Half-year Report

RNS Number : 0551F

Hammerson PLC

25 July 2016

HAMMERSON plc - UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016

Six months ended:	30 June 2016	30 June 2015	Change	Like-for-like increase
Net rental income ⁽¹⁾	£167.7m	£159.5m	+5.1%	+2.1%
Profit (including valuation changes)	£162.5m	£326.1m	- 50.2%
Adjusted profit ⁽²⁾	£112.6m	£106.2m	+6.0%
Adjusted earnings per share ⁽²⁾	14.3p	13.6p	+5.1%
Interim dividend per share	10.1p	9.5p	+6.3%

As at:	30 June 2016	31 December 2015
Property portfolio ⁽³⁾	£8,964m	£8,374m	+7.0%
Equity shareholders' funds	£5,682m	£5,517m	+3.0%
EPRA net asset value per share ⁽²⁾	£7.27	£7.10	+2.4%
Gearing	59%	54%	+5%
Loan to value ⁽⁴⁾	40%	38%	+2%

(1) On a proportionally consolidated basis, excluding interests in premium outlets

(2) Calculations for adjusted and EPRA figures are shown in note 7 to the accounts on pages 33 and 34

(3) See page 15 and note 8 to the accounts on pages 34 and 35 for the independent valuers' assessment of the 30 June 2016 valuations

(4) Value denominator includes €936 million (£775 million; Dec-15: £690 million) acquisition cost of Irish loan portfolio

David Atkins, Chief Executive of Hammerson, said: "I am pleased to deliver another set of solid results for this half year with good operational metrics and EPS growth. Looking forward, we have confidence in the resilience of our business model, which will underpin our ability to deliver robust income returns during and beyond this period of political and economic uncertainty in the UK.

We believe our European diversity, best in class retail portfolio and low capital commitments positions us to produce consistent operational results, as we have done in recent years. During 2016, we successfully delivered our market-leading platform in Dublin, accelerated momentum in signing new leases and executed our disposal programme to support our financial flexibility.

Our assets in Europe continue to perform strongly and in the UK, notwithstanding the market uncertainty, we have been reassured by the level of leasing and investment activity post the EU Referendum, both in our portfolio and across the wider property market, highlighting continued appetite for high-quality retail property."

ASSET MANAGEMENT - PRIME ASSETS CONTINUE TO ATTRACT RETAILER DEMAND

· 20 leases signed ahead of ERV post Referendum across our UK shopping centres and retail parks

· In six months to 30 June 2016, £12.6 million of leasing, up 19% year-on-year; 5% ahead of ERV

· 158 lettings (79,500m²) driving like-for-like NRI growth of 2.1% (2.7% including Premium outlets); UK shopping centre ERV growth 2.3% (rolling 12 months)

INVESTMENT MANAGEMENT - EFFECTIVE CAPITAL RECYCLING

· Successfully agreed deal with borrowers to transfer ownership of Irish loan platform; secures ownership of Dundrum Town Centre and delivers significant market share in Europe's fastest growing economy

· Diversified European portfolio with 40% outside UK; benefiting from yield compression in France and Premium outlets

· £500 million disposal programme close to completion; active recycling strategy going forward, in line with track record

DEVELOPING VENUES - TWO NEW SCHEMES TO OPEN IN NEXT SIX MONTHS

· On track to open Victoria Gate and WestQuay Watermark in next six months; average 80% pre-let

· Low committed development capital expenditure, totalling £115 million

· Work on-going to prepare major London schemes providing significant development optionality

FINANCIAL EFFICIENCY - attracting long-term capital

· Weighted average cost of debt lowered to 3.2%; LTV 40%, in line with financing policies

· £830 million of long-dated debt raised, acquisition facility fully refinanced, next bond maturity 2019; £945 million of cash and undrawn facilities

· Hammerson announces today its intention to pursue a secondary listing on Johannesburg Stock Exchange in order to access a wider pool of international capital

Contents:

	Page		Page
Introduction	1	Responsibility Statement	19
Key performance indicators	2	Financial Statements	20
Business Review	4	Notes to the accounts	27
Financial Review	11	Additional Disclosures	41
Principal Risks and Uncertainties	18	Glossary	49
Independent Review Report	19

Results presentation today:

The results presentation is being held today at 9.00 a.m. at Deutsche Bank's offices at 1 Great Winchester Street, London EC2N 2DB. A live webcast of Hammerson's results presentation will be broadcast today at 9.00 a.m. via the Company's website, www.hammerson.com. At the end of the presentation you will be able to participate in a question and answer session by dialling +44 (0)20 3427 0503. Please quote confirmation code 2413056.

Financial calendar:

Ex-dividend date	25 August 2016
Record date	26 August 2016
Interim dividend payable	10 October 2016

Enquiries:

David Atkins, Chief Executive	Tel: +44 (0)20 7887 1000
Timon Drakesmith, Chief Financial Officer
Rebecca Patton, Head of Investor Relations	Tel: +44 (0)20 7887 1109
www.hammerson.com	rebecca.patton@hammerson.com

Index to key data Unless otherwise stated, figures have been prepared on a proportionally consolidated basis, excluding premium outlets			Page
Income and operational - Six months ended	30 June 2016	30 June 2015
Portfolio total returns (including share of premium outlets portfolio)	2.9%	5.7%	2
Portfolio capital return (including share of premium outlets portfolio)	0.7%	3.0%	15
Occupancy	97.2%	97.2%	3
Like-for-like NRI growth	2.1%	2.1%	2
Adjusted earnings per share	14.3p	13.6p	2
Leasing activity	£12.6m	£10.6m	3
Leasing v ERV - UK shopping centres	+6%	+2%	4
Leasing v ERV - France	+4%	+1%	6
Like-for-like ERV growth - UK shopping centres	+0.5%	+1.5%	4
Like-for-like ERV growth - France	+0.1%	- 0.5%	6
Retail sales - UK shopping centres	- 0.8%	+2.0%	4
Retail sales - France	3.0%	-1.6%	6
EPRA cost ratio	22.1%	21.7%	3
Interim dividend per share	10.1p	9.5p	14

Capital and financing	30 June 2016	31 December 2015
Property portfolio value (including premium outlets)	£9.0bn	£8.4bn	44
Net debt	£3.4bn	£3.0bn	16
Gearing	59%	54%	16
Loan to value	40%	38%	16
Liquidity	£945m	£931m	16
Weighted average interest rate	3.2%	3.8%	16
Interest cover	3.8 times	3.6 times	16
Net debt/EBITDA	9.7 times	9.5 times	16
Fixed rate debt	68%	61%	16
Portfolio currency hedge	76%	90%	16
Equity shareholders' funds	£5.7bn	£5.5bn	14
EPRA net asset value per share	£7.27	£7.10	14

INTRODUCTION

MARKET BACKDROP

The majority vote to end the UK's membership of the European Union in the Referendum held on 23 June 2016 has created a period of political and economic uncertainty that may impact the property investment and letting markets. This uncertainty could continue whilst the UK renegotiates its trading position and other relationships with the EU and other countries.

Given the short period of time since the Referendum it is difficult to extrapolate trends in the UK property investment and letting markets or in consumer trends. However it is reassuring that a number of UK real estate companies, including Hammerson, have reported no immediate lapse in commercial discussions with tenants or investment counterparties. The pattern of consumer expenditure and footfall in our UK centres since the Referendum has been consistent with trends seen since the beginning of 2016.

It is also encouraging to note the current factors which could provide support to property valuations including the record-high spread of property yields over long-term interest rates, lower leverage across the real estate sector and well-capitalised lending institutions. In particular, the on-going European Central Bank programme of quantitative easing clearly highlights the relative attractiveness of property and has led to upward pressure on capital values.

A WELL-POSITIONED BUSINESS

Whilst we recognise the changes to the backdrop against which we operate, the Group has many resilient characteristics which will provide benefits to our stakeholders during this period of uncertainty.

Key factors which underpin the stability of our business include:

· Geographical diversity: We operate in 12 European countries, with 40% of our property portfolio, including our recently transferred Irish assets, outside the UK.

· High-quality portfolio: We own and manage prime retail properties which will continue to be the preferred locations for retailers and their customers. Significant development pipeline offering medium-term income growth.

· Security of income: We have a high-quality, diverse tenant base with almost 4,500 tenants across the Group and in the UK have an average unexpired lease term of seven years. In each of the last ten years the Group has delivered positive like-for-like NRI growth.

· Low committed development exposure: At 30 June 2016, our committed development capital expenditure of £115 million represents 1% of our total property portfolio, mostly on schemes completing over the next six months.

· Pure-play retail: Our100% retail focus means that we are solely focused on steering the Group based on the dynamics of one sector and have no exposure to other more volatile end-markets such as London offices.

· Solid financing base: We have a simple and transparent unsecured debt structure, dependable access to debt capital markets and a strong relationship with our banking group. At 30 June 2016, the average maturity of our borrowings was six years.

· Currency hedging strategy: A combination of euro borrowings and derivatives provides protection from volatility in foreign exchange markets. At 30 June 2016, 76% of our euro-denominated assets were hedged, as well as approximately two-thirds of our euro-denominated net income.

IMPLEMENTING OUR BUSINESS MODEL

Our business model, which is further explained on pages 4 and 5 of our 2015 Annual Report, aims to deliver value for all our stakeholder groups: shareholders, retailers, shoppers, colleagues and communities.

The success of our business depends on a number of principal inputs: high-quality property, talented people, retail insight and financial capital.

In order to achieve our strategic objectives we undertake the following key actions to create value: asset management, investment management, developing venues and financial efficiency. Hammerson is differentiated from peers by its Product Experience Framework applying best practice in retail design, digital solutions, customer engagement and sustainability.

We will continue to implement this successful business model but during this period of uncertainty we have refined our decision-making processes in the short term, for example we have raised the pre-letting thresholds on our developments and we have tightened our control over capital approvals. We will continue to pursue a pro-active approach to disposals to support our financial flexibility.

We have a strong and adaptable business with multiple opportunities for growth giving us the ability to respond to changes in specific end-markets and prioritise our stronger performing segments in order to enhance returns.

KEY PERFORMANCE INDICATORS

We have a number of Key Performance Indicators (KPIs) and associated benchmarks. They are split between financial and operational measures and are used to monitor the performance of the business to ensure that we deliver value for our stakeholders. The performance during the first six months of 2016 is shown below:

Financial KPIs

http://www.rns-pdf.londonstockexchange.com/rns/0551F_-2016-7-22.pdf

Note: IPD Retail Property Universe benchmark weighted 75:25 UK:France (2012-2015: 70:30). Due to the lack of available IPD data, the 2016 benchmark is based on the available UK IPD quarterly/monthly indices and the French benchmark is assumed to be equal to the Hammerson French portfolio return.

2016: 2.9%

During the first six months of 2016, the Group's properties, including premium outlets, produced a total return of 2.9% which was 0.5% ahead of the estimated IPD benchmark.

The Group's French and premium outlet portfolios produced strong performances with total returns of 5.1% and 5.7% respectively as both benefited from inward yield movements. Performance for the UK investment portfolio was lower with a total return of 1.1%, although the development portfolio produced a total return of 5.6%.

Further analysis of total and capital returns by sector is shown in Table 7 of the Additional Disclosures on page 44.

http://www.rns-pdf.londonstockexchange.com/rns/0551F_1-2016-7-22.pdf

2016: 2.1%

On a like-for-like basis, net rental income grew by 2.1% for the portfolio in the first half of 2016, above our target of 2.0% and the same as for the first half of 2015.

Income from UK and French shopping centres grew by 2.8% and 1.9% respectively. UK retail parks income increased by 1.2%.

Further details are provided within the Financial Review on page 12 and in Table 2 of the Additional Disclosures on page 42.

http://www.rns-pdf.londonstockexchange.com/rns/0551F_2-2016-7-22.pdf

*On a proportionally consolidated basis, excluding premium outlets

2016: 5.1%

Compared to the equivalent period in 2015, adjusted EPS for the six months ended 30 June 2016 increased by 0.7 pence, or 5.1%, to 14.3 pence. We compare this KPI against a weighted (75:25 UK:France) CPI inflation benchmark which for the six months to 30 June 2016 was 0.4%.

Adjusted EPS increased through additional net rental income from recently completed developments, income from acquisitions and the like-for-like portfolio which together added
1.6 pence per share. This was partly offset by income foregone from recently sold properties which reduced adjusted EPS by 0.9 pence per share.

Further commentary is provided within the Financial Review on page 11.

http://www.rns-pdf.londonstockexchange.com/rns/0551F_3-2016-7-22.pdf

OPERATIONAL KPIs

2016: 22.1%

The Group's cost ratio at 30 June 2016 is 22.1%, which is 100bps lower than for the full year 2015, but 40bps higher than the comparative period in 2015.

Compared with the full year 2015, the administration expenses element of the ratio has fallen from 11.8% in 2015 to 11.2% in 2016 and the property costs element of the ratio has also reduced from 11.3% to 10.9%. The change in property costs reflects seasonality, particularly marketing costs which are weighted towards the final quarter of the year. Nonetheless, the downward trend in the ratio indicates management's continued focus on delivering operating efficiencies across the wider group.

Further details are provided within the Financial Review on page 12 and in Table 6 of the Additional Disclosures on page 43.

http://www.rns-pdf.londonstockexchange.com/rns/0551F_4-2016-7-22.pdf

2016: 97.2%

Our portfolio has maintained high occupancy levels during 2016, with the portfolio being 97.2% occupied at 30 June 2016 above our target of 97.0%. This was marginally lower than the 2015 year end position of 97.7%, but the same as 30 June 2015.

The UK portfolio was 97.6% occupied, whilst occupancy in France was slightly lower at 96.3%.

Further details are provided within the Business Review on pages 4 to 6 and in Table 1 of the Additional Disclosures on page 41.

http://www.rns-pdf.londonstockexchange.com/rns/0551F_5-2016-7-22.pdf

*On a proportionally consolidated basis, excluding premium outlets

2016: £12.6 million

We secured income of £12.6 million in the first half of the year which is £2.0 million higher than the comparative period. We signed 158 leases (UK: 92, France 66) representing 79,500m².

For principal leases, the rent was 5% higher than December 2015 ERVs.

Further details are provided within the Business Review on pages 4 to 6.

Global emissions intensity ratio

This KPI is only calculated on an annual basis and so is not included in this announcement.

BUSINESS REVIEW

1. ASSET MANAGEMENT

This Business Review provides information on each of our key sectors. Operational metrics are presented on a proportionally consolidated basis and, unless specifically stated, exclude the Group's investments in premium outlets. This presentation is consistent with internal management reporting. Further information on our properties is provided in tables in the Additional Disclosures on pages 41 to 48.

UK SHOPPING CENTRES

Our portfolio comprises 11 major shopping centres, which together have over 1,000 tenants and attract nearly 150 million visitors each year. The portfolio includes internationally recognised schemes such as Bullring in Birmingham, Brent Cross in London and Highcross in Leicester.

Operational summary

Key metrics	Like-for-like NRI growth %	Occupancy %	Leasing activity £m	Leasing vs ERV %	Like-for-like ERV growth %	Retail sales growth %	Footfall growth %
30 June 2016	2.8	97.4	4.5	+6	0.5	(0.8)	0.3
31 December 2015*	2.1	98.3	11.7	+4	2.8	1.3	1.1
30 June 2015	1.8	97.8	5.4	+2	1.5	2.0	1.2

* 31 December figures are for the full year

Net rental income

On a like-for-like basis net rental income increased by 2.8% in the first six months of the year, compared to 1.8% in the comparative period. The increase in 2016 was driven by rent review settlements, additional turnover rent and increased car park income. Three centres: Bullring, Union Square and Victoria Quarter produced double-digit like-for-like income growth in the first half of the year.

Leasing, occupancy and ERVs

Tenants continued to demand space at our centres, and during the six months to 30 June 2016 we signed 65 leases representing
£4.5 million of annual rental income and 27,400m² of space. For principal leases, rents secured were 6% above December 2015 ERVs and 21% above the previous passing rent. ERV growth was 0.5% across the portfolio in the first half of 2016 and 2.3% over the previous twelve months. Occupancy levels remained high at 97.4%, compared with 97.8% in June 2015 and 98.3% in December 2015.

Our retail strategy is to refresh and optimise the tenant mix for each of our centres and during 2016 this has delivered a number of key leasing deals with international brands, luxury operators and new catering offers. Highlights were five new restaurants at Cabot Circus including Côte, Brasserie Blanc and the UK's first L'Osteria, a New Look Men store at The Oracle and Smiggle's and Tortilla's first Scottish stores at Silverburn. Brent Cross also celebrated its 40th anniversary year by welcoming three international brands: Urban Decay, Tesla Motors and Smiggle.

Sales, footfall and occupancy cost

Consumer confidence has been subdued during the first half of 2016, and retail sales at our centres fell by 0.8%, calculated on a same centre basis. Sales performance by centre has been mixed with the poor weather hampering summer fashion sales, whilst technology and sports sales have seen healthy growth. Three of our centres reported declining sales, whilst the remainder achieved year-on-year increases.

Footfall levels were 0.3% higher than 2015, however this included a 0.2% reduction in customer numbers in the first quarter of 2016 with growth of 0.9% returning in the second quarter. The occupational cost ratio was virtually unchanged at 19.3%.

Lease expiries and rent reviews

The portfolio offers a robust income stream, with a weighted average unexpired lease term of six years, and opportunities for rental growth. Leases subject to rent reviews, break clauses or expiries offer the prospect to secure additional rental income. Over the period to 31 December 2018, these leases would provide additional annual rental income of £9.2 million if renewed, or reviews are settled, at current ERVs.

At 30 June 2016, only four units were let to tenants in administration, equating to just 0.1% of the Group's total passing rents.

Commercial initiatives

As part of our Product Experience Framework, we have delivered a number of key initiatives in the first half of 2016, focused on enhancing our customers' experience across the portfolio.

A new click & collect kiosk was installed at Bullring in partnership with Doddle, and we now have click & collect facilities in five centres in the UK, with more planned. Usage across all centres has continued to exceed our expectations, and in July the Oracle team was the first shopping centre to be awarded the Collect + National Store of the Quarter award for exceptional customer service.

We have enhanced and upgraded our customer facilities, demonstrated by the opening of new toilets and family bathrooms at Bullring. These will serve as the template for the portfolio. Following the success of a trial at Highcross we have rolled out a new interactive children's play area in Silverburn which was used 8,000 times during its first week.

We successfully launched The Beacons at Highcross, a digital interactive place-making sculpture featuring seven 7-metre high beacons, located at the heart of St Peter's Square. The sculpture incorporates specially commissioned content created in partnership with The Curve Theatre and features content from over 100 members of the local community. It was launched in the same week as Leicester City won the Premier League title and has been enthusiastically received by shoppers, with significant coverage in local and social media.

UK RETAIL PARKS

Hammerson owns and operates 19 retail parks, which together provide 470,000m² of retail space with 440 tenants. The easily accessible parks with ample parking are located on the edge of town centres and are let to a wide spectrum of retailers including bulky goods, homewares and fashion. There are significant synergies with our shopping centre business as a growing number of retailers operate across multiple trading formats and this enables cross-portfolio leasing conversations.

