British Land Co PLC

Quarterly Report • Nov 18, 2014

National Storage Mechanism | Additional information You don't have Javascript enabled. For full functionality this page requires javascript to be enabled. RNS Number : 2701X British Land Co PLC 18 November 2014  INDEPENDENT REVIEW REPORT TO THE BRITISH LAND COMPANY PLC Report on the condensed set of financial statements in the half-yearly financial report Our conclusion We have reviewed the condensed set of financial statements, defined below, in the half-yearly financial report of The British Land Company PLC ("the Company") for the six months ended 30 September 2014. Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. This conclusion is to be read in the context of what we say in the remainder of this report. What we have reviewed The condensed set of financial statements, which are prepared by the Company, comprise: • the consolidated balance sheet as at 30 September 2014; • the consolidated income statement and consolidated statement of comprehensive income for the period then ended; • the consolidated statement of cash flows for the period then ended; • the consolidated statement of changes in equity for the period then ended; and • the explanatory notes to the condensed consolidated interim financial statements. As disclosed in note 1, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements in the half-yearly report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. What a review of condensed set of financial statements involves We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and 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. 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. Responsibilities for the condensed set of financial statements and the review Our responsibilities and those of the Directors The half-yearly financial report, including the condensed set of financial statements, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. 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. This report, including the conclusion, has been prepared for and only for the Company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. PricewaterhouseCoopers LLP Chartered Accountants 17 November 2014 London The maintenance and integrity of The British Land Company PLC's website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Consolidated Income Statement for the period ended 30 September 2014 Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 Audited Unaudited Unaudited Underlying pre tax Capital and other Total Underlying pre tax Capital and other Total Underlying pre tax Capital and other Total £m £m £m Note £m £m £m £m £m £m 384 - 384 Gross rental and related income 3 232 - 232 179 - 179 313 - 313 Net rental and related income 3 185 - 185 148 - 148 15 - 15 Fees and other income 3 7 - 7 7 - 7 124 253 377 Joint ventures and funds (see also below) 64 340 404 63 89 152 (72) - (72) Administrative expenses (39) - (39) (36) - (36) - 615 615 Net valuation movement (includes result on disposals) 3 - 519 519 - 204 204 Financing costs 9 3 12 - financing income 4 25 29 5 3 8 (90) (60) (150) - financing charges (58) (4) (62) (41) (20) (61) (81) (57) (138) (54) 21 (33) (36) (17) (53) 299 811 1,110 Profit on ordinary activities before taxation 163 880 1,043 146 276 422 Taxation 3 3 - current tax (expense) income 3 (2) (2) 4 4 3 3 - deferred tax (expense) income 3 - - 1 1 6 6 (2) (2) 5 5 1,116 Profit for the period after taxation 1,041 427 2 8 10 Attributable to non-controlling interests 8 35 43 - - - 297 809 1,106 Attributable to shareholders of the Company 155 843 998 146 281 427 110.7 p Earnings per share: basic 2 98.5p 43.0p 110.2 p diluted 2 97.9p 42.8p Share of results of joint ventures and funds 124 - 124 Underlying profit before taxation 64 - 64 63 - 63 - 258 258 Net valuation movement (includes result on disposals) - 342 342 - 83 83 - - - Financing break costs on property disposals - (1) (1) - - - - (5) (5) Current tax (expense) income - - - - (1) (1) - - - Deferred tax (expense) income - (1) (1) - 7 7 124 253 377 64 340 404 63 89 152 As defined in note 2 Consolidated Statement of Comprehensive Income for the period ended 30 September 2014 Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 Audited Unaudited Unaudited £m £m £m 1,116 Profit for the period after taxation 1,041 427 Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: (2) Net actuarial gain (loss) on pension scheme 1 (2) - Revaluation of owner occupied properties 8 - (2) 9 (2) Items that may be reclassified subsequently to profit or loss: (Losses) gains on cash flow hedges 14 - Group (23) 11 48 - Joint ventures and funds 6 35 62 (17) 46 Transferred (from) to the income statement (cash flow hedges) 8 - foreign currency derivatives (3) 6 15 - interest rate derivatives 5 7 23 2 13 Exchange differences on translation of foreign operations 2 - hedging and translation 2 (1) 1 - other (1) 1 3 1 - 5 Deferred tax taken to equity - - 5 - - 91 Other comprehensive (loss) income for the period (5) 57 1,207 Total comprehensive income for the period 1,036 484 10 Attributable to non-controlling interests 43 - 1,197 Attributable to shareholders of the Company 993 484 Consolidated Balance Sheet at 30 September 2014 31 March 2014 30 September 2014 30 September 2013 Audited Unaudited Unaudited £m Note £m £m Assets Non-current assets 7,272 Investment and development properties 4 7,752 5,950 47 Owner-occupied property 4 57 45 7,319 7,809 5,995 Other non-current assets 2,712 Investments in joint ventures and funds 5 3,008 2,676 262 Other investments 6 330 124 32 Interest rate derivative assets 7 53 35 10,325 11,200 8,830 Current assets 271 Trading properties 4 258 242 41 Debtors 43 41 142 Cash and short-term deposits 7 92 112 454 393 395 10,779 Total assets 11,593 9,225 Liabilities Current liabilities (495) Short-term borrowings and overdrafts 7 (202) (772) (263) Creditors (298) (241) (8) Corporation tax (10) (8) (766) (510) (1,021) Non-current liabilities (2,803) Debentures and loans 7 (2,955) (1,989) (32) Other non-current liabilities (32) (30) (4) Deferred tax liabilities (4) (15) (57) Interest rate derivative liabilities 7 (68) (64) (2,896) (3,059) (2,098) (3,662) Total liabilities (3,569) (3,119) 7,117 Net assets 8,024 6,106 Equity 255 Share capital 257 252 1,257 Share premium 1,272 1,250 213 Merger reserve 213 213 (70) Other reserves (76) (104) 5,091 Retained earnings 5,990 4,495 Equity attributable to shareholders 6,746 of the Company 7,656 6,106 371 Non-controlling interests 368 - 7,117 Total equity 8,024 6,106 688 p EPRA NAV per share 2 769 p 626 p * As defined in note 2 Consolidated Statement of Cash Flows for the period ended 30 September 2014 Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 Audited Unaudited Unaudited £m Note £m £m 312 Rental income received from tenants 194 145 19 Fees and other income received 9 10 (88) Operating expenses paid to suppliers and employees (60) (48) 243 Cash generated from operations 143 107 (116) Interest paid (62) (64) 29 Interest received 10 13 63 Distributions received from joint ventures and funds 5 40 31 219 Net cash inflow from operating activities 131 87 Cash flows from investing activities (175) Development and other capital expenditure (73) (94) (569) Purchase of investment properties - (586) 352 Sale of investment and trading