Half-year Report- Part 2

RNS Number : 2740P

British Land Co PLC

16 November 2016

 

consolidated income statement

For the six months ended 30 September 2016

			Six months ended 30 September 2016 Unaudited				Six months ended 30 September 2015 Unaudited2
	Note		Underlying pre-tax1 £m	Capital and other £m	Total £m		Underlying pre-tax1 £m	Capital and other £m	Total £m
Revenue	3		288	9	297		293	15	308
Costs	3		(67)	(6)	(73)		(69)	(7)	(76)
	3		221	3	224		224	8	232
Joint ventures and funds (see also below)	8		68	(199)	(131)		63	219	282
Administrative expenses			(42)	-	(42)		(49)	-	(49)
Valuation movement	4		-	(257)	(257)		-	397	397
Profit on disposal of investment properties and investments			-	27	27		-	26	26
Net financing costs
- financing income	5		2	32	34		3	4	7
- financing charges	5		(43)	(17)	(60)		(62)	(10)	(72)
			(41)	15	(26)		(59)	(6)	(65)
(Loss) profit on ordinary activities before taxation			206	(411)	(205)		179	644	823
Taxation	6		-	1	1		-	7	7
(Loss) profit for the period after taxation					(204)				830
Attributable to non-controlling interests			7	(16)	(9)		8	6	14
Attributable to shareholders of the Company			199	(394)	(195)		171	645	816
Earnings per share:
- basic	2				(19.0)p				79.8p
- diluted	2				(20.3)p				75.4p

Alll results derive from continuing operations.

			Six months ended 30 September 2016 Unaudited				Six months ended 30 September 2015 Unaudited
	Note		Underlying pre-tax1 £m	Capital and other £m	Total £m		Underlying pre-tax1 £m	Capital and other £m	Total £m
Results of joint ventures and funds accounted for using the equity method
Underlying Profit			68	-	68		63	-	63
Valuation movement	4		-	(205)	(205)		-	217	217
Capital financing costs			-	(6)	(6)		-	-	-
Profit on disposal of investment properties, trading properties and investments			-	12	12		-	2	2
Taxation			-	-	-		-	-	-
	8		68	(199)	(131)		63	219	282

¹ See definition in glossary.

² The prior period comparatives have been re-stated - see note 1.

consolidated statement OF COMPREHENSIVE INCOME

For the six months ended 30 September 2016

	Six months ended 30 September 2016 Unaudited £m	Six months ended 30 September 2015 Unaudited £m
(Loss) profit for the period after taxation	(204)	830
Other comprehensive (expense) income:
Items that will not be reclassified subsequently to profit or loss:
Net actuarial loss on pension scheme	(23)	(1)
Valuation movements on owner-occupied property	(2)	12
	(25)	11
Items that may be reclassified subsequently to profit or loss:
(Losses) gains on cash flow hedges
- Group	(47)	8
- Joint ventures and funds	(3)	4
- Reclassification of items from the statement of comprehensive income	-	-
	(50)	12
Transferred to the income statement (cash flow hedges)
- Foreign currency derivatives	-	2
- Interest rate derivatives	10	4
	10	6
Exchange differences on translation of foreign operations
- Hedging and translation	-	1
	-	1
Deferred tax on items of other comprehensive income	-	(5)
Other comprehensive (expense) profit for the period	(65)	25
Total comprehensive (expense) income for the period	(269)	855
Attributable to non-controlling interests	(10)	14
Attributable to shareholders of the Company	(259)	841

consolidated BALANCE SHEET

AS AT 30 SEPTEMBER 2016

	Note		30 September 2016 Unaudited £m	31 March 2016 Audited £m
ASSETS
Non-current assets
Investment and development properties	7		9,179	9,643
Owner-occupied property	7		93	95
			9,272	9,738
Other non-current assets
Investments in joint ventures and funds	8		3,145	3,353
Other investments	9		149	142
Deferred tax assets			3	3
Interest rate and currency derivative assets	10		255	167
			12,824	13,403
Current assets
Trading properties	7		323	325
Debtors			41	33
Cash and short-term deposits	10		107	114
			471	472
Total assets			13,295	13,875
LIABILITIES
Current liabilities
Short-term borrowings and overdrafts	10		(416)	(74)
Creditors			(217)	(218)
Corporation tax			(16)	(18)
			(649)	(310)
Non-current liabilities
Debentures and loans	10		(3,146)	(3,687)
Other non-current liabilities			(147)	(122)
Interest rate and currency derivative liabilities	10		(172)	(137)
			(3,465)	(3,946)
Total liabilities			(4,114)	(4,256)
Net assets			9,181	9,619
EQUITY
Share capital			260	260
Share premium			1,297	1,295
Merger reserve			213	213
Other reserves			(134)	(93)
Retained earnings			7,296	7,667
Equity attributable to shareholders of the Company			8,932	9,342
Non-controlling interests			249	277
Total equity			9,181	9,619
EPRA NAV per share*	2		891p	919p

* As defined in glossary.

