Half Yearly Report

RNS Number : 4380L

Hammerson PLC

01 August 2011

Hammerson plc - UNAudited Results for the six months ended 30 june 2011

	30 June	30 June		Like-for-like
Six months ended:	2011	2010	Change	change

Net rental income	£143.9m	£140.0m	+2.8%	+3.9%
Profit before tax	£192.8m	£335.6m	-42.6%
Adjusted profit before tax ⁽¹⁾	£69.7m	£70.2m	-0.7%
Adjusted earnings per share ⁽¹⁾	9.6p	9.7p	-1.0%
Interim dividend per share	7.3p	7.15p	+2.1%

As at:	30 June 2011	31 December 2010

Adjusted net asset value per share, EPRA basis ⁽¹⁾	£5.20	£4.95	+5.1%
Return on shareholders' equity (12 months)	16.8%	21.1%	-4.3ppt
Gearing	60%	52%	+8ppt

_Note (1) Calculations for adjusted figures are shown in note 7.
Operating highlights
·	Growth of 3.9% in group like-for-like net rental income demonstrating continued tenant demand for high quality assets in thriving locations, and success of asset management initiatives.
·	Increase in like-for-like shopping centre sales of 1.9% in UK and 1.8% in France, ahead of national benchmarks.
·	Group occupancy was 97.2% at 30 June, against our target of 97%. 125 lettings signed in the period in respect of 33,500m², with an improved letting performance in the second quarter.
·	Continued strength of UK retail portfolio:
-	Growth of 8.8% in like-for-like shopping centre net rental income.
-	Footfall up 2.6% at UK shopping centres, versus benchmark of -0.9%.
-	Vacancy below 3% compared to 12% market average.
·	Major development achievements in UK and France:
-	Completion of redevelopment of 54-60 rue du Faubourg Saint-Honoré, Paris, which is now valued at £51 million above cost.
-	Construction progressing well at Les Terrasses du Port, Marseille, our 56,000m², £390 million retail and leisure scheme due to complete in spring 2014.
-	Planning approval received for Principal Place, London EC2, a 79,600m² office-led project, with heads of terms agreed with CMS Cameron McKenna for c. 18,600m².
-	Planning approval received for London Wall Place, London EC2, a 45,800m² office scheme, of two buildings, offering large floor plates and occupier flexibility.
-	Planning approval received for Eastgate Quarters, a 106,000m² retail-led scheme in Leeds which will feature John Lewis and Marks & Spencer, alongside 130 new retail and restaurant units.
-	Development agreements secured for retail schemes at Sevenstone, Sheffield, where CPO notices have been served, and The Orchard Centre, Didcot.
·	Portfolio further positioned for growth. £373 million invested since the year-end in eight acquisitions which enhance growth prospects, following net disposals of £336 million in 2010.
·	Robust, flexible financial position. Over £600 million of new credit facilities signed, which combined with gearing of 60%, provides flexibility to fund investment and development opportunities.

David Atkins, Chief Executive of Hammerson, said:

"These results show continued momentum in our business, driven by high quality assets coupled with focused management initiatives. In addition we have enhanced the prospective returns from the portfolio through both targeted acquisitions and development activity, and our flexible financing structure will allow us to take advantage of further investment opportunities.

Our regionally dominant shopping centres and convenient retail parks are trading ahead of national benchmarks and continue to attract successful retailers. Despite a challenging retail backdrop in both our markets, we have seen little impact from the recent rise in UK retail administrations, and will benefit from positive indexation in France. We will capitalise on the upturn in the London office market through both existing assets and developments."

Enquiries:

David Atkins, Chief Executive

Tel: +44 (0)20 7887 1000

Timon Drakesmith, Chief Financial Officer

Morgan Bone, Director of Corporate Communications

Tel: +44 (0)20 7887 1009

morgan.bone@hammerson.com

www.hammerson.com

Results presentation today:

Time:

9.30 a.m.

Venue:

Allen & Overy

1 Bishops Square

London E1 6AO

Webcast:

A live webcast of Hammerson's results presentation will be broadcast today at 9.30 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 7784 1038. Please quote confirmation code 801311.

Financial calendar:

Ex-dividend date	17 August 2011
Record date	19 August 2011
Interim dividend payable	7 October 2011

Contents:

Chairman's Statement	3	Independent Review Report	27
Property Markets and Outlook	6	Responsibility Statement	27
Key Performance Indicators	8	Condensed Financial Statements	28
Business and Financial Review	10	Notes to the Accounts	35
Property Portfolio Information	24	Other Information	48
Principal Risks and Uncertainties	26	Glossary of Terms	49

CHAIRMAN'S STATEMENT

STRATEGY

Hammerson aims to be the best owner-manager and developer of retail and office property in the UK and France. Our strategy is to outperform through two areas of focus: maximising income growth; and creating a high quality property portfolio through acquisition, development and asset management. Both areas are underpinned by prudent financial management. We have made good progress in all areas.

MAXIMISING INCOME FROM OUR PORTFOLIO

Demand for space in our regionally dominant shopping centres, accessible retail parks and modern London offices remained strong throughout the first six months of 2011. We continue to work with our retail tenants to analyse the drivers of their sales, and determine how to optimise the tenant mix at each property. We are installing systems in our shopping centres which track consumer movement to enhance this analysis. Through our active letting strategy we capitalise on the inherent strengths of the property to maximise footfall and sales, thus ensuring the continued vibrancy of the centres and retail parks.

In the first half we signed or renewed 125 leases in respect of 33,500m². Rents secured varied according to sector and geography but overall, rents were marginally above ERVs, which have remained stable since the start of the year. Against a challenging backdrop we grew like-for-like net rental income by 3.9% and occupancy at 30 June 2011 was 97.2%, just ahead of our long-term target and up from the end of March. We have seen little impact from the recent rise in UK retail administrations. Our shopping centres in both the UK and France generated like-for-like sales increases, ahead of national benchmarks.

We have made good progress on a number of initiatives to address the opportunities and challenges which multi-channel retailing presents to a landlord. These include improving accessibility of shopping centre websites from mobile devices; providing branded collection space for retailers' 'click and collect' offer; and successfully converting online marketing to

in-store sales.

ENHANCING OUR HIGH QUALITY PORTFOLIO THROUGH ACQUISITIONS

Over the last eighteen months we have actively recycled the portfolio, reinvesting in properties which improve growth prospects. Following net disposals of £336 million in 2010, we invested £273 million over the first six months. We acquired income-producing properties in our chosen sectors with the potential to add value through asset management and development. These included a 50% interest in SQY Ouest, Saint Quentin-en-Yvelines in Paris; the remaining 75% interest in our existing Central Retail Park in Falkirk; and a portfolio of UK retail assets from St. Martins Property Investments.

In July, we announced the £100 million acquisition of the freehold of 99 Bishopsgate, London EC2, in which we already hold a long leasehold interest. This transaction increases our exposure to the London office market whilst improving liquidity and control.

ENHANCING OUR HIGH QUALITY PORTFOLIO THROUGH DEVELOPMENTS

After a period of restrained activity as the real estate market contracted during the worst of the economic downturn, we are now increasing the resources applied to development schemes. Developments have the potential to enhance returns, and we anticipate securing significant surpluses from projects in our near-term pipeline, which totals 181,400m² and has an estimated cost to complete of £1.1 billion. We are bringing forward developments in a phased manner, progressing through the planning process whilst working with prospective tenants to ensure demand, thus maximising returns whilst retaining flexibility and managing risk.

On-site, we have completed the redevelopment of 54-60 rue du Faubourg Saint-Honoré, Paris, which is now valued at £51 million above cost, and are making excellent progress with our £390 million retail and leisure scheme at Les Terrasses du Port, Marseille.

We obtained a number of planning approvals in the period including: Principal Place, EC2, a 79,600m² office-led project which has been selected by CMS Cameron McKenna LLP as their new head office; London Wall Place, EC2, a 45,800m² office scheme, with two buildings, which will offer large floor plates providing flexibility to occupiers; and Eastgate Quarters, a 106,000m² retail-led scheme in Leeds which will be anchored by John Lewis and Marks & Spencer, alongside 130 new retail and restaurant units.

We have secured revised development agreements for retail schemes at Sevenstone, Sheffield, where the Council has exercised compulsory purchase rights for the site, and The Orchard Centre, Didcot.

We have also identified a number of potential redevelopments, extensions and smaller development schemes which will show strong returns. In aggregate, these initiatives have an estimated cost of £335 million.

FINANCING

Net debt at 30 June was £2.2 billion, resulting in gearing of 60%. This compared with 52% at 31 December 2010, reflecting acquisitions undertaken during the period.

We signed a new £505 million unsecured revolving credit facility in the period, which will provide flexibility going forward. In July, at our O'Parinor joint venture, we arranged a new €219 million (€109 million Hammerson share) five-year non-recourse loan.

Liquidity at 30 June was £488 million. The weighted average maturity of the Group's borrowings, virtually all of which are unsecured, was just under seven years, with 80% of gross debt at fixed rates of interest.

RESULTS

The Group's adjusted profit before tax at £69.7 million was marginally lower than the £70.2 million for the first half of 2010, with the positive impact of acquisitions and developments offset by the effects of disposals and higher administration expenses. Adjusted earnings per share were 9.6 pence compared with 9.7 pence for the equivalent period in 2010, reflecting the movement in profit before tax and an increase in the average number of shares in issue. The Board has proposed an interim dividend of 7.3 pence per share, which compares to 7.15 pence for the first half of 2010.

Capital values increased further over the first half of the year, with the UK and French portfolios rising by 2% and 3% respectively. Adjusted net asset value per share was £5.20 at 30 June 2011, an increase of 5% since the year end.

BOARD CHANGES

Simon Melliss, who had been Chief Financial Officer since 1995, retired at the end of June. Simon was one of the longest serving Finance Directors in the FTSE 100, and I thank him for his enormous contribution to the Company over a twenty-year period. Timon Drakesmith joined Hammerson as CFO in June, bringing both sector and wider industry expertise.

Also in May, we appointed Judy Gibbons as a non-executive Director. Judy has a background in technology businesses, and her experience will help us develop further our understanding of the opportunities and challenges that multi-channel retailing presents to a landlord.

David Edmonds, who has made a significant contribution to the Company since his appointment to the Hammerson Board in May 2003, retired at the AGM in April.

OUTLOOK

John Nelson

Chairman

1 August 2011

PROPERTY MARKETS AND OUTLOOK

RETAIL OCCUPATIONAL MARKETS

In both the UK and France, rising prices and government deficit reduction measures are weighing upon consumer confidence and household spending growth. According to the British Retail Consortium's Retail Sales Monitor, six month rolling annual like-for-like sales growth was 0.2% in June, down from 0.5% in December 2010. Despite these conditions, Hammerson's UK shopping centres have continued to outperform over this period, recording like-for-like sales growth of 1.9% and an average shopping centre vacancy rate of 3.1%, well below the 12% market average.

Over the medium-term, the outlook for the UK retail market is more positive with the potential for a gradual reduction in vacancy rates and a return to positive rental growth. Although retail sales will remain constrained by austerity measures, supportive monetary policy and an improving labour market should support future spending. With retailers continuing to require a presence in key shopping locations and new retail development completions 50% below average, the positive rental outlook is most marked for prime centres of the type owned by Hammerson.

In France, consumer spending has been negatively impacted over recent months by rising prices and the phasing out of the car scrappage scheme. The latest like-for-like retail sales figures from the National Council of Shopping Centres indicates a 0.8% fall during the first five months of the year, when compared to the same period in 2010. Hammerson's shopping centres again outperformed, recording a like-for-like increase in sales of 1.8%. The longer term outlook for retailing has improved, with better-than-expected economic growth and further falls in unemployment.

With no major retailer administrations and the payment of premiums to secure leases, shopping centre vacancy rates in France are lower than in the UK at around 3%, whilst rental values have been broadly stable in the first half, having risen 1.2% during 2010. In addition, higher inflation has led to rising indexation rates in recent quarters, which will help to maintain the rental income of the portfolio in real terms.