Operational summary

Key metrics	Like-for-like NRI growth %	Occupancy %	Leasing activity £m	Leasing vs ERV %	Like-for-like ERV growth %
30 June 2016	1.2	98.7	2.5	+4	(0.1)
31 December 2015*	2.6	98.4	8.3	+4	1.3
30 June 2015	3.2	98.2	1.5	+3	0.3

* 31 December figures are for the full year

Net rental income

On a like-for-like basis net rental income increased by 1.2% in the first six months of the year. The growth is due to a year-on-year increase in surrender premiums received, associated with proactive tenant rotation. These benefits were partly offset by the impact of tenant inducements on recent lettings and costs associated with administrations such as Brantano.

Leasing, occupancy and ERVs

We signed 17 leases across the portfolio representing £2.5 million of annual rental income and 11,500m² of space. For principal leases, rents were contracted at 4% above the December 2015 ERVs. Occupancy levels have increased to 98.7% at 30 June 2016, an improvement of 0.3% during the year. ERVs are broadly unchanged during 2016, with a 0.1% decline during the six months.

We are continuing to attract a variety of traditional high-street retailers to our retail parks portfolio to improve the offer. Tenants signing new leases in 2016 include H&M, HomeSense, Mothercare, New Look, River Island and Superdrug as well as homeware retailers including Sofology and Tapi Carpets.

Key leasing transactions during the first six months of the year include four leases at Elliott's Field, Rugby securing £1.2 million of new income at an average of 4% above the December 2015 ERV and a 930m² Outfit at Ravenhead, St Helens.

Lease expiries and rent reviews

The retail parks portfolio benefit from a secure income stream and at 30 June 2016 had a weighted average unexpired lease term of eight years, including tenant break options, the longest in the Group. As with the UK shopping centres, a proportion of the leases are subject to rent reviews, break clauses or expiries and offer the opportunity to secure additional rental income. Over the period to 31 December 2018, these leases would provide additional annual rental income of £2.2 million if renewed or reviewed to current ERVs.

At 30 June 2016, there was only one tenant in administration representing £0.2 million of income.

Commercial initiatives

The new corporate branding has been rolled out to four retail parks with new totem signs installed and this programme will continue across the rest of the portfolio in the second half of the year.

We have also completed the second phase of our in-depth customer surveys to better understand consumer opinions about our parks and existing or prospective tenants. We have found that customer satisfaction has improved by 2.6% across our portfolio, dwell times and the average number of shops and restaurants visited have both increased by 8% and catering visits have increased by 7%. Where data was available for a full year, footfall in the first half of 2016 increased by 3.1%, ahead of the Springboard Retail Parks index of 1.8%.

FRANCE

In France, we own and manage ten prime shopping centres, including five in or around Paris such as Italie Deux and Les Trois Fontaines. Other high-quality centres in the portfolio include Les Terrasses du Port, Marseille and Place des Halles, Strasbourg. Our French shopping centres have over 1,000 tenants and attract almost 100 million visitors each year.

Operational summary

Key metrics	Like-for-like NRI growth %	Occupancy %	Leasing activity £m	Leasing vs ERV %	Like-for-like ERV growth %	Retail sales growth %	Footfall growth %
30 June 2016	1.9	96.3	5.2	+4	0.1	3.0	4.1
31 December 2015*	2.5	96.9	7.2	+2	-	0.6	(0.6)
30 June 2015	2.3	96.7	3.3	+1	(0.5)	(1.6)	(1.6)

* 31 December figures are for the full year

Net rental income

On a like-for-like basis net rental income increased by 1.9% in the first six months of the year. Les Terrasses du Port was the strongest performing centre with higher gross rental income and reduced year-on-year marketing expenditure as the centre matures following its opening in 2014.

Non-rental income from car park and commercialisation activities continues to grow. In 2016, this increased to £2.7 million, reflecting like-for-like growth of 9%.

Leasing, occupancy and ERVs

Our retenanting strategy has continued during 2016 as we contract income across the portfolio, with 66 leases signed in 2016, representing £5.2 million of annual rental income and 23,300m² of space. For principal leases, the income was 4% above December 2015 ERVs but 10% below the previous passing rents. The variance to previous passing rent was due to the reletting of the former H&M unit at Place des Halles to Darty and New Look. These tenants relocated within the centre and enabled a co-ordinated retenanting programme at the centre, including an upsized Zara and helped improved the tenant mix and footfall on the first floor. Excluding these two lettings, the remaining principal leases were agreed 3% above the previous passing rent.

We continue to rotate tenants and introduce new leisure and catering to refresh the retail offer at our centres. Key leasing deals during the first six months of the year included Armani Exchange and Sweet Pants at Les Terrasses du Port, Kusmi Tea at Italie Deux, ID Kids at Places des Halles and three lettings at Beauvais. In May, the new Apple store at Les Terrasses du Port opened in a striking glass unit on the terrace overlooking the Mediterranean Sea. The store welcomed over 7,000 visitors and helped increase footfall in the centre by 13% on its opening day.

Occupancy levels were marginally lower than at the beginning of the year at 96.3%, compared with 96.9% in December 2015 and increasing ERVs remains challenging with growth of 0.1% during the first half of the year.

A total of 62 units are in administration across the French portfolio, an increase of 13 during 2016. All of these units continue to trade and represent only 1.2% of the Group's passing rent and provide opportunities to introduce new tenants to improve the tenant mix at our centres.

Sales, footfall and occupancy cost

Retail sales and footfall levels have improved significantly in 2016. Retail sales, calculated on a same centre basis, have increased by 3.0% and footfall increased by 4.1% in 2016. This compared to sales growth of 0.6% and a footfall decline of 0.6% for the year ended 31 December 2015. Les Terrasses du Port has traded very strongly, whilst the Paris centres have seen more subdued growth associated with the impact of security concerns and flooding in the city.

Despite the strong sales growth, the occupational cost ratio was unchanged from the beginning of the year at 15.3% due to increased service charge and local taxes at a number of centres.

Lease expiries and rent reviews

Leases in France tend to be shorter than in the UK. Many leases contain three year breaks, which are infrequently exercised, and across our portfolio the average unexpired lease term excluding these breaks is six years. As in the UK, the portfolio offers opportunities for rental growth with an average reversion of 8.5%. Leases expiring, or subject to tenants' break clauses, over the period to 31 December 2018 would provide additional annual rental income of £2.0 million if renewed at current ERVs. Most of our French leases are subject to annual indexation, which for the majority of leases was - 0.1% in 2016.

Commercial initiatives

We apply our Product Experience Framework across the wider group with joint initiatives covering both the UK and France, and in the future, Ireland. An example of this is our on-going trial of a number of click & collect formats and Amazon lockers in three of our French centres. We have also added La Poste to Relais Colis as a partner on our Pack City lockers which has resulted in increased usage.

Following the successful partnership with Yamaha in the UK, we have also introduced pianos at a number of our French centres. Further cross-border work has enhanced customer facilities such as the upgrade of the toilets in Italie Deux and the launch of a new interactive children's play area, combining digital and analogue elements, as part of the refurbishment at Saint Sébastien.

At Italie Deux we are also trialling two Short Edition vending machines that print free short stories. The stories provide a moment to pause during a busy shopping journey and customers are printing an average of 140 stories per day.

IRELAND

In July 2016, we announced that Hammerson, together with our 50% joint venture partner Allianz Real Estate ("Allianz"), had successfully secured the ownership of Dundrum Town Centre ("Dundrum"), Ireland's pre-eminent shopping and leisure destination, as part of a portfolio of market-leading retail assets in Dublin. The joint venture had acquired, in October 2015, loans secured against a portfolio of retail assets from the National Asset Management Agency ("NAMA") for €1.85 billion (£1.53 billion), a discount to the face value of the loans.

In accordance with our stated objectives, we achieved a consensual agreement with the borrowers to transfer the underlying properties, delivering immediate ownership of Dundrum, the Dublin Central development site ("Dublin Central") and land adjoining the Pavilions shopping centre, Swords ("Pavilions"). The joint venture will take over direction of the Ilac Centre and Pavilions shopping centres, both in Dublin, pending a pre-emption process with the co-owners and regulatory approvals. On completion, the Group's total consideration for our share of the portfolio, including fees, taxes and transaction costs, will be €1.23 billion (£1.01 billion), in line with our expectations at the time of acquiring the loans. The total additional cost to Hammerson, including a balancing payment to Allianz for the underlying interests in the non-Dundrum assets and fees, taxes and transaction costs totalling €0.29 billion (£0.24 billion) will be phased over the next six months depending upon completion of the regulatory approvals and the co-owner pre-emption process at Ilac and Pavilions.

Including Dundrum, the total portfolio of Dublin assets encompasses over 200,000m² of high-quality shopping centre space, with 320 tenants and annual footfall of nearly 50 million and provides 27 acres of development land. Our share of the total contracted rent for the portfolio will be €45 million (£38 million) and the blended initial yield on the investment portfolio is 4.0% with a reversionary yield of 4.6%.

Dundrum currently has a 99% occupancy rate and delivered like-for-like retail sales growth of 6% in the twelve months to 31 March 2016. The centre has estimated reversionary potential of over 15% and therefore offers significant opportunities for rental growth. Rent reviews concluded in the last twelve months with Zara, Oasis, Pull & Bear, Bershka, Karen Millen and Coast provide clear evidence of this reversion.

The Irish economy continues to thrive, with the Irish Central Bank currently forecasting GDP growth for 2016 of 5.1% and 4.2% in 2017. Irish retail sales grew by 6.4% year-on-year in Q1 2016 (8.4% by volume) and in May 2016 were up by 5.3% year-on-year (8.1% by volume).

To support the new Irish platform and the Group's role as asset manager of Dundrum, a new office has been opened in Dublin and over the next twelve months we will act to integrate the portfolio into our existing operating structure to deliver the asset management strategy.

2. INVESTMENT MANAGEMENT

We manage our portfolio by taking advantage of opportunities to acquire or dispose of properties to enhance the quality of our portfolio and financial returns. Over the last five years disposal proceeds have averaged £270 million per annum. These proceeds have been reinvested in acquisitions of high-quality properties such as the Junction Fund Portfolio; Victoria Quarter; an additional one-sixth stake in the Bullring; Dundrum, Grand Central and further investments in our premium outlets portfolio.

Acquisitions

As explained above, following the acquisition of an Irish loan portfolio in October 2015 we successfully secured the ownership of Dundrum Town Centre and a number of other properties in Dublin in July 2016.

In February 2016, we acquired Grand Central for a total cost of £350 million. The 40,400m² shopping centre in Birmingham is anchored by a 23,200m² John Lewis and sits above New Street Station, the redeveloped major railway hub. The centre includes 40 premium stores including Fatface, Kiehls, L'Occitane en Provence and MAC and also contains 20 casual dining brands including Paul, Pho and Tortilla.

The acquisition is being reviewed by the Competition and Markets Authority ("CMA") and is subject to an initial enforcement order meaning the property is being run independently of the rest of the UK portfolio. We have fully cooperated with the investigation and the CMA are due to announce their Phase 1 decision by 29 July 2016. We have contracted to sell, subject to regulatory approval, 50% of the scheme to CPPIB, one of the existing joint venture partners in Bullring, for £175 million.

Disposals

As part of the funding strategy for the acquisition of our new Irish platform announced in September 2015, we initiated a £500 million disposal programme.

The first tranche of sales was reported with our year end results and principally related to the sale of Monument Mall, Newcastle, which completed in January 2016, for £75 million and Villebon 2, Paris for €159 million (£132 million) which completed in March 2016.

We are progressing well with the second tranche of disposals to raise a further £300 million. Thurrock Shopping Park, Essex was sold in June for proceeds of £93 million. We also announced in July the disposal of Manor Walks, Cramlington for £78 million and a smaller property in Folkestone for £7 million, both in line with their 30 June 2016 valuations. These disposals were both contracted on terms agreed before the EU Referendum result.

3. DEVELOPMENT

The Group has a number of development opportunities in both the UK and France, including two on-site schemes, three major London developments and a number of potential future pipeline projects. These schemes provide the opportunity to significantly grow the business and enhance the quality of the Group's existing portfolio over the medium term. We are committed to effective expenditure controls and will only commit to projects once the risk level is acceptable. This will vary for each project and is dependent on a variety of factors including general market conditions and project leasing, construction, programme, funding and financial viability. At 30 June 2016, committed capital expenditure totalled £115 million, of which the majority related to the completion of our two on-site development schemes. This position means the Group retains flexibility over the future commitment of its development opportunities as an integral part of the wider Group strategy.

ON-SITE DEVELOPMENTS

Work continues to progress well at our two on-site UK shopping centre development schemes in Leeds and Southampton ahead of completion over the next six months.

Scheme¹	Lettable area m²	Expected completion	Value 30 June 2016 £m	Estimated cost to complete² £m	Estimated annual income³ £m	Let⁴ %
Victoria Gate, Leeds (Phase 1)	35,400	Q4 2016	170	45	11	74
WestQuay Watermark, Southampton	17,000	Q1 2017	58	43	6	91
Total	52,400		228	88	17

1. Group ownership 100% for on-site schemes.

2. Incremental capital cost including capitalised interest.

3. Incremental income net of head rents and after expiry of rent-free periods.

4. Let or in solicitors' hands by income at 22 July 2016.

Victoria Gate is a new scheme adjacent to Hammerson's existing luxury retail destination, Victoria Quarter with a target opening in October. When complete, it will form part of the new 53,400m² Victoria Estate, a new retail destination for Leeds and the north of England, offering customers a mix of new aspirational retail brands and restaurants. The 35,400m² development consists of three buildings: a flagship John Lewis store; two covered arcades with more than 30 aspirational retailers and restaurants; and an 800-space multi-storey car park. Tenant demand remains strong, and the project is now 74% pre-let, with lettings in 2016 including Calvin Klein, GANT, Le Pain Quotidien, Neom Organics, Tommy Hilfiger and T2, the Australian tea retailer. We expect the scheme to achieve a BREEAM Excellent rating and create 1,000 retail, hospitality and customer service jobs.

In Southampton, WestQuay Watermark celebrated its topping out in April and the new city centre leisure and dining destination is due to open in early 2017. The development will deliver 17,000m² of leisure and catering space next to our jointly owned WestQuay shopping centre. The project includes a 10-screen Showcase Cinema de Lux and over 20 new restaurants, cafes and bars as well as a Hollywood Bowl. Almost fully let, 91% of the income is already secured and lettings agreed in 2016 include The Diner, TGI Fridays and All Bar One's first bar in Southampton. We are targeting BREEAM Excellent rating and the scheme has created 1,200 new jobs.

MAJOR DEVELOPMENTS

Scheme	Ownership %	Lettable area m²	Earliest start	Potential completion	Estimated cost to complete¹ £m

Brent Cross extension, London NW4	41	90,000	2017	2021	475-550
Croydon town centre, South London	50	200,000	2017	2020/21	650-700
The Goodsyard, London E1²	50	270,000	2017	Phased	140-160
Total		560,000			1,265-1,410

1. Hammerson's share of incremental capital cost including capitalised interest. These costs are indicative as full scheme details are yet to be finalised.

2. Cost reflects phase 1 only. Due to residential component of scheme, area is gross external.

We have progressed the three major developments in London which will create new iconic destinations as well as acting as catalysts for wider urban regeneration in the surrounding areas.

In conjunction with our joint venture partner, Standard Life, we have continued to advance the regeneration of Brent Cross Cricklewood in north-west London. A key element of the new town centre masterplan, which has outline planning approval, is a 90,000m² extension and refurbishment of the existing Brent Cross shopping centre which will result in a retail-led, dining and leisure destination for north London. Barnet Council has approved the use of CPO powers to acquire the remaining land to deliver the extension and a CPO inquiry started in May 2016. Subject to the confirmation of CPO powers and agreements with key tenants by early 2017, construction works could start on-site towards the end of 2017 with completion in 2021.

In South London, the Croydon Partnership, a 50:50 joint venture with Westfield, is progressing a scheme to redevelop the Whitgift Centre and refurbish Centrale shopping centre. The scheme will establish Croydon as the principal retail and leisure hub for South London and underpin a fundamental shift in the perception of Croydon which is already seeing large scale regeneration and significant new investment in homes and offices. The Partnership owns key interests in the site and controls 75% of the Whitgift Centre. Work is underway on the preparation of a new outline planning application which will be submitted later in the summer. This includes scheme revisions which are outside the scope of the existing 2013 outline planning permission, principally a new Marks & Spencer anchor store and a redesign of the northern end of the scheme. The revised design incorporates three levels of retail with over 300 shops, restaurants and cafes, as well as enhanced leisure facilities, public realm improvements and residential homes. Dependent on planning progress and additional anchor store discussions, the earliest start on site will be during 2017.

Bishopsgate Goodsyard is a 4.2ha site on the edge of the City of London which is owned in joint venture with our partner, Ballymore Properties. Following design discussions with the two local authorities, Hackney and Tower Hamlets, a planning application was submitted in June 2015 proposing a 270,000m² mixed-use development, incorporating a retail 'village', offices, residential units and substantial public realm. The application was called in by the Mayor of London in September 2015 and in April 2016, following the GLA's planning officers' recommendation to refuse the application, the Mayor agreed to defer the application to allow further consultation with the new mayoral administration to redesign elements of the proposed development over the next twelve months.

Development pipeline opportunities

We have a number of potential pipeline schemes in each of our sectors which will enhance the overall quality of the Group's portfolio. During 2016, we submitted a planning application for an extension to Union Square and progressed potential extension schemes at Italie Deux and Les Trois Fontaines. There are also a number of smaller-scale UK retail park developments at Elliott's Field, Rugby; Oldbury, Dudley; Parc Tawe, Swansea; and Fife Central, Kirkcaldy where design and planning works as well as leasing negotiations are progressing.

The precise nature and design of these schemes are fluid and they are at different stages of development. The speed of delivery for these pipeline schemes will be dependent on a variety of factors including: planning permission; retailer demand; anchor tenant negotiations; land assembly; scheme design; funding; and financial viability.

4. PREMIUM OUTLETS

As part of our strategy, the Group has been increasing its exposure to the premium outlets sector over recent years. Outlets offer a channel for brands to distribute excess inventory by selling merchandise at a material discount to the original price. Premium outlets are at the top of this sector, providing international fashion and luxury brands an environment similar to a full priced store, where retailers are able to maintain and protect their brand identity. Our exposure to the sector is gained through our long-term partnership with Value Retail and also through VIA Outlets, a joint venture established in 2014. Both investments are externally managed, although the Group has a strong relationship with both management teams.

The sector has many similarities with our directly-managed properties and we utilise the knowledge gained to enhance the brand experience across our portfolio, for example the inclusion of key aspirational brands at Victoria Gate. The Financial Review on pages 11 to 17 provides further information on how we account for our investments in Value Retail and VIA Outlets and how they have contributed towards the Group's financial performance during 2016.

Market overview

Over recent years, the European outlets sector has seen both strong sales growth and increasing investor demand. A key driver of the market has been the strong demand for discounted luxury and fashion items from international tourists, in particular from China, Russia and the Middle East. Over the last twelve months, spending patterns by wealthy global tourists have been influenced by security concerns, currency movements and reduced spending by Chinese visitors mitigated by growing demand from other international travellers.