consolidated statement OF CASH FLOWS

For the six months ended 30 September 2016

	Note		Six months ended 30 September 2016 Unaudited £m	Six months ended 30 September 20151 Unaudited £m
Rental income received from tenants			241	216
Fees and other income received			31	28
Operating expenses paid to suppliers and employees			(86)	(83)
Cash generated from operations			186	161
Interest paid			(50)	(58)
Interest received			2	-
Corporation tax repayments paid			-	(1)
Distributions and other receivables from joint ventures and funds	8		25	30
Net cash inflow from operating activities			163	132
Cash flows from investing activities
Development and other capital expenditure			(109)	(132)
Purchase of investment properties			(72)	(240)
Sale of investment and trading properties			436	390
Payments received in respect of future trading property sales			4	16
Purchase of investments			(15)	-
Investment in and loans to joint ventures and funds			(27)	(208)
Capital distributions and loan repayments from joint ventures and funds			64	323
Indirect taxes paid in respect of investing activities			(9)	(1)
Net cash inflow from investing activities			272	148
Cash flows from financing activities
Issue of ordinary shares			2	2
Purchase of ordinary shares			(8)	-
Dividends paid			(150)	(116)
Dividends paid to non-controlling interests			(6)	(9)
Acquisition of units in Hercules Unit Trust			(12)	(55)
Closeout of interest rate derivatives			(11)	13
Cash collateral transactions			-	(22)
Decrease in bank and other borrowings			(297)	(369)
Drawdowns on bank and other borrowings			40	11
Drawdown of zero coupon 2015 convertible bond			-	345
Net cash outflow from financing activities			(442)	(200)
Net (decrease) increase in cash and cash equivalents			(7)	80
Cash and cash equivalents at 1 April			114	108
Cash and cash equivalents at 30 September			107	188
Cash and cash equivalents consists of:
Cash and short-term deposits			107	188

¹ The prior period comparatives have been restated. See note 1.

Consolidated Statement of Changes in Equity

For the six months ended 30 September 2016

Six month movements in equity

	Share capital £m	Share premium £m	Hedging and translation reserve £m	Re- valuation reserve £m	Merger reserve £m	Retained earnings £m	Total £m	Non- controlling interests £m	Total equity £m
Balance at 1 April 2016	260	1,295	(107)	14	213	7,667	9,342	277	9,619
Total comprehensive expense for the period	-	-	(36)	(5)	-	(218)	(259)	(10)	(269)
Share issues	-	2	-	-	-	-	2	-	2
Fair value of share and share option awards	-	-	-	-	-	1	1	-	1
Purchase of own shares						(8)	(8)	-	(8)
Purchase of units from non-controlling interests	-	-	-	-	-	-	-	(12)	(12)
Dividends payable in period (14.18p per share)	-	-	-	-	-	(146)	(146)	-	(146)
Dividends paid to non-controlling interests	-	-	-	-	-	-	-	(6)	(6)
Balance at 30 September 2016	260	1,297	(143)	9	213	7,296	8,932	249	9,181
Balance at 1 April 2015	258	1,280	(76)	(6)	213	6,563	8,232	333	8,565
Total comprehensive income for the period	-	-	11	14	-	816	841	14	855
Share issues	1	13	-	-	-	(10)	4	-	4
Fair value of share and share option awards	-	-	-	-	-	6	6	-	6
Purchase of units from non-controlling interests	-	-	-	-	-	(1)	(1)	(54)	(55)
Dividends payable in period (13.84p per share)	-	-	-	-	-	(141)	(141)	-	(141)
Dividends payable by subsidiaries	-	-	-	-	-	-	-	(9)	(9)
Adjustment for scrip dividend element	-	-	-	-	-	28	28	-	28
Balance at 30 September 2015	259	1,293	(65)	8	213	7,261	8,969	284	9,253

Prior year movements in equity

	Share capital £m	Share premium £m	Hedging and translation reserve £m	Re- valuation reserve £m	Merger reserve £m	Retained earnings £m	Total £m	Non- controlling interests £m	Total equity £m
Balance at 1 April 2015	258	1,280	(76)	(6)	213	6,563	8,232	333	8,565
Total comprehensive income for the period	-	-	(31)	20	-	1,344	1,333	19	1,352
Share issues	2	15	-	-	-	(12)	5	-	5
Fair value of share and share option awards	-	-	-	-	-	8	8	-	8
Loss on purchase of units from non-controlling interests	-	-	-	-	-	(1)	(1)	-	(1)
Purchase of units from non-controlling interests	-	-	-	-	-	-	-	(59)	(59)
Dividends payable in year (28.00p per share)	-	-	-	-	-	(287)	(287)	-	(287)
Dividends payable by subsidiaries	-	-	-	-	-	-	-	(16)	(16)
Adjustment for scrip dividend element	-	-	-	-	-	52	52	-	52
Balance at 31 March 2016	260	1,295	(107)	14	213	7,667	9,342	277	9,619

Notes to the accounts
for the six months ended 30 September 2016

1 Basis of preparation

The financial information for the period ended 30 September 2016 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 March 2016 has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

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

The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 March 2016, which have been prepared in accordance with IFRS as adopted by the European Union.

The same accounting policies, estimates, presentation and methods of computation are followed in the half year report as applied in the Group's latest annual audited financial statements.

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

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

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

    IFRS 16 - Leases, is effective for the Group's year ending 31 March 2020. The Group does not expect adoption of IFRS 16 to have a material impact on the financial statements, since the impacts of the standard for lessors are minimal.

During the year ending 31 March 2016 the accounting for Broadgate Estates, a wholly-owned subsidiary of the Group which acts as a property manager, was reviewed resulting in a reclassification of prior period items presented in the Consolidated Income Statement and Consolidated Statement of Cash Flows.

This reclassification had no impact on either IFRS profit before tax or Underlying Profit. For the six months ended 30 September 2015, this resulted in a £17m increase in other fees and commissions received offset by a £15m increase in other fees and commissions expenses and a £2m increase in administrative expenses.

This reclassification had no impact on the net cash inflow from operating activities presented in the Consolidated Statement of Cash Flows. It resulted in £18m increase in fees and other income received and a £18m increase in operating expenses paid to suppliers and employees.

Having assessed the principal risks discussed on pages 28 - 29, the Directors believe that the Group is well placed to manage its financing and other business risks satisfactorily, and have a reasonable expectation that the Company and the Group have adequate resources to continue in operation for at least 12 months from the signing date of these financial statements. They therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

The interim financial information was approved by the Board on 15 November 2016.