properties 137 125 - Payments received in respect of trading properties 24 - (84) Purchase of investments - (6) 8 Sale of investments - - 5 Deferred consideration received - - (145) Acquisition of units in Hercules Unit Trust (27) (19) 18 Cash acquired on acquisition of subsidiary - - (113) Purchase of joint ventures and funds - - 179 Sale of joint ventures and funds - - (162) Investment in and loans to joint ventures and funds (96) (80) 28 Capital distributions and loan repayments from joint ventures and funds 101 9 (2) Indirect taxes received (paid) in respect of investing activities 3 (3) (660) Net cash inflow (outflow) from investing activities 69 (654) Cash flows from financing activities 11 Issue of ordinary shares 5 4 (159) Dividends paid (95) (74) - Dividends paid by subsidiaries to non-controlling interests (11) - (16) Close out of interest rate derivatives (2) - (8) Movement in other financial liabilities (2) (10) (49) Decrease in bank and other borrowings (313) (49) 669 Drawdowns on bank and other borrowings 168 673 448 Net cash (outflow) inflow from financing activities (250) 544 7 Net (decrease) increase in cash and cash equivalents (50) (23) 135 Opening cash and cash equivalents 142 135 142 Closing cash and cash equivalents 92 112 Cash and cash equivalents consists of: 142 Cash and short-term deposits 92 112 Consolidated Statement of Changes in Equity for the period ended 30 September 2014 Hedging & Non- Share Share translation Revaluation Merger Retained controlling Total capital * premium reserve reserve reserve earnings Total interests Equity £m £m £m £m £m £m £m £m £m Six month movements in equity Balance at 1 April 2014 255 1,257 (32) (38) 213 5,091 6,746 371 7,117 Total comprehensive income for the period - - (19) 13 - 999 993 43 1,036 Share issues 2 15 - - - (12) 5 - 5 Purchase of units from non-controlling interest - - - - - - - (35) (35) Adjustment for share and share option awards - - - - - 4 4 - 4 Dividends payable - - - - - (136) (136) - (136) Dividends payable by subsidiaries - - - - - - - (11) (11) Adjustment for scrip dividend element - - - - - 44 44 - 44 Balance at 30 September 2014 257 1,272 (51) (25) 213 5,990 7,656 368 8,024 Balance at 1 April 2013 249 1,242 (71) (92) 213 4,146 5,687 - 5,687 Total comprehensive income for the period - - 23 36 - 425 484 - 484 Share issues 3 8 - - - - 11 - 11 De-designation of cash flow hedges - - - - - - - - - Adjustment for share and share option awards - - - - - (3) (3) - (3) Dividends payable in the six month period - - - - - (130) (130) - (130) Adjustment for scrip dividend element - - - - - 57 57 - 57 Balance at 30 September 2013 252 1,250 (48) (56) 213 4,495 6,106 - 6,106 Prior year movements in equity Balance at 1 April 2013 249 1,242 (71) (92) 213 4,146 5,687 - 5,687 Total comprehensive income for the period - - 39 54 - 1,104 1,197 10 1,207 Share issues 6 15 - - - (8) 13 - 13 Non-controlling interest on acquisition of a subsidiary - - - - - - - 374 374 Purchase of units from non-controlling interest - - - - - - - (13) (13) Adjustment for share and share option awards - - - - - 10 10 - 10 Dividends payable in the year - - - - - (266) (266) - (266) Transfer - - - - - - - - - Adjustment for scrip dividend element - - - - - 105 105 - 105 Balance at 31 March 2014 255 1,257 (32) (38) 213 5,091 6,746 371 7,117 * See note 12 for a summary of the number of shares in issue Notes to the accounts (unaudited) 1. Basis of preparation The financial information for the period ended 30 September 2014 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 2014 has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498(2) or (3) of the Companies Act 2006. The 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 2014, which have been prepared in accordance with IFRS as adopted by the European Union. In the current financial year the Group has adopted the amendments to IAS 32 "Financial instruments: presentation", IAS 36 "Impairment of assets", IAS 27 (revised) "Separate financial statements", IAS 28 (revised) "Associates and joint ventures", IFRS 10 "Consolidated financial statements", IFRS 11 "Joint arrangements", and IFRS 12 "Disclosure of interests in other entities". Otherwise 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. Adoption of the standards listed above did not have a material impact on the financial statements of the Group. IFRS 9 "Financial Instruments" was the only standard or interpretation issued but not effective for the current accounting period. IFRS 9 will impact both the measurement and disclosures of financial instruments and is effective for the Group's year ending 31 March 2018. The Group has not yet completed its evaluation of the effect of adoption. The Group's business activities, financial position, cash flows, liquidity position and financing structure are discussed in the first half of this report. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. The Group's business is not seasonal. The accounting judgements and estimates are discussed in the Financial Review. The interim financial information was approved by the Board on 17 November 2014. 2. Performance measures Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 20131 Earnings Pence per share Earnings per share Earnings Pence per share Earnings Pence per share £m £m £m 297 - Underlying pre-tax profit attributable to shareholders of the company - income statement 155 - 146 - (2) - Tax charge relating to underlying profit - - (1) - 295 29.4 Underlying earnings 155 15.3 145 14.5 - - Dilution due to convertible bond - (0.6) - - 295 29.4 EPRA earnings per share (diluted) 14.7 14.5 0.1 Remove dilution due to share options and convertible bond 0.6 0.1 29.5 EPRA earnings per share (basic) 15.3 14.6 1,106 110.2 Profit for the period after taxation (diluted) 998 97.9 427 42.8 The European Public Real Estate Association (EPRA) has issued Best Practices Recommendations, the latest update of which was issued in January 2014, which give guidelines for performance measures. EPRA earnings is the profit after tax excluding property revaluations and gains or losses on disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation. A summary of the EPRA Performance Measures is provided in Table B within the Supplementary Disclosures. The EPRA earnings per share (diluted) also takes into account dilution due to the Convertible Bond issued on 10 September 2012. The Company's share price reached the conversion price of the convertible bond for the first time in the period to 30 September 2014 and therefore it was dilutive for the first time in the period. Underlying earnings consists of the EPRA earnings (diluted) measure excluding the dilutive impact of the convertible bond. The weighted average number of shares in issue for the six month period was: basic: 1,013m (Year ended 31 March 2014: 999m; six months ended 30 September 2013: 993m); diluted for the effect of share options and the convertible bond: 1,077m (Year ended 31 March 2014: 1,004m; six months ended 30 September 2013: 997m). Basic undiluted earnings per share for the six month period was 98.5p (Year ended 31 March 2014: 110.7p; six months ended 30 September 2013: 43.0p). 