OFFICE OCCUPATIONAL MARKETS

The central London office market has continued to perform well over the past six months, as continued demand and a fall in new completions reduced the availability of space and pushed vacancy rates down from 5.5% at the end of 2010 to 4.9% in June, which compares to 2.7% for Hammerson's office portfolio.

Leasing activity in the City office market is often uneven due to the impact of a small number of large transactions. Following a surge in take-up during the final quarter of 2010 and current uncertainties in financial markets, take-up in the City of London fell in each of the first two quarters of the year, declining almost 50% when compared to the second half of last year. Despite lower take-up, a 60% fall in new completions led to a fall in City office vacancy rates to 6.6% in June, 20 basis points lower than at the start of the year.

Despite this recent slowdown in the City, the medium-term outlook is for a period of strong rental growth. With London retaining its top position on the Global Financial Centres Index, the City should maintain its attraction as a business location, whilst benefitting from increased demand from emerging market occupiers. Furthermore, the volume of new completions is forecast to fall to 50% of its long run average over the next three years, limiting the availability of space and supporting higher headline rents and less generous incentive packages.

INVESTMENT MARKETS

The economies of the UK and France have continued to grow during 2011, although survey evidence and lead indicators suggest that the rate of expansion has slowed in recent months. Eurozone sovereign debt problems have escalated, leading to a sustained period of volatility in financial markets, and increased demand for lower risk asset classes. Despite above target inflation, the major central banks have indicated an unwillingness to tighten monetary policy quickly, helping to keep borrowing rates low and thus supporting property as an attractive investment.

The UK is the most liquid property market in Europe, recording £16 billion of commercial property transactions during the first half of 2011, a 5% increase on the same period in 2010. The IPD all-property equivalent yield moved in a further 11 basis points during the six months to June, however this has not diminished the attractiveness of commercial property when compared to debt rates such as five-year sterling swaps, which fell 13 basis points over the same period. Unlike previous years, UK property companies have been the biggest buyers of property in 2011, accounting for one third of all transactions. With limited bank financing and continued economic uncertainty, we expect investors to remain focused on high quality assets with growing incomes, maintaining the above-average spread between prime and secondary yields.

Investors in the French market remain risk averse, favouring well located, established properties. Consequently there is stiff competition for the best assets, resulting in prime French shopping centre initial yields being lower than other Europe markets at 4.75%. Eurozone sovereign debt problems are likely to cause investors to remain cautious throughout 2011, but as the economy recovers, risk premiums should narrow, supporting low yields for prime assets.

KEY PERFORMANCE INDICATORS

· Occupancy

Occupancy in the investment portfolio at 30 June 2011 was 97.2%, compared with 97.3% at the end of 2010 and our target of 97.0%. Lettings at Union Square, Aberdeen and in the City of London office portfolio offset increased vacancy elsewhere in the retail portfolio and the impact of acquisitions.

http://www.rns-pdf.londonstockexchange.com/rns/4380L_-2011-7-29.pdf

· Portfolio total returns relative to IPD

For the 12 months ended 30 June 2011, the total return for our portfolio was 11.6%. IPD have not yet published a UK quarterly index for the year ended 30 June 2011, but we estimate that figure, based on available information from IPD, to be 10.1%. IPD only issue an annual index for France based on calendar years.

http://www.rns-pdf.londonstockexchange.com/rns/4380L_1-2011-7-29.pdf

Portfolio returns are for the total portfolio. For 2011, the returns data is for the 12 months ended 30 June 2011. Comparative data is for calendar years. The IPD figures for 2011 are for the UK only whilst the data for comparative years are based on the UK and France IPD indices weighted according to the geographical segmentation of the portfolio value.

· Return on shareholders' equity (ROE)

Our ROE for the 12 months ended 30 June 2011 was 16.8%, which principally reflected the £309 million increase in the portfolio value during that period and retained profit. Property valuations reflect market cycles and the majority of the return is weighted towards the second half of 2010 when values increased by £188 million, whilst in the first six months of 2011, the rate of valuation increase was slower and the uplift was £121 million. Our target is to exceed our cost of equity, which is currently estimated at 8.2% per annum.

http://www.rns-pdf.londonstockexchange.com/rns/4380L_2-2011-7-29.pdf

For 2011, the ROE is for the 12 months to 30 June 2011. Comparative data is for calendar years.

BUSINESS AND FINANCIAL REVIEW

Investment portfolio

We have a consistent policy of selling mature assets to reinvest in properties where we can use our skills to generate superior returns. Since the start of the year, we have acquired eight properties for a total cost of £373 million in all three of our chosen markets: UK retail; France retail; and central London offices. This follows a period in the second half of 2010 when we disposed of non-core assets. Our approach to acquisitions in the current environment is selective and we continue to focus on the markets we know well and assets where we can use our experience to exploit opportunities to grow income and value. Since the acquisition of Silverburn in December 2009, we have sold assets valued at £704 million with an average lot size of £141 million and an average value of £4,300 per m². During the same period, we have acquired properties for a total of £634 million with an average lot size of £53 million and an average value of £2,800 per m².

Investment activity in the first half of 2011 is summarised below, chronologically.

In February, we acquired a 50% interest in SQY Ouest, a 31,000m² shopping centre in Saint Quentin-en-Yvelines, in a joint venture with Codic France. Hammerson's initial commitment was £19 million, excluding transaction costs. SQY Ouest is a modern retail and leisure scheme developed in 2005. Located 20km south west of Paris, it is adjacent to Espace Saint Quentin, a 58,600m² shopping centre, 27,800m² of which is jointly owned by Hammerson and Allianz in a 25:75 joint venture. SQY Ouest has good transport links and 39 retailers on four floors, including international brands such as Bershka, GoSport, Virgin Megastore and Zara. The top floor is anchored by one of UGC's most successful multiplex cinemas. The centre is currently 83% occupied, and the yield on purchase price was 9.2%, after taking account of vacancy charges and other direct costs. Hammerson will manage the centre and we have the opportunity to improve returns by introducing new anchor tenants, improving the catering offer, and creating additional retail space.

We acquired in March our partner's 75% interest in Central Retail Park, Falkirk for £69 million including costs, which represents an implied yield of 5.4%. The 37,100m² scheme, anchored by a Tesco superstore, is 98% let to a diverse range of tenants including Argos, Boots, Cineworld, Homebase, Mothercare and Next. The scheme is at the edge of the town centre and has 1,350 parking spaces. Passing rents at 31 December 2010 were £5.8 million and since the acquisition we have redeveloped some of the units and increased the fashion offer. Hammerson's 25% stake, which was acquired in 2002 as part of the Grantchester acquisition, was valued at £23 million at 31 December 2010.

Also in March, we purchased a portfolio of five assets from St. Martins Property Investments Limited for £175 million, or £186 million including transaction costs. Passing rents on the properties total £16.0 million, and after taking account of vacancy charges and other direct costs the yield on the purchase price was 7.1%. This is a portfolio of good properties in strong trading locations and we have scope to create value by rejuvenating the principal assets through development and asset management initiatives.

The properties acquired are detailed below:

· Centrale Shopping Centre, purchased for £98 million, implying a yield of 7.8%, is the largest of the assets and is in the heart of Croydon town centre. Croydon has the 13th largest shopping population in the UK with 455,000 people and the freehold centre covers 64,700m². It was constructed in two phases (in 1988 and 2004) and comprises 79 retail units and a 954 space car park. Tenants include Debenhams, H&M, House of Fraser and Next. The potential to create value through investment and transformation of the existing centre includes the introduction of new retail tenants, improving circulation between floors and providing a cinema and catering offer. Passing rents at 30 June were £10.5 million.

· Monument Mall, purchased for £28 million, is in the centre of Newcastle, with its main frontages opening onto the prime retailing pitches of Northumberland Street and Blackett Street. Newcastle has the sixth largest shopping population in the UK with 605,000 people. The freehold shopping centre covers 7,800m² comprising 16 retail units and a food gallery over four trading levels and currently generates passing rents of £2.2 million. The complex is adjacent to Fenwick and tenants include Peacocks, TK Maxx and Wallis. The centre offers restructuring potential through a comprehensive reconfiguration of existing units, exploiting the location by opening units to the street, and the introduction of new retailers.

· Elliott's Field Retail Park, purchased for £40 million, is situated just off the link road between Rugby and Junction 1 of the M6 motorway. The 12,700m² open A1 consented park comprises nine units in four terraces and a standalone restaurant and passing rents at 30 June were £2.1 million. Despite the current consent, the freehold scheme's tenants are predominantly bulky goods retailers and include Comet, Halfords, Homebase and Wickes. There is scope for Hammerson to increase rental income by creating additional space and capitalising on strong demand from fashion and catering tenants.

· The 3,400m² Wickes unit at Folkestone and the 5,800m² Cathedral Lanes, Coventry were purchased for an aggregate £10 million including costs and together have passing rents of £1.2 million. Both assets provide short-term asset management potential to stabilise and protect income thereby maximising their investment values. As part of the portfolio transaction, we were contracted to find a purchaser for Three Spires, in Lichfield, which was sold in June.

In July we acquired a 999-year leasehold, or virtual freehold, interest in 99 Bishopsgate, London EC2, from PRUPIM acting on behalf of the Prudential Assurance Company Ltd for £100 million, including costs. 99 Bishopsgate is a 26-storey tower providing 31,500m² of office accommodation in the City of London. It is occupied by a number of financial and professional services companies including: Deutsche Bank, Latham & Watkins, Korea Development Bank and Charles River Associates International. We have owned a long leasehold interest in the property, which expires in 2100, since its reconstruction in 1994. The rent payable to Prudential was £4.2 million per annum. Net of head rent, Hammerson's passing rents at 31 December 2010 were £13.6 million, and at that time our interest was valued at £126 million. We plan to refurbish approximately 14,300m² of the building's office space ready for occupation in 2012. This is expected to be a period of undersupply of high grade accommodation in the City of London, and ownership of the merged interest will ensure that we maximise returns to shareholders from this investment.

There were no disposals in the first half of the year, although with our 51% partner, The National Pension Service of Korea, we have mutual options for the sale by Hammerson of a further 24% interest in O'Parinor, Aulnay-sous-Bois. The option is expected to be exercised later in 2011 at a price based on the value agreed for the sale of the 51% interest in 2010 for proceeds, at 30 June 2011 exchange rates, of £96 million. If the option is exercised, Hammerson's interest in the asset would fall to 25%.

ASSET MANAGEMENT

We aim to generate good absolute and relative property returns from effective asset management. Focused operational activity takes different forms across our markets but the common themes are:

· fostering a close relationship with our tenants;

· predicting and responding to local market trends;

· offering attractive commercial solutions to occupational needs; and

· enhancing customer experience at our properties.

Retailers in the UK and France are continuing to face a difficult trading environment and we are working hard to grow income through tenant re-engineering and improving tenant mix, commercialisation and by continuing to pioneer multi-channel retailing. Retailers' requirements for space are polarising towards the high quality, regionally dominant shopping centres and conveniently located retail parks of the types which we operate.

The table below demonstrates the relative outperformance of our shopping centre portfolio when compared to the wider markets in the UK and France.

	Sales		Footfall		Non-rental income¹
	%	Benchmark %	%	Benchmark %	£m	% change
UK	+1.9	+0.2	+2.6	-0.9	7.0	+22.4
France	+1.8	-0.8	-0.5	-0.6	1.1	+0.8

_Note

_{(1) Absolute figures, year-on-year change for the first half of the year.}

For the Group as a whole, during the first six months of the year we signed 125 leases representing 33,500m² of space and generated new rental income of £10.2 million per annum representing an uplift of £1.5 million over the previous passing rent. Rents secured varied according to sector and geography but overall, the rents achieved were marginally above ERVs, which have remained stable since the start of the year. We also settled 82 rent reviews on leases with rents passing of £13.2 million which resulted in a further £0.4 million of rental income per annum.

Like-for-like, net rental income increased by 3.9%, comprising uplifts of 4.8% in the UK and 1.3% in France. The retail portfolio was the main contributor to the UK like-for-like growth rising by 6.1%, reflecting lettings and rent reviews. However income from the UK office portfolio fell by 2.4% principally due to lease expiries. Indexation was the primary reason for the increase in France.