Value Retail ("VR")

Overview

VR operates nine high-end shopping-tourism Villages in the UK and Western Europe which provide over 180,000m² of floor space and more than 1,000 stores. VR focuses on international fashion and luxury brands and attracts long-haul tourists and wealthy domestic customers. The Villages, which include Bicester Village outside London and La Vallée Village near Paris, are among the most successful outlet centres in Europe. The average sales density for the Villages is €14,600/m² with densities at Bicester Village around €40,000/m².

The Villages are strategically located close to Europe's wealthiest cities and major tourist attractions and targeted marketing enables VR to benefit from the growing shopping-tourism market. In total, 163 million residents live within a 120 minute drive of a Village, and the major cities served by the Villages attract 100 million tourists each year. The total footfall across the Villages in the first half of 2016 was 15.7 million (2015: 15.3 million). This strategy has enabled VR to deliver annual compound brand sales growth of over 15% since 2006.

Performance in 2016

Against a more challenging macroeconomic environment and a slowdown in long-haul tourism, particularly from China, sales growth has slowed during the first half of 2016 to 5%, compared with 12% in the first half of 2015. Performance has diverged across the Villages, with strong growth at La Roca, Barcelona and Kildare, Dublin which has benefited from the opening of a major extension in late 2015. Bicester Village and La Vallée Village have seen a more subdued performance, associated with some fall-off in tourist visits.

VR management are directing promotional activities towards both a more diverse tourist market; and high-end domestic customers. They are also proactively evolving and improving the brand mix at the Villages and enhancing the customer experience through refurbishment, enhanced customer services and extensions.

Value Retail - Operational performance¹	Six months ended 30 June 2016	Six months ended 30 June 2015
Brand sales (€m)	1,141	1,051
Brand sales growth (%)	5	12
Footfall (millions)	15.7	15.3
Average spend per visit (€)	72	69
Average sales densities² (€000/m²)	14.6	14.3
Occupancy (%)	94	95

1. The above figures reflect overall portfolio performance, not Hammerson's ownership share.

2. Sales densities are calculated on a rolling twelve months basis

Developments and extensions

At Fidenza Village, Milan work is well advanced on a 3,300m² extension which will add 25 units and is due to open in October 2016. Leasing demand is strong with terms agreed on over half of the space and advanced negotiations on a further third of the space.

At Bicester Village, the demolition of the former Tesco store has been completed and construction work will commence shortly on the 5,500m² extension which will include 33 new brands and over 500 new car parking spaces. The project includes enhanced road access to reduce congestion and is targeted to open towards the end of 2017.

VIA Outlets ("VIA")

Overview

VIA is an outlets joint venture formed in 2014 in partnership with APG, Value Retail and Meyer Bergman in which Hammerson has a 47% stake. VIA's strategy is to create a c.€1 billion portfolio by acquiring existing European outlet centres with strong catchments, focused on mainstream fashion brands and with potential for growth through active asset and development management.

VIA utilises the outlet expertise from VR to enhance the overall centre management, physical appearance, leisure and catering offers and tenant mix of the centres to deliver sales, income and value growth. The strategy also involves work to right-size units, the introduction of more flagship stores and targeted marketing to increase tourist visits and total footfall.

At 30 June 2016, VIA had five outlet centres providing 160,000m² of floor space and over 500 stores across five European countries. The major assets are Alcochete, near Lisbon, Batavia Stad, near Amsterdam, Fashion Arena, near Prague, and Landquart, near Zurich.

In July 2016, VIA completed the acquisition of Festival Park, Majorca (Hammerson's share of the acquisition price was €44 million). The 32,000m² centre includes an 8,000m² cinema and attracts 3.8 million visitors each year. VIA intends to improve the brand mix and enhance the food and beverage offer.

Performance in 2016

VIA Outlets - Operational performance¹	Six months ended 30 June 2016	Six months ended 30 June 2015
Brand sales (€m)	172	161
Brand sales growth (%)	7	11
Footfall (millions)	4.7	4.7
Average spend per visit (€)	41	39
Average sales densities² (€000/m²)	3.6	n/a
Occupancy (%)	86	88

1. The above figures reflect overall portfolio performance, not Hammerson's ownership share and 2015 figures have been restated to exclude Excalibur, Czech Republic which was sold in late 2015. Sales densities are not available for June 2015 as the majority of the centres had not been owned for a full twelve months period.

2. Sales densities are calculated on a rolling twelve months basis

VIA's portfolio has performed strongly during the first half of 2016, particularly Batavia Stad and Fashion Arena, and sales densities in the VIA centres have increased by 16% year-on-year.

At Batavia Stad, a 5,500m² extension to the centre, which will introduce 45 new units and increase space by 22%, is progressing well and is due to open in early 2017. Further upgrades are being implemented including new façades and 17 remerchandising projects, including new brands GANT and Falke. The tourist marketing strategy implemented in 2015 has delivered a 70% increase in tax free sales.

At Fashion Arena, the enhancement of the food court is underway and 15 remerchandising projects are scheduled for 2016 including the opening of Polo Ralph Lauren. Tax free sales were 28% higher in 2016 than for the first half of 2015.

At Alcochete, permits have been received to enable the start of major reconfiguration works to enhance the centre and 20 remerchandising projects are planned for 2016. Landquart continues to generate positive trading metrics despite challenging local trading conditions in Switzerland.

FINANCIAL REVIEW

PRESENTATION oF FINANCIAL INFORmATION

The information presented in this Financial Review is derived from the Group's financial statements, prepared under IFRS. However, management principally reviews the performance of the business on a proportionally consolidated basis, including the Group's share of joint ventures and associates, but does not proportionally consolidate our investments in premium outlets. We classify the Group's proportionally consolidated joint ventures and associates as 'Share of Property interests' and their financial contribution to the Group is shown in Tables 14 and 15 of the Additional Disclosures on page 48. Further explanations of terms used in this section are in the Glossary on pages 49 and 50.

To provide a clear explanation of the performance of the business during 2016, the tables in this Financial Review state whether the information has been presented on a proportionally consolidated basis and whether it includes our premium outlet investments.

At 30 June 2016, the property ownership associated with the Irish loan portfolio, acquired in October 2015 in a 50:50 joint venture, had yet to be transferred from the borrowers. Further details on this transaction are provided on page 7 of the Business Review and the accounting treatment is explained on page 15.

PROFIT for the PERIOD

The Group's profit for the period, attributable to equity shareholders, under IFRS was £162.5 million, £163.6 million lower than the same period in 2015. This includes income from operations and financing costs as well as one-off gains/losses realised on the sale of properties and unrealised property valuation changes. As with other property companies, and in line with EPRA guidance, we review the Group's profit on an adjusted basis, which best reflects underlying earnings, and the table below reconciles IFRS profit to adjusted profit for the period. Analysis of the Group's income statement under IFRS split between underlying "Adjusted" profit and "Capital and other" profit is shown in note 2 to the accounts on pages 28 to 30 and further details of the EPRA adjustments are provided in note 7A to the accounts on page 33.

Reconciliation of IFRS profit for the period to adjusted profit for the period

Proportionally consolidated, including premium outlets	Six months ended 30 June 2016 £m	Six months ended 30 June 2015 £m
IFRS profit for the period attributable to equity shareholders	162.5	326.1
Adjustments:
Net revaluation gains on property portfolio*	(29.5)	(163.3)
Net revaluation gains on premium outlet property portfolio	(48.0)	(69.8)
Loss/(Gain) on the sale of properties	12.6	(2.8)
Debt and loan facility cancellation costs	0.3	1.0
Change in fair value of derivatives*	(0.3)	2.4
Deferred tax - premium outlets	7.6	11.3
Other adjustments	7.4	1.3
Adjusted profit for the period (note 7A)	112.6	106.2
Adjusted EPS, pence	14.3	13.6

* Proportionally consolidated, excluding premium outlets

The Group's adjusted profit for the period in 2016 was £112.6 million, £6.4 million higher than in 2015. The table below bridges adjusted profit and adjusted EPS between the two periods and the movements are shown at constant exchange rates.

Reconciliation of adjusted profit for the period

Movements at constant exchange rates Proportionally consolidated, including premium outlets	Adjusted profit for the period £m	Adjusted EPS pence
Adjusted profit - Six months ended 30 June 2015	106.2	13.6
Net rental income increase/(decrease):
Acquisitions	5.3	0.7
Disposals	(6.8)	(0.9)
Development and other	3.9	0.5
Like-for-like portfolio	3.1	0.4
	5.5	0.7
Increase in administration expenses	(0.6)	(0.1)
Decrease in net finance costs	1.6	0.2
Decrease in Value Retail and VIA Outlets earnings	(0.5)	(0.1)
Tax and non-controlling interests	(0.7)	(0.1)
Exchange and other	1.1	0.1
Adjusted profit - Six months ended 30 June 2016	112.6	14.3

NET RENTAL INCOME

Analysis of net rental income

Proportionally consolidated, excluding premium outlets	Six months ended 30 June 2016 £m	Six months ended 30 June 2015 £m	Change £m
Like-for-like investment properties	148.9	145.8	3.1
Acquisitions	6.2	0.9	5.3
Disposals	4.1	10.9	(6.8)
Developments and other	8.5	4.6	3.9
Exchange	-	(2.7)	2.7
Net rental income	167.7	159.5	8.2

In the first six months of 2016, net rental income increased by £8.2 million, or 5.1%, to £167.7 million. Acquisitions contributed £5.3 million of additional income, principally Grand Central. Disposals reduced net rental income in 2016 by £6.8 million, reflecting the sales of Bercy 2, Paris; Drakehouse, Sheffield; Grand Maine, Angers; and Monument Mall, Newcastle.

Developments increased net rental income by £3.9 million mainly associated with Beauvais, near Paris and the retail park schemes completed in late 2015 in Rugby and Merthyr Tydfil. The like-for-like portfolio contributed £3.1 million, equivalent to growth of 2.1%. Net rental income growth by sector was: 2.8% for UK shopping centres; 1.9% for France; and 1.2% for UK retail parks.

Further analysis of net rental income is provided in Table 2 of the Additional Disclosures on page 42.

ADMINISTRATION EXPENSES

Administration expense analysis

Proportionally consolidated, excluding premium outlets	Six months ended 30 June 2016 £m	Six months ended 30 June 2015 £m
Employee and corporate costs	24.3	23.0
Management fees receivable	(3.3)	(2.9)
Administration expenses	21.0	20.1

In the first half of 2016, administration expenses were £21.0 million, reflecting, at constant exchange rates, a year-on-year increase of £0.6 million. This resulted from higher staff costs associated with increased head count, partly offset by increased management fee income, principally from our UK shopping centre joint ventures.

COST RATIO

The EPRA cost ratio, calculated on a proportionally consolidated basis excluding premium outlets, for the six months ended 30 June 2016 was 22.1%, a reduction of 100bps compared with the ratio for the year ended 31 December 2015 but 40bps higher for the comparative period in 2015. The ratio is calculated in line with EPRA best practice and reflects total operating costs, including the cost of vacancy but excluding inclusive lease costs, as a percentage of gross rental income. The ratio is not necessarily comparable between different companies as business models and expense accounting and classification practices vary. The cost ratio calculation is included as Table 6 of the Additional Disclosures on page 43.

Compared with the full year 2015, the administration expenses element of the ratio has fallen from 11.8% in 2015 to 11.2% in 2016, and the property costs element has also reduced from 11.3% to 10.9%. The change in property costs reflects seasonality, particularly marketing costs which are weighted towards the final quarter of the year. Nonetheless, the downward trend in the ratio indicates management's continued focus on delivering operating efficiencies across the Group.

LOSS ON THE SALE OF PROPERTIES

During the first half of the year, we sold three properties raising proceeds of £296 million, or £291 million after deducting selling costs. Compared to their valuation at 31 December 2015, these sales resulted in a loss of £12.6 million which primarily related to Thurrock Shopping Park, Essex sold for £93 million. Whilst this sale was below its December valuation, it was significantly above the acquisition cost of £64 million in 2012, and after taking account of £3 million of capital expenditure spent on various asset management initiatives to enhance the park, resulted in a profit on cost of 39%.

PREMIUM OUTLET INVESTMENTS - VALUE RETAIL AND VIA OUTLETS

As explained at the beginning of the Financial Review, for management reporting purposes we do not proportionally consolidate the results of our premium outlet investments in Value Retail and VIA Outlets. The nature of the control over our premium outlet investments means that VIA Outlets is accounted for as a joint venture, whilst Value Retail is accounted for as an associate.

The operating performance of our investments in Value Retail and VIA Outlets is described in the Business Review on pages 9 and 10 and the combined financial contribution to the Group's income statement and balance sheet is shown in notes 9 and 10 to the accounts and Tables 9 and 10 in the Additional Disclosures on page 45.

PROFIT FOR THE PERIOD

The Group's premium outlet investments contributed £12.8 million to the Group's adjusted profit in 2016, compared with £13.4 million for the comparable period in 2015 as shown in the table below.

Contribution to adjusted profit

	Six months ended 30 June 2016			Six months ended 30 June 2015
	Value Retail £m	VIA Outlets £m	Total £m	Value Retail £m	VIA Outlets £m	Total £m
Share of results	38.9	6.6	45.5	64.1	5.2	69.3
EPRA adjustments	(30.8)	(4.3)	(35.1)	(57.0)	(1.5)	(58.5)
Adjusted earnings from premium outlets	8.1	2.3	10.4	7.1	3.7	10.8
Interest receivable from Value Retail loans	2.4	-	2.4	2.6	-	2.6
Total contribution to adjusted profit	10.5	2.3	12.8	9.7	3.7	13.4

Adjusted earnings from premium outlets of £10.4 million were £0.4million lower than in 2015, or £0.5 million at constant exchange rates. The Group's share of Value Retail's earnings increased by £1.0 million, whilst earnings from VIA Outlets decreased by £1.4 million. The latter was due to the disposal of Excalibur, Czech Republic in late 2015 and the impact on occupancy levels arising from remerchandising activities.

NET ASSETS

Total investment

	30 June 2016			31 December 2015
	Value Retail £m	VIA Outlets £m	Total £m	Value Retail £m	VIA Outlets £m	Total £m
Share of net assets	819.4	131.5	950.9	743.8	110.8	854.6
EPRA adjustments	80.4	9.4	89.8	59.9	6.8	66.7
EPRA adjusted investment	899.8	140.9	1,040.7	803.7	117.6	921.3
Investment in VR China	6.7	-	6.7	4.8	-	4.8
Loans to Value Retail	39.5	-	39.5	76.4	-	76.4
Total investment - EPRA basis	946.0	140.9	1,086.9	884.9	117.6	1,002.5

Including the Group's loans to Value Retail, our total investment in premium outlets, calculated on an EPRA basis, totalled £1,087 million at 30 June 2016, an increase of £84 million since 31 December 2015. The increase was associated with revaluation gains from the property portfolios of £48 million and favourable foreign exchange movements as the majority of the properties are in the Eurozone, partly offset by the repayment to Hammerson by Value Retail of a €56 million loan in June 2016.

FINANCE COSTS

Underlying finance costs are shown in Table 13 of the Additional Disclosures on page 47. They comprise gross interest costs less finance income, including the Group's share of Property interests, and amounted to £44.0 million in the period to 30 June 2016,
£0.8 million lower than the period to 30 June 2015, or £1.6 million lower at constant exchange rates. Interest received from our Irish loan assets of £12.7 million was largely offset by additional interest expense associated with the increased level of borrowings due to recent acquisitions in Ireland and Birmingham.

During the first six months of 2016, the Group's weighted average interest rate reduced to 3.2%, compared with 3.8% for the year ended 31 December 2015. This reflected a number of refinancing activities:

· a £300 million 5.25% bond redeemed in December 2015 was refinanced with the issue of a £350 million ten-year 3.5% bond in October 2015 (swapped to euro at a coupon of 2.5%)

· drawing debt at low floating rates on the €1.5 billion facility used for recent acquisitions in Ireland and Birmingham

· the issue of a €500 million 1.75% seven-year bond in March 2016

· a new £420 million five-year revolving credit facility, signed in April 2016, having an initial margin of 90bps, some 60bps lower than the margin on the £150 million facility it replaced

Interest capitalised during the period was £2.3 million and related to our on-site developments at Victoria Gate and WestQuay Watermark.

tax

The Group is a UK REIT and French SIIC for tax purposes and hence is exempt from corporation tax on rental income and gains arising on property sales. On a proportionally consolidated basis, the tax charge for the six months ended 30 June 2016 remains low but has increased from £0.6 million to £1.3 million reflecting restrictions on the use of tax losses across the Group.

DIVIDEND

The Directors have declared an interim dividend of 10.1 pence per share, an increase of 6.3% compared with the 2015 interim dividend of 9.5 pence.

The interim dividend is payable on 10 October 2016 to shareholders on the register at the close of business on 26 August 2016 and will be paid entirely as a cash PID, net of withholding tax where appropriate. The Company will again be offering a scrip dividend alternative and for shareholders who elect to receive this, the dividend will be treated entirely as a PID, net of withholding tax where appropriate.

SOUTH AFRICAN SECONDARY LISTING

In order to ensure Hammerson is accessing the widest pool of international capital, the Company is pursuing a secondary listing of its shares on the Johannesburg Stock Exchange ("JSE"). Hammerson's register already includes a highly diversified global shareholder base, including a number of South African funds, and this listing is expected to further extend the depth and variety of investors and improve liquidity for existing shareholders. The secondary listing on the JSE is expected to take place in September 2016.

NET ASSETS

During the six months ended 30 June 2016, equity shareholders' funds increased by £165 million to £5,682 million.

Net assets, calculated on an EPRA basis, were £5,761 million, an increase of 3.4% during 2016. On a per share basis, net assets increased by 17 pence to £7.27 and the movement during 2016 is shown in the table below.

Movement in net assets

Proportionally consolidated, including premium outlets	Equity shareholders' fund £m	EPRA net asset adjustments* £m	EPRA net assets £m	EPRA NAV £ per share
31 December 2015	5,517	56	5,573	7.10
Property revaluation - proportionally consolidated	29	-	29	0.04
Property revaluation - premium outlets	48	-	48	0.06
	77	-	77	0.10
Adjusted profit for the period	113	-	113	0.14
Dividends	(100)	-	(100)	(0.13)
Share issue including scrip dividend dilution	37	-	37	(0.02)
Foreign exchange	75	6	81	0.10
Other movements	(37)	17	(20)	(0.02)
30 June 2016	5,682	79	5,761	7.27

* Adjustments in accordance with EPRA best practice as shown in note 7B to the accounts on page 34.

The increase in net assets was principally due to property revaluation gains, mainly in our French and premium outlets portfolios, arising from valuation yield compression and income growth. As sterling weakened relative to the euro, the value of euro-denominated assets increased by more than euro-denominated borrowings and unhedged exchange movements increased net assets by £75 million, or £81 million on an EPRA basis.