31 March 2014 30 September 2014 30 September 20131 £m Net asset value (NAV) (diluted) £m £m 7,117 Balance sheet net assets 8,024 6,106 (371) Less non-controlling interests (368) - 6 Deferred tax arising on revaluation movements 5 5 173 Mark to market on effective cash flow hedges and related debt adjustments 170 164 63 Surplus on trading properties 93 12 39 Dilution due to share options 45 37 - Dilution due to convertible bond 400 - 7,027 EPRA NAV 8,369 6,324 688 p EPRA NAV per share 769 p 626 p The EPRA NAV per share excludes the mark to market on effective cash flow hedges and related debt adjustments, and the convertible bond, deferred taxation on revaluations, and includes the surplus on trading properties and is calculated on a fully diluted basis. The EPRA NAV per share calculation also takes into account dilution for the Convertible Bond issued on 10 September 2012. The Company's share price exceeded the conversion price of the convertible bond for the first time as at 30 September 2014 and therefore it was dilutive for the first time at the period end. 1 EPRA earnings per share and EPRA NAV per share at 30 September 2013 have been re-presented to exclude the mark to market movements in the convertible bond in line with the EPRA Best Practices Recommendations additional guidance, issued in January 2014. This update increased EPRA Earnings per share by 1.9p and EPRA NAV per share by 3p in the comparative period. At 30 September 2014, the number of shares in issue was: basic: 1,018m (31 March 2014: 1,008m; 30 September 2013: 999m); diluted for the effect of share options and the convertible bond: 1,089m (31 March 2014: 1,021m; 30 September 2013: 1,011m). Total accounting return per share for the six months ended 30 September 2014 of 13.7% includes dividends paid of 13.5p (see note 8) in addition to the increase in EPRA NAV 81p. Total accounting return per share for the six months ended 30 September 2013 was 6.8% and the year ended 31 March 2014 was 20.0%. 3. Income statement notes Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 £m £m £m Gross and net rental income 310 Rent receivable 181 149 20 Spreading of tenant incentives and guaranteed rent increases 14 6 4 Surrender premia 3 2 334 Gross rental income 198 157 50 Service charge income 34 22 384 Gross rental and related income 232 179 (50) Service charge expenses (34) (22) (21) Property operating expenses (13) (9) 313 Net rental and related income 185 148 Fees and other income 10 Performance & management fees (from joint ventures & funds) 5 5 5 Other fees and commission 2 2 15 7 7 Net valuation movements on property and investments (including result on disposals) 580 Revaluation of properties 512 191 17 Result on property and investment disposals (excluding trading property disposals) 7 13 14 Result on trading property disposals 1 - 4 Revaluation of investments (1) - 615 519 204 258 Share of valuation movements of joint ventures and funds (note 5) 342 83 873 861 287 Consolidated statement of comprehensive income - Revaluation of owner occupied properties 8 - 873 869 287 Result on trading property disposals 109 Sale proceeds 38 - (95) Cost of sales (37) - 14 Result on trading property disposals 1 - Included in the £21m of net financing costs in the Capital and other column are a £17m fair value gain on the convertible bond, plus a £4m net foreign exchange gain on foreign currency denominated debt and investments in foreign operations. Tax (expense) income 2 Current tax: UK corporation tax (30 September 2014: 21%; 31 March 2014: 23%; 30 September 2013: 23%) (2) (1) 2 (2) (1) (5) Adjustments in respect of prior periods - 5 (3) Total current tax (expense) income (2) 4 (3) Deferred tax on revaluations - 1 (6) Group total taxation (2) 5 5 Attributable to joint ventures and funds (1) 6 (1) Total taxation (3) 11 Tax expense attributable to underlying profits for the six months ended 30 September 2014 was £nil (six months ended 30 September 2013: £1m; Year ended 31 March 2014: £2m). The deferred tax charge for the six months ended 30 September 2014 has been calculated using the substantively enacted UK corporation tax rate at the reporting date of 20% (effective from 1 April 2015). 4. Property Total property interests at fair value are £13,425m at 30 September 2014, comprising properties held by the Group of £8,119m, share of properties held by funds of £499m and share of properties held by joint ventures of £4,807m. Properties were valued on the basis of fair value, supported by market evidence, in accordance with the Appraisal and Valuation Standards published by The Royal Institution of Chartered Surveyors. 31 March 2014 30 September 2014 30 September 2013 £m £m £m 7,272 Investment properties 7,752 5,950 47 Owner-occupied property 57 45 7,319 Carrying value of properties on balance sheet 7,809 5,995 271 Trading properties 258 242 (32) Head lease liabilities (32) (30) 58 Surplus on trading properties 84 12 7,616 Total Group property portfolio valuation 8,119 6,219 (422) Non-controlling interests (411) - 7,194 Total Group property portfolio valuation attributable to shareholders 7,708 6,219 At 30 September 2014 Group properties valued at £1,756m were subject to a security interest (31 March 2014: £1,741m; 30 September 2013: £1,695m) and other properties of non-recourse companies amounted to £1,125m (31 March 2014: £1,066m; 30 September 2013: £42m), totalling £2,881m (31 March 2014: £2,807m; 30 September 2013: £1,737m). Interest capitalised on properties under development for the six months ended 30 September 2014 was £5m (31 March 2014: £17m; 30 September 2013: £11m). Fair value hierarchy The table below analyses investment property 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). 31 March 2014 30 September 2014 30 September 2013 Level 3 Level 3 Level 3 £m £m £m 4,443 UK Retail 4,767 3,400 2,546 Offices and Residential 2,727 2,204 251 Developments 226 316 47 Owner-Occupied 57 45 7,287 Total 7,777 5,965 329 Trading properties and surplus on trading properties 342 254 7,616 Total Group property portfolio valuation 8,119 6,219 5. Joint ventures and funds Summary of British Land's share of investments in joint ventures and funds at 30 September 2014 Underlying Profit (six months) Net Investment Property assets Other assets Gross liabilities £m £m £m £m £m Share of funds 8 425 499 25 (99) Share of joint ventures 52 2,583 4,800 216 (2,433) Total 60 3,008 5,299 241 (2,532) * Liabilities include secured bank loans. The borrowings of joint ventures and funds and their subsidiaries are non-recourse to the Group PREF, a fund owning a portfolio of retail property in Europe (in which British Land has a net investment of £29m), has its properties externally valued by CBRE. CBRE have included a market uncertainty clause in the valuation report of the Portuguese properties, due to a lack of transactional evidence and uncertainty over the economic situation in that market. In September 2014, following the sale of its Spanish assets, €42m of debt was repaid including all of its remaining bank debt. At 30 September 2014 the investment in joint ventures included within the total investment in joint ventures and funds was £2,979m (31 March 2014: £2,658m; 30 September 2013: £2,219m). Amounts owed to joint ventures on a proportional basis at 30 September 2014 were £4m (31 March 2014: £4m; 30 September 2013: £4m). Amounts owed from joint ventures on a proportional basis at 30 September 2014 were £nil (31 March 2014: £nil; 30 