2 Performance measures

Earnings per share

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

EPRA earnings per share is calculated using EPRA earnings, which is the IFRS profit after taxation attributable to shareholders of the Company excluding investment and development property revaluations, gains/losses on investing and trading property disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation. In the current period, diluted EPRA earnings per share did not include the dilutive impact of the 2012 convertible bond, as the Group's share price was below the exchange price of 693 pence.  IFRS diluted earnings per share includes the dilutive impact as IAS 33 ignores this hurdle to conversion.  In the prior year period, both measures included the dilutive impact of the 2012 convertible bond, as the Group's share price was above the exchange price.

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

	Six months ended 30 September 2016				Six months ended 30 September 2015
	Relevant earnings £m	Relevant  number of shares million	Earnings per share pence		Relevant earnings £m	Relevant number of shares million	Earnings per share pence
Underlying
Underlying basic	199	1,029	19.3		171	1,022	16.7
Underlying diluted	199	1,033	19.3		174	1,086	16.0
EPRA
EPRA basic	199	1,029	19.3		171	1,022	16.7
EPRA diluted	199	1,033	19.3		174	1,086	16.0
IFRS
Basic	(195)	1,029	(19.0)		816	1,022	79.8
Diluted	(221)	1,091	(20.3)		819	1,086	75.4

Net asset value

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

As at 30 September 2016, EPRA NAV and NNNAV did not include the dilutive impact of the 2012 convertible bond, as the Group's share price was below the exchange price of 693 pence.  IFRS net assets includes the dilutive impact following the treatment of IFRS earnings per share.  In the prior year period, both measures included the dilutive impact of the 2012 convertible bond, as the Group's share price was above the exchange price.

	30 September 2016				31 March 2016
	Relevant net assets £m	Relevant number of shares million	Net asset value per share pence		Relevant net assets £m	Relevant number of shares million	Net asset value per share pence
EPRA
EPRA NAV	9,254	1,039	891		10,074	1,096	919
EPRA NNNAV	8,623	1,039	830		9,640	1,096	880
IFRS
Basic	9,181	1,030	891		9,619	1,029	935
Diluted	9,581	1,097	873		10,019	1,096	914

Total accounting return

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

	Six months ended 30 September 2016				Six months ended 30 September 2015
	Decrease in NAV per share pence	Dividend per share paid pence	Total accounting return		Increase in NAV per share pence	Dividend per share paid pence	Total accounting return
Total accounting return	(28)	14.18	(1.5%)		62	13.84	9.1%

3 Revenue and costs

	Six months ended 30 September 2016				Six months ended 1 30 September 2015
	Underlying £m	Capital and other £m	Total £m		Underlying £m	Capital and other £m	Total £m
Rent receivable	226	-	226		218	-	218
Spreading of tenant incentives and guaranteed rent increases	(4)	-	(4)		10	-	10
Surrender premia	2	-	2		2	-	2
Gross rental income	224	-	224		230	-	230
Trading property sales proceeds	-	9	9		-	15	15
Service charge income	40	-	40		41	-	41
Management and performance fees (from joint ventures and funds)	3	-	3		3	-	3
Other fees and commissions	21	-	21		19	-	19
Revenue	288	9	297		293	15	308
Trading property cost of sales	-	(6)	(6)		-	(7)	(7)
Service charge expenses	(40)	-	(40)		(41)	-	41
Property operating expenses	(10)	-	(10)		(13)	-	13
Other fees and commissions expenses	(17)	-	(17)		(15)	-	15
Costs	(67)	(6)	(73)		(69)	(7)	(76)
	221	3	224		224	8	232

¹ The prior period comparatives have been restated. See note 1.

4 Valuation movements on property

	Six months ended 30 September 2016 £m	Six months ended 30 September 2015 £m
Consolidated income statement
Revaluation of properties	(257)	397
Revaluation of properties held by joint ventures and funds accounted for using the equity method	(205)	217
	(462)	614
Consolidated statement of comprehensive income
Revaluation of owner-occupied properties	(2)	12
	(464)	626

5 Net financing costs

	Six months ended 30 September 2016 £m	Six months ended 30 September 2015 £m
Underlying Financing charges
Bank loans, overdrafts and derivatives	(18)	(20)
Other loans	(28)	(46)
Obligations under head leases	(1)	(1)
	(47)	(67)
Development interest capitalised	4	5
	(43)	(62)
Financing income
Deposits, securities and liquid investments	2	1
Loans to joint ventures	-	2
	2	3
Net financing charges - underlying	(41)	(59)
Capital and other
Financing charges
Valuation movements on translation of foreign currency debt	-	2
Hedging reserve recycling	-	(2)
Valuation movements on fair value debt	(88)	5
Valuation movements on fair value derivatives	90	(4)
Recycling of fair value movement on close-out of derivatives	(10)	(5)
Capital financing costs	(5)	(6)
Fair value movement on non-hedge accounted derivatives	(4)	-
	(17)	(10)
Financing income
Fair value movement on convertible bonds	32	4
	32	4
Net financing income (charges) - capital	15	(6)
Total financing income	34	7
Total financing charges	(60)	(72)
Net financing costs	(26)	(65)

Interest on development expenditure is capitalised at the Group's weighted average interest rate of 2.5% (Six months ended 30 September 2015: 3.1%). The weighted average interest rate on a proportionately consolidated basis at 30 September 2016 was 3.2% (Six months ended 30 September 2015: 3.6%).