INVESTMENT AND DEVELOPMENT PROPERTIES

PORTFOLIO VALUE ANALYSIS

Movement in portfolio value
Proportionally consolidated, excluding premium outlets		Investment £m	Development £m	Total £m
Portfolio value at 1 January 2016		6,741	389	7,130
Valuation increase		11	18	29
Capital expenditure
	Acquisitions	378	10	388
	Developments	9	62	71
	Expenditure on existing portfolio	26	-	26
		413	72	485
Capitalised interest		-	2	2
Disposals		(309)	-	(309)
Exchange		230	-	230
Portfolio value at 30 June 2016		7,086	481	7,567

VALUATION CHANGE AND RETURNS

The chart below analyses the sources of the valuation change for the proportionally consolidated property portfolio during 2016.

http://www.rns-pdf.londonstockexchange.com/rns/0551F_6-2016-7-22.pdf

Note: The total portfolio movement includes the movement in the UK Other portfolio where underlying valuations decreased by £3 million during 2016.

During the first half of 2016, the Group's portfolio (excluding premium outlets) achieved a revaluation gain of £29 million. In the UK, shopping centre values fell by £13 million and retail parks values fell by £38 million, and of this adverse movement £39 million resulted from the increase in stamp duty land tax in April 2016. Investment yields were almost unchanged for UK shopping centres, but increased by an average of 10bps for the UK retail parks portfolio, resulting in a valuation reduction of £23 million.

In France, investors demand for prime assets continues to be strong and yields for our portfolio have reduced by an average of 20bps during 2016 producing a valuation increase of £69 million, partly offset by £6 million of increased transfer taxes in Paris, introduced at the beginning of the year.

Developments achieved an £18 million revaluation gain in the first half of the year, principally reflecting the construction and letting progress made on our two on-site developments in Leeds and Southampton.

The valuation change of £29 million on the Group's proportionally consolidated property portfolio was equivalent to a capital return of 0.2% for the first six months of the year. The capital return for UK shopping centres was -0.4%, -3.0% for UK retail parks, 2.9% for France and 4.9% for Developments.

In addition to the Group's proportionally consolidated portfolio, the premium outlets portfolio produced a revaluation surplus of £48 million, of which Value Retail contributed £42 million and VIA Outlets £6 million. Investor demand continues to strengthen for the sector and yields reduced by 10bps for Value Retail Villages and 15bps for VIA Outlet centres. The combined portfolio produced a capital return of 3.5% in 2016, which helped to increase the Group's total property portfolio capital return to 0.7%.

Further valuation, returns and yield analysis is included in Tables 7 and 8 in the Additional Disclosures on page 44.

BREXIT AND VALUATION UNCERTAINTY

Following the majority vote to end the UK's membership of the European Union in the EU Referendum held on 23 June 2016, it has not been possible to gauge the effect of this decision on property valuations at 30 June 2016 by reference to transactions in the market place. We are now in a period of uncertainty in relation to many factors that may impact the property investment and letting markets and this could continue whilst the UK renegotiates its trading position and other relationships with the EU and other countries.

Further information on the valuation uncertainty paragraphs included by the Group's independent property valuers in their valuation certificates, are disclosed in note 8 to the accounts on pages 34 and 35.

IRELAND

At 30 June 2016, the property ownership associated with our Irish loan portfolio, acquired in October 2015 in a 50:50 joint venture, had not transferred from the borrowers. The consensual agreement to the transfer completed on 7 July 2016 as explained on page 7 of the Business Review. At the balance sheet date, these loans, which totalled €936 million (£775 million; Dec-15: £690 million) are included within the Group's investment in joint ventures on the face of the Group balance sheet and are accounted for as a current receivable of the joint venture as shown in note 9C to the accounts on page 36.

FINANCING AND CASHFLOW

Our financing strategy is to generally borrow on an unsecured basis on the strength of the Group's covenant, to maintain operational flexibility. Borrowings are arranged to ensure an appropriate maturity profile and to maintain short-term liquidity. Acquisitions may be financed initially using short-term funds before being refinanced for the longer term when market conditions are appropriate. Short-term funding is raised principally through syndicated revolving credit facilities from a range of banks and financial institutions with which we maintain strong working relationships. Long-term debt mainly comprises the Group's fixed rate unsecured bonds. Derivative financial instruments are used to manage exposure to fluctuations in foreign currency exchange rates and interest rates, but are not employed for speculative purposes.

The Board approves financing guidelines against which it monitors the Group's financial structure. These guidelines, together with the relevant metrics, are summarised in the table below which illustrates the Group's robust financial condition.

Key financing metrics

Proportionally consolidated, excluding premium outlets

	Guideline¹	30 June 2016	31 December 2015
Net debt (£m)		3,360	2,968
Gearing (%)	Maximum 85%	59	54
Loan to value² (%)	No more than 40%	40	38
Liquidity (£m)		945	931
Weighted average interest rate (%)		3.2	3.8
Weighted average maturity of debt (years)		6.2	5.7
Interest cover (times)	At least 2.0 times	3.8	3.6
Net debt/EBITDA (times)³	Less than 10.0 times	9.7	9.5
FX hedging (%)	70-90%	76	90
Fixed rate debt (%)	At least 50%	68	61

1. Guidelines should not exceeded for an extended period of time

2. Includes the acquisition cost of the Irish loan assets of €936 million (£775 million; Dec-15: £690 million) within the denominator

3. EBITDA includes the interest received from the Irish loan assets

NET DEBT POSITION

On a proportionally consolidated basis net debt at 30 June 2016 was £3,360 million. This comprised borrowings of £3,572 million and cash and deposits of £212 million. During the first half of the year, net debt increased by £392 million and the movement is shown in the table below.

Movement in net debt

Proportionally consolidated, excluding premium outlets		Total £m
Net debt at 1 January 2016		2,968
Net cash inflow from operations		(128)
Acquisitions		391
Disposals		(297)
Development and other capital expenditure		105
Equity dividends paid		70
Repayment of Value Retail loans and other cash flows		(51)
Exchange		302
Net debt at 30 June 2016		3,360

We have continued to reduce the Group's average cost of debt with new issuance at low rates of interest whilst ensuring a solid funding platform. The weighted average cost of debt for the first half of 2016 was 3.2%. Key transactions during the period included the issue, in March, of a seven-year €500 million bond at a coupon of 1.75%, the Group's lowest ever bond coupon. In April, we signed a new £420 million unsecured revolving credit facility, at an initial margin of 90 basis points with a syndicate of eight banks. The facility has a maturity of five years which may be extended to a maximum of seven years at the Group's request and on each bank's approval of their participation. The new facility replaced an existing £150 million revolving credit facility, which featured an initial margin of 150 basis points, which would have matured in April 2017. This refinancing resulted in a net increase of £270 million of liquidity for the Group which was used to partially refinance the €1.5 billion revolving credit facility used to fund the investments in Ireland and Grand Central in Birmingham. During the first half of the year we have benefited from low floating rates on the €1.5 billion facility. At 30 June 2016, liquidity, comprising cash and undrawn committed facilities, was £945 million, compared with £931 million at the end of 2015.

Exposure to exchange translation differences on euro-denominated assets is managed through a combination of euro borrowings and derivatives. At 30 June 2016, the value of euro-denominated liabilities compared to the value of euro-denominated assets was 76%, a reduction of 14% from the position at the beginning of the year. Interest on euro debt also acts as a hedge against exchange differences arising on net income from our French business. Approximately two-thirds of such income was hedged in this way during the first half of 2016, similar to the position during 2015. The recent strengthening of the euro against sterling has resulted in modest gains to net asset value and earnings.

The Group's unsecured bank facilities and the US private placement senior notes contain financial covenants that the Group's gearing, defined as the ratio of net debt to shareholders' equity, should not exceed 150% and that interest cover, defined as net rental income divided by net interest payable, should not be less than 1.25 times. The same gearing covenant applies to three of the Company's unsecured bonds, whilst the remaining bonds contain a covenant that gearing should not exceed 175%. These figures are on a proportionally consolidated basis and the bonds have no covenant for interest cover. Hammerson's financial ratios are comfortably within these covenants and the Group's property values at 30 June 2016 (including premium outlets) would have to fall by 38% (or 57% for UK properties only) to breach the 150% gearing covenant.

Fitch and Moody's rate Hammerson's unsecured credit as A- and Baa1 respectively. Moody's changed its outlook from stable to negative in June 2016 following the UK's EU referendum result stating that the heightened economic uncertainty could dampen prospects for the UK real estate sector. This was consistent with Moody's recent change in outlook for the UK sovereign rating from stable to negative.

As explained at the beginning of this Financial Review, we do not proportionally consolidate our premium outlet investments for reporting purposes. These are financed independently from the rest of the Group and both Value Retail and VIA Outlets utilise a combination of secured borrowings and partner loans as funding. At 30 June 2016, the Group's share of net debt in VR and VIA totalled £404 million. Including the Group's share of the net assets of VR and VIA on a proforma basis at 30 June 2016 would increase the Group's gearing from 59% to 66%, whilst the loan to value ratio would reduce from 40% to 39%.

http://www.rns-pdf.londonstockexchange.com/rns/0551F_7-2016-7-22.pdf

Note: The above analysis excludes cash and deposits, the fair value of currency swaps and unamortised bank facility fees which are included in the Group's net debt at 30 June 2016.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks of the business are set out on pages 64 to 67 of the 2015 Annual Report and include commentary on their potential impact, links to the Group's strategic priorities and the relevant mitigating factors.

Other than the general heightening of economic uncertainty following the UK's EU Referendum outcome highlighted on pages 1 and 15, the Board believes that since the publication of the 2015 Annual Report there has been no material change to the Group's principal risks and the existing mitigation actions remain appropriate to manage them. The principal risks fall into eight categories:

1. Business Strategy

· Economic conditions: The macro-economic environment declines, impacting consumer spending and property values

· Retail trends: The Group fails to anticipate and address developments in consumer and occupational markets, such as multi-channel retailing and digital technology

2. Investment Management

· Acquisitions: Investment decisions result in inadequate returns or the adoption of unforeseen liabilities

· Disposals: Opportunities to divest of properties are missed or are constrained by market conditions, adversely impacting returns

3. Property Development

· Development exposure: The Group becomes over-exposed to developments, particularly long-term schemes, increasing the impact of a market downturn and pressure on financing and cash flows

· Development control: Poor control, inadequate resourcing and the failure to achieve key project milestones adversely impacts project viability and corporate reputation

4. Treasury

· Liquidity limitations: Liquidity in the banking market contracts preventing the refinancing of the Group's debt at attractive terms

· Interest rate and foreign exchange exposure: Adverse currency or interest rate movements result in financial losses

· Breach of borrowing covenants: Deterioration in the Group's financial position due to falling property valuations results in a breach of borrowing covenants

5. Ownership Structures

· Liquidity limitations: Joint control reduces liquidity and could impact operational effectiveness if partners are not strategically aligned

· Premium outlet investments: Lack of control over third-party managed investments reduces the transparency of performance and governance and may result in strategic differences

6. Tax and Regulatory

· Tax and regulatory: Legislation changes or loss of tax exempt status adversely impact the Group

7. Catastrophic Event

· Impact of catastrophic event: The Group's operations, reputation or financial security are significantly affected by a major event such as terrorist or cyber attack

· Environmental issues: Climate change impacts the Group's operations through a major incident such as flooding or changes in consumer or investor behaviour

8. Business Organisation and Human Resources

· Management structures and resourcing: The organisation structure or resourcing levels are inappropriate or the Group fails to retain key executives and staff to support the achievement of business objectives

Independent review report to Hammerson plc

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 13. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company 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. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, UK

22 July 2016

Responsibility statement

We confirm that to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting;

· the Interim Management Report, comprising pages 1 to 18 of this Half-year Report, includes a fair review of the information required by DTR 4.2.7R; and

· a fair review of related party transactions, as required by DTR 4.2.8R, is disclosed in note 1 to the accounts.

Signed on behalf of the Board on 22 July 2016

David Atkins	Timon Drakesmith
Director	Director

Consolidated income statement

Year ended 31 December 2015 Audited £m		Notes	Six months ended 30 June 2016 Unaudited £m	Six months ended 30 June 2015 Unaudited £m

236.0	Gross rental income	2	126.3	118.3
166.8	Operating profit before other net gains and share of results of joint ventures and associates	2	91.8	85.6
258.6	Other net gains	2	24.5	103.1
246.8	Share of results of joint ventures	9A	64.9	121.1
160.6	Share of results of associates	10A	39.7	64.4
832.8	Operating profit	2	220.9	374.2

(101.9)	Finance costs		(59.7)	(48.4)
(13.9)	Debt and loan facility cancellation costs		(0.3)	(1.0)
(1.1)	Change in fair value of derivatives		(0.3)	(3.0)
15.7	Finance income		6.6	7.6
(101.2)	Net finance costs	4	(53.7)	(44.8)
731.6	Profit before tax		167.2	329.4

(1.6)	Tax charge	5	(1.1)	(0.6)

730.0	Profit for the period		166.1	328.8

	Attributable to:
726.8	Equity shareholders		162.5	326.1
3.2	Non-controlling interests		3.6	2.7
730.0	Profit for the period		166.1	328.8

92.8p	Basic earnings per share	7A	20.7p	41.6p
92.6p	Diluted earnings per share	7A	20.6p	41.6p
26.9p	Adjusted earnings per share	7A	14.3p	13.6p

Consolidated statement of COMPREHENSIVE income

Year ended 31 December 2015 Audited £m		Six months ended 30 June 2016 Unaudited £m	Six months ended 30 June 2015 Unaudited £m
	Items that may subsequently be recycled through the income statement
(107.5)	Foreign exchange translation differences	406.2	(185.1)
81.9	Net (loss)/gain on hedging activities	(322.8)	159.0
(25.6)		83.4	(26.1)
	Items that may not subsequently be recycled through the income statement
(1.0)	Revaluation losses on participative loans within investment in associates	-	(0.7)
(0.3)	Net actuarial (losses)/gains on pension schemes	(11.8)	1.7
(26.9)	Total other comprehensive income	71.6	(25.1)

730.0	Profit for the period	166.1	328.8

703.1	Total comprehensive income for the period	237.7	303.7

	Attributable to:
703.5	Equity shareholders	225.6	307.3
(0.4)	Non-controlling interests	12.1	(3.6)
703.1	Total comprehensive income for the period	237.7	303.7

Consolidated balance sheet

31 December 2015 Audited £m		Notes	30 June 2016 Unaudited £m	30 June 2015 Unaudited £m
	Non-current assets
4,652.1	Investment and development properties	8	5,063.2	4,433.8
32.1	Interests in leasehold properties		38.4	31.4
7.6	Plant and equipment		7.0	7.6
3,213.6	Investment in joint ventures	9C	3,333.6	2,427.6
768.0	Investment in associates	10C	846.4	691.0
4.8	Other investments		6.7	6.3
92.1	Receivables		56.0	71.0
8,770.3			9,351.3	7,668.7
	Current assets
118.0	Receivables		94.8	91.3
34.0	Restricted monetary assets		35.6	23.4
37.0	Cash and deposits		173.5	23.6
189.0			303.9	138.3
8,959.3	Total assets		9,655.2	7,807.0

	Current liabilities
235.5	Payables		237.4	188.7
0.7	Tax		0.4	0.2
-	Borrowings	11A	29.4	-
236.2			267.2	188.9
	Non-current liabilities
3,028.1	Borrowings	11A	3,496.8	2,255.7
0.5	Deferred tax		0.5	0.5
32.5	Obligations under finance leases		39.2	31.3
75.7	Payables		90.2	72.4
3,136.8			3,626.7	2,359.9
3,373.0	Total liabilities		3,893.9	2,548.8

5,586.3	Net assets		5,761.3	5,258.2

	Equity
196.1	Share capital		198.0	196.1
1,223.3	Share premium		1,258.5	1,223.3
135.1	Translation reserve		532.8	60.2
(125.6)	Hedging reserve		(448.4)	(48.5)
374.1	Merger reserve		374.1	374.2
21.7	Other reserves		21.4	18.4
3,696.5	Retained earnings		3,746.2	3,372.7
(3.9)	Investment in own shares		(0.3)	(4.1)
5,517.3	Equity shareholders' funds		5,682.3	5,192.3
69.0	Non-controlling interests		79.0	65.9
5,586.3	Total equity		5,761.3	5,258.2

£7.03	Diluted net asset value per share	7B	£7.17	£6.62
£7.10	EPRA net asset value per share	7B	£7.27	£6.68

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2016

	Share	Share	Translation	Hedging	Merger	Other	Retained	Investment in own	Equity shareholders'	Non-controlling	Total
	capital	premium	reserve	reserve	reserve	reserves	earnings	shares*	funds	interests	equity
Unaudited	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m

Balance at 1 January 2016	196.1	1,223.3	135.1	(125.6)	374.1	21.7	3,696.5	(3.9)	5,517.3	69.0	5,586.3
Issue of shares	1.9	35.2	-	-	-	-	-	(0.3)	36.8	-	36.8
Share-based employee remuneration	-	-	-	-	-	2.8	-	-	2.8	-	2.8
Cost of shares awarded to employees	-	-	-	-	-	(3.9)	-	3.9	-	-	-
Transfer on award of own shares to employees	-	-	-	-	-	0.8	(0.8)	-	-	-	-
Proceeds on award of own shares to employees	-	-	-	-	-	-	0.1	-	0.1	-	0.1
Dividends	-	-	-	-	-	-	(100.3)	-	(100.3)	(2.1)	(102.4)
Foreign exchange translation differences	-	-	397.7	-	-	-	-	-	397.7	8.5	406.2
Net loss on hedging activities	-	-	-	(322.8)	-	-	-	-	(322.8)	-	(322.8)
Net actuarial losses on pension schemes	-	-	-	-	-	-	(11.8)	-	(11.8)	-	(11.8)
Profit for the period	-	-	-	-	-	-	162.5	-	162.5	3.6	166.1
Total comprehensive income/(loss) for the period	-	-	397.7	(322.8)	-	-	150.7	-	225.6	12.1	237.7

Balance at 30 June 2016	198.0	1,258.5	532.8	(448.4)	374.1	21.4	3,746.2	(0.3)	5,682.3	79.0	5,761.3

* Investment in own shares is stated at cost.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2015

	Share	Share	Translation	Hedging	Merger	Other	Retained	Investment in own	Equity shareholders'	Non-controlling	Total
	capital	premium	reserve	reserve	reserve	reserves	earnings	shares*	funds	interests	equity
Unaudited	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m

Balance at 1 January 2015	196.1	1,222.9	239.0	(207.5)	374.2	19.6	3,136.2	(6.8)	4,973.7	71.4	5,045.1
Issue of shares	-	0.4	-	-	-	-	-	-	0.4	-	0.4
Share-based employee remuneration	-	-	-	-	-	1.6	-	-	1.6	-	1.6
Cost of shares awarded to employees	-	-	-	-	-	(2.7)	-	2.7	-	-	-
Transfer on award of own shares to employees	-	-	-	-	-	(0.1)	0.1	-	-	-	-
Proceeds on award of own shares to employees	-	-	-	-	-	-	0.1	-	0.1	-	0.1
Dividends	-	-	-	-	-	-	(90.8)	-	(90.8)	(1.9)	(92.7)
Foreign exchange translation differences	-	-	(178.8)	-	-	-	-	-	(178.8)	(6.3)	(185.1)
Net gain on hedging activities	-	-	-	159.0	-	-	-	-	159.0	-	159.0
Revaluation losses on participative loans within investment in associates	-	-	-	-	-	-	(0.7)	-	(0.7)	-	(0.7)
Net actuarial gains on pension schemes	-	-	-	-	-	-	1.7	-	1.7	-	1.7
Profit for the period	-	-	-	-	-	-	326.1	-	326.1	2.7	328.8
Total comprehensive income/(loss) for the period	-	-	(178.8)	159.0	-	-	327.1	-	307.3	(3.6)	303.7

Balance at 30 June 2015	196.1	1,223.3	60.2	(48.5)	374.2	18.4	3,372.7	(4.1)	5,192.3	65.9	5,258.2

* Investment in own shares is stated at cost.