September 2013: £nil). British Land's share of the results of joint ventures and funds Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 £m £m £m 307 Gross rental income 125 134 253 Net rental and related income 121 127 (6) Other income and expenditure (2) (2) (123) Net financing costs (55) (62) 124 Underlying profit before taxation 64 63 258 Net valuation and disposal movements Non-recurring items 342 83 - (1) - 382 Profit on ordinary activities before taxation 405 146 (5) Current tax expense - (1) - Deferred tax income (expense) (1) 7 377 Profit on ordinary activities after taxation 404 152 Profit distributions split between controlling and non-controlling interests - Attributable to non-controlling interests 15 - 377 Attributable to shareholders of the Company 389 152 British Land's share of the operating cash flows of joint ventures and funds Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 £m £m £m 274 Rental income received from tenants 122 124 (33) Operating expenses paid to suppliers and employees (11) (15) 241 Cash generated from operations 111 109 (135) Interest paid (65) (66) 1 Interest received 2 - (6) UK corporation tax paid (4) (3) (3) Foreign tax paid - - 98 Cash inflow from operating activities 44 40 Cash inflow from operating activities deployed as: 35 Surplus cash retained within joint ventures and funds 4 9 63 Revenue distributions per Consolidated Statement of Cash Flows 40 31 Revenue distributions split between controlling and non-controlling interests - Attributable to non-controlling interests 4 - 63 Attributable to shareholders of the Company 36 31 6. Other investments 92 Investment held for trading 97 - 170 Loans and receivables 233 124 262 Other investments 330 124 The investment held for trading has been categorised as level 3 in the fair value hierarchy. Fair value of the interest has been determined by the Directors, supported by an external valuation from CBRE. The fair value of loans and receivables are equivalent to their book value. Included within loans and receivables is £208m (31 March 2014: £145m; 30 September 2013: £92m) in relation to a loan to Bluebutton Properties Limited, a joint venture company. 7. Net Debt Year ended 30 September 30 September 31 March 2014 2014 2013 £m £m £m 1,714 Debentures and unsecured bonds 1,698 1,528 458 Convertible bond 440 426 1,126 Bank debt and other floating rate debt 1,019 807 3,298 Gross debt 3,157 2,761 57 Interest rate and currency derivative liabilities 68 64 (32) Interest rate and currency derivative assets (53) (35) 3,323 3,172 2,790 (142) Cash and short-term deposits (92) (112) 3,181 Total net debt 3,080 2,678 (204) Net debt attributable to non-controlling interests (186) - 2,977 Net debt attributable to shareholders of the Company 2,894 2,678 Gross debt includes £202m due within one year at 30 September 2014 (31 March 2014: £495m; 30 September 2013: £772m). Undrawn committed bank facilities at 30 September 2014 amounted to £2,204m, of which £171m relates to partly-owned subsidiaries. The Group loan to value (LTV) ratio at 30 September 2014 was 26%, being the principal value of gross debt of £3,061m, less the relevant portion of borrowings of the partly-owned subsidiary of £199m, less cash and short-term deposits of £80m (being £92m less the relevant proportion of cash and deposits of the partly-owned subsidiary of £12m), divided by total Group property of £8,119m (note 4), plus investments in joint ventures and funds of £3,008m (note 5) and other investments of £330m (note 6), less the relevant portion of property and investments of the partly-owned subsidiary of £560m. British Land Unsecured Financial Covenants The two financial covenants applicable to the Group unsecured debt including convertible debt are: Net Borrowings not to exceed 175% of Adjusted Capital and Reserves. At 30 September 2014, the ratio was 34%: • net borrowings were £2,816m, being the principal amount of gross debt of £3,061m, less the relevant proportion of borrowings of the partly-owned subsidiary of £199m, plus amounts owed to joint ventures of £4m (see note 5), plus TPP Investments Ltd of £30m (see note 10), less the beneficially owned cash and deposits of £80m (being £92m less the relevant proportion of cash and deposits of the partly-owned subsidiary of £12m); and • adjusted capital and reserves were £8,231m, being share capital and reserves of £7,656m (see balance sheet), adjusted for £5m of deferred tax (see note 2), £93m trading property surpluses, £307m exceptional refinancing charges (see below), £170m fair value adjustments on financial assets and liabilities (being £130m mark-to-market on interest rate derivatives and £40m adjustment on the convertible bond). Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets. At 30 September 2014 the ratio is 27% i. Net Unsecured Borrowings are £1,533m, being the principal amount of gross debt of £3,061m plus amounts owed to joint ventures of £4m less cash and deposits not subject to a security interest of £70m less the principal amount of secured and non-recourse borrowings of £1,462m; and ii. Unencumbered Assets are £5,597m being properties of £8,119m (see note 4) plus investments in joint ventures and funds of £3,008m (see note 5) and other investments of £330m (see balance sheet) less investments in joint ventures of £2,979m (see note 5) and encumbered assets of £2,881m (see note 4). In calculating Adjusted Capital and Reserves for the purpose of the unsecured debt financial covenants, there is an adjustment of £307m to reflect the cumulative net amortised exceptional items relating to the refinancings in the years ended 31 March 2005, 2006 and 2007. Comparison of fair values and book values 30 September 2014 30 September 2013 Fair Book Fair Book Value Value Difference Value Value Difference £m £m £m £m £m £m Debentures and unsecured bonds 1,751 1,698 53 1,546 1,528 18 Convertible bond 440 440 - 426 426 - Bank debt and other floating rate debt 1,034 1,019 15 815 807 8 Cash and short-term deposits (92) (92) - (112) (112) - 3,133 3,065 68 2,675 2,649 26 Other financial (assets) liabilities: - interest rate derivative assets (53) (53) - (35) (35) - - interest rate derivative liabilities 68 68 - 64 64 - 15 15 - 29 29 - Total 3,148 3,080 68 2,704 2,678 26 Short-term debtors and creditors have been excluded from the disclosures on the basis that the fair value is equivalent to the book value. The fair values of debt, debentures and the convertible bond 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. 7. Net Debt (continued) 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 2014 Level 1 Level 2 Level 3 Total £m £m £m £m Interest rate and currency - (53) - (53) derivative assets Assets - (53) - (53) Interest rate and currency - 68 - 68 derivative liabilities Convertible bond 440 - - 440 Liabilities 440 68 - 508 Total 440 15 - 455 8. Dividends The 2015 second quarter dividend of 6.92 pence per share, totalling £71m, is payable on 13 February 2015 to shareholders on the register at close of business on 9 January 2015. The Board will announce the availability of the Scrip Dividend Alternative via the Regulatory News Service and on its website (www.britishland.com), no later than 4 business days before the ex-dividend date of 8 January 2015. The Board expects to announce the split between PID and non-PID income at that time. A Scrip Dividend Alternative will not be enhanced. PID dividends are paid, as required by REIT legislation, after deduction of withholding tax at the basic rate (currently 20%), where appropriate. Certain classes of shareholders may be able to elect to receive dividends gross. Please refer to our website (www.britishland.com) for details. The 2015 first quarter dividend of 6.92 pence per share, totalling £70m, was paid on 7 November 2014. 