6 Taxation

	Six months ended 30 September 2016 £m	Six months ended 30 September 2015 £m
Taxation income
Current taxation
Current period UK corporation taxation (30 September 2016: 19%; 30 September 2015: 20%)	1	2
Adjustments in respect of prior periods	-	-
Total current taxation income	1	2
Deferred taxation on revaluations and derivatives	-	5
Group total taxation	1	7
Attributable to joint ventures and funds	-	-
Total taxation income	1	7

Taxation expense attributable to Underlying Profits for the six months ended 30 September 2016 was £nil (Six months ended 30 September 2015: £nil).

7 Property

Property reconciliation

	Six months ended 30 September 2016					Year ended 31 March 2016
	Investment and development properties Level 3 £m	Trading properties £m	Owner-occupied Level 3 £m	Total £m		Investment and development properties Level 3 £m	Trading properties £m	Owner-occupied Level 3 £m	Total £m
Carrying value at the start of the period/year	9,643	325	95	10,063		9,120	274	60	9,454
Additions
- property purchases	74	-	-	74		238	-	-	238
- development expenditure	48	28	-	76		54	59	-	113
- capitalised interest and staff costs	3	3	-	6		4	5	-	9
- capital expenditure on asset management initiatives	28	-	-	28		116	-	-	116
	153	31	-	184		412	64	-	476
Depreciation	-	-	-	-		-	-	(1)	(1)
Disposals	(363)	(6)	-	(369)		(509)	(11)	-	(520)
Reclassifications	27	(27)	-	-		(15)	(2)	17	-
Revaluations included in income statement	(257)	-	-	(257)		616	-	-	616
Revaluations included in OCI	-	-	(2)	(2)		-	-	19	19
Movement in tenant incentives and contracted rent uplift balances	(24)	-	-	(24)		19	-	-	19
Carrying value at the end of the period/year	9,179	323	93	9,595		9,643	325	95	10,063
Plus: surplus on trading properties				75					85
Less: head lease liabilities				(47)					(37)
Total Group property portfolio valuation at the end of the period/year				9,623					10,111
Non-controlling interests				(302)					(324)
Total Group property portfolio valuation at the end of the period/year attributable to shareholders				9,321					9,787

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

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

On 23 June 2016 the UK electorate voted to leave the European Union. Since the referendum, the external valuers have monitored market transactions and market sentiment in arriving at their opinion of fair value. There is still a shortage of comparable evidence of arm's length transactions, resulting in the valuers exercising a greater degree of judgement than would be applied under more liquid market conditions.

Additional property covenant information

Properties valued at £1,880m (year ended 31 March 2016: £2,559m) were subject to a security interest and other properties of non-recourse companies amounted to £1,181m (year ended 31 March 2016: £1,244), totalling £3,061m (year ended 31 March 2016: £3,803m).

8 Joint ventures and funds

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

	Joint ventures £m	Funds £m	Total £m		Equity £m	Loans £m	Total £m
At 1 April 2016	3,109	244	3,353		2,851	502	3,353
Additions	34	2	36		36	-	36
Disposals	(26)	-	(26)		-	(26)	(26)
Share of loss after taxation	(123)	(8)	(131)		(131)	-	(131)
Distributions and dividends:
- Capital	(32)	(6)	(38)		(38)	-	(38)
- Revenue	(45)	-	(45)		(45)	-	(45)
Hedging and exchange movements	(3)	(1)	(4)		(4)	-	(4)
At 30 September 2016	2,914	231	3,145		2,669	476	3,145

Additional investments in joint ventures and funds covenant information

At 30 September 2016 the investments in joint ventures included within the total investments in joint ventures and funds was £3,140m (31 March 2016: £3,348m), being the £3,145m (31 March 2016: £3,353m) total investment shown above, less the net investment of £5m (31 March 2016: £5m) in PREF, a property fund in continental Europe.

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

	Six months ended 30 September 2016		Six months ended 30 September 2015
	£m 100%	£m BL Share	£m 100%	£m BL Share
Revenue	280	141	266	133
Costs	(64)	(33)	(56)	(28)
	216	108	210	105
Administrative expenses	(3)	(2)	(2)	(1)
Net financing costs	(75)	(38)	(81)	(41)
Underlying Profit before taxation	138	68	127	63
			-	-
Valuation movement	(408)	(205)	431	217
Capital financing costs	(12)	(6)
Profit on disposal of investment properties, trading properties and investments	23	12	4	2
(Loss) profit on ordinary activities before taxation	(259)	(131)	562	282
Taxation	-	-	(1)	-
(Loss) profit on ordinary activities after taxation	(259)	(131)	561	282
(Loss) profit split between controlling and non-controlling interests
Attributable to non-controlling interests		(2)		(2)
Attributable to shareholders of the Company		(133)		280

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

	Six months ended 30 September 2016 £m	Six months ended 30 September 2015 £m
Rental income received from tenants	96	102
Fees and other income received	-	1
Operating expenses paid to suppliers and employees	(10)	(9)
Cash generated from operations	86	94
Interest paid	(41)	(44)
UK corporation tax paid	-	(3)
Cash inflow from operating activities	45	47
Cash inflow from operating activities deployed as:
Surplus cash retained within joint ventures and funds	20	17
Revenue distributions per consolidated statement of cash flows	25	30
Revenue distributions split between controlling and non-controlling interests
Attributable to non-controlling interests	2	2
Attributable to shareholders of the Company	23	28

9 Other investments

	30 September 2016 £m	31 March 2016 £m
Investment held for trading	93	101
Loans, receivables and other	56	41
	149	142

The investment held for trading comprises interests as a trust beneficiary. The trusts' assets comprise freehold reversions in a pool of commercial properties, comprising Sainsbury's superstores. The interest was categorised as Level 3 in the fair value hierarchy, is subject to the same inputs as those disclosed in note 7, and its fair value was determined by the Directors, supported by an external valuation.