We have been working over the first half of the year to reposition some of our existing properties to grow income and value. At The Oracle, Reading, we undertook eight transactions to improve the tenant mix and financial returns. The project involved providing one retailer with more space, taking surrenders from two tenants, signing four new leases and relocating another retailer. This resulted in new leases to Hollister, Apple, TM Lewin and Paperchase. Zone A rents at the centre have increased from £232 to £240 since the beginning of the year.

In light of research commissioned on the demographics of its catchment area, the tenant line-up in Mall 5 at Brent Cross has been refreshed. We agreed lease surrenders with five occupiers and signed new lettings with Whistles, Jaeger Boutique, Kurt Geiger, Lush and Hawes and Curtis, resulting in a £0.2 million increase in passing rents on these units.

Since taking full control of Central Retail Park, Falkirk, we have reconfigured the asset. One unit has been subdivided and let to Mothercare and Next, whilst Smyths Toys now occupies the former MFI unit. We took vacant possession of two further units and contracts have been exchanged with Dunelm to take that space.

At Espace Saint Quentin, five renewals and two new lettings have been signed, introducing new retail concepts to the centre since the beginning of the year. Plans to exploit the operational synergies between the shopping centre and the adjacent SQY Ouest, which we acquired in February as part of a joint venture, are progressing.

Occupancy

At 30 June 2011, the occupancy rate in the portfolio was 97.2%, virtually unchanged from 97.3% at the end of 2010. Lettings at Union Square, Aberdeen and in the City of London office portfolio offset increased vacancy elsewhere in the retail portfolio and the impact of acquisitions. The table below compares occupancy by portfolio segment at the current and previous reporting dates.

Occupancy %	UK retail	France retail	UK offices	Total
30 June 2011	97.2	97.3	97.3	97.2
31 December 2010	97.3	98.1	95.6	97.3

Cash collection

We collected 98.6% of rents in the UK and 92.4% in France within fourteen days of the June quarter day.

Multi-channel initiatives

The internet and supporting technology are used in many ways, by retailers and consumers, to support the shopping experience. We continue to focus on multi-channel retailing, piloting new initiatives whilst recognising that this is a complex and rapidly evolving area. Internet-supported store-based sales are growing, often delivered by a 'click & collect' model. We have adapted this trend to the new format store of a major retailer which will open in Union Square, Aberdeen in November 2011. The store will be the first in the UK with a primary role as a collection hub for internet sales, drawing additional footfall into the centre. We are also continuing to pilot our transactional website for Italie 2, Paris, to sell merchandise on behalf of our retailers.

We use social media to engage with consumers, and the use of online promotional techniques to deliver in-store sales is gathering momentum in the retail market. We have a successful pilot with Vente Privee at O'Parinor, where a voucher purchased online entitles the consumer to additional credit in-store, and are planning similar promotions in the UK.

Consumers are increasingly accessing the internet via smart phones, so we are piloting a mobile phone-friendly website at Queensgate, Peterborough. We also intend to enhance the consumer websites for the rest of our UK shopping centre portfolio over the next twelve months.

Advancements in mobile communications are helping us with other aspects of our business. We are rolling out technology at all our shopping centres which uses mobile phone signals to analyse how customers navigate the centres and use stores, enabling us to plan for the optimal retail mix. Finally, we have developed a fully interactive iPad 'app' to allow potential tenants to visualise our proposed London Wall Place development. The 'app' has been well received by agents and potential tenants.

developments

Hammerson has been one of the leading real estate developers in the UK and France, managing complex urban regeneration schemes and office projects and forging strong links with local authorities and occupiers.

After a period of restrained activity as the real estate market contracted during the worst of the economic downturn, we are now increasing the resources applied to development. Many of our potential projects offer shareholders high returns. Overall, our committed and near-term pipeline, excluding Faubourg Saint-Honoré, totals 181,400m² and has an estimated cost to complete of £1.1 billion. Our principal schemes may be categorised as follows:

· committed - 54-60 rue du Faubourg Saint-Honoré and Les Terrasses du Port;

· near-term - Principal Place and London Wall Place; and

· longer-term - Eastgate Quarters in Leeds and Sevenstone in Sheffield.

Our pipeline of potential future developments is substantial and we maintain close contact with local authorities and prospective occupiers who have interests in these schemes. We will progress projects on the basis of sound financial analysis demonstrating good returns, when the relevant markets are sufficiently robust and when we have the right level of interest from occupiers. We will also continue to follow a prudent funding strategy for developments which will involve recycling established assets and entering into joint ventures where appropriate.

We have achieved several milestones in progressing the development programme so far this year:

· Completed the redevelopment of 54-60 rue du Faubourg Saint-Honoré;

· Signed development agreements with:

o Sheffield City Council for Sevenstone

o South Oxfordshire District Council for The Orchard Centre, Didcot

· Achieved planning approvals for:

o Principal Place

o London Wall Place

o Eastgate Quarters

· Agreed heads of terms with CMS Cameron McKenna for a lease of 18,600m² at Principal Place.

The table below summarises the major developments which we have started, or expect to start, in the next few years. For all the schemes shown below our ownership interest is currently 100%.

MAJOR DEVELOPMENTS

Scheme	Lettable area	Earliest start	Forecast completion	Cost to 30/06/11¹	Value at 30/06/11	Estimated cost to complete¹	Estimated annual income²	Let³
	m²			£m	£m	£m	£m	%
COMMITTED
Faubourg Saint-Honoré⁴	8,200	Complete	Complete	82	133	2	5	100
Terrasses du Port	56,000	Commenced	April 2014	85	95	305	29	54

NEAR-TERM
Principal Place: -office	56,500	April 2012	Dec 2014	n/a	19	290	27	32
-residential	23,100	March 2013	Nov 2015	n/a	8	195	-	nil
London Wall Place	45,800	June 2012	2015-17	n/a	-	345	27	nil
Sub total (excluding Faubourg)	181,400				122	1,135	83

LONGER-TERM
Eastgate Quarters, Leeds	106,000	2013	2016	n/a	47	550	45	nil
Sevenstone, Sheffield	60,500	2013	2016	n/a	22	290	24	nil

_Notes

_{(1) Capital cost including capitalised interest.}

_{(2) Net of head rents and after expiry of rent-free periods. For Principal Place and London Wall Place, head rent is estimated at 7% of gross rental income.}

_{(3) Let or in solicitors' hands by income at 29 July 2011.}

_{(4) Data for property as a whole, including redevelopment which opened in June 2011.}

_{(5) € converted at £1 = €1.107.}

_{(6) Timings are indicative only.}

Committed developments

The redevelopment work at 54-60 rue du Faubourg Saint-Honoré, Paris 8ème, is complete and retailers, including Burberry, Moschino, Bally and Blumarine have either started to trade or will do over the next few months. The total cost of the redevelopment was £32 million and the uplift in annual rental income is £3.0 million. For the property as a whole, the valuation at 30 June 2011 was £51 million above cost.

At Les Terrasses du Port, Marseille, construction commenced in May and is progressing well. The scheme comprises a 56,000m² shopping centre with 160 shops and 2,600 car parking spaces and will be one of the largest shopping centre developments in France over the next few years. Having redesigned the original scheme we restarted discussions with retailers and agreed new lettings to Golden Paradise, Soleil Sucré, Orange, Carnet de Vol and IZAC. Leases representing 54% of the income are now pre-let or under offer.

Near-term developments

During the year to date, we have made good progress in advancing some of our near-term projects. We have excellent opportunities for office and mixed-use developments in and around the City of London.

In July, the London Borough of Hackney resolved to grant planning consent, subject to completing a S106 agreement, for the mixed-use scheme at Principal Place (formerly known as Bishops Place). This application evolved from the planning permission granted in 2009 for an office-led scheme following a review and feedback from potential occupiers and stakeholders. The revised scheme, designed by Foster + Partners, will accommodate a single 56,500m², 16-storey office building offering large floor plates and flexibility to occupiers. Complementing the office provision are 243 private apartments in an elegantly designed residential tower, with a further 56 affordable units located on the site. The new scheme creates a main square for Principal Place at street level and opens up the area, creating a vibrant public realm with 2,400m² of retail units and restaurants. In June, we agreed heads of terms with CMS Cameron McKenna, the leading European law firm, to let around one-third of the office space.

The City of London resolved in June to grant consent for our development at London Wall Place, London EC2. The 45,800m² scheme, designed by MAKE architects, will involve the demolition of St Alphage House to make way for two landmark office buildings. A 28,300m² office building at 1 London Wall Place, adjacent to Moor House, will offer large floor plates providing flexibility to occupiers, and extensive landscaped multi-level roof gardens. To the west, 2 London Wall Place, will provide 17,500m² of office space in a 16-storey tower, which will be the same height as neighbouring 5 Aldermanbury Square. Over half of the site will be open space, with a series of new gardens set around the historic London Wall and St Alphage church tower remains. The Barbican's famous highwalk system will also be retained, allowing easy access to all parts of the City through the creation of new north/south and east/west bridges.

Longer-term developments

There continues to be strong demand from retailers for well-located, high quality accommodation in the UK and France. The supply of prime shopping centres of this type is constrained by planning restrictions and the expertise and funding requirements to build and operate them. Our pipeline provides some exciting retail development opportunities.

Work continues to progress our retail-led city centre regeneration projects in Leeds and Sheffield. In July, our revised outline planning application to Leeds City Council for a 106,000m² shopping centre development received a resolution to grant consent. The proposal for Eastgate Quarters, for which we have a development agreement with the council, features a two-level shopping centre with 130 stores, anchored by John Lewis and Marks & Spencer, and parking for 2,500 cars.

We have a new development agreement with Sheffield City Council for Sevenstone, a retail-led city centre development, and now have control of the development land. Sevenstone has outline planning consent, some of the buildings within the scheme have detailed consent and we are working closely with principal stakeholders, such as John Lewis, to progress the project. The current scheme comprises 60,500m² of retail and leisure accommodation and 2,500 car parking spaces.

Potential redevelopments and extensions

Our pipeline also includes the potential for several extensions, redevelopments and smaller development schemes as shown in the table below. In aggregate, these schemes have an estimated cost of £335 million and would provide approximately 125,000m² of restructured space and around 75,000m² of new accommodation. We would target an average profit on cost of 15% for these projects.

Scheme	Ownership interest	Lettable area	Potential start	Potential completion	Estimated total cost¹
	%	m²			£m
UK shopping centres
Monument Mall, Newcastle	100	7,800²	2012	2013	10
Centrale, Croydon	100	64,700²	2012	2014	45

UK retail parks
Newtownabbey, Belfast	100	6,000	2012	2013	11
Ravenhead, St Helens	100	5,700	2012	2013	11
Manor Walks, Cramlington	100	12,000	2012	2013	20
Elliott's Field, Rugby	100	12,700²	2012	2014	20
The Orchard Centre, Didcot	100	22,000	2013	2015	75
Parc Tawe, Swansea	100	25,800²	2013	2014	20

French shopping centres
Le Jeu de Paume, Beauvais	100	21,800	2012	2014	75
Italie 2 extension	100	6,000	2013	2014	35

London office
99 Bishopsgate	100	14,300²	2011	2012	13
Total		198,800			335

_Notes

_{(1) Incremental capital cost including capitalised interest.}

_{(2) Existing area to be restructured.}

Finally, we have long-term projects at Brent Cross/Cricklewood and Bishopsgate Goodsyard which we will continue to progress.

VALUATIONS

Portfolio overview

Our £5.8 billion property portfolio is of high quality and focused on regionally dominant shopping centres in the UK and France, conveniently located retail parks and prime office buildings in the City of London. At 30 June 2011, 73% of the portfolio by value was located in the UK, with the remainder in France. The portfolio weightings of retail and offices were 88% and 12% respectively and the investment portfolio comprised 97% of the total.

The net and gross valuations, income and yields for the Group's investment portfolio, excluding developments, are analysed in the table below. The low yields relative to other classes of property reflect the locations and attractiveness of the portfolio.