CONSOLIDATED STATEMENT OF CHANGES IN EQUIty

Year ended 31 December 2015

								Investment	Equity	Non-
	Share	Share	Translation	Hedging	Merger	Other	Retained	in own	shareholders'	controlling	Total
	capital	premium	reserve	reserve	reserve	reserves	earnings	shares*	funds	interests	equity
Audited	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m

Balance at 1 January 2015	196.1	1,222.9	239.0	(207.5)	374.2	19.6	3,136.2	(6.8)	4,973.7	71.4	5,045.1
Issue of shares	-	0.4	-	-	-	-	-	-	0.4	-	0.4
Share issue costs	-	-	-	-	(0.1)	-	-	-	(0.1)	-	(0.1)
Share-based employee remuneration	-	-	-	-	-	4.8	-	-	4.8	-	4.8
Cost of shares awarded to employees	-	-	-	-	-	(2.9)	-	2.9	-	-	-
Transfer on award of own shares to employees	-	-	-	-	-	0.2	(0.2)	-	-	-	-
Proceeds on award of own shares to employees	-	-	-	-	-	-	0.2	-	0.2	-	0.2
Dividends	-	-	-	-	-	-	(165.2)	-	(165.2)	(2.0)	(167.2)
Foreign exchange translation differences	-	-	(103.9)	-	-	-	-	-	(103.9)	(3.6)	(107.5)
Net gain on hedging activities	-	-	-	81.9	-	-	-	-	81.9	-	81.9
Revaluation losses on participative loans within investment in associates	-	-	-	-	-	-	(1.0)	-	(1.0)	-	(1.0)
Net actuarial losses on pension schemes	-	-	-	-	-	-	(0.3)	-	(0.3)	-	(0.3)
Profit for the year	-	-	-	-	-	-	726.8	-	726.8	3.2	730.0
Total comprehensive income/(loss) for the year	-	-	(103.9)	81.9	-	-	725.5	-	703.5	(0.4)	703.1
Balance at 31 December 2015	196.1	1,223.3	135.1	(125.6)	374.1	21.7	3,696.5	(3.9)	5,517.3	69.0	5,586.3

* Investment in own shares is stated at cost.

Consolidated cash flow statement

Year ended 31 December 2015 Audited £m		Notes	Six months ended 30 June 2016 Unaudited £m	Six months ended 30 June 2015 Unaudited £m
	Operating activities
166.8	Operating profit before other net gains and share of results of joint ventures and associates	2	91.8	85.6
(0.3)	Decrease/(Increase) in receivables		0.2	(10.2)
(22.7)	Decrease/(Increase) in restricted monetary assets		0.9	(12.1)
27.2	Increase in payables		8.8	10.0
6.3	Adjustment for non-cash items		19.3	6.1
177.3	Cash generated from operations		121.0	79.4

(104.0)	Interest paid		(74.0)	(51.4)
8.6	Interest received		6.6	7.5
(1.1)	Tax paid		(1.4)	(0.6)
90.4	Distributions and other receivables from joint ventures		55.0	43.5
171.2	Cash flows from operating activities		107.2	78.4

	Investing activities
(43.7)	Property acquisitions		(387.3)	(23.1)
(137.2)	Development and major refurbishments		(56.4)	(62.5)
(45.1)	Other capital expenditure		(34.9)	(25.7)
185.2	Sale of properties		297.4	66.5
(690.2)	Acquisition of Irish loan portfolio		-	-
(36.6)	Acquisition of interest in associates		(2.0)	(24.2)
(4.8)	Acquisition of other investments		(1.9)	(4.9)
44.5	Distribution received from associates		7.4	3.5
(45.4)	Decrease/(Increase) in advances to joint ventures		2.8	(36.3)
(17.1)	Decrease/(Increase) in non-current receivables		45.4	(8.6)
(790.4)	Cash flows from investing activities		(129.5)	(115.3)

	Financing activities
0.4	Issue of shares		0.1	0.4
0.2	Proceeds from award of own shares		0.1	0.1
(13.9)	Debt and loan facility cancellation costs	4	(0.3)	(1.0)
1,319.0	Proceeds from new borrowings		1,018.3	349.7
(511.4)	Repayment of borrowings		(790.3)	(215.6)
(2.0)	Dividends paid to non-controlling interests		(2.1)	(1.9)
(163.8)	Equity dividends paid	6	(69.6)	(98.2)
628.5	Cash flows from financing activities		156.2	33.5

9.3	Net increase/(decrease) in cash and deposits		133.9	(3.4)
28.6	Opening cash and deposits		37.0	28.6
(0.9)	Exchange translation movement		2.6	(1.6)
37.0	Closing cash and deposits		173.5	23.6

An analysis of the movement in net debt is provided in note 13 on page 40.

Notes to the accounts

1. FINANCIAL INFORMATION

The information for the year ended 31 December 2015 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's 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 annual financial statements of Hammerson plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this Half-year Report has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union.

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in Hammerson's latest annual audited financial statements.

Transactions with joint ventures including distributions, interest and management fees are eliminated on a proportionate basis.

The Group's financial performance is not seasonal. There have been no changes in estimates of amounts reported in prior periods which have a material impact on the current half-year period. There have been no material changes in contingent liabilities since 31 December 2015.

The principal exchange rates used to translate foreign currency denominated amounts are:

Balance Sheet: £1 = €1.208 (30 June 2015: £1 = €1.412; 31 December 2015: £1 = €1.357)

Income Statement: £1 = €1.284 (30 June 2015: £1 = €1.366; 31 December 2015: £1 = €1.378).

The Half-year Report was approved by the Board on 22 July 2016.

Going Concern

Hammerson's business activities, together with factors likely to affect its future development, performance, and position are set out in the 'Business Review', the 'Financial Review' and the 'Principal Risks and Uncertainties'. The financial position of the Group, its liquidity position and borrowing facilities are described in the 'Business Review', the 'Financial Review' and in the notes to the accounts.

The Directors have reviewed the current and projected financial position of the Group, making reasonable assumptions about future trading performance. As part of the review, the Directors considered the Group's cash balances, its debt maturity profile, including undrawn facilities, and the long-term nature of tenant leases. After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Half-year Report.

2. PROFIT FOR THE PERIOD

The following tables show the Group's profit for the period on a proportionally consolidated basis by aggregating the Reported Group results (shown in column A) with those from its share of Property interests (shown in column B), the latter being reallocated to the relevant financial statement lines. The Group's share of results arising from its interests in premium outlets has not been reallocated as management does not review these interests on a proportionally consolidated basis (see note 3) and these are therefore not included in the Group's share of Property interests. The Group's proportionally consolidated profit for the period in column C is then allocated between 'Adjusted' and 'Capital and other' for the purposes of calculating figures in accordance with EPRA best practice.

			Six months ended 30 June 2016
						Proportionally consolidated

			Reported Group	Share of Property interests	Proportionally consolidated	Adjusted	Capital and other
		Notes	£m	£m	£m	£m	£m
Notes			A	B	C	D	D
Gross rental income^E		3A	126.3	65.9	192.2	192.2	-
Ground and equity rents payable			(0.6)	(1.4)	(2.0)	(2.0)	-
Gross rental income, after rents payable			125.7	64.5	190.2	190.2	-
Service charge income			22.1	12.4	34.5	34.5	-
Service charge expenses			(26.4)	(15.5)	(41.9)	(41.9)	-
Net service charge expenses			(4.3)	(3.1)	(7.4)	(7.4)	-
Other property outgoings			(8.8)	(6.3)	(15.1)	(15.1)	-
Property outgoings			(13.1)	(9.4)	(22.5)	(22.5)	-

Net rental income		3A	112.6	55.1	167.7	167.7	-

Management fees receivable			3.3	-	3.3	3.3	-
Employee and corporate costs			(24.1)	(0.2)	(24.3)	(24.3)	-
Administration expenses			(20.8)	(0.2)	(21.0)	(21.0)	-
Operating profit before other net gains and share of results of joint ventures and associates			91.8	54.9	146.7	146.7	-
Loss on the sale of properties			(12.6)	-	(12.6)	-	(12.6)
Revaluation gains/(losses) on properties		3B	37.1	(7.6)	29.5	-	29.5
Other net gains			24.5	(7.6)	16.9	-	16.9

Share of results of joint ventures		9A, 9B	64.9	(58.3)	6.6	2.3	4.3
Share of results of associates	10A, 10B		39.7	(0.8)	38.9	8.1	30.8
Operating profit/(loss)			220.9	(11.8)	209.1	157.1	52.0

Net finance (costs)/income		4	(53.7)	12.0	(41.7)	(41.7)	-
Profit before tax			167.2	0.2	167.4	115.4	52.0
Current tax charge		5	(1.1)	(0.2)	(1.3)	(1.3)	-
Profit for the period			166.1	-	166.1	114.1	52.0
Non-controlling interests			(3.6)	-	(3.6)	(1.5)	(2.1)
Profit for the period attributable to equity shareholders		7A	162.5	-	162.5	112.6	49.9

Notes

A Reported Group results as shown in the consolidated income statement on page 20.

B Property interests reflect the Group's share of results of Property joint ventures as shown in note 9A and Nicetoile included within note 10A.

C Aggregated results on a proportionally consolidated basis showing Reported Group together with share of Property interests.

D Aggregated results on a proportionally consolidated basis allocated between 'Adjusted' and 'Capital and other' for the purposes of calculating adjusted earnings per share

as shown in note 7A.

E Included in gross rental income on a proportionally consolidated basis is £4.5 million (30 June 2015: £3.2 million; 31 December 2015: £6.6 million) of contingent rents

calculated by reference to tenants' turnover.

		Six months ended 30 June 2015
					Proportionally consolidated
		Reported Group	Share of Property interests	Proportionally consolidated	Adjusted	Capital and other
	Notes	£m	£m	£m	£m	£m
Notes (see page 28)		A	B	C	D	D
Gross rental income^E	3A	118.3	62.9	181.2	181.2	-
Ground and equity rents payable		(0.7)	(0.8)	(1.5)	(1.5)	-
Gross rental income, after rents payable		117.6	62.1	179.7	179.7	-
Service charge income		20.6	11.3	31.9	31.9	-
Service charge expenses		(24.7)	(13.5)	(38.2)	(38.2)	-
Net service charge expenses		(4.1)	(2.2)	(6.3)	(6.3)	-
Other property outgoings		(7.9)	(6.0)	(13.9)	(13.9)	-
Property outgoings		(12.0)	(8.2)	(20.2)	(20.2)	-

Net rental income	3A	105.6	53.9	159.5	159.5	-

Management fees receivable		2.9	-	2.9	2.9	-
Employee and corporate costs		(22.9)	(0.1)	(23.0)	(23.0)	-
Administration expenses		(20.0)	(0.1)	(20.1)	(20.1)	-
Operating profit before other net gains and share of results of joint ventures and associates		85.6	53.8	139.4	139.4	-
Profit on the sale of properties		2.8	-	2.8	-	2.8
Revaluation gains on properties	3B	100.3	63.0	163.3	-	163.3
Other net gains		103.1	63.0	166.1	-	166.1

Share of results of joint ventures	9A	121.1	(115.9)	5.2	3.7	1.5
Share of results of associates	10A	64.4	(0.3)	64.1	7.1	57.0
Operating profit		374.2	0.6	374.8	150.2	224.6

Net finance costs	4	(44.8)	(0.6)	(45.4)	(42.0)	(3.4)
Profit before tax		329.4	-	329.4	108.2	221.2
Current tax charge	5	(0.6)	-	(0.6)	(0.6)	-
Profit for the period		328.8	-	328.8	107.6	221.2
Non-controlling interests		(2.7)	-	(2.7)	(1.4)	(1.3)
Profit for the period attributable to equity shareholders	7A	326.1	-	326.1	106.2	219.9

		Year ended 31 December 2015
					Proportionally consolidated
		Reported Group	Share of Property interests	Proportionally consolidated	Adjusted	Capital and other
	Notes	£m	£m	£m	£m	£m
Notes (see page 28)		A	B	C	D	D
Gross rental income^E	3A	236.0	130.4	366.4	366.4	-
Ground and equity rents payable		(1.3)	(2.4)	(3.7)	(3.7)	-
Gross rental income, after rents payable		234.7	128.0	362.7	362.7	-
Service charge income		41.4	21.7	63.1	63.1	-
Service charge expenses		(49.8)	(26.6)	(76.4)	(76.4)	-
Net service charge expenses		(8.4)	(4.9)	(13.3)	(13.3)	-
Other property outgoings		(17.5)	(13.3)	(30.8)	(30.8)	-
Property outgoings		(25.9)	(18.2)	(44.1)	(44.1)	-

Net rental income	3A	208.8	109.8	318.6	318.6	-

Management fees receivable/(payable)		6.1	(0.1)	6.0	6.0	-
Employee and corporate costs		(48.1)	(0.2)	(48.3)	(48.3)	-
Administration expenses		(42.0)	(0.3)	(42.3)	(42.3)	-
Operating profit before other net gains/(losses) and share of results of joint ventures and associates		166.8	109.5	276.3	276.3	-
Gain on the sale of properties		14.9	-	14.9	-	14.9
Investment costs written off		(1.4)	-	(1.4)	-	(1.4)
Revaluation gains on properties	3B	245.1	122.4	367.5	-	367.5
Other net gains		258.6	122.4	381.0	-	381.0

Share of results of joint ventures	9A	246.8	(233.7)	13.1	6.1	7.0
Share of results of associates	10A	160.6	(1.3)	159.3	17.1	142.2
Operating profit		832.8	(3.1)	829.7	299.5	530.2

Net finance (costs)/income	4	(101.2)	3.1	(98.1)	(84.1)	(14.0)
Profit before tax		731.6	-	731.6	215.4	516.2
Current tax charge	5	(1.6)	-	(1.6)	(1.6)	-
Profit for the year		730.0	-	730.0	213.8	516.2
Non-controlling interests		(3.2)	-	(3.2)	(2.9)	(0.3)
Profit for the year attributable to equity shareholders	7A	726.8	-	726.8	210.9	515.9

3. SEGMENTAL ANALYSIS

The factors used to determine the Group's reportable segments are the geographic locations, UK and France, and the sectors in which it operates, which are generally managed by separate teams and are the basis on which performance is assessed and resources allocated. Gross rental income represents the Group's revenue from its tenants and customers. Net rental income is the principal profit measure used to determine the performance of each sector. Total assets are not monitored by segment and resource allocation is based on the distribution of property assets between segments.

As stated in the Financial Review on page 11, management reviews the business principally on a proportionally consolidated basis, except for its interests in premium outlets held through its investments in Value Retail and VIA Outlets, where the Group has less day-to-day involvement in the financial performance and which have different operational characteristics compared with the Group's property portfolio. The segmental analysis has been prepared on the basis that management uses to review the business, rather than on a statutory basis. Property interests represent the Group's non-wholly owned properties which management proportionally consolidate when reviewing the performance of the business. For reconciliation purposes the Reported Group figures, being wholly-owned properties, are shown in the following tables.

As explained on pages 11 and 15 of the Financial Review, in October 2015, the Group acquired an Irish loan portfolio secured on retail properties located in Ireland in a 50:50 joint venture and the property ownership had not transferred from the borrowers by 30 June 2016. The loan portfolio did not generate any rental income in 2015 or 2016, and at 31 December 2015 and 30 June 2016, the loan portfolio was included within the Group's Investment in joint ventures, and is shown as a current receivable of the joint venture in note 9C to the accounts. It is therefore not included in notes 3A and 3B.

A. Revenue and profit by segment

Year ended 31 December 2015				Six months ended 30 June 2016			Six months ended 30 June 2015
Gross rental income	Net rental income	Non-cash items within net rental income		Gross rental income	Net rental income	Non-cash items within net rental income	Gross rental income	Net rental income	Non-cash items within net rental income
£m	£m	£m		£m	£m	£m	£m	£m	£m
			United Kingdom
162.0	138.8	(3.8)	Shopping centres	85.0	73.5	-	78.6	68.7	(1.3)
86.2	82.0	-	Retail parks	45.4	42.3	(1.5)	43.8	41.6	(0.1)
13.8	9.6	-	Other	7.1	5.0	-	6.6	4.5	-
262.0	230.4	(3.8)	Total	137.5	120.8	(1.5)	129.0	114.8	(1.4)

95.9	83.0	2.0	France	49.4	44.0	0.8	48.8	42.7	1.4
357.9	313.4	(1.8)	Total investment portfolio	186.9	164.8	(0.7)	177.8	157.5	-
8.5	5.2	-	Developments	5.3	2.9	-	3.4	2.0	-
366.4	318.6	(1.8)	Total property portfolio	192.2	167.7	(0.7)	181.2	159.5	-
(130.4)	(109.8)	0.9	Less share of Property interests	(65.9)	(55.1)	0.7	(62.9)	(53.9)	-
236.0	208.8	(0.9)	Reported Group	126.3	112.6	-	118.3	105.6	-

The non-cash items included within net rental income relate to the amortisation of lease incentives and other costs and movements in accrued rents receivable.