10 Net debt

10.1 Fair value and book value of net debt

	30 September 2016				31 March 2016
	Fair value £m	Book value £m	Difference £m		Fair value £m	Book value £m	Difference £m
Debentures and unsecured bonds	1,783	1,696	87		1,637	1,613	24
Convertible bonds	747	747	-		779	779	-
Bank debt and other floating rate debt	1,130	1,119	11		1,384	1,369	15
Gross debt	3,660	3,562	98		3,800	3,761	39
Interest rate and currency derivative liabilities	172	172	-		137	137	-
Interest rate and currency derivative assets	(255)	(255)	-		(167)	(167)	-
Cash and short-term deposits	(107)	(107)	-		(114)	(114)	-
Net debt	3,470	3,372	98		3,656	3,617	39
Net debt attributable to non-controlling interests	(106)	(104)	(2)		(106)	(104)	(2)
Net debt attributable to shareholders of the Company	3,364	3,268	96		3,550	3,513	37

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

10.2 Loan to value

Group loan to value (LTV)

	30 September 2016 £m	31 March 2016 £m
Group loan to value (LTV)	24.6%	25.2%
Principal value of gross debt	3,297	3,552
Less debt attributable to non-controlling interests	(107)	(109)
Less cash and short-term deposits (balance sheet)	(107)	(114)
Plus cash attributable to non-controlling interests	5	8
Total net debt for LTV calculation	3,088	3,337
Group property portfolio valuation (note 7)	9,623	10,111
Investments in joint ventures and funds (note 8)	3,145	3,353
Other investments (note 9)	149	142
Less property and investments attributable to non-controlling interests	(355)	(384)
Total assets for LTV calculation	12,562	13,222

Proportionally consolidated loan to value (LTV)

	30 September 2016 £m	31 March 2016 £m
Proportionally consolidated loan to value (LTV)	31.6%	32.1%
Principal value of gross debt	4,928	5,217
Less attributable to non-controlling interests	(124)	(128)
Less cash and short-term deposits	(368)	(353)
Plus cash attributable to non-controlling interests	7	9
Total net debt for proportional LTV calculation	4,443	4,745
Group property portfolio valuation (note 7)	9,623	10,111
Share of property of joint ventures and funds	4,666	4,937
Other investments (note 9)	149	142
Less other investments attributable to joint ventures and funds	(3)	(4)
Less property attributable to non-controlling interests	(371)	(400)
Total property for proportional LTV calculation	14,064	14,786

10.3 British Land Unsecured Financial Covenants

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

	30 September 2016 £m	31 March 2016 £m
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves	33%	34%
Principal amount of gross debt	3,297	3,552
Less the relevant proportion of borrowings of the partly-owned subsidiary / non-controlling interests	(107)	(109)
Less cash and deposits (balance sheet)	(107)	(114)
Plus the relevant proportion of cash and deposits of the partly-owned subsidiary / non-controlling interests	5	8
Net Borrowings	3,088	3,337
Share capital and reserves (balance sheet)	9,181	9,619
EPRA deferred tax adjustment (EPRA Table A)	2	5
Trading property surpluses (EPRA Table A)	76	93
Exceptional refinancing charges (see below)	281	287
Fair value adjustments of financial instruments (EPRA Table A)	205	198
Less reserves attributable to non-controlling interests (balance sheet)	(249)	(277)
Adjusted Capital and Reserves	9,496	9,925

In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £281m (31 March 2016: £287m) to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended 31 March 2005, 2006 and 2007.

	30 September 2016 £m	31 March 2016 £m
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets	29%	29%
Principal amount of gross debt	3,297	3,552
Less cash and deposits not subject to a security interest (being £89m less the relevant proportion of cash and deposits of the partly owned subsidiary of £2m)	(87)	(88)
Less principal amount of secured and non-recourse borrowings	(1,278)	(1,563)
Net Unsecured Borrowings	1,932	1,901
Properties (note 7)	9,623	10,111
Investments in joint ventures and funds (note 8)	3,145	3,353
Other investments (note 9)	149	142
Less investments in joint ventures (note 8)	(3,140)	(3,348)
Less encumbered assets (note 7)	(3,061)	(3,803)
Unencumbered Assets	6,716	6,455

10.4 Convertible bonds

1.5% Convertible bond 2012 (maturity 2017)

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

Subject to their terms, the 2012 bonds are convertible into preference shares of the Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or, at the Company's election, any combination of ordinary shares and cash. Bondholders may exercise their conversion right at any time up to (but excluding) the 20th dealing day before 10 September 2017 (the maturity date).

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

From 25 September 2015, the Company has the option to redeem the 2012 bonds at par if the Company's share price has traded above 130% of the exchange price for a specified period, or at any time once 85% by nominal value of the 2012 bonds have been converted, redeemed, or purchased and cancelled. The 2012 bonds will be redeemed at par on 10 September 2017 (the maturity date) if they have not already been converted, redeemed or purchased and cancelled. No redemption of the bonds occurred in the period.

0% Convertible bond 2015 (maturity 2020)

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

Subject to their terms, the 2015 bonds are convertible into preference shares of the Issuer which are automatically transferred to the Company in exchange for ordinary shares in the Company or, at the Company's election, any combination of ordinary shares and cash. From 20 July 2015 up to and including 29 June 2018, a bondholder may exercise its conversion right if the share price has traded at a level exceeding 130% of the exchange price for a specified period. Thereafter, and up to but excluding the 7th dealing day before 9 June 2020 (the maturity date), a bondholder may convert at any time.