Investment portfolio at 30 June 2011			Gross	Net book
		Income	value	value
		£m	£m	£m
Portfolio value (net of cost to complete)			5,981	5,981
Purchasers' costs⁽¹⁾				(321)
Net portfolio valuation as reported in the financial statements				5,660
Income and yields
Rent for valuers' initial yield		311.5	5.2%	5.5%
Rent-free periods (including pre-lets)		19.2	0.3%	0.3%
Rent for 'topped-up' initial yield		330.7	5.5%	5.8%
Non-recoverable costs (net of outstanding rent reviews)		14.6	0.3%	0.3%
Passing rents		345.3	5.8%	6.1%
ERV of vacant space		9.6	0.1%	0.2%
Reversions		5.0	0.1%	0.1%
Total ERV⁽²⁾/Reversionary yield		359.9	6.0%	6.4%
True equivalent yield			6.0%
Nominal equivalent yield			5.7%
Notes
(1)	Purchasers' costs equate to 5.7% of the net portfolio value
(2)	Total ERV at 31 December 2010 was £330.1 million (£334.5 million at 30 June 2011 exchange rates).

Capital returns

For the six months ended 30 June 2011, the portfolio's total return was 4.8%, comprising a capital return of 2.2% and an income return of 2.5%.

Capital returns - total portfolio
For the six months ended 30 June 2011

	Shopping centres		Retail parks		Offices		Total
		Capital		Capital		Capital		Capital
	Value	return	Value	return	Value	return	Value	return
	£m	%	£m	%	£m	%	£m	%
UK	2,427	1.8	1,180	0.9	673	3.6	4,280	1.8
France	1,462	3.3	105	3.8	-	-	1,567	3.3
Total	3,889	2.3	1,285	1.1	673	3.6	5,847	2.2

In the UK portfolio, more than three-quarters of the valuation uplift resulted from improved investment yields, with the balance reflecting increased rental income. For the UK shopping centres, the valuation movement was almost entirely driven by changes to investment yields.

The picture was more balanced for UK retail parks and offices, with the impact of yield movements and increased rental income broadly equal. The valuation uplift in the French portfolio was exclusively derived from investment yield movements and development surpluses.

The components of the valuation changes in the first half of 2011 for the UK and French portfolios are shown below.

http://www.rns-pdf.londonstockexchange.com/rns/4380L_3-2011-7-29.pdf

http://www.rns-pdf.londonstockexchange.com/rns/4380L_4-2011-7-29.pdf

FINANCIAL REVIEW

The financial information contained in this review is extracted from or calculated using the attached condensed financial statements and the glossary of terms.

PROFIT BEFORE TAX

The Group's profit before tax for the six months ended 30 June 2011 of £192.8 million reflected a £121.1 million increase in the value of the property portfolio. For the equivalent period in 2010 the portfolio valuation increase of £258.7 million contributed to a profit before tax of £335.6 million

Analysis of profit before tax	Six months to	Six months to
	30 June 2011	30 June 2010
	£m	£m
Adjusted profit before tax	69.7	70.2
Adjustments:
Profit on the sale of investment properties	1.5	1.1
Revaluation gains on property portfolio	121.1	258.7
Share of revaluation gains and change in fair value of derivatives in associate	-	4.3
Change in fair value of derivatives	0.5	1.3
Profit before tax	192.8	335.6

Adjusted profit before tax at £69.7 million was marginally lower than the £70.2 million for the same period in 2010. The positive impacts from acquisitions, increased net rental income and developments were more than offset by the effects of disposals and higher administration expenses as shown in the table below.

Reconciliation of adjusted profit before tax
		£m
Adjusted profit before tax for H1 2010		70.2
Acquisitions		12.8
Disposals		(13.3)
Developments		2.1
Like-for-like net rental income increase		4.9
Administration expenses		(4.3)
Exchange and other		(2.7)
Adjusted profit H1 2011		69.7

For the first half of 2011, adjusted earnings per share were 9.6 pence, slightly down from 9.7 pence in the prior year, a result of the lower profit referred to above and an increase in the average number of shares in issue.

Detailed calculations for earnings per share are set out in note 7A to the accounts.

NET RENTAL INCOME

Net rental income for the period to 30 June 2011 was £143.9 million compared with £140.0 million in 2010. The net rental income lost from disposals more than offset that gained from acquisitions. However, lettings and rent reviews in the UK retail portfolio and indexation in France contributed to the increase in like-for-like net rental income.

Net rental income	Six months to	Six months to
	30 June 2011	30 June 2010
	£m	£m
Properties owned throughout both periods (i.e. like-for-like)	130.9	126.0
Acquisitions	13.4	(0.4)
Developments	(0.4)	(0.4)
Properties sold	-	14.7
Exchange and other	-	0.1
Total net rental income	143.9	140.0

Administration expenses

At £20.6 million, administration expenses were £4.3 million higher than in 2010 due to a reduction in management fees receivable, predominantly because of the cessation of the development management element of the Thornfield contract, and higher staff costs. Having brought additional skills into the business, we have a number of initiatives underway to review elements of the cost base.

Finance costs

Excluding the change in fair value of derivatives and capitalised interest, net finance costs for the six months to 30 June 2011 were £56.0 million compared with £54.8 million for the equivalent period in 2010. The increase reflected higher commitment fees and margin following the refinancing of our bank facilities in April. Interest capitalised of £2.4 million principally related to the development of Les Terrasses du Port.

For the first half of 2011, the Group's average cost of borrowing was 5.4%, compared with 5.0% for 2010 as a whole, with the increase reflecting a higher proportion of fixed rate borrowings towards the end of 2010 as disposal proceeds were used to repay cheaper variable rate bank debt. We expect the average borrowing cost for the whole of 2011 to be closer to that for 2010 as acquisitions made in the first half of 2011 have been funded by floating rate debt carrying lower rates of interest.

TAX

Due to its status as a UK REIT and French SIIC, the Group bears minimal current tax.

DIVIDEND

The Directors have declared an interim dividend of 7.3 pence per share, payable to shareholders on the register at the close of business on 19 August 2011. The dividend will be paid on 7 October 2011 and 5.5 pence per share will be paid as a PID, net of withholding tax where appropriate, with the remainder of 1.8 pence per share paid as a normal dividend. There will be no scrip alternative although the dividend reinvestment plan will be reinstated. The 2010 interim dividend of 7.15 pence per share was paid entirely as a normal cash dividend.

Balance sheet

At 30 June 2011, equity shareholders' funds were £3.7 billion, up £187 million over the six-month period. Adjusted net asset value per share increased by 5.1%, or 25p, to £5.20 compared with £4.95 at the end of 2010.

The increase in equity shareholders' funds and net asset value per share arose principally from the uplifts in the values of the property portfolio and other investments, and retained profit. Calculations for net asset value per share are set out in note 7B to the accounts.

Movement in net asset value		Equity shareholders' funds*	Adjusted NAV*
		£m	£ per share
31 December 2010		3,498	4.95
Revaluation - investment portfolio and other investments		131	0.18
Revaluation - developments		13	0.02
Adjusted profit before tax		70	0.10
Dividends		(40)	(0.06)
Exchange and other		32	0.01
30 June 2011		3,704	5.20
*	Excluding deferred tax and the fair value of derivatives, calculated in accordance with EPRA best practice.

FINANCING

Our funding strategy in the first half of 2011 has been to decrease our exposure to bank refinancing, particularly in light of the smaller group of international banks willing to lend to commercial real estate. The medium-term outlook for the sterling, euro and private placement bond markets is favourable and we believe they will be available to Hammerson to replace existing bank borrowings as they mature. We will continue to monitor these markets and consider accessing them as appropriate.

In April, we signed a £505 million syndicated five-year revolving credit facility. The facility carries a margin of 150 basis points over LIBOR, will be used for general corporate purposes and replaced existing undrawn facilities of £670 million due to expire 2011-2013.

In July we agreed a new €219 million credit facility for our O'Parinor joint venture which is expected to be drawn in September. This non-recourse facility has a maturity of 2016 with two one-year extension options and has an attractive margin.

Liquidity, comprising cash and undrawn committed facilities, less the fair value of currency swaps, was £488 million at 30 June and the average maturity of debt was just under 7 years. The Group has no debt maturing before April 2012, as shown in the chart below.

Debt maturity profile at 30 June 2011

http://www.rns-pdf.londonstockexchange.com/rns/4380L_5-2011-7-29.pdf

The Group's unsecured bank facilities 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 be not less than 1.25 times. Three of the Company's unsecured bonds contain the same gearing covenant and two contain a covenant that gearing should not exceed 175%. The bonds contain no covenant for interest cover. Further discussion of financing risk is included within Principal Risks and Uncertainties on page 26.

We monitor the Group's financial structure in the context of guidelines approved by the Board. These guidelines currently include: gearing of no more than 85% for an extended period; interest cover of at least 2.0 times; and a net debt to EBITDA ratio of less than ten times. For the first half of 2011 these ratios were 60%, 2.6 times and 8.9 times respectively. In July, Fitch upgraded Hammerson's unsecured credit rating from BBB+ to A-.

Cash flow

Cash generated from operations was £128.7 million for the 6 months ended 30 June 2011 and £106.2 million for the equivalent period in 2010. Capital expenditure, including acquisitions, was £330 million for the first half of 2011.

Net debt at 30 June 2011 was £2.2 billion, comprising borrowings of £2.3 billion and cash and deposits of £92 million. Acquisitions were the principal reasons behind the increase in net debt from £1.8 billion at the end of 2010.

PORTFOLIO STATISTICS

Income security and quality

The income stream generated by our investment portfolio is secure, has the potential for growth and benefits from leases with long terms. The weighted average unexpired lease term for the investment portfolio was more than eight years at 30 June 2011.

At the end of June, the retail portfolio was 3.0% reversionary whilst our offices were 9.6% over-rented. We estimate that by December 2013, and assuming the reversionary leases are renewed, re-let or reviewed at current ERV, the rental income from the relevant properties could grow by around £10 million per annum.

Hammerson's ten most significant retailers accounted for 17.4% of passing rents at 30 June 2011, whilst our five largest office occupiers contributed 7.8%.

Retail		Office
	% of total		% of total
Tenant	passing rent	Tenant	passing rent
B&Q	2.9	Deutsche Bank	3.0
H&M Hennes	2.2	Royal & Sun Alliance	2.1
Arcadia	1.9	Latham & Watkins LLP	1.3
Home Retail Group	1.8	Lloyds TSB	0.8
Next Group	1.7	DTZ Holdings	0.6
DSG Retail Limited	1.7
New Look	1.4
Inditex	1.3
Boots	1.3
Debenhams	1.2
Total	17.4		7.8

Our credit control team assesses the covenant strength of prospective tenants and monitors the credit ratings of major tenants using a credit rating agency. The agency's risk indicator scale runs from one to five, where a score of one is 'low risk' and two 'lower than average risk'. At 30 June 2011, all of the top ten retail tenants were scored 'one'.

Three of our top five office tenants at the end of June had a low risk indicator and the others, one of which has its rent guaranteed by its parent company, were rated as 'two'.

In the UK portfolio, the number of retail units in administration at 30 June was 37 and 24 of those were still trading. In France all 16 units which were in administration continued to trade. However, for the portfolio as a whole, income from tenants in administration represents just 1.2% of the Group's passing rents. The equivalent figure as at 31 December 2010 was 0.8%.