9% of shareholders opted for the Scrip Dividend Alternative. Both the cash dividend and Scrip Dividend Alternative were treated as PIDs. The total cash paid by the Group was £64m, being £54m paid to shareholders and £10m of withholding tax. The Consolidated Statement of Changes in Equity shows total dividends in the six months to 30 September of £136m, £68m being the third quarter 2014 dividend of 6.75 pence per share paid on 10 May 2014, and the 2014 fourth quarter PID dividend of 6.75 pence per share, paid on 9 August 2014, totalling £68m. A scrip alternative was offered in lieu of cash for both dividends. 9. Segment Information The Group allocates resources to investment and asset management according to the sectors it expects to perform over the medium term. Its two principal sectors are currently Offices and Retail. The Offices sector includes residential, as this is often incorporated into office schemes, and Retail includes leisure, for a similar rationale. The relevant revenue, net rental income, operating result, assets and capital expenditure, being the measures of segment revenue, segment result and segment assets used by the management of the business, are set out below. Revenue is derived from the rental of buildings. Operating result is the net of net rental income, fee income and administration expenses. No customer exceeds 10% of the Group's revenues. Segment result Offices Retail Other/unallocated Total 2014 2013 2014 2013 2014 2013 2014 2013 £m £m £m £m £m £m £m £m Revenue British Land Group 59 43 139 114 - - 198 157 Share of funds and joint ventures 43 42 77 83 5 9 125 134 Total 102 85 216 197 5 9 323 291 Net rental income British Land Group 55 40 130 108 - - 185 148 Share of funds and joint ventures 41 40 76 80 4 7 121 127 Total 96 80 206 188 4 7 306 275 Operating Result British Land Group 49 33 125 104 (21) (18) 153 119 Share of funds and joint ventures 41 40 75 78 3 7 119 125 Total 90 73 200 182 (18) (11) 272 244 Reconciliation to total profit before taxation British Land Group Total Operating Result 272 244 British Land Group net financing costs (54) (36) Share of funds and joint ventures net financing costs (55) (62) Capital and other 880 276 Total profit on ordinary activities before taxation 1,043 422 Segment assets Offices Retail Other/unallocated Total 2014 2013 2014 2013 2014 2013 2014 2013 £m £m £m £m £m £m £m £m Property assets (includes head leases liabilities) British Land Group 3,317 2,770 4,802 3,449 - - 8,119 6,219 Share of funds and joint ventures 2,252 1,791 3,013 3,187 41 241 5,306 5,219 Total 5,569 4,561 7,815 6,636 41 241 13,425 11,438 Segment assets British Land Group 3,245 2,779 4,822 3,470 518 300 8,585 6,549 Share of funds and joint ventures 2,397 1,953 3,097 3,263 46 272 5,540 5,488 Total 5,642 4,732 7,919 6,733 564 572 14,125 12,037 Other assets British Land Group - - - - 518 312 518 312 Share of funds and joint ventures 154 162 82 72 5 31 241 265 Total 154 162 82 72 523 343 759 577 Capital expenditure British Land Group 94 553 35 33 - - 129 586 Share of funds and joint ventures 86 45 17 9 29 1 132 55 Total 180 598 52 42 29 1 261 641 Reconciliation to net assets 2014 2013 £m £m British Land Group Segment Assets British Land Group 8,585 6,549 Share of funds and joint ventures 5,540 5,488 Total 14,125 12,037 Share of funds and joint ventures liabilities (2,532) (2,812) Current liabilities (510) (1,021) Non-current liabilities (3,059) (2,098) Net Assets 8,024 6,106 Other assets include other investments of £330m (31 March 2014: £262m; 30 September 2013: £124m), debtors of £43m (31 March 2014: £41m; 30 September 2013: £41m), cash and short-term deposits of £92m (31 March 2014: £142m; 30 September 2013: £112m) and derivatives of £53m (31 March 2014: £32m; 30 September 2013: £35m). 10. Contingent liabilities The Group has 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. TPP Investments Limited, a wholly owned ring-fenced special purpose subsidiary, is a partner in The Tesco British Land Property Partnership and, in that capacity, has entered into a secured bank loan under which its liability is limited to £30m (31 March 2014: £30m, 30 September 2014: £30m) and recourse is only to the partnership assets. 11. Related party transactions There have been no material changes in the related party transactions described in the last annual report. Details of transactions with joint ventures and funds are given in notes 3, 6 and 10. Amounts owed to joint ventures are detailed in note 5. 12. Share capital At 30 September 2014, of the issued 25p ordinary shares, 1m were held in the ESOP Trust (31 March 2014: 1m; 30 September 2013: 1m), 11m were held as Treasury shares (31 March 2014: 11m; 30 September 2013: 11m) and 1,018m shares were in free issue (31 March 2014: 1,008m; 30 September 2013: 999m). All shares are fully paid. 13. Post balance sheet events Subsequent to the period end, two steel bolts were found to have broken on The Leadenhall Building, in which the Group has a 50 per cent share. A full investigation is being conducted by both the contractor and structural engineers who will be leading on taking the appropriate remedial action. No injuries arose as a result of either fracture and the building is structurally sound. Supplementary Disclosures Table A: SUMMARY INCOME STATEMENT AND BALANCE SHEET Summary income statement based on proportional consolidation for the period ended 30 September 2014 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, i.e. proportional basis. The underlying profit before taxation and underlying profit after taxation are the same as presented in the consolidated income statement. Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 Group JVs & funds Less non-controlling interests Prop Consol Group JVs & funds Less non-controlling interests Prop Consol Group JVs & funds Prop Consol £m £m £m £m £m £m £m £m £m £m £m 334 267 (4) 597 Gross rental income 198 125 (14) 309 157 134 291 (21) (14) - (35) Property operating expenses (13) (4) - (17) (9) (7) (16) 313 253 (4) 562 Net rental income 185 121 (14) 292 148 127 275 (72) (6) - (78) Administrative expenses (39) (2) - (41) (36) (2) (38) 15 - - 15 Fees & other income 7 - - 7 7 - 7 256 247 (4) 499 Ungeared Income Return 153 119 (14) 258 119 125 244 (81) (123) 2 (202) Net interest (54) (55) 6 (103) (36) (62) (98) 175 124 (2) 297 Underlying profit before tax 99 64 (8) 155 83 63 146 (2) - - (2) Underlying tax - (1) 173 124 (2) 295 Underlying profit after taxation 155 145 29.4p Underlying earnings per share - diluted basis 15.3p 14.5p 873 Valuation movement 826 287 53 Other capital and tax (net) 17 (28) 926 Capital and other 843 259 1,221 Total return 998 404 The underlying earnings per share is calculated on underlying profit before taxation of £155m, tax attributable to underlying profits of £nil and 1,019m shares on a diluted basis, for