The initial exchange price was 1103.32 pence per ordinary share. The exchange price is adjusted based on certain events (such as the Company paying dividends in any year above 14.18 pence per ordinary share).

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

10.5 Fair value hierarchy

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

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

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

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

	30 September 2016					31 March 2016
	Level 1 £m	Level 2 £m	Level 3 £m	Total £m		Level 1 £m	Level 2 £m	Level 3 £m	Total £m
Interest rate and currency derivative assets	-	(255)	-	(255)		-	(167)	-	(167)
Other investments - available for sale	(14)	-	-	(14)		-	-	-	-
Other investments - held for trading	-	-	(93)	(93)		-	-	(101)	(101)
Assets	(14)	(255)	(93)	(362)		-	(167)	(101)	(268)
Interest rate and currency derivative liabilities	-	172	-	172		-	137	-	137
Convertible bonds	747	-	-	747		779	-	-	779
Liabilities	747	172	-	919		779	137	-	916
Total	733	(83)	(93)	557		779	(30)	(101)	648

There have been no transfers between levels in the period. An £8m valuation loss in relation to the investment held for trading has been recorded in the six months ended 30 September 2016 (30 September 2015: £3m valuation gain). Further disclosures in relation to the valuation of the investment held for trading are included within note 9.

11 Dividend

The 2017 second quarter dividend of 7.30 pence per share, totalling £75m, is payable on 10 February 2017 to shareholders on the register at close of business on 6 January 2017.

The Board will announce the availability of the Scrip Dividend Alternative, if available, via the Regulatory News Service and on its website (www.britishland.com/dividends), no later than 4 business days before the ex-dividend date of 5 January 2017. The Board expects to announce the split between Property Income Distributions ('PID') and non-PID income at that time. Any Scrip Dividend Alternative will not be enhanced. PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate. Certain classes of shareholders may be able to elect to receive dividends gross. Please refer to our website (www.britishland.com) for details.

The 2017 first quarter dividend of 7.30 pence per share, totalling £75m was paid on 11 November 2016. The whole of the first quarter dividend was a PID and no scrip alternative was offered. £63m was paid to shareholders, and £10m of withholding tax was retained.

The Consolidated Statement of Changes in Equity shows total dividends in the six months to 30 September 2016 of £146m, £73m being the third quarter 2016 dividend of 7.09 pence per share paid on 6 May 2016, and the fourth quarter 2016 dividend of 7.09 pence per share, paid on 5 August, totalling £73m. No scrip alternatives were offered for the third or fourth quarters. The whole of the third quarter dividend was a PID, and half of the fourth quarter dividend was a PID.

12 Segment information

Operating segments

The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its three principal sectors are Offices and residential, Retail and leisure and Canada Water. The Office sector includes residential, as this is often incorporated into Office schemes, and Retail includes leisure, for a similar rationale. Canada Water was added as a principal sector in the year ended 31 March 2016, reflecting the key role the campus has in the strategy of the Group. Consequently the prior period comparatives in this note have been restated to reflect this additional principal sector. There is no impact on the total figures disclosed for the prior period.

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

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

Segment result

	Six months ended 30 September
	Offices and residential			Retail and leisure			Canada Water			Other/unallocated			Total
	2016 £m	2015 £m		2016 £m	2015 £m		2016 £m	2015 £m		2016 £m	2015 £m		2016 £m	2015 £m
Gross rental income
British Land Group	70	66		142	150		5	3		-	-		217	219
Share of joint ventures and funds	60	54		50	51		-	-		-	2		110	107
Total	130	120		192	201		5	3		-	2		327	326
Net rental income
British Land Group	67	61		136	142		4	3		-	-		207	206
Share of joint ventures and funds	58	52		47	49		-	-		-	2		105	103
Total	125	113		183	191		4	3		-	2		312	309
Operating result
British Land Group	66	51		129	133		3	3		(26)	(26)		172	161
Share of joint ventures and funds	56	54		49	50		-	-		-	2		105	106
Total	122	105		178	183		3	3		(26)	(24)		277	267
Reconciliation to Underlying Profit before taxation													Six months ended 30 September 2016 £m	Six months ended 30 September 2015 £m
Operating result													277	267
Net financing costs													(78)	(96)
Underlying Profit													199	171
Reconciliation to profit on ordinary activities before taxation
Underlying Profit													199	171
Capital and other													(411)	644
Underlying Profit attributable to non-controlling interests													7	8
Total (loss) profit on ordinary activities before taxation													(205)	823

Of the gross rental income above, £nil (six months ended 30 September 2015: £2m) was derived from outside the UK.

Segment assets

	Offices and residential			Retail and leisure			Canada Water			Total
	30 September 2016 £m	31 March 2016 £m		30 September 2016 £m	31 March 2016 £m		30 September 2016 £m	31 March 2016 £m		30 September 2016 £m	31 March 2016 £m
Property assets
British Land Group	4,143	4,181		4,889	5,323		289	283		9,321	9,787
Share of funds and joint ventures	2,676	2,843		1,922	2,018		-	-		4,598	4,861
Total	6,819	7,024		6,811	7,341		289	283		13,919	14,648
Reconciliation to net assets
British Land Group										30 September 2016 £m	31 March 2016 £m
Property assets										13,919	14,648
Other non-current assets										146	138
Non-current assets										14,065	14,786
Other net current liabilities										(247)	(257)
Adjusted net debt										(4,463)	(4,765)
Other non-current liabilities										(101)	(90)
EPRA net assets (undiluted)										9,254	9,674
Convertible dilution										-	400
EPRA net assets (diluted)										9,254	10,074
Non-controlling interests										249	277
EPRA adjustments										(322)	(732)
Net assets										9,181	9,619

13 Related party transactions

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

14 Contingent liabilities

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

15 Share capital and reserves

		£m	Ordinary shares of 25p each
Issued, called and fully paid
At 1 April 2016		260	1,040,562,323
Issues		-	357,689
At 30 September 2016		260	1,040,920,012

At 30 September 2016, of the issued 25p ordinary shares, 2,685 shares were held in the ESOP trust (31 March 2016: 627), 11,266,245 shares were held as treasury shares (31 March 2016: 11,266,245 ) and 1,029,651,082 shares were in free issue (31 March 2016: 1,029,295,451). No treasury shares were acquired by the ESOP trust during the year. All issued shares are fully paid.