PROPERTY PORTFOLIO INFORMATION

RENTAL DATA FOR INVESTMENT PORTFOLIO

For the six months ended 30 June 2011


		Gross	Net		Average		Estimated	Reversion/
		rental	rental	Vacancy	rent	Rents	rental	(over-
		income	income	rate	passing	passing	value	rented)
		£m	£m	%	£/m²	£m	£m	%
Notes				1	2	3	4	5
United Kingdom
Retail:	Shopping centres	73.2	62.4	3.1	415	149.6	157.3	2.2
	Retail parks	31.9	29.6	2.3	190	67.2	70.4	2.4
		105.1	92.0	2.8	330	216.8	227.7	2.2
Office:	City	20.9	18.6	0.2	485	41.0	37.0	(11.2)
	Other	1.2	0.8	20.4	245	4.5	5.7	0.5
		22.1	19.4	2.7	445	45.5	42.7	(9.6)
Total United Kingdom		127.2	111.4	2.8	350	262.3	270.4	0.3

Continental Europe
France: Retail		39.8	34.3	2.7	355	83.0	89.5	4.9

Group
Retail		144.9	126.3	2.8	335	299.8	317.2	3.0
Office		22.1	19.4	2.7	445	45.5	42.7	(9.6)
Total investment portfolio		167.0	145.7	2.8	350	345.3	359.9	1.4
Income from developments and other sources not analysed above		0.2	(1.8)
As disclosed in note 2 to the accounts		167.2	143.9

Selected data for the year ended 31 December 2010
Group
Retail		281.3	243.2	2.5	340	269.7	288.7	4.5
Office		50.1	43.8	4.4	445	45.2	41.4	(14.0)
Total investment portfolio		331.4	287.0	2.7	355	314.9	330.1	2.0

Notes
(1)	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.
(2)	Average rent passing at 30 June 2011 before deducting head and equity rents and excluding rents passing from anchor units and car parks.
(3)	The annual rental income receivable from an investment property at 30 June 2011, after any rent-free periods and after deducting head and equity rents.
(4)	The estimated market rental value of the total lettable space in a property at 30 June 2011, after deducting head and equity rents, calculated by the Group's external valuers.
(5)	The percentage by which the ERV exceeds, or falls short of, rents passing together with the estimated rental value of vacant space, all at 30 June 2011.

PROPERTY PORTFOLIO INFORMATION

VALUATION DATA FOR INVESTMENT PORTFOLIO

For the six months ended 30 June 2011

			Revaluation				True
		Properties at	in the	Capital	Total	Initial	equivalent
		valuation	period	return	return	yield	yield
		£m	£m	%	%	%	%
Notes						1	2
United Kingdom
Retail:	Shopping centres	2,415	41	1.8	4.4	5.3	6.2
	Retail parks	1,164	8	0.7	3.4	5.4	6.1
		3,579	49	1.4	4.1	5.3	6.2
Office:	City	545	23	4.4	7.9	5.1	5.9
	Other	67	-	2.1	3.7	4.4	6.7
		612	23	4.1	7.3	5.0	6.0
Total United Kingdom		4,191	72	1.8	4.6	5.3	6.1

Continental Europe
France: Retail		1,469	36	2.6	5.2	5.0	5.5

Group
Retail		5,048	85	1.7	4.3	5.2	6.0
Office		612	23	3.9	7.1	5.0	6.0
Total investment portfolio		5,660	108	2.0	4.6	5.2	6.0
Developments		187	13	9.2	8.1
Total Group		5,847	121	2.2	4.8

Selected data for the year ended 31 December 2010

Group
Retail	4,606	403	9.1	14.9	5.2	6.0
Office	584	44	12.7	20.7	5.3	6.1
Total investment portfolio	5,190	447	9.6	15.6	5.2	6.0

Notes
(1)	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 of £17.7 million 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.
(2)	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 and assuming rents are received quarterly in advance. The property true equivalent yields are determined by the Group's external valuers.
(3)	Further analysis of development properties by segment is provided in note 3B on page 38.
(4)	The weighted average rent-free period is 0.8 years.

PRINCIPAL RISKS AND UNCERTAINTIES

PROPERTY VALUATIONS

Conditions prevailing in the property investment market and the general economic environment affect the value of Hammerson's property portfolio. Accordingly, the Group's net asset value may rise or fall due to external factors beyond management's control. Global financial markets have stabilised since the peak of the financial crisis, and investors have become more active in the real estate investment market, resulting in a rise in property values.

Our property portfolio is of high quality, geographically diversified and let to a large number of tenants. These factors should help mitigate negative impacts which may arise from changes in the financial and property markets. Further discussion of these issues is provided in the Property Markets and Outlook section of this report.

LIQUIDITY RISK

In the current environment, companies with short-term financing requirements may continue to find it difficult to secure sufficient funding at costs comparable with their existing facilities. In April we replaced £670 million of undrawn facilities, which were due to expire over the next two years, with a new £505 million five-year syndicated revolving credit facility. We are planning the refinancing of the £215 million of debt maturing in April 2012.

Gearing stood at 60% at 30 June 2011, significantly lower than the Group's most stringent borrowing covenant that gearing should not exceed 150%.

TENANT DEFAULT

Some tenants continue to face difficult operating conditions, and this increases the risk that they may be unable to pay their rents. The Group's geographical diversity and its large number of tenants mean the impact of individual tenant default for Hammerson is low. Furthermore, our occupational leases are generally long-term contracts, making the income relatively secure. The Property Markets and Outlook and the Business and Financial Review sections of this report on pages 6 and 23 respectively provide additional information on the trading environment and the Group's quality of income.

INTEREST RATE AND EXCHANGE RISK

The short-term outlook is for interest rates to remain low but, nevertheless, the interest charged on borrowings is a significant cost for Hammerson. To manage the risk of changes in interest rates, we set guidelines for our exposure to fixed and floating interest rates, using interest rate and currency swaps as appropriate. At 30 June 2011, 80% of the Group's gross debt was at fixed rates of interest.

The Group is exposed to movements in the sterling/euro exchange rate through its investment in France. Exchange risk is managed partly by matching foreign currency assets with foreign currency borrowings or derivatives. At 30 June 2011, 80% of the value of the Group's French portfolio was hedged.

DEVELOPMENT AND LETTING

Continuing economic uncertainty means that potential occupiers remain cautious about entering into commitments to lease space. We currently have one major development underway, Les Terrasses du Port in Marseille, for which around 54% of the income has been contracted or is in solicitors' hands. We will therefore seek substantial pre-lets before progressing significant developments.

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 2011 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, the analysis of movement in net debt and related notes 1 to 19. 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 Services Authority.

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

Our responsibility

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

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 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, UK

1 August 2011

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 3 to 26 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 1 August 2011

David Atkins	Timon Drakesmith
Director	Director

Consolidated income statement

			Six months	Six months
Year ended			ended	ended
31 December			30 June	30 June
2010			2011	2010
Audited			Unaudited	Unaudited
£m		Notes	£m	£m

332.0	Gross rental income	2	167.2	162.2
248.8	Operating profit before other net gains and share of results of associate	2	123.3	123.7
469.9	Other net gains	2	122.6	259.8
1.5	Share of results of associate	2	-	5.4
720.2	Operating profit	2	245.9	388.9

(111.5)	Finance costs		(55.7)	(56.7)
1.7	Change in fair value of derivatives		0.5	1.3
9.8	Finance income		2.1	2.1
(100.0)	Net finance costs	4	(53.1)	(53.3)
620.2	Profit before tax		192.8	335.6

(0.6)	Current tax credit/(charge)	5A	0.1	-
(0.1)	Deferred tax charge	5A	-	(0.1)
(0.7)	Tax credit/(charge)		0.1	(0.1)

619.5	Profit for the period		192.9	335.5

	Attributable to:
615.4	Equity shareholders		188.3	333.0
4.1	Equity minority interests		4.6	2.5
619.5	Profit for the period		192.9	335.5


87.2p	Basic earnings per share	7A	26.6p	47.3p
87.2p	Diluted earnings per share	7A	26.6p	47.3p

Adjusted earnings per share are shown in note 7A. All results derive from continuing operations.

Consolidated statement of COMPREHENSIVE income

		Six months	Six months
Year ended		ended	ended
31 December		30 June	30 June
2010		2011	2010
Audited		Unaudited	Unaudited
£m		£m	£m

(65.1)	Foreign exchange translation differences	77.0	(146.8)
50.8	Net (loss)/gain on hedge of net investment in foreign subsidiaries	(59.2)	111.7
4.5	Revaluation gains on owner-occupied property	1.5	3.2
18.4	Revaluation gains on other investments	23.4	0.6
(4.8)	Actuarial losses on pension schemes	(1.6)	(0.9)
3.8	Net gain/(loss) recognised directly in equity	41.1	(32.2)

619.5	Profit for the period	192.9	335.5
623.3	Total comprehensive income for the period	234.0	303.3

	Attributable to:
621.8	Equity shareholders	225.5	306.6
1.5	Equity minority interests	8.5	(3.3)
623.3	Total comprehensive income for the period	234.0	303.3

Consolidated balance sheet

31 December			30 June	30 June
2010			2011	2010
Audited			Unaudited	Unaudited
£m		Notes	£m	£m

	Non-current assets
5,331.1	Investment and development properties	8	5,846.7	5,355.3
30.5	Interests in leasehold properties		30.5	23.0
33.4	Plant, equipment and owner-occupied property		34.9	32.8
-	Investment in associate	9B	-	15.8
133.2	Other investments	10	157.0	114.0
45.2	Receivables	11	28.4	58.8
5,573.4			6,097.5	5,599.7
	Current assets
80.7	Receivables	12	125.0	114.3
126.2	Cash and deposits	13	92.0	158.0
206.9			217.0	272.3

5,780.3	Total assets		6,314.5	5,872.0

	Current liabilities
220.1	Payables	14	196.5	173.7
1.0	Tax	5B	0.6	0.7
4.4	Borrowings	15A	239.8	-
225.5			436.9	174.4
	Non-current liabilities
1,916.2	Borrowings	15A	2,042.1	2,323.0
0.5	Deferred tax	5B	0.5	0.5
0.5	Tax	5B	0.6	1.0
30.3	Obligations under finance leases		30.4	22.8
55.6	Payables	17	60.0	67.0
2,003.1			2,133.6	2,414.3

2,228.6	Total liabilities		2,570.5	2,588.7

3,551.7	Net assets		3,744.0	3,283.3

	Equity
176.9	Share capital	18	178.2	176.9
1,222.5	Share premium		1,221.9	1,222.4
415.2	Translation reserve		488.3	336.7
(334.6)	Hedging reserve		(393.8)	(273.7)
7.2	Capital redemption reserve		7.2	7.2
8.6	Other reserves		7.3	6.7
101.5	Revaluation reserve		126.4	82.4
1,890.1	Retained earnings		2,034.6	1,662.2
(4.0)	Investment in own shares		(1.3)	(4.5)
(3.4)	Treasury shares		(1.7)	-
3,480.0	Equity shareholders' funds		3,667.1	3,216.3

71.7	Equity minority interests		76.9	67.0
3,551.7	Total equity		3,744.0	3,283.3

£4.93	Diluted net asset value per share	7B	£5.15	£4.55
£4.95	EPRA net asset value per share	7B	£5.20	£4.54

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 June 2011

					Capital				Investment		Equity	Equity
	Share	Share	Translation	Hedging	redemption	Other	Revaluation	Retained	in own	Treasury	shareholders'	minority	Total
	capital	premium	reserve	reserve	reserve	reserves	reserve	earnings	shares	shares	funds	interests	equity
Unaudited	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m

Balance at 1 January 2011	176.9	1,222.5	415.2	(334.6)	7.2	8.6	101.5	1,890.1	(4.0)	(3.4)	3,480.0	71.7	3,551.7
Issue of shares	0.1	0.6	-	-	-	-	-	-	-	-	0.7	-	0.7
Share-based employee remuneration	-	-	-	-	-	1.1	-	-	-	-	1.1	-	1.1
Cost of shares awarded to employees	-	-	-	-	-	(4.4)	-	-	4.4	-	-	-	-
Proceeds on award of own shares to employees	-	-	-	-	-	-	-	0.1	-	-	0.1	-	0.1
Transfer from treasury shares	-	-	-	-	-	-	-	-	(1.7)	1.7	-	-	-
Transfer on award of own shares to employees	-	-	-	-	-	2.0	-	(2.0)	-	-	-	-	-
Dividends	-	-	-	-	-	-	-	(40.3)	-	-	(40.3)	(3.3)	(43.6)
Scrip dividends	1.2	(1.2)	-	-	-	-	-	-	-	-	-	-	-
Foreign exchange translation differences	-	-	73.1	-	-	-	-	-	-	-	73.1	3.9	77.0
Net loss on hedging activities	-	-	-	(59.2)	-	-	-	-	-	-	(59.2)	-	(59.2)
Revaluation gains on owner-occupied property	-	-	-	-	-	-	1.5	-	-	-	1.5	-	1.5
Revaluation gains on other investments	-	-	-	-	-	-	23.4	-	-	-	23.4	-	23.4
Actuarial losses on pension schemes	-	-	-	-	-	-	-	(1.6)	-	-	(1.6)	-	(1.6)
Profit for the period attributable to equity shareholders	-	-	-	-	-	-	-	188.3	-	-	188.3	4.6	192.9
Total comprehensive income/(loss) for the period	-	-	73.1	(59.2)	-	-	24.9	186.7	-	-	225.5	8.5	234.0
Balance at 30 June 2011	178.2	1,221.9	488.3	(393.8)	7.2	7.3	126.4	2,034.6	(1.3)	(1.7)	3,667.1	76.9	3,744.0

Investment in own shares and treasury shares are stated at cost.