B. Investment and development property assets by segment

31 December 2015				30 June 2016			30 June 2015
Property valuation	Capital expenditure	Revaluation gains		Property valuation	Capital expenditure	Revaluation gains/ (losses)	Property valuation	Capital expenditure	Revaluation gains/ (losses)
£m	£m	£m		£m	£m	£m	£m	£m	£m
			United Kingdom
3,064.9	10.7	194.9	Shopping centres	3,331.9	355.0	(13.5)	2,948.4	2.4	86.8
1,656.0	54.2	19.0	Retail parks	1,525.6	11.3	(37.9)	1,606.5	25.8	(2.2)
160.3	23.5	1.4	Other	157.7	-	(2.8)	185.3	23.0	2.0
4,881.2	88.4	215.3	Total	5,015.2	366.3	(54.2)	4,740.2	51.2	86.6

1,860.5	54.8	116.6	France	2,070.1	46.3	65.1	1,734.3	33.5	59.6
6,741.7	143.2	331.9	Total investment portfolio	7,085.3	412.6	10.9	6,474.5	84.7	146.2
388.8	169.8	35.6	Developments	481.3	71.3	18.6	354.3	94.9	17.1
7,130.5	313.0	367.5	Total property portfolio	7,566.6	483.9	29.5	6,828.8	179.6	163.3
(2,478.4)	(95.1)	(122.4)	Less share of Property interests	(2,503.4)	(11.1)	7.6	(2,395.0)	(76.3)	(63.0)
4,652.13	217.9	245.1	Reported Group	5,063.2	472.8	37.1	4,433.8	103.3	100.3

4. NET FINANCE COSTS

		Six months	Six months
Year ended		ended	ended
31 December		30 June	30 June
2015		2016	2015
£m		£m	£m
10.6	Interest on bank loans and overdrafts	10.0	4.8
93.2	Interest on other borrowings	49.7	45.0
1.8	Interest on obligations under finance leases	1.0	0.6
1.6	Other interest payable	1.3	0.8
107.2	Gross interest costs	62.0	51.2
(5.3)	Less: Interest capitalised	(2.3)	(2.8)
101.9	Finance costs	59.7	48.4
13.9	Debt and loan facility cancellation costs	0.3	1.0
1.1	Change in fair value of derivatives	0.3	3.0

(15.7)	Finance income	(6.6)	(7.6)

101.2	Net finance costs	53.7	44.8

5. TAX CHARGE

		Six months	Six months
Year ended		ended	ended
31 December		30 June	30 June
2015		2016	2015
£m		£m	£m
-	UK current tax	0.2	-
1.6	Foreign current tax	0.9	0.6
1.6	Current tax charge	1.1	0.6
-	Deferred tax charge	-	-
1.6	Tax charge	1.1	0.6

Current tax is reduced by the UK REIT and French SIIC exemptions.

6. DIVIDENDS

The Directors have declared an interim dividend of 10.1 pence per share, an increase of 6.3% compared with the 2015 interim dividend of 9.5 pence. The interim dividend is payable on 10 October 2016 to shareholders on the register at the close of business on 26 August 2016. The dividend will be paid entirely as a cash PID, net of withholding tax where appropriate. The Company will also be offering a scrip dividend alternative and for shareholders who elect to receive this, the dividend will also be treated as a PID, net of withholding tax where appropriate.

				Equity dividends
	PID pence	Non-PID pence	Total pence	Six months ended 30 June 2016	Year ended 31 December 2015	Six months ended 30 June 2015
	per share	per share	per share	£m	£m	£m
Current period
2016 interim dividend	10.1	-	10.1	-	-	-

Prior periods
2015 final dividend	6.4	6.4	12.8	100.3	-	-
2015 interim dividend	9.5	-	9.5	-	74.4	-
	15.9	6.4	22.3
2014 final dividend				-	90.8	90.8
Dividends as reported in the consolidated statement of changes in equity				100.3	165.2	90.8
2014 interim dividend withholding tax (paid January 2015)				-	9.8	9.8
2014 final dividend withholding tax (paid July 2015)				-	-	(2.4)
2015 interim dividend withholding tax (paid January 2016)				11.2	(11.2)	-
2015 final dividend withholding tax (paid July 2016)				(5.2)	-	-
2015 final dividend non-PID scrip alternative				(36.7)	-	-
Dividends paid as reported in the consolidated cash flow statement				69.6	163.8	98.2

7. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE

The European Public Real Estate Association (EPRA) has issued recommended bases for the calculation of certain per share information and these are included in the following tables A and B. Commentary on earnings and net asset value per share is provided in the Financial Review on pages 11 to 17.

A. Earnings per share

Year ended					Six months ended		Six months ended
31 December 2015					30 June 2016		30 June 2015
	Pence					Pence		Pence
Earnings	per				Earnings	per	Earnings	per
£m	share			Notes	£m	share	£m	share
726.8	92.8	Basic		2	162.5	20.7	326.1	41.6
-	(0.2)	Dilutive share options			-	(0.1)	-	-
726.8	92.6	Diluted			162.5	20.6	326.1	41.6
		Adjustments:
(245.1)	(31.2)	Revaluation (gains)/losses on properties:	Reported Group	2	(37.1)	(4.7)	(100.3)	(12.8)
(122.4)	(15.6)		Property interests	2	7.6	1.0	(63.0)	(8.0)
(367.5)	(46.8)				(29.5)	(3.7)	(163.3)	(20.8)

(14.9)	(1.9)	Loss/(Gain) on sale of properties:	Reported Group	2	12.6	1.6	(2.8)	(0.3)
13.9	1.8	Debt and loan facility cancellation costs:	Reported Group	4	0.3	-	1.0	0.1

1.1	0.1	Change in fair value of derivatives:	Reported Group	4	0.3	-	3.0	0.4
(1.0)	(0.1)		Property interests	9B	(0.6)	(0.1)	(0.6)	(0.1)
0.1	-				(0.3)	(0.1)	2.4	0.3
		Other adjustments:	Reported Group:
1.4	0.2		Fixed asset investment written off	2	-	-	-	-
0.3	-		Non-controlling interests	2	2.1	0.3	1.3	0.2
1.7	0.2				2.1	0.3	1.3	0.2

(174.1)	(22.2)	Premium outlets*:	Revaluation gains on properties	9B, 10B	(48.0)	(6.1)	(69.8)	(8.9)
27.6	3.5		Deferred tax	9B, 10B	7.6	1.0	11.3	1.4
(0.6)	(0.1)		Other adjustments	9B, 10B	5.3	0.7	2.9	0.4
(147.1)	(18.8)				(35.1)	(4.4)	(55.6)	(7.1)
(513.8)	(65.5)	Total adjustments			(49.9)	(6.3)	(217.0)	(27.6)
213.0	27.1	EPRA			112.6	14.3	109.1	14.0
(2.1)	(0.2)	Other adjustments	Premium outlets*	9B	-	-	(2.9)	(0.4)
210.9	26.9	Adjusted			112.6	14.3	106.2	13.6

		Number of shares for earnings per share calculation
	Shares million					Shares million		Shares million
	783.6	Basic				786.4		783.4
	784.7	Diluted, EPRA and Adjusted				787.7		783.6

^* Adjustments in respect of Premium outlets include VIA Outlets (note 9B) and Value Retail (note 10B).

The calculations for earnings per share use the weighted average number of shares, which excludes those shares held in the Hammerson Employee Share Ownership Plan, which are treated as cancelled.

B. Net asset value per share

31 December				30 June	30 June
2015				2016	2015
Net asset		Equity		Net asset	Net asset
value		shareholders'		value	value
per share		funds	Shares	per share	per share
£		£m	million	£	£
7.03	Basic	5,682.3	791.9	7.18	6.62
n/a	Company's own shares held in Employee Share Ownership Plan	-	(1.0)	n/a	n/a
n/a	Dilutive share schemes	1.3	1.7	n/a	n/a
7.03	Diluted	5,683.6	792.6	7.17	6.62
	Fair value adjustment to borrowings
(0.29)	- Reported Group	(308.6)		(0.39)	(0.31)
-	- Property interests	(0.1)		-	-
(0.29)		(308.7)		(0.39)	(0.31)
6.74	EPRA triple net	5,374.9		6.78	6.31
0.29	Fair value adjustment to borrowings	308.7		0.39	0.31
-	Deferred tax	0.5		-	-
	Fair value of derivatives
(0.02)	- Reported Group	(13.6)		(0.01)	-
-	- Property interests	0.5		-	-
(0.02)		(13.1)		(0.01)	-
	Premium outlets*
-	- Fair value of derivatives	5.4		-	0.01
0.14	- Deferred tax	134.8		0.17	0.11
(0.05)	- Goodwill as a result of deferred tax	(50.4)		(0.06)	(0.06)
0.09		89.8		0.11	0.06
7.10	EPRA	5,760.8	792.6	7.27	6.68

8. INVESTMENT AND DEVELOPMENT PROPERTIES

	Investment	Development
	properties	properties	Total
	Valuation	Valuation	Valuation
	£m	£m	£m

Balance at 1 January 2016	4,418.9	233.2	4,652.1
Exchange adjustment	208.0	0.3	208.3
Additions
- Capital expenditure	31.2	54.3	85.5
- Asset acquisitions	377.8	9.5	387.3
	409.0	63.8	472.8
Disposals	(309.4)	-	(309.4)
Capitalised interest	-	2.3	2.3
Revaluation	18.0	19.1	37.1
Balance at 30 June 2016	4,744.5	318.7	5,063.2

Properties are stated at fair value as at 30 June 2016, valued by professionally qualified external valuers. DTZ Debenham Tie Leung, Chartered Surveyors have valued the Group's properties, excluding those held by the Group's premium outlet investments which have been valued by Cushman & Wakefield LLP, Chartered Surveyors. All valuations have been prepared in accordance with the RICS Valuation - Professional Standards 2014.

Real estate valuations are complex and derived from data that is not widely publicly available and involves a degree of judgement. For these reasons, the valuations are classified as Level 3 in the fair value hierarchy as defined by IFRS 13. The valuations are sensitive to changes in rental and yield data. The potential impact on valuations following the recent EU Referendum is described on page 35.

At 30 June 2016 the investment properties shown above included one property for which a sale contract has been exchanged in July, with a total value of £77 million, with completion due later this year.

Valuation Uncertainty

In their valuation reports, the Group's external valuers have included statements that the probability of their opinion of value exactly coinciding with the price achieved, were there to be a sale, has reduced after the EU Referendum result. Valuations will be kept under regular review and the valuers will be able to better judge the impact on property values at the next formal valuation in December 2016.

9. INVESTMENT IN JOINT VENTURES

The Group has investments in a number of jointly controlled property and corporate interests, which are equity accounted.

As explained in note 3, management reviews the business principally on a proportionally consolidated basis, except for its premium outlet investments. The tables below split the Group's share of joint ventures under IFRS between Property joint ventures, being joint ventures which, for review purposes, management proportionally consolidates, and VIA Outlets, a premium outlets investment, which is not proportionally consolidated.

A. Share of results of joint ventures


Year ended				Six months ended	Six months ended
31 December		Property		30 June	30 June
2015		joint	VIA	2016	2015
Total		ventures	Outlets	Total	Total
£m		£m	£m	£m	£m
142.9	Gross rental income	65.1	6.4	71.5	69.1
118.6	Net rental income	54.4	4.4	58.8	58.6
(2.0)	Administration expenses	(0.2)	(1.0)	(1.2)	(0.5)
116.6	Operating profit before other net gains/(losses)	54.2	3.4	57.6	58.1
(0.8)	Loss on sale of properties	-	-	-	-
132.5	Revaluation (losses)/gains on properties	(7.7)	5.8	(1.9)	66.5
248.3	Operating profit	46.5	9.2	55.7	124.6

(1.2)	Change in fair value of derivatives	0.6	0.1	0.7	(3.1)
2.1	Translation movement on intragroup funding loan	-	-	-	2.9
0.2	Other finance income/(costs)	11.4	(0.9)	10.5	(2.2)
1.1	Net finance income/(costs)	12.0	(0.8)	11.2	(2.4)
249.4	Profit before tax	58.5	8.4	66.9	122.2
(0.1)	Current tax charge	(0.2)	(0.2)	(0.4)	(0.1)
(2.5)	Deferred tax charge	-	(1.6)	(1.6)	(1.0)
246.8	Profit for the period	58.3	6.6	64.9	121.1

B. Reconciliation to adjusted earnings


Year ended			Six months ended	Six months ended
31 December	Property		30 June	30 June
2015	joint	VIA	2016	2015
Total	ventures	Outlets	Total	Total
£m	£m	£m	£m	£m

246.8	Profit for the period	58.3	6.6	64.9	121.1
0.8	Loss on sale of properties	-	-	-	-
(132.5)	Revaluation losses/(gains) on properties	7.7	(5.8)	1.9	(66.5)
1.2	Change in fair value of derivatives	(0.6)	(0.1)	(0.7)	3.1
(2.1)	Translation movement on intragroup funding loan	-	-	-	(2.9)
2.5	Deferred tax charge	-	1.6	1.6	1.0
(130.1)	Total adjustments	7.1	(4.3)	2.8	(65.3)
116.7	Adjusted earnings of joint ventures	65.4	2.3	67.7	55.8

C. Share of assets and liabilities of joint ventures


Year ended				Six months ended	Six months ended
31 December		Property		30 June	30 June
2015		joint	VIA	2016	2015
Total		ventures	Outlets	Total	Total
£m		£m	£m	£m	£m
	Non-current assets
2,603.7	Investment and development properties	2,477.0	177.5	2,654.5	2,513.9
3.0	Goodwill	-	3.4	3.4	2.9
9.4	Interests in leasehold properties	9.4	-	9.4	9.4
-	Other non-current assets	0.1	-	0.1	0.5
2,616.1		2,486.5	180.9	2,667.4	2,526.7
	Current assets
730.6	Other current assets*	805.6	4.8	810.4	34.2
40.3	Cash and deposits	37.5	7.4	44.9	34.7
770.9		843.1	12.2	855.3	68.9
3,387.0	Total assets	3,329.6	193.1	3,522.7	2,595.6

	Current liabilities
(74.9)	Other payables	(68.0)	(9.1)	(77.1)	(71.9)
(40.2)	Borrowings - secured	-	(1.0)	(1.0)	-
(115.1)		(68.0)	(10.1)	(78.1)	(71.9)

	Non-current liabilities
(34.2)	Borrowings - secured	(45.3)	(37.9)	(83.2)	(71.8)
(9.4)	Obligations under finance leases	(9.4)	-	(9.4)	(9.4)
(8.4)	Other payables	(4.8)	(4.8)	(9.6)	(10.3)
(6.3)	Deferred tax	-	(8.8)	(8.8)	(4.6)
(58.3)		(59.5)	(51.5)	(111.0)	(96.1)
(173.4)	Total liabilities	(127.5)	(61.6)	(189.1)	(168.0)

3,213.6	Net assets	3,202.1	131.5	3,333.6	2,427.6

* Other current assets include the Irish loan assets which were acquired in October 2015 and total €936 million (£775 million; Dec-15: £690 million). On 7 July 2016, a consensual agreement was reached with the borrowers to transfer the underlying properties. Further details are provided on page 15 of the Financial Review.

D. Reconciliation to EPRA adjusted investment in joint ventures


Year ended			Six months ended	Six months ended
31 December	Property		30 June	30 June
2015	joint	VIA	2016	2015
Total	ventures	Outlets	Total	Total
£m	£m	£m	£m	£m

3,213.6	Investment in joint ventures	3,202.1	131.5	3,333.6	2,427.6
4.4	Fair value of derivatives	0.5	4.0	4.5	5.5
6.3	Deferred tax	-	8.8	8.8	4.6
(3.0)	Goodwill as a result of deferred tax	-	(3.4)	(3.4)	(2.9)
7.7	EPRA adjustments	0.5	9.4	9.9	7.2
3,221.3	EPRA adjusted investment in joint ventures	3,202.6	140.9	3,343.5	2,434.8

E. Reconciliation of movements in investment in joint ventures


Year ended		Six months ended	Six months ended
31 December		30 June	30 June
2015		2016	2015
£m		£m	£m
2,341.5	Balance at beginning of period	3,213.6	2,341.5
690.2	Acquisitions	-	-
(11.0)	Transfer of investment property on acquisition by Reported Group	-	(11.0)
246.8	Share of results of joint ventures	64.9	121.1
(92.0)	Distributions and other receivables	(52.8)	(41.3)
45.4	(Repayments)/Advances	(2.8)	39.1
1.6	Other movements	(2.4)	(5.1)
(8.9)	Foreign exchange translation differences	113.1	(16.7)
3,213.6	Balance at end of period	3,333.6	2,427.6

10. INVESTMENT IN ASSOCIATES

At 30 June 2016, the Group had two associates: Value Retail PLC and its group entities ('VR') and a 10% interest in Nicetoile, which was acquired in January 2015 and where Hammerson is the asset manager. Both investments are equity accounted under IFRS, although the shares of results in Nicetoile are included within the Group's Property interests when presenting figures on a proportionally consolidated basis. The figures presented below show the Group's share of results, assets and liabilities for these investments.

A. Share of results of associates

Year ended				Six months	Six months
31 December				ended	ended
2015				30 June 2016	30 June 2015
Total		VR	Nicetoile	Total	Total
£m		£m	£m	£m	£m
74.0	Gross rental income	38.5	0.8	39.3	33.8
56.8	Net rental income	25.3	0.7	26.0	26.8
(27.4)	Administration and other expenses	(10.9)	-	(10.9)	(14.9)
29.4	Operating profit before other net gains	14.4	0.7	15.1	11.9

164.0	Revaluation gains on properties	42.2	0.1	42.3	66.3
193.4	Operating profit	56.6	0.8	57.4	78.2

(13.1)	Net finance costs	(7.3)	-	(7.3)	(4.4)
(7.5)	Change in fair value of derivatives	(18.6)	-	(18.6)	0.1
12.6	Change in fair value of participative loans - revaluation movement	13.2	-	13.2	0.7
2.6	Change in fair value of participative loans - other movement	2.0	-	2.0	1.4
188.0	Profit before tax	45.9	0.8	46.7	76.0

(2.3)	Current tax charge	(1.0)	-	(1.0)	(1.3)
(25.1)	Deferred tax charge	(6.0)	-	(6.0)	(10.3)
160.6	Profit for the period	38.9	0.8	39.7	64.4

B. Reconciliation to adjusted earnings

Year ended		Six months			Six months
31 December		ended			ended
2015		30 June 2016			30 June 2015
Total		VR	Nicetoile	Total	Total
£m		£m	£m	£m	£m
160.6	Profit for the period	38.9	0.8	39.7	64.4
(164.0)	Revaluation gains on properties	(42.2)	(0.2)	(42.4)	(66.3)
7.5	Change in fair value of derivatives	18.6	-	18.6	(0.1)
(12.6)	Change in fair value of participative loans - revaluation movement	(13.2)	-	(13.2)	(0.7)
1.5	Loan facility costs written off	-	-	-	-
25.1	Deferred tax charge	6.0	-	6.0	10.3
(142.5)	Total adjustments	(30.8)	(0.2)	(31.0)	(56.8)
18.1	Adjusted earnings of associates	8.1	0.6	8.7	7.6

When aggregated, the Group's share of VR's operating profit before other net gains for the six months ended 30 June 2016 amounted to 31.9% (31 December 2015: 36.2%; 30 June 2015: 37.7%).

C. Share of assets and liabilities of associates

31 December
2015				30 June 2016	30 June 2015
Total		VR	Nicetoile	Total		Total
£m		£m	£m	£m		£m
65.4	Goodwill on acquisition	68.0	-	68.0		65.7
1,118.3	Investment properties	1,219.4	26.4	1,245.8		938.3
30.3	Other non-current assets	37.8	-	37.8		22.1
1,214.0	Non-current assets	1,325.2	26.4	1,351.6		1,026.1

12.7	Other current assets	8.7	0.4	9.1		33.9
53.5	Cash and deposits	46.3	0.8	47.1		55.2
66.2	Current assets	55.0	1.2	56.2		89.1

1,280.2	Total assets	1,380.2	27.6	1,407.8		1,115.2
(52.9)	Current liabilities	(81.5)	(0.4)	(81.9)		(18.2)
(339.5)	Borrowings	(382.4)	-	(382.4)		(307.6)
(92.8)	Other liabilities	(75.5)	(0.2)	(75.7)		(80.5)
(107.3)	Deferred tax	(126.0)	-	(126.0)		(83.2)
(539.6)	Non-current liabilities	(583.9)	(0.2)	(584.1)		(471.3)
(592.5)	Total liabilities	(665.4)	(0.6)	(666.0)		(489.5)
687.7	Net assets	714.8	27.0	741.8		625.7

80.3	Participative loans*	104.6	-	104.6		65.3

768.0	Investment in associates	819.4	27.0	846.4		691.0

In addition to the above investments, non-current receivables of the Group includes loans totalling €47.7 million (£39.5 million) (31 December 2015: €103.7 million, £76.4 million) secured against a number of Value Retail assets.