the six months ended 30 September 2014. includes other comprehensive income, movement in dilution due to share options and the movement in items excluded for EPRA NAV. Supplementary Disclosures (continued) Table A (continued): Summary balance sheet based on proportional consolidation as at 30 September 2014 The following pro forma information is unaudited and does not form part of the consolidated primary statements or the notes thereto. It presents the composition of the EPRA net assets of the Group, with its share of the net assets of the joint venture and fund assets and liabilities included on a line by line, i.e. proportional basis and assuming full dilution. EPRA Net assets 31 March 2014 Group Share of joint ventures & funds Less non-controlling interest Dilution due to share options and convertible bond Deferred tax Mark to market on effective cash flow hedges and related debt adjs Head Leases Valuation surplus on trading properties EPRA Net assets 30 Sep 2014 EPRA Net assets 30 Sep 2013 £m £m £m £m £m £m £m £m £m £m £m 6,852 Retail properties 4,822 3,015 (583) - - - (22) - 7,232 6,636 5,099 Office properties 3,245 2,243 - - - - (12) 93 5,569 4,561 89 Other properties - 41 - - - - - - 41 241 12,040 Total properties 8,067 5,299 (583) - - - (34) 93 12,842 11,438 - Investments in joint 3,008 (3,008) - - - - - - - - ventures and funds 194 Other investments 330 (106) - - - - - - 224 81 (317) Other net (liabilities) (301) (139) 7 45 5 - 34 - (349) (301) assets (4,890) Adjusted Net debt (3,080) (2,046) 208 - - 170 - - (4,748) (4,894) - Dilution due to convertible bond - - - 400 - - - - 400 - 7,027 Net assets 8,024 - (368) 445 5 170 - 93 8,369 6,324 688p EPRA NAV per share (note 2) 769p 626p EPRA Net Assets Movement Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 20131 £m Pence per share £m Pence per share £m Pence per share 5,967 596 Opening EPRA NAV 7,027 688 5,967 596 295 29 Income return 155 15 145 14 926 90 Capital return 879 84 259 26 (161) (27) Dividends (92) (14) (73) (13) - - Dilution due to convertible bond 400 (4) - - - - Re-presentation of mark-to-market valuation on convertible bond (see note 2) - - 26 3 7,027 688 Closing EPRA NAV 8,369 769 6,324 626 1 Re-presented in line with EPRA Best Practices Recommendations additional guidance, issued January 2014 (see note 2). Supplementary Disclosures (continued) Table B: EPRA Performance Measures EPRA Performance measures summary table Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 20131 £m Pence per share £m Pence per share £m Pence per share 295 29.5 EPRA Earnings -basic 155 15.3 145 14.6 295 29.4 -diluted 158 14.7 145 14.5 7,027 688 EPRA NAV 8,369 769 6,324 626 6,700 656 EPRA NNNAV 7,962 731 6,016 595 4.8 % EPRA Net Initial Yield 4.5 % 5.0 % 5.3 % EPRA 'topped-up' Net Initial Yield 5.0 % 5.5 % 5.2 % EPRA Vacancy Rate 4.4 % 4.6 % Calculation of EPRA earnings and EPRA earnings per share Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 20131 £m £m £m 1,106 Profit attributable to shareholders of the Company 998 427 Exclude: (5) Group - non-underlying current tax 2 (5) (3) Group - deferred tax - (1) 5 Joint Ventures and Funds - non-underlying current tax - 1 - Joint Ventures and Funds - deferred tax 1 (7) (615) Group - net valuation movement (including result on disposals) (519) (204) (258) Joint ventures and funds - net valuation movement (including result on disposals) (342) (83) 57 Changes in fair value of financial instruments and associated close-out costs (21) 17 - Financing break costs on property disposals 1 - 8 Non-controlling interest in respect of the above 35 - 295 EPRA Earnings 155 145 Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 20131 Number Number Number million million million 1,010 Weighted average number of shares 1,024 1,004 (11) Adjustment for Treasury shares (11) (11) 999 Weighted average number of shares (basic) 1,013 993 2 Dilutive effect of share options 2 1 3 Dilutive effect of ESOP shares 4 3 - Dilutive effect of convertible bond 58 - 1,004 Weighted average number of shares (diluted) 1,077 997 2014 2013 Pence Pence 110.7 Earnings per share (basic) 98.5 43.0 110.2 Earnings per share (diluted) 97.9 42.8 29.4 Underlying earnings per share (diluted) 15.3 14.5 29.5 EPRA earnings per share -basic 15.3 14.6 29.4 -diluted 14.7 14.5 1 Re-presented in line with EPRA Best Practices Recommendations additional guidance, issued January 2014 (see note 2). Supplementary Disclosures (continued) Table B (continued): Net assets per share Year ended 31 March 2014 Pence per share Six months ended 30 September 2014 Pence per share Six months ended 30 September 20131 Pence per share £m £m £m 7,117 Balance sheet net assets 8,024 6,106 6 Deferred tax arising on revaluation movement 5 5 173 Mark to market on effective cash flow hedges and related debt adjustments 170 164 39 Dilution due to share options 45 37 63 Surplus on trading properties 93 12 (371) Less non-controlling interests (368) - - Dilution due to convertible bond 400 - 7,027 688 EPRA NAV 8,369 769 6,324 626 (6) Deferred tax arising on revaluation movements (5) (5) (173) Mark to market on cash flow hedges and related debt adjustments (170) (164) (148) Mark to market on debt (232) (139) 6,700 656 EPRA NNNAV 7,962 731 6,016 595 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. 1 Re-presented in line with EPRA Best Practices Recommendations additional guidance, issued January 2014 (see note 2). EPRA Net Initial Yield and 'topped-up' Net Initial Yield Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 £m £m £m 7,194 Investment property - wholly owned 8,119 6,219 4,757 Investment property - share of joint ventures and funds 5,265 4,978 (1,192) Less developments (1,011) (1,008) 10,759 Completed property portfolio 12,373 10,189 639 Allowance for estimated purchasers' costs (542) 572 11,398 Gross up completed property portfolio valuation 11,831 10,761 554 Annualised cash passing rental income 568 545 (8) Property outgoings (9) (10) 546 Annualised net rents 559 535 53 Rent expiration of rent free periods and fixed uplifts* 68 60 599 'Topped-up' net annualised rent 627 595 4.8 % EPRA Net Initial Yield 4.7 % 5.0 % 5.3 % EPRA 'topped-up' Net Initial Yield 5.3 % 5.5 % 26 Including fixed/minimum uplifts received in lieu of rental growth 27 26 625 Total 'topped-up' net rents 654 621 5.5 % Overall 'topped-up' Net Initial Yield 5.5 % 5.8 % 599 'Topped-up' net annualised rent 627 595 33 ERV vacant space 29 28 (9) Reversions 2 (15) 623 Total Net ERV 658 608 5.5 % Net Reversionary Yield 5.6 % 5.7 % * The period over which rent free periods expire is 4 years (31 March 2014: 2 years; 30 September 2013: 4 years) The current period 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 2014, 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 Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 £m £m £m 33 Annualised potential gross rental value of vacant premises 29 28 623 Annualised potential gross rental value for the completed property portfolio 662 617 5.2 % EPRA Vacancy Rate 4.4 % 4.6 % The current period above is stated for the UK portfolio only. Supplementary Disclosures (continued) Table B (continued): EPRA Cost Ratios Year ended 31 March 2014 Six months ended 30 September 2014 Six months ended 30 September 2013 £m £m £m 21 Property outgoings 13 9 72 Administrative expenses 39 36 