CONSOLIDATED STATEMENT OF CHANGES IN EQUIty

For the year ended 31 December 2010

					Capital				Investment		Equity	Equity
	Share	Share	Translation	Hedging	redemption	Other	Revaluation	Retained	in own	Treasury	shareholders'	minority	Total
	capital	premium	reserve	reserve	reserve	reserves	reserve	earnings	shares	shares	funds	interests	equity
Audited	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2010	175.7	1,223.6	477.7	(385.4)	7.2	10.3	78.6	1,372.4	(4.6)	(5.8)	2,949.7	73.4	3,023.1
Issue of shares	-	0.1	-	-	-	-	-	-	-	-	0.1	-	0.1
Share-based employee remuneration	-	-	-	-	-	3.2	-	-	-	-	3.2	-	3.2
Cost of shares awarded to employees	-	-	-	-	-	(6.4)	-	-	6.4	-	-	-	-
Transfer on award of own shares to employees	-	-	-	-	-	1.5	-	(1.5)	-	-	-	-	-
Proceeds on award of own shares to employees	-	-	-	-	-	-	-	0.1	-	-	0.1	-	0.1
Transfer from treasury shares	-	-	-	-	-	-	-	-	(5.8)	5.8	-	-	-
Purchase of treasury shares	-	-	-	-	-	-	-	-	-	(3.4)	(3.4)	-	(3.4)
Dividends	-	-	-	-	-	-	-	(91.5)	-	-	(91.5)	(3.2)	(94.7)
Scrip dividends	1.2	(1.2)	-	-	-	-	-	-	-	-	-	-	-
Foreign exchange translation differences	-	-	(62.5)	-	-	-	-	-	-	-	(62.5)	(2.6)	(65.1)
Net gain on hedging activities	-	-	-	50.8	-	-	-	-	-	-	50.8	-	50.8
Revaluation gains on owner-occupied property	-	-	-	-	-	-	4.5	-	-	-	4.5	-	4.5
Revaluation gains on other investments	-	-	-	-	-	-	18.4	-	-	-	18.4	-	18.4
Actuarial losses on pension schemes	-	-	-	-	-	-	-	(4.8)	-	-	(4.8)	-	(4.8)
Profit for the year attributable to equity shareholders	-	-	-	-	-	-	-	615.4	-	-	615.4	4.1	619.5
Total comprehensive income/(loss) for the year	-	-	(62.5)	50.8	-	-	22.9	610.6	-	-	621.8	1.5	623.3
Balance at 31 December 2010	176.9	1,222.5	415.2	(334.6)	7.2	8.6	101.5	1,890.1	(4.0)	(3.4)	3,480.0	71.7	3,551.7

Investment in own shares and treasury shares are stated at cost.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 June 2010

					Capital				Investment		Equity	Equity
	Share	Share	Translation	Hedging	redemption	Other	Revaluation	Retained	in own	Treasury	shareholders'	minority	Total
	capital	premium	reserve	reserve	reserve	reserves	reserve	earnings	shares	shares	funds	interests	equity
Unaudited	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m

Balance at 1 January 2010	175.7	1,223.6	477.7	(385.4)	7.2	10.3	78.6	1,372.4	(4.6)	(5.8)	2,949.7	73.4	3,023.1
Share-based employee remuneration	-	-	-	-	-	1.0	-	-	-	-	1.0	-	1.0
Cost of shares awarded to employees	-	-	-	-	-	(5.9)	-	-	5.9	-	-	-	-
Transfer on award of own shares to employees	-	-	-	-	-	1.3	-	(1.3)	-	-	-	-	-
Transfer from treasury shares	-	-	-	-	-	-	-		(5.8)	5.8	-	-	-
Dividends	-	-	-	-	-	-	-	(41.0)	-	-	(41.0)	(3.1)	(44.1)
Scrip dividends	1.2	(1.2)	-	-	-	-	-	-	-	-	-	-	-
Foreign exchange translation differences	-	-	(141.0)	-	-	-	-	-	-	-	(141.0)	(5.8)	(146.8)
Net gain on hedging activities	-	-	-	111.7	-	-	-	-	-	-	111.7	-	111.7
Revaluation gains on owner-occupied property	-	-	-	-	-	-	3.2	-	-	-	3.2	-	3.2
Revaluation gains on other investments	-	-	-	-	-	-	0.6	-	-	-	0.6	-	0.6
Actuarial losses on pension schemes	-	-	-	-	-	-	-	(0.9)	-	-	(0.9)	-	(0.9)
Profit for the period attributable to equity shareholders	-	-	-	-	-	-	-	333.0	-	-	333.0	2.5	335.5
Total comprehensive income/(loss) for the period	-	-	(141.0)	111.7	-	-	3.8	332.1	-	-	306.6	(3.3)	303.3
Balance at 30 June 2010	176.9	1,222.4	336.7	(273.7)	7.2	6.7	82.4	1,662.2	(4.5)	-	3,216.3	67.0	3,283.3

Investment in own shares and treasury shares are stated at cost.

Consolidated cash flow statement

			Six months	Six months
Year ended			ended	ended
31 December			30 June	30 June
2010			2011	2010
Audited			Unaudited	Unaudited
£m		Notes	£m	£m

	Operating activities
248.8	Operating profit before other net gains and share of results of associate	2	123.3	123.7
(3.6)	Increase in receivables		(4.1)	(5.8)
0.2	Increase/(Decrease) in payables		3.3	(0.4)
(8.4)	Adjustment for non-cash items	19	6.2	(11.3)
237.0	Cash generated from operations		128.7	106.2

(111.1)	Interest paid		(88.5)	(87.9)
3.4	Interest received		0.7	2.5
4.6	Distribution received from other investments		-	-
(1.2)	Tax paid	5B	(0.1)	(0.6)
132.7	Cash flows from operating activities		40.8	20.2

	Investing activities
(218.6)	Property and corporate acquisitions		(272.9)	(55.3)
(60.8)	Development and major refurbishments		(43.2)	(39.8)
(25.5)	Other capital expenditure		(13.7)	(12.8)
474.6	Sale of properties		0.3	1.5
80.0	Disposal of associate		-	-
(1.1)	Purchase of other investments		-	-
0.3	(Increase)/Decrease in non-current receivables		(10.6)	1.0
248.9	Cash flows from investing activities		(340.1)	(105.4)

	Financing activities
0.1	Issue of shares		0.7	0.1
0.1	Proceeds from award of own shares		0.1	0.1
(3.4)	Purchase of treasury shares		-	-
(306.6)	Increase/(Decrease) in non-current borrowings		92.8	140.7
(29.2)	Increase/(Decrease) in current borrowings		208.0	(36.7)
(3.2)	Dividends paid to minorities		(3.3)	(3.1)
(95.4)	Equity dividends paid	6	(34.1)	(39.3)
(437.6)	Cash flows used in financing activities		264.2	61.8

(56.0)	Net decrease in cash and deposits		(35.1)	(23.4)

182.9	Opening cash and deposits		126.2	182.9
(0.7)	Exchange translation movement		0.9	(1.5)
126.2	Closing cash and deposits	13	92.0	158.0

Analysis of movement in net debt

For the six months ended 30 June 2011			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 2011	54.4	71.8	(4.4)	(1,916.2)	(1,794.4)
Cash flow	(37.3)	2.2	(208.0)	(92.8)	(335.9)
Exchange	0.3	0.6	(27.4)	(33.1)	(59.6)
Balance at 30 June 2011	17.4	74.6	(239.8)	(2,042.1)	(2,189.9)

Notes to the accounts

1. FINANCIAL INFORMATION

The financial information contained in this Half-year Report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The results for the year ended 31 December 2010 are an abridged version of the full accounts for that year, which received an unqualified report from the auditors, did not contain a statement under section 498(2) or (3) of the Companies Act 2006 or include a reference to any matter to which the auditors drew attention by way of emphasis without qualifying their report, and have been filed with the Registrar of Companies. 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.

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 2010.

The management fees receivable in note 2 include fees paid to Hammerson in respect of joint ventures and an associate for investment and development management services. All other related party transactions, with the exception of Directors' remuneration, are eliminated on consolidation.

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

Balance sheet: £1 = €1.107 (30 June 2010: £1 = €1.221; 31 December 2010: £1 = €1.167)

Income statement: £1 = €1.152 (30 June 2010: £1 = €1.150; 31 December 2010: £1 = €1.166).

The Half-year Report was approved by the Board on 1 August 2011.

GOING CONCERN

The current economic conditions have created a number of uncertainties. Hammerson's business activities, together with factors likely to affect its future development, performance, and position are set out in the 'Chairman's statement', 'Property markets and outlook', the 'Business and financial review' and 'Principal risks and uncertainties'. The financial position of the Group, its liquidity position and borrowing facilities are described in the 'Business and 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. RESULT FOR THE PERIOD


Year ended 31 December 2010					Six months ended 30 June 2011			Six months ended 30 June 2010
	Capital					Capital			Capital
Adjusted	and other	Total			Adjusted	and other	Total	Adjusted	and other	Total
£m	£m	£m		Notes	£m	£m	£m	£m	£m	£m
332.0	-	332.0	Gross rental income	3A	167.2	-	167.2	162.2	-	162.2
(5.1)	-	(5.1)	Ground and equity rents payable		(2.5)	-	(2.5)	(2.5)	-	(2.5)
326.9	-	326.9	Gross rental income, after rents payable		164.7	-	164.7	159.7	-	159.7

59.9	-	59.9	Service charge income		29.0	-	29.0	30.8	-	30.8
(67.7)	-	(67.7)	Service charge expenses		(33.8)	-	(33.8)	(35.0)	-	(35.0)
(7.8)	-	(7.8)	Net service charge expenses		(4.8)	-	(4.8)	(4.2)	-	(4.2)
(34.4)	-	(34.4)	Other property outgoings		(16.0)	-	(16.0)	(15.5)	-	(15.5)
(42.2)	-	(42.2)	Property outgoings		(20.8)	-	(20.8)	(19.7)	-	(19.7)

284.7	-	284.7	Net rental income	3A	143.9	-	143.9	140.0	-	140.0

9.6	-	9.6	Management fees receivable		3.0	-	3.0	4.5	-	4.5
(30.1)	-	(30.1)	Cost of property activities		(15.2)	-	(15.2)	(14.0)	-	(14.0)
(15.4)	-	(15.4)	Corporate expenses		(8.4)	-	(8.4)	(6.8)	-	(6.8)
(35.9)	-	(35.9)	Administration expenses		(20.6)	-	(20.6)	(16.3)	-	(16.3)
248.8	-	248.8	Operating profit before other net gains and share of results of associate		123.3	-	123.3	123.7	-	123.7
-	(15.7)	(15.7)	Gain/(Loss) on the sale of investment properties		-	1.5	1.5	-	1.1	1.1
	38.5	38.5	Gain on sale of associate		-	-	-	-	-	-
-	447.0	447.0	Revaluation gains on investment properties		-	107.8	107.8	-	259.4	259.4
-	0.1	0.1	Revaluation gains/(losses) on development properties		-	13.3	13.3	-	(0.7)	(0.7)
-	469.9	469.9	Other net gains		-	122.6	122.6	-	259.8	259.8

2.0	(0.5)	1.5	Share of results of associate	9A	-	-	-	1.1	4.3	5.4
250.8	469.4	720.2	Operating profit		123.3	122.6	245.9	124.8	264.1	388.9

(106.3)	6.3	(100.0)	Net finance (costs)/income	4	(53.6)	0.5	(53.1)	(54.6)	1.3	(53.3)
144.5	475.7	620.2	Profit before tax		69.7	123.1	192.8	70.2	265.4	335.6
(0.6)	-	(0.6)	Current tax credit/(charge)	5A	0.1	-	0.1	-	-	-
-	(0.1)	(0.1)	Deferred tax charge	5A	-	-	-	-	(0.1)	(0.1)
143.9	475.6	619.5	Profit for the period		69.8	123.1	192.9	70.2	265.3	335.5
(3.7)	(0.4)	(4.1)	Equity minority interest		(2.0)	(2.6)	(4.6)	(1.9)	(0.6)	(2.5)
140.2	475.2	615.4	Profit for the period attributable to equity shareholders	7A	67.8	120.5	188.3	68.3	264.7	333.0

3. SEGMENTAL ANALYSIS

The factors used to determine the Group's reportable segments are the geographic locations (UK and Continental Europe) and 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 external customers, or tenants. 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.