SUPPLEMENTARY DISCLOSURES

UNAUDITED

Table A: Summary income statement and balance sheet

Summary income statement based on proportional consolidation for the six months ended 30 September 2016

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

	Six months ended 30 September 2016					Six months ended 30 September 2015
	Group £m	Joint ventures and funds £m	Less non-controlling interests £m	Proportionally consolidated £m		Group £m	Joint ventures and funds £m	Less non-controlling interests £m	Proportionally consolidated £m
Gross rental income	224	113	(10)	327		230	110	(14)	326
Property operating expenses	(10)	(5)	-	(15)		(13)	(5)	1	(17)
Net rental income	214	108	(10)	312		217	105	(13)	309
Administrative expenses	(42)	(2)	1	(43)		(49)	(1)	1	(49)
Net fees and other income	7	-	1	8		7	-	-	7
Ungeared Income Return	179	106	(8)	277		175	104	(12)	267
Net financing costs	(41)	(38)	1	(78)		(59)	(41)	4	(96)
Underlying Profit	138	68	(7)	199		116	63	(8)	171
Underlying taxation	-	-	-	-		-	-	-	-
Underlying Profit after taxation	138	68	(7)	199		116	63	(8)	171
Valuation movement				(462)					642
Other capital and taxation (net)1				(411)					3
Capital and other				(873)					645
Total return				(674)					816

¹ Includes other comprehensive income, movement in dilution of share options and the movement in items excluded for EPRA NAV.

Summary balance sheet based on proportional consolidation as at 30 September 2016

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

	Group £m	Share of joint ventures & funds £m	Less non-controlling interests £m	Share options £m	Deferred tax £m	Mark-to-market on effective cash flow hedges and related debt adjustments £m	Head leases £m		Valuation surplus on trading properties £m	EPRA Net assets 30 September 2016 £m	EPRA Net assets 31 March  2016 £m
Retail properties	5,213	2,007	(371)	-	-	-	(38)		-	6,811	7,341
Office properties	4,084	2,675	-	-	-	-	(16)		76	6,819	7,024
Canada Water properties	298	-	-	-	-	-	(9)		-	289	283
Total properties	9,595	4,682	(371)	-	-	-	(63)		76	13,919	14,648
Investments in joint ventures and funds	3,145	(3,145)	-	-	-	-	-		-	-	-
Other investments	149	(3)	-	-	-	-	-		-	146	138
Other net (liabilities) assets	(336)	(119)	3	39	2	-	63		-	(348)	(347)
Net debt	(3,372)	(1,415)	119	-	-	205	-		-	(4,463)	(4,765)
Dilution due to 1.5% convertible bond	-	-	-	-	-	-	-		-	-	400
Net assets	9,181	-	(249)	39	2	205	-		76	9,254	10,074
EPRA NAV per share (note 2)										891p	919p

	30 September 2016			31 March 2016
	£m	Pence per share		£m	Pence per share
Opening EPRA NAV	10,074	919		9,035	829
Income return	199	18		365	34
Capital return	(473)	(43)		909	77
Dividend paid	(146)	(13)		(235)	(21)
Remove dilution of 1.5% convertible bond	(400)	10		-	-
Closing EPRA NAV	9,254	891		10,074	919

Table B: EPRA Performance measures

EPRA Performance measures summary table

		Six months ended 30 September 2016			Six months ended 30 September 2015
		£m	Pence per share		£m	Pence per share
EPRA Earnings	- basic	199	19.3		171	16.7
	- diluted	199	19.3		174	16.0
EPRA Net Initial Yield			4.3%			4.1%
EPRA 'topped-up' Net Initial Yield			4.7%			4.6%
EPRA Vacancy Rate			2.7%			2.6%

		30 September 2016			31 March 2016
		Net assets £m	Net asset value per share pence		Net assets £m	Net asset value per share pence
EPRA NAV		9,254	891		10,074	919
EPRA NNNAV		8,623	830		9,640	880

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

	Six months ended 30 September 2016 £m	Six months ended 30 September 2015 £m
(Loss) profit attributable to the shareholders of the Company	(195)	816
Exclude:
Group -  taxation	(1)	(7)
Group - valuation movement	257	(397)
Group - profit on disposal of investment properties and investments	(27)	(26)
Group - profit on disposal of trading properties	(3)	(8)
Joint ventures and funds - valuation movement (including result on disposals)	193	(219)
Joint ventures and funds - capital financing costs	6	-
Changes in fair value of financial instruments and associated close-out costs	(15)	6
Non-controlling interests in respect of the above	(16)	6
EPRA earnings - basic	199	171
Dilutive effect of 1.5% convertible bond	-	3
EPRA earnings - diluted	199	174
(Loss) profit attributable to the shareholders of the Company	(195)	816
Dilutive effect of 1.5% convertible bond	(26)	3
IFRS earnings - diluted	(221)	819