20 Share of joint ventures and funds expenses 6 9 Less: (10) Performance & management fees (from joint ventures & funds) (5) (5) (5) Other fees and commission (2) (2) (2) Ground rent costs (2) - 96 EPRA Costs (including direct vacancy costs) (A) 49 47 (13) Direct vacancy costs (7) (6) 83 EPRA Costs (excluding direct vacancy costs) (B) 42 41 330 Gross Rental Income less ground rent costs 170 157 265 Share of joint ventures and funds (GRI less ground rent costs) 137 134 595 Total Gross Rental Income (C) 307 291 16.2 % EPRA Cost Ratio (including direct vacancy costs) (A/C) 16.0 % 16.0 % 13.9 % EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 13.7 % 14.1 % Overhead and operating expenses capitalised (incl. share of joint ventures and funds) - - - No overhead or operating expenses, including employee costs, are capitalised. Table C: GROSS RENTAL INCOME AND ACCOUNTING RETURN Calculation of gross rental income Year ended Six months ended Six months ended 31 March 2014 30 September 2014 30 September 2013 £m £m £m 574 Rent receivable 306 281 23 Spreading of tenant incentives and guaranteed rent increases 13 8 4 Surrender premia 4 2 601 Gross rental income 323 291 Year ended Six months ended Six months ended 31 March 2014 30 September 2014 30 September 2013 20.0 % Total accounting return 13.7 % 6.8% SUPPLEMENTARY TABLES (Data includes Group's share of Joint Ventures and Funds) Portfolio Valuation At 30 September 2014 Group JVs & Funds1 Total Change² £m £m £m % Shopping parks 1,828 1,156 2,984 7.2 Shopping centres 803 1,185 1,988 5.8 Superstores 117 1,180 1,297 3.1 Department stores 600 1 601 6.5 Leisure 359 3 362 7.1 Retail & Leisure3 3,707 3,525 7,232 6.0 West End 2,953 - 2,953 9.0 City 68 2,209 2,277 9.0 Provincial 96 - 96 6.5 Offices 3,117 2,209 5,326 8.9 Residential4 200 43 243 4.9 Offices & Residential3 3,317 2,252 5,569 8.7 Total 7,024 5,777 12,801 7.2 Table shows UK total, excluding assets held in Europe. Total portfolio valuation including Europe of £12.8bn at year end, +7.1% valuation movement. 1 Group's share of properties in joint ventures and funds including HUT at share 2 Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales ³ Including committed developments 4 Stand-alone residential Portfolio Yield & ERV Movements At 30 September 2014 EPRA Net initial yield %1 EPRA topped up net initial yield %1, 2 Overall topped up net initial yield %1, 3 Net equivalent yield %1 Net reversionary yield %1 Net equivalent yield compression1 ERV Growth %4 Shopping parks 5.0 5.2 5.3 5.2 5.2 (45) 0.9 Shopping centres 4.6 4.9 5.0 5.2 5.2 (38) 0.3 Superstores 4.8 5.0 5.0 4.9 4.9 (12) 0.1 Department stores 4.7 4.7 6.7 5.2 4.1 (19) 8.6 Leisure 6.6 6.6 8.5 7.2 5.3 (57) 0.7 Retail & Leisure 4.9 5.1 5.4 5.3 5.1 (35) 1.1 West End 3.2 4.5 4.6 4.9 5.1 (21) 2.6 City 4.2 5.1 5.1 5.0 6.1 (34) 5.95 Provincial 6.7 6.7 6.7 5.9 5.4 (22) 0.0 Offices 3.7 4.8 4.9 4.9 5.5 (26) 3.9 Total 4.4 5.0 5.2 5.1 5.2 (32) 2.1 Table shows UK total, excluding assets held in Europe. 1 Including notional purchaser's costs 2 Including Rent contracted from expiry of rent-free periods and contracted uplifts not in lieu of growth 3 Including fixed/minimum uplifts (excluded from EPRA definition) 4 As calculated by IPD 5 City up 2.2% on a like-for-like basis Total Property Return (as calculated by IPD excluding Europe) 6 mths to 30 September 2014 Retail Offices Total % British Land IPD British Land IPD British Land IPD Capital Return 6.1 5.5 9.2 8.1 7.3 6.6 - ERV Growth 1.1 0.5 3.9 3.2 2.1 1.5 - Yield Compression1 35 bps 34 bps 26 bps 34 bps 32 bps 36 bps Income Return 2.7 2.7 1.7 2.2 2.3 2.6 Total Property Return 9.0 8.3 11.0 10.5 9.8 9.3 1 Net equivalent yield movement Portfolio Weighting At 30 September 2014 2013 2014 2014 2014 (current) (current) (pro-forma1) % % £m % Shopping parks 22.9 23.4 2,984 22.2 Shopping centres 17.3 15.5 1,988 14.9 Superstores 11.7 10.1 1,297 9.6 Department stores 4.6 4.7 601 4.5 Leisure 2.8 2.8 362 2.7 Retail & Leisure 59.3 56.5 7,232 53.9 West End 22.0 23.1 2,953 25.4 City 16.5 17.8 2,277 17.4 Provincial 0.8 0.7 96 0.7 Offices 39.3 41.6 5,326 43.5 Residential2 1.4 1.9 243 2.6 Offices & Residential 40.7 43.5 5,569 46.1 Total 100.0 100.0 12,801 100.0 Table shows UK total, excluding assets held in Europe. 1 Pro forma for committed developments at estimated end value (as determined by the Group's external valuers) 2 Stand-alone residential Annualised Rent & Estimated Rental Value (ERV) At 30 September 2014 (excluding developments) Annualised rent (valuation basis) £m1 ERV £m Average rent £psf Group JVs & Funds Total Total Contracted2, 3 ERV2 Shopping parks 97 62 159 166 25.1 25.1 Shopping centres 44 59 103 116 28.6 30.5 Superstores 7 59 66 67 22.1 21.7 Department stores 30 - 30 26 13.6 11.8 Leisure 25 - 25 21 14.2 11.7 Retail & Leisure 203 180 383 396 22.7 22.6 West End 89 - 89 140 49.8 53.4 City 4 82 86 122 48.2 53.5 Provincial 6 - 6 5 27.1 21.9 Offices 99 82 181 267 48.0 52.1 Residential4 3 - 3 4 Offices & Residential 102 82 184 271 Total 305 262 567 667 27.3 28.7 Table shows UK total, excluding assets held in Europe. 1 Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group's external valuers), less any ground rents payable under head leases, excludes contracted rent subject to rent free and future uplift 2 Office average rent & ERV £psf is based on office space only 3 Annualised rent, plus rent subject to rent free 4 Stand-alone residential Gross Rental Income1 Accounting Basis £m 6 mths to 30 September 2014 Annualised as at 30 September 2014 Group JVs & Funds2 Total Group JVs & Funds2 Total Shopping parks 48 29 77 97 61 158 Shopping centres 28 30 58 47 57 104 Superstores 4 31 35 7 61 68 Department stores 17 - 17 33 - 33 Leisure 15 - 15 29 - 29 Retail & Leisure 112 90 202 213 179 392 West End 51 - 51 107 - 107 City 3 43 46 4 92 96 Provincial 3 - 3 6 - 6 Offices 57 43 100 117 92 209 Residential3 2 - 2 3 - 3 Offices & Residential 59 43 102 120 92 212 Total 171 133 304 333 271 604 Table shows UK total, excluding assets held in Europe. 1 Gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives 2 Group's share of properties in joint ventures and funds including HUT at share 3 Stand-alone residential Lease Length & Occupancy At 30 September 2014 Average lease length yrs Occupancy rate % (excluding developments) To expiry To break Occupancy Occupancy (underlying)1 Shopping parks 8.8 7.8 97.3 98.5 Shopping centres 9.2 8.1 95.5 97.4 Superstores 14.6 14.4 100.0 100.0 Department stores 26.1 22.8 100.0 100.0 Leisure 20.2 20.2 100.0 100.0 Retail & Leisure 12.0 11.0 97.6 98.6 West End 11.0 9.0 96.2 97.0 City 9.9 8.0 90.3 92.6 Provincial 7.8 7.4 100.0 100.0 Offices 10.4 8.5 93.6 95.0 Total 11.4 10.1 95.7 97.1 Table shows UK total, excluding assets held in Europe. 1 Including accommodation under offer or subject to asset management Rent Subject to Lease Break or Expiry At 30 September 2014 2015 2016 2017 2018 2019 2015-17 2015-19 For period to 31 March £m £m £m £m £m £m £m Shopping parks 5 8 6 11 12 19 42 Shopping centres 4 8 8 9 5 20 34 Superstores - - - - - - - Department stores - - - - - - - Leisure - - - - - - - Retail & Leisure 9 16 14 20 17 39 76 West End - 4 8 8 9 12 29 City - - 19 - 18 19 37 Provincial - - - - - - - Offices1 - 4 27 8 27 31 66 Total 9 20 41 28 44 70 142 % of contracted rent 1.6% 3.1% 6.3% 4.5% 6.9% 11.0% 22.4% Potential uplift at current ERV 1 3 5 (1) 2 9 10 Table shows UK total, excluding assets held in Europe. 