A. REVENUE AND PROFIT BY SEGMENT

Year ended 31 December 2010						Six months ended 30 June 2011				Six months ended 30 June 2010
		Non-cash items						Non-cash items				Non-cash items
													Revaluation
Gross	Net	Within net	Revaluation			Gross	Net	Within net	Revaluation	Gross	Net	Within net	gains/
rental	rental	rental	gains on			rental	rental	rental	gains on	rental	rental	rental	(losses) on
income	income	income	properties			income	income	income	properties	income	income	income	properties
£m	£m	£m	£m			£m	£m	£m	£m	£m	£m	£m	£m
				United Kingdom
136.8	113.6	(2.2)	260.8	Retail:	Shopping centres	73.2	62.4	(2.9)	40.4	64.2	53.6	(0.5)	166.8
54.1	50.2	(0.6)	101.6		Retail parks	31.9	29.6	(0.4)	8.4	26.8	25.0	(0.2)	51.7
190.9	163.8	(2.8)	362.4			105.1	92.0	(3.3)	48.8	91.0	78.6	(0.7)	218.5
36.1	31.6	7.8	39.7	Office:	City	20.9	18.6	3.2	23.0	15.2	12.9	4.1	29.5
14.0	12.2	1.0	4.5		Other	1.2	0.8	(0.1)	0.3	8.0	7.0	0.7	3.9
50.1	43.8	8.8	44.2			22.1	19.4	3.1	23.3	23.2	19.9	4.8	33.4
241.0	207.6	6.0	406.6	Total United Kingdom		127.2	111.4	(0.2)	72.1	114.2	98.5	4.1	251.9

				Continental Europe
90.4	79.4	0.4	40.4	France:	Retail	39.8	34.3	0.3	35.7	47.8	42.5	0.3	7.5

				Group
281.3	243.2	(2.4)	402.8	Retail		144.9	126.3	(3.0)	84.5	138.8	121.1	(0.4)	226.0
50.1	43.8	8.8	44.2	Office		22.1	19.4	3.1	23.3	23.2	19.9	4.8	33.4
331.4	287.0	6.4	447.0	Total investment portfolio		167.0	145.7	0.1	107.8	162.0	141.0	4.4	259.4

0.6	(2.3)	-	0.1	Developments and other sources not analysed above		0.2	(1.8)	-	13.3	0.2	(1.0)	-	(0.7)
332.0	284.7	6.4	447.1	Total portfolio		167.2	143.9	0.1	121.1	162.2	140.0	4.4	258.7

2	2	19	2	As disclosed in note		2	2	19	2, 8	2	2	19	2

3. SEGMENTAL ANALYSIS continued

B. PROPERTY ASSETS BY SEGMENT

31 December 2010						30 June 2011				30 June 2010
Investment	Development		Capital			Investment	Development		Capital	Investment	Development		Capital
properties	properties	Total	expenditure			properties	properties	Total	Expenditure	properties	properties	Total	expenditure
£m	£m	£m	£m			£m	£m	£m	£m	£m	£m	£m	£m

				United Kingdom
2,243	11	2,254	26	Retail:	Shopping centres	2,415	12	2,427	141	2,146	11	2,157	15
1,025	13	1,038	98		Retail parks	1,164	16	1,180	122	933	7	940	56
3,268	24	3,292	124			3,579	28	3,607	263	3,079	18	3,097	71
518	59	577	136	Office:	City	545	60	605	7	382	56	438	7
66	1	67	2		Other	67	1	68	-	194	5	199	1
584	60	644	138			612	61	673	7	576	61	637	8
3,852	84	3,936	262	Total United Kingdom		4,191	89	4,280	270	3,655	79	3,734	79

				Continental Europe
1,338	57	1,395	30	France:	Retail	1,469	98	1,567	46	1,575	46	1,621	11

				Group
4,606	81	4,687	154	Retail		5,048	126	5,174	309	4,654	64	4,718	82
584	60	644	138	Office		612	61	673	7	576	61	637	8
5,190	141	5,331	292	Total		5,660	187	5,847	316	5,230	125	5,355	90

4. NET FINANCE COSTS

		Six months	Six months
Year ended		ended	ended
31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

9.9	Interest on bank loans and overdrafts	4.7	4.6
98.5	Interest on other borrowings	51.4	49.0
2.4	Interest on obligations under finance leases	1.3	1.1
2.4	Other interest payable	0.7	2.2
113.2	Gross interest costs	58.1	56.9
(1.7)	Less: Interest capitalised	(2.4)	(0.2)
111.5	Finance costs	55.7	56.7

(1.1)	Change in fair value of interest rate swaps	(0.2)	(0.8)
(0.6)	Change in fair value of currency swaps outside hedge accounting designation	(0.3)	(0.5)
(1.7)	Change in fair value of derivatives	(0.5)	(1.3)

(4.6)	Distribution from other investments	-	-
(5.2)	Other finance income	(2.1)	(2.1)
(9.8)	Finance income	(2.1)	(2.1)
100.0	Net finance costs	53.1	53.3

5. TAX

A. TAX (CREDIT)/CHARGE

		Six months	Six months
Year ended		ended	ended
31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

0.6	Current tax (credit)/charge	(0.1)	-

0.1	Deferred tax charge	-	0.1

0.7	Tax (credit)/charge	(0.1)	0.1

5. TAX (Continued)

B. CURRENT AND DEFERRED TAX MOVEMENTS

	1 January	Recognised	Tax	Exchange	30 June
	2011	in income	paid	movements	2011
	£m	£m	£m	£m	£m

Current tax	1.2	(0.1)	(0.1)	0.1	1.1
Deferred tax	0.5	-	-	-	0.5
	1.7	(0.1)	(0.1)	0.1	1.6

Analysed as:	1 January	30 June
	2011	2011
	£m	£m
Current assets: Corporation tax	(0.3)	(0.1)
Current liabilities: Tax	1.0	0.6
Non-current liabilities: Deferred tax	0.5	0.5
Non-current liabilities: Tax	0.5	0.6
	1.7	1.6

C. COMMENTARY

Hammerson has been a UK REIT since 1 January 2007 and a French SIIC since 1 January 2004 and therefore substantially all the Group's property rental income and gains on properties are exempt from tax.

6. DIVIDENDS

The Directors have declared an interim dividend of 7.3 pence per share, payable on 7 October 2011 to shareholders on the register at the close of business on 19 August 2011. 5.5 pence per share will be paid as a PID, net of withholding tax where appropriate, and the remainder of 1.8 pence per share will be paid as a normal dividend. There will be no scrip alternative and the dividend reinvestment plan will be reinstated. The 2010 interim dividend of 7.15 pence per share was paid entirely as a normal cash dividend.

				Equity dividends
	PID	Non-PID	Total	Six months ended	Year ended	Six months ended
	pence per	pence per	pence per	30 June 2011	31 December 2010	30 June 2010
	share	share	share	£m	£m	£m

Current period
2011 interim dividend	5.5	1.8	7.3	-	-	-

Prior periods
2010 final dividend¹	8.8	-	8.8	40.3	-	-
2010 interim dividend	-	7.15	7.15	-	50.5	-
	8.8	7.15	15.95
2009 second interim dividend¹				-	41.0	41.0
Dividends as reported in the consolidated statement of changes in equity				40.3	91.5	41.0
2010 withholding tax (paid July 2011)				(6.2)	-	-
2009 withholding tax (paid July 2010)				-	-	(5.6)
2009 withholding tax (paid January 2010)				-	3.9	3.9
Dividends paid as reported in the consolidated cash flow statement				34.1	95.4	39.3

¹	The Company offered shareholders a scrip dividend alternative for these dividends. Where a shareholder elected to receive the scrip, the dividend ceased to qualify as a PID.

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. EARNINGS PER SHARE

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 and the treasury shares, which are treated as cancelled.

Year ended				Six months ended			Six months ended
31 December 2010				30 June 2011			30 June 2010
		Pence				Pence			Pence
Earnings	Shares	per		Earnings	Shares	per	Earnings	Shares	per
£m	million	share		£m	million	share	£m	million	share
615.4	705.8	87.2	Basic	188.3	708.0	26.6	333.0	704.5	47.3
-	0.2	-	Dilutive share options	-	0.3	-	-	0.2	-
615.4	706.0	87.2	Diluted	188.3	708.3	26.6	333.0	704.7	47.3
			Adjustments:
(469.9)		(66.6)	Other net gains (note 2)	(122.6)		(17.3)	(259.8)		(36.9)
0.5		0.1	Adjustment for associate (note 9A)	-		-	(4.3)		(0.6)
(1.7)		(0.2)	Change in fair value of derivatives (note 4)	(0.5)		(0.1)	(1.3)		(0.2)
(4.6)		(0.6)	Distribution from other investments (note 4)	-		-	-		-
0.1		-	Deferred tax charge (note 5)	-		-	0.1		-
0.4		-	Equity minority interests in respect of the above	2.6		0.4	0.6		0.1
140.2		19.9	EPRA and adjusted	67.8		9.6	68.3		9.7

B. NET ASSET VALUE PER SHARE

31 December				30 June	30 June
2010				2011	2010
Net asset		Equity		Net asset	Net asset
value		shareholders'		value	value
per share		funds	Shares	per share	per share
£		£m	million	£	£
4.92	Basic	3,667.1	712.6	5.15	4.55
n/a	Company's own shares held in Employee Share Ownership Plan		(0.3)	n/a	n/a
n/a	Treasury shares		(0.4)	n/a	n/a
n/a	Unexercised share options	3.8	0.9	n/a	n/a
4.93	Diluted	3,670.9	712.8	5.15	4.55
(0.11)	Fair value adjustment to borrowings	(101.6)		(0.14)	(0.07)
4.82	EPRA triple net	3,569.3		5.01	4.48
0.02	Fair value of derivatives	33.1		0.05	(0.02)
0.11	Fair value adjustment to borrowings	101.6		0.14	0.07
-	Adjustment for associate (note 9B)	-		-	0.01
4.95	EPRA	3,704.0		5.20	4.54

8. INVESTMENT AND DEVELOPMENT PROPERTIES

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

Balance at 1 January 2011		4,469.6	5,190.2	180.6	140.9	4,650.2	5,331.1
Exchange adjustment		42.8	72.7	3.1	3.1	45.9	75.8
Additions	- Capital expenditure	13.5	13.5	27.9	27.9	41.4	41.4
	- Asset acquisitions	275.0	275.0	--	-	275.0	275.0
Disposals		(0.3)	(0.1)	-	-	(0.3)	(0.1)
Capitalised interest		0.5	0.5	1.9	1.9	2.4	2.4
Revaluation adjustment		-	107.8	-	13.3	-	121.1

Balance at 30 June 2011		4,801.1	5,659.6	213.5	187.1	5,014.6	5,846.7

Properties are stated at market value as at 30 June 2011, valued by professionally qualified external valuers. In the United Kingdom, the Group's properties were valued by DTZ Debenham Tie Leung, Chartered Surveyors. In France, the Group's properties were valued by Cushman & Wakefield, Chartered Surveyors. The valuations have been prepared in accordance with the Royal Institution of Chartered Surveyors Valuation Standards and with IVA 1 of the International Valuation Standards.

9. INVESTMENT IN ASSOCIATE

On 14 December 2010, the Group sold its interest in Bishops Square Holdings Limited, a company in which the Group held a 25% interest.