The analysis in the table above excludes liabilities in respect of distributions received in advance from VR amounting to £17.4 million (31 December 2015: £19.0 million) which are included within non-current liabilities within the Group's balance sheet. At 30 June 2016, Hammerson's investment in VR, excluding goodwill, as a proportion of VR's net assets was 38.4% (31 December 2015: 38.2%).

*	The Group's total investment in associates includes long-term debt which in substance forms part of the Group's investment. These 'participative loans' are not repayable in the foreseeable future.

D. Reconciliation to EPRA adjusted investment in associates

31 December
2015				30 June 2016	30 June 2015
Total		VR	Nicetoile	Total	Total
£m		£m	£m	£m	£m
768.0	Investment in associates	819.4	27.0	846.4	691.0
(0.4)	Fair value of derivatives	1.4	-	1.4	4.2
107.3	Deferred tax	126.0	-	126.0	83.2
(47.0)	Goodwill as a result of deferred tax	(47.0)	-	(47.0)	(47.0)
59.9	EPRA adjustments	80.4	-	80.4	40.4
827.9	EPRA adjusted investment in associates	899.8	27.0	926.8	731.4

E. Reconciliation of movements in investment in associates


Year ended				Six months	Six months
31 December				ended	ended
2015		VR	Nicetoile	30 June 2016	30 June 2015
£m		£m	£m	£m	£m
628.8	Balance at beginning of period	743.8	24.2	768.0	628.8
36.6	Acquisitions	2.0	-	2.0	24.2
160.6	Share of results of associates	38.9	0.8	39.7	64.4
(44.5)	Distributions	(7.4)	(1.0)	(8.4)	(3.5)
(1.0)	Revaluation movement on participative loan	-	-	-	(0.7)
(12.5)	Foreign exchange translation differences	42.1	3.0	45.1	(22.2)
768.0	Balance at end of period	819.4	27.0	846.4	691.0

11. BORROWINGS

A. Maturity


31 December		30 June	30 June
2015		2016	2015
£m		£m	£m
1,478.2	After five years	1,862.8	1,095.7
859.8	From two to five years	1,565.5	904.6
690.1	From one to two years	68.5	255.4
3,028.1	Due after more than one year	3,496.8	2,255.7
-	Due within one year	29.4	-
3,028.1		3,526.2	2,255.7
(30.0)	Current assets: Fair value of currency swaps	-	(1.0)
2,998.1		3,526.2	2,254.7

B. Analysis


31 December		30 June	30 June
2015		2016	2015
£m		£m	£m
	Unsecured
198.1	£200 million 7.25% sterling bonds due 2028	198.2	198.1
297.6	£300 million 6% sterling bonds due 2026	297.6	297.5
345.0	£350 million 3.5% sterling bonds due 2025	345.1	-
-	€500 million 1.75% euro bonds due 2023	411.1	-
364.6	€500 million 2% euro bonds due 2022	409.9	350.1
248.6	£250 million 6.875% sterling bonds due 2020	248.8	248.5
366.1	€500 million 2.75% euro bonds due 2019	411.7	351.5
-	£272 million 5.25% sterling bonds due 2016	-	271.7
935.2	Bank loans and overdrafts	848.7	337.9
22.0	Senior notes due 2026	24.8	21.2
135.6	Senior notes due 2024	144.6	129.4
128.1	Senior notes due 2021	141.2	120.9
3,040.9		3,481.7	2,326.8
(42.8)	Fair value of currency swaps	44.5	(72.1)
2,998.1		3,526.2	2,254.7

Senior notes comprise £215.9 million (31 December 2015: £196.5 million) denominated in US dollars, £49.7 million (31 December 2015: £44.2 million) in euro and £45.0 million (31 December 2015: £45.0 million) in sterling.

C. Undrawn committed facilities


31 December		30 June	30 June
2015	Expiry	2016	2015
£m	Expiry	£m	£m
342.0	Within two to five years	50.2	282.0
518.5	Within one to two years	518.9	116.0
-	Within one year	163.9	-
860.5		733.0	398.0

D. Currency profile


31 December		Borrowings		30 June	30 June
2015		excluding	Fair value of	2016	2015
Total		currency swaps	currency swaps	Total	Total
£m		£m	£m	£m	£m
436.3	Sterling	1,983.4	(1,023.7)	959.7	576.5
2,568.8	Euro	1,281.5	1,292.7	2,574.2	1,685.1
(7.0)	US dollar	216.8	(224.5)	(7.7)	(6.9)
2,998.1		3,481.7	44.5	3,526.2	2,254.7

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of borrowings, currency and interest rate swaps for the Reported Group, together with their carrying amounts included in the balance sheet, are as follows:


31 December 2015			30 June 2016		30 June 2015
Book	Fair		Book	Fair	Book	Fair
value	value		value	value	value	value
£m	£m		£m	£m	£m	£m
3,040.9	3,266.3	Borrowings, excluding currency swaps	3,481.7	3,790.3	2,326.8	2,569.7
(42.8)	(42.8)	Currency swaps	44.5	44.5	(72.1)	(72.1)
2,998.1	3,223.5	Total	3,526.2	3,834.8	2,254.7	2,497.6
(13.8)	(13.8)	Interest rate swaps	13.6	13.6	(3.6)	(3.6)

At 30 June 2016, the fair value of financial instruments exceeded their book value by £308.6 million (31 December 2015: £225.4 million).

The fair values of the Group's borrowings have been estimated on the basis of quoted market prices, representing Level 1 and Level 2 fair value measurements as defined by IFRS 7 Financial Instruments: Disclosures. The fair values of the Group's outstanding interest rate swaps have been estimated by calculating the present values of future cash flows, using appropriate market discount rates, representing Level 2 fair value measurements as defined by IFRS 7. The fair value of the Group's currency swaps has been estimated on the basis of the prevailing forward rates at the half-year, also representing Level 2 fair value measurements as defined by IFRS 7.

13. ANALYSIS OF MOVEMENT IN NET DEBT

			Current borrowings
	Short-term	Cash at	including	Non-current
	deposits	bank	currency swaps	borrowings	Net debt
	£m	£m	£m	£m	£m
Balance at 1 January 2016	0.1	36.9	30.0	(3,028.1)	(2,961.1)
Cash flow	0.1	133.8	11.6	(239.6)	(94.1)
Exchange	-	2.6	(71.0)	(229.1)	(297.5)
Balance at 30 June 2016	0.2	173.3	(29.4)	(3,496.8)	(3,352.7)

ADDITIONAL DISCLOSURES

Table		Page	Table		Page
	Portfolio analysis			Proportionally consolidated information
1	Rental information	41	11	Balance sheet	46
2	Net rental income	42	12	Net debt analysis	47
3	Rent reviews	42	13	Net underlying finance costs	47
4	Lease expiries and breaks	43
5	Top ten tenants	43		Share of Property interests
6	EPRA cost ratio	43	14	Income statement	48
7	Valuation analysis	44	15	Balance sheet	48
8	Yield analysis	44

	Premium outlets
9	Income statement	45
10	Balance sheet	45

PRESENTATION OF INFORMATION

As explained in the Financial Review on page 11 and consistent with the presentation in the Business Review, management reviews the performance of the business on a proportionally consolidated basis, including the Group's share of Property interests, but excluding the Group's interest in premium outlets held through investments in Value Retail and VIA Outlets. This is because the Group has less day-to-day involvement in the operational activities and the premium outlets sector has different operational characteristics compared with the Group's other property sector. The information in the following tables has been prepared on this basis and further details of the definitions for information contained within this section can be found in the Glossary on pages 49 and 50.

PORTFOLIO ANALYSIS

TABLE 1: RENTAL INFORMATION

Rental data for the six months ended 30 June 2016
Proportionally consolidated excluding premium outlets	Gross rental income £m	Net rental income £m	Vacancy rate %	Average rents passing^A £/m²	Rents passing £m	Estimated rental value^B £m	Reversion/ (over-rented) %
United Kingdom
Shopping centres	85.0	73.5	2.6	550	167.3	177.4	3.5
Retail parks	45.4	42.3	1.3	200	85.0	85.1	(1.3)
Other	7.1	5.0	7.7	165	11.9	13.4	3.9
Total	137.5	120.8	2.4	350	264.2	275.9	2.0

France	49.4	44.0	3.7	445	95.0	107.3	8.5
Total investment portfolio	186.9	164.8	2.8	370	359.2	383.2	3.8
Developments	5.3	2.9
Total property portfolio (note 2)	192.2	167.7
Selected data for the year ended 31 December 2015
Group
UK	262.0	230.4	2.0	345	261.1	270.7	1.7
France	95.9	83.0	3.1	355	88.8	101.0	9.8
Total investment portfolio	357.9	313.4	2.3	345	349.9	371.7	3.8
Developments	8.5	5.2
Total property portfolio	366.4	318.6

Notes

A. Average rents passing at the period end before deducting head and equity rents and excluding rents passing from anchor units and car parks.

B. The estimated market rental value at the period end calculated by the Group's valuers. ERVs in the above table are included within the unobservable inputs to the portfolio valuations as defined by IFRS 13.

TABLE 2: NET RENTAL INCOME

Net rental income for the six months ended 30 June 2016

	Properties owned throughout 2015/16 £m	Increase for properties owned throughout 2015/16 %	Acquisitions £m	Disposals £m	Developments and other £m	Total £m
Proportionally consolidated excluding premium outlets	Properties owned throughout 2015/16 £m	Increase for properties owned throughout 2015/16 %	Acquisitions £m	Disposals £m	Developments and other £m	Total £m
United Kingdom
Shopping centres	68.7	2.8	4.5	0.1	0.1	73.4
Retail parks	38.2	1.2	-	2.4	1.7	42.3
Other	2.6	2.8	0.8	-	4.6	8.0
Total	109.5	2.1	5.3	2.5	6.4	123.7

France	39.4	1.9	0.9	1.6	2.1	44.0
Total property portfolio	148.9	2.1	6.2	4.1	8.5	167.7

Net rental income for the six months ended 30 June 2015

	Properties owned throughout 2015/16 £m	Exchange £m	Acquisitions £m	Disposals £m	Developments and other £m	Total £m
Proportionally consolidated excluding premium outlets	Properties owned throughout 2015/16 £m	Exchange £m	Acquisitions £m	Disposals £m	Developments and other £m	Total £m
United Kingdom
Shopping centres	66.9	-	0.3	1.3	0.2	68.7
Retail parks	37.8	-	-	3.7	0.2	41.7
Other	2.5	-	0.1	0.3	3.4	6.3
Total	107.2	-	0.4	5.3	3.8	116.7

France	38.6	(2.7)	0.5	5.6	0.8	42.8
Total property portfolio	145.8	(2.7)	0.9	10.9	4.6	159.5

TABLE 3: RENT REVIEWS AS AT 30 JUNE 2016

	Rents passing subject to review in^A				Current ERV of leases subject to review in^B
Proportionally consolidated excluding premium outlets	2016^C £m	2017 £m	2018 £m	Total £m	2016 ^C £m	2017 £m	2018 £m	Total £m
United Kingdom
Shopping centres	27.6	12.7	18.8	59.1	31.4	13.3	20.2	64.9
Retail parks	42.0	8.1	8.4	58.5	43.4	8.5	8.9	60.8
Other	4.7	0.7	0.4	5.8	4.9	0.8	0.5	6.2
Total	74.3	21.5	27.6	123.4	79.7	22.6	29.6	131.9

Notes

A. The amount of rental income, based on rents passing at 30 June 2016, for leases which are subject to review in each year.

B. Projected rental income for leases that are subject to review in each year, based on the higher of the current rental income and the ERV at 30 June 2016 and ignoring the impact of changes in rental values before the review date.

C. 2016 includes outstanding rent reviews

TABLE 4: LEASE EXPIRIES AND BREAKS AS AT 30 JUNE 2016

	Rents passing that expire/break in^A				ERV of leases that expire/break in^B				Weighted average unexpired lease term
Proportionally consolidated excluding premium outlets	2016 £m	2017 £m	2018 £m	Total £m	2016 £m	2017 £m	2018 £m	Total £m	to break years	to expiry years
United Kingdom
Shopping centres	14.5	9.7	23.1	47.3	18.6	10.2	21.9	50.7	6.3	9.2
Retail parks	4.7	2.0	3.4	10.1	4.5	2.2	3.3	10.0	8.3	9.3
Other	2.4	0.7	1.9	5.0	3.0	0.9	1.4	5.3	8.5	9.6
Total	21.6	12.4	28.4	62.4	26.1	13.3	26.6	66.0	7.1	9.2

France	11.8	4.3	3.3	19.4	13.1	4.6	3.7	21.4	2.8	6.0
Total investment portfolio	33.4	16.7	31.7	81.8	39.2	17.9	30.3	87.4	5.9	8.3

Notes

A. The amount of rental income, based on rents passing at 30 June 2016, for leases which expire or, for the UK only, are subject to tenant break options, which fall due in each year.

B. The ERV at 30 June 2016 for leases that expire or, for the UK only, are subject to tenant break options which fall due in each year and ignoring the impact of rental growth and any rent-free periods.

TABLE 5: TOP TEN TENANTS

Proportionally consolidated excluding premium outlets	Passing rent £m	% of total passing rent
B&Q	12.2	3.4
H&M	7.9	2.2
Next	7.3	2.0
Dixons Carphone	6.3	1.8
Home Retail Group	6.3	1.8
Arcadia	5.8	1.6
New Look	5.5	1.5
Debenhams	5.1	1.4
Boots	4.9	1.4
Printemps	4.3	1.2
Total	65.6	18.3

Note: Tenants ranked as a percentage of Group passing rent at 30 June 2016.

TABLE 6: EPRA COST RATIO

Proportionally consolidated excluding premium outlets	Six months ended 30 June 2016 £m	Year ended 31 December 2015 £m	Six months ended 30 June 2015 £m
Net service charge expenses - non-vacancy	2.2	3.8	1.8
Net service charge expenses - vacancy	5.2	9.5	4.5
Net service charge expenses - total	7.4	13.3	6.3
Other property outgoings	15.1	30.8	13.9
Less inclusive lease costs recovered through rent	(2.0)	(3.4)	(1.6)
Total property costs (for cost ratio)	20.5	40.7	18.6
Employee and corporate costs	24.3	48.3	23.0
Management fees receivable	(3.3)	(6.0)	(2.9)
Total operating costs (for cost ratio)	41.5	83.0	38.7

Gross rental income	192.2	366.4	181.2
Ground and equity rents payable	(2.0)	(3.7)	(1.5)
Less inclusive lease costs recovered through rent	(2.0)	(3.4)	(1.6)
Gross rental income (for cost ratio)	188.2	359.3	178.1

EPRA cost ratio including net service charge expenses - vacancy (%)	22.1	23.1	21.7
EPRA cost ratio excluding net service charge expenses - vacancy (%)	19.3	20.5	19.2

Staff costs amounting to £1.2 million (30 June 2015: £1.0 million, 31 December 2015: £1.9 million) have been capitalised as development costs and are excluded from Table 6. Our business model for developments is to use a combination of in-house staff and external advisers. The cost of external advisers is capitalised to the cost of developments. The cost of staff working on developments is generally expensed, but is capitalised subject to meeting certain criteria related to the degree of time spent on and the stage of progress of specific projects.

TABLE 7: VALUATION ANALYSIS

Valuation data for the portfolio as at 30 June 2016

Proportionally consolidated including premium outlets	Properties at valuation £m	Revaluation in the period £m	Capital return %	Total return %	Initial yield %	True equivalent yield %	Nominal equivalent yield^A %
United Kingdom
Shopping centres	3,331.9	(13.5)	(0.4)	1.8	4.4	5.1	5.0
Retail parks	1,525.6	(37.9)	(3.0)	(0.5)	5.1	5.7	5.5
Other	157.7	(2.8)	(0.7)	2.4	6.1	7.7	7.3
Total	5,015.2	(54.2)	(1.3)	1.1	4.7	5.4	5.2

France	2,070.1	65.1	2.9	5.1	3.9	4.5	4.4
Total investment portfolio	7,085.3	10.9	(0.1)	2.2	4.4	5.1	5.0
Developments	481.3	18.6	4.9	5.6
Total property portfolio	7,566.6	29.5	0.2	2.4
Premium outlets^B	1,396.9	48.0	3.5	5.7
Total Group	8,963.5	77.5	0.7	2.9
Selected data for the year ended 31 December 2015
Group
UK	4,881.2	215.3	4.7	9.9	4.8	5.4	5.2
France	1,860.5	116.6	7.1	12.0	4.1	4.7	4.6
Total investment portfolio	6,741.7	331.9	5.4	10.5	4.6	5.2	5.1
Developments	388.8	35.6	12.3	14.1
Total property portfolio	7,130.5	367.5	5.7	10.7
Premium outlets^B	1,243.6	174.1	16.4	23.7
Total Group	8,374.1	541.6	7.1	12.4

Notes

A. Nominal equivalent yields are included within the unobservable inputs to the portfolio valuations as defined by IFRS 13.

B. Represents the property returns for the Group's share of premium outlets through its investments in Value Retail and VIA Outlets.

TABLE 8: YIELD ANALYSIS

Investment portfolio as at 30 June 2016 Proportionally consolidated excluding premium outlets	Income £m	Gross value £m	Net book value £m
Portfolio value (net of cost to complete)		7,514	7,514
Purchasers' costs^A			(429)
Net investment portfolio valuation on a proportionally consolidated basis			7,085
Income and yields
Rent for valuers' initial yield (equivalent to EPRA Net Initial Yield)	334.7	4.4%	4.7%
Rent-free periods (including pre-lets)^B	11.6	0.2%	0.2%
Rent for 'topped-up' initial yield^C	346.3	4.6%	4.9%
Non-recoverable costs (net of outstanding rent reviews)	12.9	0.2%	0.2%
Passing rents	359.2	4.8%	5.1%
ERV of vacant space	10.1	0.1%	0.1%
Reversions	13.9	0.2%	0.2%
Total ERV/Reversionary yield	383.2	5.1%	5.4%
True equivalent yield		5.1%
Nominal equivalent yield		5.0%

Notes

A. Purchasers' costs equate to 5.7% of the net portfolio value.

B. The weighted average remaining rent-free period is 0.3 years.

C. The yield of 4.6% based on passing rents and gross portfolio value is equivalent to EPRA's 'topped-up" Net Initial Yield.

