546	461	13.3
75-100	14	286	457	18.2	1	41	483	12.4	15	327	460	17.5
50-75	17	294	440	12.7	1	13	198	11.6	18	307	419	12.7
25-50	9	63	239	8.9	3	31	433	15.0	12	94	280	10.8
0-25	4	13	190	10.7	17	78	418	11.4	21	91	356	11.3
Sept 2015	52	835	389	14.2	27	530	494	13.1	79	1,365	424	13.8
March 2015	57	924	395	14.5	29	529	491	13.9	86	1,453	426	14.4
Geographical Spread				Annualised Gross Rent (BL Share)					Lease Structure
London & South			58%	Tesco				£37m	RPI and Fixed			7%
Rest of UK			42%	Sainsbury's				£32m	OMRR			93%
				Other				£6m
1 Excludes £12m non-foodstore occupiers in superstore led assets, and Tesco Bursledon, sold post period end
2 Excludes non food-format stores e.g. Asda Living
3 Excludes £102m of investments held for trading comprising freehold reversions in a pool of Sainsbury's Superstores

 

END

 

 

IR DXBDBLXBBGUL