A. SHARE OF RESULTS OF ASSOCIATE

		Six months	Six months
Year ended		ended	ended
31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

8.7	Gross rental income	-	4.6

2.0	Other operating profits and finance costs	-	1.1
-	Revaluation gains on investment properties	-	6.1
0.1	Change in fair value of derivatives	-	(1.1)
(0.6)	Deferred tax charge	-	(0.7)
(0.5)		-	4.3
1.5	Profit after tax for the period	-	5.4

B. SHARE OF ASSETS AND LIABILITIES OF ASSOCIATE

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

-	Investment properties	-	127.4
-	Other assets	-	4.2
-	Total assets	-	131.6

-	Fair value of derivatives	-	(9.5)
-	Deferred tax	-	(0.7)
-		-	(10.2)
-	Borrowings	-	(89.3)
-	Other liabilities	-	(16.3)
-	Total liabilities	-	(115.8)
-	Net assets	-	15.8

10. OTHER INVESTMENTS

Available for sale investments

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

74.8	Value Retail Investors Limited Partnerships	90.2	57.0
57.3	Investments in Value Retail plc and related companies	65.7	57.0
132.1		155.9	114.0
1.1	Other investments	1.1	-
133.2		157.0	114.0

11. RECEIVABLES: NON-CURRENT ASSETS

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

41.9	Loans receivable	25.3	26.2
-	Loans to associate	-	29.2
3.3	Other receivables	3.1	3.4
45.2		28.4	58.8

Loans receivable comprises a loan of €28 million to Value Retail plc bearing interest at 11% and maturing on 22 August 2012. At 31 December 2010, loans receivable comprised a loan to Value Retail of €16 million, and a loan to SCI Quantum of €30 million plus cumulative accrued interest (see note 12). At 30 June 2010, the loan of €16 million to Value Retail, translated at £13.1 million, was included within current receivables (see note 12).

12. RECEIVABLES: CURRENT ASSETS

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

38.9	Trade receivables	42.2	34.3
-	Loans receivable	30.6	13.1
37.6	Other receivables	47.2	39.7
0.3	Corporation tax	0.1	0.2
3.9	Prepayments	4.9	3.8
-	Fair value of currency swaps	-	23.2
80.7		125.0	114.3

Loans receivable comprises a loan of €30.0 million, plus cumulative accrued interest, to SCI Quantum, the purchaser in 2009 of a property in France. The loan is secured by way of a second charge on the property, bears interest at 6.1% and is for a term of one year from June 2011. At 30 June 2010 a loan of €30.0 million to SCI Quantum, translated at £26.2 million, was included within non-current receivables (see note 11).

13. CASH AND DEPOSITS

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

71.8	Cash at bank	74.6	87.7
54.4	Short-term deposits	17.4	70.3
126.2		92.0	158.0

	Currency profile
109.5	Sterling	67.2	141.6
16.7	Euro	24.8	16.4
126.2		92.0	158.0

14. PAYABLES: CURRENT LIABILITIES

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

64.8	Trade payables	72.5	64.8
128.9	Other payables	101.7	84.6
26.4	Accruals	22.3	24.3
220.1		196.5	173.7

15. BORROWINGS

A. MATURITY

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

1,040.0	After five years	1,040.4	1,039.7
837.8	From two to five years	775.4	936.5
38.4	From one to two years	226.3	346.8
1,916.2	Due after more than one year	2,042.1	2,323.0
4.4	Due within one year	239.8	-
1,920.6		2,281.9	2,323.0

15. BORROWINGS continued

B. ANALYSIS

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

	Unsecured
197.7	£200 million 7.25% Sterling bonds due 2028	197.7	197.7
296.8	£300 million 6% Sterling bonds due 2026	296.9	296.8
247.5	£250 million 6.875% Sterling bonds due 2020	247.6	247.4
298.0	£300 million 5.25% Sterling bonds due 2016	298.2	297.8
598.5	€700 million 4.875% Euro bonds due 2015	631.2	571.8
212.4	Bank loans and overdrafts	520.0	646.3
1,850.9		2,191.6	2,257.8
4.4	Fair value of currency swaps	24.9	(23.2)
1,855.3		2,216.5	2,234.6

	Secured
65.3	Sterling variable rate mortgage due 2015	65.4	65.2
1,920.6		2,281.9	2,299.8

Security for secured borrowings at 30 June 2011 is provided by a first legal charge on property for which the Group's share of the carrying value is £118.9 million.

C. UNDRAWN COMMITTED FACILITIES

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

40.0	Expiring within one year	-	40.0
746.5	Expiring between one and two years	-	438.0
126.9	Expiring after more than two years	421.1	1.2
913.4		421.1	479.2

D. CURRENCY PROFILE

31 December		Borrowings		30 June	30 June
2010		excluding	Fair value of	2011	2010
Total		currency swaps	currency swaps	Total	Total
£m		£m	£m	£m	£m

803.5	Sterling	1,580.6	(538.8)	1,041.8	1,065.6
1,117.1	Euro	676.4	563.7	1,240.1	1,234.2
1,920.6		2,257.0	24.9	2,281.9	2,299.8

16. FAIR VALUE OF FINANCIAL INSTRUMENTS

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

31 December 2010			30 June 2011		30 June 2010
Book	Fair		Book	Fair	Book	Fair
value	value		value	value	value	value
£m	£m		£m	£m	£m	£m

1,916.2	1,993.7	Borrowings, excluding currency swaps	2,257.0	2,358.6	2,323.0	2,393.2
4.4	4.4	Currency swaps	24.9	24.9	(23.2)	(23.2)
1,920.6	1,998.1	Total	2,281.9	2,383.5	2,299.8	2,370.0
8.5	8.5	Interest rate swaps	8.2	8.2	7.9	7.9

At 30 June 2011, the fair value of financial instruments exceeded their book value by £101.6 million (31 December 2010: £77.5 million) equivalent to 14 pence per share (31 December 2010: 11 pence per share) on an adjusted net asset value per share basis.

17. PAYABLES: NON-CURRENT LIABILITIES

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

25.2	Net pension liability	26.5	21.5
21.9	Other payables	25.3	37.6
8.5	Fair value of interest rate swaps	8.2	7.9
55.6		60.0	67.0

18. SHARE CAPITAL

31 December		30 June	30 June
2010		2011	2010
£m		£m	£m

176.9	Called up, allotted and fully paid	178.2	176.9

Ordinary shares of 25p each	Number

Movements in issued share capital
Number of shares in issue at 1 January 2011	707,578,856
Issued in respect of scrip dividend	4,881,115
Share options exercised - Share option scheme	148,012
Share options exercised - Save As You Earn	2,364
Number of shares in issue at 30 June 2011	712,610,347

19. ADJUSTMENT FOR NON-CASH ITEMS IN THE CASH FLOW STATEMENT

			Six months	Six months
Year ended			ended	ended
31 December			30 June	30 June
2010			2011	2010
£m		Note	£m	£m

6.4	Amortisation of lease incentives and other costs		3.0	3.1
(12.8)	Increase in accrued rents receivable		(3.1)	(7.5)
(6.4)	Non-cash items included within net rental income	3A	(0.1)	(4.4)
1.4	Depreciation		0.7	0.7
3.2	Share-based employee remuneration		1.1	1.0
(6.6)	Exchange and other items		4.5	(8.6)
(8.4)			6.2	(11.3)

Other information

DIRECTORS
John Nelson* Chairman
David Atkins Chief Executive
Peter Cole
Timon Drakesmith
Terry Duddy*
Jacques Espinasse*
Judy Gibbons*
John Hirst*
Tony Watson* CBE Senior Independent Director
*Non-Executive Director

SECRETARY
Stuart Haydon

PRINCIPAL GROUP ADDRESSES
United Kingdom
Hammerson plc, 10 Grosvenor Street, London W1K 4BJ
Tel +44 (0) 20 7887 1000	Fax +44 (0) 20 7887 1010

France
Hammerson SAS, Washington Plaza Immeuble Artois, 44 rue Washington, 75408 Paris CEDEX 08, France
Tel +33 (1) 56 69 30 00	Fax +33 (1) 56 69 30 01

Registered office
10 Grosvenor Street, London W1K 4BJ
Registered in England No. 360632

WEBSITE
This Half-year Report, the most recent Annual Report and other information are available on the Company's website, www.hammerson.com. The Company operates a service whereby all registered users can choose to receive, via e-mail, notice of all Company announcements which can be viewed on the website.

UK REIT TAXATION
As a UK REIT, Hammerson plc is exempted from corporation tax on rental income and gains on UK investment properties but is required to pay Property Income Distributions (PIDs). UK shareholders will be taxed on PIDs received at their full marginal tax rates. A REIT may in addition pay normal dividends. The 2011 interim dividend is being paid partly as a PID, to enable the Company to meet its PID obligations, and partly as a normal dividend. For most shareholders, PIDs will be paid after deducting withholding tax at the basic rate. However, certain categories of shareholder are entitled to receive PIDs without withholding tax, principally UK resident companies, UK public bodies, UK pension funds and managers of ISAs, PEPs and Child Trust Funds. Hammerson's website includes a form to be used by shareholders to certify if they qualify to receive PIDs without withholding tax. Further information on UK REITs is available on the Company's website.

DIVIDEND REINVESTMENT PLAN (DRIP)
Shareholders can reinvest dividend payments in additional shares in Hammerson under the DRIP operated by the Company's Registrars by completing an application form online at www.capitashareportal.com or calling Capita IRG Trustees: Tel: 0871 664 0381 (from the UK calls cost 10p per minute plus network extras) or +44 (0) 20 8639 3402 (from overseas) email: ssd@capitaregistrars.com. Since no scrip dividend alternative is being offered, the Dividend Reinvestment Plan is automatically reinstated for those shareholders who have already completed an application form and such shareholders should take no action unless they wish to receive their dividend in cash, in which case they should contact Capita Registrars to cancel their instruction.

FINANCIAL CALENDAR
Ex-dividend date		17 August 2011
Record date		19 August 2011
Election date for DRIP		12 September 2011
Interim dividend payable		7 October 2011

A copy of this announcement will be submitted to the National Storage Mechanism and will shortly be available at www.hemscott.com/nsm.do.

Glossary of terms

Adjusted figures (per share)	Reported amounts adjusted 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	The cost of finance expressed as a percentage of the weighted average of borrowings during the period.

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.

Dividend cover	Adjusted earnings per share divided by dividend per share.

DTR	Disclosure and Transparency Rules, issued by the United Kingdom Listing Authority.

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	European Public Real Estate Association. This organisation has issued recommended bases for the calculation of earnings per share and net asset value per share.

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 assumes rents are received quarterly in advance. The nominal equivalent yield 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, after deducting head and equity rents, calculated by the Group's external valuers.

Gearing	Net debt expressed as a percentage of equity shareholders' funds.

Gross property value	Property value before deduction of purchaser's costs, as provided by the Group's external valuers.

Gross rental income	Income from rents, car parks and commercial income, after accounting for the net effect of the amortisation of lease incentives.

IAS	International Accounting Standard.

IASB	International Accounting Standards Board.

IFRS	International Financial Reporting Standard.

Initial yield	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 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/underlying net rental income	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.

Net asset value per share (NAV)	Equity shareholders' funds divided by the number of shares in issue at the balance sheet date.

Net rental income	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.

Over-rented	The amount by which the ERV falls short of rents passing, together with the estimated rental value of vacant space.

Pre-let	A lease signed with a tenant prior to the completion of a development.

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.

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.

Rents passing or passing rents	The annual rental income receivable from an investment property, after any rent-free periods and after deducting head and equity rents. This may be more or less than the ERV (see over-rented and reversionary or under-rented).

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 period, all excluding deferred tax and certain non-recurring items.

Reversionary or under-rented	The amount by which the ERV exceeds the rents passing, together with the estimated rental value of vacant space.

Reversionary yield	The income on reversion to ERV, irrespective of timing, expressed as a percentage of the gross property valuation, as provided by the Group's external valuers.

Scrip dividend	A dividend received in the form of shares.

SIIC	Sociétés d'Investissements Immobiliers Côtées. A French tax-exempt regime available to property companies listed in France.

Total development cost	All capital expenditure on a development project, including capitalised interest.

Total return	Net rental income and capital return 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	Dividends and capital growth in the 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.

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

END

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