	Six months ended 30 September 2016 Number million	Six months ended 30 September 2015 Number million
Weighted average number of shares	1,040	1,033
Adjustment for Treasury shares	(11)	(11)
IFRS/EPRA weighted average number of shares (basic)	1,029	1,022
Dilutive effect of share options	1	2
Dilutive effect of ESOP shares	3	4
Dilutive effect of 1.5% convertible bond	58	58
IFRS weighted average number of shares (diluted)	1,091	1,086
Remove dilutive effect of 1.5% convertible bond	(58)	-
EPRA weighted average number of shares (diluted)	1,033	1,086

Net assets per share

	30 September 2016			31 March 2016
	£m	Pence per share		£m	Pence per share
Balance sheet net assets	9,181			9,619
Deferred tax arising on revaluation movements	2			5
Mark-to-market on effective cash flow hedges and related debt adjustments	205			198
Dilution effect of share options	39			36
Surplus on trading properties	76			93
1.5% convertible bond adjustment	-			400
Less non-controlling interests	(249)			(277)
EPRA NAV	9,254	891		10,074	919
Deferred tax arising on revaluation movements	(15)			(24)
Mark-to-market on effective cash flow hedges and related debt adjustments	(205)			(153)
Mark-to-market on debt	(411)			(257)
EPRA NNNAV	8,623	830		9,640	880

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

	30 September 2016 Number million	31 March 2016 Number million
Number of shares at period/year end	1,041	1,040
Adjustment for treasury shares	(11)	(11)
IFRS/EPRA Number of shares (basic)	1,030	1,029
Dilutive effect of share options	3	2
Dilutive effect of ESOP shares	6	7
Dilutive effect of 1.5% convertible bond	58	58
IFRS number of shares (diluted)	1,097	1,096
Remove dilutive effect of 1.5% convertible bond	(58)	-
EPRA number of shares (diluted)	1,039	1,096

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

	30 September 2016 £m	30 September 2015 £m
Investment property - wholly-owned	9,321	9,569
Investment property - share of joint ventures and funds	4,598	4,815
Less developments, residential and land	(951)	(805)
Completed property portfolio	12,968	13,579
Allowance for estimated purchasers' costs	914	846
Gross up completed property portfolio valuation	13,882	14,425
Annualised cash passing rental income	610	594
Property outgoings	(9)	(8)
Annualised net rents	601	586
Rent expiration of rent-free periods and fixed uplifts1	50	76
'Topped-up' net annualised rent	651	662
EPRA Net Initial Yield	4.3%	4.1%
EPRA 'topped-up' Net Initial Yield	4.7%	4.6%
Including fixed/minimum uplifts received in lieu of rental growth	16	25
Total 'topped-up' net rents	667	687
Overall 'topped-up' Net Initial Yield	4.8%	4.8%
'Topped-up' net annualised rent	651	662
ERV vacant space	19	18
Reversions	31	25
Total ERV	701	705
Net Reversionary Yield	5.0%	4.9%

¹ The weighted average period over which rent-free periods expire is 1 year (30 September 2015: 1 year).

The above is stated for the UK portfolio only.

EPRA Net Initial Yield (NIY) basis of calculation

EPRA NIY is calculated as the annualised net rent (on a cash flow basis), divided by the gross value of the completed property portfolio. The valuation of our completed property portfolio is determined by our external valuers as at 30 September 2016, plus an allowance for estimated purchaser's costs. Estimated purchaser's costs are determined by the relevant stamp duty liability, plus an estimate by our valuers of agent and legal fees on notional acquisition. The net rent deduction allowed for property outgoings is based on our valuers' assumptions on future recurring non-recoverable revenue expenditure.

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

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

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

EPRA Vacancy Rate

	30 September 2016 £m	30 September 2015 £m
Annualised potential rental value of vacant premises	19	18
Annualised potential rental value for the completed property portfolio	710	708
EPRA Vacancy Rate	2.7%	2.6%
The above is stated for the UK portfolio only.

EPRA Cost Ratios

		Six months ended 30 September 2016 £m	Six months ended 30 September 2015 £m
Property operating expenses		10	12
Administrative expenses		41	48
Share of joint ventures and funds expenses		7	6
Less:	Performance & management fees (from joint ventures & funds)	(4)	(3)
	Other fees and commission	(4)	(4)
	Ground rent costs	(1)	(1)
EPRA Costs (including direct vacancy costs) (A)		49	58
Direct vacancy costs		(6)	(5)
EPRA Costs (excluding direct vacancy costs) (B)		43	53
Gross Rental Income less ground rent costs		215	218
Share of joint ventures and funds (Gross Rental Income less ground rent costs)		111	107
Total Gross Rental Income (C)		326	325
EPRA Cost Ratio (including direct vacancy costs) (A/C)		15.0%	17.8%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C)		13.2%	16.3%
Overhead and operating expenses capitalised (including share of joint ventures and funds)		2	2

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

Table C: Gross rental income

	Six months ended 30 September 2016 £m	Six months ended 30 September 2015 £m
Rent receivable	317	304
Spreading of tenant incentives and guaranteed rent increases	8	20
Surrender premia	2	2
Gross rental income	327	326

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

Table D: Property related capital expenditure

	Six months ended 30 September 2016				Year ended 31 March 2016
	Group	Joint ventures and funds	Total		Group	Joint ventures and funds	Total
Acquisitions	74	-	74		238	-	238
Development	72	11	83		104	58	162
Like-for-like portfolio	35	23	58		99	6	105
Other	9	1	10		25	15	40
Total property related capex	190	35	225		466	79	545

The above is presented on a proportionally consolidated basis, excluding non-controlling interests and business combinations. The 'Other' category contains amounts owing to tenant incentives of £4m (31 March 2016: £27m), capitalised staff costs of £2m (31 March 2016: £4m) and capitalised interest of £4m (31 March 2016: £9m).

 

END

 

 

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