PREMIUM OUTLETS

The Group's investment in premium outlets is through interests in Value Retail and VIA Outlets. Due to the nature of the Group's control over these externally managed investments, Value Retail is accounted for as an associate and VIA Outlets as a joint venture. Tables 9 and 10 provide analysis of the impact of the two premium outlet investments on the Group's financial statements. Further information on Value Retail is provided in note 10 to the accounts on pages 37 to 39 and for VIA Outlets in note 9 to the accounts on pages 35 to 37.

Table 9: Income statement

Aggregated premium outlets income summary

	Six months ended 30 June 2016			Six months ended 30 June 2015
	Value Retail £m	VIA Outlets £m	Total £m	Value Retail £m	VIA Outlets £m	Total £m
Share of results	38.9	6.6	45.5	64.1	5.2	69.3
Less EPRA adjustments:
Revaluation gains on properties	(42.2)	(5.8)	(48.0)	(66.5)	(3.3)	(69.8)
Change in fair value of derivatives	18.6	(0.1)	18.5	(0.1)	3.7	3.6
Deferred tax	6.0	1.6	7.6	10.3	1.0	11.3
Other adjustments	(13.2)	-	(13.2)	(0.7)	(2.9)	(3.6)
EPRA adjustments	(30.8)	(4.3)	(35.1)	(57.0)	(1.5)	(58.5)
Adjusted earnings of premium outlets	8.1	2.3	10.4	7.1	3.7	10.8
Interest receivable from Value Retail loans*	2.4	-	2.4	2.6	-	2.6
Total contribution to adjusted profit	10.5	2.3	12.8	9.7	3.7	13.4

Table 10: Balance sheet

Aggregated premium outlets investment summary

	30 June 2016			31 December 2015
	Value Retail £m	VIA Outlets £m	Total £m	Value Retail £m	VIA Outlets £m	Total £m
Investment properties	1,219.4	177.5	1,396.9	1,095.0	148.6	1,243.6
Net debt	(372.4)	(31.5)	(403.9)	(335.3)	(27.1)	(362.4)
Other net liabilities	(27.6)	(14.5)	(42.1)	(15.9)	(10.7)	(26.6)
Share of net assets	819.4	131.5	950.9	743.8	110.8	854.6
Less EPRA adjustments:
Fair value of derivatives	1.4	4.0	5.4	(0.4)	3.5	3.1
Deferred tax	126.0	8.8	134.8	107.3	6.3	113.6
Goodwill as a result of deferred tax	(47.0)	(3.4)	(50.4)	(47.0)	(3.0)	(50.0)
EPRA adjustments	80.4	9.4	89.8	59.9	6.8	66.7
EPRA adjusted investment	899.8	140.9	1,040.7	803.7	117.6	921.3
Investment in VR China (within Other investments)	6.7	-	6.7	4.8	-	4.8
Loans to Value Retail*	39.5	-	39.5	76.4	-	76.4
Total impact of balance sheet - EPRA basis	946.0	140.9	1,086.9	884.9	117.6	1,002.5

* At 30 June 2016 the Group had provided loans of £39.5 million (31 December 2015: £76.4 million) to Value Retail for which the Group received interest of £2.4 million in the six months ended 30 June 2016 (30 June 2015: £2.6 million) which is included within finance income in note 4 to the accounts on page 32.

PROPORTIONALLY CONSOLIDATED INFORMATION

Note 2 to the accounts on pages 28 to 30 shows the proportionally consolidated income statement. The proportionally consolidated balance sheet, net debt and underlying finance costs are shown in Tables 11, 12 and 13 below.

In each of the tables, column A represents the Reported Group figures as shown in the financial statements; column B shows the Group's Property interests being the Group's share of Property joint ventures as shown in note 9 to the accounts on pages 35 and 36 and Nicetoile as shown in note 10 to the accounts on pages 37 and 38. Column C shows the Group's proportionally consolidated figures by aggregating the Reported Group and Property interests figures. The Group's interest in premium outlets are not proportionally consolidated as management does not review these interests on this basis.

Table 11: Proportionally consolidated balance sheet

As at 30 June 2016

	30 June 2016			31 December 2015
	Reported Group £m	Share of Property interests £m	Proportionally consolidated £m	Reported Group £m	Share of Property interests £m	Proportionally consolidated £m
	A	B	C	A	B	C
Non-current assets
Investment and development properties	5,063.2	2,503.4	7,566.6	4,652.1	2,478.4	7,130.5
Interests in leasehold properties	38.4	9.4	47.8	32.1	9.4	41.5
Plant and equipment	7.0	-	7.0	7.6	-	7.6
Investment in joint ventures	3,333.6	(3,202.1)	131.5	3,213.6	(3,102.8)	110.8
Investment in associates	846.4	(27.0)	819.4	768.0	(24.2)	743.8
Other investments	6.7	-	6.7	4.8	-	4.8
Receivables	56.0	0.1	56.1	92.1	-	92.1
	9,351.3	(716.2)	8,635.1	8,770.3	(639.2)	8,131.1
Current assets
Receivables	94.8	790.3	885.1	118.0	710.7	828.7
Restricted monetary assets	35.6	15.7	51.3	34.0	16.3	50.3
Cash and deposits	173.5	38.3	211.8	37.0	33.5	70.5
	303.9	844.3	1,148.2	189.0	760.5	949.5
Total assets	9,655.2	128.1	9,783.3	8,959.3	121.3	9,080.6
Current liabilities
Payables	(237.4)	(68.4)	(305.8)	(235.5)	(67.4)	(302.9)
Tax	(0.4)	-	(0.4)	(0.7)	-	(0.7)
Borrowings	(29.4)	-	(29.4)	-	(40.2)	(40.2)
	(267.2)	(68.4)	(335.6)	(236.2)	(107.6)	(343.8)
Non-current liabilities
Borrowings	(3,496.8)	(45.3)	(3,542.1)	(3,028.1)	-	(3,028.1)
Deferred tax	(0.5)	-	(0.5)	(0.5)	-	(0.5)
Obligations under finance leases	(39.2)	(9.4)	(48.6)	(32.5)	(9.4)	(41.9)
Payables	(90.2)	(5.0)	(95.2)	(75.7)	(4.3)	(80.0)
	(3,626.7)	(59.7)	(3,686.4)	(3,136.8)	(13.7)	(3,150.5)
Total liabilities	(3,893.9)	(128.1)	(4,022.0)	(3,373.0)	(121.3)	(3,494.3)
Net assets	5,761.3	-	5,761.3	5,586.3	-	5,586.3

Table 12: Proportionally consolidated net debt analysis

As at 30 June 2016

	30 June 2016			31 December 2015
	Reported Group £m	Share of Property interests £m	Total £m	Reported Group £m	Share of Property interests £m	Total £m
Notes	A	B	C	A	B	C
Cash at bank	173.3	37.6	210.9	36.9	32.6	69.5
Short-term deposits	0.2	0.7	0.9	0.1	0.9	1.0
Cash and deposits	173.5	38.3	211.8	37.0	33.5	70.5
Current borrowings including currency swaps	(29.4)	-	(29.4)	30.0	(40.2)	(10.2)
Non-current borrowings	(3,496.8)	(45.3)	(3,542.1)	(3,028.1)	-	(3,028.1)
Net debt	(3,352.7)	(7.0)	(3,359.7)	(2,961.1)	(6.7)	(2,967.8)

Currency profile
Sterling	(955.1)	25.6	(929.5)	(420.4)	29.2	(391.2)
Euro	(2,405.3)	(32.6)	(2,437.9)	(2,547.7)	(35.9)	(2,583.6)
US Dollar	7.7	-	7.7	7.0	-	7.0
Net debt	(3,352.7)	(7.0)	(3,359.7)	(2,961.1)	(6.7)	(2,967.8)

Table 13: Proportionally consolidated net underlying finance costs

For the six months ended 30 June 2016

	Six months ended 30 June 2016			Six months ended 30 June 2015
	Reported Group £m	Share of Property interests £m	Total £m	Reported Group £m	Share of Property interests £m	Total £m
Notes	A	B	C	A	B	C
Finance costs	59.7	1.3	61.0	48.4	1.2	49.6
Finance income	(6.6)	(12.7)	(19.3)	(7.6)	-	(7.6)
Adjusted finance costs/(income)	53.1	(11.4)	41.7	40.8	1.2	42.0
Capitalised interest	2.3	-	2.3	2.8	-	2.8
Net underlying finance costs/(income)	55.4	(11.4)	44.0	43.6	1.2	44.8

SHARE OF PROPERTY INTERESTS

The Group's share of Property interests reflects the Group's share of Property joint ventures as shown in note 9 to the accounts on pages 35 and 36 and the Group's interest in Nicetoile, which is accounted for as an associate, included within note 10 to the accounts on pages 37 and 38.

Table 14: Income statement

Aggregated Property interests income statements

	Six months ended 30 June 2016			Six months ended 30 June 2015
	Property joint ventures £m	Nicetoile £m	Share of Property interests £m	Property joint ventures £m	Nicetoile £m	Share of Property interests £m
Gross rental income	65.1	0.8	65.9	62.3	0.6	62.9
Net rental income	54.4	0.7	55.1	53.4	0.5	53.9
Administration expenses	(0.2)	-	(0.2)	(0.1)	-	(0.1)
Operating profit before other net gains/(losses)	54.2	0.7	54.9	53.3	0.5	53.8
Revaluation (losses)/gains on properties	(7.7)	0.1	(7.6)	63.2	(0.2)	63.0
Operating profit	46.5	0.8	47.3	116.5	0.3	116.8

Change in fair value of derivatives	0.6	-	0.6	0.6	-	0.6
Other finance income/(costs)	11.4	-	11.4	(1.2)	-	(1.2)
Net finance income/(costs)	12.0	-	12.0	(0.6)	-	(0.6)
Profit before tax	58.5	0.8	59.3	115.9	0.3	116.2
Current tax charge	(0.2)	-	(0.2)	-	-	-
Profit for the period	58.3	0.8	59.1	115.9	0.3	116.2

Table 15: Balance sheet

Aggregated Property interests balance sheets

	30 June 2016			31 December 2015
	Property joint ventures £m	Nicetoile £m	Share of Property interests £m	Property joint ventures £m	Nicetoile £m	Share of Property interests £m
Non-current assets
Investment and development properties	2,477.0	26.4	2,503.4	2,455.1	23.3	2,478.4
Interests in leasehold properties	9.4	-	9.4	9.4	-	9.4
Other non-current assets	0.1	-	0.1	-	-	-
	2,486.5	26.4	2,512.9	2,464.5	23.3	2,487.8
Current assets
Other current assets	805.6	0.4	806.0	726.8	0.2	727.0
Cash and deposits	37.5	0.8	38.3	32.4	1.1	33.5
	843.1	1.2	844.3	759.2	1.3	760.5
Total assets	3,329.6	27.6	3,357.2	3,223.7	24.6	3,248.3

Current liabilities
Other payables	(68.0)	(0.4)	(68.4)	(67.2)	(0.2)	(67.4)
Borrowings	-	-	-	(40.2)	-	(40.2)
	(68.0)	(0.4)	(68.4)	(107.4)	(0.2)	(107.6)
Non-current liabilities
Borrowings	(45.3)	-	(45.3)	-	-	-
Obligations under finance leases	(9.4)	-	(9.4)	(9.4)	-	(9.4)
Other payables	(4.8)	(0.2)	(5.0)	(4.1)	(0.2)	(4.3)
	(59.5)	(0.2)	(59.7)	(13.5)	(0.2)	(13.7)
Total liabilities	(127.5)	(0.6)	(128.1)	(120.9)	(0.4)	(121.3)

Net assets	3,202.1	27.0	3,229.1	3,102.8	24.2	3,127.0

Glossary

Adjusted figures (per share)	Reported amounts adjusted in accordance with EPRA guidelines to exclude certain items as set out in note 7 to the accounts.
Anchor store	A major store, usually a department, variety or DIY store or supermarket, occupying a large unit within a shopping centre or retail park, which serves as a draw to other retailers and consumers.
Average cost of borrowing or weighted average interest rate (WAIR)	The cost of finance expressed as a percentage of the weighted average of borrowings during the period.
BCSC	British Council of Shopping Centres. A not-for-profit professional body supporting the retail property industry which undertakes research and lobbies government on behalf of its members.
BREEAM	Building Research Establishment's Environmental Assessment Method.
Capital return	The change in property value during the period after taking account of capital expenditure and exchange translation movements, calculated on a monthly time-weighted basis.
Compulsory Purchase Order (CPO)	A Compulsory Purchase Order is a legal function in the UK by which land or property can be obtained to enable a development or infrastructure scheme without the consent of the owner where there is a "compelling case in the public interest".
Cost ratio (or EPRA cost ratio)	Total operating costs (being property costs, administration costs less management fees) as a percentage of gross rental income, after rents payable. Both operating costs and gross rental income are adjusted for costs associated with inclusive leases.
CPI	Consumer Price Index. A measure of inflation based on the weighted average of prices of consumer goods and services.
Dividend cover	Adjusted earnings per share divided by dividend per share.
Earnings per share (EPS)	Profit for the period attributable to equity shareholders divided by the average number of shares in issue during the period.
EBITDA	Earnings before interest, tax, depreciation and amortisation.
EPRA	The European Public Real Estate Association, a real estate industry body. This organisation has issued Best Practice Recommendations with the intention of improving the transparency, comparability and relevance of the published results of listed real estate companies in Europe.
Equivalent yield (true and nominal)	The capitalisation rate applied to future cash flows to calculate the gross property value. The cash flows reflect the timing of future rents resulting from lettings, lease renewals and rent reviews based on current ERVs. The true equivalent yield (TEY) assumes rents are received quarterly in advance. The nominal equivalent yield (NEY) assumes rents are received annually in arrears. The property true and nominal equivalent yields are determined by the Group's external valuers.
ERV	The estimated market rental value of the total lettable space in a property calculated by the Group's external valuers. It is calculated after deducting head and equity rents, and car parking and commercialisation running costs.
Gearing	Net debt expressed as a percentage of equity shareholders' funds.
Gross property value or Gross asset value (GAV)	Property value before deduction of purchasers' costs, as provided by the Group's external valuers.
Gross rental income (GRI)	Income from rents, car parks and commercial income, after accounting for the net effect of the amortisation of lease incentives.
IAS/IFRS	International Accounting Standard/International Financial Reporting Standard.
Inclusive lease	A lease, often for a short period of time, under which the rent is inclusive of costs such as service charge, rates, utilities etc. Instead, the landlord incurs these costs as part of the overall commercial arrangement.
Income return	The income derived from a property as a percentage of the property value, taking account of capital expenditure and exchange translation movements, calculated on a time-weighted basis.
Initial yield (or Net initial yield (NIY))	Annual cash rents receivable (net of head and equity rents and the cost of vacancy, and, in the case of France, net of an allowance for costs of approximately 5%, primarily for management fees), as a percentage of gross property value, as provided by the Group's external valuers. Rents receivable following the expiry of rent-free periods are not included. Rent reviews are assumed to have been settled at the contractual review date at ERV.
Interest cover	Net rental income divided by net cost of finance before exceptional finance costs, capitalised interest and change in fair value of derivatives.
Interest rate or currency swap (or derivatives)	An agreement with another party to exchange an interest or currency rate obligation for a pre-determined period of time.
IPD	Investment Property Databank. An organisation supplying independent market indices and portfolio benchmarks to the property industry.
Like-for-like (LFL) NRI	The percentage change in net rental income for completed investment properties owned throughout both current and prior periods, after taking account of exchange translation movements.
LTV (Loan to value)	Net debt expressed as a percentage of the property portfolio value calculated on a proportionally consolidated basis.
Net asset value (NAV) per share	Equity shareholders' funds divided by the number of shares in issue at the balance sheet date.
Net rental income (NRI)	Income from rents, car parks and commercial income, after deducting head and equity rents payable, and other property related costs.
Occupancy rate	The ERV of the area in a property, or portfolio, excluding developments, which is let, expressed as a percentage of the total ERV of that property or portfolio.
Occupational cost ratio	Retail sales as a percentage of total occupancy cost being rent, service charge and local taxes, excluding anchor stores
Over-rented	The amount, or percentage, by which the ERV falls short of rents passing, together with the ERV of vacant space.
Passing rents or rents passing	The annual rental income receivable from an investment property, after any rent-free periods and after deducting head and equity rents and car parking and commercialisation running costs. This may be more or less than the ERV (see over-rented and reversionary or under-rented).
Pre-let	A lease signed with a tenant prior to the completion of a development.
Principal lease	A lease signed with a tenant with a secure term of greater than three years and where the unit is not reconfigured.
Property Income Distribution (PID)	A dividend, generally subject to withholding tax, that a UK REIT is required to pay from its tax-exempt property rental business and which is taxable for UK-resident shareholders at their marginal tax rate.
Property interests	The Group's non-wholly owned properties which management proportionally consolidates when reviewing the performance of the business. These exclude the Group's premium outlets interests in Value Retail and VIA Outlets which are not proportionally consolidated.
Property joint ventures	The Group's shopping centre and retail park joint ventures which management proportionally consolidate when reviewing the performance of the business, but exclude the Group's interests in the VIA Outlets joint venture.
REIT	Real Estate Investment Trust. A tax regime which in the UK exempts participants from corporation tax both on UK rental income and gains arising on UK investment property sales, subject to certain requirements.
Reported Group	The financial results as presented under IFRS which represent the Group's 100% owned properties, transactions and balances and equity account for the Group's interests in joint ventures and associates.
Return on shareholders' equity (ROE)	Capital growth and profit for the period expressed as a percentage of equity shareholders' funds at the beginning of the year, all excluding deferred tax and certain non-recurring items.
Reversionary or under-rented	The amount, or percentage, by which the ERV exceeds the rents passing, together with the estimated rental value of vacant space.
RPI	Retail Prices Index. A measure of inflation based on the change in the cost of a representative sample of retail goods and services.
SIIC	Sociétés d'Investissements Immobiliers Côtées. A tax regime in France which exempts participants from the French tax on property income and gains subject to certain requirements.
Total development cost (TDC)	All capital expenditure on a development project, including capitalised interest.
Total property return (TPR) (or total return)	Net rental income and capital growth expressed as a percentage of the opening book value of property adjusted for capital expenditure and exchange translation movements, calculated on a monthly time-weighted basis.
Total shareholder return (TSR)	Dividends and capital growth in a Company's share price, expressed as a percentage of the share price at the beginning of the year.
Turnover rent	Rental income which is related to an occupier's turnover.
Vacancy rate	The ERV of the area in a property, or portfolio, excluding developments, which is currently available for letting, expressed as a percentage of the ERV of that property or portfolio.
Value Retail (VR)	Owner and operator of luxury outlet Villages in Europe in which the Group has an investment.
VIA Outlets (VIA)	A premium outlets joint venture, in which the Group has an investment. VIA owns and operates premium outlet centres in Europe.
Yield on cost	Passing rents expressed as a percentage of the total development cost of a property.

DISCLAIMER

This document contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking in nature and are subject to risks and uncertainties. Actual future results may differ materially from those expressed in or implied by these statements.

Many of these risks and uncertainties relate to factors that are beyond Hammerson's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Hammerson does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document. Information contained in this document relating to the Company should not be relied upon as a guide to future performance.

This information is provided by RNS

The company news service from the London Stock Exchange

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