1 Based on office space only Rent Subject to Open Market Rent Review At 30 September 2014 2015 2016 2017 2018 2019 2015-17 2015-19 For period to 31 March £m £m £m £m £m £m £m Shopping parks 11 18 16 21 25 45 91 Shopping centres 3 14 13 15 13 30 58 Superstores 11 17 6 4 8 34 46 Department stores 2 5 - - - 7 7 Leisure - - - - - - - Retail & Leisure 27 54 35 40 46 116 202 West End 4 17 13 13 20 34 67 City 1 14 2 15 14 17 46 Provincial - 6 - - - 6 6 Offices 5 37 15 28 34 57 119 Total 32 91 50 68 80 173 321 Potential uplift at current ERV 1 3 - - 1 4 5 Table shows UK total, excluding assets held in Europe. Major Holdings At 30 September 2014 BL Share Sq ft Rent Occupancy Lease (excl. developments under construction) % '000 £m pa1 rate %2 length yrs3 Broadgate, London EC2 50 3,970 180 99.9 7.0 Regent's Place, London NW1 100 1,586 71 100.0 8.8 Meadowhall Shopping Centre, Sheffield 50 1,448 80 98.2 7.5 Sainsbury's Superstores 52 2,715 64 100.0 14.9 Tesco Superstores 51 2,684 62 100.0 14.1 Paddington Central 100 638 23 94.0 9.6 The Leadenhall Building 50 601 19 57.6 16.3 Teesside Shopping Park, Stockton-on-Tees 100 417 15 96.9 6.6 Drake Circus Shopping Centre, Plymouth 100 414 16 97.0 6.1 Debenhams, Oxford Street 100 363 11 100.0 24.5 1 Annualised contracted rent, topped up for rent free, including 100% of Joint Ventures & Funds 2 Includes accommodation under offer or subject to asset management 3 Weighted average to first break Occupiers Representing over 0.5% of Total Contracted Rent At 30 September 2014 % of total rent % of total rent Tesco plc 7.4 Facebook 0.9 Debenhams 5.7 Asda Group 0.9 J Sainsbury plc 5.4 SportsDirect 0.9 HM Government 3.4 JPMorgan 0.8 UBS AG 3.0 JD Sports 0.8 Kingfisher (B&Q) 2.6 Reed Smith 0.8 Home Retail Group 2.6 Cable & Wireless plc 0.8 Next plc 2.3 Deutsche Bank AG 0.7 Arcadia Group 2.0 Gazprom 0.7 Virgin Active 1.9 Mayer Brown 0.7 Spirit Group 1.6 Hennes 0.7 Alliance Boots 1.5 Mothercare 0.6 Herbert Smith 1.3 ICAP plc 0.6 Marks & Spencer plc 1.2 Carlson (TGI Friday's) 0.6 DSG International 1.2 Credit Agricole 0.6 Royal Bank of Scotland plc 1.2 Pets at Home 0.6 Aegis Group 1.1 AstraZeneca 0.5 Hutchison Whampoa 1.1 Nokia 0.5 TJX Cos Inc (TK Maxx) 1.1 Lewis Trust (River Island) 0.5 House of Fraser 1.0 Henderson 0.5 New Look 0.9 Santander 0.5 Aon plc 0.9 Steinhoff 0.5 INVESTMENT ACTIVITY Acquisitions and Disposals From 1 April 2014 Price (gross) BL Share Annual Passing Acquisitions Area £m £m Rent £m2 Completed Hercules Unit Trust unit purchase1 Retail Various 74 74 4 Total 74 74 4 1 Units purchased over the course of the half 2 BL share of net rent topped up for rent frees where applicable From 1 April 2014 Price (gross) BL Share Annual Passing Disposals Area £m £m Rent £m1 Completed Leamington Shopping Park Retail West Midlands 72 22 1 Nassica & Vista Alegre Retail Parks Europe Spain 70 46 4 Sainsburys, Cambridge Retail East Anglia 50 25 1 Sainsburys, Cardiff (Thornhill) Retail Wales 35 17 1 Cwmbran Retail Park Retail Wales 32 32 2 Tesco, Ferndown Retail South West 29 15 1 52 Poland Street, W1 Offices London 26 26 1 Springfield Retail Park, Elgin Retail Scotland 23 23 1 Hounslow West, Morrisons Retail London 9 9 1 Residential Units Residential London 51 51 - Other 17 10 - Exchanged Clarges Mayfair Residential Residential London 227 227 - Aldgate Residential2 Residential London 60 30 - Colmore Row, Birmingham Offices West Midlands 15 15 - Nottingham, Sainsburys Retail Midlands 50 25 1 Rugby, Sainsburys Retail Midlands 59 30 2 Other 10 10 - Total 835 613 16 1 BL share of net rent topped up for rent frees where applicable 2 Including £15m (BL share) of affordable units Recently Completed & Committed Developments At 30 September 2014 Sector BL Share Sq ft PC Calendar Year Current Value Cost to Complete ERV Pre-let9 Resi End Value3 % '000 £m £m1 £m2 £m £m 2010 Programme 10 - 30 Brock Street4 Mixed Use 100 503 Completed 423 1 20.6 20.5 118 10 Portman Square Offices 100 134 Completed 205 3 9.9 9.4 - Marble Arch House5 Mixed Use 100 87 Completed 82 3 4.6 1.7 19 39 Victoria Street Offices 100 97 Completed 116 - 6.0 6.0 - 199 Bishopsgate Offices 50 144 Completed 63 1 3.5 2.0 - Whiteley Shopping, Fareham Retail 50 321 Completed 62 - 3.1 3.0 - Bedford Street Residential 100 24 Completed 10 1 - - 28 Glasgow Fort (Leisure) Retail 62 46 Completed 12 - 0.7 0.7 - The Leadenhall Building Offices 50 601 Completed 318 19 19.1 9.8 - 5 Broadgate Offices 50 710 2015 327 34 19.2 19.2 - Total 2010 Programme 2,667 1,618 62 86.7 72.3 165 Recently Committed Milton Keynes, Kingston Centre Retail 50 21 Completed 5 - 0.3 0.3 - Old Market, Hereford Retail 100 305 Completed 83 3 4.9 4.4 - Meadowhall Surrounding Land Retail 50 22 Completed 6 - 0.4 0.4 - Fort Kinnaird, Edinburgh Retail 31 57 2014 7 1 0.5 0.5 - Deepdale, Preston Retail 31 64 2014 3 2 0.4 0.4 - The Hempel Phase 16 Residential 100 25 2014 48 3 - - 53 Broadgate Circle Offices 50 41 2014 16 4 1.2 0.7 - Whiteley Leisure, Fareham Retail 50 58 2014 4 4 0.6 0.5 - Broughton Park, Chester Retail 62 54 2014 9 3 0.7 0.7 - Glasgow Fort, M&S & Retail Terrace Retail 62 112 2015 11 14 1.6 0.7 - Yalding House Offices 100 29 2015 18 9 1.7 - - The Hempel Phase 2 Residential 100 40 2016 48 22 - - 90 Aldgate Place, Phase 17 Residential 50 221 2016 23 43 - - 77 Clarges Mayfair8 Mixed Use 100 192 2017 260 188 5.7 - 462 Total Recently Committed 1,241 541 296 18.0 8.6 682 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 From 1 October 2014 to practical completion (PC) 2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 3 Residential development of which £431m completed or exchanged and a further £10m under offer 4 Includes 126,000 sq ft of residential of which £117m has now sold and completed 5 Includes 10,000 sq ft of residential of which £19m has now sold and completed 6 Previously Craven Hill Gardens 7 End value excludes sale of hotel site, receipts of £6m (BL Share) estimated 8 Includes 103,000 sq ft of residential 9 Excludes deals under offer Near-Term Pipeline At 30 September 2014 Sector BL Share Sq ft Current Value Cost to Complete2 Status '000 £m £m 4 Kingdom Street Offices 100 145 29 71 Consented 5 Kingdom Street1 Offices 100 240 58 113 Consented Blossom Street, Shoreditch3 Mixed Use 100 347 6 226 Pre-submission Glasgow Fort (Restaurants & Additional Retail Unit) Retail 62 42 - 11 Consented Fort Kinnaird, Edinburgh (Debenhams) Retail 31 30 - 2 Pre-submission Plymouth Leisure Retail 100 100 - 36 Pre-submission Aldgate Place, Phase 2 Residential 50 145 20 31 Consented Total Near-Term 1,049 113 490 1 210,000 sq ft of which is consented 2 Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 3 £6m in Current Value column represents cost of option agreement with the Corporation of London Medium-Term Pipeline At 30 September 2014 Sector BL Share Sq ft Status '000 100 Liverpool Street Offices 50 530 Pre-submission Eden Walk Shopping Centre, Kingston Mixed Use 50 545 Pre-submission Canada Water Masterplan Mixed Use 100 3,000 Pre-submission Ealing, Residential Conversion Residential 100 110 Pre-submission Meadowhall Land Retail 50 350 Pre-submission Total Medium-Term 4,535 This information is provided by RNS The company news service from the London Stock Exchange END IR DDBDBLUBBGSR